As filed with the Securities and Exchange Commission on January 12, 1999
Registration Statement No. 333-[ ]
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------
FORM F-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------------
VersaTel Telecom International N.V.
(Exact name of Registrant as specified in its charter)
VersaTel Telecom International N.V.
(Translation of Registrant's name into English)
The Netherlands 4813 None
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of incorporation or Classification Code Identification
organization) Number) Number)
----------------------
Paalbergweg 36
1105 BV Amsterdam-Zuidoost
The Netherlands
(31 20) 430 4300
(Address, including zip code, and telephone
number, including area code, of
Registrant's principal executive
offices)
----------------------
CT Corporation System
1633 Broadway
New York, NY 10019
(212) 664-1666
(Address, including zip code, and telephone number, including area code,
of agent for process)
----------------------
with copies to
David J. Beveridge John D. Morrison
Shearman & Sterling Shearman & Sterling
199 Bishopsgate 599 Lexington Avenue
London, England EC2M 3TY New York, NY 10022
(44 171) 920-9000 (212) 848-4000
Approximate date of commencement of proposed sale to the public: As
soon as practicable after the effective date of this Registration Statement.
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. |_|
If this Form is a post-effective amendment filed pursuant to Rule
462(d) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. |_|
<TABLE>
<CAPTION>
===================================================================================================================================
Title of each class of Amount to be Proposed maximum Proposed maximum Amount of
Securities to be Registered Registered offering price per note aggregate offering price Registration Fee
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
13 1/4% Senior Notes due 2008...... $150,000,000 100% $150,000,000 $41,700
===================================================================================================================================
</TABLE>
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.
================================================================================
<PAGE>
The information in the prospectus is not complete and may be changed. We may not
sell 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 state where the offer or sale is not permitted.
SUBJECT TO COMPLETION DATED __________, 1999
[Logo]
OFFER TO EXCHANGE
any and all outstanding
13 1/4% Senior Notes due 2008
($150,000,000 aggregate principal amount outstanding)
for
13 1/4% Senior Notes due 2008
of
VERSATEL TELECOM INTERNATIONAL N.V.
TERMS OF EXCHANGE OFFER
- Expires 5:00 p.m., New York City time, ,1999, unless extended
- Not subject to any other condition other than that the
Exchange Offer does not violate applicable law or any
applicable interpretation of the Staff of the Securities and
Exchange Commission
- All Outstanding Notes that are validly tendered and not validly
withdrawn will be exchanged
- Tenders of Outstanding Notes may be withdrawn any time prior to
5.00 p.m., New York City time, on the date of the expiration of
the Exchange Offer
- The exchange of Notes will not be a taxable exchange for U.S.
federal income tax purposes
- We will not receive any proceeds from the Exchange Offer
- The terms of the Exchange Notes to be issued are substantially
similar to the Outstanding Notes, except for transfer
restrictions and registration rights relating to the
Outstanding Notes
- We intend to list the Exchange Notes on the Luxembourg Stock
Exchange
---------------
See "Risk Factors" beginning on page 17 for a discussion of certain
matters that should be considered by prospective investors.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of the notes to be distributed in the
exchange offer, nor have any of these organizations determined that this
Prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
---------------
The date of this Prospectus is ____________, 1999.
<PAGE>
The Exchange Offer is not being made to, nor will we accept surrenders
for exchange from, holders of Outstanding Notes in any jurisdiction in which the
Exchange Offer or the acceptance thereof would not be in compliance with the
securities or blue sky laws of such jurisdiction.
No dealer, salesperson or other individual has been authorized to give
any information or make any representation not contained in this Prospectus in
connection with the offering covered by this prospectus. If given or made, such
information or representation must not be relied upon as having been authorized
by the Company. This prospectus does not constitute an offer or a solicitation
in any jurisdiction where, or to any person to whom, it is unlawful to make such
offer or solicitation. Neither the delivery of this prospectus, nor any
distribution of securities made hereunder shall under any circumstances, create
any implication that there has not been any change in the facts set forth in
this prospectus or in the affairs of the Company since the date hereof.
The securities may not be offered or sold in or into the United Kingdom
except in circumstances that do not constitute an offer to the public within the
meaning of the Public Offers of Securities Regulations 1995. All applicable
provisions of the Financial Services Act 1986 must be complied with in respect
of anything done in relation to securities in, from or otherwise involving the
United Kingdom.
The securities may not be offered, transferred or sold, as part of
their initial distribution or at any time thereafter, to any individual or legal
entity established, domiciled or resident in The Netherlands. The Company
confirms that any announcement of an offer of the securities, as part of their
initial distribution, any advertisement relating to such offer and any such
offer itself will comply with all applicable securities laws in the countries in
which the securities are offered. A statement to that effect will be submitted
to the Dutch securities authorities ("Stichting Toezicht Effecten Verkeer")
before the securities are offered. This statement will also be mentioned in all
offers and offer documents.
We confirm, having made all reasonable inquiries, that this prospectus
contains all information which is material in the context of the exchange 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 that there are no
other facts the omission of which would make any of such information or the
expression of any such opinions or intentions misleading in any material
respect. The Company accepts responsibility accordingly.
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<PAGE>
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. Unless the context
otherwise requires, the terms the "Company," "VersaTel," "our company" and "we"
refer to VersaTel Telecom International N.V. and its subsidiaries as a combined
entity, except where it is made clear that such term means only the parent
company. You should carefully consider the information set forth under the
heading "Risk Factors." In addition certain statements include forward-looking
statements which involve risks and uncertainties. See "Disclosure Regarding
Forward-Looking Statements." Certain terms used in our business are explained in
the "Glossary" at the end of this Prospectus.
The Exchange Offer
We completed on December 3, 1998 a private offering of units consisting
of $150,000,000 13 1/4% Senior Notes (the "Outstanding Notes") and 150,000
warrants to purchase a total of 1,000,050 Class B Shares. On the same day, we
entered into a registration rights agreement with the initial purchasers in the
private offering in which we agreed, among other things, to deliver to you this
prospectus and to complete this exchange offer within 180 days of the issuance
of the Outstanding Notes. You cannot tender the warrants issued as part of the
private offering of units for exchange. You should read the discussion under the
heading "Summary Description of the Exchange Notes" and "Description of the
Exchange Notes" for further information regarding the registered notes.
We believe that the notes issued in this Exchange Offer (the "Exchange
Notes" and, together with the Outstanding Notes, the "Notes") may be resold by
you without compliance with the registration and prospectus delivery provisions
of the Securities Act of 1933, subject to certain conditions. You should read
the discussion under the headings "Summary of the Terms of Exchange Offer" and
"The Exchange Offer" for further information regarding the Exchange Offer and
resale of the Notes.
The Company
We are a rapidly growing alternative telecommunications service
provider based in Amsterdam, The Netherlands. Our objective is to become the
leading alternative provider of facilities-based national and international
telecommunications services in the Benelux region. We currently provide high
quality, competitively priced, international and national long distance
telecommunications services in The Netherlands and Belgium, primarily to small-
and medium-sized businesses, and wholesale telecommunications services to other
carriers. With the acquisition of CS Net B.V. in November 1998, we will also be
able to offer our business customers certain internet and intranet services.
At present, the Benelux market is dominated by the former monopoly
telecommunications carriers, KPN Telecom in The Netherlands, Belgacom in
Belgium, and P&T Luxembourg in Luxembourg. The Benelux region has several
characteristics which we believe make the Benelux region an excellent market for
an alternative telecommunications provider, including:
o One of the world's highest population densities;
o A relatively high per capita GDP;
o A center of European trade and transport; and
o A relatively large and growing telecommunications market.
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<PAGE>
We believe we can capitalize on this opportunity by capturing a portion
of the incremental growth of the market and by winning market share from the
dominant incumbent service providers.
Network Plan
We are building a network infrastructure which is designed to connect
all major business and population centers in the Benelux region and to provide
local access in high density business areas as well as international
connectivity to Germany, France and the United Kingdom (the "VersaTel Network"
or the "Network").
The VersaTel Network will consist of three integrated elements:
o Benelux Overlay Network. We are constructing an overlay
network that will connect the major commercial centers in the
Benelux region (the "Benelux Overlay Network"). The initial
phase of the Benelux Overlay Network will be a fiber-optic
ring connecting Amsterdam and Brussels via The Hague,
Rotterdam and Antwerp (the "Netherlands Randstad Stage").
o Local Access Network. We plan to establish local access
infrastructure in areas with high business concentrations (the
"Local Access Network") along the Benelux Overlay Network
beginning in 1999. The Local Access Network will connect
business customers directly to the VersaTel Network.
o International Network. We intend to build or acquire
additional direct fiber-optic links connecting the Benelux
Overlay Network to interconnection points in Germany, France
and the United Kingdom (the "International Network"). We
reached an agreement in October 1998 with TelNetWork Holding
B.V., known as Global Crossing, whereby we will obtain dark
fiber from Amsterdam to London and from the Belgian-French
border to Paris and in return will provide Global Crossing
with cable ready ducts from the Dutch coast near Amsterdam to
the Belgian-French border.
Business Strategy
Our objective is to become the leading alternative provider of
facilities-based national and international telecommunications services in the
Benelux region. The principal elements of our strategy are to:
o Target the Roll-Out of Our Network. We plan to deploy the
Benelux Overlay Network in the major business and population
centers first, pass as many business as economically feasible
and commence deployment of the Local Access Network as
segments of the Benelux Overlay Network are completed.
o Expand Our Customer Base. We intend to leverage the growth of
our Network, our product and service offerings and our sales
and marketing capabilities to expand our customer base.
o Increase Product and Service Offerings. We intend to provide
new products and services in order to attract additional
customers, enhance customer loyalty and increase the
utilization of our Network by existing customers.
o Focus on Superior Customer Service. We strive to maintain a
competitive advantage over our competitors in our target
market through the provision of superior customer service.
o Expand our Facilities Based Wholesale Services. As we deploy
our Network we expect to service other telecommunications
service providers with excess network capacity, as well as
swap dark fiber, conduits and rights-of-way as a means of
accelerating the deployment of our Network.
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<PAGE>
Regulatory and Competitive Environment
The European telecommunications market has historically been dominated
by monopoly PTTs. With a series of directives, the European Commission ("EC")
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 EC 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 EC 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.
Management
VersaTel was founded by R. Gary Mesch, the Company's Managing Director.
Mr. Mesch has substantial experience in telecommunications in the United States,
where he founded NovaNet Communications, Inc. ("NovaNet"), a regional carrier in
Colorado, which was acquired by ICG Communications in 1994, and in Europe, where
he acted as a strategic adviser to several large telecommunications carriers.
VersaTel's management team also includes W. Greg Mesch, Chief Operations
Officer, brother of R. Gary Mesch. W. Greg Mesch was the Chief Operations
Officer of Esat Telecom Limited, the predecessor of Esat Telecom Group plc, a
facilities-based long distance and wireless carrier in Ireland, from 1993 to
1996.
Recent Developments
o Recent Offerings. In May 1998, we completed a private offering of
units consisting of $225,000,000 13 1/4% Senior Notes due 2008 and
warrants to purchase 1,500,000 Class B Shares of the Company (the
"First Offering"). On December 4, 1998, we completed a public
exchange offer pursuant to which all notes issued in the First
Offering were exchanged for notes registered with the Securities
and Exchange Commission. We completed on December 3, 1998 a
private offering of units consisting of $150,000,000 13 1/4%
Senior Notes due 2008 and warrants to purchase 1,000,050 Class B
Shares of the Company (the "Second Offering"). The Outstanding
Notes issued as part of the Second Offering can now be tendered
for exchange.
o Changes to Legal and Capital Structure. On October 15, 1998, we
converted our legal structure from a private company with limited
liability (besloten vennootschap met beperkte aansprakelijkheid)
("B.V.") to a company with limited liability (naamloze
vennootschap) ("N.V."), and changed our name from VersaTel Telecom
B.V. to VersaTel Telecom International N.V.
3
<PAGE>
In December 1998, we transferred substantially all
of our assets and liabilities (except the Notes and the notes
issued in the First Offering) to our subsidiaries. As a result
of the transfer, we are a holding company with no material assets,
other than the stock of our subsidiaries. Prior to the First
Offering, we completed a four part recapitalization resulting in a
share capital increase from NLG 7.0 million to NLG 50.1 million.
o Business Developments. After obtaining a license to operate
facilities and provide telecommunications services in Belgium in
the third quarter of 1998, we commenced operations in Belgium and
installed a Nortel DMS 100 switch in Antwerp.
We recently completed 140 kilometers of the Benelux Overlay
Network and continue to construct an additional 100 kilometers.
These portions of our Network are not yet operational. The fiber
swap agreement with Global Crossing provides us with additional
dark fiber on the route from Amsterdam to London and from the
Belgian-French border to Paris.
In May 1998, we acquired a 55% interest in Bizztel Telematica
B.V., a small, regional switchless reseller with over 400 small-
and medium-sized business customers in The Netherlands and in
August 1998, we acquired the remaining 45% of equity of Bizztel
Telematica B.V. In November 1998, we acquired CS Net B.V., a
provider of internet and intranet services to business customers.
4
<PAGE>
Summary of the Terms of the Exchange Offer
This Exchange Offer (the "Exchange Offer") relates to the exchange of
up to $150,000,000 aggregate principal amount of Outstanding Notes for an equal
aggregate principal amount of Exchange Notes. The Exchange Notes will be our
obligations and are entitled to the benefits of the indenture relating to the
Outstanding Notes. The form and terms of the Exchange Notes are identical in all
material respects to the form and terms of the Outstanding Notes except that the
Exchange Notes have been registered under the Securities Act of 1933, and
therefore are not subject to restrictions on transfer and not entitled to the
benefits of the registration rights granted under the registration rights
agreement, executed as a part of the Second Offering, dated December 3, 1998
among VersaTel and the initial purchasers.
Registration Rights.................. On December 3, 1998, we and the initial
purchasers agreed that you, as a holder of
the Outstanding Notes, would be entitled
to exchange your Notes for registered
Notes with substantially identical terms.
This Exchange Offer is intended to satisfy
these rights. After the Exchange Offer is
complete, you will no longer be entitled
to any exchange or registration rights
with respect to your Notes.
The Exchange Offer................... We are offering to exchange $1,000
principal amount of 13 1/4% Senior Notes
due 2008 which have been registered under
the Securities Act of 1933 for each $1,000
principal amount of our 13 1/4% Senior
Notes due 2008 which were issued in the
Second Offering. In order to be exchanged,
an Outstanding Note must be properly
tendered and accepted. All Outstanding
Notes that are validly tendered and not
validly withdrawn will be exchanged.
As of this date, there are $150 million in
aggregate principal amount of Notes
outstanding.
We will issue registered Notes on or
promptly after the expiration of the
Exchange Offer.
Resale of the Exchange
Notes.............................. Based on an interpretation by the staff of
the Securities and Exchange Commission set
forth in no-action letters issued to third
parties, including "Exxon Capital Holdings
Corporation" (available May 13, 1988),
"Morgan Stanley & Co. Incorporated"
(available June 5, 1991), "Mary Kay
Cosmetics, Inc." (available June 5, 1991)
and "Warnaco, Inc." (available October 11,
1991), we believe that the notes issued in
the exchange offer may be offered for
resale, resold and otherwise transferred
by you without compliance with the
registration and prospectus delivery
provisions of the Securities Act of 1933
provided that:
o you are acquiring the Notes issued in
the Exchange Offer in the ordinary
course of business;
o you are not participating, do not
intend to participate, and have no
arrangement or understanding with any
person to participate, in the
distribution of the Notes issued to
you in the Exchange Offer;
o you are not a broker-dealer who
purchased such Outstanding Notes
directly from us for resale pursuant
to Rule 144A or any other available
exemption under the Securities Act of
1933; and
5
<PAGE>
o you are not an "affiliate" of ours.
If our belief is inaccurate and you
transfer any Note issued to you in the
Exchange Offer without delivering a
prospectus meeting the requirements of the
Securities Act of 1933 or without an
exemption from registration of your Notes
from such requirements, you may incur
liability under the Securities Act of
1933. We do not assume or indemnify you
against such liability, but we do not
believe that any such liability should
exist.
Each broker-dealer that is issued
Notes in the Exchange Offer for its own
account in exchange for Notes which were
acquired by such broker-dealer as a result
of market-making or other trading
activities, must acknowledge that it will
deliver a prospectus meeting the
requirements of the Securities Act of
1933, in connection with any resale of the
Notes issued in the Exchange Offer. The
letter of transmittal states that by so
acknowledging and by delivering a
prospectus, such broker-dealer will not be
deemed to admit that it is an
"underwriter" within the meaning of the
Securities Act of 1933. A broker-dealer
may use this prospectus for an offer to
resell, resale or other retransfer of the
Notes issued to it in the Exchange Offer.
We have agreed that, for a period of 180
days after the date of this prospectus, we
will make this prospectus and any
amendment or supplement to this prospectus
available to any such broker-dealer for
use in connection with any such resales.
We believe that no registered holder of
the Outstanding Notes is an affiliate (as
such term is defined in Rule 405 of the
Securities Act of 1933) of VersaTel.
Expiration of Exchange
Offer.............................. The Exchange Offer will expire at 5:00
p.m., New York City time, on __________,
1999, unless we decide to extend the
expiration date.
Accrued Interest on the
Exchange Notes and the
Outstanding Notes.................. The Exchange Notes will bear interest from
December 3, 1998. Holders of Outstanding
Notes whose Notes are accepted for
exchange will be deemed to have waived the
right to receive any payment in respect of
interest on such Outstanding Notes accrued
from December 3, 1998 to the date of the
issuance of the Exchange Notes.
Consequently, holders who exchange their
Outstanding Notes for Exchange Notes will
receive the same interest payment on May
15, 1999 (the first interest payment date
with respect to the Outstanding Notes and
the Exchange Notes) that they would have
received had they not accepted the
Exchange Offer.
Termination of the Exchange
Offer.............................. We may terminate the Exchange Offer if we
determine that our ability to proceed with
the Exchange Offer could be materially
impaired due to any legal or governmental
action, new law, statute, rule or
regulation or any interpretation of the
staff of the Securities and Exchange
Commission of any existing law, statute,
rule or regulation. We do not expect any
of the foregoing conditions to occur,
although there can be no assurance that
such conditions will not occur. Holders of
Outstanding Notes will have certain rights
against our company under the registration
rights agreement executed as part of the
offering of the Outstanding Notes should
we fail to consummate the Exchange Offer.
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<PAGE>
Procedures for Tendering
Outstanding Notes.................. If you are a holder of a Note and you wish
to tender your Note for exchange pursuant
to the Exchange Offer, you must transmit
to The Bank of New York, as exchange
agent, on or prior to the expiration date:
either
o a properly completed and duly
executed letter of transmittal, which
accompanies this prospectus, or a
facsimile of the letter of
transmittal, including all other
documents required by the letter of
transmittal, to the exchange agent at
the address set forth on the cover
page of the letter of transmittal; or
o a computer-generated message
transmitted by means of the
Automated Tender Offer Program system
of The Depository Trust Company
("DTC") and received by the exchange
agent and forming a part of a
confirmation of book entry transfer
in which you acknowledge and agree to
be bound by the terms of the letter
of transmittal.
and, either
o a timely confirmation of book-entry
transfer of your outstanding notes
into the exchange agent's account at
DTC pursuant to the procedure for
book-entry transfers described in
this prospectus under the heading
"The Exchange Offer -- Procedure for
Tendering," must be received by the
exchange agent on or prior to the
expiration date; or
o the documents necessary for
compliance with the guaranteed
delivery procedures described below.
By executing the letter of transmittal,
each holder will represent to us that,
among other things, (1) the Notes to be
issued in the Exchange Offer are being
obtained in the ordinary course of
business of the person receiving such
Exchange Notes whether or not such person
is the holder, (2) neither the holder nor
any such other person has an arrangement
or understanding with any person to
participate in the distribution or such
Exchange Notes and (3) neither the holder
nor any such other person is an
"affiliate," as defined in Rule 405 under
the Securities Act of 1933, of VersaTel.
Special Procedures for Beneficial
Owners............................. If you are a beneficial owner of
registered Notes that are registered in
the name of a broker, dealer, commercial
bank, trust company or other nominee and
you wish to tender such Notes in the
Exchange Offer, you should promptly
contact such person in whose name your
Notes are registered and instruct such
person to tender on your behalf. If you,
as such beneficial holder, wish to tender
on your own behalf you must, prior to
completing and executing the letter of
transmittal and delivering your
Outstanding Notes, either make appropriate
arrangements to register ownership of the
Outstanding Notes in your name or obtain a
properly completed bond power from the
registered holder. The transfer of record
ownership may take considerable time.
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<PAGE>
Guaranteed Delivery
Procedures......................... If you wish to tender your Notes and time
will not permit your required documents to
reach the exchange agent by the expiration
date, or the procedure for book-entry
transfer cannot be completed on time or
certificates for registered notes cannot
be delivered on time, you may tender your
Notes pursuant to the procedures described
in this prospectus under the heading "The
Exchange Offer -- Guaranteed Delivery
Procedures."
Withdrawal Rights.................... You may withdraw the tender of your Notes
at any time prior to 5:00 p.m., New York
City time, on , 1999, the business day
prior to the expiration date, unless your
Notes were previously accepted for
exchange.
Acceptance of Outstanding
Notes and Delivery of Exchange
Notes.............................. Subject to certain conditions (as
summarized above in "Termination of the
Exchange Offer" and described more fully
under the "The Exchange Offer --
Termination"), we will accept for exchange
any and all Outstanding Notes which are
properly tendered in the Exchange Offer
prior to 5:00 p.m., New York City time, on
the expiration date. The Exchange Notes
issued pursuant to the Exchange Offer will
be delivered promptly following the
expiration date.
Certain U.S. Federal Income Tax
Consequences....................... The exchange of the Notes will generally
not be a taxable exchange for United
States federal income tax purposes. We
believe you will not recognize any taxable
gain or loss or any interest income as a
result of such exchange.
Use of Proceeds...................... We will not receive any proceeds from the
issuance of Notes pursuant to the Exchange
Offer. We will pay all expenses incident
to the Exchange Offer.
Exchange Agent....................... United States Trust Company of New York is
serving as exchange agent in connection
with the Exchange Offer. The exchange
agent can be reached at Corporate Trust
Administration, 770 Broadway, 13th Floor,
New York, NY 10003. For more information
with respect to the Exchange Offer, the
telephone number for the exchange agent is
(800) 548-6565 and the facsimile number
for the exchange agent is (212) 780-0592.
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Summary Description of the Exchange Notes
Issuer............................... VersaTel Telecom International N.V.
Notes Offered........................ $150,000,000 aggregate principal amount of
13 1/4 Senior Notes due 2008.
Maturity Date........................ May 15, 2008.
Interest Payments Dates.............. May 15 and November 15 of each year,
commencing May 15, 1999.
Ranking.............................. The Notes will be general unsecured
(except to the extent described under
"Escrow Account" below) 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 the notes issued
in the First Offering. At September 30,
1998, after giving effect to the Second
Offering, we would have had approximately
$368.0 million of senior indebtedness. We
transferred in December 1998 substantially
all of our assets and liabilities (other
than the Notes and the notes issued in the
First Offering) to certain of our
subsidiaries. After such transfer, we
became a holding company with limited
assets and operate our business through
our subsidiaries. Any right of VersaTel,
as a holding company, and its creditors,
including holders of the Notes, to
participate in the assets of any of our
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 our creditors, are subordinated to all
existing and future third-party
indebtedness and liabilities, including
trade payables, of our subsidiaries. At
September 30, 1998, after giving effect to
the transfer of substantially all of our
assets and liabilities (other than the
Notes and the notes issued in the First
Offering) to certain of our subsidiaries,
our subsidiaries would have had total
liabilities of $24.9 million reflected on
our balance sheet.
Escrow Account....................... Concurrently with the completion of the
Second Offering, we purchased, pledged and
transferred to the trustee under the
indenture governing the Notes, for your
benefit, U.S. Government Securities in
such amounts as will be sufficient upon
scheduled interest and principal payments
of such securities to provide for the
payment in full of the first five
scheduled interest payments on the Notes
(excluding any additional amounts and any
liquidated damages). We used approximately
$46.5 million to acquire these government
securities. We pledged these government
securities to the trustee for your
benefit, as holders of the Notes and
deposited them into an escrow account held
by an escrow agent for the benefit of the
trustee and you, as holders of the Notes,
in accordance with an escrow agreement. We
may use the funds in the escrow account to
pay interest payments on the Notes to you.
If the maturity date of the Notes
accelerates, under the escrow agreement,
the amount remaining in the escrow account
will be paid to the trustee, who can
use the remaining amount to pay any
amounts owing on the Notes as provided in
the indenture governing the Notes. Before
such disbursement, any uninvested funds
contained in the escrow account will be
invested in cash equivalents.
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<PAGE>
Optional Redemption.................. We may redeem the Notes, in whole or in
part, at any time on or after May 15, 2003
at the redemption prices set forth in this
prospectus, plus accrued and unpaid
interest, additional amounts, if any, and
liquidated damages, if any, to the
redemption date. We may also redeem the
Notes, at our option, in whole, but not in
part, at any time at a redemption price
equal to the aggregate principal amount of
the Notes being redeemed, together with
accrued and unpaid interest and liquidated
damages, if any, to the redemption date
and all additional amounts then due and
which will become due as a result of the
redemption or otherwise in the event of
certain changes affecting Netherlands
withholding taxes. See "Description of the
Exchange Notes -- Optional Redemption."
Before November 15, 2001, we may redeem up
to 35% of the aggregate principal amount
of the Notes with the net proceeds of a
public equity offering at a price equal to
113 1/4% of the aggregate principal amount
of the Notes redeemed plus accrued and
unpaid interest, additional amounts, if
any, and liquidated damages, if any,
provided that at least 65% of the
aggregate principal amount of the Notes
originally issued remains outstanding
immediately after such redemption and
provided that we give notice of such
redemption within 30 days of the closing
of any such public equity offering. See
"Description of the Exchange Notes --
Optional Redemption."
Change of Control.................... Upon certain change of control events,
each holder of the Notes may require us to
repurchase all or a portion of its Notes
at a purchase price 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, and liquidated damages,
if any to the date of repurchase. See
"Description of the Exchange Notes --
Certain Definitions" for the definition of
a change of control.
Withholding Taxes;
Additional Amounts................. Unless required by law, all our payments
in respect of the 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, we
will be required to pay any additional
amounts as may be necessary in order that
the net amounts received by you 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 Exchange Notes --
Withholding Taxes."
Certain Covenants.................... The indenture governing the Notes contains
covenants that, among other things, limit
our ability and the ability of certain of
our subsidiaries to:
o incur certain additional
indebtedness,
o pay dividends on, redeem or
repurchase our capital stock,
o make certain investments,
10
<PAGE>
o issue or sell capital stock of
certain of our subsidiaries,
o engage in transactions with
affiliates,
o create certain liens,
o sell assets,
o guarantee indebtedness,
o restrict dividend or other payments
to us, and
o consolidate, merge or transfer all or
substantially all our assets and the
assets of our subsidiaries on a
consolidated basis.
These covenants are subject to important
exceptions and qualifications, which are
described under the heading "Description
of the Exchange Notes" in this prospectus.
Exchange Offer; Registration
Rights............................. Under the registration rights agreement
executed as part of the Second Offering,
we have agreed to:
o file a registration statement within
90 days after the issue date of the
Notes enabling noteholders to
exchange the privately placed notes
for publicly registered notes with
substantially identical terms,
o use our best efforts to cause the
registration statement to become
effective within 150 days after the
issue date of the Notes,
o consummate the exchange offer within
30 days after the Securities and
Exchange Commission declares the
registration statement effective, and
o use our best efforts to file a shelf
registration statement for the resale
of the Notes if we cannot complete an
Exchange Offer within the time
periods listed above and in certain
other circumstances.
The interest rate on the Notes will
increase if we do not comply with our
obligations under the registration rights
agreement. See "The Exchange Offer."
Trustee, Escrow Agent
and Paying Agent................... United States Trust Company of New York.
Listing.............................. We expect the Notes to be eligible for
trading in the PORTAL market. We intend to
apply to list the Exchange Notes on the
Luxembourg Stock Exchange.
11
<PAGE>
Consequences of Failure to Exchange
Untendered Outstanding Notes that are not exchanged for Exchange Notes
pursuant to the Exchange Offer will remain restricted securities. Outstanding
Notes will continue to be subject to the following restrictions on transfer: (1)
Outstanding Notes may be resold only if registered pursuant to the Securities
Act of 1933, if an exemption from registration is available under the Securities
Act of 1933, or if neither such registration nor an exemption is required by
law, (2) Outstanding Notes shall bear a legend restricting transfer in the
absence of registration or an exemption from registration and (3) a holder of
Outstanding Notes who desires to sell or otherwise dispose of all or any part of
its Outstanding Notes under an exemption from registration under the Securities
Act of 1933, if requested by us, must deliver to us an opinion of independent
counsel experienced in Securities Act matters, reasonably satisfactory in form
and substance to us, that such an exemption is available. See "Risk Factors --
Consequences of Failure to Exchange."
Risk Factors
For a discussion of certain factors that should be considered carefully
in connection with an investment in the Exchange Notes, see "Risk Factors"
beginning on page 20.
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<PAGE>
Summary Financial and Other Data
The summary financial data for VersaTel, presented below, as of and for
the three fiscal years ended December 31, 1995, 1996 and 1997 have been derived
from the financial statements of VersaTel, which have been prepared in
accordance with U.S. generally accepted accounting principles ("U.S. GAAP") and
have been audited by Arthur Andersen, independent public accountants (together
with the notes thereto, the "Audited Financial Statements"). The summary
financial data as of and for the nine months ended September 30, 1997 and 1998
have been derived from the unaudited financial statements of VersaTel, which
have been prepared in accordance with U.S. GAAP and on a basis which management
believes is consistent with that of the Audited Financial Statements (the
"Unaudited Financial Statements" and, together with the Audited Financial
Statements, the "Financial Statements"). The unaudited financial data for the
nine months ended September 30, 1997 and 1998 include all normal and recurring
adjustments necessary for the fair presentation of the results of operations and
financial condition of the Company for such periods. You should read the data
below in conjunction with "Management's Discussion and Analysis of Financial
Condition and Results of Operations--Results of Operations" and the Financial
Statements included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
Fiscal Year Ended December 31, Nine Months Ended September 30,
-------------------------------------------- ----------------------------------
1995(1) 1996 1997 1997 1998
------- ------ ---------------------- ---------- ---------------------
NLG NLG NLG $(2) NLG NLG $(2)
(In thousands, except per share data)
<S> <C> <C> <C> <C> <C> <C> <C>
Statement of Operations Data:
Revenue............................... 52 6,428 18,896 10,051 14,263 25,880 13,766
Operating expenses:
Cost of revenue excl. depreciation
and amortization................. 117 4,954 17,405 9,258 11,170 21,120 11,234
Selling, general and administrative 538 5,485 17,527 9,323 10,929 30,002 15,958
Depreciation and amortization...... 11 453 3,237 1,722 1,238 4,914 2,614
------ --------- -------- -------- -------- -------- --------
Total operating expenses......... 666 10,892 38,169 20,303 23,337 56,036 29,806
------ --------- --------- --------- --------- --------- ---------
Loss from operations.................. (614) (4,464) (19,273) (10,252) (9,074) (30,156) (16,040)
Interest expense (income), net........ 1 269 534 284 330 14,962 7,959
Currency loss (gain).................. -- -- 53 28 -- (4,747) (2,525)
------- --------- ---------- ---------- --------- --------- ---------
Net loss.............................. (615) (4,733) (19,860) (10,564) (9,404) (40,371) (21,474)
======= ========= ========== ========== ========= ========== ==========
Net loss per share (Basic and Diluted) (0.18) (0.95) (2.20) (1.17) (1.06) (2.65) (1.41)
Weighted average number of shares
outstanding........................ 3,327 5,004 9,042 9,042 8,910 15,248 15,248
Cash Flow Data:
Net cash provided by (used in) operating
activities.......................... (715) (1,718) 5,766 3,067 832 (179,473) (95,464)
Net cash used in investing activities. (234) (2,569) (14,516) (7,721) (5,238) (24,076) (12,806)
Net cash provided by financing
activities.......................... 1,109 8,571 5,807 3,089 1,874 441,851 235,027
</TABLE>
<TABLE>
<CAPTION>
As of December 31, As of September 30,
1995 1996 1997 1998
----------- ------------ ------------------------- ----------------------
NLG NLG NLG $(2) NLG $(2)
(In thousands)
<S> <C> <C> <C> <C> <C> <C>
Balance Sheet Data:
Cash and restricted cash.................... 160 4,443 1,495 795 395,166 210,195
Working capital (excluding cash and
restricted cash).......................... 436 (2,704) (24,774) (13,178) (36,515) (19,423)
Capitalized finance cost.................... -- -- -- -- 19,333 10,284
Property, plant and equipment, net.......... 224 2,340 13,619 7,244 23,161 12,320
Construction in progress.................... -- -- -- -- 10,407 5,536
Goodwill.................................... -- -- -- -- 1,478 786
Total assets................................ 820 8,160 19,331 10,282 459,880 244,617
Total long-term obligations (including
current portion).......................... 614 4,185 8,491 4,516 423,022 225,012
Total shareholders' equity (deficit)........ (120) 146 (18,214) (9,688) (9,510) (5,059)
</TABLE>
13
<PAGE>
<TABLE>
<CAPTION>
Three Months Ended
------------------------------------------------------------------
June 30, Sept. 30, Dec. 31, March 31, June 30, Sept. 30,
1997 1997 1997 1998 1998 1998
---------- ---------- --------- --------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Operating Data:
Number of billable minutes (thousands)(3) .......... 5,769 6,230 7,127 12,432 26,863 34,021
Average revenue per billable minute (NLG) .......... 0.87 0.85 0.65 0.51 0.35 0.30
Total customers-- business (at period end) ......... 1,152 1,463 2,014 2,619 3,810 5,022
Total customers-- residential (at period end) ...... -- -- 230 617 1,054 1,436
</TABLE>
<TABLE>
<CAPTION>
Nine Months Ended
Fiscal Year Ended December 31, September 30,
---------------------------------------- -----------------------------
1995 1996 1997 1997 1998
-------- -------- -------------------- -------- -------------------
NLG NLG NLG $(2) NLG NLG $(2)
(In thousands, except ratio)
<S> <C> <C> <C> <C> <C> <C> <C>
Other Financial Data:
EBITDA(4) .................................. (603) (4,011) (16,036) (8,530) (7,836) (25,242) (13,426)
Capital expenditures ....................... 213 2,569 14,516 7,721 5,238 24,076 12,806
Ratio of earnings to fixed charges(5) ..... -- -- -- -- -- -- --
Deficiency of Earnings plus fixed charges to
cover fixed charges(6) ................... (614) (4,464) (19,326) (10,280) (9,075) (25,408) (13,515)
</TABLE>
- ----------
(1) The summary financial data for fiscal year 1995 reflects the financial
results of the Company 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 September 30, 1998
of NLG 1.88 per $1.00.
(3) Billable minutes are those minutes during which a call is connected to the
VersaTel switch and for which the Company bills a customer.
(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 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
the VersaTel 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 ("Earnings") 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 9.1 million for the nine months ended September 30,
1997 and NLG 25.4 million for the nine months ended September 30, 1998.
(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.
14
<PAGE>
SERVICE OF PROCESS AND
ENFORCEABILITY OF CIVIL LIABILITIES
VersaTel is incorporated under the laws of The Netherlands and
substantially all of its assets are located outside the United States. In
addition, most of VersaTel's 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
United States courts based upon civil liabilities under the United States
federal securities laws. The United States and The Netherlands do not have a
treaty providing for the reciprocal recognition and enforcement of judgments, so
United States judgments are not directly 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 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 and that its content and
possible enforcement are not contrary to public policy or public order of The
Netherlands. Notwithstanding the foregoing, there can be no assurance that
United States investors will be able to enforce against the Company, 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 the Company or such members.
VersaTel is organized under the laws of The Netherlands and its
executive offices are located at Paalbergweg 36, 1105 BV Amsterdam-Zuidoost, The
Netherlands, and its telephone number is +31-20-430-4300.
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
This Prospectus includes forward-looking statements. 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:
o Our anticipated expansion plans for the VersaTel Network and
growth strategies,
o Our expectation of the impact of this expansion on our
revenue potential, cost basis and margins,
o Our expectation of the competitiveness of our services,
o Our intention to introduce new products and services,
o Anticipated trends and conditions in our industry, including
regulatory reform and the liberalization of
telecommunications services across Europe, and
o 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.
----------------------
15
<PAGE>
PRESENTATION OF INFORMATION
We publish our financial statements in Dutch guilders. In this
prospectus, references to "U.S. dollars" or "$" are to United States dollars,
references to "Dutch guilders" or "NLG" are to the currency of The Netherlands
and references to "Belgian francs" or "BEF" are to the currency of Belgium.
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. Unless otherwise
indicated, the translations of Dutch guilders into U.S. dollars have been made
at NLG 1.88 per $1.00, the noon buying rate in the City of New York for cable
transfers in Dutch guilders as certified for customs purposes by the Federal
Reserve Bank of New York ("Noon Buying Rate") on September 30, 1998. See
"Exchange Rate Information" for historical information regarding the Noon Buying
Rate. On January 8, 1999, the Noon Buying Rate was NLG 1.91 per $1.00. See "Risk
Factors -- Risks Associated with Exchange Rate Fluctuations" and "Management's
Discussion and Analysis of Financial Condition and Results of Operations" for a
discussion of the effects of exchange rate fluctuations on the Company. For
information regarding recent rates of exchange between Dutch guilders and U.S.
dollars, see "Exchange Rate Information." 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 francs
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 34.48 per $1.00, the noon buying rate in the City of New York for cable
transfers in Belgian francs as certified for customs purposes by the Federal
Reserve Bank of New York on September 30, 1998.
16
<PAGE>
RISK FACTORS
Prospective participants in the Exchange Offer should consider
carefully the following factors in evaluating the Company and its business in
addition to the other information contained in this prospectus.
Substantial Indebtedness
We have substantial indebtedness. After giving effect to the Second
Offering we would have had, as of September 30, 1998 (on a pro forma basis),
outstanding debt of approximately NLG 691.9 million, our stockholders' equity
would have been approximately NLG (7.6) million and our assets would have been
approximately NLG 721.1 million. We may, subject to limits imposed by our debt
obligations, continue to incur substantial additional debt, as the indentures
governing the Notes and the notes issued in the First Offering do not limit the
amount of indebtedness that we may incur to finance the cost of the development
of our Network. We expect that much of such further debt will likely be secured
against our assets. Therefore, if we enter into bankruptcy, liquidation or
similar proceedings, those assets that have been used as collateral may be
seized by our creditors and therefore may not be available to repay you. See
"Selected Financial and Other Data", the Financial Statements included elsewhere
in this prospectus, "Management's Discussion and Analysis of Financial Condition
and Results of Operations," "Description of Certain Indebtedness" and
"Description of the Exchange Notes."
Our high level of indebtedness and the limits imposed by our debt
obligations could have the following effects:
o we may have difficulty in paying the interest on our outstanding
debt and any newly incurred debt;
o we may have difficulty finding sources of financing for working
capital and capital expenditure requirements and to assist paying
the interest on our outstanding debt;
o we will not be able to use a significant portion of our cash flow
in our business or to react to industry or economic changes,
because of the portion of cash flow directed to paying interest
and principal on our debt; and
o we may not be able 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.
Although we have entered into an escrow agreement pursuant to which we
have agreed to deposit with the escrow agent pledged securities in such amount
as will be sufficient to cover the first five scheduled interest payments on the
Notes, the ability to deal freely with the funds in the escrow account following
an event of default under the indenture governing the Notes may be limited by
applicable bankruptcy, insolvency, liquidation, or other similar legislation or
legal principles. See "Description of the Exchange Notes -- Escrow Account."
Continuing Operating Losses
For the nine months ended September 30, 1998, we had a loss from
operating activities of NLG 30.2 million and negative EBITDA of NLG 25.2
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 and 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 65.6 million and NLG 25.2 million as of September 30,
1998 and December 31, 1997, respectively. Although we have experienced revenue
growth since we commenced operations in 1995, there can be no assurance we will
continue to grow. As we continue to incur more costs resulting from expanding
and developing our Network, we expect to continue to incur significant further
operating losses for the foreseeable future as we incur additional costs in our
build out of the Network, the expansion of our marketing and sales force and the
introduction of new telecommunication services and products. You should also be
aware that the prices of
17
<PAGE>
telecommunications services have fallen in Europe in recent years, and as
competition increases, we expect that prices will continue to decline. As the
cost of providing services decreases and the number of our customers increase,
we expect these price reductions to be at least partially offset, but you should
be aware that we can not be certain that we will achieve or, if achieved, be
able to maintain operating profits in the future.
Debt Service Obligations
After giving pro forma effect to the recapitalization, the First
Offering and the Second Offering, our interest expense for the year ended
December 31, 1997 would have been NLG 93.4 million. Accordingly, we will need to
increase substantially our net cash flow in order to meet our debt service
obligations, including our obligations with respect to the Notes and the notes
issued in the First Offering. There is no certainty that we will be able to
generate sufficient cash flows from operating activities to pay our interest and
principal repayment obligations on our 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 region. There can be no assurance that we will generate sufficient
positive cash flow from operating activities in the future to service our debt
and to allow us to make necessary capital expenditures. If we are unable to meet
the repayment obligations, we may have to refinance our debt, sell our assets or
obtain new financing. If we cannot refinance our debt or otherwise satisfy these
obligations we could be in default under these obligations which could result in
other debt (including the Exchange Notes), becoming immediately due and payable
with extra interest. See "-- Considerable Capital Required to Expand the
Network" and "Management's Discussion and Analysis of Financial Condition and
Results of Operations."
Adverse Consequences to Holders of Notes as a Result of a Holding Company
Structure; Structural Subordination of the Notes
In December 1998, we transferred substantially all of our assets and
liabilities (except the Notes and the notes issued in the First Offering) to our
subsidiaries. After the transfer we became a holding company with no material
assets, other than the stock of our subsidiaries. Our subsidiaries will 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 or
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 your Notes, will depend on the cash flow
provided by our subsidiaries in the form of loans, dividends or other payments
to us as shareholder. The ability of our subsidiaries to make payments to us (in
any form) will depend on their earnings, tax considerations and legal
restrictions. Although the indenture governing the Notes will limit the ability
of our subsidiaries to enter into consensual restrictions on their ability to
pay dividends and make other payments, such limitations are subject to a number
of significant qualifications. See "Description of the Exchange 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 shareholder and, consequently, there may not be any assets
available for payment to you as noteholders. The Notes, therefore, are
effectively subordinated to the obligations of our subsidiaries.
Considerable Capital Required to Expand the Network
We will require significant amounts of capital to develop and expand
our Network, which also includes expanding our sales and marketing efforts and
our product and service offerings. We expect that the capital raised from the
First Offering and the Second Offering and the recapitalization in the first
half of 1998 together with other available financings and cash flow from
operations will be sufficient for our anticipated capital requirements and
anticipated losses until December 1999.
However, if these sources are not sufficient or if our plans or
assumptions change or prove to be incorrect we may have to seek other sources of
financing (such as lines of credit with commercial banks or vendors or
additional public financings), 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. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Liquidity and Capital Resources." We may
not be able to obtain additional financing or, if we can, on a timely basis or
on terms favorable to us. Our current debt obligations also restrict our ability
to raise additional financing and how we may use any such additional financing.
In addition, such additional financing is likely to be subject to additional
financial restrictions.
18
<PAGE>
If we are unable to acquire additional capital on acceptable terms, our business
and our ability to pay interest and principal on the Notes may be seriously
adversely affected.
Significant Challenges in Expanding the Network
Our future success is dependent upon our ability to build and maintain
our own telecommunications network. Our success will depend specifically on our
ability to obtain and maintain:
o experienced and qualified management and staff;
o additional switch sites;
o interconnection with PTTs' and other carriers' networks;
o the necessary licenses;
o additional transmission facilities (either through
construction or access to an existing facility); and
o 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. Recently, 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 these
rights-of-way have now been obtained, these delays prevented us from completing
the Netherlands Randstad Stage within the time originally anticipated. In
addition, 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 EC 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 negative effect on our financial condition and our ability
to make payments on the Notes and our other obligations. Even if the 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 the Network and we cannot guarantee that we will enter into these
agreements or, further, if we enter into these agreements, that the construction
will be completed efficiently. 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.
The development of our Network will be 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. See "Business -- Network."
Difficulties in Upgrading and Protecting our Network
The success of our Network will also be dependent 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 our 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 contruction work, but also from events such as floods and car accidents,
that can disrupt service.
19
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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.
Our Limited History and Experience
We were founded in October 1995 and, as a result, we have limited
experience as an operating company and we have generated only limited revenues.
We have recently entered the Belgian market and intend to enter the Luxembourg
market. In both of these markets, we have limited or no operating experience and
services have previously been provided primarily by the national PTTs.
Accordingly, our prospects must be considered in light of the risks, expenses
and delays inherent in establishing operations in a market with long established
competitors and other more recent entrants to the market.
Risks Associated with a Rapidly Changing Industry; Technology
The European telecommunication industry is changing rapidly due to,
among other factors, liberalization, privatization of PTTs, technology
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 the internet 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 ability to provide competitive products and service,
and the viability of our operations and could have a material adverse impact on
our business. See "-- Difficulties in Upgrading and Protecting our Network."
Dependence on Key Personnel in a Competitive Environment
Our success depends on the continued employment of our managing
director and other key personnel. Several of our key employees have been with
our company for only a short period of time. All of our executive officers work
on a full-time basis for us. You should also be aware that we do not have any
"key person" insurance. At December 31, 1998, approximately 9% of our full-time
employees, including one member of our key management and technical personnel,
were working pursuant to consultancy agreements, which are terminable by the
consultant at will. This issue is important to us in light of the intense
competition for qualified personnel in the telecommunications industry in Europe
and the limited availability of qualified individuals. Our financial condition
and ability to pay interest and principal on the notes depends upon a successful
business plan being implemented by qualified personnel. The loss of key
personnel could adversely affect our business.
Risks Associated with Managing Growth
Our growth strategy has and will continue to place a significant strain
on our management 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. Management is currently in
the process of addressing certain potential weaknesses in our systems of
internal controls that have been identified by our auditors. In this respect,
management has 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. Our business could be
materially adversely affected if we are unable to implement or effectively
manage our growth strategy.
Dependence on our Competitors
We do not own any of the telecommunications transmission infrastructure
that we presently use. We use the telecommunications transmission infrastructure
of other carriers in the Benelux region and we depend on interconnection
agreements with these carriers to connect our customers to our own network. Most
of the carriers with whom we maintain infrastructure and interconnection
agreements are our competitors. Our profitability depends on
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(a) our ability to maintain agreements that provide access to the facilities of
our competitors (who may try to limit our access) and (b) our ability to
maintain access to these facilities on a timely basis and at attractive rates.
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 and historically have and could
result in the loss of some customers. For example, in October 1998, we
experienced two temporary disruptions as a result of a malfunction of KPN
Telecom's software 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. See "-- Competing Against Dominant Market Participants,"
"-- Risks Associated with Changes in Regulatory Environment" and "Business --
Regulation."
Risks Associated with the Year 2000
The Year 2000 issue is the result of computer programs using two digits
rather than four 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.
We are undertaking a comprehensive program to address the Year 2000
issue with respect to the following:
o Our information technology systems;
o The telephony switching network (including equipment
installed at customers' premises);
o Our non-information technology systems (including buildings,
plant, equipment, and other infrastructure systems that may
contain embedded micro controller technology);
o The systems of our major vendors (insofar as they relate to
our business); and
o Our customers.
This program involves four "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; and
(4) an analysis of our worst case scenario. We expect to complete Steps 1 and 2
of this program by the first quarter of 1999 and Steps 3 and 4 by the end of the
second quarter of 1999.
We believe that the worst effect of the Year 2000 issue would be the
inability of customers to complete calls. Nortel, the manufacturer of our
switches, has informed us that it believes our switches to be Year 2000
compliant. We will be approaching Nortel for guarantees regarding this
compliance.
Our new billing system, which will be introduced in the third quarter
of 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 timestamp on
the call detail record. The ability of our customer care team to supply quality
service would be seriously affected if our OSS 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 we use.
No assurance can be given 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 would be
reimbursed for any additional expenditure under any of the assurances,
certificates or guarantees that we expect to obtain or otherwise. We expect to
incur specific Year 2000 charges that are estimated to be less than NLG 2
million, the majority of which will be incurred during 1999. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations."
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Competing Against Dominant Market Participants
The European telecommunications industry is a very competitive market
that is subject both to the continued dominance of PTTs and to the arrival of
other new entrants.
PTTs have significant competitive advantages over non-PTT market
participants which include:
o cost advantages as a result of economies of scale;
o greater market presence and network coverage;
o greater brand name recognition, customer loyalty and
goodwill;
o control over domestic transmission lines and control over the
access to these lines by other participants; and
o close ties to national regulatory authorities which 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 and 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 larger financial resources to create
severe price competition. We believe that prices will continue to decrease for
the forseeable future and that PTTs and other providers will continue to improve
their product offerings, increasing these competitive pressures.
Our competition in the Benelux region also comes from new market
entrants including Telfort B.V., RSL Communications Ltd., Viatel, Inc., Telenet
N.V., EnerTel N.V., Telegroup, Inc. and Mobistar. 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.
See "Business -- Competition."
Risks Associated with Exchange Rate Fluctuations
The principal and interest due on the notes is payable in U.S. dollars.
However, our revenues will largely be in Dutch guilders, Belgian francs and
increasingly in euros. Therefore, our ability to pay the interest and principal
due will also be dependent on future exchange rates.
A significant amount of the proceeds obtained from the First Offering
and the Second Offering has been retained in U.S. dollars. 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 in 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
Offering and the Second Offering to pay our construction costs. In addition we
denominate our financial reports in Dutch guilders while maintaining significant
U.S. dollar denominated assets and liabilities, and so our reported results of
operations may be significantly affected by exchange rate movements. In
addition, we will become subject to greater foreign exchange fluctuations as we
expand into markets outside the Netherlands and begin to receive revenues
denominated in currencies other than Dutch guilders, although the introduction
of the euro will largely eliminate these risks as all three Benelux countries
have adopted the euro as their legal currency.
Risks Associated with Acquisitions, Investments and Strategic Alliances
As part of our business strategy, we may enter into strategic alliances
with, or make investments in, companies in business areas that are complementary
to our current operations. Any such future strategic alliances, acquisitions
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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 the resources and management time of the Company. There
can be no assurance that any desired strategic alliance, acquisition or
investment could be made in a timely manner or on terms and conditions
acceptable to us. There can also be no assurance 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 its existing operations.
Risk Associated with International Expansion
We are subject to all the inherent risks associated with our plan to
expand internationally, including complying with various regulatory and tax
regimes and staffing and maintaining foreign operations, any of which could
result in a material adverse effect on our future operations.
Objections to Corporate Actions by a Shareholder and Control by Shareholders
Cromwilld Limited owns 15.0% of the outstanding ordinary shares, on a
fully diluted basis, after giving effect to the First Offering and Second
Offering. Cromwilld objected to the recapitalization and the First Offering and
the Second Offering and has threatened to challenge our actions in court.
Cromwilld has threatened legal challenges to nullify certain of our actions and
to nullify resolutions approved by our shareholders which may invalidate this
offering. Cromwilld is controlled by Denis O'Brien, a member of our supervisory
board. Our legal counsel believes that Cromwilld's challenges, if filed, will
have no legal basis and are without merit. Nonetheless, we are uncertain whether
or not Cromwilld will, in an attempt to frustrate our actions, block any of our
actions that require approval of all of our shareholders. You should also be
aware that Cromwilld and four other shareholders currently own 79.5% of our
shares (on a fully diluted basis). These shareholders have the power to exercise
voting and management control. The interests of these shareholders may be
different to your interests.
Risks Associated with Changes in Regulatory Environment
The implementation of directives and regulations of the European Union
intended to liberalize the telecommunications market will enable us to gain
access to telecommunications networks controlled by PTTs. A number of directives
have been implemented by the European Union members, but several directives
still remain to be implemented in the member states, including the Benelux
nations. A delay in the implementation of these directives and regulations, in a
current or potential market, 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. See "Business -- Regulation."
Risk of Fraud and Bad Debt
Our revenues for the three 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 1,000,000. 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 four 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 in place
insurance coverage for potential fraud.
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See "Management's Discussion and Analysis of Financial Condition and Results of
Operations." Any reoccurrence of the fraudulent use of our facilities could have
a material adverse effect on our business.
Although we make the appropriate provisions for non-payment of monies
owed to us by our customers, as we move into the residential market the level of
bad debts is likely to increase. Any significant increase could have a material
adverse effect on our business.
Investment Company Considerations
Our U.S. counsel has advised us that, in their opinion, we are not an
"investment company" which is required to be registered under the U.S.
Investment Company Act of 1940. In rendering such opinion our U.S. counsel did
not independently establish or verify any information or facts supplied by us
and, with our permission, assumed and relied entirely on the completeness and
accuracy of the information we supplied. We intend to carry on our business in
order to avoid becoming an "investment company." If we were to be deemed an
"investment company" under the U.S. Investment Company Act of 1940 we would be
effectively precluded from implementing this exchange offer. You should also be
aware that if we were deemed to be an "investment company", we could be subject
to administrative or legal proceedings which might mean that contracts to which
we are party might be rendered unenforceable or subject to recission.
Change of Control May Cause Default Under the Indenture
Pursuant to the terms of the notes, each holder can require us to
repurchase their Notes where a change in control of VersaTel occurs. However,
our existing contractual obligations or an inability to obtain adequate
resources may prevent us from repurchasing the Notes. Our failure to repurchase
the Notes would be an event of default under the indenture. See "Description of
the Exchange Notes."
Absence of Public Market
There is no established trading market for the Notes. The initial
purchasers in the Second Offering informed us that they intend to make a market
in the Outstanding Notes and, if issued, the Exchange Notes. However, the
initial purchasers are under no obligation to do so and may discontinue making a
market at anytime.
However, since separation, the Notes and warrants were eligible for
trading in the PORTAL market by qualified institutional buyers. In addition, we
intend to apply for a listing of the Notes on the Luxembourg Stock Exchange.
Nonetheless, the liquidity of any market for the Notes will depend upon the
number of holders of the Notes, our performance, the market for similar
securities and the prospects for our industry generally. Also, the market for
non-investment grade debt has been subject to substantial price swings.
Therefore, we cannot make any assurances that an active trading market will
develop or, if a market develops, what the liquidity of that market will be.
Consequences of Failure to Exchange
Untendered Outstanding Notes that are not exchanged for Exchange Notes
pursuant to this Exchange Offer will remain restricted securities. Outstanding
Notes will continue to be subject to the following restrictions on transfer: (i)
outstanding notes may be resold only if registered pursuant to the Securities
Act of 1933, if an exemption from registration is available thereunder, or if
neither such registration nor such exemption is required by law, (ii)
Outstanding Notes shall bear a legend restricting transfer in the absence of
registration or an exemption therefrom and (iii) a holder of Outstanding Notes
who desires to sell or otherwise dispose of all or any part of its Outstanding
Notes under an exemption from registration under the Securities Act of 1933, if
requested by VersaTel, must deliver to us an opinion of independent counsel
experienced in Securities Act matters, reasonably satisfactory in form and
substance to us, that such exemption is available.
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Original Issue Discount Consequences
The Outstanding Notes were issued with original issue discount for U.S.
federal income tax purposes. The Exchange Notes generally will be treated as a
continuation of the Outstanding Notes for U.S. federal income tax purposes.
Consequently, holders of the Exchange Notes generally will be required to
include original issue discount and stated interest on the Exchange Notes in
gross income for such purposes. See "U.S. Tax Considerations" for a more
detailed discussion of the U.S. federal income tax consequences for the holders
resulting from the Exchange Offer.
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USE OF PROCEEDS
The Company will not receive any cash proceeds from the issuance of the
Exchange Notes offered hereby. In consideration for issuing the Exchange Notes
contemplated herein, the Company will receive in exchange Outstanding Notes in
like principal amount. The Outstanding Notes surrendered in exchange for the
Exchange Notes will be retired and canceled and cannot be reissued. Accordingly,
issuance of the Exchange Notes will not result in any change in the Indebtedness
(as defined on page 94) of the Company.
The net proceeds from the Second Offering were approximately $139.0
million, after deducting underwriting discounts and commissions and estimated
fees and expenses. The Company plans to use the net proceeds from the Second
Offering to finance the cost (including the cost of design, development,
construction, acquisition, installation or integration) of assets used in the
telecommunications business acquired by the Company or certain subsidiaries of
the Company or the acquisition of interests in other entities principally
engaged in the telecommunications business. Prior to the application of the net
proceeds from the Second Offering, as described above, such funds will be
invested by the Company in short-term investment grade securities.
THE EXCHANGE OFFER
General
In connection with the Second Offering, the Company entered into a
registration rights agreement (the "Registration Rights Agreement") with Lehman
Brothers Inc., Lehman Brothers (Europe) and Paribas Corporation (the "Initial
Purchasers") and agreed to (i) file within 90 days, and use its reasonable best
efforts to cause to be declared effective within 150 days, of the date of the
original issuance of the Outstanding Notes a registration statement (the
"Registration Statement") of which this prospectus (the "Prospectus") is a part
with respect to a registered offer to exchange the Outstanding Notes for the
Exchange Notes with terms substantially identical in all material respects to
the Outstanding Notes (the "Exchange Offer") and (ii) use its reasonable best
efforts to cause the Exchange Offer to be consummated on or before 30 days after
the date on which the Registration Statement is declared effective by the
Securities and Exchange Commission (the "Commission").
In the event that (i) the Company is not permitted to file the
Registration Statement or to consummate the Exchange Offer on account of changes
in law or the applicable interpretations of the staff of the Commission, (ii)
any holder that is a "qualified institutional buyer", as defined in Rule 144A
under the Securities Act of 1933 (a "Qualified Institutional Buyer"), notifies
the Company at least 20 business days prior to the consummation of the Exchange
Offer that (a) applicable law or Commission policy prohibits the Company from
participating in the Exchange Offer, (b) such holder may not resell the Exchange
Notes acquired by it in the Exchange Offer to the public without delivering a
prospectus and that this Prospectus is not appropriate or available for such
resales by such holder or (c) such holder is a broker-dealer and holds Notes
acquired directly from the Company or an affiliate of the Company, (iii) the
Exchange Offer is not for any other reason consummated within 180 days after the
original issue date of the Outstanding Notes, (iv) any holder (other than a
Participating Broker-Dealer) is not eligible to participate in the Exchange
Offer, or in the case of any holder that participates in the Exchange Offer,
such holder does not receive Exchange Notes on the date of the exchange that may
be sold without restriction under federal securities laws (other than due solely
to the status of such holder as an affiliate of the Company within the meaning
of the Securities Act or due to the requirement that such holder deliver a copy
of this Prospectus in connection with any resale of the Exchange Notes) or (v)
the Exchange Offer has been completed and in the opinion of counsel for the
Initial Purchasers a Registration Statement must be filed and a prospectus must
be delivered by the Initial Purchasers in connection with any offering or sale
of Transfer Restricted Securities (as defined in the Registration Rights
Agreement), the Company will use its reasonable best efforts to file, within 90
days of the earliest to occur of the preceding events, a shelf registration
statement pursuant to the Securities Act with respect to the resale of the
Outstanding Notes (the "Shelf Registration Statement") and to keep the Shelf
Registration Statement effective until the second anniversary of the Issue Date.
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In the event that (i) neither the Registration Statement nor the Shelf
Registration Statement is filed with the Commission on or prior to the 90th day
following the date of original issue of the Outstanding Notes, (ii) neither the
Registration Statement nor the Shelf Registration Statement is declared
effective on or prior to the 150th day following the date of original issue of
the Outstanding Notes, (iii) the Exchange Offer is not consummated on or before
30 days after the 150th day following the date of original issue of the
Outstanding Notes, or (iv) (a) the Registration Statement is filed and declared
effective but thereafter ceases to be effective or fails to be usable for its
intended purpose at any time prior to the time that the Exchange Offer is
consummated and is not declared effective within 5 business days thereafter or
(b) the Shelf Registration Statement is filed and declared effective but
thereafter ceases to be effective or fails to be usable for its intended purpose
at any time during the Effectiveness Period (as defined in the Registration
Rights Agreement) and is not declared effective again within five business days
thereafter, the interest rate borne by the Outstanding Notes shall be increased
by one-half of one percent per annum following such 90-day period in the case of
clause (i) above, following such 150-day period in the case of clause (ii)
above, following such 30-day period in the case of clause (iii) above, or
commencing on the day the applicable registration statement ceases to be
effective or usable for its intended purpose without being declared effective
again within 5 business days in the case of clause (iv) above. The aggregate
amount of such increase from the original interest rate pursuant to these
provisions will in no event exceed 1.5 percent per annum. Upon (w) the filing of
the Registration Statement or the Shelf Registration Statement for the Exchange
Offer after the 90-day period described in clause (i) above, (x) the
effectiveness of the Registration Statement or Shelf Registration Statement
after the 150-day period described in clause (ii) above, (y) the consummation of
the Exchange Offer after the 30-day period described in clause (iii) above, or
(2) the effectiveness or usability of the Registration Statement which had
ceased to remain effective or be usable, or the effectiveness or usability of
the Shelf Registration Statement which had ceased to remain effective or be
usable, the interest rate borne by the Outstanding Notes from the date of such
filing, effectiveness, usability or the day before the date of consummation, as
the case may be, will be reduced to the original interest rate if the Company is
otherwise in compliance with such requirements.
Upon the terms and subject to the conditions set forth in this
Prospectus and in the accompanying letter of transmittal (the "Letter of
Transmittal"), the Company will accept all Outstanding Notes validly tendered
prior to 5:00 p.m., New York City time, on the __________ (the "Expiration
Date"). The Company will issue $1,000 principal amount of Exchange Notes in
exchange for each $1,000 principal amount of Outstanding Notes accepted in the
Exchange Offer. Holders may tender some or all of their Outstanding Notes
pursuant to the Exchange Offer in denominations of $1,000 and integral multiples
thereof.
Based on no-action letters issued by the staff of the Commission to
third parties, the Company believes that the Exchange Notes issued pursuant to
the Exchange Offer in exchange for Outstanding Notes may be offered for resale,
resold and otherwise transferred by any holder thereof (other than (i) a
broker-dealer who purchased such Outstanding Notes directly from the Company to
resell pursuant to Rule 144A or any other available exemption under the
Securities Act or (ii) a person that is an "affiliate" of the Company within the
meaning of Rule 405 under the Securities Act) without compliance with the
registration and prospectus delivery requirements of the Securities Act,
provided that the holder is acquiring the Exchange Notes in its ordinary course
of business and is not participating and does not intend to participate, and has
no arrangements or understanding with any person to participate, in the
distribution of the Exchange Notes. Holders of Outstanding Notes wishing to
accept the Exchange Offer must represent to the Company that such conditions
have been met.
Each broker-dealer that receives Exchange Notes in exchange for
Outstanding Notes held for its own account, as a result of market-making or
other trading activities, must acknowledge that it will deliver a prospectus in
connection with any resale of such Exchange Notes. The Letter of Transmittal
states that by so acknowledging and by delivering a prospectus, such
broker-dealer will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act. The Prospectus, as it may be amended or
supplemented from time to time, may be used by such broker-dealer in connection
with resales of Exchange Notes received in exchange for Outstanding Notes. The
Company has agreed that, for a period of 180 days after the Expiration Date, it
will make this Prospectus and any amendment or supplement to this Prospectus
available to any such broker-dealer for use in connection with any such resale.
See "Plan of Distribution."
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As of the date of this Prospectus, $150 million aggregate principal
amount of the Outstanding Notes is outstanding. In connection with the issuance
of the Outstanding Notes, the Company arranged for the Outstanding Notes
initially purchased by Qualified Institutional Buyers to be issued and
transferable in book-entry form through the facilities of DTC, acting as
depositary. The Exchange Notes will also be issuable and transferable in
book-entry form through DTC.
This Prospectus, together with the accompanying Letter of Transmittal,
is being sent to all registered holders as of _____________, 1999 (the "Record
Date").
The Company shall be deemed to have accepted validly tendered
Outstanding Notes when, as and if the Company has given oral or written notice
thereof to the Exchange Agent. See "-- Exchange Agent." The Exchange Agent will
act as agent for the tendering holders of Outstanding Notes for the purpose of
receiving Exchange Notes from the Company and delivering Exchange Notes to such
holders.
If any tendered Outstanding Notes are not accepted for exchange because
of an invalid tender or the occurrence of certain other events set forth herein,
certificates for any such unaccepted Outstanding Notes will be returned, without
expenses, to the tendering holder thereof as promptly as practicable after the
Expiration Date.
Holders of Outstanding Notes who tender in the Exchange Offer will not
be required to pay brokerage commissions or fees or, subject to the instructions
in the Letter of Transmittal, transfer taxes with respect to the exchange of
Outstanding Notes pursuant to the Exchange Offer. The Company will pay all
charges and expenses, other than certain applicable taxes, in connection with
the Exchange Offer. See "-- Fees and Expenses."
Expiration Date; Extensions; Amendments
The term "Expiration Date" shall mean ___________, 1999 unless the
Company, in its sole discretion, extends the Exchange Offer, in which case the
term "Expiration Date" shall mean the latest date to which the Exchange Offer is
extended.
In order to extend the Expiration Date, the Company will notify the
Exchange Agent of any extension by oral or written notice and will mail to the
record holders of Outstanding Notes an announcement thereof, each prior to 9:00
a.m., New York City time, on the next business day after the previously
scheduled Expiration Date. Such announcement may state that the Company is
extending the Exchange Offer for a specified period of time.
The Company reserves the right (i) to delay acceptance of any
Outstanding Notes, to extend the Exchange Offer or to terminate the Exchange
Offer and to refuse to accept Outstanding Notes not previously accepted, if any
of the conditions set forth herein under "-- Termination" shall have occurred
and shall not have been waived by the Company (if permitted to be waived by the
Company), by giving oral or written notice of such delay, extension or
termination to the Exchange Agent, and (ii) to amend the terms of the Exchange
Offer in any manner deemed by it to be advantageous to the holders of the
Outstanding Notes. Any such delay in acceptance, extension, termination or
amendment will be followed as promptly as practicable by oral or written notice
thereof. If the Exchange Offer is amended in a manner determined by the Company
to constitute a material change, the Company will promptly disclose such
amendment in a manner reasonably calculated to inform the holders of the
Outstanding Notes of such amendment.
Without limiting the manner by which the Company may choose to make
public announcements of any delay in acceptance, extension, termination or
amendment of the Exchange Offer, the Company shall have no obligation to
publish, advertise, or otherwise communicate any such public announcement, other
than by making a timely release to the Dow Jones News Service.
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Interest on the Exchange Notes
The Exchange Notes will bear interest from December 3, 1998, payable
semiannually on May 15 and November 15 of each year commencing on May 15, 1999,
at the rate of 13 1/4% per annum. Holders of Outstanding Notes whose Outstanding
Notes are accepted for exchange will be deemed to have waived the right to
receive any payment in respect of interest on the Outstanding Notes accrued from
December 3, 1998 until the date of the issuance of the Exchange Notes.
Consequently, holders who exchange their Outstanding Notes for Exchange Notes
will receive the same interest payment on May 15, 1999 (the first interest
payment date with respect to the Outstanding Notes and the Exchange Notes) that
they would have received had they not accepted the Exchange Offer.
Procedures for Tendering
To tender in the Exchange Offer, a holder must complete, sign and date
the Letter of Transmittal, or a facsimile thereof, have the signatures thereon
guaranteed if required by the Letter of Transmittal, and mail or otherwise
deliver such Letter of Transmittal or such facsimile, together with the
Outstanding Notes (unless such tender is being effected pursuant to the
procedure for book-entry transfer described below) and any other required
documents, to the Exchange Agent prior to 5:00 p.m., New York City time, on the
Expiration Date.
Any financial institution that is a participant in DTC's Book-Entry
Transfer Facility system may make book-entry delivery of the Outstanding Notes
by causing DTC to transfer such Outstanding Notes into the Exchange Agent's
account in accordance with DTC's Automated Tender Offer Program ("ATOP").
Although delivery of Outstanding Notes may be effected through book-entry
transfer into the Exchange Agent's account at DTC, the Letter of Transmittal (or
facsimile thereof), with any required signature guarantees and any other
required documents, must, in any case, be transmitted to and received or
confirmed by the Exchange Agent at its addresses set forth herein under "--
Exchange Agent" prior to 5:00 p.m., New York City time, on the Expiration Date.
DELIVERY OF DOCUMENTS TO DTC IN ACCORDANCE WITH ITS PROCEDURES DOES NOT
CONSTITUTE DELIVERY TO THE EXCHANGE AGENT.
The tender by a holder of Outstanding Notes will constitute an
agreement between such holder and the Company in accordance with the terms and
subject to the conditions set forth herein and in the Letter of Transmittal.
Delivery of all documents must be made to the Exchange Agent at its
address set forth herein. Holders may also request that their respective
brokers, dealers, commercial banks, trust companies or nominees effect such
tender for such holders.
The method of delivery of Outstanding Notes and the Letters of
Transmittal and all other required documents to the Exchange Agent is at the
election and risk of the holders. Instead of delivery by mail, it is recommended
that holders use an overnight or hand delivery service. In all cases, sufficient
time should be allowed to assure timely delivery. No Letter of Transmittal or
Outstanding Notes should be sent to the Company.
Only a holder of Outstanding Notes may tender such Outstanding Notes in
the Exchange Offer. The term "holder" with respect to the Exchange Offer means
any person in whose name Outstanding Notes are registered on the books of the
Company or any other person who has obtained a properly completed bond power
from the registered holder, or any person whose Outstanding Notes are held of
record by DTC who desires to deliver such Outstanding Notes by book-entry
transfer at DTC.
Any beneficial holder whose Outstanding Notes are registered in the
name of his broker, dealer, commercial bank, trust company or other nominee and
who wishes to tender should contact such registered holder promptly and instruct
such registered holder to tender on his behalf. If such beneficial holder wishes
to tender on his own behalf, such beneficial holder must, prior to completing
and executing the Letter of Transmittal and delivering his Outstanding Notes,
either make appropriate arrangements to register ownership of the Outstanding
Notes in such holder's name
29
<PAGE>
or obtain a properly completed bond power from the registered holder. The
transfer of record ownership may take considerable time.
Signatures on a Letter of Transmittal or a notice of withdrawal, as the
case may be, must be guaranteed by a member firm of a registered national
securities exchange or of the National Association of Securities Dealers, Inc.,
a commercial bank or trust company having an office or correspondent in the
United States or an "eligible guarantor institution" (an "Eligible Institution")
within the meaning of Rule 17Ad-15 under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), unless the Outstanding Notes tendered pursuant
thereto are tendered (i) by a registered holder who has not completed the box
entitled "Special Issuance Instructions" or "Special Delivery Instructions" on
the Letter of Transmittal or (ii) for the account of an Eligible Institution.
If the Letter of Transmittal is signed by a person other than the
registered holder of any Outstanding Notes listed therein, such Outstanding
Notes must be endorsed or accompanied by appropriate bond powers which authorize
such person to tender the Outstanding Notes on behalf of the registered holder,
in either case signed as the name of the registered holder or holders appears on
the Outstanding Notes.
If the Letter of Transmittal or any Outstanding Notes or bond powers
are signed by trustees, executors, administrators, guardians, attorneys-in-fact,
officers of corporations or others acting in a fiduciary or representative
capacity, such persons should so indicate when signing and, unless waived by the
Company, evidence satisfactory to the Company of their authority to so act must
be submitted with the Letter of Transmittal.
All the questions as to the validity, form, eligibility (including time
of receipt), acceptance and withdrawal of the tendered Outstanding Notes will be
determined by the Company in its sole discretion, which determinations will be
final and binding. The Company reserves the absolute right to reject any and all
Outstanding Notes not validly tendered or any Outstanding Notes the Company's
acceptance of which would, in the opinion of counsel for the Company, be
unlawful. The Company also reserves the absolute right to waive any
irregularities or conditions of tender as to particular Outstanding Notes. The
Company's interpretation of the terms and conditions of the Exchange Offer
(including the instructions in the Letter of Transmittal) will be final and
binding on all parties. Unless waived, any defects or irregularities in
connection with tenders of Outstanding Notes must be cured within such time as
the Company shall determine. Neither the Company, the Exchange Agent nor any
other person shall be under any duty to give notification of defects or
irregularities with respect to tenders of Outstanding Notes nor shall any of
them incur any liability for failure to give such notification. Tenders of
Outstanding Notes will not be deemed to have been made until such irregularities
have been cured or waived. Any Outstanding Notes received by the Exchange Agent
that are not properly tendered and as to which the defects or irregularities
have not been cured or waived will be returned without cost by the Exchange
Agent to the tendering holder of such Outstanding Notes unless otherwise
provided in the Letter of Transmittal, as soon as practicable following the
Expiration Date.
In addition, the Company reserves the right in its sole discretion to
(a) purchase or make offers for any Outstanding Notes that remain outstanding
subsequent to the Expiration Date, or, as set forth under "Termination," to
terminate the Exchange Offer and (b) to the extent permitted by applicable law,
purchase Outstanding Notes in the open market, in privately negotiated
transactions or otherwise. The terms of any such purchases or offers may differ
from the terms of the Exchange Offer.
By tendering, each holder of Outstanding Notes will represent to the
Company that, among other things, the Exchange Notes acquired pursuant to the
Exchange Offer are being obtained in the ordinary course of business of the
person receiving such Exchange Notes, whether or not such person is the holder,
that neither the holder nor any other person has an arrangement or understanding
with any person to participate in the distribution of the Exchange Notes and
that neither the holder nor any such other person is an "affiliate" of the
Company within the meaning of Rule 405 under the Securities Act.
30
<PAGE>
Guaranteed Delivery Procedures
Holders who wish to tender their Outstanding Notes and (i) whose
Outstanding Notes are not immediately available, or (ii) who cannot deliver
their Outstanding Notes, the Letter of Transmittal, or any other required
documents to the Exchange Agent prior to the Expiration Date, or if such holder
cannot complete the procedure for book-entry transfer on a timely basis, may
effect a tender if:
(a) the tender is made through an Eligible Institution;
(b) prior to the Expiration Date, the Exchange Agent receives from
such Eligible Institution a properly completed and duly executed
"notice of guaranteed delivery" in the form accompanying this
Prospectus (by facsimile transmission, mail or hand delivery) setting
forth the name and address of the holder of the Outstanding Notes, the
certificate number or numbers of such Outstanding Notes and the
principal amount of Outstanding Notes tendered, stating that the tender
is being made thereby, and guaranteeing that, within five business days
after the Expiration Date, the Letter of Transmittal (or facsimile
thereof), together with the certificate(s) representing the Outstanding
Notes to be tendered in proper form for transfer and any other
documents required by the Letter of Transmittal, will be deposited by
the Eligible Institution with the Exchange Agent; and
(c) such properly completed and executed Letter of Transmittal (or
facsimile thereof), together with the certificate(s) representing all
tendered Outstanding Notes in proper form for transfer (or confirmation
of a book-entry transfer into the Exchange Agent's account at DTC of
Outstanding Notes delivered electronically) and all other documents
required by the Letter of Transmittal are received by the Exchange
Agent within five business days after the Expiration Date.
Withdrawal of Tenders
Except as otherwise provided herein, tenders of Outstanding Notes may
be withdrawn at any time prior to 5:00 p.m., New York City time, on the
Expiration Date unless previously accepted for exchange.
To withdraw a tender of Outstanding Notes in the Exchange Offer, a
written or facsimile transmission notice of withdrawal must be received by the
Exchange Agent at its address set forth herein prior to 5:00 p.m., New York City
time, on the business day prior to the Expiration Date and prior to acceptance
for exchange thereof by the Company. Any such notice of withdrawal must (i)
specify the name of the person having deposited the Outstanding Notes to be
withdrawn (the "Depositor"), (ii) identify the Outstanding Notes to be withdrawn
(including the certificate number or numbers and principal amount of such
Outstanding Notes), (iii) be signed by the Depositor in the same manner as the
original signature on the Letter of Transmittal by which such Outstanding Notes
were tendered (including any required signature guarantees) or be accompanied by
documents of transfers sufficient to permit the Trustee with respect to the
Outstanding Notes to register the transfer of such Outstanding Notes into the
name of the Depositor withdrawing the tender and (iv) specify the name in which
any such Outstanding Notes are to be registered, if different from that of the
Depositor. All questions as to the validity, form and eligibility (including
time of receipt) for such withdrawal notices will be determined by the Company,
whose determination shall be final and binding on all parties. Any Outstanding
Notes so withdrawn will be deemed not to have been validly tendered for purposes
of the Exchange Offer and no Exchange Notes will be issued with respect thereto
unless the Outstanding Notes so withdrawn are validly tendered. Any Outstanding
Notes which have been tendered but which are not accepted for exchange will be
returned to the holder thereof without cost to such holder as soon as
practicable after withdrawal, rejection of tender or termination of the Exchange
Offer. Properly withdrawn Outstanding Notes may be tendered by following one of
the procedures described above under "-- Procedures for Tendering" at any time
prior to the Expiration Date.
31
<PAGE>
Termination
Notwithstanding any other term of the Exchange Offer, the Company will
not be required to accept for exchange, or exchange Exchange Notes for, any
Outstanding Notes not therefore accepted for exchange, and may terminate or
amend the Exchange Offer as provided herein before the acceptance of such
Outstanding Notes if: (i) any action or proceeding is instituted or threatened
in any court or by or before any governmental agency with respect to the
Exchange Offer, which, in the reasonable judgment of the Company, might
materially impair the Company's ability to proceed with the Exchange Offer or
(ii) any law, statute, rule or regulation is proposed, adopted or enacted, or
any existing law, statute, rule or regulation is interpreted by the staff of the
Commission or court of competent jurisdiction in a manner, which, in the
reasonable judgment of the Company, might materially impair the Company's
ability to proceed with the Exchange Offer.
If the Company determines that it may terminate the Exchange Offer, as
set forth above, the Company may (i) refuse to accept any Outstanding Notes and
return any Outstanding Notes that have been tendered to the holders thereof,
(ii) extend the Exchange Offer and retain all Outstanding Notes tendered prior
to the expiration of the Exchange Offer, subject to the rights of such holders
of tendered Outstanding Notes to withdraw their tendered Outstanding Notes, or
(iii) waive such termination event with respect to the Exchange Offer and accept
all properly tendered Outstanding Notes that have not been withdrawn. If such
waiver constitutes a material change in the Exchange Offer, the Company will
disclose such change by means of a supplement to this Prospectus that will be
distributed to each registered holder of Outstanding Notes, and the Company will
extend the Exchange Offer for a period of five to ten business days, depending
upon the significance of the waiver and the manner of disclosure to the
registered holders of the Outstanding Notes, if the Exchange Offer would
otherwise expire during such period.
Exchange Agent
United States Trust Company of New York, the Trustee under the
Indenture, has been appointed as Exchange Agent for the Exchange Offer.
Questions and requests for assistance and requests for additional copies of this
Prospectus or of the Letter of Transmittal should be directed to the Exchange
Agent addressed as follows:
By Mail or Hand Delivery: United States Trust Company of New York
770 Broadway, 13th Floor
New York, New York 10003
Attention: Corporate Trust Services
Facsimile Transmission: (212) 780-0592
Confirm by Telephone: (800) 548-6565
Fees and Expenses
The expenses of soliciting tenders pursuant to the Exchange Offer will
be borne by the Company. The principal solicitation for tenders pursuant to the
Exchange Offer is being made by mail. Additional solicitations may be made by
officers and regular employees of the Company and its affiliates in person, by
telegraph or telephone.
The Company will not make any payments to brokers, dealers or other
persons soliciting acceptances of the Exchange Offer. The Company, however, will
pay the Exchange Agent reasonable and customary fees for its services and will
reimburse the Exchange Agent for its reasonable out-of-pocket expenses in
connection therewith. The Company may also pay brokerage houses and other
custodians, nominees and fiduciaries the reasonable out-of-pocket expenses
incurred by them in forwarding copies of this Prospectus, Letters of Transmittal
and related documents to the beneficial owners of the Outstanding Notes and in
handling or forwarding tenders for exchange.
The expenses to be incurred in connection with the Exchange Offer,
including fees and expenses of the Exchange Agent and Trustee and accounting and
legal fees, will be paid by the Company.
32
<PAGE>
The Company will pay all transfer taxes, if any, applicable to the
exchange of Outstanding Notes pursuant to the Exchange Offer. If, however,
certificates representing Exchange Notes or Outstanding Notes for principal
amounts not tendered or accepted for exchange are to be delivered to, or are to
be registered or issued in the name of, any person other than the registered
holder of the Outstanding Notes tendered, or if tendered Outstanding Notes are
registered in the name of any person other than the person signing the Letter of
Transmittal, or if a transfer tax is imposed for any reason other than the
exchange of Outstanding Notes pursuant to the Exchange Offer, then the amount of
any such transfer taxes (whether imposed on the registered holder or any other
person) will be payable by the tendering holder. If satisfactory evidence of
payment of such taxes or exemption therefrom is not submitted with the Letter of
Transmittal, the amount of such transfer taxes will be billed directly to such
tendering holder.
33
<PAGE>
EXCHANGE RATE INFORMATION
The table below sets forth, for the periods and dates indicated,
certain information concerning the Noon Buying Rates for Dutch guilders
expressed in U.S. dollars per Dutch guilder. On September 30, 1998, the Noon
Buying Rate was NLG 1.88 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 January 8, 1999).............. 1.91 1.87 1.89 1.91
</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 interest or other payments to nonresident holders of the Notes 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 during the term of the Notes.
34
<PAGE>
CAPITALIZATION
The following table sets forth the cash and restricted cash and the
capitalization of the Company as of September 30, 1998 (i) on an historical
basis and (ii) on an as adjusted basis, assuming the consummation of the Second
Offering on such date and the maintenance of the estimated net proceeds thereof
as cash, as if the Second Offering had occurred on September 30, 1998. See "Use
of Proceeds." You should read the information set forth in the following table
in conjunction with the Financial Statements included elsewhere in this
Prospectus.
<TABLE>
<CAPTION>
As of September 30, 1998
-----------------------------------------------
Actual As Adjusted(1)
----------- ---------------------------
NLG NLG(2) $(3)
(In thousands)
<S> <C> <C> <C>
Cash and restricted cash(4) .................................................. 395,166 656,392 349,145
======== ======== ========
Current maturities of long-term debt ......................................... 482 482 256
Long-term debt (less current portion):
Other debt:
13 1/4% Senior Notes due 2008(5) ........................................... 422,539 422,539 224,755
-------- -------- --------
13 1/4% Senior Notes due 2008(6) ........................................... -- 268,849 143,005
-------- -------- --------
Total debt .............................................................. 423,021 691,870 368,016
-------- -------- --------
Shareholders' equity:
Ordinary Shares, par value NLG 0.10 per share-- 44,550,000 ................. 1,943 1,943 1,034
shares authorized; 19,427,405 shares issued and
outstanding
Warrants(7) ................................................................ 3,341 5,212 2,772
Additional paid-in capital ................................................. 50,787 50,787 27,014
Accumulated deficit ........................................................ (65,580) (65,580) (34,883)
-------- -------- --------
Total shareholders' equity (deficit) .................................... (9,509) (7,638) (4,063)
-------- -------- --------
Total capitalization .................................................... 413,512 684,232 363,953
======== ======== ========
</TABLE>
- ----------
(1) Reflects the Second Offering as if it had been completed on September
30, 1998, and the maintenance of the net proceeds thereof as cash. See
"Security Ownership of Principal Stockholders and Management" and "Certain
Relationships and Related Transactions."
(2) Solely for the convenience of the reader, the U.S. dollar amount of the
Notes has been translated into Dutch guilders at the Noon Buying Rate on
September 30, 1998 of NLG 1.88 per $1.00.
(3) Solely for the convenience of the reader, Dutch guilder amounts have
been translated into U.S. dollars at the Noon Buying Rate on September 30,
1998 of NLG 1.88 per $1.00.
(4) The estimated net cash proceeds from the Second Offering of NLG 261.2
million ($139.0 million) have been added to cash pending application of such
proceeds as described in "Use of Proceeds."
(5) 13 1/4% Senior Notes due 2008 issued as of May 27, 1998. For the purposes of
this table, NLG 3.3 million has been allocated to the warrants issued in
connection with the First Offering.
(6) 13 1/4% Senior Notes due 2008 issued as of December 3, 1998. For the
purposes of this table, NLG 1.9 million has been allocated to the warrants
issued in connection with the Second Offering.
(7) For the purposes of this table, NLG 3.3 million has been allocated to
the warrants issued in connection with the First Offering and NLG 1.9
million has been allocated to the warrants issued in connection with the
Second Offering.
There has been no material change in the capitalization of the Company
since September 30, 1998.
35
<PAGE>
SELECTED FINANCIAL AND OTHER DATA
The selected financial data for VersaTel, presented below, as of and
for the two fiscal years ended December 31, 1996 and December 31, 1997 have been
derived from the Audited Financial Statements of VersaTel, which have been
audited by Arthur Andersen, independent public accountants. The summary
financial data for the nine months ended September 30, 1997 and September 30,
1998 have been derived from the Unaudited Financial Statements, which have been
prepared in accordance with U.S. GAAP and on a basis which management believes
is consistent with that of the Audited Financial Statements. The unaudited
financial data for the nine months ended September 30, 1997 and 1998 include all
normal and recurring adjustments necessary for the fair presentation of the
results of operations and financial condition of the Company for such 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 Financial Statements included
elsewhere in this Prospectus.
<TABLE>
<CAPTION>
Fiscal Year Ended December 31, Nine Months Ended September 30,
---------------------------------------------- ----------------------------------
1995 1996 1997 1997 1998
---------- ---------- ----------------------- --------- ----------------------
NLG NLG NLG $(1) NLG NLG $(1)
(In thousands, except per share data)
<S> <C> <C> <C> <C> <C> <C> <C>
Statement of Operations Data:
Revenue ......................................... 52 6,428 18,896 10,051 14,263 25,880 13,766
Operating expenses:
Cost of revenue excl. depreciation and
amortization .................................. 117 4,954 17,405 9,258 11,170 21,120 11,234
Selling, general and administrative ............. 538 5,485 17,527 9,323 10,929 30,002 15,958
Depreciation and amortization ................... 11 453 3,237 1,722 1,238 4,914 2,614
------ ------- ------- ------- ------- ------- -------
Total operating expenses ........................ 666 10,892 38,169 20,303 23,337 56,036 29,806
------ ------- ------- ------- ------- ------- -------
Loss from operations ............................ (614) (4,464) (19,273) (10,252) (9,074) (30,156) (16,040)
Interest expense (income), net .................. 1 269 534 284 330 14,962 7,959
Currency loss (gain) ............................ -- -- 53 28 -- (4,747) (2,525)
------ ------- ------- ------- ------- ------- -------
Net loss ........................................ (615) (4,733) (19,860) (10,564) (9,404) (40,371) (21,474)
====== ======= ======= ======= ======= ======= =======
Net loss per share (Basic and Diluted) .......... (0.18) (0.95) (2.20) (1.17) (1.06) (2.65) (1.41)
Weighted average number of shares
outstanding ................................... 3,327 5,004 9,042 9,042 8,910 15,248 15,248
</TABLE>
<TABLE>
<CAPTION>
As of December 31, As of September 30,
------------------------------------------- ---------------------
1995 1996 1997 1998
---------- ----------- ------------------- ---------------------
NLG NLG NLG $(1) NLG $(1)
(In thousands)
<S> <C> <C> <C> <C> <C> <C>
Balance Sheet Data:
Cash and restricted cash ..................................... 160 4,443 1,495 795 395,166 210,195
Working capital (excluding cash and restricted cash) ......... 436 (2,704) (24,774) (13,178) (36,515) (19,423)
Capitalized finance cost ..................................... -- -- -- -- 19,333 10,284
Property, plant and equipment, net ........................... 224 2,340 13,619 7,244 23,161 12,320
Construction in progress ..................................... -- -- -- -- 10,407 5,536
Goodwill ..................................................... -- -- -- -- 1,478 786
------ ------ ------- -------- -------- --------
Total assets ................................................. 820 8,160 19,331 10,282 459,880 244,617
Total long-term obligations (including current portion)....... 614 4,185 8,491 4,516 423,022 225,012
Total shareholders' equity (deficit) ......................... (120) 146 (18,214) (9,688) (9,510) (5,059)
</TABLE>
36
<PAGE>
<TABLE>
<CAPTION>
Fiscal Year Ended December 31, Nine Months Ended September 30,
--------------------------------------------- -----------------------------------------
1995 1996 1997 1997 1998
-------- ------- ---------------- --------- ----------------------------
NLG NLG NLG $(1) NLG NLG $(1)
(In thousands, except ratio)
<S> <C> <C> <C> <C> <C> <C> <C>
Other Financial Data:
SG&A as a percentage of revenue ....... 194.2% 85.3% 92.8% 92.8% 76.6% 115.9% 115.9%
EBITDA(2) ............................. (603) (4,011) (16,036) (8,530) (7,836) (25,242) (13,426)
Capital expenditures .................. 213 2,569 14,516 7,721 5,238 24,076 12,806
Cash Flow Data:
Net cash provided by (used in) operating
activities .......................... (715) (1,718) 5,766 3,067 832 (179,473) (95,464)
Net cash used in investing activities . (234) (2,569) (14,516) (7,721) (5,238) (24,076) (12,806)
Net cash provided by financing
activities .......................... 1,109 8,571 5,807 3,089 1,874 441,851 235,027
Other Data:
Total customers (at period end) ....... 35 670 2,245 2,245 1,464 6,461 6,461
Number of billable minutes (in
thousands)(3) ....................... 51 6,487 23,361 23,361 16,234 73,316 73,316
Average revenue per billable minute ... 1.03 0.99 0.81 0.43 0.88 0.35 0.19
</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 September 30, 1998
of NLG 1.88 per $1.00.
(2) 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 the VersaTel 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.
(3) Billable minutes are those minutes during which a call is connected to the
VersaTel switch and for which the Company bills a customer.
37
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction
with the Financial Statements contained elsewhere in this Prospectus. See
"Selected Financial and Other Data." Certain information contained below and
elsewhere in this Prospectus, including information with respect to the
Company's plans and strategy for its business, are forward-looking statements.
See "Disclosure Regarding Forward-Looking Statements."
Overview
VersaTel is a rapidly growing alternative telecommunications service
provider based in Amsterdam, The Netherlands. VersaTel's objective is to become
the leading-alternative provider of facilities-based national and international
telecommunications services in the Benelux region. The Company currently
provides high quality competitively priced international and national long
distance telecommunications services in The Netherlands, primarily to small- and
medium-sized businesses and selected residential customers. The Company also
offers national and international telecommunications services to Belgium for
small- and medium-sized businesses. The VersaTel Network currently operates
through a Nortel DMS 100 switch located in Amsterdam and connections to other
carriers, including KPN Telecom. The Company also expects that an additional
Nortel DMS 100 switch located in Antwerp will become operational by the end of
1998. Business and residential customers access the VersaTel Network indirectly
by dialing (manually, through an auto-dialer or through pre-programmed PBX's)
the Company's "1611" carrier select code. Wholesale customers access the Network
directly through leased lines. Prior to liberalization and the implementation of
the "1611" code, business and residential customers used the six-digit Virtual
Private Network ("VPN") code or the Company's Direct Inward System Access
("DISA") code, which involves a two stage call set-up. Both the VPN and DISA
codes are currently being phased out as customers are being migrated to the
"1611" carrier select code.
Revenues
VersaTel currently derives most of its revenues from the provision of
long distance telecommunications services in The Netherlands. VersaTel provides
international long distance and national long distance services to its customer
base of small- and medium-sized businesses as well as selected residential
customers. The Company also provides wholesale services to other
telecommunications service providers.
VersaTel's revenues are derived primarily from minutes of
telecommunications traffic billed. The following table sets forth the total
revenues and billable minutes of use attributable to VersaTel's operations for
the years ended December 31, 1996 and December 31, 1997 and for the nine months
ended September 30, 1997 and September 30, 1998 as well as the total number of
customers as of December 31, 1996 and December 31, 1997 and as of September 30,
1998. All of VersaTel's 1996 and 1997 revenues were derived from The
Netherlands. VersaTel started generating revenues in Belgium in October 1998 and
is expecting to start generating revenues in Luxembourg in 1999.
Fiscal Years Ended Nine Months Ended
December 31, September 30,
----------------- -----------------
1996 1997 1997 1998
(NLG in thousands)
Revenues
Business customers ......... 6,143 16,948 12,868 22,917
Residential customers....... 0 11 -- 233
Wholesale customers......... 285 1,937 1,395 2,730
------ ------ ------ ------
Total ................... 6,428 18,896 14,263 25,880
38
<PAGE>
<TABLE>
<CAPTION>
Fiscal Years Ended Nine Months Ended
December 31, September 30,
----------------------- --------------------
1996 1997 1997 1998
----------------------- ---------------------
<S> <C> <C> <C> <C>
Billable Minutes of Use
Business customers......................................... 6,237 21,469 14,910 61,650
Residential customers...................................... 0 42 0 1,022
Wholesale customers........................................ 250 1,850 1,324 10,644
------ --------- ------- --------
Total................................................... 6,487 23,361 16,234 73,316
Customers (At period end)
Business customers......................................... 669 2,014 1,463 5,022
Residential customers...................................... 0 230 -- 1,436
Wholesale customers........................................ 1 1 1 3
------ ------- -------- --------
Total................................................... 670 2,245 1,464 6,461
</TABLE>
Currently, small- to medium-sized businesses generate the majority of
VersaTel's revenues. VersaTel expects revenues from the residential customer
segment to grow substantially with increased awareness of its "1611" carrier
select code, future introduction of carrier pre-selection, additional marketing
efforts and the introduction of new products and services targeted at
residential customers. In the future, the Company also expects to derive
revenues from monthly charges, incoming calls and new services as a result of
directly connecting business customers to the VersaTel Network. The Company also
derives a limited amount of revenues from switched voice services offered to
other telecommunications service providers on a wholesale basis. As the Benelux
Overlay Network is completed and as the Company has capacity available, it
intends to increase its marketing efforts in the wholesale segment to increase
utilization of the Network. The Company expects to expand its wholesale
offerings to include the sale of dark fiber, conduit and rights-of-way access to
help offset the cost of constructing the Network.
VersaTel's revenues are derived from minutes of telecommunications
traffic billed and revenues are allocated to the period in which the traffic has
occurred. VersaTel generally prices its services at a discount to the local PTTs
and expects to continue this pricing strategy as the Company expands its
operations. In general, PTTs have been reducing their rates over the last few
years. As a result, VersaTel has experienced and expects to continue to
experience declining revenue per minute. KPN Telecom reduced its prices most
recently in May and July 1998 with reductions of approximately 10.0% and 15.0%,
respectively, which are expected to have an adverse impact on margins in the
near term. Additionally, the Company expects to increase its 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 the VersaTel Network is built out, VersaTel expects 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 additional services, would have a
material adverse effect on VersaTel's business and financial results. In
addition, the introduction of the euro will lead to a greater transparency for
prices in the European telecommunications market, which may lead to further
competition and price decreases. See "Risk Factors -- Competing Against Dominant
Market Participants."
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Cost of Revenues
VersaTel's costs of revenues are comprised of origination costs,
network costs and termination costs and are both fixed and variable. Origination
costs represent the cost of carrying traffic from the customer to the VersaTel
Network. Origination charges for calls transported to the VersaTel 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 PTT either to VersaTel, in the case of the "1611" and VPN codes, or
directly to customers, in the case of the DISA code. In cases where the business
or residential customer is charged directly by the PTT for the origination
costs, VersaTel reimburses the customer by means of a credit to the customer's
account. The charges credited directly to the customer are a result of the use
of the DISA access code and, as noted above, are being phased out by the
Company. Origination costs billed directly to customers by the PTT are not
included in the revenues of VersaTel. The charges credited to the customer are
recorded as cost of revenues.
The Company has experienced a significant decrease in origination costs
and expects that these will continue to decrease significantly over time due to
competition and regulatory orders. In July 1998, the Netherlands regulatory
authority, the Onafhankelijke Post en Telecommunicatie Autoriteit ("OPTA"),
ruled that origination and termination charges be reduced by 55% and 30%,
respectively. In addition, as VersaTel builds-out its Network, it intends to
connect directly as many business customers as economically feasible to the
VersaTel 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 the 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 the Company to experience a decline in gross
margins per billable minute which would have a material adverse effect on the
Company's business and financial performance. See "Risk Factors -- Competing
Against Dominant Market Participants."
Currently, network costs represent the cost of transporting traffic
between the VersaTel switch and points of interconnection using leased lines.
However, as VersaTel builds-out the Network, the Company will establish more
points of interconnection and, as a result, expects network costs to rise in the
future.
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, the VersaTel switch directs calls to
the most cost- efficient carrier for the required destination. As VersaTel
builds-out the Network to new points of interconnection, the Company expects to
be able to reduce average termination costs per minute. For example, once
VersaTel establishes a direct link from Amsterdam to Rotterdam, the Company will
no longer pay for national termination costs on that route and will only pay
local termination costs from the point of interconnection in Rotterdam to the
final destination in that city. The Company also believes that per minute
termination costs will continue to decrease due to several additional factors
including: (i) the incremental build-out of the VersaTel Network which will
increase the number of carriers with which it interconnects; (ii) the increase
of minutes originated by VersaTel which should lead to higher volume discounts
available to the Company; (iii) more rigorous implementation of the EC
directives requiring cost-based termination rates and leased line rates; and
(iv) emergence of new telecommunication service providers and the construction
of new transmission facilities resulting in increased competition. There can be
no assurance, however, that the trend in 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 the
Company has developed and expanded its workforce, and are expected to continue
to increase as new operations are established and the Company expands. 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.
The Company has grown substantially since its inception and intends to
continue to grow by adding more sales, marketing and customer support staff. In
addition, the Company expects to establish additional sales offices in the
future. The expansion of its sales, marketing and customer support staff and the
development of additional sales
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offices involves substantial training costs and start-up costs, a large portion
of which will be reflected as fixed costs and recorded as selling, general and
administrative charges. Accordingly, the Company's results of operations will
vary depending on the timing and speed of the Company's 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."
Depreciation and Amortization
The Company capitalizes and depreciates its fixed assets, including
switching equipment and fiber-optic cable, over periods ranging from two to
twenty-five years. In addition, the Company capitalizes and amortizes the cost
of installing dialers at customer sites. The development of the VersaTel Network
will require large capital expenditures and larger depreciation charges in the
future. Increased capital expenditures will adversely affect the Company's
future operating results due to increased depreciation charges and interest
expense. See "Business -- Strategy" and "-- Network."
Foreign Exchange
The Company has substantial U.S. dollar denominated assets and
liabilities and its revenues are generated and costs incurred in a number of
currencies. The Company is therefore exposed to fluctuations in the U.S. dollar
and other currencies, which may result in foreign exchange gains and/or losses.
Only a limited number of equipment purchases and consultancy activities are
billed to the Company in currencies other than Dutch guilders. The Company
reviews on a weekly basis the currency risk of U.S. dollars to Dutch guilders.
Based on its currency requirements for Dutch guilders, the Company 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 nine months ended September 30, 1998 compared to the nine months ended
September 30, 1997
Revenues increased by NLG 11.6 million to NLG 25.9 million for the nine
months ended September 30, 1998 from NLG 14.3 million for the nine months ended
September 30, 1997, representing an increase of 81.1%. The growth in revenues
resulted primarily from the addition of new customers, the introduction of
national long distance services in The Netherlands and an increase in wholesale
traffic. Revenue for the nine months ended September 30 of 1998 as compared to
the same period in 1997 was negatively impacted by general price reductions
initiated by KPN Telecom in May 1998 of approximately 10.0% and in July of 1998
of approximately 15.0%. VersaTel responded to these price reductions by reducing
its own prices.
Billable minutes of use increased by 57.1 million to 73.3 million for
the nine months ended September 30, 1998 from 16.2 million for the nine months
ended September 30, 1997, representing an increase of 352.5%. The number of
customers increased by 4,997 to 6,461 as of September 30, 1998 from 1,464 as of
September 30, 1997.
Cost of revenues increased by NLG 9.9 million to NLG 21.1 million for
the nine months ended September 30, 1998 from NLG 11.2 million for the nine
months ended September 30, 1997, primarily reflecting an increase in billable
minutes. 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 19.1
million to NLG 30.0 million for the nine months ended September 30, 1998 from
NLG 10.9 million for the nine months ended September 30, 1997, representing an
175.2% 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.
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Depreciation and amortization expenses increased by NLG 3.7 million to
NLG 4.9 million for the nine months ended September 30, 1998 from NLG 1.2
million for the nine months ended September 30, 1997. This increase was
primarily related to capital expenditures incurred in connection with the
deployment of the Nortel DMS 100 switch in Amsterdam and an increase in the
number of dialers installed due to customer growth and the purchase of computer
equipment and office furniture.
Currency exchange gains, net, increased to NLG 4.7 million for the nine
months ended September 30, 1998 from no gain/loss for the nine months ended
September 30, 1997 as a result of the net gains of the Company's dollar
denominated assets and liabilities on the balance sheet.
Interest income increased by NLG 8.1 million to NLG 8.1 million for the
nine months ended September 30, 1998 from NLG 20,000 for the nine months ended
September 30, 1997. This increase was primarily related to the Company's
positive cash balance as a result of the First Offering.
Interest expense increased by NLG 22.8 million to NLG 23.1 million for
the nine months ended September 30, 1998 from 0.3 million for the nine months
ended September 30, 1997. This increase is primarily related to the accrual of
interest expense on the notes issued in the First Offering.
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 revenue
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 1,575 to 2,245 as of December 31, 1997, from 670 as of December 31,
1996.
VersaTel's revenues in 1997 were negatively impacted by KPN Telecom's
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 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. The Company
expects KPN Telecom to continue to lower its prices and create new discount
plans on a regular basis and the Company 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 the Company to respond to those implemented by
KPN Telecom which exceeded reductions in origination and termination costs.
VersaTel's revenues for the three months ended December 31, 1997 were
negatively impacted by a case of fraud in October 1997, which the Company
estimates affected approximately four days of customer traffic. The fraud
involved the unauthorized use of one of the Company's test codes. As a result, a
large number of calls were originated, primarily through ethnic calling shops,
over the course of four 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 the VersaTel Network and reverted to KPN Telecom
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for service. The Company 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. The Company has filed the case
with the local authorities and is currently determining the possibility of
filing a claim against certain parties for the cost of service and lost revenue.
The Company believes that the risk of future fraud has been reduced with the
introduction of the "1611" access code (which does not allow the type of fraud
that occurred from the unauthorized use of a test code to occur) 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
the Company'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 the Company'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 the
VersaTel 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.
Liquidity and Capital Resources
The Company has incurred significant operating losses and negative cash
flows as a result of the development of its business and the VersaTel Network.
Prior to the First Offering, the Company had financed its growth primarily
through equity and subordinated loans from its shareholders. In May 1998, the
Company issued notes and warrants in the First Offering and raised net proceeds
of $216.2 million, $78.9 million of which was invested in U.S. government
securities placed in escrow to fund the first six interest payments on the notes
issued in the First Offering. In December 1998, the Company issued the
Outstanding Notes and warrants in the Second Offering and raised net proceeds of
$139.5 million, $46.5 million of which was invested in U.S. government
securities placed in escrow to fund the first five interest payments on the
Notes. For a description of the terms of the notes issued in the First Offering,
see "Description of Certain Indebtedness." The Company has since used a
significant amount of the remaining net proceeds of the First Offering to make
capital expenditures related to the expansion and development of the VersaTel
Network, to fund operating losses and for other general corporate purposes.
Although the Company currently maintains significant cash balances, it
will require substantial additional capital to continue funding the cost of the
VersaTel Network. The estimated net proceeds of the Second Offering of
approximately $139.0 million will be used for that purpose. The Company also
used approximately $46.5 million to acquire Pledged Securities (as defined in
"Description of the Exchange Notes -- Certain Definitions") to be placed in
escrow to fund the first five interest payments on the Notes.
From and after November 15, 2001, the Company will be required to fund
substantial interest payments on the Notes and the notes issued in the First
Offering on a current basis. The Company will need to substantially increase its
net cash flow in order to meet its debt service obligations at that time,
including its obligations on the Notes. See "Risk Factors -- Substantial
Indebtedness."
To date, the Company has made limited use of bank facilities and
capital lease financing. The Company may seek to raise senior secured debt
financing as well as vendor financing as additional sources of funds for the
expansion
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of the VersaTel Network over the near term. See "Risk Factors -- Considerable
Capital Required to Expand the Network."
Net cash provided by operating activities was NLG 5.8 million in the
fiscal year December 31, 1997 compared to negative NLG 1.7 million in the fiscal
year ended December 31, 1996. This was primarily the result of an increase in
accounts payable of NLG 18.7 million in the fiscal year ended December 31, 1997.
The increase in accounts payable was mainly caused by non-paying of current
payables as a result of the liquidity difficulties discussed below.
Net cash used in investing activities was NLG 14.5 million in the
fiscal year ended December 31, 1997 and NLG 2.6 million in the fiscal year ended
December 31, 1996. Substantially all the cash utilized by investing activities
in each fiscal year resulted from an increase in capital expenditures to expand
the VersaTel Network. The Company does 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 provided by financing activities was NLG 5.8 million in the
fiscal year ended December 31, 1997 and NLG 8.6 million in the fiscal year ended
December 31, 1996. 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 the
Company's shareholders. For the fiscal year ended December 31, 1996, net cash
provided by financing activities of NLG 8.6 million resulted from NLG 5.0
million of capital contributions and NLG 3.2 million of subordinated loans
obtained from the Company's shareholders, as well as capital leases to an amount
of NLG 0.4 million.
Prior to the First Offering, the Company experienced liquidity
difficulties, which resulted in attachments to its bank account by certain
creditors. This situation was resolved by the contribution of new equity by
certain of the Company's shareholders and the issuance of guarantees for the
benefit of one of the creditors.
In February 1998, as part of the Recapitalization two of the three
shareholders of the Company, Telecom Founders and NeSBIC, a subsidiary of
Fortis, invested an additional NLG 7.2 million in equity capital in the Company.
Although this contribution was received in February 1998, the formal
shareholders meeting approving the amount to be labelled as capital was not
executed until April 17, 1998. In addition, NeSBIC and Cromwilld converted their
subordinated convertible notes totaling NLG 3.6 million into Ordinary Shares of
the Company, and NeSBIC converted its NLG 4.5 million bridge loan into Ordinary
Shares of the Company. The third component of the Recapitalization was comprised
of a new equity investment by Paribas of NLG 12.8 million. Lastly, the Company
received from Telecom Founders, NeSBIC, Paribas and NPM an additional NLG 15.0
million in equity capital immediately prior to the closing of the First
Offering. As a result of the Recapitalization, the Company's share capital
increased from NLG 7.0 million to NLG 50.1 million. See "Security Ownership of
Principal Shareholders and Management."
Risks Associated with the Year 2000
The Year 2000 issue is the result of computer programs using two digits
rather than four 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
VersaTel is undertaking a comprehensive program to address the Year
2000 issue with respect to the following:
1. The Company's information technology systems;
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2. The telephony switching network (including equipment
installed at customers' premises);
3. The Company's non-information technology systems (including
buildings, plant, equipment and other infrastructure systems
that may contain embedded micro controller technology);
4. The systems of the Company's major vendors (insofar as they
relate to the Company's business); and
5. The Company's customers.
This program involves four "Steps": (1) a wide ranging assessment of
Year 2000 problems affecting the Company; (2) the development and implementation
of remedies to address discovered problems; (3) the testing of the Company's
systems; and (4) an analysis of the worst case scenario for the Company. The
Company expects to complete Steps 1 and 2 of this program in the first quarter
of 1999 and Steps 3 and 4 by the end of the second quarter of 1999.
Steps 1-2: Assessment of Year 2000 Issues, Development and Implementation of
Remedies
The Information Technology Systems. The Company is currently undergoing
a major program to replace all of its existing OSS systems for billing, customer
care and mediation and expects to have completed the replacement program by the
end of the second quarter of 1999. In selecting the new OSS systems, the Company
asks for guarantees from the manufacturers of Year 2000 compliance. The Company
is also checking all its custom designed software for Year 2000 compliance.
The Company uses Windows 95 and Windows NT 4.0 as its operating
systems. The Company expects to upgrade all of its Windows 95 operating systems
to Windows 98, which is Year 2000 compliant, in the first quarter of 1999. The
Company expects to install the latest service pack for its NT 4.0 operating
systems which is Year 2000 compliant in the first quarter of 1999. The Company
does not presently use any other desktop or server operating systems.
The Telephony Switching Network. The Company has consulted with Nortel,
the manufacturer of its DMS 100 telephony switches and believes that its
switches will be Year 2000 compliant before the end of 1998. The Company is
currently upgrading its switch operating software to EURO-8, which is Year 2000
certified and is also investigating the Year 2000 compliance of its routers
installed at customer premises to direct traffic on to the VersaTel Network.
The Non-Information Technology Systems. The Company's office buildings
have the following embedded systems: monitor alarm (intrusion and sensors),
personnel registration plus floor access, fire alarm, climate control and
electrical power maintenance (generators). The Company'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 fourth quarter of
1998.
Major Vendor's Systems. The Company 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 the Company. The
Company 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. The Company is now
formalizing these requests, sending letters, and compiling a list of vendors'
responses.
Customers' Systems. The Company's customer services department intends
to discuss with customers the Year 2000 issue, including whether such customer
is Year 2000 compliant and to suggest that, where this issue has not been
resolved, the customer seek advice. No assurances can be given that the
Company's customers will either take such advice or be Year 2000 compliant on a
timely basis.
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Step 3: Testing of the Company's Systems
VersaTel intends to conduct a full operational test of its entire
business by the end of the second quarter of 1999, when the Company expects that
all of its systems and processes will be Year 2000 compliant. The Company's
services and products are primarily provided to business customers who operate
Monday through Friday and therefore it plans to conduct this test during a
weekend. Certain customers have approved this plan and have agreed to
participate in the test.
Step 4: Worst Case Scenario
The Company believes that the worst effect of the Year 2000 issue would
be the inability of customers to complete calls. Nortel, the manufacturer of the
Company's switches, has conducted extensive Year 2000 tests with the EURO-8
software and has informed the Company that it believes the Company's switches
are Year 2000 compliant. The Company will be approaching Nortel for guarantees
regarding this compliance.
If the Company's Year 2000 compliant billing system fails to function
correctly, the Company 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 the Company's customer care team to supply quality
service would be significantly affected if the OSS systems were not available.
Service provisioning, additional services and the development of new customers
could not continue effectively if the automated provisioning systems fail. The
Company is asking for certificates from the manufacturers of these systems that
they are Year 2000 compliant.
The Company's ability to collect revenues depends upon certain
financial institutions' computer systems, because approximately 50% of its
retail customers pay by way of direct debit facilities. The Company is seeking
assurances from these financial institutions that they are Year 2000 compliant.
The Company believes that it is not very likely 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, the Company would attempt to rectify the problem with the
appropriate people. However, no assurance can be given that the Company will be
successful in obtaining valid assurances or guarantees, that the Year 2000 issue
will not have a material adverse effect on the Company, that any Year 2000
effects could be resolved or that the Company would 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, the Company has incurred approximately NLG 200,000 in costs
for its Year 2000 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. The Company is replacing these systems to support the business
growth and not specifically to remedy the Year 2000 problem. The Company expects
to incur additional specific Year 2000 charges that are estimated to be less
than NLG 2 million, the majority of which will be incurred during 1999.
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BUSINESS
Overview
VersaTel is a rapidly growing alternative telecommunications service
provider based in Amsterdam, The Netherlands. VersaTel's objective is to become
the leading alternative provider of facilities-based national and international
telecommunications services in the Benelux region. The Company, formed on
October 10, 1995, currently provides high quality, competitively priced,
international and national long distance telecommunications services in The
Netherlands and Belgium, primarily to small- and medium-sized businesses, and
wholesale telecommunications services to other carriers. With over 5,000
business customers, the Company is a leading alternative to KPN Telecom, the
former monopoly telecommunications carrier of The Netherlands, in the small- and
medium-sized business market. The Company's business customer base has grown
from 669 as of December 31, 1996 to 5,022 as of September 30, 1998. In addition,
the Company offers its services to targeted residential customers. As of
September 30, 1998, the Company had 1,436 residential customers. The Company's
revenues for the year ended December 31, 1997 were approximately NLG 18.9
million and for the nine months ended September 30, 1998 were approximately NLG
25.9 million.
Currently, VersaTel's primary service offerings consist of
international and national long distance services. VersaTel has recently
introduced services aimed at the residential market including VersaContact, a
dial-around service, and calling cards. In addition to its retail voice and data
services, the Company offers wholesale switched voice services to other
telecommunications service providers. These services include international
gateway and national termination services in The Netherlands. With the
acquisition of CS Net in early November 1998, VersaTel will be able to offer its
business customers certain internet and intranet services. VersaTel plans to
offer additional services, including local access and high speed data services
to its business customers over the next 18 months.
VersaTel was one of the first carriers in The Netherlands to obtain a
carrier select code and to obtain full interconnection with KPN Telecom.
Customers access VersaTel's services by dialing (manually or through an auto-
dialer) the Company's select codes or through leased lines. The Company's Nortel
DMS 100 switch located in Amsterdam connects customers' calls to the required
destination using the most cost efficient routing. The Company has installed a
Nortel DMS 100 switch in Antwerp and is currently testing the switch with the
intention of bringing the switch on-line by the end of 1998. In addition to
interconnection agreements with KPN Telecom and Belgacom, VersaTel has a
national carrier agreement with Castel N.V., one of the largest regional cable
television companies in The Netherlands, and international carrier agreements
with companies such as Telfort B.V., WorldCom Inc., FaciliCom International Inc.
and Global One Communications B.V.
The Benelux Market Opportunity
VersaTel was founded to capitalize on the opportunities created by the
liberalization of the telecommunications market in the Benelux region. With a
population of approximately 26.2 million, the Benelux market is characterized by
one of the world's highest population densities (approximately 351 persons per
square kilometer) and relatively high income levels (a per capita GDP of
approximately $24,033 in 1997). Located in the heart of Europe in a relatively
small geographic area, the Benelux region is a major transportation and trade
gateway, generating a relatively high level of telecommunications traffic.
According to EITO (European Information Technology Observatory), the total
Benelux telecommunications services market amounted to approximately $14.0
billion in 1997, and would, according to EITO, if ranked as a single country,
have been the fifth largest market in telecommunications services expenditures
in western Europe behind Germany, France, the United Kingdom and Italy. The
Company expects that the importance of telecommunications will continue to
increase as the Benelux market liberalizes, and that total telecommunications
revenues as a percentage of GDP in the Benelux region (2.6% in 1997). At
present, the Benelux market is dominated by the former monopoly
telecommunications carriers, KPN Telecom, Belgacom, and P&T Luxembourg, in,
respectively, The Netherlands, Belgium and Luxembourg. The Company believes that
the Benelux telecommunications market represents a substantial opportunity which
it can capitalize on by capturing a portion of the incremental growth of the
market and by winning market share from the PTTs.
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The following chart illustrates the relative importance of the Benelux
telecommunications market.
CHART
- ----------
(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.
The Company currently operates in The Netherlands and in Belgium and
plans to extend its operations to Luxembourg by mid-1999. The following is a
brief description of each country comprising the Benelux market.
The Netherlands
With a population of 15.6 million and a population density of
approximately 376 persons per square kilometer, The Netherlands is the most
densely populated country in Europe. This high population density will enable
the Company to reach a larger number of potential customers with a less
extensive network and, as a result, lower capital expenditures. Due to its
location in the heart of western Europe and its connections with the rest of
western Europe through major highways, railroads and waterways, distribution and
the export and import of products and services account for a significant portion
of the national economy. The Netherlands per capita GDP was U.S. $23,609 in
1997. Total telecommunications expenditures accounted for approximately 2.8% of
the GDP of The Netherlands in 1997.
According to EITO, the Netherlands market accounted for approximately
5.1% of western Europe's telecommunications services expenditures, making it the
sixth largest market in western Europe. EITO also estimates that the Netherlands
market for telecommunication services has grown at a rate of 12.9%, 11.6% and
9.0% for the years 1995, 1996 and 1997, respectively, and also estimates that
the total size of the Netherlands telecommunications services market in 1997 was
$8.7 billion.
Belgium and Luxembourg
With a population of 10.2 million and a population density of 334
persons per square kilometer, Belgium is a relatively densely populated country.
It is host to a number of international organizations, including the European
Commission, parts of the European Parliament and NATO headquarters. Belgian per
capita GDP was $24,137 in 1997.
With a population of 423,000, Luxembourg is the smallest Member State
of the European Union ("EU"). It is a financial center and host to a large
number of EU institutions. The country has the highest GDP per capita in Europe
($37,132 versus $21,527 for the EU in 1997).
According to EITO, total telecommunications expenditures accounted for
approximately 2.3% of combined Belgian and Luxembourg GDP in 1997, the combined
Belgian and Luxembourg market accounted for approximately 3.1% of western
Europe's telecommunications services expenditures and the combined Belgian and
Luxembourg market for telecommunications services has grown at a rate of 14.0%,
10.6% and 10.3% for the years 1995, 1996 and 1997, respectively. EITO also
estimates that the total size of the combined Belgian and Luxembourg
telecommunications services market in 1997 was $5.26 billion which accounted for
approximately 2.0% of the GDP of the countries.
The VersaTel Network
Network Plan. The Company is building a network infrastructure which is
designed to connect all major business and population centers in the Benelux
region and provide local access in high density business areas as well as
international connectivity to Germany, France and the United Kingdom. VersaTel
believes that the demographics and high concentration of businesses in the
Benelux market will enable the Company to access a substantial portion
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of the business and residential market with relatively low capital expenditures.
The Company plans to establish one of the first integrated overlay networks in
the Benelux region and plans for the Network to connect to most of the PTTs'
points of interconnection, pass within five kilometers of more than 270,000
businesses and cover all major population centers. VersaTel believes that its
Network will enable the Company to better control costs, ensure access to
bandwidth, offer a broader portfolio of services and improve margins.
The VersaTel Network will consist of three integrated elements:
o Benelux Overlay Network. VersaTel is constructing the Benelux
Overlay Network that will connect the major commercial centers
in the Benelux region, including most interconnection points
with the PTTs and other telecommunications service providers.
The Company has been acquiring rights-of- way, ducts and dark
fiber from public authorities, utilities and other
telecommunications companies. The initial phase of the Benelux
Overlay Network will be a fiber-optic ring connecting
Amsterdam and Brussels via The Hague, Rotterdam and Antwerp.
The Netherlands Randstad Stage is expected to be completed in
early 1999. The remainder of the Benelux Overlay Network is
expected to connect an additional 23 major business centers in
the Benelux region. Upon completion, the Company expects that
the Benelux Overlay Network will consist of approximately
2,200 route kilometers of fiber-optic rings.
o Local Access Network. VersaTel intends to establish local
access infrastructure in areas with high business
concentrations along the Benelux Overlay Network. The Local
Access Network will connect business customers directly to the
VersaTel Network. The Local Access Network will consist of
both fiber-optic cable and radio links. The Company intends to
start implementing local access early in 1999, shortly after
the first segment of the Benelux Overlay Network becomes
operational. The Company plans to install up to 1,500 route
kilometers of local access infrastructure.
o International Network. The Company reached an agreement in
October 1998 with Global Crossing whereby the Company will
obtain dark fiber from Amsterdam to London and from the
Belgian- French border to Paris and in return will provide
Global Crossing with cable ready ducts from the Dutch coast
near Amsterdam to the Belgian-French border. VersaTel intends
to build or acquire additional direct fiber-optic links
connecting the Benelux Overlay Network to other
interconnection points in Germany, France and the United
Kingdom. VersaTel expects to complete fiber-optic links to its
initial interconnection points in Dusseldorf, Lille, Paris and
London in 1999.
The figure below sets forth the elements of the Company's Network.
CHART
Network Design and Implementation. VersaTel's Network will utilize
advanced technology to achieve high reliability, low operating costs and rapid
capacity expansion. The key attributes of the network architecture include self-
healing, shared protection rings, diverse routing and separate paths into
redundant network nodes and interconnection points.
The Company's network architecture is designed to allow for substantial
expansion in capacity. The Company will provide for future capacity by
installing additional underground ducts, fiber pairs, building space and
building systems (such as power equipment) when building out the VersaTel
Network, since the marginal construction costs associated with providing future
capacity are low. For example, eight ducts will be installed along most
fiber-optic routes -- one for the initial cable installation, one as back-up and
maintenance space with the remainder for growth and/or trading purposes. Each
duct can hold one or more fiber cables. The initial fiber-optic cable installed
contains 96 fibers. In addition, the Company intends to implement management
systems that will have the capacity, flexibility and design architecture to
support anticipated expansion.
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The Company intends to use advanced network equipment and management
systems to maintain low operating costs. These technologies automate many of the
functions for both network and service management. In addition, the Network will
be controlled from a single network management center, supported by a redundant
backup center. Having a single center controlling the entire Network, including
local access links, will minimize the staff required to manage network and
service operations.
The Network will use SDH transmission equipment, the industry standard
for creating bandwidth from the underlying transmission medium whether
microwave, fiber-optic cables or satellite. SDH equipment automates most of the
functions of defining, routing and connecting service bandwidth and reroutes
these channels in the event failures occur. The Company intends to continue to
use Nortel DMS switching equipment for its voice-grade circuit-switching
network. The Nortel DMS 100 switch is capable of supporting all "intelligent
network" and value-added services common in the industry. The Company intends to
establish data communications and internet service networks utilizing the
Benelux Overlay Network.
The Company is installing one of the first STM-64 (10 Gbps) fiber
networks in the Benelux region (20 Gbps including back-up capacity). This high
capacity is expected to provide a very competitive, low cost per bit
transmitted. In the future, capacity could be expanded to 160 Gbps per fiber
pair with existing WDM technology and even further as this technology is
improved. In addition, VersaTel intends to have the first deployment of Nortel's
Reunion broadband radio system in the Benelux region. This will provide high
speed Internet access as well as low cost customer access to all the services
VersaTel plans to offer.
The Company has tailored the proposed routing of the Benelux Overlay
Network to support its strategy of targeting small- and medium-sized businesses.
The Company expects that the Network will pass more businesses within five
kilometers than the networks of most other carriers. The Company believes that
although this plan will increase route length and construction costs, it will
lower the costs of local access substantially and will, ultimately, minimize the
total cost of serving its target market.
To provide local access, the Network has been designed with physical
access points at intervals averaging every 1.5 kilometers. All aspects of
network planning will integrate local customer access with the Benelux Overlay
Network. The Company believes centralized control of both local access and
overlay infrastructure as well as integrated network and service management
systems will allow the Company to deliver faster service provisioning and fault
repair, better service management and lower cost. As a result, the Company
believes that its network implementation will provide it with an advantage over
most of its competitors.
The Local Access Network will consist of both fiber-optic links and
point-to-multipoint radio connections to customers. VersaTel will decide the
means of local access based primarily on the density of the customers
anticipated in an area and the customers' distance from the Benelux Overlay
Network. Fiber-optic cables will be used to connect to office buildings and
business parks near the Benelux Overlay Network. Radio technology, which is
evolving rapidly as a capital efficient means of providing flexible bandwidth,
will be used to connect to more dispersed customers. VersaTel is working with
Nortel, a world leader in this point-to-multipoint radio technology, to become a
pioneer in implementing this technology in Europe. The Company recently received
a license which allows it to test this point-to- multipoint technology in The
Netherlands. VersaTel intends to begin a trial in January 1999 in which selected
business customers will be connected to the Benelux Overlay Network via wideband
and broadband wireless access. The Company believes it will be able to offer
local access customers a broader range of services, higher service quality,
faster service provisioning and lower costs than its competitors.
The International Network will include links from the Benelux Overlay
Network to the main interconnection points in Germany, France and the United
Kingdom. Interconnection locations will initially be Dusseldorf, Lille, Paris
and London. Later, Aachen, Cologne, Frankfurt and Metz are expected to be added.
The international links will also employ design principles of diverse routing,
as well as redundant and self-healing rings. The Company intends to build the
international links by purchasing or leasing dark fiber, swapping capacity with
alternative carriers and building its own infrastructure.
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VersaTel has entered into a framework agreement with Nortel to supply
all initial transmission equipment and network management systems through a
turn-key project. VersaTel also has a similar arrangement with Detron, a Benelux
contractor for the engineering and construction of the fiber network. In
addition, pursuant to the agreement with Nortel, the Company has negotiated
contracts with Nortel to provide implementation and operations services as well
as vendor financing. See "Risk Factors -- Significant Challenges in Expanding
the Network."
The civil engineering and construction companies that have been engaged
are responsible for obtaining rights-of-way, civil engineering, physical
construction and testing of the Benelux Overlay Network. The Benelux Overlay
Network has utilized rights-of-way of public authorities, pipeline companies,
power and gas companies and others. Under the new telecommunications
legislation, the Company expects to have improved rights-of-way on public lands
in The Netherlands. The Company also expects to have rights-of-way on public
lands in Belgium, after obtaining its license. Separately, the Company may also
negotiate rights-of-way from private landowners. See "Risk Factors --
Significant Challenges in Expanding the Network" and "-- Regulation."
The Company expects to operate the entire Network and to own
substantially all of the network equipment and most fiber-optic links. The
Company plans to utilize fiber-optic cable for most of the Benelux Overlay
Network. To accelerate implementation, VersaTel intends to acquire trench space,
ducts, dark fiber and leased capacity from other infrastructure operators,
particularly on international links. Potential partners are interested in
obtaining dark fiber capacity and, in some cases, will trade fiber capacity on
routes already constructed, as illustrated by the agreement reached with Global
Crossing.
Business Strategy
VersaTel's objective is to become the leading alternative provider of
facilities-based national and international telecommunications services in the
Benelux region. The principal elements of the Company's strategy are:
o Targeted Network Roll-out. The Benelux Overlay Network's
routing is designed to cover the major business and population
centers in the Benelux region and pass as many businesses as
economically feasible. As individual segments of the Benelux
Overlay Network are completed, the Company intends to connect
business customers directly via the Local Access Network. For
example, the first segment of the Benelux Overlay Network,
when completed, will connect the Netherlands Randstad Stage,
Antwerp and Brussels and will pass within five kilometers of
approximately 100,000 businesses. The Company believes that
this targeted network roll-out strategy will allow it to gain
market share rapidly, increase revenues and improve margins.
o Grow Customer Base. The Company intends to leverage the growth
of its facilities-based Network, its product and service
offerings and its sales and marketing capabilities to expand
its customer base. The Company believes it has developed
strong brand recognition in its target market of small- and
medium-sized businesses and intends to capitalize on this by
increasing its direct sales force, introducing new
distribution channels and targeting new customer segments,
including high-usage residential customers.
o Increase Product and Service Offerings. The Company intends to
provide new products and services in order to attract
additional customers, enhance customer loyalty and increase
network utilization by its existing customer base. In addition
to international long distance, VersaTel has also introduced
national long distance, dial-around services and calling cards
to its customers. With the acquisition of CS Net, VersaTel
will be able to offer certain internet and intranet services
to its business customers. The Company also expects to
introduce local access and high speed data services over the
next 18 months.
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o Focus on Superior Customer Service. VersaTel strives to
maintain a competitive advantage over its competitors in its
target markets by providing superior customer service. The
Company believes that its target market of small- and
medium-sized businesses 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. The Company has dedicated customer
service representatives who initiate contact with customers on
a routine basis to ensure satisfaction and market new
products. In addition, the Company provides detailed monthly
billing statements and monthly call management reports which
identify savings to customers and enable them to manage their
telecommunications expenditures more effectively.
o Expand Facilities-Based Wholesale Services. The Company
currently offers international gateway services as well as
domestic termination services for both international and
national carriers. In addition, as VersaTel deploys its
Network, the Company intends to offer additional wholesale
services, including leased lines, conduits, dark fiber and
managed bandwidth in order to increase network utilization and
to offset the cost of network construction. The Company
expects the creation of network capacity in the form of dark
fiber, conduits and rights-of-way will provide a trading
currency to be used with other carriers as a means of
accelerating the deployment of the VersaTel Network.
o Pursue Selective Acquisitions and Strategic Relationships. The
Company plans to continue to acquire other alternative
telecommunications service providers and Internet service
providers in order to accelerate the growth of its customer
base, Network and service portfolio. In addition, the Company
is actively pursuing strategic relationships with alternative
carriers in Germany, France and the United Kingdom in order to
establish interconnection agreements, to partner on
infrastructure projects and to expand its geographic reach.
Products and Services
Current Products and Services Offerings
The Company currently offers the following products and services:
Long Distance. VersaTel offers international and national long distance
telecommunications services to over 6,000 customers in The Netherlands. The
Company began offering switched-based international long distance services to
business customers in 1995, to telecommunication services providers in 1996 and
to residential customers in December 1997. Historically, the Company has focused
primarily on the sale of international voice and data services to small- and
medium-sized businesses; however, with the liberalization of the Netherlands
telecommunications market, the Company has expanded its service offerings to
include national long distance services. International and national long
distance services are the Company's core products as it expands in other
markets. The Company began offering international services in Belgium in the
third quarter of 1998 and plans to begin offering national long distance
services.
Calling Cards. The Company currently offers post-paid calling cards and
plans, in the near future, to offer pre-paid calling cards. The Company's
post-paid calling card is provided to the Company's business customers and high
international volume residential customers. The post-paid calling card provides
international and national call access in all countries where available through
one toll-free number worldwide. Call charges are itemized and appear on the call
management report. The Company expects to offer pre-paid calling cards
throughout the Benelux region by the third quarter of 1999.
Wholesale Switched Voice Services. In addition to its retail switched
voice and data services, the Company offers wholesale switched services to other
telecommunications service providers. These services include international
gateway and national termination services in The Netherlands. The increase in
traffic volume generated by offering
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these services allows the Company to obtain greater volume discounts. As the
Company completes its Network, it will be able to offer wholesale services over
its own Network throughout the Benelux region, Germany, France and the United
Kingdom, thus increasing network utilization and improving gross margins.
Future Products and Service Offerings
VersaTel continually evaluates potential product and service offerings
as well as competitors' offerings in order to retain and expand its customer
base and to increase revenue per customer. The Company places a high priority on
the development of new products and services and expects to introduce the
following:
ISDN Primary Rate services. The Company plans to offer ISDN primary
rate services to its customers in the Benelux region in the first quarter of
1999. This service will primarily target the business market with digital PABX's
and high volume outgoing and incoming traffic. Currently, ISDN is the fastest
growing service for business telephony in the West-European market.
Virtual POP dial-in services. The Company plans to offer virtual
Point-of-Presence dial-in services for independent Internet service providers
and for business customers by the second quarter of 1999. This service will be
positioned as cost efficient dial-in capability for Internet service providers
and for the business market seeking effective remote access capabilities for
their employees and customers.
Enhanced Switched Voice Services. The Company is developing advanced
call service offerings that are expected to appeal to its core customer segment,
including voice mail, VPN, voice response, personal numbering and automated
secretary. VersaTel's present switched voice system is capable of supporting
most of these enhanced services. The remaining equipment required to offer these
enhanced services is expected to be installed in 1999. These services are
expected to aid in customer retention and increase network utilization and
average revenue per customer.
Managed Bandwidth Services. With the completion of the initial links in
the Benelux Overlay Network and its International Network, the Company will be
able to participate in the market for selling bandwidth capacity. The Company is
planning service offerings beginning with E1 channels (2 Mbps) up to STM-1
channels (155 Mbps). The Company expects to provide these services primarily to
its wholesale customers, particularly at locations where the Company is the only
alternative to KPN Telecom.
Data Communication Services. VersaTel plans to offer high-speed data
communications services to its small- and medium-sized business customers
beginning in the third quarter of 1999. The Company believes that there is a
growing market for high-speed data communications services, such as frame relay,
Ethernet, and ATM services in the small- and medium-sized business market. Data
communications services and the specific protocols are evolving rapidly and the
Company is currently developing its portfolio of data communications services
and the roll-out sequence.
Internet Access Services. VersaTel plans to acquire other Internet
service providers, to accelerate the introduction of Internet services to its
target market. Demand for Internet services is growing rapidly in the Benelux
region, as small- and medium-sized businesses are starting to use these services
for e-mail, data retrieval, information services and electronic commercial
transactions. The Company expects that Internet services will generate an
increasingly large share of telecommunications industry revenue as a result of
both the introduction of new applications and substitution for various existing
services.
Sales and Marketing
VersaTel seeks to capitalize on its position as a leading alternative
telecommunications services provider that offers comprehensive customer service
and low-cost communications services in The Netherlands with a focus on
small-and medium-sized businesses and residential customers. VersaTel believes
that it has created a prominent brand name in its target market that it expects
to successfully apply throughout the Benelux region. The Company brands
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all of its products and services offerings with "Versa," such as VersaBizz
(post-paid calling cards), VersaCall (voice services), VersaFax (facsimile
services) and VersaData (data communications). VersaTel markets its products and
services through several marketing channels, including database marketing,
targeted telemarketing, brand and promotional advertising, direct mail and the
Company's direct sales force.
Customers
The Company markets its services on a retail basis to its business and
residential customers and on a wholesale basis to other carriers.
Small- and Medium-sized Businesses. The Company's target customers are
small- and medium-sized businesses (under 100 employees). The Company focuses
particularly on those business and industry segments which have historically
generated significant volumes of national and international traffic, such as
shipping, transport, import and export and agri/horti culture. The Company
believes 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.
Residential Customers. VersaTel has begun targeting residential
customers. The Company's initial focus is to market its services to employees of
its business customers and residential customers in certain niche markets
characterized by high volume calling patterns. In addition, the Company markets
its services to residential customers in The Netherlands via marketing
communications methods such as direct mail, multi-level marketing and
telemarketing. The Company believes that this approach is a cost-effective way
of targeting the residential market segment.
Wholesale Customers. The Company markets its wholesale services to
international and domestic carriers. The wholesale sales effort is supported by
senior management's existing relationships in the industry. The Company intends
to establish a carrier sales force with account managers focusing on specific
carrier customers.
Sales and Marketing Staff
The Company's sales force is composed of direct sales personnel,
telemarketers and independent sales agents. Marketing to small- and medium-sized
businesses is currently conducted by over 26 direct sales personnel in Amsterdam
and 13 in Antwerp. In the future, the Company expects to significantly expand
its direct sales force and open additional sales offices in Rotterdam and
Brussels. The Company's sales personnel make direct calls to prospective and
existing business customers, analyze business customers' usage and service
needs, and demonstrate how the Company's service package will improve a
customer's communications capabilities and costs. Each member of the Company's
sales force is required to complete the Company's intensive training program. In
addition, the Company has a telemarketing group that screens prospective
customers and verifies call volumes.
VersaTel recently established a sales agents program under which sales
agents receive commissions, but are not employed by the Company. Agents are
provided with an advertising and sales promotion budget based on the volume of
their sales. The Company currently has over 80 such sales agents and intends to
continue to increase this program.
Customer Service
VersaTel strives to maintain a competitive advantage over its
competitors in its target markets by providing superior customer service. The
Company believes that providing a high level of customer service is a key
element to establishing customer loyalty and attracting new customers. The
Company has dedicated customer service representatives who initiate contact with
its customers on a routine basis to ensure customer satisfaction and market new
products. In addition, the Company provides detailed monthly billing statements
and monthly call management
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reports which identify savings to customers and enable them to manage their
telecommunications expenditures more effectively.
VersaTel also believes that technology plays an important role in
customer satisfaction. Advanced technological equipment is crucial to enabling
the Company to provide a high quality of service to its customers. The Company
has installed sophisticated status-monitoring and diagnostic equipment on its
NOC and plans to install similar units on its SDH network. This equipment allows
the Company to identify and remedy network problems before they are detected by
customers. By providing superior customer service and through the effective use
of technology, VersaTel expects to maintain a competitive advantage in its
target markets.
Billing and Information Systems
The Company must process millions of call detail records quickly and
accurately in order to produce customer bills in a timely and efficient manner.
Call detail records are collected, backed-up, processed and verified by VersaTel
on a daily basis. This data is then transmitted electronically to a printing
company for printing and then returned to VersaTel for verification and
distribution. The Company is currently reviewing its billing systems in
anticipation of continued growth and anticipates replacing its current billing
system by the second quarter of 1999. The Company does not expect any material
disruption in its billing or information systems as a result of the Year 2000.
In addition, the Company has planned and budgeted replacements and enhancements
to its information systems to handle growth in the size and complexity of the
Company, its customer base and its product portfolio in areas such as work flow,
fixed asset management, sales support and service provisioning. See "Risk
Factors -- Managing Growth."
Competition
Until recently, the telecommunications market in each EU Member State
has been dominated by the national PTT. Since the implementation of a series of
EC directives beginning in 1990, the EU Member States have started to liberalize
their respective telecommunications markets, thus 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, the Company competes or
will compete primarily with the national PTTs. As the former monopolist
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 those of the Company. In addition,
the national PTTs own and operate virtually all of the infrastructure which the
Company must currently access to provide its services. The Company estimates
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 EnerTel, Telfort B.V., a company
formed by British Telecom and Nederlandse Spoorwegen N.V., the Netherlands
railroad company, as well as Global One Communications, Worldcom Inc. and Esprit
Telecom plc compete with KPN Telecom in The Netherlands for contracts with large
multinational companies. Unisource N.V., Concert, France Telecom, AT&T,
Worldcom, Esprit Telecom plc. and Telenet N.V. compete with Belgacom in Belgium
for contracts with large multinational companies. The Company does not currently
serve this segment of the business market, as the Company believes that it does
not presently have a competitive advantage to successfully target large
corporate customers.
In VersaTel's primary target market of small- and medium-sized
businesses, competitors include RSL Communications Ltd. and Viatel, Inc. in both
The Netherlands and in Belgium. In the residential customer market, the Company
competes with companies such as EnerTel N.V., Tele2 A.B., Telegroup, Inc.,
Viatel, Inc. and callback
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operators in The Netherlands. In Belgium, the residential customer market has
only recently been aggressively targeted by service providers such as Mobistar,
Telenet N.V. and Telegroup, Inc.
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 the Company's product and
service offerings.
The current regulatory framework in the EU and in the countries in
which the Company provides its services or intends to provide its 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 the
Company, that national or international regulators or third parties will not
raise material issues with regard to the Company's compliance or noncompliance
with applicable regulations or that any changes in applicable laws or
regulations will not have a material adverse effect on the Company. See "Risk
Factors -- Risks Associated with Changes in Regulatory Environment."
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 two directives that established these principles
in EU law: the Open Network Provision ("ONP") Framework Directive and the EC
Services Directive. These two 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 ("CUGs"). As a result, many new entrants entered the market, labeling
their services as CUG 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. This Directive has recently been amended. The purpose
of the revised 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 EU issued the Full Competition Directive, which requires
EC 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 the Company to lease
transmission capacity from companies other than the PTTs. The Full Competition
Directive also established January 1, 1998 as the date by which all EU Member
States (with the exception of Spain, Greece, Portugal, Ireland and Luxembourg,
each of which may delay implementation for various periods) must establish a
legal framework which removes all remaining restrictions on the provision of
telecommunications services, including "voice telephony." 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. See "Risk Factors --
Risks Associated with Changes in Regulatory Environment."
In addition to the Full Competition Directive, the EU 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 on a call-by-call basis select the long
distance or international carrier of their choice) as of January 1, 1998, and
carrier pre-selection (ensuring end-users can prior to the time calls are made
select the long distance or international carrier of their choice) 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.
An overview of the regulatory framework in the individual markets where
the Company operates or intends 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. VersaTel requires licenses, authorizations or registrations in
all countries in which it operates to provide its services. Licenses,
authorizations and/or registrations have been obtained in The Netherlands and
Belgium. The Company intends to apply for such licenses and registrations in
Luxembourg in the future. The Company has received an International Facilities
License (IFL) in the United Kingdom. Although the Company expects that these
licenses and registrations will be granted, there can be no assurance that
VersaTel will be able to obtain such licenses, authorizations or registrations
or that VersaTel's operations will not become subject to other regulatory
authorization or registration requirements in the countries in which it operates
or plans 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 existed as a result of the implementation of a series of EC directives. The
new
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telecommunications act contains provisions that give registered
telecommunication services providers rights-of-way, subject to certain
conditions, thereby facilitating the construction of the Network. In addition,
The Netherlands may require KPN Telecom to offer unbundled access to local
customer access lines at the Main Distributing Frame (MDF) in KPN Telecom's
central exchange offices. However, the conditions applicable to this type of
access are not clear at present. Further regulation on this issue is expected.
Another important development is the introduction of carrier pre-selection or
equal access as of January 1, 2000.
As part of the liberalization of the Netherlands telecommunications
market, a new independent supervisory authority, the Onafhankelijke Post en
Telecommunicatie Autoriteit ("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. Although no assurances can be given, the initial rulings
of OPTA have given the Company confidence that new providers of
telecommunications services will be granted fair and equal access to the market
in The Netherlands.
In August 1997, VersaTel obtained one of the first Netherlands
authorizations to operate as a telecommunications service provider of public
voice telephony (other than KPN Telecom). In September 1997, VersaTel obtained
an infrastructure license with rights-of-way for the construction and operation
of telecommunications facilities in a limited geographic area. In December 1998,
the Company obtained the first authorizations under the new telecommunications
act to operate as a public telecommunications services provider and network
operator.
Since its start in October 1995, VersaTel has adopted a proactive
regulatory strategy. In October 1996, VersaTel successfully challenged KPN
Telecom's use of its invoice records to offer VersaTel's 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 PTT Telecom to stop using information regarding the calling
behavior of customers for competitive activities, such as approaching VersaTel's
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 European Commission had delegated
this matter, has recently ruled that these discount plans indeed violate
competition law principles and has required KPN Telecom to change them.
The Company's legal and regulatory strategy has enabled VersaTel to
become 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 in January 2000 will allow
customers the option to pre-select a carrier other than KPN Telecom for all
their international and national long distance calls. The Company continues to
seek to obtain lower interconnection rates from KPN Telecom. In July 1998, OPTA
ruled that origination and termination charges be reduced by 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 the Company.
See "Risk Factors -- Dependence on our Competitors."
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 will have to lower its end-user tariffs for its national
long distance services by approxiamtely 10%. It is expected that OPTA's ruling
will have some negative effects on competition in the market in The Netherlands.
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
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obtaining a license. At the same time a new regulatory entity was introduced,
the 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
administration 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. It is expected that the
definitive regulatory framework will be in place within the next few months.
VersaTel has obtained licenses to operate facilities and provide
telecommunications services in Belgium. For marketing purposes VersaTel has
reserved the same carrier select code "1611" as it currently uses in The
Netherlands. In August 1998, VersaTel has obtained interconnection with Belgacom
for carrier selection and call termination services.
Luxembourg
The Luxembourg telecommunications market has been liberalized since
July 1, 1998, six 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 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.
Property
The Company's principal executive offices are located at Paalbergweg
36, Amsterdam-Zuidoost, The Netherlands. The office space currently leased by
the Company at this location will expire in May 2001.
Employees
As of September 30, 1998, the Company had 119 full-time employees and
30 full-time consultants. In addition, the Company employs approximately 32
temporary employees at any given time. None of the Company's employees is
represented by a labor union or covered by a collective bargaining agreement,
and the Company has never experienced a work stoppage. The Company considers its
employee relations to be good.
Intellectual Property
The Company has registered the trademark (woordmerk) "VersaTel" with
the Benelux trademark bureau (Benelux Merkenbureau). Applications for such
registrations are pending in the other EU Member States.
Legal Proceedings
The Company has 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. The Company also makes routine filings with
the regulatory agencies and governmental authorities in the countries in which
the Company operates or intends to operate. In addition, Cromwilld, one of the
Shareholders, has objected to the Recapitalization, the First Offering and the
Second Offering and has threatened to challenge in court certain of the
Company's actions in connection with the Recapitalization, the First Offering
and the Second Offering.
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The Company is from time to time involved in routine litigation in the
ordinary course of business. The Company believes that no currently pending
litigation to which it is a party will have a material adverse effect on the
Company's financial position or results of operations.
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MANAGEMENT
The members of the Supervisory Board and the Management Board of the
Company and certain other significant employees of the Company and their
respective ages and positions with the Company are set forth below.
Management Board
R. Gary Mesch is the sole managing director (statutair directeur) of
the Company.
Supervisory Board
Name Age Position
- -------------------------- ---- --------
Leopold W.A.M. van Doorne............... 39 Chairman
Denis O'Brien........................... 40 Member
Hans Wackwitz........................... 43 Member
James Meadows........................... 46 Member
Executive Officers
Name Age Position
- -------------------------- ---- -----------------
R. Gary Mesch........................... 45 Managing Director
W. Greg Mesch........................... 38 Chief Operations Officer
Raj Raithatha........................... 36 Chief Financial Officer
Larry Hendrickson....................... 56 Chief Technology Officer
Marc A.J.M. van der Heijden............. 39 Legal Counsel
Maurice J.J.J.M. Bergmans............... 33 Manager Belgium Operations
John J.L. de Rooij...................... 40 Sales Manager
Leo Y.J. van der Veen................... 42 Finance Manager
Andy Cooper............................. 36 Network Manager(1)
L. Michiel van Dis...................... 35 Manager Customer Care
- ----------
(1) Mr. Cooper serves in this position as a consultant to the Company.
Supervisory Board
Under Netherlands law and the Articles of Association of the Company,
the management of the Company 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 the Company and its business. In fulfilling
their duties, the members of the Supervisory Board are required to act in the
best interests of the Company 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 December 1996 Shareholders Agreement (the "Shareholders'
Agreement") specifies that the Supervisory Board shall consist of four members.
See "Certain Relationships and Related Transactions -- Shareholders' Agreement."
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 Shareholders' Agreement sets out the specific rules
for voting. The Supervisory Board meets each time this is deemed necessary by
one of its members. Members of the Supervisory Board shall periodically retire
in accordance with a roster drawn up by the general meeting of shareholders.
Every retiring Supervisory Director may be reappointed, provided that such
Supervisory Director has not attained the age of 72. A member of the
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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 all times be suspended or
removed by the general meeting of shareholders, at any time. The members of the
Supervisory Board may receive such compensation as may be determined by the
general meeting of shareholders.
Management Board
The management of the Company 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 the Company 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 appoint 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 the Company. 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 the Company. 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 managed the commercial operations of NovaNet, a
Denver-based regional provider of satellite-based long distance 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 Electric. Mr. Gary Mesch holds a B.S. in
Electrical Engineering from the University of Colorado and an M.B.A. from Denver
University.
Leopold W.A.M. van Doorne has served as Chairman of the Supervisory
Board of the Company on behalf of 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
100 companies operating in the fields of insurance, banking and investments.
Worldwide, Fortis has over 35,000 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.
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Denis O'Brien, Jr. has served as a member of the Supervisory Board of
the Company on behalf of 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. In addition to his positions with Esat, Mr. O'Brien
has been the Chairman of the Board of Esat Digifone since 1996, and the Chairman
of the Board and Chief Executive Officer of Esat Telecom, which he founded in
1991. Prior to that time, he was employed by Guinness Peat Aviation ("GPA
Group"), from 1983 to 1985. Mr. O'Brien holds an M.B.A. from Boston College.
Hans Wackwitz has served as a member of the Supervisory Board of the
Company on behalf of Paribas since August 1998. Mr. Wackwitz is a member of the
management board of COBEPA S.A. and Paribas N.V. From 1991 to 1993 he was
employed by Paribas Capital Markets and responsible for the Benelux region
within the investment banking group. From 1986 to 1991 he served at various
management positions at Bankers Trust Company, including vice president
corporate finance, vice president short term finance and vice president money
market. 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 the
Company on behalf of 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 the President of
America's Carriers Telecommunications Association (ACTA) and is a member of the
Board of Directors of Lone Star 2000, a public policy foundation. 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 the Company's inception in 1995 until August 1998, he served as
a member of the Supervisory Board of the Company on behalf of Telecom Founders
and has performed operations consulting roles for the Company. From 1993 to
1997, Mr. Greg Mesch was a consultant to Esat Telecom in Ireland serving in the
role of Chief Operations Officer. From 1986 to 1992, he served as Chief
Executive Officer of Nova-Net. Nova-Net was a company he founded with his
brother Mr. Gary Mesch. Mr. Mesch has been a Director of In o Touch Associates
Ltd., a U.K.-based telecommunications consulting firm, since 1997. Mr. Mesch has
an M.B.A. from Denver University.
Raj Raithatha has served as Chief Financial Officer of the Company
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.
Larry Hendrickson has served as Chief Technology Officer of the Company
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 Legal Counsel to the Company
since June 1998. Mr. van der Heijden served as regulatory counsel to the Company
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 European Commission, 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
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Nederlandse Investerings Bank. He worked as an expert for KPMG Peat Marwick on
bidding processes for mobile telephony and sale of cable companies.
Maurice J.J.J.M. Bergmans has served as Manager Belgium Operations of
the Company since April 1998. He joined the Company in 1997 and he served as
business development manager of the Company since November 1997. From 1989 to
1996 he worked at Koning en Hartman B.V., a business unit of Getronics N.V., a
publicly traded company in The Netherlands. At Koning en Hartman B.V. he held
several positions in product marketing and management in the area of telephony
and interactive voice response activities and services. Mr. Bergmans holds a
degree in computer science.
John J.L. de Rooij has served as Sales Manager of the Company 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 region. The last three 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.
Leo Y.J. van der Veen has served as Finance Manager of the Company
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.
Andy Cooper has served as Network Manager of the Company since June
1997 as an independent consultant. From 1985 to 1997, he worked at Mercury
Communications Ltd. in the United Kingdom. From 1993 to 1994, he was seconded to
Cable and Wireless Plc., Mercury's parent. His responsibilities included network
development, transmission systems maintenance, switch operations, VPN, ISDN,
Centrex and intelligent networking.
L. Michiel van Dis has served as Manager Customer Care of the Company
since May 1997. From 1991 to 1992 he worked at KLM (Royal Dutch Airlines). In
1992, he joined Independent Mail B.V. as operations manager and subsequently
became general manager of this company. Independent Mail B.V., a re-mail house
for DHL, was taken over by KPN N.V., the holding company of KPN Telecom and the
Dutch Postal Service, in 1996. From 1996 to 1997 he worked as an independent
consultant, primarily for Independent Mail B.V. Mr. van Dis holds a degree in
business administration.
Executive Compensation
The total aggregate compensation for the Supervisory Board of the
Company as a group for 1997 was NLG 37,500. The total aggregate compensation
(including amounts paid pursuant to management and consulting agreements) of all
executive officers (including the Managing Director) of the Company as a group
for 1997 was NLG 2,108,619. See "Certain Relationships and Related Transactions
- -- Additional Agreements."
During 1997, VersaTel did not accrue any amounts to provide pension,
retirement and similar benefits to the executive officers of the Company or to
any of the Managing or Supervisory Directors of the Company.
Stock Option Plans
1997 Stock Option Plan
In December 1996, VersaTel's shareholders approved the 1997 Stock
Option Plan (the "1997 Plan"). The 1997 Plan provides for the grant of options
to certain key employees of the Company to purchase depositary receipts issued
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for Ordinary Shares of the Company. Under the 1997 Plan, no options have been
granted with an expiration date of more than five 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 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.
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, 199,000
options to purchase 199,000 depositary receipts had been granted under the 1997
Plan and the Company does not intend to grant any more options under the 1997
Plan.
1998 Stock Option Plan
In March 1998, VersaTel's shareholders approved the 1998 Stock Option
Plan (the "1998 Plan"). The 1998 Plan allows the Company to grant 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
five 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 the date of this Prospectus, 2,500,000 options to purchase
2,500,000 depositary receipts have been granted under the 1998 Plan and the
Company does not intend to grant any more options under the 1998 Plan.
The depositary receipts issued under both the 1997 Plan and the 1998
Plan will be administered by the Stichting Administratiekantoor VersaTel.
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SECURITY OWNERSHIP OF PRINCIPAL
SHAREHOLDERS AND MANAGEMENT
The following table sets forth certain information regarding the
beneficial ownership of the Ordinary Shares of the Company, as of September 30,
1998, by each beneficial owner of 5.0% or more of the Ordinary Shares and by
executive officers and directors of the Company as a group.
Number
of shares Percent(1)
--------- ----------
Telecom Founders B.V. (2)............................... 3,375,292 17.4%
NeSBIC Venture Fund C.V................................. 7,581,448 39.0
Cromwilld Limited (3)................................... 3,653,024 18.8
Paribas Deelnemingen N.V................................ 3,641,170 18.7
Nederlandse Participatie Maatschappij N.V............... 1,176,471 6.1
----------- ------
Total................................................. 19,427,405 100.0%
All directors and executive officers as a group (4)..... 7,028,316 36.2
- ----------
(1) Does not give effect to dilution from the exercise of 150,000 outstanding
warrants covering 1,000,050 Ordinary Shares issued in the Second Offering
and 225,000 outstanding warrants covering 1,500,000 Ordinary Shares issued
in the First Offering or of options granted to employees covering 2,699,000
Ordinary Shares. See "Management -- Stock Option Plans."
(2) 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 Shareholders' Agreement requires Mr. Mesch to own more than
50.0% of the shares of Telecom Founders B.V. Certain of the officers and
directors of the Company have beneficial interests in Telecom Founders B.V.
(3) Cromwilld Limited, an Isle of Man company, is controlled by Denis O'Brien,
a member of the Supervisory Board of the Company. The Shareholders'
Agreement requires Mr. O'Brien to own more than 90.0% of the shares of
Cromwilld Limited.
(4) Reflects the 3,375,292 shares held by Telecom Founders B.V., beneficial
ownership of which may be attributed to Mr. Mesch, and 3,653,024 shares
held by Cromwilld Limited, beneficial ownership of which may be attributed
to Mr. O'Brien.
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Shareholders' Agreement
In December 1996, Telecom Founders, NeSBIC and Cromwilld entered into a
participation and shareholders' agreement (the "Shareholders' Agreement"), which
contains, among other things, provisions restricting the transfer of shares of
the Company, provisions relating to appointment of members of the Management
Board and the Supervisory Board and provisions with respect to the funding of
the Company. The Shareholders' Agreement superseded a prior shareholders'
agreement among VersaTel's initial shareholders. Pursuant to the Shareholders'
Agreement, the Company issued new shares to the shareholders and certain
shareholders provided subordinated convertible loans to the Company. These
subordinated convertible loans have been converted into equity as part of the
Recapitalization. As part of the Recapitalization, Paribas and NPM have agreed
to be bound by the terms of the Shareholders' Agreement pursuant to deeds of
accession and acknowledgment.
The Shareholders' Agreement contains provisions restricting the
transfer of shares of the Company (such provisions also provided for an
amendment of the Articles of Association of the Company containing similar
transfer restrictions). If a shareholder wishes to transfer its shares, it must
first offer the other shareholders the right to purchase such shares. See
"Description of Capital Stock -- Restriction on Transfer of 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.
The Shareholders' Agreement provides that the Supervisory Board of the
Company shall be composed of four members. NeSBIC and Cromwilld each have the
right to nominate one member of the Supervisory Board, whereas Telecom Founders
has the right to nominate two members of the Supervisory Board, one of which
will have to be reasonably acceptable to both NeSBIC and Cromwilld. As part of
the Recapitalization and pursuant to an agreement between Paribas and Telecom
Founders, Telecom Founders has agreed with Paribas to nominate the person to be
designated from time to time by Paribas as one of its members of the Supervisory
Board. The member of the Supervisory Board appointed upon nomination of NeSBIC
shall have a deciding vote in case of a tie in votes. Pursuant to the
Shareholders' Agreement, the Management Board requires the prior approval of the
Supervisory Board for certain transactions. See "Management -- Management
Board."
The Shareholders' Agreement will terminate upon any of the following
events: (i) by written agreement of all the parties thereto or (ii) upon the
joint sale and transfer by the parties to the Shareholders' Agreement of the
entire share capital of the Company or (iii) the listing of the entire share
capital of the Company on any securities market.
Recapitalization
In February 1998, as part of the Recapitalization, two of the three
shareholders of the Company, Telecom Founders and NeSBIC, a subsidiary of
Fortis, invested an additional NLG 7.2 million in equity capital in the Company.
In addition, NeSBIC and Cromwilld, the third shareholder of the Company,
converted their subordinated convertible Notes totaling NLG 3.6 million into
Ordinary Shares of the Company; and NeSBIC converted its NLG 4.5 million bridge
loan into Ordinary Shares of the Company. The third component of the
Recapitalization was comprised of a new equity investment by Paribas of NLG 12.8
million. Lastly, the Company received from Telecom Founders, NeSBIC, Paribas and
NPM an additional NLG 15.0 million in equity capital immediately prior to the
closing of the First Offering. As a result of the Recapitalization, the invested
equity in the Company has increased from NLG 7.0 million to NLG 50.1 million.
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Additional Agreements
Mr. Greg Mesch is also a director of In o 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.
Related Transactions
Paribas, an affiliate of Paribas Corporation, one of the Initial
Purchasers in the Second Offering, holds 18.7% of the Ordinary Shares of the
Company, and Mr. Hans Wackwitz has served on the Supervisory Board of the
Company on behalf of Paribas since August 1998. See "Management" and "Securities
Ownership of Principal Shareholders and Management."
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DESCRIPTION OF CERTAIN INDEBTEDNESS
In the First Offering in May 1998, the Company issued units consisting
of $225,000,000 principal amount of 13 1/4% Senior Notes due 2008 and warrants
to purchase 1,500,000 Class B Shares of the Company. The units were sold to
Lehman Brothers, Inc., as initial purchaser, who subsequently sold them to
certain institutional investors in reliance on certain exemptions under the
Securities Act. On December 4, 1998, the Company completed a public exchange
offer pursuant to which all the notes issued in the First Offering (the "First
Notes") were exchanged for notes registered under the Securities Act. As a
result of the consummation of that exchange offer, the Company is 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. The First Notes are redeemable at the option of the Company,
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 the Company, 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 the Company 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 certain changes affecting
Netherlands taxes or as a result of any change in the application of Netherlands
tax laws or regulations that require the Company to pay additional amounts that
the Company determines cannot be avoided by taking reasonable steps. The First
Notes rank equal to the Notes in right of payment and all other senior
indebtedness of the Company and will be senior in right of payment to any future
subordinated indebtedness of the Company.
The indenture used in the First Offering (the "First Offering
Indenture") contains covenants applicable to the Company and its subsidiaries,
including limitations on or prohibitions of certain 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 First Offering Indenture also requires the Company to commence and
consummate an offer to purchase the First Notes upon certain events constituting
or which may constitute a change of control of the Company. In addition, under
certain circumstances, the Company is required by the First Offering Indenture
to offer to purchase the First Notes with the proceeds of certain Asset Sales
(as defined in the First Offering Indenture). The First Offering Indenture
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 First
Offering Indenture are substantially identical to those applicable to the Notes
(except that the Notes include an optional redemption provision with the net
proceeds of certain equity offerings by the Company), which are more fully
summarized below under "Description of the Notes--Certain Covenants,"
"--Consolidation, Merger and Sale of Assets," "--Repurchase of Notes upon a
Change of Control," "--Events of Default," "--Withholding Taxes" and "--Certain
Definitions." The First Offering Indenture is subject to, and governed by, the
Trust Indenture Act of 1939, as amended (the "Trust Indenture Act").
The summary of material terms and conditions of the First Notes and the
First Offering Indenture set forth or referred to in the preceding paragraphs
does not purport to be complete and is subject to, and is qualified in its
entirety by reference to, all of the provisions of the First Offering Indenture,
including the definition of certain terms therein and those terms made a part
thereof by the Trust Indenture Act.
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DESCRIPTION OF THE EXCHANGE NOTES
General
The Outstanding Notes were issued under an Indenture (the "Indenture")
dated December 3, 1998 between the Company and the United States Trust Company
of New York, as trustee (the "Trustee"). The Exchange Notes will be issued under
the Indenture, which will be qualified under the United States Trust Indenture
Act of 1939, as amended (the "Trust Indenture Act"), upon the effectiveness of
the Registration Statement of which this Prospectus is a part. The form and
terms of the Exchange Notes are the same in all material respects as the form
and terms of the Outstanding Notes, except that the Exchange Notes will have
been registered under the Securities Act and, therefore, will not bear legends
restricting transfer thereof (other than those relating to the offer and sale of
Exchange Notes in The Netherlands and the United Kingdom). Upon the consummation
of the Exchange Offer, Holders of the Outstanding Notes will not be entitled to
registration rights under, or the contingent increase in interest rate provided
pursuant to, the Registration Rights Agreement. The Exchange Notes will evidence
the same debt as the Outstanding Notes and will be treated as a single class
under the Indenture with any Outstanding Notes that remain outstanding. The
Outstanding Notes and Exchange Notes are herein collectively referred to as the
"Notes."
The following summary of certain provisions of the Indenture and the
Escrow Agreement does not purport to be complete and is subject to, and is
qualified in its entirety by reference to, the Trust Indenture Act, and to all
of the provisions of the Indenture and the Escrow Agreement, including the
definitions of certain terms therein and those terms made a part of the
Indenture by reference to the Trust Indenture Act. Copies of the Indenture, the
Escrow Agreement and the Registration Rights Agreement have been filed with the
Commission as an Exhibit to the Registration Statement of which this Prospectus
is a part. The definitions of certain terms used in the following summary are
set forth under "-- Certain Definitions."
Application will be made to list the Exchange Notes on the Luxembourg
Stock Exchange. If and so long as the Exchange Notes are listed on the
Luxembourg Stock Exchange, the Company 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 (except to the extent described
under "-- Escrow Account" below) 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 equal
in right of payment with all existing and future senior indebtedness of the
Company, including the First Notes and the Outstanding Notes.
The Company transferred in December 1998 substantially all of its
assets and liabilities (other than the Notes and the First Notes) to certain of
its Restricted Subsidiaries. After such transfer, the Company became a holding
company with limited assets and will operate its business through its Restricted
Subsidiaries. Any right of the Company and its creditors, including Holders of
the Notes, to participate in the assets of any of the Company'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
the Company, including Holders of the Notes, will be effectively subordinated to
all existing and future third-party indebtedness and liabilities, including
trade payables, of the Company's Subsidiaries. At September 30, 1998, after
giving pro forma effect to the transfer of substantially all of the Company's
assets and liabilities (other than the Notes and the First Notes) to certain of
its Restricted Subsidiaries as described above, the Company's Subsidiaries would
have had total liabilities of $24.9 million reflected on the Company's balance
sheet. The Company and its Subsidiaries may incur other debt in the future,
including secured debt.
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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 Notes will be limited to $150,000,000 in aggregate principal amount
and will mature on May 15, 2008. The redemption price at maturity will be 100%.
The Notes will bear interest at the rate of 13.25% per annum, payable
semi-annually in arrears on each May 15 and November 15 (each an "Interest
Payment Date"), commencing on May 15, 1999 to the Person in whose name the Note
(or any predecessor Note) is registered at the close of business on the
preceding May 1 or November 1, as the case may be. Interest will be computed on
the basis of a 360-day year of twelve 30-day months. Principal of, premium, if
any, interest, Additional Amounts, if any, and Liquidated Damages, if any, on
the Notes will be payable at the office or agency of the Company maintained for
such purpose within the City and State of New York or, at the option of the
Company, payment of interest, Additional Amounts (as defined on page 87), if
any, and Liquidated Damages (as defined in the Registration Rights Agreement),
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 the Company, the Company's office or agency in New York
will be the office of the Trustee maintained for such purpose. The Notes are
currently represented by two global Notes in registered, global form without
interest coupons. The global Notes shall be exchanged by the Company (with
authentication by the Trustee) for one or more Definitive Notes (the "Definitive
Notes"), 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 or (b) at any time at the option of the Company. If an Event of
Default (as defined on page 83) occurs and is continuing, the Company shall, at
the request of the Holder thereof, exchange all or part of a global note for one
or more Definitive Notes (with authentication by the Trustee); provided,
however, that the principal amount of such Definitive Notes and such global note
after such exchange shall be $1,000 or integral multiples thereof. The Exchange
Notes will be issued in minimum denominations of $1,000 (in principal amount)
and integral multiples thereof. 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, interest, Additional Amounts, if any, and Liquidated Damages,
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 the
Company to mail payments in accordance with the terms of the Indenture. In case
of transfer of part only of a Definitive Exchange Note, the 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.
Escrow Account
Concurrently with the consummation of the Second Offering, pursuant to
the Escrow Agreement, the Company purchased, pledged and transferred to the
Escrow Agent, for the benefit of the Holders of the Notes, U.S. Government
Securities in such amounts as will be sufficient upon scheduled interest
payments of such securities to provide for the payment in full of the first five
scheduled interest payments on the Notes (excluding, in each case, any
Additional Amounts and any Liquidated Damages). The Company used approximately
$46.5 million of the net proceeds of the Second Offering to acquire the Pledged
Securities. The Pledged Securities were pledged to the Escrow Agent for the
benefit of the Holders of the Notes and deposited in the Escrow Account held by
the Escrow Agent for the benefit of the Trustee and the Holders of the Notes in
accordance with the Escrow Agreement. The Escrow Agreement provides, among other
things, that funds may be disbursed from the Escrow Account for interest
payments on the Notes. The Escrow Agent has been instructed to cause any
uninvested funds in the Escrow Account to be invested, pending disbursement, in
cash equivalents (as provided in the Escrow Agreement). Interest earned on the
Pledged Securities and any such cash equivalents will be added to the related
Escrow Account.
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Under the Escrow Agreement, the Company has granted to the Trustee, for
the benefit of the Holders, a first priority and exclusive security interest in
the Escrow Collateral. The Escrow Agreement provides that the Trustee may
foreclose on the Escrow Collateral upon acceleration of the maturity of the
Notes. Under the terms of the Indenture, the proceeds of the Escrow Collateral
will be applied, first, to amounts owing to the Trustee in respect of fees and
expenses of the Trustee, and second, to amounts owing on the Notes as provided
in the Indenture. The ability of Holders to realize upon the Escrow Collateral
may be subject to certain bankruptcy law limitations in the event of the
bankruptcy of the Company.
Upon payment in full of the first five scheduled interest payments
(including any Additional Amounts and any Liquidated Damages), if no Default has
occurred and is continuing, the Escrow Collateral will be released to the
Company.
Mandatory Redemption
The Company 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 the
Company's option prior to May 15, 2003. On or after May 15, 2003, the Notes will
be subject to redemption at the option of the Company, 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 Exchange 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, mailed by
first-class mail to each Holder's registered address (and, if and so long as the
Exchange 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)), at the redemption
prices (expressed as a percentage of principal amount) set forth below, plus
accrued and unpaid interest, Additional Amounts, if any, and Liquidated Damages,
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 Amounts, if any, and Liquidated Damages, 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:
Redemption
Year Price
- ------------------ ----------
2003.......................................................... 106.625%
2004.......................................................... 104.417%
2005.......................................................... 102.208%
2006 and thereafter........................................... 100.000%
In addition, at any time on or prior to November 15, 2001, the Company
may, at its option, redeem up to 35% of the aggregate principal amount of the
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 (and in the case of
Definitive Notes, subject to the right of Holders of record on the relevant
record date to receive interest and Liquidated Damages, if any, 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, the Company; provided that, in each case, at least
65% of the aggregate original principal amount of the Notes remains outstanding
immediately after the occurrence of such redemption; and provided further that
notice of any such redemption must be 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."
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In the case of any partial redemption, selection of the 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 to be fair and appropriate, although no Note of $1,000 in
original principal amount or less 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
and will be available at the offices of the paying agent. On and after the
redemption date, interest ceases to accrue on the Notes or portions thereof
called for redemption. The Luxembourg Stock Exchange will be informed of the
number of Outstanding Notes after any Optional Redemption.
Redemption for Taxation Reasons
The 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 Liquidated Damages, if
any, to the date fixed by the Company 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 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
of The Netherlands) affecting taxation which becomes effective on or after the
Issue Date, 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
Notes were then due. Prior to the publication or, where relevant, mailing of any
notice of redemption of the 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.
Certain Covenants
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.
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(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, (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; and
provided further that Indebtedness of the Company to 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 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 equal 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 equal
to, 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 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
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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
below under "Legal Defeasance and Covenant Defeasance";
(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 the
"Limitation on Issuances of Guarantees of Indebtedness by Restricted
Subsidiaries" covenant;
(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;
(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 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) 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
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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 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 forgoing shall not in any way be deemed to limit the
provisions of "-- 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, 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.
Limitation on Restricted Payments
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 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 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 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 Second Offering or the Recapitalization) 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
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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.
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 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
(b) of the "Limitation on Indebtedness" covenant; (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 "--
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 Second
Offering and warrants issued in connection with the First Offering in accordance
with the provisions set forth in the applicable warrant agreement; and (vii)
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 (vii) may
not exceed in aggregate $500,000 in any fiscal year of the Company; 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 clause (ii) thereof)
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 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 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 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
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.
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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
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
the Company or any Restricted Subsidiary not otherwise prohibited by the
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 "Limitation on Dividend and Other
Payment Restrictions Affecting Restricted Subsidiaries" covenant shall prevent
the Company 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
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 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
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 clause (i) above, 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).
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 the
"Limitation on Restricted Payments" covenant.
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.
Limitation on Asset Sales
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 equal in right of payment to the Notes.
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).
The Indenture provides 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, 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
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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, and Liquidated
Damages, 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 and Liquidated Damages, if any, due on
the relevant interest payment date and Additional Amounts, if any, in respect
thereof), in accordance with the procedures set forth in the 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. 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 the 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.
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 of the Indenture, the Company will
comply with the applicable securities laws and regulations and shall not be
deemed to have breached its obligations described in the Indenture by virtue
thereof.
Limitation on Issuances of Guarantees of Indebtedness by Restricted Subsidiaries
The Company 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 the Company unless (i) such Restricted Subsidiary
simultaneously executes and delivers a supplemental indenture to the Indenture
providing for a Guarantee of all of the Company's obligations under the Notes
and the 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 any Restricted Subsidiary may guarantee Indebtedness of the
Company 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 the Company's
obligations under the Notes and the 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 the 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.
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
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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 Subsidiary used in the licensed service areas of the Company
and any Restricted Subsidiary.
Provision of Financial Statements and Reports
The Company will file on a timely basis with the Commission, to the
extent such filings are accepted by the Commission 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 will also be required
(a) to 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, if and so long as the
Exchange 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, the Company will make an
offer to purchase all or any part (equal to $1,000 aggregate principal amount
and integral multiples 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, and Liquidated Damages, 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 and Liquidated Damages, if any, due on
the relevant interest payment date and Additional Amounts, if any, in respect
thereof). The Indenture provides that 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 Exchange 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 Exchange 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
the covenant entitled "Repurchase of Notes upon a Change of Control" and
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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 and
Liquidated Damages, if any; (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, as the case may be, and
to accrue Liquidated Damages, if any, 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; Holders
electing to have any Notes purchased pursuant to a Change of Control Offer will
be required to surrender such Notes, with the form entitled "Option of Holders
to elect Purchase" on the reverse of the Notes completed, to any office of the
paying agent; (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 the Indenture, the Company
will comply with the applicable securities laws and regulations and shall not be
deemed to have breached its obligations contained in the 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.
The Indenture provides that 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
Indenture will provide that 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 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 inform the Luxembourg Stock Exchange and 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 the Company 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 the Company outstanding at the time of a
Change of Control whose consent would be so required to permit the repurchase of
Notes, then the Company will have breached such covenant. This breach will
constitute an Event of Default under the Indenture if it continues for a period
of 30 consecutive days after written notice is given to the Company by the
Trustee or the Holders of at least 25% in aggregate principal amount of the
Notes outstanding. In addition, the failure by the Company to repurchase Notes
at
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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 the Company 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
may be contained in other securities of the Company which might be outstanding
at the time). The above covenant requiring the Company to repurchase the Notes
will, unless the consents referred to above are obtained, require the Company 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 the Company to repurchase
such holder's Notes upon the occurrence of a Change of Control may deter a third
party from seeking to acquire the Company in a transaction that would constitute
a Change of Control.
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 supplemental
indenture, executed and delivered to the Trustee, all of the obligations of the
Company with respect to the Notes and under the Indenture, the Escrow Agreement
and the Registration Rights Agreement; (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 the first
paragraph of the "Limitation on Indebtedness" covenant; (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.
Events of Default
The following constitute "Events of Default" under the Indenture: (a)
default for 30 days or more in the payment when due of interest on the Notes or
Additional Amounts, if any, or Liquidated Damages, 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
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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 "Limitation on Asset Sales"
or pursuant to a Change of Control Offer as described under "Repurchase of Notes
upon a Change of Control"; (d) failure to perform or comply with the provisions
described under "Consolidation, Merger and Sale of Assets"; (e) default in the
performance of or breach of any other covenant or agreement of the Company in
the Indenture or the Escrow Agreement 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 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; (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;
or (j) the Company challenges the Lien on the Escrow Collateral under the Escrow
Agreement prior to such time as the Escrow Collateral is to be released to the
Company, or the Escrow Collateral shall become subject to any Lien other than
the Lien under the Escrow Agreement.
If an Event of Default (other than an Event of Default specified in
clauses (h) or (i) above) occurs and is continuing under the Indenture, 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, and Liquidated Damages, 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 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 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 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 the Trustee or any Holder. 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
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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 the Indenture or the Notes except as
provided in the Indenture. Subject to certain limitations, Holders of a majority
in principal amount of the then outstanding Notes may direct the Trustee in its
exercise of any trust or power. The Indenture will provide that the Trustee may
withhold from Holders of Notes notice of any continuing Default (except a
Default relating to the payment of principal, premium, if any, interest,
Additional Amounts, if any, or Liquidated Damages, if any) if it determines that
withholding notice is in their interest. The Indenture will further provide that
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.
The Indenture requires that the Company delivers annually an Officers'
Certificate to the Trustee certifying that a review has been conducted of the
activities of the Company and the Company's performance under the Indenture and
that the Company 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. The Company will also be obligated to
notify the Trustee of any default or defaults in the performance of any
covenants or agreements under the 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 the
Company shall have any liability for any obligations of the Company under the
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 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.
Legal Defeasance and Covenant Defeasance
The obligations of the Company under the Indenture will terminate
(other than certain obligations) and will be released upon payment in full of
all of the Notes. The Company 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, Additional Amounts, if any, and
Liquidated Damages, if any, on such Notes when such payments are due or on the
redemption date solely out of the trust created pursuant to the Indenture, (ii)
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, (iii) the rights, powers, trusts,
duties and immunities of the Trustee, and the Company's obligations in
connection therewith and (iv) the Legal Defeasance provisions of the Indenture.
In addition, the Company may, at its option and at any time, elect to have the
obligations of the Company released with respect to certain covenants that are
described in the Indenture ("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 the 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, U.S. Government Securities or a combination thereof
and, 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, Additional Amounts, if any, and Liquidated Damages,
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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, Additional Amounts, if any, and Liquidated Damages, 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 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 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 in the United States (which opinion of
counsel may be subject to customary assumptions and exclusions) each stating
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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
The 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, and
Liquidated Damages, if any, to the date of maturity or redemption; (B) no
Default with respect to the 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 such Indenture; and (D) the Company has delivered
irrevocable instructions to the Trustee under such Indenture to 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.
Withholding Taxes
All payments made by the Company 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 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, 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 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:
(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 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;
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(iii) except in the case of the winding up of the Company, 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, the Company will provide the Trustee with documentation
satisfactory to the Trustee evidencing the payment of Additional Amounts. Copies
of such documentation will be made available to the Holders upon request.
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.
Amendment, Supplement and Waiver
Except as provided in the next two succeeding paragraphs, the Indenture
and the Notes issued thereunder may be amended or supplemented with the consent
of the Holders of at least a majority in principal amount of 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 the Indenture or the Notes
may be waived with the consent of the Holders of a majority in principal amount
of the Outstanding Notes (including consents obtained in connection with a
tender offer or exchange offer for the Notes).
The Indenture provides that without the consent of each Holder
affected, an amendment or waiver may not (with respect to any Notes held by a
nonconsenting Holder of the 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 on any Note, (iv) waive a Default in the payment of
principal of, premium, if any, interest, Additional Amounts, if any, or
Liquidated Damages, 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
either series of such Notes and a waiver of the payment default that resulted
from such acceleration with respect to such series of Notes), or in respect of a
covenant or provision contained in the 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
the Indenture relating to waivers of past Defaults or the rights of Holders of
such Notes to receive payments of principal, premium, if any, interest,
Additional Amounts, if any, or Liquidated Damages, if any, on such Notes, (vii)
make any change in the amendment and waiver provisions in the Indenture, (viii)
make any change in the provisions of the Indenture described under "--
Withholding Taxes" that adversely affects the rights of any Holder of the Notes,
(ix) amend the terms of the Notes or the 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 the Company agrees to pay Additional Amounts, if any, in
respect thereof, (x) modify the provisions of the Escrow Agreement or the
Indenture relating to the Escrow Collateral in any manner adverse to the Holders
or release the Escrow Collateral from the Lien under the Escrow Agreement or
permit any other obligation to be secured by the Escrow Collateral or (xi)
impair the right of any Holder of the Notes to receive payment of principal of,
interest, Liquidated Damages, if any, on such Holder's Notes
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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.
The Indenture provides that, notwithstanding the foregoing, without the
consent of any Holder of Notes, the Company and the Trustee together may amend
or supplement the Indenture or the Notes (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 comply with the covenant relating to
mergers, consolidations and sales of assets, (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 the 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, (vii) to comply with
requirements of the Commission in order to effect or maintain the qualification
of the Indenture under the Trust Indenture Act, (viii) to provide for the
issuance of the Exchange Notes or (ix) to execute and deliver any documents
necessary or appropriate to release Liens or any Escrow Collateral as permitted
by the Escrow Agreement.
The consent of the Holders is not necessary under the 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 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 Exchange 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 Exchange 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 the Trustee
The Indenture contains certain limitations on the rights of the
Trustee, should it become a creditor of the Company, 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. The 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.
The Indenture provides 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 Trustee, subject to certain exceptions. The Indenture
provides that in case an Event of Default shall occur (which shall not be
cured), the 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, the Trustee will be under no obligation to exercise any of its
rights or powers under the Indenture at the request of any Holder of such Notes,
unless such Holder shall have offered to the Trustee security and indemnity
satisfactory to it against any loss, liability or expense.
Governing Law
The Indenture and the Notes are, subject to certain exceptions,
governed by and construed in accordance with the internal laws of the State of
New York.
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Enforceability of Judgments
Since most of the operating assets of the Company and its Subsidiaries
are outside the United States, any judgment obtained in the United States
against the Company or a Subsidiary, including judgments with respect to the
payment of principal, premium, if any, interest, Additional Amounts, if any,
Liquidated Damages, if any, redemption price and any purchase price with respect
to the Notes, may not be collectible within the United States.
The Company 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 Indenture;
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
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 and that its content and
possible enforcement are not contrary to public policy or public order of The
Netherlands.
Certain Definitions
Set forth below is a summary of certain of the defined terms used in
the Indenture. Reference is made to the 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 Indenture, 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 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.
"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 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
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.
"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 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
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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" is defined to mean 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" 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 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 "-- 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 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 "-- 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 the
Company.
"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
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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; provided, however, that securities
deposited in the Escrow Account may have a Stated Maturity as late as May 15,
2001; (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.
"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 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.
"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 the Company 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'
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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" 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 the Company 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 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).
"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 the Company 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 the Company 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).
"Escrow Account" is defined to mean the account established by the
Escrow Agent pursuant to the terms of the Escrow Agreement for the deposit of
the U.S. Government Securities purchased by, or purchased at the direction of,
the Company with a portion of the net proceeds from the Second Offering.
"Escrow Agent" is defined to mean United States Trust Company of New
York, as escrow agent under the Escrow Agreement.
"Escrow Agreement" is defined to mean the Escrow Agreement, dated as of
the date of the Indenture, among the Escrow Agent, the Trustee and the Company,
governing the disbursement of funds from the Escrow Account.
"Escrow Collateral" is defined to mean all funds and securities in the
Escrow Account and the proceeds thereof.
"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 the 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 neither the accrual of interest shall 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
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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 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 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 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 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" is defined to mean the date on which the Notes were
originally issued under the 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 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
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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, 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.
"Officers' Certificate" is defined to mean 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 the Indenture.
"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, the Company
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 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 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 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
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business terms as partial payment for constructing a network relating
principally to the Permitted Business; and (ix) any Investment in Pledged
Securities.
"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 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 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 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
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" covenant; and (xv) Liens with respect to the Escrow Account
arising under the Escrow Agreement.
"Pledged Securities" is defined to mean the U.S. Government Securities
purchased by the Company with a portion of the net proceeds from the Second
Offering and deposited in the Escrow Account.
"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 Disposition
or Asset Acquisition (including acquisitions of other Persons by merger,
consolidation or purchase of
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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" is defined to mean an underwritten primary
public offering of Ordinary Shares of the Company 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 the Company 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 the Company as set forth on the Most Recent
Balance Sheet of the Company 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 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.
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"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 the Company 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 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" is defined to mean, 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.
"Unrestricted Subsidiary" is defined to mean (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 (a) the Company 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 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 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 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" is defined to mean 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" 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 are not callable or redeemable at the option of the issuer thereof.
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"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 the Company.
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CERTAIN TAX CONSIDERATIONS
Netherlands Tax Considerations
The following is a summary of the principal Netherlands tax
consequences relevant to the exchange, 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 exchange,
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; and
(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; and
(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; and
(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; and
(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").
With respect to point (iv) for Netherlands income and/or corporate
income tax purposes, a person (individual or corporate body as defined under
Netherlands tax law) holds among others directly or indirectly a substantial
interest, if such person owns or is deemed to own (e.g., directly and/or
indirectly via call options or warrants) an interest of at least 5.0% in the
issued capital of a company residing in The Netherlands ("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; and
(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:
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(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; and
(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).
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U.S. Tax Considerations
The following discussion, subject to the limitations set forth herein,
describes the material U.S. federal income tax considerations relevant to the
acquisition, ownership and disposition of Exchange Notes in general and in the
context of the Exchange Offer and is the opinion of Shearman & Sterling, special
tax counsel to the Company. This summary 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
currently in effect and all of which are subject to change, possibly with
retroactive effect). Except as specifically set forth herein, this summary deals
only with Exchange Notes held as capital assets by a U.S. Holder (as defined
below) within the meaning of Section 1221 of the Code. This summary does not
discuss all of the tax consequences that may be relevant to holders in light of
their particular circumstances or to holders subject to special tax rules, such
as insurance companies, financial institutions, dealers in securities or foreign
currencies, tax-exempt investors, persons holding the Exchange Notes as part of
a short-sale, hedging transaction, "straddle," conversion transaction or other
integrated transaction, U.S. Holders owning 10% or more of the stock of the
Company, or U.S. Holders whose functional currency (as defined in Section 985 of
the Code) is not the U.S. dollar. Persons considering the acquisition of the
Exchange 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 tax consequences of purchasing, holding and disposing of the
Exchange Notes, including the applicability and effect of the laws of any state,
local or foreign jurisdiction.
As used in this section "U.S. Tax Considerations," the term "U.S.
Holder" means a beneficial owner of a exchange note who or that is for U.S.
federal income tax purposes (i) a citizen or resident of the United States, (ii)
a corporation, partnership or other entity 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 both: (A) a U.S. court is able to exercise
primary supervision over the administration of the trust, and (B) one or more
U.S. persons have the authority to control all substantial decisions of the
trust.
General
Exchange Offer
An exchange of Notes for Exchange Notes pursuant to the Exchange Offer
will not be a taxable event for U.S. federal income tax purposes. The Exchange
Notes received by a Holder pursuant to the Exchange Offer generally will be
treated as a continuation of the Outstanding Notes in the hands of such Holder.
A U.S. Holder must continue to include original issue discount ("OID") on the
Exchange Notes and will have the same tax basis and holding period in the
Exchange Notes as the Outstanding Notes.
The Notes
Under applicable authorities, the Exchange Notes should be treated as
indebtedness for U.S. federal income tax purposes. In the unlikely event the
Exchange Notes are treated as equity, the amount of any actual or constructive
Company distributions on any such Exchange Note would first be taxable to the
holder as dividend income to the extent of the issuer's current and accumulated
earnings and profits, and next would be treated as a return of capital to the
extent of the holder's tax basis in the Exchange Note, with any remaining amount
treated as gain from the sale of an Exchange Note. Moreover, in such event a
U.S. Holder would be subject to special U.S. federal income tax rules if the
Company were classified as a "passive foreign investment company" for U.S.
federal income tax purposes. This discussion assumes that the Exchange Notes
will constitute indebtedness of the Company for U.S. federal income tax
purposes.
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Payment of Interest
Interest on the Exchange Notes will generally be taxable to a United
States 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 on the Exchange Notes, a U.S. Holder will be required to include in
income Additional Amounts, if any, and withholding tax withheld by The
Netherlands or any other Relevant Taxing Jurisdiction from interest payments, if
any, 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 report income in an
amount greater than the cash received with respect of payments made on the
Exchange Notes. A U.S. Holder may be entitled to deduct or credit the amount of
any applicable withholding tax, subject to applicable limitations in the Code.
The rules governing the foreign tax credit are complex. Interest income on the
Exchange 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. Prospective investors should
consult their own tax advisors concerning the application of the foreign tax
credit rules to their particular circumstances.
The Outstanding Notes were issued with OID and this OID will carryover
to the Exchange Notes. As such, regardless of their method of tax accounting,
U.S. Holders of the Exchange Notes will be required to include in gross income
for U.S. federal income tax purposes an amount equal to the sum of "daily
portions" of OID on an Exchange Note attributable to each day during the taxable
year on which the U.S. Holder holds the Exchange Note as such OID accrues, in
accordance with a constant yield method based on a compounding of interest,
before the receipt of cash payments attributable to such OID. Under this method,
U.S. Holders of the Exchange Notes generally will be required to include in
gross income increasingly greater amounts of OID in successive accrual periods,
with a corresponding increase in their tax basis in the Exchange Note for the
amounts so included.
Dispositions
Upon the sale, exchange or retirement of an Exchange Note, a U.S.
Holder will recognize taxable gain or loss in an amount equal to the difference,
if any, between such holder's adjusted tax basis in such Exchange Note and the
amount realized on such sale, exchange or retirement. Gain or loss recognized by
a U.S. Holder on the sale, exchange or retirement of an Exchange Note generally
will be capital gain or loss (except with respect to amounts received upon a
disposition attributable to accrued but unpaid interest, which will be taxable
as ordinary income). For certain noncorporate taxpayers (including individuals),
such gain will be eligible to be taxed at a preferential rate if the U.S.
Holder's holding period for the Exchange Notes exceeds one year. Prospective
investors should consult their own tax advisors with respect to the effect of
the capital gains provisions of the Code. The deductibility of capital losses is
subject to limitations. Further, gain realized by a U.S. Holder on the sale,
exchange or any other disposition of an Exchange Note will generally be treated
as United States source income and, under recently issued Treasury regulations,
a loss on such disposition also would be allocated to reduce U.S. source income,
subject ot applicable limitations.
As a result of certain limitations on the U.S. foreign tax credit under
the Code, a U.S. Holder may not be able to claim a U.S. foreign tax credit for
Netherlands withholding taxes, if any, imposed on the proceeds received upon the
sale, exchange, repurchase by the Company or other disposition of Exchange
Notes. Prospective investors should consult their own tax advisors concerning
the application of the U.S. foreign tax credit rules to their particular
situations.
Backup Withholding
"Backup" withholding and information reporting requirements may apply
to certain payments of principal and interest on an Exchange Note and to certain
payments of proceeds of the sale or retirement of an Exchange 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, all
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 Internal Revenue Service.
105
<PAGE>
PLAN OF DISTRIBUTION
Based on positions taken by the staff of the Commission set forth in
no-action letters issued to Exxon Capital Holdings Corp. and Morgan Stanley &
Co. Inc., among others, the Company believes that Exchange Notes issued pursuant
to the Exchange Offer in exchange for Outstanding Notes may be offered for
resale, resold and otherwise transferred by holders thereof (other than any
holder which is (i) an "affiliate" of the Company within the meaning of Rule 405
under the Securities Act, (ii) a broker-dealer who acquired Notes directly from
the Company, or (iii) broker-dealers who acquired Notes as a result of
market-making or other trading activities) without compliance with the
registration and prospectus delivery provisions for the Securities Act provided
that such Exchange Notes are acquired in the ordinary course of such holders'
business, and such holders are not engaged in, and do not intend to engage in,
and have no arrangement or understanding with any person to participate in, a
distribution of such Exchange Notes, provided that broker-dealers
("Participating Broker-Dealers") receiving Exchange Notes in the Exchange Offer
will be subject to a prospectus delivery requirement with respect to resales of
such Exchange Notes. To date, the staff of the Commission has taken the position
that Participating Broker-Dealers may fulfill their prospectus delivery
requirements with respect to transactions involving an exchange of securities
such as the exchange pursuant to the Exchange Offer (other than a resale of an
unsold allotment from the sale of the Outstanding Notes to the Initial
Purchasers thereof) with the Prospectus contained in the Registration Statement.
Pursuant to the Registration Rights Agreement, the Company has agreed to permit
Participating Broker-Dealers and other persons, if any, subject to similar
prospectus delivery requirements to use this Prospectus in connection with the
resale of such Exchange Notes. The Company has agreed that, for a period of 180
days after the Exchange Offer has been consummated, it will make this
Prospectus, and any amendment or supplement to this Prospectus, available to any
broker-dealer that requests such documents in the Letter of Transmittal.
Each holder of Outstanding Notes who wishes to exchange its Outstanding
Notes for Exchange Notes in the Exchange Offer will be required to make certain
representations to the Company as set forth in "The Exchange Offer". In
addition, each holder who is a broker-dealer and who receives Exchange Notes for
its own account in exchange for Outstanding Notes that were acquired by it as a
result of market-making activities or other trading activities, will be required
to acknowledge that it will deliver a prospectus in connection with any resale
by it of such Exchange Notes.
Holders who tender Outstanding Notes in the Exchange Offer with the
intention to participate in a distribution of the Exchange Notes may not rely
upon the Exxon Capital Holdings Corp., the Morgan Stanley & Co. Inc. or similar
no-action letters.
The Company will not receive any proceeds from any sale of Exchange
Notes by broker-dealers. Exchange Notes received by broker-dealers for their own
account pursuant to the Exchange Offer may be sold from time to time in one or
more transactions in the over-the-counter market, in negotiated transactions,
through the writing of options on the Exchange Notes or a combination of such
methods of resale, at market prices prevailing at the time of resale, at prices
related to such prevailing market prices or at negotiated prices. Any such
resale may be made directly to purchasers or to or through brokers or dealers
who may receive compensation in the form of commissions or concessions from any
such broker-dealer and/or the purchasers of any such Exchange Notes. The Letter
of Transmittal states that by acknowledging that it will deliver and by
delivering a prospectus, a broker-dealer will not be deemed to admit that it is
an "underwriter" within the meaning of the Securities Act.
The Company has agreed to pay all expenses incidental to the Exchange
Offer other than commissions and concessions of any brokers or dealers and will
indemnify holders of the Outstanding Notes (including any broker-dealers)
against certain liabilities, including liabilities under the Securities Act, as
set forth in the Registration Rights Agreement.
106
<PAGE>
LEGAL MATTERS
Certain legal matters regarding the validity of the Exchange Notes
offered hereby and the United States federal income tax consequences of the
Exchange Offer will be passed upon for the Company by Shearman & Sterling.
Certain matters of Netherlands corporate law will be passed upon for the Company
by Stibbe Simont Monahan Duhot, Amsterdam, The Netherlands.
INDEPENDENT AUDITORS
The financial statements of VersaTel as of December 31, 1997 and 1996,
and for each of the two years in the period ended December 31, 1997 included in
this Prospectus, have been audited by Arthur Andersen, independent auditors, as
set forth in their report appearing elsewhere herein.
AVAILABLE INFORMATION
The Company has filed with the Commission a Registration Statement on
Form F-4 under the Securities Act with respect to the Exchange Notes offered
hereby. This Prospectus, which forms a part of the Registration Statement, does
not contain all the information set forth in the Registration Statement, certain
parts of which have been omitted in accordance with the rules and regulations of
the Commission. For further information with respect to the Company and the
Exchange Notes, reference is made to the Registration Statement. Statements
contained in this Prospectus as to the contents of certain documents are not
necessarily complete, and, in each instance, reference is made to the copy of
the document filed as an exhibit to the Registration Statement, and each such
statement is qualified in its entirety by such reference.
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, proxy statements and other information with
the Commission. Such financial information includes annual reports containing
consolidated financial statements and notes thereto, together with an opinion
thereon expressed by an independent public accounting firm, as well as quarterly
reports containing unaudited consolidated financial statements for the first
three quarters of each fiscal year. The Registration Statement, as well as such
other information, when so filed, can be inspected and copied at the public
reference facilities maintained by the Commission at Room 1024, 450 Fifth
Street, N.W., Washington, D.C. 20549; and at the Commission's regional offices
at Suite 1400, Citicorp Center, 500 West Madison Street, Chicago, Illinois
60661-2511, and Seven World Trade Center, 13th Floor, New York, New York 10048.
Copies of such material can also be obtained from the Commission at prescribed
rates through its Public Reference Section at Judiciary Plaza, 450 Fifth Street,
N.W., Washington, D.C. 20549. In addition, the Company will file periodic
reports and other filings with the Commission through its Electronic Data
Gathering, Analysis and Retrieval ("EDGAR") system, which will be publicly
available through the Commission's site on the Internet's World Wide Web located
at http://www.sec.com. The Company will also make such reports available to
prospective purchasers of the Exchange Notes, securities analysts and
broker-dealers upon their request. The Company 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. As a foreign private issuer, the
Company is exempt from certain provisions of the Exchange Act prescribing the
furnishing and content of proxy statements to shareholders and relating to
short-swing profits reporting and liability.
107
<PAGE>
GENERAL LISTING INFORMATION
Listing
Application will be made to list the Exchange 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
Exchange Notes are listed on the Luxembourg Stock Exchange, an Agent for making
payments on, and transfers of, the Exchange Notes will be maintained in
Luxembourg.
Comments
The Company has obtained all necessary consents, approvals and
authorizations in connection with the issue of the Notes. The issue of the Notes
was authorized by resolutions of the Supervisory Board on the Company passed on
December 3, 1998.
No Material Change
Except as disclosed in this Prospectus, there has been no material
change in the financial position of the Company since September 30, 1998 and no
material adverse change in the financial position or prospects of the Company
since September 30, 1998.
Litigation
The Company 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 the Company, nor, so far as any of them is aware, is any
such proceeding pending or threatened.
Auditors
The consolidated accounts of the Company for the two years ended
December 31, 1997 have been prepared in accordance with United States generally
accepted accounting principles ("U.S. GAAP") and have been audited by Arthur
Andersen in accordance with U.S. GAAP. The unaudited consolidated interim
accounts for the nine months ended September 30, 1997 and 1998 were prepared in
accordance with U.S. GAAP. Arthur Andersen has given and not withdrawn its
written consent to the issue of this Prospectus with the inclusion in it of
their report in the form and context in which it is included.
Documents Available
Copies of the following documents may be inspected at the specified
office of the Paying and Transfer Agent in Luxembourg.
o Articles of Association of the Company;
o the Registration Rights Agreement relating to the Outstanding
Notes;
o the Indenture relating to the Notes (which includes the form
of the Note certificates); and
o the Escrow Agreement.
108
<PAGE>
In addition, copies of the most recent consolidated financial
statements of the Company for the preceding financial year, and any interim
quarterly financial statements published by the Company, will be available at
the specified office of the Paying and Transfer Agent in Luxembourg for as long
as the Exchange Notes are listed on the Luxembourg Stock Exchange.
Clearing Systems
The CUSIP number for the Notes distributed pursuant to Rule 144A
represented by the 144A Global Note is 925301 FO 7. The CUSIP number for the
Notes distributed pursuant to Regulation S is N 93195 AD 2. The CUSIP number for
the Exchange Notes is 925301 AG 8.
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; and (ii) so long as the
Exchange 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.
109
<PAGE>
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Page
<S> <C>
Report of Independent Public Accountants................................................................. F-2
Balance Sheets as of December 31, 1996 and 1997.......................................................... F-3
Statements of Operations for the Years Ended December 31, 1996 and 1997.................................. F-4
Statements of Shareholders' Equity for the Years Ended December 31, 1996 and 1997........................ F-5
Statements of Cash Flows for the Years Ended December 31, 1996 and 1997.................................. F-6
Notes to Financial Statements............................................................................ F-7
Balance Sheets as of September 30, 1997 and 1998......................................................... F-15
Statements of Operations for the Nine Month Periods Ended September 30, 1997 and 1998.................... F-16
Statements of Cash Flows for the Nine Month Periods Ended September 30, 1997 and 1998.................... F-17
Notes to Interim Financial Statements.................................................................... F-18
F-1
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To VersaTel Telecom B.V.
We have audited the balance sheets as of December 31, 1996 and 1997 of
VERSATEL TELECOM B.V. and the statements of operations, shareholders' 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 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
B.V. as of December 31, 1996 and 1997 and the result of its operations and its
cash flows for the years then ended, in conformity with United States generally
accepted accounting principles.
ARTHUR ANDERSEN
Amsterdam, The Netherlands
May 20, 1998
F-2
<PAGE>
VERSATEL TELECOM B.V.
BALANCE SHEETS
December 31, 1996 and 1997
1996 1997
------ ------
NLG NLG
ASSETS
Current Assets:
Cash.......................................................................... 4,290,119 1,345,981
Current portion of restricted cash............................................ 100,000 75,980
Accounts receivable, net of allowance for doubtful accounts of
NLG 30,000 and NLG 65,000, respectively.................................... 1,209,224 1,804,373
Inventory..................................................................... 135,411 417,572
Prepaid expenses and other.................................................... 32,472 1,995,251
------------ ------------
Total current assets....................................................... 5,767,226 5,639,157
---------- ------------
Restricted Cash, net of current portion......................................... 53,157 72,932
------------ --------------
Property and Equipment, net..................................................... 2,339,550 13,619,207
---------- -----------
Total assets.......................................................... 8,159,933 19,331,296
========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable.............................................................. 1,957,993 20,674,434
Due to related parties........................................................ 217,987 248,525
Accrued liabilities........................................................... 1,652,704 7,690,886
Current portion of deferred income............................................ -- 98,434
Current portion of capital lease obligations.................................. 252,895 278,661
----------- -----------
Total current liabilities.................................................. 4,081,579 28,990,940
----------- -----------
Deferred Income, net of current portion......................................... -- 341,648
----------- -----------
Capital Lease Obligations, net of current portion............................... 327,013 107,813
----------- -----------
Subordinated Convertible Shareholder Loans...................................... 3,605,000 8,105,000
----------- -----------
Shareholders' Equity:...........................................................
Ordinary Shares, NLG 0.10 par value, 44,550,000 shares
authorized, 8,910,000 issued and outstanding at December 31,
1996 and 9,579,643 issued and outstanding at December 31,
1997....................................................................... 891,000 957,964
Additional paid-in capital.................................................... 4,603,975 6,037,011
Accumulated deficit........................................................... (5,348,634) (25,209,080)
---------- -----------
Total shareholders' equity................................................. 146,341 (18,214,105)
----------- -----------
Total liabilities and shareholders' equity............................ 8,159,933 19,331,296
========== ===========
</TABLE>
The accompanying notes are an integral part of these
financial statements.
F-3
<PAGE>
VERSATEL TELECOM B.V.
STATEMENTS OF OPERATIONS
For the Years Ended December 31, 1996 and 1997
1996 1997
------ -----
NLG NLG
OPERATING REVENUES 6,428,178 18,895,766
OPERATING EXPENSES:
Cost of Revenues, excluding depreciation........... 4,953,829 17,405,302
Selling, general and administrative................ 5,485,159 17,526,930
Depreciation....................................... 453,165 3,236,784
---------- -----------
Total operating expenses........................ 10,892,153 38,169,016
---------- -----------
Operating loss............................. (4,463,975) (19,273,250)
---------- -----------
OTHER INCOME (EXPENSES):
Foreign currency exchange losses, net.............. -- (52,618)
Interest income.................................... 3,980 20,686
Interest expense-- third parties................... (24,584) (41,283)
Interest expense-- related parties................. (248,882) (513,981)
---------- -----------
(269,486) (587,196)
Net loss................................... (4,733,461) (19,860,446)
========== ===========
NET LOSS PER SHARE (Basic and Diluted)............... (0.95) (2.20)
Weighted average number of shares outstanding...... 5,004,247 9,042,094
The accompanying notes are an integral part of these
financial statements.
F-4
<PAGE>
VERSATEL TELECOM B.V.
STATEMENTS OF SHAREHOLDERS' EQUITY
For the Years Ended December 31, 1996 and 1997
<TABLE>
<CAPTION>
Number
of
shares Ordinary Additional Accumulated
outstanding shares capital deficit Total
----------- -------- --------- ---------- ----------
NLG NLG NLG NLG
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1995........... 4,950,000 495,000 -- (615,173) (120,173)
Shareholder contributions............ 3,960,000 396,000 4,603,975 -- 4,999,975
Net loss............................. -- -- (4,733,461) (4,733,461)
--------- ------- --------- ---------- -----------
Balance, December 31, 1996............. 8,910,000 891,000 4,603,975 (5,348,634) 146,341
Shareholder contributions............ 669,643 66,964 1,433,036 -- 1,500,000
Net loss............................. -- -- (19,860,446) (19,860,446)
--------- ------- --------- ----------- -----------
Balance, December 31, 1997............. 9,579,643 957,964 6,037,011 (25,209,080) (18,214,105)
========= ======= ========= =========== ===========
</TABLE>
The accompanying notes are an integral part of these
financial statements.
F-5
<PAGE>
VERSATEL TELECOM B.V.
STATEMENTS OF CASH FLOWS For The
Years Ended December 31, 1996 and 1997
<TABLE>
<CAPTION>
1996 1997
------ -----
NLG NLG
<S> <C> <C>
Cash Flows from Operating Activities:
Net loss......................................................................... (4,733,461) (19,860,446)
Adjustments to reconcile net loss to net cash used in operating
activities --
Depreciation.................................................................. 453,165 3,236,784
Restricted cash............................................................... -- 4,245
Deferred income............................................................... -- 440,082
Changes in other operating assets and liabilities
Accounts receivable........................................................... (1,157,287) (595,149)
Inventory..................................................................... (113,595) (282,161)
Prepaid expenses and other.................................................... 329,947 1,962,779)
Accounts payable.............................................................. 1,753,825 18,716,441
Due to related parties........................................................ 217,987 30,538
Accrued liabilities........................................................... 1,530,958 6,038,182
----------- -----------
Net cash provided by (used in) operating activities...................... (1,718,461) 5,765,737
----------- -----------
Cash Flows from Investing Activities:
Capital expenditures............................................................. (2,569,171) (14,516,441)
----------- ------------
Cash Flows from Financing Activities:
Proceeds (redemptions) from capital lease obligations............................ 421,284 (193,434)
Proceeds from subordinated convertible shareholder loans......................... 3,150,000 4,500,000
Shareholder contributions........................................................ 4,999,975 1,500,000
----------- ------------
Net cash provided by financing activities................................ 8,571,259 5,806,566
----------- ------------
Net Increase (Decrease) in Cash.................................................... 4,283,627 (2,944,138)
Cash, beginning of the year........................................................ 6,492 4,290,119
----------- ------------
Cash, end of the year.............................................................. 4,290,119 1,345,981
=========== ============
Supplemental Disclosures of Cash Flow Information:
Cash paid for --
Interest (net of amounts capitalized)......................................... 96,189 510,208
Income taxes.................................................................. -- --
</TABLE>
The accompanying notes are an integral part of these
financial statements.
F-6
<PAGE>
VERSATEL TELECOM B.V.
NOTES TO FINANCIAL STATEMENTS
1. General
VersaTel Telecom B.V. ("VersaTel" or the "Company"), incorporated in
Amsterdam on October 10, 1995, provides international and national
telecommunication services in The Netherlands.
2. Financial Condition and Operations
For the year ended December 31, 1997, the Company had a loss from
operating activities of NLG 19,273,250 and negative working capital of NLG
23,351,783 at December 31, 1997. In addition, the Company had an accumulated
deficit of NLG 25,209,080 as of December 31, 1997. 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. In addition, prices in the
telecommunications industry in Europe have declined in recent years and, as
competition continues to increase, the Company expects that prices will continue
to decline. Management of the Company believes that the Company will be able to
borrow additional financing in order to develop its network, thereby increasing
its traffic volume. Also, management believes that it is able to reduce the cost
of providing telecommunication services, commensurate with the decline of the
prices. To sustain its current level of operations and fund its negative working
capital requirements as of December 31, 1997, management has obtained necessary
financial support commitments from certain of its existing shareholders to
enable it to continue its operations through December 31, 1998. See also Note
19. (Subsequent events.)
3. Significant Accounting Principles
(a) Basis of Financial Statements
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
generally accepted accounting principles in the United States ("U.S. GAAP").
(b) Use of Estimates
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.
(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. In 1996, these gains or
losses were not material.
F-7
<PAGE>
(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.
Dialers installed at customer locations remain the Company's property and are
capitalized under property and equipment as telephony equipment and are
depreciated on a straight-line basis in 2 or 3 years. The cost of installing
these dialers at customer locations is also capitalized and amortized over the
lifetime of the dialers.
(e) Pensions and Post Retirement Benefits
Effective January 1, 1996, the Company adopted SFAS No. 132,
"Employers' Disclosures about Pensions and Other Post Retirement Benefits."
Under this Statement certain disclosures should be made related to pensions and
post retirement benefits. The Company has no pension plan or other post
retirement benefit and an analysis made by management indicated that no
additional disclosure is required.
(f) Advertising Expenses
Advertising costs are expensed as incurred.
The expenses related to direct-mail and other marketing methods are
expensed when incurred and included in the advertising expenses.
(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. In order
to properly match the cost of revenues with the associated revenues, these costs
are accrued in the balance sheet under accrued liabilities.
Origination costs billed directly to customers by the PTT (applicable
in the case of the DISA code) are not included in the revenues of the Company.
The Company does reimburse these costs to its customers by means of a credit to
the customer's account. This credit is recorded as cost of revenues.
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.
The Company did not incur any material upfront expenses in concluding
inter connection and national and international carriers agreements. All
expenses incurred on an ongoing basis as a result of these agreements are
expensed as incurred.
The expenses incurred as a result of obtaining licenses are expensed as
incurred.
(h) 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 is not expected to have
a significant effect on the Company's financial statements or disclosures.
F-8
<PAGE>
4. Restricted Cash
Restricted cash balances of NLG 153,157 and NLG 148,912 at December 31,
1996 and 1997, respectively, include mainly amounts restricted in connection
with bank guarantees given to lessors of the Company's buildings.
The restriction on cash terminates upon cancellation of the lease
agreements for the respective buildings. One of the leases will be terminated in
1998, and the restricted balance related to this lease of NLG 75,980 has been
classified under current assets. The remaining leases, which have restricted
balances of NLG 72,932, will terminate in 2001.
5. Prepaid Expenses and Other
Included in this caption as of December 31, 1997 is an amount
of NLG 1,563,644 related to Tax on Value Added.
6. 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.
Listed below are the major classes of property and equipment and their
estimated useful lives in years as of December 31, 1996 and 1997:
Useful Life 1996 1997
----------- ------ ------
NLG NLG
Leasehold improvements.................. 5 40,050 911,092
Telecommunications equipment............ 2-10 2,375,755 14,749,839
Other................................... 3-5 388,173 1,546,392
----------- -----------
Property and equipment................ 2,803,978 17,207,323
Less: Accumulated depreciation........ 464,428 3,588,116
----------- -----------
Property and equipment, net........... 2,339,550 13,619,207
=========== ===========
Presented under deferred income is cash received in connection with the
sublease by the company of part of its building. The received amount is released
to the income statement over the period of the sublease.
The short-term portion of the deferred income is presented under
short-term liabilities.
7. Long-Lived Assets
Effective January 1, 1996 the Company adopted Statement of Financial
Accounting Standards ("SFAS") No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of." In accordance
with SFAS No. 121, long-lived assets to be held and used by the Company are
reviewed to determine whether any events or changes in circumstances indicate
that the carrying amount of the asset may not be recoverable. For long-lived
assets to be held and used, the Company bases its evaluation on such impairment
indicators as the nature of the assets, the future economic benefit of the
assets, any historical or future profitability measurements, as well as other
external market conditions or factors that may be present. If such impairment
indicators are present or other factors exist that indicate that the carrying
amount of the asset may not be recoverable, the Company determines whether an
impairment has occurred through the use of an undiscounted cash flow analysis of
assets at the lowest level for which identifiable cash flows exist. If an
impairment has occurred, the Company recognizes a loss for the difference
between the carrying amount and the estimated value of the asset. The fair value
of the asset is measured
F-9
<PAGE>
using quoted market prices or, in the absence of quoted market prices, fair
value is based on an estimate of discounted cash flow analysis. During the years
ended December 31, 1996 and 1997 the Company's analyses indicated that there was
not an impairment of its long-lived assets.
8. Accrued Liabilities
The accrued liabilities per December 31, 1997 and 1996 are built up as
follows:
1996 1997
--------- ---------
NLG NLG
Accrued traffic cost.............................. 4,733,579 905,569
Other (all individually under 5%)................. 2,957,307 747,135
--------- ---------
7,690,886 1,652,704
========= =========
9. 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 1997 are as follows:
Capitalized Leases
------------------
1998................................................... NLG 298,167
1999................................................... 80,433
2000................................................... 20,315
2001................................................... 23,761
2002................................................... 3,997
-----------
Total minimum lease payments........................... 426,673
Less amount representing interest...................... 40,199
-----------
Present value of net minimum lease payments,
including current maturities of NLG 278,661.......... NLG 386,474
===========
Property, plant and equipment at year-end include the following amounts
for capitalized leases:
1997 1996
------------ -----------
Telecommunications equipment....................... NLG 819,840 NLG 770,000
Other.............................................. 27,860 --
----------- -----------
847,700 770,000
Less allowances for depreciation................... 461,226 190,092
----------- -----------
NLG 386,474 NLG 579,908
10. Subordinated Convertible Shareholder Loans
The Company had subordinated convertible shareholder loans with
outstanding balances of NLG 3,605,000 at December 31, 1996 and NLG 8,105,000 at
December 31, 1997. The loans bear interest at a rate of 10.0% per annum. The
loans will be repaid in quarterly installments, commencing September 30, 1998 to
June 30, 2001. The Company's creditors are entitled to convert NLG 3,605,000 of
the subordinated convertible shareholder loans to Ordinary Shares at a rate of
NLG 7.69 per share of the outstanding principal amount in the following
situations:
o Default on interest payments or repayments;
o Sale by the Company of (all or a portion of) the operating
activities, without the consent of the creditor;
F-10
<PAGE>
o Bankruptcy or voluntary termination of the Company.
The subordinated convertible shareholder loan obtained during 1997 of
which NLG 4,500,000 was outstanding as at December 31, 1997, can be converted by
the creditor at a rate of NLG 3.36, of the outstanding principal amount at any
time during the period between December 1, 1997 and June 20, 1998. Any unpaid
amounts as at June 20, 1998 will be automatically converted into Ordinary Shares
at the rate of NLG 3.36 per share.
The subordinated convertible shareholder loans have been converted into
Ordinary Shares subsequent to December 31, 1997. See Note 19. (Subsequent
Events.)
11. Net Loss Per Share
In February 1997, the Financial Accounting Standards Board ("FASB")
issued Statement No. 128, "Earnings per Share" ("SFAS 128"). The Company adopted
SFAS 128 for the year ended December 31, 1997. SFAS 128 replaced the primary
earnings per share calculation with a basic earnings per share calculation and
modified the calculation of diluted earnings per share. Adoption of SFAS 128 did
not affect the calculation of net loss per share for the Company. Diluted net
loss per share is calculated by dividing net loss by the weighted average number
of shares outstanding and dilutive stocks outstanding, calculated under the
treasury stock method. Because the Company has operating losses since inception,
options are anti-dilutive.
12. Employee Benefit Plans
(a) 1997 Stock Option Plan
In December 1996, the shareholders approved the 1997 Stock Option Plan
(the "1997 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.
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 May 20, 1998, 199,000 options to purchase 199,000 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 Company accounts for the 1997 Plan under APB Opinion No. 25, under
which no compensation cost has been recognized. 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:
F-11
<PAGE>
1997
------------
NLG
Net Loss:...................................... As reported (19,860,446)
Pro forma (19,886,957)
Net loss per share (basic and diluted):........ As reported (2.20)
Pro forma (2.20)
Of the 199,000 options outstanding at December 31, 1997, 149,500 have
exercise and weighted average exercise prices of NLG 1.26 and a weighted average
remaining contract life of 4.5 years. All of these options are exercisable. Of
the remaining 49,500 options outstanding at December 31, 1997, 49,500 have
exercise and weighted average exercise prices of NLG 0.59 and a weighted average
remaining contract life of 4.0 years. All of these options are exercisable.
The fair value of each option grant is estimated on the date of grant
using the Black-Scholes option pricing model with the following weighted average
assumptions used for fiscal 1997: risk free rate of 5.75%; expected dividend
yield of 0.00%; expected life of 5 years; and expected volatility of 0.00%.
The fair value of the depository receipts at the date of the grant
equals the exercise price of the options granted under the 1997 Stock Option
Plan.
(b) 1998 Stock Option Plan
In March 1998, the shareholders approved the 1998 Stock Option Plan
(the "1998 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 five 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 May 20, 1998, 2,175,000 options to purchase 2,175,000 have been
granted under the 1998 Plan and the Company estimates to grant a total of
2,500,000 options to purchase 2,500,000 depositary receipts 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 recent 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.
13. Taxes
The Company had income tax carry-forwards of NLG 1,872,022 at December
31, 1996 and NLG 8,193,178 at December 31, 1997, which may be utilized to reduce
future income taxes payable.
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.
F-12
<PAGE>
There were no significant temporary differences which gave rise to
deferred tax assets and liabilities at December 31, 1996 or 1997.
14. Advertising Expenses
The total amount of advertising expenses was NLG 3,743,285 for the year
ended December 31, 1997. The comparable expenses for the year ended December 31,
1996 amounted to NLG 1,589,815.
15. Related Party Transactions
At December 31, 1996 and 1997, the Company had various accounts payable
to and accruals outstanding relating to related parties. These relate mainly to
interest payable on the subordinated convertible shareholder loans of
approximately NLG 174,000 and NLG 199,000 at December 31, 1996 and 1997.
16. Credit Facilities
The Company maintains a credit facility under which it can borrow up to
NLG 100,000. As of December 31, 1996 and 1997, no amounts were outstanding under
this credit facility.
17. Rent and Operating Lease Commitments
Future minimum commitments in connection with rent and other operating
lease agreements are as follows at December 31, 1997:
1998.................................................. NLG 1,828,000
1999.................................................. 1,461,000
2000.................................................. 1,331,000
2001.................................................. 371,000
2002.................................................. 4,000
Rent and operating lease expenses amounted to approximately NLG 271,000
in 1996 and NLG 585,000 in 1997.
18. Financial Instruments
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.
19. Subsequent Events
Subsequent to December 31, 1997 the Company received additional
shareholder contributions of NLG 35,000,000. Furthermore, subordinated
convertible shareholder loans were converted into common stock for a total
amount of NLG 8,105,000.
F-13
<PAGE>
VERSATEL TELECOM INTERNATIONAL N.V.
BALANCE SHEETS
September 30, 1997 and 1998
(Unaudited)
<TABLE>
<CAPTION>
1997 1998
------ ------
NLG NLG
ASSETS
<S> <C> <C>
Current Assets:
Cash.......................................................... 1,757,990 239,647,819
Current portion of restricted cash............................ 13,825 --
Accounts receivable, net of allowance for doubtful accounts... 2,150,661 5,898,552
Inventory..................................................... 518,435 1,128,695
Prepaid expenses and other.................................... 2,563,956 3,307,981
------------ -----------
Total current assets....................................... 7,004,867 249,983,047
------------ -----------
Restricted Cash, net of current portion......................... -- 155,517,867
------------ -----------
Capitalized finance costs, net.................................. -- 19,333,330
------------ -----------
Property and Equipment, net..................................... 6,339,057 23,161,261
------------ -----------
Construction in progress........................................ -- 10,406,731
------------ -----------
Goodwill........................................................ -- 1,477,582
------------ -----------
Total assets............................................... 13,343,924 459,879,818
============ ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable.............................................. 11,590,947 11,443,960
Due to related parties........................................ -- --
Accrued liabilities........................................... 4,952,252 34,924,226
Current portion of deferred income............................ -- 157,003
Current portion of capital lease obligations.................. 274,644 325,346
------------- -----------
Total current liabilities.................................. 16,817,843 46,850,535
------------- -----------
Deferred Income, net of current portion......................... -- --
------------- -----------
Capital Lease Obligations, net of current portion............... 179,002 --
------------- -----------
Subordinated Convertible Shareholder Loans...................... 5,605,000 --
------------- -----------
Long Term Debt (131/4% Senior Notes)............................. -- 422,539,286
------------- -----------
Shareholders' Equity:
Ordinary Shares, NLG 0.10 par value, 44,550,000 shares
authorized,
8,910,000 issued and outstanding at September 30, 1997 and 891,000 1,942,741
19,427,405 issued and outstanding at September 30, 1998....
Additional paid-in capital.................................... 4,603,975 50,786,536
Warrants...................................................... -- 3,341,000
Accumulated deficit........................................... (14,752,896) (65,580,280)
------------- -----------
Total shareholders' equity................................. (9,257,921) (9,510,003)
------------- -----------
Total liabilities and shareholders' equity................. 13,343,924 459,879,818
============= ===========
</TABLE>
F-14
<PAGE>
VERSATEL TELECOM INTERNATIONAL N.V.
STATEMENTS OF OPERATIONS For the
Nine Month Periods Ended September 30, 1997 and 1998
(Unaudited)
<TABLE>
<CAPTION>
1997 1998
------------ -----------
NLG NLG
<S> <C> <C>
OPERATING REVENUES........................................................ 14,262,632 25,880,335
OPERATING EXPENSES:
Cost of revenues, excluding depreciation and amortization 11,169,554 21,120,277
Selling, general and administrative..................................... 10,929,293 30,001,986
Depreciation and amortization........................................... 1,238,377 4,913,693
------------ -----------
Total operating expenses............................................. 23,337,224 56,035,956
------------ -----------
Operating loss....................................................... (9,074,592) (30,155,621)
------------ -----------
OTHER INCOME (EXPENSES):
Currency exchange gain.................................................. 6 4,747,232
Interest income......................................................... 20,686 8,143,802
Interest expense--third parties......................................... (34,424) (20,296,407)
Interest expense--related parties....................................... (315,939) (2,810,398)
------------ -----------
(329,671) (10,215,771)
------------ -----------
Net loss............................................................. (9,404,263) (40,371,392)
============ ===========
NET LOSS PER SHARE (Basic and Diluted).................................... (1.06) (2.65)
Weighted average number of shares outstanding............................. 8,910,000 15,247,579
</TABLE>
F-15
<PAGE>
VERSATEL TELECOM INTERNATIONAL N.V.
STATEMENTS OF CASH FLOWS
For the Nine Month Periods Ended September 30, 1997 and 1998
(Unaudited)
<TABLE>
<CAPTION>
1997 1998
------ -----
NLG NLG
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss............................................................. (9,404,263) (40,371,392)
Adjustments to reconcile net loss to net cash used in operating
activities --
Depreciation and amortization..................................... 1,238,377 4,913,693
Restricted cash................................................... 139,332 (155,368,955)
Deferred income................................................... -- (283,079)
Currency translation adjustment................................... -- 192
Changes in other operating assets and liabilities
Accounts receivable............................................... (941,437) (4,094,179)
Inventory......................................................... (383,024) (711,123)
Prepaid expenses and other........................................ (2,531,483) (1,312,730)
Accounts payable.................................................. 9,632,954 (9,230,474)
Due to related parties............................................ (217,987) (248,525)
Accrued liabilities............................................... 3,299,548 27,233,340
------------ -------------
Net cash provided by (used in) operating activities.......... 832,017 (179,473,232)
------------ -------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures................................................. (5,237,884) (24,075,808)
------------ -------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds (redemptions) from capital lease obligations................ (126,262) (61,128)
Proceeds from subordinated convertible shareholder loans............. 2,000,000 (8,105,000)
Finance costs, net................................................... -- (20,000,000)
Proceeds from senior notes........................................... -- 422,539,286
Shareholder contributions............................................ -- 49,075,302
Goodwill paid on acquisition......................................... -- (1,597,582)
------------ -------------
Net cash provided by financing activities.................... 1,873,738 441,850,878
------------ -------------
NET INCREASE (DECREASE) IN CASH........................................ (2,532,129) 238,301,838
CASH, beginning of the year............................................ 4,290,119 1,345,981
------------ -------------
CASH, end of the year.................................................. 1,757,990 239,647,819
============ =============
</TABLE>
F-16
<PAGE>
VERSATEL TELECOM INTERNATIONAL N.V. AND ITS SUBSIDIARIES
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
As of September 30, 1998 and for the Nine
Month Periods Ended September 30, 1997 and 1998
(All Amounts Expressed in Dutch Guilders)
1. Financial Presentation and Disclosures
In the opinion of management, the accompanying unaudited condensed
consolidated financial statements of VersaTel Telecom International N.V.,
formerly known as VersaTel Telecom B.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 September 30, 1998, and the results of
operations and cash flows for the three months and nine months ended September
30, 1997 and 1998.
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 1997 audited financial
statements and the notes related thereto. The results of operations for the nine
months period ended September 30, 1998 may not be indicative of the operating
results for the full year.
As of September 30, 1998, the Company wholly-owned the following
subsidiaries:
-- VersaTel Telecom Europe B.V.
-- VersaTel Telecom Netherlands B.V.
-- VersaTel Telecom Belgium N.V.
-- Bizztel Telematica B.V.
All intercompany assets, liabilities and transactions have been
eliminated in consolidation.
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 as 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
have not determined the timing of or method of our adoption of SFAS No. 133.
2. Financial Condition and Operations
For the year ended December 31, 1997, the Company had a loss from
operating activities of NLG 19,273,250 and negative working capital of NLG
23,351,783 at December 31, 1997. For the nine-month period ended September 30,
1998, the loss from operating activities amounted to NLG 40,371,392 and the
positive working capital at September 30, 1998 amounted to NLG 203,132,512. In
addition, the Company had an accumulated deficit of NLG 25,209,080
F-17
<PAGE>
as of December 31, 1997 and of NLG 65,580,280 as of September 30, 1998. 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. In
addition, prices in the telecommunications industry in Europe have declined in
recent years and, as competition continues to increase, the Company expects that
prices will continue to decline. Management of the Company believes that the
Company will be able to borrow additional financing in order to develop its
network and by that increasing traffic volume. Also, management believes that it
is able to reduce the cost of providing telecommunication services, commensurate
with the decline of the prices. To sustain its current and future level of
operations the Company issued a private debt offering with gross proceeds of
US$225,000,000 on May 20, 1998 repayable in 2008. The private debt offering
consists of 13 1/4% senior notes due 2008 and warrants to purchase 1,500,000
Ordinary Shares of the Company. The costs in connection with the private debt
offering of NLG 20.0 million have been capitalized and are being amortized over
the duration of the underlying offering (10 years).
3. 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 the following four part Recapitalization.
In February 1998, NeSBIC converted its NLG 4.5 million bridge loan into
Ordinary Shares of the Company. In addition, Telecom Founders and NeSBIC
invested an additional NLG 7.2 million in equity capital in the Company which
was formally contributed on April 17, 1998. In addition, NeSBIC and Cromwilld
converted their subordinated convertible notes totaling NLG 3.6 million into
Ordinary Shares of the Company in April 1998. The third component included a new
equity investment by Paribas of NLG 12.8 million. In May 1998, NeSBIC, Telecom
Founders, Paribas and NPM have invested an additional NLG 15.0 million in equity
capital. Accordingly, the invested equity in the Company has increased from NLG
7.0 million to NLG 50.1 million.
The conversion price of NLG 3.36 per share used for the conversion of
the 1996 and 1997 loans was approved in separate shareholder resolutions, dated
March 2, 1998 and September 30, 1997, respectively.
The estimated fair value at the date of the extinguishment of the
shareholder loans amounted to NLG 4.45 per share, which represented the price
paid by an unrelated party on April 8, 1998 for the Company's ordinary shares.
As the conversion took place very shortly thereafter on April 17, 1998, the
price paid by the new shareholder was deemed to be fair value on the date of
extinguishment.
Cromwilld, one of the shareholders of the Company, has objected to the
above Recapitalization. Based upon advice from the Company's legal counsel, the
impact of this objection is considered to be remote.
4. Construction in Progress
The company continues to build out its network and is securing rights
of way for the Benelux Overlay Network. The resulting assets as of September 30,
1998 have been recorded at cost under the caption "Construction in progress."
Reference is also made to Note 6.
5. Acquisition
On May 29, 1998 and August 10, 1998, the Company acquired the shares of
Bizztel Telematica B.V. ("Bizztel") in two phases. The figures of Bizztel are
included in the financial statements as of September 30, 1998. The key figures
of Bizztel as included in the financial statements of VersaTel as of September
30, 1998 of VersaTel are sales of NLG 176,000, total assets NLG 311,000, total
equity of NLG (679,256) and net loss for the period of NLG (213,502).
F-18
<PAGE>
The Company applied the purchase accounting method. The goodwill, being
the difference between the purchase price amounting to NLG 1,131,827 in total
and the net asset value as of acquisition date, is being capitalized and
amortized in 5 years.
Since the impact on the revenues, net income and earnings per share
data on the consolidated Company figures is not material, pro forma figures have
been omitted.
6. Commitments Not Reflected in the Balance Sheet
Commitments in connection to the roll-out of the Company's network, not
yet recorded on the balance sheet, amount to approximately NLG 36 million as of
September 30, 1998. Reference is also made to Note 4.
7. Subsequent Event
In November 1998 the Company acquired CSNet Group. The key figures of
CSNet Group as of July 31, 1998 are summarized as follows: sales NLG 2,023,000,
total assets NLG 1,491,000, and net income for the period ended July 31, 1998
NLG 173,000.
F-19
<PAGE>
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.
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).
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 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 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.
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.
Dark fiber -- Fiber that lacks the requisite electronic and optronic
equipment necessary to use the fiber for transmission.
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-optic cable -- 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.
Interconnect -- Connection of a telecommunications device or service to
the PSTN.
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.
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
premise interface which connects to the inside wiring and equipment at the
customer premise to a terminating point within the switching wire center.
A-1
<PAGE>
Mbps -- Megabits per second, a measurement of speed for digital signal
transmission expressed in millions of bits per second.
NOC -- Network operations center.
Nodes -- Locations within the network housing electronic equipment
and/or switches which serve as intermediate connection points to send and
receive transmission signals.
Number Portability -- The ability of end users to keep their number
when changing operators.
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) -- Switches owned or leased by an
interexchange carrier that is located near a local exchange carrier's switch and
that enables the interexchange carrier to access the local exchange carrier's
customers and/or services.
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.
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.
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.
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.
Traffic -- A generic term that includes any and all calls, messages and
data sent and received by means of telecommunications.
WDM (Wavelength Division Multiplexing) -- A multiplexing technique
allowing multiple different signals to be carried simultaneously on a fiber by
allocating resources according to frequency on non-overlapping frequency bands.
A-2
<PAGE>
PRINCIPAL EXECUTIVE OFFICE OF THE COMPANY
VersaTel Telecom International N.V.
Paalbergweg 36
1105 BV Amsterdam-Zuidoost
The Netherlands
INDEPENDENT AUDITORS
Arthur Andersen
Prof. W.H. Keesomlaan 8
1183 DJ Amstelveen
The Netherlands
LEGAL ADVISERS
As to U.S. Law As to Dutch Law
Shearman & Sterling Stibbe Simont Monahan Duhot
599 Lexington Avenue Strawinskylaan 2001
New York, New York 10022-6069 1077 ZZ Amsterdam
The Netherlands
TRUSTEE, REGISTRAR, PRINCIPAL PAYING AND TRANSFER AGENT
United States Trust Company of New York
770 Broadway, 13th Floor
New York, New York 10003
LISTING AGENT, PAYING AND TRANSFER AGENT
Kredietbank, S.A. Luxembourgeoise
43, Boulevard Royal
L-2955 Luxembourg
<PAGE>
No dealer, salesperson or any other person has been authorized to give
any information or to make any representations in connection with this Exchange
Offer other than those contained in this Prospectus, and, if given or made, such
information or representations must not be relied upon as having been authorized
by the Company. This Prospectus does not constitute an offer to sell or a
solicitation of an offer to buy any security other than those to which it
relates, nor does it constitute an offer to sell or a solicitation of an offer
to buy the notes in any jurisdiction where, or to any person to whom, it is
unlawful to make such an offer or solicitation. Neither the delivery of this
Prospectus nor any sale made hereunder shall, under any circumstances, create
any implication that the information contained herein is correct as of any time
subsequent to the date hereof.
TABLE OF CONTENTS
Page
Summary 1
Service of Process and Enforceability of Civil Liabilities 15
Disclosure Regarding Forward-Looking Statements 15
Presentation of Information 16
Risk Factors 17
Use of Proceeds 26
The Exchange Offer 26
Exchange Rate Information 34
Capitalization 35
Selected Financial and Other Data 36
Management's Discussion and Analysis of Financial
Condition and Results of Operations 38
Business 47
Management 61
Security Ownership of Principal Shareholders and Management 66
Certain Relationships and Related Transactions 67
Description of Certain Indebtedness 69
Description of the Exchange Notes 70
Certain Tax Considerations 101
Plan of Distribution 106
Legal Matters 107
Independent Auditors 107
Available Information 107
General Listing Information 108
Index to Financial Statements F-1
Glossary A-1
<PAGE>
VERSATEL
TELECOM
INTERNATIONAL N.V.
Offer to Exchange
13 1/4% Senior Notes due 2008
for all Outstanding
13 1/4% Senior Notes due 2008
PROSPECTUS
___________, 1999
<PAGE>
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
Item 20. Indemnification of Directors and Officers
Netherlands law does not prohibit indemnification of directors,
employees and agents of corporations. The Company is in the process of obtaining
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 21. Exhibits and Financial Statement Schedules
(a) Exhibits
3.1* -- Deed of Incorporation and Articles of Association (as amended) of the
Company
4.1 -- Form of Outstanding Note for the Registrant's 13.25% Senior Notes
(contained in Indenture filed as Exhibit 4.3)
4.2 -- Form of Exchange Note for the Registrant's 13.25% Senior Notes
(contained in Indenture filed as Exhibit 4.3)
4.3 -- Indenture, dated December 3, 1998, between the Company and United
States Trust Company of New York, as Trustee
4.4 -- The Registration Rights Agreement, dated December 3, 1998, between
the Company and Initial Purchasers
4.5 -- Escrow Agreement, dated December 3, 1998, between the Company and
United States Trust Company of New York as Trustee and Escrow Agent
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* -- Indenture, dated May 27, 1998, between the Company and United States
Trust Company of New York, as Trustee
10.2* -- Escrow Agreement, dated May 27, 1998, between the Company and United
States Trust Company of New York as Trustee and Escrow Agent
12.1 -- Statements re computation of earnings to fixed charges
21.1 -- List of subsidiaries
23.1 -- Consent of Shearman & Sterling (included as part of Exhibit 5.1)
23.2 -- Consent of Arthur Andersen
23.3 -- Consent of Stibbe Simont Monahan Duhot (included as part of
Exhibit 5.2)
24.1 -- Power of Attorney (included on the signature pages of this
Registration Statement)
25.1 -- Statement of Eligibility of United States Trust Company of New York,
Trustee
99.1 -- Form of Letter of Transmittal
99.2 -- Form of Notice of Guaranteed Delivery
- -----------------
* 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.
II-1
(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
The financial statement schedules of the Company have been omitted
because the information required to be set forth therein is not applicable or is
shown in the Financial Statements or Notes thereto.
Item 22. Undertakings
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers for sales are
being made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by
section 10(a)(3) of the Securities Act of 1933.
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration statement
(or the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental
change in the information set forth in the registration
statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar
value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form
of prospectus filed with the Commission pursuant to Rule
424(b) if, in the aggregate, the changes in volume and price
represent no more than a 20% change in the maximum aggregate
offering price set forth in the "Calculation of Registration
Fee" table in the effective registration statement.
(iii) To include any material information with
respect to the plan of distribution not previously disclosed
in the registration statement or any material change to such
information in the registration statement.
Provided, however, that paragraphs(1)(i) and(1)(ii) of this section do
not apply if the registration statement is on Form S-3, Form S-8 or
Form F-3, and the information required to be included in a
post-effective amendment by those paragraphs is contained in periodic
reports filed with or furnished to the Commission by the registrant
pursuant to section 13 or section 15(d) of the Securities Exchange Act
of 1934 that are incorporated by reference in the registration
statement.
II-2
<PAGE>
(2) That, for the purpose of determining any liability under
the Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at
the termination of the offering.
(4) If the registrant is a foreign private issuer, to file a
post-effective amendment to the registration statement to include any
financial statement required by ss. 210.3-19 of this chapter at the
start of any delayed offering or throughout a continuous offering.
Financial statements and information otherwise required by Section
10(a)(3) of the Act need not be furnished, provided that the registrant
includes in the prospectus, by means of a post-effective amendment,
financial statements required pursuant to this paragraph (a)(4) and
other information necessary to ensure that all other information in the
prospectus is at least as current as the date of those financial
statements. Notwithstanding the foregoing, with respect to registration
statements on Form F-3, a post-effective amendment need not be filed to
include financial statements and information required by Section
10(a)(3) of the Act or ss. 210.3-19 of this chapter if such financial
statements and information are contained in periodic reports filed with
or furnished to the Commission by the registrant pursuant to section 13
or section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the Form F-3.
The undersigned registrant hereby undertakes as follows: that prior to
any public reoffering of the securities registered hereunder through use of a
prospectus which is a part of this registration statement, by any person or
party who is deemed to be an underwriter within the meaning of Rule 145(c), the
issuer undertakes that such reoffering prospectus will contain the information
called for by the applicable registration form with respect to reofferings by
persons who may be deemed underwriters, in addition to the information called
for by the other Items of the applicable form.
The undersigned registrant hereby undertakes that every prospectus (i)
that is filed pursuant to paragraph (1) immediately preceding, or (ii) that
purports to meet the requirement of section 10(a)(3) of the Act and is used in
connection with an offering of securities subject to Rule 415, will be filed as
a part of an amendment to the registration statement and will not be used until
such amendment is effective, and that, for purposes of determining any liability
under the Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
The undersigned registrant hereby undertakes: (i) to respond to
requests for information that is incorporated by reference into the prospectus
pursuant to Item 4, 10(b), 11 or 13 of this Form, within one business day of
receipt of such request, and to send the incorporated documents by first class
mail or other equally prompt means; and (ii) to arrange or provide for a
facility in the U.S. for the purpose of responding to such requests. The
undertaking in subparagraph (i) above includes information contained in
documents filed subsequent to the effective date of the registration statement
through the date of responding to the request.
The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
Insofar as indemnification arising under the Securities Act of 1933 may
be permitted to directors, officers, or persons controlling the registrant
pursuant to the foregoing provisions, the registrant has been informed that in
the opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act and is therefore unenforceable. In
the event that a claim for indemnification against such liabilities (other than
the payment by the registrant of expenses incurred or paid by a director,
officer or controlling person of the registrant
II-3
<PAGE>
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 Act and will be governed by the final adjudication of such
issue.
II-4
<PAGE>
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
the requirements for filing a Form F-4 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 12th day
of January, 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 on the 12th day of January, 1999. Each person whose
signature appears below hereby authorizes R. Gary Mesch and Raj Raithatha and
each of them, with full power of substitution, to execute in the name and on
behalf of such person any amendment or any post-effective amendment to this
Registration Statement and to file the same, with any exhibits thereto and other
documents in connection therewith, making such changes in this Registration
Statement as the Registrant deems appropriate, and appoints each of R. Gary
Mesch and Raj Raithatha and each of them, with full power of substitution,
attorney-in-fact to sign any amendment and any post-effective amendment to this
Registration Statement and to file the same, with any exhibits thereto and other
documents in connection therewith.
Signature Title
--------- -----
/s/ R. GARY MESCH Managing Director (principal executive
- --------------------------------
R. Gary Mesch officer)
/s/ RAJ RAITHATHA Chief Financial Officer (principal
- --------------------------------
Raj Raithatha financial and accounting officer)
/s/ LEOPOLD W.A.M. VAN DOORNE Supervisory Director
- --------------------------------
Leopold W.A.M. van Doorne
Supervisor Director
- --------------------------------
Denis O'Brien
/s/ HANS WACKWITZ Supervisory Director
- --------------------------------
Hans Wackwitz
/s/ JAMES MEADOWS Supervisory Director
- --------------------------------
James Meadows
II-5
<PAGE>
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 12th day of January, 1999.
Name Capacity
---- --------
/s/ DONALD J. PUGLISI Managing Director of Puglisi & Associates
- --------------------------------
Donald J. Puglisi
II-6
<PAGE>
INDEX TO EXHIBITS
Exhibit No. Description
- ----------- -----------
3.1* -- Deed of Incorporation and Articles of Association (as amended) of
the Company
4.1 -- Form of Outstanding Note for the Registrant's 13.25% Senior Notes
(contained in Indenture filed as Exhibit 4.3)
4.2 -- Form of Exchange Note for the Registrant's 13.25% Senior Notes
(contained in Indenture filed as Exhibit 4.3)
4.3 -- Indenture, dated December 3, 1998, between the Company and United
States Trust Company of New York, as Trustee
4.4 -- The Registration Rights Agreement, dated December 3, 1998, between
the Company and the Initial Purchasers
4.5 -- Escrow Agreement, dated December 3, 1998, between the Company and
United States Trust Company of New York as Trustee and Escrow Agent
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* -- Indenture, dated May 27, 1998, between the Company and United States
Trust Company of New York, as Trustee
10.2* -- Escrow Agreement, dated May 27, 1998, between the Company and United
States Trust Company of New York as Trustee and Escrow Agent
12.1 -- Statements re computation of earnings to fixed charges
21.1 -- List of subsidiaries
23.1 -- Consent of Shearman & Sterling (included as part of Exhibit 5.1)
23.2 -- Consent of Arthur Andersen
23.3 -- Consent of Stibbe Simont Monahan Duhot (included as part of
Exhibit 5.2)
24.1 -- Power of Attorney (included on the signature pages of this
Registration Statement)
25.1 -- Statement of Eligibility of United States Trust Company of New York,
Trustee
99.1 -- Form of Letter of Transmittal
99.2 -- Form of Notice of Guaranteed Delivery
- -----------------
* 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.
EXHIBIT 4.3
================================================================================
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 December 3, 1998
----------------------
$150,000,000 13 1/4% Senior Notes due 2008
================================================================================
<PAGE>
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............................. 21
SECTION 1.3 Rules of Construction......................................... 22
ARTICLE II
THE NOTES................................ 22
SECTION 2.1 Form and Dating............................................... 22
SECTION 2.2 Execution and Authentication.................................. 24
SECTION 2.3 Registrar and Paying Agent.................................... 25
SECTION 2.4 Paying Agent To Hold Assets in Trust.......................... 26
SECTION 2.5 List of Holders............................................... 26
SECTION 2.6 Book-Entry Provisions for Global Notes........................ 26
SECTION 2.7 Registration of Transfer and Exchange......................... 27
SECTION 2.8 Replacement Notes............................................. 33
SECTION 2.9 Outstanding Notes............................................. 34
SECTION 2.10 Treasury Notes................................................ 34
SECTION 2.11 Temporary Notes............................................... 35
SECTION 2.12 Cancellation.................................................. 35
SECTION 2.13 Defaulted Interest............................................ 35
SECTION 2.14 CUSIP, ISIN and Common Code Numbers........................... 36
SECTION 2.15 Deposit of Moneys............................................. 36
SECTION 2.16 Certain Matters Relating to Global Notes...................... 36
SECTION 2.17 Separation of Warrants and Notes.............................. 36
ARTICLE III
REDEMPTION................................ 37
SECTION 3.1 Optional Redemption........................................... 37
SECTION 3.2 Notices to Trustee............................................ 37
SECTION 3.3 Selection of Notes To Be Redeemed............................. 37
SECTION 3.4 Notice of Redemption.......................................... 38
SECTION 3.5 Effect of Notice of Redemption................................ 39
SECTION 3.6 Deposit of Redemption Price................................... 39
SECTION 3.7 Notes Redeemed in Part........................................ 40
<PAGE>
ARTICLE IV
COVENANTS................................ 40
SECTION 4.1 Payment of Notes.............................................. 40
SECTION 4.2 Maintenance of Office or Agency............................... 41
SECTION 4.3 Limitation on Restricted Payments............................. 41
SECTION 4.4 Limitation on Indebtedness.................................... 43
SECTION 4.5 Corporate Existence........................................... 47
SECTION 4.6 Payment of Taxes and Other Claims............................. 47
SECTION 4.7 Maintenance of Properties and Insurance....................... 48
SECTION 4.8 Compliance Certificate; Notice of Default..................... 48
SECTION 4.9 Compliance with Laws.......................................... 49
SECTION 4.10 Reports....................................................... 49
SECTION 4.11 Waiver of Stay, Extension or Usury Laws....................... 50
SECTION 4.12 Limitation on Transactions with Shareholders and Affiliates... 51
SECTION 4.13 Limitation on Dividend and Other Payment Restrictions
Affecting Restricted Subsidiaries............................. 51
SECTION 4.14 Limitation on Liens........................................... 53
SECTION 4.15 Change of Control............................................. 53
SECTION 4.16 Limitation on Asset Sales..................................... 55
SECTION 4.17 Limitation on Issuance of Guarantees of Indebtedness by
Restricted Subsidiaries....................................... 59
SECTION 4.18 Business of the Company; Restriction on Transfers of
Existing Business............................................. 59
SECTION 4.19 Limitation on the Issuance and Sale of Capital Stock of
Restricted Subsidiaries....................................... 60
SECTION 4.20 Additional Amounts............................................ 60
SECTION 4.21 Payment of Non-Income Taxes and Similar Charges............... 61
ARTICLE V
SUCCESSOR CORPORATION.......................... 61
SECTION 5.1 Consolidation, Merger, and Sale of Assets..................... 61
SECTION 5.2 Successor Corporation Substituted............................. 62
ARTICLE VI
DEFAULT AND REMEDIES........................... 62
SECTION 6.1 Events of Default............................................. 62
SECTION 6.2 Acceleration.................................................. 64
SECTION 6.3 Other Remedies................................................ 64
SECTION 6.4 The Trustee May Enforce Claims Without Possession of
Securities.................................................... 64
SECTION 6.5 Rights and Remedies Cumulative................................ 65
SECTION 6.6 Delay or Omission Not Waiver.................................. 65
<PAGE>
SECTION 6.7 Waiver of Past Defaults....................................... 65
SECTION 6.8 Control by Majority........................................... 66
SECTION 6.9 Limitation on Suits........................................... 66
SECTION 6.10 Rights of Holders To Receive Payment.......................... 66
SECTION 6.11 Collection Suit by Trustee.................................... 67
SECTION 6.12 Trustee May File Proofs of Claim.............................. 67
SECTION 6.13 Priorities.................................................... 67
SECTION 6.14 Restoration of Rights and Remedies............................ 68
SECTION 6.15 Undertaking for Costs......................................... 68
SECTION 6.16 Compliance Certificate; Notices of Default.................... 68
ARTICLE VII
TRUSTEE................................. 69
SECTION 7.1 Duties of Trustee............................................. 69
SECTION 7.2 Rights of Trustee............................................. 70
SECTION 7.3 Individual Rights of Trustee.................................. 71
SECTION 7.4 Trustee's Disclaimer.......................................... 72
SECTION 7.5 Notice of Default............................................. 72
SECTION 7.6 Report by Trustee to Holders.................................. 72
SECTION 7.7 Compensation and Indemnity.................................... 73
SECTION 7.8 Replacement of Trustee........................................ 74
SECTION 7.9 Successor Trustee by Merger, Etc.............................. 75
SECTION 7.10 Corporate Trustee Required; Eligibility....................... 75
SECTION 7.11 Disqualification; Conflicting Interests....................... 75
SECTION 7.12 Preferential Collection of Claims Against Company............. 75
ARTICLE VIII
SATISFACTION AND DISCHARGE OF INDENTURE................. 76
SECTION 8.1 Option To Effect Legal Defeasance or Covenant Defeasance...... 76
SECTION 8.2 Legal Defeasance and Discharge................................ 76
SECTION 8.3 Covenant Defeasance........................................... 76
SECTION 8.4 Conditions to Legal or Covenant Defeasance.................... 77
SECTION 8.5 Satisfaction and Discharge of Indenture....................... 79
SECTION 8.6 Survival of Certain Obligations............................... 79
SECTION 8.7 Acknowledgement of Discharge by Trustee....................... 80
SECTION 8.8 Application of Trust Moneys................................... 80
SECTION 8.9 Repayment to the Company; Unclaimed Money..................... 80
SECTION 8.10 Reinstatement................................................. 81
ARTICLE IX
AMENDMENTS, SUPPLEMENTS AND WAIVERS................... 81
SECTION 9.1 Without Consent of Holders of Notes........................... 81
<PAGE>
SECTION 9.2 With Consent of Holders of Notes.............................. 82
SECTION 9.3 Compliance with TIA........................................... 83
SECTION 9.4 Revocation and Effect of Consents............................. 83
SECTION 9.5 Notation on or Exchange of Notes.............................. 84
SECTION 9.6 Trustee To Sign Amendments, Etc............................... 84
ARTICLE X
COLLATERAL AND SECURITY......................... 84
SECTION 10.1 Escrow Agreement.............................................. 84
SECTION 10.2 Recording and Opinions........................................ 85
SECTION 10.3 Release of Collateral......................................... 86
SECTION 10.4. Certificates of the Company................................... 86
SECTION 10.5. Authorization of Actions to be Taken by the Trustee Under
the Escrow Agreement.......................................... 87
SECTION 10.6. Authorization of Receipt of Funds by the Trustee Under the
Escrow Agreement.............................................. 87
SECTION 10.7. Termination of Security Interest.............................. 87
ARTICLE XI
MISCELLANEOUS.............................. 88
SECTION 11.1 TIA Controls.................................................. 88
SECTION 11.2 Notices....................................................... 88
SECTION 11.3 Communications by Holders with Other Holders.................. 89
SECTION 11.4 Certificate and Opinion as to Conditions Precedent............ 89
SECTION 11.5 Statements Required in Certificate or Opinion................. 90
SECTION 11.6 Rules by Trustee, Paying Agent, Registrar..................... 90
SECTION 11.7 Legal Holidays................................................ 90
SECTION 11.8 Governing Law................................................. 90
SECTION 11.9 Submission to Jurisdiction; Appointment of Agent for
Service; Waiver............................................... 90
SECTION 11.10 No Adverse Interpretation of Other Agreements................. 91
SECTION 11.11 No Personal Liability of Directors, Officers, Employees,
Stockholders or Incorporators................................. 91
SECTION 11.12 Currency Indemnity............................................ 92
SECTION 11.13 Successors.................................................... 92
SECTION 11.14 Counterpart Originals......................................... 92
SECTION 11.15 Severability.................................................. 92
SECTION 11.16 Table of Contents, Headings, etc.............................. 93
<PAGE>
EXHIBITS
Exhibit A - Form of Initial Global Note
Exhibit B - Form of Initial Definitive Note
Exhibit C - Form of Exchange Global Note
Exhibit D - Form of Exchange Definitive Note
Exhibit E - Form of Transfer Certificate for Transfer from U.S. Global
Note to Regulation S Global Note
Exhibit F - Form of Transfer Certificate for Transfer from Regulation S
Global Note to U.S. Global Note
NOTE: This Table of Contents shall not, for any purpose, be deemed to
be part of this Indenture.
<PAGE>
CROSS-REFERENCE TABLE
TIA Indenture
Section Section
- ------- -------
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)......................................................... 11.3
(c)......................................................... 11.3
313(a)............................................................ 7.6
(b)(1)...................................................... 11.3
(b)(2)...................................................... 7.6
(c)......................................................... 7.6; 11.2
(d)......................................................... 7.6
314(a)............................................................ 4.8; 4.10;
11.2; 11.4
(b)......................................................... 11.2
(c)(1)...................................................... 7.2; 11.4
(c)(2)...................................................... 7.2; 11.4
(c)(3)...................................................... NA
(d)......................................................... 11.3;11.4;
11.5
(e)......................................................... 11.5
(f)......................................................... NA
315(a)............................................................ 7.1(c)
(b)......................................................... 7.5; 11.2
(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
<PAGE>
(b)......................................................... 2.4
318(a)............................................................ 11.1
(c)......................................................... 11.1
- ----------------------
NA means Not Applicable.
NOTE: This Cross-Reference Table shall not, for any purpose,
be deemed to be a part of this Indenture.
<PAGE>
1
INDENTURE, dated as of December 3, 1998,
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
its 13 1/4% Senior Notes due 2008 (the "Initial Notes") and 13 1/4% Senior Notes
due 2008 to be issued in exchange for the Initial Notes pursuant to the
Registration Rights Agreement (the "Exchange Notes" and, together with the
Initial 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
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.
<PAGE>
2
"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
2.16.
"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
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
<PAGE>
3
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 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
<PAGE>
4
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; provided, however, that, with respect to both clause (a) and
clause (b) above, securities deposited in the Escrow Account may have a Stated
Maturity as late as May 15, 2001; (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.
"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),
<PAGE>
5
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.
"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
<PAGE>
6
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 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
<PAGE>
7
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).
"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
<PAGE>
8
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.
"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).
"Escrow Account" means the account established by the Escrow
Agent pursuant to the terms of the Escrow Agreement for the deposit of the
Government
<PAGE>
9
Securities purchased by, or purchased at the direction of, the Company with a
portion of the net proceeds from the Offering.
"Escrow Agent" means United States Trust Company of New York,
as escrow agent under the Escrow Agreement until a successor replaces it in
accordance with the terms of the Escrow Agreement and thereafter means such
successor.
"Escrow Agreement" means the Escrow Agreement, dated as of the
date of this Indenture, among the Escrow Agent, the Trustee and the Company,
governing the disbursement of funds from the Escrow Account.
"Escrow Collateral" means all funds and securities in the
Escrow Account and the proceeds thereof.
"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.
"Exchange Notes" have the meaning provided in the preamble to
this Indenture.
"Exchange Offer" shall have the meaning set forth in the
Registration Rights Agreement.
"Existing Warrants" means warrants to purchase 6.667 Ordinary
Shares of the Company, issued by the Company on May 27, 1998 pursuant to the
First Offering Warrant Agreement.
"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>
11
"First Offering Warrant Agreement" means the Warrant
Agreement, dated as of May 27, 1998, between the Company and the United States
Trust Company of New York, as warrant agent thereunder.
"Global 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
<PAGE>
12
(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 and (y)
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.
"Initial Global Notes" means the Regulation S Global Note and
the U.S. Global Note.
"Initial Notes" shall have the meaning set forth in the
preamble to this Indenture.
"Initial Purchasers" means Lehman Brothers Inc., Lehman
Brothers International (Europe) and Paribas Corporation.
"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
<PAGE>
13
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).
"Liquidated Damages" shall have the meaning set forth in the
Registration Rights Agreement.
<PAGE>
14
"Maturity Date" means May 15, 2008.
"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.
"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,
including through funds contributed, extended, guaranteed or otherwise advanced
by the Company or
<PAGE>
15
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
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.
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16
"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) 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 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 Securities.
"Permitted Liens" means (i) Liens for taxes, assessments,
governmental charges or claims that are being contested in good faith by
appropriate legal proceedings
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17
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, securing Indebtedness under Interest
Rate Agreements and Currency Agreements; (x) Liens arising out of conditional
sale, title retention, consignment or similar
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18
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 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; (xiv) Liens securing Indebtedness under Credit Facilities
incurred in compliance with clause (viii) of paragraph (b) of Section 4.4; and
(xv) Liens with respect to the Escrow Account arising under the Escrow Agreement
(or any similar escrow arrangement entered into in connection with the Existing
Notes).
"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.
"Pledged Securities" means the Government Securities purchased
by the Company and deposited by the Company in the Escrow Account.
"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.
"Private Placement Legend" means the legend set forth in
Section 2.7(g).
"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
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19
pursuant to an effective registration statement under the Securities Act.
"Purchase Date" shall have the meaning set forth in Section
4.16.
"Qualified Institutional Buyer" or "QIB" shall have the
meaning specified in Rule 144A under the Securities Act.
"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 Initial Notes and Paragraphs 7 and 8 of the
Exchange Notes.
"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 Initial Notes and Paragraphs 7 and 8 of the
Exchange Notes.
"Registrar" shall have the meaning set forth in Section 2.3.
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20
"Registration Rights Agreement" means the Registration Rights
Agreement between the Company and the Initial Purchasers, relating to the Notes
and dated as of December 3, 1998, as the same may be amended, supplemented or
modified from time to time in accordance with the terms thereof.
"Regulation S" means Regulation S (including any successor
regulation thereto) under the Securities Act, as it may be amended from time to
time.
"Regulation S Global Note" shall have the meaning set forth in
Section 2.1.
"Regulation S Note" shall have the meaning set forth in
Section 2.1.
"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.
"Representatives" means Lehman Brothers Inc. and Lehman
Brothers International (Europe), on behalf of the Initial Purchasers.
"Restricted Period" shall have the meaning set forth in
Section 2.7(c).
"Restricted Subsidiary" means, at any time, any direct or
indirect Subsidiary of the Company that is then not an Unrestricted Subsidiary.
"Rule 144" means Rule 144 (including any successor regulation
thereto) under the Securities Act, as it may be amended from time to time.
"Rule 144A" means Rule 144A (including any successor
regulation thereto) under the Securities Act, as it may be amended from time to
time.
"S&P" means Standard and Poor's Ratings Group.
"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
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21
(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" shall have the meaning set forth in
Rule 405 (including any successor regulation thereto) of the rules and
regulations (the "Rules and Regulations") of the Commission, as they may be
amended from time to time.
"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.
"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.
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22
"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.
"Unit Agent" means United States Trust Company of New York, as
Unit Agent, under the Unit Agreement.
"Unit Agreement" means the Unit Agreement, dated as of
December 3, 1998, among the Company, the Trustee, the Unit Agent and United
States Trust Company of New York, as Warrant Agent.
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23
"Units" means units each consisting of $1,000 aggregate
principal amount of Notes and one Warrant to purchase 6.667 Class B Shares of
the Company, issued by the Company on the Issue Date.
"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 (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
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24
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. Global Note" shall have the meaning set forth in Section
2.1.
"U.S. Notes" shall have the meaning set forth in Section 2.1.
"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 Issue
Date 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
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25
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.
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.
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26
ARTICLE II
THE NOTES
SECTION 2.1 Form and Dating. The Initial 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 Exchange Notes
and the notation relating to the Trustee's certificate of authentication shall
be substantially in the form of Exhibits C or D, 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, B, C or D 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. The Notes will initially be
represented by the Initial Global Notes.
Notes offered and sold in their initial distribution in
reliance on Regulation S shall be initially issued as one or more global notes,
in registered global form without interest coupons, substantially in the form of
Exhibit A hereto, with such applicable legends as are provided in Exhibit A
hereto, except as otherwise permitted herein. Such Initial Global Notes shall be
referred to collectively herein as the "Regulation S Global Note." Such
Regulation S Global Note shall be deposited on behalf of the holders of the
Notes represented thereby with the Trustee, at its New York office, as custodian
for DTC, and registered in the name of DTC or its nominee, duly executed by the
Company and authenticated by the Trustee or an Authenticating Agent as provided
herein, for credit to the accounts of the respective depositaries for Euroclear
and Cedel (or such other accounts as they may direct); provided that until such
time as the Notes Separate (as defined herein) from the Warrants, the Regulation
S Global Note shall be registered in the name of the Unit Agent and shall be
represented by a Global Unit (as defined in the Unit Agreement) deposited with
the Unit Agent as custodian for and registered in the name of DTC or its
nominee, for credit to the subscribers' respective accounts at Euroclear and
Cedel. The aggregate principal amount of the Regulation S Global Note may from
time to time be increased or decreased by adjustments made on the records of the
Trustee, as custodian for DTC, or the records of DTC or its nominee, as the case
may be, as hereinafter provided (or by the issue of a further Regulation S
Global Note), in
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27
connection with a corresponding decrease or increase in the aggregate principal
amount of the U.S. Global Note or in consequence of the issue of Definitive
Notes or additional Regulation S Notes, as hereinafter provided. The Regulation
S Global Note and all other Initial Notes that are not U.S. Global Notes shall
collectively be referred to herein as the "Regulation S Notes".
Notes offered and sold in their initial distribution in
reliance on Rule 144A shall be initially issued as one or more global notes in
registered, global form without interest coupons, substantially in the form of
Exhibit A hereto, with such applicable legends as are provided in Exhibit A
hereto, except as otherwise permitted herein. Such Initial Global Note shall be
referred to collectively herein as the "U.S. Global Note." Such U.S. Global
Notes shall be deposited on behalf of the holders of the Notes represented
thereby by the Trustee, at its New York office, as custodian for DTC, duly
executed by the Company and authenticated by the Trustee or Authenticating Agent
as provided herein; provided until such time as the Notes Separate from the
Warrants, the U.S. Global Note shall be registered in the name of the Unit Agent
and shall be represented by a Global Unit deposited with the Unit Agent as
custodian for and registered in the name of DTC or its nominee. The aggregate
principal amount of the U.S. Global Note may from time to time be increased or
decreased by adjustments made on the records of the Trustee, as custodian for
DTC, or the records of DTC or its nominee, as the case may be, as hereinafter
provided (or by the issue of a further U.S. Global Note), in connection with a
corresponding decrease or increase in the aggregate principal amount of the
Regulation S Global Note or in consequence of the issue of Definitive Notes or
additional U.S. Notes, as hereinafter provided. The U.S. Global Note and all
other Initial Notes evidencing the debt, or any portion of the debt, initially
evidenced by such U.S. Global Note, shall collectively be referred to herein as
the "U.S. 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.
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28
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) Initial Notes for original
issue in the aggregate principal amount not to exceed $150,000,000, and (ii)
Exchange Notes from time to time for issue in the aggregate principal amount not
to exceed $150,000,000 for issuance in exchange for a like principal amount of
Initial Notes pursuant to an exchange offer registration statement under the
Securities Act or pursuant to a Private Exchange (as defined in the Registration
Rights Agreement), in each case upon receipt of a Company Order in the form of
an Officers' Certificate. Exchange Notes may have such distinctive series
designation, and such changes in the form thereof, as are specified in the
written order referred to in the preceding sentence. 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 Initial Notes or Exchange Notes, whether the Notes are to be issued as
Definitive Notes or Global Notes and whether or not the Notes shall bear the
Private Placement Legend, or 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 Notes outstanding at any time may not exceed $150,000,000, except as provided
in Section 2.8. 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 Notes shall be issuable only in denominations of $1,000
and any integral multiple thereof.
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29
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 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.
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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, Liquidated Damages, 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 Book-Entry Provisions for Global Notes. (a) The
Global Notes initially shall (i) be registered in the name of DTC or the nominee
of such depositary, (ii) be delivered to the Trustee as custodian for such
depositary and (iii) bear legends as set forth in Section 2.7(g) hereto.
(b) Restrictions on Transfer and Exchange of Global Notes.
Notwithstanding any other provisions of this Indenture, a Global Note may not be
transferred as a whole except by DTC to a nominee of DTC or by a nominee of DTC
to DTC or another successor of DTC or a nominee of such successor depositary.
Interests of beneficial owners in the Global Notes may be transferred or
exchanged for Definitive Notes in accordance with the rules and procedures of
DTC and the provisions of Section 2.7. All Global Notes shall be exchanged by
the Company (with authentication by the Trustee) for one or more Definitive
Notes, 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 or (b) at any
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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 a Global 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 Note after such exchange shall
be $1,000 or integral multiples thereof. Whenever all of a Global 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 Note
is exchanged for one or more Definitive Notes the Global 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 Note such that the principal amount of
such Global Note will be equal to the portion of such Global Note not exchanged
and shall thereafter return such Global Note to such Holder. A Global Note may
not be exchanged for a Definitive Note other than as provided in this Section
2.6(b).
(c) In connection with the transfer of Global Notes as an
entirety to beneficial owners pursuant to paragraph (b) of this Section 2.6, the
Global Notes shall be deemed to be surrendered to the Trustee for cancellation,
and the Company shall execute, and the Trustee shall upon written instructions
from the Company authenticate and make available for delivery, to each
beneficial owner, identified by DTC in exchange for its beneficial interest in
the Global Notes, an equal aggregate principal amount of Definitive Notes of
authorized denominations.
(d) Any Definitive Note constituting a U.S. Note delivered in
exchange for an interest in a Global Note pursuant to paragraph (b) of this
Section 2.6 shall, except as otherwise provided by Section 2.8, bear the Private
Placement Legend.
SECTION 2.7 Registration of Transfer and Exchange. (a)
Notwithstanding any provision to the contrary herein, so long as a Note remains
outstanding, transfers of beneficial interests in Global Notes or transfers of
Definitive Notes, in whole or in part, shall be made only in accordance with
this Section 2.7.
(b) U.S. Global Note to Regulation S Global Note. If a holder
of a beneficial interest in the U.S. Global Note deposited with DTC wishes at
any time to exchange its interest in such U.S. Global Note for an interest in
the Regulation S Global Note, or to transfer its interest in such U.S. Global
Note to a Person who wishes to take delivery thereof in the form of an interest
in such Regulation S Global Note, such holder may, subject to the rules and
procedures of DTC and to the requirements set forth in the following sentence,
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exchange or cause the exchange or transfer or cause the transfer of such
interest for an equivalent beneficial interest in such Regulation S Global Note.
Upon receipt by the Trustee, as Transfer Agent, at its office in The City of New
York of (1) instructions given in accordance with DTC's procedures from or on
behalf of a holder of a beneficial interest in the U.S. Global Note, directing
the Trustee (via DWAC), as Transfer Agent, to credit or cause to be credited a
beneficial interest in the Regulation S Global Note in an amount equal to the
beneficial interest in the U.S. Global Note to be exchanged or transferred, (2)
a written order given in accordance with DTC's procedures containing information
regarding the Euroclear or Cedel account to be credited with such increase and
the name of such account, and (3) a certificate in the form of Exhibit E given
by the holder of such beneficial interest stating that the exchange or transfer
of such interest has been made pursuant to and in accordance with Rule 904 of
Regulation S or Rule 144 under the Securities Act, the Trustee, as Transfer
Agent, shall promptly deliver appropriate instructions (via DWAC) to DTC, its
nominee, or the custodian for DTC, as the case may be, to reduce or reflect on
its records a reduction of the U.S. Global Note by the aggregate principal
amount of the beneficial interest in such U.S. Global Note to be so exchanged or
transferred from the relevant participant, and the Trustee, as Transfer Agent,
shall promptly deliver appropriate instructions (via DWAC) to DTC, its nominee,
or the custodian for DTC, as the case may be, concurrently with such reduction,
to increase or reflect on its records an increase of the principal amount of
such Regulation S Global Note by the aggregate principal amount of the
beneficial interest in such U.S. Global Note to be so exchanged or transferred,
and to credit or cause to be credited to the account of the Person specified in
such instructions (who shall be the agent member of Euroclear or Cedel, or both,
as the case may be) a beneficial interest in such Regulation S Global Note equal
to the reduction in the principal amount of such U.S. Global Note.
(c) Regulation S Global Note to U.S. Global Note. If a holder
of a beneficial interest in the Regulation S Global Note wishes at any time to
exchange its interest in such Regulation S Global Note for an interest in the
U.S. Global Note, or to transfer its interest in such Regulation S Global Note
to a Person who wishes to take delivery thereof in the form of an interest in
such U.S. Global Note, such holder may, subject to the rules and procedures of
Euroclear or Cedel and DTC, as the case may be, and to the requirements set
forth in the following sentence, exchange or cause the exchange or transfer or
cause the transfer of such interest for an equivalent beneficial interest in
such U.S. Global Note. Upon receipt by the Trustee, as Transfer Agent, at its
office in The City of New York of (l) instructions given in accordance with the
procedures of Euroclear or Cedel and DTC,
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33
as the case may be, from or on behalf of a beneficial owner of an interest in
the Regulation S Global Note directing the Trustee, as Transfer Agent, to credit
or cause to be credited a beneficial interest in the U.S. Global Note in an
amount equal to the beneficial interest in the Regulation S Global Note to be
exchanged or transferred, (2) a written order given in accordance with the
procedures of Euroclear or Cedel and DTC, as the case may be, containing
information regarding the account with DTC to be credited with such increase and
the name of such account, and (3) prior to or on the 40th day after the later of
the commencement of the offering of the Notes and the Closing Date (the
"Restricted Period"), a certificate in the form of Exhibit F given by the
holder of such beneficial interest and stating that the Person transferring such
interest in such Regulation S Global Note reasonably believes that the Person
acquiring such interest in such U.S. Global Note is a Qualified Institutional
Buyer (as defined in Rule 144A) and is obtaining such beneficial interest in a
transaction meeting the requirements of Rule 144A and any applicable securities
laws of any state of the United States or any other jurisdiction, the Trustee,
as Transfer Agent, shall promptly deliver (via DWAC) appropriate instructions to
DTC, its nominee, or the custodian for DTC, as the case may be, to reduce or
reflect on its records a reduction of the Regulation S Global Note by the
aggregate principal amount of the beneficial interest in such Regulation S
Global Note to be exchanged or transferred, and the Trustee, as Transfer Agent,
shall promptly deliver (via DWAC) appropriate instructions to DTC, its nominee,
or the custodian for DTC, as the case may be, concurrently with such reduction,
to increase or reflect on its records an increase of the principal amount of
such U.S. Global Note by the aggregate principal amount of the beneficial
interest in such Regulation S Global Note to be so exchanged or transferred, and
to credit or cause to be credited to the account of the Person specified in such
instructions a beneficial interest in such U.S. Global Note equal to the
reduction in the principal amount of such Regulation S Global Note. After the
expiration of the Restricted Period, the certification requirement set forth in
clause (3) of the second sentence of this Section 2.7(c)(iii) will no longer
apply to such transfers.
(d) Any beneficial interest in one of the Global Notes that is
transferred to a Person who takes delivery in the form of an interest in the
other Global Note will, upon transfer, cease to be an interest in such Global
Note and become an interest in the other Global Note and, accordingly, will
thereafter be subject to all transfer restrictions and other procedures
applicable to beneficial interests in such other Global Note for as long as it
remains such an interest.
(e) Other Exchanges. In the event that a Global
Note is exchanged for Definitive Notes in registered form
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34
without interest coupons, pursuant to Section 2.6(b), or a Definitive Note in
registered form without interest coupons is exchanged for another such
Definitive Note in registered form without interest coupons, or a Definitive
Note is exchanged for a beneficial interest in a Global Note, such Notes may be
exchanged or transferred for one another only in accordance with such procedures
as are substantially consistent with the provisions of Sections 2.7(b) and (c)
above (including the certification requirements intended to ensure that such
exchanges or transfers comply with Rule 144, Rule 144A or Regulation S, as the
case may be) and as may be from time to time adopted by the Company and the
Trustee.
(f) Interests in Regulation S Global Note to be Held Through
Euroclear or Cedel. Prior to the expiration of the Restricted Period, beneficial
interests in the Regulation S Global Note may only be held by DTC through its
member participants who are agent members of Euroclear and Cedel, unless
delivery is made through the U.S. Global Note in accordance with the
certification requirements hereof.
(g) Private Placement Legend. Each Note issued hereunder
shall, upon issuance, bear the legend set forth herein and such legend shall not
be removed from such Note except as provided in the next sentence. The legend
required for a U.S. Note may be removed from a U.S. Note if there is delivered
to the Company and the Trustee such satisfactory evidence, which may include an
opinion of independent counsel licensed to practice law in the State of New
York, as may be reasonably required by the Company and the Trustee, that neither
such legend nor the restrictions on transfer set forth therein are required to
ensure that transfers of such Note will not violate the registration
requirements of the Securities Act. Upon provision of such satisfactory
evidence, the Trustee, at the direction of the Company, shall authenticate and
deliver in exchange for such Note another Note or Notes having an equal
aggregate principal amount that does not bear such legend. If such a legend
required for a U.S. Note has been removed from a U.S. Note as provided above, no
other Note issued in exchange for all or any part of such Note shall bear such
legend, unless the Company has reasonable cause to believe that such other Note
is a "restricted security" within the meaning of Rule 144 and instructs the
Trustee to cause a legend to appear thereon.
The Initial Notes shall bear the following legend (the
"Private Placement Legend") on the face thereof:
THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY
STATE OR OTHER SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST
OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED,
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35
TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF SUCH REGISTRATION OR UNLESS THE TRANSACTION IS EXEMPT FROM,
OR NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF (1) REPRESENTS
THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE
144A UNDER THE SECURITIES ACT) OR (B) IT IS NOT A U.S. PERSON AND IS
ACQUIRING THIS SECURITY IN AN "OFFSHORE TRANSACTION" PURSUANT TO RULE
904 OF REGULATION S, (2) AGREES THAT IT WILL NOT PRIOR TO (X) THE DATE
WHICH IS TWO YEARS (OR SUCH SHORTER PERIOD OF TIME AS PERMITTED BY RULE
144(k) UNDER THE SECURITIES ACT OR ANY SUCCESSOR PROVISION THEREUNDER)
AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF (OR OF ANY
PREDECESSOR OF THIS SECURITY) OR THE LAST DAY ON WHICH THE COMPANY OR
ANY AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS SECURITY (OR ANY
PREDECESSOR OF THIS SECURITY) AND (Y) SUCH LATER DATE, IF ANY, AS MAY
BE REQUIRED BY APPLICABLE LAWS (THE "RESALE RESTRICTION TERMINATION
DATE"), OFFER, SELL OR OTHERWISE TRANSFER THIS SECURITY EXCEPT (A) TO
THE COMPANY, (B) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN
DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE
SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A PERSON
IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED
IN RULE 144A UNDER THE SECURITIES ACT THAT PURCHASES FOR ITS OWN
ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM
NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE
144A, (D) PURSUANT TO OFFERS AND SALES TO NON-U.S. PERSONS THAT OCCUR
OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER THE
SECURITIES ACT OR (E) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND (3) AGREES THAT IT
WILL GIVE TO EACH PERSON TO WHOM THIS SECURITY IS TRANSFERRED A NOTICE
SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND; PROVIDED THAT THE COMPANY
AND THE TRUSTEE SHALL HAVE THE RIGHT PRIOR TO ANY SUCH OFFER, SALE OR
TRANSFER (I) PURSUANT TO CLAUSE (D) OR (E) TO REQUIRE THE DELIVERY OF
AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION
SATISFACTORY TO EACH OF THEM, AND (II) IN EACH OF THE FOREGOING CASES,
TO REQUIRE THAT A CERTIFICATION OR TRANSFER IN THE FORM APPEARING ON
THE OTHER SIDE OF THIS SECURITY IS COMPLETED AND DELIVERED BY THE
TRANSFEROR TO THE TRUSTEE, THIS LEGEND WILL BE REMOVED UPON THE REQUEST
OF THE HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE. AS USED
HEREIN, THE TERMS "OFFSHORE TRANSACTION," "UNITED STATES" AND "U.S.
PERSON" HAVE THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE
SECURITIES ACT.
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36
After Separation, the Global Notes shall also bear the
following legend on the face thereof:
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY ("DTC") TO THE COMPANY OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER
REPRESENTATIVE OF DTC AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE
OF DTC (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER
ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO
ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO.,
HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN
WHOLE, BUT NOT IN PART, TO NOMINEES OF CEDE & CO. OR TO A SUCCESSOR
THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS
GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH
THE RESTRICTIONS SET FORTH IN SECTION 2.6 OF THE INDENTURE DATED
DECEMBER 3, 1998 PURSUANT TO WHICH THEY WERE ISSUED.
(h) General. By its acceptance of any Note bearing the Private
Placement Legend, each Holder of such a Note acknowledges the restrictions on
transfer of such Note set forth in this Indenture and in the Private Placement
Legend and agrees that it will transfer such Note only as provided in this
Indenture.
The Trustee shall have no obligation or duty to monitor,
determine or inquire as to compliance with any restrictions on transfer imposed
under this Indenture or under applicable law with respect to any transfer of any
interest in any Note (including any transfers between or among Agent Members or
beneficial owners of interest in any Global Note) other than to require delivery
of such certificates and other documentation or evidence as are expressly
required by, and to do so if and when expressly required by the terms of, this
Indenture, and to examine the same to determine substantial compliance as to
form with the express requirements hereof.
The Registrar shall retain copies of all letters, notices and
other written communications received pursuant to Section 2.6 or this Section
2.7. The Company shall have the right to inspect and make copies of all such
letters, notices or other written communications at any reasonable time upon the
giving of reasonable written notice to the Registrar.
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(i) Any Initial Notes which are presented to the Registrar for
exchange pursuant to the Exchange Offer shall be exchanged for Exchange Notes of
equal principal amount upon surrender to the Registrar of the Initial Notes to
be exchanged; provided, however, that the Initial Notes so surrendered for
exchange shall be duly endorsed and accompanied by a letter of transmittal or
written instrument of transfer in form satisfactory to the Company, the Trustee
and the Registrar duly executed by the Holder thereof or his attorney who shall
be duly authorized in writing to execute such document. Whenever any Initial
Notes are so surrendered for exchange, the Company shall execute, and upon
receipt of the Company Order provided for in Section 2.2, the Trustee shall
authenticate and deliver to the Holder the same aggregate principal amount of
Exchange Notes as those Initial Notes that have been surrendered.
(j) 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.
(k) 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.
(l) 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, interest, Additional Amounts, if
any, or Liquidated Damages, 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.
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(m) 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 2.7 (other than in respect of the
Exchange Offer, except as otherwise provided in the Registration Rights
Agreement).
(n) 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.
(o) Holders of Initial Notes (or holders of interests therein)
and prospective purchasers designated by such Holders (or holders of interests
therein) will have the right to obtain from the Company upon request by such
Holders (or holders of interests therein) or prospective purchasers, during any
period in which the Company is not subject to Section 13 or 15(d) of the
Exchange Act, or is exempt from reporting pursuant to 12g3-2(b) under the
Exchange Act, the information required by paragraph d(4)(i) of Rule 144A in
connection with any transfer or proposed transfer of such Notes.
SECTION 2.8 Replacement Notes. If a mutilated Definitive Note
is surrendered to the Registrar, if a mutilated Global 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 2.9 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 2.10, 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 2.8 (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 2.8.
If the principal amount of any Note is considered paid under
Section 4.1 hereof, it ceases to be outstanding and interest, Additional
Amounts, if any and Liquidated Damages, 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 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, Additional Amounts,
if any, and Liquidated Damages, if any, on such Notes cease to accrue.
SECTION 2.10 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 2.11 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.
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SECTION 2.12 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 cancellation pursuant to this Section 2.12.
SECTION 2.13 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 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 2.13; 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 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 2.14 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
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41
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.
SECTION 2.15 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 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 2.16 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 2.17 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
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42
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 Initial Notes pursuant to Paragraphs 8 or 9 of such Notes or Exchange
Notes pursuant to Paragraphs 7 or 8 thereof, 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 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
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43
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, Additional Amounts, if any, and
Liquidated Damages, 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, Additional Amounts, if any, and Liquidated
Damages, if any;
(e) that, unless the Company defaults in making the redemption
payment, interest, Additional Amounts, if any, and Liquidated Damages,
if any, 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, Additional Amounts, if any, and
Liquidated Damages, if any, shall cease to accrue on the portion
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44
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 CUSIP, ISIN or Common Code number, and that no
representation is made as to the correctness or accuracy of the CUSIP,
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, Additional Amounts, if any, and Liquidated
Damages, 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, Additional Amounts, if any, and
Liquidated Damages, 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. dollars sufficient to pay the Redemption Price plus
accrued and unpaid interest, if any, Additional Amounts, if any, and Liquidated
Damages, 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.
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45
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, Additional Amounts, if any, and Liquidated Damages,
if any, interest, Additional Amounts and Liquidated Damages 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, Additional Amounts, if any, and Liquidated Damages, 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, Additional Amounts, if any, and
Liquidated Damages, 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.
ARTICLE IV
COVENANTS
SECTION 4.1 Payment of Notes. (a) The Company shall pay the
principal, premium, if any, interest, Additional Amounts, if any, and Liquidated
Damages, if any, on the Notes in the manner provided in such Notes and this
Indenture. An installment of principal of or interest on the 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
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46
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), on any Additional Amounts, and
on any Liquidated Damages, 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 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
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47
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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48
(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
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49
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 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:
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(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, (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; and provided, further, that Indebtedness of the Company to 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
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51
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);
(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;
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(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;
(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
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53
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 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
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54
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
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.
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55
(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 the Escrow Agreement 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 the Escrow Agreement 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,
Additional Amounts, if any, or Liquidated Damages, 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 or the Escrow Agreement 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
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56
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
<PAGE>
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) Upon qualification of this Indenture with the TIA, 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
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58
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; 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:
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59
(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 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,
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60
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
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.
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61
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, and Liquidated Damages,
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 and Liquidated Damages, if any, 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 and Liquidated Damages, if any; (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, as the case may be, and to accrue Liquidated Damages, if any,
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
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62
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
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63
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, and
Liquidated Damages, 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 and Liquidated Damages,
if any, 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
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64
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, which shall govern the terms of the Asset Sale Offer, shall
state:
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65
(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, Additional Amounts, if
any, and Liquidated Damages, 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, Additional
Amounts, if any, and Liquidated Damages, 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, Additional Amounts, if any, and
Liquidated Damages, 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
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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 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
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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.
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
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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
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
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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 3 of the Initial Notes and paragraph 2 of the Exchange Notes, as
applicable (the "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.
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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 supplemental indenture, executed and delivered to
the Trustee, all of the obligations of the Company with respect to the Notes and
under the Indenture, the Escrow Agreement and the Registration Rights Agreement;
(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
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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:
(a) default for 30 days or more in the payment when due of
interest on the Notes or Additional Amounts, if any, or Liquidated Damages, 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
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or the Escrow Agreement 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 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;
(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
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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; or
(j) the Company challenges the Lien on the Escrow Collateral
under the Escrow Agreement prior to such time as the Escrow Collateral is to be
released to the Company, or the Escrow Collateral shall become subject to any
Lien other than the Lien under the Escrow Agreement.
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, and Liquidated Damages, 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, Additional Amounts, if any, or Liquidated Damages, 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 2.8, 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, Additional Amounts, if any, or
Liquidated Damages, 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
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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 2.11, 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
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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, Additional
Amounts, if any and Liquidated Damages, 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, Additional Amounts,
if any or Liquidated Damages, 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
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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, Additional Amounts, if any and
Liquidated Damages, 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, Additional Amounts, if any, and
Liquidated Damages, 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
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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
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
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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.
(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.
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(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, upon qualification of this Indenture under
the TIA, 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
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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, 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.
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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, Additional Amounts, if any, or
Liquidated Damages, 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. This Section 7.6
shall not be operative as a part of this Indenture until this Indenture is
qualified under the TIA, and, until such qualification, this Indenture shall be
construed as if this Section 7.6 were not contained herein.
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.
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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
and the Escrow Agreement, 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
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pay principal or premium, if any, or interest on particular Notes and except for
any assets held in the Escrow Accounts.
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
appointment to the retiring Trustee and to the Company. Immediately after that,
the retiring Trustee
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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
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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.
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:
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(a) the rights of Holders of outstanding Notes to receive payments in respect of
the principal of, premium, if any, interest, Additional Amounts, if any, and
Liquidated Damages, 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
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.
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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,
Additional Amounts, if any, and Liquidated Damages, 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, Additional Amounts, if any, and Liquidated Damages, 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 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
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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 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
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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, Additional Amounts, if any, and Liquidated Damages, 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.
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.
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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, Additional Amounts, if any, and Liquidated Damages,
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,
Additional Amounts, if any, and Liquidated Damages, 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
Article, in trust for the payment of the principal of, premium, if any,
interest, Additional Amounts, if any, and Liquidated Damages, if any, on any
Note and remaining unclaimed for two years after such principal, premium, if
any, interest, Additional Amounts, if any, and Liquidated Damages, 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
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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, Additional Amounts, if any, and Liquidated Damages, 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.
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ARTICLE IX
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, (vii) to comply with requirements of the
Commission in order to effect or maintain the qualification of the Indenture
under the TIA, (viii) to provide for the issuance of the Exchange Notes (which
will have terms identical in all material respects to the Initial Notes except
that the transfer restrictions contained in the Initial Notes will be modified
or eliminated, as appropriate), and which will be treated together with any
outstanding Initial Notes, as a single issue of Notes or (ix) to execute and
deliver any documents necessary or appropriate to release Liens on any Escrow
Collateral as permitted by the Escrow Agreement.
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
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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 payment of principal of, premium, if any, interest,
Additional Amounts, if any, or Liquidated Damages, 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, Additional Amounts, if
any, or Liquidated Damages, 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 Initial Notes or paragraph 2 of the Exchange 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, (x) impair the right of any Holder of the Notes to receive
payment of principal of, interest, Liquidated Damages, if any, 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 or (xi)
modify the provisions of the Escrow Agreement or the Indenture relating to the
Escrow Collateral in any manner adverse to the Holders or release the Escrow
Collateral from the Lien under the Escrow Agreement (except as permitted by the
terms thereunder) or permit any other obligation to be secured by the Escrow
Collateral.
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
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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. From the date on which this
Indenture is qualified under the 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
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.
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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
COLLATERAL AND SECURITY
SECTION 10.1 Escrow Agreement. The due and punctual payment of
the principal of and interest on the Notes when and as the same shall be due and
payable, whether on an Interest Payment Date, at maturity, by acceleration,
repurchase, redemption or otherwise, and interest on the overdue principal of
and interest (to the extent permitted by law), if any, on such Notes and
performance of all other obligations of the Company to the Holders of such Notes
or the Trustee under this Indenture with respect to such Notes, and each of the
Notes, according to the terms hereunder or thereunder, shall be secured as
provided in the Escrow Agreement which the Company, the Escrow Agent and the
Trustee have entered into simultaneously with the execution of this Indenture.
Each Holder of each Note, by its acceptance thereof, consents and agrees to the
terms of the Escrow Agreement (including, without limitation, the provisions
providing for foreclosure and disbursement of Escrow Collateral) as the same may
be in effect or may be amended from time to time in accordance with its terms
and authorizes and directs the Escrow Agent and the Trustee to enter into
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the Escrow Agreement and to perform its obligations and exercise its rights
thereunder in accordance therewith. The Company shall deliver to the Trustee
copies of the Escrow Agreement, and shall do or cause to be done all such acts
and things as may be necessary or proper, or as may be required by the
provisions of the Escrow Agreement, to assure and confirm to the Trustee (acting
on behalf of the Holders of the Notes) the security interest in the Escrow
Collateral with respect to the Notes contemplated by the Escrow Agreement or any
part thereof, as from time to time constituted, so as to render the same
available for the security and benefit of this Indenture with respect to, and
of, such Notes, according to the intent and purposes expressed in the Escrow
Agreement. The Company shall take any and all actions reasonably required to
cause the Escrow Agreement to create and maintain (to the extent possible under
applicable law), as security for the obligations of the Company hereunder, a
valid and enforceable perfected first priority Lien in and on all the Escrow
Collateral with respect to the Notes, in favor of the Trustee (acting on behalf
of the Holders of the Notes) for the benefit of the Holders of such Notes,
superior to and prior to the rights of all third Persons and subject to no other
Liens.
SECTION 10.2 Recording and Opinions. (a) The Company shall
furnish to the Trustee simultaneously with the execution and delivery of this
Indenture an Opinion of Counsel either (i) stating that in the opinion of such
counsel all action has been taken with respect to the recording, registering and
filing of this Indenture, financing statements or other instruments necessary to
make effective the Lien intended to be created by the Escrow Agreement, and
reciting with respect to the security interests in the Escrow Collateral, the
details of such action, or (ii) stating that, in the opinion of such counsel, no
such action is necessary to make such Lien effective.
(b) The Company shall furnish to the Escrow Agent and the
Trustee within 90 days of, and of each anniversary of, December 3, 1998, until
the date upon which the balance of Available Funds (as defined in the Escrow
Agreement) shall have been reduced to zero, an Opinion of Counsel, dated as of
such date, either (i) stating that (A) in the opinion of such counsel, action
has been taken with respect to the recording, registering, filing, re-recording,
re-registering and refiling of all supplemental indentures, financing
statements, continuation statements or other instruments of further assurance as
is necessary, if any, to maintain the Lien of the Escrow Agreement and reciting
with respect to the security interests in the Escrow Collateral the details of
such action or referring to prior Opinions of Counsel in which such details are
given and (B) based on relevant laws as in effect on the date of such Opinion of
Counsel, all
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financing statements and continuation statements have been executed and filed
that are necessary as of such date and during the succeeding 12 months fully to
preserve and protect, to the extent such protection and preservation are
possible by filing, the rights of the Holders of the Notes and the Trustee
hereunder and under the Escrow Agreement with respect to the security interests
in the Escrow Collateral with respect to such Notes or (ii) stating that, in the
opinion of such counsel, no such action is necessary to maintain such Lien and
assignment.
SECTION 10.3 Release of Collateral. (a) Subject to subsections
(b), (c) and (d) of this Section 10.3, Escrow Collateral may be released from
the Lien and security interest created by the Escrow Agreement only in
accordance with the provisions of the Escrow Agreement.
(b) Except to the extent that any Lien on proceeds of Escrow
Collateral is automatically released by operation of Section 9-306 of the
Uniform Commercial Code or other similar law, no Escrow Collateral shall be
released from the Lien and security interest created by the Escrow Agreement
pursuant to the provisions of the Escrow Agreement, other than pursuant to the
terms thereof, unless there shall have been delivered to the Trustee the
certificate required by Section 10.3(d) and Section 10.4.
(c) At any time when an Event of Default shall have occurred
and be continuing and the maturity of the Notes issued on the Issuance Date
shall have been accelerated (whether by declaration or otherwise), no Escrow
Collateral shall be released pursuant to the provisions of the Escrow Agreement,
and no release of Escrow Collateral in contravention of this Section 10.3(c)
shall be effective as against the Holders of Notes, except for the disbursement
of all Available Funds (as defined in the Escrow Agreement) to the Trustee
pursuant to Section 6(c) of the Escrow Agreement.
(d) The release of any Escrow Collateral from the Liens and
security interests created by the Escrow Agreement shall not be deemed to impair
the security under the Escrow Agreement in contravention of the provisions
hereof if and to the extent the Escrow Collateral is released pursuant to the
terms hereof or, subject to complying with the requirements of this Section
10.3, and Section 10.4 pursuant to the terms of the Escrow Agreement. To the
extent applicable, the Company shall cause TIA ss. 314(d) relating to the
release of property or securities from the Lien and security interest of the
Escrow Agreement to be complied with. Any certificate or opinion required by TIA
ss. 314(d) may be made by an Officer of the Company except in cases where TIA
ss. 314(d) requires that such certificate or opinion be made by an independent
Person, which Person shall be an independent engineer, appraiser or
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other expert selected or approved by the Trustee in the
exercise of reasonable care.
SECTION 10.4. Certificates of the Company. The Company shall
furnish to the Trustee, prior to any proposed release of Escrow Collateral other
than pursuant to the express terms of the Escrow Agreement, (i) all documents
required by Section 314(d) of the TIA and (ii) an Opinion of Counsel, which may
be rendered by internal counsel to the Company, to the effect that such
accompanying documents constitute all documents required by Section 314(d) of
the TIA. The Trustee may, to the extent permitted by Sections 7.1 and 7.2,
accept as conclusive evidence of compliance with the foregoing provisions the
appropriate statements contained in such documents and such Opinion of Counsel.
SECTION 10.5. Authorization of Actions to be Taken by the
Trustee Under the Escrow Agreement. Subject to the provisions of Sections 7.1
and 7.2, the Trustee may in the name and on behalf of the Holders of such Notes,
without the consent of the Holders of the Notes, take all actions it deems
necessary or appropriate in order to (a) enforce any of the terms of the Escrow
Agreement and (b) collect and receive any and all amounts payable in respect of
the obligations of the Company hereunder. The Trustee shall have power to
institute and maintain such suits and proceedings as it may deem expedient to
prevent any impairment of the Escrow Collateral by any acts that may be unlawful
or in violation of the Escrow Agreement or this Indenture, and such suits and
proceedings as the Trustee may deem expedient to preserve or protect its
interests and the interests of the Holders of the Notes in the Escrow Collateral
with respect to such Notes (including power to institute and maintain suits or
proceedings to restrain the enforcement of or compliance with any legislative or
other governmental enactment, rule or order that may be unconstitutional or
otherwise invalid if the enforcement of, or compliance with, such enactment,
rule or order would impair the security interest hereunder or be prejudicial to
the interests of the Holders of such Notes or of the Trustee).
SECTION 10.6. Authorization of Receipt of Funds by the Trustee
Under the Escrow Agreement. The Trustee is authorized to receive any funds for
the benefit of the Holders of Notes disbursed under the Escrow Agreement, and to
make further distributions of such funds to the Holders of Notes according to
the provisions of this Indenture.
SECTION 10.7. Termination of Security Interest. Upon the
earliest to occur of (i) the date upon which the balance of Available Funds (as
defined in the Escrow Agreement) shall have been reduced to zero, (ii) the
payment in full of all obligations of the Company under this
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Indenture and the Notes, (iii) Legal Defeasance pursuant to Section 8.2 and (iv)
Covenant Defeasance pursuant to Section 8.3, the Trustee shall, at the written
request of the Company, release the Liens pursuant to the Escrow Agreement upon
the Company's compliance with the provisions of the TIA pertaining to release of
collateral.
ARTICLE XI
MISCELLANEOUS
SECTION 11.1 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 11.2 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
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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 11.3 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 11.4 Certificate and Opinion as to Conditions
Precedent. Upon any request or application by the
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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 11.5), 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 11.5 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 11.6 Rules by Trustee, Paying Agent, Registrar. The
Trustee, Paying Agent or Registrar may make reasonable rules for its functions.
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SECTION 11.7 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 11.8 Governing Law. This Indenture and
the Notes shall be governed by and construed in accordance with the internal
laws of the State of New York.
SECTION 11.9 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"), 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.
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104
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 11.10 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 11.11 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 11.12 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
<PAGE>
105
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 11.13 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 11.14 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 11.15 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 11.16 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.
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106
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 /s/ R. Gary Mesch
----------------------------
Name: R. Gary Mesch
Title: Managing Director
UNITED STATES TRUST COMPANY OF NEW
YORK, as Trustee, Registrar and
Paying Agent,
by /s/ John Guiliano
----------------------------
Name: John Guiliano
Title: Vice President
<PAGE>
EXHIBIT A
TO THE INDENTURE
[FORM OF FACE OF INITIAL GLOBAL NOTE]
THIS NOTE IS A GLOBAL NOTE WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO.
THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE OR
OTHER SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION
HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR
OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS THE
TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF
THE SECURITIES ACT. THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF (1)
REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE
144A UNDER THE SECURITIES ACT) OR (B) IT IS NOT A U.S. PERSON AND IS ACQUIRING
THIS SECURITY IN AN "OFFSHORE TRANSACTION" PURSUANT TO RULE 904 OF REGULATION S,
(2) AGREES THAT IT WILL NOT PRIOR TO (X) THE DATE WHICH IS TWO YEARS (OR SUCH
SHORTER PERIOD OF TIME AS PERMITTED BY RULE 144(k) UNDER THE SECURITIES ACT OR
ANY SUCCESSOR PROVISION THEREUNDER) AFTER THE LATER OF THE ORIGINAL ISSUE DATE
HEREOF (OR OF ANY PREDECESSOR OF THIS SECURITY) OR THE LAST DAY ON WHICH THE
COMPANY OR ANY AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS SECURITY (OR ANY
PREDECESSOR OF THIS SECURITY) AND (Y) SUCH LATER DATE, IF ANY, AS MAY BE
REQUIRED BY APPLICABLE LAWS (THE "RESALE RESTRICTION TERMINATION DATE"), OFFER,
SELL OR OTHERWISE TRANSFER THIS SECURITY EXCEPT (A) TO THE COMPANY, (B) PURSUANT
TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE
SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE
PURSUANT TO RULE 144A, TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED
INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT THAT
PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL
BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON
RULE 144A, (D) PURSUANT TO OFFERS AND SALES TO NON-U.S. PERSONS THAT OCCUR
OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER THE
SECURITIES ACT OR (E) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND (3) AGREES THAT IT WILL GIVE
TO EACH PERSON TO WHOM THIS SECURITY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO
THE EFFECT OF THIS LEGEND; PROVIDED THAT THE COMPANY AND THE TRUSTEE SHALL HAVE
THE RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER (I) PURSUANT TO CLAUSE (D)
OR (E) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR
OTHER INFORMATION SATISFACTORY TO EACH OF THEM, AND (II) IN EACH OF THE
FOREGOING CASES, TO REQUIRE THAT A CERTIFICATION OR TRANSFER IN THE FORM
APPEARING ON THE OTHER SIDE OF THIS
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<PAGE>
SECURITY IS COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE TRUSTEE, THIS
LEGEND WILL BE REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE RESALE
RESTRICTION TERMINATION DATE. AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION,"
"UNITED STATES" AND "U.S. PERSON" HAVE THE MEANINGS GIVEN TO THEM BY REGULATION
S UNDER THE SECURITIES ACT.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY ("DTC") TO THE COMPANY OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER REPRESENTATIVE OF
DTC AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT
HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS
IN WHOLE, BUT NOT IN PART, TO NOMINEES OF CEDE & CO. OR TO A SUCCESSOR THEREOF
OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY
SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH
IN SECTION 2.6 OF THE INDENTURE PURSUANT TO WHICH THEY WERE ISSUED.
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VERSATEL TELECOM INTERNATIONAL N.V.
13 1/4% Senior Note
due 2008
CUSIP NO.:
[If Regulation S Security - CINS Number _________]
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 Cede &
Co. or registered assigns upon surrender hereof the principal sum indicated on
Schedule A hereof, on May 15, 2008.
Interest Payment Dates: May 15 and November 15, commencing May
15, 1999
Record Dates: May 1 and November 1
Reference is made to the further provisions of this Note
contained herein, which will for all purposes have the same effect as if set
forth at this place.
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<PAGE>
IN WITNESS WHEREOF, the Company has caused this Note to be
signed manually or by facsimile by its duly authorized officers.
VERSATEL TELECOM INTERNATIONAL
N.V.,
by __________________________
Name: R. Gary Mesch
Title: Managing Director
This is one of the 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>
[FORM OF REVERSE]
VERSATEL TELECOM INTERNATIONAL N.V.
13 1/4% Senior Note
due 2008
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 Notes will accrue at 13 1/4% 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, 1999, to the Holder hereof.
Notwithstanding any exchange of this Note for a Definitive Note during the
period starting on a Record Date relating to such Definitive 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
Note is registered at the close of business on the Record Date for such
interest. Interest on the Notes will accrue from the most recent date to which
interest has been paid or, if no interest has been paid, from December 3, 1998.
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), on any Additional Amounts, and on any Liquidated Damages, from time to
time on demand at the rate borne by the Notes plus 1.5% per annum to the extent
lawful. Any interest paid on this Note shall be increased to the extent
necessary to pay Additional Amounts as set forth herein.
2. Liquidated Damages. Pursuant to the Registration Rights
Agreement between the Company and the Initial Purchasers on behalf of Holders of
the Initial Notes, the Company has agreed to use its reasonable best efforts to
consummate an exchange offer pursuant to which the Holder of this Note shall
have the right to exchange this Note for the Company's 13 1/4% Senior Notes due
2008 (the "Exchange Notes"), which have then been registered under the
Securities Act, in like principal amount and having substantially identical
terms in all material respects as the Initial Notes. The Holders shall be
entitled to receive payment of additional interest ("Liquidated Damages") in the
event such exchange offer is not consummated and in certain other events,
subject, in each case, to certain conditions, all pursuant to and in accordance
with the terms of the Registration Rights Agreement. Liquidated Damages which
may be payable pursuant to the Registration Rights Agreement shall be payable in
the same manner as set forth herein with respect to the stated interest. The
provisions of the Registration Rights Agreement relating to such Liquidated
Damages are incorporated herein by reference and made a part hereof as if set
forth herein in full.
3. Additional Amounts. All payments made by the Company on the
Notes will be made without withholding or deduction for, or on account of, any
present or future Taxes
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<PAGE>
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, 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 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 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;
(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
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
Note presented for payment (where presentation is required) in the
Relevant Taxing Jurisdiction; or
(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.
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 (a) to (d)
inclusive above.
4. Method of Payment. The Company shall pay interest on the
Notes (except defaulted interest) to the Person in whose name this Note is
registered at the close of business on the Record Date for such interest.
Holders must surrender 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 of payment is legal
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<PAGE>
tender for payment of public and private debts. Immediately available funds for
the payment of the principal of (and premium, if any), interest, Additional
Amounts, if any, and Liquidated Damages, if any, on this 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.
5. 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.
6. Indenture. The Company issued the Notes under an Indenture,
dated as of December 3, 1998 (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 Initial Notes of the Company designated as its 13 1/4%
Senior Notes due 2008 (the "Initial Notes"). The Notes include the Initial Notes
and the Exchange Notes issued in exchange for the Initial Notes pursuant to the
Indenture. The terms of the 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 until such time as the Indenture is qualified under the TIA, and
thereafter as in effect on the date on which the Indenture is qualified under
the TIA. Notwithstanding anything to the contrary herein, the Notes are subject
to all such terms, and Holders of Notes are referred to the Indenture and the
TIA for a statement of them. The Notes are not secured by any of the assets of
the Company except to the limited extent provided for by the Escrow Agreement,
and will become general unsecured obligations of the Company upon disbursement
in full of the funds in the Escrow Account. The Notes are limited in aggregate
principal amount to $150,000,000 subject to the terms of the Indenture. Each
Holder, by accepting a 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.
7. Ranking. The Notes will be general unsecured (except to the
extent provided for by the Escrow Agreement) 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.
8. Optional Redemption. The Notes will be redeemable, at the
Company's option, in whole or in part, on and after May 15, 2003 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 circulation in Luxembourg (which is expected to be the
Luxemburger Wort)) or, in the case of Definitive Notes, mailed by first-class
mail to each Holder's registered address (and, if, and so long as the Notes are
listed on the Luxembourg Stock Exchange and the rules of such
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<PAGE>
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, Additional Amounts, if any, and
Liquidated Damages, 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 Amounts, if any, and Liquidated
Damages, 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:
Redemption
Year Price
2003............................................... 106.625%
2004............................................... 104.417
2005............................................... 102.208
2006 and thereafter................................ 100.000%
In addition, at any time on or prior to November 15, 2001, the
Company may, at its option, redeem up to 35% of the aggregate principal amount
of the 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 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 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.
9. Special Tax Redemption. The 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 and Liquidated Damages, if any, 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 of The
Netherlands) affecting taxation which becomes effective on or after the Issue
Date, 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
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<PAGE>
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, 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.
10. 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 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,
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)). 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 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 Notes called for redemption will cease to bear interest,
Additional Amounts, if any, or Liquidated Damages, if any, and the only right of
the Holders of such Notes will be to receive payment of the Redemption Price.
11. 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 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 plus Additional Amounts, if any, and
Liquidated Damages, 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 and Liquidated Damages, if any, due on the
relevant interest payment date and Additional Amounts, if any, in respect
thereof). Holders of 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 Notes purchased by completing
the form entitled "Option of Holder to Elect Purchase" appearing below.
12. 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
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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, and Liquidated Damages, 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 and Liquidated Damages, if any, due on the relevant interest
payment date and Additional Amounts, if any, in respect thereof). If the
aggregate principal amount of Notes surrendered by Holders thereof exceeds the
amount of Excess Proceeds, subject to applicable law, the Trustee shall select
the Notes to be redeemed in accordance with the Indenture; provided, however,
that no Notes of $1,000 or less shall be purchased in part. Holders of 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
Notes purchased by completing the form entitled "Option of Holders to Elect
Purchase" appearing below.
13. Denominations; Form. The Global Notes are in registered
global form, without coupons, in denominations of $1,000 and integral multiples
of $1,000.
14. Persons Deemed Owners. The registered Holder of this Note
shall be treated as the owner of it for all purposes, subject to the terms of
the Indenture.
15. Unclaimed Funds. If funds for the payment of principal,
interest, Additional Amounts or Liquidated Damages 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.
16. Legal Defeasance and Covenant Defeasance. The Company may
be discharged from its obligations under the Indenture and the 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.
17. Amendment; Supplement; Waiver. Subject to certain
exceptions specified in the Indenture, the Indenture or the Notes may be amended
or supplemented with the written consent of the Holders of at least a majority
in principal amount of the Notes then outstanding, and any existing Default or
Event of Default or compliance with any provision of the Indenture or the Notes
may be waived with the consent of the Holders of a majority in principal amount
of the Notes then outstanding.
18. 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.
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<PAGE>
19. Successors. When a successor assumes all the obligations
of its predecessor under the Notes and the Indenture in accordance with the
terms of the Indenture, the predecessor will be released from those obligations.
20. 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 Notes may declare all the Notes to be due and
payable immediately in the manner and with the effect provided in the Indenture.
Holders of Notes may not enforce the Indenture or the Notes except as provided
in the Indenture. The Trustee is not obligated to enforce the Indenture or the
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 Notes then outstanding to direct the
Trustee in its exercise of any trust or power. The Trustee may withhold from
Holders of Notes notice of any continuing Default or Event of Default (except a
Default in payment of principal, premium, interest, Additional Amounts, if any,
and Liquidated Damages, if any, including an accelerated payment) if it
determines that withholding notice is in their interest.
21. Trustee Dealings with Company. The Trustee under the
Indenture, 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 as if it were not the Trustee.
22. 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 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 Notes by accepting a Note waives and releases all
such liability. The waiver and release are part of the consideration for the
issuance of the Notes.
23. Authentication. This Note shall not be valid
until the Trustee or authenticating agent signs the certificate
of authentication on this Note.
24. Abbreviations and Defined Terms. Customary abbreviations
may be used in the name of a Holder of a 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.
25. CUSIP Numbers. Pursuant to a recommendation promulgated by
the Committee on Uniform Security Identification Procedures, the Company will
cause CUSIP numbers to be printed on the Notes immediately prior to the
qualification of the Indenture under the TIA as a convenience to the Holders of
the Notes. No representation is made as to the accuracy of such numbers as
printed on the Notes and reliance may be placed only on the other identification
numbers printed hereon.
A-11
<PAGE>
26. Governing Law The Indenture and the Notes shall
be governed by and construed in accordance with the internal laws
of the State of New York.
A-12
<PAGE>
SCHEDULE A
SCHEDULE OF PRINCIPAL AMOUNT
The initial principal amount at maturity of this Note shall be
$ . The following decreases/increases in the principal amount at maturity
of this Note have been made:
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
- ----------- ----------- ----------- ----------- -----------
- ----------- ----------- ----------- ----------- -----------
- ----------- ----------- ----------- ----------- -----------
- ----------- ----------- ----------- ----------- -----------
- ----------- ----------- ----------- ----------- -----------
- ----------- ----------- ----------- ----------- -----------
- ----------- ----------- ----------- ----------- -----------
- ----------- ----------- ----------- ----------- -----------
- ----------- ----------- ----------- ----------- -----------
- ----------- ----------- ----------- ----------- -----------
- ----------- ----------- ----------- ----------- -----------
- ----------- ----------- ----------- ----------- -----------
A-13
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this 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 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 Note)
Signature Guarantee: _____________________________________
Participant in a recognized Signature Guarantee Medallion Program
(or other signature guarantor program reasonably acceptable to the
Trustee)
A-14
<PAGE>
EXHIBIT B
TO THE INDENTURE
[FORM OF FACE OF INITIAL DEFINITIVE NOTE]
THIS NOTE IS A DEFINITIVE NOTE WITHIN THE MEANING OF THE
INDENTURE HEREINAFTER REFERRED TO.
THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE OR
OTHER SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION
HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR
OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS THE
TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF
THE SECURITIES ACT. THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF (1)
REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE
144A UNDER THE SECURITIES ACT) OR (B) IT IS NOT A U.S. PERSON AND IS ACQUIRING
THIS SECURITY IN AN "OFFSHORE TRANSACTION" PURSUANT TO RULE 904 OF REGULATION S,
(2) AGREES THAT IT WILL NOT PRIOR TO (X) THE DATE WHICH IS TWO YEARS (OR SUCH
SHORTER PERIOD OF TIME AS PERMITTED BY RULE 144(k) UNDER THE SECURITIES ACT OR
ANY SUCCESSOR PROVISION THEREUNDER) AFTER THE LATER OF THE ORIGINAL ISSUE DATE
HEREOF (OR OF ANY PREDECESSOR OF THIS SECURITY) OR THE LAST DAY ON WHICH THE
COMPANY OR ANY AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS SECURITY (OR ANY
PREDECESSOR OF THIS SECURITY) AND (Y) SUCH LATER DATE, IF ANY, AS MAY BE
REQUIRED BY APPLICABLE LAWS (THE "RESALE RESTRICTION TERMINATION DATE"), OFFER,
SELL OR OTHERWISE TRANSFER THIS SECURITY EXCEPT (A) TO THE COMPANY, (B) PURSUANT
TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE
SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE
PURSUANT TO RULE 144A, TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED
INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT THAT
PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL
BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON
RULE 144A, (D) PURSUANT TO OFFERS AND SALES TO NON-U.S. PERSONS THAT OCCUR
OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER THE
SECURITIES ACT OR (E) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND (3) AGREES THAT IT WILL
B-1
<PAGE>
GIVE TO EACH PERSON TO WHOM THIS SECURITY IS TRANSFERRED A NOTICE SUBSTANTIALLY
TO THE EFFECT OF THIS LEGEND; PROVIDED THAT THE COMPANY AND THE TRUSTEE SHALL
HAVE THE RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER (I) PURSUANT TO CLAUSE
(D) OR (E) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION
AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM, AND (II) IN EACH OF THE
FOREGOING CASES, TO REQUIRE THAT A CERTIFICATION OR TRANSFER IN THE FORM
APPEARING ON THE OTHER SIDE OF THIS SECURITY IS COMPLETED AND DELIVERED BY THE
TRANSFEROR TO THE TRUSTEE, THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE
HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE. AS USED HEREIN, THE TERMS
"OFFSHORE TRANSACTION," "UNITED STATES" AND "U.S. PERSON" HAVE THE MEANINGS
GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT.
B-2
<PAGE>
VERSATEL TELECOM INTERNATIONAL N.V.
13 1/4% Senior Note
due 2008
CUSIP NO.: [ ]
[If Regulation S Security - CINS Number _________]
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, 2008.
Interest Payment Dates: May 15 and November 15, commencing May
15, 1999
Record Dates: May 1 and November 1
Reference is made to the further provisions of this Note
contained herein, which will for all purposes have the same effect as if set
forth at this place.
IN WITNESS WHEREOF, the Company has caused this Note to be
signed manually or by facsimile by its duly authorized officers.
B-3
<PAGE>
VERSATEL TELECOM INTERNATIONAL
N.V.,
by
-------------------------
Name: R. Gary Mesch
Title: Managing Director
by
-------------------------
Name:
Title:
This is one of the Notes
referred to in the within-mentioned
Indenture:
UNITED STATES TRUST COMPANY OF NEW YORK, as Trustee,
by
-------------------------
Name:
Title:
Dated:
B-4
<PAGE>
[FORM OF REVERSE]
VERSATEL TELECOM INTERNATIONAL N.V.
13 1/4% Senior Note
due 2008
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 Notes will accrue at 13 1/4% 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, 1999 to the Holder hereof.
Interest on the Notes will accrue from the most recent date to which interest
has been paid or, if no interest has been paid, from December 3, 1998. 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), on any Additional Amounts, and on any Liquidated Damages, from time to
time on demand at the rate borne by the Notes plus 1.5% per annum to the extent
lawful. Any interest paid on this Note shall be increased to the extent
necessary to pay Additional Amounts as set forth herein.
2. Liquidated Damages. Pursuant to the Registration Rights
Agreement between the Company and the Initial Purchasers on behalf of Holders of
the Initial Notes, the Company has agreed to use its reasonable best efforts to
consummate an exchange offer pursuant to which the Holder of this Note shall
have the right to exchange this Note for the Company's 13 1/4% Senior Notes due
2008 (the "Exchange Notes"), which have then been registered under the
Securities Act, in like principal amount and having substantially identical
terms in all material respects as the Initial Notes. The Holders shall be
entitled to receive payment of additional interest ("Liquidated Damages") in the
event such exchange offer is not consummated and in certain other events,
subject, in each case, to certain conditions, all pursuant to and in accordance
with the terms of the Registration Rights Agreement. Liquidated Damages which
may be payable pursuant to the Registration Rights Agreement shall be payable in
the same manner as set forth herein with respect to the stated interest. The
provisions of the Registration Rights Agreement relating to such Liquidated
Damages are incorporated herein by reference and made a part hereof as if set
forth herein in full.
3. Additional Amounts. All payments made by the Company on the
Notes will be made without withholding or deduction for, or on account of, any
present
B-5
<PAGE>
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 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 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 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;
(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
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
Note presented for payment (where presentation is required) in the
Relevant Taxing Jurisdiction; or
(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.
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 (a) to (d)
inclusive above.
B-6
<PAGE>
4. Method of Payment. The Company shall pay interest on the
Notes (except defaulted interest) to the Persons who are the registered Holders
at the close of business on the Record Date immediately preceding the Interest
Payment Date for such interest. Holders must surrender 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 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, and Liquidated Damages, 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.
5. 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.
6. Indenture. The Company issued the Notes under an Indenture,
dated as of December 3, 1998 (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 Initial Notes of the Company designated as its 13 1/4%
Senior Notes due 2008 (the "Initial Notes"). The Notes include the Initial Notes
and the Exchange Notes issued in exchange for the Initial Notes pursuant to the
Indenture. The terms of the 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 until such time as the Indenture is qualified under the TIA, and
thereafter as in effect on the date on which the Indenture is qualified under
the TIA. Notwithstanding anything to the contrary herein, the Notes are subject
to all such terms, and Holders of Notes are referred to the Indenture and the
TIA for a statement of them. The Notes are not secured by any of the assets of
the Company except to the limited extent provided for by the Escrow Agreement,
and will become general unsecured obligations of the Company upon disbursement
in full of the funds in the Escrow Account. The Notes are limited in aggregate
principal amount to $150,000,000 subject to the terms of the Indenture. Each
Holder, by accepting a 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.
7. Ranking. The Notes will be general unsecured (except to the
extent provided for by the Escrow Agreement) 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.
B-7
<PAGE>
8. Optional Redemption. The Notes will be redeemable, at the
Company's option, in whole or in part, on and after May 15, 2003 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 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, Additional Amounts,
if any, and Liquidated Damages, 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, and Liquidated Damages, 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:
Redemption
Year Price
2003.............................................. 106.625%
2004.............................................. 104.417
2005.............................................. 102.208
2006 and thereafter............................... 100.000%
In addition, at any time on or prior to November 15, 2001, the
Company may, at its option, redeem up to 35% of the aggregate principal amount
of the 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, subject to the right of
Holders of record on the relevant record date to receive interest and Liquidated
Damages, if any, 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 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.
9. Special Tax Redemption. The 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 and Liquidated Damages, if any, 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
B-8
<PAGE>
thereunder) of The Netherlands (or any political subdivision or taxing authority
of The Netherlands) affecting taxation which becomes effective on or after the
Issue Date, 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 Notes were then due. Prior to the publication or,
where relevant, mailing of any notice of redemption of the 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.
10. 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 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). 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 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 Notes called for redemption will cease to bear interest,
Additional Amounts, if any, or Liquidated Damages, if any, and the only right of
the Holders of such Notes will be to receive payment of the Redemption Price.
11. 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 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, plus, Additional Amounts, if any,
and Liquidated Damages,
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<PAGE>
if any, to the date of repurchase (and, subject to the right of Holders of
record on the relevant record date to receive interest and Liquidated Damages,
if any, due on the relevant interest payment date and Additional Amounts, if
any, in respect thereof). Holders of 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 Notes
purchased by completing the form entitled "Option of Holder to Elect Purchase"
appearing below.
12. 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 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, and
Liquidated Damages, 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 and Liquidated Damages, if any, due on the relevant interest
payment date and Additional Amounts, if any, in respect thereof). If the
aggregate principal amount of Notes surrendered by Holders thereof exceeds the
amount of Excess Proceeds, subject to applicable law, the Trustee shall select
the Notes to be redeemed in accordance with the Indenture; provided, however,
that no Notes of $1,000 or less shall be purchased in part. Holders of 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
Notes purchased by completing the form entitled "Option of Holders to Elect
Purchase" appearing below.
13. Denominations; Form. The Definitive Notes are in bearer
form, without coupons, in denominations of $1,000 and integral multiples of
$1,000.
14. Persons Deemed Owners. The Holder of this Note shall be
treated as the owner of it for all purposes, subject to the terms of the
Indenture.
15. Unclaimed Funds. If funds for the payment of principal,
interest, Additional Amounts or Liquidated Damages 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.
16. Legal Defeasance and Covenant Defeasance. The Company may
be discharged from its obligations under the Indenture and the 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.
17. Amendment; Supplement; Waiver. Subject to certain
exceptions specified in the Indenture, the Indenture or the Notes may be amended
or supplemented
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<PAGE>
with the written consent of the Holders of at least a majority in principal
amount of the Notes then outstanding, and any existing Default or Event of
Default or compliance with any provision of the Indenture or the Notes may be
waived with the consent of the Holders of a majority in principal amount of the
Notes then outstanding.
18. 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.
19. Successors. When a successor assumes all the obligations
of its predecessor under the Notes and the Indenture in accordance with the
terms of the Indenture, the predecessor will be released from those obligations.
20. 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 Notes may declare all the Notes to be due and
payable immediately in the manner and with the effect provided in the Indenture.
Holders of Notes may not enforce the Indenture or the Notes except as provided
in the Indenture. The Trustee is not obligated to enforce the Indenture or the
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 Notes then outstanding to direct the
Trustee in its exercise of any trust or power. The Trustee may withhold from
Holders of Notes notice of any continuing Default or Event of Default (except a
Default in payment of principal, premium, interest, Additional Amounts, if any,
and Liquidated Damages, if any, including an accelerated payment) if it
determines that withholding notice is in their interest.
21. Trustee Dealings with Company. The Trustee under the
Indenture, 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 as if it were not the Trustee.
22. 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 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 Notes by accepting a Note waives and releases all
such liability. The waiver and release are part of the consideration for the
issuance of the Notes.
B-11
<PAGE>
23. Authentication. This Note shall not be valid until the
Trustee or authenticating agent signs the certificate of authentication on this
Note.
24. Abbreviations and Defined Terms. Customary abbreviations
may be used in the name of a Holder of a 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.
25. CUSIP Numbers. Pursuant to a recommendation promulgated by
the Committee on Uniform Security Identification Procedures, the Company will
cause CUSIP numbers to be printed on the Notes immediately prior to the
qualification of the Indenture under the TIA as a convenience to the Holders of
the Notes. No representation is made as to the accuracy of such numbers as
printed on the Notes and reliance may be placed only on the other identification
numbers printed hereon.
26. Governing Law The Indenture and the Notes shall be
governed by and construed in accordance with the internal laws of the State of
New York.
B-12
<PAGE>
-----------------------------------------------------------
ASSIGNMENT FORM
To assign this Note fill in the form below:
I or we assign and transfer this 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 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 Note.
B-13
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this 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 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 Note)
Signature Guarantee: _____________________________________
Participant in a recognized Signature Guarantee Medallion Program (or other
signature guarantor program reasonably acceptable to the Trustee)
B-14
<PAGE>
EXHIBIT C
TO THE INDENTURE
[FORM OF FACE OF EXCHANGE GLOBAL NOTE]
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY ("DTC") TO THE COMPANY OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER REPRESENTATIVE OF
DTC AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT
HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO
TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF CEDE & CO. OR TO A SUCCESSOR
THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL
SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS
SET FORTH IN SECTION 2.6 OF THE INDENTURE PURSUANT TO WHICH THEY WERE ISSUED.
C-1
<PAGE>
THIS NOTE IS A GLOBAL NOTE WITHIN THE
MEANING OF THE INDENTURE HEREINAFTER REFERRED TO
VERSATEL TELECOM INTERNATIONAL N.V.
13 1/4% Senior Note
due 2008
CUSIP 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 Cede
& Co. or registered assigns upon surrender hereof the principal sum indicated on
Schedule A hereof, on May 15, 2008.
Interest Payment Dates: May 15 and November 15, commencing May
15, 1999
Record Dates: May 1 and November 1
Reference is made to the further provisions of this Note
contained herein, which will for all purposes have the same effect as if set
forth at this place.
IN WITNESS WHEREOF, the Company has caused this Note to be
signed manually or by facsimile by its duly authorized officers.
C-2
<PAGE>
VERSATEL TELECOM INTERNATIONAL
N.V.,
by
-----------------------------
Name:
Title:
by
-----------------------------
Name:
Title:
This is one of the Notes
referred to in the within-mentioned
Indenture:
UNITED STATES TRUST COMPANY OF NEW YORK,
as Trustee,
by _________________________
Name:
Title:
Dated:
C-3
<PAGE>
[Form of REVERSE]
VERSATEL TELECOM INTERNATIONAL N.V.
13 1/4% Senior Note
due 2008
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 Notes will accrue at 13 1/4% 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, 1999 to the Holder hereof.
Notwithstanding any exchange of this Note for a Definitive Note during the
period starting on a Record Date relating to such Definitive 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
Note is registered at the close of business on the Record Date for such
interest. Interest on the Notes will accrue from the most recent date to which
interest has been paid or, if no interest has been paid, from December 3, 1998.
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 Notes plus 1.5% per annum to the extent lawful. Any interest paid
on this 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
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 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 Notes or the Trustee, as the
case may be, after such withholding or deduction, equal the respective amounts
which would
C-4
<PAGE>
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 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;
(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
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
Note presented for payment (where presentation is required) in the
Relevant Taxing Jurisdiction; or
(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.
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 (a) to (d)
inclusive above.
3. Method of Payment. The Company shall pay interest on the
Notes (except defaulted interest) to the Person in whose name this Note is
registered at the close of business on the Record Date for such interest.
Holders must surrender 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 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 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.
C-5
<PAGE>
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 Notes under an Indenture,
dated as of December 3, 1998 (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 Exchange Notes of the Company designated as its 13 1/4%
Senior Notes due 2008 (the "Exchange Notes"). The terms of the 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 until such time as the
Indenture is qualified under the TIA, and thereafter as in effect on the date on
which the Indenture is qualified under the TIA. Notwithstanding anything to the
contrary herein, the Notes are subject to all such terms, and Holders of Notes
are referred to the Indenture and the TIA for a statement of them. The Notes are
not secured by any of the assets of the Company except to the limited extent
provided for by the Escrow Agreement, and will become general unsecured
obligations of the Company upon disbursement in full of the funds in the Escrow
Account. The Notes are limited in aggregate principal amount to $150,000,000
subject to the terms of the Indenture. Each Holder, by accepting a 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 Notes will be general unsecured (except to the
extent provided for by the Escrow Agreement) 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 Notes will be redeemable, at the
Company's option, in whole or in part, on and after May 15, 2003 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 circulation in Luxembourg (which is expected to be the
Luxemburger Wort)) or, in the case of Definitive Notes, mailed by first-class
mail to each Holder's registered address (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)), at the redemption
prices (expressed as a percentage of principal amount) set forth below, plus
accrued and unpaid interest, Additional Amounts, if any, and Liquidated Damages,
if any, to the applicable Redemption Date (and in the case of Definitive Notes,
subject to the right of
C-6
<PAGE>
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:
Redemption
Year Price
2003................................................... 106.625%
2004................................................... 104.417
2005................................................... 102.208
2006 and thereafter.................................... 100.000%
In addition, at any time on or prior to November 15, 2001, the
Company may, at its option, redeem up to 35% of the aggregate principal amount
of the 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 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 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 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 to the date fixed by the Company for redemption (a "Tax Redemption
Date") plus accrued and unpaid interest 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 of The Netherlands) affecting taxation which becomes effective
on or after the Issue Date, 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
C-7
<PAGE>
Notes were then due. Prior to the publication or, where relevant, mailing of any
notice of redemption of the 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 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, 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)). 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
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 Notes called for redemption will cease to bear interest,
or Additional Amounts, if any, and the only right of the Holders of such 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 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, 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). Holders of 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 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
C-7
<PAGE>
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 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 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, and
Liquidated Damages, if any, in respect thereof). If the aggregate principal
amount of Notes surrendered by Holders thereof exceeds the amount of Excess
Proceeds, subject to applicable law, the Trustee shall select the Notes to be
redeemed in accordance with the Indenture; provided, however, that no Notes of
$1,000 or less shall be purchased in part. Holders of 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 Notes purchased by
completing the form entitled "Option of Holders to Elect Purchase" appearing
below.
12. Denominations; Form. The Global Notes are in registered
global form, without coupons, in denominations of $1,000 and integral multiples
of $1,000.
13. Persons Deemed Owners. The registered Holder of this 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 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 Notes may be amended
or supplemented with the written consent of the Holders of at least a majority
in principal amount of the Notes then outstanding, and any existing Default or
Event of Default or compliance with any provision of the Indenture or the Notes
may be waived with the consent of the Holders of a majority in principal amount
of the 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
C-9
<PAGE>
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 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 Notes may declare all the Notes to be due and
payable immediately in the manner and with the effect provided in the Indenture.
Holders of Notes may not enforce the Indenture or the Notes except as provided
in the Indenture. The Trustee is not obligated to enforce the Indenture or the
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 Notes then outstanding to direct the
Trustee in its exercise of any trust or power. The Trustee may withhold from
Holders of Notes notice of any continuing Default or Event of Default (except a
Default in payment of principal, premium, interest and Additional Amounts, if
any, and Liquidated Damages, 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 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 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 Notes by accepting a Note waives and releases all
such liability. The waiver and release are part of the consideration for the
issuance of the Notes.
22. Authentication. This Note shall not be valid
until the Trustee or authenticating agent signs the
certificate of authentication on this Note.
23. Abbreviations and Defined Terms. Customary abbreviations
may be used in the name of a Holder of a 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 Numbers. Pursuant to a recommendation promulgated by
the Committee on Uniform Security Identification Procedures, the Company will
cause
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<PAGE>
CUSIP numbers to be printed on the Notes immediately prior to the qualification
of the Indenture under the TIA as a convenience to the Holders of the Notes. No
representation is made as to the accuracy of such numbers as printed on the
Notes and reliance may be placed only on the other identification numbers
printed hereon.
25. Governing Law The Indenture and the Notes shall be
governed by and construed in accordance with the internal laws of the State of
New York.
C-11
<PAGE>
SCHEDULE A
SCHEDULE OF PRINCIPAL AMOUNT
The initial principal amount at maturity of this Note shall be
$ . The following decreases/increases in the principal amount at maturity
of this Note have been made:
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
- ----------- ----------- ----------- ----------- -----------
- ----------- ----------- ----------- ----------- -----------
- ----------- ----------- ----------- ----------- -----------
- ----------- ----------- ----------- ----------- -----------
- ----------- ----------- ----------- ----------- -----------
- ----------- ----------- ----------- ----------- -----------
- ----------- ----------- ----------- ----------- -----------
- ----------- ----------- ----------- ----------- -----------
- ----------- ----------- ----------- ----------- -----------
- ----------- ----------- ----------- ----------- -----------
- ----------- ----------- ----------- ----------- -----------
- ----------- ----------- ----------- ----------- -----------
C-12
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this 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
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 Note)
Signature Guarantee: _____________________________________
Participant in a recognized Signature Guarantee Medallion Program (or other
signature guarantor program reasonably acceptable to the Trustee)
C-13
<PAGE>
EXHIBIT D
TO THE INDENTURE
[FORM OF FACE OF EXCHANGE DEFINITIVE NOTE]
THIS NOTE IS A DEFINITIVE NOTE WITHIN THE MEANING OF THE
INDENTURE HEREINAFTER REFERRED TO.
CUSIP No.
No. $
VERSATEL TELECOM INTERNATIONAL N.V.
13 1/4% Senior Note
due 2008
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
____________, or registered assigns, upon surrender hereof the principal sum of
___________ Dollars, on May 15, 2008.
Interest Payment Dates: May 15 and November 15 commencing May
15, 1999
Record Dates: May 1 and November 1
Reference is made to the further provisions of this Note
contained herein, which will for all purposes have the same effect as if set
forth at this place.
IN WITNESS WHEREOF, the Company has caused this Note to be
signed manually or by facsimile by its duly authorized officers.
D-1
<PAGE>
VERSATEL TELECOM INTERNATIONAL
N.V.,
by
-----------------------------
Name:
Title:
by
-----------------------------
Name:
Title:
This is one of the Notes
referred to in the within-mentioned
Indenture:
UNITED STATES TRUST COMPANY OF NEW YORK, as Trustee,
by _________________________
Name:
Title:
Dated:
D-2
<PAGE>
[Form of REVERSE]
VERSATEL TELECOM INTERNATIONAL N.V.
13 1/4% Senior Note
due 2008
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 Notes will accrue at 13 1/4% 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, 1999 to the Holder hereof.
Interest on the Notes will accrue from the most recent date to which interest
has been paid or, if no interest has been paid, from December 3, 1998. 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 Notes plus 1.5% per annum to the extent lawful. Any interest paid
on this 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
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 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 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:
D-3
<PAGE>
(a) 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;
(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
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
Note presented for payment (where presentation is required) in the
Relevant Taxing Jurisdiction; or
(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.
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 (a) to (d)
inclusive above.
3. Method of Payment. The Company shall pay interest on the
Notes (except defaulted interest) to the Persons who are the registered Holders
at the close of business on the Record Date for such interest. Holders must
surrender 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 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, and Liquidated Damages, 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.
D-4
<PAGE>
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 Notes under an Indenture,
dated as of December 3, 1998 (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 Exchange Notes of the Company designated as its 13 1/4%
Senior Notes due 2008 (the "Exchange Notes"). The terms of the 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 until such time as the
Indenture is qualified under the TIA, and thereafter as in effect on the date on
which the Indenture is qualified under the TIA. Notwithstanding anything to the
contrary herein, the Notes are subject to all such terms, and Holders of Notes
are referred to the Indenture and the TIA for a statement of them. The Notes are
not secured by any of the assets of the Company except to the limited extent
provided for by the Escrow Agreement, and will become general unsecured
obligations of the Company upon disbursement in full of the funds in the Escrow
Account. The Notes are limited in aggregate principal amount to $150,000,000
subject to the terms of the Indenture. Each Holder, by accepting a 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 Notes will be general unsecured (except to the
extent provided for by the Escrow Agreement) 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 Notes will be redeemable, at the
Company's option, in whole or in part, on and after May 15, 2003 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 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, 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 Amounts, if any, and Liquidated Damages, if any, due on
the
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<PAGE>
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:
Redemption
Year Price
2003....................................................... 106.625%
2004....................................................... 104.417
2005....................................................... 102.208
2006 and thereafter........................................ 100.000%
In addition, at any time on or prior to November 15, 2001, the
Company may, at its option, redeem up to 35% of the aggregate principal amount
of the 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, subject to the right of
Holders of record on the relevant record date to receive interest and Liquidated
Damages, if any, 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 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 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 to the date fixed by the Company for redemption (a "Tax Redemption
Date"), plus accrued and unpaid interest 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 of The Netherlands) affecting taxation which becomes effective
on or after the Issue Date, 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
D-6
<PAGE>
Notes were then due. Prior to the publication or, where relevant, mailing of any
notice of redemption of the 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 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).
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 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 Notes called for redemption will cease to bear interest,
or Additional Amounts, and the only right of the Holders of such 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 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, plus, Additional Amounts, if any,
and Liquidated Damages, 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, and
Liquidated Damages, if any, in respect thereof). Holders of 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 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 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
D-7
<PAGE>
100% of the aggregate principal amount thereof, plus accrued and unpaid interest
thereon, plus Additional Amounts, if any, and Liquidated Damages, 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 Notes surrendered by Holders thereof exceeds
the amount of Excess Proceeds, subject to applicable law, the Trustee shall
select the Notes to be redeemed in accordance with the Indenture; provided,
however, that no Notes of $1,000 or less shall be purchased in part. Holders of
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 Notes purchased by completing the form entitled "Option of Holders to Elect
Purchase" appearing below.
12. Denominations; Form. The Definitive 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 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 Notes except for
certain provisions thereof ("Legal Defeasance"), and may be discharged from
their obligations to comply with certain covenants contained in the Indenture
and the Notes ("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 Notes may be amended
or supplemented with the written consent of the Holders of at least a majority
in principal amount of the Notes then outstanding, and any existing Default or
Event of Default or compliance with any provision of the Indenture or the Notes
may be waived with the consent of the Holders of a majority in principal amount
of the 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
D-8
<PAGE>
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 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 Notes may declare all the Notes to be due and
payable immediately in the manner and with the effect provided in the Indenture.
Holders of Notes may not enforce the Indenture or the Notes except as provided
in the Indenture. The Trustee is not obligated to enforce the Indenture or the
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 Notes then outstanding to direct the
Trustee in its exercise of any trust or power. The Trustee may withhold from
Holders of Notes notice of any continuing Default or Event of Default (except a
Default in payment of principal, premium, interest and Additional Amounts, if
any, and Liquidated Damages, 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 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 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 Notes by accepting a Note waives and releases all
such liability. The waiver and release are part of the consideration for the
issuance of the Notes.
22. Authentication. This Note shall not be valid until the
Trustee or authenticating agent signs the certificate of authentication on this
Note.
23. Abbreviations and Defined Terms. Customary abbreviations
may be used in the name of a Holder of a 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 Numbers. Pursuant to a recommendation promulgated by
the Committee on Uniform Security Identification Procedures, the Company will
cause
D-9
<PAGE>
CUSIP numbers to be printed on the Notes immediately prior to the qualification
of the Indenture under the TIA as a convenience to the Holders of the Notes. No
representation is made as to the accuracy of such numbers as printed on the
Notes and reliance may be placed only on the other identification numbers
printed hereon.
25. Governing Law. The Indenture and the Notes
shall be governed by and construed in accordance with the internal laws of the
State of New York.
D-10
<PAGE>
*
-----------------------------------------------------------
ASSIGNMENT FORM
To assign this Note, fill in the form below:
I or we assign and transfer this 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 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 Note.
D-11
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this 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 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 Note)
Signature Guarantee: ______________________________________
Participant in a recognized Signature Guarantee Medallion Program (or other
signature guarantor program reasonably acceptable to the Trustee)
D-12
<PAGE>
EXHIBIT E
TO THE INDENTURE
FORM OF TRANSFER CERTIFICATE FOR TRANSFER FROM U.S. GLOBAL
NOTE TO REGULATION S GLOBAL NOTE
(Transfers pursuant to Section 2.7(b)
of the Indenture)
VersaTel Telecom International N.V.
c/o United States Trust Company of New York
114 West 47th Street
New York, New York 10036-1532
Attention: Corporate Trust Administration
RE: 13 1/4% Senior Notes due 2008
(the "Notes"), of VersaTel Telecom International N.V.
Reference is hereby made to the Indenture dated as of December
3, 1998 (the "Indenture") between VersaTel Telecom International N.V. and United
States Trust Company of New York, as Trustee, Registrar and Paying Agent.
Capitalized terms used but not defined herein shall have the meanings given them
in the Indenture.
This letter relates to U.S.$_________ (being any integral
multiple of U.S.$1,000) principal amount of Notes beneficially held through
interests in the U.S. Global Note (CUSIP No. _________) with DTC in the name of
_______(the "Transferor") account no. __. The Transferor hereby requests that on
[INSERT DATE] such beneficial interest in the U.S. Global Note be transferred or
exchanged for an interest in the Regulation S Global Note (CUSIP (CINS)No. ____)
in the same principal denomination and transfer to (account no. _________). If
this is a partial transfer, a minimum amount of U.S.$1,000 and any integral
multiple of U.S.$1,000 in excess thereof of the U.S. Global Note will remain
outstanding.
In connection with such request and in respect of such Notes
the Transferor does hereby certify that such transfer has been effected in
accordance with the transfer restrictions set forth in the Indenture and the
Notes and pursuant to and in accordance with Rule 903 or 904 of Regulation S
under the United States Securities Act of 1933, as amended (the "Securities
Act"), and accordingly the Transferor further certifies that:
(A) (1) the offer of the Notes was not made to a person in the
United States;
E-1
<PAGE>
(2) either (a) at the time the buy order was
originated, the transferee was outside the United States or we
and any person acting on our behalf reasonably believed that
the transferee was outside the United States, or (b) the
transaction was executed in, on or through the facilities of a
designated offshore securities market and neither the
Transferor nor any person acting on our behalf knows that the
transaction was prearranged with a buyer in the United States,
(3) no directed selling efforts have been made in
contravention of the requirements of Rule 903(b) or 904(b) of
Regulation S, as applicable; and
(4) the transaction is not part of a plan or scheme
to evade the registration requirements of the Securities Act.
OR
(B) Such transfer is being made in accordance with Rule 144
under the Securities Act.
E-2
<PAGE>
This certificate and the statements contained herein are made
for your benefit and the benefit of the Company. Terms used in this certificate
and not otherwise defined in the Indenture have the meanings set forth in
Regulation S under the Securities Act.
Dated: _____________, ____
[Name of Transferor]
By:________________________
Name:
Title:
Telephone No.:
Please print name and address (including zip code number)
E-3
<PAGE>
EXHIBIT F
TO THE INDENTURE
FORM OF TRANSFER CERTIFICATE FOR TRANSFER FROM REGULATION S
GLOBAL NOTE TO U.S. GLOBAL NOTE
(Transfers pursuant to Section 2.7(c)
of the Indenture)
VersaTel Telecom International N.V.
c/o United States Trust Company of New York
114 West 47th Street
New York, New York 10036-1532
Attention: Corporate Trust Administration
Re: 13 1/4% Senior Notes due 2008 (the "Notes"), of
VersaTel Telecom International N.V.
Reference is hereby made to the Indenture dated as of December
3, 1998 (the "Indenture") between VersaTel Telecom International N.V. and United
States Trust Company of New York, as Trustee, Registrar and Paying Agent.
Capitalized terms used but not defined herein shall have the meanings given them
in the Indenture.
This letter relates to U.S.$__________ (being any integral
multiple of U.S.$1,000) principal amount of Notes beneficially held through
interests in the Regulation S Global Note (CUSIP (CINS) No. _________) with
[Euroclear] [Cedel] (Common Code No. _______) through DTC in the name of
_______________ (the "Transferor") [Euroclear] [Cedel] account no. ___. The
Transferor hereby requests that on [INSERT DATE] such beneficial interest in the
Regulation S Global Note be transferred or exchanged for an interest in the
U.S. Global Note (CUSIP No. _________) in the same principal denomination and
transfer to ______________ (DTC account no. ________). If this is a partial
transfer, a minimum of U.S.$1,000 and any integral multiple of U.S.$1,000 in
excess thereof of the Regulation S Global Note will remain outstanding.
In connection with such request, and in respect of such Notes,
the Transferor does hereby certify that such Notes are being transferred in
accordance with Rule 144A under the United States Securities Act of 1933, as
amended (the "Securities Act"), to a transferee that the Transferor reasonably
believes is purchasing the Notes for its own account or an account with respect
to which the transferee exercises sole investment discretion and the transferee
and any such account is a "qualified institutional buyer" within the meaning of
Rule 144A, in each case in a transaction meeting the requirements of Rule 144A
and in accordance with any applicable securities laws of any state of the United
States or any other jurisdiction.
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<PAGE>
This certificate and the statements contained herein are made
for your benefit and the benefit of the Company.
Dated:_______________, ____
[Name of Transferor]
By:___________________________
Name:
Title:
Telephone No.:
Please print name and address (including zip code number)
F-2
EXHIBIT 4.4
- --------------------------------------------------------------------------------
VersaTel Telecom International N.V.
$150,000,000 13 1/4% Senior Notes due 2008
REGISTRATION RIGHTS AGREEMENT
Dated as of December 3, 1998
Among
VERSATEL TELECOM INTERNATIONAL N.V.,
LEHMAN BROTHERS INC.,
LEHMAN BROTHERS INTERNATIONAL (EUROPE) AND
PARIBAS CORPORATION
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
-----------------
Page
----
1. Definitions.......................................................... 1
2. Exchange Offer....................................................... 4
3. Shelf Registration Statement......................................... 8
4. Liquidated Damages................................................... 9
5. Registration Procedures.............................................. 11
6. Registration Expenses................................................ 18
7. Indemnification and Contribution..................................... 19
8. Rule 144A............................................................ 23
9. Underwritten Registrations........................................... 23
10. Miscellaneous........................................................ 24
(a) No Inconsistent Agreements.................................... 24
(b) Adjustments Affecting Transfer Restricted Securities.......... 24
(c) Amendments and Waivers........................................ 24
(d) Notices....................................................... 25
(e) Successors and Assigns........................................ 26
(f) Counterparts.................................................. 26
(g) Headings...................................................... 26
(h) Governing Law................................................. 26
(i) Submission to Jurisdiction; Appointment of Agent for
Service; Waiver ............................................ 26
(j) Currency Indemnity............................................ 27
(k) Severability.................................................. 27
(l) Securities Held by the Company or Its Affiliates.............. 28
(m) Third Party Beneficiaries..................................... 28
(n) Entire Agreement.............................................. 28
i
<PAGE>
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the "Agreement") is dated as
of December 3, 1998, among VersaTel Telecom International N.V. (formerly known
as Versatel Telecom B.V.), a company organized under the laws of The Netherlands
and having its corporate seat in Amsterdam, The Netherlands (the "Company"),
Lehman Brothers Inc., Lehman Brothers International (Europe) and Paribas
Corporation (the "Initial Purchasers").
This Agreement is entered into in connection with the Purchase
Agreement, dated as of November 17, 1998, between the Company and the Initial
Purchasers (the "Purchase Agreement") which provides for the sale by the Company
to the Initial Purchasers of 150,000 Units (the "Units") consisting of $1,000
aggregate principal amount of its 13 1/4% Senior Notes due 2008 (the "Notes")
and one warrant to purchase 6.667 Class B Shares of the Company, par value NLG
0.10 per share (the "Class B Shares" and, together with the Class A Shares of
the Company, the "Ordinary Shares"). The Notes are to be issued under an
indenture, dated as of December 3, 1998 (the "Indenture"), between the Company
and United States Trust Company of New York, as Trustee. The warrants are to be
issued under a Warrant Agreement dated as of December 3, 1998 (the "Warrant
Agreement") between the Company and United States Trust Company of New York, as
Warrant Agent. In order to induce the Initial Purchasers to enter into the
Purchase Agreement, the Company has agreed to provide the registration rights
set forth in this Agreement for the benefit of the Initial Purchasers and their
direct and indirect transferees and assigns.
The parties hereby agree as follows:
1. Definitions
As used in this Agreement, the following terms shall have the
following meanings:
Advice: See Section 5 hereof.
Agreement: See the first introductory paragraph hereto.
Applicable Period: See Section 2(b) hereof.
Authenticating Agent: The Authenticating Agent as defined in the
Indenture.
Class B Shares: See the second introductory paragraph hereto.
Company: See the first introductory paragraph hereto.
Effectiveness Period: See Section 3(a) hereof.
<PAGE>
2
Effectiveness Target Date: The 150th day after the Issue Date.
Event Date: See Section 4(b) hereof.
Exchange Act: The Securities Exchange Act of 1934, as amended,
and the rules and regulations of the SEC promulgated thereunder.
Exchange Notes: See Section 2(a) hereof.
Exchange Offer: See Section 2(a) hereof.
Exchange Offer Registration Statement: See Section 2(a) hereof.
Filing Date: The 90th day after the Issue Date.
Holder: Any holder of Transfer Restricted Securities.
Indenture: See the second introductory paragraph hereto.
Initial Purchasers: See the first introductory paragraph hereto.
Inspectors: See Section 5(o) hereof.
Issue Date: The date of the issuance of the Notes under the
Indenture.
Liquidated Damages: See Section 4(a) hereof.
NASD: See Section 5(s) hereof.
Notes: See the second introductory paragraph hereto.
Ordinary Shares: See the second introductory paragraph hereto.
Participant: See Section 7(a) hereof.
Participating Broker-Dealer: See Section 2(b) hereof.
Person: An individual, trustee, corporation, partnership, limited
liability company, joint stock company, trust, unincorporated association,
union, business association, firm or other legal entity.
Private Exchange: See Section 2(b) hereof.
Private Exchange Notes: See Section 2(b) hereof.
<PAGE>
3
Prospectus: The prospectus included in any Registration Statement
(including, without limitation, any prospectus subject to completion and a
prospectus that includes any information previously omitted from a prospectus
filed as part of an effective registration statement in reliance upon Rule 430A
promulgated under the Securities Act), as amended or supplemented by any
prospectus supplement, and all other amendments and supplements to the
Prospectus, including post-effective amendments, and all material incorporated
by reference or deemed to be incorporated by reference in such Prospectus.
Purchase Agreement: See the second introductory paragraph hereto.
Records: See Section 5(o) hereof.
Registration Statement: Any registration statement of the
Company, including, but not limited to, the Exchange Offer Registration
Statement or the Shelf Registration Statement, filed with the SEC pursuant to
the provisions of this Agreement, including the Prospectus, amendments and
supplements to such registration statement, including post-effective amendments,
all exhibits, and all material incorporated by reference or deemed to be
incorporated by reference in such registration statement.
Representatives: Lehman Brothers Inc. and Lehman Brothers
International (Europe), on behalf of the Initial Purchasers.
Rule 144: Rule 144 promulgated under the Securities Act, as such
Rule may be amended from time to time, or any similar rule (other than Rule
144A) or regulation hereafter adopted by the SEC providing for offers and sales
of securities made in compliance therewith resulting in offers and sales by
subsequent holders that are not affiliates of an issuer of such securities being
free of the registration and prospectus delivery requirements of the Securities
Act.
Rule 144A: Rule 144A promulgated under the Securities Act, as
such Rule may be amended from time to time, or any similar rule (other than Rule
144) or regulation hereafter adopted by the SEC.
Rule 415: Rule 415 promulgated under the Securities Act, as such
Rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the SEC.
SEC: The U.S. Securities and Exchange Commission.
Securities Act: The U.S. Securities Act of 1933, as amended, and
the rules and regulations of the SEC promulgated thereunder.
Shelf Notice: See Section 2(c) hereof.
Shelf Registration Statement: See Section 3(a) hereof.
<PAGE>
4
Transfer Restricted Securities: Each Note until the earliest to
occur of (i) the date on which such Note has been exchanged by a Person (other
than a Participating Broker-Dealer) for Exchange Notes in the Exchange Offer,
(ii) following the exchange by a Participating Broker-Dealer in the Exchange
Offer of such Note for one or more Exchange Notes, the date on which such
Exchange Notes are sold to a purchaser who receives from such Participating
Broker-Dealer on or prior to the date of such sale a copy of the prospectus
contained in the Exchange Offer Registration Statement, (iii) the date on which
such Note has been effectively registered under the Securities Act and disposed
of in accordance with the Shelf Registration Statement or (iv) the date on which
such Note is eligible for distribution to the public pursuant to Rule 144 under
the Securities Act.
Trust Indenture Act: The Trust Indenture Act of 1939, as amended.
Trustee: The trustee under the Indenture and, if existent, the
trustee under any indenture governing the Exchange Notes and Private Exchange
Notes (if any).
underwritten registration or underwritten offering: A
registration in which securities of the Company are sold to an underwriter for
reoffering to the public.
Units: See the second introductory paragraph hereto.
Warrant Agreement: See the second introductory paragraph hereto.
2. Exchange Offer
(a) The Company agrees to file at its sole cost and expense with
the SEC no later than the Filing Date, unless prohibited by applicable law or
SEC policy, an offer to exchange (the "Exchange Offer") any and all of the
Transfer Restricted Securities (other than Private Exchange Notes, if any) for a
like aggregate principal amount of notes of the Company, which are substantially
identical in all material respects to the Notes (the "Exchange Notes") (and
which are entitled to the benefits of the Indenture or a trust indenture which
is substantially identical in all material respects to the Indenture (other than
such changes to the Indenture or any such identical trust indenture as are
necessary to comply with any requirements of the SEC to effect or maintain the
qualification thereof under the Trust Indenture Act) and which, in either case,
has been qualified under the Trust Indenture Act), except that the Exchange
Notes (other than Private Exchange Notes, if any) shall have been registered
pursuant to an effective Registration Statement under the Securities Act and
shall contain no restrictive legend thereon. The Exchange Offer shall be
registered under the Securities Act on the appropriate form (the "Exchange Offer
Registration Statement") and shall comply with all applicable tender offer rules
and regulations under the Exchange Act. The Company agrees to (i) use its
reasonable best efforts to cause the Exchange Offer Registration Statement to be
declared effective under the Securities Act on or before the Effectiveness
Target Date; (ii) keep the Exchange Offer open for at least 20 business days (or
longer if
<PAGE>
5
required by applicable law) after the date that notice of the Exchange Offer is
mailed to Holders; (iii) (A) file all pre-effective amendments to such
Registration Statement as may be necessary in order to cause such Registration
Statement to become effective, (B) file, if applicable, a post-effective
amendment to such Registration Statement pursuant to Rule 430A under the
Securities Act and (C) cause all necessary filings in connection with the
registration and qualifications of the Exchange Notes to be made under the blue
sky laws of such jurisdictions as are necessary to permit consummation of the
Exchange Offer; and (iv) use its reasonable best efforts to consummate the
Exchange Offer on or prior to 30 days after the date on which the Exchange Offer
Registration Statement is declared effective by the SEC. Upon the Exchange Offer
Registration Statement being declared effective, the Company will offer the
Exchange Notes in exchange for surrender of the Notes. If after such Exchange
Offer Registration Statement is declared effective by the SEC, the Exchange
Offer or the issuance of the Exchange Notes thereunder is interfered with by any
stop order, injunction or other order or requirement of the SEC or any other
governmental agency or court, such Exchange Offer Registration Statement shall
be deemed not to have become effective for purposes of this Agreement. Each
Holder who participates in the Exchange Offer will be required to represent that
(i) any Exchange Notes received by it will be acquired in the ordinary course of
its business, (ii) it has no arrangement or understanding with any Person to
participate in the distribution (within the meaning of the Securities Act) of
the Exchange Notes, (iii) it is not a broker-dealer that acquired Notes directly
from the Company, (iv) it is not an "affiliate" (as defined in Rule 405 under
the Securities Act) of the Company or, if it is such an affiliate, it will
comply with the registration and prospectus delivery requirements of the
Securities Act to the extent applicable and (v) it is not acting on behalf of
any Person who could not truthfully make the foregoing representations. If such
Holder is not a broker-dealer, such Holder will be required to represent that it
is not engaged in, and does not intend to engage in, the distribution of the
Exchange Notes. If such Holder is a broker-dealer that will receive Exchange
Notes for its own account in exchange for Notes that were acquired as a result
of market-making activities or other trading activities, it will be required to
acknowledge that it will deliver a prospectus in connection with any resale of
such Exchange Notes. Upon consummation of the Exchange Offer in accordance with
this Section 2, the Company shall have no further obligation to register
Transfer Restricted Securities (other than Private Exchange Notes and other than
in respect of any Exchange Notes as to which clause 2(c)(iv) hereof applies)
pursuant to Section 3 hereof. No securities other than the Exchange Notes shall
be included in the Exchange Offer Registration Statement.
(b) The Company shall include within the Prospectus contained in
the Exchange Offer Registration Statement a section entitled "Plan of
Distribution", reasonably acceptable to the Representatives, which shall contain
a summary statement of the positions taken or policies made by the Staff of the
SEC with respect to the potential "underwriter" status of any broker-dealer that
is the beneficial owner (as defined in Rule 13d-3 under the Exchange Act) of
Exchange Notes received by such broker-dealer in the Exchange Offer (a
"Participating Broker-Dealer"), whether such positions or policies have been
publicly disseminated by the Staff of the SEC or such positions or policies, in
the judgment of the Representatives, represent the prevailing views of the Staff
of the SEC. Such "Plan of
<PAGE>
6
Distribution" section shall also expressly permit the use of the Prospectus by
all Persons subject to the prospectus delivery requirements of the Securities
Act, including all Participating Broker-Dealers (unless such Participating
Broker-Dealer will be reselling an unsold allotment from the original sale of
the Notes), and include a statement describing the means by which Participating
Broker-Dealers may resell the Exchange Notes.
Upon written request after the consummation of the Exchange
Offer, the Company shall use its best efforts to keep the Exchange Offer
Registration Statement effective and to amend and supplement the Prospectus
contained therein, in order to permit such Prospectus to be lawfully delivered
by any Participating Broker-Dealer subject to the prospectus delivery
requirements of the Securities Act and other Persons, if any, with similar
prospectus delivery requirements for such period of time as is necessary to
comply with applicable law in connection with any resale of the Exchange Notes;
provided, however, that such period shall not exceed 180 days after the
consummation of the Exchange Offer (or such longer period if extended pursuant
to the last paragraph of Section 5 hereof) (the "Applicable Period").
If, prior to consummation of the Exchange Offer, the Initial
Purchasers hold any Notes acquired by them and having, or which are reasonably
likely to be determined to have, the status of an unsold allotment in the
initial distribution, the Company, upon the written request of the Initial
Purchasers simultaneously with the delivery of the Exchange Notes in the
Exchange Offer, shall issue and deliver to the Initial Purchasers in exchange
(the "Private Exchange") for such Notes held by the Initial Purchasers a like
principal amount of notes of the Company, that are substantially identical in
all material respects to the Exchange Notes (the "Private Exchange Notes") (and
which are issued pursuant to the same indenture as the Exchange Notes) except
for the placement of a restrictive legend on such Private Exchange Notes. The
Private Exchange Notes shall bear the same CUSIP number as the Exchange Notes to
the extent permitted by the CUSIP Service Bureau of Standard & Poor's.
Interest on the Exchange Notes and the Private Exchange Notes
will accrue from the last interest payment date on which interest was paid on
the Notes surrendered in exchange therefor or if no interest has been paid on
the Notes, from the Issue Date.
In connection with the Exchange Offer, the Company shall:
(1) mail to each Holder a copy of the Prospectus forming part of
the Exchange Offer Registration Statement, together with an appropriate
letter of transmittal and related documents;
(2) utilize the services of a depositary for the Exchange Offer
with an address in the Borough of Manhattan, The City of New York, which
may be the Trustee or an affiliate of the Trustee;
<PAGE>
7
(3) permit Holders to withdraw tendered Notes at any time prior
to the close of business, New York time, on the last business day on
which the Exchange Offer shall remain open; and
(4) otherwise comply in all material respects with all applicable
laws, rules and regulations.
As soon as practicable after the close of the Exchange Offer or
the Private Exchange, as the case may be, the Company shall:
(1) accept for exchange all Notes tendered and not validly
withdrawn pursuant to the Exchange Offer or the Private Exchange;
(2) deliver to the Trustee or Authenticating Agent for
cancellation all Notes so accepted for exchange; and
(3) cause the Trustee promptly to authenticate and deliver to
each Holder of the Notes, Exchange Notes or Private Exchange Notes, as
the case may be, in global form equal in principal amount to the
respective Notes so accepted for exchange, as further set forth in the
Indenture.
The Exchange Notes and the Private Exchange Notes may be issued
under (i) the Indenture or (ii) an indenture substantially identical in all
material respects to the Indenture, which in either event shall provide that (1)
the Exchange Notes shall not be subject to the transfer restrictions set forth
in the Indenture and (2) the Private Exchange Notes shall be subject to the
transfer restrictions set forth in the Indenture. The Indenture or such
indenture substantially identical in all material respects to the Indenture
shall provide that each series of Exchange Notes, Private Exchange Notes and
Notes shall vote and consent together on all matters as one class and that none
of the Exchange Notes, the Private Exchange Notes or the Notes will have the
right to vote or consent as a separate class on any matter.
(c) If (i) the Company is not permitted to file the Exchange
Offer Registration Statement or to consummate the Exchange Offer because the
Exchange Offer is not permitted by applicable law or SEC policy, (ii) any Holder
of Transfer Restricted Securities that is a "qualified institutional buyer" (as
defined in Rule 144A under the Securities Act) notifies the Company at least 20
business days prior to the consummation of the Exchange Offer that (a)
applicable law or SEC policy prohibits the Company from participating in the
Exchange Offer, (b) such Holder may not resell the Exchange Notes acquired by it
in the Exchange Offer to the public without delivering a prospectus and the
prospectus contained in the Exchange Offer Registration Statement is not
appropriate or available for such resales by such Holder or (c) such Holder is a
broker-dealer and holds Notes acquired directly from the Company or an affiliate
of the Company, (iii) the Exchange Offer is not for any other reason consummated
within 180 days after the Issue Date, (iv) any Holder (other than a
Participating Broker-Dealer) is not eligible to participate in the Exchange
Offer, or in the case of any Holder
<PAGE>
8
that participates in the Exchange Offer, such Holder does not receive Exchange
Notes on the date of the exchange that may be sold without restriction under
federal securities laws (other than due solely to the status of such Holder as
an affiliate of the Company within the meaning of the Securities Act or due to
the requirement that such Holder deliver a Prospectus in connection with any
resale of the Exchange Notes) or (v) the Exchange Offer has been completed and
in the opinion of counsel for the Initial Purchasers a Registration Statement
must be filed and a prospectus must be delivered by the Initial Purchasers in
connection with any offering or sale of Transfer Restricted Securities, then the
Company shall promptly deliver written notice thereof (the "Shelf Notice") to
the Trustee and in the case of clauses (i) and (iii), all Holders, or in the
case of clauses (ii), (iv) and (v) the affected Holders, and shall at its own
cost file a Shelf Registration Statement pursuant to Section 3 hereof.
3. Shelf Registration Statement
If a Shelf Notice is delivered as contemplated by Section 2(c)
hereof, then:
(a) Shelf Registration Statement. The Company will use its
reasonable best efforts to: (A) file with the SEC a Registration Statement for
an offering to be made on a continuous basis pursuant to Rule 415 covering all
of the Transfer Restricted Securities (the "Shelf Registration Statement"),
within 90 days of the earliest to occur of clauses (i) through (v) in Section
2(c) above and (B) cause the Shelf Registration Statement to be declared
effective by the SEC on or prior to the 150th day after such obligation arises;
provided, however, that if the Company files a Shelf Registration Statement
pursuant to this Section 3(a), it need not abandon the attempt to cause the SEC
to declare the Exchange Offer Registration Statement effective, and it may
satisfy its obligations to register the Notes pursuant to this Agreement either
by complying with Section 2 and/or Section 3. If the Company shall not have yet
filed an Exchange Offer Registration Statement, the Company shall use its best
efforts to file with the SEC the Shelf Registration Statement on or prior to the
Filing Date. The Shelf Registration Statement shall be on Form F-1 or another
appropriate form permitting registration of such Transfer Restricted Securities
for resale by Holders in the manner or manners designated by them (including,
without limitation, one or more underwritten offerings), or may be an amendment
to the Exchange Offer Registration Statement. The Company shall not permit any
securities other than the Transfer Restricted Securities to be included in the
Shelf Registration Statement.
The Company shall use its reasonable best efforts to keep the
Shelf Registration Statement continuously effective, supplemented and amended to
ensure that it is available for resales of Notes by the holders of Transfer
Restricted Securities entitled to this benefit and to ensure that such Shelf
Registration Statement conforms and continues to conform with the requirements
of this Agreement, the Securities Act and the policies, rules and regulations of
the SEC, as announced from time to time, until the second anniversary of the
Issue Date, subject to extension pursuant to the last paragraph of Section 5
hereof (the "Effectiveness Period"), or such shorter period ending when all
Transfer Restricted Securities covered by the Shelf Registration Statement have
been sold in the manner set forth and as contemplated in the
<PAGE>
9
Shelf Registration Statement or when the Transfer Restricted Securities become
eligible for resale pursuant to Rule 144 under the Securities Act without volume
restrictions, if any.
(b) Withdrawal of Stop Orders. If the Shelf Registration
Statement ceases to be effective for any reason at any time during the
Effectiveness Period (other than because of the sale of all of the securities
registered thereunder), the Company shall use its best efforts to obtain the
prompt withdrawal of any order suspending the effectiveness thereof.
(c) Supplements and Amendments. The Company shall promptly
supplement and amend the Shelf Registration Statement if required by the rules,
regulations or instructions applicable to the registration form used for such
Shelf Registration Statement, if required by the Securities Act, or if
reasonably requested by the Holders of a majority in aggregate principal amount
of the Transfer Restricted Securities covered by such Registration Statement or
by any underwriter of such Transfer Restricted Securities based on a reasonable
belief that such supplement or amendment is required by law.
4. Liquidated Damages
(a) The Company and the Initial Purchasers agree that the Holders
of Notes will suffer damages if the Company fails to fulfill its obligations
under Section 2 or Section 3 hereof and that it would not be feasible to
ascertain the extent of such damages with precision. Accordingly, the Company
agrees to pay, as liquidated damages, additional interest on the Notes
("Liquidated Damages") under the circumstances and to the extent set forth below
(each of which shall be given independent effect and shall not be duplicative):
(i if neither the Exchange Offer Registration Statement nor
the Shelf Registration Statement has been filed on or prior to the
Filing Date, then, commencing on the 91st day after the Issue Date,
Liquidated Damages shall accrue on the Notes over and above the stated
interest at a rate of 0.50% per annum for the first 90 days immediately
following the Filing Date, such Liquidated Damages rate increasing by an
additional 0.50% per annum at the beginning of each subsequent 90-day
period, or part thereof; or
(ii if neither the Exchange Offer Registration Statement nor
the Shelf Registration Statement is declared effective by the SEC on or
prior to the Effectiveness Target Date, then, commencing on the 151st
day after the Issue Date, Liquidated Damages shall accrue on the Notes
included or which should have been included in such Registration
Statement over and above the stated interest at a rate of 0.50% per
annum for the first 90 days immediately following the Effectiveness
Target Date, such Liquidated Damages rate increasing by an additional
0.50% per annum at the beginning of each subsequent 90-day period, or
part thereof; or
(iii if the Exchange Offer has not been consummated within 30
days after the Effectiveness Target Date with respect to the Exchange
Offer Registration
<PAGE>
10
Statement Liquidated Damages shall accrue on the Notes over and above
the stated interest at a rate of 0.50% per annum for the first 90 days
commencing on the 31st day after the Effectiveness Target Date, such
Liquidated Damages rate increasing by an additional 0.50% per annum at
the beginning of each subsequent 90-day period, or part thereof; or
(iv (A) the Exchange Offer Registration Statement is filed
and declared effective but thereafter ceases to be effective or fails to
be usable for its intended purpose at any time prior to the time that
the Exchange Offer is consummated and is not declared effective within
five business days thereafter or (B) the Shelf Registration Statement is
filed and declared effective but thereafter ceases to be effective or
fails to be usable for its intended purpose at any time during the
Effectiveness Period and is not declared effective again within five
business days thereafter, Liquidated Damages shall accrue on the Notes
over and above the stated interest rate at a rate of 0.50% per annum for
the first 90 days commencing on the day the applicable Registration
Statement ceases to be effective or usable for its intended purpose
without being declared effective again within 5 business days, such
Liquidated Damages rate increasing by an additional 0.50% per annum at
the beginning of each such subsequent 90-day period, or part thereof (it
being understood and agreed that, notwithstanding any provision to the
contrary, so long as any Note which is the subject of a Shelf Notice is
then covered by an effective Shelf Registration Statement, no Liquidated
Damages shall accrue on such Note);
provided, however, that Liquidated Damages may accrue at a maximum rate of 1.50%
per annum of the principal amount of Notes; and provided, further, that (1) upon
the filing of the Exchange Offer Registration Statement or a Shelf Registration
Statement as required hereunder (in the case of clause (i) of this Section
4(a)), (2) upon the effectiveness of the Exchange Offer Registration Statement
or the Shelf Registration Statement as required hereunder (in the case of clause
(ii) of this Section 4(a)), (3) upon the consummation of the Exchange Offer (in
the case of clause (iii) of this Section 4(a)), and (4) upon the effectiveness
or usability of the Exchange Offer Registration Statement which had ceased to
remain effective or be usable (in the case of clause (iv)(A) of this Section
4(a)), or upon the effectiveness or usability of the Shelf Registration
Statement which had ceased to remain effective or be usable (in the case of
clause (iv)(B) of this Section 4(a)), Liquidated Damages on the affected Notes
as a result of such clause (or the relevant subclause thereof), as the case may
be, shall cease to accrue.
(b) The Company shall notify the Trustee within five business
days after each and every date on which an event occurs in respect of which
Liquidated Damages is required to be paid (an "Event Date"). Any amounts of
Liquidated Damages due pursuant to (a)(i), (a)(ii), (a)(iii) or (a)(iv) of this
Section 4 will be payable to the Depositary or its nominee in its capacity as
the registered holder of affected Notes in cash semi-annually on each May 15 and
November 15 (to the holders of record on the May 1 and November 1 immediately
preceding such dates), commencing with the first such date occurring after any
such Liquidated Damages commences to accrue. The amount of Liquidated Damages
will be determined by
<PAGE>
11
multiplying the applicable Liquidated Damages rate by the principal amount of
the affected Notes of such Holders, multiplied by a fraction, the numerator of
which is the number of days such Liquidated Damages rate was applicable during
such period (determined on the basis of a 360-day year comprised of twelve
30-day months and, in the case of a partial month, the actual number of days
elapsed), and the denominator of which is 360. The Company shall notify the
Trustee within five business days of the cessation of any requirement to pay
Liquidated Damages hereunder.
5. Registration Procedures
In connection with the filing of any Registration Statement
pursuant to Sections 2 or 3 hereof, the Company shall effect such
registration(s) to permit the sale of the securities covered thereby in
accordance with the intended method or methods of disposition thereof, and
pursuant thereto and in connection with any Registration Statement filed by the
Company hereunder the Company shall:
(a) Prepare and file with the SEC prior to the Filing Date, a
Registration Statement or Registration Statements as prescribed by Sections 2 or
3 hereof, and use its best efforts to cause each such Registration Statement to
become effective and remain effective as provided herein; provided, however,
that, if (1) such filing is pursuant to Section 3 hereof, or (2) a Prospectus
contained in an Exchange Offer Registration Statement filed pursuant to Section
2 hereof is required to be delivered under the Securities Act by any
Participating Broker-Dealer who seeks to sell Exchange Notes during the
Applicable Period, before filing any Registration Statement or Prospectus or any
amendments or supplements thereto, the Company shall furnish to and afford the
Holders of the Transfer Restricted Securities covered by such Registration
Statement or each such Participating Broker-Dealer, as the case may be, their
counsel and the managing underwriters, if any, a reasonable opportunity to
review copies of all such documents (including copies of any documents to be
incorporated by reference therein and all exhibits thereto) proposed to be filed
(in each case at least five business days prior to such filing).
(b) Prepare and file with the SEC such amendments and
post-effective amendments to each Shelf Registration Statement or Exchange Offer
Registration Statement, as the case may be, as may be necessary to keep such
Registration Statement continuously effective for the Effectiveness Period or
the Applicable Period or until consummation of the Exchange Offer, as the case
may be; cause the related Prospectus to be supplemented by any Prospectus
supplement required by applicable law, and as so supplemented to be filed
pursuant to Rule 424 (or any similar provisions then in force) promulgated under
the Securities Act; and comply with the provisions of the Securities Act and the
Exchange Act applicable to it with respect to the disposition of all securities
covered by such Registration Statement as so amended or in such Prospectus as so
supplemented and with respect to the subsequent resale of any securities being
sold by a Participating Broker-Dealer covered by any such Prospectus.
Notwithstanding the foregoing, if the Board of Managing Directors of the Company
determines in good faith that it is in the best interests of the Company not to
disclose the existence of or
<PAGE>
12
facts surrounding any proposed or pending material event or transaction
involving the Company or its subsidiaries, the Company may (i) in the event a
Shelf Registration Statement has been filed, allow the Shelf Registration
Statement to fail to be effective or usable as a result of such nondisclosure
for up to 60 days during the Effectiveness Period, but in no event for any
period in excess of 30 consecutive days, and (ii) in the event the Exchange
Offer is consummated, allow the Exchange Offer Registration Statement to fail to
be effective or usable as a result of such non-disclosure for up to 15 days
during the Applicable Period. The Company shall be deemed not to have used its
best efforts to keep a Registration Statement effective during the Applicable
Period if it voluntarily takes any action that would result in selling Holders
of the Transfer Restricted Securities covered thereby or Participating Broker-
Dealers seeking to sell Exchange Notes not being able to sell such Transfer
Restricted Securities or such Exchange Notes during that period unless such
action is required by applicable law or unless the Company complies with this
Agreement, including, without limitation, the provisions of paragraph 5(k)
hereof and the last paragraph of this Section 5.
(c) If (1) a Shelf Registration Statement is filed pursuant to
Section 3 hereof, or (2) a Prospectus contained in an Exchange Offer
Registration Statement filed pursuant to Section 2 hereof is required to be
delivered under the Securities Act by any Participating Broker-Dealer who seeks
to sell Exchange Notes during the Applicable Period, notify the Holders of
Transfer Restricted Securities, or each such Participating Broker-Dealer, as the
case may be, their counsel and the managing underwriters, if any, promptly (but
in any event within five business days), and, if requested by such Persons,
confirm such notice in writing, (i) when a Prospectus or any Prospectus
supplement or post-effective amendment has been filed, and, with respect to a
Registration Statement or any post-effective amendment, when the same has become
effective under the Securities Act (including in such notice a written statement
that any Holder may, upon request, obtain, at the sole expense of the Company,
one conformed copy of such Registration Statement or post-effective amendment
including financial statements and schedules, documents incorporated or deemed
to be incorporated by reference and exhibits), (ii) of the issuance by the SEC
of any stop order suspending the effectiveness of a Registration Statement or of
any order preventing or suspending the use of any preliminary prospectus or the
initiation of any proceedings for that purpose, (iii) if at any time when a
prospectus is required by the Securities Act to be delivered in connection with
sales of the Transfer Restricted Securities or resales of Exchange Notes by
Participating Broker-Dealers the representations and warranties of the Company
contained in any agreement (including any underwriting agreement), contemplated
by Section 5(n) hereof cease to be true and correct, (iv) of the receipt by the
Company of any notification with respect to the suspension of the qualification
or exemption from qualification of a Registration Statement or any of the
Transfer Restricted Securities or the Exchange Notes to be sold by any
Participating Broker-Dealer for offer or sale in any jurisdiction, or the
initiation or threatening of any proceeding for such purpose, (v) of the
happening of any event, the existence of any condition or any information
becoming known that makes any statement made in such Registration Statement or
related Prospectus or any document incorporated or deemed to be incorporated
therein by reference untrue in any material respect or that requires the making
of any changes in or amendments or supplements to such Registration Statement,
Prospectus or documents so that, in the case of the
<PAGE>
13
Registration Statement, it will not 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, and that in the case of
the Prospectus, it will not contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading, and (vi) of the determination by the Company that a
post-effective amendment to a Registration Statement would be appropriate.
(d) Use its best efforts to prevent the issuance of any order
suspending the effectiveness of a Registration Statement or of any order
preventing or suspending the use of a Prospectus or suspending the qualification
(or exemption from qualification) of any of the Transfer Restricted Securities
or the Exchange Notes for sale in any jurisdiction, and, if any such order is
issued, to use its best efforts to obtain the withdrawal of any such order at
the earliest possible moment.
(e) If a Shelf Registration Statement is filed pursuant to
Section 3 and if reasonably requested by the managing underwriter or
underwriters (if any), or the Holders of a majority in aggregate principal
amount of the Transfer Restricted Securities being sold in connection with an
underwritten offering or any Participating Broker-Dealer, (i) promptly
incorporate in a prospectus supplement or post-effective amendment such
information as the managing underwriter or underwriters (if any), such Holders,
any Participating Broker-Dealer or counsel for any of them may reasonably
request to be included therein, (ii) make all required filings of such
prospectus supplement or such post-effective amendment as soon as practicable
after the Company has received notification of the matters to be incorporated in
such prospectus supplement or post-effective amendment, and (iii) supplement or
make amendments to such Registration Statement.
(f) If (l) a Shelf Registration Statement is filed pursuant to
Section 3 hereof, or (2) a Prospectus contained in an Exchange Offer
Registration Statement filed pursuant to Section 2 hereof is required to be
delivered under the Securities Act by any Participating Broker-Dealer who seeks
to sell Exchange Notes during the Applicable Period, furnish to each selling
Holder of Transfer Restricted Securities and to each such Participating
Broker-Dealer who so requests and to counsel and each managing underwriter, if
any, at the sole expense of the Company, one conformed copy of the Registration
Statement or Registration Statements and each post-effective amendment thereto,
including financial statements and schedules, and, if requested, all documents
incorporated or deemed to be incorporated therein by reference and all exhibits.
(g) If (l) a Shelf Registration Statement is filed pursuant to
Section 3 hereof, or (2) a Prospectus contained in an Exchange Offer
Registration Statement filed pursuant to Section 2 hereof is required to be
delivered under the Securities Act by any Participating Broker-Dealer who seeks
to sell Exchange Notes during the Applicable Period, deliver to each Holder of
Transfer Restricted Securities, or each such Participating Broker-Dealer, as the
case may be, their respective counsel, and the underwriters, if any, at the sole
expense of the
<PAGE>
14
Company, as many copies of the Prospectus or Prospectuses (including each form
of preliminary prospectus) and each amendment or supplement thereto and any
documents incorporated by reference therein as such Persons may reasonably
request; and, subject to the last paragraph of this Section 5, the Company
hereby consents to the use of such Prospectus and each amendment or supplement
thereto by each of the Holders of Transfer Restricted Securities or each such
Participating Broker-Dealer, as the case may be, and the underwriters or agents,
if any, and dealers (if any), in connection with the offering and sale of the
Transfer Restricted Securities covered by, or the sale by Participating
Broker-Dealers of the Exchange Notes pursuant to, such Prospectus and any
amendment or supplement thereto.
(h) Prior to any public offering of Transfer Restricted
Securities or Exchange Notes or any delivery of a Prospectus contained in the
Exchange Offer Registration Statement by any Participating Broker-Dealer who
seeks to sell Exchange Notes during the Applicable Period, use its reasonable
best efforts to register or qualify (and to cooperate with selling Holders of
Transfer Restricted Securities or each such Participating Broker-Dealer, as the
case may be, the managing underwriter or underwriters, if any, and their
respective counsel in connection with the registration or qualification (or
exemption from such registration or qualification) of such Transfer Restricted
Securities) for offer and sale under the securities or Blue Sky laws of such
jurisdictions within the United States as any selling Holder, Participating
Broker-Dealer, or the managing underwriter or underwriters reasonably request;
provided, however, that where Exchange Notes held by Participating
Broker-Dealers or Transfer Restricted Securities are offered other than through
an underwritten offering, the Company agrees to cause its counsel to perform
Blue Sky investigations and file registrations and qualifications required to be
filed pursuant to this Section 5(h); keep each such registration or
qualification (or exemption therefrom) effective during the period such
Registration Statement is required to be kept effective and do any and all other
acts or things reasonably necessary or advisable to enable the disposition in
such jurisdictions of the Exchange Notes held by Participating Broker-Dealers or
the Transfer Restricted Securities covered by the applicable Registration
Statement; provided, however, that the Company shall not be required to (A)
qualify generally to do business in any jurisdiction where it is not then so
qualified, (B) take any action that would subject it to general service of
process in any such jurisdiction where it is not then so subject or (C) subject
itself to taxation in any such jurisdiction where it is not then so subject.
(i) If a Shelf Registration Statement is filed pursuant to
Section 3 hereof, cooperate with the selling Holders of Transfer Restricted
Securities and the managing underwriter or underwriters, if any, to facilitate
the timely preparation and delivery of certificates representing Transfer
Restricted Securities to be sold, which certificates shall not bear any
restrictive legends and shall be in a form eligible for deposit with The
Depository Trust Company; and enable such Transfer Restricted Securities to be
in such denominations and registered in such names as the managing underwriter
or underwriters, if any, or Holders may request.
<PAGE>
15
(j) Use its best efforts to cause the Transfer Restricted
Securities covered by the Registration Statement and the Exchange Notes to be
registered with or approved by such other governmental agencies or authorities
as may be necessary to enable the selling Holders thereof or the underwriter or
underwriters, if any, to dispose of such Transfer Restricted Securities or
Exchange Notes, except as may be required solely as a consequence of the nature
of a selling Holder's business, in which case the Company will cooperate in all
reasonable respects with the filing of such Registration Statement and the
granting of such approvals.
(k) If (l) a Shelf Registration Statement is filed pursuant to
Section 3 hereof, or (2) a Prospectus contained in an Exchange Offer
Registration Statement filed pursuant to Section 2 hereof is required to be
delivered under the Securities Act by any Participating Broker-Dealer who seeks
to sell Exchange Notes during the Applicable Period, upon the occurrence of any
event contemplated by paragraph 5(c)(v) or 5(c)(vi) hereof, as promptly as
practicable prepare and (subject to Section 5(b) hereof) file with the SEC, at
the sole expense of the Company, a supplement or post-effective amendment to the
Registration Statement or a supplement to the related Prospectus or any document
incorporated or deemed to be incorporated therein by reference, or file any
other required document so that, as thereafter delivered to the purchasers of
the Transfer Restricted Securities being sold thereunder or to the purchasers of
the Exchange Notes to whom such Prospectus will be delivered by a Participating
Broker-Dealer, any such Prospectus will not contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading.
(l) Unless the rating in effect for the Notes is equally
applicable and in effect for the Exchange Notes and the Transfer Restricted
Securities, use its best efforts to cause the Transfer Restricted Securities
covered by a Registration Statement or the Exchange Notes, as the case may be,
to be rated with the appropriate rating agencies.
(m) Prior to the effective date of the first Registration
Statement relating to the Transfer Restricted Securities, provide a CUSIP
number, ISIN Code and Common Code for each series of Transfer Restricted
Securities or Exchange Notes, as the case may be.
(n) In connection with any underwritten offering of Transfer
Restricted Securities pursuant to a Shelf Registration Statement, enter into an
underwriting agreement as is customary in underwritten offerings of debt
securities similar to the Notes and take all such other actions as are
reasonably requested by the managing underwriter or underwriters in order to
facilitate the registration or the disposition of such Transfer Restricted
Securities and, in such connection, (i) make such representations and warranties
to, and covenants with, the underwriters with respect to the business of the
Company and its subsidiaries (including any acquired business, properties or
entity, if applicable) and the Registration Statement, Prospectus and documents,
if any, incorporated or deemed to be incorporated by reference therein, in each
case, as are customarily made by issuers to underwriters in underwritten
offerings of debt securities similar to the Notes, and confirm the same in
writing if and when
<PAGE>
16
requested; (ii) obtain the written opinion of counsel to the Company and written
updates thereof in form, scope and substance reasonably satisfactory to the
managing underwriter or underwriters, addressed to the underwriters covering the
matters customarily covered in opinions requested in underwritten offerings of
debt similar to the Notes and such other matters as may be reasonably requested
by the managing underwriter or underwriters; (iii) obtain "cold comfort" letters
and updates thereof in form, scope and substance reasonably satisfactory to the
managing underwriter or underwriters from the independent certified public
accountants of the Company (and, if necessary, any other independent certified
public accountants of any subsidiary of the Company or of any business acquired
by the Company for which financial statements and financial data are, or are
required to be, included or incorporated by reference in the Registration
Statement), addressed to each of the underwriters, such letters to be in
customary form and covering matters of the type customarily covered in "cold
comfort" letters in connection with underwritten offerings of debt similar to
the Notes and such other matters as reasonably requested by the managing
underwriter or underwriters; and (iv) if an underwriting agreement is entered
into, the same shall contain indemnification provisions and procedures
substantially similar to those set forth in Section 7 hereof (or such other
provisions and procedures acceptable to Holders of a majority in aggregate
principal amount of Transfer Restricted Securities covered by such Registration
Statement and the managing underwriter or underwriters or agents) with respect
to all parties to be indemnified pursuant to said Section, including, without
limitation, the Holders of Transfer Restricted Securities and the underwriters.
The above shall be done at each closing under such underwriting agreement, or as
and to the extent required thereunder.
(o) If (1) a Shelf Registration Statement is filed pursuant to
Section 3 hereof, or (2) a Prospectus contained in an Exchange Offer
Registration Statement filed pursuant to Section 2 hereof is required to be
delivered under the Securities Act by any Participating Broker-Dealer who seeks
to sell Exchange Notes during the Applicable Period, make available for
inspection by any selling Holder of such Transfer Restricted Securities being
sold, or each such Participating Broker-Dealer, as the case may be, any
underwriter participating in any such disposition of Transfer Restricted
Securities, if any, and any attorney, accountant or other agent retained by any
such selling Holder or each such Participating Broker-Dealer, as the case may
be, or underwriter (collectively, the "Inspectors"), at the offices where
normally kept, during reasonable business hours, all financial and other
records, pertinent corporate documents and instruments of the Company and its
subsidiaries (collectively, the "Records") as shall be reasonably necessary to
enable them to exercise any applicable due diligence responsibilities, and cause
the officers, directors and employees of the Company and its subsidiaries to
supply all information reasonably requested by any such Inspector in connection
with such Registration Statement. Records which the Company determines, in good
faith, to be confidential and any Records which it notifies the Inspectors are
confidential shall not be disclosed by the Inspectors unless (i) the disclosure
of such Records is necessary to avoid or correct a misstatement or omission in
such Registration Statement, (ii) the release of such Records is ordered
pursuant to a subpoena or other order from a court of competent jurisdiction,
(iii) disclosure of such information is, in the opinion of counsel for any
Inspector and after consultation with the Company, necessary in connection with
any action, claim, suit
<PAGE>
17
or proceeding, directly or indirectly, involving or potentially involving such
Inspector and arising out of, based upon, relating to, or involving this
Agreement, or any transactions contemplated hereby or arising hereunder, or (iv)
the information in such Records has been made generally available to the public.
Each selling Holder of such Transfer Restricted Securities and each such
Participating Broker-Dealer will be required to agree that information obtained
by it as a result of such inspections shall be deemed confidential and shall not
be used by it as the basis for any market transactions in the securities of the
Company unless and until such information is generally available to the public.
Each selling Holder of such Transfer Restricted Securities and each such
Participating Broker-Dealer or underwriter, as the case may be, will be required
further to agree that it will, upon learning that disclosure of such Records is
sought in a court of competent jurisdiction, give notice to the Company and
allow the Company at its sole expense to undertake appropriate action to prevent
disclosure of the Records deemed confidential.
(p) Provide an indenture trustee for the Transfer Restricted
Securities or the Exchange Notes, as the case may be, and cause the Indenture or
the trust indenture provided for in Section 2(a) hereof, as the case may be, to
be qualified under the Trust Indenture Act not later than the effective date of
the first Registration Statement relating to the Transfer Restricted Securities;
and in connection therewith, cooperate with the trustee under any such indenture
and the Holders of the Transfer Restricted Securities, to effect such changes to
such indenture as may be required for such indenture to be so qualified in
accordance with the terms of the Trust Indenture Act; furnish the trustee with
an officer's certificate certifying that such indenture has been so qualified
under the Trust Indenture Act and that the Transfer Restricted Securities are
the subject of a Registration Statement; and execute, and use its reasonable
best efforts to cause such trustee to execute, all documents as may be required
to effect such changes, and all other forms and documents required to be filed
with the SEC to enable such indenture to be so qualified in a timely manner.
(q) Comply with all applicable rules and regulations of the SEC
and make generally available to its securityholders earnings statements
satisfying the provisions of Section 11(a) of the Securities Act and Rule 158
thereunder (or any similar rule promulgated under the Securities Act) no later
than 45 days after the end of any 12-month period (or 90 days after the end of
any 12-month period if such period is a fiscal year) (i) commencing at the end
of any fiscal quarter in which Transfer Restricted Securities are sold to
underwriters in a firm commitment or best efforts underwritten offering and (ii)
if not sold to underwriters in such an offering, commencing on the first day of
the first fiscal quarter of the Company after the effective date of a
Registration Statement, which statements shall cover said 12-month periods.
(r) If an Exchange Offer or a Private Exchange is to be
consummated, upon delivery of the Transfer Restricted Securities by Holders to
the Company (or to such other Person as directed by the Company) in exchange for
the Exchange Notes or the Private Exchange Notes, as the case may be, the
Company shall mark, or cause to be marked, on such Transfer Restricted
Securities that such Transfer Restricted Securities are being cancelled in
<PAGE>
18
exchange for the Exchange Notes or the Private Exchange Notes, as the case may
be; in no event shall such Transfer Restricted Securities be marked as paid or
otherwise satisfied.
(s) Cooperate with each seller of Transfer Restricted Securities
covered by any Registration Statement and each underwriter, if any,
participating in the disposition of such Transfer Restricted Securities and
their respective counsel in connection with any filings required to be made with
the National Association of Securities Dealers, Inc. (the "NASD").
(t) Use its best efforts to take all other steps necessary or
advisable to effect the registration of the Exchange Notes and/or Transfer
Restricted Securities covered by a Registration Statement contemplated hereby.
(u) Make an application to list the Exchange Notes on the
Luxembourg Stock Exchange and to use its best efforts to have the Exchange Notes
admitted to trading on the Luxembourg Stock Exchange as promptly as practicable.
The Company may require each seller of Transfer Restricted
Securities as to which any Shelf Registration Statement is being effected to (i)
furnish to the Company such information regarding such seller and the
distribution of such Transfer Restricted Securities and (ii) make such
representations, in each case as the Company may, from time to time, reasonably
request. The Company may exclude from such registration the Transfer Restricted
Securities of any seller who unreasonably fails to furnish such information or
make such representations within a reasonable time after receiving such request.
Each seller as to which any Shelf Registration Statement is being effected
agrees to furnish promptly to the Company all information required to be
disclosed in order to make the information previously furnished to the Company
by such seller not materially misleading.
Each Holder of Transfer Restricted Securities and each
Participating Broker-Dealer agrees by acquisition of such Transfer Restricted
Securities or Exchange Notes to be sold by such Participating Broker-Dealer, as
the case may be, that, upon actual receipt of any notice from the Company of the
happening of any event of the kind described in Section 5(c)(ii), 5(c)(iv),
5(c)(v) or 5(c)(vi) hereof, such Holder will forthwith discontinue disposition
of such Transfer Restricted Securities covered by such Registration Statement or
Prospectus or Exchange Notes to be sold by such Holder or Participating
Broker-Dealer, as the case may be, until such Holder's or Participating
Broker-Dealer's receipt of the copies of the supplemented or amended Prospectus
contemplated by Section 5(k) hereof, or until it is advised in writing (the
"Advice") by the Company that the use of the applicable Prospectus may be
resumed, and has received copies of any amendments or supplements thereto. In
the event the Company shall give any such notice, each of the Effectiveness
Period and the Applicable Period shall be extended by the number of days during
such periods from and including the date of the giving of such notice to and
including the date when each seller of Transfer Restricted Securities covered by
such Registration Statement or Exchange Notes to be sold by such Participating
Broker-Dealer, as the case may be, shall have received (x) the copies of the
supplemented or amended Prospectus contemplated by Section 5(k) hereof or (y)
the Advice.
<PAGE>
19
6. Registration Expenses
(a) All fees and expenses incident to the performance of or
compliance with this Agreement by the Company shall be borne by the Company
whether or not the Exchange Offer Registration Statement or a Shelf Registration
Statement is filed or becomes effective, including, without limitation, (i) all
registration and filing fees (including, without limitation, (A) fees with
respect to filings required to be made with the NASD in connection with an
underwritten offering, (B) fees and expenses of compliance with state securities
or Blue Sky laws (including, without limitation, reasonable fees and
disbursements of counsel in connection with Blue Sky qualifications of the
Transfer Restricted Securities or Exchange Notes and determination of the
eligibility of the Transfer Restricted Securities or Exchange Notes for
investment under the laws of such jurisdictions (x) where the holders of
Transfer Restricted Securities are located, in the case of the Exchange Notes,
or (y) as provided in Section 5(h) hereof, in the case of Transfer Restricted
Securities or Exchange Notes to be sold by a Participating Broker-Dealer during
the Applicable Period)), and (C) all expenses and fees in connection with the
obtaining of any approval from the Stichting Toezicht Effectenverkeer or any
other relevant authority in The Netherlands; (ii) printing expenses, including,
without limitation, the printing of prospectuses if the printing of prospectuses
is requested by the managing underwriter or underwriters, if any, by the Holders
of a majority in aggregate principal amount of the Transfer Restricted
Securities included in any Registration Statement or by any Participating
Broker-Dealer, as the case may be, (iii) reasonable fees and disbursements of
counsel for the Company and reasonable fees and disbursements of special counsel
for the sellers of Transfer Restricted Securities (subject to the provisions of
Section 6(b) hereof), (iv) reasonable fees and disbursements of all independent
certified public accountants referred to in Section 5(n)(iii) hereof (including,
without limitation, the expenses of any special audit and "cold comfort" letters
required by or incident to such performance), (v) rating agency fees, if any,
and any fees associated with making the Exchange Notes eligible for trading
through The Depository Trust Company, (vi) Securities Act liability insurance,
if the Company desires such insurance, (vii) reasonable fees and expenses of all
other Persons retained by the Company, (viii) internal expenses of the Company
(including, without limitation, all salaries and expenses of officers and
employees of the Company performing legal or accounting duties), (ix) the
expense of any annual audit, (x) the reasonable fees and expenses incurred in
connection with the listing of the securities to be registered on any securities
exchange, if applicable, and (xi) the expenses relating to printing, word
processing and distributing all Registration Statements, underwriting
agreements, securities sales agreements, indentures and any other documents
necessary in order to comply with this Agreement.
(b) The Company shall reimburse the Holders of the Transfer
Restricted Securities being registered in a Shelf Registration Statement for the
reasonable fees and disbursements of not more than one counsel (in addition to
appropriate local counsel) chosen by the Holders of a majority in aggregate
principal amount of the Transfer Restricted Securities to be included in such
Registration Statement (which counsel shall be Simpson Thacher & Bartlett unless
otherwise affirmatively stated by the Holders).
<PAGE>
20
7. Indemnification and Contribution
(a) The Company shall indemnify and hold harmless each Holder of
Transfer Restricted Securities offered pursuant to a Shelf Registration
Statement, each Participating Broker-Dealer selling Exchange Notes during the
Applicable Period and the Initial Purchasers and the officers and employees and
each Person, if any, who controls any such Person within the meaning of the
Securities Act (each a "Participant") 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 the
exchange of or sales of the Transfer Restricted Securities), to which that
Participant 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 in any Registration Statement or Prospectus, or any amendment or
supplement thereto, or any related preliminary prospectus, or 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 Transfer Restricted Securities 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 therein 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 to act, by any
Participant in connection with, or relating in any manner to, the Transfer
Restricted Securities or the registration 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 Participant through its gross negligence or wilful
misconduct), and shall reimburse each Participant promptly upon demand for any
legal or other expenses reasonably incurred by that Participant 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 the Registration Statement or 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 by or on
behalf of any Participant specifically for inclusion therein; provided, further,
that with respect to any such untrue statement in or omission from any
preliminary prospectus, the indemnity agreement contained in this Section 7(a)
shall not inure to the benefit of any such Participant to the extent that the
sale to the Person asserting any such loss, claim, damage, liability or action
was an initial resale by such Participant and any such loss, claim, damage,
liability or action of or with respect to such Participant results from the fact
that both (A) to the extent required by applicable law, a copy of the Prospectus
was not sent or given to such Person at or prior to the written confirmation of
the sale of such securities to such Person
<PAGE>
21
and (B) the untrue statement in or omission from such preliminary prospectus was
corrected in the Prospectus unless, in either case, such failure to deliver the
Prospectus was a result of non-compliance by the Company with Section 5(g) of
this Agreement. The foregoing indemnity agreement is in addition to any
liability which the Company may otherwise have to any Participant.
(b) Each Holder of Transfer Restricted Securities offered
pursuant to a Shelf Registration Statement, each Participating Broker-Dealer
selling Exchange Notes during the Applicable Period and the Initial Purchasers
(each a "Participant Indemnifying Party") 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
or the Registration Statement or Prospectus, or in any amendment or supplement
thereto, or (B) in any Blue Sky Application or (ii) the omission or alleged
omission to state therein any material fact required to be stated therein or
necessary to make the 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 by that Participant Indemnifying Party
specifically for inclusion therein, and shall reimburse the Company and any such
director, officer or controlling Person 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 Participant Indemnifying Party may otherwise have to the Company or
any such director, officer or controlling Person.
(c) 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
<PAGE>
22
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 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 Initial Purchasers, if
the indemnified parties under this Section 7 consist of any Participants, 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) and 7(b), shall use its reasonable 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.
(d) 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) or 7(b) 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
<PAGE>
23
appropriate to reflect the relative benefits received by the Company on the one
hand and the Participants 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 Participants on the other with respect to the statements or
omissions which resulted in such losses, claims, damages or liabilities, as well
as any other relevant equitable considerations. The relative benefits received
by the Company on the one hand and the Participants on the other shall be deemed
to be in the same proportion as the total net proceeds from the offering of the
Notes (before deducting expenses underwriting discounts and commissions)
received by the Company bear on the one hand, and the total underwriting
discounts and commissions received by the Participants with respect to the Notes
purchased under the Purchase Agreement, on the other hand, bear to the total
gross proceeds from the offering of the Notes under the Purchase Agreement. 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
Participants, the intent of the parties and their relative knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company and the Participants 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 Participants 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(d) shall be
deemed to include, for purposes of this Section 7(d), 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(d), no Participant shall be required to contribute
any amount in excess of the amount by which the total price at which the Notes
purchased by it were resold exceeds the amount of any damages which such 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. The Participant's obligations to contribute as
provided in this Section 7(d) are several in proportion to their respective
purchase obligations and not joint.
8. Rule 144A
Whether or not required by the rules and regulations of the SEC
and until such time as none of the Notes remain outstanding, the Company
covenants to furnish to the holders of the Notes, (i) all annual and quarterly
financial information that would be required to be contained in a filing with
the SEC 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
<PAGE>
24
to be filed with the SEC on Form 8-K if the Company were required to file such
reports. Such quarterly financial information shall be furnished to the holders
of the Notes 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 will also be required (a) to file with the Trustee
copies of such reports and documents within 15 days after the date on which the
Company files such reports and documents with the SEC 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 SEC is not
accepted by the SEC 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, the Company covenants to furnish to the
holders of the Notes and to prospective investors, upon the request of such
holder, any information required to be delivered pursuant to Rule 144A(d)(4)
under the Securities Act so long as the Notes are not freely transferable under
the Securities Act.
9. Underwritten Registrations
If any of the Transfer Restricted Securities covered by any Shelf
Registration Statement are to be sold in an underwritten offering, the
investment banker or investment bankers and manager or managers that will manage
the offering will be selected by the Holders of a majority in aggregate
principal amount of such Transfer Restricted Securities included in such
offering and shall be reasonably acceptable to the Company.
No Holder of Transfer Restricted Securities may participate in
any underwritten registration hereunder unless such Holder (a) agrees to sell
such Holder's Transfer Restricted Securities on the basis provided in any
underwriting arrangements approved by the Persons entitled hereunder to approve
such arrangements and (b) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents required
under the terms of such underwriting arrangements.
10. Miscellaneous
(a) No Inconsistent Agreements. The Company has not, as of the
date hereof, nor will it, after the date of this Agreement, enter into any
agreement with respect to any of its securities that is inconsistent with the
rights granted to the Holders of Transfer Restricted Securities in this
Agreement or otherwise conflicts with the provisions hereof. The Company will
not enter into any agreement with respect to any of its securities which will
grant to any Person piggy-back registration rights with respect to the Exchange
Offer Registration Statement or the Shelf Registration Statement.
(b) Adjustments Affecting Transfer Restricted Securities. The
Company shall not, directly or indirectly, take any action with respect to the
Transfer Restricted
<PAGE>
25
Securities as a class that would adversely affect the ability of the Holders of
Transfer Restricted Securities to include such Transfer Restricted Securities in
a registration undertaken pursuant to this Agreement.
(c) Amendments and Waivers. The provisions of this Agreement may
not be amended, modified or supplemented, and waivers or consents to departures
from the provisions hereof may not be given, otherwise than with the prior
written consent of (A) the Holders of not less than a majority in aggregate
principal amount of any series of the then outstanding Transfer Restricted
Securities with respect to such series of Transfer Restricted Securities and (B)
in circumstances that would adversely affect the Participating Broker-Dealers,
the Participating Broker-Dealers holding not less than a majority in aggregate
principal amount of any series of the Exchange Notes held by all Participating
Broker-Dealers with respect to such series of Exchange Notes; provided, however,
that Section 7 and this Section 10(c) may not be amended, modified or
supplemented without the prior written consent of each Holder and each
Participating Broker-Dealer (including any Person who was a Holder or
Participating Broker-Dealer of Transfer Restricted Securities or Exchange Notes,
as the case may be, disposed of pursuant to any Registration Statement).
Notwithstanding the foregoing, a waiver or consent to depart from the provisions
hereof with respect to a matter that relates exclusively to the rights of
Holders of any series of Transfer Restricted Securities whose securities are
being sold pursuant to a Registration Statement and that does not directly or
indirectly affect, impair, limit or compromise the rights of other Holders of
Transfer Restricted Securities may be given by Holders of at least a majority in
aggregate principal amount of the Transfer Restricted Securities being sold by
such Holders pursuant to such Registration Statement; provided, however, that
the provisions of this sentence may not be amended, modified or supplemented
except in accordance with the provisions of the immediately preceding sentence.
(d) Notices. All notices and other communications (including,
without limitation, any notices or other communications to the Trustee) provided
for or permitted hereunder shall be made in writing by hand-delivery, registered
first-class mail, next-day air courier or facsimile:
(1) if to a Holder of the Transfer Restricted Securities
or any Participating Broker-Dealer, at the most current address of such
Holder or Participating Broker-Dealer, as the case may be, set forth on
the records of the registrar under the Indenture, with a copy in like
manner to the Representatives as follows:
Lehman Brothers Inc.
Lehman Brothers International (Europe)
c/o Lehman Brothers Inc.
Three World Financial Center
New York, New York 10285
Facsimile No: 212-528-8822
Attention: Syndicate Department
<PAGE>
26
with a copy to:
Simpson Thacher & Bartlett
99 Bishopsgate
21st Floor
London EC2M 3YH
Facsimile No: 44-171-422-4022
Attention: William R. Dougherty, Esq.
(2) if to any of the Initial Purchasers, at the addresses
specified in Section 10(d)(1);
(3) if to the Company, as follows:
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.
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 Initial Purchasers.
Copies of all such notices, demands or other communications shall
be concurrently delivered by the Person giving the same to the Trustee at the
address and in the manner specified in the Indenture.
(e) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of each of the parties
hereto and the Holders; provided, however, that this Agreement shall not inure
to the benefit of or be binding upon a successor or assign of a Holder unless
and to the extent such successor or assign holds Transfer Restricted Securities.
<PAGE>
27
(f) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(g) Headings. The headings in this Agreement are for convenience
of reference only and shall not limit or otherwise affect the meaning hereof.
(h) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
YORK
(i) 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 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 any of the Initial Purchasers,
their officers and employees or any person who controls any of the Initial
Purchasers 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.
<PAGE>
28
The provisions of this Section 10(i) are intended to be effective
upon the execution of this Agreement without any further action by the Company
or the Initial Purchasers and the introduction of a true copy of this Agreement
into evidence shall be conclusive and final evidence as to such matters.
(j) Currency Indemnity. The Company shall indemnify each
Participant 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 such Participant 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 such Participant. If the
U.S. dollars so purchased are greater than the amount originally due to such
Participant hereunder, such Participant agrees to pay to the Company an amount
equal to the excess of the U.S. dollars so purchased over the amount originally
due to such Participant hereunder. The foregoing shall constitute a separate and
independent obligation of the Company and the Participant, as the case may be,
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.
(k) Severability. If any term, provision, covenant or restriction
of this Agreement is held by a court of competent jurisdiction to be invalid,
illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the parties
hereto shall use their best efforts to find and employ an alternative means to
achieve the same or substantially the same result as that contemplated by such
term, provision, covenant or restriction. It is hereby stipulated and declared
to be the intention of the parties that they would have executed the remaining
terms, provisions, covenants and restrictions without including any of such that
may be hereafter declared invalid, illegal, void or unenforceable.
(l) Securities Held by the Company or Its Affiliates. Whenever
the consent or approval of Holders of a specified percentage of Transfer
Restricted Securities is required hereunder, Transfer Restricted Securities held
by the Company or its "affiliates" (as such term is defined in Rule 405 under
the Securities Act) shall not be counted in determining whether such consent or
approval was given by the Holders of such required percentage.
(m) Third Party Beneficiaries. Holders of Transfer Restricted
Securities and Participating Broker-Dealers are intended third party
beneficiaries of this Agreement, and this Agreement may be enforced by such
Persons.
(n) Entire Agreement. This Agreement, together with the Purchase
Agreement, the Unit Agreement, the Warrant Agreement, the Escrow Agreement and
the
<PAGE>
29
Indenture, is intended by the parties as a final and exclusive statement of the
agreement and understanding of the parties hereto in respect of the subject
matter contained herein and therein and any and all prior oral or written
agreements, representations, or warranties, contracts, understandings,
correspondence, conversations and memoranda between the Initial Purchasers on
the one hand and the Company on the other, or between or among any agents,
representatives, parents, subsidiaries, affiliates, predecessors in interest or
successors in interest with respect to the subject matter hereof and thereof are
merged herein and replaced hereby.
<PAGE>
30
IN WITNESS WHEREOF, the parties have executed this Agreement as
of the date first written above.
VERSATEL TELECOM INTERNATIONAL
N.V.
By: /s/ R. Gary Mesch
------------------------------
Name: R. Gary Mesch
Title: Managing Director
LEHMAN BROTHERS INC.
LEHMAN BROTHERS INTERNATIONAL
(EUROPE)
PARIBAS CORPORATION
By: LEHMAN BROTHERS INC.
On behalf of itself and the other Initial
Purchasers
By: /s/ Michael Holbert
---------------------------
Authorized Representative
EXHIBIT 4.5
================================================================================
VERSATEL TELECOM INTERNATIONAL N.V.,
UNITED STATES TRUST COMPANY OF NEW YORK,
as Escrow Agent and
Securities Intermediary
AND
UNITED STATES TRUST COMPANY OF NEW YORK,
as Trustee
------------------
ESCROW AGREEMENT
Dated as of December 3, 1998
------------------
150,000 Units Consisting of 13 1/4% Senior Notes due 2008
and Warrants to Purchase 1,000,050 Class B Shares
================================================================================
<PAGE>
ESCROW AGREEMENT
This ESCROW AGREEMENT (this "Agreement"), dated as of December 3,
1998, among United States Trust Company of New York, a New York banking
corporation, as escrow agent and securities intermediary (in such capacities,
the "Escrow Agent"), United States Trust Company of New York, as Trustee (in
such capacity, the "Trustee") under the Indenture (as defined herein), and
VersaTel Telecom International N.V. (formerly known as VersaTel Telecom B.V.), a
company organized under the laws of The Netherlands (the "Company").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, pursuant to the Unit Agreement, dated as of December 3, 1998 (the "Unit
Agreement"), between the Company and United States Trust Company of New York, as
Unit Agent (in such capacity, the "Unit Agent"), VersaTel is issuing 150,000
Units (the "Units") consisting of $1,000 aggregate principal amount of its 13
1/4% Senior Notes due 2008 (the "Notes") and one warrant to purchase 6.667 Class
B Shares of the Company, par value NLG 0.10 per share (the "Class B Shares").
The Notes are to be issued under an indenture, dated as of December 3, 1998 (the
"Indenture"), between the Company and the Trustee. The warrants are to be issued
under a Warrant Agreement, dated as of December 3, 1998, between the Company and
United States Trust Company of New York, as Warrant Agent.
WHEREAS, as security for its obligations under the Notes and the
Indenture, the Company hereby grants to the Trustee and any predecessor Trustee
under the Indenture (any such Trustee acting in the name and on behalf of the
Beneficiaries (as defined herein)) for the benefit of the Beneficiaries, a
security interest in and lien upon the Escrow Account (as defined herein).
WHEREAS, the parties have entered into this Agreement in order to
set forth the conditions upon which, and the manner in which, funds will be
disbursed from the Escrow Account (as defined herein) and released from the
security interest and lien described above.
A G R E E M E N T
NOW, THEREFORE, for good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. Defined Terms. All terms used but not defined herein shall
have the meanings ascribed to them in the Indenture. All terms defined in the
UCC (as defined herein) and not otherwise defined herein shall have the
respective meanings given to those terms in the UCC, except where the context
otherwise requires. In addition to any other defined terms used herein, the
following terms shall constitute defined terms for purposes of this Agreement
and shall have the meanings set forth below:
<PAGE>
2
"Agent" means, with respect to the Escrow Account at any date,
any investment advisor or advisors appointed by the Company from time to time,
with notice in writing to the Escrow Agent and the Trustee. Only those persons
identified in an Officers' Certificate of the Agent delivered to the Escrow
Agent at the time of notice of appointment as Agent, or any such persons
identified in a further certificate delivered by an authorized person at the
Agent to the Escrow Agent, shall be authorized to instruct the Escrow Agent
pursuant to the terms of this Agreement.
"Applied" means that disbursed funds have been applied (i) to the
payment of interest on the Notes, (ii) pursuant to Section 3(c) hereof or (iii)
pursuant to Section 6(b)(iii) hereof.
"Available Funds" mean, with respect to each Escrow Account at
any date, (A) the sum of (i) the Pledged Securities and any funds or Cash
Equivalents and (ii) interest earned or dividends paid on the Pledged Securities
and any funds or Cash Equivalents, less (B) the aggregate disbursements made
prior to such date in accordance with the terms of this Agreement.
"Beneficiaries" shall have the meaning set forth in Section
2(b)(ii).
"Cash Equivalents" mean, with respect to the Escrow Account, (i)
U.S. dollars and (ii) U.S. Government Securities having maturities of not later
than May 15, 2001.
"Collateral" shall have the meaning set forth in Section 6(a).
"Escrow Account" means the escrow account established for the
benefit of the Trustee, any predecessor Trustee under the Indenture and the
holders of the Notes pursuant to Section 2(b)(i).
"entitlement holder" means a Person which is both an "entitlement
holder" (as defined in UCC Section 8-102(a)(7)) and an "entitlement holder" (as
defined in 31 C.F.R. ss. 357.2 or, as applicable, the corresponding Federal
Book-Entry Regulations).
"Escrow Funds" shall have the meaning set forth in Section 6(c).
"Federal Book-Entry Regulations" means (a) the federal
regulations contained in Subpart B ("Treasury/Revenue Automated Debt Entry
System (TRADES)" governing Book-Entry Securities consisting of U.S. Treasury
bonds, notes and bills) and Subpart D ("Additional Provisions") of 31 C.F.R Part
357, 31 C.F.R. ss. 357.10 through ss. 357.14 and ss. 357.41 through ss.357.44
(including related defined terms in 31 C.F.R. ss. 357.2); and (b) to the extent
substantially identical to the federal regulations referred to in clause (a)
above (as in effect from time to time), the federal regulations governing other
U.S. Government Securities.
"Initial Escrow Amount" means $[46,500,000].
<PAGE>
3
"Interest Payment Date" means May 15 and November 15 of each
year, commencing on May 15, 1999 until the Notes are paid in full.
"Issue Date" means the date on which the Notes are originally
issued under the Indenture.
"Payment Notice and Disbursement Request" means a notice signed
by an Officer of the Company sent by the Company to the Escrow Agent requesting
a disbursement of funds from an Escrow Account, in substantially the form of
Exhibit A hereto.
"Pledged Securities" mean, the U.S. Government Securities
purchased by the Company and deposited in the Escrow Account.
"Secured Obligations" shall have the meaning set forth in Section
6(a).
"securities intermediary" means a Person that is both a
"securities intermediary" (as defined in UCC Section 8-102(a)(14)) and a
"securities intermediary" (as defined in 31 C.F.R. ss. 357.2 or, as applicable,
the corresponding Federal Book-Entry Regulations).
"UCC" shall mean the Uniform Commercial Code as in effect from
time to time in the State of New York.
"U.S. Government Securities" 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 are not callable or redeemable at the option of the issuer thereof,
which obligations in each case, are governed by the Federal Book-Entry
Regulations.
2. Escrow Account; Escrow Agent.
(a) Appointment of Escrow Agent. The Company and the Trustee
hereby appoint United States Trust Company of New York as the Escrow Agent, and
United States Trust Company of New York, hereby accepts such appointment under
the terms and conditions of this Agreement.
(b) Establishment of the Escrow Account.
(i) On the Issue Date, the Escrow Agent shall establish an escrow
account in the name of the Trustee entitled the "Escrow Account pledged by
VersaTel Telecom International N.V. to United States Trust Company of New York,
as Trustee, acting in the name and on behalf of the Beneficiaries" at its office
located at United States Trust Company of New York, 114 West 47th Street, New
York, NY. The Escrow Account shall be a "securities account" as such term is
defined in the UCC.
<PAGE>
4
(ii) All U.S. dollar funds, including the Initial Escrow Amount,
Pledged Securities and any Cash Equivalents accepted by the Escrow Agent
pursuant to this Agreement shall be held by the Escrow Agent for the Trustee for
the exclusive benefit of the holders of the Notes, as secured parties hereunder
(collectively, the "Beneficiaries"). All such funds shall be held in the Escrow
Account until disbursed or paid in accordance with the terms hereof.
(iii) On the Issue Date, the Company shall deliver, or cause the
delivery of, either (x) the Initial Escrow Amount to the Escrow Agent for
deposit into the Escrow Account against the Escrow Agent's written
acknowledgement and receipt of the Initial Escrow Amount, and the Escrow Agent
shall purchase pursuant to written instructions of the Company or its Agent,
Pledged Securities, with all or a portion of the Initial Escrow Amounts, or (y)
the Pledged Securities and deliver or cause to be delivered such Pledged
Securities to the Escrow Agent for deposit into the Escrow Account against the
Escrow Agent's written acknowledgement and receipt of such Pledged Securities.
Such Pledged Securities shall be held by the Escrow Agent acting in the name and
on behalf of the Beneficiaries and deposited into the Escrow Account for the
exclusive benefit of the Beneficiaries. All payments of interest and principal
on the Pledged Securities shall be deposited into the Escrow Account to be paid
or disbursed in accordance with the terms hereof or, to the extent permitted by
Section 2(d)(i) hereof, reinvested in Cash Equivalents.
(c) Escrow Agent Compensation. The Company shall pay to the
Escrow Agent such compensation for services to be performed by it under this
Agreement as the Company and the Escrow Agent may agree in writing from time to
time. The Escrow Agent shall be paid any compensation owed to it directly by the
Company and shall not disburse from the Escrow Account any such amounts nor
shall the Escrow Agent have any interest in the Escrow Account with respect to
such amounts.
The Company shall reimburse the Escrow Agent upon request for all
reasonable expenses, disbursements and advances incurred or made by the Escrow
Agent in implementing any of the provisions of this Agreement, including
compensation and the reasonable expenses and disbursements of its counsel. The
Escrow Agent shall be paid any such expenses owed to it directly by the Company
and shall not disburse from any of the Escrow Account any such amounts nor shall
the Escrow Agent have any interest in the Escrow Account with respect to such
amounts.
(d) Investment of Funds in the Escrow Account. Any funds on
deposit in the Escrow Account which are not invested may be invested or
reinvested, at the Company's option, only upon the following terms and
conditions:
(i) Acceptable Investments with respect to the Escrow Account.
All funds deposited or held in the Escrow Account at any time shall be invested
by the Escrow Agent in Cash Equivalents in accordance with the written
instructions of the Company or its Agent from time to time to the Escrow Agent;
provided, however, that (A) the Company or its Agent shall only designate
investment of funds in Cash Equivalents maturing in an amount sufficient to
<PAGE>
5
and/or generating interest income sufficient to, when added to the balance of
funds held in the Escrow Account, provide for the payment of interest on the
outstanding Notes on each Interest Payment Date beginning on and including May
15, 1999 and through and including the Interest Payment Date on May 15, 2001,
and the Company or its Agent shall designate, and hereby designates, that all
cash which may from time to time be placed or deposited in or credited,
transferred or delivered to such Escrow Account, be invested as promptly and to
the fullest extent practicable in U.S. Government Securities; and (B) any such
written instructions shall specify the particular investment to be made, shall
state that such investment is authorized to be made hereby and in particular
satisfies the requirements of the preceding clause (A) of this proviso, shall
contain the certification referred to in Section 2(d)(ii), if required, and
shall be executed by an Officer of the Company. The Escrow Agent shall have no
responsibility for determining whether funds held in the Escrow Account shall
have been invested in such a manner so as to comply with the requirements of
this clause (i). All such Cash Equivalents shall be assigned to and held in the
possession of, or, in the case of Cash Equivalents maintained in book entry form
with the Federal Reserve Bank, transferred to a book entry account in the name
of the Escrow Agent for the benefit of the Beneficiaries, except that Cash
Equivalents maintained in book entry form with the Federal Reserve Bank shall be
transferred to a book entry account in the name of the Escrow Agent at the
Federal Reserve Bank that includes only Cash Equivalents held by the Escrow
Agent for its customers and segregated by separate recordation in the books and
records of the Escrow Agent. The Escrow Agent shall not be liable for losses on
any investments made by it pursuant to and in compliance with such written
instructions. In the absence of instructions from the Company that meet the
requirements of this Section 2(d)(i), the Escrow Agent shall have no obligation
to invest funds held in the Escrow Account.
(ii) Security Interest in Investments. No investment of funds in
the Escrow Account shall be made unless the Company has certified to the Escrow
Agent and the Trustee that, upon such investment, the Trustee (acting in the
name and on behalf of the Beneficiaries as appropriate) will have a first
priority perfected security interest in the applicable investment. On the date
of this Agreement, and on each anniversary thereof (upon receipt of written
notice from the Escrow Agent), until the date upon which the balance of the
Available Funds with respect to each Escrow Account shall have been reduced to
zero, each of the Trustee and the Escrow Agent shall receive an Opinion of
Counsel to the Company, dated such date as applicable, which opinion shall
confirm the foregoing and in respect to the Escrow Account, shall meet the
requirements of Section 314(b) of the United States Trust Indenture Act of 1939,
as amended (the "TIA") and shall comply with Sections 11.4 and 11.5 of the
Indenture. If a certificate or opinion as to a class of investments has been
provided to the Escrow Agent, a certificate or opinion need not be issued with
respect to individual investments in securities in that class if the certificate
or opinion applicable to the class remains accurate with respect to such
individual investments, which continued accuracy the Escrow Agent may
conclusively assume.
(iii) Interest and Dividends. All interest earned and dividends
paid on the Pledged Securities in the Escrow Account or any funds invested in
Cash Equivalents in the
<PAGE>
6
Escrow Account shall be deposited in the Escrow Account as additional Collateral
for the exclusive benefit of the Beneficiaries and, if not required to be
disbursed in accordance with the terms hereof, subject to subsections 6(b)(iii),
6(e) and 6(f), shall be reinvested in accordance with paragraph 2(d)(i) above,
acknowledged by the Trustee, in accordance with the terms hereof unless the
Trustee has provided written notice to the Escrow Agent that a Default or Event
of Default under the Indenture has occurred or the Trustee has notified the
Escrow Agent that it should only take direction from the Trustee or should no
longer take direction from the Company in which case the Escrow Agent shall take
directions from the Trustee.
(iv) Limitation on the Escrow Agent's Responsibilities. The
Escrow Agent's sole responsibilities under this Section 2 shall be (A) to retain
possession of certificated Cash Equivalents and to be the registered or
designated owner of the Pledged Securities and any Cash Equivalents which are
not certificated, (B) to follow written instructions of the Company or its Agent
given in accordance with Section 2(d)(i), (C) to invest and reinvest funds
pursuant to this Section 2(d) and (D) to use reasonable efforts to reduce to
cash such Cash Equivalents as may be required to fund any disbursement or
payment in accordance with Section 3. In connection with clause (d)(iv)(A)
above, the Escrow Agent will maintain continuous possession in the jurisdiction
of its principal place of business of certificated Cash Equivalents and cash
included in the Collateral and will cause the Pledged Securities and any
uncertificated dollar Cash Equivalents to be registered in the book-entry system
of, and transferred to an account of the Escrow Agent or a sub-agent of the
Escrow Agent at, any Federal Reserve Bank. Except as provided in Section 6, the
Escrow Agent shall have no other responsibilities with respect to perfecting or
maintaining the perfection of the security interest in the Collateral and shall
not be required to file any instrument, document or notice in any public office
at any time or times. In connection with clause (d)(iv)(A) above and subject to
the following sentence, the Escrow Agent shall not be required to reduce to cash
any Cash Equivalents to fund any disbursement or payment in accordance with
Section 3 in the absence of written instructions signed by an Officer of the
Company specifying the particular investment to liquidate. If no such written
instructions are received, the Escrow Agent may liquidate those Cash Equivalents
having the lowest interest rate per annum or if none such exist, those having
the nearest maturity.
(e) Substitution of the Escrow Agent. The Escrow Agent may resign
by giving no less than 20 Business Days prior written notice to the Company and
the Trustee. Such resignation shall take effect upon the later to occur of (i)
delivery of all funds, the Pledged Securities and any Cash Equivalents
maintained by the Escrow Agent hereunder and copies of all books, records, plans
and other documents in the Escrow Agent's possession relating to such funds, the
Pledged Securities or any Cash Equivalents or this Agreement to a successor
escrow agent mutually approved by the Company and the Trustee (which approvals
shall not be unreasonably withheld or delayed) and (ii) the Company, the Trustee
and such successor escrow agent entering into this Agreement or any written
successor agreement no less favorable to the interests of the holders of the
Notes and the Trustee than this Agreement and the taking of such other steps as
may be necessary to give the successor escrow agent a first priority security
interest in the Pledged Securities, and the Escrow Agent shall thereupon
<PAGE>
7
be discharged of all obligations under this Agreement and shall have no further
duties, obligations or responsibilities in connection herewith, except as set
forth in Section 4. If a successor escrow agent has not been appointed or has
not accepted such appointment within 30 Business Days after notice of
resignation is given to the Company, the Escrow Agent may apply to a court of
competent jurisdiction for the appointment of a successor escrow agent.
(f) Escrow Account Statement. At least 30 days prior to each
Interest Payment Date, the Escrow Agent shall deliver to the Company and the
Trustee a statement setting forth with reasonable particularity the balance of
funds then in the Escrow Account and the manner in which such funds are
invested. The parties hereto irrevocably instruct the Escrow Agent that on the
first date upon which the balance in the Escrow Account (including the holdings
of all Cash Equivalents) is reduced to zero, the Escrow Agent shall deliver to
the Company and to the Trustee a notice that the balance in the Escrow Account
has been reduced to zero.
3. Disbursements
(a) Payment Notice and Disbursement Request, Disbursements. No
later than five Business Days prior to an Interest Payment Date, the Company
shall submit to the Escrow Agent with respect to the Notes, acknowledged by the
Trustee, a completed Payment Notice and Disbursement Request substantially in
the form of Exhibit A hereto.
The Escrow Agent's disbursement pursuant to any Payment Notice
and Disbursement Request shall be subject to the satisfaction of the applicable
conditions set forth in Section 3(b). Provided such Payment Notice and
Disbursement Request is not rejected by it, the Escrow Agent, as soon as
reasonably practicable on the Interest Payment Date, but in no event later than
11:00 a.m. (New York City time) on the Interest Payment Date, shall disburse the
funds requested in such Payment Notice and Disbursement Request by wire or
book-entry transfer of immediately available funds to the account of the Trustee
for the benefit of the Beneficiaries. The Escrow Agent shall notify the Trustee
as soon as reasonably practicable (but not later than two (2) Business Days from
the date of receipt of the Payment Notice and Disbursement Request) if any
Payment Notice and Disbursement Request is rejected and the reasons(s) therefor.
In the event such rejection is based upon nonsatisfaction of the condition in
Section 3(b)(I), the Company shall thereupon resubmit the Payment Notice and
Disbursement Request with appropriate changes.
(b) Conditions Precedent to Disbursement. The Escrow Agent's
payment of any disbursement shall be made only if: (I) the Company shall have
submitted, in accordance with the provisions of Section 3(a), a completed
Payment Notice and Disbursement Request to the Escrow Agent substantially in the
form of Exhibit A with blanks appropriately filled in, and (II) the Escrow Agent
shall not have received any written notice from the Trustee that as a result of
an Event of Default under the Indenture the indebtedness represented by the
Notes has been accelerated and has become due and payable (in which event the
Escrow Agent shall apply all Available Funds as required by Section 6(b)(iii)).
<PAGE>
8
(c) Company Payments. If the Company makes any interest payment
or portion of an interest payment on the Notes from a source of funds other than
the Escrow Account ("Company Funds"), the Company may, after payment in full of
such interest payment, direct the Escrow Agent to release to the Company or at
the direction of the Company an amount of funds from the Escrow Account less
than or equal to the amount of Company Funds so expended. Upon receipt of a
request from the Company (including the certificate described in the following
sentence), the Escrow Agent will pay over to the Company the requested amount.
Concurrently with any release of funds to the Company pursuant to this Section
3(c), the Company will deliver to the Escrow Agent an Officers' Certificate
stating that such release has been duly authorized by all necessary corporate
action, and does not contravene, or constitute a default under, any provision of
applicable law or regulation or of the Articles of Association of the Company or
of any agreement, judgment, injunction, order, decree or other instrument
binding upon the Company or result in the creation or imposition of any Lien on
any assets of the Company.
(d) If at any time the principal of and interest on the
Collateral exceeds 101% of the amount sufficient, in the written opinion of an
internationally recognized firm of independent accountants selected by the
Company and delivered to the Escrow Agent and the Trustee, to provide for
payment in full of the interest on the outstanding Notes on each Interest
Payment Date beginning on and including May 15, 1999 and through and including
the Interest Payment Date on May 15, 2001 (or, in the event one or more interest
payments have been made thereon, an amount sufficient to provide for the payment
in full of any and all interest payments on the Notes then remaining, up to and
including the fifth scheduled interest payment), the Company may direct the
Escrow Agent and the Trustee to release any such overfunded amount to the
Company or to such other party as the Company may direct. Upon receipt of
written instructions executed by the Company in the form of an Officers'
Certificate, the Escrow Agent shall pay, or shall cause the payment, over to the
Company or the Company's designee, as the case may be, any such overfunded
amount.
(e) It is understood that the Escrow Agent and the Beneficiary's
bank in any funds transfer may rely solely upon any account numbers or similar
identifying number provided by either of the other parties hereto in accordance
with the provisions of this Agreement to identify (i) the Beneficiary, (ii) the
Beneficiary's bank, or (iii) an intermediary bank. The Escrow Agent may apply
any of the Escrow Collateral under its control for any payment order it executes
using any such identifying number, even where its use may result in a Person
other than the Beneficiary being paid, or the transfer of funds to a bank other
than the Beneficiary's bank or a designated intermediary bank.
4. Escrow Agent.
(a) Limitation of the Escrow Agent's Liability; Responsibilities
of the Escrow Agent. Except as otherwise provided herein (and in any event,
without prejudice to the Escrow Agent's representations, warranties, covenants
and agreements in its capacity as securities intermediary contained herein), the
Escrow Agent's responsibility and liability under
<PAGE>
9
this Agreement shall be limited as follows: (i) the Escrow Agent does not
represent, warrant or guaranty to the holders of the Notes from time to time the
performance of the Company; (ii) the Escrow Agent shall have no responsibility
to the Company or holders of the Notes or the Trustee from time to time as a
consequence of performance or non-performance by the Escrow Agent hereunder,
except for any bad faith, gross negligence or wilful misconduct of the Escrow
Agent; (iii) the Company shall remain solely responsible for all aspects of the
Company's business and conduct; and (iv) the Escrow Agent is not obligated to
supervise, inspect or inform the Company or any third party of any matter
referred to above. In no event shall the Escrow Agent be liable (x) for acting
in accordance with or relying upon any instruction, notice, demand, certificate
or document from the Company or any entity acting on behalf of the Company
delivered in accordance with the terms hereof, (y) for any consequential,
punitive or special damages or (Z) for an amount in excess of the value of the
Escrow Account valued as of the date of deposit.
No implied covenants or obligations shall be inferred from this
Agreement against the Escrow Agent, nor shall the Escrow Agent be bound by the
provisions of any agreement beyond the specific terms hereof. Specifically and
without limiting the foregoing, the Escrow Agent shall in no event have any
liability in connection with its investment, reinvestment or liquidation, in
good faith and in accordance with the terms hereof, of any funds, the Pledged
Securities or Cash Equivalents held by it hereunder, including without
limitation any liability for any delay not resulting from bad faith, gross
negligence or wilful misconduct in such investment, reinvestment or liquidation,
or for any loss of principal or income incident to any such delay.
The Escrow Agent shall be entitled to rely upon any judicial or
administrative order or judgment, upon any opinion of counsel or upon any
certification, instruction, notice or other writing delivered to it by the
Company or the Trustee in compliance with the provisions of this Agreement
without being required to determine the authenticity or the correctness of any
fact stated therein or the propriety or validity of service thereof. The Escrow
Agent may act or refrain from acting in reliance upon any instrument comporting
with the provisions of this Agreement or signature believed by it to be genuine
and may assume that any Person purporting to give notice or receipt or advice or
make any statement or execute any document in connection with the provisions
hereof has been duly authorized to do so.
At any time the Escrow Agent may request in writing an
instruction in writing from the Company (other than with respect to any
disbursement pursuant to Section 6(b)(iii)), and may at its own option but in no
case is obliged to, include in such request the course of action it proposes to
take and the date on which it proposes to act, regarding any matter arising in
connection with its duties and obligations hereunder; provided, however, that
the Escrow Agent shall state in such request that it believes in good faith that
such proposed course of action is consistent with another identified provision
of this Agreement. The Escrow Agent shall not be liable to the Company for
acting without the Company's consent in accordance with such a proposal on or
after the date specified therein if (i) the specified date is at least two
Business Days after the Company received the Escrow Agent's request for
instructions and its
<PAGE>
10
proposed course of action, and (ii) prior to so acting, the Escrow Agent has not
received the written instruction requested from the Company.
At the expense of the Company, the Escrow Agent may act pursuant
to the advice of counsel chosen by it with respect to any matter relating to
this Agreement and (subject to clause (ii) of the preceding paragraph) shall not
be liable for any action taken or omitted in good faith and without gross
negligence or wilful misconduct in accordance with such advice.
The Escrow Agent shall not be called upon to advise any party as
to selling or retaining, or taking or refraining from taking any action with
respect to, any securities or other property deposited hereunder.
In the event of any ambiguity in the provisions of this Agreement
with respect to any funds, securities or property deposited hereunder, the
Escrow Agent shall be entitled to refuse to comply with any and all claims,
demands or instructions with respect to such funds, securities or property, and
the Escrow Agent shall not be or become liable for its failure or refusal to
comply with conflicting claims, demands or instructions. The Escrow Agent shall
be entitled to refuse to act until either any conflicting or adverse claims or
demands shall have been finally determined by a court of competent jurisdiction
or settled by agreement between the conflicting claimants as evidenced in a
writing, satisfactory to the Escrow Agent, or the Escrow Agent shall have
received security or an indemnity satisfactory to the Escrow Agent sufficient to
hold the Escrow Agent harmless from and against any and all loss, liability or
expense which the Escrow Agent may incur by reason of its acting. The Escrow
Agent may in addition elect in its sole option to commence an interpleader
action or seek other judicial relief or orders as the Escrow Agent may deem
necessary. The costs and expenses (including reasonable attorney's fees and
expenses) incurred in connection with such proceedings shall be paid by, and
shall be deemed an obligation of, the Company.
No provision of this Agreement shall require the Escrow Agent to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder.
The Escrow Agent shall not incur any liability for not performing
any act or fulfilling any duty, obligation or responsibility hereunder by reason
of any occurrence beyond the control of the Escrow Agent (including but not
limited to any act or provision of any present or future law or regulation or
governmental authority, any act of God or war, or the unavailability of the
Federal Reserve Bank wire).
5. Indemnity. The Company shall indemnify, hold harmless and, if
required or requested by the Trustee or the Escrow Agent, defend the Trustee and
the Escrow Agent, as the case may be, and their respective directors, officers,
agents, employees and controlling Persons, from and against any and all claims,
actions, obligations, liabilities and expenses, including reasonable defense
costs, reasonable investigative fees and costs, reasonable legal
<PAGE>
11
fees, and claims for damages, arising from the Trustee's or the Escrow Agent's
performance or non-performance, or in connection with the Escrow Agent's
acceptance of appointment as Escrow Agent under this Agreement, except (i) to
the extent that such liability, expense or claim is solely and directly
attributable to the bad faith, gross negligence or wilful misconduct of any of
the foregoing Persons or (ii) to the extent that any such claim, action,
obligation, liability or expense arises from the Escrow Agent's performance or
non-performance (including, without limitation, its failure to perform or
observe its obligations) as securities intermediary hereunder, to the extent
that such liability, expense or claim is solely and directly attributable to the
bad faith, negligence or wilful misconduct of the Escrow Agent. The provisions
of Section 2(c) and this Section 5 shall survive any termination, satisfaction
or discharge of this Agreement as well as the resignation or removal of the
Escrow Agent.
6. Grant of Security Interest; Instructions to the Escrow Agent.
(a) The Company hereby irrevocably grants a first priority
security interest in and lien on, and pledges, assigns, transfers and sets over
to the Trustee for the ratable benefit of the Beneficiaries, all of the
Company's right, title and interest in the Escrow Account and all property now
or hereafter placed or deposited in, or credited to, or transferred or delivered
to the Escrow Agent for placement or deposit in, or credit to the Escrow
Account, including, without limitation, all of the following (whether consisting
of certificated or uncertificated securities, accounts, chattel paper,
documents, financial assets, security entitlements, other investment property,
general intangibles, instruments, deposit accounts, bank accounts, securities
accounts or other collateral accounts, money, proceeds or other items comprising
such property), whether now owned by the Company or hereafter acquired and
whether now existing or hereafter coming into existence: the Pledged Securities,
all funds held therein, all Cash Equivalents held by (or otherwise maintained in
the name of) the Escrow Agent pursuant to Section 2, all rights of the Company
under this Agreement and all proceeds of the Collateral (including, without
limitation, all interest, dividends or other earnings, income, collections and
distributions from or in respect of investments or reinvestments, of the
Collateral) (collectively, the "Collateral"), in order to secure all obligations
and indebtedness of the Company under the Indenture, the Notes and any other
obligation, now or hereafter arising, of every kind and nature, owed by the
Company under the Indenture or the Notes to the holders of the Notes or to the
Trustee or any predecessor Trustee (the "Secured Obligations"). The Escrow Agent
hereby acknowledges the Trustee's security interest and lien as set forth above.
The Company shall take all actions necessary on its part to insure the
continuance of a first priority security interest in the Collateral in favor of
the Trustee in order to secure all such obligations and indebtedness.
(b) The Company and the Trustee hereby irrevocably instruct the
Escrow Agent to, and the Escrow Agent shall:
(i) in respect of the Collateral, (A) maintain the Escrow Account
for the sole dominion and control (including, without limitation, "control"
within the meaning of UCC Section 9-115) of the Trustee, in the name and on
behalf of the Beneficiaries, over the Pledged
<PAGE>
12
Securities, any Cash Equivalents and any and all other property in the Escrow
Account for the benefit of the Trustee, (B) maintain, or cause its agent within
the jurisdiction of its principal place of business to maintain, possession of
all certificated Cash Equivalents purchased hereunder that are physically
possessed by the Escrow Agent in order for the Trustee to enjoy a continuous
perfected first priority security interest therein under the laws of the State
of New York pursuant hereto and pursuant to any instructions received pursuant
hereto (the Company hereby agreeing that in the event any certificated Cash
Equivalents are in the possession of the Company or a third party, the Company
shall use its best efforts to deliver all such certificates to the Escrow
Agent), (C) take all reasonable steps specified by the Company pursuant to
paragraphs (a) and (b) of this Section 6 to cause the Trustee, acting in the
name and on behalf of the Beneficiaries, to enjoy a continuous perfected first
priority security interest under any applicable law of the State of New York in
all Cash Equivalents purchased hereunder that are not certificated and (D) use
its best efforts to maintain the Collateral free and clear of any security
interests senior to the security interest created hereby in favor of the Trustee
and use reasonable efforts to maintain the Collateral free and clear of all
liens, security interests, safekeeping or other charges, demands and claims
against the Escrow Agent of any nature now or hereafter existing in favor of
anyone other than the Trustee;
(ii) promptly notify the Trustee if the Escrow Agent receives
written notice that any Person has a lien or security interest upon any portion
of the Collateral other than the liens created hereby;
(iii) in addition to disbursing amounts held in escrow pursuant
to any Payment Notice and Disbursement Requests given to it pursuant to Section
3, upon receipt of written notice from the Trustee of the acceleration of
maturity of the Notes, and direction from the Trustee to disburse all Available
Funds to the Trustee, as promptly as is practicable, disburse all funds held in
the Escrow Account to the Trustee and transfer title to all Cash Equivalents
held by the Escrow Agent hereunder to the Trustee. In addition, upon an Event of
Default under the Indenture and for so long as such Event of Default continues,
the Trustee may exercise in respect of the Collateral, in addition to other
rights and remedies provided for herein or otherwise available to it, all the
rights and remedies of a secured party under the UCC or other applicable law,
and the Trustee may also upon obtaining possession of the Collateral as set
forth herein, without notice to the Company except as specified below, sell the
Collateral or any part thereof in one or more parcels at public or private sale,
at any exchange, broker's board or at any of the Trustee's offices or elsewhere,
for cash, on credit or for future delivery, and upon such other terms as the
Trustee may deem commercially reasonable. The Company acknowledges and agrees
that any such private sale may result in prices and other terms less favorable
to the seller than if such sale were a public sale. The Company agrees that, to
the extent notice of sale shall be required by law, at least ten (10) days'
notice to the Company of the time and place of any public sale or the time after
which any private sale is to be made shall constitute reasonable notification.
The Trustee shall not be obligated to make any sale regardless of notice of sale
having been given. The Trustee may adjourn any public or private sale from time
to time by announcement at the time and place fixed therefor, and
<PAGE>
13
such sale may, without further notice, be made at the time and place to which it
was so adjourned; and
(iv) comply in all respects with its covenants and agreements
contained in Section 8.
The lien and security interest provided for by this Section 6
shall automatically terminate and cease as to, and shall not extend or apply to,
and the Trustee and the Escrow Agent shall have no security interest in, any
funds disbursed by the Escrow Agent whether for payment of interest on the Notes
or to the Company pursuant to this Agreement to the extent not inconsistent with
the terms hereof. Notwithstanding any other provision contained in this
Agreement, the Escrow Agent shall act solely as the Trustee's agent in
connection with its duties herein relating to the Escrow Account or the Pledged
Securities or any funds or Cash Equivalents held thereunder. The Escrow Agent
shall not have any right to receive compensation from the Trustee and shall have
no authority to obligate the Trustee or to compromise or pledge its security
interest hereunder. Accordingly, the Escrow Agent is hereby directed to
cooperate with the Trustee in the exercise of its rights in the Collateral
provided for herein.
(c) Any money and Cash Equivalents collected by the Trustee
pursuant to Section 6(b)(iii) shall be applied as provided in Section 6.13 of
the Indenture. Any surplus of such cash or cash proceeds held by the Trustee and
remaining after indefeasible payment in full of all the obligations under the
Indenture (the "Escrow Funds") shall be paid over to the Company or as a court
of competent jurisdiction may direct.
(d) The Company will execute and deliver or cause to be executed
and delivered, or use its best efforts to procure, all stock powers, proxies,
assignments, instruments and other documents, deliver any instruments to the
Trustee and take any other actions that are necessary or desirable to perfect,
continue the perfection of, or protect the first priority of the Trustee's
security interest in and to the Collateral, to protect the Collateral against
the rights, claims, or interests of third parties or to effect the purposes of
this Agreement. The Company also hereby authorizes the Trustee to file any
financing or continuation statements with respect to the Collateral without the
signature of the Company (to extent permitted by applicable law). The Company
will pay all reasonable costs incurred in connection with any of the foregoing.
It being understood that the Trustee has no duty to determine whether to file or
record any document or instrument relating to Collateral.
(e) The Company hereby appoints the Trustee as its
attorney-in-fact with full power of substitution to do any act which the Company
is obligated hereby to do, and the Trustee may, but shall not be obligated to,
exercise such rights as the Company might exercise with respect to the
Collateral and take any action in the Company's name to protect the Trustee's
security interest hereunder.
<PAGE>
14
(f) If at any time the Escrow Agent shall receive an "entitlement
order" (within the meaning of Section 8-102(a)(8) of the UCC) issued by the
Trustee and relating to the Escrow Account, the Escrow Agent shall comply with
such entitlement order without further consent by the Company or any other
Person.
7. Termination. This Agreement and the security interest in the
Collateral evidenced by this Agreement shall terminate automatically and be of
no further force or effect upon the payment in full in cash of all interest
(including any Additional Amounts, if any and Liquidated Damages, if any) due
through the Interest Payment Date occurring on May 15, 2001, and the remaining
Collateral, if any, shall promptly be paid over and transferred to the Company;
provided, however, that the obligations of the Company under Section 2(c),
Section 5 and Section 13 (and any existing claims thereunder) shall survive
termination of this Agreement and the resignation of the Escrow Agent. At such
time, the Escrow Agent shall, pursuant to an Officer's Certificate stating that
no Default or Event of Default is then continuing and that all required payments
have been made delivered by the Company, reassign and redeliver to the Company
all of the Collateral hereunder that has not been sold, disposed of, retained or
applied by the Escrow Agent in accordance with the terms of this Agreement. Such
reassignment and delivery shall be without warranty by or recourse to the Escrow
Agent in its capacity as such, except as to the absence of any Liens on the
Collateral created by the Escrow Agent, and shall be at the sole expense of the
Company.
8. Representations and Warranties.
(a) The Company hereby represents and warrants that:
(i) The execution, delivery and performance by the Company of
this Agreement are within the Company's corporate powers, have been duly
authorized by all necessary corporate action, and do not contravene, or
constitute a default under, any provision applicable law or regulation
or the Articles of Association of the Company or any agreement,
judgment, injunction, order, decree or other instrument binding upon the
Company or result in the creation or imposition of any Lien on any
assets of the Company, except for the security interests granted under
this Agreement.
(ii) Prior to delivering the same pursuant hereto, the Company is
the beneficial owner of the Collateral, free and clear of any Lien or
claims of any Person or entity (except for the security interest,
granted under this Agreement). No financing statement covering the
Collateral is on file in any public office other than the financing
statements, if any, filed pursuant to this Agreement.
(iii) This Agreement has been duly executed and delivered by the
Company and assuming the due authorization and valid execution and
delivery of this Agreement by the Trustee and the Escrow Agent and
enforceability of this Agreement against the Escrow Agent and the
Trustee in accordance with its terms, constitutes a valid and binding
obligation of the Company, enforceable against the Company in accordance
<PAGE>
15
with its terms, except that the enforcement thereof may be limited by
(w) the effect of any applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting creditors' rights generally,
(x) general principles of equity (whether considered in a proceeding in
equity or at law) and an implied covenant of good faith and fair
dealing, (y) the exculpation provisions and rights to indemnification
hereunder may be limited by U.S. federal and state securities laws and
public policy considerations and (iv) the waiver of rights and defenses
contained in Section 15 (j) hereof.
(iv) The Company will deliver, or cause to be delivered, such
Pledged Securities to the Escrow Agent in such amount as shall be
sufficient upon scheduled interest and principal payments of such
Pledged Securities to provide for the payment in full of the first five
scheduled interest payments on the Notes (excluding any Additional
Amounts or Liquidated Damages).
(v) Upon the delivery to the Escrow Agent of the certificates or
instruments, if any, representing the Collateral and the filing of
financing statements, if any, required by the UCC and the transfer and
pledge to the Escrow Agent of the Collateral and the acquisition by the
Escrow Agent of a security entitlement thereto in accordance with
Section 6, the pledge of the Collateral pursuant to this Agreement
creates a valid and perfected first priority security interest in and to
the Collateral, securing the payment of the Company's Secured
Obligations for the benefit of the Beneficiaries, enforceable as such
against all creditors of the Company and any Persons purporting to
purchase any of the Collateral from the Company other than as permitted
by the Indenture.
(vi) No consent of any other Person and no consent,
authorization, approval, or other action by, and no notice to or filing
with, any governmental authority or regulatory body is required either
(x) for the pledge by the Company of the Collateral pursuant to this
Agreement or for the execution, delivery or performance of this
Agreement by the Company (except for any filings necessary to perfect
Liens on the Collateral) or (y) for the exercise by the Trustee of the
rights provided for in this Agreement or the remedies in respect of the
Collateral pursuant to this Agreement, except, in each case, as may be
required in connection with such disposition by laws affecting the
offering and sale of securities.
(vii) No litigation, investigation or proceeding of or before any
arbitrator or governmental authority is pending or, to the knowledge of
the Company, threatened by or against the Company with respect to this
Agreement or any of the transactions contemplated hereby, other than as
described in the Offering Memorandum, dated November 17, 1998.
(viii) The pledge of the Collateral pursuant to this Agreement is
not prohibited by any applicable law or governmental regulation,
release, interpretation or opinion of
<PAGE>
16
the Board of Governors of the Federal Reserve System or other regulatory
agency (including, without limitation, Regulations G, T, U and X of the
Board of Governors of the Federal Reserve System) or any comparable or
other laws, regulations or rules of any other government or governmental
agency or body in The Netherlands.
(b) The Escrow Agent represents, warrants, covenants and agrees:
(i) the Escrow Agent is a securities intermediary and it shall
act as such with respect to the Escrow Account, the Collateral and the
Trustee, which is (and which the Escrow Agent as securities intermediary
shall treat as) the entitlement holder and has (and which the Escrow
Agent as securities intermediary shall treat as the person with) sole
dominion and control (including, without limitation, "control" within
the meaning of UCC Section 9-115) over the Escrow Account and the
Collateral.
(ii) all Collateral (other than cash) will be deemed to
constitute "financial assets" (as defined in UCC Section 8-102(a)(7) and
the Trustee will be entitled to all rights and remedies to which an
entitlement holder or a person in control of financial assets is
entitled pursuant to Part 5 of UCC Article 8 and UCC Article 9.
(iii) the Escrow Agent, as securities intermediary, (x) agrees to
credit to the Escrow Account any and all assets and properties (but only
the assets and properties) required to be transferred, placed, delivered
or credited therein or thereto, (y) represents, warrants, covenants and
agrees (a) that it is and will remain a "Participant", and (b) that it
maintains and will continue to be eligible to maintain and to maintain a
"Participant's Securities Account" (as such terms are defined in 31
C.F.R. ss. 357.2 or, as applicable, the corresponding Federal Book-Entry
Regulations) with the Federal Reserve Bank of New York.
(iv) the Escrow Agent will maintain the Escrow Account and the
Collateral in the State of New York.
9. Covenants.
(a) The Company covenants and agrees with the Beneficiaries from
and after the date of this Agreement until the earlier of payment in
full in cash of (1) all interest due through the Interest Payment Date
occurring on May 15, 2001 or (2) all obligations due and owing under the
Indenture and the Notes in the event such obligations become due and
payable prior to the payment of the first five scheduled interest
payments on the Notes:
(A) The Company agrees that it will not (i) sell or
otherwise dispose of, or grant any option or warrant with
respect to, any of the Collateral or (ii) create or permit
to exist any Lien upon or with respect to any of
<PAGE>
17
the Collateral (except for the Lien created pursuant to
this Agreement) and at all times will be the sole
beneficial owner of the Collateral.
(B) The Company agrees that it will not (i) enter into any
agreement or understanding that purports to or may
restrict or inhibit the Trustee's rights or remedies
hereunder, including, without limitation, the Trustee's
right to sell or otherwise dispose of the Collateral or
(ii) fail to pay or discharge any tax, assessment or levy
of any nature not later than five days prior to the date
of any proposed sale under any judgment, writ or warrant
of attachment with regard to the Collateral.
(b) The Company covenants and agrees with the Beneficiaries that
it will promptly make all filings which may be necessary or appropriate
in the United States which are or may be required to create a valid and
perfected first priority security interest in and to the Collateral.
10. Power of Attorney.
In addition to all of the powers granted to the Trustee pursuant
to Article 7 of the Indenture, the Company hereby appoints and constitutes the
Trustee as the Company's attorney-in-fact to exercise to the fullest extent
permitted by law all of the following powers upon and at any time after the
occurrence and during the continuance of an Event of Default: (i) collection of
proceeds of any Collateral; (ii) conveyance of any item of Collateral to any
purchaser thereof; (iii) giving of any notices or recording of any Liens under
Section 6; (iv) making of any payments or taking any acts under Section 11; and
(v) paying or discharging taxes or Liens levied or placed upon the Collateral,
the legality or validity thereof and the amounts necessary to discharge the same
to be determined by the Trustee in its sole discretion, and such payments made
by the Trustee to become the obligations of the Company to the Trustee, due and
payable immediately upon demand. The Trustee's authority hereunder shall
include, without limitation, the authority to endorse and negotiate any checks
or instruments representing proceeds of Collateral in the name of the Company,
execute and give receipt for any certificate of ownership or any document
constituting Collateral, transfer title to any item of Collateral, sign the
Company's name on all financing statements (to the extent permitted by
applicable law) or any other documents deemed necessary or appropriate by the
Trustee to preserve, protect or perfect this security interest in the Collateral
and to file the same, prepare, file and sign the Company's name of any notice of
Lien, to take any other actions arising from or incident to the powers granted
to the Trustee in this Agreement. This power of attorney is coupled with an
interest and is irrevocable by the Company.
11. Trustee May Perform.
If the Company fails to perform any agreement contained herein,
the Trustee may itself perform, but shall not be obligated to, or cause
performance of, such agreement,
<PAGE>
18
and the reasonable expenses of the Trustee incurred in connection therewith
shall be payable by the Company under Section 13 hereof.
12. No Assumption of Duties; Reasonable Care.
The rights and powers granted to the Trustee and Escrow Agent
hereunder are being granted in order to preserve and protect the Trustee's and
the holders' of Notes security interest in and to the Collateral granted hereby
and shall not be interpreted to, and shall not, impose any duties on the Trustee
and Escrow Agent in connection therewith other than those imposed under
applicable law. Except as provided by applicable law or by the Indenture, the
Trustee and Escrow Agent shall be deemed to have exercised reasonable care in
the custody and preservation of the Collateral in its possession if the
Collateral is accorded treatment substantially equal to that which the Trustee
accords similar property in similar situations, it being understood that the
Trustee and Escrow Agent shall not have any responsibility for (i) ascertaining
or taking action with respect to calls, conversions, exchanges, maturities,
tenders or other matters relative to any Collateral, whether or not the Trustee
or Escrow Agent has or is deemed to have knowledge of such matters or (ii)
taking any necessary steps to preserve rights against any parties with respect
to any Collateral.
13. Expenses.
The Company will upon demand pay to the Trustee the amount of any
and all reasonable expenses, including, without limitation, the reasonable fees,
expenses and disbursements of its counsel, experts and agents retained by the
Trustee that the Trustee may incur in connection with (i) the administration of
this Agreement, (ii) the custody or preservation of, or the sale of, collection
from, or other realization upon, any of the Collateral, (iii) the exercise or
enforcement of any of the rights of the Beneficiaries hereunder or (iv) the
failure by the Company to perform or observe any of the provisions hereof.
14. Security Interest Absolute.
To the extent permitted by applicable law, all rights of the
Beneficiaries and security interests hereunder, and all obligations of the
Company hereunder, shall be absolute and unconditional irrespective of:
(a) any lack of validity or enforceability of the Indenture or
any other agreement or instrument relating thereto;
(b) any change in the time, manner or place of payment of, or in
any other term of, all or any of the Secured Obligations, or any other
amendment or waiver of or any consent to any departure from the
Indenture;
(c) any exchange, surrender, release or nonperfection of any
Liens on any other collateral for all or any of the Secured Obligations;
or
<PAGE>
19
(d) to the extent permitted by applicable law, any other
circumstance which might otherwise constitute a defense available to, or
a discharge of, the Company in respect of the Secured Obligations or of
this Agreement.
15. Miscellaneous.
(a) Waiver. Any party hereto may specifically waive any breach of
this Agreement by any other party, but no such waiver shall be deemed to
have been given unless such waiver is in writing, signed by the waiving
party and specifically designating the breach waived, nor shall any such
waiver constitute a continuing waiver of or for similar or other
breaches.
(b) Invalidity. If for any reason whatsoever any one or more of
the provisions of this Agreement shall be held or deemed to be
inoperative, unenforceable or invalid in a particular case or in all
cases, such circumstances shall not have the effect of rendering any of
the other provisions of this Agreement inoperative, unenforceable or
invalid, and the inoperative, unenforceable or invalid provision shall
be construed as if it were written so as to effect, to the maximum
extent possible, the parties' intent.
(c) Assignment. This Agreement is personal to the parties hereto,
and the rights and duties of any party hereunder shall not be assignable
except with the prior written consent of the other parties.
Notwithstanding the foregoing, this Agreement shall inure to and be
binding upon the parties and their successors and permitted assigns.
(d) Benefit. The parties hereto and their successors and
permitted assigns, but no others, shall be bound hereby and entitled to
the benefits hereof; provided, however, that the Beneficiaries
(including holders of the Notes) and their assigns shall be entitled to
the benefits hereof and to enforce this Agreement.
(e) Time. Time is of the essence with respect to each provision
of this Agreement.
(f) Entire Agreement; Amendments. This Agreement and, with
respect to the Trustee and the Company, the Indenture, contain the
entire agreement among the parties with respect to the subject matter
hereof and supersede any and all prior agreements, understandings and
commitments, whether oral or written. Any amendment or waiver of any
provision of this Agreement and any consent to any departure by the
Company from any provision of this Agreement shall be effective only if
made or duly given in compliance with all of the terms and provisions of
the Indenture, and none of the Escrow Agent, the Trustee or any holder
of Notes shall be deemed, by any act, delay, indulgence, omission or
otherwise, to have waived any right to remedy hereunder or to have
acquiesced in any Default or Event of Default under the
<PAGE>
20
Indenture or in any breach of any of the terms and conditions hereof.
Failure of the Escrow Agent, the Trustee or any holder of Notes to
exercise, or delay in exercising, any right, power or privilege
hereunder shall not operate as a waiver thereof. Written notice of any
amendment shall be promptly provided by the Company to its Agent. No
single or partial exercise of any right, power or privilege hereunder
shall operate as a waiver thereof. No single or partial exercise of any
right, power or privilege hereunder shall preclude any other or further
exercise thereof or the exercise of any right, power or privilege. A
waiver by the Escrow Agent, the Trustee or any holder of Notes of any
right or remedy hereunder on any one occasion shall not be construed as
a bar to any right or remedy that the Escrow Agent, the Trustee or such
holder of Notes would otherwise have on any future occasion. The rights
and remedies herein provided are cumulative, may be exercised singly or
concurrently and are not exclusive of any rights or remedies provided by
law.
(g) 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 Escrow Agent or Trustee:
United States Trust Company of New York
114 West 47th Street
New York, New York 10036-1532
Facsimile: (212) 852-1627
Attention: Corporate Trust Administration
<PAGE>
21
Each of the Company, the Escrow Agent 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, the
Escrow Agent 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 shall not be
deemed to have been given until actually received by the addressee). All notices
with respect to the Escrow Agent will be deemed to have been given on the date
received by the Escrow Agent.
(h) Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
(i) Captions. Captions in this Agreement are for convenience only
and shall not be considered or referred to in resolving questions of
interpretation of this Agreement.
(j) GOVERNING LAW; SUBMISSION TO JURISDICTION; WAIVER OF JURY
TRIAL; WAIVER OF DAMAGES.
(i) EACH PARTY HERETO AGREES THAT, FOR ALL PURPOSES OF
THIS AGREEMENT (INCLUDING, WITHOUT LIMITATION, FOR
PURPOSES OF AND WITHIN THE MEANING OF UCC SECTION 8-
110, UCC SECTIONS 9-103(6) AND 31 C.F.R.ss.357.11 (OR, AS
APPLICABLE, THE CORRESPONDING FEDERAL BOOK-ENTRY
REGULATIONS), THIS AGREEMENT (INCLUDING, WITHOUT
LIMITATION, THE CREATION, PERFECTION, EFFECTS OF
PERFECTION AND PRIORITY OF THE LIENS AND SECURITY
INTERESTS OF THE TRUSTEE ON AND IN THE ESCROW ACCOUNT
AND THE COLLATERAL AND THE ESTABLISHMENT AND
MAINTENANCE OF THE ESCROW AGENT'S PARTICIPANT'S
SECURITIES ACCOUNT AND THE ACCOUNTS) AND THE RIGHTS,
INTEREST, DUTIES AND OBLIGATIONS OF THE PARTIES UNDER
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK,
EXCLUDING (TO THE GREATEST EXTENT PERMITTED BY LAW)
ANY RULE OF LAW THAT WOULD CAUSE THE APPLICATION OF
THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF
NEW YORK. EACH PARTY HERETO IRREVOCABLY WAIVES ANY
OBJECTION ON THE GROUNDS OF VENUE, FORUM NON-
CONVENIENS OR ANY SIMILAR GROUNDS. THE COMPANY
HEREBY IRREVOCABLY DESIGNATES AND APPOINTS CT
CORPORATION SYSTEM (THE "AUTHORIZED AGENT"), AS ITS
----------------
AUTHORIZED AGENT UPON WHOM PROCESS MAY BE SERVED IN
<PAGE>
22
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.
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 ESCROW AGREEMENT, AND IRREVOCABLY AGREES THAT ALL CLAIMS
IN RESPECT OF SUCH SUIT OR PROCEEDING MAY BE DETERMINED IN ANY
SUCH COURT.
(ii) THE COMPANY AGREES THAT THE TRUSTEE SHALL, IN ITS
CAPACITY AS THE TRUSTEE OR IN THE NAME AND ON BEHALF
OF ANY HOLDER OF NOTES, HAVE THE RIGHT, TO THE EXTENT
PERMITTED BY APPLICABLE LAW, TO PROCEED AGAINST THE
COMPANY OR ITS PROPERTY IN A COURT IN ANY LOCATION
REASONABLY SELECTED IN GOOD FAITH (AND HAVING
PERSONAL OR IN REM JURISDICTION OVER THE COMPANY OR
ITS PROPERTY, AS THE CASE MAY BE) TO ENABLE THE TRUSTEE
TO REALIZE ON SUCH PROPERTY, OR TO ENFORCE A JUDGMENT
OR OTHER COURT ORDER ENTERED IN FAVOR OF THE TRUSTEE.
THE COMPANY AGREES THAT IT WILL NOT ASSERT ANY
COUNTERCLAIMS, SETOFFS OR CROSSCLAIMS IN ANY
PROCEEDING BROUGHT BY THE TRUSTEE TO REALIZE ON SUCH
PROPERTY OR TO ENFORCE A JUDGMENT OR OTHER COURT
ORDER IN FAVOR OF THE TRUSTEE, EXCEPT FOR SUCH
COUNTERCLAIMS, SETOFFS OR CROSSCLAIMS WHICH, IF NOT
ASSERTED IN ANY SUCH PROCEEDING, COULD NOT OTHERWISE
BE BROUGHT OR ASSERTED. THE COMPANY WAIVES ANY
OBJECTION THAT IT MAY HAVE TO THE LOCATION OF THE
COURT IN WHICH THE TRUSTEE HAS COMMENCED A
<PAGE>
23
PROCEEDING DESCRIBED IN THIS PARAGRAPH INCLUDING,
WITHOUT LIMITATION, ANY OBJECTION TO THE LAYING OF
VENUE OR BASED ON THE GROUNDS OF FORUM NON
CONVENIENS.
(iii) TO THE EXTENT PERMITTED BY APPLICABLE LAW, THE
COMPANY AND THE TRUSTEE EACH WAIVE ANY RIGHT TO
HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE,
WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE
ARISING OUT OF, CONNECTED WITH, RELATED TO OR
INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN
THEM IN CONNECTION WITH THIS AGREEMENT. INSTEAD, ANY
DISPUTES RESOLVED IN COURT WILL BE RESOLVED IN A BENCH
TRIAL WITHOUT A JURY.
(iv) THE COMPANY AGREES THAT NONE OF THE ESCROW AGENT,
THE TRUSTEE OR ANY HOLDER OF NOTES SHALL HAVE ANY
LIABILITY TO THE COMPANY (WHETHER SOUNDING IN TORT,
CONTRACT OR OTHERWISE) FOR LOSSES SUFFERED BY THE
COMPANY IN CONNECTION WITH, ARISING OUT OF, OR IN ANY
WAY RELATED TO, THE TRANSACTIONS CONTEMPLATED AND
THE RELATIONSHIP ESTABLISHED BY THIS AGREEMENT, OR ANY
ACT, OMISSION OR EVENT OCCURRING IN CONNECTION
THEREWITH, UNLESS IT IS DETERMINED BY A FINAL AND
NONAPPEALABLE JUDGMENT OF A COURT THAT IS BINDING ON
THE ESCROW AGENT, THE TRUSTEE OR SUCH HOLDER OF
NOTES, AS THE CASE MAY BE, THAT SUCH LOSSES WERE THE
RESULT OF ACTS OR OMISSIONS ON THE PART OF THE ESCROW
AGENT, THE TRUSTEE OR SUCH HOLDER OF NOTES, AS THE
CASE MAY BE, CONSTITUTING BAD FAITH, GROSS NEGLIGENCE
OR WILFUL MISCONDUCT.
(v) TO THE EXTENT PERMITTED BY APPLICABLE LAW, AND EXCEPT
AS OTHERWISE PROVIDED IN THIS AGREEMENT, THE COMPANY
WAIVES ALL RIGHTS OF NOTICE AND HEARING OF ANY KIND
PRIOR TO THE EXERCISE BY THE TRUSTEE OR ANY HOLDER OF
NOTES OF ITS RIGHTS DURING THE CONTINUANCE OF AN EVENT
OF DEFAULT TO REPOSSESS THE COLLATERAL WITH JUDICIAL
PROCESSOR TO REPLEVY, ATTACH OR LEVY UPON THE
COLLATERAL OR OTHER SECURITY FOR THE SECURED
OBLIGATIONS. TO THE EXTENT PERMITTED BY APPLICABLE
LAW, THE COMPANY WAIVES THE POSTING OF ANY BOND
OTHERWISE REQUIRED OF THE ESCROW AGENT, THE TRUSTEE
OR ANY HOLDER OF NOTES IN CONNECTION WITH ANY
<PAGE>
24
JUDICIAL PROCESS OR PROCEEDING TO OBTAIN POSSESSION OF,
REPLEVY, ATTACH OR LEVY UPON THE COLLATERAL OR OTHER SECURITY
FOR THE SECURED OBLIGATIONS, TO ENFORCE ANY JUDGMENT OR OTHER
COURT ORDER ENTERED IN FAVOR OF THE ESCROW AGENT, THE TRUSTEE
OR ANY HOLDER OF NOTES, OR TO ENFORCE BY SPECIFIC PERFORMANCE,
TEMPORARY RESTRAINING ORDER OR PRELIMINARY OR PERMANENT
INJUNCTION, THIS AGREEMENT OR ANY OTHER AGREEMENT OR DOCUMENT
BETWEEN THE COMPANY ON THE ONE HAND AND THE ESCROW AGENT, THE
TRUSTEE AND/OR THE HOLDERS OF NOTES ON THE OTHER HAND.
(vi) IN FURTHERANCE OF THE FOREGOING, EACH PARTY HERETO
AGREES THAT REGARDLESS OF ANY PROVISION IN ANY OTHER
AGREEMENT, THE "SECURITIES INTERMEDIARY'S JURISDICTION"
(WITHIN THE MEANING OF UCC SECTIONS 8-110 AND 9-103(b)
AND 31 C.F.R.ss.357.11 (OR, AS APPLICABLE, THE
CORRESPONDING FEDERAL BOOK-ENTRY REGULATIONS) OF THE
ESCROW AGENT WITH RESPECT TO THE ESCROW ACCOUNT AND
THE COLLATERAL IS THE STATE OF NEW YORK.
(vii) THE PROVISIONS OF THIS SECTION 15(J) ARE INTENDED TO BE
EFFECTIVE UPON THE EXECUTION OF THIS ESCROW AGREEMENT WITHOUT
ANY FURTHER ACTION BY THE COMPANY, THE ESCROW AGENT OR THE
TRUSTEE AND THE INTRODUCTION OF A TRUE COPY OF THIS ESCROW
AGREEMENT INTO EVIDENCE SHALL BE CONCLUSIVE AND FINAL EVIDENCE
AS TO SUCH MATTERS.
(k) No Adverse Interpretation of Other Agreements. This Agreement
may not be used to interpret another pledge, security or debt agreement
of the Company or any subsidiary thereof. No such pledge, security or
debt agreement may be used to interpret this Agreement.
(l) Benefits of Agreement. Nothing in this Agreement, express or
implied, shall give to any Person, other than the parties hereto and
their successors hereunder, and the holders of Notes, any benefit or any
legal or equitable right, remedy or claim under this Agreement.
(m) Interpretation of Agreement. All terms not defined herein or
in the Indenture shall have the meaning set forth in the UCC, except
where the context otherwise requires. To the extent a term or provision
of this Agreement conflicts with the Indenture, the Indenture shall
control with respect to the subject matter of such term
<PAGE>
25
or provision. Acceptance of or acquiescence in a course of performance
rendered under this Agreement shall not be relevant to determine the
meaning of this Agreement even though the accepting or acquiescing party
had knowledge of the nature of the performance and opportunity for
objection.
(n) Survival of Provisions. All representations, warranties and
covenants of the Company contained herein shall survive the execution
and delivery of this Agreement, and shall terminate only upon the
termination of this Agreement.
(o) Waivers. The Company waives presentment and demand for
payment of any of the Company's Secured Obligations, protest and notice
of dishonor or default with respect to any of the Company's Secured
Obligations, and all other notices to which the Company might otherwise
be entitled, except as otherwise expressly provided herein or in the
Indenture.
(p) Agent for Service; Submission to Jurisdiction; Waiver of
Immunities. By the execution and delivery of this Agreement, the Company
(i) acknowledges that it has, by separate written instruments,
designated and appointed CT Corporation System, 1633 Broadway, New York,
NY 10019 (the "Authorized Agent") (and any successor entity), as its
authorized agent upon which process may be served in any suit or
proceeding arising out of or relating to this Agreement that may be
instituted in any federal or state court in the Borough of Manhattan,
The City of New York, State of New York or brought under federal or
state securities laws, and represent and warrant that the Authorized
Agent has accepted such designation, (ii) submits to the jurisdiction of
any such court in any such suit or proceeding and (iii) agree that
service of process upon the Authorized Agent and written notice of said
service to the Company in accordance with the provisions of this
Agreement shall be deemed in every respect to be effective service of
process upon the Company in any such suit or proceeding. The Company
further agrees to take any and all action, including the execution and
filing of any and all such documents and instruments, as may be
necessary to continue such designation and appointment of CT Corporation
System in full force and effect for as long as any of the Notes remain
outstanding (subject to the limitation set forth in clause (i));
provided, however, that the Company may, and to the extent CT
Corporation System ceases to be able to be served on the basis
contemplated herein shall, by written notice to the Escrow Agent and the
Trustee, designate such additional or alternative agent for service of
process that (i) maintains an office located in the Borough of
Manhattan, The City of New York, State of New York, and (ii) is either
(x) United States counsel for the Company or (y) a corporate service
company which acts as agent for service of process for other Persons in
the ordinary course of its business. Such written notice shall identify
the name of such agent for service of process and the address of the
office of such agent for service of process in the Borough of Manhattan,
The City of New York, State of New York.
<PAGE>
26
To the extent that the Company has or hereafter may acquire any
immunity from jurisdiction of any court of (i) any jurisdiction in which
the Company owns or leases property or assets, (ii) United States or the
State of New York or (iii) The Netherlands or from any legal process
(whether through service of notice, attachment prior to judgment,
attachment in aid of execution, execution or otherwise) with respect to
itself or its property and assets or this Agreement or the Escrow
Account or actions to enforce judgments in respect of any thereof, the
Company hereby irrevocably waives such immunity in respect of its
obligations under the above-referenced documents, to the extent
permitted by law.
(q) U.S. Dollar Judgment Currency. U.S. dollars are the sole
currency of account and payment for all sums payable by the Company
under or in connection with the Escrow Account including damages. Any
amount received or recovered in a currency other than 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 the Escrow Agent or the Trustee 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 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 dollar amount is less
than the dollar amount expressed to be due to the recipient under this
Agreement, the Company shall indemnify it against any loss sustained by
it as a result. If that 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 paragraph, it will be sufficient
for the Escrow Agent or Trustee to certify in a satisfactory manner
(indicating the sources of information used) that it would have suffered
a loss had an actual purchase of 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 Escrow Agent and Trustee, 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
the Escrow Account.
(r) Notwithstanding any other provision of this Agreement, in no
event shall the Escrow Agent be liable for special, indirect or
consequential losses or damages of any kind whatsoever (including but
not limited to lost profits), even if the Escrow Agent has been advised
of the likelihood of such loss or damage and regardless of the form of
action.
<PAGE>
27
(s) Each party hereto, except the Escrow Agent, shall provide the
Escrow Agent, as soon as practicable, with their Tax Identification
Number as assigned by the Internal Revenue Service. All interest or
other income earned under the Escrow Agreement shall be allocated and
paid as provided herein and reported by the recipient to the Internal
Revenue Service as having been so allocated and paid.
(t) Notwithstanding any other provision of this Agreement, prior
to termination hereof as contemplated by Section 7, any instruction by
the Company to the Escrow Agent with respect to the Escrow Account or
the Collateral shall be effective only to the extent acknowledged or
expressly permitted (in each case, in writing by notice of the Trustee
to the Escrow Agent) by the Trustee.
SECTION 16. Successors. All agreements of the Company in this
Agreement shall bind its successors. All agreements of the Escrow Agent in this
Agreements shall bind its successors.
<PAGE>
IN WITNESS WHEREOF, the parties have executed and delivered this
Escrow Agreement as of the day first above written.
VERSATEL TELECOM INTERNATIONAL
N.V.
By: /s/ R. Gary Mesch
--------------------------------
Name: R. Gary Mesch
Title: Managing Director
UNITED STATES TRUST COMPANY OF NEW
YORK, as Escrow Agent and Securities
Intermediary
By: /s/ John Guiliano
--------------------------------
Name: John Guiliano
Title: Vice President
UNITED STATES TRUST COMPANY OF NEW
YORK, as Trustee
By: /s/ John Guiliano
--------------------------------
Name: John Guiliano
Title: Vice President
<PAGE>
EXHIBIT A
Form of Payment Notice and Disbursement Request
[Letterhead of the Company]
{Date}
United States Trust Company of New York
114 West 47th Street
New York, New York 10036-1532
Re: Disbursement Request No. ____
Ladies and Gentlemen:
We refer to the Escrow Agreement, dated as of December 3, 1998 (the
"Escrow Agreement"), among you (the "Escrow Agent"), United States Trust Company
of New York, as the Trustee (the "Trustee"), and VersaTel Telecom International
N.V., a company organized under the laws of The Netherlands (the "Company").
Capitalized terms used herein shall have the meaning given in the Escrow
Agreement.
This letter constitutes a Payment Notice and Disbursement Request under
the Escrow Agreement.
{choose one or more of the following, as applicable}
{The undersigned hereby notifies you that a scheduled interest payment
in the amount of $________ is due and payable on __________, ___ with respect to
the Notes and requests a disbursement of funds contained in the Escrow Account
in such amount to the Trustee.}
{The undersigned hereby notifies you and certifies to you that the
release of [$________ of funds from the Escrow Account] to the Company (to an
account designated by the Company in writing), is currently permitted to be
released in accordance with Section 3(c) of the Escrow Agreement, a duly
executed Officers' Certificate which complies with the requirements of the
applicable Section of the Escrow Agreement and with the Indenture is attached
hereto, and such amount shall be so remitted to the Company.}
{The undersigned hereby notifies you that the Escrow Agreement has been
terminated in accordance with Section 7 thereof, a duly executed Officers'
Certificate which complies with the requirements of the applicable Section of
the Escrow Agreement and with the Indenture is attached hereto, and requests
that you release the remaining Collateral contained in the Escrow Account to the
Company.}
<PAGE>
2
{The undersigned hereby notifies you that there has been an acceleration
of the maturity of the Notes. Accordingly, you are hereby requested to disburse
all remaining funds contained in the Escrow Account to the Trustee such that the
balance in the Escrow Account is reduced to zero.}
In connection with the requested disbursement, the undersigned hereby
notifies you that:
1. {The Notes have not, as a result of an Event of Default under the
Indenture, been accelerated and become due and payable.}
2. {All prior disbursements from the Escrow Account have been
Applied.}
3. {add wire instructions}
The Escrow Agent is entitled to rely on the foregoing in disbursing
funds relating to this Payment Notice and Disbursement Request.
VERSATEL TELECOM
INTERNATIONAL N.V.
By:
-----------------------
Name:
Title:
ACKNOWLEDGED BY
UNITED STATES TRUST COMPANY OF NEW YORK,
as Trustee
By:
-------------------
Name:
Title:
EXHIBIT 5.1
Shearman & Sterling
599 Lexington Avenue
New York, N.Y. 10022
(212) 848-4000
January 12, 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-4 (the "Registration
Statement")with the United States Securities and Exchange Commission (the
"Commission"). Pursuant to the Registration Statement, up to U.S.$150,000,000
aggregate principal amount of the Company's outstanding 13 1/4% Senior Notes due
2008 (the "Outstanding Notes") are exchangeable for up to a like principal
amount of the Company's 13 1/4% Senior Notes due 2008 (the "Exchange Notes").
The Outstanding Notes were, and the Exchange Notes will be, issued pursuant to
an indenture (the "Indenture") dated as of December 3, 1998 between the Company
and United States Trust Company of New York, as trustee (the "Trustee"),
registrar, paying agent and transfer agent. The Exchange Notes and the
Outstanding Notes are collectively referred to herein as the "Notes."
In our capacity as special United States counsel to the
Company, we have examined the Registration Statement, the Indenture filed as
Exhibit 4.3 to the Registration Statement, the Outstanding Notes, a form of the
Exchange Notes contained in such Indenture 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 when the
Exchange Notes are exchanged for the Outstanding Notes as contemplated in the
Registration Statement, assuming they have been duly authenticated by the
Trustee, the Notes will constitute the 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 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 Indenture 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,
/s/ Shearman & Sterling
------------------------
Shearman & Sterling
Stibbe Simont Monahan Duhot
Stibbetoren
Strawinskylaan 2001
1077 ZZ Amsterdam
Postbus 75640
1070 AP Amsterdam
January 12, 1999
VERSATEL TELECOM INTERNATIONAL N.V.
EXCHANGE OFFER
VersaTel Telecom International N.V.
Paalbergweg 36
1105 BV Amsterdam-Zuidoost
The Netherlands
We are acting as special legal counsel in the Netherlands on matters of
Dutch law to VersaTel Telecom International N.V. (pursuant to an amendment of
the articles of association of VersaTel Telecom B.V.) (the "Company") in
connection with the filing by the Company of a registration statement on Form
F-4 with the United States Securities and Exchange Commission (the "Registration
Statement"). Pursuant to the Registration Statement, up to $150,000,000
aggregate principal amount of the Company's outstanding 13 1/4% Senior Notes due
2008 (the "Outstanding Notes") are exchangeable for up to a like principal
amount of the Company's 13 1/4% Senior Notes due 2008 (the "Exchange Notes" and
together with the Outstanding Notes, the "Notes"). The exchange of the Exchange
Notes will be made pursuant to an indenture (the "Indenture") dated as of
December 3, 1998 between the Company and United States Trust Company of New
York, as trustee (the "Trustee"), registrar, paying agent and transfer agent.
In rendering this opinion, we have examined and relied upon the following
documents:
<PAGE>
2
(1) an executed copy of the Purchase Agreement (the "Purchase Agreement")
dated November 17, 1998, between Lehman Brothers Inc., Lehman Brothers
(International Europe), Paribas as Initial Purchasers and the Company;
(2) an executed copy of the Indenture;
(3) a specimen of the Outstanding Notes and a form of the Exchange Notes
contained in the Indenture;
(4) an executed copy of the Escrow Agreement (the "Escrow Agreement"),
dated as of December 3, 1998 among the Company, the Escrow Agent and the
Trustee as defined therein;
(5) an executed copy of the Registration Rights Agreement (the
"Registration Rights Agreement"), dated as of November 17, 1998 between the
Company and the Initial Purchaser;
(6) a copy of the Offering Memorandum (the "Offering Memorandum") in
relation to the issue of the outstanding Notes, dated November 17, 1998;
(7) an excerpt dated January 11, 1999 of the registration of the Company
in the Trade Register of the Chamber of Commerce of Amsterdam, the
Netherlands (the "Excerpt");
(8) the articles of association (statuten) of the Company dated October
15, 1998, as executed on October 15, 1998 before J.N.M. Carlier, civil-law
notary, officiating in Amsterdam, the Netherlands, and being in force on the
date hereof (the "Articles");
(9) a copy of the Deed of Incorporation of the Company (the "Deed of
Incorporation"), executed on October 10, 1995, before Mr. Albert Peter van
Lidth de Jeude, civil-law notary, officiating in Amsterdam, the Netherlands;
(10) 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
<PAGE>
3
expressed.
The documents referred to under (1) through (5) 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 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 Exchange Notes, to be exchanged for the Outstanding Notes as
contemplated in the Registration Statement when duly executed,
authenticated, issued and delivered in accordance with the provisions of
the Indenture, will constitute the legal, valid, binding and enforceable
obligations of the 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.
<PAGE>
4
C. The choice of New York law as the law governing the Exchange Notes
is valid and binding under the laws of the Netherlands, except (i) to the
extent that any term of the Agreement 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
judgements, United States judgments are not enforceable in The Netherlands.
However, a final judgement 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 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
<PAGE>
5
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 express no opinion on any law other than the law of the Netherlands
as it currently stands 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 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/ J. Willeumier
- - ---------------- -----------------
A.F.J.A. Leijten J. Willeumier
(212) 848-4000
January 12, 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-4 (the "Registration Statement")
with the United States Securities and Exchange Commission (the "Commission").
Pursuant to the Registration Statement, up to U.S. $150,000,000 aggregate
principal amount of the Company's outstanding 13 1/4% Senior Notes due 2008 (the
"Outstanding Notes") are exchangeable for up to a like principal amount of the
Company's 13 1/4% Senior Notes due 2008 (the "Exchange Notes"; and the offer of
the Company to exchange the Exchange Notes for the Outstanding Notes, the
"Exchange Offer"). The Outstanding Notes were, and the Exchange Notes will be,
issued pursuant to an indenture dated as of December 3, 1998 among the Company,
United States Trust Company of New York, as trustee, registrar, paying agent
and transfer agent.
The discussion under the caption "U.S. Tax Considerations" in
the Registration Statement is our opinion and, subject to the limitations stated
therein, accurately describes the material U.S. federal income tax
considerations relevant to the acquisition, ownership and disposition of
Exchange Notes in general and in the context of the Exchange Offer. The
foregoing opinion is based upon the Internal Revenue Code of 1986, as amended,
Treasury Regulations (including proposed Regulations and temporary Regulations)
promulgated thereunder, rulings, official pronouncements and judicial decisions,
all as in effect on the date hereof and all of which are subject to change,
possibly with retroactive effect.
<PAGE>
2
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 Registration Statement. 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,
S/S Shearman & Sterling
-----------------------------
Shearman & Sterling
LMB/KY
EXHIBIT 12.1
EXHIBIT 12.1 STATEMENT RE COMPUTATION OF EARNINGS TO FIXED
CHARGES
<TABLE>
<CAPTION>
SEPTEMBER 30,
1995 1996 1997 1997 1997 1998 1998
NLG NLG NLG USD NLG NLG USD
-------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Loss from
operations...... (615) (4,733) (19,860) (10,564) (9,404) (40,371) (21,474)
Fixed charges..... 1 269 534 284 330 14,962 7,959
-------------------------------------------------------------------
(614) (4,464) (19,326) (10,280) (9,074) (25,409) (13,515)
</TABLE>
1. The ratio of earnings to fixed charges is calculated by dividing income from
continuing operations before income taxes plus fixed charges by fixed
charges. Fixed charges consist of interest expense. Earnings plus fixed
charges were insufficient to cover fixed charges by NLG0.6 million in 1995,
NLG4.5 million in 1996, NLG19.3 million in 1997, NLG9.1 million for the nine
months ended September 30, 1997 and NLG25.4 million for the nine months ended
September 30, 1998.
2. Since EBITDA amounts in all periods are negative, these amounts are by
definition not available for management's discretionary use.
Exhibit 21.1
LIST OF SUBSIDIARIES
1. VersaTel Telecom Europe B.V.
2. VersaTel Telecom Netherlands B.V.
3. VersaTel Telecom Belgium N.V.
4. Bizztel Telematica B.V.
5. CS Net B.V.
EXHIBIT 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our
reports (and to all references to our Firm) included in or made a part of this
Registration Statement on Form F-4 for VersaTel Telecom International N.V.
/s/ Arthur Andersen
------------------
ARTHUR ANDERSEN
Amsterdam, The Netherlands
January 12, 1999
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
--------------------------
FORM T-1
STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OFA
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)
New York 13-3818954
(Jurisdiction of incorporation (I. R. S. Employer
if not a U. S. national bank) Identification No.)
114 West 47th Street
New York, New York 10036-1532
(Address of principal (Zip Code)
executive offices)
None
(Name, address and telephone number of agent for service)
========================
VERSATEL TELECOM INTERNATIONAL N.V.
(Exact name of obligor as specified in its charter)
Netherlands 00-0000000
(State or other jurisdiction of (I. R. S. Employer
incorporation or organization) Identification No.)
Paalbergweg 36
1105 BV Amesterdam-Z.O.
(Address of principal executive offices) (Zip Code)
$150,000,000 13 1/4% Senior Notes due 2008
(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
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.
<PAGE>
- 3 -
16. List of Exhibits
(cont'd)
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.
NOTE
As of January 8, 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 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 8th of
January 1999.
UNITED STATES TRUST COMPANY
OF NEW YORK, Trustee
By: /s/ Gerard F. Ganey
-----------------------------
Gerard F. Ganey
Senior Vice President
<PAGE>
Exhibit T-1.6
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
January 8, 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>
EXHIBIT T-1.7
UNITED STATES TRUST COMPANY OF NEW YORK
CONSOLIDATED STATEMENT OF CONDITION
SEPTEMBER 30, 1998
($ IN THOUSANDS)
ASSETS
Cash and Due from Banks $ 339,287
Short-Term Investments 161,493
Securities, Available for Sale 563,176
Loans 1,954,456
Less: Allowance for Credit Losses 16,860
----------
Net Loans 1,937,596
Premises and Equipment 58,809
Other Assets 120,308
----------
Total Assets $3,180,669
==========
LIABILITIES
Deposits:
Non-Interest Bearing $ 646,593
Interest Bearing 1,838,108
----------
Total Deposits 2,484,701
Short-Term Credit Facilities 375,849
Accounts Payable and Accrued Liabilities 142,513
----------
Total Liabilities $3,003,063
==========
STOCKHOLDER'S EQUITY
Common Stock 14,995
Capital Surplus 49,541
Retained Earnings 109,648
Unrealized Gains on Securities
Available for Sale (Net of Taxes) 3,422
----------
Total Stockholder's Equity 177,606
----------
Total Liabilities and
Stockholder's Equity $3,180,669
==========
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
November 2, 1998
EXHIBIT 99.1
LETTER OF TRANSMITTAL
13 1/4% Senior Notes due 2008 of
VersaTel Telecom International N.V.
Pursuant to the Exchange Offer in
respect of all of its Outstanding 13 1/4% Senior Notes due 2008
for 13 1/4% Senior Notes due 2008
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON _______,
1999 (THE "EXPIRATION DATE") UNLESS THE EXCHANGE OFFER IS EXTENDED BY THE
COMPANY IN ITS SOLE DISCRETION. TENDERS OF OUTSTANDING NOTES MAY BE WITHDRAWN AT
ANY TIME PRIOR TO 5:00 P.M., NEW YORK CITY TIME, ON THE EXPIRATION DATE.
To: United States Trust Company of New York, Exchange Agent
<TABLE>
<CAPTION>
<S> <C> <C>
By Facsimile Transmission Confirm By Telephone
(212) 780-0592 (800) 548-6565
By Overnight Courier and By Hand Delivery to 4:30 PM: By Registered or Certified Mail:
by Hand delivery after 4:30 PM on
Expiration Date:
United States Trust Company United States Trust Company United States Trust Company
of New York of New York of New York
770 Broadway, 13th Floor 111 Broadway, Lower Level P.O. Box 844, Cooper Station
Attn: Corporate Trust Services Attn: Corporate Trust Window Attn: Corporate Trust Services
New York, New York 10003 New York, New York 10006 New York, New York 10276-0844
</TABLE>
Delivery of this Letter of Transmittal to an address, or transmission
via telegram, telex or facsimile, other than as set forth above will not
constitute a valid delivery. The instructions contained herein should be read
carefully before this Letter of Transmittal is completed.
HOLDERS WHO WISH TO BE ELIGIBLE TO RECEIVE EXCHANGE NOTES FOR THEIR
OUTSTANDING NOTES PURSUANT TO THE EXCHANGE OFFER MUST VALIDLY TENDER (AND NOT
WITHDRAW) THEIR OUTSTANDING NOTES TO THE EXCHANGE AGENT PRIOR TO THE EXPIRATION
DATE.
By execution hereof, the undersigned acknowledges receipt of the
Prospectus (the "Prospectus"), dated __________ __, 1999, of VersaTel Telecom
International N.V., (the "Company"), which, together with this Letter of
Transmittal and the instructions hereto (the "Letter of Transmittal"),
constitutes the Company's offer (the "Exchange Offer") to exchange
U.S.$150,000,000 aggregate principal amount of its 13 1/4% Senior Notes due 2008
(the "Exchange Notes") that have been registered under the Securities Act of
1933, as amended (the "Securities Act"), pursuant to a registration statement of
which the Prospectus constitutes a part, for U.S.$150,000,000 aggregate
principal amount of its 13 1/4% Senior Notes due 2008 (the "Outstanding Notes"),
upon the terms and subject to the conditions set forth in the Prospectus.
This Letter of Transmittal is to be used by Holders (as defined below)
if: (i) certificates representing Outstanding Notes are to be physically
delivered to the Exchange Agent herewith by Holders; (ii) tender of Outstanding
Notes is to be made by book-entry transfer to the Exchange Agent's account at
The Depository Trust Company ("DTC") pursuant to the procedures set forth in the
Prospectus under "Terms of the
<PAGE>
Exchange Offer--Procedures for Tendering" by any financial institution that is a
participant in DTC and whose name appears on a security position listing as the
owner of Outstanding Notes (such participants, acting on behalf of Holders, are
referred to herein, together with such Holders, as "Acting Holders"); or (iii)
tender of Outstanding Notes is to be made according to the guaranteed delivery
procedures set forth in the Prospectus under "Terms of the Exchange
Offer--Guaranteed Delivery Procedures." Delivery of documents to DTC does not
constitute delivery to the Exchange Agent.
<PAGE>
If delivery of the Outstanding Notes is to be made by book-entry
transfer to the account maintained by the Exchange Agent at DTC as set forth in
(ii) in the immediately preceding paragraph, this Letter of Transmittal need not
be manually executed; provided, however, that tenders of Outstanding Notes must
be effected in accordance with the procedures mandated by DTC's Automated Tender
Offer Program ("ATOP"). To tender Outstanding Notes through ATOP, the electronic
instructions sent to DTC and transmitted by DTC to the Exchange Agent must
contain the character by which the participant acknowledges its receipt of and
agrees to be bound by this Letter of Transmittal.
Unless the context requires otherwise, the term "Holder" for purposes
of this Letter of Transmittal means: (i) any person in whose name Outstanding
Notes are registered on the books of the Company or any other person who has
obtained a properly completed bond power from the registered Holder or (ii) any
participant in DTC whose Outstanding Notes are held of record by DTC who desires
to deliver such Outstanding Notes by book-entry transfer at DTC.
The undersigned has completed, executed and delivered this Letter of
Transmittal to indicate the action the undersigned desires to take with respect
to the Exchange Offer. Holders who wish to tender their Outstanding Notes must
complete this letter in its entirety.
All capitalized terms used herein and not defined herein shall have the
meaning ascribed to them in the Prospectus.
The instructions included with this Letter of Transmittal must be
followed. Questions and requests for assistance or for additional copies of the
Prospectus, this Letter of Transmittal and the Notice of Guaranteed Delivery may
be directed to the Exchange Agent. See Instruction 8 herein.
HOLDERS WHO WISH TO ACCEPT THE EXCHANGE OFFER AND TENDER THEIR
OUTSTANDING NOTES MUST COMPLETE THIS LETTER OF TRANSMITTAL IN ITS ENTIRETY.
List below the Outstanding Notes to which this Letter of Transmittal
relates. If the space provided below is inadequate, list the certificate numbers
and principal amounts on a separately executed schedule and affix the schedule
to this Letter of Transmittal. Tenders of Outstanding Notes will be accepted
only in authorized denominations of $1,000.
<PAGE>
DESCRIPTION OF OUTSTANDING NOTES
<TABLE>
<CAPTION>
<S> <C> <C>
Aggregate
Certificate Principal Amount
Number(s) Tendered
Names(s) and Address(es) of Holder(s) (Attach signed list (if less
(Please fill in, if blank) if necessary) than all)**
- ----------------------------------------------------------------------------------------------------------
</TABLE>
TOTAL PRINCIPAL AMOUNT OF OUTSTANDING NOTES TENDERED
* Need not be completed by Holders tendering by book-entry transfer.
** Need not be completed by Holders who wish to tender with respect to all
Outstanding Notes listed. See Instruction 2.
|_| CHECK HERE IF TENDERED OUTSTANDING NOTES ARE BEING DELIVERED BY DTC TO
THE EXCHANGE AGENT'S ACCOUNT AT DTC AND COMPLETE THE FOLLOWING:
Name of Tendering Institution:
DTC Book-Entry Account:
Transaction Code No.:
Holders who wish to tender their Outstanding Notes and (i) whose
Outstanding Notes are not immediately available, or (ii) who cannot deliver
their Outstanding Notes, the Letter of Transmittal or any other required
documents to the Exchange Agent prior to the Expiration Date, or cannot complete
the procedure for book-entry transfer on a timely basis, may effect a tender
according to the guaranteed delivery procedures set forth in the Prospectus
under the caption "Terms of the Exchange Offer--Guaranteed Delivery Procedures."
|_| CHECK HERE IF TENDERED OUTSTANDING NOTES ARE BEING DELIVERED PURSUANT
TO A NOTICE OF GUARANTEED DELIVERY PREVIOUSLY DELIVERED TO THE EXCHANGE
AGENT AND COMPLETE THE FOLLOWING:
Name(s) of Holder(s) of Outstanding Notes:
Window Ticket No. (if any):
Date of Execution of Notice of Guaranteed Delivery:
Name of Eligible Institution that Guaranteed Delivery:
DTC Book-Entry Account No.:
If Delivered by Book-Entry Transfer:
Name of Tendering Institution:
Transaction Code No.:
|_| CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL
COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS
THERETO.
Name:
Address:
<PAGE>
Ladies and Gentlemen:
Subject to the terms of the Exchange Offer, the undersigned hereby
tenders to the Company the principal amount of Outstanding Notes indicated
above. Subject to and effective upon the acceptance for exchange of the
principal amount of Outstanding Notes tendered in accordance with this Letter of
Transmittal, the undersigned sells, assigns and transfers to, or upon the order
of, the Company all right, title and interest in and to the Outstanding Notes
tendered hereby. The undersigned hereby irrevocably constitutes and appoints the
Exchange Agent its agent and attorney-in-fact (with full knowledge that the
Exchange Agent also acts as the agent of the Company and as Trustee under the
Indenture for the Outstanding Notes and the Exchange Notes) with respect to the
tendered Outstanding Notes with full power of substitution to (i) deliver
certificates for such Outstanding Notes to the Company, or transfer ownership of
such Outstanding Notes on the account books maintained by DTC, together, in
either such case, with all accompanying evidences of transfer and authenticity
to, or upon the order of, the Company and (ii) present such Outstanding Notes
for transfer on the books of the Company and receive all benefits and otherwise
exercise all rights of beneficial ownership of such Outstanding Notes, all in
accordance with the terms of the Exchange Offer. The power of attorney granted
in this paragraph shall be deemed irrevocable and coupled with an interest.
The undersigned hereby represents and warrants that he or she has full
power and authority to tender, sell, assign and transfer the Outstanding Notes
tendered hereby and that the Company will acquire good and unencumbered title
thereto, free and clear of all liens, restrictions, charges and encumbrances and
not subject to any adverse claim, when the same are acquired by the Company. The
undersigned also acknowledges that this Exchange Offer is being made in reliance
upon an interpretation by the staff of the Securities and Exchange Commission
that the Exchange Notes issued in exchange for the Outstanding Notes pursuant to
the Exchange Offer may be offered for sale, resold and otherwise transferred by
holders thereof (other than any such holder that is an "affiliate" of the
Company within the meaning of Rule 405 under the Securities Act) without
compliance with the registration and prospectus delivery provisions of the
Securities Act, provided that such Exchange Notes are acquired in the ordinary
course of such holder's business and such holders have no arrangement with any
person to participate in the distribution of such Exchange Notes. If the
undersigned is not a broker-dealer, the undersigned represents that it is not
engaged in, and does not intend to engage in, a distribution of the Exchange
Notes. If the undersigned is a broker-dealer that will receive Exchange Notes
from its own account in exchange for Outstanding Notes, the undersigned
represents that such Outstanding Notes were acquired as a result of
market-making activities or other trading activities and acknowledges that it
will deliver a prospectus meeting the requirements of the Securities Act in
connection with any resale of such Exchange Notes; however, by so acknowledging
and by delivering a prospectus, the undersigned will not be deemed to admit that
it is an "underwriter" within the meaning of the Securities Act.
The undersigned Holder represents that (i) the Exchange Notes acquired
pursuant to the Exchange Offer are being obtained in the ordinary course of
business of the person receiving such Exchange Notes, whether or not such person
is such Holder, (ii) neither the Holder of Outstanding Notes nor any other
person has an arrangement or understanding with any person to participate in the
distribution of such Exchange Notes, (iii) if the Holder is not a broker-dealer,
or is a broker-dealer but will not receive Exchange Notes for its own account in
exchange for Outstanding Notes, neither the Holder nor any such other person is
engaged in or intends to participate in the distribution of such Exchange Notes
and (iv) neither the Holder nor any such other person is an "affiliate" of the
Company within the meaning of Rule 405 of the Securities Act or, if such Holder
is an affiliate, that such Holder will comply with the registration and
prospectus delivery requirements of the Securities Act to the extent applicable.
The undersigned will, upon request, execute and deliver any additional
documents deemed by the Exchange Agent or the Company to be necessary or
desirable to complete the assignment and transfer of the Outstanding Notes
tendered hereby.
For purposes of the Exchange Offer, the Company shall be deemed to have
accepted validly tendered Outstanding Notes when, as and if the Company has
given oral or written notice thereof
<PAGE>
to the Exchange Agent and complied with the applicable provisions of the
Registration Rights Agreement. If any tendered Outstanding Notes are not
accepted for exchange pursuant to the Exchange Offer for any reason or if
Outstanding Notes are submitted for a greater principal amount than the holder
desires to exchange, such unaccepted or non-exchanged Outstanding Notes will be
returned without expense to the tendering Holder thereof (or, in the case of
Outstanding Notes tendered by book-entry transfer into the Exchange Agent's
account at the Book-Entry Transfer Facility pursuant to the book-entry transfer
procedures described in the Prospectus under "Terms of the Exchange
Offer--Book-Entry Transfer," such non-exchanged Notes will be credited to an
account maintained with such Book-Entry Transfer Facility) as promptly as
practicable after the expiration or termination of the Exchange Offer.
All authority conferred or agreed to be conferred by this Letter of
Transmittal shall survive the death, incapacity or dissolution of the
undersigned and every obligation under this Letter of Transmittal shall be
binding upon the undersigned's heirs, personal representatives, successors and
assigns.
The undersigned understands that tenders of Outstanding Notes pursuant
to the procedures described under the caption "Terms of the Exchange
Offer--Procedures for Tendering" in the Prospectus and in the instructions
hereto will constitute a binding agreement between the undersigned and the
Company upon the terms and subject to the conditions of the Exchange Offer.
Unless otherwise indicated under "Special Issuance Instructions,"
please issue the certificates representing the Exchange Notes issued in exchange
for the Outstanding Notes accepted for exchange and return any Outstanding Notes
not tendered or not exchanged, in the name(s) of the undersigned (or in either
such event in the case of Outstanding Notes tendered by DTC, by credit to the
account at DTC). Similarly, unless otherwise indicated under "Special Delivery
Instructions," please send the certificates representing the Exchange Notes
issued in exchange for the Outstanding Notes accepted for exchange and any
certificates for Outstanding Notes not tendered or not exchanged (and
accompanying documents, as appropriate) to the undersigned at the address shown
below the undersigned's signatures, unless, in either event, tender is being
made through DTC. In the event that both "Special Issuance Instructions" and
"Special Delivery Instructions" are completed, please issue the certificates
representing the Exchange Notes issued in exchange for the Outstanding Notes
accepted for exchange and return any Outstanding Notes not tendered or not
exchanged in the name(s) of, and send said certificates to, the person(s) so
indicated. The undersigned recognizes that the Company has no obligation
pursuant to the "Special Issuance Instructions" and "Special Delivery
Instructions" to transfer any Outstanding Notes from the name of the registered
holder(s) thereof if the Company does not accept for exchange any of the
Outstanding Notes so tendered.
<PAGE>
PLEASE SIGN HERE
(To Be Completed by All Tendering Holders of Outstanding Notes Regardless
of Whether Outstanding Notes Are Being Physically Delivered Herewith)
This Letter of Transmittal must be signed by the Holder(s) of Outstanding Notes
exactly as their name(s) appear(s) on certificate(s) for Outstanding Notes or,
if tendered by a participant in DTC, exactly as such participant's name appears
on a security position listing as the owner of Outstanding Notes, or by
person(s) authorized to become registered Holder(s) by endorsements and
documents transmitted with this Letter of Transmittal. If signature is by a
trustee, executor, administrator, guardian, attorney-in-fact, officer or other
person acting in a fiduciary or representative capacity, such person must set
forth his or her full title below under "Capacity" and submit evidence
satisfactory to the Company of such person's authority to so act. See
Instruction 3 herein.
If the signature appearing below is not of the registered Holder(s) of the
Outstanding Notes, then the registered Holder(s) must sign a valid proxy.
x Date:
x Date:
Signature(s) of Holder(s) or
Authorized Signatory
Name(s): Address:
(Please Print) (Including Zip Code)
Capacity(ies): Area Code and Telephone No:
Social Security No(s).:
PLEASE COMPLETE SUBSTITUTE FORM W-9 HEREIN
SIGNATURE GUARANTEE (See Instruction 3 herein)
Certain Signatures Must Be Guaranteed by an Eligible Institution
(Name of Eligible Institution Guaranteeing Signatures)
(Address (including zip code)and Telephone Number (including area code) of Firm)
(Authorized Signature)
(Printed Name)
(Title)
Date:
<PAGE>
SPECIAL ISSUANCE INSTRUCTIONS
(See Instruction 4 herein)
To be completed ONLY if certificates for Outstanding Notes in a principal amount
not tendered are to be issued in the name of, or the Exchange Notes issued
pursuant to the Exchange Offer are to be issued to the order of, someone other
than the person or persons whose signature(s) appear(s) within this Letter of
Transmittal or issued to an address different from that shown in the box
entitled "Description of Outstanding Notes" within this Letter of Transmittal,
or if Outstanding Notes tendered by book-entry transfer that are not accepted
for purchase are to be credited to an account maintained at DTC other than the
account at DTC indicated above.
Name:
(Please Print)
Address:
(Please Print)
Zip Code
Taxpayer Identification or Social Security Number
(See Substitute Form W-9 herein)
<PAGE>
SPECIAL DELIVERY INSTRUCTIONS
(See Instruction 4 herein)
To be completed ONLY if certificates for Outstanding Notes in a
principal amount not tendered or not accepted for purchase or the Exchange Notes
issued pursuant to the Exchange Offer are to be sent to someone other than the
person or persons whose signature(s) appear(s) within this Letter of Transmittal
or to an address different from that shown in the box entitled "Description of
Outstanding Notes" within this Letter of Transmittal or to be credited to an
account maintained at DTC other than the account at DTC indicated above.
Name:
(Please Print)
Address:
(Please Print)
Zip Code
Taxpayer Identification or Social Security Number
(See Substitute Form W-9 herein)
<PAGE>
INSTRUCTIONS
Forming Part of the Terms and Conditions
of the Exchange Offer and the Solicitation
1. Delivery of this Letter of Transmittal and Outstanding Notes. The
certificates for the tendered Outstanding Notes (or a confirmation of a
book-entry into the Exchange Agent's account at DTC of all Outstanding Notes
delivered electronically), as well as a properly completed and duly executed
copy of this Letter of Transmittal or facsimile hereof and any other documents
required by this Letter of Transmittal must be received by the Exchange Agent at
its address set forth herein prior to 5:00 P.M., New York City time, on the
Expiration Date. The method of delivery of the tendered Outstanding Notes, this
Letter of Transmittal and all other required documents to the Exchange Agent are
at the election and risk of the Holder and, except as otherwise provided below,
the delivery will be deemed made only when actually received by the Exchange
Agent. Instead of delivery by mail, it is recommended that the Holder use an
overnight or hand delivery service. In all cases, sufficient time should be
allowed to assure timely delivery. No Letter of Transmittal or Outstanding Notes
should be sent to the Company.
Holders who wish to tender their Outstanding Notes and (i) whose
Outstanding Notes are not immediately available or (ii) who cannot deliver their
Outstanding Notes, this Letter of Transmittal or any other documents required
hereby to the Exchange Agent prior to the Expiration Date, or who cannot
complete the procedure for book-entry transfer on a timely basis must tender
their Outstanding Notes and follow the guaranteed delivery procedures set forth
in the Prospectus. Pursuant to such procedures: (i) such tender must be made by
or through an Eligible Institution (as defined below); (ii) prior to the
Expiration Date, the Exchange Agent must have received from the Eligible
Institution a properly completed and duly executed Notice of Guaranteed Delivery
(by facsimile transmission, mail or hand delivery) setting forth the name and
address of the Holder of the Outstanding Notes, the certificate number or
numbers of such Outstanding Notes and the principal amount of Outstanding Notes
tendered, stating that the tender is being made thereby and guaranteeing that
within three New York Stock Exchange trading days after the Expiration Date,
this Letter of Transmittal (or copy thereof) together with the certificate(s)
representing the Outstanding Notes (or a confirmation of electronic mail
delivery of book-entry delivery into the Exchange Agent's account at DTC) and
any of the required documents will be deposited by the Eligible Institution with
the Exchange Agent; and (iii) such properly completed and executed Letter of
Transmittal (or copy thereof), as well as all other documents required by this
Letter of Transmittal and the certificate(s) representing all tendered
Outstanding Notes in proper form for transfer (or a confirmation of electronic
mail delivery of book-entry delivery into the Exchange Agent's account at DTC),
must be received by the Exchange Agent within three New York Stock Exchange
trading days after the Expiration Date, all as provided in the Prospectus under
the caption "Terms of the Exchange Offer--Guaranteed Delivery Procedures." Any
Holder of Outstanding Notes who wishes to tender his Outstanding Notes pursuant
to the guaranteed delivery procedures described above must ensure that the
Exchange Agent receives the Notice of Guaranteed Delivery prior to 5:00 P.M.,
New York City time, on the Expiration Date.
All questions as to the validity, form, eligibility (including time of
receipt), acceptance and withdrawal of tendered Outstanding Notes will be
determined by the Company in its sole discretion, which determination will be
final and binding. The Company reserves the absolute right to reject any and all
Outstanding Notes not properly tendered or any Outstanding Notes the Company's
acceptance of which would, in the opinion of counsel for the Company, be
unlawful. The Company also reserves the absolute right to waive any defects,
irregularities or conditions of tender as to particular Outstanding Notes. The
Company's interpretation of the terms and conditions of the Exchange Offer
(including the instructions in this Letter of Transmittal) will be final and
binding on all parties. Unless waived, any defects or irregularities in
connection with tenders of Outstanding Notes must be cured within such time as
the Company shall determine. Although the Company intends to notify Holders of
defects or irregularities with respect to tenders of Outstanding Notes, neither
the Company, the Exchange Agent nor any other person shall be under any duty to
give notification of defects or irregularities with respect to tenders of
Outstanding Notes, nor shall any of them incur any liability for failure to give
such notification. Tenders of Outstanding Notes will not be deemed
<PAGE>
to have been made until such defects or irregularities have been cured or
waived. Any Outstanding Notes received by the Exchange Agent that are not
properly tendered and as to which the defects or irregularities have not been
cured or waived will be returned without cost by the Exchange Agent to the
tendering Holders of Outstanding Notes, unless otherwise provided in this Letter
of Transmittal, as soon as practicable following the Expiration Date.
2. Partial Tenders. Tenders of Outstanding Notes will be accepted only
in authorized denominations of $1,000. If less than the entire principal amount
of any Outstanding Notes is tendered, the tendering Holder should fill in the
principal amount tendered in the third column of the chart entitled "Description
of Outstanding Notes." The entire principal amount of Outstanding Notes
delivered to the Exchange Agent will be deemed to have been tendered unless
otherwise indicated. If the entire principal amount of all Outstanding Notes is
not tendered, Outstanding Notes for the principal amount of Outstanding Notes
delivered to the Exchange Agent will be deemed to have been tendered unless
otherwise indicated. If the entire principal amount of all Outstanding Notes is
not tendered, Outstanding Notes for the principal amount of Outstanding Notes
not tendered and a certificate or certificates representing Exchange Notes
issued in exchange of any Outstanding Notes accepted will be sent to the Holder
at his or her registered address, unless a different address is provided in the
appropriate box on this Letter of Transmittal or unless tender is made through
DTC, promptly after the Outstanding Notes are accepted for exchange.
3. Signatures on the Letter of Transmittal; Bond Powers and
Endorsements; Guarantee of Signatures. If this Letter of Transmittal (or copy
hereof) is signed by the registered Holder(s) of the Outstanding Notes tendered
hereby, the signature must correspond with the name(s) as written on the face of
the Outstanding Notes without alteration, enlargement or any change whatsoever.
If this Letter of Transmittal (or copy hereof) is signed by the
registered Holder(s) of Outstanding Notes tendered and the certificate(s) for
Exchange Notes issued in exchange therefor is to be issued (or any untendered
principal amount of Outstanding Notes is to be reissued) to the registered
Holder, such Holder need not and should not endorse any tendered Outstanding
Note, nor provide a separate bond power. In any other case, such holder must
either properly endorse the Outstanding Notes tendered or transmit a properly
completed separate bond power with this Letter of Transmittal, with the
signatures on the endorsement or bond power guaranteed by an Eligible
Institution.
If this Letter of Transmittal (or copy hereof) is signed by a person
other than the registered Holder(s) of Outstanding Notes listed therein, such
Outstanding Notes must be endorsed or accompanied by properly completed bond
powers which authorize such person to tender the Outstanding Notes on behalf of
the registered Holder, in either case signed as the name of the registered
Holder or Holders appears on the Outstanding Notes.
If this Letter of Transmittal (or copy hereof) or any Outstanding Notes
or bond powers are signed by trustees, executors, administrators, guardians,
attorneys-in-fact, or officers of corporations or others acting in a fiduciary
or representative capacity, such persons should so indicate when signing, and
unless waived by the Company, evidence satisfactory to the Company of their
authority to so act must be submitted with this Letter of Transmittal.
Endorsements on Outstanding Notes or signatures on bond powers required
by this Instruction 3 must be guaranteed by an Eligible Institution.
Signatures on this Letter of Transmittal (or copy hereof) or a notice
of withdrawal, as the case may be, must be guaranteed by a member firm of a
registered national securities exchange or of the National Association of
Securities Dealers, Inc., a commercial bank or trust company having an office or
correspondent in the United States or an "eligible guarantor institution" within
the meaning of Rule 17Ad-15 under the Exchange Act (an "Eligible Institution")
unless the Outstanding Notes tendered pursuant thereto are tendered (i) by a
registered Holder (including any participant in DTC whose name appears on a
security position listing as the owner of Outstanding Notes) who has not
completed the box set forth herein
<PAGE>
entitled "Special Issuance Instructions" or "Special Delivery Instructions" of
this Letter of Transmittal or (ii) for the account of an Eligible Institution.
4. Special Issuance and Delivery Instructions. Tendering Holders should
indicate, in the applicable spaces, the name and address to which Exchange Notes
or substitute Outstanding Notes for principal amounts not tendered or not
accepted for exchange are to be issued or sent, if different from the name and
address of the person signing this Letter of Transmittal (or in the case of
tender of the Outstanding Notes through DTC, if different from the account
maintained at DTC indicated above). In the case of issuance in a different name,
the taxpayer identification or social security number of the person named must
also be indicated.
5. Transfer Taxes. The Company will pay all transfer taxes, if any,
applicable to the exchange of Outstanding Notes pursuant to the Exchange Offer.
If, however, certificates representing Exchange Notes or Outstanding Notes for
principal amounts not tendered or accepted for exchange are to be delivered to,
or are to be registered or issued in the name of, any person other than the
registered Holder of the Outstanding Notes tendered hereby, or if tendered
Outstanding Notes are registered in the name of any person other than the person
signing this Letter of Transmittal, or if a transfer tax is imposed for any
reason other than the exchange of Outstanding Notes pursuant to the Exchange
Offer, then the amount of any such transfer taxes (whether imposed on the
registered Holder or any other person) will be payable by the tendering Holder.
If satisfactory evidence of payment of such taxes or exemption therefrom is not
submitted with this Letter of Transmittal, the amount of such transfer taxes
will be billed directly to such tendering Holder.
Except as provided in this Instruction 5, it will not be necessary for
transfer tax stamps to be affixed to the Outstanding Notes listed in this Letter
of Transmittal.
6. Waiver of Conditions. The Company reserves the absolute right to
amend, waive or modify specified conditions in the Exchange Offer in the case of
any Outstanding Notes tendered.
7. Mutilated, Lost, Stolen or Destroyed Outstanding Notes. Any
tendering Holder whose Outstanding Notes have been mutilated, lost, stolen or
destroyed should contact the Exchange Agent at the address indicated herein for
further instruction.
<PAGE>
8. Requests for Assistance or Additional Copies. Questions and requests
for assistance and requests for additional copies of the Prospectus or this
Letter of Transmittal may be directed to the Exchange Agent at the address
specified in the Prospectus. Holders may also contact their broker, dealer,
commercial bank, trust company or other nominee for assistance concerning the
Exchange Offer.
9. Irregularities. All questions as to the validity, form, eligibility
(including time of receipt), and acceptance of Letters of Transmittal or
Outstanding Notes will be resolved by the Company, whose determination will be
final and binding. The Company reserves the absolute right to reject any or all
Letters of Transmittal or tenders that are not in proper form or the acceptance
of which would, in the opinion of the Company's counsel, be unlawful. The
Company also reserves the absolute right to waive any irregularities or
conditions of tender as to the particular Outstanding Notes covered by any
Letter of Transmittal or tendered pursuant to such Letter of Transmittal. None
of the Company, the Exchange Agent or any other person will be under any duty to
give notification of any defects or irregularities in tenders or incur any
liability for failure to give any such notification. The Company's
interpretation of the terms and conditions of the Exchange Offer shall be final
and binding.
<PAGE>
IMPORTANT TAX INFORMATION
The Holder is required to give the Exchange Agent the social security
number or employer identification number of the Holder of the Notes. If the
Notes are in more than one name or are not in the name of the actual owner,
consult the enclosed Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9 for additional guidance on which number to report.
TO BE COMPLETED BY ALL TENDERING HOLDERS
PAYOR'S NAME: VERSATEL TELECOM INTERNATIONAL N.V.
<TABLE>
<CAPTION>
<S> <C> <C>
SUBSTITUTE Part 1--PLEASE PROVIDE YOUR TIN IN THE Social Security Number
BOX AT RIGHT AND CERTIFY BY or
SIGNING AND DAT Employer Identification Number
ING BELOW
FormW-9 Part 2--Check the box if you are NOT subject to back-up withholding
Department of the Treasury under the provisions of Section 3406(a)(1)(C) of the
Internal Revenue Service Internal Revenue Service Code because (1) you have not been
notified that you are subject to back-up withholding as a result of
failure to report all interest or dividends, (2) the Internal Revenue
Service has notified you that you are no longer subject to back-up
withholding or (3) you are exempt. |_|
Payer's Request for CERTIFICATION--UNDER THE PENALTIES OF PERJURY, I Part 3--Check if
Taxpayer Identification CERTIFY THAT THE INFORMATION PROVIDED ON THIS Awaiting TIN |_|
Number (TIN) FORM IS TRUE, CORRECT AND COMPLETE.
SIGNATURE DATE
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP
WITHHOLDING OF 31 PERCENT OF ANY PAYMENTS MADE TO YOU UNDER THE NOTES.
PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER
IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
IMPORTANT: This Letter of Transmittal or a facsimile thereof
(together with certificates for Outstanding Notes and all other
required documents) or a Notice of Guaranteed Delivery must be received
by the Exchange Agent on or prior to 5:00 p.m., New York City time on
the Expiration Date.
(DO NOT WRITE IN SPACE BELOW)
<TABLE>
<CAPTION>
<S> <C> <C>
Certificate Surrendered Outstanding Notes Tendered Outstanding Notes Accepted
Delivery Prepared by Checked by Date
</TABLE>
<PAGE>
The Exchange Agent for the Exchange Offer is:
United States Trust Company of New York
<TABLE>
<CAPTION>
<S> <C> <C>
By Overnight Courier and by Hand By Hand Delivery to 4:30 PM: By Registered or Certified Mail:
delivery after 4:30 PM on Expiration Date:
United States Trust Company United States Trust Company United States Trust Company
of New York of New York of New York
770 Broadway, 13th Floor 111 Broadway, Lower Level P.O. Box 844, Cooper Station
Attn: Corporate Trust Services Attn: Corporate Trust Window Attn: Corporate Trust Services
New York, New York 10003 New York, New York 10006 New York, New York 10276-0844
</TABLE>
FOR ANY QUESTIONS REGARDING THIS LETTER OF TRANSMITTAL OR FOR
ANY ADDITIONAL INFORMATION, YOU MAY CONTACT THE EXCHANGE AGENT BY
TELEPHONE AT 800-548-6565, OR BY FACSIMILE AT 212-780-0592
EXHIBIT 99.2
NOTICE OF GUARANTEED DELIVERY
for
13 1/4% Senior Notes due 2008
of
VersaTel Telecom International N.V.
As set forth in the Prospectus, dated _______ __, 1999 (the
"Prospectus"), of VersaTel Telecom International N.V., a Netherlands company
(the "Company"), in the accompanying Letter of Transmittal and instructions
thereto (the "Letter of Transmittal"), this form or one substantially equivalent
hereto must be used to accept the Company's exchange offer (the "Exchange
Offer") to exchange all of its outstanding 13 1/4% Senior Notes due 2008 (the
"Outstanding Notes") if (i) certificates representing the Outstanding Notes to
be tendered for purchase and payment are not lost but are not immediately
available, (ii) time will not permit the Letter of Transmittal, certificates
representing such Outstanding Notes or other required documents to reach the
Exchange Agent prior to the Expiration Date or (iii) the procedures for
book-entry transfer cannot be completed prior to the Expiration Date. This form
may be delivered by an Eligible Institution by mail or hand delivery or
transmitted, via telegram, telex or facsimile, to the Exchange Agent as set
forth below. All capitalized terms used herein but not defined herein shall have
the meanings ascribed to them in the Prospectus.
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON _________,
1999 (THE "EXPIRATION DATE") UNLESS THE OFFER IS EXTENDED BY THE COMPANY IN ITS
SOLE DISCRETION. TENDERS OF OUTSTANDING NOTES MAY BE WITHDRAWN AT ANY TIME PRIOR
TO 5:00 P.M., NEW YORK CITY TIME, ON THE EXPIRATION DATE.
To: The United States Trust Company of New York, Exchange Agent
By Overnight Courier and by Hand Delivery By Hand Delivery to 4:30 PM:
after 4:30 PM on Expiration Date: United States Trust Company
United States Trust Company of New York of New York
770 Broadway, 13th Floor 111 Broadway, Lower Level
Attn: Corporate Trust Services Attn: Corporate Trust Window
New York, New York 10003 New York, New York 10006
By Registered or Certified Mail:
United States Trust Company of New York
P.O. Box 844, Cooper Station
Attn: Corporate Trust Services
New York, New York 10276-0844
FOR ANY QUESTIONS REGARDING THIS NOTICE OF GUARANTEED DELIVERY OR FOR ANY
ADDITIONAL INFORMATION, YOU MAY CONTACT THE EXCHANGE AGENT BY TELEPHONE AT
800-548-6565, OR BY FACSIMILE AT 212-780-0592
Delivery of this instrument to an address, or transmission via
telegram, telex or facsimile, other than as set forth above will not constitute
a valid delivery.
This form is not to be used to guarantee signatures. If a signature on
the Letter of Transmittal is required to be guaranteed by an "Eligible
Institution" under the instructions thereto, such signature guarantee must
appear in the applicable space provided in the signature box on the Letter of
Transmittal.
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tender(s) to the Company, upon the terms and
subject to the conditions set forth in the Exchange Offer and the Letter of
Transmittal, receipt of which is hereby acknowledged, the aggregate principal
amount of Outstanding Notes set forth below pursuant to the guaranteed delivery
procedures set forth in the Prospectus.
The undersigned understands that tenders of Outstanding Notes will be
accepted only in authorized denominations. The undersigned understands that
tenders of Outstanding Notes pursuant to the Exchange Offer may not be withdrawn
after 5:00 p.m., New York City time, on the Expiration Date. Tenders of
Outstanding Notes may also be withdrawn if the Exchange Offer is terminated
without any such Outstanding Notes being purchased thereunder or as otherwise
provided in the Prospectus.
All authority herein conferred or agreed to be conferred by this Notice
of Guaranteed Delivery shall survive the death or incapacity of the undersigned
and every obligation of the undersigned under this Notice of Guaranteed Delivery
shall be binding upon the heirs, personal representatives, executors,
administrators, successors, assigns, trustees in bankruptcy and other legal
representatives of the undersigned.
<PAGE>
PLEASE SIGN AND COMPLETE
Signature(s) of Registered Owner(s) Name(s) of Registered Holder(s):
or Authorized Signatory:
Principal Amount of Outstanding Address:
Notes Tendered:
Certificate No(s). of Outstanding Notes
(if available): Area Code and Telephone No.:
If Outstanding Notes will be
delivered by book-entry
transfer at The Depository
Trust Company, insert
Depository Account No.:
Date:
This Notice of Guaranteed Delivery must be signed by the registered Holder(s) of
Outstanding Notes exactly as its (their) name(s) appear on certificates for
Outstanding Notes or on a security position listing as the owner of Outstanding
Notes, or by person(s) authorized to become registered Holder(s) by endorsements
and documents transmitted with this Notice of Guaranteed Delivery. If signature
is by a trustee, executor, administrator, guardian, attorney-in-fact, officer or
other person acting in a fiduciary or representative capacity, such person must
provide the following information.
Please print name(s) and address(es)
Name(s):
Capacity:
Address(es):
Do not send Outstanding Notes with this form. Outstanding Notes should be sent
to the Exchange Agent together with a properly completed and duly executed
Letter of Transmittal.
<PAGE>
GUARANTEE
(Not to be used for signature guarantee)
The undersigned, a member firm of a registered national securities exchange or
of the National Association of Securities Dealers, Inc. or a commercial bank or
trust company having an office or a correspondent in the United States or an
"eligible guarantor institution" as defined by Rule 17Ad-15 under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), hereby (a) represents
that each Holder of Outstanding Notes on whose behalf this tender is being made
"own(s)" the Outstanding Notes covered hereby within the meaning of Rule 14e-4
under the Exchange Act, (b) represents that such tender of Outstanding Notes
complies with such Rule 14e-4, and (c) guarantees that, within five business
days from the date of this Notice of Guaranteed Delivery, a properly completed
and duly executed Letter of Transmittal (or a facsimile thereof), together with
certificates representing the Outstanding Notes covered hereby in proper form
for transfer (or confirmation of the book-entry transfer of such Outstanding
Notes into the Exchange Agent's account at The Depository Trust Company,
pursuant to the procedure for book-entry transfer set forth in the Prospectus)
and required documents will be deposited by the undersigned with the Exchange
Agent.
The undersigned acknowledges that it must deliver the Letter of Transmittal and
Outstanding Notes tendered hereby to the Exchange Agent within the time period
set forth and that failure to do so could result in financial loss to the
undersigned.
Name of Firm:
Authorized Signature
Address:
Name:
Title:
Area Code and Telephone Number:
Date:
