<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 10, 1998
REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------------
VIATEL, INC.
(Exact Name of Registrant as Specified in its Charter)
<TABLE>
<S> <C> <C>
DELAWARE 4813 13-3787366
(State or Other Jurisdiction (Primary Standard Industrial (I.R.S. Employer
of Classification Code Number) Identification
Incorporation or Organization) Number)
</TABLE>
800 THIRD AVENUE
NEW YORK, NEW YORK 10022
(212) 350-9200
(Address, Including Zip Code, and Telephone Number, Including
Area Code, of Registrant's Principal Executive Offices)
------------------------------
SHELDON M. GOLDMAN, ESQ.
SENIOR VICE PRESIDENT
BUSINESS AFFAIRS AND GENERAL COUNSEL
VIATEL, INC.
800 THIRD AVENUE
NEW YORK, NEW YORK 10022
(212) 350-9261
(Name, Address, Including Zip Code,
and Telephone
Number, Including Area Code, of Agent
For Service)
COPIES OF ALL COMMUNICATIONS TO:
JAMES P. PRENETTA, ESQ.
KELLEY DRYE & WARREN LLP
101 PARK AVENUE
NEW YORK, NEW YORK 10178
(212) 808-7800
--------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the registration statement becomes effective.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. / /
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, 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. / /
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED
MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF SECURITIES AMOUNT TO OFFERING PRICE AGGREGATE OFFERING REGISTRATION
TO BE REGISTERED BE REGISTERED PER NOTE PRICE(1) FEE
<S> <C> <C> <C> <C>
12.50% Senior Discount Notes Due 2008........ $272,055,000 (2) 100% $272,055,000.00 $80,256.23
11.25% Senior Notes Due 2008................. $400,000,000 100% $400,000,000.00 $118,000.00
12.40% Senior Discount Notes Due 2008........ DM 123,549,680 (2)(3) 100% $68,063,948.88 $20,078.86
(U.S.$68,063,948.88)
11.15% Senior Notes Due 2008................. DM 178,000,000 (3) 100% $98,060,819.74 $28,927.94
(U.S.$98,060,819.74)
Total $838,179,768.62 $247,263.03
</TABLE>
(1) Estimated solely for purposes of calculating the amount of the registration
fee pursuant to Rule 457(f).
(2) Equals the aggregate principal amount of the securities being registered
which were issued with original issue discount.
(3) German Deutschmark amounts have been translated into U.S. Dollars at DM
1.8152, which was the noon buying rate in New York City for cable transfers
in German Deutschmarks as certified for customs purposes by the Federal
Reserve Bank of New York on July 7, 1998.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
SUBJECT TO COMPLETION, DATED JULY 10, 1998
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>
PROSPECTUS
VIATEL, INC.
OFFER TO EXCHANGE
12.50% SENIOR DISCOUNT NOTES DUE 2008 AND 11.25% SENIOR NOTES DUE 2008 (DOLLAR
DENOMINATED) AND 12.40% SENIOR DISCOUNT NOTES DUE 2008 AND 11.15% SENIOR NOTES
DUE 2008 (DM DENOMINATED)
WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT FOR ANY AND ALL OUTSTANDING
12.50% SENIOR DISCOUNT NOTES DUE 2008 AND 11.25% SENIOR NOTES DUE 2008 (DOLLAR
DENOMINATED) AND 12.40% SENIOR DISCOUNT NOTES DUE 2008 AND 11.15% SENIOR NOTES
DUE 2008 (DM DENOMINATED)
WHICH HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
The Exchange Offer and withdrawal rights will expire at 5:00 p.m., New York
City time, on , , 1998 (as such date may be extended, the
"Expiration Date").
Viatel, Inc., a Delaware corporation ("Viatel" and together with its
subsidiaries, the "Company") hereby offers, upon the terms and subject to the
conditions set forth in this Prospectus and the accompanying letters of
transmittal (the "Letters of Transmittal") (which together constitute the
"Exchange Offer"), to exchange its (i) 12.50% Senior Discount Notes Due 2008
(Dollar Denominated) (the "12.50% Exchange Notes"), (ii) 11.25% Senior Notes Due
2008 (Dollar Denominated) (the "11.25% Exchange Notes"), (iii) 12.40% Senior
Discount Notes Due 2008 (DM Denominated) (the "12.40% Exchange Notes") and (iv)
11.15% Senior Notes Due 2008 (DM Denominated) (the "11.15% Exchange Notes" and
together with the 12.50% Exchange Notes, the 11.25% Exchange Notes and the
12.40% Exchange Notes, the "Exchange Notes"), each of which has been registered
under the Securities Act of 1933, as amended (the "Securities Act"), for a like
principal amount of Viatel's (w) 12.50% Senior Discount Notes Due 2008 (Dollar
Denominated) (the "Existing 12.50% Notes"), (x) 11.25% Senior Notes Due 2008
(Dollar Denominated) (the "Existing 11.25% Notes"), (y) 12.40% Senior Discount
Notes Due 2008 (DM Denominated) (the "Existing 12.40% Notes") and (z) 11.15%
Senior Notes Due 2008 (DM Denominated) (the "Existing 11.15% Notes" and together
with the Existing 12.50% Notes, the Existing 11.25% Notes and the Existing
12.40% Notes, the "Existing Notes"), respectively, each of which has not been
registered under the Securities Act. The Existing 12.50% Notes and the Existing
12.40% Notes are hereinafter sometimes referred to as the "Existing Discount
Notes" and the Existing 11.25% Notes and the Existing 11.15% Notes are sometimes
hereinafter referred to as the "Existing Senior Notes." The form and terms of
the Exchange Notes are identical in all material respects to the form and terms
of the corresponding series of Existing Notes except that the Exchange Notes
will not bear legends restricting the transfer thereof or contain interest rate
step-up provisions upon failure to register the Existing Notes. The Exchange
Notes will evidence the same debt as the Existing Notes and will be issued
pursuant to, and entitled to the benefits of, the Indentures (as defined herein)
pursuant to which the Existing Notes were issued. The Existing Notes and the
Exchange Notes are referred to collectively herein as the "Notes". As of the
date of this Prospectus, $500.0 million principal amount at maturity
($272,055,000 original issue price) of the Existing 12.50% Notes, $400.0 million
principal amount of the Existing 11.25% Notes, DM 226.0 million principal amount
at maturity (DM 123,549,680 original issue price) of Existing 12.40% Notes and
DM 178.0 million principal amount of Existing 11.15% Notes are outstanding.
The Existing Notes were issued by Viatel in an offering (the "Offering") of
(i) Senior Discount Dollar Units (the "Senior Discount Dollar Units"), each of
which consisted of one U.S. dollar denominated Existing 12.50% Note and .490 of
a share of Series A redeemable convertible preferred stock, $.01 par value per
share, of Viatel (the "Series A Preferred"), (ii) Senior Dollar Units (the
"Senior Dollars Units"), each of which consisted of one U.S. dollar denominated
Existing 11.25% Note and .483 of a share of Series A Preferred, (iii) Senior
Discount DM Units (the "Senior Discount DM Units"), each of which consisted of
one DM denominated Existing 12.40% Note and 2.77 DM denominated 10% Subordinated
Convertible Debentures Due 2011 (the "Subordinated Convertible Debentures") and
(iv) Senior DM Units (the "Senior DM Units" and together with the Senior
Discount Dollar Units, the Senior Dollar Units and the Senior Discount DM Units,
the "Units"), each of which consisted of one DM denominated Existing 11.15% Note
and 2.69 Subordinated Convertible Debentures. The Existing Notes will become
separately tradeable from the Series A Preferred and the Subordinated
Convertible Debentures, as the case may be, upon effectiveness of the
Registration Statement (as defined herein) of which this Prospectus forms a
part.
Viatel will accept for exchange any and all existing Notes that are validly
tendered prior to 5:00 p.m., New York City time, on the Expiration Date. Tenders
of Existing Notes may be withdrawn at any time prior to 5:00 p.m., New York City
time, on the Expiration Date. The Exchange Offer is not conditioned upon any
minimum principal amount of Existing Notes being tendered for exchange. However,
the Exchange Offer is subject to certain customary conditions, which may be
waived by Viatel. Viatel reserves the right to amend, terminate or extend the
Exchange Offer at any time prior to the Expiration Date upon the occurrence of
any such condition. The Existing 12.50% Notes may be tendered only in multiples
of $1,000 principal amount at maturity, the Existing 11.25% Notes may be
tendered only in multiples of $1,000 principal amount, the Existing 12.40% Notes
may be tendered only in multiples of DM 100,000 principal amount at maturity and
the Existing 11.15% Notes may be tendered only in DM 100,000 principal amount.
See "The Exchange Offers."
The Exchange Offers are being made pursuant to the terms of the Registration
Rights Agreement, dated April 3, 1998 (the "1998 Registration Rights
Agreement"), entered into among Viatel, Morgan Stanley & Co. Incorporated,
Morgan Stanley Bank AG, Salomon Brothers Inc, ING Baring (U.S.) Securities,
Inc., and NationsBanc Montgomery Securities LLC (collectively, the "Initial
Purchasers") pursuant to the terms of a Purchase Agreement, dated April 3, 1998
(the "Purchase Agreement") among Viatel and the Initial Purchasers. See "The
Exchange Offers."
Any Existing Notes not tendered and accepted in the Exchange Offers will
remain outstanding and will be entitled to all the rights and preferences, and
will be subject to the limitations applicable thereto, under the Indentures.
Following consummation of the Exchange Offers, the holders of Existing Notes
will continue to be subject to the existing restrictions upon transfer thereof,
and Viatel will have no further obligation to such holders to provide for the
registration under the Securities Act of the Existing Notes held by them.
Following completion of the Exchange Offers, none of the Notes will be entitled
to the step-up in interest rate relating to the obligations of Viatel to
register the Existing Notes within a specific periods of time. See "The Exchange
Offers."
(CONTINUED ON NEXT PAGE)
------------------------
SEE "RISK FACTORS" BEGINNING ON PAGE 23 HEREIN FOR A DISCUSSION OF CERTAIN
RISKS THAT SHOULD BE CONSIDERED BY ELIGIBLE HOLDERS IN EVALUATING THE EXCHANGE
OFFERS.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
------------------------
The date of this Prospectus is , 1998.
2
<PAGE>
Interest on the Existing 12.50% Notes and the 12.50% Exchange Notes
(collectively, the "12.50% Notes"), is 12.50% per annum and interest on the
Existing 12.40% Notes and 12.40% Exchange Notes (collectively, the "12.40%
Notes") is 12.40% per annum. Interest on the 12.50% Notes and the 12.40% Notes
(collectively, the "Discount Notes") is payable semi-annually in cash on April
15 and October 15 of each year, commencing October 15, 2003. Interest on the
Existing 11.25% Notes and the 11.25% Exchange Notes (collectively, the "11.25%
Notes") is 11.25% per annum and interest on the Existing 11.15% Notes and the
11.15% Exchange Notes (collectively, the "11.15% Notes") is 11.15% per annum.
Interest on the 11.25% Notes and the 11.15% Notes (collectively, the "Senior
Notes") is payable semi-annually in cash on April 15 and October 15 of each
year, commencing October 15, 1998. For U.S. federal income tax purposes, holders
of 12.50% Notes and 12.40% Notes will be required to include amounts in gross
income in advance of receipt of the cash payments to which income is
attributable. See "Certain Income Tax Considerations."
The Notes
will be redeemable, at the option of Viatel, in whole or in part, at any time on
or after April 15, 2003, at the redemption prices set forth herein. In addition,
at any time prior to April 15, 2001, Viatel may, at its option, redeem up to 35%
of the aggregate principal amount at maturity of the Notes with the net proceeds
of one or more Public Equity Offerings (as defined herein) at the redemption
prices set forth herein, plus accrued and unpaid interest, if any; PROVIDED (i)
that Notes representing at least 65% of the principal amount at maturity of the
Notes initially issued remain outstanding immediately after each such redemption
and (ii) that notice of such redemption is mailed within 60 days of each such
Public Equity Offering. See "Description of the Exchange Notes -- Optional
Redemption."
Upon a Change of Control (as defined herein), Viatel will be required to
make an offer to purchase the Notes, at a purchase price of 101% of their
Accreted Value (as defined herein) in the case of the Discount Notes and 101% of
the principal amount in the case of the Senior Notes (as defined herein), in
each case, plus accrued and unpaid interest thereon to the repurchase date. See
"Description of the Exchange Notes -- Repurchase of Notes Upon a Change of
Control."
The Existing Notes are, and the Exchange Notes will be, unsecured (except as
described below), senior obligations of Viatel, ranking PARI PASSU in right of
payment with all existing and future unsecured unsubordinated obligations and
will be senior in right of payment to all existing and future subordinated
indebtedness of Viatel. After giving PRO FORMA effect to the Tender Offer and
the Offering, at March 31, 1998, Viatel would have had approximately $845.7
million of senior indebtedness. The Existing Notes are, and the Exchange Notes
will be, effectively subordinated to all existing and future liabilities
(including trade payables) of Viatel's subsidiaries. As of March 31, 1998,
Viatel's subsidiaries had approximately $14.7 million of liabilities (excluding
intercompany payables). The Indentures limit the ability of Viatel and its
subsidiaries to incur additional indebtedness. See "Risk Factors -- Substantial
Indebtedness; Ability to Service Debt; Restrictive Covenants." On the closing
date of the Offering, Viatel utilized a portion of the net proceeds from the
sale of the Existing 11.25% Notes to purchase a portfolio of U.S. Pledged
Securities (as defined herein), consisting of U.S. government obligations and
utilized a portion of the net proceeds from the sale of the Existing 11.15%
Notes to purchase a portfolio of DM Pledged Securities (as defined herein),
consisting of German government obligations, that have been pledged as security
for the first six scheduled interest payments on the 11.25% Notes and 11.15%
Notes, respectively.
The Existing Notes were issued and sold on April 8, 1998 in a transaction
exempt from the registration requirements of the Securities Act and applicable
state securities laws and may not be offered or sold in the United States unless
so registered or pursuant to an applicable exemption under the Securities Act
and applicable state securities laws. The Exchange Notes are being offered
hereunder in order to satisfy certain obligations of Viatel contained in the
1998 Registration Rights Agreement. Based on interpretations by the staff of the
Securities and Exchange Commission (the "Commission") set forth in no-action
letters issued to third parties, Viatel believes that Exchange Notes issued
pursuant to the Exchange Offers in exchange for Existing Notes may be offered
for resale, resold and otherwise transferred by any holder (other than
broker-dealers as set forth below) without compliance with the registration and
prospectus delivery requirements of the Securities Act, provided that the holder
is not an affiliate of Viatel, within the meaning of Rule 405 under the
Securities Act, is acquiring the Exchange Notes in the ordinary course of
business and is not participating, and has no arrangement or understanding with
any person to participate, in the distribution of the Exchange Notes. However,
Viatel has not sought a no-action letter with respect to the Exchange Offers and
there can be no assurance that the staff of the Commission would make a similar
determination with respect to the Exchange Offers. Holders of the Existing Notes
(other than broker-dealers) wishing to accept the Exchange Offers must represent
to Viatel in the Letters of Transmittal that the conditions referred to above
have been met.
Any holder who tenders in the Exchange Offers with the intention to
participate, or for the purpose of participating, in a distribution of the
Exchange Notes (i) may not rely upon such interpretations by the staff of the
Commission, (ii) will not be entitled to validly tender Existing Notes in the
Exchange Offers and (iii) must comply with the registration and prospectus
delivery requirements of the Securities Act in connection
3
<PAGE>
with any sale or transfer of such Existing Notes, unless such sale or transfer
is made pursuant to an exemption from, or in a transaction not subject to, such
requirements.
Each broker-dealer that receives Exchange Notes for its own account pursuant
to the Exchange Offers must acknowledge that it will deliver a prospectus
meeting the requirements of the Securities Act in connection with any resale of
such Exchange Notes. The Letters of Transmittal accompanying this Prospectus
state that by so acknowledging 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. This Prospectus, as it may be amended or supplemented from
time to time, may be used by a broker-dealer in connection with resales of
Exchange Notes received in exchange for Existing Notes where such Existing Notes
were acquired by such broker-dealer for its own account as a result of
market-making activities or other trading activities. Pursuant to the 1998
Registration Rights Agreement, Viatel has agreed that, for a period of 180 days
after the closing of the Exchange Offers, it shall use its best efforts to
maintain the effectiveness of the Registration Statement of which this
Prospectus is a part, in connection with any such resale.
Upon consummation of the Exchange Offers, the 12.50% Exchange Notes and the
11.25% Exchange Notes will be represented by permanent global notes in
definitive, fully registered form ("New Global Notes") deposited with a
custodian for, and registered in the name of, The Depositary Trust Company
("DTC") or its nominee. The 12.50% Exchange Notes and the 11.25% Exchange Notes
represented by the New Global Notes will be shown on, and transfers thereof will
be effected only through, records maintained by DTC and its direct and indirect
participants, including Morgan Guaranty Trust Company New York, Brussels Office,
as operator of the Euroclear System ("Euroclear") and Citibank N.A., as operator
of Cedel Bank SOCIETE ANONYME ("Cedel").
Upon consummation of the Exchange Offers, the 12.40% Exchange Notes and the
11.15% Exchange Notes issued in exchange for Existing 12.40% Notes and Existing
11.15% Notes, respectively, originally sold outside the United States pursuant
to Regulation S under the Securities Act ("Regulation S") will be represented by
permanent global certificates in bearer form, deposited with Deutsche Borse
Clearing AG ("DBC") (the "New DBC-DM Global Certificates") and will represent
the 12.40% Exchange Notes and 11.15% Exchange Notes held by account holders in
DBC, including the 12.40% Exchange Notes and 11.15% Exchange Notes which are
held through Euroclear and Cedel, each of which has an account with DBC. The
12.40% Exchange Notes and 11.15% Exchange Notes represented by the New DBC-DM
Global Certificates will be shown on, and transfers thereof will be effected
only through, records maintained by DBC and its direct and indirect
participants. Certificated notes will not be issued in exchange for legal co-
ownership interests in the New DBC-DM Global Certificates. Upon consummation of
the Exchange Offers, the 12.40% Exchange Notes and 11.15% Exchange Notes issued
in exchange for Existing 12.40% Notes and Existing 11.15% Notes, respectively,
originally sold pursuant to Rule 144A under the Securities Act ("Rule 144A")
will be represented by permanent global certificates in definitive, fully
registered form deposited with a custodian for, and registered in the name of
DTC (the "New DTC-DM Global Certificates" and together with the New DBC-DM
Global Certificates, the "New Global Certificates") or its nominee. The 12.40%
Exchange Notes and 11.15% Exchange Notes represented by the New DTC-DM Global
Certificates will be shown on, and transfers thereof will be effected only
through, records maintained by DTC and its direct and indirect participants.
Certificated notes will not be issued in exchange for beneficial interests in
the New DTC-DM Global Certificates. See "Description of the Exchange Notes --
Book Entry; Delivery and Form."
There has previously been only a limited secondary market, and no public
market, for the Existing Notes. The Existing Notes are eligible for trading in
the Private Offering, Resales and Trading through Automatic
Linkages ("PORTAL") market. There is no established trading market for the
Exchange Notes. Viatel does not currently intend to apply for listing of the
Exchange Notes on any national securities exchange or for quotation through any
automated quotation system. Accordingly, there can be no assurance as to the
development of any market for or the liquidity of any market that may develop
for the Exchange Notes, the ability of the holders of the Exchange Notes to sell
their Exchange Notes or the price at which such
4
<PAGE>
holders would be able to sell their Exchange Notes. If such a trading market
were to develop, the Exchange Notes could trade at prices that may be higher or
lower than the initial market values depending on many factors, including
prevailing interest rates, Viatel's results of operations, the market for
similar securities and general macroeconomic and market conditions. Depending on
such factors, the Exchange Notes may trade at a discount from their face value.
See "Risk Factors -- Absence of a Public Market for the Exchange Notes."
Viatel will not receive any proceeds from this Exchange Offers. Pursuant to
the 1998 Registration Rights Agreement, Viatel will bear all expenses incident
to Viatel's consummation of the Exchange Offers and compliance with the 1998
Registration Rights Agreement. See "The Exchange Offers."
This Prospectus, together with the Letters of Transmittal, is being sent to
all holders of the Existing Notes as of , 1998.
THE EXCHANGE OFFER IS NOT BEING MADE TO, NOR WILL VIATEL ACCEPT SURRENDERS
FOR EXCHANGE FROM, HOLDERS OF EXISTING 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.
NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY EXCHANGE MADE PURSUANT
HERETO SHALL UNDER ANY CIRCUMSTANCES IMPLY THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF VIATEL OR THAT THE INFORMATION SET FORTH HEREIN IS CURRENT AS OF ANY
DATE SUBSEQUENT TO THE DATE HEREOF.
THIS PROSPECTUS AND THE RELATED LETTERS OF TRANSMITTAL CONTAIN IMPORTANT
INFORMATION. HOLDERS OF EXISTING NOTES ARE URGED TO READ THIS PROSPECTUS AND THE
RELATED LETTERS OF TRANSMITTAL CAREFULLY BEFORE DECIDING WHETHER TO TENDER THEIR
EXISTING NOTES PURSUANT TO THE EXCHANGE OFFERS.
THE 12.40% EXCHANGE NOTES AND THE 11.15% EXCHANGE NOTES ARE ISSUED UNDER THE
"EURO SECURITIES EXEMPTION" PURSUANT TO SECTION 4 PARAGRAPH 1 NO. 1 AND SECTION
4 PARAGRAPH 2 OF THE SECURITIES SALES PROSPECTUS ACT OF THE FEDERAL REPUBLIC OF
GERMANY (WERTPAPIER-VERKAUFSPROSPEKTGESETZ) OF 13 DECEMBER, 1990 (THE
"SECURITIES PROSPECTUS ACT") OR UNDER ANOTHER EXEMPTION UNDER THE SECURITIES
PROSPECTUS ACT.
5
<PAGE>
------------------------
THIS PROSPECTUS INCLUDES "FORWARD-LOOKING STATEMENTS" WITHIN THE MEANING OF
THE SECURITIES LAWS. ALL STATEMENTS REGARDING VIATEL AND ITS SUBSIDIARIES'
EXPECTED FINANCIAL POSITION, BUSINESS AND FINANCING PLANS ARE FORWARD-LOOKING
STATEMENTS. ALTHOUGH VIATEL AND ITS SUBSIDIARIES BELIEVE THAT THE EXPECTATIONS
REFLECTED IN SUCH FORWARD-LOOKING STATEMENTS ARE REASONABLE, THEY CAN GIVE NO
ASSURANCE THAT SUCH EXPECTATIONS WILL PROVE TO HAVE BEEN CORRECT. IMPORTANT
FACTORS THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM SUCH
EXPECTATIONS ARE DISCLOSED IN THIS PROSPECTUS. ALL SUBSEQUENT WRITTEN AND ORAL
FORWARD-LOOKING STATEMENTS ATTRIBUTABLE TO VIATEL, ITS SUBSIDIARIES OR PERSONS
ACTING ON THEIR BEHALF ARE EXPRESSLY QUALIFIED IN THEIR ENTIRETY BY THE
CAUTIONARY STATEMENTS. NOTHING CONTAINED IN THIS PROSPECTUS IS OR SHOULD BE
RELIED UPON AS A PROMISE OR REPRESENTATION AS TO FUTURE RESULTS OR EVENTS.
------------------------
VIACALL, VIACALL Plus, VIACALL Express, VIAPN and VIAISDN are marketed under
a number of pending service marks and the Company uses various registered logos
including "Viatel," a federally registered service mark in the United States.
6
<PAGE>
AVAILABLE INFORMATION
Viatel has filed with the Commission a Registration Statement on Form S-4
(together with all amendments, exhibits, schedules and supplements thereto, the
"Registration Statement") under the Securities Act with respect to the Exchange
Notes offered by this Prospectus. This Prospectus, which constitutes a part of
the Registration Statement, does not contain all the information set forth in
the Registration Statement and the exhibits and schedules thereto, to which
reference is hereby made. Each statement made in this Prospectus referring to a
document filed as an exhibit or schedule to the Registration Statement is not
necessarily complete and is qualified in its entirety by reference to the
exhibit or schedule for a complete statement of its terms and conditions. Viatel
is subject to the informational and reporting requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy and information statements and other information
with the Commission. Such reports, statements and other information filed by
Viatel with the Commission in accordance with the Exchange Act may be inspected,
without charge, and copied at the Public Reference Section of the Commission
located at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C.
20549 and at the Northeast Regional Office of the Commission located at 7 World
Trade Center, Suite 1300, New York, New York 10048 and at its Chicago Regional
Office at Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661-2511. Copies of all or any portion of such materials may be
obtained from the Public Reference Section of the Commission, 450 Fifth Street,
N.W., Washington, D.C. 20549 upon payment of the prescribed fees.
The Commission maintains a Web site that contains reports, proxy and
information statements and other information regarding registrants that file
electronically with the Commission. The address of the Commission's Web site is
http://www.sec.gov. Viatel's common stock, $.01 par value per share (the "Common
Stock"), is traded on the Nasdaq National Market, and such periodic reports,
proxy and information statements and other information also can be inspected at
the office of NASDAQ Operations, 1735 K Street, N.W., Washington, D.C. 20006.
7
<PAGE>
SUMMARY
THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY AND SHOULD BE READ IN
CONJUNCTION WITH THE MORE DETAILED INFORMATION AND CONSOLIDATED FINANCIAL
STATEMENTS, INCLUDING THE NOTES THERETO, AND OTHER FINANCIAL DATA APPEARING
ELSEWHERE IN THIS PROSPECTUS. CAPITALIZED TERMS USED IN THIS SUMMARY AND NOT
OTHERWISE DEFINED SHALL HAVE THE MEANING SPECIFIED ELSEWHERE IN THIS PROSPECTUS.
THE COMPANY
OVERVIEW
The Company is a rapidly growing international telecommunications company
providing high quality, competitively priced, international and domestic long
distance telecommunications services, primarily to small and medium-sized
businesses, carriers and resellers. The Company established an early presence in
several key Western European countries to capitalize on the opportunities
presented by full deregulation of the telecommunications industry. The Company
currently operates one of the largest alternative Pan-European networks, with
international gateway switching centers in New York and London, network points
of presence ("POPs") in 30 cities, direct sales forces in nine Western European
cities and indirect sales offices in more than 100 additional locations in
Western Europe. The Company's telecommunications revenues have grown from $32.3
million in 1995 to $73.0 million in 1997.
The Company believes that network ownership is critical to becoming a high
quality, low-cost provider and will create the necessary platform to provide a
full array of telecommunications products and services to customers. The Company
has recently initiated a program to own key elements of its network
infrastructure, including interests in fiber optic cable systems. As part of
this strategy, the Company is developing a state-of-the-art fiber optic ring
which will connect five countries and will include London, Paris, Nancy,
Strasbourg, Stuttgart, Frankfurt, Cologne, Dusseldorf, Essen, Brussels, Antwerp,
Rotterdam and Amsterdam (the "Circe Network"). The Circe Network will be a high
quality, high capacity, bi-directional self-healing ring, utilizing advanced
synchronous digital hierarchy ("SDH") and dense wave division multiplexing
("DWDM") technologies. Bechtel International, Inc. (together with its affiliated
companies, "Bechtel"), one of the largest construction contractors in the world,
has been engaged by the Company to manage the construction of the system.
The Circe Network will significantly expand the Company's revenue
opportunities by enabling it to (i) provide a broader range of products and
services to retail customers, (ii) provide wholesale services to the large base
of resellers that the Company expects will develop as deregulation continues in
Western Europe and (iii) capitalize on the growing demand for bandwidth
intensive services in Europe. The Company believes there is currently a shortage
of cost-effective capacity between Western European countries. Under the
traditional system of carrying cross-border telecommunications traffic in
Europe, no incumbent telecommunications operator ("ITO") developed end-to-end
cross-border circuits. In addition, the Company believes no alternative carrier
currently offers cost-effective capacity. The Circe Network will offer
cost-effective cross-border connectivity between major Western European cities
as a compelling alternative to ITO-provided leased lines, which suffer from a
number of deficiencies in terms of cost, quality and availability. The Circe
Network will allow the Company to become a preferred provider of bandwidth to
new entrants, such as alternative carriers, global consortia of
telecommunications operators, international carriers, Internet backbone
networks, resellers, value-added networks and other service providers
(collectively, "New Entrants").
THE CIRCE NETWORK
The Circe Network is expected to have approximately 3,671 route kilometers,
including approximately 471 route kilometers of a Belgium national network and
320 route kilometers of undersea fiber optic cable. The development and
operational start-up of the Circe Network is estimated to cost approximately
$530.0 million. The Company commenced construction of Phase 1 of the Circe
Network, consisting of the portion
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of the Circe Network connecting London, Paris, Brussels, Antwerp, Rotterdam and
Amsterdam ("Phase 1"). The Company plans to commence construction of Phase 2 of
the Circe Network, consisting of the portion of the Circe Network connecting
Paris, Nancy, Strasbourg, Frankfurt, Cologne, Dusseldorf, Essen, and Amsterdam
("Phase 2"). The Company began construction of the Circe Network in the Spring
of 1998, with initial turn-up in the first quarter of 1999. The Circe Network
will be deployed along various rights-of-way, including motorways, railways,
waterways and pipelines through a combination of "new digs" and the acquisition
of dark fiber. Key characteristics of the Circe Network will include:
STATE-OF-THE-ART TECHNOLOGY. The Company will install state-of-the-art,
technologically advanced equipment in a uniform configuration throughout the
entire Circe Network, which will provide a Pan-European SDH self-healing
ring. The Circe Network will use laser-generated light to transmit bi-
directionally over fiber optic glass strands with an initial capacity of 20
gigabits per second ("Gb/s"). In connection with the development and
construction of the Circe Network, the Company will be upgrading its Network
Operations Centers ("NOCs") to enable real-time monitoring and
reconfiguration of its network.
HIGH SECURITY AND RELIABILITY. The Circe Network is being designed for
high security and reliability, based upon (i) a self-healing system that
will allow for instantaneous restoration, virtually eliminating down time in
the event of a fiber cut, (ii) fiber cable generally installed in
high-density polyethylene conduits on terrestrial portions of the system and
(iii) advanced cable armoring techniques on the submarine portions of the
system.
ADDITIONAL CAPACITY AND FLEXIBILITY. The Circe Network's high-density
network architecture may be upgraded, without service interruption, to 160
Gb/s (16 STM-64) through the use of DWDM and bi-directional multi-wavelength
optical amplifiers, to support future demand for bandwidth intensive data
applications such as frame relay, Internet and asynchronous transfer mode
("ATM") services. The Company is currently marketing capacity on the system
to other telecommunications carriers and New Entrants. The Circe Network
will enable the Company to expand the reach of its existing network to
additional strategic destinations through the exchange of capacity on the
Circe Network for capacity on other fiber optic systems. See
"Business -- Circe Network."
The Company began planning Phase 1 of the Circe Network in the Fall of 1997
and retained MK International Limited ("MKI"), a subsidiary of WorldCom, Inc.
("WorldCom"), to perform a feasibility study and to propose a terrestrial route
for Phase 1. On January 28, 1998, the Company received a preliminary route study
from MKI which identifies (i) the preferred rights-of-way for Phase 1, as well
as alternative routing options, (ii) procedures for obtaining all permits,
licenses and other regulatory requirements necessary to allow Phase 1 to be
installed along the preferred route and (iii) construction methodology and
associated risk analysis. Subsequently, the Company has received a route study
from Bechtel for Phase 2 which (i) identifies the preferred rights-of-way, (ii)
evaluates lease or build options for rights of way, (iii) provides time and cost
estimates for obtaining rights-of-way and (iv) provides a proposed action plan.
Bechtel has overall responsibility for the procurement for, and the
arranging and administering of, the engineering, construction, commissioning and
testing of the Circe Network. The Company's binding letter of intent with
Bechtel, dated March 13, 1998, which currently covers only Phase 1 of the Circe
Network, provides incentives for on-time and on-budget delivery and penalties
for failure to meet specified ready-for-service dates. Bechtel has been involved
in over 15,000 projects worldwide, including hundreds of projects in England,
France, Germany and The Netherlands. Bechtel's European projects include Euro
Disney, the Euro Tunnel connecting the United Kingdom and France, and various
rail projects across Europe.
The Company has also executed a binding letter of intent and term sheet with
Alcatel Submarine Networks ("ASN"), dated March 18, 1998, under which ASN has
agreed to procure, install and test, on a fixed price, date certain basis,
optical fiber for the submarine portions of the Circe Network. In addition,
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the Company has executed a definitive agreement with Nortel Telecom, Inc.
("Nortel"), executed on June 29, 1998, for the engineering, manufacturing,
testing, installation and commissioning of transmission equipment and related
network management systems for Phase 1 at a fixed price. Each of the
arrangements with ASN and Nortel establishes maximum contract prices and
provides for the payment of liquidated damages in the event that the respective
contractor fails to meet agreed upon ready-for-service dates.
BUSINESS STRATEGY
The Company's mission is to build a Pan-European telecommunications company
focusing on small and medium-sized businesses, while becoming a high quality,
low-cost provider of telecommunications products and services through the
ownership of key network infrastructure. The key elements of the Company's
strategy include:
CAPITALIZE ON LARGE AND RAPIDLY DEREGULATING EUROPEAN MARKETS
The Company's principal focus is on exploiting opportunities presented by
rapidly deregulating European markets. For 1996, the European international long
distance market was the largest in the world with approximately 28 billion
minutes. The Company estimates that, during 1997, the market for long distance
services and voice band data in the Western European countries in which the
Company operates represented approximately $59.6 billion, with approximately
$45.0 billion representing national long distance and approximately $14.6
billion representing international long distance. A substantial portion of the
international traffic originating in Europe terminates in Europe or the United
States where the Company has international gateway switches. As liberalization
takes effect throughout Western Europe, the Company believes New Entrants will
play a significant role in penetrating these markets.
LEVERAGE ESTABLISHED MARKET PRESENCE AND LOCAL DISTRIBUTION NETWORK
The Company established an early presence in Western Europe to capitalize on
the opportunities presented by deregulation of the telecommunications industry.
As a result, the Company has gained substantial experience in the operational,
technical, financial and logistical issues involved in building a network and
sales force in Western Europe. To date, the Company has established sales
offices in nine Western European cities and has established indirect sales
offices, through arrangements with independent sales representatives and
telemarketing agents, in more than 100 additional locations in Western Europe.
The Company believes it is well positioned to identify and capitalize on
increasing market opportunities in Western Europe and will continue to build and
enhance its sales force and operations in Europe over the next few years and add
products and services as telecommunications markets continue to deregulate.
FOCUS ON SIGNIFICANT BASE OF SMALL AND MEDIUM-SIZED BUSINESSES
The Company has established a retail customer base of small and medium-sized
businesses and intends to continue to focus its retail marketing efforts on this
market segment. In most European markets, small and medium-sized businesses
account for a significant percentage of national and international calling
traffic and the Company expects this segment will continue to provide a
significant opportunity for the Company. In 1996, small and medium-sized
businesses represented, on average, 60.0% of the total company revenues
generated and, as of 1994, approximately 66.0% of the total workforce in the EU
member states. The Company believes that small and medium-sized businesses are
likely to be receptive to competitively priced bundled service offerings by New
Entrants, such as those offered by the Company, because these businesses have
traditionally been underserved by the ITOs, which offer their best rates and
services primarily to higher-volume multinational business customers. See
"Business -- Sales and Marketing; Customers."
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ENHANCE REVENUE OPPORTUNITIES THROUGH CIRCE NETWORK
The Company believes that the Circe Network will significantly expand the
Company's ability to capitalize on opportunities presented by the deregulation
of the Western European telecommunications markets. First, the Circe Network
will provide the Company with the ability to control the quality and scope of
services to retail customers, while effectively competing on price. Second, the
Company believes that deregulation of the continental European
telecommunications market will lead to the creation of numerous New Entrants,
principally consisting of resellers, as occurred in the United States and the
United Kingdom following deregulation of the telecommunications markets in those
countries. The Circe Network will enable the Company to capture a greater share
of the expanding Western European telecommunications market by providing
wholesale services to other New Entrants. Third, the Company believes that
demand for data services will significantly outgrow existing capacity. The Circe
Network will enable the Company to service the expanding need created by
bandwidth intensive services.
ESTABLISH LOW-COST POSITION THROUGH NETWORK OWNERSHIP AND CONTROL
The Company believes it is critical to own or control key elements of its
network in order to be a low-cost provider. By owning or controlling key
elements of its network, the Company will be better able to control service
offerings, quality, and transmission and other operating costs. As part of the
Company's efforts to own key portions of its network, the Company (i) has
purchased Indefeasible Rights-of-Use ("IRU's") or Minimum Investment Units
("MIUs") in digital fiber optic cable systems, (ii) has purchased POPs and
switches, and (iii) will construct the Circe Network. The Company also intends
to acquire additional interests in submarine fiber optic cable. The Circe
Network's advanced fiber and transmission electronics are expected to provide
lower installation, operating and maintenance costs than older fiber optic
systems generally in commercial use today. In addition, to offset the
construction costs of the Circe Network, the Company intends to sell IRUs on the
Circe Network for cash or in exchange for IRUs on other cable systems.
CAPITALIZE ON EXPANDING DATA NEEDS
The majority of the Company's revenue is currently derived from
international long distance services. As liberalization leads to more favorable
interconnection rates in Western Europe, the Company intends to offer national
long distance services in additional Western European countries. Network
infrastructure ownership will facilitate the Company's entry into new products,
such as data products including frame relay, Internet and ATM services, which
are more bandwidth and transmission intensive. According to industry sources,
bandwidth demand for data in the U.S. is currently growing approximately 10
times faster than voice and the Company expects this trend to develop in Europe
as competitively priced capacity becomes available. The Company believes that
there will be substantial demand for data products by small and medium-sized
businesses, and that a bundled service offering of national and international
data and voice services will be attractive to this targeted customer base.
LEVERAGE NETWORK THROUGH CARRIER SALES
In order to complement and efficiently utilize capacity on Viatel's network,
the Company sells switched minutes to wholesale customers and other resellers in
the United States and the United Kingdom. The Company believes that the sale of
switched minutes to such customers is an effective means of achieving network
efficiencies. The Company believes that the Flat Rate Acquisition (as defined
herein) further enhances the Company's network efficiency, builds scale and
provides the Company with the critical mass necessary to compete in today's
competitive telecommunications markets. See "-- Recent Developments."
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PURSUE ACQUISITIONS, INVESTMENTS AND STRATEGIC ALLIANCES
To date, the Company's growth primarily has been internally generated and
managed. In addition to systematically expanding the Company through internal
growth, the Company intends to expand its services and network capabilities
through acquisitions, investments and strategic alliances. The Company believes
that such acquisitions, investments and strategic alliances are an important
means of increasing network traffic volume and achieving lower termination costs
and desired economies of scale.
RECENT DEVELOPMENTS
On February 27, 1998, the Company completed the acquisition of Flat Rate
Communications, Inc. ("Flat Rate"), a United States-based international
telecommunications company that markets capacity to other carriers (the "Flat
Rate Acquisition"). The consideration for Flat Rate consisted of $5.0 million in
cash, 375,000 shares of Common Stock and a contingent payment (based upon Flat
Rate's operating results for the 12 month period ending February 28, 1999) which
will range from zero to $21.0 million in cash and zero to 1.0 million shares of
Common Stock.
In December 1997, the Company hired Francis J. Mount, as Senior Vice
President, Engineering and Network Operations, and Jan S. Piazza, as General
Manager, Carrier Sales. Mr. Mount has over 30 years of experience in the
telecommunications industry, including six years with MCI, where he most
recently served as Director, Global Technical Services, responsible for
international development, alliance management and all technical operations and
services outside the United States, and 22 years with AT&T where he served in
various technical and network management capacities. Effective June 1, 1998, Mr.
Mount became a director of the Company. Ms. Piazza has over 14 years of
experience in the telecommunications industry, including two years with
Telepassport, Inc., where she served as Vice President, Sales and Marketing, and
seven years with a predecessor of WorldCom, most recently as Vice President of
Product Development and Carrier Sales.
On April 8, 1998, Viatel refinanced all of its $120.7 million principal
amount at maturity of 15% Senior Discount Notes Due 2005 (the "1994 Notes")
through the consummation of a tender offer and related consent solicitation (the
"Tender Offer"). Viatel utilized approximately $118.6 million from the Offering
to finance the Tender Offer.
In the Tender Offer, Viatel offered to purchase up to all of the 1994 Notes
for an amount in cash based on a fixed spread of 100 basis points over the yield
to maturity of the 6.375% U.S. Treasury Notes due January 1, 2000. Viatel also
solicited consents from holders of the 1994 Notes to amend the indenture under
which the 1994 Notes were issued to eliminate substantially all of the
restrictive covenants contained therein and paid a separate consent fee to
holders who tendered their 1994 Notes and delivered their consents prior to the
expiration of a specified consent date. Viatel received consents relating to,
and tenders of, 100% of the outstanding 1994 Notes.
Viatel is an operating company which renders its services directly and
indirectly through subsidiaries in each Western European country in which it
currently operates. The Company's principal executive offices are located at 800
Third Avenue, New York, New York 10022. Its telephone number is (212) 350-9200.
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THE EXCHANGE OFFERS
The Existing Notes were issued and sold on April 8, 1998 in a transaction
exempt from the registration requirements of the Securities Act and applicable
state securities laws and may not be offered or sold in the United States unless
so registered or pursuant to an applicable exemption under the Securities Act
and applicable state securities laws. In connection with the Offering, Viatel
entered into the 1998 Registration Rights Agreement, which grants holders of the
Existing Notes certain exchange and registration rights. The Exchange Offers are
intended to satisfy such exchange and registration rights, all of which will
terminate upon the consummation of the Exchange Offers except under limited
circumstances. The Exchange Offers are being made for all outstanding Existing
Notes. See "The Exchange Offers." The Exchange Notes will be entitled to the
benefits of the respective Indenture under which the particular series of
Existing Notes were issued. See "Description of the Exchange Notes."
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The Exchange Offers............. The Exchange Offers will commence on , 1998.
Pursuant to the Exchange Offers, (i) the 12.50% Exchange
Notes will be issued in exchange for an equal principal
amount at maturity of the Existing 12.50% Notes, (ii) the
11.25% Exchange Notes will be issued in exchange for an
equal principal amount of the Existing 11.25% Notes, (iii)
the 12.40% Exchange Notes will be issued in exchange for
an equal principal amount at maturity of the Existing
12.40% Notes and (iv) the 11.15% Exchange Notes will be
issued in exchange for an equal principal amount of
Existing 11.15% Notes, in each case that are validly
tendered and not withdrawn. As of the date hereof, $500.0
million principal amount at maturity ($272,055,000
original issue price) of Existing 12.50% Notes, $400.0
million principal amount of Existing 11.25% Notes, DM
226.0 million principal amount at maturity (DM 123,549,680
original issue price) of Existing 12.40% Notes and DM
178.0 million principal amount of Existing 11.15% Notes
are outstanding. Any holder of Existing Notes that is an
"affiliate" of Viatel within the meaning of Rule 405 under
the Securities Act may not participate in the Exchange
Offers. See "The Exchange Offers -- Terms of the Exchange
Offers."
Holders of Existing Notes whose Existing Notes are not
tendered and accepted in the Exchange Offers will continue
to hold such Existing Notes and will be entitled to all
the rights and preferences, and will be subject to the
limitations, applicable thereto under the Indentures
governing the Notes. Following consummation of the
Exchange Offers, the holders of Existing Notes will
continue to be subject to the existing restrictions upon
transfer thereof, and Viatel will have no further
obligations to such holders to provide for the
registration under the Securities Act of the Existing
Notes held by them. Following the completion of the
Exchange Offers, none of the Notes will be entitled to the
step-up in interest rate relating to the obligations of
Viatel to register the Existing Notes under the Exchange
Act within a specific period of time. See "The Exchange
Offers."
Resale.......................... Based on interpretations by the staff of the Commission
set forth in no-action letters and interpretative letters
issued to third parties,
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Viatel believes that the Exchange Notes issued pursuant to
the Exchange Offers in exchange for the Existing Notes may
be offered for resale, resold and otherwise transferred by
any holder thereof (other than broker-dealers, as set
forth below) 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 that such
holder is not participating, does not intend to
participate and has no arrangement or understanding with
any person to participate, in any distribution of the
Exchange Notes. However, Viatel has not sought a no-action
letter with respect to the Exchange Offers and there can
be no assurance that the staff of the Commission would
make a similar determination with respect to the Exchange
Offers. Holders of Existing Notes (other than
broker-dealers) wishing to accept the Exchange Offers must
represent to Viatel in the Letters of Transmittal that the
conditions referred to above have been met.
Any holder who tenders in the Exchange Offers with the
intention to participate, or the purpose of participating,
in a distribution of the Exchange Notes (i) may not reply
upon such interpretations by the staff of the Commission,
(ii) will not be entitled to validly tender Existing Notes
in the Exchange Offers and (iii) must comply with the
registration and prospectus delivery requirements of the
Securities Act in connection with any sale or transfer of
the Exchange Notes, unless such sale or transfer is made
pursuant to an exemption from, or in a transaction not
subject to such requirements.
Each Participating Broker-Dealer must acknowledge that it
will deliver a prospectus in connection with any resale of
such Exchange Notes. The Letters of Transmittal
accompanying this Prospectus state that by so
acknowledging 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.
See "Plan of Distribution."
The Exchange Offers are not being made to, nor will Viatel
accept surrenders of Existing Notes for exchange from,
holders thereof in any jurisdiction in which the Exchange
Offers or the acceptance thereof would not be in
compliance with the securities or blue sky laws of such
jurisdiction.
Expiration Date................. The Exchange Offers will expire at 5:00 p.m., New York
City time, on , 1998, unless extended, in which
case the term "Expiration Date" shall mean the latest date
and time to which the Exchange Offers are extended.
Conditions to the Exchange
Offers........................ The Exchange Offers are subject to certain conditions,
which may be waived by Viatel. See "The Exchange Offers --
Terms of the Exchange Offers -- Conditions of the Exchange
Offers." The
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Exchange Offers are not conditioned upon any minimum
principal amount of Existing Notes being tendered for
exchange.
Procedures for Tendering the
non-DBC Notes................. Each holder of Existing Notes, excluding the Existing
12.40% Notes and Existing 11.15% Notes represented by
global certificates in bearer form deposited with the DBC
("DBC-DM Global Certificates") (the "non-DBC Notes")
wishing to accept an Exchange Offer must complete, sign
and date the applicable Letter of Transmittal, or a
facsimile thereof, in accordance with the instructions
contained herein and therein, and mail or otherwise
deliver such Letter of Transmittal, or a facsimile
thereof, together with such Existing Notes and any other
required documentation to The Bank of New York, as U.S.
exchange agent (the "U.S. Exchange Agent"), at the address
set forth herein and therein. Persons holding Existing
Notes through DTC and wishing to accept the Exchange
Offers must do so pursuant to DTC's Automated Tender Offer
Program ("ATOP"), by which each tendering participant will
agree to be bound by the Letter of Transmittal.
By executing a Letter of Transmittal, a holder will
represent to Viatel that, among other things, (i) the
Exchange Notes acquired pursuant to the applicable
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, (ii) neither the
holder nor any such 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
Existing Notes, neither the holder nor any other such
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
Viatel within the meaning of Rule 405 under the Securities
Act. See "The Exchange Offers -- Terms of the Exchange
Offers -- Procedures for Tendering the non-DBC Notes."
Special Procedures for
Beneficial Owners of Existing
Notes......................... Any beneficial owner whose non-DBC Notes are registered in
the name of a broker-dealer, commercial bank, trust
company or other nominee and who wishes to tender such
non-DBC Notes in the Exchange Offers should contact such
registered holder promptly and instruct such registered
holder to tender on such beneficial owner's behalf. If
such beneficial owner wishes to tender on his or her own
behalf, such owner must, prior to completing and executing
the applicable Letter of Transmittal and delivering his or
her non-DBC Notes, either make appropriate arrangements to
register ownership of the non-DBC Notes in such owner's
name or obtain a properly completed bond power from the
registered holder. Such a transfer of registered ownership
may take considerable time and may not be able to be
completed prior to the
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Expiration Date. See "The Exchange Offers -- Terms of the
Exchange Offers -- Procedures for Tendering Existing
Notes."
Special Procedures for
Beneficial Owners of DBC
Notes......................... Each holder of Existing 12.40% Notes and Existing 11.15%
Notes represented by DBC-DM Global Certificates (the "DBC
Notes") wishing to accept an Exchange Offer must make
book-entry delivery of such DBC Notes by causing the
transfer of such DBC Notes to the DBC account of Deutsche
Bank, Aktiengesellschaft, as German Exchange Agent (the
"German Exchange Agent" and together with the U.S.
Exchange Agent, the "Exchange Agents") as set forth in the
applicable Letter of Transmittal and in accordance with
applicable German statutory and contractual provisions,
and must complete, sign and date the applicable Letter of
Transmittal, or a facsimile thereof, in accordance with
the instruments contained herein or therein and must
deliver such Letter of Transmittal to the German Exchange
Agent at the address set forth herein and therein.
Guaranteed Delivery
Procedures.................... Holders of non-DBC Notes who wish to tender their non-DBC
Notes and whose non-DBC Notes are not immediately
available or who cannot deliver their non-DBC Notes, the
applicable Letter of Transmittal or any other documents
required by such Letter of Transmittal to the U.S.
Exchange Agent prior to the Expiration Date, must tender
their non-DBC Notes according to the guaranteed delivery
procedures set forth in "The Exchange Offers -- Terms of
the Exchange Offers -- Guaranteed Delivery Procedures."
Acceptance of Existing Notes and
Delivery of New Notes......... Subject to certain conditions, as described more fully in
"The Exchange Offers -- Terms of the Exchange Offers --
Conditions of the Exchange Offers", Viatel will accept for
exchange any and all Existing Notes properly tendered in
the Exchange Offers and not withdrawn, prior to 5:00 p.m.,
New York City time, on the Expiration Date. The Exchange
Notes issued pursuant to the Exchange Offers will be
delivered as promptly as practicable following the
Expiration Date.
Withdrawal Rights............... Tenders of Existing Notes may be withdrawn at any time
prior to 5:00 p.m., New York City time, on the Expiration
Date, unless previously accepted by Viatel. See "The
Exchange Offers -- Terms of the Exchange Offers --
Withdrawal of Tenders of Existing Notes."
Taxation........................ For a discussion of certain United States and German tax
considerations relating to the Exchange Offers and the
purchase, ownership and disposition of Exchange Notes, see
"Certain Income Tax Considerations."
Use of Proceeds................. Viatel will not receive any proceeds from the Exchange
Offers. See "Use of Proceeds."
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Exchange Agents................. The Bank of New York is the U.S. Exchange Agent and
Deutsche Bank, Aktiengesellschaft is the German Exchange
Agent. The addresses of the Exchange Agents are set forth
in "The Exchange Offers -- Terms of the Exchange Offers --
The U.S. Exchange Agent" and "-- The German Exchange
Agent."
THE EXCHANGE NOTES
The form and terms of the Exchange Notes are identical in all material respects to the
form and terms of the Existing Notes except that the Exchange Notes will not bear legends
restricting the transfer thereof (with certain exceptions) or contain interest rate step-up
provisions.
Exchange Notes Offered.......... $500.0 million principal amount at maturity of 12.50%
Exchange Notes, $400.0 million principal amount of 11.25%
Exchange Notes, DM 226.0 million principal amount at
maturity of 12.40% Exchange Notes and DM 178.0 million
principal amount of 11.15% Exchange Notes.
Maturity........................ April 15, 2008.
Yield and Interest.............. 12.50% per annum in the case of the 12.50% Exchange Notes,
11.25% per annum in the case of the 11.25% Exchange Notes,
12.40% per annum in the case of the 12.40% Exchange Notes
and 11.15% per annum in the case of the 11.15% Exchange
Notes. The Existing Discount Notes were sold at a
substantial discount from their principal amount at
maturity, and there will not be any payment of interest on
12.50% Notes or 12.40% Notes prior to October 15, 2003.
Commencing October 15, 2003, the 12.50% Notes and the
12.40% Notes will pay interest semi-annually in cash on
April 15 and October 15 of each year. For U.S. federal
income tax purposes, holders of 12.50% Exchange Notes and
12.40% Exchange Notes will be required to include amounts
in gross income in advance of the receipt of cash payments
to which the income is attributable. See "Certain Income
Tax Considerations."
Interest on the 11.25% Exchange Notes and the 11.15%
Exchange Notes will accrue from the last interest payment
date on which interest was paid on the Existing 11.25%
Notes and the Existing 11.15% Notes or if no interest has
been paid on the Existing 11.25% Notes and the Existing
11.15% Notes, from April 8, 1998. Such accrued interest
shall be payable with the first interest payment on the
11.25% Exchange Notes and the 11.15% Exchange Notes. No
interest shall accrue in respect of the Existing 11.25%
Notes and the Existing 11.15% Notes that are exchanged for
11.25% Exchange Notes and 11.15% Exchange Notes,
respectively, in the Exchange Offers. Interest on the
11.25% Exchange Notes and the 11.15% Exchange Notes will
be payable semi-annually in cash on April 15 and October
15 of each year after their issuance, commencing October
15, 1998.
</TABLE>
17
<PAGE>
<TABLE>
<S> <C>
Security........................ The 12.50% Exchange Notes and the 12.40% Exchange Notes
will be unsecured. The 11.25% Exchange Notes will be
secured by the U.S. Pledged Securities (consisting of U.S.
government obligations) and the 11.15% Exchange Notes will
be secured by the DM Pledged Securities (consisting of
German government obligations), in each case, until the
Company makes the first six scheduled interest payments on
the 11.25% Notes and the 11.15% Notes, respectively, and
thereafter the 11.25% Notes and the 11.15% Notes will be
unsecured.
Pledged Securities.............. In accordance with the terms of the 11.25% Notes Indenture
and the 11.15% Notes Indenture (each as defined herein),
on the closing date of the Offering Viatel purchased and
pledged to the Trustee (as defined herein) for the benefit
of the holders of the 11.25% Notes and the holders of the
11.15% Notes the U.S. Pledged Securities and the DM
Pledged Securities, respectively, in an amount sufficient,
upon receipt of scheduled interest and principal payments
on such securities, to provide for payment in full of the
first six scheduled interest payments due on the 11.25%
Notes and the 11.15% Notes. A failure by Viatel to pay
interest on the 11.25% Notes or the 11.15% Notes in a
timely manner through the first six scheduled interest
payment dates for such Notes will constitute an immediate
Event of Default under the respective Indenture with no
grace or cure period. See "Description of the Exchange
Notes -- Security."
Optional Redemption............. The Notes are redeemable, at Viatel's option, in whole or
in part, at any time on or after April 15, 2003, at the
redemption prices set forth herein. In addition, at any
time prior to April 15, 2001, Viatel may, at its option,
redeem up to 35% of the aggregate principal amount at
maturity of the Notes with the net proceeds of one or more
Public Equity Offerings at the redemption prices set forth
herein, plus accrued and unpaid interest, if any;
PROVIDED, (i) that Notes representing at least 65% of the
principal amount at maturity of the Notes initially issued
remain outstanding immediately after each such redemption
and (ii) that notice of such redemption is mailed within
60 days of each such Public Equity Offering. See
"Description of the Exchange Notes -- Optional
Redemption."
Change of Control............... Upon a Change of Control, Viatel will be required to make
an offer to purchase the Notes at a purchase price of 101%
of their Accreted Value in the case of the Discount Notes
and 101% of the principal amount in the case of the Senior
Notes in each case, plus accrued and unpaid interest
thereon to the repurchase date. See "Description of the
Exchange Notes -- Repurchase of Notes Upon a Change of
Control."
Ranking......................... Each of the Existing Notes are, and the Exchange Notes
will be, unsecured (except as described in "-- Security"
above), senior obligations of Viatel, ranking PARI PASSU
in right of payment with
</TABLE>
18
<PAGE>
<TABLE>
<S> <C>
any future unsecured unsubordinated obligations and will
be senior in right of payment to all existing and future
subordinated indebtedness of Viatel. After giving PRO
FORMA effect to the Tender Offer and the Offering, at
March 31, 1998, Viatel would have had approximately $845.7
million of senior indebtedness. The Existing Notes are,
and the Exchange Notes will be, effectively subordinated
to all existing and future liabilities (including trade
payables) of Viatel's subsidiaries. As of March 31, 1998,
Viatel's subsidiaries had approximately $14.7 million of
liabilities (excluding intercompany payables). See "Risk
Factors -- Substantial Indebtedness; Ability to Service
Debt; Restrictive Covenants."
Certain Covenants............... Each of the Indentures contains certain covenants which,
among other things, restrict the ability of Viatel and its
Restricted Subsidiaries to incur additional indebtedness,
create liens, engage in sale-leaseback transactions, pay
dividends or make distributions in respect of their
capital stock, make investments or certain other
restricted payments, sell assets, redeem capital stock,
issue or sell stock of Restricted Subsidiaries, enter into
transactions with stockholders or affiliates or, with
respect to the Company, effect a consolidation or merger.
The covenants are, however, subject to a number of
important qualifications and exceptions. See "Description
of the Exchange Notes -- Covenants."
Book-Entry; Delivery and Form... The 12.50% Exchange Notes and the 11.25% Exchange Notes
will be represented by two or more permanent Global Notes
in definitive, fully registered form and will be deposited
with a custodian for, and registered in the name of, DTC
or its nominee. The 12.50% Exchange Notes and the 11.25%
Exchange Notes represented by the New Global Notes will be
shown on, and transfers thereof will be effected only
through, records maintained by DTC and its direct and
indirect participants, including Euroclear and Cedel. The
12.50% Exchange Notes and the 11.25% Exchange Notes will
be issued in minimum denominations of $1,000 principal
amount at maturity and any integral multiple thereof.
The 12.40% Exchange Notes and the 11.15% Exchange Notes
issued in exchange for Existing 12.40% Notes and Existing
11.15% Notes originally issued pursuant to Regulation S
will be represented by permanent global certificates in
bearer form, deposited with DBC and will represent the
12.40% Exchange Notes and the 11.15% Exchange Notes held
by account holders in DBC, including the 12.40% Exchange
Notes and the 11.15% Exchange Notes which are held through
Euroclear and Cedel, each of which has an account with
DBC. The 12.40% Exchange Notes and the 11.15% Exchange
Notes issued in exchange for Existing 12.40% Notes and
Existing 11.15% Notes originally sold pursuant to Rule
144A will be represented by permanent global certificates
in registered form and deposited with a custodian for, and
registered in the name of, DTC or its nominee. Transfers
of the 12.40% Exchange Notes and the 11.15% Exchange Notes
will be limited to
</TABLE>
19
<PAGE>
<TABLE>
<S> <C>
transfers of book-entry interests. Definitive certificates
for the 12.40% Exchange Notes and the 11.15% Exchange
Notes will not be issued in exchange for beneficial
interests in the New DTC-DM Global Certificates. See
"Description of the Exchange Notes -- Book Entry; Delivery
and Form." The 12.40% Exchange Notes and the 11.15%
Exchange Notes will be issued in minimum denominations of
DM 100,000 principal amount at maturity and any integral
multiple of DM 1,000 above such number.
Trading......................... There has previously been only a limited secondary market,
and no public market, for the Existing Notes. The Existing
Notes have been approved for trading in the PORTAL market.
There is no established trading market for the Exchange
Notes. Viatel does not currently intend to apply for
listing of the Exchange Notes on any securities exchange
or any automated quotation system. Accordingly, there can
be no assurance as to the development of any market for or
the liquidity of any market that may develop for the
Exchange Notes. See "Risk Factors -- Absence of a Public
Market for the Exchange Notes."
</TABLE>
For additional information regarding the Exchange Notes, see "Description of
the Exchange Notes" and "Certain Income Tax Considerations."
RISK FACTORS
See "Risk Factors," immediately following this Summary, for a discussion of
certain factors which should be carefully considered before tendering Existing
Notes in the Exchange Offers.
20
<PAGE>
SUMMARY CONSOLIDATED FINANCIAL AND OTHER DATA
The following summary Consolidated Statement of Operations Data and Other
Financial Data for the years ended December 31, 1995, 1996 and 1997 have been
derived from the Consolidated Financial Statements of the Company, and the notes
related thereto, included elsewhere in this Prospectus, which were audited by
KPMG Peat Marwick LLP, Independent Certified Public Accountants. The summary
Consolidated Statement of Operations Data, Other Financial Data and Balance
Sheet Data as of and for the three months ended March 31, 1997 and 1998 have
been derived from the unaudited Consolidated Financial Statements of the
Company, and the notes related thereto, included elsewhere in this Prospectus,
which, in the opinion of management, include all adjustments necessary for a
fair presentation of the financial condition and results of operations of the
Company for such periods. The results of operations for interim periods are not
necessarily indicative of a full year's operations. The unaudited pro forma
Statement of Operations Data, Other Financial Data and Balance Sheet Data have
been derived from the unaudited pro forma condensed financial information (the
"Pro Forma Financial Information") included elsewhere in this Prospectus. The
Pro Forma Financial Information does not purport to represent what the Company's
financial condition or results of operations actually would have been for the
date or periods presented had the Tender Offer and the Offering occurred on the
dates indicated or to indicate the results of future periods. This information
should be read in conjunction with the historical financial statements of the
Company, including the Notes thereto, "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and the other financial data
included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, THREE MONTHS ENDED MARCH 31,
---------------------------------------------- -----------------------------------
1997 1998
------------------------ ------------------------
1995 1996 ACTUAL PRO FORMA(1) 1997 ACTUAL PRO FORMA(1)
--------- --------- --------- ------------- --------- --------- -------------
(IN THOUSANDS, EXCEPT OTHER OPERATING DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Telecommunications revenue........... $ 32,313 $ 50,419 $ 73,018 $ 73,018 $ 14,552 $ 21,239 $ 21,239
Operating expenses:
Costs of telecommunications
services......................... 27,648 42,130 63,504 63,504 12,079 19,105 19,105
Selling, general and
administrative................... 24,328 32,857 36,076 36,076 8,723 8,955 8,955
Depreciation and amortization...... 2,637 4,802 7,717 7,717 1,262 2,911 2,911
Equipment impairment loss.......... 560 -- -- -- -- -- --
--------- --------- --------- ------------- --------- --------- -------------
Total operating expenses....... 55,173 79,789 107,297 107,297 22,064 30,971 30,971
--------- --------- --------- ------------- --------- --------- -------------
Operating loss....................... (22,860) (29,370) (34,279) (34,279) (7,512) (9,732) (9,732)
Interest income...................... 3,282 1,853 3,685 3,685 1,119 510 510
Interest expense..................... (8,856) (10,848) (12,450) (102,123)(2) (3,009) (3,781) (25,870)(2)
Share in loss of affiliate........... (42) (10) -- -- -- -- --
--------- --------- --------- ------------- --------- --------- -------------
Net loss............................. (28,476) (38,375) (43,044) (132,717)(3) (9,402) (13,003) (35,092)(3)
Dividends on preferred stock......... -- -- -- (4,382)(2) -- -- (1,096)(2)
--------- --------- --------- ------------- --------- --------- -------------
Net loss to common stockholders...... $ (28,476) $ (38,375) $ (43,044) $ (137,099)(3) $ (9,402) $ (13,003) $ (36,188)(3)
--------- --------- --------- ------------- --------- --------- -------------
--------- --------- --------- ------------- --------- --------- -------------
OTHER FINANCIAL DATA:
EBITDA(4)............................ $ (20,265) $ (24,578) $ (26,562) $ (26,562) $ (6,250) $ (6,821) $ (6,821)
Capital expenditures................. 11,378 9,423 34,190 34,190 3,722 2,716 2,716
Ratio of earnings to fixed
charges(5)......................... -- -- -- -- -- -- --
OTHER OPERATING DATA:
Billable minutes (000s).............. 25,932 62,249 140,918 23,517 52,418
Average revenue per billable
minute............................. $ 1.23 $ .80 $ .51 $ .62 $ .39
Average cost per billable minute..... $ 1.04 $ .67 $ .44 $ .51 $ .35
Switches(6).......................... 10 13 14(7) 14(7) 14(7)
Points of presence(6)................ 11 13 33 17 33
Customers(6)......................... 9,218 18,172 21,515 20,224 17,090
</TABLE>
<TABLE>
<CAPTION>
MARCH 31, 1998
------------------------
ACTUAL PRO FORMA(1)
--------- -------------
<S> <C> <C>
BALANCE SHEET DATA:
Cash, cash equivalents and marketable securities...................................... $ 28,150 $ 612,507
Restricted cash, current and non-current.............................................. -- 153,347
Property and equipment, net........................................................... 56,997 56,997
Total assets.......................................................................... 121,894 887,876
Long-term debt, excluding current installments........................................ 102,360 854,907
Redeemable convertible preferred stock................................................ -- 43,820
Stockholders' deficiency.............................................................. (18,271) (48,656)(8)
</TABLE>
(FOOTNOTES ON NEXT PAGE)
21
<PAGE>
- ------------------------------
(1) The Pro Forma Financial Information is based on the historical financial
statements of the Company as of and for the year ended December 31, 1997 and
the three months ended March 31, 1998. The Pro Forma Statement of Operations
Data and Other Financial Data have been prepared as if the Tender Offer and
the Offering had occurred on January 1, 1997. The Pro Forma Balance Sheet
Data has been prepared as if the Tender Offer and the Offering occurred on
March 31, 1998.
(2) On a pro forma basis, assuming the Offering closed on January 1, 1997,
interest expense on the Notes and the Subordinated Convertible Debentures
and dividends on the Series A Preferred would have been $99.1 million and
$4.4 million for purposes of the 1997 pro forma financial information and
$24.8 million and $1.1 million for purposes of the March 31, 1998 pro forma
financial information, respectively, assuming an average exchange rate of
approximately DM 1.85 per U.S. $1.00 (a recent market exchange rate at the
time of the Offering) with respect to the 12.40% Notes, the 11.15% Notes and
the Subordinated Convertible Debentures. (See Footnotes 1 and 5 to the Pro
Forma Financial Information included elsewhere in this Prosepctus.) The
Company is utilizing a portion of the proceeds of the Offering for the
construction and operational start-up of the Circe Network. Accordingly, a
portion of the interest cost of the Notes and the Subordinated Convertible
Debentures through 1999 will be capitalized. However, the pro forma interest
expense includes all of the interest cost of the Notes and the Subordinated
Convertible Debentures, including capitalized interest.
(3) Pro forma net loss and pro forma net loss to common stockholders does not
include the extraordinary loss resulting from the extinguishment of the 1994
Notes assumed to occur on January 1, 1997, for purposes of the 1997 pro
forma financial information and January 1, 1998, for purposes of the March
31, 1998 pro forma financial information. Such extraordinary loss would have
been approximately $44.2 million for 1997 and $31.7 million for the three
months ended March 31, 1998.
(4) As used herein, "EBITDA" consists of earnings before interest, income taxes
and depreciation and amortization. EBITDA is a measure commonly used in the
telecommunications industry to analyze companies on the basis of operating
performance. EBITDA is not a measure of financial performance under
generally accepted accounting principles ("GAAP"), is not necessarily
comparable to similarly titled measures of other companies, and should not
be considered as an alternative to net income as a measure of performance
nor as an alternative to cash flow as a measure of liquidity. See "Selected
Consolidated Financial Data" for cash flow measures calculated under GAAP.
(5) The ratio of earnings to fixed charges is calculated as income before taxes,
discontinued operations and extraordinary items plus interest expense,
divided by fixed charges. Fixed charges consist of interest on indebtedness,
dividends on preferred stock and one third of rental expense. For 1995,
1996, 1997, the three months ended March 31, 1997 and the three months ended
March 31, 1998, earnings were insufficient to cover fixed charges by $28.5
million, $38.4 million, $43.0 million ($137.1 million pro forma for the
Tender Offer and the Offering), $9.4 million and $13.0 million ($36.2
million pro forma for the Tender Offer and the Offering), respectively.
(6) Information presented as of the end of the periods indicated.
(7) Consists of four Nortel DMS 100e switches, one Nortel DMS 300 switch, six
Wyatt/Reuters MRX-2000 switches and three call reorigination switches.
(8) Pro forma stockholders' deficiency at March 31, 1998 includes the
extraordinary loss of $28.3 million resulting from the extinguishment of the
1994 Notes assumed to occur on March 31, 1998 as indicated in the footnotes
to the Pro Forma Financial Information included elsewhere in this
Prospectus.
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<PAGE>
RISK FACTORS
IN ADDITION TO THE OTHER INFORMATION CONTAINED IN THIS PROSPECTUS, HOLDERS
OF EXISTING NOTES SHOULD REVIEW CAREFULLY THE FOLLOWING RISK FACTORS BEFORE
TENDERING THEIR EXISTING NOTES IN THE EXCHANGE OFFERS. STATEMENTS CONTAINED IN
THIS PROSPECTUS REGARDING THE COMPANY'S EXPECTATIONS WITH RESPECT TO FUTURE
OPERATIONS AND OTHER MATTERS, WHICH CAN BE IDENTIFIED BY USING FORWARD-LOOKING
TERMINOLOGY, SUCH AS "BELIEVES," "MAY," "WILL," "EXPECT," "ANTICIPATE,"
"ESTIMATE" OR "CONTINUE" OR THE NEGATIVE THEREOF OR VARIATIONS THEREON OR
COMPARABLE TERMINOLOGY, ARE "FORWARD-LOOKING STATEMENTS," WITHIN THE MEANING OF
SECTION 27A OF THE SECURITIES ACT. IMPORTANT FACTORS THAT MAY CAUSE ACTUAL
RESULTS OR PERFORMANCE TO DIFFER MATERIALLY FROM THE RESULTS OR PERFORMANCE
DESCRIBED IN SUCH FORWARD-LOOKING STATEMENTS ARE DESCRIBED BELOW.
CONSEQUENCES OF FAILURE TO EXCHANGE EXISTING NOTES
The Existing Notes have not been registered under the Securities Act or any
state securities laws and therefore may not be offered, sold or otherwise
transferred except in compliance with the registration requirements of the
Securities Act and any other applicable securities laws, or pursuant to an
exemption therefrom or in a transaction not subject thereto. Existing Notes that
currently bear legends restricting transfers that remain outstanding after
consummation of the Exchange Offers will continue to bear such legends. In
addition, upon consummation of the Exchange Offers, holders of Existing Notes
which remain outstanding will not be entitled to any rights to have such
Existing Notes registered under the Securities Act or to any similar rights
under the 1998 Registration Rights Agreement. Viatel currently does not intend
to register under the Securities Act any Existing Notes which remain outstanding
after consummation of the Exchange Offers (subject to limited exceptions, if
applicable).
To the extent that Existing Notes are tendered and accepted in the Exchange
Offers, the principal amount of outstanding Existing Notes will be reduced by
the principal amount so tendered and exchanged and a holder's ability to sell
untendered Existing Notes could be adversely affected. As a result, the
liquidity of the market for such non-tendered Existing Notes could be adversely
affected upon completion of the Exchange Offers.
Based on an interpretation by the staff of the Commission set forth in
no-action letters and interpretative letters issued to third parties, Viatel
believes that the Exchange Notes issued pursuant to the Exchange Offers in
exchange for Existing Notes may be offered for resale, resold and otherwise
transferred by such holder (other than a broker-dealer who purchased Existing
Notes directly from Viatel for resale pursuant to Rule 144A under the Securities
Act or any other available exemption 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 that such holder is not participating, does
not intend to participate and has no arrangement or understanding with any
person to participate, in any distribution of the Exchange Notes. However, if
any holder acquires Exchange Notes in the Exchange Offers for the purpose of
distributing or participating in a distribution of the Exchange Notes, such
holder cannot rely on the position of the staff of the Commission enunciated in
the no-action letters regarding MORGAN STANLEY & CO., INCORPORATED (available
June 5, 1991) and EXXON CAPITAL HOLDINGS CORPORATION (available May 13, 1988),
or interpreted in the Commission interpretative letter to SHEARMAN & STERLING
(available July 2, 1993), or similar no-action or interpretative letters, will
not be entitled to validly tender Existing Notes in the Exchange Offers and must
comply with the registration and prospectus delivery requirements of the
Securities Act in connection with any sale or transfer of such Existing Notes,
unless such sale or transfer is made pursuant to an exemption from, or in a
transaction not subject to, such requirements. Each broker-dealer that receives
Exchange Notes for its own account in exchange for Existing Notes, where such
Existing Notes were acquired by such broker-dealer as a result of market-making
or other trading activities, acknowledges thereby that it will deliver a copy of
this Prospectus meeting the requirements of the Securities Act in connection
with any resale of such Exchange Notes. See "Plan of Distribution." In addition,
to comply with the securities or blue sky laws of certain jurisdictions, if
applicable, the Exchange Notes may not be offered or sold unless
23
<PAGE>
they have been registered or qualified for sale in such jurisdictions or an
exemption from registration or qualification is available and complied with.
The Existing Notes provide for certain interest rate increases if the
Exchange Offers are not consummated by October 8, 1998. Upon consummation of the
Exchange Offers, holders of Existing Notes will not be entitled to an increase
in the interest rate thereon or any further registration rights under the 1998
Registration Rights Agreement. See "The Exchange Offers."
SUBSTANTIAL INDEBTEDNESS; ABILITY TO SERVICE DEBT; RESTRICTIVE COVENANTS
At March 31, 1998, the Company's total indebtedness (including capitalized
lease obligations) was approximately $102.4 million, net of current portion. On
a pro forma basis after giving effect to the Tender Offer and the Offering as if
they had occurred on January 1, 1998, the Company would have had interest
expense of $25.9 million (assuming none of the interest cost of the Notes is
capitalized), EBITDA of $(6.8) million, a net loss of $36.2 million (excluding
an extraordinary loss of $31.7 million resulting from the extinguishment of the
1994 Notes assumed to occur on January 1, 1998) and its earnings would have been
insufficient to cover its fixed charges by $(36.2) million for the three months
ended March 31, 1998. The Company expects to incur significant additional
indebtedness in the future. See "-- Substantial Capital Requirements." The level
of the Company's indebtedness could have a material adverse effect upon the
Company such as, without limitation: (i) limiting the Company's ability to
obtain additional financing in the future for working capital, capital
expenditures, acquisitions and general corporate purposes, (ii) requiring a
substantial portion of the Company's cash flow from operations (if any) to be
dedicated to the payment of the principal of and interest on its indebtedness,
thereby reducing the funds available to the Company for other purposes, (iii)
making the Company more vulnerable to economic downturns, limiting its ability
to withstand competitive pressures and reducing its flexibility in responding to
changing business and economic conditions, (iv) restricting its ability to take
advantage of business opportunities, and (v) preventing the Company from making
payments on the Notes.
The ability of the Company to meet its debt service obligations will be
dependent upon the future performance of the Company, which, in turn, will be
subject to the Company's successful implementation of its strategy, as well as
to financial, competitive, business, regulatory, technical and other factors,
including factors beyond the Company's control. If the Company is at any time
unable to generate sufficient cash flow from operations to meet its debt service
requirements, it may be required to refinance all or a portion of its
indebtedness. The Company anticipates that cash flows from operations may be
insufficient to repay the Notes and the Subordinated Convertible Debentures in
full at maturity in 2008 and 2011, respectively, and that the Notes and the
Subordinated Convertible Debentures may need to be refinanced. The Company's
ability to do so will depend on, among other things, its financial condition at
the time, the restrictions in the agreements governing its indebtedness and
other factors, including market conditions. There can be no assurance that any
such refinancing would be possible on terms that would be acceptable to the
Company or that any additional financing could be obtained. If such refinancing
were not possible or if additional financing were not available, the Company
could be forced to dispose of assets under circumstances that might not be
favorable to realizing the highest price for such assets or to default on its
obligations with respect to its indebtedness, including the Notes and the
Subordinated Convertible Debentures, which would permit the holders of the Notes
to accelerate the maturity thereof.
The Indentures contain certain restrictive covenants, which affect, and in
some cases significantly limit or prohibit, among other things, the ability of
the Company and its subsidiaries to incur indebtedness, make prepayments of
certain indebtedness, pay dividends, make investments, engage in transactions
with stockholders and affiliates, issue capital stock, create liens, sell assets
and engage in mergers and consolidations. However, the limitations set forth in
the Indentures are subject to a number of important qualifications and
exceptions. In particular, while the Indentures restrict the Company's ability
to incur additional indebtedness, they permit the Company and its subsidiaries
to, among other things, incur an
24
<PAGE>
unlimited amount of secured indebtedness to finance telecommunications assets
and build-out. See "Description of the Exchange Notes -- Covenants -- Limitation
on Indebtedness."
LIMITED OPERATING HISTORY; SUBSTANTIAL NET LOSSES AND NEGATIVE CASH FLOW FROM
OPERATIONS;
EXPECTED FUTURE NET LOSSES AND NEGATIVE CASH FLOW FROM OPERATIONS
The Company commenced operations in 1991 and has only a limited operating
history upon which potential investors may base an evaluation of its
performance. For example, of the 14 switches the Company operated as of March
31, 1998, only two were deployed as of June 30, 1995. Furthermore, the
liberalization of Western European telecommunications regulation since January
1, 1998 has dramatically changed the telecommunications market in a number of
the EU member states in which the Company operates. Potential investors,
therefore, have limited historical financial information upon which to base an
evaluation of the Company's performance. The Company's prospects must be
considered in light of the risks, expenses and difficulties frequently
encountered by companies in their early stage of development.
To date, the Company has incurred substantial net losses and negative
EBITDA. Net loss for each of 1995, 1996 and 1997 and the three months ended
March 31, 1998 was approximately $(28.5) million, $(38.4) million, $(43.0)
million and $(13.0) million, respectively. EBITDA for each of 1995, 1996 and
1997 and the three months ended March 31, 1998 was approximately $(20.3)
million, $(24.6) million, $(26.6) million and $(6.8) million, respectively. Over
the last three years, the Company has experienced significant increases in
capital expenditures and expenses associated with the development and expansion
of the Viatel Network (as defined herein). The Company expects to incur
operating and net losses, and negative EBITDA and negative cash flow from
operating activities until at least the year 2000. However, the Company's EBITDA
losses and negative cash flows are likely to continue beyond the year 2000 if
the Company extends its expansion plans, if retail prices decline faster than
anticipated, interconnection rates and wholesale prices paid by the Company do
not decline as quickly as anticipated or because of any of the other risks
described herein. Accordingly, there can be no assurance that the Company will
achieve or sustain profitability or positive cash flows from operating
activities in the future. If the Company cannot achieve profitability or
positive cash flows from operating activities, it may be unable to meet its
working capital or future debt service requirements which would have a material
adverse effect on the Company's business, financial condition, results of
operations and its ability to make payments on the Notes. See "-- Substantial
Capital Requirements," "-- Variability of Operating Results," "Selected
Consolidated Financial Data," "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and the Company's Consolidated Financial
Statements, including the notes thereto.
RISKS RELATING TO THE CIRCE NETWORK
The Company's success is dependent, in part, upon its ability to construct
the Circe Network, substantially on budget and on time, substantially increase
its traffic volumes and sell IRUs and other capacity on the Circe Network. The
Company has budgeted approximately $530.0 million to complete the Circe Network
and will have substantial existing commitments for materials and labor, which
may cost more than budgeted. However, other than the definitive agreement with
Nortel with respect to Phase 1, the Company has not yet signed definitive
agreements for the construction of Phase 1. The successful completion and/or use
of Phase 1 could be materially adversely effected by, among other things, the
Company's inability to: (i) enter into final definitive agreements with Bechtel
and ASN with respect to the engineering, construction, installation and testing
of Phase 1; (ii) obtain rights-of-way; (iii) obtain appropriate licenses from
national and local governments; and (iv) effectively manage the construction of
the new fiber routes. The Company's binding letter of intent with ASN covers
price and payment terms, ready-for-service dates and project completion
incentives but needs to be replaced with a definitive agreement. The Company's
binding letter of intent with Bechtel covers cost incentives, ready-for-service
dates and rights-of-way incentives, but also needs to be replaced with a
definitive agreement. The risk that rights-of-way cannot be obtained, and the
cost thereof, will be borne entirely by the Company. Once sufficient
25
<PAGE>
rights-of-way are obtained in a given locality, construction of the local
segment of the Circe Network will commence. In addition, the successful
construction of the Circe Network is substantially dependent on third party
contractors retained by Bechtel. Although the Circe Network will consist
primarily of new "new digs", it will involve the acquisition of existing fiber
in Belgium and may also involve the acquisition of existing fiber for certain
other segments, including the United Kingdom and access and egress to Paris, and
those segments will have substantially fewer fibers than the portions of the
Circe Network that will be newly constructed. Accordingly, the value of the
Circe Network may be less than would be the case if it was entirely a "new dig."
In addition, the Company is in the planning stages of Phase 2. It has not
yet reached any definitive agreements with respect to Phase 2 and may be
required to obtain additonal regulatory approvals for such portion of the Circe
Network. Accordingly, the risks with respect to Phase 2 are currently
substantially greater than the risks with respect to Phase 1. Any such risk
could have a material adverse effect on the Company's business, financial
condition, results of operations and its ability to make payments on the Notes.
The Company will generally not be able to terminate calls over its own
network, even after the Circe Network is built. Therefore, in order to
effectively use the Circe Network, it will need to be interconnected to the
existing networks of ITOs in five separate countries (the United Kingdom,
France, Germany, Belgium and The Netherlands). Such interconnection is expected
to entail difficult negotiations with these ITOs and may be delayed.
Difficulties or delays with respect to any of the foregoing may significantly
delay or prevent the completion and/or use of the Circe Network, which would
have a material adverse effect on the Company and its ability to make payments
on the Notes. The difficulties inherent in a large construction project such as
the Circe Network are exacerbated by the fact that the Circe Network will be
built in five separate countries, each with separate legal and regulatory
regimes and different languages, and will involve submarine cable in the North
Sea and the English Channel.
The Company must obtain rights-of-way and wayleaves in order to complete the
Circe Network. Other than with respect to the Belgium portion of the Circe
Network, the Company does not have any existing rights-of-way or wayleaves on
the routes it intends to use for the Circe Network. Moreover, the Company
generally has no right to acquire rights-of-way. While the Company believes that
rights-of-way will be available at acceptable costs and in a timely manner,
there can be no assurance in this regard.
The Circe Network is also subject to construction risks, including the risks
of cost overruns and delays. If the cost of the Circe Network signficantly
exceeds the Company's budget for the project, the Company will be required to
obtain additional financing or to abandon or curtail the Circe Network. If the
Company encounters construction delays, it will not be able to route its traffic
over owned facilities as soon as it hopes, which will have a detrimental effect
on its ability to increase traffic volumes and on its gross margins. In
addition, construction delays could negatively effect the Company's ability to
sell IRU's or capacity to other carriers and delay or prevent its qualification
as an "infrastructure provider" or "network operator" in France (which are
entitled to obtain substantial discounts on interconnection in France).
The Company is aware that certain long distance carriers and consortia are
expanding capacity in Europe and believes that other long distance carriers, as
well as potential New Entrants, are considering the construction of new fiber
optic and other long distance transmission networks. For example, the Ulysses
cable system owned by WorldCom and the Hermes Europe Railtel B.V. cable system
("Hermes") connect cities that will be linked by the Circe Network. In addition,
Fibernet Group plc has built a 35 city network, primarily in the United Kingdom,
Esprit Telecom Group plc is attempting to build out its Pan-European network,
and other companies such as Level 3 Communications and British Telecom, are
planning to construct fiber optic networks in Europe. As a result, there may be
extreme pricing pressure with respect to sales of IRUs or capacity on the Circe
Network and transmission of calls between those cities. Any price competition
could have a material adverse effect on the Company's business, financial
condition, results of operations and its ability to make payments on the Notes.
Since the cost of the actual
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fiber is a relatively small portion of building new transmission lines, persons
building such lines are likely to install fiber that provides substantially more
transmission capacity than will be needed over the short or medium-term.
Further, recent technological advances have shown the potential to greatly
expand the capacity of existing and new fiber optic cable, which will add to
available supply and thereby create additional pricing pressure. For example,
Lucent Technologies Inc. announced earlier this year that it has developed new
electronics that will substantially improve the capacity of fiber optic cable.
Demand for transmission capacity in the United States has recently been fueled
by businesses seeking data transmission capacity. European businesses are not
currently using data transmission to the same extent as U.S. businesses. If
European businesses do not substantially increase their demand for data
services, the Company's ability to utilize the Circe Network will be adversely
affected. In addition, the Company intends to sell IRUs or capacity in the Circe
Network to other carriers, which will result in competitors having capacity on
the Company's routes along the Circe Network, which in turn will result in
pricing pressures with respect to traffic carried along these routes. If
industry capacity expansion results in capacity that exceeds overall demand in
general or along any of the Company's routes, severe additional pricing pressure
could develop. Furthermore, the marginal cost of carrying calls over fiber optic
cable is extremely low. As a result, certain industry observers have predicted
that, within a few years, there may be dramatic and substantial price reductions
and that long distance calls will not be significantly more expensive than local
calls. Such pricing pressure could have a material adverse effect on the Company
and its ability to make payments on the Notes.
SUBSTANTIAL CAPITAL REQUIREMENTS
In order to further develop and expand the Viatel Network, including the
Circe Network, and to develop and expand new and existing services, the Company
will require substantial additional capital. The Company has budgeted
approximately $530.0 million for the Circe Network. However, there can be no
assurance that actual costs of the Circe Network will not substantially exceed
the Company's budget for such project. Future sources of financing may include
additional public and private debt and equity offerings, project financing,
equipment financings and the sale of IRUs or capacity in the Circe Network.
There can be no assurance that additional financing arrangements will be
available on acceptable terms. Moreover, the amount of the Company's substantial
total outstanding indebtedness as a result of the Offering may adversely affect
the Company's ability to raise additional funds.
The Company believes that the net proceeds from the Offering, project
financing, equipment financing and the sale of IRUs and capacity on the Circe
Network will provide sufficient funds for the Company to expand its business as
planned and to fund its operating losses for at least the next 18 to 24 months.
However, the amount of the Company's future capital requirements will depend on
a number of factors, including the success of the Company's business, the
start-up dates for Phase 1 and Phase 2, the rate at which the Company further
expands the Viatel Network, the types of services that the Company offers,
staffing levels, acquisitions and customer growth, as well as other factors that
are not within the Company's control, including competitive conditions,
government regulatory developments and capital costs. In the event that the
Company's plans or assumptions change or prove to be inaccurate or the net
proceeds of the Offering, project financing, equipment financings and proceeds
from the sale of IRUs or capacity on the Circe Network prove to be insufficient
to fund the Company's growth in the manner and at the rate currently
anticipated, the Company may be required to delay or abandon some or all of the
Company's development and expansion plans or the Company may be required to seek
additional sources of financing earlier than currently anticipated.
COMPETITION
The international telecommunications industry is highly competitive and is
characterized by substantial on-going price declines. For example, France
Telecom has obtained approval to reduce retail prices by 9% during each of 1997
and 1998 and 4.5% during each of 1999 and 2000. Deutsche Telekom has
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announced that it intends to reduce retail long distance prices by up to 40%.
Neither of these ITOs has reduced or is expected to reduce wholesale prices to
the same extent. These pricing policies have created substantial pressure on the
Company's gross margins. The Company's success depends upon its ability to
compete with other telecommunications providers in each of its markets. These
providers include the ITO in each country in which the Company operates, such as
British Telecom, France Telecom, Belgacom and Telecom Italia, and global
alliances among some of the world's largest telecommunications carriers, such as
Uniworld, AT&T's WorldPartners' alliance with "Unisource" (Telia of Sweden,
Swiss Telecom PTT and KPN of The Netherlands), "Concert" (British Telecom and
MCI), "Global One" (Sprint, France Telecom and Deutsche Telekom) and the
alliance among WorldCom, MCI and Telefonica de Espana. Other potential
competitors include cable communications companies, wireless telephone
companies, electric and other utilities with rights-of-way, railways, microwave
carriers and large end users which have private networks. The intensity of
competition and price declines have increased over the past several years and
the Company believes that such competition and price declines will continue to
intensify, particularly in Western Europe where liberalization of the
telecommunications markets continues. Many of the Company's current and
potential competitors have substantially greater financial, marketing and other
resources than the Company. If the Company's competitors devote significant
additional resources to the provision of international or national long distance
telecommunications services to the Company's target customer base of small and
medium-sized businesses, such action could have a material adverse effect on the
Company's business, financial condition, results of operations and its ability
to make payments on the Notes and there can be no assurance that the Company
will be able to compete successfully.
Because all of the Company's current and targeted European markets (other
than the United Kingdom) have only recently liberalized or still are in the
process of liberalizing the provision of Voice Telephony (I.E., the commercial
provision for the public of the direct transport and switching of speech in
real-time between public switched network termination points, enabling any user
to use equipment connected to such a network termination point in order to
communicate with another termination point), customers in most of these markets
are not accustomed to obtaining services from competitors to ITOs and may be
reluctant to use emerging telecommunications providers, such as the Company. In
particular, the Company's target customer base of small and medium-sized
businesses with significant international calling needs, may be reluctant to
entrust their telecommunications needs to new operators that are believed to be
unproven. In addition, in continental Europe, certain of the Company's
competitors (including the ITOs) provide potential customers with a broader
range of services than the Company can offer due to existing regulatory
restrictions.
Competition for customers in the telecommunications industry is primarily
based on price and quality of services offered. The Company prices its services
primarily by offering discounts to the prices charged by ITOs and other major
competitors. However, prices for international long distance calls have
decreased substantially over the past few years in the markets in which the
Company currently maintains operations or in which it expects to establish
operations. Some of the Company's larger competitors may be able to use their
greater financial resources to cause severe price competition in the countries
in which the Company operates or expects to operate. It appears that Western
European ITOs are responding to deregulation more rapidly and aggressively than
occurred after deregulation in the United States and the United Kingdom. The
Company expects that prices for its services will continue to decrease for the
foreseeable future and that ITOs and other dominant telecommunications providers
will continue to improve their product offerings. The improvement in product
offerings and service provisions by the ITOs, as well as the liberalization of
Voice Telephony and infrastructure which has commenced in certain EU member
states, could similarly have a material adverse effect on the competitiveness of
the Company to the extent that the Company is unable to provide similar levels
of offerings and services. If the ITO in any jurisdiction uses its competitive
advantages to their fullest extent, the Company's operations in such
jurisdiction would be adversely affected. Furthermore, the marginal cost of
carrying calls over fiber optic cable is extremely low. As a result, certain
industry observers have predicted that, within a few years, there may be
dramatic and substantial price reductions and that long distance calls will not
be significantly more
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expensive than local calls. In addition, certain carriers, including AT&T, are
implementing plans to offer telecommunications services over the Internet at
substantially reduced prices. Any price competition could have a material
adverse effect on the Company's business, financial condition, results of
operations and its ability to make payments on the Notes.
The Company believes that the ITOs generally have certain competitive
advantages that the Company and other competitors do not have due to their
control over local connectivity. The Company relies on the ITOs for access to
the public switched telephone network (the "PSTN") and the provision of leased
lines, and the failure of the ITOs to provide such access or leased lines at
reasonable pricing could have a material adverse effect on the Company's
business, financial condition, results of operations and its ability to make
payments on the Notes. The reluctance of some national regulators to accept
liberalizing policies, grant regulatory approvals that would result in increased
competition for the local ITO and enforce access to ITO networks and essential
facilities could have a material adverse effect on the Company's competitive
position and its ability to make payments on the Notes. There can be no
assurance that the Company will be able to compete effectively in any of its
markets. See "Business -- Competition."
SUBSTANTIAL GOVERNMENT REGULATION
OVERVIEW. National and local laws and regulations governing the provision
of telecommunications services differ significantly among the countries in which
the Company currently operates and intends to operate. The interpretation and
enforcement of such laws and regulations varies and could limit the Company's
ability to provide certain telecommunications services in certain markets. There
can be no assurance that future regulatory, judicial and legislative changes
will not have a material adverse effect on the Company, that domestic or
international regulators or third parties will not raise material issues with
regard to the Company's compliance or noncompliance with applicable laws and
regulations, or that other regulatory activities will not have a material
adverse effect on the Company's business, financial condition, results of
operations and its ability to make payments on the Notes. See "Business --
Government Regulation."
INTERNATIONAL TRAFFIC. Under the World Trade Organization (the "WTO") Basic
Telecom Agreement (the "WTO Agreement"), concluded on February 15, 1997, 69
countries comprising 95% of the global market for basic telecommunications
services agreed to permit competition from foreign carriers. In addition, 59 of
these countries have subscribed to specific procompetitive regulatory
principles. The WTO Agreement became effective on February 5, 1998 and is
expected to be implemented by most signatory countries in 1998, although there
may be substantial delays. The Company believes that the WTO Agreement will
increase opportunities for the Company and the Company's competitors. However,
the precise scope and timing of the implementation of the WTO Agreement remain
uncertain and there can be no assurance that the WTO Agreement will result in
beneficial regulatory liberalization.
On November 26, 1997, the Federal Communications Commission (the "FCC")
adopted a new order (the "Foreign Participation Order") to implement the U.S.
obligations under the WTO Agreement. In the Foreign Participation Order, the FCC
adopted an open entry standard for carriers from WTO member countries, generally
facilitating market entry for such applicants by eliminating certain existing
tests. These tests remain in effect, however, for carriers from non-WTO member
countries. Petitions for reconsideration of the Foreign Participation Order are
pending at the FCC.
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International carriers serving the United States, including the Company,
remain subject to the FCC's international settlement policies, including new
rules adopted by the FCC regarding international settlement rates (the
"International Settlement Rates Order") which became effective on January 1,
1998. The international accounting rate system allows a U.S. facilities-based
carrier to negotiate an "accounting rate" with a foreign carrier for handling
each minute of international telephone service. Each carrier's portion of the
accounting rate (usually one-half) is referred to as the settlement rate. The
new International Settlement Rates Order generally requires U.S.
facilities-based carriers to negotiate settlement rates with their foreign
correspondent at no greater than FCC-established "benchmark" prices.
Historically, international settlement rates have vastly exceeded the cost of
terminating telecommunications traffic. In addition, the International
Settlement Rates Order imposed new conditions upon certain carriers, including
the Company. First, the FCC conditioned facilities-based authorizations for
service on a route on which a carrier has a foreign affiliate upon the foreign
affiliate offering all other U.S. carriers a settlement rate at or below the
relevant benchmark. The Company's foreign affiliate in the United Kingdom
satisfies this condition. Second, the FCC conditioned any authorization to
provide switched services over either facilities-based or resold international
private lines upon the condition that at least half of the facilities-based
international message telephone service ("IMTS") traffic on the subject route is
settled at or below the relevant benchmark rate. This condition applies whether
or not the licensee has a foreign affiliate on the route in question. However,
if the subject route does not comply with the benchmark requirement, a carrier
instead can demonstrate that the foreign country provides resale opportunities
"equivalent" to those available in the United States. Accordingly, since the
February 9, 1998 effective date of the Foreign Participation Order, the Company
has been permitted to resell private lines for the provision of switched
services to any country that either has been found by the FCC to comply with the
benchmarks or has been determined to be equivalent. The Company, however, will
require prior FCC approval in order to provide resold private lines to any
country in which it has an affiliated carrier that has not been found by the FCC
to lack market power. Many parties have appealed the International Settlement
Rates Order to the U.S. Court of Appeals for the D.C. Circuit or have filed
petitions for reconsideration with the FCC. These proceedings are still pending.
The Company cannot predict the outcome of this appeal and its possible impact on
the Company. In addition, the FCC is expected to propose in late summer 1998 to
loosen certain requirements of its current international settlements policy, but
Viatel cannot predict the outcome of any such proposal or its possible impact on
the Company.
Increasing regulatory liberalization in many countries' telecommunications
markets now permits more flexibility in the way the Company can route calls.
Although certain FCC rules limit the way in which some international calls can
be routed, the Company does not believe that its network configuration,
specifically the way in which traffic is routed through its UK facilities, is
specifically prohibited by or undermines in any way the intent of these rules.
It is possible, however, that the FCC could find that the Company's network
configuration violates these rules. If the Company were found to be in violation
of these routing restrictions, and if the violation were sufficiently severe, it
is possible that the FCC could impose sanctions and penalties upon the Company.
CALL REORIGINATION. In addition, outside the EU the Company provides its
customers with access to its services through the use of call reorigination. A
substantial number of countries have prohibited certain forms of call
reorigination. There can be no assurance that certain of the Company's services
and transmission methods will not be or not become prohibited in certain
jurisdictions and, depending on the jurisdictions, services and transmission
methods affected, there could be a material adverse effect on the Company's
business, financial condition, results of operations and its ability to make
payments on the Notes. See "Business -- Government Regulation."
UNSETTLED NATURE OF REGULATORY ENVIRONMENT. The Company has pursued and
expects to continue to pursue a strategy of providing its services to the
maximum extent it believes permissible under applicable laws and regulations.
The Company's provision of services in Western Europe may also be affected if
any EU member state imposes greater restrictions on non-EU international service
than on such service within
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the EU. There can be no assurance that the United States or foreign
jurisdictions will not adopt laws or regulatory requirements that will adversely
affect the Company. Additionally, there can be no assurance that future United
States or foreign regulatory, judicial or legislative changes will not have a
material adverse effect on the Company or that regulators or third parties will
not raise material issues with regard to the Company's compliance with
applicable laws or regulations. If the Company is unable to provide the services
it is presently providing or intends to provide or to use its existing or
contemplated transmission methods, due to its inability to receive or retain
formal or informal approvals for such services or transmission methods, or for
any other reason related to regulatory compliance or the lack thereof, such
events could have a material adverse effect on the Company's business, financial
condition, results of operations and its ability to make payments on the Notes.
See "Business -- Government Regulation."
Since January 1, 1998, the Company, as well as its U.S. competitors, have
been required to make FCC-mandated contributions to a universal service fund to
subsidize telecommunications services for low-income persons, schools and
libraries, and rural health care providers. These contributions are based upon
the Company's gross revenues. The amount of these contributions for 1998 is
unclear, as is whether the rate for these contributions will escalate in future
years. There can be no assurance that the Company will be able fully to pass the
cost of these contributions on to its customers or that doing so will not result
in a loss of customers.
EUROPEAN IMPLEMENTATION. The national governments of EU member states are
required to pass legislation to liberalize the markets within their countries to
give effect to European Commission ("EC") directives. This applies not only to
the liberalization requirements set out in EC directives that already have been
adopted, but will also apply to requirements to be contained in those directives
which still remain to be adopted by the Council of the European Communities. In
addition, some EU member states have inconsistently and, in some instances,
unclearly implemented EC telecommunications directives, which could limit,
constrain or otherwise adversely affect the Company's ability to provide certain
services. Furthermore, national governments may not necessarily pass legislation
enacting an EC directive in the form required, if at all, or may pass such
regulations only after a significant delay. In November 1997, the EC commenced
proceedings against seven EU member states, including Belgium, for failure to
fully implement certain EU telecommunications directives. Even if a national
government enacts appropriate regulations within the time frame established by
the EU, there may be significant resistance to the implementation of such
legislation from ITOs, regulators, trade unions and other sources. For example,
in France, the telecommunications union has stated its objection to the current
move towards liberalization. The above factors and other potential obstacles to
liberalization could have a material adverse effect on the Company's operations
by preventing the Company from expanding its operations as currently intended,
as well as a material adverse effect on the Company's business, financial
condition, results of operations and its ability to make payments on the Notes.
RISKS ASSOCIATED WITH MANAGEMENT OF GROWTH AND IMPLEMENTATION OF GROWTH STRATEGY
The Company's rapid growth has placed, and is expected to continue to place,
a significant strain on the Company's administrative, operational and financial
resources and has increased demands on its systems and controls. In addition,
there can be no assurance that the Company will be able to successfully add
services or expand its geographic markets or that existing regulatory barriers
to its current or future operations will be reduced or eliminated. As the
Company increases its services and expands its geographic markets, there will be
additional demands on the Company's customer support, sales and marketing and
administrative resources and network infrastructure. There can be no assurance
that the Company's administrative, operating and financial control systems and
infrastructure will be adequate to maintain and effectively monitor future
growth or that the Company will be able to successfully attract, train and
manage additional employees. The failure to continue to upgrade the Company's
administrative, operating and financial control systems and infrastructure or
the occurrence of unexpected expansion difficulties could have a material
adverse effect on the Company's business, financial condition, results of
operations and its
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ability to make payments on the Notes. See "-- Dependence on Effective
Information Systems; Year 2000 Technology Risks."
RISKS ASSOCIATED WITH INTERNATIONAL OPERATIONS AND FOREIGN EXCHANGE RATE RISKS
There are certain risks inherent in conducting an international business,
including regulatory limitations restricting or prohibiting the provision of the
Company's services, unexpected changes in regulatory requirements, tariffs,
customs, duties and other trade barriers, difficulties in staffing and managing
foreign operations, longer payment cycles, problems in collecting accounts
receivable, political risks, fluctuations in currency exchange rates, foreign
exchange controls which restrict or prohibit repatriation of funds, technology
export and import restrictions or prohibitions, delays from customs brokers or
government agencies, seasonal reductions in business activity during the summer
months in Europe and certain other parts of the world, and potentially adverse
tax consequences resulting from operating in multiple jurisdictions with
different tax laws. For example, regulatory limitations restricting or
prohibiting the Company's operations in Latin America (which includes, for
purposes of this Prospectus, the United Mexican States, Central America and
South America, respectively), including regulations in certain countries
prohibiting the provision of services through the automatic callback access
method utilized by the Company, have contributed to the Company's decision to
discontinue or modify certain of its services in such countries. Existing or
future regulations in other countries could also have similar consequences.
Since its inception in 1991, the Company has invested heavily in developing
its ability to provide international telecommunications services within Western
Europe and other deregulating markets and in developing and expanding its market
presence, including entering into the national long distance telecommunications
markets in Germany, Italy and Spain. The Company's payment obligations with
respect to the Notes are denominated in U.S. Dollars and German Deutschmarks,
but the Company's revenues will be increasingly denominated in other currencies.
Any appreciation in the value of the U.S. Dollar or the German Deutschmark
relative to such other currencies could have material adverse effect on the
Company and its ability to make payments on the Notes. The Company does not
currently use financial hedging instruments, although in the future the Company
may elect to manage the exchange rate exposure presented by the 12.40% Notes and
the 11.15% Notes by entering into certain hedging transactions. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources -- Foreign Currency." There can be
no assurance, however, that exchange rate fluctuations will not have a material
adverse effect on the Company's ability to make payments on the Notes. In
addition, there can be no assurance that laws or administrative practices
relating to taxation, foreign exchange or other matters in countries within
which the Company operates will not change. Any such change could have a
material adverse effect on the Company's business, financial condition, results
of operations and its ability to make payment on the Notes. See "-- Substantial
Government Regulation," "-- Competition," "Management's Discussion and Analysis
of Financial Condition and Results of Operations -- Liquidity and Capital
Resources -- Foreign Currency," and "Business -- Government Regulation."
The Notes are due and payable in 2008. The third stage of the European
Economic and Monetary Union ("Stage III") is presently anticipated to commence
on January 1, 1999 for the eleven EU member states, including Germany, which the
Council of the EU determined on May 2, 1998 had satisfied the convergence
criteria established in the Treaty of Maastricht. Stage III is the locking of
exchange rates among such eleven member states and the introduction of a single
currency (the "Euro"), which will replace the national currencies of such member
states. Holders of the 12.40% Notes and the 11.15% Notes should recognize that
if the Euro is adopted in Germany, at some time after January 1, 1999 it will
replace the German Deutschmark as the legal tender in Germany, which would
result in the effective redenomination of the 12.40% Notes and the 11.15% Notes
into Euros. There can be no assurance that the Euro will be adopted or, if
adopted, will maintain its value relative to other currencies. If the value of
the Euro were to decline relative to other currencies, the value of the 12.40%
Notes and the 11.15% Notes (as re-
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denominated in Euros) would necessarily decline relative to such currencies. See
"Description of the Exchange Notes -- Substitution of Currency."
RISKS ASSOCIATED WITH ACQUISITIONS, INVESTMENTS AND STRATEGIC ALLIANCES
The Company may seek to acquire customer bases and businesses from, make
investments in, or enter into strategic alliances with, other companies. Any
future acquisitions, investments, strategic alliances or related efforts will be
accompanied by the risks commonly encountered in such transactions. Such risks
include, among others, the difficulty of identifying appropriate acquisition
candidates, the difficulty of assimilating the operations and personnel of the
acquired entities, the potential disruption of the Company's ongoing business,
the inability of management to capitalize on the opportunities presented by
acquisitions, investments or strategic alliances, the failure to successfully
incorporate licensed or acquired technology and rights into the Company's
services, the failure to maintain uniform standards, controls, procedures and
policies, and the impairment of relationships with employees as a result of
changes in management and ownership. Additionally, in connection with an
acquisition, the Company may experience rates of customer attrition that are
significantly higher than the rate of customer attrition which it generally
experiences. Further, to the extent that any such transaction involves customer
bases or businesses located outside the United States, the transaction would
involve the risks associated with international operations. There can be no
assurance that the Company would be successful in overcoming these risks or any
other problems encountered with such acquisitions, investments or strategic
alliances. See "-- Risks Relating to the Circe Network," "-- Risks Associated
with International Operations and Foreign Exchange Rate Risks," "-- Risks
Associated with the Operation of the Viatel Network," and "Business -- Business
Strategy -- Pursue Acquisitions, Investments and Strategic Alliances."
RAPIDLY CHANGING INDUSTRY, TECHNOLOGY AND CUSTOMER REQUIREMENTS; SIGNIFICANT
PRICE DECLINES
The telecommunications industry is changing rapidly due to, among other
factors, liberalization, privatization of ITOs, technological improvements,
expansion of telecommunications infrastructure and the globalization of the
world's economies and free trade. Such changes may happen at any time and can
significantly affect the Company's operations from period to period. There can
be no assurance that one or more of these factors will not have unforeseen
effects which could have a material adverse effect on the Company. There can
also be no assurance, even if these factors turn out as anticipated, that the
Company will be able to implement its strategy or that its strategy will be
accepted in this rapidly evolving market.
The telecommunications industry is characterized by rapid and significant
technological advancements, introductions of new products and services utilizing
new technologies, increased availability of transmission capacity and increased
utilization of the Internet for voice and data transmission. As new technologies
develop, the Company may be placed at a competitive disadvantage and competitive
pressures may force the Company to implement such new technologies at
substantial cost. In addition, competitors may implement new technologies before
the Company is able to implement such technologies, allowing such competitors to
provide enhanced services and superior quality compared to those provided by the
Company. There can be no assurance that the Company will be able to respond to
such competitive pressures and implement such technologies on a timely basis or
at an acceptable cost. One or more of the technologies currently utilized by the
Company, or which it may implement in the future, may not be preferred by its
customers or may become obsolete. If the Company is unable to respond to
competitive pressures, implement new technologies on a timely basis, penetrate
new markets in a timely manner in response to changing market conditions or
customer requirements, or if new or enhanced services offered by the Company do
not achieve a significant degree of market acceptance, any such event could have
a material adverse effect on the Company's business, financial condition,
results of operations and its ability to make payments on the Notes.
Prices for international long distance calls historically have been kept
artificially high in part by above-cost international settlement rates and have
allowed carriers to enjoy artificially high gross margins on
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international calls. However, many observers believe that, given the negligible
marginal cost to a facilities-based carrier of carrying an international call
and given the emergence of competition in many countries, the international
settlement rate system is in the process of collapsing and that the price of
international calls will not be sufficiently more expensive than domestic long
distance calls. In addition, an EU Directive which became effective on January
1, 1998 (the "Interconnection Directive"), requires EU operators with
significant market power to charge cost-based and non-discriminatory prices for
transmission of cross-border traffic. This will have an effect on settlement
rates with countries and territories outside the EU and may also contribute to
the collapse of the international settlement rate system. For the foregoing
reasons, substantial price reductions have begun to be reflected in
international rates, particularly the rates charged for calls between countries
where competition exists. For example, Sprint has reduced its rates on certain
calls between the United States and the United Kingdom to $.10 per minute. This
represents a steep decline from rates charged for such calls as recently as
several years ago and the Company expects rates on international calls,
particularly between the United States and Western Europe, to continue to
decline significantly. Furthermore, the FCC has adopted the International
Settlement Rate Order, which is designed to bring downward pressure on
international telephone rates by requiring U.S. carriers to pay lower settlement
rates to their correspondent foreign carriers.
Industry observers predict that telephone charges will be less affected by
the distance a call is carried, particularly with the possible increased use of
voice services over the Internet. As a consequence, the Company would experience
a substantial reduction in its gross margin on international calls which, absent
a substantial increase in billable minutes of traffic carried or charges for
additional services, would have a material adverse effect on the Company's
business, financial condition, results of operations and its ability to make
payments on the Notes. In addition, France Telecom and Deutsche Telekom have
taken steps to substantially reduce retail prices, in excess of reductions in
wholesale prices, in an effort to protect their market share and deter
competitors, such as the Company. See "-- Competition" and "Management's
Discussion and Analysis of Financial Condition and Results of Operations."
RISKS ASSOCIATED WITH THE OPERATION OF THE VIATEL NETWORK
The Company's success is dependent on the seamless technical operation of
the Viatel Network and on the management of traffic volumes and route selection
over the network. Furthermore, as the Company expands the Viatel Network to
increase both its capacity and reach, and as traffic volume continues to
increase, the Company will face increasing demands and challenges in running and
managing the network, including its circuit capacity and traffic management
systems. The Viatel Network is subject to several risks which are outside of the
Company's control, such as the risk of damage to software and hardware resulting
from fire, power loss, natural disasters and general transmission failures
caused by a number of additional factors. Any failure of the Viatel Network or
other systems or hardware that causes significant interruptions to the Company's
operations could have and a material adverse effect on the Company's business,
financial condition and results of operations and its ability to make payments
on the Notes. The Company's operations are also dependent on its ability to
successfully integrate new and emerging technologies and equipment into the
Viatel Network, which could increase the risk of system failure and result in
further strains upon the Viatel Network. The Company attempts to minimize
customer inconvenience in the event of a system disruption by routing traffic to
other circuits and switches which may be owned by other carriers. However,
prolonged or significant system failures, or difficulties for customers in
accessing and maintaining connection with the Viatel Network, could seriously
damage the reputation of the Company and result in customer attrition and
financial losses. Additionally, any damage to the Company's switching centers in
Omaha, Nebraska could have a material adverse effect on the Company's ability to
monitor and manage the network operations and generate accurate call detail
reports.
The expansion and development of the Viatel Network will entail the
significant expenditure of resources in projecting growth in traffic volume and
routing preferences and determining the most cost-effective means of growing the
Viatel Network, for example, through variable or fixed lease arrangements, the
purchase of IRUs or MIUs on digital fiber optic cables or digital microwave
equipment, or the
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construction of transmission infrastructure. Failure to project traffic volume
and route preferences correctly or to determine the optimal means of expanding
the Viatel Network would result in less than optimal utilization of the Viatel
Network and could have a material adverse effect on the Company's business,
financial condition, results of operations and its ability to make payments on
the Notes. See "Business -- The Viatel Network."
DEPENDENCE ON EFFECTIVE INFORMATION SYSTEMS; YEAR 2000 TECHNOLOGY RISKS
To efficiently produce customer bills in a timely manner, the Company must
record and process millions of call detail records quickly and accurately. While
the Company believes that its billing and information systems are currently
sufficient for its operations, such systems will require enhancements and
ongoing investments, particularly as volume increases. There can be no assurance
that the Company will not encounter difficulties in enhancing its systems or
integrating new technology into its systems. The failure of the Company to
implement any required system enhancement, to acquire new systems or to
integrate new technology in a timely and cost effective manner could have a
material adverse effect on the Company's business, financial condition, results
of operations and its ability to make payments on the Notes. See "Business --
Information Systems."
While the Company believes that its software and hardware systems are Year
2000 compliant, there can be no assurance until the Year 2000 occurs that all
systems will then function adequately. The Company does not know whether the
computer systems of ITOs and other carriers on whose services the Company
depends for transmission capacity are Year 2000 compliant. If the computer
systems of the ITOs and such other carriers are not Year 2000 compliant, it
could have a material adverse effect on the Company's business, financial
condition, results of operations and its ability to make payments on the Notes.
RELIANCE ON THIRD PARTIES FOR LEASED CAPACITY AND INTERCONNECTION ARRANGEMENTS
Other than IRUs and MIUs in certain digital fiber optic cables, the Company
does not currently own any telecommunications transmission lines. As a result,
the Company depends upon other facilities-based carriers, virtually all of which
are competitors of the Company. The Company currently leases transmission lines
from, among others, British Telecom, Cable & Wireless, and the respective ITO in
each country in which the Company operates. In addition, the Company's ability
to connect customers to the Viatel Network is dependent upon the Company's
ability to secure interconnection agreements, providing access and egress into
and from the PSTN, with the respective ITO in each market in which the Company
operates. The Company currently has interconnection agreements with Cable &
Wireless, British Telecom, in the United Kingdom, KPN in The Netherlands,
Infostrada in Italy and Deutsche Telekom and ECN Telecommunications in Germany,
and expects to secure additional interconnection agreements in certain other EU
member states in which the Company operates as liberalization continues. The
Company is currently negotiating interconnection agreements with France Telecom,
Belgacom and Telecom Italia. The Company expects to encounter strong resistance
to its efforts to obtain economical interconnection agreements. Even if the
Company obtains such agreements, the actual interconnection of the Viatel
Network with the ITOs is expected to involve disputes and delays. There can be
no assurance that the Company will be successful in securing such
interconnection agreements and actual interconnection in a satisfactory or
timely manner.
The Company currently leases capacity for point-to-point circuits with fixed
monthly payments and buys minutes of use pursuant to agreements with maximum
twelve-month terms and is vulnerable to changes in its lease arrangements,
capacity limitations and service cancellations. These lease arrangements present
the Company with high fixed costs, while revenues generated by the utilization
of these leases will vary based on traffic volume and pricing. Accordingly, if
the Company is unable to generate sufficient traffic volume over particular
routes or is unable to charge appropriate rates, the Company could fail to
generate revenue sufficient to meet the fixed costs associated with the lease
and may incur negative gross
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margins with respect to such routes. Although the Company believes that its
arrangements and relationships with other carriers generally are satisfactory,
the deterioration or termination of the Company's arrangements and relationships
with one or more carriers could have a material adverse effect on the Company's
cost structure, service quality, network coverage, financial condition, results
of operations and its ability to make payments on the Notes. See "Business --
The Viatel Network" and "-- Carrier Contracts."
DEPENDENCE ON CARRIER CUSTOMERS
Revenues derived from carrier customers accounted for 27.9% of the Company's
revenues during 1997 and 44.8% during the first quarter of 1998. Such revenues
are produced by a limited number of carrier customers. Accordingly, the loss of
revenue from one or more carrier customers could have a material adverse effect
upon the Company's business, financial condition, results of operations and its
ability to make payment of the Notes.
Carrier customers are extremely price sensitive, generate very low margin
business and often choose to move their business based solely on small price
changes. In addition, smaller carrier customers generally are perceived in the
telecommunications industry as presenting a higher risk of payment delinquency
or non-payment than other customers. While the Company believes that its credit
criteria enables it to reduce its exposure to the higher payment risks generally
associated with carrier customers, no assurance can be given that such criteria
will afford adequate protection against such risks.
DEPENDENCE ON KEY PERSONNEL
The success of the Company's business will depend, to a significant extent,
upon the abilities and continued efforts of its senior management, and
particularly upon the abilities and efforts of Michael J. Mahoney, the Company's
Chief Executive Officer and President. The Company does not currently have
employment agreements with any executive officer other than Michael J. Mahoney,
Allan L. Shaw, the Company's Senior Vice President and Chief Financial Officer
and Sheldon M. Goldman, the Company's Senior Vice President, Business Affairs
and General Counsel. Except for a $3.0 million "key-man" life insurance policy
which the Company has obtained on the life of Mr. Mahoney, the Company does not
maintain and does not contemplate obtaining such life insurance policies on any
of its employees. The Company's success also will depend on its ability to
attract, retain and motivate qualified management, marketing, technical and
sales executives and other personnel who are in high demand and are often
subject to competing employment opportunities. In addition, the labor market for
software engineers and central office technicians has been extremely competitive
recently and the Company may lose key employees or be forced to increase their
compensation. The loss of the services of key personnel, or the inability to
attract additional qualified personnel, could have a material adverse effect on
the Company's business, financial condition, results of operations and its
ability to make payments on the Notes. There can be no assurance that the
Company will be successful in attracting, retaining and motivating such
personnel. Although members of management participate in the Stock Incentive
Plan (as defined herein), their options do not currently provide the right to
acquire a significant portion of the equity of Viatel. See "Management --
Directors and Executive Officers," "--Stock Option Grants," "-- Employment
Agreements," "-- Stock Incentive Plan" and "Principal Stockholders."
CONTROL BY PRINCIPAL STOCKHOLDERS
COMSAT International, Inc. ("COMSAT"), S-C V-Tel Investments, L.P. ("S-C
V-Tel") and Martin Varsavsky control, in the aggregate, approximately 40.2% of
the outstanding shares of Common Stock and Mr. Varsavsky individually
beneficially owns approximately 23.6% of the outstanding shares of Common Stock.
To the extent that these stockholders exercise their voting rights in concert,
they effectively will have the ability to control the election of all members of
the Company's Board of Directors, the outcome of most matters submitted to a
vote of the holders of Common Stock and generally will be able to direct the
affairs of the Company. The exercise of these powers may present conflicts of
interest between the
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individuals and the holders of the Notes. See "Management -- Compensation
Committee Interlocks and Insider Participation -- Shareholders Agreements," "--
Compensation Committee Interlocks and Insider Participation -- Voting Agreement"
and "Principal Stockholders."
ORIGINAL ISSUE DISCOUNT CONSEQUENCES
The Existing 12.50% Notes and the Existing 12.40% Notes were issued with
original issue discount ("OID") for U.S. federal income tax purposes. The 12.50%
Exchange Notes and the 12.40% Exchange Notes should be treated as a continuation
of the Existing 12.50% Notes and the Existing 12.40% Notes, respectively.
Consequently, a holder of 12.50% Notes and 12.40% Notes will be required to
include in such holder's income, for United States federal income tax purposes,
OID with respect to such Notes as it accrues although no cash payments of
interest thereon are scheduled to be made until October 15, 2003. See "Certain
Income Tax Considerations -- Certain United States Federal Income Tax
Considerations -- The Notes -- Original Issue Discount."
If a bankruptcy case is commenced by or against the Company under the United
States Bankruptcy Code, the claim of a holder of Discount Notes may be limited
to an amount equal to the sum of the issue price as determined by the bankruptcy
court and that portion of the OID which is deemed to accrue from the issue date
to the date of any such bankruptcy filing.
In addition, it is likely that the 12.50% Exchange Notes and the 12.40%
Exchange Notes will constitute "applicable high yield discount obligations"
("AHYDOs") for United States federal income tax purposes. If the 12.50% Exchange
Notes and the 12.40% Exchange Notes do constitute AHYDOs, the Company will not
be permitted to deduct OID in respect of the 12.50% Exchange Notes and the
12.40% Exchange Notes until amounts corresponding to such discount are paid in
cash, and some portion of such discount may not be deductible at any time. See
"Certain Income Tax Considerations -- Certain United States Federal Income Tax
Considerations -- The Notes -- Applicable High Yield Discount Obligations."
POSSIBLE LIMITATIONS ON NET OPERATING LOSS CARRYFORWARDS
As of March 31, 1998, the Company had unused United States federal and
foreign income tax net operating loss ("NOL") carryforwards of approximately
$101.8 million. Such NOL carryforwards begin to expire in the year 2007.
As a result of an "ownership change," as defined in Section 382 of the
Internal Revenue Code of 1986, as amended (the "Code"), in October 1996, certain
of the Company's NOL carryforwards from periods before such time are subject to
annual limitations. Section 382 of the Code imposes limitations with respect to
the carryforward of NOLs by a corporation that experiences a more-than-50
percent ownership change over a three-year period (or over a shorter period if
there has been a prior ownership change within the immediately preceding
three-year period). In general, if such an ownership change occurs, Section 382
of the Code limits the amount of the NOLs carried over from pre-ownership change
years that can be used in any post-ownership change year to an amount equal to
the product obtained by multiplying (1) the value of the corporation's capital
stock (with certain adjustments) at the time of the ownership change and (2) an
interest rate determined by the Internal Revenue Service for the month of the
ownership change.
It is possible that the Offering, when combined with subsequent direct or
indirect changes in the ownership of the Company's capital stock within the
relevant testing period, could result in a more-than-50 percent ownership change
and substantially restrict the Company's subsequent use of its then unutilized
NOL carryforwards.
The Company will be required to pay U.S. federal income tax in any year in
which its taxable income exceeds the amount of each of the NOL carryforwards
limited by Section 382 of the Code, plus the aggregate NOL carryforwards from
years after an ownership change. To the extent that the Company does not use the
full amount of its limited NOL carryforward in any year, such unused portion can
be used to
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increase the NOL carryforward limitation for subsequent years prior to the
expiration of the NOL carryforwards subject to the limitation.
VARIABILITY OF OPERATING RESULTS
The Company's quarterly operating results have fluctuated in the past,
primarily as a result of the evolution of the Company's business, and may
fluctuate significantly in the future as a result of a variety of factors,
including: (i) pricing changes; (ii) changes in the mix of services sold or
channels through which those services are sold; (iii) changes in user demand,
customer terminations of service, capital expenditures and other costs relating
to the expansion of the Viatel Network; (iv) the start-up of Phase 1 and Phase 2
of the Circe Network; (v) the timing and costs of any acquisitions of customer
bases and businesses, services or technologies; (vi) the timing and costs of
marketing and advertising efforts; (vii) the effects of government regulation
and regulatory changes; and (viii) specific economic conditions in the
telecommunications industry. Such variability could have a material adverse
effect on the Company's business, financial condition, results of operations and
its ability to make payments on the Notes. Any significant shortfall in demand
for the Company's services in relation to the Company's expectations, or the
occurrence of any other factor which causes revenue to fall significantly short
of the Company's expectations, would also have a material adverse effect on the
Company's business, financial condition and results of operations and its
ability to make payments on the Notes. In addition, the uncertainty of revenue
growth coupled with substantial planned increases in operating expenses and the
continued evolution in the Company's transmission methodology from switchless
resale to use of the Viatel Network may result in substantial quarterly
fluctuations in the Company's operating results. See "-- Limited Operating
History; Substantial Net Losses and Negative Cash Flow from Operations; Expected
Future Net Losses and Negative Cash Flow from Operations," "Selected
Consolidated Financial and Other Data" and "Management's Discussion and Analysis
of Financial Condition and Results of Operations."
ABSENCE OF A PUBLIC MARKET FOR THE EXCHANGE NOTES
The Existing Notes have been approved for trading in the PORTAL market.
However, the Exchange Notes will be new securities for which there is currently
no public market. There is no established trading market for the Exchange Notes.
Viatel does not currently intend to apply for listing of the Exchange Notes on
any national securities exchange or for quotation through any automated
quotation system. Accordingly, there can be no assurance as to the development
of any market for or the liquidity of any market that may develop for the
Exchange Notes, the ability of the holders of the Exchange Notes to sell their
Exchange Notes or the price at which such holders would be able to sell their
Exchange Notes. If such a trading market were to develop, the Exchange Notes
could trade at prices that may be higher or lower than the initial market values
depending on many factors, including prevailing interest rates, Viatel's results
of operations, the market for similar securities and general macroeconomic and
market conditions.
Historically, the market for noninvestment grade debt securities have been
subject to disruptions that have caused substantial volatility in the prices of
securities similar to the Notes. There can be no assurance that the markets for
the Exchange Notes will not be subject to similar disruptions. Any such
disruptions may have an adverse effect on the holders of the Notes.
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THE EXCHANGE OFFERS
The Existing Notes were issued and sold by Viatel to the Initial Purchasers
on April 8, 1998 pursuant to the Purchase Agreement. The Initial Purchaser
subsequently resold the Existing Notes to persons in offshore transactions in
reliance on Regulation S and to qualified institutional buyers (or "QIBs") in
reliance on Rule 144A. Viatel and the Initial Purchasers also entered into the
1998 Registration Rights Agreement, pursuant to which Viatel agreed, with
respect to the Existing Notes and subject to the determination that the Exchange
Offers are permitted under applicable law, to use its best efforts to consummate
the Exchange Offers on or prior to October 8, 1998. A copy of the 1998
Registration Rights Agreement has been filed as an exhibit to the Registration
Statement of which this Prospectus is a part and the description of the terms of
the 1998 Registration Rights Agreement is qualified in its entirety by reference
thereto.
In the event that applicable interpretations of the staff of the Commission
do not permit Viatel to effect the Exchange Offers, or under certain other
circumstances, Viatel shall, at its cost, use its best efforts to cause to
become effective a shelf registration statement (the "Shelf Registration
Statement") with respect to resales of the Existing Notes by holders who satisfy
certain conditions relating to the provision of information, and to keep such
registration statement effective until the expiration of the time period
referred to in Rule 144(k) under the Securities Act after April 8, 1998, or such
shorter period that will terminate when all Existing Notes covered by such
registration statement have been sold thereunder. The Exchange Offers are
intended to satisfy Viatel's exchange offer obligations under the 1998
Registration Rights Agreement.
In the event that the Exchange Offers are not consummated, or a Shelf
Registration Statement is not declared effective on or prior to October 8, 1998
(or the Registration Statement ceases to be effective or usable) then, from and
after October 9, 1998, interest (in addition to the accrual of original issue
discount on the Existing 12.50% Notes and the Existing 12.40% Notes and interest
otherwise due on the Existing 11.25% Notes and the Existing 11.15% Notes will
accure, (i) with respect to the Existing 12.50% Notes and the Existing 12.40%
Notes, at the rate of 0.5% per annum of the Accreted Value on the preceding
semi-annual interest payment date and (ii) with respect to the Existing 11.25%
Notes and the Existing 11.15% Notes, at the rate of 0.5% per annum of the
principal amount, and, in each case, be payable in cash semi-annually on April
15 and October 15 of each year, commencing April 15, 1999, until the Exchange
Offers are consummated or the Shelf Registration Statement is declared
effective. Upon consummation of the Exchange Offers, holders of Existing Notes
will not be entitled to any increase in the interest rate thereon or any further
registration rights under the 1998 Registration Rights Agreement.
The Existing Notes were issued by the Company as part of the Units. Upon the
effectiveness of the Registration Statement, the Series A Preferred and the
Subordinated Convertible Debentures, as the case may be, issued as part of such
Units will become separately tradeable from the Existing Notes and the Series A
Preferred and the Subordinated Convertible Debentures are not part of the
Exchange Offers.
TERMS OF THE EXCHANGE OFFERS
GENERAL
Viatel hereby offers, upon the terms and subject to the conditions set forth
herein, and in the accompanying Letters of Transmittal, to exchange $1,000 in
principal amount at maturity of 12.50% Exchange Notes and $1,000 principal
amount of 11.25% Exchange Notes for each $1,000 in principal amount at maturity
of Existing 12.50% Notes and $1,000 principal amount of Existing 11.25% Notes,
respectively. Viatel also hereby offers, upon the terms and subject to the
conditions set forth herein and in the accompanying Letters of Transmittal, to
exchange DM 100,000 in principal amount at maturity and any integral multiples
of DM 1,000 above such number of 12.40% Exchange Notes and 11.15% Exchange Notes
for a like principal amount of Existing 12.40% Notes and Existing 11.15% Notes.
The Exchange Offers will commence on , 1998. Viatel will accept for
exchange any and all Existing Notes that
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are validly tendered on or prior to 5:00 p.m., New York City time, on the
Expiration Date. The Exchange Offers are not conditioned upon any minimum
principal amount of Existing Notes being tendered for exchange (except as
provided herein for 12.40% Exchange Notes and 11.15% Exchange Notes). However,
the Exchange Offers are subject to the terms and provisions of the 1998
Registration Rights Agreement. See "-- Conditions of the Exchange Offers."
Any holder of Existing Notes that is an "affiliate" of Viatel within the
meaning of Rule 405 under the Securities Act may not participate in the Exchange
Offers. Viatel believes that as of the date of this Prospectus, no such holder
is an "affiliate" as defined in Rule 405.
Existing Notes may be tendered only in multiples of $1,000 (except as
provided herein for the Existing 12.40% Notes and the Existing 11.15% Notes).
Subject to the foregoing, holders may tender less than the aggregate principal
amount represented by the Existing Notes held by them, provided that they
appropriately indicate this fact on the applicable Letter of Transmittal
accompanying the tendered Existing Notes (or so indicate pursuant to the
procedures for book-entry transfer).
As of the date of this Prospectus, $500.0 million principal amount at
maturity ($272,055,000 original issue price) of Existing 12.50% Notes, $400.0
million principal amount of Existing 11.25% Notes, DM 226.0 million principal
amount at maturity (DM 123,549,680 original issue price) of Existing 12.40%
Notes and DM 178.0 million principal amount of Existing 11.15% Notes are
outstanding. Solely for reasons of administration (and for no other purpose),
Viatel has fixed the close of business on , 1998 as the record date (the
"Exchange Record Date") for purposes of determining the persons to whom this
Prospectus and the applicable Letters of Transmittal will be mailed initially.
Only a holder of the Existing Notes or such holder's legal representative or
attorney-in-fact may participate in the Exchange Offers. There will be no fixed
record date for determining holders of the Existing Notes entitled to
participate in the Exchange Offers. Holders of Existing Notes do not have any
appraisal or dissenter's rights under the General Corporation Law of Delaware or
the Indentures in connection with the Exchange Offers.
Viatel shall be deemed to have accepted validly tendered Existing Notes
when, as and if Viatel has given oral notice (confirmed in writing) of such
acceptance to the Exchange Agents. The Exchange Agents will act as agents for
Viatel.
If any tendered Existing Notes are not accepted for exchange because of an
invalid tender, the occurrence of certain other events set forth herein or
otherwise, any such unaccepted Existing Notes will be returned, without expense,
to the tendering holder thereof as promptly as practicable after the Expiration
Date.
The Exchange Notes issued pursuant to the Exchange Offers will be delivered
as promptly as practicable following the Expiration Date.
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The Expiration Date shall be , 1998, at 5:00 p.m., New York City
time, unless extended, in which case the Expiration Date shall be the latest
date and time to which the Exchange Offers are extended.
In order to extend the Exchange Offers, Viatel will notify the Exchange
Agents of any extension by oral or written notice and will make a public
announcement thereof, each prior to 9:00 a.m., New York City time, on the next
business day after the previously scheduled Expiration Date.
Viatel reserves the right, in its sole discretion (but subject to the 1998
Registration Rights Agreement) (i) to delay accepting any Existing Notes, (ii)
to extend the Exchange Offers and (iii) to amend the terms of the Exchange
Offers in any manner. If the Exchange Offers are amended in a manner determined
by Viatel to constitute a material change, Viatel will promptly disclose such
amendments by means of a prospectus supplement that will be distributed to the
registered holders of the Existing Notes and Viatel will extend the Exchange
Offers for a period of five to ten business days, depending upon the
significance of the amendment and the manner of disclosure to the registered
holders, if the Exchange Offers would otherwise expire during such five to ten
business day period.
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PROCEDURES FOR TENDERING THE NON-DBC NOTES
The tender of a holder's Existing Notes as set forth below and the
acceptance thereof by Viatel will constitute a binding agreement between the
tendering holder and Viatel upon the terms and subject to the conditions set
forth in this Prospectus and in the accompanying Letters of Transmittal. Except
as set forth below, a holder who wishes to tender non-DBC Notes for exchange
pursuant to the Exchange Offers must transmit such non-DBC Notes to the U.S.
Exchange Agent prior to 5:00 p.m., New York City time, on the Expiration Date,
together with either (i) the applicable, properly completed and duly executed
Letter of Transmittal, including all other documents required by such Letter of
Transmittal, for receipt by the U.S. Exchange Agent at the address set forth in
this Prospectus or (ii) a computer generated message (an "Agent's Message"),
transmitted by means of DTC ATOP system and received by the U.S. Exchange Agent,
in which such holder acknowledges and agrees to be bound by the terms of the
applicable Letter of Transmittal.
THE METHOD OF DELIVERY OF NON-DBC NOTES, LETTERS OF TRANSMITTAL AND ALL
OTHER REQUIRED DOCUMENTS IS AT THE ELECTION AND RISK OF THE HOLDER. IF SUCH
DELIVERY IS BY MAIL, IT IS RECOMMENDED THAT REGISTERED MAIL, PROPERLY INSURED,
WITH RETURN RECEIPT REQUESTED, BE USED. INSTEAD OF DELIVERY BY MAIL, IT IS
RECOMMENDED THAT THE HOLDER USE AN OVER-NIGHT OR HAND DELIVERY SERVICE. IN ALL
SUCH CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE TIMELY DELIVERY. NO
NON-DBC NOTES OR LETTERS OF TRANSMITTAL SHOULD BE SENT TO VIATEL.
Any financial institution that is a participant in the Book-Entry Transfer
Facility System of DTC may make book-entry delivery of the non-DBC Notes by
causing DTC to transfer such non-DBC Notes into the U.S. Exchange Agent's
account in accordance with DTC's procedures for such transfer. In connection
with a book-entry transfer, a Letter of Transmittal need not be transmitted to
the U.S. Exchange Agent, provided that the book-entry transfer procedure
transferring such non-DBC Notes must be complied with prior to 5:00 p.m., New
York City time, on the Expiration Date.
Any non-DBC Notes presented to the U.S. Exchange Agent for exchange pursuant
to the Exchange Offers shall be exchanged for Exchange Notes of equal principal
amount upon surrender to the U.S. Exchange Agent of the non-DBC Notes to be
exchanged; PROVIDED that the non-DBC Notes so surrendered for exchange are
accompanied by the applicable Letter of Transmittal duly executed by the holder
and are duly endorsed or accompanied by a written instrument of transfer in form
satisfactory to Viatel, the Trustee and the U.S. Exchange Agent and duly
executed by the holder thereof or such holder's attorney who shall be duly
authorized in writing to execute such document on the behalf of such holder.
Whenever any non-DBC Notes are so surrendered for exchange, Viatel shall
execute, and the Trustee shall authenticate and deliver to the surrendering
holder thereof, Exchange Notes in the same aggregate principal amount as the
non-DBC Notes so surrendered as promptly as practicable following the Expiration
Date.
Each signature on a Letter of Transmittal or a notice of withdrawal, as the
case may be, must be guaranteed by an Eligible Institution (as defined below)
unless the non-DBC Notes surrendered for exchange pursuant hereto are tendered
(i) by a registered holder (as defined below) of the non-DBC Notes who has not
completed either the box entitled "Special Issuance Instructions" or the box
entitled "Special Delivery Instructions" in the applicable Letter of
Transmittal, or (ii) for the account of an Eligible Institution. In the event
that a signature on a Letter of Transmittal or a notice of withdrawal, as the
case may be, is required to be guaranteed, such guarantee must be by a firm that
is a member of a registered national securities exchange or the National
Association of Securities Dealers, Inc., a commercial bank or trust company
having an office or correspondent in the United States or otherwise be an
"eligible guarantor institution" within the meaning of Rule 17Ad-15 under the
Exchange Act (collectively, "Eligible Institutions"). If the applicable Letter
of Transmittal is signed by a person other than the registered holder
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of the non-DBC Notes, the non-DBC Notes surrendered for exchange must either (i)
be endorsed by the registered holder, with the signature thereon guaranteed by
an Eligible Institution or (ii) be accompanied by a bond power, in satisfactory
form as determined by Viatel in its sole discretion, duly executed by the
registered holder, with the signature thereon guaranteed by an Eligible
Institution. The term "registered holder" as used herein with respect to the
non-DBC notes means any person in whose name the non-DBC Notes are registered on
the books of the registrar under the applicable Indenture.
All questions as to the validity, form, eligibility (including time of
receipt), acceptance and withdrawal of the non-DBC Notes tendered for exchange
will be determined by Viatel in its sole discretion, which determination shall
be final and binding. Viatel reserves the absolute right to reject any and all
non-DBC Notes not properly tendered and to reject any non-DBC Notes Viatel's
acceptance of which might, in the judgment of Viatel or its counsel, be
unlawful. Viatel also reserves the absolute right to waive any defects or
irregularities or conditions of the Exchange Offers as to particular non-DBC
Notes either before or after the Expiration Date (including the right to waive
the ineligibility of any holder who seeks to tender non-DBC Notes in the
Exchange Offers). The interpretation of the terms and conditions of the Exchange
Offers (including the Letters of Transmittal and the instructions thereto) by
Viatel shall be final and binding on all parties. Unless waived, any defects or
irregularities in connection with tenders of non-DBC Notes for exchange must be
cured within such period of time as Viatel shall determine. Viatel will use
reasonable efforts to give notification of defects or irregularities with
respect to tenders of non-DBC Notes for exchange but shall not incur any
liability for failure to give such notification. Tenders of the non-DBC Notes
will not be deemed to have been made until such irregularities have been cured
or waived.
If any Letter of Transmittal is signed by a person or persons other than the
holders of non-DBC Notes, such Letter of Transmittal must be accompanied by an
appropriate power of attorney, in either case signed exactly as the name or
names of the registered holder or holders appear on the non-DBC Notes or
security position listing maintained by DTC, as the case may be. If any Letter
of Transmittal, endorsement, bond power, power of attorney or any other
documents required by the Letters of Transmittal is signed by a trustee,
executor, administrator, guardian, attorney-in-fact, officer of the corporation
or other person acting in a fiduciary or representative capacity, such person
should so indicate when signing, and, unless waived by Viatel, proper evidence
satisfactory to Viatel, in its sole discretion, of such person's authority to so
act must be submitted.
Any beneficial owner of a non-DBC Note (a "Beneficial Owner") whose non-DBC
Notes are registered in the name of a broker, dealer, commercial bank, trust
company or other nominee and who wishes to tender non-DBC Notes in the Exchange
Offers should contact such registered holder promptly and instruct such
registered holder to tender on such Beneficial owner's behalf. If such
Beneficial Owner wishes to tender directly and is the Beneficial Owner of a
non-DBC Note in certificated form, such Beneficial Owner must, prior to
completing and executing the Letter of Transmittal and tendering non-DBC Notes,
make appropriate arrangements to register ownership of the non-DBC Notes in such
Beneficial Owner's name. Beneficial Owners should be aware that the transfer of
registered ownership may take considerable time.
By tendering (including transmission of an Agent's Message), each holder
will represent to Viatel that, among other things (i) the Exchange Notes to be
acquired in connection with the Exchange Offers by the holder and each
Beneficial Owner of the non-DBC Notes are being acquired by the holder and each
Beneficial Owner in the ordinary course of business of the holder and each
Beneficial Owner; (ii) the holder is not engaged in and does not intend to
engage in and has no arrangement or understanding with any person to participate
in, a distribution of the Exchange Notes to be issued in the Exchange Offers;
(ii) neither the holder nor the related Beneficial Owner is an affiliate (within
the meaning of the Securities Act) of Viatel; and (iv) if the holder is a
broker-dealer holding Notes acquired for its own account as a result of
market-making activities or other trading activities, it acknowledges that it
will deliver a prospectus meeting the requirements of the Securities Act in
connection with any resale of Exchange Notes received in respect of such
tendered non-DBC Notes pursuant to the Exchange Offers. In
42
<PAGE>
connection with a book-entry transfer, each participant will confirm that it
makes the representations and warranties contained in the Letters of
Transmittal.
BOOK-ENTRY TRANSFER
The U.S. Exchange Agent will make a request to establish an account with
respect to the non-DBC Notes at the Book-Entry Transfer Facility of DTC for the
purposes of the Exchange Offers promptly after the date of this Prospectus. Any
financial institution that is a participant in the Book-Entry Transfer
Facility's system may make book-entry delivery of non-DBC Notes by causing the
Book-Entry Transfer Facility to transfer such non-DBC Notes into the U.S.
Exchange Agent's account in accordance with DTC's ATOP procedures for transfer.
Holders of non-DBC Notes who are unable to deliver confirmation of the
book-entry tender of their non-DBC Notes into the U.S. Exchange Agent's account
at the Book-Entry Transfer Facility or any other documents required by the
Letters of Transmittal to the U.S. Exchange Agent on or prior to the Expiration
Date must tender their non-DBC Notes according to the guaranteed delivery
procedures described below.
GUARANTEED DELIVERY PROCEDURES
Holders who wish to tender their non-DBC Notes and (i) whose Existing Notes
are not immediately available or (ii) who cannot deliver their non-DBC Notes or
any other documents required by the Letters of Transmittal to the U.S. Exchange
Agent prior to 5:00 p.m., New York City time, on the Expiration Date (or who
cannot complete the procedure for book-entry transfer on a timely basis), may
tender their non-DBC Notes according to the guaranteed delivery procedures set
forth in the Letters of Transmittal. Pursuant to such procedures: (i) such
tender must be made by or through an Eligible Institution, (ii) on or prior to
the Expiration Date, the U.S. Exchange Agent must have received from the
Eligible Institution an applicable, 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, the certificate number or
numbers of the tendered non-DBC Notes, and the principal amount of tendered
non-DBC Notes, stating that the tender is being made thereby and guaranteeing
that, within three business days after the Expiration Date, a Letter of
Transmittal together with the tendered Existing Notes (or confirmation of a
book-entry transfer of such non-DBC Notes into the U.S. Exchange Agent's account
at DTC), and any other required documents will be deposited by the Eligible
Institution with the U.S. Exchange Agent, and (iii) such properly completed and
executed Letter of Transmittal and all documents required thereby, and the
tendered non-DBC Notes in proper form for transfer (or confirmation of a
book-entry transfer of such Existing Notes into the U.S. Exchange Agent's
account at DTC), must be received by the U.S. Exchange Agent within three
business days after the Expiration Date. Any holder who wishes to tender
Existing Notes pursuant to the guaranteed delivery procedures described above
must ensure that the U.S. Exchange Agent receives the Notice of Guaranteed
Delivery relating to such Existing Notes prior to 5:00 p.m., New York City time,
on the Expiration Date. Copies of a Notice of Guaranteed Delivery, which may be
used by Eligible Institutions for the purposes described in this paragraph are
available from the U.S. Exchange Agent.
PROCEDURES FOR THE TENDERING OF THE DBC NOTES
With respect to the DBC Notes, a holder wishing to tender DBC Notes for
exchange pursuant to the Exchange Offers must make book-entry delivery of such
DBC Notes by causing the transfer of such DBC Notes to the DBC-account of the
German Exchange Agent as set forth in the Letter of Transmittal in accordance
with the applicable German statutory and contractual provisions and must
complete, sign and date the applicable Letter of Transmittal or a facsimile
thereof, in accordance with the instructions contained herein and therein, and
must mail or otherwise deliver such Letter of Transmittal to the German Exchange
Agent at the address set forth in this Prospectus prior to 5:00 p.m., New York
time (11:00 p.m. Frankfurt/Main time) on the Expiration Date. Timely delivery by
book-entry transfer of the DBC Notes
43
<PAGE>
and of a properly completed and executed Letter of Transmittal to the German
Exchange Agent will be deemed a timely delivery of the DBC Notes.
The German Exchange Agent shall then send by wire or telecopy a confirmation
to the Company stating the aggregate amount of such DBC Notes delivered by
book-entry transfer to its DBC-account.
Any DBC Notes tendered to the German Exchange Agent for exchange pursuant to
the Exchange Offers shall be exchanged for 12.40% Exchange Notes and 11.15%
Exchange Notes in the principal amount equal to that of the DBC Notes tendered,
PROVIDED THAT the Letters of Transmittal were duly executed by the respective
holders and that a valid book-entry transfer of the DBC Notes was made to the
German Exchange Agent's account in accordance with the terms set forth in the
Letter of Transmittal and FURTHER PROVIDED that the DBC Notes may be tendered
only in denominations of DM 100,000 principal amount at maturity and any
integral multiples of DM 1,000 above such number and that no such partial tender
may reduce the principal amount at maturity of a DBC Note not tendered to less
than DM 100,000.
Upon consummation of the Exchange Offers, Viatel shall execute, and the
German Exchange Agent, in its capacity as a co-registrant under the Indentures
pursuant to which the DBC Notes were issued, shall authenticate, new DBC-DM
Global Certificates representing the aggregate amount of all of such 12.40%
Exchange Notes and 11.15% Exchange Notes. The New DBC-DM Global Certificates
shall be deposited with DBC as promptly as practicable following the
consummation of the Exchange Offers and all such 12.40% Exchange Notes and
11.15% Exchange Notes shall, on the German Exchange Agent's DBC account, replace
the DBC Notes tendered for exchange.
If all of the DBC Notes are tendered for Exchange, the DM Paying Agent shall
request to DBC to cancel the DBC-DM Global Certificates and shall withdraw the
cancelled DBC-DM Global Certificates.
If not all of the DBC Notes are tendered for exchange, the German Exchange
Agent shall make a request to DBC to deduct the aggregate amount of the DBC
Notes tendered for exchange pursuant to the Exchange Offers (which aggregate
amount shall be identical with the aggregate amount of the New DBC-DM Global
Certificates) from the principal amount of the DBC-DM Global Certificates.
All questions as to the validity, form, eligibility (including time of
receipt), acceptance and withdrawal of the DBC Notes tendered for exchange will
be determined by Viatel in its sole discretion, which determination shall be
final and binding. Viatel reserves the absolute right to reject any and all DBC
Notes not properly tendered and to reject any DBC Notes Viatel's acceptance of
which might, in the judgment of Viatel or its counsel, be unlawful. Viatel also
reserves the absolute right to waive any defects or irregularities or conditions
of the Exchange Offers as to particular DBC Notes either before or after the
Expiration Date (including the right to waive the ineligibility of any holder
who seeks to tender DBC Notes in the Exchange Offers). The interpretation of the
terms and conditions of the Exchange Offers (including the Letters of
Transmittal and the instructions thereto) by Viatel shall be final and binding
on all parties. Unless waived, any defects or irregularities in connection with
tenders of DBC Notes for exchange must be cured within such period of time as
Viatel shall determine. Viatel will use reasonable efforts to give notification
of defects or irregularities with respect to tenders of DBC Notes for exchange
but shall not incur any liability for failure to give such notification. Tenders
of the DBC Notes will not be deemed to have been made until such irregularities
have been cured or waived.
ACCEPTANCE OF EXISTING NOTES FOR EXCHANGE; DELIVERY OF EXCHANGE NOTES
Upon satisfaction or waiver of all the conditions to the Exchange Offers,
Viatel will accept any and all Existing Notes that are properly tendered in the
Exchange Offers prior to 5:00 p.m., New York City time, on the Expiration Date.
The Exchange Notes issued pursuant to the Exchange Offers will be delivered as
promptly as practicable following the Expiration Date. For the purposes of the
Exchange Offers, Viatel shall be deemed to have accepted validly tendered
non-DBC Notes, when, as, and if Viatel has given oral notice (confirmed in
writing) thereof to the U.S. Exchange Agent.
44
<PAGE>
In all cases, issuance of Exchange Notes for Existing Notes that are
accepted for exchange pursuant to the Exchange Offers will be made only after
timely receipt by (i) the U.S. Exchange Agent of such non-DBC Notes, properly
completed and duly executed Letter of Transmittal and all other required
documents (or of confirmation of a book-entry transfer of such non-DBC Notes
into the U.S. Exchange Agent's account at DTC) or (ii) the German Exchange Agent
of such DBC Notes delivered by book-entry transfer and a properly completed and
duly executed Letter of Transmittal; PROVIDED HOWEVER, that Viatel reserves the
absolute right to waive any defects or irregularities in the tender or
conditions of the Exchange Offers. If any tendered Existing Notes are not
accepted for any reason, such unaccepted Existing Notes will be returned without
expense to the tendering holder thereof as promptly as practicable after the
expiration or termination of the Exchange Offers.
WITHDRAWAL OF TENDERS OF EXISTING NOTES
Tenders of the non-DBC Notes may be withdrawn by delivery of a written
notice to the U.S. Exchange Agent, at its address set forth herein and in the
Letters of Transmittal, at any time prior to 5:00 p.m., New York City time, on
the Expiration Date, unless previously accepted by Viatel. Tenders of the DBC
Notes may be withdrawn by the delivery of a written notice to the German
Exchange Agent, at its address set forth herein and in the Letter of
Transmittal, at any time prior to 5:00 p.m., New York City time, on the
Expiration Date, unless previously accept by Viatel. Any such notice of
withdrawal must (i) specify the name of the person having deposited the Existing
Notes to be withdrawn (the "Depositor"), (ii) identify the non-DBC Notes to be
withdrawn (including the certificate number or numbers and principal amount of
such non-DBC Notes, as applicable), (iii) be signed by the holder in the same
manner as the original signatures on the Letters of Transmittal by which such
non-DBC Notes were tendered (including any required signature guarantee) or be
accompanied by a bond power in the name of the person withdrawing the tender, in
satisfactory form as determined by Viatel in its sole discretion, duly executed
by the registered holder, with the signature thereon guaranteed by an Eligible
Institution (with respect to the non-DBC Notes) together with the other
documents required upon transfer by the applicable Indenture, and (iv) specify
the name in which such Existing Notes are to be re-registered, if different from
the Depositor, pursuant to such documents of transfer. All questions as to the
validity, form and eligibility (including time of receipt) of such notices will
be determined by Viatel, in its sole discretion. The Existing Notes so withdrawn
will be deemed not to have been validly tendered for exchange for purposes of
the Exchange Offers. Any Existing Notes that have been tendered for exchange but
that are withdrawn will be returned to the holder thereof without cost to such
holder as soon as practicable after withdrawal. Properly withdrawn Existing
Notes may be retendered by following one of the procedures described under
"Procedures for Tendering Existing Notes" at any time on or prior to the
Expiration Date.
CONDITIONS OF THE EXCHANGE OFFERS
Notwithstanding any other terms of the Exchange Offers, or any extension of
the Exchange Offers, Viatel shall not be required to accept for exchange, or
exchange Exchange Notes for, any Existing Notes, and my terminate the Exchange
Offers as provided herein before the acceptance of such Existing Notes, if:
(a) any statute, rule or regulation shall have been adopted or enacted,
or any actions shall have been taken or threatened by any court or
governmental authority which, in the sole judgment of Viatel would impair
Viatel's ability to proceed with the Exchange Offers or which would
prohibit, restrict or otherwise render illegal consummation of the Exchange
Offers; or
(b) any change, or any development involving a prospective change, in
the business or financial affairs of Viatel or any of its subsidiaries has
occurred which, in the sole judgment of Viatel might materially impair the
ability of Viatel to proceed with the Exchange Offers or materially impair
the contemplated benefits of the Exchange Offers to Viatel; or
45
<PAGE>
(c) any stop order of the Commission or of any state securities
commission shall be threatened or in effect with respect to the Registration
Statement of which this Prospectus constitutes a part or qualification of
the Indentures under the Trust Indenture Act of 1939, as amended; or
(d) trading on any national securities exchange or generally in the U.S.
over-the-counter market shall have been suspended by order of the Commission
or any other governmental authority which, in Viatel's sole judgment, would
be expected to impair the ability of Viatel to proceed with the Exchange
Offers; or
(e) there shall occur a change in the current interpretations by the
staff of the Commission which, in Viatel's reasonable judgment, might
materially impair Viatel's ability to proceed with the Exchange Offers.
If Viatel determines in its sole and absolute discretion that any of the
above conditions are satisfied, Viatel may (i) terminate the Exchange Offers,
refuse to accept any Existing Notes and return all tendered Existing Notes to
the tendering holders, (ii) extend the Exchange Offers and retain all Existing
Notes tendered prior to the Expiration Date, subject, however, to the right of
holders to withdraw such Existing Notes (see "Terms of the Exchange Offers" and
"Withdrawal Rights") or (iii) waive such satisfied conditions with respect to
the Exchange Offers, or amend the terms of the Exchange Offers and accept all
validity tendered Existing Notes which have not been withdrawn. If such waiver
or amendment constitutes a material change to the Exchange Offers, Viatel will
promptly disclose such waiver or amendment by means of a prospectus supplement
that will be distributed to the registered holders, and Viatel will extend the
Exchange Offers for a period of time, depending upon the significance of the
waiver and the manner of disclosure to the registered holders, if the Exchange
Offers would otherwise expire during such period.
CONSEQUENCES OF FAILURE TO EXCHANGE
The Existing Notes have not been registered under the Securities Act or any
state securities laws and therefore may not be offered, sold or otherwise
transferred except in compliance with the registration requirements of the
Securities Act and any other applicable securities laws, or pursuant to an
exemption therefrom or in a transaction not subject thereto. Existing Notes that
currently bear legends restricting transfers that remain outstanding after
consummation of the Exchange Offers will continue to bear such legends. In
addition, upon consummation of the Exchange Offers, holders of Existing Notes
which remain outstanding will not be entitled to any rights to have such
Existing Notes registered under the Securities Act or to any similar rights
under the 1998 Registration Rights Agreement. Viatel currently does not intend
to register under the Securities Act any Existing Notes which remain outstanding
after consummation of the Exchange Offers (subject to limited exception, if
applicable).
To the extend that Existing Notes are tendered and accepted in the Exchange
Offers, the principal amount of outstanding Existing Notes will be reduced by
the principal amount so tendered and exchanged and a holder's ability to sell
untendered Existing Notes could be adversely affected. As a result, the
liquidity of the market for such non-tendered Existing Notes could be adversely
affected upon completion of the Exchange Offers.
The Existing Notes provide for certain interest rate increases if the
Exchange Offers are not consummated by October 8, 1998. Upon consummation of the
Exchange Offers, holders of Existing Notes will not be entitled to any increase
in the interest rate theron or any further registration rights under the 1998
Registration Rights Agreement.
Each series of Exchange Notes and any corresponding Existing Notes which
remain outstanding after consummation of the Exchange Offers will constitute a
single series of debt under the respective Indenture and, accordingly, will vote
together as a single class for purposes of determining whether respective
holders of the requisite percentage in outstanding principal amount thereof have
taken certain actions or exercised
46
<PAGE>
certain rights under each such Indenture. See "Description of the Exchange Notes
- -- General" and "Description of the Exchange Notes -- Modification and Waivers."
THE U.S. EXCHANGE AGENT
The Bank of New York is the U.S. Exchange Agent. All tendered DTC Notes,
executed Letters of Transmittal and other related documents should be directed
to the U.S. Exchange Agent. Questions and requests for assistance and requests
for additional copies of this Prospectus, the Letters of Transmittal and other
related documents should be addressed to the U.S. Exchange Agent as follows:
By registered or certified mail, by overnight courier or by hand:
The Bank of New York
Reorganization Section
101 Barclay Street, Floor 7 East
New York, New York 10286
Attention: Theresa Gass
Telephone No. (212) 815-5942
or
By Facsimile:
The Bank of New York
Attention: Theresa Gass
Facsimile Number (212) 815-6339
In addition, Letters of Transmittal and any other documentation should be
sent to the U.S. Exchange Agent at the address set forth above, except where
facsimile transmission is specifically authorized (e.g., withdrawals and Notices
of Guaranteed Delivery).
THE GERMAN EXCHANGE AGENT
Deutsche Bank, Aktiengesellschaft, is the German Exchange Agent. All
tendered DBC Notes, applicable executed Letters of Transmittal and other related
documents should be directed to the German Exchange Agent. Questions and
requests for assistance and requests for additional copies of this Prospectus,
the Letters of Transmittal and other related documents should be addressed to
the German Exchange Agent as follows:
Deutsche Bank, Aktiengesellschaft
IT/O CS CA Domestic
Alfred-Herrhausen--Allee 16-24
D-60262 Frankfurt am Main
Germany
DELIVERY OF LETTERS OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET
FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
FEES AND EXPENSES
All expenses incident to Viatel's performance of or compliance with the 1998
Registration Rights Agreement will be borne by Viatel regardless of whether the
Registration Statement becomes effective,
47
<PAGE>
including without limitation: (i) all registration and filing fees and expenses;
(ii) all fees and expenses associated with compliance with federal securities
and state "blue sky" or securities laws; (iii) all expenses of printing
(including printing of any certificates evidencing the Notes and printing of
Prospectuses), messenger and delivery services and telephone; and (iv) all fees
and disbursements of independent certified public accountants of Viatel.
Viatel has not retained any dealer-manager in connection with the Exchange
Offers and will not make any payments to brokers, dealers or others soliciting
acceptance of the Exchange Offers. Viatel, however, will pay the Exchange Agents
reasonable and customary fees for their services and will reimburse them for
their reasonable out-of-pocket expenses in connection therewith.
TRANSFER TAXES
Viatel will pay all transfer taxes, if any, applicable to the exchange of
the Existing Notes pursuant to the Exchange Offers. If however, Exchange Notes,
or Existing Notes for principal amounts not tendered or accepted for exchange,
are to be delivered to, or to be issued in the name of, any person other than
the registered holder of the Existing Notes tendered or if a transfer tax is
imposed for any reason other than the exchange of Existing Notes pursuant to the
Exchange Offers, then the amount of any such transfer taxes (whether imposed on
the registered holder or any other persons) will be payable by the tendering
holder. If satisfactory evidence of payment of such taxes or exemption therefrom
is not submitted with the applicable Letter of Transmittal, the amount of such
transfer taxes will be billed directly to such tendering holder.
RESALES OF THE EXCHANGE NOTES
Based on an interpretation by the staff of the Commission set forth in
no-action letters and interpretative letters issued to third parties, Viatel
believes that the Exchange Notes issued pursuant to the Exchange Offers in
exchange for Existing Notes may be offered for resale, resold and otherwise
transferred by such holder (other than a broker-dealer who purchased Existing
Notes directly from Viatel for resale pursuant to Rule 144A under the Securities
Act of any other available exemption 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 that such holder is not participating, does
not intend to participate and has no arrangement or understanding with any
person to participate, in any distribution of the Exchange Notes. However, if
any holder acquires Exchange Notes in the Exchange Offers for the purpose of
distributing or participating in a distribution of the Exchange Notes, such
holder cannot rely on the position on the staff of the Commission enunciated in
the no-action letters regarding MORGAN STANLEY & CO., INCORPORATED (available
June 5, 1991) and EXXON CAPITAL HOLDINGS CORPORATION (available May 13, 1988),
or interpreted in the Commission interpretative letter to SHEARMAN & STERLING
(available July 2, 1993), or similar no-action or interpretative letters, will
not be entitled to validly tender Existing Notes in the Exchange Offers and must
comply with the registration and prospectus delivery requirements of the
Securities Act in connection with any sale or transfer of such Existing Notes,
unless such sale or transfer is made pursuant to an exemption from, or in a
transaction not subject to, such requirements. Each broker-dealer that receives
Exchange Notes for its own account in exchange for Existing Notes, where such
Existing Notes were acquired by such broker-dealer as a result of market-making
or other trading activities, acknowledges thereby that it will deliver a copy of
this Prospectus in connection with any resale of such Exchange Notes. See "Plan
of Distribution." In addition, to comply with the securities or blue sky laws of
certain jurisdictions, if applicable, the Exchange Notes may not be offered or
sold unless they have been registered or qualified for sale in such
jurisdictions or an exemption from registration or qualification is available
and complied with. The 12.40% Exchange Notes and the 11.15% Exchange Notes may
only be issued in a minimum denomination of DM 100,000 at maturity.
48
<PAGE>
USE OF PROCEEDS
The Exchange Offers are intended to satisfy certain of Viatel's obligations
under the 1998 Registration Rights Agreement. Viatel will not receive any cash
proceeds from the issuance of the Exchange Notes offered hereby. In
consideration for issuing the Exchange Notes contemplated by this Prospectus,
Viatel will receive, in exchange, Existing Notes in like principal amount, the
terms of which are identical in all material respects to the terms of the
respective Exchange Notes. The Existing Notes surrendered in exchange for
Exchange Notes will be retired and cancelled and cannot be reissued.
Accordingly, the issuance of the Exchange Notes will not result in any increase
or decrease in the outstanding indebtedness of Viatel.
The net proceeds from the Offering were approximately $856.6 million (based
on a conversion rate of Deutschmarks into U.S. dollars of approximately DM 1.85
per U.S. $1.00, a recent exchange rate at the time of the Offering), after
deducting discounts and commissions and expenses of the Offering payable by the
Company. The Company used approximately $118.9 million of the net proceeds from
the Offering to finance the Tender Offer (including the payment of consent
fees), approximately $122.8 million to purchase the U.S. Pledge Securities and
approximately $30.6 million to purchase the DM Pledge Securities.
The Company intends to use the remaining net proceeds of the Offering to
fund a portion of the construction and operational start-up of the Circe
Network, to fund other capital expenditures and for general corporate and
working capital purposes. Pending the foregoing uses, the Company has invested
such proceeds in short-term, interest-bearing, high quality securities.
The Company believes that the net proceeds from the Offering, together with
project financing, equipment financing and the sale of IRUs or capacity on the
Circe Network will provide sufficient funds for the Company to expand its
business as planned and to fund operating losses for at least the next 18 to 24
months. However, the amount of the Company's future capital requirements will
depend on a number of factors, including the success of the Company's business,
the start-up date of the Circe Network, the rate at which the Company further
expands the Viatel Network, the types of services that the Company offers,
staffing levels, acquisitions and customer growth, as well as other factors that
are not within the Company's control, including competitive conditions,
government regulatory developments and capital costs. In the event that the
Company's plans or assumptions change or prove to be inaccurate or the net
proceeds of the Offering, project financing, equipment financings and proceeds
from the sale of IRUs or capacity on the Circe Network prove to be insufficient
to fund the Company's growth in the manner and at the rate currently
anticipated, the Company may be required to delay or abandon some or all of the
Company's development and expansion plans or the Company may be required to seek
additional sources of financing earlier than currently anticipated.
The Company will need substantial additional capital in order to further
develop and expand the Viatel Network, including the further expansion of the
Circe Network and to develop and expand new and existing services. The Company's
future capital requirements will depend on a number of factors, including the
success of the Company's business, the rate that it expands the Viatel Network,
the types of services that the Company offers, staffing levels, acquisitions and
customer growth, as well as other factors not within the Company's control,
including competitive conditions, government regulatory developments and capital
costs. See "Risk Factors -- Substantial Capital Requirements."
49
<PAGE>
CAPITALIZATION
The following table sets forth, as of March 31, 1998, the cash, cash
equivalents and marketable securities and capitalization of the Company (i) on a
historical basis, and (ii) on a pro forma basis to reflect the Tender Offer and
the Offering as if it had occurred on March 31, 1998. This table should be read
in conjunction with "Use of Proceeds," "Unaudited Pro Forma Financial Data,"
"Selected Consolidated Financial Data," "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and the financial statements and
related notes thereto of the Company included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
MARCH 31, 1998
--------------------------
HISTORICAL PRO FORMA(1)
----------- -------------
(IN THOUSANDS)
<S> <C> <C>
Cash, cash equivalents and marketable securities........................................ $ 28,150 $ 612,507
----------- -------------
----------- -------------
Restricted cash......................................................................... -- 153,347
----------- -------------
----------- -------------
Long-term debt, excluding current installments:
15% Senior Notes Due 2005, at accreted value........................................ $ 93,205 $ --
Discount Notes, at accreted value................................................... -- 338,695
Senior Notes........................................................................ -- 496,009
Subordinated Convertible Debentures................................................. -- 11,048
Other long term debt ............................................................... 9,155 9,155
----------- -------------
Total long-term debt.............................................................. 102,360 854,907
----------- -------------
Series A Redeemable Convertible Preferred Stock, $.01 par value; 718,042 shares
authorized; no shares issued and outstanding actual; 438,200 shares issued and
outstanding pro forma................................................................. -- 43,820
----------- -------------
Stockholders' deficiency:
Preferred stock, $.01 par value; 281,958 shares authorized; no shares issued and
outstanding........................................................................ -- --
Common stock, $.01 par value; 50,000,000 shares authorized;
23,077,023 shares issued and outstanding, actual and pro forma(2)................. 231 231
Additional paid-in capital.......................................................... 129,453 127,358(3)
Unearned compensation............................................................... (49) (49)
Cumulative translation adjustment................................................... (5,873) (5,873)
Accumulated deficit................................................................. (142,033) (170,323)(4)
----------- -------------
Total stockholders' deficiency.................................................... (18,271) (48,656)
----------- -------------
Total capitalization............................................................ $ 84,089 $ 850,071
----------- -------------
----------- -------------
</TABLE>
- ------------------------------
(1) Adjusted to give effect to $856.6 million of net proceeds with respect to
the issuance of the Existing Notes, the Subordinated Convertible Debentures
and 438,200 shares of Series A Preferred in the Offering, assuming an
average exchange rate of approximately DM 1.85 per U.S. $1.00 (a recent
market exchange rate at the time of the Offering) with respect to the
Existing 12.40% Notes, the Existing 11.15% Notes and the Subordinated
Convertible Debentures, partially offset by $118.9 million required to
extinguish the 1994 Notes ($93.2 million accreted value of the 1994 Notes,
approximately $24.7 million of premium paid and approximately $1.0 million
of expenses associated with the extinguishment of the 1994 Notes).
(2) Excludes approximately 2.6 million shares of Common Stock reserved for
issuance upon the exercise of stock options available for grant under the
Stock Incentive Plan pursuant to which options to purchase approximately 2.1
million shares of Common Stock were outstanding at March 31, 1998, at
exercise prices ranging from $0.75 to $12.00. See "Management -- Stock
Incentive Plan."
(3) Gives effect to issuance costs of $2.1 million associated with the Series A
Preferred sold in the Offering.
(4) Includes an extraordinary charge of $28.3 million related to the early
extinguishment of debt comprised of the following: (i) an approximately
$24.7 million premium paid in connection with the Tender Offer, (ii) a $0.3
million fee and $0.7 million of other costs associated with the Tender
Offer, and (iii) a write-off of $2.6 million in unamortized deferred
registration and debt issuance fees associated with the 1994 Notes.
50
<PAGE>
UNAUDITED PRO FORMA FINANCIAL DATA
The following unaudited Pro Forma Financial Information is based on the
historical financial statements of the Company as of and for the year ended
December 31, 1997 and as of and for the three months ended March 31, 1998. The
Statement of Operations Data and Other Financial Data have been prepared as if
the Tender Offer and the Offering occurred on January 1, 1997 for purposes of
the 1997 pro forma information and January 1, 1998 for purposes of the March 31,
1998 pro forma information. The Balance Sheet Data has been prepared as if the
Tender Offer and the Offering had occurred on March 31, 1998. The Pro Forma
Financial Information does not purport to represent what the Company's financial
condition or results of operations actually would have been for the date or
periods presented had the transactions occurred on the dates indicated or to
indicate the financial results of future periods. The Pro Forma Financial
Information should be read in conjunction with the historical financial
statements of the Company included elsewhere in this Prospectus and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1997
---------------------------------------
ACTUAL ADJUSTMENTS PRO FORMA
------------- ----------- -----------
<S> <C> <C> <C>
(IN THOUSANDS, EXCEPT PER SHARE DATA)
STATEMENT OF OPERATIONS DATA:
Telecommunications revenue....................................... $ 73,018 $ -- $ 73,018
Operating expenses:
Costs of telecommunications services........................... 63,504 -- 63,504
Selling, general and administrative............................ 36,076 -- 36,076
Depreciation and amortization.................................. 7,717 -- 7,717
------------- ----------- -----------
Total operating expenses..................................... 107,297 -- 107,297
------------- ----------- -----------
Operating loss................................................... (34,279) -- (34,279)
Interest income.................................................. 3,685 -- 3,685
Interest expense................................................. (12,450) (89,673)(1) (102,123)
------------- ----------- -----------
Net loss......................................................... (43,044) (89,673) (132,717)(2)
Dividend on preferred stock...................................... -- (4,382)(1) (4,382)
------------- ----------- -----------
Net loss to common stockholders.................................. $ (43,044) $ (94,055) $(137,099)(2)
------------- ----------- -----------
------------- ----------- -----------
Net loss per share, basic(3)..................................... $ (1.90) $ (6.06)
------------- -----------
------------- -----------
Net loss per share, diluted(3)................................... $ (1.90) $ (6.06)
------------- -----------
------------- -----------
Weighted average number of shares outstanding.................... 22,620 22,620
------------- -----------
------------- -----------
OTHER FINANCIAL DATA:
EBITDA(4).......................................................... $ (26,562) -- $ (26,562)
Capital expenditures............................................... 34,190 -- 34,190
Ratio of earnings to fixed charges(5).............................. -- --
</TABLE>
51
<PAGE>
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31, 1998
-------------------------------------
ACTUAL ADJUSTMENTS PRO FORMA
----------- ----------- -----------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Telecommunications revenue.......................................... $ 21,239 $ -- $ 21,239
Operating expenses:
Costs of telecommunications services.............................. 19,105 -- 19,105
Selling, general and administrative............................... 8,955 -- 8,955
Depreciation and amortization..................................... 2,911 -- 2,911
----------- ----------- -----------
Total operating expenses........................................ 30,971 -- 30,971
----------- ----------- -----------
Operating loss...................................................... (9,732) -- (9,732)
Interest income..................................................... 510 -- 510
Interest expense.................................................... (3,781) (22,089)(6) (25,870)
----------- ----------- -----------
Net loss............................................................ (13,003) (22,089) (35,092)(2)
Dividend on preferred stock......................................... -- (1,096)(6) (1,096)
----------- ----------- -----------
Net loss to common stockholders..................................... $ (13,003) $ (23,185) $ (36,188)(2)
----------- ----------- -----------
----------- ----------- -----------
Net loss per share, basic(3)........................................ $ (.57) $ (1.59)
----------- -----------
----------- -----------
Net loss per share, diluted(3)...................................... $ (.57) $ (1.59)
----------- -----------
----------- -----------
Weighted average number of shares outstanding....................... 22,783 22,783
----------- -----------
----------- -----------
OTHER FINANCIAL DATA:
EBITDA(4)............................................................. $ (6,821) -- $ (6,821)
Capital expenditures.................................................. 2,716 -- 2,716
Ratio of earnings to fixed charges(5)................................. -- --
</TABLE>
<TABLE>
<CAPTION>
AS OF MARCH 31, 1998
-------------------------------------
ACTUAL ADJUSTMENTS PRO FORMA
----------- ----------- -----------
<S> <C> <C> <C>
(IN THOUSANDS)
BALANCE SHEET DATA:
ASSETS
Current assets
Cash and cash equivalents, marketable securities, current............ $ 28,150 $ 584,357(7) $ 612,507
Restricted cash, current............................................. -- 28,948(8) 28,948
Trade accounts receivable, net....................................... 13,816 -- 13,816
Other receivables.................................................... 7,284 -- 7,284
Prepaid expenses..................................................... 1,284 -- 1,284
----------- ----------- -----------
Total current assets................................................. 50,534 613,305 663,839
Restricted cash, non-current......................................... -- 124,399(8) 124,399
Property and equipment, net.......................................... 56,997 -- 56,997
Deferred financing and registration fees, net........................ 2,572 -- 2,572
Intangible assets, net............................................... 9,995 28,278(9) 38,273
Other assets......................................................... 1,796 -- 1,796
----------- ----------- -----------
$ 121,894 $ 765,982 $ 887,876
----------- ----------- -----------
----------- ----------- -----------
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
Current liabilities
Accrued telecommunications costs..................................... $ 19,573 $ -- $ 19,573
Accounts payable and other accrued expenses.......................... 14,878 -- 14,878
Current installments of notes payable and obligations under capital
leases............................................................. 3,354 -- 3,354
----------- ----------- -----------
Total current liabilities............................................ 37,805 -- 37,805
</TABLE>
52
<PAGE>
<TABLE>
<CAPTION>
AS OF MARCH 31, 1998
-------------------------------------
ACTUAL ADJUSTMENTS PRO FORMA
----------- ----------- -----------
(IN THOUSANDS)
<S> <C> <C> <C>
Long-term liabilities
Senior Notes, Senior Discount Notes and Subordinated Convertible
Debentures......................................................... 93,205 752,547 (10 845,752
Notes payable and obligations under capital leases, net.............. 7,655 -- 7,655
Equipment purchase obligation........................................ 1,500 -- 1,500
----------- ----------- -----------
Total long-term liabilities.......................................... 102,360 752,547 854,907
Series A Preferred................................................... -- 43,820 (11 43,820
Stockholders' deficiency
Common stock......................................................... 231 -- 231
Additional paid-in-capital........................................... 129,453 (2,095) 12) 127,358
Unearned compensation................................................ (49) -- (49)
Cumulative translation adjustment.................................... (5,873) -- (5,873)
Accumulated deficit.................................................. (142,033) (28,290) 13) (170,323)
----------- ----------- -----------
Total stockholders' deficiency....................................... (18,271) (30,385) (48,656)
----------- ----------- -----------
$ 121,894 $ 765,982 $ 887,876
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
- ------------------------
(1) Reflects the effects on the Company's results of operations of the early
extinguishment of the 1994 Notes and the issuance of $43.8 million of Series
A Preferred, the Existing Notes consisting of $272.1 million of Existing
12.50% Notes, DM 123.5 million of Existing 12.40% Notes, $400.0 million of
Existing 11.25% Notes, DM 178.0 million of Existing 11.15% Notes and DM 20.5
million of Subordinated Convertible Debentures as if they had occurred on
January 1, 1997. Comprised of:
(a) a decrease in interest expense of approximately $12.1 million related to
interest on the 1994 Notes;
(b) a decrease in interest expense of $379,000 as a result of the write-off
of deferred registration and debt issuance fees related to the 1994
Notes;
(c) an increase in interest expense of approximately $99.1 million as a
result of the issuance of the Existing Notes and Subordinated Convertible
Debentures assuming an average exchange rate of approximately DM 1.85 per
U.S. $1.00 (a recent market exchange rate at the time of the Offering)
with respect to the Existing 12.40% Notes, the Existing 11.15% Notes and
the Subordinated Convertible Debentures;
(d) an increase in interest expense of approximately $3.1 million related to
amortization of deferred debt issuance cost on the Existing Notes and the
Subordinated Convertible Debentures; and
(e) the recognition of dividends of $4.4 million related to the Series A
Preferred.
(2) Pro forma net loss and pro forma net loss to common stockholders does not
include the extraordinary loss resulting from the extinguishment of the 1994
Notes assumed to occur on January 1, 1997, for purposes of the 1997 pro
forma financial information and January 1, 1998 for purposes of the March
31, 1998 pro forma financial information. Such extraordinary loss would have
been approximately $44.2 million for 1997 and $31.7 million for the three
months ended March 31, 1998.
(3) Net loss per share is computed on the basis described in Note 1 of the
Company's Consolidated Financial Statements.
(4) As used herein, "EBITDA" consists of earnings before interest, income taxes
and depreciation and amortization. EBITDA is a measure commonly used in the
telecommunications industry to analyze companies on the basis of operating
performance. EBITDA is not a measure of financial performance under GAAP, is
not necessarily comparable to similarly titled measures of other companies,
and should not be considered as an alternative to net income as a measure of
performance nor as an alternative to cash flow as a measure of liquidity.
(5) The ratio of earnings to fixed charges is calculated as income before taxes,
discontinued operations and extraordinary items plus interest expense,
divided by fixed charges. Fixed charges consist of
53
<PAGE>
interest on indebtedness, dividends on preferred stock and one-third of
rental expense. For 1997 and the three months ended March 31, 1998, earnings
were insufficient to cover fixed charges by $43.0 million ($137.1 million
pro forma for the Tender Offer and the Offering) and $13.0 million ($36.2
million pro forma for the Tender Offer and the Offering), respectively.
(6) Reflects the effects on the Company's results of operations of the early
extinguishment of the 1994 Notes and the issuance of $43.8 million of Series
A Preferred, the Existing Notes consisting of $272.1 million of Existing
12.50% Notes, DM 123.5 million of Existing 12.40% Notes, $400.0 million of
Existing 11.25% Notes, DM 173.0 million of Existing 11.15% Notes and DM 20.5
million of Subordinated Convertible Debentures as if they had occurred on
January 1, 1998. Comprised of:
(a) a decrease in interest expense of approximately $3.4 million related to
interest on the 1994 Notes;
(b) a decrease in interest expense of $99,000 as a result of the write-off
of deferred registration and debt issuance fees related to the 1994
Notes;
(c) an increase in interest expense of approximately $24.8 million as a
result of the issuance of the Existing Notes and Subordinated Convertible
Debentures assuming an average exchange rate of approximately DM 1.85 per
U.S. $1.00 (a recent market exchange rate at the time of the Offering)
with respect to the Existing 12.40% Notes, the Existing 11.15% Notes and
the Subordinated Convertible Debentures;
(d) an increase in interest expense of approximately $0.8 million related to
amortization of deferred debt issuance cost on the Existing Notes and the
Subordinated Convertible Debentures; and
(e) the recognition of dividends of $1.1 million related to the Series A
Preferred.
(7) Reflects the net increase in cash as a result of $703.3 million of the net
proceeds of the Offering, assuming an average exchange rate of approximately
DM 1.85 per U.S. $1.00 (a recent market exchange rate at the time of the
Offering) with respect to the Existing 12.40% Notes, the Existing 11.15%
Notes and the Subordinated Convertible Debentures partially offset by $118.9
million required to extinguish the 1994 Notes.
(8) Reflects the increase in restricted cash as a result of $153.3 million
($28.9 million of current and $124.4 million of non-current) of the net
proceeds of the Offering, assuming an average exchange rate of approximately
DM 1.85 per U.S. $1.00 (a recent market exchange rate at the time of the
Offering) with respect to the Existing 12.40% Notes, the Existing 11.15%
Notes and the Subordinated Convertible Debentures.
(9) Reflects the capitalization of $30.9 million of debt issuance costs related
to the Offering, reduced by the write-off of $2.6 million of deferred
registration and debt issuance fees related to the extinguishment of the
1994 Notes.
(10) Reflects an increase in long term debt of $845.8 million as a result of the
issuance of the Existing Notes and the Subordinated Convertible Debentures,
assuming an average exchange rate of approximately DM 1.85 per U.S. $1.00 (a
recent market exchange rate at the time of the Offering) with respect to the
Existing 12.40% Notes, the Existing 11.15% Notes and the Subordinated
Convertible Debentures, offset by a reduction of approximately $93.2 million
due to the early extinguishment of the 1994 Notes.
(11) Reflects the issuance of the Series A Preferred.
(12) Reflects a decrease in additional paid-in-capital as a result of $2.1
million of issuance costs associated with the Series A Preferred.
(13) Reflects an increase in accumulated deficit as a result of the write-off of
approximately $2.5 million of deferred registration and debt issuance costs,
approximately $24.7 million related to the premium paid to extinguish the
1994 Notes and $1.0 million of estimated expenses incurred in connection
with the extinguishment.
54
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
The following selected Consolidated Statement of Operations Data, Other
Financial Data and Balance Sheet Data as of and for the years ended December 31,
1993, 1994, 1995, 1996 and 1997 have been derived from the Consolidated
Financial Statements of the Company and the notes related thereto, which were
audited by KPMG Peat Marwick LLP, Independent Certified Public Accountants. The
consolidated financial statements as of December 31, 1996 and 1997 and for each
of the years in the three-year period ended December 31, 1997 and the report of
KPMG Peat Marwick LLP thereon, are included elsewhere in this Prospectus. The
selected Consolidated Statement of Operations Data, Other Financial Data and
Balance Sheet Data as of and for the three months ended March 31, 1997 and 1998
have been derived from the unaudited Consolidated Financial Statements of the
Company included elsewhere in this Prospectus, which, in the opinion of
Management, include all adjustments necessary for a fair presentation of the
financial condition and results of operations of the Company for such periods.
The results of operations for interim periods are not necessarily indicative of
a full year's operations. This information should be read in conjunction with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," the Company's Consolidated Financial Statements, including the
notes thereto, and the other financial data included elsewhere in this
Prospectus.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
----------------------------------------------------- --------------------
1993 1994 1995 1996 1997 1997 1998
--------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
(IN THOUSANDS, EXCEPT PER SHARE AND OTHER OPERATING DATA)
STATEMENT OF OPERATIONS DATA:
Telecommunications revenue.............. $ 21,393 $ 26,268 $ 32,313 $ 50,419 $ 73,018 $ 14,552 $ 21,239
Operating expenses:
Costs of telecommunications
services............................ 18,159 22,953 27,648 42,130 63,504 12,079 19,105
Selling, general and administrative... 8,458 14,318 24,328 32,857 36,076 8,723 8,955
Depreciation and amortization......... 111 789 2,637 4,802 7,717 1,262 2,911
Equipment impairment loss............. -- -- 560 -- -- -- --
--------- --------- --------- --------- --------- --------- ---------
Total operating expenses............ 26,728 38,060 55,173 79,789 107,297 22,064 30,971
--------- --------- --------- --------- --------- --------- ---------
Operating loss.......................... (5,335) (11,792) (22,860) (29,370) (34,279) (7,512) (9,732)
Interest income......................... 21 214 3,282 1,853 3,685 1,119 510
Interest expense........................ -- (772) (8,856) (10,848) (12,450 (1) (3,009) (3,781)(1)
Share in loss of affiliate.............. (142) (145) (42) (10) -- -- --
--------- --------- --------- --------- --------- --------- ---------
Net loss................................ $ (5,456) $ (12,495) $ (28,476) $ (38,375) $ (43,044 (1) $ (9,402) $ (13,003)(1)
--------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- ---------
Net loss per common share, basic(2)..... $ (0.77) $ (1.22) $ (2.09) $ (2.47) $ (1.90) $ (0.42) $ (0.57)
--------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- ---------
Net loss per common share, diluted(2)... $ (0.77) $ (1.22) $ (2.09) $ (2.47) $ (1.90) $ (0.42) $ (0.57)
--------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- ---------
OTHER FINANCIAL DATA:
EBITDA(3)............................... $ (5,366) $ (11,148) $ (20,265) $ (24,578) $ (26,562) $ (6,250) $ (6,821)
Net cash used in operating activities... (1,442) (11,571) (18,489) (26,331) (22,525) (10,550) (10,771)
Net cash (used in) provided by investing
activities............................ (2,949) (4,996) (37,057) (1,592) (43,164) (32,903) 16,455
Net cash provided by (used in) financing
activities............................ 6,329 80,984 (2,306) 94,772 11,286 60 (209)
Capital expenditures.................... 1,090 3,672 11,378 9,423 34,190 3,722 2,716
Ratio of earnings to fixed charges(4)... -- -- -- -- -- -- --
OTHER OPERATING DATA:
Billable minutes (000s)................. 10,899 14,981 25,932 62,249 140,918 23,517 52,418
Average revenue per billable minute..... $ 1.87 $ 1.70 $ 1.23 $ .80 $ .51 $ .62 $ .39
Average cost per billable minute........ $ 1.67 $ 1.53 $ 1.04 $ .67 $ .44 $ .51 $ .35
Switches(5)............................. 2 2 10 13 14(6) 14(6) 14(6)
Points of presence(5)................... 3 3 11 13 33 17 33
Customers(5)............................ 5,486 6,469 9,218 18,172 21,515 20,224 17,090
BALANCE SHEET DATA(5):
Cash, cash equivalents and marketable
securities............................ $ 2,327 $66,762 $ 35,066 $ 92,982 $ 47,142 $ 78,978 $ 28,150
Property and equipment, net............. 3,584 6,933 15,715 21,074 54,094 24,480 56,997
Total assets............................ 10,585 83,923 65,613 134,664 126,809 124,661 121,894
Long-term debt, excluding current
installments.......................... 866 59,955 67,283 77,904 99,609 81,371 102,360
Stockholders' (deficiency) equity....... (162) 10,985 (17,618) 38,483 (8,564) 27,284 (18,270)
</TABLE>
55
<PAGE>
- ------------------------------
(1) On a pro forma basis, assuming the Offering closed on January 1, 1997 and
January 1, 1998, interest expense on the Notes and the Subordinated
Convertible Debentures and dividends on the Series A Preferred would have
been $99.1 million and $4.4 million for 1997 and $24.8 million and $1.1
million for the three months ended March 31, 1998, respectively, assuming an
average exchange rate of approximately DM 1.85 per U.S. $1.00 (a recent
market exchange rate at the time of the Offering) with respect to the 12.40%
Notes, the 11.15% Notes and the Subordinated Convertible Debentures. (See
Footnotes 1 and 5 to the Pro Forma Financial Information included elsewhere
in this Prospectus.) The Company is utilizing a portion of the proceeds of
the Offering for the construction and operational start-up of the Circe
Network. Accordingly, a portion of the interest cost of the Notes and the
Subordinated Convertible Debentures through 1999 will be capitalized.
However, the pro forma interest expense includes all the interest cost of
the Notes and the Subordinated Convertible Debentures, including capitalized
interest.
(2) Net loss per share is computed on the basis described in Note 1 of the
Company's Consolidated Financial Statements.
(3) As used herein, "EBITDA" consists of earnings before interest, income taxes
and depreciation and amortization. EBITDA is a measure commonly used in the
telecommunications industry to analyze companies on the basis of operating
performance. EBITDA is not a measure of financial performance under GAAP, is
not necessarily comparable to similarly titled measures of other companies,
and should not be considered as an alternative to net income as a measure of
performance nor as an alternative to cash flow as a measure of liquidity.
(4) The ratio of earnings to fixed charges is calculated as income before taxes,
discontinued operations and extraordinary items plus interest expense,
divided by fixed charges. Fixed charges consist of interest on indebtedness,
dividends on preferred stock and one third of rental expense. For 1993,
1994, 1995, 1996, 1997, the three months ended March 31, 1997 and the three
months ended March 31, 1998, earnings were insufficient to cover fixed
charges by $5.5 million, $12.5 million, $28.5 million, $38.4 million, $43.0
million, $9.4 million and $13.0 million, respectively.
(5) Information presented as of the end of the periods indicated.
(6) Consists of four Nortel DMS 100e switches, one Nortel DMS 300 switch, six
Wyatt/Reuters MRX-2000 switches and three call reorigination switches.
56
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
THE FOLLOWING DISCUSSION SHOULD BE READ IN CONJUNCTION WITH VIATEL'S
FINANCIAL STATEMENTS, THE NOTES THERETO AND THE OTHER FINANCIAL DATA INCLUDED
ELSEWHERE IN THIS PROSPECTUS. THE FOLLOWING DISCUSSION INCLUDES CERTAIN
FORWARD-LOOKING STATEMENTS. FOR A DISCUSSION OF IMPORTANT FACTORS, INCLUDING,
BUT NOT LIMITED TO, THE CONTINUED DEVELOPMENT OF VIATEL'S BUSINESS, ACTIONS OF
REGULATORY AUTHORITIES AND COMPETITORS, PRICE DECLINES AND OTHER FACTORS WHICH
COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THE RESULTS REFERRED TO IN
THE FORWARD-LOOKING STATEMENTS, AND IN WHICH INVESTORS SHOULD SPECIFICALLY
CONSIDER IN EVALUATING SUCH STATEMENTS, SEE "RISK FACTORS" AND "UNAUDITED PRO
FORMA FINANCIAL DATA."
OVERVIEW
Since its inception in 1991, the Company has invested heavily in developing
the ability to provide international telecommunications services within Western
Europe and in certain other countries in Latin America and Asia and in
developing and expanding its market presence. During the past six years, the
Company has made substantial investments in software and back office operations,
an administrative infrastructure and a direct sales organization in Western
Europe. Furthermore, the Company has created an extensive commercial
telecommunications network for voice and voice band data in Western Europe,
which the Company believes is necessary to effectively render the services it
offers and intends to offer. In the future, the Company's revenues will be
derived from three primary sources: retail sales, wholesale sales and revenue
from the sale of IRUs or capacity on the Circe Network. Each revenue source will
have a different impact on the Company's results of operations. The sale of IRUs
or capacity on the Circe Network will vary substantially from period to period
and result in fluctuations in the Company's operating results. For a discussion
of the effects of the Circe Network on telecommunications revenue and other line
items, see "-- The Circe Network."
TELECOMMUNICATIONS REVENUE
Viatel's telecommunications revenue is currently based primarily on the
number of minutes of use billed by the Company or "billable minutes" and, to a
lesser extent, on the additional services and products provided through the
Viatel Network. While the Company provides both international and national long
distance telecommunications services, the Company currently derives its
telecommunications revenue principally from international long distance
telecommunications services. The Company believes, however, that revenue from
national long distance telecommunications services will continue to increase as
a percentage of total telecommunications revenue.
The Company competes with other telecommunications providers principally on
the basis of price and quality of services provided. The Company prices its
retail services generally at a discount to the ITO's prices in the various
geographic markets. The wholesale rates charged are generally priced at or
slightly below the market price of the leading United States international
facilities-based carriers, but the Company does not offer a standard discount
relative to any major carrier.
The Company has experienced, and expects to continue to experience,
declining revenue per minute in all of its markets, in part as a result of
increasing worldwide competition within the telecommunications industry. For
example, in France and Germany, the respective ITO has taken steps to
substantially reduce prices for retail domestic and international long distance
services. France Telecom has obtained approval to reduce prices of such services
by an average of 9% during 1998 and additional amounts thereafter, and Deutsche
Telekom has announced that, subject to regulatory approval, it intends to reduce
prices on domestic and international retail long distance services by up to 40%.
The Company believes, however, that the impact on its results of operations from
such price decreases will be at least partially offset by, continuing decreases
in the Company's cost of providing telecommunications services, particularly
those decreases resulting from its continued efforts to convert from leased to
owned capacity and to obtain cost effective interconnection agreements, and the
introduction of new products and services as the applicable regulatory
environment permits. There can be no assurance, however, that the results
referred to in the
57
<PAGE>
foregoing forward looking statements, including a decline in the Company's cost
of telecommunications services, can be achieved. See "Risk Factors -- Risks
Relating to the Circe Network," "-- Competition," "-- Substantial Government
Regulation," "-- Rapidly Changing Industry, Technology and Customer
Requirements; Significant Price Declines," and "-- Risks Associated with the
Operation of the Viatel Network."
COST OF TELECOMMUNICATIONS SERVICE
The Company's cost of telecommunications service can be classified into
three general categories: access costs, network costs and termination costs.
Access costs generally represent the costs associated with transporting the
traffic from a customer's premises to the closest access point on the Viatel
Network. Access costs vary depending upon the bandwidth and the distance to the
customer's premises and from country to country. The Company currently expects
that the effective per minute cost of these access costs will be reduced as
deregulation continues, certain EU directives requiring cost-oriented pricing
(i.e., costs that an effectively competitive market would yield or that
deregulation would seek to ensure) by ITOs are enforced and as the Company is
able to obtain cost effective interconnection agreements, although there can be
no assurance regarding the extent or timing of such cost decreases. In the event
that such access costs were to fall at a slower rate than the Company's price
per minute, the Company's gross margins could be adversely impacted.
Network costs represent the costs of transporting calls over the Viatel
Network from its point of entry to its point of exit. Network costs generally
consist of leased line rental costs, facility/network management costs and costs
associated with interconnection with facilities of ITOs. Network costs will
decrease substantially as a result of building the Circe Network and upon
securing infrastructure ownership on other routes. However, there will be an
associated increase in depreciation and amortization expense (which is included
in a different line item). See "-- Depreciation and Amortization."
Termination costs currently represent the costs which the Company is
required to pay to other carriers from the point of exit from the Viatel Network
to the point of destination. Termination costs are generally variable with
traffic volume and traffic mix. If a call is terminated in a city in which the
Company has a switch or POP, the call is usually transferred to the PSTN for
local termination. If the call is to a location in which the Company does not
have a switch or POP, then the call must be transferred to another carrier with
which the Company is interconnected. The Company utilizes least cost routing
designed to terminate traffic in the most cost effective manner. The Company
believes that local termination costs should decrease as the Company (i) adds
additional switches and POPs, (ii) interconnects with additional ITOs and other
infrastructure providers, (iii) additional transmission facilities are
constructed or purchased, (iv) new telecommunications service providers emerge,
and (v) in Western Europe, as EU member states implement and enforce regulations
requiring ITOs to establish rates which are set at the forward-looking, long run
economic costs that would be incurred by an efficient provider using
state-of-the-art technology. There can be no assurance regarding the results
referred to in the foregoing forward looking statements, including the extent or
timing of cost decreases. See "Risk Factors -- Risks Relating to the Circe
Network," "-- Competition," "-- Substantial Government Regulation," "-- Rapidly
Changing Industry, Technology and Customer Requirements; Significant Price
Declines," and "-- Risks Associated with the Operation of the Viatel Network."
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
The Company's selling, general and administrative expenses include
commissions paid to independent sales representatives and overhead costs
associated with its headquarters, back office and operations and sales offices
in seventeen jurisdictions. The Company's selling, general and administrative
expenses have continued to increase since the Company's inception as the Company
developed and expanded its business. The Company anticipates that such expenses
will continue to increase as the Company's business is expanded in the future
and as the Viatel Network is further developed and that such expenses will
continue to be incurred in advance of anticipated related telecommunications
revenue.
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DEPRECIATION AND AMORTIZATION
Depreciation and amortization expense includes charges relating to
depreciation of property and equipment, which consists principally of
telecommunications-related equipment such as switches and POPs, IRUs and MIUs,
furniture and equipment, leasehold improvements, and amortization of intangible
assets, including goodwill and costs associated with acquired employee base and
sales forces. The Company depreciates its network over periods ranging from five
to 15 years and amortizes its intangible assets over periods ranging from three
to seven years. The Company currently depreciates IRUs over a 15 year period but
may, in the future, depreciate IRU's over periods ranging from 15 to 20 years
based upon the estimated useful life of the systems. The Company expects
depreciation and amortization expense to increase as the Company further expands
the Viatel Network. In particular, depreciation will substantially increase as a
result of the construction of the Circe Network, at least until significant
portions of such system are sold.
THE CIRCE NETWORK
The Circe Network will have significant effects on the Company's future
results of operations. The Company will capitalize substantially all of the
costs associated with designing and building the Circe Network, as well as the
costs associated with placing the system in service. These costs are expected to
be approximately $530.0 million, although there can be no assurance in this
regard. See "Risk Factors -- Risks Relating to the Circe Network."
The Company intends to sell interests in the Circe Network on an IRU basis.
Revenue from the IRUs will be recognized in the period when the IRU is sold
under a new line item that will be titled "Capacity sales revenue." The related
cost of sales will be reported in the period when the related revenue is
recognized. With respect to any given sale of an IRU, the related cost of
capacity sales will generally be equal to the total capitalized cost of the
Circe Network multiplied by a fraction, the numerator of which will be the
capacity of the IRU sold and the denominator of which will be the capacity of
the portion of the Circe Network then available for service (i.e, "lit fiber").
In addition, the Company expects to trade IRUs or capacity on the Circe
Network for IRUs or capacity on other cable systems. These trades of IRUs or
capacity are expected to be non-monetary exchanges and are not expected to have
a material affect on the Company's statement of operations. The Company will
also incur selling, general and administrative expenses with respect to the
Circe Network that will not be capitalized and will affect the Company's results
of operations, particularly while the Circe Network is being designed and built
in 1998 and placed into service in 1999 and will incur additional operating and
maintenance expenses until capacity on the Circe Network is sold. As a result of
financing the Circe Network with debt, the Company will capitalize a portion of
the interest incurred that relates to the Circe Network until it is placed in
service and will incur substantial increases in interest expense thereafter.
RESULTS OF OPERATIONS
The following table summarizes the breakdown of the Company's results of
operations as a percentage of telecommunications revenue:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED
DECEMBER 31, MARCH 31,
------------------------------- --------------------
1995 1996 1997 1997 1998
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Cost of telecommunications services...................................... 85.6% 83.6% 87.0% 83.0% 90.0%
Selling, general and administrative expenses............................. 75.3 65.2 49.4 59.9 42.2
Depreciation and amortization............................................ 8.2 9.5 10.6 8.7 13.7
EBITDA (loss)............................................................ (62.7) (48.7) (36.4) (42.9) (32.1)
</TABLE>
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THREE MONTHS ENDED MARCH 31, 1998 COMPARED TO THREE MONTHS ENDED MARCH 31, 1997
TELECOMMUNICATIONS REVENUE. Telecommunications revenue increased by 45.9%
from $14.6 million on 23.5 million billable minutes for the three months ended
March 31, 1997 to $21.2 million on 52.4 million billable minutes for the three
months ended March 31, 1998. Telecommunications revenue growth for the first
quarter of 1998 was generated primarily from increased European traffic and from
growth in the Company's carrier business which was partially offset by decreased
traffic from the Company's Pacific Rim operations.
The overall increase of 122.9% in billable minutes from the first quarter of
1997 to the first quarter of 1998 was partially offset by declining revenue per
billable minute, as average revenue per billable minute declined by 37.1% from
$.62 in the first quarter of 1997 to $.39 in the first quarter of 1998,
primarily because of (i) a higher percentage of lower-priced intra-European and
national long distance traffic from the European Network (as defined herein) as
compared to intercontinental traffic, (ii) a higher percentage of lower-priced
carrier traffic as compared to retail traffic, (iii) reductions in certain rates
charged to retail customers in response to pricing reductions enacted by certain
ITOs and other carriers in many of the Company's markets and (iv) foreign
currency fluctuations. See"--Cost of Telecommunications Services."
Telecommunications revenue per billable minute from the sale of services to
retail customers, which represented 55.2% of total telecommunications revenue
for the three months ended March 31, 1998 (compared to 82.6% for the three
months ended March 31, 1997), decreased 38.6% from $.83 in the first quarter of
1997 to $.51 in the first quarter of 1998. Telecommunications revenue per
billable minute from the sale of services to carriers and other resellers
increased from $.27 in the first quarter of 1997 to $.29 in the first quarter of
1998. The number of customers billed declined 15.5% from 20,224 at March 31,
1997 to 17,090 at March 31, 1998. This decline in customers billed is primarily
attributable to the Company's Pacific Rim operations where the number of
customers billed declined 73.5% from 5,970 at March 31, 1997 to 1,584 at March
31, 1998, representing a net loss of 4,386 customers.
During the first quarter of 1998, approximately 52.9% of the Company's
telecommunications revenue was generated in Western Europe as compared to
approximately 41.9% of the Company's telecommunications revenue during the first
quarter of 1997. Telecommunications revenue from Latin America represented
approximately 17.3% of the Company's telecommunications revenue during the three
months ended March 31, 1998 as compared to approximately 26.9% of the Company's
telecommunications revenue during the three months ended March 31, 1997.
Telecommunications revenue from the Pacific Rim represented approximately 14.5%
of the Company telecommunications revenue during the three months ended March
31, 1997 as compared to approximately 2.9% of the Company's telecommunications
revenue during the three months ended March 31, 1998.
During the first quarter of 1998 as compared to the first quarter of 1997,
the Company has significantly increased its carrier business (through which it
sells switched minutes to carriers and other resellers at discounted rates). The
carrier business has enabled the Company to recover partially the costs
associated with increased capacity in advance of demand within retail markets.
Such economy of scale has allowed the Company to use its network more profitably
for network originations and terminations within Europe. The carrier business
represented approximately 44.6% of total telecommunications revenue and
approximately 56.2% of billable minutes for the three months ended March 31,
1998 as compared to approximately 16.6% of total telecommunications revenue and
approximately 37.6% of billable minutes for the three months ended March 31,
1997. The increase in telecommunications revenue derived from carriers and other
resellers represents an increase of approximately 275.1% over the corresponding
period in 1997.
COST OF TELECOMMUNICATIONS SERVICES. Cost of telecommunications services
increased from $12.1 million in the first quarter of 1997 to $19.1 million in
the first quarter of 1998 and, as a percentage of telecommunications revenue,
increased from approximately 83.0% to approximately 90.0% for the three months
ended March 31, 1997 and 1998, respectively. The Company's gross margin
decreased from 17.0%
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for the three months ended March 31, 1997 to 10.0% for the three months ended
March 31, 1998. This decrease was primarily due to (i) decreased revenue per
minute (resulting from price competition and foreign currency fluctuations)
which was not offset by corresponding decreases in infrastructure costs, (ii)
increased sales to carrier customers (which generate substantially lower
margins), and (iii) an increase in intra-European and national long distance
traffic compared to higher margin international traffic. This decrease in gross
margin is one of the principal reasons the Company initiated a strategy to own
key elements of its network infrastructure. Although it did not decrease as fast
as revenues per minute the Company's average cost per billable minute decreased
from $.51 during the three months ended March 31, 1997 to $.35 during the three
months ended March 31, 1998, a 31.4% decrease. This decrease, which partially
offset the effect of the decline in average revenue per billable minute, was
attributable primarily to increased traffic being routed through the European
Network and increased switched minutes generated by the Company's carrier
business, both of which increased the utilization of fixed cost leased lines.
Increased European Network utilization helped reduce costs on a per minute basis
with respect to European long distance telecommunications services.
Cost of telecommunications services increased in the three months ended
March 31, 1998 in part because of the relatively high cost of leased
infrastructure related to increasing the Viatel Network's transmission capacity.
These costs are expected to decrease as a percentage of telecommunications
revenue as the Company continues its efforts to convert from leased to owned
capacity. The Company increased its private line circuits capacity by 175%, and
as a result the fixed costs associated with the Viatel Network, increased from
approximately $1.7 million for the three months ended March 31, 1997
(approximately 11.4% of telecommunications revenue) to approximately $2.8
million for the three months ended March 31, 1998 (approximately 13.0% of
telecommunications revenue). Due to the high cost of leased lines in Western
Europe, the Company believes its use of private line circuits will decrease and
such decrease will positively impact the Company's overall gross margins as more
minutes are routed through infrastructure owned by the Company. This benefit,
however, is primarily limited to calls that either originate or terminate in a
city where the Company owns infrastructure, because otherwise the Company is
required to transport the call over the public switched telephone network at
higher transmission costs and reduced margins.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses increased from $8.7 million in the three months ended
March 31, 1997 to $9.0 million in the three months ended March 31, 1998 and, as
a percentage of telecommunications revenue, decreased from approximately 59.9%
in the three months ended March 31, 1997 to approximately 42.2% in the three
months ended March 31, 1998. Much of these expenses are attributable to overhead
costs associated with the Company's headquarters, back office and network
operations as well as maintaining a physical presence in seventeen different
jurisdictions. Salaries and commissions, as a percentage of total selling,
general and administrative expenses, were approximately 52.7% and 52.3% for the
three months ended March 31, 1997 and 1998, respectively.
EBITDA LOSS. EBITDA loss increased from $6.2 million for the three months
ended March 31, 1997 to $6.8 million for the three months ended March 31, 1998.
As a percentage of telecommunications revenue, EBITDA loss decreased from
approximately 42.9% in the first quarter of 1997 to approximately 32.1% in the
first quarter of 1998. These losses resulted from lower gross margins as a
percentage of telecommunications revenue due to the relatively high cost of
intra-European leased lines which was compounded by price reductions implemented
by certain ITOs.
DEPRECIATION AND AMORTIZATION. Depreciation and amortization expense, which
includes depreciation of the Viatel Network, increased from approximately $1.3
million in the three months ended March 31, 1997 to approximately $2.9 million
in the three months ended March 31, 1998. The increase was due primarily to the
depreciation of equipment related to network expansion and fiber optic cable
systems placed in service during 1997 and the first quarter of 1998.
Depreciation expense will increase substantially
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<PAGE>
as a result of the further expansion of the Viatel Network, particulary, in the
near term, from the construction of the Circe Network.
INTEREST. Interest expense increased from approximately $3.0 million in the
three months ended March 31, 1997 to approximately $3.8 million in the three
months ended March 31, 1998, primarily due to the accretion of non-cash interest
on the 1994 Notes. Interest income decreased from approximately $1.1 million in
the three months ended March 31, 1997 to approximately $.5 million for the three
months ended March 31, 1998. Interest expense and income will increase
substantially as a result of the completion of the Offering.
1997 COMPARED TO 1996
TELECOMMUNICATIONS REVENUE. Telecommunications revenue increased by 44.8%
from $50.4 million on 62.2 million billable minutes for 1996 to $73.0 million on
140.9 million billable minutes for 1997. Telecommunications revenue growth for
1997 was generated primarily from increased traffic volume on the European
Network, from growth in the Company's carrier business and, to a lesser extent,
increased traffic volume in Latin America and the Pacific Rim.
The overall increase of 126.4% in billable minutes from 1996 to 1997 was
partially offset by declining revenue per billable minute, as average revenue
per billable minute declined by 36.3% from $.80 in 1996 to $.51 in 1997,
primarily because of (i) a higher percentage of lower-priced intra-European and
national long distance traffic from the European Network as compared to
intercontinental traffic, (ii) a higher percentage of lower-priced carrier
traffic as compared to retail traffic, (iii) reductions in certain rates charged
to retail customers in response to pricing reductions enacted by certain ITOs
and other carriers in many of the Company's markets, (iv) changes in customer
access methods and (v) foreign currency fluctuations. See "-- Cost of
Telecommunications Services."
Telecommunications revenue per billable minute from the sale of services to
retail customers, which represented 72.1% of total telecommunications revenue in
1997 (compared to 83.5% 1996), decreased from $1.04 in 1996 to $.69 in 1997.
Telecommunications revenue per billable minute from the sale of services to
carriers and other resellers decreased from $.38 in 1996 to $.30 in 1997,
primarily as a result of price competition. The number of customers billed rose
18.4% from 18,172 at December 31, 1996 to 21,515 at December 31, 1997.
During 1997, approximately 44.7% of the Company's telecommunications revenue
was generated in Western Europe as compared to approximately 41.9% of the
Company's telecommunications revenue in 1996. Despite an increase of
approximately 14.1% over 1996, telecommunications revenue from Latin America
represented approximately 22.2% of the Company's telecommunications revenue
during 1997 as compared to approximately 28.4% of the Company's
telecommunications revenue during 1996. Telecommunications revenue from the
Pacific Rim represented approximately 12.4% of the Company's telecommunications
revenue during 1996 as compared to approximately 11.2% of the Company's
telecommunications revenue in 1997.
The Company has significantly increased its carrier business through which
it sells switched minutes to carriers and other resellers at discounted rates.
The carrier business represented approximately 27.9% of total telecommunications
revenue and approximately 46.1% of billable minutes for 1997 as compared to
approximately 16.5% of total telecommunications revenue and approximately 35.2%
of billable minutes for 1996. This increase in telecommunications revenue
represents an increase of approximately 147.0% over 1996.
COST OF TELECOMMUNICATIONS SERVICES. Cost of telecommunications services
increased from $42.1 million in 1996 to $63.5 million in 1997 and, as a
percentage of telecommunications revenue, increased from approximately 83.6% to
approximately 87.0% for 1996 and 1997, respectively. The Company's gross margin
decreased from 16.4% for 1996 to 13% for 1997. This decrease was primarily due
to (i) decreased revenue per minute (resulting from price competition and
foreign currency fluctuations) which was not offset by corresponding decreases
in infrastructure costs, (ii) increased sales to carrier customers (which
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<PAGE>
generate substantially lower margins), and (iii) an increase in intra-European
and national long distance traffic compared to higher margin international
traffic. This decrease in gross margin is one of the principal reasons the
Company initiated a strategy to own key elements of its network infrastructure.
Although it did not decrease as fast as revenues per minute, the Company's
average cost per billable minute decreased from $.67 during 1996 to $.44 during
1997, a 34.3% decrease. This decrease, which partially offset the effect of the
decline in average revenue per billable minute, was attributable primarily to
(i) increased traffic being routed through the European Network, which increased
the utilization of fixed cost leased lines, (ii) increased switched minutes
generated by the Company's carrier business, which also increased the
utilization of fixed cost leased lines, and (iii) changes in customer access
methods. Increased European Network utilization helped reduce costs on a per
minute basis with respect to European long distance telecommunications services.
Cost of telecommunications services increased in 1997 because of leased line
costs for additional transmission capacity and the accelerated rollout of
European POPs. These costs are expected to decrease as a percentage of
telecommunications revenue as the Company continues its efforts to convert from
leased to owned capacity. The Company increased its private line circuits
capacity by 311%, and as a result the fixed costs associated with the European
Network, costs for private line circuits increased from approximately $4.1
million for 1996 (approximately 8.2% of telecommunications revenue) to
approximately $6.0 million for 1997 (approximately 8.2% of telecommunications
revenue). Due to the high cost of leased lines in Europe, the Company believes
its use of private line circuits will decrease and such decrease will positively
impact the Company's overall gross margins as more minutes are routed through
infrastructure owned by the Company. This benefit, however, is primarily limited
to calls that either originate or terminate in a city where the Company has a
switch or POP, because otherwise the Company is required to transport the call
over the PSTN at higher transmission costs and reduced margins.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses increased from $32.9 million in 1996 to $36.1 million in
1997 and, as a percentage of telecommunications revenue, decreased from
approximately 65.2% in 1996 to approximately 49.4% in 1997. Much of these
expenses are attributable to overhead costs associated with the Company's
headquarters, back office and network operations as well as maintaining a
physical presence in seventeen different jurisdictions. Salaries and
commissions, as a percentage of total selling, general and administrative
expenses, were approximately 49.0% and 51.6% for 1996 and 1997, respectively.
EBITDA LOSS. EBITDA loss increased from $(24.6) million for 1996 to $(26.6)
million for 1997. As a percentage of telecommunications revenue, EBITDA loss
decreased from approximately (48.7)% in 1996 to approximately (36.4)% in 1997.
These losses resulted from lower gross margins as a percentage of
telecommunications revenue due to the relatively high cost of intra-European
leased lines which was compounded by predatory price reductions implemented by
certain ITOs.
DEPRECIATION AND AMORTIZATION. Depreciation and amortization expense, which
includes depreciation of the Viatel Network, increased from approximately $4.8
million in 1996 to approximately $7.7 million in 1997. The increase was due
primarily to the depreciation of equipment related to network expansion and
fiber optic cable systems placed in service during 1997. Amortization expense
will increase substantially as a result of the further expansion of the Viatel
Network, particularly, in the near term, from the construction of the Circe
Network.
INTEREST. Interest expense increased from approximately $10.8 million in
1996 to approximately $12.5 million in 1997 due to the accretion of non-cash
interest on the 1994 Notes not payable until July 15, 2000, at which time
semi-annual interest expense will be required through the January 15, 2005
maturity date. Interest income increased from approximately $1.9 million for
1996 to approximately $3.7 million in 1997, primarily as a result of the
investment of the net proceeds from the IPO. Interest expense will increase
substantially as a result of the Offering.
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1996 COMPARED TO 1995
TELECOMMUNICATIONS REVENUE. Telecommunications revenue increased by 56.0%
from $32.3 million on 25.9 million billable minutes for 1995 to $50.4 million on
62.2 million billable minutes for 1996. Telecommunications revenue growth for
1996 was generated primarily from higher traffic volume on the European Network,
from growth in the Company's wholesale business and, to a lesser extent, from
growth in traffic volume in Latin America and the Pacific Rim.
The overall increase of 140.0% in billable minutes from 1995 to 1996 was
partially offset by declining revenue per billable minute, as average revenue
per billable minute declined 35.0% from $1.23 in 1995 to $.80 in 1996 primarily
because of (i) a higher percentage of lower-priced intra-European traffic from
the European Network, (ii) a higher percentage of low-priced wholesale traffic,
(iii) reductions in certain rates charged to retail customers in response to
pricing reductions enacted by certain ITOs and (iv) changes in customer access
methods. See "-- Cost of Telecommunications Services."
Telecommunications revenue per billable minute from the sale of services to
retail customers decreased 28.8% from $1.46 in 1995 to $1.04 in 1996.
Telecommunications revenue per billable minute from the sale of services to
carriers and other resellers increased 8.6% from $.35 in 1995 to $.38 in 1996
primarily as a result of an overall increase in intercontinental call traffic.
The number of customers billed rose 97.1% from 9,218 at December 31, 1995 to
18,172 at December 31, 1996. During the second half of 1996, the Company
commenced offering national long distance telecommunications services in
Germany, Italy and Spain.
In order to utilize excess network capacity, the Company has significantly
increased its wholesale business through which it sells switched minutes to
carriers and other resellers at rates that are at a discount to the rates that
the Company charges its retail customers. While the wholesale business has lower
average gross margins than the Company's retail business, the telecommunications
revenue generated from the wholesale business partially offsets the fixed costs
associated with the Viatel Network. The wholesale business represented
approximately 6.2% and 21.6% of total telecommunications revenue and billable
minutes, respectively, for 1995 as compared to approximately 16.5% and 35.2% of
total telecommunications revenue and billable minutes, respectively, for 1996.
While the increase in telecommunications revenue represents an approximately
320.0% increase over the corresponding period for 1995, a portion of this
increase represents the migration of business formerly conducted by the Company
in Africa and the Middle East through indirect sales representatives to carriers
which purchase switched minutes from the Company.
COST OF TELECOMMUNICATIONS SERVICES. Cost of telecommunications services
increased from $27.6 million in 1995 to $42.1 million in 1996 and, as a
percentage of telecommunications revenue, decreased from approximately 85.6% for
1995 to approximately 83.6% for 1996. The corresponding increase in gross
margins was primarily due to changes in overall service mix and increased
utilization of the European Network. The Company experienced a 35.6% decrease in
average cost per billable minute from $1.04 during 1995 to $.67 during 1996.
This decrease, which more than offset the effect of the decline in average
revenue per billable minute, was attributable primarily to (i) increased traffic
being routed through the European Network which resulted in reduced costs on a
per minute basis with respect to European long distance telecommunications
services, (ii) an increase in switched minutes generated by the Company's
wholesale business and (iii) changes in customer access methods.
Gross margins for 1996 were negatively impacted by increases in certain
costs related to the expansion of the Company's overall transmission capacity.
The fixed costs per minute are expected to decrease as a percentage of
telecommunications revenue as traffic volume over the European Network
increases. As a result of obtaining additional private line circuits capacity,
the costs associated with the European Network increased from approximately $2.0
million for 1995 (approximately 6.3% of telecommunications revenue for such
period) to approximately $4.1 million for 1996 (approximately 8.2% of
telecommunications revenue for such period).
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SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses increased from $24.3 million in 1995 to $32.9 million in
1996 and, as a percentage of telecommunications revenue, decreased from
approximately 75.3% in 1995 to approximately 65.2% in 1996. Much of the
increased dollar amount of selling, general and administrative expenses is
attributable to the costs of building a direct sales force in Western Europe and
the Company's continued transition from indirect to direct sales organizations
in certain other countries in which the Company does business, and overhead cost
associated with the Company's headquarters, back office and operations. The
transition to a direct sales force was significantly completed in 1995 and 1996
is the first year in which the costs of such sales force was incurred throughout
the year.
During 1996, the Company took a $1.3 million charge associated with a
corporate restructuring undertaken during the year principally for employee
termination and relocation costs and a charge for a portion of the Company's
lease for its administrative headquarters in London and an $.85 million expense
associated with a French arbitration award against the Company. Had these
expenses not been incurred, selling, general and administrative expenses would
have decreased to approximately 61.0%, as a percentage of telecommunications
revenue. Salary related selling, general and administrative expenses represented
approximately 51.2% and 49.0% of total selling, general and administrative
expenses for 1995 and 1996, respectively.
EBITDA LOSS. EBITDA loss increased from $(20.3) million for 1995 to $(24.6)
million for 1996. As a percentage of telecommunications revenue, EBITDA loss
decreased from approximately (62.7)% in 1995 to approximately (48.7)% in 1996.
DEPRECIATION AND AMORTIZATION. Depreciation and amortization expense
increased from approximately $2.6 million in 1995 to approximately $4.8 million
in 1996. The increase was due primarily to the depreciation of switches and
other equipment placed in service during 1995 and 1996.
EQUIPMENT IMPAIRMENT LOSS. In connection with the replacement of
substantial portions of the European Network during 1995, the Company entered
into a termination agreement with TeleMedia International, Inc. ("TMI").
Pursuant to the terms of such agreement, the Company prepaid the remaining lease
obligation of approximately $1.0 million, thereby acquiring all of the equipment
previously leased from TMI, most of which equipment was subsequently redeployed.
The Company recorded a non-cash charge of approximately $.6 million in 1995,
which represented the original installation costs of such equipment and the
difference between the carrying value and the expected selling price of the
equipment not expected to be redeployed.
INTEREST. Interest expense increased from approximately $8.9 million in
1995 to approximately $10.8 million in 1996 due to the accretion of non-cash
interest on the 1994 Notes. Interest income was approximately $3.3 million and
$1.9 million for 1995 and 1996, respectively.
LIQUIDITY AND CAPITAL RESOURCES
The Company has incurred losses from operating activities in each year of
operations since its inception and expects to continue to incur operating and
net losses for the next several years. Since inception, the Company has utilized
cash provided by financing activities to fund operating losses and capital
expenditures. The sources of this cash have primarily been private equity
financing, the proceeds from the sale of the 1994 Notes, the proceeds from the
Company's initial public offering in October 1996 and, to a lesser extent,
equipment-based financing. As of March 31, 1998, the Company had $28.2 million
of cash, cash equivalents and other liquid investments.
On April 8, 1998, the Company completed the Offering through which it raised
approximately $889.6 million of gross proceeds ($856.6 million of net proceeds).
The Company believes that the net proceeds from the Offering, together with
project financing, equipment financing and the sale of capacity on the Circe
Network will provide sufficient funds for the Company to expand its business as
planned and to fund its operating losses for at least the next 18 to 24 months.
However, the amount of the Company's future
65
<PAGE>
capital requirements will depend on a number of factors, including the success
of the Company's business, the start-up date of the Circe Network, the rate at
which the Company further expands the Viatel Network, the types of services that
the Company offers, staffing levels, acquisitions and customer growth, as well
as other factors that are not within the Company's control, including
competitive conditions, government regulatory developments and capital costs. In
the event that the Company's plans or assumptions change or prove to be
inaccurate, the Company is unable to convert from leased to owned capacity in
accordance with its current plans or the net proceeds of the Offering, project
financing, equipment financings and the proceeds from the sale of capacity on
the Circe Network prove to be insufficient to fund the Company's growth in the
manner and at the rate currently anticipated, the Company may be required to
delay or abandon some or all of the Company's development and expansion plans or
the Company may be required to seek additional sources of financing earlier than
currently anticipated.
The Company has used certain of the net proceeds from the Offering to (i)
finance the Tender Offer (including the payment of consent fees) and (ii) to
purchase approximately $122.8 million of U.S. Pledge Securities and
approximately $30.6 million of DM Pledge Securities. The Company intends to use
the remaining net proceeds to fund a portion of the construction and operational
start-up of the Circe Network, to fund other capital expenditures and for
general corporate and working capital purposes.
The Company completed the Tender Offer on April 8, 1998 in which all $120.7
million aggregate principal amount at maturity of the 1994 Notes were tendered.
In connection with the tender for the 1994 Notes, the Company estimates that a
one-time charge of approximately $28.3 million will be incurred and recorded in
the second quarter of 1998. This extraordinary charge relates to the early
extinguishment of debt and is comprised of the following: (i) a $24.7 million
premium paid in connection with the Tender Offer, (ii) a $0.3 million fee and
$0.7 million of other costs associated with the Tender Offer, and (iii) a
write-off of $2.6 million in unamortized deferred issuance and registration fees
associated with the 1994 Notes.
CAPITAL EXPENDITURES; COMMITMENTS. The development of the Company's
business has required substantial capital expenditures. During 1995, 1996, 1997
and the three months ended March 31, 1998, the Company had capital expenditures
of approximately $11.4 million, $9.4 million, $34.2 million and $2.7 million,
respectively. The Company expects to spend approximately $530.0 million to
construct the Circe Network and place it in service, although there can be no
assurance that the Company will not spend substantially more to complete the
Circe Network. The Company has or intends to enter into certain agreements
associated with the Circe Network, purchase commitments for network expansion
and other items aggregating $200.0 million to $400.0 million during 1998. In
addition, the Company has minimum volume commitments to purchase transmission
capacity from various domestic and foreign carriers aggregating approximately
$13.8 million for 1998. See Note 13 to the Company's Consolidated Financial
Statements, contained elsewhere in this Prospectus. In connection with the
Company's license application in Germany, the Company expects that it will be
required to pay, during 1998, a one-time license fee in the amount of
approximately $7.5 million (based on the exchange rate as of March 31, 1998).
The Company has signed various letters of intent relating to the Circe Network,
which currently commit the Company to make certain payments equal to the lesser
of actual cost or $5.3 million. The Company's obligations with respect to such
amounts are subject to further reduction based on an obligation of the vendor to
mitigate damages if the arrangements are terminated by the Company.
FOREIGN CURRENCY. The Company has exposure to fluctuations in foreign
currencies relative to the U.S. Dollar as a result of billing portions of its
telecommunications revenue in local European currency in a country where the
local currency is relatively stable, while many of its obligations, including a
substantial portion of its transmission costs, are denominated in U.S. Dollars.
In countries with less stable currencies, such as Brazil, the Company bills in
U.S. Dollars. For the three months ended March 31, 1998, approximately 52.9% of
the Company's telecommunications revenue was billed in various European
currencies. Debt service on the 12.40% Notes and the 11.15% Notes are payable in
German Deutschmarks. Substantially all of the costs of acquisition and upgrade
of the Company's switches have
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been, and are expected to continue to be, U.S. Dollar denominated transactions,
however, a substantial portion of the costs to construct the Circe Network will
be denominated in various European currencies, including German Deutschmarks.
All of the European currencies in which the Company does business are expected
to converge as part of the European Monetary Union, except for the British Pound
Sterling.
With the continued expansion of the European Network, a substantial portion
of the costs associated with the European Network, such as local access charges
and a portion of the leased line costs, as well as a majority of local selling
expenses and debt service related to the 12.40% Notes and the 11.15% Notes, will
be charged to the Company in the same currencies as revenue is billed. These
developments create a natural hedge against a portion of the Company's foreign
exchange exposure. To date, much of the funding necessary to establish the local
direct sales organizations has been derived from telecommunications revenue that
was billed in local currencies. Consequently, the Company's financial position
as of March 31, 1998 and its results of operations for the three months ended
March 31, 1998 were not significantly impacted by fluctuations in the U.S.
Dollar in relationship to foreign currencies.
YEAR 2000. In 1997, the Company conducted an evaluation of its computer
systems and network for Year 2000 compliance. Based on such evaluation, the
Company believes that its software and hardware systems are Year 2000 compliant.
The Company does not know whether the computer systems of ITOs and other
carriers on whose services the Company depends for transmission capacity are
Year 2000 compliant. If the computer systems of the ITOs and such other carriers
are not Year 2000 compliant, it could have a material adverse effect on the
Company's business, financial condition and results of operations and its
ability to make payments on the Notes. See "Risk Factors -- Dependence on
Effective Information Systems; Year 2000 Technology Risks."
PROSPECTIVE ACCOUNTING PRONOUNCEMENTS
Statement of Financial Accounting Standards No. 130 ("SFAS 130"), "Reporting
Comprehensive Income," and Statement of Financial Accounting Standards No. 131
("SFAS 131"), "Disclosures about Segments of an Enterprise and Related
Information," were issued in June 1997. SFAS 130 establishes standards for
reporting and display of comprehensive income and its components in a full set
of general purpose financial statements. This statement requires that all items
that are required to be recognized under accounting standards as components of
comprehensive income, such as foreign currency fluctuations currently reported
in stockholder's equity, be reported in an annual financial statement that is
displayed with the same prominence as other financial statements. SFAS 131
establishes standards for the way public companies report information about
operating segments in annual financial statements and requires that these
companies report selected information about operating segments in interim
financial reports issued to stockholders. It also establishes standards for
related disclosures about products and services, geographic areas and major
customers. The Company adopted SFAS 130 in the first quarter of 1998 and will
adopt SFAS 131 for its annual reporting in 1998.
Statement of Financial Accounting Standards No. 133 ("SFAS 133"),
"Accounting for Derivative Instruments and Hedging Activities," was issued in
June 1998. SFAS 133 standardizes the accounting for derivative instruments,
including certain derivative instruments embedded in other contracts, by
requiring recognition of those instruments as assets and liabilities and to
measure them at fair value. SFAS 133 will be effective for the Company in 2000.
The Company has not yet determined the effects of the pronouncement.
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BUSINESS
OVERVIEW
The Company is a rapidly growing international telecommunications company
providing high quality, competitively priced, international and domestic long
distance telecommunications services, primarily to small and medium-sized
businesses, carriers and resellers. These services include national and
international long distance telecommunication services, as well as enhanced
services such as toll free services, calling cards and switched voice band data
services. The Company established an early presence in several key Western
European countries to capitalize on the opportunities presented by full
deregulation of the telecommunications industry. The Company currently operates
one of the largest alternative Pan-European networks, with international gateway
switching centers in New York and London, network POPs in 30 cities, direct
sales forces in nine Western European cities and indirect sales offices in more
than 100 additional locations in Western Europe. Today, the Company provides
telecommunications services in Belgium, France, Germany, Italy, Spain,
Switzerland, The Netherlands and the United Kingdom. The Company also provides
telecommunications services in certain countries in Latin America and Asia and
operates as a carriers' carrier in the United States and the United Kingdom. The
Company's telecommunications revenues have grown from $32.3 million in 1995 to
$73.0 million in 1997.
The Company's mission is to build a Pan-European telecommunications company
focusing on small and medium-sized businesses, while becoming a high quality,
low-cost provider of telecommunications products and services through the
ownership of key network infrastructure. The Company believes that the small and
medium-sized businesses segment offers significant market opportunities because
it has traditionally been underserved by the ITOs and is likely to be receptive
to competitively priced bundled service offerings by New Entrants, such as those
offered by the Company. To service this customer base, to date the Company has
established sales offices in nine Western European cities and has established
indirect sales offices, through arrangements with independent sales
representatives and telemarketing agents, in more than 100 additional locations
in Western Europe. At March 31, 1998, the Company's customer base, primarily
consisting of small and medium-sized businesses, was 17,090, of which 11,712
were located in Western Europe.
The Company believes that network ownership is critical to becoming an high
quality, low-cost provider and will create the necessary platform to provide a
full array of telecommunications products and services to customers. The Company
has recently initiated a program to own key elements of its network
infrastructure, including interests in fiber optic cable systems. By owning or
controlling key elements of its network, the Company will be better able to
control service offerings, quality, and transmission and other operating costs.
Ownership of network facilities is an essential element in the Company's
expansion into new service offerings such as data products, including frame
relay, Internet services and ATM services.
As part of the Company's strategy to own or control key elements of its
network, the Company is developing the Circe Network, a state-of-the-art fiber
optic ring which will connect five countries and will include London, Paris,
Nancy, Strasbourg, Stuttgart, Frankfurt, Cologne, Dusseldorf, Essen, Brussels,
Antwerp, Rotterdam and Amsterdam. Bechtel, one of the largest construction
companies in the world, has been engaged by the Company to manage the
construction of the system. The Circe Network will be a high quality, high
capacity, self-healing ring, utilizing advanced SDH, which is the current
international standard for digital transmission, and DWDM technologies. The
Circe Network will significantly expand the Company's revenue opportunities by
enabling it to (i) provide a broader range of products and services to retail
customers, (ii) provide wholesale services to the large base of resellers that
the Company expects will develop as deregulation continues in Western Europe and
(iii) capitalize on the growing demand for bandwidth intensive services in
Europe. The Company intends to offer its target customer base a better transport
system than is currently available in Europe with a higher and more consistent
level of transmission quality, redundancy, network functionality and service at
lower prices.
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The Circe Network will offer ITOs and New Entrants an attractive alternative
for the transport of cross-border telecommunications traffic. Under the
traditional system of carrying cross-border telecommunications traffic in
Europe, no ITO developed end-to-end cross-border circuits. The Company believes
no alternative carrier currently offers cost-effective capacity, resulting in
the absence of such capacity between Western European countries. The Circe
Network will offer cost-effective cross-border connectivity between major
Western European cities as a compelling alternative to ITO-provided leased
lines, which suffer from a number of deficiencies in terms of cost, quality and
availability. The Circe Network will address these deficiencies by creating a
Pan-European fiber network that will allow carriers to own capacity on a
self-healing, cross-border basis.
In order to complement and efficiently utilize capacity on Viatel's network,
the Company sells switched minutes to wholesale customers and other resellers in
the United States and the United Kingdom. The Company believes that the sale of
switched minutes to such customers is an effective means of achieving network
efficiencies. The Company believes that the Flat Rate Acquisition further
enhances the Company's network efficiency, builds scale and provides the Company
with the critical mass necessary to compete in today's competitive
telecommunications markets.
Viatel is a Delaware corporation and is the successor to VIA USA, Ltd. (a
Colorado corporation) which was merged into Viatel on October 11, 1994 to
effecuate a reincorporation within the State of Delaware.
MARKET OPPORTUNITIES
International telecommunications is one of the fastest growing segments of
the long distance industry, having experienced a compounded growth in total
minutes of 14% per annum from 1989 to 1996, and is expected to continue growing
at a rate of approximately 13% per annum through the year 2000. Based upon this
estimate, worldwide international long distance traffic is projected to grow
from 70 billion minutes in 1996 to over 114 billion minutes by the year 2000.
For 1996, the European international long distance market was the largest in the
world with approximately 28 billion minutes or 40% of international calling
volume originating in Europe. A substantial portion of the traffic originating
in Europe terminates in Europe or the United States where the Company has
international gateway switches.
INTERNATIONAL TRAFFIC PATTERNS
<TABLE>
<CAPTION>
EUROPE* USA OTHER
----------- --------- -----------
<S> <C> <C> <C>
Belgium........................................................... 75.5% 3.7% 20.8%
Netherlands....................................................... 69.0 6.2 24.8
Germany........................................................... 42.7 6.0 51.4
France............................................................ 53.5 5.7 40.8
Italy............................................................. 54.4 9.1 36.5
Spain............................................................. 53.9 4.1 42.0
United Kingdom.................................................... 36.8 14.4 48.8
</TABLE>
- ------------------------
* Europe -- represents the listed countries and Switzerland.
Source: TeleGeography 1997.
The Company estimates that, during 1997, the market for total long distance
voice and voice band data in the Western European countries in which the Company
operates represented approximately $59.6 billion, with $45.0 billion
representing national long distance and approximately $14.6 billion representing
international long distance. In many EU member states, the ability to provide
telecommunications services was liberalized on January 1, 1998. The Company
believes that regulatory liberalization in Western Europe and technological
advancements eventually will lead to market developments similar to those that
have
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occurred in the United States and the United Kingdom following deregulation,
including an increase in both international and national traffic volume, reduced
prices, increased service offerings and the emergence of New Entrants. By 1995,
New Entrants had amassed approximately 19% of the United States long distance
market, from approximately 10% in 1984. In addition, from 1991 to 1995, the
number of competitors in the United Kingdom grew from 2 to 120.
The Company believes there is a shortage of cross-border capacity in Europe.
Most infrastructure in Europe is owned and operated by the ITOs. Under the
traditional system of carrying cross-border telecommunications traffic in
Europe, no ITO developed end-to-end cross-border circuits. Instead, an
international call is carried by the ITO in the country where the call
originates and is passed off to the ITO in the country in which the call
terminates pursuant to bilateral agreements. Cable systems have historically
been built by a consortia of ITOs and certain other carriers under the "Club"
system. The Club system has traditionally had no incentive to (i) upgrade
capacity to provide access to new carriers since their respective needs were
met, or (ii) sell capacity on a cost-effective basis to other carriers. In
addition, landing stations associated with these Club systems have traditionally
been controlled by the ITO members and, in instances where capacity is sold,
other carriers have been required to negotiate "back haul" arrangements in order
to achieve access to the Club systems. The Company believes the system of
bilateralism and the construction of cable systems by the "Club" has resulted in
a serious shortage of cross-border capacity in Europe. Moreover, growth in
bandwidth intensive services will further fuel the need for bandwidth. According
to industry sources, the bandwidth demand for data in the United States is
currently growing at the rate approximately 10 times faster than the demand for
voice services and the Company expects this trend to develop in Europe as
competitively priced capacity becomes available.
There are currently two private systems carrying cross border traffic
currently in operation, Ulysses, which is owned by WorldCom, and Hermes. When
completed, Ulysses will be an approximately 1,800 route kilometer Pan-European
fiber optic network connecting London, Amsterdam, Brussels and Paris. Hermes is
currently an approximately 2,600 route kilometer fiber optic network connecting
London, Rotterdam, Amsterdam, Antwerp, Brussels, Paris, Dusseldorf and
Frankfurt. The Company believes that neither Ulysses nor Hermes are currently
selling capacity on an IRU basis to other carriers. However, Hermes is currently
leasing capacity to carriers and New Entrants at prices which are attractive
compared to those offered by the ITOs, but remain significantly higher than
actual costs. In addition to Hermes and Ulysses, Fibernet Group plc has built a
35 city network, primarily in the United Kingdom, Espirit Telecom Group plc is
attempting to build out its Pan-European network and other companies such Level
3 Communications and British Telecom are planning to launch a Pan-European
network. Cable & Wireless has also announced its intention to invest significant
resources in European telecommunications facilities and other companies, such as
Unisource and Global One, have announced their intention to continue to focus on
the European telecommunications market. The Company believes that the Circe
Network will provide a valuable opportunity to market capacity to other carriers
on an attractive cost-efficient IRU basis and to New Entrants on an IRU or
long-term lease basis.
The Company believes that a substantial part of the capacity on existing
routes has a number of deficiencies including (i) high costs, (ii) lack of
end-to-end quality control, (iii) limited availability of bandwidth, (iv) long
lead times for provisioning, (v) lack of redundancy and (vi) long delays for
restoration. While there have been significant reductions in leased line costs
as a result of deregulation, these deficiencies are exacerbated by the increase
in demand for bandwidth from New Entrants, thereby resulting in artificially and
significantly higher costs. The Company believes there is a significant
opportunity to provide cost-effective bandwidth to New Entrants.
BUSINESS STRATEGY
The Company's mission is to build a Pan-European telecommunications company
focusing on small and medium-sized businesses, while becoming a high quality,
low-cost provider of telecommunications
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products and services through the ownership of key network infrastructure. The
key elements of the Company's strategy include:
- CAPITALIZE ON LARGE AND RAPIDLY DEREGULATING EUROPEAN MARKETS
The Company's principal focus is on exploiting opportunities presented by
rapidly deregulating European markets. For 1996, the European international long
distance market was the largest in the world with approximately 28 billion
minutes. The Company estimates that, during 1997, the market for long distance
services and voice band data in the Western European countries in which the
Company operates represented approximately $59.6 billion, with approximately
$45.0 billion representing national long distance and approximately $14.6
billion representing international long distance. A substantial portion of the
international traffic originating in Europe terminates in Europe or the United
States where the Company has international gateway switches. As liberalization
takes effect throughout Western Europe, the Company believes New Entrants will
play a significant role in penetrating these markets.
- LEVERAGE ESTABLISHED MARKET PRESENCE AND LOCAL DISTRIBUTION NETWORK
The Company established an early presence in Western Europe to capitalize on
the opportunities presented by deregulation of the telecommunications industry
in Europe. As a result, the Company has gained substantial experience in the
operational, technical, financial and logistical issues involved in building a
network and sales force in Western Europe. To date, the Company has established
sales offices in nine Western European cities and has established indirect sales
offices, through arrangements with independent sales representatives and
telemarketing agents, in more than 100 additional locations in Western Europe.
The Company believes it is well positioned to identify and capitalize on
increasing market opportunities in Western Europe and will continue to build and
enhance its sales force and operations in Europe over the next few years and add
products and services as telecommunications markets continue to deregulate.
- FOCUS ON SIGNIFICANT BASE OF SMALL AND MEDIUM-SIZED BUSINESSES
The Company has established a retail customer base of small and medium-sized
businesses and intends to continue to focus its retail marketing efforts on this
market segment. In most European markets, small and medium-sized businesses
account for a significant percentage of national and international calling
traffic and the Company expects this segment will continue to provide a
significant opportunity for the Company. In 1996, small and medium-sized
businesses represented, on average, 60.0% of the total company revenues
generated and, as of 1994, approximately 66.0% of the total workforce in the EU
member states. The Company believes that small and medium-sized businesses are
likely to be receptive to competitively priced bundled service offerings by New
Entrants, such as those offered by the Company, because these businesses have
traditionally been underserved by the ITOs, which offer their best rates and
services primarily to higher-volume multinational business customers.
- ENHANCE REVENUE OPPORTUNITIES THROUGH CIRCE NETWORK
The Company believes that the Circe Network will significantly expand the
Company's ability to capitalize on opportunities presented by the deregulation
of the European telecommunications market. First, the Circe Network will provide
the Company with the ability to control the quality and scope of services to
retail customers, while effectively competing on price. Second, the Company
believes that deregulation of the continental European telecommunications market
will lead to the creation of numerous New Entrants, principally consisting of
resellers, as occurred in the United States and the United Kingdom following
deregulation of the telecommunications markets in those countries. The Circe
Network will enable the Company to capture a greater share of the expanding
Western European telecommunications market by providing wholesale services to
other New Entrants. Third, the Company believes that
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demand for data services will significantly outgrow existing capacity. The Circe
Network will enable the Company to service the expanding need created by
bandwidth intensive services.
- ESTABLISH LOW-COST POSITION THROUGH NETWORK OWNERSHIP AND CONTROL
The Company believes it is critical to own or control key elements of its
network in order to be a low-cost provider. By owning or controlling key
elements of its network, the Company will be better able to control service
offerings, quality, and transmission and other operating costs. As part of the
Company's efforts to own key portions of its network, the Company (i) has
purchased IRUs or MIUs in digital fiber optic cable systems, (ii) has purchased
POPs and switches, and (iii) will construct the Circe Network. The Company also
intends to acquire additional interests in submarine fiber optic cable
originating in the United Kingdom and connected to other EU member states in
which the Company has a local presence. The Circe Network's advanced fiber and
transmission electronics are expected to provide lower installation, operating
and maintenance costs than older fiber optic systems generally in commercial use
today. In addition, to offset the construction costs of the Circe Network, the
Company intends to sell IRUs on the Circe Network for cash or in exchange for
IRUs on other cable systems.
- CAPITALIZE ON EXPANDING DATA NEEDS
The majority of the Company's revenue is currently derived from
international long distance services. As liberalization leads to more favorable
interconnection rates in Western Europe, the Company intends to offer national
long distance services in additional Western European countries. Network
infrastructure ownership will facilitate the Company's entry into new products,
such as data products including frame relay, Internet and ATM services, which
are more bandwidth and transmission intensive. According to industry sources,
bandwidth demand for data in the U.S. is currently growing approximately 10
times faster than voice and the Company expects this trend to develop in Europe
as competitively priced capacity becomes available. The Company believes that
there will be substantial demand for data products by small and medium-sized
businesses, and that a bundled service offering of national and international
data and voice services will be attractive to this targeted customer base.
- LEVERAGE NETWORK THROUGH CARRIER SALES
In order to complement and efficiently utilize capacity on Viatel's network,
the Company sells switched minutes to wholesale customers and other resellers in
the United States and the United Kingdom. The Company believes that the sale of
switched minutes to such customers is an effective means of achieving network
efficiencies. The Company believes that the Flat Rate Acquisition further
enhances the Company's network efficiency, builds scale and provides the Company
with the critical mass necessary to compete in today's competitive
telecommunications markets.
- PURSUE ACQUISITIONS, INVESTMENTS AND STRATEGIC ALLIANCES
To date, the Company's growth primarily has been internally generated and
managed. In addition to systematically expanding the Company through internal
growth, the Company intends to expand its services and network capabilities
through acquisitions, investments and strategic alliances. The Company believes
that such acquisitions, investments and strategic alliances are an important
means of increasing network traffic volume and achieving lower termination costs
and desired economies of scale.
SERVICES
The Company currently provides competitively priced long distance services
with value-added features that typically have not been provided by the
respective ITO in many of the countries in which the Company operates. The
Company's services include Voice Telephony (where legally permissible), virtual
private networks, dedicated access for high volume users, calling cards, fax
service and the provision of switched minutes to wholesale customers. The
value-added features provided by the Company include itemized and multicurrency
billing, abbreviated dialing and multiple payment methods. See "-- The Viatel
Network."
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The Company's principal services include:
VIACALL -- a service permitting domestic and international calling to more
than 230 countries and territories through switched access. This service is
currently marketed exclusively in Germany, the United Kingdom and The
Netherlands where the Company has full interconnection and a national operator's
license.
VIACALL PLUS -- provides dedicated access via a leased line from the
customer to the Viatel Network, permitting calling without dialing access or
location codes.
VIACALL EXPRESS -- provides a paid (local) access or toll free number
programmed to dial an existing phone number or system, generally in another
country, without the need for special circuits or modifications.
VIAPN -- enables virtual private network calling to a pre-defined group of
locations within a closed user group that can be modified as required, subject
only to regulatory limitations.
VIAISDN -- permits domestic and international calling to more than 230
countries and territories through switched access via ISDN lines. In Spain, this
service is restricted to fax and voice band data pending the liberalization of
the Spanish market.
VIACONNECT -- provides "anywhere to anywhere" international callback access
through manual, automatic, X.25 or Internet initiated callback. These services
are also offered with International toll-free ("ITF") access, subject to pricing
considerations.
VIAGLOBE -- provides calling card access from more than 50 countries. In
addition to offering savings over the calling cards of AT&T, MCI and other
providers of credit-based international calling cards, VIAGLOBE provides 24-hour
operator assistance and speed dialing.
VIACARD -- is a prepaid international debit card which provides many of the
same features as VIAGLOBE on a prepaid basis.
The Company expects to begin offering data services during the second half
of 1998. The Company currently anticipates that it will incur between
$10.0-$40.0 million of capital expenditures during 1998 and 1999 in developing
such services. There can be no assurance that the Company will be able to launch
data services in the second half of 1998 or thereafter or that, if launched,
such services will be successful.
On January 1, 1998, the market for Voice Telephony was liberalized in all EU
member states where the Company currently does business, with the exception of
Spain. Seven EU member states, including Belgium, Germany and Italy have been
sued by the EC for their failure to timely implement EU directives implementing
the deregulation of Voice Telephony. See "-- Government Regulation."
THE VIATEL NETWORK
The Company currently operates one of the largest Pan-European networks,
with international gateway switching centers in New York and London, which are
connected by Company-owned digital fiber optic transmission facilities and has
developed an integrated digital, switch-based telecommunications network with
thirty locations in Western Europe including switches in Amsterdam (The
Netherlands), Barcelona and Madrid (Spain), Antwerp and Brussels (Belgium),
Frankfurt (Germany), Milan and Rome (Italy) and Paris (France) and additional
POPs as follows: Bilboa, Gerona, Majorca, Tarragona and Valencia (Spain); Leuven
(Belgium); Bordeaux, Lyon, Marseille and Toulouse (France); Geneva
(Switzerland); Rotterdam (The Netherlands); Berlin, Hamburg, Stuttgart and
Wiesbaden (Germany); Brescia, Florence, Genoa and Vicenza (Italy); connected by
leased, digital fiber optic transmission facilities (together with the switches
located at its international gateway switching center in London, the "European
Network"). The European Network, together with the Company's switches located at
its international gateway switching center in New York and POPs in Miami,
Florida and Omaha, Nebraska is referred to as
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the "Viatel Network". The Viatel Network employs four Nortel DMS 100e switches,
one Nortel DMS 300 switch, six Wyatt/Reuters MRX-2000 switches and three call
reorigination switches. The Company intends to install additional POPs in cities
with both significant calling activity directed to the Company's switched-based
cities and significant potential for originating and terminating international
and domestic long distance traffic as required for interconnection with other
carriers.
Access to the Company's services is obtained either through "switched
access" or "dedicated access." Switched access requires the use of: (i) carrier
selection (e.g., "1623" in the Netherlands), which requires the Company to pay
the ITO at a discounted rate for the cost of accessing the Company's services;
(ii) paid access, which requires the customer to pay the ITO for the cost of
accessing the Company's services; (iii) callback, which enables the customer to
receive a return call providing a dial tone originated from the Company's Omaha,
Nebraska switching center; (iv) ITF, which accesses the Company's Omaha,
Nebraska switching center by direct dial; or (v) national toll free, which
accesses a local switch in the European Network. Customers using dedicated
access are connected to a Company switch or POP by a private leased line
connected to the customer's premises. Carrier selection and dedicated access are
the Company's access method of choice in countries where the Company has
achieved full interconnection with the ITO. At this time, the Company has
interconnection agreements with the following ITOs: British Telecom (United
Kingdom), KPN (The Netherlands) and Deutsche Telekom (Germany). The Company also
has interconnection agreements with the following carriers: Cable & Wireless
(United Kingdom), Infostrada (with 32 POPs) (Italy) and ECN Telecommunications
(with 28 POPs) (Germany). Currently, substantially all of the Company's small
and medium-sized business customers use one or more forms of switched access.
The Company is currently negotiating interconnection agreements with France
Telecom, Belgacom and Telecom Italia. There can be no assurance that the Company
will be successful in securing such interconnection agreements in a satisfactory
or timely manner.
The Company's ownership of switches reduces its reliance on other carriers,
enables routing of telecommunications traffic over multiple transmission paths,
aids in controlling costs and permits the compilation of call record data and
other customer information. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Liquidity and Capital Resources
- -- Capital Expenditures; Commitments."
THE EUROPEAN NETWORK. The European Network currently consists of an
international gateway switching center in London and switches in the nine
Western European cities mentioned above. These cities were chosen as switch
locations due to the substantial number of international calls originating from
such cities. The European Network has been primarily used for call origination.
The Company anticipates increasing use of the European Network to transport
calls in Western Europe. See "-- Carrier Contracts."
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[LOGO]
PRIVATE LINE CIRCUITS. The Company's nine switches in Western Europe are
currently connected to its international gateway switching center in London by
private line circuits. Private line circuits are permanent point-to-point
connections for voice and data transmissions and, when certain levels of volume
are reached, are a less expensive alternative to the PSTNs. The private line
circuits connecting the Company's switches to the international gateway
switching center in London are leased directly, or indirectly through third
parties, from the ITOs in the countries in which such calls originate.
As part of the Company's concerted effort to convert leased capacity to
owned capacity for the purpose of improving operating margins, the Company has
continued to purchase IRUs or MIUs in digital fiber optic cable systems,
including IRUs in (i) CANUS-1/CANTAT-3 (8.196 megabits per second ("Mb/s"), a
transatlantic cable originating in the United States, Canada and the United
Kingdom,
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(ii) TAT-12/13 (8.196 Mb/s), a transatlantic cable originating in the United
States, the United Kingdom and France, (iii) Atlantic Crossing 1 (155.5 Mb/s), a
transatlantic cable originating in the United States and the United Kingdom, and
(iv) Gemini (44.7 Mb/s), a transatlantic cable originating in the United States
and the United Kingdom, and MIUs in Fiberoptic Link Around the Globe (18.440
Mb/s), a cable originating in, among other places, the United Kingdom, Italy and
Spain. The Company also intends to acquire additional interests in cross-channel
digital fiber optic cable originating in the United Kingdom and connected to
other EU member states in which the Company has a physical presence. These
cables will be used for transmission of traffic between the United States and
Europe and within Europe, resulting in improved service quality at lower cost.
SWITCHING PLATFORMS. The Viatel Network utilizes "intelligent switches"
which incorporate software designed to achieve least cost routing, the process
by which the Company enhances the routing of calls over the Viatel Network for
more than 230 countries and territories. Least cost routing is designed to allow
calls that are not routed over the Viatel Network to be routed directly from the
Company's switches through the PSTN to their destinations at the lowest rates.
The Viatel Network uses high capacity digital switching platforms designed
to provide services quickly and cost-effectively. The switches are modular and
scaleable and incorporate among the most advanced technologies such as
self-diagnosis ISDN, hierarchical call control and dynamic network management
software. These switches, currently consisting of four Nortel DMS 100e switches,
one Nortel DMS 300 switch, six Wyatt/Reuters MRX-2000 switches and three call
reorigination switches, which can also provide a bridge between older and
emerging standards. As the Viatel Network continues to evolve, the installed
base of switches can be augmented or upgraded easily to create a cost effective,
scaleable network.
By combining the Company's international gateway switching centers in New
York and London with its transatlantic fiber optic cable capacity, the Company
believes that it will be able to provide customers with improved quality, while
lowering its transmission costs.
NETWORK OPERATIONS CENTERS. The Company currently monitors the activity of
the Viatel Network from Omaha, Nebraska in the United States and London in
Europe. The Company will monitor the activity of its network later in 1998 from
dual NOCs located in London and the greater New York metropolitan area. These
NOC's are to be fully fitted with sophisticated surveillance and control
capability, fraud detection and real time transmission quality enhancements. The
Company's Omaha, Nebraska site will continue to house its back office systems of
support of NOC's and the Viatel Network. Each NOC will be capable of acting as a
full backup to the other. Each NOC will also allow "full view" capability and
will have the ability to perform remote diagnostics and testing on key elements
of the Viatel Network, including the Circe Network.
CIRCE NETWORK
As part of the Company's strategy to own or control key elements of its
network infrastructure, the Company is developing the Circe Network linking five
countries and will include London, Paris, Nancy, Strasbourg, Stuttgart,
Frankfurt, Cologne, Dusseldorf, Essen, Brussels, Antwerp, Rotterdam and
Amsterdam. The Circe Network will be a high quality, high capacity
bi-directional, self-healing ring, utilizing advanced SDH and DWDM technologies.
The Circe Network is expected to have approximately 3,671 route kilometers,
including approximately 471 route kilometers of a Belgium national network and
320 route kilometers of undersea fiber optic cable. The development and
operational start-up of the Circe Network is estimated to cost approximately
$530.0 million. The Company commenced construction of the Circe Network in the
Spring of 1998 with initial turn-up in the first quarter of 1999. The Circe
Network will be deployed along various rights-of-way, including motorways,
railways, waterways and pipelines through a combination of new digs and the
acquisition of dark fiber. Key characteristics of the Circe Network will
include:
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STATE-OF-THE-ART TECHNOLOGY. The Company will install state-of-the-art,
technologically advanced equipment in a uniform configuration throughout the
entire Circe Network, which will provide a Pan-European SDH self-healing
ring. The Circe Network will use laser-generated light to transmit bi-
directionally over fiber optic glass strands with an initial capacity at 20
Gb/s. In connection with the development and construction of the Circe
Network, the Company will be upgrading its NOCs to enable near real time
monitoring and reconfiguration of its network.
HIGH SECURITY AND RELIABILITY. The Circe Network is being designed for
high security and reliability, based upon (i) a self-healing system that
will allow for instantaneous restoration, virtually eliminating down time in
the event of a fiber cut, (ii) fiber cable generally installed in
high-density polyethylene conduits on terrestrial portions of the system and
(iii) advanced cable armoring techniques on the submarine portions of the
system.
ADDITIONAL CAPACITY AND FLEXIBILITY. The Circe Network's high-density
network architecture may be upgraded, without service interruption, to 160
Gb/s (16 STM-64) through the use of DWDM and bi-directional multi-wavelength
optical amplifiers, to support future demand for bandwidth intensive data
applications such as frame relay, Internet and ATM services. The Company is
currently marketing capacity on the system to other telecommunications
carriers and New Entrants. The Circe Network will enable the Company to
expand the reach of its existing network to additional strategic
destinations through the exchange of capacity on the Circe Network for
capacity on other fiber optic systems.
The Company began planning Phase 1 of the Circe Network in the Fall of 1997
and retained MKI, a subsidiary of WorldCom, to perform a feasibility study and
to propose a terrestrial route for Phase 1. On January 28, 1998, the Company
received a preliminary route study from MKI which identifies (i) the preferred
rights-of-way for Phase 1, as well as alternative routing options, (ii)
procedures for obtaining all permits, licenses and other regulatory requirements
necessary to allow Phase 1 to be installed along the preferred route and (iii)
construction methodology and associated risk analysis. Subsequently, the Company
has received a route study from Bechtel for Phase 2 which (i) identifies the
preferred rights-of-way, (ii) evaluates lease or build options for rights of
way, (iii) provides time and cost estimates for obtaining rights-of-way and (iv)
provides a proposed action plan.
On March 13, 1998, the Company executed a binding letter of intent and term
sheet with Bechtel, pursuant to which Bechtel was engaged by the Company to
manage the construction of Phase 1. Under the terms of the letter of intent,
Bechtel will have overall responsibility for the procurement for, and the
arranging and administering of, the engineering, construction, commissioning and
testing of Phase 1. For its services, Bechtel will be paid a fee equal to the
sum of (i) its Recoverable Costs (as defined), which include hourly costs for
personnel, other direct costs such as costs associated with travel, costs of all
equipment and all costs associated with consultants, subcontractors and other
outside services and facilities, the costs of all equipment, materials and
supplies used or consumed in the performance of its services and all duties,
excises, assessments, levies, taxes, imposts and licenses arising out of the
performance of its services; (ii) agreed upon fees upon the completion of each
of the four major segments into which Phase 1 has been divided; and (iii)
specified fees upon the acquisition of at least 95% of the rights-of-way and
wayleaves required in each of the four countries in which Phase 1 is being
constructed. Under the terms of the letter of intent, Bechtel has committed to a
ready-for-service date of December 31, 1998 for Phase 1. In the event that
Bechtel fails to achieve a specified ready-for-service date for any of the four
segments, it will be subject to certain specified liquidated damages in an
amount up to the total fee pool for the segment, and if it completes the
construction of a segment prior to its scheduled ready-for-service date, Bechtel
will be entitled to certain agreed upon incentive payments.
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The Company has also executed a binding letter of intent and term sheet with
ASN, dated March 18, 1998, under which ASN has agreed to procure, install and
test, on a fixed price, date certain basis, optical fiber for the submarine
portions of the Circe Network. In addition, the Company has executed a
definitive agreement with Nortel, executed on June 29, 1998, for the
engineering, manufacturing, testing, installation and commissioning of
transmission equipment and related network management systems for the Circe
Network at a fixed price. Each of the letter of intent with ASN and the
definitive agreement with Nortel establishes maximum contract prices and
provides for the payment of liquidated damages in the event that the respective
contractor fails to meet agreed upon ready-for-service dates (November 30, 1998
in the case of the ASN agreement and December 1998 in the case of each Nortel
agreement).
Bechtel is one of the largest construction contractors in the world. Bechtel
has been involved in over 15,000 projects in over one hundred nations on seven
continents. Bechtel has substantial experience in constructing projects in
Europe, with hundreds of projects and over 30 years of experience in Western
Europe. Bechtel has played a significant role in the various rail projects in
Europe, including the Euro Tunnel and was involved in the construction of Euro
Disney. Bechtel has over 25 years of experience in telecommunications, with
recent projects in Saudi Arabia, Argentina, Venezuela, the Phillipines,
Indonesia and the United States.
ASN is a leading submarine cable contractor. From 1992 to 1996, ASN had
approximately 33% of the worldwide market for repeated systems and approximately
32% of the worldwide market for unrepeated systems. Nortel is a leading supplier
in the development and deployment of SDH and SONET networks worldwide with a
presence in over 90 countries. Nortel has supplied the two largest new SDH
networks in the world.
The Company will employ DWDM technology, which is among the latest
commercial advancements in optical physics. DWDM is an advancement over basic
wave division multiplexing. With DWDM technology, more light waves can be
transmitted though fiber on the cable thereby permitting the transfer of greater
amounts of information at lower cost than with previous fiber optic technology.
DWDM is a proven technology currently utilized with increasing frequency in the
telecommunications industry. The Company's switching platform is largly
Nortel-based, and fully compatible with the electronics to be utilized on the
Circe Network. The contemplated package of electronics to be purchased from
Nortel includes the INM Network management system which is multi-vendor capable.
The Circe Network will replace the high-cost low-bandwidth leased lines
currently used by the Company to interconnect its switches in London, Paris,
Amsterdam, Antwerp, Brussels and Frankfurt and its POP in Stuttgart and
Rotterdam. Carriers purchasing IRUs will interconnect with the Circe Network at
optical interconnection points, which will be strategically located at sites
along the ring, permitting easy access to the system at minimal cost.
The operation of the Circe Network will be monitored by the Company's NOCs
to be located in London and in Franklin, New Jersey. These NOCs will also
control, monitor and administer switches throughout the Viatel Network and will
provide "full view" capability to the Company's maintenance staff, enabling the
monitoring of the system, as well as the digital switches, on a real-time basis.
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The construction and operation of the Circe Network will be managed by
Francis J. Mount, who joined the Company in December 1997 as Senior Vice
President, Engineering and Network Operations. Mr. Mount has over 30 years of
experience in the telecommunications industry, including six years with MCI
where he most recently served as Director, Global Technical Services,
responsible for international development, alliance management and all technical
operations and services outside of the United States, and 22 years with AT&T
Corporation where he served in various technical and network management
capacities. In addition, the Company has retained Derek Foxwell, as Director of
Infrastructure Programs, who is responsible for overseeing the development of
the design, configuration and construction of the Circe Network. Mr. Foxwell is
a chartered engineer with over 25 years of experience in international
telecommunications networks. Mr. Foxwell has been a consultant to Nynex Network
Service (FLAG Ltd.), where he chaired Flag's Assignment, Routing and Restoration
Subcommittee and to Sprint International (PTAT), where he acted as the
operations and maintenance manager for PTAT systems. Mr. Foxwell was employed by
British Telecom for almost 20 years, most recently as Transmission Engineering
Planning Manager, International Cable Network; International and National
Elements. Once the Circe Network is operational, ongoing maintenance and repair
will be handled by subcontractors, managed by the Company, strategically located
along the system's route.
SALES AND MARKETING; CUSTOMERS
The Company's principal target market consists of small and medium-sized
businesses. This market includes trading companies, financial institutions, and
import-export companies, for which long distance telecommunications service
represents a significant business expense. Small and medium-sized businesses
constitute a large and growing portion of the European economy and, in 1996,
represented on average 60.0% of the total company revenues generated in the EU
member states and, in 1994, represented approximately 66.0% of the total
workforce. The following chart presents the share of revenue generated by small
and medium-sized businesses in certain EU member states as of December 31, 1996:
[LOGO]
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The Company believes that this customer segment offers significant market
opportunities because it has been traditionally underserved by the ITOs and
small and medium-sized businesses are more likely to be receptive to
competitively priced bundled service offerings by New Entrants, such as those
offered by the Company, than larger size businesses. The Company also targets
carriers and other resellers.
From 1991 to 1994, the Company's sales and marketing efforts were conducted
by independent sales representatives in each of its markets. In late 1994, the
Company began establishing its own direct sales forces in certain Western
European and Latin American markets to take greater control over the sales and
marketing functions and to provide a higher level of customer service.
Currently, the Company has direct sales forces in the nine cities in Western
Europe in which it has switches and has established indirect sales offices,
through arrangements with independent sales representatives and telemarketing
agents, in more than 100 additional locations in Western Europe. The Company has
four sales professionals dedicated to marketing and maintaining the Company's
relationships with its wholesale customers in the United States and in the
United Kingdom. In Europe, the Company's sales and marketing staff is currently
divided into two categories: direct sales representatives and indirect sales
representatives. Direct sales representatives are responsible for face-to-face
sales efforts to accounts with $500 per month of revenue potential and indirect
sales representatives are responsible for telesales to accounts with less than
$500 per month of revenue potential.
The Company's direct sales personnel are currently compensated on a salary
and commission basis, with potential commissions being paid on the basis of
revenues generated by new customers solely during their first three months as a
customer of the Company. After such three month period, the customer is turned
over to "pro-active account managers" or "PAMs" who manage the account and are
compensated based on the monthly growth of such account above certain minimum
requirements. The Company believes that this compensation structure provides
maximum incentive to the Company's direct sales force to continue to grow the
Company's customer base and revenue.
The Company's independent sales representatives are retained on a
non-exclusive/commission-only basis, with commissions being subject to charge
back for revenues not collectible by the Company. The Company believes that its
relationship with its independent sale representatives is good.
During the first quarter of 1998, the Company instituted a sales force
training program which is designed to further educate the Company's sales
personnel regarding the Company's products and services and to improve their
marketing skills. As liberalization of the telecommunications markets in EU
member states continues, the Company anticipates that it will begin to
supplement its sales forces through the expanded use of various marketing
techniques, including direct mail and targeted advertising and promotional
efforts. In addition, as regulatory and marketing conditions warrant, the
Company may begin to utilize partnership marketing as an additional marketing
tool.
The Company generally prices its retail services at a discount to the ITOs'
prices in the various geographic markets. The wholesale rates charged are
generally priced at or slightly below the market price of the leading United
States international facilities-based carriers, but the Company does not offer a
standard discount relative to any major carrier.
INFORMATION SYSTEMS
The Company believes that integrated and reliable billing and information
systems are key elements for growth and success in the telecommunications
industry. Accordingly, the Company has made significant investments to acquire
and implement sophisticated information systems which are designed to enable the
Company to: (i) monitor and respond to customer needs by developing new and
customized services; (ii) manage lease cost routing; (iii) provide customized
billing information; (iv) provide high quality customer service; (v) detect and
control fraud; (vi) verify payables to suppliers; and (vii) rapidly integrate
new customers. The Company believes that its network intelligence, billing and
financial reporting systems enhance its ability to competitively meet the
increasingly complex and demanding requirements of the international and
national long distance markets. While the Company believes that such systems are
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currently sufficient for its operations, such network intelligence, selling and
financial reporting systems will require routine upgrades and ongoing
investments. See "Risk Factors -- Dependence on Effective Information Systems;
Year 2000 Technology Risks."
The Company currently has a turnaround time of approximately 48 hours for
new account entry, subject to credit approval. The Company's billing system
provides multicurrency billing, itemized call detail, city level detail for
destination reporting and electronic output for select accounts. Customers are
provided with several payment options, including automated credit card
processing and automated direct debiting.
The Company has developed software to provide telecommunications services
and render customer support. In certain cases, the software used to support the
Company's services may reside outside of the switches and, therefore, is not
reliant on a third party switch manufacturer for upgrades or support. Each
switch has a call detail recording function which is designed to enable the
Company to: (i) achieve accelerated collection of call records; (ii) detect
fraud and unauthorized usage; and (iii) permit rapid call detail record
analysis. See "-- The Viatel Network -- Switching Platforms."
The Company also uses proprietary software to assist in analyzing traffic
patterns and determining network usage and busy hour percentage, originating
traffic by switching center, terminating traffic by supplier and originating
traffic by customer. This data is utilized to provide least cost routing, which
may result in call traffic being transmitted over the Company's transmission
facilities, other carriers' transmission facilities or a combination of such
facilities. If traffic cannot be handled over the least cost route due to
overflow, the least cost routing system is designed to transmit the traffic over
the next least cost route. The least cost routing system chooses among the
following variables to minimize the cost of a long distance call over 15
different suppliers and multiple choices of terminating carrier per country. The
performance of the least cost routing system is verified based on a daily
overflow report generated by the Company's network traffic management and a
weekly/monthly average termination cost report generated by the Company's
billing system. See "Risk Factors -- Dependence on Effective Information
Systems; Year 2000 Technology Risks."
CARRIER CONTRACTS
The Company has entered into contracts to purchase switched minute capacity
from various domestic and foreign carriers and depends on such contracts for
origination and termination of traffic on the Viatel Network as well as for
resale of such capacity to others. Carrier costs constitute a significant
portion of the Company's variable costs. Pursuant to these contracts, the
Company obtains guaranteed rates, which are generally more favorable than
otherwise would be available, by committing to purchase switched minute minimums
from such carriers. If the Company fails to meet its switched minute minimum
requirements under a carrier contract, it would still be required to pay its
minimum monthly commitment as a penalty. The Company's aggregate annual minimum
commitments are approximately $14.0 million. The Company does not believe that
the loss of any one supplier or contract would have a material adverse impact on
the Company's business, financial condition or results of operations. See "--
Competition."
COMPETITION
The international telecommunications industry is highly competitive and is
characterized by substantial on-going price declines. For example, France
Telecom has obtained approval to reduce retail prices by 9% during each of 1997
and 1998 and 4.5% during each of 1999 and 2000. Deutsche Telekom has announced
that it intends to reduce retail long distance prices by up to 40%. Neither of
these ITOs has reduced or is expected to reduce wholesale prices to the same
extent. These pricing policies have created substantial pressure on the
Company's gross margins. The Company's success depends upon its ability to
compete with other telecommunications providers in each of its markets. These
providers include the ITO in each country in which the Company operates, such as
British Telecom, France Telecom, Belgacom and Telecom Italia, and global
alliances among some of the world's largest telecommunications carriers, such as
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Uniworld, AT&T's World Partners alliance with "Unisource" (Telia of Sweden,
Swiss Telecom PTT and KPN of The Netherlands), "Concert" (British Telecom and
MCI), "Global One" (Sprint, France Telecom and Deutsche Telekom) and the
alliance among WorldCom, MCI and Telefonica de Espana. Other potential
competitors include cable communications companies, wireless telephone
companies, electric and other utilities with rights-of-way, railways, microwave
carriers and large end users which have private networks. The intensity of
competition and price declines has increased over the past several years and the
Company believes that such competition and price declines will continue to
intensify, particularly in Western Europe where liberalization of the
telecommunications markets continues. Many of the Company's current and
potential competitors have substantially greater financial, marketing and other
resources than the Company. If the Company's competitors devote significant
additional resources to the provision of international or national long distance
telecommunications services to the Company's target customer base of small and
medium-sized businesses, such action could have a material adverse effect on the
Company's business, financial condition and results of operations, its ability
to make payments on the Notes, and there can be no assurance that the Company
will be able to compete successfully.
Because all of the Company's current and intended European markets (other
than the United Kingdom) have only recently liberalized or still are in the
process of liberalizing the provision of Voice Telephony, customers in most of
these markets are not accustomed to obtaining services from competitors to ITOs
and may be reluctant to use emerging telecommunications providers, such as the
Company. In particular, the Company's target customer base of small and
medium-sized businesses with significant international calling needs, may be
reluctant to entrust their telecommunications needs to new operators that are
believed to be unproven. In addition, in continental Europe, certain of the
Company's competitors (including the ITOs) provide potential customers with a
broader range of services than the Company can offer due to existing regulatory
restrictions.
Competition for customers in the telecommunications industry is primarily
based on price and quality of services offered. The Company prices its services
primarily by offering discounts to the prices charged by ITOs and other major
competitors. However, prices for international long distance calls have
decreased substantially over the past few years in the markets in which the
Company currently maintains operations or in which it expects to establish
operations. Some of the Company's larger competitors may be able to use their
greater financial resources to cause severe price competition in the countries
in which the Company operates or expects to operate. It appears that Western
European ITOs are responding to deregulation more rapidly and aggressively than
occurred after deregulation in the United States and the United Kingdom. The
Company expects that prices for its services will continue to decrease for the
foreseeable future and that ITOs and other dominant telecommunications providers
will continue to improve their product offerings. The improvement in product
offerings and service provisions by the ITOs, as well as the liberalization of
Voice Telephony and infrastructure which has commenced in certain EU member
states, could similarly have a material adverse effect on the competitiveness of
the Company to the extent that the Company is unable to provide similar levels
of offerings and services. If the ITO in any jurisdiction uses its competitive
advantages to their fullest extent, the Company's operations in such
jurisdiction would be adversely affected. Furthermore, the marginal cost of
carrying calls over fiber optic cable is extremely low. As a result, certain
industry observers have predicted that, within a few years, there may be
dramatic and substantial price reductions and that long distance calls will not
be significantly more expensive than local calls. In addition, certain carriers,
including AT&T, are implementing plans to offer telecommunications services over
the Internet at substantially reduced prices. Any price competition could have a
material adverse effect on the Company's business, financial condition, results
of operations, its ability to make payments on the Notes.
The Company believes that the ITOs generally have certain competitive
advantages that the Company and other competitors do not have due to their
control over local connectivity. The Company relies on the ITO for access to the
PSTN and the provision of leased lines, and the failure of the ITOs to provide
such access or leased lines at reasonable pricing could have a material adverse
effect on the Company's business, financial condition, results of operations and
its ability to make payments on the Notes. The
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reluctance of some national regulators to accept liberalizing policies, grant
regulatory approvals that would result in increased competition for the local
ITO and enforce access to ITO networks and essential facilities could have a
material adverse effect on the Company's competitive position and its ability to
make payments on the Notes. There can be no assurance that the Company would be
able to compete effectively in any of its markets. See "Risk Factors --
Competition" and "-- Rapidly Changing Industry, Technology and Customer
Requirements; Significant Price Declines."
GOVERNMENT REGULATION
OVERVIEW. National and local laws and regulations governing the provision
of telecommunications services differ significantly among the countries in which
the Company currently operates and intends to operate. The interpretation and
enforcement of such laws and regulations varies and could limit the Company's
ability to provide certain telecommunications services in certain markets. There
can be no assurance that future regulatory, judicial and legislative changes
will not have a material adverse effect on the Company, that domestic or
international regulators or third parties will not raise material issues with
regard to the Company's compliance or noncompliance with applicable laws and
regulations or that other regulatory activities will not have a material adverse
effect on the Company's business, financial condition, results of operations and
its ability make payments on the Notes.
INTERNATIONAL TRAFFIC. Under the WTO Agreement, concluded on February 15,
1997, 69 countries comprising 95% of the global market for basic
telecommunications services agreed to permit competition from foreign carriers.
In addition, 59 of these countries have subscribed to specific procompetitive
regulatory principles. The WTO Agreement became effective on February 5, 1998
and is expected to be implemented by most signatory countries in 1998, although
there may be substantial delays. The Company believes that the WTO Agreement
will increase opportunities for the Company and the Company's competitors.
However, the precise scope and timing of the implementation of the WTO Agreement
remain uncertain and there can be no assurance that the WTO Agreement will
result in beneficial regulatory liberalization.
On November 26, 1997, the FCC adopted the Foreign Participation Order to
implement the U.S. obligations under the WTO Agreement. In the Foreign
Participation Order, the FCC adopted an open entry standard for carriers from
WTO member countries, generally facilitating market entry for such applicants by
eliminating certain existing tests. These tests remain in effect, however, for
carriers from non-WTO member countries. Petitions for reconsideration of the
Foreign Participation Order are pending at the FCC.
International carriers serving the United States, including the Company,
remain subject to rules adopted in the International Settlement Rates Order
which became effective on January 1, 1998. The international accounting rate
system allows a U.S. facilities-based carrier to negotiate an "accounting rate"
with a foreign carrier for handling each minute of international telephone
service. Each carrier's portion of the accounting rate (usually one-half) is
referred to as the settlement rate. The new International Settlement Rates Order
generally requires U.S. facilities-based carriers to negotiate settlement rates
with their foreign correspondent at no greater than FCC established "benchmark"
prices. Historically, international settlement rates have vastly exceeded the
cost of carrying telecommunications traffic. In addition, the International
Settlement Rates Order imposed new conditions upon certain carriers, including
the Company. First, the FCC conditioned facilities-based authorizations for
service on a route on which a carrier has a foreign affiliate upon the foreign
affiliate offering all other U.S. carriers a settlement rate at or below the
relevant benchmark. The Company's foreign affiliate in the United Kingdom
satisfies this condition. Second, the FCC conditioned any authorization to
provide switched services over either facilities-based or resold international
private lines upon the condition that at least half of the facilities-based IMTS
traffic on the subject route is settled at or below the relevant benchmark rate.
This condition applies whether or not the licensee has a foreign affiliate on
the route in question. However, if the subject route does not comply with the
benchmark requirement, a carrier instead can demonstrate that the foreign
country provides resale opportunities "equivalent" to those available in the
United States. Accordingly,
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since the February 9, 1998 effective date of the Foreign Participation Order,
the Company has been permitted to resell private lines for the provision of
switched services to any country that either has been found by the FCC to comply
with the benchmarks or has been determined to be equivalent. The Company,
however, will require prior FCC approval in order to provide resold private
lines to any country in which it has an affiliated carrier that has not been
found by the FCC to lack market power. Many parties have appealed the
International Settlement Rates Order to the U.S. Court of Appeals for the D.C.
Circuit or have filed petitions for reconsideration with the FCC. These
proceedings are still pending. The Company cannot predict the outcome of this
appeal and its possible impact on the Company. In addition, the FCC is expected
to propose in late summer 1998 to loosen certain requirements of its current
international settlements policy, but Viatel cannot predict the outcome of any
such proposal or its possible impact on the Company.
Increasing regulatory liberalization in many countries' telecommunications
markets now permits more flexibility in the way the Company can route calls.
Although certain FCC rules limit the way in which some international calls can
be routed, the Company does not believe that its network configuration,
specifically the way in which traffic is routed through its UK facilities, is
specifically prohibited by or undermines in any way the intent of these rules.
It is possible, however, that the FCC could find that the Company's network
configuration violates these rules. If the Company were found to be in violation
of these routing restrictions, and if the violation were sufficiently severe, it
is possible that the FCC could impose sanctions and penalties upon the Company.
REGULATORY FRAMEWORK. A summary discussion of the regulatory frameworks in
certain geographic regions in which the Company operates or has targeted for
penetration is set forth below. This discussion is intended to provide a general
outline of the more relevant regulations and current regulatory posture of the
various jurisdictions and is not intended as a comprehensive discussion of such
regulations or regulatory posture. Local laws and regulations differ
significantly among the jurisdictions in which the Company operates, and, within
such jurisdictions, the interpretation and enforcement of such laws and
regulations can be unpredictable.
EUROPEAN UNION. The EU consists of the following member states: Austria,
Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg,
The Netherlands, Portugal, Spain, Sweden and the United Kingdom. The EU was
established by the Treaty of Rome and subsequent treaties. EU member states are
required to implement directives issued by the EC and the European Council by
passing national legislation. If an EU member state fails to effect such
directives with national (or, as the case may be, regional, community or local)
legislation and/or fails to render the provisions of such directives effective
within its territory, the EC may take action against the EU member state,
including in proceedings before the European Court of Justice, to enforce the
directives. Private parties may also bring actions against EU member states for
failures to implement such legislation.
The EC and European Council have issued a number of key directives
establishing basic principles for the liberalization of the EU
telecommunications market. The general framework for this liberalized
environment has been set out in the EC's Services Directive (the "Services
Directive") and its subsequent amendments, including, in particular, the Full
Competition Directive which was adopted in March 1996 (the "Full Competition
Directive"). This basic framework has been advanced by a series of harmonization
directives, which include the so-called Open Network Provision directives, as
well as two additional directives adopted in 1997, the Licensing Directive of
April 1997 and the Interconnection Directive of June 1997, which address,
respectively, the procedures for granting license authorizations and conditions
applicable to such licenses and the interconnection of networks and the
interoperability of services as well as the achievement of universal service.
The Services Directive directed EU member states to permit the competitive
provision of all telecommunications services with the exception of Voice
Telephony (which does not include value-added services and voice services within
closed user groups) and certain other services that have been gradually
liberalized through subsequent amendments to the Services Directive. The EC has
generally taken a narrow view of the services classified as Voice Telephony,
declaring that member states may not maintain
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monopolies or special operating rights on voice services that (i) confer new
value-added benefits on users (such as alternative billing methods), (ii) are
provided through dedicated customer access (e.g., by leased lines) or (iii) are
limited to a group having legal, economic or professional ties.
The Full Competition Directive amended the Services Directive to set January
1, 1998 as the date by which all EU member states were required to remove all
remaining restrictions on the provision of telecommunications services and
telecommunications infrastructure, including Voice Telephony. Certain
derogations from compliance with this timetable have been granted. The
derogations granted by the EC are as follows: Luxembourg (July 1, 1998), Spain
(November 30, 1998), Ireland (January 1, 2000), Portugal (January 1, 2000) and
Greece (January 1, 2001).
The Licensing Directive sets out framework rules for the procedures
associated with the granting of national authorizations for the provision of
telecommunications services and for the establishment or operation of any
infrastructure for the provision of telecommunications services. It
distinguishes between "general authorizations," which should normally be easier
to obtain since they do not require an explicit decision by the national
regulatory authority, and "individual licenses." Individual licenses may only be
imposed where the licensee is to acquire access to scarce resources (for
example, radio spectrum) or is to be subject to particular obligations or
benefits from particular rights. Accordingly, EU member states may impose
individual license requirements for the establishment and operation of
facilities-based networks and for the provision of Voice Telephony, among other
things. Consequently, operation of the European Network may require that the
Company be subject to an individual licensing system rather than to a general
authorization in the majority of EU member states.
The Interconnection Directive sets out the regulatory framework for securing
in the EU the interconnection of telecommunications networks. The
Interconnection Directive requires member states to remove restrictions
preventing negotiation of interconnection agreements, ensure that
interconnection requirements are non-discriminatory and transparent and to
ensure adequate and efficient interconnection for public telecommunications
networks and publicly available telecommunications services. Several EU member
states have chosen to apply the provisions of the Interconnection Directive
within their jurisdictions in such a way as to give more favorable treatment to
infrastructure providers and network operators than to switch-based carriers and
resellers. Such distinctions must be objectively justified on grounds of the
type of interconnection provided or because of relevant licensing conditions.
The Interconnection Directive is due to be amended shortly to require EU
member states (except those for whom derogations exist) to offer carrier
pre-selection to their customers by January 1, 2000, and to introduce number
portability (the ability of end-users to retain their numbers when changing
carriers) for subscribers on the public switched network by January 1, 2000.
Carrier pre-selection is only required to be made available by operators who
enjoy significant market power within the market for interconnection over the
fixed network.
The Revised Voice Telephony Directive was recently adopted and is concerned
with open and efficient access to, and use of, fixed public telephone networks
and fixed public telephone services. It requires implementation in EU member
states by June 30, 1998.
In addition, a sector specific Telecommunications Data Protection Directive
has also been recently adopted which requires implementation by October 1998.
This directive is concerned with ensuring an equivalent level of protection of
fundamental rights and freedoms across EU member states and in particular the
right to privacy in the telecommunications sector and to ensure the free
movement of such data and telecoms equipment and services. in particular, it
contains provisions on an individual's right to restrict the use of calling line
identification and the processing of personal data for telephone bills and
directories.
Each EU member state in which the Company currently conducts its business
has a different regulatory regime and such differences are expected to continue.
The requirements for the Company to obtain necessary approvals vary considerably
from country to country.
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BELGIUM
In December 1997, the Belgian Federal Parliament provided for full
liberalization of the telecommunications sector on January 1, 1998. However,
this law remains to be implemented by a considerable number of implementing
Royal Decrees to be fully effective. For instance, the licensing conditions
applicable to certain carriers, including the Company, require further
implementing Royal Decrees.
In the interim, there is a provisional licensing system, which effectively
represents a barrier for many operators wishing to enter the Belgian market. The
drafts of the Royal Decrees containing definitive licensing conditions also
contain stringent requirements, such as the operator's commitment to invest 400
million Belgian Francs or to deploy 500 kilometers of transmission
infrastructure within three years of the date the license is granted in order to
be eligible for a public telecommunications network operator license.
Furthermore, the draft Royal Decrees relating to Voice Telephony and to public
telecommunications networks each contain stringent requirements, including a
contribution of 1% of annual turnover in order to fund research and development
and other initiatives.
Notwithstanding these requirements (which may be modified by EC intervention
that has been formally commenced), the Company filed an application for the
provision of Voice Telephony on May 29, 1998 and for the establishment and
operation of a public telecommunications network on June 2, 1998. The portion of
the Circe Network to be built in Belgium is expected to satisfy the
infrastructure requirements described above.
Belgium is one of the EU member states which differentiates between
interconnection for infrastructure providers and network operators and
switch-based carriers and resellers. The interconnection tariffs of Belgacom
(Belgium's ITO), which has been officially approved by the Belgian Institute for
Postal Services and Telecommunications ("BIPT"), provides more favorable
interconnection rates for infrastructure providers and network operators than
for switch-based carriers and resellers. As a result of the construction of the
Circe Network, the Company expects to qualify for these more favorable rates.
The modified Belgian Telecommunications Law also provides for the creation
of a Universal Service Fund, to be managed by the BIPT, to which operators may
be required to contribute funds in proportion to their revenues from the Belgian
telecommunications market. However, the Universal Service Fund system will not
be activated before the year 2000, and then only insofar as: (i) Belgacom claims
a compensation for being the universal service provider, (ii) the BIPT considers
that universal service provision represents a net cost and (iii) the Belgian
Federal Government takes a formal decision to activate the Universal Service
Fund. From 1998 onwards, the BIPT will "dry-run" the universal service costing
model and keep operators informed of the contributions that they may be required
to make if and when the Universal Service Fund is activated.
FRANCE
In July 1996, legislation was enacted providing for the immediate
liberalization of all telecommunications activities in France, but maintaining a
partial exception for the provision of Voice Telephony. Voice Telephony was
subsequently fully liberalized on January 1, 1998.
The establishment and operation of public telecommunications networks and
the provision of Voice Telephony are subject to individual licenses, which are
granted by the Minister in charge of telecommunications upon recommendation of
France's new independent regulatory authority, the Autorite de Regulation des
T elecommunications ("ART").
In December 1997, the Company filed a joint application for a license as a
public telecommunications network operator (under Article L33.1 of the French
Code de Postes et T elecommunications) and provider of Voice Telephony services
to the public (under Article L34.1 of the French Code de Postes et
T elecommunications). The license application was approved by ART on April 29,
1998 and has recently received final approval of the relevant Minister.
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Should the Company be granted authorization to establish and operate a
public telecommunications network, it will be subject to certain obligations,
most notably in terms of non-discriminatory treatment of customers and an
obligation to accept reasonable requests for interconnection from other
carriers.
France is also one of the EU member states which differentiates between
interconnection for public telecommunications network operators, holding a L33.1
license, and Voice Telephony providers, holding a L34.1 license. The
interconnection tariffs of France Telecom (France's ITO), which have been
officially approved by ART, provide substantially more favorable interconnection
rates for public telecommunications network operators than for Voice Telephony
providers.
The Company has challenged the allocation of single digit access codes as
procedurally and legally invalid. This challenge is currently being pursued
before the French courts. The outcome of this proceeding cannot be predicted.
GERMANY
The German Telecommunications Act of July 25, 1996 liberalized all
telecommunications activities, but postponed effective liberalization of Voice
Telephony until January 1, 1998. The German Telecommunications Act has been
complemented by several Ordinances. The most significant Ordinances concern
license fees, rate regulation, interconnection, universal service, frequencies
and customer protection.
Under the German regulatory scheme, licenses can be granted within four
license classes. A license is required for operation of transmission lines that
extend beyond the limits of a property and that are used to provide
telecommunications services for the general public. The licenses required for
the operation of transmission lines are divided into 3 infrastructure license
classes: mobile telecommunications (license class 1); satellite (license class
2); and telecommunications services for the general public (license class 3).
Beside the infrastructure licenses, an additional license is required for
operation of Voice Telephony services on the basis of self-operated
telecommunications networks (license class 4). A class 4 license does not
include the right to operate transmission lines.
The Bundes Ministerium fur Post und Telekommunikation ("BMPT"), which was
replaced by the Regulierungsbehorde fur Telekommunikation und Post ("RegTP") on
January 1, 1998, granted the Company a regional class 3 and a nationwide class 4
license in December 1997. According to the License Fees Ordinance, a nationwide
class 4 license costs a one-time fee of DM 3,000,000. The costs for a
territorial class 3 license will be determined by RegTP and is dependent on the
population and the geographical area covered by the territorial class 3 license.
A nationwide territorial class 3 license costs DM 10,600,000.
Licensees that operate transmission lines crossing the boundary of a
property have the right to install transmission lines on, in and above public
roads, squares, bridges and public waterways without payment; however, when
installing transmission lines a planning agreement must be obtained from the
relevant authorities.
A company which operates a public telecommunications network has the right
to receive favorable interconnection rates from Deutsche Telecom, as a dominant
carrier. If the company does not agree with the offered rates or is refused
interconnection by Deutsche Telecom for whatever reason, the company can take
the case to the RegTP who decides whether the rates offered or the cause of the
complaint are based on objective criteria and are not discriminatory in nature.
Since the Company is not a dominant carrier, it is not subject to the same
interconnection obligations. Whether, and under which conditions, long distance
carriers have a right to receive favorable interconnection rates or less
favorable "special network access rates" (i.e., reseller rates) is currently
under consideration and no final ruling of the RegTP has been published to date.
Deutsche Telekom takes the view that long distance carriers do not operate a
public telecommunications network unless they have a minimum of 8 points of
interconnection in the start up phase and upgrade the network to 23 points of
interconnection in the initial phase.
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Several complaints, the outcome of which may affect the Company's business,
are currently pending before the RegTP or German courts concerning the content
of the standard interconnection offer of Deutsche Telekom. Since Deutsche
Telekom and some of its major competitors in Germany have been unable to reach
agreement on interconnection, the BMPT has established provisional
interconnection tariffs. These rates are now part of the standard offer of
Deutsche Telekom and valid for all carriers for as long as the matter is pending
before the German courts. Other pending complaints concern the costs of billing
services provided by Deutsche Telekom to other carriers and rates for direct
access to the end-user lines of Deutsche Telekom. It is expected that a final
resolution to these matters will take at least one year.
Licensed operators are under an obligation to present their standard terms
and conditions to the RegTP. The RegTP may, based upon certain criteria, decide
not to accept these terms and conditions.
The Company may become subject to universal service financing obligations.
Currently, it is unlikely that the universal service financing system will be
implemented in Germany in the foreseeable future.
The Company has not made any regulatory filings with respect to the German
portion of the Circe Network.
ITALY
In July 1997 and September 1997, the Italian authorities enacted basic
legislation and regulations to comply with the EU directives, including the full
liberalization of public telecommunications networks and Voice Telephony by
January 1, 1998. Among other provisions, the Law of July 1997 created a new
regulatory authority, Autorita per la garanzie nelle communicazioni (the
"Authority").
Although the new legislation came into effect immediately and the
Presidential Decree of September 1997 covers a wide range of areas including
licensing, interconnection, access, universal service and numbering, the
framework must be complemented by a number of implementation decrees.
To date, not all of the required decrees have been issued. License
applications can be filed with the Ministry of Communication until the Authority
is incorporated, but since January 1, 1998 only a few licenses to supply and
install fixed telecommunications networks have been granted. Major uncertainties
remain with regard to the offer of interconnection to be published by Telecom
Italia S.P.A. No assurance can be provided as to the timing or the manner in
which the Company will be able to benefit from full liberalization in Italy. The
Company intends to apply for a Voice Telephony license in Italy.
THE NETHERLANDS
In the Netherlands the installation and operation of a cable-based network
for the purpose of public telecommunications is mainly subject to either (i)
licensing requirements which are currently confined to PTT Telecom (the ITO) and
two licensed infrastructure operators, EnerTel and Telfort, or (ii)
authorization by OPTA (Onafhankelijke post-en telecommunicatie autoriteit) under
Article 23 of The Netherlands' Telecommunications Act (the "NTA"). Under the
proposed new Telecommunications Act, as adopted by the Netherlands' Lower House
of Parliament in March 1998 and now awaiting the approval of the Upper House of
Parliament, infrastructure licensing (or authorization) requirements for public
telecommunications networks will be abolished and replaced by registration
requirements with OPTA if adopted unamended. The Company holds an authorization
based on Article 23 of the NTA which was granted in March 1997. When the new
Telecommunications Act is effective the Article 23 authorization will lapse
automatically and the Company will have six months to apply for registration
after the commencement of the new Act. Registration will be granted if the
Company offers a public telecommunications network or services and provided the
requested data to OPTA.
Under the current NTA, PTT Telecom and the two infrastructure licensees
enjoy statutory rights-of-way over third party land (public or privately owned)
against payment of applicable fees. This statutory privilege is not extended to
Article 23 NTA authorization holders which must negotiate rights-of-way and
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compensation with such third parties. Under the proposed new Telecommunications
Act, this statutory privilege will be extended to all public telecommunications
network owners.
Under Article 7 of the NTA, restrictions on providing Voice Telephony
through a fixed infrastructure were abolished effective July 1, 1997. Holders of
an authorization based on Article 23 of the NTA wishing to offer such services
to third parties must register with OPTA which may allocate or reserve access
numbers for third party service or the authorization holder's own services. The
Company obtained the access number 1623 for service carrier selection on July
29, 1997.
PTT Telecom is under a statutory obligation to provide leased lines to
anyone against payment and to provide interconnection to other operators, INTER
ALIA, holders of an authorization under Article 23 of the NTA and foreign based
network operators providing voice telephony and having access to end-users. In
addition, PTT Telecom is obligated to provide special access on reasonable
request to Netherlands' and foreign based operators that provide public
telecommunication services. From 2001, the two nationwide infrastructure
licensees will also be obligated to provide leased lines to anyone against
payment and to provide interconnection to PTT Telecom and to other nationwide or
regional infrastructure licensees.
For supervisory purposes, anyone wishing to obtain interconnection or
special access to the PTT Telecom network must register with OPTA and then
negotiate its own interconnection or special access agreement. In August 1997,
the Company registered with OPTA for both interconnection and special access and
concluded an agreement for special access with PTT Telecom in June 1997.
Under the new Telecommunications Act, all operators of public
telecommunications networks that control access to end-users will be obligated
to provide interconnection to other operators that provide public
telecommunications networks or services. If parties cannot reach agreement on
the contractual terms, OPTA may issue a binding decision subject to
administrative appeal. Conditions for special access are freely negotiable.
Operators with significant market power (defined as market share of 25% or more)
must provide interconnection on a non-discriminatory basis at cost-based prices.
Operators with significant market power are also obligated on reasonable request
to provide special access on a non-discriminatory basis at cost based prices.
The two registrations obtained by the Company in August 1997 were withdrawn
in February 1998. Subsequently, two new registrations for interconnection and
for special access were granted in February 1998 to the Company subject to
conditions. These conditions have now been satisfied and the registrations have
become final.
The proposed new Telecommunications Act is intended to give full effect to
all remaining EU liberalization directives and obligations in The Netherlands
which should have been implemented no later than January 1, 1998. These include,
but are not limited to, number policy, allocation, and portability; universal
service obligations and their financing; privacy protection; and the general
competitive environment. If and when adopted, the Company intends to seek all
appropriate registrations under the proposed new Telecommunications Act.
SPAIN
Spain is one of the five countries in the EU which was granted a derogation
for implementation of the Directives to open its Voice Telephony market to
competition by January 1, 1998 until December 1, 1998. The government has made
public statements about its intent to open the market by December 1, 1998 and
the new Telecommunications Act (Ley General de Telecomunicaciones) was approved
on April 2, 1998 and entered into force on April 26, 1998. Prior to full
liberalization on December 1, 1998, a second operator began operations at the
beginning of 1998 in competition with the incumbent operator. In addition, a
third national Voice Telephony license was granted in May 1998 and a third
license for mobile telecommunications was granted in June 1998. Limited
competition is already present and cable operators may apply for a license to
provide Voice Telephony over their networks.
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The Company intends to apply for a Voice Telephony license in Spain as and
when the appropriate procedures have been published (such publication is
required by the EC by August 1, 1998).
SWITZERLAND
A new Telecommunications Act was adopted by the Swiss Parliament in April
1997 and came into effect on January 1, 1998, together with Ordinances
containing more detailed regulations covering telecommunications services,
frequency management, numbering, terminal equipment and license fees. The new
Telecommunications Act provides for liberalization of the Swiss
telecommunications market as of January 1, 1998.
The newly enacted Swiss telecommunications regulatory framework facilitates
market entry by: (i) applying a notification procedure for resellers, (ii)
applying a procedure for operators wishing to be granted a concession for the
establishment and operation of transmission facilities and (iii) providing
rights-of-way, subject to a procedure of authorization, over the public domain
to facilities-based carriers. Pro-competitive regulation is also applicable in
the area of numbering.
The Company intends to register its activities as a provider of Voice
Telephony services in Switzerland (in accordance with the notification
procedure) and will consider applying for a concession as a facilities-based
carrier.
Switzerland is not a member of the EU and, accordingly, directives do not
apply. Switzerland is, however, a party to the WTO Agreement.
UNITED KINGDOM
The Telecommunications Act 1984 (the "U.K. Act") provides a licensing and
regulatory framework for telecommunications activities in the United Kingdom.
The Secretary of State for Trade and Industry at the Department of Trade and
Industry (the "Secretary of Trade") is responsible for granting licenses under
the U.K. Act and for overseeing telecommunications policy, while the Director
General of Telecommunications (the "Director General") and his office are
responsible, among other things, for enforcing the terms of such licenses. The
Director General will recommend the grant of a license to operate a
telecommunications network to any applicant that the Director General believes
has a reasonable business plan, the necessary financial resources and where
there are no other overriding considerations against the grant of a license.
Since 1992, the British Government has permitted competition in the
provision of "any to any" international services on certain specified routes
over leased lines where all calls originate over the PSTN. From June 1995 to
December 1997, the Company's U.K. subsidiary, Viatel U.K. Limited ("Viatel UK"),
held an International Simple Resale license in the U.K. (the "ISR License"). The
ISR License entitled the Company to resell international message, telephone and
private line services. All ISR Licenses were revoked in December 1997 and all
holders were required to re-apply to the Secretary of Trade to be registered
under the new International Simple Voice Resale Standard License ("ISVR").
Viatel UK has registered under the ISVR which authorizes the provision of
international simple voice resale. International simple data resale and voice
calls which pass over a PSTN at one end only can, as before, be provided by
systems run under a Telecommunications Class License.
In December 1996, the British Government introduced the International
Facilities License ("IFL") which authorizes holders to provide international
telecommunications services over their own international infrastructure and/or
by making use of IRUs in undersea cables. Viatel UK acquired an IFL in April
1997. Although Viatel UK's IFL does not contain Code Powers. Viatel UK recently
submitted a request seeking an appropriate amendment of its IFL to provide for
Code Powers. Code Powers can be attached to certain licenses and provide the
licensees with the right to go to court to seek a court order that the licensee
be permitted to install, keep, maintain, adjust, repair or alter infrastructure
on, over or under land.
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Implementation of the EU Interconnection Directive in the UK has resulted in
Viatel UK becoming subject to the rights and obligations to interconnect
required by that Directive. As a result, Viatel UK has the right to request and
receive interconnection from all other operators deemed to be entitled to such
rights and obligations (as notified by the Director General) and also the
obligation to provide interconnect at the requests of any such operator.
Accordingly, Viatel UK is entitled to obtain interconnection with all
significant telecommunications operators in the U.K.
OTHER NEW MARKETS
The Company's ability to expand in other countries will be affected by the
degree to which liberalization has been implemented in that country. If for
strategic reasons the Company decides to build out infrastructure in each
particular market prior to full liberalization and liberalization is delayed or
not fully implemented, the Company could sustain a loss on its infrastructure
investment.
LATIN AMERICA AND THE PACIFIC RIM. Outside of the EU, the Company provides
its customers with access to its services through the use of call reorigination.
A substantial number of countries have prohibited certain forms of call
reorigination. There can be no assurance that certain of the Company's services
and transmission methods will not be or will not become prohibited in certain
jurisdictions.
The Company is subject to a different regulatory regime in each country in
Latin America in which it conducts business. Local regulations determine issues
significant to the Company's business, including whether it can obtain
authorization to offer transmission of voice and voice band data directly or
through call reorigination. In general, competition is restricted in the region,
with the result that the Company's ability to offer such service is limited.
Regulations governing enhanced services (such as facsimile and voice mail and
data transmission) tend to be more permissive than those covering Voice
Telephony.
ARGENTINA. The telecommunications industry in Argentina was privatized in
1990, but opportunities for competitive entry in basic telephony services remain
restricted. The companies created at the time of privatization, Telecom and
Telefonica, respectively, were granted exclusive rights until 1997 to the
provision of domestic local and long distance fixed telephone service in the
northern and southern portions of Argentina, respectively. Telintar, a company
owned equally by Telecom and Telefonica, was given exclusive rights until 1997
for the provision of international telephony and data transmission services.
As permitted under the terms of their concessions, Telecom, Telefonica and
Telintar have requested extensions of their exclusive rights until 2000. The
President of Argentina has recently announced a new decree extending the
carriers' exclusive rights for an additional period ending no later than
November 1999. By November 1999, the government will authorize a total of four
nationwide providers of local, domestic long distance and international
services, including Telefonica, Telecom and two additional consortia each
comprised of cooperatives that provide basic service in local areas and entities
already licensed to provide mobile telephone or cable television services in
Argentina or other telecommunications service providers with installed networks
in Argentina. In May 1998, several groups comprised of such entities filed
applications. No licensing decisions have yet been made. In the event that all
of the applications fulfill the requirements of the decree, the Government may
select the two new licensees by auction.
By November 2000, the market for long distance and international basic voice
telephony is to be open to additional competition. At least three existing
companies will be directly granted licenses for such services. However, the
Government has not yet adopted specific rules for this licensing process, and
additional licenses could be awarded through a bidding process for local, long
distance and international basic telephony.
The full implications of this new policy, as well as the timing of its
implementation, are uncertain. Implementation of the new policy must await
resolution of certain procedural questions currently pending in the Argentine
courts. Also, the new decree has been administratively challenged by a PCS
bidder. In any
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event, the decree must be complemented with several rules on universal service,
tariffs and licensing. The Secretary of Communications has issued a notice of
proposed rulemaking on the first two issues. New rules on interconnection have
already been adopted.
In addition to the rights granted to Telecom and Telefonica, other companies
have been permitted to enter the Argentine market to provide private networks
for non-voice services, mobile services, including cellular and paging, as well
as domestic data and value added services. There are no foreign ownership
restrictions for telecommunications services in Argentina.
Value-added services may be competitively provided and are essentially
deregulated. Although a license must be obtained, such licenses are routinely
granted. Facilities for international value-added services must be obtained from
Telintar. Currently, call reorigination is legal in Argentina, although the
established carriers have advocated strenuously against it and the government's
view has changed from time to time, and the government has recently ordered
Telecom and Telefonica to institute significant rate rebalancing measures which
are likely to lessen the attractiveness of call reorigination. The Supreme Court
recently ruled in favor of rate rebalancing, rejecting several challenges to it.
The Company has been operating in Argentina since 1991 and has developed a
significant customer base. The Company has focused on call reorigination,
Internet-initiated international business-to-business service and international
calling card services. The Company does not currently hold any licenses in
Argentina.
The Company is in the process of forming its own Argentine subsidiary. Once
it is formed, this affiliate will apply for a value-added license which will
allow for the provision of value added services domestically and within a
limited scope internationally.
BRAZIL. Brazil is in the process of privatizing its telecommunications
sector and opening the sector to competitive entry. A 1995 Constitutional
amendment removed the legal monopoly previously enjoyed by Telebras and its
affiliates over all public telecommunications services. Privately provided
wireless services as well as value-added and private network services also have
been permitted to compete with Telebras. Under a pair of new telecom laws
enacted in 1996 and 1997, Brazil has further opened the telecom sector. A new
regulatory authority, named the Agencia Nacional de Telecomunicacoes ("ANATEL")
has recently been constituted.
Advisors have just been appointed to recommend a specific model for the
reorganization and privatization of Telebras and its long distance and
international affiliate Embratel. According to preliminary plans recently
announced, Telebras, which consists of 27 regional companies, most likely will
be reorganized into a few regional holding companies. These companies initially
will probably be prohibited from providing interregional and international
services. Embratel, probably will be sold as a separate entity. The privatized
companies most likely will be subject to competition from at least one new long
distance company to be authorized right away. New concessions also will be
issued for local service.
In addition to reorganizing basic telecommunications services, Brazil has
established new classifications of services available for competitive entry.
Among the new service classifications is "specialized limited services," which
involves the provision of telephone, telegraph, data transmission or other such
services to closed user groups of corporations. Specialized limited services are
authorized by permit, which may be granted by competitive bid. For the purpose
of conducting auctions, proposed specialized service offerings may be deemed to
fall within one of three possible groups, according to the complexity of the
technology involved, the size of population proposed to be served and the
sophistication of the infrastructure involved. The government may limit the
number of permits that may be granted for technical or public service reasons.
The government also may decide to award a permit for specialized limited service
without conducting an auction.
Value-added services are not considered to be telecommunications services
and currently can be provided on a completely unregulated basis, without the
necessity of obtaining a permit or a concession.
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However, the service provider must operate through a Brazilian company. Call
reorigination is not prohibited in Brazil.
A foreign ownership limit of 49% has been retained in Brazil only for
cellular, satellite and cable tv services. There are presently no foreign
ownership limits for limited services, including specialized limited services,
or for value-added services. The President retains the authority to impose
foreign ownership limits on other services.
The Company is currently in the process of incorporating a subsidiary in
Brazil. The Company services in Brazil currently include call reorigination and
international calling cards and fax store and forward. Once its Brazilian
subsidiary is formed, Viatel plans to offer such services as well as to apply
for licenses to offer specialized limited services.
COLOMBIA. Under a new Constitution adopted in 1991, the possibility of
private provision of public services was ratified in Colombia. This paved the
way for both privatization of the state-owned long distance company, TELECOM, as
well as the competitive entry of other entities. Specific plans for the
privatization of TELECOM have faltered due to, among other things, labor union
resistance. However, the government has mandated that competition be introduced
in 1998. Two competitors to TELECOM have been licensed.
In Colombia, there are approximately 35 local operating companies, many
municipally owned. TELECOM is the sole long distance and international company
currently operating. Under Colombian law, local service has been completely
deregulated and may be provided without a concession or license. Other
telecommunications services require a concession or other authorization.
Value-added services are competitive, but must be licensed. There is
currently intense competition for value-added services, and the market for data
communications is one of the most dynamic segments of the telecommunications
sector.
Although Colombian law requires that all telecommunications services be
rendered by Colombian entities, foreign investment is not limited.
Most of Viatel's customers in Colombia access the Company via toll free
numbers. Callback services are illegal in Colombia. Viatel has formed a
Colombian subsidiary and has been awarded a value-added services license. Viatel
is working on the establishment and operation of a network to utilize the value-
added services license.
VENEZUELA. Pursuant to the Telecommunications Law of 1940, all
telecommunications activities in Venezuela are reserved to the government,
although concessions or permits for the provision of such services may be
granted to third parties. The administration, inspection and monitoring of all
communications systems in Venezuela are carried out by the Ministry of
Transportation and Communications through the Comision Nacional de
Telecommunicaciones ("CONATEL").
The national telephone company of Venezuela, Compania Anonima Nacional de
Telefonos de Venezuela ("CANTV") was privatized in 1991. CANTV's concession
grants it a monopoly in the provision of basic telecommunications services until
the year 2000. The only exceptions to this exclusivity are recently awarded
concessions for the provision of basic services to rural areas not reached by
CANTV.
Other telecommunications services, such as cellular telephony and other
mobile radio services, private telecommunications networks, switched data
networks and value-added services (including e-mail, Internet, video text,
telenext, voicemail and faxmail) are open to competition upon receipt of a
concession or permit, as applicable. Call reorigination is officially illegal in
Venezuela. The prohibition is supposed to be enforced by CONATEL with the
unofficial aid of CANTV through termination of subscriber service, but in
practice the prohibition is widely evaded.
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The Company does not have a local affiliate in Venezuela and does not hold
any Venezuelan concessions or authorizations. At present, the Company offers
only Internet-initiated international business-to-business services and
international calling cards in Venezuela. The Company does not believe that
these services are encompassed within the prohibition against call
reorigination, but it is possible that Venezuelan authorities may consider them
to raise similar policy issues to prohibited call reorigination services. If the
call reorigination prohibition is deemed to apply, the Company may have to
discontinue Internet-initiated services in Venezuela.
UNITED STATES. The Company's provision of international service to, from
and through the United States generally is subject to regulation by the FCC.
Section 214 of the Communications Act requires a company to make application to,
and receive authorization from, the FCC to provide such international
telecommunications services. In May 1994, the FCC authorized the Company
pursuant to Section 214 of the Communications Act to resell public switched
telecommunications services of other U.S. carriers (the "Section 214 Switched
Authorization"). The Section 214 Switched Authorization requires that services
be provided in a manner that is consistent with the laws of countries in which
the Company operates. The Company also has a license to resell international
private lines for the provision of switched services between the U.S. and the
U.K. and between the U.S. and Canada. Additionally, in September 1996 the
Company received final approval for another Section 214 authorization from the
FCC to provide both facilities-based services and resale services (including
both the resale of switched services and the resale of private lines for the
provision of switched services) to all permissible international points.
Finally, in September 1996 the Company also received final approval for another
Section 214 authorization from the FCC to provide facilities-based service
between the United States and the United Kingdom over the CANUS-1 and CANTAT-3
cable systems (the "Section 214 UK Facilities Authorization").
EMPLOYEES
As of March 31, 1998, the Company had 296 full-time employees, approximately
123 of whom were engaged in sales, marketing and customer service. None of the
Company's employees is covered by a collective bargaining agreement. Management
believes that the Company's relationship with its employees is good.
PROPERTIES
The Company currently occupies approximately 14,000 square feet of office
space at two sites in New York City, which serve as the Company's principal
executive office and an international gateway switching center. The leases have
an aggregate annual rental obligation of approximately $357,000 and expire on
January 31, 2001 and May 31, 2007, respectively. In addition, the Company leases
approximately 22,000 square feet of office space in Omaha, Nebraska, which serve
as the Company's operations center and a switching center. This lease has an
annual rental obligation of approximately $120,000 and expires on May 31, 2004.
The Company also leases approximately 26,000 square feet of space in Franklin
Township, New Jersey, which will serve as an additional international gateway
switching center and one of the Company's NOCs. This lease has an annual rental
obligation of approximately $508,000 and expires on June 1, 2008.
The Company also leases office space in various cities in Europe where it
maintains sales offices with annual rents ranging from $17,000 in Rome to
$163,000 in Frankfurt (based on foreign currency exchange rates in effect as of
January 31, 1998). The Company's aggregate annual rental obligations for its
European offices is approximately $727,000 (based on foreign currency exchange
rates in effect as of January 31, 1998).
LEGAL PROCEEDINGS
The Company is involved from time to time in litigation incidental to the
conduct of its business. The Company believes that any potential adverse
determination in any pending action will not have a material adverse effect on
the Company's business, financial condition or results of operations.
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MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information with respect to the
directors and executive officers of the Company as of July 9, 1998.
<TABLE>
<CAPTION>
NAME AGE POSITION
- ----------------------------------------------------- --- -----------------------------------------------------
<S> <C> <C>
Michael J. Mahoney(1)(2)............................. 39 President, Chief Executive Officer and Director
Allan L. Shaw(3)..................................... 34 Senior Vice President, Finance; Chief Financial
Officer; and Director
Lawrence G. Malone................................... 46 Senior Vice President, Global Sales and Marketing
Sheldon M. Goldman................................... 38 Senior Vice President, Business Affairs; General
Counsel and Secretary
Francis J. Mount..................................... 56 Senior Vice President, Engineering and Network
Operations and Director
Paul G. Pizzani(1)(2)(3)............................. 38 Director
John G. Graham....................................... 60 Director
</TABLE>
- ------------------------
(1) Member of the Directors Committee.
(2) Member of the Compensation Committee.
(3) Member of the Audit Committee.
MICHAEL J. MAHONEY. Mr. Mahoney has served as Chief Executive Officer of
the Company since September 1997, as President of the Company since September
1996 and as a director of the Company since 1995. Mr. Mahoney was also Chief
Operating Officer of the Company from September 1996 to September 1997,
Executive Vice President, Operations and Technology of the Company from July
1994 to September 1996 and Managing Director, Intercontinental of the Company
from January 1996 to September 1996. From August 1990 to June 1994, Mr. Mahoney
was employed by SITEL Corporation, a teleservices company, most recently as
President, Information Services Group. From August 1987 to August 1990, Mr.
Mahoney was employed by URIX Corporation, a manufacturer of telecommunications
hardware and software, in a variety of sales and marketing positions.
ALLAN L. SHAW. Mr. Shaw has served as Senior Vice President, Finance since
December 1997 and has served as Chief Financial Officer of the Company since
January 1996. Mr. Shaw has served as a director of the Company since June 1996.
Mr. Shaw was Vice President, Finance of the Company from January 1996 to
December 1997 and Treasurer of the Company from September 1996 to April 1998.
Prior to becoming the Company's Vice President, Finance and Chief Financial
Officer, Mr. Shaw served as Corporate Controller of the Company from November
1994 to December 1995. From August 1987 to November 1994, Mr. Shaw was employed
by Deloitte & Touche LLP, most recently as a Manager. Mr. Shaw is a Certified
Public Accountant and a member of the American Institute, United Kingdom Society
and New York State Society of Certified Public Accountants.
LAWRENCE G. MALONE. Mr. Malone has served as Senior Vice President, Global
Sales and Marketing of the Company since May 1997. Mr. Malone served as Vice
President and Managing Director, Intercontinental of the Company from September
1996 to May 1997 and served as Vice President of Sales for Carriers/Wholesale of
the Company from January 1995 to September 1996. From December 1993 to December
1994, Mr. Malone was employed by Frame Relay Technologies, a communications
equipment manufacturer, as Director of Sales. From December 1987 to November
1993, Mr. Malone was employed by Republic Telcom Systems, a voice/data
networking company, where he most recently served as Vice President of Sales and
Marketing.
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<PAGE>
SHELDON M. GOLDMAN. Mr. Goldman has served as Senior Vice President,
Business Affairs and General Counsel of the Company since December 1997. Prior
to becoming Senior Vice President, Business Affairs and General Counsel, Mr.
Goldman served as Vice President, Business and Legal Affairs of the Company from
December 1996 to December 1997 and served as United States General Counsel of
the Company from April 1996 to December 1996. From January 1987 to March 1996,
Mr. Goldman was associated with the law firm of Wien, Malkin & Bettex. Since
March 1996, Mr. Goldman has been Of Counsel to the law firm of Brief Kesselman
Knapp & Schulman, LLP.
FRANCIS J. MOUNT. Mr. Mount has served as Senior Vice President,
Engineering and Network Operations of the Company since December 1997 and as a
Director of the Company since June 1998. Prior to joining the Company, Mr. Mount
was Senior Vice President, Business Initiatives of Primus Telecommunications
Group from October 1997 to December 1997, responsible for Internet telephony,
European operations and network quality. From June 1996 to October 1997, Mr.
Mount was Executive Vice President and Chief Operating Officer of Telepassport,
Inc. and was Vice President and Chief Operating Officer of Telepassport, Inc.
from January 1996 to June 1997. From 1990 to January 1996, Mr. Mount was
employed by MCI, most recently as Director, Global Technical Services,
responsible for international development, alliance management and all technical
operations and services outside the United States, including the construction
and maintenance of large networks such as Hyperstream, "Concert" and private
networks for large accounts such as J.P. Morgan, Proctor and Gamble and I.B.M.
From March 1967 to December 1989, Mr. Mount was employed by AT&T in various
positions.
PAUL G. PIZZANI. Mr. Pizzani has served as a director of the Company since
April 1996. Mr. Pizzani is currently a Managing Director of Wasserstein Perella
Emerging Markets L.P. where he has been employed since November 1997. Prior to
November 1997, Mr. Pizzani was associated with COMSAT Corporation and its
subsidiaries in various capacities from November 1985 to October 1997, most
recently as Treasurer. COMSAT, an affiliate of COMSAT Corporation, is a
stockholder of the Company.
JOHN G. GRAHAM. Mr. Graham has served as a director of the Company since
June 1998. Mr. Graham is currently the Senior Vice President and Chief Financial
Officer of GPU, Inc., a domestic and international electric utility and
independent power generation company. Mr Graham has been employed by GPU since
1976 and has held his current position since 1987. From 1970 to 1976, Mr. Graham
was a Partner in the law firm of Ruprecht and Graham, Newark, New Jersey. From
1993 to 1997, Mr. Graham served as a Director and Chairman of the Audit
Committee of Edisto Resources, Inc., which was engaged in the exploration,
production and marketing of natural gas and oil.
SENIOR MANAGEMENT
FRED HUGHES. Mr. Hughes has served as Vice President, Engineering of the
Company since December 1997. From July 1994 to December 1997, Mr. Hughes was
Vice President, Operations-Europe of the Company. From August 1993 to July 1994,
Mr. Hughes served as Director of Telephony of the Company. From January 1991 to
August 1993, Mr. Hughes was President of Communications Services Group, a
Connecticut-based voice and data communications consulting company. From August
1988 to January 1991, Mr. Hughes was Director of Engineering at Millicom
Telecommunications Services, Inc.
PAUL K. HEUN. Mr. Heun has been Vice President, Operations of the Company
since January 1998. Prior to joining the Company, Mr. Heun was Vice President,
Network Services of Primus Telecommunications Group from October 1997 to January
1998. From April 1996 to October 1997, Mr. Heun was Vice President, Network
Services of Telepassport, Inc. From January 1995 to April 1996, Mr. Heun was
employed by AT&T as Manager, Customer Connectivity. From April 1989 to January
1995, Mr. Heun was employed by MCI, most recently as Senior Manager, Network
Operations.
WAYNE MYERS. Mr. Myers has been General Manager, European Sales of the
Company since July 1997. From February 1996 to June 1997, Mr. Myers was Channel
Sales Director of PSI Net. From November 1994 to February 1996, Mr. Myers was a
Sales Director for LDDS/WorldCom. From June 1993
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to November 1994, Mr. Myers was President of the Gold Club, a direct mail
Company. From February 1988 to June 1993, Mr. Myers was employed by Cable &
Wireless Communications, Inc. in various capacities most recent as a National
Account Director.
JAN S. PIAZZA. Ms. Piazza has served as the Company's General Manager,
Carrier Sales since January 1998. Prior to joining the Company, Ms. Piazza was a
Vice President of Primus Telecommunications Group from October 1997 to December
1997. From September 1995 to October 1997, Ms. Piazza was a Vice President,
Sales and Marketing of Telepassport, Inc. From 1987 to August 1995, Ms. Piazza
served in various positions at a predecessor of WorldCom, most recently as Vice
President of Product Development and Carrier Sales. From 1983 until 1987, Ms.
Piazza was Director of Sales Administration and Customer Service for Argo
Communications.
ELLEN S. RUDIN. Ms. Rudin has served as Assistant General Counsel of the
Company since October 1997 and an Assistant Secretary since September 1997.
Prior to becoming Assistant General Counsel, Ms. Rudin served as Counsel of the
Company from March 1997 to October 1997 and as a staff attorney for the Company
from August 1996 to March 1997. From September 1987 to August 1996, Ms. Rudin
was associated with the law firm of Wien, Malkin & Bettex.
CHARLES T. FIELD. Mr. Field has served as Treasurer of the Company since
April 1998. Prior to joining the Company, Mr. Field was employed by Horsehead
Industries, Inc., a diversified manufacturing company, from August 1995 to April
1998. From October 1987 to August 1995, Mr. Field was employed by Deloitte &
Touche LLP, Independent Certified Public Accountants, most recently as Manager.
Mr. Field is a Certified Public Accountant and a member of the American
Institute, United Kingdom Society and Illinois Society of Certified Public
Accountants.
GEORGE A. PIERACCINI. Mr. Pieraccini has served as the Company's Controller
since January 1996. Mr. Pieraccini served as Assistant Controller of the Company
from November 1994 to December 1995. From October 1991 to November 1994, Mr.
Pieraccini was employed by Edward Isaacs & Company LLP, Independent Certified
Public Accountants, most recently as an Audit Senior. Mr. Pieraccini is a
Certified Public Accountant and a member of the American Institute and the New
York State Society of Certified Public Accountants.
ALFREDO CANDAL. Mr. Candal has served as the Company's Regional Manager for
Latin America since January 1996 and as the Company's Latin American Business
Development Manager from May 1995 to December 1995. Prior to such date, Mr.
Candal served as the Company's Acting Country Manager for Italy from December
1994 to May 1995 and as the Company's Latin American specialist from October
1993 to December 1994.
CATHERINE W. MACK. Ms. Mack has served as the Company's Director, Human
Resources and Administration since January 1995. Prior to joining the Company,
Ms. Mack served as Manager, Global Compensation and Benefits Administration with
Avon Products, Inc. from February 1993 to November 1994. From July 1990 to
February 1993, Ms. Mack served in various human resources positions with Holiday
Inn Worldwide and from March 1987 to July 1990 was Manager, Corporate Personnel
for RJR Nabisco, Inc.
STEPHEN GRIST. Mr. Grist has served as European Finance Director of the
Company since February 1998. Prior to joining the Company, Mr. Grist was
employed by Mincom Pty Ltd., a privately held Australian software and consulting
company, from October 1994 to February 1998, most recently as U.K./ Europe
Financial Controller. From January 1989 to July 1994, Mr. Grist was employed by
Coopers & Lybrand, Independent Certified Public Accountants, most recently as a
Senior Audit Manager. Mr. Grist has been a member of the Institute of Chartered
Accountants in England and Wales.
DEREK FOXWELL. Mr. Foxwell has served as Director of Infrastructure
Programs since May 1998. From December 1997 to May 1998, Mr. Foxwell served as a
consultant to the Company providing advice to the Company in connection with the
development of the Circe Network. Prior to joining the Company as a
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<PAGE>
consultant, Mr. Foxwell was a consultant to Nynex Network Service (Flag Ltd.)
where he chaired the Flag Assignment, Routing & Restoration Subcommittee and
Sprint International (PTAT) and acted as the operations and maintenance manager
for PTAT systems. From 1972 to 1991, Mr. Foxwell was employed by British
Telecom, most recently as Transmission Engineering Planning Manager,
International Cable Network; International and National Elements. Mr. Foxwell is
a chartered engineer with more than 25 years of experience in international
telecommunications networks.
LOUISE LANCASTER. Ms. Lancaster has served as Director of European
Regulatory Affairs of the Company since June 1998. Prior to joining the Company,
Ms. Lancaster was employed by ACC Telecom from January 1995 to June 1998, most
recently as Director of Legal and Regulatory Affairs, Europe. From 1991 to 1994,
Ms. Lancaster was employed by Turner Kenneth Brown, solicitors, as a trainee
solicitor.
The number of directors, constituting a full board is currently seven. The
Board currently has two vacancies. The Board consists of three classes: Class A,
Class B and Class C. One of the three classes, comprising one-third of the
directors, is elected each year to succeed the directors whose terms are
expiring. Directors hold office until the annual meeting for the year in which
their terms expire and until their successors are elected and qualified unless,
prior to that date, they have resigned, retired or otherwise left office.
The Board of Directors has established three committees, a Compensation
Committee, an Audit Committee and a Directors Committee (established in May
1997). During 1997, the members of the Compensation Committee were Messrs.
Mahoney, Peet and Pizzani, the members of the Audit Committee were Messrs. Peet,
Pizzani and Shaw and the members of the Directors Committee were Messrs.
Varsavsky, Mahoney, Peet and Pizzani. The Compensation Committee reviews general
policy matters relating to compensation and benefits of employees and officers
of the Company and administers the Stock Incentive Plan. The Audit Committee
recommends to the Board the firm of independent public accountants to audit the
Company's financial statements, reviews with management and the independent
accountants the Company's interim and year-end operating results, considers the
adequacy of the internal controls and audit procedures of the Company and
reviews the nonaudit services to be performed by the independent accountants.
The Directors Committee searches for and interviews prospective directors, makes
recommendations to the Board regarding the size of the Board and candidates to
fill vacancies on the Board, including vacancies created by reason of an
increase in the size of the Board and nominates candidates for election to the
Board.
Effective June 1998, the Company increased the annual fee paid to
non-employee directors from $12,000 to $30,000 (paid $15,000 in cash, in
quarterly installments, and $15,000 in restricted shares of Common Stock),
increased from $1,000 to $1,200 the meeting fee paid to directors for every
board meeting attended and each committee meeting attended and held separately
and increased from $500 to $600 the fee paid to directors for each board meeting
or committee meeting participated in by telephone. All directors continue to be
reimbursed for out-of-pocket expenses incurred in attending Board and committee
meetings. Directors who are also employees of the Company are not separately
compensated for serving on the Board of Directors. See "-- Stock Incentive
Plan."
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SUMMARY COMPENSATION TABLE
The following table sets forth information concerning compensation for
services in all capacities awarded to, earned by or paid to, any person acting
as the Company's Chief Executive Officer during 1997, regardless of the amount
of compensation paid, and the other most highly compensated executive officers
of the Company during 1997 whose aggregate cash and cash equivalent compensation
exceeded $100,000 (collectively, the "Named Executives").
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
------------------------------------- LONG TERM COMPENSATION
OTHER --------------------------
ANNUAL RESTRICTED SECURITIES ALL
COMPENSATION STOCK UNDERLYING OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) ($)(1) AWARDS($) OPTIONS(#) COMPENSATION
- -------------------------------- --------- ---------- ---------- ------------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Michael J. Mahoney(2),.......... 1997 1996 $ 212,500 $ 125,000 -- 102,825 -- 299,997(3) -- $ 9,500(4)
President and Chief Executive 1995 166,458 183,129 $ 52,715 $ 253,333 --
Officer 123,000 117,607 -- 23,333 --
Allan L. Shaw(5),............... 1997 1996 140,000 60,000 -- -- 60,666 8,400(4)
Senior Vice President, 108,333 115,000 -- -- 43,333 --
Finance;
Chief Financial
Officer and Treasurer
Lawrence G. Malone(5)........... 1997 1996 141,750 35,588 -- -- 73,533 8,505(4)
Senior Vice President Global 98,333 88,147 -- -- 33,333 --
Sales and Marketing
Sheldon M. Goldman(6)........... 1997 1996 143,750 60,000 -- -- 40,200 9,000(4)
Senior Vice President, 86,354 100,000 -- -- 20,000 --
Business Affairs and General
Counsel
Martin Varsavsky(2)............. 1997 1996 271,875 -- 73,482 76,476 -- -- --
Chairman and 1995 350,000 200,000 99,813 -- -- --
Chief Executive Officer 329,673 100,000 -- -- --
</TABLE>
- ------------------------
(1) The amount reflected for Mr. Mahoney (i) for 1996, includes $32,416 of tax
equalization payments, $28,227 of relocation expense reimbursement
associated with Mr. Mahoney's repatriation from London to New York and
$9,263 of tax gross ups and (ii) for 1995, includes $23,834 of housing
allowance expense. The amount reflected for Mr. Varsavsky (i) for 1997,
includes $43,279 of housing allowance expense, $16,395 for housing related
expenses and $9,069 of tuition reimbursement for his children's schooling,
(ii) for 1996, includes $67,375 of housing allowance expense and $8,180 of
tuition reimbursement for his children's schooling and (iii) for 1995,
includes $35,880 of housing allowance expense and $47,500 of relocation
expense reimbursement.
(2) Mr. Mahoney was appointed as Chief Executive Officer in September 1997
following Mr. Varsavsky's resignation.
(3) Calculated based on a value of $9.00 per share, the fair market value of the
Common Stock on December 31, 1996.
(4) Represents matching contributions under the Company's 401(k) plan.
(5) The executive was not an executive officer of the Company during 1995.
(6) Mr. Goldman began his employment with the Company in March 1996.
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STOCK OPTION GRANTS
The following table sets forth information regarding grants of options to
purchase Common Stock made by the Company during the fiscal year ended December
31, 1997 to each of the Named Executives. No stock appreciation rights ("SARs")
were granted during 1997.
OPTION GRANTS IN 1997
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
INDIVIDUAL GRANTS VALUE
------------------------------------------------------ AT ASSUMED ANNUAL
NUMBER OF PERCENT OF RATES OF STOCK PRICE
SECURITIES TOTAL OPTIONS APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OPTION TERM (3)
OPTIONS EMPLOYEES IN PRICE EXPIRATION ----------------------
NAME GRANTED (#) 1997 (1) ($/SHARE)(2) DATE (5%) (10%)
- ------------------------------------ ----------- ------------- ------------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Michael J. Mahoney.................. -- -- -- -- -- --
Allan L. Shaw....................... 60,666(4)(5) 14.2% $ 9.00 01/01/07 $ 343,373 $ 870,174
Lawrence G. Malone.................. 40,200(4)(5) 9.4 9.00 01/01/07 227,534 576,616
33,333(4)(6) 7.8 6.50 05/27/07 136,259 345,307
Sheldon M. Goldman.................. 40,200(4)(5) 9.4 9.00 01/01/07 227,534 576,616
Martin Varsavsky.................... -- -- -- -- -- --
</TABLE>
- ------------------------
(1) The Company granted options to purchase a total of 428,194 shares of Common
Stock during 1997.
(2) The exercise price was equal to the fair market value of the shares of
Common Stock underlying the options on the grant date.
(3) Amounts reported in these columns represent amounts that may be realized
upon exercise of options immediately prior to the expiration of their term
assuming the specified compounded rates of appreciation (5% and 10%) on the
Common Stock over the term of the options. These assumptions are based on
rules promulgated by the Commission and do not reflect the Company's
estimate of future stock price appreciation. Actual gains, if any, on the
stock option exercises and Common Stock holdings are dependent on the timing
of such exercise and the future performance of the Common Stock. There can
be no assurance that the rates of appreciation assumed in this table can be
achieved or that the amounts reflected will be received by the option
holder.
(4) In the event of a Corporate Transaction (as defined) involving the Company,
all unvested options become fully vested. See "-- Stock Incentive Plan." The
options granted to Messrs. Shaw and Goldman also vest upon a Change of
Control (as defined). See "-- Employment Agreements."
(5) Options vested and became exercisable as to 33.34% on January 1, 1998 and
will vest and become exercisable as to an additional 33.33% on each
anniversary thereafter.
(6) Options vested and became exercisable as to 33.34% on May 27, 1998 and will
vest and become exercisable as to an additional 33.33% on each anniversary
thereafter.
Effective January 1, 1998, the Company granted stock options to executive
officers as follows: Michael J. Mahoney, 90,000 options at an exercise price of
$5.00 per share and 90,000 options at an exercise price of $5.50 per share;
Allan L. Shaw, 60,000 options at an exercise price of $5.00 per share and 60,000
options at an exercise price of $5.50 per share; Lawrence G. Malone, 27,000
options at an exercise price of $5.00 per share and 60,000 options at an
exercise price of $5.50 per share; Sheldon M. Goldman, 60,000 options at an
exercise price of $5.00 per share and 60,000 options at an exercise price of
$5.50 per share; and Francis J. Mount, 40,000 options at an exercise price of
$5.00 per share and 60,000 options at an exercise price of $5.50 per share.
The Company's Compensation Committee has determined that it would be in the
best interest of the Company and its stockholders to increase the number of
shares available for grant under the Stock Incentive Plan in order to enable the
Company to grant additional stock options to the Company's
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executive officers. If the proposed increase is approved by the Company's
stockholders at the 1998 Annual Meeting, the Compensation Committee intends to
grant to its executive officers additional stock options equal to approximately
12% of the currently outstanding Common Stock.
YEAR-END OPTION VALUES
The following table sets forth information regarding the number and year end
value of unexercised options held at December 31, 1997 by each of the Named
Executives. No SARs were exercised by the Named Executives during fiscal 1997.
FISCAL 1997 YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF SECURITIES "IN-THE-MONEY"
UNDERLYING UNEXERCISED OPTIONS AT FISCAL
OPTIONS AT FISCAL YEAR-END ($)
YEAR-END (#) EXERCISABLE/UNEXERCISABLE
NAME EXERCISABLE/UNEXERCISABLE (1)
- ------------------------------------------------------------ ----------------------- --------------------------
<S> <C> <C>
Michael J. Mahoney.......................................... 181,980/118,019 $ 29,400/$0
Allan L. Shaw............................................... 62,443/54,889 0/0
Lawrence G. Malone.......................................... 45,622/71,244 0/0
Sheldon M. Goldman.......................................... 26,734/33,466 0/0
Martin Varsavsky............................................ 0/0 0/0
</TABLE>
- ------------------------
(1) Options are "in-the-money" if the fair market value of the underlying
securities exceeds the exercise price of the options. The amounts set forth
represent the difference between $5.00 per share, the fair market value of
the Common Stock issuable upon exercise of options at December 31, 1997 and
the exercise price of the option, multiplied by the applicable number of
options.
EMPLOYMENT AGREEMENTS
The Company has executed new employment agreements with Messrs. Mahoney,
Shaw and Goldman, pursuant to which Mr. Mahoney has agreed to continue to serve
as President and Chief Executive Officer of the Company, Mr. Shaw has agreed to
continue to serve as Senior Vice President, Chief Financial Officer and
Treasurer of the Company and Mr. Goldman has agreed to continue to serve as
Senior Vice President, Business Affairs and General Counsel for the Company
(collectively, the "Employment Agreements"). The term of the Mahoney Employment
Agreement extends for a period of three years and the term of the Shaw and
Goldman Employment Agreements extend for a period of two years, in each case
unless earlier terminated in accordance with the terms thereof. Pursuant to the
respective Employment Agreement, Mr. Mahoney is entitled to receive an annual
base salary of $300,000 (subject to inflationary adjustments), Mr. Shaw is
entitled to receive an annual base salary of $175,000 and Mr. Goldman is
entitled to receive an annual base salary of $185,000, subject, in each case, to
increases approved from time to time by the Board. In addition, Mr. Mahoney's
Employment Agreement provides for an annual cash bonus payment equal to 70% of
his base salary multiplied by a bonus multiple ranging from 0.6 to 2.0
determined based upon a comparison of actual versus projected EBITDA and revenue
figures and each of Messrs. Shaw's and Goldman's Employment Agreement provides
for an annual cash bonus payment equal to 50% of their base salary multiplied by
a bonus multiple ranging from 0.6 to 2.0 determined based upon a comparison of
actual versus projected EBITDA and revenue figures. Each of the Employment
Agreements also provides that the executive will be entitled to receive annual
grants of stock options or restricted stock in amounts to be determined by the
Board of Directors in its sole and absolute discretion and provides that
following a Change of Control (as defined therein), the Company will be
obligated to pay the executive an amount equal to the Severance Amount (as
defined therein) if the executive chooses to terminate his employment and
include a non-competition covenant. Each of the Employment Agreements also
contains a prohibition on the solicitation of Company employees.
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For purposes of the Employment Agreements, "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), becomes the ultimate "beneficial owner"
(as defined in Rule 13d-3 of 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 or (ii) individuals who at the beginning of any period of two
consecutive calendar years constituted the Board (together with any new
directors whose election by the Board 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 then still in office who either were members of the Board
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 the Board then in office.
STOCK INCENTIVE PLAN
The Company has adopted the Amended Stock Incentive Plan (the "Stock
Incentive Plan") under which "non-qualified" stock options ("NQSOs") to acquire
shares of Common Stock may be granted to employees, directors and consultants of
the Company and "incentive" stock options ("ISOs") to acquire shares of Common
Stock may be granted to employees, including employee-directors. The Stock
Incentive Plan also provides for the grant of SARs and shares of restricted
Common Stock to the Company's employees, directors and consultants.
The Stock Incentive Plan currently provides for the issuance of up to a
maximum of 2,566,666 shares of Common Stock and is administered by the
Compensation Committee of the Board. Under the Stock Incentive Plan, the option
price of any ISO may not be less than the fair market value of a share of Common
Stock on the date on which the option is granted. The option price of an NQSO
may be less than the fair market value on the date the NQSO is granted if the
Board of Directors so determines. An ISO may not be granted to a "ten percent
stockholder" (as such term is defined in Section 422A of the Code) unless the
exercise price is at least 110.0% of the fair market value of the Common Stock
and the term of the option may not exceed five years from the date of grant.
Each option granted pursuant to the Stock Incentive Plan is evidenced by a
written agreement executed by the Company and the grantee, which contains the
terms, provisions and conditions of the grant. Stock options may not be assigned
or transferred during the lifetime of the holder except as may be required by
law or pursuant to a qualified domestic relations order. Common Stock subject to
a restricted stock purchase or bonus agreement is transferable only as provided
in such agreement. The maximum term of each stock option granted to persons
other than ten percent stockholders is ten years from the date of grant.
For options to qualify as ISOs, the aggregate fair market value, determined
on the date of grant, of the shares with respect to which the ISOs are
exercisable for the first time by the grantee during any calendar year may not
exceed $100,000. Payment by option holders upon exercise of an option may be
made in cash or, with the consent of the Compensation Committee, in whole or in
part, (i) with shares of Common Stock owned by the participants, (ii) by
irrevocable direction to an approved securities broker to sell shares and
deliver all or a portion of the proceeds to the Company, (iii) by delivery of a
promissory note with such provisions as the Compensation Committee determines
appropriate or (iv) in any combination of the foregoing. In addition, the
Compensation Committee, in its sole discretion, may authorize the surrender by
an optionee of all or part of an unexercised stock option and authorize a
payment in consideration thereof of an amount equal to the difference between
the aggregate fair market value of the shares of Common Stock subject to such
stock option and the aggregate option price per share of such Common Stock. In
the Compensation Committees' discretion, such payment may be made in cash,
shares of Common Stock with a fair market value on the date of surrender equal
to the payment amount or some combination thereof.
The Stock Incentive Plan provides that outstanding options, restricted
shares of Common Stock or SARs vest in their entirety and become exercisable, or
with respect to restricted Common Stock, are released from restrictions on
transfer and repurchase rights, in the event of a "Corporate Transaction." For
purposes of the Stock Incentive Plan, a Corporate Transaction includes any of
the following stockholder-approved transactions to which the Company is a party:
(i) a merger or consolidation in which the
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<PAGE>
Company is not the surviving entity, other than a transaction the principal
purpose of which is to change the state of the Company's incorporation, or a
transaction in which the Company's stockholders immediately prior to such merger
or consolidation hold (by virtue of securities received in exchange for their
shares in the Company) securities of the surviving entity representing more than
50.0% of the total voting power of such entity immediately after such
transaction; (ii) the sale, transfer or other disposition of all or
substantially all of the assets of the Company unless the Company's stockholders
immediately prior to such sale, transfer or other disposition hold (by virtue of
securities received in exchange for their shares in the Company) securities of
the purchaser or other transferee representing more than 50.0% of the total
voting power of such entity immediately after such transaction; or (iii) any
reverse merger in which the Company is the surviving entity but in which the
Company's stockholders immediately prior to such merger do not hold (by virtue
of their shares in the Company held immediately prior to such transaction)
securities of the Company representing more than 50.0% of the total voting power
of the Company immediately after such transaction.
The Company has filed with the Commission a Registration Statement on Form
S-8 covering the shares of Common Stock underlying options granted under the
Stock Incentive Plan.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 1997, the members of the Compensation Committee were Messrs. Peet,
Pizzani and Mahoney. Mr. Mahoney is the Company's President and Chief Executive
Officer. None of the executive officers of the Company currently serves on the
compensation committee of another entity or any other committee of the board of
directors of another entity performing functions similar to the Compensation
Committee. No interlocking relationships exist between the Company's Board of
Directors or its Compensation Committee and the board of directors or
compensation committee of any other company.
SHAREHOLDERS AGREEMENTS. S-C V-Tel and Martin Varsavsky are parties to a
shareholders' agreement (the "S-C V-Tel Shareholders Agreement") which provides
that, in certain instances, if Mr. Varsavsky and Juan Manuel Aisemberg propose
to sell 20.0% or more of the aggregate number of shares of Common Stock
beneficially owned by them to any person or "group" (within the meaning of
Section 13(d) or 14(d)(2) of the Exchange Act), they shall cause S-C V-Tel,
COMSAT and certain other stockholders to have the right to sell its shares of
Common Stock in such a transaction on a pro rata basis with Messrs. Varsavsky
and Aisemberg, for the same consideration per share and on the same terms as Mr.
Varsavsky.
On April 5, 1994, Messrs. Varsavsky and Aisemberg and COMSAT entered into a
shareholders' agreement (as subsequently amended, the "COMSAT Shareholders
Agreement"). Pursuant to the terms of the COMSAT Shareholders Agreement, so long
as COMSAT beneficially owns at least 10.0% (subject to certain adjustments) of
the issued and outstanding shares of Common Stock on a fully diluted basis,
COMSAT is entitled to representation on the Company's Board of Directors in
proportion to its percentage ownership of Common Stock, subject to a minimum of
one seat, and to designate one member of an Executive Committee of the Board of
Directors, if any such committee is established. COMSAT currently holds less
than 10.0% of the outstanding Common Stock.
VOTING AGREEMENT. S-C V-Tel and COMSAT are parties to a voting agreement
(the "Voting Agreement"), pursuant to which, at all times that either S-C V-Tel
or COMSAT is entitled to nominate directors
to the Board, the other party is required to vote its respective shares of
Common Stock in favor of the first party's nominees. The Voting Agreement
remains in effect until the earlier of the dissolution of the Company or the
date on which either S-C V-Tel or COMSAT no longer owns any shares of Common
Stock. See "Certain Transactions -- S-C V-Tel Investments, L.P.," and "-- COMSAT
Investments, Inc." for a description of the registration rights held by each of
S-C V-Tel and COMSAT.
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<PAGE>
CERTAIN TRANSACTIONS
S-C V-TEL INVESTMENTS, L.P.
Pursuant to the terms of a stock purchase agreement, dated September 30,
1993 (as subsequently amended, the "S-C V-Tel Stock Purchase Agreement"), S-C
V-Tel purchased 1,695,532 shares of Common Stock on October 1, 1993 and 2,739
shares of Common Stock on December 15, 1993 for an aggregate purchase price of
$5.0 million (the "S-C V-Tel Shares"). The terms of the S-C V-Tel Stock Purchase
Agreement provide that, among other things, after April 16, 1997, S-C V-Tel has
the right to demand registration under the Securities Act of the S-C V-Tel
Shares. Such demand right must be exercised for at least 30.0%, and no more than
70.0% of the S-C V-Tel Shares then owned by S-C V-Tel. No earlier than six
months after the effective date of its first demand registration, S-C V-Tel may
request a second demand registration for any remaining S-C V-Tel Shares. The
expenses of such demand registrations, excluding any underwriter's commissions
and discounts relating to the sale of the S-C V-Tel Shares, will be paid by the
Company. In addition, if the Company proposes to register any of its securities
under the Securities Act, S-C V-Tel has the right, on up to four occasions, to
include in such registration a maximum of 33 1/3% of the S-C V-Tel Shares it
then owns. The expenses of any such "piggy-back" registration, excluding any
underwriter's commissions and discounts relating to the sale of the S-C V-Tel
Shares and the fees and disbursements of S-C V-Tel's legal counsel, will be paid
by the Company. S-C V-Tel is entitled to sell or transfer any of the S-C V-Tel
Shares, without the consent of the Company, provided that the transferee is not
in competition with, or does not otherwise have interests adverse to, the
Company. See "Management -- Compensation Committee Interlocks and Insider
Participation -- Shareholders Agreements" for a description of certain tag-along
rights of S-C V-Tel.
COMSAT INVESTMENTS, INC.
Pursuant to the terms of a stock purchase agreement, dated April 5, 1994 (as
subsequently amended, the "COMSAT Purchase Agreement"), COMSAT purchased
2,140,539 shares of Common Stock for a purchase price of $8.0 million (the
"COMSAT Shares"). Pursuant to the terms of the COMSAT Purchase Agreement, COMSAT
has been granted the same demand and piggyback registration rights as S-C V-Tel.
The COMSAT Purchase Agreement further provides that COMSAT may not transfer any
COMSAT Shares to any transferee without first offering such shares to the
Company if, following such transfer, such transferee would own 20.0% or more of
the then outstanding shares of Common Stock. In addition, COMSAT has agreed that
it will not acquire more than 30.0% of the shares of Common Stock outstanding at
any time except in certain circumstances relating to changes in the percentage
of the outstanding Common Stock owned by Mr. Varsavsky. Prior to the sale of all
or substantially all of the assets of the Company or the consolidation or merger
of the Company with any person in which the Company is not the surviving entity,
COMSAT has certain rights to invest in any joint venture proposed by the
Company. See "Management -- Compensation Committee Interlocks and Insider
Participation -- Shareholders Agreements" for a description of certain rights
held by COMSAT.
VARSAVSKY/JAZZTEL
On June 3, 1998, the Company entered into a Mutual Cooperation Agreement
with Martin Varsavsky and Jazz Telecom S.A. ("JazzTel") which provides for (i)
the joint construction of a submarine cable system between Spain and the United
Kingdom, (ii) the purchase by the Company of U.S. $6.0 million of JazzTel common
stock, (iii) the purchase of international switched minutes by JazzTel and the
Company from the other party and the Company's agreement to transit at least
1/3 of its Spain domestic switched minute traffic over JazzTel's network
assuming the prices charged by JazzTel are competitive, (iv) the sale by each of
JazzTel and the Company to the other of indefeasible rights of use for fixed
prices, (v) certain lockup arrangements regarding shares of Common Stock owned
by Mr. Varsavsky and certain registration obligations and rights with respect to
such shares, (vi) mutual releases and (vii) liquidated damages in the event that
Mr. Varsavsky violates certain provisions of the agreement. The Company's
obligations to invest in JazzTel and its obligations to jointly construct the
proposed submarine cable system are conditioned upon, among other things,
JazzTel raising, through the capital markets, certain specified dollar amounts.
104
<PAGE>
PRINCIPAL STOCKHOLDERS
The following table sets forth certain information regarding the beneficial
ownership of the Common Stock, as of July 8, 1998, by (i) each person known to
the Company to own beneficially more than 5% of the Company's outstanding shares
of Common Stock, (ii) each director of the Company, (iii) each of the Named
Executives, and (iv) all executive officers and directors of the Company, as a
group. All information with respect to beneficial ownership has been furnished
to the Company by the respective stockholders of the Company.
<TABLE>
<CAPTION>
AMOUNT AND NATURE PERCENTAGE
OF BENEFICIAL OF
NAME AND ADDRESS OWNERSHIP (1) CLASS
- ------------------------------------------------------------------------------------- ------------------ -------------
<S> <C> <C>
Martin Varsavsky
Parque Empresarial Edificio 2,
c/o Beatriz De Bobadilla
14,5 Ofic. B
Madrid, Spain...................................................................... 5,449,666 23.6%
The Capital Group Companies
333 South Hope Street
Los Angeles, CA 90071(2)........................................................... 2,882,700 12.5
COMSAT International, Inc.
6560 Rock Spring Drive
Bethesda, MD 20817(3).............................................................. 2,140,539 9.3
S-C V-Tel Investments, L.P.
888 Seventh Avenue
New York, NY 10106(3).............................................................. 1,698,272 7.3
FMR Corp.
82 Devonshire Street
Boston, MA 02109................................................................... 1,644,200 7.1
Morgan Stanley, Dean Witter, Discover & Co.
1585 Broadway
New York, New York 10036........................................................... 1,244,246 5.4
Michael J. Mahoney(4)................................................................ 230,313 1.0
Allan L. Shaw(4)..................................................................... 67,443 *
Lawrence G. Malone(4)................................................................ 56,733 *
Sheldon M. Goldman(4)(5)............................................................. 34,733 *
Paul G. Pizzani...................................................................... -- *
Francis J. Mount..................................................................... -- *
John G. Graham....................................................................... 1,000 *
All directors and executive
officers as a group (7 persons)(6)................................................. 390,222 1.7
</TABLE>
- ------------------------
* Represents beneficial ownership of less than 1% of the outstanding shares of
Common Stock.
(1) Beneficial ownership is determined in accordance with the rules of the
Commission. In computing the number of shares beneficially owned by a person
and the percentage ownership of that person, shares of Common Stock subject
to options and warrants held by that person that are currently exercisable
or exercisable within 60 days of July 8, 1998 are deemed outstanding. Such
shares, however, are not
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<PAGE>
deemed outstanding for the purpose of computing the percentage ownership of
any other person. Except as indicated in the footnotes to this table, the
stockholder named in the table has sole voting and investment power with
respect to the shares set forth opposite such stockholder's name.
(2) The amount reported reflects shares held by a subsidiary of The Capital
Group Companies solely as the investment manager of various institutional
accounts. The Capital Group Companies does not have investment power or
voting power over any of these shares.
(3) Does not include 7,147,938 shares of Common Stock which COMSAT may be deemed
to beneficially own as a result of certain voting arrangements contained in
the COMSAT Shareholders Agreement. See "Management -- Compensation Committee
Interlocks and Insider Participation -- Shareholders Agreements."
(4) Includes shares of Common Stock which these individuals have the right to
acquire through the exercise of options within 60 days of July 8, 1998, as
follows: Michael J. Mahoney 181,980; Allan L. Shaw 62,443; Lawrence G.
Malone 56,733; Sheldon M. Goldman 26,733; and Francis J. Mount 0.
(5) Includes 1,000 shares owned by Mr. Goldman's wife. Mr. Goldman disclaims
"beneficial ownership" of such shares within the meaning of Rule 13d-3 under
the Exchange Act.
(6) Includes vested and exercisable options to purchase 327,889 shares of Common
Stock which were granted pursuant to the Stock Incentive Plan.
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<PAGE>
DESCRIPTION OF THE EXCHANGE NOTES
The form and terms of the Exchange Notes are identical in all material
respects to the form and terms of the respective series of Existing Notes,
except that the Exchange Notes will not bear legends restricting the transfer
thereof or contain interest rate step-up provisions upon the failure to register
the Existing Notes. Each of the Existing 12.50% Notes, the Existing 11.25%
Notes, the Existing 12.40% Notes and the Existing 11.45% Notes were issued under
an Indenture, dated as of April 8, 1998 (the "12.50% Notes Indenture," the
"11.25% Notes Indenture," the "12.40% Notes Indenture" and the "11.15% Notes
Indentures," respectively, and together the "Indentures"), and each between
Viatel, as issuer, and the Bank of New York, as trustee (the "Trustee"). A copy
of each of the Indentures has been filed as an exhibit to the Registration
Statement of which this Prospectus forms a part. Upon the issuance of the
Exchange Notes, if any, or the effectiveness of the Shelf Registration
Statement, the Indentures will be subject to the Trust Indenture Act of 1939, as
amended (the "TIA"). The following summary of certain provisions of the
Indentures does not purport to be complete and is subject to, and is qualified
in its entirety by reference to, all the provisions of the Indentures, including
the definitions of certain terms therein and those terms made a part thereof by
the TIA. Whenever particular defined terms of the Indentures not otherwise
defined herein are referred to, such defined terms are incorporated herein by
reference. For definitions of certain capitalized terms used in the following
summary, see "-- Certain Definitions."
GENERAL
The Existing Discount Notes are, and the 12.50% Exchange Notes and the
12.40% Exchange Notes will be, unsecured senior obligations of the Company,
initially limited to $500.0 million and DM 226.0 million, respectively,
aggregate principal amount at maturity and will mature on April 15, 2008.
Although for income tax purposes a significant amount of original issue
discount, taxable as ordinary income, will be recognized by a Holder as such
discount accrues from the issue date, no interest will be payable on the 12.50%
Notes or the 12.40% Notes prior to October 15, 2003. From and after April 15,
2003, interest on the 12.50% Notes and the 12.40% Notes will accrue at the rate
of 12.50% and 12.40%, respectively, from April 15, 2003 or from the most recent
Interest Payment Date to which interest has been paid or provided for, payable
semi-annually (to Holders of record at the close of business on the April 1 or
October 1 immediately preceding the Interest Payment Date) on April 15 and
October 15 of each year, commencing October 15, 2003. Interest will be computed
on the basis of a 360-day year of twelve 30-day months.
The Existing Senior Notes are, and the 11.25% Exchange Notes and 11.15%
Exchange Notes will be, unsecured (except as described in "-- Security") senior
obligations of the Company, initially limited to $400.0 million and DM 178.0
million, respectively, principal amount, and will mature on April 15, 2008.
Interest on the 11.25% Notes and the 11.15% Notes will accrue at the rate of
11.25% and 11.15%, respectively, from April 8, 1998 or from the most recent
Interest Payment Date to which interest has been paid or provided for, payable
semi-annually (to Holders of record at the close of business on the April 1 and
October 1 immediately preceding the Interest Payment Date) in cash on April 15
and October 15 of each year, commencing October 15, 1998. Interest will be
computed on the basis of a 360-day year of twelve 30-day months.
If, by October 8, 1998, the Company has not consummated the registered
exchange offer for the Existing Notes contemplated hereby or caused a shelf
registration statement with respect to resales of the Existing Notes to be
declared effective, annual interest (in addition to the accrual of original
issue discount on the Existing Discount Notes and interest otherwise due on the
Existing Senior Notes) will accrue, (i) with respect to the Existing Discount
Notes, at the rate of 0.5% per annum of the Accreted Value on the preceding
Semi-Annual Accrual Date and (ii) with respect to the Existing Senior Notes, at
the rate of 0.5% per annum of the principal amount, and, in each case, be
payable in cash semi-annually on April 15 and October 15 of each year,
commencing April 15, 1999, until the consummation of a registered exchange offer
or the effectiveness of the Shelf Registration Statement. See "-- Registration
Rights."
107
<PAGE>
Principal of, premium, if any, and interest on the Notes is payable, by wire
transfer of immediately available funds to the holder of global notes and with
respect to holders of certificated notes, at the office or agency of Viatel in
the Borough of Manhattan, the City of New York (which initially is the corporate
trust office of the Trustee in the City of New York; PROVIDED that, at the
option of Viatel, payment of interest may be made by check mailed to the Holders
at their addresses as they appear in the Security Register. In addition,
Deutsche Bank, Aktiengesellschaft will act as the DM Paying Agent for purposes
of making payments in German Deutschmarks on the 12.40% Notes and the 11.15%
Notes.
The 12.50% Exchange Notes and the 11.25% Exchange Notes will be issued only
in fully registered form, without coupons, in denominations of $1,000 of
principal amount at maturity in the case of the 12.50% Exchange Notes and $1,000
of principal amount in the case of the 11.25% Exchange Notes and, in each case,
any integral multiple thereof. The 12.40% Exchange Notes and the 11.15% Exchange
Notes will be issued in bearer form, in the case of the New DBC-DM Global
Certificates, or in registered form, in the case of the New DTC-DM Global
Certificates, and only in denominations of DM 100,000 of principal amount at
maturity in the case of the 12.40% Exchange Notes and DM 100,000 of principal
amount in the case of the 11.15% Exchange Notes and, in each case, in any
integral multiple of DM 1,000 above such number. No service charge will be made
for any registration of transfer or exchange of Notes, but Viatel may require
payment of a sum sufficient to cover any transfer tax or other similar
governmental charge payable in connection therewith.
Subject to the covenants described below under "-- Covenants" and applicable
law, Viatel may issue additional Notes under the Indentures. Each series of
Notes and any additional Notes in such series subsequently issued will be
treated as a single class for all purposes under the relevant Indenture.
SUBSTITUTION OF CURRENCY
Stage III is presently anticipated to commence on January 1, 1999 in the
eleven EU member states, including Germany, which the Council of the EU
determined on May 2, 1998 had satisfied the convergence criteria established in
the Treaty of Maastricht. Stage III is the locking of exchange rates and the
introduction of the Euro, which will replace the national currencies of such
member states. If Germany adopts the Euro, as planned, the regulations of the EC
relating to the Euro shall apply to the 12.40% Notes and the 11.15% Notes. As a
result, the 12.40% Notes and the 11.15% Notes will effectively be redenominated
into Euros. The circumstances and consequences described in this paragraph
entitle neither Viatel nor any holders of 12.40% Notes or 11.15% Notes to early
redemption, rescission, notice, repudiation, adjustment or renegotiation of the
terms and conditions of the 12.40% Notes, the 11.15% Notes, the 12.40% Notes
Indenture or the 11.15% Notes Indenture or to raise other defenses or to request
any compensation claim, nor will they affect any of the other obligations of
Viatel under the 12.40% Notes or the 11.15% Notes. See "Risk Factors -- Risks
Associated with International Operations and Foreign Exchange Rate Risks."
SECURITY
In accordance with the terms of the 11.25% Notes Indenture, Viatel purchased
and pledged to the Trustee for the benefit of the Holders of the 11.25% Notes
the U.S. Pledged Securities in an amount sufficient, upon receipt of scheduled
interest and principal payments on such securities, in the opinion of a
nationally recognized firm of independent public accountants selected by Viatel,
to provide for payment in full of the first six scheduled interest payments due
on the 11.25% Notes. In accordance with the terms of the 11.15% Notes Indenture,
Viatel purchased and pledged to the Trustee for the benefit of the Holders of
the 11.15% Notes the DM Pledged Securities in an amount sufficient upon receipt
of scheduled interest and principal payments on such securities, in the opinion
of a nationally recognized firm of independent public accountants selected by
Viatel, to provide for payment in full of the first six scheduled interest
payments due on the 11.15% Notes. Viatel used approximately $122.8 million of
the net proceeds of the
108
<PAGE>
Offering to acquire the U.S. Pledged Securities and approximately $30.6 million
of the net proceeds of the Offering to acquire the DM Pledged Securities. The
U.S. Pledged Securities and the DM Pledged Securities have been pledged by
Viatel to the Trustee for the benefit of the Holders of the 11.25% Notes and the
11.15% Notes, respectively, pursuant to the Pledge Agreement and are being held
by the Trustee in the U.S. Pledge Account and the DM Pledge Account,
respectively. Pursuant to the Pledge Agreement, immediately prior to an Interest
Payment Date on the 11.25% Notes and the 11.15% Notes, Viatel may either deposit
with the Trustee from funds otherwise available to Viatel cash sufficient to pay
the interest scheduled to be paid on such date or Viatel may direct the Trustee
to release from each of the Pledge Accounts proceeds sufficient to pay interest
then due on the 11.25% Notes and the 11.15% Notes. In the event that Viatel
exercises the former option, Viatel may thereafter direct the Trustee to release
to Viatel proceeds or Pledged Securities from the respective Pledge Account in
like amount. A failure to pay interest on the 11.25% Notes and the 11.15% Notes
in a timely manner through the first six scheduled interest payment dates will
constitute an immediate Event of Default under the 11.25% Notes Indenture and
the 11.15% Notes Indenture, as the case may be, with no grace or cure period.
Interest earned on the U.S. Pledged Securities or the DM Pledged Securities
will be added to the respective Pledge Account. In the event that the funds or
Pledged Securities held in a Pledge Account exceed the amount sufficient, in the
opinion of a nationally recognized firm of independent public accountants
selected by Viatel, to provide for payment in full of the first six scheduled
interest payments due on the 11.25% Notes and the 11.15% Notes, as the case may
be (or, in the event an interest payment or payments have been made, an amount
sufficient to provide for payment in full of any interest payments remaining, up
to and including the sixth scheduled interest payment), the Trustee will be
permitted to release to Viatel at Viatel's request any such excess amount. The
11.25% Notes are secured by the U.S. Pledged Securities and the related U.S.
Pledge Account and, accordingly, the U.S. Pledged Securities and the U.S. Pledge
Account also secure repayment of the principal amount of the 11.25% Notes to the
extent of such security. The 11.15% Notes are secured by the DM Pledged
Securities and the related DM Pledge Account and, accordingly, the DM Pledged
Securities and the related DM Pledge Account also secure repayment of the
principal amount of the 11.15% Notes to the extent of such security.
Under the Pledge Agreement, assuming that Viatel makes the first six
scheduled interest payments on the Senior Notes in a timely manner, all of the
remaining Pledged Securities will be released from the Pledge Accounts and
thereafter the Senior Notes will be unsecured.
OPTIONAL REDEMPTION
The Notes are redeemable, at Viatel's option, in whole or in part, at any
time or from time to time, on or after April 15, 2003 and prior to maturity,
upon not less than 30 nor more than 60 days' prior notice mailed by first class
mail to each Holder's last address as it appears in the Security Register, at
the Redemption Prices (expressed in percentages of principal amount at maturity
in the case of the 12.50% Notes and the 12.40% Notes and principal amount in the
case of the 11.25% Notes and 11.15% Notes) set forth below, plus accrued and
unpaid interest, if any, to the Redemption Date (subject to the right of Holders
of record on the relevant Regular Record Date that is on or prior to the
Redemption Date to receive interest due on an Interest Payment Date), if
redeemed during the 12-month period commencing April 15, of the years set forth
below:
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<PAGE>
FOR THE 12.50% NOTES
<TABLE>
<CAPTION>
YEAR REDEMPTION PRICE
- ---------------------------------------------------------------------------- ----------------
<S> <C>
2003........................................................................ 106.250%
2004........................................................................ 104.167
2005........................................................................ 102.083
2006 and thereafter......................................................... 100.000
</TABLE>
FOR THE 11.25% NOTES
<TABLE>
<CAPTION>
YEAR REDEMPTION PRICE
- ---------------------------------------------------------------------------- ----------------
<S> <C>
2003........................................................................ 105.625%
2004........................................................................ 103.750
2005........................................................................ 101.875
2006 and thereafter......................................................... 100.000
</TABLE>
FOR THE 12.40% NOTES
<TABLE>
<CAPTION>
YEAR REDEMPTION PRICE
- ---------------------------------------------------------------------------- ----------------
<S> <C>
2003........................................................................ 106.200%
2004........................................................................ 104.133
2005........................................................................ 102.067
2006 and thereafter......................................................... 100.000
</TABLE>
FOR THE 11.15% NOTES
<TABLE>
<CAPTION>
YEAR REDEMPTION PRICE
- ---------------------------------------------------------------------------- ----------------
<S> <C>
2003........................................................................ 105.575%
2004........................................................................ 103.717
2005........................................................................ 101.858
2006 and thereafter......................................................... 100.000
</TABLE>
In addition, at any time prior to April 15, 2001, Viatel may, at its option,
redeem up to 35% of the aggregate principal amount at maturity of the Notes with
the net proceeds of one or more Public Equity Offerings, at any time or from
time to time in part, at a Redemption Price (expressed as a percentage of
Accreted Value on the Redemption Date) of 112.50% and 112.40%, respectively,
with respect to the 12.50% Notes and the 12.40% Notes and at a Redemption Price
(expressed as a percentage of the principal amount) of 111.25% 111.15%,
respectively, with respect to the 11.25% Notes and the 11.15% Notes; PROVIDED
(i) that Notes representing at least 65% of the principal amount at maturity of
the Notes initially issued remain outstanding immediately after each such
redemption and (ii) that notice of each such redemption is mailed within 60 days
of each such Public Equity Offering.
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
national securities exchange, if any, on which the relevant Notes are listed or,
if the relevant Notes are not listed on a national securities exchange, by lot
or by such other method as the Trustee in its sole discretion shall deem to be
fair and appropriate; PROVIDED that no 12.50% Note of $1,000 in principal amount
at maturity or less, no 11.25% Note of $1,000 in
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principal amount or less, no 12.40% Note of DM 1,000 in principal amount at
maturity or less and no 11.15% Note of DM 1,000 in 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 at maturity or principal amount, as the case may be, thereof to
be redeemed. A new Note in principal amount equal to the unredeemed portion
thereof will be issued in the name of the Holder thereof upon cancellation of
the original Note. On and after the redemption date interest ceases to accrue on
Notes or the portion of the Notes called for redemption.
SINKING FUND
The Notes are not entitled to the benefit of any sinking fund.
REGISTRATION RIGHTS
Pursuant to the 1998 Registration Rights Agreement, Viatel agreed, for the
benefit of the Holders, that Viatel will use its best efforts, at its cost, to
consummate the Exchange Offers by October 8, 1998. In satisfaction of this
obligation, Viatel is hereby offering the Exchange Notes in return for the
surrender of the Existing Notes. It is intended by Viatel that the Exchange
Offer will satisfy the registration rights, which will terminate upon the
consummation of the Exchange Offers. For each Existing Note surrendered to
Viatel under the Exchange Offers, the Holder will receive an Exchange Note of
equal principal amount at maturity or principal amount, as the case may be. The
Accreted Value or principal amount, as the case may be, of each Exchange Note
shall be identical to, and shall be determined in the same manner as, the
Accreted Value or principal amount of the Existing Notes so surrendered and
exchanged therefor. Interest on each Exchange Note shall be calculated and paid
in the same manner as interest on the Existing Notes so surrendered and
exchanged therefor.
RANKING
The Existing Notes are, and the Exchange Notes will be, unsecured (except as
described in "-- Security") senior obligations of Viatel, ranking PARI PASSU in
right of payment with all existing and future unsecured unsubordinated
obligations of Viatel and will be senior in right of payment to all existing and
future subordinated indebtedness of Viatel. After giving PRO FORMA effect to the
Tender Offer and the Offering, as of March 31, 1998, Viatel would have had
approximately $845.7 million of indebtedness, excluding current liabilities. The
Existing Notes are, and the Exchange Notes will be, effectively subordinated to
all existing and future liabilities (including trade payables) of the Viatel's
subsidiaries. As of March 31, 1998, Viatel's subsidiaries had approximately
$14.7 million of liabilities (excluding intercompany payables).
CERTAIN DEFINITIONS
Set forth below is a summary of certain of the defined terms used in the
covenants and other provisions of the Indentures. Reference is made to the
Indentures for the definition of any other capitalized term used herein for
which no definition is provided.
"Accreted Value" means, (a) with respect to the 12.50% Notes, for any
Specified Date, the amount calculated pursuant to clause (i), (ii), (iii) or
(iv) below for each $1,000 principal amount at maturity of 12.50% Notes:
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(i) if the Specified Date occurs on one of the following dates (each a
"Semi-Annual Accrual Date"), the Accreted Value will equal the amount set
forth below for such Semi-Annual Accrual Date:
<TABLE>
<CAPTION>
ACCRETED
SEMI-ANNUAL ACCRUAL DATE VALUE
- ----------------------------------------------------------------------------------- -------------
<S> <C>
October 15, 1998................................................................... $ 579.48
April 15, 1999..................................................................... $ 615.69
October 15, 1999................................................................... $ 654.18
April 15, 2000..................................................................... $ 695.06
October 15, 2000................................................................... $ 738.50
April 15, 2001..................................................................... $ 784.66
October 15, 2001................................................................... $ 833.70
April 15, 2002..................................................................... $ 885.81
October 15, 2002................................................................... $ 941.17
April 15, 2003..................................................................... $ 1,000.00
</TABLE>
(ii) if the Specified Date occurs before the first Semi-Annual Accrual
Date, the Accreted Value will equal the sum of (a) $544.11 and (b) an amount
equal to the product of (1) $1.29 MULTIPLIED by (2) a fraction, the
numerator of which is the number of days from April 8, 1998 to the Specified
Date, using a 360-day year of twelve 30-day months, and the denominator of
which is the number of days from April 8, 1998 to the first Semi-Annual
Accrual Date, using a 360-day year of twelve 30-day months;
(iii) if the Specified Date occurs between two Semi-Annual Accrual
Dates, the Accreted Value will equal the sum of (a) the Accreted Value for
the Semi-Annual Accrual Date immediately preceding such Specified Date and
(b) an amount equal to the product of (1) the Accreted Value for the
immediately following Semi-Annual Accrual Date less the Accreted Value for
the immediately preceding Semi-Annual Accrual Date MULTIPLIED by (2) a
fraction, the numerator of which is the number of days from the immediately
preceding Semi-Annual Accrual Date to the Specified Date, using a 360-day
year of twelve 30-day months, and the denominator of which is 180; or
(iv) if the Specified Date occurs after the last Semi-Annual Accrual
Date, the Accreted Value will equal $1,000.
(b) with respect to the 12.40% Notes, for any Specified Date, the amount
calculated pursuant to clause (i), (ii), (iii) or (iv) below for each DM 1,000
principal amount at maturity of 12.40% Notes:
(i) if the Specified Date occurs on a Semi-Annual Accrual Date, the
Accreted Value will equal the amount set forth below for such Semi-Annual
Accrual Date:
<TABLE>
<CAPTION>
SEMI-ANNUAL ACCRUAL DATE ACCRETED VALUE
- --------------------------------------------------------------------------------- ---------------
<S> <C>
October 15, 1998................................................................. DM 581.94
April 15, 1999................................................................... DM 618.02
October 15, 1999................................................................. DM 656.33
April 15, 2000................................................................... DM 697.03
October 15, 2000................................................................. DM 740.24
April 15, 2001................................................................... DM 786.14
October 15, 2001................................................................. DM 834.88
April 15, 2002................................................................... DM 886.64
October 15, 2002................................................................. DM 941.61
April 15, 2003................................................................... DM 1,000.00
</TABLE>
(ii) if the Specified Date occurs before the first Semi-Annual Accrual
Date, the Accreted Value will equal the sum of (a) DM 546.68 and (b) an
amount equal to the product of (1) DM 1.28 MULTIPLIED
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by (2) a fraction, the numerator of which is the number of days from April
8, 1998 to the Specified Date, using a 360-day year of twelve 30-day months,
and the denominator of which is the number of days from April 8, 1998 to the
first Semi-Annual Accrual Date, using a 360-day year of twelve 30-day
months;
(iii) if the Specified Date occurs between two Semi-Annual Accrual
Dates, the Accreted Value will equal the sum of (a) the Accreted Value for
the Semi-Annual Accrual Date immediately preceding such Specified Date and
(b) an amount equal to the product of (1) the Accreted Value for the
immediately following Semi-Annual Accrual Date less the Accreted Value for
the immediately preceding Semi-Annual Accrual Date MULTIPLIED by (2) a
fraction, the numerator of which is the number of days from the immediately
preceding Semi-Annual Accrual Date to the Specified Date, using a 360-day
year of twelve 30-day months, and the denominator of which is 180; or
(iv) if the Specified Date occurs after the last Semi-Annual Accrual
Date, the Accreted Value will equal DM 1,000.
"Acquired Indebtedness" means Indebtedness of a Person existing at the time
such Person becomes a 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 or such Asset Acquisition.
"Adjusted Consolidated Net Income" means, for any period, the aggregate net
income (or loss) of Viatel and its Restricted Subsidiaries for such period
determined in conformity with GAAP; PROVIDED that the following items shall be
excluded in computing Adjusted Consolidated Net Income (without duplication):
(i) the net income (or loss) of any Person that is not a Restricted Subsidiary,
except (x) with respect to net income, to the extent of the amount of dividends
or other distributions actually paid to Viatel or any of its Restricted
Subsidiaries by such Person during such period and (y) with respect to net
losses, to the extent of the amount of Investments made by Viatel or any
Restricted Subsidiary in such Person during such period; (ii) solely for the
purposes of calculating the amount of Restricted Payments that may be made
pursuant to clause (C) of the first paragraph of the "Limitation on Restricted
Payments" covenant described below (and in such case, except to the extent
includable pursuant to clause (i) above), the net income (or loss) of any Person
accrued prior to the date it becomes a Restricted Subsidiary or is merged into
or consolidated with Viatel or any of its Restricted Subsidiaries or all or
substantially all of the property and assets of such Person are acquired by
Viatel or any of its Restricted Subsidiaries; (iii) the net income of any
Restricted Subsidiary to the extent that the declaration or payment of dividends
or similar distributions by such Restricted Subsidiary of such net income is not
at the time permitted by the operation of the terms of its charter or any
agreement, instrument, judgment, decree, order, statute, rule or governmental
regulation applicable to such Restricted Subsidiary; (iv) any gains or losses
(on an after-tax basis) attributable to Asset Sales and sales of indefeasible
rights-of-use or dark fibers; (v) except for purposes of calculating the amount
of Restricted Payments that may be made pursuant to clause (C) of the first
paragraph of the "Limitation on Restricted Payments" covenant described below,
any amount paid or accrued as dividends on Preferred Stock of Viatel or any
Restricted Subsidiary owned by Persons other than Viatel and any of its
Restricted Subsidiaries; (vi) all extraordinary gains and extraordinary losses;
and (vii) any compensation expense paid or payable solely with Capital Stock
(other than Disqualified Stock) of Viatel or any options, warrants or other
rights to acquire Capital Stock (other than Disqualified Stock) of Viatel.
"Adjusted Consolidated Net Tangible Assets" means the total amount of assets
of Viatel and its Restricted Subsidiaries (less applicable depreciation,
amortization and other valuation reserves), except to the extent resulting from
write-ups of capital assets (excluding write-ups in connection with accounting
for acquisitions in conformity with GAAP), after deducting therefrom (i) all
current liabilities of Viatel and its Restricted Subsidiaries (excluding
intercompany items) and (ii) all goodwill, trade names, trademarks, patents,
unamortized debt discount and expense and other like intangibles, all as set
forth on the most
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recent quarterly or annual consolidated balance sheet of Viatel and its
Restricted Subsidiaries, prepared in conformity with GAAP and filed with the
Commission or provided to the Trustee pursuant to the "Commission Reports and
Reports to Holders" covenant.
"Affiliate" means, 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, means 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" means (i) an investment by Viatel or any of its
Restricted Subsidiaries in any other Person pursuant to which such Person shall
become a Restricted Subsidiary or shall be merged into or consolidated with
Viatel or any of its Restricted Subsidiaries; PROVIDED that such Person's
primary business is related, ancillary or complementary to the businesses of
Viatel or any of its Restricted Subsidiaries on the date of such investment or
(ii) an acquisition by Viatel or any of its Restricted Subsidiaries of the
property and assets of any Person other than Viatel or any of its Restricted
Subsidiaries that constitute substantially all of a division or line of business
of such Person; PROVIDED that the property and assets acquired are related,
ancillary or complementary to the businesses of Viatel or any of its Restricted
Subsidiaries on the date of such acquisition.
"Asset Disposition" means the sale or other disposition by Viatel or any of
its Restricted Subsidiaries (other than to Viatel or another Restricted
Subsidiary) of (i) all or substantially all of the Capital Stock of any
Restricted Subsidiary or (ii) all or substantially all of the assets that
constitute a division or line of business of Viatel or any of its Restricted
Subsidiaries.
"Asset Sale" means any sale, transfer or other disposition (including by way
of merger, consolidation or sale-leaseback transaction) in one transaction or a
series of related transactions by Viatel or any of its Restricted Subsidiaries
to any Person other than Viatel or any of its Restricted Subsidiaries of (i) all
or any of the Capital Stock of any Restricted Subsidiary, (ii) all or
substantially all of the property and assets of a division or line of business
of Viatel or any of its Restricted Subsidiaries or (iii) any other property and
assets (other than the Capital Stock or other Investment in an Unrestricted
Subsidiary) of Viatel or any of its Restricted Subsidiaries outside the ordinary
course of business of Viatel or such Restricted Subsidiary and, in each case,
that is not governed by the provisions of the Indentures applicable to mergers,
consolidations and sales of all or substantially all of the assets of Viatel;
PROVIDED that "Asset Sale" shall not include (a) sales or other dispositions of
inventory, receivables and other current assets, (b) sales, transfers or other
dispositions of assets constituting a Restricted Payment permitted to be made
under the "Limitation on Restricted Payments" covenant, (c) sales, transfers or
other dispositions of assets with a fair market value (as certified in an
Officers' Certificate) not in excess of $1 million in any transaction or series
of related transactions, (d) sales or other dispositions of assets for
consideration at least equal to the fair market value of the assets sold or
disposed of, to the extent that the consideration received would constitute
property or assets of the kind described in clause (B) of the "Limitation on
Asset Sales" covenant, (e) any liquidation of Temporary Cash Investments, (f) a
transfer, directly or indirectly, of receivables or other payment rights arising
from a transfer of indefeasible rights of use or dark fiber which transfer of
receivables or rights is to a special purpose entity created for the purpose of
issuing securities to be paid or redeemed from, or beneficial interests in, the
cash or revenues generated from the assets transferred; PROVIDED that the
consideration received by Viatel is a least equal to the fair market value of
the asset transferred and the proceeds are used by Viatel (A) to repay
unsubordinated Indebtedness of Viatel owed to a Person other than Viatel or a
Restricted Subsidiary, (B) to invest in the manner described in clause (i)(B) of
the "Limitation on Asset Sales" covenant or (C) for working capital purposes or
(g) other transfers of indefeasible rights of use or dark fiber.
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"Average Life" means, at any date of determination with respect to any debt
security, the quotient obtained by dividing (i) the sum of the products of (a)
the number of years from such date of determination to the dates of each
successive scheduled principal payment of such debt security and (b) the amount
of such principal payment by (ii) the sum of all such principal payments.
"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, whether outstanding on April 8,
1998 or issued thereafter, including, without limitation, all Common Stock and
Preferred Stock.
"Capitalized Lease" means, as applied to any Person, any lease of any
property (whether real, personal or mixed) of which the discounted present value
of the rental obligations of such Person as lessee, in conformity with GAAP, is
required to be capitalized on the balance sheet of such Person.
"Capitalized Lease Obligations" means the discounted present value of the
rental obligations under a Capitalized Lease.
"Change of Control" means such time as (i) a "person" or a "group" (within
the meaning of Sections 13(d) and 14(d)(2) of the Exchange Act) 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 Voting Stock of Viatel on a fully
diluted basis; or (ii) individuals who on April 8, 1998 constitute the Board of
Directors (together with any new directors whose election by the Board of
Directors or whose nomination to the Board of Directors for election by Viatel's
stockholders was approved by a vote of at least two-thirds of the members of the
Board of Directors then in office who either were members of the Board of
Directors on April 8, 1998 or whose election or nomination for election was
previously so approved) cease for any reason to constitute a majority of the
members of the Board of Directors then in office.
"Consolidated EBITDA" means, for any period, Adjusted Consolidated Net
Income for such period plus, to the extent such amount was deducted in
calculating such Adjusted Consolidated Net Income, (i) Consolidated Interest
Expense, (ii) income taxes, (iii) depreciation expense, (iv) amortization
expense and (v) all other non-cash items reducing Adjusted Consolidated Net
Income (other than items that will require cash payments and for which an
accrual or reserve is, or is required by GAAP to be, made), less all non-cash
items increasing Adjusted Consolidated Net Income, all as determined on a
consolidated basis for Viatel and its Restricted Subsidiaries in conformity with
GAAP; PROVIDED that, if any Restricted Subsidiary is not a Wholly Owned
Restricted Subsidiary, Consolidated EBITDA shall be reduced (to the extent not
otherwise reduced in accordance with GAAP) by an amount equal to (A) the amount
of the Adjusted Consolidated Net Income attributable to such Restricted
Subsidiary multiplied by (B) the percentage ownership interest in the income of
such Restricted Subsidiary not owned on the last day of such period by Viatel or
any of its Restricted Subsidiaries.
"Consolidated Interest Expense" means, for any period, the aggregate amount
of interest in respect of Indebtedness (including, without limitation,
amortization of original issue discount on any Indebtedness and the interest
portion of any deferred payment obligation, calculated in accordance with the
effective interest method of accounting); 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
in respect of Indebtedness that is Guaranteed or secured by Viatel or any of its
Restricted Subsidiaries, and all but the principal component of rentals in
respect of Capitalized Lease Obligations paid, accrued or scheduled to be paid
or to be accrued by Viatel and its Restricted Subsidiaries during such period.
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"Consolidated Leverage Ratio" means, on any Transaction Date, the ratio of
(i) the aggregate amount of Indebtedness of Viatel and its Restricted
Subsidiaries on a consolidated basis outstanding on such Transaction Date to
(ii) four times Consolidated EBITDA for the then most recent fiscal quarter for
which financial statements of Viatel have been filed with the Commission or
provided to the Trustee pursuant to the "Commission Reports and Reports to
Holders" covenant described below; PROVIDED that, in making the foregoing
calculation, (A) PRO FORMA effect shall be given to the Incurrence or repayment
of any Indebtedness to be Incurred or repaid on the Transaction Date; (B) PRO
FORMA effect shall be given to Asset Dispositions and Asset Acquisitions
(including giving PRO FORMA effect to the application of proceeds of any Asset
Disposition) that occur from the beginning of the then most recent four fiscal
quarters through the Transaction Date (the "Reference Period"), as if they had
occurred and such proceeds had been applied on the first day of such Reference
Period; and (C) PRO FORMA effect shall be given to asset dispositions and asset
acquisitions (including giving PRO FORMA effect to the application of proceeds
of any asset disposition) that have been made by any Person that has become a
Restricted Subsidiary or has been merged with or into Viatel or any Restricted
Subsidiary during such Reference Period and that would have constituted Asset
Dispositions or Asset Acquisitions had such transactions occurred when such
Person was a Restricted Subsidiary as if such asset dispositions or asset
acquisitions were Asset Dispositions or Asset Acquisitions that occurred on the
first day of such Reference Period; PROVIDED that to the extent that clause (B)
or (C) of this sentence requires that PRO FORMA effect be given to an Asset
Acquisition or Asset Disposition, such PRO FORMA calculation shall be based upon
the four full fiscal quarters immediately preceding the Transaction Date of the
Person, or division or line of business of the Person, that is acquired or
disposed of for which financial information is available.
"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 Viatel and its Restricted Subsidiaries (which
shall be as of a date not more than 90 days prior to the date of such
computation, and which shall not take into account Unrestricted Subsidiaries),
including, without limitation, the respective amounts reported on such balance
sheet attributable to Preferred Stock, less any amounts attributable to
Disqualified 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 the Capital Stock of Viatel or any
of its Restricted Subsidiaries, each item to be determined in conformity with
GAAP (excluding the effects of foreign currency exchange adjustments under
Financial Accounting Standards Board Statement of Financial Accounting Standards
No. 52).
"Currency Agreement" means any foreign exchange contract, currency swap
agreement or other similar agreement or arrangement.
"Default" means any event that is, or after notice or passage of time or
both would be, an Event of Default.
"Disqualified Stock" means any class or series of Capital Stock of any
Person that by its terms or otherwise is (i) required to be redeemed prior to
the Stated Maturity of the Notes, (ii) redeemable at the option of the holder of
such class or series of Capital Stock at any time prior to the Stated Maturity
of the Notes or (iii) convertible into or exchangeable for Capital Stock
referred to in clause (i) or (ii) above or Indebtedness having a scheduled
maturity prior to the Stated Maturity of the Notes; PROVIDED that any Capital
Stock that would not constitute Disqualified Stock but for provisions thereof
giving holders thereof the right to require such Person to repurchase or redeem
such Capital Stock upon the occurrence of an "asset sale" or "change of control"
occurring prior to the Stated Maturity of the Notes shall not constitute
Disqualified Stock if the "asset sale" or "change of control" provisions
applicable to such Capital Stock are no more favorable to the holders of such
Capital Stock than the provisions contained in "Limitation on Asset Sales" and
"Repurchase of Notes upon a Change of Control" covenants described below and
such Capital Stock, or the agreements or instruments governing the redemption
rights thereof, specifically provides that such Person will not repurchase or
redeem any such stock pursuant to such provision prior to
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Viatel's repurchase of such Notes as are required to be repurchased pursuant to
the "Limitation on Asset Sales" and "Repurchase of Notes upon a Change of
Control" covenants described below.
"DM Pledge Account" means an account established with the Trustee pursuant
to the terms of the Pledge Agreement for the deposit of the DM Pledged
Securities purchased by Viatel with a portion of the proceeds from the sale of
the Existing 11.15% Notes.
"DM Pledged Securities" means the securities originally purchased by Viatel
with a portion of the proceeds from the sale of the Existing 11.15% Notes,
consisting of Government Securities, deposited in the DM Pledge Account, all in
accordance with the terms of the Pledge Agreement.
"Existing Stockholder Agreements" means the Stock Purchase Agreement, dated
as of September 30, 1993, between the Company and S-C V-Tel, the Stock Purchase
Agreement dated as of April 5, 1994, between the Company and COMSAT, the S-C
V-Tel Shareholders' Agreement and the COMSAT Shareholders' Agreement, in each
case, any amendments to such agreements.
"fair market value" means the price that would be paid in an arm's-length
transaction between an informed and willing seller under no compulsion to sell
and an informed and willing buyer under no compulsion to buy, as determined in
good faith by the Board of Directors, whose determination shall be conclusive if
evidenced by a Board Resolution; PROVIDED that for purposes of clause (viii) of
the second paragraph of the "Limitation on Indebtedness" covenant, (x) the fair
market value of any security registered under the Exchange Act shall be the
average of the closing prices, regular way, of such security for the 20
consecutive trading days immediately preceding the sale of Capital Stock and (y)
in the event the aggregate fair market value of any other property (other than
cash or cash equivalents) received by Viatel exceeds $30 million, the fair
market value of such property shall be determined by a nationally recognized
investment banking firm or a nationally recognized firm having expertise in the
specific area which is the subject of such determination and set forth in their
written opinion which shall be delivered to the Trustee.
"GAAP" means generally accepted accounting principles in the United States
of America as in effect as of April 8, 1998, including, without limitation,
those set forth in the opinions and pronouncements of the Accounting Principles
Board of the American Institute of Certified Public Accountants and statements
and pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as approved by a significant segment of the
accounting profession. All ratios and computations contained or referred to in
the Indentures shall be computed in conformity with GAAP applied on a consistent
basis, except that calculations made for purposes of determining compliance with
the terms of the covenants and with other provisions of the Indentures shall be
made without giving effect to (i) the amortization or write off of any expenses
incurred in connection with the offering of the Units and related Tender Offer
(ii) except as otherwise provided, the amortization of any amounts required or
permitted by Accounting Principles Board Opinion Nos. 16 and 17.
"Government Securities" means (i) in connection with the U.S. Pledged
Securities, the direct obligations of, obligations fully guaranteed by, or
participations in pools consisting solely of obligations of or obligations
guaranteed by, the United States of America for the payment of which guarantee
or obligations the full faith and credit of the United States of America is
pledged and which are not callable or redeemable at the option of the issuer
thereof and (ii) in connection with the DM Pledged Securities, the direct
obligations of, obligations fully guaranteed by, or participations in pools
consisting solely of obligations of or obligations guranteed by, the Federal
Republic of Germany for the payment of which guarantee or obligations the full
faith and credit of the Federal Republic of Germany is pledged and which 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 of any other Person and,
without limiting the generality of the foregoing, any obligation, direct or
indirect, contingent or otherwise, of such Person (i) to purchase or pay (or
advance or supply funds for the purchase or payment of) such Indebtedness of
such other Person (whether
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arising by virtue of partnership arrangements, or by agreements to keep-well, to
purchase assets, goods, securities or services (unless such purchase
arrangements are on arm's-length terms and are entered into in the ordinary
course of business), to take-or-pay, or to maintain financial statement
conditions or otherwise) or (ii) entered into for purposes of assuring in any
other manner the obligee of such Indebtedness of the payment thereof or to
protect such obligee against loss in respect thereof (in whole or in part);
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" 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 Acquired Indebtedness; PROVIDED that neither the
accrual of interest nor the accretion of original issue discount shall 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 for
borrowed money, (ii) all obligations of such Person evidenced by bonds,
debentures, notes or other similar instruments, (iii) all obligations of such
Person in respect of letters of credit or other similar instruments (including
reimbursement obligations with respect thereto, but excluding obligations with
respect to letters of credit (including trade letters of credit) securing
obligations (other than obligations described in (i) or (ii) above or (v), (vi)
or (vii) below) entered into in the ordinary course of business of such Person
to the extent such letters of credit are not drawn upon or, if drawn upon, to
the extent such drawing is reimbursed no later than the third Business Day
following receipt by such Person of a demand for reimbursement), (iv) all
obligations of such Person to pay the deferred and unpaid 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, (v) all Capitalized
Lease Obligations of such Person, (vi) all Indebtedness of other Persons secured
by a Lien on any asset of such Person, whether or not such Indebtedness is
assumed by such Person; PROVIDED that the amount of such Indebtedness shall be
the lesser of (A) the fair market value of such asset at such date of
determination and (B) the amount of such Indebtedness, (vii) all Indebtedness of
other Persons Guaranteed by such Person to the extent such Indebtedness is
Guaranteed by such Person and (viii) 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 the maximum liability at such time with respect to contingent
obligations upon the occurrence of the contingency giving rise to the
obligation, which, in the case of a Guarantee, shall be the outstanding balance
of the Guaranteed Indebtedness, PROVIDED (A) 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 the time of its issuance as determined in
conformity with GAAP, (B) that money borrowed and set aside at the time of the
Incurrence of any Indebtedness in order to prefund the payment of the interest
on such Indebtedness shall not be deemed to be "Indebtedness" so long as such
money is held to secure the payment of such interest and (C) that Indebtedness
shall not include any liability for federal, state, local or other taxes.
"Interest Rate Agreement" means any interest rate protection agreement,
interest rate future agreement, interest rate option agreement, interest rate
swap agreement, interest rate cap agreement, interest rate collar agreement,
interest rate hedge agreement, option or future contract or other similar
agreement or arrangement.
"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 extensions of credit to customers in the
ordinary course of business that are, in conformity with GAAP, recorded as
accounts receivable on the balance sheet of Viatel or its Restricted
Subsidiaries) or capital contribution to (by means of any transfer of cash or
other property to others or any payment for property or services for
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the account or use of others), or any purchase or acquisition of Capital Stock,
bonds, notes, debentures or other similar instruments issued by, such Person and
shall include (i) the designation of a Restricted Subsidiary as an Unrestricted
Subsidiary and (ii) the fair market value of the Capital Stock (or any other
Investment), held by Viatel or any of its Restricted Subsidiaries, of (or in)
any Person that has ceased to be a Restricted Subsidiary, including without
limitation, by reason of any transaction permitted by clause (iii) of the
"Limitation on the Issuance and Sale of Capital Stock of Restricted
Subsidiaries" covenant; PROVIDED that the fair market value of the Investment
remaining in any Person that has ceased to be a Restricted Subsidiary shall not
exceed the aggregate amount of Investments previously made in such Person valued
at the time such Investments were made less the net reduction of such
Investments. For purposes of the definition of "Unrestricted Subsidiary" and the
"Limitation on Restricted Payments" covenant described below, (i) "Investment"
shall include the fair market value of the assets (net of liabilities (other
than liabilities to Viatel or any of its Restricted Subsidiaries)) of any
Restricted Subsidiary at the time that such Restricted Subsidiary is designated
an Unrestricted Subsidiary, (ii) the fair market value of the assets (net of
liabilities (other than liabilities to Viatel or any of its Restricted
Subsidiaries)) of any Unrestricted Subsidiary at the time that such Unrestricted
Subsidiary is designated a Restricted Subsidiary shall be considered a reduction
in outstanding Investments and (iii) any property transferred to or from an
Unrestricted Subsidiary shall be valued at its fair market value at the time of
such transfer.
"Lien" means any mortgage, pledge, security interest, encumbrance, lien or
charge of any kind (including, without limitation, any conditional sale or other
title retention agreement or lease in the nature thereof or any agreement to
give any security interest).
"Moody's" means Moody's Investors Service, Inc. and its successors.
"Net Cash Proceeds" means, (a) with respect to any Asset Sale, the proceeds
of such Asset Sale in the form of cash or cash equivalents, including payments
in respect of deferred payment obligations (to the extent corresponding to the
principal, but not interest, component thereof) when received in the form of
cash or cash equivalents (except to the extent such obligations are financed or
sold with recourse to Viatel or any Restricted Subsidiary) 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) provisions for all taxes (whether or not such taxes will
actually be paid or are payable) as a result of such Asset Sale without regard
to the consolidated results of operations of Viatel and its Restricted
Subsidiaries, taken as a whole, (iii) payments made or required to be 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, (iv) payments made or required
to be made to Persons having a beneficial interests in the assets subject to the
Asset Sale, and (v) appropriate amounts to be provided by Viatel or any
Restricted Subsidiary 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 GAAP and (b) with respect to any
issuance or sale of Capital Stock, the proceeds of such 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 such obligations are financed or sold with
recourse to Viatel or any Restricted Subsidiary) 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.
"Offer to Purchase" means an offer to purchase Notes by Viatel from the
Holders commenced by mailing a notice to the Trustee and each Holder stating:
(i) the covenant pursuant to which the offer is being made and that all Notes
validly tendered will be accepted for payment on a PRO RATA basis; (ii) the
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purchase price and the date of purchase (which shall be a Business Day no
earlier than 30 days nor later than 60 days from the date such notice is mailed)
(the "Payment Date"); (iii) that any Note not tendered will continue to accrue
interest (or original issue discount) pursuant to its terms; (iv) that, unless
Viatel defaults in the payment of the purchase price, any Note accepted for
payment pursuant to the Offer to Purchase shall cease to accrue interest (or
original issue discount) on and after the Payment Date; (v) that Holders
electing to have a Note purchased pursuant to the Offer to Purchase will be
required to surrender the Note, together with the form entitled "Option of the
Holder to Elect Purchase" on the reverse side of the Note completed, to the
Paying Agent at the address specified in the notice prior to the close of
business on the Business Day immediately preceding the Payment Date; (vi) that
Holders will be entitled to withdraw their election if the Paying Agent
receives, not later than the close of business on the third Business Day
immediately preceding the Payment Date, a telegram, facsimile transmission or
letter setting forth the name of such Holder, the principal amount at maturity
of Notes delivered for purchase and a statement that such Holder is withdrawing
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 Notes surrendered; PROVIDED that each
Note purchased and each new Note issued shall be in a principal amount at
maturity of $1,000 or DM 1,000 or an integral multiple thereof. On the Payment
Date, Viatel shall (i) accept for payment on a PRO RATA basis Notes or portions
thereof tendered pursuant to an Offer to Purchase; (ii) deposit with the Paying
Agent money sufficient to pay the purchase price of all Notes or portions
thereof so accepted; and (iii) deliver, or cause to be delivered, to the Trustee
all Notes or portions thereof so accepted together with an Officers' Certificate
specifying the Notes or portions thereof accepted for payment by Viatel. The
Paying Agent shall promptly mail to the Holders of Notes so accepted payment in
an amount equal to the purchase price, and the Trustee shall promptly
authenticate and mail to such Holders a new Note equal in principal amount at
maturity to any unpurchased portion of the Note surrendered; PROVIDED that each
Note purchased and each new Note issued shall be in a principal amount at
maturity of $1,000 or DM 1,000 or an integral multiple thereof. Viatel will
publicly announce the results of an Offer to Purchase as soon as practicable
after the Payment Date. The Trustee shall act as the Paying Agent for an Offer
to Purchase. Viatel will comply with Rule 14e-1 under the Exchange Act and any
other securities laws and regulations thereunder to the extent such laws and
regulations are applicable, in the event that Viatel is required to repurchase
Notes pursuant to an Offer to Purchase.
"Permitted Investment" means (i) an Investment in Viatel or 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, Viatel or a Restricted
Subsidiary; PROVIDED that such person's primary business is related, ancillary
or complementary to the businesses of Viatel or any of its Restricted
Subsidiaries on the date of such Investment; (ii) Temporary Cash Investments;
(iii) payroll, travel and similar advances to cover matters that are expected at
the time of such advances ultimately to be treated as expenses in accordance
with GAAP; (iv) Investments received in the bankruptcy or reorganization of a
Person or any exchange of such Investment with the issuer thereof or taken in
settlement of or other resolution of claims or disputes or acquired as the
result of foreclosure of any secured Investment, and, in each case, extensions,
modifications and renewal thereof; (v) Investments in prepaid expenses,
negotiable instruments held for collection and lease, utility and worker's
compensation, performance and other similar deposits; (vi) Interest Rate
Agreements and Currency Agreements designed solely to protect Viatel or its
Restricted Subsidiaries against fluctuations in interest rates or foreign
currency exchange rates; (vii) loans or advances to officers or employees of
Viatel or any Restricted Subsidiary that do not in the aggregate exceed $1
million at any time outstanding; (viii) investments consisting of securities
issued by or beneficial interests in a special purpose entity referred to in
clause (f) of the definition of "Asset Sale" and which are received in exchange
for assets that are transferred by Viatel or a Restricted Subsidiary to such
special purpose entity and used for the purpose referred to therein and (ix)
Investments as a result of consideration received in connection with an Asset
Sale made in compliance with the "Limitation on Asset Sales" covenant.
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"Permitted Joint Venture" means any joint venture between Viatel or any
Restricted Subsidiary and (i) any Person other than a Subsidiary, engaged in the
provision or sale of telecommunications services or (ii) any Person engaged as
an independent sale representative of Viatel; PROVIDED that prior to making any
Investment in such a Person, Viatel's Board of Directors shall have determined
that such Investment fits Viatel's strategic plan and is on terms that are fair
and reasonable to Viatel.
"Permitted Liens" means (i) Liens for taxes, assessments, governmental
charges or claims not yet subject to penalty or 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 GAAP shall have been made; (ii) statutory
and common law 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 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) Liens incurred or deposits made to secure the performance of
tenders, bids, leases, statutory or regulatory obligations, bankers'
acceptances, surety and appeal bonds, government contracts, performance and
return-of-money bonds and other obligations of a similar nature incurred in the
ordinary course of business (exclusive of obligations for the payment of
borrowed money); (v) 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 Viatel or any
of its Restricted Subsidiaries; (vi) Liens (including extensions and renewals
thereof) upon real or personal (whether tangible or intangible) property
acquired after April 8, 1998; PROVIDED that (a) such Lien is created solely for
the purpose of securing Indebtedness Incurred, in accordance with the
"Limitation on Indebtedness" covenant described below, to finance or refinance
the cost (including the cost of design, development, acquisition, construction,
installation, improvement, transportation or integration) of the item or related
group of items of property or assets subject thereto or the business in which
such property or assets are used and such Lien is created prior to, at the time
of or within eighteen months after the later of the acquisition, the completion
of (except in the case of refinancing) construction or the commencement of full
operation of such property, (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 or group of items
of property or assets and any improvements on such item; (vii) leases or
subleases granted to others that do not materially interfere with the ordinary
course of business of Viatel and its Restricted Subsidiaries, taken as a whole;
(viii) Liens encumbering property or assets under construction arising from
progress or partial payments by a customer of Viatel or its Restricted
Subsidiaries relating to such property or assets; (ix) any interest or title of
a lessor in the property subject to any Capitalized Lease or operating lease;
(x) Liens arising from filing Uniform Commercial Code financing statements
regarding leases; (xi) Liens on property of, or on shares of Capital Stock or
Indebtedness of, any Person existing at the time such Person becomes, or becomes
a part of, any Restricted Subsidiary; PROVIDED that such Liens do not extend to
or cover any property or assets of Viatel or any Restricted Subsidiary other
than the property or assets acquired; (xii) Liens in favor of Viatel or any
Restricted Subsidiary; (xiii) Liens arising from the rendering of a final
judgment or order against Viatel or any Restricted Subsidiary that does not give
rise to an Event of Default; (xiv) Liens securing reimbursement obligations with
respect to letters of credit that encumber documents and other property relating
to such letters of credit and the products and proceeds thereof; (xv) Liens in
favor of customs and revenue authorities arising as a matter of law to secure
payment of customs duties in connection with the importation of goods; (xvi)
Liens encumbering customary initial deposits and margin deposits, and other
Liens that are within the general parameters customary in the industry and
incurred in the ordinary course
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of business, in each case, securing Indebtedness under Interest Rate Agreements
and Currency Agreements and forward contracts, options, future contracts,
futures options or similar agreements or arrangements designed solely to protect
Viatel or any of its Restricted Subsidiaries from fluctuations in interest
rates, currencies or the price of commodities; (xvii) Liens arising out of
conditional sale, title retention, consignment or similar arrangements for the
sale of goods entered into by Viatel or any of its Restricted Subsidiaries in
the ordinary course of business in accordance with the past practices of Viatel
and its Restricted Subsidiaries prior to April 8, 1998; (xviii) Liens on or
sales of receivables or other rights to payment; (xix) Liens secured with assets
that have a fair market value not in excess of 15% of Adjusted Consolidated Net
Tangible Assets when such Liens are Incurred; and (xx) any extension, renewal,
or replacement (or successive extensions, renewals, or replacements) in whole or
in part, of Liens described in clauses (i) through (xix) above.
"Permitted Wholesale Consortium" means any Person in which Viatel Invests
for the principal purpose of leasing or otherwise acquiring transmission rights
with respect to long distance telecommunications; PROVIDED that prior to making
any Investment in such a Person, Viatel's Board of Directors shall have
determined that such Investment will afford Viatel greater economic benefits
than it could otherwise obtain from other sources of transmission rights.
"Pledge Accounts" means the U.S. Pledge Account and the DM Pledge Account.
"Pledge Agreement" means the Collateral Pledge and Security Agreement, dated
as of the date of the Indentures, made by Viatel in favor of the Trustee,
governing the disbursement of funds from the Pledge Accounts, as such agreement
may be amended, restated, supplemented or otherwise modified from time to time.
"Public Equity Offering" means an underwritten primary public offering of
Common Stock of Viatel pursuant to an effective registration statement under the
Securities Act.
"Restricted Subsidiary" means any Subsidiary of Viatel other than an
Unrestricted Subsidiary.
"Significant Subsidiary" means, at any date of determination, any Restricted
Subsidiary that, together with its Subsidiaries, (i) for the most recent fiscal
year of Viatel, accounted for more than 10% of the consolidated revenues of
Viatel and its Restricted Subsidiaries or (ii) as of the end of such fiscal
year, was the owner of more than 10% of the consolidated assets of Viatel and
its Restricted Subsidiaries, all as set forth on the most recently available
consolidated financial statements of Viatel for such fiscal year.
"S&P" means Standard & Poor's Ratings Services and its successors.
"Specified Date" means any Redemption Date, any Payment Date for an Offer to
Purchase or any date on which the Notes first become due and payable after an
Event of Default.
"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 Subordinated Indebtedness" means Indebtedness of Viatel Incurred
to finance the acquisition of a Person engaged in a business that is related,
ancillary or complementary to the business conducted by Viatel or any of its
Restricted Subsidiaries, which Indebtedness by its terms, or by the terms of any
agreement or instrument pursuant to which such Indebtedness is Incurred, (i) is
expressly made subordinate in right of payment to the Notes and (ii) provides
that no payment of principal, premium or interest on, or any other payment with
respect to, such Indebtedness may be made prior to the payment in full of all of
Viatel's obligations under the Notes; PROVIDED that such Indebtedness may
provide for and be repaid at any time from the proceeds of a capital
contribution, the sale of Capital Stock (other than Disqualified Stock) of
Viatel, or other Strategic Subordinated Indebtedness Incurred, after the
Incurrence of such Indebtedness.
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"Subsidiary" means, with respect to any Person, any corporation, association
or other business entity of which more than 50% of the voting power of the
outstanding Voting Stock is owned, directly or indirectly, by such Person and
one or more other Subsidiaries of such Person.
"Temporary Cash Investment" means any of the following: (i) direct
obligations of the United States of America or any agency thereof or obligations
fully and unconditionally guaranteed by the United States of America or any
agency thereof, (ii) time deposit accounts, eurodollar time deposits, bankers'
acceptances, certificates of deposit and money market deposits, in each case
maturing within one year of the date of acquisition thereof and issued by a bank
or trust company which is organized under the laws of the United States of
America, any state thereof or any foreign country recognized by the United
States of America, and which bank or trust company has capital, surplus and
undivided profits aggregating in excess of $50 million (or the foreign currency
equivalent thereof) and has outstanding debt which is rated "A" (or such similar
equivalent rating) or higher by at least one nationally recognized statistical
rating organization (as defined in Rule 436 under the Securities Act) or any
money-market fund sponsored by a registered broker dealer or mutual fund
distributor, (iii) repurchase obligations with a term of not more than 30 days
for underlying securities of the types described in clause (i) above entered
into with a bank meeting the qualifications described in clause (ii) above, (iv)
commercial paper, maturing not more than one year after the date of acquisition,
issued by a corporation (other than an Affiliate of Viatel) organized and in
existence under the laws of the United States of America, any state thereof or
any foreign country recognized by the United States of America with a rating at
the time as of which any investment therein is made of "P-2" (or higher)
according to Moody's or "A-2" (or higher) according to S&P, (v) securities with
maturities of one year or less from the date of acquisition issued or fully and
unconditionally guaranteed by any state, commonwealth or territory of the United
States of America, or by any political subdivision or taxing authority thereof,
and rated at least "A" by S&P or Moody's, and (vi) shares or other interests in
an investment company the assets of which consist solely of (A) securities of
the type described in clauses (i) through (v) above and (B) mortgage-backed
securities rated AAA or the equivalent by S&P, Moody's or Fitch Investor
Services, Inc.
"Trade Payables" means, with respect to any Person, any accounts payable or
any other indebtedness or monetary obligation to trade creditors created,
assumed or Guaranteed by such Person or any of its Subsidiaries arising in the
ordinary course of business in connection with the acquisition of goods or
services.
"Transaction Date" means, with respect to the Incurrence of any Indebtedness
by Viatel 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" means (i) any Subsidiary of Viatel that at the
time of determination shall be designated an Unrestricted Subsidiary 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 Restricted
Subsidiary (including any newly acquired or newly formed Subsidiary of Viatel)
to be an Unrestricted Subsidiary unless such Subsidiary owns any Capital Stock
of, or owns or holds any Lien on any property of, Viatel or any Restricted
Subsidiary; PROVIDED that (A) any Guarantee by Viatel or any Restricted
Subsidiary of any Indebtedness of the Subsidiary being so designated shall be
deemed an "Incurrence" of such Indebtedness and an "Investment" by Viatel or
such Restricted Subsidiary (or both, if applicable) at the time of such
designation; (B) either (I) the Subsidiary to be so designated has total assets
of $1,000 or less or (II) if such Subsidiary has assets greater than $1,000,
such designation would be permitted under the "Limitation on Restricted
Payments" covenant described below and (C) if applicable, the Incurrence of
Indebtedness and the Investment referred to in clause (A) of this proviso would
be permitted under the "Limitation on Indebtedness" and "Limitation on
Restricted Payments" covenants described below. The Board of Directors may
designate any Unrestricted Subsidiary to be a Restricted Subsidiary; PROVIDED
that (i) no Default or Event of Default shall have occurred and be continuing at
the time of or after giving effect to such designation and (ii) all Liens and
Indebtedness of such Unrestricted Subsidiary outstanding immediately after such
designation would, if Incurred at such time, have been permitted to be Incurred
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(and shall be deemed to have been Incurred) for all purposes of the Indentures.
Any such designation by the Board of Directors shall be evidenced to the Trustee
by promptly filing with the Trustee a copy of the Board Resolution giving effect
to such designation and an Officers' Certificate certifying that such
designation complied with the foregoing provisions.
"U.S. Pledge Account" means an account established with the Trustee pursuant
to the terms of the Pledge Agreement for the deposit of the U.S. Pledged
Securities purchased by Viatel with a portion of the proceeds from the sale of
the 11.25% Notes.
"U.S. Pledged Securities" means the securities originally purchased by
Viatel with a portion of the proceeds from the sale of the 11.25% Notes,
consisting of Government Securities, deposited in the U.S. Pledge Account, all
in accordance with the terms of the Pledge Agreement.
"Voting Stock" means with respect to any Person, Capital Stock of any class
or kind ordinarily having the power to vote for the election of directors,
managers or other voting members of the governing body of such Person.
"Wholly Owned" means, with respect to any Subsidiary of any Person, the
ownership of all of the outstanding Capital Stock of such Subsidiary (other than
any director's qualifying shares or Investments by foreign nationals mandated by
applicable law) by such Person or one or more Wholly Owned Subsidiaries of such
Person.
COVENANTS
LIMITATION ON INDEBTEDNESS
(a) Viatel will not, and will not permit any of its Restricted Subsidiaries
to, Incur any Indebtedness (other than the Notes and Indebtedness existing on
April 8, 1998); PROVIDED that Viatel may Incur Indebtedness if, after giving
effect to the Incurrence of such Indebtedness and the receipt and application of
the proceeds therefrom, the Consolidated Leverage Ratio would be greater than
zero and less than 6:1.
Notwithstanding the foregoing, Viatel and any Restricted Subsidiary (except
as specified below) may Incur each and all of the following: (i) Indebtedness
outstanding at any time in an aggregate principal amount not to exceed $100
million of Indebtedness that is PARI PASSU with or subordinated to the Notes and
$150 million of Indebtedness that is subordinated to the Notes, less any amount
of such Indebtedness permanently repaid as provided under the "Limitation on
Asset Sales" covenant described below; (ii) Indebtedness owed (A) by any
Restricted Subsidiary to Viatel or another Restricted Subsidiary or (B) by
Viatel to any Restricted Subsidiary; PROVIDED that any event which results in
any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or any
subsequent transfer of such Indebtedness (other than to Viatel or another
Restricted Subsidiary) shall be deemed, in each case, to constitute an
Incurrence of such Indebtedness not permitted by this clause (ii); (iii)
Indebtedness issued in exchange for, or the net proceeds of which are used to
repay, redeem, defease, refinance, refund, extend, renew, replace, discharge or
otherwise retire any then outstanding Indebtedness (other than Indebtedness
Incurred under clause (i), (ii), (iv), (vi), (viii), (xi) or (xii) of this
paragraph) and any refinancings thereof in an amount not to exceed the amount so
refinanced or refunded (plus premiums, penalties, accrued interest, fees and
expenses); PROVIDED that Indebtedness the proceeds of which are used to
refinance or refund the Notes or Indebtedness that is PARI PASSU with, or
subordinated in right of payment to, the Notes shall only be permitted under
this clause (iii) if (A) in case the Notes are refinanced in part or the
Indebtedness to be refinanced 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 outstanding, is expressly made PARI
PASSU with, or subordinate in right of payment to, the remaining Notes, (B) in
case the Indebtedness to be refinanced is subordinated in right of payment to
the Notes, such new Indebtedness, by its terms or by the terms of any agreement
or instrument pursuant to which such new Indebtedness is issued or remains
outstanding, is expressly made subordinate in right of payment to the Notes at
least to the extent that the Indebtedness to be refinanced is subordinated to
the Notes and (C) such new Indebtedness, determined as of the date of Incurrence
of such
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new Indebtedness, does not mature prior to the Stated Maturity of the
Indebtedness to be refinanced or refunded, and the Average Life of such new
Indebtedness is at least equal to the remaining Average Life of the Indebtedness
to be refinanced or refunded; and PROVIDED FURTHER that in no event may
Indebtedness of Viatel be refinanced 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 provided in the ordinary course
of business, (B) under Currency Agreements and Interest Rate Agreements;
provided that such agreements (a) are designed solely to protect Viatel or any
of its Restricted Subsidiaries against fluctuations in foreign currency exchange
rates or interest rates and (b) 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 Viatel 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 (other than Guarantees of Indebtedness
Incurred by any Person acquiring all or any portion of such business, assets or
Restricted Subsidiary for the purpose of financing such acquisition), in a
principal amount not to exceed the gross proceeds actually received by Viatel or
any Restricted Subsidiary in connection with such disposition; (v) Indebtedness
of Viatel, to the extent the net proceeds thereof are promptly (A) used to
purchase Notes tendered in an Offer to Purchase made as a result of a Change in
Control or (B) deposited to defease the Notes as described below under
"Defeasance"; (vi) Guarantees of the Notes and Guarantees of Indebtedness of
Viatel by any Restricted Subsidiary provided the Guarantee of such Indebtedness
is permitted by and made in accordance with the "Limitation on Issuance of
Guarantees by Restricted Subsidiaries" covenant described below; (vii)
Indebtedness (including Guarantees) Incurred to finance the cost (including the
cost of design, development, acquisition, construction, installation,
improvement, transportation or integration) to acquire equipment, inventory or
network assets (including acquisitions by way of Capitalized Lease and
acquisitions of the Capital Stock of a Person that becomes a Restricted
Subsidiary to the extent of the fair market value of the equipment, inventory or
network assets so acquired) by Viatel or a Restricted Subsidiary after April 8,
1998; (viii) Indebtedness of Viatel not to exceed, at any one time outstanding,
two times (A) the Net Cash Proceeds received by Viatel after April 8, 1998 as a
capital contribution or from the issuance and sale of its Capital Stock (other
than Disqualified Stock) to a Person that is not a Subsidiary of Viatel, to the
extent (I) such capital contribution or Net Cash Proceeds have not been used
pursuant to clause (C)(2) of the first paragraph or clause (iii), (iv), (vi) or
(vii) of the second paragraph of the "Limitation on Restricted Payments"
covenant described below to make a Restricted Payment and (II) if such capital
contribution or Net Cash Proceeds are used to consummate a transaction pursuant
to which Viatel Incurs Acquired Indebtedness, the amount of such Net Cash
Proceeds exceeds one-half of the amount of Acquired Indebtedness so Incurred and
(B) 80% of the fair market value of property (other than cash and cash
equivalents) received by Viatel after April 8, 1998 from the sale of its Capital
Stock (other than Disqualified Stock) to a Person that is not a Subsidiary of
Viatel, to the extent (I) such capital contribution or sale of Capital Stock has
not been used pursuant to clause (iii), (iv), (vi) or (vii) of the second
paragraph of the "Limitation on Restricted Payments" covenant described below to
make a Restricted Payment and (II) if such capital contribution or Capital Stock
is used to consummate a transaction pursuant to which Viatel Incurs Acquired
Indebtedness, 80% of the fair market value of the property received exceeds
one-half of the amount of Acquired Indebtedness so Incurred PROVIDED that such
Indebtedness does not mature prior to the Stated Maturity of the Notes and has
an Average Life longer than the Notes; (ix) Acquired Indebtedness; (x) Strategic
Subordinated Indebtedness; (xi) Indebtedness in respect of bankers' acceptance
and letters of credit, all in the ordinary course of business, in an aggregate
amount outstanding at any time of up to $10 million; (xii) Indebtedness arising
from the honoring by a bank or other financial institution of a check, or
similar instrument inadvertently (except in the case of daylight overdrafts)
drawn against insufficient funds in the ordinary course of business, PROVIDED
that such Indebtedness is extinguished within three business days of Incurrence.
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(b) Notwithstanding any other provision of this "Limitation on Indebtedness"
covenant, the maximum amount of Indebtedness that Viatel or a Restricted
Subsidiary may Incur pursuant to this "Limitation on Indebtedness" covenant
shall not be deemed to be exceeded, with respect to any outstanding Indebtedness
due solely to the result of fluctuations in the exchange rates of currencies.
(c) For purposes of determining any particular amount of Indebtedness under
this "Limitation on Indebtedness" covenant, (1) 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 and (2) any
Liens granted pursuant to the equal and ratable provisions referred to in the
"Limitation on Liens" covenant described below shall not be treated as
Indebtedness. For purposes of determining compliance with this "Limitation on
Indebtedness" covenant, 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, Viatel, in its sole discretion, shall classify, and from time to time
may reclassify, such item of Indebtedness and only be required to include the
amount and type of such Indebtedness in one of such clauses.
LIMITATION ON RESTRICTED PAYMENTS
Viatel will not, and will not permit any Restricted Subsidiary to, directly
or indirectly, (i)(A) declare or pay any dividend or make any distribution on or
with respect to its Capital Stock (other than (x) dividends or distributions
payable solely in shares of its Capital Stock (other than Disqualified Stock) or
in options, warrants or other rights to acquire shares of such Capital Stock and
(y) PRO RATA dividends or distributions on Common Stock of Restricted
Subsidiaries held by minority stockholders) held by Persons other than Viatel or
any of its Restricted Subsidiaries or (B) pay any cash interest on the
Subordinated Convertible Debentures, (ii) purchase, redeem, retire or otherwise
acquire for value any shares of Capital Stock of (A) Viatel or an Unrestricted
Subsidiary (including options, warrants or other rights to acquire such shares
of Capital Stock) held by any Person or (B) a Restricted Subsidiary (including
options, warrants or other rights to acquire such shares of Capital Stock) held
by any Affiliate of Viatel (other than a Wholly Owned Restricted Subsidiary) or
any holder (or any Affiliate of such holder) of 5% or more of the Capital Stock
of Viatel, (iii) make any voluntary or optional principal payment, or voluntary
or optional redemption, repurchase, defeasance, or other acquisition or
retirement for value, of Indebtedness of Viatel that is subordinated in right of
payment to the Notes or (iv) make any Investment (after the Closing Date), other
than a Permitted Investment, in any Person (such payments or any other actions
described in clauses (i) through (iv) above being collectively "Restricted
Payments") if, at the time of, and after giving effect to, the proposed
Restricted Payment: (A) a Default or Event of Default shall have occurred and be
continuing, (B) Viatel could not Incur at least $1.00 of Indebtedness under the
first paragraph of the "Limitation on Indebtedness" covenant or (C) the
aggregate amount of all Restricted Payments (the amount, 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) made after April 8,
1998 shall exceed the sum of (1) 50% of the aggregate amount of the Adjusted
Consolidated Net Income (or, if the Adjusted Consolidated Net Income is a loss,
minus 100% of the amount of such loss) (determined by excluding income resulting
from transfers of assets by Viatel or a Restricted Subsidiary to an Unrestricted
Subsidiary) accrued on a cumulative basis during the period (taken as one
accounting period) beginning on the first day of the fiscal quarter immediately
following April 8, 1998 and ending on the last day of the last fiscal quarter
preceding the Transaction Date for which reports have been filed with the
Commission or provided to the Trustee pursuant to the "Commission Reports and
Reports to Holders" covenant plus (2) the aggregate Net Cash Proceeds received
by Viatel after April 8, 1998 as a capital contribution or from the issuance and
sale permitted by the Indentures of its Capital Stock (other than Disqualified
Stock) to a Person who is not a Subsidiary of Viatel, including an issuance or
sale permitted by the Indentures of Indebtedness of Viatel for cash subsequent
to April 8, 1998 upon the conversion of such Indebtedness into Capital Stock
(other than Disqualified Stock) of Viatel, or from the issuance to a Person who
is not a Subsidiary of Viatel of any options, warrants or other rights to
acquire Capital Stock of Viatel (in each case, exclusive of any Disqualified
Stock or any options, warrants or other rights that are redeemable at the
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option of the holder, or are required to be redeemed, prior to the Stated
Maturity of the Notes), in each case except to the extent such Net Cash Proceeds
are used to Incur Indebtedness pursuant to clause (viii) of the second paragraph
under the "Limitation on Indebtedness" covenant, PLUS (3) an amount equal to the
net reduction in Investments (other than reductions in Permitted Investments) in
any Person resulting from payments of interest on Indebtedness, dividends,
repayments of loans or advances, or other transfers of assets, in each case to
Viatel or any Restricted Subsidiary or from the Net Cash Proceeds from the
return of capital, redemption, or sale of any such Investment (except, in each
case, to the extent any such payment or proceeds are included in the calculation
of Adjusted Consolidated Net Income), or from redesignations of Unrestricted
Subsidiaries as Restricted Subsidiaries (valued in each case as provided in the
definition of "Investments"), or from the release of any Guarantee that
constituted a Restricted Payment, to the extent of such release, not to exceed,
in each case, the amount of Investments previously made by Viatel or any
Restricted Subsidiary in such Person or Unrestricted Subsidiary.
The foregoing provision shall not be violated by reason of: (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 foregoing paragraph;
(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 the second
paragraph of part (a) of the "Limitation on Indebtedness" covenant; (iii) the
repurchase, redemption or other acquisition of Capital Stock of Viatel or an
Unrestricted Subsidiary (or options, warrants or other rights to acquire such
Capital Stock) in exchange for, or out of the proceeds of a capital contribution
or a substantially concurrent offering of, shares of Capital Stock (other than
Disqualified Stock) of Viatel (or options, warrants or other rights to acquire
such Capital Stock); (iv) the making of any principal payment or the repurchase,
redemption, retirement, defeasance or other acquisition for value of
Indebtedness of Viatel which is subordinated in right of payment to the Notes in
exchange for, or out of the proceeds of a capital contribution or a
substantially concurrent offering of, shares of the Capital Stock (other than
Disqualified Stock) of Viatel (or options, warrants or other rights to acquire
such Capital Stock); (v) payments or distributions, to dissenting stockholders
pursuant to applicable law, pursuant to or in connection with a consolidation,
merger or transfer of assets that complies with the provisions of the Indentures
applicable to mergers, consolidations and transfers of all or substantially all
of the property and assets of Viatel; (vi) Investments in any Person the primary
business of which is related, ancillary or complementary to the business of
Viatel or any of its Restricted Subsidiaries on the date of such Investments;
provided that the aggregate amount of Investments made pursuant to this clause
(vi) does not exceed $30 million at any one time outstanding; (vii) Investments
acquired in exchange for Capital Stock (other than Disqualified Stock) of Viatel
or the Net Cash Proceeds from the issuance and sale of such Capital Stock
PROVIDED that such proceeds are so used within 180 days of the receipt thereof;
(viii) the redemption, repurchase, retirement, or other acquisition of any
Capital Stock of Viatel (or options, warrants, or other rights to acquire such
Capital Stock) from an employee or former employee of Viatel or any of its
Subsidiaries (or from such person's estate, heirs, or representatives) in
connection with such employee's death, disability, or termination of employment,
PROVIDED that the aggregate amount expended pursuant to this clause does not
exceed $1 million per annum plus the cumulative amount of such per annum limit
not used in prior years and the cash proceeds from such Investments PROVIDED
that such proceeds are used within 180 days of the receipt thereof; (ix)
Investments in permitted Wholesale Consortiums and Permitted Joint Ventures not
exceeding, at the time of the Investment, the sum of (A) 10% of the consolidated
revenue of Viatel (excluding with respect to Persons in whom an equity interest
is owned by Persons other than Viatel and its Restricted Subsidiaries, the pro
rata share of such revenue attributable to such other equity holders) accrued on
a cumulative basis during the period (taken as one accounting period) beginning
on the first day of the first full fiscal quarter immediately following April 8,
1998 and ending on the last day of the last fiscal quarter preceding the date of
such Investment and (B) the Net Cash Proceeds from the disposition of Viatel's
interest in any such Permitted Wholesale Consortium or Permitted Joint Venture;
(x) the repurchase of shares of the Series A Preferred upon a Change of Control
pursuant to an Offer to Purchase; PROVIDED that an Offer to Purchase is
consummated
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with respect to the Notes prior to any repurchase of shares of the Series A
Preferred; (xi) the payment of cash dividends on the Series A Preferred sold as
a Unit with any of the Notes and issued as dividends thereon, after April 15,
2003; and (xii) other Restricted Payments in an aggregate amount not to exceed
$10 million, increased by the amount of any Restricted Payment made pursuant to
this clause (x) that is an Investment and is not outstanding; PROVIDED that,
except in the case of clauses (i) and (iii), 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 preceding paragraph (other
than the Restricted Payment referred to in clause (ii) thereof, an exchange of
Capital Stock for Capital Stock or Indebtedness referred to in clause (iii) or
(iv) thereof and an Investment referred to in clause (vi) thereof), and the Net
Cash Proceeds from any capital contribution or any issuance of Capital Stock
referred to in clauses (iii), (iv) and (vi), 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 Capital Stock
of Viatel are used for the redemption, repurchase or other acquisition of the
Notes, or Indebtedness that is PARI PASSU with 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
Indebtedness.
Any Restricted Payments made in other than cash shall be valued at fair
market value. The amount of any Investment "outstanding" at any time shall be
deemed to be equal to the amount of such Investment on the date made, less the
return of capital, repayment of loans, return on capital and release of
Guarantees, in each case of or to Viatel and its Restricted Subsidiaries with
respect to such Investment (up to the amount of such investment on the date
made).
LIMITATION ON DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING RESTRICTED
SUBSIDIARIES
Viatel will not, and will not permit any Restricted Subsidiary to, 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 Capital Stock of such Restricted Subsidiary owned by
Viatel or any other Restricted Subsidiary, (ii) pay any Indebtedness owed to
Viatel or any other Restricted Subsidiary, (iii) make loans or advances to
Viatel or any other Restricted Subsidiary or (iv) transfer any of its property
or assets to Viatel or any Restricted Subsidiary.
The foregoing provisions shall not restrict any encumbrances or
restrictions: (i) existing on April 8, 1998 in the Indentures or any other
agreements in effect on April 8, 1998, and any extensions, refinancings,
renewals or replacements of such agreements; PROVIDED that the encumbrances and
restrictions in any such extensions, refinancings, renewals or replacements are
no less favorable in any material respect to the Holders than those encumbrances
or restrictions that are then in effect and that are being extended, refinanced,
renewed or replaced; (ii) existing under or by reason of applicable law; (iii)
existing with respect to any Person or the property or assets of such Person
acquired by Viatel or any Restricted Subsidiary, 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; (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 a lease, 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 Viatel or any Restricted Subsidiary not otherwise
prohibited by the Indentures 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, detract from the value of property or assets of Viatel or any
Restricted Subsidiary in any manner material to Viatel or any Restricted
Subsidiary; (v) with respect to a Restricted
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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 of, or
property and assets of, such Restricted Subsidiary; (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 Viatel) and (C) Viatel determines that
any such encumbrance or restriction will not materially affect Viatel's ability
to make principal or interest payments on the Notes or (vii) imposed in
connection with a transaction described in clause (f) of the proviso to the
definition of "Asset Sale" and relating solely to a Restricted Subsidiary that
transfers assets to the special purpose entity referred to therein; provided
that Viatel determines that any such encumbrance or restriction will not
materially affect Viatel'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 Viatel or
any Restricted Subsidiary from (1) creating, incurring, assuming or suffering to
exist any Liens otherwise permitted in the "Limitation on Liens" covenant or (2)
restricting the sale or other disposition of property or assets of Viatel or any
of its Restricted Subsidiaries that secure Indebtedness of Viatel or any of its
Restricted Subsidiaries.
LIMITATION ON THE ISSUANCE AND SALE OF CAPITAL STOCK OF RESTRICTED
SUBSIDIARIES
Viatel will not sell, and will not permit any Restricted Subsidiary,
directly or indirectly, to issue or sell, any shares of Capital Stock of a
Restricted Subsidiary (including options, warrants or other rights to purchase
shares of such Capital Stock) except (i) to Viatel 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, to the
extent required by applicable law; (iii) if, immediately after giving effect to
such issuance or sale, such Restricted Subsidiary would no longer constitute a
Restricted Subsidiary and any Investment in such Person remaining after giving
effect to such issuance or sale would have been permitted to be made under the
"Limitation on Restricted Payments" covenant if made on the date of such
issuance or sale; (iv) a pledge or hypothecation of or Lien on any Capital Stock
of a Subsidiary to the extent not prohibited under the "Limitation or Liens"
covenant; or (v) sales by Viatel or Restricted Subsidiaries of Common Stock of a
Restricted Subsidiary, PROVIDED that Viatel or such Restricted Subsidiaries
apply the Net Cash Proceeds, if any, of any such sale in accordance with clause
(A) or (B) of the "Limitation on Asset Sales" covenant described below.
LIMITATION ON ISSUANCES OF GUARANTEES BY RESTRICTED SUBSIDIARIES
Viatel will not permit any Restricted Subsidiary, directly or indirectly, to
Guarantee any Indebtedness of Viatel which is PARI PASSU with or subordinate in
right of payment to the Notes ("Guaranteed Indebtedness"), unless (i) such
Restricted Subsidiary simultaneously executes and delivers a supplemental
indenture to the Indentures providing for a Guarantee (a "Subsidiary Guarantee")
of payment of the Notes by such Restricted Subsidiary 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 Viatel or any other Restricted Subsidiary as a
result of any payment by such Restricted Subsidiary under its Subsidiary
Guarantee; PROVIDED that this paragraph shall not be applicable to any Guarantee
of any Restricted Subsidiary that existed at the time such Person became a
Restricted Subsidiary and was not Incurred in connection with, or in
contemplation of, such Person becoming a Restricted Subsidiary. If the
Guaranteed Indebtedness is (A) PARI PASSU with the Notes, then the Guarantee of
such Guaranteed Indebtedness shall be PARI PASSU with, or subordinated to, the
Subsidiary Guarantee or (B) subordinated to the Notes, then the Guarantee of
such Guaranteed Indebtedness shall be subordinated to the Subsidiary Guarantee
at least to the extent that the Guaranteed Indebtedness is subordinated to the
Notes.
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Notwithstanding the foregoing, any Subsidiary Guarantee by a Restricted
Subsidiary may provide by its terms that it shall be automatically and
unconditionally released and discharged upon (i) any sale, exchange or transfer,
to any Person not an Affiliate of Viatel, of all of Viatel's and each Restricted
Subsidiary's Capital Stock in, or all or substantially all the assets of, such
Restricted Subsidiary (which sale, exchange or transfer is not prohibited by the
Indentures) or (ii) the release or discharge of the Guarantee which resulted in
the creation of such Subsidiary Guarantee, except a discharge or release by or
as a result of payment under such Guarantee.
LIMITATION ON TRANSACTIONS WITH SHAREHOLDERS AND AFFILIATES
Viatel will not, and will not permit any Restricted Subsidiary to, directly
or indirectly, enter into, renew or extend any transaction (including, without
limitation, the purchase, sale, lease or exchange of property or assets, or the
rendering of any service) with any holder (or any Affiliate of such holder) of
5% or more of any class of Capital Stock of Viatel or with any Affiliate of
Viatel or any Restricted Subsidiary, except upon fair and reasonable terms no
less favorable to Viatel or such Restricted Subsidiary than could be obtained,
at the time of such transaction or, if such transaction is pursuant to a written
agreement, at the time of the execution of the agreement providing therefor, in
a comparable arm's-length transaction with a Person that is not such a holder or
an Affiliate.
The foregoing limitation does not limit, and shall not apply to (i)
transactions (A) approved by a majority of the disinterested members of the
Board of Directors or (B) for which Viatel or a Restricted Subsidiary delivers
to the Trustee a written opinion of a nationally recognized investment banking
firm stating that the transaction is fair to Viatel or such Restricted
Subsidiary from a financial point of view; (ii) any transaction solely between
Viatel and any of its Restricted Subsidiaries or solely between Restricted
Subsidiaries; (iii) the payment of reasonable and customary regular fees to
directors of Viatel who are not employees of Viatel; (iv) any payments or other
transactions pursuant to any tax-sharing agreement between Viatel and any other
Person with which Viatel files a consolidated tax return or with which Viatel is
part of a consolidated group for tax purposes; (v) compensation,
indemnification, and other benefits paid or made available to officers,
directors, and employees in the ordinary course of business in connection with
services actually rendered and consistent with past practice; (vi) transactions
in accordance with the Existing Stockholder Agreements as in effect on April 8,
1998; or (vii) any Restricted Payments not prohibited by the "Limitation on
Restricted Payments" covenant. Notwithstanding the foregoing, any transaction or
series of related transactions covered by the first paragraph of this
"Limitation on Transactions with Shareholders and Affiliates" covenant and not
covered by clauses (ii) through (v) of this paragraph, the aggregate amount of
which exceeds $2.0 million in value, must be approved or determined to be fair
in the manner provided for in clause (i)(A) or (B) above.
LIMITATION ON LIENS
Viatel will not, and will not permit any Restricted Subsidiary to, create,
incur, assume or suffer to exist any Lien on any of its assets or properties of
any character (including, without limitation, licenses), or any shares of
Capital Stock or Indebtedness of any Restricted Subsidiary, without making
effective provision for all of the Notes and all other amounts due under the
Indentures 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.
The foregoing limitation does not apply to (i) Liens existing on April 8,
1998; (ii) Liens granted after April 8, 1998 on any assets or Capital Stock of
Viatel or its Restricted Subsidiaries created in favor of the Holders; (iii)
Liens with respect to the assets of a Restricted Subsidiary granted by such
Restricted Subsidiary to Viatel or a Wholly Owned Restricted Subsidiary to
secure Indebtedness owing to Viatel or such other Restricted Subsidiary; (iv)
Liens securing Indebtedness permitted to be Incurred under clause (iii) of the
second paragraph of the "Limitation on Indebtedness" covenant which is Incurred
to refinance secured Indebtedness; PROVIDED that such Liens do not extend to or
cover any property or assets of Viatel or any Restricted Subsidiary other than
the property or assets securing the Indebtedness being refinanced;
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(v) Liens on the Capital Stock of, or any property or assets of, a Restricted
Subsidiary securing Indebtedness of such Restricted Subsidiary permitted under
the "Limitation on Indebtedness" covenant; (vi) Liens on the Capital Stock of
Restricted Subsidiaries that own a substantial portion of assets financed with
Indebtedness Incurred under clause (vii) of the "Limitation on Indebtedness"
covenant, if such liens secure only such Indebtedness; or (vii) Permitted Liens.
LIMITATION ON SALE-LEASEBACK TRANSACTIONS
Viatel will not, and will not permit any Restricted Subsidiary to, enter
into any sale-leaseback transaction involving any of its assets or properties
whether now owned or hereafter acquired, whereby Viatel or a Restricted
Subsidiary sells or transfers such assets or properties and then or thereafter
leases such assets or properties or any part thereof or any other assets or
properties which Viatel or such Restricted Subsidiary, as the case may be,
intends to use for substantially the same purpose or purposes as the assets or
properties sold or transferred; PROVIDED that a sale-leaseback transaction shall
not include any lease in connection with which Viatel or a Restricted Subsidiary
acquires assets or property in anticipation of the substantially contemporaneous
sale or transfer to the lessor under such lease.
The foregoing restriction does not apply to any sale-leaseback transaction
if (i) the lease is for a period, including renewal rights, of not in excess of
three years; (ii) the lease secures or relates to industrial revenue or
pollution control bonds; (iii) the transaction is solely between Viatel and any
Restricted Subsidiary or solely between Restricted Subsidiaries; or (iv) Viatel
or such Restricted Subsidiary, within 12 months after the sale or transfer of
any assets or properties is completed, applies an amount not less than the net
proceeds received from such sale in accordance with clause (A) or (B) of the
first paragraph of the "Limitation on Asset Sales" covenant described below.
LIMITATION ON ASSET SALES
Viatel and will not permit any Restricted Subsidiary to, consummate any
Asset Sale, unless (i) the consideration received by Viatel or such Restricted
Subsidiary is at least equal to the fair market value of the assets sold or
disposed of and (ii) at least 75% of the consideration received consists of cash
or Temporary Cash Investments. In the event and to the extent that the Net Cash
Proceeds received by Viatel or any of its Restricted Subsidiaries from one or
more Asset Sales occurring on or after April 8, 1998 in any period of 12
consecutive months exceed 10% of Adjusted Consolidated Net Tangible Assets
(determined as of the date closest to the commencement of such 12-month period
for which a consolidated balance sheet of Viatel and its Subsidiaries has been
filed with the Commission pursuant to the "Commission Reports and Reports to
Holders" covenant), then Viatel shall or shall cause the relevant Restricted
Subsidiary to (i) within 12 months after the date Net Cash Proceeds so received
exceed 10% of Adjusted Consolidated Net Tangible Assets (A) apply an amount
equal to such excess Net Cash Proceeds to permanently repay unsubordinated
Indebtedness of Viatel, or any Restricted Subsidiary providing a Subsidiary
Guarantee pursuant to the "Limitation on Issuances of Guarantees by Restricted
Subsidiaries" covenant described above or Indebtedness of any other Restricted
Subsidiary, in each case owing to a Person other than Viatel or any of its
Restricted Subsidiaries or (B) invest an equal amount, or the amount not so
applied pursuant to clause (A) (or enter into a definitive agreement committing
to so invest within 12 months after the date of such agreement), either in
property or assets (other than current assets) of a nature or type or that are
used in a business, or in a company having property and assets of a nature or
type, or engaged in a business, in either case similar or related to the nature
or type of the property and assets of, or the business of, Viatel or any of its
Restricted Subsidiaries existing on the date of such investment (as determined
in good faith by the Board of Directors, whose determination shall be conclusive
and evidenced by a Board Resolution) and (ii) apply (no later than the end of
the 12-month period referred to in clause (i)) such excess Net Cash Proceeds (to
the extent not applied pursuant to clause (i)) as provided in the following
paragraph of this "Limitation on Asset Sales" covenant. The amount of such
excess Net Cash Proceeds required to be applied (or to be committed to be
applied) during such 12-month period as set forth in clause (i) of the preceding
sentence and not applied as so required by the end of such period shall
constitute "Excess Proceeds."
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If, as of the first day of any calendar month, the aggregate amount of
Excess Proceeds not theretofore subject to an Offer to Purchase pursuant to this
"Limitation on Asset Sales" covenant totals at least $10 million, Viatel must
commence, not later than the fifteenth Business Day of such month, and
consummate an Offer to Purchase from the Holders on a PRO RATA basis an
aggregate principal amount of Notes equal to the Excess Proceeds on such date,
at a purchase price equal to 101% of the principal amount of the 11.25% Notes
and the 11.15% Notes and 101% of the Accreted Value of the 12.50% Notes and
12.40% Notes on the relevant Payment Date, plus, in each case, accrued interest
(if any) to the Payment Date.
REPURCHASE OF NOTES UPON A CHANGE OF CONTROL
Viatel must commence, within 30 days of the occurrence of a Change of
Control, and consummate an Offer to Purchase for all Notes then outstanding, at
a purchase price equal to 101% of the principal amount of the 11.25% Notes and
the 11.15% Notes and 101% of the Accreted Value of the 12.50% Notes and 12.40%
Notes on the relevant Payment Date, plus accrued interest (if any) to the
Payment Date.
There can be no assurance that Viatel 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 Viatel which might be outstanding at the time).
The above covenant requiring Viatel to repurchase the Notes will, unless
consents are obtained, require Viatel to repay all indebtedness then outstanding
which by its terms would prohibit such Note repurchase, either prior to or
concurrently with such Note repurchase.
COMMISSION REPORTS AND REPORTS TO HOLDERS
At all times from and after the earlier of (i) the date of the commencement
of an Exchange Offers or the effectiveness of the Shelf Registration Statement
(the "Registration") and (ii) October 8, 1998, in either case, whether or not
Viatel is then required to file reports with the Commission, Viatel shall file
with the Commission all such reports and other information as it would be
required to file with the Commission by Sections 13(a) or 15(d) under the
Securities Exchange Act of 1934 if it were subject thereto. Viatel shall supply
the Trustee and each Holder or shall supply to the Trustee for forwarding to
each such Holder, without cost to such Holder, copies of such reports and other
information. In addition, at all times prior to the earlier of the date of the
Registration and October 8, 1998, Viatel shall, at its cost, deliver to each
Holder of the Notes quarterly and annual reports substantially equivalent to
those which would be required by the Exchange Act. In addition, at all times
prior to the Registration, upon the request of any Holder or any prospective
purchaser of the Notes designated by a Holder, Viatel shall supply to such
Holder or such prospective purchaser the information required under Rule 144A
under the Securities Act.
EVENTS OF DEFAULT
The following events will be defined as "Events of Default" in the
Indentures: (a) default in the payment of principal of (or premium, if any, on)
any Note when the same becomes due and payable at maturity, upon acceleration,
redemption or otherwise; (b) default in the payment of interest on any Note when
the same becomes due and payable, and such default continues for a period of 30
days; PROVIDED that a failure to make any of the first six scheduled interest
payments on the Senior Notes in a timely manner will constitute an Event of
Default with no grace or cure period; (c) default in the performance or breach
of the provisions of the relevant Indentures applicable to mergers,
consolidations and transfers of all or substantially all of the assets of Viatel
or the failure to make or consummate an Offer to Purchase in accordance with the
"Limitation on Asset Sales" or "Repurchase of Notes upon a Change of Control"
covenant; (d) Viatel defaults in the performance of or breaches any other
covenant or agreement of Viatel in the Indentures or under the Notes (other than
a default specified in clause (a), (b) or (c) above) 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 or principal
amount at maturity, as the case
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may be, of any series of Notes; (e) there occurs with respect to any issue or
issues of Indebtedness of Viatel or any Significant Subsidiary having an
outstanding principal amount of $10 million or more in the aggregate for all
such issues of all such Persons, whether such Indebtedness now exists or shall
hereafter be created, (I) an event of default that has caused the holder thereof
to declare such Indebtedness to be due and payable prior to its Stated Maturity
and such Indebtedness has not been discharged in full or such acceleration has
not been rescinded or annulled within 30 days of such acceleration and/or (II)
the failure to make a principal payment at the final (but not any interim) fixed
maturity and such defaulted payment shall not have been made, waived or extended
within 30 days of such payment default; (f) any final judgment or order (not
covered by insurance) for the payment of money in excess of $10 million in the
aggregate for all such final judgments or orders against all such Persons
(treating any deductibles, self-insurance or retention as not so covered) shall
be rendered against Viatel or any Significant Subsidiary and shall not be paid
or discharged, and there shall be any period of 60 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 or discharged against
all such Persons to exceed $10 million during which a stay of enforcement of
such final judgment or order, by reason of a pending appeal or otherwise, shall
not be in effect; (g) a court having jurisdiction in the premises enters a
decree or order for (A) relief in respect of Viatel or any Significant
Subsidiary 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
Viatel or any Significant Subsidiary or for all or substantially all of the
property and assets of Viatel or any Significant Subsidiary or (C) the winding
up or liquidation of the affairs of Viatel or any Significant Subsidiary and, in
each case, such decree or order shall remain unstayed and in effect for a period
of 60 consecutive days; or (h) Viatel or any Significant Subsidiary (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 Viatel or any
Significant Subsidiary or for all or substantially all of the property and
assets of Viatel or any Significant Subsidiary or (C) effects any general
assignment for the benefit of creditors.
If an Event of Default (other than an Event of Default specified in clause
(g) or (h) above that occurs with respect to Viatel) occurs and is continuing
under any Indenture, the Trustee or the Holders of at least 25% in aggregate
principal amount or principal amount at maturity, as the case may be, of any
series of Notes, then outstanding, by written notice to Viatel (and to the
Trustee if such notice is given by the Holders), may, and the Trustee at the
request of such Holders shall, declare the principal amount (in the case of the
11.25% Notes and 11.15% Notes) or Accreted Value (in the case of the 12.50%
Notes or 12.40% Notes) of, premium, if any, and accrued interest on the relevant
series of Notes to be immediately due and payable. Upon a declaration of
acceleration, such principal amount or Accreted Value, as the case may be, of
premium, if any, and accrued interest shall be immediately due and payable. In
the event of a declaration of acceleration because an Event of Default set forth
in clause (e) 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 (e) shall be
remedied or cured by Viatel or the relevant Significant Subsidiary 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 clause
(g) or (h) above occurs with respect to Viatel, the principal amount or Accreted
Value, as the case may be, of premium, if any, and accrued interest 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 Holders of at least a majority in principal amount or principal amount at
maturity, as the case may be, of the outstanding Notes of any series, by written
notice to Viatel and to the Trustee, may waive all past defaults with respect to
such series of Notes 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, and interest on the Notes that have become
due solely by such declaration of acceleration, have
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been cured or waived and (ii) the rescission would not conflict with any
judgment or decree of a court of competent jurisdiction. For information as to
the waiver of defaults, see "-- Modification and Waiver."
The Holders of at least a majority in aggregate principal amount or
principal amount at maturity, as the case may be, of the outstanding Notes of
any series, may direct the time, method and place of conducting any proceeding
for any remedy available to the Trustee or exercising any trust or power
conferred on the Trustee. However, the Trustee may refuse to follow any
direction that conflicts with law or the relevant Indenture, that may involve
the Trustee in personal liability, or that the Trustee determines in good faith
may be unduly prejudicial to the rights of Holders of the relevant Notes, not
joining in the giving of such direction and may take any other action it deems
proper that is not inconsistent with any such direction received from Holders of
the relevant Notes. A Holder may not pursue any remedy with respect to the
Indentures or the Notes unless: (i) the Holder gives the Trustee written notice
of a continuing Event of Default; (ii) the Holders of at least 25% in aggregate
principal amount or principal amount at maturity, as the case may be, of
outstanding Notes of the relevant series, make a written request to the Trustee
to pursue the remedy; (iii) such Holder or Holders offer the Trustee indemnity
satisfactory to the Trustee against any costs, liability or expense; (iv) the
Trustee does not comply with the request within 60 days after receipt of the
request and the offer of indemnity; and (v) during such 60-day period, the
Holders of a majority in aggregate principal amount or principal amount at
maturity, as the case may be, of the outstanding Notes of the relevant series,
do not give the Trustee a direction that is inconsistent with the request.
However, such limitations do not apply to the right of any Holder of a Note to
receive payment of the Accreted Value of, premium, if any, or interest on, such
Note or to bring suit for the enforcement of any such payment, on or after the
due date expressed in the Notes, which right shall not be impaired or affected
without the consent of the Holder.
The Indentures require certain officers of Viatel to certify, on or before a
date not more than 90 days after the end of each fiscal year, that a review has
been conducted of the activities of Viatel and its Restricted Subsidiaries and
Viatel's and its Restricted Subsidiaries' performance under the Indentures and
that Viatel 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. Viatel will also be obligated to notify the
Trustee of any default or defaults in the performance of any covenants or
agreements under the Indentures.
CONSOLIDATION, MERGER AND SALE OF ASSETS
Viatel 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 a
series of related transactions) to, any Person or permit any Person to merge
with or into Viatel unless: (i) Viatel shall be the continuing Person, or the
Person (if other than Viatel) formed by such consolidation or into which Viatel
is merged or that acquired or leased such property and assets of Viatel shall be
a corporation organized and validly existing under the laws of the United States
of America or any jurisdiction thereof and shall expressly assume, by a
supplemental indenture, executed and delivered to the Trustee, all of the
obligations of Viatel on all of the Notes and under the Indentures; (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, Viatel 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 Viatel immediately prior to such
transaction; (iv) immediately after giving effect to such transaction on a pro
forma basis Viatel, or any Person becoming the successor obligor of the Notes,
as the case may be, could Incur at least $1.00 of Indebtedness under the first
paragraph of the "Limitation on Indebtedness" covenant; PROVIDED that this
clause (iv) shall not apply to (x) a consolidation, merger or sale of all (but
not less than all) of the assets of Viatel if all Liens and Indebtedness of
Viatel or any Person becoming the successor obligor on the Notes, as the case
may be, and its Restricted Subsidiaries outstanding immediately after such
transaction would, if Incurred at such time, have been permitted to be Incurred
(and all such Liens and Indebtedness, other than Liens and Indebtedness of
Viatel and its
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Restricted Subsidiaries outstanding immediately prior to the transaction, shall
be deemed to have been Incurred) for all purposes of the Indentures or (y) a
consolidation, merger or sale of all or substantially all of the assets of
Viatel if immediately after giving effect to such transaction on a pro forma
basis, Viatel or any Person becoming the successor obligor of the Notes shall
have a Consolidated Leverage Ratio equal to or less than the Consolidated
Leverage Ratio of Viatel immediately prior to such transaction; and (v) Viatel
delivers to the Trustee an Officers' Certificate (attaching the arithmetic
computations to demonstrate compliance with clauses (iii) and (iv) above) and
Opinion of Counsel, in each case stating that such consolidation, merger or
transfer and such supplemental indenture complies with this provision and that
all conditions precedent provided for herein relating to such transaction have
been complied with; PROVIDED, HOWEVER, that clauses (iii) and (iv) above do not
apply if, in the good faith determination of the Board of Directors of Viatel,
whose determination shall be evidenced by a Board Resolution, the principal
purpose of such transaction is to change the state of incorporation of Viatel;
and PROVIDED FURTHER that any such transaction shall not have as one of its
purposes the evasion of the foregoing limitations.
DEFEASANCE
DEFEASANCE AND DISCHARGE. Each Indenture provides that Viatel will be
deemed to have paid and will be discharged from any and all obligations in
respect of the Notes issued thereunder on the 123rd day after the deposit
referred to below, and the provisions of the relevant Indenture will no longer
be in effect with respect to such Notes (except for, among other matters,
certain obligations to register the transfer or exchange of such Notes, to
replace stolen, lost or mutilated Notes, to maintain paying agencies and to hold
monies for payment in trust) if, among other things, (A) Viatel has deposited
with the relevant Trustee, in trust, money and/or U.S. Government Obligations
that through the payment of interest and principal in respect thereof in
accordance with their terms will provide money in an amount sufficient to pay
the principal of, premium, if any, and accrued interest on the relevant Notes on
the Stated Maturity of such payments in accordance with the terms of the
relevant Indenture and the Notes, (B) Viatel has delivered to the relevant
Trustee (i) either (x) an Opinion of Counsel to the effect that Holders will not
recognize income, gain or loss for federal income tax purposes as a result of
Viatel's exercise of its option under this "Defeasance" provision and will be
subject to federal income tax on the same amount and in the same manner and at
the same times as would have been the case if such deposit, defeasance and
discharge had not occurred, which Opinion of Counsel must be based upon (and
accompanied by a copy of) a ruling of the Internal Revenue Service to the same
effect unless there has been a change in applicable federal income tax law after
April 8, 1998 such that a ruling is no longer required or (y) a ruling directed
to the relevant Trustee received from the Internal Revenue Service to the same
effect as the aforementioned Opinion of Counsel and (ii) an Opinion of Counsel
to the effect that the creation of the defeasance trust does not violate the
Investment Company Act of 1940 and after the passage of 123 days following the
deposit, the trust fund will not be subject to the effect of Section 547 of the
United States Bankruptcy Code or Section 15 of the New York Debtor and Creditor
Law, (C) immediately after giving effect to such deposit on a pro forma basis,
no Event of Default, or event that after the giving of notice or lapse of time
or both would become an Event of Default, shall have occurred and be continuing
on the date of such deposit or during the period ending on the 123rd day after
the date of such deposit, and such deposit shall not result in a breach or
violation of, or constitute a default under, any other agreement or instrument
to which Viatel or any of its Subsidiaries is a party or by which Viatel or any
of its Subsidiaries is bound and (D) if at such time the relevant Notes are
listed on a national securities exchange, Viatel has delivered to the relevant
Trustee an Opinion of Counsel to the effect that the relevant Notes will not be
delisted as a result of such deposit, defeasance and discharge.
DEFEASANCE OF CERTAIN COVENANTS AND CERTAIN EVENTS OF DEFAULT. Each
Indenture further provides that the provisions of such Indenture will no longer
be in effect with respect to clauses (iii) and (iv) under "Consolidation, Merger
and Sale of Assets" and all the covenants described herein under "Covenants,"
clause (c) under "Events of Default" with respect to such clauses (iii) and (iv)
under "Consolidation, Merger and Sale of Assets," clause (d) under "Events of
Default" with respect to such other covenants and
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clauses (e) and (f) under "Events of Default" shall be deemed not to be Events
of Default upon, among other things, the deposit with the relevant Trustee, in
trust, of money and/or U.S. Government Obligations, in the case of the 12.50%
Notes and the 11.25% Notes, or German Government Obligations, in the case of the
12.40% Notes and the 11.15% Notes, that through the payment of interest and
principal in respect thereof in accordance with their terms will provide money
in an amount sufficient to pay the principal of, premium, if any, and accrued
interest on the relevant Notes on the Stated Maturity of such payments in
accordance with the terms of the relevant Indenture and the Notes, the
satisfaction of the provisions described in clauses (B)(ii), (C) and (D) of the
preceding paragraph and the delivery by Viatel to the relevant Trustee of an
Opinion of Counsel to the effect that, among other things, the Holders will not
recognize income, gain or loss for federal income tax purposes as a result of
such deposit and defeasance of certain covenants and Events of Default and will
be subject to federal income tax on the same amount and in the same manner and
at the same times as would have been the case if such deposit and defeasance had
not occurred.
DEFEASANCE AND CERTAIN OTHER EVENTS OF DEFAULT. In the event the Company
exercises its option to omit compliance with certain covenants and provisions of
an Indenture with respect to any series of Notes as described in the immediately
preceding paragraph and such Notes are declared due and payable because of the
occurrence of an Event of Default that remains applicable, the amount of money
and/or U.S. Government Obligations, in the case of the 12.50% Notes and the
11.25% Notes, or German Government Obligations, in the case of the 12.40% Notes
and the 11.15% Notes, on deposit with the relevant Trustee will be sufficient to
pay amounts due on such Notes at the time of their Stated Maturity but may not
be sufficient to pay amounts due on such Notes at the time of the acceleration
resulting from such Event of Default. However, Viatel will remain liable for
such payments.
MODIFICATION AND WAIVER
Modifications and amendments of each Indenture may be made by Viatel and the
Trustee with the consent of the Holders of not less than a majority in aggregate
principal amount at maturity of the outstanding 12.50% Notes or 12.40% Notes, or
aggregate principal amount of the 11.25% Notes or 11.15% Notes, as the case may
be; PROVIDED, HOWEVER, that no such modification or amendment may, without the
consent of each Holder affected thereby, (i) change the Stated Maturity of the
principal of, or any installment of interest on, any Note, (ii) reduce the
principal amount of, or premium, if any, or interest on, any Note, (iii) change
the place or currency of payment of principal of, or premium, if any, or
interest on, any Note, (iv) impair the right to institute suit for the
enforcement of any payment on or after the Stated Maturity (or, in the case of a
redemption, on or after the Redemption Date) of any Note, (v) reduce the
above-stated percentage of outstanding 11.25% Notes, 12.50% Notes, 11.15% Notes
or 12.40% Notes, as the case may be, the consent of whose Holders is necessary
to modify or amend the applicable Indenture, (vi) waive a default in the payment
of principal of, premium, if any, or interest on the Notes or (vii) reduce the
percentage or aggregate principal amount or principal amount at maturity, as the
case may be, of outstanding 11.25% Notes, 12.50% Notes, 11.15% Notes or 12.40%
Notes, as the case may be, the consent of whose Holders is necessary for waiver
of compliance with certain provisions of the applicable Indenture or for waiver
of certain defaults.
NO PERSONAL LIABILITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS, DIRECTORS, OR
EMPLOYEES
The Indentures provide that no recourse for the payment of the principal of,
premium, if any, or interest on any of the Notes or for any claim based thereon
or otherwise in respect thereof, and no recourse under or upon any obligation,
covenant or agreement of Viatel in the Indentures, or in any of the Notes or
because of the creation of any Indebtedness represented thereby, shall be had
against any incorporator, stockholder, officer, director, employee or
controlling person of Viatel or of any successor Person thereof. Each Holder, by
accepting the Notes, waives and releases all such liability.
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CONCERNING THE TRUSTEE
The Indentures provide that, except during the continuance of a Default, the
Trustee will not be liable, except for the performance of such duties as are
specifically set forth in such Indentures. If an Event of Default has occurred
and is continuing, the Trustee will use the same degree of care and skill in its
exercise of the rights and powers vested in it under the Indentures as a prudent
person would exercise under the circumstances in the conduct of such person's
own affairs.
The Indentures and provisions of the TIA incorporated by reference therein
contain limitations on the rights of the Trustee, should it become a creditor of
Viatel, to obtain payment of claims in certain cases or to realize on certain
property received by it in respect of any such claims, as security or otherwise.
The Trustee is permitted to engage in other transactions; PROVIDED, HOWEVER,
that if it acquires any conflicting interest, it must eliminate such conflict or
resign.
BOOK ENTRY; DELIVERY AND FORM
12.50% EXCHANGE NOTES AND 11.25% EXCHANGE NOTES
The 12.50% Exchange Notes and the 11.25% Exchange Notes will be represented
by permanent global notes in definitive, fully registered book-entry form (each
a "New Global Note") which will be registered in the name of DTC or its nominee
and deposited on behalf of the beneficial holders of such 12.50% Exchange Notes
and 11.25% Exchange Notes represented thereby with a custodian for DTC for
credit to the respective accounts of the beneficial holders (or to such other
accounts as they may direct at the Euroclear or Cedel).
THE NEW GLOBAL NOTES. Viatel expects that pursuant to procedures
established by DTC (a) upon deposit of the New Global Notes, DTC or its
custodian will credit on its internal system portions of the New Global Notes
which shall be comprised of the corresponding respective principal amount of the
New Global Notes to the respective accounts of persons who have accounts with
such depositary and (b) ownership of the 12.50% Exchange Notes and 11.25%
Exchange Notes will be shown on, and the transfer of ownership thereof will be
effected only through, records maintained by DTC or its nominee (with respect to
interests of Participants (as defined herein)) and the records of Participants
(with respect to interests of Persons other than Participants). Ownership of
beneficial interests in the New Global Notes will be limited to persons who have
accounts with DTC ("Participants") or persons who hold interests through
Participants.
So long as DTC or its nominee is the registered owner or holder of the
12.50% Exchange Notes and 11.25% Exchange Notes, DTC or such nominee will be
considered the sole owner or holder of the 12.50% Exchange Notes and 11.25%
Exchange Notes represented by the New Global Notes for all purposes under the
Indentures and the New Global Notes. No beneficial owner of an interest in the
New Global Notes will be able to transfer such interest except in accordance
with the applicable procedures of DTC, Euroclear and Cedel.
Payments of the principal of or premium, if any, on and interest on the New
Global Notes will be made to DTC or its nominee, as the case may be, as the
registered owner thereof. Neither Viatel nor the Trustee or any Paying Agent
under the applicable Indentures will have any responsibility or liability for
any aspect of the records relating to, or payments made on account of,
beneficial ownership interests in the New Global Notes or for maintaining,
supervising or reviewing any records relating to such beneficial ownership
interests.
Viatel expects that DTC or its nominee, upon receipt of any payment of the
principal or premium, if any, on and interest on the New Global Notes, will
credit Participants' accounts with payments in amounts proportionate to their
respective beneficial interests in the principal amount of the New Global Notes
as shown on the records of DTC or its nominee. Viatel also expects that payments
by Participants to owners of beneficial interests in the New Global Notes held
through Participants will be governed by standing
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instructions and customary practice as is now the case with securities held for
the accounts of customers registered in the names of nominees for such
customers. Such payments will be the responsibility of such Participants.
Transfers between Participants in DTC will be effected in accordance with
DTC rules and will be settled in immediately available funds. If a holder
requires physical delivery of certificated notes for any reason, including to
sell 12.50% Exchange Notes or 11.25% Exchange Notes, respectively, to persons in
states which require physical delivery of such securities or to pledge such
securities, such holder must transfer its interest in the New Global Notes in
accordance with the normal procedures of DTC and in accordance with the
procedures set forth in the respective Indenture.
DTC has advised Viatel that DTC will take any action permitted to be taken
by a holder of New Global Notes (including the presentation of New Global Notes
for exchange as described below) only at the direction of one or more
Participants to whose account the DTC interests in the New Global Notes are
credited and only in respect of the aggregate principal amount of 12.50%
Exchange Notes and 11.25% Exchange Notes, as the case may be, as to which such
Participant or Participants has or have given such direction. However, if there
is an Event of Default under the applicable Indenture, DTC will exchange the
applicable New Global Notes for certificated notes which it will distribute to
its Participants.
DTC has advised Viatel as follows: DTC is a limited-purpose trust company
organized under the laws of the State of New York, a " banking organization"
within the meaning of the New York Banking Law, a member of the Federal Reserve
System, a "clearing corporation" within the meaning of the Uniform Commercial
Code and a "clearing agency" registered pursuant to the provision of Section 17A
of the Exchange Act. DTC was created to hold securities for its Participants and
facilitate the clearance and settlement of securities transactions between
Participants through electronic book-entry changes in accounts of its
Participants, thereby eliminating the need for physical movement of
certificates. Participants include securities brokers and dealers, banks, trust
companies and clearing corporations and certain other organizations. Indirect
access to the DTC system is available to others such as banks, brokers, dealers
and trust companies that clear through or maintain a custodial relationship with
a Participant, either directly or indirectly ("Indirect Participants").
Although DTC, Euroclear and Cedel are expected to follow the foregoing
procedures in order to facilitate transfers of interests in the New Global Notes
among Participants of DTC, Euroclear and Cedel, they are under no obligations to
follow such procedures, and such procedures may be discontinued at any time.
Neither Viatel, the Trustee nor any Paying Agent under the respective Indenture
will have any responsibility for the performance by DTC, Euroclear or Cedel or
the Participants or Indirect Participants of their respective obligations under
the rules and procedures governing their operations.
CERTIFICATED NOTES. Subject to certain conditions, any person having a
beneficial interest in the New Global Notes may, upon request to the Trustee,
exchange such beneficial interest for 12.50% Exchange Notes or 11.25% Exchange
Notes, as the case may be, in the form of certificated notes. Upon any such
issuance, the Trustee is required to register such certificated notes in the
name of, and cause the same to be delivered to, such person or persons (or any
nominee thereof). In addition, interests in the New Global Notes will be
exchangeable or transferable, as the case may be, for certificated notes if (i)
DTC notifies Viatel that it is unwilling or unable to continue as depositary for
such New Global Notes, or DTC ceases to be a "Clearing Agency" registered under
the Exchange Act, and a successor depositary is not appointed by Viatel within
90 days or (ii) an Event of Default has occurred and is continuing with respect
to such Notes. Upon the occurrence of any of the events described in the
preceding sentence, Viatel will cause the appropriate certificated notes to be
delivered. Certificated notes may only be transferred on the books and records
of the Paying Agent for such Notes.
12.40% EXCHANGE NOTES AND 11.15% EXCHANGE NOTES
The 12.40% Exchange Notes and the 11.15% Exchange Notes will each be
represented by permanent global certificates without interest coupons. Certain
of such permanent global certificates will be the New
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DBC-DM Global Certificates and will be kept in custody by Deutsche Borse
Clearing AG, will be issued in bearer form and will represent the 12.40%
Exchange Notes issued in exchange for Existing 12.40% Notes and the 11.15%
Exchange Notes issued in exchange for Existing 11.15% Notes, in each case as
originally sold outside the United States to non-U.S. persons pursuant to
Regulation S under the Securities Act and will be held through financial
institutions that are account holders in DBC ("DBC Accountholders"). The other
permanent global certificates will be represented by the New DTC-DM Global
Certificates, and will include the 12.40% Exchange Notes and 11.15% Exchange
Notes which are held through Euroclear and Cedel, each of which has an account
with DBC. The New DTC-DM Global Certificates will be deposited with a custodian
for DTC, will be issued in registered form in the name of the nominee of DTC,
and will represent the 12.40% Exchange Notes issued in exchange for Existing
12.40% Notes and the 11.15% Exchange Notes issued in exchange for Existing
11.15% Notes, in each case as originally sold to QIBs pursuant to Rule 144A and
will be held through financial institutions that are Participants in DTC.
The amount of 12.40% Exchange Notes and 11.15% Exchange Notes represented by
each of the New DBC-DM Global Certificates and the New DTC-DM Global
Certificates is evidenced by the register (the "Register") maintained for that
purpose by the Registrar (as defined herein). Together, (i) the 12.40% Exchange
Notes represented by the New DBC-DM Global Certificates and the New DTC-DM
Global Certificates will equal the aggregate principal amount at maturity of the
12.40% Exchange Notes outstanding at any time and (ii) the 11.15% Exchange Notes
represented by the New DBC-DM Global Certificates and the New DTC-DM Global
Certificates will equal the aggregate principal amount of the 11.15% Exchange
Notes at any time outstanding.
Transfers of 12.40% Exchange Notes and 11.15% Exchange Notes will be limited
to transfers of book-entry interests between and within DBC and DTC. Transfers
of 12.40% Exchange Notes and 11.15% Exchange Notes between DBC Accountholders on
the one hand and DTC Participants on the other hand shall be recorded in the
Register and shall be effected by an increase or a reduction in the aggregate
amount of 12.40% Exchange Notes or 11.15% Exchange Notes, as the case may be,
represented by the New DBC-DM Global Certificates and a corresponding reduction
or increase in the aggregate amount of 12.40% Exchange Notes or 11.15% Exchange
Notes represented by the New DTC-DM Global Certificates.
Owners of legal co-ownership interests in the New DBC-DM Global Certificates
or of beneficial interests in the New DTC-DM Global Certificates will not be
entitled to have 12.40% Exchange Notes or 11.15% Exchange Notes registered in
their names, and will not receive or be entitled to receive physical delivery of
definitive certificates representing individual 12.40% Exchange Notes or 11.15%
Exchange Notes, as the case may be.
Viatel has appointed The Bank of New York, as registrar (the "Registrar"),
and as paying agent in respect of the 12.40% Exchange Notes and 11.15% Exchange
Notes represented by the New DTC-DM Global Certificates (the "U.S. Paying
Agent") and Deutsche Bank, Aktiengesellschaft as co-registrar (the
"Co-Registrar") and as paying agent for the 12.40% Exchange Notes and 11.15%
Exchange Notes represented by the New DBC-DM Global Certificates (the "DM Paying
Agent", and together with the U.S. Paying Agent, the "Paying Agents"). The
Registrar, together with the Co-Registrar, provides the link between DTC and
DBC. Viatel shall ensure that for as long as any 12.40% Exchange Notes and
11.15% Exchange Notes shall be outstanding there shall always be a registrar, a
U.S. paying agent and a DM paying agent to perform the functions assigned to any
of them in the 12.40% Notes Indenture and the 11.15% Notes Indenture.
Payment of principal of and interest on the 12.40% Exchange Notes and 11.15%
Exchange Notes represented by the New Global Certificates will be made by Viatel
in German Deutschmarks through the DM Paying Agent. Payments of principal of and
interest on the New DBC-DM Global Certificates will be made by the DM Paying
Agent in German Deutschmarks directly to DBC. Payment of principal of and
interest on the New DTC-DM Global Certificates will be made by the DM Paying
Agent to the U.S. Paying Agent, which in turn shall make such payments in U.S.
Dollars to the nominee for DTC, as the registered
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holder of the New DTC-DM Global Certificates or in German Deutschmarks to any
person holding beneficial interests in the New DTC-DM Global Certificates
electing to receive payments in German Deutschmarks as described below.
Any person holding beneficial interests in the New DTC-DM Global
Certificates (a "New DTC-DM Note Holder") shall receive payments of principal
and interest in respect of 12.40% Exchange Notes and 11.15% Exchange Notes, as
the case may be, in U.S. Dollars, unless such DTC-DM Note Holder elects to
receive payments in German Deutschmarks in accordance with the procedures set
forth below. To the extent that the New DTC-DM Note Holders shall not have made
such election in respect of any payment of principal or interest, the aggregate
amount designated for all such New DTC-DM Note Holders in respect of such
payment (the "DM Conversion Amount") shall be credited to the U.S. Paying
Agent's account and converted by the U.S. Paying Agent into U.S. Dollars and
paid by wire transfer of same-day funds to the registered holder of the New
DTC-DM Global Certificates for payment through DTC's settlement system to the
relevant DTC Participants. All costs of any such conversion and wire transfer
shall be deducted from such payments. Any such conversion shall be based on The
Bank of New York's bid quotation, at or prior to 11:00 a.m. New York time, on
the second New York Business Day (as defined herein) preceding the relevant
payment date, for the purchase by the U.S. Paying Agent of the DM Conversion
Amount of U.S. Dollars for settlement on such payment date. If such bid
quotation is not available for any reason, the U.S. Paying Agent shall endeavor
to obtain a bid quotation from the leading foreign exchange bank in New York
City selected by the U.S. Paying Agent for such purpose. If no bid quotation
from a leading foreign exchange bank is available, payment of the DM Conversion
Amount will be made in German Deutschmarks to the account or accounts specified
by DTC to the U.S. Paying Agent.
In addition to acting in its capacity as U.S. Paying Agent, The Bank of New
York may act as a foreign exchange dealer for purposes of converting German
Deutschmarks to U.S. Dollars as described in the paragraph above and, when
acting as a foreign exchange dealer, The Bank of New York will derive profits
from such activities in addition to the fees earned by it for its services as
Trustee, Registrar and U.S. Paying Agent. Each such conversion will be made on
such terms, conditions and charges not inconsistent with the terms of the 12.40%
Notes and 11.15% Notes as The Bank of New York may from time to time establish
in accordance with its regular foreign exchange practices, and subject to
applicable U.S. law and regulations.
A New DTC-DM Note Holder may elect to receive payment of principal and
interest with respect to the 12.40% Exchange Notes and 11.25% Exchange Notes in
German Deutschmarks by causing DTC through the relevant DTC Participant to
notify the U.S. Paying Agent by the time specified below of (i) such New DTC-DM
Note Holder's election to receive all or a portion of such payment in German
Deutschmarks and (ii) wire transfer instructions to a German Deutschmark account
in the Federal Republic of Germany. Such election in respect of any payment must
be made by the New DTC-DM Note Holder at the time and in the manner required by
the DTC procedures applicable from time to time and shall, in accordance with
such procedures, be irrevocable and shall relate only to such payment. DTC
notifications of such election, wire transfer instructions and the amount
payable in German Deutschmarks must be received by the U.S. Paying Agent prior
to 5:00 p.m. New York time on the fifth New York Business Day (as defined below)
following the relevant record date in the case of interest, and prior to 5:00
p.m. New York time on the tenth day prior to the payment date for the payment of
principal. Any payments in German Deutschmarks shall be made by wire transfer of
same-day funds to German Deutschmarks accounts designated by DTC. The term "New
York Business Day" shall mean any day other than a Saturday or Sunday or a day
on which banking institutions in New York City are authorized or required by law
or executive order to close.
Payments by DTC Participants and Indirect DTC Participants (as defined
herein) to owners of beneficial interests in the New DTC-DM Global Certificates
will be governed by standing instructions and customary practices, as is now the
case with securities held by the accounts of customers registered in "street
name," and will be the responsibility of the DTC Participants or Indirect DTC
Participants. Neither the Trustee nor either Paying Agent will have any
responsibility or liability for any aspect of the records of DTC relating to or
payments made by DTC on account of beneficial interests in the New DTC-DM Global
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Certificates or for maintaining, supervising or reviewing any records of DTC
relating to such beneficial interests. Substantially similar principles will
apply with regard to the New DBC-DM Global Certificates and payments to holders
of interests therein.
CLEARING AND SETTLEMENT
DBC
DBC is incorporated under the laws of Germany and acts as a specialized
depositary and clearing organization. DBC is subject to regulations and
supervision by the German Banking Supervisory Authority.
DBC holds securities for DBC Accountholders and facilitates the clearance
and settlement of securities transactions between its DBC Accountholders through
electronic book-entry changes in securities accounts with simultaneous payment
in German Deutschmarks in same-day funds. Thus, the need for physical delivery
of certificates is eliminated.
DBC provides to the DBC Accountholders, among other things, services for
safekeeping, administration, clearance and settlement of domestic German and
internationally traded securities and securities-lending and borrowing. DBC
Accountholders include banking institutions located in Germany, including German
branches of non-German financial institutions, securities brokers or dealers
admitted to a German stock exchange that meet certain additional requirements,
certain foreign clearing institutions and, subject to certain requirements,
other credit institutions within the European Union. Indirect access to DBC is
available to others such as securities brokers and dealers, banks, trust
companies, clearing corporations and others, including individuals that clear
through or maintain custodial relationships with DBC Accountholders either
directly or indirectly.
CEDEL
Cedel, 67 Boulevard Grande-Duchesse Charlotte, L-1331 Luxembourg, was
incorporated in 1970 as a limited company under Luxembourg law. Cedel is owned
by banks, securities dealers and financial institutions, and currently has about
100 shareholders, including U.S. financial institutions or their subsidiaries.
No single entity may own more than five percent of Cedel's stock. Cedel is
registered as a bank in Luxembourg, and as such is subject to regulation by the
Insitut Monetaire Luxembourgeois (the Luxembourg Monetary Authority or "IML"),
which supervises Luxembourg banks. Cedel holds securities for its customers and
facilitates the clearance and settlement of securities transactions by
electronic book-entry transfers between their accounts. Cedel provides various
services, including safekeeping, administration, clearance and settlement of
internationally traded securities and securities lending and borrowing. Cedel
also deals with domestic securities markets in several countries through
established depository and custodial relationships. Cedel has established an
electronic bridge with Morgan Guaranty Trust as the Euroclear Operator in
Brussels to facilitate settlement of trades between systems. Cedel currently
accepts over 90,000 securities issues on its books.
Cedel's customers are worldwide financial institutions including
underwriters, securities brokers and dealers, banks, trust companies and
clearing corporations. Cedel's U.S. customers are limited to securities brokers
and dealers, and banks. Currently, Cedel has approximately 3,000 customers
located in over 60 countries, including all major European countries, Canada,
and the United States. Indirect access to Cedel is available to other
institutions which clear through or maintain a custodial relationship with an
account holder of Cedel.
EUROCLEAR
Euroclear was created in 1968 to hold securities for Euroclear Participants
and to clear and settle transactions between Euroclear Participants through
simultaneous book-entry delivery against payment, thereby eliminating the need
for physical movement of certificates and any risk from lack of simultaneous
transfers of securities and cash. Transactions may now be settled in various
currencies, including German
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Deutschmarks. Euroclear includes various other services, including securities
lending and borrowing and interfaces with domestic markets in several countries.
Euroclear is operated by the Brussels, Belgium office of Morgan Guaranty Trust
Company of New York (the "Euroclear Operator"), under contract with Euroclear
Clearance System S.C., a Belgian cooperative corporation (the "Cooperative").
All operations are conducted by the Euroclear Operator, and all Euroclear
securities clearance accounts and Euroclear cash accounts are accounts with the
Euroclear Operator, not the Cooperative. Euroclear Participants include banks
(including central banks), securities brokers and dealers and other professional
financial intermediaries. Indirect access to Euroclear is also available to
other firms that clear through or maintain a custodial relationship with a
Euroclear Participant, either directly or indirectly.
The Euroclear Operator is the Belgian branch of a New York banking
corporation which is a member bank of the Federal Reserve System. As such, it is
regulated and examined by the Board of Governors of the Federal Reserve System.
As such, it is regulated and examined by the Board of Governors of the Federal
Reserve System and the New York State Banking Department, as well as the Belgian
Banking Commission.
Securities clearance accounts and cash accounts with the Euroclear Operator
are governed by the Terms and Conditions Governing Use of Euroclear and the
Related Operating Procedures of the Euroclear System, and applicable Belgian law
(collectively, the "Euroclear Terms and Conditions"). The Euroclear Terms and
Conditions govern transfers of securities and cash within Euroclear, withdrawals
of securities and cash from Euroclear, and receipts of payments with respect to
securities in Euroclear. All securities in Euroclear are held on a fungible
basis without attribution of specific certificates to specific securities
clearance accounts. The Euroclear Operator acts under the Euroclear Terms and
Conditions only on behalf of Euroclear Participants, and has no record of or
relationship with persons holding through Euroclear Participants.
Distributions with respect to Notes held beneficially through Euroclear will
be credited to the cash accounts of Euroclear Participants in accordance with
the Euroclear Terms and Conditions, to the extent received by the Euroclear
Operator.
GLOBAL CLEARANCE AND SETTLEMENT PROCEDURES
The following paragraphs set forth the procedures governing settlement of
secondary market sales of securities such as the 12.40% Exchange Notes and
11.15% Exchange Notes in effect on the date hereof.
SECONDARY MARKET SALES WITHIN EACH CLEARING SYSTEM AND BETWEEN EUROCLEAR
PARTICIPANTS AND CEDEL PARTICIPANTS. These sales will settle in accordance with
the rules and procedures established by the relevant system. Sales to be settled
within Euroclear or Cedel and between Euroclear and Cedel will normally settle
on a three-day basis unless parties specify a different period (which may be as
short as two days). DTC is a U.S. Dollar-based system but sales may be settled
in other currencies on a free-delivery basis. Sales to be settled within DTC
denominated in U.S. Dollars can settle on a same-day basis; in the case of
non-U.S. Dollar-denominated sales within DTC, the 12.40% Exchange Notes and the
11.15% Exchange Notes can be delivered same-day, but payment will be made
outside DTC.
SECONDARY MARKET SALES BETWEEN DBC ACCOUNTHOLDERS AND EUROCLEAR OR CEDEL
PARTICIPANTS. These trades normally settle on a three-day basis unless parties
specify a different period (which may be as short as two days).
SECONDARY MARKET SALES FROM A DTC PARTICIPANT TO A DBC ACCOUNTHOLDER OR A
EUROCLEAR OR CEDEL PARTICIPANT. Two days prior to settlement, a DTC Participant
selling 12.40% Exchange Notes or 11.15% Exchange Notes to a DBC Accountholder or
a Euroclear Participant or Cedel Participant will notify The Bank of New York of
the settlement instructions and will deliver the 12.40% Exchange Notes or 11.15%
Exchange Notes, as the case may be, to the DM Paying Agent by means of DTC's
Delivery Order procedures. The Bank of New York will send the settlement
instructions to the DM Paying Agent. One day prior to settlement, the DM Paying
Agent will enter delivery-versus-payment instructions into DBC for
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settlement through its DBC transfer account; the Euroclear Participant or Cedel
Participant will instruct its clearing system to transmit receipt-versus-payment
instructions to DBC and the DBC Accountholder will transmit such instructions
directly to DBC, with The Bank of New York as counterparty. On the settlement
date, the DTC Participant will input a Deposit/Withdrawal at Custodian ("DWAC")
transaction to remove the 12.40% Exchange Notes or 11.15% Exchange Notes, as the
case may be, to be sold from its DTC securities account; matched and pre-checked
trades are settled-versus-payment, and the DBC Accountholder's or Euroclear
Participant's or Cedel Participant's securities account is credited the same day
for the value settlement date, and the DM Paying Agent causes the DTC
Participant's pre-specified DM account at the DM Paying Agent to be credited for
same-day value, or any other DM account pre-specified by such DTC participant
for value the next day.
SECONDARY MARKET SALES FROM A DBC ACCOUNTHOLDER OR A EUROCLEAR OR CEDEL
PARTICIPANT TO A DTC PARTICIPANT. Two days prior to settlement, a DTC
Participant will send The Bank of New York the details of the transaction for
transmittal to the DM Paying Agent and instruct its bank to fund the DM Paying
Agent's German Deutschmark account one day prior to settlement.
The Euroclear Participant or Cedel Participant will instruct its clearing
system no later than one day prior to settlement to transmit settlement
instructions to DBC, and a DBC Accountholder will transmit one day prior to
settlement such instructions directly to DBC, naming the DM Paying Agent as
counterparty with further credit to DTC. At the same time (I.E., one day prior
to settlement), the DM Paying Agent will transmit settlement instructions to
DBC.
On the settlement day, upon settlement of the trade in DBC, the DM Paying
Agent will so inform The Bank of New York; the DTC Participant will initiate a
DWAC deposit transaction for The Bank of New York to approve, resulting in a
deposit of 12.40% Exchange Notes or 11.15% Exchange Notes, as the case may be,
in the DTC Participant's securities account same-day value. The DBC
Accountholder or a Euroclear Participant's or Cedel Participant's accounts are
credited with the sales proceeds same-day value.
Settlement in other currencies between the DTC and DBC systems is possible
free-of-payment transfers to move the 12.40% Exchange Notes and the 11.15%
Exchange Notes, but funds movement will take place separately.
Although DTC, DBC, Euroclear and Cedel are expected to follow the foregoing
procedures in order to facilitate transfers of interests in the global
certificates among DTC Participants, DBC Accountholders, Euroclear Participants
and Cedel Participants, they are under no obligation to follow such procedures,
and such procedures may be discontinued at any time. Neither Viatel, the Trustee
nor any Paying Agent will have responsibility for the performance by DTC, DBC,
Euroclear, or Cedel or the DTC Participants, DBC Accountholders, Euroclear
Participants or Cedel Participants of their respective obligations under the
rules and procedures governing their operations.
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CERTAIN INCOME TAX CONSIDERATIONS
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The following summary sets forth the opinion of Kelley Drye & Warren LLP,
counsel to the Company, as to the principal U.S. federal income tax consequences
of an exchange of the Existing Notes for the Exchange Notes and the ownership
and disposition of the Exchange Notes under U.S. federal income tax laws as of
the date hereof. This summary is based on current provisions of the Code,
applicable final, temporary and proposed Treasury Regulations, judicial
authority, and current administrative rulings and pronouncements of the Internal
Revenue Service (the "Service") and upon the facts concerning the Company as of
the date hereof. There can be no assurance that the Service will not take a
contrary view, and no ruling from the Service has been or will be sought by the
Company. Legislative, judicial, or administrative changes or interpretations may
be forthcoming that could alter or modify the statements and conclusions set
forth herein. Any such changes or interpretations may or may not be retroactive
and could affect the tax consequences to holders.
This summary does not purport to deal with all aspects of taxation that may
be relevant to particular holders of the Exchange Notes in light of their
personal investment or tax circumstances, or to certain types of investors
(including individual retirement accounts and other tax deferred accounts,
insurance companies, financial institutions, broker-dealers or tax-exempt
organizations) subject to special treatment under the U.S. federal income tax
laws. This discussion does not deal with special tax situations, such as the
holding of the Exchange Notes as part of a straddle with other investments, or
situations in which the functional currency of a holder is not the U.S. dollar.
In addition, except as otherwise provided, this discussion deals only with
Exchange Notes acquired in exchange for the Existing Notes which were originally
acquired at their initial issue prices in the Offering. Further, this discussion
deals only with Exchange Notes held as capital assets within the meaning of
Section 1221 of the Code.
For purposes of this discussion, the term "U.S. Holder" means a citizen or
resident of the U.S., a corporation, limited liability company or partnership
created or organized in the U.S. or under the law of the U.S. or any state
thereof (including the District of Columbia), an estate the income of which is
includible in gross income for U.S. federal income tax purposes regardless of
its source, or a trust if a court within the U.S. is able to exercise primary
supervision over the administration of the trust and one or more U.S. persons
has the authority to control all substantial decisions of the trust (or, under
certain circumstances, a trust the income of which is includible in gross income
for U.S. federal income tax purposes regardless of its source). The term
"Non-U.S. Holder" means any person other than a U.S. Holder.
THE FOLLOWING DISCUSSION IS FOR GENERAL INFORMATION ONLY. THE TAX TREATMENT MAY
VARY DEPENDING UPON A HOLDER'S PARTICULAR SITUATION. HOLDERS SHOULD CONSULT
THEIR OWN TAX ADVISORS AS TO THE PARTICULAR TAX CONSEQUENCES TO THEM OF
PURCHASING, HOLDING AND DISPOSING OF THE EXCHANGE NOTES, INCLUDING THE
APPLICABILITY AND EFFECT OF ANY STATE, LOCAL OR FOREIGN TAX LAWS.
THE EXISTING NOTES -- UNITS
For U.S. federal income tax purposes, the Existing Notes were originally
issued and sold as part of a Unit with the issue price of a Unit allocated
between the components of such Unit based on the Company's best judgment of the
relative fair market values on the issue date as follows: (i) $544.11 to the
Existing 12.50% Notes and $100 to the Series A Preferred issued therewith; (ii)
DM 546.68 to the Existing 12.40% Notes and DM 18.54 to the Subordinated
Convertible Debenture issued therewith; (iii) $1,000 to the Existing 11.25%
Notes and $100 to the Series A Preferred issued therewith; and (iv) DM 1,000 to
the Existing 11.15% Notes and DM 18.54 to the Subordinated Convertible Debenture
issued therewith.
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Because each Exchange Note is a continuation of the corresponding Existing
Note, the term "Note" refers to both the Exchange Notes and the Existing Notes.
Pursuant to Treasury Regulations issued under provisions of the Code
relating to OID (the "OID Regulations"), each holder will be bound by such
allocations for U.S. federal income tax purposes unless such holder discloses on
a statement attached to its tax return for the taxable year that includes the
acquisition date of such Unit that its allocations differs from those of the
Company. No assurance can be given that the Service will accept the Company's
allocations. If the Company's allocations were successfully challenged by the
Service, the accrual of OID, if any, on the Notes, the gain or loss on the sale
or other disposition of a Note, and certain other consequences of an investment
in the Units could be different from the consequences that would result under
the allocations determined by the Company.
The exchange of the Existing Notes for the Exchange Notes pursuant to the
Exchange Offers will not be a taxable event for U.S. federal income tax
purposes. As a result, there will not be any material U.S. federal income tax
consequences to a holder exchanging the Existing Notes for the Exchange Notes
pursuant to the Exchange Offers.
THE NOTES
Under applicable authorities, the Company intends to treat the Notes as
indebtedness for U.S. federal income tax purposes. However, it is possible that
the Service will contend that the Notes should be treated as an equity interest
in, rather than indebtedness of, the Company. In the event that the Notes are
treated as equity, the amount of any actual or constructive payments on any such
Note would first be taxable to the holder as dividend income to the extent of
the Company'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
Note with any remaining amount treated as gain from the sale of a Note. As a
result, until such time as the Company has earnings and profits as determined
for U.S. federal income tax purposes, payments on any Note treated as equity
will be a nontaxable return of capital and will be applied against and reduce
the adjusted tax basis of such Note in the hands of its holder (but not below
zero) and any excess will be treated as gain from the sale of the Note. Further,
payments on the Notes treated as equity to Non-U.S. Holders would not be
eligible for the portfolio interest exception from U.S. withholding tax, and
dividends thereon would be subject to U.S. withholding tax at a flat rate of 30%
(or lower applicable treaty rate) and gain from their sale or other taxable
disposition might also be subject to U.S. tax in certain circumstances. In
addition, in the event of equity treatment, the Company would not be entitled to
deduct interest on the Notes for U.S. federal income tax purposes. The remainder
of this discussion assumes that the Notes will constitute indebtedness of the
Company for such tax purposes.
PAYMENTS OF INTEREST ON THE SENIOR NOTES
GENERAL. Interest paid on a Senior Note (whether in U.S. dollars or in
foreign currency) will generally be taxable to a U.S. Holder as ordinary
interest income at the time it accrues or is received, in accordance with the
U.S. Holder's method of accounting for federal income tax purposes.
FOREIGN CURRENCY DENOMINATED NOTES. A U.S. Holder of an 11.15% Note will be
required to include in income the U.S. dollar value of the interest paid on an
11.15% Note. The amount of interest income so realized by a U.S. Holder that
uses the cash method of tax accounting will be the U.S. dollar value of the
foreign currency payment based on the spot rate of exchange on the date of
receipt regardless of whether the payment in fact is converted into U.S.
dollars.
A U.S. Holder that uses the accrual method of tax accounting will accrue
interest income on an 11.15% Note in foreign currency, and will translate the
accrued amount into U.S. dollars using the average rate of exchange for the
accrual period (generally, the simple average of the spot exchange rates for
each business day of such period or other average exchange rate for the period
reasonably derived and consistently applied by the holder) or, with respect to
an accrual period that spans two taxable years, at the
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average rate for the partial period within the taxable year. At the time the
interest so accrued in a prior accrual period is received, the U.S. Holder will
realize exchange gain or loss equal to the difference, if any, between the spot
rate of the foreign currency received by the U.S. Holder and the amount of
interest income previously accrued for such period. Such exchange gain or loss,
if any, will be ordinary gain or loss and generally will not be treated as
interest income or expense, except to the extent provided by administrative
pronouncements of the Service.
A U.S. Holder may elect to translate accrued interest income into U.S.
dollars at the spot rate on the last day of the interest accrual period (or, in
the case of a partial accrual period, the spot rate on the last day of the
taxable year) or, if the date of receipt is within five business days of the
last day of the interest accrual period, the spot rate on the date of receipt. A
U.S. Holder that makes such an election must apply it consistently to all debt
instruments from year to year and cannot change the election without the consent
of the Service.
For purposes of this discussion, the "spot rate" generally means a rate that
reflects a fair market rate of exchange available to the public for currency
under a "spot contract" in a free market and involving representative amounts. A
"spot contract" is a contract to buy or sell a currency on or before two
business days following the date of the execution of the contract. If such a
spot rate cannot be demonstrated, the Service has the authority to determine the
spot rate.
ORIGINAL ISSUE DISCOUNT
GENERAL. The Discount Notes will be issued with OID for U.S. federal income
tax purposes. Each U.S. Holder will be required to accrue any OID on a Discount
Note into income on a constant-yield basis (regardless of whether such U.S.
Holder is a cash or accrual basis taxpayer) in advance of the receipt of
corresponding cash payments on such Discount Note. See "-- Taxation of Original
Issue Discount."
The amount of OID with respect to a Discount Note will be equal to the
excess of (i) its "stated redemption price at maturity" over (ii) its issue
price, as determined above. See "-- The Existing Notes -- Units." Under the OID
Regulations, the "stated redemption price at maturity" of a Discount Note will
include all payments to be made in respect thereof, including any stated
interest payments, other than "qualified stated interest." Payments of qualified
stated interest are payments of interest which are unconditionally payable in
cash or property (other than debt instruments of the issuer) at least annually
at a qualifying rate, including a single fixed rate. Because stated interest on
the Discount Notes is not payable until October 15 , 2003, all payments of
stated interest on the Discount Notes must be included in the stated redemption
price at maturity.
TAXATION OF ORIGINAL ISSUE DISCOUNT. A U.S. Holder of a Discount Note
issued with OID is required to include in gross income for U.S. federal income
tax purposes an amount equal to the sum of the "daily portions" of such OID for
all days during the taxable year on which the holder holds the Discount Note.
The daily portions of OID required to be included in a U.S. Holder's gross
income in a taxable year will be determined on a constant-yield basis by
allocating to each day during the taxable year on which the holder holds the
Discount Note a pro-rata portion of the OID on such Discount Note which is
attributable to the "accrual period" in which such day is included. Accrual
periods with respect to a Discount Note may be of any length and may vary in
length over the term of the Discount Note as long as (i) no accrual period is
longer than one year and (ii) each scheduled payment of interest or principal on
the Discount Note occurs on either the final or first day of an accrual period.
The amount of the OID attributable to each accrual period will be the product of
the "adjusted issue price" at the beginning of such accrual period and the yield
to maturity of the Discount Note (stated in a manner appropriately taking into
account the length of the accrual period). The yield to maturity is the discount
rate that, when used in computing the present value of all payments to be made
under the Discount Note, produces an amount equal to the issue price of the
Discount Note. The adjusted issue price of a Discount Note at the beginning of
an accrual period
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generally will equal the issue price of the Discount Note plus the aggregate
amount of OID that accrued in all prior accrual periods, less any cash payments
on the Discount Note.
FOREIGN CURRENCY DENOMINATED NOTES. A U.S. Holder of a 12.40% Note will be
required to include in income the U.S. dollar value of the amount of OID and, if
applicable, market discount (provided an election is made to accrue the market
discount currently (see "-- Market Discount, Acquisition Premium")) that has
accrued during an accrual period. The U.S. dollar value of such accrued income
will be determined in the same manner discussed above with respect to U.S.
Holders of 11.15% Notes that are on an accrual method of tax accounting. See
"--Payments of Interest on the Senior Notes -- Foreign Currency Denominated
Notes" above. At the time the interest so accrued in a prior accrual period is
received, the U.S. Holder will realize exchange gain or loss equal to the
difference, if any, between the spot rate of the foreign currency received by
the U.S. Holder and the amount of interest income previously accrued for such
period. Such exchange gain or loss, if any, will be ordinary gain or loss and
generally will not be treated as interest income or expense, except to the
extent provided by administrative pronouncements of the Service.
EFFECT OF MANDATORY AND OPTIONAL REDEMPTIONS ON OID. In the event of a
Change of Control, the Company will be required to offer to redeem all of the
Notes at redemption prices specified elsewhere herein. In the event that the
Company receives net proceeds from one or more Equity Offerings, the Company
may, at any time prior to April 15, 2001, use all or a portion of such net
proceeds to redeem the Notes in amounts and at redemption prices specified
elsewhere herein. Under the OID Regulations, computation of yield and maturity
of the Notes is not affected by such redemption rights and obligations if, based
on all the facts and circumstances as of the issue date, payments on the Notes
are significantly more likely than not to occur in accordance with the stated
payment schedule of the Notes (that does not reflect a Change of Control or
Equity Offerings). The Company believes, based on all of the facts and
circumstances as of the issue date, that the stated payment schedule is
significantly more likely than not to occur with respect to the Notes.
Therefore, the Company will not take the redemption rights and obligations into
account in determining the yield and maturity of the Notes.
The Company may redeem the Notes, in whole or in part, at any time on or
after April 15, 2003, at redemption prices specified elsewhere herein, plus
accrued and unpaid interest to the date of redemption. The OID Regulations
contain rules for determining the yield and maturity of any instrument that may
be redeemed prior to its stated maturity date at the option of the issuer. Under
the OID Regulations, solely for purposes of the accrual of OID, it is assumed
that the issuer will exercise any option to redeem a debt instrument if such
exercise will lower the yield-to-maturity of the debt instrument. The Company
believes that it will not be presumed to redeem the Notes prior to their stated
maturity under the foregoing rules because the exercise of such option would not
lower the yield-to-maturity of the Notes.
APPLICABLE HIGH YIELD DISCOUNT OBLIGATIONS
If the yield to maturity on the Discount Notes equals or exceeds the sum of
(x) the "applicable federal rate" (as determined under Section 1273(d) of the
Code) (or, in the case of the 12.40% Notes, the foreign currency rate of
interest that is analogous to the applicable federal rate) in effect for the
month in which the Discount Notes are issued (the "AFR") and (y) five percent,
and the OID on such Discount Notes is "significant," such Discount Notes will be
considered AHYDOs, as defined in Section 163(i) of the Code. With respect to any
Discount Notes that are AHYDOs, the Company would not be entitled to a deduction
for OID accrued on such Discount Notes for U.S. federal income tax purposes
until such time as the Company actually paid interest on such Discount Notes.
For April, 1998, the long-term AFR was 5.89% (based on semi-annual compounding)
and the mid-term AFR was 5.62% (based on semi-annual compounding). The
appropriate AFR depends upon the weighted average maturity of the Discount
Notes. Moreover, if the yield to maturity on any of the Discount Notes exceeds
the sum of (x) the AFR and (y) six percent (such excess is referred to as the
"Disqualified Yield"), the deduction for OID accrued on such Discount Notes will
be permanently disallowed (regardless of whether the Company actually pays
interest
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on such Discount Notes) to the extent such OID is attributable to the
Disqualified Yield on the such Discount Notes ("Dividend-Equivalent Interest").
For purposes of the dividends-received deduction, such Dividend-Equivalent
Interest generally will be treated as a dividend to the extent it is deemed to
have been paid out of the Company's current or accumulated earnings and profits.
Accordingly, a U.S. Holder that is a corporation may be entitled to a
dividends-received deduction with respect to any Dividend-Equivalent Interest
received by such corporate U.S. Holder in respect of the Discount Notes.
MARKET DISCOUNT, ACQUISITION PREMIUM
GENERAL. If a U.S. Holder acquires a Note for an amount that is less than
its stated redemption price at maturity, or in the case of a Discount Note
issued with OID, its revised issue price (generally, adjusted issue price at the
time of acquisition), the amount of the difference will be treated as "market
discount," unless such difference is less than a specified de minimis amount.
Under the market discount rules of the Code, a U.S. Holder will be required to
treat any principal payment on, or any gain on the sale, exchange, retirement or
other disposition (including a gift) of, a Note as ordinary income to the extent
of any accrued market discount that has not previously been included in income.
Market discount generally accrues on a straight-line basis over the remaining
term of the Note, unless the U.S. Holder elects to accrue market discount on a
constant interest method. A U.S. Holder may not be allowed to deduct immediately
all or a portion of the interest expense on any indebtedness incurred or
continued to purchase or to carry such Note.
A U.S. Holder may elect to include market discount in income currently as it
accrues (either on a straight-line basis or, if the U.S. Holder so elects, on a
constant-yield basis), in which case the interest deferral rule set forth in the
preceding paragraph will not apply. Such an election will apply to all market
discount bonds acquired by the U.S. Holder on or after the first day of the
first taxable year to which such election applies and may be revoked only with
the consent of the Service.
A U.S. Holder that acquires a Note for an amount that is greater than the
adjusted issue price of such Note, but equal to or less than the sum of all
amounts payable on such Note after the purchase date, will be considered to have
purchased such Note at an "acquisition premium." Under the acquisition premium
rules of the Code and the OID Regulations, the daily portion of OID which such
holder must include in its gross income with respect to such Note for any
taxable year will be reduced by an amount equal to the OID multiplied by a
fraction, the numerator of which is the amount of such acquisition premium and
the denominator of which is the OID remaining for the period from the date the
Note was purchased to its maturity date.
FOREIGN CURRENCY DENOMINATED NOTES. A U.S. Holder of 12.40% Notes or 11.15%
Notes that elects not to include market discount, if any, in income currently as
it accrues, must translate such market discount into U.S. dollars at the spot
rate on the date that the 12.40% Notes or 11.15% Notes are disposed of. No part
of such accrued market discount is treated as exchange gain or loss. See "--
Original Issue Discount -- Foreign Currency Denominated Notes" for treatment of
market discount which a holder elects to include in income currently as it
accrues.
AMORTIZATION OF BOND PREMIUM
GENERAL. A U.S. Holder that purchases a Note for an amount in excess of the
sum of all remaining payments due on the Note after the purchase date (other
than payments of qualified stated interest in the case of a Senior Note) will be
considered to have purchased the Note at a premium. Such holder may elect to
amortize such premium (as an offset to interest income), using a constant-yield
method, over the remaining term of the Note. Such election, once made, generally
applies to all debt instruments held or subsequently acquired by the U.S. Holder
on or after the first taxable year to which the election applies and may be
revoked only with the consent of the Service. A U.S. Holder that elects to
amortize such premium must reduce its tax basis in the Note by the amount of the
premium amortized during its holding
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period. With respect to a U.S. Holder that does not elect to amortize bond
premium, the amount of such premium will be included in the U.S. Holder's tax
basis for purposes of computing gain or loss in connection with a taxable
disposition of the Note.
FOREIGN CURRENCY DENOMINATED NOTES. Amortizable bond premium in respect of
a 12.40% Note or 11.15% Note will be computed in, and, if an election is made to
amortize such premium, will reduce interest income in, units of foreign
currency. At the time amortized bond premium offsets interest income, exchange
gain or loss, which will be taxable as ordinary income or loss, will be realized
with respect to amortized bond premium on such 12.40% Note or 11.15% Note based
on the difference between the spot rate of exchange on the date or dates such
premium is recovered through interest payments on such Note and the spot rate of
exchange on the date on which the U.S. Holder acquired the 12.40% Note or 11.15%
Note. With respect to a U.S. Holder that does not elect to amortize bond
premium, the amount of bond premium will constitute a market loss when the
12.40% Note or 11.15% Note matures.
SALE OR OTHER DISPOSITION
GENERAL. In general, upon the sale, exchange or redemption of a Note, a
U.S. Holder will recognize taxable gain or loss equal to the difference between
(i) the amount of cash proceeds and the fair market value of any property
received on the sale, exchange or redemption (not including any amount
attributable to accrued but unpaid qualified stated interest) and (ii) the U.S.
Holder's adjusted tax basis in the Note. A U.S. Holder's adjusted tax basis in a
Note generally will be equal to the cost of the Note to such U.S. Holder (or the
portion of the Unit purchase price allocable to such Note), increased by the
amount of any market discount and OID previously taken into income by the U.S.
Holder and reduced by the amount of any amortized bond premium and all payments
received by the U.S. Holder (other than payments of qualified stated interest).
Subject to the discussion of market discount above, gain or loss realized on
the sale, exchange or redemption of a Note will be capital gain or loss. Capital
gain recognized by individual U.S. Holders generally will be subject to a
maximum federal income tax rate of (i) 39.6% if the U.S. Holder held the Note
for not more than one year, (ii) 28% if the U.S. Holder held the Note for more
than one year but not more than eighteen months, and (iii) 20% if the U.S.
Holder held the Note for more than eighteen months. The distinction between
capital gain or loss and ordinary income or loss is also relevant for purposes
of, among other things, limitations with respect to the deductibility of capital
losses.
FOREIGN CURRENCY DENOMINATED NOTES. Gain or loss realized on the sale,
exchange or redemption of a 12.40% Note or 11.15% Note that is attributable to
fluctuations in currency exchange rates will be ordinary income or loss, which
will not be treated as interest income or expense. Such foreign currency gain or
loss will be realized only to the extent of the total gain or loss realized by a
U.S. Holder on the sale, exchange or redemption of the 12.40% Note or 11.15%
Note. A U.S. Holder will have a tax basis in any foreign currency received on
the sale, exchange or redemption of a 12.40% Note or 11.15% Note equal to the
U.S. dollar value of such foreign currency, determined at the time of such sale,
exchange or redemption.
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NON-U.S. HOLDERS
In general, subject to the discussion below:
(a) payments of principal or interest (including OID) on the Notes by the
Company or any paying agent to a beneficial owner of a Note that is a Non-U.S.
Holder will not be subject to U.S. withholding tax, provided that, in the case
of interest or accrued OID, (i) such Non-U.S. Holder does not own, actually or
constructively, 10% or more of the total combined voting power of all classes of
stock of the Company entitled to vote, within the meaning of Section 871(h)(3)
of the Code, (ii) such Non-U.S. Holder is not a "controlled foreign corporation"
(within the meaning of the Code) that is related, directly or indirectly, to the
Company through stock ownership, (iii) such Non-U.S. Holder is not a bank
receiving interest described in Section 881(c)(3)(A) of the Code, and (iv) the
certification requirements under Section 871(h) or Section 881(c) of the Code
and Treasury Regulations thereunder (summarized below) are satisfied;
(b) a Non-U.S. Holder of a Note will not be subject to U.S. federal income
tax on gains realized on the sale, exchange or other disposition of such Note,
unless (i) such Non-U.S. Holder is an individual who is present in the U.S. for
183 days or more in the taxable year of sale, exchange or other disposition, and
certain conditions are met, (ii) such gain is effectively connected with the
conduct by the Non-U.S. Holder of a trade or business in the U.S. and, if
certain tax treaties apply, is attributable to a U.S. permanent establishment
maintained by the Non-U.S. Holder, or (iii) the Non-U.S. Holder is subject to
Code provisions applicable to certain U.S. expatriates; and
(c) a Note held by an individual who is not a citizen or resident of the
U.S. at the time or his death will not be subject to U.S. estate tax as a result
of such individual's death, provided that, at the time of such individual's
death, the individual does not own, actually or constructively, 10% or more of
the total combined voting power of all classes of stock of the Company entitled
to vote and payments with respect to such Note would not have been effectively
connected with the conduct by such individual of a trade or business in the U.S.
To satisfy the certification requirements referred to in (a)(iv) above,
Sections 871(h) and 881(c) of the Code and currently effective Treasury
Regulations thereunder require that either (i) the beneficial owner of a Note
must certify, under penalties of perjury, to the Company or its paying agent, as
the case may be, that such owner is a Non-U.S. Holder and must provide such
owner's name and address, and U.S. taxpayer identification number ("TIN"), if
any, or (ii) a securities clearing organization, bank or other financial
institution that holds customers securities in the ordinary course of its trade
or business (a "Financial Institution") and holds the Note on behalf of the
beneficial owner thereof must certify, under penalties of perjury, to the
Company or its paying agent, as the case may be, that such certificate has been
received from the beneficial owner and must furnish the payor with a copy
thereof. A certificate described in this paragraph is effective only with
respect to payments of interest made to the certifying Non-U.S. Holder after
delivery of the certificate in the calendar year of its delivery and the two
immediately succeeding calendar years. Under temporary Treasury Regulations,
such requirement will be fulfilled if the beneficial owner of a Note certifies
on IRS Form W-8, under penalties of perjury, that it is a Non-U.S. Holder and
provides its name and address, and any Financial Institution holding the Note on
behalf of the beneficial owner files a statement with the withholding agent to
the effect that it has received such a statement from the beneficial owner (and
furnishes the withholding agent with a copy thereof).
Treasury Regulations published on October 14, 1997 (the "New Regulations"),
and, pursuant to an announcement made by the Service on March 30, 1998,
effective for payments made after December 31, 1999, will provide alternative
methods for satisfying the certification requirements described above. The New
Regulations also would require, in the case of Notes held by a foreign
partnership, that (i) the certification be provided by the partners rather than
by the foreign partnership and (ii) the partnership provide certain information,
including a U.S. taxpayer identification number. A look-through rule would apply
in the case of tiered partnerships.
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If a Non-U.S. Holder of a Note is engaged in a trade or business in the
U.S., and if interest (including OID) on the Note or gain realized on the sale,
exchange or other disposition of the Note are effectively connected with the
conduct of such trade or business (and, if certain tax treaties apply, are
attributable to a U.S. permanent establishment maintained by the Non-U.S. Holder
in the United States), the Non-U.S. Holder, although exempt from U.S. federal
withholding tax (provided that the certification requirements discussed in the
next sentence are met), will generally be subject to regular U.S. income tax on
such interest, dividends or gain in the same manner as if it were a U.S. Holder.
In lieu of the certificate described above (with respect to non-effectively
connected interest), such a Non-U.S. Holder will be required, under currently
effective Treasury Regulations, to provide the Company with a properly executed
IRS Form 4224 in order to claim an exemption from withholding tax. In addition,
if such Non-U.S. Holder is a foreign corporation, it may be subject to a branch
profits tax equal to 30% (or such lower rate provided by an applicable treaty)
of its effectively connected earnings and profits for the taxable year, subject
to certain adjustments. For purposes of the branch profits tax, interest
(including OID) on a Note and any gain recognized on the sale, exchange or other
disposition of a Note will be included in the earnings and profits of such
Non-U.S. Holder if such interest, dividends or gain are effectively connected
with the conduct by a Non-U.S. Holder of a trade or business in the United
States. The New Regulations will change certain of the withholding reporting and
certification requirements described above, effective for payments made after
December 31, 1999, subject to certain grandfathering provisions.
In the event the Notes were treated as equity, the periodic payments
received by a Non-U.S. Holder on the Notes would not qualify for the portfolio
interest exemption from U.S. federal income tax described above. Rather, the
periodic payments would be subject to a 30% U.S. federal withholding tax (or
reduced rate under an applicable tax treaty) if income on the Notes was not
effectively connected with a U.S. trade or business of such Non-U.S. Holder.
Under currently effective Treasury Regulations, a withholding agent would be
required to withhold tax from all payments made on the stock regardless of the
Company's earnings and profits, but holders could apply for refunds if such
stock's share of the Company's earnings and profits were less than the amount of
the payments. Under the New Regulations, and with respect to payments made after
December 31, 1999, a company may reduce the amount of withholding required under
the foregoing rule if it elects to make a reasonable estimate of its current and
accumulated earnings and profits.
Non-U.S. Holders should consult with their tax advisors regarding U.S. and
foreign tax consequences with respect to the Notes.
BACKUP WITHHOLDING AND INFORMATION REPORTING
Backup withholding of U.S. federal income tax at a rate of 31% may apply to
payments made in respect of a Note to a holder that is not an "exempt recipient"
and that fail to provide certain identifying information (such as the holder's
TIN) in the manner required. Generally, individuals are not exempt recipients,
whereas corporations and certain other entities are exempt recipients. Payments
made in respect of a Note must be reported to the Service, unless the holder is
an exempt recipient or otherwise establishes an exemption.
In the case of payments to a Non-U.S. Holder of interest on a Note, Treasury
Regulations provide that backup withholding and information reporting will not
apply to payments with respect to which either requisite certification has been
received or an exemption has otherwise been established (provided that neither
the Company nor a paying agent has actual knowledge that the holder is a U.S.
Holder or that the conditions of any other exemption are not in fact satisfied).
Payments of the proceeds of a sale of a Note to or through a foreign office
of a broker that is a U.S. person, a "controlled foreign corporation" (within
the meaning of the Code) or a foreign person, 50% or more of whose gross income
from all sources for the three-year period ending with the close of its taxable
year preceding the payment was effectively connected with the conduct of a trade
or business within the
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U.S., are currently subject to certain information reporting requirements,
unless the payee is an exempt recipient or such broker has evidence in its
records that the payee is a Non-U.S. Holder and no actual knowledge that such
evidence is false and certain other conditions are met. Temporary Treasury
Regulations indicate that such payments are not currently subject to backup
withholding. Under current Treasury Regulations, payments of the proceeds of a
sale of a Note to or through the U.S. office of a broker will be subject to
information reporting and backup withholding unless the payee certifies under
penalties of perjury as to his or her status as a Non-U.S. Holder and satisfies
certain other qualifications (and no agent or broker who is responsible for
receiving or reviewing such statement has actual knowledge that it is incorrect)
and provides his or her name and address or the payee otherwise establishes an
exemption.
Non-U.S. Holders should consult their tax advisors regarding the application
of information reporting and backup withholding in their particular situations,
the availability of an exemption therefrom, and the procedure for obtaining such
an exemption, if available. Any amounts withheld under the backup withholding
rules from a payment to a holder of a Note will be allowed as a refund or credit
against such holder's U.S. federal income tax, provided that the required
information is furnished to the Service.
As noted above, the Treasury Department recently issued the New Regulations.
In general, the New Regulations do not significantly alter the substantive
withholding and information reporting requirements but unify current
certification procedures and forms and clarify reliance standards. Under the New
Regulations, special rules apply which permit the shifting of primary
responsibility for withholding to certain financial intermediaries acting on
behalf of beneficial owners. Although the New Regulations do not take effect
until after December 31, 1999, the Service announced on March 30, 1998, that it
will regard the 1999 calendar year as a transition period for the administration
of the withholding tax system. Accordingly, in enforcing compliance with current
withholding rules for 1999, the Service will take into account the extent to
which a withholding agent makes a good faith effort to transform its information
systems to comply with the New Regulations. A holder of a Note should consult
with its tax advisor regarding the application of the backup withholding rules
to its particular situation, the availability of an exemption therefrom, the
procedure for obtaining such an exemption, if available, and the impact of the
New Regulations on payments made with respect to Notes after December 31, 1999.
THE FOREGOING SUMMARY DOES NOT DISCUSS ALL ASPECTS OF UNITED STATES FEDERAL
INCOME TAXATION THAT MAY BE RELEVANT TO A PARTICULAR HOLDER OF NOTES IN LIGHT OF
ITS PARTICULAR CIRCUMSTANCES AND INCOME TAX SITUATION. PROSPECTIVE HOLDERS
SHOULD CONSULT THEIR OWN TAX ADVISOR AS TO THE SPECIFIC TAX CONSEQUENCES TO THEM
OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF NOTES, INCLUDING THE APPLICATION
AND EFFECT OF STATE, LOCAL, FOREIGN AND OTHER TAX LAWS AND THE POSSIBLE EFFECTS
OF CHANGES IN UNITED STATES OR OTHER TAX LAWS.
CERTAIN FEDERAL REPUBLIC OF GERMANY INCOME TAX CONSIDERATIONS
The following summary sets forth the opinion of Oppenhoff & Radler, German
tax counsel to the Company, as to the principal German income tax consequences
of an exchange of Existing Notes for the Exchange Notes and the ownership and
disposition of the Exchange Notes under German income tax laws as of the date
hereof. This summary is based on current provisions of German law and upon the
facts concerning the Company as of the date hereof. Legislative, judicial, or
administrative changes or interpretations may be forthcoming that could alter or
modify the statements and conclusions set forth herein. Any such changes or
interpretations may or may not be retroactive and could affect the tax
consequences to holders.
THE FOLLOWING DISCUSSION IS FOR GENERAL INFORMATION ONLY AND REFLECTS GERMAN
LAW AS OF THE DATE OF THIS PROSPECTUS. THE TAX TREATMENT MAY VARY DEPENDING UPON
A HOLDER'S PARTICULAR SITUATION. HOLDERS SHOULD CONSULT THEIR OWN TAX ADVISORS
AS TO THE PARTICULAR TAX CONSEQUENCES TO THEM OF
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PURCHASING, HOLDING AND DISPOSING OF THE EXCHANGE NOTES, INCLUDING THE
APPLICABILITY AND EFFECT OF ANY GERMAN FEDERAL STATE OR LOCAL TAX LAWS.
THE EXISTING NOTES -- UNITS
The Existing Notes were originally issued and sold as part of a Unit
allocated between the components of such Units based on the Company's best
judgment of the relative fair market values on the issue date.The Company's
allocation is not binding on the German tax authorities. If the German tax
authorities do not accept the Company's allocation, the amount of accrued OID,
if any, on the Notes, the amount of a gain or loss on the sale or other
disposition of a Note will be different from the amounts that would result under
the allocation determined by the Company.
The exchange of the Existing Notes for the Exchange Notes pursuant to the
Exchange Offers should not be a taxable event for German income tax purposes.
INCOME TAX
Interest paid (or, if income of the holder is determined on an accrual
basis, including OID, if any, accrued) on a Note that is (i) paid to holders who
are residents of the Federal Republic of Germany for tax purposes or which are
corporations that maintain their statutory seats or principal places of
management in the Federal Republic of Germany ("German Holder"), or is (ii)
attributable to a permanent establishment maintained by, or a fixed base
regularly available to, a holder otherwise not deemed to be resident in the
Federal Republic of Germany for German tax purposes (hereinafter "Foreign
Holder"), is subject to German income tax by assessment at regular German tax
rates. The same applies to accrued interest and accrued OID, if any, at the time
of the sale or redemption of the Notes and included in the price or redemption
price. Such interest or OID, if any, is also subject to a solidarity surcharge
(SOLIDARITATSZUSCHLAG) equal to 5.5% of the otherwise applicable German income
tax liability attributable to such interest income.
WITHHOLDING TAX
Under current German law, principal and interest on the Notes will be
payable without imposition of, or deduction or withholding imposed or levied by,
the Federal Republic of Germany, unless any of the circumstances described below
are met.
Recipients of interest on the Notes will be subject to an advance deduction
for income tax payable by the recipient of interest (ZINSABSCHLAG, hereinafter
the "Deduction") under certain circumstances. The Deduction will apply, INTER
ALIA, at a rate of 30% of the gross amount of interest paid or disbursed by a
German financial institution, including a German branch of a foreign financial
institution, but excluding a foreign branch of a German financial institution
(hereinafter, the "Disbursing Agent") if the Disbursing Agent holds the Notes in
custody.
The Deduction will apply to:
(i) a holder of a Note who is resident in the Federal Republic of Germany,
which, for purposes of German taxation, includes a natural person having
a residence or habitual abode in the Federal Republic of Germany, and a
juridical person having its statutory seat or place of management in the
Federal Republic of Germany, or
(ii) a holder of a Note who is not resident in the Federal Republic of
Germany and who is therefore taxable in the Federal Republic of Germany
only with respect to certain German-source income if according to German
tax law the interest received from such Note constitutes income from such
certain German sources (such as income effectively connected with a
German trade or business, income from the letting and leasing of German
property, etc.).
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Where a holder of a Note disposes of the Note prior to maturity, the excess
of interest having accrued since the last interest payment up to the disposal of
the Note (hereinafter "Accrued Interest") over any accrued interest paid by the
holder of a Note to the same Disbursing Agent during the same calendar year will
be subject to the Deduction at a rate of 30%, provided the Accrued Interest is
credited separately.
In case the interest is not paid in cash and interest received in cash is
not sufficient to cover the Deduction, the holder of the Note is obliged under
German law to provide the person who is obliged to withhold the Deduction with
the shortfall. Otherwise, the person who is obliged to withhold the Deduction
must notify the competent tax authorities accordingly.
Due to the fact that the Discount Notes carry OID, an additional Deduction
may apply if such Discount Note is repaid at maturity or sold by the holder of a
Discount Note prior to maturity, as follows:
(x) a positive difference between the issue price or purchase price paid
by such holder (and attributable to the Discount Note) and the
redemption amount or selling price, respectively, will be subject to
the Deduction at a rate of 30%, provided the same Disbursing Agent
acquired or sold the Discount Note and has, since such acquisition
or sale, held such Discount Notes in custody;
(y) in cases in which the Disbursing Agent did not acquire or sell the
Discount Note, and did not hold the Discount Note in custody, the
Deduction will apply at a rate of 30% calculated on 30% of the
redemption amount, or on 30% of the selling price, respectively.
A solidarity surcharge (Solidaritatszuschlag) at a rate of 5.5% of the
amount of the Deduction (the rate mentioned above of 30% increases to 31.65%),
applies while the solidarity surcharge is in effect.
The Deduction gives rise to a refundable tax credit against a German
resident holder's assessed liability to corporate or personal income tax in the
case of (i) above. The same applies in the case of (ii) above with respect to a
holder of a Note not resident in the Federal Republic of Germany.
CAPITAL GAINS
Gains derived from the sale or other disposition of Notes by a holder, other
than those attributable to Accrued Interest or OID, if any, are not subject to
tax in the Federal Republic of Germany, unless (i) in the case of a Foreign
Holder, the gains are attributable to a permanent establishment maintained by,
or a fixed base regularly available to, such holder in the Federal Republic of
Germany, or (ii) in the case of a German Holder, such holder is a corporate
entity resident for tax purposes in the Federal Republic of Germany or the Notes
were otherwise held as business assets of the holder, or (iii) a speculative
capital gain (i.e., if the time period between the acquisition and the disposal
of the Notes does not exceed six months and the Notes do not qualify as business
assets) is given by a German resident who holds the Notes.
THE FOREGOING SUMMARY DOES NOT DISCUSS ALL ASPECTS OF FEDERAL REPUBLIC OF
GERMANY INCOME TAXATION THAT MAY BE RELEVANT TO A PARTICULAR HOLDER OF NOTES, IN
LIGHT OF ITS PARTICULAR CIRCUMSTANCES AND INCOME TAX SITUATION. PROSPECTIVE
HOLDERS SHOULD CONSULT THEIR OWN TAX ADVISOR AS TO THE PARTICULAR TAX
CONSEQUENCES TO THEM OF PURCHASING, HOLDING AND DISPOSING OF EXCHANGE NOTES,
INCLUDING THE APPLICATION AND EFFECT OF STATE, LOCAL, FOREIGN AND OTHER TAX LAWS
AND THE POSSIBLE EFFECTS OF CHANGES IN FEDERAL REPUBLIC OF GERMANY TAX LAWS.
154
<PAGE>
PLAN OF DISTRIBUTION
Reference is made to "The Exchange Offers" above for a description of the
Exchange Offers, including the purpose of the Exchange Offers, the basis upon
which the Exchange Notes are offered and expenses incurred in connection with
the Exchange Offers.
Each broker-dealer that receives Exchange Notes for its own account pursuant
to the Exchange Offers must acknowledge that it will deliver a copy of this
Prospectus in connection with any resale of such Exchange Notes. This
Prospectus, as it may be amended or supplemented from time to time, may be used
by a broker-dealer in connection with resales of Exchange Notes received in
exchange for Existing Notes where such Existing Notes were acquired by such
broker-dealer for its own account as a result of market-making activities or
other trading activities. For a period of 180 days after the Expiration Date,
Viatel will use its best efforts to keep the Registration Statement continuously
effective and to amend and supplement the Prospectus contained therein in order
to permit such Prospectus to be lawfully delivered by any broker-dealer for use
in connection with any such resale. However, if any holder is acquiring Exchange
Notes in the Exchange Offers for the purpose of distributing or participating in
a distribution of the Exchange Notes, such holder cannot rely on the position of
the staff of the Commission enunciated in the no-action letters regarding MORGAN
STANLEY & CO. INCORPORATED (available June 5, 1991) and EXXON CAPITAL HOLDINGS
CORPORATION (available May 13, 1988), or interpreted in the Commission's
interpretative letter to SHEARMAN & STERLING (available July 2, 1993), or
similar no-action or interpretive letters, will not be entitled to validly
tender Existing Notes in the Exchange Offers, and must comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with any sale or transfer of such Existing Notes, unless such sale or
transfer is made pursuant to an exemption from, or in a transaction not subject
to, such requirements.
Viatel will not receive any proceeds from the exchange of Existing Notes for
Exchange Notes or from the sale of Exchange Notes by any broker-dealer or any
other person. Exchange Notes received by broker-dealers for their own account
pursuant to the Exchange Offers 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, and at market prices prevailing at the time of resale, or at the prices
related to such prevailing market prices or 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 or dealer and/or the purchasers of any Exchange Notes. Any broker or
dealer that resells Exchange Notes that were received by it for its own account
pursuant to the Exchange Offers and any person that participates in the
distribution of such Exchange Notes may be deemed to be an "underwriter" within
the meaning of the Securities Act and any profit from any such resale of
Exchange Notes or any commissions or concessions received by any such person may
be deemed to be underwriting compensation under the Securities Act. The Letters
of Transmittal state 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.
Viatel has agreed to pay all expenses incidental to the Exchange Offers
other than commissions or concessions of any broker-dealer and will indemnify
holders of the Existing Notes (including any broker-dealers) against certain
liabilities, including liabilities under the Securities Act.
By acceptance of these Exchange Offers, each broker-dealer that receives
Exchange Notes pursuant to the Exchange Offers agrees that, upon receipt of
notice from Viatel of the happening of any event which makes any statement in
this Prospectus untrue in any material respect or which requires the making of
any changes in this Prospectus in order to make the statements therein not
misleading (which notice Viatel agrees to delivery promptly to such
broker-dealers), such broker-dealer will suspend use of this Prospectus until
Viatel has amended or supplemented this Prospectus to correct such misstatement
or omission and has furnished copies of the amended or supplemented Prospectus
to such broker-dealer or until such broker-dealer is advised in writing by
Viatel that the use of the Prospectus may be resumed, and such
155
<PAGE>
broker-dealer has received copies of any additional or supplemental filings that
are incorporated by reference in the Prospectus.
The Exchange Notes are new securities for which there currently is no
market. It is not intended that the Exchange Notes will be listed on any
national or foreign securities exchange and will not be authorized for trading
on Nasdaq. There can be no assurance that an active market for the Exchange
Notes will develop or as to the liquidity of any such market.
LEGAL MATTERS
The validity of the Exchange Notes will be passed upon for the Company by
Kelley Drye & Warren LLP, New York, New York, counsel to the Company.
EXPERTS
The consolidated financial statements and schedule of Viatel, Inc. and
subsidiaries as of December 31, 1996 and 1997 and for each of the years in the
three year period ended December 31, 1997 appearing herein and elsewhere in the
Registration Statement have been included herein and in the registration
statement in reliance upon the report of KPMG Peat Marwick LLP, independent
certified public accountants, upon the authority of such firm as experts in
accounting and auditing.
156
<PAGE>
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
VIATEL, INC. AND SUBSIDIARIES
Independent Auditors' Report............................................................................... F-2
Consolidated Balance Sheets as of December 31, 1996 and 1997............................................... F-3
Consolidated Statements of Operations for the Years Ended
December 31, 1995, 1996 and 1997......................................................................... F-4
Consolidated Statements of Stockholders' Equity (Deficiency) for the
Years ended December 31, 1995, 1996 and 1997............................................................. F-5
Consolidated Statements of Cash Flows for the Years ended
December 31, 1995, 1996 and 1997......................................................................... F-6
Notes to Consolidated Financial Statements for the Years
Ended December 31, 1995, 1996 and 1997................................................................... F-7
Condensed Consolidated Balance Sheet as of March 31, 1998 (Unaudited)...................................... F-20
Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 1997 and 1998
(Unaudited).............................................................................................. F-21
Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 1997 and 1998
(Unaudited).............................................................................................. F-22
Notes to Condensed Consolidated Financial Statements for the Three Months Ended March 31, 1997 and 1998
(Unaudited).............................................................................................. F-23
</TABLE>
F-1
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Stockholders
Viatel, Inc:
We have audited the consolidated balance sheets of Viatel, Inc. and
subsidiaries as of December 31, 1996 and 1997, and the related consolidated
statements of operations, stockholders' equity (deficiency), and cash flows for
each of the years in the three-year period ended December 31, 1997. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.
We conducted our audits in accordance with 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 financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
Viatel, Inc. and subsidiaries as of December 31, 1996 and 1997, and the results
of their operations and their cash flows for each of the years in the three-year
period ended December 31, 1997, in conformity with generally accepted accounting
principles.
KPMG PEAT MARWICK LLP
New York, New York
March 4, 1998, except as to note 13(c),
which is as of March 18, 1998
F-2
<PAGE>
VIATEL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1996 AND 1997
<TABLE>
<CAPTION>
1996 1997
-------------- --------------
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents...................................................... $ 75,796,102 $ 21,095,635
Marketable securities, current................................................. 8,181,332 3,499,691
Trade accounts receivable, net of allowance for doubtful accounts of $602,000
and $1,041,000, respectively................................................. 8,542,305 10,980,737
Other receivables.............................................................. 4,402,944 6,505,875
Prepaid expenses............................................................... 789,307 1,347,814
-------------- --------------
Total current assets......................................................... 97,711,990 43,429,752
-------------- --------------
Marketable securities, non-current............................................... 9,004,075 22,546,591
Property and equipment, net...................................................... 21,074,417 54,093,748
Deferred financing and registration fees, net of accumulated amortization of
$742,000 and $1,121,000, respectively.......................................... 3,046,897 2,668,541
Intangible assets, net........................................................... 1,973,910 1,670,251
Other assets..................................................................... 1,853,161 2,400,315
-------------- --------------
$ 134,664,450 $ 126,809,198
-------------- --------------
-------------- --------------
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)
Current Liabilities:
Accrued telecommunications costs............................................... $ 11,915,671 $ 16,899,194
Accounts payable and other accrued expenses.................................... 5,916,223 15,232,939
Current installments of notes payable.......................................... -- 3,099,454
Current installments of obligations under capital leases....................... 96,064 273,469
Commissions payable............................................................ 349,646 258,533
-------------- --------------
Total current liabilities.................................................... 18,277,604 35,763,589
-------------- --------------
Long term liabilities:
Senior discount notes, less discount of $42,945,967 and $30,845,388,
respectively................................................................. 77,754,033 89,854,612
Notes payable, excluding current installments.................................. -- 7,684,963
Obligations under capital leases, excluding current installments............... 149,983 569,719
Equipment purchase obligation.................................................. -- 1,500,000
-------------- --------------
Total long term liabilities.................................................. 77,904,016 99,609,294
-------------- --------------
Commitments and contingencies
Stockholders' equity (deficiency):
Preferred Stock, $.01 par value. Authorized 1,000,000 shares, no shares issued
and outstanding.............................................................. -- --
Common Stock, $.01 par value. Authorized 50,000,000 shares, issued and
outstanding 22,513,226 and 22,635,267 shares, respectively................... 225,132 226,353
Additional paid-in capital..................................................... 125,236,410 125,661,323
Unearned compensation.......................................................... (130,080) (65,040)
Cumulative translation adjustment.............................................. (862,458) (5,356,474)
Accumulated deficit............................................................ (85,986,174) (129,029,847)
-------------- --------------
Total stockholders' equity (deficiency)...................................... 38,482,830 (8,563,685)
-------------- --------------
$ 134,664,450 $ 126,809,198
-------------- --------------
-------------- --------------
</TABLE>
See accompanying notes to consolidated financial statements.
F-3
<PAGE>
VIATEL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1995, 1996 AND 1997
<TABLE>
<CAPTION>
1995 1996 1997
-------------- -------------- --------------
<S> <C> <C> <C>
Telecommunications revenue....................................... $ 32,313,293 $ 50,418,694 $ 73,018,004
-------------- -------------- --------------
Operating expenses:
Costs of telecommunications services........................... 27,648,340 42,130,308 63,504,031
Selling, general and administrative expenses................... 24,327,537 32,856,785 36,075,778
Depreciation and amortization.................................. 2,636,787 4,801,624 7,717,236
Equipment impairment loss...................................... 560,419 -- --
-------------- -------------- --------------
Total operating expenses..................................... 55,173,083 79,788,717 107,297,045
Other income (expenses):
Interest income................................................ 3,281,926 1,852,323 3,685,711
Interest expense............................................... (8,856,317) (10,848,025) (12,450,343)
Share in loss of affiliate..................................... (41,530) (9,625) --
-------------- -------------- --------------
Net loss..................................................... $ (28,475,711) $ (38,375,350) $ (43,043,673)
-------------- -------------- --------------
-------------- -------------- --------------
Net loss per common share, basic............................. $ (2.09) $ (2.47) $ (1.90)
-------------- -------------- --------------
-------------- -------------- --------------
Net loss per common share, diluted........................... $ (2.09) $ (2.47) $ (1.90)
-------------- -------------- --------------
-------------- -------------- --------------
Weighted average common shares outstanding................... 13,640,980 15,514,479 22,620,178
-------------- -------------- --------------
-------------- -------------- --------------
</TABLE>
See accompanying notes to the consolidated financial statements.
F-4
<PAGE>
VIATEL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIENCY)
YEARS ENDED DECEMBER 31, 1995, 1996 AND 1997
<TABLE>
<CAPTION>
NUMBER OF
NUMBER OF CLASS A
COMMON COMMON CLASS A ADDITIONAL CUMULATIVE
STOCK STOCK COMMON COMMON PAID-IN UNEARNED TRANSLATION ACCUMULATED
SHARES SHARES STOCK STOCK CAPITAL COMPENSATION ADJUSTMENT DEFICIT
----------- ----------- --------- --------- ------------- ------------- ------------ --------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at January 1,
1995............... 10,716,135 2,904,846 $ 107,161 $ 29,048 $ 29,982,211 $ -- $ 1,523 $ (19,135,113)
Issuance of
restricted common
stock.............. 20,000 -- 200 -- 116,800 (78,000) -- --
Foreign currency
translation
adjustment -- -- -- -- -- -- (166,199) --
Net loss........... -- -- -- -- -- -- -- (28,475,711)
----------- ----------- --------- --------- ------------- ------------- ------------ --------------
Balance at December
31, 1995........... 10,736,135 2,904,846 107,361 29,048 30,099,011 (78,000) (164,676) (47,610,824)
Issuance of
restricted common
stock.............. 66,666 -- 667 -- 389,333 (52,080) -- --
Issuance of common
stock, net of
$9,541,954 issue
costs.............. 8,667,000 -- 86,670 -- 94,375,376 -- -- --
Conversion of Class A
common stock to
common stock....... 2,904,846 (2,904,846) 29,048 (29,048) -- -- -- --
Stock options
exercised.......... 138,579 -- 1,386 -- 372,690 -- -- --
Foreign currency
translation
adjustment......... -- -- -- -- -- -- (697,782) --
Net loss............. -- -- -- -- -- -- -- (38,375,350)
----------- ----------- --------- --------- ------------- ------------- ------------ --------------
Balance at December
31, 1996........... 22,513,226 -- 225,132 -- 125,236,410 (130,080) (862,458) (85,986,174)
Stock options
exercised.......... 122,041 -- 1,221 -- 424,913 -- -- --
Earned
compensation....... -- -- -- -- -- 65,040 -- --
Foreign currency
translation
adjustment......... -- -- -- -- -- -- (4,494,016) --
Net loss............. -- -- -- -- -- -- -- (43,043,673)
----------- ----------- --------- --------- ------------- ------------- ------------ --------------
Balance at December
31, 1997........... 22,635,267 -- $ 226,353 $ -- $ 125,661,323 $ (65,040) $ (5,356,474) $ (129,029,847)
----------- ----------- --------- --------- ------------- ------------- ------------ --------------
----------- ----------- --------- --------- ------------- ------------- ------------ --------------
<CAPTION>
TOTAL
-------------
<S> <C>
Balance at January 1,
1995............... $ 10,984,830
Issuance of
restricted common
stock.............. 39,000
Foreign currency
translation
adjustment (166,199)
Net loss........... (28,475,711)
-------------
Balance at December
31, 1995........... (17,618,080)
Issuance of
restricted common
stock.............. 337,920
Issuance of common
stock, net of
$9,541,954 issue
costs.............. 94,462,046
Conversion of Class A
common stock to
common stock....... --
Stock options
exercised.......... 374,076
Foreign currency
translation
adjustment......... (697,782)
Net loss............. (38,375,350)
-------------
Balance at December
31, 1996........... 38,482,830
Stock options
exercised.......... 426,134
Earned
compensation....... 65,040
Foreign currency
translation
adjustment......... (4,494,016)
Net loss............. (43,043,673)
-------------
Balance at December
31, 1997........... $ (8,563,685)
-------------
-------------
</TABLE>
See accompanying notes to consolidated financial statements.
F-5
<PAGE>
VIATEL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1995, 1996 AND 1997
<TABLE>
<CAPTION>
1995 1996 1997
--------------- --------------- ---------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss........................................................ $ (28,475,711) $ (38,375,350) $ (43,043,673)
Adjustments to reconcile net loss to net cash used in operating
activities:
Depreciation and amortization................................. 2,636,787 4,801,624 7,717,236
Interest expense on senior discount notes..................... 8,773,438 10,783,468 12,478,935
Accrued interest income on marketable securities.............. (714,468) (369,761) (2,002,089)
Provision for losses on accounts receivable................... 1,229,473 2,224,953 2,733,220
Share in loss of affiliate.................................... 41,530 9,625 --
Earned compensation........................................... 39,000 337,920 65,040
Deferred financing and registration costs..................... (460,032) -- --
Equipment impairment loss..................................... 560,419 -- --
Changes in assets and liabilities:
Increase in accounts receivable............................... (2,127,611) (6,057,936) (6,220,589)
Increase in prepaid expenses and other receivables............ (2,593,863) (1,013,989) (1,479,665)
Increase in other assets and intangible assets................ (991,345) (315,056) (1,021,891)
Increase in accrued telecommunications costs, accounts
payable, accrued expenses and commissions payable........... 3,592,930 1,643,858 8,248,754
--------------- --------------- ---------------
Net cash used in operating activities....................... (18,489,453) (26,330,644) (22,524,722)
--------------- --------------- ---------------
Cash flows from investing activities:
Purchase of property, equipment and software.................. (11,377,850) (9,423,191) (34,190,052)
Purchase of marketable securities............................. (55,495,423) (30,571,006) (49,097,155)
Proceeds from maturity of marketable securities............... 30,078,399 38,807,045 40,123,514
Investment in affiliate....................................... (262,214) (101,904) --
Issuance of notes receivable.................................. -- (303,227) --
--------------- --------------- ---------------
Net cash used in investing activities......................... (37,057,088) (1,592,283) (43,163,693)
--------------- --------------- ---------------
Cash flows from financing activities:
Borrowings on notes payable................................... -- -- 11,120,672
Proceeds from issuance of Common Stock........................ -- 94,836,122 426,134
Payments under capital leases................................. (1,306,453) (63,885) (524,859)
Repayment of notes payable.................................... (999,463) -- (336,255)
Borrowings under bank credit line............................. -- -- 600,000
--------------- --------------- ---------------
Net cash (used in) provided by financing activities........... (2,305,916) 94,772,237 11,285,692
--------------- --------------- ---------------
Effects of exchange rate changes on cash.......................... 25,757 11,878 (297,744)
--------------- --------------- ---------------
Net (decrease) increase in cash and cash equivalents.............. (57,826,700) 66,861,188 (54,700,467)
Cash and cash equivalents at beginning of year.................... 66,761,614 8,934,914 75,796,102
--------------- --------------- ---------------
Cash and cash equivalents at end of year.......................... $ 8,934,914 $ 75,796,102 $ 21,095,635
--------------- --------------- ---------------
--------------- --------------- ---------------
Supplemental disclosures of cash flow information:
Interest paid................................................... $ 58,040 $ 64,557 $ 134,409
--------------- --------------- ---------------
--------------- --------------- ---------------
Equipment acquired under capital lease obligations.............. $ -- $ 309,933 $ 1,122,000
--------------- --------------- ---------------
--------------- --------------- ---------------
</TABLE>
See accompanying notes to consolidated financial statements.
F-6
<PAGE>
VIATEL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1996 AND 1997
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(A) DESCRIPTION OF BUSINESS
Viatel, Inc. (the "Company") is an international telecommunications company
providing international and domestic long distance telecommunications services,
primarily to small and medium-sized business carriers and resellers.
(B) PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of the Company
and its wholly owned subsidiaries. All significant inter-company balances and
transactions have been eliminated in consolidation. Investments in affiliates in
which the Company has significant influence but does not exercise control are
accounted for under the equity method.
(C) CASH AND CASH EQUIVALENTS
The Company's policy is to maintain its uninvested cash at minimum levels.
Cash equivalents, which include highly liquid debt instruments purchased with a
maturity of three months or less, were $71,765,458 and $8,204,924 at December
31, 1996 and 1997, respectively.
(D) REVENUE
The Company records telecommunications revenue as earned, at the time
services are provided.
(E) PROPERTY AND EQUIPMENT
Property and equipment consist principally of telecommunications related
equipment such as switches, fiber optic cable systems, remote nodes and related
computer software and is stated at cost. Equipment acquired under capital leases
is stated at the present value of the future minimum lease payments. Maintenance
and repairs are expensed as incurred.
Depreciation is provided using the straight-line method over the estimated
useful lives of the related assets. Leasehold improvements are amortized over
the life of the lease or useful life of the improvement, whichever is shorter.
The estimated useful lives are as follows:
<TABLE>
<S> <C>
5 to 7
Communications systems......................................... years
Fiber optic cable systems...................................... 15 years
2 to 5
Leasehold improvements......................................... years
Furniture, equipment and other................................. 5 years
</TABLE>
(F) INTANGIBLE ASSETS
Goodwill, which represents the excess of purchase price over fair value of
net assets acquired, is amortized on a straight-line basis over the expected
periods to be benefitted, seven years.
Acquired employee base and sales force in place represents the intangible
assets associated with the acquisition of independent sales organizations and is
being amortized over three years.
F-7
<PAGE>
VIATEL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995, 1996 AND 1997
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Deferred financing and registration fees represent costs incurred to issue
and register debt and are being amortized over the term of the related debt.
The costs of all other intangible assets are being amortized over their
useful lives, ranging from three to seven years.
(G) INCOME TAXES
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases and operating loss and tax credit carryforwards. Deferred tax assets and
liabilities are measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are expected to be
recovered or settled. The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in income or expense in the period it occurs.
(H) FOREIGN CURRENCY TRANSLATION
Foreign currency assets and liabilities are translated using the exchange
rates in effect at the balance sheet date. Results of operations are translated
using the average exchange rates prevailing throughout the year. The effects of
exchange rate fluctuations on translating foreign currency assets and
liabilities into U.S. dollars are accumulated as part of the foreign currency
translation adjustment in stockholders' equity. Gains and losses from foreign
currency transactions are included in selling, general and administrative
expenses in the period in which they occur. For the years ending December 31,
1995, 1996 and 1997, the Company experienced $107,846 in foreign exchange
transaction gains and $10,637 and $858 in foreign exchange transaction losses,
respectively.
(I) NET LOSS PER SHARE
The Company adopted the provisions of Statement of Financial Accounting
Standards No. 128, "Earnings Per Share" ("SFAS 128"), for year-end 1997. SFAS
128, which supersedes APB Opinion No. 15, "Earnings Per Share" was issued in
February 1997. SFAS 128 requires dual presentation of basic and diluted earnings
per share ("EPS") for complex capital structures on the face of the statement of
operations. Basic EPS is computed by dividing income or loss by the weighted
average number of common shares outstanding for the period. Diluted EPS reflects
the potential dilution from the exercise or conversion of securities into common
stock. Per share amounts for 1996 and 1995 have been retroactively restated to
give effect to SFAS 128 and were not different from EPS measured under APB No.
15.
Net loss and weighted average shares outstanding used for computing diluted
loss per common share were the same as that used for computing basic loss per
common share for each of the years ended December 31, 1995, 1996 and 1997.
The Company had potentially dilutive common stock equivalents of 474,137,
969,836 and 1,052,200 for the years ended December 31, 1995, 1996 and 1997,
respectively, which were not included in the computation of diluted net loss per
common share because they were antidilutive for the periods presented.
F-8
<PAGE>
VIATEL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995, 1996 AND 1997
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(J) CONCENTRATION OF CREDIT RISK
Financial instruments that potentially subject the Company to concentration
of credit risk consist primarily of temporary cash investments and trade
receivables. The Company restricts investment of temporary cash investments to
financial institutions with high credit standing. The Company does not believe
there is any concentration of credit risk on trade receivables as a result of
the large and diverse nature of the Company's worldwide customer base.
(K) RECLASSIFICATIONS
Certain reclassifications have been made to the prior year's financial
statements to conform to the current year's presentation.
(L) USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses during the reporting
period. Actual results could differ from those estimates.
(M) ADDITIONAL ACCOUNTING POLICIES
Additional accounting policies are incorporated into the notes herein.
(N) STOCK OPTION PLAN
Prior to January 1, 1996, the Company accounted for its stock option plan in
accordance with the provisions of Accounting Principles Board ("APB") Opinion
No. 25, "Accounting for Stock Issued to Employees," and related interpretations.
As such, compensation expense was recorded on the date of grant only if the
current market price of the underlying stock exceeded the exercise price. On
January 1, 1996, the Company adopted SFAS No. 123, "Accounting for Stock-Based
Compensation," which permits entities to recognize as expense over the vesting
period the fair value of all stock-based awards on the date of grant.
Alternatively, SFAS No. 123 also allows entities to continue to apply the
provisions of APB Opinion No. 25 and provide pro forma net income and pro forma
earnings per share disclosures for employee stock option grants made in 1995 and
future years as if the fair-value-based method, as defined in SFAS No. 123, had
been applied. The Company has elected to continue to apply the provisions of APB
Opinion No. 25 and provide the pro forma disclosure required by SFAS No. 123.
See Note 11.
(O) IMPAIRMENT OF LONG-LIVED ASSETS AND LONG-LIVED ASSETS TO BE DISPOSED OF
The Company adopted the provisions of SFAS No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of" on
January 1, 1996. SFAS 121 requires that long-lived assets and certain
identifiable intangibles be reviewed for impairment whenever events or changes
in circumstances indicate that the carrying amount of an asset may not be
recoverable. Recoverability of assets to be held and used is measured by a
comparison of the carrying amount of an asset to
F-9
<PAGE>
VIATEL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995, 1996 AND 1997
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
future net cash flows expected to be generated by the asset. If such assets are
considered to be impaired, the impairment to be recognized is measured by the
amount by which the carrying amount of the assets exceed the fair value of the
assets. Assets to be disposed of are reported at the lower of the carrying
amount or fair value less costs to sell. Adoption of SFAS 121 did not have a
material impact on the Company's financial position, results of operations, or
liquidity.
(2) INVESTMENTS IN DEBT SECURITIES
Management determines the appropriate classification of its investments in
debt securities at the time of purchase and classifies them as held to maturity
or available for sale. These investments are diversified among high credit
quality securities in accordance with the Company's investment policy. Debt
securities that the Company has both the intent and ability to hold to maturity
are carried at amortized cost. Debt securities for which the Company does not
have the intent or ability to hold to maturity are classified as available for
sale. Securities available for sale are carried at fair value, with the
unrealized gains and losses, net of tax, reported in a separate component of
stockholders' equity. The Company does not invest in securities for the purpose
of trading and as such does not classify any securities as trading.
The amortized cost of debt securities classified as held to maturity are
adjusted for amortization of premiums and accretion of discounts to maturity
over the estimated life of the security. Such amortization and interest are
included in interest income. There were no securities classified as held to
maturity as of December 31, 1996 or 1997.
The following is a summary of the fair value of securities available for
sale at December 31, 1996 and 1997:
<TABLE>
<CAPTION>
1996 1997
------------- -------------
<S> <C> <C>
Corporate debt securities...................................... $ 9,131,726 $ 13,481,881
U.S. Treasury obligations...................................... 6,932,280 2,027,510
Federal agencies obligations................................... 1,121,401 10,536,891
------------- -------------
Total...................................................... $ 17,185,407 $ 26,046,282
------------- -------------
------------- -------------
</TABLE>
Unrealized gains or losses on securities classified as available for sale
are not material at December 31, 1996 and 1997.
Securities available for sale at December 31, 1997 by contractual maturity
are shown below:
<TABLE>
<S> <C>
Due within one year............................................ $3,499,691
Due after one year through two years........................... 1,027,799
Due after two years............................................ 21,518,792
----------
Total.......................................................... $26,046,282
----------
----------
</TABLE>
Actual maturities will differ from contractual maturities because borrowers
may have the right to call or prepay obligations with or without call or
prepayment penalties.
F-10
<PAGE>
VIATEL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995, 1996 AND 1997
(3) PROPERTY AND EQUIPMENT
Property and equipment consists of the following as of December 31:
<TABLE>
<CAPTION>
1996 1997
------------- -------------
<S> <C> <C>
Communications system.............................................................. $ 20,514,213 $ 43,321,912
Fiber optic cable systems.......................................................... 309,933 1,431,933
Leasehold improvements............................................................. 2,122,911 3,254,515
Furniture, equipment and other..................................................... 4,750,137 8,923,806
Construction in progress........................................................... 100,962 10,093,614
------------- -------------
27,798,156 67,025,780
Less accumulated depreciation and amortization..................................... 6,723,739 12,932,032
------------- -------------
$ 21,074,417 $ 54,093,748
------------- -------------
------------- -------------
</TABLE>
At December 31, 1996 and 1997, construction in progress represents a portion
of the current expansion of the European Network. For the years ended December
31, 1995, 1996 and 1997, $508,600, $66,500 and $163,000, respectively, of
interest was capitalized with respect to this project.
(4) INTANGIBLE ASSETS
Intangible assets consist of the following as of December 31:
<TABLE>
<CAPTION>
1996 1997
------------- -------------
<S> <C> <C>
Acquired employee base and sales force in place.................................... $ 1,607,225 $ 1,607,225
Goodwill........................................................................... 474,065 474,065
Purchased software................................................................. 1,157,467 1,493,546
Other.............................................................................. 374,539 849,276
------------- -------------
3,613,296 4,424,112
Less accumulated amortization...................................................... 1,639,386 2,753,861
------------- -------------
$ 1,973,910 $ 1,670,251
------------- -------------
------------- -------------
</TABLE>
(5) ACCOUNTS PAYABLE AND ACCRUED EXPENSES
Accounts payable and accrued expenses consists of the following as of
December 31:
<TABLE>
<CAPTION>
1996 1997
------------ -------------
<S> <C> <C>
Accounts payable..................................................................... $ 870,875 $ 5,972,722
Accrued expenses..................................................................... 3,792,657 3,252,750
Accrued capital expenditures......................................................... -- 4,738,902
Accrued compensation and benefits.................................................... 1,252,691 1,268,565
------------ -------------
$ 5,916,223 $ 15,232,939
------------ -------------
------------ -------------
</TABLE>
F-11
<PAGE>
VIATEL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995, 1996 AND 1997
(6) LINE OF CREDIT AND LETTERS OF CREDIT
The Company has a revolving line of credit agreement which provides for
secured borrowings of up to $2.3 million. Borrowings under this line of credit
agreement can be made under either of the following interest rate formulas: (i)
the lending institution's prime rate or (ii) the LIBOR rate plus two hundred
basis points. The Company had $0.6 million and no borrowings under the line of
credit agreement at December 31, 1997 and 1996, respectively. The terms of the
line of credit agreement include, among other provisions, requirements for
maintaining defined levels of securities and other liquid collateral. At
December 31, 1997, standby letters of credit of approximately $1.6 million have
been issued under this line of credit agreement.
The weighted-average interest rate on short-term borrowings under this line
of credit agreement at December 31, 1997 was 8.0%.
(7) LONG TERM LIABILITIES
(A) SENIOR DISCOUNT NOTES
On December 21, 1994, the Company issued $120,700,000, representing the
aggregate principal amount of 15% senior unsecured discount notes due January
15, 2005 (the "1994 Notes") for approximately $58,000,000. The notes will fully
accrete on a semiannual compounding basis to face value on January 15, 2000 with
semiannual interest payments commencing July 15, 2000 until maturity.
The notes are redeemable at the Company's option, in whole or in part, at
any time on or after January 15, 2000 until maturity at redemption prices that
range from 110% to 100% of the notes' face value plus accrued interest. Upon a
change of control, the Company is required to make an offer to purchase the
notes at a purchase price equal to 101% of their accreted value, plus accrued
interest, if any. The notes contain certain covenants that, among other things,
limit the ability of the Company and certain of its subsidiaries to incur
indebtedness, make pre-payments of certain indebtedness and pay dividends.
On December 31, 1997, the Company estimated the fair value of these notes to
be $98,371,000. The estimate is based on quoted market prices for the notes.
On March 3, 1998, the Company commenced a tender offer to purchase all of
the outstanding 1994 Notes and a consent solicitation to eliminate most of the
covenants in the indenture relating to the 1994 Notes. The total consideration
to be paid for the 1994 Notes will be determined by reference to a fixed spread
of 100 basis points over the yield to maturity of the United States Treasury
6.375% Notes Due January 15, 2000. Assuming the extinguishment of the 1994 Notes
is completed on March 31, 1998, the Company expects to record an extraordinary
loss of approximately $28.3 million related to the early extinguishment of debt
comprised of the following: (i) a premium of approximately $24.7 million, (ii)
approximately $2.6 million in unamortized deferred financing and registration
fees, and (iii) approximately $1.0 million of other associated costs. The tender
offer is subject to completion of the offering of Units, consisting of Senior
Notes Due 2008 and shares of convertible redeemable preferred stock of the
Company. See Note 15.
(B) EQUIPMENT FINANCING
In November and December 1997, the Company entered into Loan and Security
Agreements with Charter Financial, Inc. ("Charter") pursuant to which the
Company borrowed an aggregate of $11.1 million. Repayment of these loans
commenced on either December 1997 or January 1998, respectively, and
F-12
<PAGE>
VIATEL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995, 1996 AND 1997
(7) LONG TERM LIABILITIES (CONTINUED)
are repayable in thirty-two or thirty-six successive monthly installments. Under
the terms of these arrangements, the Company is required to satisfy certain
EBITDA, unrestricted cash and tangible net worth requirements. Obligations under
these Loan and Security Agreements are secured by the grant to Charter of a
security interest in certain designated telecommunications equipment. A portion
of the payment obligations under these borrowing arrangements are also secured
by letters of credit issued by The Chase Manhattan Bank.
(C) EQUIPMENT PURCHASE OBLIGATION
Equipment purchase obligation represents the long term portion of accrued
capital expenditures which will be financed in 1998. In connection with the
financing of such equipment, which was delivered to the Company in the fourth
quarter of 1997, the Company has entered into an agreement with Charter which is
expected to contain substantially similar terms and provisions as previous
equipment financings. The Company expects such financing to be completed in the
second quarter of 1998.
(8) STOCKHOLDERS' EQUITY
On October 23, 1996, the Company completed an initial public offering
("IPO") of its Common Stock, through which it sold 8,667,000 shares of Common
Stock at $12 a share and raised approximately $104 million of gross proceeds
($94.5 million of net proceeds).
In connection with the IPO, all shares of then Class A Common Stock were
converted into shares of Common Stock at a ratio of one-to-one and all then
outstanding shares of Common Stock were subject to a reverse stock split at a
ratio of 3-to-2. In addition, the Company's stockholders approved an amendment
to the Company's Certificate of Incorporation which (i) authorized the Board of
Directors to issue up to 1 million shares of Preferred Stock, $.01 par value per
share, of which no shares were issued and outstanding at December 31, 1996, in
one or more series and to fix the powers, voting rights, designations and
preferences of each series and (ii) eliminated the Class A Common Stock.
All earnings per share and share data presented herein have been restated
retroactively to reflect the conversion of the Class A Common Stock into Common
Stock and the reverse stock split of all then outstanding shares of Common
Stock.
(9) INCOME TAXES
The statutory Federal tax rates for the years ended December 31, 1995, 1996
and 1997 were 35%. The effective tax rates were zero for the years ended
December 31, 1995, 1996 and 1997 due to the Company incurring net operating
losses for which no tax benefit was recorded.
For Federal and foreign income tax purposes, the Company has unused net
operating loss carryforwards of approximately $93.9 million expiring in 2007
through 2012. The availability of the net operating loss carryforwards to offset
income in future years is restricted as a result of the Company's issuance of
its Common Stock and as a result of future sales of Company stock and other
events.
F-13
<PAGE>
VIATEL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995, 1996 AND 1997
(9) INCOME TAXES (CONTINUED)
The tax effect of temporary differences that give rise to significant
portions of the deferred tax assets are as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------------
<S> <C> <C>
1996 1997
-------------- --------------
Accounts receivable principally due to
allowance for doubtful accounts............................. $ 352,000 $ 587,000
OID Interest not deductible in current period................. 6,914,000 11,149,000
Federal net operating loss carryforwards...................... 21,432,000 29,093,000
Foreign net operating loss carryforwards...................... 1,242,000 3,777,000
-------------- --------------
Total gross deferred tax assets......................... 29,940,000 44,606,000
Less valuation allowance...................................... (29,940,000) (44,606,000)
-------------- --------------
Net deferred tax assets................................. $ -- $ --
-------------- --------------
-------------- --------------
</TABLE>
In assessing the realizability of deferred tax assets, management considers
whether it is more likely than not that some portion or all of the deferred tax
assets will not be realized. The ultimate realization of deferred tax assets is
dependent upon the generation of future taxable income during the periods in
which those temporary differences become deductible. Management considers the
scheduled reversal of deferred tax liabilities, projected future taxable income,
and tax planning in making these assessments. During 1996 and 1997, the
valuation allowance increased by $13,610,000 and $14,666,000, respectively.
(10) SEGMENT DATA
The information below summarizes export sales by geographic area.
<TABLE>
<CAPTION>
1995 1996 1997
------------- ------------- -------------
<S> <C> <C> <C>
Latin America....................................................... $ 12,093,771 $ 14,401,901 $ 16,240,483
Asia/Pacific Rim.................................................... 4,375,412 6,159,507 8,198,705
Middle East......................................................... 554,139 77,832 1,403
Africa.............................................................. 1,207,225 78,833 --
Other............................................................... 369,425 267,446 --
------------- ------------- -------------
$ 18,599,972 $ 20,985,519 $ 24,440,591
------------- ------------- -------------
------------- ------------- -------------
</TABLE>
F-14
<PAGE>
VIATEL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995, 1996 AND 1997
(10) SEGMENT DATA (CONTINUED)
The information below summarizes the results of operations and selected
balance sheet data for the Company's European geographic segment.
<TABLE>
<CAPTION>
1995 1996 1997
------------- ------------- -------------
<S> <C> <C> <C>
Revenue............................................................. $ 11,601,000 $ 19,917,000 $ 32,647,000
Operating loss...................................................... 11,076,000 14,753,000 17,092,000
Capital expenditures................................................ 9,959,000 6,475,000 25,544,000
Depreciation expense................................................ 243,000 2,258,000 4,019,000
<CAPTION>
DECEMBER 31,
-------------------------------------------
1995 1996 1997
------------- ------------- -------------
<S> <C> <C> <C>
Identifiable assets................................................. $ 10,216,000 $ 15,103,000 $ 55,949,000
</TABLE>
(11) STOCK OPTION PLAN
During 1993, the Board of Directors approved the 1993 Flexible Stock
Incentive Plan (the "Stock Incentive Plan") under which "non-qualified" stock
options ("NQSOs") to acquire shares of Common Stock may be granted to employees,
directors and consultants of the Company and "incentive" stock options ("ISOs")
to acquire shares of Common Stock may be granted to employees, including non-
employee directors. The Stock Incentive Plan also provides for the grant of
stock appreciation rights ("SARs") and shares of restricted stock to the
Company's employees, directors and consultants.
The Stock Incentive Plan provides for the issuance of up to a maximum of
2,333,333 shares of Common Stock and is currently administered by the
Compensation Committee of the Board of Directors. Under the Stock Incentive
Plan, the option price of any ISO may not be less than the fair market value of
a share of Common Stock on the date on which the option is granted. The option
price of an NQSO may be less than the fair market value on the date the NQSO is
granted if the Board of Directors so determines. An ISO may not be granted to a
"ten percent stockholder" (as such term is defined in Section 422A of the
Internal Revenue Code) unless the exercise price is at least 110% of the fair
market value of the Common Stock and the term of the option may not exceed five
years from the date of grant. Common Stock subject to a restricted stock
purchase or bonus agreement is transferable only as provided in such agreement.
The maximum term of each stock option granted to persons other than ten percent
stockholders is ten years from the date of grant.
The per share weighted average fair value of stock options granted during
1996 and 1997 was $2.29 and $5.99, respectively, on the date of grant using the
Black-Scholes option pricing model with the following assumptions: (1) a risk
free interest rate of 5.5% in 1996 and 1997, (2) an expected life of 10 years
for both 1996 and 1997, (3) volatility of approximately 35.9% for 1996 and 52.2%
for 1997 and (4) an annual dividend yield of 0% for both 1996 and 1997.
The Company applies APB Opinion No. 25 in accounting for its Stock Incentive
Plan and, accordingly, no compensation cost has been recognized for its stock
options in the financial statements. Had the Company determined compensation
cost based on the fair value at the grant date for its stock options
F-15
<PAGE>
VIATEL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995, 1996 AND 1997
(11) STOCK OPTION PLAN (CONTINUED)
under SFAS No. 123, the Company's net loss would have been increased to the pro
forma amounts indicated below:
<TABLE>
<CAPTION>
1995 1996 1997
---------- ---------- ----------
<S> <C> <C> <C>
As reported net loss (in 000s)............................ $ (28,476) $ (38,375) $ (43,044)
Pro forma net loss (in 000s).............................. (28,642) (38,986) (44,171)
As reported net loss per share............................ (2.09) (2.47) (1.90)
Pro forma net loss per share.............................. (2.10) (2.51) (1.95)
</TABLE>
Pro forma net loss reflects only options granted during 1995, 1996 and 1997.
Therefore, the full impact of calculating compensation cost for stock options
under SFAS No. 123 is not reflected in the pro forma net loss amounts because
compensation cost is reflected over the options' vesting period of three years
and compensation cost for options granted prior to January 1, 1995 is not
considered.
Stock option activity under the Stock Incentive Plan is shown below:
<TABLE>
<CAPTION>
WEIGHTED
AVERAGE
EXERCISE NUMBER OF
PRICES SHARES
----------- -----------
<S> <C> <C>
Outstanding at January 1, 1995............................................................ $ 3.13 392,654
Granted................................................................................... 5.85 177,654
Forfeited................................................................................. 3.80 (96,171)
----- -----------
Outstanding at December 31, 1995.......................................................... 4.01 474,137
Granted................................................................................... 6.75 822,265
Forfeited................................................................................. 5.77 (187,987)
Exercised................................................................................. 2.70 (138,579)
----- -----------
Outstanding at December 31, 1996.......................................................... 6.18 969,836
Granted................................................................................... 8.61 428,194
Forfeited................................................................................. 6.68 (197,135)
Expired................................................................................... 5.46 (26,654)
Exercised................................................................................. 3.49 (122,041)
----- -----------
Outstanding at December 31, 1997.......................................................... 7.40 1,052,200
----- -----------
----- -----------
</TABLE>
The following table summarizes weighted-average option exercise price
information:
<TABLE>
<CAPTION>
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
--------------------------------------- ------------------------------
<S> <C> <C> <C> <C> <C>
NUMBER WEIGHTED WEIGHTED WEIGHTED
RANGE OF OUTSTANDING AT AVERAGE AVERAGE NUMBER AVERAGE
EXERCISE DECEMBER 31, REMAINING EXERCISE EXERCISABLE AT EXERCISE
PRICES 1997 LIFE PRICE DECEMBER 31, 1997 PRICE
- -------------------------------- -------------- ---------- ----------- ----------------- -----------
$0.75 - $3.50 3,947 6 Years 0.75 3,947 0.75
3.51 - 5.75 62,931 7 Years 3.74 62,931 3.74
5.76 - 8.75 555,179 9 Years 5.93 369,443 5.85
8.76 - 12.00 430,143 10 Years 9.84 132,548 9.68
-------------- --- ------- ---
1,052,200 7.40 568,869 6.47
-------------- --- ------- ---
-------------- --- ------- ---
</TABLE>
F-16
<PAGE>
VIATEL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995, 1996 AND 1997
(11) STOCK OPTION PLAN (CONTINUED)
Prior to the adoption of the Stock Incentive Plan, 5,913 options were
granted. These options were exercised at $0.75 per share during the year ended
December 31, 1996.
The exercise price of all options approximates the fair market value of the
Common Stock on the date of grant.
In addition, prior to the adoption of the Stock Incentive Plan, the Board of
Directors authorized the issuance of up to 233,333 shares of Common Stock as
compensation to employees and consultants of the Company of which 219,639 are
available for issuance at December 31, 1997.
(12) EQUIPMENT IMPAIRMENT LOSS
On August 4, 1995, the Company entered into an agreement (the "Termination
Agreement") with TMI USA (Delaware), Inc. ("TMI") which terminated its existing
agreements. Pursuant to the terms of the Termination Agreement, the Company
prepaid the existing capital lease obligation of $1,025,000, thereby acquiring
all of the equipment previously leased from TMI. The capital lease obligation
was payable over a three year term expiring on December 31, 1996. In addition,
on August 4, 1995, the Company entered into a short-term facilities management
agreement with TMI effective through August 31, 1996, pursuant to which TMI
performed maintenance, equipment housing, site preparation, network extension
and other similar services for the European Network under its present
configuration. Thereafter, the Company managed the European Network using its
own personnel rather than a third party provider.
As a result of the Termination Agreement, the Company has written off the
costs relating to the original installation of such equipment. Accordingly, the
Company has recognized non-cash charges of approximately $560,000 which
represent the original installation costs of such equipment and the difference
between the carrying value and the expected selling price of the equipment not
redeployed.
(13) COMMITMENTS AND CONTINGENCIES
(A) LEASES
At December 31, 1997, the Company was committed under non-cancelable
operating and capital leases for the rental of office space and for fiber optic
cable systems.
The Company's future minimum capital and operating lease payments are as
follows:
<TABLE>
<CAPTION>
CAPITAL OPERATING
------------ ------------
<S> <C> <C>
1998.............................................................. $ 349,098 $ 1,211,500
1999.............................................................. 271,456 1,054,882
2000.............................................................. 201,825 997,279
2001.............................................................. 184,228 639,008
2002.............................................................. -- 464,991
Thereafter........................................................ -- 1,534,057
------------ ------------
1,006,607 $ 5,901,717
------------
------------
Less interest costs............................................... 163,419
------------
$ 843,188
------------
------------
</TABLE>
F-17
<PAGE>
VIATEL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995, 1996 AND 1997
(13) COMMITMENTS AND CONTINGENCIES (CONTINUED)
Total rent expense amounted to $948,826, $1,530,889 and $1,326,433 for the
years ended December 31, 1995, 1996 and 1997, respectively.
(B) CARRIER CONTRACTS
The Company has entered into contracts to purchase transmission capacity
from various domestic and foreign carriers. By committing to purchase minimum
volumes of transmission capacity from carriers, the Company is able to obtain
guaranteed rates which are more favorable than those generally offered in the
marketplace. The minimum volume commitments are approximately $13.8 million for
the year ending December 31, 1998. The Company is involved in disputes with
carriers arising in the ordinary course of business. The Company believes the
outcome of all current disputes will not have a material effect on the Company's
financial position or results of operations.
(C) PURCHASE COMMITMENTS
The Company is continually upgrading and expanding the European Network and
its switching facilities. In connection therewith, the Company has entered into
purchase commitments to expend approximately $11.8 million.
The Company is developing a fiber-optic ring which will connect London,
Paris, Brussels, Antwerp, Rotterdam and Amsterdam (the "Circe Network"). In
connection with the Circe Network, the Company has signed various letters of
intent which currently commit the Company to make certain payments equal to the
lesser of actual cost or $5.3 million. The Company's obligations with respect to
such amounts are subject to further reduction based on an obligation of the
vendor to mitigate damages if the arrangements are terminated by the Company.
The Company does not believe that such arrangements, if terminated by the
Company prior to April 6, 1998, will result in Company expenditures in excess of
$630,000.
(D) LETTERS OF CREDIT
The Company has outstanding irrevocable letters of credit in the amount of
$1.6 million at December 31, 1997. These letters of credit collateralize the
Company's obligations to third parties. The fair value of these letters of
credit approximates contract values based on the nature of the fee arrangements
with the issuing bank.
(E) EMPLOYMENT CONTRACTS
The Company has employment contracts with certain officers at amounts
generally equal to such officers' current levels of compensation. The Company's
remaining commitments at December 31, 1997 for the next three years under such
contracts aggregates approximately $477,000.
(F) LITIGATION
In connection with the Company's transition to direct sales organizations in
Europe, the Company's former independent sales representative in Madrid, Spain
commenced an arbitration proceeding before the American Arbitration Association
in New York claiming a breach of contract by the Company and seeking $5.8
million in damages. In May 1997, the Company settled this matter for an
aggregate cost, including legal fees, of approximately $0.8 million and
exchanged mutual releases. This settlement was charged to selling, general and
administrative expenses during 1997.
F-18
<PAGE>
VIATEL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995, 1996 AND 1997
(14) REGULATORY MATTERS
The Company is subject to regulation in countries in which it does business.
The Company believes that an adverse determination as to the permissibility of
the Company's services under the laws and regulations of any such country would
not have a material adverse long-term effect on its business.
(15) SUBSEQUENT EVENTS
(a) On February 27, 1998, the Company acquired Flat Rate Communications,
Inc. ("Flat Rate"), a long distance telecommunications reseller, for $5.0
million of cash, 375,000 shares of the Company's common stock and a contingent
payment based upon operating results for the twelve month period ending February
28, 1999 which will range from zero to $21.0 million in cash and zero to 1.0
million shares of common stock. The Company will record this acquisition under
the purchase method of accounting. If this acquisition had occurred at January
1, 1997, total telecommunications revenue, net loss and net loss per share would
have been $101,753,000 and $44,769,000, and $1.95, respectively.
(b) To finance the tender offer commenced by the Company on March 3, 1998
and to fund certain proposed capital expenditures and general corporate
purposes, the Company is proposing to raise approximately $889.6 million of the
gross proceeds through an offering of units consisting of senior notes and
shares of convertible redeemable preferred stock and units of senior notes and
subordinated convertible debentures.
F-19
<PAGE>
VIATEL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
(UNAUDITED)
<TABLE>
<CAPTION>
MARCH 31,
1998
--------------
<S> <C>
ASSETS
Current assets:
Cash and cash equivalents....................................................................... $ 26,461,943
Marketable securities, current.................................................................. 1,688,343
Trade accounts receivable, less allowance for doubtful accounts of $1,313,000................... 13,815,690
Other receivables............................................................................... 7,283,260
Prepaid expenses................................................................................ 1,283,854
--------------
Total current assets.......................................................................... 50,533,090
--------------
Marketable securities, non-current................................................................ --
Property and equipment, net of accumulated depreciation of $15,182,000............................ 56,997,123
Deferred financing and registration fees, net of accumulated amortization of $1,217,000........... 2,571,962
Intangible assets, net of accumulated amortization of $3,102,000.................................. 9,995,352
Other assets...................................................................................... 1,796,104
--------------
$ 121,893,631
--------------
--------------
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
Current liabilities:
Accrued telecommunications costs................................................................ $ 19,572,434
Accounts payable and other accrued expenses..................................................... 14,878,000
Current installments of notes payable and obligations under capital leases...................... 3,353,527
--------------
Total current liabilities..................................................................... 37,803,961
--------------
Long-term liabilities:
Senior discount notes, less discount of $27,495,460............................................. 93,204,540
Notes payable and obligations under capital leases, excluding current installments.............. 7,655,835
Equipment purchase obligation................................................................... 1,500,000
--------------
Total long-term liabilities................................................................... 102,360,375
--------------
Commitments and contingencies
Stockholders' deficiency:
Preferred Stock, $.01 par value. Authorized 1,000,000 shares, no shares issued and
outstanding................................................................................... --
Common Stock, $.01 par value. Authorized 50,000,000 shares, issued and outstanding 23,077,023... 230,770
Additional paid-in-capital...................................................................... 129,453,149
Unearned compensation........................................................................... (48,780)
Cumulative translation adjustment............................................................... (5,873,448)
Accumulated deficit............................................................................. (142,032,396)
--------------
Total stockholders' deficiency................................................................ (18,270,705)
--------------
$ 121,893,631
--------------
--------------
</TABLE>
See accompanying notes to consolidated financial statements.
F-20
<PAGE>
VIATEL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED
MARCH 31,
------------------------------
1997 1998
-------------- --------------
<S> <C> <C>
Telecommunications revenue........................................................ $ 14,552,334 $ 21,238,772
-------------- --------------
Operating Expenses:
Cost of telecommunications services............................................. 12,079,084 19,104,652
Selling, general and administrative expenses.................................... 8,723,000 8,954,802
Depreciation and amortization................................................... 1,262,162 2,910,912
-------------- --------------
Total operating expenses...................................................... 22,064,246 30,970,366
-------------- --------------
Other income (expense):
Interest income................................................................. 1,118,818 509,872
Interest expense................................................................ (3,009,266) (3,780,827)
-------------- --------------
Net loss...................................................................... $ (9,402,360) $ (13,002,549)
-------------- --------------
-------------- --------------
Net loss per common share, basic and diluted.................................. $ (0.42) $ (0.57)
-------------- --------------
-------------- --------------
Weighted average common shares outstanding.................................... 22,591,745 22,783,095
-------------- --------------
</TABLE>
See accompanying notes to consolidated financial statements.
F-21
<PAGE>
VIATEL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED
MARCH 31,
------------------------------
1997 1998
-------------- --------------
<S> <C> <C>
Cash flows from operating activities:
Net loss........................................................................ $ (9,402,360) $ (13,002,549)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization................................................. 1,262,162 2,910,912
Interest expense on senior discount notes..................................... 2,992,999 3,446,507
Accrued interest income on marketable securities.............................. (455,212) (354,962)
Provision for losses on accounts receivable................................... 503,993 753,941
Earned compensation........................................................... 16,260 16,260
Changes in assets and liabilities:
Increase in accounts receivable............................................... (510,106) (2,731,794)
Increase in prepaid expenses and other receivables............................ (780,467) (1,248,084)
(Increase) decrease in other assets and intangible assets..................... (290,886) 555,122
Decrease in accrued telecommunication costs, accounts payable and other
accrued expenses............................................................ (3,886,064) (1,116,029)
-------------- --------------
Net cash used in operating activities....................................... (10,549,681) (10,770,676)
-------------- --------------
Cash flows from investing activities:
Purchase of property, equipment and software.................................... (3,721,743) (2,715,742)
Payment for business acquired excluding cash of $364,000........................ -- (5,000,000)
Purchase of marketable securities............................................... (118,541,950) (3,509,922)
Proceeds from maturity of marketable securities................................. 89,360,201 27,680,804
-------------- --------------
Net cash (used in) provided by investing activities......................... (32,903,492) 16,455,140
Cash flows from financing activities:
Proceeds from issuance of Common Stock.......................................... 352,832 421,243
Repayment of notes payable and bank credit line................................. -- (576,803)
Payments under capital leases................................................... (292,475) (53,422)
-------------- --------------
Net cash provided by (used in) financing activities......................... 60,357 (208,982)
-------------- --------------
Effects of exchange rate changes on cash.......................................... (14,246) (109,174)
-------------- --------------
Net (decrease) increase in cash equivalents....................................... (43,407,062) 5,366,308
Cash and cash equivalents at beginning of period.................................. 75,796,102 21,095,635
-------------- --------------
Cash and cash equivalents at end of period........................................ $ 32,389,040 $ 26,461,943
-------------- --------------
-------------- --------------
Supplemental disclosures of cash flow information:
Interest paid................................................................... $ 16,267 $ 334,320
-------------- --------------
-------------- --------------
Equipment acquired under capital lease obligations.............................. $ 1,023,000 $ --
-------------- --------------
-------------- --------------
</TABLE>
See accompanying notes to consolidated financial statements.
F-22
<PAGE>
VIATEL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(INFORMATION AS OF MARCH 31, 1998 AND FOR THE PERIODS
ENDED MARCH 31, 1997 AND 1998 IS UNAUDITED)
(1) INTERIM CONSOLIDATED FINANCIAL STATEMENTS
The consolidated financial statements as of March 31, 1998 and for the three
month periods ended March 31, 1997 and 1998 have been prepared by Viatel, Inc.
and subsidiaries (collectively, the "Company"), without audit, pursuant to the
rules and regulations of the Securities and Exchange Commission. In the opinion
of management, all adjustments (consisting of only normal recurring adjustments)
necessary for a fair presentation of the consolidated financial position,
results of operations and cash flows for each period presented have been made on
a consistent basis. Certain information and footnote disclosures normally
included in consolidated financial statements prepared in accordance with
generally accepted accounting principles have been condensed or omitted pursuant
to such rules and regulations although management believes that the disclosures
herein are adequate to make the information presented not misleading. It is
suggested that these financial statements be read in conjunction with the
Company's annual consolidated financial statements. Operating results for the
three months ended March 31, 1998 may not be indicative of the results that may
be expected for the full year. Certain reclassifications have been made to the
previous year's financial statements to conform to the current year's
presentation.
The Company adopted the provisions of Statement of Financial Accounting
Standards No. 128, "Earnings Per Share" ("SFAS 128"), for year-end 1997. SFAS
128, which supersedes APB Opinion No. 15, "Earnings Per Share" was issued in
February 1997. SFAS 128 requires dual presentation of basic and diluted earnings
per share ("EPS") for complex capital structures on the face of the statement of
operations. Basic EPS is computed by dividing income or loss by the weighted
average number of common shares outstanding for the period. Diluted EPS reflects
the potential dilution from the exercise or conversion of securities into common
stock. Per share amounts for the three months ended March 31, 1997 and 1998 have
been retroactively restated to give effect to SFAS 128 and were not different
from EPS measured under APB No. 15.
Statement of Financial Accounting Standards No. 130 ("SFAS 130"), "Reporting
Comprehensive Income," and Statement of Financial Accounting Standards No. 131
("SFAS 131"), "Disclosures about Segments of an Enterprise and Related
Information," were issued in June 1997. SFAS 130 establishes standards for
reporting and display of comprehensive income and its components in a full set
of general purpose financial statements. This statement requires that all items
that are required to be recognized under accounting standards as components of
comprehensive income, such as foreign currency fluctuations currently reported
in stockholder's equity, be reported in an annual financial statement that is
displayed with the same prominence as other financial statements. SFAS 131
establishes standards for the way public companies report information about
operating segments in annual financial statements and requires that those
companies report selected information about operating segments in interim
financial reports issued to shareholders. It also establishes standards for
related disclosures about products and services, geographic areas and major
customers. The Company has adopted SFAS 130 in the first quarter of 1998 and
will adopt SFAS 131 for its annual reporting in 1998.
(2) INVESTMENTS IN DEBT SECURITIES
Management determines the appropriate classification of its investments in
debt securities at the time of purchase and classifies them as held to maturity
or available for sale. These investments are diversified among high credit
quality securities in accordance with the Company's investment policy. Debt
securities that the Company has both the intent and ability to hold to maturity
are carried at amortized cost. Debt
F-23
<PAGE>
VIATEL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION AS OF MARCH 31, 1998 AND FOR THE PERIODS
ENDED MARCH 31, 1997 AND 1998 IS UNAUDITED)
(2) INVESTMENTS IN DEBT SECURITIES (CONTINUED)
securities for which the Company does not have the intent or ability to hold to
maturity are classified as available for sale. Securities available for sale are
carried at fair value, with the unrealized gains and losses, net of tax,
reported in a separate component of stockholders' equity. The Company does not
invest in securities for the purpose of trading and as such does not classify
any securities as trading.
The amortized cost of debt securities classified as held to maturity are
adjusted for amortization of premiums and accretion of discounts to maturity
over the estimated life of the security. Such amortization and interest are
included in interest income. There were no securities classified as held to
maturity as of March 31, 1998.
As of March 31, 1998, the Company had corporate debt securities available
for sale of $1,688,343 which were, by contractual maturity, due within one year.
Unrealized gains or losses on securities classified as available for sale
are not material at March 31, 1998.
Actual maturities will differ from contractual maturities because borrowers
may have the right to call or prepay obligations with or without call or
prepayment penalties.
There were no changes in the classification of any securities held to
maturity or securities available for sale from the time of purchase to the time
of maturity or sale.
(3)STOCK INCENTIVE PLAN
The Amended Stock Incentive Plan (the "Stock Incentive Plan") provides for
the issuance of up to a maximum of 2,566,666 shares of the Company's common
stock, $.01 par value (the "Common Stock").
Stock option activity for the three months ended March 31, 1998 under the
Stock Incentive Plan is shown below:
<TABLE>
<CAPTION>
WEIGHTED AVERAGE NUMBER OF
EXERCISE PRICES SHARES
----------------- ----------
<S> <C> <C>
Outstanding at January 1, 1998................................. $ 7.40 1,052,200
Granted........................................................ 5.44 1,117,000
Exercised...................................................... 6.31 (66,755)
----- ----------
Outstanding at March 31, 1998.................................. $ 6.39 2,102,455
----- ----------
----- ----------
</TABLE>
As of March 31, 1998, 515,369 options were exercisable under the Stock
Incentive Plan.
F-24
<PAGE>
VIATEL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION AS OF MARCH 31, 1998 AND FOR THE PERIODS
ENDED MARCH 31, 1997 AND 1998 IS UNAUDITED)
(4) COMPREHENSIVE LOSS
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
------------------------------
1997 1998
-------------- --------------
<S> <C> <C>
Net loss...................................................... $ (9,402,360) $ (13,002,549)
Foreign currency translation adjustment....................... (2,165,449) (516,974)
-------------- --------------
Comprehensive loss............................................ $ (11,567,809) $ (13,519,523)
-------------- --------------
-------------- --------------
</TABLE>
(5) REGULATORY MATTERS
The Company is subject to regulation in countries in which it does business.
The Company believes that an adverse determination as to the permissibility of
the Company's services under the laws and regulations of any single country
would not have a material adverse long-term effect on its business.
(6) ACQUISITION
On February 27, 1998, the Company acquired Flat Rate Communications, Inc.
("Flat Rate"), a long distance telecommunications reseller, for $5.0 million of
cash, 375,000 shares of Common Stock valued at approximately $3.4 million and a
contingent payment based upon operating results for the twelve month period
ending February 28, 1999 which will range from zero to $21.0 million in cash and
zero to 1.0 million shares of Common Stock. The Company recorded this
acquisition under the purchase method of accounting.
(7) SUBSEQUENT EVENTS
(a) UNITS OFFERING
On April 8, 1998, the Company completed an offering of units consisting of
senior notes or senior discount notes and shares of 10% Series A Redeemable
Convertible Preferred Stock, $.01 par value per share, of the Company (the
"Series A Preferred") and units consisting of senior notes or senior discount
notes and subordinated convertible debentures (the "Units Offering") through
which it raised approximately $889.6 million of gross proceeds ($856.6 million
of net proceeds). A portion of the proceeds from the Units Offering were
utilized by the Company to retire its 15% Senior Discount Notes due 2005 (the
"1994 Notes") pursuant to a tender offer transaction. Additionally, a portion of
the proceeds from the Units Offering were used to purchase approximately $122.8
million of U.S. government securities which were pledged as security for the
U.S. dollar denominated senior notes and approximately $30.6 million of German
government obligations which were pledged as security for the Deutschmark
denominated senior notes issued in the Units Offering.
F-25
<PAGE>
VIATEL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION AS OF MARCH 31, 1998 AND FOR THE PERIODS
ENDED MARCH 31, 1997 AND 1998 IS UNAUDITED)
(7) SUBSEQUENT EVENTS (CONTINUED)
(b) PRO FORMA BALANCE SHEET
The following table presents the effects on the Company's selected balance
sheet data of the Units Offering as of March 31, 1998, on a pro forma basis,
assuming the Units Offering had occurred at that date.
<TABLE>
<CAPTION>
AS OF MARCH 31, 1998
-------------------------
ACTUAL PRO FORMA(1)
---------- -------------
<S> <C> <C>
Pro forma Balance Sheet Data (000s):
Cash, cash equivalents and marketable securities................. $ 28,150 $ 612,507
Restricted cash, current and non-current......................... -- 153,347
Working Capital.................................................. 12,729 626,034
Property and equipment, net...................................... 56,997 56,997
Total assets..................................................... 121,894 887,876
Series A redeemable convertible preferred stock.................. -- 43,820
Long-term debt, excluding current installments................... 102,360 854,907
Stockholders' deficiency......................................... (18,271) (48,655)
</TABLE>
- -------------------
(1) Adjusted to give effect to approximately $856.6 million of net proceeds from
the Units Offering, capitalization of approximately $30.8 million of debt
issue costs and the reduction of additional paid in capital of approximately
$2.1 million for issuance costs associated with the Series A Preferred
issued as part of certain of the units and the extinguishment of the
Company's then existing 1994 Notes for approximately $118.9 million
resulting in an extraordinary loss of approximately $28.3 million which
includes the writeoff of deferred financing costs of approximately $2.6
million.
F-26
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH THE EXCHANGE
OFFERS CONTAINED HEREIN, OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS OR IN THE
ACCOMPANYING LETTERS OF TRANSMITTAL AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY VIATEL.
NEITHER THIS PROSPECTUS NOR THE ACCOMPANYING LETTERS OF TRANSMITTAL CONSTITUTE
AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY SECURITY OTHER THAN
THOSE TO WHICH IT RELATES NOR DO THEY CONSTITUTE AN OFFER TO SELL, OR A
SOLICITATION OF AN OFFER TO BUY, ANY SECURITY TO ANY PERSON IN ANY JURISDICTION
IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED, OR IN WHICH THE PERSON
MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO, OR TO ANY PERSON TO
WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF
THIS PROSPECTUS NOR THE ACCOMPANYING LETTERS OF TRANSMITTAL NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATIONS THAT THERE HAS
BEEN NO CHANGE IN THE AFFAIRS OF VIATEL SINCE THE DATE HEREOF OR THAT THE
INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE
HEREOF.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Available Information.......................... 7
Summary........................................ 8
Risk Factors................................... 23
The Exchange Offers............................ 39
Use of Proceeds................................ 49
Capitalization................................. 50
Unaudited Pro Forma Financial Data............. 51
Selected Consolidated Financial Data........... 55
Management's Discussion and Analysis of
Financial Condition and Results of
Operations.................................... 57
Business....................................... 68
Management..................................... 95
Certain Transactions........................... 104
Principal Stockholders......................... 105
Description of the Exchange Notes.............. 107
Certain Income Tax Considerations.............. 144
Plan of Distribution........................... 155
Legal Matters.................................. 156
Experts........................................ 156
Index to Financial Statements.................. F-1
</TABLE>
VIATEL, INC.
OFFERS TO EXCHANGE
12.50% SENIOR DISCOUNT NOTES
DUE 2008,
11.25% SENIOR NOTES DUE 2008,
12.40% SENIOR DISCOUNT NOTES
DUE 2008
AND
11.15% SENIOR NOTES DUE 2008
WHICH HAVE BEEN REGISTERED
UNDER THE SECURITIES ACT
FOR ANY AND ALL OUTSTANDING
12.50% SENIOR DISCOUNT NOTES
DUE 2008,
11.25% SENIOR NOTES DUE 2008,
12.40% SENIOR DISCOUNT NOTES
DUE 2008
AND
11.15% SENIOR NOTES DUE 2008,
RESPECTIVELY,
WHICH HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT
------------------
PROSPECTUS
------------------
JULY , 1998
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law (the "DGCL") provides
that a Delaware corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative (a
"proceeding") (other than an action by or in the right of the corporation) by
reason of the fact that he is or was a director, officer, employee or agent of
the corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by the person in connection with such action, suit or proceeding if the
person acted in good faith and in a manner the person reasonably believed to be
in or not opposed to the best interests of the corporation, and, with respect to
any criminal action or proceeding, had no reasonable cause to believe his
conduct was unlawful. A Delaware corporation may indemnify any person under such
Section in connection with a proceeding by or in the right of the corporation to
procure judgment in its favor, as provided in the preceding sentence, against
expenses (including attorneys' fees) actually and reasonably incurred by the
person in connection with the defense or settlement of such action, except that
no indemnification shall be made in respect thereof unless, and then only to the
extent that, a court of competent jurisdiction shall determine upon application
that such person is fairly and reasonably entitled to indemnity for such
expenses as the court shall deem proper. A Delaware corporation must indemnify
any person who was successful on the merits or otherwise in defense of any
action, suit or proceeding or in defense of any claim, issue or matter in any
proceeding, by reason of the fact that he is or was a director, officer,
employee or agent of the corporation or is or was serving at the request of the
corporation, against expenses (including attorneys' fees) actually and
reasonably incurred by him in connection therewith. A Delaware corporation may
pay for the expenses (including attorneys' fees) incurred by an officer or
director in defending a proceeding in advance of the final disposition upon
receipt of an undertaking by or on behalf of such officer or director to repay
such amount if it shall ultimately be determined that he is not entitled to be
indemnified by the corporation.
Section 102(b)(7) of the DGCL permits a corporation to provide in its
certificate of incorporation that a director shall not be personally liable to
the corporation or its stockholders for monetary damages for a breach of
fiduciary duty as a director, except for liability (i) for any breach of the
director's duty of loyalty to the corporation or its stockholders, (ii) for any
acts or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) in respect of certain unlawful dividend payments
or stock redemptions or repurchases, or (iv) for any transaction from which the
director derived an improper personal benefit. Article Ninth of Viatel's Amended
and Restated Certificate of Incorporation eliminates the liability of directors
to the fullest extent permitted by Section 102(b)(7) of the DGCL. The DGCL
permits the purchase of insurance on behalf of directors and officers against
any liability asserted against directors and officers and incurred by such
persons in such capacity, or arising out of their status as such, whether or not
the corporation would have the power to indemnify directors and officers against
such liability. Viatel has obtained officers' and directors' liability insurance
of $10 million for members of its Board of Directors and executive officers. In
addition, Viatel has entered into agreements to indemnify its directors and
officers from and against any Expenses (as defined in the indemnity agreement)
incurred by such person in connection with investigating, defending, serving as
a witness in, participating in (including on appeal), or preparing for any of
the foregoing in any threatened, pending or contemplated action, suit, or
proceeding (including an action by or in the right of Viatel), or any inquiry,
hearing or investigation, to the fullest extent permitted by law, as such law
may be amended or interpreted (but only to the extent that such amendment or
interpretation provides for broader indemnification rights). The indemnity
agreement contains certain provisions to ensure that the indemnitee receives the
benefits contemplated by the agreement in the event of a "change in control" (as
defined in the indemnity agreement) such as the
II-1
<PAGE>
establishment and funding of a trust in an amount sufficient to satisfy any and
all expenses reasonably anticipated to be incurred by the indemnitee in
connection with investigating, preparing for, participating in and/or defending
a proceeding.
At present, there is no pending litigation or other proceeding involving a
director or officer of Viatel as to which indemnification is being sought, nor
is Viatel aware of any threatened litigation that may result in claims for
indemnification by any officer or director.
Article Tenth of Viatel's Amended and Restated Certificate of Incorporation
and Article X of it's Second Amended and Restated Bylaws provide for
indemnification of directors and officers to the fullest extent permitted by
Section 145 of the DGCL.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) EXHIBITS:
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
- ----------- ---------------------------------------------------------------------------------------------------
<C> <C> <S>
3(i)(a)* -- Amended and Restated Certificate of Incorporation of Viatel (incorporated herein by reference to
Exhibit 3.1(i)(b) to Viatel's Registration Statement on Form S-1, filed on August 7, 1996,
Registration No. 333-09699 ("Viatel's S-1")).
3(i)(b) -- Certificate of Designations, Preferences and Rights of 10% Series A Redeemable Convertible
Preferred Stock, $.01 par value.
3(ii)* -- Second Amended and Restated Bylaws of Viatel (incorporated herein by reference to Exhibit 3.1(ii)
of Viatel's Form 10-Q for the fiscal quarter ended September 30, 1997, File No. 000-21261).
4.1 -- Indenture, dated as of April 8, 1998, between Viatel and The Bank of New York, as Trustee, relating
to Viatel's 12.50% Senior Discount Notes Due 2008 (including form of 12.50% Senior Discount Note).
4.2 -- Indenture, dated as of April 8, 1998, between Viatel and The Bank of New York, as Trustee, relating
to Viatel's 11.25% Senior Notes Due 2008 (including form of 11.25% Senior Note).
4.3 -- Indenture, dated as of April 8, 1998, among Viatel, The Bank of New York, as Trustee, and Deutsche
Bank, Aktiengesellschaft, as German Paying Agent and Co-Registrar, relating to Viatel's 12.40%
Senior Discount Notes Due 2008 (including form of 12.40% Senior Discount Note).
4.4 -- Indenture, dated as of April 8, 1998, among Viatel, The Bank of New York, as Trustee, and Deutsche
Bank, Aktiengesellschaft, as German Paying Agent and Co-Registrar, relating to Viatel's 11.15%
Senior Notes Due 2008 (including form of 11.15% Senior Note).
4.5 -- Indenture, dated as of April 8, 1998, among Viatel, The Bank of New York, as Trustee, and Deutsche
Bank, Aktiengesellschaft, as German Paying Agent and Co-Registrar, relating to Viatel's 10%
Subordinated Convertible Debentures Due 2011 (including form of 10% Subordinated Convertible
Debenture).
4.6 -- Registration Rights Agreement, dated April 3, 1998, among Viatel, Morgan Stanley & Co.
Incorporated, Morgan Stanley Bank AG, Salomon Brothers Inc, ING Baring (U.S.) Securities, Inc. and
NationsBanc Montgomery Securities LLC.
4.7 -- Conversion Shares Registration Rights Agreement, dated April 3, 1998, among Viatel, Morgan Stanley
& Co. Incorporated, Morgan Stanley Bank AG, Salomon Brothers Inc, ING Baring (U.S.) Securities,
Inc. and NationsBanc Montgomery Securities LLC.
4.8 -- Purchase Agreement, dated April 3, 1998, among Viatel, Morgan Stanley & Co. Incorporated, Morgan
Stanley Bank AG, Salomon Brothers Inc, ING Baring (U.S.) Securities, Inc. and NationsBanc
Montgomery Securities LLC, as Initial Purchasers.
5.1** -- Opinion of Kelley Drye & Warren LLP as to the validity of the securities being registered.
</TABLE>
II-2
<PAGE>
<TABLE>
<C> <C> <S>
10.1* -- Common Stock Registration Rights Agreement, dated as of December 15, 1994, among Viatel, Martin
Varsavsky, Juan Manuel Aisemberg and Morgan Stanley & Co. Incorporated in connection with Viatel's
shares of non-voting Class A Common Stock (incorporated herein by reference to Exhibit 10.4 to
Viatel's Registration Statement on Form S-4, filed on May 24, 1995, Registration No. 33-92696
("Viatel's 1995 S-4")).
10.2* -- Mercury Carrier Services Agreement, dated as of March 1, 1994, between Viatel and Mercury
Communications Limited (incorporated herein by reference to Exhibit 10.8 to Viatel's 1995 S-4).
10.3* -- Provision and Management Facilities Agreement, dated as of October 17, 1994, between Viatel and
Mercury Communications Limited (incorporated herein by reference to Exhibit 10.9 to Viatel's 1995
S-4).
10.4* -- Stock Purchase Agreement, dated as of September 30, 1993, as amended as of April 5, 1994, and as
further amended as of December 21, 1994, between Viatel and S-C V-Tel Investments, L.P.
(incorporated herein by reference to Exhibit 10.13 to Viatel's 1995 S-4).
10.5* -- Stock Purchase Agreement, dated as of April 5, 1994, between the Company and COMSAT Investments,
Inc. (incorporated herein by reference to Exhibit 10.14 to Viatel's 1995 S-4).
10.6* -- Shareholders' Agreement, dated as of April 5, 1994, and as amended as of November 22, 1994, by and
among Viatel, Martin Varsavsky, Juan Manuel Aisemberg and COMSAT Investments, Inc. (incorporated
herein by reference to Exhibit 10.19 to Viatel's 1995 S-4).
10.7* -- Shareholders' Agreement, dated as of September 30, 1993, as amended as of December 9, 1993, and as
further amended as of April 5, 1994, November 22, 1994 and December 21, 1994, by and among Viatel,
Martin Varsavsky and S-C V-Tel Investments, L.P. (incorporated herein by reference to Exhibit 10.21
to Viatel's 1995 S-4).
10.8* -- Commercial Lease Agreement, dated as of November 1, 1993, and Addendum, dated as of December 8,
1994, between Viatel and 123rd Street Partnership in connection with Viatel's premises located in
Omaha, Nebraska (incorporated herein by reference to Exhibit 10.24 to Viatel's 1995 S-4).
10.9* -- Facilities Management and Services Agreement, dated as of August 4, 1995, between Viatel U.K.
Limited and Telemedia International Ltd. (incorporated herein by reference to Exhibit 10.32 to
Viatel's 1995 S-4).
10.10* -- Agreement of Lease, dated August 7, 1995, between Viatel and Joseph P. Day Realty Corp.
(incorporated herein by reference to Exhibit 10.33 to Viatel's 1995 S-4).
10.11* -- Employment Agreement between Viatel and Michael J. Mahoney (incorporated herein by reference to
Exhibit 10.12 to Viatel's Annual Report on Form 10-K for the fiscal year ended December 31, 1997,
File No. 000-21261 (the "1997 Form 10-K")).+
10.12* -- Amended Stock Incentive Plan (incorporated herein by reference to Exhibit 10.31 to Viatel's Form
10-Q for the fiscal quarter ended September 30, 1997, File No. 000-21261).+
10.13* -- Employment Agreement between Viatel and Allan L. Shaw (incorporated herein by reference to Exhibit
10.14 to the 1997 Form 10-K).+
10.14* -- Employment Agreement between Viatel and Sheldon M. Goldman (incorporated herein by reference to
Exhibit 10.15 to the 1997 Form 10-K).+
10.15* -- Mutual Cooperation Agreement, dated as of June 3, 1998, among Viatel, Martin Varsavsky and Jazz
Telecom S.A. (incorporated herein by reference to Exhibit 10.16 to Viatel's Current Report on Form
8-K, dated June 8, 1998, File No. 000-21261).
10.16*** -- Equipment Purchase Agreement, dated June 29, 1998, between Viatel and Nortel PLC.
12.1 -- Calculation of Ratio of Earnings to Fixed Charges.
21.1 -- Subsidiaries of Viatel.
23.1** -- Consent of Kelley Drye & Warren LLP (included in Exhibit 5.1).
23.2 -- Consent of KPMG Peat Marwick LLP.
24.1 -- Power of Attorney (appears on signature page).
</TABLE>
II-3
<PAGE>
<TABLE>
<C> <C> <S>
25.1 -- Statement of Eligibility of The Bank of New York on Form T-1 relating to the 12.50% Senior Discount
Notes Due 2008.
25.2 -- Statement of Eligibility of The Bank of New York on Form T-1 relating to the 11.25% Senior Notes
Due 2008.
25.3 -- Statement of Eligibility of The Bank of New York on Form T-1 relating to the 12.40% Senior Discount
Notes Due 2008.
25.4 -- Statement of Eligibility of The Bank of New York on Form T-1 relating to the 11.15% Senior Notes
Due 2008.
99.1** -- Letter of Transmittal relating to the 12.50% Senior Discount Notes Due 2008 (Dollar Denominated),
the 11.25% Senior Notes Due 2008 (Dollar Denominated), the 12.40% Senior Discount Notes Due 2008
(DM Denominated/DTC Held) and the 11.15% Senior Notes Due 2008 (DM Denominated/DTC Held).
99.2** -- Letter of Transmittal relating to the 12.40% Senior Discount Notes Due 2008 (DM Denominated/DBC
Held) and the 11.15% Senior Notes Due 2008 (DM Denominated/DBC Held).
99.3** -- Notice of Guaranteed Delivery.
</TABLE>
- ---------
* Incorporated herein by reference.
** To be filed by amendment.
*** Confidential treatment requested as to certain portions.
+ Management contract or compensatory plan or arrangement.
II-4
<PAGE>
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES. (CONTINUED)
(B) SUPPLEMENTAL FINANCIAL STATEMENT SCHEDULES:
Schedule II--Valuation and Qualifying Accounts.
All other schedules are omitted because they are inapplicable or the
requested information is shown in the consolidated financial statements or
related notes.
ITEM 22. UNDERTAKINGS.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indeminification 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 in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement;
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act 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;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement.
(2) That, for the purpose of determinig any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registgration 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.
The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Items 4, 10(b), 11 or 13 of this Form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt mail. This 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 this registration statement when it became effective.
II-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of New York,
State of New York, on the 8th day of July 1998.
<TABLE>
<S> <C> <C>
VIATEL, INC.
By: /s/ MICHAEL J. MAHONEY
-----------------------------------------
Michael J. Mahoney
PRESIDENT AND CHIEF EXECUTIVE OFFICER
</TABLE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each individual whose signature appears
below constitutes and appoints Michael J. Mahoney, Allan L. Shaw and Sheldon M.
Goldman, and each of them as his true and lawful attorneys-in-fact and agents
for the undersigned, with full power of substitution, for and in the name, place
and stead of the undersigned to sign and file with the Securities and Exchange
Commission under the Securities Act of 1933, as amended, (i) any and all
pre-effective and post-effective amendments to this registration statement, (ii)
any exhibits to any such pre-effective or post-effective amendments, (iii) any
and all applications and other documents in connection with any such
pre-effective or post-effective amendments, and (iv) generally to do all things
and perform any and all acts and things whatsoever requisite and necessary or
desirable to enable the Registrant to comply with the provisions of the
Securities Act of 1933, as amended, and all requirements of the Securities and
Exchange Commission.
In accordance with the requirements of the Securities Act of 1933, as
amended, this Registration Statement was signed on the 8th day of July, 1998, by
the following persons in the capacities indicated.
NAME TITLE(S)
- ------------------------------ ---------------------------------------------
/s/ MICHAEL J. MAHONEY
- ------------------------------ President, Chief Executive Officer and
Michael J. Mahoney Director (Principal Executive Officer)
/s/ ALLAN L. SHAW Senior Vice President, Finance; Chief
- ------------------------------ Financial Officer (Principal Financial and
Allan L. Shaw Accounting Officer); and Director
/s/ PAUL G. PIZZANI
- ------------------------------ Director
Paul G. Pizzani
/s/ FRANCIS J. MOUNT
- ------------------------------ Director
Francis J. Mount
- ------------------------------ Director
John G. Graham
II-6
<PAGE>
VIATEL, INC. AND SUBSIDIARIES
SCHEDULE II--VALUATIONS AND QUALIFYING ACCOUNTS
<TABLE>
<CAPTION>
ADDITIONS
BALANCE AT CHARGED TO BALANCE
BEGINNING COSTS AND OTHER AT END
DESCRIPTION OF PERIOD EXPENSES RETIREMENTS CHANGES OF PERIOD
- ----------------------------------------------- ---------- ------------ ------------ ------------- ------------
<S> <C> <C> <C> <C> <C>
Reserves and allowances deducted from asset
accounts:
Allowances for uncollectible accounts
Receivable
Year ended December 31, 1995................. $ 475,000 $ 1,230,000 $ 1,232,000 -- $ 473,000
Year ended December 31, 1996................. 473,000 2,225,000 2,096,000 -- 602,000
Year ended December 31, 1997................. 602,000 2,733,000 2,294,000 -- 1,041,000
Allowances for asset impairment
Year ended December 31, 1995................. -- $ 560,000 -- -- 560,000
Year ended December 31, 1996................. 560,000 -- -- -- 560,000
Year ended December 31, 1997................. 560,000 -- -- -- 560,000
</TABLE>
S-1
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION OF DOCUMENT PAGE
- ----------- ------------------------------------------------------------------------------------- ---------------
<C> <C> <S> <C>
3(i)(a)* -- Amended and Restated Certificate of Incorporation of Viatel (incorporated herein by
reference to Exhibit 3.1(i)(b) to Viatel's Registration Statement on Form S-1, filed
on August 7, 1996, Registration No. 333-09699 ("Viatel's S-1")).
3(i)(b) -- Certificate of Designations, Preferences and Rights of 10% Series A Redeemable
Convertible Preferred Stock, $.01 par value.
3(ii)* -- Second Amended and Restated Bylaws of Viatel (incorporated herein by reference to
Exhibit 3.1(ii) of Viatel's Form 10-Q for the fiscal quarter ended September 30,
1997, File No. 000-21261).
4.1 -- Indenture, dated as of April 8, 1998, between Viatel and The Bank of New York, as
Trustee, relating to Viatel's 12.50% Senior Discount Notes Due 2008 (including form
of 12.50% Senior Discount Note).
4.2 -- Indenture, dated as of April 8, 1998, between Viatel and The Bank of New York, as
Trustee, relating to Viatel's 11.25% Senior Notes Due 2008 (including form of 11.25%
Senior Note).
4.3 -- Indenture, dated as of April 8, 1998, among Viatel, The Bank of New York, as Trustee,
and Deutsche Bank, Aktiengesellschaft, as German Paying Agent and Co-Registrar,
relating to Viatel's 12.40% Senior Discount Notes Due 2008 (including form of 12.40%
Senior Discount Note).
4.4 -- Indenture, dated as of April 8, 1998, among Viatel, The Bank of New York, as Trustee,
and Deutsche Bank, Aktiengesellschaft, as German Paying Agent and Co-Registrar,
relating to Viatel's 11.15% Senior Notes Due 2008 (including form of 11.15% Senior
Note).
4.5 -- Indenture, dated as of April 8, 1998, among Viatel, The Bank of New York, as Trustee,
and Deutsche Bank, Aktiengesellschaft, as German Paying Agent and Co-Registrar,
relating to Viatel's 10% Subordinated Convertible Debentures Due 2011 (including form
of 10% subordinated Convertible Debenture).
4.6 -- Registration Rights Agreement, dated April 3, 1998, among Viatel, Morgan Stanley &
Co. Incorporated, Morgan Stanley Bank AG, Salomon Brothers Inc, ING Baring (U.S.)
Securities, Inc. and NationsBanc Montgomery Securities LLC.
4.7 -- Conversion Shares Registration Rights Agreement, dated April 3, 1998, among Viatel,
Morgan Stanley & Co. Incorporated, Morgan Stanley Bank AG, Salomon Brothers Inc, ING
Baring (U.S.) Securities, Inc. and NationsBanc Montgomery Securities LLC.
4.8 -- Purchase Agreement, dated April 3, 1998, among Viatel, Morgan Stanley & Co.
Incorporated, Morgan Stanley Bank AG, Salomon Brothers Inc, ING Baring (U.S.)
Securities, Inc. and NationsBanc Montgomery Securities LLC, as Initial Purchasers.
5.1** -- Opinion of Kelley Drye & Warren LLP as to the validity of the securities being
registered.
10.1* -- Common Stock Registration Rights Agreement, dated as of December 15, 1994, among
Viatel, Martin Varsavsky, Juan Manuel Aisemberg and Morgan Stanley & Co. Incorporated
in connection with Viatel's shares of non-voting Class A Common Stock (incorporated
herein by reference to Exhibit 10.4 to Viatel's Registration Statement on Form S-4,
filed on May 24, 1995, Registration No. 33-92696 ("Viatel's 1995 S-4")).
</TABLE>
<PAGE>
<TABLE>
<C> <C> <S> <C>
10.2* -- Mercury Carrier Services Agreement, dated as of March 1, 1994, between Viatel and
Mercury Communications Limited (incorporated herein by reference to Exhibit 10.8 to
Viatel's 1995 S-4).
10.3* -- Provision and Management Facilities Agreement, dated as of October 17, 1994, between
Viatel and Mercury Communications Limited (incorporated herein by reference to
Exhibit 10.9 to Viatel's 1995 S-4).
10.4* -- Stock Purchase Agreement, dated as of September 30, 1993, as amended as of April 5,
1994, and as further amended as of December 21, 1994, between Viatel and S-C V-Tel
Investments, L.P. (incorporated herein by reference to Exhibit 10.13 to Viatel's 1995
S-4).
10.5* -- Stock Purchase Agreement, dated as of April 5, 1994, between the Company and COMSAT
Investments, Inc. (incorporated herein by reference to Exhibit 10.14 to Viatel's 1995
S-4).
10.6* -- Shareholders' Agreement, dated as of April 5, 1994, and as amended as of November 22,
1994, by and among Viatel, Martin Varsavsky, Juan Manuel Aisemberg and COMSAT
Investments, Inc. (incorporated herein by reference to Exhibit 10.19 to Viatel's 1995
S-4).
10.7* -- Shareholders' Agreement, dated as of September 30, 1993, as amended as of December 9,
1993, and as further amended as of April 5, 1994, November 22, 1994 and December 21,
1994, by and among Viatel, Martin Varsavsky and S-C V-Tel Investments, L.P.
(incorporated herein by reference to Exhibit 10.21 to Viatel's 1995 S-4).
10.8* -- Commercial Lease Agreement, dated as of November 1, 1993, and Addendum, dated as of
December 8, 1994, between Viatel and 123rd Street Partnership in connection with
Viatel's premises located in Omaha, Nebraska (incorporated herein by reference to
Exhibit 10.24 to Viatel's 1995 S-4).
10.9* -- Facilities Management and Services Agreement, dated as of August 4, 1995, between
Viatel U.K. Limited and Telemedia International Ltd. (incorporated herein by
reference to Exhibit 10.32 to Viatel's 1995 S-4).
10.10* -- Agreement of Lease, dated August 7, 1995, between Viatel and Joseph P. Day Realty
Corp. (incorporated herein by reference to Exhibit 10.33 to Viatel's 1995 S-4).
10.11* -- Employment Agreement between Viatel and Michael J. Mahoney (incorporated herein by
reference to Exhibit 10.12 to Viatel's Annual Report on Form 10-K for the fiscal year
ended December 31, 1997, File No. 000-21261 (the "1997 Form 10-K")).+
10.12* -- Amended Stock Incentive Plan (incorporated herein by reference to Exhibit 10.31 to
Viatel's Form 10-Q for the fiscal quarter ended September 30, 1997, File No.
000-21261).+
10.13* -- Employment Agreement between Viatel and Allan L. Shaw (incorporated herein by
reference to Exhibit 10.14 to the 1997 Form 10-K).+
10.14* -- Employment Agreement between Viatel and Sheldon M. Goldman (incorporated herein by
reference to Exhibit 10.15 to the 1997 Form 10-K).+
10.15* -- Mutual Cooperation Agreement, dated as of June 3, 1998, among Viatel, Martin
Varsavsky and Jazz Telecom S.A. (incorporated herein by reference to Exhibit 10.16 to
Viatel's Current Report on Form 8-K, dated June 8, 1998, File No. 000-21261).
10.16*** -- Equipment Purchase Agreement, dated June 29, 1998, between Viatel and Nortel PLC.
12.1 -- Calculation of Ratio of Earnings to Fixed Charges.
21.1 -- Subsidiaries of Viatel.
23.1** -- Consent of Kelley Drye & Warren LLP (included in Exhibit 5.1).
23.2 -- Consent of KPMG Peat Marwick LLP.
24.1 -- Power of Attorney (appears on signature page).
</TABLE>
<PAGE>
<TABLE>
<C> <C> <S> <C>
25.1 -- Statement of Eligibility of The Bank of New York on Form T-1 relating to the 12.50%
Senior Discount Notes Due 2008.
25.2 -- Statement of Eligibility of The Bank of New York on Form T-1 relating to the 11.25%
Senior Notes Due 2008.
25.3 -- Statement of Eligibility of The Bank of New York on Form T-1 relating to the 12.40%
Senior Discount Notes Due 2008.
25.4 -- Statement of Eligibility of The Bank of New York on Form T-1 relating to the 11.15%
Senior Notes Due 2008.
99.1** -- Letter of Transmittal relating to the 12.50% Senior Discount Notes Due 2008 (Dollar
Denominated), the 11.25% Senior Notes Due 2008 (Dollar Denominated), the 12.40%
Senior Discount Notes Due 2008 (DM Denominated/DTC Held) and the 11.15% Senior Notes
Due 2008 (DM Denominated/DTC Held).
99.2** -- Letter of Transmittal relating to the 12.40% Senior Discount Notes Due 2008 (DM
Denominated/DBC Held) and the 11.15% Senior Notes Due 2008 (DM Denominated/DBC Held).
99.3** -- Notice of Guaranteed Delivery.
</TABLE>
- ---------
* Incorporated herein by reference.
** To be filed by amendment.
*** Confidential treatment requested as to certain portions.
+ Management contract or compensatory plan or arrangement.
<PAGE>
Exhibit 3(i)(b)
CERTIFICATE OF DESIGNATIONS, PREFERENCES AND RIGHTS
OF
10% SERIES A REDEEMABLE CONVERTIBLE PREFERRED STOCK
($0.01 par value per share)
OF
VIATEL, INC.
--------------------------
Pursuant to Section 151(g) of the General Corporation Law
of the State of Delaware
--------------------------
The undersigned, being, respectively, the President and Chief Executive
Officer and the Secretary of Viatel, Inc., a corporation duly organized and
existing under the General Corporation Law of the State of Delaware (the
"Corporation"), DO HEREBY CERTIFY that, pursuant to the provisions of Section
151(g) of the General Corporation Law of the State of Delaware, the following
resolution was duly adopted by the Board of Directors of the Corporation and,
pursuant to authority conferred upon the Board of Directors of the Corporation
by the provisions of the Corporation's Amended and Restated Certificate of
Incorporation, the Board of Directors of the Corporation at a meeting duly held
on April 3, 1998, adopted the following resolution fixing the designations, and
the relative, participating and other special rights, and the qualifications,
limitations or restrictions of a series of preferred stock:
"RESOLVED, that pursuant to authority expressly granted to and vested in
the Board of Directors of the Corporation by the provisions of the Corporation's
Amended and Restated Certificate of Incorporation, the Board of Directors hereby
creates a series of 718,042 shares of Series A Redeemable Convertible Preferred
Stock of the Corporation and authorizes the issuance thereof, and hereby fixes
the designation thereof, and the relative powers, preferences and relative,
participating, optional and other special limitations or restrictions thereon
(in addition to the designations, preferences and relative, participating and
other special rights, and the qualifications, limitations or restrictions
thereof, set forth in the Corporation's Amended and Restated Certificate of
Incorporation, which are applicable to the preferred stock of all series, if
any) as follows:
Section 1. DESIGNATION AND NUMBER. The shares of such series shall be
designated as the "10% Series A Redeemable Convertible Preferred Stock"
(hereinafter referred to as the "Series A Preferred") and the number of shares
constituting such series shall be 718,042. Other than the shares of Series A
Preferred originally issued and payable as dividends thereon, the Corporation
may not issue additional shares of Series A Preferred.
<PAGE>
Section 2. RANK. The Series A Preferred shall, with respect to
dividend distributions and distributions upon the liquidation, winding-up and
dissolution of the Corporation, rank (i) senior to (A) all classes of common
stock of the Corporation and (b) each other class of capital stock or series of
preferred stock hereafter created by the Board of Directors, the terms of which
do not expressly provide that it ranks senior to or on a parity with the Series
A Preferred as to dividend distributions and distributions upon the liquidation,
winding-up and dissolution of the Corporation (collectively referred to herein,
together with all classes of common stock of the Corporation, as the "Junior
Securities"); (ii) subject to certain conditions, on a parity with any class of
capital stock or series of preferred stock hereafter created by the Board of
Directors, the terms of which expressly provide that such class or series will
rank on a parity with the Series A Preferred as to dividend distributions and
distributions upon the liquidation, winding-up and dissolution of the
Corporation (collectively referred to as "Parity Securities"); (iii) subject to
certain conditions, junior to each class of capital stock or series of preferred
stock hereafter created by the Board of Directors, the terms of which have been
approved by the holders of the Series A Preferred in accordance with Section
5(b) hereof and which expressly provide that such class or series will rank
senior to the Series A Preferred as to dividend distributions and distributions
upon liquidation, winding-up and dissolution of the Corporation (collectively
referred to as "Senior Securities")
Section 3. DIVIDENDS. (a) Holders of Series A Preferred are
entitled to receive, when, as and if declared by the Board of Directors, out of
the funds of the Corporation legally available therefor, dividends at the annual
rate of 10% per share of Series A Preferred (calculated based on the Liquidation
Preference per share of Series A Preferred), payable, in arrears, in equal
quarterly installments on each January 15, April 15, July 15 and October 15
(each a "Dividend Payment Date"), commencing July 15, 1998 (i) through April 15,
2003 in either cash or in shares of Series A Preferred or any combination
thereof (subject to restrictions contained in the certain indentures of the
Corporation which will effectively restrict the Corporation's ability to pay
cash dividends until April 15, 2003), and (ii) after April 15, 2003 solely in
cash. If any Dividend Payment Date shall be on a day other than a Business Day
(as defined herein), then the Dividend Payment Date shall be on the next
succeeding Business Day. Dividends on the Series A Preferred will be cumulative
from their date of issue, and will be payable to holders of record as they
appear on the stock books of the Corporation on such record dates (each such
date, a "Dividend Payment Record Date"), which shall be not more than 60 days
nor less than 10 days preceding the Dividend Payment Date thereof, as shall be
fixed by the Board of Directors. Dividends on the Series A Preferred shall
accrue (whether or not declared) on a daily basis from their date of issue, and
accrued dividends for each quarterly dividend period shall accumulate to the
extent not paid on the Dividend Payment Date first following the quarterly
dividend period for which they accrue. As used herein, the term "Business Day"
shall mean any day other than a Saturday, Sunday or other day on which banking
Institutions in The City of New York are required or obligated by
2
<PAGE>
law or executive order to close or be closed. All dividends paid with respect
to the shares of Series A Preferred shall be paid PRO RATA to the holders
entitled thereto.
(b) The amount of dividends payable for each full quarterly dividend
period shall be computed by dividing the annual dividend rate by four (rounded
down to the nearest one-cent) and the actual number of days elapsed in the
period for which dividends are payable. Dividends payable for any partial
dividend period shall be computed on the basis of a 360-day year consisting of
twelve 30-day months. Holders of shares of Series A Preferred called for
redemption on a redemption date falling between the close of business on a
Dividend Payment Record Date and the opening of business on the corresponding
Dividend Payment Date shall, in lieu of receiving such dividend on the Dividend
Payment Date fixed therefor, receive such dividend payment together with all
other accrued and unpaid dividends on the date fixed for redemption (unless such
holder converts such shares in accordance with Section 3 hereof). Dividends
that are in arrears and unpaid on any past Dividend Payment Date may be declared
and paid at any time without reference to any regular Dividend Payment Date, to
holders of record on such date, not more than 45 days prior to the payment
thereof, as may be fixed by the Board of Directors of the Corporation.
(c) If the average closing price of the Corporation's common stock, $0.01
par value (the "Common Stock") (rounded down to the nearest one-cent) during the
20 trading days immediately prior to April 15, 1999, is within one of the price
ranges specified in the left column below, the Corporation will declare a
special dividend on the Series A Preferred, payable in additional shares of
Series A Preferred (which shares shall have terms identical to the shares of
Series A Preferred originally issued except that such shares will not be
entitled to any special dividend payment) having an aggregate Liquidation
Preference (as defined below), equal to the amount set forth in the
corresponding line of the right column below:
Special Per
Common Stock Price Share Dividend Amount
------------------ ---------------------
$11.25 - 11.75 $ 2.13
$10.75 - 11.24 $ 6.76
$10.25 - 10.74 $ 11.73
$ 9.75 - 10.24 $ 17.19
$ 9.25 - 9.74 $ 23.20
$ 8.75 - 9.24 $ 29.87
$ 8.25 - 8.74 $ 37.30
$ 7.75 - 8.24 $ 45.63
$ 7.25 - 7.74 $ 55.04
$ 7.00 - 7.24 $ 65.75
Below $7.00 $ 71.43
3
<PAGE>
(d) The Corporation has entered into a registration rights agreement with
Morgan Stanley & Co. Incorporated, Morgan Stanley Bank AG, Salomon Brothers Inc,
ING Baring (U.S.) Securities, Inc. and NationsBanc Montgomery Securities LLC
(the "Registration Rights Agreement"), pursuant to which the Corporation will,
at it's cost, for the benefit of the holders of the Series A Preferred, file
with, and cause to be declared effective by, the Securities and Exchange
Commission (the "Commission"), no later than April 8, 1999, a shelf registration
statement (the "Shelf Registration Statement") covering the shares of Common
Stock issuable to holders upon conversion of Series A Preferred, and (ii) keep
such Shelf Registration Statement effective for two years or, if earlier, when
all of the shares of Series A Preferred have been converted into Common Stock
pursuant to the Shelf Registration Statement (the "Shelf Period"). If the Shelf
Registration Statement is not effective by April 8, 1999 or does not continue to
be effective (except during certain "blockout periods") after the end of the
Shelf Period, additional dividends shall accrue on the Series A Preferred at a
rate (expressed as a percentage of Liquidation Preference) of 0.5% per annum,
payable in cash, until the Shelf Registration Statement is effective.
(e) (i) No full dividends shall be declared by the Board of Directors or
paid or funds set apart for payment of dividends by the Corporation on any
Parity Securities for any period unless full cumulative dividends shall have
been or contemporaneously shall be declared and paid in full or declared and, if
payable in cash, a sum in cash shall be set apart sufficient for each payment on
the Series A Preferred, for all dividend periods terminating on or prior to the
date of payment of such full dividends on such Parity Securities. If full
dividends are not paid, as aforesaid, upon the shares of the Series A Preferred,
all dividends declared or prior declared upon shares of the Series A Preferred
and any other Parity Securities shall be declared PRO RATA so that the amount of
dividends declared per share on the Series A Preferred and such Parity
Securities shall in all cases bear to each other the same ratio that accrued
dividends per share on the Series A Preferred and such Parity Securities bear to
each other.
(ii) (A) Holders of shares of Series A Preferred shall be entitled to
receive the dividends provided for in Section 2(a) and 2(c) hereof in preference
to and in priority over any dividends upon any of the Junior Securities.
(B) So long as any shares of Series A Preferred are outstanding, the
Corporation shall not declare, pay or set apart for payment any dividend on any
of the Junior Securities (other than distributions or dividends in Junior
Securities to the holders of Junior Securities) or make any payment on account
of, or set apart for payment money for a sinking or other similar fund for, the
repurchase, redemption or other retirement of any of the Junior Securities or
any warrants, rights, calls or options exercisable for or convertible into any
of the Junior Securities (other than the repurchase, redemption or other
acquisition or retirement for value of Junior Securities (or options, warrants
or other rights to acquire such Junior Securities)), and shall not permit any
corporation or other entity directly or indirectly controlled by the Corporation
to purchase or redeem any of the Junior
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Securities or any such warrants, rights, calls or options, unless full
cumulative dividends determined in accordance herewith have been paid in full on
the Series A Preferred.
(C) So long as any shares of the Series A Preferred are outstanding,
the Corporation shall not make any payment on account of, or set apart for
payment money for a sinking or other similar fund for, the repurchase,
redemption or other retirement of any of the Parity Securities or any warrants,
rights, calls or options exercisable for or convertible into any of the Parity
Securities, and shall not permit any corporation or other entity directly or
indirectly controlled by the Corporation to purchase or redeem any of the Parity
Securities or any such warrants, rights, calls or options, unless full
cumulative dividends determined in accordance herewith on the Series A Preferred
have been paid in full.
Section 4 (a) OPTIONAL CONVERSION. At any time on or after April 9, 1999,
holders of shares of Series A Preferred shall have the right, at their option,
to convert all or any part of their shares of Series A Preferred into shares of
Common Stock at a conversion price (as adjusted from time to time, the
"Conversion Price") equal to $13.20 per share of Common Stock, subject to
adjustment as provided in paragraph (f) below. The number of shares of Common
Stock into which each share of Series A Preferred shall be converted shall be
determined by dividing the Liquidation Preference of such share by the
Conversion Price then in effect.
(b) AUTOMATIC CONVERSION. The shares of Series A Preferred will
automatically convert into shares of Common Stock, at the Conversion Price, if
the per share closing of the Common Stock for any 20 consecutive trading days
during the twelve months ending April 15, 1999, April 15, 2000, April 15, 2001,
April 15, 2002 or April 15, 2003, exceeds $26.40, $32.30, $38.20, $44.10 or
$50.00, respectively (collectively, the "Automatic Conversion Prices");
PROVIDED, HOWEVER, that no such conversion will occur (i) until April 9, 1999
and will not occur until the Shelf Registration Statement is effective and (ii)
unless the price of the Common Stock on the conversion date exceeds the relevant
price listed above. Notwithstanding the foregoing, the Automatic Conversion
Prices shall be adjusted as nearly as practicable as provided in paragraph (f)
below.
(c) A holder of Series A Preferred wishing to exercise its conversion
right shall (i) give written notice of conversion to The Bank of New York, or
such other agent or agents of the Company as may be designated by the Board of
Directors of the Corporation as the registrar and transfer agent for the Series
A Preferred from time to time (the "Registrar and Transfer Agent"), that the
holder elects to convert such number of shares of Series A Preferred specified
in such notice and (ii) if required, furnish appropriate endorsements and
transfer documents. Any notice regarding conversion shall state the name or
names (with address) in which the shares of Common Stock which shall be issuable
upon such conversion shall be issued, and shall be accompanied by funds in an
amount sufficient to pay any transfer or similar tax required by the provisions
of paragraph (e) below.
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Each conversion shall be deemed to have been effected on the date on which
the requirements set forth in this paragraph 4(d) have been satisfied as to such
share of Series A Preferred so converted, and the person in whose name any
certificate or certificates for the shares of Common Stock shall be issuable
upon such conversion shall be deemed to have become, on said date, the holder of
record of the shares represented thereby.
(d) No fractional shares of Common Stock or script representing fractional
shares of Common Stock shall be issued upon conversion of shares of Series A
Preferred. If more than one share of Series A Preferred shall be surrendered
for conversion at one time by the same holder, the number of full shares of
Common Stock issuable upon conversion thereof shall be computed on the basis of
the aggregate number of shares of Series A Preferred so surrendered. Instead of
any fractional shares of Common Stock issuable upon conversion of any shares of
Series A Preferred, the Corporation shall pay a cash adjustment in respect to
such fraction based on the last reported closing price of the Common Stock on
the trading day immediately preceding the day on which the affected shares of
Series A Preferred are deemed to have been converted.
(e) If a holder converts shares of Series A Preferred, the Corporation
shall pay any and all documentary, stamp or similar transfer tax payable in
respect of the issue or delivery of the shares of Common Stock upon the
conversion; PROVIDED, HOWEVER, the Corporation shall not be required to pay any
such tax that may be payable because any such shares are issued in a name other
than the name of the holder of such shares of Series A Preferred.
(f) The Conversion Price in effect at any time shall be subject to
adjustment, from time to time, as follows:
(i) In case the Corporation shall pay a dividend or make a
distribution, in shares of Common Stock, on Common Stock, the Conversion Price
in effect at the opening of business on the date following the date fixed for
the determination of stockholders entitled to receive such dividend or other
distribution shall be reduced by multiplying such Conversion Price by a fraction
of which the numerator shall be the number of shares of Common Stock outstanding
at the close of business on the date fixed for such determination and the
denominator shall be the sum of such number of shares and the total number of
shares constituting such dividend or other distribution, such reduction to
become effective immediately after the opening of business on the day following
the date fixed for such determination. The Corporation will not pay any dividend
or make any distribution on shares of Common Stock held in the treasury of the
Corporation. If any dividend or distribution of the type described in this
Section 4(f)(i) is declared but is not so paid or made and not required to be so
paid or made, the Conversion Price shall again be adjusted to the Conversion
Price which would then be in effect if such dividend or distribution had not
been declared.
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(ii) In case the Corporation shall issue rights or warrants to all
holders of Common Stock entitling them (for a period expiring within 45 days
after the date fixed for determination of stockholders entitled to receive such
rights or warrants) to subscribe for or purchase Common Stock at a price per
share less than the Average Market Value (as defined below) per share at the
record date for the determination of stockholders entitled to receive such
rights or warrants, the Conversion Price in effect immediately prior thereto
shall be adjusted so that the same shall equal the rate determined by
multiplying the Conversion Price in effect immediately prior to the date fixed
for determination of stockholders entitled to receive such rights or warrants by
a fraction the numerator of which shall be the number of shares of Common Stock
outstanding at the close of business on the date fixed for determination of
stockholders entitled to receive such rights or warrants plus the number of
shares which the aggregate offering price of the total number of shares so
offered would purchase at such Average Market Value and the denominator of which
shall be the number of shares of Common Stock outstanding on the date fixed for
determination of stockholders entitled to receive such rights or warrants plus
the number of additional shares of Common Stock offered for subscription or
purchase. Such adjustment shall be made successive whenever any such rights or
warrants are issued, and shall become effective immediately after the opening of
business on the day following the record date for the determination of the
stockholders entitled to receive such rights or warrants. In determining whether
any rights or warrants entitle the holders to subscribe for or purchase shares
of Common Stock at less than such Average Market Value, and in determining the
aggregate offering price of such shares of Common Stock, there shall be taken
into account any consideration received by the Corporation for such rights or
warrants, the value of such consideration, if other than cash, to be determined
by the Board of Directors. To the extent that shares of Common Stock are not
delivered or required to be delivered after the expiration of such rights or
warrants, the Conversion Price shall be readjusted to the Conversion Price which
would then be in effect had the adjustments made upon the issuance of such
rights or warrants been made on the basis of delivery of only the number of
shares of Common Stock actually delivered. If such rights or warrants are not so
issued and not required to be so issued, the Conversion Price shall again be
adjusted to be the Conversion Price which would then be in effect if such record
date for the determination of stockholders entitled to receive such rights or
warrants had not been fixed. As used herein, the term "Average Market Value"
means the average of the Current Market Value of the Common Stock for the ten
trading days ending on the second Business Day prior to the applicable date of
payment and "Current Market Value" means (i) the volume weighted average price,
as reported by the Nasdaq National Market, or (ii) the average of the high and
low sale prices of the Common Stock, if reported on any other national
securities exchange.
(iii) In case outstanding shares of Common Stock shall be subdivided
into a greater number of shares of Common Stock, the Conversion Price in effect
at the opening of business on the day following the day upon which such
subdivision becomes effective shall be proportionately reduced, and conversely,
in case outstanding shares of Common Stock shall be combined into a smaller
number of shares of Common Stock, the Conversion Price in effect at the opening
of business on the day following the day upon which such combination becomes
effective shall be proportionately increased, such
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reduction or increase, as the case may be, to become effective immediately after
the opening of business on the day following the day upon which such subdivision
or combination becomes effective.
(iv) In case the Corporation shall distribute to all holders of
Common Stock any shares of any class of capital stock of the Corporation (other
than Common Stock) or evidences of its indebtedness or assets (excluding cash
dividends or other distributions to the extent paid from retained earnings of
the Corporation) or rights or warrants to subscribe for or purchase any of its
securities (excluding those referred to in subsection (ii) above) (any of the
foregoing hereinafter in this subsection the "Distributed Securities"), then, in
each such case, the Conversion Price shall be reduced so that the same shall
equal the rate determined by multiplying the Conversion Price in effect on the
record date with respect to such distribution by a fraction of which the
numerator shall be the Average Market Value on such record date less the fair
market value on such record date (as determined by the Board of Directors of the
Corporation, whose determination shall be conclusive) of the Distributed
Securities applicable to one share of Common Stock and the denominator of which
shall be the Average Market Value per share on the record date for the
determination of stockholders entitled to receive such distribution; such
adjustment shall become effective immediately prior to the opening of business
on the day following such record date. Notwithstanding the foregoing, in the
event the then fair market value (as so determined) of the portion of the
Distributed Securities applicable to one share of Common Stock is equal to or
greater than the Average Market Value on the relevant record date, in lieu of
the foregoing adjustment, adequate provision shall be made so that each Holder
shall have the right to receive upon exchange the amount of Distributed
Securities such holder would have received had such holder exchanged each Series
A Preferred on such record date. In the event that such distribution is not so
paid or made, the Conversion Price shall again be adjusted to the Conversion
Price which would then be in effect if such distribution had not been declared.
If the Board of Directors of the Corporation determines the fair market value of
any distribution for purposes of this subsection by reference to the actual or
when issued trading market for any securities, it must in doing so consider the
prices in such market over the same period used in computing the Average Market
Value.
Notwithstanding the foregoing provisions of this subsection, no
adjustment shall be made hereunder for any distribution of Distributed
Securities if the Corporation makes proper provision so that each holder who
exchanges a Series A Preferred (or any portion thereof) after the record date
for such distribution shall be entitled to receive upon such exchange, in
addition to the shares of Common Stock issuable upon such exchange, the amount
and kind of Distributed Securities that such holder would have been entitled to
receive if such holder had, immediately prior to such record date, exchanged
such Series A Preferred for Common Stock, PROVIDED that, with respect to any
Distributed Securities that are convertible, exchangeable or exercisable, the
foregoing provision shall only apply to the extent (and so long as) the
Distributed Securities receivable upon exchange of such Series A Preferred would
be convertible, exchangeable or exercisable, as applicable, without any loss of
rights or privileges for a period of at least 60 days following exchange of such
Series A Preferred.
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(v) In case the Corporation shall, by dividend or otherwise,
distribute to all holders of Common Stock cash (excluding (x) any quarterly cash
dividend on the Common Stock to the extent the aggregate cash dividend per share
of Common Stock in any fiscal quarter does not exceed the greater of (A) the
amount per share of Common Stock of the next preceding quarterly cash dividend
on the Common Stock to the extent such preceding quarterly dividend did not
require any adjustment of the Conversion Price pursuant to this subsection (as
adjusted to reflect subdivisions or combinations of the Common Stock), and (B)
3.75% of the average of the last reported sales price of the Common Stock
(determined as provided below) during the ten trading days next preceding the
date of declaration of such dividend and (y) any dividend or distribution in
connection with the liquidation, dissolution or winding up of the Company,
whether voluntary or involuntary), then, in such case, unless the Corporation
elects to reserve such cash for distribution to the holders upon the conversion
of the Series A Preferred so that any such holder converting Series A Preferred
will receive upon such conversion, in addition to the shares of Common Stock to
which such holder is entitled, the amount of cash which such holder would have
received if such holder had, immediately prior to the record date for such
distribution of cash, converted its Series A Preferred for Common Stock, the
Conversion Price shall be reduced so that the same shall equal the rate
determined by multiplying the Conversion Price in effect immediately prior to
the close of business on such record date by a fraction of which the numerator
shall be such Average Market Value on the record date less the amount of cash so
distributed (and not excluded as provided above) applicable to one share of
Common Stock and the denominator of which shall be the Average Market Value on
such record date; such adjustment to be effective immediately prior to the
opening of business on the day following the record date; PROVIDED, HOWEVER,
that in the event the portion of the cash so distributed applicable to one share
of Common Stock is equal to or greater than the Average Market Value on the
record date, in lieu of the foregoing adjustment, adequate provision shall be
made so that each holder of Series A Preferred shall have the right to receive
upon exchange the amount of cash such holder would have received had such holder
exchanged each share of Series A Preferred on the record date. If such dividend
or distribution is not so paid or made, the Conversion Price shall again be
adjusted to be Conversion Price which would then be in effect if such dividend
or distribution had not been declared.
If any adjustment is required to be made as set forth in this
subsection as a result of a distribution that is a quarterly dividend, such
adjustment shall be based upon the amount by which such distribution exceeds the
amount of the quarterly cash dividend permitted to be excluded pursuant hereto.
If an adjustment is required to be made as set forth in this subsection above as
a result of a distribution that is not a quarterly dividend, such adjustment
shall be based upon the full amount of the distribution.
(vi) In case a tender or exchange offer made by the Corporation or
any subsidiary of the Corporation for all or any portion of the Common Stock
shall expire and such tender or exchange offer shall involve the payment by the
Corporation or such subsidiary of consideration per share of Common Stock having
a fair market value (as
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determined by the Board of Directors of the Corporation or, to the extent
permitted by applicable law, a duly authorized committee thereof, whose
determination shall be conclusive, and described in a resolution of the Board of
Directors of the Corporation or such duly authorized committee thereof, as the
case may be), at the last time (the "Expiration Time") tenders or exchanges may
be made pursuant to such tender or exchange offer (as it shall have been
amended), that exceeds the Average Market Value on the trading day next
succeeding the Expiration Time, the Conversion Price shall be reduced so that
the same shall equal the rate determined by multiplying the Conversion Price in
effect immediately prior to the Expiration Time by a fraction of which the
numerator shall be the number of shares of Common Stock outstanding (including
any tendered or exchanged shares) on the Expiration Time multiplied by the
Average Market Value on the trading day next succeeding the Expiration Time and
the denominator of which shall be the sum of (x) the fair market value
(determined as aforesaid) of the aggregate consideration payable to stockholders
based on the acceptance (up to any maximum specified in the terms of the tender
or exchange offer) of all shares validly tendered or exchanged and not withdrawn
as of the Expiration Time (the shares deemed so accepted up to any such maximum,
being referred to in this subsection as the "Purchased Shares") and (y) the
product of the number of shares of Common Stock outstanding (less any Purchased
Shares) on the Expiration Time and the Average Market Value on the trading day
next succeeding the Expiration Time; such adjustment to become effective
immediately prior to the opening of business on the day following the Expiration
Time. If the Corporation is obligated to purchase shares pursuant to any such
tender or exchange offer, but the Corporation is permanently prevented by
applicable law from effecting any such purchases or all such purchases are
rescinded, the Conversion Price shall again be adjusted to be the Conversion
Price which would then be in effect if such tender or exchange offer had not
been made.
(vii) The "fair market value" shall mean the amount which a willing
buyer under no compulsion to buy would pay a willing seller under no compulsion
to sell in an arm's length transaction. The "record date" shall mean, with
respect to any dividend, distribution or other transaction or event in which the
holders of Common Stock have the right to receive any cash, securities or other
property or in which the Common Stock (or other applicable security) is
exchanged for or converted into any combination of cash, securities or other
property, the date fixed for determination of stockholders entitled to receive
such cash, securities or other property (whether such date is fixed by the Board
of Directors of the Corporation or by statute, contract or otherwise).
(viii) Rights or warrants distributed by the Corporation to all
holders of Common Stock entitling the holders thereof to subscribe for or
purchase shares of the Corporation's capital stock (either initially or under
certain circumstances), which rights or warrants, until the occurrence of a
specified event or events ("Trigger Event"):
(A) are deemed to be transferred with such shares of Common Stock,
(B) are not exercisable, and
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(C) are also issued in respect of future issuances of Common
Stock,
shall not be deemed distributed for purposes of this Section 4 until the
occurrence of the earliest Trigger Event. In addition, in the event of any
distribution of rights or warrants, or any Trigger Event with respect thereto,
that shall have resulted in an adjustment to the Conversion Price under this
Section 4, (1) in the ease of any such rights or warrants which shall all have
been redeemed or repurchased without exercise by any holders thereof, the
Conversion Price shall be readjusted upon such final redemption or purchase to
give effect to such distribution or Trigger Event, as the case may be, as though
it were a cash distribution, equal to the per share redemption or repurchase
price received by a holder of Common Stock with respect to such rights or
warrants (assuming such holder had retained such rights or warrants), made to
all holders of Common Stock as of the date of such redemption or repurchase, and
(2) in the case of any such rights or warrants all of which shall have expired
without exercise by any holder thereof, the Conversion Price shall be adjusted
as if such issuance had not occurred.
(ix) No adjustment to the Conversion Price shall be required unless
such adjustment would require an increase or decrease of at least 1% in such
rate; PROVIDED, HOWEVER, that any adjustments which by reason of this subsection
(i) are not required to be made shall be carried forward and taken into account
in any subsequent adjustment. All calculations under this Section 4 shall be
made by the Company and shall be made to the nearest cent or to the nearest one
hundredth of a share, as the case may be. Anything in this Section 4 to the
contrary notwithstanding, the Corporation shall be entitled to make such
reductions in the Conversion Price, in addition to those required by this
Section 4, as they in their discretion shall determine to be advisable in order
that any stock dividends, subdivision of shares, distribution of rights to
purchase stock or securities, or any distribution of securities convertible into
or exchangeable for stock hereafter made by the Corporation to its stockholders
shall not be taxable. To the extent permitted by applicable law, the Corporation
from time to time may reduce the Conversion Price by any amount for any period
of time if the period is at least 20 days, the reduction is irrevocable during
the period and the Board of Directors of the Corporation shall have made a
determination that such reduction would be in the best interests of the
Corporation, which determination shall be conclusive. Whenever the Conversion
Price is so reduced, the Corporation shall mail to holders a notice of the
reduction. The Corporation shall mail the notice at least 15 days before the
date the reduced Conversion Price takes effect. The notice shall state the
reduced Conversion Price and the period it will be in effect.
(x) Whenever the Conversion Price is adjusted, as herein provided,
the Corporation shall promptly prepare an officers' certificate setting forth
the Conversion Price after such adjustment and setting forth a brief statement
of the facts requiring such adjustment. Promptly after the preparation of such
certificate, shall prepare a notice of such adjustment of the Conversion Price
setting forth the adjusted Conversion Price and the date on which such
adjustment becomes effective and shall mail such notice of such adjustment of
the Conversion Price to each holder.
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(xi) In any case in which this Section 4 provides that an
adjustment shall become effective immediately after a record date for an event,
the Corporation may defer until the occurrence of such event (i) issuing to any
holder of Series A Preferred converted after such record date and before the
occurrence of such event the additional shares of Common Stock issuable upon
such conversion by reason of the adjustment required by such event over and
above the Common Stock issuable upon such conversion before giving effect to
such adjustment and (ii) paying to such holder any amount in cash or additional
shares in lieu of any fractional share.
(xii) In case of a tender or exchange offer made by a person other
than the Corporation or any subsidiary for an amount which increases the
offeror's ownership of the Common Stock to more than 25% of the Common Stock
outstanding and shall involve the payment by such person of consideration per
share of Common Stock having a fair market value (as determined by the Board of
Directors of the Corporation, whose determination shall be conclusive, and
described in a resolution of the Board of Directors of the Corporation) at the
last time (the "Expiration Time") tenders or exchanges may be made pursuant to
such tender or exchange offer (as it shall have been amended) that exceeds the
Average Market Value on the trading day next succeeding the Expiration Time, and
in which, as of the Expiration Time the Board of Directors of the Corporation is
not recommending rejection of the offer, the Conversion Price shall be reduced
so that the same shall equal the price determined by multiplying the Conversion
Price in effect immediately prior to the Expiration Time by a fraction of which
the numerator shall be the number of shares of Common Stock outstanding
(including any tendered or exchange shares) on the Expiration Time multiplied by
the Average Market Value on the trading day next succeeding the Expiration Time
and the denominator shall be the sum of (x) the fair market value (determined as
aforesaid) of the aggregate consideration payable to stockholders based on the
acceptance (up to any maximum specified in the terms of the tender or exchange
offer) of all shares validly tendered or exchanged and not withdrawn as of the
Expiration Time (the shares deemed so accepted, up to any such maximum, being
referred to in this subsection as the "Purchased Shares") and (y) the product of
the number of shares of Common Stock outstanding (less any Purchased Shares) on
the Expiration Time and the Average Market Value on the trading day next
succeeding the Expiration Time, such reduction to become effective immediately
prior to the opening of business on the day following the Expiration Time. In
the event that such person is obligated to purchase shares pursuant to any such
tender or exchange offer, but such person is permanently prevented by applicable
law from effecting any such purchases or all such purchases are rescinded, the
Conversion Price shall again be adjusted to be the Conversion Price which would
then be in effect if such tender or exchange offer had not been made.
Notwithstanding the foregoing, the adjustment described in this paragraph 4(xii)
shall not be made if, as of the Expiration Time, the offering documents with
respect to such offer disclose a plan or intention to cause the Corporation to
engage in a consolidation or merger of the Corporation's or a sale of
substantially all of the Corporation's assets.
4A. EFFECT OF RECLASSIFICATION, CONSOLIDATION, MERGER OR SALE. If any of
the following events occur, namely (i) any reclassification or change of
outstanding shares of
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Common Stock (other than a change in par value, or from par value to no par
value, or from no par value to par value, or as a result of a subdivision or
combination), (ii) any consolidation, merger or combination of the Corporation
with another person as a result of which holders of Common Stock shall be
entitled to receive stock, securities or other property or assets (including
cash) with respect to or in exchange for such Common Stock, or (iii) any sale or
conveyance of the properties and assets of the Corporation as, or substantially
as, an entirety to any other person as a result of which holders of Common Stock
shall be entitled to receive stock, securities or other property or assets
(including cash) with respect to or in exchange for such Common Stock, then each
share of Series A Preferred shall be converted for the kind and amount of shares
of stock and other securities or property or assets (including cash) receivable
upon such reclassification, change, consolidation, merger, combination, sale or
conveyance by a holder of a number of shares of Common Stock issuable upon
exchange of such share of Series A Preferred immediately prior to such
reclassification, change, consolidation, merger, combination, sale or
conveyance. Any such adjustments shall be as nearly equivalent as may be
practicable to the adjustments provided for in Section 4 hereof. The above
provisions of this Section shall similarly apply to successive
reclassifications, consolidations, mergers, combinations, and sales.
4B. RIGHTS PLAN. If the Corporation implements a stockholders' rights
plan, such rights plan must provide that upon exchange of the Series A Preferred
into Common Stock the holders will receive, in addition to the Common Stock
issuable upon such exchange, such rights whether or not such rights have
separated from the Common Stock at the time of such exchange.
4C. FUNDAMENTAL CHANGE. Notwithstanding the foregoing, but not in
addition to the adjustments set forth elsewhere herein, if the Corporation makes
an announcement of the occurrence or an imminent occurrence of a Fundamental
Change at any time prior to the mandatory redemption on April 15, 2010, there
will be an adjustment to the Conversion Price of the Series A Preferred (the
"Fundamental Change Exchange Rate") such that the Conversion Price will
thereafter equal the Liquidation Preference, divided by the Fundamental Change
Average Market Price, unless the Fundamental Change Exchange Rate is lower than
the then current Conversion Price of the Series A Preferred as calculated in the
manner described above (in which case there will be no such adjustment to the
exchange rate).
The term "Fundamental Change" means the occurrence of any transaction or
event in connection with which all or substantially of all of the outstanding
shares of Common Stock shall be exchanged for, converted into, acquired for or
constitute the right to receive stock, securities, other property or assets
(including cash) of another entity or person (whether by means of an exchange
offer, liquidation, tender offer, consolidation, merger, combination,
reclassification, recapitalization or otherwise).
"Fundamental Change Average Market Value" of the Common Stock means the
arithmetic average of the Current Market Value for the ten trading days ending
on the fifth Business Day prior to the date of the closing of the Fundamental
Change.
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4D. NO. ADJUSTMENTS. Notwithstanding anything herein to the contrary, no
adjustment will be required as a result of (a) the issuance of shares of Common
Stock as a result of any of the following (i) the grant or exercise of employee
or director stock options (ii) the exercise of outstanding warrants or
conversion or exchange of existing notes and securities and (iii) any
contribution to any 401(k) plan or supplemental deferred compensation plan
maintained by the Corporation or (b) the issuance of Common Stock as a dividend
on or upon exchange of the Series A Preferred. Common Stock issued in
connection with acquisitions of business or assets from persons that are not
affiliates of the Corporation will be deemed to have been issued for a price at
least equal to Average Market Value.
4E. RESERVED SHARES. The Corporation will at all times reserve, keep
available and be prepared to issue, free from any preemptive rights, out of its
authorized but unissued Common Stock solely for the purpose of effecting
conversion of the Series A Preferred, the full number of shares of Common Stock
then issuable upon the conversion of all outstanding shares of Series A
Preferred, including shares of Series A Preferred issued as dividends. The
Corporation shall from time to time, in accordance with the laws of the State of
Delaware, endeavor to amend its charter to increase the authorized amount of its
Common Stock remaining unissued if at any time there shall be insufficient
authorized but unissued shares of Common Stock to permit the conversion of all
outstanding Series A Preferred.
Section 5. VOTING. (a) Except as set forth below or otherwise required
by law, the holders of shares of Series A Preferred shall not have a vote with
respect to matters submitted to stockholders of the Corporation for vote or
consent.
(i) DIVIDEND DEFAULTS. If and whenever the Corporation fails to pay any
dividends on the Series A Preferred within 15 days of the applicable Dividend
Payment Date, the holders of Series A Preferred shall become entitled to the
right to elect two additional directors, without the requirement of any
additional action by the Board of Directors or stockholders of the Corporation,
and upon such event, the number of directors constituting the Board of Directors
shall automatically be increased by two and the holders of shares of Series A
Preferred (voting together as a single class (pro rata based on liquidation
preference in the case of preferred stock and principal amount in the case of
the Corporation's 10% Subordinated Convertible Debentures Due 2011 (the
"Debentures")) with the holders of Debentures and any series of authorized
preferred stock of the Corporation ranking on a parity with the Series A
Preferred either as to dividends or upon liquidation and upon which like voting
rights have been conferred and are exercisable and which are then so entitled to
vote) shall be entitled to elect the directors to fill the resulting vacancies
on the Board of Directors of the Corporation (the "Additional Directors"). Such
right to vote to elect directors shall, when vested, continue with respect to
the Series A Preferred until all dividends in arrears on all shares of Series A
Preferred shall have been paid in full and, when so paid, such right to so elect
directors shall cease, subject to the same provisions for the vesting of such
right to elect directors in the case of future failure to pay dividend defaults.
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(ii) Whenever such voting rights shall have vested, such right may
be exercised initially either at a special meeting called as herein provided or
at any annual meeting of stockholders held for the purpose of electing such
Additional Directors.
(iii) At any time when the voting right granted by paragraph 5(a)(i)
shall have vested in the holders of shares of Series A Preferred, and if such
right shall not already have been initially exercised, an officer of the
Corporation shall, upon written request of holders of record of 20% in the
aggregate of such shares of Series A Preferred then outstanding, addressed to
the President and Chief Executive Officer of the Corporation, call a special
meeting. Such meeting shall be held at the earliest practicable date upon the
notice required for special meetings of stockholders at the place for holding
annual meetings to stockholders of the Corporation or, if none, at a place
designated by the President and Chief Executive Officer of the Corporation. If
such meeting shall not be called by the proper officers of the Corporation
within 30 days after such written request is mailed to the President and Chief
Executive Officer of the Corporation, by registered mail, addressed to the
President and Chief Executive Officer of the Corporation at its principal office
(such mailing to be evidenced by the registry receipt issued by the postal
authorities), then the holders of record of 20% of the shares of Series A
Preferred then outstanding may, subject to any applicable legal requirements,
designate in writing any person to call such meeting at the expense of the
Corporation, and such meeting may be called by such person so designated upon
the notice required for special meetings of stockholders and shall be held at
the same place as is elsewhere provided in this paragraph 5(a)(iii). Any holder
of Series A Preferred then outstanding that would be entitled to vote at such
meeting shall have access to the stock record books of the Corporation for the
purpose of causing a meeting of stockholders to be called pursuant to the
provisions of this paragraph 5(a)(iii). Notwithstanding the provisions of this
paragraph, however, no such special meeting shall be called or held during a
period within 30 days immediately preceding the date fixed for the next annual
meeting of stockholders.
(iv) The Additional Directors elected pursuant to this Section 5 shall
serve until the next annual meeting or until their respective successors shall
be elected and shall qualify. Any Additional Director may be removed by, and
shall not be removed otherwise than by, the majority vote of such holders who
were entitled to participate in such election of directors, voting as a special
class (pro rata based on liquidation preference in the case of preferred stock
and principal amount in the case of the Debentures), at a meeting called for
such purpose or by written consent as permitted by law and the Certificate of
Incorporation and By-laws of the Corporation. So long as a default shall
continue, any vacancy in the office of an Additional Director, other than one
resulting from the removal of such director, may be filled by the remaining
Additional Director and such replacement director shall hold office for the
unexpired term of the replaced director. In the case of the removal of an
Additional Director, or if there shall be no remaining Additional Director, the
vacancy may be filled by the majority vote of such holders then entitled to vote
(with the number of votes to be determined based on liquidation preferences in
the case of preferred stock and principal amount in the case of
15
<PAGE>
the Debentures). Upon any termination of right of holders to vote for directors
as herein provided, the term of office of the Additional Directors then in
office elected by such holders, voting as a class, shall terminate immediately.
Whenever the terms of office of Additional Directors shall so terminate, the
number of directors shall be such as may be provided for pursuant to the
Certificate of Incorporation or By-laws of the Corporation irrespective of any
increase made pursuant to the provisions of paragraph 5(a)(i) above.
(v) So long as any shares Series A Preferred are outstanding, the
By-laws shall contain no provisions that would restrict the exercise, by the
holders of shares of Series A Preferred, of the right to elect directors under
the circumstances provided in paragraph 5(a)(i) above.
(b) So long as any shares of the Series A Preferred remain
outstanding, the affirmative vote or consent of the holders of at least
two-thirds of the shares of Series A Preferred outstanding at the time, and
voting as a class, given in person or by proxy, either in writing (as permitted
by law and the Certificate of Incorporation and By-laws of the Corporation) or
at any special or annual meeting, shall be necessary to permit, effect or
validate any one or more of the following:
(i) the authorization, creation or issuance, or increase in the
authorized or issued amount of shares of, any class or series of stock ranking
senior to the Series A Preferred, either as to dividends or upon liquidation,
PROVIDED, HOWEVER, that no consent of holders of shares of Series A Preferred
shall be required with respect to any increase in the authorized number of
shares of the Corporations' preferred stock or the creation and issuance of any
other series of authorized preferred stock ranking on a parity with or junior to
the Series A Preferred (both as to dividends and on liquidation); or
(ii) the amendment, alteration or repeal, whether by merger,
consolidation or otherwise, of any provisions of the Certificate of
Incorporation (including the Certificate of Designations, Preferences and Rights
creating the Series A Preferred), which would materially and adversely affect
any special rights, preferences, or powers of the Series A Preferred Stock;
PROVIDED, HOWEVER, that any amendment that the Board of Directors determines, in
good faith, pursuant to a board resolution, does not to materially and adversely
affect such preferences, special rights or powers, shall be deemed not to
materially and adversely affect such preferences, special rights or power.
Section 6. REDEMPTION.
(a) MANDATORY REDEMPTION. Unless earlier redeemed or converted, the
Company shall be required to redeem all outstanding shares of Series A Preferred
on April 15, 2010 at the Liquidation Preference thereof per share, plus accrued
and unpaid dividends, if any, to the date of such redemption, subject to the
legal availability of funds therefor.
(b) OPTIONAL REDEMPTION. The shares of Series A Preferred are not
redeemable by the Corporation prior to April 15, 2003. On or after April 15,
2003, the Series A
16
<PAGE>
Preferred are subject to redemption by the Corporation at its option, in whole
or in part, out of funds legally available therefor, at any time or from time to
time, subject to the notice provisions and the provisions for partial
redemptions described below at the following redemption prices (expressed as a
percentage of Liquidity Preference) plus any accrued and unpaid dividends
thereon, if any, to the date of redemption (subject to the right of holders of
record on the relevant dividend payment date that is on or prior to the date of
redemption to receive dividends due on the payment date), if redeemed during the
12-month period commencing April 15, of the years set forth below.
Year Redemption Price
---- ----------------
2003 105.000%
2004 103.333%
2005 101.667%
2006 and thereafter 100.000%
(c) In the case the Corporation shall desire to exercise its rights to
redeem the shares of Series A Preferred, in whole or in part, pursuant to
paragraph 6(b), it shall fix a date for redemption and shall, not less than 30
nor more than 60 days prior to the date fixed for any such redemption of shares
of the Series A Preferred, mail notice of such redemption by first class mail,
postage prepaid, to each holder of the shares of Series A Preferred to be
redeemed at such holder's last address as it appears on the books of the
Registrar and Transfer Agent. If all of the Series A Preferred are represented
by global certificates deposited with a Clearing Agency (as defined below),
notices of redemption shall also be sent to the Clearing Agency. Such notice
shall state: (i) that the Corporation has elected to redeem all or a portion of
the Series A Preferred, as specified in such notice; (ii) the redemption price
(expressed as a percentage of Liquidation Preference); (iii) the redemption
date; (iv) that, unless the Corporation defaults in the delivery of payment of
the redemption price on the redemption date, all shares of Series A Preferred
called for redemption shall cease to accrue dividends after the redemption date
and shall cease to be outstanding after such date; (v) the number of shares of
Series A Preferred held as of the appropriate record date by the holder thereof
that the Corporation intends to redeem; (vi) that the holder thereof is to
surrender to the Corporation in the manner and at the price designated, its
certificate or certificates representing shares of Series A Preferred to be
redeemed; and (vii) any other information required by applicable law to be
included therein and any other customary procedures that a holder of shares of
Series A Preferred must follow to receive payment for such holder's redeemed
shares of Series A Preferred. Neither failure to mail such notice, nor any
defect therein or in the mailing thereof, to any particular holder shall affect
the sufficiency of the notice or the validity of the proceedings for redemption
with respect to any other holder.
(d) If and to the extent the Series A Preferred are represented by
book-entry interests, the Corporation shall irrevocably deposit sufficient funds
on the date fixed for redemption with the Clearing Agency and give the Clearing
Agency irrevocable instructions and authority to pay the redemption price to the
holders of the Series A Preferred to be redeemed, and if the Series A Preferred
are not represented by book-entry
17
<PAGE>
interests, the Corporation shall irrevocably deposit such funds with the
Registrar and Transfer Agent for the Series A Preferred and give such transfer
agent such irrevocable instructions and authority to pay the redemption price to
the holders of the Series A Preferred to be redeemed. If a notice of redemption
shall have been given and sufficient funds irrevocably deposited as required,
then immediately prior to the close of business on the date of such deposit, all
rights of the holders of such Series A Preferred so called for redemption will
cease, except the right of such holders to receive the redemption price, but
without additional interest from and after such redemption date. In the event
that any date fixed for redemption of Series A Preferred is not a Business Day,
then payment of the redemption price payable on such date will be made on the
next succeeding day which is a Business Day (and without any interest or other
payment in respect of any such delay), except that if such Business Day falls in
the next calendar year, such payment will be made on the immediately preceding
Business Day. In the event that payment of the redemption price is improperly
withheld or refused and not paid by the Corporation (pursuant to the guarantee),
dividends on the Series A Preferred called for redemption will continue to
accumulate at the then applicable rate to the date that the redemption price is
actually paid and the holders of such Series A Preferred may exercise all of
their rights as holders thereof.
As used herein, the term "Clearing Agency" means an organization registered
as a "Clearing Agency" pursuant to Section 17A of the Securities Exchange Act of
1934, as amended, that is acting as depositary for the Series A Preferred and in
whose name (or nominee's name) shall be registered one or more global
certificates representing Series A Preferred and which shall undertake to effect
book-entry transfers and pledges of interests in the Series A Preferred.
(e) In the case of redemption of less than all of the outstanding shares
of Series A Preferred, selection of the Series A Preferred for redemption will
be made by the Registrar and Transfer Agent in compliance with the requirements
of the principal national securities exchange, if any, on which the Series A
Preferred is listed or, if the Series A Preferred is not listed on a national
securities exchange, on a PRO RATA basis, by lot or by such other method as such
Registrar and Transfer Agent in its sole discretion shall deem to be fair and
appropriate. In the event that less than all of the shares represented by any
certificate are redeemed, a new certificate shall be issued representing the
unredeemed shares.
Section 8. CHANGE OF CONTROL. If a Change of Control (as defined
below) with respect to the Corporation shall occur, the Corporation shall be
required to commence an Offer to Purchase (as defined below) for all of the
outstanding shares of Series A Preferred, at a price equal to 101% of the
Liquidation Preference thereof; PROVIDED, HOWEVER, that the Corporation may, at
its option, in lieu of making such an Offer to Purchase, reduce the Conversion
Price such that the securities receivable per share of Series A Preferred upon
conversion at the time of closing of the event constituting the Change of
Control would have a value at least equal to the Liquidation Preference.
18
<PAGE>
As used herein, the term "Change of Control" means such time as (i) a
"person" or a "group" (within the meaning of Sections 13(d) and 14(d)(2) of the
Securities Exchange Act of 1934) becomes the ultimate "beneficial owner" (as
defined in Rule 13d-3 under the Securities Exchange Act of 1934) of more than
50% of the total voting power of all outstanding shares of capital stock of the
Corporation entitled to vote for the election of directors under ordinary
circumstances; or (ii) individuals who on the date of issuance of the Series A
Preferred constitute the Board of Directors (together with any new directors
whose election by the Board of Directors or whose nomination to the Board of
Directors 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 in office who
either were members of the Board of Directors on the date of issuance of the
Series A Preferred or whose election or nomination for election was previously
so approved) cease for any reason to constitute a majority of the members of the
Board of Directors then in office.
In addition, as used herein, the term "Offer to Purchase" means an offer to
purchase all of the shares of Series A Preferred by the Corporation from the
holders thereof commenced by mailing a notice to each holder within 30 days of
the Change of Control stating: (a) that the offer is being made and that all
shares of Series A Preferred validly tendered will be accepted for payment; (b)
that any shares of Series A Preferred not tendered will continue to accrue
dividends pursuant to their terms; (c) that, unless the Corporation defaults in
the payment of the purchase price of the Series A Preferred, any share of Series
A Preferred accepted for payment pursuant to the Offer to Purchase shall cease
to accrue dividends on and after the payment date therefor; (d) that any holder
electing to have shares of Series A Preferred purchased pursuant to the Offer to
Purchase will be required to surrender the certificate or certificates, duly
endorsed for transfer, to the Registrar and Transfer Agent at the address
specified in such notice prior to the close of business on the Business Day
immediately preceding the payment date; (e) that the holder will be entitled to
withdraw their election to have shares repurchased if the Registrar and Transfer
Agent receives, not later than the close of business on the third Business Day
immediately preceding the payment date, a telegram, facsimile transmission or
letter setting forth the name of such holder, the number of shares delivered and
a statement that the holder is withdrawing his tendered shares of Series A
Preferred. On the payment date, the Company shall (i) accept all shares
tendered for payment pursuant to the Offer to Purchase and (ii) deposit with the
Registrar and Transfer Agent money sufficient to pay the purchase price for the
shares tendered and not withdrawn. The Registrar and Transfer Agent shall
promptly mail to holders of Series A Preferred tendered and not withdrawn an
amount equal to the applicable purchase price, and the Registrar and Transfer
Agent shall mail to any holder only tendering a portion of the shares of Series
A Preferred owned by such holder a new certificate representing the number of
shares not tendered for repurchase.
Section 9. LIQUIDATION PREFERENCE. The liquidation value per share of
the Series A Preferred in the event of any voluntary or involuntary dissolution,
liquidation or winding up of the Corporation before any payment or distribution
of the assets of the Corporation or any proceeds thereof (whether capital or
surplus), shall be made to or set apart for the holders of any class or series
of stock of the Corporation ranking junior to
19
<PAGE>
the Series A Preferred upon liquidation, shall be an amount equal to $100 per
share (the "Liquidation Preference").
(b) After the payment to the holders of shares of Series A Preferred Stock
of the full Liquidation Preference, the holders of Series A Preferred Stock as
such shall not have any right or claim to any of the remaining assets of the
Corporation.
(c) If upon any voluntary or involuntary dissolution, liquidation or
winding up of the Corporation, the assets of the Corporation or proceeds thereof
(whether capital or surplus) available for distribution to the holders of Series
A Preferred and any other class or series of stock of the Corporation ranking on
a parity with the Series A Preferred as to payments upon liquidation,
dissolution or winding up shall be insufficient to pay the holders of all
outstanding shares of Series A Preferred and all other such parity stock the
full preferential amounts (including all dividends accrued and unpaid) payable
on such shares of stock, then the holders of each class or series of such stock
will share ratably in any such distribution of assets, or the proceeds thereof,
in accordance with the respective amounts that would be payable on such shares
if all amounts payable thereon were paid in full.
(d) Neither the consolidation or merger of the Corporation with or into
any other entity, any merger of any other entity with or into the Corporation,
nor any sale or transfer of all or substantially all of the Corporation's assets
for cash or securities or other property shall be considered a liquidation,
dissolution or winding up of the Corporation for purpose of this Section 9.
Section 10. SINKING FUND. The Series A Preferred shall not be subject to
the operation of a sinking fund.
Section 11. SHARES TO BE RETIRED. Any share of Series A Preferred
converted, redeemed or otherwise acquired by the Corporation shall be retired
and canceled and shall upon cancellation be restored to the status of authorized
but unissued shares of preferred stock, subject to reissuance by the Board of
Directors as Series A Preferred or as shares of preferred stock of one or more
other series.
Section 12. BOOK-ENTRY ISSUANCE. (a) The Depository Trust Company, New
York, New York ("DTC"), will initially act as the Clearing Agency. The Series A
Preferred will be issued only as fully-registered securities and will be
initially registered in the name of Cede & Co. (DTC's partnership nominee).
(b) DTC may discontinue providing its services as Clearing Agency with
respect to the Series A Preferred by giving reasonable notice to the Corporation
as provided in the agreement between the Corporation and DTC. Under such
circumstances, if a successor Clearing Agency is not obtained, the Corporation
at its expense shall cause certificates for Series A Preferred to be printed and
delivered as promptly as practicable. If the Corporation decides to discontinue
use of the system of book-entry transfers through DTC (or a successor Clearing
Agency), the Corporation at its expense shall cause
20
<PAGE>
certificates for Series A Preferred to be printed and delivered to the
beneficial owners of the Series A Preferred as promptly as practicable.
(c) In the event that the Series A Preferred does not remain in
book-entry-only form, the following provisions will apply:
(i) Registration of transfers of Series A Preferred will be
effected without charge by or on behalf of the Corporation but upon payment
(and/or the giving of such indemnity as the Corporation may require) in respect
of any tax or other governmental charges which may be imposed in connection
therewith.
(ii) Exchanges of Series A Preferred for shares of Common Stock
shall be effected without charge by or on behalf of the Corporation, but upon
payment (and/or the giving of such indemnity as the Corporation may require) in
respect of any tax or other governmental charges which may be imposed in
connection with the issuance of any shares of Common Stock in the name of any
person other than the holder of the Series A Preferred for which it is being
exchanged or for any reason other than such exchange.
(iii) The Corporation shall not be required to register or cause to
be registered the transfer of Series A Preferred after such Series A Preferred
have been called for redemption."
21
<PAGE>
IN WITNESS WHEREOF, the Corporation has caused this Certificate to be
duly executed on its behalf by the undersigned President and Chief Executive
Officer and attested to by its Secretary this day 6th April, 1998.
/s/ Michael J. Mahoney
-------------------------------------
Michael J. Mahoney
President and Chief Executive Officer
ATTEST:
/s/ Sheldon M. Goldman
- ----------------------------
Sheldon M. Goldman
Secretary
22
<PAGE>
Exhibit 4.1
================================================================================
VIATEL, INC.,
as Issuer
and
THE BANK OF NEW YORK,
as Trustee
-------------
Senior Discount Dollar Indenture
Dated as of April 8, 1998
-------------
$400,000,000
12.50% Senior Discount Notes due 2008
================================================================================
<PAGE>
CROSS-REFERENCE TABLE
TIA Sections Indenture Sections
- ------------ ------------------
ss. 310(a)(1) ............................................... 7.10
(a)(5) ............................................... 7.10
(b) .................................................. 7.03; 7.08
ss. 311 ..................................................... 7.03
ss. 313(a) .................................................. 7.06
(c) .................................................. 7.05; 7.06
ss. 314(a) .................................................. 4.17
(a)(4) ............................................... 1.01
(e) .................................................. 1.01
ss. 315(a)................................................... 7.02
ss. 316(a)................................................... 6.06
Note: The Cross-Reference Table shall not for any purpose be deemed to be a part
of the Indenture.
<PAGE>
TABLE OF CONTENTS
Page
RECITALS OF THE COMPANY.......................................................1
ARTICLE ONE
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. Definitions....................................................2
SECTION 1.02. Incorporation by Reference of Trust Indenture Act.............26
SECTION 1.03. Rules of Construction.........................................27
ARTICLE TWO
THE NOTES
SECTION 2.01. Form and Dating...............................................27
SECTION 2.02. Restrictive Legends...........................................29
SECTION 2.03. Execution, Authentication and Denominations...................31
SECTION 2.04. Registrar and Paying Agent....................................32
SECTION 2.05. Paying Agent to Hold Money in Trust...........................33
SECTION 2.06. Transfer and Exchange.........................................34
SECTION 2.07. Book-Entry Provisions for Global Notes........................34
SECTION 2.08. Special Transfer Provisions...................................36
SECTION 2.09. Replacement Notes.............................................39
SECTION 2.10. Outstanding Notes.............................................40
SECTION 2.11. Temporary Notes...............................................40
SECTION 2.12. Cancellation..................................................41
SECTION 2.13. CUSIP Numbers.................................................41
SECTION 2.14. Defaulted Interest............................................41
SECTION 2.15. Issuance of Additional Notes..................................42
ARTICLE THREE
REDEMPTION
SECTION 3.01. Right of Redemption...........................................42
SECTION 3.02. Notices to Trustee............................................42
SECTION 3.03. Selection of Notes to Be Redeemed.............................43
SECTION 3.04. Notice of Redemption..........................................43
SECTION 3.05. Effect of Notice of Redemption................................44
SECTION 3.06. Deposit of Redemption Price...................................44
SECTION 3.07. Payment of Notes Called for Redemption........................44
Note: The Table of Contents shall not for any purposes be deemed to be a part of
the Indenture.
<PAGE>
ii
Page
SECTION 3.08. Notes Redeemed in Part........................................45
ARTICLE FOUR
COVENANTS
SECTION 4.01. Payment of Notes..............................................45
SECTION 4.02. Maintenance of Office or Agency...............................45
SECTION 4.03. Limitation on Indebtedness....................................46
SECTION 4.04. Limitation on Restricted Payments.............................49
SECTION 4.05. Limitation on Dividend and Other Payment Restrictions
Affecting Restricted Subsidiaries...........................54
SECTION 4.06. Limitation on the Issuance and Sale of Capital Stock of
Restricted Subsidiaries.....................................55
SECTION 4.07. Limitation on Issuances of Guarantees by
Restricted Subsidiaries.....................................55
SECTION 4.08. Limitation on Transactions with Shareholders and Affiliates...56
SECTION 4.09. Limitation on Liens...........................................57
SECTION 4.10. Limitation on Sale-Leaseback Transactions.....................58
SECTION 4.11. Limitation on Asset Sales.....................................59
SECTION 4.12. Repurchase of Notes upon a Change of Control..................60
SECTION 4.13. Existence.....................................................60
SECTION 4.14. Payment of Taxes and Other Claims.............................60
SECTION 4.15. Maintenance of Properties and Insurance.......................61
SECTION 4.16. Notice of Defaults............................................61
SECTION 4.17. Compliance Certificates.......................................61
SECTION 4.18. Commission Reports and Reports to Holders.....................61
SECTION 4.19. Waiver of Stay, Extension or Usury Laws.......................62
SECTION 4.20. Calculation of Original Issue Discount........................62
ARTICLE FIVE
SUCCESSOR CORPORATION
SECTION 5.01. When Company May Merge, Etc...................................63
SECTION 5.02. Successor Substituted.........................................64
ARTICLE SIX
DEFAULT AND REMEDIES
SECTION 6.01. Events of Default.............................................64
SECTION 6.02. Acceleration..................................................66
SECTION 6.03. Other Remedies................................................66
SECTION 6.04. Waiver of Past Defaults.......................................66
SECTION 6.05. Control by Majority...........................................67
SECTION 6.06. Limitation on Suits...........................................67
<PAGE>
iii
Page
SECTION 6.07. Rights of Holders to Receive Payment..........................68
SECTION 6.08. Collection Suit by Trustee....................................68
SECTION 6.09. Trustee May File Proofs of Claim..............................68
SECTION 6.10. Priorities....................................................69
SECTION 6.11. Undertaking for Costs.........................................69
SECTION 6.12. Restoration of Rights and Remedies............................69
SECTION 6.13. Rights and Remedies Cumulative................................70
SECTION 6.14. Delay or Omission Not Waiver..................................70
ARTICLE SEVEN
TRUSTEE
SECTION 7.01. General.......................................................70
SECTION 7.02. Certain Rights of Trustee.....................................70
SECTION 7.03. Individual Rights of Trustee..................................72
SECTION 7.04. Trustee's Disclaimer..........................................72
SECTION 7.05. Notice of Default.............................................72
SECTION 7.06. Reports by Trustee to Holders.................................73
SECTION 7.07. Compensation and Indemnity....................................73
SECTION 7.08. Replacement of Trustee........................................74
SECTION 7.09. Successor Trustee by Merger, Etc..............................75
SECTION 7.10. Eligibility...................................................75
SECTION 7.11. Money Held in Trust...........................................75
SECTION 7.12. Withholding Taxes.............................................75
ARTICLE EIGHT
DISCHARGE OF INDENTURE
SECTION 8.01. Termination of the Company's Obligations.......................75
SECTION 8.02. Defeasance and Discharge of Indenture.........................76
SECTION 8.03. Defeasance of Certain Obligations.............................78
SECTION 8.04. Application of Trust Money....................................79
SECTION 8.05. Repayment to Company..........................................79
SECTION 8.06. Reinstatement.................................................79
SECTION 8.07. Defeasance and Certain Other Events of Default................80
ARTICLE NINE
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 9.01. Without Consent of Holders....................................80
SECTION 9.02. With Consent of Holders.......................................81
SECTION 9.03. Revocation and Effect of Consent..............................82
SECTION 9.04. Notation on or Exchange of Notes..............................82
<PAGE>
iv
Page
SECTION 9.05. Trustee to Sign Amendments, Etc...............................83
SECTION 9.06. Conformity with Trust Indenture Act...........................83
ARTICLE TEN
MISCELLANEOUS
SECTION 10.01. Trust Indenture Act of 1939..................................83
SECTION 10.02. Notices......................................................83
SECTION 10.03. Certificate and Opinion As to Conditions Precedent...........85
SECTION 10.04. Statements Required in Certificate or Opinion................85
SECTION 10.05. Rules by Trustee, Paying Agent or Registrar..................86
SECTION 10.06. Payment Date Other Than a Business Day.......................86
SECTION 10.07. Governing Law; Submission to Jurisdiction;
Agent for Service..........................................86
SECTION 10.08. No Adverse Interpretation of Other Agreements................86
SECTION 10.09. No Recourse Against Others...................................86
SECTION 10.10. Successors...................................................87
SECTION 10.11. Duplicate Originals..........................................87
SECTION 10.12. Separability.................................................87
SECTION 10.13. Table of Contents, Headings, Etc.............................87
EXHIBIT A Form of Restricted Global Note..............................A-1
EXHIBIT B Form of Regulation S Global Note............................B-1
EXHIBIT C Form of U.S. Certificated Note..............................C-1
EXHIBIT D Form of Certificate.........................................D-1
EXHIBIT E Form of Certificate to Be Delivered in Connection with
Transfers Pursuant to Regulation S........................E-1
EXHIBIT F Form of Certificate to Be Delivered in Connection with
Transfers to Non-QIB Accredited Investors.................F-1
<PAGE>
INDENTURE, dated as of April 8, 1998, between VIATEL, INC., a
Delaware corporation, as issuer (the "Company"), and THE BANK OF NEW YORK, as
trustee (the "Trustee").
RECITALS OF THE COMPANY
The Company has duly authorized the execution and delivery of this
Indenture to provide for the issuance from time to time of 12.50% Senior
Discount Dollar Notes due 2008 (the "Notes") issuable as provided in this
Indenture. Pursuant to the terms of a Purchase Agreement dated as of April 3,
1998 (the "Purchase Agreement") between the Company and Morgan Stanley & Co.
Incorporated, as the manager for itself and the several initial purchasers named
on Schedule I thereto (the "Manager"), the Company has agreed to issue and sell
500,000 Senior Discount Dollar Units (collectively, the "Senior Discount Dollar
Units"), 400,000 Senior Dollar Units (collectively, the "Senior Dollar Units"),
226,000 Senior Discount DM Units (collectively, the "Senior Discount DM Units")
and 178,000 Senior DM Units (collectively, the "Senior DM Units"; and together
with the Senior Discount Dollar Units, the Senior Dollar Units and the Senior
Discount DM Units, the "Units"). Each Senior Discount Dollar Unit will consist
of (i) one 12.50% Senior Discount Note due 2008 of the Company with a principal
amount of maturity of $1,000 (collectively, the "Senior Discount Dollar Notes"
to be issued pursuant to the provisions of this Indenture (the "Senior Discount
Dollar Indenture" or "this Indenture") and (ii) .490 of a share of Series A
Redeemable Convertible Preferred Stock of the Company (collectively, the "Series
A Preferred"). Each Senior Dollar Unit will consist of (i) one 11.25% Senior
Note due 2008 of the Company with a principal amount of $1,000 (collectively,
the "Senior Dollar Notes") to be issued pursuant to the provisions of an
Indenture (the "Senior Dollar Indenture") dated as of the Closing Date between
the Company and the Trustee and (ii) .483 of a share of Series A Preferred. Each
Senior Discount DM Unit will consist of (i) one 12.40% Senior Discount Note due
2008 of the Company with a principal amount at maturity of DM 1,000
(collectively, the "Senior Discount DM Notes") to be issued pursuant to the
provisions of an Indenture (the "Senior Discount DM Indenture") dated as of the
Closing Date between the Company, the Trustee and Deutsche Bank,
Aktiengesellschaft (Deutsche Bank AG), as German paying agent and co-registrar
(the "German Paying Agent") and (ii) 2.77 DM denominated 10% Subordinated
Convertible Debentures Due 2011 of the Company(the "Subordinated Convertible
Debentures") to be issued pursuant to the provisions of an Indenture (the
"Subordinated Indenture") to be dated as of the Closing Date between the
Company, the Trustee and the German Paying Agent. Each Senior DM Unit will
consist of (i) one 11.15% Senior Note due 2008 of the Company with a principal
amount of DM 1,000 (collectively, the "Senior DM Notes"; and together with the
Senior Discount Dollar Notes, the Senior Dollar Notes and the Senior Discount DM
Notes, the
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2
"1998 Notes") to be issued pursuant to the provisions of an Indenture (the
"Senior DM Indenture"; and together with the Senior Discount Dollar Indenture,
the Senior Dollar Indenture and the Senior Discount DM Indenture, the
"Indentures") and (ii) 2.69 DM denominated 10% Subordinated Convertible
Debentures. The offering of the Senior Discount DM Units and the Senior DM Units
outside the United States is lead managed by Morgan Stanley Bank AG, an
affiliate of Morgan Stanley & Co. Incorporated. The global offering of the
Senior Discount Dollar Unit and the Senior Dollar Units is lead managed by
Morgan Stanley & Co. Incorporated. All references herein to the "Manager"
include Morgan Stanley & Co. Incorporated and Morgan Stanley Bank AG.
All things necessary to make this Indenture a valid agreement of the
Company, in accordance with its terms, have been done, and the Company has done
all things necessary to make the Notes, when executed by the Company and
authenticated and delivered by the Trustee hereunder and duly issued by the
Company, the valid obligations of the Company as hereinafter provided.
The Notes and the shares of Series A Preferred will be automatically
separated upon the date (the "Separation Date") which is the earliest to occur
of (i) the date that is six months after the Closing Date (as defined below),
(ii) the commencement of an exchange offer with respect to the Notes undertaken
pursuant to the Registration Rights Agreement (as defined below), (iii) the
effective date of a shelf registration with respect to resales of the Notes and
(iv) the commencement of an offer to repurchase the Notes pursuant to the terms
of this Indenture.
This Indenture will, upon the effectiveness of the registration
statement provided for under the Registration Rights Agreement, be subject to,
and governed by, the provisions of the Trust Indenture Act of 1939, as amended,
that are required to be a part of and to govern indentures qualified under the
Trust Indenture Act of 1939, as amended.
For and in consideration of the premises and the purchase of the
Notes by the Holders thereof, it is mutually covenanted and agreed, for the
equal and proportionate benefit of all Holders, as follows.
ARTICLE ONE
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. Definitions.
"Accreted Value" means, for any Specified Date, the amount
calculated pursuant to clause (i), (ii), (iii) or (iv) below for each $1,000
principal amount at maturity of Notes:
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3
(i) if the Specified Date occurs on one of the following dates (each
a "Semi-Annual Accrual Date"), the Accreted Value will equal the amount
set forth below for such Semi-Annual Accrual Date:
Semi-Annual Accrual Date Accreted Value
- ------------------------ --------------
October 15, 1998.............................................. $579.48
April 15, 1999................................................ $615.69
October 15, 1999.............................................. $654.18
April 15, 2000................................................ $695.06
October 15, 2000.............................................. $738.50
April 15, 2001................................................ $784.66
October 15, 2001.............................................. $833.70
April 15, 2002................................................ $885.81
October 15, 2002.............................................. $941.17
April 15, 2003................................................$1,000.00
(ii) if the Specified Date occurs before the first Semi-Annual
Accrual Date, the Accreted Value will equal the sum of (a) $544.11 and (b)
an amount equal to the product of (1) $1.29 multiplied by (2) a fraction,
the numerator of which is the number of days from the Closing Date to the
Specified Date, using a 360-day year of twelve 30-day months, and the
denominator of which is the number of days from the Closing Date to the
first Semi-Annual Accrual Date, using a 360-day year of twelve 30-day
months;
(iii) if the Specified Date occurs between two Semi-Annual Accrual
Dates, the Accreted Value will equal the sum of (a) the Accreted Value for
the Semi-Annual Accrual Date immediately preceding such Specified Date and
(b) an amount equal to the product of (1) the Accreted Value for the
immediately following Semi-Annual Accrual Date less the Accreted Value for
the immediately preceding Semi-Annual Accrual Date multiplied by (2) a
fraction, the numerator of which is the number of days from the
immediately preceding Semi-Annual Accrual Date to the Specified Date,
using a 360-day year of twelve 30-day months, and the denominator of which
is 180; or
(iv) if the Specified Date occurs after the last Semi-Annual Accrual
Date, the Accreted Value will equal $1,000.
"Acquired Indebtedness" means Indebtedness of a Person existing at
the time such Person becomes a Restricted Subsidiary or assumed in connection
with an Asset
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4
Acquisition by the Company or a Restricted Subsidiary and not Incurred in
connection with, or in anticipation of, such Person becoming a Restricted
Subsidiary or such Asset Acquisition.
"Adjusted Consolidated Net Income" means, for any period, the
aggregate net income (or loss) of the Company and its Restricted Subsidiaries
for such period determined in conformity with GAAP; provided that the following
items shall be excluded in computing Adjusted Consolidated Net Income (without
duplication): (i) the net income (or loss) of any Person that is not a
Restricted Subsidiary, except (x) with respect to net income, to the extent of
the amount of dividends or other distributions actually paid to the Company or
any of its Restricted Subsidiaries by such Person during such period and (y)
with respect to net losses, to the extent of the amount of Investments made by
the Company or any Restricted Subsidiary in such Person during such period; (ii)
solely for the purposes of calculating the amount of Restricted Payments that
may be made pursuant to clause (C) of the first paragraph of Section 4.04 hereof
(and in such case, except to the extent includable pursuant to clause (i)
above), the net income (or loss) of any Person accrued prior to the date it
becomes a Restricted Subsidiary or is merged into or consolidated with the
Company or any of its Restricted Subsidiaries or all or substantially all of the
property and assets of such Person are acquired by the Company or any of its
Restricted Subsidiaries; (iii) the net income of any Restricted Subsidiary to
the extent that the declaration or payment of dividends or similar distributions
by such Restricted Subsidiary of such net income is not at the time permitted by
the operation of the terms of its charter or any agreement, instrument,
judgment, decree, order, statute, rule or governmental regulation applicable to
such Restricted Subsidiary; (iv) any gains or losses (on an after-tax basis)
attributable to Asset Sales and sales of indefeasible rights-of-use or dark
fibers; (v) except for purposes of calculating the amount of Restricted Payments
that may be made pursuant to clause (C) of the first paragraph of Section 4.04
hereof, any amount paid or accrued as dividends on Preferred Stock of the
Company or any Restricted Subsidiary owned by Persons other than the Company and
any of its Restricted Subsidiaries; (vi) all extraordinary gains and
extraordinary losses; and (vii) any compensation expense paid or payable solely
with Capital Stock (other than Disqualified Stock) of the Company or any
options, warrants or other rights to acquire Capital Stock (other than
Disqualified Stock) of the Company.
"Adjusted Consolidated Net Tangible Assets" means the total amount
of assets of the Company and its Restricted Subsidiaries (less applicable
depreciation, amortization and other valuation reserves), except to the extent
resulting from write-ups of capital assets (excluding write-ups in connection
with accounting for acquisitions in conformity with GAAP), after deducting
therefrom (i) all current liabilities of the Company and its Restricted
Subsidiaries (excluding intercompany items) and (ii) all goodwill, trade names,
trademarks, patents, unamortized debt discount and expense and other like
intangibles, all as set forth on the most recent quarterly or annual
consolidated balance sheet of the Company and its
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5
Restricted Subsidiaries, prepared in conformity with GAAP and filed with the
Commission or provided to the Trustee pursuant to Section 4.18 hereof.
"Affiliate" means, 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, means 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" has the meaning provided in Section 2.07(a) hereof.
"Asset Acquisition" means (i) an investment by the Company or any of
its Restricted Subsidiaries in any other Person pursuant to which such Person
shall become a Restricted Subsidiary or shall be merged into or consolidated
with the Company or any of its Restricted Subsidiaries; provided that such
Person's primary business is related, ancillary or complementary to the
businesses of the Company or any of its Restricted Subsidiaries on the date of
such investment 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 a
division or line of business of such Person; provided that the property and
assets acquired are related, ancillary or complementary to the businesses of the
Company or any of its Restricted Subsidiaries on the date of such acquisition.
"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 (i) all or substantially all of the Capital
Stock of any Restricted Subsidiary or (ii) all or substantially all of the
assets that constitute a division or line of business of the Company or any of
its Restricted Subsidiaries.
"Asset Sale" means any sale, transfer or other disposition
(including by way of merger, consolidation or sale-leaseback transaction) 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 Capital Stock of any Restricted
Subsidiary, (ii) all or substantially all of the property and assets of a
division or line of business of the Company or any of its Restricted
Subsidiaries or (iii) any other property and assets (other than the Capital
Stock or other Investment in an Unrestricted Subsidiary) of the
<PAGE>
6
Company or any of its Restricted Subsidiaries outside the ordinary course of
business of the Company or such Restricted Subsidiary and, in each case, that is
not governed by Article Five hereof; provided that "Asset Sale" shall not
include (a) sales or other dispositions of inventory, receivables and other
current assets, (b) sales, transfers or other dispositions of assets
constituting a Restricted Payment permitted to be made under Section 4.04
hereof, (c) sales, transfers or other dispositions of assets with a fair market
value (as certified in an Officers' Certificate) not in excess of $1 million in
any transaction or series of related transactions, (d) sales or other
dispositions of assets for consideration at least equal to the fair market value
of the assets sold or disposed of, to the extent that the consideration received
would constitute property or assets of the kind described in clause (B) of
Section 4.11 hereof, (e) any liquidation of Temporary Cash Investments, (f) a
transfer, directly or indirectly, of receivables or other payment rights arising
from a transfer of indefeasible rights of use or dark fiber, which transfer of
receivables or rights is to a special purpose entity created for the purpose of
issuing securities to be paid or redeemed from, or beneficial interests in, the
cash or revenues generated from the assets transferred; provided that the
consideration received by the Company is at least equal to the fair market value
of the asset transferred and the proceeds are used by the Company (A) to repay
unsubordinated Indebtedness of the Company owed to a Person other than the
Company or a Restricted Subsidiary, (B) to invest in the manner described in
clause (i)(B) of Section 4.11 hereof covenant or (C) for working capital
purposes or (g) other transfers of indefeasible rights of use or dark fiber.
"Average Life" means, at any date of determination with respect to
any debt security, the quotient obtained by dividing (i) the sum of the products
of (a) the number of years from such date of determination to the dates of each
successive scheduled principal payment of such debt security and (b) the amount
of such principal payment by (ii) the sum of all such principal payments.
"Board of Directors" means the Board of Directors of the Company as
required by the context or any committee of such Board of Directors duly
authorized to act under this Indenture.
"Board Resolution" means a copy of a resolution, certified by the
Secretary or Assistant Secretary of the Company as required by the context to
have been duly adopted by the Board of Directors and to be in full force and
effect on the date of such certification, and delivered to the Trustee.
"Business Day" means any day except a Saturday, Sunday or other day
on which commercial banks in The City of New York, or in the city of the
Corporate Trust Office of the Trustee, are authorized or required by law to
close.
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7
"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, whether outstanding on
the Closing Date or issued thereafter, including, without limitation, all Common
Stock and Preferred Stock.
"Capitalized Lease" means, as applied to any Person, any lease of
any property (whether real, personal or mixed) of which the discounted present
value of the rental obligations of such Person as lessee, in conformity with
GAAP, is required to be capitalized on the balance sheet of such Person.
"Capitalized Lease Obligations" means the discounted present value
of the rental obligations under a Capitalized Lease.
"Certificated Notes" has the meaning provided in Section 2.01
hereof.
"Change of Control" means such time as (i) a "person" or a "group"
(within the meaning of Sections 13(d) and 14(d)(2) of the Exchange Act) 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 Voting Stock of the
Company on a fully diluted basis; or (ii) individuals who on the Closing Date
constitute the Board of Directors (together with any new directors whose
election by the Board of Directors or whose nomination to the Board of Directors
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 in office who either
were members of the Board of Directors on the Closing Date or whose election or
nomination for election was previously so approved) cease for any reason to
constitute a majority of the members of the Board of Directors then in office.
"Closing Date" means the date on which the Notes are originally
issued under this Indenture.
"Commission" means the Securities and Exchange Commission, as from
time to time constituted, created under the Exchange Act or, if at any time
after the execution of this instrument such Commission is not existing and
performing the duties now assigned to it under the TIA, then the body performing
such duties at such time.
"Common Stock" means, with respect to any Person, any and all
shares, interests, participations or other equivalents (however designated,
whether voting or non-voting) of such Person's common stock, whether now
outstanding or issued after the date of this Indenture, including, without
limitation, all series and classes of such common stock.
<PAGE>
8
"Company" means the party named as such in the first paragraph of
this Indenture until a successor replaces it pursuant to the applicable
provisions of this Indenture and thereafter means the successor.
"Company Order" means a written request or order signed in the name
of the Company (i) by its Chairman of the Board, the Vice Chairman of the Board,
its President or a Vice President and (ii) by its Chief Financial Officer,
Treasurer, an Assistant Treasurer, its Secretary or an Assistant Secretary and
delivered to the Trustee; provided, however, that such written request or order
may be signed by any two of the officers or directors listed in clause (i) above
in lieu of being signed by one of such officers or directors listed in such
clause (i) and one of the officers listed in clause (ii) above.
"Consolidated EBITDA" means, for any period, Adjusted Consolidated
Net Income for such period plus, to the extent such amount was deducted in
calculating such Adjusted Consolidated Net Income, (i) Consolidated Interest
Expense, (ii) income taxes, (iii) depreciation expense, (iv) amortization
expense and (v) all other non-cash items reducing Adjusted Consolidated Net
Income (other than items that will require cash payments and for which an
accrual or reserve is, or is required by GAAP to be, made), less all non-cash
items increasing Adjusted Consolidated Net Income, all as determined on a
consolidated basis for the Company and its Restricted Subsidiaries in conformity
with GAAP; provided that, if any Restricted Subsidiary is not a Wholly Owned
Restricted Subsidiary, Consolidated EBITDA shall be reduced (to the extent not
otherwise reduced in accordance with GAAP) by an amount equal to (A) the amount
of the Adjusted Consolidated Net Income attributable to such Restricted
Subsidiary multiplied by (B) the percentage ownership interest in the income of
such Restricted Subsidiary not owned on the last day of such period by the
Company or any of its Restricted Subsidiaries.
"Consolidated Interest Expense" means, for any period, the aggregate
amount of interest in respect of Indebtedness (including, without limitation,
amortization of original issue discount on any Indebtedness and the interest
portion of any deferred payment obligation, calculated in accordance with the
effective interest method of accounting; 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
in respect of Indebtedness that is Guaranteed or secured by the Company or any
of its Restricted Subsidiaries), and all but the principal component of rentals
in respect of Capitalized Lease Obligations paid, accrued or scheduled to be
paid or to be accrued by the Company and its Restricted Subsidiaries during such
period.
"Consolidated Leverage Ratio" means, on any Transaction Date, the
ratio of (i) the aggregate amount of Indebtedness of the Company and its
Restricted Subsidiaries on a consolidated basis outstanding on such Transaction
Date to (ii) four times Consolidated
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9
EBITDA for the then most recent fiscal quarter for which financial statements of
the Company have been filed with the Commission or provided to the Trustee
pursuant to Section 4.18 hereof; provided that, in making the foregoing
calculation, (A) pro forma effect shall be given to the Incurrence or repayment
of any Indebtedness to be Incurred or repaid on the Transaction Date; (B) pro
forma effect shall be given to Asset Dispositions and Asset Acquisitions
(including giving pro forma effect to the application of proceeds of any Asset
Disposition) that occur from the beginning of the then most recent four fiscal
quarters through the Transaction Date (the "Reference Period"), as if they had
occurred and such proceeds had been applied on the first day of such Reference
Period; and (C) pro forma effect shall be given to asset dispositions and asset
acquisitions (including giving pro forma effect to the application of proceeds
of any asset disposition) that have been made by any Person that has become a
Restricted Subsidiary or has been merged with or into the Company or any
Restricted Subsidiary during such Reference Period and that would have
constituted Asset Dispositions or Asset Acquisitions had such transactions
occurred when such Person was a Restricted Subsidiary as if such asset
dispositions or asset acquisitions were Asset Dispositions or Asset Acquisitions
that occurred on the first day of such Reference Period; provided that to the
extent that clause (B) or (C) of this sentence requires that pro forma effect be
given to an Asset Acquisition or Asset Disposition, such pro forma calculation
shall be based upon the four full fiscal quarters immediately preceding the
Transaction Date of the Person, or division or line of business of the Person,
that is acquired or disposed of for which financial information is available.
"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 the Company and its Restricted Subsidiaries
(which shall be as of a date not more than 90 days prior to the date of such
computation, and which shall not take into account Unrestricted Subsidiaries),
including, without limitation, the respective amounts reported on such balance
sheet attributable to Preferred Stock, less any amounts attributable to
Disqualified 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 the Capital Stock of the Company or
any of its Restricted Subsidiaries, each item to be determined in conformity
with GAAP (excluding the effects of foreign currency exchange adjustments under
Financial Accounting Standards Board Statement of Financial Accounting Standards
No. 52).
"Corporate Trust Office" means the office of the Trustee at which
the corporate trust business of the Trustee shall, at any particular time, be
principally administered, which office is, at the date of this Indenture,
located at 101 Barclay Street, Floor 21 West, New York NY 10286, Attention:
Corporate Trust Administration.
"Currency Agreement" means any foreign exchange contract, currency
swap agreement or other similar agreement or arrangement.
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10
"Default" means any event that is, or after notice or passage of
time or both would be, an Event of Default.
"Depository" shall mean DTC, its nominees and their respective
successors.
"Disqualified Stock" means any class or series of Capital Stock of
any Person that by its terms or otherwise is (i) required to be redeemed prior
to the Stated Maturity of the Notes, (ii) redeemable at the option of the holder
of such class or series of Capital Stock at any time prior to the Stated
Maturity of the Notes or (iii) convertible into or exchangeable for Capital
Stock referred to in clause (i) or (ii) above or Indebtedness having a scheduled
maturity prior to the Stated Maturity of the Notes; provided that any Capital
Stock that would not constitute Disqualified Stock but for provisions thereof
giving holders thereof the right to require such Person to repurchase or redeem
such Capital Stock upon the occurrence of an "asset sale" or "change of control"
occurring prior to the Stated Maturity of the Notes shall not constitute
Disqualified Stock if the "asset sale" or "change of control" provisions
applicable to such Capital Stock are no more favorable to the holders of such
Capital Stock than the provisions contained in Sections 4.11 and 4.12 hereof,
and such Capital Stock, or the agreements or instruments governing the
redemption rights thereof, specifically provides that such Person will not
repurchase or redeem any such stock pursuant to such provision prior to the
Company's repurchase of such Notes as are required to be repurchased pursuant to
Sections 4.11 and 4.12 hereof.
"DTC" means The Depository Trust Company.
"Event of Default" has the meaning provided in Section 6.01 hereof.
"Excess Proceeds" has the meaning provided in Section 4.11 hereof.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Exchange Notes" means any notes of the Company containing terms
identical to the Notes (except that such Exchange Notes (i) shall be registered
under the Securities Act, (ii) will not provide for an increase in the rate of
interest (other than with respect to overdue amounts) and (iii) will not contain
terms with respect to transfer restrictions) that are issued and exchanged for
the Notes pursuant to the Registration Rights Agreement and this Indenture.
"Existing Stockholder Agreements" means the Stock Purchase
Agreement, dated as of September 30, 1993, between the Company and S-C V-Tel,
the Stock Purchase Agreement dated as of April 5, 1994, between the Company and
COMSAT, the S-C V-Tel Shareholders' Agreement and the COMSAT Shareholders'
Agreement, in each case, any amendments to such agreements.
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11
"fair market value" means the price that would be paid in an
arm's-length transaction between an informed and willing seller under no
compulsion to sell and an informed and willing buyer under no compulsion to buy,
as determined in good faith by the Board of Directors, whose determination shall
be conclusive if evidenced by a Board Resolution; provided that for purposes of
clause (viii) of the second paragraph of Section 4.03 hereof, (x) the fair
market value of any security registered under the Exchange Act shall be the
average of the closing prices, regular way, of such security for the 20
consecutive trading days immediately preceding the sale of Capital Stock and (y)
in the event the aggregate fair market value of any other property (other than
cash or cash equivalents) received by the Company exceeds $30 million, the fair
market value of such property shall be determined by a nationally recognized
investment banking firm or a nationally recognized firm having expertise in the
specific area which is the subject of such determination and set forth in their
written opinion which shall be delivered to the Trustee.
"GAAP" means generally accepted accounting principles in the United
States of America as in effect as of the Closing Date, including, without
limitation, those set forth in the opinions and pronouncements of the Accounting
Principles Board of the American Institute of Certified Public Accountants and
statements and pronouncements of the Financial Accounting Standards Board or in
such other statements by such other entity as approved by a significant segment
of the accounting profession. All ratios and computations contained or referred
to in this Indenture shall be computed in conformity with GAAP applied on a
consistent basis, except that calculations made for purposes of determining
compliance with the terms of the covenants and with other provisions of this
Indenture shall be made without giving effect to (i) the amortization or
write-off of any expenses incurred in connection with the offering of the Units
consisting of the 1998 Notes and Preferred Stock of the Company and related
tender offer and consent solicitation, (ii) except as otherwise provided, the
amortization of any amounts required or permitted by Accounting Principles Board
Opinion Nos. 16 and 17.
"German Paying Agent" means Deutsche Bank and any successor German
Paying Agent, except that, for the purposes of Article Eight, the German Paying
Agent shall not be the Company or a Subsidiary of the Company or an Affiliate of
any of them.
"Global Notes" has the meaning provided in Section 2.01.
"Guarantee" means any obligation, contingent or otherwise, of any
Person directly or indirectly guaranteeing any Indebtedness of any other Person
and, without limiting the generality of the foregoing, any obligation, direct or
indirect, contingent or otherwise, of such Person (i) to purchase or pay (or
advance or supply funds for the purchase or payment of) such Indebtedness of
such other Person (whether arising by virtue of partnership arrangements, or by
agreements to keep-well, to purchase assets, goods, securities or services
<PAGE>
12
(unless such purchase arrangements are on arm's-length terms and are entered
into in the ordinary course of business), to take-or-pay, or to maintain
financial statement conditions or otherwise) or (ii) entered into for purposes
of assuring in any other manner the obligee of such Indebtedness of the payment
thereof or to protect such obligee against loss in respect thereof (in whole or
in part); 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.
"Guaranteed Indebtedness" has the meaning provided in Section 4.07
hereof.
"Holder" or "Noteholder" means the registered holder of any Note.
"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 Acquired Indebtedness; provided that
neither the accrual of interest nor the accretion of original issue discount
shall 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 for
borrowed money, (ii) all obligations of such Person evidenced by bonds,
debentures, notes or other similar instruments, (iii) all obligations of such
Person in respect of letters of credit or other similar instruments (including
reimbursement obligations with respect thereto, but excluding obligations with
respect to letters of credit (including trade letters of credit) securing
obligations (other than obligations described in (i) or (ii) above or (v), (vi)
or (vii) below) entered into in the ordinary course of business of such Person
to the extent such letters of credit are not drawn upon or, if drawn upon, to
the extent such drawing is reimbursed no later than the third Business Day
following receipt by such Person of a demand for reimbursement), (iv) all
obligations of such Person to pay the deferred and unpaid 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, (v) all Capitalized
Lease Obligations of such Person, (vi) all Indebtedness of other Persons secured
by a Lien on any asset of such Person, whether or not such Indebtedness is
assumed by such Person; provided that the amount of such Indebtedness shall be
the lesser of (A) the fair market value of such asset at such date of
determination and (B) the amount of such Indebtedness, (vii) all Indebtedness of
other Persons Guaranteed by such Person to the extent such Indebtedness is
Guaranteed by such Person and (viii) 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 the maximum liability at such time with respect to contingent
obligations upon the occurrence of the contingency giving rise to the
<PAGE>
13
obligation, which, in the case of a Guarantee, shall be the outstanding balance
of the Guaranteed Indebtedness, provided (A) 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 the time of its issuance as determined in
conformity with GAAP, (B) that money borrowed and set aside at the time of the
Incurrence of any Indebtedness in order to prefund the payment of the interest
on such Indebtedness shall not be deemed to be "Indebtedness" so long as such
money is held to secure the payment of such interest and (C) that Indebtedness
shall not include any liability for federal, state, local or other taxes.
"Indenture" means this Indenture as originally executed or as it may
be amended or supplemented from time to time by one or more indentures
supplemental to this Indenture entered into pursuant to the applicable
provisions of this Indenture.
"Institutional Accredited Investor" shall mean an institution that
is an "accredited investor" as that term is defined in Rule 501(a)(1), (2), (3)
or (7) under the Securities Act.
"Interest Payment Date" means each semiannual interest payment date
on April 15 and October 15 of each year, commencing October 15, 2003.
"Interest Rate Agreement" means any interest rate protection
agreement, interest rate future agreement, interest rate option agreement,
interest rate swap agreement, interest rate cap agreement, interest rate collar
agreement, interest rate hedge agreement, option or future contract or other
similar agreement or arrangement.
"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 extensions of credit to
customers in the ordinary course of business that are, in conformity with GAAP,
recorded as accounts receivable on the balance sheet of the Company or its
Restricted Subsidiaries) or capital contribution to (by means of any transfer of
cash or other property to others or any payment for property or services for the
account or use of others), or any purchase or acquisition of Capital Stock,
bonds, notes, debentures or other similar instruments issued by, such Person and
shall include (i) the designation of a Restricted Subsidiary as an Unrestricted
Subsidiary and (ii) the fair market value of the Capital Stock (or any other
Investment), held by the Company or any of its Restricted Subsidiaries, of (or
in) any Person that has ceased to be a Restricted Subsidiary, including, without
limitation, by reason of any transaction permitted by clause (iii) of Section
4.06 hereof; provided that the fair market value of the Investment remaining in
any Person that has ceased to be a Restricted Subsidiary shall not exceed the
aggregate amount of Investments previously made in such Person valued at the
time such Investments were made less the net reduction of such
<PAGE>
14
Investments. For purposes of the definition of "Unrestricted Subsidiary" and
Section 4.04 hereof, (i) "Investment" shall include the fair market value of the
assets (net of liabilities (other than liabilities to the Company or any of its
Restricted Subsidiaries)) of any Restricted Subsidiary at the time that such
Restricted Subsidiary is designated an Unrestricted Subsidiary, (ii) the fair
market value of the assets (net of liabilities (other than liabilities to the
Company or any of its Restricted Subsidiaries)) of any Unrestricted Subsidiary
at the time that such Unrestricted Subsidiary is designated a Restricted
Subsidiary shall be considered a reduction in outstanding Investments and (iii)
any property transferred to or from an Unrestricted Subsidiary shall be valued
at its fair market value at the time of such transfer.
"Lien" means any mortgage, pledge, security interest, encumbrance,
lien or charge of any kind (including, without limitation, any conditional sale
or other title retention agreement or lease in the nature thereof or any
agreement to give any security interest).
"Manager" means Morgan Stanley & Co. Incorporated and Morgan Stanley
Bank AG, as lead managers for the several initial purchasers named in the
Purchase Agreement. The offering of the Notes outside the U.S. will be lead
managed by Morgan Stanley AG.
"Moody's" means Moody's Investors Service, Inc. and its successors.
"Net Cash Proceeds" means, (a) with respect to any Asset Sale, the
proceeds of such Asset Sale in the form of cash or cash equivalents, including
payments in respect of deferred payment obligations (to the extent corresponding
to the principal, but not interest, component thereof) when received in the form
of cash or cash equivalents (except to the extent such obligations are financed
or sold with recourse to the Company or any Restricted Subsidiary) 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) provisions for all taxes (whether or not such taxes will
actually be paid or are payable) as a result of such Asset Sale without regard
to the consolidated results of operations of the Company and its Restricted
Subsidiaries, taken as a whole, (iii) payments made or required to be 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, (iv) payments made or required
to be made to Persons having a beneficial interest in the assets subject to the
Asset Sale, and (v) appropriate amounts to be provided by the Company or any
Restricted Subsidiary 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 GAAP, and (b) with respect to any
issuance or sale of Capital Stock, the
<PAGE>
15
proceeds of such 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 such
obligations are financed or sold with recourse to the Company or any Restricted
Subsidiary) 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.
"1998 Notes" means the Notes issued pursuant to this Indenture,
together with the Senior DM Notes, Senior Dollar Notes and the Senior Dollar
Discount Notes.
"Non-U.S. Person" means a Person who is not a U.S. person, as
defined in Regulation S.
"Notes" means any of the notes, as defined in the first paragraph of
the recitals hereof, that are authenticated and delivered under this Senior
Discount Dollar Indenture. For all purposes of this Indenture, the term "Notes"
shall include any Exchange Notes to be issued and exchanged for any Notes
pursuant to the Registration Rights Agreement and this Indenture and, for
purposes of this Indenture, all Notes and Exchange Notes shall vote together as
one series of Notes under this Indenture.
"Note Register" has the meaning provided in Section 2.04.
"Offer to Purchase" means an offer to purchase Notes by the Company
from the Holders commenced by mailing a notice to the Trustee and each Holder
stating: (i) the covenant pursuant to which the offer is being made and that all
Notes validly tendered will be accepted for payment on a pro rata basis; (ii)
the purchase price and the date of purchase (which shall be a Business Day no
earlier than 30 days nor later than 60 days from the date such notice is mailed)
(the "Payment Date"); (iii) that any Note not tendered will continue to accrue
interest (or original issue discount) pursuant to its terms; (iv) that, unless
the Company defaults in the payment of the purchase price, any Note accepted for
payment pursuant to the Offer to Purchase shall cease to accrue interest (or
original issue discount) on and after the Payment Date; (v) that Holders
electing to have a Note purchased pursuant to the Offer to Purchase will be
required to surrender the Note, together with the form entitled "Option of the
Holder to Elect Purchase" on the reverse side of the Note completed, to the
Paying Agent at the address specified in the notice prior to the close of
business on the Business Day immediately preceding the Payment Date; (vi) that
Holders will be entitled to withdraw their election if the Paying Agent
receives, not later than the close of business on the third Business Day
immediately preceding the Payment Date, a telegram, facsimile transmission or
letter
<PAGE>
16
setting forth the name of such Holder, the principal amount at maturity of Notes
delivered for purchase and a statement that such Holder is withdrawing 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 Notes surrendered; provided that each Note
purchased and each new Note issued shall be in a principal amount at maturity of
$1,000 or an integral multiple thereof. On the Payment Date, the Company shall
(i) accept for payment on a pro rata basis Notes or portions thereof tendered
pursuant to an Offer to Purchase; (ii) deposit with the Paying Agent money
sufficient to pay the purchase price of all Notes or portions thereof so
accepted; and (iii) deliver, or cause to be delivered, to the Trustee all Notes
or portions thereof so accepted together with an Officers' Certificate
specifying the Notes or portions thereof accepted for payment by the Company.
The Paying Agent shall promptly mail to the Holders of Notes so accepted payment
in an amount equal to the purchase price, and the Trustee shall promptly
authenticate and mail to such Holders a new Note equal in principal amount at
maturity to any unpurchased portion of the Note surrendered; provided that each
Note purchased and each new Note issued shall be in a principal amount at
maturity of $1,000 or an integral multiple thereof. The Company will publicly
announce the results of an Offer to Purchase as soon as practicable after the
Payment Date. The Trustee shall act as the Paying Agent for an Offer to
Purchase. The Company will comply with Rule 14e-1 under the Exchange Act and any
other securities laws and regulations thereunder to the extent such laws and
regulations are applicable, in the event that the Company is required to
repurchase Notes pursuant to an Offer to Purchase.
"Officer" means, with respect to the Company, (i) the Chairman of
the Board, the Vice Chairman of the Board, the President, the Chief Executive
Officer, the Chief Financial Officer or a Vice President, and (ii) the Treasurer
or any Assistant Treasurer, or the Secretary or any Assistant Secretary of the
Company.
"Officers' Certificate" means a certificate signed by one Officer
listed in clause (i) of the definition thereof and one Officer listed in clause
(ii) of the definition thereof; provided, however, that any such certificate may
be signed by any two of the Officers listed in clause (i) of the definition
thereof in lieu of being signed by one Officer listed in clause (i) of the
definition thereof and one Officer listed in clause (ii) of the definition
thereof. Each Officers' Certificate (other than certificates provided pursuant
to TIA Section 314(a)(4)) shall include the statements provided for in TIA
Section 314(e).
"Opinion of Counsel" means a written opinion signed by legal counsel
who may be an employee of or counsel to the Company. Each such Opinion of
Counsel shall include the statements provided for in TIA Section 314(e).
<PAGE>
17
"Participant" means, with respect to DTC, Euroclear or Cedel, a
Person who has an account with DTC, Euroclear or Cedel, respectively (and, with
respect to DTC, shall include Euroclear and Cedel).
"Paying Agent" means the U.S. Paying Agent, any successor thereof,
and any other Person (including the Company acting as the Paying Agent, except
that, for the purposes of Article Eight, the Paying Agent shall not be the
Company or a Subsidiary of the Company or an Affiliate of any of them),
authorized by the Company to pay the principal of (and premium, if any) or
interest on any Notes on behalf of the Company.
"Payment Date" means the date of purchase, which shall be a Business
Day no earlier than 30 days nor later than 60 days from the date of notice is
mailed pursuant to an Offer to Purchase.
"Permanent Regulation S Global" means the permanent global Notes
issued in exchange for one or more Temporary Regulation S Global upon
certification that the beneficial interests in such global Note are owned by
either Non-U.S. Persons or U.S. Persons who purchased such interests pursuant to
an exemption from, or in transactions not subject to, the registration
requirements of the Securities Act.
"Permitted Investment" means (i) an Investment in the Company or 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; provided that such Person's primary business is
related, ancillary or complementary to the businesses of the Company or any of
its Restricted Subsidiaries on the date of such Investment; (ii) Temporary Cash
Investments; (iii) payroll, travel and similar advances to cover matters that
are expected at the time of such advances ultimately to be treated as expenses
in accordance with GAAP; (iv) Investments received in the bankruptcy or
reorganization of a Person or any exchange of such Investment with the issuer
thereof or taken in settlement of or other resolution of claims or disputes or
acquired as the result of foreclosure of any secured Investment and, in each
case, extensions, modifications and renewal thereof; (v) Investments in prepaid
expenses, negotiable instruments held for collection and lease, utility and
worker's compensation, performance and other similar deposits; (vi) Interest
Rate Agreements and Currency Agreements designed solely to protect the Company
or its Restricted Subsidiaries against fluctuations in interest rates or foreign
currency exchange rates; (vii) loans or advances to officers or employees of the
Company or any Restricted Subsidiary that do not in the aggregate exceed $1
million at any time outstanding; (viii) investments consisting of securities
issued by or beneficial interests in a special purpose entity referred to in
clause (f) of the definition of "Asset Sale" and which are received in exchange
for assets that are transferred by the Company or a Restricted Subsidiary to
such special purpose entity and used for the purpose referred to therein; and
<PAGE>
18
(ix) Investments as a result of consideration received in connection with an
Asset Sale made in compliance with Section 4.11 hereof.
"Permitted Joint Venture" means any joint venture between the
Company or any Restricted Subsidiary and (i) any Person, other than a
Subsidiary, engaged in the provision or sale of telecommunications services or
(ii) any Person engaged as an independent sale representative of the Company;
provided that, prior to making any Investment in such a Person, the Company's
Board of Directors shall have determined that such Investment fits the Company's
strategic plan and is on terms that are fair and reasonable to the Company.
"Permitted Liens" means (i) Liens for taxes, assessments,
governmental charges or claims not yet subject to penalty or 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 GAAP shall have been made; (ii)
statutory and common law 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 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) Liens incurred or deposits made to secure the
performance of tenders, bids, leases, statutory or regulatory obligations,
bankers' acceptances, surety and appeal bonds, government contracts, performance
and return-of-money bonds and other obligations of a similar nature incurred in
the ordinary course of business (exclusive of obligations for the payment of
borrowed money); (v) 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; (vi) Liens (including extensions and
renewals thereof) upon real or personal (whether tangible or intangible)
property acquired after the Closing Date; provided that (a) such Lien is created
solely for the purpose of securing Indebtedness Incurred, in accordance with
Section 4.03 hereof, to finance or refinance the cost (including the cost of
design, development, acquisition, construction, installation, improvement,
transportation or integration) of the item or related group of items of property
or assets subject thereto or the business in which such property or assets are
used and such Lien is created prior to, at the time of or within eighteen months
after the later of the acquisition, the completion of (except in the case of
refinancing) construction or the commencement of full operation of such
property, (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 or group of items of property or
assets and any improvements on such item; (vii) leases or subleases granted to
others that do not materially interfere with the
<PAGE>
19
ordinary course of business of the Company and its Restricted Subsidiaries,
taken as a whole; (viii) Liens encumbering property or assets under construction
arising from progress or partial payments by a customer of the Company or its
Restricted Subsidiaries relating to such property or assets; (ix) any interest
or title of a lessor in the property subject to any Capitalized Lease or
operating lease; (x) Liens arising from filing Uniform Commercial Code financing
statements regarding leases; (xi) Liens on property of, or on shares of Capital
Stock or Indebtedness of, any Person existing at the time such Person becomes,
or becomes a part of, any Restricted Subsidiary; provided that such Liens do not
extend to or cover any property or assets of the Company or any Restricted
Subsidiary other than the property or assets acquired; (xii) Liens in favor of
the Company or any Restricted Subsidiary; (xiii) Liens arising from the
rendering of a final judgment or order against the Company or any Restricted
Subsidiary that does not give rise to an Event of Default; (xiv) Liens securing
reimbursement obligations with respect to letters of credit that encumber
documents and other property relating to such letters of credit and the products
and proceeds thereof; (xv) Liens in favor of customs and revenue authorities
arising as a matter of law to secure payment of customs duties in connection
with the importation of goods; (xvi) Liens encumbering customary initial
deposits and margin deposits, and other Liens that are within the general
parameters customary in the industry and incurred in the ordinary course of
business, in each case, securing Indebtedness under Interest Rate Agreements and
Currency Agreements and forward contracts, options, future contracts, futures
options or similar agreements or arrangements designed solely to protect the
Company or any of its Restricted Subsidiaries from fluctuations in interest
rates, currencies or the price of commodities; (xvii) 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 Closing Date; (xviii) Liens
on or sales of receivables or other rights to payment; (xix) Liens secured with
assets that have a fair market value not in excess of 15% of Adjusted
Consolidated Net Tangible Assets when such Liens are Incurred; and (xx) any
extension, renewal, or replacement (or successive extensions, renewals, or
replacements) in whole or in part of Liens described in clauses (i) through
(xix) above.
"Permitted Wholesale Consortium" means any Person in which the
Company Invests for the principal purpose of leasing or otherwise acquiring
transmission rights with respect to long distance telecommunications; provided
that prior to making any Investment in such a Person, the Company's Board of
Directors shall have determined that such Investment will afford the Company
greater economic benefits than it could otherwise obtain from other sources of
transmission rights.
"Person" means an individual, a corporation, a partnership, a
limited liability company, a joint venture, an association, a trust, an
unincorporated organization or any other
<PAGE>
20
entity or organization, including a government or political subdivision or an
agency or instrumentality thereof.
"Preferred Stock" or "preferred stock" means, with respect to any
Person, any and all shares, interests, participation or other equivalents
(however designated, whether voting or non-voting) of such Person's preferred or
preference stock, whether now outstanding or issued after the date of this
Indenture, including, without limitation, all series and classes of such
preferred or preference stock, including the Series A Preferred.
"principal" of a debt security, including the Notes, means the
principal amount due on the Stated Maturity as shown on such debt security.
"Private Placement Legend" means the legend initially set forth on
the Notes in the form set forth in Section 2.02(a).
"Public Equity Offering" means an underwritten primary public
offering of Common Stock of the Company pursuant to an effective registration
statement under the Securities Act.
"Purchase Agreement" has the meaning provided in the recitals to
this Agreement.
"QIB" means a "qualified institutional buyer" as defined in Rule
144A.
"Redemption Date", when used with respect to any Note or part
thereof to be redeemed, means the date fixed for such redemption by or pursuant
to the terms of the Notes and this Indenture.
"Redemption Price", when used with respect to any Note or part
thereof to be redeemed, means the price at which such Note is to be redeemed
pursuant to the terms of the Notes and this Indenture.
"Registrar" has the meaning provided in Section 2.04.
"Registration Rights Agreement" means the Registration Rights
Agreement, dated as of April 3, 1998, between the Company and Morgan Stanley &
Co. Incorporated, on behalf of itself and Morgan Stanley Bank AG, Salomon
Brothers Inc, NationsBanc Montgomery Securities LLC and ING Baring (U.S.)
Securities, Inc., relating to the Notes.
"Registration Statement" means any registration statement of the
Company that covers any of the Exchange Notes, and all amendments and
supplements to any such
<PAGE>
21
Registration Statement, including post-effective amendments, in each case
including the prospectus contained therein, all exhibits thereto and all
material incorporated by reference therein.
"Regular Record Date" for the interest payable on any Interest
Payment Date means April 1 or October 1 (whether or not a Business Day), as the
case may be, next preceding such Interest Payment Date.
"Regulation S" means Regulation S under the Securities Act.
"Regulation S Certificated Notes" has the meaning provided in
Section 2.01.
"Regulation S Global" has the meaning provided in Section 2.01.
"Responsible Officer", when used with respect to the Trustee, means
any officer of the Trustee with direct responsibility for the administration of
this Indenture and also means, with respect to a particular corporate trust
matter, any other officer to whom such matter is referred because of his or her
knowledge of and familiarity with the particular subject.
"Restricted Global" has the meaning provided in Section 2.01.
"Restricted Payments" has the meaning provided in Section 4.04.
"Restricted Subsidiary" means any Subsidiary of the Company other
than an Unrestricted Subsidiary.
"Rule 144A" means Rule 144A under the Securities Act.
"Securities Act" means the Securities Act of 1933, as amended.
"Senior Discount DM Indenture" means the Indenture dated as of the
Closing Date between the Company, The Bank of New York and Deutsche Bank AG
governing the issuance of the Senior Discount Dollar Notes.
"Senior Discount DM Notes" means the notes issued pursuant to the
Senior Discount DM Indenture.
"Senior Discount DM Units" means the senior Discount DM Units, each
consisting of one Senior Discount DM Note and 2.77 DM denominated 10%
Subordinated Convertible Debentures.
<PAGE>
22
"Senior Discount Dollar Indenture" means this Indenture.
"Senior Discount Dollar Notes" means the notes issued pursuant to
this Indenture.
"Senior Discount Dollar Units" means the Senior Discount Dollar
Units, each consisting of one Senior Discount Dollar Note and .490 of share of
Series A Preferred.
"Senior DM Indenture" means the Indenture dated as of the Closing
Date between the Company, The Bank of New York and Deutsche Bank AG governing
the issuance of the Senior DM Notes.
"Senior DM Notes" means the notes issued pursuant to the Senior DM
Indenture.
"Senior DM Units" means the Senior DM Units, each consisting of one
Senior DM Note and 2.69 DM denominated 10% Subordinated Convertible Debentures.
"Senior Dollar Indenture" means the Indenture dated as of the
Closing Date between the Company and The Bank of New York, governing the
issuance of the Senior Dollar Notes.
"Senior Dollar Notes" means the notes issued pursuant to the Senior
Dollar Indenture.
"Senior Dollar Units" means the Senior Dollar Units, each consisting
of one Senior Dollar Note and .483 shares of Series A Preferred.
"Separation Date" has the meaning specified in the recitals to this
Indenture.
"Series A Preferred" means the Series A preferred stock, $.01 par
value per share, of the Company.
"Significant Subsidiary" means, at any date of determination, any
Restricted Subsidiary that, together with its Subsidiaries, (i) for the most
recent fiscal year of the Company, accounted for more than 10% of the
consolidated revenues of the Company and its Restricted Subsidiaries or (ii) as
of the end of such fiscal year, was the owner of more than 10% of the
consolidated assets of the Company and its Restricted Subsidiaries, all as set
forth on the most recently available consolidated financial statements of the
Company for such fiscal year.
<PAGE>
23
"Specified Date" means any Redemption Date, any Payment Date for an
Offer to Purchase or any date on which the Notes first become due and payable
after an Event of Default.
"S&P" means Standard & Poor's Ratings Services and its successors.
"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 Subordinated Indebtedness" means Indebtedness of the
Company Incurred to finance the acquisition of a Person engaged in a business
that is related, ancillary or complementary to the business conducted by the
Company or any of its Restricted Subsidiaries, which Indebtedness by its terms,
or by the terms of any agreement or instrument pursuant to which such
Indebtedness is Incurred, (i) is expressly made subordinate in right of payment
to the Notes and (ii) provides that no payment of principal, premium or interest
on, or any other payment with respect to, such Indebtedness may be made prior to
the payment in full of all of the Company's obligations under the Notes;
provided that such Indebtedness may provide for and be repaid at any time from
the proceeds of a capital contribution, the sale of Capital Stock (other than
Disqualified Stock) of the Company, or other Strategic Subordinated Indebtedness
Incurred after the Incurrence of such Indebtedness.
"Subordinated Convertible Debentures" means the debentures issued
pursuant to the Subordinated Indenture.
"Subordinated Indenture" means the Indenture dated as of the Closing
Date beween the Company, The Bank of New York and Deutsche Bank AG, governing
the issuance of the Subordinated Convertible Debentures.
"Subsidiary" means, with respect to any Person, any corporation,
association or other business entity of which more than 50% of the voting power
of the outstanding Voting Stock is owned, directly or indirectly, by such Person
and one or more other Subsidiaries of such Person.
"Temporary Cash Investment" means any of the following: (i) direct
obligations of the United States of America or any agency thereof or obligations
fully and unconditionally guaranteed by the United States of America or any
agency thereof, (ii) time deposit accounts, eurodollar time deposits, bankers'
acceptances, certificates of deposit and money market deposits, in each case
maturing within one year of the date of acquisition
<PAGE>
24
thereof and issued by a bank or trust company which is organized under the laws
of the United States of America, any state thereof or any foreign country
recognized by the United States of America, and which bank or trust company has
capital, surplus and undivided profits aggregating in excess of $50 million (or
the foreign currency equivalent thereof) and has outstanding debt which is rated
"A" (or such similar equivalent rating) or higher by at least one nationally
recognized statistical rating organization (as defined in Rule 436 under the
Securities Act), or any money-market fund sponsored by a registered broker
dealer or mutual fund distributor, (iii) repurchase obligations with a term of
not more than 30 days for underlying securities of the types described in clause
(i) above entered into with a bank meeting the qualifications described in
clause (ii) above, (iv) commercial paper, maturing not more than one year after
the date of acquisition, issued by a corporation (other than an Affiliate of the
Company) organized and in existence under the laws of the United States of
America, any state thereof or any foreign country recognized by the United
States of America with a rating at the time as of which any investment therein
is made of "P-2" (or higher) according to Moody's or "A-2" (or higher) according
to S&P, (v) securities with maturities of one year or less from the date of
acquisition issued or fully and unconditionally guaranteed by any state,
commonwealth or territory of the United States of America, or by any political
subdivision or taxing authority thereof, and rated at least "A" by S&P or
Moody's, and (vi) shares or other interests in an investment company the assets
of which consist solely of (A) securities of the type described in clauses (i)
through (v) above and (B) mortgage-backed securities rated AAA or the equivalent
by S&P, Moody's or Fetch Investor Services, Inc. and (vii) the DM Pledged
Securities.
"Temporary Regulation S Global Note" means the Global Note bearing
the Private Placement Legend in registered form without interest coupons, that
will be issued in a denomination equal to the outstanding principal amount of
the Notes sold in reliance on Regulation S and deposited with the Trustee, as
custodian for the Depository.
"TIA" or "Trust Indenture Act" means the Trust Indenture Act of
1939, as amended (15 U.S. Code ss.ss. 77aaa-77bbb), as in effect on the date
this Indenture was executed, except as provided in Section 9.06; provided,
however, that, in the event the Trust Indenture Act of 1939 is amended after
such date, "TIA" or "Trust Indenture Act" means, to the extent required by any
such amendment, the Trust Indenture Act of 1939 as so amended.
"Trade Payables" means, with respect to any Person, any accounts
payable or any other indebtedness or monetary obligation to trade creditors
created, assumed or Guaranteed by such Person or any of its Subsidiaries arising
in the ordinary course of business in connection with the acquisition of goods
or 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
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25
Incurred and, with respect to any Restricted Payment, the date such Restricted
Payment is to be made.
"Trustee" means the party named as such in the first paragraph of
this Indenture until a successor replaces it in accordance with the provisions
of Article Seven of this Indenture and thereafter means such successor.
"Unit Legend" has the meaning provided in Section 2.02(c).
"United States Bankruptcy Code" means the Bankruptcy Reform Act of
1978, as amended and as codified in Title 11 of the United States Code, as
amended from time to time hereafter, or any successor federal bankruptcy law.
"Units" means the units, as defined in the first paragraph of the
recitals hereof.
"Unrestricted Subsidiary" means (i) any Subsidiary of the Company
that at the time of determination shall be designated an Unrestricted Subsidiary
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
Restricted Subsidiary (including any newly acquired or newly formed Subsidiary
of the Company) to be an Unrestricted Subsidiary unless such Subsidiary owns any
Capital Stock of, or owns or holds any Lien on any property of, the Company or
any Restricted Subsidiary; provided that (A) any Guarantee by the Company or any
Restricted Subsidiary of any Indebtedness of the Subsidiary being so designated
shall be deemed an "Incurrence" of such Indebtedness and an "Investment" by the
Company or such Restricted Subsidiary (or both, if applicable) at the time of
such designation; (B) either (I) the Subsidiary to be so designated has total
assets of $1,000 or less or (II) if such Subsidiary has assets greater than
$1,000, such designation would be permitted under Section 4.04 hereof and (C) if
applicable, the Incurrence of Indebtedness and the Investment referred to in
clause (A) of this proviso would be permitted under Section 4.03 hereof and
Section 4.04 hereof. The Board of Directors may designate any Unrestricted
Subsidiary to be a Restricted Subsidiary; provided that (i) no Default or Event
of Default shall have occurred and be continuing at the time of or after giving
effect to such designation and (ii) all Liens and Indebtedness of such
Unrestricted Subsidiary outstanding immediately after such designation would, if
Incurred at such time, have been permitted to be Incurred (and shall be deemed
to have been Incurred) for all purposes of the Indenture. Any such designation
by the Board of Directors shall be evidenced to the Trustee by promptly filing
with the Trustee a copy of the Board Resolution giving effect to such
designation and an Officers' Certificate certifying that such designation
complied with the foregoing provisions.
"U.S. Government Obligations" means securities that are (i) direct
obligations of the United States of America for the payment of which its full
faith and credit is pledged or
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26
(ii) obligations of a Person controlled or supervised by and acting as an agency
or instrumentality of the United States of America the payment of which is
unconditionally guaranteed as a full faith and credit obligation by the United
States of America, which, in either case, are not callable or redeemable at the
option of the issuer thereof at any time prior to the Stated Maturity of the
Notes, and shall also include depository receipts issued by a bank or trust
company as custodian with respect to any such U.S. Government Obligation or a
specific payment of interest on or principal of any such U.S. Government
Obligation held by such custodian for the account of the holder of a depository
receipt; provided that (except as required by law) such custodian is not
authorized to make any deduction from the amount payable to the holder of such
depository receipt from any amount received by the custodian in respect of the
U.S. Government Obligation or the specific payment of interest on or principal
of the U.S. Government Obligation evidenced by such depository receipt.
"U.S. Paying Agent" means The Bank of New York and any successor
U.S. Paying Agent.
"U.S. Person" has the meaning ascribed thereto in Rule 902 under the
Securities Act.
"U.S. Certificated Notes" has the meaning provided in Section 2.01.
"Voting Stock" means, with respect to any Person, Capital Stock of
any class or kind ordinarily having the power to vote for the election of
directors, managers or other voting members of the governing body of such
Person.
"Wholly Owned" means, with respect to any Subsidiary of any Person,
the ownership of all of the outstanding Capital Stock of such Subsidiary (other
than any director's qualifying shares or Investments by foreign nationals
mandated by applicable law) by such Person or one or more Wholly Owned
Subsidiaries of such Person.
SECTION 1.02. Incorporation by Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision of the TIA, the provision is
incorporated by reference in and made a part of this Indenture. The following
TIA terms used in this Indenture have the following meanings:
"indenture securities" means the Notes;
"indenture security holder" means a Holder or a Noteholder;
"indenture to be qualified" means this Indenture;
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27
"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 a rule of the
Commission and not otherwise defined herein have the meanings assigned to them
therein.
SECTION 1.03. Rules of Construction. Unless the context otherwise
requires:
(i) a term has the meaning assigned to it;
(ii) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP;
(iii) "or" is not exclusive;
(iv) words in the singular include the plural, and words in the
plural include the singular;
(v) provisions apply to successive events and transactions;
(vi) "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; and
(vii) all references to Sections or Articles refer to Sections or
Articles of this Indenture unless otherwise indicated.
ARTICLE TWO
THE NOTES
SECTION 2.01. Form and Dating. The Notes and the Trustee's
certificate of authentication with respect thereto shall be substantially in the
form annexed hereto as Exhibit A, in the case of the Restricted Global, Exhibit
B, in the case of the Regulation S Global and Exhibit C, in the case of a U.S.
Certificated Note. The Notes may have such appropriate insertions, omissions,
substitutions and other variations as are required or permitted by this
Indenture and may have letters, notations, legends or endorsements required by
law, stock exchange agreements to which the Company is subject or usage. Any
portion of
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28
the text of any Note may be set forth on the reverse thereof, with an
appropriate reference thereto on the face of the Note. The Company shall approve
the form of the Notes and any notation, legend or endorsement on the Notes. Each
Note shall be dated the date of its authentication.
The terms and provisions contained in the form of the Notes annexed
hereto as Exhibits A, B and C shall constitute, and are hereby expressly made, a
part of this Indenture. Each of the Company and the Trustee, by its execution
and delivery of this Indenture, expressly agrees to the terms and provisions of
the Notes applicable to it and to be bound thereby.
Notes initially offered and sold in reliance on Rule 144A shall be
issued initially in the form of one or more permanent global Notes in registered
form, substantially in the form set forth in Exhibit A (the "Restricted Global")
deposited with the Trustee, as custodian for the Depository, duly executed by
the Company and authenticated by the Trustee as hereinafter provided. The
aggregate principal amount at maturity of a Restricted Global may from time to
time be increased or decreased by adjustments made on the records of the
Trustee, as custodian for the Depository or its nominee, as hereinafter
provided.
Notes offered and sold in offshore transactions in reliance on
Regulation S shall be issued initially in the form of one or more temporary
global Notes in registered form, substantially in the form set forth in Exhibit
B (the "Temporary Regulation S Global") deposited on behalf of the purchasers of
the Notes represented thereby with the Trustee, as custodian for the Depository,
duly executed by the Company and authenticated by the Trustee as hereinafter
provided. At any time following the later of the Separation Date and April 8,
1998, upon receipt by the Trustee and the Company of a certificate substantially
in the form of Exhibit D hereto, one or more permanent global Notes in
registered form substantially in the form set forth in Exhibit B (the "Permanent
Regulation S Global" and, together with the Temporary Regulation S Global, the
"Regulation S Global") duly executed by the Company and authenticated by the
Trustee as hereinafter provided shall be deposited with the Trustee, as
custodian for the Depository which shall reflect on its books and records the
date and a decrease in the principal amount of the Temporary Regulation S Global
in an amount equal to the principal amount of the beneficial interest in the
Temporary Regulation S Global transferred. The aggregate principal amount at
maturity of a Regulation S Global may from time to time be increased or
decreased by adjustments made in the records of the Trustee, as custodian for
the Depository or its nominee, as herein provided.
Notes which are offered and sold to Institutional Accredited
Investors which are not QIBs (excluding Non-U.S. Persons) shall be issued in the
form of permanent certificated Notes in registered form in substantially the
form set forth in Exhibit C (the "U.S. Certificated Notes"). Notes issued
pursuant to Section 2.07 hereof in exchange for interests in the
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29
Regulation S Global shall be in the form of certificated Notes in registered
form substantially in the form set forth in Exhibit C (the "Regulation S
Certificated Notes"). Notes issued pursuant to Section 2.07 hereof in exchange
for interests in the Restricted Global shall be in the form of the U.S.
Certificated Note.
The Regulation S Certificated Notes and the U.S. Certificated Notes
are sometimes collectively referred to herein as the "Certificated Notes". The
Restricted Global and Regulation S Global are sometimes collectively herein
referred to as the "Global Notes".
The definitive Notes shall be typed, printed, lithographed or
engraved or produced by any combination of these methods or may be produced in
any other manner permitted by the rules of any securities exchange on which the
Notes may be listed, all as determined by the officers executing such Notes, as
evidenced by their execution of such Notes.
SECTION 2.02. Restrictive Legends. (a) Note Legends. Unless and
until a Note is exchanged for an Exchange Note or otherwise disposed of in
connection with an effective Registration Statement pursuant to the Registration
Rights Agreement, (i) each Restricted Global and each U.S. Certificated Note
shall bear the legend, set forth below on the face thereof and (ii) each
Regulation S Certificated Note and each Temporary Regulation S Global shall bear
the legend set forth below on the face thereof until at least 41 days after the
Closing Date and receipt by the Company and the Trustee of a certificate
substantially in the form of Exhibit D hereto.
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS, AND
ACCORDINGLY, MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED
WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S.
PERSONS EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION
HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED
INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) OR
(B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE
501(a)(1), (2), (3) OR (7) OF REGULATION D UNDER THE SECURITIES ACT) (AN
"INSTITUTIONAL ACCREDITED INVESTOR") OR (C) IT IS NOT A U.S. PERSON AND IS
ACQUIRING THIS NOTE IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 903
OF REGULATION S UNDER THE SECURITIES ACT; (2) AGREES THAT IT WILL NOT,
WITHIN THE TIME PERIOD REFERRED TO IN RULE 144(k) (TAKING INTO ACCOUNT THE
PROVISIONS OF RULE 144(d) UNDER THE SECURITIES ACT, IF APPLICABLE), RESELL
OR OTHERWISE TRANSFER
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30
THIS NOTE EXCEPT (A) TO THE COMPANY OR ANY SUBSIDIARY THEREOF, (B) TO A
QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE
SECURITIES ACT, (C) INSIDE THE UNITED STATES TO AN INSTITUTIONAL
ACCREDITED INVESTOR THAT, PRIOR TO SUCH TRANSFER, FURNISHES TO THE TRUSTEE
A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING
TO THE RESTRICTIONS ON TRANSFER OF THIS NOTE (THE FORM OF WHICH LETTER CAN
BE OBTAINED FROM THE TRUSTEE) AND IF SUCH TRANSFER IS IN RESPECT OF AN
AGGREGATE PRINCIPAL AMOUNT AT MATURITY OF NOTES OF LESS THAN $100,000, AN
OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY THAT SUCH TRANSFER IS IN
COMPLIANCE WITH THE SECURITIES ACT, (D) OUTSIDE THE UNITED STATES IN AN
OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT,
(E) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER
THE SECURITIES ACT (IF AVAILABLE) OR (F) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND (3) AGREES THAT IT
WILL DELIVER TO EACH PERSON TO WHOM THIS NOTE IS TRANSFERRED A NOTICE
SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY
TRANSFER OF THIS NOTE WITHIN THE TIME PERIOD REFERRED TO ABOVE, THE HOLDER
MUST CHECK THE APPROPRIATE BOX SET FORTH ON THE REVERSE HEREOF RELATING TO
THE MANNER OF SUCH TRANSFER AND SUBMIT THIS CERTIFICATE TO THE TRUSTEE. IF
THE PROPOSED TRANSFEREE IS AN INSTITUTIONAL ACCREDITED INVESTOR, THE
HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO EACH OF THE TRUSTEE AND
THE COMPANY SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS
SUCH PERSONS MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING
MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO,
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. 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. THE
INDENTURE CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER
ANY TRANSFER OF THIS NOTE IN VIOLATION OF THE FOREGOING RESTRICTIONS.
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31
(b) Global Note Legend. Each Global Note, whether or not an Exchange
Note, shall also bear the following legend on the face thereof:
UNLESS THIS GLOBAL NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY TO THE COMPANY OR ITS AGENT FOR REGISTRATION
OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS REGISTERED IN THE
NAME OF CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY OR SUCH OTHER
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY OR SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY
(AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS
IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY), 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 NOTE 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 NOTE SHALL BE
LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN
SECTION 2.08 OF THE INDENTURE.
(c) Units Legends. Each Note issued prior to the Separation Date
shall bear the following legend (the "Unit Legend") on the face thereof:
THE NOTES EVIDENCED BY THIS CERTIFICATE ARE INITIALLY ISSUED AS PART OF AN
ISSUANCE OF UNITS, EACH OF WHICH CONSISTS OF $1,000 PRINCIPAL AMOUNT AT
MATURITY OF 12.50% SENIOR DISCOUNT NOTES DUE 2008 OF VIATEL, INC. (THE
"NOTES") AND .490 OF A SHARE OF SERIES A REDEEMABLE CONVERTIBLE PREFERRED
STOCK (THE "SERIES A PREFERRED"). THE NOTES AND THE SHARES OF SERIES A
PREFERRED WILL BE AUTOMATICALLY SEPARATED UPON THE EARLIEST TO OCCUR OF
(i) SIX MONTHS AFTER APRIL 8, 1998, (ii) COMMENCEMENT OF AN EXCHANGE OFFER
WITH RESPECT TO THE NOTES, (iii) THE EFFECTIVENESS OF
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32
A SHELF REGISTRATION STATEMENT WITH RESPECT TO RESALE OF THE NOTES OR (iv)
COMMENCEMENT OF AN OFFER TO REPURCHASE THE NOTES PURSUANT TO THE
INDENTURE. THE NOTES EVIDENCED BY THIS CERTIFICATE MAY NOT BE TRANSFERRED
OR EXCHANGED SEPARATELY FROM, BUT MAY BE TRANSFERRED OR EXCHANGED ONLY
TOGETHER WITH, THE SERIES A PREFERRED.
SECTION 2.03. Execution, Authentication and Denominations. Subject
to Article Four, the aggregate principal amount at maturity of Notes (including
Exchange Notes) which may be authenticated and delivered under this Indenture is
unlimited. The Notes shall be executed by two Officers of the Company, by
facsimile or manual signature, in the name and on behalf of the Company.
If an Officer whose signature is on a Note no longer holds that
office at the time the Trustee or authenticating agent authenticates the Note,
the Note shall be valid nevertheless.
A Note shall not be valid until the Trustee or authenticating agent
manually signs the certificate of authentication on the Note. The signature
shall be conclusive evidence that the Note has been authenticated under this
Indenture.
At any time and from time to time after the execution of this
Indenture, the Trustee or an authenticating agent shall, upon receipt of a
Company Order, authenticate for original issue Notes in the aggregate principal
amount at maturity specified in such Company Order. Such Company Order shall
specify the amount of Notes to be authenticated, the date on which the issue of
Notes is to be authenticated and in case of an issuance of Notes pursuant to
Section 2.15, shall certify that such issuance is in compliance with Article
Four.
The Trustee may appoint an authenticating agent reasonably
acceptable to the Company to authenticate Notes. Unless limited by the terms of
such 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 or an Affiliate
of the Company.
The Notes shall be issuable only in registered form without coupons
in denominations of $1,000 in principal amount at maturity and any integral
multiple of $1,000 in excess thereof.
SECTION 2.04. Registrar and Paying Agent. The Company shall maintain
an office or agency in New York City where Notes may be presented for
registration of transfer
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33
or for exchange (the "Registrar"), an office or agency in New York City where
Notes may be presented for payment the "Paying Agent") and an office or agency
where notices and demands to or upon the Company in respect of the Notes and
this Indenture may be served, which shall be in the City of New York. The
Company shall cause the Registrar to keep a register of the Notes and of their
transfer and exchange (the "Note Register"). The Company may have one or more
co-Registrars and one or more additional Paying Agents.
The Company shall enter into an appropriate agency agreement with
any Agent not a party to this Indenture. The agreement shall implement the
provisions of this Indenture that relate to such Agent. The Company shall give
prompt written notice to the Trustee of the name and address of any such Agent
and any change in the address of such Agent. If the Company fails to maintain a
Registrar, Paying Agent and/or agent for service of notices and demands, the
Trustee shall act as such Registrar, Paying Agent and/or agent for service of
notices and demands for so long as such failure shall continue. The Company may
remove any Agent upon written notice to such Agent and the Trustee; provided
that no such removal shall become effective until (i) the acceptance of an
appointment by a successor Agent to such Agent as evidenced by an appropriate
agency agreement entered into by the Company and such successor Agent and
delivered to the Trustee or (ii) notification to the Trustee that the Trustee
shall serve as such Agent until the appointment of a successor Agent in
accordance with clause (i) of this proviso. The Company, any Subsidiary of the
Company, or any Affiliate of any of them may act as Paying Agent, Registrar or
co-Registrar, and/or agent for service of notice and demands; provided, however,
that neither the Company, a Subsidiary of the Company nor an Affiliate of any of
them shall act as Paying Agent in connection with the defeasance of the Notes or
the discharge of this Indenture under Article Eight.
The Company initially appoints the Trustee as Registrar, U.S. Paying
Agent, authenticating agent and agent for service of notice and demands. If, at
any time, the Trustee is not the Registrar, the Registrar shall make available
to the Trustee on or before each Interest Payment Date and at such other times
as the Trustee may reasonably request, the names and addresses of the Holders as
they appear in the Note Register.
SECTION 2.05. Paying Agent to Hold Money in Trust. Not later than
10:00 a.m. New York City time on each due date of the principal, premium, if
any, or interest on any Notes, the Company shall deposit with the Paying Agent
money in immediately available funds sufficient to pay such principal, premium,
if any, or interest so becoming due. The Company shall require each Paying
Agent, if any, other than the Trustee to agree in writing that such Paying Agent
shall hold in trust for the benefit of the Holders or the Trustee all money held
by the Paying Agent for the payment of principal of, premium, if any, or
interest on the Notes (whether such money has been paid to it by the Company or
any other obligor on the Notes), and that such Paying Agent shall promptly
notify the Trustee of any default by the Company (or any other obligor on the
Notes) in making any such payment. The
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34
Company at any time may require a Paying Agent to pay all money held by it to
the Trustee and account for any funds 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 pay all money held by it to the Trustee and
to account for any funds disbursed. Upon doing so, the Paying Agent shall have
no further liability for the money so paid over to the Trustee. If the Company
or any Subsidiary of the Company or any Affiliate of any of them acts as Paying
Agent, it will, on or before each due date of any principal of, premium, if any,
or interest on the Notes, segregate and hold in a separate trust fund for the
benefit of the Holders a sum of money sufficient to pay such principal, premium,
if any, or interest so becoming due until such sum of money shall be paid to
such Holders or otherwise disposed of as provided in this Indenture, and will
promptly notify the Trustee of its action or failure to act as required by this
Section 2.05.
SECTION 2.06. Transfer and Exchange. The Notes are issuable only in
registered form. A Holder may transfer a Note by written application to the
Registrar stating the name of the proposed transferee and otherwise complying
with the terms of this Indenture. No such transfer shall be effected until, and
such transferee shall succeed to the rights of a Holder only upon registration
of the transfer by the Registrar in the Note Register. Prior to the registration
of any transfer by a Holder as provided herein, the Company, the Trustee, and
any agent of the Company or the Trustee shall treat the Person in whose name the
Note is registered as the owner thereof for all purposes whether or not the Note
shall be overdue, and neither the Company, the Trustee, nor any such agent shall
be affected by notice to the contrary. Furthermore, any Holder of a Global Note
shall, by acceptance of such Global Note, agree that transfers of beneficial
interests in such Global Note may be effected only through a book-entry system
maintained by the Depository (or its agent), and that ownership of a beneficial
interest in the Note shall be required to be reflected in a book entry. When
Notes are presented to the Registrar or a co-Registrar with a request to
register the transfer or to exchange them for an equal principal amount at
maturity of Notes of other authorized denominations (including an exchange of
Notes for Exchange Notes), the Registrar shall register the transfer or make the
exchange as requested if its requirements for such transactions are met;
provided that no exchanges of Notes for Exchange Notes shall occur until a
Registration Statement shall have been declared effective by the Commission and
that any Notes that are exchanged for Exchange Notes shall be canceled by the
Trustee. To permit registrations of transfers and exchanges in accordance with
the terms, conditions and restrictions hereof, the Company shall execute and the
Trustee shall authenticate Notes at the Registrar's request. No service charge
shall be made to any Holder for any registration of transfer or exchange or
redemption of the Notes, but the Company may require payment of a sum sufficient
to cover any transfer tax or similar governmental charge payable in connection
therewith (other than any such transfer taxes or other similar governmental
charge payable upon transfers, exchanges or redemptions pursuant to Section
2.11, 3.08, 4.11, 4.12 or 9.04).
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35
The Registrar shall not be required (i) to issue, register the
transfer of or exchange any Note during a period beginning at the opening of
business 15 days before the day of the mailing of a notice of redemption of
Notes selected for redemption under Section 3.03 or Section 3.08 and ending at
the close of business on the day of such mailing, or (ii) to register the
transfer of or exchange any Note so selected for redemption in whole or in part,
except the unredeemed portion of any Note being redeemed in part.
SECTION 2.07. Book-Entry Provisions for Global Notes. (a) Each
Restricted Global and Regulation S Global initially shall (i) be registered in
the name of the Depository for such Global Note or the nominee of such
Depository, (ii) be delivered to the Trustee as custodian for such Depository
and (iii) bear legends as set forth in Section 2.02 hereof.
Members of, or Participants in, the Depository ("Agent Members")
shall have no rights under this Indenture with respect to any Global Note held
on their behalf by the Depository, or the Trustee as its custodian, or under any
Global Note, and the Depository may be treated by the Company, the Trustee and
any agent of the Company or the Trustee as the absolute owner of such 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 the Depository or impair, as between the Depository
and its Agent Members, the operation of customary practices governing the
exercise of the rights of a beneficial owner of any Note.
(b) Transfers of a Global Note shall be limited to transfers of such
Global Note in whole, but not in part, to the Depository, its successors or
their respective nominees. Transfers of interests in one Global Note to parties
who will hold the interests through the same Global Note will be effected in the
ordinary way in accordance with the respective rules and operating procedures of
the DTC, Euroclear or Cedel Bank, as the case may be, and the provisions of
Section 2.08 hereof. In addition, U.S. Certificated Notes or Regulation S
Certificated Notes shall be transferred to all beneficial owners in exchange for
their beneficial interests in a Restricted Global or a Regulation S Global,
respectively, if (i) the Depository notifies the Company that it is unwilling or
unable to continue as Depository for the Restricted Global or the Regulation S
Global, as the case may be and a successor depositary is not appointed by the
Company within 90 days of such notice or (ii) an Event of Default has occurred
and is continuing and the Registrar has received a request to the foregoing
effect from the Depository or the Trustee.
(c) 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, if any, and other
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36
procedures applicable to beneficial interests in such other Global Note for as
long as it remains such an interest.
(d) In connection with any transfer pursuant to paragraph (b) of
this Section of a portion of the beneficial interests in a Restricted Global or
Regulation S Global to beneficial owners who are required to hold Certificated
Notes, the Registrar shall reflect on its books and records the date and a
decrease in the principal amount at maturity of such Restricted Global or
Regulation S Global, as the case may be, in an amount equal to the principal
amount at maturity of the beneficial interest in such Restricted Global or
Regulation S Global to be transferred, and the Company shall execute, and the
Trustee shall authenticate and deliver, one or more U.S. Certificated Notes or
Regulation S Certificated Notes, as the case may be, of like tenor and amount.
(e) In connection with the transfer of all the beneficial interests
in a Restricted Global or Regulation S Global to beneficial owners pursuant to
paragraph (b) of this Section, the Restricted Global or Regulation S Global, as
the case may be, shall be deemed to be surrendered to the Trustee for
cancellation, and the Company shall execute, and the Trustee shall authenticate
and deliver, to each beneficial owner identified by the Depository in exchange
for its beneficial interest in the Restricted Global or Regulation S Global, as
the case may be, an equal aggregate principal amount at maturity of U.S.
Certificated Notes or Regulation S Certificated Notes, as the case may be, of
authorized denominations.
(f) Any U.S. Certificated Note delivered in exchange for an interest
in a Restricted Global pursuant to paragraph (b), (d) or (e) of this Section
shall, except as otherwise provided by paragraphs (f)(i)(x) and (d) of Section
2.08 hereof, bear the legend regarding transfer restrictions applicable to the
U.S. Certificated Note set forth in Section 2.02.
(g) Any Regulation S Certificated Note delivered in exchange for an
interest in a Regulation S Global pursuant to paragraph (b), (d) or (e) of this
Section shall, except as otherwise provided by paragraphs (f)(i)(x) and (d) of
Section 2.08 hereof, bear the legend regarding transfer restrictions applicable
to the Regulation S Certificated Note set forth in Section 2.02 hereof.
(h) The registered holder of a Global Note may grant proxies and
otherwise authorize any Person, including 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.
(i) QIBs that are beneficial owners of interests in a Global Note
may receive Certificated Notes (which shall bear the Private Placement Legend if
required by Section 2.02)
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37
in accordance with the procedures of the Depository. In connection with the
execution, authentication and delivery of such Certificated Notes, the Registrar
shall reflect on its books and records a decrease in the principal amount of the
relevant Global Note equal to the principal amount of such Certificated Notes
and the Company shall execute and the Trustee shall authenticate and deliver one
or more Certificated Notes having an equal aggregate principal amount.
(j) All Notes issued upon any transfer or exchange of Notes shall be
valid obligations of the Company, evidencing the same debt, and entitled to the
same benefits under this Indenture, as the Notes surrendered upon such transfer
or exchange.
SECTION 2.08. Special Transfer Provisions. Unless and until a Note
is exchanged for an Exchange Note in connection with an effective Registration
Statement pursuant to the Registration Rights Agreement, the following
provisions shall apply:
(a) Transfers to QIBs. The following provisions shall apply with
respect to the registration of any proposed transfer of a U.S. Certificated Note
or an interest in a Restricted Global to a QIB (excluding Non-U.S. Persons):
(i) If the Note to be transferred consists of (x) U.S. Certificated
Notes, the Registrar shall register the transfer if such transfer is being
made by a proposed transferor who has checked the box provided for on the
form of Note stating, or has otherwise advised the Company and the
Registrar in writing, that the sale has been made in compliance with the
provisions of Rule 144A to a transferee who has signed the certification
provided for on the form of Note stating, or has otherwise advised the
Company and the Registrar in writing, that it is purchasing the Note for
its own account or an account with respect to which it exercises sole
investment discretion and that it and any such account is a QIB within the
meaning of Rule 144A, and is aware that the sale to it is being made in
reliance on Rule 144A and acknowledges that it has received such
information regarding the Company as it has requested pursuant to Rule
144A or has determined not to request such information and that it is
aware that the transferor is relying upon its foregoing representations in
order to claim the exemption from registration provided by Rule 144A or
(y) an interest in a Restricted Global, the transfer of such interest may
be effected only through the book entry system maintained by the
Depository.
(ii) If the proposed transferee is an Agent Member, and the Note to
be transferred consists of U.S. Certificated Notes, upon receipt by the
Registrar of the documents referred to in clause (i) and instructions
given in accordance with the Depository's and the Registrar's procedures,
the Registrar shall reflect on its books and records the date and an
increase in the principal amount at maturity of such Restricted
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38
Global in an amount equal to the principal amount at maturity of the U.S.
Certificated Notes to be transferred, and the Trustee shall cancel the
Certificated Note so transferred.
(b) Transfers of Interests in Regulation S Global or Regulation S
Certificated Notes to U.S. Persons. The following provisions shall apply with
respect to any transfer of interests in a Regulation S Global or Regulation S
Certificated Notes to U.S. Persons:
(i) prior to the removal of the Private Placement Legend from a
Regulation S Global or a Regulation S Certificated Note pursuant to
Section 2.02, the Registrar shall refuse to register such transfer; and
(ii) after such removal, the Registrar shall register the transfer
of any such Note without requiring any additional certification.
(c) Transfers to Non-U.S. Persons at Any Time. The following
provisions shall apply with respect to any transfer of a Note to a Non-U.S.
Person:
(i) The Registrar shall register any proposed transfer to any
Non-U.S. Person if the Note to be transferred is a U.S. Certificated Note
or an interest in a Restricted Global only upon receipt of a certificate
substantially in the form of Exhibit E from the proposed transferor.
(ii) (a) If the proposed transferor is an Agent Member holding a
beneficial interest in a Restricted Global, upon receipt by the Registrar
of (x) the documents required by paragraph (i) and (y) instructions in
accordance with the Depository's and the Registrar's procedures, the
Registrar shall reflect on its books and records the date and a decrease
in the principal amount at maturity of such Restricted Global in an amount
equal to the principal amount at maturity of the beneficial interest in
the Restricted Global to be transferred, and (b) if the proposed
transferee is an Agent Member, upon receipt by the Registrar of
instructions given in accordance with the Depository's and the Registrar's
procedures, the Registrar shall reflect on its books and records the date
and an increase in the principal amount at maturity of such Regulation S
Global in an amount equal to the principal amount at maturity of the U.S.
Certificated Notes or the Restricted Global, as the case may be, to be
transferred, and the Trustee shall cancel the Certificated Note, if any,
so transferred or decrease the amount of the Restricted Global.
(d) Private Placement Legend. Upon the registration of transfer,
exchange or replacement of Notes not bearing the Private Placement Legend, the
Registrar shall deliver
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39
Notes that do not bear the Private Placement Legend. Upon the registration of
transfer, exchange or replacement of Notes bearing the Private Placement Legend,
the Registrar shall deliver only Notes that bear the Private Placement Legend
unless either (i) the Private Placement Legend is no longer required by Section
2.02 or (ii) there is delivered to the Registrar an Opinion of Counsel
reasonably satisfactory to the Company and the Trustee to the effect that
neither such legend nor the related restrictions on transfer are required in
order to maintain compliance with the provisions of the Securities Act.
(e) 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 Registrar shall not register a transfer of any Note unless such
transfer complies with the restrictions on transfer of such Note set forth in
this Indenture. In connection with any transfer of Notes to an Institutional
Accredited Investor, each Holder agrees by its acceptance of the Notes to
furnish the Registrar or the Company such certifications, legal opinions or
other information as either of them may reasonably require to confirm that such
transfer is being made pursuant to an exemption from, or a transaction not
subject to, the registration requirements of the Securities Act; provided that
the Registrar shall not be required to determine (but may rely on a
determination made by the Company with respect to) the sufficiency of any such
certifications, legal opinions or other information.
(f) Transfers to Non-QIB Institutional Accredited Investors. The
following provisions shall apply with respect to the registration of any
proposed transfer of a Note to any Institutional Accredited Investor which is
not a QIB (excluding Non-U.S. Persons):
(i) The Registrar shall register the transfer of any Note, whether
or not such Note bears the Private Placement Legend, if (x) the requested
transfer is after the time period referred to in Rule 144(k) under the
Securities Act as in effect with respect to such transfer or (y) the
proposed transferee has delivered to the Registrar (A) a certificate
substantially in the form of Exhibit F hereto and (B) if the aggregate
principal amount at maturity of the Notes being transferred is less than
$500,000 at the time of such transfer, an Opinion of Counsel acceptable to
the Company that such transfer is in compliance with the Securities Act.
(ii) If the proposed transferor is an Agent Member holding a
beneficial interest in a Restricted Global, upon receipt by the Registrar
and the Company of (x) the documents, if any, required by paragraph (i)
and (y) instructions given in accordance with the Depository's and the
Registrar's procedures, the Registrar shall reflect on its books and
records the date and a decrease in the principal amount at
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40
maturity of such Restricted Global in an amount equal to the principal
amount at maturity of the beneficial interest in the Restricted Global to
be transferred, and the Company shall execute, and the Trustee shall
authenticate and deliver, one or more U.S. Certificated Notes of like
tenor and amount.
The Registrar shall retain, in accordance with its customary
procedures, copies of all letters, notices and other written communications
received pursuant to Section 2.07 or this Section 2.08. 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.
SECTION 2.09. Replacement Notes. If a mutilated Note is surrendered
to the Trustee or if the Holder claims that the Note has been lost, destroyed or
wrongfully taken, the Company shall issue and the Trustee shall authenticate a
replacement Note of like tenor and principal amount and bearing a number not
contemporaneously outstanding; provided that the requirements of the second
paragraph of Section 2.10 are met. If required by the Trustee or the Company, an
indemnity bond must be furnished that is sufficient in the judgment of both the
Trustee and the Company to protect the Company, the Trustee or any Agent from
any loss that any of them may suffer if a Note is replaced. The Company may
charge such Holder for its expenses and the expenses of the Trustee in replacing
a Note. In case any such mutilated, lost, destroyed or wrongfully taken Note has
become or is about to become due and payable, the Company in its discretion may
pay such Note instead of issuing a new Note in replacement thereof.
Every replacement Note is an additional obligation of the Company
and shall be entitled to the benefits of this Indenture.
SECTION 2.10. Outstanding Notes. Notes outstanding at any time are
all Notes that have been authenticated by the Trustee except for those canceled
by it, those delivered to it for cancellation and those described in this
Section 2.10 as not outstanding.
If a Note is replaced pursuant to Section 2.09, it ceases to be
outstanding unless and until the Trustee and the Company receive proof
reasonably satisfactory to them that the replaced Note is held by a bona fide
purchaser.
If the Paying Agent (other than the Company or an Affiliate of the
Company) holds on the maturity date or a redemption date money sufficient to pay
all principal, premium, if any, and interest payable on that date with respect
to the Notes (or portions thereof) to be redeemed or payable on that date, then
on and after that date such Notes cease to be outstanding and interest on them
shall cease to accrue, or the principal of such Notes shall cease to accrete, as
the case may be.
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41
A Note does not cease to be outstanding because the Company or one
of its Affiliates holds such Note; provided, however, that, in determining
whether the Holders of the requisite principal amount at maturity of the
outstanding Notes have given any request, demand, authorization, direction,
notice, consent or waiver hereunder, Notes owned by the Company or any other
obligor upon the Notes or any Affiliate of the Company or of such other obligor
shall be disregarded and deemed not to be outstanding, except that, in
determining whether the Trustee shall be protected in relying upon any such
request, demand, authorization, direction, notice, consent or waiver, only Notes
which a Responsible Officer of the Trustee knows to be so owned shall be so
disregarded. Notes so owned which have been pledged in good faith may be
regarded as outstanding if the pledgee establishes to the satisfaction of the
Trustee the pledgee's right so to act with respect to such Notes and that the
pledgee is not the Company or any other obligor upon the Notes or any Affiliate
of the Company or of such other obligor.
SECTION 2.11. Temporary Notes. Until definitive Notes are ready for
delivery, the Company may prepare and the Trustee shall authenticate temporary
Notes. Temporary Notes shall be substantially in the form of definitive Notes
but may have insertions, substitutions, omissions and other variations
determined to be appropriate by the Officers executing the temporary Notes, as
evidenced by their execution of such temporary Notes. If temporary Notes are
issued, the Company will cause definitive Notes to be prepared without
unreasonable delay. After the preparation of definitive Notes, the temporary
Notes shall be exchangeable for definitive Notes upon surrender of the temporary
Notes at the office or agency of the Company designated for such purpose
pursuant to Section 4.02, without charge to the Holder. Upon surrender for
cancellation of any one or more temporary Notes the Company shall execute and
the Trustee shall authenticate and deliver in exchange therefor a like principal
amount at maturity of definitive Notes of authorized denominations. Until so
exchanged, the temporary Notes shall be entitled to the same benefits under this
Indenture as definitive Notes.
SECTION 2.12. Cancellation. The Company at any time may deliver to
the Trustee for cancellation any Notes previously authenticated and delivered
hereunder which the Company may have acquired in any manner whatsoever, and may
deliver to the Trustee for cancellation any Notes previously authenticated
hereunder which the Company has not issued and sold. The Registrar and the
Paying Agent shall forward to the Trustee any Notes surrendered to them for
registration of transfer, exchange, purchase or payment. The Trustee shall
cancel all Notes surrendered for registration of transfer, exchange, purchase,
payment or cancellation and shall return all such Notes to the Company. The
Company shall not issue 1998 Notes to replace Notes it has paid in full or
delivered to the Trustee for cancellation.
SECTION 2.13. CUSIP Numbers. The Company in issuing the Notes may
use "CUSIP" and "CINS" numbers as the case may be, in notices of redemption or
exchange as a
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42
convenience to Holders; provided that any such notice shall state that no
representation is made as to the correctness of such numbers either as printed
on the Notes or as contained in any notice of redemption or exchange and that
reliance may be placed only on the other identification numbers printed on the
Notes. The Company shall promptly advise the Trustee of any change in the CUSIP
numbers.
SECTION 2.14. Defaulted Interest. If the Company defaults in a
payment of interest on the Notes, it shall pay, or shall deposit with the Paying
Agent money in immediately available funds sufficient to pay, the defaulted
interest, plus (to the extent lawful) interest on the defaulted interest, to the
Persons who are Holders on a subsequent special record date. A special record
date, as used in this Section 2.14 with respect to the payment of any defaulted
interest, shall mean the 15th day next preceding the date fixed by the Company
for the payment of defaulted interest, whether or not such day is a Business
Day. At least 15 days before the subsequent special record date, the Company
shall mail to each Holder and to the Trustee a notice that states the subsequent
special record date, the payment date and the amount of defaulted interest to be
paid.
SECTION 2.15. Issuance of Additional Notes. The Company may, subject
to Article Four of this Indenture, issue additional Notes under this Indenture.
The Notes issued on the Closing Date and any additional Notes subsequently
issued shall be treated as a single class for all purposes under this Indenture.
ARTICLE THREE
REDEMPTION
SECTION 3.01. Right of Redemption. (a) The Notes may be redeemed at
the election of the Company, in whole or in part, at any time and from time to
time on or after April 15, 2003 and prior to maturity, upon not less than 30 nor
more than 60 days' prior notice mailed by first-class mail to each Holder's last
address as it appears in the Note Register, at the following Redemption Prices
(expressed in percentages of their principal amount at maturity), plus accrued
and unpaid interest, if any, to the Redemption Date (subject to the right of
Holders of record on the relevant Regular Record Date that is on or prior to the
Redemption Date to receive interest due on an Interest Payment Date that is on
or prior to the Redemption Date) if redeemed during the 12-month period
commencing on April 15 of the applicable year set forth below:
Year Redemption Price
- ---- ----------------
2003........................................................ 106.250%
2004........................................................ 104.167
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43
2005........................................................ 102.083
2006 and thereafter......................................... 100.000
(b) In addition, at any time prior to April 15, 2001, the Company
may, at its option, redeem up to 35% of the aggregate principal amount at
maturity of the Notes with the net proceeds of one or more Public Equity
Offerings, at any time or from time to time in part, at a Redemption Price
(expressed as a percentage of Accreted Value on the Redemption Date) of
112.500%; provided (i) that 1998 Notes representing at least 65% of the
principal amount at maturity of the 1998 Notes initially issued remain
outstanding immediately after each such redemption and (ii) that notice of each
such redemption is mailed within 60 days of each such Public Equity Offering.
SECTION 3.02. Notices to Trustee. If the Company elects to redeem
Notes pursuant to Section 3.01, it shall notify the Trustee in writing of the
Redemption Date and the principal amount at maturity of Notes to be redeemed.
The Company shall give each notice provided for in this Section 3.02
in an Officers' Certificate at least 45 days before the Redemption Date (unless
a shorter period shall be satisfactory to the Trustee).
SECTION 3.03. Selection of Notes to Be Redeemed. If less than all of
the Notes are to be redeemed at any time, the Trustee shall select the Notes to
be redeemed in compliance with the requirements of the principal national
securities exchange, if any, on which the Notes are listed or if the Notes are
not listed on a national securities exchange, by lot or by such other method as
the Trustee in its sole discretion shall deem to be fair and appropriate;
provided that no Notes of $1,000 in principal amount at maturity or less shall
be redeemed in part.
The Trustee shall make the selection from the Notes outstanding and
not previously called for redemption. Notes in denominations of $1,000 in
principal amount at maturity may only be redeemed in whole. The Trustee may
select for redemption portions (equal to $1,000 in principal amount at maturity
or any integral multiple thereof) of Notes that have denominations larger than
$1,000 in principal amount at maturity. Provisions of this Indenture that apply
to Notes called for redemption also apply to portions of Notes called for
redemption. The Trustee shall notify the Company and the Registrar promptly in
writing of the Notes or portions of Notes to be called for redemption.
SECTION 3.04. Notice of Redemption. With respect to any redemption
of Notes pursuant to Section 3.01, at least 30 days but not more than 60 days
before a Redemption Date, the Company, or at the Company's request, the Trustee
shall mail a notice of redemption by first class mail to each Holder whose Notes
are to be redeemed.
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44
The notice shall identify the Notes to be redeemed and shall state:
(i) the Redemption Date;
(ii) the Redemption Price;
(iii) the name and address of the Paying Agent;
(iv) that Notes called for redemption must be surrendered to the
Paying Agent in order to collect the Redemption Price;
(v) that, unless the Company defaults in making the redemption
payment, interest on Notes (or portions thereof) called for redemption
ceases to accrue or Notes called for redemption cease to accrete in value,
as the case may be, on and after the Redemption Date and the only
remaining right of the Holders is to receive payment of the Redemption
Price plus accrued interest to the Redemption Date upon surrender of the
Notes to the Paying Agent;
(vi) that, if any Note is being redeemed in part, the portion of the
principal amount at maturity (equal to $1,000 in principal amount at
maturity or any integral multiple thereof) of such Note to be redeemed and
that, on and after the Redemption Date, upon surrender of such Note, a new
Note or Notes in principal amount at maturity equal to the unredeemed
portion thereof will be reissued; and
(vii) that, if any Note contains a CUSIP number as provided in
Section 2.13, no representation is being made as to the correctness of the
CUSIP number either as printed on the Notes or as contained in the notice
of redemption.
At the Company's request (which request may be revoked by the
Company at any time prior to the time at which the Trustee shall have given such
notice to the Holders), made in writing to the Trustee at least 45 days (or such
shorter period as shall be satisfactory to the Trustee) before a Redemption
Date, the Trustee shall give the notice of redemption in the name and at the
expense of the Company. If, however, the Company gives such notice to the
Holders, the Company shall concurrently deliver to the Trustee a copy of such
notice of redemption.
SECTION 3.05. Effect of Notice of Redemption. Once notice of
redemption is mailed, Notes called for redemption become due and payable on the
Redemption Date and at the Redemption Price. Upon surrender of any Notes to the
Paying Agent, such Notes shall be paid at the Redemption Price, plus accrued
interest, if any, to the Redemption Date. Notice of redemption shall be deemed
to be given when mailed, whether or not the Holder receives the
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45
notice. In any event, failure to give such notice, or any defect therein, shall
not affect the validity of the proceedings for the redemption of Notes held by
Holders to whom such notice was properly given.
SECTION 3.06. Deposit of Redemption Price. On or prior to any
Redemption Date, the Company shall deposit with the Paying Agent (or, if the
Company, one of its Subsidiaries or any of their Affiliates is acting as Paying
Agent, shall segregate and hold in trust as provided in Section 2.05) money
sufficient to pay the Redemption Price of and accrued interest on all Notes to
be redeemed on that date other than Notes or portions thereof called for
redemption on that date that have been delivered by the Company to the Trustee
for cancellation.
SECTION 3.07. Payment of Notes Called for Redemption. If notice of
redemption has been given in the manner provided above, the Notes or portion of
Notes specified in such notice to be redeemed shall become due and payable on
the Redemption Date at the Redemption Price stated therein, together with
accrued interest to such Redemption Date, and on and after such date (unless the
Company shall default in the payment of such Notes at the Redemption Price and
accrued interest to the Redemption Date, in which case the principal, until
paid, shall bear interest from the Redemption Date at the rate prescribed in the
Notes), such Notes shall cease to accrue interest or accrete in value, as the
case may be. Upon surrender of any Note for redemption in accordance with a
notice of redemption, such Note shall be paid and redeemed by the Company at the
Redemption Price, together with accrued interest, if any, to the Redemption
Date; provided that installments of interest whose Stated Maturity is on or
prior to the Redemption Date shall be payable to the Holders registered as such
at the close of business on the relevant Regular Record Date.
SECTION 3.08. Notes Redeemed in Part. Upon surrender of any Note
that is redeemed in part, the Company shall execute and the Trustee shall
authenticate and deliver to the Holder a new Note equal in principal amount at
maturity to the unredeemed portion of such surrendered Note.
ARTICLE FOUR
COVENANTS
SECTION 4.01. Payment of Notes. The Company shall pay the principal
of, premium, if any, and interest on the Notes on the dates and in the manner
provided in the Notes and this Indenture. An installment of principal, premium,
if any, or interest shall be considered paid on the date due if the Trustee or
Paying Agent (other than the Company, a Subsidiary of the Company, or any
Affiliate of any of them) holds on that date money designated for and sufficient
to pay the installment. If the Company or any Subsidiary of the
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46
Company or any Affiliate of any of them, acts as Paying Agent, an installment of
principal, premium, if any, or interest shall be considered paid on the due date
if the entity acting as Paying Agent complies with the last sentence of Section
2.05. As provided in Section 6.09, upon any bankruptcy or reorganization
procedure relative to the Company, the Trustee shall serve as the Paying Agent
and conversion agent, if any, for the Notes.
The Company shall pay interest on overdue principal, premium, if
any, and interest on overdue installments of interest, to the extent lawful, at
the rate per annum specified in the Notes.
SECTION 4.02. Maintenance of Office or Agency. The Company will
maintain in the Borough of Manhattan, the City of New York, an office or agency
where Notes may be surrendered for registration of transfer or exchange or for
presentation for payment and where notices and demands to or upon the Company in
respect of the Notes and this Indenture may be served. The Company will 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 10.02
hereof.
The Company may also from time to time designate one or more other
offices or agencies (in or outside the City of New York) where the Notes may be
presented or surrendered for any or all such purposes and may from time to time
rescind such designations; provided that no such designation or rescission shall
in any manner relieve the Company of its obligation to maintain an office or
agency in the Borough of Manhattan, the City of New York for such purposes. The
Company will give prompt written notice to the Trustee of any such designation
or rescission and of any change in the location of any such other office or
agency.
The Company hereby initially designates the Corporate Trust Office
of the Trustee, located in the Borough of Manhattan, the City of New York, as
such office of the Company in accordance with Section 2.04.
SECTION 4.03. Limitation on Indebtedness. (a) The Company will not,
and will not permit any of its Restricted Subsidiaries to, Incur any
Indebtedness (other than the 1998 Notes and Indebtedness existing on the Closing
Date); provided that the Company may Incur Indebtedness if, after giving effect
to the Incurrence of such Indebtedness and the receipt and application of the
proceeds therefrom, the Consolidated Leverage Ratio would be greater than zero
and less than 6:1.
Notwithstanding the foregoing, the Company and any Restricted
Subsidiary (except as specified below) may Incur each and all of the following:
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47
(i) Indebtedness outstanding at any time in an aggregate principal
amount not to exceed $100 million of Indebtedness that is pari passu with
or subordinated to the Notes and $150 million of Indebtedness that is
subordinated to the Notes, less any amount of such Indebtedness
permanently repaid as provided under Section 4.11 hereof;
(ii) Indebtedness owed (A) by any Restricted Subsidiary to the
Company or another Restricted Subsidiary or (B) by the Company to any
Restricted Subsidiary; provided that any event which results in any such
Restricted Subsidiary ceasing to be a Restricted Subsidiary or any
subsequent transfer of such Indebtedness (other than to the Company or
another Restricted Subsidiary) shall be deemed, in each case, to
constitute an Incurrence of such Indebtedness not permitted by this clause
(ii);
(iii) Indebtedness issued in exchange for, or the net proceeds of
which are used to repay, redeem, defease, refinance, refund, extend,
renew, replace, discharge or otherwise retire any then outstanding
Indebtedness (other than Indebtedness Incurred under clause (i), (ii),
(iv), (vi), (viii), (xi) or (xii) of this paragraph) and any refinancings
thereof in an amount not to exceed the amount so refinanced or refunded
(plus premiums, penalties, accrued interest, fees and expenses); provided
that Indebtedness the proceeds of which are used to refinance or refund
the Notes or Indebtedness that is pari passu with, or subordinated in
right of payment to, the Notes shall only be permitted under this clause
(iii) if (A) in case the Notes are refinanced in part or the Indebtedness
to be refinanced 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 outstanding, is expressly made pari passu with,
or subordinate in right of payment to, the remaining Notes, (B) in case
the Indebtedness to be refinanced is subordinated in right of payment to
the Notes, such new Indebtedness, by its terms or by the terms of any
agreement or instrument pursuant to which such new Indebtedness is issued
or remains outstanding, is expressly made subordinate in right of payment
to the Notes at least to the extent that the Indebtedness to be refinanced
is subordinated to the Notes and (C) such new Indebtedness, determined as
of the date of Incurrence of such new Indebtedness, does not mature prior
to the Stated Maturity of the Indebtedness to be refinanced or refunded,
and the Average Life of such new Indebtedness is at least equal to the
remaining Average Life of the Indebtedness to be refinanced or refunded;
and provided further that in no event may Indebtedness of the Company be
refinanced 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 provided in the ordinary course of business, (B) under Currency
Agreements and Interest Rate Agreements; provided that such agreements (a)
are designed solely to
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48
protect the Company or any of its Restricted Subsidiaries against
fluctuations in foreign currency exchange rates or interest rates and (b)
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 (other than Guarantees of Indebtedness Incurred by any Person
acquiring all or any portion of such business, assets or Restricted
Subsidiary for the purpose of financing such acquisition), 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 of the Company, to the extent the net proceeds
thereof are promptly (A) used to purchase Notes tendered in an Offer to
Purchase made as a result of a Change in Control or (B) deposited to
defease the Notes as described below under Article Eight hereof;
(vi) Guarantees of the Notes and Guarantees of Indebtedness of the
Company by any Restricted Subsidiary provided the Guarantee of such
Indebtedness is permitted by and made in accordance with Section 4.07
hereof;
(vii) Indebtedness (including Guarantees) Incurred to finance the
cost (including the cost of design, development, acquisition,
construction, installation, improvement, transportation or integration) to
acquire equipment, inventory or network assets (including acquisitions by
way of Capitalized Lease and acquisitions of the Capital Stock of a Person
that becomes a Restricted Subsidiary to the extent of the fair market
value of the equipment, inventory or network assets so acquired) by the
Company or a Restricted Subsidiary after the Closing Date;
(viii) Indebtedness of the Company not to exceed, at any one time
outstanding, two times (A) the Net Cash Proceeds received by the Company
after the Closing Date as a capital contribution or from the issuance and
sale of its Capital Stock (other than Disqualified Stock) to a Person that
is not a Subsidiary of the Company, to the extent (I) such capital
contribution or Net Cash Proceeds have not been used pursuant to clause
(C)(2) of the first paragraph or clause (iii), (iv), (vi) or (vii) of the
second paragraph of Section 4.04 hereof to make a Restricted Payment and
(II) if such capital contribution or Net Cash Proceeds are used to
consummate a transaction pursuant to which the Company Incurs Acquired
Indebtedness, the amount of such Net Cash Proceeds exceeds one-half of the
amount of Acquired Indebtedness so Incurred and (B)
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49
80% of the fair market value of property (other than cash and cash
equivalents) received by the Company after the Closing Date from the sale
of its Capital Stock (other than Disqualified Stock) to a Person that is
not a Subsidiary of the Company, to the extent (I) such capital
contribution or sale of Capital Stock has not been used pursuant to clause
(iii), (iv), (vi) or (vii) of the second paragraph of Section 4.04 hereof
to make a Restricted Payment and (II) if such capital contribution or
Capital Stock is used to consummate a transaction pursuant to which the
Company Incurs Acquired Indebtedness, 80% of the fair market value of the
property received exceeds one-half of the amount of Acquired Indebtedness
so Incurred provided that such Indebtedness does not mature prior to the
Stated Maturity of the Notes and has an Average Life longer than the
Notes;
(ix) Acquired Indebtedness;
(x) Strategic Subordinated Indebtedness;
(xi) Indebtedness in respect of bankers' acceptance and letters of
credit, all in the ordinary course of business, in an aggregate amount
outstanding at any time of up to $10 million;
(xii) Indebtedness arising from the honoring by a bank or other
financial institution of a check, or similar instrument inadvertently
(except in the case of daylight overdrafts) drawn against insufficient
funds in the ordinary course of business, provided that such Indebtedness
is extinguished within three business days of Incurrence.
(b) Notwithstanding any other provision of this Section 4.03, the
maximum amount of Indebtedness that the Company or a Restricted Subsidiary may
Incur pursuant to this Section 4.03 shall not be deemed to be exceeded, with
respect to any outstanding Indebtedness due solely to the result of fluctuations
in the exchange rates of currencies.
(c) For purposes of determining any particular amount of
Indebtedness under this Section 4.03, (1) 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 and (2) any Liens
granted pursuant to the equal and ratable provisions referred to in Section 4.09
shall not be treated as Indebtedness. For purposes of determining compliance
with this Section 4.03, in the event that an item of Indebtedness meets the
criteria of more than one of the types of Indebtedness described in clauses (i)
through (xii) of Section 4.03(a), the Company, in its sole discretion, shall
classify, and from time to time may reclassify, such item of Indebtedness and
only be required to include the amount and type of such Indebtedness in one of
such clauses.
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50
SECTION 4.04. Limitation on Restricted Payments. The Company will
not, and will not permit any Restricted Subsidiary to, directly or indirectly,
(i) (A) declare or pay any dividend or make any distribution on or
with respect to its Capital Stock (other than (x) dividends or
distributions payable solely in shares of its Capital Stock (other than
Disqualified Stock) or in options, warrants or other rights to acquire
shares of such Capital Stock and (y) pro rata dividends or distributions
on Common Stock of Restricted Subsidiaries held by minority stockholders)
held by Persons other than the Company or any of its Restricted
Subsidiaries, or (B) pay any cash interest on the Subordinated Convertible
Debentures.
(ii) purchase, redeem, retire or otherwise acquire for value any
shares of Capital Stock of (A) the Company or an Unrestricted Subsidiary
(including options, warrants or other rights to acquire such shares of
Capital Stock) held by any Person or (B) a Restricted Subsidiary
(including options, warrants or other rights to acquire such shares of
Capital Stock) held by any Affiliate of the Company (other than a Wholly
Owned Restricted Subsidiary) or any holder (or any Affiliate of such
holder) of 5% or more of the Capital Stock of the Company,
(iii) make any voluntary or optional principal payment, or voluntary
or optional redemption, repurchase, defeasance, or other acquisition or
retirement for value, of Indebtedness of the Company that is subordinated
in right of payment to the Notes or
(iv) make any Investment (after the Closing Date), other than a
Permitted Investment, in any Person (such payments or any other actions
described in clauses (i) through (iv) above being collectively "Restricted
Payments")
if, at the time of, and after giving effect to, the proposed Restricted Payment:
(A) a Default or Event of Default shall have occurred and be continuing, (B) the
Company could not Incur at least $1.00 of Indebtedness under the first paragraph
of Section 4.03 hereof or (C) the aggregate amount of all Restricted Payments
(the amount, 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) made after the Closing Date shall exceed the sum of (1) 50% of the
aggregate amount of the Adjusted Consolidated Net Income (or, if the Adjusted
Consolidated Net Income is a loss, minus 100% of the amount of such loss)
(determined by excluding income resulting from transfers of assets by the
Company or a Restricted Subsidiary to an Unrestricted Subsidiary) accrued on a
cumulative basis during the period (taken as one accounting period) beginning on
the first day of the fiscal quarter immediately following the Closing Date and
ending on the last day of the last fiscal quarter preceding the Transaction Date
for which reports have been filed with the Commission or provided to the Trustee
<PAGE>
51
pursuant to Section 4.18 hereof plus (2) the aggregate Net Cash Proceeds
received by the Company after the Closing Date as a capital contribution or from
the issuance and sale permitted by this Indenture of its Capital Stock (other
than Disqualified Stock) to a Person who is not a Subsidiary of the Company,
including an issuance or sale permitted by this Indenture of Indebtedness of the
Company for cash subsequent to the Closing Date upon the conversion of such
Indebtedness into Capital Stock (other than Disqualified Stock) of the Company,
or from the issuance to a Person who is not a Subsidiary of the Company of any
options, warrants or other rights to acquire Capital Stock of the Company (in
each case, exclusive of any Disqualified Stock or any options, warrants or other
rights that are redeemable at the option of the holder, or are required to be
redeemed, prior to the Stated Maturity of the Notes), in each case except to the
extent such Net Cash Proceeds are used to Incur Indebtedness pursuant to clause
(viii) of the second paragraph under Section 4.03 hereof, plus (3) an amount
equal to the net reduction in Investments (other than reductions in Permitted
Investments) in any Person resulting from payments of interest on Indebtedness,
dividends, repayments of loans or advances, or other transfers of assets, in
each case to the Company or any Restricted Subsidiary or from the Net Cash
Proceeds from the return of capital, redemption, or sale of any such Investment
(except, in each case, to the extent any such payment or proceeds are included
in the calculation of Adjusted Consolidated Net Income), or from redesignations
of Unrestricted Subsidiaries as Restricted Subsidiaries (valued in each case as
provided in the definition of "Investments"), or from the release of any
Guarantee that constituted a Restricted Payment, to the extent of such release,
not to exceed, in each case, the amount of Investments previously made by the
Company or any Restricted Subsidiary in such Person or Unrestricted Subsidiary.
The foregoing provision shall not be violated by reason of:
(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 foregoing paragraph;
(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 the second paragraph of part (a) of Section 4.03
hereof;
(iii) the repurchase, redemption or other acquisition of Capital
Stock of the Company or an Unrestricted Subsidiary (or options, warrants
or other rights to acquire such Capital Stock) in exchange for, or out of
the proceeds of a capital contribution or a substantially concurrent
offering of, shares of Capital Stock (other than Disqualified
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52
Stock) of the Company (or options, warrants or other rights to acquire
such Capital Stock);
(iv) the making of any principal payment or the repurchase,
redemption, retirement, defeasance or other acquisition for value of
Indebtedness of the Company which is subordinated in right of payment to
the Notes in exchange for, or out of the proceeds of a capital
contribution or a substantially concurrent offering of, shares of the
Capital Stock (other than Disqualified Stock) of the Company (or options,
warrants or other rights to acquire such Capital Stock);
(v) payments or distributions to dissenting stockholders pursuant to
applicable law, pursuant to or in connection with a consolidation, merger
or transfer of assets that complies with the provisions of Article Five
hereof;
(vi) Investments in any Person the primary business of which is
related, ancillary or complementary to the business of the Company or any
of its Restricted Subsidiaries on the date of such Investments; provided
that the aggregate amount of Investments made pursuant to this clause (vi)
does not exceed $30 million at any one time outstanding;
(vii) Investments acquired in exchange for Capital Stock (other than
Disqualified Stock) of the Company or the Net Cash Proceeds from the
issuance and sale of such Capital Stock, provided that such proceeds are
so used within 180 days of the receipt thereof;
(viii) the redemption, repurchase, retirement or other acquisition
of any Capital Stock of the Company (or options, warrants or other rights
to acquire such Capital Stock) from an employee or former employee of the
Company or any of its Subsidiaries (or from such person's estate, heirs or
representatives) in connection with such employee's death, disability or
termination of employment, provided that the aggregate amount expended
pursuant to this clause does not exceed $1 million per annum plus the
cumulative amount of such per annum limit not used in prior years and the
cash proceeds from such Investments, provided that such proceeds are used
within 180 days of the receipt thereof;
(ix) Investments in permitted Wholesale Consortiums and Permitted
Joint Ventures not exceeding, at the time of the Investment, the sum of
(A) 10% of the consolidated revenue of the Company (excluding with respect
to Persons in whom an equity interest is owned by Persons other than the
Company and its Restricted Subsidiaries, the pro rata share of such
revenue attributable to such other equity holders) accrued on a cumulative
basis during the period (taken as one accounting
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53
period) beginning on the first day of the first full fiscal quarter
immediately following the Closing Date and ending on the last day of the
last fiscal quarter preceding the date of such Investment and (B) the Net
Cash Proceeds from the disposition of the Company's interest in any such
Permitted Wholesale Consortium or Permitted Joint Venture;
(x) the repurchase of shares of the Series A Preferred upon a Change
of Control pursuant to an Offer to Purchase; provided that an Offer to
Purchase is consummated with respect to the Notes prior to any repurchase
of shares of the Series A Preferred;
(xi) the payment of cash dividends on the Series A Preferred sold as
a Unit with any of the 1998 Notes or issued as dividends thereon, (A)
after April 15, 2003 or (B) at a rate of 0.5% per annum as a result of the
Company's failure to have a registration statement under the Securities
Act for the Series A Preferred declared effective within one year after
the Closing Date;
(xii) the payment of cash interest on Subordinated Convertible
Debentures sold as a Unit with any of the 1998 Notes or issued as interest
thereon (A) after April 15, 2003 or (B) at a rate of 0.5% per annum as a
result of the Company's failure to have a registration statement under the
Securities Act for the Subordinated Convertible Debentures declared
effective within one year after the Closing Date; and
(xiii) other Restricted Payments in an aggregate amount not to
exceed $10 million, increased by the amount of any Restricted Payment made
pursuant to this clause (x) that is an Investment and is not outstanding;
provided that, except in the case of clauses (i) and (iii), 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 preceding
paragraph (other than the Restricted Payment referred to in clause (ii) thereof,
an exchange of Capital Stock for Capital Stock or Indebtedness referred to in
clause (iii) or (iv) thereof and an Investment referred to in clause (vi)
thereof), and the Net Cash Proceeds from any capital contribution or any
issuance of Capital Stock referred to in clauses (iii), (iv) and (vi), shall be
included in calculating whether the conditions of clause (C) of the first
paragraph of this Section 4.04 have been met with respect to any subsequent
Restricted Payments. In the event the proceeds of an issuance of Capital Stock
of the Company are used for the redemption, repurchase or other acquisition of
the Notes, or Indebtedness that is pari passu with the Notes, then the Net Cash
Proceeds of such issuance shall be included in clause (C) of the first paragraph
of this Section
<PAGE>
54
4.04 only to the extent such proceeds are not used for such redemption,
repurchase or other acquisition of Indebtedness.
Any Restricted Payments made in other than cash shall be valued at
fair market value. The amount of any Investment "outstanding" at any time shall
be deemed to be equal to the amount of such Investment on the date made, less
the return of capital, repayment of loans, return on capital and release of
Guarantees, in each case of or to the Company and its Restricted Subsidiaries
with respect to such Investment (up to the amount of such investment on the date
made).
SECTION 4.05. Limitation on Dividend and Other Payment Restrictions
Affecting Restricted Subsidiaries. The Company will not, and will not permit any
Restricted Subsidiary to, 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 Capital Stock 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.
The foregoing provisions shall not restrict any encumbrances or
restrictions:
(i) existing on the Closing Date in the Indenture or any other
agreements in effect on the Closing Date, and any extensions,
refinancings, renewals or replacements of such agreements; provided that
the encumbrances and restrictions in any such extensions, refinancings,
renewals or replacements are no less favorable in any material respect to
the Holders than those encumbrances or restrictions that are then in
effect and that are being extended, refinanced, renewed or replaced;
(ii) existing under or by reason of applicable law;
(iii) existing with respect to any Person or the property or assets
of such Person acquired by the Company or any Restricted Subsidiary,
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;
(iv) in the case of clause (iv) of the first paragraph of this
Section 4.05, (A) that restrict in a customary manner the subletting,
assignment or transfer of any property or asset that is a lease, license,
conveyance or contract or similar property or asset, (B) existing by
virtue of any transfer of, agreement to transfer, option or right
<PAGE>
55
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,
detract from the value of property or assets of the Company or any
Restricted Subsidiary in any manner material 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 of, or property and assets of,
such Restricted Subsidiary;
(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 Company) and (C) the Company
determines that any such encumbrance or restriction will not materially
affect the Company's ability to make principal or interest payments on the
Notes; or
(vii) imposed in connection with a transaction described in clause
(f) of the proviso to the definition of "Asset Sale" and relating solely
to a Restricted Subsidiary that transfers assets to the special purpose
entity referred to therein; provided that the Company 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 4.05 shall prevent the Company or any
Restricted Subsidiary from (1) creating, incurring, assuming or suffering to
exist any Liens otherwise permitted in Section 4.09 hereof or (2) restricting
the sale or other disposition of property or assets of the Company or any of its
Restricted Subsidiaries that secure Indebtedness of the Company or any of its
Restricted Subsidiaries.
SECTION 4.06. Limitation on the Issuance and Sale of Capital Stock
of Restricted Subsidiaries. The Company will not sell, and will not permit any
Restricted Subsidiary, directly or indirectly, to issue or sell, any shares of
Capital Stock of a Restricted Subsidiary (including options, warrants or other
rights to purchase shares of such Capital Stock) except (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, to the extent required by applicable law; (iii) if,
immediately after giving effect to such issuance or sale, such Restricted
Subsidiary would no longer constitute a Restricted Subsidiary and any Investment
in such Person remaining after giving effect to such
<PAGE>
56
issuance or sale would have been permitted to be made under Section 4.04 hereof
if made on the date of such issuance or sale; (iv) a pledge or hypothecation of
or Lien on any Capital Stock of a Subsidiary to the extent not prohibited under
Section 4.09 hereof; or (v) sales by the Company or Restricted Subsidiaries of
Common Stock of a Restricted Subsidiary, provided that the Company or such
Restricted Subsidiaries apply the Net Cash Proceeds, if any, of any such sale in
accordance with clause (A) or (B) of Section 4.11 hereof.
SECTION 4.07. Limitation on Issuances of Guarantees by Restricted
Subsidiaries. The Company will not permit any Restricted Subsidiary, directly or
indirectly, to Guarantee any Indebtedness of the Company which is pari passu
with or subordinate in right of payment to the Notes ("Guaranteed
Indebtedness"), unless (i) such Restricted Subsidiary simultaneously executes
and delivers a supplemental indenture to this Indenture providing for a
Guarantee (a "Subsidiary Guarantee") of payment of the Notes by such Restricted
Subsidiary 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 Subsidiary Guarantee; provided that this paragraph shall
not be applicable to any Guarantee of any Restricted Subsidiary that existed at
the time such Person became a Restricted Subsidiary and was not Incurred in
connection with, or in contemplation of, such Person becoming a Restricted
Subsidiary. If the Guaranteed Indebtedness is (A) pari passu with the Notes,
then the Guarantee of such Guaranteed Indebtedness shall be pari passu with, or
subordinated to, the Subsidiary Guarantee or (B) subordinated to the Notes, then
the Guarantee of such Guaranteed Indebtedness shall be subordinated to the
Subsidiary Guarantee at least to the extent that the Guaranteed Indebtedness is
subordinated to the Notes.
Notwithstanding the foregoing, any Subsidiary Guarantee by a
Restricted Subsidiary may provide by its terms that it shall 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 Capital Stock in, or all or substantially all
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 Subsidiary Guarantee, except a
discharge or release by or as a result of payment under such Guarantee.
SECTION 4.08. 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
(including, without limitation, the purchase, sale, lease or exchange of
property or assets, or the rendering of any service) with any 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,
except upon fair and
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57
reasonable terms no less favorable to the Company or such Restricted Subsidiary
than could be obtained, at the time of such transaction or, if such transaction
is pursuant to a written agreement, at the time of the execution of the
agreement providing therefor, in a comparable arm's-length transaction with a
Person that is not such a holder or an Affiliate.
The foregoing limitation does not limit, and shall not apply to:
(i) transactions (A) approved by a majority of the disinterested
members of the Board of Directors or (B) for which the Company or a
Restricted Subsidiary delivers to the Trustee a written opinion of a
nationally recognized investment banking firm stating that the transaction
is fair to the Company or such Restricted Subsidiary from a financial
point of view;
(ii) any transaction solely between the Company and any of its
Restricted Subsidiaries or solely between Restricted Subsidiaries;
(iii) the payment of reasonable and customary regular fees to
directors of the Company who are not employees of the Company;
(iv) any payments or other transactions pursuant to any tax-sharing
agreement between the Company and any other Person with which the Company
files a consolidated tax return or with which the Company is part of a
consolidated group for tax purposes;
(v) compensation, indemnification and other benefits paid or made
available to officers, directors and employees in the ordinary course of
business in connection with services actually rendered and consistent with
past practice;
(vi) transactions in accordance with the Existing Stockholder
Agreements as in effect on the Closing Date; or
(vii) any Restricted Payments not prohibited by Section 4.04 hereof.
Notwithstanding the foregoing, any transaction or series of related transactions
covered by the first paragraph of this Section 4.08 and not covered by clauses
(ii) through (v) of this paragraph, the aggregate amount of which exceeds $2
million in value, must be approved or determined to be fair in the manner
provided for in clause (i)(A) or (B) of this Section 4.08.
SECTION 4.09. Limitation on Liens. The Company will not, and will
not permit any Restricted Subsidiary to, create, incur, assume or suffer to
exist any Lien on any of its assets or properties of any character (including,
without limitation, licenses), or any shares
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58
of Capital Stock or Indebtedness of any Restricted Subsidiary, without making
effective provision for all of the Notes and all other amounts due under this
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.
The foregoing limitation does not apply to:
(i) Liens existing on the Closing Date;
(ii) Liens granted after the Closing Date on any assets or Capital
Stock of the Company or its Restricted Subsidiaries created in favor of
the Holders;
(iii) Liens with respect to the assets of a Restricted Subsidiary
granted by such Restricted Subsidiary to the Company or a Wholly Owned
Restricted Subsidiary to secure Indebtedness owing to the Company or such
other Restricted Subsidiary;
(iv) Liens securing Indebtedness permitted to be Incurred under
clause (iii) of the second paragraph of Section 4.03 hereof which is
Incurred to refinance secured Indebtedness; provided that such Liens do
not extend to or cover any property or assets of the Company or any
Restricted Subsidiary other than the property or assets securing the
Indebtedness being refinanced;
(v) Liens on the Capital Stock of, or any property or assets of, a
Restricted Subsidiary securing Indebtedness of such Restricted Subsidiary
permitted under Section 4.03 hereof;
(vi) Liens on the Capital Stock of Restricted Subsidiaries that own
a substantial portion of assets financed with Indebtedness Incurred under
clause (vii) of Section 4.03 hereof, if such liens secure only such
Indebtedness; or
(vii) Permitted Liens.
SECTION 4.10. Limitation on Sale-Leaseback Transactions. The Company
will not, and will not permit any Restricted Subsidiary to, enter into any
sale-leaseback transaction involving any of its assets or properties whether now
owned or hereafter acquired, whereby the Company or a Restricted Subsidiary
sells or transfers such assets or properties and then or thereafter leases such
assets or properties or any part thereof or any other assets or properties which
the Company or such Restricted Subsidiary, as the case may be, intends to use
for substantially the same purpose or purposes as the assets or properties sold
or transferred; provided that a sale-leaseback transaction shall not include any
lease in connection
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59
with which the Company or a Restricted Subsidiary acquires assets or property in
anticipation of the substantially contemporaneous sale or transfer to the lessor
under such lease.
The foregoing restriction does not apply to any sale-leaseback
transaction if:
(i) the lease is for a period, including renewal rights, of not in
excess of three years;
(ii) the lease secures or relates to industrial revenue or pollution
control bonds;
(iii) the transaction is solely between the Company and any
Restricted Subsidiary or solely between Restricted Subsidiaries; or
(iv) the Company or such Restricted Subsidiary, within 12 months
after the sale or transfer of any assets or properties is completed,
applies an amount not less than the net proceeds received from such sale
in accordance with clause (A) or (B) of the first paragraph of Section
4.11 hereof.
SECTION 4.11. Limitation on Asset Sales. The Company will not, and
will not permit any Restricted Subsidiary to, consummate any Asset Sale, unless
(i) the consideration received by the Company or such Restricted Subsidiary is
at least equal to the fair market value of the assets sold or disposed of and
(ii) at least 75% of the consideration received consists of cash or Temporary
Cash Investments. In the event and to the extent that the Net Cash Proceeds
received by the Company or any of its Restricted Subsidiaries from one or more
Asset Sales occurring on or after the Closing Date in any period of 12
consecutive months exceed 10% of Adjusted Consolidated Net Tangible Assets
(determined as of the date closest to the commencement of such 12-month period
for which a consolidated balance sheet of the Company and its Subsidiaries has
been filed with the Commission pursuant to Section 4.18 hereof, then the Company
shall or shall cause the relevant Restricted Subsidiary to (i) within 12 months
after the date Net Cash Proceeds so received exceed 10% of Adjusted Consolidated
Net Tangible Assets, (A) apply an amount equal to such excess Net Cash Proceeds
to permanently repay unsubordinated Indebtedness of the Company, or any
Restricted Subsidiary providing a Subsidiary Guarantee pursuant to Section 4.07
hereof or Indebtedness of any other Restricted Subsidiary, in each case owing to
a Person other than the Company or any of its Restricted Subsidiaries or (B)
invest an equal amount, or the amount not so applied pursuant to clause (A) (or
enter into a definitive agreement committing to so invest within 12 months after
the date of such agreement), either in property or assets (other than current
assets) of a nature or type or that are used in a business, or in a company
having property and assets of a nature or type, or engaged in a business, in
either case similar or related to the nature or type of the property and assets
of, or the business of, the Company or
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any of its Restricted Subsidiaries existing on the date of such investment (as
determined in good faith by the Board of Directors, whose determination shall be
conclusive and evidenced by a Board Resolution) and (ii) apply (no later than
the end of the 12-month period referred to in clause (i)) such excess Net Cash
Proceeds (to the extent not applied pursuant to clause (i)) as provided in the
following paragraph of this Section 4.11. The amount of such excess Net Cash
Proceeds required to be applied (or to be committed to be applied) during such
12-month period as set forth in clause (i) of the preceding sentence and not
applied as so required by the end of such period shall constitute "Excess
Proceeds."
If, as of the first day of any calendar month, the aggregate amount
of Excess Proceeds not theretofore subject to an Offer to Purchase pursuant to
this Section 4.11 totals at least $10 million, the Company must commence, not
later than the fifteenth Business Day of such month, and consummate an Offer to
Purchase from the Holders on a pro rata basis an aggregate principal amount of
Notes equal to the Excess Proceeds on such date, at a purchase price equal to
101% of the Accreted Value of the Notes on the relevant Payment Date, plus, in
each case, accrued interest (if any) to the Payment Date.
SECTION 4.12. Repurchase of Notes upon a Change of Control. The
Company must commence, within 30 days of the occurrence of a Change of Control,
and consummate an Offer to Purchase for all the Notes then outstanding, at a
purchase price equal to 101% of the Accreted Value of the Notes on the relevant
Payment Date, plus accrued interest (if any) to the Payment Date.
SECTION 4.13. Existence. Except as otherwise provided or permitted
in Articles Four and Five of this Indenture, the Company will do or cause to be
done all things necessary to preserve and keep in full force and effect its
existence and the existence of each of its Restricted Subsidiaries in accordance
with the respective organizational documents of the Company and each such
Subsidiary (as the same may be amended from time to time) and the rights
(whether pursuant to charter, partnership certificate, agreement, statute or
otherwise), material licenses and franchises of the Company and each such
Subsidiary; provided that the Company shall not be required to preserve any such
right, license or franchise, or the existence of any Restricted Subsidiary, if
the maintenance or preservation thereof is no longer desirable in the conduct of
the business of the Company and its Restricted Subsidiaries taken as a whole.
SECTION 4.14. Payment of Taxes and Other Claims. The Company will
pay or discharge and shall cause each of its Subsidiaries to 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
(a) the Company or any such Subsidiary, (b) the income or profits of any such
Subsidiary which is a corporation or (c) the property of the Company or any such
Subsidiary and (ii) all material lawful claims for labor, materials and
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supplies that, if unpaid, might by law become a Lien upon the property of the
Company or any such Subsidiary; provided 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 the amount, applicability or validity of which is
being contested in good faith by appropriate proceedings, for which adequate
reserves have been established.
SECTION 4.15. Maintenance of Properties and Insurance. The Company
will cause all properties used or useful in the conduct of its business or the
business of any of its Restricted Subsidiaries, to be maintained and kept in
good condition, repair and working order (ordinary wear and tear excepted) and
supplied with all necessary equipment and will cause to be made all necessary
repairs, renewals, replacements, betterments and improvements thereof, all as in
the judgment of the Company may be necessary so that the business carried on in
connection therewith may be properly and advantageously conducted at all times;
provided that nothing in this Section 4.15 shall prevent the Company or any such
Subsidiary 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 Company, desirable in the conduct of the business of the
Company or such Subsidiary.
The Company will provide or cause to be provided, for itself and its
Restricted Subsidiaries, insurance (including appropriate self-insurance)
against loss or damage of the kinds customarily insured against by corporations
similarly situated and owning like properties, with reputable insurers or with
the government of the United States of America, or an agency or instrumentality
thereof, in such amounts, with such deductibles and by such methods as shall be
customary for corporations similarly situated in the industry in which the
Company or such Restricted Subsidiary, as the case may be, is then conducting
business.
SECTION 4.16. Notice of Defaults. In the event that the Company
becomes aware of any Default or Event of Default, the Company, promptly after it
becomes aware thereof, will give written notice thereof to the Trustee.
SECTION 4.17. Compliance Certificates. The principal accounting
officer and the principal financial officer of the Company shall certify, on or
before a date not more than 90 days after the end of each fiscal year of the
Company, that a review has been conducted of the activities of the Company and
its Restricted Subsidiaries and the Company's and its Restricted Subsidiaries'
performance under this Indenture and that the Company has fulfilled all
obligations hereunder, 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 shall also notify the Trustee of any default or defaults in the
performance of any covenants or agreements under this Indenture. The Company
shall also comply with the other provisions of Section 314(a) of the TIA.
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SECTION 4.18. Commission Reports and Reports to Holders. At all
times from and after the earlier of (i) the date of the commencement of an
Exchange Offer or the effectiveness of a Shelf Registration Statement (the
"Registration") and (ii) the date that is six months after the Closing Date, in
either case, whether or not the Company is then required to file reports with
the Commission, the Company shall file with the Commission all such reports and
other information as it would be required to file with the Commission by
Sections 13(a) or 15(d) under the Securities Exchange Act of 1934 if it were
subject thereto. The Company shall supply the Trustee and each Holder or shall
supply to the Trustee for forwarding to each such Holder, without cost to such
Holder, copies of such reports and other information. In addition, at all times
prior to the earlier of the date of the Registration and the date that is six
months after the Closing Date, the Company shall, at its cost, deliver to each
Holder of the Notes quarterly and annual reports substantially equivalent to
those which would be required by the Exchange Act. In addition, at all times
prior to the Registration, upon the request of any Holder or any prospective
purchaser of the Notes designated by a Holder, the Company shall supply to such
Holder or such prospective purchaser the information required under Rule 144A
under the Securities Act.
Delivery of such reports, information and documents to the Trustee
is for informational purposes only and the Trustee's receipt of such shall not
constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Company's
compliance with any of its covenants hereunder (as to which the Trustee is
entitled to rely exclusively on Officers' Certificates).
SECTION 4.19. Waiver of Stay, Extension or Usury Laws. The Company
covenants (to the extent that it may lawfully do so) that it will not at any
time insist upon, or plead, or in any manner whatsoever claim or take the
benefit or advantage of, any stay 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, premium, if any, or interest on the Notes as contemplated herein,
wherever enacted, now or at any time hereafter in force, or that 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 4.20. Calculation of Original Issue Discount. The Company
shall file with the Trustee promptly at the end of each calendar year (i) a
written notice specifying the amount of original issue discount (including daily
rates and accrual periods) accrued on outstanding Notes as of the end of such
year and (ii) such other specific information relating to such original issue
discount as may then be relevant under the Internal Revenue Code of 1986, as
amended from time to time.
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ARTICLE FIVE
SUCCESSOR CORPORATION
SECTION 5.01. When Company May Merge, Etc. The Company shall 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 a series of related
transactions) to, any Person or permit any Person to merge with or into the
Company unless:
(i) the Company shall be the continuing Person, or the Person (if
other than the Company) formed by such consolidation or into which the
Company is merged or that acquired or leased such property and assets of
the Company shall be a corporation organized and validly existing under
the laws of the United States of America or any jurisdiction thereof and
shall expressly assume, by a supplemental indenture, executed and
delivered to the Trustee, all of the obligations of the Company on all of
the Notes and under this Indenture;
(ii) immediately after giving effect to such transaction, no Default
or Event of Default shall have occurred and be continuing;
(iii) immediately after giving effect to such transaction on a pro
forma basis, the Company or any Person becoming the successor obligor of
the Notes shall have a Consolidated Net Worth equal to or greater than the
Consolidated Net Worth of the Company immediately prior to such
transaction;
(iv) immediately after giving effect to such transaction on a pro
forma basis, the Company, or any Person becoming the successor obligor of
the 1998 Notes, as the case may be, could Incur at least $1.00 of
Indebtedness under the first paragraph of Section 4.03 hereof; provided
that this clause (iv) shall not apply to (x) a consolidation, merger or
sale of all (but not less than all) of the assets of the Company if all
Liens and Indebtedness of the Company or any Person becoming the successor
obligor on the Notes, as the case may be, and its Restricted Subsidiaries
outstanding immediately after such transaction would, if Incurred at such
time, have been permitted to be Incurred (and all such Liens and
Indebtedness, other than Liens and Indebtedness of the Company and its
Restricted Subsidiaries outstanding immediately prior to the transaction,
shall be deemed to have been Incurred) for all purposes of this Indenture
or (y) a consolidation, merger or sale of all or substantially all of the
assets of the Company if, 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
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Consolidated Leverage Ratio equal to or less than the Consolidated
Leverage Ratio of the Company immediately prior to such transaction; and
(v) the Company delivers to the Trustee an Officers' Certificate
(attaching the arithmetic computations to demonstrate compliance with
clauses (iii) and (iv) of this Section 5.01) and Opinion of Counsel, in
each case stating that such consolidation, merger or transfer and such
supplemental indenture complies with this provision and that all
conditions precedent provided for herein relating to such transaction have
been complied with;
provided, however, that clauses (iii) and (iv) of this Section 5.01 do not apply
if, in the good faith determination of the Board of Directors of the Company,
whose determination shall be evidenced by a Board Resolution, the principal
purpose of such transaction is to change the state of incorporation of the
Company; and provided further that any such transaction shall not have as one of
its purposes the evasion of the foregoing limitations.
SECTION 5.02. Successor Substituted. Upon any consolidation or
merger, or any sale, conveyance, transfer or other disposition of all or
substantially all of the property and assets of the Company in accordance with
Section 5.01 of this Indenture, the successor Person formed by such
consolidation or into which the Company is merged or to which such sale,
conveyance, transfer or other disposition is made shall succeed to, and be
substituted for, and may exercise every right and power of, the Company under
this Indenture with the same effect as if such successor Person had been named
as the Company herein.
ARTICLE SIX
DEFAULT AND REMEDIES
SECTION 6.01. Events of Default. An "Event of Default" shall occur
with respect to the Notes if:
(a) the Company defaults 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;
(b) the Company defaults in the payment of interest on any Note when
the same becomes due and payable, and such default continues for a period
of 30 days;
(c) the Company defaults in the performance or breach of the
provisions of Article Five hereof or fails to make or consummate an Offer
to Purchase in accordance with Section 4.11 or Section 4.12 hereof;
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(d) the Company defaults in the performance of or breaches any other
covenant or agreement of the Company in this Indenture or under the Notes
(other than a default specified in clause (a), (b) or (c) of this Section
6.01) 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 at maturity of the Notes;
(e) there occurs with respect to any issue or issues of Indebtedness
of the Company or any Significant Subsidiary having an outstanding
principal amount of $10 million or more in the aggregate for all such
issues of all such Persons, whether such Indebtedness now exists or shall
hereafter be created, (I) an event of default that has caused the holder
thereof to declare such Indebtedness to be due and payable prior to its
Stated Maturity and such Indebtedness has not been discharged in full or
such acceleration has not been rescinded or annulled within 30 days of
such acceleration and/or (II) the failure to make a principal payment at
the final (but not any interim) fixed maturity and such defaulted payment
shall not have been made, waived or extended within 30 days of such
payment default;
(f) any final judgment or order (not covered by insurance) for the
payment of money in excess of $10 million in the aggregate for all such
final judgments or orders against all such Persons (treating any
deductibles, self-insurance or retention as not so covered) shall be
rendered against the Company or any Significant Subsidiary and shall not
be paid or discharged, and there shall be any period of 60 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 or discharged against all such Persons to exceed $10 million
during which a stay of enforcement of such final judgment or order, by
reason of a pending appeal or otherwise, shall not be in effect;
(g) a court having jurisdiction in the premises enters a decree or
order for (A) relief in respect of the Company or any Significant
Subsidiary 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 Significant
Subsidiary or for all or substantially all of the property and assets of
the Company or any Significant Subsidiary or (C) the winding up or
liquidation of the affairs of the Company or any Significant Subsidiary
and, in each case, such decree or order shall remain unstayed and in
effect for a period of 60 consecutive days; or
(h) the Company or any Significant Subsidiary (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,
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liquidator, assignee, custodian, trustee, sequestrator or similar official
of the Company or any Significant Subsidiary or for all or substantially
all of the property and assets of the Company or any Significant
Subsidiary or (C) effects any general assignment for the benefit of
creditors.
SECTION 6.02. Acceleration. If an Event of Default (other than an
Event of Default specified in clause (g) or (h) of Section 6.01 that occurs with
respect to the Company) occurs and is continuing under this Indenture, the
Trustee or the Holders of at least 25% in aggregate principal amount at maturity
of the Notes then outstanding, by written notice to the Company (and to the
Trustee if such notice is given by the Holders), may, and the Trustee at the
request of such Holders shall, declare the Accreted Value, of, premium, if any,
and accrued interest on the Notes to be immediately due and payable. Upon a
declaration of acceleration, such Accreted Value of premium, if any, and accrued
interest shall be immediately due and payable. In the event of a declaration of
acceleration because an Event of Default set forth in clause (e) of Section 6.01
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 (e) shall be remedied or cured by the
Company or the relevant Significant Subsidiary 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 clause (g) or (h) of
Section 6.01 occurs with respect to the Company, Accreted Value of premium, if
any, and accrued interest 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 Holders of at least a majority in principal amount at maturity
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, and interest 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.
SECTION 6.03. 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, premium, if any, or interest
on the Notes or to enforce the performance of any provision of the Notes or this
Indenture.
The Trustee may maintain a proceeding even if it does not possess
any of the Notes or does not produce any of them in the proceeding.
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SECTION 6.04. Waiver of Past Defaults. Subject to Section 9.02, at
any time after such a declaration of acceleration, but before a judgment or
decree for the payment of the money due has been obtained by the Trustee, the
Holders of at least a majority in aggregate principal amount at maturity 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 (except a Default in the payment of principal of premium, if any,
or interest on any Note as specified in clause (a) or (b) of Section 6.01 (but
not as a result of such acceleration) or in respect of a covenant or provision
of this Indenture which cannot be modified or amended without the consent of the
Holder of each outstanding Note affected) if (i) all existing Events of Default,
other than the nonpayment of the Accreted Value of, premium, if any, and
interest 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. Upon
any such waiver, such Default shall cease to exist, and any Event of Default
arising therefrom shall be deemed to have been cured, for every purpose of this
Indenture; but no such waiver shall extend to any subsequent or other Default or
Event of Default or impair any right consequent thereto.
SECTION 6.05. Control by Majority. The Holders of at least a
majority in aggregate principal amount at maturity of the outstanding Notes may
direct the time, method and place of conducting any proceeding for any remedy
available to the Trustee or exercising any trust or power conferred on the
Trustee. However, the Trustee may refuse to follow any direction that conflicts
with law or this Indenture, that may involve the Trustee in personal liability,
or that the Trustee determines in good faith may be unduly prejudicial to the
rights of Holders of the Notes, not joining in the giving of such direction and
may take any other action it deems proper that is not inconsistent with any such
direction received from Holders of the Notes.
SECTION 6.06. Limitation on Suits. A Holder may not pursue any
remedy with respect to this Indenture or the Notes unless:
(i) the Holder gives the Trustee written notice of a continuing
Event of Default;
(ii) the Holders of at least 25% in aggregate principal amount at
maturity of outstanding Notes make a written request to the Trustee to
pursue the remedy;
(iii) such Holder or Holders offer the Trustee indemnity
satisfactory to the Trustee against any costs, liability or expense;
(iv) the Trustee does not comply with the request within 60 days
after receipt of the request and the offer of indemnity; and
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(v) during such 60-day period, the Holders of a majority in
aggregate principal amount at maturity of the outstanding Notes do not
give the Trustee a direction that is inconsistent with the request.
For purposes of Section 6.05 of this Indenture and this Section
6.06, the Trustee shall comply with TIA Section 316(a) in making any
determination of whether the Holders of the required aggregate principal amount
at maturity of outstanding Notes have concurred in any request or direction of
the Trustee to pursue any remedy available to the Trustee or the Holders with
respect to this Indenture or the Notes or otherwise under the law.
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 6.07. Rights of Holders to Receive Payment. Notwithstanding
any other provision of this Indenture, the right of any Holder of a Note to
receive payment of principal of, premium, if any, or interest on such Holder's
Note on or after the respective due dates expressed on 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 6.08. Collection Suit by Trustee. If an Event of Default in
payment of principal, premium or interest specified in clause (a) or (b) of
Section 6.01 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 of the Notes for the whole amount of principal, premium, if any, and
accrued interest remaining unpaid, together with interest on overdue principal,
premium, if any, and, to the extent that payment of such interest is lawful,
interest on overdue installments of interest, in each case at the rate specified
in 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 7.07 hereof.
SECTION 6.09. 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, and any other amounts due the Trustee under
Section 7.07) and the Holders allowed in any judicial proceedings relative to
the Company (or any other obligor of the Notes), its creditors or its property
and shall be entitled and empowered to collect and receive any monies,
securities or other property payable or deliverable upon conversion or exchange
of the Notes or upon any such claims and to distribute the same, and any
custodian, receiver, assignee, trustee, liquidator, sequestrator or other
similar official in any such judicial proceeding is hereby authorized by each
Holder to
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make such payments to the Trustee and, in the event that the Trustee shall
consent to the making of such payments directly to the Holders, to pay to the
Trustee any amount due to it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agent and counsel, and any other
amounts due the Trustee under Section 7.07. Nothing herein contained shall be
deemed to empower the Trustee to authorize or consent to, or accept or adopt on
behalf of any Holder, any plan of reorganization, arrangement, adjustment or
composition affecting the Notes or the rights of any Holder thereof, or to
authorize the Trustee to vote in respect of the claim of any Holder in any such
proceeding.
SECTION 6.10. Priorities. If the Trustee collects any money pursuant
to this Article Six, it shall pay out the money in the following order:
First: to the Trustee for all amounts due under Section 7.07;
Second: to Holders for amounts then due and unpaid for principal of,
premium, if any, and interest on the Notes in respect of which or for the
benefit of which such money has been collected, ratably, without preference or
priority of any kind, according to the amounts due and payable on such Notes for
principal, premium, if any, and interest, respectively; and
Third: to the Company, as its interests may appear.
The Trustee, upon prior written notice to the Company, may fix a
record date and payment date for any payment to Holders pursuant to this Section
6.10.
SECTION 6.11. 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 may require any party
litigant in such suit to file an undertaking to pay the costs of the suit, and
the court 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 6.11 does not apply to a suit by the Trustee, a suit by a Holder
pursuant to Section 6.07 of this Indenture, or a suit by Holders of more than
10% in principal amount at maturity of the outstanding Notes.
SECTION 6.12. Restoration of Rights and Remedies. If the Trustee or
any Holder has instituted any proceeding to enforce any right or remedy under
this Indenture and such proceeding has been discontinued or abandoned for any
reason, or has been determined adversely to the Trustee or to such Holder, then,
and in every such case, subject to any determination in such proceeding, the
Company, the Trustee and the Holders shall be restored severally and
respectively to their former positions hereunder and thereafter all rights and
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remedies of the Company, the Trustee and the Holders shall continue as though no
such proceeding had been instituted.
SECTION 6.13. Rights and Remedies Cumulative. Except as otherwise
provided with respect to the replacement or payment of mutilated, destroyed,
lost or wrongfully taken Notes in Section 2.09, no right or remedy herein
conferred upon or reserved to the Trustee or to the Holders is intended to be
exclusive of any other right or remedy, and every right and remedy shall, to the
extent permitted by law, be cumulative and in addition to every other right and
remedy given hereunder or now or hereafter existing at law or in equity or
otherwise. The assertion or employment of any right or remedy hereunder, or
otherwise, shall not prevent the concurrent assertion or employment of any other
appropriate right or remedy.
SECTION 6.14. Delay or Omission Not Waiver. No delay or omission of
the Trustee or of any Holder 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 Six or by law to the Trustee or to the Holders may be
exercised from time to time, and as often as may be deemed expedient, by the
Trustee or by the Holders, as the case may be.
ARTICLE SEVEN
TRUSTEE
SECTION 7.01. General. The duties and responsibilities of the
Trustee shall be as provided by the TIA and as set forth herein. Notwithstanding
the foregoing, no provision of this Indenture shall require the Trustee to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder, or in the exercise of any of its
rights or powers, if it shall have reasonable grounds for believing that
repayment of such funds or adequate indemnity against such risk or liability is
not reasonably assured to it. Whether or not therein expressly so provided,
every provision of this Indenture relating to the conduct or affecting the
liability of or affording protection to the Trustee shall be subject to the
provisions of this Article Seven.
SECTION 7.02. Certain Rights of Trustee. Subject to TIA Sections
315(a) through (d):
(i) the Trustee may conclusively rely and shall be protected in
acting or refraining from acting upon any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction,
consent, order, bond, debenture, note, other evidence of indebtedness or
other paper or document (whether in its original or facsimile form)
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believed by it to be genuine and to have been signed or presented by the
proper person. The Trustee need not investigate any fact or matter stated
in the document and may in good faith conclusively rely as to the truth of
the statements and the correctness of the opinions therein;
(ii) before the Trustee acts or refrains from acting, it may require
an Officers' Certificate or an Opinion of Counsel, which shall conform to
Section 10.04. The Trustee shall not be liable for any action it takes or
omits to take in good faith in reliance on such certificate, opinion
and/or an accountants' certificate if required under the TIA;
(iii) the Trustee may act through its attorneys and agents and shall
not be responsible for the misconduct or negligence of any agent appointed
with due care;
(iv) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or
direction of any of the Holders, unless such Holders shall have offered to
the Trustee security or indemnity reasonably satisfactory to it against
the costs, expenses and liabilities that might be incurred by it in
compliance with such request or direction;
(v) the Trustee shall not be liable for any action it takes or omits
to take in good faith that it believes to be authorized or within its
rights or powers or for any action it takes or omits to take in accordance
with the direction of the Holders of a majority in principal amount at
maturity of the outstanding Notes relating to the time, method and place
of conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred upon the Trustee, under this
Indenture; provided that the Trustee's conduct does not constitute
negligence or bad faith;
(vi) whenever in the administration of this Indenture the Trustee
shall deem it desirable that a matter be proved or established prior to
taking, suffering or omitting any action hereunder, the Trustee (unless
other evidence be herein specifically prescribed) may, in the absence of
bad faith on its part, rely upon an Officers' Certificate;
(vii) the Trustee shall not be bound to make any investigation into
the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note, other evidence of indebtedness or other paper or
document, but the Trustee, in its discretion, may make such further
inquiry or investigation into such facts or matters as it may see fit,
and, if the Trustee shall determine to make such further inquiry or
investigation, it shall be
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entitled at the sole cost of the Company to examine the books, records and
premises of the Company personally or by agent or attorney and shall incur
no liability or additional liability of any kind by reason of such inquiry
or investigation;
(viii) The Trustee shall not be charged with knowledge of any
Default or Event of Default, of the identity of any Restricted Subsidiary
or of the existence of any Change of Control or Asset Sale unless either
(i) a Responsible Officer shall have actual knowledge thereof, or (ii) the
Trustee shall have received written notice thereof from the Company or any
Holder of the Notes; and
(ix) The Trustee may consult with counsel of its selection and the
advice of such counsel or any Opinion of Counsel shall be full and
complete authorization and protection in respect of any action taken,
suffered or omitted by it hereunder in good faith and in reliance thereon.
SECTION 7.03. 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 or its Affiliates with the same rights it
would have if it were not the Trustee. Any Agent may do the same with like
rights. However, the Trustee is subject to TIA Sections 310(b) and 311.
SECTION 7.04. Trustee's Disclaimer. The Trustee (i) makes no
representation as to the validity or adequacy of this Indenture or the Notes,
(ii) shall not be accountable for the Company's use or application of the
proceeds from the Notes and (iii) shall not be responsible for any statement in
the Notes other than its certificate of authentication.
SECTION 7.05. Notice of Default. If any Default or any Event of
Default occurs and is continuing and if such Default or Event of Default is
known to a Responsible Officer of the Trustee, the Trustee shall mail to each
Holder in the manner and to the extent provided in TIA Section 313(c) notice of
the Default or Event of Default within 90 days after it occurs, unless such
Default or Event of Default has been cured; provided, however, that, except in
the case of a default in the payment of the principal of, premium, if any, or
interest on any Note, the Trustee shall be protected in withholding such notice
if and so long as the board of directors, the executive committee or a trust
committee of directors and/or Responsible Officers of the Trustee in good faith
determine that the withholding of such notice is in the interest of the Holders.
If an Event of Default has occurred and is continuing, the Trustee shall use the
same degree of care and skill in its exercise of the rights and powers invested
in it under this Indenture as a prudent person would exercise under the
circumstances in the conduct of such person's own affairs.
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SECTION 7.06. Reports by Trustee to Holders. Within 60 days after
each November 15, beginning with November 15, 1998, the Trustee shall mail to
each Holder as provided in TIA Section 313(c) a brief report that complies with
TIA Section 313(a) dated as of such November 15, if required by TIA Section
313(a).
SECTION 7.07. Compensation and Indemnity. The Company shall pay to
the Trustee such compensation as shall be agreed upon from time to time in
writing for its services. The compensation of the Trustee 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 out-of-pocket expenses and
advances incurred or made by the Trustee. Such expenses shall include the
reasonable compensation and expenses of the Trustee's agents and counsel.
The Company shall indemnify each of the Trustee and any predecessor
Trustee for, and hold it harmless against, any and all loss, claim, damage or
liability or expense (including taxes other than taxes based upon the income of
the Trustee) incurred by it without negligence or bad faith on its part in
connection with the acceptance or administration of this Indenture and its
duties under this Indenture and the Notes, including the costs and expenses of
defending itself against any claim or liability and of complying with any
process served upon it or any of its officers in connection with the exercise or
performance of any of its powers or duties under this Indenture and the Notes.
The Trustee shall notify the Company promptly of any claim asserted against the
Trustee for which it may seek indemnity. The Company shall defend the claim and
the Trustee shall provide reasonable cooperation at the Company's expense in the
defense. The Trustee may have separate counsel of its selection and the Company
shall pay the reasonable fees and expenses of such counsel; provided, that the
Company will not be required to pay such fees and expenses if it assumes the
Trustee's defense and there is no conflict of interest between the Company and
the Trustee in connection with such defense. The Company need not pay for any
settlement made without its written consent.
To secure the Company's payment obligations in this Section 7.07,
the Trustee shall have a lien prior to the Notes on all money or property held
or collected by the Trustee, in its capacity as Trustee, except money or
property held in trust to pay principal of, premium, if any, and interest on
particular Notes.
If the Trustee incurs expenses or renders services after the
occurrence of an Event of Default specified in clause (h) or (i) of Section
6.01, the expenses and the compensation for the services will be intended to
constitute expenses of administration under Title 11 of the United States
Bankruptcy Code or any applicable federal or state law for the relief of
debtors.
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The rights, privileges, protections and benefits given to the
Trustee, including, without limitation, its rights to be indemnified, are
extended to, and shall be enforceable by, the Trustee in each of its capacities
hereunder.
The provisions of this Section 7.07 shall survive the resignation or
removal of the Trustee and the defeasance or other termination of this
Indenture.
SECTION 7.08. Replacement of Trustee. 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 7.08.
The Trustee may resign at any time by so notifying the Company in
writing at least 30 days prior to the date of the proposed resignation. The
Holders of a majority in principal amount at maturity of the outstanding Notes
may remove the Trustee by so notifying the Trustee in writing and may appoint a
successor Trustee with the consent of the Company. The Company may at any time
remove the Trustee, by Company Order given at least 30 days prior to the date of
the proposed removal; provided that at such date no Event of Default shall have
occurred and be continuing.
If the Trustee resigns or is removed, or if a vacancy exists in the
office of Trustee for any reason, the Company shall promptly appoint a successor
Trustee. Within one year after the successor Trustee takes office, the Holders
of a majority in principal amount at maturity of the outstanding Notes may
appoint a successor Trustee to replace the successor Trustee appointed by the
Company. If the successor Trustee does not deliver its written acceptance
required by the next succeeding paragraph of this Section 7.08 within 30 days
after the retiring Trustee resigns or is removed, the retiring Trustee, the
Company or the Holders of a majority in principal amount at maturity of the
outstanding Notes may petition at the expense of the Company any court of
competent jurisdiction for the appointment of a successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Immediately after the
delivery of such written acceptance, subject to the lien provided in Section
7.07, (i) the retiring Trustee shall transfer all property held by it as Trustee
to the successor Trustee, (ii) the resignation or removal of the retiring
Trustee shall become effective and (iii) 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 the Trustee is no longer eligible under Section 7.10, any Holder
who satisfies the requirements of TIA Section 310(b) may petition any court of
competent jurisdiction for the removal of the Trustee and the appointment of a
successor Trustee.
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The Company shall give notice of any resignation and any removal of
the Trustee and each appointment of a successor Trustee to all Holders. Each
notice shall include the name of the successor Trustee and the address of its
Corporate Trust Office.
SECTION 7.09. 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 national banking
association, the resulting, surviving or transferee corporation or national
banking association without any further act shall be the successor Trustee with
the same effect as if the successor Trustee had been named as the Trustee
herein.
SECTION 7.10. Eligibility. This Indenture shall always have a
Trustee who satisfies the requirements of TIA Sections 310(a)(1) and 310(a)(5).
The Trustee shall have a combined capital and surplus of at least $50,000,000 as
set forth in its most recent published annual report of condition.
SECTION 7.11. Money Held in Trust. The Trustee shall not be liable
for interest on any money received by it except as the Trustee may agree with
the Company in writing. Money held in trust by the Trustee need not be
segregated from other funds except to the extent required by law and except for
money held in trust under Article Eight of this Indenture.
SECTION 7.12. Withholding Taxes. The Trustee, as agent for the
Company, shall exclude and withhold from each payment of principal and interest
and other amounts due hereunder or under the Notes any and all withholding taxes
applicable thereto as required by law. The Trustee agrees to act as such
withholding agent and, in connection therewith, whenever any present or future
taxes or similar charges are required to be withheld with respect to any amounts
payable in respect of the Notes, to withhold such amounts and timely pay the
same to the appropriate authority in the name of and on behalf of the Holders of
the Notes, that it will file any necessary withholding tax returns or statements
when due, and that, as promptly as possible after the payment thereof, it will
deliver to each Holder of a Note appropriate documentation showing the payment
thereof, together with such additional documentary evidence as such Holders may
reasonably request from time to time.
ARTICLE EIGHT
DISCHARGE OF INDENTURE
SECTION 8.01. Termination of the Company's Obligations. Except as
otherwise provided in this Section 8.01, the Company may terminate its
obligations under the Notes and this Indenture if:
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(i) all Notes previously authenticated and delivered (other than
destroyed, lost or stolen Notes that have been replaced or Notes that are
paid pursuant to Section 4.01 or Notes for whose payment money or
securities have theretofore been held in trust and thereafter repaid to
the Company, as provided in Section 8.05) have been delivered to the
Trustee for cancellation and the Company has paid all sums payable by it
hereunder; or
(ii) (A) all the Notes mature within one year or all of them are to
be called for redemption within one year under arrangements satisfactory
to the Trustee for giving the notice of redemption, (B) the Company
deposits in trust with the Trustee during such one-year period, under the
terms of an irrevocable trust agreement in form and substance satisfactory
to the Trustee, as trust funds solely for the benefit of the Holders for
that purpose, money or U.S. Government Obligations sufficient to pay
principal, premium, if, any, and interest on the Notes to maturity or
redemption, as the case may be, and to pay all other sums payable by it
hereunder, (C) no Default or Event of Default with respect to the Notes
shall have occurred and be continuing on the date of such deposit, (D)
such deposit will not result in a breach or violation of, or constitute a
default under, this Indenture or any other agreement or instrument to
which the Company is a party or by which it is bound, (E) if at such time
the Notes are listed on a national securities exchange, the Notes will not
be delisted as a result of such deposit, defeasance or discharge and (F)
the Company has delivered to the Trustee an Officers' Certificate and an
Opinion of Counsel, in each case stating that all conditions precedent
provided for herein relating to the satisfaction and discharge of this
Indenture have been complied with.
With respect to the foregoing clause (i), the Company's obligations
under Section 7.07 shall survive. With respect to the foregoing clause (ii), the
Company's obligations in Sections 2.02, 2.03, 2.04, 2.05, 2.06, 2.07, 2.08,
2.09, 2.14, 4.01, 4.02, 7.07, 7.08, 8.04, 8.05 and 8.06 shall survive until the
Notes are no longer outstanding. Thereafter, only the Company's obligations in
Sections 7.07, 8.05 and 8.06 shall survive. After any such irrevocable deposit,
the Trustee upon request shall acknowledge in writing the discharge of the
Company's obligations, as the case may be, under the Notes and this Indenture
except for those surviving obligations specified above.
SECTION 8.02. Defeasance and Discharge of Indenture. The Company
will be deemed to have paid and will be discharged from any and all obligations
in respect of the Notes on the 123rd day after the deposit referred to below,
and the provisions of this Indenture will no longer be in effect with respect to
the Notes if:
(A) the Company has deposited with the Trustee, in trust, money
and/or U.S. Government Obligations that through the payment of interest
and principal in
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respect thereof in accordance with their terms will provide money in an
amount sufficient to pay the principal of, premium, if any, and accrued
interest on the Notes on the Stated Maturity of such payments in
accordance with the terms of this Indenture and the Notes;
(B) the Company has delivered to the Trustee (i) either (x) an
Opinion of Counsel to the effect that Holders will not recognize income,
gain or loss for federal income tax purposes as a result of the Company's
exercise of its option under this Section 8.02 and will be subject to
federal income tax on the same amount and in the same manner and at the
same times as would have been the case if such deposit, defeasance and
discharge had not occurred, which Opinion of Counsel must be based upon
(and accompanied by a copy of) a ruling of the Internal Revenue Service to
the same effect unless there has been a change in applicable federal
income tax law after the Closing Date such that a ruling is no longer
required or (y) a ruling directed to the Trustee received from the
Internal Revenue Service to the same effect as the aforementioned Opinion
of Counsel and (ii) an Opinion of Counsel to the effect that the creation
of the defeasance trust does not violate the Investment Company Act of
1940 and after the passage of 123 days following the deposit, the trust
fund will not be subject to the effect of Section 547 of the United States
Bankruptcy Code or Section 15 of the New York Debtor and Creditor Law;
(C) immediately after giving effect to such deposit on a pro forma
basis, no Event of Default, or event that after the giving of notice or
lapse of time or both would become an Event of Default, shall have
occurred and be continuing on the date of such deposit or during the
period ending on the 123rd day after the date of such deposit, and such
deposit shall not result in a breach or violation of, or constitute a
default under, any other agreement or instrument to which the Company or
any of its Subsidiaries is a party or by which the Company or any of its
Subsidiaries is bound; and
(D) if at such time the Notes are listed on a national securities
exchange, the Company has delivered to the Trustee an Opinion of Counsel
to the effect that the Notes will not be delisted as a result of such
deposit, defeasance and discharge.
Notwithstanding the foregoing, prior to the end of the 123-day
period referred to in clause (B)(ii) of this Section 8.02, none of the Company's
obligations under this Indenture shall be discharged. Subsequent to the end of
such 123-day period with respect to this Section 8.02, the Company's obligations
in Sections 2.02, 2.03, 2.04, 2.05, 2.06, 2.07, 2.08, 2.09, 2.14, 4.01, 4.02,
4.17, 7.07, 7.08, 8.05 and 8.06 shall survive until the Notes are no longer
outstanding. Thereafter, only the Company's obligations in Sections 7.07, 8.05
and 8.06 shall survive. If and when a ruling from the Internal Revenue Service
or an Opinion of Counsel referred to in clause (B)(i) of this Section 8.02 may
be provided specifically without
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regard to, and not in reliance upon, the continuance of the Company's
obligations under Section 4.01, then the Company's obligations under such
Section 4.01 shall cease upon delivery to the Trustee of such ruling or Opinion
of Counsel and compliance with the other conditions precedent provided for
herein relating to the defeasance contemplated by this Section 8.02.
After the 123 day period referred to in clause (B)(ii) of this
Section 8.02, the Trustee upon Company Order shall acknowledge in writing the
discharge of the Company's obligations under the Notes and this Indenture except
for those surviving obligations in the immediately preceding paragraph.
SECTION 8.03. Defeasance of Certain Obligations. The Company may
omit to comply with any term, provision or condition set forth in clauses (iii)
and (iv) of Section 5.01 and Sections 4.03 through 4.11, and clause (c) of
Section 6.01 with respect to clauses (iii) and (iv) of Section 5.01 and clause
(d) of Section 6.01 with respect to Sections 4.01, 4.02 and 4.12 through 4.19,
and clauses (e), (f) and (g) of Section 6.01 shall be deemed not to be Events of
Default, upon:
(a) the deposit, in trust, with the Trustee (or another trustee
satisfying the requirements of Section 7.10 hereof) of money and/or U.S.
Government Obligations that, through the payment of interest and principal
in respect thereof in accordance with their terms, will in the opinion of
a nationally recognized firm of independent public accountants expressed
in a written certification thereof delivered to the Trustee, provide money
in an amount sufficient to pay the principal of, premium, if any, and
accrued interest on the Notes on the Stated Maturity of such payments in
accordance with the terms of this Indenture and the Notes;
(b) the satisfaction of the provisions described in clauses B(ii),
(C) and (D) of Section 8.02 hereof;
(c) delivery by the Company to the Trustee of an Opinion of Counsel
to the effect that, the Holders will not recognize income, gain or loss
for federal income tax purposes as a result of such deposit and defeasance
and will be subject to federal income tax on the same amount and in the
same manner and at the same times as would have been the case if such
deposit and defeasance had not occurred; and
(d) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, in each case stating that all
conditions precedent provided for herein relating to the defeasance
contemplated by this Section 8.03 have been complied with.
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SECTION 8.04. Application of Trust Money. Subject to Section 8.06,
the Trustee or Paying Agent shall hold in trust money or U.S. Government
Obligations deposited with it pursuant to Section 8.01, 8.02 or 8.03, as the
case may be, and shall apply the deposited money and the money from U.S.
Government Obligations in accordance with the Notes and this Indenture to the
payment of principal of, premium, if any, and interest on the Notes; but such
money need not be segregated from other funds except to the extent required by
law.
SECTION 8.05. Repayment to Company. Subject to Sections 7.07, 8.01,
8.02 and 8.03, the Trustee and the Paying Agent shall promptly pay to the
Company any excess money, as determined by a nationally recognized firm of
independent public accountants expressed in a written certification thereof
delivered to the Trustee, and held by them at any time and thereupon shall be
relieved from all liability with respect to such money. The Trustee and the
Paying Agent shall pay to the Company upon request any money held by them for
the payment of principal, premium, if any, or interest that remains unclaimed
for two years; provided that the Trustee or such Paying Agent before being
required to make any payment may cause to be published at the expense of the
Company once in a newspaper of general circulation in the City of New York or
mail to each Holder entitled to such money at such Holder's address (as set
forth in the Note Register) notice that such money remains unclaimed[; provided
that the Trustee or such Paying Agent before being required to make any payment
may give notice in accordance with Section 10.02(b) that such money remains
unclaimed] and that after a date specified therein (which shall be at least 30
days from the date of such publication or mailing) any unclaimed balance of such
money then remaining will be repaid to the Company. After payment to the
Company, Holders entitled to such money must look to the Company for payment as
general creditors unless an applicable law designates another Person, and all
liability of the Trustee and such Paying Agent with respect to such money shall
cease.
SECTION 8.06. Reinstatement. If the Trustee or Paying Agent is
unable to apply any money or U.S. Government Obligations in accordance with
Section 8.01, 8.02 or 8.03, as the case may be, 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 8.01, 8.02 or
8.03, as the case may be, until such time as the Trustee or Paying Agent is
permitted to apply all such money or U.S. Government Obligations in accordance
with Section 8.01, 8.02 or 8.03, as the case may be; provided that, if the
Company has made any payment of principal of, premium, if any, or interest on
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 U.S. Government Obligations held by the Trustee or Paying
Agent.
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SECTION 8.07. Defeasance and Certain Other Events of Default. In the
event the Company exercises its option to omit compliance with certain covenants
and provisions of this Indenture with respect to the Notes pursuant to Section
8.03 and such Notes are declared due and payable because of the occurrence of an
Event of Default that remains applicable, the amount of money and/or U.S.
Government Obligations on deposit with the Trustee will be sufficient to pay
amounts due on such Notes at the time of their Stated Maturity. If, in the event
the Company exercises its option to omit compliance with certain covenants and
provisions of this Indenture with respect to the Notes pursuant to Section 8.03
and such Notes are declared due and payable because of the occurrence of an
Event of Default that remains applicable, the amount of money and/or U.S.
Government Obligations on deposit with the Trustee is insufficient to pay
amounts due on the Notes at the time of the acceleration resulting from such
Events of Default pursuant to Section 6.02, the Company will remain liable for
such payments.
ARTICLE NINE
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 9.01. Without Consent of Holders. The Company, when
authorized by resolutions of its Board of Directors (as evidenced by a Board
Resolution), and the Trustee may amend or supplement this Indenture or the Notes
without notice to, or the consent of, any Holder:
(i) to cure any ambiguity, defect or inconsistency in this
Indenture; provided that, in the good faith opinion of the Board of
Directors of the Company evidenced by a Board Resolution, such amendments
or supplements do not adversely affect the interests of the Holders in any
material respect;
(ii) to comply with Article Five;
(iii) to comply with any requirements of the Commission in
connection with the qualification of this Indenture under the TIA;
(iv) to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee; or
(v) to make any change that, in the good faith opinion of the Board
of Directors of the Company evidenced by a Board Resolution, does not
materially and adversely affect the rights of any Holder.
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SECTION 9.02. With Consent of Holders. Subject to Sections 6.04 and
6.07 and without prior notice to the Holders, the Company, when authorized by
its Board of Directors (as evidenced by a Board Resolution), and the Trustee may
amend this Indenture and the Notes with the written consent of the Holders of a
majority in aggregate principal amount at maturity of the Notes then
outstanding, and the Holders of a majority in principal amount at maturity of
the Notes then outstanding by written notice to the Trustee may waive aggregate
compliance by the Company with any provision of this Indenture or the Notes.
Notwithstanding the provisions of this Section 9.02, without the
consent of each Holder affected thereby, an amendment or waiver, including a
waiver pursuant to Section 6.04, may not:
(i) change the Stated Maturity of the principal of, or any
installment of interest on, any Note;
(ii) reduce the principal amount of, or premium, if any, or interest
on, any Note;
(iii) change the place or currency of payment of principal of, or
premium, if any, or interest on, any Note;
(iv) impair the right to institute suit for the enforcement of any
payment on or after the Stated Maturity (or, in the case of a redemption,
on or after the Redemption Date) of any Note;
(v) reduce the above-stated percentage of outstanding Notes, the
consent of whose Holders is necessary to modify or amend this Indenture;
(vi) waive a default in the payment of principal of, premium, if
any, or interest on the Notes; or
(vii) reduce the percentage or aggregate principal amount at
maturity of outstanding Notes the consent of whose Holders is necessary
for waiver of compliance with certain provisions of this Indenture or for
waiver of certain defaults.
It shall not be necessary for the consent of the Holders under this
Section 9.02 to approve the particular form of any proposed amendment,
supplement or waiver, but it shall be sufficient if such consent approves the
substance thereof.
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After an amendment, supplement or waiver under this Section 9.02
becomes effective, the Trustee shall mail to the Holders affected thereby a
notice briefly describing the amendment, supplement or waiver. The Company will
mail supplemental indentures to Holders upon request. 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 supplemental indenture or waiver.
SECTION 9.03. Revocation and Effect of Consent. Until an amendment
or waiver becomes effective, a consent to it by a Holder is a continuing consent
by the Holder and every subsequent Holder of a Note or portion of a Note that
evidences the same debt as the Note of the consenting Holder, even if notation
of the consent is not made on any Note. However, any such Holder or subsequent
Holder may revoke the consent as to its Note or portion of its Note. Such
revocation shall be effective only if the Trustee receives the notice of
revocation before the date the amendment, supplement or waiver becomes
effective. An amendment, supplement or waiver shall become effective on receipt
by the Trustee of written consents from the Holders of the requisite percentage
in principal amount at maturity of the outstanding Notes.
The Company may, but shall not be obligated to, fix a record date
for the purpose of determining the Holders entitled to consent to any amendment,
supplement or waiver. If a record date is fixed, then, notwithstanding the last
two sentences of the immediately preceding paragraph, those Persons who were
Holders at such record date (or their duly designated proxies) and only those
Persons shall be entitled to consent to such amendment, supplement or waiver or
to revoke any consent previously given, whether or not such Persons continue to
be Holders after such record date. No such consent shall be valid or effective
for more than 90 days after such record date.
After an amendment, supplement or waiver becomes effective, it shall
bind every Holder unless it is of the type described in any of clauses (i)
through (vii) of Section 9.02. In case of an amendment or waiver of the type
described in clauses (i) through (vii) of Section 9.02, the amendment or waiver
shall bind each Holder who has consented to it and every subsequent Holder of a
Note that evidences the same indebtedness as the Note of the consenting Holder.
SECTION 9.04. Notation on or Exchange of Notes. If an amendment,
supplement or waiver changes the terms of a Note, the Trustee may require the
Holder to deliver it to the Trustee. The Trustee may place an appropriate
notation on the Note about the changed terms and return it to the Holder and the
Trustee may place an appropriate notation on any Note thereafter authenticated.
Alternatively, if the Company or the Trustee so determines, the Company in
exchange for the Note shall issue and the Trustee shall authenticate a new Note
that reflects the changed terms.
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SECTION 9.05. Trustee to Sign Amendments, Etc. The Trustee shall be
entitled to receive, and shall be fully protected in relying upon, in addition
to the documents required by Section 10.03, an Opinion of Counsel stating that
the execution of any amendment, supplement or waiver authorized pursuant to this
Article Nine is authorized or permitted by this Indenture. Subject to the
preceding sentence, the Trustee shall sign such amendment, supplement or waiver
if the same does not adversely affect the rights of the Trustee. The Trustee
may, but shall not be obligated to, execute any such amendment, supplement or
waiver that affects the Trustee's own rights, duties or immunities under this
Indenture or otherwise.
SECTION 9.06. Conformity with Trust Indenture Act. Every
supplemental indenture executed pursuant to this Article Nine shall conform to
the requirements of the TIA as then in effect.
ARTICLE TEN
MISCELLANEOUS
SECTION 10.01. Trust Indenture Act of 1939. Prior to the
effectiveness of the Registration Statement, this Indenture shall incorporate
and be governed by the provisions of the TIA that are required or deemed to be
part of and to govern indentures qualified under the TIA. After the
effectiveness of the Registration Statement, this Indenture shall be subject to
the provisions of the TIA that are required or deemed to be a part of this
Indenture and shall, to the extent applicable, be governed by such provisions.
SECTION 10.02. Notices. (a) Any notice or communication shall be
sufficiently given if in writing and delivered in person or mailed by first
class mail, commercial courier service or telecopier communication, addressed as
follows:
if to the Company:
Viatel, Inc.
800 Third Avenue
New York, NY 10022
Telecopier Number: (212) 350-9250
Attention: Sheldon M. Goldman
<PAGE>
84
With, in the case of any notice given pursuant to
Article Six, a copy to:
Kelley Drye & Warren LLP
101 Park Avenue
New York, NY 10178
Attention: James T. Prenetta, Jr.
if to the Trustee:
The Bank of New York
101 Barclay Street, Floor 21 West
New York, NY 10286
Telecopier Number: (212) 815-5915
Attention: Corporate Trust Administration
With a copy to:
Emmet, Marvin & Martin
120 Broadway
New York, NY 10271
Attention: Anthony Marvin
The Company, the Trustee, or the Depository by notice to the others
may designate additional or different addresses for subsequent notices or
communications.
All notices and communications (other than those sent to Holders)
shall be deemed to have been duly given: at the time delivered by hand, if
personally delivered; five Business Days after being deposited in the mail,
postage prepaid, if mailed; when receipt acknowledged, if telecopied; and the
next Business Day after timely delivery to the courier, if sent by overnight air
courier guaranteeing next day delivery.
(b) Any notice or communication mailed to a Holder shall be mailed
to him at his address as it appears on the Note Register by first class mail and
shall be sufficiently given to him if so mailed within the time prescribed.
Copies of any such communication or notice to a Holder shall also be mailed to
the Trustee and each Agent at the same time.
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. Except for
a notice to the Trustee, which is deemed given only when received, and except as
otherwise provided in this
<PAGE>
85
Indenture, if a notice or communication is mailed in the manner provided in this
Section 10.02, it is duly given, whether or not the addressee receives it.
(c) Where this Indenture provides for notice in any manner, such
notice may be waived in writing by the Person entitled to receive such notice,
either before or after the event, and such waiver shall be the equivalent of
such notice. Waivers of notice by Holders shall be filed with the Trustee, but
such filing shall not be a condition precedent to the validity of any action
taken in reliance upon such waiver.
In case by reason of the suspension of regular mail service or by
reason of any other cause it shall be impracticable to give such notice by mail,
then such notification as shall be made with the approval of the Trustee shall
constitute a sufficient notification for every purpose hereunder.
SECTION 10.03. Certificate and Opinion As to Conditions Precedent.
Upon any request or application by the Company to the Trustee to take any action
under this Indenture, the Company shall furnish to the Trustee:
(i) an Officers' Certificate stating that, in the opinion of the
signers, all conditions precedent, if any, provided for in this Indenture
relating to the proposed action have been complied with; and
(ii) an Opinion of Counsel stating that, in the opinion of such
Counsel, all such conditions precedent have been complied with.
SECTION 10.04. 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:
(i) a statement that each person signing such certificate or opinion
has read such covenant or condition and the definitions herein relating
thereto;
(ii) a brief statement as to the nature and scope of the examination
or investigation upon which the statement or opinion contained in such
certificate or opinion is based;
(iii) a statement that, in the opinion of each such person, he has
made such examination or investigation as is necessary to enable him to
express an informed opinion as to whether or not such covenant or
condition has been complied with; and
<PAGE>
86
(iv) a statement as to whether or not, in the opinion of each such
person, such condition or covenant has been complied with; provided,
however, that, with respect to matters of fact, an Opinion of Counsel may
rely on an Officers' Certificate or certificates of public officials.
SECTION 10.05. Rules by Trustee, Paying Agent or Registrar. The
Trustee may make reasonable rules for action by or at a meeting of Holders. The
Paying Agent or Registrar may make reasonable rules for its functions.
SECTION 10.06. Payment Date Other Than a Business Day. If an
Interest Payment Date, Redemption Date, Payment Date, Stated Maturity or date of
maturity of any Note shall not be a Business Day, then payment of principal of,
premium, if any, or interest on such Note, as the case may be, need not be made
on such date, but may be made on the next succeeding Business Day with the same
force and effect as if made on the Interest Payment Date, Payment Date, or
Redemption Date, or at the Stated Maturity or date of maturity of such Note;
provided that no interest shall accrue for the period from and after such
Interest Payment Date, Payment Date, Redemption Date, Stated Maturity or date of
maturity, as the case may be.
SECTION 10.07. Governing Law; Submission to Jurisdiction; Agent for
Service. This Indenture and the Notes shall be governed by the laws of the State
of New York The Company hereby appoints CT Corporation System as its agent for
service of process in any suit, action or proceeding with respect to this
Indenture or the Notes and for actions brought under the U.S. federal or state
securities laws brought in any federal or state court located in The City of New
York and the Company agrees to submit to the jurisdiction of any such court.
SECTION 10.08. No Adverse Interpretation of Other Agreements. This
Indenture may not be used to interpret another indenture, loan or debt agreement
of the Company or any Subsidiary of the Company. Any such indenture, loan or
debt agreement may not be used to interpret this Indenture.
SECTION 10.09. No Recourse Against Others. No recourse for the
payment of the principal of, premium, if any, or interest on any of the Notes,
or for any claim based thereon or otherwise in respect thereof, and no recourse
under or upon any obligation, covenant or agreement of the Company contained in
this Indenture, or in any of the Notes, or because of the creation of any
Indebtedness represented thereby, shall be had against any incorporator or
against any past, present or future partner, shareholder, other equityholder,
officer, director, employee or controlling person, as such, of the Company or of
any successor Person, either directly or through the Company or any successor
Person, whether by virtue of any constitution, statute or rule of law, or by the
enforcement of any assessment or penalty or
<PAGE>
87
otherwise; it being expressly understood that all such liability is hereby
expressly waived and released as a condition of, and as a consideration for, the
execution of this Indenture and the issue of the Notes.
SECTION 10.10. 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 successors.
SECTION 10.11. Duplicate Originals. The parties may sign any number
of copies of this Indenture. Each signed copy shall be an original, but all of
them together represent the same agreement.
SECTION 10.12. Separability. In case any provision in this Indenture
or in the Notes shall be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.
SECTION 10.13. 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 hereof and shall in no way modify or restrict any of the
terms and provisions hereof.
<PAGE>
88
SIGNATURES
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed, all as of the date first written above.
VIATEL, INC.
By: /s/ Michael J. Mahoney
-----------------------------------
Name: Michael J. Mahoney
Title: President and Chief Executive
Officer
THE BANK OF NEW YORK,
as Trustee
By: /s/ Ming J. Shiang
-----------------------------------
Name: Ming J. Shiang
Title: Assistant Vice President
<PAGE>
EXHIBIT A
FORM OF REGISTERED GLOBAL NOTE
FACE OF NOTE
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS, AND ACCORDINGLY,
MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHIN THE UNITED
STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS EXCEPT AS SET FORTH
IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS
THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER
THE SECURITIES ACT) OR (B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS
DEFINED IN RULE 501(a)(1), (2), (3) OR (7) OF REGULATION D UNDER THE SECURITIES
ACT) (AN "INSTITUTIONAL ACCREDITED INVESTOR") OR (C) IT IS NOT A U.S. PERSON AND
IS ACQUIRING THIS NOTE IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 903 OF
REGULATION S UNDER THE SECURITIES ACT; (2) AGREES THAT IT WILL NOT, WITHIN THE
TIME PERIOD REFERRED TO IN RULE 144(k) (TAKING INTO ACCOUNT THE PROVISIONS OF
RULE 144(d) UNDER THE SECURITIES ACT, IF APPLICABLE), RESELL OR OTHERWISE
TRANSFER THIS NOTE EXCEPT (A) TO THE COMPANY OR ANY SUBSIDIARY THEREOF, (B) TO A
QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES
ACT, (C) INSIDE THE UNITED STATES TO AN INSTITUTIONAL ACCREDITED INVESTOR THAT,
PRIOR TO SUCH TRANSFER, FURNISHES TO THE TRUSTEE A SIGNED LETTER CONTAINING
CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER
OF THIS NOTE (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM THE TRUSTEE) AND IF
SUCH TRANSFER IS IN RESPECT OF AN AGGREGATE PRINCIPAL AMOUNT AT MATURITY OF
NOTES OF LESS THAN $100,000, AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY
THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT, (D) OUTSIDE THE
UNITED STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE
SECURITIES ACT, (E) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE
144 UNDER THE SECURITIES ACT (IF AVAILABLE) OR (F) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND (3) AGREES THAT IT WILL
DELIVER TO EACH PERSON TO WHOM THIS NOTE IS TRANSFERRED A NOTICE SUBSTANTIALLY
TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF THIS NOTE
WITHIN THE TIME PERIOD REFERRED TO ABOVE, THE HOLDER MUST CHECK THE APPROPRIATE
BOX SET FORTH ON THE REVERSE HEREOF RELATING TO THE MANNER OF SUCH TRANSFER AND
SUBMIT THIS CERTIFICATE TO THE TRUSTEE. IF THE PROPOSED TRANSFEREE IS AN
INSTITUTIONAL ACCREDITED INVESTOR, THE HOLDER MUST, PRIOR TO SUCH
<PAGE>
A-2
TRANSFER, FURNISH TO EACH OF THE TRUSTEE AND THE COMPANY SUCH CERTIFICATIONS,
LEGAL OPINIONS OR OTHER INFORMATION AS SUCH PERSONS MAY REASONABLY REQUIRE TO
CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A
TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.
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. THE INDENTURE CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO
REGISTER ANY TRANSFER OF THIS NOTE IN VIOLATION OF THE FOREGOING RESTRICTIONS.
THE NOTES EVIDENCED BY THIS CERTIFICATE ARE INITIALLY ISSUED AS PART OF AN
ISSUANCE OF UNITS, EACH OF WHICH CONSISTS OF $1,000 PRINCIPAL AMOUNT AT MATURITY
OF 12.50% SENIOR DISCOUNT NOTES DUE 2008 OF VIATEL, INC. (THE "NOTES") AND .490
OF A SHARE OF SERIES A REDEEMABLE CONVERTIBLE PREFERRED STOCK (THE "SERIES A
PREFERRED"). THE NOTES AND THE SHARES OF SERIES A PREFERRED WILL BE
AUTOMATICALLY SEPARATED UPON THE EARLIEST TO OCCUR OF (i) SIX MONTHS AFTER APRIL
8, 1998, (ii) COMMENCEMENT OF AN EXCHANGE OFFER WITH RESPECT TO THE NOTES, (iii)
THE EFFECTIVENESS OF A SHELF REGISTRATION STATEMENT WITH RESPECT TO RESALE OF
THE NOTES OR (iv) COMMENCEMENT OF AN OFFER TO REPURCHASE THE NOTES PURSUANT TO
THE INDENTURE. THE NOTES EVIDENCED BY THIS CERTIFICATE MAY NOT BE TRANSFERRED OR
EXCHANGED SEPARATELY FROM, BUT MAY BE TRANSFERRED OR EXCHANGED ONLY TOGETHER
WITH, THE SERIES A PREFERRED.
UNLESS THIS GLOBAL NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF
TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS REGISTERED IN THE NAME OF
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY OR SUCH OTHER REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (AND ANY PAYMENT HEREON IS MADE
TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY), 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.
<PAGE>
A-3
TRANSFERS OF THIS GLOBAL NOTE 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 NOTE SHALL BE LIMITED TO
TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN SECTION 2.08 OF
THE INDENTURE.
THIS NOTE WAS ISSUED WITH ORIGINAL ISSUE DISCOUNT FOR U.S. FEDERAL INCOME TAX
PURPOSES. FOR INFORMATION REGARDING ISSUE PRICE, AMOUNT OF ORIGINAL ISSUE
DISCOUNT, ISSUE DATE AND YIELD TO MATURITY, THE HOLDER MAY CONTACT ALLAN L.
SHAW, CHIEF FINANCIAL OFFICER OF THE COMPANY, AT (212) 350-9220.
<PAGE>
A-4
VIATEL, INC.
12.50% Senior Discount Note Due 2008
[CUSIP][CINS][INIS] _____
No. __________ $____________
Issue date: April 8, 1998
VIATEL, INC., a Delaware corporation (the "Company", which term includes
any successor under the Indenture hereinafter referred to), for value received,
promises to pay to CEDE & CO., or its registered assigns, upon surrender hereof
the principal sum of $_________ on April 15, 2008.
Interest Payment Dates: April 15 and October 15, commencing October 15,
2003.
Record Dates: April 1 and October 1.
Reference is hereby made to the further provisions of this Note set forth
on the reverse hereof, which further provisions shall for all purposes have the
same effect as if set forth at this place.
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Note to be signed manually
or by facsimile by its duly authorized officers.
Date: April 8, 1998 VIATEL, INC.
By:
-------------------------
Name:
Title:
By:
-------------------------
Name:
Title:
(Certificate of Authentication)
This is one of the 12.50% Senior Discount Notes due 2008 described in the
within-mentioned Indenture.
Date: April 8, 1998 THE BANK OF NEW YORK, as Trustee
By
------------------------------
Authorized Signatory
<PAGE>
A-6
[REVERSE SIDE OF NOTE]
VIATEL, INC.
12.50% Senior Discount Note due 2008
1. Principal and Interest.
The Company will pay the principal of this Note on April 15, 2008.
The Company promises to pay interest on the principal amount of this
Note on each Interest Payment Date, as set forth below, at the rate per annum
shown above.
Interest will be payable semiannually in cash (to the holders of
record of the Notes at the close of business on the April 1 or October 1
immediately preceding the Interest Payment Date) on each Interest Payment Date,
commencing October 15, 2003; provided that no interest shall accrue on the
principal amount of this Note prior to April 15, 2003 and no interest shall be
paid on this Note prior to October 15, 2003, except as provided in the next
paragraph.
If an exchange offer registered under the Securities Act is not
consummated, and a shelf registration statement under the Securities Act with
respect to resales of the Notes is not declared effective by the Commission, on
or before the date that is six months after the Closing Date in accordance with
the terms of the Registration Rights Agreement dated April 3, 1998 between the
Company and Morgan Stanley & Co. Incorporated, as the manager for itself and the
several initial purchasers named on Schedule I to the Purchase Agreement dated
April 3, 1998, annual interest (in addition to the accrual of original discount
during the period prior to October 15, 2003 and in addition to the interest
otherwise due on the Notes after such date) will accrue, at an annual rate of
0.5% per annum of the Accreted Value on the preceding Semi-Annual Accrual Date,
payable in cash semiannually, in arrears, on April 15 and October 15 of each
year, commencing April 15, 1999 until the consummation of a registered exchange
offer or the effectiveness of a shelf-registration statement with respect to
resale of this Note. The Holder of this Note is entitled to the benefits of such
Registration Rights Agreement.
From and after April 15, 2003, 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 April 15, 2003; provided that, if there is no existing default
in the payment of interest and this Note is authenticated between a Regular
Record Date referred to on the face hereof and the next succeeding Interest
Payment Date, interest shall accrue from such Interest Payment Date. Interest
will be computed on the basis of a 360-day year of twelve 30-day months.
<PAGE>
A-7
The Company shall pay interest on overdue principal and premium, if
any, and interest on overdue installments of interest, to the extent lawful, at
a rate per annum that is 12.50% per annum.
2. Method of Payment.
The Company will pay principal as provided above and interest
(except defaulted interest) on the principal amount of the Notes as provided
above on each April 15 and October 15 to the Persons who are Holders (as
reflected in the Note Register at the close of business on such April 1 and
October 1, immediately preceding the Interest Payment Date), in each case, even
if the Note is canceled on registration of transfer or registration of exchange
after such record date; provided that, with respect to the payment of principal,
the Company will not make payment to the Holder unless this Note is surrendered
to a Paying Agent.
The Company will pay principal, premium, if any, and as provided
above, interest in money of the United States that at the time of payment is
legal tender for payment of public and private debts. However, the Company may
pay principal, premium, if any, and interest by its check payable in such money.
It may mail an interest check to a Holder's registered address (as reflected in
the Note Register). If a payment date is a date other than a Business Day at a
place of payment, payment may be made at that place on the next succeeding day
that is a Business Day and no interest shall accrue for the intervening period.
3. Paying Agent and Registrar.
Initially, the Trustee will act as U.S. Paying Agent and Registrar.
The Company may change any Paying Agent or Registrar without notice. The
Company, any Subsidiary or any Affiliate of any of them may act as Paying Agent,
Registrar or co-Registrar.
4. Indenture; Issuance of Additional Notes.
This Note is one of a duly authorized issue of Notes of the Company
designated its 12.50% Senior Discount Notes due 2008, issued and to be issued
under an Indenture dated as of April 8, 1998 (the "Indenture"), between the
Company and The Bank of New York, as trustee (the "Trustee"). Capitalized terms
herein are used as defined in the Indenture unless otherwise indicated. 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. The Notes are subject to
all such terms, and Holders are referred to the Indenture and the Trust
Indenture Act for a statement of all such terms. To the extent permitted by
applicable law, in the event of any inconsistency between the terms of this Note
and the terms of the Indenture, the terms of the Indenture shall control.
<PAGE>
A-8
5. Redemption.
The Notes will be redeemable, at the Company's option, in whole or
in part, at any time and from time to time on or after April 15, 2003 and prior
to maturity, upon not less than 30 nor more than 60 days' prior notice mailed by
first-class mail to each Holders' last address as it appears in the Note
Register, at the following Redemption Prices (expressed in percentages of their
principal amount at maturity), plus accrued and unpaid interest, if any, to the
Redemption Date (subject to the right of Holders of record on the relevant
Regular Record Date that is on or prior to the Redemption Date to receive
interest due on an Interest Payment Date), if redeemed during the 12-month
period commencing on April 15, of the years set forth below:
Redemption
Year Price
---- ----------
2003 106.250%
2004 104.167
2005 102.083
2006 and thereafter 100.000
In addition, at any time or from time to time on or prior to April
15, 2001, the Company may, at its option, redeem up to 35% of the aggregate
principal amount at maturity of the Notes with the net proceeds of one or more
Public Equity Offerings, at a Redemption Price (expressed as a percentage of
Accreted Value on the Redemption Date) of 112.50%; provided; (i) that Notes
representing at least 65% of the principal amount at maturity of the Notes
originally issued remain outstanding after each such redemption and (ii) that
notice of each such redemption is mailed within 60 days of each such Public
Equity Offering.
6. Notice of Redemption.
Notice of any optional redemption will be mailed at least 30 days
but not more than 60 days before the Redemption Date to each Holder of Notes to
be redeemed at his last address as it appears in the Note Register. Notes in
original denominations larger than $1,000 of principal amount at maturity may be
redeemed in part. On and after the Redemption Date, interest ceases to accrue on
Notes or portions of Notes called for redemption, unless the Company defaults in
the payment of the Redemption Price.
7. Repurchase upon Change in Control.
Upon the occurrence of any Change of Control, each Holder shall have
the right to require the repurchase of its Notes by the Company in cash pursuant
to the offer described in the Indenture at a purchase price equal to 101% of the
Accreted Value thereof plus accrued and unpaid interest, if any, to the date of
purchase (the "Change of Control Payment").
<PAGE>
A-9
A notice of such Change of Control will be mailed within 30 days
after any Change of Control occurs to each Holder at his last address as it
appears in the Note Register. Notes in original denominations larger than $1,000
of principal amount at maturity may be sold to the Company in part. On and after
the date of the Change of Control Payment, interest ceases to accrue on Notes or
portions of Notes surrendered for purchase by the Company, unless the Company
defaults in the payment of the Change of Control Payment.
8. Registration Rights
Pursuant to the Registration Rights Agreement, the Company will be
obligated, within 180 days after the issue date of this Note, 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 Exchange Notes (as defined in the
Registration Rights Agreement) which have been registered under the Securities
Act, in like principal amount at maturity and having terms identical in all
material respects as the Initial Notes. The Holders of the Initial Notes shall
be entitled to receive certain additional interest payments in the event such
exchange offer is not consummated and upon certain other conditions, all
pursuant and in accordance with the terms of the Registration Rights Agreement.
9. Denominations; Transfer; Exchange.
The Notes are in registered form without coupons in denominations of
$1,000 of principal amount at maturity and any integral multiples of $1,000 in
excess thereof. A Holder may register the transfer or exchange of Notes in
accordance with the Indenture. The Registrar may require a Holder, among other
things, to furnish appropriate endorsements and transfer documents and to pay
any taxes and fees required by law or permitted by the Indenture. The Registrar
need not register the transfer or exchange of any Notes selected for redemption.
Also, it need not register the transfer or exchange of any Notes for a period of
15 days before a selection of Notes to be redeemed is made.
10. Persons Deemed Owners.
A Holder shall be treated as the owner of a Note for all purposes.
11. Unclaimed Money.
If money for the payment of principal, premium, if any, or interest
remains unclaimed for two years, the Trustee and the Paying Agent will pay the
money back to the Company at its request. After that, Holders entitled to the
money must look to the Company for payment, unless an abandoned property law
designates another Person, and all liability of the Trustee and such Paying
Agent with respect to such money shall cease.
<PAGE>
A-10
12. Discharge Prior to Redemption or Maturity.
If the Company deposits with the Trustee money and/or U.S.
Government Obligations sufficient to pay the then outstanding principal of,
premium, if any, and accrued interest on the Notes to redemption (a) or
maturity, the Company will be discharged from the Indenture and the Notes,
except in certain circumstances for certain sections thereof, and (b) or to
Stated Maturity, the Company will be discharged from certain covenants set forth
in the Indenture.
13. Amendment; Supplement; Waiver.
Subject to certain exceptions, the Indenture or the Notes may be
amended or supplemented with the consent of the Holders of at least a majority
in principal amount at maturity of the Notes then outstanding, and any existing
default or compliance with any provision may be waived with the consent of the
Holders of at least a majority in principal amount at maturity of the Notes then
outstanding. Without notice to or the consent of any Holder, the parties thereto
may amend or supplement the Indenture or the Notes to, among other things, cure
any ambiguity, defect or inconsistency and make any change that does not
materially and adversely affect the rights of any Holder.
14. Restrictive Covenants.
The Indenture imposes certain limitations on the ability of the
Company and its Restricted Subsidiaries, among other things, to Incur
Indebtedness, make Restricted Payments, use the proceeds from Asset Sales,
engage in transactions with Affiliates or, with respect to the Company, merge,
consolidate or transfer substantially all of its assets. Within 90 days after
the end of the last fiscal quarter of each year, the Company must report to the
Trustee on compliance with the terms of the Indenture.
15. Successor Persons.
When a successor Person or other entity assumes all the obligations
of its predecessor under the Notes and the Indenture, the predecessor Person
will be released from those obligations.
16. Defaults and Remedies.
The following events constitute "Events of Default" under the
Indenture: (a) default in the payment of principal of (or premium, if any, on)
any Note when the same becomes due and payable at maturity, upon acceleration,
redemption or otherwise; (b) default in the payment of interest on any Note when
the same becomes due and payable, and such default
<PAGE>
A-11
continues for a period of 30 days; (c) default in the performance or breach of
the provisions of the Indenture applicable to mergers, consolidations and
transfers of all or substantially all of the assets of the Company or the
failure to make or consummate an Offer to Purchase in accordance with Section
4.11 of the Indenture or Section 4.12 of the Indenture; (d) the Company defaults
in the performance of or breaches any other covenant or agreement of the Company
in the Indenture or under the Notes (other than a default specified in clause
(a), (b) or (c) of Section 6.01 of the Indenture) 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 or principal
amount at maturity of Notes; (e) there occurs with respect to any issue or
issues of Indebtedness of the Company or any Significant Subsidiary having an
outstanding principal amount of $10 million or more in the aggregate for all
such issues of all such Persons, whether such Indebtedness now exists or shall
hereafter be created, (I) an event of default that has caused the holder thereof
to declare such Indebtedness to be due and payable prior to its Stated Maturity
and such Indebtedness has not been discharged in full or such acceleration has
not been rescinded or annulled within 30 days of such acceleration and/or (II)
the failure to make a principal payment at the final (but not any interim) fixed
maturity and such defaulted payment shall not have been made, waived or extended
within 30 days of such payment default; (f) any final judgment or order (not
covered by insurance) for the payment of money in excess of $10 million in the
aggregate for all such final judgments or orders against all such Persons
(treating any deductibles, self-insurance or retention as not so covered) shall
be rendered against the Company or any Significant Subsidiary and shall not be
paid or discharged, and there shall be any period of 60 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 or discharged
against all such Persons to exceed $10 million during which a stay of
enforcement of such final judgment or order, by reason of a pending appeal or
otherwise, shall not be in effect; (g) a court having jurisdiction in the
premises enters a decree or order for (A) relief in respect of the Company or
any Significant Subsidiary 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 Significant Subsidiary or
for all or substantially all of the property and assets of the Company or any
Significant Subsidiary or (C) the winding up or liquidation of the affairs of
the Company or any Significant Subsidiary and, in each case, such decree or
order shall remain unstayed and in effect for a period of 60 consecutive days;
or (h) the Company or any Significant Subsidiary (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 Significant Subsidiary or
for all or substantially all of the property and assets of the Company or any
Significant Subsidiary or (C) effects any general assignment for the benefit of
creditors.
<PAGE>
A-12
If an Event of Default (other than an Event of Default specified in
clause (g) or (h) above that occurs with respect to the Company) occurs and is
continuing under the Indenture, the Trustee or the Holders of at least 25% in
aggregate principal amount at maturity of the Notes, then outstanding, by
written notice to the Company (and to the Trustee if such notice is given by the
Holders) , may, and the Trustee at the request of such Holders shall, declare
the Accreted Value of, premium, if any, and accrued interest on the Notes to be
immediately due and payable.
If an Event of Default, as defined in the Indenture, occurs and is
continuing, the Trustee or the Holders of at least 25% in aggregate principal
amount at maturity of the Notes then outstanding may declare all the Notes to be
due and payable. If a bankruptcy or insolvency default with respect to the
Company or any Restricted Subsidiary occurs and is continuing, the Notes
automatically become due and payable. Holders may not enforce the Indenture or
the Notes except as provided in the Indenture. The Trustee may require indemnity
satisfactory to it before it enforces the Indenture or the Notes. Subject to
certain limitations, Holders of at least a majority in principal amount at
maturity of the Notes then outstanding may direct the Trustee in its exercise of
any trust or power.
17. Trustee Dealings with Company.
The Trustee under the Indenture, in its individual or any other
capacity, may make loans to, accept deposits from and perform services for the
Company or its Affiliates and may otherwise deal with the Company or its
Affiliates as if it were not the Trustee.
18. No Recourse Against Others.
No incorporator or any past, present or future partner, stockholder,
other equity holder, officer, director, employee or controlling person as such,
of the Company or of any successor Person 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 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.
19. Authentication.
This Note shall not be valid until the Trustee or authenticating
agent signs the certificate of authentication on the other side of this Note.
20. Abbreviations.
Customary abbreviations may be used in the name of a Holder or an
assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the
entireties), JT TEN
<PAGE>
A-13
(= joint tenants with right of survivorship and not as tenants in common), CUST
(= Custodian) and U/G/M/A (= Uniform Gifts to Minors Act).
21. CUSIP Numbers.
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures, the Issuer has caused CUSIP numbers to be
printed on the Notes and the Trustee may use CUSIP numbers in notices of
redemption as a convenience to Holders. No representation is made as to the
accuracy of such numbers either as printed on the Notes or as contained in any
notice of redemption.
This Note shall be governed by the laws of the State of New York.
The Company will furnish to any Holder upon written request and
without charge a copy of the Indenture. Requests may be made to Viatel, Inc.,
800 Third Avenue, New York, New York, 10022, Attention: Sheldon M. Goldman.
<PAGE>
A-14
SCHEDULE OF PRINCIPAL AMOUNT OF INDEBTEDNESS
EVIDENCED BY THIS NOTE
The initial principal amount of indebtedness evidenced by this Note
shall be $________. The following decreases/increases in the principal amount
evidenced by this Note have been made:
Decrease in Increase in Total Principal
Principal Principal Amount of this Notation Made
Date of Amount of Amount of Global Note by or on
Decrease/ this Global this Global Following such Behalf of
Increase Note Note Decrease/Increase Trustee
- -------- ---- ---- ----------------- -------
_______ __________ __________ ________________ ________________
_______ __________ __________ ________________ ________________
_______ __________ __________ ________________ ________________
_______ __________ __________ ________________ ________________
_______ __________ __________ ________________ ________________
_______ __________ __________ ________________ ________________
_______ __________ __________ ________________ ________________
_______ __________ __________ ________________ ________________
_______ __________ __________ ________________ ________________
_______ __________ __________ ________________ ________________
_______ __________ __________ ________________ ________________
_______ __________ __________ ________________ ________________
_______ __________ __________ ________________ ________________
_______ __________ __________ ________________ ________________
_______ __________ __________ ________________ ________________
_______ __________ __________ ________________ ________________
<PAGE>
A-15
[FORM OF TRANSFER NOTICE]
FOR VALUE RECEIVED the undersigned registered holder hereby sell(s),
assign(s) and transfer(s) unto
Insert Taxpayer Identification No.
______________________________________________________________________________
Please print or typewrite name and address including zip code of assignee
_______________________________________________________________________________
the within Note and all rights thereunder, hereby irrevocably constituting and
appointing ________________________________________ attorney to transfer said
Note on the books of the Company with full power of substitution in the
premises.
[THE FOLLOWING PROVISION TO BE INCLUDED
ON ALL NOTES OTHER THAN EXCHANGE NOTES,
UNLEGENDED REGULATION S GLOBAL AND
UNLEGENDED REGULATION S CERTIFICATED NOTES]
In connection with any transfer of this Note occurring prior to the date
which is the earlier of (i) the date of an effective Registration or (ii) the
end of the period referred to in Rule 144(k) under the Securities Act, the
undersigned confirms that without utilizing any general solicitation or general
advertising that:
[Check One]
|_| (a) this Note is being transferred in compliance with the exemption from
registration under the Securities Act of 1933, as amended, provided by
Rule 144A thereunder.
or
|_| (b) this Note is being transferred other than in accordance with (a)
above and documents are being furnished which comply with the conditions
of transfer set forth in this Note and the Indenture.
If none of the foregoing boxes is checked, the Trustee or other Registrar shall
not be obligated to register this Note in the name of any Person other than the
Holder hereof unless and until the conditions to any such transfer of
registration set forth herein and in Section 2.08 of the Indenture shall have
been satisfied.
<PAGE>
A-16
Date:
---------------- ----------------------------------------
NOTICE: The signature to this assignment
must correspond with the name as written
upon the face of the within-mentioned
instrument in every particular, without
alteration or any change whatsoever.
TO BE COMPLETED BY PURCHASER IF (a) ABOVE IS CHECKED.
The undersigned represents and warrants that it is purchasing this Note
for its own account or an account with respect to which it exercises sole
investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act of
1933, as amended, and is aware that the sale to it is being made in reliance on
Rule 144A and acknowledges that it has received such information regarding the
Company as the undersigned has requested pursuant to Rule 144A or has determined
not to request such information and that it is aware that the transferor is
relying upon the undersigned's foregoing representations in order to claim the
exemption from registration provided by Rule 144A.
Dated:
------------------- -----------------------------------------------
NOTICE: To be executed by an executive officer
<PAGE>
A-17
OPTION OF HOLDER TO ELECT PURCHASE
If you wish to have this Note purchased by the Company pursuant to
Section 4.11 or Section 4.12 of the Indenture, check the Box: |_|
If you wish to have a portion of this Note purchased by the Company
pursuant to Section 4.11 or Section 4.12 of the Indenture, state the amount (in
principal amount at maturity): $____________.
Date:
---------------
Your Signature:
-------------------------------------------------------------
(Sign exactly as your name appears on the other side of
this Note)
Signature Guarantee:
------------------------------
<PAGE>
EXHIBIT B
FORM OF REGULATION S GLOBAL NOTE
[FACE OF NOTE]
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS, AND ACCORDINGLY,
MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHIN THE UNITED
STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS EXCEPT AS SET FORTH
IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS
THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER
THE SECURITIES ACT) OR (B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS
DEFINED IN RULE 501(a)(1), (2), (3) OR (7) OF REGULATION D UNDER THE SECURITIES
ACT) (AN "INSTITUTIONAL ACCREDITED INVESTOR") OR (C) IT IS NOT A U.S. PERSON AND
IS ACQUIRING THIS NOTE IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 903 OF
REGULATION S UNDER THE SECURITIES ACT; (2) AGREES THAT IT WILL NOT, WITHIN THE
TIME PERIOD REFERRED TO IN RULE 144(k) (TAKING INTO ACCOUNT THE PROVISIONS OF
RULE 144(d) UNDER THE SECURITIES ACT, IF APPLICABLE), RESELL OR OTHERWISE
TRANSFER THIS NOTE EXCEPT (A) TO THE COMPANY OR ANY SUBSIDIARY THEREOF, (B) TO A
QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES
ACT, (C) INSIDE THE UNITED STATES TO AN INSTITUTIONAL ACCREDITED INVESTOR THAT,
PRIOR TO SUCH TRANSFER, FURNISHES TO THE TRUSTEE A SIGNED LETTER CONTAINING
CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER
OF THIS NOTE (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM THE TRUSTEE) AND IF
SUCH TRANSFER IS IN RESPECT OF AN AGGREGATE PRINCIPAL AMOUNT AT MATURITY OF
NOTES OF LESS THAN $100,000, AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY
THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT, (D) OUTSIDE THE
UNITED STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE
SECURITIES ACT, (E) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE
144 UNDER THE SECURITIES ACT (IF AVAILABLE) OR (F) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND (3) AGREES THAT IT WILL
DELIVER TO EACH PERSON TO WHOM THIS NOTE IS TRANSFERRED A NOTICE SUBSTANTIALLY
TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF THIS NOTE
WITHIN THE TIME PERIOD REFERRED TO ABOVE, THE HOLDER MUST CHECK THE APPROPRIATE
<PAGE>
B-2
BOX SET FORTH ON THE REVERSE HEREOF RELATING TO THE MANNER OF SUCH TRANSFER AND
SUBMIT THIS CERTIFICATE TO THE TRUSTEE. IF THE PROPOSED TRANSFEREE IS AN
INSTITUTIONAL ACCREDITED INVESTOR, THE HOLDER MUST, PRIOR TO SUCH TRANSFER,
FURNISH TO EACH OF THE TRUSTEE AND THE COMPANY SUCH CERTIFICATIONS, LEGAL
OPINIONS OR OTHER INFORMATION AS SUCH PERSONS MAY REASONABLY REQUIRE TO CONFIRM
THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A
TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.
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. THE INDENTURE CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO
REGISTER ANY TRANSFER OF THIS NOTE IN VIOLATION OF THE FOREGOING RESTRICTIONS.
THE NOTES EVIDENCED BY THIS CERTIFICATE ARE INITIALLY ISSUED AS PART OF AN
ISSUANCE OF UNITS, EACH OF WHICH CONSISTS OF $1,000 PRINCIPAL AMOUNT AT MATURITY
OF 12.50% SENIOR DISCOUNT NOTES DUE 2008 OF VIATEL, INC. (THE "NOTES") AND .490
OF A SHARE OF SERIES A REDEEMABLE CONVERTIBLE PREFERRED STOCK (THE "SERIES A
PREFERRED"). THE NOTES AND THE SHARES OF SERIES A PREFERRED WILL BE
AUTOMATICALLY SEPARATED UPON THE EARLIEST TO OCCUR OF (i) SIX MONTHS AFTER APRIL
8, 1998, (ii) COMMENCEMENT OF AN EXCHANGE OFFER WITH RESPECT TO THE NOTES, (iii)
THE EFFECTIVENESS OF A SHELF REGISTRATION STATEMENT WITH RESPECT TO RESALE OF
THE NOTES OR (iv) COMMENCEMENT OF AN OFFER TO REPURCHASE THE NOTES PURSUANT TO
THE INDENTURE. THE NOTES EVIDENCED BY THIS CERTIFICATE MAY NOT BE TRANSFERRED OR
EXCHANGED SEPARATELY FROM, BUT MAY BE TRANSFERRED OR EXCHANGED ONLY TOGETHER
WITH, THE SERIES A PREFERRED.
THIS NOTE WAS ISSUED WITH ORIGINAL ISSUE DISCOUNT FOR U.S. FEDERAL INCOME TAX
PURPOSES. FOR INFORMATION REGARDING ISSUE PRICE, AMOUNT OF ORIGINAL ISSUE
DISCOUNT, ISSUE DATE AND YIELD TO MATURITY, THE HOLDER MAY CONTACT ALLAN L.
SHAW, CHIEF FINANCIAL OFFICER OF THE COMPANY, AT (212) 350-9220.
<PAGE>
B-3
VIATEL, INC.
12.50% Senior Discount Note Due 2008
[CUSIP][CINS][INIS][WKN] _____
No. __________ $______________
Issue date: April 8, 1998
VIATEL, INC., a Delaware corporation (the "Company", which term includes
any successor under the Indenture hereinafter referred to), for value received,
promises to pay to ___________ , or its registered assigns, the principal sum of
$_________ on April 15, 2008.
Interest Payment Dates: April 15 and October 15, commencing October 15,
2003.
Reference is hereby made to the further provisions of this Note set forth
on the reverse hereof, which further provisions shall for all purposes have the
same effect as if set forth at this place.
<PAGE>
B-4
IN WITNESS WHEREOF, the Company has caused this Note to be signed manually
or by facsimile by its duly authorized officers.
Date: April 8, 1998 VIATEL, INC.
By
-------------------------------
Name:
Title:
By
-------------------------------
Name:
Title:
(Trustee's Certificate of Authentication)
This is one of the 12.50% Senior Discount Notes due 2008 described in the
within-mentioned Indenture.
Date: April 8, 1998 THE BANK OF NEW YORK, as Trustee
By
--------------------------------
Authorized Signatory
<PAGE>
B-5
[REVERSE SIDE OF NOTE]
VIATEL, INC.
12.50% Senior Discount Note due 2008
1. Principal and Interest.
The Company will pay the principal of this Note on April 15, 2008.
The Company promises to pay interest on the principal amount of this
Note on each Interest Payment Date, as set forth below, at the rate per annum
shown above.
Interest will be payable semiannually in cash (to the holders of
record of the Notes at the close of business on the April 1 or October 1
immediately preceding the Interest Payment Date) on each Interest Payment Date,
commencing October 15, 2003; provided that no interest shall accrue on the
principal amount of this Note prior to April 15, 2003 and no interest shall be
paid on this Note prior to October 15, 2003, except as provided in the next
paragraph.
If an exchange offer registered under the Securities Act is not
consummated, and a shelf registration statement under the Securities Act with
respect to resales of the Notes is not declared effective by the Commission, on
or before the date that is six months after the Closing Date in accordance with
the terms of the Registration Rights Agreement dated April 3, 1998 between the
Company and Morgan Stanley & Co. Incorporated, as the manager for itself and the
several initial purchasers named on Schedule I to the Purchase Agreement dated
April 3, 1998, annual interest (in addition to the accrual of original discount
during the period prior to October 15, 2003 and in addition to the interest
otherwise due on the Notes after such date) will accrue, at an annual rate of
0.5% per annum of the Accreted Value on the preceding Semi-Annual Accrual Date,
payable in cash semiannually, in arrears, on April 15 and October 15 of each
year, commencing April 15, 1999 until the consummation of a registered exchange
offer or the effectiveness of a shelf-registration statement with respect to
resale of this Note. The Holder of this Note is entitled to the benefits of such
Registration Rights Agreement.
From and after April 15, 2003, 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 April 15, 2003; provided that, if there is no existing default
in the payment of interest and this Note is authenticated between a Regular
Record Date referred to on the face hereof and the next succeeding Interest
Payment Date, interest shall accrue from such Interest Payment Date. Interest
will be computed on the basis of a 360-day year of twelve 30-day months.
<PAGE>
B-6
The Company shall pay interest on overdue principal and premium, if
any, and interest on overdue installments of interest, to the extent lawful, at
a rate per annum that is 12.50% per annum.
2. Method of Payment.
The Company will pay principal as provided above and interest
(except defaulted interest) on the principal amount of the Notes as provided
above on each April 15 and October 15 to the Persons who are Holders (as
reflected in the Note Register at the close of business on such April 1 and
October 1, immediately preceding the Interest Payment Date), in each case, even
if the Note is canceled on registration of transfer or registration of exchange
after such record date; provided that, with respect to the payment of principal,
the Company will not make payment to the Holder unless this Note is surrendered
to a Paying Agent.
The Company will pay principal, premium, if any, and as provided
above, interest in money of the United States that at the time of payment is
legal tender for payment of public and private debts. However, the Company may
pay principal, premium, if any, and interest by its check payable in such money.
It may mail an interest check to a Holder's registered address (as reflected in
the Note Register). If a payment date is a date other than a Business Day at a
place of payment, payment may be made at that place on the next succeeding day
that is a Business Day and no interest shall accrue for the intervening period.
3. Paying Agent and Registrar.
Initially, the Trustee will act as U.S. Paying Agent and Registrar.
The Company may change any Paying Agent or Registrar without notice. The
Company, any Subsidiary or any Affiliate of any of them may act as Paying Agent,
Registrar or co-Registrar.
4. Indenture; Issuance of Additional Notes.
This Note is one of a duly authorized issue of Notes of the Company
designated its 12.50% Senior Discount Notes due 2008, issued and to be issued
under an Indenture dated as of April 8, 1998 (the "Indenture"), between the
Company and The Bank of New York, as trustee (the "Trustee"). Capitalized terms
herein are used as defined in the Indenture unless otherwise indicated. 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. The Notes are subject to
all such terms, and Holders are referred to the Indenture and the Trust
Indenture Act for a statement of all such terms. To the extent permitted by
applicable law, in the event of any inconsistency between the terms of this Note
and the terms of the Indenture, the terms of the Indenture shall control.
<PAGE>
B-7
5. Redemption.
The Notes will be redeemable, at the Company's option, in whole or
in part, at any time and from time to time on or after April 15, 2003 and prior
to maturity, upon not less than 30 nor more than 60 days' prior notice mailed by
first-class mail to each Holders' last address as it appears in the Note
Register, at the following Redemption Prices (expressed in percentages of their
principal amount at maturity), plus accrued and unpaid interest, if any, to the
Redemption Date (subject to the right of Holders of record on the relevant
Regular Record Date that is on or prior to the Redemption Date to receive
interest due on an Interest Payment Date), if redeemed during the 12-month
period commencing on April 15, of the years set forth below:
Redemption
Year Price
---- -----------
2003 106.250%
2004 104.167
2005 102.083
2006 and thereafter 100.000
In addition, at any time or from time to time on or prior to April
15, 2001, the Company may, at its option, redeem up to 35% of the aggregate
principal amount at maturity of the Notes with the net proceeds of one or more
Public Equity Offerings, at a Redemption Price (expressed as a percentage of
Accreted Value on the Redemption Date) of 112.50%; provided; (i) that Notes
representing at least 65% of the principal amount at maturity of the Notes
originally issued remain outstanding after each such redemption and (ii) that
notice of each such redemption is mailed within 60 days of each such Public
Equity Offering.
6. Notice of Redemption.
Notice of any optional redemption will be mailed at least 30 days
but not more than 60 days before the Redemption Date to each Holder of Notes to
be redeemed at his last address as it appears in the Note Register. Notes in
original denominations larger than 1,000 of principal amount at maturity may be
redeemed in part. On and after the Redemption Date, interest ceases to accrue on
Notes or portions of Notes called for redemption, unless the Company defaults in
the payment of the Redemption Price.
7. Repurchase upon Change in Control.
Upon the occurrence of any Change of Control, each Holder shall have
the right to require the repurchase of its Notes by the Company in cash pursuant
to the offer described in
<PAGE>
B-8
the Indenture at a purchase price equal to 101% of the Accreted Value thereof
plus accrued and unpaid interest, if any, to the date of purchase (the "Change
of Control Payment").
A notice of such Change of Control will be mailed within 30 days
after any Change of Control occurs to each Holder at his last address as it
appears in the Note Register. Notes in original denominations larger than $1,000
of principal amount at maturity may be sold to the Company in part. On and after
the date of the Change of Control Payment, interest ceases to accrue on Notes or
portions of Notes surrendered for purchase by the Company, unless the Company
defaults in the payment of the Change of Control Payment.
8. Registration Rights
Pursuant to the Registration Rights Agreement, the Company will be
obligated, within 180 days after the issue date of this Note, 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 Exchange Notes (as defined in the
Registration Rights Agreement) which have been registered under the Securities
Act, in like principal amount at maturity and having terms identical in all
material respects as the Initial Notes. The Holders of the Initial Notes shall
be entitled to receive certain additional interest payments in the event such
exchange offer is not consummated and upon certain other conditions, all
pursuant and in accordance with the terms of the Registration Rights Agreement.
9. Denominations; Transfer; Exchange.
The Notes are in registered form without coupons in denominations of
$1,000 of principal amount at maturity and any integral multiples of $1,000 in
excess thereof. A Holder may register the transfer or exchange of Notes in
accordance with the Indenture. The Registrar may require a Holder, among other
things, to furnish appropriate endorsements and transfer documents and to pay
any taxes and fees required by law or permitted by the Indenture. The Registrar
need not register the transfer or exchange of any Notes selected for redemption.
Also, it need not register the transfer or exchange of any Notes for a period of
15 days before a selection of Notes to be redeemed is made.
10. Persons Deemed Owners.
A Holder shall be treated as the owner of a Note for all purposes.
11. Unclaimed Money.
If money for the payment of principal, premium, if any, or interest
remains unclaimed for two years, the Trustee and the Paying Agent will pay the
money back to the
<PAGE>
B-9
Company at its request. After that, Holders entitled to the money must look to
the Company for payment, unless an abandoned property law designates another
Person, and all liability of the Trustee and such Paying Agent with respect to
such money shall cease.
12. Discharge Prior to Redemption or Maturity.
If the Company deposits with the Trustee money and/or U.S.
Government Obligations sufficient to pay the then outstanding principal of,
premium, if any, and accrued interest on the Notes to redemption (a) or
maturity, the Company will be discharged from the Indenture and the Notes,
except in certain circumstances for certain sections thereof, and (b) or to
Stated Maturity, the Company will be discharged from certain covenants set forth
in the Indenture.
13. Amendment; Supplement; Waiver.
Subject to certain exceptions, the Indenture or the Notes may be
amended or supplemented with the consent of the Holders of at least a majority
in principal amount at maturity of the Notes then outstanding, and any existing
default or compliance with any provision may be waived with the consent of the
Holders of at least a majority in principal amount at maturity of the Notes then
outstanding. Without notice to or the consent of any Holder, the parties thereto
may amend or supplement the Indenture or the Notes to, among other things, cure
any ambiguity, defect or inconsistency and make any change that does not
materially and adversely affect the rights of any Holder.
14. Restrictive Covenants.
The Indenture imposes certain limitations on the ability of the
Company and its Restricted Subsidiaries, among other things, to Incur
Indebtedness, make Restricted Payments, use the proceeds from Asset Sales,
engage in transactions with Affiliates or, with respect to the Company, merge,
consolidate or transfer substantially all of its assets. Within 90 days after
the end of the last fiscal quarter of each year, the Company must report to the
Trustee on compliance with the terms of the Indenture.
15. Successor Persons.
When a successor Person or other entity assumes all the obligations
of its predecessor under the Notes and the Indenture, the predecessor Person
will be released from those obligations.
<PAGE>
B-10
16. Defaults and Remedies.
The following events constitute "Events of Default" under the
Indenture: (a) default in the payment of principal of (or premium, if any, on)
any Note when the same becomes due and payable at maturity, upon acceleration,
redemption or otherwise; (b) default in the payment of interest on any Note when
the same becomes due and payable, and such default continues for a period of 30
days; provided that a failure to make any of the first six scheduled interest
payments on this Note in a timely manner will constitute an Event of Default
with no grace or cure period; (c) default in the performance or breach of the
provisions of the Indenture applicable to mergers, consolidations and transfers
of all or substantially all of the assets of the Company or the failure to make
or consummate an Offer to Purchase in accordance with Section 4.11 of the
Indenture or Section 4.12 of the Indenture; (d) the Company defaults in the
performance of or breaches any other covenant or agreement of the Company in the
Indenture or under the Notes (other than a default specified in clause (a), (b)
or (c) of Section 6.01 of the Indenture) 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 or principal amount at
maturity of Notes; (e) there occurs with respect to any issue or issues of
Indebtedness of the Company or any Significant Subsidiary having an outstanding
principal amount of $10 million or more in the aggregate for all such issues of
all such Persons, whether such Indebtedness now exists or shall hereafter be
created, (I) an event of default that has caused the holder thereof to declare
such Indebtedness to be due and payable prior to its Stated Maturity and such
Indebtedness has not been discharged in full or such acceleration has not been
rescinded or annulled within 30 days of such acceleration and/or (II) the
failure to make a principal payment at the final (but not any interim) fixed
maturity and such defaulted payment shall not have been made, waived or extended
within 30 days of such payment default; (f) any final judgment or order (not
covered by insurance) for the payment of money in excess of $10 million in the
aggregate for all such final judgments or orders against all such Persons
(treating any deductibles, self-insurance or retention as not so covered) shall
be rendered against the Company or any Significant Subsidiary and shall not be
paid or discharged, and there shall be any period of 60 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 or discharged
against all such Persons to exceed $10 million during which a stay of
enforcement of such final judgment or order, by reason of a pending appeal or
otherwise, shall not be in effect; (g) a court having jurisdiction in the
premises enters a decree or order for (A) relief in respect of the Company or
any Significant Subsidiary 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 Significant Subsidiary or
for all or substantially all of the property and assets of the Company or any
Significant Subsidiary or (C) the winding up or liquidation of the affairs of
the Company or any Significant Subsidiary and, in each case, such decree or
order shall remain unstayed and in effect for a period of 60 consecutive days;
or (h) the Company or any Significant Subsidiary (A) commences a voluntary case
under any
<PAGE>
B-11
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 Significant Subsidiary or for all or
substantially all of the property and assets of the Company or any Significant
Subsidiary or (C) effects any general assignment for the benefit of creditors.
If an Event of Default (other than an Event of Default specified in
clause (g) or (h) above that occurs with respect to the Company) occurs and is
continuing under the Indenture, the Trustee or the Holders of at least 25% in
aggregate principal amount at maturity of the Notes, then outstanding, by
written notice to the Company (and to the Trustee if such notice is given by the
Holders) , may, and the Trustee at the request of such Holders shall, declare
the Accreted Value of, premium, if any, and accrued interest on the Notes to be
immediately due and payable.
If an Event of Default, as defined in the Indenture, occurs and is
continuing, the Trustee or the Holders of at least 25% in aggregate principal
amount at maturity of the Notes then outstanding may declare all the Notes to be
due and payable. If a bankruptcy or insolvency default with respect to the
Company or any Restricted Subsidiary occurs and is continuing, the Notes
automatically become due and payable. Holders may not enforce the Indenture or
the Notes except as provided in the Indenture. The Trustee may require indemnity
satisfactory to it before it enforces the Indenture or the Notes. Subject to
certain limitations, Holders of at least a majority in principal amount at
maturity of the Notes then outstanding may direct the Trustee in its exercise of
any trust or power.
17. Trustee Dealings with Company.
The Trustee under the Indenture, in its individual or any other
capacity, may make loans to, accept deposits from and perform services for the
Company or its Affiliates and may otherwise deal with the Company or its
Affiliates as if it were not the Trustee.
18. No Recourse Against Others.
No incorporator or any past, present or future partner, stockholder,
other equity holder, officer, director, employee or controlling person as such,
of the Company or of any successor Person 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 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.
<PAGE>
B-12
19. Authentication.
This Note shall not be valid until the Trustee or authenticating
agent signs the certificate of authentication on the other side of this Note.
20. Abbreviations.
Customary abbreviations may be used in the name of a Holder 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).
21. CUSIP Numbers.
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures, the Issuer has caused CUSIP numbers to be
printed on the Notes and the Trustee may use CUSIP numbers in notices of
redemption as a convenience to Holders. No representation is made as to the
accuracy of such numbers either as printed on the Notes or as contained in any
notice of redemption.
This Note shall be governed by the laws of the State of New York.
The Company will furnish to any Holder upon written request and
without charge a copy of the Indenture. Requests may be made to Viatel, Inc.,
800 Third Avenue, New York, New York, 10022, Attention: Sheldon M. Goldman.
<PAGE>
B-13
[FORM OF TRANSFER NOTICE]
FOR VALUE RECEIVED the undersigned registered holder hereby sell(s),
assign(s) and transfer(s) unto
Insert Taxpayer Identification No.
______________________________________________________________________________
Please print or typewrite name and address including zip code of assignee
_______________________________________________________________________________
the within Note and all rights thereunder, hereby irrevocably constituting and
appointing ________________________________________ attorney to transfer said
Note on the books of the Company with full power of substitution in the
premises.
[THE FOLLOWING PROVISION TO BE INCLUDED
ON ALL NOTES OTHER THAN EXCHANGE NOTES,
UNLEGENDED REGULATION S GLOBAL AND
UNLEGENDED REGULATION S CERTIFICATED NOTES]
In connection with any transfer of this Note occurring prior to the date
which is the earlier of (i) the date of an effective Registration or (ii) the
end of the period referred to in Rule 144(k) under the Securities Act, the
undersigned confirms that without utilizing any general solicitation or general
advertising that:
[Check One]
|_| (a) this Note is being transferred in compliance with the exemption from
registration under the Securities Act of 1933, as amended, provided by
Rule 144A thereunder.
or
|_| (b) this Note is being transferred other than in accordance with (a)
above and documents are being furnished which comply with the conditions
of transfer set forth in this Note and the Indenture.
If none of the foregoing boxes is checked, the Trustee or other Registrar shall
not be obligated to register this Note in the name of any Person other than the
Holder hereof unless and until the conditions to any such transfer of
registration set forth herein and in Section 2.08 of the Indenture shall have
been satisfied.
<PAGE>
B-14
Date:
----------------- ----------------------------------------
NOTICE: The signature to this assignment
must correspond with the name as written
upon the face of the within-mentioned
instrument in every particular, without
alteration or any change whatsoever.
TO BE COMPLETED BY PURCHASER IF (a) ABOVE IS CHECKED.
The undersigned represents and warrants that it is purchasing this
Note for its own account or an account with respect to which it exercises sole
investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act of
1933, as amended, and is aware that the sale to it is being made in reliance on
Rule 144A and acknowledges that it has received such information regarding the
Company as the undersigned has requested pursuant to Rule 144A or has determined
not to request such information and that it is aware that the transferor is
relying upon the undersigned's foregoing representations in order to claim the
exemption from registration provided by Rule 144A.
Dated:
--------------- -----------------------------------------------
NOTICE: To be executed by an executive officer
<PAGE>
B-15
OPTION OF HOLDER TO ELECT PURCHASE
If you wish to have this Note purchased by the Company pursuant to
Section 4.11 or Section 4.12 of the Indenture, check the Box: |_|
If you wish to have a portion of this Note purchased by the Company
pursuant to Section 4.11 or Section 4.12 of the Indenture, state the amount (in
principal amount at maturity): $_____________
Date:
---------------
Your Signature: ------------------------------------------------------------
(Sign exactly as your name appears on the other side of
this Note)
Signature Guarantee:
------------------------------
<PAGE>
EXHIBIT C
FORM OF U.S. CERTIFICATED NOTE
[FACE OF NOTE]
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS, AND ACCORDINGLY,
MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHIN THE UNITED
STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS EXCEPT AS SET FORTH
IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS
THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER
THE SECURITIES ACT) OR (B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS
DEFINED IN RULE 501(a)(1), (2), (3) OR (7) OF REGULATION D UNDER THE SECURITIES
ACT) (AN "INSTITUTIONAL ACCREDITED INVESTOR") OR (C) IT IS NOT A U.S. PERSON AND
IS ACQUIRING THIS NOTE IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 903 OF
REGULATION S UNDER THE SECURITIES ACT; (2) AGREES THAT IT WILL NOT, WITHIN THE
TIME PERIOD REFERRED TO IN RULE 144(k) (TAKING INTO ACCOUNT THE PROVISIONS OF
RULE 144(d) UNDER THE SECURITIES ACT, IF APPLICABLE), RESELL OR OTHERWISE
TRANSFER THIS NOTE EXCEPT (A) TO THE COMPANY OR ANY SUBSIDIARY THEREOF, (B) TO A
QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES
ACT, (C) INSIDE THE UNITED STATES TO AN INSTITUTIONAL ACCREDITED INVESTOR THAT,
PRIOR TO SUCH TRANSFER, FURNISHES TO THE TRUSTEE A SIGNED LETTER CONTAINING
CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER
OF THIS NOTE (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM THE TRUSTEE) AND IF
SUCH TRANSFER IS IN RESPECT OF AN AGGREGATE PRINCIPAL AMOUNT AT MATURITY OF
NOTES OF LESS THAN $100,000, AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY
THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT, (D) OUTSIDE THE
UNITED STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE
SECURITIES ACT, (E) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE
144 UNDER THE SECURITIES ACT (IF AVAILABLE) OR (F) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND (3) AGREES THAT IT WILL
DELIVER TO EACH PERSON TO WHOM THIS NOTE IS TRANSFERRED A NOTICE SUBSTANTIALLY
TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF THIS NOTE
WITHIN THE TIME PERIOD REFERRED TO ABOVE, THE HOLDER MUST CHECK THE APPROPRIATE
BOX SET FORTH ON THE REVERSE HEREOF RELATING TO THE MANNER OF SUCH TRANSFER AND
SUBMIT THIS CERTIFICATE TO THE TRUSTEE. IF THE PROPOSED TRANSFEREE IS AN
<PAGE>
C-2
INSTITUTIONAL ACCREDITED INVESTOR, THE HOLDER MUST, PRIOR TO SUCH TRANSFER,
FURNISH TO EACH OF THE TRUSTEE AND THE COMPANY SUCH CERTIFICATIONS, LEGAL
OPINIONS OR OTHER INFORMATION AS SUCH PERSONS MAY REASONABLY REQUIRE TO CONFIRM
THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A
TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.
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. THE INDENTURE CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO
REGISTER ANY TRANSFER OF THIS NOTE IN VIOLATION OF THE FOREGOING RESTRICTIONS.
THE NOTES EVIDENCED BY THIS CERTIFICATE ARE INITIALLY ISSUED AS PART OF AN
ISSUANCE OF UNITS, EACH OF WHICH CONSISTS OF $1,000 PRINCIPAL AMOUNT AT MATURITY
OF 12.50% SENIOR DISCOUNT NOTES DUE 2008 OF VIATEL, INC. (THE "NOTES") AND .490
OF A SHARE OF SERIES A REDEEMABLE CONVERTIBLE PREFERRED STOCK (THE "SERIES A
PREFERRED"). THE NOTES AND THE SHARES OF SERIES A PREFERRED WILL BE
AUTOMATICALLY SEPARATED UPON THE EARLIEST TO OCCUR OF (i) SIX MONTHS AFTER APRIL
8, 1998, (ii) COMMENCEMENT OF AN EXCHANGE OFFER WITH RESPECT TO THE NOTES, (iii)
THE EFFECTIVENESS OF A SHELF REGISTRATION STATEMENT WITH RESPECT TO RESALE OF
THE NOTES OR (iv) COMMENCEMENT OF AN OFFER TO REPURCHASE THE NOTES PURSUANT TO
THE INDENTURE. THE NOTES EVIDENCED BY THIS CERTIFICATE MAY NOT BE TRANSFERRED OR
EXCHANGED SEPARATELY FROM, BUT MAY BE TRANSFERRED OR EXCHANGED ONLY TOGETHER
WITH, THE SERIES A PREFERRED.
THIS NOTE WAS ISSUED WITH ORIGINAL ISSUE DISCOUNT FOR U.S. FEDERAL INCOME TAX
PURPOSES. FOR INFORMATION REGARDING ISSUE PRICE, AMOUNT OF ORIGINAL ISSUE
DISCOUNT, ISSUE DATE AND YIELD TO MATURITY, THE HOLDER MAY CONTACT ALLAN L.
SHAW, CHIEF FINANCIAL OFFICER OF THE COMPANY, AT (212) 350-9220.
<PAGE>
C-3
VIATEL, INC.
12.50% Senior Discount Note Due 2008
[CUSIP][CINS][ISIN] _____
No. R-_______ $___________
Issue Date: April 8, 1998
VIATEL, INC., a Delaware corporation (the "Company", which term includes
any successor under the Indenture hereinafter referred to), for value received,
promises to pay to _____________________, or its registered assigns, the
principal sum of $__________ on April 15, 2008.
Interest Payment Dates: April 15 and October 15, commencing October
15, 2003.
Record Dates: April 1 and October 1.
Reference is hereby made to the further provisions of this Note set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Note to be signed
manually or by facsimile by its duly authorized officers.
Date: VIATEL, INC.
By
----------------------------
Name:
Title:
By
----------------------------
Name:
Title:
(Trustee's Certificate of Authentication)
This is one of the 12.50% Senior Discount Notes due 2008 described in the
within-mentioned Indenture.
Date: THE BANK OF NEW YORK, as Trustee
By
----------------------------------
Authorized Signatory
<PAGE>
C-5
[REVERSE SIDE OF NOTE]
VIATEL, INC.
12.50% Senior Discount Note due 2008
1. Principal and Interest.
The Company will pay the principal of this Note on April 15, 2008.
The Company promises to pay interest on the principal amount of this
Note on each Interest Payment Date, as set forth below, at the rate per annum
shown above.
Interest will be payable semiannually in cash (to the holders of
record of the Notes at the close of business on the April 1 or October 1
immediately preceding the Interest Payment Date) on each Interest Payment Date,
commencing October 15, 2003; provided that no interest shall accrue on the
principal amount of this Note prior to April 15, 2003 and no interest shall be
paid on this Note prior to October 15, 2003, except as provided in the next
paragraph.
If an exchange offer registered under the Securities Act is not
consummated, and a shelf registration statement under the Securities Act with
respect to resales of the Notes is not declared effective by the Commission, on
or before the date that is six months after the Closing Date in accordance with
the terms of the Registration Rights Agreement dated April 3, 1998 between the
Company and Morgan Stanley & Co. Incorporated, as the manager for itself and the
several initial purchasers named on Schedule I to the Purchase Agreement dated
April 3, 1998, annual interest (in addition to the accrual of original discount
during the period prior to October 15, 2003 and in addition to the interest
otherwise due on the Notes after such date) will accrue, at an annual rate of
0.5% per annum of the Accreted Value on the preceding Semi-Annual Accrual Date,
payable in cash semiannually, in arrears, on April 15 and October 15 of each
year, commencing April 15, 1999 until the consummation of a registered exchange
offer or the effectiveness of a shelf-registration statement with respect to
resale of this Note. The Holder of this Note is entitled to the benefits of such
Registration Rights Agreement.
From and after October 15, 2003, 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 April 15, 2003; provided that, if there is no existing default
in the payment of interest and this Note is authenticated between a Regular
Record Date referred to on the face hereof and the next succeeding Interest
Payment Date, interest shall accrue from such Interest Payment Date. Interest
will be computed on the basis of a 360-day year of twelve 30-day months.
<PAGE>
C-6
The Company shall pay interest on overdue principal and premium, if
any, and interest on overdue installments of interest, to the extent lawful, at
a rate per annum that is 12.50% per annum.
2. Method of Payment.
The Company will pay principal as provided above and interest
(except defaulted interest) on the principal amount of the Notes as provided
above on each April 15 and October 15 to the Persons who are Holders (as
reflected in the Note Register at the close of business on such April 1 and
October 1, immediately preceding the Interest Payment Date), in each case, even
if the Note is canceled on registration of transfer or registration of exchange
after such record date; provided that, with respect to the payment of principal,
the Company will not make payment to the Holder unless this Note is surrendered
to a Paying Agent.
The Company will pay principal, premium, if any, and as provided
above, interest in money of the United States that at the time of payment is
legal tender for payment of public and private debts. However, the Company may
pay principal, premium, if any, and interest by its check payable in such money.
It may mail an interest check to a Holder's registered address (as reflected in
the Note Register). If a payment date is a date other than a Business Day at a
place of payment, payment may be made at that place on the next succeeding day
that is a Business Day and no interest shall accrue for the intervening period.
3. Paying Agent and Registrar.
Initially, the Trustee will act as U.S. Paying Agent and Registrar.
The Company may change any Paying Agent or Registrar without notice. The
Company, any Subsidiary or any Affiliate of any of them may act as Paying Agent,
Registrar or co-Registrar.
4. Indenture; Issuance of Additional Notes.
This Note is one of a duly authorized issue of Notes of the Company
designated its 12.50% Senior Discount Notes due 2008, issued and to be issued
under an Indenture dated as of April 8, 1998 (the "Indenture"), between the
Company and The Bank of New York, as trustee (the "Trustee"). Capitalized terms
herein are used as defined in the Indenture unless otherwise indicated. 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. The Notes are subject to
all such terms, and Holders are referred to the Indenture and the Trust
Indenture Act for a statement of all such terms. To the extent permitted by
applicable law, in the event of any inconsistency between the terms of this Note
and the terms of the Indenture, the terms of the Indenture shall control.
<PAGE>
C-7
5. Redemption.
The Notes will be redeemable, at the Company's option, in whole or
in part, at any time and from time to time on or after April 15, 2003 and prior
to maturity, upon not less than 30 nor more than 60 days' prior notice mailed by
first-class mail to each Holders' last address as it appears in the Note
Register, at the following Redemption Prices (expressed in percentages of their
principal amount at maturity), plus accrued and unpaid interest, if any, to the
Redemption Date (subject to the right of Holders of record on the relevant
Regular Record Date that is on or prior to the Redemption Date to receive
interest due on an Interest Payment Date), if redeemed during the 12-month
period commencing on April 15, of the years set forth below:
Redemption
Year Price
---- ----------
2003 106.250%
2004 104.167
2005 102.083
2006 and thereafter 100.000
In addition, at any time or from time to time on or prior to April
15, 2001, the Company may, at its option, redeem up to 35% of the aggregate
principal amount at maturity of the Notes with the net proceeds of one or more
Public Equity Offerings, at a Redemption Price (expressed as a percentage of
Accreted Value on the Redemption Date) of 112.50%; provided; (i) that Notes
representing at least 65% of the principal amount at maturity of the Notes
originally issued remain outstanding after each such redemption and (ii) that
notice of each such redemption is mailed within 60 days of each such Public
Equity Offering.
6. Notice of Redemption.
Notice of any optional redemption will be mailed at least 30 days
but not more than 60 days before the Redemption Date to each Holder of Notes to
be redeemed at his last address as it appears in the Note Register. Notes in
original denominations larger than 1,000 of principal amount at maturity may be
redeemed in part. On and after the Redemption Date, interest ceases to accrue on
Notes or portions of Notes called for redemption, unless the Company defaults in
the payment of the Redemption Price.
7. Repurchase upon Change in Control.
Upon the occurrence of any Change of Control, each Holder shall have
the right to require the repurchase of its Notes by the Company in cash pursuant
to the offer described in the Indenture at a purchase price equal to 101% of the
Accreted Value thereof plus accrued and unpaid interest, if any, to the date of
purchase (the "Change of Control Payment").
<PAGE>
C-8
A notice of such Change of Control will be mailed within 30 days
after any Change of Control occurs to each Holder at his last address as it
appears in the Note Register. Notes in original denominations larger than $1,000
of principal amount at maturity may be sold to the Company in part. On and after
the date of the Change of Control Payment, interest ceases to accrue on Notes or
portions of Notes surrendered for purchase by the Company, unless the Company
defaults in the payment of the Change of Control Payment.
8. Registration Rights
Pursuant to the Registration Rights Agreement, the Company will be
obligated, within 180 days after the issue date of this Note, 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 Exchange Notes (as defined in the
Registration Rights Agreement) which have been registered under the Securities
Act, in like principal amount at maturity and having terms identical in all
material respects as the Initial Notes. The Holders of the Initial Notes shall
be entitled to receive certain additional interest payments in the event such
exchange offer is not consummated and upon certain other conditions, all
pursuant and in accordance with the terms of the Registration Rights Agreement.
9. Denominations; Transfer; Exchange.
The Notes are in registered form without coupons in denominations of
1,000 of principal amount at maturity and any integral multiples of $1,000 in
excess thereof. A Holder may register the transfer or exchange of Notes in
accordance with the Indenture. The Registrar may require a Holder, among other
things, to furnish appropriate endorsements and transfer documents and to pay
any taxes and fees required by law or permitted by the Indenture. The Registrar
need not register the transfer or exchange of any Notes selected for redemption.
Also, it need not register the transfer or exchange of any Notes for a period of
15 days before a selection of Notes to be redeemed is made.
10. Persons Deemed Owners.
A Holder shall be treated as the owner of a Note for all purposes.
11. Unclaimed Money.
If money for the payment of principal, premium, if any, or interest
remains unclaimed for two years, the Trustee and the Paying Agent will pay the
money back to the Company at its request. After that, Holders entitled to the
money must look to the Company for payment, unless an abandoned property law
designates another Person, and all liability of the Trustee and such Paying
Agent with respect to such money shall cease.
<PAGE>
C-9
12. Discharge Prior to Redemption or Maturity.
If the Company deposits with the Trustee money and/or U.S.
Government Obligations sufficient to pay the then outstanding principal of,
premium, if any, and accrued interest on the Notes to redemption (a) or
maturity, the Company will be discharged from the Indenture and the Notes,
except in certain circumstances for certain sections thereof, and (b) or to
Stated Maturity, the Company will be discharged from certain covenants set forth
in the Indenture.
13. Amendment; Supplement; Waiver.
Subject to certain exceptions, the Indenture or the Notes may be
amended or supplemented with the consent of the Holders of at least a majority
in principal amount at maturity of the Notes then outstanding, and any existing
default or compliance with any provision may be waived with the consent of the
Holders of at least a majority in principal amount at maturity of the Notes then
outstanding. Without notice to or the consent of any Holder, the parties thereto
may amend or supplement the Indenture or the Notes to, among other things, cure
any ambiguity, defect or inconsistency and make any change that does not
materially and adversely affect the rights of any Holder.
14. Restrictive Covenants.
The Indenture imposes certain limitations on the ability of the
Company and its Restricted Subsidiaries, among other things, to Incur
Indebtedness, make Restricted Payments, use the proceeds from Asset Sales,
engage in transactions with Affiliates or, with respect to the Company, merge,
consolidate or transfer substantially all of its assets. Within 90 days after
the end of the last fiscal quarter of each year, the Company must report to the
Trustee on compliance with the terms of the Indenture.
15. Successor Persons.
When a successor Person or other entity assumes all the obligations
of its predecessor under the Notes and the Indenture, the predecessor Person
will be released from those obligations.
16. Defaults and Remedies.
The following events constitute "Events of Default" under the
Indenture: (a) default in the payment of principal of (or premium, if any, on)
any Note when the same becomes due and payable at maturity, upon acceleration,
redemption or otherwise; (b) default in the payment of interest on any Note when
the same becomes due and payable, and such default
<PAGE>
C-10
continues for a period of 30 days; (c) default in the performance or breach of
the provisions of the Indenture applicable to mergers, consolidations and
transfers of all or substantially all of the assets of the Company or the
failure to make or consummate an Offer to Purchase in accordance with Section
4.11 of the Indenture or Section 4.12 of the Indenture; (d) the Company defaults
in the performance of or breaches any other covenant or agreement of the Company
in the Indenture or under the Notes (other than a default specified in clause
(a), (b) or (c) of Section 6.01 of the Indenture) 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 or principal
amount at maturity of Notes; (e) there occurs with respect to any issue or
issues of Indebtedness of the Company or any Significant Subsidiary having an
outstanding principal amount of $10 million or more in the aggregate for all
such issues of all such Persons, whether such Indebtedness now exists or shall
hereafter be created, (I) an event of default that has caused the holder thereof
to declare such Indebtedness to be due and payable prior to its Stated Maturity
and such Indebtedness has not been discharged in full or such acceleration has
not been rescinded or annulled within 30 days of such acceleration and/or (II)
the failure to make a principal payment at the final (but not any interim) fixed
maturity and such defaulted payment shall not have been made, waived or extended
within 30 days of such payment default; (f) any final judgment or order (not
covered by insurance) for the payment of money in excess of $10 million in the
aggregate for all such final judgments or orders against all such Persons
(treating any deductibles, self-insurance or retention as not so covered) shall
be rendered against the Company or any Significant Subsidiary and shall not be
paid or discharged, and there shall be any period of 60 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 or discharged
against all such Persons to exceed $10 million during which a stay of
enforcement of such final judgment or order, by reason of a pending appeal or
otherwise, shall not be in effect; (g) a court having jurisdiction in the
premises enters a decree or order for (A) relief in respect of the Company or
any Significant Subsidiary 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 Significant Subsidiary or
for all or substantially all of the property and assets of the Company or any
Significant Subsidiary or (C) the winding up or liquidation of the affairs of
the Company or any Significant Subsidiary and, in each case, such decree or
order shall remain unstayed and in effect for a period of 60 consecutive days;
or (h) the Company or any Significant Subsidiary (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 Significant Subsidiary or
for all or substantially all of the property and assets of the Company or any
Significant Subsidiary or (C) effects any general assignment for the benefit of
creditors.
<PAGE>
C-11
If an Event of Default (other than an Event of Default specified in
clause (g) or (h) above that occurs with respect to the Company) occurs and is
continuing under the Indenture, the Trustee or the Holders of at least 25% in
aggregate principal amount at maturity of the Notes, then outstanding, by
written notice to the Company (and to the Trustee if such notice is given by the
Holders) , may, and the Trustee at the request of such Holders shall, declare
the Accreted Value of, premium, if any, and accrued interest on the Notes to be
immediately due and payable.
If an Event of Default, as defined in the Indenture, occurs and is
continuing, the Trustee or the Holders of at least 25% in aggregate principal
amount at maturity of the Notes then outstanding may declare all the Notes to be
due and payable. If a bankruptcy or insolvency default with respect to the
Company or any Restricted Subsidiary occurs and is continuing, the Notes
automatically become due and payable. Holders may not enforce the Indenture or
the Notes except as provided in the Indenture. The Trustee may require indemnity
satisfactory to it before it enforces the Indenture or the Notes. Subject to
certain limitations, Holders of at least a majority in principal amount at
maturity of the Notes then outstanding may direct the Trustee in its exercise of
any trust or power.
17. Trustee Dealings with Company.
The Trustee under the Indenture, in its individual or any other
capacity, may make loans to, accept deposits from and perform services for the
Company or its Affiliates and may otherwise deal with the Company or its
Affiliates as if it were not the Trustee.
18. No Recourse Against Others.
No incorporator or any past, present or future partner, stockholder,
other equity holder, officer, director, employee or controlling person as such,
of the Company or of any successor Person 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 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.
19. Authentication.
This Note shall not be valid until the Trustee or authenticating
agent signs the certificate of authentication on the other side of this Note.
20. Abbreviations.
Customary abbreviations may be used in the name of a Holder or an
assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the
entireties), JT TEN
<PAGE>
C-12
(= joint tenants with right of survivorship and not as tenants in common), CUST
(= Custodian) and U/G/M/A (= Uniform Gifts to Minors Act).
21. CUSIP Numbers.
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures, the Issuer has caused CUSIP numbers to be
printed on the Notes and the Trustee may use CUSIP numbers in notices of
redemption as a convenience to Holders. No representation is made as to the
accuracy of such numbers either as printed on the Notes or as contained in any
notice of redemption.
This Note shall be governed by the laws of the State of New York.
The Company will furnish to any Holder upon written request and
without charge a copy of the Indenture. Requests may be made to Viatel, Inc.,
800 Third Avenue, New York, New York, 10022, Attention: Sheldon M. Goldman.
<PAGE>
C-13
[FORM OF TRANSFER NOTICE]
FOR VALUE RECEIVED the undersigned registered holder hereby sell(s),
assign(s) and transfer(s) unto
Insert Taxpayer Identification No.
______________________________________________________________________________
Please print or typewrite name and address including zip code of assignee
_______________________________________________________________________________
the within Note and all rights thereunder, hereby irrevocably constituting and
appointing ________________________________________ attorney to transfer said
Note on the books of the Company with full power of substitution in the
premises.
[THE FOLLOWING PROVISION TO BE INCLUDED
ON ALL NOTES OTHER THAN EXCHANGE NOTES,
UNLEGENDED REGULATION S GLOBAL AND
UNLEGENDED REGULATION S CERTIFICATED NOTES]
In connection with any transfer of this Note occurring prior to the date
which is the earlier of (i) the date of an effective Registration or (ii) the
end of the period referred to in Rule 144(k) under the Securities Act, the
undersigned confirms that without utilizing any general solicitation or general
advertising that:
[Check One]
|_| (a) this Note is being transferred in compliance with the exemption from
registration under the Securities Act of 1933, as amended, provided by
Rule 144A thereunder.
or
|_| (b) this Note is being transferred other than in accordance with (a)
above and documents are being furnished which comply with the conditions
of transfer set forth in this Note and the Indenture.
If none of the foregoing boxes is checked, the Trustee or other Registrar shall
not be obligated to register this Note in the name of any Person other than the
Holder hereof unless and until the conditions to any such transfer of
registration set forth herein and in Section 2.08 of the Indenture shall have
been satisfied.
<PAGE>
C-14
Date:
---------------- -----------------------------------------
NOTICE: The signature to this assignment
must correspond with the name as written
upon the face of the within-mentioned
instrument in every particular, without
alteration or any change whatsoever.
TO BE COMPLETED BY PURCHASER IF (a) ABOVE IS CHECKED.
The undersigned represents and warrants that it is purchasing this Note
for its own account or an account with respect to which it exercises sole
investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act of
1933, as amended, and is aware that the sale to it is being made in reliance on
Rule 144A and acknowledges that it has received such information regarding the
Company as the undersigned has requested pursuant to Rule 144A or has determined
not to request such information and that it is aware that the transferor is
relying upon the undersigned's foregoing representations in order to claim the
exemption from registration provided by Rule 144A.
Dated:
------------ -----------------------------------------------
NOTICE: To be executed by an executive officer
<PAGE>
C-15
OPTION OF HOLDER TO ELECT PURCHASE
If you wish to have this Note purchased by the Company pursuant to
Section 4.11 or Section 4.12 of the Indenture, check the Box: |_|
If you wish to have a portion of this Note purchased by the Company
pursuant to Section 4.11 or Section 4.12 of the Indenture, state the amount (in
principal amount at maturity): $____________
Date:
---------
Your Signature: -------------------------------------------------------------
(Sign exactly as your name appears on the other side of
this Note)
Signature Guarantee:
------------------------------------
<PAGE>
EXHIBIT D
Form of Certificate
The Bank of New York __________ __, 19__
101 Barclay Street, Floor 21 West
New York, NY 10286
Attention: Corporate Trust Administration
Re: Viatel, Inc. (the "Company")
12.50% Senior Discount Dollar Notes
due 2008 (the "Notes")
Ladies and Gentlemen:
This letter relates to $_________ principal amount at maturity of
Notes represented by a Note (the "Legended Note") which bears a legend outlining
restrictions upon transfer of such Legended Note. Pursuant to Section 2.02 of
the Indenture (the "Indenture") dated as of April 8, 1998 relating to the Notes,
we hereby certify that we are (or we will hold such Notes on behalf of) a person
outside the United States to whom the Notes could be transferred in accordance
with Rule 904 of Regulation S promulgated under the U.S. Securities Act of 1933,
as amended. Accordingly, you are hereby requested to exchange the legended
certificate for an unlegended certificate representing an identical principal
amount at maturity of Notes, all in the manner provided for in the Indenture.
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby. Terms used in this certificate have the
meanings set forth in Regulation S.
Very truly yours,
[Name of Holder]
By:
-----------------------------
Authorized Signature
<PAGE>
EXHIBIT E
Form of Certificate to Be Delivered
in Connection with Transfers
Pursuant to Regulation S
The Bank of New York __________ __, 19__
101 Barclay Street, Floor 21 West
New York, NY 10286
Attention: Corporate Trust Administration
Re: Viatel, Inc. (the "Company")
12.50% Senior Discount Dollar Notes
due 2008 (the "Notes")
Ladies and Gentlemen:
In connection with our proposed sale of $_________ aggregate
principal amount at maturity of the Notes, we confirm that such sale has been
effected pursuant to and in accordance with Regulation S under the Securities
Act of 1933, as amended, and, accordingly, we represent that:
(1) the offer of the Notes was not made to a person in the United
States;
(2) 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;
(3) no directed selling efforts have been made by us in the United
States in contravention of the requirements of Rule 903(b) or Rule 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 U.S. Securities Act of 1933.
<PAGE>
E-2
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby. Terms used in this certificate have the
meanings set forth in Regulation S.
Very truly yours,
[Name of Transferor]
By:
-----------------------------
Authorized Signature
<PAGE>
EXHIBIT F
Form of Certificate to Be
Delivered in Connection with
Transfers to Non-QIB Accredited Investors
The Bank of New York __________ __, 19__
101 Barclay Street, Floor 21 West
New York, NY 10286
Attention: Corporate Trust Administration
Re: Viatel, Inc. (the "Company")
12.50% Senior Discount Dollar Notes
due 2008 (the "Notes")
Dear Sirs:
In connection with our proposed purchase of $ ___________ aggregate
principal amount of the Notes, we confirm that:
1. We understand that any subsequent transfer of the Notes is
subject to certain restrictions and conditions set forth in the Indenture
dated as of April 8, 1998 relating to the Notes (the "Indenture") and the
undersigned agrees to be bound by, and not to resell, pledge or otherwise
transfer the Notes except in compliance with, such restrictions and
conditions and the Securities Act of 1933, as amended (the "Securities
Act").
2. We understand that the offer and sale of the Notes have not been
registered under the Securities Act, and that the Notes may not be offered
or sold except as permitted in the following sentence. We agree, on our
own behalf and on behalf of any accounts for which we are acting as
hereinafter stated, that if we should sell any Notes, we will do so only
(A) to the Company or any subsidiary thereof, (B) in accordance with Rule
144A under the Securities Act to a "qualified institutional buyer" (as
defined therein), (C) to an institutional "accredited investor" (as
defined below) that, prior to such transfer, furnishes (or has furnished
on its behalf by a U.S. broker-dealer) to you and to the Company a signed
letter substantially in the form of this letter, (D) outside the United
States in accordance with Rule 904 of Regulation S under the Securities
Act, (E) pursuant to the provisions of Rule 144 under the Securities Act,
or (F) pursuant to an effective registration statement under the
Securities Act, and we further agree to provide to any person purchasing
any of
<PAGE>
F-2
the Notes from us a notice advising such purchaser that resales of the
Notes are restricted as stated herein.
3. We understand that, on any proposed resale of any Notes, we will
be required to furnish to you and the Company such certifications, legal
opinions and other information as you and the Company may reasonably
require to confirm that the proposed sale complies with the foregoing
restrictions. We further understand that the Notes purchased by us will
bear a legend to the foregoing effect.
4. We are an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and
have such knowledge and experience in financial and business matters as to
be capable of evaluating the merits and risks of our investment in the
Notes, and we and any accounts for which we are acting are each able to
bear the economic risk of our or its investment.
5. We are acquiring the Notes purchased by us for our own account or
for one or more accounts (each of which is an institutional "accredited
investor") as to each of which we exercise sole investment discretion.
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby.
Very truly yours,
[Name of Transferor]
By:
-----------------------------
Authorized Signature
<PAGE>
Exhibit 4.2
================================================================================
VIATEL, INC.,
as Issuer
and
THE BANK OF NEW YORK,
as Trustee
----------------
Senior Dollar Indenture
Dated as of April 8, 1998
----------------
11.25% Senior Notes due 2008
================================================================================
<PAGE>
CROSS-REFERENCE TABLE
TIA Sections Indenture Sections
- ------------ ------------------
ss. 310(a)(1)............................................... 7.10
(a)(5)............................................... 7.10
(b).................................................. 7.03; 7.08
ss. 311 .................................................... 7.03
ss. 313(a).................................................. 7.06
(c).................................................. 7.05; 7.06
ss. 314(a).................................................. 4.17
(b).................................................. 10.01
(c)(1)............................................... 1.01
(d).................................................. 10.01
(e).................................................. 1.01
ss. 315(a).................................................. 7.02
(b).................................................. 7.05; 10.02
ss. 316(a).................................................. 6.06
Note: The Cross-Reference Table shall not for any purpose be deemed to be a part
of the Indenture.
<PAGE>
TABLE OF CONTENTS
Page
RECITALS OF THE COMPANY.....................................................1
ARTICLE ONE
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. Definitions..................................................3
SECTION 1.02. Incorporation by Reference of Trust Indenture Act...........26
SECTION 1.03. Rules of Construction.......................................26
ARTICLE TWO
THE NOTES
SECTION 2.01. Form and Dating.............................................27
SECTION 2.02. Restrictive Legends.........................................29
SECTION 2.03. Execution, Authentication and Denominations.................31
SECTION 2.04. Registrar and Paying Agent..................................32
SECTION 2.05. Paying Agent to Hold Money in Trust.........................33
SECTION 2.06. Transfer and Exchange.......................................33
SECTION 2.07. Book-Entry Provisions for Global Notes......................34
SECTION 2.08. Special Transfer Provisions.................................36
SECTION 2.09. Replacement Notes...........................................39
SECTION 2.10. Outstanding Notes...........................................40
SECTION 2.11. Temporary Notes.............................................40
SECTION 2.12. Cancellation................................................41
SECTION 2.13. CUSIP Numbers...............................................41
SECTION 2.14. Defaulted Interest..........................................41
SECTION 2.15. Issuance of Additional Notes................................41
ARTICLE THREE
REDEMPTION
SECTION 3.01. Right of Redemption.........................................42
SECTION 3.02. Notices to Trustee..........................................42
SECTION 3.03. Selection of Notes to Be Redeemed...........................42
SECTION 3.04. Notice of Redemption........................................43
SECTION 3.05. Effect of Notice of Redemption..............................44
SECTION 3.06. Deposit of Redemption Price.................................44
SECTION 3.07. Payment of Notes Called for Redemption......................44
Note: The Table of Contents shall not for any purposes be deemed to be a part of
the Indenture.
<PAGE>
ii
Page
SECTION 3.08. Notes Redeemed in Part.......................................45
ARTICLE FOUR
COVENANTS
SECTION 4.01. Payment of Notes.............................................45
SECTION 4.02. Maintenance of Office or Agency..............................45
SECTION 4.03. Limitation on Indebtedness...................................46
SECTION 4.04. Limitation on Restricted Payments............................49
SECTION 4.05. Limitation on Dividend and Other Payment Restrictions
Affecting Restricted Subsidiaries..........................53
SECTION 4.06. Limitation on the Issuance and Sale of Capital Stock of
Restricted Subsidiaries....................................55
SECTION 4.07. Limitation on Issuances of Guarantees by Restricted
Subsidiaries...............................................55
SECTION 4.08. Limitation on Transactions with Shareholders and Affiliates..56
SECTION 4.09. Limitation on Liens..........................................57
SECTION 4.10. Limitation on Sale-Leaseback Transactions....................58
SECTION 4.11. Limitation on Asset Sales....................................58
SECTION 4.12. Repurchase of Notes upon a Change of Control.................59
SECTION 4.13. Existence....................................................60
SECTION 4.14. Payment of Taxes and Other Claims............................60
SECTION 4.15. Maintenance of Properties and Insurance......................60
SECTION 4.16. Notice of Defaults...........................................61
SECTION 4.17. Compliance Certificates......................................61
SECTION 4.18. Commission Reports and Reports to Holders....................61
SECTION 4.19. Waiver of Stay, Extension or Usury Laws......................62
ARTICLE FIVE
SUCCESSOR CORPORATION
SECTION 5.01. When Company May Merge, Etc..................................62
SECTION 5.02. Successor Substituted........................................63
ARTICLE SIX
DEFAULT AND REMEDIES
SECTION 6.01. Events of Default............................................64
SECTION 6.02. Acceleration.................................................65
SECTION 6.03. Other Remedies...............................................66
SECTION 6.04. Waiver of Past Defaults......................................66
SECTION 6.05. Control by Majority..........................................66
SECTION 6.06. Limitation on Suits..........................................67
SECTION 6.07. Rights of Holders to Receive Payment.........................67
<PAGE>
iii
Page
SECTION 6.08. Collection Suit by Trustee...................................67
SECTION 6.09. Trustee May File Proofs of Claim.............................68
SECTION 6.10. Priorities...................................................68
SECTION 6.11. Undertaking for Costs........................................69
SECTION 6.12. Restoration of Rights and Remedies...........................69
SECTION 6.13. Rights and Remedies Cumulative...............................69
SECTION 6.14. Delay or Omission Not Waiver.................................69
ARTICLE SEVEN
TRUSTEE
SECTION 7.01. General......................................................70
SECTION 7.02. Certain Rights of Trustee....................................70
SECTION 7.03. Individual Rights of Trustee.................................71
SECTION 7.04. Trustee's Disclaimer.........................................72
SECTION 7.05. Notice of Default............................................72
SECTION 7.06. Reports by Trustee to Holders................................72
SECTION 7.07. Compensation and Indemnity...................................72
SECTION 7.08. Replacement of Trustee.......................................73
SECTION 7.09. Successor Trustee by Merger, Etc.............................74
SECTION 7.10. Eligibility..................................................74
SECTION 7.11. Money Held in Trust..........................................74
SECTION 7.12. Withholding Taxes............................................74
ARTICLE EIGHT
DISCHARGE OF INDENTURE
SECTION 8.01. Termination of the Company's Obligations......................75
SECTION 8.02. Defeasance and Discharge of Indenture........................76
SECTION 8.03. Defeasance of Certain Obligations............................77
SECTION 8.04. Application of Trust Money...................................78
SECTION 8.05. Repayment to Company.........................................78
SECTION 8.06. Reinstatement................................................79
SECTION 8.07. Defeasance and Certain Other Events of Default...............79
ARTICLE NINE
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 9.01. Without Consent of Holders...................................80
SECTION 9.02. With Consent of Holders......................................80
SECTION 9.03. Revocation and Effect of Consent.............................81
SECTION 9.04. Notation on or Exchange of Notes.............................82
SECTION 9.05. Trustee to Sign Amendments, Etc..............................82
<PAGE>
iv
Page
SECTION 9.06. Conformity with Trust Indenture Act............................82
ARTICLE TEN
SECURITY
SECTION 10.01. Security......................................................83
ARTICLE ELEVEN
MISCELLANEOUS
SECTION 11.01. Trust Indenture Act of 1939...................................84
SECTION 11.02. Notices.......................................................84
SECTION 11.03. Certificate and Opinion As to Conditions Precedent............86
SECTION 11.04. Statements Required in Certificate or Opinion.................86
SECTION 11.05. Rules by Trustee, Paying Agent or Registrar...................87
SECTION 11.06. Payment Date Other Than a Business Day........................87
SECTION 11.07. Governing Law; Submission to Jurisdiction; Agent for Service..87
SECTION 11.08. No Adverse Interpretation of Other Agreements.................87
SECTION 11.09. No Recourse Against Others....................................88
SECTION 11.10. Successors....................................................88
SECTION 11.11. Duplicate Originals...........................................88
SECTION 11.12. Separability..................................................88
SECTION 11.13. Table of Contents, Headings, Etc..............................88
EXHIBIT A Form of Restricted Global Note...............................A-1
EXHIBIT B Form of Regulation S Global Note.............................B-1
EXHIBIT C Form of U.S. Certificated Note...............................C-1
EXHIBIT D Form of Certificate..........................................D-1
EXHIBIT E Form of Certificate to Be Delivered in Connection with
Transfers Pursuant to Regulation S.........................E-1
EXHIBIT F Form of Certificate to Be Delivered in Connection with
Transfers to Non-QIB Accredited Investors..................F-1
<PAGE>
INDENTURE, dated as of April 8, 1998, between VIATEL, INC., a
Delaware corporation, as issuer (the "Company"), and THE BANK OF NEW YORK, as
trustee (the "Trustee").
RECITALS OF THE COMPANY
The Company has duly authorized the execution and delivery of this
Indenture to provide for the issuance from time to time of 11.25% Senior Dollar
Notes due 2008 (the "Notes") issuable as provided in this Indenture. Pursuant to
the terms of a Purchase Agreement dated as of April 3, 1998 (the "Purchase
Agreement") between the Company and Morgan Stanley & Co. Incorporated, as the
manager for itself and the several initial purchasers named on Schedule I
thereto (the "Manager"), the Company has agreed to issue and sell 500,000 Senior
Discount Dollar Units (collectively, the "Senior Discount Dollar Units"),
400,000 Senior Dollar Units (collectively, the "Senior Dollar Units"), 226,000
Senior Discount DM Units (collectively, the "Senior Discount DM Units") and
178,000 Senior DM Units (collectively, the "Senior DM Units"; and together with
the Senior Discount Dollar Units, the Senior Dollar Units and the Senior
Discount DM Units, the "Units"). Each Senior Discount Dollar Unit will consist
of (i) one 12.50% Senior Discount Note due 2008 of the Company with a principal
amount of maturity of $1,000 (collectively, the "Senior Discount Dollar Notes")
to be issued pursuant to the provisions of an Indenture (the "Senior Discount
Dollar Indenture") dated as of the Closing Date (as defined below) between the
Company and the Trustee and (ii) .490 shares of Series A Redeemable Convertible
Preferred Stock of the Company (collectively, the "Series A Preferred"). Each
Senior Dollar Unit will consist of (i) one 11.25% Senior Note due 2008 of the
Company with a principal amount of $1,000 (collectively, the "Senior Dollar
Notes") to be issued pursuant to the provisions of this Indenture (the "Senior
Dollar Indenture" or "this Indenture") and (ii) .483 shares of Series A
Preferred. Each Senior Discount DM Unit will consist of (i) one 12.40% Senior
Discount Note due 2008 of the Company with a principal amount at maturity of DM
1,000 (collectively, the "Senior Discount DM Notes") to be issued pursuant to
the provisions of an Indenture (the "Senior Discount DM Indenture") dated as of
the Closing Date between the Company, the Trustee and Deutsche Bank,
Aktiengesellschaft, as German paying agent and co-registrar (the "German Paying
Agent") and (ii) 2.77 DM denominated 10% Subordinated Convertible Debentures of
the Company Due 2011 (the "Subordinated Convertible Debentures") to be issued
pursuant to the provisions of an Indenture (the "Subordinated Indenture") to be
dated as of the Closing Date between the Company, the Trustee and the German
Paying Agent. Each Senior DM Unit will consist of (i) one 11.15% Senior Note due
2008 of the Company with a principal amount of DM 1,000 (collectively, the
"Senior DM Notes"; and together with the Senior Discount Dollar Notes, the
Senior Dollar Notes and the Senior Discount Notes, the
<PAGE>
2
"1998 Notes") to be issued pursuant to the provisions of an Indenture (the
"Senior DM Indenture") and together with the Senior Discount Dollar Indenture,
the Senior Dollar Indenture and the Senior Discount DM Indenture, the
"Indentures") dated as of the Closing Date between the Company, the Trustee and
the German Paying Agent; dated as of the Closing Date between the Company, the
Trustee and the German Paying Agent and (ii) 2.69 DM denominated 10%
Subordinated Convertible Debentures. The offering of the Senior Discount DM
Units and the Senior DM Units outside the United States is lead managed by
Morgan Stanley Bank AG. The global offering of the Senior Discount Dollar Units
and the Senior Dollar Units is lead managed by Morgan Stanley & Co.
Incorporated. All references herein to the "Manager" include Morgan Stanley &
Co. Incorporated and Morgan Stanley Bank AG.
All things necessary to make this Indenture a valid agreement of the
Company, in accordance with its terms, have been done, and the Company has done
all things necessary to make the Notes, when executed by the Company and
authenticated and delivered by the Trustee hereunder and duly issued by the
Company, the valid obligations of the Company as hereinafter provided.
The Notes and the Subordinated Convertible Debentures will be
automatically separated upon the date (the "Separation Date") which is the
earliest to occur of (i) the date that is six months after the Closing Date (as
defined below), (ii) the commencement of an exchange offer with respect to the
Notes undertaken pursuant to the Registration Rights Agreement (as defined
below), (iii) the effective date of a shelf registration with respect to resales
of the Notes and (iv) the commencement of an offer to repurchase the Notes
pursuant to the terms of this Indenture.
This Indenture will, upon the effectiveness of the registration
statement provided for under the Registration Rights Agreement, be subject to,
and governed by, the provisions of the Trust Indenture Act of 1939, as amended,
that are required to be a part of and to govern indentures qualified under the
Trust Indenture Act of 1939, as amended.
For and in consideration of the premises and the purchase of the
Notes by the Holders thereof, it is mutually covenanted and agreed, for the
equal and proportionate benefit of all Holders, as follows.
<PAGE>
3
ARTICLE ONE
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. Definitions.
"Acquired Indebtedness" means Indebtedness of a Person existing at
the time such Person becomes a 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 or such Asset Acquisition.
"Adjusted Consolidated Net Income" means, for any period, the
aggregate net income (or loss) of the Company and its Restricted Subsidiaries
for such period determined in conformity with GAAP; provided that the following
items shall be excluded in computing Adjusted Consolidated Net Income (without
duplication): (i) the net income (or loss) of any Person that is not a
Restricted Subsidiary, except (x) with respect to net income, to the extent of
the amount of dividends or other distributions actually paid to the Company or
any of its Restricted Subsidiaries by such Person during such period and (y)
with respect to net losses, to the extent of the amount of Investments made by
the Company or any Restricted Subsidiary in such Person during such period; (ii)
solely for the purposes of calculating the amount of Restricted Payments that
may be made pursuant to clause (C) of the first paragraph of Section 4.04 hereof
(and in such case, except to the extent includable pursuant to clause (i)
above), the net income (or loss) of any Person accrued prior to the date it
becomes a Restricted Subsidiary or is merged into or consolidated with the
Company or any of its Restricted Subsidiaries or all or substantially all of the
property and assets of such Person are acquired by the Company or any of its
Restricted Subsidiaries; (iii) the net income of any Restricted Subsidiary to
the extent that the declaration or payment of dividends or similar distributions
by such Restricted Subsidiary of such net income is not at the time permitted by
the operation of the terms of its charter or any agreement, instrument,
judgment, decree, order, statute, rule or governmental regulation applicable to
such Restricted Subsidiary; (iv) any gains or losses (on an after-tax basis)
attributable to Asset Sales and sales of indefeasible rights-of-use or dark
fibers; (v) except for purposes of calculating the amount of Restricted Payments
that may be made pursuant to clause (C) of the first paragraph of Section 4.04
hereof, any amount paid or accrued as dividends on Preferred Stock of the
Company or any Restricted Subsidiary owned by Persons other than the Company and
any of its Restricted Subsidiaries; (vi) all extraordinary gains and
extraordinary losses; and (vii) any compensation expense paid or payable solely
with Capital Stock (other than Disqualified Stock) of the Company or any
options, warrants or other rights to acquire Capital Stock (other than
Disqualified Stock) of the Company.
"Adjusted Consolidated Net Tangible Assets" means the total amount
of assets of the Company and its Restricted Subsidiaries (less applicable
depreciation, amortization and
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4
other valuation reserves), except to the extent resulting from write-ups of
capital assets (excluding write-ups in connection with accounting for
acquisitions in conformity with GAAP), after deducting therefrom (i) all current
liabilities of the Company and its Restricted Subsidiaries (excluding
intercompany items) and (ii) all goodwill, trade names, trademarks, patents,
unamortized debt discount and expense and other like intangibles, all as set
forth on the most recent quarterly or annual consolidated balance sheet of the
Company and its Restricted Subsidiaries, prepared in conformity with GAAP and
filed with the Commission or provided to the Trustee pursuant to Section 4.18
hereof.
"Affiliate" means, 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, means 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" has the meaning provided in Section 2.07(a) hereof.
"Asset Acquisition" means (i) an investment by the Company or any of
its Restricted Subsidiaries in any other Person pursuant to which such Person
shall become a Restricted Subsidiary or shall be merged into or consolidated
with the Company or any of its Restricted Subsidiaries; provided that such
Person's primary business is related, ancillary or complementary to the
businesses of the Company or any of its Restricted Subsidiaries on the date of
such investment 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 a
division or line of business of such Person; provided that the property and
assets acquired are related, ancillary or complementary to the businesses of the
Company or any of its Restricted Subsidiaries on the date of such acquisition.
"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 (i) all or substantially all of the Capital
Stock of any Restricted Subsidiary or (ii) all or substantially all of the
assets that constitute a division or line of business of the Company or any of
its Restricted Subsidiaries.
<PAGE>
5
"Asset Sale" means any sale, transfer or other disposition
(including by way of merger, consolidation or sale-leaseback transaction) 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 Capital Stock of any Restricted
Subsidiary, (ii) all or substantially all of the property and assets of a
division or line of business of the Company or any of its Restricted
Subsidiaries or (iii) any other property and assets (other than the Capital
Stock or other Investment in an Unrestricted Subsidiary) of the Company or any
of its Restricted Subsidiaries outside the ordinary course of business of the
Company or such Restricted Subsidiary and, in each case, that is not governed by
Article Five hereof; provided that "Asset Sale" shall not include (a) sales or
other dispositions of inventory, receivables and other current assets, (b)
sales, transfers or other dispositions of assets constituting a Restricted
Payment permitted to be made under Section 4.04 hereof, (c) sales, transfers or
other dispositions of assets with a fair market value (as certified in an
Officers' Certificate) not in excess of $1 million in any transaction or series
of related transactions, (d) sales or other dispositions of assets for
consideration at least equal to the fair market value of the assets sold or
disposed of, to the extent that the consideration received would constitute
property or assets of the kind described in clause (B) of Section 4.11 hereof,
(e) any liquidation of Temporary Cash Investments, (f) a transfer, directly or
indirectly, of receivables or other payment rights arising from a transfer of
indefeasible rights of use or dark fiber, which transfer of receivables or
rights is to a special purpose entity created for the purpose of issuing
securities to be paid or redeemed from, or beneficial interests in, the cash or
revenues generated from the assets transferred; provided that the consideration
received by the Company is at least equal to the fair market value of the asset
transferred and the proceeds are used by the Company (A) to repay unsubordinated
Indebtedness of the Company owed to a Person other than the Company or a
Restricted Subsidiary, (B) to invest in the manner described in clause (i)(B) of
Section 4.11 hereof covenant or (C) for working capital purposes or (g) other
transfers of indefeasible rights of use or dark fiber.
"Average Life" means, at any date of determination with respect to
any debt security, the quotient obtained by dividing (i) the sum of the products
of (a) the number of years from such date of determination to the dates of each
successive scheduled principal payment of such debt security and (b) the amount
of such principal payment by (ii) the sum of all such principal payments.
"Board of Directors" means the Board of Directors of the Company as
required by the context or any committee of such Board of Directors duly
authorized to act under this Indenture.
"Board Resolution" means a copy of a resolution, certified by the
Secretary or Assistant Secretary of the Company as required by the context to
have been duly adopted by
<PAGE>
6
the Board of Directors and to be in full force and effect on the date of such
certification, and delivered to the Trustee.
"Business Day" means any day except a Saturday, Sunday or other day
on which commercial banks in The City of New York, or in the city of the
Corporate Trust Office of the Trustee, are authorized or required by law to
close.
"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, whether outstanding on
the Closing Date or issued thereafter, including, without limitation, all Common
Stock and Preferred Stock.
"Capitalized Lease" means, as applied to any Person, any lease of
any property (whether real, personal or mixed) of which the discounted present
value of the rental obligations of such Person as lessee, in conformity with
GAAP, is required to be capitalized on the balance sheet of such Person.
"Capitalized Lease Obligations" means the discounted present value
of the rental obligations under a Capitalized Lease.
"Certificated Notes" has the meaning provided in Section 2.01
hereof.
"Change of Control" means such time as (i) a "person" or a "group"
(within the meaning of Sections 13(d) and 14(d)(2) of the Exchange Act) 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 Voting Stock of the
Company on a fully diluted basis; or (ii) individuals who on the Closing Date
constitute the Board of Directors (together with any new directors whose
election by the Board of Directors or whose nomination to the Board of Directors
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 in office who either
were members of the Board of Directors on the Closing Date or whose election or
nomination for election was previously so approved) cease for any reason to
constitute a majority of the members of the Board of Directors then in office.
"Closing Date" means the date on which the Notes are originally
issued under this Indenture.
"Commission" means the Securities and Exchange Commission, as from
time to time constituted, created under the Exchange Act or, if at any time
after the execution of this instrument such Commission is not existing and
performing the duties now assigned to it under the TIA, then the body performing
such duties at such time.
<PAGE>
7
"Common Stock" means, with respect to any Person, any and all
shares, interests, participations or other equivalents (however designated,
whether voting or non-voting) of such Person's common stock, whether now
outstanding or issued after the date of this Indenture, including, without
limitation, all series and classes of such common stock.
"Company" means the party named as such in the first paragraph of
this Indenture until a successor replaces it pursuant to the applicable
provisions of this Indenture and thereafter means the successor.
"Company Order" means a written request or order signed in the name
of the Company (i) by its Chairman of the Board, the Vice Chairman of the Board,
its President or a Vice President and (ii) by its Chief Financial Officer,
Treasurer, an Assistant Treasurer, its Secretary or an Assistant Secretary and
delivered to the Trustee; provided, however, that such written request or order
may be signed by any two of the officers or directors listed in clause (i) above
in lieu of being signed by one of such officers or directors listed in such
clause (i) and one of the officers listed in clause (ii) above.
"Consolidated EBITDA" means, for any period, Adjusted Consolidated
Net Income for such period plus, to the extent such amount was deducted in
calculating such Adjusted Consolidated Net Income, (i) Consolidated Interest
Expense, (ii) income taxes, (iii) depreciation expense, (iv) amortization
expense and (v) all other non-cash items reducing Adjusted Consolidated Net
Income (other than items that will require cash payments and for which an
accrual or reserve is, or is required by GAAP to be, made), less all non-cash
items increasing Adjusted Consolidated Net Income, all as determined on a
consolidated basis for the Company and its Restricted Subsidiaries in conformity
with GAAP; provided that, if any Restricted Subsidiary is not a Wholly Owned
Restricted Subsidiary, Consolidated EBITDA shall be reduced (to the extent not
otherwise reduced in accordance with GAAP) by an amount equal to (A) the amount
of the Adjusted Consolidated Net Income attributable to such Restricted
Subsidiary multiplied by (B) the percentage ownership interest in the income of
such Restricted Subsidiary not owned on the last day of such period by the
Company or any of its Restricted Subsidiaries.
"Consolidated Interest Expense" means, for any period, the aggregate
amount of interest in respect of Indebtedness (including, without limitation,
amortization of original issue discount on any Indebtedness and the interest
portion of any deferred payment obligation, calculated in accordance with the
effective interest method of accounting; 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
in respect of Indebtedness that is Guaranteed or secured by the Company or any
of its Restricted Subsidiaries), and all but the principal component of rentals
in respect of Capitalized Lease
<PAGE>
8
Obligations paid, accrued or scheduled to be paid or to be accrued by the
Company and its Restricted Subsidiaries during such period.
"Consolidated Leverage Ratio" means, on any Transaction Date, the
ratio of (i) the aggregate amount of Indebtedness of the Company and its
Restricted Subsidiaries on a consolidated basis outstanding on such Transaction
Date to (ii) four times Consolidated EBITDA for the then most recent fiscal
quarter for which financial statements of the Company have been filed with the
Commission or provided to the Trustee pursuant to Section 4.18 hereof; provided
that, in making the foregoing calculation, (A) pro forma effect shall be given
to the Incurrence or repayment of any Indebtedness to be Incurred or repaid on
the Transaction Date; (B) pro forma effect shall be given to Asset Dispositions
and Asset Acquisitions (including giving pro forma effect to the application of
proceeds of any Asset Disposition) that occur from the beginning of the then
most recent four fiscal quarters through the Transaction Date (the "Reference
Period"), as if they had occurred and such proceeds had been applied on the
first day of such Reference Period; and (C) pro forma effect shall be given to
asset dispositions and asset acquisitions (including giving pro forma effect to
the application of proceeds of any asset disposition) that have been made by any
Person that has become a Restricted Subsidiary or has been merged with or into
the Company or any Restricted Subsidiary during such Reference Period and that
would have constituted Asset Dispositions or Asset Acquisitions had such
transactions occurred when such Person was a Restricted Subsidiary as if such
asset dispositions or asset acquisitions were Asset Dispositions or Asset
Acquisitions that occurred on the first day of such Reference Period; provided
that to the extent that clause (B) or (C) of this sentence requires that pro
forma effect be given to an Asset Acquisition or Asset Disposition, such pro
forma calculation shall be based upon the four full fiscal quarters immediately
preceding the Transaction Date of the Person, or division or line of business of
the Person, that is acquired or disposed of for which financial information is
available.
"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 the Company and its Restricted Subsidiaries
(which shall be as of a date not more than 90 days prior to the date of such
computation, and which shall not take into account Unrestricted Subsidiaries),
including, without limitation, the respective amounts reported on such balance
sheet attributable to Preferred Stock, less any amounts attributable to
Disqualified 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 the Capital Stock of the Company or
any of its Restricted Subsidiaries, each item to be determined in conformity
with GAAP (excluding the effects of foreign currency exchange adjustments under
Financial Accounting Standards Board Statement of Financial Accounting Standards
No. 52).
<PAGE>
9
"Corporate Trust Office" means the office of the Trustee at which
the corporate trust business of the Trustee shall, at any particular time, be
principally administered, which office is, at the date of this Indenture,
located at 101 Barclay Street, Floor 21 West, New York NY 10286, Attention:
Corporate Trust Administration.
"Currency Agreement" means any foreign exchange contract, currency
swap agreement or other similar agreement or arrangement.
"Default" means any event that is, or after notice or passage of
time or both would be, an Event of Default.
"Depository" shall mean DTC, its nominees and their respective
successors.
"Disqualified Stock" means any class or series of Capital Stock of
any Person that by its terms or otherwise is (i) required to be redeemed prior
to the Stated Maturity of the Notes, (ii) redeemable at the option of the holder
of such class or series of Capital Stock at any time prior to the Stated
Maturity of the Notes or (iii) convertible into or exchangeable for Capital
Stock referred to in clause (i) or (ii) above or Indebtedness having a scheduled
maturity prior to the Stated Maturity of the Notes; provided that any Capital
Stock that would not constitute Disqualified Stock but for provisions thereof
giving holders thereof the right to require such Person to repurchase or redeem
such Capital Stock upon the occurrence of an "asset sale" or "change of control"
occurring prior to the Stated Maturity of the Notes shall not constitute
Disqualified Stock if the "asset sale" or "change of control" provisions
applicable to such Capital Stock are no more favorable to the holders of such
Capital Stock than the provisions contained in Sections 4.11 and 4.12 hereof,
and such Capital Stock, or the agreements or instruments governing the
redemption rights thereof, specifically provides that such Person will not
repurchase or redeem any such stock pursuant to such provision prior to the
Company's repurchase of such Notes as are required to be repurchased pursuant to
Sections 4.11 and 4.12 hereof.
"DTC" means The Depository Trust Company.
"Event of Default" has the meaning provided in Section 6.01 hereof.
"Excess Proceeds" has the meaning provided in Section 4.11 hereof.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Exchange Notes" means any notes of the Company containing terms
identical to the Notes (except that such Exchange Notes (i) shall be registered
under the Securities Act, (ii) will not provide for an increase in the rate of
interest (other than with respect to overdue
<PAGE>
10
amounts) and (iii) will not contain terms with respect to transfer restrictions)
that are issued and exchanged for the Notes pursuant to the Registration Rights
Agreement and this Indenture.
"Existing Stockholder Agreements" means the Stock Purchase
Agreement, dated as of September 30, 1993, between the Company and S-C V-Tel,
the Stock Purchase Agreement dated as of April 5, 1994, between the Company and
COMSAT, the S-C V-Tel Shareholders' Agreement and the COMSAT Shareholders'
Agreement, in each case, any amendments to such agreements.
"fair market value" means the price that would be paid in an
arm's-length transaction between an informed and willing seller under no
compulsion to sell and an informed and willing buyer under no compulsion to buy,
as determined in good faith by the Board of Directors, whose determination shall
be conclusive if evidenced by a Board Resolution; provided that for purposes of
clause (viii) of the second paragraph of Section 4.03 hereof, (x) the fair
market value of any security registered under the Exchange Act shall be the
average of the closing prices, regular way, of such security for the 20
consecutive trading days immediately preceding the sale of Capital Stock and (y)
in the event the aggregate fair market value of any other property (other than
cash or cash equivalents) received by the Company exceeds $30 million, the fair
market value of such property shall be determined by a nationally recognized
investment banking firm or a nationally recognized firm having expertise in the
specific area which is the subject of such determination and set forth in their
written opinion which shall be delivered to the Trustee.
"GAAP" means generally accepted accounting principles in the United
States of America as in effect as of the Closing Date, including, without
limitation, those set forth in the opinions and pronouncements of the Accounting
Principles Board of the American Institute of Certified Public Accountants and
statements and pronouncements of the Financial Accounting Standards Board or in
such other statements by such other entity as approved by a significant segment
of the accounting profession. All ratios and computations contained or referred
to in this Indenture shall be computed in conformity with GAAP applied on a
consistent basis, except that calculations made for purposes of determining
compliance with the terms of the covenants and with other provisions of this
Indenture shall be made without giving effect to (i) the amortization or
write-off of any expenses incurred in connection with the offering of the Units
consisting of the 1998 Notes and Preferred Stock of the Company and related
tender offer and consent solicitation, (ii) except as otherwise provided, the
amortization of any amounts required or permitted by Accounting Principles Board
Opinion Nos. 16 and 17.
"Global Notes" has the meaning provided in Section 2.01.
<PAGE>
11
"Government Securities" means, in connection with the U.S. Pledged
Securities, the direct obligations of, obligations fully guaranteed by, or
participations in pools consisting solely of obligations of, or of obligations
guaranteed by, the United States of America for the payment of which guarantee
or obligations the full faith and credit of the United States of America is
pledged and which 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 of any other Person
and, without limiting the generality of the foregoing, any obligation, direct or
indirect, contingent or otherwise, of such Person (i) to purchase or pay (or
advance or supply funds for the purchase or payment of) such Indebtedness of
such other Person (whether arising by virtue of partnership arrangements, or by
agreements to keep-well, to purchase assets, goods, securities or services
(unless such purchase arrangements are on arm's-length terms and are entered
into in the ordinary course of business), to take-or-pay, or to maintain
financial statement conditions or otherwise) or (ii) entered into for purposes
of assuring in any other manner the obligee of such Indebtedness of the payment
thereof or to protect such obligee against loss in respect thereof (in whole or
in part); 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.
"Guaranteed Indebtedness" has the meaning provided in Section 4.07
hereof.
"Holder" or "Noteholder" means the registered holder of any Note.
"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 Acquired Indebtedness; provided that
neither the accrual of interest nor the accretion of original issue discount
shall 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 for
borrowed money, (ii) all obligations of such Person evidenced by bonds,
debentures, notes or other similar instruments, (iii) all obligations of such
Person in respect of letters of credit or other similar instruments (including
reimbursement obligations with respect thereto, but excluding obligations with
respect to letters of credit (including trade letters of credit) securing
obligations (other than obligations described in (i) or (ii) above or (v), (vi)
or (vii) below) entered into in the ordinary course of business of such Person
to the extent such letters of credit are not drawn upon or, if drawn upon, to
the extent such drawing is reimbursed no later than the third Business Day
following receipt by such Person of a demand for reimbursement), (iv) all
obligations of such
<PAGE>
12
Person to pay the deferred and unpaid 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, (v) all Capitalized Lease Obligations of
such Person, (vi) all Indebtedness of other Persons secured by a Lien on any
asset of such Person, whether or not such Indebtedness is assumed by such
Person; provided that the amount of such Indebtedness shall be the lesser of (A)
the fair market value of such asset at such date of determination and (B) the
amount of such Indebtedness, (vii) all Indebtedness of other Persons Guaranteed
by such Person to the extent such Indebtedness is Guaranteed by such Person and
(viii) 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 the maximum
liability at such time with respect to contingent obligations upon the
occurrence of the contingency giving rise to the obligation, which, in the case
of a Guarantee, shall be the outstanding balance of the Guaranteed Indebtedness,
provided (A) 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 the time of its issuance as determined in conformity with GAAP,
(B) that money borrowed and set aside at the time of the Incurrence of any
Indebtedness in order to prefund the payment of the interest on such
Indebtedness shall not be deemed to be "Indebtedness" so long as such money is
held to secure the payment of such interest and (C) that Indebtedness shall not
include any liability for federal, state, local or other taxes.
"Indenture" means this Indenture as originally executed or as it may
be amended or supplemented from time to time by one or more indentures
supplemental to this Indenture entered into pursuant to the applicable
provisions of this Indenture.
"Institutional Accredited Investor" shall mean an institution that
is an "accredited investor" as that term is defined in Rule 501(a)(1), (2), (3)
or (7) under the Securities Act.
"Interest Payment Date" means each semiannual interest payment date
on April 15 and October 15 of each year, commencing October 15, 1998.
"Interest Rate Agreement" means any interest rate protection
agreement, interest rate future agreement, interest rate option agreement,
interest rate swap agreement, interest rate cap agreement, interest rate collar
agreement, interest rate hedge agreement, option or future contract or other
similar agreement or arrangement.
"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;
<PAGE>
13
but excluding extensions of credit to customers in the ordinary course of
business that are, in conformity with GAAP, recorded as accounts receivable on
the balance sheet of the Company or its Restricted Subsidiaries) or capital
contribution to (by means of any transfer of cash or other property to others or
any payment for property or services for the account or use of others), or any
purchase or acquisition of Capital Stock, bonds, notes, debentures or other
similar instruments issued by, such Person and shall include (i) the designation
of a Restricted Subsidiary as an Unrestricted Subsidiary and (ii) the fair
market value of the Capital Stock (or any other Investment), held by the Company
or any of its Restricted Subsidiaries, of (or in) any Person that has ceased to
be a Restricted Subsidiary, including, without limitation, by reason of any
transaction permitted by clause (iii) of Section 4.06 hereof; provided that the
fair market value of the Investment remaining in any Person that has ceased to
be a Restricted Subsidiary shall not exceed the aggregate amount of Investments
previously made in such Person valued at the time such Investments were made
less the net reduction of such Investments. For purposes of the definition of
"Unrestricted Subsidiary" and Section 4.04 hereof, (i) "Investment" shall
include the fair market value of the assets (net of liabilities (other than
liabilities to the Company or any of its Restricted Subsidiaries)) of any
Restricted Subsidiary at the time that such Restricted Subsidiary is designated
an Unrestricted Subsidiary, (ii) the fair market value of the assets (net of
liabilities (other than liabilities to the Company or any of its Restricted
Subsidiaries)) of any Unrestricted Subsidiary at the time that such Unrestricted
Subsidiary is designated a Restricted Subsidiary shall be considered a reduction
in outstanding Investments and (iii) any property transferred to or from an
Unrestricted Subsidiary shall be valued at its fair market value at the time of
such transfer.
"Lien" means any mortgage, pledge, security interest, encumbrance,
lien or charge of any kind (including, without limitation, any conditional sale
or other title retention agreement or lease in the nature thereof or any
agreement to give any security interest).
"Manager" means Morgan Stanley & Co. Incorporated and Morgan Stanley
Bank AG, as lead managers for the several initial purchasers named in the
Purchase Agreement. The offering of the Notes outside the U.S. will be lead
managed by Morgan Stanley AG.
"Moody's" means Moody's Investors Service, Inc. and its successors.
"Net Cash Proceeds" means, (a) with respect to any Asset Sale, the
proceeds of such Asset Sale in the form of cash or cash equivalents, including
payments in respect of deferred payment obligations (to the extent corresponding
to the principal, but not interest, component thereof) when received in the form
of cash or cash equivalents (except to the extent such obligations are financed
or sold with recourse to the Company or any Restricted Subsidiary) 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
<PAGE>
14
(including fees and expenses of counsel and investment bankers) related to such
Asset Sale, (ii) provisions for all taxes (whether or not such taxes will
actually be paid or are payable) as a result of such Asset Sale without regard
to the consolidated results of operations of the Company and its Restricted
Subsidiaries, taken as a whole, (iii) payments made or required to be 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, (iv) payments made or required
to be made to Persons having a beneficial interest in the assets subject to the
Asset Sale, and (v) appropriate amounts to be provided by the Company or any
Restricted Subsidiary 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 GAAP, and (b) with respect to any
issuance or sale of Capital Stock, the proceeds of such 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 such obligations are financed or sold with
recourse to the Company or any Restricted Subsidiary) 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.
"1998 Notes" means the Notes issued pursuant to this Indenture,
together with the Senior DM Notes, Senior Discount Dollar Notes and the Senior
Discount DM Notes.
"Non-U.S. Person" means a Person who is not a U.S. person, as
defined in Regulation S.
"Notes" means any of the notes, as defined in the first paragraph of
the recitals hereof, that are authenticated and delivered under this Senior
Dollar Indenture. For all purposes of this Indenture, the term "Notes" shall
include any Exchange Notes to be issued and exchanged for any Notes pursuant to
the Registration Rights Agreement and this Indenture and, for purposes of this
Indenture, all Notes and Exchange Notes shall vote together as one series of
Notes under this Indenture.
"Note Register" has the meaning provided in Section 2.04.
"Offer to Purchase" means an offer to purchase Notes by the Company
from the Holders commenced by mailing a notice to the Trustee and each Holder
stating: (i) the covenant pursuant to which the offer is being made and that all
Notes validly tendered will be
<PAGE>
15
accepted for payment on a pro rata basis; (ii) the purchase price and the date
of purchase (which shall be a Business Day no earlier than 30 days nor later
than 60 days from the date such notice is mailed) (the "Payment Date"); (iii)
that any Note not tendered will continue to accrue interest pursuant to its
terms; (iv) that, unless the Company defaults in the payment of the purchase
price, any Note accepted for payment pursuant to the Offer to Purchase shall
cease to accrue interest on and after the Payment Date; (v) that Holders
electing to have a Note purchased pursuant to the Offer to Purchase will be
required to surrender the Note, together with the form entitled "Option of the
Holder to Elect Purchase" on the reverse side of the Note completed, to the
Paying Agent at the address specified in the notice prior to the close of
business on the Business Day immediately preceding the Payment Date; (vi) that
Holders will be entitled to withdraw their election if the Paying Agent
receives, not later than the close of business on the third Business Day
immediately preceding the Payment Date, a telegram, facsimile transmission or
letter setting forth the name of such Holder, the principal amount of Notes
delivered for purchase and a statement that such Holder is withdrawing 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 Notes surrendered; provided that each Note
purchased and each new Note issued shall be in a principal amount of $1,000 or
an integral multiple thereof. On the Payment Date, the Company shall (i) accept
for payment on a pro rata basis Notes or portions thereof tendered pursuant to
an Offer to Purchase; (ii) deposit with the Paying Agent money sufficient to pay
the purchase price of all Notes or portions thereof so accepted; and (iii)
deliver, or cause to be delivered, to the Trustee all Notes or portions thereof
so accepted together with an Officers' Certificate specifying the Notes or
portions thereof accepted for payment by the Company. The Paying Agent shall
promptly mail to the Holders of Notes so accepted payment in an amount equal to
the purchase price, and the Trustee shall promptly authenticate and mail to such
Holders a new Note equal in principal amount to any unpurchased portion of the
Note surrendered; provided that each Note purchased and each new Note issued
shall be in a principal amount of $1,000 or an integral multiple thereof. The
Company will publicly announce the results of an Offer to Purchase as soon as
practicable after the Payment Date. The Trustee shall act as the Paying Agent
for an Offer to Purchase. The Company will comply with Rule 14e-1 under the
Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable, in the event that the Company
is required to repurchase Notes pursuant to an Offer to Purchase.
"Officer" means, with respect to the Company, (i) the Chairman of
the Board, the Vice Chairman of the Board, the President, the Chief Executive
Officer, the Chief Financial Officer or a Vice President, and (ii) the Treasurer
or any Assistant Treasurer, or the Secretary or any Assistant Secretary of the
Company.
"Officers' Certificate" means a certificate signed by one Officer
listed in clause (i) of the definition thereof and one Officer listed in clause
(ii) of the definition thereof;
<PAGE>
16
provided, however, that any such certificate may be signed by any two of the
Officers listed in clause (i) of the definition thereof in lieu of being signed
by one Officer listed in clause (i) of the definition thereof and one Officer
listed in clause (ii) of the definition thereof. Each Officers' Certificate
(other than certificates provided pursuant to TIA Section 314(a)(4)) shall
include the statements provided for in TIA Section 314(e).
"Opinion of Counsel" means a written opinion signed by legal counsel
who may be an employee of or counsel to the Company. Each such Opinion of
Counsel shall include the statements provided for in TIA Section 314(e).
"Participant" means, with respect to DTC, Euroclear or Cedel, a
Person who has an account with DTC, Euroclear or Cedel, respectively (and, with
respect to DTC, shall include Euroclear and Cedel).
"Paying Agent" means the U.S. Paying Agent, any successor thereof,
and any other Person (including the Company acting as the Paying Agent, except
that, for the purposes of Article Eight, the Paying Agent shall not be the
Company or a Subsidiary of the Company or an Affiliate of any of them),
authorized by the Company to pay principal and premium, if any, or interest on
any Notes on behalf of the Company.
"Payment Date" means the date of purchase, which shall be a Business
Day no earlier than 30 days nor later than 60 days from the date of notice is
mailed pursuant to an Offer to Purchase.
"Permanent Regulation S Global" means the permanent global Notes
issued in exchange for one or more Temporary Regulation S Global upon
certification that the beneficial interests in such global Note are owned by
either Non-U.S. Persons or U.S. Persons who purchased such interests pursuant to
an exemption from, or in transactions not subject to, the registration
requirements of the Securities Act.
"Permitted Investment" means (i) an Investment in the Company or 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; provided that such Person's primary business is
related, ancillary or complementary to the businesses of the Company or any of
its Restricted Subsidiaries on the date of such Investment; (ii) Temporary Cash
Investments; (iii) payroll, travel and similar advances to cover matters that
are expected at the time of such advances ultimately to be treated as expenses
in accordance with GAAP; (iv) Investments received in the bankruptcy or
reorganization of a Person or any exchange of such Investment with the issuer
thereof or taken in settlement of or other resolution of claims or disputes or
acquired as the result of foreclosure of any secured Investment and, in each
case, extensions,
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17
modifications and renewal thereof; (v) Investments in prepaid expenses,
negotiable instruments held for collection and lease, utility and worker's
compensation, performance and other similar deposits; (vi) Interest Rate
Agreements and Currency Agreements designed solely to protect the Company or its
Restricted Subsidiaries against fluctuations in interest rates or foreign
currency exchange rates; (vii) loans or advances to officers or employees of the
Company or any Restricted Subsidiary that do not in the aggregate exceed $1
million at any time outstanding; (viii) investments consisting of securities
issued by or beneficial interests in a special purpose entity referred to in
clause (f) of the definition of "Asset Sale" and which are received in exchange
for assets that are transferred by the Company or a Restricted Subsidiary to
such special purpose entity and used for the purpose referred to therein; and
(ix) Investments as a result of consideration received in connection with an
Asset Sale made in compliance with Section 4.11 hereof.
"Permitted Joint Venture" means any joint venture between the
Company or any Restricted Subsidiary and (i) any Person, other than a
Subsidiary, engaged in the provision or sale of telecommunications services or
(ii) any Person engaged as an independent sale representative of the Company;
provided that, prior to making any Investment in such a Person, the Company's
Board of Directors shall have determined that such Investment fits the Company's
strategic plan and is on terms that are fair and reasonable to the Company.
"Permitted Liens" means (i) Liens for taxes, assessments,
governmental charges or claims not yet subject to penalty or 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 GAAP shall have been made; (ii)
statutory and common law 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 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) Liens incurred or deposits made to secure the
performance of tenders, bids, leases, statutory or regulatory obligations,
bankers' acceptances, surety and appeal bonds, government contracts, performance
and return-of-money bonds and other obligations of a similar nature incurred in
the ordinary course of business (exclusive of obligations for the payment of
borrowed money); (v) 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; (vi) Liens (including extensions and
renewals thereof) upon real or personal (whether tangible or intangible)
property acquired after the Closing Date; provided that (a) such Lien is created
solely for the purpose of securing Indebtedness Incurred, in
<PAGE>
18
accordance with Section 4.03 hereof, to finance or refinance the cost (including
the cost of design, development, acquisition, construction, installation,
improvement, transportation or integration) of the item or related group of
items of property or assets subject thereto or the business in which such
property or assets are used and such Lien is created prior to, at the time of or
within eighteen months after the later of the acquisition, the completion of
(except in the case of refinancing) construction or the commencement of full
operation of such property, (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 or group of items
of property or assets and any improvements on such item; (vii) leases or
subleases granted to others that do not materially interfere with the ordinary
course of business of the Company and its Restricted Subsidiaries, taken as a
whole; (viii) Liens encumbering property or assets under construction arising
from progress or partial payments by a customer of the Company or its Restricted
Subsidiaries relating to such property or assets; (ix) any interest or title of
a lessor in the property subject to any Capitalized Lease or operating lease;
(x) Liens arising from filing Uniform Commercial Code financing statements
regarding leases; (xi) Liens on property of, or on shares of Capital Stock or
Indebtedness of, any Person existing at the time such Person becomes, or becomes
a part of, any Restricted Subsidiary; provided that such Liens do not extend to
or cover any property or assets of the Company or any Restricted Subsidiary
other than the property or assets acquired; (xii) Liens in favor of the Company
or any Restricted Subsidiary; (xiii) Liens arising from the rendering of a final
judgment or order against the Company or any Restricted Subsidiary that does not
give rise to an Event of Default; (xiv) Liens securing reimbursement obligations
with respect to letters of credit that encumber documents and other property
relating to such letters of credit and the products and proceeds thereof; (xv)
Liens in favor of customs and revenue authorities arising as a matter of law to
secure payment of customs duties in connection with the importation of goods;
(xvi) Liens encumbering customary initial deposits and margin deposits, and
other Liens that are within the general parameters customary in the industry and
incurred in the ordinary course of business, in each case, securing Indebtedness
under Interest Rate Agreements and Currency Agreements and forward contracts,
options, future contracts, futures options or similar agreements or arrangements
designed solely to protect the Company or any of its Restricted Subsidiaries
from fluctuations in interest rates, currencies or the price of commodities;
(xvii) 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 Closing Date; (xviii) Liens on or sales of receivables or other rights to
payment; (xix) Liens secured with assets that have a fair market value not in
excess of 15% of Adjusted Consolidated Net Tangible Assets when such Liens are
Incurred; and (xx) any extension, renewal, or replacement (or successive
extensions, renewals, or replacements) in whole or in part of Liens described in
clauses (i) through (xix) above.
<PAGE>
19
"Permitted Wholesale Consortium" means any Person in which the
Company Invests for the principal purpose of leasing or otherwise acquiring
transmission rights with respect to long distance telecommunications; provided
that prior to making any Investment in such a Person, the Company's Board of
Directors shall have determined that such Investment will afford the Company
greater economic benefits than it could otherwise obtain from other sources of
transmission rights.
"Person" means an individual, a corporation, a partnership, a
limited liability company, a joint venture, an association, a trust, an
unincorporated organization or any other entity or organization, including a
government or political subdivision or an agency or instrumentality thereof.
"Pledge Agreement" means the Collateral Pledge and Security
Agreement, dated as of the date of this Indenture, made by the Company in favor
of the Trustee, governing the disbursement of funds from the U.S. Pledge
Account, as such agreement may be amended, restated, supplemented or otherwise
modified from time to time.
"Preferred Stock" or "preferred stock" means, with respect to any
Person, any and all shares, interests, participation or other equivalents
(however designated, whether voting or non-voting) of such Person's preferred or
preference stock, whether now outstanding or issued after the date of this
Indenture, including, without limitation, all series and classes of such
preferred or preference stock, including the Series A Preferred.
"principal" of a debt security, including the Notes, means the
principal amount due on the Stated Maturity as shown on such debt security.
"Private Placement Legend" means the legend initially set forth on
the Notes in the form set forth in Section 2.02(a).
"Public Equity Offering" means an underwritten primary public
offering of Common Stock of the Company pursuant to an effective registration
statement under the Securities Act.
"Purchase Agreement" has the meaning provided in the recitals to
this Agreement.
"QIB" means a "qualified institutional buyer" as defined in Rule
144A.
"Redemption Date", when used with respect to any Note or part
thereof to be redeemed, means the date fixed for such redemption by or pursuant
to the terms of the Notes and this Indenture.
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20
"Redemption Price", when used with respect to any Note or part
thereof to be redeemed, means the price at which such Note is to be redeemed
pursuant to the terms of the Notes and this Indenture.
"Registrar" has the meaning provided in Section 2.04.
"Registration Rights Agreement" means the Registration Rights
Agreement, dated as of April 3, 1998, between the Company and Morgan Stanley &
Co. Incorporated, on behalf of itself and Morgan Stanley Bank AG, Salomon
Brothers Inc, NationsBanc Montgomery Securities LLC and ING Baring (U.S.)
Securities, Inc., relating to the Notes.
"Registration Statement" means any registration statement of the
Company that covers any of the Exchange Notes, and all amendments and
supplements to any such Registration Statement, including post-effective
amendments, in each case including the prospectus contained therein, all
exhibits thereto and all material incorporated by reference therein.
"Regular Record Date" for the interest payable on any Interest
Payment Date means April 1 or October 1 (whether or not a Business Day), as the
case may be, next preceding such Interest Payment Date.
"Regulation S" means Regulation S under the Securities Act.
"Regulation S Certificated Notes" has the meaning provided in
Section 2.01.
"Regulation S Global" has the meaning provided in Section 2.01.
"Responsible Officer", when used with respect to the Trustee, means
any officer of the Trustee with direct responsibility for the administration of
this Indenture and also means, with respect to a particular corporate trust
matter, any other officer to whom such matter is referred because of his or her
knowledge of and familiarity with the particular subject.
"Restricted Global" has the meaning provided in Section 2.01.
"Restricted Payments" has the meaning provided in Section 4.04.
"Restricted Subsidiary" means any Subsidiary of the Company other
than an Unrestricted Subsidiary.
"Rule 144A" means Rule 144A under the Securities Act.
<PAGE>
21
"Securities Act" means the Securities Act of 1933, as amended.
"Senior Discount DM Indenture" means the Indenture dated as of the
Closing Date between the Company, The Bank of New York and Deutsche Bank
governing the issuance of the Senior Discount Dollar Notes.
"Senior Discount DM Notes" means the notes issued pursuant to the
Senior Discount DM Indenture.
"Senior Discount DM Units" means the Senior Discount DM Units, each
consisting of one Senior Discount DM Note and 2.77 DM denominated 10%
Subordinated Convertible Debentures.
"Senior Discount Dollar Indenture" means the Indenture dated as of
the Closing Date between the Company and The Bank of New York, governing the
issuance of the Senior Discount Dollar Notes.
"Senior Discount Dollar Notes" means the notes issued pursuant to
the Senior Discount Dollar Indenture.
"Senior Discount Dollar Units" means the Senior Discount Dollar
Units, each consisting of one Senior Discount Dollar Note and .490 shares of
Series A Preferred.
"Senior DM Indenture" means the Indenture dated as of the Closing
Date between the Company and The Bank of New York, governing the issuance of the
Senior DM Notes.
"Senior DM Notes" means the notes issued pursuant to the Senior DM
Indenture.
"Senior DM Units" means the Senior DM Units, each consisting of one
Senior DM Note and 2.69 DM denominated 10% Subordinated Convertible Debentures.
"Senior Dollar Indenture" means this Indenture.
"Senior Dollar Notes" means the notes issued pursuant to this
Indenture.
"Senior Dollar Units" means the Senior Dollar Units, each consisting
of one Senior Dollar Note and .483 shares of Series A Preferred.
<PAGE>
22
"Separation Date" has the meaning specified in the recitals to this
Indenture.
"Series A Preferred" means the Series A preferred stock, $.01 par
value per share, of the Company.
"Significant Subsidiary" means, at any date of determination, any
Restricted Subsidiary that, together with its Subsidiaries, (i) for the most
recent fiscal year of the Company, accounted for more than 10% of the
consolidated revenues of the Company and its Restricted Subsidiaries or (ii) as
of the end of such fiscal year, was the owner of more than 10% of the
consolidated assets of the Company and its Restricted Subsidiaries, all as set
forth on the most recently available consolidated financial statements of the
Company for such fiscal year.
"Specified Date" means any Redemption Date, any Payment Date for an
Offer to Purchase or any date on which the Notes first become due and payable
after an Event of Default.
"S&P" means Standard & Poor's Ratings Services and its successors.
"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 Subordinated Indebtedness" means Indebtedness of the
Company Incurred to finance the acquisition of a Person engaged in a business
that is related, ancillary or complementary to the business conducted by the
Company or any of its Restricted Subsidiaries, which Indebtedness by its terms,
or by the terms of any agreement or instrument pursuant to which such
Indebtedness is Incurred, (i) is expressly made subordinate in right of payment
to the Notes and (ii) provides that no payment of principal, premium or interest
on, or any other payment with respect to, such Indebtedness may be made prior to
the payment in full of all of the Company's obligations under the Notes;
provided that such Indebtedness may provide for and be repaid at any time from
the proceeds of a capital contribution, the sale of Capital Stock (other than
Disqualified Stock) of the Company, or other Strategic Subordinated Indebtedness
Incurred after the Incurrence of such Indebtedness.
"Subordinated Convertible Debentures" means the debentures issued
pursuant to the Subordinated Indentures.
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23
"Subordinated Indenture" means the Indenture dated as of the Closing
Date between the Company, The Bank of New York and Deutsche Bank, governing the
issuance of the Subordinated Convertible Debenture.
"Subsidiary" means, with respect to any Person, any corporation,
association or other business entity of which more than 50% of the voting power
of the outstanding Voting Stock is owned, directly or indirectly, by such Person
and one or more other Subsidiaries of such Person.
"Temporary Cash Investment" means any of the following: (i) direct
obligations of the United States of America or any agency thereof or obligations
fully and unconditionally guaranteed by the United States of America or any
agency thereof, (ii) time deposit accounts, eurodollar time deposits, bankers'
acceptances, certificates of deposit and money market deposits, in each case
maturing within one year of the date of acquisition thereof and issued by a bank
or trust company which is organized under the laws of the United States of
America, any state thereof or any foreign country recognized by the United
States of America, and which bank or trust company has capital, surplus and
undivided profits aggregating in excess of $50 million (or the foreign currency
equivalent thereof) and has outstanding debt which is rated "A" (or such similar
equivalent rating) or higher by at least one nationally recognized statistical
rating organization (as defined in Rule 436 under the Securities Act), or any
money-market fund sponsored by a registered broker dealer or mutual fund
distributor, (iii) repurchase obligations with a term of not more than 30 days
for underlying securities of the types described in clause (i) above entered
into with a bank meeting the qualifications described in clause (ii) above, (iv)
commercial paper, maturing not more than one year after the date of acquisition,
issued by a corporation (other than an Affiliate of the Company) organized and
in existence under the laws of the United States of America, any state thereof
or any foreign country recognized by the United States of America with a rating
at the time as of which any investment therein is made of "P-2" (or higher)
according to Moody's or "A-2" (or higher) according to S&P, (v) securities with
maturities of one year or less from the date of acquisition issued or fully and
unconditionally guaranteed by any state, commonwealth or territory of the United
States of America, or by any political subdivision or taxing authority thereof,
and rated at least "A" by S&P or Moody's, (vi) shares or other interests in an
investment company the assets of which consist solely of (A) securities of the
type described in clauses (i) through (v) above and (B) mortgage-backed
securities rated AAA or the equivalent by S&P, Moody's or Fitch Investor
Services, Inc, and (vii) the DM Pledged Securities.
"Temporary Regulation S Global" means the Global Note bearing the
Private Placement Legend in registered form without interest coupons, that will
be issued in a denomination equal to the outstanding principal amount of the
Notes sold in reliance on Regulation S and deposited with the Trustee, as
custodian for the Depository.
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24
"TIA" or "Trust Indenture Act" means the Trust Indenture Act of
1939, as amended (15 U.S. Code ss.ss. 77aaa-77bbb), as in effect on the date
this Indenture was executed, except as provided in Section 9.06; provided,
however, that, in the event the Trust Indenture Act of 1939 is amended after
such date, "TIA" or "Trust Indenture Act" means, to the extent required by any
such amendment, the Trust Indenture Act of 1939 as so amended.
"Trade Payables" means, with respect to any Person, any accounts
payable or any other indebtedness or monetary obligation to trade creditors
created, assumed or Guaranteed by such Person or any of its Subsidiaries arising
in the ordinary course of business in connection with the acquisition of goods
or 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.
"Trustee" means the party named as such in the first paragraph of
this Indenture until a successor replaces it in accordance with the provisions
of Article Seven of this Indenture and thereafter means such successor.
"Unit Legend" has the meaning provided in Section 2.02(c).
"United States Bankruptcy Code" means the Bankruptcy Reform Act of
1978, as amended and as codified in Title 11 of the United States Code, as
amended from time to time hereafter, or any successor federal bankruptcy law.
"Units" means the units, as defined in the first paragraph of the
recitals hereof.
"U.S. Pledge Account" means an account established with the Trustee
pursuant to the terms of the Pledge Agreement for the deposit of the Pledged
Securities purchased by the Company with a portion of the proceeds from the sale
of the Senior Dollar Notes.
"U.S. Pledge Agreement" means the Collateral Pledge and Security
Agreement, dated as of the date of this Indenture, made by the Company in favor
of the Trustee, governing the disbursement of funds from the Pledged Accounts,
as such agreement may be amended, restated, supplemented or otherwise modified
from time to time.
"U.S. Pledged Securities" means the securities originally purchased
by the Company with a portion of the proceeds from the sale of the Senior Dollar
Notes, which shall consist of Government Securities, to be deposited in the U.S.
Pledged Account, all in accordance with the terms of the U.S. Pledged Agreement.
<PAGE>
25
"Unrestricted Subsidiary" means (i) any Subsidiary of the Company
that at the time of determination shall be designated an Unrestricted Subsidiary
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
Restricted Subsidiary (including any newly acquired or newly formed Subsidiary
of the Company) to be an Unrestricted Subsidiary unless such Subsidiary owns any
Capital Stock of, or owns or holds any Lien on any property of, the Company or
any Restricted Subsidiary; provided that (A) any Guarantee by the Company or any
Restricted Subsidiary of any Indebtedness of the Subsidiary being so designated
shall be deemed an "Incurrence" of such Indebtedness and an "Investment" by the
Company or such Restricted Subsidiary (or both, if applicable) at the time of
such designation; (B) either (I) the Subsidiary to be so designated has total
assets of $1,000 or less or (II) if such Subsidiary has assets greater than
$1,000, such designation would be permitted under Section 4.04 hereof and (C) if
applicable, the Incurrence of Indebtedness and the Investment referred to in
clause (A) of this proviso would be permitted under Section 4.03 hereof and
Section 4.04 hereof. The Board of Directors may designate any Unrestricted
Subsidiary to be a Restricted Subsidiary; provided that (i) no Default or Event
of Default shall have occurred and be continuing at the time of or after giving
effect to such designation and (ii) all Liens and Indebtedness of such
Unrestricted Subsidiary outstanding immediately after such designation would, if
Incurred at such time, have been permitted to be Incurred (and shall be deemed
to have been Incurred) for all purposes of the Indenture. Any such designation
by the Board of Directors shall be evidenced to the Trustee by promptly filing
with the Trustee a copy of the Board Resolution giving effect to such
designation and an Officers' Certificate certifying that such designation
complied with the foregoing provisions.
"U.S. Government Obligations" means securities that are (i) direct
obligations of the United States of America for the payment of which its full
faith and credit is pledged or (ii) obligations of a Person controlled or
supervised by and acting as an agency or instrumentality of the United States of
America the payment of which is unconditionally guaranteed as a full faith and
credit obligation by the United States of America, which, in either case, are
not callable or redeemable at the option of the issuer thereof at any time prior
to the Stated Maturity of the Notes, and shall also include depository receipts
issued by a bank or trust company as custodian with respect to any such U.S.
Government Obligation or a specific payment of interest on or principal of any
such U.S. Government Obligation held by such custodian for the account of the
holder of a depository receipt; provided that (except as required by law) such
custodian is not authorized to make any deduction from the amount payable to the
holder of such depository receipt from any amount received by the custodian in
respect of the U.S. Government Obligation or the specific payment of interest on
or principal of the U.S. Government Obligation evidenced by such depository
receipt.
"U.S. Paying Agent" means The Bank of New York and any successor
U.S. Paying Agent.
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26
"U.S. Person" has the meaning ascribed thereto in Rule 902 under the
Securities Act.
"U.S. Certificated Notes" has the meaning provided in Section 2.01.
"Voting Stock" means, with respect to any Person, Capital Stock of
any class or kind ordinarily having the power to vote for the election of
directors, managers or other voting members of the governing body of such
Person.
"Wholly Owned" means, with respect to any Subsidiary of any Person,
the ownership of all of the outstanding Capital Stock of such Subsidiary (other
than any director's qualifying shares or Investments by foreign nationals
mandated by applicable law) by such Person or one or more Wholly Owned
Subsidiaries of such Person.
SECTION 1.02. Incorporation by Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision of the TIA, the provision is
incorporated by reference in and made a part of this Indenture. The following
TIA terms used in this Indenture have the following meanings:
"indenture securities" means the Notes;
"indenture security holder" means a Holder or a Noteholder;
"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 a rule of the
Commission and not otherwise defined herein have the meanings assigned to them
therein.
SECTION 1.03. Rules of Construction. Unless the context otherwise
requires:
(i) a term has the meaning assigned to it;
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27
(ii) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP;
(iii) "or" is not exclusive;
(iv) words in the singular include the plural, and words in the
plural include the singular;
(v) provisions apply to successive events and transactions;
(vi) "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; and
(vii) all references to Sections or Articles refer to Sections or
Articles of this Indenture unless otherwise indicated.
ARTICLE TWO
THE NOTES
SECTION 2.01. Form and Dating. The Notes and the Trustee's
certificate of authentication with respect thereto shall be substantially in the
form annexed hereto as Exhibit A, in the case of the Restricted Global, Exhibit
B, in the case of the Regulation S Global and Exhibit C, in the case of a U.S.
Certificated Note. The Notes may have such appropriate insertions, omissions,
substitutions and other variations as are required or permitted by this
Indenture and may have letters, notations, legends or endorsements required by
law, stock exchange agreements to which the Company is subject or usage. Any
portion of the text of any Note may be set forth on the reverse thereof, with an
appropriate reference thereto on the face of the Note. The Company shall approve
the form of the Notes and any notation, legend or endorsement on the Notes. Each
Note shall be dated the date of its authentication.
The terms and provisions contained in the form of the Notes annexed
hereto as Exhibits A, B and C shall constitute, and are hereby expressly made, a
part of this Indenture. Each of the Company and the Trustee, by its execution
and delivery of this Indenture, expressly agrees to the terms and provisions of
the Notes applicable to it and to be bound thereby.
Notes initially offered and sold in reliance on Rule 144A shall be
issued initially in the form of one or more permanent global Notes in registered
form, substantially in the
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form set forth in Exhibit A (the "Restricted Global") deposited with the
Trustee, as custodian for the Depository, duly executed by the Company and
authenticated by the Trustee as hereinafter provided. The aggregate principal
amount of a Restricted Global may from time to time be increased or decreased by
adjustments made on the records of the Trustee, as custodian for the Depository
or its nominee, as hereinafter provided.
Notes offered and sold in offshore transactions in reliance on
Regulation S shall be issued initially in the form of one or more temporary
global Notes in registered form substantially in the form set forth in Exhibit B
(the "Temporary Regulation S Global") deposited on behalf of the purchasers of
the Notes represented thereby with the Trustee, as custodian for the Depository
duly executed by the Company and authenticated by the Trustee as hereinafter
provided. At any time following the later of the Separation Date and May 18,
1998, upon receipt by the Trustee and the Company of a certificate substantially
in the form of Exhibit D hereto, one or more permanent global Notes in
registered form substantially in the form set forth in Exhibit B (the "Permanent
Regulation S Global" and, together with the Temporary Regulation S Global, the
"Regulation S Global") duly executed by the Company and authenticated by the
Trustee as hereinafter provided shall be deposited with the Trustee, as
custodian for the Depository which shall reflect on its books and records the
date and a decrease in the principal amount of the Temporary Regulation S Global
in an amount equal to the principal amount of the beneficial interest in the
Temporary Regulation S Global transferred. The aggregate principal amount of a
Regulation S Global may from time to time be increased or decreased by
adjustments made in the records of the Trustee, as custodian for the Depository
or its nominee, as herein provided.
Notes which are offered and sold to Institutional Accredited
Investors which are not QIBs (excluding Non-U.S. Persons) shall be issued in the
form of permanent certificated Notes in registered form in substantially the
form set forth in Exhibit C (the "U.S. Certificated Notes"). Notes issued
pursuant to Section 2.07 in exchange for interests in the Regulation S Global
shall be in the form of certificated Notes in registered form substantially in
the form set forth in Exhibit C (the "Regulation S Certificated Notes"). Notes
issued pursuant to Section 2.07 in exchange for interests in the Restricted
Global shall be in the form of the U.S. Certificated Note.
The Regulation S Certificated Notes and the U.S. Certificated Notes
are sometimes collectively referred to herein as the "Certificated Notes". The
Restricted Global and Regulation S Global are sometimes collectively herein
referred to as the "Global Notes".
The definitive Notes shall be typed, printed, lithographed or
engraved or produced by any combination of these methods or may be produced in
any other manner permitted by the rules of any securities exchange on which the
Notes may be listed, all as
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determined by the officers executing such Notes, as evidenced by their execution
of such Notes.
SECTION 2.02. Restrictive Legends. (a) Note Legends. Unless and
until a Note is exchanged for an Exchange Note or otherwise disposed of in
connection with an effective Registration Statement pursuant to the Registration
Rights Agreement, (i) each Restricted Global and each U.S. Certificated Note
shall bear the legend, set forth below on the face thereof and (ii) each
Regulation S Certificated Note and each Temporary Regulation S Global shall bear
the legend set forth below on the face thereof until at least 41 days after the
Closing Date and receipt by the Company and the Trustee of a certificate
substantially in the form of Exhibit D hereto.
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS, AND
ACCORDINGLY, MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED
WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S.
PERSONS EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION
HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED
INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) OR
(B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE
501(a)(1), (2), (3) OR (7) OF REGULATION D UNDER THE SECURITIES ACT) (AN
"INSTITUTIONAL ACCREDITED INVESTOR") OR (C) IT IS NOT A U.S. PERSON AND IS
ACQUIRING THIS NOTE IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 903
OF REGULATION S UNDER THE SECURITIES ACT; (2) AGREES THAT IT WILL NOT,
WITHIN THE TIME PERIOD REFERRED TO IN RULE 144(k) (TAKING INTO ACCOUNT THE
PROVISIONS OF RULE 144(d) UNDER THE SECURITIES ACT, IF APPLICABLE), RESELL
OR OTHERWISE TRANSFER THIS NOTE EXCEPT (A) TO THE COMPANY OR ANY
SUBSIDIARY THEREOF, (B) TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE
WITH RULE 144A UNDER THE SECURITIES ACT, (C) INSIDE THE UNITED STATES TO
AN INSTITUTIONAL ACCREDITED INVESTOR THAT, PRIOR TO SUCH TRANSFER,
FURNISHES TO THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN
REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER OF
THIS NOTE (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM THE TRUSTEE) AND
IF SUCH TRANSFER IS IN RESPECT OF AN AGGREGATE PRINCIPAL AMOUNT OF DOLLAR
NOTES OF LESS THAN $100,000, AN OPINION OF COUNSEL ACCEPTABLE TO THE
COMPANY THAT SUCH TRANSFER IS IN
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COMPLIANCE WITH THE SECURITIES ACT, (D) OUTSIDE THE UNITED STATES IN AN
OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT,
(E) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER
THE SECURITIES ACT (IF AVAILABLE) OR (F) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND (3) AGREES THAT IT
WILL DELIVER TO EACH PERSON TO WHOM THIS NOTE IS TRANSFERRED A NOTICE
SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY
TRANSFER OF THIS NOTE WITHIN THE TIME PERIOD REFERRED TO ABOVE, THE HOLDER
MUST CHECK THE APPROPRIATE BOX SET FORTH ON THE REVERSE HEREOF RELATING TO
THE MANNER OF SUCH TRANSFER AND SUBMIT THIS CERTIFICATE TO THE TRUSTEE. IF
THE PROPOSED TRANSFEREE IS AN INSTITUTIONAL ACCREDITED INVESTOR, THE
HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO EACH OF THE TRUSTEE AND
THE COMPANY SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS
SUCH PERSONS MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING
MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO,
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. 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. THE
INDENTURE CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER
ANY TRANSFER OF THIS NOTE IN VIOLATION OF THE FOREGOING RESTRICTIONS.
(b) Global Note Legend. Each Global Note, whether or not an Exchange
Note, shall also bear the following legend on the face thereof:
UNLESS THIS GLOBAL NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY TO THE COMPANY OR ITS AGENT FOR REGISTRATION
OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS REGISTERED IN THE
NAME OF CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY OR SUCH OTHER
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY OR SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY
(AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS
IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE
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DEPOSITORY TRUST COMPANY), 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 NOTE 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 NOTE SHALL BE
LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN
SECTION 2.08 OF THE INDENTURE.
(c) Units Legends. Each Note issued prior to the Separation Date
shall bear the following legend (the "Unit Legend") on the face thereof:
THE NOTES EVIDENCED BY THIS CERTIFICATE ARE INITIALLY ISSUED AS PART OF AN
ISSUANCE OF UNITS, EACH OF WHICH CONSISTS OF $1,000 PRINCIPAL AMOUNT OF
11.25% SENIOR NOTES DUE 2008 OF VIATEL, INC. AND .483 SHARES OF SERIES A
REDEEMABLE CONVERTIBLE PREFERRED STOCK (THE "SERIES A PREFERRED"). THE
NOTES AND THE SHARES OF SERIES A PREFERRED WILL BE AUTOMATICALLY SEPARATED
UPON THE EARLIEST TO OCCUR OF (i) SIX MONTHS AFTER APRIL 8, 1998, (ii) THE
COMMENCEMENT OF AN EXCHANGE OFFER WITH RESPECT TO THE NOTES, (iii) THE
EFFECTIVENESS OF A SHELF REGISTRATION STATEMENT WITH RESPECT TO RESALE OF
THE NOTES OR (iv) THE COMMENCEMENT OF AN OFFER TO REPURCHASE THE NOTES
PURSUANT TO THE INDENTURE. THE NOTES EVIDENCED BY THIS CERTIFICATE MAY NOT
BE TRANSFERRED OR EXCHANGED SEPARATELY FROM, BUT MAY BE TRANSFERRED OR
EXCHANGED ONLY TOGETHER WITH, THE SERIES A PREFERRED.
SECTION 2.03. Execution, Authentication and Denominations. Subject
to Article Four, the aggregate principal amount of Notes (including Exchange
Notes) which may be authenticated and delivered under this Indenture is
unlimited. The Notes shall be executed by two Officers of the Company, by
facsimile or manual signature, in the name and on behalf of the Company.
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If an Officer whose signature is on a Note no longer holds that
office at the time the Trustee or authenticating agent authenticates the Note,
the Note shall be valid nevertheless.
A Note shall not be valid until the Trustee or authenticating agent
manually signs the certificate of authentication on the Note. The signature
shall be conclusive evidence that the Note has been authenticated under this
Indenture.
At any time and from time to time after the execution of this
Indenture, the Trustee or an authenticating agent shall, upon receipt of a
Company Order, authenticate for original issue Notes in the aggregate principal
amount specified in such Company Order. Such Company Order shall specify the
amount of Notes to be authenticated, the date on which the issue of Notes is to
be authenticated and in case of an issuance of Notes pursuant to Section 2.15,
shall certify that such issuance is in compliance with Article Four.
The Trustee may appoint an authenticating agent reasonably
acceptable to the Company to authenticate Notes. Unless limited by the terms of
such 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 or an Affiliate
of the Company.
The Notes shall be issuable only in registered form without coupons
in principal amount of $1,000 and any integral multiple of $1,000 in excess
thereof.
SECTION 2.04. Registrar and Paying Agent. The Company shall maintain
an office or agency in New York City where Notes may be presented for
registration of transfer or for exchange (the "Registrar"), an office or agency
in New York City where Notes may be presented for payment (the "Paying Agent")
and an office or agency where notices and demands to or upon the Company in
respect of the Notes and this Indenture may be served, which shall be in the
City of New York. The Company shall cause the Registrar to keep a register of
the Notes and of their transfer and exchange (the "Note Register"). The Company
may have one or more co-Registrars and one or more additional Paying Agents.
The Company shall enter into an appropriate agency agreement with
any Agent not a party to this Indenture. The agreement shall implement the
provisions of this Indenture that relate to such Agent. The Company shall give
prompt written notice to the Trustee of the name and address of any such Agent
and any change in the address of such Agent. If the Company fails to maintain a
Registrar, Paying Agent and/or agent for service of notices and demands, the
Trustee shall act as such Registrar, Paying Agent and/or agent for service of
notices and demands for so long as such failure shall continue. The Company may
remove any Agent upon written notice to such Agent and the Trustee; provided
that no such removal
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shall become effective until (i) the acceptance of an appointment by a successor
Agent to such Agent as evidenced by an appropriate agency agreement entered into
by the Company and such successor Agent and delivered to the Trustee or (ii)
notification to the Trustee that the Trustee shall serve as such Agent until the
appointment of a successor Agent in accordance with clause (i) of this proviso.
The Company, any Subsidiary of the Company, or any Affiliate of any of them may
act as Paying Agent, Registrar or co-Registrar, and/or agent for service of
notice and demands; provided, however, that neither the Company, a Subsidiary of
the Company nor an Affiliate of any of them shall act as Paying Agent in
connection with the defeasance of the Notes or the discharge of this Indenture
under Article Eight.
The Company initially appoints the Trustee as Registrar, Paying
Agent, authenticating agent and agent for service of notice and demands. If, at
any time, the Trustee is not the Registrar, the Registrar shall make available
to the Trustee on or before each Interest Payment Date and at such other times
as the Trustee may reasonably request, the names and addresses of the Holders as
they appear in the Note Register.
SECTION 2.05. Paying Agent to Hold Money in Trust. Not later than
10:00 a.m. New York City time on each due date of the principal, premium, if
any, or interest on any Notes, the Company shall deposit with the Paying Agent
money in immediately available funds sufficient to pay such principal, premium,
if any, or interest so becoming due. The Company shall require each Paying
Agent, if any, other than the Trustee to agree in writing that such Paying Agent
shall hold in trust for the benefit of the Holders or the Trustee all money held
by the Paying Agent for the payment of principal of, premium, if any, or
interest on the Notes (whether such money has been paid to it by the Company or
any other obligor on the Notes), and that such Paying Agent shall promptly
notify the Trustee of any default by the Company (or any other obligor on the
Notes) in making any such payment. The Company at any time may require a Paying
Agent to pay all money held by it to the Trustee and account for any funds
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
pay all money held by it to the Trustee and to account for any funds disbursed.
Upon doing so, the Paying Agent shall have no further liability for the money so
paid over to the Trustee. If the Company or any Subsidiary of the Company or any
Affiliate of any of them acts as Paying Agent, it will, on or before each due
date of any principal of, premium, if any, or interest on the Notes, segregate
and hold in a separate trust fund for the benefit of the Holders a sum of money
sufficient to pay such principal, premium, if any, or interest so becoming due
until such sum of money shall be paid to such Holders or otherwise disposed of
as provided in this Indenture, and will promptly notify the Trustee of its
action or failure to act as required by this Section 2.05.
SECTION 2.06. Transfer and Exchange. The Notes are issuable only in
registered form. A Holder may transfer a Note by written application to the
Registrar stating
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the name of the proposed transferee and otherwise complying with the terms of
this Indenture. No such transfer shall be effected until, and such transferee
shall succeed to the rights of a Holder only upon registration of the transfer
by the Registrar in the Note Register. Prior to the registration of any transfer
by a Holder as provided herein, the Company, the Trustee, and any agent of the
Company or the Trustee shall treat the Person in whose name the Note is
registered as the owner thereof for all purposes whether or not the Note shall
be overdue, and neither the Company, the Trustee, nor any such agent shall be
affected by notice to the contrary. Furthermore, any Holder of a Global Note
shall, by acceptance of such Global Note, agree that transfers of beneficial
interests in such Global Note may be effected only through a book-entry system
maintained by the Depository (or its agent), and that ownership of a beneficial
interest in the Note shall be required to be reflected in a book entry. When
Notes are presented to the Registrar or a co-Registrar with a request to
register the transfer or to exchange them for an equal principal amount of Notes
of other authorized denominations (including an exchange of Notes for Exchange
Notes), the Registrar shall register the transfer or make the exchange as
requested if its requirements for such transactions are met; provided that no
exchanges of Notes for Exchange Notes shall occur until a Registration Statement
shall have been declared effective by the Commission and that any Notes that are
exchanged for Exchange Notes shall be cancelled by the Trustee. To permit
registrations of transfers and exchanges in accordance with the terms,
conditions and restrictions hereof, the Company shall execute and the Trustee
shall authenticate Notes at the Registrar's request. No service charge shall be
made to any Holder for any registration of transfer or exchange or redemption of
the Notes, but the Company may require payment of a sum sufficient to cover any
transfer tax or similar governmental charge payable in connection therewith
(other than any such transfer taxes or other similar governmental charge payable
upon transfers, exchanges or redemptions pursuant to Section 2.11, 3.08, 4.11,
4.12 or 9.04).
The Registrar shall not be required (i) to issue, register the
transfer of or exchange any Note during a period beginning at the opening of
business 15 days before the day of the mailing of a notice of redemption of
Notes selected for redemption under Section 3.03 or Section 3.08 and ending at
the close of business on the day of such mailing, or (ii) to register the
transfer of or exchange any Note so selected for redemption in whole or in part,
except the unredeemed portion of any Note being redeemed in part.
SECTION 2.07. Book-Entry Provisions for Global Notes. (a) Each
Restricted Global and Regulation S Global initially shall (i) be registered in
the name of the Depository for such Global Note or the nominee of such
Depository, (ii) be delivered to the Trustee as custodian for such Depository
and (iii) bear legends as set forth in Section 2.02 hereof.
Members of, or Participants in, the Depository ("Agent Members")
shall have no rights under this Indenture with respect to any Global Note held
on their behalf by the Depository, or the Trustee as its custodian, or under any
Global Note, and the Depository may
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be treated by the Company, the Trustee and any agent of the Company or the
Trustee as the absolute owner of such 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 the Depository
or impair, as between the Depository and its Agent Members, the operation of
customary practices governing the exercise of the rights of a beneficial owner
of any Note.
(b) Transfers of a Global Note shall be limited to transfers of such
Global Note in whole, but not in part, to the Depository, its successors or
their respective nominees. Transfers of interests in one Global Note to parties
who will hold the interests through the same Global Note will be effected in the
ordinary way in accordance with the respective rules and operating procedures of
the DTC, Euroclear or Cedel Bank, as the case may be, and the provisions of
Section 2.08 hereof. In addition, U.S. Certificated Notes or Regulation S
Certificated Notes shall be transferred to all beneficial owners in exchange for
their beneficial interests in a Restricted Global or a Regulation S Global,
respectively, if (i) the Depository notifies the Company that it is unwilling or
unable to continue as Depository for the Restricted Global or the Regulation S
Global, as the case may be and a successor depositary is not appointed by the
Company within 90 days of such notice or (ii) an Event of Default has occurred
and is continuing and the Registrar has received a request to the foregoing
effect from the Depository or the Trustee.
(c) 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, if any, and other procedures
applicable to beneficial interests in such other Global Note for as long as it
remains such an interest.
(d) In connection with any transfer pursuant to paragraph (b) of
this Section of a portion of the beneficial interests in a Restricted Global or
Regulation S Global to beneficial owners who are required to hold Certificated
Notes, the Registrar shall reflect on its books and records the date and a
decrease in the principal amount of such Restricted Global or Regulation S
Global in an amount equal to the principal amount of the beneficial interest in
such Restricted Global or Regulation S Global to be transferred, and the Company
shall execute, and the Trustee shall authenticate and deliver, one or more U.S.
Certificated Notes or Regulation S Certificated Notes, as the case may be, of
like tenor and amount.
(e) In connection with the transfer of all the beneficial interests
in a Restricted Global or Regulation S Global to beneficial owners pursuant to
paragraph (b) of this Section, the Restricted Global or Regulation S Global, as
the case may be, shall be deemed to
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be surrendered to the Trustee for cancellation, and the Company shall execute,
and the Trustee shall authenticate and deliver, to each beneficial owner
identified by the Depository in exchange for its beneficial interest in the
Restricted Global or Regulation S Global, as the case may be, an equal aggregate
principal amount of U.S. Certificated Notes or Regulation S Certificated Notes,
as the case may be, of authorized denominations.
(f) Any U.S. Certificated Note delivered in exchange for an interest
in a Restricted Global pursuant to paragraph (b), (d) or (e) of this Section
shall, except as otherwise provided by paragraphs (f)(i)(x) and (d) of Section
2.08 hereof, bear the legend regarding transfer restrictions applicable to the
U.S. Certificated Note set forth in Section 2.02.
(g) Any Regulation S Certificated Note delivered in exchange for an
interest in a Regulation S Global pursuant to paragraph (b), (d) or (e) of this
Section shall, except as otherwise provided by paragraphs (f)(i)(x) and (d) of
Section 2.08 hereof, bear the legend regarding transfer restrictions applicable
to the Regulation S Certificated Note set forth in Section 2.02 hereof.
(h) The registered holder of a Global Note may grant proxies and
otherwise authorize any Person, including 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.
(i) QIBs that are beneficial owners of interests in a Global Note
may receive Certificated Notes (which shall bear the Private Placement Legend if
required by Section 2.02) in accordance with the procedures of the Depository.
In connection with the execution, authentication and delivery of such
Certificated Notes, the Registrar shall reflect on its books and records a
decrease in the principal amount of the relevant Global Note equal to the
principal amount of such Certificated Notes and the Company shall execute and
the Trustee shall authenticate and deliver one or more Certificated Notes having
an equal aggregate principal amount.
(j) All Notes issued upon any transfer or exchange of Notes shall be
valid obligations of the Company, evidencing the same debt, and entitled to the
same benefits under this Indenture, as the Notes surrendered upon such transfer
or exchange.
SECTION 2.08. Special Transfer Provisions. Unless and until a Note
is exchanged for an Exchange Note in connection with an effective Registration
Statement pursuant to the Registration Rights Agreement, the following
provisions shall apply:
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(a) Transfers to QIBs. The following provisions shall apply with
respect to the registration of any proposed transfer of a U.S. Certificated Note
or an interest in a Restricted Global to a QIB (excluding Non-U.S. Persons):
(i) If the Note to be transferred consists of (x) U.S. Certificated
Notes, the Registrar shall register the transfer if such transfer is being
made by a proposed transferor who has checked the box provided for on the
form of Note stating, or has otherwise advised the Company and the
Registrar in writing, that the sale has been made in compliance with the
provisions of Rule 144A to a transferee who has signed the certification
provided for on the form of Note stating, or has otherwise advised the
Company and the Registrar in writing, that it is purchasing the Note for
its own account or an account with respect to which it exercises sole
investment discretion and that it and any such account is a QIB within the
meaning of Rule 144A, and is aware that the sale to it is being made in
reliance on Rule 144A and acknowledges that it has received such
information regarding the Company as it has requested pursuant to Rule
144A or has determined not to request such information and that it is
aware that the transferor is relying upon its foregoing representations in
order to claim the exemption from registration provided by Rule 144A or
(y) an interest in a Restricted Global, the transfer of such interest may
be effected only through the book entry system maintained by the
Depository.
(ii) If the proposed transferee is an Agent Member, and the Note to
be transferred consists of U.S. Certificated Notes, upon receipt by the
Registrar of the documents referred to in clause (i) and instructions
given in accordance with the Depository's and the Registrar's procedures,
the Registrar shall reflect on its books and records the date and an
increase in the principal amount of such Restricted Global in an amount
equal to the principal amount of the U.S. Certificated Notes to be
transferred, and the Trustee shall cancel the Certificated Note so
transferred.
(b) Transfers of Interests in Regulation S Global or Regulation S
Certificated Notes to U.S. Persons. The following provisions shall apply with
respect to any transfer of interests in a Regulation S Global or Regulation S
Certificated Notes to U.S. Persons:
(i) prior to the removal of the Private Placement Legend from a
Regulation S Global or a Regulation S Certificated Note pursuant to
Section 2.02, the Registrar shall refuse to register such transfer; and
(ii) after such removal, the Registrar shall register the transfer
of any such Note without requiring any additional certification.
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(c) Transfers to Non-U.S. Persons at Any Time. The following
provisions shall apply with respect to any transfer of a Note to a Non-U.S.
Person:
(i) The Registrar shall register any proposed transfer to any
Non-U.S. Person if the Note to be transferred is a U.S. Certificated Note
or an interest in a Restricted Global only upon receipt of a certificate
substantially in the form of Exhibit E from the proposed transferor.
(ii) (a) If the proposed transferor is an Agent Member holding a
beneficial interest in a Restricted Global, upon receipt by the Registrar
of (x) the documents required by paragraph (i) and (y) instructions in
accordance with the Depository's and the Registrar's procedures, the
Registrar shall reflect on its books and records the date and a decrease
in the principal amount of such Restricted Global in an amount equal to
the principal amount of the beneficial interest in the Restricted Global
to be transferred, and (b) if the proposed transferee is an Agent Member,
upon receipt by the Registrar of instructions given in accordance with the
Depository's and the Registrar's procedures, the Registrar shall reflect
on its books and records the date and an increase in the principal amount
of such Regulation S Global in an amount equal to the principal amount of
the U.S. Certificated Notes or the Restricted Global, as the case may be,
to be transferred, and the Trustee shall cancel the Certificated Note, if
any, so transferred or decrease the amount of the Restricted Global.
(d) Private Placement Legend. Upon the registration of transfer,
exchange or replacement of Notes not bearing the Private Placement Legend, the
Registrar shall deliver Notes that do not bear the Private Placement Legend.
Upon the registration of transfer, exchange or replacement of Notes bearing the
Private Placement Legend, the Registrar shall deliver only Notes that bear the
Private Placement Legend unless either (i) the Private Placement Legend is no
longer required by Section 2.02 or (ii) there is delivered to the Registrar an
Opinion of Counsel reasonably satisfactory to the Company and the Trustee to the
effect that neither such legend nor the related restrictions on transfer are
required in order to maintain compliance with the provisions of the Securities
Act.
(e) 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 Registrar shall not register a transfer of any Note unless such
transfer complies with the restrictions on transfer of such Note set forth in
this Indenture. In connection with any transfer of Notes to an Institutional
Accredited Investor, each Holder agrees by its acceptance of the Notes to
furnish the Registrar or the Company such certifications, legal opinions or
other information as either of them may reasonably require to confirm that such
transfer is being made pursuant to an exemption from,
<PAGE>
39
or a transaction not subject to, the registration requirements of the Securities
Act; provided that the Registrar shall not be required to determine (but may
rely on a determination made by the Company with respect to) the sufficiency of
any such certifications, legal opinions or other information.
(f) Transfers to Non-QIB Institutional Accredited Investors. The
following provisions shall apply with respect to the registration of any
proposed transfer of a Note to any Institutional Accredited Investor which is
not a QIB (excluding Non-U.S. Persons):
(i) The Registrar shall register the transfer of any Note, whether
or not such Note bears the Private Placement Legend, if (x) the requested
transfer is after the time period referred to in Rule 144(k) under the
Securities Act as in effect with respect to such transfer or (y) the
proposed transferee has delivered to the Registrar (A) a certificate
substantially in the form of Exhibit F hereto and (B) if the aggregate
principal amount of the Notes being transferred is less than $500,000 at
the time of such transfer, an Opinion of Counsel acceptable to the Company
that such transfer is in compliance with the Securities Act.
(ii) If the proposed transferor is an Agent Member holding a
beneficial interest in a Restricted Global, upon receipt by the Registrar
and the Company of (x) the documents, if any, required by paragraph (i)
and (y) instructions given in accordance with the Depository's and the
Registrar's procedures, the Registrar shall reflect on its books and
records the date and a decrease in the principal amount of such Restricted
Global in an amount equal to the principal amount of the beneficial
interest in the Restricted Global to be transferred, and the Company shall
execute, and the Trustee shall authenticate and deliver, one or more U.S.
Certificated Notes of like tenor and amount.
The Registrar shall retain, in accordance with its customary
procedures, copies of all letters, notices and other written communications
received pursuant to Section 2.07 or this Section 2.08. 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.
SECTION 2.09. Replacement Notes. If a mutilated Note is surrendered
to the Trustee or if the Holder claims that the Note has been lost, destroyed or
wrongfully taken, the Company shall issue and the Trustee shall authenticate a
replacement Note of like tenor and principal amount and bearing a number not
contemporaneously outstanding; provided that the requirements of the second
paragraph of Section 2.10 are met. If required by the Trustee or the Company, an
indemnity bond must be furnished that is sufficient in the judgment of both the
Trustee and the Company to protect the Company, the Trustee or any Agent from
any loss
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40
that any of them may suffer if a Note is replaced. The Company may charge such
Holder for its expenses and the expenses of the Trustee in replacing a Note. In
case any such mutilated, lost, destroyed or wrongfully taken Note has become or
is about to become due and payable, the Company in its discretion may pay such
Note instead of issuing a new Note in replacement thereof.
Every replacement Note is an additional obligation of the Company
and shall be entitled to the benefits of this Indenture.
SECTION 2.10. Outstanding Notes. Notes outstanding at any time are
all Notes that have been authenticated by the Trustee except for those cancelled
by it, those delivered to it for cancellation and those described in this
Section 2.10 as not outstanding.
If a Note is replaced pursuant to Section 2.09, it ceases to be
outstanding unless and until the Trustee and the Company receive proof
reasonably satisfactory to them that the replaced Note is held by a bona fide
purchaser.
If the Paying Agent (other than the Company or an Affiliate of the
Company) holds on the maturity date or a redemption date money sufficient to pay
all principal, premium, if any, and interest payable on that date with respect
to the Notes (or portions thereof) to be redeemed or payable on that date, then
on and after that date such Notes cease to be outstanding and interest on them
shall cease to accrue.
A Note does not cease to be outstanding because the Company or one
of its Affiliates holds such Note; provided, however, that, in determining
whether the Holders of the requisite principal amount of the outstanding Notes
have given any request, demand, authorization, direction, notice, consent or
waiver hereunder, Notes owned by the Company or any other obligor upon the Notes
or any Affiliate of the Company or of such other obligor shall be disregarded
and deemed not to be outstanding, except that, in determining whether the
Trustee shall be protected in relying upon any such request, demand,
authorization, direction, notice, consent or waiver, only Notes which a
Responsible Officer of the Trustee knows to be so owned shall be so disregarded.
Notes so owned which have been pledged in good faith may be regarded as
outstanding if the pledgee establishes to the satisfaction of the Trustee the
pledgee's right so to act with respect to such Notes and that the pledgee is not
the Company or any other obligor upon the Notes or any Affiliate of the Company
or of such other obligor.
SECTION 2.11. Temporary Notes. Until definitive Notes are ready for
delivery, the Company may prepare and the Trustee shall authenticate temporary
Notes. Temporary Notes shall be substantially in the form of definitive Notes
but may have insertions, substitutions, omissions and other variations
determined to be appropriate by the Officers executing the temporary Notes, as
evidenced by their execution of such temporary
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41
Notes. If temporary Notes are issued, the Company will cause definitive Notes to
be prepared without unreasonable delay. After the preparation of definitive
Notes, the temporary Notes shall be exchangeable for definitive Notes upon
surrender of the temporary Notes at the office or agency of the Company
designated for such purpose pursuant to Section 4.02, without charge to the
Holder. Upon surrender for cancellation of any one or more temporary Notes the
Company shall execute and the Trustee shall authenticate and deliver in exchange
therefor a like principal amount of definitive Notes of authorized
denominations. Until so exchanged, the temporary Notes shall be entitled to the
same benefits under this Indenture as definitive Notes.
SECTION 2.12. Cancellation. The Company at any time may deliver to
the Trustee for cancellation any Notes previously authenticated and delivered
hereunder which the Company may have acquired in any manner whatsoever, and may
deliver to the Trustee for cancellation any Notes previously authenticated
hereunder which the Company has not issued and sold. The Registrar and the
Paying Agent shall forward to the Trustee any Notes surrendered to them for
registration of transfer, exchange, purchase or payment. The Trustee shall
cancel all Notes surrendered for registration of transfer, exchange, purchase,
payment or cancellation and shall return all such Notes to the Company. The
Company shall not issue 1998 Notes to replace Notes it has paid in full or
delivered to the Trustee for cancellation.
SECTION 2.13. CUSIP Numbers. The Company in issuing the Notes may
use "CUSIP" and "CINS" numbers, as the case may be, in notices of redemption or
exchange as a convenience to Holders; provided that any such notice shall state
that no representation is made as to the correctness of such numbers either as
printed on the Notes or as contained in any notice of redemption or exchange and
that reliance may be placed only on the other identification numbers printed on
the Notes. The Company shall promptly advise the Trustee of any change in the
CUSIP numbers.
SECTION 2.14. Defaulted Interest. If the Company defaults in a
payment of interest on the Notes, it shall pay, or shall deposit with the Paying
Agent money in immediately available funds sufficient to pay, the defaulted
interest, plus (to the extent lawful) interest on the defaulted interest, to the
Persons who are Holders on a subsequent special record date. A special record
date, as used in this Section 2.14 with respect to the payment of any defaulted
interest, shall mean the 15th day next preceding the date fixed by the Company
for the payment of defaulted interest, whether or not such day is a Business
Day. At least 15 days before the subsequent special record date, the Company
shall mail to each Holder and to the Trustee a notice that states the subsequent
special record date, the payment date and the amount of defaulted interest to be
paid.
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42
SECTION 2.15. Issuance of Additional Notes. The Company may, subject
to Article Four of this Indenture, issue additional Notes under this Indenture.
The Notes issued on the Closing Date and any additional Notes subsequently
issued shall be treated as a single class for all purposes under this Indenture.
ARTICLE THREE
REDEMPTION
SECTION 3.01. Right of Redemption. (a) The Notes may be redeemed at
the election of the Company, in whole or in part, at any time and from time to
time on or after April 15, 2003 and prior to maturity, upon not less than 30 nor
more than 60 days' prior notice mailed by first-class mail to each Holder's last
address as it appears in the Note Register, at the following Redemption Prices
(expressed in percentages of their principal amount), plus accrued and unpaid
interest, if any, to the Redemption Date (subject to the right of Holders of
record on the relevant Regular Record Date that is on or prior to the Redemption
Date to receive interest due on an Interest Payment Date that is on or prior to
the Redemption Date) if redeemed during the 12-month period commencing on April
15 of the applicable year set forth below:
Year Redemption Price
- ---- ----------------
2003..................................................... 105.625%
2004..................................................... 103.750
2005..................................................... 101.875
2006 and thereafter...................................... 100.000
(b) In addition, at any time prior to April 15, 2001, the Company
may, at its option, redeem up to 35% of the aggregate principal amount at
maturity of the Notes with the net proceeds of one or more Public Equity
Offerings, at any time or from time to time in part, at a Redemption Price
(expressed as a percentage of the principal amount) of 111.25%; provided (i)
that 1998 Notes representing at least 65% of the principal amount at maturity of
the 1998 Notes initially issued remain outstanding immediately after each such
redemption and (ii) that notice of each such redemption is mailed within 60 days
of each such Public Equity Offering.
SECTION 3.02. Notices to Trustee. If the Company elects to redeem
Notes pursuant to Section 3.01, it shall notify the Trustee in writing of the
Redemption Date and the principal amount of Notes to be redeemed.
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43
The Company shall give each notice provided for in this Section 3.02
in an Officers' Certificate at least 45 days before the Redemption Date (unless
a shorter period shall be satisfactory to the Trustee).
SECTION 3.03. Selection of Notes to Be Redeemed. If less than all of
the Notes are to be redeemed at any time, the Trustee shall select the Notes to
be redeemed in compliance with the requirements of the principal national
securities exchange, if any, on which the Notes are listed or if the Notes are
not listed on a national securities exchange, by lot or by such other method as
the Trustee in its sole discretion shall deem to be fair and appropriate;
provided that no Notes of $1,000 in principal amount or less shall be redeemed
in part.
The Trustee shall make the selection from the Notes outstanding and
not previously called for redemption. Notes in denominations of $1,000 in
principal amount may only be redeemed in whole. The Trustee may select for
redemption portions (equal to $1,000 in principal amount or any integral
multiple thereof) of Notes that have denominations larger than $1,000 in
principal amount. Provisions of this Indenture that apply to Notes called for
redemption also apply to portions of Notes called for redemption. The Trustee
shall notify the Company and the Registrar promptly in writing of the Notes or
portions of Notes to be called for redemption.
SECTION 3.04. Notice of Redemption. With respect to any redemption
of Notes pursuant to Section 3.01, at least 30 days but not more than 60 days
before a Redemption Date, the Company, or at the Company's request the Trustee
shall mail a notice of redemption by first class mail to each Holder whose Notes
are to be redeemed.
The notice shall identify the Notes to be redeemed and shall state:
(i) the Redemption Date;
(ii) the Redemption Price;
(iii) the name and address of the Paying Agent;
(iv) that Notes called for redemption must be surrendered to the
Paying Agent in order to collect the Redemption Price;
(v) that, unless the Company defaults in making the redemption
payment, interest on Notes (or portions thereof) called for redemption
ceases to accrue on and after the Redemption Date and the only remaining
right of the Holders is to receive
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44
payment of the Redemption Price plus accrued interest to the Redemption
Date upon surrender of the Notes to the Paying Agent;
(vi) that, if any Note is being redeemed in part, the portion of the
principal amount (equal to $1,000 in principal amount or any integral
multiple thereof) of such Note to be redeemed and that, on and after the
Redemption Date, upon surrender of such Note, a new Note or Notes in
principal amount equal to the unredeemed portion thereof will be reissued;
and
(vii) that, if any Note contains a CUSIP number as provided in
Section 2.13, no representation is being made as to the correctness of the
CUSIP number either as printed on the Notes or as contained in the notice
of redemption.
At the Company's request (which request may be revoked by the Company at any
time prior to the time at which the Trustee shall have given such notice to the
Holders), made in writing to the Trustee at least 45 days (or such shorter
period as shall be satisfactory to the Trustee) before a Redemption Date, the
Trustee shall give the notice of redemption in the name and at the expense of
the Company. If, however, the Company gives such notice to the Holders, the
Company shall concurrently deliver to the Trustee a copy of such notice of
redemption.
SECTION 3.05. Effect of Notice of Redemption. Once notice of
redemption is mailed, Notes called for redemption become due and payable on the
Redemption Date and at the Redemption Price. Upon surrender of any Notes to the
Paying Agent, such Notes shall be paid at the Redemption Price, plus accrued
interest, if any, to the Redemption Date. Notice of redemption shall be deemed
to be given when mailed, whether or not the Holder receives the notice. In any
event, failure to give such notice, or any defect therein, shall not affect the
validity of the proceedings for the redemption of Notes held by Holders to whom
such notice was properly given.
SECTION 3.06. Deposit of Redemption Price. On or prior to any
Redemption Date, the Company shall deposit with the Paying Agent (or, if the
Company, one of its Subsidiaries or any of their Affiliates is acting as Paying
Agent, shall segregate and hold in trust as provided in Section 2.05) money
sufficient to pay the Redemption Price of and accrued interest on all Notes to
be redeemed on that date other than Notes or portions thereof called for
redemption on that date that have been delivered by the Company to the Trustee
for cancellation.
SECTION 3.07. Payment of Notes Called for Redemption. If notice of
redemption has been given in the manner provided above, the Notes or portion of
Notes specified in such notice to be redeemed shall become due and payable on
the Redemption Date at the Redemption Price stated therein, together with
accrued interest to such Redemption
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45
Date, and on and after such date (unless the Company shall default in the
payment of such Notes at the Redemption Price and accrued interest to the
Redemption Date, in which case the principal, until paid, shall bear interest
from the Redemption Date at the rate prescribed in the Notes), such Notes shall
cease to accrue interest. Upon surrender of any Note for redemption in
accordance with a notice of redemption, such Note shall be paid and redeemed by
the Company at the Redemption Price, together with accrued interest, if any, to
the Redemption Date; provided that installments of interest whose Stated
Maturity is on or prior to the Redemption Date shall be payable to the Holders
registered as such at the close of business on the relevant Regular Record Date.
SECTION 3.08. Notes Redeemed in Part. Upon surrender of any Note
that is redeemed in part, the Company shall execute and the Trustee shall
authenticate and deliver to the Holder a new Note equal in principal amount to
the unredeemed portion of such surrendered Note.
ARTICLE FOUR
COVENANTS
SECTION 4.01. Payment of Notes. The Company shall pay the principal
of, premium, if any, and interest on the Notes on the dates and in the manner
provided in the Notes and this Indenture. An installment of principal, premium,
if any, or interest shall be considered paid on the date due if the Trustee or
Paying Agent (other than the Company, a Subsidiary of the Company, or any
Affiliate of any of them) holds on that date money designated for and sufficient
to pay the installment. If the Company or any Subsidiary of the Company or any
Affiliate of any of them, acts as Paying Agent, an installment of principal,
premium, if any, or interest shall be considered paid on the due date if the
entity acting as Paying Agent complies with the last sentence of Section 2.05.
As provided in Section 6.09, upon any bankruptcy or reorganization procedure
relative to the Company, the Trustee shall serve as the Paying Agent and
conversion agent, if any, for the Notes.
The Company shall pay interest on overdue principal, premium, if
any, and interest on overdue installments of interest, to the extent lawful, at
the rate per annum specified in the Notes.
SECTION 4.02. Maintenance of Office or Agency. The Company will
maintain in the Borough of Manhattan, the City of New York, an office or agency
where Notes may be surrendered for registration of transfer or exchange or for
presentation for payment and where notices and demands to or upon the Company in
respect of the Notes and this Indenture may be served. The Company will 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
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46
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 11.02 hereof.
The Company may also from time to time designate one or more other
offices or agencies (in or outside the City of New York) where the Notes may be
presented or surrendered for any or all such purposes and may from time to time
rescind such designations; provided that no such designation or rescission shall
in any manner relieve the Company of its obligation to maintain an office or
agency in the Borough of Manhattan, the City of New York for such purposes. The
Company will give prompt written notice to the Trustee of any such designation
or rescission and of any change in the location of any such other office or
agency.
The Company hereby initially designates the Corporate Trust Office
of the Trustee, located in the Borough of Manhattan, the City of New York, as
such office of the Company in accordance with Section 2.04.
SECTION 4.03. Limitation on Indebtedness. (a) The Company will not,
and will not permit any of its Restricted Subsidiaries to, Incur any
Indebtedness (other than the 1998 Notes and Indebtedness existing on the Closing
Date); provided that the Company may Incur Indebtedness if, after giving effect
to the Incurrence of such Indebtedness and the receipt and application of the
proceeds therefrom, the Consolidated Leverage Ratio would be greater than zero
and less than 6:1.
Notwithstanding the foregoing, the Company and any Restricted
Subsidiary (except as specified below) may Incur each and all of the following:
(i) Indebtedness outstanding at any time in an aggregate principal
amount not to exceed $100 million of Indebtedness that is pari passu with
or subordinated to the Notes and $150 million of Indebtedness that is
subordinated to the Notes, less any amount of such Indebtedness
permanently repaid as provided under Section 4.11 hereof;
(ii) Indebtedness owed (A) by any Restricted Subsidiary to the
Company or another Restricted Subsidiary or (B) by the Company to any
Restricted Subsidiary; provided that any event which results in any such
Restricted Subsidiary ceasing to be a Restricted Subsidiary or any
subsequent transfer of such Indebtedness (other than to the Company or
another Restricted Subsidiary) shall be deemed, in each case, to
constitute an Incurrence of such Indebtedness not permitted by this clause
(ii);
(iii) Indebtedness issued in exchange for, or the net proceeds of
which are used to repay, redeem, defease, refinance, refund, extend,
renew, replace, discharge or
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47
otherwise retire any then outstanding Indebtedness (other than
Indebtedness Incurred under clause (i), (ii), (iv), (vi), (viii), (xi) or
(xii) of this paragraph) and any refinancings thereof in an amount not to
exceed the amount so refinanced or refunded (plus premiums, penalties,
accrued interest, fees and expenses); provided that Indebtedness the
proceeds of which are used to refinance or refund the Notes or
Indebtedness that is pari passu with, or subordinated in right of payment
to, the Notes shall only be permitted under this clause (iii) if (A) in
case the Notes are refinanced in part or the Indebtedness to be refinanced
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 outstanding, is expressly made pari passu with, or
subordinate in right of payment to, the remaining Notes, (B) in case the
Indebtedness to be refinanced is subordinated in right of payment to the
Notes, such new Indebtedness, by its terms or by the terms of any
agreement or instrument pursuant to which such new Indebtedness is issued
or remains outstanding, is expressly made subordinate in right of payment
to the Notes at least to the extent that the Indebtedness to be refinanced
is subordinated to the Notes and (C) such new Indebtedness, determined as
of the date of Incurrence of such new Indebtedness, does not mature prior
to the Stated Maturity of the Indebtedness to be refinanced or refunded,
and the Average Life of such new Indebtedness is at least equal to the
remaining Average Life of the Indebtedness to be refinanced or refunded;
and provided further that in no event may Indebtedness of the Company be
refinanced 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 provided in the ordinary course of business, (B) under Currency
Agreements and Interest Rate Agreements; provided that such agreements (a)
are designed solely to protect the Company or any of its Restricted
Subsidiaries against fluctuations in foreign currency exchange rates or
interest rates and (b) 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 (other than Guarantees of Indebtedness Incurred by any Person
acquiring all or any portion of such business, assets or Restricted
Subsidiary for the purpose of financing such acquisition), in a principal
amount not to exceed the gross proceeds actually received by the Company
or any Restricted Subsidiary in connection with such disposition;
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48
(v) Indebtedness of the Company, to the extent the net proceeds
thereof are promptly (A) used to purchase Notes tendered in an Offer to
Purchase made as a result of a Change in Control or (B) deposited to
defease the Notes as described below under Article Eight hereof;
(vi) Guarantees of the Notes and Guarantees of Indebtedness of the
Company by any Restricted Subsidiary provided the Guarantee of such
Indebtedness is permitted by and made in accordance with Section 4.07
hereof;
(vii) Indebtedness (including Guarantees) Incurred to finance the
cost (including the cost of design, development, acquisition,
construction, installation, improvement, transportation or integration) to
acquire equipment, inventory or network assets (including acquisitions by
way of Capitalized Lease and acquisitions of the Capital Stock of a Person
that becomes a Restricted Subsidiary to the extent of the fair market
value of the equipment, inventory or network assets so acquired) by the
Company or a Restricted Subsidiary after the Closing Date;
(viii) Indebtedness of the Company not to exceed, at any one time
outstanding, two times (A) the Net Cash Proceeds received by the Company
after the Closing Date as a capital contribution or from the issuance and
sale of its Capital Stock (other than Disqualified Stock) to a Person that
is not a Subsidiary of the Company, to the extent (I) such capital
contribution or Net Cash Proceeds have not been used pursuant to clause
(C)(2) of the first paragraph or clause (iii), (iv), (vi) or (vii) of the
second paragraph of Section 4.04 hereof to make a Restricted Payment and
(II) if such capital contribution or Net Cash Proceeds are used to
consummate a transaction pursuant to which the Company Incurs Acquired
Indebtedness, the amount of such Net Cash Proceeds exceeds one-half of the
amount of Acquired Indebtedness so Incurred and (B) 80% of the fair market
value of property (other than cash and cash equivalents) received by the
Company after the Closing Date from the sale of its Capital Stock (other
than Disqualified Stock) to a Person that is not a Subsidiary of the
Company, to the extent (I) such capital contribution or sale of Capital
Stock has not been used pursuant to clause (iii), (iv), (vi) or (vii) of
the second paragraph of Section 4.04 hereof to make a Restricted Payment
and (II) if such capital contribution or Capital Stock is used to
consummate a transaction pursuant to which the Company Incurs Acquired
Indebtedness, 80% of the fair market value of the property received
exceeds one-half of the amount of Acquired Indebtedness so Incurred
provided that such Indebtedness does not mature prior to the Stated
Maturity of the Notes and has an Average Life longer than the Notes;
(ix) Acquired Indebtedness;
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49
(x) Strategic Subordinated Indebtedness;
(xi) Indebtedness in respect of bankers' acceptance and letters of
credit, all in the ordinary course of business, in an aggregate amount
outstanding at any time of up to $10 million;
(xii) Indebtedness arising from the honoring by a bank or other
financial institution of a check, or similar instrument inadvertently
(except in the case of daylight overdrafts) drawn against insufficient
funds in the ordinary course of business, provided that such Indebtedness
is extinguished within three business days of Incurrence.
(b) Notwithstanding any other provision of this Section 4.03, the
maximum amount of Indebtedness that the Company or a Restricted Subsidiary may
Incur pursuant to this Section 4.03 shall not be deemed to be exceeded, with
respect to any outstanding Indebtedness due solely to the result of fluctuations
in the exchange rates of currencies.
(c) For purposes of determining any particular amount of
Indebtedness under this Section 4.03, (1) 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 and (2) any Liens
granted pursuant to the equal and ratable provisions referred to in Section 4.09
shall not be treated as Indebtedness. For purposes of determining compliance
with this Section 4.03, in the event that an item of Indebtedness meets the
criteria of more than one of the types of Indebtedness described in clauses (i)
through (xii) of Section 4.03(a), the Company, in its sole discretion, shall
classify, and from time to time may reclassify, such item of Indebtedness and
only be required to include the amount and type of such Indebtedness in one of
such clauses.
SECTION 4.04. Limitation on Restricted Payments. The Company will
not, and will not permit any Restricted Subsidiary to, directly or indirectly,
(i) (A) declare or pay any dividend or make any distribution on or
with respect to its Capital Stock (other than (x) dividends or
distributions payable solely in shares of its Capital Stock (other than
Disqualified Stock) or in options, warrants or other rights to acquire
shares of such Capital Stock and (y) pro rata dividends or distributions
on Common Stock of Restricted Subsidiaries held by minority stockholders)
held by Persons other than the Company or any of its Restricted
Subsidiaries or (B) pay any cash interest on the Subordinated Convertible
Debentures,
(ii) purchase, redeem, retire or otherwise acquire for value any
shares of Capital Stock of (A) the Company or an Unrestricted Subsidiary
(including options,
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50
warrants or other rights to acquire such shares of Capital Stock) held by
any Person or (B) a Restricted Subsidiary (including options, warrants or
other rights to acquire such shares of Capital Stock) held by any
Affiliate of the Company (other than a Wholly Owned Restricted Subsidiary)
or any holder (or any Affiliate of such holder) of 5% or more of the
Capital Stock of the Company,
(iii) make any voluntary or optional principal payment, or voluntary
or optional redemption, repurchase, defeasance, or other acquisition or
retirement for value, of Indebtedness of the Company that is subordinated
in right of payment to the Notes or
(iv) make any Investment (after the Closing Date), other than a
Permitted Investment, in any Person (such payments or any other actions
described in clauses (i) through (iv) above being collectively "Restricted
Payments")
if, at the time of, and after giving effect to, the proposed Restricted Payment:
(A) a Default or Event of Default shall have occurred and be continuing, (B) the
Company could not Incur at least $1.00 of Indebtedness under the first paragraph
of Section 4.03 hereof or (C) the aggregate amount of all Restricted Payments
(the amount, 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) made after the Closing Date shall exceed the sum of (1) 50% of the
aggregate amount of the Adjusted Consolidated Net Income (or, if the Adjusted
Consolidated Net Income is a loss, minus 100% of the amount of such loss)
(determined by excluding income resulting from transfers of assets by the
Company or a Restricted Subsidiary to an Unrestricted Subsidiary) accrued on a
cumulative basis during the period (taken as one accounting period) beginning on
the first day of the fiscal quarter immediately following the Closing Date and
ending on the last day of the last fiscal quarter preceding the Transaction Date
for which reports have been filed with the Commission or provided to the Trustee
pursuant to Section 4.18 hereof plus (2) the aggregate Net Cash Proceeds
received by the Company after the Closing Date as a capital contribution or from
the issuance and sale permitted by this Indenture of its Capital Stock (other
than Disqualified Stock) to a Person who is not a Subsidiary of the Company,
including an issuance or sale permitted by this Indenture of Indebtedness of the
Company for cash subsequent to the Closing Date upon the conversion of such
Indebtedness into Capital Stock (other than Disqualified Stock) of the Company,
or from the issuance to a Person who is not a Subsidiary of the Company of any
options, warrants or other rights to acquire Capital Stock of the Company (in
each case, exclusive of any Disqualified Stock or any options, warrants or other
rights that are redeemable at the option of the holder, or are required to be
redeemed, prior to the Stated Maturity of the Notes), in each case except to the
extent such Net Cash Proceeds are used to Incur Indebtedness pursuant to clause
(viii) of the second paragraph under Section 4.03 hereof, plus (3) an amount
equal to the net reduction in Investments (other than reductions in Permitted
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51
Investments) in any Person resulting from payments of interest on Indebtedness,
dividends, repayments of loans or advances, or other transfers of assets, in
each case to the Company or any Restricted Subsidiary or from the Net Cash
Proceeds from the return of capital, redemption, or sale of any such Investment
(except, in each case, to the extent any such payment or proceeds are included
in the calculation of Adjusted Consolidated Net Income), or from redesignations
of Unrestricted Subsidiaries as Restricted Subsidiaries (valued in each case as
provided in the definition of "Investments"), or from the release of any
Guarantee that constituted a Restricted Payment, to the extent of such release,
not to exceed, in each case, the amount of Investments previously made by the
Company or any Restricted Subsidiary in such Person or Unrestricted Subsidiary.
The foregoing provision shall not be violated by reason of:
(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 foregoing paragraph;
(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 the second paragraph of part (a) of Section 4.03
hereof;
(iii) the repurchase, redemption or other acquisition of Capital
Stock of the Company or an Unrestricted Subsidiary (or options, warrants
or other rights to acquire such Capital Stock) in exchange for, or out of
the proceeds of a capital contribution or a substantially concurrent
offering of, shares of Capital Stock (other than Disqualified Stock) of
the Company (or options, warrants or other rights to acquire such Capital
Stock);
(iv) the making of any principal payment or the repurchase,
redemption, retirement, defeasance or other acquisition for value of
Indebtedness of the Company which is subordinated in right of payment to
the Notes in exchange for, or out of the proceeds of a capital
contribution or a substantially concurrent offering of, shares of the
Capital Stock (other than Disqualified Stock) of the Company (or options,
warrants or other rights to acquire such Capital Stock);
(v) payments or distributions to dissenting stockholders pursuant to
applicable law, pursuant to or in connection with a consolidation, merger
or transfer of assets that complies with the provisions of Article Five
hereof;
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52
(vi) Investments in any Person the primary business of which is
related, ancillary or complementary to the business of the Company or any
of its Restricted Subsidiaries on the date of such Investments; provided
that the aggregate amount of Investments made pursuant to this clause (vi)
does not exceed $30 million at any one time outstanding;
(vii) Investments acquired in exchange for Capital Stock (other than
Disqualified Stock) of the Company or the Net Cash Proceeds from the
issuance and sale of such Capital Stock, provided that such proceeds are
so used within 180 days of the receipt thereof;
(viii) the redemption, repurchase, retirement or other acquisition
of any Capital Stock of the Company (or options, warrants or other rights
to acquire such Capital Stock) from an employee or former employee of the
Company or any of its Subsidiaries (or from such person's estate, heirs or
representatives) in connection with such employee's death, disability or
termination of employment, provided that the aggregate amount expended
pursuant to this clause does not exceed $1 million per annum plus the
cumulative amount of such per annum limit not used in prior years and the
cash proceeds from such Investments, provided that such proceeds are used
within 180 days of the receipt thereof;
(ix) Investments in permitted Wholesale Consortiums and Permitted
Joint Ventures not exceeding, at the time of the Investment, the sum of
(A) 10% of the consolidated revenue of the Company (excluding with respect
to Persons in whom an equity interest is owned by Persons other than the
Company and its Restricted Subsidiaries, the pro rata share of such
revenue attributable to such other equity holders) accrued on a cumulative
basis during the period (taken as one accounting period) beginning on the
first day of the first full fiscal quarter immediately following the
Closing Date and ending on the last day of the last fiscal quarter
preceding the date of such Investment and (B) the Net Cash Proceeds from
the disposition of the Company's interest in any such Permitted Wholesale
Consortium or Permitted Joint Venture;
(x) the repurchase of shares of the Series A Preferred upon a Change
of Control pursuant to an Offer to Purchase; provided that an Offer to
Purchase is consummated with respect to the Notes prior to any repurchase
of shares of the Series A Preferred;
(xi) the payment of cash dividends on the Series A Preferred sold as
a Unit with any of the 1998 Notes or issued as dividends thereon, (A)
after April 15, 2003 or (B) at a rate of 0.5% per annum as a result of the
Company's failure to have a
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53
registration statement under the Securities Act for the Series A Preferred
declared effective within one year after the Closing Date; and
(xii) other Restricted Payments in an aggregate amount not to exceed
$10 million, increased by the amount of any Restricted Payment made
pursuant to this clause (x) that is an Investment and is not outstanding;
provided that, except in the case of clauses (i) and (iii), 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 preceding
paragraph (other than the Restricted Payment referred to in clause (ii) thereof,
an exchange of Capital Stock for Capital Stock or Indebtedness referred to in
clause (iii) or (iv) thereof and an Investment referred to in clause (vi)
thereof), and the Net Cash Proceeds from any capital contribution or any
issuance of Capital Stock referred to in clauses (iii), (iv) and (vi), shall be
included in calculating whether the conditions of clause (C) of the first
paragraph of this Section 4.04 have been met with respect to any subsequent
Restricted Payments. In the event the proceeds of an issuance of Capital Stock
of the Company are used for the redemption, repurchase or other acquisition of
the Notes, or Indebtedness that is pari passu with the Notes, then the Net Cash
Proceeds of such issuance shall be included in clause (C) of the first paragraph
of this Section 4.04 only to the extent such proceeds are not used for such
redemption, repurchase or other acquisition of Indebtedness.
Any Restricted Payments made in other than cash shall be valued at
fair market value. The amount of any Investment "outstanding" at any time shall
be deemed to be equal to the amount of such Investment on the date made, less
the return of capital, repayment of loans, return on capital and release of
Guarantees, in each case of or to the Company and its Restricted Subsidiaries
with respect to such Investment (up to the amount of such investment on the date
made).
SECTION 4.05. Limitation on Dividend and Other Payment Restrictions
Affecting Restricted Subsidiaries. The Company will not, and will not permit any
Restricted Subsidiary to, 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 Capital Stock 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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54
The foregoing provisions shall not restrict any encumbrances or
restrictions:
(i) existing on the Closing Date in the Indenture or any other
agreements in effect on the Closing Date, and any extensions,
refinancings, renewals or replacements of such agreements; provided that
the encumbrances and restrictions in any such extensions, refinancings,
renewals or replacements are no less favorable in any material respect to
the Holders than those encumbrances or restrictions that are then in
effect and that are being extended, refinanced, renewed or replaced;
(ii) existing under or by reason of applicable law;
(iii) existing with respect to any Person or the property or assets
of such Person acquired by the Company or any Restricted Subsidiary,
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;
(iv) in the case of clause (iv) of the first paragraph of this
Section 4.05, (A) that restrict in a customary manner the subletting,
assignment or transfer of any property or asset that is a lease, 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,
detract from the value of property or assets of the Company or any
Restricted Subsidiary in any manner material 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 of, or property and assets of,
such Restricted Subsidiary;
(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 Company) and (C) the Company
determines that any such encumbrance or restriction will not materially
affect the Company's ability to make principal or interest payments on the
Notes; or
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55
(vii) imposed in connection with a transaction described in clause
(f) of the proviso to the definition of "Asset Sale" and relating solely
to a Restricted Subsidiary that transfers assets to the special purpose
entity referred to therein; provided that the Company 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 4.05 shall prevent the Company or any
Restricted Subsidiary from (1) creating, incurring, assuming or suffering to
exist any Liens otherwise permitted in Section 4.09 hereof or (2) restricting
the sale or other disposition of property or assets of the Company or any of its
Restricted Subsidiaries that secure Indebtedness of the Company or any of its
Restricted Subsidiaries.
SECTION 4.06. Limitation on the Issuance and Sale of Capital Stock
of Restricted Subsidiaries. The Company will not sell, and will not permit any
Restricted Subsidiary, directly or indirectly, to issue or sell, any shares of
Capital Stock of a Restricted Subsidiary (including options, warrants or other
rights to purchase shares of such Capital Stock) except (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, to the extent required by applicable law; (iii) if,
immediately after giving effect to such issuance or sale, such Restricted
Subsidiary would no longer constitute a Restricted Subsidiary and any Investment
in such Person remaining after giving effect to such issuance or sale would have
been permitted to be made under Section 4.04 hereof if made on the date of such
issuance or sale; (iv) a pledge or hypothecation of or Lien on any Capital Stock
of a Subsidiary to the extent not prohibited under Section 4.09 hereof; or (v)
sales by the Company or Restricted Subsidiaries of Common Stock of a Restricted
Subsidiary, provided that the Company or such Restricted Subsidiaries apply the
Net Cash Proceeds, if any, of any such sale in accordance with clause (A) or (B)
of Section 4.11 hereof.
SECTION 4.07. Limitation on Issuances of Guarantees by Restricted
Subsidiaries. The Company will not permit any Restricted Subsidiary, directly or
indirectly, to Guarantee any Indebtedness of the Company which is pari passu
with or subordinate in right of payment to the Notes ("Guaranteed
Indebtedness"), unless (i) such Restricted Subsidiary simultaneously executes
and delivers a supplemental indenture to this Indenture providing for a
Guarantee (a "Subsidiary Guarantee") of payment of the Notes by such Restricted
Subsidiary 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 Subsidiary Guarantee; provided that this paragraph shall
not be applicable to any Guarantee of any Restricted Subsidiary that existed at
the time such Person became a Restricted Subsidiary and was not Incurred in
connection with, or in contemplation of, such Person becoming a Restricted
Subsidiary. If the
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56
Guaranteed Indebtedness is (A) pari passu with the Notes, then the Guarantee of
such Guaranteed Indebtedness shall be pari passu with, or subordinated to, the
Subsidiary Guarantee or (B) subordinated to the Notes, then the Guarantee of
such Guaranteed Indebtedness shall be subordinated to the Subsidiary Guarantee
at least to the extent that the Guaranteed Indebtedness is subordinated to the
Notes.
Notwithstanding the foregoing, any Subsidiary Guarantee by a
Restricted Subsidiary may provide by its terms that it shall 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 Capital Stock in, or all or substantially all
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 Subsidiary Guarantee, except a
discharge or release by or as a result of payment under such Guarantee.
SECTION 4.08. 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
(including, without limitation, the purchase, sale, lease or exchange of
property or assets, or the rendering of any service) with any 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,
except upon fair and reasonable terms no less favorable to the Company or such
Restricted Subsidiary than could be obtained, at the time of such transaction
or, if such transaction is pursuant to a written agreement, at the time of the
execution of the agreement providing therefor, in a comparable arm's-length
transaction with a Person that is not such a holder or an Affiliate.
The foregoing limitation does not limit, and shall not apply to:
(i) transactions (A) approved by a majority of the disinterested
members of the Board of Directors or (B) for which the Company or a
Restricted Subsidiary delivers to the Trustee a written opinion of a
nationally recognized investment banking firm stating that the transaction
is fair to the Company or such Restricted Subsidiary from a financial
point of view;
(ii) any transaction solely between the Company and any of its
Restricted Subsidiaries or solely between Restricted Subsidiaries;
(iii) the payment of reasonable and customary regular fees to
directors of the Company who are not employees of the Company;
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(iv) any payments or other transactions pursuant to any tax-sharing
agreement between the Company and any other Person with which the Company
files a consolidated tax return or with which the Company is part of a
consolidated group for tax purposes;
(v) compensation, indemnification and other benefits paid or made
available to officers, directors and employees in the ordinary course of
business in connection with services actually rendered and consistent with
past practice;
(vi) transactions in accordance with the Existing Stockholder
Agreements as in effect on the Closing Date; or
(vii) any Restricted Payments not prohibited by Section 4.04 hereof.
Notwithstanding the foregoing, any transaction or series of related transactions
covered by the first paragraph of this Section 4.08 and not covered by clauses
(ii) through (v) of this paragraph, the aggregate amount of which exceeds $2.0
million in value, must be approved or determined to be fair in the manner
provided for in clause (i)(A) or (B) of this Section 4.08.
SECTION 4.09. Limitation on Liens. The Company will not, and will
not permit any Restricted Subsidiary to, create, incur, assume or suffer to
exist any Lien on any of its assets or properties of any character (including,
without limitation, licenses), or any shares of Capital Stock or Indebtedness of
any Restricted Subsidiary, without making effective provision for all of the
Notes and all other amounts due under this 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.
The foregoing limitation does not apply to:
(i) Liens existing on the Closing Date;
(ii) Liens granted after the Closing Date on any assets or Capital
Stock of the Company or its Restricted Subsidiaries created in favor of
the Holders;
(iii) Liens with respect to the assets of a Restricted Subsidiary
granted by such Restricted Subsidiary to the Company or a Wholly Owned
Restricted Subsidiary to secure Indebtedness owing to the Company or such
other Restricted Subsidiary;
(iv) Liens securing Indebtedness permitted to be Incurred under
clause (iii) of the second paragraph of Section 4.03 hereof which is
Incurred to refinance
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secured Indebtedness; provided that such Liens do not extend to or cover
any property or assets of the Company or any Restricted Subsidiary other
than the property or assets securing the Indebtedness being refinanced;
(v) Liens on the Capital Stock of, or any property or assets of, a
Restricted Subsidiary securing Indebtedness of such Restricted Subsidiary
permitted under Section 4.03 hereof;
(vi) Liens on the Capital Stock of Restricted Subsidiaries that own
a substantial portion of assets financed with Indebtedness Incurred under
clause (vii) of Section 4.03 hereof, if such liens secure only such
Indebtedness; or
(vii) Permitted Liens.
SECTION 4.10. Limitation on Sale-Leaseback Transactions. The Company
will not, and will not permit any Restricted Subsidiary to, enter into any
sale-leaseback transaction involving any of its assets or properties whether now
owned or hereafter acquired, whereby the Company or a Restricted Subsidiary
sells or transfers such assets or properties and then or thereafter leases such
assets or properties or any part thereof or any other assets or properties which
the Company or such Restricted Subsidiary, as the case may be, intends to use
for substantially the same purpose or purposes as the assets or properties sold
or transferred; provided that a sale-leaseback transaction shall not include any
lease in connection with which the Company or a Restricted Subsidiary acquires
assets or property in anticipation of the substantially contemporaneous sale or
transfer to the lessor under such lease.
The foregoing restriction does not apply to any sale-leaseback
transaction if:
(i) the lease is for a period, including renewal rights, of not in
excess of three years;
(ii) the lease secures or relates to industrial revenue or pollution
control bonds;
(iii) the transaction is solely between the Company and any
Restricted Subsidiary or solely between Restricted Subsidiaries; or
(iv) the Company or such Restricted Subsidiary, within 12 months
after the sale or transfer of any assets or properties is completed,
applies an amount not less than the net proceeds received from such sale
in accordance with clause (A) or (B) of the first paragraph of Section
4.11 hereof.
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SECTION 4.11. Limitation on Asset Sales. The Company will not, and
will not permit any Restricted Subsidiary to, consummate any Asset Sale, unless
(i) the consideration received by the Company or such Restricted Subsidiary is
at least equal to the fair market value of the assets sold or disposed of and
(ii) at least 75% of the consideration received consists of cash or Temporary
Cash Investments. In the event and to the extent that the Net Cash Proceeds
received by the Company or any of its Restricted Subsidiaries from one or more
Asset Sales occurring on or after the Closing Date in any period of 12
consecutive months exceed 10% of Adjusted Consolidated Net Tangible Assets
(determined as of the date closest to the commencement of such 12-month period
for which a consolidated balance sheet of the Company and its Subsidiaries has
been filed with the Commission pursuant to Section 4.18 hereof, then the Company
shall or shall cause the relevant Restricted Subsidiary to (i) within 12 months
after the date Net Cash Proceeds so received exceed 10% of Adjusted Consolidated
Net Tangible Assets, (A) apply an amount equal to such excess Net Cash Proceeds
to permanently repay unsubordinated Indebtedness of the Company, or any
Restricted Subsidiary providing a Subsidiary Guarantee pursuant to Section 4.07
hereof or Indebtedness of any other Restricted Subsidiary, in each case owing to
a Person other than the Company or any of its Restricted Subsidiaries or (B)
invest an equal amount, or the amount not so applied pursuant to clause (A) (or
enter into a definitive agreement committing to so invest within 12 months after
the date of such agreement), either in property or assets (other than current
assets) of a nature or type or that are used in a business, or in a company
having property and assets of a nature or type, or engaged in a business, in
either case similar or related to the nature or type of the property and assets
of, or the business of, the Company or any of its Restricted Subsidiaries
existing on the date of such investment (as determined in good faith by the
Board of Directors, whose determination shall be conclusive and evidenced by a
Board Resolution) and (ii) apply (no later than the end of the 12-month period
referred to in clause (i)) such excess Net Cash Proceeds (to the extent not
applied pursuant to clause (i)) as provided in the following paragraph of this
Section 4.11. The amount of such excess Net Cash Proceeds required to be applied
(or to be committed to be applied) during such 12-month period as set forth in
clause (i) of the preceding sentence and not applied as so required by the end
of such period shall constitute "Excess Proceeds."
If, as of the first day of any calendar month, the aggregate amount
of Excess Proceeds not theretofore subject to an Offer to Purchase pursuant to
this Section 4.11 totals at least $10 million, the Company must commence, not
later than the fifteenth Business Day of such month, and consummate an Offer to
Purchase from the Holders on a pro rata basis an aggregate principal amount of
Notes equal to the Excess Proceeds on such date, at a purchase price equal to
101% of the principal amount of the Notes on the relevant Payment Date, plus, in
each case, accrued interest (if any) to the Payment Date.
SECTION 4.12. Repurchase of Notes upon a Change of Control. The
Company must commence, within 30 days of the occurrence of a Change of Control,
and
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consummate an Offer to Purchase for all the Notes then outstanding, at a
purchase price equal to 101% of the principal amount of the Notes on the
relevant Payment Date, plus accrued interest (if any) to the Payment Date.
SECTION 4.13. Existence. Except as otherwise provided or permitted
in Articles Four and Five of this Indenture, the Company will do or cause to be
done all things necessary to preserve and keep in full force and effect its
existence and the existence of each of its Restricted Subsidiaries in accordance
with the respective organizational documents of the Company and each such
Subsidiary (as the same may be amended from time to time) and the rights
(whether pursuant to charter, partnership certificate, agreement, statute or
otherwise), material licenses and franchises of the Company and each such
Subsidiary; provided that the Company shall not be required to preserve any such
right, license or franchise, or the existence of any Restricted Subsidiary, if
the maintenance or preservation thereof is no longer desirable in the conduct of
the business of the Company and its Restricted Subsidiaries taken as a whole.
SECTION 4.14. Payment of Taxes and Other Claims. The Company will
pay or discharge and shall cause each of its Subsidiaries to 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
(a) the Company or any such Subsidiary, (b) the income or profits of any such
Subsidiary which is a corporation or (c) the property of the Company or any such
Subsidiary and (ii) all material lawful claims for labor, materials and supplies
that, if unpaid, might by law become a Lien upon the property of the Company or
any such Subsidiary; provided 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 the amount, applicability or validity of which is being contested in
good faith by appropriate proceedings, for which adequate reserves have been
established.
SECTION 4.15. Maintenance of Properties and Insurance. The Company
will cause all properties used or useful in the conduct of its business or the
business of any of its Restricted Subsidiaries, to be maintained and kept in
good condition, repair and working order (ordinary wear and tear excepted) and
supplied with all necessary equipment and will cause to be made all necessary
repairs, renewals, replacements, betterments and improvements thereof, all as in
the judgment of the Company may be necessary so that the business carried on in
connection therewith may be properly and advantageously conducted at all times;
provided that nothing in this Section 4.15 shall prevent the Company or any such
Subsidiary 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 Company, desirable in the conduct of the business of the
Company or such Subsidiary.
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The Company will provide or cause to be provided, for itself and its
Restricted Subsidiaries, insurance (including appropriate self-insurance)
against loss or damage of the kinds customarily insured against by corporations
similarly situated and owning like properties, with reputable insurers or with
the government of the United States of America, or an agency or instrumentality
thereof, in such amounts, with such deductibles and by such methods as shall be
customary for corporations similarly situated in the industry in which the
Company or such Restricted Subsidiary, as the case may be, is then conducting
business.
SECTION 4.16. Notice of Defaults. In the event that the Company
becomes aware of any Default or Event of Default, the Company, promptly after it
becomes aware thereof, will give written notice thereof to the Trustee.
SECTION 4.17. Compliance Certificates. The principal accounting
officer and the principal financial officer of the Company shall certify, on or
before a date not more than 90 days after the end of each fiscal year of the
Company, that a review has been conducted of the activities of the Company and
its Restricted Subsidiaries and the Company's and its Restricted Subsidiaries'
performance under this Indenture and that the Company has fulfilled all
obligations hereunder, 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 shall also notify the Trustee of any default or defaults in the
performance of any covenants or agreements under this Indenture. The Company
shall also comply with the other provisions of Section 314(a) of the TIA.
SECTION 4.18. Commission Reports and Reports to Holders. At all
times from and after the earlier of (i) the date of the commencement of an
Exchange Offer or the effectiveness of a Shelf Registration Statement (the
"Registration") and (ii) the date that is six months after the Closing Date, in
either case, whether or not the Company is then required to file reports with
the Commission, the Company shall file with the Commission all such reports and
other information as it would be required to file with the Commission by
Sections 13(a) or 15(d) under the Securities Exchange Act of 1934 if it were
subject thereto. The Company shall supply the Trustee and each Holder or shall
supply to the Trustee for forwarding to each such Holder, without cost to such
Holder, copies of such reports and other information. In addition, at all times
prior to the earlier of the date of the Registration and the date that is six
months after the Closing Date, the Company shall, at its cost, deliver to each
Holder of the Notes quarterly and annual reports substantially equivalent to
those which would be required by the Exchange Act. In addition, at all times
prior to the Registration, upon the request of any Holder or any prospective
purchaser of the Notes designated by a Holder, the Company shall supply to such
Holder or such prospective purchaser the information required under Rule 144A
under the Securities Act.
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Delivery of such reports, information and documents to the Trustee
is for informational purposes only and the Trustee's receipt of such shall not
constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Company's
compliance with any of its covenants hereunder (as to which the Trustee is
entitled to rely exclusively on Officers' Certificates).
SECTION 4.19. Waiver of Stay, Extension or Usury Laws. The Company
covenants (to the extent that it may lawfully do so) that it will not at any
time insist upon, or plead, or in any manner whatsoever claim or take the
benefit or advantage of, any stay 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, premium, if any, or interest on the Notes as contemplated herein,
wherever enacted, now or at any time hereafter in force, or that 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.
ARTICLE FIVE
SUCCESSOR CORPORATION
SECTION 5.01. When Company May Merge, Etc. The Company shall 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 a series of related
transactions) to, any Person or permit any Person to merge with or into the
Company unless:
(i) the Company shall be the continuing Person, or the Person (if
other than the Company) formed by such consolidation or into which the
Company is merged or that acquired or leased such property and assets of
the Company shall be a corporation organized and validly existing under
the laws of the United States of America or any jurisdiction thereof and
shall expressly assume, by a supplemental indenture, executed and
delivered to the Trustee, all of the obligations of the Company on all of
the Notes and under this Indenture;
(ii) immediately after giving effect to such transaction, no Default
or Event of Default shall have occurred and be continuing;
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(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 1998 Notes, as the case may be, could Incur at least $1.00 of
Indebtedness under the first paragraph of Section 4.03 hereof; provided
that this clause (iv) shall not apply to (x) a consolidation, merger or
sale of all (but not less than all) of the assets of the Company if all
Liens and Indebtedness of the Company or any Person becoming the successor
obligor on the Notes, as the case may be, and its Restricted Subsidiaries
outstanding immediately after such transaction would, if Incurred at such
time, have been permitted to be Incurred (and all such Liens and
Indebtedness, other than Liens and Indebtedness of the Company and its
Restricted Subsidiaries outstanding immediately prior to the transaction,
shall be deemed to have been Incurred) for all purposes of this Indenture
or (y) a consolidation, merger or sale of all or substantially all of the
assets of the Company if, 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 Leverage Ratio
equal to or less than the Consolidated Leverage Ratio of the Company
immediately prior to such transaction; and
(v) the Company delivers to the Trustee an Officers' Certificate
(attaching the arithmetic computations to demonstrate compliance with
clauses (iii) and (iv) of this Section 5.01) and Opinion of Counsel, in
each case stating that such consolidation, merger or transfer and such
supplemental indenture complies with this provision and that all
conditions precedent provided for herein relating to such transaction have
been complied with;
provided, however, that clauses (iii) and (iv) of this Section 5.01 do not apply
if, in the good faith determination of the Board of Directors of the Company,
whose determination shall be evidenced by a Board Resolution, the principal
purpose of such transaction is to change the state of incorporation of the
Company; and provided further that any such transaction shall not have as one of
its purposes the evasion of the foregoing limitations.
SECTION 5.02. Successor Substituted. Upon any consolidation or
merger, or any sale, conveyance, transfer or other disposition of all or
substantially all of the property and assets of the Company in accordance with
Section 5.01 of this Indenture, the successor Person formed by such
consolidation or into which the Company is merged or to which such sale,
conveyance, transfer or other disposition is made shall succeed to, and be
substituted for,
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and may exercise every right and power of, the Company under this Indenture with
the same effect as if such successor Person had been named as the Company
herein.
ARTICLE SIX
DEFAULT AND REMEDIES
SECTION 6.01. Events of Default. An "Event of Default" shall occur
with respect to the Notes if:
(a) the Company defaults 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;
(b) the Company defaults in the payment of interest on any Note when
the same becomes due and payable, and such default continues for a period
of 30 days; provided that a failure to make any of the first six scheduled
interest payments on the Notes in a timely manner will constitute an Event
of Default with no grace or cure period;
(c) the Company defaults in the performance or breach of the
provisions of Article Five hereof or fails to make or consummate an Offer
to Purchase in accordance with Section 4.11 or Section 4.12 hereof;
(d) the Company defaults in the performance of or breaches any other
covenant or agreement of the Company in this Indenture or under the Notes
(other than a default specified in clause (a), (b) or (c) of this Section
6.01) 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;
(e) there occurs with respect to any issue or issues of Indebtedness
of the Company or any Significant Subsidiary having an outstanding
principal amount of $10 million or more in the aggregate for all such
issues of all such Persons, whether such Indebtedness now exists or shall
hereafter be created, (I) an event of default that has caused the holder
thereof to declare such Indebtedness to be due and payable prior to its
Stated Maturity and such Indebtedness has not been discharged in full or
such acceleration has not been rescinded or annulled within 30 days of
such acceleration and/or (II) the failure to make a principal payment at
the final (but not any interim) fixed maturity and such defaulted payment
shall not have been made, waived or extended within 30 days of such
payment default;
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(f) any final judgment or order (not covered by insurance) for the
payment of money in excess of $10 million in the aggregate for all such
final judgments or orders against all such Persons (treating any
deductibles, self-insurance or retention as not so covered) shall be
rendered against the Company or any Significant Subsidiary and shall not
be paid or discharged, and there shall be any period of 60 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 or discharged against all such Persons to exceed $10 million
during which a stay of enforcement of such final judgment or order, by
reason of a pending appeal or otherwise, shall not be in effect;
(g) a court having jurisdiction in the premises enters a decree or
order for (A) relief in respect of the Company or any Significant
Subsidiary 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 Significant
Subsidiary or for all or substantially all of the property and assets of
the Company or any Significant Subsidiary or (C) the winding up or
liquidation of the affairs of the Company or any Significant Subsidiary
and, in each case, such decree or order shall remain unstayed and in
effect for a period of 60 consecutive days; or
(h) the Company or any Significant Subsidiary (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 Significant Subsidiary or for all or substantially all of
the property and assets of the Company or any Significant Subsidiary or
(C) effects any general assignment for the benefit of creditors.
SECTION 6.02. Acceleration. If an Event of Default (other than an
Event of Default specified in clause (g) or (h) of Section 6.01 that occurs with
respect to the Company) occurs and is continuing under this 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 (and to the Trustee if
such notice is given by the Holders), may, and the Trustee at the request of
such Holders shall, declare the principal amount, of, premium, if any, and
accrued interest on the Notes to be immediately due and payable. Upon a
declaration of acceleration, such principal amount of premium, if any, and
accrued interest shall be immediately due and payable. In the event of a
declaration of acceleration because an Event of Default set forth in clause (e)
of Section 6.01 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 (e) shall be remedied or cured by the
Company or the relevant Significant
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Subsidiary 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 clause (g) or (h) of Section 6.01 occurs with respect to
the Company, principal amount of premium, if any, and accrued interest 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 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, and interest 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.
SECTION 6.03. 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, premium, if any, or interest
on the Notes or to enforce the performance of any provision of the Notes or this
Indenture.
The Trustee may maintain a proceeding even if it does not possess
any of the Notes or does not produce any of them in the proceeding.
SECTION 6.04. Waiver of Past Defaults. Subject to Section 9.02, at
any time after such a declaration of acceleration, but before a judgment or
decree for the payment of the money due has been obtained by the Trustee, the
Holders of at least a majority in aggregate 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 (except a Default in the payment of principal of premium, if any,
or interest on any Note as specified in clause (a) or (b) of Section 6.01 (but
not as a result of such acceleration) or in respect of a covenant or provision
of this Indenture which cannot be modified or amended without the consent of the
Holder of each outstanding Note affected) if (i) all existing Events of Default,
other than the nonpayment of the principal amount of, premium, if any, and
interest 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. Upon
any such waiver, such Default shall cease to exist, and any Event of Default
arising therefrom shall be deemed to have been cured, for every purpose of this
Indenture; but no such waiver shall extend to any subsequent or other Default or
Event of Default or impair any right consequent thereto.
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SECTION 6.05. Control by Majority. The Holders of at least a
majority in aggregate principal amount of the outstanding Notes may direct the
time, method and place of conducting any proceeding for any remedy available to
the Trustee or exercising any trust or power conferred on the Trustee. However,
the Trustee may refuse to follow any direction that conflicts with law or this
Indenture, that may involve the Trustee in personal liability, or that the
Trustee determines in good faith may be unduly prejudicial to the rights of
Holders of the Notes, not joining in the giving of such direction and may take
any other action it deems proper that is not inconsistent with any such
direction received from Holders of the Notes.
SECTION 6.06. Limitation on Suits. A Holder may not pursue any
remedy with respect to this Indenture or the Notes unless:
(i) the Holder gives the Trustee written notice of a continuing
Event of Default;
(ii) the Holders of at least 25% in aggregate principal amount of
outstanding Notes make a written request to the Trustee to pursue the
remedy;
(iii) such Holder or Holders offer the Trustee indemnity
satisfactory to the Trustee against any costs, liability or expense;
(iv) the Trustee does not comply with the request within 60 days
after receipt of the request and the offer of indemnity; and
(v) during such 60-day period, the Holders of a majority in
aggregate principal amount of the outstanding Notes do not give the
Trustee a direction that is inconsistent with the request.
For purposes of Section 6.05 of this Indenture and this Section
6.06, the Trustee shall comply with TIA Section 316(a) in making any
determination of whether the Holders of the required aggregate principal amount
of outstanding Notes have concurred in any request or direction of the Trustee
to pursue any remedy available to the Trustee or the Holders with respect to
this Indenture or the Notes or otherwise under the law.
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 6.07. Rights of Holders to Receive Payment. Notwithstanding
any other provision of this Indenture, the right of any Holder of a Note to
receive payment of principal of, premium, if any, or interest on such Holder's
Note on or after the respective due dates expressed on such Note, or to bring
suit for the enforcement of any such payment on or
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after such respective dates, shall not be impaired or affected without the
consent of such Holder.
SECTION 6.08. Collection Suit by Trustee. If an Event of Default in
payment of principal, premium or interest specified in clause (a) or (b) of
Section 6.01 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 of the Notes for the whole amount of principal, premium, if any, and
accrued interest remaining unpaid, together with interest on overdue principal,
premium, if any, and, to the extent that payment of such interest is lawful,
interest on overdue installments of interest, in each case at the rate specified
in 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 7.07 hereof.
SECTION 6.09. 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, and any other amounts due the Trustee under
Section 7.07) and the Holders allowed in any judicial proceedings relative to
the Company (or any other obligor of the Notes), its creditors or its property
and shall be entitled and empowered to collect and receive any monies,
securities or other property payable or deliverable upon conversion or exchange
of the Notes or upon any such claims and to distribute the same, and any
custodian, receiver, assignee, trustee, liquidator, sequestrator or other
similar official in any such judicial proceeding is hereby authorized by each
Holder to make such payments to the Trustee and, in the event that the Trustee
shall consent to the making of such payments directly to the Holders, to pay to
the Trustee any amount due to it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agent and counsel, and any other
amounts due the Trustee under Section 7.07. Nothing herein contained shall be
deemed to empower the Trustee to authorize or consent to, or accept or adopt on
behalf of any Holder, any plan of reorganization, arrangement, adjustment or
composition affecting the Notes or the rights of any Holder thereof, or to
authorize the Trustee to vote in respect of the claim of any Holder in any such
proceeding.
SECTION 6.10. Priorities. If the Trustee collects any money pursuant
to this Article Six, it shall pay out the money in the following order:
First: to the Trustee for all amounts due under Section 7.07;
Second: to Holders for amounts then due and unpaid for principal of,
premium, if any, and interest on the Notes in respect of which or for the
benefit of which such money has been collected, ratably, without
preference or priority of any kind,
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according to the amounts due and payable on such Notes for principal,
premium, if any, and interest, respectively; and
Third: to the Company as its interests may appear.
The Trustee, upon prior written notice to the Company, may fix a
record date and payment date for any payment to Holders pursuant to this Section
6.10.
SECTION 6.11. 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 may require any party
litigant in such suit to file an undertaking to pay the costs of the suit, and
the court 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 6.11 does not apply to a suit by the Trustee, a suit by a Holder
pursuant to Section 6.07 of this Indenture, or a suit by Holders of more than
10% in principal amount of the outstanding Notes.
SECTION 6.12. Restoration of Rights and Remedies. If the Trustee or
any Holder has instituted any proceeding to enforce any right or remedy under
this Indenture and such proceeding has been discontinued or abandoned for any
reason, or has been determined adversely to the Trustee or to such Holder, then,
and in every such case, subject to any determination in such proceeding, the
Company, the Trustee and the Holders shall be restored severally and
respectively to their former positions hereunder and thereafter all rights and
remedies of the Company, the Trustee and the Holders shall continue as though no
such proceeding had been instituted.
SECTION 6.13. Rights and Remedies Cumulative. Except as otherwise
provided with respect to the replacement or payment of mutilated, destroyed,
lost or wrongfully taken Notes in Section 2.09, no right or remedy herein
conferred upon or reserved to the Trustee or to the Holders is intended to be
exclusive of any other right or remedy, and every right and remedy shall, to the
extent permitted by law, be cumulative and in addition to every other right and
remedy given hereunder or now or hereafter existing at law or in equity or
otherwise. The assertion or employment of any right or remedy hereunder, or
otherwise, shall not prevent the concurrent assertion or employment of any other
appropriate right or remedy.
SECTION 6.14. Delay or Omission Not Waiver. No delay or omission of
the Trustee or of any Holder 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 Six or by law to the
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Trustee or to the Holders may be exercised from time to time, and as often as
may be deemed expedient, by the Trustee or by the Holders, as the case may be.
ARTICLE SEVEN
TRUSTEE
SECTION 7.01. General. The duties and responsibilities of the
Trustee shall be as provided by the TIA and as set forth herein. Notwithstanding
the foregoing, no provision of this Indenture shall require the Trustee to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder, or in the exercise of any of its
rights or powers, if it shall have reasonable grounds for believing that
repayment of such funds or adequate indemnity against such risk or liability is
not reasonably assured to it. Whether or not therein expressly so provided,
every provision of this Indenture relating to the conduct or affecting the
liability of or affording protection to the Trustee shall be subject to the
provisions of this Article Seven.
SECTION 7.02. Certain Rights of Trustee. Subject to TIA Sections
315(a) through (d):
(i) the Trustee may conclusively rely and shall be protected in
acting or refraining from acting upon any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction,
consent, order, bond, debenture, note, other evidence of indebtedness or
other paper or document (whether in its original or facsimile form)
believed by it to be genuine and to have been signed or presented by the
proper person. The Trustee need not investigate any fact or matter stated
in the document and may in good faith conclusively rely as to the truth of
the statements and the correctness of the opinions therein;
(ii) before the Trustee acts or refrains from acting, it may require
an Officers' Certificate or an Opinion of Counsel, which shall conform to
Section 10.04. The Trustee shall not be liable for any action it takes or
omits to take in good faith in reliance on such certificate, opinion
and/or an accountants' certificate if required under the TIA;
(iii) the Trustee may act through its attorneys and agents and shall
not be responsible for the misconduct or negligence of any agent appointed
with due care;
(iv) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or
direction of any of the Holders, unless such Holders shall have offered to
the Trustee security or indemnity reasonably
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satisfactory to it against the costs, expenses and liabilities that might
be incurred by it in compliance with such request or direction;
(v) the Trustee shall not be liable for any action it takes or omits
to take in good faith that it believes to be authorized or within its
rights or powers or for any action it takes or omits to take in accordance
with the direction of the Holders of a majority in principal amount of the
outstanding Notes relating to the time, method and place of conducting any
proceeding for any remedy available to the Trustee, or exercising any
trust or power conferred upon the Trustee, under this Indenture; provided
that the Trustee's conduct does not constitute negligence or bad faith;
(vi) whenever in the administration of this Indenture the Trustee
shall deem it desirable that a matter be proved or established prior to
taking, suffering or omitting any action hereunder, the Trustee (unless
other evidence be herein specifically prescribed) may, in the absence of
bad faith on its part, rely upon an Officers' Certificate;
(vii) the Trustee shall not be bound to make any investigation into
the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note, other evidence of indebtedness or other paper or
document, but the Trustee, in its discretion, may make such further
inquiry or investigation into such facts or matters as it may see fit,
and, if the Trustee shall determine to make such further inquiry or
investigation, it shall be entitled at the sole cost of the Company to
examine the books, records and premises of the Company personally or by
agent or attorney and shall incur no liability or additional liability of
any kind by reason of such inquiry or investigation;
(viii) The Trustee shall not be charged with knowledge of any
Default or Event of Default, of the identity of any Restricted Subsidiary
or of the existence of any Change of Control or Asset Sale unless either
(i) a Responsible Officer shall have actual knowledge thereof, or (ii) the
Trustee shall have received written notice thereof from the Company or any
Holder of the Notes; and
(ix) The Trustee may consult with counsel of its selection and the
advice of such counsel or any Opinion of Counsel shall be full and
complete authorization and protection in respect of any action taken,
suffered or omitted by it hereunder in good faith and in reliance thereon.
SECTION 7.03. 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 or its Affiliates with the same rights it
would have if it were not the Trustee.
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Any Agent may do the same with like rights. However, the Trustee is subject to
TIA Sections 310(b) and 311.
SECTION 7.04. Trustee's Disclaimer. The Trustee (i) makes no
representation as to the validity or adequacy of this Indenture or the Notes,
(ii) shall not be accountable for the Company's use or application of the
proceeds from the Notes and (iii) shall not be responsible for any statement in
the Notes other than its certificate of authentication.
SECTION 7.05. Notice of Default. If any Default or any Event of
Default occurs and is continuing and if such Default or Event of Default is
known to a Responsible Officer of the Trustee, the Trustee shall mail to each
Holder in the manner and to the extent provided in TIA Section 313(c) notice of
the Default or Event of Default within 90 days after it occurs, unless such
Default or Event of Default has been cured; provided, however, that, except in
the case of a default in the payment of the principal of, premium, if any, or
interest on any Note, the Trustee shall be protected in withholding such notice
if and so long as the board of directors, the executive committee or a trust
committee of directors and/or Responsible Officers of the Trustee in good faith
determine that the withholding of such notice is in the interest of the Holders.
If an Event of Default has occurred and is continuing, the Trustee shall use the
same degree of care and skill in its exercise of the rights and powers invested
in it under this Indenture as a prudent person would exercise under the
circumstances in the conduct of such person's own affairs.
SECTION 7.06. Reports by Trustee to Holders. Within 60 days after
each November 15, beginning with November 15, 1998, the Trustee shall mail to
each Holder as provided in TIA Section 313(c) a brief report that complies with
TIA Section 313(a) dated as of such November 15, if required by TIA Section
313(a).
SECTION 7.07. Compensation and Indemnity. The Company shall pay to
the Trustee such compensation as shall be agreed upon from time to time in
writing for its services. The compensation of the Trustee 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 out-of-pocket expenses and
advances incurred or made by the Trustee. Such expenses shall include the
reasonable compensation and expenses of the Trustee's agents and counsel.
The Company shall indemnify each of the Trustee and any predecessor
Trustee for, and hold it harmless against, any and all loss, claim, damage or
liability or expense (including taxes other than taxes based upon the income of
the Trustee) incurred by it without negligence or bad faith on its part in
connection with the acceptance or administration of this Indenture and its
duties under this Indenture and the Notes, including the costs and expenses of
defending itself against any claim or liability and of complying with any
process served upon it
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or any of its officers in connection with the exercise or performance of any of
its powers or duties under this Indenture and the Notes. The Trustee shall
notify the Company promptly of any claim asserted against the Trustee for which
it may seek indemnity. The Company shall defend the claim and the Trustee shall
provide reasonable cooperation at the Company's expense in the defense. The
Trustee may have separate counsel of its selection and the Company shall pay the
reasonable fees and expenses of such counsel; provided, that the Company will
not be required to pay such fees and expenses if it assumes the Trustee's
defense and there is no conflict of interest between the Company and the Trustee
in connection with such defense. The Company need not pay for any settlement
made without its written consent.
To secure the Company's payment obligations in this Section 7.07,
the Trustee shall have a lien prior to the Notes on all money or property held
or collected by the Trustee, in its capacity as Trustee, except money or
property held in trust to pay principal of, premium, if any, and interest on
particular Notes.
If the Trustee incurs expenses or renders services after the
occurrence of an Event of Default specified in clause (h) or (i) of Section
6.01, the expenses and the compensation for the services will be intended to
constitute expenses of administration under Title 11 of the United States
Bankruptcy Code or any applicable federal or state law for the relief of
debtors.
The rights, privileges, protections and benefits given to the
Trustee, including, without limitation, its rights to be indemnified, are
extended to, and shall be enforceable by, the Trustee in each of its capacities
hereunder.
The provisions of this Section 7.07 shall survive the resignation or
removal of the Trustee and the defeasance or other termination of this
Indenture.
SECTION 7.08. Replacement of Trustee. 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 7.08.
The Trustee may resign at any time by so notifying the Company in
writing at least 30 days prior to the date of the proposed resignation. The
Holders of a majority in principal amount of the outstanding Notes may remove
the Trustee by so notifying the Trustee in writing and may appoint a successor
Trustee with the consent of the Company. The Company may at any time remove the
Trustee, by Company Order given at least 30 days prior to the date of the
proposed removal; provided that at such date no Event of Default shall have
occurred and be continuing.
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If the Trustee resigns or is removed, or if a vacancy exists in the
office of Trustee for any reason, the Company 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 outstanding Notes may appoint a
successor Trustee to replace the successor Trustee appointed by the Company. If
the successor Trustee does not deliver its written acceptance required by the
next succeeding paragraph of this Section 7.08 within 30 days after the retiring
Trustee resigns or is removed, the retiring Trustee, the Company or the Holders
of a majority in principal amount of the outstanding Notes may petition at the
expense of the Company any court of competent jurisdiction for the appointment
of a successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Immediately after the
delivery of such written acceptance, subject to the lien provided in Section
7.07, (i) the retiring Trustee shall transfer all property held by it as Trustee
to the successor Trustee, (ii) the resignation or removal of the retiring
Trustee shall become effective and (iii) 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 the Trustee is no longer eligible under Section 7.10, any Holder
who satisfies the requirements of TIA Section 310(b) may petition any court of
competent jurisdiction for the removal of the Trustee and the appointment of a
successor Trustee.
The Company shall give notice of any resignation and any removal of
the Trustee and each appointment of a successor Trustee to all Holders. Each
notice shall include the name of the successor Trustee and the address of its
Corporate Trust Office.
SECTION 7.09. 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 national banking
association, the resulting, surviving or transferee corporation or national
banking association without any further act shall be the successor Trustee with
the same effect as if the successor Trustee had been named as the Trustee
herein.
SECTION 7.10. Eligibility. This Indenture shall always have a
Trustee who satisfies the requirements of TIA Sections 310(a)(1) and 310(a)(5).
The Trustee shall have a combined capital and surplus of at least $50,000,000 as
set forth in its most recent published annual report of condition.
SECTION 7.11. Money Held in Trust. The Trustee shall not be liable
for interest on any money received by it except as the Trustee may agree with
the Company in writing. Money held in trust by the Trustee need not be
segregated from other funds except to
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the extent required by law and except for money held in trust under Article
Eight of this Indenture.
SECTION 7.12. Withholding Taxes. The Trustee, as agent for the
Company, shall exclude and withhold from each payment of principal and interest
and other amounts due hereunder or under the Notes any and all withholding taxes
applicable thereto as required by law. The Trustee agrees to act as such
withholding agent and, in connection therewith, whenever any present or future
taxes or similar charges are required to be withheld with respect to any amounts
payable in respect of the Notes, to withhold such amounts and timely pay the
same to the appropriate authority in the name of and on behalf of the Holders of
the Notes, that it will file any necessary withholding tax returns or statements
when due, and that, as promptly as possible after the payment thereof, it will
deliver to each Holder of a Note appropriate documentation showing the payment
thereof, together with such additional documentary evidence as such Holders may
reasonably request from time to time.
ARTICLE EIGHT
DISCHARGE OF INDENTURE
SECTION 8.01. Termination of the Company's Obligations. Except as
otherwise provided in this Section 8.01, the Company may terminate its
obligations under the Notes and this Indenture if:
(i) all Notes previously authenticated and delivered (other than
destroyed, lost or stolen Notes that have been replaced or Notes that are
paid pursuant to Section 4.01 or Notes for whose payment money or
securities have theretofore been held in trust and thereafter repaid to
the Company, as provided in Section 8.05) have been delivered to the
Trustee for cancellation and the Company has paid all sums payable by it
hereunder; or
(ii) (A) all the Notes mature within one year or all of them are to
be called for redemption within one year under arrangements satisfactory
to the Trustee for giving the notice of redemption, (B) the Company
deposits in trust with the Trustee during such one-year period, under the
terms of an irrevocable trust agreement in form and substance satisfactory
to the Trustee, as trust funds solely for the benefit of the Holders for
that purpose, money or U.S. Government Obligations sufficient to pay
principal, premium, if, any, and interest on the Notes to maturity or
redemption, as the case may be, and to pay all other sums payable by it
hereunder, (C) no Default or Event of Default with respect to the Notes
shall have occurred and be continuing on the date of such deposit, (D)
such deposit will not result in a breach or violation of, or constitute a
default under, this Indenture or any other agreement or instrument to
which
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the Company is a party or by which it is bound, (E) if at such time the
Notes are listed on a national securities exchange, the Notes will not be
delisted as a result of such deposit, defeasance or discharge and (F) the
Company has delivered to the Trustee an Officers' Certificate and an
Opinion of Counsel, in each case stating that all conditions precedent
provided for herein relating to the satisfaction and discharge of this
Indenture have been complied with.
With respect to the foregoing clause (i), the Company's obligations
under Section 7.07 shall survive. With respect to the foregoing clause (ii), the
Company's obligations in Sections 2.02, 2.03, 2.04, 2.05, 2.06, 2.07, 2.08,
2.09, 2.14, 4.01, 4.02, 7.07, 7.08, 8.04, 8.05 and 8.06 shall survive until the
Notes are no longer outstanding. Thereafter, only the Company's obligations in
Sections 7.07, 8.05 and 8.06 shall survive. After any such irrevocable deposit,
the Trustee upon request shall acknowledge in writing the discharge of the
Company's obligations, as the case may be, under the Notes and this Indenture
except for those surviving obligations specified above.
SECTION 8.02. Defeasance and Discharge of Indenture. The Company
will be deemed to have paid and will be discharged from any and all obligations
in respect of the Notes on the 123rd day after the deposit referred to below,
and the provisions of this Indenture will no longer be in effect with respect to
the Notes if:
(A) the Company has deposited with the Trustee, in trust, money
and/or U.S. Government Obligations that through the payment of interest
and principal in respect thereof in accordance with their terms will
provide money in an amount sufficient to pay the principal of, premium, if
any, and accrued interest on the Notes on the Stated Maturity of such
payments in accordance with the terms of this Indenture and the Notes;
(B) the Company has delivered to the Trustee (i) either (x) an
Opinion of Counsel to the effect that Holders will not recognize income,
gain or loss for federal income tax purposes as a result of the Company's
exercise of its option under this Section 8.02 and will be subject to
federal income tax on the same amount and in the same manner and at the
same times as would have been the case if such deposit, defeasance and
discharge had not occurred, which Opinion of Counsel must be based upon
(and accompanied by a copy of) a ruling of the Internal Revenue Service to
the same effect unless there has been a change in applicable federal
income tax law after the Closing Date such that a ruling is no longer
required or (y) a ruling directed to the Trustee received from the
Internal Revenue Service to the same effect as the aforementioned Opinion
of Counsel and (ii) an Opinion of Counsel to the effect that the creation
of the defeasance trust does not violate the Investment Company Act of
1940 and after the passage of 123 days following the deposit, the trust
fund will not be
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subject to the effect of Section 547 of the United States Bankruptcy Code
or Section 15 of the New York Debtor and Creditor Law;
(C) immediately after giving effect to such deposit on a pro forma
basis, no Event of Default, or event that after the giving of notice or
lapse of time or both would become an Event of Default, shall have
occurred and be continuing on the date of such deposit or during the
period ending on the 123rd day after the date of such deposit, and such
deposit shall not result in a breach or violation of, or constitute a
default under, any other agreement or instrument to which the Company or
any of its Subsidiaries is a party or by which the Company or any of its
Subsidiaries is bound; and
(D) if at such time the Notes are listed on a national securities
exchange, the Company has delivered to the Trustee an Opinion of Counsel
to the effect that the Notes will not be delisted as a result of such
deposit, defeasance and discharge.
Notwithstanding the foregoing, prior to the end of the 123-day
period referred to in clause (B)(ii) of this Section 8.02, none of the Company's
obligations under this Indenture shall be discharged. Subsequent to the end of
such 123-day period with respect to this Section 8.02, the Company's obligations
in Sections 2.02, 2.03, 2.04, 2.05, 2.06, 2.07, 2.08, 2.09, 2.14, 4.01, 4.02,
4.17, 7.07, 7.08, 8.05 and 8.06 shall survive until the Notes are no longer
outstanding. Thereafter, only the Company's obligations in Sections 7.07, 8.05
and 8.06 shall survive. If and when a ruling from the Internal Revenue Service
or an Opinion of Counsel referred to in clause (B)(i) of this Section 8.02 may
be provided specifically without regard to, and not in reliance upon, the
continuance of the Company's obligations under Section 4.01, then the Company's
obligations under such Section 4.01 shall cease upon delivery to the Trustee of
such ruling or Opinion of Counsel and compliance with the other conditions
precedent provided for herein relating to the defeasance contemplated by this
Section 8.02.
After the 123 day period referred to in clause (B)(ii) of this
Section 8.02, the Trustee upon Company Order shall acknowledge in writing the
discharge of the Company's obligations under the Notes and this Indenture except
for those surviving obligations in the immediately preceding paragraph.
SECTION 8.03. Defeasance of Certain Obligations. The Company may
omit to comply with any term, provision or condition set forth in clauses (iii)
and (iv) of Section 5.01 and Sections 4.03 through 4.11, and clause (c) of
Section 6.01 with respect to clauses (iii) and (iv) of Section 5.01 and clause
(d) of Section 6.01 with respect to Sections 4.01, 4.02 and 4.12 through 4.19,
and clauses (e), (f) and (g) of Section 6.01 shall be deemed not to be Events of
Default, upon:
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(a) the deposit, in trust, with the Trustee (or another trustee
satisfying the requirements of Section 7.10 hereof) of money and/or U.S.
Government Obligations that, through the payment of interest and principal
in respect thereof in accordance with their terms, will in the opinion of
a nationally recognized firm of independent public accountants expressed
in a written certification thereof delivered to the Trustee, provide money
in an amount sufficient to pay the principal of, premium, if any, and
accrued interest on the Notes on the Stated Maturity of such payments in
accordance with the terms of this Indenture and the Notes;
(b) the satisfaction of the provisions described in clauses B(ii),
(C) and (D) of Section 8.02 hereof;
(c) delivery by the Company to the Trustee of an Opinion of Counsel
to the effect that, the Holders will not recognize income, gain or loss
for federal income tax purposes as a result of such deposit and defeasance
and will be subject to federal income tax on the same amount and in the
same manner and at the same times as would have been the case if such
deposit and defeasance had not occurred; and
(d) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, in each case stating that all
conditions precedent provided for herein relating to the defeasance
contemplated by this Section 8.03 have been complied with.
SECTION 8.04. Application of Trust Money. Subject to Section 8.06,
the Trustee or Paying Agent shall hold in trust money or U.S. Government
Obligations deposited with it pursuant to Section 8.01, 8.02 or 8.03, as the
case may be, and shall apply the deposited money and the money from U.S.
Government Obligations in accordance with the Notes and this Indenture to the
payment of principal of, premium, if any, and interest on the Notes; but such
money need not be segregated from other funds except to the extent required by
law.
SECTION 8.05. Repayment to Company. Subject to Sections 7.07, 8.01,
8.02 and 8.03, the Trustee and the Paying Agent shall promptly pay to the
Company any excess money, as determined by a nationally recognized firm of
independent public accountants expressed in a written certification thereof
delivered to the Trustee, and held by them at any time and thereupon shall be
relieved from all liability with respect to such money. The Trustee and the
Paying Agent shall pay to the Company upon request any money held by them for
the payment of principal, premium, if any, or interest that remains unclaimed
for two years; provided that the Trustee or such Paying Agent before being
required to make any payment may cause to be published at the expense of the
Company once in a newspaper of general circulation in the City of New York or
mail to each Holder entitled to such money at
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such Holder's address (as set forth in the Note Register) notice that such money
remains unclaimed provided that the Trustee or such Paying Agent before being
required to make any payment may give notice in accordance with Section 11.02(b)
that such money remains unclaimed and that after a date specified therein (which
shall be at least 30 days from the date of such publication or mailing) any
unclaimed balance of such money then remaining will be repaid to the Company.
After payment to the Company, Holders entitled to such money must look to the
Company for payment as general creditors unless an applicable law designates
another Person, and all liability of the Trustee and such Paying Agent with
respect to such money shall cease.
SECTION 8.06. Reinstatement. If the Trustee or Paying Agent is
unable to apply any money or U.S. Government Obligations in accordance with
Section 8.01, 8.02 or 8.03, as the case may be, 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 8.01, 8.02 or
8.03, as the case may be, until such time as the Trustee or Paying Agent is
permitted to apply all such money or U.S. Government Obligations in accordance
with Section 8.01, 8.02 or 8.03, as the case may be; provided that, if the
Company has made any payment of principal of, premium, if any, or interest on
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 U.S. Government Obligations held by the Trustee or Paying
Agent.
SECTION 8.07. Defeasance and Certain Other Events of Default. In the
event the Company exercises its option to omit compliance with certain covenants
and provisions of this Indenture with respect to the Notes pursuant to Section
8.03 and such Notes are declared due and payable because of the occurrence of an
Event of Default that remains applicable, the amount of money and/or U.S.
Government Obligations on deposit with the Trustee will be sufficient to pay
amounts due on such Notes at the time of their Stated Maturity. If, in the event
the Company exercises its option to omit compliance with certain covenants and
provisions of this Indenture with respect to the Notes pursuant to Section 8.03
and such Notes are declared due and payable because of the occurrence of an
Event of Default that remains applicable, the amount of money and/or U.S.
Government Obligations on deposit with the Trustee is insufficient to pay
amounts due on the Notes at the time of the acceleration resulting from such
Events of Default pursuant to Section 6.02, the Company will remain liable for
such payments.
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ARTICLE NINE
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 9.01. Without Consent of Holders. The Company, when
authorized by resolutions of its Board of Directors (as evidenced by a Board
Resolution), and the Trustee may amend or supplement this Indenture or the Notes
without notice to, or the consent of, any Holder:
(i) to cure any ambiguity, defect or inconsistency in this
Indenture; provided that, in the good faith opinion of the Board of
Directors of the Company evidenced by a Board Resolution, such amendments
or supplements do not adversely affect the interests of the Holders in any
material respect;
(ii) to comply with Article Five;
(iii) to comply with any requirements of the Commission in
connection with the qualification of this Indenture under the TIA;
(iv) to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee; or
(v) to make any change that, in the good faith opinion of the Board
of Directors of the Company evidenced by a Board Resolution, does not
materially and adversely affect the rights of any Holder.
SECTION 9.02. With Consent of Holders. Subject to Sections 6.07 and
without prior notice to the Holders, the Company, when authorized by its Board
of Directors (as evidenced by a Board Resolution), and the Trustee may amend
this Indenture and the Notes with the written consent of the Holders of a
majority in aggregate principal amount of the Notes then outstanding, and the
Holders of a majority in aggregate principal amount of the Notes then
outstanding by written notice to the Trustee may waive compliance by the Company
with any provision of this Indenture or the Notes.
Notwithstanding the provisions of this Section 9.02, without the
consent of each Holder affected thereby, an amendment or waiver, including a
waiver pursuant to Section 6.04, may not:
(i) change the Stated Maturity of the principal of, or any
installment of interest on, any Note;
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(ii) reduce the principal amount of, or premium, if any, or interest
on, any Note;
(iii) change the place or currency of payment of principal of, or
premium, if any, or interest on, any Note;
(iv) impair the right to institute suit for the enforcement of any
payment on or after the Stated Maturity (or, in the case of a redemption,
on or after the Redemption Date) of any Note;
(v) reduce the above-stated percentage of outstanding Notes, the
consent of whose Holders is necessary to modify or amend this Indenture;
(vi) waive a default in the payment of principal of, premium, if
any, or interest on the Notes; or
(vii) reduce the percentage or aggregate principal amount of
outstanding Notes the consent of whose Holders is necessary for waiver of
compliance with certain provisions of this Indenture or for waiver of
certain defaults.
It shall not be necessary for the consent of the Holders under this
Section 9.02 to approve the particular form of any proposed amendment,
supplement or waiver, but it shall be sufficient if such consent approves the
substance thereof.
After an amendment, supplement or waiver under this Section 9.02
becomes effective, the Trustee shall mail to the Holders affected thereby a
notice briefly describing the amendment, supplement or waiver. The Company will
mail supplemental indentures to Holders upon request. 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 supplemental indenture or waiver.
SECTION 9.03. Revocation and Effect of Consent. Until an amendment
or waiver becomes effective, a consent to it by a Holder is a continuing consent
by the Holder and every subsequent Holder of a Note or portion of a Note that
evidences the same debt as the Note of the consenting Holder, even if notation
of the consent is not made on any Note. However, any such Holder or subsequent
Holder may revoke the consent as to its Note or portion of its Note. Such
revocation shall be effective only if the Trustee receives the notice of
revocation before the date the amendment, supplement or waiver becomes
effective. An amendment, supplement or waiver shall become effective on receipt
by the Trustee of written consents from the Holders of the requisite percentage
in principal amount of the outstanding Notes.
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The Company may, but shall not be obligated to, fix a record date
for the purpose of determining the Holders entitled to consent to any amendment,
supplement or waiver. If a record date is fixed, then, notwithstanding the last
two sentences of the immediately preceding paragraph, those Persons who were
Holders at such record date (or their duly designated proxies) and only those
Persons shall be entitled to consent to such amendment, supplement or waiver or
to revoke any consent previously given, whether or not such Persons continue to
be Holders after such record date. No such consent shall be valid or effective
for more than 90 days after such record date.
After an amendment, supplement or waiver becomes effective, it shall
bind every Holder unless it is of the type described in any of clauses (i)
through (vii) of Section 9.02. In case of an amendment or waiver of the type
described in clauses (i) through (vii) of Section 9.02, the amendment or waiver
shall bind each Holder who has consented to it and every subsequent Holder of a
Note that evidences the same indebtedness as the Note of the consenting Holder.
SECTION 9.04. Notation on or Exchange of Notes. If an amendment,
supplement or waiver changes the terms of a Note, the Trustee may require the
Holder to deliver it to the Trustee. The Trustee may place an appropriate
notation on the Note about the changed terms and return it to the Holder and the
Trustee may place an appropriate notation on any Note thereafter authenticated.
Alternatively, if the Company or the Trustee so determines, the Company in
exchange for the Note shall issue and the Trustee shall authenticate a new Note
that reflects the changed terms.
SECTION 9.05. Trustee to Sign Amendments, Etc. The Trustee shall be
entitled to receive, and shall be fully protected in relying upon, in addition
to the documents required by Section 11.03, an Opinion of Counsel stating that
the execution of any amendment, supplement or waiver authorized pursuant to this
Article Nine is authorized or permitted by this Indenture. Subject to the
preceding sentence, the Trustee shall sign such amendment, supplement or waiver
if the same does not adversely affect the rights of the Trustee. The Trustee
may, but shall not be obligated to, execute any such amendment, supplement or
waiver that affects the Trustee's own rights, duties or immunities under this
Indenture or otherwise.
SECTION 9.06. Conformity with Trust Indenture Act. Every
supplemental indenture executed pursuant to this Article Nine shall conform to
the requirements of the TIA as then in effect.
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ARTICLE TEN
SECURITY
SECTION 10.01. Security. (a) On the Closing Date, the Company shall
(i) enter into the Pledge Agreement and comply with the terms and provisions
thereof and (ii) purchase the U.S. Pledged Securities to be pledged to the
Trustee for the benefit of the Holders in such amount as will be sufficient upon
receipt of scheduled interest and/or principal payments of such U.S. Pledged
Securities, in the opinion of a nationally recognized firm of independent public
accountants selected by the Company, to provide for payment in full of the first
six scheduled interest payments due on the Notes. The U.S. Pledged Securities
shall be pledged by the Company to the Trustee for the benefit of the Holders
and shall be held by the Trustee in the U.S. Pledge Account pending disposition
pursuant to the Pledge Agreement.
(b) Each Holder, by its acceptance of a Note, consents and agrees to
the terms of the Pledge Agreement (including, without limitation, the provisions
providing for foreclosure and release of the U.S. Pledged Securities) 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 Trustee to enter into the Pledge Agreement
and to perform its respective obligations and exercise its respective rights
thereunder in accordance therewith. The Company will do or cause to be done all
such acts and things as may be necessary or reasonably requested by the Trustee,
or as may be required by the provisions of the Pledge Agreement, to assure and
confirm to the Trustee the security interest in the U.S. Pledged Securities
contemplated hereby, by the Pledge 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 and of the Notes secured hereby, according to the
intent and purposes herein and therein expressed. The Company shall take, or
shall cause to be taken, upon request of the Trustee, any and all actions
reasonably required to cause the Pledge Agreement to create and maintain, as
security for the obligations of the Company under this Indenture and the Notes,
valid and enforceable first priority liens in and on all the U.S. Pledged
Securities, in favor of the Trustee, superior to and prior to the rights of
third Persons and subject to no other Liens.
(c) The release of any U.S. Pledged Securities pursuant to the
Pledge Agreement will not be deemed to impair the security under this Indenture
in contravention of the provisions hereof if and to the extent the U.S. Pledged
Securities are released pursuant to this Indenture and the Pledge Agreement. To
the extent applicable, the Company shall cause TIA Section 314(d) relating to
the release of property or securities from the Lien and security interest of the
Pledge Agreement and relating to the substitution therefor of any property or
securities to be subjected to the Lien and security interest of the Pledge
Agreement to be complied with. Any certificate or opinion required by TIA
Section 314(d) may be made by an Officer of the Company, except in cases where
TIA Section 314(d) requires that such
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certificate or opinion be made by an independent Person, which Person shall be
an independent engineer, appraiser or other expert selected by the Company.
(d) The Company shall cause TIA Section 314(b), relating to opinions
of counsel regarding the Lien under the Pledge Agreement, to be complied with.
The Trustee may accept, to the extent permitted by Sections 4.18 and 7.06 as
conclusive evidence of compliance with the foregoing provisions, the appropriate
statements contained in such instruments.
(e) The Trustee may, in its sole discretion and without the consent
of the Holders, on behalf of the Holders, take all reasonable actions in
accordance with the Pledge Agreement necessary or appropriate in order to (i)
enforce any of the terms of the Pledge Agreement and (ii) collect and receive
any and all amounts payable in respect of the obligations of the Company
thereunder. The Trustee shall have power to institute and to maintain such suits
and proceedings as the Trustee may reasonably deem expedient to preserve or
protect its interests and the interests of the Holders in the U.S. Pledged
Securities (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 or of the Trustee).
ARTICLE ELEVEN
MISCELLANEOUS
SECTION 11.01. Trust Indenture Act of 1939. Prior to the
effectiveness of the Registration Statement, this Indenture shall incorporate
and be governed by the provisions of the TIA that are required or deemed to be
part of and to govern indentures qualified under the TIA. After the
effectiveness of the Registration Statement, this Indenture shall be subject to
the provisions of the TIA that are required or deemed to be a part of this
Indenture and shall, to the extent applicable, be governed by such provisions.
SECTION 11.02. Notices. (a) Any notice or communication shall be
sufficiently given if in writing and delivered in person or mailed by first
class mail, commercial courier service or telecopier communication, addressed as
follows:
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if to the Company:
Viatel, Inc.
800 Third Avenue
New York, NY 10022
Telecopier Number: (212) 350-9250
Attention: Sheldon M. Goldman
With, in the case of any notice given pursuant to
Article Six, a copy to:
Kelley Drye & Warren LLP
101 Park Avenue
New York, NY 10178
Attention: James T. Prenetta, Jr.
if to the Trustee:
The Bank of New York
101 Barclay Street, Floor 21 West
New York, NY 10286
Telecopier Number: (212) 815-5915
Attention: Corporate Trust Administration
With a copy to:
Emmet, Marvin & Martin
120 Broadway
New York, NY 10271
Attention: Anthony Marvin
The Company, the Trustee, or the Depository by notice to the others
may designate additional or different addresses for subsequent notices or
communications.
All notices and communications (other than those sent to Holders)
shall be deemed to have been duly given: at the time delivered by hand, if
personally delivered; five Business Days after being deposited in the mail,
postage prepaid, if mailed; when receipt acknowledged, if telecopied; and the
next Business Day after timely delivery to the courier, if sent by overnight air
courier guaranteeing next day delivery.
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(b) Any notice or communication mailed to a Holder shall be mailed
to him at his address as it appears on the Note Register by first class mail and
shall be sufficiently given to him if so mailed within the time prescribed.
Copies of any such communication or notice to a Holder shall also be mailed to
the Trustee and each Agent at the same time.
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. Except for
a notice to the Trustee, which is deemed given only when received, and except as
otherwise provided in this Indenture, if a notice or communication is mailed in
the manner provided in this Section 11.02, it is duly given, whether or not the
addressee receives it.
(c) Where this Indenture provides for notice in any manner, such
notice may be waived in writing by the Person entitled to receive such notice,
either before or after the event, and such waiver shall be the equivalent of
such notice. Waivers of notice by Holders shall be filed with the Trustee, but
such filing shall not be a condition precedent to the validity of any action
taken in reliance upon such waiver.
In case by reason of the suspension of regular mail service or by
reason of any other cause it shall be impracticable to give such notice by mail,
then such notification as shall be made with the approval of the Trustee shall
constitute a sufficient notification for every purpose hereunder.
SECTION 11.03. Certificate and Opinion As to Conditions Precedent.
Upon any request or application by the Company to the Trustee to take any action
under this Indenture, the Company shall furnish to the Trustee:
(i) an Officers' Certificate stating that, in the opinion of the
signers, all conditions precedent, if any, provided for in this Indenture
relating to the proposed action have been complied with; and
(ii) an Opinion of Counsel stating that, in the opinion of such
Counsel, all such conditions precedent have been complied with.
SECTION 11.04. 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:
(i) a statement that each person signing such certificate or opinion
has read such covenant or condition and the definitions herein relating
thereto;
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(ii) a brief statement as to the nature and scope of the examination
or investigation upon which the statement or opinion contained in such
certificate or opinion is based;
(iii) a statement that, in the opinion of each such person, he has
made such examination or investigation as is necessary to enable him to
express an informed opinion as to whether or not such covenant or
condition has been complied with; and
(iv) 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 11.05. Rules by Trustee, Paying Agent or Registrar. The
Trustee may make reasonable rules for action by or at a meeting of Holders. The
Paying Agent or Registrar may make reasonable rules for its functions.
SECTION 11.06. Payment Date Other Than a Business Day. If an
Interest Payment Date, Redemption Date, Payment Date, Stated Maturity or date of
maturity of any Note shall not be a Business Day, then payment of principal of,
premium, if any, or interest on such Note, as the case may be, need not be made
on such date, but may be made on the next succeeding Business Day with the same
force and effect as if made on the Interest Payment Date, Payment Date, or
Redemption Date, or at the Stated Maturity or date of maturity of such Note;
provided that no interest shall accrue for the period from and after such
Interest Payment Date, Payment Date, Redemption Date, Stated Maturity or date of
maturity, as the case may be.
SECTION 11.07. Governing Law; Submission to Jurisdiction; Agent for
Service. This Indenture and the Notes shall be governed by the laws of the State
of New York. The Company hereby appoints CT Corporation System as its agent for
service of process in any suit, action or proceeding with respect to this
Indenture or the Notes and for actions brought under the U.S. federal or state
securities laws brought in any federal or state court located in The City of New
York and the Company agrees to submit to the jurisdiction of any such court.
SECTION 11.08. No Adverse Interpretation of Other Agreements. This
Indenture may not be used to interpret another indenture, loan or debt agreement
of the Company or any Subsidiary of the Company. Any such indenture, loan or
debt agreement may not be used to interpret this Indenture.
<PAGE>
88
SECTION 11.09. No Recourse Against Others. No recourse for the
payment of the principal of, premium, if any, or interest on any of the Notes,
or for any claim based thereon or otherwise in respect thereof, and no recourse
under or upon any obligation, covenant or agreement of the Company contained in
this Indenture, or in any of the Notes, or because of the creation of any
Indebtedness represented thereby, shall be had against any incorporator or
against any past, present or future partner, shareholder, other equityholder,
officer, director, employee or controlling person, as such, of the Company or of
any successor Person, either directly or through the Company or any successor
Person, whether by virtue of any constitution, statute or rule of law, or by the
enforcement of any assessment or penalty or otherwise; it being expressly
understood that all such liability is hereby expressly waived and released as a
condition of, and as a consideration for, the execution of this Indenture and
the issue of the Notes.
SECTION 11.10. 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 successors.
SECTION 11.11. Duplicate Originals. The parties may sign any number
of copies of this Indenture. Each signed copy shall be an original, but all of
them together represent the same agreement.
SECTION 11.12. Separability. In case any provision in this Indenture
or in the Notes shall be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.
SECTION 11.13. 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 hereof and shall in no way modify or restrict any of the
terms and provisions hereof.
<PAGE>
SIGNATURES
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed, all as of the date first written above.
VIATEL, INC.
By: /s/ Michael J. Mahoney
-----------------------------------
Name: Michael J. Mahoney
Title: President and Chief Executive
Officer
THE BANK OF NEW YORK,
as Trustee
By: /s/ Ming J. Shiang
-----------------------------------
Name: Ming J. Shiang
Title: Assistant Vice President
<PAGE>
EXHIBIT A
FORM OF REGISTERED GLOBAL NOTE
FACE OF NOTE
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS, AND ACCORDINGLY,
MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHIN THE UNITED
STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS EXCEPT AS SET FORTH
IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS
THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER
THE SECURITIES ACT) OR (B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS
DEFINED IN RULE 501(a)(1), (2), (3) OR (7) OF REGULATION D UNDER THE SECURITIES
ACT) (AN "INSTITUTIONAL ACCREDITED INVESTOR") OR (C) IT IS NOT A U.S. PERSON AND
IS ACQUIRING THIS NOTE IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 903 OF
REGULATION S UNDER THE SECURITIES ACT; (2) AGREES THAT IT WILL NOT, WITHIN THE
TIME PERIOD REFERRED TO IN RULE 144(k) (TAKING INTO ACCOUNT THE PROVISIONS OF
RULE 144(d) UNDER THE SECURITIES ACT, IF APPLICABLE), RESELL OR OTHERWISE
TRANSFER THIS NOTE EXCEPT (A) TO THE COMPANY OR ANY SUBSIDIARY THEREOF, (B) TO A
QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES
ACT, (C) INSIDE THE UNITED STATES TO AN INSTITUTIONAL ACCREDITED INVESTOR THAT,
PRIOR TO SUCH TRANSFER, FURNISHES TO THE TRUSTEE A SIGNED LETTER CONTAINING
CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER
OF THIS NOTE (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM THE TRUSTEE) AND IF
SUCH TRANSFER IS IN RESPECT OF AN AGGREGATE PRINCIPAL AMOUNT OF DOLLAR NOTES OF
LESS THAN $100,000, AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY THAT SUCH
TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT, (D) OUTSIDE THE UNITED STATES
IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT,
(E) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE
SECURITIES ACT (IF AVAILABLE) OR (F) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT AND (3) AGREES THAT IT WILL DELIVER TO EACH
PERSON TO WHOM THIS NOTE IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF
THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF THIS NOTE WITHIN THE TIME PERIOD
REFERRED TO ABOVE, THE HOLDER MUST CHECK THE APPROPRIATE BOX SET FORTH ON THE
REVERSE HEREOF RELATING TO THE MANNER OF SUCH TRANSFER AND SUBMIT
<PAGE>
A-2
THIS CERTIFICATE TO THE TRUSTEE. IF THE PROPOSED TRANSFEREE IS AN INSTITUTIONAL
ACCREDITED INVESTOR, THE HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO EACH OF
THE TRUSTEE AND THE COMPANY SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER
INFORMATION AS SUCH PERSONS MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER
IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO,
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. 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. THE INDENTURE CONTAINS A
PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF THIS NOTE
IN VIOLATION OF THE FOREGOING RESTRICTIONS.
THE NOTES EVIDENCED BY THIS CERTIFICATE ARE INITIALLY ISSUED AS PART OF AN
ISSUANCE OF UNITS, EACH OF WHICH CONSISTS OF $1,000 PRINCIPAL AMOUNT OF 11.25%
SENIOR NOTES DUE 2008 OF VIATEL, INC. (THE "NOTES") AND .483 OF A SHARE OF
SERIES A REDEEMABLE CONVERTIBLE PREFERRED STOCK. THE NOTES AND THE SHARES OF
SERIES A PREFERRED WILL BE AUTOMATICALLY SEPARATED UPON THE EARLIEST TO OCCUR OF
(i) SIX MONTHS AFTER APRIL 8, 1998, (ii) THE COMMENCEMENT OF AN EXCHANGE OFFER
WITH RESPECT TO THE NOTES, (iii) THE EFFECTIVENESS OF A SHELF REGISTRATION
STATEMENT WITH RESPECT TO RESALE OF THE NOTES OR (iv) COMMENCEMENT OF AN OFFER
TO REPURCHASE THE NOTES PURSUANT TO THE INDENTURE. THE NOTES EVIDENCED BY THIS
CERTIFICATE MAY NOT BE TRANSFERRED OR EXCHANGED SEPARATELY FROM, BUT MAY BE
TRANSFERRED OR EXCHANGED ONLY TOGETHER WITH, THE SERIES A PREFERRED STOCK.
UNLESS THIS GLOBAL NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF
TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS REGISTERED IN THE NAME OF
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY OR SUCH OTHER REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (AND ANY PAYMENT HEREON IS MADE
TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY), 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.
<PAGE>
A-3
TRANSFERS OF THIS GLOBAL NOTE 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 NOTE SHALL BE LIMITED TO
TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN SECTION 2.08 OF
THE INDENTURE.
<PAGE>
A-4
VIATEL, INC.
11.25% Senior Note Due 2008
[CUSIP][CINS][INIS][___]
No. __________ $[_______]
Issue date: April 8, 1998
VIATEL, INC., a Delaware corporation (the "Company", which term includes
any successor under the Indenture hereinafter referred to), for value received,
promises to pay to ________________, or its registered assigns, upon surrender
hereof the principal sum of $_________ on April 15, 2008.
Interest Payment Dates: April 15 and October 15, commencing October 15,
1998.
Record Dates: April 1 and October 1.
Reference is hereby made to the further provisions of this Note set forth
on the reverse hereof, which further provisions shall for all purposes have the
same effect as if set forth at this place.
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Note to be signed manually
or by facsimile by its duly authorized officers.
Date: April 8, 1998 VIATEL, INC.
By
------------------------------
Name:
Title:
By
------------------------------
Name:
Title:
(Trustee's Certificate of Authentication)
This is one of the 11.25% Senior Notes due 2008 described in the
within-mentioned Indenture.
Date: April 8, 1998 THE BANK OF NEW YORK, as Trustee
By
-------------------------------
Authorized Signatory
<PAGE>
A-6
[REVERSE SIDE OF NOTE]
VIATEL, INC.
11.25% Senior Note due 2008
1. Principal and Interest.
The Company will pay the principal of this Note on April 15, 2008.
The Company promises to pay interest on the principal amount of this
Note on each Interest Payment Date, as set forth below, at the rate per annum
shown above.
Interest will be payable semiannually in cash (to the holders of
record of the Notes at the close of business on the April 1 or October 1
immediately preceding the Interest Payment Date) on each Interest Payment Date,
commencing October 15, 1998. Interest will be computed on the basis of a 360 day
year of twelve 30 day months.
If an exchange offer registered under the Securities Act is not
consummated, and a shelf registration statement under the Securities Act with
respect to resales of the Notes is not declared effective by the Commission, on
or before the date that is six months after the Closing Date in accordance with
the terms of the Registration Rights Agreement dated April 3, 1998 between the
Company and Morgan Stanley & Co. Incorporated, as the manager for itself and the
several initial purchasers named on Schedule I to the Purchase Agreement dated
April 3, 1998, annual interest (in addition to interest otherwise due on the
Notes) will accrue, at an annual rate of 0.5% per annum of the principal amount,
payable in cash semiannually, in arrears on April 15 and October 15 of each
year, commencing April 15, 1999 until the consummation of a registered exchange
offer or the effectiveness of a shelf-registration statement with respect to
resale of this Note. The Holder of this Note is entitled to the benefits of such
Registration Rights Agreement.
The Holder of this Note is entitled to the benefits of a Pledge
Agreement dated April 8, 1998 between the Company and The Bank of New York, as
trustee (the "Trustee"), pursuant to which the Company has placed in the U.S.
Pledge Account cash or Government Securities sufficient to provide for the
payment of the first six interest payments on this Note.
The Company shall pay interest on overdue principal and premium, if
any, and interest on overdue installments of interest, to the extent lawful, at
a rate per annum that is 11.25% per annum.
<PAGE>
A-7
2. Method of Payment.
The Company will pay principal as provided above and interest
(except defaulted interest) on the principal amount of the Notes as provided
above on each April 15 and October 15 to the Persons who are Holders (as
reflected in the Note Register at the close of business on such April 1 and
October 1, immediately preceding the Interest Payment Date), in each case, even
if the Note is cancelled on registration of transfer or registration of exchange
after such record date; provided that, with respect to the payment of principal,
the Company will not make payment to the Holder unless this Note is surrendered
to a Paying Agent.
The Company will pay principal, premium, if any, and as provided
above, interest in money of the United States that at the time of payment is
legal tender for payment of public and private debts. However, the Company may
pay principal, premium, if any, and interest by its check payable in such money.
It may mail an interest check to a Holder's registered address (as reflected in
the Note Register). If a payment date is a date other than a Business Day at a
place of payment, payment may be made at that place on the next succeeding day
that is a Business Day and no interest shall accrue for the intervening period.
3. Paying Agent and Registrar.
Initially, the Trustee will act as U.S. Paying Agent and Registrar.
The Company may change any Paying Agent or Registrar without notice. The
Company, any Subsidiary or any Affiliate of any of them may act as Paying Agent,
Registrar or co-Registrar.
4. Indenture; Issuance of Additional Notes.
This Note is one of a duly authorized issue of Notes of the Company
designated its 11.25% Senior Notes due 2008, issued and to be issued under an
Indenture dated as of April 8, 1998 (the "Indenture"), between the Company and
the Trustee. Capitalized terms herein are used as defined in the Indenture
unless otherwise indicated. 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. The Notes are subject to all such terms, and Holders are referred
to the Indenture and the Trust Indenture Act for a statement of all such terms.
To the extent permitted by applicable law, in the event of any inconsistency
between the terms of this Note and the terms of the Indenture, the terms of the
Indenture shall control.
5. Redemption.
The Notes will be redeemable, at the Company's option, in whole or
in part, at any time and from time to time on or after April 15, 2003 and prior
to maturity, upon not less than 30 nor more than 60 days' prior notice mailed by
first-class mail to each Holders' last address as
<PAGE>
A-8
it appears in the Note Register, at the following Redemption Prices (expressed
in percentages of their principal amount), plus accrued and unpaid interest, if
any, to the Redemption Date (subject to the right of Holders of record on the
relevant Regular Record Date that is on or prior to the Redemption Date to
receive interest due on an Interest Payment Date), if redeemed during the
12-month period commencing on April 15, of the years set forth below:
Redemption
Year Price
---- -----------
2003 105.625%
2004 103.750
2005 101.875
2006 and thereafter 100.000
In addition, at any time or from time to time on or prior to April
15, 2001, the Company may, at its option, redeem up to 35% of the aggregate
principal amount at maturity of the Notes with the net proceeds of one or more
Public Equity Offerings, at a Redemption Price (expressed as a percentage of
principal amount) of 111.250%, provided, (i) that Notes representing at least
65% of the principal amount at maturity of the Notes originally issued remain
outstanding after each such redemption and (ii) that notice of each such
redemption is mailed within 60 days of each such Public Equity Offering.
6. Notice of Redemption.
Notice of any optional redemption will be mailed at least 30 days
but not more than 60 days before the Redemption Date to each Holder of Notes to
be redeemed at his last address as it appears in the Note Register. Notes in
original denominations larger than $1,000 of principal amount may be redeemed in
part. On and after the Redemption Date, interest ceases to accrue on Notes or
portions of Notes called for redemption, unless the Company defaults in the
payment of the Redemption Price.
7. Repurchase upon Change in Control.
Upon the occurrence of any Change of Control, each Holder shall have
the right to require the repurchase of its Notes by the Company in cash pursuant
to the offer described in the Indenture at a purchase price equal to 101% of the
principal amount thereof plus accrued and unpaid interest, if any, to the date
of purchase (the "Change of Control Payment").
A notice of such Change of Control will be mailed within 30 days
after any Change of Control occurs to each Holder at his last address as it
appears in the Note Register. Notes in original denominations larger than $1,000
of principal amount may be sold to the Company in part. On and after the date of
the Change of Control Payment, interest ceases to accrue on Notes
<PAGE>
A-9
or portions of Notes surrendered for purchase by the Company, unless the Company
defaults in the payment of the Change of Control Payment.
8. Registration Rights
Pursuant to the Registration Rights Agreement, the Company will be
obligated, within 180 days after the issue date of this Note, 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 Exchange Notes (as defined in the
Registration Rights Agreement) which have been registered under the Securities
Act, in like principal amount and having terms identical in all material
respects as the Initial Notes. The Holders of the Initial Notes shall be
entitled to receive certain additional interest payments in the event such
exchange offer is not consummated and upon certain other conditions, all
pursuant and in accordance with the terms of the Registration Rights Agreement.
9. Denominations; Transfer; Exchange.
The Notes are in registered form without coupons in denominations of
$1,000 of principal amount and any integral multiples of $1,000 in excess
thereof. A Holder may register the transfer or exchange of Notes in accordance
with the Indenture. The Registrar may require a Holder, among other things, to
furnish appropriate endorsements and transfer documents and to pay any taxes and
fees required by law or permitted by the Indenture. The Registrar need not
register the transfer or exchange of any Notes selected for redemption. Also, it
need not register the transfer or exchange of any Notes for a period of 15 days
before a selection of Notes to be redeemed is made.
10. Persons Deemed Owners.
A Holder shall be treated as the owner of a Note for all purposes.
11. Unclaimed Money.
If money for the payment of principal, premium, if any, or interest
remains unclaimed for two years, the Trustee and the Paying Agent will pay the
money back to the Company at its request. After that, Holders entitled to the
money must look to the Company for payment, unless an abandoned property law
designates another Person, and all liability of the Trustee and such Paying
Agent with respect to such money shall cease.
<PAGE>
A-10
12. Discharge Prior to Redemption or Maturity.
If the Company deposits with the Trustee money and/or U.S.
Government Obligations sufficient to pay the then outstanding principal of,
premium, if any, and accrued interest on the Notes to redemption (a) or
maturity, the Company will be discharged from the Indenture and the Notes,
except in certain circumstances for certain sections thereof, and (b) or to
Stated Maturity, the Company will be discharged from certain covenants set forth
in the Indenture.
13. Amendment; Supplement; Waiver.
Subject to certain exceptions, the Indenture or the Notes may be
amended or supplemented with the consent of the Holders of at least a majority
in principal amount of the Notes then outstanding, and any existing default or
compliance with any provision may be waived with the consent of the Holders of
at least a majority in principal amount of the Notes then outstanding. Without
notice to or the consent of any Holder, the parties thereto may amend or
supplement the Indenture or the Notes to, among other things, cure any
ambiguity, defect or inconsistency and make any change that does not materially
and adversely affect the rights of any Holder.
14. Restrictive Covenants.
The Indenture imposes certain limitations on the ability of the
Company and its Restricted Subsidiaries, among other things, to Incur
Indebtedness, make Restricted Payments, use the proceeds from Asset Sales,
engage in transactions with Affiliates or, with respect to the Company, merge,
consolidate or transfer substantially all of its assets. Within 90 days after
the end of the last fiscal quarter of each year, the Company must report to the
Trustee on compliance with the terms of the Indenture.
15. Successor Persons.
When a successor Person or other entity assumes all the obligations
of its predecessor under the Notes and the Indenture, the predecessor Person
will be released from those obligations.
16. Defaults and Remedies.
The following events constitute "Events of Default" under the
Indenture: (a) default in the payment of principal of (or premium, if any, on)
any Note when the same becomes due and payable at maturity, upon acceleration,
redemption or otherwise; (b) default in the payment of interest on any Note when
the same becomes due and payable, and such default
<PAGE>
A-11
continues for a period of 30 days; provided that a failure to make any of the
first six scheduled interest payments on this Note in a timely manner will
constitute an Event of Default with no grace or cure period; (c) default in the
performance or breach of the provisions of the Indenture applicable to mergers,
consolidations and transfers of all or substantially all of the assets of the
Company or the failure to make or consummate an Offer to Purchase in accordance
with Section 4.11 of the Indenture or Section 4.12 of the Indenture; (d) the
Company defaults in the performance of or breaches any other covenant or
agreement of the Company in the Indenture or under the Notes (other than a
default specified in clause (a), (b) or (c) of Section 6.01 of the Indenture)
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 or principal amount of Notes; (e) there occurs with respect to
any issue or issues of Indebtedness of the Company or any Significant Subsidiary
having an outstanding principal amount of $10 million or more in the aggregate
for all such issues of all such Persons, whether such Indebtedness now exists or
shall hereafter be created, (I) an event of default that has caused the holder
thereof to declare such Indebtedness to be due and payable prior to its Stated
Maturity and such Indebtedness has not been discharged in full or such
acceleration has not been rescinded or annulled within 30 days of such
acceleration and/or (II) the failure to make a principal payment at the final
(but not any interim) fixed maturity and such defaulted payment shall not have
been made, waived or extended within 30 days of such payment default; (f) any
final judgment or order (not covered by insurance) for the payment of money in
excess of $10 million in the aggregate for all such final judgments or orders
against all such Persons (treating any deductibles, self-insurance or retention
as not so covered) shall be rendered against the Company or any Significant
Subsidiary and shall not be paid or discharged, and there shall be any period of
60 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 or discharged against all such Persons to exceed $10 million during which a
stay of enforcement of such final judgment or order, by reason of a pending
appeal or otherwise, shall not be in effect; (g) a court having jurisdiction in
the premises enters a decree or order for (A) relief in respect of the Company
or any Significant Subsidiary 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 Significant Subsidiary or
for all or substantially all of the property and assets of the Company or any
Significant Subsidiary or (C) the winding up or liquidation of the affairs of
the Company or any Significant Subsidiary and, in each case, such decree or
order shall remain unstayed and in effect for a period of 60 consecutive days;
or (h) the Company or any Significant Subsidiary (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 Significant Subsidiary or
for all or substantially all of the property and assets of the Company or any
Significant Subsidiary or (C) effects any general assignment for the benefit of
creditors.
<PAGE>
A-12
If an Event of Default (other than an Event of Default specified in
clause (g) or (h) above that occurs with respect to the Company) 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 (and to the Trustee if such notice is given by the Holders) , may,
and the Trustee at the request of such Holders shall, declare the principal
amount of, premium, if any, and accrued interest on the Notes to be immediately
due and payable.
If an Event of Default, as defined in the Indenture, occurs and is
continuing, the Trustee or the Holders of at least 25% in aggregate principal
amount of the Notes then outstanding may declare all the Notes to be due and
payable. If a bankruptcy or insolvency default with respect to the Company or
any Restricted Subsidiary occurs and is continuing, the Notes automatically
become due and payable. Holders may not enforce the Indenture or the Notes
except as provided in the Indenture. The Trustee may require indemnity
satisfactory to it before it enforces the Indenture or the Notes. Subject to
certain limitations, Holders of at least a majority in principal amount of the
Notes then outstanding may direct the Trustee in its exercise of any trust or
power.
17. Trustee Dealings with Company.
The Trustee under the Indenture, in its individual or any other
capacity, may make loans to, accept deposits from and perform services for the
Company or its Affiliates and may otherwise deal with the Company or its
Affiliates as if it were not the Trustee.
18. No Recourse Against Others.
No incorporator or any past, present or future partner, stockholder,
other equity holder, officer, director, employee or controlling person as such,
of the Company or of any successor Person 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 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.
19. Authentication.
This Note shall not be valid until the Trustee or authenticating
agent signs the certificate of authentication on the other side of this Note.
20. Abbreviations.
Customary abbreviations may be used in the name of a Holder or an
assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the
entireties), JT TEN
<PAGE>
A-13
(= joint tenants with right of survivorship and not as tenants in common), CUST
(= Custodian) and U/G/M/A (= Uniform Gifts to Minors Act).
21. CUSIP Numbers.
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures, the Issuer has caused CUSIP numbers to be
printed on the Notes and the Trustee may use CUSIP numbers in notices of
redemption as a convenience to Holders. No representation is made as to the
accuracy of such numbers either as printed on the Notes or as contained in any
notice of redemption.
This Note shall be governed by the laws of the State of New York.
The Company will furnish to any Holder upon written request and
without charge a copy of the Indenture. Requests may be made to Viatel, Inc.,
800 Third Avenue, New York, New York, 10022, Attention: Sheldon M. Goldman.
<PAGE>
A-14
SCHEDULE OF PRINCIPAL AMOUNT OF INDEBTEDNESS
EVIDENCED BY THIS NOTE
The initial principal amount of indebtedness evidenced by this Note
shall be $__ ,___ ,____ . The following decreases/increases in the principal
amount evidenced by this Note have been made:
Decrease in Increase in Total Principal
Principal Principal Amount of this Notation Made
Date of Amount of Amount of Global Note by or on
Decrease/ this Global this Global Following such Behalf of
Increase Note Note Decrease/Increase Trustee
- -------- ---- ---- ----------------- -------
_______ __________ __________ ________________ ________________
_______ __________ __________ ________________ ________________
_______ __________ __________ ________________ ________________
_______ __________ __________ ________________ ________________
_______ __________ __________ ________________ ________________
_______ __________ __________ ________________ ________________
_______ __________ __________ ________________ ________________
_______ __________ __________ ________________ ________________
_______ __________ __________ ________________ ________________
_______ __________ __________ ________________ ________________
_______ __________ __________ ________________ ________________
_______ __________ __________ ________________ ________________
_______ __________ __________ ________________ ________________
_______ __________ __________ ________________ ________________
_______ __________ __________ ________________ ________________
_______ __________ __________ ________________ ________________
<PAGE>
A-15
[FORM OF TRANSFER NOTICE]
FOR VALUE RECEIVED the undersigned registered holder hereby sell(s),
assign(s) and transfer(s) unto
Insert Taxpayer Identification No.
_______________________________________________________________________________
Please print or typewrite name and address including zip code of assignee
_______________________________________________________________________________
the within Note and all rights thereunder, hereby irrevocably constituting and
appointing ________________________________________ attorney to transfer said
Note on the books of the Company with full power of substitution in the
premises.
[THE FOLLOWING PROVISION TO BE INCLUDED
ON ALL NOTES OTHER THAN EXCHANGE NOTES,
UNLEGENDED REGULATION S GLOBAL AND
UNLEGENDED REGULATION S CERTIFICATED NOTES]
In connection with any transfer of this Note occurring prior to the date
which is the earlier of (i) the date of an effective Registration or (ii) the
end of the period referred to in Rule 144(k) under the Securities Act, the
undersigned confirms that without utilizing any general solicitation or general
advertising that:
[Check One]
|_| (a) this Note is being transferred in compliance with the exemption from
registration under the Securities Act of 1933, as amended, provided by
Rule 144A thereunder.
or
|_| (b) this Note is being transferred other than in accordance with (a)
above and documents are being furnished which comply with the conditions
of transfer set forth in this Note and the Indenture.
If none of the foregoing boxes is checked, the Trustee or other Registrar shall
not be obligated to register this Note in the name of any Person other than the
Holder hereof unless and until the conditions to any such transfer of
registration set forth herein and in Section 2.08 of the Indenture shall have
been satisfied.
<PAGE>
A-16
Date: __________ ________________________________________
NOTICE: The signature to this assignment
must correspond with the name as written
upon the face of the within-mentioned
instrument in every particular, without
alteration or any change whatsoever.
TO BE COMPLETED BY PURCHASER IF (a) ABOVE IS CHECKED.
The undersigned represents and warrants that it is purchasing this Note
for its own account or an account with respect to which it exercises sole
investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act of
1933, as amended, and is aware that the sale to it is being made in reliance on
Rule 144A and acknowledges that it has received such information regarding the
Company as the undersigned has requested pursuant to Rule 144A or has determined
not to request such information and that it is aware that the transferor is
relying upon the undersigned's foregoing representations in order to claim the
exemption from registration provided by Rule 144A.
Dated:_________ _______________________________________________
NOTICE: To be executed by an executive officer
<PAGE>
A-17
OPTION OF HOLDER TO ELECT PURCHASE
If you wish to have this Note purchased by the Company pursuant to
Section 4.11 or Section 4.12 of the Indenture, check the Box: |_|
If you wish to have a portion of this Note purchased by the Company
pursuant to Section 4.11 or Section 4.12 of the Indenture, state the amount (in
principal amount): $___________.
Date:________
Your Signature: _______________________________________________________________
(Sign exactly as your name appears on the other side of this
Note)
Signature Guarantee: __________________________________________________________
<PAGE>
EXHIBIT B
FORM OF REGULATION S GLOBAL NOTE
[FACE OF NOTE]
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS, AND ACCORDINGLY,
MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHIN THE UNITED
STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS EXCEPT AS SET FORTH
IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS
THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER
THE SECURITIES ACT) OR (B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS
DEFINED IN RULE 501(a)(1), (2), (3) OR (7) OF REGULATION D UNDER THE SECURITIES
ACT) (AN "INSTITUTIONAL ACCREDITED INVESTOR") OR (C) IT IS NOT A U.S. PERSON AND
IS ACQUIRING THIS NOTE IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 903 OF
REGULATION S UNDER THE SECURITIES ACT; (2) AGREES THAT IT WILL NOT, WITHIN THE
TIME PERIOD REFERRED TO IN RULE 144(k) (TAKING INTO ACCOUNT THE PROVISIONS OF
RULE 144(d) UNDER THE SECURITIES ACT, IF APPLICABLE), RESELL OR OTHERWISE
TRANSFER THIS NOTE EXCEPT (A) TO THE COMPANY OR ANY SUBSIDIARY THEREOF, (B) TO A
QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES
ACT, (C) INSIDE THE UNITED STATES TO AN INSTITUTIONAL ACCREDITED INVESTOR THAT,
PRIOR TO SUCH TRANSFER, FURNISHES TO THE TRUSTEE A SIGNED LETTER CONTAINING
CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER
OF THIS NOTE (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM THE TRUSTEE) AND IF
SUCH TRANSFER IS IN RESPECT OF AN AGGREGATE PRINCIPAL AMOUNT OF DOLLAR NOTES OF
LESS THAN $100,000, AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY THAT SUCH
TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT, (D) OUTSIDE THE UNITED STATES
IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT,
(E) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE
SECURITIES ACT (IF AVAILABLE) OR (F) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT AND (3) AGREES THAT IT WILL DELIVER TO EACH
PERSON TO WHOM THIS NOTE IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF
THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF THIS NOTE WITHIN THE TIME
<PAGE>
B-2
PERIOD REFERRED TO ABOVE, THE HOLDER MUST CHECK THE APPROPRIATE BOX SET FORTH ON
THE REVERSE HEREOF RELATING TO THE MANNER OF SUCH TRANSFER AND SUBMIT THIS
CERTIFICATE TO THE TRUSTEE. IF THE PROPOSED TRANSFEREE IS AN INSTITUTIONAL
ACCREDITED INVESTOR, THE HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO EACH OF
THE TRUSTEE AND THE COMPANY SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER
INFORMATION AS SUCH PERSONS MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER
IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO,
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. 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. THE INDENTURE CONTAINS A
PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF THIS NOTE
IN VIOLATION OF THE FOREGOING RESTRICTIONS.
THE NOTES EVIDENCED BY THIS CERTIFICATE ARE INITIALLY ISSUED AS PART OF AN
ISSUANCE OF UNITS, EACH OF WHICH CONSISTS OF $1,000 PRINCIPAL AMOUNT OF 11.25%
SENIOR DOLLAR NOTES DUE 2008 OF VIATEL, INC. (THE "NOTES") AND .483 OF A SHARE
OF SERIES A REDEEMABLE CONVERTIBLE PREFERRED STOCK. THE NOTES AND THE SHARES OF
SERIES A PREFERRED WILL BE AUTOMATICALLY SEPARATED UPON THE EARLIEST TO OCCUR OF
(i) SIX MONTHS AFTER APRIL 8, 1998, (ii) COMMENCEMENT OF AN EXCHANGE OFFER WITH
RESPECT TO THE NOTES, (iii) THE EFFECTIVENESS OF A SHELF REGISTRATION STATEMENT
WITH RESPECT TO RESALE OF THE NOTES OR (iv) COMMENCEMENT OF AN OFFER TO
REPURCHASE THE NOTES PURSUANT TO THE INDENTURE. THE NOTES EVIDENCED BY THIS
CERTIFICATE MAY NOT BE TRANSFERRED OR EXCHANGED SEPARATELY FROM, BUT MAY BE
TRANSFERRED OR EXCHANGED ONLY TOGETHER WITH, THE SERIES A PREFERRED STOCK.
<PAGE>
B-3
VIATEL, INC.
11.25% Senior Note Due 2008
[CUSIP][CINS][INIS][WKN] _________
No. __________ $_________
Issue date: April 8, 1998
VIATEL, INC., a Delaware corporation (the "Company", which term includes
any successor under the Indenture hereinafter referred to), for value received,
promises to pay to ___________, or its registered assigns, the principal sum of
$_________ on April 15, 2008.
Interest Payment Dates: April 15 and October 15, commencing October 15,
2003.
Record Dates: April 1 and October 1.
Reference is hereby made to the further provisions of this Note set forth
on the reverse hereof, which further provisions shall for all purposes have the
same effect as if set forth at this place.
<PAGE>
B-4
IN WITNESS WHEREOF, the Company has caused this Note to be signed manually
or by facsimile by its duly authorized officers.
Date: April 8, 1998 VIATEL, INC.
By
-------------------------------
Name:
Title:
By
-------------------------------
Name:
Title:
(Trustee's Certificate of Authentication)
This is one of the 11.25% Senior Notes due 2008 described in the
within-mentioned Indenture.
Date: April 8, 1998 THE BANK OF NEW YORK, as Trustee
By
--------------------------------
Authorized Signatory
<PAGE>
B-5
VIATEL, INC.
11.25% Senior Note Due 2008
[CUSIP][CINS][INIS] _______
No. __________ $_______
Issue date: April 8, 1998
VIATEL, INC., a Delaware corporation (the "Company", which term includes
any successor under the Indenture hereinafter referred to), for value received,
promises to pay to ________________, or its registered assigns, upon surrender
hereof the principal sum of $_________ on April 15, 2008.
Interest Payment Dates: April 15 and October 15, commencing October 15,
1998.
Record Dates: April 1 and October 1.
Reference is hereby made to the further provisions of this Note set forth
on the reverse hereof, which further provisions shall for all purposes have the
same effect as if set forth at this place.
<PAGE>
B-6
IN WITNESS WHEREOF, the Company has caused this Note to be signed manually
or by facsimile by its duly authorized officers.
Date: April 8, 1998 VIATEL, INC.
By
-------------------------------
Name:
Title:
By
-------------------------------
Name:
Title:
(Trustee's Certificate of Authentication)
This is one of the 11.25% Senior Notes due 2008 described in the
within-mentioned Indenture.
Date: April 8, 1998 THE BANK OF NEW YORK, as Trustee
By
--------------------------------
Authorized Signatory
<PAGE>
B-7
[REVERSE SIDE OF NOTE]
VIATEL, INC.
11.25% Senior Note due 2008
1. Principal and Interest.
The Company will pay the principal of this Note on April 15, 2008.
The Company promises to pay interest on the principal amount of this
Note on each Interest Payment Date, as set forth below, at the rate per annum
shown above.
Interest will be payable semiannually in cash (to the holders of
record of the Notes at the close of business on the April 1 or October 1
immediately preceding the Interest Payment Date) on each Interest Payment Date,
commencing October 15, 1998. Interest will be computed on the basis of a 360 day
year of twelve 30 day months.
If an exchange offer registered under the Securities Act is not
consummated, and a shelf registration statement under the Securities Act with
respect to resales of the Notes is not declared effective by the Commission, on
or before the date that is six months after the Closing Date in accordance with
the terms of the Registration Rights Agreement dated April 3, 1998 between the
Company and Morgan Stanley & Co. Incorporated, as the manager for itself and the
several initial purchasers named on Schedule I to the Purchase Agreement dated
April 3, 1998, annual interest (in addition to interest otherwise due on the
Notes) will accrue, at an annual rate of 0.5% per annum of the principal amount,
payable in cash semiannually, in arrears on April 15 and October 15 of each
year, commencing April 15, 1999 until the consummation of a registered exchange
offer or the effectiveness of a shelf-registration statement with respect to
resale of this Note. The Holder of this Note is entitled to the benefits of such
Registration Rights Agreement.
The Holder of this Note is entitled to the benefits of a Pledge
Agreement dated April 8, 1998 between the Company and The Bank of New York, as
trustee (the "Trustee"), pursuant to which the Company has placed in the U.S.
Pledge Account cash or Government Securities sufficient to provide for the
payment of the first six interest payments on this Note.
The Company shall pay interest on overdue principal and premium, if
any, and interest on overdue installments of interest, to the extent lawful, at
a rate per annum that is 11.25% per annum.
<PAGE>
B-8
2. Method of Payment.
The Company will pay principal as provided above and interest
(except defaulted interest) on the principal amount of the Notes as provided
above on each April 15 and October 15 to the Persons who are Holders (as
reflected in the Note Register at the close of business on such April 1 and
October 1, immediately preceding the Interest Payment Date), in each case, even
if the Note is cancelled on registration of transfer or registration of exchange
after such record date; provided that, with respect to the payment of principal,
the Company will not make payment to the Holder unless this Note is surrendered
to a Paying Agent.
The Company will pay principal, premium, if any, and as provided
above, interest in money of the United States that at the time of payment is
legal tender for payment of public and private debts. However, the Company may
pay principal, premium, if any, and interest by its check payable in such money.
It may mail an interest check to a Holder's registered address (as reflected in
the Note Register). If a payment date is a date other than a Business Day at a
place of payment, payment may be made at that place on the next succeeding day
that is a Business Day and no interest shall accrue for the intervening period.
3. Paying Agent and Registrar.
Initially, the Trustee will act as U.S. Paying Agent and Registrar.
The Company may change any Paying Agent or Registrar without notice. The
Company, any Subsidiary or any Affiliate of any of them may act as Paying Agent,
Registrar or co-Registrar.
4. Indenture; Issuance of Additional Notes.
This Note is one of a duly authorized issue of Notes of the Company
designated its 11.25% Senior Notes due 2008, issued and to be issued under an
Indenture dated as of April 8, 1998 (the "Indenture"), between the Company and
the Trustee. Capitalized terms herein are used as defined in the Indenture
unless otherwise indicated. 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. The Notes are subject to all such terms, and Holders are referred
to the Indenture and the Trust Indenture Act for a statement of all such terms.
To the extent permitted by applicable law, in the event of any inconsistency
between the terms of this Note and the terms of the Indenture, the terms of the
Indenture shall control.
5. Redemption.
The Notes will be redeemable, at the Company's option, in whole or
in part, at any time and from time to time on or after April 15, 2003 and prior
to maturity, upon not less than 30 nor more than 60 days' prior notice mailed by
first-class mail to each Holders' last address as
<PAGE>
B-9
it appears in the Note Register, at the following Redemption Prices (expressed
in percentages of their principal amount), plus accrued and unpaid interest, if
any, to the Redemption Date (subject to the right of Holders of record on the
relevant Regular Record Date that is on or prior to the Redemption Date to
receive interest due on an Interest Payment Date), if redeemed during the 12-
month period commencing on April 15, of the years set forth below:
Redemption
Year Price
---- ------------
2003 105.625%
2004 103.750
2005 101.875
2006 and thereafter 100.000
In addition, at any time or from time to time on or prior to April
15, 2001, the Company may, at its option, redeem up to 35% of the aggregate
principal amount at maturity of the Notes with the net proceeds of one or more
Public Equity Offerings, at a Redemption Price (expressed as a percentage of
principal amount) of 111.250%; provided; (i) that Notes representing at least
65% of the principal amount at maturity of the Notes originally issued remain
outstanding after each such redemption and (ii) that notice of each such
redemption is mailed within 60 days of each such Public Equity Offering.
6. Notice of Redemption.
Notice of any optional redemption will be mailed at least 30 days
but not more than 60 days before the Redemption Date to each Holder of Notes to
be redeemed at his last address as it appears in the Note Register. Notes in
original denominations larger than $1,000 of principal amount may be redeemed in
part. On and after the Redemption Date, interest ceases to accrue on Notes or
portions of Notes called for redemption, unless the Company defaults in the
payment of the Redemption Price.
7. Repurchase upon Change in Control.
Upon the occurrence of any Change of Control, each Holder shall have
the right to require the repurchase of its Notes by the Company in cash pursuant
to the offer described in the Indenture at a purchase price equal to 101% of the
principal amount thereof plus accrued and unpaid interest, if any, to the date
of purchase (the "Change of Control Payment").
A notice of such Change of Control will be mailed within 30 days
after any Change of Control occurs to each Holder at his last address as it
appears in the Note Register. Notes in original denominations larger than $1,000
of principal amount may be sold to the Company in part. On and after the date of
the Change of Control Payment, interest ceases to accrue on Notes
<PAGE>
B-10
or portions of Notes surrendered for purchase by the Company, unless the Company
defaults in the payment of the Change of Control Payment.
8. Registration Rights
Pursuant to the Registration Rights Agreement, the Company will be
obligated, within 180 days after the issue date of this Note, 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 Exchange Notes (as defined in the
Registration Rights Agreement) which have been registered under the Securities
Act, in like principal amount and having terms identical in all material
respects as the Initial Notes. The Holders of the Initial Notes shall be
entitled to receive certain additional interest payments in the event such
exchange offer is not consummated and upon certain other conditions, all
pursuant and in accordance with the terms of the Registration Rights Agreement.
9. Denominations; Transfer; Exchange.
The Notes are in registered form without coupons in denominations of
$1,000 of principal amount and any integral multiples of $1,000 in excess
thereof. A Holder may register the transfer or exchange of Notes in accordance
with the Indenture. The Registrar may require a Holder, among other things, to
furnish appropriate endorsements and transfer documents and to pay any taxes and
fees required by law or permitted by the Indenture. The Registrar need not
register the transfer or exchange of any Notes selected for redemption. Also, it
need not register the transfer or exchange of any Notes for a period of 15 days
before a selection of Notes to be redeemed is made.
10. Persons Deemed Owners.
A Holder shall be treated as the owner of a Note for all purposes.
11. Unclaimed Money.
If money for the payment of principal, premium, if any, or interest
remains unclaimed for two years, the Trustee and the Paying Agent will pay the
money back to the Company at its request. After that, Holders entitled to the
money must look to the Company for payment, unless an abandoned property law
designates another Person, and all liability of the Trustee and such Paying
Agent with respect to such money shall cease.
<PAGE>
B-11
12. Discharge Prior to Redemption or Maturity.
If the Company deposits with the Trustee money and/or U.S.
Government Obligations sufficient to pay the then outstanding principal of,
premium, if any, and accrued interest on the Notes to redemption (a) or
maturity, the Company will be discharged from the Indenture and the Notes,
except in certain circumstances for certain sections thereof, and (b) or to
Stated Maturity, the Company will be discharged from certain covenants set forth
in the Indenture.
13. Amendment; Supplement; Waiver.
Subject to certain exceptions, the Indenture or the Notes may be
amended or supplemented with the consent of the Holders of at least a majority
in principal amount of the Notes then outstanding, and any existing default or
compliance with any provision may be waived with the consent of the Holders of
at least a majority in principal amount of the Notes then outstanding. Without
notice to or the consent of any Holder, the parties thereto may amend or
supplement the Indenture or the Notes to, among other things, cure any
ambiguity, defect or inconsistency and make any change that does not materially
and adversely affect the rights of any Holder.
14. Restrictive Covenants.
The Indenture imposes certain limitations on the ability of the
Company and its Restricted Subsidiaries, among other things, to Incur
Indebtedness, make Restricted Payments, use the proceeds from Asset Sales,
engage in transactions with Affiliates or, with respect to the Company, merge,
consolidate or transfer substantially all of its assets. Within 90 days after
the end of the last fiscal quarter of each year, the Company must report to the
Trustee on compliance with the terms of the Indenture.
15. Successor Persons.
When a successor Person or other entity assumes all the obligations
of its predecessor under the Notes and the Indenture, the predecessor Person
will be released from those obligations.
16. Defaults and Remedies.
The following events constitute "Events of Default" under the
Indenture: (a) default in the payment of principal of (or premium, if any, on)
any Note when the same becomes due and payable at maturity, upon acceleration,
redemption or otherwise; (b) default in the payment of interest on any Note when
the same becomes due and payable, and such default
<PAGE>
B-12
continues for a period of 30 days; provided that a failure to make any of the
first six scheduled interest payments on this Note in a timely manner will
constitute an Event of Default with no grace or cure period; (c) default in the
performance or breach of the provisions of the Indenture applicable to mergers,
consolidations and transfers of all or substantially all of the assets of the
Company or the failure to make or consummate an Offer to Purchase in accordance
with Section 4.11 of the Indenture or Section 4.12 of the Indenture; (d) the
Company defaults in the performance of or breaches any other covenant or
agreement of the Company in the Indenture or under the Notes (other than a
default specified in clause (a), (b) or (c) of Section 6.01 of the Indenture)
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 or principal amount of Notes; (e) there occurs with respect to
any issue or issues of Indebtedness of the Company or any Significant Subsidiary
having an outstanding principal amount of $10 million or more in the aggregate
for all such issues of all such Persons, whether such Indebtedness now exists or
shall hereafter be created, (I) an event of default that has caused the holder
thereof to declare such Indebtedness to be due and payable prior to its Stated
Maturity and such Indebtedness has not been discharged in full or such
acceleration has not been rescinded or annulled within 30 days of such
acceleration and/or (II) the failure to make a principal payment at the final
(but not any interim) fixed maturity and such defaulted payment shall not have
been made, waived or extended within 30 days of such payment default; (f) any
final judgment or order (not covered by insurance) for the payment of money in
excess of $10 million in the aggregate for all such final judgments or orders
against all such Persons (treating any deductibles, self-insurance or retention
as not so covered) shall be rendered against the Company or any Significant
Subsidiary and shall not be paid or discharged, and there shall be any period of
60 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 or discharged against all such Persons to exceed $10 million during which a
stay of enforcement of such final judgment or order, by reason of a pending
appeal or otherwise, shall not be in effect; (g) a court having jurisdiction in
the premises enters a decree or order for (A) relief in respect of the Company
or any Significant Subsidiary 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 Significant Subsidiary or
for all or substantially all of the property and assets of the Company or any
Significant Subsidiary or (C) the winding up or liquidation of the affairs of
the Company or any Significant Subsidiary and, in each case, such decree or
order shall remain unstayed and in effect for a period of 60 consecutive days;
or (h) the Company or any Significant Subsidiary (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 Significant Subsidiary or
for all or substantially all of the property and assets of the Company or any
Significant Subsidiary or (C) effects any general assignment for the benefit of
creditors.
<PAGE>
B-13
If an Event of Default (other than an Event of Default specified in
clause (g) or (h) above that occurs with respect to the Company) 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 (and to the Trustee if such notice is given by the Holders) , may,
and the Trustee at the request of such Holders shall, declare the principal
amount of, premium, if any, and accrued interest on the Notes to be immediately
due and payable.
If an Event of Default, as defined in the Indenture, occurs and is
continuing, the Trustee or the Holders of at least 25% in aggregate principal
amount of the Notes then outstanding may declare all the Notes to be due and
payable. If a bankruptcy or insolvency default with respect to the Company or
any Restricted Subsidiary occurs and is continuing, the Notes automatically
become due and payable. Holders may not enforce the Indenture or the Notes
except as provided in the Indenture. The Trustee may require indemnity
satisfactory to it before it enforces the Indenture or the Notes. Subject to
certain limitations, Holders of at least a majority in principal amount of the
Notes then outstanding may direct the Trustee in its exercise of any trust or
power.
17. Trustee Dealings with Company.
The Trustee under the Indenture, in its individual or any other
capacity, may make loans to, accept deposits from and perform services for the
Company or its Affiliates and may otherwise deal with the Company or its
Affiliates as if it were not the Trustee.
18. No Recourse Against Others.
No incorporator or any past, present or future partner, stockholder,
other equity holder, officer, director, employee or controlling person as such,
of the Company or of any successor Person 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 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.
19. Authentication.
This Note shall not be valid until the Trustee or authenticating
agent signs the certificate of authentication on the other side of this Note.
20. Abbreviations.
Customary abbreviations may be used in the name of a Holder or an
assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the
entireties), JT TEN
<PAGE>
B-14
(= joint tenants with right of survivorship and not as tenants in common), CUST
(= Custodian) and U/G/M/A (= Uniform Gifts to Minors Act).
21. CUSIP Numbers.
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures, the Issuer has caused CUSIP numbers to be
printed on the Notes and the Trustee may use CUSIP numbers in notices of
redemption as a convenience to Holders. No representation is made as to the
accuracy of such numbers either as printed on the Notes or as contained in any
notice of redemption.
This Note shall be governed by the laws of the State of New York.
The Company will furnish to any Holder upon written request and
without charge a copy of the Indenture. Requests may be made to Viatel, Inc.,
800 Third Avenue, New York, New York, 10022, Attention: Sheldon M. Goldman.
<PAGE>
B-15
SCHEDULE OF PRINCIPAL AMOUNT OF INDEBTEDNESS
EVIDENCED BY THIS NOTE
The initial principal amount of indebtedness evidenced by this Note
shall be $__ ,___ ,____ . The following decreases/increases in the principal
amount evidenced by this Note have been made:
Decrease in Increase in Total Principal
Principal Principal Amount of this Notation Made
Date of Amount of Amount of Global Note by or on
Decrease/ this Global this Global Following such Behalf of
Increase Note Note Decrease/Increase Trustee
- -------- ---- ---- ----------------- -------
_______ __________ __________ ________________ ________________
_______ __________ __________ ________________ ________________
_______ __________ __________ ________________ ________________
_______ __________ __________ ________________ ________________
_______ __________ __________ ________________ ________________
_______ __________ __________ ________________ ________________
_______ __________ __________ ________________ ________________
_______ __________ __________ ________________ ________________
_______ __________ __________ ________________ ________________
_______ __________ __________ ________________ ________________
_______ __________ __________ ________________ ________________
_______ __________ __________ ________________ ________________
_______ __________ __________ ________________ ________________
_______ __________ __________ ________________ ________________
_______ __________ __________ ________________ ________________
_______ __________ __________ ________________ ________________
<PAGE>
B-16
[FORM OF TRANSFER NOTICE]
FOR VALUE RECEIVED the undersigned registered holder hereby sell(s),
assign(s) and transfer(s) unto
Insert Taxpayer Identification No.
______________________________________________________________________________
Please print or typewrite name and address including zip code of assignee
_______________________________________________________________________________
the within Note and all rights thereunder, hereby irrevocably constituting and
appointing ________________________________________ attorney to transfer said
Note on the books of the Company with full power of substitution in the
premises.
[THE FOLLOWING PROVISION TO BE INCLUDED
ON ALL NOTES OTHER THAN EXCHANGE NOTES,
UNLEGENDED REGULATION S GLOBAL AND
UNLEGENDED REGULATION S CERTIFICATED NOTES]
In connection with any transfer of this Note occurring prior to the date
which is the earlier of (i) the date of an effective Registration or (ii) the
end of the period referred to in Rule 144(k) under the Securities Act, the
undersigned confirms that without utilizing any general solicitation or general
advertising that:
[Check One]
|_| (a) this Note is being transferred in compliance with the exemption from
registration under the Securities Act of 1933, as amended, provided by
Rule 144A thereunder.
or
|_| (b) this Note is being transferred other than in accordance with (a)
above and documents are being furnished which comply with the conditions
of transfer set forth in this Note and the Indenture.
If none of the foregoing boxes is checked, the Trustee or other Registrar shall
not be obligated to register this Note in the name of any Person other than the
Holder hereof unless and until the conditions to any such transfer of
registration set forth herein and in Section 2.08 of the Indenture shall have
been satisfied.
<PAGE>
B-17
Date:____________ ________________________________________
NOTICE: The signature to this assignment
must correspond with the name as written
upon the face of the within-mentioned
instrument in every particular, without
alteration or any change whatsoever.
TO BE COMPLETED BY PURCHASER IF (a) ABOVE IS CHECKED.
The undersigned represents and warrants that it is purchasing this Note
for its own account or an account with respect to which it exercises sole
investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act of
1933, as amended, and is aware that the sale to it is being made in reliance on
Rule 144A and acknowledges that it has received such information regarding the
Company as the undersigned has requested pursuant to Rule 144A or has determined
not to request such information and that it is aware that the transferor is
relying upon the undersigned's foregoing representations in order to claim the
exemption from registration provided by Rule 144A.
Dated:__________ _______________________________________________
NOTICE: To be executed by an executive officer
<PAGE>
B-18
OPTION OF HOLDER TO ELECT PURCHASE
If you wish to have this Note purchased by the Company pursuant to
Section 4.11 or Section 4.12 of the Indenture, check the Box: |_|
If you wish to have a portion of this Note purchased by the Company
pursuant to Section 4.11 or Section 4.12 of the Indenture, state the amount (in
principal amount): $___________ .
Date:__________
Your Signature: _______________________________________________________________
(Sign exactly as your name appears on the other side of this
Note)
Signature Guarantee: _____________________
<PAGE>
EXHIBIT C
FORM OF U.S. CERTIFICATED NOTE
[FACE OF NOTE]
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS, AND ACCORDINGLY,
MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHIN THE UNITED
STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS EXCEPT AS SET FORTH
IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS
THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER
THE SECURITIES ACT) OR (B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS
DEFINED IN RULE 501(a)(1), (2), (3) OR (7) OF REGULATION D UNDER THE SECURITIES
ACT) (AN "INSTITUTIONAL ACCREDITED INVESTOR") OR (C) IT IS NOT A U.S. PERSON AND
IS ACQUIRING THIS NOTE IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 903 OF
REGULATION S UNDER THE SECURITIES ACT; (2) AGREES THAT IT WILL NOT, WITHIN THE
TIME PERIOD REFERRED TO IN RULE 144(k) (TAKING INTO ACCOUNT THE PROVISIONS OF
RULE 144(d) UNDER THE SECURITIES ACT, IF APPLICABLE), RESELL OR OTHERWISE
TRANSFER THIS NOTE EXCEPT (A) TO THE COMPANY OR ANY SUBSIDIARY THEREOF, (B) TO A
QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES
ACT, (C) INSIDE THE UNITED STATES TO AN INSTITUTIONAL ACCREDITED INVESTOR THAT,
PRIOR TO SUCH TRANSFER, FURNISHES TO THE TRUSTEE A SIGNED LETTER CONTAINING
CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER
OF THIS NOTE (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM THE TRUSTEE) AND IF
SUCH TRANSFER IS IN RESPECT OF AN AGGREGATE PRINCIPAL AMOUNT OF DOLLAR NOTES OF
LESS THAN $100,000, AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY THAT SUCH
TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT, (D) OUTSIDE THE UNITED STATES
IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT,
(E) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE
SECURITIES ACT (IF AVAILABLE) OR (F) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT AND (3) AGREES THAT IT WILL DELIVER TO EACH
PERSON TO WHOM THIS NOTE IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF
THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF THIS NOTE WITHIN THE TIME PERIOD
REFERRED TO ABOVE, THE HOLDER MUST CHECK THE APPROPRIATE BOX SET FORTH ON THE
REVERSE HEREOF RELATING TO THE MANNER OF SUCH TRANSFER AND SUBMIT
<PAGE>
C-2
THIS CERTIFICATE TO THE TRUSTEE. IF THE PROPOSED TRANSFEREE IS AN INSTITUTIONAL
ACCREDITED INVESTOR, THE HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO EACH OF
THE TRUSTEE AND THE COMPANY SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER
INFORMATION AS SUCH PERSONS MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER
IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO,
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. 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. THE INDENTURE CONTAINS A
PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF THIS NOTE
IN VIOLATION OF THE FOREGOING RESTRICTIONS.
THE NOTES EVIDENCED BY THIS CERTIFICATE ARE INITIALLY ISSUED AS PART OF AN
ISSUANCE OF UNITS, EACH OF WHICH CONSISTS OF $1,000 PRINCIPAL AMOUNT OF 11.25%
SENIOR DOLLAR NOTES DUE 2008 OF VIATEL, INC. (THE "NOTES") AND .483 OF A SHARE
OF SERIES A REDEEMABLE CONVERTIBLE PREFERRED STOCK. THE NOTES AND THE SHARES OF
SERIES A PREFERRED WILL BE AUTOMATICALLY SEPARATED UPON THE EARLIEST TO OCCUR OF
(i) SIX MONTHS AFTER APRIL 8, 1998, (ii) COMMENCEMENT OF AN EXCHANGE OFFER WITH
RESPECT TO THE NOTES, (iii) THE EFFECTIVENESS OF A SHELF REGISTRATION STATEMENT
WITH RESPECT TO RESALE OF THE NOTES OR (iv) COMMENCEMENT OF AN OFFER TO
REPURCHASE THE NOTES PURSUANT TO THE INDENTURE. THE NOTES EVIDENCED BY THIS
CERTIFICATE MAY NOT BE TRANSFERRED OR EXCHANGED SEPARATELY FROM, BUT MAY BE
TRANSFERRED OR EXCHANGED ONLY TOGETHER WITH, THE SERIES A PREFERRED STOCK.
<PAGE>
C-3
VIATEL, INC.
11.25% Senior Note Due 2008
[CUSIP][CINS][ISIN] ___
No. R-________ $____________
Issue Date: April 8, 1998
VIATEL, INC., a Delaware corporation (the "Company", which term includes
any successor under the Indenture hereinafter referred to), for value received,
promises to pay to _____________________, or its registered assigns, the
principal sum of $__________ on April 15, 2008.
Interest Payment Dates: April 15 and October 15, commencing October 15,
2003.
Record Dates: April 1 and October 1.
Reference is hereby made to the further provisions of this Note set forth
on the reverse hereof, which further provisions shall for all purposes have the
same effect as if set forth at this place.
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Note to be signed manually
or by facsimile by its duly authorized officers.
Date: April 8, 1998 VIATEL, INC.
By
-------------------------------
Name:
Title:
By
-------------------------------
Name:
Title:
(Trustee's Certificate of Authentication)
This is one of the 11.25% Senior Notes due 2008 described in the
within-mentioned Indenture.
Date: April 8, 1998 THE BANK OF NEW YORK, as Trustee
By
--------------------------------
Authorized Signatory
<PAGE>
C-5
VIATEL, INC.
11.25% Senior Note Due 2008
[CUSIP][CINS][INIS]___
No. __________ $_______
Issue date: April 8, 1998
VIATEL, INC., a Delaware corporation (the "Company", which term includes
any successor under the Indenture hereinafter referred to), for value received,
promises to pay to ________________, or its registered assigns, upon surrender
hereof the principal sum of $_________ on April 15, 2008.
Interest Payment Dates: April 15 and October 15, commencing October 15,
1998.
Record Dates: April 1 and October 1.
Reference is hereby made to the further provisions of this Note set forth
on the reverse hereof, which further provisions shall for all purposes have the
same effect as if set forth at this place.
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Note to be signed manually
or by facsimile by its duly authorized officers.
Date: April 8, 1998 VIATEL, INC.
By
-------------------------------
Name:
Title:
By
-------------------------------
Name:
Title:
(Trustee's Certificate of Authentication)
This is one of the 11.25% Senior Notes due 2008 described in the
within-mentioned Indenture.
Date: April 8, 1998 THE BANK OF NEW YORK, as Trustee
By
--------------------------------
Authorized Signatory
<PAGE>
C-7
[REVERSE SIDE OF NOTE]
VIATEL, INC.
11.25% Senior Note due 2008
1. Principal and Interest.
The Company will pay the principal of this Note on April 15, 2008.
The Company promises to pay interest on the principal amount of this
Note on each Interest Payment Date, as set forth below, at the rate per annum
shown above.
Interest will be payable semiannually in cash (to the holders of
record of the Notes at the close of business on the April 1 or October 1
immediately preceding the Interest Payment Date) on each Interest Payment Date,
commencing October 15, 1998. Interest will be computed on the basis of a 360 day
year of twelve 30 day months.
If an exchange offer registered under the Securities Act is not
consummated, and a shelf registration statement under the Securities Act with
respect to resales of the Notes is not declared effective by the Commission, on
or before the date that is six months after the Closing Date in accordance with
the terms of the Registration Rights Agreement dated April 3, 1998 between the
Company and Morgan Stanley & Co. Incorporated, as the manager for itself and the
several initial purchasers named on Schedule I to the Purchase Agreement dated
April 3, 1998, annual interest (in addition to interest otherwise due on the
Notes) will accrue, at an annual rate of 0.5% per annum of the principal amount,
payable in cash semiannually, in arrears on April 15 and October 15 of each
year, commencing April 15, 1999 until the consummation of a registered exchange
offer or the effectiveness of a shelf-registration statement with respect to
resale of this Note. The Holder of this Note is entitled to the benefits of such
Registration Rights Agreement.
The Holder of this Note is entitled to the benefits of a Pledge
Agreement dated April 8, 1998 between the Company and The Bank of New York, as
trustee (the "Trustee"), pursuant to which the Company has placed in the U.S.
Pledge Account cash or Government Securities sufficient to provide for the
payment of the first six interest payments on this Note.
The Company shall pay interest on overdue principal and premium, if
any, and interest on overdue installments of interest, to the extent lawful, at
a rate per annum that is 11.25% per annum.
<PAGE>
C-8
2. Method of Payment.
The Company will pay principal as provided above and interest
(except defaulted interest) on the principal amount of the Notes as provided
above on each April 15 and October 15 to the Persons who are Holders (as
reflected in the Note Register at the close of business on such April 1 and
October 1, immediately preceding the Interest Payment Date), in each case, even
if the Note is cancelled on registration of transfer or registration of exchange
after such record date; provided that, with respect to the payment of principal,
the Company will not make payment to the Holder unless this Note is surrendered
to a Paying Agent.
The Company will pay principal, premium, if any, and as provided
above, interest in money of the United States that at the time of payment is
legal tender for payment of public and private debts. However, the Company may
pay principal, premium, if any, and interest by its check payable in such money.
It may mail an interest check to a Holder's registered address (as reflected in
the Note Register). If a payment date is a date other than a Business Day at a
place of payment, payment may be made at that place on the next succeeding day
that is a Business Day and no interest shall accrue for the intervening period.
3. Paying Agent and Registrar.
Initially, the Trustee will act as U.S. Paying Agent and Registrar.
The Company may change any Paying Agent or Registrar without notice. The
Company, any Subsidiary or any Affiliate of any of them may act as Paying Agent,
Registrar or co-Registrar.
4. Indenture; Issuance of Additional Notes.
This Note is one of a duly authorized issue of Notes of the Company
designated its 11.25% Senior Notes due 2008, issued and to be issued under an
Indenture dated as of April 8, 1998 (the "Indenture"), between the Company and
the Trustee. Capitalized terms herein are used as defined in the Indenture
unless otherwise indicated. 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. The Notes are subject to all such terms, and Holders are referred
to the Indenture and the Trust Indenture Act for a statement of all such terms.
To the extent permitted by applicable law, in the event of any inconsistency
between the terms of this Note and the terms of the Indenture, the terms of the
Indenture shall control.
5. Redemption.
The Notes will be redeemable, at the Company's option, in whole or
in part, at any time and from time to time on or after April 15, 2003 and prior
to maturity, upon not less than 30 nor more than 60 days' prior notice mailed by
first-class mail to each Holders' last address as
<PAGE>
C-9
it appears in the Note Register, at the following Redemption Prices (expressed
in percentages of their principal amount), plus accrued and unpaid interest, if
any, to the Redemption Date (subject to the right of Holders of record on the
relevant Regular Record Date that is on or prior to the Redemption Date to
receive interest due on an Interest Payment Date), if redeemed during the 12-
month period commencing on April 15, of the years set forth below:
Redemption
Year Price
---- -----------
2003 105.625%
2004 103.750
2005 101.875
2006 and thereafter 100.000
In addition, at any time or from time to time on or prior to April
15, 2001, the Company may, at its option, redeem up to 35% of the aggregate
principal amount at maturity of the Notes with the net proceeds of one or more
Public Equity Offerings, at a Redemption Price (expressed as a percentage of
principal amount) of 111.250%; provided, (i) that Notes representing at least
65% of the principal amount at maturity of the Notes originally issued remain
outstanding after each such redemption and (ii) that notice of each such
redemption is mailed within 60 days of each such Public Equity Offering.
6. Notice of Redemption.
Notice of any optional redemption will be mailed at least 30 days
but not more than 60 days before the Redemption Date to each Holder of Notes to
be redeemed at his last address as it appears in the Note Register. Notes in
original denominations larger than $1,000 of principal amount may be redeemed in
part. On and after the Redemption Date, interest ceases to accrue on Notes or
portions of Notes called for redemption, unless the Company defaults in the
payment of the Redemption Price.
7. Repurchase upon Change in Control.
Upon the occurrence of any Change of Control, each Holder shall have
the right to require the repurchase of its Notes by the Company in cash pursuant
to the offer described in the Indenture at a purchase price equal to 101% of the
principal amount thereof plus accrued and unpaid interest, if any, to the date
of purchase (the "Change of Control Payment").
A notice of such Change of Control will be mailed within 30 days
after any Change of Control occurs to each Holder at his last address as it
appears in the Note Register. Notes in original denominations larger than $1,000
of principal amount may be sold to the Company in part. On and after the date of
the Change of Control Payment, interest ceases to accrue on Notes
<PAGE>
C-10
or portions of Notes surrendered for purchase by the Company, unless the Company
defaults in the payment of the Change of Control Payment.
8. Registration Rights
Pursuant to the Registration Rights Agreement, the Company will be
obligated, within 180 days after the issue date of this Note, 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 Exchange Notes (as defined in the
Registration Rights Agreement) which have been registered under the Securities
Act, in like principal amount and having terms identical in all material
respects as the Initial Notes. The Holders of the Initial Notes shall be
entitled to receive certain additional interest payments in the event such
exchange offer is not consummated and upon certain other conditions, all
pursuant and in accordance with the terms of the Registration Rights Agreement.
9. Denominations; Transfer; Exchange.
The Notes are in registered form without coupons in denominations of
$1,000 of principal amount and any integral multiples of $1,000 in excess
thereof. A Holder may register the transfer or exchange of Notes in accordance
with the Indenture. The Registrar may require a Holder, among other things, to
furnish appropriate endorsements and transfer documents and to pay any taxes and
fees required by law or permitted by the Indenture. The Registrar need not
register the transfer or exchange of any Notes selected for redemption. Also, it
need not register the transfer or exchange of any Notes for a period of 15 days
before a selection of Notes to be redeemed is made.
10. Persons Deemed Owners.
A Holder shall be treated as the owner of a Note for all purposes.
11. Unclaimed Money.
If money for the payment of principal, premium, if any, or interest
remains unclaimed for two years, the Trustee and the Paying Agent will pay the
money back to the Company at its request. After that, Holders entitled to the
money must look to the Company for payment, unless an abandoned property law
designates another Person, and all liability of the Trustee and such Paying
Agent with respect to such money shall cease.
<PAGE>
C-11
12. Discharge Prior to Redemption or Maturity.
If the Company deposits with the Trustee money and/or U.S.
Government Obligations sufficient to pay the then outstanding principal of,
premium, if any, and accrued interest on the Notes to redemption (a) or
maturity, the Company will be discharged from the Indenture and the Notes,
except in certain circumstances for certain sections thereof, and (b) or to
Stated Maturity, the Company will be discharged from certain covenants set forth
in the Indenture.
13. Amendment; Supplement; Waiver.
Subject to certain exceptions, the Indenture or the Notes may be
amended or supplemented with the consent of the Holders of at least a majority
in principal amount of the Notes then outstanding, and any existing default or
compliance with any provision may be waived with the consent of the Holders of
at least a majority in principal amount of the Notes then outstanding. Without
notice to or the consent of any Holder, the parties thereto may amend or
supplement the Indenture or the Notes to, among other things, cure any
ambiguity, defect or inconsistency and make any change that does not materially
and adversely affect the rights of any Holder.
14. Restrictive Covenants.
The Indenture imposes certain limitations on the ability of the
Company and its Restricted Subsidiaries, among other things, to Incur
Indebtedness, make Restricted Payments, use the proceeds from Asset Sales,
engage in transactions with Affiliates or, with respect to the Company, merge,
consolidate or transfer substantially all of its assets. Within 90 days after
the end of the last fiscal quarter of each year, the Company must report to the
Trustee on compliance with the terms of the Indenture.
15. Successor Persons.
When a successor Person or other entity assumes all the obligations
of its predecessor under the Notes and the Indenture, the predecessor Person
will be released from those obligations.
16. Defaults and Remedies.
The following events constitute "Events of Default" under the
Indenture: (a) default in the payment of principal of (or premium, if any, on)
any Note when the same becomes due and payable at maturity, upon acceleration,
redemption or otherwise; (b) default in the payment of interest on any Note when
the same becomes due and payable, and such default
<PAGE>
C-12
continues for a period of 30 days; provided that a failure to make any of the
first six scheduled interest payments on this Note in a timely manner will
constitute an Event of Default with no grace or cure period; (c) default in the
performance or breach of the provisions of the Indenture applicable to mergers,
consolidations and transfers of all or substantially all of the assets of the
Company or the failure to make or consummate an Offer to Purchase in accordance
with Section 4.11 of the Indenture or Section 4.12 of the Indenture; (d) the
Company defaults in the performance of or breaches any other covenant or
agreement of the Company in the Indenture or under the Notes (other than a
default specified in clause (a), (b) or (c) of Section 6.01 of the Indenture)
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 or principal amount of Notes; (e) there occurs with respect to
any issue or issues of Indebtedness of the Company or any Significant Subsidiary
having an outstanding principal amount of $10 million or more in the aggregate
for all such issues of all such Persons, whether such Indebtedness now exists or
shall hereafter be created, (I) an event of default that has caused the holder
thereof to declare such Indebtedness to be due and payable prior to its Stated
Maturity and such Indebtedness has not been discharged in full or such
acceleration has not been rescinded or annulled within 30 days of such
acceleration and/or (II) the failure to make a principal payment at the final
(but not any interim) fixed maturity and such defaulted payment shall not have
been made, waived or extended within 30 days of such payment default; (f) any
final judgment or order (not covered by insurance) for the payment of money in
excess of $10 million in the aggregate for all such final judgments or orders
against all such Persons (treating any deductibles, self-insurance or retention
as not so covered) shall be rendered against the Company or any Significant
Subsidiary and shall not be paid or discharged, and there shall be any period of
60 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 or discharged against all such Persons to exceed $10 million during which a
stay of enforcement of such final judgment or order, by reason of a pending
appeal or otherwise, shall not be in effect; (g) a court having jurisdiction in
the premises enters a decree or order for (A) relief in respect of the Company
or any Significant Subsidiary 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 Significant Subsidiary or
for all or substantially all of the property and assets of the Company or any
Significant Subsidiary or (C) the winding up or liquidation of the affairs of
the Company or any Significant Subsidiary and, in each case, such decree or
order shall remain unstayed and in effect for a period of 60 consecutive days;
or (h) the Company or any Significant Subsidiary (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 Significant Subsidiary or
for all or substantially all of the property and assets of the Company or any
Significant Subsidiary or (C) effects any general assignment for the benefit of
creditors.
<PAGE>
C-13
If an Event of Default (other than an Event of Default specified in
clause (g) or (h) above that occurs with respect to the Company) 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 (and to the Trustee if such notice is given by the Holders) , may,
and the Trustee at the request of such Holders shall, declare the principal
amount of, premium, if any, and accrued interest on the Notes to be immediately
due and payable.
If an Event of Default, as defined in the Indenture, occurs and is
continuing, the Trustee or the Holders of at least 25% in aggregate principal
amount of the Notes then outstanding may declare all the Notes to be due and
payable. If a bankruptcy or insolvency default with respect to the Company or
any Restricted Subsidiary occurs and is continuing, the Notes automatically
become due and payable. Holders may not enforce the Indenture or the Notes
except as provided in the Indenture. The Trustee may require indemnity
satisfactory to it before it enforces the Indenture or the Notes. Subject to
certain limitations, Holders of at least a majority in principal amount of the
Notes then outstanding may direct the Trustee in its exercise of any trust or
power.
17. Trustee Dealings with Company.
The Trustee under the Indenture, in its individual or any other
capacity, may make loans to, accept deposits from and perform services for the
Company or its Affiliates and may otherwise deal with the Company or its
Affiliates as if it were not the Trustee.
18. No Recourse Against Others.
No incorporator or any past, present or future partner, stockholder,
other equity holder, officer, director, employee or controlling person as such,
of the Company or of any successor Person 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 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.
19. Authentication.
This Note shall not be valid until the Trustee or authenticating
agent signs the certificate of authentication on the other side of this Note.
20. Abbreviations.
Customary abbreviations may be used in the name of a Holder or an
assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the
entireties), JT TEN
<PAGE>
C-14
(= joint tenants with right of survivorship and not as tenants in common), CUST
(= Custodian) and U/G/M/A (= Uniform Gifts to Minors Act).
21. CUSIP Numbers.
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures, the Issuer has caused CUSIP numbers to be
printed on the Notes and the Trustee may use CUSIP numbers in notices of
redemption as a convenience to Holders. No representation is made as to the
accuracy of such numbers either as printed on the Notes or as contained in any
notice of redemption.
This Note shall be governed by the laws of the State of New York.
The Company will furnish to any Holder upon written request and
without charge a copy of the Indenture. Requests may be made to Viatel, Inc.,
800 Third Avenue, New York, New York, 10022, Attention: Sheldon M. Goldman.
<PAGE>
C-15
[FORM OF TRANSFER NOTICE]
FOR VALUE RECEIVED the undersigned registered holder hereby sell(s),
assign(s) and transfer(s) unto
Insert Taxpayer Identification No.
______________________________________________________________________________
Please print or typewrite name and address including zip code of assignee
_______________________________________________________________________________
the within Note and all rights thereunder, hereby irrevocably constituting and
appointing ________________________________________ attorney to transfer said
Note on the books of the Company with full power of substitution in the
premises.
[THE FOLLOWING PROVISION TO BE INCLUDED
ON ALL NOTES OTHER THAN EXCHANGE NOTES,
UNLEGENDED REGULATION S GLOBAL AND
UNLEGENDED REGULATION S CERTIFICATED NOTES]
In connection with any transfer of this Note occurring prior to the date
which is the earlier of (i) the date of an effective Registration or (ii) the
end of the period referred to in Rule 144(k) under the Securities Act, the
undersigned confirms that without utilizing any general solicitation or general
advertising that:
[Check One]
|_| (a) this Note is being transferred in compliance with the exemption from
registration under the Securities Act of 1933, as amended, provided by
Rule 144A thereunder.
or
|_| (b) this Note is being transferred other than in accordance with (a)
above and documents are being furnished which comply with the conditions
of transfer set forth in this Note and the Indenture.
If none of the foregoing boxes is checked, the Trustee or other Registrar shall
not be obligated to register this Note in the name of any Person other than the
Holder hereof unless and until the conditions to any such transfer of
registration set forth herein and in Section 2.08 of the Indenture shall have
been satisfied.
<PAGE>
C-16
Date:__________ ________________________________________
NOTICE: The signature to this assignment
must correspond with the name as written
upon the face of the within-mentioned
instrument in every particular, without
alteration or any change whatsoever.
TO BE COMPLETED BY PURCHASER IF (a) ABOVE IS CHECKED.
The undersigned represents and warrants that it is purchasing this Note
for its own account or an account with respect to which it exercises sole
investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act of
1933, as amended, and is aware that the sale to it is being made in reliance on
Rule 144A and acknowledges that it has received such information regarding the
Company as the undersigned has requested pursuant to Rule 144A or has determined
not to request such information and that it is aware that the transferor is
relying upon the undersigned's foregoing representations in order to claim the
exemption from registration provided by Rule 144A.
Dated:_________ _______________________________________________
NOTICE: To be executed by an executive officer
<PAGE>
C-17
OPTION OF HOLDER TO ELECT PURCHASE
If you wish to have this Note purchased by the Company pursuant to
Section 4.11 or Section 4.12 of the Indenture, check the Box: |_|
If you wish to have a portion of this Note purchased by the Company
pursuant to Section 4.11 or Section 4.12 of the Indenture, state the amount (in
principal amount): $____________.
Date:__________
Your Signature: ______________________________________________________________
(Sign exactly as your name appears on the other side of this
Note)
Signature Guarantee: _____________________
<PAGE>
EXHIBIT D
Form of Certificate
The Bank of New York __________ __, 19__
101 Barclay Street, Floor 21 West
New York, NY 10286
Attention: Corporate Trust Administration
Re:Viatel, Inc. (the "Company")
11.25% Senior Dollar Notes
due 2008 (the "Notes")
Ladies and Gentlemen:
This letter relates to $__________ principal amount of Notes
represented by a Note (the "Legended Note") which bears a legend outlining
restrictions upon transfer of such Legended Note. Pursuant to Section 2.02 of
the Indenture (the "Indenture") dated as of April 8, 1998 relating to the Notes,
we hereby certify that we are (or we will hold such Notes on behalf of) a person
outside the United States to whom the Notes could be transferred in accordance
with Rule 904 of Regulation S promulgated under the U.S. Securities Act of 1933,
as amended. Accordingly, you are hereby requested to exchange the legended
certificate for an unlegended certificate representing an identical principal
amount of Notes, all in the manner provided for in the Indenture.
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby. Terms used in this certificate have the
meanings set forth in Regulation S.
Very truly yours,
[Name of Holder]
By:
--------------------------------
Authorized Signature
<PAGE>
EXHIBIT E
Form of Certificate to Be Delivered
in Connection with Transfers
Pursuant to Regulation S
The Bank of New York __________ __, 19__
101 Barclay Street, Floor 21 West
New York, NY 10286
Attention: Corporate Trust Administration
Re: Viatel, Inc. (the "Company")
11.25% Senior Dollar Notes
due 2008 (the "Notes")
Ladies and Gentlemen:
In connection with our proposed sale of $_________ aggregate
principal amount of the Notes, we confirm that such sale has been effected
pursuant to and in accordance with Regulation S under the Securities Act of
1933, as amended, and, accordingly, we represent that:
(1) the offer of the Notes was not made to a person in the United
States;
(2) 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;
(3) no directed selling efforts have been made by us in the United
States in contravention of the requirements of Rule 903(b) or Rule 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 U.S. Securities Act of 1933.
<PAGE>
E-2
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby. Terms used in this certificate have the
meanings set forth in Regulation S.
Very truly yours,
[Name of Transferor]
By:
---------------------------
Authorized Signature
<PAGE>
EXHIBIT F
Form of Certificate to Be
Delivered in Connection with
Transfers to Non-QIB Accredited Investors
The Bank of New York __________ __, 19__
101 Barclay Street, Floor 21 West
New York, NY 10286
Attention: Corporate Trust Administration
Re: Viatel, Inc. (the "Company")
11.15% Senior Dollar Notes
due 2008 (the "Notes")
Dear Sirs:
In connection with our proposed purchase of $___________ aggregate
principal amount of the Notes, we confirm that:
1. We understand that any subsequent transfer of the Notes is
subject to certain restrictions and conditions set forth in the Indenture
dated as of April 8, 1998 relating to the Notes (the "Indenture") and the
undersigned agrees to be bound by, and not to resell, pledge or otherwise
transfer the Notes except in compliance with, such restrictions and
conditions and the Securities Act of 1933, as amended (the "Securities
Act").
2. We understand that the offer and sale of the Notes have not been
registered under the Securities Act, and that the Notes may not be offered
or sold except as permitted in the following sentence. We agree, on our
own behalf and on behalf of any accounts for which we are acting as
hereinafter stated, that if we should sell any Notes, we will do so only
(A) to the Company or any subsidiary thereof, (B) in accordance with Rule
144A under the Securities Act to a "qualified institutional buyer" (as
defined therein), (C) to an institutional "accredited investor" (as
defined below) that, prior to such transfer, furnishes (or has furnished
on its behalf by a U.S. broker-dealer) to you and to the Company a signed
letter substantially in the form of this letter, (D) outside the United
States in accordance with Rule 904 of Regulation S under the Securities
Act, (E) pursuant to the provisions of Rule 144 under the Securities Act,
or (F) pursuant to an effective registration statement under the
Securities Act, and we further agree to provide to any person purchasing
any of
<PAGE>
F-2
the Notes from us a notice advising such purchaser that resales of the
Notes are restricted as stated herein.
3. We understand that, on any proposed resale of any Notes, we will
be required to furnish to you and the Company such certifications, legal
opinions and other information as you and the Company may reasonably
require to confirm that the proposed sale complies with the foregoing
restrictions. We further understand that the Notes purchased by us will
bear a legend to the foregoing effect.
4. We are an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and
have such knowledge and experience in financial and business matters as to
be capable of evaluating the merits and risks of our investment in the
Notes, and we and any accounts for which we are acting are each able to
bear the economic risk of our or its investment.
5. We are acquiring the Notes purchased by us for our own account or
for one or more accounts (each of which is an institutional "accredited
investor") as to each of which we exercise sole investment discretion.
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby.
Very truly yours,
[Name of Transferee]
By:
--------------------------
Authorized Signature
<PAGE>
Exhibit 4.3
================================================================================
VIATEL, INC.,
as Issuer
THE BANK OF NEW YORK,
as Trustee, U.S. Paying Agent and Registrar
and
DEUTSCHE BANK, AKTIENGESELLSCHAFT,
as German Paying Agent and
Co-Registrar
----------
Senior Discount DM Indenture
Dated as of April 8, 1998
----------
12.40% Senior Discount Notes due 2008
================================================================================
<PAGE>
CROSS-REFERENCE TABLE
TIA Sections Indenture Sections
- ------------ ------------------
ss. 310(a)(1).............................................. 7.10
(a)(5).............................................. 7.10
(b)................................................. 7.03; 7.08
ss. 311 ................................................... 7.03
ss. 313(a)................................................. 7.06
(c)................................................. 7.05; 7.06
ss. 314(a)................................................. 4.17
(a)(4).............................................. 1.01
(e)................................................. 1.01
ss. 315(a)................................................. 7.02
ss. 316(a)................................................. 6.06
Note: The Cross-Reference Table shall not for any purpose be deemed to be a part
of the Indenture.
<PAGE>
TABLE OF CONTENTS
Page
RECITALS OF THE COMPANY........................................................1
ARTICLE ONE
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. Definitions.....................................................2
SECTION 1.02. Incorporation by Reference of Trust Indenture Act..............26
SECTION 1.03. Rules of Construction..........................................27
ARTICLE TWO
THE NOTES
SECTION 2.01. Form and Dating................................................27
SECTION 2.02. Restrictive Legends............................................29
SECTION 2.03. Execution, Authentication and Denominations....................32
SECTION 2.04. Registrar and Paying Agent.....................................33
SECTION 2.05. Paying Agent to Hold Money in Trust............................33
SECTION 2.06. Transfer and Exchange..........................................34
SECTION 2.07. Book-Entry Provisions for Global Notes.........................35
SECTION 2.08. Special Transfer Provisions....................................37
SECTION 2.09. Replacement Notes..............................................40
SECTION 2.10. Outstanding Notes..............................................40
SECTION 2.11. Temporary Notes................................................41
SECTION 2.12. Cancellation...................................................42
SECTION 2.13. CUSIP Numbers..................................................42
SECTION 2.14. Defaulted Interest.............................................42
SECTION 2.15. Issuance of Additional Notes...................................42
ARTICLE THREE
REDEMPTION
SECTION 3.01. Right of Redemption............................................43
SECTION 3.02. Notices to Trustee.............................................43
SECTION 3.03. Selection of Notes to Be Redeemed..............................43
SECTION 3.04. Notice of Redemption...........................................44
SECTION 3.05. Effect of Notice of Redemption.................................45
SECTION 3.06. Deposit of Redemption Price....................................45
SECTION 3.07. Payment of Notes Called for Redemption.........................45
Note: The Table of Contents shall not for any purposes be deemed to be a part of
the Indenture.
<PAGE>
ii
Page
SECTION 3.08. Notes Redeemed in Part.........................................46
ARTICLE FOUR
COVENANTS
SECTION 4.01. Payment of Notes...............................................46
SECTION 4.02. Maintenance of Office or Agency................................46
SECTION 4.03. Limitation on Indebtedness.....................................47
SECTION 4.04. Limitation on Restricted Payments..............................50
SECTION 4.05. Limitation on Dividend and Other Payment Restrictions
Affecting Restricted Subsidiaries............................55
SECTION 4.06. Limitation on the Issuance and Sale of Capital Stock of
Restricted Subsidiaries......................................56
SECTION 4.07. Limitation on Issuances of Guarantees by Restricted
Subsidiaries.................................................56
SECTION 4.08. Limitation on Transactions with Shareholders and
Affiliates...................................................57
SECTION 4.09. Limitation on Liens............................................58
SECTION 4.10. Limitation on Sale-Leaseback Transactions......................59
SECTION 4.11. Limitation on Asset Sales......................................60
SECTION 4.12. Repurchase of Notes upon a Change of Control...................61
SECTION 4.13. Existence......................................................61
SECTION 4.14. Payment of Taxes and Other Claims..............................61
SECTION 4.15. Maintenance of Properties and Insurance........................62
SECTION 4.16. Notice of Defaults.............................................62
SECTION 4.17. Compliance Certificates........................................62
SECTION 4.18. Commission Reports and Reports to Holders......................62
SECTION 4.19. Waiver of Stay, Extension or Usury Laws........................63
SECTION 4.20. Calculation of Original Issue Discount.........................63
ARTICLE FIVE
SUCCESSOR CORPORATION
SECTION 5.01. When Company May Merge, Etc....................................64
SECTION 5.02. Successor Substituted..........................................65
ARTICLE SIX
DEFAULT AND REMEDIES
SECTION 6.01. Events of Default..............................................65
SECTION 6.02. Acceleration...................................................67
SECTION 6.03. Other Remedies.................................................67
SECTION 6.04. Waiver of Past Defaults........................................67
SECTION 6.05. Control by Majority............................................68
SECTION 6.06. Limitation on Suits............................................68
<PAGE>
iii
Page
SECTION 6.07. Rights of Holders to Receive Payment...........................69
SECTION 6.08. Collection Suit by Trustee.....................................69
SECTION 6.09. Trustee May File Proofs of Claim...............................69
SECTION 6.10. Priorities.....................................................70
SECTION 6.11. Undertaking for Costs..........................................70
SECTION 6.12. Restoration of Rights and Remedies.............................70
SECTION 6.13. Rights and Remedies Cumulative.................................71
SECTION 6.14. Delay or Omission Not Waiver...................................71
ARTICLE SEVEN
TRUSTEE
SECTION 7.01. General........................................................71
SECTION 7.02. Certain Rights of Trustee......................................71
SECTION 7.03. Individual Rights of Trustee...................................73
SECTION 7.04. Trustee's Disclaimer...........................................73
SECTION 7.05. Notice of Default..............................................73
SECTION 7.06. Reports by Trustee to Holders..................................73
SECTION 7.07. Compensation and Indemnity.....................................74
SECTION 7.08. Replacement of Trustee.........................................75
SECTION 7.09. Successor Trustee by Merger, Etc...............................76
SECTION 7.10. Eligibility....................................................76
SECTION 7.11. Money Held in Trust............................................76
SECTION 7.12. Withholding Taxes..............................................76
ARTICLE EIGHT
DISCHARGE OF INDENTURE
SECTION 8.01. Termination of the Company's Obligations........................76
SECTION 8.02. Defeasance and Discharge of Indenture..........................77
SECTION 8.03. Defeasance of Certain Obligations..............................79
SECTION 8.04. Application of Trust Money.....................................80
SECTION 8.05. Repayment to Company...........................................80
SECTION 8.06. Reinstatement..................................................80
SECTION 8.07. Defeasance and Certain Other Events of Default.................81
ARTICLE NINE
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 9.01. Without Consent of Holders.....................................81
SECTION 9.02. With Consent of Holders........................................82
SECTION 9.03. Revocation and Effect of Consent...............................83
SECTION 9.04. Notation on or Exchange of Notes...............................83
<PAGE>
iv
Page
SECTION 9.05. Trustee to Sign Amendments, Etc................................84
SECTION 9.06. Conformity with Trust Indenture Act............................84
ARTICLE TEN
MISCELLANEOUS
SECTION 10.01. Trust Indenture Act of 1939...................................84
SECTION 10.02. Notices.......................................................84
SECTION 10.03. Certificate and Opinion As to Conditions Precedent............86
SECTION 10.04. Statements Required in Certificate or Opinion.................86
SECTION 10.05. Rules by Trustee, Paying Agent or Registrar...................87
SECTION 10.06. Payment Date Other Than a Business Day........................87
SECTION 10.07. Governing Law; Submission to Jurisdiction; Agent
for Service.................................................87
SECTION 10.08. No Adverse Interpretation of Other Agreements.................87
SECTION 10.09. No Recourse Against Others....................................88
SECTION 10.10. Successors....................................................88
SECTION 10.11. Duplicate Originals...........................................88
SECTION 10.12. Separability..................................................88
SECTION 10.13. Table of Contents, Headings, Etc..............................88
SECTION 10.14. Substitution of Currency......................................88
SECTION 10.15. Method of Payment.............................................89
EXHIBIT A Form of DTC Global Note......................................A-1
EXHIBIT B Form of DBC Global Note......................................B-1
EXHIBIT C Form of U.S. Certificated Note...............................C-1
EXHIBIT D Form of Certificate..........................................D-1
EXHIBIT E Form of Certificate to Be Delivered in Connection
with Transfers Pursuant to Regulation S....................E-1
EXHIBIT F Form of Certificate to Be Delivered in Connection
with Transfers to Non-QIB Accredited Investors.............F-1
<PAGE>
INDENTURE, dated as of April 8, 1998, between VIATEL, INC., a
Delaware corporation, as issuer (the "Company"), THE BANK OF NEW YORK, a New
York banking corporation as trustee (the "Trustee") and Deutsche Bank,
Aktiengesellschaft (Deutsche Bank AG), as Paying Agent and Co-Registrar.
RECITALS OF THE COMPANY
The Company has duly authorized the execution and delivery of this
Indenture to provide for the issuance from time to time of 12.40% Senior
Discount DM Notes due 2008 (the "Notes") issuable as provided in this Indenture.
Pursuant to the terms of a Purchase Agreement dated as of April 3, 1998 (the
"Purchase Agreement") between the Company and Morgan Stanley & Co. Incorporated,
as the manager for itself and the several initial purchasers named on Schedule I
thereto (the "Manager"), the Company has agreed to issue and sell 500,000 Senior
Discount Dollar Units (collectively, the "Senior Discount Dollar Units"),
400,000 Senior Dollar Units (collectively, the "Senior Dollar Units"), 226,000
Senior Discount DM Units (collectively, the "Senior Discount DM Units") and
178,000 Senior DM Units (collectively, the "Senior DM Units"; and together with
the Senior Discount Dollar Units, the Senior Dollar Units and the Senior
Discount DM Units, the "Units"). Each Senior Discount Dollar Unit will consist
of (i) one 12.50% Senior Discount Note due 2008 of the Company with a principal
amount of maturity of $1,000 (collectively, the "Senior Discount Dollar Notes")
to be issued pursuant to the provisions of an Indenture (the "Senior Discount
Dollar Indenture ") dated as of the Closing Date between the Company and the
Trustee and (ii) .490 shares of Series A Redeemable Convertible Preferred Stock
of the Company (collectively, the "Series A Preferred"). Each Senior Dollar Unit
will consist of (i) one 11.25% Senior Note due 2008 of the Company with a
principal amount of $1,000 (collectively, the "Senior Dollar Notes") to be
issued pursuant to the provisions of an Indenture (the "Senior Dollar
Indenture") dated as of the Closing Date between the Company and the Trustee and
(ii) .483 shares of Series A Preferred. Each Senior Discount DM Unit will
consist of (i) one 12.40% Senior Discount Note due 2008 of the Company with a
principal amount at maturity of DM 1,000 (collectively, the "Senior Discount DM
Notes") to be issued pursuant to the provisions of this Indenture (the "Senior
Discount DM Indenture" or "this Indenture") and (ii) 2.77 DM denominated 10%
Subordinated Convertible Debentures Due 2011 of the Company (the "Subordinated
Convertible Debentures") to be issued pursuant to the provisions of an Indenture
(the "Subordinated Indenture") to be dated as of the Closing Date between the
Company, the Trustee and the German Paying Agent. Each Senior DM Unit will
consist of (i) one 11.15% Senior Note due 2008 of the Company with a principal
amount of DM 1,000 (collectively, the "Senior DM Notes"; and together with the
Senior Discount Dollar Notes, the Senior Dollar Notes and the Senior Discount DM
Notes, the "1998 Notes")
<PAGE>
2
to be issued pursuant to the provisions of an Indenture (the "Senior DM
Indenture"; and together with the Senior Discount Dollar Indenture, the Senior
Dollar Indenture and the Senior Discount DM Indenture, the "Indentures") and
(ii) 2.69 DM denominated 10% Subordinated Convertible Debentures. The offering
of the Senior Discount DM Units and the Senior DM Units outside the United
States is lead managed by Morgan Stanley Bank AG, an affiliate of Morgan Stanley
& Co. Incorporated. The global offering of the Senior Discount Dollar Unit and
the Senior Dollar Units is lead managed by Morgan Stanley & Co. Incorporated.
All references herein to the "Manager" include Morgan Stanley & Co. Incorporated
and Morgan Stanley Bank AG.
All things necessary to make this Indenture a valid agreement of the
Company, in accordance with its terms, have been done, and the Company has done
all things necessary to make the Notes, when executed by the Company and
authenticated and delivered by the Trustee hereunder and duly issued by the
Company, the valid obligations of the Company as hereinafter provided.
The Notes and the Subordinated Convertible Debentures will be
automatically separated upon the date (the "Separation Date") which is the
earliest to occur of (i) the date that is six months after the Closing Date (as
defined below), (ii) the commencement of an exchange offer with respect to the
Notes undertaken pursuant to the Registration Rights Agreement (as defined
below), (iii) the effective date of a shelf registration with respect to resales
of the Notes and (iv) the commencement of an offer to repurchase the Notes
pursuant to the terms of this Indenture.
This Indenture will, upon the effectiveness of the registration
statement provided for under the Registration Rights Agreement, be subject to,
and governed by, the provisions of the Trust Indenture Act of 1939, as amended,
that are required to be a part of and to govern indentures qualified under the
Trust Indenture Act of 1939, as amended.
For and in consideration of the premises and the purchase of the
Notes by the Holders thereof, it is mutually covenanted and agreed, for the
equal and proportionate benefit of all Holders, as follows.
<PAGE>
3
ARTICLE ONE
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. Definitions.
"Accreted Value" means, for any Specified Date, the amount
calculated pursuant to clause (i), (ii), (iii) or (iv) below for each DM 1,000
principal amount at maturity of Notes:
(i) if the Specified Date occurs on a Semi-Annual Accrual Date, the
Accreted Value will equal the amount set forth below for such Semi-Annual
Accrual Date:
Semi-Annual Accrual Date Accreted Value
- ------------------------ --------------
October 15, 1998................................................ DM 581.94
April 15, 1999.................................................. DM 618.02
October 15, 1999................................................ DM 656.33
April 15, 2000.................................................. DM 697.03
October 15, 2000................................................ DM 740.24
April 15, 2001.................................................. DM 786.14
October 15, 2001................................................ DM 834.88
April 15, 2002.................................................. DM 886.64
April 15, 2002.................................................. DM 941.61
October 15, 2003................................................ DM 1,000.00
(ii) if the Specified Date occurs before the first Semi-Annual
Accrual Date, the Accreted Value will equal the sum of (a) DM 546.68 and
(b) an amount equal to the product of (1) DM 1.28 multiplied by (2) a
fraction, the numerator of which is the number of days from the Closing
Date to the Specified Date, using a 360-day year of twelve 30-day months,
and the denominator of which is the number of days from the Closing Date
to the first Semi-Annual Accrual Date, using a 360-day year of twelve
30-day months;
(iii) if the Specified Date occurs between two Semi-Annual Accrual
Dates, the Accreted Value will equal the sum of (a) the Accreted Value for
the Semi-Annual Accrual Date immediately preceding such Specified Date and
(b) an amount equal to the product of (1) the Accreted Value for the
immediately following Semi-Annual Accrual Date less the Accreted Value for
the immediately preceding Semi-Annual Accrual Date multiplied by (2) a
fraction, the numerator of which is the number of days from the
immediately preceding Semi-Annual Accrual Date to the Specified Date,
<PAGE>
4
using a 360-day year of twelve 30-day months, and the denominator of which
is 180; or
(iv) if the Specified Date occurs after the last Semi-Annual Accrual
Date, the Accreted Value will equal DM 1,000.
"Acquired Indebtedness" means Indebtedness of a Person existing at
the time such Person becomes a 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 or such Asset Acquisition.
"Adjusted Consolidated Net Income" means, for any period, the
aggregate net income (or loss) of the Company and its Restricted Subsidiaries
for such period determined in conformity with GAAP; provided that the following
items shall be excluded in computing Adjusted Consolidated Net Income (without
duplication): (i) the net income (or loss) of any Person that is not a
Restricted Subsidiary, except (x) with respect to net income, to the extent of
the amount of dividends or other distributions actually paid to the Company or
any of its Restricted Subsidiaries by such Person during such period and (y)
with respect to net losses, to the extent of the amount of Investments made by
the Company or any Restricted Subsidiary in such Person during such period; (ii)
solely for the purposes of calculating the amount of Restricted Payments that
may be made pursuant to clause (C) of the first paragraph of Section 4.04 hereof
(and in such case, except to the extent includable pursuant to clause (i)
above), the net income (or loss) of any Person accrued prior to the date it
becomes a Restricted Subsidiary or is merged into or consolidated with the
Company or any of its Restricted Subsidiaries or all or substantially all of the
property and assets of such Person are acquired by the Company or any of its
Restricted Subsidiaries; (iii) the net income of any Restricted Subsidiary to
the extent that the declaration or payment of dividends or similar distributions
by such Restricted Subsidiary of such net income is not at the time permitted by
the operation of the terms of its charter or any agreement, instrument,
judgment, decree, order, statute, rule or governmental regulation applicable to
such Restricted Subsidiary; (iv) any gains or losses (on an after-tax basis)
attributable to Asset Sales and sales of indefeasible rights-of-use or dark
fibers; (v) except for purposes of calculating the amount of Restricted Payments
that may be made pursuant to clause (C) of the first paragraph of Section 4.04
hereof, any amount paid or accrued as dividends on Preferred Stock of the
Company or any Restricted Subsidiary owned by Persons other than the Company and
any of its Restricted Subsidiaries; (vi) all extraordinary gains and
extraordinary losses; and (vii) any compensation expense paid or payable solely
with Capital Stock (other than Disqualified Stock) of the Company or any
options, warrants or other rights to acquire Capital Stock (other than
Disqualified Stock) of the Company.
<PAGE>
5
"Adjusted Consolidated Net Tangible Assets" means the total amount
of assets of the Company and its Restricted Subsidiaries (less applicable
depreciation, amortization and other valuation reserves), except to the extent
resulting from write-ups of capital assets (excluding write-ups in connection
with accounting for acquisitions in conformity with GAAP), after deducting
therefrom (i) all current liabilities of the Company and its Restricted
Subsidiaries (excluding intercompany items) and (ii) all goodwill, trade names,
trademarks, patents, unamortized debt discount and expense and other like
intangibles, all as set forth on the most recent quarterly or annual
consolidated balance sheet of the Company and its Restricted Subsidiaries,
prepared in conformity with GAAP and filed with the Commission or provided to
the Trustee pursuant to Section 4.18 hereof.
"Affiliate" means, 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, means 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" has the meaning provided in Section 2.07(a) hereof.
"Asset Acquisition" means (i) an investment by the Company or any of
its Restricted Subsidiaries in any other Person pursuant to which such Person
shall become a Restricted Subsidiary or shall be merged into or consolidated
with the Company or any of its Restricted Subsidiaries; provided that such
Person's primary business is related, ancillary or complementary to the
businesses of the Company or any of its Restricted Subsidiaries on the date of
such investment 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 a
division or line of business of such Person; provided that the property and
assets acquired are related, ancillary or complementary to the businesses of the
Company or any of its Restricted Subsidiaries on the date of such acquisition.
"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 (i) all or substantially all of the Capital
Stock of any Restricted Subsidiary or (ii) all or substantially all of the
assets that constitute a division or line of business of the Company or any of
its Restricted Subsidiaries.
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6
"Asset Sale" means any sale, transfer or other disposition
(including by way of merger, consolidation or sale-leaseback transaction) 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 Capital Stock of any Restricted
Subsidiary, (ii) all or substantially all of the property and assets of a
division or line of business of the Company or any of its Restricted
Subsidiaries or (iii) any other property and assets (other than the Capital
Stock or other Investment in an Unrestricted Subsidiary) of the Company or any
of its Restricted Subsidiaries outside the ordinary course of business of the
Company or such Restricted Subsidiary and, in each case, that is not governed by
Article Five hereof; provided that "Asset Sale" shall not include (a) sales or
other dispositions of inventory, receivables and other current assets, (b)
sales, transfers or other dispositions of assets constituting a Restricted
Payment permitted to be made under Section 4.04 hereof, (c) sales, transfers or
other dispositions of assets with a fair market value (as certified in an
Officers' Certificate) not in excess of $1 million in any transaction or series
of related transactions, (d) sales or other dispositions of assets for
consideration at least equal to the fair market value of the assets sold or
disposed of, to the extent that the consideration received would constitute
property or assets of the kind described in clause (B) of Section 4.11 hereof,
(e) any liquidation of Temporary Cash Investments, (f) a transfer, directly or
indirectly, of receivables or other payment rights arising from a transfer of
indefeasible rights of use or dark fiber, which transfer of receivables or
rights is to a special purpose entity created for the purpose of issuing
securities to be paid or redeemed from, or beneficial interests in, the cash or
revenues generated from the assets transferred; provided that the consideration
received by the Company is at least equal to the fair market value of the asset
transferred and the proceeds are used by the Company (A) to repay unsubordinated
Indebtedness of the Company owed to a Person other than the Company or a
Restricted Subsidiary, (B) to invest in the manner described in clause (i)(B) of
Section 4.11 hereof covenant or (C) for working capital purposes or (g) other
transfers of indefeasible rights of use or dark fiber.
"Average Life" means, at any date of determination with respect to
any debt security, the quotient obtained by dividing (i) the sum of the products
of (a) the number of years from such date of determination to the dates of each
successive scheduled principal payment of such debt security and (b) the amount
of such principal payment by (ii) the sum of all such principal payments.
"Board of Directors" means the Board of Directors of the Company as
required by the context or any committee of such Board of Directors duly
authorized to act under this Indenture.
"Board Resolution" means a copy of a resolution, certified by the
Secretary or Assistant Secretary of the Company as required by the context to
have been duly adopted by
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7
the Board of Directors and to be in full force and effect on the date of such
certification, and delivered to the Trustee.
"Business Day" means any day except a Saturday, Sunday or other day
on which commercial banks in The City of New York, or in the city of the
Corporate Trust Office of the Trustee, are authorized or required by law to
close.
"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, whether outstanding on
the Closing Date or issued thereafter, including, without limitation, all Common
Stock and Preferred Stock.
"Capitalized Lease" means, as applied to any Person, any lease of
any property (whether real, personal or mixed) of which the discounted present
value of the rental obligations of such Person as lessee, in conformity with
GAAP, is required to be capitalized on the balance sheet of such Person.
"Capitalized Lease Obligations" means the discounted present value
of the rental obligations under a Capitalized Lease.
"Certificated Notes" has the meaning provided in Section 2.01
hereof.
"Change of Control" means such time as (i) a "person" or a "group"
(within the meaning of Sections 13(d) and 14(d)(2) of the Exchange Act) 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 Voting Stock of the
Company on a fully diluted basis; or (ii) individuals who on the Closing Date
constitute the Board of Directors (together with any new directors whose
election by the Board of Directors or whose nomination to the Board of Directors
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 in office who either
were members of the Board of Directors on the Closing Date or whose election or
nomination for election was previously so approved) cease for any reason to
constitute a majority of the members of the Board of Directors then in office.
"Closing Date" means the date on which the Notes are originally
issued under this Indenture.
"Commission" means the Securities and Exchange Commission, as from
time to time constituted, created under the Exchange Act or, if at any time
after the execution of this instrument such Commission is not existing and
performing the duties now assigned to it under the TIA, then the body performing
such duties at such time.
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8
"Common Stock" means, with respect to any Person, any and all
shares, interests, participations or other equivalents (however designated,
whether voting or non-voting) of such Person's common stock, whether now
outstanding or issued after the date of this Indenture, including, without
limitation, all series and classes of such common stock.
"Company" means the party named as such in the first paragraph of
this Indenture until a successor replaces it pursuant to the applicable
provisions of this Indenture and thereafter means the successor.
"Company Order" means a written request or order signed in the name
of the Company (i) by its Chairman of the Board, the Vice Chairman of the Board,
its President or a Vice President and (ii) by its Chief Financial Officer,
Treasurer, an Assistant Treasurer, its Secretary or an Assistant Secretary and
delivered to the Trustee; provided, however, that such written request or order
may be signed by any two of the officers or directors listed in clause (i) above
in lieu of being signed by one of such officers or directors listed in such
clause (i) and one of the officers listed in clause (ii) above.
"Consolidated EBITDA" means, for any period, Adjusted Consolidated
Net Income for such period plus, to the extent such amount was deducted in
calculating such Adjusted Consolidated Net Income, (i) Consolidated Interest
Expense, (ii) income taxes, (iii) depreciation expense, (iv) amortization
expense and (v) all other non-cash items reducing Adjusted Consolidated Net
Income (other than items that will require cash payments and for which an
accrual or reserve is, or is required by GAAP to be, made), less all non-cash
items increasing Adjusted Consolidated Net Income, all as determined on a
consolidated basis for the Company and its Restricted Subsidiaries in conformity
with GAAP; provided that, if any Restricted Subsidiary is not a Wholly Owned
Restricted Subsidiary, Consolidated EBITDA shall be reduced (to the extent not
otherwise reduced in accordance with GAAP) by an amount equal to (A) the amount
of the Adjusted Consolidated Net Income attributable to such Restricted
Subsidiary multiplied by (B) the percentage ownership interest in the income of
such Restricted Subsidiary not owned on the last day of such period by the
Company or any of its Restricted Subsidiaries.
"Consolidated Interest Expense" means, for any period, the aggregate
amount of interest in respect of Indebtedness (including, without limitation,
amortization of original issue discount on any Indebtedness and the interest
portion of any deferred payment obligation, calculated in accordance with the
effective interest method of accounting; 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
in respect of Indebtedness that is Guaranteed or secured by the Company or any
of its Restricted Subsidiaries), and all but the principal component of rentals
in respect of Capitalized Lease
<PAGE>
9
Obligations paid, accrued or scheduled to be paid or to be accrued by the
Company and its Restricted Subsidiaries during such period.
"Consolidated Leverage Ratio" means, on any Transaction Date, the
ratio of (i) the aggregate amount of Indebtedness of the Company and its
Restricted Subsidiaries on a consolidated basis outstanding on such Transaction
Date to (ii) four times Consolidated EBITDA for the then most recent fiscal
quarter for which financial statements of the Company have been filed with the
Commission or provided to the Trustee pursuant to Section 4.18 hereof; provided
that, in making the foregoing calculation, (A) pro forma effect shall be given
to the Incurrence or repayment of any Indebtedness to be Incurred or repaid on
the Transaction Date; (B) pro forma effect shall be given to Asset Dispositions
and Asset Acquisitions (including giving pro forma effect to the application of
proceeds of any Asset Disposition) that occur from the beginning of the then
most recent four fiscal quarters through the Transaction Date (the "Reference
Period"), as if they had occurred and such proceeds had been applied on the
first day of such Reference Period; and (C) pro forma effect shall be given to
asset dispositions and asset acquisitions (including giving pro forma effect to
the application of proceeds of any asset disposition) that have been made by any
Person that has become a Restricted Subsidiary or has been merged with or into
the Company or any Restricted Subsidiary during such Reference Period and that
would have constituted Asset Dispositions or Asset Acquisitions had such
transactions occurred when such Person was a Restricted Subsidiary as if such
asset dispositions or asset acquisitions were Asset Dispositions or Asset
Acquisitions that occurred on the first day of such Reference Period; provided
that to the extent that clause (B) or (C) of this sentence requires that pro
forma effect be given to an Asset Acquisition or Asset Disposition, such pro
forma calculation shall be based upon the four full fiscal quarters immediately
preceding the Transaction Date of the Person, or division or line of business of
the Person, that is acquired or disposed of for which financial information is
available.
"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 the Company and its Restricted Subsidiaries
(which shall be as of a date not more than 90 days prior to the date of such
computation, and which shall not take into account Unrestricted Subsidiaries),
including, without limitation, the respective amounts reported on such balance
sheet attributable to Preferred Stock, less any amounts attributable to
Disqualified 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 the Capital Stock of the Company or
any of its Restricted Subsidiaries, each item to be determined in conformity
with GAAP (excluding the effects of foreign currency exchange adjustments under
Financial Accounting Standards Board Statement of Financial Accounting Standards
No. 52).
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"Corporate Trust Office" means the office of the Trustee at which
the corporate trust business of the Trustee shall, at any particular time, be
principally administered, which office is, at the date of this Indenture,
located at 101 Barclay Street, Floor 21 West, New York NY 10286, Attention:
Corporate Trust Administration.
"Currency Agreement" means any foreign exchange contract, currency
swap agreement or other similar agreement or arrangement.
"DBC" means Deutsche Borse Clearing Frankfurt am Main and any
successor thereto.
"DBC Global" has the meaning provided in Section 2.01 hereof.
"Default" means any event that is, or after notice or passage of
time or both would be, an Event of Default.
"Depository" shall mean DTC, its nominees and their respective
successors, and DBC.
"Disqualified Stock" means any class or series of Capital Stock of
any Person that by its terms or otherwise is (i) required to be redeemed prior
to the Stated Maturity of the Notes, (ii) redeemable at the option of the holder
of such class or series of Capital Stock at any time prior to the Stated
Maturity of the Notes or (iii) convertible into or exchangeable for Capital
Stock referred to in clause (i) or (ii) above or Indebtedness having a scheduled
maturity prior to the Stated Maturity of the Notes; provided that any Capital
Stock that would not constitute Disqualified Stock but for provisions thereof
giving holders thereof the right to require such Person to repurchase or redeem
such Capital Stock upon the occurrence of an "asset sale" or "change of control"
occurring prior to the Stated Maturity of the Notes shall not constitute
Disqualified Stock if the "asset sale" or "change of control" provisions
applicable to such Capital Stock are no more favorable to the holders of such
Capital Stock than the provisions contained in Sections 4.11 and 4.12 hereof,
and such Capital Stock, or the agreements or instruments governing the
redemption rights thereof, specifically provides that such Person will not
repurchase or redeem any such stock pursuant to such provision prior to the
Company's repurchase of such Notes as are required to be repurchased pursuant to
Sections 4.11 and 4.12 hereof.
"DM" means Deutsche Mark.
"DTC" means The Depository Trust Company.
"DTC Global" has the meaning provided in Section 2.01 hereof.
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11
"Event of Default" has the meaning provided in Section 6.01 hereof.
"Excess Proceeds" has the meaning provided in Section 4.11 hereof.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Exchange Notes" means any notes of the Company containing terms
identical to the Notes (except that such Exchange Notes (i) shall be registered
under the Securities Act, (ii) will not provide for an increase in the rate of
interest (other than with respect to overdue amounts) and (iii) will not contain
terms with respect to transfer restrictions) that are issued and exchanged for
the Notes pursuant to the Registration Rights Agreement and this Indenture.
"Existing Stockholder Agreements" means the Stock Purchase
Agreement, dated as of September 30, 1993, between the Company and S-C V-Tel,
the Stock Purchase Agreement dated as of April 5, 1994, between the Company and
COMSAT, the S-C V-Tel Shareholders' Agreement and the COMSAT Shareholders'
Agreement, in each case, any amendments to such agreements.
"fair market value" means the price that would be paid in an
arm's-length transaction between an informed and willing seller under no
compulsion to sell and an informed and willing buyer under no compulsion to buy,
as determined in good faith by the Board of Directors, whose determination shall
be conclusive if evidenced by a Board Resolution; provided that for purposes of
clause (viii) of the second paragraph of Section 4.03 hereof, (x) the fair
market value of any security registered under the Exchange Act shall be the
average of the closing prices, regular way, of such security for the 20
consecutive trading days immediately preceding the sale of Capital Stock and (y)
in the event the aggregate fair market value of any other property (other than
cash or cash equivalents) received by the Company exceeds $30 million, the fair
market value of such property shall be determined by a nationally recognized
investment banking firm or a nationally recognized firm having expertise in the
specific area which is the subject of such determination and set forth in their
written opinion which shall be delivered to the Trustee.
"Federal Republic of Germany Obligations" means securities that are
direct and unconditional obligations of the Federal Republic of Germany or any
of its states (Bundeslander), as defined in Section 1807, Paragraph 1, No. 2 of
the German Civil Code (Burgerliches Gesetzbuch), as from time to time amended
and are not callable or redeemable at the option of the issuer thereof.
"GAAP" means generally accepted accounting principles in the United
States of America as in effect as of the Closing Date, including, without
limitation, those set forth in the opinions and pronouncements of the Accounting
Principles Board of the American Institute of
<PAGE>
12
Certified Public Accountants and statements and pronouncements of the Financial
Accounting Standards Board or in such other statements by such other entity as
approved by a significant segment of the accounting profession. All ratios and
computations contained or referred to in this Indenture shall be computed in
conformity with GAAP applied on a consistent basis, except that calculations
made for purposes of determining compliance with the terms of the covenants and
with other provisions of this Indenture shall be made without giving effect to
(i) the amortization or write-off of any expenses incurred in connection with
the offering of the Units consisting of the 1998 Notes and Preferred Stock of
the Company and related tender offer and consent solicitation, (ii) except as
otherwise provided, the amortization of any amounts required or permitted by
Accounting Principles Board Opinion Nos. 16 and 17.
"German Paying Agent" means Deutsche Bank and any successor German
Paying Agent, except that, for the purposes of Article Eight, the German Paying
Agent shall not be the Company or a Subsidiary of the Company or an Affiliate of
any of them.
"Global Notes" has the meaning provided in Section 2.01.
"Guarantee" means any obligation, contingent or otherwise, of any
Person directly or indirectly guaranteeing any Indebtedness of any other Person
and, without limiting the generality of the foregoing, any obligation, direct or
indirect, contingent or otherwise, of such Person (i) to purchase or pay (or
advance or supply funds for the purchase or payment of) such Indebtedness of
such other Person (whether arising by virtue of partnership arrangements, or by
agreements to keep-well, to purchase assets, goods, securities or services
(unless such purchase arrangements are on arm's-length terms and are entered
into in the ordinary course of business), to take-or-pay, or to maintain
financial statement conditions or otherwise) or (ii) entered into for purposes
of assuring in any other manner the obligee of such Indebtedness of the payment
thereof or to protect such obligee against loss in respect thereof (in whole or
in part); 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.
"Guaranteed Indebtedness" has the meaning provided in Section 4.07
hereof.
"Holder" or "Noteholder" means the registered holder of any Note.
"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 Acquired Indebtedness; provided that
neither the accrual of interest nor the accretion of original issue discount
shall be considered an Incurrence of Indebtedness.
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13
"Indebtedness" means, with respect to any Person at any date of
determination (without duplication), (i) all indebtedness of such Person for
borrowed money, (ii) all obligations of such Person evidenced by bonds,
debentures, notes or other similar instruments, (iii) all obligations of such
Person in respect of letters of credit or other similar instruments (including
reimbursement obligations with respect thereto, but excluding obligations with
respect to letters of credit (including trade letters of credit) securing
obligations (other than obligations described in (i) or (ii) above or (v), (vi)
or (vii) below) entered into in the ordinary course of business of such Person
to the extent such letters of credit are not drawn upon or, if drawn upon, to
the extent such drawing is reimbursed no later than the third Business Day
following receipt by such Person of a demand for reimbursement), (iv) all
obligations of such Person to pay the deferred and unpaid 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, (v) all Capitalized
Lease Obligations of such Person, (vi) all Indebtedness of other Persons secured
by a Lien on any asset of such Person, whether or not such Indebtedness is
assumed by such Person; provided that the amount of such Indebtedness shall be
the lesser of (A) the fair market value of such asset at such date of
determination and (B) the amount of such Indebtedness, (vii) all Indebtedness of
other Persons Guaranteed by such Person to the extent such Indebtedness is
Guaranteed by such Person and (viii) 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 the maximum liability at such time with respect to contingent
obligations upon the occurrence of the contingency giving rise to the
obligation, which, in the case of a Guarantee, shall be the outstanding balance
of the Guaranteed Indebtedness, provided (A) 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 the time of its issuance as determined in
conformity with GAAP, (B) that money borrowed and set aside at the time of the
Incurrence of any Indebtedness in order to prefund the payment of the interest
on such Indebtedness shall not be deemed to be "Indebtedness" so long as such
money is held to secure the payment of such interest and (C) that Indebtedness
shall not include any liability for federal, state, local or other taxes.
"Indenture" means this Indenture as originally executed or as it may
be amended or supplemented from time to time by one or more indentures
supplemental to this Indenture entered into pursuant to the applicable
provisions of this Indenture.
"Institutional Accredited Investor" shall mean an institution that
is an "accredited investor" as that term is defined in Rule 501(a)(1), (2), (3)
or (7) under the Securities Act.
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14
"Interest Payment Date" means each semiannual interest payment date
on April 15 and October 15 of each year, commencing October 15, 2003.
"Interest Rate Agreement" means any interest rate protection
agreement, interest rate future agreement, interest rate option agreement,
interest rate swap agreement, interest rate cap agreement, interest rate collar
agreement, interest rate hedge agreement, option or future contract or other
similar agreement or arrangement.
"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 extensions of credit to
customers in the ordinary course of business that are, in conformity with GAAP,
recorded as accounts receivable on the balance sheet of the Company or its
Restricted Subsidiaries) or capital contribution to (by means of any transfer of
cash or other property to others or any payment for property or services for the
account or use of others), or any purchase or acquisition of Capital Stock,
bonds, notes, debentures or other similar instruments issued by, such Person and
shall include (i) the designation of a Restricted Subsidiary as an Unrestricted
Subsidiary and (ii) the fair market value of the Capital Stock (or any other
Investment), held by the Company or any of its Restricted Subsidiaries, of (or
in) any Person that has ceased to be a Restricted Subsidiary, including, without
limitation, by reason of any transaction permitted by clause (iii) of Section
4.06 hereof; provided that the fair market value of the Investment remaining in
any Person that has ceased to be a Restricted Subsidiary shall not exceed the
aggregate amount of Investments previously made in such Person valued at the
time such Investments were made less the net reduction of such Investments. For
purposes of the definition of "Unrestricted Subsidiary" and Section 4.04 hereof,
(i) "Investment" shall include the fair market value of the assets (net of
liabilities (other than liabilities to the Company or any of its Restricted
Subsidiaries)) of any Restricted Subsidiary at the time that such Restricted
Subsidiary is designated an Unrestricted Subsidiary, (ii) the fair market value
of the assets (net of liabilities (other than liabilities to the Company or any
of its Restricted Subsidiaries)) of any Unrestricted Subsidiary at the time that
such Unrestricted Subsidiary is designated a Restricted Subsidiary shall be
considered a reduction in outstanding Investments and (iii) any property
transferred to or from an Unrestricted Subsidiary shall be valued at its fair
market value at the time of such transfer.
"Lien" means any mortgage, pledge, security interest, encumbrance,
lien or charge of any kind (including, without limitation, any conditional sale
or other title retention agreement or lease in the nature thereof or any
agreement to give any security interest).
"Manager" means Morgan Stanley & Co. Incorporated and Morgan Stanley
Bank AG, as lead managers for the several initial purchasers named in the
Purchase Agreement. The offering of the Notes outside the U.S. will be lead
managed by Morgan Stanley AG.
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15
"Moody's" means Moody's Investors Service, Inc. and its successors.
"Net Cash Proceeds" means, (a) with respect to any Asset Sale, the
proceeds of such Asset Sale in the form of cash or cash equivalents, including
payments in respect of deferred payment obligations (to the extent corresponding
to the principal, but not interest, component thereof) when received in the form
of cash or cash equivalents (except to the extent such obligations are financed
or sold with recourse to the Company or any Restricted Subsidiary) 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) provisions for all taxes (whether or not such taxes will
actually be paid or are payable) as a result of such Asset Sale without regard
to the consolidated results of operations of the Company and its Restricted
Subsidiaries, taken as a whole, (iii) payments made or required to be 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, (iv) payments made or required
to be made to Persons having a beneficial interest in the assets subject to the
Asset Sale, and (v) appropriate amounts to be provided by the Company or any
Restricted Subsidiary 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 GAAP, and (b) with respect to any
issuance or sale of Capital Stock, the proceeds of such 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 such obligations are financed or sold with
recourse to the Company or any Restricted Subsidiary) 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.
"1998 Notes" means the Notes issued pursuant to this Indenture,
together with the Senior DM Notes, Senior Dollar Notes and the Senior Dollar
Discount Notes.
"Non-U.S. Person" means a Person who is not a U.S. person, as
defined in Regulation S.
"Notes" means any of the notes, as defined in the first paragraph of
the recitals hereof, that are authenticated and delivered under this Senior
Discount DM Indenture. For all purposes of this Indenture, the term "Notes"
shall include any Exchange Notes to be issued
<PAGE>
16
and exchanged for any Notes pursuant to the Registration Rights Agreement and
this Indenture and, for purposes of this Indenture, all Notes and Exchange Notes
shall vote together as one series of Notes under this Indenture.
"Note Register" has the meaning provided in Section 2.04.
"Offer to Purchase" means an offer to purchase Notes by the Company
from the Holders commenced by mailing a notice to the Trustee and each Holder
stating: (i) the covenant pursuant to which the offer is being made and that all
Notes validly tendered will be accepted for payment on a pro rata basis; (ii)
the purchase price and the date of purchase (which shall be a Business Day no
earlier than 30 days nor later than 60 days from the date such notice is mailed)
(the "Payment Date"); (iii) that any Note not tendered will continue to accrue
interest (or original issue discount) pursuant to its terms; (iv) that, unless
the Company defaults in the payment of the purchase price, any Note accepted for
payment pursuant to the Offer to Purchase shall cease to accrue interest (or
original issue discount) on and after the Payment Date; (v) that Holders
electing to have a Note purchased pursuant to the Offer to Purchase will be
required to surrender the Note, together with the form entitled "Option of the
Holder to Elect Purchase" on the reverse side of the Note completed, to the
Paying Agent at the address specified in the notice prior to the close of
business on the Business Day immediately preceding the Payment Date; (vi) that
Holders will be entitled to withdraw their election if the Paying Agent
receives, not later than the close of business on the third Business Day
immediately preceding the Payment Date, a telegram, facsimile transmission or
letter setting forth the name of such Holder, the principal amount at maturity
of Notes delivered for purchase and a statement that such Holder is withdrawing
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 Notes surrendered; provided that each
Note purchased and each new Note issued shall be in a principal amount at
maturity of DM 1,000 or an integral multiple thereof. On the Payment Date, the
Company shall (i) accept for payment on a pro rata basis Notes or portions
thereof tendered pursuant to an Offer to Purchase; (ii) deposit with the Paying
Agent money sufficient to pay the purchase price of all Notes or portions
thereof so accepted; and (iii) deliver, or cause to be delivered, to the Trustee
all Notes or portions thereof so accepted together with an Officers' Certificate
specifying the Notes or portions thereof accepted for payment by the Company.
The Paying Agent shall promptly mail to the Holders of Notes so accepted payment
in an amount equal to the purchase price, and the Trustee shall promptly
authenticate and mail to such Holders a new Note equal in principal amount at
maturity to any unpurchased portion of the Note surrendered; provided that each
Note purchased and each new Note issued shall be in a principal amount at
maturity of DM 1,000 or an integral multiple thereof. The Company will publicly
announce the results of an Offer to Purchase as soon as practicable after the
Payment Date. The Trustee shall act as the Paying Agent for an Offer to
Purchase. The Company will comply with Rule 14e-1 under the Exchange Act and any
other securities laws and regulations
<PAGE>
17
thereunder to the extent such laws and regulations are applicable, in the event
that the Company is required to repurchase Notes pursuant to an Offer to
Purchase.
"Officer" means, with respect to the Company, (i) the Chairman of
the Board, the Vice Chairman of the Board, the President, the Chief Executive
Officer, the Chief Financial Officer or a Vice President, and (ii) the Treasurer
or any Assistant Treasurer, or the Secretary or any Assistant Secretary of the
Company.
"Officers' Certificate" means a certificate signed by one Officer
listed in clause (i) of the definition thereof and one Officer listed in clause
(ii) of the definition thereof; provided, however, that any such certificate may
be signed by any two of the Officers listed in clause (i) of the definition
thereof in lieu of being signed by one Officer listed in clause (i) of the
definition thereof and one Officer listed in clause (ii) of the definition
thereof. Each Officers' Certificate (other than certificates provided pursuant
to TIA Section 314(a)(4)) shall include the statements provided for in TIA
Section 314(e).
"Opinion of Counsel" means a written opinion signed by legal counsel
who may be an employee of or counsel to the Company. Each such Opinion of
Counsel shall include the statements provided for in TIA Section 314(e).
"Participant" means, with respect to DTC, Euroclear or Cedel, a
Person who has an account with DTC, Euroclear or Cedel, respectively (and, with
respect to DTC, shall include Euroclear and Cedel).
"Paying Agent" means the German Paying Agent, any successor thereof,
the U.S. Paying Agent, any successor thereof, and any other Person (including
the Company acting as the Paying Agent, except that, for the purposes of Article
Eight, the Paying Agent shall not be the Company or a Subsidiary of the Company
or an Affiliate of any of them), authorized by the Company to pay the principal
of (and premium, if any) or interest on any Notes on behalf of the Company.
"Payment Date" means the date of purchase, which shall be a Business
Day no earlier than 30 days nor later than 60 days from the date of notice is
mailed pursuant to an Offer to Purchase.
"Permanent DBC Global" means the permanent global Notes issued in
exchange for one or more Temporary DBC Global, substantially in the form of
Exhibit B attached hereto.
"Permitted Investment" means (i) an Investment in the Company or a
Restricted Subsidiary or a Person which will, upon the making of such
Investment, become a Restricted
<PAGE>
18
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;
provided that such Person's primary business is related, ancillary or
complementary to the businesses of the Company or any of its Restricted
Subsidiaries on the date of such Investment; (ii) Temporary Cash Investments;
(iii) payroll, travel and similar advances to cover matters that are expected at
the time of such advances ultimately to be treated as expenses in accordance
with GAAP; (iv) Investments received in the bankruptcy or reorganization of a
Person or any exchange of such Investment with the issuer thereof or taken in
settlement of or other resolution of claims or disputes or acquired as the
result of foreclosure of any secured Investment and, in each case, extensions,
modifications and renewal thereof; (v) Investments in prepaid expenses,
negotiable instruments held for collection and lease, utility and worker's
compensation, performance and other similar deposits; (vi) Interest Rate
Agreements and Currency Agreements designed solely to protect the Company or its
Restricted Subsidiaries against fluctuations in interest rates or foreign
currency exchange rates; (vii) loans or advances to officers or employees of the
Company or any Restricted Subsidiary that do not in the aggregate exceed $1
million at any time outstanding; (viii) investments consisting of securities
issued by or beneficial interests in a special purpose entity referred to in
clause (f) of the definition of "Asset Sale" and which are received in exchange
for assets that are transferred by the Company or a Restricted Subsidiary to
such special purpose entity and used for the purpose referred to therein; and
(ix) Investments as a result of consideration received in connection with an
Asset Sale made in compliance with Section 4.11 hereof.
"Permitted Joint Venture" means any joint venture between the
Company or any Restricted Subsidiary and (i) any Person, other than a
Subsidiary, engaged in the provision or sale of telecommunications services or
(ii) any Person engaged as an independent sale representative of the Company;
provided that, prior to making any Investment in such a Person, the Company's
Board of Directors shall have determined that such Investment fits the Company's
strategic plan and is on terms that are fair and reasonable to the Company.
"Permitted Liens" means (i) Liens for taxes, assessments,
governmental charges or claims not yet subject to penalty or 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 GAAP shall have been made; (ii)
statutory and common law 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 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) Liens incurred or deposits made to secure the
performance of tenders,
<PAGE>
19
bids, leases, statutory or regulatory obligations, bankers' acceptances, surety
and appeal bonds, government contracts, performance and return-of-money bonds
and other obligations of a similar nature incurred in the ordinary course of
business (exclusive of obligations for the payment of borrowed money); (v)
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; (vi) Liens (including extensions and renewals thereof)
upon real or personal (whether tangible or intangible) property acquired after
the Closing Date; provided that (a) such Lien is created solely for the purpose
of securing Indebtedness Incurred, in accordance with Section 4.03 hereof, to
finance or refinance the cost (including the cost of design, development,
acquisition, construction, installation, improvement, transportation or
integration) of the item or related group of items of property or assets subject
thereto or the business in which such property or assets are used and such Lien
is created prior to, at the time of or within eighteen months after the later of
the acquisition, the completion of (except in the case of refinancing)
construction or the commencement of full operation of such property, (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 or group of items of property or assets and any
improvements on such item; (vii) leases or subleases granted to others that do
not materially interfere with the ordinary course of business of the Company and
its Restricted Subsidiaries, taken as a whole; (viii) Liens encumbering property
or assets under construction arising from progress or partial payments by a
customer of the Company or its Restricted Subsidiaries relating to such property
or assets; (ix) any interest or title of a lessor in the property subject to any
Capitalized Lease or operating lease; (x) Liens arising from filing Uniform
Commercial Code financing statements regarding leases; (xi) Liens on property
of, or on shares of Capital Stock or Indebtedness of, any Person existing at the
time such Person becomes, or becomes a part of, any Restricted Subsidiary;
provided that such Liens do not extend to or cover any property or assets of the
Company or any Restricted Subsidiary other than the property or assets acquired;
(xii) Liens in favor of the Company or any Restricted Subsidiary; (xiii) Liens
arising from the rendering of a final judgment or order against the Company or
any Restricted Subsidiary that does not give rise to an Event of Default; (xiv)
Liens securing reimbursement obligations with respect to letters of credit that
encumber documents and other property relating to such letters of credit and the
products and proceeds thereof; (xv) Liens in favor of customs and revenue
authorities arising as a matter of law to secure payment of customs duties in
connection with the importation of goods; (xvi) Liens encumbering customary
initial deposits and margin deposits, and other Liens that are within the
general parameters customary in the industry and incurred in the ordinary course
of business, in each case, securing Indebtedness under Interest Rate Agreements
and Currency Agreements and forward contracts, options, future contracts,
futures options or similar agreements or arrangements designed solely to protect
the Company or any of its Restricted Subsidiaries from fluctuations in interest
rates, currencies or the price of commodities; (xvii) Liens arising out of
conditional sale, title
<PAGE>
20
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 Closing Date; (xviii) Liens on or sales of
receivables or other rights to payment; (xix) Liens secured with assets that
have a fair market value not in excess of 15% of Adjusted Consolidated Net
Tangible Assets when such Liens are Incurred; and (xx) any extension, renewal,
or replacement (or successive extensions, renewals, or replacements) in whole or
in part of Liens described in clauses (i) through (xix) above.
"Permitted Wholesale Consortium" means any Person in which the
Company Invests for the principal purpose of leasing or otherwise acquiring
transmission rights with respect to long distance telecommunications; provided
that prior to making any Investment in such a Person, the Company's Board of
Directors shall have determined that such Investment will afford the Company
greater economic benefits than it could otherwise obtain from other sources of
transmission rights.
"Person" means an individual, a corporation, a partnership, a
limited liability company, a joint venture, an association, a trust, an
unincorporated organization or any other entity or organization, including a
government or political subdivision or an agency or instrumentality thereof.
"Preferred Stock" or "preferred stock" means, with respect to any
Person, any and all shares, interests, participation or other equivalents
(however designated, whether voting or non-voting) of such Person's preferred or
preference stock, whether now outstanding or issued after the date of this
Indenture, including, without limitation, all series and classes of such
preferred or preference stock, including the Series A Preferred.
"principal" of a debt security, including the Notes, means the
principal amount due on the Stated Maturity as shown on such debt security.
"Private Placement Legend" means the legend initially set forth on
the Notes in the form set forth in Section 2.02(a).
"Public Equity Offering" means an underwritten primary public
offering of Common Stock of the Company pursuant to an effective registration
statement under the Securities Act.
"Purchase Agreement" has the meaning provided in the recitals to
this Agreement.
"QIB" means a "qualified institutional buyer" as defined in Rule
144A.
<PAGE>
21
"Redemption Date", when used with respect to any Note or part
thereof to be redeemed, means the date fixed for such redemption by or pursuant
to the terms of the Notes and this Indenture.
"Redemption Price", when used with respect to any Note or part
thereof to be redeemed, means the price at which such Note is to be redeemed
pursuant to the terms of the Notes and this Indenture.
"Registrar" has the meaning provided in Section 2.04.
"Registration Rights Agreement" means the Registration Rights
Agreement, dated as of April 3, 1998, between the Company and Morgan Stanley &
Co. Incorporated, on behalf of itself and Morgan Stanley Bank AG, Salomon
Brothers Inc, NationsBanc Montgomery Securities AG and ING Baring (U.S.)
Securities, Inc., relating to the Notes.
"Registration Statement" means any registration statement of the
Company that covers any of the Exchange Notes, and all amendments and
supplements to any such Registration Statement, including post-effective
amendments, in each case including the prospectus contained therein, all
exhibits thereto and all material incorporated by reference therein.
"Regular Record Date" for the interest payable on any Interest
Payment Date means the April 1 or October 1 (whether or not a Business Day), as
the case may be, next preceding such Interest Payment Date.
"Regulation S" means Regulation S under the Securities Act.
"Regulation S Certificated Notes" has the meaning provided in
Section 2.01.
"Responsible Officer", when used with respect to the Trustee, means
any officer of the Trustee with direct responsibility for the administration of
this Indenture and also means, with respect to a particular corporate trust
matter, any other officer to whom such matter is referred because of his or her
knowledge of and familiarity with the particular subject.
"Restricted Payments" has the meaning provided in Section 4.04.
"Restricted Subsidiary" means any Subsidiary of the Company other
than an Unrestricted Subsidiary.
"Rule 144A" means Rule 144A under the Securities Act.
<PAGE>
22
"Securities Act" means the Securities Act of 1933, as amended.
"Senior Discount DM Indenture" means this Indenture.
"Senior Discount DM Notes" means the notes issued pursuant to this
Indenture.
"Senior Discount DM Units" means the senior Discount DM Units, each
consisting of one Senior Discount DM Note and 2.77 DM denominated 10%
Subordinated Convertible Debentures.
"Senior Discount Dollar Indenture" means the Indenture dated as of
the Closing Date between the Company and the Bank of New York governing the
issuance of the Senior Discount Dollar Notes.
"Senior Discount Dollar Notes" means the notes issued pursuant to
the Senior Discount Dollar Indenture.
"Senior Discount Dollar Units" means the Senior Discount Dollar
Units, each consisting of one Senior Discount Dollar Note and .490 shares of
Series A Preferred.
"Senior DM Indenture" means the Indenture dated as of the Closing
Date between the Company, The Bank of New York and Deutsche Bank governing the
issuance of the Senior DM Notes.
"Senior DM Notes" means the notes issued pursuant to the Senior DM
Indenture.
"Senior DM Units" means the Senior DM Units, each consisting of one
Senior DM Note and 2.69 DM denominated 10% Subordinated Convertible Debentures.
"Senior Dollar Indenture" means the Indenture dated as of the
Closing Date between the Company and The Bank of New York, governing the
issuance of the Senior Dollar Notes.
"Senior Dollar Notes" means the notes issued pursuant to the Senior
Dollar Indenture.
"Senior Dollar Units" means the Senior Dollar Units, each consisting
of one Senior Dollar Note and .483 shares of Series A Preferred.
"Separation Date" has the meaning specified in the recitals to this
Indenture.
<PAGE>
23
"Series A Preferred" means the Series A preferred stock, $.01 par
value per share, of the Company.
"Significant Subsidiary" means, at any date of determination, any
Restricted Subsidiary that, together with its Subsidiaries, (i) for the most
recent fiscal year of the Company, accounted for more than 10% of the
consolidated revenues of the Company and its Restricted Subsidiaries or (ii) as
of the end of such fiscal year, was the owner of more than 10% of the
consolidated assets of the Company and its Restricted Subsidiaries, all as set
forth on the most recently available consolidated financial statements of the
Company for such fiscal year.
"Specified Date" means any Redemption Date, any Payment Date for an
Offer to Purchase or any date on which the Notes first become due and payable
after an Event of Default.
"S&P" means Standard & Poor's Ratings Services and its successors.
"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 Subordinated Indebtedness" means Indebtedness of the
Company Incurred to finance the acquisition of a Person engaged in a business
that is related, ancillary or complementary to the business conducted by the
Company or any of its Restricted Subsidiaries, which Indebtedness by its terms,
or by the terms of any agreement or instrument pursuant to which such
Indebtedness is Incurred, (i) is expressly made subordinate in right of payment
to the Notes and (ii) provides that no payment of principal, premium or interest
on, or any other payment with respect to, such Indebtedness may be made prior to
the payment in full of all of the Company's obligations under the Notes;
provided that such Indebtedness may provide for and be repaid at any time from
the proceeds of a capital contribution, the sale of Capital Stock (other than
Disqualified Stock) of the Company, or other Strategic Subordinated Indebtedness
Incurred after the Incurrence of such Indebtedness.
"Subordinated Convertible Debentures" means the debentures issued
pursuant to the Subordinated Indenture.
"Subordinated Indenture" means the Indenture dated as of the Closing
Date beween the Company, The Bank of New York and Deutsche Bank governing the
issuance of the Subordinated Convertible Debentures.
<PAGE>
24
"Subsidiary" means, with respect to any Person, any corporation,
association or other business entity of which more than 50% of the voting power
of the outstanding Voting Stock is owned, directly or indirectly, by such Person
and one or more other Subsidiaries of such Person.
"Temporary Cash Investment" means any of the following: (i) direct
obligations of the United States of America or any agency thereof or obligations
fully and unconditionally guaranteed by the United States of America or any
agency thereof, (ii) time deposit accounts, eurodollar time deposits, bankers'
acceptances, certificates of deposit and money market deposits, in each case
maturing within one year of the date of acquisition thereof and issued by a bank
or trust company which is organized under the laws of the United States of
America, any state thereof or any foreign country recognized by the United
States of America, and which bank or trust company has capital, surplus and
undivided profits aggregating in excess of $50 million (or the foreign currency
equivalent thereof) and has outstanding debt which is rated "A" (or such similar
equivalent rating) or higher by at least one nationally recognized statistical
rating organization (as defined in Rule 436 under the Securities Act), or any
money-market fund sponsored by a registered broker dealer or mutual fund
distributor, (iii) repurchase obligations with a term of not more than 30 days
for underlying securities of the types described in clause (i) above entered
into with a bank meeting the qualifications described in clause (ii) above, (iv)
commercial paper, maturing not more than one year after the date of acquisition,
issued by a corporation (other than an Affiliate of the Company) organized and
in existence under the laws of the United States of America, any state thereof
or any foreign country recognized by the United States of America with a rating
at the time as of which any investment therein is made of "P-2" (or higher)
according to Moody's or "A-2" (or higher) according to S&P, (v) securities with
maturities of one year or less from the date of acquisition issued or fully and
unconditionally guaranteed by any state, commonwealth or territory of the United
States of America, or by any political subdivision or taxing authority thereof,
and rated at least "A" by S&P or Moody's, (vi) shares or other interests in an
investment company the assets of which consist solely of (A) securities of the
type described in clauses (i) through (v) above and (B) mortgage-backed
securities rated AAA or the equivalent by S&P, Moody's or Fetch Investor
Services, Inc., and (vii) the DM Pledged Securities.
"Temporary DBC Global" has the meaning provided in Section 2.01.
"TIA" or "Trust Indenture Act" means the Trust Indenture Act of
1939, as amended (15 U.S. Code ss.ss. 77aaa-77bbb), as in effect on the date
this Indenture was executed, except as provided in Section 9.06; provided,
however, that, in the event the Trust Indenture Act of 1939 is amended after
such date, "TIA" or "Trust Indenture Act" means, to the extent required by any
such amendment, the Trust Indenture Act of 1939 as so amended.
<PAGE>
25
"Trade Payables" means, with respect to any Person, any accounts
payable or any other indebtedness or monetary obligation to trade creditors
created, assumed or Guaranteed by such Person or any of its Subsidiaries arising
in the ordinary course of business in connection with the acquisition of goods
or services.
"Treaty" means the Treaty on the European Economic and Monetary
Union.
"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.
"Trustee" means the party named as such in the first paragraph of
this Indenture until a successor replaces it in accordance with the provisions
of Article Seven of this Indenture and thereafter means such successor.
"Unit Legend" has the meaning provided in Section 2.02(c).
"United States Bankruptcy Code" means the Bankruptcy Reform Act of
1978, as amended and as codified in Title 11 of the United States Code, as
amended from time to time hereafter, or any successor federal bankruptcy law.
"Units" means the units, as defined in the first paragraph of the
recitals hereof.
"Unrestricted Subsidiary" means (i) any Subsidiary of the Company
that at the time of determination shall be designated an Unrestricted Subsidiary
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
Restricted Subsidiary (including any newly acquired or newly formed Subsidiary
of the Company) to be an Unrestricted Subsidiary unless such Subsidiary owns any
Capital Stock of, or owns or holds any Lien on any property of, the Company or
any Restricted Subsidiary; provided that (A) any Guarantee by the Company or any
Restricted Subsidiary of any Indebtedness of the Subsidiary being so designated
shall be deemed an "Incurrence" of such Indebtedness and an "Investment" by the
Company or such Restricted Subsidiary (or both, if applicable) at the time of
such designation; (B) either (I) the Subsidiary to be so designated has total
assets of $1,000 or less or (II) if such Subsidiary has assets greater than
$1,000, such designation would be permitted under Section 4.04 hereof and (C) if
applicable, the Incurrence of Indebtedness and the Investment referred to in
clause (A) of this proviso would be permitted under Section 4.03 hereof and
Section 4.04 hereof. The Board of Directors may designate any Unrestricted
Subsidiary to be a Restricted Subsidiary; provided that (i) no Default or Event
of Default shall have occurred and be continuing at the time of or after giving
effect to such designation and (ii) all Liens and
<PAGE>
26
Indebtedness of such Unrestricted Subsidiary outstanding immediately after such
designation would, if Incurred at such time, have been permitted to be Incurred
(and shall be deemed to have been Incurred) for all purposes of the Indenture.
Any such designation by the Board of Directors shall be evidenced to the Trustee
by promptly filing with the Trustee a copy of the Board Resolution giving effect
to such designation and an Officers' Certificate certifying that such
designation complied with the foregoing provisions.
"U.S. Government Obligations" means securities that are (i) direct
obligations of the United States of America for the payment of which its full
faith and credit is pledged or (ii) obligations of a Person controlled or
supervised by and acting as an agency or instrumentality of the United States of
America the payment of which is unconditionally guaranteed as a full faith and
credit obligation by the United States of America, which, in either case, are
not callable or redeemable at the option of the issuer thereof at any time prior
to the Stated Maturity of the Notes, and shall also include depository receipts
issued by a bank or trust company as custodian with respect to any such U.S.
Government Obligation or a specific payment of interest on or principal of any
such U.S. Government Obligation held by such custodian for the account of the
holder of a depository receipt; provided that (except as required by law) such
custodian is not authorized to make any deduction from the amount payable to the
holder of such depository receipt from any amount received by the custodian in
respect of the U.S. Government Obligation or the specific payment of interest on
or principal of the U.S. Government Obligation evidenced by such depository
receipt.
"U.S. Paying Agent" means The Bank of New York and any successor
U.S. Paying Agent.
"U.S. Person" has the meaning ascribed thereto in Rule 902 under the
Securities Act.
"U.S. Certificated Notes" has the meaning provided in Section 2.01.
"Voting Stock" means, with respect to any Person, Capital Stock of
any class or kind ordinarily having the power to vote for the election of
directors, managers or other voting members of the governing body of such
Person.
"Wholly Owned" means, with respect to any Subsidiary of any Person,
the ownership of all of the outstanding Capital Stock of such Subsidiary (other
than any director's qualifying shares or Investments by foreign nationals
mandated by applicable law) by such Person or one or more Wholly Owned
Subsidiaries of such Person.
SECTION 1.02. Incorporation by Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision of the TIA, the provision is
incorporated by
<PAGE>
27
reference in and made a part of this Indenture. The following TIA terms used in
this Indenture have the following meanings:
"indenture securities" means the Notes;
"indenture security holder" means a Holder or a Noteholder;
"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 a rule of the
Commission and not otherwise defined herein have the meanings assigned to them
therein.
SECTION 1.03. Rules of Construction. Unless the context otherwise
requires:
(i) a term has the meaning assigned to it;
(ii) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP;
(iii) "or" is not exclusive;
(iv) words in the singular include the plural, and words in the
plural include the singular;
(v) provisions apply to successive events and transactions;
(vi) "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; and
(vii) all references to Sections or Articles refer to Sections or
Articles of this Indenture unless otherwise indicated.
<PAGE>
28
ARTICLE TWO
THE NOTES
SECTION 2.01. Form and Dating. The Notes and the certificate of
authentication with respect thereto shall be substantially in the form annexed
hereto as Exhibit A, in the case of the DTC Global, Exhibit B, in the case of
the DBC Global and Exhibit C, in the case of a U.S. Certificated Note. The Notes
may have such appropriate insertions, omissions, substitutions and other
variations as are required or permitted by this Indenture and may have letters,
notations, legends or endorsements required by law, stock exchange agreements to
which the Company is subject or usage. Any portion of the text of any Note may
be set forth on the reverse thereof, with an appropriate reference thereto on
the face of the Note. The Company shall approve the form of the Notes and any
notation, legend or endorsement on the Notes. Each Note shall be dated the date
of its authentication.
The terms and provisions contained in the form of the Notes annexed
hereto as Exhibits A, B and C shall constitute, and are hereby expressly made, a
part of this Indenture. Each of the Company and the Trustee, by its execution
and delivery of this Indenture, expressly agrees to the terms and provisions of
the Notes applicable to it and to be bound thereby.
Notes initially offered and sold in reliance on Rule 144A and others
electing settlement through DTC shall be issued initially in the form of one or
more permanent global Notes in registered form, substantially in the form set
forth in Exhibit A (the "DTC Global"), deposited with the Trustee, as custodian
for the Depository, duly executed by the Company and authenticated by the
Trustee as hereinafter provided. The aggregate principal amount at maturity of a
DTC Global may from time to time be increased or decreased by adjustments made
on the records of the Trustee, as custodian for the Depository or its nominee,
as hereinafter provided.
Notes offered and sold in offshore transactions in reliance on
Regulation S (other than Notes sold outside the United States to investors
electing settlement through DTC) shall be issued initially in the form of one or
more temporary global Notes in bearer form, substantially in the form set forth
in Exhibit B (the "Temporary DBC Global") deposited on behalf of the purchasers
of the Notes represented thereby with DBC, duly executed by the Company and
authenticated by the Trustee as hereinafter provided. At any time following the
later of the Separation Date and April 8, 1998, upon receipt by the Trustee and
the Company of a certificate substantially in the form of Exhibit D hereto, one
or more permanent global Notes in bearer form substantially in the form set
forth in Exhibit B (the "Permanent DBC Global" and, together with the Temporary
DBC Global, the "DBC Global") duly executed by the Company and authenticated by
the Trustee as hereinafter provided shall be deposited with DBC, which shall
reflect on its books and records the date and a decrease in the principal
<PAGE>
29
amount of the Temporary DBC Global in an amount equal to the principal amount of
the beneficial interest in the DBC Global transferred. The aggregate principal
amount at maturity of a DBC Global may from time to time be increased or
decreased by adjustments made in the records of the Trustee, as custodian for
the Depository or its nominee, as herein provided.
Notes which are offered and sold to Institutional Accredited
Investors which are not QIBs (excluding Non-U.S. Persons) shall be issued in the
form of permanent certificated Notes in registered form in substantially the
form set forth in Exhibit C (the "U.S. Certificated Notes"). Notes issued
pursuant to Section 2.07 hereof in exchange for interests in the DBC Global
shall be in the form of certificated Notes in registered form substantially in
the form set forth in Exhibit C (the "Regulation S Certificated Notes"). Notes
issued pursuant to Section 2.07 hereof in exchange for interests in the DTC
Global shall be in the form of the U.S. Certificated Note.
The Regulation S Certificated Notes and the U.S. Certificated Notes
are sometimes collectively referred to herein as the "Certificated Notes". The
DTC Global and DBC Global are sometimes collectively herein referred to as the
"Global Notes".
The definitive Notes shall be typed, printed, lithographed or
engraved or produced by any combination of these methods or may be produced in
any other manner permitted by the rules of any securities exchange on which the
Notes may be listed, all as determined by the officers executing such Notes, as
evidenced by their execution of such Notes.
SECTION 2.02. Restrictive Legends. (a) Note Legends. Unless and
until a Note is exchanged for an Exchange Note or otherwise disposed of in
connection with an effective Registration Statement pursuant to the Registration
Rights Agreement, (i) each DTC Global and each U.S. Certificated Note shall bear
the legend, set forth below on the face thereof and (ii) each Regulation S
Certificated Note and each DBC Global shall bear the legend set forth below on
the face thereof until at least 41 days after the Closing Date and receipt by
the Company and the Trustee of a certificate substantially in the form of
Exhibit D hereto.
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS, AND
ACCORDINGLY, MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED
WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S.
PERSONS EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION
HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED
INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE
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30
SECURITIES ACT) OR (B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS
DEFINED IN RULE 501(a)(1), (2), (3) OR (7) OF REGULATION D UNDER THE
SECURITIES ACT) (AN "INSTITUTIONAL ACCREDITED INVESTOR") OR (C) IT IS NOT
A U.S. PERSON AND IS ACQUIRING THIS NOTE IN AN OFFSHORE TRANSACTION IN
COMPLIANCE WITH RULE 903 OF REGULATION S UNDER THE SECURITIES ACT; (2)
AGREES THAT IT WILL NOT, WITHIN THE TIME PERIOD REFERRED TO IN RULE 144(k)
(TAKING INTO ACCOUNT THE PROVISIONS OF RULE 144(d) UNDER THE SECURITIES
ACT, IF APPLICABLE), RESELL OR OTHERWISE TRANSFER THIS NOTE EXCEPT (A) TO
THE COMPANY OR ANY SUBSIDIARY THEREOF, (B) TO A QUALIFIED INSTITUTIONAL
BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, (C) INSIDE
THE UNITED STATES TO AN INSTITUTIONAL ACCREDITED INVESTOR THAT, PRIOR TO
SUCH TRANSFER, FURNISHES TO THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN
REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER OF
THIS NOTE (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM THE TRUSTEE) AND
IF SUCH TRANSFER IS IN RESPECT OF AN AGGREGATE PRINCIPAL AMOUNT AT
MATURITY OF NOTES OF LESS THAN DM 150,000, AN OPINION OF COUNSEL
ACCEPTABLE TO THE COMPANY THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE
SECURITIES ACT, (D) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION
IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT, (E) PURSUANT TO THE
EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT
(IF AVAILABLE) OR (F) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT AND (3) AGREES THAT IT WILL DELIVER TO EACH
PERSON TO WHOM THIS NOTE IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE
EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF THIS NOTE WITHIN
THE TIME PERIOD REFERRED TO ABOVE, THE HOLDER MUST CHECK THE APPROPRIATE
BOX SET FORTH ON THE REVERSE HEREOF RELATING TO THE MANNER OF SUCH
TRANSFER AND SUBMIT THIS CERTIFICATE TO THE TRUSTEE. IF THE PROPOSED
TRANSFEREE IS AN INSTITUTIONAL ACCREDITED INVESTOR, THE HOLDER MUST, PRIOR
TO SUCH TRANSFER, FURNISH TO EACH OF THE TRUSTEE AND THE COMPANY SUCH
CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS SUCH PERSONS MAY
REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO
AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT. AS USED HEREIN, THE TERMS "OFFSHORE
TRANSACTION", "UNITED STATES" AND "U.S. PERSON" HAVE THE
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31
MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT. THE
INDENTURE CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER
ANY TRANSFER OF THIS NOTE IN VIOLATION OF THE FOREGOING RESTRICTIONS.
(b) Global Note Legend. The DTC Global, whether or not an Exchange
Note, shall also bear the following legend on the face thereof:
UNLESS THIS GLOBAL NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY TO THE COMPANY OR ITS AGENT FOR REGISTRATION
OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS REGISTERED IN THE
NAME OF CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY OR SUCH OTHER
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY OR SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY
(AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS
IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY), 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 NOTE 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 NOTE SHALL BE
LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN
SECTION 2.08 OF THE INDENTURE.
(c) Temporary DBC Global Legend. Each Temporary DBC Global, whether
or not an Exchange Note shall also bear the following legend on the face
thereof:
THIS GLOBAL CERTIFICATE HAS BEEN CREATED IN ORDER TO BE HELD IN CUSTODY BY
DEUTSCHE BORSE CLEARING AG ("DBC") AND TO SERVE AS THE BASIS FOR THE
DELIVERY AND TRANSFER OF NOTES TO BE HELD IN THE DBC DEPOSITARY AND
CLEARING SYSTEM THROUGHOUT THE LIFE OF THE NOTES.
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32
(d) Units Legends. Each Note issued prior to the Separation Date
shall bear the following legend (the "Unit Legend") on the face thereof:
THE NOTES EVIDENCED BY THIS CERTIFICATE ARE INITIALLY ISSUED AS PART OF AN
ISSUANCE OF UNITS, EACH OF WHICH CONSISTS OF DM 1,000 PRINCIPAL AMOUNT AT
MATURITY OF 12.40% SENIOR DISCOUNT DM NOTES DUE 2008 OF VIATEL, INC. (THE
"NOTES") AND 2.77 10% SUBORDINATED CONVERTIBLE DEBENTURES DUE 2011 (THE
"SUBORDINATED CONVERTIBLE DEBENTURES"). THE NOTES AND THE SUBORDINATED
CONVERTIBLE DEBENTURES WILL BE AUTOMATICALLY SEPARATED UPON THE EARLIEST
TO OCCUR OF (i) SIX MONTHS AFTER APRIL 8, 1998, (ii) THE COMMENCEMENT OF
AN EXCHANGE OFFER WITH RESPECT TO THE NOTES, (iii) THE EFFECTIVENESS OF A
SHELF REGISTRATION STATEMENT WITH RESPECT TO RESALE OF THE NOTES OR (iv)
THE COMMENCEMENT OF AN OFFER TO REPURCHASE THE NOTES PURSUANT TO THE
INDENTURE. THE NOTES EVIDENCED BY THIS CERTIFICATE MAY NOT BE TRANSFERRED
OR EXCHANGED SEPARATELY FROM, BUT MAY BE TRANSFERRED OR EXCHANGED ONLY
TOGETHER WITH, THE SUBORDINATED CONVERTIBLE DEBENTURES.
SECTION 2.03. Execution, Authentication and Denominations. Subject
to Article Four, the aggregate principal amount at maturity of Notes (including
Exchange Notes) which may be authenticated and delivered under this Indenture is
unlimited. The Notes shall be executed by two Officers of the Company, by
facsimile or manual signature, in the name and on behalf of the Company.
If an Officer whose signature is on a Note no longer holds that
office at the time the Trustee or authenticating agent authenticates the Note,
the Note shall be valid nevertheless.
A Note shall not be valid until the Trustee or authenticating agent
manually signs the certificate of authentication on the Note. The signature
shall be conclusive evidence that the Note has been authenticated under this
Indenture.
At any time and from time to time after the execution of this
Indenture, the Trustee or an authenticating agent shall, upon receipt of a
Company Order, authenticate for original issue Notes in the aggregate principal
amount at maturity specified in such Company Order. Such Company Order shall
specify the amount of Notes to be authenticated, the date on which the issue of
Notes is to be authenticated and in case of an issuance of Notes pursuant to
Section 2.15, shall certify that such issuance is in compliance with Article
Four.
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33
The Trustee may appoint an authenticating agent reasonably
acceptable to the Company to authenticate Notes. Unless limited by the terms of
such 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 or an Affiliate
of the Company.
The Notes shall be issuable in registered form without coupons in
the case of the DTC Global and the Certificated Notes and in bearer form,
without coupons, in the case of the DBC Global and, in each case, only in
denominations of DM 1,000 in principal amount at maturity and any integral
multiple of DM 1,000 in excess thereof.
SECTION 2.04. Registrar and Paying Agent. The Company shall maintain
an office or agency in New York City where Notes may be presented for
registration of transfer or for exchange (the "Registrar"), an office or agency
in New York City and in Frankfurt am Main, Germany where Notes may be presented
for payment (collectively, the "Paying Agent") and an office or agency where
notices and demands to or upon the Company in respect of the Notes and this
Indenture may be served, which shall be in the City of New York. The Company
shall cause the Registrar to keep a register of the Notes and of their transfer
and exchange (the "Note Register"). The Company may have one or more
co-Registrars and one or more additional Paying Agents.
The Company shall enter into an appropriate agency agreement with
any Agent not a party to this Indenture. The agreement shall implement the
provisions of this Indenture that relate to such Agent. The Company shall give
prompt written notice to the Trustee of the name and address of any such Agent
and any change in the address of such Agent. If the Company fails to maintain a
Registrar, Paying Agent and/or agent for service of notices and demands, the
Trustee shall act as such Registrar, Paying Agent and/or agent for service of
notices and demands for so long as such failure shall continue. The Company may
remove any Agent upon written notice to such Agent and the Trustee; provided
that no such removal shall become effective until (i) the acceptance of an
appointment by a successor Agent to such Agent as evidenced by an appropriate
agency agreement entered into by the Company and such successor Agent and
delivered to the Trustee or (ii) notification to the Trustee that the Trustee
shall serve as such Agent until the appointment of a successor Agent in
accordance with clause (i) of this proviso. The Company, any Subsidiary of the
Company, or any Affiliate of any of them may act as Paying Agent, Registrar or
co-Registrar, and/or agent for service of notice and demands; provided, however,
that neither the Company, a Subsidiary of the Company nor an Affiliate of any of
them shall act as Paying Agent in connection with the defeasance of the Notes or
the discharge of this Indenture under Article Eight.
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34
The Company initially appoints the Trustee as Registrar, U.S. Paying
Agent, authenticating agent and agent for service of notice and demands. The
Company also appoints Deutsche Bank as German Paying Agent. If, at any time, the
Trustee is not the Registrar, the Registrar shall make available to the Trustee
or German Paying Agent, as the case may be, as on or before each Interest
Payment Date and at such other times as the Trustee may reasonably request, the
names and addresses of the Holders as they appear in the Note Register.
SECTION 2.05. Paying Agent to Hold Money in Trust. Not later than
3:00 p.m. (Frankfurt time) to the Business Day immediately preceding each due
date of the principal, premium, if any, or interest on any Notes, the Company
shall deposit with the Paying Agent money in immediately available funds
sufficient to pay such principal, premium, if any, or interest so becoming due.
The Paying Agent shall compensate the Company for the overnight use of such
funds at the overnight interbank interest rate which can be reasonably obtained
for overnight investment of such funds; provided always that, if any due date
shall not be a Business Day, the Issuer shall make such transfer to the account
of the Bank on the next succeeding Business Day preceding the due date for such
payment. The Company shall require each Paying Agent, if any, other than the
Trustee to agree in writing that such Paying Agent shall hold in trust for the
benefit of the Holders or the Trustee all money held by the Paying Agent for the
payment of principal of, premium, if any, or interest on the Notes (whether such
money has been paid to it by the Company or any other obligor on the Notes), and
that such Paying Agent shall promptly notify the Trustee of any default by the
Company (or any other obligor on the Notes) in making any such payment. The
Company at any time may require a Paying Agent to pay all money held by it to
the Trustee and account for any funds 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 pay all money held by it to the Trustee and
to account for any funds disbursed. Upon doing so, the Paying Agent shall have
no further liability for the money so paid over to the Trustee. If the Company
or any Subsidiary of the Company or any Affiliate of any of them acts as Paying
Agent, it will, on or before each due date of any principal of, premium, if any,
or interest on the Notes, segregate and hold in a separate trust fund for the
benefit of the Holders a sum of money sufficient to pay such principal, premium,
if any, or interest so becoming due until such sum of money shall be paid to
such Holders or otherwise disposed of as provided in this Indenture, and will
promptly notify the Trustee of its action or failure to act as required by this
Section 2.05.
SECTION 2.06. Transfer and Exchange. The Notes are issuable in
registered form in the case of DTC Global and the Certificated Notes and in
bearer form in the case of the DBC Global. A Holder may transfer a Note by
written application to the Registrar stating the name of the proposed transferee
and otherwise complying with the terms of this Indenture. No such transfer shall
be effected until, and such transferee shall succeed to the rights of a Holder
only upon registration of the transfer by the Registrar in the Note Register.
Prior to
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35
the registration of any transfer by a Holder as provided herein, the Company,
the Trustee, and any agent of the Company or the Trustee shall treat the Person
in whose name the Note is registered as the owner thereof for all purposes
whether or not the Note shall be overdue, and neither the Company, the Trustee,
nor any such agent shall be affected by notice to the contrary. Furthermore, any
Holder of a Global Note shall, by acceptance of such Global Note, agree that
transfers of beneficial interests in such Global Note may be effected only
through a book-entry system maintained by the Depository (or its agent), and
that ownership of a beneficial interest in the Note shall be required to be
reflected in a book entry. When Notes are presented to the Registrar or a
co-Registrar with a request to register the transfer or to exchange them for an
equal principal amount at maturity of Notes of other authorized denominations
(including an exchange of Notes for Exchange Notes), the Registrar shall
register the transfer or make the exchange as requested if its requirements for
such transactions are met; provided that no exchanges of Notes for Exchange
Notes shall occur until a Registration Statement shall have been declared
effective by the Commission and that any Notes that are exchanged for Exchange
Notes shall be canceled by the Trustee. To permit registrations of transfers and
exchanges in accordance with the terms, conditions and restrictions hereof, the
Company shall execute and the Trustee shall authenticate Notes at the
Registrar's request. No service charge shall be made to any Holder for any
registration of transfer or exchange or redemption of the Notes, but the Company
may require payment of a sum sufficient to cover any transfer tax or similar
governmental charge payable in connection therewith (other than any such
transfer taxes or other similar governmental charge payable upon transfers,
exchanges or redemptions pursuant to Section 2.11, 3.08, 4.11, 4.12 or 9.04).
The Registrar shall not be required (i) to issue, register the
transfer of or exchange any Note during a period beginning at the opening of
business 15 days before the day of the mailing of a notice of redemption of
Notes selected for redemption under Section 3.03 or Section 3.08 and ending at
the close of business on the day of such mailing, or (ii) to register the
transfer of or exchange any Note so selected for redemption in whole or in part,
except the unredeemed portion of any Note being redeemed in part.
SECTION 2.07. Book-Entry Provisions for Global Notes. (a) Each DTC
Global shall (i) be registered in the name of the Depository for such Global
Note or the nominee of such Depository, (ii) be delivered to the Trustee as
custodian for such Depository and (iii) bear legends as set forth in Section
2.02 hereof. Each DBC Global initially shall (i) be issued in the form of a
single temporary certificate in bearer form, (ii) be deposited with DBC and
(iii) bear legends as set forth in Section 2.02 hereof.
Members of, or Participants in, the Depository ("Agent Members")
shall have no rights under this Indenture with respect to any Global Note held
on their behalf by the Depository, or the Trustee as its custodian or under any
Global Note, and the Depository may be treated by the Company, the Trustee and
any agent of the Company or the Trustee as the
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36
absolute owner of such 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 the Depository or
impair, as between the Depository and its Agent Members, the operation of
customary practices governing the exercise of the rights of a beneficial owner
of any Note.
(b) Transfers of a Global Note shall be limited to transfers of such
Global Note in whole, but not in part, to the Depository, its successors or
their respective nominees. Transfers of interests in one Global Note to parties
who will hold the interests through the same Global Note will be effected in the
ordinary way in accordance with the respective rules and operating procedures of
the DBC, DTC, Euroclear or Cedel Bank, as the case may be, and the provisions of
Section 2.08 hereof. In addition, U.S. Certificated Notes shall be transferred
to all beneficial owners in exchange for their beneficial interests in a DTC
Global if (i) the Depository notifies the Company that it is unwilling or unable
to continue as Depository for the DTC Global, and a successor depositary is not
appointed by the Company within 90 days of such notice or (ii) an Event of
Default has occurred and is continuing and the Registrar has received a request
to the foregoing effect from the Depository or the Trustee. In addition,
Regulation S Certificated Notes shall be transferred to all beneficial owners in
exchange for their beneficial interests in a DBC Global, if (i) DBC notifies the
Company that it is unwilling or unable to continue as Depository for the DBC
Global or (ii) if at any time DBC shall no longer be eligible to serve as
depository and a successor depository for the DBC Global is not appointed by the
Company within 90 days after the Company receives such notice or becomes aware
of such ineligibility.
(c) 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, if any, and other procedures
applicable to beneficial interests in such other Global Note for as long as it
remains such an interest.
(d) In connection with any transfer pursuant to paragraph (b) of
this Section of a portion of the beneficial interests in a DTC Global or DBC
Global to beneficial owners who are required to hold Certificated Notes, the
Registrar shall reflect on its books and records the date and a decrease in the
principal amount at maturity of such DTC Global or DBC Global, as the case may
be, in an amount equal to the principal amount at maturity of the beneficial
interest in such DTC Global or DBC Global to be transferred, and the Company
shall execute, and the Trustee shall authenticate and deliver, one or more U.S.
Certificated Notes or Regulation S Certificated Notes, as the case may be, of
like tenor and amount.
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37
(e) In connection with the transfer of all the beneficial interests
in a DTC Global or DBC Global to beneficial owners pursuant to paragraph (b) of
this Section, the DTC Global or DBC Global, as the case may be, shall be deemed
to be surrendered to the Trustee for cancellation, and the Company shall
execute, and the Trustee shall authenticate and deliver, to each beneficial
owner identified by the Depository in exchange for its beneficial interest in
the DTC Global or DBC Global, as the case may be, an equal aggregate principal
amount at maturity of U.S. Certificated Notes or Regulation S Certificated
Notes, as the case may be, of authorized denominations.
(f) Any U.S. Certificated Note delivered in exchange for an interest
in a DTC Global pursuant to paragraph (b), (d) or (e) of this Section shall,
except as otherwise provided by paragraphs (f)(i)(x) and (d) of Section 2.08
hereof, bear the legend regarding transfer restrictions applicable to the U.S.
Certificated Note set forth in Section 2.02.
(g) Any Regulation S Certificated Note delivered in exchange for an
interest in a DBC Global pursuant to paragraph (b), (d) or (e) of this Section
shall, except as otherwise provided by paragraphs (f)(i)(x) and (d) of Section
2.08 hereof, bear the legend regarding transfer restrictions applicable to the
Regulation S Certificated Note set forth in Section 2.02 hereof.
(h) The registered holder of a Global Note may grant proxies and
otherwise authorize any Person, including 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.
(i) QIBs that are beneficial owners of interests in a Global Note
may receive Certificated Notes (which shall bear the Private Placement Legend if
required by Section 2.02) in accordance with the procedures of the Depository.
In connection with the execution, authentication and delivery of such
Certificated Notes, the Registrar shall reflect on its books and records a
decrease in the principal amount of the relevant Global Note equal to the
principal amount of such Certificated Notes and the Company shall execute and
the Trustee shall authenticate and deliver one or more Certificated Notes having
an equal aggregate principal amount.
(j) All Notes issued upon any transfer or exchange of Notes shall be
valid obligations of the Company, evidencing the same debt, and entitled to the
same benefits under this Indenture, as the Notes surrendered upon such transfer
or exchange.
SECTION 2.08. Special Transfer Provisions. Unless and until a Note
is exchanged for an Exchange Note in connection with an effective Registration
Statement pursuant to the Registration Rights Agreement, the following
provisions shall apply:
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38
(a) Transfers to QIBs. The following provisions shall apply with
respect to the registration of any proposed transfer of a U.S. Certificated Note
or an interest in a DTC Global to a QIB (excluding Non-U.S. Persons):
(i) If the Note to be transferred consists of (x) U.S. Certificated
Notes, the Registrar shall register the transfer if such transfer is being
made by a proposed transferor who has checked the box provided for on the
form of Note stating, or has otherwise advised the Company and the
Registrar in writing, that the sale has been made in compliance with the
provisions of Rule 144A to a transferee who has signed the certification
provided for on the form of Note stating, or has otherwise advised the
Company and the Registrar in writing, that it is purchasing the Note for
its own account or an account with respect to which it exercises sole
investment discretion and that it and any such account is a QIB within the
meaning of Rule 144A, and is aware that the sale to it is being made in
reliance on Rule 144A and acknowledges that it has received such
information regarding the Company as it has requested pursuant to Rule
144A or has determined not to request such information and that it is
aware that the transferor is relying upon its foregoing representations in
order to claim the exemption from registration provided by Rule 144A or
(y) an interest in a DTC Global, the transfer of such interest may be
effected only through the book entry system maintained by the Depository.
(ii) If the proposed transferee is an Agent Member, and the Note to
be transferred consists of U.S. Certificated Notes, upon receipt by the
Registrar of the documents referred to in clause (i) and instructions
given in accordance with the Depository's and the Registrar's procedures,
the Registrar shall reflect on its books and records the date and an
increase in the principal amount at maturity of such DTC Global in an
amount equal to the principal amount at maturity of the U.S. Certificated
Notes to be transferred, and the Trustee shall cancel the Certificated
Note so transferred.
(b) Transfers of Interests in DBC Global or Regulation S
Certificated Notes to U.S. Persons. The following provisions shall apply with
respect to any transfer of interests in a DBC Global or Regulation S
Certificated Notes to U.S. Persons:
(i) prior to the removal of the Private Placement Legend from a DBC
Global or a Regulation S Certificated Note pursuant to Section 2.02, the
Registrar shall refuse to register such transfer; and
(ii) after such removal, the Registrar shall register the transfer
of any such Note without requiring any additional certification.
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39
(c) Transfers to Non-U.S. Persons at Any Time. The following
provisions shall apply with respect to any transfer of a Note to a Non-U.S.
Person:
(i) The Registrar shall register any proposed transfer to any
Non-U.S. Person if the Note to be transferred is a U.S. Certificated Note
or an interest in a DTC Global only upon receipt of a certificate
substantially in the form of Exhibit E from the proposed transferor.
(ii) (a) If the proposed transferor is an Agent Member holding a
beneficial interest in a DTC Global, upon receipt by the Registrar of (x)
the documents required by paragraph (i) and (y) instructions in accordance
with the Depository's and the Registrar's procedures, the Registrar shall
reflect on its books and records the date and a decrease in the principal
amount at maturity of such DTC Global in an amount equal to the principal
amount at maturity of the beneficial interest in DTC Global to be
transferred, and (b) if the proposed transferee is an Agent Member, upon
receipt by the Registrar of instructions given in accordance with the
Depository's and the Registrar's procedures, the Registrar shall reflect
on its books and records the date and an increase in the principal amount
at maturity of such DBC Global in an amount equal to the principal amount
at maturity of the U.S. Certificated Notes or the DTC Global, as the case
may be, to be transferred, and the Trustee shall cancel the Certificated
Note, if any, so transferred or decrease the amount of the DTC Global.
(d) Private Placement Legend. Upon the registration of transfer,
exchange or replacement of Notes not bearing the Private Placement Legend, the
Registrar shall deliver Notes that do not bear the Private Placement Legend.
Upon the registration of transfer, exchange or replacement of Notes bearing the
Private Placement Legend, the Registrar shall deliver only Notes that bear the
Private Placement Legend unless either (i) the Private Placement Legend is no
longer required by Section 2.02 or (ii) there is delivered to the Registrar an
Opinion of Counsel reasonably satisfactory to the Company and the Trustee to the
effect that neither such legend nor the related restrictions on transfer are
required in order to maintain compliance with the provisions of the Securities
Act.
(e) 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 Registrar shall not register a transfer of any Note unless such
transfer complies with the restrictions on transfer of such Note set forth in
this Indenture. In connection with any transfer of Notes to an Institutional
Accredited Investor, each Holder agrees by its acceptance of the Notes to
furnish the Registrar or the Company such certifications, legal opinions or
other information as either of them may reasonably require to confirm that such
transfer is being made pursuant to an exemption from,
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40
or a transaction not subject to, the registration requirements of the Securities
Act; provided that the Registrar shall not be required to determine (but may
rely on a determination made by the Company with respect to) the sufficiency of
any such certifications, legal opinions or other information.
(f) Transfers to Non-QIB Institutional Accredited Investors. The
following provisions shall apply with respect to the registration of any
proposed transfer of a Note to any Institutional Accredited Investor which is
not a QIB (excluding Non-U.S. Persons):
(i) The Registrar shall register the transfer of any Note, whether
or not such Note bears the Private Placement Legend, if (x) the requested
transfer is after the time period referred to in Rule 144(k) under the
Securities Act as in effect with respect to such transfer or (y) the
proposed transferee has delivered to the Registrar (A) a certificate
substantially in the form of Exhibit F hereto and (B) if the aggregate
principal amount at maturity of the Notes being transferred is less than
$500,000 at the time of such transfer, an Opinion of Counsel acceptable to
the Company that such transfer is in compliance with the Securities Act.
(ii) If the proposed transferor is an Agent Member holding a
beneficial interest in a DTC Global, upon receipt by the Registrar and the
Company of (x) the documents, if any, required by paragraph (i) and (y)
instructions given in accordance with the Depository's and the Registrar's
procedures, the Registrar shall reflect on its books and records the date
and a decrease in the principal amount at maturity of such DTC Global in
an amount equal to the principal amount at maturity of the beneficial
interest in the DTC Global to be transferred, and the Company shall
execute, and the Trustee shall authenticate and deliver, one or more U.S.
Certificated Notes of like tenor and amount.
The Registrar shall retain, in accordance with its customary
procedures, copies of all letters, notices and other written communications
received pursuant to Section 2.07 or this Section 2.08. 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.
SECTION 2.09. Replacement Notes. If a mutilated Note is surrendered
to the Trustee or if the Holder claims that the Note has been lost, destroyed or
wrongfully taken, the Company shall issue and the Trustee shall authenticate a
replacement Note of like tenor and principal amount and bearing a number not
contemporaneously outstanding; provided that the requirements of the second
paragraph of Section 2.10 are met. If required by the Trustee or the Company, an
indemnity bond must be furnished that is sufficient in the judgment of both the
Trustee and the Company to protect the Company, the Trustee or any Agent from
any loss
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41
that any of them may suffer if a Note is replaced. The Company may charge such
Holder for its expenses and the expenses of the Trustee in replacing a Note. In
case any such mutilated, lost, destroyed or wrongfully taken Note has become or
is about to become due and payable, the Company in its discretion may pay such
Note instead of issuing a new Note in replacement thereof.
Every replacement Note is an additional obligation of the Company
and shall be entitled to the benefits of this Indenture.
SECTION 2.10. Outstanding Notes. Notes outstanding at any time are
all Notes that have been authenticated by the Trustee except for those canceled
by it, those delivered to it for cancellation and those described in this
Section 2.10 as not outstanding.
If a Note is replaced pursuant to Section 2.09, it ceases to be
outstanding unless and until the Trustee and the Company receive proof
reasonably satisfactory to them that the replaced Note is held by a bona fide
purchaser.
If the Paying Agent (other than the Company or an Affiliate of the
Company) holds on the maturity date or a redemption date money in such coin or
currency of the Federal Republic of Germany as at the time of payment shall be
legal tender for the payment of public and private debts sufficient to pay all
principal, premium, if any, and interest payable on that date with respect to
the Notes (or portions thereof) to be redeemed or payable on that date, then on
and after that date such Notes cease to be outstanding and interest on them
shall cease to accrue, or the principal of such Notes shall cease to accrete, as
the case may be.
A Note does not cease to be outstanding because the Company or one
of its Affiliates holds such Note; provided, however, that, in determining
whether the Holders of the requisite principal amount at maturity of the
outstanding Notes have given any request, demand, authorization, direction,
notice, consent or waiver hereunder, Notes owned by the Company or any other
obligor upon the Notes or any Affiliate of the Company or of such other obligor
shall be disregarded and deemed not to be outstanding, except that, in
determining whether the Trustee shall be protected in relying upon any such
request, demand, authorization, direction, notice, consent or waiver, only Notes
which a Responsible Officer of the Trustee knows to be so owned shall be so
disregarded. Notes so owned which have been pledged in good faith may be
regarded as outstanding if the pledgee establishes to the satisfaction of the
Trustee the pledgee's right so to act with respect to such Notes and that the
pledgee is not the Company or any other obligor upon the Notes or any Affiliate
of the Company or of such other obligor.
SECTION 2.11. Temporary Notes. Until definitive Notes are ready for
delivery, the Company may prepare and the Trustee shall authenticate temporary
Notes.
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42
Temporary Notes shall be substantially in the form of definitive Notes but may
have insertions, substitutions, omissions and other variations determined to be
appropriate by the Officers executing the temporary Notes, as evidenced by their
execution of such temporary Notes. If temporary Notes are issued, the Company
will cause definitive Notes to be prepared without unreasonable delay. After the
preparation of definitive Notes, the temporary Notes shall be exchangeable for
definitive Notes upon surrender of the temporary Notes at the office or agency
of the Company designated for such purpose pursuant to Section 4.02, without
charge to the Holder. Upon surrender for cancellation of any one or more
temporary Notes the Company shall execute and the Trustee shall authenticate and
deliver in exchange therefor a like principal amount at maturity of definitive
Notes of authorized denominations. Until so exchanged, the temporary Notes shall
be entitled to the same benefits under this Indenture as definitive Notes.
SECTION 2.12. Cancellation. The Company at any time may deliver to
the Trustee for cancellation any Notes previously authenticated and delivered
hereunder which the Company may have acquired in any manner whatsoever, and may
deliver to the Trustee for cancellation any Notes previously authenticated
hereunder which the Company has not issued and sold. The Registrar and the
Paying Agent shall forward to the Trustee any Notes surrendered to them for
registration of transfer, exchange, purchase or payment. The Trustee shall
cancel all Notes surrendered for registration of transfer, exchange, purchase,
payment or cancellation and shall return all such Notes to the Company. The
Company shall not issue 1998 Notes to replace Notes it has paid in full or
delivered to the Trustee for cancellation.
SECTION 2.13. CUSIP Numbers. The Company in issuing the Notes may
use a "CUSIP" "CINS", "ISIN" or any other applicable identification number (if
then generally in use), and the Trustee shall use CUSIP, CINS, ISIN or other
identification number, as the case may be, in notices of redemption or exchange
as a convenience to Holders; provided that any such notice shall state that no
representation is made as to the correctness of such numbers either as printed
on the Notes or as contained in any notice of redemption or exchange and that
reliance may be placed only on the other identification numbers printed on the
Notes. The Company shall promptly advise the Trustee of any change in the CUSIP
numbers.
SECTION 2.14. Defaulted Interest. If the Company defaults in a
payment of interest on the Notes, it shall pay, or shall deposit with the Paying
Agent money in such coin or currency of the Federal Republic of Germany as at
the time of payment shall be legal tender for the payment of public and private
debts in immediately available funds sufficient to pay, the defaulted interest,
plus (to the extent lawful) interest on the defaulted interest, to the Persons
who are Holders on a subsequent special record date. A special record date, as
used in this Section 2.14 with respect to the payment of any defaulted interest,
shall mean the 15th day next preceding the date fixed by the Company for the
payment of defaulted interest, whether or not such day is a Business Day. At
least 15 days before the subsequent special
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43
record date, the Company shall mail to each Holder and to the Trustee a notice
that states the subsequent special record date, the payment date and the amount
of defaulted interest to be paid.
SECTION 2.15. Issuance of Additional Notes. The Company may, subject
to Article Four of this Indenture, issue additional Notes under this Indenture.
The Notes issued on the Closing Date and any additional Notes subsequently
issued shall be treated as a single class for all purposes under this Indenture.
ARTICLE THREE
REDEMPTION
SECTION 3.01. Right of Redemption. (a) The Notes may be redeemed at
the election of the Company, in whole or in part, at any time and from time to
time on or after April 15, 2003 and prior to maturity, upon not less than 30 nor
more than 60 days' prior notice mailed by first-class mail to each Holder's last
address as it appears in the Note Register, at the following Redemption Prices
(expressed in percentages of their principal amount at maturity), plus accrued
and unpaid interest, if any, to the Redemption Date (subject to the right of
Holders of record on the relevant Regular Record Date that is on or prior to the
Redemption Date to receive interest due on an Interest Payment Date that is on
or prior to the Redemption Date) if redeemed during the 12-month period
commencing on April 15 of the applicable year set forth below:
Year Redemption Price
2003..................................................... 106.200 %
2004..................................................... 104.133
2005..................................................... 102.067
2006 and thereafter...................................... 100.000
(b) In addition, at any time prior to April 15, 2001, the Company
may, at its option, redeem up to 35% of the aggregate principal amount at
maturity of the Notes with the net proceeds of one or more Public Equity
Offerings, at any time or from time to time in part, at a Redemption Price
(expressed as a percentage of Accreted Value on the Redemption Date) of
112.400%; provided (i) that 1998 Notes representing at least 65% of the
principal amount at maturity of the 1998 Notes initially issued remain
outstanding immediately after each such redemption and (ii) that notice of each
such redemption is mailed within 60 days of each such Public Equity Offering.
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44
SECTION 3.02. Notices to Trustee. If the Company elects to redeem
Notes pursuant to Section 3.01, it shall notify the Trustee in writing of the
Redemption Date and the principal amount at maturity of Notes to be redeemed.
The Company shall give each notice provided for in this Section 3.02
in an Officers' Certificate at least 45 days before the Redemption Date (unless
a shorter period shall be satisfactory to the Trustee).
SECTION 3.03. Selection of Notes to Be Redeemed. If less than all of
the Notes are to be redeemed at any time, the Trustee shall select the Notes to
be redeemed in compliance with the requirements of the principal national
securities exchange, if any, on which the Notes are listed or if the Notes are
not listed on a national securities exchange, by lot or by such other method as
the Trustee in its sole discretion shall deem to be fair and appropriate;
provided that no Notes of DM 1,000 in principal amount at maturity or less shall
be redeemed in part.
The Trustee shall make the selection from the Notes outstanding and
not previously called for redemption. Notes in denominations of DM 1,000 in
principal amount at maturity may only be redeemed in whole. The Trustee may
select for redemption portions (equal to DM 1,000 in principal amount at
maturity or any integral multiple thereof) of Notes that have denominations
larger than DM 1,000 in principal amount at maturity. Provisions of this
Indenture that apply to Notes called for redemption also apply to portions of
Notes called for redemption. The Trustee shall notify the Company and the
Registrar promptly in writing of the Notes or portions of Notes to be called for
redemption.
SECTION 3.04. Notice of Redemption. With respect to any redemption
of Notes pursuant to Section 3.01, at least 30 days but not more than 60 days
before a Redemption Date, the Company, or at the Company's request, the Trustee
shall mail a notice of redemption by first class mail to each Holder whose Notes
are to be redeemed.
The notice shall identify the Notes to be redeemed and shall state:
(i) the Redemption Date;
(ii) the Redemption Price;
(iii) the name and address of the Paying Agent;
(iv) that Notes called for redemption must be surrendered to the
Paying Agent in order to collect the Redemption Price;
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45
(v) that, unless the Company defaults in making the redemption
payment, interest on Notes (or portions thereof) called for redemption
ceases to accrue or Notes called for redemption cease to accrete in value,
as the case may be, on and after the Redemption Date and the only
remaining right of the Holders is to receive payment of the Redemption
Price plus accrued interest to the Redemption Date upon surrender of the
Notes to the Paying Agent;
(vi) that, if any Note is being redeemed in part, the portion of the
principal amount at maturity (equal to DM 1,000 in principal amount at
maturity or any integral multiple thereof) of such Note to be redeemed and
that, on and after the Redemption Date, upon surrender of such Note, a new
Note or Notes in principal amount at maturity equal to the unredeemed
portion thereof will be reissued; and
(vii) that, if any Note contains a CUSIP number as provided in
Section 2.13, no representation is being made as to the correctness of the
CUSIP number either as printed on the Notes or as contained in the notice
of redemption.
At the Company's request (which request may be revoked by the Company at
any time prior to the time at which the Trustee shall have given such notice to
the Holders), made in writing to the Trustee at least 45 days (or such shorter
period as shall be satisfactory to the Trustee) before a Redemption Date, the
Trustee shall give the notice of redemption in the name and at the expense of
the Company. If, however, the Company gives such notice to the Holders, the
Company shall concurrently deliver to the Trustee a copy of such notice of
redemption.
SECTION 3.05. Effect of Notice of Redemption. Once notice of
redemption is mailed, Notes called for redemption become due and payable on the
Redemption Date and at the Redemption Price. Upon surrender of any Notes to the
Paying Agent, such Notes shall be paid at the Redemption Price, plus accrued
interest, if any, to the Redemption Date. Notice of redemption shall be deemed
to be given when mailed, whether or not the Holder receives the notice. In any
event, failure to give such notice, or any defect therein, shall not affect the
validity of the proceedings for the redemption of Notes held by Holders to whom
such notice was properly given.
SECTION 3.06. Deposit of Redemption Price. On or prior to any
Redemption Date, the Company shall deposit with the Paying Agent (or, if the
Company, one of its Subsidiaries or any of their Affiliates is acting as Paying
Agent, shall segregate and hold in trust as provided in Section 2.05) money , in
such coin or currency of the Federal Republic of Germany as at the time of
payment shall be legal tender for the payment of public and private debts,
sufficient to pay the Redemption Price of and accrued interest on all Notes to
be
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46
redeemed on that date other than Notes or portions thereof called for redemption
on that date that have been delivered by the Company to the Trustee for
cancellation.
SECTION 3.07. Payment of Notes Called for Redemption. If notice of
redemption has been given in the manner provided above, the Notes or portion of
Notes specified in such notice to be redeemed shall become due and payable on
the Redemption Date at the Redemption Price stated therein, together with
accrued interest to such Redemption Date, and on and after such date (unless the
Company shall default in the payment of such Notes at the Redemption Price and
accrued interest to the Redemption Date, in which case the principal, until
paid, shall bear interest from the Redemption Date at the rate prescribed in the
Notes), such Notes shall cease to accrue interest or accrete in value, as the
case may be. Upon surrender of any Note for redemption in accordance with a
notice of redemption, such Note shall be paid and redeemed by the Company at the
Redemption Price, together with accrued interest, if any, to the Redemption
Date; provided that installments of interest whose Stated Maturity is on or
prior to the Redemption Date shall be payable to the Holders registered as such
at the close of business on the relevant Regular Record Date.
SECTION 3.08. Notes Redeemed in Part. Upon surrender of any Note
that is redeemed in part, the Company shall execute and the Trustee shall
authenticate and deliver to the Holder a new Note equal in principal amount at
maturity to the unredeemed portion of such surrendered Note.
ARTICLE FOUR
COVENANTS
SECTION 4.01. Payment of Notes. The Company shall pay the principal
of, premium, if any, and interest on the Notes on the dates and in the manner
provided in the Notes and this Indenture. An installment of principal, premium,
if any, or interest shall be considered paid on the date due if the Trustee or
Paying Agent (other than the Company, a Subsidiary of the Company, or any
Affiliate of any of them) holds on that date money in such coin or currency of
the Federal Republic of Germany as at the time of payment shall be legal tender
for the payment of public and private debts designated for and sufficient to pay
the installment. If the Company or any Subsidiary of the Company or any
Affiliate of any of them, acts as Paying Agent, an installment of principal,
premium, if any, or interest shall be considered paid on the due date if the
entity acting as Paying Agent complies with the last sentence of Section 2.05.
As provided in Section 6.09, upon any bankruptcy or reorganization procedure
relative to the Company, the Trustee shall serve as the Paying Agent and
conversion agent, if any, for the Notes.
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47
The Company shall pay interest on overdue principal, premium, if
any, and interest on overdue installments of interest, to the extent lawful, at
the rate per annum specified in the Notes.
SECTION 4.02. Maintenance of Office or Agency. The Company will
maintain in the Borough of Manhattan, the City of New York, an office or agency
where Notes may be surrendered for registration of transfer or exchange or for
presentation for payment, an office or agency in New York and Frankfurt am Main,
Germany, where Notes may be presented for payment and monies for payment in
respect of the Notes will be disbursed and where notices and demands to or upon
the Company in respect of the Notes and this Indenture may be served. The
Company will 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 10.02 hereof.
The Company may also from time to time designate one or more other
offices or agencies (in or outside the City of New York) where the Notes may be
presented or surrendered for any or all such purposes and may from time to time
rescind such designations; provided that no such designation or rescission shall
in any manner relieve the Company of its obligation to maintain an office or
agency in the Borough of Manhattan, the City of New York and Frankfurt am Main,
Germany for such purposes. The Company will give prompt written notice to the
Trustee of any such designation or rescission and of any change in the location
of any such other office or agency.
The Company hereby initially designates the Corporate Trust Office
of the Trustee, located in the Borough of Manhattan, the City of New York, as
such office of the Company in accordance with Section 2.04. The Company hereby
appoints Deutsche Bank for Notes represented by the DBC Global.
SECTION 4.03. Limitation on Indebtedness. (a) The Company will not,
and will not permit any of its Restricted Subsidiaries to, Incur any
Indebtedness (other than the 1998 Notes and Indebtedness existing on the Closing
Date); provided that the Company may Incur Indebtedness if, after giving effect
to the Incurrence of such Indebtedness and the receipt and application of the
proceeds therefrom, the Consolidated Leverage Ratio would be greater than zero
and less than 6:1.
Notwithstanding the foregoing, the Company and any Restricted
Subsidiary (except as specified below) may Incur each and all of the following:
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48
(i) Indebtedness outstanding at any time in an aggregate principal
amount not to exceed $100 million of Indebtedness that is pari passu with
or subordinated to the Notes and $150 million of Indebtedness that is
subordinated to the Notes, less any amount of such Indebtedness
permanently repaid as provided under Section 4.11 hereof;
(ii) Indebtedness owed (A) by any Restricted Subsidiary to the
Company or another Restricted Subsidiary or (B) by the Company to any
Restricted Subsidiary; provided that any event which results in any such
Restricted Subsidiary ceasing to be a Restricted Subsidiary or any
subsequent transfer of such Indebtedness (other than to the Company or
another Restricted Subsidiary) shall be deemed, in each case, to
constitute an Incurrence of such Indebtedness not permitted by this clause
(ii);
(iii) Indebtedness issued in exchange for, or the net proceeds of
which are used to repay, redeem, defease, refinance, refund, extend,
renew, replace, discharge or otherwise retire any then outstanding
Indebtedness (other than Indebtedness Incurred under clause (i), (ii),
(iv), (vi), (viii), (xi) or (xii) of this paragraph) and any refinancings
thereof in an amount not to exceed the amount so refinanced or refunded
(plus premiums, penalties, accrued interest, fees and expenses); provided
that Indebtedness the proceeds of which are used to refinance or refund
the Notes or Indebtedness that is pari passu with, or subordinated in
right of payment to, the Notes shall only be permitted under this clause
(iii) if (A) in case the Notes are refinanced in part or the Indebtedness
to be refinanced 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 outstanding, is expressly made pari passu with,
or subordinate in right of payment to, the remaining Notes, (B) in case
the Indebtedness to be refinanced is subordinated in right of payment to
the Notes, such new Indebtedness, by its terms or by the terms of any
agreement or instrument pursuant to which such new Indebtedness is issued
or remains outstanding, is expressly made subordinate in right of payment
to the Notes at least to the extent that the Indebtedness to be refinanced
is subordinated to the Notes and (C) such new Indebtedness, determined as
of the date of Incurrence of such new Indebtedness, does not mature prior
to the Stated Maturity of the Indebtedness to be refinanced or refunded,
and the Average Life of such new Indebtedness is at least equal to the
remaining Average Life of the Indebtedness to be refinanced or refunded;
and provided further that in no event may Indebtedness of the Company be
refinanced 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 provided in the ordinary course of business, (B) under Currency
Agreements and Interest Rate Agreements; provided that such agreements (a)
are designed solely to
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49
protect the Company or any of its Restricted Subsidiaries against
fluctuations in foreign currency exchange rates or interest rates and (b)
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 (other than Guarantees of Indebtedness Incurred by any Person
acquiring all or any portion of such business, assets or Restricted
Subsidiary for the purpose of financing such acquisition), 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 of the Company, to the extent the net proceeds
thereof are promptly (A) used to purchase Notes tendered in an Offer to
Purchase made as a result of a Change in Control or (B) deposited to
defease the Notes as described below under Article Eight hereof;
(vi) Guarantees of the Notes and Guarantees of Indebtedness of the
Company by any Restricted Subsidiary provided the Guarantee of such
Indebtedness is permitted by and made in accordance with Section 4.07
hereof;
(vii) Indebtedness (including Guarantees) Incurred to finance the
cost (including the cost of design, development, acquisition,
construction, installation, improvement, transportation or integration) to
acquire equipment, inventory or network assets (including acquisitions by
way of Capitalized Lease and acquisitions of the Capital Stock of a Person
that becomes a Restricted Subsidiary to the extent of the fair market
value of the equipment, inventory or network assets so acquired) by the
Company or a Restricted Subsidiary after the Closing Date;
(viii) Indebtedness of the Company not to exceed, at any one time
outstanding, two times (A) the Net Cash Proceeds received by the Company
after the Closing Date as a capital contribution or from the issuance and
sale of its Capital Stock (other than Disqualified Stock) to a Person that
is not a Subsidiary of the Company, to the extent (I) such capital
contribution or Net Cash Proceeds have not been used pursuant to clause
(C)(2) of the first paragraph or clause (iii), (iv), (vi) or (vii) of the
second paragraph of Section 4.04 hereof to make a Restricted Payment and
(II) if such capital contribution or Net Cash Proceeds are used to
consummate a transaction pursuant to which the Company Incurs Acquired
Indebtedness, the amount of such Net Cash Proceeds exceeds one-half of the
amount of Acquired Indebtedness so Incurred and
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(B) 80% of the fair market value of property (other than cash and cash
equivalents) received by the Company after the Closing Date from the sale
of its Capital Stock (other than Disqualified Stock) to a Person that is
not a Subsidiary of the Company, to the extent (I) such capital
contribution or sale of Capital Stock has not been used pursuant to clause
(iii), (iv), (vi) or (vii) of the second paragraph of Section 4.04 hereof
to make a Restricted Payment and (II) if such capital contribution or
Capital Stock is used to consummate a transaction pursuant to which the
Company Incurs Acquired Indebtedness, 80% of the fair market value of the
property received exceeds one-half of the amount of Acquired Indebtedness
so Incurred provided that such Indebtedness does not mature prior to the
Stated Maturity of the Notes and has an Average Life longer than the
Notes;
(ix) Acquired Indebtedness;
(x) Strategic Subordinated Indebtedness;
(xi) Indebtedness in respect of bankers' acceptance and letters of
credit, all in the ordinary course of business, in an aggregate amount
outstanding at any time of up to $10 million;
(xii) Indebtedness arising from the honoring by a bank or other
financial institution of a check, or similar instrument inadvertently
(except in the case of daylight overdrafts) drawn against insufficient
funds in the ordinary course of business, provided that such Indebtedness
is extinguished within three business days of Incurrence.
(b) Notwithstanding any other provision of this Section 4.03, the
maximum amount of Indebtedness that the Company or a Restricted Subsidiary may
Incur pursuant to this Section 4.03 shall not be deemed to be exceeded, with
respect to any outstanding Indebtedness due solely to the result of fluctuations
in the exchange rates of currencies.
(c) For purposes of determining any particular amount of
Indebtedness under this Section 4.03, (1) 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 and (2) any Liens
granted pursuant to the equal and ratable provisions referred to in Section 4.09
shall not be treated as Indebtedness. For purposes of determining compliance
with this Section 4.03, in the event that an item of Indebtedness meets the
criteria of more than one of the types of Indebtedness described in clauses (i)
through (xii) of Section 4.03(a), the Company, in its sole discretion, shall
classify, and from time to time may reclassify, such item of Indebtedness and
only be required to include the amount and type of such Indebtedness in one of
such clauses.
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SECTION 4.04. Limitation on Restricted Payments. The Company will
not, and will not permit any Restricted Subsidiary to, directly or indirectly,
(i) (A) declare or pay any dividend or make any distribution on or
with respect to its Capital Stock (other than (x) dividends or
distributions payable solely in shares of its Capital Stock (other than
Disqualified Stock) or in options, warrants or other rights to acquire
shares of such Capital Stock and (y) pro rata dividends or distributions
on Common Stock of Restricted Subsidiaries held by minority stockholders)
held by Persons other than the Company or any of its Restricted
Subsidiaries or (B) pay any cash interest on the Subordinated Convertible
Debentures,
(ii) purchase, redeem, retire or otherwise acquire for value any
shares of Capital Stock of (A) the Company or an Unrestricted Subsidiary
(including options, warrants or other rights to acquire such shares of
Capital Stock) held by any Person or (B) a Restricted Subsidiary
(including options, warrants or other rights to acquire such shares of
Capital Stock) held by any Affiliate of the Company (other than a Wholly
Owned Restricted Subsidiary) or any holder (or any Affiliate of such
holder) of 5% or more of the Capital Stock of the Company,
(iii) make any voluntary or optional principal payment, or voluntary
or optional redemption, repurchase, defeasance, or other acquisition or
retirement for value, of Indebtedness of the Company that is subordinated
in right of payment to the Notes or
(iv) make any Investment (after the Closing Date), other than a
Permitted Investment, in any Person (such payments or any other actions
described in clauses (i) through (iv) above being collectively "Restricted
Payments")
if, at the time of, and after giving effect to, the proposed Restricted Payment:
(A) a Default or Event of Default shall have occurred and be continuing, (B) the
Company could not Incur at least $1.00 of Indebtedness under the first paragraph
of Section 4.03 hereof or (C) the aggregate amount of all Restricted Payments
(the amount, 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) made after the Closing Date shall exceed the sum of (1) 50% of the
aggregate amount of the Adjusted Consolidated Net Income (or, if the Adjusted
Consolidated Net Income is a loss, minus 100% of the amount of such loss)
(determined by excluding income resulting from transfers of assets by the
Company or a Restricted Subsidiary to an Unrestricted Subsidiary) accrued on a
cumulative basis during the period (taken as one accounting period) beginning on
the first day of the fiscal quarter immediately following the Closing Date and
ending on the last day of the last fiscal quarter preceding the Transaction Date
for which reports have been filed with the Commission or provided to the Trustee
<PAGE>
52
pursuant to Section 4.18 hereof plus (2) the aggregate Net Cash Proceeds
received by the Company after the Closing Date as a capital contribution or from
the issuance and sale permitted by this Indenture of its Capital Stock (other
than Disqualified Stock) to a Person who is not a Subsidiary of the Company,
including an issuance or sale permitted by this Indenture of Indebtedness of the
Company for cash subsequent to the Closing Date upon the conversion of such
Indebtedness into Capital Stock (other than Disqualified Stock) of the Company,
or from the issuance to a Person who is not a Subsidiary of the Company of any
options, warrants or other rights to acquire Capital Stock of the Company (in
each case, exclusive of any Disqualified Stock or any options, warrants or other
rights that are redeemable at the option of the holder, or are required to be
redeemed, prior to the Stated Maturity of the Notes), in each case except to the
extent such Net Cash Proceeds are used to Incur Indebtedness pursuant to clause
(viii) of the second paragraph under Section 4.03 hereof, plus (3) an amount
equal to the net reduction in Investments (other than reductions in Permitted
Investments) in any Person resulting from payments of interest on Indebtedness,
dividends, repayments of loans or advances, or other transfers of assets, in
each case to the Company or any Restricted Subsidiary or from the Net Cash
Proceeds from the return of capital, redemption, or sale of any such Investment
(except, in each case, to the extent any such payment or proceeds are included
in the calculation of Adjusted Consolidated Net Income), or from redesignations
of Unrestricted Subsidiaries as Restricted Subsidiaries (valued in each case as
provided in the definition of "Investments"), or from the release of any
Guarantee that constituted a Restricted Payment, to the extent of such release,
not to exceed, in each case, the amount of Investments previously made by the
Company or any Restricted Subsidiary in such Person or Unrestricted Subsidiary.
The foregoing provision shall not be violated by reason of:
(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 foregoing paragraph;
(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 the second paragraph of part (a) of Section 4.03
hereof;
(iii) the repurchase, redemption or other acquisition of Capital
Stock of the Company or an Unrestricted Subsidiary (or options, warrants
or other rights to acquire such Capital Stock) in exchange for, or out of
the proceeds of a capital contribution or a substantially concurrent
offering of, shares of Capital Stock (other than Disqualified
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53
Stock) of the Company (or options, warrants or other rights to acquire
such Capital Stock);
(iv) the making of any principal payment or the repurchase,
redemption, retirement, defeasance or other acquisition for value of
Indebtedness of the Company which is subordinated in right of payment to
the Notes in exchange for, or out of the proceeds of a capital
contribution or a substantially concurrent offering of, shares of the
Capital Stock (other than Disqualified Stock) of the Company (or options,
warrants or other rights to acquire such Capital Stock);
(v) payments or distributions to dissenting stockholders pursuant to
applicable law, pursuant to or in connection with a consolidation, merger
or transfer of assets that complies with the provisions of Article Five
hereof;
(vi) Investments in any Person the primary business of which is
related, ancillary or complementary to the business of the Company or any
of its Restricted Subsidiaries on the date of such Investments; provided
that the aggregate amount of Investments made pursuant to this clause (vi)
does not exceed $30 million at any one time outstanding;
(vii) Investments acquired in exchange for Capital Stock (other than
Disqualified Stock) of the Company or the Net Cash Proceeds from the
issuance and sale of such Capital Stock, provided that such proceeds are
so used within 180 days of the receipt thereof;
(viii) the redemption, repurchase, retirement or other acquisition
of any Capital Stock of the Company (or options, warrants or other rights
to acquire such Capital Stock) from an employee or former employee of the
Company or any of its Subsidiaries (or from such person's estate, heirs or
representatives) in connection with such employee's death, disability or
termination of employment, provided that the aggregate amount expended
pursuant to this clause does not exceed $1 million per annum plus the
cumulative amount of such per annum limit not used in prior years and the
cash proceeds from such Investments, provided that such proceeds are used
within 180 days of the receipt thereof;
(ix) Investments in permitted Wholesale Consortiums and Permitted
Joint Ventures not exceeding, at the time of the Investment, the sum of
(A) 10% of the consolidated revenue of the Company (excluding with respect
to Persons in whom an equity interest is owned by Persons other than the
Company and its Restricted Subsidiaries, the pro rata share of such
revenue attributable to such other equity holders) accrued on a cumulative
basis during the period (taken as one accounting
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54
period) beginning on the first day of the first full fiscal quarter
immediately following the Closing Date and ending on the last day of the
last fiscal quarter preceding the date of such Investment and (B) the Net
Cash Proceeds from the disposition of the Company's interest in any such
Permitted Wholesale Consortium or Permitted Joint Venture;
(x) the repurchase of shares of the Series A Preferred upon a Change
of Control pursuant to an Offer to Purchase; provided that an Offer to
Purchase is consummated with respect to the Notes prior to any repurchase
of shares of the Series A Preferred;
(xi) the payment of cash dividends on the Series A Preferred sold as
a Unit with any of the 1998 Notes or issued as dividends thereon (A) after
April 15, 2003 or (B) at a rate of 0.5% per annum as a result of the
Company's failure to have a registration statement under the Securities
Act or the Series A Preferred declared effective within one year after the
Closing Date;
(xii) the payment of cash interest on Subordinated Convertible
Debentures sold as a Unit with any of the 1998 Notes or issued as interest
thereon (A) after April 15, 2003 or (B) at a rate of 0.5% per annum as a
result of the Company's failure to have a registration statement under the
Securities Act for the Subordinated Convertible Debentures declared
effective within one year after the Closing Date; and
(xiii) other Restricted Payments in an aggregate amount not to
exceed $10 million, increased by the amount of any Restricted Payment made
pursuant to this clause (x) that is an Investment and is not outstanding;
provided that, except in the case of clauses (i) and (iii), 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 preceding
paragraph (other than the Restricted Payment referred to in clause (ii) thereof,
an exchange of Capital Stock for Capital Stock or Indebtedness referred to in
clause (iii) or (iv) thereof and an Investment referred to in clause (vi)
thereof), and the Net Cash Proceeds from any capital contribution or any
issuance of Capital Stock referred to in clauses (iii), (iv) and (vi), shall be
included in calculating whether the conditions of clause (C) of the first
paragraph of this Section 4.04 have been met with respect to any subsequent
Restricted Payments. In the event the proceeds of an issuance of Capital Stock
of the Company are used for the redemption, repurchase or other acquisition of
the Notes, or Indebtedness that is pari passu with the Notes, then the Net Cash
Proceeds of such issuance shall be included in clause (C) of the first paragraph
of this Section
<PAGE>
55
4.04 only to the extent such proceeds are not used for such redemption,
repurchase or other acquisition of Indebtedness.
Any Restricted Payments made in other than cash shall be valued at
fair market value. The amount of any Investment "outstanding" at any time shall
be deemed to be equal to the amount of such Investment on the date made, less
the return of capital, repayment of loans, return on capital and release of
Guarantees, in each case of or to the Company and its Restricted Subsidiaries
with respect to such Investment (up to the amount of such investment on the date
made).
SECTION 4.05. Limitation on Dividend and Other Payment Restrictions
Affecting Restricted Subsidiaries. The Company will not, and will not permit any
Restricted Subsidiary to, 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 Capital Stock 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.
The foregoing provisions shall not restrict any encumbrances or
restrictions:
(i) existing on the Closing Date in the Indenture or any other
agreements in effect on the Closing Date, and any extensions,
refinancings, renewals or replacements of such agreements; provided that
the encumbrances and restrictions in any such extensions, refinancings,
renewals or replacements are no less favorable in any material respect to
the Holders than those encumbrances or restrictions that are then in
effect and that are being extended, refinanced, renewed or replaced;
(ii) existing under or by reason of applicable law;
(iii) existing with respect to any Person or the property or assets
of such Person acquired by the Company or any Restricted Subsidiary,
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;
(iv) in the case of clause (iv) of the first paragraph of this
Section 4.05, (A) that restrict in a customary manner the subletting,
assignment or transfer of any property or asset that is a lease, license,
conveyance or contract or similar property or asset, (B) existing by
virtue of any transfer of, agreement to transfer, option or right
<PAGE>
56
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,
detract from the value of property or assets of the Company or any
Restricted Subsidiary in any manner material 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 of, or property and assets of,
such Restricted Subsidiary;
(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 Company) and (C) the Company
determines that any such encumbrance or restriction will not materially
affect the Company's ability to make principal or interest payments on the
Notes; or
(vii) imposed in connection with a transaction described in clause
(f) of the proviso to the definition of "Asset Sale" and relating solely
to a Restricted Subsidiary that transfers assets to the special purpose
entity referred to therein; provided that the Company 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 4.05 shall prevent the Company or any
Restricted Subsidiary from (1) creating, incurring, assuming or suffering to
exist any Liens otherwise permitted in Section 4.09 hereof or (2) restricting
the sale or other disposition of property or assets of the Company or any of its
Restricted Subsidiaries that secure Indebtedness of the Company or any of its
Restricted Subsidiaries.
SECTION 4.06. Limitation on the Issuance and Sale of Capital Stock
of Restricted Subsidiaries. The Company will not sell, and will not permit any
Restricted Subsidiary, directly or indirectly, to issue or sell, any shares of
Capital Stock of a Restricted Subsidiary (including options, warrants or other
rights to purchase shares of such Capital Stock) except (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, to the extent required by applicable law; (iii) if,
immediately after giving effect to such issuance or sale, such Restricted
Subsidiary would no longer constitute a Restricted Subsidiary and any Investment
in such Person remaining after giving effect to such
<PAGE>
57
issuance or sale would have been permitted to be made under Section 4.04 hereof
if made on the date of such issuance or sale; (iv) a pledge or hypothecation of
or Lien on any Capital Stock of a Subsidiary to the extent not prohibited under
Section 4.09 hereof; or (v) sales by the Company or Restricted Subsidiaries of
Common Stock of a Restricted Subsidiary, provided that the Company or such
Restricted Subsidiaries apply the Net Cash Proceeds, if any, of any such sale in
accordance with clause (A) or (B) of Section 4.11 hereof.
SECTION 4.07. Limitation on Issuances of Guarantees by Restricted
Subsidiaries. The Company will not permit any Restricted Subsidiary, directly or
indirectly, to Guarantee any Indebtedness of the Company which is pari passu
with or subordinate in right of payment to the Notes ("Guaranteed
Indebtedness"), unless (i) such Restricted Subsidiary simultaneously executes
and delivers a supplemental indenture to this Indenture providing for a
Guarantee (a "Subsidiary Guarantee") of payment of the Notes by such Restricted
Subsidiary 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 Subsidiary Guarantee; provided that this paragraph shall
not be applicable to any Guarantee of any Restricted Subsidiary that existed at
the time such Person became a Restricted Subsidiary and was not Incurred in
connection with, or in contemplation of, such Person becoming a Restricted
Subsidiary. If the Guaranteed Indebtedness is (A) pari passu with the Notes,
then the Guarantee of such Guaranteed Indebtedness shall be pari passu with, or
subordinated to, the Subsidiary Guarantee or (B) subordinated to the Notes, then
the Guarantee of such Guaranteed Indebtedness shall be subordinated to the
Subsidiary Guarantee at least to the extent that the Guaranteed Indebtedness is
subordinated to the Notes.
Notwithstanding the foregoing, any Subsidiary Guarantee by a
Restricted Subsidiary may provide by its terms that it shall 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 Capital Stock in, or all or substantially all
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 Subsidiary Guarantee, except a
discharge or release by or as a result of payment under such Guarantee.
SECTION 4.08. 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
(including, without limitation, the purchase, sale, lease or exchange of
property or assets, or the rendering of any service) with any 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,
except upon fair and
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58
reasonable terms no less favorable to the Company or such Restricted Subsidiary
than could be obtained, at the time of such transaction or, if such transaction
is pursuant to a written agreement, at the time of the execution of the
agreement providing therefor, in a comparable arm's-length transaction with a
Person that is not such a holder or an Affiliate.
The foregoing limitation does not limit, and shall not apply to:
(i) transactions (A) approved by a majority of the disinterested
members of the Board of Directors or (B) for which the Company or a
Restricted Subsidiary delivers to the Trustee a written opinion of a
nationally recognized investment banking firm stating that the transaction
is fair to the Company or such Restricted Subsidiary from a financial
point of view;
(ii) any transaction solely between the Company and any of its
Restricted Subsidiaries or solely between Restricted Subsidiaries;
(iii) the payment of reasonable and customary regular fees to
directors of the Company who are not employees of the Company;
(iv) any payments or other transactions pursuant to any tax-sharing
agreement between the Company and any other Person with which the Company
files a consolidated tax return or with which the Company is part of a
consolidated group for tax purposes;
(v) compensation, indemnification and other benefits paid or made
available to officers, directors and employees in the ordinary course of
business in connection with services actually rendered and consistent with
past practice;
(vi) transactions in accordance with the Existing Stockholder
Agreements as in effect on the Closing Date; or
(vii) any Restricted Payments not prohibited by Section 4.04 hereof.
Notwithstanding the foregoing, any transaction or series of related transactions
covered by the first paragraph of this Section 4.08 and not covered by clauses
(ii) through (v) of this paragraph, the aggregate amount of which exceeds $2
million in value, must be approved or determined to be fair in the manner
provided for in clause (i)(A) or (B) of this Section 4.08.
SECTION 4.09. Limitation on Liens. The Company will not, and will
not permit any Restricted Subsidiary to, create, incur, assume or suffer to
exist any Lien on any of its assets or properties of any character (including,
without limitation, licenses), or any shares
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59
of Capital Stock or Indebtedness of any Restricted Subsidiary, without making
effective provision for all of the Notes and all other amounts due under this
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.
The foregoing limitation does not apply to:
(i) Liens existing on the Closing Date;
(ii) Liens granted after the Closing Date on any assets or Capital
Stock of the Company or its Restricted Subsidiaries created in favor of
the Holders;
(iii) Liens with respect to the assets of a Restricted Subsidiary
granted by such Restricted Subsidiary to the Company or a Wholly Owned
Restricted Subsidiary to secure Indebtedness owing to the Company or such
other Restricted Subsidiary;
(iv) Liens securing Indebtedness permitted to be Incurred under
clause (iii) of the second paragraph of Section 4.03 hereof which is
Incurred to refinance secured Indebtedness; provided that such Liens do
not extend to or cover any property or assets of the Company or any
Restricted Subsidiary other than the property or assets securing the
Indebtedness being refinanced;
(v) Liens on the Capital Stock of, or any property or assets of, a
Restricted Subsidiary securing Indebtedness of such Restricted Subsidiary
permitted under Section 4.03 hereof;
(vi) Liens on the Capital Stock of Restricted Subsidiaries that own
a substantial portion of assets financed with Indebtedness Incurred under
clause (vii) of Section 4.03 hereof, if such liens secure only such
Indebtedness; or
(vii) Permitted Liens.
SECTION 4.10. Limitation on Sale-Leaseback Transactions. The Company
will not, and will not permit any Restricted Subsidiary to, enter into any
sale-leaseback transaction involving any of its assets or properties whether now
owned or hereafter acquired, whereby the Company or a Restricted Subsidiary
sells or transfers such assets or properties and then or thereafter leases such
assets or properties or any part thereof or any other assets or properties which
the Company or such Restricted Subsidiary, as the case may be, intends to use
for substantially the same purpose or purposes as the assets or properties sold
or transferred; provided that a sale-leaseback transaction shall not include any
lease in connection
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60
with which the Company or a Restricted Subsidiary acquires assets or property in
anticipation of the substantially contemporaneous sale or transfer to the lessor
under such lease.
The foregoing restriction does not apply to any sale-leaseback
transaction if:
(i) the lease is for a period, including renewal rights, of not in
excess of three years;
(ii) the lease secures or relates to industrial revenue or pollution
control bonds;
(iii) the transaction is solely between the Company and any
Restricted Subsidiary or solely between Restricted Subsidiaries; or
(iv) the Company or such Restricted Subsidiary, within 12 months
after the sale or transfer of any assets or properties is completed,
applies an amount not less than the net proceeds received from such sale
in accordance with clause (A) or (B) of the first paragraph of Section
4.11 hereof.
SECTION 4.11. Limitation on Asset Sales. The Company will not, and
will not permit any Restricted Subsidiary to, consummate any Asset Sale, unless
(i) the consideration received by the Company or such Restricted Subsidiary is
at least equal to the fair market value of the assets sold or disposed of and
(ii) at least 75% of the consideration received consists of cash or Temporary
Cash Investments. In the event and to the extent that the Net Cash Proceeds
received by the Company or any of its Restricted Subsidiaries from one or more
Asset Sales occurring on or after the Closing Date in any period of 12
consecutive months exceed 10% of Adjusted Consolidated Net Tangible Assets
(determined as of the date closest to the commencement of such 12-month period
for which a consolidated balance sheet of the Company and its Subsidiaries has
been filed with the Commission pursuant to Section 4.18 hereof, then the Company
shall or shall cause the relevant Restricted Subsidiary to (i) within 12 months
after the date Net Cash Proceeds so received exceed 10% of Adjusted Consolidated
Net Tangible Assets, (A) apply an amount equal to such excess Net Cash Proceeds
to permanently repay unsubordinated Indebtedness of the Company, or any
Restricted Subsidiary providing a Subsidiary Guarantee pursuant to Section 4.07
hereof or Indebtedness of any other Restricted Subsidiary, in each case owing to
a Person other than the Company or any of its Restricted Subsidiaries or (B)
invest an equal amount, or the amount not so applied pursuant to clause (A) (or
enter into a definitive agreement committing to so invest within 12 months after
the date of such agreement), either in property or assets (other than current
assets) of a nature or type or that are used in a business, or in a company
having property and assets of a nature or type, or engaged in a business, in
either case similar or related to the nature or type of the property and assets
of, or the business of, the Company or
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61
any of its Restricted Subsidiaries existing on the date of such investment (as
determined in good faith by the Board of Directors, whose determination shall be
conclusive and evidenced by a Board Resolution) and (ii) apply (no later than
the end of the 12-month period referred to in clause (i)) such excess Net Cash
Proceeds (to the extent not applied pursuant to clause (i)) as provided in the
following paragraph of this Section 4.11. The amount of such excess Net Cash
Proceeds required to be applied (or to be committed to be applied) during such
12-month period as set forth in clause (i) of the preceding sentence and not
applied as so required by the end of such period shall constitute "Excess
Proceeds."
If, as of the first day of any calendar month, the aggregate amount
of Excess Proceeds not theretofore subject to an Offer to Purchase pursuant to
this Section 4.11 totals at least $10 million, the Company must commence, not
later than the fifteenth Business Day of such month, and consummate an Offer to
Purchase from the Holders on a pro rata basis an aggregate principal amount of
Notes equal to the Excess Proceeds on such date, at a purchase price equal to
101% of the Accreted Value of the Notes on the relevant Payment Date, plus, in
each case, accrued interest (if any) to the Payment Date.
SECTION 4.12. Repurchase of Notes upon a Change of Control. The
Company must commence, within 30 days of the occurrence of a Change of Control,
and consummate an Offer to Purchase for all the Notes then outstanding, at a
purchase price equal to 101% of the Accreted Value of the Notes on the relevant
Payment Date, plus accrued interest (if any) to the Payment Date.
SECTION 4.13. Existence. Except as otherwise provided or permitted
in Articles Four and Five of this Indenture, the Company will do or cause to be
done all things necessary to preserve and keep in full force and effect its
existence and the existence of each of its Restricted Subsidiaries in accordance
with the respective organizational documents of the Company and each such
Subsidiary (as the same may be amended from time to time) and the rights
(whether pursuant to charter, partnership certificate, agreement, statute or
otherwise), material licenses and franchises of the Company and each such
Subsidiary; provided that the Company shall not be required to preserve any such
right, license or franchise, or the existence of any Restricted Subsidiary, if
the maintenance or preservation thereof is no longer desirable in the conduct of
the business of the Company and its Restricted Subsidiaries taken as a whole.
SECTION 4.14. Payment of Taxes and Other Claims. The Company will
pay or discharge and shall cause each of its Subsidiaries to 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
(a) the Company or any such Subsidiary, (b) the income or profits of any such
Subsidiary which is a corporation or (c) the property of the Company or any such
Subsidiary and (ii) all material lawful claims for labor, materials and
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62
supplies that, if unpaid, might by law become a Lien upon the property of the
Company or any such Subsidiary; provided 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 the amount, applicability or validity of which is
being contested in good faith by appropriate proceedings, for which adequate
reserves have been established.
SECTION 4.15. Maintenance of Properties and Insurance. The Company
will cause all properties used or useful in the conduct of its business or the
business of any of its Restricted Subsidiaries, to be maintained and kept in
good condition, repair and working order (ordinary wear and tear excepted) and
supplied with all necessary equipment and will cause to be made all necessary
repairs, renewals, replacements, betterments and improvements thereof, all as in
the judgment of the Company may be necessary so that the business carried on in
connection therewith may be properly and advantageously conducted at all times;
provided that nothing in this Section 4.15 shall prevent the Company or any such
Subsidiary 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 Company, desirable in the conduct of the business of the
Company or such Subsidiary.
The Company will provide or cause to be provided, for itself and its
Restricted Subsidiaries, insurance (including appropriate self-insurance)
against loss or damage of the kinds customarily insured against by corporations
similarly situated and owning like properties, with reputable insurers or with
the government of the United States of America, or an agency or instrumentality
thereof, in such amounts, with such deductibles and by such methods as shall be
customary for corporations similarly situated in the industry in which the
Company or such Restricted Subsidiary, as the case may be, is then conducting
business.
SECTION 4.16. Notice of Defaults. In the event that the Company
becomes aware of any Default or Event of Default, the Company, promptly after it
becomes aware thereof, will give written notice thereof to the Trustee.
SECTION 4.17. Compliance Certificates. The principal accounting
officer and the principal financial officer of the Company shall certify, on or
before a date not more than 90 days after the end of each fiscal year of the
Company, that a review has been conducted of the activities of the Company and
its Restricted Subsidiaries and the Company's and its Restricted Subsidiaries'
performance under this Indenture and that the Company has fulfilled all
obligations hereunder, 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 shall also notify the Trustee of any default or defaults in the
performance of any covenants or agreements under this Indenture. The Company
shall also comply with the other provisions of Section 314(a) of the TIA.
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SECTION 4.18. Commission Reports and Reports to Holders. At all
times from and after the earlier of (i) the date of the commencement of an
Exchange Offer or the effectiveness of a Shelf Registration Statement (the
"Registration") and (ii) the date that is six months after the Closing Date, in
either case, whether or not the Company is then required to file reports with
the Commission, the Company shall file with the Commission all such reports and
other information as it would be required to file with the Commission by
Sections 13(a) or 15(d) under the Securities Exchange Act of 1934 if it were
subject thereto. The Company shall supply the Trustee and each Holder or shall
supply to the Trustee for forwarding to each such Holder, without cost to such
Holder, copies of such reports and other information. In addition, at all times
prior to the earlier of the date of the Registration and the date that is six
months after the Closing Date, the Company shall, at its cost, deliver to each
Holder of the Notes quarterly and annual reports substantially equivalent to
those which would be required by the Exchange Act. In addition, at all times
prior to the Registration, upon the request of any Holder or any prospective
purchaser of the Notes designated by a Holder, the Company shall supply to such
Holder or such prospective purchaser the information required under Rule 144A
under the Securities Act.
Delivery of such reports, information and documents to the Trustee
is for informational purposes only and the Trustee's receipt of such shall not
constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Company's
compliance with any of its covenants hereunder (as to which the Trustee is
entitled to rely exclusively on Officers' Certificates).
SECTION 4.19. Waiver of Stay, Extension or Usury Laws. The Company
covenants (to the extent that it may lawfully do so) that it will not at any
time insist upon, or plead, or in any manner whatsoever claim or take the
benefit or advantage of, any stay 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, premium, if any, or interest on the Notes as contemplated herein,
wherever enacted, now or at any time hereafter in force, or that 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 4.20. Calculation of Original Issue Discount. The Company
shall file with the Trustee promptly at the end of each calendar year (i) a
written notice specifying the amount of original issue discount (including daily
rates and accrual periods) accrued on outstanding Notes as of the end of such
year and (ii) such other specific information relating to such original issue
discount as may then be relevant under the Internal Revenue Code of 1986, as
amended from time to time.
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ARTICLE FIVE
SUCCESSOR CORPORATION
SECTION 5.01. When Company May Merge, Etc. The Company shall 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 a series of related
transactions) to, any Person or permit any Person to merge with or into the
Company unless:
(i) the Company shall be the continuing Person, or the Person (if
other than the Company) formed by such consolidation or into which the
Company is merged or that acquired or leased such property and assets of
the Company shall be a corporation organized and validly existing under
the laws of the United States of America or any jurisdiction thereof and
shall expressly assume, by a supplemental indenture, executed and
delivered to the Trustee, all of the obligations of the Company on all of
the Notes and under this Indenture;
(ii) immediately after giving effect to such transaction, no Default
or Event of Default shall have occurred and be continuing;
(iii) immediately after giving effect to such transaction on a pro
forma basis, the Company or any Person becoming the successor obligor of
the Notes shall have a Consolidated Net Worth equal to or greater than the
Consolidated Net Worth of the Company immediately prior to such
transaction;
(iv) immediately after giving effect to such transaction on a pro
forma basis, the Company, or any Person becoming the successor obligor of
the 1998 Notes, as the case may be, could Incur at least $1.00 of
Indebtedness under the first paragraph of Section 4.03 hereof; provided
that this clause (iv) shall not apply to (x) a consolidation, merger or
sale of all (but not less than all) of the assets of the Company if all
Liens and Indebtedness of the Company or any Person becoming the successor
obligor on the Notes, as the case may be, and its Restricted Subsidiaries
outstanding immediately after such transaction would, if Incurred at such
time, have been permitted to be Incurred (and all such Liens and
Indebtedness, other than Liens and Indebtedness of the Company and its
Restricted Subsidiaries outstanding immediately prior to the transaction,
shall be deemed to have been Incurred) for all purposes of this Indenture
or (y) a consolidation, merger or sale of all or substantially all of the
assets of the Company if, 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
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Consolidated Leverage Ratio equal to or less than the Consolidated
Leverage Ratio of the Company immediately prior to such transaction; and
(v) the Company delivers to the Trustee an Officers' Certificate
(attaching the arithmetic computations to demonstrate compliance with
clauses (iii) and (iv) of this Section 5.01) and Opinion of Counsel, in
each case stating that such consolidation, merger or transfer and such
supplemental indenture complies with this provision and that all
conditions precedent provided for herein relating to such transaction have
been complied with;
provided, however, that clauses (iii) and (iv) of this Section 5.01 do not apply
if, in the good faith determination of the Board of Directors of the Company,
whose determination shall be evidenced by a Board Resolution, the principal
purpose of such transaction is to change the state of incorporation of the
Company; and provided further that any such transaction shall not have as one of
its purposes the evasion of the foregoing limitations.
SECTION 5.02. Successor Substituted. Upon any consolidation or
merger, or any sale, conveyance, transfer or other disposition of all or
substantially all of the property and assets of the Company in accordance with
Section 5.01 of this Indenture, the successor Person formed by such
consolidation or into which the Company is merged or to which such sale,
conveyance, transfer or other disposition is made shall succeed to, and be
substituted for, and may exercise every right and power of, the Company under
this Indenture with the same effect as if such successor Person had been named
as the Company herein.
ARTICLE SIX
DEFAULT AND REMEDIES
SECTION 6.01. Events of Default. An "Event of Default" shall occur
with respect to the Notes if:
(a) the Company defaults 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;
(b) the Company defaults in the payment of interest on any Note when
the same becomes due and payable, and such default continues for a period
of 30 days;
(c) the Company defaults in the performance or breach of the
provisions of Article Five hereof or fails to make or consummate an Offer
to Purchase in accordance with Section 4.11 or Section 4.12 hereof;
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(d) the Company defaults in the performance of or breaches any other
covenant or agreement of the Company in this Indenture or under the Notes
(other than a default specified in clause (a), (b) or (c) of this Section
6.01) 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 at maturity of the Notes;
(e) there occurs with respect to any issue or issues of Indebtedness
of the Company or any Significant Subsidiary having an outstanding
principal amount of $10 million or more in the aggregate for all such
issues of all such Persons, whether such Indebtedness now exists or shall
hereafter be created, (I) an event of default that has caused the holder
thereof to declare such Indebtedness to be due and payable prior to its
Stated Maturity and such Indebtedness has not been discharged in full or
such acceleration has not been rescinded or annulled within 30 days of
such acceleration and/or (II) the failure to make a principal payment at
the final (but not any interim) fixed maturity and such defaulted payment
shall not have been made, waived or extended within 30 days of such
payment default;
(f) any final judgment or order (not covered by insurance) for the
payment of money in excess of $10 million in the aggregate for all such
final judgments or orders against all such Persons (treating any
deductibles, self-insurance or retention as not so covered) shall be
rendered against the Company or any Significant Subsidiary and shall not
be paid or discharged, and there shall be any period of 60 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 or discharged against all such Persons to exceed $10 million
during which a stay of enforcement of such final judgment or order, by
reason of a pending appeal or otherwise, shall not be in effect;
(g) a court having jurisdiction in the premises enters a decree or
order for (A) relief in respect of the Company or any Significant
Subsidiary 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 Significant
Subsidiary or for all or substantially all of the property and assets of
the Company or any Significant Subsidiary or (C) the winding up or
liquidation of the affairs of the Company or any Significant Subsidiary
and, in each case, such decree or order shall remain unstayed and in
effect for a period of 60 consecutive days; or
(h) the Company or any Significant Subsidiary (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,
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liquidator, assignee, custodian, trustee, sequestrator or similar official
of the Company or any Significant Subsidiary or for all or substantially
all of the property and assets of the Company or any Significant
Subsidiary or (C) effects any general assignment for the benefit of
creditors.
SECTION 6.02. Acceleration. If an Event of Default (other than an
Event of Default specified in clause (g) or (h) of Section 6.01 that occurs with
respect to the Company) occurs and is continuing under this Indenture, the
Trustee or the Holders of at least 25% in aggregate principal amount at maturity
of the Notes then outstanding, by written notice to the Company (and to the
Trustee if such notice is given by the Holders), may, and the Trustee at the
request of such Holders shall, declare the Accreted Value, of, premium, if any,
and accrued interest on the Notes to be immediately due and payable. Upon a
declaration of acceleration, such Accreted Value of premium, if any, and accrued
interest shall be immediately due and payable. In the event of a declaration of
acceleration because an Event of Default set forth in clause (e) of Section 6.01
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 (e) shall be remedied or cured by the
Company or the relevant Significant Subsidiary 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 clause (g) or (h) of
Section 6.01 occurs with respect to the Company, Accreted Value of premium, if
any, and accrued interest 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 Holders of at least a majority in principal amount at maturity
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, and interest 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.
SECTION 6.03. 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, premium, if any, or interest
on the Notes or to enforce the performance of any provision of the Notes or this
Indenture.
The Trustee may maintain a proceeding even if it does not possess
any of the Notes or does not produce any of them in the proceeding.
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SECTION 6.04. Waiver of Past Defaults. Subject to Section 9.02, at
any time after such a declaration of acceleration, but before a judgment or
decree for the payment of the money due has been obtained by the Trustee, the
Holders of at least a majority in aggregate principal amount at maturity 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 (except a Default in the payment of principal of, premium, if any,
or interest on any Note as specified in clause (a) or (b) of Section 6.01 (but
not as a result of such acceleration) or in respect of a covenant or provision
of this Indenture which cannot be modified or amended without the consent of the
Holder of each outstanding Note affected) if (i) all existing Events of Default,
other than the nonpayment of the Accreted Value of, premium, if any, and
interest 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. Upon
any such waiver, such Default shall cease to exist, and any Event of Default
arising therefrom shall be deemed to have been cured, for every purpose of this
Indenture; but no such waiver shall extend to any subsequent or other Default or
Event of Default or impair any right consequent thereto.
SECTION 6.05. Control by Majority. The Holders of at least a
majority in aggregate principal amount at maturity of the outstanding Notes may
direct the time, method and place of conducting any proceeding for any remedy
available to the Trustee or exercising any trust or power conferred on the
Trustee. However, the Trustee may refuse to follow any direction that conflicts
with law or this Indenture, that may involve the Trustee in personal liability,
or that the Trustee determines in good faith may be unduly prejudicial to the
rights of Holders of the Notes, not joining in the giving of such direction and
may take any other action it deems proper that is not inconsistent with any such
direction received from Holders of the Notes.
SECTION 6.06. Limitation on Suits. A Holder may not pursue any
remedy with respect to this Indenture or the Notes unless:
(i) the Holder gives the Trustee written notice of a continuing
Event of Default;
(ii) the Holders of at least 25% in aggregate principal amount at
maturity of outstanding Notes make a written request to the Trustee to
pursue the remedy;
(iii) such Holder or Holders offer the Trustee indemnity
satisfactory to the Trustee against any costs, liability or expense;
(iv) the Trustee does not comply with the request within 60 days
after receipt of the request and the offer of indemnity; and
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(v) during such 60-day period, the Holders of a majority in
aggregate principal amount at maturity of the outstanding Notes do not
give the Trustee a direction that is inconsistent with the request.
For purposes of Section 6.05 of this Indenture and this Section
6.06, the Trustee shall comply with TIA Section 316(a) in making any
determination of whether the Holders of the required aggregate principal amount
at maturity of outstanding Notes have concurred in any request or direction of
the Trustee to pursue any remedy available to the Trustee or the Holders with
respect to this Indenture or the Notes or otherwise under the law.
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 6.07. Rights of Holders to Receive Payment. Notwithstanding
any other provision of this Indenture, the right of any Holder of a Note to
receive payment of principal of, premium, if any, or interest on such Holder's
Note on or after the respective due dates expressed on 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 6.08. Collection Suit by Trustee. If an Event of Default in
payment of principal, premium or interest specified in clause (a) or (b) of
Section 6.01 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 of the Notes for the whole amount of principal, premium, if any, and
accrued interest remaining unpaid, together with interest on overdue principal,
premium, if any, and, to the extent that payment of such interest is lawful,
interest on overdue installments of interest, in each case at the rate specified
in 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 7.07 hereof.
SECTION 6.09. 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, and any other amounts due the Trustee under
Section 7.07) and the Holders allowed in any judicial proceedings relative to
the Company (or any other obligor of the Notes), its creditors or its property
and shall be entitled and empowered to collect and receive any monies,
securities or other property payable or deliverable upon conversion or exchange
of the Notes or upon any such claims and to distribute the same, and any
custodian, receiver, assignee, trustee, liquidator, sequestrator or other
similar official in any such judicial proceeding is hereby authorized by each
Holder to
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make such payments to the Trustee and, in the event that the Trustee shall
consent to the making of such payments directly to the Holders, to pay to the
Trustee any amount due to it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agent and counsel, and any other
amounts due the Trustee under Section 7.07. Nothing herein contained shall be
deemed to empower the Trustee to authorize or consent to, or accept or adopt on
behalf of any Holder, any plan of reorganization, arrangement, adjustment or
composition affecting the Notes or the rights of any Holder thereof, or to
authorize the Trustee to vote in respect of the claim of any Holder in any such
proceeding.
SECTION 6.10. Priorities. If the Trustee collects any money pursuant
to this Article Six, it shall pay out the money in the following order:
First: to the Trustee for all amounts due under Section 7.07;
Second: to Holders for amounts then due and unpaid for principal of,
premium, if any, and interest on the Notes in respect of which or for the
benefit of which such money has been collected, ratably, without
preference or priority of any kind, according to the amounts due and
payable on such Notes for principal, premium, if any, and interest,
respectively; and
Third: to the Company, as its interests may appear.
The Trustee, upon prior written notice to the Company, may fix a
record date and payment date for any payment to Holders pursuant to this Section
6.10.
SECTION 6.11. 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 may require any party
litigant in such suit to file an undertaking to pay the costs of the suit, and
the court 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 6.11 does not apply to a suit by the Trustee, a suit by a Holder
pursuant to Section 6.07 of this Indenture, or a suit by Holders of more than
10% in principal amount at maturity of the outstanding Notes.
SECTION 6.12. Restoration of Rights and Remedies. If the Trustee or
any Holder has instituted any proceeding to enforce any right or remedy under
this Indenture and such proceeding has been discontinued or abandoned for any
reason, or has been determined adversely to the Trustee or to such Holder, then,
and in every such case, subject to any determination in such proceeding, the
Company, the Trustee and the Holders shall be restored severally and
respectively to their former positions hereunder and thereafter all rights and
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remedies of the Company, the Trustee and the Holders shall continue as though no
such proceeding had been instituted.
SECTION 6.13. Rights and Remedies Cumulative. Except as otherwise
provided with respect to the replacement or payment of mutilated, destroyed,
lost or wrongfully taken Notes in Section 2.09, no right or remedy herein
conferred upon or reserved to the Trustee or to the Holders is intended to be
exclusive of any other right or remedy, and every right and remedy shall, to the
extent permitted by law, be cumulative and in addition to every other right and
remedy given hereunder or now or hereafter existing at law or in equity or
otherwise. The assertion or employment of any right or remedy hereunder, or
otherwise, shall not prevent the concurrent assertion or employment of any other
appropriate right or remedy.
SECTION 6.14. Delay or Omission Not Waiver. No delay or omission of
the Trustee or of any Holder 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 Six or by law to the Trustee or to the Holders may be
exercised from time to time, and as often as may be deemed expedient, by the
Trustee or by the Holders, as the case may be.
ARTICLE SEVEN
TRUSTEE
SECTION 7.01. General. The duties and responsibilities of the
Trustee shall be as provided by the TIA and as set forth herein. Notwithstanding
the foregoing, no provision of this Indenture shall require the Trustee to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder, or in the exercise of any of its
rights or powers. Whether or not therein expressly so provided, every provision
of this Indenture relating to the conduct or affecting the liability of or
affording protection to the Trustee shall be subject to the provisions of this
Article Seven.
SECTION 7.02. Certain Rights of Trustee. Subject to TIA Sections
315(a) through (d):
(i) the Trustee may conclusively rely and shall be protected in
acting or refraining from acting upon any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction,
consent, order, bond, debenture, note, other evidence of indebtedness or
other paper or document (whether in its original or facsimile form)
believed by it to be genuine and to have been signed or presented by the
proper person. The Trustee need not investigate any fact or matter stated
in the document and may in
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good faith conclusively rely as to the truth of the statements and the
correctness of the opinions therein;
(ii) before the Trustee acts or refrains from acting, it may require
an Officers' Certificate or an Opinion of Counsel, which shall conform to
Section 10.04. The Trustee shall not be liable for any action it takes or
omits to take in good faith in reliance on such certificate, opinion
and/or an accountants' certificate if required under the TIA;
(iii) the Trustee may act through its attorneys and agents and shall
not be responsible for the misconduct or negligence of any agent appointed
with due care;
(iv) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or
direction of any of the Holders, unless such Holders shall have offered to
the Trustee security or indemnity reasonably satisfactory to it against
the costs, expenses and liabilities that might be incurred by it in
compliance with such request or direction;
(v) the Trustee shall not be liable for any action it takes or omits
to take in good faith that it believes to be authorized or within its
rights or powers or for any action it takes or omits to take in accordance
with the direction of the Holders of a majority in principal amount at
maturity of the outstanding Notes relating to the time, method and place
of conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred upon the Trustee, under this
Indenture; provided that the Trustee's conduct does not constitute
negligence or bad faith;
(vi) whenever in the administration of this Indenture the Trustee
shall deem it desirable that a matter be proved or established prior to
taking, suffering or omitting any action hereunder, the Trustee (unless
other evidence be herein specifically prescribed) may, in the absence of
bad faith on its part, rely upon an Officers' Certificate;
(vii) the Trustee shall not be bound to make any investigation into
the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note, other evidence of indebtedness or other paper or
document, but the Trustee, in its discretion, may make such further
inquiry or investigation into such facts or matters as it may see fit,
and, if the Trustee shall determine to make such further inquiry or
investigation, it shall be entitled at the sole cost of the Company to
examine the books, records and premises of
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the Company personally or by agent or attorney and shall incur no
liability or additional liability of any kind by reason of such inquiry or
investigation;
(viii) The Trustee shall not be charged with knowledge of any
Default or Event of Default, of the identity of any Restricted Subsidiary
or of the existence of any Change of Control or Asset Sale unless either
(i) a Responsible Officer shall have actual knowledge thereof, or (ii) the
Trustee shall have received written notice thereof from the Company or any
Holder of the Notes; and
(ix) The Trustee may consult with counsel of its selection and the
advice of such counsel or any Opinion of Counsel shall be full and
complete authorization and protection in respect of any action taken,
suffered or omitted by it hereunder in good faith and in reliance thereon.
SECTION 7.03. 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 or its Affiliates with the same rights it
would have if it were not the Trustee. Any Agent may do the same with like
rights. However, the Trustee is subject to TIA Sections 310(b) and 311.
SECTION 7.04. Trustee's Disclaimer. The Trustee (i) makes no
representation as to the validity or adequacy of this Indenture or the Notes,
(ii) shall not be accountable for the Company's use or application of the
proceeds from the Notes and (iii) shall not be responsible for any statement in
the Notes other than its certificate of authentication.
SECTION 7.05. Notice of Default. If any Default or any Event of
Default occurs and is continuing and if such Default or Event of Default is
known to a Responsible Officer of the Trustee, the Trustee shall mail to each
Holder in the manner and to the extent provided in TIA Section 313(c) notice of
the Default or Event of Default within 90 days after it occurs, unless such
Default or Event of Default has been cured; provided, however, that, except in
the case of a default in the payment of the principal of, premium, if any, or
interest on any Note, the Trustee shall be protected in withholding such notice
if and so long as the board of directors, the executive committee or a trust
committee of directors and/or Responsible Officers of the Trustee in good faith
determine that the withholding of such notice is in the interest of the Holders.
If an Event of Default has occurred and is continuing, the Trustee shall use the
same degree of care and skill in its exercise of the rights and powers invested
in it under this Indenture as a prudent person would exercise under the
circumstances in the conduct of such person's own affairs.
SECTION 7.06. Reports by Trustee to Holders. Within 60 days after
each November 15, beginning with November 15, 1998, the Trustee shall mail to
each Holder as
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provided in TIA Section 313(c) a brief report that complies with TIA Section
313(a) dated as of such November 15, if required by TIA Section 313(a).
SECTION 7.07. Compensation and Indemnity. The Company shall pay to
the Trustee such compensation as shall be agreed upon from time to time in
writing for its services. The compensation of the Trustee 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 out-of-pocket expenses and
advances incurred or made by the Trustee. Such expenses shall include the
reasonable compensation and expenses of the Trustee's agents and counsel.
The Company shall indemnify each of the Trustee and any predecessor
Trustee for, and hold it harmless against, any and all loss, claim, damage or
liability or expense (including taxes other than taxes based upon the income of
the Trustee) incurred by it without negligence or bad faith on its part in
connection with the acceptance or administration of this Indenture and its
duties under this Indenture and the Notes, including the costs and expenses of
defending itself against any claim or liability and of complying with any
process served upon it or any of its officers in connection with the exercise or
performance of any of its powers or duties under this Indenture and the Notes.
The Trustee shall notify the Company promptly of any claim asserted against the
Trustee for which it may seek indemnity. The Company shall defend the claim and
the Trustee shall provide reasonable cooperation at the Company's expense in the
defense. The Trustee may have separate counsel of its selection and the Company
shall pay the reasonable fees and expenses of such counsel; provided in Senior
DM Indenture also that the Company will not be required to pay such fees and
expenses if it assumes the Trustee's defense and there is no conflict of
interest between the Company and the Trustee in connection with such defense.
The Company need not pay for any settlement made without its written consent.
To secure the Company's payment obligations in this Section 7.07,
the Trustee shall have a lien prior to the Notes on all money or property held
or collected by the Trustee, in its capacity as Trustee, except money or
property held in trust to pay principal of, premium, if any, and interest on
particular Notes.
If the Trustee incurs expenses or renders services after the
occurrence of an Event of Default specified in clause (h) or (i) of Section
6.01, the expenses and the compensation for the services will be intended to
constitute expenses of administration under Title 11 of the United States
Bankruptcy Code or any applicable federal or state law for the relief of
debtors.
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The rights, privileges, protections and benefits given to the Trustee,
including, without limitation, its rights to be indemnified, are extended to,
and shall be enforceable by, the Trustee in each of its capacities hereunder.
The provisions of this Section 7.07 shall survive the resignation or
removal of the Trustee and the defeasance or other termination of this
Indenture.
SECTION 7.08. Replacement of Trustee. 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 7.08.
The Trustee may resign at any time by so notifying the Company in
writing at least 30 days prior to the date of the proposed resignation. The
Holders of a majority in principal amount at maturity of the outstanding Notes
may remove the Trustee by so notifying the Trustee in writing and may appoint a
successor Trustee with the consent of the Company. The Company may at any time
remove the Trustee, by Company Order given at least 30 days prior to the date of
the proposed removal; provided that at such date no Event of Default shall have
occurred and be continuing.
If the Trustee resigns or is removed, or if a vacancy exists in the
office of Trustee for any reason, the Company shall promptly appoint a successor
Trustee. Within one year after the successor Trustee takes office, the Holders
of a majority in principal amount at maturity of the outstanding Notes may
appoint a successor Trustee to replace the successor Trustee appointed by the
Company. If the successor Trustee does not deliver its written acceptance
required by the next succeeding paragraph of this Section 7.08 within 30 days
after the retiring Trustee resigns or is removed, the retiring Trustee, the
Company or the Holders of a majority in principal amount at maturity of the
outstanding Notes may petition at the expense of the Company any court of
competent jurisdiction for the appointment of a successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Immediately after the
delivery of such written acceptance, subject to the lien provided in Section
7.07, (i) the retiring Trustee shall transfer all property held by it as Trustee
to the successor Trustee, (ii) the resignation or removal of the retiring
Trustee shall become effective and (iii) 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 the Trustee is no longer eligible under Section 7.10, any Holder
who satisfies the requirements of TIA Section 310(b) may petition any court of
competent jurisdiction for the removal of the Trustee and the appointment of a
successor Trustee.
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The Company shall give notice of any resignation and any removal of
the Trustee and each appointment of a successor Trustee to all Holders. Each
notice shall include the name of the successor Trustee and the address of its
Corporate Trust Office.
SECTION 7.09. 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 national banking
association, the resulting, surviving or transferee corporation or national
banking association without any further act shall be the successor Trustee with
the same effect as if the successor Trustee had been named as the Trustee
herein.
SECTION 7.10. Eligibility. This Indenture shall always have a
Trustee who satisfies the requirements of TIA Sections 310(a)(1) and 310(a)(5).
The Trustee shall have a combined capital and surplus of at least $50,000,000 as
set forth in its most recent published annual report of condition.
SECTION 7.11. Money Held in Trust. The Trustee shall not be liable
for interest on any money received by it except as the Trustee may agree with
the Company in writing. Money held in trust by the Trustee need not be
segregated from other funds except to the extent required by law and except for
money held in trust under Article Eight of this Indenture.
SECTION 7.12. Withholding Taxes. The Trustee, as agent for the
Company, shall exclude and withhold from each payment of principal and interest
and other amounts due hereunder or under the Notes any and all withholding taxes
applicable thereto as required by law. The Trustee agrees to act as such
withholding agent and, in connection therewith, whenever any present or future
taxes or similar charges are required to be withheld with respect to any amounts
payable in respect of the Notes, to withhold such amounts and timely pay the
same to the appropriate authority in the name of and on behalf of the Holders of
the Notes, that it will file any necessary withholding tax returns or statements
when due, and that, as promptly as possible after the payment thereof, it will
deliver to each Holder of a Note appropriate documentation showing the payment
thereof, together with such additional documentary evidence as such Holders may
reasonably request from time to time.
ARTICLE EIGHT
DISCHARGE OF INDENTURE
SECTION 8.01. Termination of the Company's Obligations. Except as
otherwise provided in this Section 8.01, the Company may terminate its
obligations under the Notes and this Indenture if:
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(i) all Notes previously authenticated and delivered (other than
destroyed, lost or stolen Notes that have been replaced or Notes that are
paid pursuant to Section 4.01 or Notes for whose payment money or
securities have theretofore been held in trust and thereafter repaid to
the Company, as provided in Section 8.05) have been delivered to the
Trustee for cancellation and the Company has paid all sums payable by it
hereunder; or
(ii) (A) all the Notes mature within one year or all of them are to
be called for redemption within one year under arrangements satisfactory
to the Trustee for giving the notice of redemption, (B) the Company
deposits in trust with the Trustee during such one-year period, under the
terms of an irrevocable trust agreement in form and substance satisfactory
to the Trustee, as trust funds solely for the benefit of the Holders for
that purpose, money or Federal Republic of Germany Obligations sufficient
to pay principal, premium, if, any, and interest on the Notes to maturity
or redemption, as the case may be, and to pay all other sums payable by it
hereunder, (C) no Default or Event of Default with respect to the Notes
shall have occurred and be continuing on the date of such deposit, (D)
such deposit will not result in a breach or violation of, or constitute a
default under, this Indenture or any other agreement or instrument to
which the Company is a party or by which it is bound, (E) if at such time
the Notes are listed on a national securities exchange, the Notes will not
be delisted as a result of such deposit, defeasance or discharge and (F)
the Company has delivered to the Trustee an Officers' Certificate and an
Opinion of Counsel, in each case stating that all conditions precedent
provided for herein relating to the satisfaction and discharge of this
Indenture have been complied with.
With respect to the foregoing clause (i), the Company's obligations
under Section 7.07 shall survive. With respect to the foregoing clause (ii), the
Company's obligations in Sections 2.02, 2.03, 2.04, 2.05, 2.06, 2.07, 2.08,
2.09, 2.14, 4.01, 4.02, 7.07, 7.08, 8.04, 8.05 and 8.06 shall survive until the
Notes are no longer outstanding. Thereafter, only the Company's obligations in
Sections 7.07, 8.05 and 8.06 shall survive. After any such irrevocable deposit,
the Trustee upon request shall acknowledge in writing the discharge of the
Company's obligations, as the case may be, under the Notes and this Indenture
except for those surviving obligations specified above.
SECTION 8.02. Defeasance and Discharge of Indenture. The Company
will be deemed to have paid and will be discharged from any and all obligations
in respect of the Notes on the 123rd day after the deposit referred to below,
and the provisions of this Indenture will no longer be in effect with respect to
the Notes if:
(A) the Company has deposited with the Trustee, in trust, money
and/or Federal Republic of Germany Obligations that through the payment of
interest and
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principal in respect thereof in accordance with their terms will provide
money in an amount sufficient to pay the principal of, premium, if any,
and accrued interest on the Notes on the Stated Maturity of such payments
in accordance with the terms of this Indenture and the Notes;
(B) the Company has delivered to the Trustee (i) either (x) an
Opinion of Counsel to the effect that Holders will not recognize income,
gain or loss for federal income tax purposes as a result of the Company's
exercise of its option under this Section 8.02 and will be subject to
federal income tax on the same amount and in the same manner and at the
same times as would have been the case if such deposit, defeasance and
discharge had not occurred, which Opinion of Counsel must be based upon
(and accompanied by a copy of) a ruling of the Internal Revenue Service to
the same effect unless there has been a change in applicable federal
income tax law after the Closing Date such that a ruling is no longer
required or (y) a ruling directed to the Trustee received from the
Internal Revenue Service to the same effect as the aforementioned Opinion
of Counsel and (ii) an Opinion of Counsel to the effect that the creation
of the defeasance trust does not violate the Investment Company Act of
1940 and after the passage of 123 days following the deposit, the trust
fund will not be subject to the effect of Section 547 of the United States
Bankruptcy Code or Section 15 of the New York Debtor and Creditor Law;
(C) immediately after giving effect to such deposit on a pro forma
basis, no Event of Default, or event that after the giving of notice or
lapse of time or both would become an Event of Default, shall have
occurred and be continuing on the date of such deposit or during the
period ending on the 123rd day after the date of such deposit, and such
deposit shall not result in a breach or violation of, or constitute a
default under, any other agreement or instrument to which the Company or
any of its Subsidiaries is a party or by which the Company or any of its
Subsidiaries is bound; and
(D) if at such time the Notes are listed on a national securities
exchange, the Company has delivered to the Trustee an Opinion of Counsel
to the effect that the Notes will not be delisted as a result of such
deposit, defeasance and discharge.
Notwithstanding the foregoing, prior to the end of the 123-day
period referred to in clause (B)(ii) of this Section 8.02, none of the Company's
obligations under this Indenture shall be discharged. Subsequent to the end of
such 123-day period with respect to this Section 8.02, the Company's obligations
in Sections 2.02, 2.03, 2.04, 2.05, 2.06, 2.07, 2.08, 2.09, 2.14, 4.01, 4.02,
4.17, 7.07, 7.08, 8.05 and 8.06 shall survive until the Notes are no longer
outstanding. Thereafter, only the Company's obligations in Sections 7.07, 8.05
and 8.06 shall survive. If and when a ruling from the Internal Revenue Service
or an Opinion of Counsel referred to in clause (B)(i) of this Section 8.02 may
be provided specifically without
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regard to, and not in reliance upon, the continuance of the Company's
obligations under Section 4.01, then the Company's obligations under such
Section 4.01 shall cease upon delivery to the Trustee of such ruling or Opinion
of Counsel and compliance with the other conditions precedent provided for
herein relating to the defeasance contemplated by this Section 8.02.
After the 123 day period referred to in clause (B)(ii) of this
Section 8.02, the Trustee upon Company Order shall acknowledge in writing the
discharge of the Company's obligations under the Notes and this Indenture except
for those surviving obligations in the immediately preceding paragraph.
SECTION 8.03. Defeasance of Certain Obligations. The Company may
omit to comply with any term, provision or condition set forth in clauses (iii)
and (iv) of Section 5.01 and Sections 4.03 through 4.11, and clause (c) of
Section 6.01 with respect to clauses (iii) and (iv) of Section 5.01 and clause
(d) of Section 6.01 with respect to Sections 4.01, 4.02 and 4.12 through 4.19,
and clauses (e), (f) and (g) of Section 6.01 shall be deemed not to be Events of
Default, upon:
(a) the deposit, in trust, with the Trustee (or another trustee
satisfying the requirements of Section 7.10 hereof) of money and/or
Federal Republic of Germany Obligations that, through the payment of
interest and principal in respect thereof in accordance with their terms,
will in the opinion of a nationally recognized firm of independent public
accountants expressed in a written certification thereof delivered to the
Trustee, provide money in an amount sufficient to pay the principal of,
premium, if any, and accrued interest on the Notes on the Stated Maturity
of such payments in accordance with the terms of this Indenture and the
Notes;
(b) the satisfaction of the provisions described in clauses B(ii),
(C) and (D) of Section 8.02 hereof;
(c) delivery by the Company to the Trustee of an Opinion of Counsel
to the effect that, the Holders will not recognize income, gain or loss
for federal income tax purposes as a result of such deposit and defeasance
and will be subject to federal income tax on the same amount and in the
same manner and at the same times as would have been the case if such
deposit and defeasance had not occurred; and
(d) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, in each case stating that all
conditions precedent provided for herein relating to the defeasance
contemplated by this Section 8.03 have been complied with.
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SECTION 8.04. Application of Trust Money. Subject to Section 8.06,
the Trustee or Paying Agent shall hold in trust money or Federal Republic of
Germany Obligations deposited with it pursuant to Section 8.01, 8.02 or 8.03, as
the case may be, and shall apply the deposited money and the money from Federal
Republic of Germany Obligations in accordance with the Notes and this Indenture
to the payment of principal of, premium, if any, and interest on the Notes; but
such money need not be segregated from other funds except to the extent required
by law.
SECTION 8.05. Repayment to Company. Subject to Sections 7.07, 8.01,
8.02 and 8.03, the Trustee and the Paying Agent shall promptly pay to the
Company any excess money, as determined by a nationally recognized firm of
independent public accountants expressed in a written certification thereof
delivered to the Trustee, and held by them at any time and thereupon shall be
relieved from all liability with respect to such money. The Trustee and the
Paying Agent shall pay to the Company upon request any money held by them for
the payment of principal, premium, if any, or interest that remains unclaimed
for two years; provided that the Trustee or such Paying Agent before being
required to make any payment may cause to be published at the expense of the
Company once in a newspaper of general circulation in the City of New York or
mail to each Holder entitled to such money at such Holder's address (as set
forth in the Note Register) notice that such money remains unclaimed; provided
that the Trustee or such Paying Agent before being required to make any payment
may give notice in accordance with Section 10.02(b) that such money remains
unclaimed and that after a date specified therein (which shall be at least 30
days from the date of such publication or mailing) any unclaimed balance of such
money then remaining will be repaid to the Company. After payment to the
Company, Holders entitled to such money must look to the Company for payment as
general creditors unless an applicable law designates another Person, and all
liability of the Trustee and such Paying Agent with respect to such money shall
cease.
SECTION 8.06. Reinstatement. If the Trustee or Paying Agent is
unable to apply any money or Federal Republic of Germany Obligations in
accordance with Section 8.01, 8.02 or 8.03, as the case may be, 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
8.01, 8.02 or 8.03, as the case may be, until such time as the Trustee or Paying
Agent is permitted to apply all such money or Federal Republic of Germany
Obligations in accordance with Section 8.01, 8.02 or 8.03, as the case may be;
provided that, if the Company has made any payment of principal of, premium, if
any, or interest on 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 Federal Republic of Germany Obligations
held by the Trustee or Paying Agent.
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SECTION 8.07. Defeasance and Certain Other Events of Default. In the
event the Company exercises its option to omit compliance with certain covenants
and provisions of this Indenture with respect to the Notes pursuant to Section
8.03 and such Notes are declared due and payable because of the occurrence of an
Event of Default that remains applicable, the amount of money and/or Federal
Republic of Germany Obligations on deposit with the Trustee will be sufficient
to pay amounts due on such Notes at the time of their Stated Maturity. If, in
the event the Company exercises its option to omit compliance with certain
covenants and provisions of this Indenture with respect to the Notes pursuant to
Section 8.03 and such Notes are declared due and payable because of the
occurrence of an Event of Default that remains applicable, the amount of money
and/or Federal Republic of Germany Obligations on deposit with the Trustee is
insufficient to pay amounts due on the Notes at the time of the acceleration
resulting from such Events of Default pursuant to Section 6.02, the Company will
remain liable for such payments.
ARTICLE NINE
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 9.01. Without Consent of Holders. The Company, when
authorized by resolutions of its Board of Directors (as evidenced by a Board
Resolution), and the Trustee may amend or supplement this Indenture or the Notes
without notice to, or the consent of, any Holder:
(i) to cure any ambiguity, defect or inconsistency in this
Indenture; provided that, in the good faith opinion of the Board of
Directors of the Company evidenced by a Board Resolution, such amendments
or supplements do not adversely affect the interests of the Holders in any
material respect;
(ii) to comply with Article Five;
(iii) to comply with any requirements of the Commission in
connection with the qualification of this Indenture under the TIA;
(iv) to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee;
(v) to make any change that, in the good faith opinion of the Board
of Directors of the Company evidenced by a Board Resolution, does not
materially and adversely affect the rights of any Holder; or
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(vi) to facilitate the introduction of the Euro and the exchange of
the Notes for the Euro-denominated Notes in a manner not adverse to the
holders of the Notes.
SECTION 9.02. With Consent of Holders. Subject to Sections 6.04 and
6.07 and without prior notice to the Holders, the Company, when authorized by
its Board of Directors (as evidenced by a Board Resolution), and the Trustee may
amend this Indenture and the Notes with the written consent of the Holders of a
majority in aggregate principal amount at maturity of the Notes then
outstanding, and the Holders of a majority in principal amount at maturity of
the Notes then outstanding by written notice to the Trustee may waive aggregate
compliance by the Company with any provision of this Indenture or the Notes.
Notwithstanding the provisions of this Section 9.02, without the
consent of each Holder affected thereby, an amendment or waiver, including a
waiver pursuant to Section 6.04, may not:
(i) change the Stated Maturity of the principal of, or any
installment of interest on, any Note;
(ii) reduce the principal amount of, or premium, if any, or interest
on, any Note;
(iii) change the place or currency of payment of principal of, or
premium, if any, or interest on, any Note;
(iv) impair the right to institute suit for the enforcement of any
payment on or after the Stated Maturity (or, in the case of a redemption,
on or after the Redemption Date) of any Note;
(v) reduce the above-stated percentage of outstanding Notes, the
consent of whose Holders is necessary to modify or amend this Indenture;
(vi) waive a default in the payment of principal of, premium, if
any, or interest on the Notes; or
(vii) reduce the percentage or aggregate principal amount at
maturity of outstanding Notes the consent of whose Holders is necessary
for waiver of compliance with certain provisions of this Indenture or for
waiver of certain defaults.
It shall not be necessary for the consent of the Holders under this
Section 9.02 to approve the particular form of any proposed amendment,
supplement or waiver, but it shall be sufficient if such consent approves the
substance thereof.
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After an amendment, supplement or waiver under this Section 9.02
becomes effective, the Trustee shall mail to the Holders affected thereby a
notice briefly describing the amendment, supplement or waiver. The Company will
mail supplemental indentures to Holders upon request. 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 supplemental indenture or waiver.
SECTION 9.03. Revocation and Effect of Consent. Until an amendment
or waiver becomes effective, a consent to it by a Holder is a continuing consent
by the Holder and every subsequent Holder of a Note or portion of a Note that
evidences the same debt as the Note of the consenting Holder, even if notation
of the consent is not made on any Note. However, any such Holder or subsequent
Holder may revoke the consent as to its Note or portion of its Note. Such
revocation shall be effective only if the Trustee receives the notice of
revocation before the date the amendment, supplement or waiver becomes
effective. An amendment, supplement or waiver shall become effective on receipt
by the Trustee of written consents from the Holders of the requisite percentage
in principal amount at maturity of the outstanding Notes.
The Company may, but shall not be obligated to, fix a record date
for the purpose of determining the Holders entitled to consent to any amendment,
supplement or waiver. If a record date is fixed, then, notwithstanding the last
two sentences of the immediately preceding paragraph, those Persons who were
Holders at such record date (or their duly designated proxies) and only those
Persons shall be entitled to consent to such amendment, supplement or waiver or
to revoke any consent previously given, whether or not such Persons continue to
be Holders after such record date. No such consent shall be valid or effective
for more than 90 days after such record date.
After an amendment, supplement or waiver becomes effective, it shall
bind every Holder unless it is of the type described in any of clauses (i)
through (vii) of Section 9.02. In case of an amendment or waiver of the type
described in clauses (i) through (vii) of Section 9.02, the amendment or waiver
shall bind each Holder who has consented to it and every subsequent Holder of a
Note that evidences the same indebtedness as the Note of the consenting Holder.
SECTION 9.04. Notation on or Exchange of Notes. If an amendment,
supplement or waiver changes the terms of a Note, the Trustee may require the
Holder to deliver it to the Trustee. The Trustee may place an appropriate
notation on the Note about the changed terms and return it to the Holder and the
Trustee may place an appropriate notation on any Note thereafter authenticated.
Alternatively, if the Company or the Trustee so determines, the Company in
exchange for the Note shall issue and the Trustee shall authenticate a new Note
that reflects the changed terms.
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SECTION 9.05. Trustee to Sign Amendments, Etc. The Trustee shall be
entitled to receive, and shall be fully protected in relying upon, in addition
to the documents required by Section 10.03, an Opinion of Counsel stating that
the execution of any amendment, supplement or waiver authorized pursuant to this
Article Nine is authorized or permitted by this Indenture. Subject to the
preceding sentence, the Trustee shall sign such amendment, supplement or waiver
if the same does not adversely affect the rights of the Trustee. The Trustee
may, but shall not be obligated to, execute any such amendment, supplement or
waiver that affects the Trustee's own rights, duties or immunities under this
Indenture or otherwise.
SECTION 9.06. Conformity with Trust Indenture Act. Every
supplemental indenture executed pursuant to this Article Nine shall conform to
the requirements of the TIA as then in effect.
ARTICLE TEN
MISCELLANEOUS
SECTION 10.01. Trust Indenture Act of 1939. Prior to the
effectiveness of the Registration Statement, this Indenture shall incorporate
and be governed by the provisions of the TIA that are required to be part of and
to govern indentures qualified under the TIA. After the effectiveness of the
Registration Statement, this Indenture shall be subject to the provisions of the
TIA that are required to be a part of this Indenture and shall, to the extent
applicable, be governed by such provisions.
SECTION 10.02. Notices. (a) Any notice or communication shall be
sufficiently given if in writing and delivered in person or mailed by first
class mail, commercial courier service or telecopier communication, addressed as
follows:
if to the Company:
Viatel, Inc.
800 Third Avenue
New York, NY 10022
Telecopier Number: (212) 350-9250
Attention: Sheldon M. Goldman
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With, in the case of any notice given pursuant to
Article Six, a copy to:
Kelley Drye & Warren LLP
101 Park Avenue
New York, NY 10178
Attention: James T. Prenetta, Jr.
if to the German Paying Agent:
Deutsche Bank, Aktiengesellschaft
Grosse Gallusstrasse 10-14
G0272 Frankfurt am Main
Attention: Fiscal Agency Services
if to the Trustee:
The Bank of New York
101 Barclay Street, Floor 21 West
New York, NY 10286
Telecopier Number: (212) 815-5915
Attention: Corporate Trust Administration
With a copy to:
Emmet, Marvin & Martin
120 Broadway
New York, NY 10271
Attention: Anthony Marvin
The Company, the Trustee, or the Depository by notice to the others
may designate additional or different addresses for subsequent notices or
communications.
All notices and communications (other than those sent to Holders)
shall be deemed to have been duly given: at the time delivered by hand, if
personally delivered; five Business Days after being deposited in the mail,
postage prepaid, if mailed; when receipt acknowledged, if telecopied; and the
next Business Day after timely delivery to the courier, if sent by overnight air
courier guaranteeing next day delivery.
(b) Where this Indenture provides for notice of any event to Holders
by the Company or Trustee, such notice shall be sufficiently given (unless
otherwise herein expressly
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provided): to registered Holders, if in writing and mailed, first-class postage
(or, if first class mail is unavailable, by airmail) prepaid, to each registered
Holder at his address as it appears in the Note Register, in each case not later
than the latest date, and not earlier than the earliest date, prescribed
hereunder for the giving of such notice; or, to unregistered Holders, if such
notice is published in the following journals: (i) the Bundesanzeiger and one
mandatory nationwide newspaper (if practicable, the Borsen-Zeitung) in the
German language; and (ii) a leading daily newspaper (if practicable, The Wall
Street Journal (Eastern Edition)) printed in the English language and of general
circulation in New York, in each case, once in each of three successive calendar
weeks, the first publication to be not later than the latest date, and not
earlier than the earliest date, prescribed hereunder for the giving of such
notice. Any notice to unregistered Holders will become effective for all
purposes on the date of its publication in the Bundesanzeiger. The Company shall
provide to the Trustee copies of all notices to Holders in the required language
of publication other than those notices given in the English language.
(c) Where this Indenture provides for notice in any manner, such
notice may be waived in writing by the Person entitled to receive such notice,
either before or after the event, and such waiver shall be the equivalent of
such notice. Waivers of notice by Holders shall be filed with the Trustee, but
such filing shall not be a condition precedent to the validity of any action
taken in reliance upon such waiver.
In case by reason of the suspension of regular mail service or by
reason of any other cause it shall be impracticable to give such notice by mail,
then such notification as shall be made with the approval of the Trustee shall
constitute a sufficient notification for every purpose hereunder.
SECTION 10.03. Certificate and Opinion As to Conditions Precedent.
Upon any request or application by the Company to the Trustee to take any action
under this Indenture, the Company shall furnish to the Trustee:
(i) an Officers' Certificate stating that, in the opinion of the
signers, all conditions precedent, if any, provided for in this Indenture
relating to the proposed action have been complied with; and
(ii) an Opinion of Counsel stating that, in the opinion of such
counsel, all such conditions precedent have been complied with.
SECTION 10.04. 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:
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(i) a statement that each person signing such certificate or opinion
has read such covenant or condition and the definitions herein relating
thereto;
(ii) a brief statement as to the nature and scope of the examination
or investigation upon which the statement or opinion contained in such
certificate or opinion is based;
(iii) a statement that, in the opinion of each such person, he has
made such examination or investigation as is necessary to enable him to
express an informed opinion as to whether or not such covenant or
condition has been complied with; and
(iv) a statement as to whether or not, in the opinion of each such
person, such condition or covenant has been complied with; provided,
however, that, with respect to matters of fact, an Opinion of Counsel may
rely on an Officers' Certificate or certificates of public officials.
SECTION 10.05. Rules by Trustee, Paying Agent or Registrar. The
Trustee may make reasonable rules for action by or at a meeting of Holders. The
Paying Agent or Registrar may make reasonable rules for its functions.
SECTION 10.06. Payment Date Other Than a Business Day. If an
Interest Payment Date, Redemption Date, Payment Date, Stated Maturity or date of
maturity of any Note shall not be a Business Day, then payment of principal of,
premium, if any, or interest on such Note, as the case may be, need not be made
on such date, but may be made on the next succeeding Business Day with the same
force and effect as if made on the Interest Payment Date, Payment Date, or
Redemption Date, or at the Stated Maturity or date of maturity of such Note;
provided that no interest shall accrue for the period from and after such
Interest Payment Date, Payment Date, Redemption Date, Stated Maturity or date of
maturity, as the case may be.
SECTION 10.07. Governing Law; Submission to Jurisdiction; Agent for
Service. This Indenture and the Notes shall be governed by the laws of the State
of New York, except as referred to in Section 10.14 hereof. The Company hereby
appoints CT Corporation System as its agent for service of process in any suit,
action or proceeding with respect to this Indenture or the Notes and for actions
brought under the U.S. federal or state securities laws brought in any federal
or state court located in The City of New York and the Company agrees to submit
to the jurisdiction of any such court.
SECTION 10.08. No Adverse Interpretation of Other Agreements. This
Indenture may not be used to interpret another indenture, loan or debt agreement
of the
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Company or any Subsidiary of the Company. Any such indenture, loan or debt
agreement may not be used to interpret this Indenture.
SECTION 10.09. No Recourse Against Others. No recourse for the
payment of the principal of, premium, if any, or interest on any of the Notes,
or for any claim based thereon or otherwise in respect thereof, and no recourse
under or upon any obligation, covenant or agreement of the Company contained in
this Indenture, or in any of the Notes, or because of the creation of any
Indebtedness represented thereby, shall be had against any incorporator or
against any past, present or future partner, shareholder, other equityholder,
officer, director, employee or controlling person, as such, of the Company or of
any successor Person, either directly or through the Company or any successor
Person, whether by virtue of any constitution, statute or rule of law, or by the
enforcement of any assessment or penalty or otherwise; it being expressly
understood that all such liability is hereby expressly waived and released as a
condition of, and as a consideration for, the execution of this Indenture and
the issue of the Notes.
SECTION 10.10. 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 successors.
SECTION 10.11. Duplicate Originals. The parties may sign any number
of copies of this Indenture. Each signed copy shall be an original, but all of
them together represent the same agreement.
SECTION 10.12. Separability. In case any provision in this Indenture
or in the Notes shall be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.
SECTION 10.13. 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 hereof and shall in no way modify or restrict any of the
terms and provisions hereof.
SECTION 10.14. Substitution of Currency. Under the Treaty on the
European Economic and Monetary union (the "Treaty"), to which Germany is a
signatory, on or before January 1, 1999, and subject to the fulfillment of
certain conditions, the "Euro" may replace all or some of the currencies of the
member states of the European Union, including the Deutsche Mark. If, pursuant
to the Treaty, the Deutsche Mark is replaced by the Euro (or another currency,
however captioned), all sums payable by the Company under or in connection with
the Notes (including, without limitation, principal of, or interest on, the
Notes) will be effected in Euro (or such other currency) in conformity with
legally applicable
<PAGE>
89
measures taken pursuant to, or by virtue of, the Treaty. In addition, the
regulations of the European Commission relating to the Euro (or such other
currency) will then apply to the Notes and this Indenture. The circumstances and
consequences described in this Section 10.14 entitle neither the Company nor any
Holder to early redemption, recission, notice, repudiation, adjustment or
renegotiation of the terms and conditions of Notes or this Indenture or to raise
other defenses or to request any compensation claim, nor will they affect any of
the other obligations of the Company under the Notes and this Indenture.
SECTION 10.15. Method of Payment. Deutsche Marks are the sole
currency of account and payment for all sums payable by the Company under or in
connection with the Notes, including damages.
<PAGE>
SIGNATURES
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed, all as of the date first written above.
VIATEL, INC.
By: /s/ Michael J. Mahoney
-----------------------------------
Name: Michael J. Mahoney
Title: President and Chief Executive
Officer
THE BANK OF NEW YORK,
as Trustee
By: /s/ Ming J. Shiang
-----------------------------------
Name: Ming J. Shiang
Title: Assistant Vice President
DEUTSCHE BANK, Aktiengesellschaft,
as German Paying Agent and Co-
Registrar
By: /s/ Peter C. Olsen
--------------------------------
Name: Peter C. Olsen
Title: Vice President
<PAGE>
EXHIBIT A
FORM OF DTC GLOBAL NOTE
FACE OF NOTE
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS, AND ACCORDINGLY,
MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHIN THE UNITED
STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS EXCEPT AS SET FORTH
IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS
THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER
THE SECURITIES ACT) OR (B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS
DEFINED IN RULE 501(a)(1), (2), (3) OR (7) OF REGULATION D UNDER THE SECURITIES
ACT) (AN "INSTITUTIONAL ACCREDITED INVESTOR") OR (C) IT IS NOT A U.S. PERSON AND
IS ACQUIRING THIS NOTE IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 903 OF
REGULATION S UNDER THE SECURITIES ACT; (2) AGREES THAT IT WILL NOT, WITHIN THE
TIME PERIOD REFERRED TO IN RULE 144(k) (TAKING INTO ACCOUNT THE PROVISIONS OF
RULE 144(d) UNDER THE SECURITIES ACT, IF APPLICABLE), RESELL OR OTHERWISE
TRANSFER THIS NOTE EXCEPT (A) TO THE COMPANY OR ANY SUBSIDIARY THEREOF, (B) TO A
QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES
ACT, (C) INSIDE THE UNITED STATES TO AN INSTITUTIONAL ACCREDITED INVESTOR THAT,
PRIOR TO SUCH TRANSFER, FURNISHES TO THE TRUSTEE A SIGNED LETTER CONTAINING
CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER
OF THIS NOTE (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM THE TRUSTEE) AND IF
SUCH TRANSFER IS IN RESPECT OF AN AGGREGATE PRINCIPAL AMOUNT AT MATURITY OF
NOTES OF LESS THAN DM 150,000, AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY
THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT, (D) OUTSIDE THE
UNITED STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE
SECURITIES ACT, (E) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE
144 UNDER THE SECURITIES ACT (IF AVAILABLE) OR (F) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND (3) AGREES THAT IT WILL
DELIVER TO EACH PERSON TO WHOM THIS NOTE IS TRANSFERRED A NOTICE SUBSTANTIALLY
TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF THIS NOTE
WITHIN THE TIME PERIOD REFERRED TO ABOVE, THE HOLDER MUST CHECK THE APPROPRIATE
BOX SET FORTH ON THE REVERSE HEREOF RELATING TO THE MANNER OF SUCH TRANSFER AND
SUBMIT THIS CERTIFICATE TO THE TRUSTEE. IF THE PROPOSED TRANSFEREE IS AN
INSTITUTIONAL ACCREDITED INVESTOR, THE HOLDER MUST, PRIOR TO SUCH
<PAGE>
A-2
TRANSFER, FURNISH TO EACH OF THE TRUSTEE AND THE COMPANY SUCH CERTIFICATIONS,
LEGAL OPINIONS OR OTHER INFORMATION AS SUCH PERSONS MAY REASONABLY REQUIRE TO
CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A
TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.
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. THE INDENTURE CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO
REGISTER ANY TRANSFER OF THIS NOTE IN VIOLATION OF THE FOREGOING RESTRICTIONS.
THE NOTES EVIDENCED BY THIS CERTIFICATE ARE INITIALLY ISSUED AS PART OF AN
ISSUANCE OF UNITS, EACH OF WHICH CONSISTS OF DM 1,000 PRINCIPAL AMOUNT AT
MATURITY OF 12.40% SENIOR DISCOUNT DM NOTES DUE 2008 OF VIATEL, INC. (THE
"NOTES") AND 2.77 DM DENOMINATED 10% SUBORDINATED CONVERTIBLE DEBENTURES DUE
2011 (THE "SUBORDINATED CONVERTIBLE DEBENTURES"). THE NOTES AND SUBORDINATED
CONVERTIBLE DEBENTURES WILL BE AUTOMATICALLY SEPARATED UPON THE EARLIEST TO
OCCUR OF (i) SIX MONTHS AFTER APRIL 8, 1998, (ii) THE COMMENCEMENT OF AN
EXCHANGE OFFER WITH RESPECT TO THE NOTES, (iii) THE EFFECTIVENESS OF A SHELF
REGISTRATION STATEMENT WITH RESPECT TO RESALE OF THE NOTES OR (iv) THE
COMMENCEMENT OF AN OFFER TO REPURCHASE THE NOTES PURSUANT TO THE INDENTURE. THE
NOTES EVIDENCED BY THIS CERTIFICATE MAY NOT BE TRANSFERRED OR EXCHANGED
SEPARATELY FROM, BUT MAY BE TRANSFERRED OR EXCHANGED ONLY TOGETHER WITH, THE
SUBORDINATED CONVERTIBLE DEBENTURES.
UNLESS THIS GLOBAL NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF
TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS REGISTERED IN THE NAME OF
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY OR SUCH OTHER REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (AND ANY PAYMENT HEREON IS MADE
TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY), 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.
<PAGE>
A-3
TRANSFERS OF THIS GLOBAL NOTE 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 NOTE SHALL BE LIMITED TO
TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN SECTION 2.08 OF
THE INDENTURE.
THIS NOTE WAS ISSUED WITH ORIGINAL ISSUE DISCOUNT FOR U.S. FEDERAL INCOME TAX
PURPOSES. FOR INFORMATION REGARDING ISSUE PRICE, AMOUNT OF ORIGINAL ISSUE
DISCOUNT, ISSUE DATE AND YIELD TO MATURITY, THE HOLDER MAY CONTACT ALLAN L.
SHAW, CHIEF FINANCIAL OFFICER OF THE COMPANY, AT (212) 350-9220.
<PAGE>
A-4
VIATEL, INC.
12.40% Senior Discount Note Due 2008
[CUSIP][CINS][INIS] ___
No. __________ DM _______
VIATEL, INC., a Delaware corporation (the "Company", which term includes
any successor under the Indenture hereinafter referred to), for value received,
promises to pay to ________________, or its registered assigns, upon surrender
hereof the principal sum of DM _________ on April 15, 2008.
Issue date: April 8, 1998.
I Issue Price (for each DM 1,000 principal amount at maturity): DM 546.68
Interest Payment Dates: April 15 and October 15, commencing October 15,
2003.
Record Dates: April 1 and October 1.
Reference is hereby made to the further provisions of this Note set forth
on the reverse hereof, which further provisions shall for all purposes have the
same effect as if set forth at this place.
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Note to be signed manually
or by facsimile by its duly authorized officers.
Date: April 8, 1998 VIATEL, INC.
By:
--------------------------------
Name:
Title:
By:
--------------------------------
Name:
Title:
(Certificate of Authentication)
This is one of the 12.40% Senior Discount Notes due 2008 described in the
within-mentioned Indenture.
Date: April 8, 1998 THE BANK OF NEW YORK, as trustee
By
-------------------------------
Authorized Signatory
<PAGE>
A-6
[REVERSE SIDE OF NOTE]
VIATEL, INC.
12.40% Senior Discount Note due 2008
1. Principal and Interest.
The Company will pay the principal of this Note on April 15, 2008.
The Company promises to pay interest on the principal amount of this
Note on each Interest Payment Date, as set forth below, at the rate per annum
shown above.
Interest will be payable semiannually in cash (to the holders of
record of the Notes at the close of business on the April 1 or October 1
immediately preceding the Interest Payment Date) on each Interest Payment Date,
commencing October 15, 2003; provided that no interest shall accrue on the
principal amount of this Note prior to April 15, 2003 and no interest shall be
paid on this Note prior to October 15, 2003, except as provided in the next
paragraph.
If an exchange offer registered under the Securities Act is not
consummated, and a shelf registration statement under the Securities Act with
respect to resales of the Notes is not declared effective by the Commission, on
or before the date that is six months after the Closing Date in accordance with
the terms of the Registration Rights Agreement dated April 3, 1998 between the
Company and Morgan Stanley & Co. Incorporated, as the manager for itself and the
several initial purchasers named on Schedule I to the Purchase Agreement dated
April 3, 1998, annual interest (in addition to the accrual of original discount
during the period prior to October 15, 2003 and in addition to the interest
otherwise due on the Notes after such date) will accrue, at an annual rate of
0.5% per annum of the Accreted Value on the preceding Semi-Annual Accrual Date,
payable in cash semiannually, in arrears, on April 15 and October 15 of each
year, commencing April 15, 1999 until the consummation of a registered exchange
offer or the effectiveness of a shelf-registration statement with respect to
resale of this Note. The Holder of this Note is entitled to the benefits of such
Registration Rights Agreement.
From and after October 15, 2003, 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 April 15, 2003; provided that, if there is no existing default
in the payment of interest and this Note is authenticated between a Regular
Record Date referred to on the face hereof and the next succeeding Interest
Payment Date, interest shall accrue from such Interest Payment Date. Interest
will be computed on the basis of a 360-day year of twelve 30-day months.
<PAGE>
A-7
The Company shall pay interest on overdue principal and premium, if
any, and interest on overdue installments of interest, to the extent lawful, at
a rate per annum that is 12.40% per annum.
2. Method of Payment.
The Company will pay principal as provided above and interest
(except defaulted interest) on the principal amount of the Notes as provided
above on each April 15 and October 15 to the Persons who are Holders (as
reflected in the Note Register at the close of business on such April 1 and
October 1 immediately preceding the Interest Payment Date), in each case, even
if the Note is canceled on registration of transfer or registration of exchange
after such record date; provided that, with respect to the payment of principal,
the Company will not make payment to the Holder unless this Note is surrendered
to a Paying Agent.
The Company will pay principal, premium, if any, and as provided
above, interest in money of the Federal Republic of Germany that at the time of
payment is legal tender for payment of public and private debts. However, the
Company may pay principal, premium, if any, and interest by its check payable in
such money. It may mail an interest check to a Holder's registered address (as
reflected in the Note Register). If a payment date is a date other than a
Business Day at a place of payment, payment may be made at that place on the
next succeeding day that is a Business Day and no interest shall accrue for the
intervening period.
3. Paying Agent and Registrar.
Initially, the Trustee will act as U.S. Paying Agent and Registrar
and Deutsche Bank will act as German Paying Agent. The Company may change any
Paying Agent or Registrar without notice. The Company, any Subsidiary or any
Affiliate of any of them may act as Paying Agent, Registrar or co-Registrar.
4. Indenture; Issuance of Additional Notes.
This Note is one of a duly authorized issue of Notes of the Company
designated its 12.40% Senior Discount Notes due 2008, issued and to be issued
under an Indenture dated as of April 8, 1998 (the "Indenture"), between the
Company, The Bank of New York, as trustee (the "Trustee") and Deutsche Bank, as
German Paying Agent and Co-Registrar. Capitalized terms herein are used as
defined in the Indenture unless otherwise indicated. 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. The Notes are subject to all such terms,
and Holders are referred to the Indenture and the Trust Indenture Act for a
statement of all such terms. To the extent permitted by applicable law, in the
event of any inconsistency between the terms of this Note and the terms of the
Indenture, the terms of the Indenture shall control.
<PAGE>
A-8
5. Redemption.
The Notes will be redeemable, at the Company's option, in whole or
in part, at any time and from time to time on or after April 15, 2003 and prior
to maturity, upon not less than 30 nor more than 60 days' prior notice mailed by
first-class mail to each Holders' last address as it appears in the Note
Register, at the following Redemption Prices (expressed in percentages of their
principal amount at maturity), plus accrued and unpaid interest, if any, to the
Redemption Date (subject to the right of Holders of record on the relevant
Regular Record Date that is on or prior to the Redemption Date to receive
interest due on an Interest Payment Date), if redeemed during the 12-month
period commencing on April 15, of the years set forth below:
Redemption
Year Price
---- -----
2003 106.200%
2004 104.133
2005 102.067
2006 and thereafter 100.000
In addition, at any time or from time to time on or prior to April
15, 2001, the Company may, at its option, redeem up to 35% of the aggregate
principal amount at maturity of the Notes with the net proceeds of one or more
Public Equity Offerings, at a Redemption Price (expressed as a percentage of
Accreted Value on the Redemption Date) of 112.400%; provided; (i) that Notes
representing at least 65% of the principal amount at maturity of the Notes
originally issued remain outstanding after each such redemption and (ii) that
notice of each such redemption is mailed within 60 days of each such Public
Equity Offering.
6. Notice of Redemption.
Notice of any optional redemption will be mailed at least 30 days
but not more than 60 days before the Redemption Date to each Holder of Notes to
be redeemed at his last address as it appears in the Note Register. Notes in
original denominations larger than DM 1,000 of principal amount at maturity may
be redeemed in part. On and after the Redemption Date, interest ceases to accrue
on Notes or portions of Notes called for redemption, unless the Company defaults
in the payment of the Redemption Price.
7. Repurchase upon Change in Control.
Upon the occurrence of any Change of Control, each Holder shall have
the right to require the repurchase of its Notes by the Company in cash pursuant
to the offer described in the Indenture at a purchase price equal to 101% of the
Accreted Value thereof plus accrued and unpaid interest, if any, to the date of
purchase (the "Change of Control Payment").
<PAGE>
A-9
A notice of such Change of Control will be mailed within 30 days
after any Change of Control occurs to each Holder at his last address as it
appears in the Note Register. Notes in original denominations larger than DM
1,000 of principal amount at maturity may be sold to the Company in part. On and
after the date of the Change of Control Payment, interest ceases to accrue on
Notes or portions of Notes surrendered for purchase by the Company, unless the
Company defaults in the payment of the Change of Control Payment.
8. Registration Rights
Pursuant to the Registration Rights Agreement, the Company will be
obligated, within 180 days after the issue date of this Note, 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 Exchange Notes (as defined in the
Registration Rights Agreement) which have been registered under the Securities
Act, in like principal amount at maturity and having terms identical in all
material respects as the Initial Notes. The Holders of the Initial Notes shall
be entitled to receive certain additional interest payments in the event such
exchange offer is not consummated and upon certain other conditions, all
pursuant and in accordance with the terms of the Registration Rights Agreement.
9. Denominations; Transfer; Exchange.
The Notes are in registered form without coupons in denominations of
DM 1,000 of principal amount at maturity and any integral multiples of DM 1,000
in excess thereof. A Holder may register the transfer or exchange of Notes in
accordance with the Indenture. The Registrar may require a Holder, among other
things, to furnish appropriate endorsements and transfer documents and to pay
any taxes and fees required by law or permitted by the Indenture. The Registrar
need not register the transfer or exchange of any Notes selected for redemption.
Also, it need not register the transfer or exchange of any Notes for a period of
15 days before a selection of Notes to be redeemed is made.
10. Persons Deemed Owners.
A Holder shall be treated as the owner of a Note for all purposes.
11. Unclaimed Money.
If money for the payment of principal, premium, if any, or interest
remains unclaimed for two years, the Trustee and the Paying Agent will pay the
money back to the Company at its request. After that, Holders entitled to the
money must look to the Company for payment, unless an abandoned property law
designates another Person, and all liability of the Trustee and such Paying
Agent with respect to such money shall cease.
<PAGE>
A-10
12. Discharge Prior to Redemption or Maturity.
If the Company deposits with the Trustee money and/or U.S.
Government Obligations sufficient to pay the then outstanding principal of,
premium, if any, and accrued interest on the Notes to redemption (a) or
maturity, the Company will be discharged from the Indenture and the Notes,
except in certain circumstances for certain sections thereof, and (b) or to
Stated Maturity, the Company will be discharged from certain covenants set forth
in the Indenture.
13. Amendment; Supplement; Waiver.
Subject to certain exceptions, the Indenture or the Notes may be
amended or supplemented with the consent of the Holders of at least a majority
in principal amount at maturity of the Notes then outstanding, and any existing
default or compliance with any provision may be waived with the consent of the
Holders of at least a majority in principal amount at maturity of the Notes then
outstanding. Without notice to or the consent of any Holder, the parties thereto
may amend or supplement the Indenture or the Notes to, among other things, cure
any ambiguity, defect or inconsistency and make any change that does not
materially and adversely affect the rights of any Holder.
14. Restrictive Covenants.
The Indenture imposes certain limitations on the ability of the
Company and its Restricted Subsidiaries, among other things, to Incur
Indebtedness, make Restricted Payments, use the proceeds from Asset Sales,
engage in transactions with Affiliates or, with respect to the Company, merge,
consolidate or transfer substantially all of its assets. Within 90 days after
the end of the last fiscal quarter of each year, the Company must report to the
Trustee on compliance with the terms of the Indenture.
15. Successor Persons.
When a successor Person or other entity assumes all the obligations
of its predecessor under the Notes and the Indenture, the predecessor Person
will be released from those obligations.
16. Defaults and Remedies.
The following events constitute "Events of Default" under the
Indenture: (a) default in the payment of principal of (or premium, if any, on)
any Note when the same becomes due and payable at maturity, upon acceleration,
redemption or otherwise; (b) default in the payment of interest on any Note when
the same becomes due and payable, and such default
<PAGE>
A-11
continues for a period of 30 days; provided that a failure to make any of the
first six scheduled interest payments on this Note in a timely manner will
constitute an Event of Default with no grace or cure period; (c) default in the
performance or breach of the provisions of the Indenture applicable to mergers,
consolidations and transfers of all or substantially all of the assets of the
Company or the failure to make or consummate an Offer to Purchase in accordance
with Section 4.11 of the Indenture or Section 4.12 of the Indenture; (d) the
Company defaults in the performance of or breaches any other covenant or
agreement of the Company in the Indenture or under the Notes (other than a
default specified in clause (a), (b) or (c) of Section 6.01 of the Indenture)
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 or principal amount at maturity of Notes; (e) there occurs with
respect to any issue or issues of Indebtedness of the Company or any Significant
Subsidiary having an outstanding principal amount of $10 million or more in the
aggregate for all such issues of all such Persons, whether such Indebtedness now
exists or shall hereafter be created, (I) an event of default that has caused
the holder thereof to declare such Indebtedness to be due and payable prior to
its Stated Maturity and such Indebtedness has not been discharged in full or
such acceleration has not been rescinded or annulled within 30 days of such
acceleration and/or (II) the failure to make a principal payment at the final
(but not any interim) fixed maturity and such defaulted payment shall not have
been made, waived or extended within 30 days of such payment default; (f) any
final judgment or order (not covered by insurance) for the payment of money in
excess of $10 million in the aggregate for all such final judgments or orders
against all such Persons (treating any deductibles, self-insurance or retention
as not so covered) shall be rendered against the Company or any Significant
Subsidiary and shall not be paid or discharged, and there shall be any period of
60 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 or discharged against all such Persons to exceed $10 million during which a
stay of enforcement of such final judgment or order, by reason of a pending
appeal or otherwise, shall not be in effect; (g) a court having jurisdiction in
the premises enters a decree or order for (A) relief in respect of the Company
or any Significant Subsidiary 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 Significant Subsidiary or
for all or substantially all of the property and assets of the Company or any
Significant Subsidiary or (C) the winding up or liquidation of the affairs of
the Company or any Significant Subsidiary and, in each case, such decree or
order shall remain unstayed and in effect for a period of 60 consecutive days;
or (h) the Company or any Significant Subsidiary (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 Significant Subsidiary or
for all or substantially all of the property and assets of the Company or any
Significant Subsidiary or (C) effects any general assignment for the benefit of
creditors.
<PAGE>
A-12
If an Event of Default (other than an Event of Default specified in
clause (g) or (h) above that occurs with respect to the Company) occurs and is
continuing under the Indenture, the Trustee or the Holders of at least 25% in
aggregate principal amount at maturity of the Notes, then outstanding, by
written notice to the Company (and to the Trustee if such notice is given by the
Holders) , may, and the Trustee at the request of such Holders shall, declare
the Accreted Value of, premium, if any, and accrued interest on the Notes to be
immediately due and payable.
If an Event of Default, as defined in the Indenture, occurs and is
continuing, the Trustee or the Holders of at least 25% in aggregate principal
amount at maturity of the Notes then outstanding may declare all the Notes to be
due and payable. If a bankruptcy or insolvency default with respect to the
Company or any Restricted Subsidiary occurs and is continuing, the Notes
automatically become due and payable. Holders may not enforce the Indenture or
the Notes except as provided in the Indenture. The Trustee may require indemnity
satisfactory to it before it enforces the Indenture or the Notes. Subject to
certain limitations, Holders of at least a majority in principal amount at
maturity of the Notes then outstanding may direct the Trustee in its exercise of
any trust or power.
17. Trustee Dealings with Company.
The Trustee under the Indenture, in its individual or any other
capacity, may make loans to, accept deposits from and perform services for the
Company or its Affiliates and may otherwise deal with the Company or its
Affiliates as if it were not the Trustee.
18. No Recourse Against Others.
No incorporator or any past, present or future partner, stockholder,
other equity holder, officer, director, employee or controlling person as such,
of the Company or of any successor Person 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 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.
19. Authentication.
This Note shall not be valid until the Trustee or authenticating
agent signs the certificate of authentication on the other side of this Note.
20. Abbreviations.
Customary abbreviations may be used in the name of a Holder or an
assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the
entireties), JT TEN
<PAGE>
A-13
(= joint tenants with right of survivorship and not as tenants in common), CUST
(= Custodian) and U/G/M/A (= Uniform Gifts to Minors Act).
21. CUSIP Numbers.
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures, the Issuer has caused CUSIP numbers to be
printed on the Notes and the Trustee may use CUSIP numbers in notices of
redemption as a convenience to Holders. No representation is made as to the
accuracy of such numbers either as printed on the Notes or as contained in any
notice of redemption.
This Note shall be governed by the laws of the State of New York except as
referred to in Section 10.14 of the Indenture.
The Company will furnish to any Holder upon written request and
without charge a copy of the Indenture. Requests may be made to Viatel, Inc.,
800 Third Avenue, New York, New York, 10022, Attention: Sheldon M. Goldman.
<PAGE>
A-14
SCHEDULE OF PRINCIPAL AMOUNT OF INDEBTEDNESS
EVIDENCED BY THIS NOTE
The initial principal amount of indebtedness evidenced by this Note
shall be DM_________. The following decreases/increases in the principal amount
evidenced by this Note have been made:
Decrease in Increase in Total Principal
Principal Principal Amount of this Global Notation Made
Date of Amount of Amount of Note Following such by or on
Decrease/ this Global this Global Decrease/Increase Behalf of
Increase Note Note ----------------- Trustee
- -------- ---- ---- -------
_________ ___________ __________ _________________ _____________
_________ ___________ __________ _________________ _____________
_________ ___________ __________ _________________ _____________
_________ ___________ __________ _________________ _____________
_________ ___________ __________ _________________ _____________
_________ ___________ __________ _________________ _____________
_________ ___________ __________ _________________ _____________
_________ ___________ __________ _________________ _____________
_________ ___________ __________ _________________ _____________
_________ ___________ __________ _________________ _____________
_________ ___________ __________ _________________ _____________
_________ ___________ __________ _________________ _____________
_________ ___________ __________ _________________ _____________
_________ ___________ __________ _________________ _____________
_________ ___________ __________ _________________ _____________
_________ ___________ __________ _________________ _____________
<PAGE>
A-15
[FORM OF TRANSFER NOTICE]
FOR VALUE RECEIVED the undersigned registered holder hereby sell(s),
assign(s) and transfer(s) unto
Insert Taxpayer Identification No.
________________________________________________________________________________
Please print or typewrite name and address including zip code of assignee
________________________________________________________________________________
the within Note and all rights thereunder, hereby irrevocably constituting and
appointing __________________________________________ attorney to transfer said
Note on the books of the Company with full power of substitution in the
premises.
[THE FOLLOWING PROVISION TO BE INCLUDED
ON ALL NOTES OTHER THAN EXCHANGE NOTES,
UNLEGENDED DBC GLOBAL AND
UNLEGENDED REGULATION S CERTIFICATED NOTES]
In connection with any transfer of this Note occurring prior to the date
which is the earlier of (i) the date of an effective Registration or (ii) the
end of the period referred to in Rule 144(k) under the Securities Act, the
undersigned confirms that without utilizing any general solicitation or general
advertising that:
[Check One]
[ ] (a) this Note is being transferred in compliance with the exemption from
registration under the Securities Act of 1933, as amended, provided by
Rule 144A thereunder.
or
[ ] (b) this Note is being transferred other than in accordance with (a)
above and documents are being furnished which comply with the conditions
of transfer set forth in this Note and the Indenture.
If none of the foregoing boxes is checked, the Trustee or other Registrar shall
not be obligated to register this Note in the name of any Person other than the
Holder hereof unless and until the conditions to any such transfer of
registration set forth herein and in Section 2.08 of the Indenture shall have
been satisfied.
<PAGE>
A-16
Date: _________________ _______________________________________________
NOTICE: The signature to this assignment must
correspond with the name as written upon the face
of the within-mentioned instrument in every
particular, without alteration or any change
whatsoever.
TO BE COMPLETED BY PURCHASER IF (a) ABOVE IS CHECKED.
The undersigned represents and warrants that it is purchasing this Note
for its own account or an account with respect to which it exercises sole
investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act of
1933, as amended, and is aware that the sale to it is being made in reliance on
Rule 144A and acknowledges that it has received such information regarding the
Company as the undersigned has requested pursuant to Rule 144A or has determined
not to request such information and that it is aware that the transferor is
relying upon the undersigned's foregoing representations in order to claim the
exemption from registration provided by Rule 144A.
Dated: ________________ _______________________________________________
NOTICE: To be executed by an executive officer
<PAGE>
A-17
OPTION OF HOLDER TO ELECT PURCHASE
If you wish to have this Note purchased by the Company pursuant to
Section 4.11 or Section 4.12 of the Indenture, check the Box: |_|
If you wish to have a portion of this Note purchased by the Company
pursuant to Section 4.11 or Section 4.12 of the Indenture, state the amount (in
principal amount at maturity): DM_____________.
Date: ___________________
Your Signature: ________________________________________________________________
(Sign exactly as your name appears on the other side of this Note)
Signature Guarantee: ______________________________
<PAGE>
EXHIBIT B
FORM OF DBC GLOBAL NOTE
[FACE OF NOTE]
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS, AND ACCORDINGLY,
MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHIN THE UNITED
STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS EXCEPT AS SET FORTH
IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS
THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER
THE SECURITIES ACT) OR (B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS
DEFINED IN RULE 501(a)(1), (2), (3) OR (7) OF REGULATION D UNDER THE SECURITIES
ACT) (AN "INSTITUTIONAL ACCREDITED INVESTOR") OR (C) IT IS NOT A U.S. PERSON AND
IS ACQUIRING THIS NOTE IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 903 OF
REGULATION S UNDER THE SECURITIES ACT; (2) AGREES THAT IT WILL NOT, WITHIN THE
TIME PERIOD REFERRED TO IN RULE 144(k) (TAKING INTO ACCOUNT THE PROVISIONS OF
RULE 144(d) UNDER THE SECURITIES ACT, IF APPLICABLE), RESELL OR OTHERWISE
TRANSFER THIS NOTE EXCEPT (A) TO THE COMPANY OR ANY SUBSIDIARY THEREOF, (B) TO A
QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES
ACT, (C) INSIDE THE UNITED STATES TO AN INSTITUTIONAL ACCREDITED INVESTOR THAT,
PRIOR TO SUCH TRANSFER, FURNISHES TO THE TRUSTEE A SIGNED LETTER CONTAINING
CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER
OF THIS NOTE (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM THE TRUSTEE) AND IF
SUCH TRANSFER IS IN RESPECT OF AN AGGREGATE PRINCIPAL AMOUNT AT MATURITY OF
NOTES OF LESS THAN DM 150,000, AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY
THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT, (D) OUTSIDE THE
UNITED STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE
SECURITIES ACT, (E) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE
144 UNDER THE SECURITIES ACT (IF AVAILABLE) OR (F) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND (3) AGREES THAT IT WILL
DELIVER TO EACH PERSON TO WHOM THIS NOTE IS TRANSFERRED A NOTICE SUBSTANTIALLY
TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF THIS NOTE
WITHIN THE TIME PERIOD REFERRED TO ABOVE, THE HOLDER MUST CHECK THE APPROPRIATE
<PAGE>
B-2
BOX SET FORTH ON THE REVERSE HEREOF RELATING TO THE MANNER OF SUCH TRANSFER AND
SUBMIT THIS CERTIFICATE TO THE TRUSTEE. IF THE PROPOSED TRANSFEREE IS AN
INSTITUTIONAL ACCREDITED INVESTOR, THE HOLDER MUST, PRIOR TO SUCH TRANSFER,
FURNISH TO EACH OF THE TRUSTEE AND THE COMPANY SUCH CERTIFICATIONS, LEGAL
OPINIONS OR OTHER INFORMATION AS SUCH PERSONS MAY REASONABLY REQUIRE TO CONFIRM
THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A
TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.
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. THE INDENTURE CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO
REGISTER ANY TRANSFER OF THIS NOTE IN VIOLATION OF THE FOREGOING RESTRICTIONS.
THE NOTES EVIDENCED BY THIS CERTIFICATE ARE INITIALLY ISSUED AS PART OF AN
ISSUANCE OF UNITS, EACH OF WHICH CONSISTS OF DM 1,000 PRINCIPAL AMOUNT AT
MATURITY OF 12.40% SENIOR DISCOUNT DM NOTES DUE 2008 OF VIATEL, INC. (THE
"NOTES") AND 2.77 DM DENOMINATED 10% SUBORDINATED CONVERTIBLE DEBENTURES DUE
2011 (THE "SUBORDINATED CONVERTIBLE DEBENTURES"). THE NOTES AND THE SHARES OF
SUBORDINATED CONVERTIBLE DEBENTURES WILL BE AUTOMATICALLY SEPARATED UPON THE
EARLIEST TO OCCUR OF (i) SIX MONTHS AFTER APRIL 8, 1998, (ii) THE COMMENCEMENT
OF AN EXCHANGE OFFER WITH RESPECT TO THE NOTES, (iii) THE EFFECTIVENESS OF A
SHELF REGISTRATION STATEMENT WITH RESPECT TO RESALE OF THE NOTES OR (iv) THE
COMMENCEMENT OF AN OFFER TO REPURCHASE THE NOTES PURSUANT TO THE INDENTURE. THE
NOTES EVIDENCED BY THIS CERTIFICATE MAY NOT BE TRANSFERRED OR EXCHANGED
SEPARATELY FROM, BUT MAY BE TRANSFERRED OR EXCHANGED ONLY TOGETHER WITH, THE
SUBORDINATED CONVERTIBLE DEBENTURES.
THIS GLOBAL CERTIFICATE HAS BEEN CREATED IN ORDER TO BE HELD IN CUSTODY BY
DEUTSCHE BORSE CLEARING AG ("DBC") AND TO SERVE AS THE BASIS FOR THE DELIVERY
AND TRANSFER OF NOTES TO BE HELD IN THE DBC DEPOSITARY AND CLEARING SYSTEM
THROUGHOUT THE LIFE OF THE NOTES.
THIS NOTE WAS ISSUED WITH ORIGINAL ISSUE DISCOUNT FOR U.S. FEDERAL INCOME TAX
PURPOSES. FOR INFORMATION REGARDING ISSUE PRICE, AMOUNT OF ORIGINAL ISSUE
DISCOUNT, ISSUE DATE AND YIELD TO MATURITY, THE HOLDER MAY CONTACT ALLAN L.
SHAW, CHIEF FINANCIAL OFFICER OF THE COMPANY, AT (212) 350-9220.
<PAGE>
B-3
VIATEL, INC.
12.40% Senior Discount Note Due 2008
[CUSIP][CINS][INIS][WKN] ____
No. __________ DM _________
VIATEL, INC., a Delaware corporation (the "Company", which term includes
any successor under the Indenture hereinafter referred to), for value received,
promises to pay to the bearer upon surrender hereof, the principal sum of DM
_________ on April 15, 2008.
Issue date: April 8, 1998
Issue Price (for each DM 1,000 principal amount at maturity): DM 546.68
Record Dates: April 1, and October 1.
Interest Payment Dates: April 15 and October 15, commencing October 15,
2003.
Reference is hereby made to the further provisions of this Note set forth
on the reverse hereof, which further provisions shall for all purposes have the
same effect as if set forth at this place, and the provisions, terms and
conditions of the Indenture governing this Note, which is attached as an annex
hereto.
<PAGE>
B-4
IN WITNESS WHEREOF, the Company has caused this Note to be signed manually
or by facsimile by its duly authorized officers.
Date: April 8, 1998 VIATEL, INC.
By
-----------------------------
Name:
Title:
By
-----------------------------
Name:
Title:
(Certificate of Authentication)
This is one of the 12.40% Senior Discount Notes due 2008 described in the
within-mentioned Indenture.
Date: April 8, 1998 DEUTSCHE BANK, as Authenticating Agent
By
-----------------------------
Authorized Signatory
<PAGE>
B-5
[REVERSE SIDE OF NOTE]
VIATEL, INC.
12.40% Senior Discount Note due 2008
1. Principal and Interest.
The Company will pay the principal of this Note on April 15, 2008.
The Company promises to pay interest on the principal amount of this
Note on each Interest Payment Date, as set forth below, at the rate per annum
shown above.
Interest will be payable semiannually in cash (to the holders of
record of the Notes at the close of business on the April 1 or October 1
immediately preceding the Interest Payment Date) on each Interest Payment Date,
commencing October 15, 2003; provided that no interest shall accrue on the
principal amount of this Note prior to April 15, 2003 and no interest shall be
paid on this Note prior to October 15, 2003, except as provided in the next
paragraph.
If an exchange offer registered under the Securities Act is not
consummated, and a shelf registration statement under the Securities Act with
respect to resales of the Notes is not declared effective by the Commission, on
or before the date that is six months after the Closing Date in accordance with
the terms of the Registration Rights Agreement dated April 3, 1998 between the
Company and Morgan Stanley & Co. Incorporated, as the manager for itself and the
several initial purchasers named on Schedule I to the Purchase Agreement dated
April 3, 1998, annual interest (in addition to the accrual of original discount
during the period prior to October 15, 2003 and in addition to the interest
otherwise due on the Notes after such date) will accrue, at an annual rate of
0.5% per annum of the Accreted Value on the preceding Semi-Annual Accrual Date,
payable in cash semiannually, in arrears, on April 15 and October 15 of each
year, commencing April 15, 1999 until the consummation of a registered exchange
offer or the effectiveness of a shelf-registration statement with respect to
resale of this Note. The Holder of this Note is entitled to the benefits of such
Registration Rights Agreement.
From and after October 15, 2003, 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 October 15, 2003; provided that, if there is no existing default
in the payment of interest and this Note is authenticated between a Regular
Record Date referred to on the face hereof and the next succeeding Interest
Payment Date, interest shall accrue from such Interest Payment Date. Interest
will be computed on the basis of a 360-day year of twelve 30-day months.
<PAGE>
B-6
The Company shall pay interest on overdue principal and premium, if
any, and interest on overdue installments of interest, to the extent lawful, at
a rate per annum that is 12.40% per annum.
2. Method of Payment.
The Company will pay principal as provided above and interest
(except defaulted interest) on the principal amount of the Notes as provided
above on each April 15 and October 15 to the Persons who are Holders (as
reflected in the Note Register at the close of business on such April 1 and
October 1 immediately preceding the Interest Payment Date), in each case, even
if the Note is canceled on registration of transfer or registration of exchange
after such record date; provided that, with respect to the payment of principal,
the Company will not make payment to the Holder unless this Note is surrendered
to a Paying Agent.
The Company will pay principal, premium, if any, and as provided
above, interest in money of the Federal Republic of Germany that at the time of
payment is legal tender for payment of public and private debts. However, the
Company may pay principal, premium, if any, and interest by its check payable in
such money. It may mail an interest check to a Holder's registered address (as
reflected in the Note Register). If a payment date is a date other than a
Business Day at a place of payment, payment may be made at that place on the
next succeeding day that is a Business Day and no interest shall accrue for the
intervening period.
3. Paying Agent and Registrar.
Initially, the Trustee will act as U.S. Paying Agent and Registrar
and Deutsche Bank will act as German Paying Agent. The Company may change any
Paying Agent or Registrar without notice. The Company, any Subsidiary or any
Affiliate of any of them may act as Paying Agent, Registrar or co-Registrar.
4. Indenture; Issuance of Additional Notes.
This Note is one of a duly authorized issue of Notes of the Company
designated its 12.40% Senior Discount Notes due 2008, issued and to be issued
under an Indenture dated as of April 8, 1998 (the "Indenture"), between the
Company, The Bank of New York, as trustee (the "Trustee") and Deutsche Bank, as
German Paying Agent and Co-Registrar. Capitalized terms herein are used as
defined in the Indenture unless otherwise indicated. 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. The Notes are subject to all such terms,
and Holders are referred to the Indenture and the Trust Indenture Act for a
statement of all such terms. To the extent permitted by applicable law, in the
event of any inconsistency between the terms of this Note and the terms of the
Indenture, the terms of the Indenture shall control.
<PAGE>
B-7
5. Redemption.
The Notes will be redeemable, at the Company's option, in whole or
in part, at any time and from time to time on or after April 15, 2003 and prior
to maturity, upon not less than 30 nor more than 60 days' prior notice mailed by
first-class mail to each Holders' last address as it appears in the Note
Register, at the following Redemption Prices (expressed in percentages of their
principal amount at maturity), plus accrued and unpaid interest, if any, to the
Redemption Date (subject to the right of Holders of record on the relevant
Regular Record Date that is on or prior to the Redemption Date to receive
interest due on an Interest Payment Date), if redeemed during the 12-month
period commencing on April 15, of the years set forth below:
Redemption
Year Price
---- -----
2003 106.200%
2004 104.133
2005 102.067
2006 and thereafter 100.000
In addition, at any time or from time to time on or prior to April
15, 2001, the Company may, at its option, redeem up to 35% of the aggregate
principal amount at maturity of the Notes with the net proceeds of one or more
Public Equity Offerings, at a Redemption Price (expressed as a percentage of
Accreted Value on the Redemption Date) of 112.400%; provided; (i) that Notes
representing at least 65% of the principal amount at maturity of the Notes
originally issued remain outstanding after each such redemption and (ii) that
notice of each such redemption is mailed within 60 days of each such Public
Equity Offering.
6. Notice of Redemption.
Notice of any optional redemption will be mailed at least 30 days
but not more than 60 days before the Redemption Date to each Holder of Notes to
be redeemed at his last address as it appears in the Note Register. Notes in
original denominations larger than DM 1,000 of principal amount at maturity may
be redeemed in part. On and after the Redemption Date, interest ceases to accrue
on Notes or portions of Notes called for redemption, unless the Company defaults
in the payment of the Redemption Price.
7. Repurchase upon Change in Control.
Upon the occurrence of any Change of Control, each Holder shall have
the right to require the repurchase of its Notes by the Company in cash pursuant
to the offer described in the Indenture at a purchase price equal to 101% of the
Accreted Value thereof plus accrued and unpaid interest, if any, to the date of
purchase (the "Change of Control Payment").
<PAGE>
B-8
A notice of such Change of Control will be mailed within 30 days
after any Change of Control occurs to each Holder at his last address as it
appears in the Note Register. Notes in original denominations larger than DM
1,000 of principal amount at maturity may be sold to the Company in part. On and
after the date of the Change of Control Payment, interest ceases to accrue on
Notes or portions of Notes surrendered for purchase by the Company, unless the
Company defaults in the payment of the Change of Control Payment.
8. Registration Rights
Pursuant to the Registration Rights Agreement, the Company will be
obligated, within 180 days after the issue date of this Note, 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 Exchange Notes (as defined in the
Registration Rights Agreement) which have been registered under the Securities
Act, in like principal amount at maturity and having terms identical in all
material respects as the Initial Notes. The Holders of the Initial Notes shall
be entitled to receive certain additional interest payments in the event such
exchange offer is not consummated and upon certain other conditions, all
pursuant and in accordance with the terms of the Registration Rights Agreement.
9. Denominations; Transfer; Exchange.
The Notes are in bearer form without coupons in denominations of DM
1,000 of principal amount at maturity and any integral multiples of DM 1,000 in
excess thereof. A Holder may register the transfer or exchange of Notes in
accordance with the Indenture. The Registrar may require a Holder, among other
things, to furnish appropriate endorsements and transfer documents and to pay
any taxes and fees required by law or permitted by the Indenture. The Registrar
need not register the transfer or exchange of any Notes selected for redemption.
Also, it need not register the transfer or exchange of any Notes for a period of
15 days before a selection of Notes to be redeemed is made.
10. Persons Deemed Owners.
A Holder shall be treated as the owner of a Note for all purposes.
11. Unclaimed Money.
If money for the payment of principal, premium, if any, or interest
remains unclaimed for two years, the Trustee and the Paying Agent will pay the
money back to the Company at its request. After that, Holders entitled to the
money must look to the Company for payment, unless an abandoned property law
designates another Person, and all liability of the Trustee and such Paying
Agent with respect to such money shall cease.
<PAGE>
B-9
12. Discharge Prior to Redemption or Maturity.
If the Company deposits with the Trustee money and/or U.S.
Government Obligations sufficient to pay the then outstanding principal of,
premium, if any, and accrued interest on the Notes to redemption (a) or
maturity, the Company will be discharged from the Indenture and the Notes,
except in certain circumstances for certain sections thereof, and (b) or to
Stated Maturity, the Company will be discharged from certain covenants set forth
in the Indenture.
13. Amendment; Supplement; Waiver.
Subject to certain exceptions, the Indenture or the Notes may be
amended or supplemented with the consent of the Holders of at least a majority
in principal amount at maturity of the Notes then outstanding, and any existing
default or compliance with any provision may be waived with the consent of the
Holders of at least a majority in principal amount at maturity of the Notes then
outstanding. Without notice to or the consent of any Holder, the parties thereto
may amend or supplement the Indenture or the Notes to, among other things, cure
any ambiguity, defect or inconsistency and make any change that does not
materially and adversely affect the rights of any Holder.
14. Restrictive Covenants.
The Indenture imposes certain limitations on the ability of the
Company and its Restricted Subsidiaries, among other things, to Incur
Indebtedness, make Restricted Payments, use the proceeds from Asset Sales,
engage in transactions with Affiliates or, with respect to the Company, merge,
consolidate or transfer substantially all of its assets. Within 90 days after
the end of the last fiscal quarter of each year, the Company must report to the
Trustee on compliance with the terms of the Indenture.
15. Successor Persons.
When a successor Person or other entity assumes all the obligations
of its predecessor under the Notes and the Indenture, the predecessor Person
will be released from those obligations.
16. Defaults and Remedies.
The following events constitute "Events of Default" under the
Indenture: (a) default in the payment of principal of (or premium, if any, on)
any Note when the same becomes due and payable at maturity, upon acceleration,
redemption or otherwise; (b) default in the payment of interest on any Note when
the same becomes due and payable, and such default
<PAGE>
B-10
continues for a period of 30 days; provided that a failure to make any of the
first six scheduled interest payments on this Note in a timely manner will
constitute an Event of Default with no grace or cure period; (c) default in the
performance or breach of the provisions of the Indenture applicable to mergers,
consolidations and transfers of all or substantially all of the assets of the
Company or the failure to make or consummate an Offer to Purchase in accordance
with Section 4.11 of the Indenture or Section 4.12 of the Indenture; (d) the
Company defaults in the performance of or breaches any other covenant or
agreement of the Company in the Indenture or under the Notes (other than a
default specified in clause (a), (b) or (c) of Section 6.01 of the Indenture)
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 or principal amount at maturity of Notes; (e) there occurs with
respect to any issue or issues of Indebtedness of the Company or any Significant
Subsidiary having an outstanding principal amount of $10 million or more in the
aggregate for all such issues of all such Persons, whether such Indebtedness now
exists or shall hereafter be created, (I) an event of default that has caused
the holder thereof to declare such Indebtedness to be due and payable prior to
its Stated Maturity and such Indebtedness has not been discharged in full or
such acceleration has not been rescinded or annulled within 30 days of such
acceleration and/or (II) the failure to make a principal payment at the final
(but not any interim) fixed maturity and such defaulted payment shall not have
been made, waived or extended within 30 days of such payment default; (f) any
final judgment or order (not covered by insurance) for the payment of money in
excess of $10 million in the aggregate for all such final judgments or orders
against all such Persons (treating any deductibles, self-insurance or retention
as not so covered) shall be rendered against the Company or any Significant
Subsidiary and shall not be paid or discharged, and there shall be any period of
60 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 or discharged against all such Persons to exceed $10 million during which a
stay of enforcement of such final judgment or order, by reason of a pending
appeal or otherwise, shall not be in effect; (g) a court having jurisdiction in
the premises enters a decree or order for (A) relief in respect of the Company
or any Significant Subsidiary 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 Significant Subsidiary or
for all or substantially all of the property and assets of the Company or any
Significant Subsidiary or (C) the winding up or liquidation of the affairs of
the Company or any Significant Subsidiary and, in each case, such decree or
order shall remain unstayed and in effect for a period of 60 consecutive days;
or (h) the Company or any Significant Subsidiary (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 Significant Subsidiary or
for all or substantially all of the property and assets of the Company or any
Significant Subsidiary or (C) effects any general assignment for the benefit of
creditors.
<PAGE>
B-11
If an Event of Default (other than an Event of Default specified in
clause (g) or (h) above that occurs with respect to the Company) occurs and is
continuing under the Indenture, the Trustee or the Holders of at least 25% in
aggregate principal amount at maturity of the Notes, then outstanding, by
written notice to the Company (and to the Trustee if such notice is given by the
Holders) , may, and the Trustee at the request of such Holders shall, declare
the Accreted Value of, premium, if any, and accrued interest on the Notes to be
immediately due and payable.
If an Event of Default, as defined in the Indenture, occurs and is
continuing, the Trustee or the Holders of at least 25% in aggregate principal
amount at maturity of the Notes then outstanding may declare all the Notes to be
due and payable. If a bankruptcy or insolvency default with respect to the
Company or any Restricted Subsidiary occurs and is continuing, the Notes
automatically become due and payable. Holders may not enforce the Indenture or
the Notes except as provided in the Indenture. The Trustee may require indemnity
satisfactory to it before it enforces the Indenture or the Notes. Subject to
certain limitations, Holders of at least a majority in principal amount at
maturity of the Notes then outstanding may direct the Trustee in its exercise of
any trust or power.
17. Trustee Dealings with Company.
The Trustee under the Indenture, in its individual or any other
capacity, may make loans to, accept deposits from and perform services for the
Company or its Affiliates and may otherwise deal with the Company or its
Affiliates as if it were not the Trustee.
18. No Recourse Against Others.
No incorporator or any past, present or future partner, stockholder,
other equity holder, officer, director, employee or controlling person as such,
of the Company or of any successor Person 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 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.
19. Authentication.
This Note shall not be valid until the Trustee or authenticating
agent signs the certificate of authentication on the other side of this Note.
20. Abbreviations.
Customary abbreviations may be used in the name of a Holder or an
assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the
entireties), JT TEN
<PAGE>
B-12
(= joint tenants with right of survivorship and not as tenants in common), CUST
(= Custodian) and U/G/M/A (= Uniform Gifts to Minors Act).
21. CUSIP Numbers.
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures, the Issuer has caused CUSIP numbers to be
printed on the Notes and the Trustee may use CUSIP numbers in notices of
redemption as a convenience to Holders. No representation is made as to the
accuracy of such numbers either as printed on the Notes or as contained in any
notice of redemption.
This Note shall be governed by the laws of the State of New York except as
referred to in Section 10.14 of the Indenture.
The Company will furnish to any Holder upon written request and
without charge a copy of the Indenture. Requests may be made to Viatel, Inc.,
800 Third Avenue, New York, New York, 10022, Attention: Sheldon M. Goldman.
<PAGE>
B-13
SCHEDULE OF PRINCIPAL AMOUNT OF INDEBTEDNESS
EVIDENCED BY THIS NOTE
The initial principal amount of indebtedness evidenced by this Note
shall be DM_________. The following decreases/increases in the principal amount
evidenced by this Note have been made:
Decrease in Increase in Total Principal
Principal Principal Amount of this Global Notation Made
Date of Amount of Amount of Note Following such by or on
Decrease/ this Global this Global Decrease/Increase Behalf of
Increase Note Note ----------------- Trustee
- -------- ---- ---- -------
_________ ___________ __________ _________________ _____________
_________ ___________ __________ _________________ _____________
_________ ___________ __________ _________________ _____________
_________ ___________ __________ _________________ _____________
_________ ___________ __________ _________________ _____________
_________ ___________ __________ _________________ _____________
_________ ___________ __________ _________________ _____________
_________ ___________ __________ _________________ _____________
_________ ___________ __________ _________________ _____________
_________ ___________ __________ _________________ _____________
_________ ___________ __________ _________________ _____________
_________ ___________ __________ _________________ _____________
_________ ___________ __________ _________________ _____________
_________ ___________ __________ _________________ _____________
_________ ___________ __________ _________________ _____________
_________ ___________ __________ _________________ _____________
<PAGE>
B-14
[FORM OF TRANSFER NOTICE]
FOR VALUE RECEIVED the undersigned registered holder hereby sell(s),
assign(s) and transfer(s) unto
Insert Taxpayer Identification No.
________________________________________________________________________________
Please print or typewrite name and address including zip code of assignee
________________________________________________________________________________
the within Note and all rights thereunder, hereby irrevocably constituting and
appointing __________________________________ attorney to transfer said Note on
the books of the Company with full power of substitution in the premises.
[THE FOLLOWING PROVISION TO BE INCLUDED
ON ALL NOTES OTHER THAN EXCHANGE NOTES,
UNLEGENDED DBC GLOBAL AND
UNLEGENDED REGULATION S CERTIFICATED NOTES]
In connection with any transfer of this Note occurring prior to the date
which is the earlier of (i) the date of an effective Registration or (ii) the
end of the period referred to in Rule 144(k) under the Securities Act, the
undersigned confirms that without utilizing any general solicitation or general
advertising that:
[Check One]
[ ] (a) this Note is being transferred in compliance with the exemption from
registration under the Securities Act of 1933, as amended, provided by
Rule 144A thereunder.
or
[ ] (b) this Note is being transferred other than in accordance with (a)
above and documents are being furnished which comply with the conditions
of transfer set forth in this Note and the Indenture.
If none of the foregoing boxes is checked, the Trustee or other Registrar shall
not be obligated to register this Note in the name of any Person other than the
Holder hereof unless and until the conditions to any such transfer of
registration set forth herein and in Section 2.08 of the Indenture shall have
been satisfied.
<PAGE>
B-15
Date: ___________________ __________________________________________________
NOTICE: The signature to this assignment must
correspond with the name as written upon the face
of the within-mentioned instrument in every
particular, without alteration or any change
whatsoever.
TO BE COMPLETED BY PURCHASER IF (a) ABOVE IS CHECKED.
The undersigned represents and warrants that it is purchasing this Note
for its own account or an account with respect to which it exercises sole
investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act of
1933, as amended, and is aware that the sale to it is being made in reliance on
Rule 144A and acknowledges that it has received such information regarding the
Company as the undersigned has requested pursuant to Rule 144A or has determined
not to request such information and that it is aware that the transferor is
relying upon the undersigned's foregoing representations in order to claim the
exemption from registration provided by Rule 144A.
Dated: __________________ __________________________________________________
NOTICE: To be executed by an executive officer
<PAGE>
B-16
OPTION OF HOLDER TO ELECT PURCHASE
If you wish to have this Note purchased by the Company pursuant to
Section 4.11 or Section 4.12 of the Indenture, check the Box: |_|
If you wish to have a portion of this Note purchased by the Company
pursuant to Section 4.11 or Section 4.12 of the Indenture, state the amount (in
principal amount at maturity): DM_____________.
Date: _________________
Your Signature: ________________________________________________________________
(Sign exactly as your name appears on the other side of this Note)
Signature Guarantee: ______________________________
<PAGE>
EXHIBIT C
FORM OF U.S. CERTIFICATED NOTE
[FACE OF NOTE]
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS, AND ACCORDINGLY,
MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHIN THE UNITED
STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS EXCEPT AS SET FORTH
IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS
THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER
THE SECURITIES ACT) OR (B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS
DEFINED IN RULE 501(a)(1), (2), (3) OR (7) OF REGULATION D UNDER THE SECURITIES
ACT) (AN "INSTITUTIONAL ACCREDITED INVESTOR") OR (C) IT IS NOT A U.S. PERSON AND
IS ACQUIRING THIS NOTE IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 903 OF
REGULATION S UNDER THE SECURITIES ACT; (2) AGREES THAT IT WILL NOT, WITHIN THE
TIME PERIOD REFERRED TO IN RULE 144(k) (TAKING INTO ACCOUNT THE PROVISIONS OF
RULE 144(d) UNDER THE SECURITIES ACT, IF APPLICABLE), RESELL OR OTHERWISE
TRANSFER THIS NOTE EXCEPT (A) TO THE COMPANY OR ANY SUBSIDIARY THEREOF, (B) TO A
QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES
ACT, (C) INSIDE THE UNITED STATES TO AN INSTITUTIONAL ACCREDITED INVESTOR THAT,
PRIOR TO SUCH TRANSFER, FURNISHES TO THE TRUSTEE A SIGNED LETTER CONTAINING
CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER
OF THIS NOTE (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM THE TRUSTEE) AND IF
SUCH TRANSFER IS IN RESPECT OF AN AGGREGATE PRINCIPAL AMOUNT AT MATURITY OF
NOTES OF LESS THAN DM 150,000, AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY
THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT, (D) OUTSIDE THE
UNITED STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE
SECURITIES ACT, (E) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE
144 UNDER THE SECURITIES ACT (IF AVAILABLE) OR (F) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND (3) AGREES THAT IT WILL
DELIVER TO EACH PERSON TO WHOM THIS NOTE IS TRANSFERRED A NOTICE SUBSTANTIALLY
TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF THIS NOTE
WITHIN THE TIME PERIOD REFERRED TO ABOVE, THE HOLDER MUST CHECK THE APPROPRIATE
BOX SET FORTH ON THE REVERSE HEREOF RELATING TO THE MANNER OF SUCH TRANSFER AND
SUBMIT THIS CERTIFICATE TO THE TRUSTEE. IF THE PROPOSED TRANSFEREE IS AN
INSTITUTIONAL ACCREDITED INVESTOR, THE HOLDER MUST, PRIOR TO SUCH TRANSFER,
FURNISH TO EACH OF THE TRUSTEE AND THE COMPANY SUCH
<PAGE>
C-2
CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS SUCH PERSONS MAY
REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN
EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT. 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. THE INDENTURE CONTAINS A PROVISION
REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF THIS NOTE IN
VIOLATION OF THE FOREGOING RESTRICTIONS.
THE NOTES EVIDENCED BY THIS CERTIFICATE ARE INITIALLY ISSUED AS PART OF AN
ISSUANCE OF UNITS, EACH OF WHICH CONSISTS OF DM 1,000 PRINCIPAL AMOUNT AT
MATURITY OF 12.40% SENIOR DISCOUNT DM NOTES DUE 2008 OF VIATEL, INC. (THE
"NOTES") AND 2.77 10% SUBORDINATED CONVERTIBLE DEBENTURES DUE 2011 (THE
"SUBORDINATED CONVERTIBLE DEBENTURES"). THE NOTES AND THE SUBORDINATED
CONVERTIBLE DEBENTURES WILL BE AUTOMATICALLY SEPARATED UPON THE EARLIEST TO
OCCUR OF (i) SIX MONTHS AFTER APRIL 8, 1998, (ii) THE COMMENCEMENT OF AN
EXCHANGE OFFER WITH RESPECT TO THE NOTES, (iii) THE EFFECTIVENESS OF A SHELF
REGISTRATION STATEMENT WITH RESPECT TO RESALE OF THE NOTES OR (iv) THE
COMMENCEMENT OF AN OFFER TO REPURCHASE THE NOTES PURSUANT TO THE INDENTURE. THE
NOTES EVIDENCED BY THIS CERTIFICATE MAY NOT BE TRANSFERRED OR EXCHANGED
SEPARATELY FROM, BUT MAY BE TRANSFERRED OR EXCHANGED ONLY TOGETHER WITH, THE
SUBORDINATED CONVERTIBLE DEBENTURES.
THIS NOTE WAS ISSUED WITH ORIGINAL ISSUE DISCOUNT FOR U.S. FEDERAL INCOME TAX
PURPOSES. FOR INFORMATION REGARDING ISSUE PRICE, AMOUNT OF ORIGINAL ISSUE
DISCOUNT, ISSUE DATE AND YIELD TO MATURITY, THE HOLDER MAY CONTACT ALLAN L.
SHAW, CHIEF FINANCIAL OFFICER OF THE COMPANY, AT (212) 350-9220.
<PAGE>
C-3
VIATEL, INC.
12.40% Senior Discount Note Due 2008
[CUSIP][CINS][ISIN] ___
No. R-_______ DM ____________
VIATEL, INC., a Delaware corporation (the "Company", which term includes
any successor under the Indenture hereinafter referred to), for value received,
promises to pay to _____________________, or its registered assigns, the
principal sum of DM [__________] on [__________], 2008.
Issue Date: April 8, 1998
Issue Price (for each DM 1,000 principal amount at maturity): DM 546.68
Interest Payment Dates: April 15 and October 15, commencing October 15,
2003.
Record Dates: April 1 and October 1.
Reference is hereby made to the further provisions of this Note set forth
on the reverse hereof, which further provisions shall for all purposes have the
same effect as if set forth at this place.
<PAGE>
C-4
IN WITNESS WHEREOF, the Company has caused this Note to be signed manually
or by facsimile by its duly authorized officers.
Date: April 8, 1998 VIATEL, INC.
By
------------------------------
Name:
Title:
By
------------------------------
Name:
Title:
(Certificate of Authentication)
This is one of the 12.40% Senior Discount Notes due 2008 described in the
within-mentioned Indenture.
Date: April 8, 1998 DEUTSCHE BANK, as Authenticating Agent
By
------------------------------
Authorized Signatory
<PAGE>
C-5
[REVERSE SIDE OF NOTE]
VIATEL, INC.
12.40% Senior Discount Note due 2008
1. Principal and Interest.
The Company will pay the principal of this Note on April 15, 2008.
The Company promises to pay interest on the principal amount of this
Note on each Interest Payment Date, as set forth below, at the rate per annum
shown above.
Interest will be payable semiannually in cash (to the holders of
record of the Notes at the close of business on the April 1 or October 1
immediately preceding the Interest Payment Date) on each Interest Payment Date,
commencing October 15, 2003; provided that no interest shall accrue on the
principal amount of this Note prior to April 15, 2003 and no interest shall be
paid on this Note prior to April 15, 2003, except as provided in the next
paragraph.
If an exchange offer registered under the Securities Act is not
consummated, and a shelf registration statement under the Securities Act with
respect to resales of the Notes is not declared effective by the Commission, on
or before the date that is six months after the Closing Date in accordance with
the terms of the Registration Rights Agreement dated April 3, 1998 between the
Company and Morgan Stanley & Co. Incorporated, as the manager for itself and the
several initial purchasers named on Schedule I to the Purchase Agreement dated
April 3, 1998, annual interest (in addition to the accrual of original discount
during the period prior to October 15, 2003 and in addition to the interest
otherwise due on the Notes after such date) will accrue, at an annual rate of
0.5% per annum of the Accreted Value on the preceding Semi-Annual Accrual Date,
payable in cash semiannually, in arrears, on April 15 and October 15 of each
year, commencing April 15, 1999 until the consummation of a registered exchange
offer or the effectiveness of a shelf-registration statement with respect to
resale of this Note. The Holder of this Note is entitled to the benefits of such
Registration Rights Agreement.
From and after October 15, 2003, 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 October 15, 2003; provided that, if there is no existing default
in the payment of interest and this Note is authenticated between a Regular
Record Date referred to on the face hereof and the next succeeding Interest
Payment Date, interest shall accrue from such Interest Payment Date. Interest
will be computed on the basis of a 360-day year of twelve 30-day months.
<PAGE>
C-6
The Company shall pay interest on overdue principal and premium, if
any, and interest on overdue installments of interest, to the extent lawful, at
a rate per annum that is 12.40% per annum.
2. Method of Payment.
The Company will pay principal as provided above and interest
(except defaulted interest) on the principal amount of the Notes as provided
above on each April 15 and October 15 to the Persons who are Holders (as
reflected in the Note Register at the close of business on such April 1 and
October 1 immediately preceding the Interest Payment Date), in each case, even
if the Note is canceled on registration of transfer or registration of exchange
after such record date; provided that, with respect to the payment of principal,
the Company will not make payment to the Holder unless this Note is surrendered
to a Paying Agent.
The Company will pay principal, premium, if any, and as provided
above, interest in money of the Federal Republic of Germany that at the time of
payment is legal tender for payment of public and private debts. However, the
Company may pay principal, premium, if any, and interest by its check payable in
such money. It may mail an interest check to a Holder's registered address (as
reflected in the Note Register). If a payment date is a date other than a
Business Day at a place of payment, payment may be made at that place on the
next succeeding day that is a Business Day and no interest shall accrue for the
intervening period.
3. Paying Agent and Registrar.
Initially, the Trustee will act as U.S. Paying Agent and Registrar
and Deutsche Bank will act as German Paying Agent. The Company may change any
Paying Agent or Registrar without notice. The Company, any Subsidiary or any
Affiliate of any of them may act as Paying Agent, Registrar or co-Registrar.
4. Indenture; Issuance of Additional Notes.
This Note is one of a duly authorized issue of Notes of the Company
designated its 12.40% Senior Discount Notes due 2008, issued and to be issued
under an Indenture dated as of April 8, 1998 (the "Indenture"), between the
Company, The Bank of New York, as trustee (the "Trustee") and Deutsche Bank, as
German Paying Agent and Co-Registrar. Capitalized terms herein are used as
defined in the Indenture unless otherwise indicated. 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. The Notes are subject to all such terms,
and Holders are referred to the Indenture and the Trust Indenture Act for a
statement of all such terms. To the extent permitted by applicable law, in the
event of any inconsistency between the terms of this Note and the terms of the
Indenture, the terms of the Indenture shall control.
<PAGE>
C-7
5. Redemption.
The Notes will be redeemable, at the Company's option, in whole or
in part, at any time and from time to time on or after April 15, 2003 and prior
to maturity, upon not less than 30 nor more than 60 days' prior notice mailed by
first-class mail to each Holders' last address as it appears in the Note
Register, at the following Redemption Prices (expressed in percentages of their
principal amount at maturity), plus accrued and unpaid interest, if any, to the
Redemption Date (subject to the right of Holders of record on the relevant
Regular Record Date that is on or prior to the Redemption Date to receive
interest due on an Interest Payment Date), if redeemed during the 12-month
period commencing on April 15, of the years set forth below:
Redemption
Year Price
---- -----
2003 106.200%
2004 104.133
2005 102.067
2006 and thereafter 100.000
In addition, at any time or from time to time on or prior to April
15, 2001, the Company may, at its option, redeem up to 35% of the aggregate
principal amount at maturity of the Notes with the net proceeds of one or more
Public Equity Offerings, at a Redemption Price (expressed as a percentage of
Accreted Value on the Redemption Date) of 112.400%; provided; (i) that Notes
representing at least 65% of the principal amount at maturity of the Notes
originally issued remain outstanding after each such redemption and (ii) that
notice of each such redemption is mailed within 60 days of each such Public
Equity Offering.
6. Notice of Redemption.
Notice of any optional redemption will be mailed at least 30 days
but not more than 60 days before the Redemption Date to each Holder of Notes to
be redeemed at his last address as it appears in the Note Register. Notes in
original denominations larger than DM 1,000 of principal amount at maturity may
be redeemed in part. On and after the Redemption Date, interest ceases to accrue
on Notes or portions of Notes called for redemption, unless the Company defaults
in the payment of the Redemption Price.
7. Repurchase upon Change in Control.
Upon the occurrence of any Change of Control, each Holder shall have
the right to require the repurchase of its Notes by the Company in cash pursuant
to the offer described in the Indenture at a purchase price equal to 101% of the
Accreted Value thereof plus accrued and unpaid interest, if any, to the date of
purchase (the "Change of Control Payment").
<PAGE>
C-8
A notice of such Change of Control will be mailed within 30 days
after any Change of Control occurs to each Holder at his last address as it
appears in the Note Register. Notes in original denominations larger than DM
1,000 of principal amount at maturity may be sold to the Company in part. On and
after the date of the Change of Control Payment, interest ceases to accrue on
Notes or portions of Notes surrendered for purchase by the Company, unless the
Company defaults in the payment of the Change of Control Payment.
8. Registration Rights
Pursuant to the Registration Rights Agreement, the Company will be
obligated, within 180 days after the issue date of this Note, 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 Exchange Notes (as defined in the
Registration Rights Agreement) which have been registered under the Securities
Act, in like principal amount at maturity and having terms identical in all
material respects as the Initial Notes. The Holders of the Initial Notes shall
be entitled to receive certain additional interest payments in the event such
exchange offer is not consummated and upon certain other conditions, all
pursuant and in accordance with the terms of the Registration Rights Agreement.
9. Denominations; Transfer; Exchange.
The Notes are in registered form without coupons in denominations of
DM 1,000 of principal amount at maturity and any integral multiples of DM 1,000
in excess thereof. A Holder may register the transfer or exchange of Notes in
accordance with the Indenture. The Registrar may require a Holder, among other
things, to furnish appropriate endorsements and transfer documents and to pay
any taxes and fees required by law or permitted by the Indenture. The Registrar
need not register the transfer or exchange of any Notes selected for redemption.
Also, it need not register the transfer or exchange of any Notes for a period of
15 days before a selection of Notes to be redeemed is made.
10. Persons Deemed Owners.
A Holder shall be treated as the owner of a Note for all purposes.
11. Unclaimed Money.
If money for the payment of principal, premium, if any, or interest
remains unclaimed for two years, the Trustee and the Paying Agent will pay the
money back to the Company at its request. After that, Holders entitled to the
money must look to the Company for payment, unless an abandoned property law
designates another Person, and all liability of the Trustee and such Paying
Agent with respect to such money shall cease.
<PAGE>
C-9
12. Discharge Prior to Redemption or Maturity.
If the Company deposits with the Trustee money and/or U.S.
Government Obligations sufficient to pay the then outstanding principal of,
premium, if any, and accrued interest on the Notes to redemption (a) or
maturity, the Company will be discharged from the Indenture and the Notes,
except in certain circumstances for certain sections thereof, and (b) or to
Stated Maturity, the Company will be discharged from certain covenants set forth
in the Indenture.
13. Amendment; Supplement; Waiver.
Subject to certain exceptions, the Indenture or the Notes may be
amended or supplemented with the consent of the Holders of at least a majority
in principal amount at maturity of the Notes then outstanding, and any existing
default or compliance with any provision may be waived with the consent of the
Holders of at least a majority in principal amount at maturity of the Notes then
outstanding. Without notice to or the consent of any Holder, the parties thereto
may amend or supplement the Indenture or the Notes to, among other things, cure
any ambiguity, defect or inconsistency and make any change that does not
materially and adversely affect the rights of any Holder.
14. Restrictive Covenants.
The Indenture imposes certain limitations on the ability of the
Company and its Restricted Subsidiaries, among other things, to Incur
Indebtedness, make Restricted Payments, use the proceeds from Asset Sales,
engage in transactions with Affiliates or, with respect to the Company, merge,
consolidate or transfer substantially all of its assets. Within 90 days after
the end of the last fiscal quarter of each year, the Company must report to the
Trustee on compliance with the terms of the Indenture.
15. Successor Persons.
When a successor Person or other entity assumes all the obligations
of its predecessor under the Notes and the Indenture, the predecessor Person
will be released from those obligations.
16. Defaults and Remedies.
The following events constitute "Events of Default" under the
Indenture: (a) default in the payment of principal of (or premium, if any, on)
any Note when the same becomes due and payable at maturity, upon acceleration,
redemption or otherwise; (b) default in the payment of interest on any Note when
the same becomes due and payable, and such default
<PAGE>
C-10
continues for a period of 30 days; provided that a failure to make any of the
first six scheduled interest payments on this Note in a timely manner will
constitute an Event of Default with no grace or cure period; (c) default in the
performance or breach of the provisions of the Indenture applicable to mergers,
consolidations and transfers of all or substantially all of the assets of the
Company or the failure to make or consummate an Offer to Purchase in accordance
with Section 4.11 of the Indenture or Section 4.12 of the Indenture; (d) the
Company defaults in the performance of or breaches any other covenant or
agreement of the Company in the Indenture or under the Notes (other than a
default specified in clause (a), (b) or (c) of Section 6.01 of the Indenture)
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 or principal amount at maturity of Notes; (e) there occurs with
respect to any issue or issues of Indebtedness of the Company or any Significant
Subsidiary having an outstanding principal amount of $10 million or more in the
aggregate for all such issues of all such Persons, whether such Indebtedness now
exists or shall hereafter be created, (I) an event of default that has caused
the holder thereof to declare such Indebtedness to be due and payable prior to
its Stated Maturity and such Indebtedness has not been discharged in full or
such acceleration has not been rescinded or annulled within 30 days of such
acceleration and/or (II) the failure to make a principal payment at the final
(but not any interim) fixed maturity and such defaulted payment shall not have
been made, waived or extended within 30 days of such payment default; (f) any
final judgment or order (not covered by insurance) for the payment of money in
excess of $10 million in the aggregate for all such final judgments or orders
against all such Persons (treating any deductibles, self-insurance or retention
as not so covered) shall be rendered against the Company or any Significant
Subsidiary and shall not be paid or discharged, and there shall be any period of
60 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 or discharged against all such Persons to exceed $10 million during which a
stay of enforcement of such final judgment or order, by reason of a pending
appeal or otherwise, shall not be in effect; (g) a court having jurisdiction in
the premises enters a decree or order for (A) relief in respect of the Company
or any Significant Subsidiary 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 Significant Subsidiary or
for all or substantially all of the property and assets of the Company or any
Significant Subsidiary or (C) the winding up or liquidation of the affairs of
the Company or any Significant Subsidiary and, in each case, such decree or
order shall remain unstayed and in effect for a period of 60 consecutive days;
or (h) the Company or any Significant Subsidiary (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 Significant Subsidiary or
for all or substantially all of the property and assets of the Company or any
Significant Subsidiary or (C) effects any general assignment for the benefit of
creditors.
<PAGE>
C-11
If an Event of Default (other than an Event of Default specified in
clause (g) or (h) above that occurs with respect to the Company) occurs and is
continuing under the Indenture, the Trustee or the Holders of at least 25% in
aggregate principal amount at maturity of the Notes, then outstanding, by
written notice to the Company (and to the Trustee if such notice is given by the
Holders) , may, and the Trustee at the request of such Holders shall, declare
the Accreted Value of, premium, if any, and accrued interest on the Notes to be
immediately due and payable.
If an Event of Default, as defined in the Indenture, occurs and is
continuing, the Trustee or the Holders of at least 25% in aggregate principal
amount at maturity of the Notes then outstanding may declare all the Notes to be
due and payable. If a bankruptcy or insolvency default with respect to the
Company or any Restricted Subsidiary occurs and is continuing, the Notes
automatically become due and payable. Holders may not enforce the Indenture or
the Notes except as provided in the Indenture. The Trustee may require indemnity
satisfactory to it before it enforces the Indenture or the Notes. Subject to
certain limitations, Holders of at least a majority in principal amount at
maturity of the Notes then outstanding may direct the Trustee in its exercise of
any trust or power.
17. Trustee Dealings with Company.
The Trustee under the Indenture, in its individual or any other
capacity, may make loans to, accept deposits from and perform services for the
Company or its Affiliates and may otherwise deal with the Company or its
Affiliates as if it were not the Trustee.
18. No Recourse Against Others.
No incorporator or any past, present or future partner, stockholder,
other equity holder, officer, director, employee or controlling person as such,
of the Company or of any successor Person 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 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.
19. Authentication.
This Note shall not be valid until the Trustee or authenticating
agent signs the certificate of authentication on the other side of this Note.
20. Abbreviations.
Customary abbreviations may be used in the name of a Holder or an
assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the
entireties), JT TEN
<PAGE>
C-12
(= joint tenants with right of survivorship and not as tenants in common), CUST
(= Custodian) and U/G/M/A (= Uniform Gifts to Minors Act).
21. CUSIP Numbers.
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures, the Issuer has caused CUSIP numbers to be
printed on the Notes and the Trustee may use CUSIP numbers in notices of
redemption as a convenience to Holders. No representation is made as to the
accuracy of such numbers either as printed on the Notes or as contained in any
notice of redemption.
This Note shall be governed by the laws of the State of New York except as
referred to in Section 10.14 of the Indenture.
The Company will furnish to any Holder upon written request and
without charge a copy of the Indenture. Requests may be made to Viatel, Inc.,
800 Third Avenue, New York, New York, 10022, Attention: Sheldon M. Goldman.
<PAGE>
C-13
[FORM OF TRANSFER NOTICE]
FOR VALUE RECEIVED the undersigned registered holder hereby sell(s),
assign(s) and transfer(s) unto
Insert Taxpayer Identification No.
________________________________________________________________________________
Please print or typewrite name and address including zip code of assignee
________________________________________________________________________________
the within Note and all rights thereunder, hereby irrevocably constituting and
appointing ____________________________________ attorney to transfer said Note
on the books of the Company with full power of substitution in the premises.
[THE FOLLOWING PROVISION TO BE INCLUDED
ON ALL NOTES OTHER THAN EXCHANGE NOTES,
UNLEGENDED DBC GLOBAL AND
UNLEGENDED REGULATION S CERTIFICATED NOTES]
In connection with any transfer of this Note occurring prior to the
date which is the earlier of (i) the date of an effective Registration or (ii)
the end of the period referred to in Rule 144(k) under the Securities Act, the
undersigned confirms that without utilizing any general solicitation or general
advertising that:
[Check One]
[ ] (a) this Note is being transferred in compliance with the exemption
from registration under the Securities Act of 1933, as amended, provided
by Rule 144A thereunder.
or
[ ] (b) this Note is being transferred other than in accordance with (a)
above and documents are being furnished which comply with the conditions
of transfer set forth in this Note and the Indenture.
If none of the foregoing boxes is checked, the Trustee or other Registrar shall
not be obligated to register this Note in the name of any Person other than the
Holder hereof unless and until the conditions to any such transfer of
registration set forth herein and in Section 2.08 of the Indenture shall have
been satisfied.
<PAGE>
C-14
Date: ________________ __________________________________________________
NOTICE: The signature to this assignment must
correspond with the name as written upon the face
of the within-mentioned instrument in every
particular, without alteration or any change
whatsoever.
TO BE COMPLETED BY PURCHASER IF (a) ABOVE IS CHECKED.
The undersigned represents and warrants that it is purchasing this Note
for its own account or an account with respect to which it exercises sole
investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act of
1933, as amended, and is aware that the sale to it is being made in reliance on
Rule 144A and acknowledges that it has received such information regarding the
Company as the undersigned has requested pursuant to Rule 144A or has determined
not to request such information and that it is aware that the transferor is
relying upon the undersigned's foregoing representations in order to claim the
exemption from registration provided by Rule 144A.
Dated: _______________ __________________________________________________
NOTICE: To be executed by an executive officer
<PAGE>
C-15
OPTION OF HOLDER TO ELECT PURCHASE
If you wish to have this Note purchased by the Company pursuant to
Section 4.11 or Section 4.12 of the Indenture, check the Box: |_|
If you wish to have a portion of this Note purchased by the Company
pursuant to Section 4.11 or Section 4.12 of the Indenture, state the amount (in
principal amount at maturity): DM_____________.
Date: _________________
Your Signature: ________________________________________________________________
(Sign exactly as your name appears on the other side of this Note)
Signature Guarantee: ______________________________
<PAGE>
EXHIBIT D
Form of Certificate
The Bank of New York __________ __, 19__
101 Barclay Street, Floor 21 West
New York, NY 10286
Attention: Corporate Trust Administration
Re: Viatel, Inc. (the "Company")
12.40% Senior Discount Dollar DM Notes
due 2008 (the "Notes")
Ladies and Gentlemen:
This letter relates to DM ___________ principal amount at maturity
of Notes represented by a Note (the "Legended Note") which bears a legend
outlining restrictions upon transfer of such Legended Note. Pursuant to Section
2.02 of the Indenture (the "Indenture") dated as of April 8, 1998 relating to
the Notes, we hereby certify that we are (or we will hold such Notes on behalf
of) a person outside the United States to whom the Notes could be transferred in
accordance with Rule 904 of Regulation S promulgated under the U.S. Securities
Act of 1933, as amended. Accordingly, you are hereby requested to exchange the
legended certificate for an unlegended certificate representing an identical
principal amount at maturity of Notes, all in the manner provided for in the
Indenture.
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby. Terms used in this certificate have the
meanings set forth in Regulation S.
Very truly yours,
[Name of Holder]
By:
--------------------------------
Authorized Signature
<PAGE>
EXHIBIT E
Form of Certificate to Be Delivered
in Connection with Transfers
Pursuant to Regulation S
The Bank of New York __________ __, 19__
101 Barclay Street, Floor 21 West
New York, NY 10286
Attention: Corporate Trust Administration
Re: Viatel, Inc. (the "Company")
12.40% Senior Discount Dollar DM Notes
due 2008 (the "Notes")
Ladies and Gentlemen:
In connection with our proposed sale of U.S.$ DM _____________
aggregate principal amount at maturity of the Notes, we confirm that such sale
has been effected pursuant to and in accordance with Regulation S under the
Securities Act of 1933, as amended, and, accordingly, we represent that:
(1) the offer of the Notes was not made to a person in the United
States;
(2) 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;
(3) no directed selling efforts have been made by us in the United
States in contravention of the requirements of Rule 903(b) or Rule 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 U.S. Securities Act of 1933.
<PAGE>
E-2
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby. Terms used in this certificate have the
meanings set forth in Regulation S.
Very truly yours,
[Name of Transferor]
By:
------------------------------
Authorized Signature
<PAGE>
EXHIBIT F
Form of Certificate to Be
Delivered in Connection with
Transfers to Non-QIB Accredited Investors
The Bank of New York __________ __, 19__
101 Barclay Street, Floor 21 West
New York, NY 10286
Attention: Corporate Trust Administration
Re: Viatel, Inc. (the "Company")
12.40% Senior Discount DM Notes
due 2008 (the "Notes")
Dear Sirs:
In connection with our proposed purchase of DM ___________ aggregate
principal amount of the Notes, we confirm that:
1. We understand that any subsequent transfer of the Notes is
subject to certain restrictions and conditions set forth in the Indenture
dated as of April 8, 1998 relating to the Notes (the "Indenture") and the
undersigned agrees to be bound by, and not to resell, pledge or otherwise
transfer the Notes except in compliance with, such restrictions and
conditions and the Securities Act of 1933, as amended (the "Securities
Act").
2. We understand that the offer and sale of the Notes have not been
registered under the Securities Act, and that the Notes may not be offered
or sold except as permitted in the following sentence. We agree, on our
own behalf and on behalf of any accounts for which we are acting as
hereinafter stated, that if we should sell any Notes, we will do so only
(A) to the Company or any subsidiary thereof, (B) in accordance with Rule
144A under the Securities Act to a "qualified institutional buyer" (as
defined therein), (C) to an institutional "accredited investor" (as
defined below) that, prior to such transfer, furnishes (or has furnished
on its behalf by a U.S. broker-dealer) to you and to the Company a signed
letter substantially in the form of this letter, (D) outside the United
States in accordance with Rule 904 of Regulation S under the Securities
Act, (E) pursuant to the provisions of Rule 144 under the Securities Act,
or (F) pursuant to an effective registration statement under the
Securities Act, and we further agree to provide to any person purchasing
any of
<PAGE>
F-2
the Notes from us a notice advising such purchaser that resales of the
Notes are restricted as stated herein.
3. We understand that, on any proposed resale of any Notes, we will
be required to furnish to you and the Company such certifications, legal
opinions and other information as you and the Company may reasonably
require to confirm that the proposed sale complies with the foregoing
restrictions. We further understand that the Notes purchased by us will
bear a legend to the foregoing effect.
4. We are an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and
have such knowledge and experience in financial and business matters as to
be capable of evaluating the merits and risks of our investment in the
Notes, and we and any accounts for which we are acting are each able to
bear the economic risk of our or its investment.
5. We are acquiring the Notes purchased by us for our own account or
for one or more accounts (each of which is an institutional "accredited
investor") as to each of which we exercise sole investment discretion.
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby.
Very truly yours,
[Name of Transferee]
By:
---------------------------------
Authorized Signature
<PAGE>
Exhibit 4.4
================================================================================
VIATEL, INC.,
as Issuer,
THE BANK OF NEW YORK
as Trustee, U.S. Paying Agent and Registrar
and
DEUTSCHE BANK, AKTIENGESELLSCHAFT,
as German Paying Agent and
Co-Registrar
----------
Senior DM Indenture
Dated as of April 8, 1998
----------
11.15% Senior Notes due 2008
================================================================================
<PAGE>
CROSS-REFERENCE TABLE
TIA Sections Indenture Sections
- ------------ ------------------
ss. 310(a)(1)........................................... 7.10
(a)(5)........................................... 7.10
(b).............................................. 7.03; 7.08
ss. 311................................................. 7.03
ss. 313(a).............................................. 7.06
(c).............................................. 7.05; 7.06
ss. 314(a).............................................. 4.17
(b).............................................. 10.01
(c)(1)........................................... 1.01
(d).............................................. 10.01
(e).............................................. 1.01
ss. 315(a).............................................. 7.02
(b).............................................. 7.05; 10.02
ss. 316(a).............................................. 6.06
Note: The Cross-Reference Table shall not for any purpose be deemed to be a part
of the Indenture.
<PAGE>
TABLE OF CONTENTS
Page
RECITALS OF THE COMPANY ......................................................1
ARTICLE ONE
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. Definitions......................................................2
SECTION 1.02. Incorporation by Reference of Trust Indenture Act...............25
SECTION 1.03. Rules of Construction...........................................26
ARTICLE TWO
THE NOTES
SECTION 2.01. Form and Dating.................................................26
SECTION 2.02. Restrictive Legends.............................................28
SECTION 2.03. Execution, Authentication and Denominations.....................31
SECTION 2.04. Registrar and Paying Agent......................................31
SECTION 2.05. Paying Agent to Hold Money in Trust.............................32
SECTION 2.06. Transfer and Exchange...........................................33
SECTION 2.07. Book-Entry Provisions for Global Notes..........................34
SECTION 2.08. Special Transfer Provisions.....................................36
SECTION 2.09. Replacement Notes...............................................39
SECTION 2.10. Outstanding Notes...............................................39
SECTION 2.11. Temporary Notes.................................................40
SECTION 2.12. Cancellation....................................................40
SECTION 2.13. CUSIP Numbers...................................................41
SECTION 2.14. Defaulted Interest..............................................41
SECTION 2.15. Issuance of Additional Notes....................................41
ARTICLE THREE
REDEMPTION
SECTION 3.01. Right of Redemption.............................................41
SECTION 3.02. Notices to Trustee..............................................42
SECTION 3.03. Selection of Notes to Be Redeemed...............................42
SECTION 3.04. Notice of Redemption............................................43
SECTION 3.05. Effect of Notice of Redemption..................................44
SECTION 3.06. Deposit of Redemption Price.....................................44
SECTION 3.07. Payment of Notes Called for Redemption..........................44
SECTION 3.08. Notes Redeemed in Part..........................................44
Note: The Table of Contents shall not for any purposes be deemed to be a part of
the Indenture.
<PAGE>
ii Page
ARTICLE FOUR
COVENANTS
SECTION 4.01. Payment of Notes................................................45
SECTION 4.02. Maintenance of Office or Agency.................................45
SECTION 4.03. Limitation on Indebtedness......................................46
SECTION 4.04. Limitation on Restricted Payments...............................49
SECTION 4.05. Limitation on Dividend and Other Payment Restrictions
Affecting Restricted Subsidiaries...........................53
SECTION 4.06. Limitation on the Issuance and Sale of Capital Stock of
Restricted Subsidiaries.....................................55
SECTION 4.07. Limitation on Issuances of Guarantees by Restricted
Subsidiaries................................................55
SECTION 4.08. Limitation on Transactions with Shareholders and Affiliates.....56
SECTION 4.09. Limitation on Liens.............................................57
SECTION 4.10. Limitation on Sale-Leaseback Transactions.......................58
SECTION 4.11. Limitation on Asset Sales.......................................58
SECTION 4.12. Repurchase of Notes upon a Change of Control....................59
SECTION 4.13. Existence ......................................................59
SECTION 4.14. Payment of Taxes and Other Claims...............................60
SECTION 4.15. Maintenance of Properties and Insurance.........................60
SECTION 4.16. Notice of Defaults..............................................60
SECTION 4.17. Compliance Certificates.........................................60
SECTION 4.18. Commission Reports and Reports to Holders.......................61
SECTION 4.19. Waiver of Stay, Extension or Usury Laws.........................61
ARTICLE FIVE
SUCCESSOR CORPORATION
SECTION 5.01. When Company May Merge, Etc.....................................62
SECTION 5.02. Successor Substituted...........................................63
ARTICLE SIX
DEFAULT AND REMEDIES
SECTION 6.01. Events of Default...............................................63
SECTION 6.02. Acceleration....................................................65
SECTION 6.03. Other Remedies..................................................65
SECTION 6.04. Waiver of Past Defaults.........................................65
SECTION 6.05. Control by Majority.............................................66
SECTION 6.06. Limitation on Suits.............................................66
SECTION 6.07. Rights of Holders to Receive Payment............................67
SECTION 6.08. Collection Suit by Trustee......................................67
SECTION 6.09. Trustee May File Proofs of Claim................................67
<PAGE>
iii Page
SECTION 6.10. Priorities......................................................68
SECTION 6.11. Undertaking for Costs...........................................68
SECTION 6.12. Restoration of Rights and Remedies..............................68
SECTION 6.13. Rights and Remedies Cumulative..................................68
SECTION 6.14. Delay or Omission Not Waiver....................................69
ARTICLE SEVEN
TRUSTEE
SECTION 7.01. General ......................................................69
SECTION 7.02. Certain Rights of Trustee.......................................69
SECTION 7.03. Individual Rights of Trustee....................................71
SECTION 7.04. Trustee's Disclaimer............................................71
SECTION 7.05. Notice of Default...............................................71
SECTION 7.06. Reports by Trustee to Holders...................................71
SECTION 7.07. Compensation and Indemnity......................................71
SECTION 7.08. Replacement of Trustee..........................................72
SECTION 7.09. Successor Trustee by Merger, Etc................................73
SECTION 7.10. Eligibility.....................................................73
SECTION 7.11. Money Held in Trust.............................................74
SECTION 7.12. Withholding Taxes...............................................74
ARTICLE EIGHT
DISCHARGE OF INDENTURE
SECTION 8.01. Termination of the Company's Obligations........................74
SECTION 8.02. Defeasance and Discharge of Indenture...........................75
SECTION 8.03. Defeasance of Certain Obligations...............................76
SECTION 8.04. Application of Trust Money......................................77
SECTION 8.05. Repayment to Company............................................77
SECTION 8.06. Reinstatement...................................................78
SECTION 8.07. Defeasance and Certain Other Events of Default..................78
ARTICLE NINE
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 9.01. Without Consent of Holders......................................79
SECTION 9.02. With Consent of Holders.........................................79
SECTION 9.03. Revocation and Effect of Consent................................80
SECTION 9.04. Notation on or Exchange of Notes................................81
SECTION 9.05. Trustee to Sign Amendments, Etc.................................81
SECTION 9.06. Conformity with Trust Indenture Act.............................81
<PAGE>
iv Page
ARTICLE TEN
SECURITY
SECTION 10.01. Security ......................................................82
ARTICLE ELEVEN
MISCELLANEOUS
SECTION 11.01. Trust Indenture Act of 1939....................................83
SECTION 11.02. Notices ......................................................83
SECTION 11.03. Certificate and Opinion As to Conditions Precedent.............85
SECTION 11.04. Statements Required in Certificate or Opinion..................85
SECTION 11.05. Rules by Trustee, Paying Agent or Registrar....................86
SECTION 11.06. Payment Date Other Than a Business Day.........................86
SECTION 11.07. Governing Law; Submission to Jurisdiction; Agent for
Service.....................................................86
SECTION 11.08. No Adverse Interpretation of Other Agreements..................86
SECTION 11.09. No Recourse Against Others.....................................86
SECTION 11.10. Successors.....................................................87
SECTION 11.11. Duplicate Originals............................................87
SECTION 11.12. Separability...................................................87
SECTION 11.13. Table of Contents, Headings, Etc...............................87
SECTION 11.14. Substitution of Currency.......................................87
SECTION 11.15. Method of Payment..............................................88
EXHIBIT A Form of DTC Global Note.....................................A-1
EXHIBIT B Form of DBC Global Note.....................................B-1
EXHIBIT C Form of U.S. Certificated Note..............................C-1
EXHIBIT D Form of Certificate.........................................D-1
EXHIBIT E Form of Certificate to Be Delivered in Connection with
Transfers Pursuant to Regulation S...................E-1
EXHIBIT F Form of Certificate to Be Delivered in Connection with
Transfers to Non-QIB Accredited Investors............F-1
<PAGE>
INDENTURE, dated as of April 8, 1998, between VIATEL, INC., a
Delaware corporation, as issuer (the "Company"), THE BANK OF NEW YORK, a New
York banking corporation as trustee (the "Trustee"), and Deutsche Bank,
Aktiengesellschaft (Deutsche Bank AG), as German paying agent and Co-Registrar
("German Paying Agent").
RECITALS OF THE COMPANY
The Company has duly authorized the execution and delivery of this
Indenture to provide for the issuance from time to time of 11.15% DM Notes due
2008 (the "Notes") issuable as provided in this Indenture. Pursuant to the terms
of a Purchase Agreement dated as of April 3, 1998 (the "Purchase Agreement")
between the Company and Morgan Stanley & Co. Incorporated, as the manager for
itself and the several initial purchasers named on Schedule I thereto (the
"Manager"), the Company has agreed to issue and sell 500,000 Senior Discount
Dollar Units (collectively, the "Senior Discount Dollar Units"), 400,000 Senior
Dollar Units (collectively, the "Senior Dollar Units"), 226,000 Senior Discount
DM Units (collectively, the "Senior Discount DM Units") and 178,000 Senior DM
Units (collectively, the "Senior DM Units"; and together with the Senior
Discount Dollar Units, the Senior Dollar Units and the Senior Discount DM Units,
the "Units"). Each Senior Discount Dollar Unit will consist of (i) one 12.50%
Senior Discount Note due 2008 of the Company with a principal amount of maturity
of $1,000 (collectively, the "Senior Discount Dollar Notes") to be issued
pursuant to the provisions of an Indenture (the "Senior Discount Dollar
Indenture") dated as of the Closing Date (as defined below) between the Company
and the Trustee and (ii) .490 shares of Series A Redeemable Convertible
Preferred Stock of the Company (collectively, the "Series A Preferred"). Each
Senior Dollar Unit will consist of (i) one 11.25% Senior Note due 2008 of the
Company with a principal amount of $1,000 (collectively, the "Senior Dollar
Notes") to be issued pursuant to the provisions of an Indenture (the "Senior
Dollar Indenture") dated as of the Closing Date between the Company and the
Trustee and (ii) .483 shares of Series A Preferred. Each Senior Discount DM Unit
will consist of (i) one 12.40% Senior Discount Note due 2008 of the Company with
a principal amount at maturity of DM 1,000 (collectively, the "Senior Discount
DM Notes") to be issued pursuant to the provisions of an Indenture (the "Senior
Discount DM Indenture") dated as of the Closing Date between the Company, the
Trustee and the German Paying Agent and (ii) 2.77 DM denominated 10%
Subordinated Convertible Debentures of the Company Due 2011 (the "Subordinated
Convertible Debentures") to be issued pursuant to the provisions of an Indenture
(the "Subordinated Indenture") to be dated as of the Closing Date between the
Company, the Trustee and the German Paying Agent. Each Senior DM Unit will
consist of (i) one 11.15% Senior Note due 2008 of the Company with a principal
amount of DM 1,000 (collectively, the "Senior DM Notes"; and together with the
Senior Discount Dollar Notes, the Senior Dollar Notes and the Senior Discount DM
Notes, the "1998 Notes") to be issued pursuant to the provisions of this
Indenture (the "Senior DM Indenture" or "this Indenture"); and together with the
Senior Discount Dollar Indenture, the Senior Dollar Indenture and the Senior
Discount DM Indenture, the "Indentures") dated as of the Closing Date between
the Company and the Trustee and (ii) 2.69 DM denominated 10% Subordinated
Convertible Debentures. The offering of the Senior Discount DM Units and the
Senior DM
<PAGE>
2
Units outside the United States is lead managed by Morgan Stanley Bank AG, an
affiliate of Morgan Stanley & Co. Incorporated. The global offering of the
Senior Discount Dollar Units and the Senior Dollar Units is lead managed by
Morgan Stanley & Co. Incorporated. All references herein to the "Manager"
include Morgan Stanley & Co. Incorporated and Morgan Stanley Bank AG.
All things necessary to make this Indenture a valid agreement of the
Company, in accordance with its terms, have been done, and the Company has done
all things necessary to make the Notes, when executed by the Company and
authenticated and delivered by the Trustee hereunder and duly issued by the
Company, the valid obligations of the Company as hereinafter provided.
The Notes and the Subordinated Convertible Debentures will be
automatically separated upon the date (the "Separation Date") which is the
earliest to occur of (i) the date that is six months after the Closing Date (as
defined below), (ii) the commencement of an exchange offer with respect to the
Notes undertaken pursuant to the Registration Rights Agreement (as defined
below), (iii) the effective date of a shelf registration with respect to resales
of the Notes and (iv) the commencement of an offer to repurchase the Notes
pursuant to the terms of this Indenture.
This Indenture will, upon the effectiveness of the registration
statement provided for under the Registration Rights Agreement, be subject to,
and governed by, the provisions of the Trust Indenture Act of 1939, as amended,
that are required to be a part of and to govern indentures qualified under the
Trust Indenture Act of 1939, as amended.
For and in consideration of the premises and the purchase of the
Notes by the Holders thereof, it is mutually covenanted and agreed, for the
equal and proportionate benefit of all Holders, as follows.
ARTICLE ONE
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. Definitions.
"Acquired Indebtedness" means Indebtedness of a Person existing at
the time such Person becomes a 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 or such Asset Acquisition.
<PAGE>
3
"Adjusted Consolidated Net Income" means, for any period, the
aggregate net income (or loss) of the Company and its Restricted Subsidiaries
for such period determined in conformity with GAAP; provided that the following
items shall be excluded in computing Adjusted Consolidated Net Income (without
duplication): (i) the net income (or loss) of any Person that is not a
Restricted Subsidiary, except (x) with respect to net income, to the extent of
the amount of dividends or other distributions actually paid to the Company or
any of its Restricted Subsidiaries by such Person during such period and (y)
with respect to net losses, to the extent of the amount of Investments made by
the Company or any Restricted Subsidiary in such Person during such period; (ii)
solely for the purposes of calculating the amount of Restricted Payments that
may be made pursuant to clause (C) of the first paragraph of Section 4.04 hereof
(and in such case, except to the extent includable pursuant to clause (i)
above), the net income (or loss) of any Person accrued prior to the date it
becomes a Restricted Subsidiary or is merged into or consolidated with the
Company or any of its Restricted Subsidiaries or all or substantially all of the
property and assets of such Person are acquired by the Company or any of its
Restricted Subsidiaries; (iii) the net income of any Restricted Subsidiary to
the extent that the declaration or payment of dividends or similar distributions
by such Restricted Subsidiary of such net income is not at the time permitted by
the operation of the terms of its charter or any agreement, instrument,
judgment, decree, order, statute, rule or governmental regulation applicable to
such Restricted Subsidiary; (iv) any gains or losses (on an after-tax basis)
attributable to Asset Sales and sales of indefeasible rights-of-use or dark
fibers; (v) except for purposes of calculating the amount of Restricted Payments
that may be made pursuant to clause (C) of the first paragraph of Section 4.04
hereof, any amount paid or accrued as dividends on Preferred Stock of the
Company or any Restricted Subsidiary owned by Persons other than the Company and
any of its Restricted Subsidiaries; (vi) all extraordinary gains and
extraordinary losses; and (vii) any compensation expense paid or payable solely
with Capital Stock (other than Disqualified Stock) of the Company or any
options, warrants or other rights to acquire Capital Stock (other than
Disqualified Stock) of the Company.
"Adjusted Consolidated Net Tangible Assets" means the total amount
of assets of the Company and its Restricted Subsidiaries (less applicable
depreciation, amortization and other valuation reserves), except to the extent
resulting from write-ups of capital assets (excluding write-ups in connection
with accounting for acquisitions in conformity with GAAP), after deducting
therefrom (i) all current liabilities of the Company and its Restricted
Subsidiaries (excluding intercompany items) and (ii) all goodwill, trade names,
trademarks, patents, unamortized debt discount and expense and other like
intangibles, all as set forth on the most recent quarterly or annual
consolidated balance sheet of the Company and its Restricted Subsidiaries,
prepared in conformity with GAAP and filed with the Commission or provided to
the Trustee pursuant to Section 4.18 hereof.
"Affiliate" means, 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
<PAGE>
4
purposes of this definition, "control" (including, with correlative meanings,
the terms "controlling," "controlled by" and "under common control with"), as
applied to any Person, means 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" has the meaning provided in Section 2.07(a) hereof.
"Asset Acquisition" means (i) an investment by the Company or any of
its Restricted Subsidiaries in any other Person pursuant to which such Person
shall become a Restricted Subsidiary or shall be merged into or consolidated
with the Company or any of its Restricted Subsidiaries; provided that such
Person's primary business is related, ancillary or complementary to the
businesses of the Company or any of its Restricted Subsidiaries on the date of
such investment 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 a
division or line of business of such Person; provided that the property and
assets acquired are related, ancillary or complementary to the businesses of the
Company or any of its Restricted Subsidiaries on the date of such acquisition.
"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 (i) all or substantially all of the Capital
Stock of any Restricted Subsidiary or (ii) all or substantially all of the
assets that constitute a division or line of business of the Company or any of
its Restricted Subsidiaries.
"Asset Sale" means any sale, transfer or other disposition
(including by way of merger, consolidation or sale-leaseback transaction) 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 Capital Stock of any Restricted
Subsidiary, (ii) all or substantially all of the property and assets of a
division or line of business of the Company or any of its Restricted
Subsidiaries or (iii) any other property and assets (other than the Capital
Stock or other Investment in an Unrestricted Subsidiary) of the Company or any
of its Restricted Subsidiaries outside the ordinary course of business of the
Company or such Restricted Subsidiary and, in each case, that is not governed by
Article Five hereof; provided that "Asset Sale" shall not include (a) sales or
other dispositions of inventory, receivables and other current assets, (b)
sales, transfers or other dispositions of assets constituting a Restricted
Payment permitted to be made under Section 4.04 hereof, (c) sales, transfers or
other dispositions of assets with a fair market value (as certified in an
Officers' Certificate) not in excess of $1 million in any transaction or series
of related transactions, (d) sales or other
<PAGE>
5
dispositions of assets for consideration at least equal to the fair market value
of the assets sold or disposed of, to the extent that the consideration received
would constitute property or assets of the kind described in clause (B) of
Section 4.11 hereof, (e) any liquidation of Temporary Cash Investments, (f) a
transfer, directly or indirectly, of receivables or other payment rights arising
from a transfer of indefeasible rights of use or dark fiber, which transfer of
receivables or rights is to a special purpose entity created for the purpose of
issuing securities to be paid or redeemed from, or beneficial interests in, the
cash or revenues generated from the assets transferred; provided that the
consideration received by the Company is at least equal to the fair market value
of the asset transferred and the proceeds are used by the Company (A) to repay
unsubordinated Indebtedness of the Company owed to a Person other than the
Company or a Restricted Subsidiary, (B) to invest in the manner described in
clause (i)(B) of Section 4.11 hereof covenant or (C) for working capital
purposes or (g) other transfers of indefeasible rights of use or dark fiber.
"Average Life" means, at any date of determination with respect to
any debt security, the quotient obtained by dividing (i) the sum of the products
of (a) the number of years from such date of determination to the dates of each
successive scheduled principal payment of such debt security and (b) the amount
of such principal payment by (ii) the sum of all such principal payments.
"Board of Directors" means the Board of Directors of the Company as
required by the context or any committee of such Board of Directors duly
authorized to act under this Indenture.
"Board Resolution" means a copy of a resolution, certified by the
Secretary or Assistant Secretary of the Company as required by the context to
have been duly adopted by the Board of Directors and to be in full force and
effect on the date of such certification, and delivered to the Trustee.
"Business Day" means any day except a Saturday, Sunday or other day
on which commercial banks in The City of New York, or in the city of the
Corporate Trust Office of the Trustee, are authorized or required by law to
close.
"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, whether outstanding on
the Closing Date or issued thereafter, including, without limitation, all Common
Stock and Preferred Stock.
"Capitalized Lease" means, as applied to any Person, any lease of
any property (whether real, personal or mixed) of which the discounted present
value of the rental obligations
<PAGE>
6
of such Person as lessee, in conformity with GAAP, is required to be capitalized
on the balance sheet of such Person.
"Capitalized Lease Obligations" means the discounted present value
of the rental obligations under a Capitalized Lease.
"Certificated Notes" has the meaning provided in Section 2.01
hereof.
"Change of Control" means such time as (i) a "person" or a "group"
(within the meaning of Sections 13(d) and 14(d)(2) of the Exchange Act) 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 Voting Stock of the
Company on a fully diluted basis; or (ii) individuals who on the Closing Date
constitute the Board of Directors (together with any new directors whose
election by the Board of Directors or whose nomination to the Board of Directors
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 in office who either
were members of the Board of Directors on the Closing Date or whose election or
nomination for election was previously so approved) cease for any reason to
constitute a majority of the members of the Board of Directors then in office.
"Closing Date" means the date on which the Notes are originally
issued under this Indenture.
"Commission" means the Securities and Exchange Commission, as from
time to time constituted, created under the Exchange Act or, if at any time
after the execution of this instrument such Commission is not existing and
performing the duties now assigned to it under the TIA, then the body performing
such duties at such time.
"Common Stock" means, with respect to any Person, any and all
shares, interests, participations or other equivalents (however designated,
whether voting or non-voting) of such Person's common stock, whether now
outstanding or issued after the date of this Indenture, including, without
limitation, all series and classes of such common stock.
"Company" means the party named as such in the first paragraph of
this Indenture until a successor replaces it pursuant to the applicable
provisions of this Indenture and thereafter means the successor.
"Company Order" means a written request or order signed in the name
of the Company (i) by its Chairman of the Board, the Vice Chairman of the Board,
its President or a Vice President and (ii) by its Chief Financial Officer,
Treasurer, an Assistant Treasurer, its Secretary or an Assistant Secretary and
delivered to the Trustee; provided, however, that such written request or order
may be signed by any two of the officers or directors listed in clause (i)
<PAGE>
7
above in lieu of being signed by one of such officers or directors listed in
such clause (i) and one of the officers listed in clause (ii) above.
"Consolidated EBITDA" means, for any period, Adjusted Consolidated
Net Income for such period plus, to the extent such amount was deducted in
calculating such Adjusted Consolidated Net Income, (i) Consolidated Interest
Expense, (ii) income taxes, (iii) depreciation expense, (iv) amortization
expense and (v) all other non-cash items reducing Adjusted Consolidated Net
Income (other than items that will require cash payments and for which an
accrual or reserve is, or is required by GAAP to be, made), less all non-cash
items increasing Adjusted Consolidated Net Income, all as determined on a
consolidated basis for the Company and its Restricted Subsidiaries in conformity
with GAAP; provided that, if any Restricted Subsidiary is not a Wholly Owned
Restricted Subsidiary, Consolidated EBITDA shall be reduced (to the extent not
otherwise reduced in accordance with GAAP) by an amount equal to (A) the amount
of the Adjusted Consolidated Net Income attributable to such Restricted
Subsidiary multiplied by (B) the percentage ownership interest in the income of
such Restricted Subsidiary not owned on the last day of such period by the
Company or any of its Restricted Subsidiaries.
"Consolidated Interest Expense" means, for any period, the aggregate
amount of interest in respect of Indebtedness (including, without limitation,
amortization of original issue discount on any Indebtedness and the interest
portion of any deferred payment obligation, calculated in accordance with the
effective interest method of accounting; 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
in respect of Indebtedness that is Guaranteed or secured by the Company or any
of its Restricted Subsidiaries), and all but the principal component of rentals
in respect of Capitalized Lease Obligations paid, accrued or scheduled to be
paid or to be accrued by the Company and its Restricted Subsidiaries during such
period.
"Consolidated Leverage Ratio" means, on any Transaction Date, the
ratio of (i) the aggregate amount of Indebtedness of the Company and its
Restricted Subsidiaries on a consolidated basis outstanding on such Transaction
Date to (ii) four times Consolidated EBITDA for the then most recent fiscal
quarter for which financial statements of the Company have been filed with the
Commission or provided to the Trustee pursuant to Section 4.18 hereof; provided
that, in making the foregoing calculation, (A) pro forma effect shall be given
to the Incurrence or repayment of any Indebtedness to be Incurred or repaid on
the Transaction Date; (B) pro forma effect shall be given to Asset Dispositions
and Asset Acquisitions (including giving pro forma effect to the application of
proceeds of any Asset Disposition) that occur from the beginning of the then
most recent four fiscal quarters through the Transaction Date (the "Reference
Period"), as if they had occurred and such proceeds had been applied on the
first day of such Reference Period; and (C) pro forma effect shall be given to
asset dispositions and asset acquisitions
<PAGE>
8
(including giving pro forma effect to the application of proceeds of any asset
disposition) that have been made by any Person that has become a Restricted
Subsidiary or has been merged with or into the Company or any Restricted
Subsidiary during such Reference Period and that would have constituted Asset
Dispositions or Asset Acquisitions had such transactions occurred when such
Person was a Restricted Subsidiary as if such asset dispositions or asset
acquisitions were Asset Dispositions or Asset Acquisitions that occurred on the
first day of such Reference Period; provided that to the extent that clause (B)
or (C) of this sentence requires that pro forma effect be given to an Asset
Acquisition or Asset Disposition, such pro forma calculation shall be based upon
the four full fiscal quarters immediately preceding the Transaction Date of the
Person, or division or line of business of the Person, that is acquired or
disposed of for which financial information is available.
"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 the Company and its Restricted Subsidiaries
(which shall be as of a date not more than 90 days prior to the date of such
computation, and which shall not take into account Unrestricted Subsidiaries),
including, without limitation, the respective amounts reported on such balance
sheet attributable to Preferred Stock, less any amounts attributable to
Disqualified 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 the Capital Stock of the Company or
any of its Restricted Subsidiaries, each item to be determined in conformity
with GAAP (excluding the effects of foreign currency exchange adjustments under
Financial Accounting Standards Board Statement of Financial Accounting Standards
No. 52).
"Corporate Trust Office" means the office of the Trustee at which
the corporate trust business of the Trustee shall, at any particular time, be
principally administered, which office is, at the date of this Indenture,
located at 101 Barclay Street, Floor 21 West, New York NY 10286, Attention:
Corporate Trust Administration.
"Currency Agreement" means any foreign exchange contract, currency
swap agreement or other similar agreement or arrangement.
"DBC" means Deutsche Borse Clearing Frankfurt am Main and any
successor thereto.
"DBC Global" has the meaning provided in Section 2.01 hereof.
"Default" means any event that is, or after notice or passage of
time or both would be, an Event of Default.
<PAGE>
9
"Depository" shall mean DTC, its nominees and their respective
successors, and DBC.
"Disqualified Stock" means any class or series of Capital Stock of
any Person that by its terms or otherwise is (i) required to be redeemed prior
to the Stated Maturity of the Notes, (ii) redeemable at the option of the holder
of such class or series of Capital Stock at any time prior to the Stated
Maturity of the Notes or (iii) convertible into or exchangeable for Capital
Stock referred to in clause (i) or (ii) above or Indebtedness having a scheduled
maturity prior to the Stated Maturity of the Notes; provided that any Capital
Stock that would not constitute Disqualified Stock but for provisions thereof
giving holders thereof the right to require such Person to repurchase or redeem
such Capital Stock upon the occurrence of an "asset sale" or "change of control"
occurring prior to the Stated Maturity of the Notes shall not constitute
Disqualified Stock if the "asset sale" or "change of control" provisions
applicable to such Capital Stock are no more favorable to the holders of such
Capital Stock than the provisions contained in Sections 4.11 and 4.12 hereof,
and such Capital Stock, or the agreements or instruments governing the
redemption rights thereof, specifically provides that such Person will not
repurchase or redeem any such stock pursuant to such provision prior to the
Company's repurchase of such Notes as are required to be repurchased pursuant to
Sections 4.11 and 4.12 hereof.
"DM" means Deutsche Mark.
"DM Pledge Account" means an account established with the Trustee
pursuant to the terms of the Pledge Agreement for the deposit of the DM Pledged
Securities purchased by the Company with a portion of the proceeds from the sale
of the Senior DM Notes.
"DM Pledged Securities" means the securities originally purchased by
the Company with a portion of the proceeds from the sale of the Senior DM Notes,
which shall consist of Government Securities, to be deposited in the DM Pledge
Account, all in accordance with the terms of the Pledge Agreement.
"DTC" means The Depository Trust Company.
"DTC Global" has the meaning provided in Section 2.01 hereof.
"Event of Default" has the meaning provided in Section 6.01 hereof.
"Excess Proceeds" has the meaning provided in Section 4.11 hereof.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
<PAGE>
10
"Exchange Notes" means any notes of the Company containing terms
identical to the Notes (except that such Exchange Notes (i) shall be registered
under the Securities Act, (ii) will not provide for an increase in the rate of
interest (other than with respect to overdue amounts) and (iii) will not contain
terms with respect to transfer restrictions) that are issued and exchanged for
the Notes pursuant to the Registration Rights Agreement and this Indenture.
"Existing Stockholder Agreements" means the Stock Purchase
Agreement, dated as of September 30, 1993, between the Company and S-C V-Tel,
the Stock Purchase Agreement dated as of April 5, 1994, between the Company and
COMSAT, the S-C V-Tel Shareholders' Agreement and the COMSAT Shareholders'
Agreement, in each case, any amendments to such agreements.
"fair market value" means the price that would be paid in an
arm's-length transaction between an informed and willing seller under no
compulsion to sell and an informed and willing buyer under no compulsion to buy,
as determined in good faith by the Board of Directors, whose determination shall
be conclusive if evidenced by a Board Resolution; provided that for purposes of
clause (viii) of the second paragraph of Section 4.03 hereof, (x) the fair
market value of any security registered under the Exchange Act shall be the
average of the closing prices, regular way, of such security for the 20
consecutive trading days immediately preceding the sale of Capital Stock and (y)
in the event the aggregate fair market value of any other property (other than
cash or cash equivalents) received by the Company exceeds $30 million, the fair
market value of such property shall be determined by a nationally recognized
investment banking firm or a nationally recognized firm having expertise in the
specific area which is the subject of such determination and set forth in their
written opinion which shall be delivered to the Trustee.
"Federal Republic of Germany Obligations" means securities that are
direct and unconditional obligations of the Federal Republic of Germany or any
of its states (Bundeslander), as defined in Section 1807, Paragraph 1, No. 2 of
the German Civil Code (Burgerliches Gesetzbuch), as from time to time amended
and are not callable or redeemable at the option of the issuer thereof.
"GAAP" means generally accepted accounting principles in the United
States of America as in effect as of the Closing Date, including, without
limitation, those set forth in the opinions and pronouncements of the Accounting
Principles Board of the American Institute of Certified Public Accountants and
statements and pronouncements of the Financial Accounting Standards Board or in
such other statements by such other entity as approved by a significant segment
of the accounting profession. All ratios and computations contained or referred
to in this Indenture shall be computed in conformity with GAAP applied on a
consistent basis, except that calculations made for purposes of determining
compliance with the terms of the covenants and with other provisions of this
Indenture shall be made without giving effect to (i) the amortization or
write-off of any expenses incurred in connection with the offering of the Units
consisting of
<PAGE>
11
the 1998 Notes and Preferred Stock of the Company and related tender offer and
consent solicitation, (ii) except as otherwise provided, the amortization of any
amounts required or permitted by Accounting Principles Board Opinion Nos. 16 and
17.
"German Paying Agent" means Deutsche Bank and any successor German
Paying Agent, except that, for the purposes of Article Eight, the German Paying
Agent shall not be the Company or a Subsidiary of the Company or an Affiliate of
any of them.
"Global Notes" has the meaning provided in Section 2.01.
"Government Securities" means, in connection with the DM Pledged
Securities, the direct obligations of, obligations fully guaranteed by, or
participations in pools consisting solely of obligations of, or obligations
guaranteed by, the Federal Republic of Germany for the payment of which
guarantee or obligations the full faith and credit of the Federal Republic of
Germany is pledged and which 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 of any other Person
and, without limiting the generality of the foregoing, any obligation, direct or
indirect, contingent or otherwise, of such Person (i) to purchase or pay (or
advance or supply funds for the purchase or payment of) such Indebtedness of
such other Person (whether arising by virtue of partnership arrangements, or by
agreements to keep-well, to purchase assets, goods, securities or services
(unless such purchase arrangements are on arm's-length terms and are entered
into in the ordinary course of business), to take-or-pay, or to maintain
financial statement conditions or otherwise) or (ii) entered into for purposes
of assuring in any other manner the obligee of such Indebtedness of the payment
thereof or to protect such obligee against loss in respect thereof (in whole or
in part); 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.
"Guaranteed Indebtedness" has the meaning provided in Section 4.07
hereof.
"Holder" or "Noteholder" means the registered holder of any Note.
"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 Acquired Indebtedness; provided that
neither the accrual of interest nor the accretion of original issue discount
shall 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 for
borrowed money, (ii) all obligations of such Person evidenced by bonds,
debentures, notes or other similar instruments, (iii) all
<PAGE>
12
obligations of such Person in respect of letters of credit or other similar
instruments (including reimbursement obligations with respect thereto, but
excluding obligations with respect to letters of credit (including trade letters
of credit) securing obligations (other than obligations described in (i) or (ii)
above or (v), (vi) or (vii) below) entered into in the ordinary course of
business of such Person to the extent such letters of credit are not drawn upon
or, if drawn upon, to the extent such drawing is reimbursed no later than the
third Business Day following receipt by such Person of a demand for
reimbursement), (iv) all obligations of such Person to pay the deferred and
unpaid 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, (v) all Capitalized Lease Obligations of such Person, (vi) all
Indebtedness of other Persons secured by a Lien on any asset of such Person,
whether or not such Indebtedness is assumed by such Person; provided that the
amount of such Indebtedness shall be the lesser of (A) the fair market value of
such asset at such date of determination and (B) the amount of such
Indebtedness, (vii) all Indebtedness of other Persons Guaranteed by such Person
to the extent such Indebtedness is Guaranteed by such Person and (viii) 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 the maximum liability at such
time with respect to contingent obligations upon the occurrence of the
contingency giving rise to the obligation, which, in the case of a Guarantee,
shall be the outstanding balance of the Guaranteed Indebtedness, provided (A)
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 the
time of its issuance as determined in conformity with GAAP, (B) that money
borrowed and set aside at the time of the Incurrence of any Indebtedness in
order to prefund the payment of the interest on such Indebtedness shall not be
deemed to be "Indebtedness" so long as such money is held to secure the payment
of such interest and (C) that Indebtedness shall not include any liability for
federal, state, local or other taxes.
"Indenture" means this Indenture as originally executed or as it may
be amended or supplemented from time to time by one or more indentures
supplemental to this Indenture entered into pursuant to the applicable
provisions of this Indenture.
"Institutional Accredited Investor" shall mean an institution that
is an "accredited investor" as that term is defined in Rule 501(a)(1), (2), (3)
or (7) under the Securities Act.
"Interest Payment Date" means each semiannual interest payment date
on April 15 and October 15 of each year, commencing October 15, 1998.
"Interest Rate Agreement" means any interest rate protection
agreement, interest rate future agreement, interest rate option agreement,
interest rate swap agreement, interest rate
<PAGE>
13
cap agreement, interest rate collar agreement, interest rate hedge agreement,
option or future contract or other similar agreement or arrangement.
"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 extensions of credit to
customers in the ordinary course of business that are, in conformity with GAAP,
recorded as accounts receivable on the balance sheet of the Company or its
Restricted Subsidiaries) or capital contribution to (by means of any transfer of
cash or other property to others or any payment for property or services for the
account or use of others), or any purchase or acquisition of Capital Stock,
bonds, notes, debentures or other similar instruments issued by, such Person and
shall include (i) the designation of a Restricted Subsidiary as an Unrestricted
Subsidiary and (ii) the fair market value of the Capital Stock (or any other
Investment), held by the Company or any of its Restricted Subsidiaries, of (or
in) any Person that has ceased to be a Restricted Subsidiary, including, without
limitation, by reason of any transaction permitted by clause (iii) of Section
4.06 hereof; provided that the fair market value of the Investment remaining in
any Person that has ceased to be a Restricted Subsidiary shall not exceed the
aggregate amount of Investments previously made in such Person valued at the
time such Investments were made less the net reduction of such Investments. For
purposes of the definition of "Unrestricted Subsidiary" and Section 4.04 hereof,
(i) "Investment" shall include the fair market value of the assets (net of
liabilities (other than liabilities to the Company or any of its Restricted
Subsidiaries)) of any Restricted Subsidiary at the time that such Restricted
Subsidiary is designated an Unrestricted Subsidiary, (ii) the fair market value
of the assets (net of liabilities (other than liabilities to the Company or any
of its Restricted Subsidiaries)) of any Unrestricted Subsidiary at the time that
such Unrestricted Subsidiary is designated a Restricted Subsidiary shall be
considered a reduction in outstanding Investments and (iii) any property
transferred to or from an Unrestricted Subsidiary shall be valued at its fair
market value at the time of such transfer.
"Lien" means any mortgage, pledge, security interest, encumbrance,
lien or charge of any kind (including, without limitation, any conditional sale
or other title retention agreement or lease in the nature thereof or any
agreement to give any security interest).
"Manager" means Morgan Stanley & Co. Incorporated and Morgan Stanley
Bank AG, as lead managers for the several initial purchasers named in the
Purchase Agreement. The offering of the Notes outside the U.S. will be lead
managed by Morgan Stanley AG.
"Moody's" means Moody's Investors Service, Inc. and its successors.
"Net Cash Proceeds" means, (a) with respect to any Asset Sale, the
proceeds of such Asset Sale in the form of cash or cash equivalents, including
payments in respect of deferred payment obligations (to the extent corresponding
to the principal, but not interest, component thereof) when received in the form
of cash or cash equivalents (except to the extent
<PAGE>
14
such obligations are financed or sold with recourse to the Company or any
Restricted Subsidiary) 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) provisions for all
taxes (whether or not such taxes will actually be paid or are payable) as a
result of such Asset Sale without regard to the consolidated results of
operations of the Company and its Restricted Subsidiaries, taken as a whole,
(iii) payments made or required to be 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, (iv) payments made or required to be made to Persons having
a beneficial interest in the assets subject to the Asset Sale, and (v)
appropriate amounts to be provided by the Company or any Restricted Subsidiary
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 GAAP, and (b) with respect to any issuance or sale of Capital
Stock, the proceeds of such 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 such
obligations are financed or sold with recourse to the Company or any Restricted
Subsidiary) 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.
"1998 Notes" means the Notes issued pursuant to this Indenture,
together with the Senior Dollar Notes, Senior Discount Dollar Notes and the
Senior Discount DM Notes.
"Non-U.S. Person" means a Person who is not a U.S. person, as
defined in Regulation S.
"Notes" means any of the notes, as defined in the first paragraph of
the recitals hereof, that are authenticated and delivered under this Senior DM
Indenture. For all purposes of this Indenture, the term "Notes" shall include
any Exchange Notes to be issued and exchanged for any Notes pursuant to the
Registration Rights Agreement and this Indenture and, for purposes of this
Indenture, all Notes and Exchange Notes shall vote together as one series of
Notes under this Indenture.
"Note Register" has the meaning provided in Section 2.04.
"Offer to Purchase" means an offer to purchase Notes by the Company
from the Holders commenced by mailing a notice to the Trustee and each Holder
stating: (i) the covenant
<PAGE>
15
pursuant to which the offer is being made and that all Notes validly tendered
will be accepted for payment on a pro rata basis; (ii) the purchase price and
the date of purchase (which shall be a Business Day no earlier than 30 days nor
later than 60 days from the date such notice is mailed) (the "Payment Date");
(iii) that any Note not tendered will continue to accrue interest pursuant to
its terms; (iv) that, unless the Company defaults in the payment of the purchase
price, any Note accepted for payment pursuant to the Offer to Purchase shall
cease to accrue interest on and after the Payment Date; (v) that Holders
electing to have a Note purchased pursuant to the Offer to Purchase will be
required to surrender the Note, together with the form entitled "Option of the
Holder to Elect Purchase" on the reverse side of the Note completed, to the
Paying Agent at the address specified in the notice prior to the close of
business on the Business Day immediately preceding the Payment Date; (vi) that
Holders will be entitled to withdraw their election if the Paying Agent
receives, not later than the close of business on the third Business Day
immediately preceding the Payment Date, a telegram, facsimile transmission or
letter setting forth the name of such Holder, the principal amount of Notes
delivered for purchase and a statement that such Holder is withdrawing 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 Notes surrendered; provided that each Note
purchased and each new Note issued shall be in a principal amount of DM 1,000 or
an integral multiple thereof. On the Payment Date, the Company shall (i) accept
for payment on a pro rata basis Notes or portions thereof tendered pursuant to
an Offer to Purchase; (ii) deposit with the Paying Agent money sufficient to pay
the purchase price of all Notes or portions thereof so accepted; and (iii)
deliver, or cause to be delivered, to the Trustee all Notes or portions thereof
so accepted together with an Officers' Certificate specifying the Notes or
portions thereof accepted for payment by the Company. The Paying Agent shall
promptly mail to the Holders of Notes so accepted payment in an amount equal to
the purchase price, and the Trustee shall promptly authenticate and mail to such
Holders a new Note equal in principal amount to any unpurchased portion of the
Note surrendered; provided that each Note purchased and each new Note issued
shall be in a principal amount of DM 1,000 or an integral multiple thereof. The
Company will publicly announce the results of an Offer to Purchase as soon as
practicable after the Payment Date. The Trustee shall act as the Paying Agent
for an Offer to Purchase. The Company will comply with Rule 14e-1 under the
Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable, in the event that the Company
is required to repurchase Notes pursuant to an Offer to Purchase.
"Officer" means, with respect to the Company, (i) the Chairman of
the Board, the Vice Chairman of the Board, the President, the Chief Executive
Officer, the Chief Financial Officer or a Vice President, and (ii) the Treasurer
or any Assistant Treasurer, or the Secretary or any Assistant Secretary of the
Company.
"Officers' Certificate" means a certificate signed by one Officer
listed in clause (i) of the definition thereof and one Officer listed in clause
(ii) of the definition thereof; provided, however, that any such certificate may
be signed by any two of the Officers listed in clause (i) of the definition
thereof in lieu of being signed by one Officer listed in clause (i) of
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16
the definition thereof and one Officer listed in clause (ii) of the definition
thereof. Each Officers' Certificate (other than certificates provided pursuant
to TIA Section 314(a)(4)) shall include the statements provided for in TIA
Section 314(e).
"Opinion of Counsel" means a written opinion signed by legal counsel
who may be an employee of or counsel to the Company. Each such Opinion of
Counsel shall include the statements provided for in TIA Section 314(e).
"Participant" means, with respect to DTC, Euroclear or Cedel, a
Person who has an account with DTC, Euroclear or Cedel, respectively (and, with
respect to DTC, shall include Euroclear and Cedel).
"Paying Agent" means the German Paying Agent, any successor thereof,
the U.S. Paying Agent, any successor thereof, and any other Person (including
the Company acting as the Paying Agent, except that, for the purposes of Article
Eight, the Paying Agent shall not be the Company or a Subsidiary of the Company
or an Affiliate of any of them), authorized by the Company to pay principal and
premium, if any, or interest on any Notes on behalf of the Company.
"Payment Date" means the date of purchase, which shall be a Business
Day no earlier than 30 days nor later than 60 days from the date of notice is
mailed pursuant to an Offer to Purchase.
"Permanent DBC Global" means the permanent global Notes issued in
exchange for one or more Temporary DBC Global, substantially in the form of
Exhibit B attached hereto.
"Permitted Investment" means (i) an Investment in the Company or 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; provided that such Person's primary business is
related, ancillary or complementary to the businesses of the Company or any of
its Restricted Subsidiaries on the date of such Investment; (ii) Temporary Cash
Investments; (iii) payroll, travel and similar advances to cover matters that
are expected at the time of such advances ultimately to be treated as expenses
in accordance with GAAP; (iv) Investments received in the bankruptcy or
reorganization of a Person or any exchange of such Investment with the issuer
thereof or taken in settlement of or other resolution of claims or disputes or
acquired as the result of foreclosure of any secured Investment and, in each
case, extensions, modifications and renewal thereof; (v) Investments in prepaid
expenses, negotiable instruments held for collection and lease, utility and
worker's compensation, performance and other similar deposits; (vi) Interest
Rate Agreements and Currency Agreements designed solely to protect the Company
or its Restricted Subsidiaries against fluctuations in interest rates or foreign
currency
<PAGE>
17
exchange rates; (vii) loans or advances to officers or employees of the Company
or any Restricted Subsidiary that do not in the aggregate exceed $1 million at
any time outstanding; (viii) investments consisting of securities issued by or
beneficial interests in a special purpose entity referred to in clause (f) of
the definition of "Asset Sale" and which are received in exchange for assets
that are transferred by the Company or a Restricted Subsidiary to such special
purpose entity and used for the purpose referred to therein; and (ix)
Investments as a result of consideration received in connection with an Asset
Sale made in compliance with Section 4.11 hereof.
"Permitted Joint Venture" means any joint venture between the
Company or any Restricted Subsidiary and (i) any Person, other than a
Subsidiary, engaged in the provision or sale of telecommunications services or
(ii) any Person engaged as an independent sale representative of the Company;
provided that, prior to making any Investment in such a Person, the Company's
Board of Directors shall have determined that such Investment fits the Company's
strategic plan and is on terms that are fair and reasonable to the Company.
"Permitted Liens" means (i) Liens for taxes, assessments,
governmental charges or claims not yet subject to penalty or 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 GAAP shall have been made; (ii)
statutory and common law 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 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) Liens incurred or deposits made to secure the
performance of tenders, bids, leases, statutory or regulatory obligations,
bankers' acceptances, surety and appeal bonds, government contracts, performance
and return-of-money bonds and other obligations of a similar nature incurred in
the ordinary course of business (exclusive of obligations for the payment of
borrowed money); (v) 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; (vi) Liens (including extensions and
renewals thereof) upon real or personal (whether tangible or intangible)
property acquired after the Closing Date; provided that (a) such Lien is created
solely for the purpose of securing Indebtedness Incurred, in accordance with
Section 4.03 hereof, to finance or refinance the cost (including the cost of
design, development, acquisition, construction, installation, improvement,
transportation or integration) of the item or related group of items of property
or assets subject thereto or the business in which such property or assets are
used and such Lien is created prior to, at the time of or within eighteen months
after the later of the acquisition, the completion of (except in the case of
refinancing) construction or the
<PAGE>
18
commencement of full operation of such property, (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 or group of items of property or assets and any improvements on such item;
(vii) leases or subleases granted to others that do not materially interfere
with the ordinary course of business of the Company and its Restricted
Subsidiaries, taken as a whole; (viii) Liens encumbering property or assets
under construction arising from progress or partial payments by a customer of
the Company or its Restricted Subsidiaries relating to such property or assets;
(ix) any interest or title of a lessor in the property subject to any
Capitalized Lease or operating lease; (x) Liens arising from filing Uniform
Commercial Code financing statements regarding leases; (xi) Liens on property
of, or on shares of Capital Stock or Indebtedness of, any Person existing at the
time such Person becomes, or becomes a part of, any Restricted Subsidiary;
provided that such Liens do not extend to or cover any property or assets of the
Company or any Restricted Subsidiary other than the property or assets acquired;
(xii) Liens in favor of the Company or any Restricted Subsidiary; (xiii) Liens
arising from the rendering of a final judgment or order against the Company or
any Restricted Subsidiary that does not give rise to an Event of Default; (xiv)
Liens securing reimbursement obligations with respect to letters of credit that
encumber documents and other property relating to such letters of credit and the
products and proceeds thereof; (xv) Liens in favor of customs and revenue
authorities arising as a matter of law to secure payment of customs duties in
connection with the importation of goods; (xvi) Liens encumbering customary
initial deposits and margin deposits, and other Liens that are within the
general parameters customary in the industry and incurred in the ordinary course
of business, in each case, securing Indebtedness under Interest Rate Agreements
and Currency Agreements and forward contracts, options, future contracts,
futures options or similar agreements or arrangements designed solely to protect
the Company or any of its Restricted Subsidiaries from fluctuations in interest
rates, currencies or the price of commodities; (xvii) 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 Closing Date; (xviii) Liens
on or sales of receivables or other rights to payment; (xix) Liens secured with
assets that have a fair market value not in excess of 15% of Adjusted
Consolidated Net Tangible Assets when such Liens are Incurred; and (xx) any
extension, renewal, or replacement (or successive extensions, renewals, or
replacements) in whole or in part of Liens described in clauses (i) through
(xix) above.
"Permitted Wholesale Consortium" means any Person in which the
Company Invests for the principal purpose of leasing or otherwise acquiring
transmission rights with respect to long distance telecommunications; provided
that prior to making any Investment in such a Person, the Company's Board of
Directors shall have determined that such Investment will afford the Company
greater economic benefits than it could otherwise obtain from other sources of
transmission rights.
<PAGE>
19
"Person" means an individual, a corporation, a partnership, a
limited liability company, a joint venture, an association, a trust, an
unincorporated organization or any other entity or organization, including a
government or political subdivision or an agency or instrumentality thereof.
"Pledge Agreement" means the Collateral Pledge and Security
Agreement, dated as of the date of this Indenture, made by the Company in favor
of the Trustee, governing the disbursement of funds from the DM Pledge Account,
as such agreement may be amended, restated, supplemented or otherwise modified
from time to time.
"Preferred Stock" or "preferred stock" means, with respect to any
Person, any and all shares, interests, participation or other equivalents
(however designated, whether voting or non-voting) of such Person's preferred or
preference stock, whether now outstanding or issued after the date of this
Indenture, including, without limitation, all series and classes of such
preferred or preference stock, including the Series A Preferred.
"principal" of a debt security, including the Notes, means the
principal amount due on the Stated Maturity as shown on such debt security.
"Private Placement Legend" means the legend initially set forth on
the Notes in the form set forth in Section 2.02(a).
"Public Equity Offering" means an underwritten primary public
offering of Common Stock of the Company pursuant to an effective registration
statement under the Securities Act.
"Purchase Agreement" has the meaning provided in the recitals to
this Agreement.
"QIB" means a "qualified institutional buyer" as defined in Rule
144A.
"Redemption Date", when used with respect to any Note or part
thereof to be redeemed, means the date fixed for such redemption by or pursuant
to the terms of the Notes and this Indenture.
"Redemption Price", when used with respect to any Note or part
thereof to be redeemed, means the price at which such Note is to be redeemed
pursuant to the terms of the Notes and this Indenture.
"Registrar" has the meaning provided in Section 2.04.
"Registration Rights Agreement" means the Registration Rights
Agreement, dated as of April 3, 1998, between the Company and Morgan Stanley &
Co. Incorporated, on behalf of
<PAGE>
20
itself and Morgan Standly Bank AG, Salomon Brothers Inc, NationsBanc Montgomery
Securities LLC and ING Baring (U.S.) Securities, Inc., relating to the Notes.
"Registration Statement" means any registration statement of the
Company that covers any of the Exchange Notes, and all amendments and
supplements to any such Registration Statement, including post-effective
amendments, in each case including the prospectus contained therein, all
exhibits thereto and all material incorporated by reference therein.
"Regular Record Date" for the interest payable on any Interest
Payment Date means April 1 or October 1 (whether or not a Business Day), as the
case may be, next preceding such Interest Payment Date.
"Regulation S" means Regulation S under the Securities Act.
"Regulation S Certificated Notes" has the meaning provided in
Section 2.01.
"Responsible Officer", when used with respect to the Trustee, means
any officer of the Trustee with direct responsibility for the administration of
this Indenture and also means, with respect to a particular corporate trust
matter, any other officer to whom such matter is referred because of his or her
knowledge of and familiarity with the particular subject.
"Restricted Payments" has the meaning provided in Section 4.04.
"Restricted Subsidiary" means any Subsidiary of the Company other
than an Unrestricted Subsidiary.
"Rule 144A" means Rule 144A under the Securities Act.
"Securities Act" means the Securities Act of 1933, as amended.
"Senior Discount DM Indenture" means the Indenture dated as of the
Closing Date between the Company, and The Bank of New York, governing the
issuance of the Senior Discount Dollar Notes.
"Senior Discount DM Notes" means the notes issued pursuant to the
Senior Discount DM Indenture.
"Senior Discount DM Units" means the senior Discount DM Units, each
consisting of one Senior Discount DM Note and 2.77 DM denominated 10%
Subordinated Convertible Debentures.
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21
"Senior Discount Dollar Indenture" means the Indenture dated as of
the Closing Date between the Company, and The Bank of New York, governing the
issuance of the Senior Discount Dollar Notes.
"Senior Discount Dollar Notes" means the notes issued pursuant to
the Senior Discount Dollar Indenture.
"Senior Discount Dollar Units" means the Senior Discount Dollar
Units, each consisting of one Senior Discount Dollar Note and .490 shares of
Series A Preferred.
"Senior DM Indenture" means this Indenture.
"Senior DM Notes" means the notes issued pursuant to this Indenture.
"Senior DM Units" means the Senior DM Units, each consisting of one
Senior DM Note and 2.69 DM denominated 10% Subordinated Convertible Debentures.
"Senior Dollar Indenture" means the Indenture dated as of the
Closing Date between the Company and The Bank of New York, governing the
issuance of the Senior Dollar Notes.
"Senior Dollar Notes" means the notes issued pursuant to the Senior
Dollar Indenture.
"Senior Dollar Units" means the Senior Dollar Units, each consisting
of one Senior Dollar Note and .483 shares of Series A Preferred.
"Separation Date" has the meaning specified in the recitals to this
Indenture.
"Series A Preferred" means the Series A preferred stock, $.01 par
value per share, of the Company.
"Significant Subsidiary" means, at any date of determination, any
Restricted Subsidiary that, together with its Subsidiaries, (i) for the most
recent fiscal year of the Company, accounted for more than 10% of the
consolidated revenues of the Company and its Restricted Subsidiaries or (ii) as
of the end of such fiscal year, was the owner of more than 10% of the
consolidated assets of the Company and its Restricted Subsidiaries, all as set
forth on the most recently available consolidated financial statements of the
Company for such fiscal year.
"Specified Date" means any Redemption Date, any Payment Date for an
Offer to Purchase or any date on which the Notes first become due and payable
after an Event of Default.
<PAGE>
22
"S&P" means Standard & Poor's Ratings Services and its successors.
"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 Subordinated Indebtedness" means Indebtedness of the
Company Incurred to finance the acquisition of a Person engaged in a business
that is related, ancillary or complementary to the business conducted by the
Company or any of its Restricted Subsidiaries, which Indebtedness by its terms,
or by the terms of any agreement or instrument pursuant to which such
Indebtedness is Incurred, (i) is expressly made subordinate in right of payment
to the Notes and (ii) provides that no payment of principal, premium or interest
on, or any other payment with respect to, such Indebtedness may be made prior to
the payment in full of all of the Company's obligations under the Notes;
provided that such Indebtedness may provide for and be repaid at any time from
the proceeds of a capital contribution, the sale of Capital Stock (other than
Disqualified Stock) of the Company, or other Strategic Subordinated Indebtedness
Incurred after the Incurrence of such Indebtedness.
"Subordinated Convertible Debentures" means the debentures issued
pursuant to the Subordinated Indenture.
"Subordinated Indenture" means the Indenture dated as of the Closing
Date between the Company, The Bank of New York and Deutsche Bank, governing the
issuance of the Subordinated Convertible Debentures.
"Subsidiary" means, with respect to any Person, any corporation,
association or other business entity of which more than 50% of the voting power
of the outstanding Voting Stock is owned, directly or indirectly, by such Person
and one or more other Subsidiaries of such Person.
"Temporary Cash Investment" means any of the following: (i) direct
obligations of the United States of America or any agency thereof or obligations
fully and unconditionally guaranteed by the United States of America or any
agency thereof, (ii) time deposit accounts, eurodollar time deposits, bankers'
acceptances, certificates of deposit and money market deposits, in each case
maturing within one year of the date of acquisition thereof and issued by a bank
or trust company which is organized under the laws of the United States of
America, any state thereof or any foreign country recognized by the United
States of America, and which bank or trust company has capital, surplus and
undivided profits aggregating in excess of $50 million (or the foreign currency
equivalent thereof) and has outstanding debt which is rated "A" (or such similar
equivalent rating) or higher by at least one nationally recognized statistical
rating
<PAGE>
23
organization (as defined in Rule 436 under the Securities Act), or any
money-market fund sponsored by a registered broker dealer or mutual fund
distributor, (iii) repurchase obligations with a term of not more than 30 days
for underlying securities of the types described in clause (i) above entered
into with a bank meeting the qualifications described in clause (ii) above, (iv)
commercial paper, maturing not more than one year after the date of acquisition,
issued by a corporation (other than an Affiliate of the Company) organized and
in existence under the laws of the United States of America, any state thereof
or any foreign country recognized by the United States of America with a rating
at the time as of which any investment therein is made of "P-2" (or higher)
according to Moody's or "A-2" (or higher) according to S&P, (v) securities with
maturities of one year or less from the date of acquisition issued or fully and
unconditionally guaranteed by any state, commonwealth or territory of the United
States of America, or by any political subdivision or taxing authority thereof,
and rated at least "A" by S&P or Moody's, (vi) shares or other interests in an
investment company the assets of which consist solely of (A) securities of the
type described in clauses (i) through (v) above and (B) mortgage-backed
securities rated AAA or the equivalent by S&P, Moody's or Fitch Investor
Services, Inc., and (vii) the DM Pledged Securities.
"Temporary DBC Global" has the meaning provided in Section 2.01.
"TIA" or "Trust Indenture Act" means the Trust Indenture Act of
1939, as amended (15 U.S. Code ss.ss. 77aaa-77bbb), as in effect on the date
this Indenture was executed, except as provided in Section 9.06; provided,
however, that, in the event the Trust Indenture Act of 1939 is amended after
such date, "TIA" or "Trust Indenture Act" means, to the extent required by any
such amendment, the Trust Indenture Act of 1939 as so amended.
"Trade Payables" means, with respect to any Person, any accounts
payable or any other indebtedness or monetary obligation to trade creditors
created, assumed or Guaranteed by such Person or any of its Subsidiaries arising
in the ordinary course of business in connection with the acquisition of goods
or 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.
"Treaty" means the Treaty on the European Economic and Monetary
Union.
"Trustee" means the party named as such in the first paragraph of
this Indenture until a successor replaces it in accordance with the provisions
of Article Seven of this Indenture and thereafter means such successor.
"Unit Legend" has the meaning provided in Section 2.02(c).
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24
"United States Bankruptcy Code" means the Bankruptcy Reform Act of
1978, as amended and as codified in Title 11 of the United States Code, as
amended from time to time hereafter, or any successor federal bankruptcy law.
"Units" means the units, as defined in the first paragraph of the
recitals hereof.
"Unrestricted Subsidiary" means (i) any Subsidiary of the Company
that at the time of determination shall be designated an Unrestricted Subsidiary
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
Restricted Subsidiary (including any newly acquired or newly formed Subsidiary
of the Company) to be an Unrestricted Subsidiary unless such Subsidiary owns any
Capital Stock of, or owns or holds any Lien on any property of, the Company or
any Restricted Subsidiary; provided that (A) any Guarantee by the Company or any
Restricted Subsidiary of any Indebtedness of the Subsidiary being so designated
shall be deemed an "Incurrence" of such Indebtedness and an "Investment" by the
Company or such Restricted Subsidiary (or both, if applicable) at the time of
such designation; (B) either (I) the Subsidiary to be so designated has total
assets of $1,000 or less or (II) if such Subsidiary has assets greater than
$1,000, such designation would be permitted under Section 4.04 hereof and (C) if
applicable, the Incurrence of Indebtedness and the Investment referred to in
clause (A) of this proviso would be permitted under Section 4.03 hereof and
Section 4.04 hereof. The Board of Directors may designate any Unrestricted
Subsidiary to be a Restricted Subsidiary; provided that (i) no Default or Event
of Default shall have occurred and be continuing at the time of or after giving
effect to such designation and (ii) all Liens and Indebtedness of such
Unrestricted Subsidiary outstanding immediately after such designation would, if
Incurred at such time, have been permitted to be Incurred (and shall be deemed
to have been Incurred) for all purposes of the Indenture. Any such designation
by the Board of Directors shall be evidenced to the Trustee by promptly filing
with the Trustee a copy of the Board Resolution giving effect to such
designation and an Officers' Certificate certifying that such designation
complied with the foregoing provisions.
"U.S. Paying Agent" means The Bank of New York and any successor
U.S. Paying Agent.
"U.S. Person" has the meaning ascribed thereto in Rule 902 under the
Securities Act.
"U.S. Certificated Notes" has the meaning provided in Section 2.01.
"Voting Stock" means, with respect to any Person, Capital Stock of
any class or kind ordinarily having the power to vote for the election of
directors, managers or other voting members of the governing body of such
Person.
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25
"Wholly Owned" means, with respect to any Subsidiary of any Person,
the ownership of all of the outstanding Capital Stock of such Subsidiary (other
than any director's qualifying shares or Investments by foreign nationals
mandated by applicable law) by such Person or one or more Wholly Owned
Subsidiaries of such Person.
SECTION 1.02. Incorporation by Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision of the TIA, the provision is
incorporated by reference in and made a part of this Indenture. The following
TIA terms used in this Indenture have the following meanings:
"indenture securities" means the Notes;
"indenture security holder" means a Holder or a Noteholder;
"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 a rule of the
Commission and not otherwise defined herein have the meanings assigned to them
therein.
SECTION 1.03. Rules of Construction. Unless the context otherwise
requires:
(i) a term has the meaning assigned to it;
(ii) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP;
(iii) "or" is not exclusive;
(iv) words in the singular include the plural, and words in the
plural include the singular;
(v) provisions apply to successive events and transactions;
(vi) "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; and
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26
(vii) all references to Sections or Articles refer to Sections or
Articles of this Indenture unless otherwise indicated.
ARTICLE TWO
THE NOTES
SECTION 2.01. Form and Dating. The Notes and the certificate of
authentication with respect thereto shall be substantially in the form annexed
hereto as Exhibit A, in the case of the DTC Global, Exhibit B, in the case of
the DBC Global and Exhibit C, in the case of a U.S. Certificated Note. The Notes
may have such appropriate insertions, omissions, substitutions and other
variations as are required or permitted by this Indenture and may have letters,
notations, legends or endorsements required by law, stock exchange agreements to
which the Company is subject or usage. Any portion of the text of any Note may
be set forth on the reverse thereof, with an appropriate reference thereto on
the face of the Note. The Company shall approve the form of the Notes and any
notation, legend or endorsement on the Notes. Each Note shall be dated the date
of its authentication.
The terms and provisions contained in the form of the Notes annexed
hereto as Exhibits A, B and C shall constitute, and are hereby expressly made, a
part of this Indenture. Each of the Company and the Trustee, by its execution
and delivery of this Indenture, expressly agrees to the terms and provisions of
the Notes applicable to it and to be bound thereby.
Notes initially offered and sold in reliance on Rule 144A and others
electing settlement through DTC shall be issued initially in the form of one or
more permanent global Notes in registered form, substantially in the form set
forth in Exhibit A (the "DTC Global"), deposited with the Trustee, as custodian
for the Depository, duly executed by the Company and authenticated by the
Trustee as hereinafter provided. The aggregate principal amount of a DTC Global
may from time to time be increased or decreased by adjustments made on the
records of the Trustee, as custodian for the Depository or its nominee, as
hereinafter provided.
Notes offered and sold in offshore transactions in reliance on
Regulation S (other than Notes sold outside the United States to investors
electing settlement through DTC) shall be issued initially in the form of one or
more temporary global Notes in bearer form, substantially in the form set forth
in Exhibit B (the "Temporary DBC Global") deposited with DBC, duly executed by
the Company and authenticated by the Trustee as hereinafter provided. At any
time following the later of the Separation Date and May 18, 1998, upon receipt
by the Trustee and the Company of a certificate substantially in the form of
Exhibit D hereto, one or more permanent global Notes in bearer form
substantially in the form set forth in Exhibit B (the "Permanent DBC Global"
and, together with the Temporary DBC Global, the "DBC Global") duly executed by
the Company and authenticated by the Trustee as hereinafter provided shall be
deposited with DBC, which shall reflect on its books and records the date and a
decrease in the principal amount of the
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27
Temporary DBC Global in an amount equal to the principal amount of the
beneficial interest in the Temporary DBC Global transferred. The aggregate
principal amount of a DBC Global may from time to time be increased or decreased
by adjustments made in the records of the Trustee, as custodian for the
Depository or its nominee, as herein provided.
Notes which are offered and sold to Institutional Accredited
Investors which are not QIBs (excluding Non-U.S. Persons) shall be issued in the
form of permanent certificated Notes in registered form in substantially the
form set forth in Exhibit C (the "U.S. Certificated Notes"). Notes issued
pursuant to Section 2.07 in exchange for interests in the DBC Global shall be in
the form of certificated Notes in registered form substantially in the form set
forth in Exhibit C (the "Regulation S Certificated Notes"). Notes issued
pursuant to Section 2.07 in exchange for interests in the DTC Global shall be in
the form of the U.S. Certificated Note.
The Regulation S Certificated Notes and the U.S. Certificated Notes
are sometimes collectively referred to herein as the "Certificated Notes". The
DTC Global and DBC Global are sometimes collectively herein referred to as the
"Global Notes".
The definitive Notes shall be typed, printed, lithographed or
engraved or produced by any combination of these methods or may be produced in
any other manner permitted by the rules of any securities exchange on which the
Notes may be listed, all as determined by the officers executing such Notes, as
evidenced by their execution of such Notes.
SECTION 2.02. Restrictive Legends. (a) Note Legends. Unless and
until a Note is exchanged for an Exchange Note or otherwise disposed of in
connection with an effective Registration Statement pursuant to the Registration
Rights Agreement, (i) each DTC Global and each U.S. Certificated Note shall bear
the legend, set forth below on the face thereof and (ii) each Regulation S
Certificated Note and each Temporary DBC Global shall bear the legend set forth
below on the face thereof until at least 41 days after the Closing Date and
receipt by the Company and the Trustee of a certificate substantially in the
form of Exhibit D hereto.
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS, AND
ACCORDINGLY, MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED
WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S.
PERSONS EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION
HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED
INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) OR
(B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE
501(a)(1), (2), (3) OR (7) OF REGULATION D UNDER THE SECURITIES ACT) (AN
"INSTITUTIONAL ACCREDITED INVESTOR") OR (C) IT IS NOT A U.S. PERSON
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28
AND IS ACQUIRING THIS NOTE IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH
RULE 903 OF REGULATION S UNDER THE SECURITIES ACT; (2) AGREES THAT IT WILL
NOT, WITHIN THE TIME PERIOD REFERRED TO IN RULE 144(k) (TAKING INTO
ACCOUNT THE PROVISIONS OF RULE 144(d) UNDER THE SECURITIES ACT, IF
APPLICABLE), RESELL OR OTHERWISE TRANSFER THIS NOTE EXCEPT (A) TO THE
COMPANY OR ANY SUBSIDIARY THEREOF, (B) TO A QUALIFIED INSTITUTIONAL BUYER
IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, (C) INSIDE THE
UNITED STATES TO AN INSTITUTIONAL ACCREDITED INVESTOR THAT, PRIOR TO SUCH
TRANSFER, FURNISHES TO THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN
REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER OF
THIS NOTE (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM THE TRUSTEE) AND
IF SUCH TRANSFER IS IN RESPECT OF AN AGGREGATE PRINCIPAL AMOUNT OF NOTES
OF LESS THAN DM 150,000, AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY
THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT, (D) OUTSIDE
THE UNITED STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904
UNDER THE SECURITIES ACT, (E) PURSUANT TO THE EXEMPTION FROM REGISTRATION
PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE) OR (F)
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT
AND (3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS NOTE IS
TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN
CONNECTION WITH ANY TRANSFER OF THIS NOTE WITHIN THE TIME PERIOD REFERRED
TO ABOVE, THE HOLDER MUST CHECK THE APPROPRIATE BOX SET FORTH ON THE
REVERSE HEREOF RELATING TO THE MANNER OF SUCH TRANSFER AND SUBMIT THIS
CERTIFICATE TO THE TRUSTEE. IF THE PROPOSED TRANSFEREE IS AN INSTITUTIONAL
ACCREDITED INVESTOR, THE HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO
EACH OF THE TRUSTEE AND THE COMPANY SUCH CERTIFICATIONS, LEGAL OPINIONS OR
OTHER INFORMATION AS SUCH PERSONS MAY REASONABLY REQUIRE TO CONFIRM THAT
SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A
TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT. 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. THE INDENTURE CONTAINS A PROVISION REQUIRING THE
TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF THIS NOTE IN VIOLATION OF
THE FOREGOING RESTRICTIONS.
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29
(b) Global Note Legend. The DTC Global, whether or not an Exchange
Note, shall also bear the following legend on the face thereof:
UNLESS THIS GLOBAL NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY TO THE COMPANY OR ITS AGENT FOR REGISTRATION
OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS REGISTERED IN THE
NAME OF CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY OR SUCH OTHER
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY OR SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY
(AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS
IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY), 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 NOTE 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 NOTE SHALL BE
LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN
SECTION 2.08 OF THE INDENTURE.
(c) Temporary DBC Global Legend. Each Temporary DBC Global, whether
or not an Exchange Note, shall also bear the following legend on the face
thereof:
THIS GLOBAL CERTIFICATE HAS BEEN CREATED IN ORDER TO BE HELD IN CUSTODY BY
DEUTSCHE BORSE CLEARING AG ("DBC") AND TO SERVE AS THE BASIS FOR THE
DELIVERY AND TRANSFER OF NOTES TO BE HELD IN THE DBC DEPOSITARY AND
CLEARING SYSTEM THROUGHOUT THE LIFE OF THE NOTES.
(d) Units Legends. Each Note issued prior to the Separation Date
shall bear the following legend (the "Unit Legend") on the face thereof:
THE NOTES EVIDENCED BY THIS CERTIFICATE ARE INITIALLY ISSUED AS PART OF AN
ISSUANCE OF UNITS, EACH OF WHICH CONSISTS OF DM 1,000 PRINCIPAL AMOUNT OF
11.15% SENIOR DM
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30
NOTES DUE 2008 OF VIATEL, INC. (THE "NOTES") AND 2.69 10% SUBORDINATED
CONVERTIBLE DEBENTURES DUE 2011 (THE "SUBORDINATED CONVERTIBLE
DEBENTURES"). THE NOTES AND THE SUBORDINATED CONVERTIBLE DEBENTURES WILL
BE AUTOMATICALLY SEPARATED UPON THE EARLIEST TO OCCUR OF (i) SIX MONTHS
AFTER APRIL 8, 1998, (ii) THE COMMENCEMENT OF AN EXCHANGE OFFER WITH
RESPECT TO THE NOTES, (iii) THE EFFECTIVENESS OF A SHELF REGISTRATION
STATEMENT WITH RESPECT TO RESALE OF THE NOTES OR (iv) THE COMMENCEMENT OF
AN OFFER TO REPURCHASE THE NOTES PURSUANT TO THE INDENTURE. THE NOTES
EVIDENCED BY THIS CERTIFICATE MAY NOT BE TRANSFERRED OR EXCHANGED
SEPARATELY FROM, BUT MAY BE TRANSFERRED OR EXCHANGED ONLY TOGETHER WITH,
THE SUBORDINATED CONVERTIBLE DEBENTURES.
SECTION 2.03. Execution, Authentication and Denominations. Subject
to Article Four, the aggregate principal amount of Notes (including Exchange
Notes) which may be authenticated and delivered under this Indenture is
unlimited. The Notes shall be executed by two Officers of the Company, by
facsimile or manual signature, in the name and on behalf of the Company.
If an Officer whose signature is on a Note no longer holds that
office at the time the Trustee or authenticating agent authenticates the Note,
the Note shall be valid nevertheless.
A Note shall not be valid until the Trustee or authenticating agent
manually signs the certificate of authentication on the Note. The signature
shall be conclusive evidence that the Note has been authenticated under this
Indenture.
At any time and from time to time after the execution of this
Indenture, the Trustee or an authenticating agent shall, upon receipt of a
Company Order, authenticate for original issue Notes in the aggregate principal
amount specified in such Company Order. Such Company Order shall specify the
amount of Notes to be authenticated, the date on which the issue of Notes is to
be authenticated and in case of an issuance of Notes pursuant to Section 2.15,
shall certify that such issuance is in compliance with Article Four.
The Trustee may appoint an authenticating agent reasonably
acceptable to the Company to authenticate Notes. Unless limited by the terms of
such 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 or an Affiliate
of the Company.
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31
The Notes shall be issuable in registered form without coupons in
the case of the DTC Global and the Certificated Notes in bearer form, without
coupons, in the case of the DBC Global and, in each case, only in denominations
of DM 1,000 in principal amount and any integral multiple of DM 1,000 in excess
thereof.
SECTION 2.04. Registrar and Paying Agent. The Company shall maintain
an office or agency in New York City where Notes may be presented for
registration of transfer or for exchange (the "Registrar"), an office or agency
in New York City and in Frankfurt am Main, Germany where Notes may be presented
for payment (collectively, the "Paying Agent") and an office or agency where
notices and demands to or upon the Company in respect of the Notes and this
Indenture may be served, which shall be in the City of New York. The Company
shall cause the Registrar to keep a register of the Notes and of their transfer
and exchange (the "Note Register"). The Company may have one or more
co-Registrars and one or more additional Paying Agents.
The Company shall enter into an appropriate agency agreement with
any Agent not a party to this Indenture. The agreement shall implement the
provisions of this Indenture that relate to such Agent. The Company shall give
prompt written notice to the Trustee of the name and address of any such Agent
and any change in the address of such Agent. If the Company fails to maintain a
Registrar, Paying Agent and/or agent for service of notices and demands, the
Trustee shall act as such Registrar, Paying Agent and/or agent for service of
notices and demands for so long as such failure shall continue. The Company may
remove any Agent upon written notice to such Agent and the Trustee; provided
that no such removal shall become effective until (i) the acceptance of an
appointment by a successor Agent to such Agent as evidenced by an appropriate
agency agreement entered into by the Company and such successor Agent and
delivered to the Trustee or (ii) notification to the Trustee that the Trustee
shall serve as such Agent until the appointment of a successor Agent in
accordance with clause (i) of this proviso. The Company, any Subsidiary of the
Company, or any Affiliate of any of them may act as Paying Agent, Registrar or
co-Registrar, and/or agent for service of notice and demands; provided, however,
that neither the Company, a Subsidiary of the Company nor an Affiliate of any of
them shall act as Paying Agent in connection with the defeasance of the Notes or
the discharge of this Indenture under Article Eight.
The Company initially appoints the Trustee as Registrar, U.S. Paying
Agent, authenticating agent and agent for service of notice and demands. The
Company also appoints Deutsche Bank as German Paying Agent. If, at any time, the
Trustee is not the Registrar, the Registrar shall make available to the Trustee
or German Paying Agent, as the case may be, on or before each Interest Payment
Date and at such other times as the Trustee may reasonably request, the names
and addresses of the Holders as they appear in the Note Register.
SECTION 2.05. Paying Agent to Hold Money in Trust. Not later than
3:00 p.m. (Frankfurt time) on the Business Day immediately preceding each due
date of the principal,
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32
premium, if any, or interest on any Notes, the Company shall deposit with the
Paying Agent money in immediately available funds sufficient to pay such
principal, premium, if any, or interest so becoming due. The Paying Agent shall
compensate the Company for the overnight use of such funds at the overnight
interbank interest rate which can be reasonably obtained for overnight
investment of such funds; provided always that, if any due date shall not be a
Business Day, the Issuer shall make such transfer to the account of the Bank on
the next succeeding Business Day preceding the due date for such payment. The
Company shall require each Paying Agent, if any, other than the Trustee to agree
in writing that such Paying Agent shall hold in trust for the benefit of the
Holders or the Trustee all money held by the Paying Agent for the payment of
principal of, premium, if any, or interest on the Notes (whether such money has
been paid to it by the Company or any other obligor on the Notes), and that such
Paying Agent shall promptly notify the Trustee of any default by the Company (or
any other obligor on the Notes) in making any such payment. The Company at any
time may require a Paying Agent to pay all money held by it to the Trustee and
account for any funds 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 pay all money held by it to the Trustee and to
account for any funds disbursed. Upon doing so, the Paying Agent shall have no
further liability for the money so paid over to the Trustee. If the Company or
any Subsidiary of the Company or any Affiliate of any of them acts as Paying
Agent, it will, on or before each due date of any principal of, premium, if any,
or interest on the Notes, segregate and hold in a separate trust fund for the
benefit of the Holders a sum of money sufficient to pay such principal, premium,
if any, or interest so becoming due until such sum of money shall be paid to
such Holders or otherwise disposed of as provided in this Indenture, and will
promptly notify the Trustee of its action or failure to act as required by this
Section 2.05.
SECTION 2.06. Transfer and Exchange. The Notes are issuable in
registered form in the case of DTC Global and the Certificated Notes and in
bearer form in the case of the DBC Global. A Holder may transfer a Note by
written application to the Registrar stating the name of the proposed transferee
and otherwise complying with the terms of this Indenture. No such transfer shall
be effected until, and such transferee shall succeed to the rights of a Holder
only upon registration of the transfer by the Registrar in the Note Register.
Prior to the registration of any transfer by a Holder as provided herein, the
Company, the Trustee, and any agent of the Company or the Trustee shall treat
the Person in whose name the Note is registered as the owner thereof for all
purposes whether or not the Note shall be overdue, and neither the Company, the
Trustee, nor any such agent shall be affected by notice to the contrary.
Furthermore, any Holder of a Global Note shall, by acceptance of such Global
Note, agree that transfers of beneficial interests in such Global Note may be
effected only through a book-entry system maintained by the Depository (or its
agent), and that ownership of a beneficial interest in the Note shall be
required to be reflected in a book entry. When Notes are presented to the
Registrar or a co-Registrar with a request to register the transfer or to
exchange them for an equal principal amount of Notes of other authorized
denominations (including an exchange of Notes
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33
for Exchange Notes), the Registrar shall register the transfer or make the
exchange as requested if its requirements for such transactions are met;
provided that no exchanges of Notes for Exchange Notes shall occur until a
Registration Statement shall have been declared effective by the Commission and
that any Notes that are exchanged for Exchange Notes shall be cancelled by the
Trustee. To permit registrations of transfers and exchanges in accordance with
the terms, conditions and restrictions hereof, the Company shall execute and the
Trustee shall authenticate Notes at the Registrar's request. No service charge
shall be made to any Holder for any registration of transfer or exchange or
redemption of the Notes, but the Company may require payment of a sum sufficient
to cover any transfer tax or similar governmental charge payable in connection
therewith (other than any such transfer taxes or other similar governmental
charge payable upon transfers, exchanges or redemptions pursuant to Section
2.11, 3.08, 4.11, 4.12 or 9.04).
The Registrar shall not be required (i) to issue, register the
transfer of or exchange any Note during a period beginning at the opening of
business 15 days before the day of the mailing of a notice of redemption of
Notes selected for redemption under Section 3.03 or Section 3.08 and ending at
the close of business on the day of such mailing, or (ii) to register the
transfer of or exchange any Note so selected for redemption in whole or in part,
except the unredeemed portion of any Note being redeemed in part.
SECTION 2.07. Book-Entry Provisions for Global Notes. (a) Each DTC
Global shall (i) be registered in the name of the Depository for such Global
Note or the nominee of such Depository, (ii) be delivered to the Trustee as
custodian for such Depository and (iii) bear legends as set forth in Section
2.02 hereof. Each DBC Global initially shall (i) be issued in the form of a
single temporary certificate in bearer form, (ii) be deposited with DBC and
(iii) bear legends as set forth in Section 2.02 hereof.
Members of, or Participants in, the Depository ("Agent Members")
shall have no rights under this Indenture with respect to any Global Note held
on their behalf by the Depository, or the Trustee as its custodian, or under any
Global Note, and the Depository may be treated by the Company, the Trustee and
any agent of the Company or the Trustee as the absolute owner of such 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 the Depository or impair, as between the Depository
and its Agent Members, the operation of customary practices governing the
exercise of the rights of a beneficial owner of any Note.
(b) Transfers of a Global Note shall be limited to transfers of such
Global Note in whole, but not in part, to the Depository, its successors or
their respective nominees. Transfers of interests in one Global Note to parties
who will hold the interests through the same Global Note will be effected in the
ordinary way in accordance with the respective rules and
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34
operating procedures of the DBC, DTC, Euroclear or Cedel Bank, as the case may
be, and the provisions of Section 2.08 hereof. In addition, U.S. Certificated
Notes shall be transferred to all beneficial owners in exchange for their
beneficial interests in a DTC Global if (i) the Depository notifies the Company
that it is unwilling or unable to continue as Depository for the DTC Global, and
a successor depositary is not appointed by the Company within 90 days of such
notice or (ii) an Event of Default has occurred and is continuing and the
Registrar has received a request to the foregoing effect from the Depository or
the Trustee. In addition, Regulation S Certificated Notes shall be transferred
to all beneficial owners in exchange for their beneficial interests in a DBC
Global, if (i) DBC notifies the Company that it is unwilling or unable to
continue as Depository for the DBC Global or (ii) if at any time DBC shall no
longer be eligible to serve as depository and a successor depository for the DBC
Global is not appointed by the Company within 90 days after the Company receives
such notice or becomes aware of such ineligibility.
(c) 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, if any, and other procedures
applicable to beneficial interests in such other Global Note for as long as it
remains such an interest.
(d) In connection with any transfer pursuant to paragraph (b) of
this Section of a portion of the beneficial interests in a DTC Global or DBC
Global to beneficial owners who are required to hold Certificated Notes, the
Registrar shall reflect on its books and records the date and a decrease in the
principal amount of such DTC Global or DBC Global, as the case may be, in an
amount equal to the principal amount of the beneficial interest in such DTC
Global or DBC Global to be transferred, and the Company shall execute, and the
Trustee shall authenticate and deliver, one or more U.S. Certificated Notes or
Regulation S Certificated Notes, as the case may be, of like tenor and amount.
(e) In connection with the transfer of all the beneficial interests
in a DTC Global or DBC Global to beneficial owners pursuant to paragraph (b) of
this Section, the DTC Global or DBC Global, as the case may be, shall be deemed
to be surrendered to the Trustee for cancellation, and the Company shall
execute, and the Trustee shall authenticate and deliver, to each beneficial
owner identified by the Depository in exchange for its beneficial interest in
the DTC Global or DBC Global, as the case may be, an equal aggregate principal
amount of U.S. Certificated Notes or Regulation S Certificated Notes, as the
case may be, of authorized denominations.
(f) Any U.S. Certificated Note delivered in exchange for an interest
in a DTC Global pursuant to paragraph (b), (d) or (e) of this Section shall,
except as otherwise provided by
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35
paragraphs (f)(i)(x) and (d) of Section 2.08 hereof, bear the legend regarding
transfer restrictions applicable to the U.S. Certificated Note set forth in
Section 2.02.
(g) Any Regulation S Certificated Note delivered in exchange for an
interest in a DBC Global pursuant to paragraph (b), (d) or (e) of this Section
shall, except as otherwise provided by paragraphs (f)(i)(x) and (d) of Section
2.08 hereof, bear the legend regarding transfer restrictions applicable to the
Regulation S Certificated Note set forth in Section 2.02 hereof.
(h) The registered holder of a Global Note may grant proxies and
otherwise authorize any Person, including 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.
(i) QIBs that are beneficial owners of interests in a Global Note
may receive Certificated Notes (which shall bear the Private Placement Legend if
required by Section 2.02) in accordance with the procedures of the Depository.
In connection with the execution, authentication and delivery of such
Certificated Notes, the Registrar shall reflect on its books and records a
decrease in the principal amount of the relevant Global Note equal to the
principal amount of such Certificated Notes and the Company shall execute and
the Trustee shall authenticate and deliver one or more Certificated Notes having
an equal aggregate principal amount.
(j) All Notes issued upon any transfer or exchange of Notes shall be
valid obligations of the Company, evidencing the same debt, and entitled to the
same benefits under this Indenture, as the Notes surrendered upon such transfer
or exchange.
SECTION 2.08. Special Transfer Provisions. Unless and until a Note
is exchanged for an Exchange Note in connection with an effective Registration
Statement pursuant to the Registration Rights Agreement, the following
provisions shall apply:
(a) Transfers to QIBs. The following provisions shall apply with
respect to the registration of any proposed transfer of a U.S. Certificated Note
or an interest in a DTC Global to a QIB (excluding Non-U.S. Persons):
(i) If the Note to be transferred consists of (x) U.S. Certificated
Notes, the Registrar shall register the transfer if such transfer is being
made by a proposed transferor who has checked the box provided for on the
form of Note stating, or has otherwise advised the Company and the
Registrar in writing, that the sale has been made in compliance with the
provisions of Rule 144A to a transferee who has signed the certification
provided for on the form of Note stating, or has otherwise advised the
Company and the Registrar in writing, that it is purchasing the Note for
its own account
<PAGE>
36
or an account with respect to which it exercises sole investment
discretion and that it and any such account is a QIB within the meaning of
Rule 144A, and is aware that the sale to it is being made in reliance on
Rule 144A and acknowledges that it has received such information regarding
the Company as it has requested pursuant to Rule 144A or has determined
not to request such information and that it is aware that the transferor
is relying upon its foregoing representations in order to claim the
exemption from registration provided by Rule 144A or (y) an interest in a
DTC Global, the transfer of such interest may be effected only through the
book entry system maintained by the Depository.
(ii) If the proposed transferee is an Agent Member, and the Note to
be transferred consists of U.S. Certificated Notes, upon receipt by the
Registrar of the documents referred to in clause (i) and instructions
given in accordance with the Depository's and the Registrar's procedures,
the Registrar shall reflect on its books and records the date and an
increase in the principal amount of such DTC Global in an amount equal to
the principal amount of the U.S. Certificated Notes to be transferred, and
the Trustee shall cancel the Certificated Note so transferred.
(b) Transfers of Interests in DBC Global or Regulation S
Certificated Notes to U.S. Persons. The following provisions shall apply with
respect to any transfer of interests in a DBC Global or Regulation S
Certificated Notes to U.S. Persons:
(i) prior to the removal of the Private Placement Legend from a DBC
Global or a Regulation S Certificated Note pursuant to Section 2.02, the
Registrar shall refuse to register such transfer; and
(ii) after such removal, the Registrar shall register the transfer
of any such Note without requiring any additional certification.
(c) Transfers to Non-U.S. Persons at Any Time. The following
provisions shall apply with respect to any transfer of a Note to a Non-U.S.
Person:
(i) The Registrar shall register any proposed transfer to any
Non-U.S. Person if the Note to be transferred is a U.S. Certificated Note
or an interest in a DTC Global only upon receipt of a certificate
substantially in the form of Exhibit E from the proposed transferor.
(ii) (a) If the proposed transferor is an Agent Member holding a
beneficial interest in a DTC Global, upon receipt by the Registrar of (x)
the documents required by paragraph (i) and (y) instructions in accordance
with the Depository's and the Registrar's procedures, the Registrar shall
reflect on its books and records the date and a decrease in
<PAGE>
37
the principal amount of such DTC Global in an amount equal to the
principal amount of the beneficial interest in the DTC Global to be
transferred, and (b) if the proposed transferee is an Agent Member, upon
receipt by the Registrar of instructions given in accordance with the
Depository's and the Registrar's procedures, the Registrar shall reflect
on its books and records the date and an increase in the principal amount
of such DBC Global in an amount equal to the principal amount of the U.S.
Certificated Notes or the DTC Global, as the case may be, to be
transferred, and the Trustee shall cancel the Certificated Note, if any,
so transferred or decrease the amount of the DTC Global.
(d) Private Placement Legend. Upon the registration of transfer,
exchange or replacement of Notes not bearing the Private Placement Legend, the
Registrar shall deliver Notes that do not bear the Private Placement Legend.
Upon the registration of transfer, exchange or replacement of Notes bearing the
Private Placement Legend, the Registrar shall deliver only Notes that bear the
Private Placement Legend unless either (i) the Private Placement Legend is no
longer required by Section 2.02 or (ii) there is delivered to the Registrar an
Opinion of Counsel reasonably satisfactory to the Company and the Trustee to the
effect that neither such legend nor the related restrictions on transfer are
required in order to maintain compliance with the provisions of the Securities
Act.
(e) 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 Registrar shall not register a transfer of any Note unless such
transfer complies with the restrictions on transfer of such Note set forth in
this Indenture. In connection with any transfer of Notes to an Institutional
Accredited Investor, each Holder agrees by its acceptance of the Notes to
furnish the Registrar or the Company such certifications, legal opinions or
other information as either of them may reasonably require to confirm that such
transfer is being made pursuant to an exemption from, or a transaction not
subject to, the registration requirements of the Securities Act; provided that
the Registrar shall not be required to determine (but may rely on a
determination made by the Company with respect to) the sufficiency of any such
certifications, legal opinions or other information.
(f) Transfers to Non-QIB Institutional Accredited Investors. The
following provisions shall apply with respect to the registration of any
proposed transfer of a Note to any Institutional Accredited Investor which is
not a QIB (excluding Non-U.S. Persons):
(i) The Registrar shall register the transfer of any Note, whether
or not such Note bears the Private Placement Legend, if (x) the requested
transfer is after the time period referred to in Rule 144(k) under the
Securities Act as in effect with respect to such transfer or (y) the
proposed transferee has delivered to the Registrar (A) a certificate
substantially in the form of Exhibit F hereto and (B) if the aggregate
principal amount of
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the Notes being transferred is less than $500,000 at the time of such
transfer, an Opinion of Counsel acceptable to the Company that such
transfer is in compliance with the Securities Act.
(ii) If the proposed transferor is an Agent Member holding a
beneficial interest in a DTC Global, upon receipt by the Registrar and the
Company of (x) the documents, if any, required by paragraph (i) and (y)
instructions given in accordance with the Depository's and the Registrar's
procedures, the Registrar shall reflect on its books and records the date
and a decrease in the principal amount of such DTC Global in an amount
equal to the principal amount of the beneficial interest in the DTC Global
to be transferred, and the Company shall execute, and the Trustee shall
authenticate and deliver, one or more U.S. Certificated Notes of like
tenor and amount.
The Registrar shall retain, in accordance with its customary
procedures, copies of all letters, notices and other written communications
received pursuant to Section 2.07 or this Section 2.08. 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.
SECTION 2.09. Replacement Notes. If a mutilated Note is surrendered
to the Trustee or if the Holder claims that the Note has been lost, destroyed or
wrongfully taken, the Company shall issue and the Trustee shall authenticate a
replacement Note of like tenor and principal amount and bearing a number not
contemporaneously outstanding; provided that the requirements of the second
paragraph of Section 2.10 are met. If required by the Trustee or the Company, an
indemnity bond must be furnished that is sufficient in the judgment of both the
Trustee and the Company to protect the Company, the Trustee or any Agent from
any loss that any of them may suffer if a Note is replaced. The Company may
charge such Holder for its expenses and the expenses of the Trustee in replacing
a Note. In case any such mutilated, lost, destroyed or wrongfully taken Note has
become or is about to become due and payable, the Company in its discretion may
pay such Note instead of issuing a new Note in replacement thereof.
Every replacement Note is an additional obligation of the Company
and shall be entitled to the benefits of this Indenture.
SECTION 2.10. Outstanding Notes. Notes outstanding at any time are
all Notes that have been authenticated by the Trustee except for those cancelled
by it, those delivered to it for cancellation and those described in this
Section 2.10 as not outstanding.
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39
If a Note is replaced pursuant to Section 2.09, it ceases to be
outstanding unless and until the Trustee and the Company receive proof
reasonably satisfactory to them that the replaced Note is held by a bona fide
purchaser.
If the Paying Agent (other than the Company or an Affiliate of the
Company) holds on the maturity date or a redemption date money in such coin or
currency of the Federal Republic of Germany as at the time of payment shall be
legal tender for the payment of public and private debts sufficient to pay all
principal, premium, if any, and interest payable on that date with respect to
the Notes (or portions thereof) to be redeemed or payable on that date, then on
and after that date such Notes cease to be outstanding and interest on them
shall cease to accrue.
A Note does not cease to be outstanding because the Company or one
of its Affiliates holds such Note; provided, however, that, in determining
whether the Holders of the requisite principal amount of the outstanding Notes
have given any request, demand, authorization, direction, notice, consent or
waiver hereunder, Notes owned by the Company or any other obligor upon the Notes
or any Affiliate of the Company or of such other obligor shall be disregarded
and deemed not to be outstanding, except that, in determining whether the
Trustee shall be protected in relying upon any such request, demand,
authorization, direction, notice, consent or waiver, only Notes which a
Responsible Officer of the Trustee knows to be so owned shall be so disregarded.
Notes so owned which have been pledged in good faith may be regarded as
outstanding if the pledgee establishes to the satisfaction of the Trustee the
pledgee's right so to act with respect to such Notes and that the pledgee is not
the Company or any other obligor upon the Notes or any Affiliate of the Company
or of such other obligor.
SECTION 2.11. Temporary Notes. Until definitive Notes are ready for
delivery, the Company may prepare and the Trustee shall authenticate temporary
Notes. Temporary Notes shall be substantially in the form of definitive Notes
but may have insertions, substitutions, omissions and other variations
determined to be appropriate by the Officers executing the temporary Notes, as
evidenced by their execution of such temporary Notes. If temporary Notes are
issued, the Company will cause definitive Notes to be prepared without
unreasonable delay. After the preparation of definitive Notes, the temporary
Notes shall be exchangeable for definitive Notes upon surrender of the temporary
Notes at the office or agency of the Company designated for such purpose
pursuant to Section 4.02, without charge to the Holder. Upon surrender for
cancellation of any one or more temporary Notes the Company shall execute and
the Trustee shall authenticate and deliver in exchange therefor a like principal
amount of definitive Notes of authorized denominations. Until so exchanged, the
temporary Notes shall be entitled to the same benefits under this Indenture as
definitive Notes.
SECTION 2.12. Cancellation. The Company at any time may deliver to
the Trustee for cancellation any Notes previously authenticated and delivered
hereunder which the Company may have acquired in any manner whatsoever, and may
deliver to the Trustee for
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40
cancellation any Notes previously authenticated hereunder which the Company has
not issued and sold. The Registrar and the Paying Agent shall forward to the
Trustee any Notes surrendered to them for registration of transfer, exchange,
purchase or payment. The Trustee shall cancel all Notes surrendered for
registration of transfer, exchange, purchase, payment or cancellation and shall
return all such Notes to the Company. The Company shall not issue 1998 Notes to
replace Notes it has paid in full or delivered to the Trustee for cancellation.
SECTION 2.13. CUSIP Numbers. The Company in issuing the Notes may
use a "CUSIP", "CINS", "ISIN" or any other applicable identification number (if
then generally in use), and the Trustee shall use CUSIP, CINS, ISIN or other
identification number, as the case may be, in notices of redemption or exchange
as a convenience to Holders; provided that any such notice shall state that no
representation is made as to the correctness of such numbers either as printed
on the Notes or as contained in any notice of redemption or exchange and that
reliance may be placed only on the other identification numbers printed on the
Notes. The Company shall promptly advise the Trustee of any change in the CUSIP
numbers.
SECTION 2.14. Defaulted Interest. If the Company defaults in a
payment of interest on the Notes, it shall pay, or shall deposit with the Paying
Agent money in such coin or currency of the Federal Republic of Germany as at
the time of payment shall be legal tender for the payment of public and private
debts in immediately available funds sufficient to pay, the defaulted interest,
plus (to the extent lawful) interest on the defaulted interest, to the Persons
who are Holders on a subsequent special record date. A special record date, as
used in this Section 2.14 with respect to the payment of any defaulted interest,
shall mean the 15th day next preceding the date fixed by the Company for the
payment of defaulted interest, whether or not such day is a Business Day. At
least 15 days before the subsequent special record date, the Company shall mail
to each Holder and to the Trustee a notice that states the subsequent special
record date, the payment date and the amount of defaulted interest to be paid.
SECTION 2.15. Issuance of Additional Notes. The Company may, subject
to Article Four of this Indenture, issue additional Notes under this Indenture.
The Notes issued on the Closing Date and any additional Notes subsequently
issued shall be treated as a single class for all purposes under this Indenture.
ARTICLE THREE
REDEMPTION
SECTION 3.01. Right of Redemption. (a) The Notes may be redeemed at
the election of the Company, in whole or in part, at any time and from time to
time on or after April 15, 2003 and prior to maturity, upon not less than 30 nor
more than 60 days' prior notice mailed by first-class mail to each Holder's last
address as it appears in the Note Register, at the
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41
following Redemption Prices (expressed in percentages of their principal
amount), plus accrued and unpaid interest, if any, to the Redemption Date
(subject to the right of Holders of record on the relevant Regular Record Date
that is on or prior to the Redemption Date to receive interest due on an
Interest Payment Date that is on or prior to the Redemption Date) if redeemed
during the 12-month period commencing on April 15 of the applicable year set
forth below:
Year Redemption Price
---- ----------------
2003............................................. 105.575%
2004............................................. 103.717
2005............................................. 101.858
2006 and thereafter.............................. 100.000
(b) In addition, at any time prior to April 15, 2001, the Company
may, at its option, redeem up to 35% of the aggregate principal amount at
maturity of the Notes with the net proceeds of one or more Public Equity
Offerings, at any time or from time to time in part, at a Redemption Price
(expressed as a percentage of the principal amount) of 111.150%; provided (i)
that 1998 Notes representing at least 65% of the principal amount at maturity of
the 1998 Notes initially issued remain outstanding immediately after each such
redemption and (ii) that notice of each such redemption is mailed within 60 days
of each such Public Equity Offering.
SECTION 3.02. Notices to Trustee. If the Company elects to redeem
Notes pursuant to Section 3.01, it shall notify the Trustee in writing of the
Redemption Date and the principal amount of Notes to be redeemed.
The Company shall give each notice provided for in this Section 3.02
in an Officers' Certificate at least 45 days before the Redemption Date (unless
a shorter period shall be satisfactory to the Trustee).
SECTION 3.03. Selection of Notes to Be Redeemed. If less than all of
the Notes are to be redeemed at any time, the Trustee shall select the Notes to
be redeemed in compliance with the requirements of the principal national
securities exchange, if any, on which the Notes are listed or if the Notes are
not listed on a national securities exchange, by lot or by such other method as
the Trustee in its sole discretion shall deem to be fair and appropriate;
provided that no Notes of DM 1,000 in principal amount or less shall be redeemed
in part.
The Trustee shall make the selection from the Notes outstanding and
not previously called for redemption. Notes in denominations of DM 1,000 in
principal amount may only be redeemed in whole. The Trustee may select for
redemption portions (equal to DM 1,000 in principal amount or any integral
multiple thereof) of Notes that have denominations larger than DM 1,000 in
principal amount. Provisions of this Indenture that apply to Notes called for
redemption also apply to portions of Notes called for redemption. The Trustee
shall notify the
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42
Company and the Registrar promptly in writing of the Notes or portions of Notes
to be called for redemption.
SECTION 3.04. Notice of Redemption. With respect to any redemption
of Notes pursuant to Section 3.01, at least 30 days but not more than 60 days
before a Redemption Date, the Company, or at the Company's request, the Trustee
shall mail a notice of redemption by first class mail to each Holder whose Notes
are to be redeemed.
The notice shall identify the Notes to be redeemed and shall state:
(i) the Redemption Date;
(ii) the Redemption Price;
(iii) the name and address of the Paying Agent;
(iv) that Notes called for redemption must be surrendered to the
Paying Agent in order to collect the Redemption Price;
(v) that, unless the Company defaults in making the redemption
payment, interest on Notes (or portions thereof) called for redemption
ceases to accrue on and after the Redemption Date and the only remaining
right of the Holders is to receive payment of the Redemption Price plus
accrued interest to the Redemption Date upon surrender of the Notes to the
Paying Agent;
(vi) that, if any Note is being redeemed in part, the portion of the
principal amount (equal to DM $1,000 in principal amount or any integral
multiple thereof) of such Note to be redeemed and that, on and after the
Redemption Date, upon surrender of such Note, a new Note or Notes in
principal amount equal to the unredeemed portion thereof will be reissued;
and
(vii) that, if any Note contains a CUSIP number as provided in
Section 2.13, no representation is being made as to the correctness of the
CUSIP number either as printed on the Notes or as contained in the notice
of redemption.
At the Company's request (which request may be revoked by the Company at
any time prior to the time at which the Trustee shall have given such notice to
the Holders), made in writing to the Trustee at least 45 days (or such shorter
period as shall be satisfactory to the Trustee) before a Redemption Date, the
Trustee shall give the notice of redemption in the name and at the expense of
the Company. If, however, the Company gives such notice to the Holders, the
Company shall concurrently deliver to the Trustee a copy of such notice of
redemption.
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43
SECTION 3.05. Effect of Notice of Redemption. Once notice of
redemption is mailed, Notes called for redemption become due and payable on the
Redemption Date and at the Redemption Price. Upon surrender of any Notes to the
Paying Agent, such Notes shall be paid at the Redemption Price, plus accrued
interest, if any, to the Redemption Date. Notice of redemption shall be deemed
to be given when mailed, whether or not the Holder receives the notice. In any
event, failure to give such notice, or any defect therein, shall not affect the
validity of the proceedings for the redemption of Notes held by Holders to whom
such notice was properly given.
SECTION 3.06. Deposit of Redemption Price. On or prior to any
Redemption Date, the Company shall deposit with the Paying Agent (or, if the
Company, one of its Subsidiaries or any of their Affiliates is acting as Paying
Agent, shall segregate and hold in trust as provided in Section 2.05) money, in
such coin or currency of the Federal Republic of Germany as at the time of
payment shall be legal tender for the payment of public and private debts,
sufficient to pay the Redemption Price of and accrued interest on all Notes to
be redeemed on that date other than Notes or portions thereof called for
redemption on that date that have been delivered by the Company to the Trustee
for cancellation.
SECTION 3.07. Payment of Notes Called for Redemption. If notice of
redemption has been given in the manner provided above, the Notes or portion of
Notes specified in such notice to be redeemed shall become due and payable on
the Redemption Date at the Redemption Price stated therein, together with
accrued interest to such Redemption Date, and on and after such date (unless the
Company shall default in the payment of such Notes at the Redemption Price and
accrued interest to the Redemption Date, in which case the principal, until
paid, shall bear interest from the Redemption Date at the rate prescribed in the
Notes), such Notes shall cease to accrue interest. Upon surrender of any Note
for redemption in accordance with a notice of redemption, such Note shall be
paid and redeemed by the Company at the Redemption Price, together with accrued
interest, if any, to the Redemption Date; provided that installments of interest
whose Stated Maturity is on or prior to the Redemption Date shall be payable to
the Holders registered as such at the close of business on the relevant Regular
Record Date.
SECTION 3.08. Notes Redeemed in Part. Upon surrender of any Note
that is redeemed in part, the Company shall execute and the Trustee shall
authenticate and deliver to the Holder a new Note equal in principal amount to
the unredeemed portion of such surrendered Note.
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44
ARTICLE FOUR
COVENANTS
SECTION 4.01. Payment of Notes. The Company shall pay the principal
of, premium, if any, and interest on the Notes on the dates and in the manner
provided in the Notes and this Indenture. An installment of principal, premium,
if any, or interest shall be considered paid on the date due if the Trustee or
Paying Agent (other than the Company, a Subsidiary of the Company, or any
Affiliate of any of them) holds on that date money in such coin or currency of
the Federal Republic of Germany as at the time of payment shall be legal tender
for the payment of public and private debts designated for and sufficient to pay
the installment. If the Company or any Subsidiary of the Company or any
Affiliate of any of them, acts as Paying Agent, an installment of principal,
premium, if any, or interest shall be considered paid on the due date if the
entity acting as Paying Agent complies with the last sentence of Section 2.05.
As provided in Section 6.09, upon any bankruptcy or reorganization procedure
relative to the Company, the Trustee shall serve as the Paying Agent and
conversion agent, if any, for the Notes.
The Company shall pay interest on overdue principal, premium, if
any, and interest on overdue installments of interest, to the extent lawful, at
the rate per annum specified in the Notes.
SECTION 4.02. Maintenance of Office or Agency. The Company will
maintain in the Borough of Manhattan, the City of New York, an office or agency
where Notes may be surrendered for registration of transfer or exchange or for
presentation for payment, an office or agency in New York and Frankfurt am Main,
Germany, where Notes may be presented for payment and monies for payment in
respect of the Notes will be disbursed and where notices and demands to or upon
the Company in respect of the Notes and this Indenture may be served. The
Company will 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 11.02 hereof.
The Company may also from time to time designate one or more other
offices or agencies (in or outside the City of New York) where the Notes may be
presented or surrendered for any or all such purposes and may from time to time
rescind such designations; provided that no such designation or rescission shall
in any manner relieve the Company of its obligation to maintain an office or
agency in the Borough of Manhattan, the City of New York and Frankfurt am Main,
Germany for such purposes. The Company will give prompt written notice to the
Trustee of any such designation or rescission and of any change in the location
of any such other office or agency.
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45
The Company hereby initially designates the Corporate Trust Office
of the Trustee, located in the Borough of Manhattan, the City of New York, as
such office of the Company in accordance with Section 2.04. The Company hereby
appoints Deutsche Bank for Notes represented by the DBC Global.
SECTION 4.03. Limitation on Indebtedness. (a) The Company will not,
and will not permit any of its Restricted Subsidiaries to, Incur any
Indebtedness (other than the 1998 Notes and Indebtedness existing on the Closing
Date); provided that the Company may Incur Indebtedness if, after giving effect
to the Incurrence of such Indebtedness and the receipt and application of the
proceeds therefrom, the Consolidated Leverage Ratio would be greater than zero
and less than 6:1.
Notwithstanding the foregoing, the Company and any Restricted
Subsidiary (except as specified below) may Incur each and all of the following:
(i) Indebtedness outstanding at any time in an aggregate principal
amount not to exceed $100 million of Indebtedness that is pari passu with
or subordinated to the Notes and $150 million of Indebtedness that is
subordinated to the Notes, less any amount of such Indebtedness
permanently repaid as provided under Section 4.11 hereof;
(ii) Indebtedness owed (A) by any Restricted Subsidiary to the
Company or another Restricted Subsidiary or (B) by the Company to any
Restricted Subsidiary; provided that any event which results in any such
Restricted Subsidiary ceasing to be a Restricted Subsidiary or any
subsequent transfer of such Indebtedness (other than to the Company or
another Restricted Subsidiary) shall be deemed, in each case, to
constitute an Incurrence of such Indebtedness not permitted by this clause
(ii);
(iii) Indebtedness issued in exchange for, or the net proceeds of
which are used to repay, redeem, defease, refinance, refund, extend,
renew, replace, discharge or otherwise retire any then outstanding
Indebtedness (other than Indebtedness Incurred under clause (i), (ii),
(iv), (vi), (viii), (xi) or (xii) of this paragraph) and any refinancings
thereof in an amount not to exceed the amount so refinanced or refunded
(plus premiums, penalties, accrued interest, fees and expenses); provided
that Indebtedness the proceeds of which are used to refinance or refund
the Notes or Indebtedness that is pari passu with, or subordinated in
right of payment to, the Notes shall only be permitted under this clause
(iii) if (A) in case the Notes are refinanced in part or the Indebtedness
to be refinanced is pari passu with the Notes, such new Indebtedness, by
its terms or by the terms of any agreement or
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46
instrument pursuant to which such new Indebtedness is outstanding, is
expressly made pari passu with, or subordinate in right of payment to, the
remaining Notes, (B) in case the Indebtedness to be refinanced is
subordinated in right of payment to the Notes, such new Indebtedness, by
its terms or by the terms of any agreement or instrument pursuant to which
such new Indebtedness is issued or remains outstanding, is expressly made
subordinate in right of payment to the Notes at least to the extent that
the Indebtedness to be refinanced is subordinated to the Notes and (C)
such new Indebtedness, determined as of the date of Incurrence of such new
Indebtedness, does not mature prior to the Stated Maturity of the
Indebtedness to be refinanced or refunded, and the Average Life of such
new Indebtedness is at least equal to the remaining Average Life of the
Indebtedness to be refinanced or refunded; and provided further that in no
event may Indebtedness of the Company be refinanced 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 provided in the ordinary course of business, (B) under Currency
Agreements and Interest Rate Agreements; provided that such agreements (a)
are designed solely to protect the Company or any of its Restricted
Subsidiaries against fluctuations in foreign currency exchange rates or
interest rates and (b) 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 (other than Guarantees of Indebtedness Incurred by any Person
acquiring all or any portion of such business, assets or Restricted
Subsidiary for the purpose of financing such acquisition), 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 of the Company, to the extent the net proceeds
thereof are promptly (A) used to purchase Notes tendered in an Offer to
Purchase made as a result of a Change in Control or (B) deposited to
defease the Notes as described below under Article Eight hereof;
(vi) Guarantees of the Notes and Guarantees of Indebtedness of the
Company by any Restricted Subsidiary provided the Guarantee of such
Indebtedness is permitted by and made in accordance with Section 4.07
hereof;
(vii) Indebtedness (including Guarantees) Incurred to finance the
cost (including the cost of design, development, acquisition,
construction, installation, improvement, transportation or integration) to
acquire equipment, inventory or network assets (including acquisitions by
way of Capitalized Lease and acquisitions of the Capital Stock of a Person
that becomes a Restricted Subsidiary to the extent of the fair market
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47
value of the equipment, inventory or network assets so acquired) by the
Company or a Restricted Subsidiary after the Closing Date;
(viii) Indebtedness of the Company not to exceed, at any one time
outstanding, two times (A) the Net Cash Proceeds received by the Company
after the Closing Date as a capital contribution or from the issuance and
sale of its Capital Stock (other than Disqualified Stock) to a Person that
is not a Subsidiary of the Company, to the extent (I) such capital
contribution or Net Cash Proceeds have not been used pursuant to clause
(C)(2) of the first paragraph or clause (iii), (iv), (vi) or (vii) of the
second paragraph of Section 4.04 hereof to make a Restricted Payment and
(II) if such capital contribution or Net Cash Proceeds are used to
consummate a transaction pursuant to which the Company Incurs Acquired
Indebtedness, the amount of such Net Cash Proceeds exceeds one-half of the
amount of Acquired Indebtedness so Incurred and (B) 80% of the fair market
value of property (other than cash and cash equivalents) received by the
Company after the Closing Date from the sale of its Capital Stock (other
than Disqualified Stock) to a Person that is not a Subsidiary of the
Company, to the extent (I) such capital contribution or sale of Capital
Stock has not been used pursuant to clause (iii), (iv), (vi) or (vii) of
the second paragraph of Section 4.04 hereof to make a Restricted Payment
and (II) if such capital contribution or Capital Stock is used to
consummate a transaction pursuant to which the Company Incurs Acquired
Indebtedness, 80% of the fair market value of the property received
exceeds one-half of the amount of Acquired Indebtedness so Incurred
provided that such Indebtedness does not mature prior to the Stated
Maturity of the Notes and has an Average Life longer than the Notes;
(ix) Acquired Indebtedness;
(x) Strategic Subordinated Indebtedness;
(xi) Indebtedness in respect of bankers' acceptance and letters of
credit, all in the ordinary course of business, in an aggregate amount
outstanding at any time of up to $10 million;
(xii) Indebtedness arising from the honoring by a bank or other
financial institution of a check, or similar instrument inadvertently
(except in the case of daylight overdrafts) drawn against insufficient
funds in the ordinary course of business, provided that such Indebtedness
is extinguished within three business days of Incurrence.
(b) Notwithstanding any other provision of this Section 4.03, the
maximum amount of Indebtedness that the Company or a Restricted Subsidiary may
Incur pursuant to this Section 4.03 shall not be deemed to be exceeded, with
respect to any outstanding Indebtedness due solely to the result of fluctuations
in the exchange rates of currencies.
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(c) For purposes of determining any particular amount of
Indebtedness under this Section 4.03, (1) 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 and (2) any Liens
granted pursuant to the equal and ratable provisions referred to in Section 4.09
shall not be treated as Indebtedness. For purposes of determining compliance
with this Section 4.03, in the event that an item of Indebtedness meets the
criteria of more than one of the types of Indebtedness described in clauses (i)
through (xii) of Section 4.03(a), the Company, in its sole discretion, shall
classify, and from time to time may reclassify, such item of Indebtedness and
only be required to include the amount and type of such Indebtedness in one of
such clauses.
SECTION 4.04. Limitation on Restricted Payments. The Company will
not, and will not permit any Restricted Subsidiary to, directly or indirectly,
(i) (A) declare or pay any dividend or make any distribution on or
with respect to its Capital Stock (other than (x) dividends or
distributions payable solely in shares of its Capital Stock (other than
Disqualified Stock) or in options, warrants or other rights to acquire
shares of such Capital Stock and (y) pro rata dividends or distributions
on Common Stock of Restricted Subsidiaries held by minority stockholders)
held by Persons other than the Company or any of its Restricted
Subsidiaries or (B) pay any cash interest on the Subordinated Convertible
Debenture,
(ii) purchase, redeem, retire or otherwise acquire for value any
shares of Capital Stock of (A) the Company or an Unrestricted Subsidiary
(including options, warrants or other rights to acquire such shares of
Capital Stock) held by any Person or (B) a Restricted Subsidiary
(including options, warrants or other rights to acquire such shares of
Capital Stock) held by any Affiliate of the Company (other than a Wholly
Owned Restricted Subsidiary) or any holder (or any Affiliate of such
holder) of 5% or more of the Capital Stock of the Company,
(iii) make any voluntary or optional principal payment, or voluntary
or optional redemption, repurchase, defeasance, or other acquisition or
retirement for value, of Indebtedness of the Company that is subordinated
in right of payment to the Notes or
(iv) make any Investment (after the Closing Date), other than a
Permitted Investment, in any Person (such payments or any other actions
described in clauses (i) through (iv) above being collectively "Restricted
Payments")
if, at the time of, and after giving effect to, the proposed Restricted Payment:
(A) a Default or Event of Default shall have occurred and be continuing, (B) the
Company could not Incur at least $1.00 of Indebtedness under the first paragraph
of Section 4.03 hereof or (C) the aggregate
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49
amount of all Restricted Payments (the amount, 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) made after the Closing Date
shall exceed the sum of (1) 50% of the aggregate amount of the Adjusted
Consolidated Net Income (or, if the Adjusted Consolidated Net Income is a loss,
minus 100% of the amount of such loss) (determined by excluding income resulting
from transfers of assets by the Company or a Restricted Subsidiary to an
Unrestricted Subsidiary) accrued on a cumulative basis during the period (taken
as one accounting period) beginning on the first day of the fiscal quarter
immediately following the Closing Date and ending on the last day of the last
fiscal quarter preceding the Transaction Date for which reports have been filed
with the Commission or provided to the Trustee pursuant to Section 4.18 hereof
plus (2) the aggregate Net Cash Proceeds received by the Company after the
Closing Date as a capital contribution or from the issuance and sale permitted
by this Indenture of its Capital Stock (other than Disqualified Stock) to a
Person who is not a Subsidiary of the Company, including an issuance or sale
permitted by this Indenture of Indebtedness of the Company for cash subsequent
to the Closing Date upon the conversion of such Indebtedness into Capital Stock
(other than Disqualified Stock) of the Company, or from the issuance to a Person
who is not a Subsidiary of the Company of any options, warrants or other rights
to acquire Capital Stock of the Company (in each case, exclusive of any
Disqualified Stock or any options, warrants or other rights that are redeemable
at the option of the holder, or are required to be redeemed, prior to the Stated
Maturity of the Notes), in each case except to the extent such Net Cash Proceeds
are used to Incur Indebtedness pursuant to clause (viii) of the second paragraph
under Section 4.03 hereof, plus (3) an amount equal to the net reduction in
Investments (other than reductions in Permitted Investments) in any Person
resulting from payments of interest on Indebtedness, dividends, repayments of
loans or advances, or other transfers of assets, in each case to the Company or
any Restricted Subsidiary or from the Net Cash Proceeds from the return of
capital, redemption, or sale of any such Investment (except, in each case, to
the extent any such payment or proceeds are included in the calculation of
Adjusted Consolidated Net Income), or from redesignations of Unrestricted
Subsidiaries as Restricted Subsidiaries (valued in each case as provided in the
definition of "Investments"), or from the release of any Guarantee that
constituted a Restricted Payment, to the extent of such release, not to exceed,
in each case, the amount of Investments previously made by the Company or any
Restricted Subsidiary in such Person or Unrestricted Subsidiary.
The foregoing provision shall not be violated by reason of:
(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 foregoing paragraph;
(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
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50
premium, if any, and accrued and unpaid interest, with the proceeds of, or
in exchange for, Indebtedness Incurred under clause (iii) of the second
paragraph of part (a) of Section 4.03 hereof;
(iii) the repurchase, redemption or other acquisition of Capital
Stock of the Company or an Unrestricted Subsidiary (or options, warrants
or other rights to acquire such Capital Stock) in exchange for, or out of
the proceeds of a capital contribution or a substantially concurrent
offering of, shares of Capital Stock (other than Disqualified Stock) of
the Company (or options, warrants or other rights to acquire such Capital
Stock);
(iv) the making of any principal payment or the repurchase,
redemption, retirement, defeasance or other acquisition for value of
Indebtedness of the Company which is subordinated in right of payment to
the Notes in exchange for, or out of the proceeds of a capital
contribution or a substantially concurrent offering of, shares of the
Capital Stock (other than Disqualified Stock) of the Company (or options,
warrants or other rights to acquire such Capital Stock);
(v) payments or distributions to dissenting stockholders pursuant to
applicable law, pursuant to or in connection with a consolidation, merger
or transfer of assets that complies with the provisions of Article Five
hereof;
(vi) Investments in any Person the primary business of which is
related, ancillary or complementary to the business of the Company or any
of its Restricted Subsidiaries on the date of such Investments; provided
that the aggregate amount of Investments made pursuant to this clause (vi)
does not exceed $30 million at any one time outstanding;
(vii) Investments acquired in exchange for Capital Stock (other than
Disqualified Stock) of the Company or the Net Cash Proceeds from the
issuance and sale of such Capital Stock, provided that such proceeds are
so used within 180 days of the receipt thereof;
(viii) the redemption, repurchase, retirement or other acquisition
of any Capital Stock of the Company (or options, warrants or other rights
to acquire such Capital Stock) from an employee or former employee of the
Company or any of its Subsidiaries (or from such person's estate, heirs or
representatives) in connection with such employee's death, disability or
termination of employment, provided that the aggregate amount expended
pursuant to this clause does not exceed $1 million per annum plus the
cumulative amount of such per annum limit not used in prior years and the
cash proceeds from such Investments, provided that such proceeds are used
within 180 days of the receipt thereof;
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51
(ix) Investments in permitted Wholesale Consortiums and Permitted
Joint Ventures not exceeding, at the time of the Investment, the sum of
(A) 10% of the consolidated revenue of the Company (excluding with respect
to Persons in whom an equity interest is owned by Persons other than the
Company and its Restricted Subsidiaries, the pro rata share of such
revenue attributable to such other equity holders) accrued on a cumulative
basis during the period (taken as one accounting period) beginning on the
first day of the first full fiscal quarter immediately following the
Closing Date and ending on the last day of the last fiscal quarter
preceding the date of such Investment and (B) the Net Cash Proceeds from
the disposition of the Company's interest in any such Permitted Wholesale
Consortium or Permitted Joint Venture;
(x) the repurchase of shares of the Series A Preferred upon a Change
of Control pursuant to an Offer to Purchase; provided that an Offer to
Purchase is consummated with respect to the Notes prior to any repurchase
of shares of the Series A Preferred;
(xi) the payment of cash dividends on the Series A Preferred sold as
a Unit with any of the 1998 Notes or issued as dividends thereon (A) after
April 15, 2003 or (B) at a rate of 0.5% per annum as a result of the
Company's failure to have a registration statement under the Securities
Act or the Series A Preferred declared effective within one year after the
Closing Date;
(xii) the payment of cash interest on Subordinated Convertible
Debentures sold as a Unit with any of the 1998 Notes or issued as interest
thereon (A) after April 15, 2003 or (B) at a rate of 0.5% per annum as a
result of the Company's failure to have a registration statement under the
Securities Act for the Subordinated Convertible Debentures declared
effective within one year after the Closing Date; and
(xiii) other Restricted Payments in an aggregate amount not to
exceed $10 million, increased by the amount of any Restricted Payment made
pursuant to this clause (x) that is an Investment and is not outstanding;
provided that, except in the case of clauses (i) and (iii), 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 preceding
paragraph (other than the Restricted Payment referred to in clause (ii) thereof,
an exchange of Capital Stock for Capital Stock or Indebtedness referred to in
clause (iii) or (iv) thereof and an Investment referred to in clause (vi)
thereof), and the Net Cash Proceeds from any capital contribution or any
issuance of Capital Stock referred to in clauses (iii), (iv) and (vi), shall be
included in calculating whether the conditions of clause (C) of the first
paragraph of this Section 4.04 have been met
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52
with respect to any subsequent Restricted Payments. In the event the proceeds of
an issuance of Capital Stock of the Company are used for the redemption,
repurchase or other acquisition of the Notes, or Indebtedness that is pari passu
with the Notes, then the Net Cash Proceeds of such issuance shall be included in
clause (C) of the first paragraph of this Section 4.04 only to the extent such
proceeds are not used for such redemption, repurchase or other acquisition of
Indebtedness.
Any Restricted Payments made in other than cash shall be valued at
fair market value. The amount of any Investment "outstanding" at any time shall
be deemed to be equal to the amount of such Investment on the date made, less
the return of capital, repayment of loans, return on capital and release of
Guarantees, in each case of or to the Company and its Restricted Subsidiaries
with respect to such Investment (up to the amount of such investment on the date
made).
SECTION 4.05. Limitation on Dividend and Other Payment Restrictions
Affecting Restricted Subsidiaries. The Company will not, and will not permit any
Restricted Subsidiary to, 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 Capital Stock 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.
The foregoing provisions shall not restrict any encumbrances or
restrictions:
(i) existing on the Closing Date in the Indenture or any other
agreements in effect on the Closing Date, and any extensions,
refinancings, renewals or replacements of such agreements; provided that
the encumbrances and restrictions in any such extensions, refinancings,
renewals or replacements are no less favorable in any material respect to
the Holders than those encumbrances or restrictions that are then in
effect and that are being extended, refinanced, renewed or replaced;
(ii) existing under or by reason of applicable law;
(iii) existing with respect to any Person or the property or assets
of such Person acquired by the Company or any Restricted Subsidiary,
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;
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53
(iv) in the case of clause (iv) of the first paragraph of this
Section 4.05, (A) that restrict in a customary manner the subletting,
assignment or transfer of any property or asset that is a lease, 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,
detract from the value of property or assets of the Company or any
Restricted Subsidiary in any manner material 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 of, or property and assets of,
such Restricted Subsidiary;
(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 Company) and (C) the Company
determines that any such encumbrance or restriction will not materially
affect the Company's ability to make principal or interest payments on the
Notes; or
(vii) imposed in connection with a transaction described in clause
(f) of the proviso to the definition of "Asset Sale" and relating solely
to a Restricted Subsidiary that transfers assets to the special purpose
entity referred to therein; provided that the Company 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 4.05 shall prevent the Company or any
Restricted Subsidiary from (1) creating, incurring, assuming or suffering to
exist any Liens otherwise permitted in Section 4.09 hereof or (2) restricting
the sale or other disposition of property or assets of the Company or any of its
Restricted Subsidiaries that secure Indebtedness of the Company or any of its
Restricted Subsidiaries.
SECTION 4.06. Limitation on the Issuance and Sale of Capital Stock
of Restricted Subsidiaries. The Company will not sell, and will not permit any
Restricted Subsidiary, directly or indirectly, to issue or sell, any shares of
Capital Stock of a Restricted Subsidiary (including options, warrants or other
rights to purchase shares of such Capital Stock) except (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
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54
Subsidiaries, to the extent required by applicable law; (iii) if, immediately
after giving effect to such issuance or sale, such Restricted Subsidiary would
no longer constitute a Restricted Subsidiary and any Investment in such Person
remaining after giving effect to such issuance or sale would have been permitted
to be made under Section 4.04 hereof if made on the date of such issuance or
sale; (iv) a pledge or hypothecation of or Lien on any Capital Stock of a
Subsidiary to the extent not prohibited under Section 4.09 hereof; or (v) sales
by the Company or Restricted Subsidiaries of Common Stock of a Restricted
Subsidiary, provided that the Company or such Restricted Subsidiaries apply the
Net Cash Proceeds, if any, of any such sale in accordance with clause (A) or (B)
of Section 4.11 hereof.
SECTION 4.07. Limitation on Issuances of Guarantees by Restricted
Subsidiaries. The Company will not permit any Restricted Subsidiary, directly or
indirectly, to Guarantee any Indebtedness of the Company which is pari passu
with or subordinate in right of payment to the Notes ("Guaranteed
Indebtedness"), unless (i) such Restricted Subsidiary simultaneously executes
and delivers a supplemental indenture to this Indenture providing for a
Guarantee (a "Subsidiary Guarantee") of payment of the Notes by such Restricted
Subsidiary 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 Subsidiary Guarantee; provided that this paragraph shall
not be applicable to any Guarantee of any Restricted Subsidiary that existed at
the time such Person became a Restricted Subsidiary and was not Incurred in
connection with, or in contemplation of, such Person becoming a Restricted
Subsidiary. If the Guaranteed Indebtedness is (A) pari passu with the Notes,
then the Guarantee of such Guaranteed Indebtedness shall be pari passu with, or
subordinated to, the Subsidiary Guarantee or (B) subordinated to the Notes, then
the Guarantee of such Guaranteed Indebtedness shall be subordinated to the
Subsidiary Guarantee at least to the extent that the Guaranteed Indebtedness is
subordinated to the Notes.
Notwithstanding the foregoing, any Subsidiary Guarantee by a
Restricted Subsidiary may provide by its terms that it shall 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 Capital Stock in, or all or substantially all
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 Subsidiary Guarantee, except a
discharge or release by or as a result of payment under such Guarantee.
SECTION 4.08. 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
(including, without limitation, the purchase, sale, lease or exchange of
property or assets, or the rendering of any service) with any holder (or any
Affiliate of such holder) of 5% or more of any class of Capital Stock of the
Company or with any
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55
Affiliate of the Company or any Restricted Subsidiary, except upon fair and
reasonable terms no less favorable to the Company or such Restricted Subsidiary
than could be obtained, at the time of such transaction or, if such transaction
is pursuant to a written agreement, at the time of the execution of the
agreement providing therefor, in a comparable arm's-length transaction with a
Person that is not such a holder or an Affiliate.
The foregoing limitation does not limit, and shall not apply to:
(i) transactions (A) approved by a majority of the disinterested
members of the Board of Directors or (B) for which the Company or a
Restricted Subsidiary delivers to the Trustee a written opinion of a
nationally recognized investment banking firm stating that the transaction
is fair to the Company or such Restricted Subsidiary from a financial
point of view;
(ii) any transaction solely between the Company and any of its
Restricted Subsidiaries or solely between Restricted Subsidiaries;
(iii) the payment of reasonable and customary regular fees to
directors of the Company who are not employees of the Company;
(iv) any payments or other transactions pursuant to any tax-sharing
agreement between the Company and any other Person with which the Company
files a consolidated tax return or with which the Company is part of a
consolidated group for tax purposes;
(v) compensation, indemnification and other benefits paid or made
available to officers, directors and employees in the ordinary course of
business in connection with services actually rendered and consistent with
past practice;
(vi) transactions in accordance with the Existing Stockholder
Agreements as in effect on the Closing Date; or
(vii) any Restricted Payments not prohibited by Section 4.04 hereof.
Notwithstanding the foregoing, any transaction or series of related transactions
covered by the first paragraph of this Section 4.08 and not covered by clauses
(ii) through (v) of this paragraph, the aggregate amount of which exceeds $2.0
million in value, must be approved or determined to be fair in the manner
provided for in clause (i)(A) or (B) of this Section 4.08.
SECTION 4.09. Limitation on Liens. The Company will not, and will
not permit any Restricted Subsidiary to, create, incur, assume or suffer to
exist any Lien on any of its assets or properties of any character (including,
without limitation, licenses), or any shares of Capital Stock or Indebtedness of
any Restricted Subsidiary, without making effective provision for all of
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56
the Notes and all other amounts due under this 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.
The foregoing limitation does not apply to:
(i) Liens existing on the Closing Date;
(ii) Liens granted after the Closing Date on any assets or Capital
Stock of the Company or its Restricted Subsidiaries created in favor of
the Holders;
(iii) Liens with respect to the assets of a Restricted Subsidiary
granted by such Restricted Subsidiary to the Company or a Wholly Owned
Restricted Subsidiary to secure Indebtedness owing to the Company or such
other Restricted Subsidiary;
(iv) Liens securing Indebtedness permitted to be Incurred under
clause (iii) of the second paragraph of Section 4.03 hereof which is
Incurred to refinance secured Indebtedness; provided that such Liens do
not extend to or cover any property or assets of the Company or any
Restricted Subsidiary other than the property or assets securing the
Indebtedness being refinanced;
(v) Liens on the Capital Stock of, or any property or assets of, a
Restricted Subsidiary securing Indebtedness of such Restricted Subsidiary
permitted under Section 4.03 hereof;
(vi) Liens on the Capital Stock of Restricted Subsidiaries that own
a substantial portion of assets financed with Indebtedness Incurred under
clause (vii) of Section 4.03 hereof, if such liens secure only such
Indebtedness; or
(vii) Permitted Liens.
SECTION 4.10. Limitation on Sale-Leaseback Transactions. The Company
will not, and will not permit any Restricted Subsidiary to, enter into any
sale-leaseback transaction involving any of its assets or properties whether now
owned or hereafter acquired, whereby the Company or a Restricted Subsidiary
sells or transfers such assets or properties and then or thereafter leases such
assets or properties or any part thereof or any other assets or properties which
the Company or such Restricted Subsidiary, as the case may be, intends to use
for substantially the same purpose or purposes as the assets or properties sold
or transferred; provided that a sale-leaseback transaction shall not include any
lease in connection with which the Company or a Restricted Subsidiary acquires
assets or property in anticipation of the substantially contemporaneous sale or
transfer to the lessor under such lease.
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57
The foregoing restriction does not apply to any sale-leaseback
transaction if:
(i) the lease is for a period, including renewal rights, of not in
excess of three years;
(ii) the lease secures or relates to industrial revenue or pollution
control bonds;
(iii) the transaction is solely between the Company and any
Restricted Subsidiary or solely between Restricted Subsidiaries; or
(iv) the Company or such Restricted Subsidiary, within 12 months
after the sale or transfer of any assets or properties is completed,
applies an amount not less than the net proceeds received from such sale
in accordance with clause (A) or (B) of the first paragraph of Section
4.11 hereof.
SECTION 4.11. Limitation on Asset Sales. The Company will not, and
will not permit any Restricted Subsidiary to, consummate any Asset Sale, unless
(i) the consideration received by the Company or such Restricted Subsidiary is
at least equal to the fair market value of the assets sold or disposed of and
(ii) at least 75% of the consideration received consists of cash or Temporary
Cash Investments. In the event and to the extent that the Net Cash Proceeds
received by the Company or any of its Restricted Subsidiaries from one or more
Asset Sales occurring on or after the Closing Date in any period of 12
consecutive months exceed 10% of Adjusted Consolidated Net Tangible Assets
(determined as of the date closest to the commencement of such 12-month period
for which a consolidated balance sheet of the Company and its Subsidiaries has
been filed with the Commission pursuant to Section 4.18 hereof, then the Company
shall or shall cause the relevant Restricted Subsidiary to (i) within 12 months
after the date Net Cash Proceeds so received exceed 10% of Adjusted Consolidated
Net Tangible Assets, (A) apply an amount equal to such excess Net Cash Proceeds
to permanently repay unsubordinated Indebtedness of the Company, or any
Restricted Subsidiary providing a Subsidiary Guarantee pursuant to Section 4.07
hereof or Indebtedness of any other Restricted Subsidiary, in each case owing to
a Person other than the Company or any of its Restricted Subsidiaries or (B)
invest an equal amount, or the amount not so applied pursuant to clause (A) (or
enter into a definitive agreement committing to so invest within 12 months after
the date of such agreement), either in property or assets (other than current
assets) of a nature or type or that are used in a business, or in a company
having property and assets of a nature or type, or engaged in a business, in
either case similar or related to the nature or type of the property and assets
of, or the business of, the Company or any of its Restricted Subsidiaries
existing on the date of such investment (as determined in good faith by the
Board of Directors, whose determination shall be conclusive and evidenced by a
Board Resolution) and (ii) apply (no later than the end of the 12-month period
referred to in clause (i)) such excess Net Cash Proceeds (to the extent not
applied pursuant to clause (i)) as provided in the following paragraph of this
Section 4.11. The amount of such excess Net Cash Proceeds required to be applied
(or to be committed to be
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applied) during such 12-month period as set forth in clause (i) of the preceding
sentence and not applied as so required by the end of such period shall
constitute "Excess Proceeds."
If, as of the first day of any calendar month, the aggregate amount
of Excess Proceeds not theretofore subject to an Offer to Purchase pursuant to
this Section 4.11 totals at least $10 million, the Company must commence, not
later than the fifteenth Business Day of such month, and consummate an Offer to
Purchase from the Holders on a pro rata basis an aggregate principal amount of
Notes equal to the Excess Proceeds on such date, at a purchase price equal to
101% of the principal amount of the Notes on the relevant Payment Date, plus, in
each case, accrued interest (if any) to the Payment Date.
SECTION 4.12. Repurchase of Notes upon a Change of Control. The
Company must commence, within 30 days of the occurrence of a Change of Control,
and consummate an Offer to Purchase for all the Notes then outstanding, at a
purchase price equal to 101% of the principal amount of the Notes on the
relevant Payment Date, plus accrued interest (if any) to the Payment Date.
SECTION 4.13. Existence. Except as otherwise provided or permitted
in Articles Four and Five of this Indenture, the Company will do or cause to be
done all things necessary to preserve and keep in full force and effect its
existence and the existence of each of its Restricted Subsidiaries in accordance
with the respective organizational documents of the Company and each such
Subsidiary (as the same may be amended from time to time) and the rights
(whether pursuant to charter, partnership certificate, agreement, statute or
otherwise), material licenses and franchises of the Company and each such
Subsidiary; provided that the Company shall not be required to preserve any such
right, license or franchise, or the existence of any Restricted Subsidiary, if
the maintenance or preservation thereof is no longer desirable in the conduct of
the business of the Company and its Restricted Subsidiaries taken as a whole.
SECTION 4.14. Payment of Taxes and Other Claims. The Company will
pay or discharge and shall cause each of its Subsidiaries to 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
(a) the Company or any such Subsidiary, (b) the income or profits of any such
Subsidiary which is a corporation or (c) the property of the Company or any such
Subsidiary and (ii) all material lawful claims for labor, materials and supplies
that, if unpaid, might by law become a Lien upon the property of the Company or
any such Subsidiary; provided 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 the amount, applicability or validity of which is being contested in
good faith by appropriate proceedings, for which adequate reserves have been
established.
SECTION 4.15. Maintenance of Properties and Insurance. The Company
will cause all properties used or useful in the conduct of its business or the
business of any of its
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59
Restricted Subsidiaries, to be maintained and kept in good condition, repair and
working order (ordinary wear and tear excepted) and supplied with all necessary
equipment and will cause to be made all necessary repairs, renewals,
replacements, betterments and improvements thereof, all as in the judgment of
the Company may be necessary so that the business carried on in connection
therewith may be properly and advantageously conducted at all times; provided
that nothing in this Section 4.15 shall prevent the Company or any such
Subsidiary 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 Company, desirable in the conduct of the business of the
Company or such Subsidiary.
The Company will provide or cause to be provided, for itself and its
Restricted Subsidiaries, insurance (including appropriate self-insurance)
against loss or damage of the kinds customarily insured against by corporations
similarly situated and owning like properties, with reputable insurers or with
the government of the United States of America, or an agency or instrumentality
thereof, in such amounts, with such deductibles and by such methods as shall be
customary for corporations similarly situated in the industry in which the
Company or such Restricted Subsidiary, as the case may be, is then conducting
business.
SECTION 4.16. Notice of Defaults. In the event that the Company
becomes aware of any Default or Event of Default, the Company, promptly after it
becomes aware thereof, will give written notice thereof to the Trustee.
SECTION 4.17. Compliance Certificates. The principal accounting
officer and the principal financial officer of the Company shall certify, on or
before a date not more than 90 days after the end of each fiscal year of the
Company, that a review has been conducted of the activities of the Company and
its Restricted Subsidiaries and the Company's and its Restricted Subsidiaries'
performance under this Indenture and that the Company has fulfilled all
obligations hereunder, 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 shall also notify the Trustee of any default or defaults in the
performance of any covenants or agreements under this Indenture. The Company
shall also comply with the other provisions of Section 314(a) of the TIA.
SECTION 4.18. Commission Reports and Reports to Holders. At all
times from and after the earlier of (i) the date of the commencement of an
Exchange Offer or the effectiveness of a Shelf Registration Statement (the
"Registration") and (ii) the date that is six months after the Closing Date, in
either case, whether or not the Company is then required to file reports with
the Commission, the Company shall file with the Commission all such reports and
other information as it would be required to file with the Commission by
Sections 13(a) or 15(d) under the Securities Exchange Act of 1934 if it were
subject thereto. The Company shall supply the Trustee and each Holder or shall
supply to the Trustee for forwarding to each such Holder, without cost to such
Holder, copies of such reports and other information. In addition, at all times
prior to the earlier of the date of the Registration and the date that is six
months after the
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Closing Date, the Company shall, at its cost, deliver to each Holder of the
Notes quarterly and annual reports substantially equivalent to those which would
be required by the Exchange Act. In addition, at all times prior to the
Registration, upon the request of any Holder or any prospective purchaser of the
Notes designated by a Holder, the Company shall supply to such Holder or such
prospective purchaser the information required under Rule 144A under the
Securities Act.
Delivery of such reports, information and documents to the Trustee
is for informational purposes only and the Trustee's receipt of such shall not
constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Company's
compliance with any of its covenants hereunder (as to which the Trustee is
entitled to rely exclusively on Officers' Certificates).
SECTION 4.19. Waiver of Stay, Extension or Usury Laws. The Company
covenants (to the extent that it may lawfully do so) that it will not at any
time insist upon, or plead, or in any manner whatsoever claim or take the
benefit or advantage of, any stay 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, premium, if any, or interest on the Notes as contemplated herein,
wherever enacted, now or at any time hereafter in force, or that 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.
ARTICLE FIVE
SUCCESSOR CORPORATION
SECTION 5.01. When Company May Merge, Etc. The Company shall 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 a series of related
transactions) to, any Person or permit any Person to merge with or into the
Company unless:
(i) the Company shall be the continuing Person, or the Person (if
other than the Company) formed by such consolidation or into which the
Company is merged or that acquired or leased such property and assets of
the Company shall be a corporation organized and validly existing under
the laws of the United States of America or any jurisdiction thereof and
shall expressly assume, by a supplemental indenture, executed
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and delivered to the Trustee, all of the obligations of the Company on all
of the Notes and under this Indenture;
(ii) immediately after giving effect to such transaction, no Default
or Event of Default shall have occurred and be continuing;
(iii) immediately after giving effect to such transaction on a pro
forma basis, the Company or any Person becoming the successor obligor of
the Notes shall have a Consolidated Net Worth equal to or greater than the
Consolidated Net Worth of the Company immediately prior to such
transaction;
(iv) immediately after giving effect to such transaction on a pro
forma basis, the Company, or any Person becoming the successor obligor of
the 1998 Notes, as the case may be, could Incur at least $1.00 of
Indebtedness under the first paragraph of Section 4.03 hereof; provided
that this clause (iv) shall not apply to (x) a consolidation, merger or
sale of all (but not less than all) of the assets of the Company if all
Liens and Indebtedness of the Company or any Person becoming the successor
obligor on the Notes, as the case may be, and its Restricted Subsidiaries
outstanding immediately after such transaction would, if Incurred at such
time, have been permitted to be Incurred (and all such Liens and
Indebtedness, other than Liens and Indebtedness of the Company and its
Restricted Subsidiaries outstanding immediately prior to the transaction,
shall be deemed to have been Incurred) for all purposes of this Indenture
or (y) a consolidation, merger or sale of all or substantially all of the
assets of the Company if, 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 Leverage Ratio
equal to or less than the Consolidated Leverage Ratio of the Company
immediately prior to such transaction; and
(v) the Company delivers to the Trustee an Officers' Certificate
(attaching the arithmetic computations to demonstrate compliance with
clauses (iii) and (iv) of this Section 5.01) and Opinion of Counsel, in
each case stating that such consolidation, merger or transfer and such
supplemental indenture complies with this provision and that all
conditions precedent provided for herein relating to such transaction have
been complied with;
provided, however, that clauses (iii) and (iv) of this Section 5.01 do not apply
if, in the good faith determination of the Board of Directors of the Company,
whose determination shall be evidenced by a Board Resolution, the principal
purpose of such transaction is to change the state of incorporation of the
Company; and provided further that any such transaction shall not have as one of
its purposes the evasion of the foregoing limitations.
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SECTION 5.02. Successor Substituted. Upon any consolidation or
merger, or any sale, conveyance, transfer or other disposition of all or
substantially all of the property and assets of the Company in accordance with
Section 5.01 of this Indenture, the successor Person formed by such
consolidation or into which the Company is merged or to which such sale,
conveyance, transfer or other disposition is made shall succeed to, and be
substituted for, and may exercise every right and power of, the Company under
this Indenture with the same effect as if such successor Person had been named
as the Company herein.
ARTICLE SIX
DEFAULT AND REMEDIES
SECTION 6.01. Events of Default. An "Event of Default" shall occur
with respect to the Notes if:
(a) the Company defaults 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;
(b) the Company defaults in the payment of interest on any Note when
the same becomes due and payable, and such default continues for a period
of 30 days; provided that a failure to make any of the first six scheduled
interest payments on the Notes in a timely manner will constitute an Event
of Default with no grace or cure period;
(c) the Company defaults in the performance or breach of the
provisions of Article Five hereof or fails to make or consummate an Offer
to Purchase in accordance with Section 4.11 or Section 4.12 hereof;
(d) the Company defaults in the performance of or breaches any other
covenant or agreement of the Company in this Indenture or under the Notes
(other than a default specified in clause (a), (b) or (c) of this Section
6.01) 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;
(e) there occurs with respect to any issue or issues of Indebtedness
of the Company or any Significant Subsidiary having an outstanding
principal amount of $10 million or more in the aggregate for all such
issues of all such Persons, whether such Indebtedness now exists or shall
hereafter be created, (I) an event of default that has caused the holder
thereof to declare such Indebtedness to be due and payable prior to its
Stated Maturity and such Indebtedness has not been discharged in full or
such acceleration has not been rescinded or annulled within 30 days of
such acceleration and/or (II) the failure to make a principal payment at
the final (but not any interim) fixed
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maturity and such defaulted payment shall not have been made, waived or
extended within 30 days of such payment default;
(f) any final judgment or order (not covered by insurance) for the
payment of money in excess of $10 million in the aggregate for all such
final judgments or orders against all such Persons (treating any
deductibles, self-insurance or retention as not so covered) shall be
rendered against the Company or any Significant Subsidiary and shall not
be paid or discharged, and there shall be any period of 60 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 or discharged against all such Persons to exceed $10 million
during which a stay of enforcement of such final judgment or order, by
reason of a pending appeal or otherwise, shall not be in effect;
(g) a court having jurisdiction in the premises enters a decree or
order for (A) relief in respect of the Company or any Significant
Subsidiary 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 Significant
Subsidiary or for all or substantially all of the property and assets of
the Company or any Significant Subsidiary or (C) the winding up or
liquidation of the affairs of the Company or any Significant Subsidiary
and, in each case, such decree or order shall remain unstayed and in
effect for a period of 60 consecutive days; or
(h) the Company or any Significant Subsidiary (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 Significant Subsidiary or for all or substantially all of
the property and assets of the Company or any Significant Subsidiary or
(C) effects any general assignment for the benefit of creditors.
SECTION 6.02. Acceleration. If an Event of Default (other than an
Event of Default specified in clause (g) or (h) of Section 6.01 that occurs with
respect to the Company) occurs and is continuing under this 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 (and to the Trustee if
such notice is given by the Holders), may, and the Trustee at the request of
such Holders shall, declare the principal amount, of, premium, if any, and
accrued interest on the Notes to be immediately due and payable. Upon a
declaration of acceleration, such principal amount of premium, if any, and
accrued interest shall be immediately due and payable. In the event of a
declaration of acceleration because an Event of Default set forth in clause (e)
of Section 6.01 has occurred and is continuing, such declaration of acceleration
shall be
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automatically rescinded and annulled if the event of default triggering such
Event of Default pursuant to clause (e) shall be remedied or cured by the
Company or the relevant Significant Subsidiary 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 clause (g) or (h) of
Section 6.01 occurs with respect to the Company, principal amount of premium, if
any, and accrued interest 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 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, and interest 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.
SECTION 6.03. 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, premium, if any, or interest
on the Notes or to enforce the performance of any provision of the Notes or this
Indenture.
The Trustee may maintain a proceeding even if it does not possess
any of the Notes or does not produce any of them in the proceeding.
SECTION 6.04. Waiver of Past Defaults. Subject to Section 9.02, at
any time after such a declaration of acceleration, but before a judgment or
decree for the payment of the money due has been obtained by the Trustee, the
Holders of at least a majority in aggregate 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 (except a Default in the payment of principal of, premium, if any,
or interest on any Note as specified in clause (a) or (b) of Section 6.01 (but
not as a result of such acceleration) or in respect of a covenant or provision
of this Indenture which cannot be modified or amended without the consent of the
Holder of each outstanding Note affected) if (i) all existing Events of Default,
other than the nonpayment of the principal amount of, premium, if any, and
interest 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. Upon
any such waiver, such Default shall cease to exist, and any Event of Default
arising therefrom shall be deemed to have been cured, for every purpose of this
Indenture; but no such waiver shall extend to any subsequent or other Default or
Event of Default or impair any right consequent thereto.
SECTION 6.05. Control by Majority. The Holders of at least a
majority in aggregate principal amount of the outstanding Notes may direct the
time, method and place of
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conducting any proceeding for any remedy available to the Trustee or exercising
any trust or power conferred on the Trustee. However, the Trustee may refuse to
follow any direction that conflicts with law or this Indenture, that may involve
the Trustee in personal liability, or that the Trustee determines in good faith
may be unduly prejudicial to the rights of Holders of the Notes, not joining in
the giving of such direction and may take any other action it deems proper that
is not inconsistent with any such direction received from Holders of the Notes.
SECTION 6.06. Limitation on Suits. A Holder may not pursue any
remedy with respect to this Indenture or the Notes unless:
(i) the Holder gives the Trustee written notice of a continuing
Event of Default;
(ii) the Holders of at least 25% in aggregate principal amount of
outstanding Notes make a written request to the Trustee to pursue the
remedy;
(iii) such Holder or Holders offer the Trustee indemnity
satisfactory to the Trustee against any costs, liability or expense;
(iv) the Trustee does not comply with the request within 60 days
after receipt of the request and the offer of indemnity; and
(v) during such 60-day period, the Holders of a majority in
aggregate principal amount of the outstanding Notes do not give the
Trustee a direction that is inconsistent with the request.
For purposes of Section 6.05 of this Indenture and this Section
6.06, the Trustee shall comply with TIA Section 316(a) in making any
determination of whether the Holders of the required aggregate principal amount
of outstanding Notes have concurred in any request or direction of the Trustee
to pursue any remedy available to the Trustee or the Holders with respect to
this Indenture or the Notes or otherwise under the law.
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 6.07. Rights of Holders to Receive Payment. Notwithstanding
any other provision of this Indenture, the right of any Holder of a Note to
receive payment of principal of, premium, if any, or interest on such Holder's
Note on or after the respective due dates expressed on 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.
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SECTION 6.08. Collection Suit by Trustee. If an Event of Default in
payment of principal, premium or interest specified in clause (a) or (b) of
Section 6.01 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 of the Notes for the whole amount of principal, premium, if any, and
accrued interest remaining unpaid, together with interest on overdue principal,
premium, if any, and, to the extent that payment of such interest is lawful,
interest on overdue installments of interest, in each case at the rate specified
in 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 7.07 hereof.
SECTION 6.09. 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, and any other amounts due the Trustee under
Section 7.07) and the Holders allowed in any judicial proceedings relative to
the Company (or any other obligor of the Notes), its creditors or its property
and shall be entitled and empowered to collect and receive any monies,
securities or other property payable or deliverable upon conversion or exchange
of the Notes or upon any such claims and to distribute the same, and any
custodian, receiver, assignee, trustee, liquidator, sequestrator or other
similar official in any such judicial proceeding is hereby authorized by each
Holder to make such payments to the Trustee and, in the event that the Trustee
shall consent to the making of such payments directly to the Holders, to pay to
the Trustee any amount due to it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agent and counsel, and any other
amounts due the Trustee under Section 7.07. Nothing herein contained shall be
deemed to empower the Trustee to authorize or consent to, or accept or adopt on
behalf of any Holder, any plan of reorganization, arrangement, adjustment or
composition affecting the Notes or the rights of any Holder thereof, or to
authorize the Trustee to vote in respect of the claim of any Holder in any such
proceeding.
SECTION 6.10. Priorities. If the Trustee collects any money pursuant
to this Article Six, it shall pay out the money in the following order:
First: to the Trustee for all amounts due under Section 7.07;
Second: to Holders for amounts then due and unpaid for principal of,
premium, if any, and interest on the Notes in respect of which or for the
benefit of which such money has been collected, ratably, without
preference or priority of any kind, according to the amounts due and
payable on such Notes for principal, premium, if any, and interest,
respectively; and
Third: to the Company, as its interests may appear.
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The Trustee, upon prior written notice to the Company, may fix a
record date and payment date for any payment to Holders pursuant to this Section
6.10.
SECTION 6.11. 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 may require any party
litigant in such suit to file an undertaking to pay the costs of the suit, and
the court 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 6.11 does not apply to a suit by the Trustee, a suit by a Holder
pursuant to Section 6.07 of this Indenture, or a suit by Holders of more than
10% in principal amount of the outstanding Notes.
SECTION 6.12. Restoration of Rights and Remedies. If the Trustee or
any Holder has instituted any proceeding to enforce any right or remedy under
this Indenture and such proceeding has been discontinued or abandoned for any
reason, or has been determined adversely to the Trustee or to such Holder, then,
and in every such case, subject to any determination in such proceeding, the
Company, the Trustee and the Holders shall be restored severally and
respectively to their former positions hereunder and thereafter all rights and
remedies of the Company, the Trustee and the Holders shall continue as though no
such proceeding had been instituted.
SECTION 6.13. Rights and Remedies Cumulative. Except as otherwise
provided with respect to the replacement or payment of mutilated, destroyed,
lost or wrongfully taken Notes in Section 2.09, no right or remedy herein
conferred upon or reserved to the Trustee or to the Holders is intended to be
exclusive of any other right or remedy, and every right and remedy shall, to the
extent permitted by law, be cumulative and in addition to every other right and
remedy given hereunder or now or hereafter existing at law or in equity or
otherwise. The assertion or employment of any right or remedy hereunder, or
otherwise, shall not prevent the concurrent assertion or employment of any other
appropriate right or remedy.
SECTION 6.14. Delay or Omission Not Waiver. No delay or omission of
the Trustee or of any Holder 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 Six or by law to the Trustee or to the Holders may be
exercised from time to time, and as often as may be deemed expedient, by the
Trustee or by the Holders, as the case may be.
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ARTICLE SEVEN
TRUSTEE
SECTION 7.01. General. The duties and responsibilities of the
Trustee shall be as provided by the TIA and as set forth herein. Notwithstanding
the foregoing, no provision of this Indenture shall require the Trustee to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder, or in the exercise of any of its
rights or powers. Whether or not therein expressly so provided, every provision
of this Indenture relating to the conduct or affecting the liability of or
affording protection to the Trustee shall be subject to the provisions of this
Article Seven.
SECTION 7.02. Certain Rights of Trustee. Subject to TIA Sections
315(a) through (d):
(i) the Trustee may conclusively rely and shall be protected in
acting or refraining from acting upon any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction,
consent, order, bond, debenture, note, other evidence of indebtedness or
other paper or document (whether in its original or facsimile form)
believed by it to be genuine and to have been signed or presented by the
proper person. The Trustee need not investigate any fact or matter stated
in the document and may in good faith conclusively rely as to the truth of
the statements and the correctness of the opinions therein;
(ii) before the Trustee acts or refrains from acting, it may require
an Officers' Certificate or an Opinion of Counsel, which shall conform to
Section 10.04. The Trustee shall not be liable for any action it takes or
omits to take in good faith in reliance on such certificate, opinion
and/or an accountants' certificate if required under the TIA;
(iii) the Trustee may act through its attorneys and agents and shall
not be responsible for the misconduct or negligence of any agent appointed
with due care;
(iv) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or
direction of any of the Holders, unless such Holders shall have offered to
the Trustee security or indemnity reasonably satisfactory to it against
the costs, expenses and liabilities that might be incurred by it in
compliance with such request or direction;
(v) the Trustee shall not be liable for any action it takes or omits
to take in good faith that it believes to be authorized or within its
rights or powers or for any action it takes or omits to take in accordance
with the direction of the Holders of a majority in principal amount of the
outstanding Notes relating to the time, method and place of conducting any
proceeding for any remedy available to the Trustee, or exercising any
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trust or power conferred upon the Trustee, under this Indenture; provided
that the Trustee's conduct does not constitute negligence or bad faith;
(vi) whenever in the administration of this Indenture the Trustee
shall deem it desirable that a matter be proved or established prior to
taking, suffering or omitting any action hereunder, the Trustee (unless
other evidence be herein specifically prescribed) may, in the absence of
bad faith on its part, rely upon an Officers' Certificate;
(vii) the Trustee shall not be bound to make any investigation into
the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note, other evidence of indebtedness or other paper or
document, but the Trustee, in its discretion, may make such further
inquiry or investigation into such facts or matters as it may see fit,
and, if the Trustee shall determine to make such further inquiry or
investigation, it shall be entitled at the sole cost of the Company to
examine the books, records and premises of the Company personally or by
agent or attorney and shall incur no liability or additional liability of
any kind by reason of such inquiry or investigation;
(viii) The Trustee shall not be charged with knowledge of any
Default or Event of Default, of the identity of any Restricted Subsidiary
or of the existence of any Change of Control or Asset Sale unless either
(i) a Responsible Officer shall have actual knowledge thereof, or (ii) the
Trustee shall have received written notice thereof from the Company or any
Holder of the Notes; and
(ix) The Trustee may consult with counsel of its selection and the
advice of such counsel or any Opinion of Counsel shall be full and
complete authorization and protection in respect of any action taken,
suffered or omitted by it hereunder in good faith and in reliance thereon.
SECTION 7.03. 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 or its Affiliates with the same rights it
would have if it were not the Trustee. Any Agent may do the same with like
rights. However, the Trustee is subject to TIA Sections 310(b) and 311.
SECTION 7.04. Trustee's Disclaimer. The Trustee (i) makes no
representation as to the validity or adequacy of this Indenture or the Notes,
(ii) shall not be accountable for the Company's use or application of the
proceeds from the Notes and (iii) shall not be responsible for any statement in
the Notes other than its certificate of authentication.
SECTION 7.05. Notice of Default. If any Default or any Event of
Default occurs and is continuing and if such Default or Event of Default is
known to a Responsible Officer of
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the Trustee, the Trustee shall mail to each Holder in the manner and to the
extent provided in TIA Section 313(c) notice of the Default or Event of Default
within 90 days after it occurs, unless such Default or Event of Default has been
cured; provided, however, that, except in the case of a default in the payment
of the principal of, premium, if any, or interest on any Note, the Trustee shall
be protected in withholding such notice if and so long as the board of
directors, the executive committee or a trust committee of directors and/or
Responsible Officers of the Trustee in good faith determine that the withholding
of such notice is in the interest of the Holders. If an Event of Default has
occurred and is continuing, the Trustee shall use the same degree of care and
skill in its exercise of the rights and powers invested in it under this
Indenture as a prudent person would exercise under the circumstances in the
conduct of such person's own affairs.
SECTION 7.06. Reports by Trustee to Holders. Within 60 days after
each November 15, beginning with November 15, 1998, the Trustee shall mail to
each Holder as provided in TIA Section 313(c) a brief report that complies with
TIA Section 313(a) dated as of such November 15, if required by TIA Section
313(a).
SECTION 7.07. Compensation and Indemnity. The Company shall pay to
the Trustee such compensation as shall be agreed upon from time to time in
writing for its services. The compensation of the Trustee 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 out-of-pocket expenses and
advances incurred or made by the Trustee. Such expenses shall include the
reasonable compensation and expenses of the Trustee's agents and counsel.
The Company shall indemnify each of the Trustee and any predecessor
Trustee for, and hold it harmless against, any and all loss, claim, damage or
liability or expense (including taxes other than taxes based upon the income of
the Trustee) incurred by it without negligence or bad faith on its part in
connection with the acceptance or administration of this Indenture and its
duties under this Indenture and the Notes, including the costs and expenses of
defending itself against any claim or liability and of complying with any
process served upon it or any of its officers in connection with the exercise or
performance of any of its powers or duties under this Indenture and the Notes.
The Trustee shall notify the Company promptly of any claim asserted against the
Trustee for which it may seek indemnity. The Company shall defend the claim and
the Trustee shall provide reasonable cooperation at the Company's expense in the
defense. The Trustee may have separate counsel of its selection and the Company
shall pay the reasonable fees and expenses of such counsel; provided that the
Company will not be required to pay such fees and expenses if it assumes the
Trustee's defense and there is no conflict of interest between the Company and
the Trustee in connection with such defense. The Company need not pay for any
settlement made without its written consent.
To secure the Company's payment obligations in this Section 7.07,
the Trustee shall have a lien prior to the Notes on all money or property held
or collected by the Trustee, in
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its capacity as Trustee, except money or property held in trust to pay principal
of, premium, if any, and interest on particular Notes.
If the Trustee incurs expenses or renders services after the
occurrence of an Event of Default specified in clause (h) or (i) of Section
6.01, the expenses and the compensation for the services will be intended to
constitute expenses of administration under Title 11 of the United States
Bankruptcy Code or any applicable federal or state law for the relief of
debtors.
The rights, privileges, protections and benefits given to the
Trustee, including, without limitation, its rights to be indemnified, are
extended to, and shall be enforceable by, the Trustee in each of its capacities
hereunder.
The provisions of this Section 7.07 shall survive the resignation or
removal of the Trustee and the defeasance or other termination of this
Indenture.
SECTION 7.08. Replacement of Trustee. 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 7.08.
The Trustee may resign at any time by so notifying the Company in
writing at least 30 days prior to the date of the proposed resignation. The
Holders of a majority in principal amount of the outstanding Notes may remove
the Trustee by so notifying the Trustee in writing and may appoint a successor
Trustee with the consent of the Company. The Company may at any time remove the
Trustee, by Company Order given at least 30 days prior to the date of the
proposed removal; provided that at such date no Event of Default shall have
occurred and be continuing.
If the Trustee resigns or is removed, or if a vacancy exists in the
office of Trustee for any reason, the Company 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 outstanding Notes may appoint a
successor Trustee to replace the successor Trustee appointed by the Company. If
the successor Trustee does not deliver its written acceptance required by the
next succeeding paragraph of this Section 7.08 within 30 days after the retiring
Trustee resigns or is removed, the retiring Trustee, the Company or the Holders
of a majority in principal amount of the outstanding Notes may petition at the
expense of the Company any court of competent jurisdiction for the appointment
of a successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Immediately after the
delivery of such written acceptance, subject to the lien provided in Section
7.07, (i) the retiring Trustee shall transfer all property held by it as Trustee
to the successor Trustee, (ii) the resignation or removal of the retiring
Trustee shall become effective and (iii) the successor Trustee shall have all
the rights, powers and duties
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of the Trustee under this Indenture. A successor Trustee shall mail notice of
its succession to each Holder.
If the Trustee is no longer eligible under Section 7.10, any Holder
who satisfies the requirements of TIA Section 310(b) may petition any court of
competent jurisdiction for the removal of the Trustee and the appointment of a
successor Trustee.
The Company shall give notice of any resignation and any removal of
the Trustee and each appointment of a successor Trustee to all Holders. Each
notice shall include the name of the successor Trustee and the address of its
Corporate Trust Office.
SECTION 7.09. 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 national banking
association, the resulting, surviving or transferee corporation or national
banking association without any further act shall be the successor Trustee with
the same effect as if the successor Trustee had been named as the Trustee
herein.
SECTION 7.10. Eligibility. This Indenture shall always have a
Trustee who satisfies the requirements of TIA Sections 310(a)(1) and 310(a)(5).
The Trustee shall have a combined capital and surplus of at least $50,000,000 as
set forth in its most recent published annual report of condition.
SECTION 7.11. Money Held in Trust. The Trustee shall not be liable
for interest on any money received by it except as the Trustee may agree with
the Company in writing. Money held in trust by the Trustee need not be
segregated from other funds except to the extent required by law and except for
money held in trust under Article Eight of this Indenture.
SECTION 7.12. Withholding Taxes. The Trustee, as agent for the
Company, shall exclude and withhold from each payment of principal and interest
and other amounts due hereunder or under the Notes any and all withholding taxes
applicable thereto as required by law. The Trustee agrees to act as such
withholding agent and, in connection therewith, whenever any present or future
taxes or similar charges are required to be withheld with respect to any amounts
payable in respect of the Notes, to withhold such amounts and timely pay the
same to the appropriate authority in the name of and on behalf of the Holders of
the Notes, that it will file any necessary withholding tax returns or statements
when due, and that, as promptly as possible after the payment thereof, it will
deliver to each Holder of a Note appropriate documentation showing the payment
thereof, together with such additional documentary evidence as such Holders may
reasonably request from time to time.
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ARTICLE EIGHT
DISCHARGE OF INDENTURE
SECTION 8.01. Termination of the Company's Obligations. Except as
otherwise provided in this Section 8.01, the Company may terminate its
obligations under the Notes and this Indenture if:
(i) all Notes previously authenticated and delivered (other than
destroyed, lost or stolen Notes that have been replaced or Notes that are
paid pursuant to Section 4.01 or Notes for whose payment money or
securities have theretofore been held in trust and thereafter repaid to
the Company, as provided in Section 8.05) have been delivered to the
Trustee for cancellation and the Company has paid all sums payable by it
hereunder; or
(ii) (A) all the Notes mature within one year or all of them are to
be called for redemption within one year under arrangements satisfactory
to the Trustee for giving the notice of redemption, (B) the Company
deposits in trust with the Trustee during such one-year period, under the
terms of an irrevocable trust agreement in form and substance satisfactory
to the Trustee, as trust funds solely for the benefit of the Holders for
that purpose, money or Federal Republic of Germany Obligations sufficient
to pay principal, premium, if, any, and interest on the Notes to maturity
or redemption, as the case may be, and to pay all other sums payable by it
hereunder, (C) no Default or Event of Default with respect to the Notes
shall have occurred and be continuing on the date of such deposit, (D)
such deposit will not result in a breach or violation of, or constitute a
default under, this Indenture or any other agreement or instrument to
which the Company is a party or by which it is bound, (E) if at such time
the Notes are listed on a national securities exchange, the Notes will not
be delisted as a result of such deposit, defeasance or discharge and (F)
the Company has delivered to the Trustee an Officers' Certificate and an
Opinion of Counsel, in each case stating that all conditions precedent
provided for herein relating to the satisfaction and discharge of this
Indenture have been complied with.
With respect to the foregoing clause (i), the Company's obligations
under Section 7.07 shall survive. With respect to the foregoing clause (ii), the
Company's obligations in Sections 2.02, 2.03, 2.04, 2.05, 2.06, 2.07, 2.08,
2.09, 2.14, 4.01, 4.02, 7.07, 7.08, 8.04, 8.05 and 8.06 shall survive until the
Notes are no longer outstanding. Thereafter, only the Company's obligations in
Sections 7.07, 8.05 and 8.06 shall survive. After any such irrevocable deposit,
the Trustee upon request shall acknowledge in writing the discharge of the
Company's obligations, as the case may be, under the Notes and this Indenture
except for those surviving obligations specified above.
SECTION 8.02. Defeasance and Discharge of Indenture. The Company
will be deemed to have paid and will be discharged from any and all obligations
in respect of the Notes
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on the 123rd day after the deposit referred to below, and the provisions of this
Indenture will no longer be in effect with respect to the Notes if:
(A) the Company has deposited with the Trustee, in trust, money
and/or Federal Republic of Germany Obligations that through the payment of
interest and principal in respect thereof in accordance with their terms
will provide money in an amount sufficient to pay the principal of,
premium, if any, and accrued interest on the Notes on the Stated Maturity
of such payments in accordance with the terms of this Indenture and the
Notes;
(B) the Company has delivered to the Trustee (i) either (x) an
Opinion of Counsel to the effect that Holders will not recognize income,
gain or loss for federal income tax purposes as a result of the Company's
exercise of its option under this Section 8.02 and will be subject to
federal income tax on the same amount and in the same manner and at the
same times as would have been the case if such deposit, defeasance and
discharge had not occurred, which Opinion of Counsel must be based upon
(and accompanied by a copy of) a ruling of the Internal Revenue Service to
the same effect unless there has been a change in applicable federal
income tax law after the Closing Date such that a ruling is no longer
required or (y) a ruling directed to the Trustee received from the
Internal Revenue Service to the same effect as the aforementioned Opinion
of Counsel and (ii) an Opinion of Counsel to the effect that the creation
of the defeasance trust does not violate the Investment Company Act of
1940 and after the passage of 123 days following the deposit, the trust
fund will not be subject to the effect of Section 547 of the United States
Bankruptcy Code or Section 15 of the New York Debtor and Creditor Law;
(C) immediately after giving effect to such deposit on a pro forma
basis, no Event of Default, or event that after the giving of notice or
lapse of time or both would become an Event of Default, shall have
occurred and be continuing on the date of such deposit or during the
period ending on the 123rd day after the date of such deposit, and such
deposit shall not result in a breach or violation of, or constitute a
default under, any other agreement or instrument to which the Company or
any of its Subsidiaries is a party or by which the Company or any of its
Subsidiaries is bound; and
(D) if at such time the Notes are listed on a national securities
exchange, the Company has delivered to the Trustee an Opinion of Counsel
to the effect that the Notes will not be delisted as a result of such
deposit, defeasance and discharge.
Notwithstanding the foregoing, prior to the end of the 123-day
period referred to in clause (B)(ii) of this Section 8.02, none of the Company's
obligations under this Indenture shall be discharged. Subsequent to the end of
such 123-day period with respect to this Section 8.02, the Company's obligations
in Sections 2.02, 2.03, 2.04, 2.05, 2.06, 2.07, 2.08, 2.09, 2.14,
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75
4.01, 4.02, 4.17, 7.07, 7.08, 8.05 and 8.06 shall survive until the Notes are no
longer outstanding. Thereafter, only the Company's obligations in Sections 7.07,
8.05 and 8.06 shall survive. If and when a ruling from the Internal Revenue
Service or an Opinion of Counsel referred to in clause (B)(i) of this Section
8.02 may be provided specifically without regard to, and not in reliance upon,
the continuance of the Company's obligations under Section 4.01, then the
Company's obligations under such Section 4.01 shall cease upon delivery to the
Trustee of such ruling or Opinion of Counsel and compliance with the other
conditions precedent provided for herein relating to the defeasance contemplated
by this Section 8.02.
After the 123 day period referred to in clause (B)(ii) of this
Section 8.02, the Trustee upon Company Order shall acknowledge in writing the
discharge of the Company's obligations under the Notes and this Indenture except
for those surviving obligations in the immediately preceding paragraph.
SECTION 8.03. Defeasance of Certain Obligations. The Company may
omit to comply with any term, provision or condition set forth in clauses (iii)
and (iv) of Section 5.01 and Sections 4.03 through 4.11, and clause (c) of
Section 6.01 with respect to clauses (iii) and (iv) of Section 5.01 and clause
(d) of Section 6.01 with respect to Sections 4.01, 4.02 and 4.12 through 4.19,
and clauses (e), (f) and (g) of Section 6.01 shall be deemed not to be Events of
Default, upon:
(a) the deposit, in trust, with the Trustee (or another trustee
satisfying the requirements of Section 7.10 hereof) of money and/or
Federal Republic of Germany Obligations that, through the payment of
interest and principal in respect thereof in accordance with their terms,
will in the opinion of a nationally recognized firm of independent public
accountants expressed in a written certification thereof delivered to the
Trustee, provide money in an amount sufficient to pay the principal of,
premium, if any, and accrued interest on the Notes on the Stated Maturity
of such payments in accordance with the terms of this Indenture and the
Notes;
(b) the satisfaction of the provisions described in clauses B(ii),
(C) and (D) of Section 8.02 hereof;
(c) delivery by the Company to the Trustee of an Opinion of Counsel
to the effect that, the Holders will not recognize income, gain or loss
for federal income tax purposes as a result of such deposit and defeasance
and will be subject to federal income tax on the same amount and in the
same manner and at the same times as would have been the case if such
deposit and defeasance had not occurred; and
(d) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, in each case stating that all
conditions precedent provided for
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herein relating to the defeasance contemplated by this Section 8.03 have
been complied with.
SECTION 8.04. Application of Trust Money. Subject to Section 8.06,
the Trustee or Paying Agent shall hold in trust money or Federal Republic of
Germany Obligations deposited with it pursuant to Section 8.01, 8.02 or 8.03, as
the case may be, and shall apply the deposited money and the money from Federal
Republic of Germany Obligations in accordance with the Notes and this Indenture
to the payment of principal of, premium, if any, and interest on the Notes; but
such money need not be segregated from other funds except to the extent required
by law.
SECTION 8.05. Repayment to Company. Subject to Sections 7.07, 8.01,
8.02 and 8.03, the Trustee and the Paying Agent shall promptly pay to the
Company any excess money, as determined by a nationally recognized firm of
independent public accountants expressed in a written certification thereof
delivered to the Trustee, and held by them at any time and thereupon shall be
relieved from all liability with respect to such money. The Trustee and the
Paying Agent shall pay to the Company upon request any money held by them for
the payment of principal, premium, if any, or interest that remains unclaimed
for two years; provided that the Trustee or such Paying Agent before being
required to make any payment may cause to be published at the expense of the
Company once in a newspaper of general circulation in the City of New York or
mail to each Holder entitled to such money at such Holder's address (as set
forth in the Note Register) notice that such money remains unclaimed; provided
that the Trustee or such Paying Agent before being required to make any payment
may give notice in accordance with Section 11.02(b) that such money remains
unclaimed and that after a date specified therein (which shall be at least 30
days from the date of such publication or mailing) any unclaimed balance of such
money then remaining will be repaid to the Company. After payment to the
Company, Holders entitled to such money must look to the Company for payment as
general creditors unless an applicable law designates another Person, and all
liability of the Trustee and such Paying Agent with respect to such money shall
cease.
SECTION 8.06. Reinstatement. If the Trustee or Paying Agent is
unable to apply any money or Federal Republic of Germany Obligations in
accordance with Section 8.01, 8.02 or 8.03, as the case may be, 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
8.01, 8.02 or 8.03, as the case may be, until such time as the Trustee or Paying
Agent is permitted to apply all such money or Federal Republic of Germany
Obligations in accordance with Section 8.01, 8.02 or 8.03, as the case may be;
provided that, if the Company has made any payment of principal of, premium, if
any, or interest on 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 Federal Republic of Germany Obligations
held by the Trustee or Paying Agent.
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SECTION 8.07. Defeasance and Certain Other Events of Default. In the
event the Company exercises its option to omit compliance with certain covenants
and provisions of this Indenture with respect to the Notes pursuant to Section
8.03 and such Notes are declared due and payable because of the occurrence of an
Event of Default that remains applicable, the amount of money and/or Federal
Republic of Germany Obligations on deposit with the Trustee will be sufficient
to pay amounts due on such Notes at the time of their Stated Maturity. If, in
the event the Company exercises its option to omit compliance with certain
covenants and provisions of this Indenture with respect to the Notes pursuant to
Section 8.03 and such Notes are declared due and payable because of the
occurrence of an Event of Default that remains applicable, the amount of money
and/or Federal Republic of Germany Obligations on deposit with the Trustee is
insufficient to pay amounts due on the Notes at the time of the acceleration
resulting from such Events of Default pursuant to Section 6.02, the Company will
remain liable for such payments.
ARTICLE NINE
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 9.01. Without Consent of Holders. The Company, when
authorized by resolutions of its Board of Directors (as evidenced by a Board
Resolution), and the Trustee may amend or supplement this Indenture or the Notes
without notice to, or the consent of, any Holder:
(i) to cure any ambiguity, defect or inconsistency in this
Indenture; provided that, in the good faith opinion of the Board of
Directors of the Company evidenced by a Board Resolution, such amendments
or supplements do not adversely affect the interests of the Holders in any
material respect;
(ii) to comply with Article Five;
(iii) to comply with any requirements of the Commission in
connection with the qualification of this Indenture under the TIA;
(iv) to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee;
(v) to make any change that, in the good faith opinion of the Board
of Directors of the Company evidenced by a Board Resolution, does not
materially and adversely affect the rights of any Holder; or
(vi) to facilitate the introduction of the Euro and the exchange of
the Notes for the Euro-denominated Notes in a manner not adverse to the
holders of the Notes.
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SECTION 9.02. With Consent of Holders. Subject to Sections 6.04 and
6.07 and without prior notice to the Holders, the Company, when authorized by
its Board of Directors (as evidenced by a Board Resolution), and the Trustee may
amend this Indenture and the Notes with the written consent of the Holders of a
majority in aggregate principal amount of the Notes then outstanding, and the
Holders of a majority in aggregate principal amount of the Notes then
outstanding by written notice to the Trustee may waive compliance by the Company
with any provision of this Indenture or the Notes.
Notwithstanding the provisions of this Section 9.02, without the
consent of each Holder affected thereby, an amendment or waiver, including a
waiver pursuant to Section 6.04, may not:
(i) change the Stated Maturity of the principal of, or any
installment of interest on, any Note;
(ii) reduce the principal amount of, or premium, if any, or interest
on, any Note;
(iii) change the place or currency of payment of principal of, or
premium, if any, or interest on, any Note;
(iv) impair the right to institute suit for the enforcement of any
payment on or after the Stated Maturity (or, in the case of a redemption,
on or after the Redemption Date) of any Note;
(v) reduce the above-stated percentage of outstanding Notes, the
consent of whose Holders is necessary to modify or amend this Indenture;
(vi) waive a default in the payment of principal of, premium, if
any, or interest on the Notes; or
(vii) reduce the percentage or aggregate principal amount of
outstanding Notes the consent of whose Holders is necessary for waiver of
compliance with certain provisions of this Indenture or for waiver of
certain defaults.
It shall not be necessary for the consent of the Holders under this
Section 9.02 to approve the particular form of any proposed amendment,
supplement or waiver, but it shall be sufficient if such consent approves the
substance thereof.
After an amendment, supplement or waiver under this Section 9.02
becomes effective, the Trustee shall mail to the Holders affected thereby a
notice briefly describing the amendment, supplement or waiver. The Company will
mail supplemental indentures to Holders
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79
upon request. 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 supplemental indenture or waiver.
SECTION 9.03. Revocation and Effect of Consent. Until an amendment
or waiver becomes effective, a consent to it by a Holder is a continuing consent
by the Holder and every subsequent Holder of a Note or portion of a Note that
evidences the same debt as the Note of the consenting Holder, even if notation
of the consent is not made on any Note. However, any such Holder or subsequent
Holder may revoke the consent as to its Note or portion of its Note. Such
revocation shall be effective only if the Trustee receives the notice of
revocation before the date the amendment, supplement or waiver becomes
effective. An amendment, supplement or waiver shall become effective on receipt
by the Trustee of written consents from the Holders of the requisite percentage
in principal amount of the outstanding Notes.
The Company may, but shall not be obligated to, fix a record date
for the purpose of determining the Holders entitled to consent to any amendment,
supplement or waiver. If a record date is fixed, then, notwithstanding the last
two sentences of the immediately preceding paragraph, those Persons who were
Holders at such record date (or their duly designated proxies) and only those
Persons shall be entitled to consent to such amendment, supplement or waiver or
to revoke any consent previously given, whether or not such Persons continue to
be Holders after such record date. No such consent shall be valid or effective
for more than 90 days after such record date.
After an amendment, supplement or waiver becomes effective, it shall
bind every Holder unless it is of the type described in any of clauses (i)
through (vii) of Section 9.02. In case of an amendment or waiver of the type
described in clauses (i) through (vii) of Section 9.02, the amendment or waiver
shall bind each Holder who has consented to it and every subsequent Holder of a
Note that evidences the same indebtedness as the Note of the consenting Holder.
SECTION 9.04. Notation on or Exchange of Notes. If an amendment,
supplement or waiver changes the terms of a Note, the Trustee may require the
Holder to deliver it to the Trustee. The Trustee may place an appropriate
notation on the Note about the changed terms and return it to the Holder and the
Trustee may place an appropriate notation on any Note thereafter authenticated.
Alternatively, if the Company or the Trustee so determines, the Company in
exchange for the Note shall issue and the Trustee shall authenticate a new Note
that reflects the changed terms.
SECTION 9.05. Trustee to Sign Amendments, Etc. The Trustee shall be
entitled to receive, and shall be fully protected in relying upon, in addition
to the documents required by Section 11.03, an Opinion of Counsel stating that
the execution of any amendment, supplement or waiver authorized pursuant to this
Article Nine is authorized or permitted by this Indenture. Subject to the
preceding sentence, the Trustee shall sign such amendment, supplement or waiver
if the same does not adversely affect the rights of the Trustee. The Trustee
may, but shall not be
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obligated to, execute any such amendment, supplement or waiver that affects the
Trustee's own rights, duties or immunities under this Indenture or otherwise.
SECTION 9.06. Conformity with Trust Indenture Act. Every
supplemental indenture executed pursuant to this Article Nine shall conform to
the requirements of the TIA as then in effect.
ARTICLE TEN
SECURITY
SECTION 10.01. Security. (a) On the Closing Date, the Company shall
(i) enter into the Pledge Agreement and comply with the terms and provisions
thereof and (ii) purchase the DM Pledged Securities to be pledged to the Trustee
for the benefit of the Holders in such amount as will be sufficient upon receipt
of scheduled interest and/or principal payments of such DM Pledged Securities,
in the opinion of a nationally recognized firm of independent public accountants
selected by the Company, to provide for payment in full of the first six
scheduled interest payments due on the Notes. The DM Pledged Securities shall be
pledged by the Company to the Trustee for the benefit of the Holders and shall
be held by the Trustee in the DM Pledge Account pending disposition pursuant to
the Pledge Agreement.
(b) Each Holder, by its acceptance of a Note, consents and agrees to
the terms of the Pledge Agreement (including, without limitation, the provisions
providing for foreclosure and release of the DM Pledged Securities) 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 Trustee to enter into the Pledge Agreement
and to perform its respective obligations and exercise its respective rights
thereunder in accordance therewith. The Company will do or cause to be done all
such acts and things as may be necessary or reasonably requested by the Trustee,
or as may be required by the provisions of the Pledge Agreement, to assure and
confirm to the Trustee the security interest in the DM Pledged Securities
contemplated hereby, by the Pledge 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 and of the Notes secured hereby, according to the
intent and purposes herein and therein expressed. The Company shall take, or
shall cause to be taken, upon request of the Trustee, any and all actions
reasonably required to cause the Pledge Agreement to create and maintain, as
security for the obligations of the Company under this Indenture and the Notes,
valid and enforceable first priority liens in and on all the DM Pledged
Securities, in favor of the Trustee, superior to and prior to the rights of
third Persons and subject to no other Liens.
(c) The release of any DM Pledged Securities pursuant to the Pledge
Agreement will not be deemed to impair the security under this Indenture in
contravention of the provisions hereof if and to the extent the DM Pledged
Securities are released pursuant to this Indenture and the Pledge Agreement. To
the extent applicable, the Company shall cause TIA
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Section 314(d) relating to the release of property or securities from the Lien
and security interest of the Pledge Agreement and relating to the substitution
therefor of any property or securities to be subjected to the Lien and security
interest of the Pledge Agreement to be complied with. Any certificate or opinion
required by TIA Section 314(d) may be made by an Officer of the Company, except
in cases where TIA Section 314(d) requires that such certificate or opinion be
made by an independent Person, which Person shall be an independent engineer,
appraiser or other expert selected by the Company.
(d) The Company shall cause TIA Section 314(b), relating to opinions
of counsel regarding the Lien under the Pledge Agreement, to be complied with.
The Trustee may accept, to the extent permitted by Sections 4.18 and 7.06, as
conclusive evidence of compliance with the foregoing provisions, the appropriate
statements contained in such instruments.
(e) The Trustee may, in its sole discretion and without the consent
of the Holders, on behalf of the Holders, take all reasonable actions in
accordance with the Pledge Agreement necessary or appropriate in order to (i)
enforce any of the terms of the Pledge Agreement and (ii) collect and receive
any and all amounts payable in respect of the obligations of the Company
thereunder. The Trustee shall have power to institute and to maintain such suits
and proceedings as the Trustee may reasonably deem expedient to preserve or
protect its interests and the interests of the Holders in the DM Pledged
Securities (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 or of the Trustee).
ARTICLE ELEVEN
MISCELLANEOUS
SECTION 11.01. Trust Indenture Act of 1939. Prior to the
effectiveness of the Registration Statement, this Indenture shall incorporate
and be governed by the provisions of the TIA that are required to be part of and
to govern indentures qualified under the TIA. After the effectiveness of the
Registration Statement, this Indenture shall be subject to the provisions of the
TIA that are required to be a part of this Indenture and shall, to the extent
applicable, be governed by such provisions.
SECTION 11.02. Notices. (a) Any notice or communication shall be
sufficiently given if in writing and delivered in person or mailed by first
class mail, commercial courier service or telecopier communication, addressed as
follows:
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if to the Company:
Viatel, Inc.
800 Third Avenue
New York, NY 10022
Telecopier Number: (212) 350-9250
Attention: Sheldon M. Goldman
With, in the case of any notice given pursuant to
Article Six, a copy to:
Kelley Drye & Warren LLP
101 Park Avenue
New York, NY 10178
Attention: James T. Prenetta, Jr.
if to the German Paying Agent:
Deutsche Bank, Aktiengesellschaft
Grosse Gallusstrasse 10-14
G0272 Frankfurt am Main
Attention: Fiscal Agency Services
if to the Trustee:
The Bank of New York
101 Barclay Street, Floor 21 West
New York, NY 10286
Telecopier Number: (212) 815-5915
Attention: Corporate Trust Administration
With a copy to:
Emmet, Marvin & Martin
120 Broadway
New York, NY 10271
Attention: Anthony Marvin
The Company, the Trustee, or the Depository by notice to the others
may designate additional or different addresses for subsequent notices or
communications.
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All notices and communications (other than those sent to Holders)
shall be deemed to have been duly given: at the time delivered by hand, if
personally delivered; five Business Days after being deposited in the mail,
postage prepaid, if mailed; when receipt acknowledged, if telecopied; and the
next Business Day after timely delivery to the courier, if sent by overnight air
courier guaranteeing next day delivery.
(b) Where this Indenture provides for notice of any event to Holders
by the Company or Trustee, such notice shall be sufficiently given (unless
otherwise herein expressly provided): to registered Holders, if in writing and
mailed, first-class postage (or, if first class mail is unavailable, by airmail)
prepaid, to each registered Holder at his adders as it appears in the Note
Register, in each case not later than the latest date, and not earlier than the
earliest date, prescribed hereunder for the giving of such notice; or, to
unregistered Holders, if such notice is published in the following journals: (i)
the Bundesanzeiger and one mandatory nationwide newspaper (if practicable, the
Borsen-Zeitung) in the German language; and (ii) a leading daily newspaper (if
practicable, The Wall Street Journal (Eastern Edition)) printed in the English
language and of general circulation in New York, in each case, once in each of
three successive calendar weeks, the first publication to be not later than the
latest date, and not earlier than the earliest date, prescribed hereunder for
the giving of such notice. Any notice to unregistered Holders will become
effective for all purposes on the date of its publication in the Bundesanzeiger.
The Company shall provide to the Trustee copies of all notices to Holders in the
required language of publication other than those notices given in the English
language.
(c) Where this Indenture provides for notice in any manner, such
notice may be waived in writing by the Person entitled to receive such notice,
either before or after the event, and such waiver shall be the equivalent of
such notice. Waivers of notice by Holders shall be filed with the Trustee, but
such filing shall not be a condition precedent to the validity of any action
taken in reliance upon such waiver.
In case by reason of the suspension of regular mail service or by
reason of any other cause it shall be impracticable to give such notice by mail,
then such notification as shall be made with the approval of the Trustee shall
constitute a sufficient notification for every purpose hereunder.
SECTION 11.03. Certificate and Opinion As to Conditions Precedent.
Upon any request or application by the Company to the Trustee to take any action
under this Indenture, the Company shall furnish to the Trustee:
(i) an Officers' Certificate stating that, in the opinion of the
signers, all conditions precedent, if any, provided for in this Indenture
relating to the proposed action have been complied with; and
<PAGE>
84
(ii) an Opinion of Counsel stating that, in the opinion of such
counsel, all such conditions precedent have been complied with.
SECTION 11.04. 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:
(i) a statement that each person signing such certificate or opinion
has read such covenant or condition and the definitions herein relating
thereto;
(ii) a brief statement as to the nature and scope of the examination
or investigation upon which the statement or opinion contained in such
certificate or opinion is based;
(iii) a statement that, in the opinion of each such person, he has
made such examination or investigation as is necessary to enable him to
express an informed opinion as to whether or not such covenant or
condition has been complied with; and
(iv) 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 11.05. Rules by Trustee, Paying Agent or Registrar. The
Trustee may make reasonable rules for action by or at a meeting of Holders. The
Paying Agent or Registrar may make reasonable rules for its functions.
SECTION 11.06. Payment Date Other Than a Business Day. If an
Interest Payment Date, Redemption Date, Payment Date, Stated Maturity or date of
maturity of any Note shall not be a Business Day, then payment of principal of,
premium, if any, or interest on such Note, as the case may be, need not be made
on such date, but may be made on the next succeeding Business Day with the same
force and effect as if made on the Interest Payment Date, Payment Date, or
Redemption Date, or at the Stated Maturity or date of maturity of such Note;
provided that no interest shall accrue for the period from and after such
Interest Payment Date, Payment Date, Redemption Date, Stated Maturity or date of
maturity, as the case may be.
SECTION 11.07. Governing Law; Submission to Jurisdiction; Agent for
Service. This Indenture and the Notes shall be governed by the laws of the State
of New York, except as referred to in Section 11.14. The Company hereby appoints
CT Corporation System as its agent for service of process in any suit, action or
proceeding with respect to this Indenture or the Notes and for actions brought
under the U.S. federal or state securities laws brought in any federal or
<PAGE>
85
state court located in The City of New York and the Company agrees to submit to
the jurisdiction of any such court.
SECTION 11.08. No Adverse Interpretation of Other Agreements. This
Indenture may not be used to interpret another indenture, loan or debt agreement
of the Company or any Subsidiary of the Company. Any such indenture, loan or
debt agreement may not be used to interpret this Indenture.
SECTION 11.09. No Recourse Against Others. No recourse for the
payment of the principal of, premium, if any, or interest on any of the Notes,
or for any claim based thereon or otherwise in respect thereof, and no recourse
under or upon any obligation, covenant or agreement of the Company contained in
this Indenture, or in any of the Notes, or because of the creation of any
Indebtedness represented thereby, shall be had against any incorporator or
against any past, present or future partner, shareholder, other equityholder,
officer, director, employee or controlling person, as such, of the Company or of
any successor Person, either directly or through the Company or any successor
Person, whether by virtue of any constitution, statute or rule of law, or by the
enforcement of any assessment or penalty or otherwise; it being expressly
understood that all such liability is hereby expressly waived and released as a
condition of, and as a consideration for, the execution of this Indenture and
the issue of the Notes.
SECTION 11.10. 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 successors.
SECTION 11.11. Duplicate Originals. The parties may sign any number
of copies of this Indenture. Each signed copy shall be an original, but all of
them together represent the same agreement.
SECTION 11.12. Separability. In case any provision in this Indenture
or in the Notes shall be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.
SECTION 11.13. 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 hereof and shall in no way modify or restrict any of the
terms and provisions hereof.
SECTION 11.14. Substitution of Currency. Under the Treaty on the
European Economic and Monetary Union (the "Treaty"), to which Germany is a
signatory, on or before January 1, 1999, and subject to the fulfillment of
certain conditions, the "Euro" may replace all or some of the currencies of the
member states of the European Union, including the Deutsche
<PAGE>
86
Mark. If, pursuant to the Treaty, the Deutsche Mark is replaced by the Euro (or
other currency, however captioned), all sums payable to the Company under or in
connection with the Notes (including, without limitation, principal of, or
interest on, the Notes) will be effected in Euro (or such other currency) in
conformity with legally applicable measures taken pursuant to, or by virtue of,
the Treaty. In addition, the regulations of the European Commission relating to
the Euro (or such other currency) will then apply to the Notes and this
Indenture. The circumstances and consequences described in this Section 11.14
entitle neither the Company nor any Holder to early redemption, rescission,
notice, repudiation, adjustment or renegotiation of the terms and conditions of
Notes or this Indenture or to raise other defenses or to request any
compensation claim, nor will they affect any of the other obligations of the
Company under the Notes and this Indenture.
SECTION 11.15. Method of Payment. Deutsche Marks are the sole
currency of account and payment for all sums payable by the Company under or in
connection with the Notes, including damages.
<PAGE>
SIGNATURES
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed, all as of the date first written above.
VIATEL, INC.
By: /s/ Michael J. Mahoney
-----------------------------------
Name: Michael J. Mahoney
Title: President and Chief Executive
Officer
THE BANK OF NEW YORK,
as Trustee
By: /s/ Ming J. Shiang
-----------------------------------
Name: Ming J. Shiang
Title: Assistant Vice President
DEUTSCHE BANK, Aktiengesellschaft,
as German Paying Agent and Co-
Registrar
By: /s/ Peter C. Olsen
-----------------------------------
Name: Peter C. Olsen
Title: Vice President
<PAGE>
EXHIBIT A
FORM OF DTC GLOBAL NOTE
FACE OF NOTE
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS, AND ACCORDINGLY,
MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHIN THE UNITED
STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS EXCEPT AS SET FORTH
IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS
THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER
THE SECURITIES ACT) OR (B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS
DEFINED IN RULE 501(a)(1), (2), (3) OR (7) OF REGULATION D UNDER THE SECURITIES
ACT) (AN "INSTITUTIONAL ACCREDITED INVESTOR") OR (C) IT IS NOT A U.S. PERSON AND
IS ACQUIRING THIS NOTE IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 903 OF
REGULATION S UNDER THE SECURITIES ACT; (2) AGREES THAT IT WILL NOT, WITHIN THE
TIME PERIOD REFERRED TO IN RULE 144(k) (TAKING INTO ACCOUNT THE PROVISIONS OF
RULE 144(d) UNDER THE SECURITIES ACT, IF APPLICABLE), RESELL OR OTHERWISE
TRANSFER THIS NOTE EXCEPT (A) TO THE COMPANY OR ANY SUBSIDIARY THEREOF, (B) TO A
QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES
ACT, (C) INSIDE THE UNITED STATES TO AN INSTITUTIONAL ACCREDITED INVESTOR THAT,
PRIOR TO SUCH TRANSFER, FURNISHES TO THE TRUSTEE A SIGNED LETTER CONTAINING
CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER
OF THIS NOTE (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM THE TRUSTEE) AND IF
SUCH TRANSFER IS IN RESPECT OF AN AGGREGATE PRINCIPAL AMOUNT OF NOTES OF LESS
THAN DM 150,000, AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY THAT SUCH
TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT, (D) OUTSIDE THE UNITED STATES
IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT,
(E) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE
SECURITIES ACT (IF AVAILABLE) OR (F) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT AND (3) AGREES THAT IT WILL DELIVER TO EACH
PERSON TO WHOM THIS NOTE IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF
THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF THIS NOTE WITHIN THE TIME PERIOD
REFERRED TO ABOVE, THE HOLDER MUST CHECK THE APPROPRIATE BOX SET FORTH ON THE
REVERSE HEREOF RELATING TO THE MANNER OF SUCH TRANSFER AND SUBMIT THIS
CERTIFICATE TO THE TRUSTEE. IF THE PROPOSED TRANSFEREE IS AN INSTITUTIONAL
ACCREDITED INVESTOR, THE HOLDER MUST, PRIOR TO SUCH
<PAGE>
A-2
TRANSFER, FURNISH TO EACH OF THE TRUSTEE AND THE COMPANY SUCH CERTIFICATIONS,
LEGAL OPINIONS OR OTHER INFORMATION AS SUCH PERSONS MAY REASONABLY REQUIRE TO
CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A
TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.
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. THE INDENTURE CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO
REGISTER ANY TRANSFER OF THIS NOTE IN VIOLATION OF THE FOREGOING RESTRICTIONS.
THE NOTES EVIDENCED BY THIS CERTIFICATE ARE INITIALLY ISSUED AS PART OF AN
ISSUANCE OF UNITS, EACH OF WHICH CONSISTS OF DM 1,000 PRINCIPAL AMOUNT OF 11.15%
SENIOR DM NOTES DUE 2008 OF VIATEL, INC. (THE "NOTES") AND 2.69 10% SUBORDINATED
CONVERTIBLE DEBENTURES DUE 2011 OF THE COMPANY(THE "SUBORDINATED CONVERTIBLE
DEBENTURES"). THE NOTES AND THE SUBORDINATED CONVERTIBLE DEBENTURES WILL BE
AUTOMATICALLY SEPARATED UPON THE EARLIEST TO OCCUR OF (i) SIX MONTHS AFTER APRIL
8, 1998, (ii) THE COMMENCEMENT OF AN EXCHANGE OFFER WITH RESPECT TO THE NOTES,
(iii) THE EFFECTIVENESS OF A SHELF REGISTRATION STATEMENT WITH RESPECT TO RESALE
OF THE NOTES OR (iv) COMMENCEMENT OF AN OFFER TO REPURCHASE THE NOTES PURSUANT
TO THE INDENTURE. THE NOTES EVIDENCED BY THIS CERTIFICATE MAY NOT BE TRANSFERRED
OR EXCHANGED SEPARATELY FROM, BUT MAY BE TRANSFERRED OR EXCHANGED ONLY TOGETHER
WITH, THE SUBORDINATED CONVERTIBLE DEBENTURES.
UNLESS THIS GLOBAL NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF
TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS REGISTERED IN THE NAME OF
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY OR SUCH OTHER REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (AND ANY PAYMENT HEREON IS MADE
TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY), 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.
<PAGE>
A-3
TRANSFERS OF THIS GLOBAL NOTE 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 NOTE SHALL BE LIMITED TO
TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN SECTION 2.08 OF
THE INDENTURE.
<PAGE>
A-4
VIATEL, INC.
11.15% Senior Note Due 2008
[CUSIP][CINS][INIS]________
No. __________ DM_______
VIATEL, INC., a Delaware corporation (the "Company", which term includes
any successor under the Indenture hereinafter referred to), for value received,
promises to pay to ________________, or its registered assigns, upon surrender
hereof the principal sum of DM _________ on April 15, 2008.
Issue date: April 8, 1998
Interest Payment Dates: April 15 and October 15, commencing October 15,
1998.
Record Dates: April 1 and October 1
Reference is hereby made to the further provisions of this Note set forth
on the reverse hereof, which further provisions shall for all purposes have the
same effect as if set forth at this place.
<PAGE>
A-5
IN WITNESS WHEREOF, the Company has caused this Note to be signed manually
or by facsimile by its duly authorized officers.
Date: April 8, 1998 VIATEL, INC.
By:
-----------------------------------
Name:
Title:
By:
-----------------------------------
Name:
Title:
(Certificate of Authentication)
This is one of the 11.15% Senior Notes due 2008 described in the
within-mentioned Indenture.
Date: April 8, 1998 THE BANK OF NEW YORK, as trustee
By:
-----------------------------------
Authorized Signatory
<PAGE>
A-6
[REVERSE SIDE OF NOTE]
VIATEL, INC.
11.15% Senior Note due 2008
1. Principal and Interest.
The Company will pay the principal of this Note on April 15, 2008.
The Company promises to pay interest on the principal amount of this
Note on each Interest Payment Date, as set forth below, at the rate per annum
shown above.
Interest will be payable semiannually in cash (to the holders of
record of the Notes at the close of business on the April 1 or October 1
immediately preceding the Interest Payment Date) on each Interest Payment Date,
commencing October 15, 1998. Interest will be computed on the basis of a 360 day
year of twelve 30 day months.
If an exchange offer registered under the Securities Act is not
consummated, and a shelf registration statement under the Securities Act with
respect to resales of the Notes is not declared effective by the Commission, on
or before the date that is six months after the Closing Date in accordance with
the terms of the Registration Rights Agreement dated April 3, 1998 between the
Company and Morgan Stanley & Co. Incorporated, as the manager for itself and the
several initial purchasers named on Schedule I to the Purchase Agreement dated
April 3, 1998, annual interest (in addition to interest otherwise due on the
Notes) will accrue, at an annual rate of 0.5% per annum of the principal amount,
payable in cash semiannually, in arrears, on April 15 and October 15 of each
year, commencing April 15, 1999 until the consummation of a registered exchange
offer or the effectiveness of a shelf-registration statement with respect to
resale of this Note. The Holder of this Note is entitled to the benefits of such
Registration Rights Agreement.
The Holder of this Note is entitled to the benefits of a Pledge
Agreement dated April 8, 1998 between the Company and The Bank of New York, as
trustee (the "Trustee"), pursuant to which the Company has placed in the DM
Pledge Account cash or Government Securities sufficient to provide for the
payment of the first six interest payments on this Note.
The Company shall pay interest on overdue principal and premium, if
any, and interest on overdue installments of interest, to the extent lawful, at
a rate per annum that is 11.15% per annum.
<PAGE>
A-7
2. Method of Payment.
The Company will pay principal as provided above and interest
(except defaulted interest) on the principal amount of the Notes as provided
above on each April 15 and October 15 to the Persons who are Holders (as
reflected in the Note Register at the close of business on such April 1 and
October 1 immediately preceding the Interest Payment Date), in each case, even
if the Note is canceled on registration of transfer or registration of exchange
after such record date; provided that, with respect to the payment of principal,
the Company will not make payment to the Holder unless this Note is surrendered
to a Paying Agent.
The Company will pay principal, premium, if any, and as provided
above, interest in money of the Federal Republic of Germany that at the time of
payment is legal tender for payment of public and private debts. However, the
Company may pay principal, premium, if any, and interest by its check payable in
such money. It may mail an interest check to a Holder's registered address (as
reflected in the Note Register). If a payment date is a date other than a
Business Day at a place of payment, payment may be made at that place on the
next succeeding day that is a Business Day and no interest shall accrue for the
intervening period.
3. Paying Agent and Registrar.
Initially, the Trustee will act as U.S. Paying Agent and Registrar
and Deutsche Bank will act as German Paying Agent. The Company may change any
Paying Agent or Registrar without notice. The Company, any Subsidiary or any
Affiliate of any of them may act as Paying Agent, Registrar or co-Registrar.
4. Indenture; Issuance of Additional Notes.
This Note is one of a duly authorized issue of Notes of the Company
designated its 11.15% Senior Notes due 2008, issued and to be issued under an
Indenture dated as of April 8, 1998 (the "Indenture"), between the Company, the
Trustee and the German Paying Agent and Co-Registrar. Capitalized terms herein
are used as defined in the Indenture unless otherwise indicated. 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. The Notes are subject to all
such terms, and Holders are referred to the Indenture and the Trust Indenture
Act for a statement of all such terms. To the extent permitted by applicable
law, in the event of any inconsistency between the terms of this Note and the
terms of the Indenture, the terms of the Indenture shall control.
5. Redemption.
The Notes will be redeemable, at the Company's option, in whole or
in part, at any time and from time to time on or after April 15, 2003 and prior
to maturity, upon not less than 30
<PAGE>
A-8
nor more than 60 days' prior notice mailed by first-class mail to each Holders'
last address as it appears in the Note Register, at the following Redemption
Prices (expressed in percentages of their principal amount), plus accrued and
unpaid interest, if any, to the Redemption Date (subject to the right of Holders
of record on the relevant Regular Record Date that is on or prior to the
Redemption Date to receive interest due on an Interest Payment Date), if
redeemed during the 12-month period commencing on April 15, of the years set
forth below:
Redemption
Year Price
---- ----------
2003 105.575%
2004 103.717
2005 101.858
2006 and thereafter 100.000
In addition, at any time or from time to time on or prior to April 15,
2001, the Company may, at its option, redeem up to 35% of the aggregate
principal amount at maturity of the Notes with the net proceeds of one or more
Public Equity Offerings, at a Redemption Price (expressed as a percentage of
principal amount) of 111.150%; provided (i) that Notes representing at least 65%
of the principal amount at maturity of the Notes originally issued remain
outstanding after each such redemption and (ii) that notice of each such
redemption is mailed within 60 days of each such Public Equity Offering.
6. Notice of Redemption.
Notice of any optional redemption will be mailed at least 30 days
but not more than 60 days before the Redemption Date to each Holder of Notes to
be redeemed at his last address as it appears in the Note Register. Notes in
original denominations larger than DM 1,000 of principal amount may be redeemed
in part. On and after the Redemption Date, interest ceases to accrue on Notes or
portions of Notes called for redemption, unless the Company defaults in the
payment of the Redemption Price.
7. Repurchase upon Change in Control.
Upon the occurrence of any Change of Control, each Holder shall have
the right to require the repurchase of its Notes by the Company in cash pursuant
to the offer described in the Indenture at a purchase price equal to 101% of the
principal amount thereof plus accrued and unpaid interest, if any, to the date
of purchase (the "Change of Control Payment").
A notice of such Change of Control will be mailed within 30 days
after any Change of Control occurs to each Holder at his last address as it
appears in the Note Register. Notes in original denominations larger than DM
1,000 of principal amount may be sold to the Company in
<PAGE>
A-9
part. On and after the date of the Change of Control Payment, interest ceases to
accrue on Notes or portions of Notes surrendered for purchase by the Company,
unless the Company defaults in the payment of the Change of Control Payment.
8. Registration Rights
Pursuant to the Registration Rights Agreement, the Company will be
obligated, within 180 days after the issue date of this Note, 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 Exchange Notes (as defined in the
Registration Rights Agreement) which have been registered under the Securities
Act, in like principal amount and having terms identical in all material
respects as the Initial Notes. The Holders of the Initial Notes shall be
entitled to receive certain additional interest payments in the event such
exchange offer is not consummated and upon certain other conditions, all
pursuant and in accordance with the terms of the Registration Rights Agreement.
9. Denominations; Transfer; Exchange.
The Notes are in registered form without coupons in denominations of
DM 1,000 of principal amount and any integral multiples of DM 1,000 in excess
thereof. A Holder may register the transfer or exchange of Notes in accordance
with the Indenture. The Registrar may require a Holder, among other things, to
furnish appropriate endorsements and transfer documents and to pay any taxes and
fees required by law or permitted by the Indenture. The Registrar need not
register the transfer or exchange of any Notes selected for redemption. Also, it
need not register the transfer or exchange of any Notes for a period of 15 days
before a selection of Notes to be redeemed is made.
10. Persons Deemed Owners.
A Holder shall be treated as the owner of a Note for all purposes.
11. Unclaimed Money.
If money for the payment of principal, premium, if any, or interest
remains unclaimed for two years, the Trustee and the Paying Agent will pay the
money back to the Company at its request. After that, Holders entitled to the
money must look to the Company for payment, unless an abandoned property law
designates another Person, and all liability of the Trustee and such Paying
Agent with respect to such money shall cease.
12. Discharge Prior to Redemption or Maturity.
If the Company deposits with the Trustee money and/or Federal
Republic of Germany Obligations sufficient to pay the then outstanding principal
of, premium, if any, and accrued interest
<PAGE>
A-10
on the Notes to redemption (a) or maturity, the Company will be discharged from
the Indenture and the Notes, except in certain circumstances for certain
sections thereof, and (b) or to Stated Maturity, the Company will be discharged
from certain covenants set forth in the Indenture.
13. Amendment; Supplement; Waiver.
Subject to certain exceptions, the Indenture or the Notes may be
amended or supplemented with the consent of the Holders of at least a majority
in principal amount of the Notes then outstanding, and any existing default or
compliance with any provision may be waived with the consent of the Holders of
at least a majority in principal amount of the Notes then outstanding. Without
notice to or the consent of any Holder, the parties thereto may amend or
supplement the Indenture or the Notes to, among other things, cure any
ambiguity, defect or inconsistency and make any change that does not materially
and adversely affect the rights of any Holder.
14. Restrictive Covenants.
The Indenture imposes certain limitations on the ability of the
Company and its Restricted Subsidiaries, among other things, to Incur
Indebtedness, make Restricted Payments, use the proceeds from Asset Sales,
engage in transactions with Affiliates or, with respect to the Company, merge,
consolidate or transfer substantially all of its assets. Within 90 days after
the end of the last fiscal quarter of each year, the Company must report to the
Trustee on compliance with the terms of the Indenture.
15. Successor Persons.
When a successor Person or other entity assumes all the obligations
of its predecessor under the Notes and the Indenture, the predecessor Person
will be released from those obligations.
16. Defaults and Remedies.
The following events constitute "Events of Default" under the
Indenture: (a) default in the payment of principal of (or premium, if any, on)
any Note when the same becomes due and payable at maturity, upon acceleration,
redemption or otherwise; (b) default in the payment of interest on any Note when
the same becomes due and payable, and such default continues for a period of 30
days; provided that a failure to make any of the first six scheduled interest
payments on this Note in a timely manner will constitute an Event of Default
with no grace or cure period; (c) default in the performance or breach of the
provisions of the Indenture applicable to mergers, consolidations and transfers
of all or substantially all of the assets of the Company or the failure to make
or consummate an Offer to Purchase in accordance with Section 4.11 of the
Indenture or Section 4.12 of the Indenture; (d) the Company defaults in the
performance of or breaches any other covenant or agreement of the Company in the
Indenture or under the Notes (other than a default
<PAGE>
A-11
specified in clause (a), (b) or (c) of Section 6.01 of the Indenture) 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 or principal amount of Notes; (e) there occurs with respect to any issue
or issues of Indebtedness of the Company or any Significant Subsidiary having an
outstanding principal amount of $10 million or more in the aggregate for all
such issues of all such Persons, whether such Indebtedness now exists or shall
hereafter be created, (I) an event of default that has caused the holder thereof
to declare such Indebtedness to be due and payable prior to its Stated Maturity
and such Indebtedness has not been discharged in full or such acceleration has
not been rescinded or annulled within 30 days of such acceleration and/or (II)
the failure to make a principal payment at the final (but not any interim) fixed
maturity and such defaulted payment shall not have been made, waived or extended
within 30 days of such payment default; (f) any final judgment or order (not
covered by insurance) for the payment of money in excess of $10 million in the
aggregate for all such final judgments or orders against all such Persons
(treating any deductibles, self-insurance or retention as not so covered) shall
be rendered against the Company or any Significant Subsidiary and shall not be
paid or discharged, and there shall be any period of 60 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 or discharged
against all such Persons to exceed $10 million during which a stay of
enforcement of such final judgment or order, by reason of a pending appeal or
otherwise, shall not be in effect; (g) a court having jurisdiction in the
premises enters a decree or order for (A) relief in respect of the Company or
any Significant Subsidiary 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 Significant Subsidiary or
for all or substantially all of the property and assets of the Company or any
Significant Subsidiary or (C) the winding up or liquidation of the affairs of
the Company or any Significant Subsidiary and, in each case, such decree or
order shall remain unstayed and in effect for a period of 60 consecutive days;
or (h) the Company or any Significant Subsidiary (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 Significant Subsidiary or
for all or substantially all of the property and assets of the Company or any
Significant Subsidiary or (C) effects any general assignment for the benefit of
creditors.
If an Event of Default (other than an Event of Default specified in
clause (g) or (h) above that occurs with respect to the Company) 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 (and to the Trustee if such notice is given by the Holders) , may,
and the Trustee at the request of such Holders shall, declare the principal
amount of, premium, if any, and accrued interest on the Notes to be immediately
due and payable.
<PAGE>
A-12
If an Event of Default, as defined in the Indenture, occurs and is
continuing, the Trustee or the Holders of at least 25% in aggregate principal
amount of the Notes then outstanding may declare all the Notes to be due and
payable. If a bankruptcy or insolvency default with respect to the Company or
any Restricted Subsidiary occurs and is continuing, the Notes automatically
become due and payable. Holders may not enforce the Indenture or the Notes
except as provided in the Indenture. The Trustee may require indemnity
satisfactory to it before it enforces the Indenture or the Notes. Subject to
certain limitations, Holders of at least a majority in principal amount of the
Notes then outstanding may direct the Trustee in its exercise of any trust or
power.
17. Trustee Dealings with Company.
The Trustee under the Indenture, in its individual or any other
capacity, may make loans to, accept deposits from and perform services for the
Company or its Affiliates and may otherwise deal with the Company or its
Affiliates as if it were not the Trustee.
18. No Recourse Against Others.
No incorporator or any past, present or future partner, stockholder,
other equity holder, officer, director, employee or controlling person as such,
of the Company or of any successor Person 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 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.
19. Authentication.
This Note shall not be valid until the Trustee or authenticating
agent signs the certificate of authentication on the other side of this Note.
20. Abbreviations.
Customary abbreviations may be used in the name of a Holder 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).
21. CUSIP Numbers.
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures, the Issuer has caused CUSIP numbers to be
printed on the Notes and the Trustee may use CUSIP numbers in notices of
redemption as a convenience to Holders. No
<PAGE>
A-13
representation is made as to the accuracy of such numbers either as printed on
the Notes or as contained in any notice of redemption.
This Note shall be governed by the laws of the State of New York except as
referred to in Section 11.14 of the Indenture.
The Company will furnish to any Holder upon written request and
without charge a copy of the Indenture. Requests may be made to Viatel, Inc.,
800 Third Avenue, New York, New York, 10022, Attention: Sheldon M. Goldman.
<PAGE>
A-14
SCHEDULE OF PRINCIPAL AMOUNT OF INDEBTEDNESS
EVIDENCED BY THIS NOTE
The initial principal amount of indebtedness evidenced by this Note
shall be DM __, __, __. The following decreases/increases in the principal
amount evidenced by this Note have been made:
Decrease in Increase in Total Principal
Principal Principal Amount of this Global Notation Made
Date of Amount of Amount of Note Following such by or on
Decrease/ this Global this Global Decrease/Increase Behalf of
Increase Note Note --------------------- Trustee
- -------- ---- ---- -------
________ ___________ ___________ _________________ _____________
________ ___________ ___________ _________________ _____________
________ ___________ ___________ _________________ _____________
________ ___________ ___________ _________________ _____________
________ ___________ ___________ _________________ _____________
________ ___________ ___________ _________________ _____________
________ ___________ ___________ _________________ _____________
________ ___________ ___________ _________________ _____________
________ ___________ ___________ _________________ _____________
________ ___________ ___________ _________________ _____________
________ ___________ ___________ _________________ _____________
________ ___________ ___________ _________________ _____________
________ ___________ ___________ _________________ _____________
________ ___________ ___________ _________________ _____________
________ ___________ ___________ _________________ _____________
________ ___________ ___________ _________________ _____________
<PAGE>
A-15
[FORM OF TRANSFER NOTICE]
FOR VALUE RECEIVED the undersigned registered holder hereby sell(s),
assign(s) and transfer(s) unto
Insert Taxpayer Identification No.
_________________________________________________________________________
Please print or typewrite name and address including zip code of assignee
_________________________________________________________________________
the within Note and all rights thereunder, hereby irrevocably constituting and
appointing _____________________________________ attorney to transfer said Note
on the books of the Company with full power of substitution in the premises.
[THE FOLLOWING PROVISION TO BE INCLUDED
ON ALL NOTES OTHER THAN EXCHANGE NOTES,
UNLEGENDED DBC GLOBAL AND
UNLEGENDED REGULATION S CERTIFICATED NOTES]
In connection with any transfer of this Note occurring prior to the date
which is the earlier of (i) the date of an effective Registration or (ii) the
end of the period referred to in Rule 144(k) under the Securities Act, the
undersigned confirms that without utilizing any general solicitation or general
advertising that:
[Check One]
[_] (a) this Note is being transferred in compliance with the exemption from
registration under the Securities Act of 1933, as amended, provided by
Rule 144A thereunder.
or
[_] (b) this Note is being transferred other than in accordance with (a)
above and documents are being furnished which comply with the
conditions of transfer set forth in this Note and the Indenture.
If none of the foregoing boxes is checked, the Trustee or other Registrar shall
not be obligated to register this Note in the name of any Person other than the
Holder hereof unless and until the conditions to any such transfer of
registration set forth herein and in Section 2.08 of the Indenture shall have
been satisfied.
<PAGE>
A-16
Date:____________ _____________________________________________
NOTICE: The signature to this assignment must
correspond with the name as written upon the
face of the within-mentioned instrument in
every particular, without alteration or any
change whatsoever.
TO BE COMPLETED BY PURCHASER IF (a) ABOVE IS CHECKED.
The undersigned represents and warrants that it is purchasing this Note
for its own account or an account with respect to which it exercises sole
investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act of
1933, as amended, and is aware that the sale to it is being made in reliance on
Rule 144A and acknowledges that it has received such information regarding the
Company as the undersigned has requested pursuant to Rule 144A or has determined
not to request such information and that it is aware that the transferor is
relying upon the undersigned's foregoing representations in order to claim the
exemption from registration provided by Rule 144A.
Dated:____________ ____________________________________________________
NOTICE: To be executed by an executive officer
<PAGE>
A-17
OPTION OF HOLDER TO ELECT PURCHASE
If you wish to have this Note purchased by the Company pursuant to
Section 4.11 or Section 4.12 of the Indenture, check the Box: |_|
If you wish to have a portion of this Note purchased by the Company
pursuant to Section 4.11 or Section 4.12 of the Indenture, state the amount (in
principal amount): DM_____________.
Date:____________
Your Signature: ________________________________________________________________
(Sign exactly as your name appears on the other side of this
Note)
Signature Guarantee: ______________________________
<PAGE>
EXHIBIT B
FORM OF DBC GLOBAL NOTE
[FACE OF NOTE]
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS, AND ACCORDINGLY,
MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHIN THE UNITED
STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS EXCEPT AS SET FORTH
IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS
THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER
THE SECURITIES ACT) OR (B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS
DEFINED IN RULE 501(a)(1), (2), (3) OR (7) OF REGULATION D UNDER THE SECURITIES
ACT) (AN "INSTITUTIONAL ACCREDITED INVESTOR") OR (C) IT IS NOT A U.S. PERSON AND
IS ACQUIRING THIS NOTE IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 903 OF
REGULATION S UNDER THE SECURITIES ACT; (2) AGREES THAT IT WILL NOT, WITHIN THE
TIME PERIOD REFERRED TO IN RULE 144(k) (TAKING INTO ACCOUNT THE PROVISIONS OF
RULE 144(d) UNDER THE SECURITIES ACT, IF APPLICABLE), RESELL OR OTHERWISE
TRANSFER THIS NOTE EXCEPT (A) TO THE COMPANY OR ANY SUBSIDIARY THEREOF, (B) TO A
QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES
ACT, (C) INSIDE THE UNITED STATES TO AN INSTITUTIONAL ACCREDITED INVESTOR THAT,
PRIOR TO SUCH TRANSFER, FURNISHES TO THE TRUSTEE A SIGNED LETTER CONTAINING
CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER
OF THIS NOTE (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM THE TRUSTEE) AND IF
SUCH TRANSFER IS IN RESPECT OF AN AGGREGATE PRINCIPAL AMOUNT OF NOTES OF LESS
THAN DM 150,000, AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY THAT SUCH
TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT, (D) OUTSIDE THE UNITED STATES
IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT,
(E) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE
SECURITIES ACT (IF AVAILABLE) OR (F) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT AND (3) AGREES THAT IT WILL DELIVER TO EACH
PERSON TO WHOM THIS NOTE IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF
THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF THIS NOTE WITHIN THE TIME PERIOD
REFERRED TO ABOVE, THE HOLDER MUST CHECK THE APPROPRIATE BOX SET FORTH ON THE
REVERSE HEREOF RELATING TO THE MANNER OF SUCH TRANSFER AND SUBMIT THIS
CERTIFICATE TO THE TRUSTEE. IF THE PROPOSED TRANSFEREE IS AN
<PAGE>
B-2
INSTITUTIONAL ACCREDITED INVESTOR, THE HOLDER MUST, PRIOR TO SUCH TRANSFER,
FURNISH TO EACH OF THE TRUSTEE AND THE COMPANY SUCH CERTIFICATIONS, LEGAL
OPINIONS OR OTHER INFORMATION AS SUCH PERSONS MAY REASONABLY REQUIRE TO CONFIRM
THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A
TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.
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. THE INDENTURE CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO
REGISTER ANY TRANSFER OF THIS NOTE IN VIOLATION OF THE FOREGOING RESTRICTIONS.
THE NOTES EVIDENCED BY THIS CERTIFICATE ARE INITIALLY ISSUED AS PART OF AN
ISSUANCE OF UNITS, EACH OF WHICH CONSISTS OF DM 1,000 PRINCIPAL AMOUNT OF 11.15%
SENIOR DM NOTES DUE 2008 OF VIATEL, INC. (THE "NOTES") AND 2.69 10% SUBORDINATED
CONVERTIBLE DEBENTURES DUE 2011 OF THE COMPANY (THE "SUBORDINATED CONVERTIBLE
DEBENTURES"). THE NOTES AND THE SUBORDINATED CONVERTIBLE DEBENTURES WILL BE
AUTOMATICALLY SEPARATED UPON THE EARLIEST TO OCCUR OF (i) SIX MONTHS AFTER APRIL
8, 1998, (ii) THE COMMENCEMENT OF AN EXCHANGE OFFER WITH RESPECT TO THE NOTES,
(iii) THE EFFECTIVENESS OF A SHELF REGISTRATION STATEMENT WITH RESPECT TO RESALE
OF THE NOTES OR (iv) COMMENCEMENT OF AN OFFER TO REPURCHASE THE NOTES PURSUANT
TO THE INDENTURE. THE NOTES EVIDENCED BY THIS CERTIFICATE MAY NOT BE TRANSFERRED
OR EXCHANGED SEPARATELY FROM, BUT MAY BE TRANSFERRED OR EXCHANGED ONLY TOGETHER
WITH, THE SUBORDINATED CONVERTIBLE DEBENTURES.
THIS GLOBAL CERTIFICATE HAS BEEN CREATED IN ORDER TO BE HELD IN CUSTODY BY
DEUTSCHE BORSE CLEARING AG ("DBC") AND TO SERVE AS THE BASIS FOR THE DELIVERY
AND TRANSFER OF NOTES TO BE HELD IN THE DBC DEPOSITARY AND CLEARING SYSTEM
THROUGHOUT THE LIFE OF THE NOTES.
<PAGE>
B-3
VIATEL, INC.
11.15% Senior Note Due 2008
[CUSIP][CINS][INIS]________
No. __________ DM_______
VIATEL, INC., a Delaware corporation (the "Company", which term includes
any successor under the Indenture hereinafter referred to), for value received,
promises to pay to ________________, or its registered assigns, upon surrender
hereof the principal sum of DM _________ on April 15, 2008.
Issue date: April 8, 1998
Interest Payment Dates: April 15 and October 15, commencing October 15,
1998.
Record Dates: April 1 and October 1
Reference is hereby made to the further provisions of this Note set forth
on the reverse hereof, which further provisions shall for all purposes have the
same effect as if set forth at this place.
<PAGE>
B-4
IN WITNESS WHEREOF, the Company has caused this Note to be signed manually
or by facsimile by its duly authorized officers.
Date: April 8, 1998 VIATEL, INC.
By:
-----------------------------------
Name:
Title:
By:
-----------------------------------
Name:
Title:
(Certificate of Authentication)
This is one of the 11.15% Senior Notes due 2008 described in the
within-mentioned Indenture.
Date: April 8, 1998 DEUTSCHE BANK, as Authenticating Agent
By:
-----------------------------------
Authorized Signatory
<PAGE>
B-5
[REVERSE SIDE OF NOTE]
VIATEL, INC.
11.15% Senior Note due 2008
1. Principal and Interest.
The Company will pay the principal of this Note on April 15, 2008.
The Company promises to pay interest on the principal amount of this
Note on each Interest Payment Date, as set forth below, at the rate per annum
shown above.
Interest will be payable semiannually in cash (to the holders of
record of the Notes at the close of business on the April 1 or October 1
immediately preceding the Interest Payment Date) on each Interest Payment Date,
commencing October 15, 1998. Interest will be computed on the basis of a 360 day
year of twelve 30 day months.
If an exchange offer registered under the Securities Act is not
consummated, and a shelf registration statement under the Securities Act with
respect to resales of the Notes is not declared effective by the Commission, on
or before the date that is six months after the Closing Date in accordance with
the terms of the Registration Rights Agreement dated April 3, 1998 between the
Company and Morgan Stanley & Co. Incorporated, as the manager for itself and the
several initial purchasers named on Schedule I to the Purchase Agreement dated
April 3, 1998, annual interest (in addition to interest otherwise due on the
Notes) will accrue, at an annual rate of 0.5% per annum of the principal amount,
payable in cash semiannually, in arrears, on April 15 and October 15 of each
year, commencing April 15, 1999 until the consummation of a registered exchange
offer or the effectiveness of a shelf-registration statement with respect to
resale of this Note. The Holder of this Note is entitled to the benefits of such
Registration Rights Agreement.
The Holder of this Note is entitled to the benefits of a Pledge
Agreement dated April 8, 1998 between the Company and The Bank of New York, as
trustee (the "Trustee"), pursuant to which the Company has placed in the DM
Pledge Account cash or Government Securities sufficient to provide for the
payment of the first six interest payments on this Note.
The Company shall pay interest on overdue principal and premium, if
any, and interest on overdue installments of interest, to the extent lawful, at
a rate per annum that is 11.15% per annum.
<PAGE>
B-6
2. Method of Payment.
The Company will pay principal as provided above and interest
(except defaulted interest) on the principal amount of the Notes as provided
above on each April 15 and October 15 to the Persons who are Holders (as
reflected in the Note Register at the close of business on such April 1 and
October 1 immediately preceding the Interest Payment Date), in each case, even
if the Note is canceled on registration of transfer or registration of exchange
after such record date; provided that, with respect to the payment of principal,
the Company will not make payment to the Holder unless this Note is surrendered
to a Paying Agent.
The Company will pay principal, premium, if any, and as provided
above, interest in money of the Federal Republic of Germany that at the time of
payment is legal tender for payment of public and private debts. However, the
Company may pay principal, premium, if any, and interest by its check payable in
such money. It may mail an interest check to a Holder's registered address (as
reflected in the Note Register). If a payment date is a date other than a
Business Day at a place of payment, payment may be made at that place on the
next succeeding day that is a Business Day and no interest shall accrue for the
intervening period.
3. Paying Agent and Registrar.
Initially, the Trustee will act as U.S. Paying Agent and Registrar
and Deutsche Bank will act as German Paying Agent. The Company may change any
Paying Agent or Registrar without notice. The Company, any Subsidiary or any
Affiliate of any of them may act as Paying Agent, Registrar or co-Registrar.
4. Indenture; Issuance of Additional Notes.
This Note is one of a duly authorized issue of Notes of the Company
designated its 11.15% Senior Notes due 2008, issued and to be issued under an
Indenture dated as of April 8, 1998 (the "Indenture"), between the Company, the
Trustee and the German Paying Agent and Co-Registrar. Capitalized terms herein
are used as defined in the Indenture unless otherwise indicated. 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. The Notes are subject to all
such terms, and Holders are referred to the Indenture and the Trust Indenture
Act for a statement of all such terms. To the extent permitted by applicable
law, in the event of any inconsistency between the terms of this Note and the
terms of the Indenture, the terms of the Indenture shall control.
5. Redemption.
The Notes will be redeemable, at the Company's option, in whole or
in part, at any time and from time to time on or after April 15, 2003 and prior
to maturity, upon not less than 30
<PAGE>
B-7
nor more than 60 days' prior notice mailed by first-class mail to each Holders'
last address as it appears in the Note Register, at the following Redemption
Prices (expressed in percentages of their principal amount), plus accrued and
unpaid interest, if any, to the Redemption Date (subject to the right of Holders
of record on the relevant Regular Record Date that is on or prior to the
Redemption Date to receive interest due on an Interest Payment Date), if
redeemed during the 12-month period commencing on April 15, of the years set
forth below:
Redemption
Year Price
---- ----------
2003 105.575%
2004 103.717
2005 101.858
2006 and thereafter 100.000
In addition, at any time or from time to time on or prior to April
15, 2001, the Company may, at its option, redeem up to 35% of the aggregate
principal amount at maturity of the Notes with the net proceeds of one or more
Public Equity Offerings, at a Redemption Price (expressed as a percentage of
principal amount) of 111.150%; provided (i) that Notes representing at least 65%
of the principal amount at maturity of the Notes originally issued remain
outstanding after each such redemption and (ii) that notice of each such
redemption is mailed within 60 days of each such Public Equity Offering.
6. Notice of Redemption.
Notice of any optional redemption will be mailed at least 30 days
but not more than 60 days before the Redemption Date to each Holder of Notes to
be redeemed at his last address as it appears in the Note Register. Notes in
original denominations larger than DM 1,000 of principal amount may be redeemed
in part. On and after the Redemption Date, interest ceases to accrue on Notes or
portions of Notes called for redemption, unless the Company defaults in the
payment of the Redemption Price.
7. Repurchase upon Change in Control.
Upon the occurrence of any Change of Control, each Holder shall have
the right to require the repurchase of its Notes by the Company in cash pursuant
to the offer described in the Indenture at a purchase price equal to 101% of the
principal amount thereof plus accrued and unpaid interest, if any, to the date
of purchase (the "Change of Control Payment").
A notice of such Change of Control will be mailed within 30 days
after any Change of Control occurs to each Holder at his last address as it
appears in the Note Register. Notes in original denominations larger than DM
1,000 of principal amount may be sold to the Company in
<PAGE>
B-8
part. On and after the date of the Change of Control Payment, interest ceases to
accrue on Notes or portions of Notes surrendered for purchase by the Company,
unless the Company defaults in the payment of the Change of Control Payment.
8. Registration Rights
Pursuant to the Registration Rights Agreement, the Company will be
obligated, within 180 days after the issue date of this Note, 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 Exchange Notes (as defined in the
Registration Rights Agreement) which have been registered under the Securities
Act, in like principal amount and having terms identical in all material
respects as the Initial Notes. The Holders of the Initial Notes shall be
entitled to receive certain additional interest payments in the event such
exchange offer is not consummated and upon certain other conditions, all
pursuant and in accordance with the terms of the Registration Rights Agreement.
9. Denominations; Transfer; Exchange.
The Notes are in bearer form without coupons in denominations of DM
1,000 of principal amount and any integral multiples of DM 1,000 in excess
thereof. A Holder may register the transfer or exchange of Notes in accordance
with the Indenture. The Registrar may require a Holder, among other things, to
furnish appropriate endorsements and transfer documents and to pay any taxes and
fees required by law or permitted by the Indenture. The Registrar need not
register the transfer or exchange of any Notes selected for redemption. Also, it
need not register the transfer or exchange of any Notes for a period of 15 days
before a selection of Notes to be redeemed is made.
10. Persons Deemed Owners.
A Holder shall be treated as the owner of a Note for all purposes.
11. Unclaimed Money.
If money for the payment of principal, premium, if any, or interest
remains unclaimed for two years, the Trustee and the Paying Agent will pay the
money back to the Company at its request. After that, Holders entitled to the
money must look to the Company for payment, unless an abandoned property law
designates another Person, and all liability of the Trustee and such Paying
Agent with respect to such money shall cease.
12. Discharge Prior to Redemption or Maturity.
If the Company deposits with the Trustee money and/or Federal
Republic of Germany Obligations sufficient to pay the then outstanding principal
of, premium, if any, and accrued interest
<PAGE>
B-9
on the Notes to redemption (a) or maturity, the Company will be discharged from
the Indenture and the Notes, except in certain circumstances for certain
sections thereof, and (b) or to Stated Maturity, the Company will be discharged
from certain covenants set forth in the Indenture.
13. Amendment; Supplement; Waiver.
Subject to certain exceptions, the Indenture or the Notes may be amended
or supplemented with the consent of the Holders of at least a majority in
principal amount of the Notes then outstanding, and any existing default or
compliance with any provision may be waived with the consent of the Holders of
at least a majority in principal amount of the Notes then outstanding. Without
notice to or the consent of any Holder, the parties thereto may amend or
supplement the Indenture or the Notes to, among other things, cure any
ambiguity, defect or inconsistency and make any change that does not materially
and adversely affect the rights of any Holder.
14. Restrictive Covenants.
The Indenture imposes certain limitations on the ability of the
Company and its Restricted Subsidiaries, among other things, to Incur
Indebtedness, make Restricted Payments, use the proceeds from Asset Sales,
engage in transactions with Affiliates or, with respect to the Company, merge,
consolidate or transfer substantially all of its assets. Within 90 days after
the end of the last fiscal quarter of each year, the Company must report to the
Trustee on compliance with the terms of the Indenture.
15. Successor Persons.
When a successor Person or other entity assumes all the obligations
of its predecessor under the Notes and the Indenture, the predecessor Person
will be released from those obligations.
16. Defaults and Remedies.
The following events constitute "Events of Default" under the
Indenture: (a) default in the payment of principal of (or premium, if any, on)
any Note when the same becomes due and payable at maturity, upon acceleration,
redemption or otherwise; (b) default in the payment of interest on any Note when
the same becomes due and payable, and such default continues for a period of 30
days; provided that a failure to make any of the first six scheduled interest
payments on this Note in a timely manner will constitute an Event of Default
with no grace or cure period; (c) default in the performance or breach of the
provisions of the Indenture applicable to mergers, consolidations and transfers
of all or substantially all of the assets of the Company or the failure to make
or consummate an Offer to Purchase in accordance with Section 4.11 of the
Indenture or Section 4.12 of the Indenture; (d) the Company defaults in the
performance of or breaches any other covenant or agreement of the Company in the
Indenture or under the Notes (other than a default
<PAGE>
B-10
specified in clause (a), (b) or (c) of Section 6.01 of the Indenture) 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 or principal amount of Notes; (e) there occurs with respect to any issue
or issues of Indebtedness of the Company or any Significant Subsidiary having an
outstanding principal amount of $10 million or more in the aggregate for all
such issues of all such Persons, whether such Indebtedness now exists or shall
hereafter be created, (I) an event of default that has caused the holder thereof
to declare such Indebtedness to be due and payable prior to its Stated Maturity
and such Indebtedness has not been discharged in full or such acceleration has
not been rescinded or annulled within 30 days of such acceleration and/or (II)
the failure to make a principal payment at the final (but not any interim) fixed
maturity and such defaulted payment shall not have been made, waived or extended
within 30 days of such payment default; (f) any final judgment or order (not
covered by insurance) for the payment of money in excess of $10 million in the
aggregate for all such final judgments or orders against all such Persons
(treating any deductibles, self-insurance or retention as not so covered) shall
be rendered against the Company or any Significant Subsidiary and shall not be
paid or discharged, and there shall be any period of 60 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 or discharged
against all such Persons to exceed $10 million during which a stay of
enforcement of such final judgment or order, by reason of a pending appeal or
otherwise, shall not be in effect; (g) a court having jurisdiction in the
premises enters a decree or order for (A) relief in respect of the Company or
any Significant Subsidiary 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 Significant Subsidiary or
for all or substantially all of the property and assets of the Company or any
Significant Subsidiary or (C) the winding up or liquidation of the affairs of
the Company or any Significant Subsidiary and, in each case, such decree or
order shall remain unstayed and in effect for a period of 60 consecutive days;
or (h) the Company or any Significant Subsidiary (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 Significant Subsidiary or
for all or substantially all of the property and assets of the Company or any
Significant Subsidiary or (C) effects any general assignment for the benefit of
creditors.
If an Event of Default (other than an Event of Default specified in
clause (g) or (h) above that occurs with respect to the Company) 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 (and to the Trustee if such notice is given by the Holders) , may,
and the Trustee at the request of such Holders shall, declare the principal
amount of, premium, if any, and accrued interest on the Notes to be immediately
due and payable.
<PAGE>
B-11
If an Event of Default, as defined in the Indenture, occurs and is
continuing, the Trustee or the Holders of at least 25% in aggregate principal
amount of the Notes then outstanding may declare all the Notes to be due and
payable. If a bankruptcy or insolvency default with respect to the Company or
any Restricted Subsidiary occurs and is continuing, the Notes automatically
become due and payable. Holders may not enforce the Indenture or the Notes
except as provided in the Indenture. The Trustee may require indemnity
satisfactory to it before it enforces the Indenture or the Notes. Subject to
certain limitations, Holders of at least a majority in principal amount of the
Notes then outstanding may direct the Trustee in its exercise of any trust or
power.
17. Trustee Dealings with Company.
The Trustee under the Indenture, in its individual or any other
capacity, may make loans to, accept deposits from and perform services for the
Company or its Affiliates and may otherwise deal with the Company or its
Affiliates as if it were not the Trustee.
18. No Recourse Against Others.
No incorporator or any past, present or future partner, stockholder,
other equity holder, officer, director, employee or controlling person as such,
of the Company or of any successor Person 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 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.
19. Authentication.
This Note shall not be valid until the Trustee or authenticating
agent signs the certificate of authentication on the other side of this Note.
20. Abbreviations.
Customary abbreviations may be used in the name of a Holder 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).
21. CUSIP Numbers.
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures, the Issuer has caused CUSIP numbers to be
printed on the Notes and the Trustee may use CUSIP numbers in notices of
redemption as a convenience to Holders. No
<PAGE>
B-12
representation is made as to the accuracy of such numbers either as printed on
the Notes or as contained in any notice of redemption.
This Note shall be governed by the laws of the State of New York except as
referred to in Section 11.14 of the Indenture.
The Company will furnish to any Holder upon written request and
without charge a copy of the Indenture. Requests may be made to Viatel, Inc.,
800 Third Avenue, New York, New York, 10022, Attention: Sheldon M. Goldman.
<PAGE>
B-13
SCHEDULE OF PRINCIPAL AMOUNT OF INDEBTEDNESS
EVIDENCED BY THIS NOTE
The initial principal amount of indebtedness evidenced by this Note
shall be DM __, __, __. The following decreases/increases in the principal
amount evidenced by this Note have been made:
Decrease in Increase in Total Principal
Principal Principal Amount of this Global Notation Made
Date of Amount of Amount of Note Following such by or on
Decrease/ this Global this Global Decrease/Increase Behalf of
Increase Note Note --------------------- Trustee
- -------- ---- ---- -------
________ ___________ ___________ _________________ _____________
________ ___________ ___________ _________________ _____________
________ ___________ ___________ _________________ _____________
________ ___________ ___________ _________________ _____________
________ ___________ ___________ _________________ _____________
________ ___________ ___________ _________________ _____________
________ ___________ ___________ _________________ _____________
________ ___________ ___________ _________________ _____________
________ ___________ ___________ _________________ _____________
________ ___________ ___________ _________________ _____________
________ ___________ ___________ _________________ _____________
________ ___________ ___________ _________________ _____________
________ ___________ ___________ _________________ _____________
________ ___________ ___________ _________________ _____________
________ ___________ ___________ _________________ _____________
________ ___________ ___________ _________________ _____________
<PAGE>
B-14
[FORM OF TRANSFER NOTICE]
FOR VALUE RECEIVED the undersigned registered holder hereby sell(s),
assign(s) and transfer(s) unto
Insert Taxpayer Identification No.
_________________________________________________________________________
Please print or typewrite name and address including zip code of assignee
_________________________________________________________________________
the within Note and all rights thereunder, hereby irrevocably constituting and
appointing _____________________________________ attorney to transfer said Note
on the books of the Company with full power of substitution in the premises.
[THE FOLLOWING PROVISION TO BE INCLUDED
ON ALL NOTES OTHER THAN EXCHANGE NOTES,
UNLEGENDED DBC GLOBAL AND
UNLEGENDED REGULATION S CERTIFICATED NOTES]
In connection with any transfer of this Note occurring prior to the date
which is the earlier of (i) the date of an effective Registration or (ii) the
end of the period referred to in Rule 144(k) under the Securities Act, the
undersigned confirms that without utilizing any general solicitation or general
advertising that:
[Check One]
[_] (a) this Note is being transferred in compliance with the exemption from
registration under the Securities Act of 1933, as amended, provided by
Rule 144A thereunder.
or
[_] (b) this Note is being transferred other than in accordance with (a)
above and documents are being furnished which comply with the
conditions of transfer set forth in this Note and the Indenture.
If none of the foregoing boxes is checked, the Trustee or other Registrar shall
not be obligated to register this Note in the name of any Person other than the
Holder hereof unless and until the conditions to any such transfer of
registration set forth herein and in Section 2.08 of the Indenture shall have
been satisfied.
<PAGE>
B-15
Date:____________ _____________________________________________
NOTICE: The signature to this assignment must
correspond with the name as written upon the
face of the within-mentioned instrument in
every particular, without alteration or any
change whatsoever.
TO BE COMPLETED BY PURCHASER IF (a) ABOVE IS CHECKED.
The undersigned represents and warrants that it is purchasing this Note
for its own account or an account with respect to which it exercises sole
investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act of
1933, as amended, and is aware that the sale to it is being made in reliance on
Rule 144A and acknowledges that it has received such information regarding the
Company as the undersigned has requested pursuant to Rule 144A or has determined
not to request such information and that it is aware that the transferor is
relying upon the undersigned's foregoing representations in order to claim the
exemption from registration provided by Rule 144A.
Dated:____________ ____________________________________________________
NOTICE: To be executed by an executive officer
<PAGE>
B-16
OPTION OF HOLDER TO ELECT PURCHASE
If you wish to have this Note purchased by the Company pursuant to
Section 4.11 or Section 4.12 of the Indenture, check the Box: |_|
If you wish to have a portion of this Note purchased by the Company
pursuant to Section 4.11 or Section 4.12 of the Indenture, state the amount (in
principal amount): DM_____________.
Date:____________
Your Signature: ________________________________________________________________
(Sign exactly as your name appears on the other side of this
Note)
Signature Guarantee: ______________________________
<PAGE>
EXHIBIT C
FORM OF U.S. CERTIFICATED NOTE
[FACE OF NOTE]
[CUSIP][CINS][ISIN] ______
No. R-_________ DM ____________
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS, AND ACCORDINGLY,
MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHIN THE UNITED
STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS EXCEPT AS SET FORTH
IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS
THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER
THE SECURITIES ACT) OR (B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS
DEFINED IN RULE 501(a)(1), (2), (3) OR (7) OF REGULATION D UNDER THE SECURITIES
ACT) (AN "INSTITUTIONAL ACCREDITED INVESTOR") OR (C) IT IS NOT A U.S. PERSON AND
IS ACQUIRING THIS NOTE IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 903 OF
REGULATION S UNDER THE SECURITIES ACT; (2) AGREES THAT IT WILL NOT, WITHIN THE
TIME PERIOD REFERRED TO IN RULE 144(k) (TAKING INTO ACCOUNT THE PROVISIONS OF
RULE 144(d) UNDER THE SECURITIES ACT, IF APPLICABLE), RESELL OR OTHERWISE
TRANSFER THIS NOTE EXCEPT (A) TO THE COMPANY OR ANY SUBSIDIARY THEREOF, (B) TO A
QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES
ACT, (C) INSIDE THE UNITED STATES TO AN INSTITUTIONAL ACCREDITED INVESTOR THAT,
PRIOR TO SUCH TRANSFER, FURNISHES TO THE TRUSTEE A SIGNED LETTER CONTAINING
CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER
OF THIS NOTE (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM THE TRUSTEE) AND IF
SUCH TRANSFER IS IN RESPECT OF AN AGGREGATE PRINCIPAL AMOUNT OF NOTES OF LESS
THAN DM 150,000, AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY THAT SUCH
TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT, (D) OUTSIDE THE UNITED STATES
IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT,
(E) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE
SECURITIES ACT (IF AVAILABLE) OR (F) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT AND (3) AGREES THAT IT WILL DELIVER TO EACH
PERSON TO WHOM THIS NOTE IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF
THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF THIS NOTE WITHIN THE TIME PERIOD
REFERRED TO ABOVE, THE HOLDER MUST CHECK THE APPROPRIATE BOX SET FORTH ON THE
REVERSE
<PAGE>
C-2
HEREOF RELATING TO THE MANNER OF SUCH TRANSFER AND SUBMIT THIS CERTIFICATE TO
THE TRUSTEE. IF THE PROPOSED TRANSFEREE IS AN INSTITUTIONAL ACCREDITED INVESTOR,
THE HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO EACH OF THE TRUSTEE AND THE
COMPANY SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS SUCH PERSONS
MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO
AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT. 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. THE INDENTURE CONTAINS A PROVISION
REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF THIS NOTE IN
VIOLATION OF THE FOREGOING RESTRICTIONS.
THE NOTES EVIDENCED BY THIS CERTIFICATE ARE INITIALLY ISSUED AS PART OF AN
ISSUANCE OF UNITS, EACH OF WHICH CONSISTS OF DM 1,000 PRINCIPAL AMOUNT OF 11.15%
SENIOR DM NOTES DUE 2008 OF VIATEL, INC. (THE "NOTES") AND 2.69 10% SUBORDINATED
CONVERTIBLE DEBENTURES DUE 2011 OF THE COMPANY (THE "SUBORDINATED CONVERTIBLE
DEBENTURES"). THE NOTES AND THE SUBORDINATED CONVERTIBLE DEBENTURES WILL BE
AUTOMATICALLY SEPARATED UPON THE EARLIEST TO OCCUR OF (i) SIX MONTHS AFTER APRIL
8, 1998, (ii) THE COMMENCEMENT OF AN EXCHANGE OFFER WITH RESPECT TO THE NOTES,
(iii) THE EFFECTIVENESS OF A SHELF REGISTRATION STATEMENT WITH RESPECT TO RESALE
OF THE NOTES OR (iv) COMMENCEMENT OF AN OFFER TO REPURCHASE THE NOTES PURSUANT
TO THE INDENTURE. THE NOTES EVIDENCED BY THIS CERTIFICATE MAY NOT BE TRANSFERRED
OR EXCHANGED SEPARATELY FROM, BUT MAY BE TRANSFERRED OR EXCHANGED ONLY TOGETHER
WITH, THE SUBORDINATED CONVERTIBLE DEBENTURES.
<PAGE>
C-3
VIATEL, INC.
11.15% Senior Note Due 2008
[CUSIP][CINS][INIS]________
No. __________ DM_______
VIATEL, INC., a Delaware corporation (the "Company", which term includes
any successor under the Indenture hereinafter referred to), for value received,
promises to pay to ________________, or its registered assigns, upon surrender
hereof the principal sum of DM _________ on April 15, 2008.
Issue date: April 8, 1998
Interest Payment Dates: April 15 and October 15, commencing October 15,
1998.
Record Dates: April 1 and October 1
Reference is hereby made to the further provisions of this Note set forth
on the reverse hereof, which further provisions shall for all purposes have the
same effect as if set forth at this place.
<PAGE>
C-4
IN WITNESS WHEREOF, the Company has caused this Note to be signed manually
or by facsimile by its duly authorized officers.
Date: April 8, 1998 VIATEL, INC.
By:
-----------------------------------
Name:
Title:
By:
-----------------------------------
Name:
Title:
(Certificate of Authentication)
This is one of the 11.15% Senior Notes due 2008 described in the
within-mentioned Indenture.
Date: April 8, 1998 DEUTSCHE BANK, as Authenticating Agent
By:
-----------------------------------
Authorized Signatory
<PAGE>
C-5
[REVERSE SIDE OF NOTE]
VIATEL, INC.
11.15% Senior Note due 2008
1. Principal and Interest.
The Company will pay the principal of this Note on April 15, 2008.
The Company promises to pay interest on the principal amount of this
Note on each Interest Payment Date, as set forth below, at the rate per annum
shown above.
Interest will be payable semiannually in cash (to the holders of
record of the Notes at the close of business on the April 1 or October 1
immediately preceding the Interest Payment Date) on each Interest Payment Date,
commencing October 15, 1998. Interest will be computed on the basis of a 360 day
year of twelve 30 day months.
If an exchange offer registered under the Securities Act is not
consummated, and a shelf registration statement under the Securities Act with
respect to resales of the Notes is not declared effective by the Commission, on
or before the date that is six months after the Closing Date in accordance with
the terms of the Registration Rights Agreement dated April 3, 1998 between the
Company and Morgan Stanley & Co. Incorporated, as the manager for itself and the
several initial purchasers named on Schedule I to the Purchase Agreement dated
April 3, 1998, annual interest (in addition to interest otherwise due on the
Notes) will accrue, at an annual rate of 0.5% per annum of the principal amount,
payable in cash semiannually, in arrears, on April 15 and October 15 of each
year, commencing April 15, 1999 until the consummation of a registered exchange
offer or the effectiveness of a shelf-registration statement with respect to
resale of this Note. The Holder of this Note is entitled to the benefits of such
Registration Rights Agreement.
The Holder of this Note is entitled to the benefits of a Pledge
Agreement dated April 8, 1998 between the Company and The Bank of New York, as
trustee (the "Trustee"), pursuant to which the Company has placed in the DM
Pledge Account cash or Government Securities sufficient to provide for the
payment of the first six interest payments on this Note.
The Company shall pay interest on overdue principal and premium, if
any, and interest on overdue installments of interest, to the extent lawful, at
a rate per annum that is 11.15% per annum.
<PAGE>
C-6
2. Method of Payment.
The Company will pay principal as provided above and interest
(except defaulted interest) on the principal amount of the Notes as provided
above on each April 15 and October 15 to the Persons who are Holders (as
reflected in the Note Register at the close of business on such April 1 and
October 1 immediately preceding the Interest Payment Date), in each case, even
if the Note is canceled on registration of transfer or registration of exchange
after such record date; provided that, with respect to the payment of principal,
the Company will not make payment to the Holder unless this Note is surrendered
to a Paying Agent.
The Company will pay principal, premium, if any, and as provided
above, interest in money of the Federal Republic of Germany that at the time of
payment is legal tender for payment of public and private debts. However, the
Company may pay principal, premium, if any, and interest by its check payable in
such money. It may mail an interest check to a Holder's registered address (as
reflected in the Note Register). If a payment date is a date other than a
Business Day at a place of payment, payment may be made at that place on the
next succeeding day that is a Business Day and no interest shall accrue for the
intervening period.
3. Paying Agent and Registrar.
Initially, the Trustee will act as U.S. Paying Agent and Registrar
and Deutsche Bank will act as German Paying Agent. The Company may change any
Paying Agent or Registrar without notice. The Company, any Subsidiary or any
Affiliate of any of them may act as Paying Agent, Registrar or co-Registrar.
4. Indenture; Issuance of Additional Notes.
This Note is one of a duly authorized issue of Notes of the Company
designated its 11.15% Senior Notes due 2008, issued and to be issued under an
Indenture dated as of April 8, 1998 (the "Indenture"), between the Company, the
Trustee and the German Paying Agent and Co-Registrar. Capitalized terms herein
are used as defined in the Indenture unless otherwise indicated. 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. The Notes are subject to all
such terms, and Holders are referred to the Indenture and the Trust Indenture
Act for a statement of all such terms. To the extent permitted by applicable
law, in the event of any inconsistency between the terms of this Note and the
terms of the Indenture, the terms of the Indenture shall control.
5. Redemption.
The Notes will be redeemable, at the Company's option, in whole or
in part, at any time and from time to time on or after April 15, 2003 and prior
to maturity, upon not less than 30
<PAGE>
C-7
nor more than 60 days' prior notice mailed by first-class mail to each Holders'
last address as it appears in the Note Register, at the following Redemption
Prices (expressed in percentages of their principal amount), plus accrued and
unpaid interest, if any, to the Redemption Date (subject to the right of Holders
of record on the relevant Regular Record Date that is on or prior to the
Redemption Date to receive interest due on an Interest Payment Date), if
redeemed during the 12-month period commencing on April 15, of the years set
forth below:
Redemption
Year Price
---- ----------
2003 105.575%
2004 103.717
2005 101.858
2006 and thereafter 100.000
In addition, at any time or from time to time on or prior to April
15, 2001, the Company may, at its option, redeem up to 35% of the aggregate
principal amount at maturity of the Notes with the net proceeds of one or more
Public Equity Offerings, at a Redemption Price (expressed as a percentage of
principal amount) of 111.150%; provided (i) that Notes representing at least 65%
of the principal amount at maturity of the Notes originally issued remain
outstanding after each such redemption and (ii) that notice of each such
redemption is mailed within 60 days of each such Public Equity Offering.
6. Notice of Redemption.
Notice of any optional redemption will be mailed at least 30 days
but not more than 60 days before the Redemption Date to each Holder of Notes to
be redeemed at his last address as it appears in the Note Register. Notes in
original denominations larger than DM 1,000 of principal amount may be redeemed
in part. On and after the Redemption Date, interest ceases to accrue on Notes or
portions of Notes called for redemption, unless the Company defaults in the
payment of the Redemption Price.
7. Repurchase upon Change in Control.
Upon the occurrence of any Change of Control, each Holder shall have
the right to require the repurchase of its Notes by the Company in cash pursuant
to the offer described in the Indenture at a purchase price equal to 101% of the
principal amount thereof plus accrued and unpaid interest, if any, to the date
of purchase (the "Change of Control Payment").
A notice of such Change of Control will be mailed within 30 days
after any Change of Control occurs to each Holder at his last address as it
appears in the Note Register. Notes in original denominations larger than DM
1,000 of principal amount may be sold to the
<PAGE>
C-8
Company in part. On and after the date of the Change of Control Payment,
interest ceases to accrue on Notes or portions of Notes surrendered for purchase
by the Company, unless the Company defaults in the payment of the Change of
Control Payment.
8. Registration Rights
Pursuant to the Registration Rights Agreement, the Company will be
obligated, within 180 days after the issue date of this Note, 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 Exchange Notes (as defined in the
Registration Rights Agreement) which have been registered under the Securities
Act, in like principal amount and having terms identical in all material
respects as the Initial Notes. The Holders of the Initial Notes shall be
entitled to receive certain additional interest payments in the event such
exchange offer is not consummated and upon certain other conditions, all
pursuant and in accordance with the terms of the Registration Rights Agreement.
9. Denominations; Transfer; Exchange.
The Notes are in registered form without coupons in denominations of
DM 1,000 of principal amount and any integral multiples of DM 1,000 in excess
thereof. A Holder may register the transfer or exchange of Notes in accordance
with the Indenture. The Registrar may require a Holder, among other things, to
furnish appropriate endorsements and transfer documents and to pay any taxes and
fees required by law or permitted by the Indenture. The Registrar need not
register the transfer or exchange of any Notes selected for redemption. Also, it
need not register the transfer or exchange of any Notes for a period of 15 days
before a selection of Notes to be redeemed is made.
10. Persons Deemed Owners.
A Holder shall be treated as the owner of a Note for all purposes.
11. Unclaimed Money.
If money for the payment of principal, premium, if any, or interest
remains unclaimed for two years, the Trustee and the Paying Agent will pay the
money back to the Company at its request. After that, Holders entitled to the
money must look to the Company for payment, unless an abandoned property law
designates another Person, and all liability of the Trustee and such Paying
Agent with respect to such money shall cease.
<PAGE>
C-9
12. Discharge Prior to Redemption or Maturity.
If the Company deposits with the Trustee money and/or Federal
Republic of Germany Obligations sufficient to pay the then outstanding principal
of, premium, if any, and accrued interest on the Notes to redemption (a) or
maturity, the Company will be discharged from the Indenture and the Notes,
except in certain circumstances for certain sections thereof, and (b) or to
Stated Maturity, the Company will be discharged from certain covenants set forth
in the Indenture.
13. Amendment; Supplement; Waiver.
Subject to certain exceptions, the Indenture or the Notes may be
amended or supplemented with the consent of the Holders of at least a majority
in principal amount of the Notes then outstanding, and any existing default or
compliance with any provision may be waived with the consent of the Holders of
at least a majority in principal amount of the Notes then outstanding. Without
notice to or the consent of any Holder, the parties thereto may amend or
supplement the Indenture or the Notes to, among other things, cure any
ambiguity, defect or inconsistency and make any change that does not materially
and adversely affect the rights of any Holder.
14. Restrictive Covenants.
The Indenture imposes certain limitations on the ability of the
Company and its Restricted Subsidiaries, among other things, to Incur
Indebtedness, make Restricted Payments, use the proceeds from Asset Sales,
engage in transactions with Affiliates or, with respect to the Company, merge,
consolidate or transfer substantially all of its assets. Within 90 days after
the end of the last fiscal quarter of each year, the Company must report to the
Trustee on compliance with the terms of the Indenture.
15. Successor Persons.
When a successor Person or other entity assumes all the obligations
of its predecessor under the Notes and the Indenture, the predecessor Person
will be released from those obligations.
16. Defaults and Remedies.
The following events constitute "Events of Default" under the
Indenture: (a) default in the payment of principal of (or premium, if any, on)
any Note when the same becomes due and payable at maturity, upon acceleration,
redemption or otherwise; (b) default in the payment of interest on any Note when
the same becomes due and payable, and such default
<PAGE>
C-10
continues for a period of 30 days; provided that a failure to make any of the
first six scheduled interest payments on this Note in a timely manner will
constitute an Event of Default with no grace or cure period; (c) default in the
performance or breach of the provisions of the Indenture applicable to mergers,
consolidations and transfers of all or substantially all of the assets of the
Company or the failure to make or consummate an Offer to Purchase in accordance
with Section 4.11 of the Indenture or Section 4.12 of the Indenture; (d) the
Company defaults in the performance of or breaches any other covenant or
agreement of the Company in the Indenture or under the Notes (other than a
default specified in clause (a), (b) or (c) of Section 6.01 of the Indenture)
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 or principal amount of Notes; (e) there occurs with respect to
any issue or issues of Indebtedness of the Company or any Significant Subsidiary
having an outstanding principal amount of $10 million or more in the aggregate
for all such issues of all such Persons, whether such Indebtedness now exists or
shall hereafter be created, (I) an event of default that has caused the holder
thereof to declare such Indebtedness to be due and payable prior to its Stated
Maturity and such Indebtedness has not been discharged in full or such
acceleration has not been rescinded or annulled within 30 days of such
acceleration and/or (II) the failure to make a principal payment at the final
(but not any interim) fixed maturity and such defaulted payment shall not have
been made, waived or extended within 30 days of such payment default; (f) any
final judgment or order (not covered by insurance) for the payment of money in
excess of $10 million in the aggregate for all such final judgments or orders
against all such Persons (treating any deductibles, self-insurance or retention
as not so covered) shall be rendered against the Company or any Significant
Subsidiary and shall not be paid or discharged, and there shall be any period of
60 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 or discharged against all such Persons to exceed $10 million during which a
stay of enforcement of such final judgment or order, by reason of a pending
appeal or otherwise, shall not be in effect; (g) a court having jurisdiction in
the premises enters a decree or order for (A) relief in respect of the Company
or any Significant Subsidiary 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 Significant Subsidiary or
for all or substantially all of the property and assets of the Company or any
Significant Subsidiary or (C) the winding up or liquidation of the affairs of
the Company or any Significant Subsidiary and, in each case, such decree or
order shall remain unstayed and in effect for a period of 60 consecutive days;
or (h) the Company or any Significant Subsidiary (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 Significant Subsidiary or
for all or substantially all of the property and assets of the Company or any
Significant Subsidiary or (C) effects any general assignment for the benefit of
creditors.
<PAGE>
C-11
If an Event of Default (other than an Event of Default specified in
clause (g) or (h) above that occurs with respect to the Company) 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 (and to the Trustee if such notice is given by the Holders) , may,
and the Trustee at the request of such Holders shall, declare the principal
amount of, premium, if any, and accrued interest on the Notes to be immediately
due and payable.
If an Event of Default, as defined in the Indenture, occurs and is
continuing, the Trustee or the Holders of at least 25% in aggregate principal
amount of the Notes then outstanding may declare all the Notes to be due and
payable. If a bankruptcy or insolvency default with respect to the Company or
any Restricted Subsidiary occurs and is continuing, the Notes automatically
become due and payable. Holders may not enforce the Indenture or the Notes
except as provided in the Indenture. The Trustee may require indemnity
satisfactory to it before it enforces the Indenture or the Notes. Subject to
certain limitations, Holders of at least a majority in principal amount of the
Notes then outstanding may direct the Trustee in its exercise of any trust or
power.
17. Trustee Dealings with Company.
The Trustee under the Indenture, in its individual or any other
capacity, may make loans to, accept deposits from and perform services for the
Company or its Affiliates and may otherwise deal with the Company or its
Affiliates as if it were not the Trustee.
18. No Recourse Against Others.
No incorporator or any past, present or future partner, stockholder,
other equity holder, officer, director, employee or controlling person as such,
of the Company or of any successor Person 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 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.
19. Authentication.
This Note shall not be valid until the Trustee or authenticating
agent signs the certificate of authentication on the other side of this Note.
20. Abbreviations.
Customary abbreviations may be used in the name of a Holder or an
assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the
entireties), JT TEN
<PAGE>
C-12
(= joint tenants with right of survivorship and not as tenants in common), CUST
(= Custodian) and U/G/M/A (= Uniform Gifts to Minors Act).
21. CUSIP Numbers.
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures, the Issuer has caused CUSIP numbers to be
printed on the Notes and the Trustee may use CUSIP numbers in notices of
redemption as a convenience to Holders. No representation is made as to the
accuracy of such numbers either as printed on the Notes or as contained in any
notice of redemption.
This Note shall be governed by the laws of the State of New York except as
referred to in Section 11.14 of the Indenture.
The Company will furnish to any Holder upon written request and
without charge a copy of the Indenture. Requests may be made to Viatel, Inc.,
800 Third Avenue, New York, New York, 10022, Attention: Sheldon M. Goldman.
<PAGE>
C-13
[FORM OF TRANSFER NOTICE]
FOR VALUE RECEIVED the undersigned registered holder hereby sell(s),
assign(s) and transfer(s) unto
Insert Taxpayer Identification No.
_________________________________________________________________________
Please print or typewrite name and address including zip code of assignee
_________________________________________________________________________
the within Note and all rights thereunder, hereby irrevocably constituting and
appointing _____________________________________ attorney to transfer said Note
on the books of the Company with full power of substitution in the premises.
[THE FOLLOWING PROVISION TO BE INCLUDED
ON ALL NOTES OTHER THAN EXCHANGE NOTES,
UNLEGENDED DBC GLOBAL AND
UNLEGENDED REGULATION S CERTIFICATED NOTES]
In connection with any transfer of this Note occurring prior to the date
which is the earlier of (i) the date of an effective Registration or (ii) the
end of the period referred to in Rule 144(k) under the Securities Act, the
undersigned confirms that without utilizing any general solicitation or general
advertising that:
[Check One]
[_] (a) this Note is being transferred in compliance with the exemption from
registration under the Securities Act of 1933, as amended, provided by
Rule 144A thereunder.
or
[_] (b) this Note is being transferred other than in accordance with (a)
above and documents are being furnished which comply with the
conditions of transfer set forth in this Note and the Indenture.
If none of the foregoing boxes is checked, the Trustee or other Registrar shall
not be obligated to register this Note in the name of any Person other than the
Holder hereof unless and until the conditions to any such transfer of
registration set forth herein and in Section 2.08 of the Indenture shall have
been satisfied.
<PAGE>
C-14
Date:____________ _____________________________________________
NOTICE: The signature to this assignment must
correspond with the name as written upon the
face of the within-mentioned instrument in
every particular, without alteration or any
change whatsoever.
TO BE COMPLETED BY PURCHASER IF (a) ABOVE IS CHECKED.
The undersigned represents and warrants that it is purchasing this Note
for its own account or an account with respect to which it exercises sole
investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act of
1933, as amended, and is aware that the sale to it is being made in reliance on
Rule 144A and acknowledges that it has received such information regarding the
Company as the undersigned has requested pursuant to Rule 144A or has determined
not to request such information and that it is aware that the transferor is
relying upon the undersigned's foregoing representations in order to claim the
exemption from registration provided by Rule 144A.
Dated:____________ ____________________________________________________
NOTICE: To be executed by an executive officer
<PAGE>
C-15
OPTION OF HOLDER TO ELECT PURCHASE
If you wish to have this Note purchased by the Company pursuant to
Section 4.11 or Section 4.12 of the Indenture, check the Box: |_|
If you wish to have a portion of this Note purchased by the Company
pursuant to Section 4.11 or Section 4.12 of the Indenture, state the amount (in
principal amount): DM_____________.
Date:____________
Your Signature: ________________________________________________________________
(Sign exactly as your name appears on the other side of this
Note)
Signature Guarantee: ______________________________
<PAGE>
EXHIBIT D
Form of Certificate
The Bank of New York __________ __, 19__
101 Barclay Street, Floor 21 West
New York, NY 10286
Attention: Corporate Trust Administration
Re:Viatel, Inc. (the "Company")
11.15% Senior DM Notes
due 2008 (the "Notes")
Ladies and Gentlemen:
This letter relates to DM __________ principal amount of Notes
represented by a Note (the "Legended Note") which bears a legend outlining
restrictions upon transfer of such Legended Note. Pursuant to Section 2.02 of
the Indenture (the "Indenture") dated as of April 8, 1998 relating to the Notes,
we hereby certify that we are (or we will hold such Notes on behalf of) a person
outside the United States to whom the Notes could be transferred in accordance
with Rule 904 of Regulation S promulgated under the U.S. Securities Act of 1933,
as amended. Accordingly, you are hereby requested to exchange the legended
certificate for an unlegended certificate representing an identical principal
amount of Notes, all in the manner provided for in the Indenture.
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby. Terms used in this certificate have the
meanings set forth in Regulation S.
Very truly yours,
[Name of Holder]
By:
-----------------------------------
Authorized Signatory
<PAGE>
EXHIBIT E
Form of Certificate to Be Delivered
in Connection with Transfers
Pursuant to Regulation S
The Bank of New York __________ __, 19__
101 Barclay Street, Floor 21 West
New York, NY 10286
Attention: Corporate Trust Administration
Re:Viatel, Inc. (the "Company")
11.15% Senior DM Notes
due 2008 (the "Notes")
Ladies and Gentlemen:
In connection with our proposed sale of DM ____________ aggregate
principal amount of the Notes, we confirm that such sale has been effected
pursuant to and in accordance with Regulation S under the Securities Act of
1933, as amended, and, accordingly, we represent that:
(1) the offer of the Notes was not made to a person in the United
States;
(2) 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;
(3) no directed selling efforts have been made by us in the United
States in contravention of the requirements of Rule 903(b) or Rule 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 U.S. Securities Act of 1933.
<PAGE>
E-2
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby. Terms used in this certificate have the
meanings set forth in Regulation S.
Very truly yours,
[Name of Transferor]
By:
-----------------------------------
Authorized Signatory
<PAGE>
EXHIBIT F
Form of Certificate to Be
Delivered in Connection with
Transfers to Non-QIB Accredited Investors
The Bank of New York __________ __, 19__
101 Barclay Street, Floor 21 West
New York, NY 10286
Attention: Corporate Trust Administration
Re:Viatel, Inc. (the "Company")
11.15% Senior DM Notes
due 2008 (the "Notes")
Dear Sirs:
In connection with our proposed purchase of DM ___________ aggregate
principal amount of the Notes, we confirm that:
1. We understand that any subsequent transfer of the Notes is
subject to certain restrictions and conditions set forth in the Indenture
dated as of April 8, 1998 relating to the Notes (the "Indenture") and the
undersigned agrees to be bound by, and not to resell, pledge or otherwise
transfer the Notes except in compliance with, such restrictions and
conditions and the Securities Act of 1933, as amended (the "Securities
Act").
2. We understand that the offer and sale of the Notes have not been
registered under the Securities Act, and that the Notes may not be offered
or sold except as permitted in the following sentence. We agree, on our
own behalf and on behalf of any accounts for which we are acting as
hereinafter stated, that if we should sell any Notes, we will do so only
(A) to the Company or any subsidiary thereof, (B) in accordance with Rule
144A under the Securities Act to a "qualified institutional buyer" (as
defined therein), (C) to an institutional "accredited investor" (as
defined below) that, prior to such transfer, furnishes (or has furnished
on its behalf by a U.S. broker-dealer) to you and to the Company a signed
letter substantially in the form of this letter, (D) outside the United
States in accordance with Rule 904 of Regulation S under the Securities
Act, (E) pursuant to the provisions of Rule 144 under the Securities Act,
or (F) pursuant to an effective registration statement under the
Securities Act, and we further agree to provide to any person purchasing
any of
<PAGE>
F-2
the Notes from us a notice advising such purchaser that resales of the
Notes are restricted as stated herein.
3. We understand that, on any proposed resale of any Notes, we will
be required to furnish to you and the Company such certifications, legal
opinions and other information as you and the Company may reasonably
require to confirm that the proposed sale complies with the foregoing
restrictions. We further understand that the Notes purchased by us will
bear a legend to the foregoing effect.
4. We are an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and
have such knowledge and experience in financial and business matters as to
be capable of evaluating the merits and risks of our investment in the
Notes, and we and any accounts for which we are acting are each able to
bear the economic risk of our or its investment.
5. We are acquiring the Notes purchased by us for our own account or
for one or more accounts (each of which is an institutional "accredited
investor") as to each of which we exercise sole investment discretion.
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby.
Very truly yours,
[Name of Transferee]
By:
-----------------------------------
Authorized Signatory
<PAGE>
Exhibit 4.5
================================================================================
VIATEL, INC.,
as Issuer,
THE BANK OF NEW YORK
as Trustee, U.S. Paying Agent
and Registrar
and
DEUTSCHE BANK, AKTIENGESELLSCHAFT
as German Paying Agent
and Co-Registrar
and Conversion Agent
----------
Subordinated Debenture Indenture
Dated as of April 8, 1998
----------
10% Subordinated Convertible Debentures due 2011
================================================================================
<PAGE>
CROSS-REFERENCE TABLE
TIA Sections Indenture Sections
- ------------ ------------------
ss. 310(a)(1)............................................ 8.10
(b)............................................... 8.03
ss. 311.................................................. 8.03
ss. 313(a)............................................... 8.06
(c)............................................... 8.05; 8.06
ss. 314(a)............................................... 4.17
ss. 315(c)............................................... 8.02
(d)............................................... 8.02
ss. 316(a)............................................... 7.06
Note: The Cross-Reference Table shall not for any purpose be deemed to be a part
of the Indenture.
<PAGE>
TABLE OF CONTENTS
Page
RECITALS OF THE COMPANY........................................................1
ARTICLE ONE
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. Definitions......................................................2
SECTION 1.02. Incorporation by Reference of Trust Indenture Act...............12
SECTION 1.03. Rules of Construction...........................................13
ARTICLE TWO
THE DEBENTURES
SECTION 2.01. Form and Dating.................................................13
SECTION 2.02. Restrictive Legends.............................................15
SECTION 2.03. Execution, Authentication and Denominations.....................18
SECTION 2.04. Registrar and Paying Agent......................................19
SECTION 2.05. Paying Agent to Hold Money in Trust.............................19
SECTION 2.06. Transfer and Exchange...........................................20
SECTION 2.07. Book-Entry Provisions for Global Debentures.....................21
SECTION 2.08. Special Transfer Provisions.....................................23
SECTION 2.09. Replacement Debentures..........................................26
SECTION 2.10. Outstanding Debentures..........................................26
SECTION 2.11. Temporary Debentures............................................27
SECTION 2.12. Cancellation....................................................27
SECTION 2.13. CUSIP Numbers...................................................28
SECTION 2.14. Defaulted Interest..............................................28
SECTION 2.15. Issuance of Additional Debentures...............................30
ARTICLE THREE
REDEMPTION
SECTION 3.01. Right of Redemption.............................................30
SECTION 3.02. Notices to Trustee..............................................31
SECTION 3.03. Selection of Debentures to Be Redeemed..........................31
SECTION 3.04. Notice of Redemption............................................31
SECTION 3.05. Effect of Notice of Redemption..................................33
SECTION 3.06. Deposit of Redemption Price.....................................33
Note: The Table of Contents shall not for any purposes be deemed to be a part of
the Indenture.
<PAGE>
ii Page
SECTION 3.07. Payment of Debentures Called for Redemption.....................33
SECTION 3.08. Debentures Redeemed in Part.....................................33
ARTICLE FOUR
SUBORDINATION OF DEBENTURES
SECTION 4.01. Debentures Subordinated to Senior Indebtedness..................34
SECTION 4.02. No Payment on Debentures in Certain Circumstances...............34
SECTION 4.03. Payment over Proceeds upon Dissolution, Etc.....................35
SECTION 4.04. Subrogation.....................................................37
SECTION 4.05. Obligations of Company Unconditional............................37
SECTION 4.06. Notice to Trustee...............................................38
SECTION 4.07. Reliance on Judicial Order or Certificate of Liquidating Agent..39
SECTION 4.08. Trustee's Relation to Senior Indebtedness.......................39
SECTION 4.09. Subordination Rights Not Impaired by Acts or Omissions of the
Company or Holders of Senior Indebtedness.....................39
SECTION 4.10. Holders Authorize Trustee to Effectuate Subordination of
Debentures....................................................40
SECTION 4.11. Not to Prevent Events of Default................................40
SECTION 4.12. Trustee's Compensation Not Prejudiced...........................40
SECTION 4.13. No Waiver of Subordination Provisions...........................40
SECTION 4.14. Payments May Be Paid Prior to Dissolution.......................41
ARTICLE FIVE
CONVERSION OF DEBENTURES
SECTION 5.01. Optional Conversion.............................................41
SECTION 5.02. Automatic Conversion............................................41
SECTION 5.03. Procedures......................................................42
SECTION 5.04. Fractional Shares...............................................42
SECTION 5.05. Payment of Taxes................................................42
SECTION 5.06. Adjustments to Conversion Price.................................42
SECTION 5.07. Effect of Reclassification, Consolidation, Merger or Sale.......49
SECTION 5.08. Rights Plan.....................................................50
SECTION 5.09. Fundamental Change..............................................50
SECTION 5.10. No Adjustments..................................................50
ARTICLE SIX
COVENANTS
SECTION 6.01. Payment of Debentures...........................................51
SECTION 6.03. Maintenance of Office or Agency.................................52
SECTION 6.04. Repurchase of Debentures upon a Change of Control...............53
<PAGE>
iii Page
SECTION 6.05 Existence.......................................................53
SECTION 6.06. Payment of Taxes and Other Claims...............................53
SECTION 6.07. Maintenance of Properties and Insurance.........................53
SECTION 6.08. Notice of Defaults..............................................54
SECTION 6.09. Compliance Certificates.........................................54
SECTION 6.10. Commission Reports and Reports to Holders.......................54
SECTION 6.11. Waiver of Stay, Extension or Usury Laws.........................55
ARTICLE SEVEN
DEFAULT AND REMEDIES
SECTION 7.01. Events of Default...............................................55
SECTION 7.02. Acceleration....................................................56
SECTION 7.03. Other Remedies..................................................56
SECTION 7.04. Waiver of Past Defaults.........................................56
SECTION 7.05. Control by Majority.............................................57
SECTION 7.06. Limitation on Suits.............................................57
SECTION 7.07. Rights of Holders to Receive Payment............................58
SECTION 7.08. Collection Suit by Trustee......................................58
SECTION 7.09. Trustee May File Proofs of Claim................................58
SECTION 7.10. Priorities......................................................59
SECTION 7.11. Undertaking for Costs...........................................59
SECTION 7.12. Restoration of Rights and Remedies..............................59
SECTION 7.13. Rights and Remedies Cumulative..................................60
SECTION 7.14. Delay or Omission Not Waiver....................................60
ARTICLE EIGHT
TRUSTEE
SECTION 8.01. General.........................................................60
SECTION 8.02. Certain Rights of Trustee.......................................60
SECTION 8.03. Individual Rights of Trustee....................................62
SECTION 8.04. Trustee's Disclaimer............................................62
SECTION 8.05. Notice of Default...............................................62
SECTION 8.06. Reports by Trustee to Holders...................................62
SECTION 8.07. Compensation and Indemnity......................................63
SECTION 8.08. Replacement of Trustee..........................................64
SECTION 8.09. Successor Trustee by Merger, Etc................................64
SECTION 8.10. Eligibility.....................................................65
SECTION 8.11. Money Held in Trust.............................................65
SECTION 8.12. Withholding Taxes...............................................65
<PAGE>
iv Page
ARTICLE NINE
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 9.01. Without Consent of Holders......................................65
SECTION 9.02. With Consent of Holders.........................................66
SECTION 9.03. Revocation and Effect of Consent................................67
SECTION 9.04. Notation on or Exchange of Debentures...........................68
SECTION 9.05. Trustee to Sign Amendments, Etc.................................68
SECTION 9.06. Conformity with Trust Indenture Act.............................68
ARTICLE TEN
MISCELLANEOUS
SECTION 10.01. Trust Indenture Act of 1939....................................68
SECTION 10.02. Notices........................................................68
SECTION 10.03. Certificate and Opinion As to Conditions Precedent.............70
SECTION 10.04. Statements Required in Certificate or Opinion..................71
SECTION 10.05. Rules by Trustee, Paying Agent or Registrar....................71
SECTION 10.06. Payment Date Other Than a Business Day.........................71
SECTION 10.07. Governing Law; Submission to Jurisdiction; Agent for Service...71
SECTION 10.08. No Adverse Interpretation of Other Agreements..................72
SECTION 10.09. No Recourse Against Others.....................................72
SECTION 10.10. Successors.....................................................72
SECTION 10.11. Duplicate Originals............................................72
SECTION 10.12. Separability...................................................72
SECTION 10.13. Table of Contents, Headings, Etc...............................72
SECTION 10.14. Substitution of Currency.......................................73
SECTION 10.15. Method of Payment..............................................73
EXHIBIT A Form of DTC Global Note.......................................A-1
EXHIBIT B Form of DBC Global Note.......................................B-1
EXHIBIT C Form of U.S. Certificated Note................................C-1
EXHIBIT D Form of Certificate...........................................D-1
EXHIBIT E Form of Certificate to Be Delivered in Connection with
Transfers Pursuant to Regulation S.......................E-1
EXHIBIT F Form of Certificate to Be Delivered in Connection with
Transfers to Non-QIB Accredited Investors................F-1
<PAGE>
INDENTURE, dated as of April 8, 1998, between VIATEL, INC., a
Delaware corporation, as issuer (the "Company"), THE BANK OF NEW YORK, a New
York banking corporation, as trustee (the "Trustee"), and Deutsche Bank,
Aktiengesellschaft, as German paying agent and Co-Registrar ("German Paying
Agent").
RECITALS OF THE COMPANY
The Company has duly authorized the execution and delivery of this
Indenture to provide for the issuance from time to time of 10% Subordinated
Convertible Debentures due 2011 (the "Debentures") issuable as provided in this
Indenture. Pursuant to the terms of a Purchase Agreement dated as of April 3,
1998 (the "Purchase Agreement") between the Company and Morgan Stanley & Co.
Incorporated, as the manager for itself and the several initial purchasers named
on Schedule I thereto (the "Manager"), the Company has agreed to issue and sell
500,000 Senior Discount Dollar Units (collectively, the "Senior Discount Dollar
Units"), 400,000 Senior Dollar Units (collectively, the "Senior Dollar Units"),
226,000 Senior Discount DM Units (collectively, the "Senior Discount DM Units")
and 178,000 Senior DM Units (collectively, the "Senior DM Units"; and together
with the Senior Discount Dollar Units, the Senior Dollar Units and the Senior
Discount DM Units, the "Units"). Each Senior Discount Dollar Unit will consist
of (i) one 12.50% Senior Discount Note due 2008 of the Company with a principal
amount of maturity of $1,000 (collectively, the "Senior Discount Dollar Notes")
to be issued pursuant to the provisions of an Indenture (the "Senior Discount
Dollar Indenture") dated as of the Closing Date (as defined below) between the
Company and the Trustee and (ii) .490 shares of Series A Redeemable Convertible
Preferred Stock of the Company (collectively, the "Series A Preferred"). Each
Senior Dollar Unit will consist of (i) one 11.25% Senior Note due 2008 of the
Company with a principal amount of $1,000 (collectively, the "Senior Dollar
Notes") to be issued pursuant to the provisions of an Indenture (the "Senior
Dollar Indenture") dated as of the Closing Date between the Company and the
Trustee and (ii) .483 shares of Series A Preferred. Each Senior Discount DM Unit
will consist of (i) one 12.40% Senior Discount Note due 2008 of the Company with
a principal amount at maturity of DM 1,000 (collectively, the "Senior Discount
DM Notes") to be issued pursuant to the provisions of an Indenture (the "Senior
Discount DM Indenture") dated as of the Closing Date between the Company, the
Trustee and the German Paying Agent and (ii) 2.77 Debentures. Each Senior DM
Unit will consist of (i) one 11.15% Senior Note due 2008 of the Company with a
principal amount of DM 1,000 (collectively, the "Senior DM Notes"; and together
with the Senior Discount Dollar Notes, the Senior Dollar Notes and the Senior
Discount DM Notes, the "1998 Notes") to be issued pursuant to the provisions of
an Indenture (the "Senior DM Indenture", and together with the Senior Discount
Dollar Indenture, the Senior Dollar Indenture and the Senior Discount DM
Indenture, the "Indentures") dated as of the Closing Date between the Company,
the Trustee and the German Paying Agent and (ii) 2.69 Debentures. The offering
of the Senior Discount DM
<PAGE>
2
Units and the Senior DM Units outside the United States is lead managed by
Morgan Stanley Bank AG, an affiliate of Morgan Stanley & Co. Incorporated. The
global offering of the Senior Discount Dollar Units and the Senior Dollar Units
is lead managed by Morgan Stanley & Co. Incorporated. All references herein to
the "Manager" include Morgan Stanley & Co. Incorporated and Morgan Stanley Bank
AG.
All things necessary to make this Indenture a valid agreement of the
Company, in accordance with its terms, have been done, and the Company has done
all things necessary to make the Debentures, when executed by the Company and
authenticated and delivered by the Trustee hereunder and duly issued by the
Company, the valid obligations of the Company as hereinafter provided.
The Debentures and the Senior DM Discount Notes and the Senior DM
Notes (collectively, the "DM Notes"), as the case may be, will be automatically
separated upon the date (the "Separation Date") which is the earliest to occur
of (i) the date that is six months after the Closing Date (as defined below),
(ii) the commencement of an exchange offer with respect to the relevant DM Notes
undertaken pursuant to the Registration Rights Agreement (as defined below),
(iii) the effective date of a shelf registration with respect to resales of the
relevant DM Notes and (iv) the commencement of an offer to repurchase the
relevant DM Notes pursuant to the terms of this Indenture.
This Indenture will, upon the effectiveness of the registration
statement provided for under the Registration Rights Agreement, be subject to,
and governed by, the provisions of the Trust Indenture Act of 1939, as amended,
that are required to be a part of and to govern indentures qualified under the
Trust Indenture Act of 1939, as amended.
For and in consideration of the premises and the purchase of the
Debentures by the Holders thereof, it is mutually covenanted and agreed, for the
equal and proportionate benefit of all Holders, as follows.
ARTICLE ONE
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. Definitions.
"Affiliate" means, 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, means the
possession, directly or indirectly, of the power to direct or cause the
direction of the
<PAGE>
3
management and policies of such Person, whether through the ownership of voting
securities, by contract or otherwise.
"Board of Directors" means the Board of Directors of the Company as
required by the context or any committee of such Board of Directors duly
authorized to act under this Indenture.
"Board Resolution" means a copy of a resolution, certified by the
Secretary or Assistant Secretary of the Company as required by the context to
have been duly adopted by the Board of Directors and to be in full force and
effect on the date of such certification, and delivered to the Trustee.
"Business Day" means any day except a Saturday, Sunday or other day
on which commercial banks in The City of New York, or in the city of the
Corporate Trust Office of the Trustee, are authorized or required by law to
close.
"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, whether outstanding on
the Closing Date or issued thereafter, including, without limitation, all Common
Stock and Preferred Stock.
"Certificated Debentures" has the meaning provided in Section 2.01
hereof.
"Change of Control" means such time as (i) a "person" or a "group"
(within the meaning of Sections 13(d) and 14(d)(2) of the Exchange Act) 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 Voting Stock of the
Company on a fully diluted basis; or (ii) individuals who on the Closing Date
constitute the Board of Directors (together with any new directors whose
election by the Board of Directors or whose nomination to the Board of Directors
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 in office who either
were members of the Board of Directors on the Closing Date or whose election or
nomination for election was previously so approved) cease for any reason to
constitute a majority of the members of the Board of Directors then in office.
"Closing Date" means the date on which the Debentures are originally
issued under this Indenture.
"Commission" means the Securities and Exchange Commission, as from
time to time constituted, created under the Exchange Act or, if at any time
after the execution of this instrument such Commission is not existing and
performing the duties now assigned to it under the TIA, then the body performing
such duties at such time.
<PAGE>
4
"Common Stock" means, with respect to any Person, any and all
shares, interests, participations or other equivalents (however designated,
whether voting or non-voting) of such Person's common stock, whether now
outstanding or issued after the date of this Indenture, including, without
limitation, all series and classes of such common stock.
"Company" means the party named as such in the first paragraph of
this Indenture until a successor replaces it pursuant to the applicable
provisions of this Indenture and thereafter means the successor.
"Company Order" means a written request or order signed in the name
of the Company (i) by its Chairman of the Board, the Vice Chairman of the Board,
its President or a Vice President and (ii) by its Chief Financial Officer,
Treasurer, an Assistant Treasurer, its Secretary or an Assistant Secretary and
delivered to the Trustee; provided, however, that such written request or order
may be signed by any two of the officers or directors listed in clause (i) above
in lieu of being signed by one of such officers or directors listed in such
clause (i) and one of the officers listed in clause (ii) above.
"Corporate Trust Office" means the office of the Trustee at which
the corporate trust business of the Trustee shall, at any particular time, be
principally administered, which office is, at the date of this Indenture,
located at 101 Barclay Street, Floor 21 West, New York NY 10286, Attention:
Corporate Trust Administration.
"DBC" means Deutsche Borse Clearing Frankfurt am Main and any
successor thereto.
"DBC Global" has the meaning provided in Section 2.01 hereof.
"Debenture Register" has the meaning provided in Section 2.04.
"Debentures" means any of the Debentures, as defined in the first
paragraph of the recitals hereof, that are authenticated and delivered under
this Indenture.
"Default" means any event that is, or after notice or passage of
time or both would be, an Event of Default.
"Depository" shall mean DTC, its nominees and their respective
successors, and DBC.
"Designated Senior Indebtedness" means (i) any Indebtedness under
the New Indentures (except that any Indebtedness which represents a partial
refinancing of Indebtedness theretofore outstanding pursuant to the New
Indentures, rather than a complete refinancing
<PAGE>
5
thereof, shall only constitute Designated Senior Indebtedness if such partial
refinancing meets the requirements of clause (ii) below) and (ii) any other
Indebtedness constituting Senior Indebtedness that, at the date of
determination, has an aggregate principal amount outstanding of at least $25
million and that is specifically designated by the Company, in the instrument
creating or evidencing such Senior Indebtedness, as "Designated Senior
Indebtedness."
"DM" means Deutsche Mark.
"DTC" means The Depository Trust Company.
"DTC Global" has the meaning provided in Section 2.01 hereof.
"Event of Default" has the meaning provided in Section 7.01 hereof.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"German Paying Agent" means Deutsche Bank and any successor German
Paying Agent, except that, for the purposes of Article Eight, the German Paying
Agent shall not be the Company or a Subsidiary of the Company or an Affiliate of
any of them.
"Global Debentures" has the meaning provided in Section 2.01.
"Holder" or "Debentureholder" means the registered holder of any
Debenture.
"Indenture" means this Indenture as originally executed or as it may
be amended or supplemented from time to time by one or more indentures
supplemental to this Indenture entered into pursuant to the applicable
provisions of this Indenture.
"Institutional Accredited Investor" shall mean an institution that
is an "accredited investor" as that term is defined in Rule 501(a)(1), (2), (3)
or (7) under the Securities Act.
"Interest Payment Date" means each quarterly interest payment date
on January 15, April 15, July 15 and October 15 of each year, commencing July
15, 1998.
"Manager" means Morgan Stanley & Co. Incorporated and Morgan Stanley
Bank AG, as lead managers for the several initial purchasers named in the
Purchase Agreement. The offering of the Notes outside the U.S. will be lead
managed by Morgan Stanley Bank AG.
"1998 Notes" means the Senior Dollar Notes, Senior Discount Dollar
Notes, Senior DM Notes and the Senior Discount DM Notes.
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6
"Non-U.S. Person" means a Person who is not a U.S. person, as
defined in Regulation S.
"Offer to Purchase" means an offer to purchase Debentures by the
Company from the Holders commenced by mailing a notice to the Trustee and each
Holder stating: (i) the covenant pursuant to which the offer is being made and
that all Debentures validly tendered will be accepted for payment on a pro rata
basis; (ii) the purchase price and the date of purchase (which shall be a
Business Day no earlier than 30 days nor later than 60 days from the date such
notice is mailed) (the "Payment Date"); (iii) the Conversion Price; (iv) that
any Debenture not tendered will continue to accrue interest pursuant to its
terms; (v) that, unless the Company defaults in the payment of the purchase
price, any Debenture accepted for payment pursuant to the Offer to Purchase
shall cease to accrue interest on and after the Payment Date; (vi) that Holders
electing to have a Debenture purchased pursuant to the Offer to Purchase will be
required to surrender the Debenture, together with the form entitled "Option of
the Holder to Elect Purchase" on the reverse side of the Debenture completed, to
the Paying Agent at the address specified in the notice prior to the close of
business on the Business Day immediately preceding the Payment Date; (vii) that
Holders will be entitled to withdraw their election if the Paying Agent
receives, not later than the close of business on the third Business Day
immediately preceding the Payment Date, a telegram, facsimile transmission or
letter setting forth the name of such Holder, the principal amount of Debentures
delivered for purchase and a statement that such Holder is withdrawing his
election to have such Debentures purchased; and (viii) that Holders whose
Debentures are being purchased only in part will be issued new Debentures equal
in principal amount to the unpurchased portion of the Debentures surrendered;
provided that each Debenture purchased and each new Debenture issued shall be in
a principal amount of DM 1,000 or an integral multiple thereof. On the Payment
Date, the Company shall (i) accept for payment on a pro rata basis Debentures or
portions thereof tendered pursuant to an Offer to Purchase; (ii) deposit with
the Paying Agent money sufficient to pay the purchase price of all Debentures or
portions thereof so accepted; and (iii) deliver, or cause to be delivered, to
the Trustee all Debentures or portions thereof so accepted together with an
Officers' Certificate specifying the Debentures or portions thereof accepted for
payment by the Company. The Paying Agent shall promptly mail to the Holders of
Debentures so accepted payment in an amount equal to the purchase price, and the
Trustee shall promptly authenticate and mail to such Holders a new Debenture
equal in principal amount to any unpurchased portion of the Debenture
surrendered; provided that each Debenture purchased and each new Debenture
issued shall be in a principal amount of DM 1,000 or an integral multiple
thereof. The Company will publicly announce the results of an Offer to Purchase
as soon as practicable after the Payment Date. The Trustee shall act as the
Paying Agent for an Offer to Purchase. The Company will comply with Rule 14e-1
under the Exchange Act and any other securities laws and regulations thereunder
to the extent such laws and regulations are applicable, in the event that the
Company is required to repurchase Debentures pursuant to an Offer to Purchase.
<PAGE>
7
"Officer" means, with respect to the Company, (i) the Chairman of
the Board, the Vice Chairman of the Board, the President, the Chief Executive
Officer, the Chief Financial Officer or a Vice President, and (ii) the Treasurer
or any Assistant Treasurer, or the Secretary or any Assistant Secretary of the
Company.
"Officers' Certificate" means a certificate signed by one Officer
listed in clause (i) of the definition thereof and one Officer listed in clause
(ii) of the definition thereof; provided, however, that any such certificate may
be signed by any two of the Officers listed in clause (i) of the definition
thereof in lieu of being signed by one Officer listed in clause (i) of the
definition thereof and one Officer listed in clause (ii) of the definition
thereof. Each Officers' Certificate (other than certificates provided pursuant
to TIA Section 314(a)(4)) shall include the statements provided for in TIA
Section 314(e).
"Opinion of Counsel" means a written opinion signed by legal counsel
who may be an employee of or counsel to the Company. Each such Opinion of
Counsel shall include the statements provided for in TIA Section 314(e).
"Participant" means, with respect to DTC, Euroclear or Cedel, a
Person who has an account with DTC, Euroclear or Cedel, respectively (and, with
respect to DTC, shall include Euroclear and Cedel).
"Paying Agent" means the German Paying Agent, any successor thereof,
the U.S. Paying Agent, any successor thereof, and any other Person (including
the Company acting as the Paying Agent, except that, for the purposes of Article
Eight, the Paying Agent shall not be the Company or a Subsidiary of the Company
or an Affiliate of any of them), authorized by the Company to pay principal and
premium, if any, or interest on any Debentures on behalf of the Company.
"Payment Blockage Period" has the meaning provided in Section 4.01
of this Indenture.
"Payment Date" means the date of purchase, which shall be a Business
Day no earlier than 30 days nor later than 60 days from the date of notice is
mailed pursuant to an Offer to Purchase.
"Permanent DBC Global" means the permanent global Debentures issued
in exchange for one or more Temporary DBC Global, substantially in the form of
Exhibit B attached hereto.
"Person" means an individual, a corporation, a partnership, a
limited liability company, a joint venture, an association, a trust, an
unincorporated organization or any other
<PAGE>
8
entity or organization, including a government or political subdivision or an
agency or instrumentality thereof.
"principal" of a debt security, including the Debentures, means the
principal amount due on the Stated Maturity as shown on such debt security.
"Private Placement Legend" means the legend initially set forth on
the Notes in the form set forth in Section 2.02(a).
"Purchase Agreement" has the meaning provided in the recitals to
this Indenture.
"QIB" means a "qualified institutional buyer" as defined in Rule
144A.
"Redemption Date", when used with respect to any Debenture or part
thereof to be redeemed, means the date fixed for such redemption by or pursuant
to the terms of the Debentures and this Indenture.
"Redemption Price", when used with respect to any Debenture or part
thereof to be redeemed, means the price at which such Debenture is to be
redeemed pursuant to the terms of the Debentures and this Indenture.
"Registrar" has the meaning provided in Section 2.04.
"Registration Rights Agreement" means the Shelf Registration Rights
Agreement, dated as of April 3, 1998, between the Company and Morgan Stanley &
Co. Incorporated, on behalf of itself and Morgan Stanley Bank AG, Salomon
Brothers Inc, NationsBanc Montgomery Securities LLC and ING Baring (U.S.)
Securities, Inc., relating to the Debentures.
"Registration Statement" means any registration statement of the
Company that covers any of the Common Stock issuable upon conversion of the
Debentures, and all amendments and supplements to any such Registration
Statement, including post-effective amendments, in each case including the
prospectus contained therein, all exhibits thereto and all material incorporated
by reference therein.
"Regular Record Date" for the interest payable on any Interest
Payment Date means January 1, April 1, July 1 or October 1 (whether or not a
Business Day), as the case may be, next preceding such Interest Payment Date.
"Regulation S" means Regulation S under the Securities Act.
"Regulation S Certificated Debentures" has the meaning provided in
Section 2.01.
<PAGE>
9
"Responsible Officer", when used with respect to the Trustee, means
any officer of the Trustee with direct responsibility for the administration of
this Indenture and also means, with respect to a particular corporate trust
matter, any other officer to whom such matter is referred because of his or her
knowledge of and familiarity with the particular subject.
"Restricted Subsidiary " means any Subsidiary of the Company other
than an Unrestricted Subsidiary.
"Rule 144A" means Rule 144A under the Securities Act.
"Securities Act" means the Securities Act of 1933, as amended.
"Senior Discount DM Indenture" means the Indenture dated as of the
Closing Date between the Company, The Bank of New York and Deutsche Bank
governing the issuance of the Senior Discount Dollar Notes.
"Senior Discount DM Notes" means the notes issued pursuant to the
Senior Discount DM Indenture.
"Senior Discount DM Units" means the Senior Discount DM Units, each
consisting of one Senior Discount DM Note and 2.77 Debentures.
"Senior Discount Dollar Indenture" means the Indenture dated as of
the Closing Date between the Company, The Bank of New York and Deutsche Bank,
governing the issuance of the Senior Discount Dollar Notes.
"Senior Discount Dollar Notes" means the notes issued pursuant to
the Senior Discount Dollar Indenture.
"Senior Discount Dollar Units" means the Senior Discount Dollar
Units, each consisting of one Senior Discount Dollar Note and .490 shares of
Series A Preferred.
"Senior DM Indenture" means the Indenture dated as of the Closing
Date between the Company, The Bank of New York and Deutsche Bank, governing the
issuance of the Senior DM Notes.
"Senior DM Notes" means the notes issued pursuant to the Senior DM
Indenture.
"Senior DM Units" means the Senior DM Units, each consisting of one
Senior DM Note and 2.69 Debentures.
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10
"Senior Dollar Indenture" means the Indenture dated as of the
Closing Date between the Company and the Bank of New York, governing the
issuance of the Senior Dollar Notes.
"Senior Dollar Notes" means the notes issued pursuant to the Senior
Dollar Indenture.
"Senior Dollar Units" means the Senior Dollar Units, each consisting
of one Senior Dollar Note and .483 shares of Series A Preferred.
"Senior Indebtedness" means the following obligations of the
Company, whether outstanding on the Closing Date or thereafter Incurred: (i) all
Indebtedness and all other monetary obligations (including, without limitation,
expenses, fees, principal, interest, reimbursement obligations under letters of
credit and indemnities payable in connection therewith) of the Company under (or
in respect of) the New Indentures and (ii) all other Indebtedness and all other
monetary obligations of the Company (other than the Debentures), including
principal and interest on such Indebtedness, unless such Indebtedness, by its
terms or by the terms of any agreement or instrument pursuant to which such
Indebtedness is issued, is pari passu with, or subordinated in right of payment
to, the Debentures; provided that the term "Senior Indebtedness" shall not
include (a) any Indebtedness of the Company that, when Incurred, was without
recourse to the Company, (b) any Indebtedness of the Company to a Subsidiary of
the Company, or to a joint venture in which the Company has an interest, (c) any
Indebtedness to any employee of the Company or any of its respective
Subsidiaries, (d) any liability for taxes owed or owing by the Company or (g)
any trade payables. Senior Indebtedness will also include interest accruing
subsequent to events of bankruptcy of the Company and its respective
Subsidiaries at the rate provided for in the document governing such Senior
Indebtedness, whether or not such interest is an allowed claim enforceable
against the debtor in a bankruptcy case under bankruptcy law.
"Separation Date" has the meaning specified in the recitals to this
Indenture.
"Series A Preferred" means the Series A preferred stock, $.01 par
value per share, of the Company.
"Significant Subsidiary" means, at any date of determination, any
Restricted Subsidiary that, together with its Subsidiaries, (i) for the most
recent fiscal year of the Company, accounted for more than 10% of the
consolidated revenues of the Company and its Restricted Subsidiaries or (ii) as
of such fiscal year was the owner of more than 10% of the consolidated assets of
the Company and its Restricted Subsidiaries, all as set forth on the most
recently available consolidated financial statements of the Company for such
fiscal year.
<PAGE>
11
"Specified Date" means any Redemption Date, any Payment Date for an
Offer to Purchase or any date on which the Notes first become due and payable
after an Event of Default.
"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.
"Subordinated Indenture" means this Indenture.
"Subordinated Obligations" means any principal of, premium, if any,
interest, or other amounts due, on the Debentures payable pursuant to the terms
of the Debentures or upon acceleration, including any amounts received upon the
exercise of rights of rescission or other rights of action (including claims for
damages) or otherwise, to the extent relating to the purchase price of the
Debentures amounts corresponding to such principal, premium, if any, or interest
on the Debentures.
"Subsidiary" means, with respect to any Person, any corporation,
association or other business entity of which more than 50% of the voting power
of the outstanding Voting Stock is owned, directly or indirectly, by such Person
and one or more other Subsidiaries of such Person.
"Temporary DBC Global" has the meaning provided in Section 2.01.
"TIA" or "Trust Indenture Act" means the Trust Indenture Act of
1939, as amended (15 U.S. Code ss.ss. 77aaa-77bbb), as in effect on the date
this Indenture was executed, except as provided in Section 9.06; provided,
however, that, in the event the Trust Indenture Act of 1939 is amended after
such date, "TIA" or "Trust Indenture Act" means, to the extent required by any
such amendment, the Trust Indenture Act of 1939 as so amended.
"Treaty" means the Treaty on the European Economic and Monetary
Union.
"Trustee" means the party named as such in the first paragraph of
this Indenture until a successor replaces it in accordance with the provisions
of Article Seven of this Indenture and thereafter means such successor.
"Unit Legend" has the meaning provided in Section 2.02(c).
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12
"United States Bankruptcy Code" means the Bankruptcy Reform Act of
1978, as amended and as codified in Title 11 of the United States Code, as
amended from time to time hereafter, or any successor federal bankruptcy law.
"Units" means the units, as defined in the first paragraph of the
recitals hereof.
"U.S. Certificated Debentures" has the meaning provided in Section
2.01.
"U.S. Paying Agent" means The Bank of New York and any successor
U.S. Paying Agent.
"U.S. Person" has the meaning ascribed thereto in Rule 902 under the
Securities Act.
"Voting Stock" means, with respect to any Person, Capital Stock of
any class or kind ordinarily having the power to vote for the election of
directors, managers or other voting members of the governing body of such
Person.
SECTION 1.02. Incorporation by Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision of the TIA, the provision is
incorporated by reference in and made a part of this Indenture. The following
TIA terms used in this Indenture have the following meanings:
"indenture securities" means the Debentures;
"indenture security holder" means a Holder or a Debentureholder;
"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 Debentures.
All other TIA terms used in this Indenture that are defined by the
TIA, defined by TIA reference to another statute or defined by a rule of the
Commission and not otherwise defined herein have the meanings assigned to them
therein.
<PAGE>
13
SECTION 1.03. Rules of Construction. Unless the context otherwise
requires:
(i) a term has the meaning assigned to it;
(ii) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP;
(iii) "or" is not exclusive;
(iv) words in the singular include the plural, and words in the
plural include the singular;
(v) provisions apply to successive events and transactions;
(vi) "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; and
(vii) all references to Sections or Articles refer to Sections or
Articles of this Indenture unless otherwise indicated.
ARTICLE TWO
THE DEBENTURES
SECTION 2.01. Form and Dating. The Debentures and the certificate of
authentication with respect thereto shall be substantially in the form annexed
hereto as Exhibit A in the case of the DTC Global, Exhibit B, in the case of the
DBC Global and Exhibit C, in the case of a U.S. Certificated Debenture. The
Debentures may have such appropriate insertions, omissions, substitutions and
other variations as are required or permitted by this Indenture and may have
letters, notations, legends or endorsements required by law, stock exchange
agreements to which the Company is subject or usage. Any portion of the text of
any Debenture may be set forth on the reverse thereof, with an appropriate
reference thereto on the face of the Debenture. The Company shall approve the
form of the Debentures and any notation, legend or endorsement on the
Debentures. Each Debenture shall be dated the date of its authentication.
The terms and provisions contained in the form of the Debentures
annexed hereto as Exhibits A, B and C shall constitute, and are hereby expressly
made, a part of this Indenture. Each of the Company and the Trustee, by its
execution and delivery of this Indenture, expressly agrees to the terms and
provisions of the Debentures applicable to it and to be bound thereby.
<PAGE>
14
Debentures initially offered and sold in reliance on Rule 144A and
others electing settlement through DTC shall be issued initially in the form of
one or more permanent global Debentures in registered form, substantially in the
form set forth in Exhibit A (the "DTC Global"), deposited with the Trustee, as
custodian for the Depository, duly executed by the Company and authenticated by
the Trustee as hereinafter provided. The aggregate principal amount of a DTC
Global may from time to time be increased or decreased by adjustments made on
the records of the Trustee, as custodian for the Depository or its nominee, as
hereinafter provided.
Debentures offered and sold in offshore transactions in reliance on
Regulation S (other than Debentures sold outside the United States to investors
electing settlement through DTC) shall be issued initially in the form of one or
more temporary global Debentures in bearer form, substantially in the form set
forth in Exhibit B (the "Temporary DBC Global"), deposited with DBC, duly
executed by the Company and authenticated by the Trustee as hereinafter
provided. At any time following the later of the Separation Date and May 18,
1998, upon receipt by the Trustee and the Company of a certificate substantially
in the form of Exhibit D hereto, one or more permanent global Debentures in
bearer form substantially in the form set forth in Exhibit B (the "Permanent DBC
Global" and, together with the Temporary DBC Global, the "DBC Global") duly
executed by the Company and authenticated by the Trustee as hereinafter provided
shall be deposited with DBC, which shall reflect on its books and records the
date and a decrease in the principal amount of the Temporary DBC Global in an
amount equal to the principal amount of the beneficial interest in the Temporary
DBC Global transferred. The aggregate principal amount of a DBC Global may from
time to time be increased or decreased by adjustments made in the records of the
Trustee, as custodian for the Depository or its nominee, as herein provided.
Debentures which are offered and sold to Institutional Accredited
Investors which are not QIBs (excluding Non-U.S. Persons) shall be issued in the
form of permanent certificated Debentures in registered form in substantially
the form set forth in Exhibit C (the "U.S. Certificated Debentures"). Debentures
issued pursuant to Section 2.07 in exchange for interests in the DBC Global
shall be in the form of certificated Debentures in registered form substantially
in the form set forth in Exhibit C (the "Regulation S Certificated Debentures").
Debentures issued pursuant to Section 2.07 in exchange for interests in the DTC
Global shall be in the form of the U.S. Certificated Debenture.
The Regulation S Certificated Debentures and the U.S. Certificated
Debentures are sometimes collectively referred to herein as the "Certificated
Debentures". The DTC Global and DBC Global are sometimes collectively herein
referred to as the "Global Debentures".
The definitive Debentures shall be typed, printed, lithographed or
engraved or produced by any combination of these methods or may be produced in
any other manner
<PAGE>
15
permitted by the rules of any securities exchange on which the Debentures may be
listed, all as determined by the officers executing such Debentures, as
evidenced by their execution of such Debentures.
SECTION 2.02. Restrictive Legends. (a) Debenture Legends. (i) Each
DTC Global and each U.S. Certificated Debenture shall bear the legend, set forth
below on the face thereof and (ii) each Regulation S Certificated Debenture and
each Temporary DBC Global shall bear the legend set forth below on the face
thereof until at least 41 days after the Closing Date and receipt by the Company
and the Trustee of a certificate substantially in the form of Exhibit D hereto.
THIS DEBENTURE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS, AND
ACCORDINGLY, MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED
WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S.
PERSONS EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION
HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED
INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) OR
(B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE
501(a)(1), (2), (3) OR (7) OF REGULATION D UNDER THE SECURITIES ACT) (AN
"INSTITUTIONAL ACCREDITED INVESTOR") OR (C) IT IS NOT A U.S. PERSON AND IS
ACQUIRING THIS DEBENTURE IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH
RULE 903 OF REGULATION S UNDER THE SECURITIES ACT; (2) AGREES THAT IT WILL
NOT, WITHIN THE TIME PERIOD REFERRED TO IN RULE 144(k) (TAKING INTO
ACCOUNT THE PROVISIONS OF RULE 144(d) UNDER THE SECURITIES ACT, IF
APPLICABLE), RESELL OR OTHERWISE TRANSFER THIS DEBENTURE EXCEPT (A) TO THE
COMPANY OR ANY SUBSIDIARY THEREOF, (B) TO A QUALIFIED INSTITUTIONAL BUYER
IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, (C) INSIDE THE
UNITED STATES TO AN INSTITUTIONAL ACCREDITED INVESTOR THAT, PRIOR TO SUCH
TRANSFER, FURNISHES TO THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN
REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER OF
THIS DEBENTURE (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM THE TRUSTEE)
AND IF SUCH TRANSFER IS IN RESPECT OF AN AGGREGATE PRINCIPAL AMOUNT OF
DEBENTURES OF LESS THAN DM 150,000, AN OPINION OF COUNSEL ACCEPTABLE TO
THE COMPANY THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT,
(D) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE
WITH RULE 904 UNDER THE SECURITIES ACT, (E) PURSUANT
<PAGE>
16
TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE
SECURITIES ACT (IF AVAILABLE) OR (F) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT AND (3) AGREES THAT IT WILL DELIVER TO
EACH PERSON TO WHOM THIS DEBENTURE IS TRANSFERRED A NOTICE SUBSTANTIALLY
TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF THIS
DEBENTURE WITHIN THE TIME PERIOD REFERRED TO ABOVE, THE HOLDER MUST CHECK
THE APPROPRIATE BOX SET FORTH ON THE REVERSE HEREOF RELATING TO THE MANNER
OF SUCH TRANSFER AND SUBMIT THIS CERTIFICATE TO THE TRUSTEE. IF THE
PROPOSED TRANSFEREE IS AN INSTITUTIONAL ACCREDITED INVESTOR, THE HOLDER
MUST, PRIOR TO SUCH TRANSFER, FURNISH TO EACH OF THE TRUSTEE AND THE
COMPANY SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS SUCH
PERSONS MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE
PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. 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. THE
INDENTURE CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER
ANY TRANSFER OF THIS DEBENTURE IN VIOLATION OF THE FOREGOING RESTRICTIONS.
(b) Global Debenture Legend. The DTC Global shall also bear the
following legend on the face thereof:
UNLESS THIS GLOBAL DEBENTURE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY TO THE COMPANY OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY DEBENTURE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR TO SUCH OTHER ENTITY AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY
OR SUCH OTHER REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY OR SUCH OTHER
NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH
OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY
<PAGE>
17
PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN
INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL DEBENTURE 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
DEBENTURE SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE
RESTRICTIONS SET FORTH IN SECTION 2.08 OF THE INDENTURE.
(c) Temporary DBC Global Legend. Each Temporary DBC Global shall
also bear the following legend on the face thereof:
THIS GLOBAL CERTIFICATE HAS BEEN CREATED IN ORDER TO BE HELD IN CUSTODY BY
DEUTSCHE BORSE CLEARING AG ("DBC") AND TO SERVE AS THE BASIS FOR THE
DELIVERY AND TRANSFER OF DEBENTURES TO BE HELD IN THE DBC DEPOSITARY AND
CLEARING SYSTEM THROUGHOUT THE LIFE OF THE DEBENTURES.
(d) Units Legends. Each Debenture issued prior to the Separation
Date shall bear the following legend (the "Unit Legend") on the face thereof:
THE DEBENTURES EVIDENCED BY THIS CERTIFICATE ARE INITIALLY ISSUED AS PART
OF AN ISSUANCE OF UNITS, EACH OF WHICH CONSISTS OF DM 1,000 PRINCIPAL
AMOUNT OF 11.15% [12.40] SENIOR DM [DISCOUNT] DEBENTURES DUE 2008 OF
VIATEL, INC. (THE "NOTES") AND 2.69 [2.77] 10% SUBORDINATED CONVERTIBLE
DEBENTURES DUE 2011 (THE "SUBORDINATED CONVERTIBLE DEBENTURES"). THE NOTES
AND THE SUBORDINATED CONVERTIBLE DEBENTURES WILL BE AUTOMATICALLY
SEPARATED UPON THE EARLIEST TO OCCUR OF (i) SIX MONTHS AFTER APRIL 8,
1998, (ii) THE COMMENCEMENT OF AN EXCHANGE OFFER WITH RESPECT TO THE NOTES
(iii) THE EFFECTIVENESS OF A SHELF REGISTRATION STATEMENT WITH RESPECT TO
RESALE OF THE NOTES OR (iv) THE COMMENCEMENT OF AN OFFER TO REPURCHASE THE
NOTES PURSUANT TO THE INDENTURE. THE DEBENTURES EVIDENCED BY THIS
CERTIFICATE MAY NOT BE TRANSFERRED OR EXCHANGED SEPARATELY FROM, BUT MAY
BE TRANSFERRED OR EXCHANGED ONLY TOGETHER WITH, THE NOTES.
<PAGE>
18
SECTION 2.03. Execution, Authentication and Denominations. Subject
to Article Four, the aggregate principal amount of Debentures which may be
authenticated and delivered under this Indenture is unlimited. The Debentures
shall be executed by two Officers of the Company, by facsimile or manual
signature, in the name and on behalf of the Company.
If an Officer whose signature is on an Indenture no longer holds
that office at the time the Trustee or authenticating agent authenticates the
Debenture, the Debenture shall be valid nevertheless.
A Debenture shall not be valid until the Trustee or authenticating
agent manually signs the certificate of authentication on the Debenture. The
signature shall be conclusive evidence that the Debenture has been authenticated
under this Indenture.
At any time and from time to time after the execution of this
Indenture, the Trustee or an authenticating agent shall, upon receipt of a
Company Order, authenticate for original issue Debentures in the aggregate
principal amount specified in such Company Order. Such Company Order shall
specify the amount of Debentures to be authenticated, the date on which the
issue of Debentures is to be authenticated and in case of an issuance of
Debentures pursuant to Section 2.15, shall certify that such issuance is in
compliance with this Indenture.
The Trustee may appoint an authenticating agent reasonably
acceptable to the Company to authenticate Debentures. Unless limited by the
terms of such appointment, an authenticating agent may authenticate Debentures
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 or an Affiliate of the Company.
The Debentures shall be issuable in registered form without coupons
in the case of the DTC Global and the Certificated Debentures, and in bearer
form, without coupons, in the case of the DBC Global and, in each case, only in
denominations of DM 1,000 in principal amount and any integral multiple of DM
1,000 in excess thereof.
SECTION 2.04. Registrar and Paying Agent. The Company shall maintain
an office or agency in New York City where Debentures may be presented for
registration of transfer or for exchange (the "Registrar"), an office or agency
in New York City and in Frankfurt am Main, Germany where Debentures may be
presented for payment (collectively, the "Paying Agent") and an office or agency
where notices and demands to or upon the Company in respect of the Debentures
and this Indenture may be served, which shall be in the City of New York. The
Company shall cause the Registrar to keep a register of the Debentures and of
their transfer and exchange (the "Debenture Register"). The Company may have one
or more co-Registrars and one or more additional Paying Agents.
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19
The Company shall enter into an appropriate agency agreement with
any Agent not a party to this Indenture. The agreement shall implement the
provisions of this Indenture that relate to such Agent. The Company shall give
prompt written notice to the Trustee of the name and address of any such Agent
and any change in the address of such Agent. If the Company fails to maintain a
Registrar, Paying Agent and/or agent for service of notices and demands, the
Trustee shall act as such Registrar, Paying Agent and/or agent for service of
notices and demands for so long as such failure shall continue. The Company may
remove any Agent upon written notice to such Agent and the Trustee; provided
that no such removal shall become effective until (i) the acceptance of an
appointment by a successor Agent to such Agent as evidenced by an appropriate
agency agreement entered into by the Company and such successor Agent and
delivered to the Trustee or (ii) notification to the Trustee that the Trustee
shall serve as such Agent until the appointment of a successor Agent in
accordance with clause (i) of this proviso. The Company, any Subsidiary of the
Company, or any Affiliate of any of them may act as Paying Agent, Registrar or
co-Registrar, and/or agent for service of notice and demands; provided, however,
that neither the Company, a Subsidiary of the Company nor an Affiliate of any of
them shall act as Paying Agent in connection with the defeasance of the
Debentures or the discharge of this Indenture under Article Eight.
The Company initially appoints the Trustee as Registrar, U.S. Paying
Agent, authenticating agent and agent for service of notice and demands. The
Company also appoints Deutsche Bank as German Paying Agent. If, at any time, the
Trustee is not the Registrar, the Registrar shall make available to the Trustee
or German Paying Agent, as the case may be, on or before each Interest Payment
Date and at such other times as the Trustee may reasonably request, the names
and addresses of the Holders as they appear in the Debenture Register.
SECTION 2.05. Paying Agent to Hold Money in Trust. Not later than
3:00 p.m. (Frankfurt time) on the Business Day immediately preceding each due
date of the principal, premium, if any, or interest on any Debentures, except
with respect to interest to be paid by the issuance of additional Debentures,
the Company shall deposit with the Paying Agent money in immediately available
funds sufficient to pay such principal, premium, if any, or interest so becoming
due. The Paying Agent shall compensate the Company for the overnight use of such
funds at the overnight interbank interest rate which can be reasonably obtained
for overnight investment of such funds; provided always that, if any due date
shall not be a Business Day, the Issuer shall make such transfer to the account
of the Bank on the next succeeding Business Day preceding the due date for such
payment. The Company shall require each Paying Agent, if any, other than the
Trustee to agree in writing that such Paying Agent shall hold in trust for the
benefit of the Holders or the Trustee all money held by the Paying Agent for the
payment of principal of, premium, if any, or interest on the Debentures (whether
such money has been paid to it by the Company or any other obligor on the
Debentures), and that such Paying Agent shall promptly notify the Trustee of any
default by the Company (or any other obligor on the Debentures) in making any
such payment. The Company at any time may require a Paying
<PAGE>
20
Agent to pay all money held by it to the Trustee and account for any funds
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
pay all money held by it to the Trustee and to account for any funds disbursed.
Upon doing so, the Paying Agent shall have no further liability for the money so
paid over to the Trustee. If the Company or any Subsidiary of the Company or any
Affiliate of any of them acts as Paying Agent, it will, on or before each due
date of any principal of, premium, if any, or interest on the Debentures,
segregate and hold in a separate trust fund for the benefit of the Holders a sum
of money sufficient to pay such principal, premium, if any, or interest so
becoming due until such sum of money shall be paid to such Holders or otherwise
disposed of as provided in this Indenture, and will promptly notify the Trustee
of its action or failure to act as required by this Section 2.05.
SECTION 2.06. Transfer and Exchange. The Debentures are issuable in
registered form in the case of DTC Global and the Certificated Debentures and in
bearer form in the case of the DBC Global. A Holder may transfer a Debenture by
written application to the Registrar stating the name of the proposed transferee
and otherwise complying with the terms of this Indenture. No such transfer shall
be effected until, and such transferee shall succeed to the rights of a Holder
only upon registration of the transfer by the Registrar in the Debenture
Register. Prior to the registration of any transfer by a Holder as provided
herein, the Company, the Trustee, and any agent of the Company or the Trustee
shall treat the Person in whose name the Debenture is registered as the owner
thereof for all purposes whether or not the Debenture shall be overdue, and
neither the Company, the Trustee, nor any such agent shall be affected by notice
to the contrary. Furthermore, any Holder of a Global Debenture shall, by
acceptance of such Global Debenture, agree that transfers of beneficial
interests in such Global Debenture may be effected only through a book-entry
system maintained by the Depository (or its agent), and that ownership of a
beneficial interest in the Debenture shall be required to be reflected in a book
entry. When Debentures are presented to the Registrar or a co-Registrar with a
request to register the transfer or to exchange them for an equal principal
amount of Debentures of other authorized denominations, the Registrar shall
register the transfer or make the exchange as requested if its requirements for
such transactions are met. To permit registrations of transfers and exchanges in
accordance with the terms, conditions and restrictions hereof, the Company shall
execute and the Trustee shall authenticate Debentures at the Registrar's
request. No service charge shall be made to any Holder for any registration of
transfer or exchange or redemption of the Debentures, but the Company may
require payment of a sum sufficient to cover any transfer tax or similar
governmental charge payable in connection therewith (other than any such
transfer taxes or other similar governmental charge payable upon transfers,
exchanges or redemptions pursuant to Section 2.11, 3.08, 6.04 or 9.04).
The Registrar shall not be required (i) to issue, register the
transfer of or exchange any Debenture during a period beginning at the opening
of business 15 days before the day of the mailing of a notice of redemption of
Debentures selected for redemption under Section 3.03 or
<PAGE>
21
Section 3.08 and ending at the close of business on the day of such mailing, or
(ii) to register the transfer of or exchange any Debenture so selected for
redemption in whole or in part, except the unredeemed portion of any Debenture
being redeemed in part.
SECTION 2.07. Book-Entry Provisions for Global Debentures. (a) Each
DTC Global shall (i) be registered in the name of the Depository for such Global
Debenture or the nominee of such Depository, (ii) be delivered to the Trustee as
custodian for such Depository and (iii) bear legends as set forth in Section
2.02 hereof. Each DBC Global initially shall (i) be issued in the form of a
single temporary certificate in bearer form, (ii) be deposited with DBC and
(iii) bear legends as set forth in Section 2.02 hereof.
Members of, or Participants in, the Depository ("Agent Members")
shall have no rights under this Indenture with respect to any Global Debenture
held on their behalf by the Depository, or the Trustee as its custodian, or
under any Global Debenture, and the Depository may be treated by the Company,
the Trustee and any agent of the Company or the Trustee as the absolute owner of
such Global Debenture 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 the Depository or impair, as between
the Depository and its Agent Members, the operation of customary practices
governing the exercise of the rights of a beneficial owner of any Debenture.
(b) Transfers of a Global Debenture shall be limited to transfers of
such Global Debenture in whole, but not in part, to the Depository, its
successors or their respective nominees. Transfers of interests in one Global
Debenture to parties who will hold the interests through the same Global
Debenture will be effected in the ordinary way in accordance with the respective
rules and operating procedures of the DBC, DTC, Euroclear or Cedel Bank, as the
case may be, and the provisions of Section 2.08 hereof. In addition, U.S.
Certificated Debentures shall be transferred to all beneficial owners in
exchange for their beneficial interests in a DTC Global if (i) the Depository
notifies the Company that it is unwilling or unable to continue as Depository
for the DTC Global, and a successor depositary is not appointed by the Company
within 90 days of such notice or (ii) an Event of Default has occurred and is
continuing and the Registrar has received a request to the foregoing effect from
the Depository or the Trustee. In addition, Regulation S Certificated Debentures
shall be transferred to all beneficial owners in exchange for their beneficial
interests in a DBC Global, if (i) DBC notifies the Company that it is unwilling
or unable to continue as Depository for the DBC Global or (ii) if at any time
DBC shall no longer be eligible to serve as depository and a successor
depository for the DBC Global is not appointed by the Company within 90 days
after the Company receives such notice or becomes aware of such ineligibility.
<PAGE>
22
(c) Any beneficial interest in one of the Global Debentures that is
transferred to a Person who takes delivery in the form of an interest in the
other Global Debenture will, upon transfer, cease to be an interest in such
Global Debenture and become an interest in the other Global Debenture and,
accordingly, will thereafter be subject to all transfer restrictions, if any,
and other procedures applicable to beneficial interests in such other Global
Debenture for as long as it remains such an interest.
(d) In connection with any transfer pursuant to paragraph (b) of
this Section of a portion of the beneficial interests in a DTC Global or DBC
Global to beneficial owners who are required to hold Certificated Debentures,
the Registrar shall reflect on its books and records the date and a decrease in
the principal amount of such DTC Global or DBC Global, as the case may be, in an
amount equal to the principal amount of the beneficial interest in such DTC
Global or DBC Global to be transferred, and the Company shall execute, and the
Trustee shall authenticate and deliver, one or more U.S. Certificated Debentures
or Regulation S Certificated Debentures, as the case may be, of like tenor and
amount.
(e) In connection with the transfer of all the beneficial interests
in a DTC Global or DBC Global to beneficial owners pursuant to paragraph (b) of
this Section, the DTC Global or DBC Global, as the case may be, shall be deemed
to be surrendered to the Trustee for cancellation, and the Company shall
execute, and the Trustee shall authenticate and deliver, to each beneficial
owner identified by the Depository in exchange for its beneficial interest in
the DTC Global or DBC Global, as the case may be, an equal aggregate principal
amount of U.S. Certificated Debentures or Regulation S Certificated Debentures,
as the case may be, of authorized denominations.
(f) Any U.S. Certificated Debenture delivered in exchange for an
interest in a DTC Global pursuant to paragraph (b), (d) or (e) of this Section
shall, except as otherwise provided by paragraphs (f)(i)(x) and (d) of Section
2.08 hereof, bear the legend regarding transfer restrictions applicable to the
U.S. Certificated Debenture set forth in Section 2.02.
(g) Any Regulation S Certificated Debenture delivered in exchange
for an interest in a DBC Global pursuant to paragraph (b), (d) or (e) of this
Section shall, except as otherwise provided by paragraphs (f)(i)(x) and (d) of
Section 2.08 hereof, bear the legend regarding transfer restrictions applicable
to the Regulation S Certificated Debenture set forth in Section 2.02 hereof.
(h) The registered holder of a Global Debenture may grant proxies
and otherwise authorize any Person, including 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 Debentures.
<PAGE>
23
(i) QIBs that are beneficial owners of interests in a Global
Debenture may receive Certificated Debentures (which shall bear the Private
Placement Legend if required by Section 2.02) in accordance with the procedures
of the Depository. In connection with the execution, authentication and delivery
of such Certificated Debentures, the Registrar shall reflect on its books and
records a decrease in the principal amount of the relevant Global Debenture
equal to the principal amount of such Certificated Debentures and the Company
shall execute and the Trustee shall authenticate and deliver one or more
Certificated Debentures having an equal aggregate principal amount.
(j) All Debentures issued upon any transfer or exchange of
Debentures shall be valid obligations of the Company, evidencing the same debt,
and entitled to the same benefits under this Indenture, as the Debentures
surrendered upon such transfer or exchange.
SECTION 2.08. Special Transfer Provisions. (a) Transfers to QIBs.
The following provisions shall apply with respect to the registration of any
proposed transfer of a U.S. Certificated Debenture or an interest in a DTC
Global to a QIB (excluding Non-U.S. Persons):
(i) If the Debenture to be transferred consists of (x) U.S.
Certificated Debentures, the Registrar shall register the transfer if such
transfer is being made by a proposed transferor who has checked the box
provided for on the form of Debenture stating, or has otherwise advised
the Company and the Registrar in writing, that the sale has been made in
compliance with the provisions of Rule 144A to a transferee who has signed
the certification provided for on the form of Debenture stating, or has
otherwise advised the Company and the Registrar in writing, that it is
purchasing the Debenture for its own account or an account with respect to
which it exercises sole investment discretion and that it and any such
account is a QIB within the meaning of Rule 144A, and is aware that the
sale to it is being made in reliance on Rule 144A and acknowledges that it
has received such information regarding the Company as it has requested
pursuant to Rule 144A or has determined not to request such information
and that it is aware that the transferor is relying upon its foregoing
representations in order to claim the exemption from registration provided
by Rule 144A or (y) an interest in a DTC Global, the transfer of such
interest may be effected only through the book entry system maintained by
the Depository.
(ii) If the proposed transferee is an Agent Member, and the
Debenture to be transferred consists of U.S. Certificated Debentures, upon
receipt by the Registrar of the documents referred to in clause (i) and
instructions given in accordance with the Depository's and the Registrar's
procedures, the Registrar shall reflect on its books and records the date
and an increase in the principal amount of such DTC Global in an
<PAGE>
24
amount equal to the principal amount of the U.S. Certificated Debentures
to be transferred, and the Trustee shall cancel the Certificated Debenture
so transferred.
(b) Transfers of Interests in DBC Global or Regulation S
Certificated Debentures to U.S. Persons. The following provisions shall apply
with respect to any transfer of interests in a DBC Global or Regulation S
Certificated Debentures to U.S. Persons:
(i) prior to the removal of the Private Placement Legend from a DBC
Global or a Regulation S Certificated Debenture pursuant to Section 2.02,
the Registrar shall refuse to register such transfer; and
(ii) after such removal, the Registrar shall register the transfer
of any such Debenture without requiring any additional certification.
(c) Transfers to Non-U.S. Persons at Any Time. The following
provisions shall apply with respect to any transfer of a Debenture to a Non-U.S.
Person:
(i) The Registrar shall register any proposed transfer to any
Non-U.S. Person if the Debenture to be transferred is a U.S. Certificated
Debenture or an interest in a DTC Global only upon receipt of a
certificate substantially in the form of Exhibit E from the proposed
transferor.
(ii) (a) If the proposed transferor is an Agent Member holding a
beneficial interest in a DTC Global, upon receipt by the Registrar of (x)
the documents required by paragraph (i) and (y) instructions in accordance
with the Depository's and the Registrar's procedures, the Registrar shall
reflect on its books and records the date and a decrease in the principal
amount of such DTC Global in an amount equal to the principal amount of
the beneficial interest in the DTC Global to be transferred, and (b) if
the proposed transferee is an Agent Member, upon receipt by the Registrar
of instructions given in accordance with the Depository's and the
Registrar's procedures, the Registrar shall reflect on its books and
records the date and an increase in the principal amount of such DBC
Global in an amount equal to the principal amount of the U.S. Certificated
Debentures or the DTC Global, as the case may be, to be transferred, and
the Trustee shall cancel the Certificated Debenture, if any, so
transferred or decrease the amount of the DTC Global.
(d) Private Placement Legend. Upon the registration of transfer,
exchange or replacement of Debentures not bearing the Private Placement Legend,
the Registrar shall deliver Debentures that do not bear the Private Placement
Legend. Upon the registration of transfer, exchange or replacement of Debentures
bearing the Private Placement Legend, the Registrar shall deliver only
Debentures that bear the Private Placement Legend unless either (i) the Private
<PAGE>
25
Placement Legend is no longer required by Section 2.02 or (ii) there is
delivered to the Registrar an Opinion of Counsel reasonably satisfactory to the
Company and the Trustee to the effect that neither such legend nor the related
restrictions on transfer are required in order to maintain compliance with the
provisions of the Securities Act.
(e) General. By its acceptance of any Debenture bearing the Private
Placement Legend, each Holder of such a Debenture acknowledges the restrictions
on transfer of such Debenture set forth in this Indenture and in the Private
Placement Legend and agrees that it will transfer such Debenture only as
provided in this Indenture. The Registrar shall not register a transfer of any
Debenture unless such transfer complies with the restrictions on transfer of
such Debenture set forth in this Indenture. In connection with any transfer of
Debentures to an Institutional Accredited Investor, each Holder agrees by its
acceptance of the Debentures to furnish the Registrar or the Company such
certifications, legal opinions or other information as either of them may
reasonably require to confirm that such transfer is being made pursuant to an
exemption from, or a transaction not subject to, the registration requirements
of the Securities Act; provided that the Registrar shall not be required to
determine (but may rely on a determination made by the Company with respect to)
the sufficiency of any such certifications, legal opinions or other information.
(f) Transfers to Non-QIB Institutional Accredited Investors. The
following provisions shall apply with respect to the registration of any
proposed transfer of a Debenture to any Institutional Accredited Investor which
is not a QIB (excluding Non-U.S. Persons):
(i) The Registrar shall register the transfer of any Debenture,
whether or not such Debenture bears the Private Placement Legend, if (x)
the requested transfer is after the time period referred to in Rule 144(k)
under the Securities Act as in effect with respect to such transfer or (y)
the proposed transferee has delivered to the Registrar (A) a certificate
substantially in the form of Exhibit F hereto and (B) if the aggregate
principal amount of the Debentures being transferred is less than $500,000
at the time of such transfer, an Opinion of Counsel acceptable to the
Company that such transfer is in compliance with the Securities Act.
(ii) If the proposed transferor is an Agent Member holding a
beneficial interest in a DTC Global, upon receipt by the Registrar and the
Company of (x) the documents, if any, required by paragraph (i) and (y)
instructions given in accordance with the Depository's and the Registrar's
procedures, the Registrar shall reflect on its books and records the date
and a decrease in the principal amount of such DTC Global in an amount
equal to the principal amount of the beneficial interest in the DTC Global
to be transferred, and the Company shall execute, and the Trustee shall
authenticate and deliver, one or more U.S. Certificated Debentures of like
tenor and amount.
<PAGE>
26
The Registrar shall retain, in accordance with its customary
procedures, copies of all letters, notices and other written communications
received pursuant to Section 2.07 or this Section 2.08. 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.
SECTION 2.09. Replacement Debentures. If a mutilated Debenture is
surrendered to the Trustee or if the Holder claims that the Debenture has been
lost, destroyed or wrongfully taken, the Company shall issue and the Trustee
shall authenticate a replacement Debenture of like tenor and principal amount
and bearing a number not contemporaneously outstanding; provided that the
requirements of the second paragraph of Section 2.10 are met. If required by the
Trustee or the Company, an indemnity bond must be furnished that is sufficient
in the judgment of both the Trustee and the Company to protect the Company, the
Trustee or any Agent from any loss that any of them may suffer if a Debenture is
replaced. The Company may charge such Holder for its expenses and the expenses
of the Trustee in replacing a Debenture. In case any such mutilated, lost,
destroyed or wrongfully taken Debenture has become or is about to become due and
payable, the Company in its discretion may pay such Debenture instead of issuing
a new Debenture in replacement thereof.
Every replacement Debenture is an additional obligation of the
Company and shall be entitled to the benefits of this Indenture.
SECTION 2.10. Outstanding Debentures. Debentures outstanding at any
time are all Debentures that have been authenticated by the Trustee except for
those cancelled by it, those delivered to it for cancellation and those
described in this Section 2.10 as not outstanding.
If a Debenture is replaced pursuant to Section 2.09, it ceases to be
outstanding unless and until the Trustee and the Company receive proof
reasonably satisfactory to them that the replaced Debenture is held by a bona
fide purchaser.
If the Paying Agent (other than the Company or an Affiliate of the
Company) holds on the maturity date or a redemption date money in such coin or
currency of the Federal Republic of Germany as at the time of payment shall be
legal tender for the payment of public and private debts sufficient to pay all
principal, premium, if any, and interest payable on that date with respect to
the Debentures (or portions thereof) to be redeemed or payable on that date,
then on and after that date such Debentures cease to be outstanding and interest
on them shall cease to accrue.
A Debenture does not cease to be outstanding because the Company or
one of its Affiliates holds such Debenture; provided, however, that, in
determining whether the Holders of the requisite principal amount of the
outstanding Debentures have given any request, demand,
<PAGE>
27
authorization, direction, notice, consent or waiver hereunder, Debentures owned
by the Company or any other obligor upon the Debentures or any Affiliate of the
Company or of such other obligor shall be disregarded and deemed not to be
outstanding, except that, in determining whether the Trustee shall be protected
in relying upon any such request, demand, authorization, direction, notice,
consent or waiver, only Debentures which a Responsible Officer of the Trustee
knows to be so owned shall be so disregarded. Debentures so owned which have
been pledged in good faith may be regarded as outstanding if the pledgee
establishes to the satisfaction of the Trustee the pledgee's right so to act
with respect to such Debentures and that the pledgee is not the Company or any
other obligor upon the Debentures or any Affiliate of the Company or of such
other obligor.
SECTION 2.11. Temporary Debentures. Until definitive Debentures are
ready for delivery, the Company may prepare and the Trustee shall authenticate
temporary Debentures. Temporary Debentures shall be substantially in the form of
definitive Debentures but may have insertions, substitutions, omissions and
other variations determined to be appropriate by the Officers executing the
temporary Debentures, as evidenced by their execution of such temporary
Debentures. If temporary Debentures are issued, the Company will cause
definitive Debentures to be prepared without unreasonable delay. After the
preparation of definitive Debentures, the temporary Debentures shall be
exchangeable for definitive Debentures upon surrender of the temporary
Debentures at the office or agency of the Company designated for such purpose
pursuant to Section 6.03, without charge to the Holder. Upon surrender for
cancellation of any one or more temporary Debentures the Company shall execute
and the Trustee shall authenticate and deliver in exchange therefor a like
principal amount of definitive Debentures of authorized denominations. Until so
exchanged, the temporary Debentures shall be entitled to the same benefits under
this Indenture as definitive Debentures.
SECTION 2.12. Cancellation. The Company at any time may deliver to
the Trustee for cancellation any Debentures previously authenticated and
delivered hereunder which the Company may have acquired in any manner
whatsoever, and may deliver to the Trustee for cancellation any Debentures
previously authenticated hereunder which the Company has not issued and sold.
The Registrar and the Paying Agent shall forward to the Trustee any Debentures
surrendered to them for registration of transfer, exchange, purchase or payment.
The Trustee shall cancel all Debentures surrendered for registration of
transfer, exchange, purchase, payment or cancellation and shall return all such
Debentures to the Company. The Company shall not issue Debentures to replace
Debentures it has paid in full or delivered to the Trustee for cancellation.
SECTION 2.13. CUSIP Numbers. The Company in issuing the Debentures
may use a "CUSIP", "CINS", "ISIN" or any other applicable identification number
(if then generally in use), and the Trustee shall use CUSIP, CINS, ISIN or other
identification number, as the case may be, in notices of redemption or exchange
as a convenience to Holders; provided that any
<PAGE>
28
such notice shall state that no representation is made as to the correctness of
such numbers either as printed on the Debentures or as contained in any notice
of redemption or exchange and that reliance may be placed only on the other
identification numbers printed on the Debentures. The Company shall promptly
advise the Trustee of any change in the CUSIP numbers.
SECTION 2.14. Defaulted Interest. (a) If the Company defaults in a
payment of interest on the Debentures, it shall pay, or shall deposit with the
Paying Agent money in such coin or currency of the Federal Republic of Germany
as at the time of payment shall be legal tender for the payment of public and
private debts in immediately available funds sufficient to pay, the defaulted
interest, plus (to the extent lawful) interest on the defaulted interest, to the
Persons who are Holders on a subsequent special record date. A special record
date, as used in this Section 2.14 with respect to the payment of any defaulted
interest, shall mean the 15th day next preceding the date fixed by the Company
for the payment of defaulted interest, whether or not such day is a Business
Day. At least 15 days before the subsequent special record date, the Company
shall mail to each Holder and to the Trustee a notice that states the subsequent
special record date, the payment date and the amount of defaulted interest to be
paid.
(b) (i) If and whenever the Company fails to pay any interest on the
Debentures within 15 days of the applicable Interest Payment Date, the holders
of Debentures shall become entitled to the right to elect directors, without the
requirement of any additional action by the Board of Directors or stockholders
of the Company, and upon such event, the number of directors constituting the
Board of Directors shall automatically be increased by two and the holders of
Debentures (voting together as a class pro rata based on liquidation preference
in the case of preferred stock and principal amount in the case of the
Debentures with the holders of Series A Preferred and any series of authorized
preferred stock of the Corporation ranking on a parity with the Series A
Preferred either as to dividends or upon liquidation and upon which like voting
rights have been conferred and are exercisable and which are then so entitled to
vote) shall be entitled to elect the directors to fill the resulting vacancies
on the Board of Directors of the Corporation (the "Additional Directors"). Such
right to vote to elect directors shall, when vested, continue with respect to
the Debentures until all dividends in default on all Debentures shall have been
paid in full and, when so paid, such right to so elect directors shall cease,
subject to the same provisions for the vesting of such right to elect directors
in the case of future dividend defaults.
(ii) Whenever such voting rights shall have vested, such right may
be exercised initially either at a special meeting called as herein provided or
at any annual meeting of stockholders held for the purpose of electing such
Additional Directors.
(iii) At any time when the voting right granted by Section
2.14(b)(i) shall have vested in the holders of Debentures, and if such right
shall not already have been initially exercised, an officer of the Company
shall, upon written request of holders of record of 20% in
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29
the aggregate principal amount of such Debentures then outstanding, addressed to
the President and Chief Executive Officer of the Company, call a special
meeting. Such meeting shall be held at the earliest practicable date upon the
notice required for special meetings of stockholders at the place for holding
annual meetings to stockholders of the Company or, if none, at a place
designated by the President and Chief Executive Officer of the Company. If such
meeting shall not be called by the proper officers of the Company within 30 days
after such written request is mailed to the President and Chief Executive
Officer of the Company, by registered mail, addressed to the President and Chief
Executive Officer of the Company at its principal office (such mailing to be
evidenced by the registry receipt issued by the postal authorities), then the
holders of record of 20% in the aggregate principal amount of the Debentures
then outstanding may, subject to any applicable legal requirements, designate in
writing any person to call such meeting at the expense of the Company, and such
meeting may be called by such person so designated upon the notice required for
special meetings of stockholders and shall be held at the same place as is
elsewhere provided in this Section 2.14(b)(i). Any holder of Debentures then
outstanding that would be entitled to vote at such meeting shall have access to
the stock record books of the Company for the purpose of causing a meeting of
stockholders to be called pursuant to the provisions of this Section 2.14(b)(i).
Notwithstanding the provisions of this Section 2.14(b)(i), however, no such
special meeting shall be called or held during a period within 30 days
immediately preceding the date fixed for the next annual meeting of
stockholders.
(iv) The Additional Directors elected pursuant to this Section
2.14(b) shall serve until the next annual meeting or until their respective
successors shall be elected and shall qualify. Any Additional Director may be
removed by, and shall not be removed otherwise than by, the majority vote of
such holders who were entitled to participate in such election of directors,
voting as a special class (pro rata based on liquidation preference in the case
of preferred stock and principal amount in the case of the Debentures), at a
meeting called for such purpose or by written consent as permitted by law and
the Certificate of Incorporation and By-laws of the Company. So long as a
default shall continue, any vacancy in the office of an Additional Director,
other than one resulting from the removal of such director, may be filled by the
remaining Additional Director and such replacement director shall hold office
for the unexpired term of the replaced director. In the case of the removal of
an Additional Director, or if there shall be no remaining Additional Director,
the vacancy may be filled by the majority vote of securities then entitled to
vote (with the number of votes to be determined based on liquidation preferences
in the case of preferred stock and principal amount in the case of the
Debentures). Upon any termination of right of holders to vote for directors as
herein provided, the term of office of the Additional Directors then in office
elected by such holders, voting as a class, shall terminate immediately.
Whenever the terms of office of Additional Directors shall so terminate, the
number of directors shall be such as may be provided for pursuant to the
Certificate of Incorporation or By-laws of the Company irrespective of any
increase made pursuant to the provisions of Section 2.14(b)(i) above.
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30
(v) So long as any shares of Debentures are outstanding, the By-laws
shall contain no provisions that would restrict the exercise, by the holders of
Debentures, of the right to elect directors under the circumstances provided in
Section 2.14(b)(i) above.
SECTION 2.15. Issuance of Additional Debentures. The Company may,
subject to Article Four of this Indenture, issue additional Debentures under
this Indenture. The Debentures issued on the Closing Date and any additional
Debentures subsequently issued shall be treated as a single class for all
purposes under this Indenture.
ARTICLE THREE
REDEMPTION
SECTION 3.01. Right of Redemption. The Debentures may be redeemed at
the election of the Company, in whole or in part, at any time and from time to
time on or after April 15, 2003 and prior to maturity, upon not less than 30 nor
more than 60 days' prior notice mailed by first-class mail to each Holder's last
address as it appears in the Debenture Register, at the following Redemption
Prices (expressed in percentages of their principal amount), plus accrued and
unpaid interest, if any, to the Redemption Date (subject to the right of Holders
of record on the relevant Regular Record Date that is on or prior to the
Redemption Date to receive interest due on an Interest Payment Date that is on
or prior to the Redemption Date) if redeemed during the 12-month period
commencing on April 15 of the applicable year set forth below:
Year Redemption Price
---- ----------------
2003.................................................. 105.000%
2004.................................................. 103.333
2005.................................................. 101.667
2006 and thereafter................................... 100.000
SECTION 3.02. Notices to Trustee. If the Company elects to redeem
Debentures pursuant to Section 3.01, it shall notify the Trustee in writing of
the Redemption Date and the principal amount of Debentures to be redeemed.
The Company shall give each notice provided for in this Section 3.02
in an Officers' Certificate at least 45 days before the Redemption Date (unless
a shorter period shall be satisfactory to the Trustee).
SECTION 3.03. Selection of Debentures to Be Redeemed. If less than
all of the Debentures are to be redeemed at any time, the Trustee shall select
the Debentures to be
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31
redeemed in compliance with the requirements of the principal national
securities exchange, if any, on which the Debentures are listed or if the
Debentures are not listed on a national securities exchange, by lot or by such
other method as the Trustee in its sole discretion shall deem to be fair and
appropriate; provided that no Debentures of DM 1,000 in principal amount or less
shall be redeemed in part.
The Trustee shall make the selection from the Debentures outstanding
and not previously called for redemption. Debentures in denominations of DM
1,000 in principal amount may only be redeemed in whole. The Trustee may select
for redemption portions (equal to DM 1,000 in principal amount or any integral
multiple thereof) of Debentures that have denominations larger than DM 1,000 in
principal amount. Provisions of this Indenture that apply to Debentures called
for redemption also apply to portions of Debentures called for redemption. The
Trustee shall notify the Company and the Registrar promptly in writing of the
Debentures or portions of Debentures to be called for redemption.
SECTION 3.04. Notice of Redemption. With respect to any redemption
of Debentures pursuant to Section 3.01, at least 30 days but not more than 60
days before a Redemption Date, the Company, or at the Company's request, the
Trustee shall mail a notice of redemption by first class mail to each Holder
whose Debentures are to be redeemed.
The notice shall identify the Debentures to be redeemed and shall
state:
(i) the Redemption Date;
(ii) the Redemption Price;
(iii) the Conversion Price;
(iv) the name and address of the Paying Agent;
(v) that Debentures called for redemption must be surrendered to the
Paying Agent in order to collect the Redemption Price;
(vi) that Debentures called for redemption may be converted at any
time before the closing of business on the day preceding the Redemption
Date, in accordance with Article 5;
(vii) that, unless the Company defaults in making the redemption
payment, interest on Debentures (or portions thereof) called for
redemption ceases to accrue on and after the Redemption Date and the only
remaining right of the Holders is to receive
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32
payment of the Redemption Price plus accrued interest to the Redemption
Date upon surrender of the Debentures to the Paying Agent;
(viii) that, if any Debenture is being redeemed in part, the portion
of the principal amount (equal to DM $1,000 in principal amount or any
integral multiple thereof) of such Debenture to be redeemed and that, on
and after the Redemption Date, upon surrender of such Debenture, a new
Debenture or Debentures in principal amount equal to the unredeemed
portion thereof will be reissued; and
(ix) that, if any Debenture contains a CUSIP number as provided in
Section 2.13, no representation is being made as to the correctness of the
CUSIP number either as printed on the Debentures or as contained in the
notice of redemption.
At the Company's request (which request may be revoked by the
Company at any time prior to the time at which the Trustee shall have given such
notice to the Holders), made in writing to the Trustee at least 45 days (or such
shorter period as shall be satisfactory to the Trustee) before a Redemption
Date, the Trustee shall give the notice of redemption in the name and at the
expense of the Company. If, however, the Company gives such notice to the
Holders, the Company shall concurrently deliver to the Trustee a copy of such
notice of redemption.
SECTION 3.05. Effect of Notice of Redemption. Once notice of
redemption is mailed, Debentures called for redemption become due and payable on
the Redemption Date and at the Redemption Price. Upon surrender of any
Debentures to the Paying Agent, such Debentures shall be paid at the Redemption
Price, plus accrued interest, if any, to the Redemption Date. Notice of
redemption shall be deemed to be given when mailed, whether or not the Holder
receives the notice. In any event, failure to give such notice, or any defect
therein, shall not affect the validity of the proceedings for the redemption of
Debentures held by Holders to whom such notice was properly given.
SECTION 3.06. Deposit of Redemption Price. On or prior to any
Redemption Date, the Company shall deposit with the Paying Agent (or, if the
Company, one of its Subsidiaries or any of their Affiliates is acting as Paying
Agent, shall segregate and hold in trust as provided in Section 2.05) money, in
such coin or currency of the Federal Republic of Germany as at the time of
payment shall be legal tender for the payment of public and private debts,
sufficient to pay the Redemption Price of and accrued interest on all Debentures
to be redeemed on that date other than Debentures or portions thereof called for
redemption on that date that have been delivered by the Company to the Trustee
for cancellation.
SECTION 3.07. Payment of Debentures Called for Redemption. If notice
of redemption has been given in the manner provided above, the Debentures or
portion of Debentures specified in such notice to be redeemed shall become due
and payable on the
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33
Redemption Date at the Redemption Price stated therein, together with accrued
interest to such Redemption Date, and on and after such date (unless the Company
shall default in the payment of such Debentures at the Redemption Price and
accrued interest to the Redemption Date, in which case the principal, until
paid, shall bear interest from the Redemption Date at the rate prescribed in the
Debentures), such Debentures shall cease to accrue interest. Upon surrender of
any Debenture for redemption in accordance with a notice of redemption, such
Debenture shall be paid and redeemed by the Company at the Redemption Price,
together with accrued interest, if any, to the Redemption Date; provided that
installments of interest whose Stated Maturity is on or prior to the Redemption
Date shall be payable to the Holders registered as such at the close of business
on the relevant Regular Record Date.
SECTION 3.08. Debentures Redeemed in Part. Upon surrender of any
Debenture that is redeemed in part, the Company shall execute and the Trustee
shall authenticate and deliver to the Holder a new Debenture equal in principal
amount to the unredeemed portion of such surrendered Debenture.
ARTICLE FOUR
SUBORDINATION OF DEBENTURES
SECTION 4.01. Debentures Subordinated to Senior Indebtedness. The
Company and the Trustee each covenants and agrees, and each Holder, by its
acceptance of a Debenture, likewise covenants and agrees that all Debentures
shall be issued subject to the provisions of this Article Four; and each Person
holding any Debentures, whether upon original issue or upon transfer, assignment
or exchange thereof, accepts and agrees that Subordinated Obligations shall, to
the extent and in the manner set forth in this Article Four, be subordinated in
right of payment to the prior payment in full, in cash or cash equivalents, of
all existing and future Senior Indebtedness, including, without limitation, the
Company's obligations under the 1998 Notes (including any interest accruing
subsequent to an event specified in Sections 7.01(b) and 7.01(c) of this
Indenture, whether or not such interest is an allowed claim enforceable against
the debtor under the United States Bankruptcy Code).
SECTION 4.02. No Payment on Debentures in Certain Circumstances. (a)
No direct or indirect payment by or on behalf of the Company of Subordinated
Obligations (other than with the money, securities or proceeds held under any
defeasance trust established in accordance with this Indenture), whether
pursuant to the terms of the Debenture or upon acceleration or otherwise shall
be made if, at the time of such payment, there exists a default in the payment
of all or any portion of the obligations on any Senior Indebtedness of the
Company and such default shall not have been cured or waived or the benefits of
this sentence waived by or on behalf of the holders of such Senior Indebtedness.
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34
(b) During the continuance of any other event of default with
respect to any Designated Senior Indebtedness pursuant to which the maturity
thereof may be accelerated, upon receipt by the Trustee of written notice from
the trustee or other representative for the holders of such Designated Senior
Indebtedness (or the holders of at least a majority in principal amount of such
Designated Senior Indebtedness then outstanding), no payment of Subordinated
Obligations (other than with the money, securities or proceeds held under any
defeasance trust established in accordance with this Indenture) may be made by
or on behalf of the Company upon or in respect of the Debentures for a period (a
"Payment Blockage Period") commencing on the date of receipt of such notice and
ending 179 days thereafter (unless, in each case, such Payment Blockage Period
shall be terminated by written notice to the Trustee from such trustee of, or
other representatives for, such holders or by payment in full in cash or cash
equivalents of such Designated Senior Indebtedness or such event of default has
been cured or waived). Not more than one Payment Blockage Period may be
commenced with respect to the Debentures during any period of 360 consecutive
days. Notwithstanding anything in this Indenture to the contrary, there must be
180 consecutive days in any 360-day period in which no Payment Blockage Period
is in effect. No event of default that existed or was continuing (it being
acknowledged that any subsequent action that would give rise to an event of
default pursuant to any provision under which an event of default previously
existed or was continuing shall constitute a new event of default for this
purpose) on the date of the commencement of any Payment Blockage Period with
respect to the Designated Senior Indebtedness initiating such Payment Blockage
Period shall be, or shall be made, the basis for the commencement of a second
Payment Blockage Period by the representative for, or the holders of, such
Designated Senior Indebtedness, whether or not within a period of 360
consecutive days, unless such event of default shall have been cured or waived
for a period of not less than 90 consecutive days.
(c) In the event that, notwithstanding the foregoing, any payment
shall be received by the Trustee or any Holder when such payment is prohibited
by Section 4.02(a) or 4.02(b) of this Indenture, the Trustee shall promptly
notify the holders of Senior Indebtedness of such prohibited payment and such
payment shall be held in trust for the benefit of, and shall be paid over or
delivered to, the holders of Senior Indebtedness or their respective
representatives, or to the trustee or trustees under any indenture pursuant to
which any of such Senior Indebtedness may have been issued, as their respective
interests may appear, but only to the extent that, upon notice from the Trustee
to the holders of Senior Indebtedness that such prohibited payment has been
made, the holders of the Senior Indebtedness (or their representative or
representatives of a trustee) within 30 days of receipt of such notice from the
Trustee notify the Trustee of the amounts then due and owing on the Senior
Indebtedness, if any, and only the amounts specified in such notice to the
Trustee shall be paid to the holders of Senior Indebtedness and any excess above
such amounts due and owing on Senior Indebtedness shall be paid to the Company.
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35
SECTION 4.03. Payment over Proceeds upon Dissolution, Etc. (a) Upon
any payment or distribution of assets or securities of the Company of any kind
or character, whether in cash, property or securities (other than with the
money, securities or proceeds held under any defeasance trust established in
accordance with this Indenture), in connection with any dissolution or winding
up or total or partial liquidation or reorganization of the Company, whether
voluntary or involuntary, or in bankruptcy, insolvency, receivership or other
proceedings or other marshalling of assets for the benefit of creditors, all
amounts due or to become due upon all Senior Indebtedness (including any
interest accruing subsequent to an event specified in Sections 7.01(a) and
7.01(b) of this Indenture, whether or not such interest is an allowed claim
enforceable against the debtor under the United States Bankruptcy Code) shall
first be paid in full, in cash or cash equivalents, before the Holders or the
Trustee on their behalf shall be entitled to receive any payment by (or on
behalf of) the Company on account of Subordinated Obligations, or any payment to
acquire any of the Debentures for cash, property or securities, or any
distribution with respect to the Debentures of any cash, property or securities.
Before any payment may be made by, or on behalf of, the Company on any
Subordinated Obligations (other than with the money, securities or proceeds held
under any defeasance trust established in accordance with this Indenture) in
connection with any such dissolution, winding up, liquidation or reorganization,
any payment or distribution of assets or securities for the Company of any kind
or character, whether in cash, property or securities, to which the Holders or
the Trustee on their behalf would be entitled, but for the provisions of this
Article Four, shall be made by the Company or by any receiver, trustee in
bankruptcy, liquidating trustee, agent or other similar Person making such
payment or distribution, or by the Holders or the Trustee if received by them or
it, directly to the holders of Senior Indebtedness (pro rata to such holders on
the basis of the respective amounts of Senior Indebtedness held by such holders)
or their representatives or to any trustee or trustees under any other indenture
pursuant to which any such Senior Indebtedness may have been issued, as their
respective interests appear, to the extent necessary to pay all such Senior
Indebtedness in full, in cash or cash equivalents after giving effect to any
concurrent payment, distribution or provision therefor to or for the holders of
such Senior Indebtedness.
(b) To the extent any payment of Senior Indebtedness (whether by or
on behalf of the Company, as proceeds of security or enforcement of any right of
setoff or otherwise) is declared to be fraudulent or preferential, set aside or
required to be paid to any receiver, trustee in bankruptcy, liquidating trustee,
agent or other similar Person under any bankruptcy, insolvency, receivership,
fraudulent conveyance or similar law, then if such payment is recovered by, or
paid over to, such receiver, trustee in bankruptcy, liquidating trustee or other
similar Person, the Senior Indebtedness or part thereof originally intended to
be satisfied shall be deemed to be reinstated and outstanding as if such payment
had not occurred. To the extent the obligation to repay any Senior Indebtedness
is declared to be fraudulent, invalid, or otherwise set aside under any
bankruptcy, insolvency, receivership, fraudulent conveyance or similar law, then
the obligation so declared fraudulent, invalid or otherwise set aside (and all
other amounts that would come due with respect thereto had such obligation not
been so affected) shall be deemed
<PAGE>
36
to be reinstated and outstanding as Senior Indebtedness for all purposes hereof
as if such declaration, invalidity or setting aside had not occurred.
(c) In the event that, notwithstanding the foregoing provision
prohibiting such payment or distribution, any payment or distribution of assets
or securities of the Company of any kind or character, whether in cash, property
or securities, shall be received by the Trustee or any Holder at a time when
such payment or distribution is prohibited by Section 4.03(a) of this Indenture
and before all obligations in respect of Senior Indebtedness are paid in full,
in cash or cash equivalents, such payment or distribution shall be received and
held in trust for the benefit of, and shall be paid over or delivered to, the
holders of Senior Indebtedness (pro rata to such holders on the basis of such
respective amount of Senior Indebtedness held by such holders) or their
representatives, or to the trustee or trustees under any indenture pursuant to
which any such Senior Indebtedness may have been issued, as their respective
interests appear, for application to the payment of Senior Indebtedness
remaining unpaid until all such Senior Indebtedness has been paid in full, in
cash or cash equivalents, after giving effect to any concurrent payment,
distribution or provision therefor to or for the holders of such Senior
Indebtedness.
(d) For purposes of this Section 4.03, the words "cash, property or
securities" shall not be deemed to include, so long as the effect of this clause
is not to cause the Debentures to be treated in any case or proceeding or
similar event described in this Section 4.03 as part of the same class of claims
as the Senior Indebtedness or any class of claims pari passu with, or senior to,
the Senior Indebtedness for any payment or distribution, securities of the
Company or any other corporation provided for by a plan of reorganization or
readjustment that are subordinated, at least to the extent that the Debentures
are subordinated, to the payment of all Senior Indebtedness then outstanding;
provided that (1) if a new corporation results from such reorganization or
readjustment, such corporation assumes the Senior Indebtedness and (2) the
rights of the holders of the Senior Indebtedness are not, without the consent of
such holders, altered by such reorganization or readjustment.
SECTION 4.04. Subrogation. (a) Upon the payment in full of all
Senior Indebtedness in cash or cash equivalents, the Holders shall be subrogated
to the rights of the holders of Senior Indebtedness to receive payments or
distributions of cash, property or securities of the Company made on such Senior
Indebtedness until the principal of, premium, if any, and interest on the
Debentures shall be paid in full; and, for the purposes of such subrogation, no
payments or distributions to the holders of the Senior Indebtedness of any cash,
property or securities to which the Holders or the Trustee on their behalf would
be entitled except for the provisions of this Article Four, and no payment
pursuant to the provisions of this Article Four to the holders of Senior
Indebtedness by Holders or the Trustee on their behalf shall, as between the
Company, its creditors other than holders of Senior Indebtedness, and the
Holders, be deemed to be a payment by the Company to or on account of the Senior
Indebtedness. It is understood that the provisions of this Article Four are
intended solely for the purpose of defining the relative
<PAGE>
37
rights of the Holders, on the one hand, and the holders of the Senior
Indebtedness, on the other hand.
(b) If any payment or distribution to which the Holders would
otherwise have been entitled but for the provisions of this Article Four shall
have been applied, pursuant to the provisions of this Article Four, to the
payment of all amounts payable under Senior Indebtedness, then, and in such
case, the Holders shall be entitled to receive from the holders of such Senior
Indebtedness any payments or distributions received by such holders of Senior
Indebtedness in excess of the amount required to make payment in full, in cash
or cash equivalents, of such Senior Indebtedness of such holders.
SECTION 4.05. Obligations of Company Unconditional. (a) Nothing
contained in this Article Four or elsewhere in this Indenture or in the
Debentures is intended to or shall impair, as among the Company and the Holders,
the obligation of the Company, which is absolute and unconditional, to pay to
the Holders the principal of, premium, if any, and interest on the Debentures as
and when the same shall become due and payable in accordance with their terms,
or is intended to or shall affect the relative rights of the Holders and
creditors of the Company other than the holders of the Senior Indebtedness, nor
shall anything herein or therein prevent the Holders or the Trustee on their
behalf from exercising all remedies otherwise permitted by applicable law upon
default under this Indenture, subject to the rights, if any, under this Article
Four of the holders of the Senior Indebtedness.
(b) Without limiting the generality of the foregoing, nothing
contained in this Article Four will restrict the right of the Trustee or the
Holders to take any action to declare the Debentures to be due and payable prior
to their Stated Maturity pursuant to Section 5.01 of this Indenture or to pursue
any rights or remedies hereunder; provided, however, that all Senior
Indebtedness then due and payable or thereafter declared to be due and payable
shall first be paid in full, in cash or cash equivalents, before the Holders or
the Trustee are entitled to receive any direct or indirect payment from the
Company of Subordinated Obligations.
SECTION 4.06. Notice to Trustee. (a) The Company shall give prompt
written notice to the Trustee of any fact known to the Company that would
prohibit the making of any payment to or by the Trustee in respect of the
Debentures pursuant to the provisions of this Article Four. The Trustee shall
not be charged with the knowledge of the existence of any default or event of
default with respect to any Senior Indebtedness or of any other facts that would
prohibit the making of any payment to or by the Trustee unless and until the
Trustee shall have received notice in writing at its Corporate Trust Office to
that effect signed by an Officer of the Company, or by a holder of Senior
Indebtedness or trustee or agent thereof; and prior to the receipt of any such
written notice, the Trustee shall, subject to Article Seven, be entitled to
assume that no such facts exist; provided that, if the Trustee shall not have
received the notice provided for in this Section 4.06 at least two Business Days
prior to the date upon which, by the
<PAGE>
38
terms of this Indenture, any monies shall become payable for any purpose
(including, without limitation, the payment of the principal of, premium, if
any, or interest on any Debenture), then, notwithstanding anything herein to the
contrary, the Trustee shall have full power and authority to receive any monies
from the Company and to apply the same to the purpose for which they were
received, and shall not be affected by any notice to the contrary that may be
received by it on or after such prior date except for an acceleration of the
Debentures prior to such application. Nothing contained in this Section 4.06
shall limit the right of the holders of Senior Indebtedness to recover payments
as contemplated by this Article Four. The foregoing shall not apply if the
Paying Agent is the Company. The Trustee shall be entitled to rely on the
delivery to it of a written notice by a Person representing himself or itself to
be a holder of any Senior Indebtedness (or a trustee on behalf of, or other
representative of, such holder) to establish that such notice has been given by
a holder of such Senior Indebtedness or a trustee or representative on behalf of
any such holder.
(b) In the event that the Trustee determines in good faith that any
evidence is required with respect to the right of any Person as a holder of
Senior Indebtedness to participate in any payment or distribution pursuant to
this Article Four, the Trustee may request such Person to furnish evidence to
the reasonable satisfaction of the Trustee as to the amount of Senior
Indebtedness held by such Person, the extent to which such Person is entitled to
participate in such payment or distribution and any other facts pertinent to the
rights of such Person under this Article Four and, if such evidence is not
furnished to the Trustee, the Trustee may defer any payment to such Person
pending judicial determination as to the right of such Person to receive such
payment.
SECTION 4.07. Reliance on Judicial Order or Certificate of
Liquidating Agent. Upon any payment or distribution of assets or securities
referred to in this Article Four, the Trustee and the Holders shall be entitled
to rely upon any order or decree made by any court of competent jurisdiction in
which bankruptcy, dissolution, winding up, liquidation or reorganization
proceedings are pending, or upon a certificate of the receiver, trustee in
bankruptcy, liquidating trustee, agent or other similar Person making such
payment or distribution, delivered to the Trustee or to the Holders for the
purpose of ascertaining the persons entitled to participate in such
distribution, the holders of the Senior Indebtedness and other Indebtedness of
the Company, the amount thereof or payable thereon, the amount or amounts paid
or distributed thereon and all other facts pertinent thereto or to this Article
Four.
SECTION 4.08. Trustee's Relation to Senior Indebtedness. (a) The
Trustee and any Paying Agent shall be entitled to all the rights set forth in
this Article Four with respect to any Senior Indebtedness that may at any time
be held by it in its individual or any other capacity to the same extent as any
other holder of Senior Indebtedness and nothing in this Indenture shall deprive
the Trustee or any Paying Agent of any of its rights as such holder.
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39
(b) With respect to the holders of Senior Indebtedness, the Trustee
undertakes to perform or to observe only such of its covenants and obligations
as are specifically set forth in this Article Four, and no implied covenants or
obligations with respect to the holders of Senior Indebtedness shall be read
into this Indenture against the Trustee. The Trustee shall not be deemed to owe
any fiduciary duty to the holders of Senior Indebtedness (except as provided in
Sections 4.02(c) and 4.03(c) of this Indenture) and shall not be liable to any
such holders if the Trustee shall in good faith mistakenly pay over or
distribute to Holders of Debentures or to the Company or to any other person
cash, property or securities to which any holders of Senior Indebtedness shall
be entitled by virtue of this Article Four or otherwise.
SECTION 4.09. Subordination Rights Not Impaired by Acts or Omissions
of the Company or Holders of Senior Indebtedness. No right of any present or
future holders of any Senior Indebtedness to enforce subordination as provided
in this Article Four will at any time in any way be prejudiced or impaired by
any act or failure to act on the part of the Company or by any act or failure to
act, in good faith, by any such holder, or by any noncompliance by the Company
with the terms of this Indenture, regardless of any knowledge thereof that any
such holder may have or otherwise be charged with. The provisions of this
Article Four are intended to be for the benefit of, and shall be enforceable
directly by, the holders of Senior Indebtedness.
SECTION 4.10. Holders Authorize Trustee to Effectuate Subordination
of Debentures. Each Holder by his acceptance of any Debentures authorizes and
expressly directs the Trustee on his behalf to take such action as may be
necessary or appropriate to effectuate the subordination provided in this
Article Four, and appoints the Trustee his attorney-in-fact for such purposes,
including, in the event of any dissolution, winding up, liquidation or
reorganization of the Company (whether in bankruptcy, insolvency, receivership,
reorganization or similar proceedings or upon an assignment for the benefit of
creditors or otherwise) tending towards liquidation of the property and assets
of the Company, the filing of a claim for the unpaid balance of its Debentures
in the form required in those proceedings. If the Trustee does not file a proper
claim or proof in indebtedness in the form required in such proceeding at least
30 days before the expiration of the time to file such claim or claims, each
holder of Senior Indebtedness is hereby authorized to file an appropriate claim
for and on behalf of the Holders.
SECTION 4.11. Not to Prevent Events of Default. The failure to make
a payment on account of principal of, premium, if any, or interest on the
Debentures by reason of any provision of this Article Four will not be construed
as preventing the occurrence of an Event of Default.
SECTION 4.12. Trustee's Compensation Not Prejudiced. Nothing in this
Article Four will apply to amounts due to the Trustee pursuant to other sections
of this Indenture, including Section 7.07.
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40
SECTION 4.13. No Waiver of Subordination Provisions. Without in any
way limiting the generality of Section 4.09, the holders of Senior Indebtedness
may, at any time and from time to time, without the consent of or notice to the
Trustee or the Holders, without incurring responsibility to the Holders and
without impairing or releasing the subordination provided in this Article Four
or the obligations hereunder of the Holders to the holders of Senior
Indebtedness, do any one or more of the following: (a) change the manner, place
or terms of payment or extend the time of payment of, or renew or alter, Senior
Indebtedness or any instrument evidencing the same or any agreement under which
Senior Indebtedness is outstanding or secured; (b) sell, exchange, release or
otherwise deal with any property pledged, mortgaged or otherwise securing Senior
Indebtedness; (c) release any Person liable in any manner for the collection of
Senior Indebtedness; and (d) exercise or refrain from exercising any rights
against the Company and any other Person.
SECTION 4.14. Payments May Be Paid Prior to Dissolution. Nothing
contained in this Article Four or elsewhere in this Indenture shall prevent (i)
the Company except under the conditions described in Section 4.02 or 4.03, from
making payments of principal of, premium, if any, and interest on the
Debentures, or from depositing with the Trustee any money for such payments, or
(ii) the application by the Trustee of any money deposited with it for the
purpose of making such payments of principal of, premium, if any, and interest
on the Debentures to the holders entitled thereto unless, at least two Business
Days prior to the date upon which such payment becomes due and payable, the
Trustee shall have received the written notice provided for in Section 4.02(b)
of this Indenture (or there shall have been an acceleration of the Debentures
prior to such application) or in Section 4.06 of this Indenture. The Company
shall give prompt written notice to the Trustee of any dissolution, winding up,
liquidation or reorganization of the Company.
SECTION 4.15. Consent of Holders of Senior Indebtedness Under the
New Indentures. The provisions of this Article Four (including the definitions
contained in this Article and references to this Article contained in this
Indenture) shall not be amended in a manner that would adversely affect the
rights of the holders of 1998 Notes under the New Indentures, and no such
amendment shall become effective unless the holders of Senior Indebtedness under
the New Indentures shall have consented (in accordance with the provisions of
the New Indentures) to such amendment. The Trustee shall be entitled to receive
and rely on an Officers' Certificate stating that such consent has been given.
<PAGE>
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ARTICLE FIVE
CONVERSION OF DEBENTURES
SECTION 5.01. Optional Conversion. At any time on or after the date
that is one year after the Closing Date holders of Debentures shall have the
right, at their option, to convert all or any part of their Debentures into
shares of Common Stock at a conversion price (as adjusted from time to time, the
"Conversion Price") equal to $13.20 per share of Common Stock, subject to
adjustment as provided in Section 5.06 below.
SECTION 5.02. Automatic Conversion. The Debentures automatically
convert into shares of Common Stock, at the Conversion Price, if the price of
the Common Stock for any 20 consecutive trading days during the twelve months
ending April 15, 1999, April 15, 2000, April 15, 2001, April 15, 2002 or April
15, 2003, exceeds $26.40, $32.30, $38.20, $44.10 or $50.00, respectively
(collectively, the "Automatic Conversion Prices"); provided, however, that no
such conversion will occur (i) until April 8, 1999 and will not occur until the
Shelf Registration Statement is effective and (ii) unless the price of the
Common Stock on the conversion date exceeds the relevant price listed above.
Notwithstanding the foregoing, the Automatic Conversion Prices shall be adjusted
as nearly as practicable as provided in Section 5.06 below.
SECTION 5.03. Procedures. A holder of Debentures wishing to exercise
its conversion right shall (i) give written notice of conversion to Deutsche
Bank AG, or such other agent or agents of the Company as may be designated by
the Board of Directors of the Company as the trustee for the Debentures from
time to time (the "Conversion Agent"), that the holder elects to convert such
number of Debentures specified in such notice and (ii) if required, furnish
appropriate endorsements and transfer documents. Any notice regarding conversion
shall state the name or names (with address) in which the shares of Common Stock
which shall be issuable upon such conversion shall be issued, and shall be
accompanied by funds in an amount sufficient to pay any transfer or similar tax
required by the provisions of Section 5.05 below.
Each conversion shall be deemed to have been effected on the date on
which the requirements set forth in this Section 5.03 have been satisfied as to
such Debenture so converted, and the person in whose name any certificate or
certificates for the shares of Common Stock shall be issuable upon such
conversion shall be deemed to have become, on said date, the holder of record of
the shares represented thereby.
SECTION 5.04. Fractional Shares. No fractional shares of Common
Stock or script representing fractional shares of Common Stock shall be issued
upon conversion of Debentures. If more than one Debenture shall be surrendered
for conversion at one time by the same holder, the number of full shares of
Common Stock issuable upon conversion thereof shall be computed on the basis of
the aggregate number of Debentures so surrendered. Instead of any
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42
fractional shares of Common Stock issuable upon conversion of any Debentures,
the Company shall pay a cash adjustment in respect to such fraction based on the
last reported closing price of the Common Stock on the trading day immediately
preceding the day on which the affected Debentures are deemed to have been
converted.
SECTION 5.05. Payment of Taxes. If a holder converts Debentures, the
Company shall pay any and all documentary, stamp or similar transfer tax payable
in respect of the issue or delivery of the shares of Common Stock upon the
conversion; provided, however, the Company shall not be required to pay any such
tax that may be payable because any such Debentures are issued in a name other
than the name of the holder of such Debentures.
SECTION 5.06. Adjustments to Conversion Price. The Conversion Price
in effect at any time shall be subject to adjustment, from time to time, as
follows:
(i) In case the Company shall pay a dividend or make a distribution,
in shares of Common Stock, on Common Stock, the Conversion Price in effect
at the opening of business on the date following the date fixed for the
determination of stockholders entitled to receive such dividend or other
distribution shall be reduced by multiplying such Conversion Price by a
fraction of which the numerator shall be the number of shares of Common
Stock outstanding at the close of business on the date fixed for such
determination and the denominator shall be the sum of such number of
shares and the total number of shares constituting such dividend or other
distribution, such reduction to become effective immediately after the
opening of business on the day following the date fixed for such
determination. The Company will not pay any dividend or make any
distribution on shares of Common Stock held in the treasury of the
Company. If any dividend or distribution of the type described in this
Section 5.06(i) is declared but is not so paid or made and not required to
be so paid or made, the Conversion Price shall again be adjusted to the
Conversion Price which would then be in effect if such dividend or
distribution had not been declared.
(ii) In case the Company shall issue rights or warrants to all
holders of Common Stock entitling them (for a period expiring within 45
days after the date fixed for determination of stockholders entitled to
receive such rights or warrants) to subscribe for or purchase Common Stock
at a price per share less than the Average Market Value (as defined below)
per share at the record date for the determination of stockholders
entitled to receive such rights or warrants, the Conversion Price in
effect immediately prior thereto shall be adjusted so that the same shall
equal the rate determined by multiplying the Conversion Price in effect
immediately prior to the date fixed for determination of stockholders
entitled to receive such rights or warrants by a fraction the numerator of
which shall be the number of shares of Common Stock outstanding at the
close of business on the date fixed for determination of stockholders
entitled to receive
<PAGE>
43
such rights or warrants plus the number of shares which the aggregate
offering price of the total number of shares so offered would purchase at
such Average Market Value and the denominator of which shall be the number
of shares of Common Stock outstanding on the date fixed for determination
of stockholders entitled to receive such rights or warrants plus the
number of additional shares of Common Stock offered for subscription or
purchase. Such adjustment shall be made successive whenever any such
rights or warrants are issued, and shall become effective immediately
after the opening of business on the day following the record date for the
determination of the stockholders entitled to receive such rights or
warrants. In determining whether any rights or warrants entitle the
holders to subscribe for or purchase shares of Common Stock at less than
such Average Market Value, and in determining the aggregate offering price
of such shares of Common Stock, there shall be taken into account any
consideration received by the Company for such rights or warrants, the
value of such consideration, if other than cash, to be determined by the
Board of Directors. To the extent that shares of Common Stock are not
delivered or required to be delivered after the expiration of such rights
or warrants, the Conversion Price shall be readjusted to the Conversion
Price which would then be in effect had the adjustments made upon the
issuance of such rights or warrants been made on the basis of delivery of
only the number of shares of Common Stock actually delivered. If such
rights or warrants are not so issued and not required to be so issued, the
Conversion Price shall again be adjusted to be the Conversion Price which
would then be in effect if such record date for the determination of
stockholders entitled to receive such rights or warrants had not been
fixed. As used herein, the term "Average Market Value" means the average
of the Current Market Value of the Common Stock for the ten trading days
ending on the second Business Day prior to the applicable date of payment
and "Current Market Value" means (i) the volume weighted average price, as
reported by the Nasdaq National Market, or (ii) the average of the high
and low sale prices of the Common Stock, if reported on any other national
securities exchange.
(iii) In case outstanding shares of Common Stock shall be subdivided
into a greater number of shares of Common Stock, the Conversion Price in
effect at the opening of business on the day following the day upon which
such subdivision becomes effective shall be proportionately reduced, and
conversely, in case outstanding shares of Common Stock shall be combined
into a smaller number of shares of Common Stock, the Conversion Price in
effect at the opening of business on the day following the day upon which
such combination becomes effective shall be proportionately increased,
such reduction or increase, as the case may be, to become effective
immediately after the opening of business on the day following the day
upon which such subdivision or combination becomes effective.
(iv) In case the Company shall distribute to all holders of Common
Stock any shares of any class of capital stock of the Company (other than
Common Stock) or
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44
evidences of its indebtedness or assets (excluding cash dividends or other
distributions to the extent paid from retained earnings of the Company) or
rights or warrants to subscribe for or purchase any of its securities
(excluding those referred to in subsection (ii) above) (any of the
foregoing hereinafter in this subsection, the "Distributed Securities"),
then, in each such case, the Conversion Price shall be reduced so that the
same shall equal the rate determined by multiplying the Conversion Price
in effect on the record date with respect to such distribution by a
fraction of which the numerator shall be the Average Market Value on such
record date less the fair market value on such record date (as determined
by the Board of Directors of the Company, whose determination shall be
conclusive) of the Distributed Securities applicable to one share of
Common Stock and the denominator of which shall be the Average Market
Value per share on the record date for the determination of stockholders
entitled to receive such distribution; such adjustment shall become
effective immediately prior to the opening of business on the day
following such record date. Notwithstanding the foregoing, in the event
the then fair market value (as so determined) of the portion of the
Distributed Securities applicable to one share of Common Stock is equal to
or greater than the Average Market Value on the relevant record date, in
lieu of the foregoing adjustment, adequate provision shall be made so that
each Holder shall have the right to receive upon exchange the amount of
Distributed Securities such holder would have received had such holder
exchanged each Debenture on such record date. In the event that such
distribution is not so paid or made, the Conversion Price shall again be
adjusted to the Conversion Price which would then be in effect if such
distribution had not been declared. If the Board of Directors of the
Corporation determines the fair market value of any distribution for
purposes of this subsection by reference to the actual or when issued
trading market for any securities, it must in doing so consider the prices
in such market over the same period used in computing the Average Market
Value.
Notwithstanding the foregoing provisions of this subsection, no
adjustment shall be made hereunder for any distribution of Distributed
Securities if the Company makes proper provision so that each holder who
exchanges a Debenture (or any portion thereof) after the record date for
such distribution shall be entitled to receive upon such exchange, in
addition to the shares of Common Stock issuable upon such exchange, the
amount and kind of Distributed Securities that such holder would have been
entitled to receive if such holder had, immediately prior to such record
date, exchanged such Debenture for Common Stock, provided that, with
respect to any Distributed Securities that are convertible, exchangeable
or exercisable, the foregoing provision shall only apply to the extent
(and so long as) the Distributed Securities receivable upon exchange of
such Debenture would be convertible, exchangeable or exercisable, as
applicable, without any loss of rights or privileges for a period of at
least 60 days following exchange of such Debenture.
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45
(v) In case the Company shall, by dividend or otherwise, distribute
to all holders of Common Stock cash (excluding (x) any quarterly cash
dividend on the Common Stock to the extent the aggregate cash dividend per
share of Common Stock in any fiscal quarter does not exceed the greater of
(A) the amount per share of Common Stock of the next preceding quarterly
cash dividend on the Common Stock to the extent such preceding quarterly
dividend did not require any adjustment of the Conversion Price pursuant
to this subsection (as adjusted to reflect subdivisions or combinations of
the Common Stock), and (B) 3.75% of the average of the last reported sales
price of the Common Stock (determined as provided below) during the ten
trading days next preceding the date of declaration of such dividend and
(y) any dividend or distribution in connection with the liquidation,
dissolution or winding up of the Company, whether voluntary or
involuntary), then, in such case, unless the Company elects to reserve
such cash for distribution to the holders upon the conversion of the
Debentures so that any such holder converting Debentures will receive upon
such conversion, in addition to the shares of Common Stock to which such
holder is entitled, the amount of cash which such holder would have
received if such holder had, immediately prior to the record date for such
distribution of cash, converting its Debentures for Common Stock, the
Conversion Price shall be reduced so that the same shall equal the rate
determined by multiplying the Conversion Price in effect immediately prior
to the close of business on such record date by a fraction of which the
numerator shall be such Average Market Value on the record date less the
amount of cash so distributed (and not excluded as provided above)
applicable to one share of Common Stock and the denominator of which shall
be the Average Market Value on such record date; such adjustment to be
effective immediately prior to the opening of business on the day
following the record date; provided, however, that in the event the
portion of the cash so distributed applicable to one share of Common Stock
is equal to or greater than the Average Market Value on the record date,
in lieu of the foregoing adjustment, adequate provision shall be made so
that each holder of Debentures shall have the right to receive upon
exchange the amount of cash such holder would have received had such
holder exchanged each Debenture on the record date. If such dividend or
distribution is not so paid or made, the Conversion Price shall again be
adjusted to be Conversion Price which would then be in effect if such
dividend or distribution had not been declared.
If any adjustment is required to be made as set forth in this
subsection as a result of a distribution that is a quarterly dividend,
such adjustment shall be based upon the amount by which such distribution
exceeds the amount of the quarterly cash dividend permitted to be excluded
pursuant hereto. If an adjustment is required to be made as set forth in
this subsection above as a result of a distribution that is not a
quarterly dividend, such adjustment shall be based upon the full amount of
the distribution.
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46
(vi) In case a tender or exchange offer made by the Company or any
subsidiary of the Company for all or any portion of the Common Stock shall
expire and such tender or exchange offer shall involve the payment by the
Company or such subsidiary of consideration per share of Common Stock
having a fair market value (as determined by the Board of Directors of the
Company or, to the extent permitted by applicable law, a duly authorized
committee thereof, whose determination shall be conclusive, and described
in a resolution of the Board of Directors of the Company or such duly
authorized committee thereof, as the case may be), at the last time (the
"Expiration Time") tenders or exchanges may be made pursuant to such
tender or exchange offer (as it shall have been amended), that exceeds the
Average Market Value on the trading day next succeeding the Expiration
Time, the Conversion Price shall be reduced so that the same shall equal
the rate determined by multiplying the Conversion Price in effect
immediately prior to the Expiration Time by a fraction of which the
numerator shall be the number of shares of Common Stock outstanding
(including any tendered or exchanged shares) on the Expiration Time
multiplied by the Average Market Value on the trading day next succeeding
the Expiration Time and the denominator of which shall be the sum of (x)
the fair market value (determined as aforesaid) of the aggregate
consideration payable to stockholders based on the acceptance (up to any
maximum specified in the terms of the tender or exchange offer) of all
shares validly tendered or exchanged and not withdrawn as of the
Expiration Time (the shares deemed so accepted up to any such maximum,
being referred to in this subsection as the "Purchased Shares") and (y)
the product of the number of shares of Common Stock outstanding (less any
Purchased Shares) on the Expiration Time and the Average Market Value on
the trading day next succeeding the Expiration Time; such adjustment to
become effective immediately prior to the opening of business on the day
following the Expiration Time. If the Company is obligated to purchase
shares pursuant to any such tender or exchange offer, but the Company is
permanently prevented by applicable law from effecting any such purchases
or all such purchases are rescinded, the Conversion Price shall again be
adjusted to be the Conversion Price which would then be in effect if such
tender or exchange offer had not been made.
(vii) The "fair market value" shall mean the amount which a willing
buyer under no compulsion to buy would pay a willing seller under no
compulsion to sell in an arm's length transaction. The "record date" shall
mean, with respect to any dividend, distribution or other transaction or
event in which the holders of Common Stock have the right to receive any
cash, securities or other property or in which the Common Stock (or other
applicable security) is exchanged for or converted into any combination of
cash, securities or other property, the date fixed for determination of
stockholders entitled to receive such cash, securities or other property
(whether such date is fixed by the Board of Directors of the Company or by
statute, contract or otherwise).
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47
(viii) Rights or warrants distributed by the Company to all holders
of Common Stock entitling the holders thereof to subscribe for or purchase
shares of the Company's capital stock (either initially or under certain
circumstances), which rights or warrants, until the occurrence of a
specified event or events ("Trigger Event"):
(A) are deemed to be transferred with such shares of Common
Stock,
(B) are not exercisable, and
(C) are also issued in respect of future issuances of Common
Stock,
shall not be deemed distributed for purposes of this Section 5 until the
occurrence of the earliest Trigger Event. In addition, in the event of any
distribution of rights or warrants, or any Trigger Event with respect
thereto, that shall have resulted in an adjustment to the Conversion Price
under this Section 5, (1) in the ease of any such rights or warrants which
shall all have been redeemed or repurchased without exercise by any
holders thereof, the Conversion Price shall be readjusted upon such final
redemption or purchase to give effect to such distribution or Trigger
Event, as the case may be, as though it were a cash distribution, equal to
the per share redemption or repurchase price received by a holder of
Common Stock with respect to such rights or warrants (assuming such holder
had retained such rights or warrants), made to all holders of Common Stock
as of the date of such redemption or repurchase, and (2) in the case of
any such rights or warrants all of which shall have expired without
exercise by any holder thereof, the Conversion Price shall be adjusted as
if such issuance had not occurred.
(ix) No adjustment to the Conversion Price shall be required unless
such adjustment would require an increase or decrease of at least 1% in
such rate; provided, however, that any adjustments which by reason of this
subsection (ix) are not required to be made shall be carried forward and
taken into account in any subsequent adjustment. All calculations under
this Section 5 shall be made by the Company and shall be made to the
nearest cent or to the nearest one hundredth of a share, as the case may
be. Anything in this Section 5 to the contrary notwithstanding, the
Company shall be entitled to make such reductions in the Conversion Price,
in addition to those required by this Section 5, as they in their
discretion shall determine to be advisable in order that any stock
dividends, subdivision of shares, distribution of rights to purchase stock
or securities, or any distribution of securities convertible into or
exchangeable for stock hereafter made by the Company to its stockholders
shall not be taxable. To the extent permitted by applicable law, the
Company from time to time may reduce the Conversion Price by any amount
for any period of time if the period is at least 20 days, the increase is
irrevocable during the period and the Board of Directors of the Company
shall have made a determination that such increase would be in the best
interests of the Company, which determination shall be
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48
conclusive. Whenever the Conversion Price is so reduced, the Company shall
mail to holders a notice of the reduction. The Company shall mail the
notice at least 15 days before the date the reduced Conversion Price takes
effect. The notice shall state the decreased Conversion Price and the
period it will be in effect.
(x) Whenever the Conversion Price is adjusted, as herein provided,
the Company shall promptly prepare an officers' certificate setting forth
the Conversion Price after such adjustment and setting forth a brief
statement of the facts requiring such adjustment. Promptly after the
preparation of such certificate, shall prepare a notice of such adjustment
of the Conversion Price setting forth the adjusted Conversion Price and
the date on which such adjustment becomes effective and shall mail such
notice of such adjustment of the Conversion Price to each holder.
(xi) In any case in which this Section 5 provides that an adjustment
shall become effective immediately after a record date for an event, the
Company may defer until the occurrence of such event (i) issuing to any
holder of Debentures converted after such record date and before the
occurrence of such event the additional shares of Common Stock issuable
upon such exchange by reason of the adjustment required by such event over
and above the Common Stock issuable upon such exchange before giving
effect to such adjustment and (ii) paying to such holder any amount in
cash or additional shares in lieu of any fractional share.
(xii) In case of a tender or exchange offer made by a person other
than the Corporation or any subsidiary for an amount which increases the
offeror's ownership of the Common Stock to more than 25% of the Common
Stock outstanding and shall involve the payment by such person of
consideration per share of Common Stock having a fair market value (as
determined by the Board of Directors of the Corporation, whose
determination shall be conclusive, and described in a resolution of the
Board of Directors of the Corporation) at the last time (the "Expiration
Time") tenders or exchanges may be made pursuant to such tender or
exchange offer (as it shall have been amended) that exceeds the Average
Market Value on the trading day next succeeding the Expiration Time, and
in which, as of the Expiration Time the Board of Directors of the
Corporation is not recommending rejection of the offer, the Conversion
Price shall be increased so that the same shall equal the price determined
by multiplying the Conversion Price in effect immediately prior to the
Expiration Time by a fraction of which the denominator shall be the number
of shares of Common Stock outstanding (including any tendered or exchange
shares) on the Expiration Time multiplied by the Average Market Value on
the trading day next succeeding the Expiration Time and the numerator
shall be the sum of (x) the fair market value (determined as aforesaid) of
the aggregate consideration payable to stockholders based on the
acceptance (up to any maximum specified in the terms of the tender or
exchange offer) of all shares validly tendered or exchanged and not
withdrawn
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49
as of the Expiration Time (the shares deemed so accepted, up to any such
maximum, being referred to in this subsection as the "Purchased Shares")
and (y) the product of the number of shares of Common Stock outstanding
(less any Purchased Shares) on the Expiration Time and the Average Market
Value on the trading day next succeeding the Expiration Time, such
increase to become effective immediately prior to the opening of business
on the day following the Expiration Time. In the event that such person is
obligated to purchase shares pursuant to any such tender or exchange
offer, but such person is permanently prevented by applicable law from
effecting any such purchases or all such purchases are rescinded, the
Conversion Price shall again be adjusted to be the Conversion Price which
would then be in effect if such tender or exchange offer had not been
made. Notwithstanding the foregoing, the adjustment described in this
Section 5.06(viii) shall not be made if, as of the Expiration Time, the
offering documents with respect to such offer disclose a plan or intention
to cause the Corporation to engage in a consolidation or merger of the
Corporation's or a sale of substantially all of the Corporation's assets.
SECTION 5.07. Effect of Reclassification, Consolidation, Merger or
Sale. If any of the following events occur, namely (i) any reclassification or
change of outstanding shares of Common Stock (other than a change in par value,
or from par value to no par value, or from no par value to par value, or as a
result of a subdivision or combination), (ii) any consolidation, merger or
combination of the Company with another person as a result of which holders of
Common Stock shall be entitled to receive stock, securities or other property or
assets (including cash) with respect to or in exchange for such Common Stock, or
(iii) any sale or conveyance of the properties and assets of the Company as, or
substantially as, an entirety to any other person as a result of which holders
of Common Stock shall be entitled to receive stock, securities or other property
or assets (including cash) with respect to or in exchange for such Common Stock,
then each Debenture shall be converted for the kind and amount of shares of
stock and other securities or property or assets (including cash) receivable
upon such reclassification, change, consolidation, merger, combination, sale or
conveyance by a holder of a number of shares of Common Stock issuable upon
conversion of the Debentures immediately prior to such reclassification, change,
consolidation, merger, combination, sale or conveyance. Any such adjustments
shall be as nearly equivalent as may be practicable to the adjustments provided
for in Section 5.06 hereof. The above provisions of this Section 5 shall
similarly apply to successive reclassifications, consolidations, mergers,
combinations, and sales.
SECTION 5.08. Rights Plan. If the Company implements a stockholders'
rights plan, such rights plan must provide that upon conversion of the
Debentures into Common Stock the holders will receive, in addition to the Common
Stock issuable upon such conversion, such rights whether or not such rights have
separated from the Common Stock at the time of such exchange.
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SECTION 5.09. Fundamental Change. Notwithstanding the foregoing, but
not in addition to the adjustments set forth elsewhere herein, if the Company
makes an announcement of the occurrence or an imminent occurrence of a
Fundamental Change at any time prior to the mandatory redemption on April 15,
2011, there will be an adjustment to the Conversion Rate of the Debentures (the
"Fundamental Change Conversion Rate") such that the Conversion Rate will
thereafter equal $100, divided by the Fundamental Change Average Market Price,
unless the Fundamental Change Exchange Rate is lower than the then current
exchange rate of the Debentures as calculated in the manner described above (in
which case there will be no such adjustment to the exchange rate).
The term "Fundamental Change" means the occurrence of any
transaction or event in connection with which all or substantially of all of the
outstanding shares of Common Stock shall be exchanged for, converted into,
acquired for or constitute the right to receive stock, securities, other
property or assets (including cash) of another entity or person (whether by
means of an exchange offer, liquidation, tender offer, consolidation, merger,
combination, reclassification, recapitalization or otherwise).
"Fundamental Change Average Market Value" of the Common Stock means
the arithmetic average of the Current Market Value for the ten trading days
ending on the fifth Business Day prior to the date of the closing of the
Fundamental Change.
SECTION 5.10. No Adjustments. Notwithstanding anything herein to the
contrary, no adjustment will be required as a result of (a) the issuance of
shares of Common Stock as a result of any of the following (i) the grant or
exercise of employee or director stock options (ii) the exercise of outstanding
warrants or conversion or exchange of existing notes and securities and (iii)
any contribution to any 401(k) plan or supplemental deferred compensation plan
maintained by the Company or (b) the issuance of Common Stock as a dividend on
or upon conversion of the Series A Preferred. Common Stock issued in connection
with acquisitions of business or assets from persons that are not affiliates of
the Company will be deemed to have been issued for a price at least equal to
Average Market Value.
ARTICLE SIX
COVENANTS
SECTION 6.01. Payment of Debentures . The Company shall pay the
principal of, premium, if any, and interest on the Debentures on the dates and
in the manner provided in the Debentures and this Indenture. An installment of
principal, premium, if any, or interest shall be considered paid on the date due
if the Trustee or Paying Agent (other than the Company, a Subsidiary of the
Company, or any Affiliate of any of them) holds on that date money in such coin
or currency of the Federal Republic of Germany as at the time of payment shall
be legal
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51
tender for the payment of public and private debts designated for and sufficient
to pay the installment. If the Company or any Subsidiary of the Company or any
Affiliate of any of them, acts as Paying Agent, an installment of principal,
premium, if any, or interest shall be considered paid on the due date if the
entity acting as Paying Agent complies with the last sentence of Section 2.05.
As provided in Section 7.09, upon any bankruptcy or reorganization procedure
relative to the Company, the Trustee shall serve as the Paying Agent and
conversion agent, if any, for the Debentures.
The Company shall pay interest on overdue principal, premium, if
any, and interest on overdue installments of interest, to the extent lawful, at
the rate per annum specified in the Debentures.
SECTION 6.02. Special Interest Payment. If the average closing price
of the Common Stock, par value $.01 per share, of the Company (rounded down to
the nearest one-cent) during the 20 trading days immediately prior to April 15,
1999, is within one of the price ranges specified in the left column below, the
Company shall make a special interest payment payable in additional Debentures,
having an aggregate principal amount equal to the amount set forth on the
corresponding line of the right column below:
Special Per Debenture
Common Stock Price Interest Payment Amount
------------------ -----------------------
$ 11.25 - 11.75 DM 0.39
$ 10.75 - 11.24 DM 1.25
$ 10.25 - 10.74 DM 2.18
$ 9.75 - 10.24 DM 3.19
$ 9.25 - 9.74 DM 4.30
$ 8.75 - 9.24 DM 5.54
$ 8.25 - 8.74 DM 6.92
$ 7.75 - 8.24 DM 8.46
$ 7.25 - 7.74 DM 10.20
$ 7.00 - 7.24 DM 12.19
Below $7.00 DM 13.24
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52
The Debentures issued as a special interest payment will have the
same Conversion Price as the Debentures initially issued.
SECTION 6.03. Maintenance of Office or Agency. The Company will
maintain in the Borough of Manhattan, the City of New York, an office or agency
where Debentures may be surrendered for registration of transfer or exchange or
for presentation for payment, an office or agency in New York and Frankfurt am
Main, Germany, where Debentures may be presented for payment and monies for
payment in respect of the Debentures will be disbursed and where notices and
demands to or upon the Company in respect of the Debentures and this Indenture
may be served. The Company will 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 11.02 hereof.
The Company may also from time to time designate one or more other
offices or agencies (in or outside the City of New York) where the Debentures
may be presented or surrendered for any or all such purposes and may from time
to time rescind such designations; provided that no such designation or
rescission shall in any manner relieve the Company of its obligation to maintain
an office or agency in the Borough of Manhattan, the City of New York and
Frankfurt am Main, Germany for such purposes. The Company will give prompt
written notice to the Trustee of any such designation or rescission and of any
change in the location of any such other office or agency.
The Company hereby initially designates the Corporate Trust Office
of the Trustee, located in the Borough of Manhattan, the City of New York, as
such office of the Company in accordance with Section 2.04. The Company hereby
appoints Deutsche Bank for Debentures represented by the DBC Global.
SECTION 6.04. Repurchase of Debentures upon a Change of Control.
Except as set forth in Article Five, the Company must commence, within 30 days
of the occurrence of a Change of Control, and consummate an Offer to Purchase
for all the Debentures then outstanding, at a purchase price equal to 101% of
the principal amount of the Debentures on the relevant Payment Date, plus
accrued interest (if any) to the Payment Date.
SECTION 6.05 Existence. Except as otherwise provided or permitted in
Articles Four and Five of this Indenture, the Company will do or cause to be
done all things necessary to preserve and keep in full force and effect its
existence and the existence of each of its Restricted Subsidiaries in accordance
with the respective organizational documents of the Company and each such
Subsidiary (as the same may be amended from time to time) and the rights
(whether pursuant to charter, partnership certificate, agreement, statute or
otherwise), material licenses and
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53
franchises of the Company and each such Subsidiary; provided that the Company
shall not be required to preserve any such right, license or franchise, or the
existence of any Restricted Subsidiary, if the maintenance or preservation
thereof is no longer desirable in the conduct of the business of the Company and
its Restricted Subsidiaries taken as a whole.
SECTION 6.06. Payment of Taxes and Other Claims. The Company will
pay or discharge and shall cause each of its Subsidiaries to 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
(a) the Company or any such Subsidiary, (b) the income or profits of any such
Subsidiary which is a corporation or (c) the property of the Company or any such
Subsidiary and (ii) all material lawful claims for labor, materials and supplies
that, if unpaid, might by law become a Lien upon the property of the Company or
any such Subsidiary; provided 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 the amount, applicability or validity of which is being contested in
good faith by appropriate proceedings, for which adequate reserves have been
established.
SECTION 6.07. Maintenance of Properties and Insurance. The Company
will cause all properties used or useful in the conduct of its business or the
business of any of its Restricted Subsidiaries, to be maintained and kept in
good condition, repair and working order (ordinary wear and tear excepted) and
supplied with all necessary equipment and will cause to be made all necessary
repairs, renewals, replacements, betterments and improvements thereof, all as in
the judgment of the Company may be necessary so that the business carried on in
connection therewith may be properly and advantageously conducted at all times;
provided that nothing in this Section 6.07 shall prevent the Company or any such
Subsidiary 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 Company, desirable in the conduct of the business of the
Company or such Subsidiary.
The Company will provide or cause to be provided, for itself and its
Restricted Subsidiaries, insurance (including appropriate self-insurance)
against loss or damage of the kinds customarily insured against by corporations
similarly situated and owning like properties, with reputable insurers or with
the government of the United States of America, or an agency or instrumentality
thereof, in such amounts, with such deductibles and by such methods as shall be
customary for corporations similarly situated in the industry in which the
Company or such Restricted Subsidiary, as the case may be, is then conducting
business.
SECTION 6.08. Notice of Defaults. In the event that the Company
becomes aware of any Default or Event of Default, the Company, promptly after it
becomes aware thereof, will give written notice thereof to the Trustee.
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54
SECTION 6.09. Compliance Certificates. The principal accounting
officer and the principal financial officer of the Company shall certify, on or
before a date not more than 90 days after the end of each fiscal year of the
Company, that a review has been conducted of the activities of the Company and
its Restricted Subsidiaries and the Company's and its Restricted Subsidiaries'
performance under this Indenture and that the Company has fulfilled all
obligations hereunder, 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 shall also notify the Trustee of any default or defaults in the
performance of any covenants or agreements under this Indenture. The Company
shall also comply with the other provisions of Section 314(a) of the TIA.
SECTION 6.10. Commission Reports and Reports to Holders. At all
times from and after the earlier of (i) the date of effectiveness of a Shelf
Registration Statement (the "Registration") and (ii) the date that is six months
after the Closing Date, in either case, whether or not the Company is then
required to file reports with the Commission, the Company shall file with the
Commission all such reports and other information as it would be required to
file with the Commission by Sections 13(a) or 15(d) under the Securities
Exchange Act of 1934 if it were subject thereto. The Company shall supply the
Trustee and each Holder or shall supply to the Trustee for forwarding to each
such Holder, without cost to such Holder, copies of such reports and other
information. In addition, at all times prior to the earlier of the date of the
Registration and the date that is six months after the Closing Date, the Company
shall, at its cost, deliver to each Holder of the Debentures quarterly and
annual reports substantially equivalent to those which would be required by the
Exchange Act. In addition, at all times prior to the Registration, upon the
request of any Holder or any prospective purchaser of the Debentures designated
by a Holder, the Company shall supply to such Holder or such prospective
purchaser the information required under Rule 144A under the Securities Act.
Delivery of such reports, information and documents to the Trustee
is for informational purposes only and the Trustee's receipt of such shall not
constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Company's
compliance with any of its covenants hereunder (as to which the Trustee is
entitled to rely exclusively on Officers' Certificates).
SECTION 6.11. Waiver of Stay, Extension or Usury Laws. The Company
covenants (to the extent that it may lawfully do so) that it will not at any
time insist upon, or plead, or in any manner whatsoever claim or take the
benefit or advantage of, any stay 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, premium, if any, or interest on the Debentures as contemplated
herein, wherever enacted, now or at any time hereafter in force, or that 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,
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55
but will suffer and permit the execution of every such power as though no such
law had been enacted.
ARTICLE SEVEN
DEFAULT AND REMEDIES
SECTION 7.01. Events of Default. An "Event of Default" shall occur
with respect to the Debentures if:
(a) the Company defaults in the payment of principal of (or premium,
if any, on) any Debenture when the same becomes due and payable at
maturity, upon acceleration, redemption, conversion or otherwise;
(b) a court having jurisdiction in the premises enters a decree or
order for (A) relief in respect of the Company or any Significant
Subsidiary 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 Significant
Subsidiary or for all or substantially all of the property and assets of
the Company or any Significant Subsidiary or (C) the winding up or
liquidation of the affairs of the Company or any Significant Subsidiary
and, in each case, such decree or order shall remain unstayed and in
effect for a period of 60 consecutive days; or
(c) the Company or any Significant Subsidiary (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 Significant Subsidiary or for all or substantially all of
the property and assets of the Company or any Significant Subsidiary or
(C) effects any general assignment for the benefit of creditors.
SECTION 7.02. Acceleration. If an Event of Default (other than an
Event of Default specified in clause (b) or (c) of Section 7.01 that occurs with
respect to the Company) occurs and is continuing under this Indenture, the
Trustee or the Holders of at least 25% in aggregate principal amount of the
Debentures then outstanding, by written notice to the Company (and to the
Trustee if such notice is given by the Holders), may, and the Trustee at the
request of such Holders shall, declare the principal amount, of, premium, if
any, and accrued interest on the Debentures to be immediately due and payable.
If an Event of Default specified in clause (b) or (c) of Section 7.01 occurs
with respect to the Company, principal amount of
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56
premium, if any, and accrued interest on the Debentures 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 Holders of at least a majority in principal amount of the
outstanding Debentures, 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, and interest on the Debentures
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.
SECTION 7.03. 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, premium, if any, or interest
on the Debentures or to enforce the performance of any provision of the
Debentures or this Indenture.
The Trustee may maintain a proceeding even if it does not possess
any of the Notes or does not produce any of them in the proceeding.
SECTION 7.04. Waiver of Past Defaults. Subject to Section 7.02, at
any time after such a declaration of acceleration, but before a judgment or
decree for the payment of the money due has been obtained by the Trustee, the
Holders of at least a majority in aggregate principal amount of the outstanding
Debentures 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 (except a Default in the payment of principal of, or premium, if
any, on any Debenture as specified in clause (a) of Section 7.01) (but not as a
result of such acceleration) or in respect of a covenant or provision of this
Indenture which cannot be modified or amended without the consent of the Holder
of each outstanding Debenture affected) if (i) all existing Events of Default,
other than the nonpayment of the principal amount of, premium, if any, and
interest on the Debentures 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. Upon
any such waiver, such Default shall cease to exist, and any Event of Default
arising therefrom shall be deemed to have been cured, for every purpose of this
Indenture; but no such waiver shall extend to any subsequent or other Default or
Event of Default or impair any right consequent thereto.
SECTION 7.05. Control by Majority. The Holders of at least a
majority in aggregate principal amount of the outstanding Debentures may direct
the time, method and place of conducting any proceeding for any remedy available
to the Trustee or exercising any trust or power conferred on the Trustee.
However, the Trustee may refuse to follow any direction that
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57
conflicts with law or this Indenture, that may involve the Trustee in personal
liability, or that the Trustee determines in good faith may be unduly
prejudicial to the rights of Holders of the Debentures, not joining in the
giving of such direction and may take any other action it deems proper that is
not inconsistent with any such direction received from Holders of the
Debentures.
SECTION 7.06. Limitation on Suits. A Holder may not pursue any
remedy with respect to this Indenture or the Debentures unless:
(i) the Holder gives the Trustee written notice of a continuing
Event of Default;
(ii) the Holders of at least 25% in aggregate principal amount of
outstanding Debentures make a written request to the Trustee to pursue the
remedy;
(iii) such Holder or Holders offer the Trustee indemnity
satisfactory to the Trustee against any costs, liability or expense;
(iv) the Trustee does not comply with the request within 60 days
after receipt of the request and the offer of indemnity; and
(v) during such 60-day period, the Holders of a majority in
aggregate principal amount of the outstanding Debentures do not give the
Trustee a direction that is inconsistent with the request.
For purposes of Section 7.05 of this Indenture and this Section
7.06, the Trustee shall comply with TIA Section 316(a) in making any
determination of whether the Holders of the required aggregate principal amount
of outstanding Debentures have concurred in any request or direction of the
Trustee to pursue any remedy available to the Trustee or the Holders with
respect to this Indenture or the Debentures or otherwise under the law.
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 7.07. Rights of Holders to Receive Payment. Notwithstanding
any other provision of this Indenture, the right of any Holder of a Debenture to
receive payment of principal of, premium, if any, or interest on such Holder's
Debenture on or after the respective due dates expressed on such Debenture, 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.
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58
SECTION 7.08. Collection Suit by Trustee. If an Event of Default in
payment of principal or premium specified in clause (a) of Section 7.01 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 of the
Debentures for the whole amount of principal, premium, if any, and accrued
interest remaining unpaid, together with interest on overdue principal, premium,
if any, and, to the extent that payment of such interest is lawful, interest on
overdue installments of interest, in each case at the rate specified in the
Debentures, 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 8.07 hereof.
SECTION 7.09. 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, and any other amounts due the Trustee under
Section 5.07) and the Holders allowed in any judicial proceedings relative to
the Company (or any other obligor of the Debentures), its creditors or its
property and shall be entitled and empowered to collect and receive any monies,
securities or other property payable or deliverable upon conversion or exchange
of the Debentures or upon any such claims and to distribute the same, and any
custodian, receiver, assignee, trustee, liquidator, sequestrator or other
similar official in any such judicial proceeding is hereby authorized by each
Holder to make such payments to the Trustee and, in the event that the Trustee
shall consent to the making of such payments directly to the Holders, to pay to
the Trustee any amount due to it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agent and counsel, and any other
amounts due the Trustee under Section 8.07. Nothing herein contained shall be
deemed to empower the Trustee to authorize or consent to, or accept or adopt on
behalf of any Holder, any plan of reorganization, arrangement, adjustment or
composition affecting the Debentures or the rights of any Holder thereof, or to
authorize the Trustee to vote in respect of the claim of any Holder in any such
proceeding.
SECTION 7.10. Priorities. If the Trustee collects any money pursuant
to this Article Five, it shall pay out the money in the following order:
First: to the Trustee for all amounts due under Section 8.07;
Second: to Holders for amounts then due and unpaid for principal of,
premium, if any, and interest on the Debentures in respect of which or for
the benefit of which such money has been collected, ratably, without
preference or priority of any kind, according to the amounts due and
payable on such Debentures for principal, premium, if any, and interest,
respectively; and
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Third: to the Company, as its interests may appear.
The Trustee, upon prior written notice to the Company, may fix a
record date and payment date for any payment to Holders pursuant to this Section
7.10.
SECTION 7.11. 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 may require any party
litigant in such suit to file an undertaking to pay the costs of the suit, and
the court 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 7.11 does not apply to a suit by the Trustee, a suit by a Holder
pursuant to Section 7.07 of this Indenture, or a suit by Holders of more than
10% in principal amount of the outstanding Debentures.
SECTION 7.12. Restoration of Rights and Remedies. If the Trustee or
any Holder has instituted any proceeding to enforce any right or remedy under
this Indenture and such proceeding has been discontinued or abandoned for any
reason, or has been determined adversely to the Trustee or to such Holder, then,
and in every such case, subject to any determination in such proceeding, the
Company, the Trustee and the Holders shall be restored severally and
respectively to their former positions hereunder and thereafter all rights and
remedies of the Company, the Trustee and the Holders shall continue as though no
such proceeding had been instituted.
SECTION 7.13. Rights and Remedies Cumulative. Except as otherwise
provided with respect to the replacement or payment of mutilated, destroyed,
lost or wrongfully taken Debentures in Section 2.09, no right or remedy herein
conferred upon or reserved to the Trustee or to the Holders is intended to be
exclusive of any other right or remedy, and every right and remedy shall, to the
extent permitted by law, be cumulative and in addition to every other right and
remedy given hereunder or now or hereafter existing at law or in equity or
otherwise. The assertion or employment of any right or remedy hereunder, or
otherwise, shall not prevent the concurrent assertion or employment of any other
appropriate right or remedy.
SECTION 7.14. Delay or Omission Not Waiver. No delay or omission of
the Trustee or of any Holder 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 Seven or by law to the Trustee or to the Holders may be
exercised from time to time, and as often as may be deemed expedient, by the
Trustee or by the Holders, as the case may be.
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ARTICLE EIGHT
TRUSTEE
SECTION 8.01. General. The duties and responsibilities of the
Trustee shall be as provided by the TIA and as set forth herein. Notwithstanding
the foregoing, no provision of this Indenture shall require the Trustee to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder, or in the exercise of any of its
rights or powers. Whether or not therein expressly so provided, every provision
of this Indenture relating to the conduct or affecting the liability of or
affording protection to the Trustee shall be subject to the provisions of this
Article Seven.
SECTION 8.02. Certain Rights of Trustee. Subject to TIA Sections
315(a) through (d):
(i) the Trustee may conclusively rely and shall be protected in
acting or refraining from acting upon any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction,
consent, order, bond, debenture, note, other evidence of indebtedness or
other paper or document (whether in its original or facsimile form)
believed by it to be genuine and to have been signed or presented by the
proper person. The Trustee need not investigate any fact or matter stated
in the document and may in good faith conclusively rely as to the truth of
the statements and the correctness of the opinions therein;
(ii) before the Trustee acts or refrains from acting, it may require
an Officers' Certificate or an Opinion of Counsel, which shall conform to
Section 8.04. The Trustee shall not be liable for any action it takes or
omits to take in good faith in reliance on such certificate, opinion
and/or an accountants' certificate if required under the TIA;
(iii) the Trustee may act through its attorneys and agents and shall
not be responsible for the misconduct or negligence of any agent appointed
with due care;
(iv) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or
direction of any of the Holders, unless such Holders shall have offered to
the Trustee security or indemnity reasonably satisfactory to it against
the costs, expenses and liabilities that might be incurred by it in
compliance with such request or direction;
(v) the Trustee shall not be liable for any action it takes or omits
to take in good faith that it believes to be authorized or within its
rights or powers or for any action it takes or omits to take in accordance
with the direction of the Holders of a majority in principal amount of the
outstanding Debentures relating to the time, method and place of
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61
conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred upon the Trustee, under this
Indenture; provided that the Trustee's conduct does not constitute
negligence or bad faith;
(vi) whenever in the administration of this Indenture the Trustee
shall deem it desirable that a matter be proved or established prior to
taking, suffering or omitting any action hereunder, the Trustee (unless
other evidence be herein specifically prescribed) may, in the absence of
bad faith on its part, rely upon an Officers' Certificate;
(vii) the Trustee shall not be bound to make any investigation into
the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note, other evidence of indebtedness or other paper or
document, but the Trustee, in its discretion, may make such further
inquiry or investigation into such facts or matters as it may see fit,
and, if the Trustee shall determine to make such further inquiry or
investigation, it shall be entitled at the sole cost of the Company to
examine the books, records and premises of the Company personally or by
agent or attorney and shall incur no liability or additional liability of
any kind by reason of such inquiry or investigation;
(viii) The Trustee shall not be charged with knowledge of any
Default or Event of Default, of the identity of any Restricted Subsidiary
or of the existence of any Change of Control or Asset Sale unless either
(i) a Responsible Officer shall have actual knowledge thereof, or (ii) the
Trustee shall have received written notice thereof from the Company or any
Holder of the Debentures; and
(ix) The Trustee may consult with counsel of its selection and the
advice of such counsel or any Opinion of Counsel shall be full and
complete authorization and protection in respect of any action taken,
suffered or omitted by it hereunder in good faith and in reliance thereon.
SECTION 8.03. Individual Rights of Trustee. The Trustee, in its
individual or any other capacity, may become the owner or pledgee of Debentures
and may otherwise deal with the Company or its Affiliates with the same rights
it would have if it were not the Trustee. Any Agent may do the same with like
rights. However, the Trustee is subject to TIA Sections 310(b) and 311.
SECTION 8.04. Trustee's Disclaimer. The Trustee (i) makes no
representation as to the validity or adequacy of this Indenture or the
Debentures, (ii) shall not be accountable for the Company's use or application
of the proceeds from the Debentures and (iii) shall not be responsible for any
statement in the Debentures other than its certificate of authentication.
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SECTION 8.05. Notice of Default. If any Default or any Event of
Default occurs and is continuing and if such Default or Event of Default is
known to a Responsible Officer of the Trustee, the Trustee shall mail to each
Holder in the manner and to the extent provided in TIA Section 313(c) notice of
the Default or Event of Default within 90 days after it occurs, unless such
Default or Event of Default has been cured; provided, however, that, except in
the case of a default in the payment of the principal of, premium, if any, or
interest on any Debenture, the Trustee shall be protected in withholding such
notice if and so long as the board of directors, the executive committee or a
trust committee of directors and/or Responsible Officers of the Trustee in good
faith determine that the withholding of such notice is in the interest of the
Holders. If an Event of Default has occurred and is continuing, the Trustee
shall use the same degree of care and skill in its exercise of the rights and
powers invested in it under this Indenture as a prudent person would exercise
under the circumstances in the conduct of such person's own affairs.
SECTION 8.06. Reports by Trustee to Holders. Within 60 days after
each November 15, beginning with November 15, 1998, the Trustee shall mail to
each Holder as provided in TIA Section 313(c) a brief report that complies with
TIA Section 313(a) dated as of such November 15, if required by TIA Section
313(a).
SECTION 8.07. Compensation and Indemnity. The Company shall pay to
the Trustee such compensation as shall be agreed upon from time to time in
writing for its services. The compensation of the Trustee 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 out-of-pocket expenses and
advances incurred or made by the Trustee. Such expenses shall include the
reasonable compensation and expenses of the Trustee's agents and counsel.
The Company shall indemnify each of the Trustee and any predecessor
Trustee for, and hold it harmless against, any and all loss, claim, damage or
liability or expense (including taxes other than taxes based upon the income of
the Trustee) incurred by it without negligence or bad faith on its part in
connection with the acceptance or administration of this Indenture and its
duties under this Indenture and the Debentures, including the costs and expenses
of defending itself against any claim or liability and of complying with any
process served upon it or any of its officers in connection with the exercise or
performance of any of its powers or duties under this Indenture and the
Debentures. The Trustee shall notify the Company promptly of any claim asserted
against the Trustee for which it may seek indemnity. The Company shall defend
the claim and the Trustee shall provide reasonable cooperation at the Company's
expense in the defense. The Trustee may have separate counsel of its selection
and the Company shall pay the reasonable fees and expenses of such counsel;
provided that the Company will not be required to pay such fees and expenses if
it assumes the Trustee's defense and there is no conflict of interest between
the Company and the Trustee in connection with such defense. The Company need
not pay for any settlement made without its written consent.
<PAGE>
63
To secure the Company's payment obligations in this Section 8.07,
the Trustee shall have a lien prior to the Debentures on all money or property
held or collected by the Trustee, in its capacity as Trustee, except money or
property held in trust to pay principal of, premium, if any, and interest on
particular Debentures.
If the Trustee incurs expenses or renders services after the
occurrence of an Event of Default specified in clause (b) or (c) of Section
7.01, the expenses and the compensation for the services will be intended to
constitute expenses of administration under Title 11 of the United States
Bankruptcy Code or any applicable federal or state law for the relief of
debtors.
The rights, privileges, protections and benefits given to the
Trustee, including, without limitation, its rights to be indemnified, are
extended to, and shall be enforceable by, the Trustee in each of its capacities
hereunder.
The provisions of this Section 8.07 shall survive the resignation or
removal of the Trustee and the defeasance or other termination of this
Indenture.
SECTION 8.08. Replacement of Trustee. 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 8.08.
The Trustee may resign at any time by so notifying the Company in
writing at least 30 days prior to the date of the proposed resignation. The
Holders of a majority in principal amount of the outstanding Debentures may
remove the Trustee by so notifying the Trustee in writing and may appoint a
successor Trustee with the consent of the Company. The Company may at any time
remove the Trustee, by Company Order given at least 30 days prior to the date of
the proposed removal; provided that at such date no Event of Default shall have
occurred and be continuing.
If the Trustee resigns or is removed, or if a vacancy exists in the
office of Trustee for any reason, the Company 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 outstanding Debentures may appoint a
successor Trustee to replace the successor Trustee appointed by the Company. If
the successor Trustee does not deliver its written acceptance required by the
next succeeding paragraph of this Section 8.08 within 30 days after the retiring
Trustee resigns or is removed, the retiring Trustee, the Company or the Holders
of a majority in principal amount of the outstanding Debentures may petition at
the expense of the Company any court of competent jurisdiction for the
appointment of a successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Immediately after the
delivery of such written acceptance,
<PAGE>
64
subject to the lien provided in Section 8.07, (i) the retiring Trustee shall
transfer all property held by it as Trustee to the successor Trustee, (ii) the
resignation or removal of the retiring Trustee shall become effective and (iii)
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 the Trustee is no longer eligible under Section 8.10, any Holder
who satisfies the requirements of TIA Section 310(b) may petition any court of
competent jurisdiction for the removal of the Trustee and the appointment of a
successor Trustee.
The Company shall give notice of any resignation and any removal of
the Trustee and each appointment of a successor Trustee to all Holders. Each
notice shall include the name of the successor Trustee and the address of its
Corporate Trust Office.
SECTION 8.09. 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 national banking
association, the resulting, surviving or transferee corporation or national
banking association without any further act shall be the successor Trustee with
the same effect as if the successor Trustee had been named as the Trustee
herein.
SECTION 8.10. Eligibility. This Indenture shall always have a
Trustee who satisfies the requirements of TIA Sections 310(a)(1) and 310(a)(5).
The Trustee shall have a combined capital and surplus of at least $50,000,000 as
set forth in its most recent published annual report of condition.
SECTION 8.11. Money Held in Trust. The Trustee shall not be liable
for interest on any money received by it except as the Trustee may agree with
the Company in writing. Money held in trust by the Trustee need not be
segregated from other funds except to the extent required by law and except for
money held in trust under Article Eight of this Indenture.
SECTION 8.12. Withholding Taxes. The Trustee, as agent for the
Company, shall exclude and withhold from each payment of principal and interest
and other amounts due hereunder or under the Debentures any and all withholding
taxes applicable thereto as required by law. The Trustee agrees to act as such
withholding agent and, in connection therewith, whenever any present or future
taxes or similar charges are required to be withheld with respect to any amounts
payable in respect of the Debentures, to withhold such amounts and timely pay
the same to the appropriate authority in the name of and on behalf of the
Holders of the Debentures, that it will file any necessary withholding tax
returns or statements when due, and that, as promptly as possible after the
payment thereof, it will deliver to each Holder of a Debenture appropriate
documentation showing the payment thereof, together with such additional
documentary evidence as such Holders may reasonably request from time to time.
<PAGE>
65
ARTICLE NINE
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 9.01. Without Consent of Holders. The Company, when
authorized by resolutions of its Board of Directors (as evidenced by a Board
Resolution), and the Trustee may amend or supplement this Indenture or the
Debentures without notice to, or the consent of, any Holder:
(i) to cure any ambiguity, defect or inconsistency in this
Indenture; provided that, in the good faith opinion of the Board of
Directors of the Company evidenced by a Board Resolution, such amendments
or supplements do not adversely affect the interests of the Holders in any
material respect;
(ii) to comply with any requirements of the Commission in connection
with the qualification of this Indenture under the TIA;
(iii) to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee;
(iv) to make any change that, in the good faith opinion of the Board
of Directors of the Company evidenced by a Board Resolution, does not
materially and adversely affect the rights of any Holder; or
(v) to facilitate the introduction of the Euro and the exchange of
the Debentures for the Euro-denominated Debentures in a manner not adverse
to the holders of the Debentures.
SECTION 9.02. With Consent of Holders. Subject to Section 8.07 and
without prior notice to the Holders, the Company, when authorized by its Board
of Directors (as evidenced by a Board Resolution), and the Trustee may amend
this Indenture and the Debentures with the written consent of the Holders of a
majority in aggregate principal amount of the Debentures then outstanding, and
the Holders of a majority in aggregate principal amount of the Debentures then
outstanding by written notice to the Trustee may waive compliance by the Company
with any provision of this Indenture or the Debentures.
Notwithstanding the provisions of this Section 9.02, without the
consent of each Holder affected thereby, an amendment or waiver, including a
waiver pursuant to Section 7.04, may not:
<PAGE>
66
(i) change the Stated Maturity of the principal of, or any
installment of interest on, any Debenture;
(ii) reduce the principal amount of, or premium, if any, or interest
on, any Debenture;
(iii) change the place or currency of payment of principal of, or
premium, if any, or interest on, any Debenture;
(iv) impair the right to institute suit for the enforcement of any
payment on or after the Stated Maturity (or, in the case of a redemption,
on or after the Redemption Date) of any Debenture;
(v) reduce the above-stated percentage of outstanding Debentures,
the consent of whose Holders is necessary to modify or amend this
Indenture;
(vi) waive a default in the payment of principal of, premium, if
any, or interest on the Debentures; or
(vii) reduce the percentage or aggregate principal amount of
outstanding Debentures the consent of whose Holders is necessary for
waiver of compliance with certain provisions of this Indenture or for
waiver of certain defaults.
It shall not be necessary for the consent of the Holders under this
Section 9.02 to approve the particular form of any proposed amendment,
supplement or waiver, but it shall be sufficient if such consent approves the
substance thereof.
After an amendment, supplement or waiver under this Section 9.02
becomes effective, the Trustee shall mail to the Holders affected thereby a
notice briefly describing the amendment, supplement or waiver. The Company will
mail supplemental indentures to Holders upon request. 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 supplemental indenture or waiver.
SECTION 9.03. Revocation and Effect of Consent. Until an amendment
or waiver becomes effective, a consent to it by a Holder is a continuing consent
by the Holder and every subsequent Holder of a Debenture or portion of a
Debenture that evidences the same debt as the Debenture of the consenting
Holder, even if notation of the consent is not made on any Debenture. However,
any such Holder or subsequent Holder may revoke the consent as to its Debenture
or portion of its Debenture. Such revocation shall be effective only if the
Trustee receives the notice of revocation before the date the amendment,
supplement or waiver becomes effective. An amendment, supplement or waiver shall
become effective on receipt by the Trustee
<PAGE>
67
of written consents from the Holders of the requisite percentage in principal
amount of the outstanding Debentures.
The Company may, but shall not be obligated to, fix a record date
for the purpose of determining the Holders entitled to consent to any amendment,
supplement or waiver. If a record date is fixed, then, notwithstanding the last
two sentences of the immediately preceding paragraph, those Persons who were
Holders at such record date (or their duly designated proxies) and only those
Persons shall be entitled to consent to such amendment, supplement or waiver or
to revoke any consent previously given, whether or not such Persons continue to
be Holders after such record date. No such consent shall be valid or effective
for more than 90 days after such record date.
After an amendment, supplement or waiver becomes effective, it shall
bind every Holder unless it is of the type described in any of clauses (i)
through (vii) of Section 9.02. In case of an amendment or waiver of the type
described in clauses (i) through (vii) of Section 9.02, the amendment or waiver
shall bind each Holder who has consented to it and every subsequent Holder of a
Debenture that evidences the same indebtedness as the Debenture of the
consenting Holder.
SECTION 9.04. Notation on or Exchange of Debentures. If an
amendment, supplement or waiver changes the terms of a Debenture, the Trustee
may require the Holder to deliver it to the Trustee. The Trustee may place an
appropriate notation on the Debenture about the changed terms and return it to
the Holder and the Trustee may place an appropriate notation on any Debenture
thereafter authenticated. Alternatively, if the Company or the Trustee so
determines, the Company in exchange for the Debenture shall issue and the
Trustee shall authenticate a new Debenture that reflects the changed terms.
SECTION 9.05. Trustee to Sign Amendments, Etc. The Trustee shall be
entitled to receive, and shall be fully protected in relying upon, in addition
to the documents required by Section 10.03, an Opinion of Counsel stating that
the execution of any amendment, supplement or waiver authorized pursuant to this
Article Seven is authorized or permitted by this Indenture. Subject to the
preceding sentence, the Trustee shall sign such amendment, supplement or waiver
if the same does not adversely affect the rights of the Trustee. The Trustee
may, but shall not be obligated to, execute any such amendment, supplement or
waiver that affects the Trustee's own rights, duties or immunities under this
Indenture or otherwise.
SECTION 9.06. Conformity with Trust Indenture Act. Every
supplemental indenture executed pursuant to this Article Seven shall conform to
the requirements of the TIA as then in effect.
<PAGE>
68
ARTICLE TEN
MISCELLANEOUS
SECTION 10.01. Trust Indenture Act of 1939. Prior to the
effectiveness of the Registration Statement, this Indenture shall incorporate
and be governed by the provisions of the TIA that are required or deemed to be
part of and to govern indentures qualified under the TIA. After the
effectiveness of the Registration Statement, this Indenture shall be subject to
the provisions of the TIA that are required or deemed to be a part of this
Indenture and shall, to the extent applicable, be governed by such provisions.
SECTION 10.02. Notices. (a) Any notice or communication shall be
sufficiently given if in writing and delivered in person or mailed by first
class mail, commercial courier service or telecopier communication, addressed as
follows:
if to the Company:
Viatel, Inc.
800 Third Avenue
New York, NY 10022
Telecopier Number: (212) 350-9250
Attention: Sheldon M. Goldman
With, in the case of any notice given pursuant to
Article Five, a copy to:
Kelley Drye & Warren LLP
101 Park Avenue
New York, NY 10178
Attention: James T. Prenetta, Jr.
if to the German Paying Agent:
Deutsche Bank, Aktiengesellschaft
Grosse Gallusstrasse 10-14
G0272 Frankfurt am Main
Attention: Fiscal Agency Services
<PAGE>
69
if to the Trustee:
The Bank of New York
101 Barclay Street, Floor 21 West
New York, NY 10286
Telecopier Number: (212) 815-5915
Attention: Corporate Trust Administration
With a copy to:
Emmet, Marvin & Martin
120 Broadway
New York, NY 10271
Attention: Anthony Marvin
The Company, the Trustee, or the Depository by notice to the others
may designate additional or different addresses for subsequent notices or
communications.
All notices and communications (other than those sent to Holders)
shall be deemed to have been duly given: at the time delivered by hand, if
personally delivered; five Business Days after being deposited in the mail,
postage prepaid, if mailed; when receipt acknowledged, if telecopied; and the
next Business Day after timely delivery to the courier, if sent by overnight air
courier guaranteeing next day delivery.
(b) Where this Indenture provides for notice of any event to Holders
by the Company or Trustee, such notice shall be sufficiently given (unless
otherwise herein expressly provided): to registered Holders, if in writing and
mailed, first-class postage (or, if first class mail is unavailable, by airmail)
prepaid, to each registered Holder at his adders as it appears in the Debenture
Register, in each case not later than the latest date, and not earlier than the
earliest date, prescribed hereunder for the giving of such notice; or, to
unregistered Holders, if such notice is published in the following journals: (i)
the Bundesanzeiger and one mandatory nationwide newspaper (if practicable, the
Borsen-Zeitung) in the German language; and (ii) a leading daily newspaper (if
practicable, The Wall Street Journal (Eastern Edition)) printed in the English
language and of general circulation in New York, in each case, once in each of
three successive calendar weeks, the first publication to be not later than the
latest date, and not earlier than the earliest date, prescribed hereunder for
the giving of such notice. Any notice to unregistered Holders will become
effective for all purposes on the date of its publication in the Bundesanzeiger.
The Company shall provide to the Trustee copies of all notices to Holders in the
required language of publication other than those notices given in the English
language.
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70
(c) Where this Indenture provides for notice in any manner, such
notice may be waived in writing by the Person entitled to receive such notice,
either before or after the event, and such waiver shall be the equivalent of
such notice. Waivers of notice by Holders shall be filed with the Trustee, but
such filing shall not be a condition precedent to the validity of any action
taken in reliance upon such waiver.
In case by reason of the suspension of regular mail service or by
reason of any other cause it shall be impracticable to give such notice by mail,
then such notification as shall be made with the approval of the Trustee shall
constitute a sufficient notification for every purpose hereunder.
SECTION 10.03. Certificate and Opinion As to Conditions Precedent.
Upon any request or application by the Company to the Trustee to take any action
under this Indenture, the Company shall furnish to the Trustee:
(i) an Officers' Certificate stating that, in the opinion of the
signers, all conditions precedent, if any, provided for in this Indenture
relating to the proposed action have been complied with; and
(ii) an Opinion of Counsel stating that, in the opinion of such
counsel, all such conditions precedent have been complied with.
SECTION 10.04. 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:
(i) a statement that each person signing such certificate or opinion
has read such covenant or condition and the definitions herein relating
thereto;
(ii) a brief statement as to the nature and scope of the examination
or investigation upon which the statement or opinion contained in such
certificate or opinion is based;
(iii) a statement that, in the opinion of each such person, he has
made such examination or investigation as is necessary to enable him to
express an informed opinion as to whether or not such covenant or
condition has been complied with; and
(iv) 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.
<PAGE>
71
SECTION 10.05. Rules by Trustee, Paying Agent or Registrar. The
Trustee may make reasonable rules for action by or at a meeting of Holders. The
Paying Agent or Registrar may make reasonable rules for its functions.
SECTION 10.06. Payment Date Other Than a Business Day. If an
Interest Payment Date, Redemption Date, Payment Date, Conversion Date Stated
Maturity or date of maturity of any Debenture shall not be a Business Day, then
payment of principal of, premium, if any, or interest on such Debenture, as the
case may be, need not be made on such date, but may be made on the next
succeeding Business Day with the same force and effect as if made on the
Interest Payment Date, Payment Date, Conversion Date or Redemption Date, or at
the Stated Maturity or date of maturity of such Debenture; provided that no
interest shall accrue for the period from and after such Interest Payment Date,
Payment Date, Redemption Date, Stated Maturity, Conversion Date or date of
maturity, as the case may be.
SECTION 10.07. Governing Law; Submission to Jurisdiction; Agent for
Service. This Indenture and the Debentures shall be governed by the laws of the
State of New York, except as referred to in Section 10.14. The Company hereby
appoints CT Corporation System as its agent for service of process in any suit,
action or proceeding with respect to this Indenture or the Notes and for actions
brought under the U.S. federal or state securities laws brought in any federal
or state court located in The City of New York and the Company agrees to submit
to the jurisdiction of any such court.
SECTION 10.08. No Adverse Interpretation of Other Agreements. This
Indenture may not be used to interpret another indenture, loan or debt agreement
of the Company or any Subsidiary of the Company. Any such indenture, loan or
debt agreement may not be used to interpret this Indenture.
SECTION 10.09. No Recourse Against Others. No recourse for the
payment of the principal of, premium, if any, or interest on any of the
Debentures, or for any claim based thereon or otherwise in respect thereof, and
no recourse under or upon any obligation, covenant or agreement of the Company
contained in this Indenture, or in any of the Debentures, or because of the
creation of any indebtedness represented thereby, shall be had against any
incorporator or against any past, present or future partner, shareholder, other
equityholder, officer, director, employee or controlling person, as such, of the
Company or of any successor Person, either directly or through the Company or
any successor Person, whether by virtue of any constitution, statute or rule of
law, or by the enforcement of any assessment or penalty or otherwise; it being
expressly understood that all such liability is hereby expressly waived and
released as a condition of, and as a consideration for, the execution of this
Indenture and the issue of the Debentures.
<PAGE>
72
SECTION 10.10. Successors. All agreements of the Company in this
Indenture and the Debentures shall bind its successors. All agreements of the
Trustee in this Indenture shall bind its successors.
SECTION 10.11. Duplicate Originals. The parties may sign any number
of copies of this Indenture. Each signed copy shall be an original, but all of
them together represent the same agreement.
SECTION 10.12. Separability. In case any provision in this Indenture
or in the Debentures shall be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.
SECTION 10.13. 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 hereof and shall in no way modify or restrict any of the
terms and provisions hereof.
SECTION 10.14. Substitution of Currency. Under the Treaty on the
European Economic and Monetary Union (the "Treaty"), to which Germany is a
signatory, on or before January 1, 1999, and subject to the fulfillment of
certain conditions, the "Euro" may replace all or some of the currencies of the
member states of the European Union, including the Deutsche Mark. If, pursuant
to the Treaty, the Deutsche Mark is replaced by the Euro (or other currency,
however captioned), all sums payable to the Company under or in connection with
the Debentures (including, without limitation, principal of, or interest on, the
Debentures) will be effected in Euro (or such other currency) in conformity with
legally applicable measures taken pursuant to, or by virtue of, the Treaty. In
addition, the regulations of the European Commission relating to the Euro (or
such other currency) will then apply to the Debentures and this Indenture. The
circumstances and consequences described in this Section 10.14 entitle neither
the Company nor any Holder to early redemption, rescission, notice, repudiation,
adjustment or renegotiation of the terms and conditions of Debentures or this
Indenture or to raise other defenses or to request any compensation claim, nor
will they affect any of the other obligations of the Company under the
Debentures and this Indenture.
SECTION 10.15. Method of Payment. Deutsche Marks are the sole
currency of account and payment for all sums payable by the Company under or in
connection with the Notes, including damages.
<PAGE>
SIGNATURES
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed, all as of the date first written above.
VIATEL, INC.
By: /s/ Michael J. Mahoney
-----------------------------------
Name: Michael J. Mahoney
Title: President and Chief Executive
Officer
THE BANK OF NEW YORK,
as Trustee
By: /s/ Ming J. Shiang
-----------------------------------
Name: Ming J. Shiang
Title: Assistant Vice President
DEUTSCHE BANK,
AKTIENGESELLSCHAFT
as German Paying Agent
and Co-Registrar
By: /s/ Peter C. Olsen
-----------------------------------
Name: Peter C. Olsen
Title: Vice President
<PAGE>
EXHIBIT A
FORM OF DTC GLOBAL DEBENTURE
FACE OF DEBENTURE
THIS DEBENTURE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS, AND ACCORDINGLY,
MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHIN THE UNITED
STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS EXCEPT AS SET FORTH
IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS
THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER
THE SECURITIES ACT) OR (B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS
DEFINED IN RULE 501(a)(1), (2), (3) OR (7) OF REGULATION D UNDER THE SECURITIES
ACT) (AN "INSTITUTIONAL ACCREDITED INVESTOR") OR (C) IT IS NOT A U.S. PERSON AND
IS ACQUIRING THIS DEBENTURE IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE
903 OF REGULATION S UNDER THE SECURITIES ACT; (2) AGREES THAT IT WILL NOT,
WITHIN THE TIME PERIOD REFERRED TO IN RULE 144(k) (TAKING INTO ACCOUNT THE
PROVISIONS OF RULE 144(d) UNDER THE SECURITIES ACT, IF APPLICABLE), RESELL OR
OTHERWISE TRANSFER THIS DEBENTURE EXCEPT (A) TO THE COMPANY OR ANY SUBSIDIARY
THEREOF, (B) TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A
UNDER THE SECURITIES ACT, (C) INSIDE THE UNITED STATES TO AN INSTITUTIONAL
ACCREDITED INVESTOR THAT, PRIOR TO SUCH TRANSFER, FURNISHES TO THE TRUSTEE A
SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE
RESTRICTIONS ON TRANSFER OF THIS DEBENTURE (THE FORM OF WHICH LETTER CAN BE
OBTAINED FROM THE TRUSTEE) AND IF SUCH TRANSFER IS IN RESPECT OF AN AGGREGATE
PRINCIPAL AMOUNT OF DEBENTURES OF LESS THAN DM 150,000, AN OPINION OF COUNSEL
ACCEPTABLE TO THE COMPANY THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE
SECURITIES ACT, (D) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN
COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT, (E) PURSUANT TO THE EXEMPTION
FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE)
OR (F) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT
AND (3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS DEBENTURE IS
TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN CONNECTION
WITH ANY TRANSFER OF THIS DEBENTURE WITHIN THE TIME PERIOD REFERRED TO ABOVE,
THE HOLDER MUST CHECK THE APPROPRIATE BOX SET FORTH ON THE REVERSE HEREOF
RELATING TO THE MANNER OF SUCH TRANSFER AND SUBMIT THIS CERTIFICATE TO THE
TRUSTEE. IF THE PROPOSED TRANSFEREE IS AN INSTITUTIONAL ACCREDITED
<PAGE>
A-2
INVESTOR, THE HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO EACH OF THE
TRUSTEE AND THE COMPANY SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION
AS SUCH PERSONS MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING
MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. 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. THE INDENTURE CONTAINS A
PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF THIS
DEBENTURE IN VIOLATION OF THE FOREGOING RESTRICTIONS.
THE DEBENTURES EVIDENCED BY THIS CERTIFICATE ARE INITIALLY ISSUED AS PART OF AN
ISSUANCE OF UNITS, EACH OF WHICH CONSISTS OF DM 1,000 PRINCIPAL AMOUNT OF
[12.40] [11.15]% SENIOR [DISCOUNT] DM NOTES DUE 2008 OF VIATEL, INC. (THE
"NOTES") AND [2.77] [2.69] 10% SUBORDINATED CONVERTIBLE DEBENTURES DUE 2011 OF
THE COMPANY (THE "SUBORDINATED CONVERTIBLE DEBENTURES"). THE NOTES AND THE
SUBORDINATED CONVERTIBLE DEBENTURES WILL BE AUTOMATICALLY SEPARATED UPON THE
EARLIEST TO OCCUR OF (i) SIX MONTHS AFTER APRIL 8, 1998, (ii) THE COMMENCEMENT
OF AN EXCHANGE OFFER WITH RESPECT TO THE NOTES, (iii) THE EFFECTIVENESS OF A
SHELF REGISTRATION STATEMENT WITH RESPECT TO RESALE OF THE NOTES OR (iv)
COMMENCEMENT OF AN OFFER TO REPURCHASE THE NOTES PURSUANT TO THE INDENTURE. THE
DEBENTURES EVIDENCED BY THIS CERTIFICATE MAY NOT BE TRANSFERRED OR EXCHANGED
SEPARATELY FROM, BUT MAY BE TRANSFERRED OR EXCHANGED ONLY TOGETHER WITH, THE
NOTES.
UNLESS THIS GLOBAL DEBENTURE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF
TRANSFER, EXCHANGE OR PAYMENT, AND ANY DEBENTURE ISSUED IS REGISTERED IN THE
NAME OF CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY OR SUCH OTHER REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (AND ANY PAYMENT HEREON IS MADE
TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY), 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.
<PAGE>
A-3
TRANSFERS OF THIS GLOBAL DEBENTURE 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 DEBENTURE SHALL BE
LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN
SECTION 2.08 OF THE INDENTURE.
THIS DEBENTURE WAS ISSUED WITH ORIGINAL ISSUE DISCOUNT FOR U.S. FEDERAL INCOME
TAX PURPOSES. FOR INFORMATION REGARDING ISSUE PRICE, AMOUNT OF ORIGINAL ISSUE
DISCOUNT, ISSUE DATE AND YIELD TO MATURITY, THE HOLDER MAY CONTACT ALLAN L.
SHAW, CHIEF FINANCIAL OFFICER OF THE COMPANY, AT (212) 350-9220.
VIATEL, INC.
10% Subordinated Convertible Debenture Due 2011
[CUSIP][CINS][INIS] ________
No. __________ DM_______
VIATEL, INC., a Delaware corporation (the "Company", which term includes
any successor under the Indenture hereinafter referred to), for value received,
promises to pay to ________________, or its registered assigns, upon surrender
hereof the principal sum of DM _________ on April 15, 2011.
Issue date: April 8, 1998
Interest Payment Dates: January 15, April 15, July 15 and October 15,
commencing July 15, 1998.
Record Dates: January 1, April 1, July 1 and October 1.
Reference is hereby made to the further provisions of this Debenture set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
<PAGE>
A-4
IN WITNESS WHEREOF, the Company has caused this Debenture to be signed
manually or by facsimile by its duly authorized officers.
Date: April 8, 1998 VIATEL, INC.
By:
-----------------------------------
Name:
Title:
By:
-----------------------------------
Name:
Title:
(Certificate of Authentication)
This is one of the 10% Subordinated Convertible Debenture due 2011 described in
the within-mentioned Indenture.
Date: April 8, 1998 DEUTSCHE BANK, as Authenticating Agent
By:
-----------------------------------
Authorized Signatory
<PAGE>
A-5
[REVERSE SIDE OF DEBENTURE]
VIATEL, INC.
10% Subordinated Convertible Debenture due 2011
1. Principal and Interest.
The Company will pay the principal of this Debenture on April 15,
2011.
The Company promises to pay interest on the principal amount of this
Debenture on each Interest Payment Date, as set forth below, at the rate per
annum shown above.
Interest will be payable quarterly, through April 15, 2005 in
additional Debentures or cash or any combination thereof, at the Company's
options subject to restrictions contained in the New Indentures. After April 15,
2003, interest will be payable in cash (in each case, to the holders of record
of the Debentures at the close of business on the January 1, April 1, July 1 or
October 1 immediately preceding the Interest Payment Date) in each case, on each
Interest Payment Date. Interest will be computed on the basis of a 360 day year
of twelve 30 day months.
If a shelf registration statement under the Securities Act with
respect to resales of the Debentures is not declared effective by the
Commission, on or before the date that is one year after the Closing Date or
does not continue to be effective (except during certain "blackout periods" and
after the end of the Debenture Shelf Period) in accordance with the terms of the
Registration Rights Agreement dated April 3, 1998 between the Company and Morgan
Stanley & Co. Incorporated, as the manager for itself and the several initial
purchasers named on Schedule I to the Purchase Agreement dated April 3, 1998,
interest (in addition to interest otherwise due on the Debentures) will accrue,
at an annual rate of 0.5% per annum of the principal amount, payable in cash
semiannually, in arrears, on January 15, April 15, July 15 and October 15 of
each year, commencing April 15, 1999 until the effectiveness of a
shelf-registration statement with respect to resale of this Debenture. The
Holder of this Debenture is entitled to the benefits of such Registration Rights
Agreement.
The Company shall pay interest on overdue principal and premium, if
any, and interest on overdue installments of interest, to the extent lawful, at
a rate per annum that is 10% per annum.
<PAGE>
A-6
2. Subordination.
The payment of the Debentures will, to the extent set forth in the
Indenture, be subordinated in right of payment to the prior payment in full, in
cash or cash equivalents, of all Senior Indebtedness.
3. Method of Payment.
The Company will pay principal as provided above and interest
(except defaulted interest) on the principal amount of the Debentures as
provided above on each January 15, April 15, July 15 and October 15 to the
Persons who are Holders (as reflected in the Debenture Register at the close of
business on such January 1, April 1, July 1 and October 1 immediately preceding
the Interest Payment Date), in each case, even if the Debenture is cancelled on
registration of transfer or registration of exchange after such record date;
provided that, with respect to the payment of principal, the Company will not
make payment to the Holder unless this Debenture is surrendered to a Paying
Agent.
The Company will pay principal, premium, if any, and as provided
above, interest in money of the Federal Republic of Germany that at the time of
payment is legal tender for payment of public and private debts. However, the
Company may pay principal, premium, if any, and interest by its check payable in
such money. It may mail an interest check to a Holder's registered address (as
reflected in the Debenture Register). If a payment date is a date other than a
Business Day at a place of payment, payment may be made at that place on the
next succeeding day that is a Business Day and no interest shall accrue for the
intervening period.
4. Paying Agent and Registrar.
Initially, the Trustee will act as U.S. Paying Agent and Registrar
and Deutsche Bank will act as German Paying Agent. The Company may change any
Paying Agent or Registrar without notice. The Company, any Subsidiary or any
Affiliate of any of them may act as Paying Agent, Registrar or co-Registrar.
5. Indenture; Issuance of Additional Debentures.
This Debenture is one of a duly authorized issue of Debentures of
the Company designated its 10% Senior Debentures due 2011, issued and to be
issued under an Indenture dated as of April 8, 1998 (the "Indenture"), between
the Company, The Bank of New York, as trustee (the "Trustee") and Deutsche Bank
German Paying Agent and Co- Registrar. Capitalized terms herein are used as
defined in the Indenture unless otherwise indicated. The terms of the Debentures
include those stated in the Indenture and those made part of the Indenture by
reference to the Trust Indenture Act. The Debentures are subject to all such
terms, and Holders are referred to the Indenture and the
<PAGE>
A-7
Trust Indenture Act for a statement of all such terms. To the extent permitted
by applicable law, in the event of any inconsistency between the terms of this
Debenture and the terms of the Indenture, the terms of the Indenture shall
control.
6. Redemption.
The Debentures will be redeemable, at the Company's option, in whole
or in part, at any time and from time to time on or after April 15, 2003 and
prior to maturity, upon not less than 30 nor more than 60 days' prior notice
mailed by first-class mail to each Holders' last address as it appears in the
Debenture Register, at the following Redemption Prices (expressed in percentages
of their principal amount), plus accrued and unpaid interest, if any, to the
Redemption Date (subject to the right of Holders of record on the relevant
Regular Record Date that is on or prior to the Redemption Date to receive
interest due on an Interest Payment Date), if redeemed during the 12-month
period commencing on April 15, of the years set forth below:
Redemption
Year Price
---- ----------
2003 105.000%
2004 103.333
2005 101.667
2006 and thereafter 100.000
7. Notice of Redemption.
Notice of any optional redemption will be mailed at least 30 days
but not more than 60 days before the Redemption Date to each Holder of
Debentures to be redeemed at his last address as it appears in the Debenture
Register. Debentures in original denominations larger than DM 1,000 of principal
amount may be redeemed in part. On and after the Redemption Date, interest
ceases to accrue on Debentures or portions of Debentures called for redemption,
unless the Company defaults in the payment of the Redemption Price.
8. Conversion.
At any time on or after the date that is one year after the Closing
Date, the Debentures will be convertible, at the option of the holders, into
shares of Common Stock at the Conversion Price, subject to certain adjustments.
In addition, if the per share closing price of the Common Stock for any 20
consecutive trading days during the twelve months ending April 15, 1999, April
15, 2000, April 15, 2001, April 15, 2002 or April 15, 2003 exceeds $26.40,
$32.30, $38.20, $44.10 or $50.00, respectively, then the Debentures shall
automatically be converted into shares of Common Stock at the Conversion Price;
provided that no such conversion will occur (i) until the date that is one year
after the Closing Date and will not occur until the Debenture Shelf Registration
Statement is
<PAGE>
A-8
effective and (ii) unless the price of the Common Stock on the conversion date
exceeds the relevant price listed above.
9. Repurchase upon Change in Control.
Upon the occurrence of any Change of Control, each Holder shall have
the right to require the repurchase of its Debentures by the Company pursuant to
the offer described in the Indenture at a purchase price equal to 101% of the
principal amount thereof plus accrued and unpaid interest, if any; provided,
however, pursuant to Article 5 of the Indenture, that in lieu of making an offer
to purchase, the Company may reduce the Debenture Conversion Price such that the
securities receivable upon conversion at the time of the closing of the event
constituting a Change of Control would have a value at least equal to the
principal amount plus accrued interest, if any, on the Debentures (the "Change
of Control Payment").
A notice of such Change of Control will be mailed within 30 days
after any Change of Control occurs to each Holder at his last address as it
appears in the Debenture Register. Debentures in original denominations larger
than DM 1,000 of principal amount may be sold to the Company in part. On and
after the date of the Change of Control Payment, interest ceases to accrue on
Debentures or portions of Debentures surrendered for purchase by the Company,
unless the Company defaults in the payment of the Change of Control Payment.
10. Registration Rights
On or prior to the date that is one year after the Closing Date, the
Company shall, at it cost, file and cause to become effective the Debenture
Shelf Registration Statement with respect to issuances of Common Stock upon
conversion of the Subordinated Convertible Debentures. Subject to certain
limited "blackout periods," the Company shall keep the Debenture Shelf
Registration Statement effective during the Debenture Shelf Period.
11. Denominations; Transfer; Exchange.
The Debentures are in registered form without coupons in
denominations of DM 1,000 of principal amount and any integral multiples of DM
1,000 in excess thereof. A Holder may register the transfer or exchange of
Debentures in accordance with the Indenture. The Registrar may require a Holder,
among other things, to furnish appropriate endorsements and transfer documents
and to pay any taxes and fees required by law or permitted by the Indenture. The
Registrar need not register the transfer or exchange of any Debentures selected
for redemption. Also, it need not register the transfer or exchange of any
Debentures for a period of 15 days before a selection of Debentures to be
redeemed is made.
<PAGE>
A-9
12. Persons Deemed Owners.
A Holder shall be treated as the owner of a Debenture for all
purposes.
13. Unclaimed Money.
If money for the payment of principal, premium, if any, or interest
remains unclaimed for two years, the Trustee and the Paying Agent will pay the
money back to the Company at its request. After that, Holders entitled to the
money must look to the Company for payment, unless an abandoned property law
designates another Person, and all liability of the Trustee and such Paying
Agent with respect to such money shall cease.
14. Amendment; Supplement; Waiver.
Subject to certain exceptions, the Indenture or the Debentures may
be amended or supplemented with the consent of the Holders of at least a
majority in principal amount of the Debentures then outstanding, and any
existing default or compliance with any provision may be waived with the consent
of the Holders of at least a majority in principal amount of the Debentures then
outstanding. Without notice to or the consent of any Holder, the parties thereto
may amend or supplement the Indenture or the Debentures to, among other things,
cure any ambiguity, defect or inconsistency and make any change that does not
materially and adversely affect the rights of any Holder.
15. Defaults and Remedies.
The following events constitute "Events of Default" under the
Indenture: (a) default in the payment of principal of (or premium, if any, on)
any Debenture when the same becomes due and payable at maturity, upon
acceleration, redemption or otherwise; (b) a court having jurisdiction in the
premises enters a decree or order for (A) relief in respect of the Company or
any Significant Subsidiary 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 Significant Subsidiary or
for all or substantially all of the property and assets of the Company or any
Significant Subsidiary or (C) the winding up or liquidation of the affairs of
the Company or any Significant Subsidiary and, in each case, such decree or
order shall remain unstayed and in effect for a period of 60 consecutive days;
or (c) the Company or any Significant Subsidiary (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 Significant Subsidiary or
for all or
<PAGE>
A-10
substantially all of the property and assets of the Company or any Significant
Subsidiary or (C) effects any general assignment for the benefit of creditors.
If an Event of Default (other than an Event of Default specified in
clause (b) or (c) above that occurs with respect to the Company) occurs and is
continuing under the Indenture, the Trustee or the Holders of at least 25% in
aggregate principal amount of the Debentures then outstanding, by written notice
to the Company (and to the Trustee if such notice is given by the Holders) ,
may, and the Trustee at the request of such Holders shall, declare the principal
amount of, premium, if any, and accrued interest on the Debentures to be
immediately due and payable.
If an Event of Default, as defined in the Indenture, occurs and is
continuing, the Trustee or the Holders of at least 25% in aggregate principal
amount of the Debentures then outstanding may declare all the Debentures to be
due and payable. If a bankruptcy or insolvency default with respect to the
Company or any Restricted Subsidiary occurs and is continuing, the Debentures
automatically become due and payable. Holders may not enforce the Indenture or
the Debentures except as provided in the Indenture. The Trustee may require
indemnity satisfactory to it before it enforces the Indenture or the Debentures.
Subject to certain limitations, Holders of at least a majority in principal
amount of the Debentures then outstanding may direct the Trustee in its exercise
of any trust or power.
16. Trustee Dealings with Company.
The Trustee under the Indenture, in its individual or any other
capacity, may make loans to, accept deposits from and perform services for the
Company or its Affiliates and may otherwise deal with the Company or its
Affiliates as if it were not the Trustee.
17. No Recourse Against Others.
No incorporator or any past, present or future partner, stockholder,
other equity holder, officer, director, employee or controlling person as such,
of the Company or of any successor Person shall have any liability for any
obligations of the Company under the Debentures or the Indenture or for any
claim based on, in respect of or by reason of, such obligations or their
creation. Each Holder by accepting a Debentures waives and releases all such
liability. The waiver and release are part of the consideration for the issuance
of the Debentures.
18. Authentication.
This Debenture shall not be valid until the Trustee or
authenticating agent signs the certificate of authentication on the other side
of this Debenture.
<PAGE>
A-11
19. Abbreviations.
Customary abbreviations may be used in the name of a Holder 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).
20. CUSIP Numbers.
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures, the Issuer has caused CUSIP numbers to be
printed on the Debentures and the Trustee may use CUSIP numbers in notices of
redemption as a convenience to Holders. No representation is made as to the
accuracy of such numbers either as printed on the Debentures or as contained in
any notice of redemption.
This Debenture shall be governed by the laws of the State of New York
except as referred to in Section 10.14 of the Indenture.
The Company will furnish to any Holder upon written request and
without charge a copy of the Indenture. Requests may be made to Viatel, Inc.,
800 Third Avenue, New York, New York, 10022, Attention: Sheldon M. Goldman.
<PAGE>
A-12
SCHEDULE OF PRINCIPAL AMOUNT OF INDEBTEDNESS
EVIDENCED BY THIS DEBENTURE
The initial principal amount of indebtedness evidenced by this
Debenture shall be DM __, __, __. The following decreases/increases in the
principal amount evidenced by this Debenture have been made:
Decrease in Increase in Total Principal
Principal Principal Amount of this Notation Made
Date of Amount of Amount of Global Debenture by or on
Decrease/ this Global this Global Following such Behalf of
Increase Debenture Debenture Decrease/Increase Trustee
- -------- --------- --------- ----------------- -------
________ ___________ ___________ _________________ _____________
________ ___________ ___________ _________________ _____________
________ ___________ ___________ _________________ _____________
________ ___________ ___________ _________________ _____________
________ ___________ ___________ _________________ _____________
________ ___________ ___________ _________________ _____________
________ ___________ ___________ _________________ _____________
________ ___________ ___________ _________________ _____________
________ ___________ ___________ _________________ _____________
________ ___________ ___________ _________________ _____________
________ ___________ ___________ _________________ _____________
________ ___________ ___________ _________________ _____________
________ ___________ ___________ _________________ _____________
________ ___________ ___________ _________________ _____________
________ ___________ ___________ _________________ _____________
________ ___________ ___________ _________________ _____________
<PAGE>
A-13
[FORM OF TRANSFER NOTICE]
FOR VALUE RECEIVED the undersigned registered holder hereby sell(s),
assign(s) and transfer(s) unto
Insert Taxpayer Identification No.
_________________________________________________________________________
Please print or typewrite name and address including zip code of assignee
_________________________________________________________________________
the within Debenture and all rights thereunder, hereby irrevocably constituting
and appointing __________________________ attorney to transfer said Debenture on
the books of the Company with full power of substitution in the premises.
[THE FOLLOWING PROVISION TO BE INCLUDED
ON ALL DEBENTURES OTHER THAN EXCHANGE
DEBENTURES, UNLEGENDED DBC GLOBAL AND
UNLEGENDED REGULATION S CERTIFICATEDS]
In connection with any transfer of this Debenture occurring prior to the
date which is the earlier of (i) the date of an effective Registration or (ii)
the end of the period referred to in Rule 144(k) under the Securities Act, the
undersigned confirms that without utilizing any general solicitation or general
advertising that:
[Check One]
[_] (a) this Debenture is being transferred in compliance with the exemption
from registration under the Securities Act of 1933, as amended, provided
by Rule 144A thereunder.
or
[_] (b) this Debenture is being transferred other than in accordance with (a)
above and documents are being furnished which comply with the conditions
of transfer set forth in this Debenture and the Indenture.
If none of the foregoing boxes is checked, the Trustee or other Registrar shall
not be obligated to register this Debenture in the name of any Person other than
the Holder hereof unless and until the conditions to any such transfer of
registration set forth herein and in Section 2.08 of the Indenture shall have
been satisfied.
<PAGE>
A-14
Date:____________ _____________________________________________
NOTICE: The signature to this assignment must
correspond with the name as written upon the
face of the within-mentioned instrument in
every particular, without alteration or any
change whatsoever.
TO BE COMPLETED BY PURCHASER IF (a) ABOVE IS CHECKED.
The undersigned represents and warrants that it is purchasing this
Debenture for its own account or an account with respect to which it exercises
sole investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act of
1933, as amended, and is aware that the sale to it is being made in reliance on
Rule 144A and acknowledges that it has received such information regarding the
Company as the undersigned has requested pursuant to Rule 144A or has determined
not to request such information and that it is aware that the transferor is
relying upon the undersigned's foregoing representations in order to claim the
exemption from registration provided by Rule 144A.
Date:____________ ____________________________________________________
NOTICE: To be executed by an executive officer
<PAGE>
A-15
OPTION OF HOLDER TO ELECT PURCHASE
If you wish to have this Debenture purchased by the Company pursuant
to Section 6.04 of the Indenture, check the Box: |_|
If you wish to have a portion of this Debenture purchased by the
Company pursuant to Section 6.04 of the Indenture, state the amount (in
principal amount): DM_____________.
Date:____________
Your Signature: ________________________________________________________________
(Sign exactly as your name appears on the other side of this
Debenture)
Signature Guarantee: ______________________________
<PAGE>
EXHIBIT B
FORM OF DBC GLOBAL DEBENTURE
FACE OF DEBENTURE
THIS DEBENTURE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS, AND ACCORDINGLY,
MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHIN THE UNITED
STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS EXCEPT AS SET FORTH
IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS
THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER
THE SECURITIES ACT) OR (B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS
DEFINED IN RULE 501(a)(1), (2), (3) OR (7) OF REGULATION D UNDER THE SECURITIES
ACT) (AN "INSTITUTIONAL ACCREDITED INVESTOR") OR (C) IT IS NOT A U.S. PERSON AND
IS ACQUIRING THIS DEBENTURE IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE
903 OF REGULATION S UNDER THE SECURITIES ACT; (2) AGREES THAT IT WILL NOT,
WITHIN THE TIME PERIOD REFERRED TO IN RULE 144(k) (TAKING INTO ACCOUNT THE
PROVISIONS OF RULE 144(d) UNDER THE SECURITIES ACT, IF APPLICABLE), RESELL OR
OTHERWISE TRANSFER THIS DEBENTURE EXCEPT (A) TO THE COMPANY OR ANY SUBSIDIARY
THEREOF, (B) TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A
UNDER THE SECURITIES ACT, (C) INSIDE THE UNITED STATES TO AN INSTITUTIONAL
ACCREDITED INVESTOR THAT, PRIOR TO SUCH TRANSFER, FURNISHES TO THE TRUSTEE A
SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE
RESTRICTIONS ON TRANSFER OF THIS DEBENTURE (THE FORM OF WHICH LETTER CAN BE
OBTAINED FROM THE TRUSTEE) AND IF SUCH TRANSFER IS IN RESPECT OF AN AGGREGATE
PRINCIPAL AMOUNT OF DEBENTURES OF LESS THAN DM 150,000, AN OPINION OF COUNSEL
ACCEPTABLE TO THE COMPANY THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE
SECURITIES ACT, (D) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN
COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT, (E) PURSUANT TO THE EXEMPTION
FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE)
OR (F) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT
AND (3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS DEBENTURE IS
TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN CONNECTION
WITH ANY TRANSFER OF THIS DEBENTURE WITHIN THE TIME PERIOD REFERRED TO ABOVE,
THE HOLDER MUST CHECK THE APPROPRIATE BOX SET FORTH ON THE REVERSE HEREOF
RELATING TO THE MANNER OF SUCH TRANSFER AND SUBMIT THIS CERTIFICATE TO THE
TRUSTEE. IF THE PROPOSED TRANSFEREE IS AN INSTITUTIONAL ACCREDITED
<PAGE>
B-2
INVESTOR, THE HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO EACH OF THE
TRUSTEE AND THE COMPANY SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION
AS SUCH PERSONS MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING
MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. 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. THE INDENTURE CONTAINS A
PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF THIS
DEBENTURE IN VIOLATION OF THE FOREGOING RESTRICTIONS.
THE DEBENTURES EVIDENCED BY THIS CERTIFICATE ARE INITIALLY ISSUED AS PART OF AN
ISSUANCE OF UNITS, EACH OF WHICH CONSISTS OF DM 1,000 PRINCIPAL AMOUNT OF
[12.40] [11.15]% SENIOR [DISCOUNT] DM NOTES DUE 2008 OF VIATEL, INC. (THE
"NOTES") AND [2.77] [2.69] 10% SUBORDINATED CONVERTIBLE DEBENTURES DUE 2011 OF
THE COMPANY (THE "SUBORDINATED CONVERTIBLE DEBENTURES"). THE NOTES AND THE
SUBORDINATED CONVERTIBLE DEBENTURES WILL BE AUTOMATICALLY SEPARATED UPON THE
EARLIEST TO OCCUR OF (i) SIX MONTHS AFTER APRIL 8, 1998, (ii) THE COMMENCEMENT
OF AN EXCHANGE OFFER WITH RESPECT TO THE NOTES, (iii) THE EFFECTIVENESS OF A
SHELF REGISTRATION STATEMENT WITH RESPECT TO RESALE OF THE NOTES OR (iv)
COMMENCEMENT OF AN OFFER TO REPURCHASE THE NOTES PURSUANT TO THE INDENTURE. THE
DEBENTURES EVIDENCED BY THIS CERTIFICATE MAY NOT BE TRANSFERRED OR EXCHANGED
SEPARATELY FROM, BUT MAY BE TRANSFERRED OR EXCHANGED ONLY TOGETHER WITH, THE
NOTES.
THIS GLOBAL CERTIFICATE HAS BEEN CREATED IN ORDER TO BE HELD IN CUSTODY BY
DEUTSCHE BORSE CLEARING AG ("DBC") AND TO SERVE AS THE BASIS FOR THE DELIVERY
AND TRANSFER OF DEBENTURES TO BE HELD IN THE DBC DEPOSITARY AND CLEARING SYSTEM
THROUGHOUT THE LIFE OF THE DEBENTURES.
THIS DEBENTURE WAS ISSUED WITH ORIGINAL ISSUE DISCOUNT FOR U.S. FEDERAL INCOME
TAX PURPOSES. FOR INFORMATION REGARDING ISSUE PRICE, AMOUNT OF ORIGINAL ISSUE
DISCOUNT, ISSUE DATE AND YIELD TO MATURITY, THE HOLDER MAY CONTACT ALLAN L.
SHAW, CHIEF FINANCIAL OFFICER OF THE COMPANY, AT (212) 350-9220.
<PAGE>
B-3
VIATEL, INC.
10% Subordinated Convertible Debenture Due 2011
[CUSIP][CINS][INIS][WKN]______
No. __________ DM _________
VIATEL, INC., a Delaware corporation (the "Company", which term includes
any successor under the Indenture hereinafter referred to), for value received,
promises to pay to the bearer upon surrender hereof, the principal sum of DM
_________ on April 15, 2011.
Issue date: April 8, 1998
Interest Payment Dates: January 15, April 15, July 15 and October 15,
commencing July 15, 1998.
Record Dates: January 1, April 1, July 1 and October 1.
Reference is hereby made to the further provisions of this Debenture set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place, and the provisions, terms
and conditions of the Indenture governing this Debenture, which is attached as
an annex hereto.
<PAGE>
B-4
IN WITNESS WHEREOF, the Company has caused this Debenture to be signed
manually or by facsimile by its duly authorized officers.
Date: April 8, 1998 VIATEL, INC.
By
------------------------------------
Name:
Title:
By
------------------------------------
Name:
Title:
(Certificate of Authentication)
This is one of the 10% Subordinated Convertible Debenture due 2011 described in
the within-mentioned Indenture.
Date: April 8, 1998 DEUTSCHE BANK, as Authenticating Agent
By
------------------------------------
Authorized Signatory
<PAGE>
B-5
[REVERSE SIDE OF DEBENTURE]
VIATEL, INC.
10% Subordinated Convertible Debenture due 2011
1. Principal and Interest.
The Company will pay the principal of this Debenture on April 15,
2011.
The Company promises to pay interest on the principal amount of this
Debenture on each Interest Payment Date, as set forth below, at the rate per
annum shown above.
Interest will be payable quarterly, through April 15, 2005 in
additional Debentures or cash or any combination thereof, at the Company's
options subject to restrictions contained in the New Indentures. After April 15,
2003, interest will be payable in cash (in each case, to the holders of record
of the Debentures at the close of business on the January 1, April 1, July 1 or
October 1 immediately preceding the Interest Payment Date) in each case, on each
Interest Payment Date. Interest will be computed on the basis of a 360 day year
of twelve 30 day months.
If a shelf registration statement under the Securities Act with
respect to resales of the Debentures is not declared effective by the
Commission, on or before the date that is one year after the Closing Date or
does not continue to be effective (except during certain "blackout periods" and
after the end of the Debenture Shelf Period) in accordance with the terms of the
Registration Rights Agreement dated April 3, 1998 between the Company and Morgan
Stanley & Co. Incorporated, as the manager for itself and the several initial
purchasers named on Schedule I to the Purchase Agreement dated April 3, 1998,
interest (in addition to interest otherwise due on the Debentures) will accrue,
at an annual rate of 0.5% per annum of the principal amount, payable in cash
semiannually, in arrears, on January 15, April 15, July 15 and October 15 of
each year, commencing April 15, 1999 until the effectiveness of a
shelf-registration statement with respect to resale of this Debenture. The
Holder of this Debenture is entitled to the benefits of such Registration Rights
Agreement.
The Company shall pay interest on overdue principal and premium, if
any, and interest on overdue installments of interest, to the extent lawful, at
a rate per annum that is 10% per annum.
<PAGE>
B-6
2. Subordination.
The payment of the Debentures will, to the extent set forth in the
Indenture, be subordinated in right of payment to the prior payment in full, in
cash or cash equivalents, of all Senior Indebtedness.
3. Method of Payment.
The Company will pay principal as provided above and interest
(except defaulted interest) on the principal amount of the Debentures as
provided above on each January 15, April 15, July 15 and October 15 to the
Persons who are Holders (as reflected in the Debenture Register at the close of
business on such January 1, April 1, July 1 and October 1 immediately preceding
the Interest Payment Date), in each case, even if the Debenture is canceled on
registration of transfer or registration of exchange after such record date;
provided that, with respect to the payment of principal, the Company will not
make payment to the Holder unless this Debenture is surrendered to a Paying
Agent.
The Company will pay principal, premium, if any, and as provided
above, interest in money of the Federal Republic of Germany that at the time of
payment is legal tender for payment of public and private debts. However, the
Company may pay principal, premium, if any, and interest by its check payable in
such money. It may mail an interest check to a Holder's registered address (as
reflected in the Debenture Register). If a payment date is a date other than a
Business Day at a place of payment, payment may be made at that place on the
next succeeding day that is a Business Day and no interest shall accrue for the
intervening period.
4. Paying Agent and Registrar.
Initially, the Trustee will act as U.S. Paying Agent and Registrar
and Deutsche Bank will act as German Paying Agent. The Company may change any
Paying Agent or Registrar without notice. The Company, any Subsidiary or any
Affiliate of any of them may act as Paying Agent, Registrar or co-Registrar.
5. Indenture; Issuance of Additional Debentures.
This Debenture is one of a duly authorized issue of Debentures of
the Company designated its 10% Senior Debentures due 2011, issued and to be
issued under an Indenture dated as of April 8, 1998 (the "Indenture"), between
the Company, The Bank of New York, as trustee (the "Trustee") and Deutsche Bank
German Paying Agent and Co- Registrar. Capitalized terms herein are used as
defined in the Indenture unless otherwise indicated. The terms of the Debentures
include those stated in the Indenture and those made part of the Indenture by
reference to the Trust Indenture
<PAGE>
B-7
Act. The Debentures are subject to all such terms, and Holders are referred to
the Indenture and the Trust Indenture Act for a statement of all such terms. To
the extent permitted by applicable law, in the event of any inconsistency
between the terms of this Debenture and the terms of the Indenture, the terms of
the Indenture shall control.
6. Redemption.
The Debentures will be redeemable, at the Company's option, in whole
or in part, at any time and from time to time on or after April 15, 2003 and
prior to maturity, upon not less than 30 nor more than 60 days' prior notice
mailed by first-class mail to each Holders' last address as it appears in the
Debenture Register, at the following Redemption Prices (expressed in percentages
of their principal amount), plus accrued and unpaid interest, if any, to the
Redemption Date (subject to the right of Holders of record on the relevant
Regular Record Date that is on or prior to the Redemption Date to receive
interest due on an Interest Payment Date), if redeemed during the 12-month
period commencing on April 15, of the years set forth below:
Redemption
Year Price
---- ----------
2003 105.000%
2004 103.333
2005 101.667
2006 and thereafter 100.000
7. Notice of Redemption.
Notice of any optional redemption will be mailed at least 30 days
but not more than 60 days before the Redemption Date to each Holder of
Debentures to be redeemed at his last address as it appears in the Debenture
Register. Debentures in original denominations larger than DM 1,000 of principal
amount may be redeemed in part. On and after the Redemption Date, interest
ceases to accrue on Debentures or portions of Debentures called for redemption,
unless the Company defaults in the payment of the Redemption Price.
8. Conversion.
At any time on or after the date that is one year after the Closing
Date, the Debentures will be convertible, at the option of the holders, into
shares of Common Stock at the Conversion Price, subject to certain adjustments.
In addition, if the per share closing price of the Common Stock for any 20
consecutive trading days during the twelve months ending April 15, 1999, April
15, 2000, April 15, 2001, April 15, 2002 or April 15, 2003 exceeds $26.40,
$32.30, $38.20, $44.10 or $50.00, respectively, then the Debentures shall
automatically be converted into shares of Common Stock at the Conversion Price;
provided that no such conversion will occur (i) until the date that is one year
<PAGE>
B-8
after the Closing Date and will not occur until the Debenture Shelf Registration
Statement is effective and (ii) unless the price of the Common Stock on the
conversion date exceeds the relevant price listed above.
9. Repurchase upon Change in Control.
Upon the occurrence of any Change of Control, each Holder shall have
the right to require the repurchase of its Debentures by the Company pursuant to
the offer described in the Indenture at a purchase price equal to 101% of the
principal amount thereof plus accrued and unpaid interest, if any; provided,
however, pursuant to Article 5 of the Indenture, that in lieu of making an offer
to purchase, the Company may reduce the Debenture Conversion Price such that the
securities receivable upon conversion at the time of the closing of the event
constituting a Change of Control would have a value at least equal to the
principal amount plus accrued interest, if any, on the Debentures (the "Change
of Control Payment").
A notice of such Change of Control will be mailed within 30 days
after any Change of Control occurs to each Holder at his last address as it
appears in the Debenture Register. Debentures in original denominations larger
than DM 1,000 of principal amount may be sold to the Company in part. On and
after the date of the Change of Control Payment, interest ceases to accrue on
Debentures or portions of Debentures surrendered for purchase by the Company,
unless the Company defaults in the payment of the Change of Control Payment.
10. Registration Rights
On or prior to the date that is one year after the Closing Date, the
Company shall, at it cost, file and cause to become effective the Debenture
Shelf Registration Statement with respect to issuances of Common Stock upon
conversion of the Subordinated Convertible Debentures. Subject to certain
limited "blackout periods," the Company shall keep the Debenture Shelf
Registration Statement effective during the Debenture Shelf Period.
11. Denominations; Transfer; Exchange.
The Debentures are in bearer form without coupons in denominations
of DM 1,000 of principal amount and any integral multiples of DM 1,000 in excess
thereof. A Holder may register the transfer or exchange of Debentures in
accordance with the Indenture. The Registrar may require a Holder, among other
things, to furnish appropriate endorsements and transfer documents and to pay
any taxes and fees required by law or permitted by the Indenture. The Registrar
need not register the transfer or exchange of any Debentures selected for
redemption. Also, it need not register the transfer or exchange of any
Debentures for a period of 15 days before a selection of Debentures to be
redeemed is made.
<PAGE>
B-9
12. Persons Deemed Owners.
A Holder shall be treated as the owner of a Debenture for all
purposes.
13. Unclaimed Money.
If money for the payment of principal, premium, if any, or interest
remains unclaimed for two years, the Trustee and the Paying Agent will pay the
money back to the Company at its request. After that, Holders entitled to the
money must look to the Company for payment, unless an abandoned property law
designates another Person, and all liability of the Trustee and such Paying
Agent with respect to such money shall cease.
14. Amendment; Supplement; Waiver.
Subject to certain exceptions, the Indenture or the Debentures may
be amended or supplemented with the consent of the Holders of at least a
majority in principal amount of the Debentures then outstanding, and any
existing default or compliance with any provision may be waived with the consent
of the Holders of at least a majority in principal amount of the Debentures then
outstanding. Without notice to or the consent of any Holder, the parties thereto
may amend or supplement the Indenture or the Debentures to, among other things,
cure any ambiguity, defect or inconsistency and make any change that does not
materially and adversely affect the rights of any Holder.
15. Defaults and Remedies.
The following events constitute "Events of Default" under the
Indenture: (a) default in the payment of principal of (or premium, if any, on)
any Debenture when the same becomes due and payable at maturity, upon
acceleration, redemption or otherwise; (b) a court having jurisdiction in the
premises enters a decree or order for (A) relief in respect of the Company or
any Significant Subsidiary 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 Significant Subsidiary or
for all or substantially all of the property and assets of the Company or any
Significant Subsidiary or (C) the winding up or liquidation of the affairs of
the Company or any Significant Subsidiary and, in each case, such decree or
order shall remain unstayed and in effect for a period of 60 consecutive days;
or (c) the Company or any Significant Subsidiary (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 Significant Subsidiary or
for all or
<PAGE>
B-10
substantially all of the property and assets of the Company or any Significant
Subsidiary or (C) effects any general assignment for the benefit of creditors.
If an Event of Default (other than an Event of Default specified in
clause (b) or (c) above that occurs with respect to the Company) occurs and is
continuing under the Indenture, the Trustee or the Holders of at least 25% in
aggregate principal amount of the Debentures then outstanding, by written notice
to the Company (and to the Trustee if such notice is given by the Holders) ,
may, and the Trustee at the request of such Holders shall, declare the principal
amount of, premium, if any, and accrued interest on the Debentures to be
immediately due and payable.
If an Event of Default, as defined in the Indenture, occurs and is
continuing, the Trustee or the Holders of at least 25% in aggregate principal
amount of the Debentures then outstanding may declare all the Debentures to be
due and payable. If a bankruptcy or insolvency default with respect to the
Company or any Restricted Subsidiary occurs and is continuing, the Debentures
automatically become due and payable. Holders may not enforce the Indenture or
the Debentures except as provided in the Indenture. The Trustee may require
indemnity satisfactory to it before it enforces the Indenture or the Debentures.
Subject to certain limitations, Holders of at least a majority in principal
amount of the Debentures then outstanding may direct the Trustee in its exercise
of any trust or power.
16. Trustee Dealings with Company.
The Trustee under the Indenture, in its individual or any other
capacity, may make loans to, accept deposits from and perform services for the
Company or its Affiliates and may otherwise deal with the Company or its
Affiliates as if it were not the Trustee.
17. No Recourse Against Others.
No incorporator or any past, present or future partner, stockholder,
other equity holder, officer, director, employee or controlling person as such,
of the Company or of any successor Person shall have any liability for any
obligations of the Company under the Debentures or the Indenture or for any
claim based on, in respect of or by reason of, such obligations or their
creation. Each Holder by accepting a Debentures waives and releases all such
liability. The waiver and release are part of the consideration for the issuance
of the Debentures.
18. Authentication.
This Debenture shall not be valid until the Trustee or
authenticating agent signs the certificate of authentication on the other side
of this Debenture.
<PAGE>
B-11
19. Abbreviations.
Customary abbreviations may be used in the name of a Holder 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).
20. CUSIP Numbers.
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures, the Issuer has caused CUSIP numbers to be
printed on the Debentures and the Trustee may use CUSIP numbers in notices of
redemption as a convenience to Holders. No representation is made as to the
accuracy of such numbers either as printed on the Debentures or as contained in
any notice of redemption.
This Debenture shall be governed by the laws of the State of New York
except as referred to in Section 10.14 of the Indenture.
The Company will furnish to any Holder upon written request and
without charge a copy of the Indenture. Requests may be made to Viatel, Inc.,
800 Third Avenue, New York, New York, 10022, Attention: Sheldon M. Goldman.
<PAGE>
B-12
SCHEDULE OF PRINCIPAL AMOUNT OF INDEBTEDNESS
EVIDENCED BY THIS DEBENTURE
The initial principal amount of indebtedness evidenced by this
Debenture shall be DM __, __, __. The following decreases/increases in the
principal amount evidenced by this Debenture have been made:
Decrease in Increase in Total Principal
Principal Principal Amount of this Notation Made
Date of Amount of Amount of Global Debenture by or on
Decrease/ this Global this Global Following such Behalf of
Increase Debenture Debenture Decrease/Increase Trustee
- -------- --------- --------- ----------------- -------
________ ___________ ___________ _________________ _____________
________ ___________ ___________ _________________ _____________
________ ___________ ___________ _________________ _____________
________ ___________ ___________ _________________ _____________
________ ___________ ___________ _________________ _____________
________ ___________ ___________ _________________ _____________
________ ___________ ___________ _________________ _____________
________ ___________ ___________ _________________ _____________
________ ___________ ___________ _________________ _____________
________ ___________ ___________ _________________ _____________
________ ___________ ___________ _________________ _____________
________ ___________ ___________ _________________ _____________
________ ___________ ___________ _________________ _____________
________ ___________ ___________ _________________ _____________
________ ___________ ___________ _________________ _____________
________ ___________ ___________ _________________ _____________
<PAGE>
B-13
[FORM OF TRANSFER NOTICE]
FOR VALUE RECEIVED the undersigned registered holder hereby sell(s),
assign(s) and transfer(s) unto
Insert Taxpayer Identification No.
_________________________________________________________________________
Please print or typewrite name and address including zip code of assignee
_________________________________________________________________________
the within Debenture and all rights thereunder, hereby irrevocably constituting
and appointing _________________________________ attorney to transfer said
Debenture on the books of the Company with full power of substitution in the
premises.
[THE FOLLOWING PROVISION TO BE INCLUDED
ON ALL DEBENTURES OTHER THAN EXCHANGE
DEBENTURES, UNLEGENDED DBC GLOBAL AND
UNLEGENDED REGULATION S CERTIFICATED DEBENTURES]
In connection with any transfer of this Debenture occurring prior to the
date which is the earlier of (i) the date of an effective Registration or (ii)
the end of the period referred to in Rule 144(k) under the Securities Act, the
undersigned confirms that without utilizing any general solicitation or general
advertising that:
[Check One]
[_] (a) this Debenture is being transferred in compliance with the exemption
from registration under the Securities Act of 1933, as amended, provided
by Rule 144A thereunder.
or
[_] (b) this Debenture is being transferred other than in accordance with (a)
above and documents are being furnished which comply with the conditions
of transfer set forth in this Debenture and the Indenture.
If none of the foregoing boxes is checked, the Trustee or other Registrar shall
not be obligated to register this Debenture in the name of any Person other than
the Holder hereof unless and until the conditions to any such transfer of
registration set forth herein and in Section 2.08 of the Indenture shall have
been satisfied.
<PAGE>
B-14
Date:_______________ ______________________________________________
NOTICE: The signature to this assignment must
correspond with the name as written upon the
face of the within-mentioned instrument in
every particular, without alteration or any
change whatsoever.
TO BE COMPLETED BY PURCHASER IF (a) ABOVE IS CHECKED.
The undersigned represents and warrants that it is purchasing this
Debenture for its own account or an account with respect to which it exercises
sole investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act of
1933, as amended, and is aware that the sale to it is being made in reliance on
Rule 144A and acknowledges that it has received such information regarding the
Company as the undersigned has requested pursuant to Rule 144A or has determined
not to request such information and that it is aware that the transferor is
relying upon the undersigned's foregoing representations in order to claim the
exemption from registration provided by Rule 144A.
Dated:_______________ ____________________________________________________
NOTICE: To be executed by an executive officer
<PAGE>
B-15
OPTION OF HOLDER TO ELECT PURCHASE
If you wish to have this Debenture purchased by the Company pursuant
to Section 6.04 of the Indenture, check the Box: |_|
If you wish to have a portion of this Debenture purchased by the
Company pursuant to Section 6.04 of the Indenture, state the amount (in
principal amount): DM_____________.
Date:____________
Your Signature: ________________________________________________________________
(Sign exactly as your name appears on the other side of this
Debenture)
Signature Guarantee: ______________________________
<PAGE>
EXHIBIT C
FORM OF U.S. CERTIFICATED DEBENTURE
[FACE OF DEBENTURE]
[CUSIP][CINS][ISIN] ______
No. R-________ DM ____________
THIS DEBENTURE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS, AND ACCORDINGLY,
MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHIN THE UNITED
STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS EXCEPT AS SET FORTH
IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS
THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER
THE SECURITIES ACT) OR (B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS
DEFINED IN RULE 501(a)(1), (2), (3) OR (7) OF REGULATION D UNDER THE SECURITIES
ACT) (AN "INSTITUTIONAL ACCREDITED INVESTOR") OR (C) IT IS NOT A U.S. PERSON AND
IS ACQUIRING THIS DEBENTURE IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE
903 OF REGULATION S UNDER THE SECURITIES ACT; (2) AGREES THAT IT WILL NOT,
WITHIN THE TIME PERIOD REFERRED TO IN RULE 144(k) (TAKING INTO ACCOUNT THE
PROVISIONS OF RULE 144(d) UNDER THE SECURITIES ACT, IF APPLICABLE), RESELL OR
OTHERWISE TRANSFER THIS DEBENTURE EXCEPT (A) TO THE COMPANY OR ANY SUBSIDIARY
THEREOF, (B) TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A
UNDER THE SECURITIES ACT, (C) INSIDE THE UNITED STATES TO AN INSTITUTIONAL
ACCREDITED INVESTOR THAT, PRIOR TO SUCH TRANSFER, FURNISHES TO THE TRUSTEE A
SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE
RESTRICTIONS ON TRANSFER OF THIS DEBENTURE (THE FORM OF WHICH LETTER CAN BE
OBTAINED FROM THE TRUSTEE) AND IF SUCH TRANSFER IS IN RESPECT OF AN AGGREGATE
PRINCIPAL AMOUNT OF DEBENTURES OF LESS THAN DM 150,000, AN OPINION OF COUNSEL
ACCEPTABLE TO THE COMPANY THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE
SECURITIES ACT, (D) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN
COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT, (E) PURSUANT TO THE EXEMPTION
FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE)
OR (F) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT
AND (3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS DEBENTURE IS
TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN CONNECTION
WITH ANY TRANSFER OF THIS DEBENTURE WITHIN THE TIME PERIOD REFERRED TO ABOVE,
THE HOLDER MUST CHECK THE APPROPRIATE BOX SET FORTH ON THE REVERSE HEREOF
RELATING TO
<PAGE>
C-2
THE MANNER OF SUCH TRANSFER AND SUBMIT THIS CERTIFICATE TO THE TRUSTEE. IF THE
PROPOSED TRANSFEREE IS AN INSTITUTIONAL ACCREDITED INVESTOR, THE HOLDER MUST,
PRIOR TO SUCH TRANSFER, FURNISH TO EACH OF THE TRUSTEE AND THE COMPANY SUCH
CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS SUCH PERSONS MAY
REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN
EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT. 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. THE INDENTURE CONTAINS A PROVISION
REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF THIS DEBENTURE IN
VIOLATION OF THE FOREGOING RESTRICTIONS.
THE DEBENTURES EVIDENCED BY THIS CERTIFICATE ARE INITIALLY ISSUED AS PART OF AN
ISSUANCE OF UNITS, EACH OF WHICH CONSISTS OF DM 1,000 PRINCIPAL AMOUNT OF
[12.40] [11.15]% SENIOR [DISCOUNT] DM NOTES DUE 2008 OF VIATEL, INC. (THE
"NOTES") AND [2.77] [2.69] 10% SUBORDINATED CONVERTIBLE DEBENTURES DUE 2011 OF
THE COMPANY (THE "SUBORDINATED CONVERTIBLE DEBENTURES"). THE NOTES AND THE
SUBORDINATED CONVERTIBLE DEBENTURES WILL BE AUTOMATICALLY SEPARATED UPON THE
EARLIEST TO OCCUR OF (i) SIX MONTHS AFTER APRIL 8, 1998, (ii) THE COMMENCEMENT
OF AN EXCHANGE OFFER WITH RESPECT TO THE NOTES, (iii) THE EFFECTIVENESS OF A
SHELF REGISTRATION STATEMENT WITH RESPECT TO RESALE OF THE NOTES OR (iv)
COMMENCEMENT OF AN OFFER TO REPURCHASE THE NOTES PURSUANT TO THE INDENTURE. THE
DEBENTURES EVIDENCED BY THIS CERTIFICATE MAY NOT BE TRANSFERRED OR EXCHANGED
SEPARATELY FROM, BUT MAY BE TRANSFERRED OR EXCHANGED ONLY TOGETHER WITH, THE
SUBORDINATED CONVERTIBLE DEBENTURES.
THIS DEBENTURE WAS ISSUED WITH ORIGINAL ISSUE DISCOUNT FOR U.S. FEDERAL INCOME
TAX PURPOSES. FOR INFORMATION REGARDING ISSUE PRICE, AMOUNT OF ORIGINAL ISSUE
DISCOUNT, ISSUE DATE AND YIELD TO MATURITY, THE HOLDER MAY CONTACT ALLAN L.
SHAW, CHIEF FINANCIAL OFFICER OF THE COMPANY, AT (212) 350-9220.
<PAGE>
C-3
VIATEL, INC.
10% Subordinated Convertible Debenture Due 2001
VIATEL, INC., a Delaware corporation (the "Company", which term includes
any successor under the Indenture hereinafter referred to), for value received,
promises to pay to _____________________, or its registered assigns, the
principal sum of DM __________ on April 15, 2011.
Issue Date: April 8, 1998
Interest Payment Dates: January 15, April 15, July 15 and October 15,
commencing July 15, 1998.
Record Dates: January 1, April 1, July 1 and October 1.
Reference is hereby made to the further provisions of this Debenture set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
<PAGE>
C-4
IN WITNESS WHEREOF, the Company has caused this Debenture to be signed
manually or by facsimile by its duly authorized officers.
Date: April 8, 1998 VIATEL, INC.
By
------------------------------------
Name:
Title:
By
------------------------------------
Name:
Title:
(Certificate of Authentication)
This is one of the 10% Subordinated Convertible Debenture due 2011 described in
the within-mentioned Indenture.
Date: April 8, 1998 DEUTSCHE BANK, as Authenticating Agent
By
------------------------------------
Authorized Signatory
<PAGE>
C-5
[REVERSE SIDE OF DEBENTURE]
VIATEL, INC.
10% Subordinated Convertible Debenture due 2011
1. Principal and Interest.
The Company will pay the principal of this Debenture on April 15,
2011.
The Company promises to pay interest on the principal amount of this
Debenture on each Interest Payment Date, as set forth below, at the rate per
annum shown above.
Interest will be payable quarterly, through April 15, 2005 in
additional Debentures or cash or any combination thereof, at the Company's
options subject to restrictions contained in the New Indentures. After April 15,
2003, interest will be payable in cash (in each case, to the holders of record
of the Debentures at the close of business on the January 1, April 1, July 1 or
October 1 immediately preceding the Interest Payment Date) in each case, on each
Interest Payment Date. Interest will be computed on the basis of a 360 day year
of twelve 30 day months.
If a shelf registration statement under the Securities Act with
respect to resales of the Debentures is not declared effective by the
Commission, on or before the date that is one year after the Closing Date or
does not continue to be effective (except during certain "blackout periods" and
after the end of the Debenture Shelf Period) in accordance with the terms of the
Registration Rights Agreement dated April 3, 1998 between the Company and Morgan
Stanley & Co. Incorporated, as the manager for itself and the several initial
purchasers named on Schedule I to the Purchase Agreement dated April 3, 1998,
interest (in addition to interest otherwise due on the Debentures) will accrue,
at an annual rate of 0.5% per annum of the principal amount, payable in cash
semiannually, in arrears, on January 15, April 15, July 15 and October 15 of
each year, commencing April 15, 1999 until the effectiveness of a
shelf-registration statement with respect to resale of this Debenture. The
Holder of this Debenture is entitled to the benefits of such Registration Rights
Agreement.
The Company shall pay interest on overdue principal and premium, if
any, and interest on overdue installments of interest, to the extent lawful, at
a rate per annum that is 10% per annum.
<PAGE>
C-6
2. Subordination.
The payment of the Debentures will, to the extent set forth in the
Indenture, be subordinated in right of payment to the prior payment in full, in
cash or cash equivalents, of all Senior Indebtedness.
3. Method of Payment.
The Company will pay principal as provided above and interest
(except defaulted interest) on the principal amount of the Debentures as
provided above on each January 15, April 15, July 15 and October 15 to the
Persons who are Holders (as reflected in the Debenture Register at the close of
business on such January 1, April 1, July 1 and October 1 immediately preceding
the Interest Payment Date), in each case, even if the Debenture is canceled on
registration of transfer or registration of exchange after such record date;
provided that, with respect to the payment of principal, the Company will not
make payment to the Holder unless this Debenture is surrendered to a Paying
Agent.
The Company will pay principal, premium, if any, and as provided
above, interest in money of the Federal Republic of Germany that at the time of
payment is legal tender for payment of public and private debts. However, the
Company may pay principal, premium, if any, and interest by its check payable in
such money. It may mail an interest check to a Holder's registered address (as
reflected in the Debenture Register). If a payment date is a date other than a
Business Day at a place of payment, payment may be made at that place on the
next succeeding day that is a Business Day and no interest shall accrue for the
intervening period.
4. Paying Agent and Registrar.
Initially, the Trustee will act as U.S. Paying Agent and Registrar
and Deutsche Bank will act as German Paying Agent. The Company may change any
Paying Agent or Registrar without notice. The Company, any Subsidiary or any
Affiliate of any of them may act as Paying Agent, Registrar or co-Registrar.
5. Indenture; Issuance of Additional Debentures.
This Debenture is one of a duly authorized issue of Debentures of
the Company designated its 10% Senior Debentures due 2011, issued and to be
issued under an Indenture dated as of April 8, 1998 (the "Indenture"), between
the Company, The Bank of New York, as trustee (the "Trustee") and Deutsche Bank
German Paying Agent and Co- Registrar. Capitalized terms herein are used as
defined in the Indenture unless otherwise indicated. The terms of the Debentures
include those stated in the Indenture and those made part of the Indenture by
reference to the Trust Indenture Act. The Debentures are subject to all such
terms, and Holders are referred to the Indenture and the
<PAGE>
C-7
Trust Indenture Act for a statement of all such terms. To the extent permitted
by applicable law, in the event of any inconsistency between the terms of this
Debenture and the terms of the Indenture, the terms of the Indenture shall
control.
6. Redemption.
The Debentures will be redeemable, at the Company's option, in whole
or in part, at any time and from time to time on or after April 15, 2003 and
prior to maturity, upon not less than 30 nor more than 60 days' prior notice
mailed by first-class mail to each Holders' last address as it appears in the
Debenture Register, at the following Redemption Prices (expressed in percentages
of their principal amount), plus accrued and unpaid interest, if any, to the
Redemption Date (subject to the right of Holders of record on the relevant
Regular Record Date that is on or prior to the Redemption Date to receive
interest due on an Interest Payment Date), if redeemed during the 12-month
period commencing on April 15, of the years set forth below:
Redemption
Year Price
---- ----------
2003 105.000%
2004 103.333
2005 101.667
2006 and thereafter 100.000
7. Notice of Redemption.
Notice of any optional redemption will be mailed at least 30 days
but not more than 60 days before the Redemption Date to each Holder of
Debentures to be redeemed at his last address as it appears in the Debenture
Register. Debentures in original denominations larger than DM 1,000 of principal
amount may be redeemed in part. On and after the Redemption Date, interest
ceases to accrue on Debentures or portions of Debentures called for redemption,
unless the Company defaults in the payment of the Redemption Price.
8. Conversion.
At any time on or after the date that is one year after the Closing Date,
the Debentures will be convertible, at the option of the holders, into shares of
Common Stock at the Conversion Price, subject to certain adjustments. In
addition, if the per share closing price of the Common Stock for any 20
consecutive trading days during the twelve months ending April 15, 1999, April
15, 2000, April 15, 2001, April 15, 2002 or April 15, 2003 exceeds $26.40,
$32.30, $38.20, $44.10 or $50.00, respectively, then the Debentures shall
automatically be converted into shares of Common Stock at the Conversion Price;
provided that no such conversion will occur (i) until the date that is one year
after the Closing Date and will not occur until the Debenture Shelf Registration
Statement is
<PAGE>
C-8
effective and (ii) unless the price of the Common Stock on the conversion date
exceeds the relevant price listed above.
9. Repurchase upon Change in Control.
Upon the occurrence of any Change of Control, each Holder shall have
the right to require the repurchase of its Debentures by the Company pursuant to
the offer described in the Indenture at a purchase price equal to 101% of the
principal amount thereof plus accrued and unpaid interest, if any; provided,
however, pursuant to Article 5 of the Indenture, that in lieu of making an offer
to purchase, the Company may reduce the Debenture Conversion Price such that the
securities receivable upon conversion at the time of the closing of the event
constituting a Change of Control would have a value at least equal to the
principal amount plus accrued interest, if any, on the Debentures (the "Change
of Control Payment").
A notice of such Change of Control will be mailed within 30 days
after any Change of Control occurs to each Holder at his last address as it
appears in the Debenture Register. Debentures in original denominations larger
than DM 1,000 of principal amount may be sold to the Company in part. On and
after the date of the Change of Control Payment, interest ceases to accrue on
Debentures or portions of Debentures surrendered for purchase by the Company,
unless the Company defaults in the payment of the Change of Control Payment.
10. Registration Rights
On or prior to the date that is one year after the Closing Date, the
Company shall, at it cost, file and cause to become effective the Debenture
Shelf Registration Statement with respect to issuances of Common Stock upon
conversion of the Subordinated Convertible Debentures. Subject to certain
limited "blackout periods," the Company shall keep the Debenture Shelf
Registration Statement effective during the Debenture Shelf Period.
11. Denominations; Transfer; Exchange.
The Debentures are in registered form without coupons in
denominations of DM 1,000 of principal amount and any integral multiples of DM
1,000 in excess thereof. A Holder may register the transfer or exchange of
Debentures in accordance with the Indenture. The Registrar may require a Holder,
among other things, to furnish appropriate endorsements and transfer documents
and to pay any taxes and fees required by law or permitted by the Indenture. The
Registrar need not register the transfer or exchange of any Debentures selected
for redemption. Also, it need not register the transfer or exchange of any
Debentures for a period of 15 days before a selection of Debentures to be
redeemed is made.
<PAGE>
C-9
12. Persons Deemed Owners.
A Holder shall be treated as the owner of a Debenture for all
purposes.
13. Unclaimed Money.
If money for the payment of principal, premium, if any, or interest
remains unclaimed for two years, the Trustee and the Paying Agent will pay the
money back to the Company at its request. After that, Holders entitled to the
money must look to the Company for payment, unless an abandoned property law
designates another Person, and all liability of the Trustee and such Paying
Agent with respect to such money shall cease.
14. Amendment; Supplement; Waiver.
Subject to certain exceptions, the Indenture or the Debentures may
be amended or supplemented with the consent of the Holders of at least a
majority in principal amount of the Debentures then outstanding, and any
existing default or compliance with any provision may be waived with the consent
of the Holders of at least a majority in principal amount of the Debentures then
outstanding. Without notice to or the consent of any Holder, the parties thereto
may amend or supplement the Indenture or the Debentures to, among other things,
cure any ambiguity, defect or inconsistency and make any change that does not
materially and adversely affect the rights of any Holder.
15. Defaults and Remedies.
The following events constitute "Events of Default" under the
Indenture: (a) default in the payment of principal of (or premium, if any, on)
any Debenture when the same becomes due and payable at maturity, upon
acceleration, redemption or otherwise; (b) a court having jurisdiction in the
premises enters a decree or order for (A) relief in respect of the Company or
any Significant Subsidiary 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 Significant Subsidiary or
for all or substantially all of the property and assets of the Company or any
Significant Subsidiary or (C) the winding up or liquidation of the affairs of
the Company or any Significant Subsidiary and, in each case, such decree or
order shall remain unstayed and in effect for a period of 60 consecutive days;
or (c) the Company or any Significant Subsidiary (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 Significant Subsidiary or
for all or
<PAGE>
C-10
substantially all of the property and assets of the Company or any Significant
Subsidiary or (C) effects any general assignment for the benefit of creditors.
If an Event of Default (other than an Event of Default specified in
clause (b) or (c) above that occurs with respect to the Company) occurs and is
continuing under the Indenture, the Trustee or the Holders of at least 25% in
aggregate principal amount of the Debentures then outstanding, by written notice
to the Company (and to the Trustee if such notice is given by the Holders) ,
may, and the Trustee at the request of such Holders shall, declare the principal
amount of, premium, if any, and accrued interest on the Debentures to be
immediately due and payable.
If an Event of Default, as defined in the Indenture, occurs and is
continuing, the Trustee or the Holders of at least 25% in aggregate principal
amount of the Debentures then outstanding may declare all the Debentures to be
due and payable. If a bankruptcy or insolvency default with respect to the
Company or any Restricted Subsidiary occurs and is continuing, the Debentures
automatically become due and payable. Holders may not enforce the Indenture or
the Debentures except as provided in the Indenture. The Trustee may require
indemnity satisfactory to it before it enforces the Indenture or the Debentures.
Subject to certain limitations, Holders of at least a majority in principal
amount of the Debentures then outstanding may direct the Trustee in its exercise
of any trust or power.
16. Trustee Dealings with Company.
The Trustee under the Indenture, in its individual or any other
capacity, may make loans to, accept deposits from and perform services for the
Company or its Affiliates and may otherwise deal with the Company or its
Affiliates as if it were not the Trustee.
17. No Recourse Against Others.
No incorporator or any past, present or future partner, stockholder,
other equity holder, officer, director, employee or controlling person as such,
of the Company or of any successor Person shall have any liability for any
obligations of the Company under the Debentures or the Indenture or for any
claim based on, in respect of or by reason of, such obligations or their
creation. Each Holder by accepting a Debentures waives and releases all such
liability. The waiver and release are part of the consideration for the issuance
of the Debentures.
18. Authentication.
This Debenture shall not be valid until the Trustee or
authenticating agent signs the certificate of authentication on the other side
of this Debenture.
<PAGE>
C-11
19. Abbreviations.
Customary abbreviations may be used in the name of a Holder 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).
20. CUSIP Numbers.
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures, the Issuer has caused CUSIP numbers to be
printed on the Debentures and the Trustee may use CUSIP numbers in notices of
redemption as a convenience to Holders. No representation is made as to the
accuracy of such numbers either as printed on the Debentures or as contained in
any notice of redemption.
This Debenture shall be governed by the laws of the State of New York
except as referred to in Section 10.14 of the Indenture.
The Company will furnish to any Holder upon written request and
without charge a copy of the Indenture. Requests may be made to Viatel, Inc.,
800 Third Avenue, New York, New York, 10022, Attention: Sheldon M. Goldman.
<PAGE>
C-12
[FORM OF TRANSFER NOTICE]
FOR VALUE RECEIVED the undersigned registered holder hereby sell(s),
assign(s) and transfer(s) unto
Insert Taxpayer Identification No.
__________________________________________________________________________
Please print or typewrite name and address including zip code of assignee
__________________________________________________________________________
the within Debenture and all rights thereunder, hereby irrevocably constituting
and appointing _________________________________ attorney to transfer said
Debenture on the books of the Company with full power of substitution in the
premises.
[THE FOLLOWING PROVISION TO BE INCLUDED
ON ALL DEBENTURES OTHER THAN EXCHANGE
DEBENTURES, UNLEGENDED DBC GLOBAL AND
UNLEGENDED REGULATION S CERTIFICATED DEBENTURES]
In connection with any transfer of this Debenture occurring prior to the
date which is the earlier of (i) the date of an effective Registration or (ii)
the end of the period referred to in Rule 144(k) under the Securities Act, the
undersigned confirms that without utilizing any general solicitation or general
advertising that:
[Check One]
[_] (a) this Debenture is being transferred in compliance with the exemption
from registration under the Securities Act of 1933, as amended, provided
by Rule 144A thereunder.
or
[_] (b) this Debenture is being transferred other than in accordance with (a)
above and documents are being furnished which comply with the conditions
of transfer set forth in this Debenture and the Indenture.
If none of the foregoing boxes is checked, the Trustee or other Registrar shall
not be obligated to register this Debenture in the name of any Person other than
the Holder hereof unless and until the conditions to any such transfer of
registration set forth herein and in Section 2.08 of the Indenture shall have
been satisfied.
<PAGE>
C-13
Date:____________ _____________________________________________
NOTICE: The signature to this assignment must
correspond with the name as written upon the
face of the within-mentioned instrument in
every particular, without alteration or any
change whatsoever.
TO BE COMPLETED BY PURCHASER IF (a) ABOVE IS CHECKED.
The undersigned represents and warrants that it is purchasing this
Debenture for its own account or an account with respect to which it exercises
sole investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act of
1933, as amended, and is aware that the sale to it is being made in reliance on
Rule 144A and acknowledges that it has received such information regarding the
Company as the undersigned has requested pursuant to Rule 144A or has determined
not to request such information and that it is aware that the transferor is
relying upon the undersigned's foregoing representations in order to claim the
exemption from registration provided by Rule 144A.
Dated:____________ ____________________________________________________
NOTICE: To be executed by an executive officer
<PAGE>
C-14
OPTION OF HOLDER TO ELECT PURCHASE
If you wish to have this Debenture purchased by the Company pursuant to
Section 6.04 of the Indenture, check the Box: |_|
If you wish to have a portion of this Debenture purchased by the Company
pursuant to Section 6.04 of the Indenture, state the amount (in principal
amount): DM_____________.
Date:____________
Your Signature: ________________________________________________________________
(Sign exactly as your name appears on the other side of this
Debenture)
Signature Guarantee: ______________________________
<PAGE>
EXHIBIT D
Form of Certificate
The Bank of New York __________ __, 19__
101 Barclay Street, Floor 21 West
New York, NY 10286
Attention: Corporate Trust Administration
Re: Viatel, Inc. (the "Company")
10% Subordinated Convertible Debentures
due 2011 (the "Debentures")
Ladies and Gentlemen:
This letter relates to DM _______________ principal amount of
Debentures represented by a (the "Legended Debenture") which bears a legend
outlining restrictions upon transfer of such Legended Debenture. Pursuant to
Section 2.02 of the Indenture (the "Indenture") dated as of April 8, 1998
relating to the Debentures, we hereby certify that we are (or we will hold such
Debentures on behalf of) a person outside the United States to whom the
Debentures could be transferred in accordance with Rule 904 of Regulation S
promulgated under the U.S. Securities Act of 1933, as amended. Accordingly, you
are hereby requested to exchange the legended certificate for an unlegended
certificate representing an identical principal amount of Debentures, all in the
manner provided for in the Indenture.
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby. Terms used in this certificate have the
meanings set forth in Regulation S.
Very truly yours,
[Name of Holder]
By:
-----------------------------------
Authorized Signature
<PAGE>
EXHIBIT E
Form of Certificate to Be Delivered
in Connection with Transfers
Pursuant to Regulation S
The Bank of New York __________ __, 19__
101 Barclay Street, Floor 21 West
New York, NY 10286
Attention: Corporate Trust Administration
Re: Viatel, Inc. (the "Company")
10% Subordinated Convertible Debentures
due 2011 (the "Debentures")
Ladies and Gentlemen:
In connection with our proposed sale of DM _________ aggregate
principal amount of the Debentures, we confirm that such sale has been effected
pursuant to and in accordance with Regulation S under the Securities Act of
1933, as amended, and, accordingly, we represent that:
(1) the offer of the Debentures was not made to a person in the
United States;
(2) 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;
(3) no directed selling efforts have been made by us in the United
States in contravention of the requirements of Rule 903(b) or Rule 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 U.S. Securities Act of 1933.
<PAGE>
E-2
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby. Terms used in this certificate have the
meanings set forth in Regulation S.
Very truly yours,
[Name of Transferor]
By:
-----------------------------------
Authorized Signature
<PAGE>
EXHIBIT F
Form of Certificate to Be
Delivered in Connection with
Transfers to Non-QIB Accredited Investors
The Bank of New York __________ __, 19__
101 Barclay Street, Floor 21 West
New York, NY 10286
Attention: Corporate Trust Administration
Re: Viatel, Inc. (the "Company")
10% Subordinated Convertible Debentures
due 2011 (the "Debentures")
Dear Sirs:
In connection with our proposed purchase of DM ___________ aggregate
principal amount of the Debentures, we confirm that:
1. We understand that any subsequent transfer of the Debentures is
subject to certain restrictions and conditions set forth in the Indenture
dated as of April 8, 1998 relating to the Debentures (the "Indenture") and
the undersigned agrees to be bound by, and not to resell, pledge or
otherwise transfer the Debentures except in compliance with, such
restrictions and conditions and the Securities Act of 1933, as amended
(the "Securities Act").
2. We understand that the offer and sale of the Debentures have not
been registered under the Securities Act, and that the Debentures may not
be offered or sold except as permitted in the following sentence. We
agree, on our own behalf and on behalf of any accounts for which we are
acting as hereinafter stated, that if we should sell any Debentures, we
will do so only (A) to the Company or any subsidiary thereof, (B) in
accordance with Rule 144A under the Securities Act to a "qualified
institutional buyer" (as defined therein), (C) to an institutional
"accredited investor" (as defined below) that, prior to such transfer,
furnishes (or has furnished on its behalf by a U.S. broker-dealer) to you
and to the Company a signed letter substantially in the form of this
letter, (D) outside the United States in accordance with Rule 904 of
Regulation S under the Securities Act, (E) pursuant to the provisions of
Rule 144 under the Securities Act, or (F) pursuant to an effective
registration statement under the Securities Act, and we further agree to
provide to any person purchasing
<PAGE>
F-2
any of the Debentures from us a notice advising such purchaser that
resales of the Debentures are restricted as stated herein.
3. We understand that, on any proposed resale of any Debentures, we
will be required to furnish to you and the Company such certifications,
legal opinions and other information as you and the Company may reasonably
require to confirm that the proposed sale complies with the foregoing
restrictions. We further understand that the Debentures purchased by us
will bear a legend to the foregoing effect.
4. We are an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and
have such knowledge and experience in financial and business matters as to
be capable of evaluating the merits and risks of our investment in the
Debentures, and we and any accounts for which we are acting are each able
to bear the economic risk of our or its investment.
5. We are acquiring the Debentures purchased by us for our own
account or for one or more accounts (each of which is an institutional
"accredited investor") as to each of which we exercise sole investment
discretion.
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby.
Very truly yours,
[Name of Transferor]
By:
-----------------------------------
Authorized Signature
<PAGE>
Exhibit 4.6
- --------------------------------------------------------------------------------
REGISTRATION RIGHTS AGREEMENT
Dated April 3, 1998
between
VIATEL, INC.
and
MORGAN STANLEY & CO. INCORPORATED
MORGAN STANLEY BANK AG
SALOMON BROTHERS INC
ING BARING (U.S.) SECURITIES, INC.
NATIONSBANC MONTGOMERY SECURITIES LLC
- --------------------------------------------------------------------------------
<PAGE>
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made and
entered into April 3, 1998 between VIATEL, INC., a Delaware corporation (the
"Company"), and MORGAN STANLEY & CO. INCORPORATED, MORGAN STANLEY BANK AG,
SALOMON BROTHERS INC, ING BARING (U.S.) SECURITIES, INC. and NATIONSBANC
MONTGOMERY SECURITIES LLC (collectively, the "Initial Purchasers").
This Agreement is made pursuant to the Purchase Agreement, dated the
date hereof, between the Company and the Initial Purchasers (the "Purchase
Agreement"), which provides for the sale by the Company to the Initial
Purchasers of 500,000 Senior Discount Dollar Units (the "Senior Discount Dollar
Units"), 400,000 Senior Dollar Units (the "Senior Dollar Units"), 226,000 Senior
Discount DM Units (the "Senior Discount DM Units") and 178,000 Senior DM Units
(the "Senior DM Units" and together with the Senior Discount Dollar Units, the
Senior Dollar Units and the Senior Discount DM Units, collectively, the
"Units"). Each Senior Discount Dollar Unit will consist of (i) one 12.50%
Senior Discount Note Due 2008 of the Company with a principal amount at maturity
of $1,000 (the "Senior Discount Dollar Notes") and (ii) .490 of a share of
Series A Redeemable Convertible Preferred Stock, $.01 par value per share, of
the Company (the "Series A Preferred"). Each Senior Dollar Unit will consist of
(i) one 11.25% Senior Note Due 2008 of the Company with a principal amount of
$1,000 (the "Senior Dollar Notes") and (ii) .483 of a share of Series A
Preferred. Each Senior Discount DM Unit will consist of (i) one 12.40% Senior
Discount Note Due 2008 of the Company with a principal amount at maturity of
DM 1,000 (the "Senior Discount DM Notes") and (ii) 2.77 DM denominated 10%
Subordinated Convertible Debentures Due 2011 (the "Debentures"). Each Senior DM
Unit will consist of (i) one 11.15% Senior Note Due 2008 of the Company with a
principal amount of DM 1,000 (the "Senior DM Notes" and together with the Senior
Discount Dollar Notes, the Senior Dollar Notes and the Senior Discount DM Notes,
collectively, the "Notes") and (ii) 2.69 Debentures. The Senior Discount Dollar
Notes and the Senior Discount DM Notes are collectively referred to as the
"Discount Notes". The Senior Dollar Notes and the Senior DM Notes are
collectively referred to as the "Senior Notes". In order to induce the Initial
Purchasers to enter into the Purchase Agreement, the Company has agreed to
provide to the Initial Purchasers and their direct and indirect transferees the
registration rights set forth in this Agreement. The execution of this
Agreement is a condition to the closing under the Purchase Agreement.
<PAGE>
2
In consideration of the foregoing, the parties hereto agree as
follows:
1. DEFINITIONS.
As used in this Agreement, the following capitalized defined terms
shall have the following meanings:
"ACCRETED VALUE" shall mean the Accreted Value as defined in the
Senior Discount Dollar Notes Indenture and the Senior Discount DM Notes
Indenture.
"CLOSING DATE" shall mean the Closing Date as defined in the Purchase
Agreement.
"COMMON STOCK" shall have the meaning set forth in the Preamble of
this Agreement.
"COMPANY" shall have the meaning set forth in the Preamble to this
Agreement and shall also include the Company's successors.
"DEBENTURES" shall have the meaning set forth in the Preamble to this
Agreement.
"DISCOUNT NOTES" shall have the meaning set forth in the Preamble to
this Agreement.
"EXCHANGE DATES" shall have the meaning set forth in Section 2(a)(ii)
hereof.
"EXCHANGE NOTES" shall mean notes issued in the Exchange Offer
pursuant to Section 2(a) hereof.
"EXCHANGE OFFER" shall mean the exchange offer by the Company of
Exchange Notes for Registrable Notes pursuant to Section 2(a) hereof.
"EXCHANGE OFFER REGISTRATION" shall mean a registration under the 1933
Act effected pursuant to Section 2(a) hereof.
"EXCHANGE OFFER REGISTRATION STATEMENT" shall mean an exchange offer
registration statement on Form S-4 (or, if applicable, on another appropriate
form) and all amendments and supplements to such registration statement, in each
case including the Prospectus contained therein, all exhibits thereto and all
material incorporated by reference therein.
<PAGE>
3
"HOLDER" shall mean any Initial Purchaser, for so long as it owns any
Registrable Notes, and the successors, assigns and direct and indirect
transferees of the Initial Purchasers who become registered owners of
Registrable Notes under the Indentures; PROVIDED that for purposes of
Sections 4 and 5 of this Agreement, the term "Holder" shall include
Participating Broker-Dealers (as defined in Section 4(a) hereof).
"INDENTURES" shall mean the Senior Discount Dollar Notes Indenture,
the Senior Dollar Notes Indenture, the Senior Discount DM Notes Indenture
and the Senior DM Notes Indenture.
"INITIAL PURCHASERS" shall have the meaning set forth in the Preamble
to this Agreement.
"MAJORITY HOLDERS" shall mean the Holders of a majority of the
aggregate principal amount of outstanding Registrable Notes that are Senior
Notes and the principal amount at maturity of Registrable Notes that are
Discount Notes; PROVIDED that the principal amount and principal amount at
maturity of the Senior DM Notes and the Senior DM Discount Notes,
respectively, shall be calculated in dollars based upon an exchange rate of
DM 1.85 per U.S.$1.00; PROVIDED that whenever the consent or approval of
Holders of a specified percentage of Registrable Notes is required
hereunder, Registrable Notes held by the Company or any of its affiliates
(as such term is defined in Rule 405 under the 1933 Act) (other than the
Initial Purchasers or subsequent holders of Registrable Notes if such
subsequent holders are deemed to be such affiliates solely by reason of
their holding of such Registrable Notes) shall not be counted in
determining whether such consent or approval was given by the Holders of
such required percentage or amount.
"1934 ACT" shall mean the Securities Exchange Act of 1934, as amended
from time to time.
"1933 ACT" shall mean the Securities Act of 1933, as amended from time
to time.
"NOTES" shall have the meaning set forth in the Preamble to this
Agreement.
"PERSON" shall mean an individual, partnership, corporation, limited
liability company, joint venture, association, joint stock company, trust
or unincorporated organization or other entity, or a government or agency
or political subdivision thereof.
<PAGE>
4
"PROSPECTUS" shall mean the prospectus included in a Registration
Statement, including any preliminary prospectus, and any such prospectus as
amended or supplemented by any prospectus supplement, including a
prospectus supplement with respect to the terms of the offering of any
portion of the Registrable Notes covered by a Shelf Registration Statement,
and by all other amendments and supplements to such prospectus, and in each
case including all material incorporated by reference therein.
"PURCHASE AGREEMENT" shall have the meaning set forth in the Preamble
to this Agreement.
"REGISTRABLE NOTES" shall mean the Notes; PROVIDED, HOWEVER, that a
particular Note shall cease to be a Registrable Note when the earliest of
the following events occurs (i) a Registration Statement with respect to
such Note shall have been declared effective under the 1933 Act and such
Note shall have been disposed of pursuant to such Registration Statement,
(ii) such Note has been sold to the public pursuant to Rule 144 (or any
similar rule then in force, but not Rule 144A) under the 1933 Act or
(iii) such Note shall have ceased to be outstanding.
"REGISTRATION EXPENSES" shall mean any and all expenses incident to
performance of or compliance by the Company with this Agreement, including
without limitation: (i) all SEC, stock exchange or National Association of
Securities Dealers, Inc. registration and filing fees, (ii) all fees and
expenses incurred in connection with compliance with state securities or
blue sky laws (including reasonable fees and disbursements of counsel for
any underwriters or Holders in connection with blue sky qualification of
any of the Exchange Notes or Registrable Notes), (iii) all expenses of any
Persons in preparing or assisting in preparing, word processing, printing
and distributing any Registration Statement, any Prospectus, any amendments
or supplements thereto, any underwriting agreements, securities sales
agreements and other documents relating to the performance of and
compliance with this Agreement, (iv) all rating agency fees, (v) all fees
and disbursements relating to the qualification of the Indentures under
applicable securities laws, (vi) the fees and disbursements of the Trustee
and its counsel, (vii) the fees and disbursements of counsel for the
Company and, in the case of a Shelf Registration Statement, the reasonable
fees and disbursements of one counsel for the Holders (which counsel shall
be selected by the Majority Holders and which counsel may also be counsel
for the Initial Purchaser) and (viii) the fees and disbursements of the
independent public accountants of the Company, including the expenses of
any special audits or "cold comfort" letters required by or incident to
such performance and compliance, but excluding fees and expenses of counsel
to the underwriters (other than reasonable fees and expenses set forth in
clause (ii) above) or the Holders and underwriting discounts and
commissions and transfer taxes, if any, relating to the sale or disposition
of Registrable Notes by a Holder.
<PAGE>
5
"REGISTRATION STATEMENT" shall mean any registration statement of the
Company that covers any of the Exchange Notes or Registrable Notes pursuant
to the provisions of this Agreement and all amendments and supplements to
any such Registration Statement, including post-effective amendments, in
each case including the Prospectus contained therein, all exhibits thereto
and all material incorporated by reference therein.
"SEC" shall mean the Securities and Exchange Commission.
"SEMI-ANNUAL ACCRUAL DATE" shall mean the Semi-Annual Accrual Date as
defined in the Senior Discount Dollar Notes Indenture and the Senior
Discount DM Notes Indenture.
"SENIOR DISCOUNT DM NOTES" shall have the meaning set forth in the
Preamble to this Agreement.
"SENIOR DISCOUNT DM NOTES INDENTURE" shall mean the Indenture relating
to the Senior Discount DM Notes, to be dated the Closing Date, between the
Company and The Bank of New York, as trustee, as the same may be amended
from time to time in accordance with the terms thereof.
"SENIOR DISCOUNT DM UNITS" shall have the meaning set forth in the
Preamble to this Agreement.
"SENIOR DISCOUNT DOLLAR NOTES" shall have the meaning set forth in the
Preamble to this Agreement.
"SENIOR DISCOUNT DOLLAR NOTES INDENTURE" shall mean the Indenture
relating to the Senior Discount Dollar Notes, to be dated the Closing Date,
between the Company and The Bank of New York, as trustee, as the same may
be amended from time to time in accordance with the terms thereof.
"SENIOR DISCOUNT DOLLAR UNITS" shall have the meaning set forth in the
Preamble to this Agreement.
"SENIOR DM NOTES" shall have the meaning set forth in the Preamble to
this Agreement.
"SENIOR DM NOTES INDENTURE" shall mean the Indenture relating to the
Senior DM Notes, to be dated the Closing Date, between the Company and The
Bank of New
<PAGE>
6
York, as trustee, as the same may be amended from time to time in
accordance with the terms thereof.
"SENIOR DM UNITS" shall have the meaning set forth in the Preamble to
this Agreement.
"SENIOR DOLLAR NOTES" shall have the meaning set forth in the Preamble
to this Agreement.
"SENIOR DOLLAR NOTES INDENTURE" shall mean the Indenture relating to
the Senior Dollar Notes, to be dated the Closing Date, between the Company
and The Bank of New York, as trustee, as the same may be amended from time
to time in accordance with the terms thereof.
"SENIOR DOLLAR UNITS" shall have the meaning set forth in the Preamble
to this Agreement.
"SENIOR NOTES" shall have the meaning set forth in the Preamble to
this Agreement.
"SHELF REGISTRATION" shall mean a registration effected pursuant to
Section 2(b) hereof.
"SHELF REGISTRATION STATEMENT" shall mean a "shelf" registration
statement of the Company pursuant to the provisions of Section 2(b) of this
Agreement which covers all of the Registrable Notes (but no other
securities unless approved by the Majority Holders) on an appropriate form
under Rule 415 under the 1933 Act, or any similar rule that may be adopted
by the SEC, and all amendments and supplements to such registration
statement, including post-effective amendments, in each case including the
Prospectus contained therein, all exhibits thereto and all material
incorporated by reference therein.
"TRUSTEE" shall mean the trustee with respect to the Notes under the
Indentures.
"UNDERWRITTEN REGISTRATION" or "UNDERWRITTEN OFFERING" shall mean a
registration in which Registrable Notes are sold to an Underwriter (as
hereinafter defined) for reoffering to the public.
"UNITS" shall have the meaning set forth in the Preamble to this
Agreement.
2. REGISTRATION UNDER THE 1933 ACT.
<PAGE>
7
(a) To the extent not prohibited by any applicable law or applicable
interpretation of the Staff of the SEC, the Company shall use its best efforts
to cause to be filed an Exchange Offer Registration Statement covering the offer
by the Company to the Holders to exchange all of the Registrable Notes for
Exchange Notes and to have such Registration Statement remain effective until
the closing of the Exchange Offer. The Company shall commence the Exchange
Offer promptly after the Exchange Offer Registration Statement has been declared
effective by the SEC and use its best efforts to have the Exchange Offer
consummated not later than 60 days after such effective date. The Company shall
commence the Exchange Offer by mailing the related exchange offer Prospectus and
accompanying documents to each Holder stating, in addition to such other
disclosures as are required by applicable law:
(i) that the Exchange Offer is being made pursuant to this
Registration Rights Agreement and that all Registrable Notes validly
tendered will be accepted for exchange;
(ii) the dates of acceptance for exchange (which shall be a period
of at least 20 business days from the date such notice is mailed) (the
"Exchange Dates");
(iii) that any Registrable Note not tendered will remain outstanding
and continue to accrue interest, but will not retain any rights under this
Registration Rights Agreement;
(iv) that Holders electing to have a Registrable Note exchanged
pursuant to the Exchange Offer will be required to surrender such
Registrable Note, together with the enclosed letters of transmittal, to the
institution and at the address (located in the Borough of Manhattan, The
City of New York) specified in the notice prior to the close of business on
the last Exchange Date; and
(v) that Holders will be entitled to withdraw their election, not
later than the close of business on the last Exchange Date, by sending to
the institution and at the address (located in the Borough of Manhattan,
The City of New York) specified in the notice a telegram, telex, facsimile
transmission or letter setting forth the name of such Holder, the principal
amount, or principal amount at maturity, in the case of Registrable Notes
that are Discount Notes, of Registrable Notes delivered for exchange and a
statement that such Holder is withdrawing his election to have such Notes
exchanged.
As soon as practicable after the last Exchange Date, the Company
shall:
<PAGE>
8
(i) accept for exchange Registrable Notes or portions thereof
tendered and not validly withdrawn pursuant to the Exchange Offer; and
(ii) deliver, or cause to be delivered, to the Trustee for
cancellation all Registrable Notes or portions thereof so accepted for
exchange by the Company and issue, and cause the Trustee to promptly
authenticate and mail to each Holder, an Exchange Note of the same series
equal in principal amount or principal amount at maturity, in the case of
Discount Notes, and of like terms to the Registrable Notes surrendered by
such Holder.
The Company shall use its best efforts to complete the Exchange Offer as
provided above and shall comply with the applicable requirements of the 1933
Act, the 1934 Act and other applicable laws and regulations in connection with
the Exchange Offer. The Exchange Offer shall not be subject to any conditions,
other than that the Exchange Offer does not violate applicable law or any
applicable interpretation of the Staff of the SEC. The Company shall inform the
Initial Purchasers of the names and addresses of the Holders to whom the
Exchange Offer is made, and the Initial Purchasers shall have the right, subject
to applicable law, to contact such Holders and otherwise facilitate the tender
of Registrable Notes in the Exchange Offer.
(b) In the event that (i) the Company determines that the Exchange
Offer Registration provided for in Section 2(a) above is not available or may
not be consummated as soon as practicable after the last Exchange Date because
it would violate applicable law or the applicable interpretations of the Staff
of the SEC, (ii) the Exchange Offer is not for any other reason consummated by
the date that is six months after the Closing Date or (iii) 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 Registrable Notes
by such Initial Purchasers, of Registrable Notes that were acquired by the
Initial Purchasers from the Company, the Company shall use its best efforts to
cause to be filed as soon as practicable after such determination, date or
notice of such opinion of counsel is given to the Company, as the case may be, a
Shelf Registration Statement providing for the sale by the Holders of all of the
Registrable Notes and to have such Shelf Registration Statement declared
effective by the SEC. The Company agrees to use its best efforts to keep the
Shelf Registration Statement continuously effective until the expiration of the
period referred to in Rule 144(k) under the 1933 Act with respect to all
Registrable Notes covered by the Shelf Registration Statement, or such shorter
period that will terminate when all of the Registrable Notes covered by the
Shelf Registration Statement have been sold pursuant to the Shelf Registration
Statement. The Company further agrees to supplement or amend the Shelf
Registration Statement if required by the rules, regulations or instructions
applicable to the registration form used by the Company for such Shelf
Registration Statement or by the 1933 Act or by any other applicable rules and
regulations thereunder
<PAGE>
9
for shelf registration or if reasonably requested by a Holder with respect to
information relating to such Holder, and to use its best efforts to cause any
such amendment to become effective and such Shelf Registration Statement to
become usable as soon as thereafter practicable. The Company agrees to furnish
to the Holders of Registrable Notes copies of any such supplement or amendment
promptly after its being used or filed with the SEC.
(c) The Company shall pay all Registration Expenses in connection
with the registration pursuant to Section 2(a) or Section 2(b). Each Holder
shall pay all underwriting discounts and commissions and transfer taxes, if any,
relating to the sale or disposition of such Holder's Registrable Notes pursuant
to the Shelf Registration Statement.
(d) An Exchange Offer Registration Statement pursuant to Section
2(a) hereof or a Shelf Registration Statement pursuant to Section 2(b) hereof
will not be deemed to have become effective unless it has been declared
effective by the SEC; PROVIDED, HOWEVER, that, if, after it has been declared
effective, the offering of Registrable Notes pursuant to a Shelf Registration
Statement is interfered with by any stop order, injunction or other order or
requirement of the SEC or any other governmental agency or court, such
Registration Statement will be deemed not to have become effective during the
period of such interference until the offering of Registrable Notes pursuant to
such Registration Statement may legally resume. In the event that the Exchange
Offer is not consummated and, if a Shelf Registration Statement is required
hereby, the Shelf Registration Statement is not declared effective on or prior
to the date that is six months after the Closing Date, (i) the interest rate on
the Senior Notes will increase by 0.5% per annum and (ii) with respect to the
Discount Notes, interest (in addition to the accrual of original issue discount
on the Discount Notes and interest otherwise due on the Discount Notes) will
accrue at the rate of 0.5% per annum of the Accreted Value and the preceding
Semi-Annual Accrual Date and in each case, be payable in cash semi-annually on
April 15 and October 15 of each year, commencing April 15, 1999, until the date
the Exchange Offer is consummated or a Shelf Registration Statement is declared
effective.
(e) Without limiting the remedies available to the Initial
Purchasers and the Holders, the Company acknowledges that any failure by the
Company to comply with its obligations under Section 2(a) and Section 2(b)
hereof may result in material irreparable injury to the Initial Purchasers or
the Holders for which there is no adequate remedy at law, that it will not be
possible to measure damages for such injuries precisely and that, in the event
of any such failure, the Initial Purchasers or any Holder may obtain such relief
as may be required to specifically enforce the Company's obligations under
Section 2(a) and Section 2(b) hereof.
3. REGISTRATION PROCEDURES.
<PAGE>
10
In connection with the obligations of the Company with respect to the
Registration Statements pursuant to Section 2(a) and Section 2(b) hereof, the
Company shall as expeditiously as possible:
(a) prepare and file with the SEC a Registration Statement on the
appropriate form under the 1933 Act, which form (x) shall be selected by
the Company and (y) shall, in the case of a Shelf Registration, be
available for the sale of the Registrable Notes by the selling Holders
thereof and (z) shall comply as to form in all material respects with the
requirements of the applicable form and include all financial statements
required by the SEC to be filed therewith, and use its best efforts to
cause such Registration Statement to become effective and remain effective
in accordance with Section 2 hereof;
(b) prepare and file with the SEC such amendments and
post-effective amendments to each Registration Statement as may be
necessary to keep such Registration Statement effective for the applicable
period and cause each Prospectus to be supplemented by any required
prospectus supplement and, as so supplemented, to be filed pursuant to
Rule 424 under the 1933 Act; to keep each Prospectus current during the
period described under Section 4(3) and Rule 174 under the 1933 Act that is
applicable to transactions by brokers or dealers with respect to the
Registrable Notes or Exchange Notes;
(c) in the case of a Shelf Registration, furnish to each Holder of
Registrable Notes, to counsel for the Initial Purchasers, to counsel for
the Holders and to each Underwriter of an Underwritten Offering of
Registrable Notes, if any, without charge, as many copies of each
Prospectus, including each preliminary Prospectus, and any amendment or
supplement thereto and such other documents as such Holder or Underwriter
may reasonably request, in order to facilitate the public sale or other
disposition of the Registrable Notes; and the Company consents to the use
of such Prospectus and any amendment or supplement thereto in accordance
with applicable law by each of the selling Holders of Registrable Notes and
any such Underwriters in connection with the offering and sale of the
Registrable Notes covered by and in the manner described in such Prospectus
or any amendment or supplement thereto in accordance with applicable law;
(d) use its reasonable best efforts to register or qualify the
Registrable Notes under all applicable state securities or "blue sky" laws
of such jurisdictions as any Holder of Registrable Notes covered by a
Registration Statement shall reasonably request in writing by the time the
applicable Registration Statement is declared effective by the SEC, to
cooperate with such Holders in connection with any filings required to be
made with the National Association of Securities Dealers, Inc. and do any
and all
<PAGE>
11
other acts and things which may be reasonably necessary or advisable to
enable such Holder to consummate the disposition in each such jurisdiction
of such Registrable Notes owned by such Holder; PROVIDED, HOWEVER, that the
Company shall not be required to (i) qualify as a foreign corporation or as
a dealer in securities in any jurisdiction where it would not otherwise be
required to qualify but for this Section 3(d), (ii) file any general
consent to service of process or (iii) subject itself to taxation in any
such jurisdiction if it is not so subject;
(e) in the case of a Shelf Registration, notify each Holder of
Registrable Notes, counsel for the Holders and counsel for the Initial
Purchasers promptly and, if requested by any such Holder or counsel,
confirm such advice in writing (i) when a Registration Statement has become
effective and when any post-effective amendment thereto has been filed and
becomes effective, (ii) of any request by the SEC or any state securities
authority for amendments and supplements to a Registration Statement and
Prospectus or for additional information after the Registration Statement
has become effective, (iii) of the issuance by the SEC or any state
securities authority of any stop order suspending the effectiveness of a
Registration Statement or the initiation of any proceedings for that
purpose, (iv) if, between the effective date of a Registration Statement
and the closing of any sale of Registrable Notes covered thereby, the
representations and warranties of the Company contained in any underwriting
agreement, securities sales agreement or other similar agreement, if any,
relating to the offering cease to be true and correct in all material
respects or if the Company receives any notification with respect to the
suspension of the qualification of the Registrable Notes for sale in any
jurisdiction or the initiation of any proceeding for such purpose, (v) of
the happening of any event during the period a Shelf Registration Statement
is effective which makes any statement made in such Registration Statement
or the related Prospectus untrue in any material respect or which requires
the making of any changes in such Registration Statement or Prospectus in
order to make the statements therein not misleading in any material respect
and (vi) of any determination by the Company that a post-effective
amendment to a Registration Statement would be appropriate;
(f) make every reasonable effort to obtain the withdrawal of any
order suspending the effectiveness of a Registration Statement at the
earliest possible moment and provide prompt notice to each Holder of the
withdrawal of any such order;
(g) in the case of a Shelf Registration, furnish to each Holder of
Registrable Notes, without charge, at least one conformed copy of each
Registration Statement and any post-effective amendment thereto (without
documents incorporated therein by reference or exhibits thereto, unless
requested);
<PAGE>
12
(h) in the case of a Shelf Registration, cooperate with the
selling Holders of Registrable Notes to facilitate the timely preparation
and delivery of certificates representing Registrable Notes to be sold and
not bearing any restrictive legends and enable such Registrable Notes to be
in such denominations (consistent with the provisions of the respective
Indenture) and registered in such names as the selling Holders may
reasonably request at least two business days prior to the closing of any
sale of Registrable Notes;
(i) in the case of a Shelf Registration, upon the occurrence of
any event contemplated by Section 3(e)(v) hereof, use its best efforts to
prepare and file with the SEC a supplement or post-effective amendment to a
Registration Statement or the related Prospectus or any document
incorporated therein by reference or file any other required document so
that, as thereafter delivered to the purchasers of the Registrable Notes,
such Prospectus will not contain any untrue statement of a material fact or
omit to state a material fact necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading.
The Company agrees to notify the Holders to suspend use of the Prospectus
as promptly as practicable after the occurrence of such an event, and the
Holders hereby agree to suspend use of the Prospectus until the Company has
amended or supplemented the Prospectus to correct such misstatement or
omission;
(j) a reasonable time prior to the filing of any Registration
Statement, any Prospectus, any amendment to a Registration Statement or
amendment or supplement to a Prospectus or any document that is to be
incorporated by reference into a Registration Statement or a Prospectus
after initial filing of a Registration Statement, provide copies of such
document to the Initial Purchasers and their counsel (and, in the case of a
Shelf Registration Statement, the Holders and their counsel) and make such
of the representatives of the Company as shall be reasonably requested by
the Initial Purchasers or their counsel (and, in the case of a Shelf
Registration Statement, the Holders or their counsel) available for
discussion of such document, and shall not at any time file or make any
amendment to the Registration Statement, any Prospectus or any amendment of
or supplement to a Registration Statement or a Prospectus or any document
which is to be incorporated by reference into a Registration Statement or a
Prospectus, of which the Initial Purchasers and their counsel (and, in the
case of a Shelf Registration Statement, the Holders and their counsel)
shall not have previously been advised and furnished a copy or to which the
Initial Purchasers or their counsel (and, in the case of a Shelf
Registration Statement, the Holders or their counsel) shall reasonably
object;
(k) obtain a CUSIP number for all Exchange Notes or Registrable
Notes, as the case may be, not later than the effective date of a
Registration Statement;
<PAGE>
13
(l) cause the Indentures to be qualified under the Trust Indenture
Act of 1939, as amended (the "TIA"), in connection with the registration of
the Exchange Notes or Registrable Notes, as the case may be, cooperate with
the Trustee and the Holders to effect such changes to the Indentures as may
be required for the Indentures to be so qualified in accordance with the
terms of the TIA and execute, and use its reasonable best efforts to cause
the 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 the Indentures to be so qualified in a timely manner;
(m) in the case of a Shelf Registration, upon execution of
customary confidentiality agreements reasonably satisfactory to the Company
and its counsel, make available for inspection by a representative of the
Holders of the Registrable Notes, any Underwriter participating in any
disposition pursuant to such Shelf Registration Statement, and attorneys
and accountants designated by the Holders, at reasonable times and in a
reasonable manner, all financial and other records, pertinent documents and
properties of the Company, and cause the respective officers, directors and
employees of the Company to supply all information reasonably requested by
any such representative, Underwriter, attorney or accountant in connection
with a Shelf Registration Statement;
(n) in the case of a Shelf Registration, if reasonably requested
by any Holder of Registrable Notes covered by such Registration Statement,
(i) promptly incorporate in a Prospectus supplement or post-effective
amendment such information with respect to such Holder as such Holder
reasonably requests to be included therein and (ii) make all required
filings of such Prospectus supplement or such post-effective amendment as
soon as the Company has received notification of the matters to be
incorporated in such filing; and
(o) in the case of a Shelf Registration, use its reasonable best
efforts to enter into such customary agreements and take all such other
actions in connection therewith (including those requested by the Holders
of a majority in principal amount of the Registrable Notes being sold) in
order to expedite or facilitate the disposition of such Registrable Notes
including, but not limited to, an Underwritten Offering and in such
connection, (i) to the extent possible, make such representations and
warranties to the Holders and any Underwriters of such Registrable Notes
with respect to the business of the Company and its subsidiaries, the Shelf
Registration Statement, Prospectus and documents incorporated by reference
therein or deemed incorporated by reference therein, if any, in each case,
in form, substance and scope as are customarily made by issuers to
underwriters in underwritten offerings and confirm the same if and when
requested, (ii) use its reasonable best efforts to obtain opinions of
counsel to the
<PAGE>
14
Company (which counsel and opinions, in form, scope and substance, shall be
reasonably satisfactory to the Holders and such Underwriters and their
respective counsel) addressed to each selling Holder and Underwriter of
Registrable Notes, covering the matters customarily covered in opinions
requested in underwritten offerings, (iii) use its reasonable best efforts
to obtain "cold comfort" letters from the independent certified public
accountants of the Company (and, if necessary, any other certified public
accountant 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 in the Shelf Registration Statement) addressed to
each selling Holder and Underwriter of Registrable Notes, such letters to
be in customary form and covering matters of the type customarily covered
in "cold comfort" letters in connection with underwritten offerings, and
(iv) deliver such documents and certificates as may be reasonably requested
by the Holders of a majority in principal amount of the Registrable Notes
being sold or the Underwriters, and which are customarily delivered in
underwritten offerings, to evidence the continued validity of the
representations and warranties of the Company made pursuant to clause (i)
above and to evidence compliance with any customary conditions contained in
an underwriting agreement.
In the case of a Shelf Registration Statement, the Company may require
each Holder of Registrable Notes to furnish to the Company such information
regarding the Holder and the proposed distribution by such Holder of such
Registrable Notes as the Company may from time to time reasonably request in
writing. No Holder of Registrable Notes may include its Registrable Notes in
such Shelf Registration Statement unless and until such Holder furnishes such
information to the Company. Each Holder including Registrable Notes in a Shelf
Registration shall agree to furnish promptly to the Company any information
regarding such Holder and the proposed distribution by such Holder of such
Registrable Notes required to make any information previously furnished to the
Company by such Holder not materially misleading.
In the case of a Shelf Registration Statement, each Holder agrees
that, upon receipt of any notice from the Company of the happening of any event
of the kind described in Section 3(e)(v) hereof, such Holder will forthwith
discontinue disposition of Registrable Notes pursuant to a Shelf Registration
Statement until such Holder's receipt of the copies of the supplemented or
amended Prospectus contemplated by Section 3(i) hereof, and, if so directed by
the Company, such Holder will deliver to the Company (at its expense) all copies
in its possession, other than permanent file copies then in such Holder's
possession, of the Prospectus covering such Registrable Notes current at the
time of receipt of such notice. If the Company shall give any such notice to
suspend the disposition of Registrable Notes pursuant to a Shelf Registration
Statement, the Company shall extend the period during which the Registration
Statement shall be maintained effective pursuant to this Agreement by the number
of days during the period from and including the date of the giving of such
notice to and including the
<PAGE>
15
date when the Holders shall have received copies of the supplemented or amended
Prospectus necessary to resume such dispositions. There may not be more than
two such suspensions during any 365 day period and any such suspensions may not
exceed 30 days for each suspension.
The Holders of Registrable Notes covered by a Shelf Registration
Statement who desire to do so may sell such Registrable Notes in an Underwritten
Offering; PROVIDED that the Company shall be required to use its reasonable best
efforts to effect an underwritten offering only upon the request of Holders of
at least 25% in aggregate principal amount of the Registrable Notes that are
Senior Notes and the principal amount at maturity of the Registrable Notes that
are Senior Discount Notes (assuming an exchange rate equal to DM 1.8 per
U.S.$1.00 in the case of the Senior DM Notes and Senior Discount DM Notes)
outstanding at the time such request is delivered to the Company. In any such
Underwritten Offering, the investment banker or investment bankers and manager
or managers (the "Underwriters") that will administer the offering will be
selected by the Majority Holders of the Registrable Notes included in such
offering, subject to approval by the Company, which approval will not be
unreasonably withheld.
4. PARTICIPATION OF BROKER-DEALERS IN EXCHANGE OFFER.
(a) The Staff of the SEC has taken the position that any
broker-dealer that receives Exchange Notes for its own account in the Exchange
Offer in exchange for Notes that were acquired by such broker-dealer as a result
of market-making or other trading activities (a "Participating Broker-Dealer"),
may be deemed to be an "underwriter" within the meaning of the 1933 Act and must
deliver a prospectus meeting the requirements of the 1933 Act in connection with
any resale of such Exchange Notes.
The Company understands that it is the Staff's position that if the
Prospectus contained in the Exchange Offer Registration Statement includes a
plan of distribution containing a statement to the above effect and the means by
which Participating Broker-Dealers may resell the Exchange Notes, without naming
the Participating Broker-Dealers or specifying the amount of Exchange Notes
owned by them, such Prospectus may be delivered by Participating Broker-Dealers
to satisfy their prospectus delivery obligation under the 1933 Act in connection
with resales of Exchange Notes for their own accounts, so long as the Prospectus
otherwise meets the requirements of the 1933 Act.
(b) In light of the above, notwithstanding the other provisions of
this Agreement, the Company agrees that the provisions of this Agreement as they
relate to a Shelf Registration shall also apply to an Exchange Offer
Registration to the extent, and with such reasonable modifications thereto as
may be, reasonably requested by the Initial Purchasers or by one or more
Participating Broker-Dealers, in each case as provided in clause (ii) below, in
order to expedite or facilitate the disposition of any Exchange Notes by
<PAGE>
16
Participating Broker-Dealers consistent with the positions of the Staff recited
in Section 4(a) above; PROVIDED that:
(i) the Company shall not be required to amend or supplement the
Prospectus contained in the Exchange Offer Registration Statement, as would
otherwise be contemplated by Section 3(i), for a period exceeding 180 days
after the last Exchange Date (as such period may be extended pursuant to
the penultimate paragraph of Section 3 of this Agreement) and Participating
Broker-Dealers shall not be authorized by the Company to deliver and shall
not deliver such Prospectus after such period in connection with the
resales contemplated by this Section 4; and
(ii) the application of the Shelf Registration procedures set forth
in Section 3 of this Agreement to an Exchange Offer Registration, to the
extent not required by the positions of the Staff of the SEC or the 1933
Act and the rules and regulations thereunder, will be in conformity with
the reasonable request to the Company by the Initial Purchasers or with the
reasonable request in writing to the Company by one or more broker-dealers
who certify to the Initial Purchasers and the Company in writing that they
anticipate that they will be Participating Broker-Dealers; and PROVIDED
FURTHER that, in connection with such application of the Shelf Registration
procedures set forth in Section 3 to an Exchange Offer Registration, the
Company shall be obligated (x) to deal only with one entity representing
the Participating Broker-Dealers, which shall be Morgan Stanley & Co.
Incorporated unless it elects not to act as such representative, (y) to pay
the fees and expenses of only one counsel representing the Participating
Broker-Dealers, which shall be counsel to the Initial Purchasers unless
such counsel elects not to so act and (z) to cause to be delivered only
one, if any, "cold comfort" letter with respect to the Prospectus in the
form existing on the last Exchange Date and with respect to each subsequent
amendment or supplement, if any, effected during the period specified in
clause (i) above.
(c) the Initial Purchasers shall have no liability to the Company
or any Holder with respect to any request that it may make pursuant to Section
4(b) above.
5. INDEMNIFICATION AND CONTRIBUTION.
(a) The Company agrees to indemnify and hold harmless each Initial
Purchaser, each Holder and each person, if any, who controls any Initial
Purchaser or any Holder within the meaning of either Section 15 of the 1933 Act
or Section 20 of the 1934 Act, or is under common control with, or is controlled
by, any Initial Purchaser or any Holder, from and against all losses, claims,
damages and liabilities (including, without limitation, any legal or other
expenses reasonably incurred by any Initial Purchaser, any Holder or any such
controlling or affiliated person in connection with defending or investigating
any such action or
<PAGE>
17
claim) caused by any untrue statement or alleged untrue statement of a material
fact contained in any Registration Statement (or any amendment thereto) pursuant
to which Exchange Notes or Registrable Notes were registered under the 1933 Act,
including all documents incorporated therein by reference, or caused by any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, or
caused by any untrue statement or alleged untrue statement of a material fact
contained in any Prospectus (as amended or supplemented if the Company shall
have furnished any amendments or supplements thereto), or caused by any omission
or alleged omission to state therein a material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, except insofar as such losses, claims, damages or
liabilities are caused by any such untrue statement or omission or alleged
untrue statement or omission based upon information relating to any Initial
Purchaser or any Holder furnished to the Company in writing by such Initial
Purchaser or any selling Holder expressly for use therein; PROVIDED, that the
foregoing indemnity agreement shall not inure to the benefit of any Holder or
any Person controlling such Holder, with respect to any sale or disposition of
Registrable Notes by such Holder in violation of the penultimate paragraph of
Section 3 of this Agreement. In connection with any Underwritten Offering
permitted by Section 3, the Company will also indemnify the Underwriters, if
any, selling brokers, dealers and similar securities industry professionals
participating in the distribution, their officers and directors and each Person
who controls such Persons (within the meaning of either Section 15 of the 1933
Act or Section 20 of the 1934 Act) to the same extent as provided above with
respect to the indemnification of the Holders, if requested in connection with
any Registration Statement.
(b) Each Holder agrees, severally and not jointly, to indemnify
and hold harmless the Company, each Initial Purchaser and the other selling
Holders, and each of their respective directors, officers who sign the
Registration Statement and each Person, if any, who controls the Company, any
Initial Purchaser and any other selling Holder within the meaning of either
Section 15 of the 1933 Act or Section 20 of the 1934 Act to the same extent as
the foregoing indemnity from the Company to the Initial Purchasers and the
Holders, but only with reference to information relating to such Holder
furnished to the Company in writing by such Holder expressly for use in any
Registration Statement (or any amendment thereto) or any Prospectus (or any
amendment or supplement thereto).
(c) In case any proceeding (including any governmental
investigation) shall be instituted involving any person in respect of which
indemnity may be sought pursuant to either paragraph (a) or paragraph (b) above,
such person (the "indemnified party") shall promptly notify the person against
whom such indemnity may be sought (the "indemnifying party") in writing (but the
failure to so notify an indemnifying party shall not relieve it from any
liability which it may have under this Section, except to the extent that it has
been prejudiced in any material respect by such failure, or from any liability
it may otherwise have) and the indemnifying party, upon request of the
indemnified party, shall retain counsel
<PAGE>
18
reasonably satisfactory to the indemnified party to represent the indemnified
party and any others the indemnifying party may designate in such proceeding and
shall pay the fees and disbursements of such counsel related to such proceeding.
In any such proceeding, any indemnified party shall have the right to retain its
own counsel, but the fees and expenses of such counsel shall be at the expense
of such indemnified party unless (i) the indemnifying party and the indemnified
party shall have mutually agreed to the retention of such counsel or (ii) the
named parties to any such proceeding (including any impleaded parties) include
both the indemnifying party and the indemnified party and representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. It is understood that the indemnifying party
shall not, in respect of the legal expenses of any indemnified party in
connection with any proceeding or related proceedings in the same jurisdiction,
be liable for (a) the reasonable fees and expenses of more than one separate
firm (in addition to any local counsel) for the Initial Purchasers and all
Persons, if any, who control any Initial Purchaser within the meaning of either
Section 15 of the 1933 Act or Section 20 of the 1934 Act, (b) the reasonable
fees and expenses of more than one separate firm (in addition to any local
counsel) for the Company, its directors, its officers who sign the Registration
Statement and each Person, if any, who controls the Company within the meaning
of either such Section and (c) the reasonable fees and expenses of more than one
separate firm (in addition to any local counsel) for all Holders and all
Persons, if any, who control any Holders within the meaning of either such
Section, and that all such fees and expenses shall be reimbursed as they are
incurred. In such case involving any Initial Purchaser and Persons who control
such Initial Purchaser, such firm shall be designated in writing by Morgan
Stanley & Co. Incorporated. In such case involving the Holders and such Persons
who control Holders, such firm shall be designated in writing by the Majority
Holders. In all other cases, such firm shall be designated by the Company. The
indemnifying party shall not be liable for any settlement of any proceeding
effected without its written consent but, if settled with such consent or if
there be a final judgment for the plaintiff, the indemnifying party agrees to
indemnify the indemnified party from and against any loss or liability by reason
of such settlement or judgment. Notwithstanding the foregoing sentence, if at
any time an indemnified party shall have requested an indemnifying party to
reimburse the indemnified party for fees and expenses of counsel as contemplated
by the second and third sentences of this paragraph, the indemnifying party
agrees that it shall be liable for any settlement of any proceeding effected
without its written consent if (i) such settlement is entered into more than 60
days after receipt by such indemnifying party of the aforesaid request and (ii)
such indemnifying party shall not have reimbursed the indemnified party for such
fees and expenses of counsel in accordance with such request prior to the date
of such settlement. No indemnifying party shall, without the prior written
consent of the indemnified party (which consent may not be unreasonably
withheld), effect any settlement of any pending or threatened proceeding in
respect of which such indemnified party is or could have been a party and
indemnity could have been sought hereunder (whether or not any indemnified party
is an actual or potential party to such proceeding) by such indemnified party,
unless such settlement includes an unconditional
<PAGE>
19
release of such indemnified party from all liability on claims that are the
subject matter of such proceeding.
(d) To the extent the indemnification provided for in paragraph
(a) or paragraph (b) of this Section 5 is unavailable to an indemnified party or
insufficient in respect of any losses, claims, damages or liabilities referred
to therein, then each indemnifying party under such paragraph, in lieu of
indemnifying such indemnified party thereunder, shall contribute to the amount
paid or payable by such indemnified party as a result of such losses, claims,
damages or liabilities in such proportion as is appropriate to reflect the
relative fault of the indemnifying party or parties, on the one hand, and of the
indemnified party or parties, on the other hand, in connection with the
statements or omissions that resulted in such losses, claims, damages or
liabilities, as well as any other relevant equitable considerations. The
relative fault of the Company and the Holders shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company or by the Holders and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The Holders' respective
obligations to contribute pursuant to this Section 5(d) are several in
proportion to the respective principal amount of Registrable Notes of such
Holder that were registered pursuant to a Registration Statement.
(e) The Company and each Holder agree that it would not be just or
equitable if contribution pursuant to this Section 5 were determined by PRO RATA
allocation or by any other method of allocation that does not take account of
the equitable considerations referred to in paragraph (d) above. The amount
paid or payable by an indemnified party as a result of the losses, claims,
damages and liabilities referred to in paragraph (d) above shall be deemed to
include, subject to the limitations set forth above, 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 5, no Holder shall be required to indemnify or contribute any amount in
excess of the amount by which the total price at which Registrable Notes were
sold by such Holder exceeds the amount of any damages that such Holder has
otherwise been required to pay by reason of such 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 1933 Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. The remedies provided for in this Section 5 are not
exclusive and shall not limit any rights or remedies which may otherwise be
available to any indemnified party at law or in equity.
The indemnity and contribution provisions contained in this Section 5
shall remain operative and in full force and effect regardless of (i) any
termination of this Agreement, (ii) any investigation made by or on behalf of
any Initial Purchaser, any Holder or
<PAGE>
20
any Person controlling any Initial Purchaser or any Holder, or by or on behalf
of the Company, its officers or directors or any Person controlling the Company,
(iii) acceptance of any of the Exchange Notes and (iv) any sale of Registrable
Notes pursuant to a Shelf Registration Statement.
6. MISCELLANEOUS.
(a) NO INCONSISTENT AGREEMENTS. The Company has not entered into,
and on or after the date of this Agreement will not enter into, any agreement
which is inconsistent with the rights granted to the Holders of Registrable
Notes in this Agreement or otherwise conflicts with the provisions hereof. The
rights granted to the Holders hereunder do not in any way conflict with and are
not inconsistent with the rights granted to the holders of the Company's other
issued and outstanding securities under any such agreements.
(b) AMENDMENTS AND WAIVERS. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given unless the Company has obtained the written consent of Holders
of at least a majority in aggregate principal amount of the outstanding
Registrable Notes that are Senior Notes and the aggregate principal amount at
maturity of the outstanding Registrable Notes that are Senior Discount Notes
(assuming an exchange rate equal to DM 1.8 per U.S. Dollar in the case of the
Senior DM Notes and Senior Discount DM Notes), in each case, which are affected
by such amendment, modification, supplement, waiver or consent; PROVIDED,
HOWEVER, that no amendment, modification, supplement, waiver or consent to any
departure from the provisions of Section 5 hereof shall be effective as against
any Holder of Registrable Notes unless consented to in writing by such Holder.
(c) NOTICES. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, registered
first-class mail, telex, telecopier, or any courier guaranteeing overnight
delivery (i) if to a Holder, at the most current address given by such Holder to
the Company by means of a notice given in accordance with the provisions of this
Section 6(c), which address initially is, with respect to the Initial
Purchasers, the address set forth in the Purchase Agreement; and (ii) if to the
Company, initially at the Company's address set forth in the Purchase Agreement
and thereafter at such other address, notice of which is given in accordance
with the provisions of this Section 6(c).
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five business
days after being deposited in the mail, postage prepaid, if mailed; when
answered back, if telexed; when receipt is acknowledged, if telecopied; and on
the next business day if timely delivered to an air courier guaranteeing
overnight delivery.
<PAGE>
21
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 specified in the Indentures.
(d) SUCCESSORS AND ASSIGNS. This Agreement shall inure to the
benefit of and be binding upon the successors, assigns and transferees of each
of the parties, including, without limitation and without the need for an
express assignment, subsequent Holders; PROVIDED that nothing herein shall be
deemed to permit any assignment, transfer or other disposition of Registrable
Notes in violation of the terms of the Purchase Agreement. If any transferee of
any Holder shall acquire Registrable Notes, in any manner, whether by operation
of law or otherwise, such Registrable Notes shall be held subject to all of the
terms of this Agreement, and by taking and holding such Registrable Notes such
person shall be conclusively deemed to have agreed to be bound by and to perform
all of the terms and provisions of this Agreement and such person shall be
entitled to receive the benefits hereof. The Initial Purchasers (in their
capacity as Initial Purchasers) shall have no liability or obligation to the
Company with respect to any failure by a Holder to comply with, or any breach by
any Holder of, any of the obligations of such Holder under this Agreement.
(e) PURCHASES AND SALES OF NOTES. The Company shall not, and
shall use its best efforts to cause its affiliates (as defined in Rule 405 under
the 1933 Act) not to, purchase and then resell or otherwise transfer any Notes.
(f) THIRD PARTY BENEFICIARY. The Holders shall be third party
beneficiaries to the agreements made hereunder between the Company, on the one
hand, and the Initial Purchasers, on the other hand, and shall have the right to
enforce such agreements directly to the extent it deems such enforcement
necessary or advisable to protect its rights or the rights of Holders hereunder.
(g) 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.
(h) HEADINGS. The headings in this Agreement are for convenience
of reference only and shall not limit or otherwise affect the meaning hereof.
(i) GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of New York.
<PAGE>
22
(j) SEVERABILITY. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstance, is
held invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions contained herein shall not be affected or impaired thereby.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
VIATEL, INC.
By /s/ Michael J. Mahoney
--------------------------
Name: Michael J. Mahoney
Title: President and Chief Executive
Officer
Confirmed and accepted as of
the date first above written:
MORGAN STANLEY & CO. INCORPORATED
MORGAN STANLEY BANK AG
SALOMON BROTHERS INC
ING BARING (U.S.) SECURITIES, INC.
NATIONSBANC MONTGOMERY SECURITIES LLC
By: MORGAN STANLEY & CO. INCORPORATED
In its individual capacity and as representative
of the other Initial Purchasers.
By /s/ Kenneth G. Pott
-----------------------------
Name: Kenneth G. Pott
Title: Vice President
<PAGE>
Exhibit 4.7
- --------------------------------------------------------------------------------
CONVERSION SHARES REGISTRATION RIGHTS AGREEMENT
Dated April 3, 1998
between
VIATEL, INC.
and
MORGAN STANLEY & CO. INCORPORATED
MORGAN STANLEY BANK AG
SALOMON BROTHERS INC
ING BARING (U.S.) SECURITIES, INC.
NATIONSBANC MONTGOMERY SECURITIES LLC
- --------------------------------------------------------------------------------
<PAGE>
CONVERSION SHARES REGISTRATION RIGHTS AGREEMENT
THIS CONVERSION SHARES REGISTRATION RIGHTS AGREEMENT (the "Agreement")
is made and entered into April 3, 1998 between VIATEL, INC., a Delaware
corporation (the "Company"), and MORGAN STANLEY & CO. INCORPORATED, MORGAN
STANLEY BANK AG, SALOMON BROTHERS INC, ING BARING (U.S.) SECURITIES, INC. and
NATIONSBANC MONTGOMERY SECURITIES LLC (the "Initial Purchasers").
This Agreement is made pursuant to the Purchase Agreement, dated the
date hereof, between the Company and the Initial Purchasers (the "Purchase
Agreement"), which provides for the sale by the Company to the Initial
Purchasers of 500,000 Senior Discount Dollar Units (the "Senior Discount Dollar
Units"), 400,000 Senior Dollar Units (the "Senior Dollar Units"), 226,000 Senior
Discount DM Units (the "Senior Discount DM Units") and 178,000 Senior DM Units
(the "Senior DM Units" and together with the Senior Discount Dollar Units, the
Senior Dollar Units and the Senior Discount DM Units, collectively, the
"Units"). Each Senior Discount Dollar Unit will consist of (i) one 12.50%
Senior Discount Note Due 2008 of the Company with a principal amount at maturity
of $1,000 (the "Senior Dollar Notes") and (ii) .490 of a share of shares of
Series A redeemable convertible Preferred Stock, $.01 par value per share, of
the Company (the "Preferred Stock"). Each Senior Dollar Unit will consist of
(i) one 11.25% Senior Dollar Note Due 2008 with a principal amount of $1,000
(the "Senior Dollar Notes") and (ii) .483 of a share of Preferred Stock. Each
Senior Discount DM Unit will consist of (i) one 12.40% Senior Discount Note Due
2008 of the Company with a principal amount at maturity of DM 1,000 (the "Senior
Discount DM Notes") and (ii) 2.77 DM denominated 10% Subordinated Convertible
Debentures Due 2011 of the Company (the "Debentures"). Each Senior DM Unit will
consist of (i) one 11.15% Senior Note Due 2008 of the Company with a principal
amount of DM 1,000 (the "Senior DM Notes" and, together with the Senior Discount
Dollar Notes, the Senior Dollar Notes and the Senior Discount DM Notes,
collectively, the "Notes") and (ii) 2.69 Debentures. The Senior Discount Dollar
Notes and the Senior Discount DM Notes are collectively referred to as the
"Discount Notes." The Senior Dollar Notes and the Senior DM Notes are
collectively referred to as the "Senior Notes." In order to induce the Initial
Purchasers to enter into the Purchase Agreement, the Company has agreed to
provide to the Initial Purchasers and their direct and indirect transferees the
registration rights with respect to the Conversion Shares (as defined herein)
set forth in this Agreement. The execution of this Agreement is a condition to
the closing under the Purchase Agreement.
<PAGE>
2
In consideration of the foregoing, the parties hereto agree as
follows:
1. DEFINITIONS.
As used in this Agreement, the following capitalized defined terms
shall have the following meanings:
"CERTIFICATE OF DESIGNATIONS" shall mean the Certificate of
Designations, Preferences and Rights relating to the Preferred Stock, filed
with the Secretary of State of the State of Delaware.
"CLOSING DATE" shall mean the Closing Date as defined in the Purchase
Agreement.
"COMMON STOCK" shall have the meaning set forth in the preamble to
this Agreement.
"COMPANY" shall have the meaning set forth in the preamble to this
Agreement and shall also include the Company's successors.
"CONVERSION SHARES" shall mean the shares of Common Stock issuable
upon conversion of the Preferred Stock and the Debentures at the rate and
in the manner described in the Certificate of Designations and the
Indenture, respectively.
"DEBENTURES" shall have the meaning set forth in the preamble to this
Agreement.
"HOLDER" shall mean any Initial Purchaser, for so long as it owns any
of the Preferred Stock or Debentures, and the successors, assigns and
direct and indirect transferees of the Initial Purchasers who become
registered owners of Preferred Stock or Debentures.
"INDENTURE" shall mean the Indenture relating to the Debentures dated
as of April 8, 1998 between the Company and The Bank of New York, as
trustee, and as the same may be amended from time to time in accordance
with the term thereof.
"INITIAL PURCHASERS" shall have the meaning set forth in the preamble to
this Agreement.
"MAJORITY HOLDERS" shall mean the Holders of a majority of the
outstanding Preferred Stock and the outstanding Debentures, as the case may
be; PROVIDED that
<PAGE>
3
whenever the consent or approval of Holders of a specified percentage of
Preferred Stock or Debentures is required hereunder, Preferred Stock or
Debentures, as the case may be, held by the Company or any of its
affiliates (as such term is defined in Rule 405 under the 1933 Act) (other
than the Initial Purchasers or subsequent holders of Preferred Stock or
Debentures, as the case may be, if such subsequent holders are deemed to be
such affiliates solely by reason of their holding of such Preferred Stock
or Debentures, as the case may be) shall not be counted in determining
whether such consent or approval was given by the Holders of such required
percentage or amount.
"1934 ACT" shall mean the Securities Exchange Act of 1934, as amended
from time to time.
"1933 ACT" shall mean the Securities Act of 1933, as amended from time
to time.
"NOTES" shall have the meaning set forth in the preamble to this
Agreement.
"PERSON" shall mean an individual, partnership, corporation, limited
liability company, joint venture, association, joint stock company, trust
or unincorporated organization or other entity, or a government or agency
or political subdivision thereof.
"PREFERRED STOCK" shall have the meaning set forth in the preamble to
this Agreement.
"PROSPECTUS" shall mean the prospectus included in a Registration
Statement, including any preliminary prospectus, and any such prospectus as
amended or supplemented by any prospectus supplement, including a
prospectus supplement with respect to the terms of the offering of any
portion of the Conversion Shares covered by a Shelf Registration Statement,
and by all other amendments and supplements to such prospectus, and in each
case including all material incorporated by reference therein.
"PURCHASE AGREEMENT" shall have the meaning set forth in the preamble
to this Agreement.
"REGISTRATION EXPENSES" shall mean any and all expenses incident to
performance of or compliance by the Company with this Agreement, including
without limitation: (i) all SEC, stock exchange or National Association of
Securities Dealers, Inc. registration, listing and filing fees, (ii) all
fees and expenses incurred in connection with compliance with state
securities or blue sky laws (including reasonable fees and disbursements of
counsel for any underwriters or Holders in connection with blue sky
qualification), (iii) all expenses of any Persons in preparing or assisting
in preparing,
<PAGE>
4
word processing, printing and distributing the Shelf Registration
Statement, any Prospectus, any amendments or supplements thereto, any
underwriting agreements, securities sales agreements and other documents
relating to the performance of and compliance with this Agreement, (iv) all
rating agency fees, (v) the fees and disbursements of counsel for the
Company and the reasonable fees and disbursements of counsel for the
Holders (which counsel shall be selected by the Majority Holders and which
counsel may also be counsel for the Initial Purchasers ) and (vi) the fees
and disbursements of the independent public accountants of the Company,
including the expenses of any special audits or "cold comfort" letters
required by or incident to such performance and compliance, but excluding
fees and expenses of counsel to the underwriters (other than reasonable
fees and expenses set forth in clause (ii) above) or the Holders.
"SEC" shall mean the Securities and Exchange Commission.
"SHELF PERIOD" shall have the meaning set forth in Section 2(a)
hereof.
"SHELF REGISTRATION" shall mean a registration effected pursuant to
Section 2(a) hereof.
"SHELF REGISTRATION STATEMENT" shall mean a "shelf" registration
statement of the Company pursuant to the provisions of Section 2(a) of this
Agreement which covers all of the Conversion Shares (but no other
securities unless approved by the Majority Holders) on an appropriate form
under Rule 415 under the 1933 Act, or any similar rule that may be adopted
by the SEC, and all amendments and supplements to such registration
statement, including post-effective amendments, in each case including the
Prospectus contained therein, all exhibits thereto and all material
incorporated by reference therein.
"TRUSTEE" shall mean the trustee with respect to the Notes under the
Indenture.
2. REGISTRATION UNDER THE 1933 ACT.
(a) The Company shall use its best efforts to cause to be filed and
to be declared effective by the SEC on or prior to the date that is one year
after the Closing Date, a Shelf Registration Statement covering the issuance of
the Conversion Shares. Subject to certain limited "blackout periods" referred
to in the last paragraph of Section 4 the Company shall keep the Shelf
Registration Statement effective for two years, or if earlier, when all
Debentures and shares of Preferred Stock have been converted into Common Stock
pursuant to the Shelf Registration Statement (the "Shelf Period"). The Company
further agrees to supplement or amend the Shelf Registration Statement if
required by the rules, regulations or
<PAGE>
5
instructions applicable to the registration form used by the Company for such
Shelf Registration Statement or by the 1933 Act or by any other applicable rules
and regulations thereunder for shelf registration or if reasonably requested by
a Holder with respect to information relating to such Holder, and to use its
best efforts to cause any such amendment to become effective and such Shelf
Registration Statement to become usable as soon as thereafter practicable. The
Company agrees to furnish to the Holders copies of any such supplement or
amendment promptly after its being used or filed with the SEC.
(b) The Company shall pay all Registration Expenses in connection
with the registration pursuant to Section 2(a).
(c) The Shelf Registration Statement pursuant to Section 2(a) hereof
will not be deemed to have become effective unless it has been declared
effective by the SEC; PROVIDED, HOWEVER, that, if, after it has been declared
effective, the offering of Conversion Shares pursuant to the Shelf Registration
Statement is interfered with by any stop order, injunction or other order or
requirement of the SEC or any other governmental agency or court, such Shelf
Registration Statement will be deemed not to have become effective during the
period of such interference until the offering of Conversion Shares pursuant to
such Registration Statement may legally resume. If the Shelf Registration
Statement is not declared effective on or prior to the date that is one year
after the Closing Date (except during the "blackout periods" referred to in the
last paragraph of Section 4 and after the Shelf Period), the dividend rate on
the Preferred Stock will increase by (expressed as a percentage of liquidation
preference) 0.5% per annum and the interest rate on the Debentures will increase
by 0.5% per annum (per 1,000 principal amount) each of which increase must be
paid in cash, until a Shelf Registration Statement is declared effective.
(d) Without limiting the remedies available to the Initial Purchasers
and the Holders, the Company acknowledges that any failure by the Company to
comply with its obligations under Section 2(a) hereof may result in material
irreparable injury to the Initial Purchasers or the Holders for which there is
no adequate remedy at law, that it will not be possible to measure damages for
such injuries precisely and that, in the event of any such failure, the Initial
Purchasers or any Holder may obtain such relief as may be required to
specifically enforce the Company's obligations under Section 2(a).
3. REGISTRATION PROCEDURES.
In connection with the obligations of the Company with respect to the
Shelf Registration Statement pursuant to Section 2(a) hereof, the Company shall
as expeditiously as possible:
<PAGE>
6
(a) furnish to each Holder of Preferred Stock and Debentures, to
counsel for the Initial Purchasers and to counsel for the Holders, without
charge, as many copies of each Prospectus, including each preliminary
Prospectus, and any amendment or supplement thereto and such other documents as
such Holder may reasonably request, in order to facilitate the conversion of the
Preferred Stock and Debentures;
(b) use its reasonable best efforts to register or qualify the
Conversion Shares under all applicable state securities or "blue sky" laws of
such jurisdictions as any Holder shall reasonably request in writing by the time
the applicable Shelf Registration Statement is declared effective by the SEC, to
cooperate with such Holders in connection with any filings required to be made
with the National Association of Securities Dealers, Inc. and do any and all
other acts and things which may be reasonably necessary or advisable to enable
such Holder to consummate in each such jurisdiction the conversion of the
Preferred Stock and the Debentures, as the case may be, owned by such Holder;
PROVIDED, HOWEVER, that the Company shall not be required to (i) qualify as a
foreign corporation or as a dealer in securities in any jurisdiction where it
would not otherwise be required to qualify but for this Section 3(b), (ii) file
any general consent to service of process or (iii) subject itself to taxation in
any such jurisdiction if it is not so subject;
(c) notify each Holder, counsel for the Holders and counsel for the
Initial Purchasers promptly and, if requested by any such Holder or counsel,
confirm such advice in writing (i) when the Shelf Registration Statement has
become effective and when any post-effective amendment thereto has been filed
and becomes effective, (ii) of any request by the SEC or any state securities
authority for amendments and supplements to the Shelf Registration Statement and
Prospectus or for additional information after the Shelf Registration Statement
has become effective, (iii) of the issuance by the SEC or any state securities
authority of any stop order suspending the effectiveness of the Shelf
Registration Statement or the initiation of any proceedings for that purpose,
(iv) if, between the effective date of the Shelf Registration Statement and the
end of the Shelf Period if the Company receives any notification with respect to
the suspension of the qualification of the Conversion Shares for sale in any
jurisdiction or the initiation of any proceeding for such purpose, (v) of the
happening of any event during the period the Shelf Registration Statement is
effective which makes any statement made in the Shelf Registration Statement or
the related Prospectus untrue in any material respect or which requires the
making of any changes in the Shelf Registration Statement or Prospectus in order
to make the statements therein not misleading in any material respect and (vi)
of any determination by the Company that a post-effective amendment to the Shelf
Registration Statement would be appropriate;
(d) make every reasonable effort to obtain the withdrawal of any
order suspending the effectiveness of the Shelf Registration Statement at the
earliest possible moment and provide prompt notice to each Holder of the
withdrawal of any such order;
<PAGE>
7
(e) furnish to each Holder, without charge, at least one conformed
copy of the Shelf Registration Statement and any post-effective amendment
thereto (without documents incorporated therein by reference or exhibits
thereto, unless requested);
(f) cooperate with the converting Holders to facilitate the timely
preparation and delivery of certificates representing Conversion Shares and not
bearing any restrictive legends and enable such Conversion Shares to be
registered in such names as the converting Holders may reasonably request at
least one business day prior to any conversion of Preferred Stock or Debentures,
as the case may be, into Conversion Shares;
(g) upon the occurrence of any event contemplated by Section 3(c)(v)
hereof, use its best efforts to prepare and file with the SEC a supplement or
post-effective amendment to the Shelf Registration Statement or the related
Prospectus or any document incorporated therein by reference or file any other
required document so that, as thereafter delivered to the Holders, such
Prospectus will not contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading. The Company
agrees to notify the Holders to suspend use of the Prospectus as promptly as
practicable after the occurrence of such an event, and the Holders hereby agree
to suspend use of the Prospectus until the Company has amended or supplemented
the Prospectus to correct such misstatement or omission;
(h) a reasonable time prior to the filing of the Shelf Registration
Statement, any Prospectus, any amendment to the Shelf Registration Statement or
amendment or supplement to a Prospectus or any document which is to be
incorporated by reference into the Shelf Registration Statement or a Prospectus
after initial filing of the Shelf Registration Statement, provide copies of such
document to the Initial Purchasers, the Holders and their counsel and make such
of the representatives of the Company as shall be reasonably requested by the
Initial Purchasers, the Holders or their counsel available for discussion of
such document, and shall not at any time file or make any amendment to the Shelf
Registration Statement, any Prospectus or any amendment of or supplement to the
Shelf Registration Statement or a Prospectus or any document which is to be
incorporated by reference into the Shelf Registration Statement or a Prospectus,
of which the Initial Purchasers, the Holders and their counsel shall not have
previously been advised and furnished a copy or to which the Initial Purchasers,
the Holders or their counsel shall reasonably object;
(i) upon execution of customary confidentiality agreements reasonably
satisfactory to the Company and its counsel, make available for inspection by a
representative of the Holders of each of the Preferred Stock and the Debentures,
and attorneys and accountants designated by the Holders of each of the Preferred
Stock and the Debentures, at reasonable times and in a reasonable manner, all
financial and other records, pertinent
<PAGE>
8
documents and properties of the Company, and cause the respective officers,
directors and employees of the Company to supply all information reasonably
requested by any such representative, attorney or accountant in connection with
the Shelf Registration Statement; and
(j) if reasonably requested by any Holder covered by the Shelf
Registration Statement, (i) promptly incorporate in a Prospectus supplement or
post-effective amendment such information with respect to such Holder as such
Holder reasonably requests to be included therein and (ii) make all required
filings of such Prospectus supplement or such post-effective amendment as soon
as the Company has received notification of the matters to be incorporated in
such filing.
Each Holder agrees that, upon receipt of any notice from the Company
of the happening of any event of the kind described in Section 3(c)(v) hereof,
such Holder will forthwith discontinue conversion of Preferred Stock and
Debentures pursuant to the Shelf Registration Statement until such Holder's
receipt of the copies of the supplemented or amended Prospectus contemplated by
Section 3(g) hereof, and, if so directed by the Company, such Holder will
deliver to the Company (at its expense) all copies in its possession, other than
permanent file copies then in such Holder's possession, of the Prospectus
covering the Conversion Shares current at the time of receipt of such notice.
If the Company shall give any such notice to suspend the conversion of Preferred
Stock and Debentures pursuant to the Shelf Registration Statement, the Company
shall extend the period during which the Shelf Registration Statement shall be
maintained effective pursuant to this Agreement by the number of days during the
period from and including the date of the giving of such notice to and including
the date when the Holders shall have received copies of the supplemented or
amended Prospectus necessary to resume such conversion. There may not be more
than two such suspensions during any 365 day period and any such suspensions may
not exceed 30 days for each suspension.
4. INDEMNIFICATION AND CONTRIBUTION.
(a) The Company agrees to indemnify and hold harmless each Initial
Purchaser, each Holder and each person, if any, who controls any Initial
Purchaser or any Holder within the meaning of either Section 15 of the 1933 Act
or Section 20 of the 1934 Act, or is under common control with, or is controlled
by, any Initial Purchaser or any Holder, from and against all losses, claims,
damages and liabilities (including, without limitation, any legal or other
expenses reasonably incurred by any Initial Purchaser, any Holder or any such
controlling or affiliated person in connection with defending or investigating
any such action or claim) caused by any untrue statement or alleged untrue
statement of a material fact contained in the Shelf Registration Statement (or
any amendment thereto) pursuant to which the Conversion Shares were registered
under the 1933 Act, including all documents incorporated therein by reference,
or caused by any omission or alleged omission to state
<PAGE>
9
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, or caused by any untrue statement or alleged
untrue statement of a material fact contained in any Prospectus (as amended or
supplemented if the Company shall have furnished any amendments or supplements
thereto), or caused by any omission or alleged omission to state therein a
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, except insofar as such
losses, claims, damages or liabilities are caused by any such untrue statement
or omission or alleged untrue statement or omission based upon information
relating to any Initial Purchaser or any Holder furnished to the Company in
writing by such Initial Purchaser or any selling Holder expressly for use
therein; PROVIDED that the foregoing indemnity agreement shall not inure to the
benefit of any Holder or any Person controlling such Holder, with respect to any
conversion of Preferred Stock or Debentures into Conversion Shares by such
Holder in violation of the final paragraph of Section 3 of this Agreement.
(b) Each Holder agrees, severally and not jointly, to indemnify and
hold harmless the Company, each Initial Purchaser and the other selling Holders,
and each of their respective directors, officers who sign the Shelf Registration
Statement and each Person, if any, who controls the Company, any Initial
Purchaser and any other selling Holder within the meaning of either Section 15
of the 1933 Act or Section 20 of the 1934 Act to the same extent as the
foregoing indemnity from the Company to the Initial Purchasers and the Holders,
but only with reference to information relating to such Holder furnished to the
Company in writing by such Holder expressly for use in the Shelf Registration
Statement (or any amendment thereto) or any Prospectus (or any amendment or
supplement thereto).
(c) In case any proceeding (including any governmental investigation)
shall be instituted involving any person in respect of which indemnity may be
sought pursuant to either paragraph (a) or paragraph (b) above, such person (the
"indemnified party") shall promptly notify the person against whom such
indemnity may be sought (the "indemnifying party") in writing (but the failure
to so notify an indemnifying party shall not relieve it from any liability which
it may have under this Section, except to the extent that it has been prejudiced
in any material respect by such failure, or from any liability it may otherwise
have) and the indemnifying party, upon request of the indemnified party, shall
retain counsel reasonably satisfactory to the indemnified party to represent the
indemnified party and any others the indemnifying party may designate in such
proceeding and shall pay the fees and disbursements of such counsel related to
such proceeding. In any such proceeding, any indemnified party shall have the
right to retain its own counsel, but the fees and expenses of such counsel shall
be at the expense of such indemnified party unless (i) the indemnifying party
and the indemnified party shall have mutually agreed to the retention of such
counsel or (ii) the named parties to any such proceeding (including any
impleaded parties) include both the indemnifying party and the indemnified party
and representation of both parties by the same counsel would be inappropriate
due to actual or potential differing interests between
<PAGE>
10
them. It is understood that the indemnifying party shall not, in respect of the
legal expenses of any indemnified party in connection with any proceeding or
related proceedings in the same jurisdiction, be liable for (a) the reasonable
fees and expenses of more than one separate firm (in addition to any local
counsel) for the Initial Purchasers and all Persons, if any, who control any
Initial Purchaser within the meaning of either Section 15 of the 1933 Act or
Section 20 of the 1934 Act, (b) the reasonable fees and expenses of more than
one separate firm (in addition to any local counsel) for the Company, its
directors, its officers who sign the Shelf Registration Statement and each
Person, if any, who controls the Company within the meaning of either such
Section and (c) the reasonable fees and expenses of more than one separate firm
(in addition to any local counsel) for all Holders and all Persons, if any, who
control any Holders within the meaning of either such Section, and that all such
fees and expenses shall be reimbursed as they are incurred. In such case
involving any Initial Purchaser and Persons who control such Initial Purchaser,
such firm shall be designated in writing by Morgan Stanley & Co. Incorporated.
In such case involving the Holders and such Persons who control Holders, such
firm shall be designated in writing by the Majority Holders. In all other
cases, such firm shall be designated by the Company. The indemnifying party
shall not be liable for any settlement of any proceeding effected without its
written consent but, if settled with such consent or if there be a final
judgment for the plaintiff, the indemnifying party agrees to indemnify the
indemnified party from and against any loss or liability by reason of such
settlement or judgment. Notwithstanding the foregoing sentence, if at any time
an indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel as contemplated by the second
and third sentences of this paragraph, the indemnifying party agrees that it
shall be liable for any settlement of any proceeding effected without its
written consent if (i) such settlement is entered into more than 60 days after
receipt by such indemnifying party of the aforesaid request and (ii) such
indemnifying party shall not have reimbursed the indemnified party for such fees
and expenses of counsel in accordance with such request prior to the date of
such settlement. No indemnifying party shall, without the prior written consent
of the indemnified party (which consent may not be unreasonably withheld),
effect any settlement of any pending or threatened proceeding in respect of
which such indemnified party is or could have been a party and indemnity could
have been sought hereunder (whether or not any indemnified party is an actual or
potential party to such proceeding) by such indemnified party, unless such
settlement includes an unconditional release of such indemnified party from all
liability on claims that are the subject matter of such proceeding.
(d) To the extent the indemnification provided for in paragraph (a)
or paragraph (b) of this Section 4 is unavailable to an indemnified party or
insufficient in respect of any losses, claims, damages or liabilities referred
to therein, then each indemnifying party under such paragraph, in lieu of
indemnifying such indemnified party thereunder, shall contribute to the amount
paid or payable by such indemnified party as a result of such losses, claims,
damages or liabilities in such proportion as is appropriate to reflect the
relative fault of
<PAGE>
11
the indemnifying party or parties, on the one hand, and of the indemnified party
or parties, on the other hand, in connection with the statements or omissions
that resulted in such losses, claims, damages or liabilities, as well as any
other relevant equitable considerations. The relative fault of the Company and
the Holders shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the Company
or by the Holders and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Holders' respective obligations to contribute pursuant to this Section 4(d)
are several in proportion to the respective number of Conversion Shares of such
Holder that were registered pursuant to the Shelf Registration Statement.
(e) The Company and each Holder agree that it would not be just or
equitable if contribution pursuant to this Section 4 were determined by PRO RATA
allocation or by any other method of allocation that does not take account of
the equitable considerations referred to in paragraph (d) above. The amount
paid or payable by an indemnified party as a result of the losses, claims,
damages and liabilities referred to in paragraph (d) above shall be deemed to
include, subject to the limitations set forth above, any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the 1933 Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. The remedies provided for in this Section 4 are not
exclusive and shall not limit any rights or remedies which may otherwise be
available to any indemnified party at law or in equity.
The indemnity and contribution provisions contained in this Section 4
shall remain operative and in full force and effect regardless of (i) any
termination of this Agreement, (ii) any investigation made by or on behalf of
any Initial Purchaser, any Holder or any Person controlling any Initial
Purchaser or any Holder, or by or on behalf of the Company, its officers or
directors or any Person controlling the Company and (iii) any conversion of
Preferred Stock or Debentures into Conversion Shares pursuant to the Shelf
Registration Statement.
5. MISCELLANEOUS.
(a) NO INCONSISTENT AGREEMENTS. The Company has not entered into,
and on or after the date of this Agreement will not enter into, any agreement
which is inconsistent with the rights granted to the Holders in this Agreement
or otherwise conflicts with the provisions hereof. The rights granted to the
Holders hereunder do not in any way conflict with and are not inconsistent with
the rights granted to the holders of the Company's other issued and outstanding
securities under any such agreements.
<PAGE>
12
(b) AMENDMENTS AND WAIVERS. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given unless the Company has obtained the written consent of Holders
of at least a majority of the outstanding shares of Preferred Stock and at least
a majority of the outstanding principal amount of Debentures affected by such
amendment, modification, supplement, waiver or consent; PROVIDED, HOWEVER, that
no amendment, modification, supplement, waiver or consent to any departure from
the provisions of Section 4 hereof shall be effective as against any Holder
unless consented to in writing by such Holder.
(c) NOTICES. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, registered
first-class mail, telex, telecopier, or any courier guaranteeing overnight
delivery (i) if to a Holder, at the most current address given by such Holder to
the Company by means of a notice given in accordance with the provisions of this
Section 5(c), which address initially is, with respect to the Initial
Purchasers, the address set forth in the Purchase Agreement; and (ii) if to the
Company, initially at the Company's address set forth in the Purchase Agreement
and thereafter at such other address, notice of which is given in accordance
with the provisions of this Section 5(c).
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five business
days after being deposited in the mail, postage prepaid, if mailed; when
answered back, if telexed; when receipt is acknowledged, if telecopied; and on
the next business day if timely delivered to an air courier guaranteeing
overnight delivery.
(d) SUCCESSORS AND ASSIGNS. This Agreement shall inure to the
benefit of and be binding upon the successors, assigns and transferees of each
of the parties, including, without limitation and without the need for an
express assignment, subsequent Holders. If any transferee of any Holder shall
acquire Preferred Stock or Debentures, as the case may be, in any manner,
whether by operation of law or otherwise, such Preferred Stock or Debentures, as
the case may be, shall be held subject to all of the terms of this Agreement,
and by taking and holding such Preferred Stock or Debentures, as the case may
be, such person shall be conclusively deemed to have agreed to be bound by and
to perform all of the terms and provisions of this Agreement and such person
shall be entitled to receive the benefits hereof. The Initial Purchasers (in
their capacity as Initial Purchasers) shall have no liability or obligation to
the Company with respect to any failure by a Holder to comply with, or any
breach by any Holder of, any of the obligations of such Holder under this
Agreement.
<PAGE>
13
(e) THIRD PARTY BENEFICIARY. The Holders shall be third party
beneficiaries to the agreements made hereunder between the Company, on the one
hand, and the Initial Purchasers, on the other hand, and shall have the right to
enforce such agreements directly to the extent it deems such enforcement
necessary or advisable to protect its rights or the rights of Holders hereunder.
(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) SEVERABILITY. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstance, is
held invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions contained herein shall not be affected or impaired thereby.
<PAGE>
14
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
VIATEL, INC.
By /s/ Michael J. Mahoney
--------------------------
Name: Michael J. Mahoney
Title: President and Chief Executive
Officer
Confirmed and accepted as of
the date first above written:
MORGAN STANLEY & CO. INCORPORATED
MORGAN STANLEY BANK AG
SALOMON BROTHERS INC
ING BARING (U.S.) SECURITIES, INC.
NATIONSBANC MONTGOMERY SECURITIES LLC
By: MORGAN STANLEY & CO. INCORPORATED
In its individual capacity and as representative
of the other Initial Purchasers.
By /s/ Kenneth G. Pott
-----------------------------
Name: Kenneth G. Pott
Title: Vice President
<PAGE>
Exhibit 4.8
VIATEL, INC.
$524,500,000 REPRESENTING 500,000 SENIOR DISCOUNT DOLLAR UNITS,
EACH UNIT CONSISTING OF ONE 12.50% SENIOR DISCOUNT
NOTE DUE 2008 AND .490 OF A SHARE OF SERIES A REDEEMABLE CONVERTIBLE PREFERRED
STOCK OF THE COMPANY
$419,320,000 REPRESENTING 400,000 SENIOR DOLLAR UNITS,
EACH UNIT CONSISTING OF ONE 11.25% SENIOR NOTE DUE 2008
AND .483 OF A SHARE OF SERIES A REDEEMABLE
CONVERTIBLE PREFERRED STOCK OF THE COMPANY
DM 237,606,410.80 REPRESENTING 226,000 SENIOR DISCOUNT DM UNITS,
EACH UNIT CONSISTING OF ONE 12.40% SENIOR DISCOUNT
NOTE DUE 2008 AND 2.77 10% SUBORDINATED
CONVERTIBLE DEBENTURES DUE 2011 OF THE COMPANY
DM 186,877,322.80 REPRESENTING 178,000 SENIOR DM UNITS,
EACH UNIT CONSISTING OF ONE 11.15% SENIOR
NOTE DUE 2008 AND 2.69 10% SUBORDINATED
CONVERTIBLE DEBENTURES DUE 2011 OF THE COMPANY
<PAGE>
2
PURCHASE AGREEMENT
April 3, 1998
<PAGE>
VIATEL, INC.
PURCHASE AGREEMENT
April 3, 1998
Morgan Stanley & Co. Incorporated
Morgan Stanley Bank AG
Salomon Brothers Inc
ING Baring (U.S.) Securities, Inc.
NationsBanc Montgomery Securities LLC
c/o Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036-8293
Dear Sirs and Mesdames:
Viatel, Inc., a Delaware corporation (the "Company"), proposes to
issue and sell to the initial purchasers named in Schedule I hereto (the
"Initial Purchasers") 500,000 Senior Discount Dollar Units (the "Senior Discount
Dollar Units"), 400,000 Senior Dollar Units (the "Senior Dollar Units"), 226,000
Senior Discount DM Units (the "Senior Discount DM Units") and 178,000 Senior DM
Units (the "Senior DM Units" and together with the Senior Discount Dollar Units,
the Senior Dollar Units and the Senior Discount DM Units, collectively, the
"Units"). Each Senior Discount Dollar Unit will consist of (i) one 12.50%
Senior Discount Note Due 2008 of the Company with a principal amount at maturity
of $1,000 (the "Senior Discount Dollar Notes") to be issued pursuant to the
provisions of an Indenture (the "Senior Discount Dollar Notes Indenture") to be
dated as of the Closing Date (as defined below) between the Company and The Bank
of New York, as trustee (in such capacity, the "Trustee") and (ii) .490 of a
share of Series A Redeemable Convertible Preferred Stock, $.01 par value per
share, of the Company (the "Series A Preferred"). Each Senior Dollar Unit will
consist of (i) one 11.25% Senior Note Due 2008 of the Company with a principal
amount of $1,000 (the "Senior Dollar Notes") to be issued pursuant to the
provisions of an Indenture (the "Senior Dollar Notes Indenture") to be dated as
of the Closing Date between the Company and the Trustee and (ii) .483 of a share
of Series A Preferred. Each Senior Discount DM Unit will consist of (i) one
12.40% Senior Discount Note Due 2008 of the Company with a principal amount at
maturity of DM 1,000 (the "Senior Discount DM Notes") to be issued pursuant to
the provisions of an Indenture (the "Senior Discount DM Notes Indenture") to be
dated as of the Closing Date among the Company, the Trustee and Deutsche Bank
Aktiengesellschaft ("Deutsche Bank") and (ii) 2.77 10% Subordinated Convertible
Debentures Due 2011 of the
<PAGE>
2
Company (the "Debentures") to be issued pursuant to the provisions of an
Indenture (the "Subordinated Indenture") to be dated as of the Closing Date
among the Company, the Trustee and Deutsche Bank. Each Senior DM Unit will
consist of (i) one 11.15% Senior Note Due 2008 of the Company with a principal
amount of DM 1,000 (the "Senior DM Notes" and together with the Senior Discount
Dollar Notes, the Senior Dollar Notes and the Senior Discount DM Notes,
collectively, the "Notes") to be issued pursuant to the provisions of an
Indenture (the "Senior DM Notes Indenture" and together with the Senior Discount
Dollar Notes Indenture, the Senior Dollar Notes Indenture, the Senior Discount
DM Notes Indenture and the Subordinated Indenture, collectively, the
"Indentures") to be dated as of the Closing Date between the Company, the
Trustee and Deutsche Bank and (ii) 2.69 Debentures. The Senior Dollar Notes
Indenture will provide that on the Closing Date the Company will purchase and
pledge to the Trustee for the benefit of the Holders of the Senior Dollar Notes,
pursuant to the terms of the Pledge Agreement, the U.S. Pledged Securities in an
amount sufficient, upon receipt of scheduled interest and principal payments on
such securities, to provide for the payment in full of the first six scheduled
interest payments on the Senior Dollar Notes. The Senior DM Notes Indenture
will provide that on the Closing Date the Company will purchase and pledge to
the Trustee for the benefit of the Holders of the Senior DM Notes, pursuant to
the terms of the Pledge Agreement, the DM Pledged Securities in an amount
sufficient upon receipt of scheduled interest and principal payments on such
securities, to provide for the payment in full of the first six scheduled
interest payments on the Senior DM Notes. Capitalized terms used herein without
definition have the respective meanings specified in the Final Memorandum (as
defined below).
The Units will be offered without being registered under the
Securities Act of 1933, as amended (the "Securities Act"), to "qualified
institutional buyers" (as defined in Rule 144A under the Securities Act) in
compliance with the exemption from registration provided by Rule 144A under the
Securities Act, to other institutional "accredited investors" (as defined in
Rule 501(a)(1), (2), (3) or (7) under the Securities Act) that deliver a letter
in the form annexed to the Final Memorandum and outside the United States in
compliance with Regulation S under the Securities Act ("Regulation S").
The Initial Purchasers and their direct and indirect transferees will
be entitled to the benefits of a Registration Rights Agreement relating to the
Notes, to be dated the date hereof, and to be substantially in the form attached
hereto as Exhibit A (the "Note Registration Rights Agreement") and a
Registration Rights Agreement relating to the Series A Preferred and the
Debentures, to be dated the date hereof, and to be substantially in the form
attached as Exhibit B (the "Conversion Shares Registration Rights Agreement,"
and together with the Note Registration Rights Agreement, the "Registration
Rights Agreements").
In connection with the sale of the Units, the Company has prepared a
preliminary offering memorandum dated March 18, 1998 (the "Preliminary
Memorandum")
<PAGE>
3
and will prepare a final offering memorandum (the "Final Memorandum" and, with
the Preliminary Memorandum, each a "Memorandum") setting forth or including a
description of the terms of the Units, the terms of the offering and a
description of the Company and its business.
1. REPRESENTATIONS AND WARRANTIES. The Company represents and
warrants to, and agrees with, you that as of the date hereof:
(a) The Preliminary Memorandum as of the date hereof does not contain
and the Final Memorandum, in the form used by the Initial Purchasers to
confirm sales does not, and on the Closing Date will not, contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, except that the representations
and warranties set forth in this paragraph do not apply to statements in or
omissions from either Memorandum (or any supplement or amendment thereto)
based upon information relating to any Initial Purchaser furnished to the
Company in writing by such Initial Purchaser expressly for use therein.
(b) The Company has been duly incorporated and is validly existing as
a corporation in good standing under the laws of the State of Delaware with
full corporate power and corporate authority to own its properties and to
conduct its business as described in each Memorandum and is duly qualified
to transact business as a foreign corporation and is in good standing in
each jurisdiction in which the conduct of its business or its ownership or
leasing of property requires such qualification, except to the extent that
the failure to be so qualified or be in good standing would not have a
Material Adverse Effect (as defined below) on the Company and its
Subsidiaries, taken as a whole.
(c) Each subsidiary of the Company is listed on Exhibit C hereto
(each a "Subsidiary" and, collectively, the "Subsidiaries"). If applicable
to such country, each of the Subsidiaries operating in such country has
been duly incorporated or otherwise organized, is validly existing in good
standing under the laws of the jurisdiction of its incorporation or
organization, with full corporate power and corporate authority to own its
properties and to conduct its business as described in each Memorandum and
is duly qualified to transact business and is in good standing in each
jurisdiction in which the conduct of its business or its ownership or
leasing of property requires such qualification, except to the extent that
the failure to be so qualified or be in good standing would not have a
Material Adverse Effect on the Company and the Subsidiaries, taken as a
whole; all of the issued shares of capital stock or other equity interests,
as the case may be, of each Subsidiary of the Company have been duly
authorized and are validly issued, fully paid and non-assessable and are
owned, either
<PAGE>
4
directly or indirectly, by the Company, free and clear of all liens,
encumbrances, equities or claims, other than those indicated in either
Memorandum.
(d) This Agreement has been duly authorized, executed and delivered
by the Company.
(e) The Notes and the Debentures have been duly authorized by the
Company and, when issued and authenticated in accordance with the
respective indenture and delivered to and paid for by the Initial
Purchasers in accordance with the terms of this Agreement and the
respective Indenture, will (x) be valid and binding obligations of the
Company enforceable against the Company in accordance with their terms,
except as the enforceability thereof may be limited by applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium
and other similar laws affecting creditors' rights generally and subject to
general equitable principles (whether considered in a proceeding in equity
or at law) (the "Enforceability Exceptions"), and (y) be entitled to the
benefits of the respective indenture pursuant to which such Notes or
Debentures are to be issued and the Registration Rights Agreements.
(f) Each of the Indentures, the Subordinated Indenture and the
Registration Rights Agreements has been duly authorized by the Company and,
when duly executed and delivered by the Company, will constitute a valid
and legally binding obligation of the Company, enforceable against the
Company in accordance with its terms, subject to the Enforceability
Exceptions and except that (x) rights to indemnification and contribution
may be limited by public policy and (y) provisions of the Indentures and
the Subordinated Indenture, if any, requiring any waiver of stay or
extension laws, diligent performance or other acts on the part of the
Trustee may be unenforceable under principles of public policy.
(g) The Pledge Agreement has been duly authorized by the Company and,
when executed and delivered by the Company, will constitute a valid and
legally binding obligation of the Company, enforceable against the Company
in accordance with its terms, subject to the Enforceability Exceptions.
(h) Upon the delivery to the Trustee of the certificates or
instruments, if any, representing the U.S. Pledged Securities and the DM
Pledged Securities, the pledge of and grant of a security interest in the
U.S. Pledged Securities and the DM Pledged Securities for the benefit of
the Trustee and the holders of the Senior Dollar Notes and the Senior DM
Notes, as the case may be, will constitute a first priority security
interest in the U.S. Pledged Securities and the DM Pledged Securities,
enforceable as against all creditors of the Company (and any persons
purporting to
<PAGE>
5
purchase any of the U.S. Pledged Securities or DM Pledged Securities from
the Company).
(i) The authorized capital stock of the Company conforms as to legal
matters to the description thereof contained in the Final Memorandum.
(j) The outstanding shares of Common Stock, par value $.01 per share,
of the Company (the "Common Stock") have been duly authorized and are
validly issued, fully paid and non-assessable.
(k) The Certificate of Designations, Preferences and Rights relating
to the Series A Preferred (the "Certificate of Designations"), the proposed
form of which will be furnished to you prior to the Closing Date, will have
been duly filed with the Secretary of State of the State of Delaware and
with all other offices where such filing is required, on or before the
Closing Date.
(l) The Series A Preferred has been duly authorized and, when issued
and delivered to and paid for by the Initial Purchasers in accordance with
the terms of this Agreement, will be validly issued, fully paid and
non-assessable, and the issuance of the Series A Preferred will not be
subject to any preemptive or similar rights.
(m) The shares of Common Stock reserved for issuance upon conversion
of the Series A Preferred and the Debentures have been duly authorized and
reserved and, when issued upon conversion of the Series A Preferred and the
Debentures in accordance with their terms, will be validly issued, fully
paid and non-assessable, and the issuance of such shares of Common Stock
will not be subject to any preemptive or similar rights.
(n) The execution and delivery by the Company of, and the performance
by the Company of its obligations under, this Agreement, the Indentures,
the Subordinated Indenture, the Registration Rights Agreements, the Pledge
Agreement, the Notes, the Debentures and the Series A Preferred
(collectively, the "Transaction Documents") and the issuance, sale and
delivery of the Units, Notes, Debentures and Series A Preferred and the
issuance by the Company of the Common Stock upon conversion of the Series A
Preferred and the Debentures in accordance with their terms will not
contravene (i) any provision of applicable law, (ii) the certificate of
incorporation or by-laws of the Company, (iii) any material agreement or
other instrument binding upon the Company or any of its Subsidiaries, or
(iv) any judgment, order or decree of any governmental body, agency or
court having jurisdiction over the Company or any Subsidiary, except with
respect to clauses (i) and (iii) to the extent that any contravention would
not have a Material Adverse Effect (as defined below) on the Company and
its Subsidiaries, taken
<PAGE>
6
as a whole, and no consent, approval, authorization or order of, or
qualification with, any governmental body or agency is required for the
performance by the Company of its obligations under the Transaction
Documents, except (x) such as may be required by the securities or Blue Sky
laws of the various states in connection with the offer and sale of the
Units, Notes, Debentures and Series A Preferred, (y) such as may be
required by Federal and state securities laws with respect to the Company's
obligations under the Registration Rights Agreements and (z) for any
consents, approvals, authorizations, orders or qualifications, the failure
to obtain which would not have a Material Adverse Effect on the ability of
the Company to perform its obligations under the Transaction Documents.
(o) There has not occurred any material adverse change, or any
development involving a prospective material adverse change, in the
condition, financial or otherwise, or in the earnings, business or
operations of the Company and its Subsidiaries, taken as a whole (a
"Material Adverse Effect"), from that set forth in the Preliminary
Memorandum. Furthermore, (1) other than the transactions contemplated
hereby, the Company and its Subsidiaries have not incurred any material
liability or obligation, direct or contingent, nor entered into any
material transaction not in the ordinary course of business; (2) the
Company has not purchased any of its outstanding capital stock, nor
declared, paid or otherwise made any dividend or distribution of any kind
on its capital stock other than ordinary and customary dividends; and (3)
there has not been any material change in the capital stock, short-term
debt or long-term debt of the Company and its consolidated Subsidiaries,
taken as a whole, except in each case as described in the Final Memorandum.
(p) There are no legal or governmental proceedings pending or, to the
knowledge of the Company, threatened to which the Company or any of its
Subsidiaries is or may be a party or to which any of the properties of the
Company or any of its Subsidiaries is or may be subject other than
proceedings accurately described in all material respects in such
Memorandum and proceedings that are not reasonably likely to have a
Material Adverse Effect on the Company and its Subsidiaries, taken as a
whole, or on the power or ability of the Company to perform its obligations
under any of the Transaction Documents or to consummate the transactions
contemplated by the Final Memorandum.
(q) Neither the Company nor any affiliate of the Company (as defined
in Rule 501(b) of Regulation D under the Securities Act, an "Affiliate")
has directly, or through any agent, (i) sold, offered for sale, solicited
offers to buy or otherwise negotiated in respect of, any security (as
defined in the Securities Act) which is or will be integrated with the sale
of the Units, the Notes, the Debentures or the Series A Preferred in a
manner that would require the registration under the Securities Act of the
<PAGE>
7
Units, the Debentures or the Series A Preferred or (ii) engaged in any form
of general solicitation or general advertising (as those terms are used in
Regulation D under the Securities Act) in connection with the offering of
the Units, the Notes, Debentures or the Series A Preferred or in any manner
involving a public offering within the meaning of Section 4(2) of the
Securities Act.
(r) The Company is not, and after giving effect to the offering and
sale of the Units, the Notes, the Debentures and the Series A Preferred and
the application of the proceeds thereof as described in the Final
Memorandum under the caption "Use of Proceeds," will not be an "investment
company" as such term is defined in the Investment Company Act of 1940, as
amended.
(s) Assuming the accuracy of the Initial Purchasers' representations
contained herein and the Initial Purchasers' compliance with their
agreements hereunder, it is not necessary to register the Units, the Notes,
the Debentures or the Series A Preferred under the Securities Act or to
qualify the Indentures or the Subordinated Indenture under the Trust
Indenture Act of 1939, as amended.
(t) The Company and its Subsidiaries (i) are in compliance with any
and all applicable foreign, federal, state and local laws and regulations
relating to the protection of human health and safety, the environment or
hazardous or toxic substances or wastes, pollutants or contaminants
("Environmental Laws"), (ii) have received all permits, licenses or other
approvals required of them under applicable Environmental Laws to conduct
their respective businesses and (iii) are in compliance with all terms and
conditions of any such permit, license or approval, except where such
noncompliance with Environmental Laws, failure to receive required permits,
licenses or other approvals or failure to comply with the terms and
conditions of such permits, licenses or approvals would not, singly or in
the aggregate, have a Material Adverse Effect on the Company and its
Subsidiaries, taken as a whole.
(u) There are no costs and liabilities associated with Environmental
Laws (including, without limitation, any capital or operating expenditures
required for clean-up, closure of properties or compliance with
Environmental Laws or any permit, license or approval, any related
constraints on operating activities and any potential liabilities to third
parties) which would, singly or in the aggregate, have a Material Adverse
Effect on the Company and its Subsidiaries, taken as a whole.
(v) The Units, the Notes, the Debentures and the Series A Preferred
satisfy the requirements set forth in Rule 144A(d)(3) under the Securities
Act.
<PAGE>
8
(w) None of the Company, its Affiliates or any person acting on its
or their behalf (other than the Initial Purchasers) has engaged in any
directed selling efforts (as that term is defined in Regulation S under the
Securities Act) with respect to the Units, the Notes, the Debentures or the
Series A Preferred and the Company and its Affiliates and any person acting
on its or their behalf (other than the Initial Purchasers) have complied
with the offering restrictions requirement of Regulation S.
(x) Except as described in each Memorandum, the Company and its
Subsidiaries (i) have all necessary consents, authorizations, approvals,
orders, certificates and permits of and from, and have made all
declarations and filings with, all federal, state, local and other
governmental, administrative or regulatory authorities, all self-regulatory
organizations and all courts and other tribunals, to own, lease, license
and use their properties and assets and to conduct their business in the
manner described in each Memorandum, except to the extent that the failure
to obtain such consents, authorizations, approvals, orders, certificates or
permits or make such declarations or filings would not have a Material
Adverse Effect on the Company and its Subsidiaries, taken as a whole; and
(ii) has not received any notice of proceedings relating to the violation,
revocation or modification of any such license, consent, authorization,
approval, order, certificate or permit which, singly or in the aggregate,
if the subject of an unfavorable decision, ruling or finding, would
reasonably be expected to have a Material Adverse Effect on the Company and
its Subsidiaries, taken as a whole.
(y) The Company and its Subsidiaries have good and marketable title
in fee simple to all real property and good and marketable title to all
personal property owned by them which is material to the business of the
Company and its Subsidiaries, taken as a whole, in each case free and clear
of all liens, encumbrances and defects except (i) such as are reflected in
the Company's financial statements or are described in each Memorandum,
(ii) such as do not materially affect the value of such property and do not
interfere with the use made and proposed to be made of such property by the
Company and its Subsidiaries; or (iii) such as do not have a Material
Adverse Effect on the Company and its Subsidiaries, taken as a whole; and
any real property and buildings held under lease by the Company and its
Subsidiaries are held by them under valid, binding and enforceable leases
with such exceptions as are not material and do not materially interfere
with the use made and proposed to be made of such property and buildings by
the Company and its Subsidiaries, in each case except as described in or
contemplated by each Memorandum and subject to Enforceability Exceptions.
(z) The Company and its Subsidiaries own or possess, or can acquire
on reasonable terms, all material patents, patent rights, licenses,
inventions, copyrights, know-how (including trade secrets and other
unpatented and/or unpatentable
<PAGE>
9
proprietary or confidential information, systems or procedures),
trademarks, service marks and trade names currently employed by them in
connection with the business now operated by them, and, except as set forth
in each Memorandum, neither the Company nor any of its Subsidiaries has
received any notice of infringement of or conflict with asserted rights of
others with respect to any of the foregoing which, singly or in the
aggregate, if the subject of an unfavorable decision, ruling or finding,
would be reasonably likely to have a Material Adverse Effect on the Company
and its Subsidiaries, taken as a whole.
(aa) No material labor dispute with the employees of the Company or
any of its Subsidiaries exists, except as described in or contemplated by
each Memorandum, or, to the knowledge of the Company, is imminent; and the
Company is not aware of any existing, threatened or imminent labor
disturbance by the employees of any of its principal suppliers,
manufacturers or contractors that might reasonably be expected to have a
Material Adverse Effect on the Company and its Subsidiaries, taken as a
whole.
(bb) The Company and its Subsidiaries are insured against such losses
and risks and in such amounts as the Company reasonably believes are
prudent and customary in the businesses in which they are engaged; neither
the Company nor any such Subsidiary has been refused any insurance coverage
sought or applied for; and neither the Company nor any such Subsidiary has
any reason to believe that it will not be able to renew its existing
insurance coverage as and when such coverage expires or to obtain similar
coverage from similar insurers as may be necessary to continue its business
at a cost that would not have a Material Adverse Effect on the Company and
its Subsidiaries, taken as a whole, except as described in or contemplated
by each Memorandum.
(cc) The Company and its Subsidiaries maintain a system of internal
accounting controls sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with management's general or
specific authorizations; (ii) transactions are recorded as necessary to
permit preparation of financial statements in conformity with generally
accepted accounting principles and to maintain asset accountability; (iii)
access to assets is permitted only in accordance with management's general
or specific authorization; and (iv) the recorded accountability for assets
is compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any differences.
(dd) The Units, the Notes, the Debentures, the Series A Preferred, the
Common Stock, the Indentures and the Subordinated Indenture conform in all
material respects to the description thereof contained in the Final
Memorandum under the headings "Description of the Units," "Description of
the Notes," "Description of the
<PAGE>
10
Subordinated Convertible Debentures," "Description of the Series A
Preferred," and "Description of Capital Stock," respectively.
2. AGREEMENTS TO SELL AND PURCHASE. The Company hereby agrees to
sell to the several Initial Purchasers, and the Initial Purchasers, upon the
basis of the representations and warranties herein contained, but subject to the
conditions hereinafter stated, agree, severally and not jointly, to purchase
from the Company the number of Senior Discount Dollar Units, Senior Dollar
Units, Senior Discount DM Units and Senior DM Units set forth in Schedule I
hereto opposite their names at a purchase price of $571.86115 per Senior
Discount Dollar Unit, (the "Discount Dollar Purchase Price"), $1,013.62650 per
Senior Dollar Unit (the "Senior Dollar Purchase Price"), DM 576.59519 per Senior
Discount DM Unit (the "Discount DM Purchase Price") and DM 1,015.12573 per
Senior DM Unit (the "Senior DM Purchase Price" and, together with the Discount
Dollar Purchase Price, Senior Dollar Purchase Price and Discount DM Purchase
Price, collectively, the "Purchase Price") plus accrued interest, if any, on the
Notes from April 8, 1998 to the Closing Date.
The Company hereby agrees that, without the prior written consent of
Morgan Stanley & Co. Incorporated on behalf of the Initial Purchasers, it will
not, during the period ending 90 days after the date of the Final Memorandum,
(i) offer, pledge, sell, contract to sell, sell any option or contract to
purchase, purchase any option or contract to sell, grant any option, right or
warrant to purchase, lend, or otherwise transfer or dispose of, directly or
indirectly, any shares of Common Stock or other securities convertible into or
exercisable or exchangeable for Common Stock or (ii) enter into any swap or
other arrangement that transfers to another, in whole or in part, any of the
economic consequences of ownership of the Common Stock, whether any such
transaction described in clause (i) or (ii) above is to be settled by delivery
of Common Stock or such other securities, in cash or otherwise. The foregoing
sentence shall not apply to (A) the sale of the Series A Preferred and
Debentures under this Agreement or (B) any options to purchase Common Stock, or
any shares of Common Stock issued by the Company upon the exercise of such
options granted under the Company's existing Stock Incentive Plan or upon the
exercise of any other outstanding options or warrant or the conversion of a
security outstanding on the date hereof.
The Company hereby agrees that, without the prior written consent of
Morgan Stanley & Co. Incorporated on behalf of the Initial Purchasers, it will
not, during the period beginning on the date hereof and continuing to and
including the Closing Date, offer, sell, contract to sell or otherwise dispose
of any debt of the Company or warrants to purchase debt of the Company
substantially similar to the Notes or the Debentures (other than the sale of the
Notes and the Debentures under this Agreement).
3. TERMS OF OFFERING. You have advised the Company that the
Initial Purchasers will make an offering of the Units purchased by the Initial
Purchasers hereunder on
<PAGE>
11
the terms set forth in the Final Memorandum, as soon as practicable after this
Agreement is entered into as in your judgment is advisable.
4. PAYMENT AND DELIVERY. Payment for the Senior Discount Dollar
Units and the Senior Dollar Units shall be made to the Company in Federal or
other funds immediately available in New York City against delivery of such
Units and payment for the Senior Discount DM Units and the Senior DM Units shall
be made to the Company in Deutsche Mark against delivery of such Units at the
closings (the "Closings") to be held at the office of Shearman & Sterling, 599
Lexington Avenue, New York, New York, at 10:00 A.M. and 4:00 A.M., respectively,
local time, on April 8, 1998, or at such other time on the same or such other
date, not later than April 22, 1998, as shall be agreed to by the Company and
Morgan Stanley & Co. Incorporated. The time and date of such payment are herein
referred to as the "Closing Date."
Certificates for the Units shall be in definitive form or global form,
as specified by you, and registered in such names and in such denominations as
you shall request in writing not later than two full business days prior to the
Closing Date. The certificates evidencing the Units (other than the Regulation
S Global Note and the Regulation S Global Subordinated Certificate, which shall
be delivered to DBC one business day prior to the Closing Date) shall be
delivered to you on the Closing Date for the accounts of the Initial Purchasers,
with any transfer taxes payable in connection with the transfer of the Units to
the Initial Purchasers duly paid, against payment of the purchase price
therefor.
5. Conditions to the Initial Purchaser's Obligations. The several
obligations of the Initial Purchasers to purchase and pay for the Units on the
Closing Date is subject to the following conditions:
(a) Subsequent to the execution and delivery of this Agreement and
prior to the Closing Date,
(i) there shall not have occurred any downgrading, nor shall
any notice have been given of any intended or potential downgrading or
of any review for a possible change that does not indicate the
direction of the possible change, in the rating accorded any of the
Company's securities by any nationally recognized statistical rating
organization," as such term is defined for purposes of Rule 436(g)(2)
under the Securities Act; and
(ii) there shall not have occurred any change, or any development
involving a prospective change, in the condition, financial or
otherwise, or in the earnings, business or operations, of the Company
and its subsidiaries, taken as a whole, from that set forth in the
Final Memorandum (exclusive of any amendments or supplements thereto
subsequent to the date of this Agreement)
<PAGE>
12
that, in your judgment, is material and adverse and that makes it, in
your judgment, impracticable to market the Units on the terms and in
the manner contemplated in the Final Memorandum.
(b) The Initial Purchasers shall have received on the Closing Date a
certificate, dated the Closing Date and signed by an executive officer of
the Company, to the effect set forth in Section 5(a)(i) of this Agreement
and to the effect that the representations and warranties of the Company
contained in this Agreement are true and correct as of the Closing Date and
that the Company has complied with all of the agreements and satisfied all
of the conditions contained herein on its part to be performed or satisfied
hereunder on or before the Closing Date.
The officer signing and delivering such certificate may rely upon the
best of his or her knowledge as to any proceedings threatened.
(c) The Initial Purchasers shall have received on the Closing Date an
opinion of Kelley Drye & Warren LLP, outside counsel to the Company, dated
the Closing Date, to the effect set forth in Exhibit D. Such opinion
shall be rendered to the Initial Purchasers at the request of the Company
and shall so state therein.
(d) The Initial Purchasers shall have received on the Closing Date
opinions of foreign local counsel in Germany, Switzerland, Colombia,
Brazil, Argentina, Italy, France, Belgium, Spain, The Netherlands and the
United Kingdom dated the Closing Date, to the effect set forth in Exhibit E
or as to such other form as agreed to by the Initial Purchasers. Such
opinions shall be rendered to the Initial Purchasers at the request of the
Company and shall so state therein.
(e) The Initial Purchasers shall have received on the Closing Date an
opinion of Morrison & Forester, LLP, special U.S. communications counsel to
the Company, together with opinion of Nebraska counsel, each dated the
Closing Date, substantially to the effect set forth in Exhibit F. Such
opinions shall be rendered to the Initial Purchasers at the request of the
Company and shall so state therein.
(f) The Initial Purchasers shall have received on the Closing Date
opinions of Davis, Graham and Stubbs and Swidler & Berlin, Chartered,
counsel to Flat Rate Communications, Inc., dated the Closing Date, to the
effect set forth in Exhibit E. Such opinion shall be rendered to the
Initial Purchasers to the request of the Company and shall so state
therein.
<PAGE>
13
(g) The Initial Purchasers shall have received on the Closing Date an
opinion of Shearman & Sterling, counsel to the Initial Purchasers, dated
the Closing Date, in form and substance satisfactory to you.
(h) The Initial Purchasers shall have received on each of the date
hereof and the Closing Date a letter, dated the date hereof or the Closing
Date, as the case may be, in form and substance satisfactory to the Initial
Purchasers, from KPMG Peat Marwick LLP, independent public accountants,
containing statements and information of the type ordinarily included in
accountants' "comfort letters" to underwriters with respect to the
financial statements and certain financial information contained in the
Final Memorandum; PROVIDED that the letter delivered on the Closing Date
shall use a "cut-off date" not earlier than the date hereof.
(i) The Initial Purchasers shall have received on the Closing Date a
certificate from the United States Trust Company of New York, in its
capacity as depositary, dated the Closing Date, to the effect that all
$120.7 million aggregate principal amount at maturity of the Company's 15%
Senior Discount Notes Due 2005 had been irrevocably tendered for exchange.
(j) The Certificate of Designations, in the form of which has been
furnished to you, shall have been filed with the Secretary of State of the
State of Delaware and with all other offices where such filing is required.
(k) You shall have received such other documents and certificates as
are reasonably requested by you or your counsel.
6. COVENANTS OF THE COMPANY. In further consideration of the
agreements of the Initial Purchasers contained in this Agreement, the
Company covenants with the Initial Purchasers as follows:
(a) To use its best efforts to furnish to you in New York City,
without charge, prior to 10:00 a.m. New York City time on the business day
next succeeding the date of this Agreement and during the period mentioned
in Section 6(c), as many copies of the Final Memorandum and any supplements
and amendments thereto as you may reasonably request.
(b) Before amending or supplementing either Memorandum, to furnish to
you a copy of each such proposed amendment or supplement and not to use any
such proposed amendment or supplement without the consent of Morgan Stanley
& Co. Incorporated, which consent shall not be unreasonably withheld or
delayed.
<PAGE>
14
(c) If, during such period after the date hereof and prior to the
date on which all of the Units shall have been sold by the Initial
Purchasers, any event shall occur or condition exist as a result of which
it is necessary to amend or supplement the Final Memorandum in order to
make the statements therein, in the light of the circumstances when the
Final Memorandum is delivered to a purchaser, not misleading, or if, in the
opinion of counsel to the Initial Purchasers it is necessary to amend or
supplement the Final Memorandum to comply with applicable law, forthwith to
prepare and furnish, at its own expense, to the Initial Purchasers, either
amendments or supplements to the Final Memorandum so that the statements in
the Final Memorandum as so amended or supplemented will not, in the light
of the circumstances when the Final Memorandum is delivered to a purchaser,
be misleading or so that the Final Memorandum, as so amended or
supplemented, will comply with applicable law.
(d) To endeavor to qualify the Units, the Notes, the Debentures, the
Series A Preferred and the Common Stock issuable upon conversion of the
Series A Preferred and the Debentures for offer and sale under the
securities or Blue Sky laws of such jurisdictions as you shall reasonably
request; PROVIDED that in no event shall the Company be obligated to
qualify to do business in any jurisdiction where it is not now so qualified
or to take any action which would subject it to taxation in any
jurisdiction where it is not now so subject or to service or process in
suits, other than those arising out of the offering or sale of the Units,
the Notes, the Debentures, the Series A Preferred or the Common Stock
issuable upon conversion of the Debentures and the Series A Preferred in
any jurisdiction where it is not now so subject.
(e) Whether or not the transactions contemplated in this Agreement
are consummated or this Agreement is terminated, to pay or cause to be paid
all expenses incident to the performance of its obligations under this
Agreement, including: (i) the preparation of each Memorandum and all
amendments and supplements thereto, (ii) the preparation, issuance and
delivery of the Units, the Notes, the Debentures and the Series A
Preferred, (iii) the fees and disbursements of the Company's counsel and
accountants and the Trustee and its counsel, (iv) the qualification of such
Units, Notes, Debentures and Series A Preferred under securities or Blue
Sky laws in accordance with the provisions of Section 6(d), including
filing fees and the fees and disbursements of counsel for the Initial
Purchasers in connection therewith and in connection with the preparation
of any Blue Sky or legal investment memoranda, (v) the printing and
delivery to the Initial Purchasers in quantities as hereinabove stated of
copies of each Memorandum and any amendments or supplements thereto,
(vi) any fees charged by rating agencies, (vii) all document production
charges and expenses of counsel to the Initial Purchasers (but not
including their fees for professional services) in connection with the
preparation of this Agreement, (viii) the fees and expenses, if any,
incurred in
<PAGE>
15
connection with the admission of such Units, Notes, Debentures or Series A
Preferred for trading in the Private Offerings, Resales and Trading through
Automatic Linkages Market ("PORTAL") or any other appropriate market
system, (ix) the costs and expenses of the Company relating to investor
presentations on any "road show" undertaken in connection with the
marketing of the Offering, including, without limitation, expenses
associated with the production of road show slides and graphics, fees and
expenses of any consultants engaged in connection with the road show
presentations with the prior approval of the Company, travel and lodging
expense of the representatives and officers of the Company and any such
consultants, and the cost of any aircraft chartered in connection with the
road show with the prior approval of the Company, and (x) all other costs
and expenses incident to the performance of the obligations of the Company
hereunder for which provision is not otherwise made in this Section. It is
understood, however, that except as provided in this Section, Section 8 and
Section 11, the Initial Purchasers will pay all of their costs and
expenses, including fees and disbursements of their counsel, transfer taxes
payable on resale of any of the Units, the Notes, the Debentures or the
Series A Preferred by them and any advertising expenses connected with any
offers they may make.
(f) Neither the Company nor any Affiliate will sell, offer for sale
or solicit offers to buy or otherwise negotiate in respect of any security
(as defined in the Securities Act) which would be integrated with the sale
of the Units, the Notes, the Debentures or the Series A Preferred in a
manner which would require the registration under the Securities Act of
such Units, Notes, the Debentures or Series A Preferred.
(g) Not to solicit any offer to buy or offer or sell the Units,
Notes, the Debentures or Series A Preferred by means of any form of general
solicitation or general advertising (within the meaning of Rule 502(c)
under the Securities Act) or in any manner involving a public offering
within the meaning of Section 4(2) of the Securities Act, except as may be
contemplated by the Registration Rights Agreements.
(h) While any of the Units, the Notes, the Debentures or the Series A
Preferred remain "restricted securities" within the meaning of Rule 144
under the Securities Act, to make available, upon request, to any seller of
such Units, Notes, the Debentures or the Series A Preferred the information
specified in Rule 144A(d)(4) under the Securities Act, unless the Company
is then subject to and in compliance with Section 13 or 15(d) of the
Securities Exchange Act of 1934 (the "Exchange Act").
(i) Except as may be contemplated by the Registration Rights
Agreements, none of the Company, its Affiliates or any person acting on its
or their behalf (other than the Initial Purchasers) will engage in any
directed selling efforts (as that term is defined in Regulation S) with
respect to the Units, the Notes, the Debentures or the
<PAGE>
16
Series A Preferred and the Company and its Affiliates and each person
acting on its or their behalf (other than the Initial Purchasers) will
comply with the offering restrictions of Regulation S.
(j) To refuse, and to cause the Trustee or the registrar and transfer
agent, as the case may be, to refuse, to register any transfer of the
Units, the Notes, the Debentures or the Series A Preferred sold pursuant to
Regulation S if such transfer is not made in accordance with the provisions
of Regulation S and the Indentures.
(k) To use its reasonable best efforts to permit the Units, the
Notes, the Debentures or the Series A Preferred to be designated PORTAL
securities in accordance with the rules and regulations adopted by the
National Association of Securities Dealers, Inc. relating to trading in the
PORTAL Market.
(l) The Company shall not, and shall use its best efforts to cause
its Affiliates not to, purchase and then resell or otherwise transfer any
Units, Notes, Debentures or the Series A Preferred.
7. OFFERING OF UNITS, NOTES, DEBENTURES AND SERIES A PREFERRED;
RESTRICTIONS ON TRANSFER. (a) Each Initial Purchaser, severally and not
jointly, represents and warrants that such Initial Purchaser is a qualified
institutional buyer as defined in Rule 144A under the Securities Act (a "QIB").
Each Initial Purchaser, severally and not jointly, agrees with the Company that
(i) it will not solicit offers for, or offer or sell, Units, Notes, Debentures
or Series A Preferred by any form of general solicitation or general advertising
(as those terms are used in Rule 502(c) under the Securities Act) or in any
manner involving a public offering within the meaning of Section 4(2) of the
Securities Act and (ii) it will solicit offers for Units, Notes, Debentures or
Series A Preferred only from, and will offer such Units, Notes, Debentures and
Series A Preferred only to, persons that it reasonably believes to be (A) in the
case of offers inside the United States, (x) other QIBs or (y) institutional
accredited investors (as defined in Rule 501(a) (1), (2), (3) or (7) under the
Securities Act) ("institutional accredited investors") that, prior to their
purchase of Units, Notes, Debentures or Series A Preferred, deliver to such
Initial Purchaser a letter containing the representations and agreements set
forth in Appendix A to the Final Memorandum and (B) in the case of offers
outside the United States, to persons other than U.S. persons ("foreign
purchasers," which term shall include dealers or other professional fiduciaries
in the United States acting on a discretionary basis for foreign beneficial
owners (other than an estate or trust)) in reliance upon Regulation S under the
Securities Act that, in each case, in purchasing such Units, Notes, the
Debentures or the Series A Preferred are deemed to have represented and agreed
as provided in the Final Memorandum under the caption "Transfer Restrictions."
<PAGE>
17
(b) Each Initial Purchaser, severally and not jointly, represents,
warrants, and agrees with respect to offers and sales outside the United
States that:
(i) it understands that no action has been or will be
taken in any jurisdiction by the Company that would permit a
public offering of the Units, the Notes, the Debentures or the
Series A Preferred, or possession or distribution of either
Memorandum or any other offering or publicity material relating
to the Units, the Notes, the Debentures or the Series A
Preferred, in any country or jurisdiction where action for that
purpose is required;
(ii) such Initial Purchaser will comply with all
applicable laws and regulations in each jurisdiction in which it
acquires, offers, sells or delivers Units, Notes, Debentures or
Series A Preferred or has in its possession or distributes either
Memorandum or any such other material, in all cases at its own
expense;
(iii) the Units, the Notes, the Debentures or the Series A
Preferred have not been and will not be registered under the
Securities Act and may not be offered or sold within the United
States or to, or for the account or benefit of, U.S. persons
except in accordance with Rule 144A under the Securities Act or
pursuant to another exemption from the registration requirements
of the Securities Act;
(iv) such Initial Purchaser has offered the Units, the
Notes, the Debentures or the Series A Preferred and will offer
and sell the Units, the Notes, the Debentures or the Series A
Preferred (A) as part of their distribution at any time and
(B) otherwise until 40 days after the Closing Date, with respect
to the Notes and the Debentures, and one year after the Closing
Date with respect to the Units and the Series A Preferred, only
in accordance with Rule 903 of Regulation S or as otherwise
permitted in Section 7(a); accordingly, neither such Initial
Purchaser, its Affiliates nor any persons acting on its or their
behalf have engaged or will engage in any directed selling
efforts (within the meaning of Regulation S) with respect to the
Units, the Notes, the Debentures or the Series A Preferred, and
any such Initial Purchaser, its Affiliates and any such persons
have complied and will comply with the offering restrictions
requirement of Regulation S;
(v) such Initial Purchaser has (A) not offered or sold
and, prior to the date six months after the Closing Date, will
not offer or sell any Units, Notes, Debentures or Series A
Preferred to persons in the
<PAGE>
18
United Kingdom except to persons whose ordinary activities involve
them in acquiring, holding, managing or disposing of investments (as
principal or agent) for the purposes of their businesses or otherwise
in circumstances which have not resulted and will not result in an
offer to the public in the United Kingdom within the meaning of the
Public Offers of Securities Regulations 1995; (B) complied and will
comply with all applicable provisions of the Financial Services Act
1986 with respect to anything done by it in relation to the Units, the
Notes, the Debentures or the Series A Preferred in, from or otherwise
involving the United Kingdom; and (C) only issued or passed on and
will only issue or pass on in the United Kingdom any document received
by it in connection with the issue of the Units, the Notes, the
Debentures or the Series A Preferred to a person who is of a kind
described in Article 11(3) of the Financial Services Act 1986
(Investment Advertisements) (Exemptions) Order 1996, or is a person to
whom such document may otherwise lawfully be issued or passed on;
(vi) such Initial Purchaser understands that the Units,
the Notes, the Debentures and the Series A Preferred have not
been and will not be registered under the Securities and Exchange
Law of Japan, and represents that it has not offered or sold, and
agrees that it will not offer or sell, any Units, Notes,
Debentures or Series A Preferred directly or indirectly in Japan
or for the account of any resident thereof except pursuant to any
exemption from the registration requirements of the Securities
and Exchange Law of Japan and otherwise in compliance with
applicable provisions of Japanese law; and
(vii) such Initial Purchaser agrees that, at or prior to
confirmation of sales of the Units, it will have sent to each
distributor, dealer or person receiving a selling concession, fee
or other remuneration that purchases Units from it during the
restricted period a confirmation or notice to substantially the
following effect:
"The Units, the Notes, the Debentures and the Series A
Preferred covered hereby have not been registered under
the U.S. Securities Act of 1933, as amended (the
"Securities Act"), and may not be offered and sold
within the United States or to, or for the account or
benefit of, U.S. persons (i) as part of their
distribution at any time or (ii) otherwise until 40
days after the closing date with respect to the Notes
and the Debentures and one year after the Closing Date with
respect to the Units and the Series A Preferred, except in
either case in accordance with Regulation S (or Rule 144A
if available) under the Securities Act. Terms used
above have the meaning given to them by Regulation S."
<PAGE>
19
Terms used and not defined in this Section 7(b) have the meanings given to
them by Regulation S.
8. INDEMNIFICATION AND CONTRIBUTION. (a) The Company agrees to
indemnify and hold harmless each Initial Purchaser, and each person, if any, who
controls such Initial Purchaser within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act from and against any and all
losses, claims, damages and liabilities (including, without limitation, any
legal or other expenses reasonably incurred in connection with defending or
investigating any such action or claim) caused by any untrue statement or
alleged untrue statement of a material fact contained in either Memorandum (as
amended or supplemented if the Company shall have furnished any amendments or
supplements thereto), or caused by any omission or alleged omission to state
therein a material fact necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading; PROVIDED,
HOWEVER, that the Company will not be liable in any such case to the extent, but
only to the extent, that any such losses, claims, damages or liabilities are
caused by any such untrue statement or omission or alleged untrue statement or
omission based upon information relating to any Initial Purchaser furnished to
the Company in writing by such Initial Purchaser expressly for use therein;
PROVIDED, HOWEVER, that the foregoing indemnity agreement with respect to any
Preliminary Memorandum shall not inure to the benefit of any Initial
Purchaser from whom the person asserting any such losses, claims, damages or
liabilities purchased Units, or any person controlling such Initial
Purchaser, if a copy of the Final Memorandum (as then amended or supplemented
if the Company shall have furnished any amendments or supplements thereto)
was not sent or given by or on behalf of such Initial Purchaser to such
person if required by law so to have been delivered at or prior to the
written confirmation of the sale of the units to such person, and if the
Final Memorandum (as so amended or supplemented) would have cured the defect
giving rise to such losses, claims, damages or liabilities, unless such
failure is the result of noncompliance by the Company with Section 6(a)
hereof.
(b) Each Initial Purchaser agrees, severally and not jointly, to
indemnify and hold harmless the Company, its directors, its officers and each
person, if any, who controls the Company within the meaning of either Section 15
of the Securities Act or Section 20 of the Exchange Act to the same extent as
the foregoing indemnity from the Company to such Initial Purchaser, but only
with reference to information relating to such Initial Purchaser furnished to
the Company in writing by such Initial Purchaser expressly for use in either
Memorandum or any amendments or supplements thereto.
(c) In case any proceeding (including any governmental investigation)
shall be instituted involving any person in respect of which indemnity may be
sought pursuant to either Section 8(a) or 8(b), such person (the "indemnified
party") shall promptly notify the person against whom such indemnity may be
sought (the "indemnifying party") in writing (but the failure to so notify an
indemnifying party shall not relieve it from any liability which it may have
under this Section 8, except to the extent that it has been prejudiced in any
material respect by such failure, or from any liability it may otherwise have)
and the indemnifying
<PAGE>
20
party, upon request of the indemnified party, shall retain counsel reasonably
satisfactory to the indemnified party to represent the indemnified party and any
others the indemnifying party may designate in such proceeding and shall pay the
fees and disbursements of such counsel related to such proceeding. In any such
proceeding, any indemnified party shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the expense of
such indemnified party unless (i) the indemnifying party and the indemnified
party shall have mutually agreed to the retention of such counsel or (ii) the
named parties to any such proceeding (including any impleaded parties) include
both the indemnifying party and the indemnified party and representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. It is understood that the indemnifying party
shall not, in respect of the legal expenses of any indemnified party in
connection with any proceeding or related proceedings in the same jurisdiction,
be liable for the reasonable fees and expenses of more than one separate firm
(in addition to any local counsel) for all such indemnified parties and that all
such fees and expenses shall be reimbursed as they are incurred. Such firm
shall be designated in writing by Morgan Stanley & Co. Incorporated in the case
of parties indemnified pursuant to Section 8(a) and by the Company in the case
of parties indemnified pursuant to Section 8(b). The indemnifying party shall
not be liable for any settlement of any proceeding effected without its written
consent, but if settled with such consent or if there be a final judgment for
the plaintiff, the indemnifying party agrees to indemnify the indemnified party
from and against any loss or liability by reason of such settlement or judgment.
Notwithstanding the foregoing sentence, if at any time an indemnified party
shall have requested an indemnifying party to reimburse the indemnified party
for fees and expenses of counsel as contemplated by the second and third
sentences of this paragraph, the indemnifying party agrees that it shall be
liable for any settlement of any proceeding effected without its written consent
if (i) such settlement is entered into more than 60 days after receipt by such
indemnifying party of the aforesaid request and (ii) such indemnifying party
shall not have reimbursed the indemnified party in accordance with such request
prior to the date of such settlement. No indemnifying party shall, without the
prior written consent of the indemnified party, which consent may not be
unreasonably withheld, effect any settlement of any pending or threatened
proceeding in respect of which any indemnified party is or could have been a
party and indemnity could have been sought hereunder (whether or not any
indemnified party is an actual or potential party to such proceeding) by such
indemnified party, unless such settlement includes an unconditional release of
such indemnified party from all liability on claims that are the subject matter
of such proceeding.
(d) To the extent the indemnification provided for in Section 8(a) or
8(b) is unavailable to an indemnified party or insufficient in respect of any
losses, claims, damages or liabilities referred to therein, then each
indemnifying party under such section, in lieu of indemnifying such indemnified
party thereunder, shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or liabilities
<PAGE>
21
(i) in such proportion as is appropriate to reflect the relative benefits
received by the Company, on the one hand, and the Initial Purchasers, on the
other hand, from the offering of such Units or (ii) if the allocation provided
by clause 8(d)(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 8(d)(i) above but also the relative fault of the Company, on the one
hand, and the Initial Purchasers, on the other hand, in connection with the
statements or omissions that 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 Initial
Purchasers, on the other hand, in connection with the offering of the Units
shall be deemed to be in the same respective proportions as the net proceeds
from the offering of the Units (net of discounts and commissions but before
deducting expenses) received by the Company and the total discounts and
commissions received by the Initial Purchasers in respect thereof bear to the
aggregate offering price of the Units. The relative fault of the Company, on
the one hand, and of the Initial Purchasers, on the other hand, shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company or by the Initial
Purchasers and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission.
(e) The Company and the Initial Purchaser agree that it would not be
just or equitable if contribution pursuant to this Section 8 were determined by
pro rata allocation or by any other method of allocation that does not take
account of the equitable considerations referred to in Section 8(d). The amount
paid or payable by an indemnified party as a result of the losses, claims,
damages and liabilities referred to in Section 8(d) above shall be deemed to
include, subject to the limitations set forth above, 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 8, the Initial Purchasers shall not be required to contribute any amount
in excess of the amount by which the total price at which the Units resold by it
in the initial placement of such Units were offered to investors exceeds the
amount of any damages that such Initial Purchaser has otherwise been required to
pay by reason of such 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
remedies provided for in this Section 8 are not exclusive and shall not limit
any rights or remedies which may otherwise be available to any indemnified party
at law or in equity.
(f) The indemnity and contribution provisions contained in this
Section 8 and the representations, warranties and other statements of the
Company contained in this Agreement shall remain operative and in full force and
effect regardless of (i) any termination of this Agreement, (ii) any
investigation made by or on behalf of any Initial Purchaser or any
<PAGE>
22
person controlling or Initial Purchaser or by or on behalf of the Company, its
officers or directors or any person controlling the Company and (iii) acceptance
of and payment for any of the Units.
9. TERMINATION. This Agreement shall be subject to termination by
notice given by you to the Company, if (a) after the execution and delivery of
this Agreement and prior to the Closing Date (i) trading generally shall have
been suspended or materially limited on or by, as the case may be, any of the
New York Stock Exchange, the American Stock Exchange, the National Association
of Securities Dealers, Inc., the Chicago Board of Options Exchange, the Chicago
Mercantile Exchange or the Chicago Board of Trade, (ii) trading of any
securities of the Company shall have been suspended on any exchange or in any
over-the-counter market, (iii) a general moratorium on commercial banking
activities in New York shall have been declared by either Federal or New York
State authorities or (iv) there shall have occurred any outbreak or escalation
of hostilities or any change in financial markets or any calamity or crisis
that, in your judgment, is material and adverse and (b) in the case of any of
the events specified in clauses 9(a)(i) through 9(a)(iv), such event singly or
together with any other such event makes it, in your judgment, impracticable to
market the Units on the terms and in the manner contemplated in the Final
Memorandum.
10. EFFECTIVENESS. This Agreement shall become effective upon the
execution and delivery hereof by the parties hereto.
11. MISCELLANEOUS. If, on the Closing Date any one or more of the
Initial Purchasers shall fail or refuse to purchase Units that it or they have
agreed to purchase hereunder on such date, and the amount of Units which such
defaulting Initial Purchaser or Initial Purchasers agreed but failed or refused
to purchase is not more than one-tenth of the aggregate amount of Units to be
purchased on such date, the other Initial Purchasers shall be obligated
severally in the proportions that the amount of Units set forth opposite their
respective names in Schedule I bears to the aggregate amount of Units set forth
opposite the names of all such non-defaulting Initial Purchasers, or in such
other proportions as you may specify, to purchase the Units which such
defaulting Initial Purchaser or Initial Purchasers agreed but failed or refused
to purchase on such date; PROVIDED that in no event shall the amount of Units
that any Initial Purchaser has agreed to purchase pursuant to Section 2 be
increased pursuant to Section 11 by an amount in excess of one-ninth of such
amount of Units without the written consent of such Initial Purchaser. If, on
the Closing Date, any Initial Purchaser or Initial Purchasers shall fail or
refuse to purchase Units which it or they have agreed to purchase hereunder on
such date and the aggregate amount of Units with respect to which such default
occurs is more than one-tenth of the aggregate amount of Units to be purchased
on such date and arrangements satisfactory to you and the Company for the
purchase of such Units are not made within 36 hours after such default, this
Agreement shall terminate without liability on the part of any non-defaulting
Initial Purchaser or the Company.
<PAGE>
23
In any such case either you or the Company shall have the right to postpone the
Closing Date, but in no event for longer than seven days, in order that the
required changes, if any, in the Final Memorandum or in any other documents or
arrangements may be effected. Any action taken under this paragraph shall not
relieve any defaulting Initial Purchaser from liability in respect of any
default of such Initial Purchaser under this Agreement.
If this Agreement shall be terminated by the Initial Purchasers, or
any of them, because of any failure or refusal on the part of the Company to
comply with the terms or to fulfill any of the conditions of this Agreement, or
if for any reason the Company shall be unable to perform its obligations under
this Agreement (other than by reason of a breach of this Agreement by the
Initial Purchasers), the Company will reimburse the Initial Purchasers or such
Initial Purchasers as have so terminated this Agreement with respect to
themselves, severally for all out-of-pocket expenses (including the fees and
disbursements of their counsel) reasonably incurred by such Initial Purchasers
in connection with this Agreement or the offering contemplated hereunder.
12. NOTICES. All notices and other communications required or
permitted to be given under this Agreement shall be in writing and shall be
deemed to have been duly given if delivered personally to the parties hereto as
follows:
(a) If to you:
Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
Attention: Ken Pott
(b) If to the Company:
Viatel, Inc.
800 Third Avenue
New York, New York 10022
Attention: Sheldon M. Goldman
Senior Vice President,
Business Affairs and General Counsel
<PAGE>
24
with a copy to:
Kelley Drye & Warren LLP
Two Stamford Plaza
281 Tresser Blvd.
Stamford, Connecticut 06901-3229
Attention: James P. Prenetta
13. COUNTERPARTS. This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
14. APPLICABLE LAW. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of New York.
15. HEADINGS. The headings of the sections of this Agreement have
been inserted for convenience of reference only and shall not be deemed a part
of this Agreement.
<PAGE>
Please confirm your agreement to the foregoing by signing in the space
provided below for that purpose and returning to us a copy hereof, whereupon
this Agreement shall constitute a binding agreement between us.
Very truly yours,
VIATEL, INC.
By /s/ Michael J. Mahoney
--------------------------
Name: Michael J. Mahoney
Title: President and Chief Executive
Officer
Agreed, April 3, 1998
MORGAN STANLEY & CO. INCORPORATED
MORGAN STANLEY BANK AG
SALOMON BROTHERS INC
ING BARING (U.S.) SECURITIES, INC.
NATIONSBANC MONTGOMERY SECURITIES LLC
By: MORGAN STANLEY & CO. INCORPORATED
In its individual capacity and as representative
of the other Initial Purchasers.
By /s/ Kenneth G. Pott
-----------------------------
Name: Kenneth G. Pott
Title: Vice President
<PAGE>
SCHEDULE I
<TABLE>
<CAPTION>
Number of Senior Number of Senior Number of Senior Number of Senior
Discount Dollar Units Dollar Units To Discount DM Units DM Units To Be
Initial Purchasers To Be Purchased Be Purchased To Be Purchased Purchased
- ------------------ --------------- ------------ --------------- ---------
<S> <C> <C> <C> <C>
Morgan Stanley & Co. Incorporated* 401,171.12 318,453.57 181,933.40 139,484.65
Salomon Brothers Inc 32,942.96 27,182.14 14,688.87 12,838.45
ING Baring (U.S.) Securities, Inc. 32,942.96 27,182.14 14,688.87 12,838.45
NationsBanc Montgomery Securities LLC 32,942.96 27,182.14 14,688.87 12,838.45
----------- ----------- ----------- -----------
Total 500,000.00 400,000.00 226,000.00 178,000.00
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
</TABLE>
- -------------------
The offering of the Senior Discount DM Units and the Senior DM Units
outside the United States is lead managed by Morgan Stanley Bank AG,
an affiliate of Morgan Stanley & Co. Incorporated.
<PAGE>
EXHIBIT A
Form of Note Registration Rights Agreement
<PAGE>
EXHIBIT B
Form of Shelf Registration Rights Agreement
<PAGE>
EXHIBIT C
SUBSIDIARIES OF VIATEL, INC.
NAME OF SUBSIDIARY JURISDICTION OF INCORPORATION OR ORGANIZATION
- ------------------ ---------------------------------------------
Viatel U.K. Limited United Kingdom
Viaphone S.R.L. Italy
Viatel S.R.L. Italy
Viatel Operations, S.A. France
Viatel S.A. France
Viafon Dat Iberica, S.A. Spain
Viatel Global Communications Espana S.A. Spain
Viatel Belgium SA/NV Belgium
Viaphone SA/NV Belgium
Viatel Gmbh Germany
Viaphone Gmbh Germany
Viatel AG Switzerland
Viaphone AG Switzerland
Viatel Global Communications BV Netherlands
Viafoperations BV Netherlands
Viacol Ltda. Colombia
Viatel Colombia Management Inc. Delaware
Viatel Colombia Holdings, Inc. Delaware
Viatel Sales U.S.A., Inc. Delaware
YYC Communications Delaware
Viatel Nebraska, Inc. Delaware
Viatel Sweden, Inc. Delaware
Viatel Finland, Inc. Delaware
Viatel Argentina Holdings, Inc. Delaware
Viatel Argentina Management, Inc. Delaware
Viatel Brazil Management, Inc. Delaware
Viatel Brazil Holdings, Inc. Delaware
<PAGE>
EXHIBIT D
Form of Opinion of
Kelley Drye & Warren LLP
Pursuant to Section 5(c) of the Purchase Agreement, Kelley Drye &
Warren LLP shall deliver an opinion to the effect that:
(A) the Company has been duly incorporated and is validly existing as
a corporation in good standing under the laws of the State of Delaware with
full corporate power and corporate authority to own its properties and to
conduct its business as described in the Final Memorandum (references
herein to the Final Memorandum being taken to mean the same, as amended or
supplemented), and is duly qualified to transact business as a foreign
corporation and is in good standing in each jurisdiction in which the
conduct of its business or its ownership or leasing of property requires
such qualification; except to the extent that the failure to be so
qualified or be in good standing would not have a Material Adverse Effect
on the Company and its Subsidiaries, taken as a whole;
(B) the Purchase Agreement has been duly authorized, executed and
delivered by the Company;
(C) the Pledge Agreement has been duly authorized, executed and
delivered by the Company, and assuming due authorization, execution and
delivery by the Trustee, the Pledge Agreement will constitute a valid and
legally binding obligation of the Company, enforceable against the Company
in accordance with its terms, except as the enforceability thereof may be
limited by applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws affecting creditors'
rights generally and equitable principles (whether considered in a
proceeding in equity or at law);
(D) upon the delivery to the Trustee of the certificates or
instruments, if any, representing the U.S. Pledged Securities and the DM
Pledged Securities, the pledge of and grant of a security interest in the
U.S. Pledged Securities and the DM Pledged Securities for the benefit of
the Trustee and the holders of the Senior Dollar Notes and the Senior DM
Notes will constitute a first priority security interest in the U.S.
Pledged Securities and the DM Pledged Securities, enforceable as against
all creditors of the Company (and any person purporting to purchase any of
the U.S. Pledged Securities or DM Pledged Securities from the Company);
<PAGE>
D-2
(E) the authorized capital stock of the Company conforms as to legal
matters to the description thereof contained in the Final Memorandum;
(F) the outstanding shares of Common Stock have been duly authorized
and are validly issued, fully paid and non-assessable;
(G) the Certificate of Designation creating the Series A Preferred
has been duly filed with the Secretary of State of the State of Delaware
and with any other offices where such filing is required to be made on or
prior to the Closing Date;
(H) the Series A Preferred has been duly authorized and, when issued
and delivered to and paid for by the Initial Purchasers in accordance with
the terms of the Purchase Agreement, will be validly issued, fully paid and
non-assessable, and the issuance of such Series A Preferred will not be
subject to any preemptive or similar rights;
(I) the shares of Common Stock reserved for issuance upon conversion
of the Debentures and the Series A Preferred have been duly authorized and
reserved and, when issued upon conversion of the Debentures and the Series
A Preferred in accordance with their terms, will be validly issued, fully
paid and non-assessable, and the issuance of such shares of Common Stock
will not be subject to any preemptive or similar rights;
(J) the Notes and the Debentures have been duly authorized,
executed, and issued by the Company and, assuming due authentication
thereof by the Trustee in accordance with the terms of the respective
indenture and upon payment and delivery in accordance with the terms of the
Purchase Agreement, will (x) constitute valid and legally binding
obligations of the Company enforceable against the Company in accordance
with their terms, except as the enforceability thereof may be limited by
applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws affecting creditors' rights generally and
equitable principles (whether considered in a proceeding in equity or at
law) and (y) be entitled to the benefits of the respective indenture and
the Registration Rights Agreements;
(K) each of the Indentures and the Registration Rights Agreements has
been duly authorized, executed and delivered by the Company, and, assuming
the due authorization, execution and delivery by the other parties thereto,
constitutes a valid and legally binding obligation of the Company,
enforceable against the Company in accordance with its terms except as
(x) the enforceability thereof may be limited by bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar state
or federal laws affecting the rights and remedies of creditors generally
and general equitable principles (whether considered in a proceeding in
equity or at law), (y) rights to indemnification and contribution may be
limited by public policy and (z)
<PAGE>
D-3
provisions of the Indentures and the Supplemental Indentures, if any,
requiring any waiver of stay or extension laws, diligent performance or
other acts on the part of the Trustee may be unenforceable under principles
of public policy;
(L) neither the execution, delivery nor performance by the Company of
its obligations under the Transaction Documents nor the issuance, sale and
delivery of the Units, the Notes, the Debentures and the Series A Preferred
and the issuance of the Common Stock upon conversion of the Series A
Preferred and the Debentures in accordance with their terms will contravene
(i) the DGCL or any U.S. federal or New York State law, statute, ordinance,
rule, regulation, judgment, order or decree applicable to the Company or
any of its assets or properties, whether owned or leased, (ii) the
Certificate of Incorporation or By-laws of the Company, (iii) any agreement
or other instrument binding upon the Company or any of its Subsidiaries
that is material to the Company and its Subsidiaries, taken as a whole, or
(iv) any judgment, order or decree of any governmental body, agency or
court having jurisdiction over the Company or any Subsidiary, except, in
the case of clauses (i), (iii) and (iv), for such contraventions which
would not have a Material Adverse Effect on the Company and its
Subsidiaries, taken as a whole and, except as may be required under
applicable state securities or Blue Sky laws, and except for the filing of
registration statements under the Securities Act and qualification of the
Indentures under the Trust Indenture Act in connection with the
Registration Rights Agreements, no consent, approval, authorization or
order of, or qualification with, any U.S. federal or New York or Delaware
state governmental body or agency is required for the performance by the
Company of its obligations under the Transaction Documents;
(M) to the best knowledge of such counsel, there is no legal or
governmental proceeding, now pending or threatened, to which the Company or
any of its Subsidiaries is a party or to which any of the properties of the
Company or any of its Subsidiaries is or may be subject that is required to
be disclosed in the Final Memorandum and that is not so disclosed, or which
could reasonably be expected to have a Material Adverse Effect on the
Company and its Subsidiaries, taken as a whole, or on the ability of the
Company to perform its obligations under the Transaction Documents or to
consummate the transactions contemplated by the Final Memorandum;
(N) the Company is not, and after giving effect to the offering and
sale of the Units, the Notes, the Debentures and the Series A Preferred and
the application of the proceeds thereof as described in the Final
Memorandum, will not be an "investment company" as such term is defined in
the Investment Company Act of 1940, as amended;
<PAGE>
D-4
(O) the statements in the Final Memorandum under the captions
"Business - Legal Proceedings," "Description of Certain Indebtedness,"
"Description of the Units," "Description of the Series A Preferred,"
"Description of the Subordinated Convertible Debentures," "Description of
Capital Stock," "Private Placement" and "Transfer Restrictions," in each
case insofar as such statements constitute summaries of the legal matters,
documents or proceedings referred to therein, constitute accurate summaries
of the matters described therein in all material respects;
(P) the statements in the Final Memorandum, under the caption
"Certain Income Tax Considerations--Certain United States Federal Income
Tax Considerations" insofar as such statements constitute summaries of
certain U.S. federal income tax laws and regulations, constitute accurate
summaries of the matters described therein in all material respects; and
(Q) based upon the representations, warranties, and agreements of the
Company in the Purchase Agreement and of the Initial Purchasers in Section
7 of the Purchase Agreement, it is not necessary in connection with the
offer, sale and delivery of the Units, the Notes, the Debentures and the
Series A Preferred to the Initial Purchasers under the Purchase Agreement
or in connection with the initial resale of such Units, the Notes, the
Debentures and the Series A Preferred by the Initial Purchasers solely in
accordance with Section 7 of the Purchase Agreement to register the Units,
the Notes, the Debentures and the Series A Preferred under the Securities
Act, it being understood that no opinion is expressed as to any subsequent
resale of any Unit, Note, Debenture or share of Series A Preferred.
<PAGE>
ATTACHMENT A
TO
FORM OF KELLEY DRYE & WARREN LLP OPINION
----------------------------------------
In the course of the preparation by the Company of the Final Memorandum, we
have participated in conferences with officers, directors and representatives of
the Company, its independent auditors, your representatives and representatives
of your counsel at which conferences the contents of the Final Memorandum and
related matters were discussed. Although we have not independently verified
the accuracy or completeness of, or otherwise verified the statements made in
the Final Memorandum (other than as expressly provided above), nothing has come
to our attention that has led us to believe that the Final Memorandum, as of its
date or the date hereof, contained an untrue statement of a material fact or
omitted to state a material fact necessary in order the make the statements
therein, in the light of the circumstances under which they were made, not
misleading. Notwithstanding the foregoing, we are not expressing any opinion or
belief as to the financial statements and supporting notes and schedules and
other financial data contained in the Final Memorandum.
<PAGE>
EXHIBIT E
Form of Foreign Local Counsel Opinion
(A) [________] (the "Company") has been duly incorporated, is validly
existing as a company under the laws of [Name of Country], has the corporate
power and authority to own its property and to conduct its business as described
in the Offering Memorandum of Viatel, Inc. dated [______], 1998 (the "Final
Memorandum") and is duly qualified to transact business in each jurisdiction in
which the conduct of its business or its ownership or leasing of property
requires such qualification (except to the extent that the failure to be so
qualified would not in our view have a material adverse effect on the Company
and its subsidiaries taken as a whole).
(B) The Company has no subsidiaries.
(C) The Company has all materially necessary certificates, orders,
permits, licenses, authorizations, consents and approvals of and from, and has
made all declarations and filings with all relevant governmental authorities,
all self-regulatory organizations and all relevant courts and tribunals, to own,
lease, license and use its properties and assets and to conduct its business in
the manner described in the Final Memorandum, and to the best of our knowledge
after due inquiry has not received any notice of proceedings relating to
revocation or modification of any such certificates, orders, permits, licenses,
authorizations, consents or approvals, nor is the Company in violation of, or in
default under, any federal, state, local, national or regional law, regulation,
rule, decree, order or judgment applicable to the Company, the effect of which,
singly or in the aggregate, would have a material adverse effect on the
prospects, condition, financial or otherwise, or in the earnings, business or
operations of the Company, except as described herein or in the Final
Memorandum.
(D) The statements in the Final Memorandum under the caption
"Business -- [_______]" are accurate in all material respects and fairly
summarize all matters referred to therein.
(E) There are no restrictions (legal, contractual or otherwise) on
the ability of the Company to declare and pay any dividend or make any payment
or transfer of property or assets to its stockholders other than those described
in the Final Memorandum and such restrictions as would not have a material
adverse effect on the prospects, condition, financial or otherwise, or in the
earnings, business or operations of the company and such descriptions, if any,
fairly summarize such restrictions.
<PAGE>
EXHIBIT F
Form of U.S. Regulatory Counsel Opinion
Pursuant to Section 5(e) of the Purchase Agreement, Morrison & Foerster
LLP, regulatory counsel for the Company, shall furnish an opinion to the effect
that:
(A) (1) the execution and delivery of the Purchase Agreement by the
Company and the consummation of the transactions contemplated thereby do
not violate (i) the federal Communications Act of 1934, as amended, and the
Telecommunications Act of 1996, any rules or regulations of the Federal
Communications Commission ("FCC") applicable to the Company (collectively,
the "Communications Act"), (ii) any state telecommunications law, rules or
regulations ("State Law") applicable to the Company, and (iii) to the best
of such counsel's knowledge, any decree from any court, and (2) no consent,
approval, authorization or order of or filing with the FCC or any state
authority overseeing telecommunications matters ("State Authority"), is
necessary for the execution and delivery of the Purchase Agreement by the
Company and except to the extent that the failure to obtain such consents,
approvals, authorizations or orders or to make filings with, the FCC or any
State Authority would not, individually or in the aggregate, have a
material adverse effect on the prospects, condition (financial or
otherwise) or in the earnings, business or operations of the Company and
the subsidiaries listed in Schedule B to the Purchase Agreement (the
"Subsidiaries") taken as a whole;
(B) except as indicated in this paragraph B, to the best of our
knowledge, (1) the Company and its Subsidiaries have made all reports and
filings, and paid all fees, required by the FCC and the State Authorities,
and have all certificates, orders, permits, licenses, authorizations,
consents and approvals of and from, and have made all filings and
registrations, with the FCC and the State Authorities necessary to own,
lease, license and use its properties and assets and to conduct its
respective business in the manner described in the Preliminary and Final
Memorandum, except for those filings, fees, and approvals the failure to
obtain or file of which would not have material adverse effect on the
financial condition, or on the earnings, business, or operations of the
Company and its Subsidiaries, taken as a whole; (2) has not received any
notice of proceedings relating to the violation, revocation or modification
of any such certificates, orders, permits, licenses, authorizations,
consents or approvals, or the
<PAGE>
F-2
qualification or rejection of any such filing or registration, the effect
of which, singly or in the aggregate, would have a material adverse effect
on the prospects, condition, financial or otherwise, or in the earnings,
business or operations of the Company, taken as a whole; and (3) neither
the Company nor its Subsidiaries is in violation of, or in default under,
the Communications Act or State Law, the effect of which, singly or in the
aggregate, would have a material adverse effect on the prospects,
condition, financial or otherwise, or in the earnings, business or
operations of the Company and its Subsidiaries, taken as a whole;
(C) to the best of such counsel's knowledge after due inquiry (i) no
adverse judgment, decree or order of the FCC or any State Authority has
been issued against the Company or its Subsidiaries and (ii) no litigation,
proceeding, inquiry or investigation has been commenced or threatened
against the Company or its Subsidiaries before or by the FCC or any State
Authority which, if decided adversely to the interests of the Company or
its Subsidiaries would have a material adverse effect on the Company and
its Subsidiaries, taken as a whole; and
(D) the statements in the Final Memorandum under the captions "Risk
Factors - Competition," "Risk Factors - Substantial Government Regulation,"
"Business - Government Regulation," insofar as such statements constitute a
summary of the legal matters, documents or proceedings of the FCC and State
Authorities with respect to telecommunications regulation referred to
therein, fairly summarize the matters referred to therein.
<PAGE>
EQUIPMENT PURCHASE AGREEMENT
BETWEEN
VIATEL, INC.
AND
NORTEL PLC.
<PAGE>
THIS AGREEMENT, DATED JUNE 29, 1998 (HEREINAFTER THE "EFFECTIVE DATE"), BY AND
BETWEEN:
NORTEL PLC., WHOSE REGISTERED OFFICES ARE AT MAIDENHEAD OFFICE PARK, WESTACOTT
WAY, MAIDENHEAD, BERKSHIRE SL6 3QH, ENGLAND (HEREINAFTER CALLED "NORTEL");
AND
VIATEL, INC., WHOSE PRINCIPLE OFFICES ARE AT 800 THIRD AVENUE, NEW YORK, NY
10022, USA (HEREINAFTER CALLED "VIATEL");
and jointly referred to as the "Parties".
WHEREAS Viatel desires to purchase and/or license various Equipment, Software,
and related Services from Nortel for deployment within certain specified
countries of the European Union;
AND WHEREAS Nortel is willing to supply such Equipment and related Services to
Viatel upon the terms and conditions hereinafter contained.
NOW THEREFORE, the Parties agree as follows:
1. DEFINITIONS
The meaning of terms and expressions used herein are set out in Clause 1 of
Annex A hereto.
2. SCOPE
2.1 This Agreement shall govern the ordering and purchase of Nortel Digital
Transmission Equipment by Viatel and its Affiliates from Nortel and its
Affiliates and sets forth the terms and conditions by which Nortel will
manufacture, factory system test, engineer, install, test and commission the
Equipment and test the Circe Network and the provision of the Software for
Viatel's Circe Project in the United Kingdom, the Netherlands, Belgium and
France, and such other equipment or services as the parties hereto may agree
and may add to this Agreement in writing by means of an Amendment.
2.2 Viatel may from time to time identify to Nortel different countries within
the European Union in which they wish to deploy Digital Transmission
Equipment or Equipment other than Digital Transmission Equipment they wish
to deploy in their network in the European Union whereupon the Parties shall
determine the configuration(s) of such Equipment suitable to Viatel's needs
and prices therefor applicable to each country for which Viatel expects to
place Orders pursuant to an Amendment to this Agreement. The results of this
determination shall be incorporated into Annex C of this Agreement thus
defining the Contractual rights and obligations of
2
<PAGE>
the Parties in relation to the type and specification of the Equipment,
Software and Services which Nortel are to provide and the prices which
Viatel shall pay for them.
3. EFFECTIVE DATE, TERM, AND RENEWAL
3.1 This Agreement shall come into force and effect on the Effective Date and
shall govern the manufacture, factory system testing, engineering,
installation, testing and commissioning of the Equipment and testing of the
Circe Network, the provision of Software and the provision of any other
specific Equipment, Software, or Services set forth in the relevant Annex C
hereof. A separate Specification will be prepared for each product type
specific to each country of deployment and shall be numbered sequentially
(C1, C2 etc.).
4. PRICES
4.1 The unit Prices to be paid by Viatel for each item of Equipment, Software
and Services purchased under this Agreement shall be those set forth in
Annex C. The total price for the Equipment, Software and Services necessary
to implement the Circe Network shall be set forth in Annex D.
4.2 Unless the Parties agree otherwise, the Prices include Delivery on DDP
European Union Site (INCOTERMS 1990) terms and unloading at the applicable
sites. Based upon the principle that at the date of this Agreement, sales
between member states of the European Union do not attract import duties or
sales taxes other than Value Added Tax, DDP terms will be subject to review
should this change.
4.3 Where sales take place which are on terms other than those specified in
Sub-clause 4.2 above, Viatel shall, at Nortel's direction, promptly
reimburse Nortel or pay directly to the applicable government or taxing
authority all taxes and charges arising hereunder, except for taxes computed
upon the net income of Nortel. This shall include Value Added Tax and taxes
on Services which are not included in the Total Price by virtue of the
relevant INCOTERM. Viatel's obligations pursuant to this Clause 4 shall
survive any termination of this Agreement.
5. ORDERING PROCESS
The following procedure shall apply to Equipment and related Services to be
supplied and installed by Nortel hereunder:
5.1 The specific terms for the purchase of Equipment by Viatel are set forth in
this Agreement. Orders shall reference this Agreement and shall be governed
solely by the terms and conditions set forth herein and in Annex A hereto.
Orders shall specify the Viatel Site address to which the foregoing are to
be delivered, the
3
<PAGE>
relevant implementation schedule, and any other information which may be
required to be included in accordance with the provisions of this
Agreement.
5.2 This Agreement sets the terms and conditions for sale of Equipment by Nortel
and their Affiliates, and where appropriate, their distributors, to Viatel
and Viatel Affiliates for the Circe Network. The Nortel Affiliates
appropriate to the sale of the Digital Transmission Equipment type in each
country of deployment is set out in Annex B. Viatel or a Viatel Affiliate
shall place an Order for Equipment on Nortel or the appropriate Nortel
Affiliate or distributor covering the territory into which the Equipment is
to be delivered.
In determining the most appropriate entity, the Parties will take into
account the most efficient VAT regime.
5.3 Nortel shall be responsible to consult with the Project Manager of Viatel to
co-ordinate the delivery and provision of the Equipment, Software and
Services that are the subject of this Agreement on a timely basis to the
sites designated by Viatel or the Project Manager on Viatel's behalf in the
United Kingdom, the Netherlands, Belgium and France.
6. SUCCESSORS
This Agreement shall be binding upon the Parties to it and their successors
and permitted assigns.
7. CONTRACTOR NOT AGENT
Nortel agrees that the relationship established by this Agreement
constitutes it as an independent contractor and that this Agreement shall not in
any way constitute Nortel or its employees or agents, an employee, partner or
agent of Viatel nor appoint nor authorise Nortel to act as agent of Viatel and
that furthermore no tax, assessment or legal liability of Nortel or of its
employees or agents becomes, by reason of this Agreement, an obligation of
Viatel.
8. NOTICES
Any and all notices or other information required to be given by one of the
Parties to the other shall be deemed sufficiently given when forwarded by
prepaid registered mail, by facsimile followed by a mailed or hand delivered
copy, or hand-delivered to the other Party at the following address:
Viatel, Inc., Nortel plc.,
800 Third Street, Oakleigh Road South,
New York, New Southgate,
NY 10022, London N11 1HB,
4
<PAGE>
USA England
Attention: Sheldon M. Goldman Attention: Contracts Manager
Facsimile: (212)350-9250 Facsimile: +44-(0)181-945-2316
and such notices shall be deemed to have been received ten (10) business days
after mailing if forwarded by mail, and the following business day if forwarded
by facsimile or by a recognised courier service for domestic delivery or
hand-delivered. The aforementioned address of either Party may be changed at any
time by giving fifteen (15) business days prior notice to the other Party in
accordance with the foregoing.
Furthermore, for the purpose of service of all notices, writs, or summons or
other documents in any suit at law, action or proceeding which Viatel may take
under the Agreement, and for all legal intent or purposes, Nortel elects
domicile at the aforementioned address.
9. APPLICABLE LAW
This Agreement shall be construed and governed by the laws of the State of
New York. Should any provisions of this Agreement be illegal or not enforceable
under such laws, it or they shall be considered severable and this Agreement and
its conditions shall remain in force and be binding upon the Parties as though
the said provisions had never been included.
The Courts of the State of New York in the County of New York or the Federal
courts of the United States of America for the Southern District of New York
shall have exclusive jurisdiction with respect to any litigation between the
parties. Each party submits to the Jurisdiction of such courts and submits to
the enforcement of any interim judgements issues by any such courts.
10. ASSIGNMENT
Either Party shall have the right to assign all or any part of its rights or
interests under this Agreement to any of its Affiliates without the consent of
the other Party. Such assignment to an Affiliate shall however be notified to
the other Party prior to execution. Otherwise, neither Party shall assign all or
any part of its rights or interest under this Agreement without the prior
written consent of the other Party.
11. PUBLIC RELEASE OF INFORMATION
The Parties shall obtain the written approval one of the other concerning
the content and timing of news releases, articles, brochures, advertisements,
prepared speeches and other information releases concerning this Agreement.
12. GUARANTEE
5
<PAGE>
Viatel absolutely, irrevocably and unconditionally guarantees the
performance of any Viatel Affiliate under this Agreement, which has been
authorised by Viatel, created hereunder, including without limitation, the
obligations of Viatel under Sections 6 and 19 of Annex A. Viatel hereby
expressly waives any
other diligence, protest or notice as well as any requirement that Nortel
exhaust any remedy or right against Viatel.
Nortel absolutely, irrevocably and unconditionally guarantees the
performance of any Nortel Affiliate under this Agreement. Nortel hereby
expressly waives any diligence, protest or notice as well as any requirement
that Viatel exhaust any remedy or right against Nortel.
13. ATTACHED DOCUMENTS
The following documents attached hereto form part hereof:
Annex A--General Conditions
Annex B--Schedule of Nortel Affiliates.
Annex C--Schedule of Prices.
Annex D--Specification and Statement of Work.
14. ENTIRE AGREEMENT
This Agreement including its Annexes sets forth the entire agreement and
understanding between the Parties with respect to the supply and acquisition of
Equipment and Services and the performance of the Work subsequent to the date
hereof. There are no understandings, representations, conditions, or warranties,
express or implied, statutory or otherwise, made or assumed by the Parties,
other than those expressly contained in this Agreement. Neither Party shall be
bound by any term, clause, provision or condition save as expressly provided
herein or as duly set forth on or subsequent to the date of this Agreement in
writing signed by duly authorised officers of the Parties.
IN WITNESS WHEREOF the Parties have executed these presents on the date first
herein above written.
VIATEL, INC. NORTEL PLC.
By: /s/ Sheldon M. Goldman By: /s/ Andre Van Baarle
6
<PAGE>
Name: Sheldon M. Goldman Name: Andre Van Baarle
Title: Senior Vice President Title: Vice-President
Date: June 29, 1998 Date: June 29, 1998
7
<PAGE>
ANNEX A
GENERAL CONDITIONS
8
<PAGE>
1 DEFINITIONS AND INTERPRETATION
1.1
The following expressions shall have the meanings hereby respectively
assigned to them:
1.1.1 "Acceptance"
Means in respect of the System and any Equipment and Software installed and
commissioned by Nortel when Acceptance Certificates shall have been issued in
respect of the System or any part thereof in accordance with the process
described in Clauses 15 and 16 hereof. "Accept" and "Accepted" shall be
interpreted accordingly.
1.1.2 "Acceptance Certificate"
Means the certificate to be issued when the System or any specified part
thereof has satisfactorily completed the appropriate Acceptance Tests, in
accordance with the requirements of Clauses 15 and 16 hereof.
1.1.3 "Acceptance Tests"
Means such tests described in Clauses 15 and 16 hereof carried out pursuant
to test specifications acceptable to Viatel, as may be undertaken by Nortel to
demonstrate to the reasonable satisfaction of the Parties that the System as
installed and commissioned on Site by Nortel or any integral part thereof
complies with the Specification and other provisions of the Agreement.
1.1.4 "Affiliate"
Means a Party's parent company, or any corporation or company effectively
controlled directly or indirectly by such parent company through the ownership
or control of shares or other securities in such corporation or company. Nortel
Dasa GmbH. of Germany shall for the purposes of this Agreement also be treated
as an Affiliate of Nortel.
1.1.5 "Amendment"
Means the written document executed by both Parties by which changes to the
Agreement are effected pursuant to Clause 3.
1.1.6 "Circe Network"
Means Viatel's SDH network to be installed in the United Kingdom, the
Netherlands, Belgium and France.
1.1.7 "Delivery Acceptance"
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<PAGE>
Means the Acceptance that takes place at the successful conclusion of
Delivery Acceptance Testing as set forth in Clause 15.1a) hereof.
1.1.8 "Equipment"
Means all items of hardware which Nortel is required to supply to meet the
requirements of this Agreement, including those items set forth in Annex C.
1.1.9 "Guaranteed Acceptance Date"
Means 22nd December 1998.
1.1.10 "Network Acceptance"
Means the Acceptance that takes place at the successful conclusion of
Network Acceptance Testing as set forth in Clause 15.1 c) hereof.
1.1.11 "Network Price"
Means the aggregate of all the Order Prices to be paid by Viatel and its
Affiliates to Nortel and its Affiliates hereunder.
1.1.12 "Nortel"
Means Nortel Plc. or its nominated Affiliate and includes its successors and
permitted assigns.
1.1.13 "Order"
Means the purchase order placed by Viatel's appropriate Affiliate on
Nortel's appropriate Affiliate for the provision of Works incorporating these
terms and Specifications and other documents contained herein.
1.1.14 "Order Price"
Means the price payable to Nortel by Viatel pursuant to the terms hereof for
items of Equipment, Software, the performance of the Work, or for Services as
detailed in Annex C.
1.1.15 "Provisional Acceptance"
Means the Acceptance that takes place at the successful conclusion of
Provisional Acceptance Testing as set forth in Clause 15.1 b) hereof.
1.1.16 "Services"
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<PAGE>
Means the factory testing, engineering, testing, installation and
commissioning of the Equipment and the testing of the Circe Network and other
services specified or reasonably inferred herein, including everything necessary
to complete the installation of the Equipment in accordance with the terms of
this Agreement.
1.1.17 "Site"
Means the land, buildings and environment where the System is to be
installed or the storage premises nominated by Viatel.
1.1.18 "Software"
Means the set of machine readable instructions provided by Nortel for the
control and operation of the System.
1.1.19 "Specification"
Means the Specification incorporated in Annex D.
1.1.20 "System"
Means the Equipment and Software integrated as necessary to meet the
requirements of the Specification and the other provisions of this Agreement.
1.1.21 "Viatel"
Means Viatel, Inc. or its nominated Affiliate and includes its successors
and permitted assigns.
1.1.22 "Work"
Means the (i) manufacture, factory testing, engineering, testing,
installation and commissioning of the Equipment and testing of the Circe Network
in accordance with all the terms and conditions contained in this Agreement,
(ii) all services necessary so that the System to be provided by Nortel
hereunder shall be in accordance with the Specification and the other
requirements of this Agreement, (iii) the provision of materials, test
equipment, labour and services as necessary for the terms of this Agreement,
(iv) complying with the Guaranteed Acceptance Date, (v) complying with the
Warranties during the applicable period, (vi) technical and other co-ordination
with Viatel and its Project Manager such that the System shall be compatible
with the Specifications, and (vii) all other matters specified as the
responsibility of Nortel in this Agreement.
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<PAGE>
1.2
Words indicating the singular only also include the plural and vice versa
where the context requires.
1.3
The heading of the terms shall not affect their interpretation.
1.4
The term "including" shall mean "including, without limitation".
1.5
Any reference to any gender includes the other gender.
1.6
Any reference to "hereof", "hereto", "herein", "hereunder" or any similar
term is a reference to this Agreement as a whole, and not to any particular
provision or part of this Agreement.
1.7
Any reference to "this Agreement" shall include all appendices, exhibits,
annexes and schedules thereto, and be a reference to such agreement, instrument,
contract or other document as amended, supplemented, modified, suspended,
restated or novated from time to time.
2. DOCUMENTS
All drawings, diagrams, Specifications and any other information to be
provided by one Party to the other Party hereunder shall be supplied in the
English language.
3. ALTERATION TO ORDER
3.1
All alterations, waivers, consents or amendments shall be mutually agreed
between Viatel and Nortel and recorded by means of formal Amendments executed by
Viatel and by Nortel before it is effective.
3.2
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<PAGE>
From time to time, Nortel may submit to Viatel a request for, or Viatel may
submit to Nortel a proposed amendment that may result in:
(a) an increase or decrease in a unit Price contained in Annex C or the
total Network Price set forth in Annex C ; or
(b) an adjustment in the in the Guaranteed Acceptance Date, the project
schedule, the progress schedule and any other dates related to Nortel's
performance set forth in the scope of work.
As a result of the following:
(i) any Force Majeure; or
(ii) any change in any applicable law occurring after the Effective
Date; or
(iii) an Optional Suspension.
Viatel's grant of an adjustment shall not constitute a waiver of any of its
rights in respect thereof.
4. PRICES
The prices stated herein shall be firm and fixed in United States of America
Dollars ($US) and shall not be varied except by formal Amendment as permitted
herein.
5. TAXES, DUTIES AND LEVIES
Responsibility for customs formalities, including administration charges,
duties, taxes and/or levies payable upon exportation or importation of Equipment
shall be apportioned in accordance with the INCOTERM shipping term set forth in
Clause 7 hereof or in Annex C. In any event, Viatel shall be responsible for the
payment of Value Added Tax as an addition to the Price at the rate prevailing at
the date of invoice.
6. TERMS OF PAYMENT
6.1
Invoices shall be submitted to Viatel by Nortel in accordance with the
following payment schedule:
6.1.1 Initial Networks.:
i) *
* The confidential portion has been omitted pursuant to a request for
confidential treatment and omitted material has been filed separately with
the Commission.
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ii) *
iii) *
iv) *
v) *
6.1.2 Additional Items
Payment of the Price for Additional Items shall become payable as follows:
6.1.2.1 In the case of supply and install items, the pattern of payment
shown in 6.1.1 above shall apply.
6.1.2.2 In the case of supply only items, the pattern of payments shown
below shall apply:
i) *
ii) *
6.2
Payment shall be made to Nortel by Viatel within * days of receipt of
Nortel's invoices. In the event that Nortel does not receive payment within *
calendar days of Viatel's receipt of an invoice, then Nortel reserves the
right to charge daily interest upon the outstanding sum(s) at a rate which is
* above the Midland Bank Base Lending Rate as then current until Nortel
receives payment in full.
6.3
Viatel may withhold payment where it can be shown to protect Viatel from
financial loss when:
a) defective work attributable to Nortel has not been remedied by
Nortel;
b) there are third party claims against the Equipment, or Nortel
pursuant to the terms hereof by virtue of the acts or omissions of Nortel;
c) Nortel has failed to obtain or maintain insurance as required by
Clause 20 hereof;
* The confidential portion has been omitted pursuant to a request for
confidential treatment and omitted material has been filed separately with
the Commission.
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e) Nortel has failed to provide all documentation required hereunder;
f) Nortel's failure to pay an amount of liquidated damages;
g) Nortel has failed to properly make payments for materials or labour;
h) Viatel can demonstrate that any prior progress payment exceeds the
amount that should have been payable based upon the Work actually performed.
In all cases, the amount withheld shall not exceed the amount which would
otherwise have become due to Nortel but for Nortel's shortcoming in meeting the
contractual obligation in question. When Nortel has rectified its shortcoming,
then the sum withheld shall be paid by Viatel forthwith.
7. DELIVERY TERMS, PROPERTY AND RISK
7.1
Nortel shall undertake delivery of Equipment in accordance with the Order
implementation plan upon Delivered Duty Paid (DDP) European Union destination
terms in accordance with INCOTERMS 1990 published by the International Chamber
of Commerce. Based upon the principle that at the date of this Agreement, sales
between member states of the European Union do not attract import duties or
sales taxes other than Value Added Tax, DDP terms will be subject to review
should this change.
7.2
A schedule of the Equipment shall be submitted to Viatel prior to delivery
to facilitate the checking of consignment contents by Viatel when deliveries are
made.
7.3
Risk of loss or damage to the Equipment shall pass upon Delivery Acceptance.
7.4
Equipment supplied pursuant to this Agreement shall become the property of
Viatel at the time that payment of the Price is made in full by Viatel to the
extent required pursuant to the terms of this Agreement.
7.5
Viatel shall not acquire any rights in respect of the Software other than
the licence with respect to Software granted in accordance with Clause 19.
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8. PERSONNEL
8.1
Both Parties shall appoint project managers who shall each:
a) be fully conversant with the requirements of this Agreement; and
b) speak English on a technical level; and
c) have full control of their employer's personnel, including any of
its subcontractors, engaged in the performance of this Agreement.
8.2
The Parties shall ensure that their staff assigned under the Agreement are
suited in skill, health and temperament to undertake their duties. Viatel may
object to and direct Nortel to remove within 24 hours any person employed by
Nortel and such person shall not be employed again for any portion of the
Services hereunder without the prior approval of Viatel.
9. SITE INFORMATION
9.1
When requested by Nortel to do so, Viatel shall supply Nortel with accurate
and complete information in all material respects concerning the Site and any
equipment and facilities installed thereon, and shall within a reasonable time
advise Nortel of any alterations thereto during this Agreement, and shall
prepare the Site for installation in accordance with Nortel's reasonable
requirements.
9.2
Nortel shall ensure that the System complies with all applicable legal
requirements. Nortel shall comply with all laws, codes, permits, standards
applicable in the countries, provinces and territories in which any part of the
Services are to be performed. Viatel shall not be responsible for any act or
omission of Nortel that violates any such law, code, permit or standard, and
Nortel shall indemnifiy and hold harmless Viatel from and against any and all
costs or liabilities arising in connection with any such violation by Nortel.
9.3
At Nortel's request Viatel shall afford Nortel access to the Site at all
reasonable times.
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10. LOCAL FACILITIES AND SERVICES
10.1
Viatel shall be responsible for the provision and costs of:
(i) any crane, slings or other specialist lifting or positioning
equipment required to facilitate installation activities on Site which
Viatel shall ensure are in safe working condition.
(ii) suitable office and temporary storage facilities for use by Nortel
or its sub-contractors until the date of Acceptance.
(iii) interpreters as may be necessary to assist Nortel's personnel in
their duties under the Order.
(iv) the fencing, lighting and guarding of the Site.
(v) the supply of telephone, fax, electricity, water and gas facilities
as may be required by Nortel
(vi) approaches to the Site suitable for Nortel's delivery vehicles.
10.2
Viatel shall obtain at its own expense, prior to the date scheduled for
commencement of any work on Site, all necessary consents, licences and permits
for the installation and use of the Equipment and Software which it shall be
required under applicable law to obtain as the owner of the Circe System.
11. PROGRESS
11.1
If Nortel at any time has reason to believe that the schedule for the
performance of the Work may be delayed Nortel shall promptly notify Viatel.
11.2
If and to the extent that the schedule for the performance of the Work is
delayed by reasons of Force Majeure the provisions of Clause 12 shall apply.
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11.3
If Viatel at any time has reason to believe that the date by which Viatel is
to provide Sites, equipment or services ready for use by Nortel may be delayed
Viatel shall promptly advise Nortel. In such event Nortel shall be granted an
extension of time to the Guaranteed Acceptance Date in an amount to be agreed by
the Parties, but no more than the amount of the delay directly attributable to
Viatel. The costs and expenses incurred which are directly attributable to the
delay (less any savings) shall be recoverable from Viatel and reflected in an
appropriate Amendment to be agreed between the Parties. Nortel shall use
reasonable efforts to mitigate such costs and expenses.
11.4
Viatel may suspend the Work, in whole or in part, at any time from time to
time, upon written notice to Nortel of such suspension, stating the effective
date and anticipated duration of the suspension ("Optional Suspension").
Promptly after receipt of such notice (and in any event, within 10 days), Viatel
shall suspend the Work to the extent specified. During any Optional Suspension,
Nortel shall:
a) place no further orders relating to the suspended Work;
b) shall negotiate reasonably with Viatel to reschedule the manufacture
of Equipment;
c) protect and care for all Work and Equipment already manufactured;
d) give Viatel copies of all outstanding orders with respect to the
Work, materials and services and take any action with respect to such orders
as Viatel may reasonably direct.
Thereafter, Nortel:
(i) shall resume performance of the Work within a reasonable period
after being directed to do so by Viatel; and
(ii) shall be entitled to an amendment to the Price and Guaranteed
Acceptance Date as agreed by the Parties.All additional costs incurred by
Nortel during an Optional Suspension shall be reimbursed to Nortel by
Viatel. Nortel shall use reasonable efforts to mitigate such costs and
expenses. Should the period of Optional Suspension continue for longer than
three months then Nortel shall be entitled to terminate the Agreement in
accordance with Clause 2 hereof.
12. FORCE MAJEURE
12.1
The following events shall constitute Force Majeure events:
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a) Any destruction of or damage to, or any interruption, suspension or
interference with, the Work caused by Acts of God, landslides, lightning,
earthquakes, volcanic eruptions, fires, explosions, floods, epidemic,
plague, acts of a public enemy, wars, revolutions, blockades, riots,
rebellions, sabotage, insurrections, civil disturbances or similar
occurrences;
b) Any national, regional or local labour strike, work stoppage,
boycott or walk-out occurring other than any such which pertains solely to
Nortel's employees, (collectively "Labour Disputes") so long as Nortel has
advised Viatel as far in advance as possible of such Labour Dispute; and
c) Any suspension, termination, interruption, denial or failure to
obtain or renew any permit that Viatel has the responsibility to obtain;
d) Any act or omission of Viatel, its agents or subcontractors;
provided that Force Majeure shall not include any of the forgoing to the
extent that:
(i) it is or was within Nortel's control, provided that the forgoing
does not imply that Nortel must meet any labour demand;
(ii) Nortel should have been able to prevent or provide against it by
exercise of reasonable diligence;
(iii) It does not result in a material delay to, and/or increase in cost
of, the Work to Nortel;
(iv) It results from the fault or negligence of Nortel, its affiliates,
subcontractors or vendors.
12.2
In the event that either Party shall be prevented from material performance
of its obligations hereunder by reason of an event of Force Majeure for a
continuous period of more than six months the other Party shall have the right
to terminate the Agreement by notice in writing whereupon the provisions of
Clauses 21.5 or 22.6 as appropriate shall apply.
12.3
Notwithstanding Clause 12.1, such cause shall not apply to Viatel's
obligation to make payments hereunder.
13. LIQUIDATED DAMAGES
19
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If Nortel, other than for reasons of Force Majeure or any acts or
omissions of Viatel, fails to achieve Network Acceptance by the Guaranteed
Acceptance Date set forth in the Agreement, and such failure is the direct
result of Nortel's failure to manufacture, factory system test, engineer,
install, test and commission the Equipment, then Nortel shall pay to Viatel
as liquidated damages for any loss or damage sustained by Viatel resulting
from delay in the period from the Guarantee Acceptance Date until actual date
of Acceptance of the System the sum of * for each complete day of delay up to
a maximum of * of the Price of the item in delay or portion of the System
which cannot be taken into commercial service, or such other amounts as may
be mutually agreed. Such sum shall be in full and final satisfaction of
Nortel's liability for delay.
14. FACTORY TESTS AND INSPECTIONS
14.1
Nortel shall be responsible for standard factory testing procedures which
will ensure that the Equipment meets the needs of the System and the other terms
and conditions of the Agreement.
14.2
Viatel shall have the right to inspect Nortel's manufacturing facility and
witness factory testing and shall give Nortel, in writing, 30 calendar days'
notice of its intention to visit Nortel's facility. In any event the factory
tests shall proceed according to Nortel's plan which has been disclosed to
Viatel in writing whether or not Viatel's representative is in attendance.
14.3
Viatel shall be responsible for all costs and expenses in respect of its
representative(s) visiting Nortel's facility. Whilst on Nortel's premises
Viatel's representative(s) shall comply with all Nortel's regulations in force.
15. ACCEPTANCE TESTING
15.1
Nortel shall submit for the approval of Viatel a comprehensive schedule of
tests in respect of Equipment and Software, which Nortel is to install and
commission on
* The confidential portion has been omitted pursuant to a request for
confidential treatment and omitted material has been filed separately with
the Commission.
20
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Site, designed to demonstrate that the System and each portion thereof will
perform in accordance with the criteria defined in the Specification and the
other terms and conditions hereof. These shall comprise the following:
a) Delivery Acceptance Testing--this will take place following
installation of the Equipment at each installation Site and its connection
to its specified electricity supply. It shall demonstrate that the Equipment
and Software so installed works correctly in isolate mode.
b) Provisional Acceptance Testing--this will be carried out on each
completed route or node following the connection of all of the Equipment and
Software within the said route or node already the subject of Delivery
Acceptance. It shall demonstrate that the System comprised in the route or
node can provide the facilities and services required for each route or node
and that the route or node will carry traffic all as set forth in the
Specification.
c) Network Acceptance Testing--this will be carried out on the completed
Circe Network following connection of all of the routes and nodes which have
passed Provisional Acceptance. It shall demonstrate that the total System
meets the technical requirements set forth in the Specification and the
other terms and conditions of this Agreement.
Viatel shall approve the schedule of tests, or reject on the grounds of
non-compliance with this Agreement, within 14 (fourteen) days of submission by
Nortel.
15.2
Nortel shall give Viatel 14 (fourteen) days notice in writing of the
commencement of the each of the tests of the System or any Equipment or Software
thereof so that Viatel can either make the necessary arrangements for its
representative to be present to witness such tests and approve results or advise
Nortel that its representative will not attend.
15.3
On satisfactory completion of each schedule of tests a comprehensive record
of results shall be provided by Nortel to Viatel. If Viatel has advised Nortel
in accordance with Clause 15.2 that its representative will not attend the
testing of any part or parts of the System, the schedule of results shall be
annotated to this effect by Nortel.
16. ACCEPTANCE
16.1
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Acceptance of each portion of the System as set out in Clause 15 above,
shall be signified by the appropriate Acceptance Certificate signed by Viatel
upon satisfactory completion of each of the Acceptance Tests, where applicable.
Viatel will not unreasonably refuse to sign an Acceptance Certificate on account
of minor omissions or defects which do not materially affect the use of the
System.
16.2
In the event that the Equipment and/or Software or any portion thereof is
put into use for commercial purposes by Viatel after completion of the
applicable tests but prior to its signature of an appropriate Acceptance
Certificate then the appropriate Acceptance shall be deemed to have taken place
upon the date of such putting into use for commercial purposes, unless within a
reasonable time Viatel have given written notice to Nortel of material
shortcomings in the Network as demonstrated by the Acceptance Tests or other
terms and conditions of this Agreement which it requires Nortel to rectify. Such
Acceptance shall be without prejudice to Nortel's obligations to complete the
System in accordance with the requirements of the Agreement.
16.3
The Network Acceptance Date shall occur when the Network Acceptance
Certificate has been issued as set forth above. It shall be a condition
precedent to the issuance of the Network Acceptance Certificate that the
following conditions have been satisfied:
a) an initial commissioning report has been delivered;
b) that the System has been completed in accordance with the
Specification and any other requirements of this Agreement as demonstrated
by the Acceptance Tests;
c) that the System has achieved all performance requirements during the
Network Acceptance Tests;
d) that the System is available for commercial operation as described in
the Specification;
e) that all liens relating to the system have been discharged and
releases given therefor, except for those which may apply by virtue of any
financing arrangement which Viatel are using to make the purchase.
f) that no unresolved event of default by Nortel exists;
g) that all requirements of the Agreement relating to the System, or
such smaller portion of the System as has, by the mutual agreement of the
Parties, undergone Acceptance (including all technical requirements) have
been fulfilled and all required documentation
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has been completed, in each case other than those that do not, by the
express terms hereof, have to be fulfilled on or completed prior to Network
Acceptance.
16.4
Final Acceptance shall occur when Viatel issues a Certificate of Final
Acceptance acknowledging that the following conditions have been satisfied:
a) A Network Acceptance Certificate has been issued;
b) the Warranty Period shall have expired and there shall be no
outstanding warranty claims thereunder;
c) all documentation required under the Agreement has been delivered;
d) there shall be no outstanding liens except for those which may apply
by virtue of any financing arrangement which Viatel are using to make the
purchase.
17. WARRANTY
17.1
The following shall be Nortel's general warranties ("General Warranties"):
a) The Work, including the Equipment and Software shall meet the
performance criteria set out in the Specification;
b) The Work shall be done in a workmanlike manner and in accordance
with:
(i) best practices of the telecommunications industry;
(ii) all applicable mandatory requirements of the law of the country
of deployment;
(iii) all other workmanship requirements specified in the Agreement.
(iv) be free from defects in design, materials, installations or
workmanship.
c) The Equipment shall be new and Equipment and Software (except where
expressly specified in the Agreement), fit for the purpose specified in the
Agreement, and shall meet the requirements of the Agreement; and
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d) The Equipment shall be:
(i) fit for the purpose of transmitting and receiving
telecommunications signals of the type specified in the Agreement;
(ii) capable of achieving the performance specification set out in
the Specification; and
(iii) built strictly in accordance with the Specification.
The warranty period ("Warranty Period") shall end:
a) * after the date of Network Acceptance but not more
than * from Delivery Acceptance except as provided in the next
sentence. If the date of Network Acceptance is delayed by longer than *
for reasons within Nortel's reasonable control then the start of the
Warranty Period shall be extended accordingly;
b) In the case of any additional items to the System, they will be
subject to * warranty from the date of their Installation;
c) In the case of item repaired or replaced under this warranty, they
will be subject to the outstanding balance of the Warranty Period or a
period of * after their replacement, whichever is longest.
Notwithstanding Network Acceptance having occurred, Nortel undertakes that
during the Warranty Period, it shall promptly repair or replace, at its option,
without charge to Viatel, the whole or any part of the System found to be faulty
by reason of the above causes. This Warranty shall not apply to consumable items
or routine maintenance materials.
17.2
Any parts found not to be compliant with the Warranty in Clause 17.1 shall
be returned by Viatel to Nortel's works, carriage and insurance to Nortel's
account, and the replacement or repaired parts supplied by Nortel shall be
delivered free of charge to the Site.
17.3
In the event of a major service-affecting failure during the Warranty Period
Nortel shall promptly:
(a) advise any corrective action that Viatel may be able to take on
Site; or
(b) despatch by express delivery such parts and/or Software as may be
necessary to restore the System; or
- -------------
* The confidential portion has been omitted pursuant to a request for
confidential treatment and omitted material has been filed separately
with the Commission.
24
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(c) send an appropriate specialist to Site and maintain him there at no
cost to Viatel for as long as is necessary to rectify the defect.
Nortel shall make every reasonable effort to minimise the period of time
that the System is out of service for repair and testing. For failures or any
situations that cause or risk an outage of the Circe System, Nortel shall
initiate a corrective action immediately after receipt of notice from Viatel.
Upon any breach of the Warranties contained herein during the applicable
Warranty Period, Viatel may, to the extent that Nortel has failed to (i) make
prompt repair or replacement, or (ii) minimise System out-of-service time for
testing and repair, arrange for the repair or replacement of any defective Work
and Nortel shall reimburse Viatel for the cost of repairs or replacements.
17.4
Nortel shall have no obligation to repair or replace Equipment and/or
Software which has been abused, used in unauthorised applications in accordance
as per Clause 19 hereof, altered, or used in conjunction with third party
material which is defective or of poor quality, or which has been operated and
maintained by Viatel with a material lack of compliance with Nortel's operating
and maintenance instructions. Nortel shall be entitled to charge Viatel for any
work performed in investigating and/or rectifying problems not covered by the
provisions of Clause 17.1.
17.5
EXCEPT AS PROVIDED BY APPLICABLE LAW, THE WARRANTY PROVIDED IN THIS CLAUSE
17 CONSTITUTES THE SOLE LIABILITY OF NORTEL IN RESPECT OF THOSE MATTERS TO WHICH
IT REFERS. ALL OTHER TERMS, CONDITIONS AND WARRANTIES EXPRESSES OR IMPLIED
WHETHER STATUTORIALLY OR OTHERWISE ARE HEREBY EXPRESSLY EXCLUDED TO THE EXTENT
THAT THE PARTIES CANNOT SO EXCLUDE AT APPLICABLE LAW.
18. SUPPORT
For a period of * years from the date of Network Acceptance Nortel
shall, if required by Viatel, supply any spare or replacement parts, or suitable
alternatives, for the Equipment at the prices then prevailing.
19. RIGHTS TO USE THE SOFTWARE
19.1
- -----------
* The confidential portion has been omitted pursuant to a request for
confidential treatment and omitted material has been filed separately
with the Commission.
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In consideration of Viatel paying to Nortel fees as specified in the Order,
Nortel grants to Viatel a permanent (subject to compliance with terms hereof)
non-exclusive non-transferable Right to Use licence in respect of the Software
and associated documentation delivered in accordance with this Agreement. Viatel
shall not duplicate nor modify nor disassemble nor decompile the Software except
as provided for under the Council of the European Communities Directive on the
legal protection of Computer Programs dated the 14th May 1991 (91/250/EEC) and
furthermore Viatel shall not divulge or otherwise make available any Software or
associated documentation to persons other than its employees without the prior
written consent of Nortel.
19.2
The Right to Use licence is granted on condition that the Software is
utilised for the operation and maintenance of the appropriate elements of the
System as detailed herein and for no other purpose and on no equipment other
than the Equipment without the prior written authorisation of Nortel.
19.3
This Software licence is granted only on those features identified in the
Software Specification and for which licence fees have been paid in accordance
with the Price Schedule. Viatel understands that Nortel may furnish within the
Software load features which Viatel is not granted a right to use by virtue of
not being included within the specified licence fees, but may nevertheless be
accessible to them. Where Viatel wishes to use such non-licensed features then
it shall be entitled to do so subject to payment of the applicable additional
Software right to use fee prior to commercial deployment of such non-licensed
Software feature or functionality.
19.4
The conditions of this Clause 19 shall survive the expiry or termination of
the Agreement except where termination is by virtue of breach of the software
licence..
20. LIABILITY AND INSURANCE
20.1
Each Party shall be indemnified by the other Party against any liability,
loss, claim and/or proceedings whatsoever in respect of personal injury to
and/or death of any person and damages to and/or loss of tangible property
howsoever arising pursuant to this Agreement or any breach thereof due to the
acts or omissions of such other Party, its servants or agents.
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20.2
Each Party's liability under 20.1 above, except in respect of death or
personal injury, whether in contract or tort or resulting from that Party's
proven negligent acts or omissions shall not exceed * for any one or more
separate claims having the same cause or attributable to the same event or
occurrence. Nortel shall at all times during the continuance of this
Agreement maintain insurance against such liabilities.
20.3
IN NO EVENT SHALL EITHER VIATEL OR NORTEL BE LIABLE, WHETHER AS THE RESULT
OF CONTRACT, TORT, INCLUDING, WITHOUT LIMITATION, NEGLIGENCE, OR
OTHERWISE HOWSOEVER ARISING, FOR ANY SPECIAL, INDIRECT OR CONSEQUENTIAL DAMAGES
OR FOR ANY DAMAGES ARISING FROM OR ATTRIBUTABLE TO FAILURE TO REALISE EXPECTED
SAVINGS, LOSS OF DATA, CAPITAL DOWNTIME COSTS, LOSS OF USE, LOSS OF GOODWILL OR
LOSS OF ANTICIPATED OR ACTUAL REVENUE OR PROFIT EVEN IF EITHER PARTY HAS BEEN
ADVISED OF THE POSSIBILITY OF ANY SUCH DAMAGES.
20.4
Subject to sub-clause 20.1 of this Agreement in the event that Nortel is
found liable for breach of Agreement its total liability shall not under any
circumstances exceed the Network Price for any breach or breaches.
20.5
20.5.1 Nortel shall insure the Works and keep each part thereof insured for
their full replacement value against all loss or damage from whatever cause
arising until a Delivery Acceptance Certificate has been issued. All monies
received under any such policy shall be applied in or towards the replacement
and repair of the Works lost, damaged or destroyed.
20.5.2 Nortel shall, prior to commencing work on the Site pursuant to the
Agreement, insure in an amount which shall not exceed * per event, against
his liability for damage or death or personal injury occurring before the
Works have achieved Acceptance, to any person (including any employee of
Nortel or Viatel) or to any property (other than property forming part of the
Works) due to or arising out of the execution of the Works.
20.5.3 Nortel shall insure and shall maintain insurance against his
liability for accidents or injuries to their employees.
20.5.4 If Nortel shall fail to effect and keep in force the insurances
specified herein then Viatel may effect and keep in force any such insurance and
pay such premium or premiums as may be necessary and from time to time deduct
the amount so paid by Viatel from any monies due or
* The confidential portion has been omitted pursuant to a request for
confidential treatment and omitted material has been filed separately with
the Commission.
27
<PAGE>
which may become due to, or recover the same as a debt due from Nortel.
Nortel shall furnish Viatel with documentary evidence as to the existence of
the above policies.
21. TERMINATION BY VIATEL
21.1
If Nortel shall be in material breach of the Agreement and Viatel shall so
inform Nortel by notice in writing and should the breach continue for more than
30 (thirty) days, or such longer period as may be specified by Viatel, after
such notice then Viatel may terminate the Agreement by notice in writing to
Nortel and may suspend further payment to Nortel pending resolution of financial
settlement pursuant to the conditions set out below.
21.2
Upon termination of the Agreement as provided in Clauses 21.1 or 23 Nortel
shall forthwith cease work and remove its labour from the Site. However Nortel
shall not remove from the Site any Equipment, the title of which has not passed
to Viatel, nor any of its installation tools or materials unless given
permission to do so in writing by Viatel. Viatel may elect to complete the
purchase of any such Equipment and use any such installation tools or materials
by paying Nortel the unpaid price of such Equipment and a fair price for use of
such tools and/or materials less any amount payable hereunder by Nortel to
Viatel.
21.3
Upon termination of the Agreement as provided for in Clauses 21.1 or 23,
Viatel may at its option;
21.3.1 reject the System and elect to retain such portion(s) of the System
as it may determine. Nortel shall refund any amount(s) of money to Viatel which
Viatel has paid in respect of the rejected items subject to the payment by
Viatel to the extent required to the for those items which Viatel elects to
retain (less any amount payable hereunder by Nortel to Viatel), and/or
21.3.2 continue work either by itself or by sub-contracting to a third party
to complete the System. Nortel shall if so required by Viatel to the extent
allowable by such agreements, within 14 (fourteen) calendar days of the date of
termination assign to Viatel without payment the benefit of any agreement for
supply of materials or goods and/or execution of any work for the purposes of
this Agreement. In the event that Viatel had already paid the price thereof to
Nortel, then Nortel shall promptly repay such sum(s) to Viatel. In the event of
the System being completed by Viatel or a third party and the total cost
incurred by Viatel in so completing the System being greater than that which
would
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have been incurred had the Agreement not been terminated then Nortel shall
pay to Viatel such excess up to a maximum of the Agreement Price.
21.4
In addition to any other powers to terminate the Agreement Viatel shall have
the power to terminate the Agreement in whole or in part for its own convenience
at any time by giving notice in writing to Nortel. In the event of Viatel
exercising such power of termination Nortel shall carry out Viatel's reasonable
instructions in regard to termination.
21.5
Upon termination by the Viatel in accordance with the provisions of Clauses
12 or 21.4 Nortel shall immediately cease work and Viatel shall pay to Nortel
forthwith upon termination the proportion of the Price applicable to the portion
or portions fully or substantially performed prior to the termination in
accordance with pricing set forth in Annex C.
21.6
Termination of this Agreement shall be without prejudice to the rights and
remedies of the parties accrued under the Agreement immediately prior to the
termination.
22. TERMINATION BY NORTEL
22.1
Nortel shall not have the right to terminate the Agreement except for
reasons of Force Majeure (Clause 12) or in the event of actual insolvency of
Viatel (Clause 23) or in respect of a material breach of the terms and
provisions of the Agreement by Viatel (Clause 22.2).
22.2
Without prejudice to the provisions of Clause 22.3, if Viatel shall be in
material breach of the Agreement and Nortel shall so inform Viatel by notice in
writing and should the breach continue for 30 (thirty) days after such notice,
or, in the case of failure by Viatel to pay any sum due to Nortel hereunder, 10
(ten) working days after such notice, Nortel shall without prejudice to any of
its other rights and remedies have the right to immediately terminate the
Agreement and claim from Viatel for any resulting loss or damage.
22.3
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Notwithstanding the provisions of Clause 22.2, in the event of a material
breach or violation of the Software Right to Use conditions (Clause 19) by
Viatel, Nortel shall inform Viatel by notice in writing and should the breach or
violation continue for more than 14 (fourteen) days after such notice Nortel may
terminate the Software Right to Use licence forthwith.
22.4
Upon termination of the Software Right to Use licence in accordance with
Clause 22.3 Nortel may, at its absolute discretion, either require Viatel to
return all copies of the Software and associated documentation within 14
(fourteen) days of the notice to do so, or permit Viatel the continued use of
the Software and associated documentation upon such terms as Nortel may direct.
22.5
Application of the provisions of Clause 22.4 shall be without prejudice to
Nortel's right to recover costs and/or damages for breach of contract by Viatel.
The sums to be paid by Viatel to Nortel in respect of such costs or damages
shall be as agreed by the Parties or as awarded by a court of competent
jurisdiction subject to the limitation set forth herein.
22.6
Upon termination by Nortel in accordance with the provisions of Clause 12.2,
Viatel shall pay to Nortel forthwith upon termination the proportion of the
Order Price applicable to the portion or portions of the Agreement which have
been delivered or are in progress of manufacture (unless such Equipment is sold
to a third party) plus the price of services performed prior to such
termination, together with any additional sums properly expended by Nortel in
regard to termination plus a reasonable rate of profit on the same (less any
savings). Nortel shall have a duty to mitigate damages hereunder.
23. INSOLVENCY AND LIQUIDATION
If either party shall commence any case, proceeding or other action under
any law relating to bankrupcy, insolvency, reorganisation or relief of debtors,
seeking to have an order for relief entered with respect to or seeking to
adjudicate it a bankrupt or insolvent or seeking reorganisation, arrangement,
adjustment, winding up, liquidation, dissolution, composition or other relief
with respect to it or its debts or seeking appointment of a receiver, trustee,
custodian, conservator or other similar official for it or for all or any
substantial part of its assets, or shall make a general assignment for the
benefit of its creditors or there is commenced against it any such action, case,
or proceeding, then the other Party shall be entitled to terminate the Agreement
and exercise any remedies provided for herein or in law.
30
<PAGE>
24. PATENTS AND COPYRIGHTS
24.1
Nortel shall defend and indemnify Viatel against all actions or claims for
infringement of patents, copyright, registered design or other intellectual
property rights arising by reason of Viatel's purchase, possession or use of the
System, the Software, or the Equipment provided that Viatel:
(i) gives notice to Nortel of any actual or threatened action or
claim within a reasonable time of becoming aware of the same; and
(ii) gives Nortel the sole conduct of the defence to any actual or
threatened action or claim in respect of an alleged intellectual property
infringement and does not at any time, following receiving a threat of or
notice of commencement of proceedings, admit liability or otherwise
attempt to settle or compromise the said action or claim except with the
prior written consent of Nortel; and
(iii) acts in accordance with the reasonable instructions of Nortel
and gives to Nortel such assistance as it shall reasonably require in
respect of the conduct of the said defence including, without prejudice
to the generality of the foregoing, the filing of all pleadings and other
court process and the provision of all relevant documents. In this
respect Nortel shall reimburse Viatel's reasonable out of pocket expenses
incurred in such an exercise.
24.2
In the event that it is held that there is an infringement as described in
Clause 24.1, Viatel agrees that Nortel's total liability in addition to the
payment of any losses or damage awarded against Viatel shall, at Nortel's
option, be either :
(i) to modify the System or part thereof so that it does not
infringe; or
(ii) to replace the System or part thereof with non-infringing
products; or
(iii) to procure for Viatel the right for Viatel to continue its use
of the System
In the event that Nortel cannot perform under (i), (ii) or (iii) above,
Viatel shall have the right to return the infringing Equipment and / or Software
to Nortel following written notice to Nortel, and in the event of such return,
neither Party shall have any further liabilities or obligations in respect of
such Equipment and Software, except that Nortel shall refund the Network Price
and take possession of the affected Equipment and Software.
24.3
This indemnity shall not extend to infringement resulting from use or
adoption by
31
<PAGE>
Nortel of Viatel's parts, designs or specific instructions or from use of the
System, the Equipment or the Software in a manner or for a purpose not stated
in the Specification or in the event that Viatel makes an admission,
following receiving a threat of or notice of commencement of proceedings,
which is or may be prejudicial to Nortel's case.
24.4
The copyright in all drawings, specifications and data issued by either
Party in connection with the Agreement shall remain the property of the issuing
Party but the other Party shall be entitled for all reasonable purposes in
connection with the Agreement to a personal, non-exclusive, non-transferable
licence, free of charge, to use such drawings, specifications and data. Use by
the other Party of such drawings, specifications and data for any other purpose
will entitle the issuing Party to terminate such license forthwith.
25. CONFIDENTIAL INFORMATION
Each Party shall keep confidential and shall disclose only to its own
employees and agents to the extent necessary for the performance of this
Agreement and shall not, without the other Party's prior written consent,
disclose to any third party any document or information acquired from the other
Party pursuant to the Agreement and such documents and information shall only be
used for the purpose of the Agreement provided however that nothing shall
prevent either Party from disclosing information which:
(a) is in its possession with the full right to disclose prior to
receiving it from the other Party or,
(b) is or later becomes public knowledge other than by a breach of this
Clause 25 or,
(c) it may independently receive from a third party with the full right
to disclose or,
(d) is developed independently of the information disclosed under this
Clause 25 or,
(e) is required by law to be disclosed,
subject, in the case of disclosure to agents, to the signature by such
agents of a confidentiality undertaking in favour of the party to whom any
relevant information belongs in terms equivalent to the provisions of this
clause 25.
26. GIFTS OR CONSIDERATIONS
Nortel shall not offer to give or agree to give to any person any gift or
consideration of any kind as an inducement or reward for doing or forbearing to
do or for having done or forborne to do any act in relation to the obtaining or
execution of this or any other agreement with Viatel or for showing or
forbearing to show favour or disfavour to any person in relation to this or any
other Agreement with Viatel.
32
<PAGE>
27. EXPORT AND RE-EXPORT
27.1
This Agreement is subject to the granting of all appropriate Governmental
export and where applicable, import licences prior to any deliveries. In the
event that such licences are not granted within 6 (six) months of signature of
the Agreement then the Agreement shall be declared null and void. In such event
neither Party shall have any claims against the other Party with respect to this
Agreement.
27.2
Regardless of any disclosure made by Viatel to Nortel of the ultimate
destination of the System or any part thereof, Viatel undertakes not to export,
either directly or indirectly, the System in whole or in part, nor any system
incorporating the System in whole or in part without having first obtained
clearance or a licence to re-export from the USA and/or Canadian Governments as
required under their respective re-export regulations.
28. CONSTRUCTION OF AGREEMENT
If any term or condition of the Agreement is held to be invalid under any
applicable statute or rule of law, it shall be deemed to be omitted from these
terms and conditions to the extent of such invalidity but the remainder of the
Agreement provisions shall continue in full force.
29. SUBCONTRACTING
Should any sub-contractor required by Nortel to perform the Works or parts
thereof which were not identified to Viatel prior to signature of the Agreement,
Nortel will submit details of the proposed sub-contractors for Viatel's approval
prior to the sub-contractors commencing any work. Any notification by Nortel of
such sub-contract not relieve Nortel from any liability or obligation under the
Agreement.
30. NON-WAIVER
The failure of either Party to give notice to the other of any breach or
non-fulfilment of any provision, term or Clause of this Order shall not
constitute a waiver thereof, nor shall the waiver of any breach or
non-fulfilment of any provision, term or Clause hereof constitute a waiver of
any other provision, term or Clause hereof.
31. SURVIVAL OF CONDITIONS
33
<PAGE>
The provisions of the following Clauses shall survive and shall continue in
full force and effect notwithstanding the expiration or earlier termination of
the Order:
Clause 17 relating to Warranty
Clause 19 relating to Right to Use Software
Clause 20 relating to Liability and Insurance
Clause 24 relating to Patents & Copyrights
Clause 25 relating to Confidential Information
Clause 27.2 relating to Re-export Controls
Clause 28.1 relating to Applicable Law
34
<PAGE>
ANNEX B
NORTEL TRADING ENTITIES FOR PURCHASE ORDER PLACEMENT.
UNITED KINGDOM
Nortel plc.,
Maidenhead Office Park,
Westacott Way,
Maidenhead,
Berkshire SL6 3QH
NETHERLANDS
Northern Telecom BV,
Siriusdreef 17-27,
2132 WT Hoofddorp,
FRANCE
Matra Nortel Communications SAS.,
33 quai Paul Doumer,
Paris la Defense,
92415 Courbevoie Cedex.
BELGIUM
Northern Telecom NV.,
Belgicastraat 4,
1930 Zaventum,
Brussels.
35
<PAGE>
ANNEX C
SCHEDULE OF PRICES
36
<PAGE>
Annex C
Schedule of Prices
Section a - Summary
PRICE SUMMARY
<TABLE>
<CAPTION>
ISSUE 1.0
SELLING
ABBREVIATED DESCRIPTION CODE PRICE EXT PRICE
- -------------------------------------------------------------------------------- ----------- ------------ -----------
<S> <C> <C> <C>
$US $US
1.0 SDH Nodes (includes Belgian ring)........................................... * *
2.0 Digital Cross Connects...................................................... * *
3.0 Network Management.......................................................... * *
4.0 Services (NetworkProject Management & Engineering, and Installation &
Commissioning)................................................................ * *
5.0 Installation Materials...................................................... * *
----- ------------ -----------
Total * *
</TABLE>
- ------------------------
* The confidential portion has been omitted pursuant to a request for
confidential treatment and omitted material has been filed seperately with
the commission.
37
<PAGE>
<TABLE>
<CAPTION>
VIATEL CIRCLE 1 CONTRACT
ANNEX C
SCHEDULE OF PRICES
SECTION B - UK
LONDON-WINTERTON R/A3 ISSUE 1.0
---------------------------------------- -----------------------------------------------------------------------------
ABBREVIATED DESCRIPTION CODE SELLING PRICE LON.-WIN. R/A3 EXT PRICE
---------------------------------------- -------------------------- --------------- ----------------- -------------
$US QTY $US
<S> <C> <C> <C> <C> <C>
1.0 TRANSMISSION EQUIPMENT
1.1 TN-16 4F
Core
OC192 SC060 SHELF CONTROLLER............ NTCA41BA * * *
MAINTENANCE INTERFACE................... NTCA42AA * * *
*** CABLE ASSY (MODEM ACCESS)........... NTCC8930 * * *
MESSAGE TRANSFER CARD................... NTCA48AA * * *
BREAKER MODULE.......................... NTCA40AA * * *
COMMON EQUIPMENT FILLER CARD (1 IN.).... NTCA59AA * * *
PARTITIONED OPC CONTROLLER.............. NTCA50AA *
*** CA ASSY (10 BASE T CROSSOVER)....... NT7E44KC *
PARTITIONED OPC STORAGE MODULE.......... NTCA51AA *
OPC FLASH CARTRIDGE..................... NTCA53AA *
PARTITIONED OPC IO MODULE............... NTCA52AA *
*** SM OPTICAL PATCHCORD 20M (66FT)
(SC-TUNED) SEE A06.................... NT7E46HD * * *
*** SM OPTICAL PATCHCORD 20M (66FT)
(SC-TUNED) W/MVOA..................... NT7E47HD * * *
TRANSPORT SHELF FILLER CARD............. NTCA49AA * * *
TRANSPORT SHELF SWITCH FILLER CARD...... NTCA49AB * * *
OC-192 OPTICAL AMPLIFIER W/ SERVICE
CHANNEL (SC).......................... NTCA11AC * * *
OC-192 OPTICAL AMPLIFIER (SC)........... NTCA11BC *
1625NM OPTICAL SERVICE CHANNEL (SC)..... NTCA11CC *
1550/1625NM WDM COUPLER (SC)............ NTCC13AC *
MOR RTU................................. NTCA62DA * * *
1.2 TN-16X
Core
STM16 LTE/ADM/RING SHELF--COST
REDUCED............................... NTFW50EA *
SH PROCESSOR FOR SDH (DCC HUBBING)...... NT7E20GC *
SH PROCESSOR(ETHERNET,SYNC MSG 24M)..... NT7E20KA *
Maintenance Interface Unit.............. NT7E23AA *
TN-16X Regenerator Subrack Kit.......... NTFW51AA *
OC-48/STM-16 Ring Demux................. NT8E06AB *
OC48 DWDM 1528.77 NM RING TX............ NT8E11DQ *
OC48 DWDM 1530.33 RING TRANSMITTER...... NT8E11FQ *
OC48 WDM 1533.47 RING TRANSMITTER....... NT8E11KQ *
OC48 WDM 1535.04 RING TRANSMITTER....... NT8E11MQ *
OC48 DWDM 1550.92 NM RING TRANSMITTER... NT8E11KR *
OC48 DWDM 1552.52 RING TRANSMITTER...... NT8E11MR *
OC48 DWDM 1555.75 NM RING TRANSMITTER... NT8E11RR *
OC48 DWDM 1557.36 RING TRANSMITTER...... NT8E11TR *
OC48 DWDM 1528.77 NM REGEN.............. NT8E13DJ *
OC48 DWDM 1530.33 REG/TX INTERFACE...... NT8E13FJ *
OC48 DWDM 1533.47 REG/TX INTERFACE...... NT8E13KJ *
OC48 DWDM 1535.04 REG/TX INTERFACE...... NT8E13MJ *
OC48 DWDM 1550.92 REG/TX INTERFACE...... NT8E13KK *
OC48 DWDM 1552.52 REG/TX INTERFACE...... NT8E13MK *
OC48 DWDM 1555.75 REG/TX INTERFACE...... NT8E13RK *
OC48 DWDM 1557.36 REG/TX INTERFACE...... NT8E13TK *
OC-48/STM16 LR SAW Rx Interface (SC).... NT8E02DD *
STM1o IR 1310 Tributary I/F (SC)........ NTFW11CD *
STM1 Optical Carrier Assembly........... NTFW19BA *
External synchronisation interface
carrier............................... NT7E19AA *
External Synchronisation Interface (2
MHz).................................. NTFW27AA *
*** OPTICAL PATCH CORD 20M (SC-SC)...... NT7E46FD *
*** OPTICAL PATCH CORD W/MVOA 20M
(SC-SC)............................... NT7E47FD *
KIT, SC OPTICAL CONNECTOR. INITIAL USE
NTN401AA.............................. NTN459SC *
*** FIBRE OPTIC CABLE ASSY STM1 DUPLEX
SC-SC 20M............................. NTFW5753 *
TN-16X Regenerator Software Licence
(Release 7)........................... NTQJ93GG *
TN-16X Shared Protection Ring Software
Licence (Release 7)................... NTQJ93HG *
Extra Traffic on Rings on Licence....... NTQJ93TB *
OPC with tape drive..................... NT7E24BC *
PHOENIX SUPERSET CODE FOR REL 7......... NTFW97HA *
*** CNET BAY/BAY CABLE 5.0M............. NT7E44JC *
TN-MS EC-16X Multi-user Licence......... NTQJ93CA *
TN-MS EC-16X Release 7 Licence.......... NTQJ93AG *
TN-MS EC-16X Release 7 Standby Licence.. NTQJ93BG *
FW TN-16X Rel 7 NTPS (CD-ROM)........... NTFW64AH *
1.3 ADVANCED OPTICS (DWDM)
DWDM FILTER MODULE SHELF ASSY--4
POS--ETSI............................. NTCE88BA *
DWDM COUPLER 8W,MB/DR W/O VOA,SC........ NTCA10GC *
</TABLE>
- ------------------------
* The confidential portion has been omitted pursuant to a request for
confidential treatment and omitted
material has been filed separately with the commission.
38
<PAGE>
<TABLE>
<CAPTION>
VIATEL CIRCLE 1 CONTRACT
ANNEX C
SCHEDULE OF PRICES
SECTION B - UK
<S> <C> <C> <C> <C> <C>
DWDM COUPLER 8W,DB/MR W/O VOA,SC........ NTCA10HC *
TN-1X
Core
TN-1X Synchronous Access Multiplexer
Subrack............................... 25GMU00750GWV *
Shelf Kit............................... 25SKM00750HFN *
TN-1X Installation Kit.................. 25SKM00807ABL *
Local Craft Access Panel Type 1......... 25UEP00750GXB *
Service Interface Module Type 10
(Misc)................................ 25UJJ00750GXC *
Service Interface Module Type 40
(LCAP)................................ 25UJJ00750GWX *
Subrack Cover Kit....................... 25SKM00750HFL *
Rack Mounting Kit for ETSI.............. 25SKM00019AAE *
Dummy Front Panel 1".................... 25RBN00021AAB *
Dummy SIA Panel 1"...................... 25RBN00021AAA *
Power Supply Unit....................... 25UPW00750HAY *
Subrack Control Unit.................... 25UMN00750GXD *
Payload Manager (mixed payload)......... NTKD10AA *
STM-1 G.957 L1.2 Optical Aggregate Port
Card (1550nm)......................... 25UTM00750HWH *
STM-1 G.957 L-1.1, S1.1 Optical
Tributary Card (1" wide).............. NTKD11AA *
***Optical patchcord 20m FC-FC.......... NT7E46BD *
Craft Access Terminal................... NTQJ09AA *
RS 232 Cable Assembly................... 25YCN00748AAA *
TN-1 CAT Release 12 Application
(3.5")................................ NTQJ35LA
TN-MS CA-1X Release 12 Licence.......... NTQJ91DL
Netscape Windows95 (Fastrack Server and
Navigator)............................ NTQJ81BA *
TN-1X Release 8 Software Download (from
CAT).................................. NTQJ36HA
HP B132, 128Mbytes RAM, 2Gb HD, DAT, CD,
N.Hem................................. NTQJ01FA *
TN-MS EC-1 Release 12 (DAT)............. NTQJ30LA
Netscape for UNIX (Fastrack Server and
Navigator)............................ NTQJ81AA *
TN-1X Release 8 software download (from
EC)................................... NTQJ31HA
TN-1C Release 3 Software kit (disk &
tape)................................. NTFT81CA *
TN-MS EC-1 Release 12 Licence for
TN-1X................................. NTQJ91AL *
TN-MS EC-1 Release 12 Standby Licence... NTQJ91BL *
TN-MS EC-1 Multi-user Licence........... NTQJ91CA *
X terminal software on DAT.............. NTQJ05JB *
TN-1X Rel 8 NTPs (CD-ROM MAC)........... 32HSC00456VEC *
TN-1C
Core
TN-1C 8x2/16x2 turbo ADM (1550nm L1.2).. NTFT52BI *
AC/DC Power Unit........................ NTFT21AA *
12V Battery............................. NTFT24AA *
***BT43/5F & 3002 cable assy 20m........ 32YCN00750CAA *
***Optical patchcord 20m FC-FC.......... NT7E46BD *
TN-MS EC-1 Release 12 Licence for
TN-1C................................. NTQJ91FL *
Craft Access Terminal................... NTQJ09AA *
CAT Cable Assembly...................... NTFT15AC *
TN-1C Release 3 Software kit (disk &
tape)................................. NTFT81CA *
TN-1 CAT Release 12 Application
(3.5")................................ NTQJ35LA
Netscape Windows95 (Fastrack Server and
Navigator)............................ NTQJ81BA *
TN-1C Release 3 handbook CD-ROM......... NTFT66CA *
1.4 DXC *
256 Port Cross Connect (MSH84).......... MSH84
STM-1 Optical card......................
16 x 2Mbit/s Port Unit..................
MV-36 Element controller................ MV-36
Managed Object Agent (MOA)..............
1.5 TN-MS INM *
Hardware
HP C200 workstation, north & south
hemisphere............................ NTQJ01GC
NRM Release 6 Software and Handbooks.... NTQJ12FA
NRM Release 6 Feature Profile Tape--Core
+ IM + PM + CM........................ NTQJ10FK
TN-MS NRM (Rel6) Alarm surveillance
Licence............................... NTQJ90AF
TN-MS NRM (Rel6) Electronic Software
Delivery Licence...................... NTQJ90BF
TN-MS NRM (Rel6) Inventory Manager
Licence............................... NTQJ90DF
TN-MS NRM (Rel6) Perf. Mon.
Consolidation Licence................. NTQJ90EF
TN-MS NRM (Rel6) Connection Management
Licence............................... NTQJ90FF
TN-MS NRM (Rel6) Software Management
User Guide............................ NTQJ19FT
TN-MS NRM (Rel6) Inventory Management
User Guide............................ NTQJ19FX
TN-MS NRM (Rel6) Performance Management
User Guide............................ NTQJ19FW
TN-MS NRM (Rel6) Connection Management
User Guide............................ NTQJ19FV
Router 2501 OSI......................... NTJM01BA
Router 2514 OSI......................... NTJM01KA
DCN RConfig "P" 2514 ent. 0 tunnels,
Ser: 2 L2,0 L1 CPC Allocated:
A0741950.............................. NTJM9914
DCN RConfig "P" 2514 ent. 1 tunnel, Ser:
1 L2,1 L1 CPC Allocated: A0741941..... NTJM9912
HS modem SP-1-AR,AC..................... NTJM01SA
Shelf Cantilever 19in mounting.......... P0878672
</TABLE>
- ------------------------
* The confidential portion has been omitted pursuant to a request for
confidential treatment and omitted
material has been filed separately with the commission.
39
<PAGE>
<TABLE>
<CAPTION>
VIATEL CIRCLE 1 CONTRACT
ANNEX C
SCHEDULE OF PRICES
SECTION B - UK
<S> <C> <C> <C> <C> <C>
Transceiver 10BaseT..................... NTJM01VA
Ethernet 10BaseT Transceiver............ A0383333
Baystack 101 10baseT hub 12 port RJ45
250VAC................................ NTJM02PA
***Cable Assy LAN RJ45--RJ45 h/e........ 32YCN00727AFA
***Ethernet kit for OPC hub
(20m,OC-48)........................... NT7E44JE
1.6 NETWORK SYNCHRONISATION *
DCD-521C................................
DCD-Cs ETSI Standalone Cesium PRC....... 990-43100-02
DCD-LPR Shelf GPS Applications.......... 990-44100-12
GPS Timing Kit E1 (Rubidium or Quartz).. 990-44140-14
Blank Unit LPR.......................... 090-44198-01
LOU-2 Dual oscillator................... 090-44145-02
DCD-521/C ETSI Shelf Master/Expansion... 990-44210-01
MRC-EA/Input card 2MHz/2Mb/s, 4 inputs.. 090-44010-06
TNCE Clock card rubidium................ 090-44017-02
TNC Clock card transit node OCXO........ 090-44020-02
TO-EA Output card 2MHz/2Mb/s 10
outputs............................... 090-44029-01
MIS Maint i'f analysis/config/remote.... 990-44018-14
Blank Panel 1 TO slot wide.............. 074-00208-01
Timing Input Module MRC SMB............. 990-45107-02
Timing Output Module SMB,1:1 prot....... 990-45105-07
1.7 EQUIPMENT PRACTICE
Mechanical bay assy ETSI (no expansion
sh)................................... NTCE89AA * * *
NTE-STM16 Rack (2200 x 600 x 300)--cost
reduced............................... NTFW70EA *
TN-16X Installation Kit................. 25SKM00807ABM *
REGEN Rack Assy......................... NTFW71AA *
Rack side cover L/H u/o NTFW70AA........ P0725173 *
Rack side cover R/H u/o NTFW70AA........ P0725175 *
Mechanical assembly, rack, 42U.......... A0726263
Distribution block 8 way left hand cable
entry................................. A0729317
Distribution block 8 way right hand
cable entry........................... A0729318
ETSI Rack, 220cm, without side panels... NTKD70AA *
NT ETSI Rack Standard Inst.Kit.......... 25SKM00807ABE *
ETSI Rack 48V DC Distrib Panel with Rack
Alarm Unit............................ 25SKM00807AAN *
1.8 ADDITIONAL ITEMS
OC-192 REL 1.4 SUPERSET CUSTOMER
LOADS................................. ***PLM_TN-16X_NC_1
AC Power Cable Assembly................. PLM_Source_locally *
***Cable Assy, RJ45 crossover........... 32YCN01094AFA *
*** OPTICAL PATCHCORD 20M SC-SC......... PLM_Advanced Optics_NC_3 *
TOTAL EXTENDED EQUIPMENT PRICE.......... *
2.0 INSTALLATION & COMMISSIONING............ * *
Installation Materials.................. *
-----
TOTAL EXTENDED PRICE.................... *
-----
-----
</TABLE>
- ------------------------
* The confidential portion has been omitted pursuant to a request for
confidential treatment and omitted
material has been filed separately with the commission.
40
<PAGE>
<TABLE>
<CAPTION>
VIATEL CIRCLE 1 CONTRACT
ANNEX C
SCHEDULE OF PRICES
SECTION B - UK
<S> <C> <C> <C> <C> <C>
LONDON-WINTERTON R/A2 ISSUE 1.0
---------------------------------------- -----------------------------------------------------------------------------
<CAPTION>
ABBREVIATED DESCRIPTION CODE SELLING PRICE LON.-WIN. R/A2 EXT PRICE
---------------------------------------- -------------------------- --------------- ----------------- -------------
$US QTY $US
<S> <C> <C> <C> <C> <C>
1.0 TRANSMISSION EQUIPMENT
1.1 TN-16 4F
Core
OC192 SC060 SHELF CONTROLLER............ NTCA41BA * * *
MAINTENANCE INTERFACE................... NTCA42AA * * *
*** CABLE ASSY (MODEM ACCESS)........... NTCC8930 * * *
MESSAGE TRANSFER CARD................... NTCA48AA * * *
BREAKER MODULE.......................... NTCA40AA * * *
COMMON EQUIPMENT FILLER CARD (1 IN.).... NTCA59AA * * *
PARTITIONED OPC CONTROLLER.............. NTCA50AA *
*** CA ASSY (10 BASE T CROSSOVER)....... NT7E44KC *
PARTITIONED OPC STORAGE MODULE.......... NTCA51AA *
OPC FLASH CARTRIDGE..................... NTCA53AA *
PARTITIONED OPC IO MODULE............... NTCA52AA *
*** SM OPTICAL PATCHCORD 20M (66FT)
(SC-TUNED) SEE A06.................... NT7E46HD * * *
*** SM OPTICAL PATCHCORD 20M (66FT)
(SC-TUNED) W/MVOA..................... NT7E47HD * * *
TRANSPORT SHELF FILLER CARD............. NTCA49AA * * *
TRANSPORT SHELF SWITCH FILLER CARD...... NTCA49AB * * *
OC-192 OPTICAL AMPLIFIER W/ SERVICE
CHANNEL (SC).......................... NTCA11AC * * *
OC-192 OPTICAL AMPLIFIER (SC)........... NTCA11BC *
1625NM OPTICAL SERVICE CHANNEL (SC)..... NTCA11CC *
1550/1625NM WDM COUPLER (SC)............ NTCC13AC *
MOR RTU................................. NTCA62DA * * *
1.2 TN-16X
Core
STM16 LTE/ADM/RING SHELF--COST
REDUCED............................... NTFW50EA *
SH PROCESSOR FOR SDH (DCC HUBBING)...... NT7E20GC *
SH PROCESSOR(ETHERNET,SYNC MSG 24M)..... NT7E20KA *
Maintenance Interface Unit.............. NT7E23AA *
TN-16X Regenerator Subrack Kit.......... NTFW51AA *
OC-48/STM-16 Ring Demux................. NT8E06AB *
OC48 DWDM 1528.77 NM RING TX............ NT8E11DQ *
OC48 DWDM 1530.33 RING TRANSMITTER...... NT8E11FQ *
OC48 WDM 1533.47 RING TRANSMITTER....... NT8E11KQ *
OC48 WDM 1535.04 RING TRANSMITTER....... NT8E11MQ *
OC48 DWDM 1550.92 NM RING TRANSMITTER... NT8E11KR *
OC48 DWDM 1552.52 RING TRANSMITTER...... NT8E11MR *
OC48 DWDM 1555.75 NM RING TRANSMITTER... NT8E11RR *
OC48 DWDM 1557.36 RING TRANSMITTER...... NT8E11TR *
OC48 DWDM 1528.77 NM REGEN.............. NT8E13DJ *
OC48 DWDM 1530.33 REG/TX INTERFACE...... NT8E13FJ *
OC48 DWDM 1533.47 REG/TX INTERFACE...... NT8E13KJ *
OC48 DWDM 1535.04 REG/TX INTERFACE...... NT8E13MJ *
OC48 DWDM 1550.92 REG/TX INTERFACE...... NT8E13KK *
OC48 DWDM 1552.52 REG/TX INTERFACE...... NT8E13MK *
OC48 DWDM 1555.75 REG/TX INTERFACE...... NT8E13RK *
OC48 DWDM 1557.36 REG/TX INTERFACE...... NT8E13TK *
OC-48/STM16 LR SAW Rx Interface (SC).... NT8E02DD *
STM1o IR 1310 Tributary I/F (SC)........ NTFW11CD *
STM1 Optical Carrier Assembly........... NTFW19BA *
External synchronisation interface
carrier............................... NT7E19AA *
External Synchronisation Interface (2
MHz).................................. NTFW27AA *
*** OPTICAL PATCH CORD 20M (SC-SC)...... NT7E46FD *
*** OPTICAL PATCH CORD W/MVOA 20M
(SC-SC)............................... NT7E47FD *
KIT, SC OPTICAL CONNECTOR. INITIAL USE
NTN401AA.............................. NTN459SC *
*** FIBRE OPTIC CABLE ASSY STM1 DUPLEX
SC-SC 20M............................. NTFW5753 *
TN-16X Regenerator Software Licence
(Release 7)........................... NTQJ93GG *
TN-16X Shared Protection Ring Software
Licence (Release 7)................... NTQJ93HG *
Extra Traffic on Rings on Licence....... NTQJ93TB *
OPC with tape drive..................... NT7E24BC *
PHOENIX SUPERSET CODE FOR REL 7......... NTFW97HA *
*** CNET BAY/BAY CABLE 5.0M............. NT7E44JC *
TN-MS EC-16X Multi-user Licence......... NTQJ93CA *
TN-MS EC-16X Release 7 Licence.......... NTQJ93AG *
TN-MS EC-16X Release 7 Standby Licence.. NTQJ93BG *
FW TN-16X Rel 7 NTPS (CD-ROM)........... NTFW64AH *
1.3 ADVANCED OPTICS (DWDM)
Core
DWDM FILTER MODULE SHELF ASSY--4
POS--ETSI............................. NTCE88BA *
DWDM COUPLER 8W,MB/DR W/O VOA,SC........ NTCA10GC *
</TABLE>
- ------------------------
* The confidential portion has been omitted pursuant to a request for
confidential treatment and omitted
material has been filed separately with the commission.
41
<PAGE>
<TABLE>
<CAPTION>
VIATEL CIRCLE 1 CONTRACT
ANNEX C
SCHEDULE OF PRICES
SECTION B - UK
<S> <C> <C> <C> <C> <C>
DWDM COUPLER 8W,DB/MR W/O VOA,SC........ NTCA10HC *
TN-1X
Core
TN-1X Synchronous Access Multiplexer
Subrack............................... 25GMU00750GWV *
Shelf Kit............................... 25SKM00750HFN *
TN-1X Installation Kit.................. 25SKM00807ABL *
Local Craft Access Panel Type 1......... 25UEP00750GXB *
Service Interface Module Type 10
(Misc)................................ 25UJJ00750GXC *
Service Interface Module Type 40
(LCAP)................................ 25UJJ00750GWX *
Subrack Cover Kit....................... 25SKM00750HFL *
Rack Mounting Kit for ETSI.............. 25SKM00019AAE *
Dummy Front Panel 1".................... 25RBN00021AAB *
Dummy SIA Panel 1"...................... 25RBN00021AAA *
Power Supply Unit....................... 25UPW00750HAY *
Subrack Control Unit.................... 25UMN00750GXD *
Payload Manager (mixed payload)......... NTKD10AA *
STM-1 G.957 L1.2 Optical Aggregate Port
Card (1550nm)......................... 25UTM00750HWH *
STM-1 G.957 L-1.1, S1.1 Optical
Tributary Card (1" wide).............. NTKD11AA *
***Optical patchcord 20m FC-FC.......... NT7E46BD *
Craft Access Terminal................... NTQJ09AA *
RS 232 Cable Assembly................... 25YCN00748AAA *
TN-1 CAT Release 12 Application
(3.5")................................ NTQJ35LA
TN-MS CA-1X Release 12 Licence.......... NTQJ91DL
Netscape Windows95 (Fastrack Server and
Navigator)............................ NTQJ81BA *
TN-1X Release 8 Software Download (from
CAT).................................. NTQJ36HA
HP B132, 128Mbytes RAM, 2Gb HD, DAT, CD,
N.Hem................................. NTQJ01FA *
TN-MS EC-1 Release 12 (DAT)............. NTQJ30LA
Netscape for UNIX (Fastrack Server and
Navigator)............................ NTQJ81AA *
TN-1X Release 8 software download (from
EC)................................... NTQJ31HA
TN-1C Release 3 Software kit (disk &
tape)................................. NTFT81CA *
TN-MS EC-1 Release 12 Licence for
TN-1X................................. NTQJ91AL *
TN-MS EC-1 Release 12 Standby Licence... NTQJ91BL *
TN-MS EC-1 Multi-user Licence........... NTQJ91CA *
X terminal software on DAT.............. NTQJ05JB *
TN-1X Rel 8 NTPs (CD-ROM MAC)........... 32HSC00456VEC *
TN-1C
Core
TN-1C 8x2/16x2 turbo ADM (1550nm L1.2).. NTFT52BI *
AC/DC Power Unit........................ NTFT21AA *
12V Battery............................. NTFT24AA *
***BT43/5F & 3002 cable assy 20m........ 32YCN00750CAA *
***Optical patchcord 20m FC-FC.......... NT7E46BD *
TN-MS EC-1 Release 12 Licence for
TN-1C................................. NTQJ91FL *
Craft Access Terminal................... NTQJ09AA *
CAT Cable Assembly...................... NTFT15AC *
TN-1C Release 3 Software kit (disk &
tape)................................. NTFT81CA *
TN-1 CAT Release 12 Application
(3.5")................................ NTQJ35LA
Netscape Windows95 (Fastrack Server and
Navigator)............................ NTQJ81BA *
TN-1C Release 3 handbook CD-ROM......... NTFT66CA *
1.4 DXC *
256 Port Cross Connect (MSH84).......... MSH84
STM-1 Optical card......................
16 x 2Mbit/s Port Unit..................
MV-36 Element controller................ MV-36
Managed Object Agent (MOA)..............
1.5 TN-MS INM *
Hardware
HP C200 workstation, north & south
hemisphere............................ NTQJ01GC
NRM Release 6 Software and Handbooks.... NTQJ12FA
NRM Release 6 Feature Profile Tape--Core
+ IM + PM + CM........................ NTQJ10FK
TN-MS NRM (Rel6) Alarm surveillance
Licence............................... NTQJ90AF
TN-MS NRM (Rel6) Electronic Software
Delivery Licence...................... NTQJ90BF
TN-MS NRM (Rel6) Inventory Manager
Licence............................... NTQJ90DF
TN-MS NRM (Rel6) Perf. Mon.
Consolidation Licence................. NTQJ90EF
TN-MS NRM (Rel6) Connection Management
Licence............................... NTQJ90FF
TN-MS NRM (Rel6) Software Management
User Guide............................ NTQJ19FT
TN-MS NRM (Rel6) Inventory Management
User Guide............................ NTQJ19FX
TN-MS NRM (Rel6) Performance Management
User Guide............................ NTQJ19FW
TN-MS NRM (Rel6) Connection Management
User Guide............................ NTQJ19FV
Router 2501 OSI......................... NTJM01BA
Router 2514 OSI......................... NTJM01KA
DCN RConfig "P" 2514 ent. 0 tunnels,
Ser: 2 L2,0 L1 CPC Allocated:
A0741950.............................. NTJM9914
DCN RConfig "P" 2514 ent. 1 tunnel, Ser:
1 L2,1 L1 CPC Allocated: A0741941..... NTJM9912
HS modem SP-1-AR,AC..................... NTJM01SA
Shelf Cantilever 19in mounting.......... P0878672
</TABLE>
- ------------------------
* The confidential portion has been omitted pursuant to a request for
confidential treatment and omitted
material has been filed separately with the commission.
42
<PAGE>
<TABLE>
<CAPTION>
VIATEL CIRCLE 1 CONTRACT
ANNEX C
SCHEDULE OF PRICES
SECTION B - UK
<S> <C> <C> <C> <C> <C>
Transceiver 10BaseT..................... NTJM01VA
Ethernet 10BaseT Transceiver............ A0383333
Baystack 101 10baseT hub 12 port RJ45
250VAC................................ NTJM02PA
***Cable Assy LAN RJ45--RJ45 h/e........ 32YCN00727AFA
***Ethernet kit for OPC hub
(20m,OC-48)........................... NT7E44JE
1.6 NETWORK SYNCHRONISATION *
DCD-521C
DCD-Cs ETSI Standalone Cesium PRC....... 990-43100-02
DCD-LPR Shelf GPS Applications.......... 990-44100-12
GPS Timing Kit E1 (Rubidium or Quartz).. 990-44140-14
Blank Unit LPR.......................... 090-44198-01
LOU-2 Dual oscillator................... 090-44145-02
DCD-521/C ETSI Shelf Master/Expansion... 990-44210-01
MRC-EA/Input card 2MHz/2Mb/s, 4 inputs.. 090-44010-06
TNCE Clock card rubidium................ 090-44017-02
TNC Clock card transit node OCXO........ 090-44020-02
TO-EA Output card 2MHz/2Mb/s 10
outputs............................... 090-44029-01
MIS Maint i'f analysis/config/remote.... 990-44018-14
Blank Panel 1 TO slot wide.............. 074-00208-01
Timing Input Module MRC SMB............. 990-45107-02
Timing Output Module SMB,1:1 prot....... 990-45105-07
1.7 EQUIPMENT PRACTICE
Mechanical bay assy ETSI (no expansion
sh)................................... NTCE89AA * * *
NTE-STM16 Rack (2200 x 600 x 300)--cost
reduced............................... NTFW70EA *
TN-16X Installation Kit................. 25SKM00807ABM *
REGEN Rack Assy......................... NTFW71AA *
Rack side cover L/H u/o NTFW70AA........ P0725173 *
Rack side cover R/H u/o NTFW70AA........ P0725175 *
Mechanical assembly, rack, 42U.......... A0726263
Distribution block 8 way left hand cable
entry................................. A0729317
Distribution block 8 way right hand
cable entry........................... A0729318
ETSI Rack, 220cm, without side panels... NTKD70AA *
NT ETSI Rack Standard Inst.Kit.......... 25SKM00807ABE *
ETSI Rack 48V DC Distrib Panel with Rack
Alarm Unit............................ 25SKM00807AAN *
1.8 ADDITIONAL ITEMS
OC-192 REL 1.4 SUPERSET CUSTOMER
LOADS................................. ***PLM_TN-16X_NC_1
AC Power Cable Assembly................. PLM_Source_locally *
***Cable Assy, RJ45 crossover........... 32YCN01094AFA *
*** OPTICAL PATCHCORD 20M SC-SC......... PLM_Advanced Optics_NC_3 *
TOTAL EXTENDED EQUIPMENT PRICE *
2.0 INSTALLATION & COMMISSIONING............ * * * *
Installation Materials.................. *
-----
TOTAL EXTENDED PRICE.................... *
-----
-----
</TABLE>
- ------------------------
* The confidential portion has been omitted pursuant to a request for
confidential treatment and omitted
material has been filed separately with the commission.
43
<PAGE>
<TABLE>
<CAPTION>
VIATEL CIRCLE 1 CONTRACT
ANNEX C
SCHEDULE OF PRICES
SECTION B - UK
LONDON-WINTERTON R/A1 ISSUE 1.0
---------------------------------------- ------------------------------------------------------------------------------
ABBREVIATED DESCRIPTION CODE SELLING PRICE LON.-WIN. R/A3 EXT PRICE
---------------------------------------- --------------------------- --------------- ----------------- -------------
$US QTY $US
<S> <C> <C> <C> <C> <C>
1.0 TRANSMISSION EQUIPMENT
1.1 TN-16 4F
Core
OC192 SC060 SHELF CONTROLLER............ NTCA41BA * * *
MAINTENANCE INTERFACE................... NTCA42AA * * *
*** CABLE ASSY (MODEM ACCESS)........... NTCC8930 * * *
MESSAGE TRANSFER CARD................... NTCA48AA * * *
BREAKER MODULE.......................... NTCA40AA * * *
COMMON EQUIPMENT FILLER CARD (1 IN.).... NTCA59AA * * *
PARTITIONED OPC CONTROLLER.............. NTCA50AA *
*** CA ASSY (10 BASE T CROSSOVER)....... NT7E44KC *
PARTITIONED OPC STORAGE MODULE.......... NTCA51AA *
OPC FLASH CARTRIDGE..................... NTCA53AA *
PARTITIONED OPC IO MODULE............... NTCA52AA *
*** SM OPTICAL PATCHCORD 20M (66FT)
(SC-TUNED) SEE A06.................... NT7E46HD * * *
*** SM OPTICAL PATCHCORD 20M (66FT)
(SC-TUNED) W/MVOA..................... NT7E47HD * * *
TRANSPORT SHELF FILLER CARD............. NTCA49AA * * *
TRANSPORT SHELF SWITCH FILLER CARD...... NTCA49AB * * *
OC-192 OPTICAL AMPLIFIER W/ SERVICE
CHANNEL (SC).......................... NTCA11AC *
OC-192 OPTICAL AMPLIFIER (SC)........... NTCA11BC *
1625NM OPTICAL SERVICE CHANNEL (SC)..... NTCA11CC *
1550/1625NM WDM COUPLER (SC)............ NTCC13AC *
MOR RTU................................. NTCA62DA * * *
1.2 TN-16X
Core
STM16 LTE/ADM/RING SHELF--COST
REDUCED............................... NTFW50EA *
SH PROCESSOR FOR SDH (DCC HUBBING)...... NT7E20GC *
SH PROCESSOR(ETHERNET,SYNC MSG 24M)..... NT7E20KA *
Maintenance Interface Unit.............. NT7E23AA *
TN-16X Regenerator Subrack Kit.......... NTFW51AA *
OC-48/STM-16 Ring Demux................. NT8E06AB *
OC48 DWDM 1528.77 NM RING TX............ NT8E11DQ *
OC48 DWDM 1530.33 RING TRANSMITTER...... NT8E11FQ *
OC48 WDM 1533.47 RING TRANSMITTER....... NT8E11KQ *
OC48 WDM 1535.04 RING TRANSMITTER....... NT8E11MQ *
OC48 DWDM 1550.92 NM RING TRANSMITTER... NT8E11KR *
OC48 DWDM 1552.52 RING TRANSMITTER...... NT8E11MR *
OC48 DWDM 1555.75 NM RING TRANSMITTER... NT8E11RR *
OC48 DWDM 1557.36 RING TRANSMITTER...... NT8E11TR *
OC48 DWDM 1528.77 NM REGEN.............. NT8E13DJ *
OC48 DWDM 1530.33 REG/TX INTERFACE...... NT8E13FJ *
OC48 DWDM 1533.47 REG/TX INTERFACE...... NT8E13KJ *
OC48 DWDM 1535.04 REG/TX INTERFACE...... NT8E13MJ *
OC48 DWDM 1550.92 REG/TX INTERFACE...... NT8E13KK *
OC48 DWDM 1552.52 REG/TX INTERFACE...... NT8E13MK *
OC48 DWDM 1555.75 REG/TX INTERFACE...... NT8E13RK *
OC48 DWDM 1557.36 REG/TX INTERFACE...... NT8E13TK *
OC-48/STM16 LR SAW Rx Interface (SC).... NT8E02DD *
STM1o IR 1310 Tributary I/F (SC)........ NTFW11CD *
STM1 Optical Carrier Assembly........... NTFW19BA *
External synchronisation interface
carrier............................... NT7E19AA *
External Synchronisation Interface (2
MHz).................................. NTFW27AA *
*** OPTICAL PATCH CORD 20M (SC-SC)...... NT7E46FD *
*** OPTICAL PATCH CORD W/MVOA 20M
(SC-SC)............................... NT7E47FD *
KIT, SC OPTICAL CONNECTOR. INITIAL USE
NTN401AA.............................. NTN459SC *
*** FIBRE OPTIC CABLE ASSY STM1 DUPLEX
SC-SC 20M............................. NTFW5753 *
TN-16X Regenerator Software Licence
(Release 7)........................... NTQJ93GG *
TN-16X Shared Protection Ring Software
Licence (Release 7)................... NTQJ93HG *
Extra Traffic on Rings on Licence....... NTQJ93TB *
OPC with tape drive..................... NT7E24BC *
PHOENIX SUPERSET CODE FOR REL 7......... NTFW97HA *
*** CNET BAY/BAY CABLE 5.0M............. NT7E44JC *
TN-MS EC-16X Multi-user Licence......... NTQJ93CA *
TN-MS EC-16X Release 7 Licence.......... NTQJ93AG *
TN-MS EC-16X Release 7 Standby Licence.. NTQJ93BG *
FW TN-16X Rel 7 NTPS (CD-ROM)........... NTFW64AH *
1.3 ADVANCED OPTICS (DWDM)
Core
DWDM FILTER MODULE SHELF ASSY--4
POS--ETSI............................. NTCE88BA *
DWDM COUPLER 8W,MB/DR W/O VOA,SC........ NTCA10GC *
</TABLE>
- ------------------------
* The confidential portion has been omitted pursuant to a request for
confidential treatment and omitted
material has been filed separately with the commission.
44
<PAGE>
<TABLE>
<CAPTION>
VIATEL CIRCLE 1 CONTRACT
ANNEX C
SCHEDULE OF PRICES
SECTION B - UK
<S> <C> <C> <C> <C> <C>
DWDM COUPLER 8W,DB/MR W/O VOA,SC........ NTCA10HC *
TN-1X
Core
TN-1X Synchronous Access Multiplexer
Subrack............................... 25GMU00750GWV *
Shelf Kit............................... 25SKM00750HFN *
TN-1X Installation Kit.................. 25SKM00807ABL *
Local Craft Access Panel Type 1......... 25UEP00750GXB *
Service Interface Module Type 10
(Misc)................................ 25UJJ00750GXC *
Service Interface Module Type 40
(LCAP)................................ 25UJJ00750GWX *
Subrack Cover Kit....................... 25SKM00750HFL *
Rack Mounting Kit for ETSI.............. 25SKM00019AAE *
Dummy Front Panel 1'.................... 25RBN00021AAB *
Dummy SIA Panel 1'...................... 25RBN00021AAA *
Power Supply Unit....................... 25UPW00750HAY *
Subrack Control Unit.................... 25UMN00750GXD *
Payload Manager (mixed payload)......... NTKD10AA *
STM-1 G.957 L1.2 Optical Aggregate Port
Card (1550nm)......................... 25UTM00750HWH *
STM-1 G.957 L-1.1, S1.1 Optical
Tributary Card (1'wide)............... NTKD11AA *
***Optical patchcord 20m FC-FC.......... NT7E46BD *
Craft Access Terminal................... NTQJ09AA *
RS 232 Cable Assembly................... 25YCN00748AAA *
TN-1 CAT Release 12 Application
(3.5")................................ NTQJ35LA
TN-MS CA-1X Release 12 Licence.......... NTQJ91DL
Netscape Windows95 (Fastrack Server and
Navigator)............................ NTQJ81BA *
TN-1X Release 8 Software Download (from
CAT).................................. NTQJ36HA
HP B132, 128Mbytes RAM, 2Gb HD, DAT, CD,
N.Hem................................. NTQJ01FA *
TN-MS EC-1 Release 12 (DAT)............. NTQJ30LA
Netscape for UNIX (Fastrack Server and
Navigator)............................ NTQJ81AA *
TN-1X Release 8 software download (from
EC)................................... NTQJ31HA
TN-1C Release 3 Software kit (disk &
tape)................................. NTFT81CA *
TN-MS EC-1 Release 12 Licence for
TN-1X................................. NTQJ91AL *
TN-MS EC-1 Release 12 Standby Licence... NTQJ91BL *
TN-MS EC-1 Multi-user Licence........... NTQJ91CA *
X terminal software on DAT.............. NTQJ05JB *
TN-1X Rel 8 NTPs (CD-ROM MAC)........... 32HSC00456VEC *
TN-1C
Core
TN-1C 8x2/16x2 turbo ADM (1550nm L1.2).. NTFT52BI *
AC/DC Power Unit........................ NTFT21AA *
12V Battery............................. NTFT24AA *
***BT43/5F & 3002 cable assy 20m........ 32YCN00750CAA *
***Optical patchcord 20m FC-FC.......... NT7E46BD *
TN-MS EC-1 Release 12 Licence for
TN-1C................................. NTQJ91FL *
Craft Access Terminal................... NTQJ09AA *
CAT Cable Assembly...................... NTFT15AC *
TN-1C Release 3 Software kit (disk &
tape)................................. NTFT81CA *
TN-1 CAT Release 12 Application
(3.5")................................ NTQJ35LA
Netscape Windows95 (Fastrack Server and
Navigator)............................ NTQJ81BA *
TN-1C Release 3 handbook CD-ROM......... NTFT66CA *
1.4 DXC *
256 Port Cross Connect (MSH84).......... MSH84
STM-1 Optical card
16 x 2Mbit/s Port Unit
MV-36 Element controller................ MV-36
Managed Object Agent (MOA)
1.5 TN-MS INM *
Hardware
HP C200 workstation, north & south
hemisphere............................ NTQJ01GC
NRM Release 6 Software and Handbooks.... NTQJ12FA
NRM Release 6 Feature Profile Tape--Core
+ IM + PM + CM........................ NTQJ10FK
TN-MS NRM (Rel6) Alarm surveillance
Licence............................... NTQJ90AF
TN-MS NRM (Rel6) Electronic Software
Delivery Licence...................... NTQJ90BF
TN-MS NRM (Rel6) Inventory Manager
Licence............................... NTQJ90DF
TN-MS NRM (Rel6) Perf. Mon.
Consolidation Licence................. NTQJ90EF
TN-MS NRM (Rel6) Connection Management
Licence............................... NTQJ90FF
TN-MS NRM (Rel6) Software Management
User Guide............................ NTQJ19FT
TN-MS NRM (Rel6) Inventory Management
User Guide............................ NTQJ19FX
TN-MS NRM (Rel6) Performance Management
User Guide............................ NTQJ19FW
TN-MS NRM (Rel6) Connection Management
User Guide............................ NTQJ19FV
Router 2501 OSI......................... NTJM01BA
Router 2514 OSI......................... NTJM01KA
DCN RConfig "P" 2514 ent. 0 tunnels,
Ser: 2 L2,0 L1 CPC Allocated:
A0741950.............................. NTJM9914
DCN RConfig "P" 2514 ent. 1 tunnel, Ser:
1 L2,1 L1 CPC Allocated: A0741941..... NTJM9912
HS modem SP-1-AR,AC..................... NTJM01SA
Shelf Cantilever 19in mounting.......... P0878672
</TABLE>
- ------------------------
* The confidential portion has been omitted pursuant to a request for
confidential treatment and omitted
material has been filed separately with the commission.
45
<PAGE>
<TABLE>
<CAPTION>
VIATEL CIRCLE 1 CONTRACT
ANNEX C
SCHEDULE OF PRICES
SECTION B - UK
<S> <C> <C> <C> <C> <C>
Transceiver 10BaseT..................... NTJM01VA
Ethernet 10BaseT Transceiver............ A0383333
Baystack 101 10baseT hub 12 port RJ45
250VAC................................ NTJM02PA
***Cable Assy LAN RJ45--RJ45 h/e........ 32YCN00727AFA
***Ethernet kit for OPC hub
(20m,OC-48)........................... NT7E44JE
1.6 NETWORK SYNCHRONISATION *
DCD-521C
DCD-Cs ETSI Standalone Cesium PRC....... 990-43100-02
DCD-LPR Shelf GPS Applications.......... 990-44100-12
GPS Timing Kit E1 (Rubidium or Quartz).. 990-44140-14
Blank Unit LPR.......................... 090-44198-01
LOU-2 Dual oscillator................... 090-44145-02
DCD-521/C ETSI Shelf Master/Expansion... 990-44210-01
MRC-EA/Input card 2MHz/2Mb/s, 4 inputs.. 090-44010-06
TNCE Clock card rubidium................ 090-44017-02
TNC Clock card transit node OCXO........ 090-44020-02
TO-EA Output card 2MHz/2Mb/s 10
outputs............................... 090-44029-01
MIS Maint i'f analysis/config/remote.... 990-44018-14
Blank Panel 1 TO slot wide.............. 074-00208-01
Timing Input Module MRC SMB............. 990-45107-02
Timing Output Module SMB,1:1 prot....... 990-45105-07
1.7 EQUIPMENT PRACTICE
Mechanical bay assy ETSI (no expansion
sh)................................... NTCE89AA * * *
NTE-STM16 Rack (2200 x 600 x 300)--cost
reduced............................... NTFW70EA *
TN-16X Installation Kit................. 25SKM00807ABM *
REGEN Rack Assy......................... NTFW71AA *
Rack side cover L/H u/o NTFW70AA........ P0725173 *
Rack side cover R/H u/o NTFW70AA........ P0725175 *
Mechanical assembly, rack, 42U.......... A0726263
Distribution block 8 way left hand cable
entry................................. A0729317
Distribution block 8 way right hand
cable entry........................... A0729318
ETSI Rack, 220cm, without side panels... NTKD70AA *
NT ETSI Rack Standard Inst.Kit.......... 25SKM00807ABE *
ETSI Rack 48V DC Distrib Panel with Rack
Alarm Unit............................ 25SKM00807AAN *
1.8 ADDITIONAL ITEMS
OC-192 REL 1.4 SUPERSET CUSTOMER
LOADS................................. ***PLM_TN-16X_NC_1
AC Power Cable Assembly................. PLM_Source_locally *
***Cable Assy, RJ45 crossover........... 32YCN01094AFA *
*** OPTICAL PATCHCORD 20M SC-SC......... PLM_Advanced Optics_NC_3 *
TOTAL EXTENDED EQUIPMENT PRICE.......... *
2.0 INSTALLATION & COMMISSIONING............ * * *
Installation Materials.................. *
-----
TOTAL EXTENDED PRICE.................... *
-----
-----
</TABLE>
- ------------------------
* The confidential portion has been omitted pursuant to a request for
confidential treatment and omitted
material has been filed separately with the commission.
46
<PAGE>
<TABLE>
<CAPTION>
VIATEL CIRCLE 1 CONTRACT
ANNEX C
SCHEDULE OF PRICES
SECTION B - UK
LONDON TELEHOUSE ISSUE 1.0
---------------------------------------- ------------------------------------------------------------------------------
ABBREVIATED DESCRIPTION CODE SELLING PRICE LON.-TELEHOUSE EXT PRICE
---------------------------------------- --------------------------- --------------- ----------------- -------------
$US QTY $US
<S> <C> <C> <C> <C> <C>
1.0 TRANSMISSION EQUIPMENT
1.1 TN-16 4F
Core
OC192 SC060 SHELF CONTROLLER............ NTCA41BA * * *
MAINTENANCE INTERFACE................... NTCA42AA * * *
*** CABLE ASSY (MODEM ACCESS)........... NTCC8930 * * *
MESSAGE TRANSFER CARD................... NTCA48AA * * *
BREAKER MODULE.......................... NTCA40AA * * *
COMMON EQUIPMENT FILLER CARD (1 IN.).... NTCA59AA * * *
PARTITIONED OPC CONTROLLER.............. NTCA50AA *
*** CA ASSY (10 BASE T CROSSOVER)....... NT7E44KC *
PARTITIONED OPC STORAGE MODULE.......... NTCA51AA *
OPC FLASH CARTRIDGE..................... NTCA53AA *
PARTITIONED OPC IO MODULE............... NTCA52AA *
*** SM OPTICAL PATCHCORD 20M (66FT)
(SC-TUNED) SEE A06.................... NT7E46HD * * *
*** SM OPTICAL PATCHCORD 20M (66FT)
(SC-TUNED) W/MVOA..................... NT7E47HD * * *
TRANSPORT SHELF FILLER CARD............. NTCA49AA * * *
TRANSPORT SHELF SWITCH FILLER CARD...... NTCA49AB * * *
OC-192 OPTICAL AMPLIFIER W/ SERVICE
CHANNEL (SC).......................... NTCA11AC * * *
OC-192 OPTICAL AMPLIFIER (SC)........... NTCA11BC *
1625NM OPTICAL SERVICE CHANNEL (SC)..... NTCA11CC *
1550/1625NM WDM COUPLER (SC)............ NTCC13AC *
MOR RTU................................. NTCA62DA * * *
1.2 TN-16X
Core
STM16 LTE/ADM/RING SHELF--COST
REDUCED............................... NTFW50EA * * *
SH PROCESSOR FOR SDH (DCC HUBBING)...... NT7E20GC * * *
SH PROCESSOR(ETHERNET,SYNC MSG 24M)..... NT7E20KA *
Maintenance Interface Unit.............. NT7E23AA * * *
TN-16X Regenerator Subrack Kit.......... NTFW51AA *
OC-48/STM-16 Ring Demux................. NT8E06AB * * *
OC48 DWDM 1528.77 NM RING TX............ NT8E11DQ * * *
OC48 DWDM 1530.33 RING TRANSMITTER...... NT8E11FQ * * *
OC48 WDM 1533.47 RING TRANSMITTER....... NT8E11KQ * * *
OC48 WDM 1535.04 RING TRANSMITTER....... NT8E11MQ * * *
OC48 DWDM 1550.92 NM RING TRANSMITTER... NT8E11KR * * *
OC48 DWDM 1552.52 RING TRANSMITTER...... NT8E11MR * * *
OC48 DWDM 1555.75 NM RING TRANSMITTER... NT8E11RR * * *
OC48 DWDM 1557.36 RING TRANSMITTER...... NT8E11TR * * *
OC48 DWDM 1528.77 NM REGEN.............. NT8E13DJ *
OC48 DWDM 1530.33 REG/TX INTERFACE...... NT8E13FJ *
OC48 DWDM 1533.47 REG/TX INTERFACE...... NT8E13KJ *
OC48 DWDM 1535.04 REG/TX INTERFACE...... NT8E13MJ *
OC48 DWDM 1550.92 REG/TX INTERFACE...... NT8E13KK *
OC48 DWDM 1552.52 REG/TX INTERFACE...... NT8E13MK *
OC48 DWDM 1555.75 REG/TX INTERFACE...... NT8E13RK *
OC48 DWDM 1557.36 REG/TX INTERFACE...... NT8E13TK *
OC-48/STM16 LR SAW Rx Interface (SC).... NT8E02DD * * *
STM1o IR 1310 Tributary I/F (SC)........ NTFW11CD * * *
STM1 Optical Carrier Assembly........... NTFW19BA * * *
External synchronisation interface
carrier............................... NT7E19AA * * *
External Synchronisation Interface (2
MHz)................................... NTFW27AA * * *
*** OPTICAL PATCH CORD 20M (SC-SC)...... NT7E46FD * * *
*** OPTICAL PATCH CORD W/MVOA 20M
(SC-SC)............................... NT7E47FD * * *
KIT, SC OPTICAL CONNECTOR. INITIAL USE
NTN401AA.............................. NTN459SC * * *
*** FIBRE OPTIC CABLE ASSY STM1 DUPLEX
SC-SC 20M............................. NTFW5753 * * * *
TN-16X Shared Protection Ring Software
Licence (Release 7)................... NTQJ93HG * * *
Extra Traffic on Rings on Licence....... NTQJ93TB * * *
* NT7E24BC *
PHOENIX SUPERSET CODE FOR REL 7......... NTFW97HA *
*** CNET BAY/BAY CABLE 5.0M............. NT7E44JC *
* NTQJ93CA *
TN-MS EC-16X Release 7 Licence.......... NTQJ93AG *
TN-MS EC-16X Release 7 Standby Licence.. NTQJ93BG *
FW TN-16X Rel 7 NTPS (CD-ROM)........... NTFW64AH *
1.3 ADVANCED OPTICS (DWDM)
Core
DWDM FILTER MODULE SHELF ASSY--4
POS--ETSI............................. NTCE88BA * * *
DWDM COUPLER 8W,MB/DR W/O VOA,SC........ NTCA10GC * * *
</TABLE>
- ------------------------
* The confidential portion has been omitted pursuant to a request for
confidential treatment and omitted
material has been filed separately with the commission.
47
<PAGE>
<TABLE>
<CAPTION>
VIATEL CIRCLE 1 CONTRACT
ANNEX C
SCHEDULE OF PRICES
SECTION B - UK
<S> <C> <C> <C> <C> <C>
DWDM COUPLER 8W,DB/MR W/O VOA,SC........ NTCA10HC * * *
TN-1X
Core
TN-1X Synchronous Access Multiplexer
Subrack............................... 25GMU00750GWV *
Shelf Kit............................... 25SKM00750HFN *
TN-1X Installation Kit.................. 25SKM00807ABL *
Local Craft Access Panel Type 1......... 25UEP00750GXB *
Service Interface Module Type 10
(Misc)................................ 25UJJ00750GXC *
Service Interface Module Type 40
(LCAP)................................ 25UJJ00750GWX *
Subrack Cover Kit....................... 25SKM00750HFL *
Rack Mounting Kit for ETSI.............. 25SKM00019AAE *
Dummy Front Panel 1'.................... 25RBN00021AAB *
Dummy SIA Panel 1'...................... 25RBN00021AAA *
Power Supply Unit....................... 25UPW00750HAY *
Subrack Control Unit.................... 25UMN00750GXD *
Payload Manager (mixed payload)......... NTKD10AA *
STM-1 G.957 L1.2 Optical Aggregate Port
Card (1550nm)......................... 25UTM00750HWH *
STM-1 G.957 L-1.1, S1.1 Optical
Tributary Card (1'wide)............... NTKD11AA *
***Optical patchcord 20m FC-FC.......... NT7E46BD *
Craft Access Terminal................... NTQJ09AA *
RS 232 Cable Assembly................... 25YCN00748AAA *
TN-1 CAT Release 12 Application
(3.5")................................ NTQJ35LA
TN-MS CA-1X Release 12 Licence.......... NTQJ91DL
Netscape Windows95 (Fastrack Server and
Navigator)............................ NTQJ81BA *
TN-1X Release 8 Software Download (from
CAT).................................. NTQJ36HA
HP B132, 128Mbytes RAM, 2Gb HD, DAT, CD,
N.Hem................................. NTQJ01FA *
TN-MS EC-1 Release 12 (DAT)............. NTQJ30LA
Netscape for UNIX (Fastrack Server and
Navigator)............................ NTQJ81AA *
TN-1X Release 8 software download (from
EC)................................... NTQJ31HA
TN-1C Release 3 Software kit (disk &
tape)................................. NTFT81CA *
TN-MS EC-1 Release 12 License for TN-1X NTQJ91AL *
TN-MS EC-1 Release 12 Standby Licence... NTQJ91BL *
TN-MS EC-1 Multi-user Licence........... NTQJ91CA *
X terminal software on DAT.............. NTQJ05JB *
TN-1X Rel 8 NTPs (CD-ROM MAC)........... 32HSC00456VEC *
TN-1C
Core
TN-1C 8x2/16x2 turbo ADM (1550nm L1.2).. NTFT52BI *
AC/DC Power Unit........................ NTFT21AA *
12V Battery............................. NTFT24AA *
***BT43/5F & 3002 cable assy 20m........ 32YCN00750CAA *
***Optical patchcord 20m FC-FC.......... NT7E46BD *
TN-MS EC-1 Release 12 Licence for
TN-1C................................. NTQJ91FL *
Craft Access Terminal................... NTQJ09AA *
CAT Cable Assembly...................... NTFT15AC *
TN-1C Release 3 Software kit (disk &
tape)................................. NTFT81CA *
TN-1 CAT Release 12 Application
(3.5")................................ NTQJ35LA
Netscape Windows95 (Fastrack Server and
Navigator)............................ NTQJ81BA *
TN-1C Release 3 handbook CD-ROM......... NTFT66CA *
1.4 DXC * *
256 Port Cross Connect (MSH84).......... MSH84 *
STM-1 Optical card...................... *
16 x 2Mbit/s Port Unit.................. *
MV-36 Element controller................ MV-36
Managed Object Agent (MOA)
1.5 TN-MS INM *
Hardware
HP C200 workstation, north & south
hemisphere............................ NTQJ01GC
NRM Release 6 Software and Handbooks.... NTQJ12FA
NRM Release 6 Feature Profile Tape--Core
+ IM + PM + CM........................ NTQJ10FK
TN-MS NRM (Rel6) Alarm surveillance
Licence............................... NTQJ90AF
TN-MS NRM (Rel6) Electronic Software
Delivery Licence...................... NTQJ90BF
TN-MS NRM (Rel6) Inventory Manager
Licence............................... NTQJ90DF
TN-MS NRM (Rel6) Perf. Mon.
Consolidation Licence................. NTQJ90EF
TN-MS NRM (Rel6) Connection Management
Licence............................... NTQJ90FF
TN-MS NRM (Rel6) Software Management
User Guide............................ NTQJ19FT
TN-MS NRM (Rel6) Inventory Management
User Guide............................ NTQJ19FX
TN-MS NRM (Rel6) Performance Management
User Guide............................ NTQJ19FW
TN-MS NRM (Rel6) Connection Management
User Guide............................ NTQJ19FV
Router 2501 OSI......................... NTJM01BA
Router 2514 OSI......................... NTJM01KA
DCN RConfig "P" 2514 ent. 0 tunnels,
Ser: 2 L2,0 L1 CPC Allocated:
A0741950.............................. NTJM9914
DCN RConfig "P" 2514 ent. 1 tunnel, Ser:
1 L2,1 L1 CPC Allocated: A0741941..... NTJM9912
HS modem SP-1-AR,AC..................... NTJM01SA
Shelf Cantilever 19in mounting.......... P0878672
</TABLE>
- ------------------------
* The confidential portion has been omitted pursuant to a request for
confidential treatment and omitted
material has been filed separately with the commission.
48
<PAGE>
<TABLE>
<CAPTION>
VIATEL CIRCLE 1 CONTRACT
ANNEX C
SCHEDULE OF PRICES
SECTION B - UK
<S> <C> <C> <C> <C> <C>
Transceiver 10BaseT..................... NTJM01VA
Ethernet 10BaseT Transceiver............ A0383333
Baystack 101 10baseT hub 12 port RJ45
250VAC................................ NTJM02PA
***Cable Assy LAN RJ45--RJ45 h/e........ 32YCN00727AFA
***Ethernet kit for OPC hub
(20m,OC-48)........................... NT7E44JE
1.6 NETWORK SYNCHRONISATION *
DCD-521C
DCD-Cs ETSI Standalone Cesium PRC....... 990-43100-02
DCD-LPR Shelf GPS Applications.......... 990-44100-12
GPS Timing Kit E1 (Rubidium or Quartz).. 990-44140-14
Blank Unit LPR.......................... 090-44198-01
LOU-2 Dual oscillator................... 090-44145-02
DCD-521/C ETSI Shelf Master/Expansion... 990-44210-01
MRC-EA/Input card 2MHz/2Mb/s, 4 inputs.. 090-44010-06
TNCE Clock card rubidium................ 090-44017-02
TNC Clock card transit node OCXO........ 090-44020-02
TO-EA Output card 2MHz/2Mb/s 10
outputs............................... 090-44029-01
MIS Maint i'f analysis/config/remote.... 990-44018-14
Blank Panel 1 TO slot wide.............. 074-00208-01
Timing Input Module MRC SMB............. 990-45107-02
Timing Output Module SMB,1:1 prot....... 990-45105-07
1.7 EQUIPMENT PRACTICE
Mechanical bay assy ETSI (no expansion
sh)................................... NTCE89AA * * *
NTE-STM16 Rack (2200 x 600 x 300)--cost
reduced............................... NTFW70EA * * *
TN-16X Installation Kit................. 25SKM00807ABM * * *
* REGEN Rack Assy......................... NTFW71AA *
Rack side cover L/H u/o NTFW70AA........ P0725173 * * *
Rack side cover R/H u/o NTFW70AA........ P0725175 * * *
Mechanical assembly, rack, 42U.......... A0726263
Distribution block 8 way left hand cable
entry................................. A0729317
Distribution block 8 way right hand
cable entry........................... A0729318
ETSI Rack, 220cm, without side panels... NTKD70AA *
NT ETSI Rack Standard Inst.Kit.......... 25SKM00807ABE *
ETSI Rack 48V DC Distrib Panel with Rack
Alarm Unit............................ 25SKM00807AAN *
1.8 ADDITIONAL ITEMS
OC-192 REL 1.4 SUPERSET CUSTOMER
LOADS................................. ***PLM_TN-16X_NC_1
AC Power Cable Assembly................. PLM_Source_locally *
***Cable Assy, RJ45 crossover........... 32YCN01094AFA *
*** OPTICAL PATCHCORD 20M SC-SC......... PLM_Advanced Optics_NC_3 * * *
TOTAL EXTENDED EQUIPMENT PRICE
2.0 INSTALLATION & COMMISSIONING * * *
Installation Materials.................. * * *
-----
TOTAL EXTENDED PRICE.................... *
-----
-----
</TABLE>
- ------------------------
* The confidential portion has been omitted pursuant to a request for
confidential treatment and omitted
material has been filed separately with the commission.
49
<PAGE>
<TABLE>
<CAPTION>
VIATEL CIRCLE 1 CONTRACT
ANNEX C
SCHEDULE OF PRICES
SECTION B - UK
STAINES ISSUE 1.0
----------------------------------------------- ------------------------------------------------------------------------
ABBREVIATED DESCRIPTION CODE SELLING PRICE STAINES EXT PRICE
----------------------------------------------- --------------------------- --------------- ----------- -------------
$US QTY $US
<S> <C> <C> <C> <C> <C>
1.0 TRANSMISSION EQUIPMENT
1.1 TN-16 4F
Core
OC192 SC060 SHELF CONTROLLER................... NTCA41BA * * *
MAINTENANCE INTERFACE.......................... NTCA42AA * * *
*** CABLE ASSY (MODEM ACCESS).................. NTCC8930 * * *
MESSAGE TRANSFER CARD.......................... NTCA48AA * * *
BREAKER MODULE................................. NTCA40AA * * *
COMMON EQUIPMENT FILLER CARD (1 IN.)........... NTCA59AA * * *
PARTITIONED OPC CONTROLLER..................... NTCA50AA * * *
*** CA ASSY (10 BASE T CROSSOVER).............. NT7E44KC * * *
PARTITIONED OPC STORAGE MODULE................. NTCA51AA * * *
OPC FLASH CARTRIDGE............................ NTCA53AA * * *
PARTITIONED OPC IO MODULE...................... NTCA52AA * * *
*** SM OPTICAL PATCHCORD 20M (66FT) (SC-TUNED)
SEE A06...................................... NT7E46HD * * *
*** SM OPTICAL PATCHCORD 20M (66FT) (SC-TUNED)
W/MVOA....................................... NT7E47HD * * *
TRANSPORT SHELF FILLER CARD.................... NTCA49AA * * *
TRANSPORT SHELF SWITCH FILLER CARD............. NTCA49AB * * *
OC-192 OPTICAL AMPLIFIER W/ SERVICE CHANNEL
(SC)......................................... NTCA11AC * * *
OC-192 OPTICAL AMPLIFIER (SC).................. NTCA11BC *
1625NM OPTICAL SERVICE CHANNEL (SC) NTCA11CC *
1550/1625NM WDM COUPLER (SC) NTCC13AC *
MOR RTU........................................ NTCA62DA * * *
1.2 TN-16X
Core
STM16 LTE/ADM/RING SHELF--COST REDUCED......... NTFW50EA * * *
SH PROCESSOR FOR SDH (DCC HUBBING)............. NT7E20GC * * *
SH PROCESSOR(ETHERNET,SYNC MSG 24M)............ NT7E20KA *
Maintenance Interface Unit..................... NT7E23AA * * *
TN-16X Regenerator Subrack Kit................. NTFW51AA *
OC-48/STM-16 Ring Demux........................ NT8E06AB * * *
OC48 DWDM 1528.77 NM RING TX................... NT8E11DQ * * *
OC48 DWDM 1530.33 RING TRANSMITTER............. NT8E11FQ * * *
OC48 WDM 1533.47 RING TRANSMITTER.............. NT8E11KQ * * *
OC48 WDM 1535.04 RING TRANSMITTER.............. NT8E11MQ * * *
OC48 DWDM 1550.92 NM RING TRANSMITTER.......... NT8E11KR * * *
OC48 DWDM 1552.52 RING TRANSMITTER............. NT8E11MR * * *
OC48 DWDM 1555.75 NM RING TRANSMITTER.......... NT8E11RR * * *
OC48 DWDM 1557.36 RING TRANSMITTER............. NT8E11TR * * *
OC48 DWDM 1528.77 NM REGEN..................... NT8E13DJ *
OC48 DWDM 1530.33 REG/TX INTERFACE............. NT8E13FJ *
OC48 DWDM 1533.47 REG/TX INTERFACE............. NT8E13KJ *
OC48 DWDM 1535.04 REG/TX INTERFACE............. NT8E13MJ *
OC48 DWDM 1550.92 REG/TX INTERFACE............. NT8E13KK *
OC48 DWDM 1552.52 REG/TX INTERFACE............. NT8E13MK *
OC48 DWDM 1555.75 REG/TX INTERFACE............. NT8E13RK *
OC48 DWDM 1557.36 REG/TX INTERFACE............. NT8E13TK *
OC-48/STM16 LR SAW Rx Interface (SC)........... NT8E02DD * * *
STM1o IR 1310 Tributary I/F (SC)............... NTFW11CD * * *
STM1 Optical Carrier Assembly.................. NTFW19BA * * *
External synchronisation interface carrier..... NT7E19AA * * *
External Synchronisation Interface (2 MHz)..... NTFW27AA * * *
*** OPTICAL PATCH CORD 20M (SC-SC)............. NT7E46FD * * *
*** OPTICAL PATCH CORD W/MVOA 20M (SC-SC)...... NT7E47FD * * *
KIT, SC OPTICAL CONNECTOR. INITIAL USE
NTN401AA..................................... NTN459SC * * *
*** FIBRE OPTIC CABLE ASSY STM1 DUPLEX SC-SC
20M.......................................... NTFW5753 * * *
TN-16X Regenerator Software Licence (Release
7)........................................... NTQJ93GG * *
TN-16X Shared Protection Ring Software Licence
(Release 7).................................. NTQJ93HG * * *
Extra Traffic on Rings on Licence.............. NTQJ93TB * * *
OPC with tape drive............................ NT7E24BC * * *
PHOENIX SUPERSET CODE FOR REL 7................ NTFW97HA * * *
*** CNET BAY/BAY CABLE 5.0M.................... NT7E44JC * * *
TN-MS EC-16X Multi-user Licence................ NTQJ93CA * * *
TN-MS EC-16X Release 7 Licence................. NTQJ93AG * * *
TN-MS EC-16X Release 7 Standby Licence......... NTQJ93BG *
FW TN-16X Rel 7 NTPS (CD-ROM).................. NTFW64AH * * *
1.3 ADVANCED OPTICS (DWDM)
Core
DWDM FILTER MODULE SHELF ASSY--4 POS--ETSI..... NTCE88BA * * *
DWDM COUPLER 8W,MB/DR W/O VOA,SC............... NTCA10GC * * *
</TABLE>
- ------------------------
* The confidential portion has been omitted pursuant to a request for
confidential treatment and omitted
material has been filed separately with the commission.
50
<PAGE>
<TABLE>
<CAPTION>
VIATEL CIRCLE 1 CONTRACT
ANNEX C
SCHEDULE OF PRICES
SECTION B - UK
<S> <C> <C> <C> <C> <C>
DWDM COUPLER 8W,DB/MR W/O VOA,SC............... NTCA10HC * * *
TN-1X
Core
TN-1X Synchronous Access Multiplexer Subrack... 25GMU00750GWV *
Shelf Kit...................................... 25SKM00750HFN *
TN-1X Installation Kit......................... 25SKM00807ABL *
Local Craft Access Panel Type 1................ 25UEP00750GXB *
Service Interface Module Type 10 (Misc)........ 25UJJ00750GXC *
Service Interface Module Type 40 (LCAP)........ 25UJJ00750GWX *
Subrack Cover Kit.............................. 25SKM00750HFL *
Rack Mounting Kit for ETSI..................... 25SKM00019AAE *
Dummy Front Panel 1"........................... 25RBN00021AAB *
Dummy SIA Panel 1"............................. 25RBN00021AAA *
Power Supply Unit.............................. 25UPW00750HAY *
Subrack Control Unit........................... 25UMN00750GXD *
Payload Manager (mixed payload)................ NTKD10AA *
STM-1 G.957 L1.2 Optical Aggregate Port Card
(1550nm)..................................... 25UTM00750HWH *
STM-1 G.957 L-1.1, S1.1 Optical Tributary Card
(1" wide).................................... NTKD11AA *
***Optical patchcord 20m FC-FC................. NT7E46BD *
Craft Access Terminal.......................... NTQJ09AA *
RS 232 Cable Assembly.......................... 25YCN00748AAA *
TN-1 CAT Release 12 Application (3.5")......... NTQJ35LA
TN-MS CA-1X Release 12 Licence................. NTQJ91DL
Netscape Windows95 (Fastrack Server and
Navigator)................................... NTQJ81BA *
TN-1X Release 8 Software Download (from CAT)... NTQJ36HA
HP B132, 128Mbytes RAM, 2Gb HD, DAT, CD,
N.Hem........................................ NTQJ01FA *
TN-MS EC-1 Release 12 (DAT).................... NTQJ30LA *
Netscape for UNIX (Fastrack Server and
Navigator)................................... NTQJ81AA * * *
TN-1X Release 8 software download (from EC).... NTQJ31HA *
TN-1C Release 3 Software kit (disk & tape)..... NTFT81CA * * *
TN-MS EC-1 Release 12 Licence for TN-1X........ NTQJ91AL * * *
TN-MS EC-1 Release 12 Standby Licence.......... NTQJ91BL *
TN-MS EC-1 Multi-user Licence.................. NTQJ91CA * * *
X terminal software on DAT..................... NTQJ05JB * * *
TN-1X Rel 8 NTPs (CD-ROM MAC).................. 32HSC00456VEC *
TN-1C Release 3 handbook CD-ROM................ NTFT66CA * * *
TN-1C
Core
TN-1C 8x2/16x2 turbo ADM (1550nm L1.2)......... NTFT52BI *
AC/DC Power Unit............................... NTFT21AA *
12V Battery.................................... NTFT24AA *
***BT43/5F & 3002 cable assy 20m............... 32YCN00750CAA *
***Optical patchcord 20m FC-FC................. NT7E46BD *
TN-MS EC-1 Release 12 Licence for TN-1C........ NTQJ91FL *
Craft Access Terminal.......................... NTQJ09AA *
CAT Cable Assembly............................. NTFT15AC *
TN-1C Release 3 Software kit (disk & tape)..... NTFT81CA *
TN-1 CAT Release 12 Application (3.5")......... NTQJ35LA
Netscape Windows95 (Fastrack Server and
Navigator)................................... NTQJ81BA *
1.4 DXC * * *
256 Port Cross Connect (MSH84)................. MSH84 *
STM-1 Optical card............................. *
16 x 2Mbit/s Port Unit......................... *
MV-36 Element controller....................... MV-36 *
Managed Object Agent (MOA)..................... *
1.5 TN-MS INM * * *
Hardware.......................................
HP C200 workstation, north & south
hemisphere................................... NTQJ01GC *
NRM Release 6 Software and Handbooks........... NTQJ12FA *
NRM Release 6 Feature Profile Tape--Core + IM +
PM + CM...................................... NTQJ10FK *
TN-MS NRM (Rel6) Alarm surveillance Licence.... NTQJ90AF *
TN-MS NRM (Rel6) Electronic Software Delivery
Licence...................................... NTQJ90BF *
TN-MS NRM (Rel6) Inventory Manager Licence..... NTQJ90DF *
TN-MS NRM (Rel6) Perf. Mon. Consolidation
Licence...................................... NTQJ90EF *
TN-MS NRM (Rel6) Connection Management
Licence...................................... NTQJ90FF *
TN-MS NRM (Rel6) Software Management User
Guide........................................ NTQJ19FT *
TN-MS NRM (Rel6) Inventory Management User
Guide........................................ NTQJ19FX *
TN-MS NRM (Rel6) Performance Management User
Guide........................................ NTQJ19FW *
TN-MS NRM (Rel6) Connection Management User
Guide........................................ NTQJ19FV *
Router 2501 OSI................................ NTJM01BA
Router 2514 OSI................................ NTJM01KA *
DCN RConfig "P" 2514 ent. 0 tunnels, Ser: 2
L2,0 L1 CPC Allocated: A0741950.............. NTJM9914
DCN RConfig "P" 2514 ent. 1 tunnel, Ser: 1 L2,1
L1 CPC Allocated: A0741941................... NTJM9912 *
HS modem SP-1-AR,AC............................ NTJM01SA *
Shelf Cantilever 19in mounting................. P0878672 *
</TABLE>
- ------------------------
* The confidential portion has been omitted pursuant to a request for
confidential treatment and omitted
material has been filed separately with the commission.
51
<PAGE>
<TABLE>
<CAPTION>
VIATEL CIRCLE 1 CONTRACT
ANNEX C
SCHEDULE OF PRICES
SECTION B - UK
<S> <C> <C> <C> <C> <C>
Transceiver 10BaseT............................ NTJM01VA *
Ethernet 10BaseT Transceiver................... A0383333 *
Baystack 101 10baseT hub 12 port RJ45 250VAC... NTJM02PA *
***Cable Assy LAN RJ45--RJ45 h/e............... 32YCN00727AFA *
***Ethernet kit for OPC hub (20m,OC-48)........ NT7E44JE *
1.6 NETWORK SYNCHRONISATION * * *
DCD-521C
DCD-Cs ETSI Standalone Cesium PRC.............. 990-43100-02 *
DCD-LPR Shelf GPS Applications................. 990-44100-12 *
GPS Timing Kit E1 (Rubidium or Quartz)......... 990-44140-14 *
Blank Unit LPR................................. 090-44198-01 *
LOU-2 Dual oscillator.......................... 090-44145-02
DCD-521/C ETSI Shelf Master/Expansion.......... 990-44210-01 *
MRC-EA/Input card 2MHz/2Mb/s, 4 inputs......... 090-44010-06 *
TNCE Clock card rubidium....................... 090-44017-02 *
TNC Clock card transit node OCXO............... 090-44020-02
TO-EA Output card 2MHz/2Mb/s 10 outputs........ 090-44029-01 *
MIS Maint i'f analysis/config/remote........... 990-44018-14 *
Blank Panel 1 TO slot wide..................... 074-00208-01 *
Timing Input Module MRC SMB.................... 990-45107-02 *
Timing Output Module SMB,1:1 prot.............. 990-45105-07 *
1.7 EQUIPMENT PRACTICE
Mechanical bay assy ETSI (no expansion sh)..... NTCE89AA * * *
NTE-STM16 Rack (2200 x 600 x 300)--cost
reduced...................................... NTFW70EA * * *
TN-16X Installation Kit........................ 25SKM00807ABM * * *
REGEN Rack Assy................................ NTFW71AA *
Rack side cover L/H u/o NTFW70AA............... P0725173 * * *
Rack side cover R/H u/o NTFW70AA............... P0725175 * * *
Mechanical assembly, rack, 42U................. A0726263 *
Distribution block 8 way left hand cable
entry........................................ A0729317 *
Distribution block 8 way right hand cable
entry........................................ A0729318 *
ETSI Rack, 220cm, without side panels.......... NTKD70AA *
NT ETSI Rack Standard Inst.Kit................. 25SKM00807ABE *
ETSI Rack 48V DC Distrib Panel with Rack Alarm
Unit......................................... 25SKM00807AAN *
1.8 ADDITIONAL ITEMS
OC-192 REL 1.4 SUPERSET CUSTOMER LOADS......... ***PLM_TN-16X_NC_1 *
AC Power Cable Assembly........................ PLM_Source_locally *
***Cable Assy, RJ45 crossover.................. 32YCN01094AFA *
*** OPTICAL PATCHCORD 20M SC-SC................ PLM_Advanced Optics_NC_3 * * *
TOTAL EXTENDED EQUIPMENT PRICE................. *
2.0 Installation & Commissioning................... * * *
Installation Materials......................... * * *
-----
TOTAL EXTENDED PRICE........................... *
-----
-----
</TABLE>
- ------------------------
* The confidential portion has been omitted pursuant to a request for
confidential treatment and omitted
material has been filed separately with the commission.
52
<PAGE>
<TABLE>
<CAPTION>
VIATEL CIRCLE 1 CONTRACT
ANNEX C
SCHEDULE OF PRICES
SECTION B - UK
PEVENSEY BAY--STAINES R/A1 ISSUE 1.0
-------------------------------------- --------------------------------------------------------------------------------
ABBREVIATED DESCRIPTION CODE SELLING PRICE PB-STAINES R/A1 EXT PRICE
-------------------------------------- --------------------------- --------------- ------------------- -------------
$US QTY $US
<S> <C> <C> <C> <C> <C>
1.0 TRANSMISSION EQUIPMENT
1.1 TN-16 4F
Core
OC192 SC060 SHELF CONTROLLER.......... NTCA41BA * * *
MAINTENANCE INTERFACE................. NTCA42AA * * *
*** CABLE ASSY (MODEM ACCESS)......... NTCC8930 * * *
MESSAGE TRANSFER CARD................. NTCA48AA * * *
BREAKER MODULE........................ NTCA40AA * * *
COMMON EQUIPMENT FILLER CARD (1
IN.)................................ NTCA59AA * * *
PARTITIONED OPC CONTROLLER............ NTCA50AA *
*** CA ASSY (10 BASE T CROSSOVER)..... NT7E44KC *
PARTITIONED OPC STORAGE MODULE........ NTCA51AA *
OPC FLASH CARTRIDGE................... NTCA53AA *
PARTITIONED OPC IO MODULE............. NTCA52AA *
*** SM OPTICAL PATCHCORD 20M (66FT)
(SC-TUNED) SEE A06.................. NT7E46HD * * *
*** SM OPTICAL PATCHCORD 20M (66FT)
(SC-TUNED) W/MVOA................... NT7E47HD * * *
TRANSPORT SHELF FILLER CARD........... NTCA49AA * * *
TRANSPORT SHELF SWITCH FILLER CARD.... NTCA49AB * * *
OC-192 OPTICAL AMPLIFIER W/ SERVICE
CHANNEL (SC)........................ NTCA11AC * * *
OC-192 OPTICAL AMPLIFIER (SC)......... NTCA11BC *
1625NM OPTICAL SERVICE CHANNEL (SC) NTCA11CC *
1550/1625NM WDM COUPLER (SC) NTCC13AC *
MOR RTU............................... NTCA62DA * * *
1.2 TN-16X
Core
STM16 LTE/ADM/RING SHELF--COST
REDUCED............................. NTFW50EA *
SH PROCESSOR FOR SDH (DCC HUBBING).... NT7E20GC *
SH PROCESSOR(ETHERNET,SYNC MSG 24M)... NT7E20KA *
Maintenance Interface Unit............ NT7E23AA *
TN-16X Regenerator Subrack Kit........ NTFW51AA *
OC-48/STM-16 Ring Demux............... NT8E06AB *
OC48 DWDM 1528.77 NM RING TX.......... NT8E11DQ *
OC48 DWDM 1530.33 RING TRANSMITTER.... NT8E11FQ *
OC48 WDM 1533.47 RING TRANSMITTER..... NT8E11KQ *
OC48 WDM 1535.04 RING TRANSMITTER..... NT8E11MQ *
OC48 DWDM 1550.92 NM RING
TRANSMITTER......................... NT8E11KR *
OC48 DWDM 1552.52 RING TRANSMITTER.... NT8E11MR *
OC48 DWDM 1555.75 NM RING
TRANSMITTER......................... NT8E11RR *
OC48 DWDM 1557.36 RING TRANSMITTER.... NT8E11TR *
OC48 DWDM 1528.77 NM REGEN............ NT8E13DJ *
OC48 DWDM 1530.33 REG/TX INTERFACE.... NT8E13FJ *
OC48 DWDM 1533.47 REG/TX INTERFACE.... NT8E13KJ *
OC48 DWDM 1535.04 REG/TX INTERFACE.... NT8E13MJ *
OC48 DWDM 1550.92 REG/TX INTERFACE.... NT8E13KK *
OC48 DWDM 1552.52 REG/TX INTERFACE.... NT8E13MK *
OC48 DWDM 1555.75 REG/TX INTERFACE.... NT8E13RK *
OC48 DWDM 1557.36 REG/TX INTERFACE.... NT8E13TK *
OC-48/STM16 LR SAW Rx Interface (SC).. NT8E02DD *
STM1o IR 1310 Tributary I/F (SC)...... NTFW11CD *
STM1 Optical Carrier Assembly......... NTFW19BA *
External synchronisation interface
carrier............................. NT7E19AA *
External Synchronisation Interface (2
MHz)................................ NTFW27AA *
*** OPTICAL PATCH CORD 20M (SC-SC).... NT7E46FD *
*** OPTICAL PATCH CORD W/MVOA 20M
(SC-SC)............................. NT7E47FD *
KIT, SC OPTICAL CONNECTOR. INITIAL USE
NTN401AA............................ NTN459SC *
*** FIBRE OPTIC CABLE ASSY STM1 DUPLEX
SC-SC 20M........................... NTFW5753 *
TN-16X Regenerator Software Licence
(Release 7)......................... NTQJ93GG *
TN-16X Shared Protection Ring Software
Licence (Release 7)................. NTQJ93HG *
Extra Traffic on Rings on Licence..... NTQJ93TB *
OPC with tape drive................... NT7E24BC *
PHOENIX SUPERSET CODE FOR REL 7....... NTFW97HA *
*** CNET BAY/BAY CABLE 5.0M........... NT7E44JC *
TN-MS EC-16X Multi-user Licence....... NTQJ93CA *
TN-MS EC-16X Release 7 Licence........ NTQJ93AG *
TN-MS EC-16X Release 7 Standby
Licence............................. NTQJ93BG *
FW TN-16X Rel 7 NTPS (CD-ROM)......... NTFW64AH *
1.3 ADVANCED OPTICS (DWDM)
Core
DWDM FILTER MODULE SHELF ASSY--4
POS--ETSI........................... NTCE88BA *
DWDM COUPLER 8W,MB/DR W/O VOA,SC...... NTCA10GC *
</TABLE>
- ------------------------
* The confidential portion has been omitted pursuant to a request for
confidential treatment and omitted
material has been filed separately with the commission.
53
<PAGE>
<TABLE>
<CAPTION>
VIATEL CIRCLE 1 CONTRACT
ANNEX C
SCHEDULE OF PRICES
SECTION B - UK
<S> <C> <C> <C> <C> <C>
DWDM COUPLER 8W,DB/MR W/O VOA,SC...... NTCA10HC *
TN-1X
Core
TN-1X Synchronous Access Multiplexer
Subrack............................. 25GMU00750GWV *
Shelf Kit............................. 25SKM00750HFN *
TN-1X Installation Kit................ 25SKM00807ABL *
Local Craft Access Panel Type 1....... 25UEP00750GXB *
Service Interface Module Type 10
(Misc).............................. 25UJJ00750GXC *
Service Interface Module Type 40
(LCAP).............................. 25UJJ00750GWX *
Subrack Cover Kit..................... 25SKM00750HFL *
Rack Mounting Kit for ETSI............ 25SKM00019AAE *
Dummy Front Panel 1'.................. 25RBN00021AAB *
Dummy SIA Panel 1'.................... 25RBN00021AAA *
Power Supply Unit..................... 25UPW00750HAY *
Subrack Control Unit.................. 25UMN00750GXD *
Payload Manager (mixed payload)....... NTKD10AA *
STM-1 G.957 L1.2 Optical Aggregate
Port Card (1550nm).................. 25UTM00750HWH *
STM-1 G.957 L-1.1, S1.1 Optical
Tributary Card (1'wide)............. NTKD11AA *
***Optical patchcord 20m FC-FC........ NT7E46BD *
Craft Access Terminal................. NTQJ09AA *
RS 232 Cable Assembly................. 25YCN00748AAA *
TN-1 CAT Release 12 Application
(3.5").............................. NTQJ35LA
TN-MS CA-1X Release 12 Licence........ NTQJ91DL
Netscape Windows95 (Fastrack Server
and Navigator)...................... NTQJ81BA *
TN-1X Release 8 Software Download
(from CAT).......................... NTQJ36HA
HP B132, 128Mbytes RAM, 2Gb HD, DAT,
CD, N.Hem........................... NTQJ01FA *
TN-MS EC-1 Release 12 (DAT)........... NTQJ30LA
Netscape for UNIX (Fastrack Server and
Navigator).......................... NTQJ81AA *
TN-1X Release 8 software download
(from EC)........................... NTQJ31HA
TN-1C Release 3 Software kit (disk &
tape)............................... NTFT81CA *
TN-MS EC-1 Release 12 Licence for
TN-1X............................... NTQJ91AL *
TN-MS EC-1 Release 12 Standby
Licence............................. NTQJ91BL *
TN-MS EC-1 Multi-user Licence......... NTQJ91CA *
X terminal software on DAT............ NTQJ05JB *
TN-1X Rel 8 NTPs (CD-ROM MAC)......... 32HSC00456VEC *
TN-1C
Core
TN-1C 8x2/16x2 turbo ADM (1550nm
L1.2)............................... NTFT52BI *
AC/DC Power Unit...................... NTFT21AA *
12V Battery NTFT24AA *
***BT43/5F & 3002 cable assy 20m...... 32YCN00750CAA *
***Optical patchcord 20m FC-FC........ NT7E46BD *
TN-MS EC-1 Release 12 Licence for
TN-1C............................... NTQJ91FL *
Craft Access Terminal................. NTQJ09AA *
CAT Cable Assembly.................... NTFT15AC *
TN-1C Release 3 Software kit (disk &
tape)............................... NTFT81CA *
TN-1 CAT Release 12 Application
(3.5").............................. NTQJ35LA
Netscape Windows95 (Fastrack Server
and Navigator)...................... NTQJ81BA *
TN-1C Release 3 handbook CD-ROM....... NTFT66CA *
1.4 DXC *
256 Port Cross Connect (MSH84) MSH84
STM-1 Optical card
16 x 2Mbit/s Port Unit
MV-36 Element controller.............. MV-36
Managed Object Agent (MOA)
1.5 TN-MS INM *
Hardware
HP C200 workstation, north & south
hemisphere.......................... NTQJ01GC
NRM Release 6 Software and Handbooks.. NTQJ12FA
NRM Release 6 Feature Profile Tape--
Core + IM + PM + CM................. NTQJ10FK
TN-MS NRM (Rel6) Alarm surveillance
Licence............................. NTQJ90AF
TN-MS NRM (Rel6) Electronic Software
Delivery Licence.................... NTQJ90BF
TN-MS NRM (Rel6) Inventory Manager
Licence............................. NTQJ90DF
TN-MS NRM (Rel6) Perf. Mon.
Consolidation Licence............... NTQJ90EF
TN-MS NRM (Rel6) Connection Management
Licence............................. NTQJ90FF
TN-MS NRM (Rel6) Software Management
User Guide.......................... NTQJ19FT
TN-MS NRM (Rel6) Inventory Management
User Guide.......................... NTQJ19FX
TN-MS NRM (Rel6) Performance
Management User Guide............... NTQJ19FW
TN-MS NRM (Rel6) Connection Management
User Guide.......................... NTQJ19FV
Router 2501 OSI....................... NTJM01BA
Router 2514 OSI....................... NTJM01KA
DCN RConfig "P" 2514 ent. 0 tunnels,
Ser: 2 L2,0 L1 CPC Allocated:
A0741950............................ NTJM9914
DCN RConfig "P" 2514 ent. 1 tunnel,
Ser: 1 L2,1 L1 CPC Allocated:
A0741941............................ NTJM9912
HS modem SP-1-AR,AC................... NTJM01SA
Shelf Cantilever 19in mounting........ P0878672
</TABLE>
- ------------------------
* The confidential portion has been omitted pursuant to a request for
confidential treatment and omitted
material has been filed separately with the commission.
54
<PAGE>
<TABLE>
<CAPTION>
VIATEL CIRCLE 1 CONTRACT
ANNEX C
SCHEDULE OF PRICES
SECTION B - UK
<S> <C> <C> <C> <C> <C>
Transceiver 10BaseT................... NTJM01VA
Ethernet 10BaseT Transceiver.......... A0383333
Baystack 101 10baseT hub 12 port RJ45
250VAC.............................. NTJM02PA
***Cable Assy LAN RJ45--RJ45 h/e...... 32YCN00727AFA
***Ethernet kit for OPC hub
(20m,OC-48)......................... NT7E44JE
1.6 NETWORK SYNCHRONISATION *
DCD-521C
DCD-Cs ETSI Standalone Cesium PRC..... 990-43100-02
DCD-LPR Shelf GPS Applications........ 990-44100-12
GPS Timing Kit E1 (Rubidium or
Quartz)............................. 990-44140-14
Blank Unit LPR........................ 090-44198-01
LOU-2 Dual oscillator................. 090-44145-02
DCD-521/C ETSI Shelf
Master/Expansion.................... 990-44210-01
MRC-EA/Input card 2MHz/2Mb/s, 4
inputs.............................. 090-44010-06
TNCE Clock card rubidium.............. 090-44017-02
TNC Clock card transit node OCXO...... 090-44020-02
TO-EA Output card 2MHz/2Mb/s 10
outputs............................. 090-44029-01
MIS Maint i'f
analysis/config/remote.............. 990-44018-14
Blank Panel 1 TO slot wide............ 074-00208-01
Timing Input Module MRC SMB........... 990-45107-02
Timing Output Module SMB,1:1 prot..... 990-45105-07
1.7 EQUIPMENT PRACTICE
Mechanical bay assy ETSI (no expansion
sh)................................. NTCE89AA * * *
NTE-STM16 Rack (2200 x 600 x 300)--
cost reduced........................ NTFW70EA *
TN-16X Installation Kit............... 25SKM00807ABM *
REGEN Rack Assy....................... NTFW71AA *
Rack side cover L/H u/o NTFW70AA...... P0725173 *
Rack side cover R/H u/o NTFW70AA...... P0725175 *
Mechanical assembly, rack, 42U........ A0726263
Distribution block 8 way left hand
cable entry......................... A0729317
Distribution block 8 way right hand
cable entry......................... A0729318
ETSI Rack, 220cm, without side
panels.............................. NTKD70AA *
NT ETSI Rack Standard Inst.Kit........ 25SKM00807ABE *
ETSI Rack 48V DC Distrib Panel with
Rack Alarm Unit..................... 25SKM00807AAN *
1.8 ADDITIONAL ITEMS
OC-192 REL 1.4 SUPERSET CUSTOMER
LOADS............................... ***PLM_TN-16X_NC_1
AC Power Cable Assembly............... PLM_Source_locally *
***Cable Assy, RJ45 crossover......... 32YCN01094AFA *
*** OPTICAL PATCHCORD 20M SC-SC....... PLM_Advanced Optics_NC_3 *
TOTAL EXTENDED EQUIPMENT PRICE........ *
2.0 Installation & Commissioning.......... * * *
Installation Materials................ *
-----
TOTAL EXTENDED PRICE.................. *
-----
-----
</TABLE>
- ------------------------
* The confidential portion has been omitted pursuant to a request for
confidential treatment and omitted
material has been filed separately with the commission.
55
<PAGE>
<TABLE>
<CAPTION>
VIATEL CIRCLE 1 CONTRACT
ANNEX C
SCHEDULE OF PRICES
SECTION B - UK
PEVENSEY BAY ISSUE 1.0
----------------------------------------- ----------------------------------------------------------------------------
ABBREVIATED DESCRIPTION CODE SELLING PRICE PEVENSEY BAY EXT PRICE
----------------------------------------- --------------------------- --------------- --------------- -------------
$US QTY $US
<S> <C> <C> <C> <C> <C>
1.0 TRANSMISSION EQUIPMENT
1.1 TN-16 4F
Core
OC192 SC060 SHELF CONTROLLER............. NTCA41BA * * *
MAINTENANCE INTERFACE.................... NTCA42AA * * *
*** CABLE ASSY (MODEM ACCESS)............ NTCC8930 * * *
MESSAGE TRANSFER CARD.................... NTCA48AA * * *
BREAKER MODULE........................... NTCA40AA * * *
COMMON EQUIPMENT FILLER CARD (1 IN.)..... NTCA59AA * * *
PARTITIONED OPC CONTROLLER............... NTCA50AA *
*** CA ASSY (10 BASE T CROSSOVER)........ NT7E44KC *
PARTITIONED OPC STORAGE MODULE........... NTCA51AA *
OPC FLASH CARTRIDGE...................... NTCA53AA *
PARTITIONED OPC IO MODULE................ NTCA52AA *
*** SM OPTICAL PATCHCORD 20M (66FT)
(SC-TUNED) SEE A06..................... NT7E46HD * * *
*** SM OPTICAL PATCHCORD 20M (66FT)
(SC-TUNED) W/MVOA...................... NT7E47HD * * *
TRANSPORT SHELF FILLER CARD.............. NTCA49AA * * *
TRANSPORT SHELF SWITCH FILLER CARD....... NTCA49AB * * *
OC-192 OPTICAL AMPLIFIER W/ SERVICE
CHANNEL (SC)........................... NTCA11AC * * *
OC-192 OPTICAL AMPLIFIER (SC)............ NTCA11BC *
1625NM OPTICAL SERVICE CHANNEL (SC) NTCA11CC *
1550/1625NM WDM COUPLER (SC) NTCC13AC *
MOR RTU.................................. NTCA62DA * * *
1.2 TN-16X
Core
STM16 LTE/ADM/RING SHELF--COST REDUCED... NTFW50EA *
SH PROCESSOR FOR SDH (DCC HUBBING)....... NT7E20GC *
SH PROCESSOR(ETHERNET,SYNC MSG 24M)...... NT7E20KA * * *
Maintenance Interface Unit............... NT7E23AA * * *
TN-16X Regenerator Subrack Kit........... NTFW51AA * * *
OC-48/STM-16 Ring Demux.................. NT8E06AB *
OC48 DWDM 1528.77 NM RING TX............. NT8E11DQ *
OC48 DWDM 1530.33 RING TRANSMITTER....... NT8E11FQ *
OC48 WDM 1533.47 RING TRANSMITTER........ NT8E11KQ *
OC48 WDM 1535.04 RING TRANSMITTER........ NT8E11MQ *
OC48 DWDM 1550.92 NM RING TRANSMITTER.... NT8E11KR *
OC48 DWDM 1552.52 RING TRANSMITTER....... NT8E11MR *
OC48 DWDM 1555.75 NM RING TRANSMITTER.... NT8E11RR *
OC48 DWDM 1557.36 RING TRANSMITTER....... NT8E11TR *
OC48 DWDM 1528.77 NM REGEN............... NT8E13DJ * * *
OC48 DWDM 1530.33 REG/TX INTERFACE....... NT8E13FJ * * *
OC48 DWDM 1533.47 REG/TX INTERFACE....... NT8E13KJ * * *
OC48 DWDM 1535.04 REG/TX INTERFACE....... NT8E13MJ * * *
OC48 DWDM 1550.92 REG/TX INTERFACE....... NT8E13KK * * *
OC48 DWDM 1552.52 REG/TX INTERFACE....... NT8E13MK * * *
OC48 DWDM 1555.75 REG/TX INTERFACE....... NT8E13RK * * *
OC48 DWDM 1557.36 REG/TX INTERFACE....... NT8E13TK * * *
OC-48/STM16 LR SAW Rx Interface (SC)..... NT8E02DD * * *
STM1o IR 1310 Tributary I/F (SC)......... NTFW11CD *
STM1 Optical Carrier Assembly............ NTFW19BA *
External synchronisation interface
carrier................................ NT7E19AA *
External Synchronisation Interface (2
MHz)................................... NTFW27AA *
*** OPTICAL PATCH CORD 20M (SC-SC)....... NT7E46FD * * *
*** OPTICAL PATCH CORD W/MVOA 20M
(SC-SC)................................ NT7E47FD * * *
KIT, SC OPTICAL CONNECTOR. INITIAL USE
NTN401AA............................... NTN459SC * * *
*** FIBRE OPTIC CABLE ASSY STM1 DUPLEX
SC-SC 20M.............................. NTFW5753 *
TN-16X Regenerator Software Licence
(Release 7)............................ NTQJ93GG * * *
TN-16X Shared Protection Ring Software
Licence (Release 7).................... NTQJ93HG *
Extra Traffic on Rings on Licence........ NTQJ93TB *
OPC with tape drive...................... NT7E24BC *
PHOENIX SUPERSET CODE FOR REL 7.......... NTFW97HA *
*** CNET BAY/BAY CABLE 5.0M.............. NT7E44JC *
TN-MS EC-16X Multi-user Licence.......... NTQJ93CA *
TN-MS EC-16X Release 7 Licence........... NTQJ93AG *
TN-MS EC-16X Release 7 Standby Licence... NTQJ93BG *
FW TN-16X Rel 7 NTPS (CD-ROM)............ NTFW64AH *
1.3 ADVANCED OPTICS (DWDM)
</TABLE>
- ------------------------
* The confidential portion has been omitted pursuant to a request for
confidential treatment and omitted
material has been filed separately with the commission.
56
<PAGE>
<TABLE>
<CAPTION>
VIATEL CIRCLE 1 CONTRACT
ANNEX C
SCHEDULE OF PRICES
SECTION B - UK
<S> <C> <C> <C> <C> <C>
Core
DWDM FILTER MODULE SHELF ASSY-- 4
POS--ETSI.............................. NTCE88BA * * *
DWDM COUPLER 8W,MB/DR W/O VOA,SC......... NTCA10GC * * *
DWDM COUPLER 8W,DB/MR W/O VOA,SC......... NTCA10HC * * *
TN-1X
Core
TN-1X Synchronous Access Multiplexer
Subrack................................ 25GMU00750GWV *
Shelf Kit................................ 25SKM00750HFN *
TN-1X Installation Kit................... 25SKM00807ABL *
Local Craft Access Panel Type 1.......... 25UEP00750GXB *
Service Interface Module Type 10
(Misc)................................. 25UJJ00750GXC *
Service Interface Module Type 40
(LCAP)................................. 25UJJ00750GWX *
Subrack Cover Kit........................ 25SKM00750HFL *
Rack Mounting Kit for ETSI............... 25SKM00019AAE *
Dummy Front Panel 1'..................... 25RBN00021AAB *
Dummy SIA Panel 1'....................... 25RBN00021AAA *
Power Supply Unit........................ 25UPW00750HAY *
Subrack Control Unit..................... 25UMN00750GXD *
Payload Manager (mixed payload).......... NTKD10AA *
STM-1 G.957 L1.2 Optical Aggregate Port
Card (1550nm).......................... 25UTM00750HWH *
STM-1 G.957 L-1.1, S1.1 Optical Tributary
Card (1'wide).......................... NTKD11AA *
***Optical patchcord 20m FC-FC........... NT7E46BD *
Craft Access Terminal.................... NTQJ09AA *
RS 232 Cable Assembly.................... 25YCN00748AAA *
TN-1 CAT Release 12 Application (3.5")... NTQJ35LA
TN-MS CA-1X Release 12 Licence........... NTQJ91DL
Netscape Windows95 (Fastrack Server and
Navigator)............................. NTQJ81BA *
TN-1X Release 8 Software Download (from
CAT)................................... NTQJ36HA
HP B132, 128Mbytes RAM, 2Gb HD, DAT, CD,
N.Hem.................................. NTQJ01FA *
TN-MS EC-1 Release 12 (DAT).............. NTQJ30LA
Netscape for UNIX (Fastrack Server and
Navigator)............................. NTQJ81AA *
TN-1X Release 8 software download (from
EC).................................... NTQJ31HA
TN-1C Release 3 Software kit (disk &
tape).................................. NTFT81CA *
TN-MS EC-1 Release 12 Licence for TN-1X.. NTQJ91AL *
TN-MS EC-1 Release 12 Standby Licence.... NTQJ91BL *
TN-MS EC-1 Multi-user Licence............ NTQJ91CA *
X terminal software on DAT............... NTQJ05JB *
TN-1X Rel 8 NTPs (CD-ROM MAC)............ 32HSC00456VEC *
TN-1C
Core
TN-1C 8x2/16x2 turbo ADM (1550nm L1.2)... NTFT52BI *
AC/DC Power Unit......................... NTFT21AA *
12V Battery.............................. NTFT24AA *
***BT43/5F & 3002 cable assy 20m......... 32YCN00750CAA *
***Optical patchcord 20m FC-FC........... NT7E46BD *
TN-MS EC-1 Release 12 Licence for TN-1C.. NTQJ91FL *
Craft Access Terminal.................... NTQJ09AA *
CAT Cable Assembly....................... NTFT15AC *
TN-1C Release 3 Software kit (disk &
tape).................................. NTFT81CA *
TN-1 CAT Release 12 Application (3.5")... NTQJ35LA
Netscape Windows95 (Fastrack Server and
Navigator)............................. NTQJ81BA *
TN-1C Release 3 handbook CD-ROM.......... NTFT66CA *
1.4 DXC *
256 Port Cross Connect (MSH84)........... MSH84
STM-1 Optical card.......................
16 x 2Mbit/s Port Unit...................
MV-36 Element controller................. MV-36
Managed Object Agent (MOA)
1.5 TN-MS INM *
Hardware
HP C200 workstation, north & south
hemisphere............................. NTQJ01GC
NRM Release 6 Software and Handbooks..... NTQJ12FA
NRM Release 6 Feature Profile Tape--Core
+ IM + PM + CM......................... NTQJ10FK
TN-MS NRM (Rel6) Alarm surveillance
Licence................................ NTQJ90AF
TN-MS NRM (Rel6) Electronic Software
Delivery Licence....................... NTQJ90BF
TN-MS NRM (Rel6) Inventory Manager
Licence................................ NTQJ90DF
TN-MS NRM (Rel6) Perf. Mon. Consolidation
Licence................................ NTQJ90EF
TN-MS NRM (Rel6) Connection Management
Licence................................ NTQJ90FF
TN-MS NRM (Rel6) Software Management User
Guide.................................. NTQJ19FT
TN-MS NRM (Rel6) Inventory Management
User Guide............................. NTQJ19FX
TN-MS NRM (Rel6) Performance Management
User Guide............................. NTQJ19FW
TN-MS NRM (Rel6) Connection Management
User Guide............................. NTQJ19FV
Router 2501 OSI.......................... NTJM01BA
</TABLE>
- ------------------------
* The confidential portion has been omitted pursuant to a request for
confidential treatment and omitted
material has been filed separately with the commission.
57
<PAGE>
<TABLE>
<CAPTION>
VIATEL CIRCLE 1 CONTRACT
ANNEX C
SCHEDULE OF PRICES
SECTION B - UK
<S> <C> <C> <C> <C> <C>
Router 2514 OSI.......................... NTJM01KA
DCN RConfig "P" 2514 ent. 0 tunnels, Ser:
2 L2,0 L1 CPC Allocated: A0741950...... NTJM9914
DCN RConfig "P" 2514 ent. 1 tunnel, Ser:
1 L2,1 L1 CPC Allocated: A0741941...... NTJM9912
HS modem SP-1-AR,AC...................... NTJM01SA
Shelf Cantilever 19in mounting........... P0878672
Transceiver 10BaseT...................... NTJM01VA
Ethernet 10BaseT Transceiver............. A0383333
Baystack 101 10baseT hub 12 port RJ45
250VAC................................. NTJM02PA
***Cable Assy LAN RJ45--RJ45 h/e......... 32YCN00727AFA
***Ethernet kit for OPC hub
(20m,OC-48)............................ NT7E44JE
1.6 NETWORK SYNCHRONISATION *
DCD-521C
DCD-Cs ETSI Standalone Cesium PRC........ 990-43100-02
DCD-LPR Shelf GPS Applications........... 990-44100-12
GPS Timing Kit E1 (Rubidium or Quartz)... 990-44140-14
Blank Unit LPR........................... 090-44198-01
LOU-2 Dual oscillator.................... 090-44145-02
DCD-521/C ETSI Shelf Master/Expansion.... 990-44210-01
MRC-EA/Input card 2MHz/2Mb/s, 4 inputs... 090-44010-06
TNCE Clock card rubidium................. 090-44017-02
TNC Clock card transit node OCXO......... 090-44020-02
TO-EA Output card 2MHz/2Mb/s 10 outputs.. 090-44029-01
MIS Maint i'f analysis/config/remote..... 990-44018-14
Blank Panel 1 TO slot wide............... 074-00208-01
Timing Input Module MRC SMB.............. 990-45107-02
Timing Output Module SMB,1:1 prot........ 990-45105-07
1.7 EQUIPMENT PRACTICE
Mechanical bay assy ETSI (no expansion
sh).................................... NTCE89AA * * *
NTE-STM16 Rack (2200 x 600 x 300)--cost
reduced................................ NTFW70EA *
TN-16X Installation Kit.................. 25SKM00807ABM * * *
REGEN Rack Assy.......................... NTFW71AA * * *
Rack side cover L/H u/o NTFW70AA......... P0725173 * * *
Rack side cover R/H u/o NTFW70AA......... P0725175 * * *
Mechanical assembly, rack, 42U........... A0726263
Distribution block 8 way left hand cable
entry.................................. A0729317
Distribution block 8 way right hand cable
entry.................................. A0729318
ETSI Rack, 220cm, without side panels.... NTKD70AA *
NT ETSI Rack Standard Inst.Kit........... 25SKM00807ABE *
ETSI Rack 48V DC Distrib Panel with Rack
Alarm Unit............................. 25SKM00807AAN *
1.8 ADDITIONAL ITEMS
OC-192 REL 1.4 SUPERSET CUSTOMER LOADS... ***PLM_TN-16X_NC_1
AC Power Cable Assembly.................. PLM_Source_locally *
***Cable Assy, RJ45 crossover............ 32YCN01094AFA *
*** OPTICAL PATCHCORD 20M SC-SC.......... PLM_Advanced Optics_NC_3 * * *
Total Extended Equipment Price........... *
2.0 INSTALLATION & COMMISSIONING * * *
Installation Materials................... *
-----
TOTAL EXTENDED PRICE..................... *
-----
-----
</TABLE>
- ------------------------
* The confidential portion has been omitted pursuant to a request for
confidential treatment and omitted
material has been filed separately with the commission.
58
<PAGE>
<TABLE>
<CAPTION>
VIATEL CIRCLE 1 CONTRACT
ANNEX C
SCHEDULE OF PRICES
SECTION B - UK
WINTERTON ISSUE 1.0
----------------------------------------- ----------------------------------------------------------------------------
ABBREVIATED DESCRIPTION CODE SELLING PRICE WINTERTON EXT PRICE
----------------------------------------- --------------------------- --------------- --------------- -------------
$US QTY $US
<S> <C> <C> <C> <C> <C>
1.0 TRANSMISSION EQUIPMENT
1.1 TN-16 4F
Core
OC192 SC060 SHELF CONTROLLER............. NTCA41BA * * *
MAINTENANCE INTERFACE.................... NTCA42AA * * *
*** CABLE ASSY (MODEM ACCESS)............ NTCC8930 * * *
MESSAGE TRANSFER CARD.................... NTCA48AA * * *
BREAKER MODULE........................... NTCA40AA * * *
COMMON EQUIPMENT FILLER CARD (1 IN.)..... NTCA59AA * * *
PARTITIONED OPC CONTROLLER............... NTCA50AA *
*** CA ASSY (10 BASE T CROSSOVER)........ NT7E44KC *
PARTITIONED OPC STORAGE MODULE........... NTCA51AA *
OPC FLASH CARTRIDGE...................... NTCA53AA *
PARTITIONED OPC IO MODULE................ NTCA52AA *
*** SM OPTICAL PATCHCORD 20M (66FT)
(SC-TUNED) SEE A06....................... NT7E46HD * * *
*** SM OPTICAL PATCHCORD 20M (66FT)
(SC-TUNED) W/MVOA........................ NT7E47HD * * *
TRANSPORT SHELF FILLER CARD.............. NTCA49AA * * *
TRANSPORT SHELF SWITCH FILLER CARD....... NTCA49AB * * *
OC-192 OPTICAL AMPLIFIER W/ SERVICE
CHANNEL (SC)............................. NTCA11AC * * *
OC-192 OPTICAL AMPLIFIER (SC)............ NTCA11BC * * *
1625NM OPTICAL SERVICE CHANNEL (SC) NTCA11CC *
1550/1625NM WDM COUPLER (SC) NTCC13AC *
MOR RTU.................................. NTCA62DA * * *
1.2 TN-16X
Core
STM16 LTE/ADM/RING SHELF--COST REDUCED... NTFW50EA *
SH PROCESSOR FOR SDH (DCC HUBBING)....... NT7E20GC *
SH PROCESSOR(ETHERNET,SYNC MSG 24M)...... NT7E20KA * * *
Maintenance Interface Unit............... NT7E23AA * * *
TN-16X Regenerator Subrack Kit........... NTFW51AA * * *
OC-48/STM-16 Ring Demux.................. NT8E06AB *
OC48 DWDM 1528.77 NM RING TX............. NT8E11DQ *
OC48 DWDM 1530.33 RING TRANSMITTER....... NT8E11FQ *
OC48 WDM 1533.47 RING TRANSMITTER........ NT8E11KQ *
OC48 WDM 1535.04 RING TRANSMITTER........ NT8E11MQ *
OC48 DWDM 1550.92 NM RING TRANSMITTER.... NT8E11KR *
OC48 DWDM 1552.52 RING TRANSMITTER....... NT8E11MR *
OC48 DWDM 1555.75 NM RING TRANSMITTER.... NT8E11RR *
OC48 DWDM 1557.36 RING TRANSMITTER....... NT8E11TR *
OC48 DWDM 1528.77 NM REGEN............... NT8E13DJ * * *
OC48 DWDM 1530.33 REG/TX INTERFACE....... NT8E13FJ * * *
OC48 DWDM 1533.47 REG/TX INTERFACE....... NT8E13KJ *
OC48 DWDM 1535.04 REG/TX INTERFACE....... NT8E13MJ *
OC48 DWDM 1550.92 REG/TX INTERFACE....... NT8E13KK * * *
OC48 DWDM 1552.52 REG/TX INTERFACE....... NT8E13MK * * *
OC48 DWDM 1555.75 REG/TX INTERFACE....... NT8E13RK * * *
OC48 DWDM 1557.36 REG/TX INTERFACE....... NT8E13TK * * *
OC-48/STM16 LR SAW Rx Interface (SC)..... NT8E02DD * * *
STM1o IR 1310 Tributary I/F (SC)......... NTFW11CD *
STM1 Optical Carrier Assembly............ NTFW19BA *
External synchronisation interface
carrier.................................. NT7E19AA *
External Synchronisation Interface (2
MHz)..................................... NTFW27AA *
*** OPTICAL PATCH CORD 20M (SC-SC)....... NT7E46FD * * *
*** OPTICAL PATCH CORD W/MVOA 20M (SC-SC) NT7E47FD * * *
KIT, SC OPTICAL CONNECTOR. INITIAL USE
NTN401AA................................. NTN459SC * * *
*** FIBRE OPTIC CABLE ASSY STM1 DUPLEX SC-SC
20M...................................... NTFW5753 *
TN-16X Regenerator Software Licence (Release
7)....................................... NTQJ93GG * * *
TN-16X Shared Protection Ring Software
Licence (Release 7)...................... NTQJ93HG *
Extra Traffic on Rings on Licence........ NTQJ93TB *
OPC with tape drive...................... NT7E24BC *
PHOENIX SUPERSET CODE FOR REL 7.......... NTFW97HA *
*** CNET BAY/BAY CABLE 5.0M.............. NT7E44JC *
TN-MS EC-16X Multi-user Licence.......... NTQJ93CA *
TN-MS EC-16X Release 7 Licence........... NTQJ93AG *
TN-MS EC-16X Release 7 Standby Licence... NTQJ93BG *
FW TN-16X Rel 7 NTPS (CD-ROM)............ NTFW64AH *
</TABLE>
- ------------------------
* The confidential portion has been omitted pursuant to a request for
confidential treatment and omitted
material has been filed separately with the commission.
59
<PAGE>
<TABLE>
<CAPTION>
VIATEL CIRCLE 1 CONTRACT
ANNEX C
SCHEDULE OF PRICES
SECTION B - UK
<S> <C> <C> <C> <C> <C>
1.3 ADVANCED OPTICS (DWDM)
Core
DWDM FILTER MODULE SHELF ASSY--4
POS--ETSI................................... NTCE88BA * * *
DWDM COUPLER 8W,MB/DR W/O VOA,SC............ NTCA10GC * * *
DWDM COUPLER 8W,DB/MR W/O VOA,SC............ NTCA10HC * * *
TN-1X
Core
TN-1X Synchronous Access Multiplexer
Subrack..................................... 25GMU00750GWV *
Shelf Kit................................... 25SKM00750HFN *
TN-1X Installation Kit...................... 25SKM00807ABL *
Local Craft Access Panel Type 1............. 25UEP00750GXB *
Service Interface Module Type 10 (Misc)..... 25UJJ00750GXC *
Service Interface Module Type 40 (LCAP)..... 25UJJ00750GWX *
Subrack Cover Kit........................... 25SKM00750HFL *
Rack Mounting Kit for ETSI.................. 25SKM00019AAE *
Dummy Front Panel 1'........................ 25RBN00021AAB *
Dummy SIA Panel 1'.......................... 25RBN00021AAA *
Power Supply Unit........................... 25UPW00750HAY *
Subrack Control Unit........................ 25UMN00750GXD *
Payload Manager (mixed payload)............. NTKD10AA *
STM-1 G.957 L1.2 Optical Aggregate Port Card
(1550nm).................................... 25UTM00750HWH *
STM-1 G.957 L-1.1, S1.1 Optical Tributary
Card (1'wide)............................... NTKD11AA *
***Optical patchcord 20m FC-FC.............. NT7E46BD *
Craft Access Terminal....................... NTQJ09AA *
RS 232 Cable Assembly....................... 25YCN00748AAA *
TN-1 CAT Release 12 Application (3.5")...... NTQJ35LA
TN-MS CA-1X Release 12 Licence.............. NTQJ91DL
Netscape Windows95 (Fastrack Server and
Navigator).................................. NTQJ81BA *
TN-1X Release 8 Software Download (from
CAT)........................................ NTQJ36HA
HP B132, 128Mbytes RAM, 2Gb HD, DAT, CD,
N.Hem....................................... NTQJ01FA *
TN-MS EC-1 Release 12 (DAT)................. NTQJ30LA
Netscape for UNIX (Fastrack Server and
Navigator).................................. NTQJ81AA *
TN-1X Release 8 software download (from
EC)......................................... NTQJ31HA
TN-1C Release 3 Software kit (disk &
tape)....................................... NTFT81CA *
TN-MS EC-1 Release 12 Licence for TN-1X..... NTQJ91AL *
TN-MS EC-1 Release 12 Standby Licence....... NTQJ91BL *
TN-MS EC-1 Multi-user Licence............... NTQJ91CA *
X terminal software on DAT.................. NTQJ05JB *
TN-1X Rel 8 NTPs (CD-ROM MAC)............... 32HSC00456VEC *
TN-1C
Core
TN-1C 8x2/16x2 turbo ADM (1550nm L1.2)...... NTFT52BI *
AC/DC Power Unit............................ NTFT21AA *
12V Battery NTFT24AA *
***BT43/5F & 3002 cable assy 20m............ 32YCN00750CAA *
***Optical patchcord 20m FC-FC.............. NT7E46BD *
TN-MS EC-1 Release 12 Licence for TN-1C..... NTQJ91FL *
Craft Access Terminal....................... NTQJ09AA *
CAT Cable Assembly.......................... NTFT15AC *
TN-1C Release 3 Software kit (disk &
tape)....................................... NTFT81CA *
TN-1 CAT Release 12 Application (3.5")...... NTQJ35LA
Netscape Windows95 (Fastrack Server and
Navigator).................................. NTQJ81BA *
TN-1C Release 3 handbook CD-ROM............. NTFT66CA *
1.4 DXC *
256 Port Cross Connect (MSH84).............. MSH84
STM-1 Optical card..........................
16 x 2Mbit/s Port Unit......................
MV-36 Element controller.................... MV-36
Managed Object Agent (MOA)
1.5 TN-MS INM *
Hardware
HP C200 workstation, north & south
hemisphere.................................. NTQJ01GC
NRM Release 6 Software and Handbooks........ NTQJ12FA
NRM Release 6 Feature Profile Tape--Core +
IM + PM + CM................................ NTQJ10FK
TN-MS NRM (Rel6) Alarm surveillance
Licence..................................... NTQJ90AF
TN-MS NRM (Rel6) Electronic Software
Delivery Licence............................ NTQJ90BF
TN-MS NRM (Rel6) Inventory Manager Licence.. NTQJ90DF
TN-MS NRM (Rel6) Perf. Mon. Consolidation
Licence..................................... NTQJ90EF
TN-MS NRM (Rel6) Connection Management
Licence..................................... NTQJ90FF
</TABLE>
- ------------------------
* The confidential portion has been omitted pursuant to a request for
confidential treatment and omitted
material has been filed separately with the commission.
60
<PAGE>
<TABLE>
<CAPTION>
VIATEL CIRCLE 1 CONTRACT
ANNEX C
SCHEDULE OF PRICES
SECTION B - UK
<S> <C> <C> <C> <C> <C>
TN-MS NRM (Rel6) Software Management User
Guide....................................... NTQJ19FT
TN-MS NRM (Rel6) Inventory Management User
Guide....................................... NTQJ19FX
TN-MS NRM (Rel6) Performance Management User
Guide....................................... NTQJ19FW
TN-MS NRM (Rel6) Connection Management User
Guide....................................... NTQJ19FV
Router 2501 OSI............................. NTJM01BA
Router 2514 OSI............................. NTJM01KA
DCN RConfig "P" 2514 ent. 0 tunnels, Ser: 2
L2,0 L1 CPC Allocated: A0741950............. NTJM9914
DCN RConfig "P" 2514 ent. 1 tunnel, Ser: 1
L2,1 L1 CPC Allocated: A0741941............. NTJM9912
HS modem SP-1-AR,AC......................... NTJM01SA
Shelf Cantilever 19in mounting.............. P0878672
Transceiver 10BaseT......................... NTJM01VA
Ethernet 10BaseT Transceiver................ A0383333
Baystack 101 10baseT hub 12 port RJ45
250VAC...................................... NTJM02PA
***Cable Assy LAN RJ45--RJ45 h/e............ 32YCN00727AFA
***Ethernet kit for OPC hub (20m,OC-48)..... NT7E44JE
1.6 NETWORK SYNCHRONISATION *
DCD-521C
DCD-Cs ETSI Standalone Cesium PRC........... 990-43100-02
DCD-LPR Shelf GPS Applications.............. 990-44100-12
GPS Timing Kit E1 (Rubidium or Quartz)...... 990-44140-14
Blank Unit LPR.............................. 090-44198-01
LOU-2 Dual oscillator....................... 090-44145-02
DCD-521/C ETSI Shelf Master/Expansion....... 990-44210-01
MRC-EA/Input card 2MHz/2Mb/s, 4 inputs...... 090-44010-06
TNCE Clock card rubidium.................... 090-44017-02
TNC Clock card transit node OCXO............ 090-44020-02
TO-EA Output card 2MHz/2Mb/s 10 outputs..... 090-44029-01
MIS Maint i'f analysis/config/remote........ 990-44018-14
Blank Panel 1 TO slot wide.................. 074-00208-01
Timing Input Module MRC SMB................. 990-45107-02
Timing Output Module SMB,1:1 prot........... 990-45105-07
1.7 EQUIPMENT PRACTICE
Mechanical bay assy ETSI (no expansion
sh)......................................... NTCE89AA * * *
NTE-STM16 Rack (2200 x 600 x 300)--cost
reduced..................................... NTFW70EA *
TN-16X Installation Kit..................... 25SKM00807ABM * * *
REGEN Rack Assy............................. NTFW71AA * * *
Rack side cover L/H u/o NTFW70AA............ P0725173 * * *
Rack side cover R/H u/o NTFW70AA............ P0725175 * * *
Mechanical assembly, rack, 42U.............. A0726263
Distribution block 8 way left hand cable
entry....................................... A0729317
Distribution block 8 way right hand cable
entry....................................... A0729318
ETSI Rack, 220cm, without side panels....... NTKD70AA *
NT ETSI Rack Standard Inst.Kit.............. 25SKM00807ABE *
ETSI Rack 48V DC Distrib Panel with Rack
Alarm Unit.................................. 25SKM00807AAN *
1.8 ADDITIONAL ITEMS
OC-192 REL 1.4 SUPERSET CUSTOMER LOADS...... ***PLM_TN-16X_NC_1
AC Power Cable Assembly..................... PLM_Source_locally *
***Cable Assy, RJ45 crossover............... 32YCN01094AFA *
*** OPTICAL PATCHCORD 20M SC-SC............. PLM_Advanced Optics_NC_3 * * *
TOTAL EXTENDED EQUIPMENT PRICE.............. *
2.0 INSTALLATION & COMMISSIONING * * *
Installation Materials...................... *
-----
TOTAL EXTENDED PRICE........................ *
-----
-----
</TABLE>
- ------------------------
* The confidential portion has been omitted pursuant to a request for
confidential treatment and omitted
material has been filed separately with the commission.
61
<PAGE>
<TABLE>
<CAPTION>
VIATEL CIRCLE 1 CONTRACT
ANNEX C
SCHEDULE OF PRICES
SECTION C - NETHERLANDS
ROTTERDAM ISSUE 1.0
------------------------------------------ ---------------------------------------------------------------------------
ABBREVIATED DESCRIPTION CODE SELLING PRICE ROTTERDAM EXT PRICE
------------------------------------------ ---------------------------- --------------- ------------- -------------
$US $US
<S> <C> <C> <C> <C> <C>
1.0 TRANSMISSION EQUIPMENT
1.1 TN-16 4F
Core
OC192 SC060 SHELF CONTROLLER.............. NTCA41BA * * *
MAINTENANCE INTERFACE..................... NTCA42AA * * *
*** CABLE ASSY (MODEM ACCESS)............. NTCC8930 * * *
MESSAGE TRANSFER CARD..................... NTCA48AA * * *
BREAKER MODULE............................ NTCA40AA * * *
COMMON EQUIPMENT FILLER CARD (1 IN.)...... NTCA59AA * * *
PARTITIONED OPC CONTROLLER................ NTCA50AA *
*** CA ASSY (10 BASE T CROSSOVER)......... NT7E44KC *
PARTITIONED OPC STORAGE MODULE............ NTCA51AA *
OPC FLASH CARTRIDGE....................... NTCA53AA *
PARTITIONED OPC IO MODULE................. NTCA52AA *
*** SM OPTICAL PATCHCORD 20M (66FT)
(SC-TUNED) SEE A06........................ NT7E46HD * * *
*** SM OPTICAL PATCHCORD 20M (66FT)
(SC-TUNED) W/MVOA......................... NT7E47HD * * *
TRANSPORT SHELF FILLER CARD............... NTCA49AA * * *
TRANSPORT SHELF SWITCH FILLER CARD........ NTCA49AB * * *
OC-192 OPTICAL AMPLIFIER W/ SERVICE
CHANNEL (SC).............................. NTCA11AC * * *
OC-192 OPTICAL AMPLIFIER (SC)............. NTCA11BC *
1625NM OPTICAL SERVICE CHANNEL (SC)....... NTCA11CC *
1550/1625NM WDM COUPLER (SC).............. NTCC13AC *
MOR RTU................................... NTCA62DA * * *
1.2 TN-16X
Core
STM16 LTE/ADM/RING SHELF--COST REDUCED.... NTFW50EA * * *
SH PROCESSOR FOR SDH (DCC HUBBING)........ NT7E20GC * * *
SH PROCESSOR(ETHERNET,SYNC MSG 24M)....... NT7E20KA *
Maintenance Interface Unit................ NT7E23AA * * *
TN-16X Regenerator Subrack Kit............ NTFW51AA *
OC-48/STM-16 Ring Demux................... NT8E06AB * * *
OC48 DWDM 1528.77 NM RING TX.............. NT8E11DQ * * *
OC48 DWDM 1530.33 RING TRANSMITTER........ NT8E11FQ * * *
OC48 WDM 1533.47 RING TRANSMITTER......... NT8E11KQ * * *
OC48 WDM 1535.04 RING TRANSMITTER......... NT8E11MQ * * *
OC48 DWDM 1550.92 NM RING TRANSMITTER..... NT8E11KR * * *
OC48 DWDM 1552.52 RING TRANSMITTER........ NT8E11MR * * *
OC48 DWDM 1555.75 NM RING TRANSMITTER..... NT8E11RR * * *
OC48 DWDM 1557.36 RING TRANSMITTER........ NT8E11TR * * *
OC48 DWDM 1528.77 NM REGEN................ NT8E13DJ *
OC48 DWDM 1530.33 REG/TX INTERFACE........ NT8E13FJ *
OC48 DWDM 1533.47 REG/TX INTERFACE........ NT8E13KJ *
OC48 DWDM 1535.04 REG/TX INTERFACE........ NT8E13MJ *
OC48 DWDM 1550.92 REG/TX INTERFACE........ NT8E13KK *
OC48 DWDM 1552.52 REG/TX INTERFACE........ NT8E13MK *
OC48 DWDM 1555.75 REG/TX INTERFACE........ NT8E13RK *
OC48 DWDM 1557.36 REG/TX INTERFACE........ *
OC-48/STM16 LR SAW Rx Interface (SC)...... NT8E02DD * * *
STM1o IR 1310 Tributary I/F (SC).......... NTFW11CD * * *
STM1 Optical Carrier Assembly............. NTFW19BA * * *
External synchronisation interface
carrier................................... NT7E19AA * * *
External Synchronisation Interface (2
MHz)...................................... NTFW27AA * * *
*** OPTICAL PATCH CORD 20M (SC-SC)........ NT7E46FD * * *
*** OPTICAL PATCH CORD W/MVOA 20M
(SC-SC)................................... NT7E47FD * * *
KIT, SC OPTICAL CONNECTOR. INITIAL USE
NTN401AA.................................. NTN459SC * * *
*** FIBRE OPTIC CABLE ASSY STM1 DUPLEX
SC-SC 20M................................. NTFW5753 * * *
TN-16X Regenerator Software Licence
(Release 7)............................... NTQJ93GG *
TN-16X Shared Protection Ring Software
Licence (Release 7)....................... NTQJ93HG * * *
Extra Traffic on Rings on Licence......... NTQJ93TB * * *
OPC with tape drive....................... NT7E24BC *
PHOENIX SUPERSET CODE FOR REL 7........... NTFW97HA *
*** CNET BAY/BAY CABLE 5.0M............... NT7E44JC *
TN-MS EC-16X Multi-user Licence........... NTQJ93CA *
TN-MS EC-16X Release 7 Licence............ NTQJ93AG *
TN-MS EC-16X Release 7 Standby Licence.... NTQJ93BG *
FW TN-16X Rel 7 NTPS (CD-ROM)............. NTFW64AH *
1.3 ADVANCED OPTICS (DWDM)
</TABLE>
- ------------------------
* The confidential portion has been omitted pursuant to a request for
confidential treatment and omitted
material has been filed separately with the commission.
62
<PAGE>
<TABLE>
<CAPTION>
VIATEL CIRCLE 1 CONTRACT
ANNEX C
SCHEDULE OF PRICES
SECTION C - NETHERLANDS
<S> <C> <C> <C> <C> <C>
Core
DWDM FILTER MODULE SHELF ASSY--4
POS--ETSI................................. NTCE88BA * * *
DWDM COUPLER 8W,MB/DR W/O VOA,SC.......... NTCA10GC * * *
DWDM COUPLER 8W,DB/MR W/O VOA,SC.......... NTCA10HC * * *
TN-1X
Core
TN-1X Synchronous Access Multiplexer
Subrack................................... 25GMU00750GWV *
Shelf Kit................................. 25SKM00750HFN *
TN-1X Installation Kit.................... 25SKM00807ABL *
Local Craft Access Panel Type 1........... 25UEP00750GXB *
Service Interface Module Type 10 (Misc)... 25UJJ00750GXC *
Service Interface Module Type 40 (LCAP)... 25UJJ00750GWX *
Subrack Cover Kit......................... 25SKM00750HFL *
Rack Mounting Kit for ETSI................ 25SKM00019AAE *
Dummy Front Panel 1'...................... 25RBN00021AAB *
Dummy SIA Panel 1''....................... 25RBN00021AAA *
Power Supply Unit......................... 25UPW00750HAY *
Subrack Control Unit...................... 25UMN00750GXD *
Payload Manager (mixed payload)........... NTKD10AA *
STM-1 G.957 L1.2 Optical Aggregate Port
Card (1550nm)............................. 25UTM00750HWH *
STM-1 G.957 L-1.1, S1.1 Optical Tributary
Card (1''wide)............................ NTKD11AA *
***Optical patchcord 20m FC-FC............ NT7E46BD *
Craft Access Terminal..................... NTQJ09AA *
RS 232 Cable Assembly..................... 25YCN00748AAA *
TN-1 CAT Release 12 Application (3.5").... NTQJ35LA
TN-MS CA-1X Release 12 Licence............ NTQJ91DL
Netscape Windows95 (Fastrack Server and
Navigator)................................ NTQJ81BA *
TN-1X Release 8 Software Download (from
CAT)...................................... NTQJ36HA
HP B132, 128Mbytes RAM, 2Gb HD, DAT, CD,
N.Hem..................................... NTQJ01FA *
TN-MS EC-1 Release 12 (DAT)............... NTQJ30LA
Netscape for UNIX (Fastrack Server and
Navigator)................................ NTQJ81AA *
TN-1X Release 8 software download (from
EC)....................................... NTQJ31HA
TN-1C Release 3 Software kit (disk &
tape)..................................... NTFT81CA *
TN-MS EC-1 Release 12 Licence for TN-1X... NTQJ91AL *
TN-MS EC-1 Release 12 Standby Licence..... NTQJ91BL *
TN-MS EC-1 Multi-user Licence............. NTQJ91CA *
X terminal software on DAT................ NTQJ05JB *
TN-1X Rel 8 NTPs (CD-ROM MAC)............. 32HSC00456VEC *
TN-1C
Core
TN-1C 8x2/16x2 turbo ADM (1550nm L1.2).... NTFT52BI *
AC/DC Power Unit.......................... NTFT21AA *
12V Battery NTFT24AA *
***BT43/5F & 3002 cable assy 20m.......... 32YCN00750CAA *
***Optical patchcord 20m FC-FC............ NT7E46BD *
TN-MS EC-1 Release 12 Licence for TN-1C... NTQJ91FL *
Craft Access Terminal..................... NTQJ09AA *
CAT Cable Assembly........................ NTFT15AC *
TN-1C Release 3 Software kit (disk &
tape)..................................... NTFT81CA *
TN-1 CAT Release 12 Application (3.5").... NTQJ35LA
Netscape Windows95 (Fastrack Server and
Navigator)................................ NTQJ81BA *
TN-1C Release 3 handbook CD-ROM........... NTFT66CA *
1.4 DXC
256 Port Cross Connect (MSH84)............ MSH84 * * *
STM-1 Optical card *
16 x 2Mbit/s Port Unit *
MV-36 Element controller.................. MV-36 *
Managed Object Agent (MOA) *
1.5 TN-MS INM *
Hardware
HP C200 workstation, north & south
hemisphere................................ NTQJ01GC
NRM Release 6 Software and Handbooks...... NTQJ12FA
NRM Release 6 Feature Profile Tape--Core +
IM + PM + CM.............................. NTQJ10FK
TN-MS NRM (Rel6) Alarm surveillance
Licence................................... NTQJ90AF
TN-MS NRM (Rel6) Electronic Software
Delivery Licence.......................... NTQJ90BF
TN-MS NRM (Rel6) Inventory Manager
Licence................................... NTQJ90DF
TN-MS NRM (Rel6) Perf. Mon. Consolidation
Licence................................... NTQJ90EF
TN-MS NRM (Rel6) Connection Management
Licence................................... NTQJ90FF
TN-MS NRM (Rel6) Software Management User
Guide..................................... NTQJ19FT
TN-MS NRM (Rel6) Inventory Management User
Guide..................................... NTQJ19FX
TN-MS NRM (Rel6) Performance Management
User Guide................................ NTQJ19FW
TN-MS NRM (Rel6) Connection Management
User Guide................................ NTQJ19FV
Router 2501 OSI........................... NTJM01BA
</TABLE>
- ------------------------
* The confidential portion has been omitted pursuant to a request for
confidential treatment and omitted
material has been filed separately with the commission.
63
<PAGE>
<TABLE>
<CAPTION>
VIATEL CIRCLE 1 CONTRACT
ANNEX C
SCHEDULE OF PRICES
SECTION C - NETHERLANDS
<S> <C> <C> <C> <C> <C>
Router 2514 OSI........................... NTJM01KA
DCN RConfig "P" 2514 ent. 0 tunnels, Ser:
2 L2,0 L1 CPC Allocated: A0741950......... NTJM9914
DCN RConfig "P" 2514 ent. 1 tunnel, Ser: 1
L2,1 L1 CPC Allocated: A0741941........... NTJM9912
HS modem SP-1-AR,AC....................... NTJM01SA
Shelf Cantilever 19in mounting............ P0878672
Transceiver 10BaseT....................... NTJM01VA
Ethernet 10BaseT Transceiver.............. A0383333
Baystack 101 10baseT hub 12 port RJ45
250VAC.................................... NTJM02PA
***Cable Assy LAN RJ45--RJ45 h/e.......... 32YCN00727AFA
***Ethernet kit for OPC hub (20m,OC-48)... NT7E44JE
1.6 NETWORK SYNCHRONISATION................... *
DCD-521C
DCD-Cs ETSI Standalone Cesium PRC......... 990-43100-02
DCD-LPR Shelf GPS Applications............ 990-44100-12
GPS Timing Kit E1 (Rubidium or Quartz).... 990-44140-14
Blank Unit LPR............................ 090-44198-01
LOU-2 Dual oscillator..................... 090-44145-02
DCD-521/C ETSI Shelf Master/Expansion..... 990-44210-01
MRC-EA/Input card 2MHz/2Mb/s, 4 inputs.... 090-44010-06
TNCE Clock card rubidium.................. 090-44017-02
TNC Clock card transit node OCXO.......... 090-44020-02
TO-EA Output card 2MHz/2Mb/s 10 outputs... 090-44029-01
MIS Maint i'f analysis/config/remote...... 990-44018-14
Blank Panel 1 TO slot wide................ 074-00208-01
Timing Input Module MRC SMB............... 990-45107-02
Timing Output Module SMB,1:1 prot......... 990-45105-07
1.7 EQUIPMENT PRACTICE
Mechanical bay assy ETSI (no expansion
sh)....................................... NTCE89AA * * *
NTE-STM16 Rack (2200 x 600 x 300)--cost
reduced................................... NTFW70EA * * *
TN-16X Installation Kit................... 25SKM00807ABM * * *
REGEN Rack Assy........................... NTFW71AA *
Rack side cover L/H u/o NTFW70AA.......... P0725173 * * *
Rack side cover R/H u/o NTFW70AA.......... P0725175 * * *
Mechanical assembly, rack, 42U............ A0726263
Distribution block 8 way left hand cable
entry..................................... A0729317
Distribution block 8 way right hand cable
entry..................................... A0729318
ETSI Rack, 220cm, without side panels..... NTKD70AA *
NT ETSI Rack Standard Inst.Kit............ 25SKM00807ABE *
ETSI Rack 48V DC Distrib Panel with Rack
Alarm Unit................................ 25SKM00807AAN *
1.8 ADDITIONAL ITEMS
OC-192 REL 1.4 SUPERSET CUSTOMER LOADS.... ***PLM_TN-16X_NC_1
AC Power Cable Assembly................... PLM_Source_locally *
***Cable Assy, RJ45 crossover............. 32YCN01094AFA *
*** OPTICAL PATCHCORD 20M SC-SC PLM_Advanced Optics_NC_3 * * *
TOTAL EXTENDED EQUIPMENT PRICE
2.0 INSTALLATION & COMMISSIONING * * *
Installation Materials.................... * * *
-----
TOTAL EXTENDED PRICE *
-----
-----
</TABLE>
- ------------------------
* The confidential portion has been omitted pursuant to a request for
confidential treatment and omitted
material has been filed separately with the commission.
64
<PAGE>
<TABLE>
<CAPTION>
VIATEL CIRCLE 1 CONTRACT
ANNEX C
SCHEDULE OF PRICES
SECTION C - NETHERLANDS
ZANDVOORT ISSUE 1.0
-------------------------------------------- -------------------------------------------------------------------------
ABBREVIATED DESCRIPTION CODE SELLING PRICE ZANDVOORT EXT PRICE
-------------------------------------------- -------------------------- --------------- ------------- -------------
$US $US
<S> <C> <C> <C> <C> <C>
1.0 TRANSMISSION EQUIPMENT
1.1 TN-16 4F
Core
OC192 SC060 SHELF CONTROLLER................ NTCA41BA * * *
MAINTENANCE INTERFACE....................... NTCA42AA * * *
*** CABLE ASSY (MODEM ACCESS)............... NTCC8930 * * *
MESSAGE TRANSFER CARD....................... NTCA48AA * * *
BREAKER MODULE.............................. NTCA40AA * * *
COMMON EQUIPMENT FILLER CARD (1 IN.)........ NTCA59AA * * *
PARTITIONED OPC CONTROLLER.................. NTCA50AA *
*** CA ASSY (10 BASE T CROSSOVER)........... NT7E44KC *
PARTITIONED OPC STORAGE MODULE.............. NTCA51AA *
OPC FLASH CARTRIDGE......................... NTCA53AA *
PARTITIONED OPC IO MODULE................... NTCA52AA *
*** SM OPTICAL PATCHCORD 20M (66FT)
(SC-TUNED) SEE A06.......................... NT7E46HD * * *
*** SM OPTICAL PATCHCORD 20M (66FT)
(SC-TUNED) W/MVOA........................... NT7E47HD * * *
TRANSPORT SHELF FILLER CARD................. NTCA49AA * * *
TRANSPORT SHELF SWITCH FILLER CARD.......... NTCA49AB * * *
OC-192 OPTICAL AMPLIFIER W/ SERVICE CHANNEL
(SC)........................................ NTCA11AC * * *
OC-192 OPTICAL AMPLIFIER (SC)............... NTCA11BC * * *
1625NM OPTICAL SERVICE CHANNEL (SC)......... NTCA11CC *
1550/1625NM WDM COUPLER (SC)................ NTCC13AC *
MOR RTU..................................... NTCA62DA * * *
1.2 TN-16X
Core
STM16 LTE/ADM/RING SHELF--COST REDUCED...... NTFW50EA *
SH PROCESSOR FOR SDH (DCC HUBBING).......... NT7E20GC *
SH PROCESSOR(ETHERNET,SYNC MSG 24M)......... NT7E20KA * * *
Maintenance Interface Unit.................. NT7E23AA * * *
TN-16X Regenerator Subrack Kit.............. NTFW51AA * * *
OC-48/STM-16 Ring Demux..................... NT8E06AB *
OC48 DWDM 1528.77 NM RING TX................ NT8E11DQ *
OC48 DWDM 1530.33 RING TRANSMITTER.......... NT8E11FQ *
OC48 WDM 1533.47 RING TRANSMITTER........... NT8E11KQ *
OC48 WDM 1535.04 RING TRANSMITTER........... NT8E11MQ *
OC48 DWDM 1550.92 NM RING TRANSMITTER....... NT8E11KR *
OC48 DWDM 1552.52 RING TRANSMITTER.......... NT8E11MR *
OC48 DWDM 1555.75 NM RING TRANSMITTER....... NT8E11RR *
OC48 DWDM 1557.36 RING TRANSMITTER.......... NT8E11TR *
OC48 DWDM 1528.77 NM REGEN.................. NT8E13DJ * * *
OC48 DWDM 1530.33 REG/TX INTERFACE.......... NT8E13FJ * * *
OC48 DWDM 1533.47 REG/TX INTERFACE.......... NT8E13KJ * * *
OC48 DWDM 1535.04 REG/TX INTERFACE.......... NT8E13MJ * * *
OC48 DWDM 1550.92 REG/TX INTERFACE.......... NT8E13KK * * *
OC48 DWDM 1552.52 REG/TX INTERFACE.......... NT8E13MK * * *
OC48 DWDM 1555.75 REG/TX INTERFACE.......... NT8E13RK *
OC48 DWDM 1557.36 REG/TX INTERFACE.......... NT8E13TK *
OC-48/STM16 LR SAW Rx Interface (SC)........ NT8E02DD * * *
STM1o IR 1310 Tributary I/F (SC)............ NTFW11CD *
STM1 Optical Carrier Assembly............... NTFW19BA *
External synchronisation interface
carrier..................................... NT7E19AA *
External Synchronisation Interface (2
MHz)........................................ NTFW27AA *
*** OPTICAL PATCH CORD 20M (SC-SC).......... NT7E46FD * * *
*** OPTICAL PATCH CORD W/MVOA 20M (SC-SC)... NT7E47FD * * *
KIT, SC OPTICAL CONNECTOR. INITIAL USE
NTN401AA.................................... NTN459SC * * *
*** FIBRE OPTIC CABLE ASSY STM1 DUPLEX SC-SC
20M......................................... NTFW5753 *
TN-16X Regenerator Software Licence (Release
7).......................................... NTQJ93GG * * *
TN-16X Shared Protection Ring Software
Licence (Release 7)......................... NTQJ93HG *
Extra Traffic on Rings on Licence........... NTQJ93TB *
OPC with tape drive......................... NT7E24BC *
PHOENIX SUPERSET CODE FOR REL 7............. NTFW97HA *
*** CNET BAY/BAY CABLE 5.0M................. NT7E44JC *
TN-MS EC-16X Multi-user Licence............. NTQJ93CA *
TN-MS EC-16X Release 7 Licence.............. NTQJ93AG *
TN-MS EC-16X Release 7 Standby Licence...... NTQJ93BG *
FW TN-16X Rel 7 NTPS (CD-ROM)............... NTFW64AH *
1.3 ADVANCED OPTICS (DWDM)
Core
DWDM FILTER MODULE SHELF ASSY--4
POS--ETSI................................... NTCE88BA * * *
DWDM COUPLER 8W,MB/DR W/O VOA,SC............ NTCA10GC * * *
</TABLE>
- ------------------------
* The confidential portion has been omitted pursuant to a request for
confidential treatment and omitted
material has been filed separately with the commission.
65
<PAGE>
<TABLE>
<CAPTION>
VIATEL CIRCLE 1 CONTRACT
ANNEX C
SCHEDULE OF PRICES
SECTION C - NETHERLANDS
ZANDVOORT ISSUE 1.0
-------------------------------------------- -------------------------------------------------------------------------
ABBREVIATED DESCRIPTION CODE SELLING PRICE ZANDVOORT EXT PRICE
-------------------------------------------- -------------------------- --------------- ------------- -------------
$US $US
<S> <C> <C> <C> <C> <C>
DWDM COUPLER 8W,DB/MR W/O VOA,SC............ NTCA10HC * * *
TN-1X
Core
TN-1X Synchronous Access Multiplexer
Subrack..................................... 25GMU00750GWV *
Shelf Kit................................... 25SKM00750HFN *
TN-1X Installation Kit...................... 25SKM00807ABL *
Local Craft Access Panel Type 1............. 25UEP00750GXB *
Service Interface Module Type 10 (Misc)..... 25UJJ00750GXC *
Service Interface Module Type 40 (LCAP)..... 25UJJ00750GWX *
Subrack Cover Kit........................... 25SKM00750HFL *
Rack Mounting Kit for ETSI.................. 25SKM00019AAE *
Dummy Front Panel 1''....................... 25RBN00021AAB *
Dummy SIA Panel 1''......................... 25RBN00021AAA *
Power Supply Unit........................... 25UPW00750HAY *
Subrack Control Unit........................ 25UMN00750GXD *
Payload Manager (mixed payload)............. NTKD10AA *
STM-1 G.957 L1.2 Optical Aggregate Port Card
(1550nm).................................... 25UTM00750HWH *
STM-1 G.957 L-1.1, S1.1 Optical Tributary
Card (1'' wide)............................. NTKD11AA *
***Optical patchcord 20m FC-FC.............. NT7E46BD *
Craft Access Terminal....................... NTQJ09AA *
RS 232 Cable Assembly....................... 25YCN00748AAA *
TN-1 CAT Release 12 Application (3.5")...... NTQJ35LA
TN-MS CA-1X Release 12 Licence.............. NTQJ91DL
Netscape Windows95 (Fastrack Server and
Navigator).................................. NTQJ81BA *
TN-1X Release 8 Software Download (from
CAT)........................................ NTQJ36HA
HP B132, 128Mbytes RAM, 2Gb HD, DAT, CD,
N.Hem....................................... NTQJ01FA *
TN-MS EC-1 Release 12 (DAT)................. NTQJ30LA
Netscape for UNIX (Fastrack Server and
Navigator).................................. NTQJ81AA *
TN-1X Release 8 software download (from
EC)......................................... NTQJ31HA
TN-1C Release 3 Software kit (disk &
tape)....................................... NTFT81CA *
TN-MS EC-1 Release 12 Licence for TN-1X..... NTQJ91AL *
TN-MS EC-1 Release 12 Standby Licence....... NTQJ91BL *
TN-MS EC-1 Multi-user Licence............... NTQJ91CA *
X terminal software on DAT.................. NTQJ05JB *
TN-1X Rel 8 NTPs (CD-ROM MAC)............... 32HSC00456VEC *
TN-1C
Core
TN-1C 8x2/16x2 turbo ADM (1550nm L1.2)...... NTFT52BI *
AC/DC Power Unit............................ NTFT21AA *
12V Battery................................. NTFT24AA *
***BT43/5F & 3002 cable assy 20m............ 32YCN00750CAA *
***Optical patchcord 20m FC-FC.............. NT7E46BD
TN-MS EC-1 Release 12 Licence for TN-1C..... NTQJ91FL *
Craft Access Terminal....................... NTQJ09AA *
CAT Cable Assembly.......................... NTFT15AC *
TN-1C Release 3 Software kit (disk &
tape)....................................... NTFT81CA *
TN-1 CAT Release 12 Application (3.5")...... NTQJ35LA
Netscape Windows95 (Fastrack Server and
Navigator).................................. NTQJ81BA *
TN-1C Release 3 handbook CD-ROM............. NTFT66CA *
1.4 DXC *
256 Port Cross Connect (MSH84).............. MSH84
STM-1 Optical card
16 x 2Mbit/s Port Unit
MV-36 Element controller.................... MV-36
Managed Object Agent (MOA)
1.5 TN-MS INM *
Hardware
HP C200 workstation, north & south
hemisphere.................................. NTQJ01GC
NRM Release 6 Software and Handbooks........ NTQJ12FA
NRM Release 6 Feature Profile Tape--Core +
IM + PM + CM................................ NTQJ10FK
TN-MS NRM (Rel6) Alarm surveillance
Licence..................................... NTQJ90AF
TN-MS NRM (Rel6) Electronic Software
Delivery Licence............................ NTQJ90BF
TN-MS NRM (Rel6) Inventory Manager Licence.. NTQJ90DF
TN-MS NRM (Rel6) Perf. Mon. Consolidation
Licence..................................... NTQJ90EF
TN-MS NRM (Rel6) Connection Management
Licence..................................... NTQJ90FF
TN-MS NRM (Rel6) Software Management User
Guide....................................... NTQJ19FT
TN-MS NRM (Rel6) Inventory Management User
Guide....................................... NTQJ19FX
TN-MS NRM (Rel6) Performance Management User
Guide....................................... NTQJ19FW
TN-MS NRM (Rel6) Connection Management User
Guide....................................... NTQJ19FV
Router 2501 OSI............................. NTJM01BA
Router 2514 OSI............................. NTJM01KA
DCN RConfig "P" 2514 ent. 0 tunnels, Ser: 2
L2,0 L1 CPC Allocated: A0741950............. NTJM9914
DCN RConfig "P" 2514 ent. 1 tunnel, Ser: 1
L2,1 L1 CPC Allocated: A0741941............. NTJM9912
HS modem SP-1-AR,AC......................... NTJM01SA
Shelf Cantilever 19in mounting.............. P0878672
</TABLE>
- ------------------------
* The confidential portion has been omitted pursuant to a request for
confidential treatment and omitted
material has been filed separately with the commission.
66
<PAGE>
<TABLE>
<CAPTION>
VIATEL CIRCLE 1 CONTRACT
ANNEX C
SCHEDULE OF PRICES
SECTION C - NETHERLANDS
<S> <C> <C> <C> <C> <C>
Transceiver 10BaseT......................... NTJM01VA
Ethernet 10BaseT Transceiver................ A0383333
Baystack 101 10baseT hub 12 port RJ45
250VAC...................................... NTJM02PA
***Cable Assy LAN RJ45--RJ45 h/e............ 32YCN00727AFA
***Ethernet kit for OPC hub (20m,OC-48)..... NT7E44JE
1.6 NETWORK SYNCHRONISATION *
DCD-521C
DCD-Cs ETSI Standalone Cesium PRC........... 990-43100-02
DCD-LPR Shelf GPS Applications.............. 990-44100-12
GPS Timing Kit E1 (Rubidium or Quartz)...... 990-44140-14
Blank Unit LPR.............................. 090-44198-01
LOU-2 Dual oscillator....................... 090-44145-02
DCD-521/C ETSI Shelf Master/Expansion....... 990-44210-01
MRC-EA/Input card 2MHz/2Mb/s, 4 inputs...... 090-44010-06
TNCE Clock card rubidium.................... 090-44017-02
TNC Clock card transit node OCXO............ 090-44020-02
TO-EA Output card 2MHz/2Mb/s 10 outputs..... 090-44029-01
MIS Maint i'f analysis/config/remote........ 990-44018-14
Blank Panel 1 TO slot wide.................. 074-00208-01
Timing Input Module MRC SMB................. 990-45107-02
Timing Output Module SMB,1:1 prot........... 990-45105-07
1.7 EQUIPMENT PRACTICE
Mechanical bay assy ETSI (no expansion
sh)......................................... NTCE89AA * * *
NTE-STM16 Rack (2200 x 600 x 300)--cost
reduced..................................... NTFW70EA * * *
TN-16X Installation Kit..................... 25SKM00807ABM * * *
REGEN Rack Assy............................. NTFW71AA * * *
Rack side cover L/H u/o NTFW70AA............ P0725173 * * *
Rack side cover R/H u/o NTFW70AA............ P0725175 * * *
Mechanical assembly, rack, 42U.............. A0726263
Distribution block 8 way left hand cable
entry....................................... A0729317
Distribution block 8 way right hand cable
entry....................................... A0729318
ETSI Rack, 220cm, without side panels....... NTKD70AA *
NT ETSI Rack Standard Inst.Kit.............. 25SKM00807ABE *
ETSI Rack 48V DC Distrib Panel with Rack
Alarm Unit.................................. 25SKM00807AAN *
1.8 ADDITIONAL ITEMS
OC-192 REL 1.4 SUPERSET CUSTOMER LOADS...... ***PLM_TN-16X_NC_1
AC Power Cable Assembly..................... PLM_Source_locally *
***Cable Assy, RJ45 crossover............... 32YCN01094AFA *
*** OPTICAL PATCHCORD 20M SC-SC............. PLM_Advanced Optics_NC_3 * * *
TOTAL EXTENDED EQUIPMENT PRICE *
2.0 INSTALLATION & COMMISSIONING *
Installation Materials...................... *
-----
TOTAL EXTENDED PRICE *
-----
-----
</TABLE>
- ------------------------
* The confidential portion has been omitted pursuant to a request for
confidential treatment and omitted
material has been filed separately with the commission.
67
<PAGE>
<TABLE>
<CAPTION>
VIATEL CIRCLE 1 CONTRACT
ANNEX C
SCHEDULE OF PRICES
SECTION C - NETHERLANDS
AMSTERDAM ISSUE 1.0
------------------------------------------- ---------------------------------------------------------------------------
ABBREVIATED DESCRIPTION CODE SELLING PRICE AMSTERDAM EXT PRICE
------------------------------------------- -------------------------- --------------- --------------- -------------
$US $US
<S> <C> <C> <C> <C> <C>
1.0 TRANSMISSION EQUIPMENT
1.1 TN-16 4F
Core
OC192 SC060 SHELF CONTROLLER............... NTCA41BA * * *
MAINTENANCE INTERFACE...................... NTCA42AA * * *
*** CABLE ASSY (MODEM ACCESS).............. NTCC8930 * * *
MESSAGE TRANSFER CARD...................... NTCA48AA * * *
BREAKER MODULE............................. NTCA40AA * * *
COMMON EQUIPMENT FILLER CARD (1 IN.)....... NTCA59AA * * *
PARTITIONED OPC CONTROLLER................. NTCA50AA * * *
*** CA ASSY (10 BASE T CROSSOVER).......... NT7E44KC * * *
PARTITIONED OPC STORAGE MODULE............. NTCA51AA * * *
OPC FLASH CARTRIDGE........................ NTCA53AA * * *
PARTITIONED OPC IO MODULE.................. NTCA52AA * * *
*** SM OPTICAL PATCHCORD 20M (66FT)
(SC-TUNED) SEE A06......................... NT7E46HD * * *
*** SM OPTICAL PATCHCORD 20M (66FT)
(SC-TUNED) W/MVOA.......................... NT7E47HD * * *
TRANSPORT SHELF FILLER CARD................ NTCA49AA * * *
TRANSPORT SHELF SWITCH FILLER CARD......... NTCA49AB * * *
OC-192 OPTICAL AMPLIFIER W/ SERVICE CHANNEL
(SC)....................................... NTCA11AC * * *
OC-192 OPTICAL AMPLIFIER (SC).............. NTCA11BC * * *
1625NM OPTICAL SERVICE CHANNEL (SC)........ NTCA11CC *
1550/1625NM WDM COUPLER (SC)............... NTCC13AC *
MOR RTU.................................... NTCA62DA * * *
1.2 TN-16X
Core
STM16 LTE/ADM/RING SHELF--COST REDUCED..... NTFW50EA * * *
SH PROCESSOR FOR SDH (DCC HUBBING)......... NT7E20GC * * *
SH PROCESSOR(ETHERNET,SYNC MSG 24M)........ NT7E20KA * *
Maintenance Interface Unit................. NT7E23AA * * *
TN-16X Regenerator Subrack Kit............. NTFW51AA *
OC-48/STM-16 Ring Demux.................... NT8E06AB * * *
OC48 DWDM 1528.77 NM RING TX............... NT8E11DQ * * *
OC48 DWDM 1530.33 RING TRANSMITTER......... NT8E11FQ * * *
OC48 WDM 1533.47 RING TRANSMITTER.......... NT8E11KQ * * *
OC48 WDM 1535.04 RING TRANSMITTER.......... NT8E11MQ * * *
OC48 DWDM 1550.92 NM RING TRANSMITTER...... NT8E11KR * * *
OC48 DWDM 1552.52 RING TRANSMITTER......... NT8E11MR * * *
OC48 DWDM 1555.75 NM RING TRANSMITTER...... NT8E11RR * * *
OC48 DWDM 1557.36 RING TRANSMITTER......... NT8E11TR * * *
OC48 DWDM 1528.77 NM REGEN................. NT8E13DJ *
OC48 DWDM 1530.33 REG/TX INTERFACE......... NT8E13FJ *
OC48 DWDM 1533.47 REG/TX INTERFACE......... NT8E13KJ *
OC48 DWDM 1535.04 REG/TX INTERFACE......... NT8E13MJ *
OC48 DWDM 1550.92 REG/TX INTERFACE......... NT8E13KK *
OC48 DWDM 1552.52 REG/TX INTERFACE......... NT8E13MK *
OC48 DWDM 1555.75 REG/TX INTERFACE......... NT8E13RK *
OC48 DWDM 1557.36 REG/TX INTERFACE......... NT8E13TK *
OC-48/STM16 LR SAW Rx Interface (SC)....... NT8E02DD * * *
STM1o IR 1310 Tributary I/F (SC)........... NTFW11CD * * *
STM1 Optical Carrier Assembly.............. NTFW19BA * * *
External synchronisation interface
carrier.................................... NT7E19AA * * *
External Synchronisation Interface (2
MHz)....................................... NTFW27AA * * *
*** OPTICAL PATCH CORD 20M (SC-SC)......... NT7E46FD * * *
*** OPTICAL PATCH CORD W/MVOA 20M
(SC-SC).................................... NT7E47FD * * *
KIT, SC OPTICAL CONNECTOR. INITIAL USE
NTN401AA................................... NTN459SC * * *
*** FIBRE OPTIC CABLE ASSY STM1 DUPLEX
SC-SC 20M.................................. NTFW5753 * * *
TN-16X Regenerator Software Licence
(Release 7)................................ NTQJ93GG * *
TN-16X Shared Protection Ring Software
Licence (Release 7)........................ NTQJ93HG * * *
Extra Traffic on Rings on Licence.......... NTQJ93TB * * *
OPC with tape drive........................ NT7E24BC * * *
PHOENIX SUPERSET CODE FOR REL 7............ NTFW97HA * * *
*** CNET BAY/BAY CABLE 5.0M................ NT7E44JC * * *
TN-MS EC-16X Multi-user Licence............ NTQJ93CA *
TN-MS EC-16X Release 7 Licence............. NTQJ93AG *
TN-MS EC-16X Release 7 Standby Licence..... NTQJ93BG * * *
FW TN-16X Rel 7 NTPS (CD-ROM).............. NTFW64AH *
1.3 ADVANCED OPTICS (DWDM)
</TABLE>
- ------------------------
* The confidential portion has been omitted pursuant to a request for
confidential treatment and omitted
material has been filed separately with the commission.
68
<PAGE>
<TABLE>
<CAPTION>
VIATEL CIRCLE 1 CONTRACT
ANNEX C
SCHEDULE OF PRICES
SECTION C - NETHERLANDS
<S> <C> <C> <C> <C> <C>
Core
DWDM FILTER MODULE SHELF ASSY--4
POS--ETSI.................................. NTCE88BA * * *
DWDM COUPLER 8W,MB/DR W/O VOA,SC........... NTCA10GC * * *
DWDM COUPLER 8W,DB/MR W/O VOA,SC........... NTCA10HC * * *
TN-1X
Core
TN-1X Synchronous Access Multiplexer
Subrack.................................... 25GMU00750GWV *
Shelf Kit.................................. 25SKM00750HFN *
TN-1X Installation Kit..................... 25SKM00807ABL *
Local Craft Access Panel Type 1............ 25UEP00750GXB *
Service Interface Module Type 10 (Misc).... 25UJJ00750GXC *
Service Interface Module Type 40 (LCAP).... 25UJJ00750GWX *
Subrack Cover Kit.......................... 25SKM00750HFL *
Rack Mounting Kit for ETSI................. 25SKM00019AAE *
Dummy Front Panel 1''...................... 25RBN00021AAB *
Dummy SIA Panel 1''........................ 25RBN00021AAA *
Power Supply Unit.......................... 25UPW00750HAY *
Subrack Control Unit....................... 25UMN00750GXD *
Payload Manager (mixed payload)............ NTKD10AA *
STM-1 G.957 L1.2 Optical Aggregate Port
Card (1550nm).............................. 25UTM00750HWH *
STM-1 G.957 L-1.1, S1.1 Optical Tributary
Card (1'' wide)............................ NTKD11AA *
***Optical patchcord 20m FC-FC............. NT7E46BD *
Craft Access Terminal...................... NTQJ09AA *
RS 232 Cable Assembly...................... 25YCN00748AAA *
TN-1 CAT Release 12 Application (3.5")..... NTQJ35LA
TN-MS CA-1X Release 12 Licence............. NTQJ91DL
Netscape Windows95 (Fastrack Server and
Navigator)................................. NTQJ81BA *
TN-1X Release 8 Software Download (from
CAT)....................................... NTQJ36HA
HP B132, 128Mbytes RAM, 2Gb HD, DAT, CD,
N.Hem...................................... NTQJ01FA * *
TN-MS EC-1 Release 12 (DAT)................ NTQJ30LA
Netscape for UNIX (Fastrack Server and
Navigator)................................. NTQJ81AA * *
TN-1X Release 8 software download (from
EC)........................................ NTQJ31HA
TN-1C Release 3 Software kit (disk &
tape)...................................... NTFT81CA * *
TN-MS EC-1 Release 12 Licence for TN-1X.... NTQJ91AL *
TN-MS EC-1 Release 12 Standby Licence...... NTQJ91BL * *
TN-MS EC-1 Multi-user Licence.............. NTQJ91CA *
X terminal software on DAT................. NTQJ05JB *
TN-1X Rel 8 NTPs (CD-ROM MAC).............. 32HSC00456VEC *
TN-1C
Core
TN-1C 8x2/16x2 turbo ADM (1550nm L1.2)..... NTFT52BI *
AC/DC Power Unit........................... NTFT21AA *
12V Battery................................ NTFT24AA *
***BT43/5F & 3002 cable assy 20m........... 32YCN00750CAA *
***Optical patchcord 20m FC-FC............. NT7E46BD *
TN-MS EC-1 Release 12 Licence for TN-1C.... NTQJ91FL *
Craft Access Terminal...................... NTQJ09AA *
CAT Cable Assembly......................... NTFT15AC *
TN-1C Release 3 Software kit (disk &
tape)...................................... NTFT81CA *
TN-1 CAT Release 12 Application (3.5")..... NTQJ35LA
Netscape Windows95 (Fastrack Server and
Navigator)................................. NTQJ81BA *
TN-1C Release 3 handbook CD-ROM............ NTFT66CA *
1.4 DXC * * *
256 Port Cross Connect (MSH84)............. MSH84 *
STM-1 Optical card......................... *
16 x 2Mbit/s Port Unit..................... *
MV-36 Element controller................... MV-36
Managed Object Agent (MOA)
1.5 TN-MS INM *
Hardware
HP C200 workstation, north & south
hemisphere................................. NTQJ01GC
NRM Release 6 Software and Handbooks....... NTQJ12FA
NRM Release 6 Feature Profile Tape--Core +
IM + PM + CM............................... NTQJ10FK
TN-MS NRM (Rel6) Alarm surveillance
Licence.................................... NTQJ90AF
TN-MS NRM (Rel6) Electronic Software
Delivery Licence........................... NTQJ90BF
TN-MS NRM (Rel6) Inventory Manager
Licence.................................... NTQJ90DF
TN-MS NRM (Rel6) Perf. Mon. Consolidation
Licence.................................... NTQJ90EF
TN-MS NRM (Rel6) Connection Management
Licence.................................... NTQJ90FF
TN-MS NRM (Rel6) Software Management User
Guide...................................... NTQJ19FT
TN-MS NRM (Rel6) Inventory Management User
Guide...................................... NTQJ19FX
TN-MS NRM (Rel6) Performance Management
User Guide................................. NTQJ19FW
TN-MS NRM (Rel6) Connection Management User
Guide...................................... NTQJ19FV
Router 2501 OSI............................ NTJM01BA
</TABLE>
- ------------------------
* The confidential portion has been omitted pursuant to a request for
confidential treatment and omitted
material has been filed separately with the commission.
69
<PAGE>
<TABLE>
<CAPTION>
VIATEL CIRCLE 1 CONTRACT
ANNEX C
SCHEDULE OF PRICES
SECTION C - NETHERLANDS
<S> <C> <C> <C> <C> <C>
Router 2514 OSI............................ NTJM01KA *
DCN RConfig "P" 2514 ent. 0 tunnels, Ser: 2
L2,0 L1 CPC Allocated: A0741950............ NTJM9914
DCN RConfig "P" 2514 ent. 1 tunnel, Ser: 1
L2,1 L1 CPC Allocated: A0741941............ NTJM9912 *
HS modem SP-1-AR,AC........................ NTJM01SA *
Shelf Cantilever 19in mounting............. P0878672 *
Transceiver 10BaseT........................ NTJM01VA *
Ethernet 10BaseT Transceiver............... A0383333 *
Baystack 101 10baseT hub 12 port RJ45
250VAC..................................... NTJM02PA *
***Cable Assy LAN RJ45--RJ45 h/e........... 32YCN00727AFA *
***Ethernet kit for OPC hub (20m,OC-48).... NT7E44JE *
1.6 NETWORK SYNCHRONISATION * * *
DCD-521C
DCD-Cs ETSI Standalone Cesium PRC.......... 990-43100-02 *
DCD-LPR Shelf GPS Applications............. 990-44100-12 *
GPS Timing Kit E1 (Rubidium or Quartz)..... 990-44140-14 *
Blank Unit LPR............................. 090-44198-01 *
LOU-2 Dual oscillator...................... 090-44145-02
DCD-521/C ETSI Shelf Master/Expansion...... 990-44210-01 *
MRC-EA/Input card 2MHz/2Mb/s, 4 inputs..... 090-44010-06 *
TNCE Clock card rubidium................... 090-44017-02 *
TNC Clock card transit node OCXO........... 090-44020-02
TO-EA Output card 2MHz/2Mb/s 10 outputs.... 090-44029-01 *
MIS Maint i'f analysis/config/remote....... 990-44018-14 *
Blank Panel 1 TO slot wide................. 074-00208-01 *
Timing Input Module MRC SMB................ 990-45107-02 *
Timing Output Module SMB,1:1 prot.......... 990-45105-07 *
1.7 EQUIPMENT PRACTICE
Mechanical bay assy ETSI (no expansion
sh)........................................ NTCE89AA * * *
NTE-STM16 Rack (2200 x 600 x 300)--cost
reduced.................................... NTFW70EA * * *
TN-16X Installation Kit.................... 25SKM00807ABM * * *
REGEN Rack Assy............................ NTFW71AA *
Rack side cover L/H u/o NTFW70AA........... P0725173 * * *
Rack side cover R/H u/o NTFW70AA........... P0725175 * * *
Mechanical assembly, rack, 42U............. A0726263
Distribution block 8 way left hand cable
entry...................................... A0729317
Distribution block 8 way right hand cable
entry...................................... A0729318
ETSI Rack, 220cm, without side panels...... NTKD70AA *
NT ETSI Rack Standard Inst.Kit............. 25SKM00807ABE *
ETSI Rack 48V DC Distrib Panel with Rack
Alarm Unit................................. 25SKM00807AAN *
1.8 ADDITIONAL ITEMS
OC-192 REL 1.4 SUPERSET CUSTOMER LOADS..... ***PLM_TN-16X_NC_1
AC Power Cable Assembly.................... PLM_Source_locally *
***Cable Assy, RJ45 crossover.............. 32YCN01094AFA *
*** OPTICAL PATCHCORD 20M SC-SC............ PLM_Advanced Optics_NC_3 * * *
TOTAL EXTENDED EQUIPMENT PRICE
2.0 INSTALLATION & COMMISSIONING * * *
Installation Materials..................... * * *
-----
Total Extended Price
-----
-----
</TABLE>
- ------------------------
* The confidential portion has been omitted pursuant to a request for
confidential treatment and omitted
material has been filed separately with the commission.
70
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<TABLE>
<CAPTION>
VIATEL CIRCLE 1 CONTRACT
ANNEX C
SCHEDULE OF PRICES
SECTION D - Belgium
MONS ISSUE 1.0
--------------------------------------- -------------------------------------------------------------------------------
ABBREVIATED DESCRIPTION CODE SELLING PRICE MONS EXT PRICE
--------------------------------------- ---------------------------- --------------- ----------------- -------------
$US $US
<S> <C> <C> <C> <C> <C>
1.0 TRANSMISSION EQUIPMENT
1.1 TN-16 4F
Core
OC192 SC060 SHELF CONTROLLER........... NTCA41BA *
MAINTENANCE INTERFACE.................. NTCA42AA *
*** CABLE ASSY (MODEM ACCESS).......... NTCC8930 *
MESSAGE TRANSFER CARD.................. NTCA48AA *
BREAKER MODULE......................... NTCA40AA *
COMMON EQUIPMENT FILLER CARD (1 IN.)... NTCA59AA *
PARTITIONED OPC CONTROLLER............. NTCA50AA *
*** CA ASSY (10 BASE T CROSSOVER)...... NT7E44KC *
PARTITIONED OPC STORAGE MODULE......... NTCA51AA *
OPC FLASH CARTRIDGE.................... NTCA53AA *
PARTITIONED OPC IO MODULE.............. NTCA52AA *
*** SM OPTICAL PATCHCORD 20M (66FT)
(SC-TUNED) SEE A06..................... NT7E46HD *
*** SM OPTICAL PATCHCORD 20M (66FT)
(SC-TUNED) W/MVOA...................... NT7E47HD *
TRANSPORT SHELF FILLER CARD............ NTCA49AA *
TRANSPORT SHELF SWITCH FILLER CARD..... NTCA49AB *
OC-192 OPTICAL AMPLIFIER W/ SERVICE
CHANNEL (SC)........................... NTCA11AC *
OC-192 OPTICAL AMPLIFIER (SC).......... NTCA11BC *
1625NM OPTICAL SERVICE CHANNEL (SC).... NTCA11CC *
1550/1625NM WDM COUPLER (SC)........... NTCC13AC *
MOR RTU................................ NTCA62DA *
1.2 TN-16X
Core
STM16 LTE/ADM/RING SHELF--COST
REDUCED................................ NTFW50EA *
SH PROCESSOR FOR SDH (DCC HUBBING)..... NT7E20GC *
SH PROCESSOR(ETHERNET,SYNC MSG 24M).... NT7E20KA *
Maintenance Interface Unit............. NT7E23AA *
TN-16X Regenerator Subrack Kit......... NTFW51AA *
OC-48/STM-16 Ring Demux................ NT8E06AB *
OC48 DWDM 1528.77 NM RING TX........... NT8E11DQ *
OC48 DWDM 1530.33 RING TRANSMITTER..... NT8E11FQ *
OC48 WDM 1533.47 RING TRANSMITTER...... NT8E11KQ *
OC48 WDM 1535.04 RING TRANSMITTER...... NT8E11MQ *
OC48 DWDM 1550.92 NM RING
TRANSMITTER............................ NT8E11KR *
OC48 DWDM 1552.52 RING TRANSMITTER..... NT8E11MR *
OC48 DWDM 1555.75 NM RING
TRANSMITTER............................ NT8E11RR *
OC48 DWDM 1557.36 RING TRANSMITTER..... NT8E11TR *
OC48 DWDM 1528.77 NM REGEN............. NT8E13DJ *
OC48 DWDM 1530.33 REG/TX INTERFACE..... NT8E13FJ *
OC48 DWDM 1533.47 REG/TX INTERFACE..... NT8E13KJ *
OC48 DWDM 1535.04 REG/TX INTERFACE..... NT8E13MJ *
OC48 DWDM 1550.92 REG/TX INTERFACE..... NT8E13KK *
OC48 DWDM 1552.52 REG/TX INTERFACE..... NT8E13MK *
OC48 DWDM 1555.75 REG/TX INTERFACE..... NT8E13RK *
OC48 DWDM 1557.36 REG/TX INTERFACE..... NT8E13TK *
OC-48/STM16 LR SAW Rx Interface (SC)... NT8E02DD *
STM1o IR 1310 Tributary I/F (SC)....... NTFW11CD *
STM1 Optical Carrier Assembly.......... NTFW19BA *
External synchronisation interface
carrier................................ NT7E19AA *
External Synchronisation Interface (2
MHz)................................... NTFW27AA *
*** OPTICAL PATCH CORD 20M (SC-SC)..... NT7E46FD *
*** OPTICAL PATCH CORD W/MVOA 20M
(SC-SC)................................ NT7E47FD *
KIT, SC OPTICAL CONNECTOR. INITIAL USE
NTN401AA............................... NTN459SC *
*** FIBRE OPTIC CABLE ASSY STM1 DUPLEX
SC-SC 20M.............................. NTFW5753 *
TN-16X Regenerator Software Licence
(Release 7)............................ NTQJ93GG *
TN-16X Shared Protection Ring Software
Licence (Release 7).................... NTQJ93HG *
Extra Traffic on Rings on Licence...... NTQJ93TB *
OPC with tape drive.................... NT7E24BC *
PHOENIX SUPERSET CODE FOR REL 7........ NTFW97HA *
*** CNET BAY/BAY CABLE 5.0M............ NT7E44JC *
TN-MS EC-16X Multi-user Licence........ NTQJ93CA *
TN-MS EC-16X Release 7 Licence......... NTQJ93AG *
</TABLE>
- ------------------------
* The confidential portion has been omitted pursuant to a request for
confidential treatment and omitted
material has been filed separately with the commission.
71
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<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
VIATEL CIRCLE 1 CONTRACT
ANNEX C
SCHEDULE OF PRICES
SECTION D - Belgium
TN-MS EC-16X Release 7 Standby
Licence................................ NTQJ93BG *
FW TN-16X Rel 7 NTPS (CD-ROM).......... NTFW64AH *
1.3 ADVANCED OPTICS (DWDM)
Core
DWDM FILTER MODULE SHELF ASSY--4
POS--ETSI.............................. NTCE88BA *
DWDM COUPLER 8W,MB/DR W/O VOA,SC....... NTCA10GC *
DWDM COUPLER 8W,DB/MR W/O VOA,SC....... NTCA10HC *
TN-1X
Core
TN-1X Synchronous Access Multiplexer
Subrack................................ 25GMU00750GWV *
Shelf Kit.............................. 25SKM00750HFN *
TN-1X Installation Kit................. 25SKM00807ABL *
Local Craft Access Panel Type 1........ 25UEP00750GXB *
Service Interface Module Type 10
(Misc)................................. 25UJJ00750GXC *
Service Interface Module Type 40
(LCAP)................................. 25UJJ00750GWX *
Subrack Cover Kit...................... 25SKM00750HFL *
Rack Mounting Kit for ETSI............. 25SKM00019AAE *
Dummy Front Panel 1"................... 25RBN00021AAB *
Dummy SIA Panel 1"..................... 25RBN00021AAA *
Power Supply Unit...................... 25UPW00750HAY *
Subrack Control Unit................... 25UMN00750GXD *
Payload Manager (mixed payload)........ NTKD10AA *
STM-1 G.957 L1.2 Optical Aggregate Port
Card (1550nm).......................... 25UTM00750HWH *
STM-1 G.957 L-1.1, S1.1 Optical
Tributary Card (1" wide)............... NTKD11AA *
***Optical patchcord 20m FC-FC......... NT7E46BD *
Craft Access Terminal.................. NTQJ09AA *
RS 232 Cable Assembly.................. 25YCN00748AAA *
TN-1 CAT Release 12 Application
(3.5")................................. NTQJ35LA *
TN-MS CA-1X Release 12 Licence......... NTQJ91DL *
Netscape Windows95 (Fastrack Server and
Navigator)............................. NTQJ81BA *
TN-1X Release 8 Software Download (from
CAT)................................... NTQJ36HA *
HP B132, 128Mbytes RAM, 2Gb HD, DAT,
CD, N.Hem.............................. NTQJ01FA *
TN-MS EC-1 Release 12 (DAT)............ NTQJ30LA *
Netscape for UNIX (Fastrack Server and
Navigator)............................. NTQJ81AA *
TN-1X Release 8 software download (from
EC).................................... NTQJ31HA *
TN-1C Release 3 Software kit (disk &
tape).................................. NTFT81CA *
TN-MS EC-1 Release 12 Licence for
TN-1X.................................. NTQJ91AL *
TN-MS EC-1 Release 12 Standby Licence.. NTQJ91BL *
TN-MS EC-1 Multi-user Licence.......... NTQJ91CA *
X terminal software on DAT............. NTQJ05JB *
TN-1X Rel 8 NTPs (CD-ROM MAC).......... 32HSC00456VEC *
TN-1C
CORE
TN-1C 8x2/16x2 turbo ADM (1550nm
L1.2).................................. NTFT52BI * * *
AC/DC Power Unit....................... NTFT21AA * * *
12V Battery............................ NTFT24AA * * *
***BT43/5F & 3002 cable assy 20m....... 32YCN00750CAA * * *
***Optical patchcord 20m FC-FC......... NT7E46BD * * *
TN-MS EC-1 Release 12 Licence for
TN-1C.................................. NTQJ91FL * * *
Craft Access Terminal.................. NTQJ09AA *
CAT Cable Assembly..................... NTFT15AC *
TN-1C Release 3 Software kit (disk &
tape).................................. NTFT81CA *
TN-1 CAT Release 12 Application
(3.5")................................. NTQJ35LA
Netscape Windows95 (Fastrack Server and
Navigator)............................. NTQJ81BA *
TN-1C Release 3 handbook CD-ROM........ NTFT66CA *
1.4 DXC *
256 Port Cross Connect (MSH84)......... MSH84
STM-1 Optical card
16 x 2Mbit/s Port Unit
MV-36 Element controller............... MV-36
Managed Object Agent (MOA)
1.5 TN-MS INM *
Hardware
HP C200 workstation, north & south
hemisphere............................. NTQJ01GC
NRM Release 6 Software and Handbooks... NTQJ12FA
NRM Release 6 Feature Profile Tape--
Core + IM + PM + CM.................... NTQJ10FK
TN-MS NRM (Rel6) Alarm surveillance
Licence................................ NTQJ90AF
</TABLE>
72
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<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
VIATEL CIRCLE 1 CONTRACT
ANNEX C
SCHEDULE OF PRICES
SECTION D - Belgium
TN-MS NRM (Rel6) Electronic Software
Delivery Licence....................... NTQJ90BF
TN-MS NRM (Rel6) Inventory Manager
Licence................................ NTQJ90DF
TN-MS NRM (Rel6) Perf. Mon.
Consolidation Licence.................. NTQJ90EF
TN-MS NRM (Rel6) Connection Management
Licence................................ NTQJ90FF
TN-MS NRM (Rel6) Software Management
User Guide............................. NTQJ19FT
TN-MS NRM (Rel6) Inventory Management
User Guide............................. NTQJ19FX
TN-MS NRM (Rel6) Performance Management
User Guide............................. NTQJ19FW
TN-MS NRM (Rel6) Connection Management
User Guide............................. NTQJ19FV
Router 2501 OSI........................ NTJM01BA
Router 2514 OSI........................ NTJM01KA
DCN RConfig "P" 2514 ent. 0 tunnels,
Ser: 2 L2,0 L1 CPC Allocated:
A0741950............................... NTJM9914
DCN RConfig "P" 2514 ent. 1 tunnel,
Ser: 1 L2,1 L1 CPC Allocated:
A0741941............................... NTJM9912
HS modem SP-1-AR,AC.................... NTJM01SA
Shelf Cantilever 19in mounting......... P0878672
Transceiver 10BaseT.................... NTJM01VA
Ethernet 10BaseT Transceiver........... A0383333
Baystack 101 10baseT hub 12 port RJ45
250VAC................................. NTJM02PA
***Cable Assy LAN RJ45--RJ45 h/e....... 32YCN00727AFA
***Ethernet kit for OPC hub
(20m,OC-48)............................ NT7E44JE
1.6 NETWORK SYNCHRONISATION *
DCD-521C
DCD-Cs ETSI Standalone Cesium PRC...... 990-43100-02
DCD-LPR Shelf GPS Applications......... 990-44100-12
GPS Timing Kit E1 (Rubidium or
Quartz)................................ 990-44140-14
Blank Unit LPR......................... 090-44198-01
LOU-2 Dual oscillator.................. 090-44145-02
DCD-521/C ETSI Shelf Master/Expansion.. 990-44210-01
MRC-EA/Input card 2MHz/2Mb/s, 4
inputs................................. 090-44010-06
TNCE Clock card rubidium............... 090-44017-02
TNC Clock card transit node OCXO....... 090-44020-02
TO-EA Output card 2MHz/2Mb/s 10
outputs................................ 090-44029-01
MIS Maint i'f analysis/config/remote... 990-44018-14
Blank Panel 1 TO slot wide............. 074-00208-01
Timing Input Module MRC SMB............ 990-45107-02
Timing Output Module SMB,1:1 prot...... 990-45105-07
1.7 EQUIPMENT PRACTICE
Mechanical bay assy ETSI (no expansion
sh).................................... NTCE89AA *
NTE-STM16 Rack (2200 x 600 x 300)--
cost reduced........................... NTFW70EA *
TN-16X Installation Kit................ 25SKM00807ABM *
REGEN Rack Assy........................ NTFW71AA *
Rack side cover L/H u/o NTFW70AA....... P0725173 *
Rack side cover R/H u/o NTFW70AA....... P0725175 *
Mechanical assembly, rack, 42U......... A0726263
Distribution block 8 way left hand
cable entry............................ A0729317
Distribution block 8 way right hand
cable entry............................ A0729318
ETSI Rack, 220cm, without side
panels................................. NTKD70AA *
NT ETSI Rack Standard Inst.Kit......... 25SKM00807ABE *
ETSI Rack 48V DC Distrib Panel with
Rack Alarm Unit........................ 25SKM00807AAN *
1.8 ADDITIONAL ITEMS
OC-192 REL 1.4 SUPERSET CUSTOMER
LOADS.................................. ***PLM_TN-16X_NC_1
AC Power Cable Assembly................ PLM_Source_locally * * *
***Cable Assy, RJ45 crossover.......... 32YCN01094AFA *
*** OPTICAL PATCHCORD 20M SC-SC........ PLM_Advanced Optics_NC_3 *
TOTAL EXTENDED EQUIPMENT PRICE......... *
2.0 INSTALLATION & COMMISSIONING........... * * *
INSTALLATION MATERIALS................. *
-----
TOTAL EXTENDED PRICE *
-----
-----
</TABLE>
- ------------------------
* The confidential portion has been omitted pursuant to a request for
confidential treatment and omitted
material has been filed separately with the commission.
73
<PAGE>
<TABLE>
<CAPTION>
VIATEL CIRCLE 1 CONTRACT
ANNEX C
SCHEDULE OF PRICES
SECTION D - Belgium
LIEGE ISSUE 1.0
--------------------------------------- -------------------------------------------------------------------------------
ABBREVIATED DESCRIPTION CODE SELLING PRICE LIEGE EXT PRICE
--------------------------------------- ---------------------------- --------------- ----------------- -------------
$US $US
<S> <C> <C> <C> <C> <C>
1.0 TRANSMISSION EQUIPMENT
1.1 TN-16 4F
Core
OC192 SC060 SHELF CONTROLLER........... NTCA41BA *
MAINTENANCE INTERFACE.................. NTCA42AA *
*** CABLE ASSY (MODEM ACCESS).......... NTCC8930 *
MESSAGE TRANSFER CARD.................. NTCA48AA *
BREAKER MODULE......................... NTCA40AA *
COMMON EQUIPMENT FILLER CARD (1 IN.)... NTCA59AA *
PARTITIONED OPC CONTROLLER............. NTCA50AA *
*** CA ASSY (10 BASE T CROSSOVER)...... NT7E44KC *
PARTITIONED OPC STORAGE MODULE......... NTCA51AA *
OPC FLASH CARTRIDGE.................... NTCA53AA *
PARTITIONED OPC IO MODULE.............. NTCA52AA *
*** SM OPTICAL PATCHCORD 20M (66FT)
(SC-TUNED) SEE A06..................... NT7E46HD *
*** SM OPTICAL PATCHCORD 20M (66FT)
(SC-TUNED) W/MVOA...................... NT7E47HD *
TRANSPORT SHELF FILLER CARD............ NTCA49AA *
TRANSPORT SHELF SWITCH FILLER CARD..... NTCA49AB *
OC-192 OPTICAL AMPLIFIER W/ SERVICE
CHANNEL (SC)........................... NTCA11AC *
OC-192 OPTICAL AMPLIFIER (SC).......... NTCA11BC *
1625NM OPTICAL SERVICE CHANNEL (SC).... NTCA11CC *
1550/1625NM WDM COUPLER (SC)........... NTCC13AC *
MOR RTU................................ NTCA62DA *
1.2 TN-16X
Core
STM16 LTE/ADM/RING SHELF--COST
REDUCED................................ NTFW50EA *
SH PROCESSOR FOR SDH (DCC HUBBING)..... NT7E20GC *
SH PROCESSOR(ETHERNET,SYNC MSG 24M).... NT7E20KA *
Maintenance Interface Unit............. NT7E23AA *
TN-16X Regenerator Subrack Kit......... NTFW51AA *
OC-48/STM-16 Ring Demux................ NT8E06AB *
OC48 DWDM 1528.77 NM RING TX........... NT8E11DQ *
OC48 DWDM 1530.33 RING TRANSMITTER..... NT8E11FQ *
OC48 WDM 1533.47 RING TRANSMITTER...... NT8E11KQ *
OC48 WDM 1535.04 RING TRANSMITTER...... NT8E11MQ *
OC48 DWDM 1550.92 NM RING
TRANSMITTER............................ NT8E11KR *
OC48 DWDM 1552.52 RING TRANSMITTER..... NT8E11MR *
OC48 DWDM 1555.75 NM RING
TRANSMITTER............................ NT8E11RR *
OC48 DWDM 1557.36 RING TRANSMITTER..... NT8E11TR *
OC48 DWDM 1528.77 NM REGEN............. NT8E13DJ *
OC48 DWDM 1530.33 REG/TX INTERFACE..... NT8E13FJ *
OC48 DWDM 1533.47 REG/TX INTERFACE..... NT8E13KJ *
OC48 DWDM 1535.04 REG/TX INTERFACE..... NT8E13MJ *
OC48 DWDM 1550.92 REG/TX INTERFACE..... NT8E13KK *
OC48 DWDM 1552.52 REG/TX INTERFACE..... NT8E13MK *
OC48 DWDM 1555.75 REG/TX INTERFACE..... NT8E13RK *
OC48 DWDM 1557.36 REG/TX INTERFACE..... NT8E13TK *
OC-48/STM16 LR SAW Rx Interface (SC)... NT8E02DD *
STM1o IR 1310 Tributary I/F (SC)....... NTFW11CD *
STM1 Optical Carrier Assembly.......... NTFW19BA *
External synchronisation interface
carrier................................ NT7E19AA *
External Synchronisation Interface (2
MHz)................................... NTFW27AA *
*** OPTICAL PATCH CORD 20M (SC-SC)..... NT7E46FD *
*** OPTICAL PATCH CORD W/MVOA 20M
(SC-SC)................................ NT7E47FD *
KIT, SC OPTICAL CONNECTOR. INITIAL USE
NTN401AA............................... NTN459SC *
*** FIBRE OPTIC CABLE ASSY STM1 DUPLEX
SC-SC 20M.............................. NTFW5753 *
TN-16X Regenerator Software Licence
(Release 7)............................ NTQJ93GG *
TN-16X Shared Protection Ring Software
Licence (Release 7).................... NTQJ93HG *
Extra Traffic on Rings on Licence...... NTQJ93TB *
OPC with tape drive.................... NT7E24BC *
PHOENIX SUPERSET CODE FOR REL 7........ NTFW97HA *
*** CNET BAY/BAY CABLE 5.0M............ NT7E44JC *
TN-MS EC-16X Multi-user Licence........ NTQJ93CA *
TN-MS EC-16X Release 7 Licence......... NTQJ93AG *
TN-MS EC-16X Release 7 Standby
Licence................................ NTQJ93BG *
FW TN-16X Rel 7 NTPS (CD-ROM).......... NTFW64AH *
</TABLE>
- ------------------------
* The confidential portion has been omitted pursuant to a request for
confidential treatment and omitted
material has been filed separately with the commission.
74
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
VIATEL CIRCLE 1 CONTRACT
ANNEX C
SCHEDULE OF PRICES
SECTION D - Belgium
1.3 ADVANCED OPTICS (DWDM)
Core
DWDM FILTER MODULE SHELF ASSY--4
POS--ETSI.............................. NTCE88BA *
DWDM COUPLER 8W,MB/DR W/O VOA,SC....... NTCA10GC *
DWDM COUPLER 8W,DB/MR W/O VOA,SC....... NTCA10HC *
TN-1X
Core
TN-1X Synchronous Access Multiplexer
Subrack................................ 25GMU00750GWV *
Shelf Kit.............................. 25SKM00750HFN *
TN-1X Installation Kit................. 25SKM00807ABL *
Local Craft Access Panel Type 1........ 25UEP00750GXB *
Service Interface Module Type 10
(Misc)................................. 25UJJ00750GXC *
Service Interface Module Type 40
(LCAP)................................. 25UJJ00750GWX *
Subrack Cover Kit...................... 25SKM00750HFL *
Rack Mounting Kit for ETSI............. 25SKM00019AAE *
Dummy Front Panel 1'................... 25RBN00021AAB *
Dummy SIA Panel 1'..................... 25RBN00021AAA *
Power Supply Unit...................... 25UPW00750HAY *
Subrack Control Unit................... 25UMN00750GXD *
Payload Manager (mixed payload)........ NTKD10AA *
STM-1 G.957 L1.2 Optical Aggregate Port
Card (1550nm).......................... 25UTM00750HWH *
STM-1 G.957 L-1.1, S1.1 Optical
Tributary Card (1'wide)................ NTKD11AA *
***Optical patchcord 20m FC-FC......... NT7E46BD *
Craft Access Terminal.................. NTQJ09AA *
RS 232 Cable Assembly.................. 25YCN00748AAA *
TN-1 CAT Release 12 Application
(3.5")................................. NTQJ35LA
TN-MS CA-1X Release 12 Licence......... NTQJ91DL
Netscape Windows95 (Fastrack Server and
Navigator)............................. NTQJ81BA *
TN-1X Release 8 Software Download (from
CAT)................................... NTQJ36HA
HP B132, 128Mbytes RAM, 2Gb HD, DAT,
CD, N.Hem.............................. NTQJ01FA *
TN-MS EC-1 Release 12 (DAT)............ NTQJ30LA
Netscape for UNIX (Fastrack Server and
Navigator)............................. NTQJ81AA *
TN-1X Release 8 software download (from
EC).................................... NTQJ31HA
TN-1C Release 3 Software kit (disk &
tape).................................. NTFT81CA *
TN-MS EC-1 Release 12 Licence for
TN-1X.................................. NTQJ91AL *
TN-MS EC-1 Release 12 Standby Licence.. NTQJ91BL *
TN-MS EC-1 Multi-user Licence.......... NTQJ91CA *
X terminal software on DAT............. NTQJ05JB *
TN-1X Rel 8 NTPs (CD-ROM MAC).......... 32HSC00456VEC *
TN-1C
Core
TN-1C 8x2/16x2 turbo ADM (1550nm
L1.2).................................. NTFT52BI * * *
AC/DC Power Unit....................... NTFT21AA * * *
12V Battery............................ NTFT24AA * * *
***BT43/5F & 3002 cable assy 20m....... 32YCN00750CAA * * *
***Optical patchcord 20m FC-FC......... NT7E46BD * * *
TN-MS EC-1 Release 12 Licence for
TN-1C.................................. NTQJ91FL * * *
Craft Access Terminal.................. NTQJ09AA *
CAT Cable Assembly..................... NTFT15AC *
TN-1C Release 3 Software kit (disk &
tape).................................. NTFT81CA *
TN-1 CAT Release 12 Application
(3.5")................................. NTQJ35LA
Netscape Windows95 (Fastrack Server and
Navigator)............................. NTQJ81BA *
TN-1C Release 3 handbook CD-ROM........ NTFT66CA *
1.4 DXC *
256 Port Cross Connect (MSH84)......... MSH84
STM-1 Optical card
16 x 2Mbit/s Port Unit
MV-36 Element controller............... MV-36
Managed Object Agent (MOA)
1.5 TN-MS INM *
Hardware
HP C200 workstation, north & south
hemisphere............................. NTQJ01GC
NRM Release 6 Software and Handbooks... NTQJ12FA
NRM Release 6 Feature Profile Tape--
Core + IM + PM + CM.................... NTQJ10FK
TN-MS NRM (Rel6) Alarm surveillance
Licence................................ NTQJ90AF
TN-MS NRM (Rel6) Electronic Software
Delivery Licence....................... NTQJ90BF
TN-MS NRM (Rel6) Inventory Manager
Licence................................ NTQJ90DF
TN-MS NRM (Rel6) Perf. Mon.
Consolidation Licence.................. NTQJ90EF
TN-MS NRM (Rel6) Connection Management
Licence................................ NTQJ90FF
</TABLE>
- ------------------------
* The confidential portion has been omitted pursuant to a request for
confidential treatment and omitted
material has been filed separately with the commission.
75
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
VIATEL CIRCLE 1 CONTRACT
ANNEX C
SCHEDULE OF PRICES
SECTION D - Belgium
TN-MS NRM (Rel6) Software Management
User Guide............................. NTQJ19FT
TN-MS NRM (Rel6) Inventory Management
User Guide............................. NTQJ19FX
TN-MS NRM (Rel6) Performance Management
User Guide............................. NTQJ19FW
TN-MS NRM (Rel6) Connection Management
User Guide............................. NTQJ19FV
Router 2501 OSI........................ NTJM01BA
Router 2514 OSI........................ NTJM01KA
DCN RConfig "P" 2514 ent. 0 tunnels,
Ser: 2 L2,0 L1 CPC Allocated:
A0741950............................... NTJM9914
DCN RConfig "P" 2514 ent. 1 tunnel,
Ser: 1 L2,1 L1 CPC Allocated:
A0741941............................... NTJM9912
HS modem SP-1-AR,AC.................... NTJM01SA
Shelf Cantilever 19in mounting......... P0878672
Transceiver 10BaseT.................... NTJM01VA
Ethernet 10BaseT Transceiver........... A0383333
Baystack 101 10baseT hub 12 port RJ45
250VAC................................. NTJM02PA
***Cable Assy LAN RJ45--RJ45 h/e....... 32YCN00727AFA
***Ethernet kit for OPC hub
(20m,OC-48)............................ NT7E44JE
1.6 NETWORK SYNCHRONISATION *
DCD-521C
DCD-Cs ETSI Standalone Cesium PRC...... 990-43100-02
DCD-LPR Shelf GPS Applications......... 990-44100-12
GPS Timing Kit E1 (Rubidium or
Quartz)................................ 990-44140-14
Blank Unit LPR......................... 090-44198-01
LOU-2 Dual oscillator.................. 090-44145-02
DCD-521/C ETSI Shelf Master/Expansion.. 990-44210-01
MRC-EA/Input card 2MHz/2Mb/s, 4
inputs................................. 090-44010-06
TNCE Clock card rubidium............... 090-44017-02
TNC Clock card transit node OCXO....... 090-44020-02
TO-EA Output card 2MHz/2Mb/s 10
outputs................................ 090-44029-01
MIS Maint i'f analysis/config/remote... 990-44018-14
Blank Panel 1 TO slot wide............. 074-00208-01
Timing Input Module MRC SMB............ 990-45107-02
Timing Output Module SMB,1:1 prot...... 990-45105-07
1.7 EQUIPMENT PRACTICE
Mechanical bay assy ETSI (no expansion
sh).................................... NTCE89AA *
NTE-STM16 Rack (2200 x 600 x 300)--
cost reduced........................... NTFW70EA *
TN-16X Installation Kit................ 25SKM00807ABM *
REGEN Rack Assy........................ NTFW71AA *
Rack side cover L/H u/o NTFW70AA....... P0725173 *
Rack side cover R/H u/o NTFW70AA....... P0725175 *
Mechanical assembly, rack, 42U......... A0726263 *
Distribution block 8 way left hand
cable entry............................ A0729317
Distribution block 8 way right hand
cable entry............................ A0729318
ETSI Rack, 220cm, without side
panels................................. NTKD70AA *
NT ETSI Rack Standard Inst.Kit......... 25SKM00807ABE *
ETSI Rack 48V DC Distrib Panel with
Rack Alarm Unit........................ 25SKM00807AAN *
1.8 ADDITIONAL ITEMS
OC-192 REL 1.4 SUPERSET CUSTOMER
LOADS.................................. ***PLMTN-16X_NC_1
AC Power Cable Assembly................ PLM_Source_locally * * *
***Cable Assy, RJ45 crossover.......... 32YCN01094AFA *
*** OPTICAL PATCHCORD 20M SC-SC........ PLM_Advanced Optics_NC_ *
TOTAL EXTENDED EQUIPMENT PRICE *
2.0 INSTALLATION & COMMISSIONING........... * * *
Installation Materials................. *
-----
TOTAL EXTENDED PRICE................... *
-----
-----
</TABLE>
- ------------------------
* The confidential portion has been omitted pursuant to a request for
confidential treatment and omitted
material has been filed separately with the commission.
76
<PAGE>
<TABLE>
<CAPTION>
VIATEL CIRCLE 1 CONTRACT
ANNEX C
SCHEDULE OF PRICES
SECTION D - Belgium
KORTRIJK ISSUE 1.0
--------------------------------------- -------------------------------------------------------------------------------
ABBREVIATED DESCRIPTION CODE SELLING PRICE KORTRIJK EXT PRICE
--------------------------------------- ---------------------------- --------------- ----------------- -------------
$US $US
<S> <C> <C> <C> <C> <C>
1.0 TRANSMISSION EQUIPMENT
1.1 TN-16 4F
Core
OC192 SC060 SHELF CONTROLLER........... NTCA41BA *
MAINTENANCE INTERFACE.................. NTCA42AA *
*** CABLE ASSY (MODEM ACCESS).......... NTCC8930 *
MESSAGE TRANSFER CARD.................. NTCA48AA *
BREAKER MODULE......................... NTCA40AA *
COMMON EQUIPMENT FILLER CARD (1 IN.)... NTCA59AA *
PARTITIONED OPC CONTROLLER............. NTCA50AA *
*** CA ASSY (10 BASE T CROSSOVER)...... NT7E44KC *
PARTITIONED OPC STORAGE MODULE......... NTCA51AA *
OPC FLASH CARTRIDGE.................... NTCA53AA *
PARTITIONED OPC IO MODULE.............. NTCA52AA *
*** SM OPTICAL PATCHCORD 20M (66FT)
(SC-TUNED) SEE A06..................... NT7E46HD *
*** SM OPTICAL PATCHCORD 20M (66FT)
(SC-TUNED) W/MVOA...................... NT7E47HD *
TRANSPORT SHELF FILLER CARD............ NTCA49AA *
TRANSPORT SHELF SWITCH FILLER CARD..... NTCA49AB *
OC-192 OPTICAL AMPLIFIER W/ SERVICE
CHANNEL (SC)........................... NTCA11AC *
OC-192 OPTICAL AMPLIFIER (SC).......... NTCA11BC *
1625NM OPTICAL SERVICE CHANNEL (SC).... NTCA11CC *
1550/1625NM WDM COUPLER (SC)........... NTCC13AC *
MOR RTU................................ NTCA62DA *
1.2 TN-16X
Core
STM16 LTE/ADM/RING SHELF--COST
REDUCED................................ NTFW50EA *
SH PROCESSOR FOR SDH (DCC HUBBING)..... NT7E20GC *
SH PROCESSOR(ETHERNET,SYNC MSG 24M).... NT7E20KA *
Maintenance Interface Unit............. NT7E23AA *
TN-16X Regenerator Subrack Kit......... NTFW51AA *
OC-48/STM-16 Ring Demux................ NT8E06AB *
OC48 DWDM 1528.77 NM RING TX........... NT8E11DQ *
OC48 DWDM 1530.33 RING TRANSMITTER..... NT8E11FQ *
OC48 WDM 1533.47 RING TRANSMITTER...... NT8E11KQ *
OC48 WDM 1535.04 RING TRANSMITTER...... NT8E11MQ *
OC48 DWDM 1550.92 NM RING
TRANSMITTER............................ NT8E11KR *
OC48 DWDM 1552.52 RING TRANSMITTER..... NT8E11MR *
OC48 DWDM 1555.75 NM RING
TRANSMITTER............................ NT8E11RR *
OC48 DWDM 1557.36 RING TRANSMITTER..... NT8E11TR *
OC48 DWDM 1528.77 NM REGEN............. NT8E13DJ *
OC48 DWDM 1530.33 REG/TX INTERFACE..... NT8E13FJ *
OC48 DWDM 1533.47 REG/TX INTERFACE..... NT8E13KJ *
OC48 DWDM 1535.04 REG/TX INTERFACE..... NT8E13MJ *
OC48 DWDM 1550.92 REG/TX INTERFACE..... NT8E13KK *
OC48 DWDM 1552.52 REG/TX INTERFACE..... NT8E13MK *
OC48 DWDM 1555.75 REG/TX INTERFACE..... NT8E13RK *
OC48 DWDM 1557.36 REG/TX INTERFACE..... NT8E13TK *
OC-48/STM16 LR SAW Rx Interface (SC)... NT8E02DD *
STM1o IR 1310 Tributary I/F (SC)....... NTFW11CD *
STM1 Optical Carrier Assembly.......... NTFW19BA *
External synchronisation interface
carrier................................ NT7E19AA *
External Synchronisation Interface (2
MHz)................................... NTFW27AA *
*** OPTICAL PATCH CORD 20M (SC-SC)..... NT7E46FD *
*** OPTICAL PATCH CORD W/MVOA 20M
(SC-SC)................................ NT7E47FD *
KIT, SC OPTICAL CONNECTOR. INITIAL USE
NTN401AA............................... NTN459SC *
*** FIBRE OPTIC CABLE ASSY STM1 DUPLEX
SC-SC 20M.............................. NTFW5753 *
TN-16X Regenerator Software Licence
(Release 7)............................ NTQJ93GG *
TN-16X Shared Protection Ring Software
Licence (Release 7).................... NTQJ93HG *
Extra Traffic on Rings on Licence...... NTQJ93TB *
OPC with tape drive.................... NT7E24BC *
PHOENIX SUPERSET CODE FOR REL 7........ NTFW97HA *
*** CNET BAY/BAY CABLE 5.0M............ NT7E44JC *
TN-MS EC-16X Multi-user Licence........ NTQJ93CA *
TN-MS EC-16X Release 7 Licence......... NTQJ93AG *
TN-MS EC-16X Release 7 Standby
Licence................................ NTQJ93BG *
FW TN-16X Rel 7 NTPS (CD-ROM).......... NTFW64AH *
</TABLE>
- ------------------------
* The confidential portion has been omitted pursuant to a request for
confidential treatment and omitted
material has been filed separately with the commission.
77
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
VIATEL CIRCLE 1 CONTRACT
ANNEX C
SCHEDULE OF PRICES
SECTION D - Belgium
1.3 ADVANCED OPTICS (DWDM)
CORE
DWDM FILTER MODULE SHELF ASSY--4
POS--ETSI.............................. NTCE88BA *
DWDM COUPLER 8W,MB/DR W/O VOA,SC....... NTCA10GC *
DWDM COUPLER 8W,DB/MR W/O VOA,SC....... NTCA10HC *
TN-1X
Core
TN-1X Synchronous Access Multiplexer
Subrack................................ 25GMU00750GWV *
Shelf Kit.............................. 25SKM00750HFN *
TN-1X Installation Kit................. 25SKM00807ABL *
Local Craft Access Panel Type 1........ 25UEP00750GXB *
Service Interface Module Type 10
(Misc)................................. 25UJJ00750GXC *
Service Interface Module Type 40
(LCAP)................................. 25UJJ00750GWX *
Subrack Cover Kit...................... 25SKM00750HFL *
Rack Mounting Kit for ETSI............. 25SKM00019AAE *
Dummy Front Panel 1'................... 25RBN00021AAB *
Dummy SIA Panel 1'..................... 25RBN00021AAA *
Power Supply Unit...................... 25UPW00750HAY *
Subrack Control Unit................... 25UMN00750GXD *
Payload Manager (mixed payload)........ NTKD10AA *
STM-1 G.957 L1.2 Optical Aggregate Port
Card (1550nm).......................... 25UTM00750HWH *
STM-1 G.957 L-1.1, S1.1 Optical
Tributary Card (1'wide)................ NTKD11AA *
***Optical patchcord 20m FC-FC......... NT7E46BD *
Craft Access Terminal.................. NTQJ09AA *
RS 232 Cable Assembly.................. 25YCN00748AAA *
TN-1 CAT Release 12 Application
(3.5")................................. NTQJ35LA
TN-MS CA-1X Release 12 Licence......... NTQJ91DL
Netscape Windows95 (Fastrack Server and
Navigator)............................. NTQJ81BA *
TN-1X Release 8 Software Download (from
CAT)................................... NTQJ36HA
HP B132, 128Mbytes RAM, 2Gb HD, DAT,
CD, N.Hem.............................. NTQJ01FA *
TN-MS EC-1 Release 12 (DAT)............ NTQJ30LA
Netscape for UNIX (Fastrack Server and
Navigator)............................. NTQJ81AA *
TN-1X Release 8 software download (from
EC).................................... NTQJ31HA
TN-1C Release 3 Software kit (disk &
tape).................................. NTFT81CA *
TN-MS EC-1 Release 12 Licence for
TN-1X.................................. NTQJ91AL *
TN-MS EC-1 Release 12 Standby Licence.. NTQJ91BL *
TN-MS EC-1 Multi-user Licence.......... NTQJ91CA *
X terminal software on DAT............. NTQJ05JB *
TN-1X Rel 8 NTPs (CD-ROM MAC).......... 32HSC00456VEC *
TN-1C
Core
TN-1C 8x2/16x2 turbo ADM (1550nm
L1.2).................................. NTFT52BI * * *
AC/DC Power Unit....................... NTFT21AA * * *
12V Battery............................ NTFT24AA * * *
***BT43/5F & 3002 cable assy 20m....... 32YCN00750CAA * * *
***Optical patchcord 20m FC-FC......... NT7E46BD * * *
TN-MS EC-1 Release 12 Licence for
TN-1C.................................. NTQJ91FL * * *
Craft Access Terminal.................. NTQJ09AA *
CAT Cable Assembly..................... NTFT15AC *
TN-1C Release 3 Software kit (disk &
tape).................................. NTFT81CA *
TN-1 CAT Release 12 Application
(3.5")................................. NTQJ35LA
Netscape Windows95 (Fastrack Server and
Navigator)............................. NTQJ81BA *
TN-1C Release 3 handbook CD-ROM........ NTFT66CA *
1.4 DXC *
256 Port Cross Connect (MSH84)......... MSH84
STM-1 Optical card
16 x 2Mbit/s Port Unit
MV-36 Element controller............... MV-36
Managed Object Agent (MOA)
1.5 TN-MS INM *
Hardware
HP C200 workstation, north & south
hemisphere............................. NTQJ01GC
NRM Release 6 Software and Handbooks... NTQJ12FA
NRM Release 6 Feature Profile Tape--
Core + IM + PM + CM.................... NTQJ10FK
TN-MS NRM (Rel6) Alarm surveillance
Licence................................ NTQJ90AF
TN-MS NRM (Rel6) Electronic Software
Delivery Licence....................... NTQJ90BF
TN-MS NRM (Rel6) Inventory Manager
Licence................................ NTQJ90DF
TN-MS NRM (Rel6) Perf. Mon.
Consolidation Licence.................. NTQJ90EF
TN-MS NRM (Rel6) Connection Management
Licence................................ NTQJ90FF
</TABLE>
- ------------------------
* The confidential portion has been omitted pursuant to a request for
confidential treatment and omitted
material has been filed separately with the commission.
78
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
VIATEL CIRCLE 1 CONTRACT
ANNEX C
SCHEDULE OF PRICES
SECTION D - Belgium
TN-MS NRM (Rel6) Software Management
User Guide............................. NTQJ19FT
TN-MS NRM (Rel6) Inventory Management
User Guide............................. NTQJ19FX
TN-MS NRM (Rel6) Performance Management
User Guide............................. NTQJ19FW
TN-MS NRM (Rel6) Connection Management
User Guide............................. NTQJ19FV
Router 2501 OSI........................ NTJM01BA
Router 2514 OSI........................ NTJM01KA
DCN RConfig "P" 2514 ent. 0 tunnels,
Ser: 2 L2,0 L1 CPC Allocated:
A0741950............................... NTJM9914
DCN RConfig "P" 2514 ent. 1 tunnel,
Ser: 1 L2,1 L1 CPC Allocated:
A0741941............................... NTJM9912
HS modem SP-1-AR,AC.................... NTJM01SA
Shelf Cantilever 19in mounting......... P0878672
Transceiver 10BaseT.................... NTJM01VA
Ethernet 10BaseT Transceiver........... A0383333
Baystack 101 10baseT hub 12 port RJ45
250VAC................................. NTJM02PA
***Cable Assy LAN RJ45--RJ45 h/e....... 32YCN00727AFA
***Ethernet kit for OPC hub
(20m,OC-48)............................ NT7E44JE
1.6 NETWORK SYNCHRONISATION *
DCD-521C
DCD-Cs ETSI Standalone Cesium PRC...... 990-43100-02
DCD-LPR Shelf GPS Applications......... 990-44100-12
GPS Timing Kit E1 (Rubidium or
Quartz)................................ 990-44140-14
Blank Unit LPR......................... 090-44198-01
LOU-2 Dual oscillator.................. 090-44145-02
DCD-521/C ETSI Shelf Master/Expansion.. 990-44210-01
MRC-EA/Input card 2MHz/2Mb/s, 4
inputs................................. 090-44010-06
TNCE Clock card rubidium............... 090-44017-02
TNC Clock card transit node OCXO....... 090-44020-02
TO-EA Output card 2MHz/2Mb/s 10
outputs................................ 090-44029-01
MIS Maint i'f analysis/config/remote... 990-44018-14
Blank Panel 1 TO slot wide............. 074-00208-01
Timing Input Module MRC SMB............ 990-45107-02
Timing Output Module SMB,1:1 prot...... 990-45105-07
1.7 EQUIPMENT PRACTICE
Mechanical bay assy ETSI (no expansion
sh).................................... NTCE89AA *
NTE-STM16 Rack (2200 x 600 x 300)--
cost reduced........................... NTFW70EA *
TN-16X Installation Kit................ 25SKM00807ABM *
REGEN Rack Assy........................ NTFW71AA *
Rack side cover L/H u/o NTFW70AA....... P0725173 *
Rack side cover R/H u/o NTFW70AA....... P0725175 *
Mechanical assembly, rack, 42U......... A0726263
Distribution block 8 way left hand
cable entry............................ A0729317
Distribution block 8 way right hand
cable entry............................ A0729318
ETSI Rack, 220cm, without side
panels................................. NTKD70AA *
NT ETSI Rack Standard Inst.Kit......... 25SKM00807ABE *
ETSI Rack 48V DC Distrib Panel with
Rack Alarm Unit........................ 25SKM00807AAN *
1.8 ADDITIONAL ITEMS
OC-192 REL 1.4 SUPERSET CUSTOMER
LOADS.................................. ***PLM_TN-16X_NC_1
AC Power Cable Assembly................ PLM_Source_locally * * *
***Cable Assy, RJ45 crossover.......... 32YCN01094AFA *
*** OPTICAL PATCHCORD 20M SC-SC........ PLM_Advanced Optics_NC_3 *
TOTAL EXTENDED EQUIPMENT PRICE......... *
2.0 INSTALLATION & COMMISSIONING........... * * *
INSTALLATION MATERIALS................. *
-----
TOTAL EXTENDED PRICE................... *
-----
-----
</TABLE>
- ------------------------
* The confidential portion has been omitted pursuant to a request for
confidential treatment and omitted
material has been filed separately with the commission.
79
<PAGE>
<TABLE>
<CAPTION>
VIATEL CIRCLE 1 CONTRACT
ANNEX C
SCHEDULE OF PRICES
SECTION D - BELGIUM
HASSELT ISSUE 1.0
----------------------------------------------- --------------------------------------------------------------------
SELLING
ABBREVIATED DESCRIPTION CODE PRICE HASSELT EXT PRICE
----------------------------------------------- -------------------------- ------------ ----------- -------------
$US $US
<S> <C> <C> <C> <C> <C>
1.0 TRANSMISSION EQUIPMENT
1.1 TN-16 4F
Core
OC192 SC060 SHELF CONTROLLER................... NTCA41BA *
MAINTENANCE INTERFACE.......................... NTCA42AA *
*** CABLE ASSY (MODEM ACCESS).................. NTCC8930 *
MESSAGE TRANSFER CARD.......................... NTCA48AA *
BREAKER MODULE................................. NTCA40AA *
COMMON EQUIPMENT FILLER CARD (1 IN.)........... NTCA59AA *
PARTITIONED OPC CONTROLLER..................... NTCA50AA *
*** CA ASSY (10 BASE T CROSSOVER).............. NT7E44KC *
PARTITIONED OPC STORAGE MODULE................. NTCA51AA *
OPC FLASH CARTRIDGE............................ NTCA53AA *
PARTITIONED OPC IO MODULE...................... NTCA52AA *
*** SM OPTICAL PATCHCORD 20M (66FT) (SC-TUNED)
SEE A06........................................ NT7E46HD *
*** SM OPTICAL PATCHCORD 20M (66FT) (SC-TUNED)
W/MVOA......................................... NT7E47HD *
TRANSPORT SHELF FILLER CARD.................... NTCA49AA *
TRANSPORT SHELF SWITCH FILLER CARD............. NTCA49AB *
OC-192 OPTICAL AMPLIFIER W/ SERVICE CHANNEL
(SC)........................................... NTCA11AC *
OC-192 OPTICAL AMPLIFIER (SC).................. NTCA11BC *
1625NM OPTICAL SERVICE CHANNEL (SC)............ NTCA11CC *
1550/1625NM WDM COUPLER (SC)................... NTCC13AC *
MOR RTU........................................ NTCA62DA *
1.2 TN-16X
Core
STM16 LTE/ADM/RING SHELF--COST REDUCED......... NTFW50EA *
SH PROCESSOR FOR SDH (DCC HUBBING)............. NT7E20GC *
SH PROCESSOR(ETHERNET,SYNC MSG 24M)............ NT7E20KA *
Maintenance Interface Unit..................... NT7E23AA *
TN-16X Regenerator Subrack Kit................. NTFW51AA *
OC-48/STM-16 Ring Demux........................ NT8E06AB *
OC48 DWDM 1528.77 NM RING TX................... NT8E11DQ *
OC48 DWDM 1530.33 RING TRANSMITTER............. NT8E11FQ *
OC48 WDM 1533.47 RING TRANSMITTER.............. NT8E11KQ *
OC48 WDM 1535.04 RING TRANSMITTER.............. NT8E11MQ *
OC48 DWDM 1550.92 NM RING TRANSMITTER.......... NT8E11KR *
OC48 DWDM 1552.52 RING TRANSMITTER............. NT8E11MR *
OC48 DWDM 1555.75 NM RING TRANSMITTER.......... NT8E11RR *
OC48 DWDM 1557.36 RING TRANSMITTER............. NT8E11TR *
OC48 DWDM 1528.77 NM REGEN..................... NT8E13DJ *
OC48 DWDM 1530.33 REG/TX INTERFACE............. NT8E13FJ *
OC48 DWDM 1533.47 REG/TX INTERFACE............. NT8E13KJ *
OC48 DWDM 1535.04 REG/TX INTERFACE............. NT8E13MJ *
OC48 DWDM 1550.92 REG/TX INTERFACE............. NT8E13KK *
OC48 DWDM 1552.52 REG/TX INTERFACE............. NT8E13MK *
OC48 DWDM 1555.75 REG/TX INTERFACE............. NT8E13RK *
OC48 DWDM 1557.36 REG/TX INTERFACE............. NT8E13TK *
OC-48/STM16 LR SAW Rx Interface (SC)........... NT8E02DD *
STM1o IR 1310 Tributary I/F (SC)............... NTFW11CD *
STM1 Optical Carrier Assembly.................. NTFW19BA *
External synchronisation interface carrier..... NT7E19AA *
External Synchronisation Interface (2 MHz)..... NTFW27AA *
*** OPTICAL PATCH CORD 20M (SC-SC)............. NT7E46FD *
*** OPTICAL PATCH CORD W/MVOA 20M (SC-SC)...... NT7E47FD *
KIT, SC OPTICAL CONNECTOR. INITIAL USE
NTN401AA....................................... NTN459SC *
*** FIBRE OPTIC CABLE ASSY STM1 DUPLEX SC-SC
20M............................................ NTFW5753 *
TN-16X Regenerator Software Licence (Release
7)............................................. NTQJ93GG *
TN-16X Shared Protection Ring Software Licence
(Release 7).................................... NTQJ93HG *
Extra Traffic on Rings on Licence.............. NTQJ93TB *
OPC with tape drive............................ NT7E24BC *
PHOENIX SUPERSET CODE FOR REL 7................ NTFW97HA *
*** CNET BAY/BAY CABLE 5.0M.................... NT7E44JC *
TN-MS EC-16X Multi-user Licence................ NTQJ93CA *
TN-MS EC-16X Release 7 Licence................. NTQJ93AG *
TN-MS EC-16X Release 7 Standby Licence......... NTQJ93BG *
FW TN-16X Rel 7 NTPS (CD-ROM).................. NTFW64AH *
</TABLE>
- ------------------------
* The confidential portion has been omitted pursuant to a request for
confidential treatment and omitted
material has been filed separately with the commission.
80
<PAGE>
<TABLE>
<CAPTION>
VIATEL CIRCLE 1 CONTRACT
ANNEX C
SCHEDULE OF PRICES
SECTION D - BELGIUM
<S> <C> <C> <C> <C> <C>
1.3 ADVANCED OPTICS (DWDM)
Core
DWDM FILTER MODULE SHELF ASSY--4 POS--ETSI..... NTCE88BA *
DWDM COUPLER 8W,MB/DR W/O VOA,SC............... NTCA10GC *
DWDM COUPLER 8W,DB/MR W/O VOA,SC............... NTCA10HC *
TN-1X
Core
TN-1X Synchronous Access Multiplexer Subrack... 25GMU00750GWV *
Shelf Kit...................................... 25SKM00750HFN *
TN-1X Installation Kit......................... 25SKM00807ABL *
Local Craft Access Panel Type 1................ 25UEP00750GXB *
Service Interface Module Type 10 (Misc)........ 25UJJ00750GXC *
Service Interface Module Type 40 (LCAP)........ 25UJJ00750GWX *
Subrack Cover Kit.............................. 25SKM00750HFL *
Rack Mounting Kit for ETSI..................... 25SKM00019AAE *
Dummy Front Panel 1''.......................... 25RBN00021AAB *
Dummy SIA Panel 1''............................ 25RBN00021AAA *
Power Supply Unit.............................. 25UPW00750HAY *
Subrack Control Unit........................... 25UMN00750GXD *
Payload Manager (mixed payload)................ NTKD10AA *
STM-1 G.957 L1.2 Optical Aggregate Port Card
(1550nm)....................................... 25UTM00750HWH *
STM-1 G.957 L-1.1, S1.1 Optical Tributary Card
(1'' wide)..................................... NTKD11AA *
***Optical patchcord 20m FC-FC................. NT7E46BD *
Craft Access Terminal.......................... NTQJ09AA *
RS 232 Cable Assembly.......................... 25YCN00748AAA *
TN-1 CAT Release 12 Application (3.5")......... NTQJ35LA
TN-MS CA-1X Release 12 Licence................. NTQJ91DL
Netscape Windows95 (Fastrack Server and
Navigator)..................................... NTQJ81BA *
TN-1X Release 8 Software Download (from CAT)... NTQJ36HA
HP B132, 128Mbytes RAM, 2Gb HD, DAT, CD,
N.Hem.......................................... NTQJ01FA *
TN-MS EC-1 Release 12 (DAT).................... NTQJ30LA
Netscape for UNIX (Fastrack Server and
Navigator)..................................... NTQJ81AA *
TN-1X Release 8 software download (from EC).... NTQJ31HA
TN-1C Release 3 Software kit (disk & tape)..... NTFT81CA *
TN-MS EC-1 Release 12 Licence for TN-1X........ NTQJ91AL *
TN-MS EC-1 Release 12 Standby Licence.......... NTQJ91BL *
TN-MS EC-1 Multi-user Licence.................. NTQJ91CA *
X terminal software on DAT..................... NTQJ05JB *
TN-1X Rel 8 NTPs (CD-ROM MAC).................. 32HSC00456VEC *
TN-1C
Core
TN-1C 8x2/16x2 turbo ADM (1550nm L1.2)......... NTFT52BI * * *
AC/DC Power Unit............................... NTFT21AA * * *
12V Battery.................................... NTFT24AA * * *
***BT43/5F & 3002 cable assy 20m............... 32YCN00750CAA * * *
***Optical patchcord 20m FC-FC................. NT7E46BD * * *
TN-MS EC-1 Release 12 Licence for TN-1C........ NTQJ91FL * * *
Craft Access Terminal.......................... NTQJ09AA *
CAT Cable Assembly............................. NTFT15AC *
TN-1C Release 3 Software kit (disk & tape)..... NTFT81CA *
TN-1 CAT Release 12 Application (3.5")......... NTQJ35LA
Netscape Windows95 (Fastrack Server and
Navigator)..................................... NTQJ81BA *
TN-1C Release 3 handbook CD-ROM................ NTFT66CA *
1.4 DXC *
256 Port Cross Connect (MSH85)................. MSH84
STM-1 Optical card.............................
16 x 2Mbit/s Port Unit.........................
MV-36 Element controller....................... MV-36
Managed Object Agent (MOA).....................
1.5 TN-MS INM *
Hardware.......................................
HP C200 workstation, north & south
hemisphere..................................... NTQJ01GC
NRM Release 6 Software and Handbooks........... NTQJ12FA
NRM Release 6 Feature Profile Tape--Core + IM +
PM + CM........................................ NTQJ10FK
TN-MS NRM (Rel6) Alarm surveillance Licence.... NTQJ90AF
TN-MS NRM (Rel6) Electronic Software Delivery
Licence........................................ NTQJ90BF
TN-MS NRM (Rel6) Inventory Manager Licence..... NTQJ90DF
TN-MS NRM (Rel6) Perf. Mon. Consolidation
Licence........................................ NTQJ90EF
TN-MS NRM (Rel6) Connection Management
Licence........................................ NTQJ90FF
</TABLE>
- ------------------------
* The confidential portion has been omitted pursuant to a request for
confidential treatment and omitted
material has been filed separately with the commission.
81
<PAGE>
<TABLE>
<CAPTION>
VIATEL CIRCLE 1 CONTRACT
ANNEX C
SCHEDULE OF PRICES
SECTION D - BELGIUM
<S> <C> <C> <C> <C> <C>
TN-MS NRM (Rel6) Software Management User
Guide.......................................... NTQJ19FT
TN-MS NRM (Rel6) Inventory Management User
Guide.......................................... NTQJ19FX
TN-MS NRM (Rel6) Performance Management User
Guide.......................................... NTQJ19FW
TN-MS NRM (Rel6) Connection Management User
Guide.......................................... NTQJ19FV
Router 2501 OSI................................ NTJM01BA
Router 2514 OSI................................ NTJM01KA
DCN RConfig "P" 2514 ent. 0 tunnels, Ser: 2
L2,0 L1 CPC Allocated: A0741950................ NTJM9914
DCN RConfig "P" 2514 ent. 1 tunnel, Ser: 1 L2,1
L1 CPC Allocated: A0741941..................... NTJM9912
HS modem SP-1-AR,AC............................ NTJM01SA
Shelf Cantilever 19in mounting................. P0878672
Transceiver 10BaseT............................ NTJM01VA
Ethernet 10BaseT Transceiver................... A0383333
Baystack 101 10baseT hub 12 port RJ45 250VAC... NTJM02PA
***Cable Assy LAN RJ45--RJ45 h/e............... 32YCN00727AFA
***Ethernet kit for OPC hub (20m,OC-48)........ NT7E44JE
1.6 NETWORK SYNCHRONISATION........................ *
DCD-521C.......................................
DCD-Cs ETSI Standalone Cesium PRC.............. 990-43100-02
DCD-LPR Shelf GPS Applications................. 990-44100-12
GPS Timing Kit E1 (Rubidium or Quartz)......... 990-44140-14
Blank Unit LPR................................. 090-44198-01
LOU-2 Dual oscillator.......................... 090-44145-02
DCD-521/C ETSI Shelf Master/Expansion.......... 990-44210-01
MRC-EA/Input card 2MHz/2Mb/s, 4 inputs......... 090-44010-06
TNCE Clock card rubidium....................... 090-44017-02
TNC Clock card transit node OCXO............... 090-44020-02
TO-EA Output card 2MHz/2Mb/s 10 outputs........ 090-44029-01
MIS Maint i'f analysis/config/remote........... 990-44018-14
Blank Panel 1 TO slot wide..................... 074-00208-01
Timing Input Module MRC SMB.................... 990-45107-02
Timing Output Module SMB,1:1 prot.............. 990-45105-07
1.7 EQUIPMENT PRACTICE
Mechanical bay assy ETSI (no expansion sh)..... NTCE89AA *
NTE-STM16 Rack (2200 x 600 x 300)--cost
reduced........................................ NTFW70EA *
TN-16X Installation Kit........................ 25SKM00807ABM *
REGEN Rack Assy................................ NTFW71AA *
Rack side cover L/H u/o NTFW70AA............... P0725173 *
Rack side cover R/H u/o NTFW70AA............... P0725175 *
Mechanical assembly, rack, 42U................. A0726263
Distribution block 8 way left hand cable
entry.......................................... A0729317
Distribution block 8 way right hand cable
entry.......................................... A0729318
ETSI Rack, 220cm, without side panels.......... NTKD70AA *
NT ETSI Rack Standard Inst.Kit................. 25SKM00807ABE *
ETSI Rack 48V DC Distrib Panel with Rack Alarm
Unit........................................... 25SKM00807AAN *
1.8 ADDITIONAL ITEMS
OC-192 REL 1.4 SUPERSET CUSTOMER LOADS......... ***PLM_TN-16X_NC_1
AC Power Cable Assembly........................ PLM_Source_locally * * *
***Cable Assy, RJ45 crossover.................. 32YCN01094AFA *
*** OPTICAL PATCHCORD 20M SC-SC................ PLM_Advanced Optics_NC_3 *
Total Extended Equipment Price................. *
2.0 INSTALLATION & COMMISSIONING * * *
Installation Materials......................... *
-----
Total Extended Price........................... *
-----
-----
</TABLE>
- ------------------------
* The confidential portion has been omitted pursuant to a request for
confidential treatment and omitted
material has been filed separately with the commission.
82
<PAGE>
<TABLE>
<CAPTION>
VIATEL CIRCLE 1 CONTRACT
ANNEX C
SCHEDULE OF PRICES
SECTION D - BELGIUM
GENT ISSUE 1.0
---------------------------------------- ------------------------------------------------------------------------------
ABBREVIATED DESCRIPTION CODE SELLING PRICE GENT EXT PRICE
---------------------------------------- ---------------------------------- -------------- ----- -------------
$US $US
<S> <C> <C> <C> <C> <C>
1.0 TRANSMISSION EQUIPMENT
1.1 TN-16 4F
Core
OC192 SC060 SHELF CONTROLLER............ NTCA41BA *
MAINTENANCE INTERFACE................... NTCA42AA *
*** CABLE ASSY (MODEM ACCESS)........... NTCC8930 *
MESSAGE TRANSFER CARD................... NTCA48AA *
BREAKER MODULE.......................... NTCA40AA *
COMMON EQUIPMENT FILLER CARD (1 IN.).... NTCA59AA *
PARTITIONED OPC CONTROLLER.............. NTCA50AA *
*** CA ASSY (10 BASE T CROSSOVER)....... NT7E44KC *
PARTITIONED OPC STORAGE MODULE.......... NTCA51AA *
OPC FLASH CARTRIDGE..................... NTCA53AA *
PARTITIONED OPC IO MODULE............... NTCA52AA *
*** SM OPTICAL PATCHCORD 20M (66FT)
(SC-TUNED) SEE A06...................... NT7E46HD *
*** SM OPTICAL PATCHCORD 20M (66FT)
(SC-TUNED) W/MVOA....................... NT7E47HD *
TRANSPORT SHELF FILLER CARD............. NTCA49AA *
TRANSPORT SHELF SWITCH FILLER CARD...... NTCA49AB *
OC-192 OPTICAL AMPLIFIER W/ SERVICE
CHANNEL (SC)............................ NTCA11AC *
OC-192 OPTICAL AMPLIFIER (SC)........... NTCA11BC *
1625NM OPTICAL SERVICE CHANNEL (SC)..... NTCA11CC *
1550/1625NM WDM COUPLER (SC)............ NTCC13AC *
MOR RTU................................. NTCA62DA *
1.2 TN-16X
Core....................................
STM16 LTE/ADM/RING SHELF--COST
REDUCED................................. NTFW50EA *
SH PROCESSOR FOR SDH (DCC HUBBING)...... NT7E20GC *
SH PROCESSOR(ETHERNET,SYNC MSG 24M)..... NT7E20KA *
Maintenance Interface Unit.............. NT7E23AA *
TN-16X Regenerator Subrack Kit.......... NTFW51AA *
OC-48/STM-16 Ring Demux................. NT8E06AB *
OC48 DWDM 1528.77 NM RING TX............ NT8E11DQ *
OC48 DWDM 1530.33 RING TRANSMITTER...... NT8E11FQ *
OC48 WDM 1533.47 RING TRANSMITTER....... NT8E11KQ *
OC48 WDM 1535.04 RING TRANSMITTER....... NT8E11MQ *
OC48 DWDM 1550.92 NM RING TRANSMITTER... NT8E11KR *
OC48 DWDM 1552.52 RING TRANSMITTER...... NT8E11MR *
OC48 DWDM 1555.75 NM RING TRANSMITTER... NT8E11RR *
OC48 DWDM 1557.36 RING TRANSMITTER...... NT8E11TR *
OC48 DWDM 1528.77 NM REGEN.............. NT8E13DJ *
OC48 DWDM 1530.33 REG/TX INTERFACE...... NT8E13FJ *
OC48 DWDM 1533.47 REG/TX INTERFACE...... NT8E13KJ *
OC48 DWDM 1535.04 REG/TX INTERFACE...... NT8E13MJ *
OC48 DWDM 1550.92 REG/TX INTERFACE...... NT8E13KK *
OC48 DWDM 1552.52 REG/TX INTERFACE...... NT8E13MK *
OC48 DWDM 1555.75 REG/TX INTERFACE...... NT8E13RK *
OC48 DWDM 1557.36 REG/TX INTERFACE...... NT8E13TK *
OC-48/STM16 LR SAW Rx Interface (SC).... NT8E02DD *
STM1o IR 1310 Tributary I/F (SC)........ NTFW11CD *
STM1 Optical Carrier Assembly........... NTFW19BA *
External synchronisation interface
carrier................................. NT7E19AA *
External Synchronisation Interface (2
MHz).................................... NTFW27AA *
*** OPTICAL PATCH CORD 20M (SC-SC)...... NT7E46FD *
*** OPTICAL PATCH CORD W/MVOA 20M
(SC-SC)................................. NT7E47FD *
KIT, SC OPTICAL CONNECTOR. INITIAL USE
NTN401AA................................ NTN459SC *
*** FIBRE OPTIC CABLE ASSY STM1 DUPLEX
SC-SC 20M............................... NTFW5753 *
TN-16X Regenerator Software Licence
(Release 7)............................. NTQJ93GG *
TN-16X Shared Protection Ring Software
Licence (Release 7)..................... NTQJ93HG *
Extra Traffic on Rings on Licence....... NTQJ93TB *
OPC with tape drive..................... NT7E24BC *
PHOENIX SUPERSET CODE FOR REL 7......... NTFW97HA *
*** CNET BAY/BAY CABLE 5.0M............. NT7E44JC *
TN-MS EC-16X Multi-user Licence......... NTQJ93CA *
TN-MS EC-16X Release 7 Licence.......... NTQJ93AG *
TN-MS EC-16X Release 7 Standby Licence.. NTQJ93BG *
FW TN-16X Rel 7 NTPS (CD-ROM)........... NTFW64AH *
</TABLE>
- ------------------------
* The confidential portion has been omitted pursuant to a request for
confidential treatment and omitted
material has been filed separately with the commission.
83
<PAGE>
<TABLE>
<CAPTION>
VIATEL CIRCLE 1 CONTRACT
ANNEX C
SCHEDULE OF PRICES
SECTION D-BELGIUM
<S> <C> <C> <C> <C> <C>
1.3 ADVANCED OPTICS (DWDM)
Core....................................
DWDM FILTER MODULE SHELF ASSY--4
POS--ETSI............................... NTCE88BA *
DWDM COUPLER 8W,MB/DR W/O VOA,SC........ NTCA10GC *
DWDM COUPLER 8W,DB/MR W/O VOA,SC........ NTCA10HC *
TN-1X
Core....................................
TN-1X Synchronous Access Multiplexer
Subrack................................. 25GMU00750GWV *
Shelf Kit............................... 25SKM00750HFN *
TN-1X Installation Kit.................. 25SKM00807ABL *
Local Craft Access Panel Type 1......... 25UEP00750GXB *
Service Interface Module Type 10
(Misc).................................. 25UJJ00750GXC *
Service Interface Module Type 40
(LCAP).................................. 25UJJ00750GWX *
Subrack Cover Kit....................... 25SKM00750HFL *
Rack Mounting Kit for ETSI.............. 25SKM00019AAE *
Dummy Front Panel 1'.................... 25RBN00021AAB *
Dummy SIA Panel 1'...................... 25RBN00021AAA *
Power Supply Unit....................... 25UPW00750HAY *
Subrack Control Unit.................... 25UMN00750GXD *
Payload Manager (mixed payload)......... NTKD10AA *
STM-1 G.957 L1.2 Optical Aggregate Port
Card (1550nm)........................... 25UTM00750HWH *
STM-1 G.957 L-1.1, S1.1 Optical
Tributary Card (1'wide)................. NTKD11AA *
***Optical patchcord 20m FC-FC.......... NT7E46BD *
Craft Access Terminal................... NTQJ09AA *
RS 232 Cable Assembly................... 25YCN00748AAA *
TN-1 CAT Release 12 Application
(3.5").................................. NTQJ35LA
TN-MS CA-1X Release 12 Licence.......... NTQJ91DL
Netscape Windows95 (Fastrack Server and
Navigator).............................. NTQJ81BA *
TN-1X Release 8 Software Download (from
CAT).................................... NTQJ36HA
HP B132, 128Mbytes RAM, 2Gb HD, DAT, CD,
N.Hem................................... NTQJ01FA *
TN-MS EC-1 Release 12 (DAT)............. NTQJ30LA
Netscape for UNIX (Fastrack Server and
Navigator).............................. NTQJ81AA *
TN-1X Release 8 software download (from
EC)..................................... NTQJ31HA *
TN-1C Release 3 Software kit (disk &
tape)................................... NTFT81CA *
TN-MS EC-1 Release 12 Licence for
TN-1X................................... NTQJ91AL *
TN-MS EC-1 Release 12 Standby Licence... NTQJ91BL *
TN-MS EC-1 Multi-user Licence........... NTQJ91CA *
X terminal software on DAT.............. NTQJ05JB *
TN-1X Rel 8 NTPs (CD-ROM MAC)........... 32HSC00456VEC *
TN-1C
Core
TN-1C 8x2/16x2 turbo ADM (1550nm L1.2).. NTFT52BI * * *
AC/DC Power Unit........................ NTFT21AA * * *
12V Battery............................. NTFT24AA * * *
***BT43/5F & 3002 cable assy 20m........ 32YCN00750CAA * * *
***Optical patchcord 20m FC-FC.......... NT7E46BD * * *
TN-MS EC-1 Release 12 Licence for
TN-1C................................... NTQJ91FL * * *
Craft Access Terminal................... NTQJ09AA *
CAT Cable Assembly...................... NTFT15AC *
TN-1C Release 3 Software kit (disk &
tape)................................... NTFT81CA *
TN-1 CAT Release 12 Application
(3.5").................................. NTQJ35LA
Netscape Windows95 (Fastrack Server and
Navigator).............................. NTQJ81BA *
TN-1C Release 3 handbook CD-ROM......... NTFT66CA *
1.4 DXC *
256 Port Cross Connect (MSH84).......... MSH84
STM-1 Optical card......................
16 x 2Mbit/s Port Unit..................
MV-36 Element controller................ MV-36
Managed Object Agent (MOA)..............
1.5 TN-MS INM............................... *
Hardware................................
HP C200 workstation, north & south
hemisphere.............................. NTQJ01GC
NRM Release 6 Software and Handbooks.... NTQJ12FA
NRM Release 6 Feature Profile Tape--Core
+ IM + PM + CM.......................... NTQJ10FK
TN-MS NRM (Rel6) Alarm surveillance
Licence................................. NTQJ90AF
TN-MS NRM (Rel6) Electronic Software
Delivery Licence........................ NTQJ90BF
TN-MS NRM (Rel6) Inventory Manager
Licence................................. NTQJ90DF
TN-MS NRM (Rel6) Perf. Mon.
Consolidation Licence................... NTQJ90EF
TN-MS NRM (Rel6) Connection Management
Licence................................. NTQJ90FF
</TABLE>
- ------------------------
* The confidential portion has been omitted pursuant to a request for
confidential treatment and omitted
material has been filed separately with the commission.
84
<PAGE>
<TABLE>
<CAPTION>
VIATEL CIRCLE 1 CONTRACT
ANNEX C
SCHEDULE OF PRICES
SECTION D-BELGIUM
<S> <C> <C> <C> <C> <C>
TN-MS NRM (Rel6) Software Management
User Guide.............................. NTQJ19FT
TN-MS NRM (Rel6) Inventory Management
User Guide.............................. NTQJ19FX
TN-MS NRM (Rel6) Performance Management
User Guide.............................. NTQJ19FW
TN-MS NRM (Rel6) Connection Management
User Guide.............................. NTQJ19FV
Router 2501 OSI......................... NTJM01BA
Router 2514 OSI......................... NTJM01KA
DCN RConfig "P" 2514 ent. 0 tunnels,
Ser: 2 L2,0 L1 CPC Allocated:
A0741950................................ NTJM9914
DCN RConfig "P" 2514 ent. 1 tunnel, Ser:
1 L2,1 L1 CPC Allocated: A0741941....... NTJM9912
HS modem SP-1-AR,AC..................... NTJM01SA
Shelf Cantilever 19in mounting.......... P0878672
Transceiver 10BaseT..................... NTJM01VA
Ethernet 10BaseT Transceiver............ A0383333
Baystack 101 10baseT hub 12 port RJ45
250VAC.................................. NTJM02PA
***Cable Assy LAN RJ45--RJ45 h/e........ 32YCN00727AFA
***Ethernet kit for OPC hub
(20m,OC-48)............................. NT7E44JE
1.6 NETWORK SYNCHRONISATION *
DCD-521C
DCD-Cs ETSI Standalone Cesium PRC....... 990-43100-02
DCD-LPR Shelf GPS Applications.......... 990-44100-12
GPS Timing Kit E1 (Rubidium or Quartz).. 990-44140-14
Blank Unit LPR.......................... 090-44198-01
LOU-2 Dual oscillator................... 090-44145-02
DCD-521/C ETSI Shelf Master/Expansion... 990-44210-01
MRC-EA/Input card 2MHz/2Mb/s, 4 inputs.. 090-44010-06
TNCE Clock card rubidium................ 090-44017-02
TNC Clock card transit node OCXO........ 090-44020-02
TO-EA Output card 2MHz/2Mb/s 10
outputs................................. 090-44029-01
MIS Maint i'f analysis/config/remote.... 990-44018-14
Blank Panel 1 TO slot wide.............. 074-00208-01
Timing Input Module MRC SMB............. 990-45107-02
Timing Output Module SMB,1:1 prot....... 990-45105-07
1.7 EQUIPMENT PRACTICE......................
Mechanical bay assy ETSI (no expansion
sh)..................................... NTCE89AA *
NTE-STM16 Rack (2200 x 600 x 300)--cost
reduced................................. NTFW70EA *
TN-16X Installation Kit................. 25SKM00807ABM *
REGEN Rack Assy......................... NTFW71AA *
Rack side cover L/H u/o NTFW70AA........ P0725173 *
Rack side cover R/H u/o NTFW70AA........ P0725175 *
Mechanical assembly, rack, 42U.......... A0726263
Distribution block 8 way left hand cable
entry................................... A0729317
Distribution block 8 way right hand
cable entry............................. A0729318
ETSI Rack, 220cm, without side panels... NTKD70AA *
NT ETSI Rack Standard Inst.Kit.......... 25SKM00807ABE *
ETSI Rack 48V DC Distrib Panel with Rack
Alarm Unit.............................. 25SKM00807AAN *
1.8 ADDITIONAL ITEMS
OC-192 REL 1.4 SUPERSET CUSTOMER
LOADS................................... ***PLM_TN-16X_NC_1
AC Power Cable Assembly................. PLM_Source_locally * * *
***Cable Assy, RJ45 crossover........... 32YCN01094AFA *
*** OPTICAL PATCHCORD 20M SC-SC......... PLM_Advanced Optics_NC_3 *
Total Extended Equipment Price.......... *
2.0 INSTALLATION & COMMISSIONING............ * *
Installation Materials.................. *
-----
Total Extended Price.................... *
-----
-----
</TABLE>
85
<PAGE>
<TABLE>
<CAPTION>
VIATEL CIRCLE 1 CONTRACT
ANNEX C
SCHEDULE OF PRICES
SECTION D - BELGIUM
CHARLEROL ISSUE 1.0
------------------------------------- --------------------------------------------------------------------------------
ABBREVIATED DESCRIPTION CODE SELLING PRICE CHARLEROL EXT PRICE
------------------------------------- ----------------------------- --------------- ----------------- -------------
$US $US
<S> <C> <C> <C> <C> <C>
1.0 TRANSMISSION EQUIPMENT
1.1 TN-16 4F
Core.................................
OC192 SC060 SHELF CONTROLLER......... NTCA41BA *
MAINTENANCE INTERFACE................ NTCA42AA *
*** CABLE ASSY (MODEM ACCESS)........ NTCC8930 *
MESSAGE TRANSFER CARD................ NTCA48AA *
BREAKER MODULE....................... NTCA40AA *
COMMON EQUIPMENT FILLER CARD (1 IN.) NTCA59AA *
PARTITIONED OPC CONTROLLER........... NTCA50AA *
*** CA ASSY (10 BASE T CROSSOVER).... NT7E44KC *
PARTITIONED OPC STORAGE MODULE....... NTCA51AA *
OPC FLASH CARTRIDGE.................. NTCA53AA *
PARTITIONED OPC IO MODULE............ NTCA52AA *
*** SM OPTICAL PATCHCORD 20M (66FT)
(SC-TUNED) SEE A06................... NT7E46HD *
*** SM OPTICAL PATCHCORD 20M (66FT)
(SC-TUNED) W/MVOA.................... NT7E47HD *
TRANSPORT SHELF FILLER CARD.......... NTCA49AA *
TRANSPORT SHELF SWITCH FILLER CARD... NTCA49AB *
OC-192 OPTICAL AMPLIFIER W/ SERVICE
CHANNEL (SC)......................... NTCA11AC *
OC-192 OPTICAL AMPLIFIER (SC)........ NTCA11BC *
1625NM OPTICAL SERVICE CHANNEL (SC).. NTCA11CC *
1550/1625NM WDM COUPLER (SC)......... NTCC13AC *
MOR RTU.............................. NTCA62DA *
1.2 TN-16X
Core.................................
STM16 LTE/ADM/RING SHELF-- COST
REDUCED.............................. NTFW50EA *
SH PROCESSOR FOR SDH (DCC HUBBING)... NT7E20GC *
SH PROCESSOR(ETHERNET,SYNC MSG 24M).. NT7E20KA *
Maintenance Interface Unit........... NT7E23AA *
TN-16X Regenerator Subrack Kit....... NTFW51AA *
OC-48/STM-16 Ring Demux.............. NT8E06AB *
OC48 DWDM 1528.77 NM RING TX......... NT8E11DQ *
OC48 DWDM 1530.33 RING TRANSMITTER... NT8E11FQ *
OC48 WDM 1533.47 RING TRANSMITTER.... NT8E11KQ *
OC48 WDM 1535.04 RING TRANSMITTER.... NT8E11MQ *
OC48 DWDM 1550.92 NM RING
TRANSMITTER.......................... NT8E11KR *
OC48 DWDM 1552.52 RING TRANSMITTER... NT8E11MR *
OC48 DWDM 1555.75 NM RING
TRANSMITTER.......................... NT8E11RR *
OC48 DWDM 1557.36 RING TRANSMITTER... NT8E11TR *
OC48 DWDM 1528.77 NM REGEN........... NT8E13DJ *
OC48 DWDM 1530.33 REG/TX INTERFACE... NT8E13FJ *
OC48 DWDM 1533.47 REG/TX INTERFACE... NT8E13KJ *
OC48 DWDM 1535.04 REG/TX INTERFACE... NT8E13MJ *
OC48 DWDM 1550.92 REG/TX INTERFACE... NT8E13KK *
OC48 DWDM 1552.52 REG/TX INTERFACE... NT8E13MK *
OC48 DWDM 1555.75 REG/TX INTERFACE... NT8E13RK *
OC48 DWDM 1557.36 REG/TX INTERFACE... NT8E13TK *
OC-48/STM16 LR SAW Rx Interface
(SC)................................. NT8E02DD *
STM1o IR 1310 Tributary I/F (SC)..... NTFW11CD *
STM1 Optical Carrier Assembly........ NTFW19BA *
External synchronisation interface
carrier.............................. NT7E19AA *
External Synchronisation Interface (2
MHz)................................. NTFW27AA *
*** OPTICAL PATCH CORD 20M (SC-SC)... NT7E46FD *
*** OPTICAL PATCH CORD W/ MVOA 20M
(SC-SC).............................. NT7E47FD *
KIT, SC OPTICAL CONNECTOR. INITIAL
USE NTN401AA......................... NTN459SC *
*** FIBRE OPTIC CABLE ASSY STM1
DUPLEX SC-SC 20M..................... NTFW5753 *
TN-16X Regenerator Software Licence
(Release 7).......................... NTQJ93GG *
TN-16X Shared Protection Ring
Software Licence (Release 7)......... NTQJ93HG *
Extra Traffic on Rings on Licence.... NTQJ93TB *
OPC with tape drive.................. NT7E24BC *
PHOENIX SUPERSET CODE FOR REL 7...... NTFW97HA *
*** CNET BAY/BAY CABLE 5.0M.......... NT7E44JC *
TN-MS EC-16X Multi-user Licence...... NTQJ93CA *
TN-MS EC-16X Release 7 Licence....... NTQJ93AG *
TN-MS EC-16X Release 7 Standby
Licence.............................. NTQJ93BG *
FW TN-16X Rel 7 NTPS (CD-ROM)........ NTFW64AH *
</TABLE>
- ------------------------
* The confidential portion has been omitted pursuant to a request for
confidential treatment and omitted
material has been filed separately with the commission.
86
<PAGE>
<TABLE>
<CAPTION>
VIATEL CIRCLE 1 CONTRACT
ANNEX C
SCHEDULE OF PRICES
SECTION D - BELGIUM
<S> <C> <C> <C> <C> <C>
1.3 ADVANCED OPTICS (DWDM)
Core.................................
DWDM FILTER MODULE SHELF ASSY--4
POS--ETSI............................ NTCE88BA *
DWDM COUPLER 8W,MB/DR W/O VOA,SC..... NTCA10GC *
DWDM COUPLER 8W,DB/MR W/O VOA,SC..... NTCA10HC *
TN-1X
Core.................................
TN-1X Synchronous Access Multiplexer
Subrack.............................. 25GMU00750GWV *
Shelf Kit............................ 25SKM00750HFN *
TN-1X Installation Kit............... 25SKM00807ABL *
Local Craft Access Panel Type 1...... 25UEP00750GXB *
Service Interface Module Type 10
(Misc)............................... 25UJJ00750GXC *
Service Interface Module Type 40
(LCAP)............................... 25UJJ00750GWX *
Subrack Cover Kit.................... 25SKM00750HFL *
Rack Mounting Kit for ETSI........... 25SKM00019AAE *
Dummy Front Panel 1'................. 25RBN00021AAB *
Dummy SIA Panel 1'................... 25RBN00021AAA *
Power Supply Unit.................... 25UPW00750HAY *
Subrack Control Unit................. 25UMN00750GXD *
Payload Manager (mixed payload)...... NTKD10AA *
STM-1 G.957 L1.2 Optical Aggregate
Port Card (1550nm)................... 25UTM00750HWH *
STM-1 G.957 L-1.1, S1.1 Optical
Tributary Card (1'wide).............. NTKD11AA *
***Optical patchcord 20m FC-FC....... NT7E46BD *
Craft Access Terminal................ NTQJ09AA *
RS 232 Cable Assembly................ 25YCN00748AAA *
TN-1 CAT Release 12 Application
(3.5")............................... NTQJ35LA
TN-MS CA-1X Release 12 Licence....... NTQJ91DL
Netscape Windows95 (Fastrack Server
and Navigator)....................... NTQJ81BA *
TN-1X Release 8 Software Download
(from CAT)........................... NTQJ36HA
HP B132, 128Mbytes RAM, 2Gb HD, DAT,
CD, N.Hem............................ NTQJ01FA *
TN-MS EC-1 Release 12 (DAT).......... NTQJ30LA
Netscape for UNIX (Fastrack Server
and Navigator)....................... NTQJ81AA *
TN-1X Release 8 software download
(from EC)............................ NTQJ31HA
TN-1C Release 3 Software kit (disk &
tape)................................ NTFT81CA *
TN-MS EC-1 Release 12 Licence for
TN-1X................................ NTQJ91AL *
TN-MS EC-1 Release 12 Standby
Licence.............................. NTQJ91BL *
TN-MS EC-1 Multi-user Licence........ NTQJ91CA *
X terminal software on DAT........... NTQJ05JB *
TN-1X Rel 8 NTPs (CD-ROM MAC)........ 32HSC00456VEC *
TN-1C
Core.................................
TN-1C 8x2/16x2 turbo ADM (1550nm
L1.2)................................ NTFT52BI * * *
AC/DC Power Unit..................... NTFT21AA * * *
12V Battery.......................... NTFT24AA * * *
***BT43/5F & 3002 cable assy 20m..... 32YCN00750CAA * * *
***Optical patchcord 20m FC-FC....... NT7E46BD * * *
TN-MS EC-1 Release 12 Licence for
TN-1C................................ NTQJ91FL * * *
Craft Access Terminal................ NTQJ09AA *
CAT Cable Assembly................... NTFT15AC *
TN-1C Release 3 Software kit (disk &
tape)................................ NTFT81CA *
TN-1 CAT Release 12 Application
(3.5")............................... NTQJ35LA
Netscape Windows95 (Fastrack Server
and Navigator)....................... NTQJ81BA *
TN-1C Release 3 handbook CD-ROM...... NTFT66CA *
1.4 DXC.................................. *
256 Port Cross Connect (MSH84)....... MSH84
STM-1 Optical card...................
16 x 2Mbit/s Port Unit...............
MV-36 Element controller............. MV-36
Managed Object Agent (MOA)...........
1.5 TN-MS INM *
Hardware.............................
HP C200 workstation, north & south
hemisphere........................... NTQJ01GC
NRM Release 6 Software and
Handbooks............................ NTQJ12FA
NRM Release 6 Feature Profile Tape--
Core + IM + PM + CM.................. NTQJ10FK
TN-MS NRM (Rel6) Alarm surveillance
Licence.............................. NTQJ90AF
TN-MS NRM (Rel6) Electronic Software
Delivery Licence..................... NTQJ90BF
TN-MS NRM (Rel6) Inventory Manager
Licence.............................. NTQJ90DF
TN-MS NRM (Rel6) Perf. Mon.
Consolidation Licence................ NTQJ90EF
TN-MS NRM (Rel6) Connection
Management Licence................... NTQJ90FF
</TABLE>
- ------------------------
* The confidential portion has been omitted pursuant to a request for
confidential treatment and omitted
material has been filed separately with the commission.
87
<PAGE>
<TABLE>
<CAPTION>
VIATEL CIRCLE 1 CONTRACT
ANNEX C
SCHEDULE OF PRICES
SECTION D - BELGIUM
<S> <C> <C> <C> <C> <C>
TN-MS NRM (Rel6) Software Management
User Guide........................... NTQJ19FT
TN-MS NRM (Rel6) Inventory Management
User Guide........................... NTQJ19FX
TN-MS NRM (Rel6) Performance
Management User Guide................ NTQJ19FW
TN-MS NRM (Rel6) Connection
Management User Guide................ NTQJ19FV
Router 2501 OSI...................... NTJM01BA
Router 2514 OSI...................... NTJM01KA
DCN RConfig "P" 2514 ent. 0 tunnels,
Ser: 2 L2,0 L1 CPC Allocated:
A0741950............................. NTJM9914
DCN RConfig "P" 2514 ent. 1 tunnel,
Ser: 1 L2,1 L1 CPC Allocated:
A0741941............................. NTJM9912
HS modem SP-1-AR,AC.................. NTJM01SA
Shelf Cantilever 19in mounting....... P0878672
Transceiver 10BaseT.................. NTJM01VA
Ethernet 10BaseT Transceiver......... A0383333
Baystack 101 10baseT hub 12 port RJ45
250VAC............................... NTJM02PA
***Cable Assy LAN RJ45--RJ45 h/e..... 32YCN00727AFA
***Ethernet kit for OPC hub
(20m,OC-48).......................... NT7E44JE
1.6 NETWORK SYNCHRONISATION *
DCD-521C.............................
DCD-Cs ETSI Standalone Cesium PRC.... 990-43100-02
DCD-LPR Shelf GPS Applications....... 990-44100-12
GPS Timing Kit E1 (Rubidium or
Quartz).............................. 990-44140-14
Blank Unit LPR....................... 090-44198-01
LOU-2 Dual oscillator................ 090-44145-02
DCD-521/C ETSI Shelf Master/
Expansion............................ 990-44210-01
MRC-EA/Input card 2MHz/2Mb/s, 4
inputs............................... 090-44010-06
TNCE Clock card rubidium............. 090-44017-02
TNC Clock card transit node OCXO..... 090-44020-02
TO-EA Output card 2MHz/2Mb/s 10
outputs.............................. 090-44029-01
MIS Maint i'f
analysis/config/remote............... 990-44018-14
Blank Panel 1 TO slot wide........... 074-00208-01
Timing Input Module MRC SMB.......... 990-45107-02
Timing Output Module SMB,1:1 prot.... 990-45105-07
1.7 EQUIPMENT PRACTICE
Mechanical bay assy ETSI (no
expansion sh)........................ NTCE89AA *
NTE-STM16 Rack (2200 x 600 x 300)--
cost reduced......................... NTFW70EA *
TN-16X Installation Kit.............. 25SKM00807ABM *
REGEN Rack Assy...................... NTFW71AA *
Rack side cover L/H u/o NTFW70AA..... P0725173 *
Rack side cover R/H u/o NTFW70AA..... P0725175 *
Mechanical assembly, rack, 42U....... A0726263
Distribution block 8 way left hand
cable entry.......................... A0729317
Distribution block 8 way right hand
cable entry.......................... A0729318
ETSI Rack, 220cm, without side
panels............................... NTKD70AA *
NT ETSI Rack Standard Inst.Kit....... 25SKM00807ABE *
ETSI Rack 48V DC Distrib Panel with
Rack Alarm Unit...................... 25SKM00807AAN *
1.8 ADDITIONAL ITEMS
OC-192 REL 1.4 SUPERSET CUSTOMER
LOADS................................ ***PLM_TN-16X_NC_1
AC Power Cable Assembly.............. PLM_Source_locally * * *
***Cable Assy, RJ45 crossover........ 32YCN01094AFA *
*** OPTICAL PATCHCORD 20M SC-SC...... PLM_Advanced Optics_NC_3 *
Total Extended Equipment Price....... *
2.0 INSTALLATION & COMMISSIONING * * *
Installation Materials............... *
-----
Total Extended Price................. *
-----
-----
</TABLE>
- ------------------------
* The confidential portion has been omitted pursuant to a request for
confidential treatment and omitted
material has been filed separately with the commission.
88
<PAGE>
<TABLE>
<CAPTION>
VIATEL CIRCLE 1 CONTRACT
ANNEX C
SCHEDULE OF PRICES
SECTION D - BELGIUM
BRU-PARIS R/A2 ISSUE 1.0
------------------------------------------------------------ -----------------------------------------------------------------
ABBREVIATED DESCRIPTION CODE SELLING PRICE BRU.-PARIS R/A2 EXT PRICE
------------------------------------------------------------ -------------------- ------------- --------------- ---------
$US TOURNAI $US
<S> <C> <C> <C> <C> <C>
1.0 TRANSMISSION EQUIPMENT
1.1 TN-16 4F
Core
OC192 SC060 SHELF CONTROLLER................................ NTCA41BA * * *
MAINTENANCE INTERFACE....................................... NTCA42AA * * *
*** CABLE ASSY (MODEM ACCESS)............................... NTCC8930 * * *
MESSAGE TRANSFER CARD....................................... NTCA48AA * * *
BREAKER MODULE.............................................. NTCA40AA * * *
COMMON EQUIPMENT FILLER CARD (1 IN.)........................ NTCA59AA * * *
PARTITIONED OPC CONTROLLER.................................. NTCA50AA *
*** CA ASSY (10 BASE T CROSSOVER)........................... NT7E44KC *
PARTITIONED OPC STORAGE MODULE.............................. NTCA51AA *
OPC FLASH CARTRIDGE......................................... NTCA53AA *
PARTITIONED OPC IO MODULE................................... NTCA52AA *
*** SM OPTICAL PATCHCORD 20M (66FT) (SC-TUNED) SEE A06...... NT7E46HD * * *
*** SM OPTICAL PATCHCORD 20M (66FT) (SC-TUNED) W/MVOA....... NT7E47HD * * *
TRANSPORT SHELF FILLER CARD................................. NTCA49AA * * *
TRANSPORT SHELF SWITCH FILLER CARD.......................... NTCA49AB * * *
OC-192 OPTICAL AMPLIFIER W/ SERVICE CHANNEL (SC)............ NTCA11AC * * *
OC-192 OPTICAL AMPLIFIER (SC)............................... NTCA11BC *
1625NM OPTICAL SERVICE CHANNEL (SC)......................... NTCA11CC *
1550/1625NM WDM COUPLER (SC)................................ NTCC13AC *
MOR RTU..................................................... NTCA62DA * * *
1.2 TN-16X
Core
STM16 LTE/ADM/RING SHELF--COST REDUCED...................... NTFW50EA *
SH PROCESSOR FOR SDH (DCC HUBBING).......................... NT7E20GC *
SH PROCESSOR(ETHERNET,SYNC MSG 24M)......................... NT7E20KA * * *
Maintenance Interface Unit.................................. NT7E23AA * * *
TN-16X Regenerator Subrack Kit.............................. NTFW51AA * * *
OC-48/STM-16 Ring Demux..................................... NT8E06AB *
OC48 DWDM 1528.77 NM RING TX................................ NT8E11DQ *
OC48 DWDM 1530.33 RING TRANSMITTER.......................... NT8E11FQ *
OC48 WDM 1533.47 RING TRANSMITTER........................... NT8E11KQ *
OC48 WDM 1535.04 RING TRANSMITTER........................... NT8E11MQ *
OC48 DWDM 1550.92 NM RING TRANSMITTER....................... NT8E11KR *
OC48 DWDM 1552.52 RING TRANSMITTER.......................... NT8E11MR *
OC48 DWDM 1555.75 NM RING TRANSMITTER....................... NT8E11RR *
OC48 DWDM 1557.36 RING TRANSMITTER.......................... NT8E11TR *
OC48 DWDM 1528.77 NM REGEN.................................. NT8E13DJ * * *
OC48 DWDM 1530.33 REG/TX INTERFACE.......................... NT8E13FJ * * *
OC48 DWDM 1533.47 REG/TX INTERFACE.......................... NT8E13KJ * * *
OC48 DWDM 1535.04 REG/TX INTERFACE.......................... NT8E13MJ * * *
OC48 DWDM 1550.92 REG/TX INTERFACE.......................... NT8E13KK * * *
OC48 DWDM 1552.52 REG/TX INTERFACE.......................... NT8E13MK * * *
OC48 DWDM 1555.75 REG/TX INTERFACE.......................... NT8E13RK * * *
OC48 DWDM 1557.36 REG/TX INTERFACE.......................... NT8E13TK * * *
OC-48/STM16 LR SAW Rx Interface (SC)........................ NT8E02DD * * *
STM1o IR 1310 Tributary I/F (SC)............................ NTFW11CD *
STM1 Optical Carrier Assembly............................... NTFW19BA *
External synchronisation interface carrier.................. NT7E19AA *
External Synchronisation Interface (2 MHz).................. NTFW27AA *
*** OPTICAL PATCH CORD 20M (SC-SC).......................... NT7E46FD * * *
*** OPTICAL PATCH CORD W/MVOA 20M (SC-SC)................... NT7E47FD * * *
KIT, SC OPTICAL CONNECTOR. INITIAL USE NTN401AA............. NTN459SC * * *
*** FIBRE OPTIC CABLE ASSY STM1 DUPLEX SC-SC 20M............ NTFW5753 *
TN-16X Regenerator Software Licence (Release 7)............. NTQJ93GG * * *
TN-16X Shared Protection Ring Software Licence (Release
7).......................................................... NTQJ93HG *
Extra Traffic on Rings on Licence........................... NTQJ93TB *
OPC with tape drive......................................... NT7E24BC *
PHOENIX SUPERSET CODE FOR REL 7............................. NTFW97HA *
*** CNET BAY/BAY CABLE 5.0M................................. NT7E44JC *
TN-MS EC-16X Multi-user Licence............................. NTQJ93CA *
TN-MS EC-16X Release 7 Licence.............................. NTQJ93AG *
TN-MS EC-16X Release 7 Standby Licence...................... NTQJ93BG *
FW TN-16X Rel 7 NTPS (CD-ROM)............................... NTFW64AH *
1.3 ADVANCED OPTICS (DWDM)
Core
DWDM FILTER MODULE SHELF ASSY--4 POS--ETSI.................. NTCE88BA * *
DWDM COUPLER 8W,MB/DR W/O VOA,SC............................ NTCA10GC * *
</TABLE>
- ------------------------
* The confidential portion has been omitted pursuant to a request for
confidential treatment and omitted
material has been filed separately with the commission.
89
<PAGE>
<TABLE>
<CAPTION>
VIATEL CIRCLE 1 CONTRACT
ANNEX C
SCHEDULE OF PRICES
SECTION D - BELGIUM
<S> <C> <C> <C> <C> <C>
DWDM COUPLER 8W,DB/MR W/O VOA,SC............................ NTCA10HC * * *
TN-1X
Core
TN-1X Synchronous Access Multiplexer Subrack................ 25GMU00750GWV *
Shelf Kit................................................... 25SKM00750HFN *
TN-1X Installation Kit...................................... 25SKM00807ABL *
Local Craft Access Panel Type 1............................. 25UEP00750GXB *
Service Interface Module Type 10 (Misc)..................... 25UJJ00750GXC *
Service Interface Module Type 40 (LCAP)..................... 25UJJ00750GWX *
Subrack Cover Kit........................................... 25SKM00750HFL *
Rack Mounting Kit for ETSI.................................. 25SKM00019AAE *
Dummy Front Panel 1'........................................ 25RBN00021AAB *
Dummy SIA Panel 1'.......................................... 25RBN00021AAA *
Power Supply Unit........................................... 25UPW00750HAY *
Subrack Control Unit........................................ 25UMN00750GXD *
Payload Manager (mixed payload)............................. NTKD10AA *
STM-1 G.957 L1.2 Optical Aggregate Port Card (1550nm)....... 25UTM00750HWH *
STM-1 G.957 L-1.1, S1.1 Optical Tributary Card (1'wide)..... NTKD11AA *
***Optical patchcord 20m FC-FC.............................. NT7E46BD *
Craft Access Terminal....................................... NTQJ09AA *
RS 232 Cable Assembly....................................... 25YCN00748AAA *
TN-1 CAT Release 12 Application (3.5")...................... NTQJ35LA
TN-MS CA-1X Release 12 Licence.............................. NTQJ91DL
Netscape Windows95 (Fastrack Server and Navigator).......... NTQJ81BA *
TN-1X Release 8 Software Download (from CAT)................ NTQJ36HA
HP B132, 128Mbytes RAM, 2Gb HD, DAT, CD, N.Hem.............. NTQJ01FA *
TN-MS EC-1 Release 12 (DAT)................................. NTQJ30LA
Netscape for UNIX (Fastrack Server and Navigator)........... NTQJ81AA *
TN-1X Release 8 software download (from EC)................. NTQJ31HA
TN-1C Release 3 Software kit (disk & tape).................. NTFT81CA *
TN-MS EC-1 Release 12 Licence for TN-1X..................... NTQJ91AL *
TN-MS EC-1 Release 12 Standby Licence....................... NTQJ91BL *
TN-MS EC-1 Multi-user Licence............................... NTQJ91CA *
X terminal software on DAT.................................. NTQJ05JB *
TN-1X Rel 8 NTPs (CD-ROM MAC)............................... 32HSC00456VEC *
TN-1C
Core
TN-1C 8x2/16x2 turbo ADM (1550nm L1.2)...................... NTFT52BI *
AC/DC Power Unit............................................ NTFT21AA *
12V Battery................................................. NTFT24AA *
***BT43/5F & 3002 cable assy 20m............................ 32YCN00750CAA *
***Optical patchcord 20m FC-FC.............................. NT7E46BD *
TN-MS EC-1 Release 12 Licence for TN-1C..................... NTQJ91FL *
Craft Access Terminal....................................... NTQJ09AA *
CAT Cable Assembly.......................................... NTFT15AC *
TN-1C Release 3 Software kit (disk & tape).................. NTFT81CA *
TN-1 CAT Release 12 Application (3.5")...................... NTQJ35LA
Netscape Windows95 (Fastrack Server and Navigator).......... NTQJ81BA *
TN-1C Release 3 handbook CD-ROM............................. NTFT66CA *
1.4 DXC......................................................... *
256 Port Cross Connect (MSH84).............................. MSH84
STM-1 Optical card
16 x 2Mbit/s Port Unit
MV-36 Element controller.................................... MV-36
Managed Object Agent (MOA)
1.5 TN-MS INM................................................... *
Hardware
HP C200 workstation, north & south hemisphere............... NTQJ01GC
NRM Release 6 Software and Handbooks........................ NTQJ12FA
NRM Release 6 Feature Profile Tape--Core + IM + PM + CM..... NTQJ10FK
TN-MS NRM (Rel6) Alarm surveillance Licence................. NTQJ90AF
TN-MS NRM (Rel6) Electronic Software Delivery Licence....... NTQJ90BF
TN-MS NRM (Rel6) Inventory Manager Licence.................. NTQJ90DF
TN-MS NRM (Rel6) Perf. Mon. Consolidation Licence........... NTQJ90EF
TN-MS NRM (Rel6) Connection Management Licence.............. NTQJ90FF
TN-MS NRM (Rel6) Software Management User Guide............. NTQJ19FT
TN-MS NRM (Rel6) Inventory Management User Guide............ NTQJ19FX
TN-MS NRM (Rel6) Performance Management User Guide.......... NTQJ19FW
TN-MS NRM (Rel6) Connection Management User Guide........... NTQJ19FV
Router 2501 OSI............................................. NTJM01BA
Router 2514 OSI............................................. NTJM01KA
DCN RConfig "P" 2514 ent. 0 tunnels, Ser: 2 L2,0 L1 CPC
Allocated: A0741950......................................... NTJM9914
DCN RConfig "P" 2514 ent. 1 tunnel, Ser: 1 L2,1 L1 CPC
Allocated: A0741941......................................... NTJM9912
HS modem SP-1-AR,AC......................................... NTJM01SA
Shelf Cantilever 19in mounting.............................. P0878672
</TABLE>
- ------------------------
* The confidential portion has been omitted pursuant to a request for
confidential treatment and omitted
material has been filed separately with the commission.
90
<PAGE>
<TABLE>
<CAPTION>
VIATEL CIRCLE 1 CONTRACT
ANNEX C
SCHEDULE OF PRICES
SECTION D - BELGIUM
<S> <C> <C> <C> <C> <C>
Transceiver 10BaseT......................................... NTJM01VA
Ethernet 10BaseT Transceiver................................ A0383333
Baystack 101 10baseT hub 12 port RJ45 250VAC................ NTJM02PA
***Cable Assy LAN RJ45--RJ45 h/e............................ 32YCN00727AFA
***Ethernet kit for OPC hub (20m,OC-48)..................... NT7E44JE
1.6 NETWORK SYNCHRONISATION..................................... *
DCD-521C
DCD-Cs ETSI Standalone Cesium PRC........................... 990-43100-02
DCD-LPR Shelf GPS Applications 990-44100-12
GPS Timing Kit E1 (Rubidium or Quartz)...................... 990-44140-14
Blank Unit LPR.............................................. 090-44198-01
LOU-2 Dual oscillator....................................... 090-44145-02
DCD-521/C ETSI Shelf Master/Expansion....................... 990-44210-01
MRC-EA/Input card 2MHz/2Mb/s, 4 inputs...................... 090-44010-06
TNCE Clock card rubidium.................................... 090-44017-02
TNC Clock card transit node OCXO............................ 090-44020-02
TO-EA Output card 2MHz/2Mb/s 10 outputs..................... 090-44029-01
MIS Maint i'f analysis/config/remote........................ 990-44018-14
Blank Panel 1 TO slot wide.................................. 074-00208-01
Timing Input Module MRC SMB................................. 990-45107-02
Timing Output Module SMB,1:1 prot........................... 990-45105-07
1.7 EQUIPMENT PRACTICE
Mechanical bay assy ETSI (no expansion sh).................. NTCE89AA * * *
NTE-STM16 Rack (2200 x 600 x 300)--cost reduced............. NTFW70EA *
TN-16X Installation Kit..................................... 25SKM00807ABM * * *
REGEN Rack Assy............................................. NTFW71AA * * *
Rack side cover L/H u/o NTFW70AA............................ P0725173 * * *
Rack side cover R/H u/o NTFW70AA............................ P0725175 * * *
Mechanical assembly, rack, 42U.............................. A0726263
Distribution block 8 way left hand cable entry.............. A0729317
Distribution block 8 way right hand cable entry............. A0729318
ETSI Rack, 220cm, without side panels....................... NTKD70AA *
NT ETSI Rack Standard Inst.Kit.............................. 25SKM00807ABE *
ETSI Rack 48V DC Distrib Panel with Rack Alarm Unit......... 25SKM00807AAN *
1.8 ADDITIONAL ITEMS
OC-192 REL 1.4 SUPERSET CUSTOMER LOADS...................... ***PLM_TN-16X_NC_1
AC Power Cable Assembly..................................... PLM_Source_locally *
***Cable Assy, RJ45 crossover............................... 32YCN01094AFA *
*** OPTICAL PATCHCORD 20M SC-SC............................. PLM_Advanced
Optics_NC * * *
Total Extended Equipment Price
2.0 Installation & Commissioning................................ * * *
Installation Materials...................................... *
---------
Total Extended Price........................................ *
---------
---------
</TABLE>
- ------------------------
* The confidential portion has been omitted pursuant to a request for
confidential treatment and omitted
material has been filed separately with the commission.
91
<PAGE>
<TABLE>
<CAPTION>
VIATEL CIRCLE 1 CONTRACT
ANNEX C
SCHEDULE OF PRICES
SECTION D - BELGIUM
ANTWERP ISSUE 1.0
------------------------------------------------------------ -----------------------------------------------------------------
ABBREVIATED DESCRIPTION CODE SELLING PRICE ANTWERP EXT PRICE
------------------------------------------------------------ -------------------- ------------- --------------- ---------
$US $US
<S> <C> <C> <C> <C> <C>
1.0 Transmission Equipment
1.1 TN-16 4F
Core
OC192 SC060 SHELF CONTROLLER................................ NTCA41BA * * *
MAINTENANCE INTERFACE....................................... NTCA42AA * * *
*** CABLE ASSY (MODEM ACCESS)............................... NTCC8930 * * *
MESSAGE TRANSFER CARD....................................... NTCA48AA * * *
BREAKER MODULE.............................................. NTCA40AA * * *
COMMON EQUIPMENT FILLER CARD (1 IN.)........................ NTCA59AA * *
PARTITIONED OPC CONTROLLER.................................. NTCA50AA *
*** CA ASSY (10 BASE T CROSSOVER)........................... NT7E44KC *
PARTITIONED OPC STORAGE MODULE.............................. NTCA51AA *
OPC FLASH CARTRIDGE......................................... NTCA53AA *
PARTITIONED OPC IO MODULE................................... NTCA52AA *
*** SM OPTICAL PATCHCORD 20M (66FT) (SC-TUNED) SEE A06...... NT7E46HD * * *
*** SM OPTICAL PATCHCORD 20M (66FT) (SC-TUNED) W/MVOA....... NT7E47HD * * *
TRANSPORT SHELF FILLER CARD................................. NTCA49AA * * *
TRANSPORT SHELF SWITCH FILLER CARD.......................... NTCA49AB * * *
OC-192 OPTICAL AMPLIFIER W/ SERVICE CHANNEL (SC)............ NTCA11AC * * *
OC-192 OPTICAL AMPLIFIER (SC)............................... NTCA11BC *
1625NM OPTICAL SERVICE CHANNEL (SC)......................... NTCA11CC *
1550/1625NM WDM COUPLER (SC)................................ NTCC13AC *
MOR RTU..................................................... NTCA62DA * * *
1.2 TN-16X
Core
STM16 LTE/ADM/RING SHELF--COST REDUCED...................... NTFW50EA * * *
SH PROCESSOR FOR SDH (DCC HUBBING).......................... NT7E20GC * * *
SH PROCESSOR(ETHERNET,SYNC MSG 24M)......................... NT7E20KA *
Maintenance Interface Unit.................................. NT7E23AA * * *
TN-16X Regenerator Subrack Kit.............................. NTFW51AA *
OC-48/STM-16 Ring Demux..................................... NT8E06AB * * *
OC48 DWDM 1528.77 NM RING TX................................ NT8E11DQ * * *
OC48 DWDM 1530.33 RING TRANSMITTER.......................... NT8E11FQ * * *
OC48 WDM 1533.47 RING TRANSMITTER........................... NT8E11KQ * * *
OC48 WDM 1535.04 RING TRANSMITTER........................... NT8E11MQ * * *
OC48 DWDM 1550.92 NM RING TRANSMITTER....................... NT8E11KR * * *
OC48 DWDM 1552.52 RING TRANSMITTER.......................... NT8E11MR * * *
OC48 DWDM 1555.75 NM RING TRANSMITTER....................... NT8E11RR * * *
OC48 DWDM 1557.36 RING TRANSMITTER.......................... NT8E11TR * * *
OC48 DWDM 1528.77 NM REGEN.................................. NT8E13DJ *
OC48 DWDM 1530.33 REG/TX INTERFACE.......................... NT8E13FJ *
OC48 DWDM 1533.47 REG/TX INTERFACE.......................... NT8E13KJ *
OC48 DWDM 1535.04 REG/TX INTERFACE.......................... NT8E13MJ *
OC48 DWDM 1550.92 REG/TX INTERFACE.......................... NT8E13KK *
OC48 DWDM 1552.52 REG/TX INTERFACE.......................... NT8E13MK *
OC48 DWDM 1555.75 REG/TX INTERFACE.......................... NT8E13RK *
OC48 DWDM 1557.36 REG/TX INTERFACE.......................... NT8E13TK *
OC-48/STM16 LR SAW Rx Interface (SC)........................ NT8E02DD * * *
STM1o IR 1310 Tributary I/F (SC)............................ NTFW11CD * * *
STM1 Optical Carrier Assembly............................... NTFW19BA * * *
External synchronisation interface carrier.................. NT7E19AA * * *
External Synchronisation Interface (2 MHz).................. NTFW27AA * * *
*** OPTICAL PATCH CORD 20M (SC-SC).......................... NT7E46FD * * *
*** OPTICAL PATCH CORD W/MVOA 20M (SC-SC)................... NT7E47FD * * *
KIT, SC OPTICAL CONNECTOR. INITIAL USE NTN401AA............. NTN459SC * * *
*** FIBRE OPTIC CABLE ASSY STM1 DUPLEX SC-SC 20M............ NTFW5753 * * *
TN-16X Regenerator Software Licence (Release 7)............. NTQJ93GG *
TN-16X Shared Protection Ring Software Licence (Release
7).......................................................... NTQJ93HG * * *
Extra Traffic on Rings on Licence........................... NTQJ93TB * * *
OPC with tape drive......................................... NT7E24BC *
PHOENIX SUPERSET CODE FOR REL 7............................. NTFW97HA *
*** CNET BAY/BAY CABLE 5.0M................................. NT7E44JC *
TN-MS EC-16X Multi-user Licence............................. NTQJ93CA *
TN-MS EC-16X Release 7 Licence.............................. NTQJ93AG *
TN-MS EC-16X Release 7 Standby Licence...................... NTQJ93BG *
FW TN-16X Rel 7 NTPS (CD-ROM)............................... NTFW64AH *
1.3 Advanced Optics (DWDM)
</TABLE>
- ------------------------
* The confidential portion has been omitted pursuant to a request for
confidential treatment and omitted
material has been filed separately with the commission.
92
<PAGE>
<TABLE>
<CAPTION>
VIATEL CIRCLE 1 CONTRACT
ANNEX C
SCHEDULE OF PRICES
SECTION D - BELGIUM
<S> <C> <C> <C> <C> <C>
Core
DWDM FILTER MODULE SHELF ASSY--4 POS--ETSI.................. NTCE88BA * * *
DWDM COUPLER 8W,MB/DR W/O VOA,SC............................ NTCA10GC * * *
DWDM COUPLER 8W,DB/MR W/O VOA,SC............................ NTCA10HC * * *
TN-1X
Core
TN-1X Synchronous Access Multiplexer Subrack................ 25GMU00750GWV * * *
Shelf Kit................................................... 25SKM00750HFN * * *
TN-1X Installation Kit...................................... 25SKM00807ABL * * *
Local Craft Access Panel Type 1............................. 25UEP00750GXB * * *
Service Interface Module Type 10 (Misc)..................... 25UJJ00750GXC * * *
Service Interface Module Type 40 (LCAP)..................... 25UJJ00750GWX * * *
Subrack Cover Kit........................................... 25SKM00750HFL * * *
Rack Mounting Kit for ETSI.................................. 25SKM00019AAE * * *
Dummy Front Panel 1'........................................ 25RBN00021AAB * * *
Dummy SIA Panel 1'.......................................... 25RBN00021AAA * * *
Power Supply Unit........................................... 25UPW00750HAY * * *
Subrack Control Unit........................................ 25UMN00750GXD * * *
Payload Manager (mixed payload)............................. NTKD10AA * * *
STM-1 G.957 L1.2 Optical Aggregate Port Card (1550nm)....... 25UTM00750HWH * * *
STM-1 G.957 L-1.1, S1.1 Optical Tributary Card (1'wide)..... NTKD11AA * * *
***Optical patchcord 20m FC-FC.............................. NT7E46BD * * *
Craft Access Terminal....................................... NTQJ09AA * * *
RS 232 Cable Assembly....................................... 25YCN00748AAA * * *
TN-1 CAT Release 12 Application (3.5")...................... NTQJ35LA *
TN-MS CA-1X Release 12 Licence.............................. NTQJ91DL *
Netscape Windows95 (Fastrack Server and Navigator).......... NTQJ81BA * * *
TN-1X Release 8 Software Download (from CAT)................ NTQJ36HA *
HP B132, 128Mbytes RAM, 2Gb HD, DAT, CD, N.Hem.............. NTQJ01FA *
TN-MS EC-1 Release 12 (DAT)................................. NTQJ30LA
Netscape for UNIX (Fastrack Server and Navigator)........... NTQJ81AA *
TN-1X Release 8 software download (from EC)................. NTQJ31HA
TN-1C Release 3 Software kit (disk & tape).................. NTFT81CA *
TN-MS EC-1 Release 12 Licence for TN-1X..................... NTQJ91AL *
TN-MS EC-1 Release 12 Standby Licence....................... NTQJ91BL *
TN-MS EC-1 Multi-user Licence............................... NTQJ91CA *
X terminal software on DAT.................................. NTQJ05JB *
TN-1X Rel 8 NTPs (CD-ROM MAC)............................... 32HSC00456VEC * * *
TN-1C
Core
TN-1C 8x2/16x2 turbo ADM (1550nm L1.2)...................... NTFT52BI *
AC/DC Power Unit............................................ NTFT21AA *
12V Battery................................................. NTFT24AA *
***BT43/5F & 3002 cable assy 20m............................ 32YCN00750CAA *
***Optical patchcord 20m FC-FC.............................. NT7E46BD *
TN-MS EC-1 Release 12 Licence for TN-1C..................... NTQJ91FL *
Craft Access Terminal....................................... NTQJ09AA * * *
CAT Cable Assembly.......................................... NTFT15AC * * *
TN-1C Release 3 Software kit (disk & tape).................. NTFT81CA * * *
TN-1 CAT Release 12 Application (3.5")...................... NTQJ35LA *
Netscape Windows95 (Fastrack Server and Navigator).......... NTQJ81BA * * *
TN-1C Release 3 handbook CD-ROM............................. NTFT66CA *
1.4 DXC * * *
256 Port Cross Connect (MSH84) MSH84 *
STM-1 Optical card *
16 x 2Mbit/s Port Unit *
MV-36 Element controller MV-36
Managed Object Agent (MOA)
1.5 TN-MS INM................................................... *
Hardware
HP C200 workstation, north & south hemisphere............... NTQJ01GC
NRM Release 6 Software and Handbooks........................ NTQJ12FA
NRM Release 6 Feature Profile Tape--Core + IM + PM + CM..... NTQJ10FK
TN-MS NRM (Rel6) Alarm surveillance Licence................. NTQJ90AF
TN-MS NRM (Rel6) Electronic Software Delivery Licence....... NTQJ90BF
TN-MS NRM (Rel6) Inventory Manager Licence.................. NTQJ90DF
TN-MS NRM (Rel6) Perf. Mon. Consolidation Licence........... NTQJ90EF
TN-MS NRM (Rel6) Connection Management Licence.............. NTQJ90FF
TN-MS NRM (Rel6) Software Management User Guide............. NTQJ19FT
TN-MS NRM (Rel6) Inventory Management User Guide............ NTQJ19FX
TN-MS NRM (Rel6) Performance Management User Guide.......... NTQJ19FW
TN-MS NRM (Rel6) Connection Management User Guide........... NTQJ19FV
Router 2501 OSI............................................. NTJM01BA
</TABLE>
- ------------------------
* The confidential portion has been omitted pursuant to a request for
confidential treatment and omitted
material has been filed separately with the commission.
93
<PAGE>
<TABLE>
<CAPTION>
VIATEL CIRCLE 1 CONTRACT
ANNEX C
SCHEDULE OF PRICES
SECTION D - BELGIUM
<S> <C> <C> <C> <C> <C>
Router 2514 OSI............................................. NTJM01KA
DCN RConfig "P" 2514 ent. 0 tunnels, Ser: 2 L2,0 L1 CPC
Allocated: A0741950......................................... NTJM9914
DCN RConfig "P" 2514 ent. 1 tunnel, Ser: 1 L2,1 L1 CPC
Allocated: A0741941......................................... NTJM9912
HS modem SP-1-AR,AC......................................... NTJM01SA
Shelf Cantilever 19in mounting.............................. P0878672
Transceiver 10BaseT......................................... NTJM01VA
Ethernet 10BaseT Transceiver................................ A0383333
Baystack 101 10baseT hub 12 port RJ45 250VAC................ NTJM02PA
***Cable Assy LAN RJ45--RJ45 h/e............................ 32YCN00727AFA
***Ethernet kit for OPC hub (20m,OC-48)..................... NT7E44JE
1.6 Network Synchronisation..................................... *
DCD-521C
DCD-Cs ETSI Standalone Cesium PRC........................... 990-43100-02
DCD-LPR Shelf GPS Applications 990-44100-12
GPS Timing Kit E1 (Rubidium or Quartz)...................... 990-44140-14
Blank Unit LPR.............................................. 090-44198-01
LOU-2 Dual oscillator....................................... 090-44145-02
DCD-521/C ETSI Shelf Master/Expansion....................... 990-44210-01
MRC-EA/Input card 2MHz/2Mb/s, 4 inputs...................... 090-44010-06
TNCE Clock card rubidium.................................... 090-44017-02
TNC Clock card transit node OCXO............................ 090-44020-02
TO-EA Output card 2MHz/2Mb/s 10 outputs..................... 090-44029-01
MIS Maint i'f analysis/config/remote........................ 990-44018-14
Blank Panel 1 TO slot wide.................................. 074-00208-01
Timing Input Module MRC SMB................................. 990-45107-02
Timing Output Module SMB,1:1 prot........................... 990-45105-07
1.7 EQUIPMENT PRACTICE
Mechanical bay assy ETSI (no expansion sh).................. NTCE89AA * * *
NTE-STM16 Rack (2200 x 600 x 300)--cost reduced............. NTFW70EA * * *
TN-16X Installation Kit..................................... 25SKM00807ABM * * *
REGEN Rack Assy............................................. NTFW71AA * * *
Rack side cover L/H u/o NTFW70AA............................ P0725173 * * *
Rack side cover R/H u/o NTFW70AA............................ P0725175 * * *
Mechanical assembly, rack, 42U.............................. A0726263
Distribution block 8 way left hand cable entry.............. A0729317
Distribution block 8 way right hand cable entry............. A0729318
ETSI Rack, 220cm, without side panels....................... NTKD70AA * * *
NT ETSI Rack Standard Inst.Kit.............................. 25SKM00807ABE * * *
ETSI Rack 48V DC Distrib Panel with Rack Alarm Unit......... 25SKM00807AAN * * *
1.8 Additional Items
OC-192 REL 1.4 SUPERSET CUSTOMER LOADS...................... ***PLM_TN-16X_NC_1
AC Power Cable Assembly..................................... PLM_Source_locally *
***Cable Assy, RJ45 crossover............................... 32YCN01094AFA *
*** OPTICAL PATCHCORD 20M SC-SC............................. PLM_Advanced
Optics_NC_3 * * *
Total Extended Equipment Price
2.0 Installation & Commissioning................................ * * *
Installation Materials...................................... * * *
---------
Total Extended Price........................................
---------
---------
</TABLE>
- ------------------------
* The confidential portion has been omitted pursuant to a request for
confidential treatment and omitted
material has been filed separately with the commission.
94
<PAGE>
<TABLE>
<CAPTION>
VIATEL CIRCLE 1 CONTRACT
ANNEX C
SCHEDULE OF PRICES
SECTION D - BELGIUM
BRUSSELS ISSUE 1.0
------------------------------------------------------------ -----------------------------------------------------------------
ABBREVIATED DESCRIPTION CODE SELLING PRICE BRUSSELS EXT PRICE
------------------------------------------------------------ -------------------- ------------- --------------- ---------
$US $US
<S> <C> <C> <C> <C> <C>
1.0 Transmission Equipment
1.1 TN-16 4F
Core
OC192 SC060 SHELF CONTROLLER................................ NTCA41BA * * *
MAINTENANCE INTERFACE....................................... NTCA42AA * * *
*** CABLE ASSY (MODEM ACCESS)............................... NTCC8930 * * *
MESSAGE TRANSFER CARD....................................... NTCA48AA * * *
BREAKER MODULE.............................................. NTCA40AA * * *
COMMON EQUIPMENT FILLER CARD (1 IN.)........................ NTCA59AA * * *
PARTITIONED OPC CONTROLLER.................................. NTCA50AA *
*** CA ASSY (10 BASE T CROSSOVER)........................... NT7E44KC *
PARTITIONED OPC STORAGE MODULE.............................. NTCA51AA *
OPC FLASH CARTRIDGE......................................... NTCA53AA *
PARTITIONED OPC IO MODULE................................... NTCA52AA *
*** SM OPTICAL PATCHCORD 20M (66FT) (SC-TUNED) SEE A06...... NT7E46HD * * *
*** SM OPTICAL PATCHCORD 20M (66FT) (SC-TUNED) W/MVOA....... NT7E47HD * * *
TRANSPORT SHELF FILLER CARD................................. NTCA49AA * * *
TRANSPORT SHELF SWITCH FILLER CARD.......................... NTCA49AB * * *
OC-192 OPTICAL AMPLIFIER W/ SERVICE CHANNEL (SC)............ NTCA11AC * * *
OC-192 OPTICAL AMPLIFIER (SC)............................... NTCA11BC *
1625NM OPTICAL SERVICE CHANNEL (SC)......................... NTCA11CC *
1550/1625NM WDM COUPLER (SC)................................ NTCC13AC *
MOR RTU..................................................... NTCA62DA * * *
1.2 TN-16X
Core
STM16 LTE/ADM/RING SHELF--COST REDUCED...................... NTFW50EA * * *
SH PROCESSOR FOR SDH (DCC HUBBING).......................... NT7E20GC * * *
SH PROCESSOR(ETHERNET,SYNC MSG 24M)......................... NT7E20KA *
Maintenance Interface Unit.................................. NT7E23AA * * *
TN-16X Regenerator Subrack Kit.............................. NTFW51AA *
OC-48/STM-16 Ring Demux..................................... NT8E06AB * * *
OC48 DWDM 1528.77 NM RING TX................................ NT8E11DQ * * *
OC48 DWDM 1530.33 RING TRANSMITTER.......................... NT8E11FQ * * *
OC48 WDM 1533.47 RING TRANSMITTER........................... NT8E11KQ * * *
OC48 WDM 1535.04 RING TRANSMITTER........................... NT8E11MQ * * *
OC48 DWDM 1550.92 NM RING TRANSMITTER....................... NT8E11KR * * *
OC48 DWDM 1552.52 RING TRANSMITTER.......................... NT8E11MR * * *
OC48 DWDM 1555.75 NM RING TRANSMITTER....................... NT8E11RR * * *
OC48 DWDM 1557.36 RING TRANSMITTER.......................... NT8E11TR * * *
OC48 DWDM 1528.77 NM REGEN.................................. NT8E13DJ *
OC48 DWDM 1530.33 REG/TX INTERFACE.......................... NT8E13FJ *
OC48 DWDM 1533.47 REG/TX INTERFACE.......................... NT8E13KJ *
OC48 DWDM 1535.04 REG/TX INTERFACE.......................... NT8E13MJ *
OC48 DWDM 1550.92 REG/TX INTERFACE.......................... NT8E13KK *
OC48 DWDM 1552.52 REG/TX INTERFACE.......................... NT8E13MK *
OC48 DWDM 1555.75 REG/TX INTERFACE.......................... NT8E13RK *
OC48 DWDM 1557.36 REG/TX INTERFACE.......................... NT8E13TK *
OC-48/STM16 LR SAW Rx Interface (SC)........................ NT8E02DD * * *
STM1o IR 1310 Tributary I/F (SC)............................ NTFW11CD * * *
STM1 Optical Carrier Assembly............................... NTFW19BA * * *
External synchronisation interface carrier.................. NT7E19AA * * *
External Synchronisation Interface (2 MHz).................. NTFW27AA * * *
*** OPTICAL PATCH CORD 20M (SC-SC).......................... NT7E46FD * * *
*** OPTICAL PATCH CORD W/MVOA 20M (SC-SC)................... NT7E47FD * * *
KIT, SC OPTICAL CONNECTOR. INITIAL USE NTN401AA............. NTN459SC * * *
*** FIBRE OPTIC CABLE ASSY STM1 DUPLEX SC-SC 20M............ NTFW5753 * * *
TN-16X Regenerator Software Licence (Release 7)............. NTQJ93GG * * *
TN-16X Shared Protection Ring Software Licence (Release
7).......................................................... NTQJ93HG * * *
Extra Traffic on Rings on Licence........................... NTQJ93TB * * *
OPC with tape drive......................................... NT7E24BC *
PHOENIX SUPERSET CODE FOR REL 7............................. NTFW97HA *
*** CNET BAY/BAY CABLE 5.0M................................. NT7E44JC *
TN-MS EC-16X Multi-user Licence............................. NTQJ93CA *
TN-MS EC-16X Release 7 Licence.............................. NTQJ93AG *
TN-MS EC-16X Release 7 Standby Licence...................... NTQJ93BG *
FW TN-16X Rel 7 NTPS (CD-ROM)............................... NTFW64AH *
</TABLE>
- ------------------------
* The confidential portion has been omitted pursuant to a request for
confidential treatment and omitted
material has been filed separately with the commission.
95
<PAGE>
<TABLE>
<CAPTION>
VIATEL CIRCLE 1 CONTRACT
ANNEX C
SCHEDULE OF PRICES
SECTION D - BELGIUM
<S> <C> <C> <C> <C> <C>
1.3 Advanced Optics (DWDM)
Core
DWDM FILTER MODULE SHELF ASSY--4 POS--ETSI.................. NTCE88BA * * *
DWDM COUPLER 8W,MB/DR W/O VOA,SC............................ NTCA10GC * * *
DWDM COUPLER 8W,DB/MR W/O VOA,SC............................ NTCA10HC * * *
TN-1X
Core
TN-1X Synchronous Access Multiplexer Subrack................ 25GMU00750GWV *
Shelf Kit................................................... *
TN-1X Installation Kit...................................... 25SKM00807ABL *
Local Craft Access Panel Type 1............................. 25UEP00750GXB *
Service Interface Module Type 10 (Misc)..................... 25UJJ00750GXC *
Service Interface Module Type 40 (LCAP)..................... 25UJJ00750GWX *
Subrack Cover Kit........................................... 25SKM00750HFL *
Rack Mounting Kit for ETSI.................................. 25SKM00019AAE *
Dummy Front Panel 1'........................................ 25RBN00021AAB *
Dummy SIA Panel 1'.......................................... 25RBN00021AAA *
Power Supply Unit........................................... 25UPW00750HAY *
Subrack Control Unit........................................ 25UMN00750GXD *
Payload Manager (mixed payload)............................. NTKD10AA *
STM-1 G.957 L1.2 Optical Aggregate Port Card (1550nm)....... 25UTM00750HWH *
STM-1 G.957 L-1.1, S1.1 Optical Tributary Card (1'wide)..... NTKD11AA *
***Optical patchcord 20m FC-FC.............................. NT7E46BD *
Craft Access Terminal....................................... NTQJ09AA *
RS 232 Cable Assembly....................................... 25YCN00748AAA *
TN-1 CAT Release 12 Application (3.5")...................... NTQJ35LA
TN-MS CA-1X Release 12 Licence.............................. NTQJ91DL
Netscape Windows95 (Fastrack Server and Navigator).......... NTQJ81BA *
TN-1X Release 8 Software Download (from CAT)................ NTQJ36HA
HP B132, 128Mbytes RAM, 2Gb HD, DAT, CD, N.Hem.............. NTQJ01FA *
TN-MS EC-1 Release 12 (DAT)................................. NTQJ30LA
Netscape for UNIX (Fastrack Server and Navigator)........... NTQJ81AA *
TN-1X Release 8 software download (from EC)................. NTQJ31HA
TN-1C Release 3 Software kit (disk & tape).................. NTFT81CA *
TN-MS EC-1 Release 12 Licence for TN-1X..................... NTQJ91AL *
TN-MS EC-1 Release 12 Standby Licence....................... NTQJ91BL *
TN-MS EC-1 Multi-user Licence............................... NTQJ91CA *
X terminal software on DAT.................................. NTQJ05JB *
TN-1X Rel 8 NTPs (CD-ROM MAC)............................... 32HSC00456VEC *
TN-1C
Core
TN-1C 8x2/16x2 turbo ADM (1550nm L1.2)...................... NTFT52BI *
AC/DC Power Unit............................................ NTFT21AA *
12V Battery................................................. NTFT24AA *
***BT43/5F & 3002 cable assy 20m............................ 32YCN00750CAA *
***Optical patchcord 20m FC-FC.............................. NT7E46BD *
TN-MS EC-1 Release 12 Licence for TN-1C..................... NTQJ91FL *
Craft Access Terminal....................................... NTQJ09AA *
CAT Cable Assembly.......................................... NTFT15AC *
TN-1C Release 3 Software kit (disk & tape).................. NTFT81CA *
TN-1 CAT Release 12 Application (3.5")...................... NTQJ35LA
Netscape Windows95 (Fastrack Server and Navigator).......... NTQJ81BA *
TN-1C Release 3 handbook CD-ROM............................. NTFT66CA *
1.4 DXC......................................................... * * *
256 Port Cross Connect (MSH84).............................. MSH84 *
STM-1 Optical card.......................................... *
16 x 2Mbit/s Port Unit...................................... *
MV-36 Element controller.................................... MV-36
Managed Object Agent (MOA)..................................
1.5 TN-MS INM................................................... *
Hardware
HP C200 workstation, north & south hemisphere............... NTQJ01GC
NRM Release 6 Software and Handbooks........................ NTQJ12FA
NRM Release 6 Feature Profile Tape--Core + IM + PM + CM..... NTQJ10FK
TN-MS NRM (Rel6) Alarm surveillance Licence................. NTQJ90AF
TN-MS NRM (Rel6) Electronic Software Delivery Licence....... NTQJ90BF
TN-MS NRM (Rel6) Inventory Manager Licence.................. NTQJ90DF
TN-MS NRM (Rel6) Perf. Mon. Consolidation Licence........... NTQJ90EF
TN-MS NRM (Rel6) Connection Management Licence.............. NTQJ90FF
</TABLE>
- ------------------------
* The confidential portion has been omitted pursuant to a request for
confidential treatment and omitted
material has been filed separately with the commission.
96
<PAGE>
<TABLE>
<CAPTION>
VIATEL CIRCLE 1 CONTRACT
ANNEX C
SCHEDULE OF PRICES
SECTION D - BELGIUM
<S> <C> <C> <C> <C> <C>
TN-MS NRM (Rel6) Software Management User Guide............. NTQJ19FT
TN-MS NRM (Rel6) Inventory Management User Guide............ NTQJ19FX
TN-MS NRM (Rel6) Performance Management User Guide.......... NTQJ19FW
TN-MS NRM (Rel6) Connection Management User Guide........... NTQJ19FV
Router 2501 OSI............................................. NTJM01BA
Router 2514 OSI............................................. NTJM01KA
DCN RConfig "P" 2514 ent. 0 tunnels, Ser: 2 L2,0 L1 CPC
Allocated: A0741950......................................... NTJM9914
DCN RConfig "P" 2514 ent. 1 tunnel, Ser: 1 L2,1 L1 CPC
Allocated: A0741941......................................... NTJM9912
HS modem SP-1-AR,AC......................................... NTJM01SA
Shelf Cantilever 19in mounting.............................. P0878672
Transceiver 10BaseT......................................... NTJM01VA
Ethernet 10BaseT Transceiver................................ A0383333
Baystack 101 10baseT hub 12 port RJ45 250VAC................ NTJM02PA
***Cable Assy LAN RJ45--RJ45 h/e............................ 32YCN00727AFA
***Ethernet kit for OPC hub (20m,OC-48)..................... NT7E44JE
1.6 Network Synchronisation..................................... *
DCD-521C
DCD-Cs ETSI Standalone Cesium PRC........................... 990-43100-02
DCD-LPR Shelf GPS Applications.............................. 990-44100-12
GPS Timing Kit E1 (Rubidium or Quartz)...................... 990-44140-14
Blank Unit LPR.............................................. 090-44198-01
LOU-2 Dual oscillator....................................... 090-44145-02
DCD-521/C ETSI Shelf Master/Expansion....................... 990-44210-01
MRC-EA/Input card 2MHz/2Mb/s, 4 inputs...................... 090-44010-06
TNCE Clock card rubidium.................................... 090-44017-02
TNC Clock card transit node OCXO............................ 090-44020-02
TO-EA Output card 2MHz/2Mb/s 10 outputs..................... 090-44029-01
MIS Maint i'f analysis/config/remote........................ 990-44018-14
Blank Panel 1 TO slot wide.................................. 074-00208-01
Timing Input Module MRC SMB................................. 990-45107-02
Timing Output Module SMB,1:1 prot........................... 990-45105-07
1.7 EQUIPMENT PRACTICE
Mechanical bay assy ETSI (no expansion sh).................. NTCE89AA * * *
NTE-STM16 Rack (2200 x 600 x 300)--cost reduced............. NTFW70EA * * *
TN-16X Installation Kit..................................... 25SKM00807ABM * * *
REGEN Rack Assy............................................. NTFW71AA *
Rack side cover L/H u/o NTFW70AA............................ P0725173 * * *
Rack side cover R/H u/o NTFW70AA............................ P0725175 * * *
Mechanical assembly, rack, 42U.............................. A0726263
Distribution block 8 way left hand cable entry.............. A0729317
Distribution block 8 way right hand cable entry............. A0729318
ETSI Rack, 220cm, without side panels....................... NTKD70AA *
NT ETSI Rack Standard Inst.Kit.............................. 25SKM00807ABE *
ETSI Rack 48V DC Distrib Panel with Rack Alarm Unit......... 25SKM00807AAN *
1.8 Additional Items
OC-192 REL 1.4 SUPERSET CUSTOMER LOADS...................... ***PLM_TN-16X_NC_1
AC Power Cable Assembly..................................... PLM_Source_locally *
***Cable Assy, RJ45 crossover............................... 32YCN01094AFA *
*** OPTICAL PATCHCORD 20M SC-SC............................. PLM_Advanced
Optics_NC_3 * * *
Total Extended Equipment Price
2.0 Installation & Commissioning................................ * * *
Installation Materials...................................... * * *
---------
Total Extended Price
---------
---------
</TABLE>
- ------------------------
* The confidential portion has been omitted pursuant to a request for
confidential treatment and omitted
material has been filed separately with the commission.
97
<PAGE>
<TABLE>
<CAPTION>
VIATEL CIRCLE 1 CONTRACT
ANNEX C
SCHEDULE OF PRICES
SECTION D - BELGIUM
NAMUR ISSUE 1.0
-------------------------------------------------- ---------------------------------------------------------------------
ABBREVIATED DESCRIPTION CODE SELLING PRICE NAMUR EXT PRICE
-------------------------------------------------- ------------------------ ------------- --------------- ---------
$US QTY $US
<S> <C> <C> <C> <C> <C>
1.0 TRANSMISSION EQUIPMENT
1.1 TN-16 4F
Core
OC192 SC060 SHELF CONTROLLER...................... NTCA41BA *
MAINTENANCE INTERFACE............................. NTCA42AA *
*** CABLE ASSY (MODEM ACCESS)..................... NTCC8930 *
MESSAGE TRANSFER CARD............................. NTCA48AA *
BREAKER MODULE.................................... NTCA40AA *
COMMON EQUIPMENT FILLER CARD (1 IN.).............. NTCA59AA *
PARTITIONED OPC CONTROLLER........................ NTCA50AA *
*** CA ASSY (10 BASE T CROSSOVER)................. NT7E44KC *
PARTITIONED OPC STORAGE MODULE.................... NTCA51AA *
OPC FLASH CARTRIDGE............................... NTCA53AA *
PARTITIONED OPC IO MODULE......................... NTCA52AA *
*** SM OPTICAL PATCHCORD 20M (66FT) (SC-TUNED) SEE
A06............................................. NT7E46HD *
*** SM OPTICAL PATCHCORD 20M (66FT) (SC-TUNED)
W/MVOA.......................................... NT7E47HD *
TRANSPORT SHELF FILLER CARD....................... NTCA49AA *
TRANSPORT SHELF SWITCH FILLER CARD................ NTCA49AB *
OC-192 OPTICAL AMPLIFIER W/ SERVICE CHANNEL
(SC)............................................ NTCA11AC *
OC-192 OPTICAL AMPLIFIER (SC)..................... NTCA11BC *
1625NM OPTICAL SERVICE CHANNEL (SC)............... NTCA11CC *
1550/1625NM WDM COUPLER (SC)...................... NTCC13AC *
MOR RTU........................................... NTCA62DA *
1.2 TN-16X
Core
STM16 LTE/ADM/RING SHELF--COST REDUCED............ NTFW50EA *
SH PROCESSOR FOR SDH (DCC HUBBING)................ NT7E20GC *
SH PROCESSOR(ETHERNET,SYNC MSG 24M)............... NT7E20KA *
Maintenance Interface Unit........................ NT7E23AA *
TN-16X Regenerator Subrack Kit.................... NTFW51AA *
OC-48/STM-16 Ring Demux........................... NT8E06AB *
OC48 DWDM 1528.77 NM RING TX...................... NT8E11DQ *
OC48 DWDM 1530.33 RING TRANSMITTER................ NT8E11FQ *
OC48 WDM 1533.47 RING TRANSMITTER................. NT8E11KQ *
OC48 WDM 1535.04 RING TRANSMITTER................. NT8E11MQ *
OC48 DWDM 1550.92 NM RING TRANSMITTER............. NT8E11KR *
OC48 DWDM 1552.52 RING TRANSMITTER................ NT8E11MR *
OC48 DWDM 1555.75 NM RING TRANSMITTER............. NT8E11RR *
OC48 DWDM 1557.36 RING TRANSMITTER................ NT8E11TR *
OC48 DWDM 1528.77 NM REGEN........................ NT8E13DJ *
OC48 DWDM 1530.33 REG/TX INTERFACE................ NT8E13FJ *
OC48 DWDM 1533.47 REG/TX INTERFACE................ NT8E13KJ *
OC48 DWDM 1535.04 REG/TX INTERFACE................ NT8E13MJ *
OC48 DWDM 1550.92 REG/TX INTERFACE................ NT8E13KK *
OC48 DWDM 1552.52 REG/TX INTERFACE................ NT8E13MK *
OC48 DWDM 1555.75 REG/TX INTERFACE................ NT8E13RK *
OC48 DWDM 1557.36 REG/TX INTERFACE................ NT8E13TK *
OC-48/STM16 LR SAW Rx Interface (SC).............. NT8E02DD *
STM1o IR 1310 Tributary I/F (SC).................. NTFW11CD *
STM1 Optical Carrier Assembly..................... NTFW19BA *
External synchronisation interface carrier........ NT7E19AA *
External Synchronisation Interface (2 MHz)........ NTFW27AA *
*** OPTICAL PATCH CORD 20M (SC-SC)................ NT7E46FD *
*** OPTICAL PATCH CORD W/MVOA 20M (SC-SC)......... NT7E47FD *
KIT, SC OPTICAL CONNECTOR. INITIAL USE
NTN401AA........................................ NTN459SC *
*** FIBRE OPTIC CABLE ASSY STM1 DUPLEX SC-SC
20M............................................. NTFW5753 *
TN-16X Regenerator Software Licence (Release 7)... NTQJ93GG *
TN-16X Shared Protection Ring Software Licence
(Release 7)..................................... NTQJ93HG *
Extra Traffic on Rings on Licence................. NTQJ93TB *
OPC with tape drive............................... NT7E24BC *
PHOENIX SUPERSET CODE FOR REL 7................... NTFW97HA *
*** CNET BAY/BAY CABLE 5.0M....................... NT7E44JC *
TN-MS EC-16X Multi-user Licence................... NTQJ93CA *
TN-MS EC-16X Release 7 Licence.................... NTQJ93AG *
TN-MS EC-16X Release 7 Standby Licence............ NTQJ93BG *
FW TN-16X Rel 7 NTPS (CD-ROM)..................... NTFW64AH *
</TABLE>
98
<PAGE>
<TABLE>
<CAPTION>
VIATEL CIRCLE 1 CONTRACT
ANNEX C
SCHEDULE OF PRICES
SECTION D - BELGIUM
<S> <C> <C> <C> <C> <C>
1.3 ADVANCED OPTICS (DWDM)
Core
DWDM FILTER MODULE SHELF ASSY--4 POS--ETSI........ NTCE88BA *
DWDM COUPLER 8W,MB/DR W/O VOA,SC.................. NTCA10GC *
DWDM COUPLER 8W,DB/MR W/O VOA,SC.................. NTCA10HC *
TN-1X
Core.............................................. *
TN-1X Synchronous Access Multiplexer Subrack...... 25GMU00750GWV *
Shelf Kit......................................... 25SKM00750HFN *
TN-1X Installation Kit............................ 25SKM00807ABL *
Local Craft Access Panel Type 1................... 25UEP00750GXB *
Service Interface Module Type 10 (Misc)........... 25UJJ00750GXC *
Service Interface Module Type 40 (LCAP)........... 25UJJ00750GWX *
Subrack Cover Kit................................. 25SKM00750HFL *
Rack Mounting Kit for ETSI........................ 25SKM00019AAE *
Dummy Front Panel 1'.............................. 25RBN00021AAB *
Dummy SIA Panel 1'................................ 25RBN00021AAA *
Power Supply Unit................................. 25UPW00750HAY *
Subrack Control Unit.............................. 25UMN00750GXD *
Payload Manager (mixed payload)................... NTKD10AA *
STM-1 G.957 L1.2 Optical Aggregate Port Card
(1550nm)........................................ 25UTM00750HWH *
STM-1 G.957 L-1.1, S1.1 Optical Tributary Card
(1'wide)........................................ NTKD11AA *
***Optical patchcord 20m FC-FC.................... NT7E46BD *
Craft Access Terminal............................. NTQJ09AA *
RS 232 Cable Assembly............................. 25YCN00748AAA *
TN-1 CAT Release 12 Application (3.5")............ NTQJ35LA *
TN-MS CA-1X Release 12 Licence.................... NTQJ91DL *
Netscape Windows95 (Fastrack Server and
Navigator)...................................... NTQJ81BA *
TN-1X Release 8 Software Download (from CAT)...... NTQJ36HA *
HP B132, 128Mbytes RAM, 2Gb HD, DAT, CD, N.Hem.... NTQJ01FA *
TN-MS EC-1 Release 12 (DAT)....................... NTQJ30LA *
Netscape for UNIX (Fastrack Server and
Navigator)...................................... NTQJ81AA *
TN-1X Release 8 software download (from EC)....... NTQJ31HA *
TN-1C Release 3 Software kit (disk & tape)........ NTFT81CA *
TN-MS EC-1 Release 12 Licence for TN-1X........... NTQJ91AL *
TN-MS EC-1 Release 12 Standby Licence............. NTQJ91BL *
TN-MS EC-1 Multi-user Licence..................... NTQJ91CA *
X terminal software on DAT........................ NTQJ05JB *
TN-1X Rel 8 NTPs (CD-ROM MAC)..................... 32HSC00456VEC *
TN-1C
Core.............................................. *
TN-1C 8x2/16x2 turbo ADM (1550nm L1.2)............ NTFT52BI * * *
AC/DC Power Unit.................................. NTFT21AA * * *
12V Battery....................................... NTFT24AA * * *
***BT43/5F & 3002 cable assy 20m.................. 32YCN00750CAA * * *
***Optical patchcord 20m FC-FC.................... NT7E46BD * * *
TN-MS EC-1 Release 12 Licence for TN-1C........... NTQJ91FL * * *
Craft Access Terminal............................. NTQJ09AA *
CAT Cable Assembly................................ NTFT15AC *
TN-1C Release 3 Software kit (disk & tape)........ NTFT81CA *
TN-1 CAT Release 12 Application (3.5")............ NTQJ35LA *
Netscape Windows95 (Fastrack Server and
Navigator)...................................... NTQJ81BA *
TN-1C Release 3 handbook CD-ROM................... NTFT66CA *
1.4 DXC............................................... *
256 Port Cross Connect (MSH84).................... MSH84
STM-1 Optical card
16 x 2Mbit/s Port Unit
MV-36 Element controller.......................... MV-36
Managed Object Agent (MOA)
1.5 TN-MS INM......................................... *
Hardware
HP C200 workstation, north & south hemisphere..... NTQJ01GC
NRM Release 6 Software and Handbooks.............. NTQJ12FA
NRM Release 6 Feature Profile Tape--Core + IM + PM
+ CM............................................ NTQJ10FK
TN-MS NRM (Rel6) Alarm surveillance Licence....... NTQJ90AF
TN-MS NRM (Rel6) Electronic Software Delivery
Licence......................................... NTQJ90BF
TN-MS NRM (Rel6) Inventory Manager Licence........ NTQJ90DF
TN-MS NRM (Rel6) Perf. Mon. Consolidation
Licence......................................... NTQJ90EF
TN-MS NRM (Rel6) Connection Management Licence.... NTQJ90FF
</TABLE>
99
<PAGE>
<TABLE>
<CAPTION>
VIATEL CIRCLE 1 CONTRACT
ANNEX C
SCHEDULE OF PRICES
SECTION D - BELGIUM
<S> <C> <C> <C> <C> <C>
TN-MS NRM (Rel6) Software Management User Guide... NTQJ19FT
TN-MS NRM (Rel6) Inventory Management User
Guide........................................... NTQJ19FX
TN-MS NRM (Rel6) Performance Management User
Guide........................................... NTQJ19FW
TN-MS NRM (Rel6) Connection Management User
Guide........................................... NTQJ19FV
Router 2501 OSI................................... NTJM01BA
Router 2514 OSI................................... NTJM01KA
DCN RConfig "P" 2514 ent. 0 tunnels, Ser: 2 L2,0
L1 CPC Allocated: A0741950...................... NTJM9914
DCN RConfig "P" 2514 ent. 1 tunnel, Ser: 1 L2,1 L1
CPC Allocated: A0741941......................... NTJM9912
HS modem SP-1-AR,AC............................... NTJM01SA
Shelf Cantilever 19in mounting.................... P0878672
Transceiver 10BaseT............................... NTJM01VA
Ethernet 10BaseT Transceiver...................... A0383333
Baystack 101 10baseT hub 12 port RJ45 250VAC...... NTJM02PA
***Cable Assy LAN RJ45--RJ45 h/e.................. 32YCN00727AFA
***Ethernet kit for OPC hub (20m,OC-48)........... NT7E44JE
1.6 NETWORK SYNCHRONISATION........................... *
DCD-521C
DCD-Cs ETSI Standalone Cesium PRC................. 990-43100-02
DCD-LPR Shelf GPS Applications.................... 990-44100-12
GPS Timing Kit E1 (Rubidium or Quartz)............ 990-44140-14
Blank Unit LPR.................................... 090-44198-01
LOU-2 Dual oscillator............................. 090-44145-02
DCD-521/C ETSI Shelf Master/Expansion............. 990-44210-01
MRC-EA/Input card 2MHz/2Mb/s, 4 inputs............ 090-44010-06
TNCE Clock card rubidium.......................... 090-44017-02
TNC Clock card transit node OCXO.................. 090-44020-02
TO-EA Output card 2MHz/2Mb/s 10 outputs........... 090-44029-01
MIS Maint i'f analysis/config/remote.............. 990-44018-14
Blank Panel 1 TO slot wide........................ 074-00208-01
Timing Input Module MRC SMB....................... 990-45107-02
Timing Output Module SMB,1:1 prot................. 990-45105-07
1.7 EQUIPMENT PRACTICE
Mechanical bay assy ETSI (no expansion sh)........ NTCE89AA *
NTE-STM16 Rack (2200 x 600 x 300)--cost reduced... NTFW70EA *
TN-16X Installation Kit........................... 25SKM00807ABM *
REGEN Rack Assy................................... NTFW71AA *
Rack side cover L/H u/o NTFW70AA.................. P0725173 *
Rack side cover R/H u/o NTFW70AA.................. P0725175 *
Mechanical assembly, rack, 42U.................... A0726263
Distribution block 8 way left hand cable entry.... A0729317
Distribution block 8 way right hand cable entry... A0729318
ETSI Rack, 220cm, without side panels............. NTKD70AA *
NT ETSI Rack Standard Inst.Kit.................... 25SKM00807ABE *
ETSI Rack 48V DC Distrib Panel with Rack Alarm
Unit............................................ 25SKM00807AAN *
1.8 ADDITIONAL ITEMS
OC-192 REL 1.4 SUPERSET CUSTOMER LOADS............ ***PLM_TN-16X_NC_1
AC Power Cable Assembly........................... PLM_Source_locally * * *
***Cable Assy, RJ45 crossover..................... 32YCN01094AFA *
*** OPTICAL PATCHCORD 20M SC-SC................... PLM_Advanced Optics_NC_3 *
Total Extended Equipment Price.................... *
2.0 INSTALLATION & COMMISSIONING
Installation Materials............................ * * *
---------
Total Extended Price.............................. * *
---------
---------
</TABLE>
100
<PAGE>
<TABLE>
<CAPTION>
VIATEL CIRCLE 1 CONTRACT
ANNEX C
SCHEDULE OF PRICES
SECTION E - FRANCE
CAYEUX-SUR-MER ISSUE 1.0
-------------------------------------------------- ---------------------------------------------------------------------
ABBREVIATED DESCRIPTION CODE SELLING PRICE CAYEUX-SUR-MER EXT PRICE
-------------------------------------------------- ------------------------ ------------- --------------- ---------
$US QTY $US
<S> <C> <C> <C> <C> <C>
1.0 TRANSMISSION EQUIPMENT
1.1 TN-16 4F
Core
OC192 SC060 SHELF CONTROLLER...................... NTCA41BA * * *
MAINTENANCE INTERFACE............................. NTCA42AA * * *
*** CABLE ASSY (MODEM ACCESS)..................... NTCC8930 * * *
MESSAGE TRANSFER CARD............................. NTCA48AA * * *
BREAKER MODULE.................................... NTCA40AA * * *
COMMON EQUIPMENT FILLER CARD (1 IN.).............. NTCA59AA * * *
PARTITIONED OPC CONTROLLER........................ NTCA50AA *
*** CA ASSY (10 BASE T CROSSOVER)................. NT7E44KC *
PARTITIONED OPC STORAGE MODULE.................... NTCA51AA *
OPC FLASH CARTRIDGE............................... NTCA53AA *
PARTITIONED OPC IO MODULE......................... NTCA52AA *
*** SM OPTICAL PATCHCORD 20M (66FT) (SC-TUNED) SEE
A06............................................. NT7E46HD * * *
*** SM OPTICAL PATCHCORD 20M (66FT) (SC-TUNED)
W/MVOA.......................................... NT7E47HD * * *
TRANSPORT SHELF FILLER CARD....................... NTCA49AA * * *
TRANSPORT SHELF SWITCH FILLER CARD................ NTCA49AB * * *
OC-192 OPTICAL AMPLIFIER W/ SERVICE CHANNEL
(SC)............................................ NTCA11AC * * *
OC-192 OPTICAL AMPLIFIER (SC)..................... NTCA11BC *
1625NM OPTICAL SERVICE CHANNEL (SC)............... NTCA11CC *
1550/1625NM WDM COUPLER (SC)...................... NTCC13AC *
MOR RTU........................................... NTCA62DA * * *
1.2 TN-16X
Core
STM16 LTE/ADM/RING SHELF--COST REDUCED............ NTFW50EA *
SH PROCESSOR FOR SDH (DCC HUBBING)................ NT7E20GC *
SH PROCESSOR(ETHERNET,SYNC MSG 24M)............... NT7E20KA * * *
Maintenance Interface Unit........................ NT7E23AA * * *
TN-16X Regenerator Subrack Kit.................... NTFW51AA * * *
OC-48/STM-16 Ring Demux........................... NT8E06AB *
OC48 DWDM 1528.77 NM RING TX...................... NT8E11DQ *
OC48 DWDM 1530.33 RING TRANSMITTER................ NT8E11FQ *
OC48 WDM 1533.47 RING TRANSMITTER................. NT8E11KQ *
OC48 WDM 1535.04 RING TRANSMITTER................. NT8E11MQ *
OC48 DWDM 1550.92 NM RING TRANSMITTER............. NT8E11KR *
OC48 DWDM 1552.52 RING TRANSMITTER................ NT8E11MR *
OC48 DWDM 1555.75 NM RING TRANSMITTER............. NT8E11RR *
OC48 DWDM 1557.36 RING TRANSMITTER................ NT8E11TR *
OC48 DWDM 1528.77 NM REGEN........................ NT8E13DJ * * *
OC48 DWDM 1530.33 REG/TX INTERFACE................ NT8E13FJ * * *
OC48 DWDM 1533.47 REG/TX INTERFACE................ NT8E13KJ * * *
OC48 DWDM 1535.04 REG/TX INTERFACE................ NT8E13MJ * * *
OC48 DWDM 1550.92 REG/TX INTERFACE................ NT8E13KK * * *
OC48 DWDM 1552.52 REG/TX INTERFACE................ NT8E13MK * * *
OC48 DWDM 1555.75 REG/TX INTERFACE................ NT8E13RK * * *
OC48 DWDM 1557.36 REG/TX INTERFACE................ NT8E13TK * * *
OC-48/STM16 LR SAW Rx Interface (SC).............. NT8E02DD * * *
STM1o IR 1310 Tributary I/F (SC).................. NTFW11CD *
STM1 Optical Carrier Assembly..................... NTFW19BA *
External synchronisation interface carrier........ NT7E19AA *
External Synchronisation Interface (2 MHz)........ NTFW27AA *
*** OPTICAL PATCH CORD 20M (SC-SC)................ NT7E46FD * * *
*** OPTICAL PATCH CORD W/MVOA 20M (SC-SC)......... NT7E47FD * * *
KIT, SC OPTICAL CONNECTOR. INITIAL USE
NTN401AA........................................ NTN459SC * * *
*** FIBRE OPTIC CABLE ASSY STM1 DUPLEX SC-SC
20M............................................. NTFW5753 *
TN-16X Regenerator Software Licence (Release 7)... NTQJ93GG * * *
TN-16X Shared Protection Ring Software Licence
(Release 7)..................................... NTQJ93HG *
Extra Traffic on Rings on Licence................. NTQJ93TB *
OPC with tape drive............................... NT7E24BC *
PHOENIX SUPERSET CODE FOR REL 7................... NTFW97HA *
*** CNET BAY/BAY CABLE 5.0M....................... NT7E44JC *
TN-MS EC-16X Multi-user Licence................... NTQJ93CA *
TN-MS EC-16X Release 7 Licence.................... NTQJ93AG *
TN-MS EC-16X Release 7 Standby Licence............ NTQJ93BG *
FW TN-16X Rel 7 NTPS (CD-ROM)..................... NTFW64AH *
1.3 ADVANCED OPTICS (DWDM)
Core
DWDM FILTER MODULE SHELF ASSY--4 POS--ETSI........ NTCE88BA * * *
DWDM COUPLER 8W,MB/DR W/O VOA,SC.................. NTCA10GC * * *
</TABLE>
101
<PAGE>
<TABLE>
<CAPTION>
VIATEL CIRCLE 1 CONTRACT
ANNEX C
SCHEDULE OF PRICES
SECTION E - FRANCE
<S> <C> <C> <C> <C> <C>
DWDM COUPLER 8W,DB/MR W/O VOA,SC.................. NTCA10HC * * *
TN-1X
Core
TN-1X Synchronous Access Multiplexer Subrack...... 25GMU00750GWV *
Shelf Kit......................................... 25SKM00750HFN *
TN-1X Installation Kit............................ 25SKM00807ABL *
Local Craft Access Panel Type 1................... 25UEP00750GXB *
Service Interface Module Type 10 (Misc)........... 25UJJ00750GXC *
Service Interface Module Type 40 (LCAP)........... 25UJJ00750GWX *
Subrack Cover Kit................................. 25SKM00750HFL *
Rack Mounting Kit for ETSI........................ 25SKM00019AAE *
Dummy Front Panel 1'.............................. 25RBN00021AAB *
Dummy SIA Panel 1'................................ 25RBN00021AAA *
Power Supply Unit................................. 25UPW00750HAY *
Subrack Control Unit.............................. 25UMN00750GXD *
Payload Manager (mixed payload)................... NTKD10AA *
STM-1 G.957 L1.2 Optical Aggregate Port Card
(1550nm)........................................ 25UTM00750HWH *
STM-1 G.957 L-1.1, S1.1 Optical Tributary Card
(1'wide)........................................ NTKD11AA *
***Optical patchcord 20m FC-FC.................... NT7E46BD *
Craft Access Terminal............................. NTQJ09AA *
RS 232 Cable Assembly............................. 25YCN00748AAA *
TN-1 CAT Release 12 Application (3.5")............ NTQJ35LA
TN-MS CA-1X Release 12 Licence.................... NTQJ91DL
Netscape Windows95 (Fastrack Server and
Navigator)...................................... NTQJ81BA *
TN-1X Release 8 Software Download (from CAT)...... NTQJ36HA
HP B132, 128Mbytes RAM, 2Gb HD, DAT, CD, N.Hem.... NTQJ01FA *
TN-MS EC-1 Release 12 (DAT)....................... NTQJ30LA
Netscape for UNIX (Fastrack Server and
Navigator)...................................... NTQJ81AA *
TN-1X Release 8 software download (from EC)....... NTQJ31HA
TN-1C Release 3 Software kit (disk & tape)........ NTFT81CA *
TN-MS EC-1 Release 12 Licence for TN-1X........... NTQJ91AL *
TN-MS EC-1 Release 12 Standby Licence............. NTQJ91BL *
TN-MS EC-1 Multi-user Licence..................... NTQJ91CA *
X terminal software on DAT........................ NTQJ05JB *
TN-1X Rel 8 NTPs (CD-ROM MAC)..................... 32HSC00456VEC *
TN-1C
Core
TN-1C 8x2/16x2 turbo ADM (1550nm L1.2)............ NTFT52BI *
AC/DC Power Unit.................................. NTFT21AA *
12V Battery....................................... NTFT24AA *
***BT43/5F & 3002 cable assy 20m.................. 32YCN00750CAA *
***Optical patchcord 20m FC-FC.................... NT7E46BD *
TN-MS EC-1 Release 12 Licence for TN-1C........... NTQJ91FL *
Craft Access Terminal............................. NTQJ09AA *
CAT Cable Assembly................................ NTFT15AC *
TN-1C Release 3 Software kit (disk & tape)........ NTFT81CA *
TN-1 CAT Release 12 Application (3.5")............ NTQJ35LA
Netscape Windows95 (Fastrack Server and
Navigator)...................................... NTQJ81BA *
TN-1C Release 3 handbook CD-ROM................... NTFT66CA *
1.4 DXC
256 Port Cross Connect (MSH84).................... MSH84
STM-1 Optical card................................
16 x 2Mbit/s Port Unit............................
MV-36 Element controller.......................... MV-36
Managed Object Agent (MOA)........................
1.5 TN-MS INM
Hardware
HP C200 workstation, north & south hemisphere..... NTQJ01GC
NRM Release 6 Software and Handbooks.............. NTQJ12FA
NRM Release 6 Feature Profile Tape--Core + IM + PM
+ CM............................................ NTQJ10FK
TN-MS NRM (Rel6) Alarm surveillance Licence....... NTQJ90AF
TN-MS NRM (Rel6) Electronic Software Delivery
Licence......................................... NTQJ90BF
TN-MS NRM (Rel6) Inventory Manager Licence........ NTQJ90DF
TN-MS NRM (Rel6) Perf. Mon. Consolidation
Licence......................................... NTQJ90EF
TN-MS NRM (Rel6) Connection Management Licence.... NTQJ90FF
TN-MS NRM (Rel6) Software Management User Guide... NTQJ19FT
TN-MS NRM (Rel6) Inventory Management User
Guide........................................... NTQJ19FX
TN-MS NRM (Rel6) Performance Management User
Guide........................................... NTQJ19FW
TN-MS NRM (Rel6) Connection Management User
Guide........................................... NTQJ19FV
Router 2501 OSI................................... NTJM01BA
Router 2514 OSI................................... NTJM01KA
DCN RConfig "P" 2514 ent. 0 tunnels, Ser: 2 L2,0
L1 CPC Allocated: A0741950...................... NTJM9914
DCN RConfig "P" 2514 ent. 1 tunnel, Ser: 1 L2,1 L1
CPC Allocated: A0741941......................... NTJM9912
HS modem SP-1-AR,AC............................... NTJM01SA
Shelf Cantilever 19in mounting.................... P0878672
</TABLE>
102
<PAGE>
<TABLE>
<CAPTION>
VIATEL CIRCLE 1 CONTRACT
ANNEX C
SCHEDULE OF PRICES
SECTION E - UK
<S> <C> <C> <C> <C> <C>
Transceiver 10BaseT............................... NTJM01VA
Ethernet 10BaseT Transceiver...................... A0383333
Baystack 101 10baseT hub 12 port RJ45 250VAC...... NTJM02PA
***Cable Assy LAN RJ45--RJ45 h/e.................. 32YCN00727AFA
***Ethernet kit for OPC hub (20m,OC-48)........... NT7E44JE
1.6 NETWORK SYNCHRONISATION........................... *
DCD-521C
DCD-Cs ETSI Standalone Cesium PRC................. 990-43100-02
DCD-LPR Shelf GPS Applications.................... 990-44100-12
GPS Timing Kit E1 (Rubidium or Quartz)............ 990-44140-14
Blank Unit LPR.................................... 090-44198-01
LOU-2 Dual oscillator............................. 090-44145-02
DCD-521/C ETSI Shelf Master/Expansion............. 990-44210-01
MRC-EA/Input card 2MHz/2Mb/s, 4 inputs............ 090-44010-06
TNCE Clock card rubidium.......................... 090-44017-02
TNC Clock card transit node OCXO.................. 090-44020-02
TO-EA Output card 2MHz/2Mb/s 10 outputs........... 090-44029-01
MIS Maint i'f analysis/config/remote.............. 990-44018-14
Blank Panel 1 TO slot wide........................ 074-00208-01
Timing Input Module MRC SMB....................... 990-45107-02
Timing Output Module SMB,1:1 prot................. 990-45105-07
1.7 EQUIPMENT PRACTICE
Mechanical bay assy ETSI (no expansion sh)........ NTCE89AA * * *
NTE-STM16 Rack (2200 x 600 x 300)--cost reduced... NTFW70EA *
TN-16X Installation Kit........................... 25SKM00807ABM * * *
REGEN Rack Assy................................... NTFW71AA * * *
Rack side cover L/H u/o NTFW70AA.................. P0725173 * * *
Rack side cover R/H u/o NTFW70AA.................. P0725175 * * *
Mechanical assembly, rack, 42U.................... A0726263
Distribution block 8 way left hand cable entry.... A0729317
Distribution block 8 way right hand cable entry... A0729318
ETSI Rack, 220cm, without side panels............. NTKD70AA *
NT ETSI Rack Standard Inst.Kit.................... 25SKM00807ABE *
ETSI Rack 48V DC Distrib Panel with Rack Alarm
Unit............................................ 25SKM00807AAN *
1.8 ADDITIONAL ITEMS
OC-192 REL 1.4 SUPERSET CUSTOMER LOADS............ ***PLM_TN-16X_NC_1
AC Power Cable Assembly........................... PLM_Source_locally *
***Cable Assy, RJ45 crossover..................... 32YCN01094AFA *
*** OPTICAL PATCHCORD 20M SC-SC................... PLM_Advanced Optics_NC_3 * * *
Total Extended Equipment Price.................... *
2.0 INSTALLATION & COMMISSIONING...................... * * *
Installation Materials............................ *
---------
Total Extended Price.............................. *
---------
---------
</TABLE>
103
<PAGE>
<TABLE>
<CAPTION>
VIATEL CIRCLE 1 CONTRACT
ANNEX C
SCHEDULE OF PRICES
SECTION E - FRANCE
AMIENS ISSUE 1.0
-------------------------------------------------- ---------------------------------------------------------------------
ABBREVIATED DESCRIPTION CODE SELLING PRICE AMIENS EXT PRICE
-------------------------------------------------- ------------------------ ------------- --------------- ---------
$US QTY $US
<S> <C> <C> <C> <C> <C>
1.0 TRANSMISSION EQUIPMENT
1.1 TN-16 4F
Core
OC192 SC060 SHELF CONTROLLER...................... NTCA41BA * * *
MAINTENANCE INTERFACE............................. NTCA42AA * * *
*** CABLE ASSY (MODEM ACCESS)..................... NTCC8930 * * *
MESSAGE TRANSFER CARD............................. NTCA48AA * * *
BREAKER MODULE.................................... NTCA40AA * * *
COMMON EQUIPMENT FILLER CARD (1 IN.).............. NTCA59AA * * *
PARTITIONED OPC CONTROLLER........................ NTCA50AA *
*** CA ASSY (10 BASE T CROSSOVER)................. NT7E44KC *
PARTITIONED OPC STORAGE MODULE.................... NTCA51AA *
OPC FLASH CARTRIDGE............................... NTCA53AA *
PARTITIONED OPC IO MODULE......................... NTCA52AA *
*** SM OPTICAL PATCHCORD 20M (66FT) (SC-TUNED) SEE
A06............................................. NT7E46HD * * *
*** SM OPTICAL PATCHCORD 20M (66FT) (SC-TUNED)
W/MVOA.......................................... NT7E47HD * * *
TRANSPORT SHELF FILLER CARD....................... NTCA49AA * * *
TRANSPORT SHELF SWITCH FILLER CARD................ NTCA49AB * * *
OC-192 OPTICAL AMPLIFIER W/ SERVICE CHANNEL
(SC)............................................ NTCA11AC * * *
OC-192 OPTICAL AMPLIFIER (SC)..................... NTCA11BC *
1625NM OPTICAL SERVICE CHANNEL (SC)............... NTCA11CC *
1550/1625NM WDM COUPLER (SC)...................... NTCC13AC *
MOR RTU........................................... NTCA62DA * * *
1.2 TN-16X
Core
STM16 LTE/ADM/RING SHELF--COST REDUCED............ NTFW50EA * * *
SH PROCESSOR FOR SDH (DCC HUBBING)................ NT7E20GC * * *
SH PROCESSOR(ETHERNET,SYNC MSG 24M)............... NT7E20KA *
Maintenance Interface Unit........................ NT7E23AA * * *
TN-16X Regenerator Subrack Kit.................... NTFW51AA *
OC-48/STM-16 Ring Demux........................... NT8E06AB * * *
OC48 DWDM 1528.77 NM RING TX...................... NT8E11DQ * * *
OC48 DWDM 1530.33 RING TRANSMITTER................ NT8E11FQ * * *
OC48 WDM 1533.47 RING TRANSMITTER................. NT8E11KQ * * *
OC48 WDM 1535.04 RING TRANSMITTER................. NT8E11MQ * * *
OC48 DWDM 1550.92 NM RING TRANSMITTER............. NT8E11KR * * *
OC48 DWDM 1552.52 RING TRANSMITTER................ NT8E11MR * * *
OC48 DWDM 1555.75 NM RING TRANSMITTER............. NT8E11RR * * *
OC48 DWDM 1557.36 RING TRANSMITTER................ NT8E11TR * * *
OC48 DWDM 1528.77 NM REGEN........................ NT8E13DJ *
OC48 DWDM 1530.33 REG/TX INTERFACE................ NT8E13FJ *
OC48 DWDM 1533.47 REG/TX INTERFACE................ NT8E13KJ *
OC48 DWDM 1535.04 REG/TX INTERFACE................ NT8E13MJ *
OC48 DWDM 1550.92 REG/TX INTERFACE................ NT8E13KK *
OC48 DWDM 1552.52 REG/TX INTERFACE................ NT8E13MK *
OC48 DWDM 1555.75 REG/TX INTERFACE................ NT8E13RK *
OC48 DWDM 1557.36 REG/TX INTERFACE................ NT8E13TK *
OC-48/STM16 LR SAW Rx Interface (SC).............. NT8E02DD * * *
STM1o IR 1310 Tributary I/F (SC).................. NTFW11CD * * *
STM1 Optical Carrier Assembly..................... NTFW19BA * * *
External synchronisation interface carrier........ NT7E19AA * * *
External Synchronisation Interface (2 MHz)........ NTFW27AA * * *
*** OPTICAL PATCH CORD 20M (SC-SC)................ NT7E46FD * * *
*** OPTICAL PATCH CORD W/MVOA 20M (SC-SC)......... NT7E47FD * * *
KIT, SC OPTICAL CONNECTOR. INITIAL USE
NTN401AA........................................ NTN459SC * * *
*** FIBRE OPTIC CABLE ASSY STM1 DUPLEX SC-SC
20M............................................. NTFW5753 * * *
TN-16X Regenerator Software Licence (Release 7)... NTQJ93GG *
TN-16X Shared Protection Ring Software Licence
(Release 7)..................................... NTQJ93HG * * *
Extra Traffic on Rings on Licence................. NTQJ93TB * * *
OPC with tape drive............................... NT7E24BC *
PHOENIX SUPERSET CODE FOR REL 7................... NTFW97HA *
*** CNET BAY/BAY CABLE 5.0M....................... NT7E44JC *
TN-MS EC-16X Multi-user Licence................... NTQJ93CA *
TN-MS EC-16X Release 7 Licence.................... NTQJ93AG *
TN-MS EC-16X Release 7 Standby Licence............ NTQJ93BG *
FW TN-16X Rel 7 NTPS (CD-ROM)..................... NTFW64AH *
</TABLE>
104
<PAGE>
<TABLE>
<CAPTION>
VIATEL CIRCLE 1 CONTRACT
ANNEX C
SCHEDULE OF PRICES
SECTION E - FRANCE
<S> <C> <C> <C> <C> <C>
1.3 ADVANCED OPTICS (DWDM)
Core
DWDM FILTER MODULE SHELF ASSY--4 POS--ETSI........ NTCE88BA * * *
DWDM COUPLER 8W,MB/DR W/O VOA,SC.................. NTCA10GC * * *
DWDM COUPLER 8W,DB/MR W/O VOA,SC.................. NTCA10HC * * *
TN-1X
Core
TN-1X Synchronous Access Multiplexer Subrack...... 25GMU00750GWV *
Shelf Kit......................................... 25SKM00750HFN *
TN-1X Installation Kit............................ 25SKM00807ABL *
Local Craft Access Panel Type 1................... 25UEP00750GXB *
Service Interface Module Type 10 (Misc)........... 25UJJ00750GXC *
Service Interface Module Type 40 (LCAP)........... 25UJJ00750GWX *
Subrack Cover Kit................................. 25SKM00750HFL *
Rack Mounting Kit for ETSI........................ 25SKM00019AAE *
Dummy Front Panel 1'.............................. 25RBN00021AAB *
Dummy SIA Panel 1'................................ 25RBN00021AAA *
Power Supply Unit................................. 25UPW00750HAY *
Subrack Control Unit.............................. 25UMN00750GXD *
Payload Manager (mixed payload)................... NTKD10AA *
STM-1 G.957 L1.2 Optical Aggregate Port Card
(1550nm)........................................ 25UTM00750HWH *
STM-1 G.957 L-1.1, S1.1 Optical Tributary Card
(1'wide)........................................ NTKD11AA *
***Optical patchcord 20m FC-FC.................... NT7E46BD *
Craft Access Terminal............................. NTQJ09AA *
RS 232 Cable Assembly............................. 25YCN00748AAA *
TN-1 CAT Release 12 Application (3.5")............ NTQJ35LA
TN-MS CA-1X Release 12 Licence.................... NTQJ91DL
Netscape Windows95 (Fastrack Server and
Navigator)...................................... NTQJ81BA *
TN-1X Release 8 Software Download (from CAT)...... NTQJ36HA
HP B132, 128Mbytes RAM, 2Gb HD, DAT, CD, N.Hem.... NTQJ01FA *
TN-MS EC-1 Release 12 (DAT)....................... NTQJ30LA
Netscape for UNIX (Fastrack Server and
Navigator)...................................... NTQJ81AA *
TN-1X Release 8 software download (from EC)....... NTQJ31HA
TN-1C Release 3 Software kit (disk & tape)........ NTFT81CA *
TN-MS EC-1 Release 12 Licence for TN-1X........... NTQJ91AL *
TN-MS EC-1 Release 12 Standby Licence............. NTQJ91BL *
TN-MS EC-1 Multi-user Licence..................... NTQJ91CA *
X terminal software on DAT........................ NTQJ05JB *
TN-1X Rel 8 NTPs (CD-ROM MAC)..................... 32HSC00456VEC *
TN-1C
Core
TN-1C 8x2/16x2 turbo ADM (1550nm L1.2)............ NTFT52BI *
AC/DC Power Unit.................................. NTFT21AA *
12V Battery....................................... NTFT24AA *
***BT43/5F & 3002 cable assy 20m.................. 32YCN00750CAA *
***Optical patchcord 20m FC-FC.................... NT7E46BD *
TN-MS EC-1 Release 12 Licence for TN-1C........... NTQJ91FL *
Craft Access Terminal............................. NTQJ09AA *
CAT Cable Assembly................................ NTFT15AC *
TN-1C Release 3 Software kit (disk & tape)........ NTFT81CA *
TN-1 CAT Release 12 Application (3.5")............ NTQJ35LA
Netscape Windows95 (Fastrack Server and
Navigator)...................................... NTQJ81BA *
TN-1C Release 3 handbook CD-ROM................... NTFT66CA *
1.4 DXC
256 Port Cross Connect (MSH84).................... MSH84 * * *
STM-1 Optical card................................ *
16 x 2Mbit/s Port Unit............................ *
MV-36 Element controller.......................... MV-36 *
Managed Object Agent (MOA)
1.5 TN-MS INM
Hardware
HP C200 workstation, north & south hemisphere..... NTQJ01GC
NRM Release 6 Software and Handbooks.............. NTQJ12FA
NRM Release 6 Feature Profile Tape--Core + IM + PM
+ CM............................................ NTQJ10FK
TN-MS NRM (Rel6) Alarm surveillance Licence....... NTQJ90AF
TN-MS NRM (Rel6) Electronic Software Delivery
Licence......................................... NTQJ90BF
TN-MS NRM (Rel6) Inventory Manager Licence........ NTQJ90DF
TN-MS NRM (Rel6) Perf. Mon. Consolidation
Licence......................................... NTQJ90EF
TN-MS NRM (Rel6) Connection Management Licence.... NTQJ90FF
</TABLE>
105
<PAGE>
<TABLE>
<CAPTION>
VIATEL CIRCLE 1 CONTRACT
ANNEX C
SCHEDULE OF PRICES
SECTION E - FRANCE
<S> <C> <C> <C> <C> <C>
TN-MS NRM (Rel6) Software Management User Guide... NTQJ19FT
TN-MS NRM (Rel6) Inventory Management User
Guide........................................... NTQJ19FX
TN-MS NRM (Rel6) Performance Management User
Guide........................................... NTQJ19FW
TN-MS NRM (Rel6) Connection Management User
Guide........................................... NTQJ19FV
Router 2501 OSI................................... NTJM01BA
Router 2514 OSI................................... NTJM01KA
DCN RConfig "P" 2514 ent. 0 tunnels, Ser: 2 L2,0
L1 CPC Allocated: A0741950...................... NTJM9914
DCN RConfig "P" 2514 ent. 1 tunnel, Ser: 1 L2,1 L1
CPC Allocated: A0741941......................... NTJM9912
HS modem SP-1-AR,AC............................... NTJM01SA
Shelf Cantilever 19in mounting.................... P0878672
Transceiver 10BaseT............................... NTJM01VA
Ethernet 10BaseT Transceiver...................... A0383333
Baystack 101 10baseT hub 12 port RJ45 250VAC...... NTJM02PA
***Cable Assy LAN RJ45--RJ45 h/e.................. 32YCN00727AFA
***Ethernet kit for OPC hub (20m,OC-48)........... NT7E44JE
1.6 NETWORK SYNCHRONISATION........................... *
DCD-521C
DCD-Cs ETSI Standalone Cesium PRC................. 990-43100-02
DCD-LPR Shelf GPS Applications.................... 990-44100-12
GPS Timing Kit E1 (Rubidium or Quartz)............ 990-44140-14
Blank Unit LPR.................................... 090-44198-01
LOU-2 Dual oscillator............................. 090-44145-02
DCD-521/C ETSI Shelf Master/Expansion............. 990-44210-01
MRC-EA/Input card 2MHz/2Mb/s, 4 inputs............ 090-44010-06
TNCE Clock card rubidium.......................... 090-44017-02
TNC Clock card transit node OCXO.................. 090-44020-02
TO-EA Output card 2MHz/2Mb/s 10 outputs........... 090-44029-01
MIS Maint i'f analysis/config/remote.............. 990-44018-14
Blank Panel 1 TO slot wide........................ 074-00208-01
Timing Input Module MRC SMB....................... 990-45107-02
Timing Output Module SMB,1:1 prot................. 990-45105-07
1.7 EQUIPMENT PRACTICE
Mechanical bay assy ETSI (no expansion sh)........ NTCE89AA * * *
NTE-STM16 Rack (2200 x 600 x 300)--cost reduced... NTFW70EA * * *
TN-16X Installation Kit........................... 25SKM00807ABM * * *
REGEN Rack Assy................................... NTFW71AA *
Rack side cover L/H u/o NTFW70AA.................. P0725173 * * *
Rack side cover R/H u/o NTFW70AA.................. P0725175 * * *
Mechanical assembly, rack, 42U.................... A0726263
Distribution block 8 way left hand cable entry.... A0729317
Distribution block 8 way right hand cable entry... A0729318
ETSI Rack, 220cm, without side panels............. NTKD70AA *
NT ETSI Rack Standard Inst.Kit.................... 25SKM00807ABE *
ETSI Rack 48V DC Distrib Panel with Rack Alarm
Unit............................................ 25SKM00807AAN *
1.8 ADDITIONAL ITEMS
OC-192 REL 1.4 SUPERSET CUSTOMER LOADS............ ***PLM_TN-16X_NC_1
AC Power Cable Assembly........................... PLM_Source_locally *
***Cable Assy, RJ45 crossover..................... 32YCN01094AFA *
*** OPTICAL PATCHCORD 20M SC-SC................... PLM_Advanced Optics_NC_3 * * *
Total Extended Equipment Price
2.0 INSTALLATION & COMMISSIONING...................... * * *
---------
Total Extended Price.............................. * * *
---------
---------
</TABLE>
106
<PAGE>
<TABLE>
<CAPTION>
VIATEL CIRCLE 1 CONTRACT
ANNEX C
SCHEDULE OF PRICES
SECTION E - FRANCE
LA DEFENSE - AMIENS R/A4 ISSUE 1.0
------------------------------------- ---------------------------------------------------------------------------------
ABBREVIATED DESCRIPTION CODE SELLING PRICE LA D-AMIENS R/A4 EXT PRICE
------------------------------------- -------------------------- --------------- --------------------- -------------
$US PERONNE $US
<S> <C> <C> <C> <C> <C>
1.0 TRANSMISSION EQUIPMENT
1.1 TN-16 4F
Core
OC192 SC060 SHELF CONTROLLER......... NTCA41BA * * *
MAINTENANCE INTERFACE................ NTCA42AA * * *
*** CABLE ASSY (MODEM ACCESS)........ NTCC8930 * * *
MESSAGE TRANSFER CARD................ NTCA48AA * * *
BREAKER MODULE....................... NTCA40AA * * *
COMMON EQUIPMENT FILLER CARD (1 IN.). NTCA59AA * * *
PARTITIONED OPC CONTROLLER........... NTCA50AA *
*** CA ASSY (10 BASE T CROSSOVER).... NT7E44KC *
PARTITIONED OPC STORAGE MODULE....... NTCA51AA *
OPC FLASH CARTRIDGE.................. NTCA53AA *
PARTITIONED OPC IO MODULE............ NTCA52AA *
*** SM OPTICAL PATCHCORD 20M (66FT)
(SC-TUNED) SEE A06................... NT7E46HD * * *
*** SM OPTICAL PATCHCORD 20M (66FT)
(SC-TUNED) W/MVOA.................... NT7E47HD * * *
TRANSPORT SHELF FILLER CARD.......... NTCA49AA * * *
TRANSPORT SHELF SWITCH FILLER CARD... NTCA49AB * * *
OC-192 OPTICAL AMPLIFIER W/ SERVICE
CHANNEL (SC)......................... NTCA11AC * * *
OC-192 OPTICAL AMPLIFIER (SC)........ NTCA11BC *
1625NM OPTICAL SERVICE CHANNEL (SC).. NTCA11CC *
1550/1625NM WDM COUPLER (SC)......... NTCC13AC *
MOR RTU.............................. NTCA62DA * * *
1.2 TN-16X
Core
STM16 LTE/ADM/RING SHELF-- COST
REDUCED.............................. NTFW50EA *
SH PROCESSOR FOR SDH (DCC HUBBING)... NT7E20GC *
SH PROCESSOR(ETHERNET,SYNC MSG 24M).. NT7E20KA *
Maintenance Interface Unit........... NT7E23AA *
TN-16X Regenerator Subrack Kit....... NTFW51AA *
OC-48/STM-16 Ring Demux.............. NT8E06AB *
OC48 DWDM 1528.77 NM RING TX......... NT8E11DQ *
OC48 DWDM 1530.33 RING TRANSMITTER... NT8E11FQ *
OC48 WDM 1533.47 RING TRANSMITTER.... NT8E11KQ *
OC48 WDM 1535.04 RING TRANSMITTER.... NT8E11MQ *
OC48 DWDM 1550.92 NM RING
TRANSMITTER.......................... NT8E11KR *
OC48 DWDM 1552.52 RING TRANSMITTER... NT8E11MR *
OC48 DWDM 1555.75 NM RING
TRANSMITTER.......................... NT8E11RR *
OC48 DWDM 1557.36 RING TRANSMITTER... NT8E11TR *
OC48 DWDM 1528.77 NM REGEN........... NT8E13DJ *
OC48 DWDM 1530.33 REG/TX INTERFACE... NT8E13FJ *
OC48 DWDM 1533.47 REG/TX INTERFACE... NT8E13KJ *
OC48 DWDM 1535.04 REG/TX INTERFACE... NT8E13MJ *
OC48 DWDM 1550.92 REG/TX INTERFACE... NT8E13KK *
OC48 DWDM 1552.52 REG/TX INTERFACE... NT8E13MK *
OC48 DWDM 1555.75 REG/TX INTERFACE... NT8E13RK *
OC48 DWDM 1557.36 REG/TX INTERFACE... NT8E13TK *
OC-48/STM16 LR SAW Rx Interface (SC). NT8E02DD *
STM1o IR 1310 Tributary I/F (SC)..... NTFW11CD *
STM1 Optical Carrier Assembly........ NTFW19BA *
External synchronisation interface
carrier.............................. NT7E19AA *
External Synchronisation Interface
(2 MHz).............................. NTFW27AA *
*** OPTICAL PATCH CORD 20M (SC-SC)... NT7E46FD *
*** OPTICAL PATCH CORD W/ MVOA 20M
(SC-SC).............................. NT7E47FD *
KIT, SC OPTICAL CONNECTOR. INITIAL
USE NTN401AA......................... NTN459SC *
*** FIBRE OPTIC CABLE ASSY STM1
DUPLEX SC-SC 20M..................... NTFW5753 *
TN-16X Regenerator Software Licence
(Release 7).......................... NTQJ93GG *
TN-16X Shared Protection Ring
Software Licence (Release 7)......... NTQJ93HG *
Extra Traffic on Rings on Licence.... NTQJ93TB *
OPC with tape drive.................. NT7E24BC *
PHOENIX SUPERSET CODE FOR REL 7...... NTFW97HA *
*** CNET BAY/BAY CABLE 5.0M.......... NT7E44JC *
TN-MS EC-16X Multi-user Licence...... NTQJ93CA *
TN-MS EC-16X Release 7 Licence....... NTQJ93AG *
TN-MS EC-16X Release 7 Standby
Licence.............................. NTQJ93BG *
FW TN-16X Rel 7 NTPS (CD-ROM)........ NTFW64AH *
1.3 ADVANCED OPTICS (DWDM)
Core
DWDM FILTER MODULE SHELF ASSY--4
POS--ETSI............................ NTCE88BA *
DWDM COUPLER 8W,MB/DR W/O VOA,SC..... NTCA10GC *
</TABLE>
- ------------------------
* The confidential portion has been omitted pursuant to a request for
confidential treatment and omitted
material has been filed separately with the commission.
107
<PAGE>
<TABLE>
<CAPTION>
VIATEL CIRCLE 1 CONTRACT
ANNEX C
SCHEDULE OF PRICES
SECTION E - FRANCE
LA DEFENSE - AMIENS R/A4 ISSUE 1.0
------------------------------------- ---------------------------------------------------------------------------------
ABBREVIATED DESCRIPTION CODE SELLING PRICE LA D-AMIENS R/A4 EXT PRICE
------------------------------------- -------------------------- --------------- --------------------- -------------
$US PERONNE $US
<S> <C> <C> <C> <C> <C>
DWDM COUPLER 8W,DB/MR W/O VOA,SC..... NTCA10HC *
TN-1X
Core
TN-1X Synchronous Access Multiplexer
Subrack.............................. 25GMU00750GWV *
Shelf Kit............................ 25SKM00750HFN *
TN-1X Installation Kit............... 25SKM00807ABL *
Local Craft Access Panel Type 1...... 25UEP00750GXB *
Service Interface Module Type 10
(Misc)............................... 25UJJ00750GXC *
Service Interface Module Type 40
(LCAP)............................... 25UJJ00750GWX *
Subrack Cover Kit.................... 25SKM00750HFL *
Rack Mounting Kit for ETSI........... 25SKM00019AAE *
Dummy Front Panel 1'................. 25RBN00021AAB *
Dummy SIA Panel 1'................... 25RBN00021AAA *
Power Supply Unit.................... 25UPW00750HAY *
Subrack Control Unit................. 25UMN00750GXD *
Payload Manager (mixed payload)...... NTKD10AA *
STM-1 G.957 L1.2 Optical Aggregate
Port Card (1550nm)................... 25UTM00750HWH *
STM-1 G.957 L-1.1, S1.1 Optical
Tributary Card (1'wide).............. NTKD11AA *
***Optical patchcord 20m FC-FC....... NT7E46BD *
Craft Access Terminal................ NTQJ09AA *
RS 232 Cable Assembly................ 25YCN00748AAA *
TN-1 CAT Release 12 Application
(3.5")............................... NTQJ35LA
TN-MS CA-1X Release 12 Licence....... NTQJ91DL
Netscape Windows95 (Fastrack Server
and Navigator)....................... NTQJ81BA *
TN-1X Release 8 Software Download
(from CAT)........................... NTQJ36HA
HP B132, 128Mbytes RAM, 2Gb HD, DAT,
CD, N.Hem............................ NTQJ01FA *
TN-MS EC-1 Release 12 (DAT).......... NTQJ30LA
Netscape for UNIX (Fastrack Server
and Navigator)....................... NTQJ81AA *
TN-1X Release 8 software download
(from EC)............................ NTQJ31HA
TN-1C Release 3 Software kit (disk &
tape)................................ NTFT81CA *
TN-MS EC-1 Release 12 Licence for
TN-1X................................ NTQJ91AL *
TN-MS EC-1 Release 12 Standby
Licence.............................. NTQJ91BL *
TN-MS EC-1 Multi-user Licence........ NTQJ91CA *
X terminal software on DAT........... NTQJ05JB *
TN-1X Rel 8 NTPs (CD-ROM MAC)........ 32HSC00456VEC *
TN-1C
Core
TN-1C 8x2/16x2 turbo ADM (1550nm
L1.2)................................ NTFT52BI *
AC/DC Power Unit..................... NTFT21AA *
12V Battery.......................... NTFT24AA *
***BT43/5F & 3002 cable assy 20m..... 32YCN00750CAA *
***Optical patchcord 20m FC-FC....... NT7E46BD *
TN-MS EC-1 Release 12 Licence for
TN-1C................................ NTQJ91FL *
Craft Access Terminal................ NTQJ09AA *
CAT Cable Assembly................... NTFT15AC *
TN-1C Release 3 Software kit (disk &
tape)................................ NTFT81CA *
TN-1 CAT Release 12 Application
(3.5")............................... NTQJ35LA
Netscape Windows95 (Fastrack Server
and Navigator)....................... NTQJ81BA *
TN-1C Release 3 handbook CD-ROM...... NTFT66CA *
1.4 DXC *
256 Port Cross Connect (MSH84)....... MSH84
STM-1 Optical card
16 x 2Mbit/s Port Unit
MV-36 Element controller............. MV-36
Managed Object Agent (MOA)
1.5 TN-MS INM *
Hardware
HP C200 workstation, north & south
hemisphere........................... NTQJ01GC
NRM Release 6 Software and
Handbooks............................ NTQJ12FA
NRM Release 6 Feature Profile Tape--
Core + IM + PM + CM.................. NTQJ10FK
TN-MS NRM (Rel6) Alarm surveillance
Licence.............................. NTQJ90AF
TN-MS NRM (Rel6) Electronic Software
Delivery Licence..................... NTQJ90BF
TN-MS NRM (Rel6) Inventory Manager
Licence.............................. NTQJ90DF
TN-MS NRM (Rel6) Perf. Mon.
Consolidation Licence................ NTQJ90EF
TN-MS NRM (Rel6) Connection
Management Licence................... NTQJ90FF
TN-MS NRM (Rel6) Software Management
User Guide........................... NTQJ19FT
TN-MS NRM (Rel6) Inventory Management
User Guide........................... NTQJ19FX
TN-MS NRM (Rel6) Performance
Management User Guide................ NTQJ19FW
TN-MS NRM (Rel6) Connection
Management User Guide................ NTQJ19FV
Router 2501 OSI...................... NTJM01BA
Router 2514 OSI...................... NTJM01KA
DCN RConfig "P" 2514 ent. 0 tunnels,
Ser: 2 L2,0 L1 CPC Allocated:
A0741950............................. NTJM9914
DCN RConfig "P" 2514 ent. 1 tunnel,
Ser: 1 L2,1 L1 CPC Allocated:
A0741941............................. NTJM9912
HS modem SP-1-AR,AC.................. NTJM01SA
Shelf Cantilever 19in mounting....... P0878672
</TABLE>
- ------------------------
* The confidential portion has been omitted pursuant to a request for
confidential treatment and omitted
material has been filed separately with the commission.
108
<PAGE>
<TABLE>
<CAPTION>
VIATEL CIRCLE 1 CONTRACT
ANNEX C
SCHEDULE OF PRICES
SECTION E - FRANCE
LA DEFENSE - AMIENS R/A4 ISSUE 1.0
------------------------------------- ---------------------------------------------------------------------------------
ABBREVIATED DESCRIPTION CODE SELLING PRICE LA D-AMIENS R/A4 EXT PRICE
------------------------------------- -------------------------- --------------- --------------------- -------------
$US PERONNE $US
<S> <C> <C> <C> <C> <C>
Transceiver 10BaseT.................. NTJM01VA
Ethernet 10BaseT Transceiver......... A0383333
Baystack 101 10baseT hub 12 port RJ45
250VAC............................... NTJM02PA
***Cable Assy LAN RJ45--RJ45 h/e..... 32YCN00727AFA
***Ethernet kit for OPC hub
(20m,OC-48).......................... NT7E44JE
1.6 NETWORK SYNCHRONISATION *
DCD-521C
DCD-Cs ETSI Standalone Cesium PRC.... 990-43100-02
DCD-LPR Shelf GPS Applications....... 990-44100-12
GPS Timing Kit E1 (Rubidium or
Quartz).............................. 990-44140-14
Blank Unit LPR....................... 090-44198-01
LOU-2 Dual oscillator................ 090-44145-02
DCD-521/C ETSI Shelf Master/
Expansion............................ 990-44210-01
MRC-EA/Input card 2MHz/2Mb/s, 4
inputs............................... 090-44010-06
TNCE Clock card rubidium............. 090-44017-02
TNC Clock card transit node OCXO..... 090-44020-02
TO-EA Output card 2MHz/2Mb/s 10
outputs.............................. 090-44029-01
MIS Maint i'f
analysis/config/remote............... 990-44018-14
Blank Panel 1 TO slot wide........... 074-00208-01
Timing Input Module MRC SMB.......... 990-45107-02
Timing Output Module SMB,1:1 prot.... 990-45105-07
1.7 EQUIPMENT PRACTICE
Mechanical bay assy ETSI (no
expansion sh)........................ NTCE89AA * * *
NTE-STM16 Rack (2200 x 600 x 300)--
cost reduced......................... NTFW70EA *
TN-16X Installation Kit.............. 25SKM00807ABM *
REGEN Rack Assy...................... NTFW71AA *
Rack side cover L/H u/o NTFW70AA..... P0725173 *
Rack side cover R/H u/o NTFW70AA..... P0725175 *
Mechanical assembly, rack, 42U....... A0726263
Distribution block 8 way left hand
cable entry.......................... A0729317
Distribution block 8 way right hand
cable entry.......................... A0729318
ETSI Rack, 220cm, without side
panels............................... NTKD70AA *
NT ETSI Rack Standard Inst.Kit....... 25SKM00807ABE *
ETSI Rack 48V DC Distrib Panel with
Rack Alarm Unit...................... 25SKM00807AAN *
1.8 ADDITIONAL ITEMS
OC-192 REL 1.4 SUPERSET CUSTOMER
LOADS................................ ***PLM_TN-16X_NC_1
AC POWER CABLE ASSEMBLY.............. PLM_SOURCE_LOCALLY *
***CABLE ASSY, RJ45 CROSSOVER........ 32YCN01094AFA *
*** OPTICAL PATCHCORD 20M SC-SC...... PLM_ADVANCED OPTICS_NC_3 *
TOTAL EXTENDED EQUIPMENT PRICE....... *
2.0 INSTALLATION & COMMISSIONING * * * *
Installation Materials............... *
-----
TOTAL EXTENDED PRICE *
-----
-----
</TABLE>
- ------------------------
* The confidential portion has been omitted pursuant to a request for
confidential treatment and omitted
material has been filed separately with the commission.
109
<PAGE>
<TABLE>
<CAPTION>
VIATEL CIRCLE 1 CONTRACT
ANNEX C
SCHEDULE OF PRICES
SECTION E - FRANCE
LA DEFENSE - AMIENS R/A2 ISSUE 1.0
------------------------------------- ----------------------------------------------------------------------------------
ABBREVIATED DESCRIPTION CODE SELLING PRICE LA DEF-AMIENS R/A2 EXT PRICE
------------------------------------- ------------------------- --------------- ----------------------- -------------
$US $US
<S> <C> <C> <C> <C> <C>
1.0 TRANSMISSION EQUIPMENT
1.1 TN-16 4F
Core
OC192 SC060 SHELF CONTROLLER......... NTCA41BA * * *
MAINTENANCE INTERFACE................ NTCA42AA * * *
*** CABLE ASSY (MODEM ACCESS)........ NTCC8930 * * *
MESSAGE TRANSFER CARD................ NTCA48AA * * *
BREAKER MODULE....................... NTCA40AA * * *
COMMON EQUIPMENT FILLER CARD (1 IN.). NTCA59AA * * *
PARTITIONED OPC CONTROLLER........... NTCA50AA *
*** CA ASSY (10 BASE T CROSSOVER).... NT7E44KC *
PARTITIONED OPC STORAGE MODULE....... NTCA51AA *
OPC FLASH CARTRIDGE.................. NTCA53AA *
PARTITIONED OPC IO MODULE............ NTCA52AA *
*** SM OPTICAL PATCHCORD 20M (66FT)
(SC-TUNED) SEE A06................... NT7E46HD * * *
*** SM OPTICAL PATCHCORD 20M (66FT)
(SC-TUNED) W/MVOA.................... NT7E47HD * * *
TRANSPORT SHELF FILLER CARD.......... NTCA49AA * * *
TRANSPORT SHELF SWITCH FILLER CARD... NTCA49AB * * *
OC-192 OPTICAL AMPLIFIER W/ SERVICE
CHANNEL (SC)......................... NTCA11AC * * *
OC-192 OPTICAL AMPLIFIER (SC)........ NTCA11BC *
1625NM OPTICAL SERVICE CHANNEL (SC) NTCA11CC *
1550/1625NM WDM COUPLER (SC)......... NTCC13AC *
MOR RTU.............................. NTCA62DA * * *
1.2 TN-16X
Core
STM16 LTE/ADM/RING SHELF-- COST
REDUCED.............................. NTFW50EA *
SH PROCESSOR FOR SDH (DCC HUBBING)... NT7E20GC *
SH PROCESSOR(ETHERNET,SYNC MSG 24M).. NT7E20KA *
Maintenance Interface Unit........... NT7E23AA *
TN-16X Regenerator Subrack Kit....... NTFW51AA *
OC-48/STM-16 Ring Demux.............. NT8E06AB *
OC48 DWDM 1528.77 NM RING TX......... NT8E11DQ *
OC48 DWDM 1530.33 RING TRANSMITTER... NT8E11FQ *
OC48 WDM 1533.47 RING TRANSMITTER.... NT8E11KQ *
OC48 WDM 1535.04 RING TRANSMITTER.... NT8E11MQ *
OC48 DWDM 1550.92 NM RING
TRANSMITTER.......................... NT8E11KR *
OC48 DWDM 1552.52 RING TRANSMITTER... NT8E11MR *
OC48 DWDM 1555.75 NM RING
TRANSMITTER.......................... NT8E11RR *
OC48 DWDM 1557.36 RING TRANSMITTER... NT8E11TR *
OC48 DWDM 1528.77 NM REGEN........... NT8E13DJ *
OC48 DWDM 1530.33 REG/TX INTERFACE... NT8E13FJ *
OC48 DWDM 1533.47 REG/TX INTERFACE... NT8E13KJ *
OC48 DWDM 1535.04 REG/TX INTERFACE... NT8E13MJ *
OC48 DWDM 1550.92 REG/TX INTERFACE... NT8E13KK *
OC48 DWDM 1552.52 REG/TX INTERFACE... NT8E13MK *
OC48 DWDM 1555.75 REG/TX INTERFACE... NT8E13RK *
OC48 DWDM 1557.36 REG/TX INTERFACE... NT8E13TK *
OC-48/STM16 LR SAW Rx Interface (SC). NT8E02DD *
STM1o IR 1310 Tributary I/F (SC)..... NTFW11CD *
STM1 Optical Carrier Assembly........ NTFW19BA *
External synchronisation interface
carrier.............................. NT7E19AA *
External Synchronisation Interface
(2 MHz).............................. NTFW27AA *
*** OPTICAL PATCH CORD 20M (SC-SC)... NT7E46FD *
*** OPTICAL PATCH CORD W/ MVOA 20M
(SC-SC).............................. NT7E47FD *
KIT, SC OPTICAL CONNECTOR. INITIAL
USE NTN401AA......................... NTN459SC *
*** FIBRE OPTIC CABLE ASSY STM1
DUPLEX SC-SC 20M..................... NTFW5753 *
TN-16X Regenerator Software Licence
(Release 7).......................... NTQJ93GG *
TN-16X Shared Protection Ring
Software Licence (Release 7)......... NTQJ93HG *
Extra Traffic on Rings on Licence.... NTQJ93TB *
OPC with tape drive.................. NT7E24BC *
PHOENIX SUPERSET CODE FOR REL 7...... NTFW97HA *
*** CNET BAY/BAY CABLE 5.0M.......... NT7E44JC *
TN-MS EC-16X Multi-user Licence...... NTQJ93CA *
TN-MS EC-16X Release 7 Licence....... NTQJ93AG *
TN-MS EC-16X Release 7 Standby
Licence.............................. NTQJ93BG *
FW TN-16X Rel 7 NTPS (CD-ROM)........ NTFW64AH *
1.3 ADVANCED OPTICS (DWDM)
Core
DWDM FILTER MODULE SHELF ASSY--4
POS--ETSI............................ NTCE88BA *
DWDM COUPLER 8W,MB/DR W/O VOA,SC..... NTCA10GC *
DWDM COUPLER 8W,DB/MR W/O VOA,SC..... NTCA10HC *
</TABLE>
- ------------------------
* The confidential portion has been omitted pursuant to a request for
confidential treatment and omitted
material has been filed separately with the commission.
110
<PAGE>
<TABLE>
<CAPTION>
VIATEL CIRCLE 1 CONTRACT
ANNEX C
SCHEDULE OF PRICES
SECTION E - FRANCE
LA DEFENSE - AMIENS R/A2 ISSUE 1.0
------------------------------------- ----------------------------------------------------------------------------------
ABBREVIATED DESCRIPTION CODE SELLING PRICE LA DEF-AMIENS R/A2 EXT PRICE
------------------------------------- ------------------------- --------------- ----------------------- -------------
$US $US
<S> <C> <C> <C> <C> <C>
TN-1X
Core
TN-1X Synchronous Access Multiplexer
Subrack.............................. 25GMU00750GWV *
Shelf Kit............................ 25SKM00750HFN *
TN-1X Installation Kit............... 25SKM00807ABL *
Local Craft Access Panel Type 1...... 25UEP00750GXB *
Service Interface Module Type 10
(Misc)............................... 25UJJ00750GXC *
Service Interface Module Type 40
(LCAP)............................... 25UJJ00750GWX *
Subrack Cover Kit.................... 25SKM00750HFL *
Rack Mounting Kit for ETSI........... 25SKM00019AAE *
Dummy Front Panel 1'................. 25RBN00021AAB *
Dummy SIA Panel 1'................... 25RBN00021AAA *
Power Supply Unit.................... 25UPW00750HAY *
Subrack Control Unit................. 25UMN00750GXD *
Payload Manager (mixed payload)...... NTKD10AA *
STM-1 G.957 L1.2 Optical Aggregate
Port Card (1550nm)................... 25UTM00750HWH *
STM-1 G.957 L-1.1, S1.1 Optical
Tributary Card (1'wide).............. NTKD11AA *
***Optical patchcord 20m FC-FC....... NT7E46BD *
Craft Access Terminal................ NTQJ09AA *
RS 232 Cable Assembly................ 25YCN00748AAA *
TN-1 CAT Release 12 Application
(3.5")............................... NTQJ35LA
TN-MS CA-1X Release 12 Licence....... NTQJ91DL
Netscape Windows95 (Fastrack Server
and Navigator)....................... NTQJ81BA *
TN-1X Release 8 Software Download
(from CAT)........................... NTQJ36HA
HP B132, 128Mbytes RAM, 2Gb HD, DAT,
CD, N.Hem............................ NTQJ01FA *
TN-MS EC-1 Release 12 (DAT).......... NTQJ30LA
Netscape for UNIX (Fastrack Server
and Navigator)....................... NTQJ81AA *
TN-1X Release 8 software download
(from EC)............................ NTQJ31HA
TN-1C Release 3 Software kit (disk &
tape)................................ NTFT81CA *
TN-MS EC-1 Release 12 Licence for
TN-1X................................ NTQJ91AL *
TN-MS EC-1 Release 12 Standby
Licence.............................. NTQJ91BL *
TN-MS EC-1 Multi-user Licence........ NTQJ91CA *
X terminal software on DAT........... NTQJ05JB *
TN-1X Rel 8 NTPs (CD-ROM MAC)........ 32HSC00456VEC *
TN-1C
Core
TN-1C 8x2/16x2 turbo ADM (1550nm
L1.2)................................ NTFT52BI *
AC/DC Power Unit..................... NTFT21AA *
12V Battery NTFT24AA *
***BT43/5F & 3002 cable assy 20m..... 32YCN00750CAA *
***Optical patchcord 20m FC-FC....... NT7E46BD *
TN-MS EC-1 Release 12 Licence for
TN-1C................................ NTQJ91FL *
Craft Access Terminal................ NTQJ09AA *
CAT Cable Assembly................... NTFT15AC *
TN-1C Release 3 Software kit (disk &
tape)................................ NTFT81CA *
TN-1 CAT Release 12 Application
(3.5")............................... NTQJ35LA
Netscape Windows95 (Fastrack Server
and Navigator)....................... NTQJ81BA *
TN-1C Release 3 handbook CD-ROM...... NTFT66CA *
1.4 DXC *
256 Port Cross Connect (MSH84) MSH84
STM-1 Optical card
16 x 2Mbit/s Port Unit
MV-36 Element controller............. MV-36
Managed Object Agent (MOA)
1.5 TN-MS INM *
Hardware
HP C200 workstation, north & south
hemisphere........................... NTQJ01GC
NRM Release 6 Software and
Handbooks............................ NTQJ12FA
NRM Release 6 Feature Profile Tape--
Core + IM + PM + CM.................. NTQJ10FK
TN-MS NRM (Rel6) Alarm surveillance
Licence.............................. NTQJ90AF
TN-MS NRM (Rel6) Electronic Software
Delivery Licence..................... NTQJ90BF
TN-MS NRM (Rel6) Inventory Manager
Licence.............................. NTQJ90DF
TN-MS NRM (Rel6) Perf. Mon.
Consolidation Licence................ NTQJ90EF
TN-MS NRM (Rel6) Connection
Management Licence................... NTQJ90FF
TN-MS NRM (Rel6) Software Management
User Guide........................... NTQJ19FT
TN-MS NRM (Rel6) Inventory Management
User Guide........................... NTQJ19FX
TN-MS NRM (Rel6) Performance
Management User Guide................ NTQJ19FW
TN-MS NRM (Rel6) Connection
Management User Guide................ NTQJ19FV
Router 2501 OSI...................... NTJM01BA
Router 2514 OSI...................... NTJM01KA
DCN RConfig "P" 2514 ent. 0 tunnels,
Ser: 2 L2,0 L1 CPC Allocated:
A0741950............................. NTJM9914
DCN RConfig "P" 2514 ent. 1 tunnel,
Ser: 1 L2,1 L1 CPC Allocated:
A0741941............................. NTJM9912
HS modem SP-1-AR,AC.................. NTJM01SA
Shelf Cantilever 19in mounting....... P0878672
Transceiver 10BaseT.................. NTJM01VA
Ethernet 10BaseT Transceiver......... A0383333
Baystack 101 10baseT hub 12 port
RJ45 250VAC.......................... NTJM02PA
***Cable Assy LAN RJ45--RJ45 h/e..... 32YCN00727AFA
</TABLE>
- ------------------------
* The confidential portion has been omitted pursuant to a request for
confidential treatment and omitted
material has been filed separately with the commission.
111
<PAGE>
<TABLE>
<CAPTION>
VIATEL CIRCLE 1 CONTRACT
ANNEX C
SCHEDULE OF PRICES
SECTION E - FRANCE
LA DEFENSE - AMIENS R/A2 ISSUE 1.0
------------------------------------- ----------------------------------------------------------------------------------
ABBREVIATED DESCRIPTION CODE SELLING PRICE LA DEF-AMIENS R/A2 EXT PRICE
------------------------------------- ------------------------- --------------- ----------------------- -------------
$US $US
<S> <C> <C> <C> <C> <C>
***Ethernet kit for OPC hub
(20m,OC-48).......................... NT7E44JE
1.6 NETWORK SYNCHRONISATION *
DCD-521C
DCD-Cs ETSI Standalone Cesium PRC.... 990-43100-02
DCD-LPR Shelf GPS Applications....... 990-44100-12
GPS Timing Kit E1 (Rubidium or
Quartz).............................. 990-44140-14
Blank Unit LPR....................... 090-44198-01
LOU-2 Dual oscillator................ 090-44145-02
DCD-521/C ETSI Shelf Master/
Expansion............................ 990-44210-01
MRC-EA/Input card 2MHz/2Mb/s, 4
inputs............................... 090-44010-06
TNCE Clock card rubidium............. 090-44017-02
TNC Clock card transit node OCXO..... 090-44020-02
TO-EA Output card 2MHz/2Mb/s 10
outputs.............................. 090-44029-01
MIS Maint i'f
analysis/config/remote............... 990-44018-14
Blank Panel 1 TO slot wide........... 074-00208-01
Timing Input Module MRC SMB.......... 990-45107-02
Timing Output Module SMB,1:1 prot.... 990-45105-07
1.7 EQUIPMENT PRACTICE
Mechanical bay assy ETSI (no
expansion sh)........................ NTCE89AA * * *
NTE-STM16 Rack (2200 x 600 x 300)--
cost reduced......................... NTFW70EA *
TN-16X Installation Kit.............. 25SKM00807ABM *
REGEN Rack Assy...................... NTFW71AA *
Rack side cover L/H u/o NTFW70AA..... P0725173 *
Rack side cover R/H u/o NTFW70AA..... P0725175 *
Mechanical assembly, rack, 42U....... A0726263
Distribution block 8 way left hand
cable entry.......................... A0729317
Distribution block 8 way right hand
cable entry.......................... A0729318
ETSI Rack, 220cm, without side
panels............................... NTKD70AA *
NT ETSI Rack Standard Inst.Kit....... 25SKM00807ABE *
ETSI Rack 48V DC Distrib Panel with
Rack Alarm Unit...................... 25SKM00807AAN *
1.8 ADDITIONAL ITEMS
OC-192 REL 1.4 SUPERSET CUSTOMER
LOADS................................ ***PLM_TN-16X_NC_1
AC Power Cable Assembly.............. PLM_Source_locally *
***Cable Assy, RJ45 crossover........ 32YCN01094AFA *
*** OPTICAL PATCHCORD 20M SC-SC...... PLM_Advanced Optics_NC_3 *
TOTAL EXTENDED EQUIPMENT PRICE....... *
2.0 INSTALLATION & COMMISSIONING * * *
Installation Materials............... *
-----
TOTAL EXTENDED PRICE................. *
-----
-----
</TABLE>
- ------------------------
* The confidential portion has been omitted pursuant to a request for
confidential treatment and omitted
material has been filed separately with the commission.
112
<PAGE>
<TABLE>
<CAPTION>
VIATEL CIRCLE 1 CONTRACT
ANNEX C
SCHEDULE OF PRICES
SECTION E - FRANCE
PARIS-LA DEFENSE ISSUE 1.0
-------------------------------------- --------------------------------------------------------------------------------
ABBREVIATED DESCRIPTION CODE SELLING PRICE PARIS - LA DEFENSE EXT PRICE
-------------------------------------- ------------------------- --------------- --------------------- -------------
$US $US
<S> <C> <C> <C> <C> <C>
1.0 TRANSMISSION EQUIPMENT
1.1 TN-16 4F
Core
OC192 SC060 SHELF CONTROLLER.......... NTCA41BA * * *
MAINTENANCE INTERFACE................. NTCA42AA * * *
*** CABLE ASSY (MODEM ACCESS)......... NTCC8930 * * *
MESSAGE TRANSFER CARD................. NTCA48AA * * *
BREAKER MODULE........................ NTCA40AA * * *
COMMON EQUIPMENT FILLER CARD (1
IN.).................................. NTCA59AA * * *
PARTITIONED OPC CONTROLLER............ NTCA50AA *
*** CA ASSY (10 BASE T CROSSOVER)..... NT7E44KC *
PARTITIONED OPC STORAGE MODULE........ NTCA51AA *
OPC FLASH CARTRIDGE................... NTCA53AA *
PARTITIONED OPC IO MODULE............. NTCA52AA *
*** SM OPTICAL PATCHCORD 20M (66FT)
(SC-TUNED) SEE A06.................... NT7E46HD * * *
*** SM OPTICAL PATCHCORD 20M (66FT)
(SC-TUNED) W/MVOA..................... NT7E47HD * * *
TRANSPORT SHELF FILLER CARD........... NTCA49AA * * *
TRANSPORT SHELF SWITCH FILLER CARD.... NTCA49AB * * *
OC-192 OPTICAL AMPLIFIER W/ SERVICE
CHANNEL (SC).......................... NTCA11AC * * *
OC-192 OPTICAL AMPLIFIER (SC)......... NTCA11BC *
1625NM OPTICAL SERVICE CHANNEL (SC)... NTCA11CC *
1550/1625NM WDM COUPLER (SC).......... NTCC13AC *
MOR RTU............................... NTCA62DA * * *
1.2 TN-16X
Core
STM16 LTE/ADM/RING SHELF--COST
REDUCED............................... NTFW50EA * * *
SH PROCESSOR FOR SDH (DCC HUBBING).... NT7E20GC * * *
SH PROCESSOR(ETHERNET,SYNC MSG 24M)... NT7E20KA *
Maintenance Interface Unit............ NT7E23AA * * *
TN-16X Regenerator Subrack Kit........ NTFW51AA *
OC-48/STM-16 Ring Demux............... NT8E06AB * * *
OC48 DWDM 1528.77 NM RING TX.......... NT8E11DQ * * *
OC48 DWDM 1530.33 RING TRANSMITTER.... NT8E11FQ * * *
OC48 WDM 1533.47 RING TRANSMITTER..... NT8E11KQ * * *
OC48 WDM 1535.04 RING TRANSMITTER..... NT8E11MQ * * *
OC48 DWDM 1550.92 NM RING
TRANSMITTER........................... NT8E11KR * * *
OC48 DWDM 1552.52 RING TRANSMITTER.... NT8E11MR * * *
OC48 DWDM 1555.75 NM RING
TRANSMITTER........................... NT8E11RR * * *
OC48 DWDM 1557.36 RING TRANSMITTER.... NT8E11TR * * *
OC48 DWDM 1528.77 NM REGEN............ NT8E13DJ *
OC48 DWDM 1530.33 REG/TX INTERFACE.... NT8E13FJ *
OC48 DWDM 1533.47 REG/TX INTERFACE.... NT8E13KJ *
OC48 DWDM 1535.04 REG/TX INTERFACE.... NT8E13MJ *
OC48 DWDM 1550.92 REG/TX INTERFACE.... NT8E13KK *
OC48 DWDM 1552.52 REG/TX INTERFACE.... NT8E13MK *
OC48 DWDM 1555.75 REG/TX INTERFACE.... NT8E13RK *
OC48 DWDM 1557.36 REG/TX INTERFACE.... NT8E13TK *
OC-48/STM16 LR SAW Rx Interface (SC).. NT8E02DD * * *
STM1o IR 1310 Tributary I/F (SC)...... NTFW11CD * * *
STM1 Optical Carrier Assembly......... NTFW19BA * * *
External synchronisation interface
carrier............................... NT7E19AA * * *
External Synchronisation Interface
(2 MHz)............................... NTFW27AA * * *
*** OPTICAL PATCH CORD 20M (SC-SC).... NT7E46FD * * *
*** OPTICAL PATCH CORD W/MVOA 20M
(SC-SC)............................... NT7E47FD * * *
KIT, SC OPTICAL CONNECTOR. INITIAL USE
NTN401AA.............................. NTN459SC * * *
*** FIBRE OPTIC CABLE ASSY STM1 DUPLEX
SC-SC 20M............................. NTFW5753 * * *
TN-16X Regenerator Software Licence
(Release 7)........................... NTQJ93GG *
TN-16X Shared Protection Ring Software
Licence (Release 7)................... NTQJ93HG * * *
Extra Traffic on Rings on Licence..... NTQJ93TB * * *
OPC with tape drive................... NT7E24BC *
PHOENIX SUPERSET CODE FOR REL 7....... NTFW97HA *
*** CNET BAY/BAY CABLE 5.0M........... NT7E44JC *
TN-MS EC-16X Multi-user Licence....... NTQJ93CA *
TN-MS EC-16X Release 7 Licence........ NTQJ93AG *
TN-MS EC-16X Release 7 Standby
Licence............................... NTQJ93BG *
FW TN-16X Rel 7 NTPS (CD-ROM)......... NTFW64AH *
1.3 ADVANCED OPTICS (DWDM)
Core
DWDM FILTER MODULE SHELF ASSY--4
POS--ETSI............................. NTCE88BA * * *
DWDM COUPLER 8W,MB/DR W/O VOA,SC...... NTCA10GC * * *
DWDM COUPLER 8W,DB/MR W/O VOA,SC...... NTCA10HC * * *
</TABLE>
- ------------------------
* The confidential portion has been omitted pursuant to a request for
confidential treatment and omitted
material has been filed separately with the commission.
113
<PAGE>
<TABLE>
<CAPTION>
VIATEL CIRCLE 1 CONTRACT
ANNEX C
SCHEDULE OF PRICES
SECTION E - FRANCE
PARIS-LA DEFENSE ISSUE 1.0
-------------------------------------- --------------------------------------------------------------------------------
ABBREVIATED DESCRIPTION CODE SELLING PRICE PARIS - LA DEFENSE EXT PRICE
-------------------------------------- ------------------------- --------------- --------------------- -------------
$US $US
<S> <C> <C> <C> <C> <C>
TN-1X
CORE
TN-1X SYNCHRONOUS ACCESS MULTIPLEXER
SUBRACK............................... 25GMU00750GWV *
SHELF KIT............................. 25SKM00750HFN *
TN-1X INSTALLATION KIT................ 25SKM00807ABL *
LOCAL CRAFT ACCESS PANEL TYPE 1....... 25UEP00750GXB *
SERVICE INTERFACE MODULE TYPE 10
(MISC)................................ 25UJJ00750GXC *
SERVICE INTERFACE MODULE TYPE 40
(LCAP)................................ 25UJJ00750GWX *
SUBRACK COVER KIT..................... 25SKM00750HFL *
RACK MOUNTING KIT FOR ETSI............ 25SKM00019AAE *
DUMMY FRONT PANEL 1'.................. 25RBN00021AAB *
DUMMY SIA PANEL 1'.................... 25RBN00021AAA *
POWER SUPPLY UNIT..................... 25UPW00750HAY *
SUBRACK CONTROL UNIT.................. 25UMN00750GXD *
PAYLOAD MANAGER (MIXED PAYLOAD)....... NTKD10AA *
STM-1 G.957 L1.2 OPTICAL AGGREGATE
PORT CARD (1550NM).................... 25UTM00750HWH *
STM-1 G.957 L-1.1, S1.1 OPTICAL
TRIBUTARY CARD (1'WIDE)............... NTKD11AA *
***OPTICAL PATCHCORD 20M FC-FC........ NT7E46BD *
CRAFT ACCESS TERMINAL................. NTQJ09AA *
RS 232 CABLE ASSEMBLY................. 25YCN00748AAA *
TN-1 CAT RELEASE 12 APPLICATION
(3.5")................................ NTQJ35LA
TN-MS CA-1X RELEASE 12 LICENCE........ NTQJ91DL
NETSCAPE WINDOWS95 (FASTRACK SERVER
AND NAVIGATOR)........................ NTQJ81BA *
TN-1X RELEASE 8 SOFTWARE DOWNLOAD
(FROM CAT)............................ NTQJ36HA
HP B132, 128MBYTES RAM, 2GB HD, DAT,
CD, N.HEM............................. NTQJ01FA *
TN-MS EC-1 RELEASE 12 (DAT)........... NTQJ30LA
NETSCAPE FOR UNIX (FASTRACK SERVER AND
NAVIGATOR)............................ NTQJ81AA *
TN-1X RELEASE 8 SOFTWARE DOWNLOAD
(FROM EC)............................. NTQJ31HA
TN-1C RELEASE 3 SOFTWARE KIT (DISK &
TAPE)................................. NTFT81CA *
TN-MS EC-1 RELEASE 12 LICENCE FOR
TN-1X................................. NTQJ91AL *
TN-MS EC-1 RELEASE 12 STANDBY
LICENCE............................... NTQJ91BL *
TN-MS EC-1 MULTI-USER LICENCE......... NTQJ91CA *
X TERMINAL SOFTWARE ON DAT............ NTQJ05JB *
TN-1X REL 8 NTPS (CD-ROM MAC)......... 32HSC00456VEC *
TN-1C
CORE
TN-1C 8X2/16X2 TURBO ADM
(1550NM L1.2)......................... NTFT52BI *
AC/DC POWER UNIT...................... NTFT21AA *
12V BATTERY........................... NTFT24AA *
***BT43/5F & 3002 CABLE ASSY 20M...... 32YCN00750CAA *
***OPTICAL PATCHCORD 20M FC-FC........ NT7E46BD *
TN-MS EC-1 RELEASE 12 LICENCE FOR
TN-1C................................. NTQJ91FL *
CRAFT ACCESS TERMINAL................. NTQJ09AA *
CAT CABLE ASSEMBLY.................... NTFT15AC *
TN-1C RELEASE 3 SOFTWARE KIT (DISK &
TAPE)................................. NTFT81CA *
TN-1 CAT RELEASE 12 APPLICATION
(3.5")................................ NTQJ35LA
NETSCAPE WINDOWS95 (FASTRACK SERVER
AND NAVIGATOR)........................ NTQJ81BA *
TN-1C RELEASE 3 HANDBOOK CD-ROM....... NTFT66CA *
1.4 DXC * * *
256 Port Cross Connect (MSH84)........ MSH84 *
STM-1 Optical card.................... * *
16 x 2Mbit/s Port Unit................ * *
MV-36 Element controller.............. MV-36
Managed Object Agent (MOA)
1.5 TN-MS INM *
Hardware
HP C200 workstation, north & south
hemisphere............................ NTQJ01GC
NRM Release 6 Software and Handbooks.. NTQJ12FA
NRM Release 6 Feature Profile Tape--
Core + IM + PM + CM................... NTQJ10FK
TN-MS NRM (Rel6) Alarm surveillance
Licence............................... NTQJ90AF
TN-MS NRM (Rel6) Electronic Software
Delivery Licence...................... NTQJ90BF
TN-MS NRM (Rel6) Inventory Manager
Licence............................... NTQJ90DF
TN-MS NRM (Rel6) Perf. Mon.
Consolidation Licence................. NTQJ90EF
TN-MS NRM (Rel6) Connection Management
Licence............................... NTQJ90FF
TN-MS NRM (Rel6) Software Management
User Guide............................ NTQJ19FT
TN-MS NRM (Rel6) Inventory Management
User Guide............................ NTQJ19FX
TN-MS NRM (Rel6) Performance
Management User Guide................. NTQJ19FW
TN-MS NRM (Rel6) Connection Management
User Guide............................ NTQJ19FV
Router 2501 OSI....................... NTJM01BA
Router 2514 OSI....................... NTJM01KA
DCN RConfig "P" 2514 ent. 0 tunnels,
Ser: 2 L2,0 L1 CPC Allocated:
A0741950.............................. NTJM9914
DCN RConfig "P" 2514 ent. 1 tunnel,
Ser: 1 L2,1 L1 CPC Allocated:
A0741941.............................. NTJM9912
HS modem SP-1-AR,AC................... NTJM01SA
Shelf Cantilever 19in mounting........ P0878672
Transceiver 10BaseT................... NTJM01VA
Ethernet 10BaseT Transceiver.......... A0383333
Baystack 101 10baseT hub 12 port
RJ45 250VAC........................... NTJM02PA
***Cable Assy LAN RJ45--RJ45 h/e...... 32YCN00727AFA
</TABLE>
- ------------------------
* The confidential portion has been omitted pursuant to a request for
confidential treatment and omitted
material has been filed separately with the commission.
114
<PAGE>
<TABLE>
<CAPTION>
VIATEL CIRCLE 1 CONTRACT
ANNEX C
SCHEDULE OF PRICES
SECTION E - FRANCE
PARIS-LA DEFENSE ISSUE 1.0
-------------------------------------- --------------------------------------------------------------------------------
ABBREVIATED DESCRIPTION CODE SELLING PRICE PARIS - LA DEFENSE EXT PRICE
-------------------------------------- ------------------------- --------------- --------------------- -------------
$US $US
<S> <C> <C> <C> <C> <C>
***Ethernet kit for OPC hub
(20m,OC-48)........................... NT7E44JE
1.6 NETWORK SYNCHRONISATION *
DCD-521C
DCD-Cs ETSI Standalone Cesium PRC..... 990-43100-02
DCD-LPR Shelf GPS Applications........ 990-44100-12
GPS Timing Kit E1 (Rubidium or
Quartz)............................... 990-44140-14
Blank Unit LPR........................ 090-44198-01
LOU-2 Dual oscillator................. 090-44145-02
DCD-521/C ETSI Shelf
Master/Expansion...................... 990-44210-01
MRC-EA/Input card 2MHz/2Mb/s, 4
inputs................................ 090-44010-06
TNCE Clock card rubidium.............. 090-44017-02
TNC Clock card transit node OCXO...... 090-44020-02
TO-EA Output card 2MHz/2Mb/s 10
outputs............................... 090-44029-01
MIS Maint i'f
analysis/config/remote................ 990-44018-14
Blank Panel 1 TO slot wide............ 074-00208-01
Timing Input Module MRC SMB........... 990-45107-02
Timing Output Module SMB,1:1 prot..... 990-45105-07
1.7 EQUIPMENT PRACTICE
Mechanical bay assy ETSI (no expansion
sh)................................... NTCE89AA * * *
NTE-STM16 Rack (2200 x 600 x 300)--
cost reduced.......................... NTFW70EA * * *
TN-16X Installation Kit............... 25SKM00807ABM * * *
REGEN Rack Assy....................... NTFW71AA *
Rack side cover L/H u/o NTFW70AA...... P0725173 * * *
Rack side cover R/H u/o NTFW70AA...... P0725175 * * *
Mechanical assembly, rack, 42U........ A0726263
Distribution block 8 way left hand
cable entry........................... A0729317
Distribution block 8 way right hand
cable entry........................... A0729318
ETSI Rack, 220cm, without side
panels................................ NTKD70AA *
NT ETSI Rack Standard Inst.Kit........ 25SKM00807ABE *
ETSI Rack 48V DC Distrib Panel with
Rack Alarm Unit....................... 25SKM00807AAN *
1.8 ADDITIONAL ITEMS
OC-192 REL 1.4 SUPERSET CUSTOMER
LOADS................................. ***PLM_TN-16X_NC_1
AC Power Cable Assembly............... PLM_Source_locally *
***Cable Assy, RJ45 crossover......... 32YCN01094AFA *
*** OPTICAL PATCHCORD 20M SC-SC....... PLM_Advanced Optics_NC_3 * * *
TOTAL EXTENDED EQUIPMENT PRICE........ *
2.0 INSTALLATION & COMMISSIONING * * *
Installation Materials................ * * *
-----
TOTAL EXTENDED PRICE.................. *
-----
-----
</TABLE>
- ------------------------
* The confidential portion has been omitted pursuant to a request for
confidential treatment and omitted
material has been filed separately with the commission.
115
<PAGE>
<TABLE>
<CAPTION>
VIATEL CIRCE 1 CONTRACT
ANNEX C
SCHEDULE OF PRICES
SECTION E--FRANCE
PARIS (BASTILLE) ISSUE 1.0
---------------------------------------------------------- -------------------------------------------------------
SELLING PARIS
ABBREVIATED DESCRIPTION CODE PRICE (BASTILLE) EXT PRICE
---------------------------------------------------------- ------------------- --------- --------- ---------
$US $US
<S> <C> <C> <C> <C> <C>
1.0 TRANSMISSION EQUIPMENT
1.1 TN-16 4F
Core
OC192 SC060 SHELF CONTROLLER............................. NTCA41BA * * *
MAINTENANCE INTERFACE.................................... NTCA42AA * * *
*** CABLE ASSY (MODEM ACCESS)............................ NTCC8930 * * *
MESSAGE TRANSFER CARD.................................... NTCA48AA * * *
BREAKER MODULE........................................... NTCA40AA * * *
COMMON EQUIPMENT FILLER CARD (1 IN.)..................... NTCA59AA * * *
PARTITIONED OPC CONTROLLER............................... NTCA50AA *
*** CA ASSY (10 BASE T CROSSOVER)........................ NT7E44KC *
PARTITIONED OPC STORAGE MODULE........................... NTCA51AA *
OPC FLASH CARTRIDGE...................................... NTCA53AA *
PARTITIONED OPC IO MODULE................................ NTCA52AA *
*** SM OPTICAL PATCHCORD 20M (66FT) (SC-TUNED) SEE A06... NT7E46HD * * *
*** SM OPTICAL PATCHCORD 20M (66FT) (SC-TUNED) W/MVOA.... NT7E47HD * * *
TRANSPORT SHELF FILLER CARD.............................. NTCA49AA * * *
TRANSPORT SHELF SWITCH FILLER CARD....................... NTCA49AB * * *
OC-192 OPTICAL AMPLIFIER W/ SERVICE CHANNEL (SC)......... NTCA11AC * * *
OC-192 OPTICAL AMPLIFIER (SC)............................ NTCA11BC *
1625NM OPTICAL SERVICE CHANNEL (SC)...................... NTCA11CC *
1550/1625NM WDM COUPLER (SC)............................. NTCC13AC *
MOR RTU.................................................. NTCA62DA * * *
1.2 TN-16X
Core
STM16 LTE/ADM/RING SHELF--COST REDUCED................... NTFW50EA * * *
SH PROCESSOR FOR SDH (DCC HUBBING)....................... NT7E20GC * * *
SH PROCESSOR(ETHERNET,SYNC MSG 24M)...................... NT7E20KA * *
Maintenance Interface Unit............................... NT7E23AA * *
TN-16X Regenerator Subrack Kit........................... NTFW51AA * *
OC-48/STM-16 Ring Demux.................................. NT8E06AB * * *
OC48 DWDM 1528.77 NM RING TX............................. NT8E11DQ * * *
OC48 DWDM 1530.33 RING TRANSMITTER....................... NT8E11FQ * * *
OC48 WDM 1533.47 RING TRANSMITTER........................ NT8E11KQ * * *
OC48 WDM 1535.04 RING TRANSMITTER........................ NT8E11MQ * * *
OC48 DWDM 1550.92 NM RING TRANSMITTER.................... NT8E11KR * * *
OC48 DWDM 1552.52 RING TRANSMITTER....................... NT8E11MR * * *
OC48 DWDM 1555.75 NM RING TRANSMITTER.................... NT8E11RR * * *
OC48 DWDM 1557.36 RING TRANSMITTER....................... NT8E11TR * * *
OC48 DWDM 1528.77 NM REGEN............................... NT8E13DJ *
OC48 DWDM 1530.33 REG/TX INTERFACE....................... NT8E13FJ *
OC48 DWDM 1533.47 REG/TX INTERFACE....................... NT8E13KJ *
OC48 DWDM 1535.04 REG/TX INTERFACE....................... NT8E13MJ *
OC48 DWDM 1550.92 REG/TX INTERFACE....................... NT8E13KK *
OC48 DWDM 1552.52 REG/TX INTERFACE....................... NT8E13MK *
OC48 DWDM 1555.75 REG/TX INTERFACE....................... NT8E13RK *
OC48 DWDM 1557.36 REG/TX INTERFACE....................... NT8E13TK *
OC-48/STM16 LR SAW Rx Interface (SC)..................... NT8E02DD * * *
STM1o IR 1310 Tributary I/F (SC)......................... NTFW11CD * * *
STM1 Optical Carrier Assembly............................ NTFW19BA * * *
External synchronisation interface carrier............... NT7E19AA * * *
External Synchronisation Interface (2 MHz)............... NTFW27AA * * *
*** OPTICAL PATCH CORD 20M (SC-SC)....................... NT7E46FD * * *
*** OPTICAL PATCH CORD W/MVOA 20M (SC-SC)................ NT7E47FD * * *
KIT, SC OPTICAL CONNECTOR. INITIAL USE NTN401AA.......... NTN459SC * * *
*** FIBRE OPTIC CABLE ASSY STM1 DUPLEX SC-SC 20M......... NTFW5753 * * *
TN-16X Regenerator Software Licence (Release 7).......... NTQJ93GG *
TN-16X Shared Protection Ring Software Licence (Release 7) NTQJ93HG * * *
Extra Traffic on Rings on Licence........................ NTQJ93TB *
OPC with tape drive...................................... NT7E24BC *
PHOENIX SUPERSET CODE FOR REL 7.......................... NTFW97HA *
*** CNET BAY/BAY CABLE 5.0M.............................. NT7E44JC *
TN-MS EC-16X Multi-user Licence.......................... NTQJ93CA *
TN-MS EC-16X Release 7 Licence........................... NTQJ93AG *
TN-MS EC-16X Release 7 Standby Licence................... NTQJ93BG *
FW TN-16X Rel 7 NTPS (CD-ROM)............................ NTFW64AH *
1.3 ADVANCED OPTICS (DWDM)
Core
DWDM FILTER MODULE SHELF ASSY--4 POS--ETSI............... NTCE88BA * * *
DWDM COUPLER 8W,MB/DR W/O VOA,SC......................... NTCA10GC * * *
</TABLE>
- ------------------------
* The confidential portion has been omitted pursuant to a request for
confidential treatment and omitted material has been filed separately with
the commission.
116
<PAGE>
<TABLE>
<CAPTION>
VIATEL CIRCE 1 CONTRACT
ANNEX C
SCHEDULE OF PRICES
SECTION E--FRANCE
<S> <C> <C> <C> <C> <C>
DWDM COUPLER 8W,DB/MR W/O VOA,SC......................... NTCA10HC * * *
TN-1X
Core
TN-1X Synchronous Access Multiplexer Subrack............. 25GMU00750GWV *
Shelf Kit................................................ 25SKM00750HFN *
TN-1X Installation Kit................................... 25SKM00807ABL *
Local Craft Access Panel Type 1.......................... 25UEP00750GXB *
Service Interface Module Type 10 (Misc).................. 25UJJ00750GXC *
Service Interface Module Type 40 (LCAP).................. 25UJJ00750GWX *
Subrack Cover Kit........................................ 25SKM00750HFL *
Rack Mounting Kit for ETSI............................... 25SKM00019AAE *
Dummy Front Panel 1"..................................... 25RBN00021AAB *
Dummy SIA Panel 1"....................................... 25RBN00021AAA *
Power Supply Unit........................................ 25UPW00750HAY *
Subrack Control Unit..................................... 25UMN00750GXD *
Payload Manager (mixed payload).......................... NTKD10AA *
STM-1 G.957 L1.2 Optical Aggregate Port Card (1550nm).... 25UTM00750HWH *
STM-1 G.957 L-1.1, S1.1 Optical Tributary Card (1" wide). NTKD11AA *
***Optical patchcord 20m FC-FC........................... NT7E46BD *
Craft Access Terminal.................................... NTQJ09AA *
RS 232 Cable Assembly.................................... 25YCN00748AAA *
TN-1 CAT Release 12 Application (3.5")................... NTQJ35LA *
TN-MS CA-1X Release 12 Licence........................... NTQJ91DL *
Netscape Windows95 (Fastrack Server and Navigator)....... NTQJ81BA *
TN-1X Release 8 Software Download (from CAT)............. NTQJ36HA *
HP B132, 128Mbytes RAM, 2Gb HD, DAT, CD, N.Hem........... NTQJ01FA *
TN-MS EC-1 Release 12 (DAT).............................. NTQJ30LA *
Netscape for UNIX (Fastrack Server and Navigator)........ NTQJ81AA *
TN-1X Release 8 software download (from EC).............. NTQJ31HA *
TN-1C Release 3 Software kit (disk & tape)............... NTFT81CA *
TN-MS EC-1 Release 12 Licence for TN-1X.................. NTQJ91AL *
TN-MS EC-1 Release 12 Standby Licence.................... NTQJ91BL *
TN-MS EC-1 Multi-user Licence............................ NTQJ91CA *
X terminal software on DAT............................... NTQJ05JB *
TN-1X Rel 8 NTPs (CD-ROM MAC)............................ 32HSC00456VEC *
TN-1C
Core
TN-1C 8x2/16x2 turbo ADM (1550nm L1.2)................... NTFT52BI *
AC/DC Power Unit......................................... NTFT21AA *
12V Battery.............................................. NTFT24AA *
***BT43/5F & 3002 cable assy 20m......................... 32YCN00750CAA *
***Optical patchcord 20m FC-FC........................... NT7E46BD *
TN-MS EC-1 Release 12 Licence for TN-1C.................. NTQJ91FL *
Craft Access Terminal.................................... NTQJ09AA *
CAT Cable Assembly....................................... NTFT15AC *
TN-1C Release 3 Software kit (disk & tape)............... NTFT81CA *
TN-1 CAT Release 12 Application (3.5")................... NTQJ35LA
Netscape Windows95 (Fastrack Server and Navigator)....... NTQJ81BA *
TN-1C Release 3 handbook CD-ROM.......................... NTFT66CA *
1.4 DXC * * *
256 Port Cross Connect (MSH84)........................... MSH84 * *
STM-1 Optical card....................................... *
16 x 2Mbit/s Port Unit................................... *
MV-36 Element controller................................. MV-36
Managed Object Agent (MOA)...............................
1.5 TN-MS INM *
Hardware
HP C200 workstation, north & south hemisphere........... NTQJ01GC
NRM Release 6 Software and Handbooks.................... NTQJ12FA
NRM Release 6 Feature Profile Tape--Core + IM + PM + CM. NTQJ10FK
TN-MS NRM (Rel6) Alarm surveillance Licence............. NTQJ90AF
TN-MS NRM (Rel6) Electronic Software Delivery Licence... NTQJ90BF
TN-MS NRM (Rel6) Inventory Manager Licence.............. NTQJ90DF
TN-MS NRM (Rel6) Perf. Mon. Consolidation Licence....... NTQJ90EF
TN-MS NRM (Rel6) Connection Management Licence.......... NTQJ90FF
TN-MS NRM (Rel6) Software Management User Guide......... NTQJ19FT
TN-MS NRM (Rel6) Inventory Management User Guide........ NTQJ19FX
TN-MS NRM (Rel6) Performance Management User Guide...... NTQJ19FW
TN-MS NRM (Rel6) Connection Management User Guide....... NTQJ19FV
Router 2501 OSI......................................... NTJM01BA
Router 2514 OSI......................................... NTJM01KA
DCN RConfig "P" 2514 ent. 0 tunnels, Ser: 2 L2,0 L1 CPC
Allocated: A0741950................................... NTJM9914
DCN RConfig "P" 2514 ent. 1 tunnel, Ser: 1 L2,1 L1 CPC
Allocated: A0741941................................... NTJM9912
HS modem SP-1-AR,AC..................................... NTJM01SA
Shelf Cantilever 19in mounting.......................... P0878672
</TABLE>
- ------------------------
* The confidential portion has been omitted pursuant to a request for
confidential treatment and omitted material has been filed separately with
the commission.
117
<PAGE>
<TABLE>
<CAPTION>
VIATEL CIRCE 1 CONTRACT
ANNEX C
SCHEDULE OF PRICES
SECTION E--FRANCE
<S> <C> <C> <C> <C> <C>
Transceiver 10BaseT..................................... NTJM01VA
Ethernet 10BaseT Transceiver............................ A0383333
Baystack 101 10baseT hub 12 port RJ45 250VAC............ NTJM02PA
***Cable Assy LAN RJ45--RJ45 h/e........................ 32YCN00727AFA
***Ethernet kit for OPC hub (20m,OC-48)................. NT7E44JE
1.6 Network Synchronisation................................. *
DCD-521C................................................
DCD-Cs ETSI Standalone Cesium PRC....................... 990-43100-02
DCD-LPR Shelf GPS Applications.......................... 990-44100-12
GPS Timing Kit E1 (Rubidium or Quartz).................. 990-44140-14
Blank Unit LPR.......................................... 090-44198-01
LOU-2 Dual oscillatoz................................... 090-44145-02
DCD-521/C ETSI Shelf Master/Expansion................... 990-44210-01
MRC-EA/Input card 2MHz/2Mb/s, 4 inputs.................. 090-44010-06
TNCE Clock card rubidium................................ 090-44017-02
TNC Clock card transit node OCXO........................ 090-44020-02
TO-EA Output card 2MHz/2Mb/s 10 outputs................. 090-44029-01
MIS Maint i'f analysis/config/remote.................... 990-44018-14
Blank Panel 1 TO slot wide.............................. 074-00208-01
Timing Input Module MRC SMB............................. 990-45107-02
Timing Output Module SMB,1:1 prot....................... 990-45105-07
1.7 EQUIPMENT PRACTICE
Mechanical bay assy ETSI (no expansion sh).............. NTCE89AA * * *
NTE-STM16 Rack (2200 x 600 x 300)--cost reduced......... NTFW70EA * * *
TN-16X Installation Kit................................. 25SKM00807ABM * * *
REGEN Rack Assy......................................... NTFW71AA *
Rack side cover L/H u/o NTFW70AA........................ P0725173 * * *
Rack side cover R/H u/o NTFW70AA........................ P0725175 * * *
Mechanical assembly, rack, 42U.......................... A0726263
Distribution block 8 way left hand cable entry.......... A0729317
Distribution block 8 way right hand cable entry......... A0729318
ETSI Rack, 220cm, without side panels................... NTKD70AA *
NT ETSI Rack Standard Inst.Kit.......................... 25SKM00807ABE *
ETSI Rack 48V DC Distrib Panel with Rack Alarm Unit..... 25SKM00807AAN *
1.8 ADDITIONAL ITEMS
OC-192 REL 1.4 SUPERSET CUSTOMER LOADS.................. ***PLM_TN-16X_NC_1
AC Power Cable Assembly................................. PLM_Source_locally *
***Cable Assy, RJ45 crossover........................... 32YCN01094AFA *
*** OPTICAL PATCHCORD 20M SC-SC......................... PLM_Advanced Optics_NC_3 * * *
TOTAL EXTENDED EQUIPMENT PRICE
2.0 INSTALLATION & COMMISSIONING............................ * * *
Installation Materials.................................. * * *
-------
TOTAL EXTENDED PRICE.................................... *
-------
-------
</TABLE>
- ------------------------
* The confidential portion has been omitted pursuant to a request for
confidential treatment and omitted material has been filed separately with
the commission.
118
<PAGE>
<TABLE>
<CAPTION>
VIATEL CIRCE 1 CONTRACT
ANNEX C
SCHEDULE OF PRICES
SECTION E--FRANCE
BRUSSELS-PARIS RA3 ISSUE 1.0
------------------------------------------------------------ ------------------------------------------------------
SELLING BRU.-PARIS
ABBREVIATED DESCRIPTION CODE PRICE R/A3 EXT PRICE
------------------------------------------------------------ ------------------- --------- --------- ---------
$US $US
<S> <C> <C> <C> <C> <C>
1.0 TRANSMISSION EQUIPMENT
1.1 TN-16 4F
Core
OC192 SC060 SHELF CONTROLLER............................. NTCA41BA * * *
MAINTENANCE INTERFACE.................................... NTCA42AA * * *
*** CABLE ASSY (MODEM ACCESS)............................ NTCC8930 * * *
MESSAGE TRANSFER CARD.................................... NTCA48AA * * *
BREAKER MODULE........................................... NTCA40AA * * *
COMMON EQUIPMENT FILLER CARD (1 IN.)..................... NTCA59AA * * *
PARTITIONED OPC CONTROLLER............................... NTCA50AA *
*** CA ASSY (10 BASE T CROSSOVER)........................ NT7E44KC *
PARTITIONED OPC STORAGE MODULE........................... NTCA51AA *
OPC FLASH CARTRIDGE...................................... NTCA53AA *
PARTITIONED OPC IO MODULE................................ NTCA52AA *
*** SM OPTICAL PATCHCORD 20M (66FT) (SC-TUNED) SEE A06... NT7E46HD * * *
*** SM OPTICAL PATCHCORD 20M (66FT) (SC-TUNED) W/MVOA.... NT7E47HD * * *
TRANSPORT SHELF FILLER CARD.............................. NTCA49AA * * *
TRANSPORT SHELF SWITCH FILLER CARD....................... NTCA49AB * * *
OC-192 OPTICAL AMPLIFIER W/ SERVICE CHANNEL (SC)......... NTCA11AC * * *
OC-192 OPTICAL AMPLIFIER (SC)............................ NTCA11BC *
1625NM OPTICAL SERVICE CHANNEL (SC)...................... NTCA11CC *
1550/1625NM WDM COUPLER (SC)............................. NTCC13AC *
MOR RTU.................................................. NTCA62DA * * *
1.2 TN-16X
Core
STM16 LTE/ADM/RING SHELF--COST REDUCED................... NTFW50EA *
SH PROCESSOR FOR SDH (DCC HUBBING)....................... NT7E20GC *
SH PROCESSOR (ETHERNET,SYNC MSG 24M)..................... NT7E20KA *
Maintenance Interface Unit............................... NT7E23AA *
TN-16X Regenerator Subrack Kit........................... NTFW51AA *
OC-48/STM-16 Ring Demux.................................. NT8E06AB *
OC48 DWDM 1528.77 NM RING TX............................. NT8E11DQ *
OC48 DWDM 1530.33 RING TRANSMITTER....................... NT8E11FQ *
OC48 WDM 1533.47 RING TRANSMITTER........................ NT8E11KQ *
OC48 WDM 1535.04 RING TRANSMITTER........................ NT8E11MQ *
OC48 DWDM 1550.92 NM RING TRANSMITTER.................... NT8E11KR *
OC48 DWDM 1552.52 RING TRANSMITTER....................... NT8E11MR *
OC48 DWDM 1555.75 NM RING TRANSMITTER.................... NT8E11RR *
OC48 DWDM 1557.36 RING TRANSMITTER....................... NT8E11TR *
OC48 DWDM 1528.77 NM REGEN............................... NT8E13DJ *
OC48 DWDM 1530.33 REG/TX INTERFACE....................... NT8E13FJ *
OC48 DWDM 1533.47 REG/TX INTERFACE....................... NT8E13KJ *
OC48 DWDM 1535.04 REG/TX INTERFACE....................... NT8E13MJ *
OC48 DWDM 1550.92 REG/TX INTERFACE....................... NT8E13KK *
OC48 DWDM 1552.52 REG/TX INTERFACE....................... NT8E13MK *
OC48 DWDM 1555.75 REG/TX INTERFACE....................... NT8E13RK *
OC48 DWDM 1557.36 REG/TX INTERFACE....................... NT8E13TK *
OC-48/STM16 LR SAW Rx Interface (SC)..................... NT8E02DD *
STM1o IR 1310 Tributary I/F (SC)......................... NTFW11CD *
STM1 Optical Carrier Assembly............................ NTFW19BA *
External synchronisation interface carrier............... NT7E19AA *
External Synchronisation Interface (2 MHz)............... NTFW27AA *
*** OPTICAL PATCH CORD 20M (SC-SC)....................... NT7E46FD *
*** OPTICAL PATCH CORD W/MVOA 20M (SC-SC)................ NT7E47FD *
KIT, SC OPTICAL CONNECTOR. INITIAL USE NTN401AA.......... NTN459SC *
*** FIBRE OPTIC CABLE ASSY STM1 DUPLEX SC-SC 20M......... NTFW5753 *
TN-16X Regenerator Software Licence (Release 7).......... NTQJ93GG *
TN-16X Shared Protection Ring Software Licence (Release 7) NTQJ93HG *
Extra Traffic on Rings on Licence........................ NTQJ93TB *
OPC with tape drive...................................... NT7E24BC *
PHOENIX SUPERSET CODE FOR REL 7.......................... NTFW97HA *
*** CNET BAY/BAY CABLE 5.0M.............................. NT7E44JC *
TN-MS EC-16X Multi-user Licence.......................... NTQJ93CA *
TN-MS EC-16X Release 7 Licence........................... NTQJ93AG *
TN-MS EC-16X Release 7 Standby Licence................... NTQJ93BG *
FW TN-16X Rel 7 NTPS (CD-ROM)............................ NTFW64AH *
1.3 ADVANCED OPTICS (DWDM)
Core
DWDM FILTER MODULE SHELF ASSY-- 4 POS--ETSI.............. NTCE88BA *
DWDM COUPLER 8W,MB/DR W/O VOA,SC......................... NTCA10GC *
</TABLE>
- ------------------------
* The confidential portion has been omitted pursuant to a request for
confidential treatment and omitted material has been filed separately with
the commission.
119
<PAGE>
<TABLE>
<CAPTION>
VIATEL CIRCE 1 CONTRACT
ANNEX C
SCHEDULE OF PRICES
SECTION E--FRANCE
<S> <C> <C> <C> <C> <C>
DWDM COUPLER 8W,DB/MR W/O VOA,SC......................... NTCA10HC *
TN-1X
Core
TN-1X Synchronous Access Multiplexer Subrack............. 25GMU00750GWV *
Shelf Kit................................................ 25SKM00750HFN *
TN-1X Installation Kit................................... 25SKM00807ABL *
Local Craft Access Panel Type 1.......................... 25UEP00750GXB *
Service Interface Module Type 10 (Misc).................. 25UJJ00750GXC *
Service Interface Module Type 40 (LCAP).................. 25UJJ00750GWX *
Subrack Cover Kit........................................ 25SKM00750HFL *
Rack Mounting Kit for ETSI............................... 25SKM00019AAE *
Dummy Front Panel 1"..................................... 25RBN00021AAB *
Dummy SIA Panel 1"....................................... 25RBN00021AAA *
Power Supply Unit........................................ 25UPW00750HAY *
Subrack Control Unit..................................... 25UMN00750GXD *
Payload Manager (mixed payload).......................... NTKD10AA *
STM-1 G.957 L1.2 Optical Aggregate Port Card (1550nm).... 25UTM00750HWH *
STM-1 G.957 L-1.1, S1.1 Optical Tributary Card (1" wide). NTKD11AA *
***Optical patchcord 20m FC-FC........................... NT7E46BD *
Craft Access Terminal.................................... NTQJ09AA *
RS 232 Cable Assembly.................................... 25YCN00748AAA *
TN-1 CAT Release 12 Application (3.5")................... NTQJ35LA
TN-MS CA-1X Release 12 Licence........................... NTQJ91DL
Netscape Windows95 (Fastrack Server and Navigator)....... NTQJ81BA *
TN-1X Release 8 Software Download (from CAT)............. NTQJ36HA
HP B132, 128Mbytes RAM, 2Gb HD, DAT, CD, N.Hem........... NTQJ01FA *
TN-MS EC-1 Release 12 (DAT).............................. NTQJ30LA
Netscape for UNIX (Fastrack Server and Navigator)........ NTQJ81AA *
TN-1X Release 8 software download (from EC).............. NTQJ31HA
TN-1C Release 3 Software kit (disk & tape)............... NTFT81CA *
TN-MS EC-1 Release 12 Licence for TN-1X.................. NTQJ91AL *
TN-MS EC-1 Release 12 Standby Licence.................... NTQJ91BL *
TN-MS EC-1 Multi-user Licence............................ NTQJ91CA *
X terminal software on DAT............................... NTQJ05JB *
TN-1X Rel 8 NTPs (CD-ROM MAC)............................ 32HSC00456VEC *
TN-1C
Core
TN-1C 8x2/16x2 turbo ADM (1550nm L1.2)................... NTFT52BI *
AC/DC Power Unit......................................... NTFT21AA *
12V Battery.............................................. NTFT24AA *
***BT43/5F & 3002 cable assy 20m......................... 32YCN00750CAA *
***Optical patchcord 20m FC-FC........................... NT7E46BD *
TN-MS EC-1 Release 12 Licence for TN-1C.................. NTQJ91FL *
Craft Access Terminal.................................... NTQJ09AA *
CAT Cable Assembly....................................... NTFT15AC *
TN-1C Release 3 Software kit (disk & tape)............... NTFT81CA *
TN-1 CAT Release 12 Application (3.5")................... NTQJ35LA
Netscape Windows95 (Fastrack Server and Navigator)....... NTQJ81BA *
TN-1C Release 3 handbook CD-ROM.......................... NTFT66CA *
1.4 DXC *
256 Port Cross Connect (MSH84)........................... MSH84
STM-1 Optical card.......................................
16 x 2Mbit/s Port Unit...................................
MV-36 Element controller................................. MV-36
Managed Object Agent (MOA)...............................
1.5 TN-MS INM *
Hardware.................................................
HP C200 workstation, north & south hemisphere............ NTQJ01GC
NRM Release 6 Software and Handbooks..................... NTQJ12FA
NRM Release 6 Feature Profile Tape--Core + IM + PM + CM.. NTQJ10FK
TN-MS NRM (Rel6) Alarm surveillance Licence.............. NTQJ90AF
TN-MS NRM (Rel6) Electronic Software Delivery Licence.... NTQJ90BF
TN-MS NRM (Rel6) Inventory Manager Licence............... NTQJ90DF
TN-MS NRM (Rel6) Perf. Mon. Consolidation Licence........ NTQJ90EF
TN-MS NRM (Rel6) Connection Management Licence........... NTQJ90FF
TN-MS NRM (Rel6) Software Management User Guide.......... NTQJ19FT
TN-MS NRM (Rel6) Inventory Management User Guide......... NTQJ19FX
TN-MS NRM (Rel6) Performance Management User Guide....... NTQJ19FW
TN-MS NRM (Rel6) Connection Management User Guide........ NTQJ19FV
Router 2501 OSI.......................................... NTJM01BA
Router 2514 OSI.......................................... NTJM01KA
DCN RConfig "P" 2514 ent. 0 tunnels, Ser: 2 L2,0 L1 CPC
Allocated: A0741950.................................... NTJM9914
DCN RConfig "P" 2514 ent. 1 tunnel, Ser: 1 L2,1 L1 CPC
Allocated: A0741941.................................... NTJM9912
HS modem SP-1-AR,AC...................................... NTJM01SA
Shelf Cantilever 19in mounting........................... P0878672
</TABLE>
- ------------------------
* The confidential portion has been omitted pursuant to a request for
confidential treatment and omitted material has been filed separately with
the commission.
120
<PAGE>
<TABLE>
<CAPTION>
VIATEL CIRCE 1 CONTRACT
ANNEX C
SCHEDULE OF PRICES
SECTION E--FRANCE
<S> <C> <C> <C> <C> <C>
Transceiver 10BaseT...................................... NTJM01VA
Ethernet 10BaseT Transceiver............................. A0383333
Baystack 101 10baseT hub 12 port RJ45 250VAC............. NTJM02PA
***Cable Assy LAN RJ45--RJ45 h/e......................... 32YCN00727AFA
***Ethernet kit for OPC hub (20m,OC-48).................. NT7E44JE
1.6 NETWORK SYNCHRONISATION *
DCD-521C.................................................
DCD-Cs ETSI Standalone Cesium PRC........................ 990-43100-02
DCD-LPR Shelf GPS Applications........................... 990-44100-12
GPS Timing Kit E1 (Rubidium or Quartz)................... 990-44140-14
Blank Unit LPR........................................... 090-44198-01
LOU-2 Dual oscillator.................................... 090-44145-02
DCD-521/C ETSI Shelf Master/Expansion.................... 990-44210-01
MRC-EA/Input card 2MHz/2Mb/s, 4 inputs................... 090-44010-06
TNCE Clock card rubidium................................. 090-44017-02
TNC Clock card transit node OCXO......................... 090-44020-02
TO-EA Output card 2MHz/2Mb/s 10 outputs.................. 090-44029-01
MIS Maint i'f analysis/config/remote..................... 990-44018-14
Blank Panel 1 TO slot wide............................... 074-00208-01
Timing Input Module MRC SMB.............................. 990-45107-02
Timing Output Module SMB,1:1 prot........................ 990-45105-07
1.7 EQUIPMENT PRACTICE
Mechanical bay assy ETSI (no expansion sh)............... NTCE89AA * * *
NTE-STM16 Rack (2200 x 600 x 300)--cost reduced.......... NTFW70EA *
TN-16X Installation Kit.................................. 25SKM00807ABM *
REGEN Rack Assy.. ....................................... NTFW71AA *
Rack side cover L/H u/o NTFW70AA......................... P0725173 *
Rack side cover R/H u/o NTFW70AA......................... P0725175 *
Mechanical assembly, rack, 42U........................... A0726263
Distribution block 8 way left hand cable entry........... A0729317
Distribution block 8 way right hand cable entry.......... A0729318
ETSI Rack, 220cm, without side panels.................... NTKD70AA *
NT ETSI Rack Standard Inst.Kit........................... 25SKM00807ABE *
ETSI Rack 48V DC Distrib Panel with Rack Alarm Unit...... 25SKM00807AAN *
1.8 ADDITIONAL ITEMS
OC-192 REL 1.4 SUPERSET CUSTOMER LOADS................... ***PLM_TN-16X_NC_1
AC Power Cable Assembly.................................. PLM_Source_locally *
***Cable Assy, RJ45 crossover............................ 32YCN01094AFA *
*** OPTICAL PATCHCORD 20M SC-SC.......................... PLM_Advanced Optics_NC_3 *
TOTAL EXTENDED EQUIPMENT PRICE *
2.0 INSTALLATION & COMMISSIONING * * *
Installation Materials *
-------
TOTAL EXTENDED PRICE *
-------
-------
</TABLE>
- ------------------------
* The confidential portion has been omitted pursuant to a request for
confidential treatment and omitted material has been filed separately with
the commission.
121
<PAGE>
<TABLE>
<CAPTION>
VIATEL CIRCE 1 CONTRACT
ANNEX C
SCHEDULE OF PRICES
SECTION E--FRANCE
BRUSSELS-PARIS RA4 ISSUE 1.0
------------------------------------------------------------ ------------------------------------------------------
SELLING BRU.-PARIS
ABBREVIATED DESCRIPTION CODE PRICE R/A4 EXT PRICE
------------------------------------------------------------ ------------------- --------- --------- ---------
$US $US
<S> <C> <C> <C> <C> <C>
1.0 TRANSMISSION EQUIPMENT
1.1 TN-16 4F
Core
OC192 SC060 SHELF CONTROLLER............................. NTCA41BA * * *
MAINTENANCE INTERFACE.................................... NTCA42AA * * *
*** CABLE ASSY (MODEM ACCESS)............................ NTCC8930 * * *
MESSAGE TRANSFER CARD.................................... NTCA48AA * * *
BREAKER MODULE........................................... NTCA40AA * * *
COMMON EQUIPMENT FILLER CARD (1 IN.)..................... NTCA59AA * * *
PARTITIONED OPC CONTROLLER............................... NTCA50AA *
*** CA ASSY (10 BASE T CROSSOVER)........................ NT7E44KC *
PARTITIONED OPC STORAGE MODULE........................... NTCA51AA *
OPC FLASH CARTRIDGE...................................... NTCA53AA *
PARTITIONED OPC IO MODULE................................ NTCA52AA *
*** SM OPTICAL PATCHCORD 20M (66FT) (SC-TUNED) SEE A06... NT7E46HD * * *
*** SM OPTICAL PATCHCORD 20M (66FT) (SC-TUNED) W/MVOA.... NT7E47HD * * *
TRANSPORT SHELF FILLER CARD.............................. NTCA49AA * * *
TRANSPORT SHELF SWITCH FILLER CARD....................... NTCA49AB * * *
OC-192 OPTICAL AMPLIFIER W/ SERVICE CHANNEL (SC)......... NTCA11AC * * *
OC-192 OPTICAL AMPLIFIER (SC)............................ NTCA11BC *
1625NM OPTICAL SERVICE CHANNEL (SC)...................... NTCA11CC *
1550/1625NM WDM COUPLER (SC)............................. NTCC13AC *
MOR RTU.................................................. NTCA62DA * * *
1.2 TN-16X
Core
STM16 LTE/ADM/RING SHELF--COST REDUCED................... NTFW50EA *
SH PROCESSOR FOR SDH (DCC HUBBING)....................... NT7E20GC *
SH PROCESSOR (ETHERNET,SYNC MSG 24M)..................... NT7E20KA *
Maintenance Interface Unit............................... NT7E23AA *
TN-16X Regenerator Subrack Kit........................... NTFW51AA *
OC-48/STM-16 Ring Demux.................................. NT8E06AB *
OC48 DWDM 1528.77 NM RING TX............................. NT8E11DQ *
OC48 DWDM 1530.33 RING TRANSMITTER....................... NT8E11FQ *
OC48 WDM 1533.47 RING TRANSMITTER........................ NT8E11KQ *
OC48 WDM 1535.04 RING TRANSMITTER........................ NT8E11MQ *
OC48 DWDM 1550.92 NM RING TRANSMITTER.................... NT8E11KR *
OC48 DWDM 1552.52 RING TRANSMITTER....................... NT8E11MR *
OC48 DWDM 1555.75 NM RING TRANSMITTER.................... NT8E11RR *
OC48 DWDM 1557.36 RING TRANSMITTER....................... NT8E11TR *
OC48 DWDM 1528.77 NM REGEN............................... NT8E13DJ *
OC48 DWDM 1530.33 REG/TX INTERFACE....................... NT8E13FJ *
OC48 DWDM 1533.47 REG/TX INTERFACE....................... NT8E13KJ *
OC48 DWDM 1535.04 REG/TX INTERFACE....................... NT8E13MJ *
OC48 DWDM 1550.92 REG/TX INTERFACE....................... NT8E13KK *
OC48 DWDM 1552.52 REG/TX INTERFACE....................... NT8E13MK *
OC48 DWDM 1555.75 REG/TX INTERFACE....................... NT8E13RK *
OC48 DWDM 1557.36 REG/TX INTERFACE....................... NT8E13TK *
OC-48/STM16 LR SAW Rx Interface (SC)..................... NT8E02DD *
STM1o IR 1310 Tributary I/F (SC)......................... NTFW11CD *
STM1 Optical Carrier Assembly............................ NTFW19BA *
External synchronisation interface carrier............... NT7E19AA *
External Synchronisation Interface (2 MHz)............... NTFW27AA *
*** OPTICAL PATCH CORD 20M (SC-SC)....................... NT7E46FD *
*** OPTICAL PATCH CORD W/MVOA 20M (SC-SC)................ NT7E47FD *
KIT, SC OPTICAL CONNECTOR. INITIAL USE NTN401AA.......... NTN459SC *
*** FIBRE OPTIC CABLE ASSY STM1 DUPLEX SC-SC 20M......... NTFW5753 *
TN-16X Regenerator Software Licence (Release 7).......... NTQJ93GG *
TN-16X Shared Protection Ring Software Licence (Release 7) NTQJ93HG *
Extra Traffic on Rings on Licence........................ NTQJ93TB *
OPC with tape drive...................................... NT7E24BC *
PHOENIX SUPERSET CODE FOR REL 7.......................... NTFW97HA *
*** CNET BAY/BAY CABLE 5.0M.............................. NT7E44JC *
TN-MS EC-16X Multi-user Licence.......................... NTQJ93CA *
TN-MS EC-16X Release 7 Licence........................... NTQJ93AG *
TN-MS EC-16X Release 7 Standby Licence................... NTQJ93BG *
FW TN-16X Rel 7 NTPS (CD-ROM)............................ NTFW64AH *
1.3 ADVANCED OPTICS (DWDM)
Core
DWDM FILTER MODULE SHELF ASSY--4 POS--ETSI............... NTCE88BA *
DWDM COUPLER 8W,MB/DR W/O VOA,SC......................... NTCA10GC *
</TABLE>
- ------------------------
* The confidential portion has been omitted pursuant to a request for
confidential treatment and omitted material has been filed separately with
the commission.
122
<PAGE>
<TABLE>
<CAPTION>
VIATEL CIRCE 1 CONTRACT
ANNEX C
SCHEDULE OF PRICES
SECTION E--FRANCE
<S> <C> <C> <C> <C> <C>
DWDM COUPLER 8W,DB/MR W/O VOA,SC NTCA10HC *
TN-1X
Core
TN-1X Synchronous Access Multiplexer Subrack............. 25GMU00750GWV *
Shelf Kit................................................ 25SKM00750HFN *
TN-1X Installation Kit................................... 25SKM00807ABL *
Local Craft Access Panel Type 1.......................... 25UEP00750GXB *
Service Interface Module Type 10 (Misc).................. 25UJJ00750GXC *
Service Interface Module Type 40 (LCAP).................. 25UJJ00750GWX *
Subrack Cover Kit........................................ 25SKM00750HFL *
Rack Mounting Kit for ETSI............................... 25SKM00019AAE *
Dummy Front Panel 1"..................................... 25RBN00021AAB *
Dummy SIA Panel 1"....................................... 25RBN00021AAA *
Power Supply Unit........................................ 25UPW00750HAY *
Subrack Control Unit..................................... 25UMN00750GXD *
Payload Manager (mixed payload).......................... NTKD10AA *
STM-1 G.957 L1.2 Optical Aggregate Port Card (1550nm).... 25UTM00750HWH *
STM-1 G.957 L-1.1, S1.1 Optical Tributary Card (1" wide). NTKD11AA *
***Optical patchcord 20m FC-FC........................... NT7E46BD *
Craft Access Terminal.................................... NTQJ09AA *
RS 232 Cable Assembly.................................... 25YCN00748AAA *
TN-1 CAT Release 12 Application (3.5")................... NTQJ35LA
TN-MS CA-1X Release 12 Licence........................... NTQJ91DL
Netscape Windows95 (Fastrack Server and Navigator)....... NTQJ81BA *
TN-1X Release 8 Software Download (from CAT)............. NTQJ36HA
HP B132, 128Mbytes RAM, 2Gb HD, DAT, CD, N.Hem........... NTQJ01FA *
TN-MS EC-1 Release 12 (DAT).............................. NTQJ30LA
Netscape for UNIX (Fastrack Server and Navigator)........ NTQJ81AA *
TN-1X Release 8 software download (from EC).............. NTQJ31HA
TN-1C Release 3 Software kit (disk & tape)............... NTFT81CA *
TN-MS EC-1 Release 12 Licence for TN-1X.................. NTQJ91AL *
TN-MS EC-1 Release 12 Standby Licence.................... NTQJ91BL *
TN-MS EC-1 Multi-user Licence............................ NTQJ91CA *
X terminal software on DAT............................... NTQJ05JB *
TN-1X Rel 8 NTPs (CD-ROM MAC)............................ 32HSC00456VEC *
TN-1C
Core
TN-1C 8x2/16x2 turbo ADM (1550nm L1.2)................... NTFT52BI *
AC/DC Power Unit......................................... NTFT21AA *
12V Battery.............................................. NTFT24AA *
***BT43/5F & 3002 cable assy 20m......................... 32YCN00750CAA *
***Optical patchcord 20m FC-FC........................... NT7E46BD *
TN-MS EC-1 Release 12 Licence for TN-1C.................. NTQJ91FL *
Craft Access Terminal.................................... NTQJ09AA *
CAT Cable Assembly....................................... NTFT15AC *
TN-1C Release 3 Software kit (disk & tape)............... NTFT81CA *
TN-1 CAT Release 12 Application (3.5")................... NTQJ35LA
Netscape Windows95 (Fastrack Server and Navigator)....... NTQJ81BA *
TN-1C Release 3 handbook CD-ROM.......................... NTFT66CA *
1.4 DXC *
256 Port Cross Connect (MSH84)........................... MSH84
STM-1 Optical card.......................................
16 x 2Mbit/s Port Unit...................................
MV-36 Element controller................................. MV-36
Managed Object Agent (MOA)...............................
1.5 TN-MS INM................................................ *
Hardware.................................................
HP C200 workstation, north & south hemisphere............ NTQJ01GC
NRM Release 6 Software and Handbooks..................... NTQJ12FA
NRM Release 6 Feature Profile Tape--Core + IM + PM + CM.. NTQJ10FK
TN-MS NRM (Rel6) Alarm surveillance Licence.............. NTQJ90AF
TN-MS NRM (Rel6) Electronic Software Delivery Licence.... NTQJ90BF
TN-MS NRM (Rel6) Inventory Manager Licence............... NTQJ90DF
TN-MS NRM (Rel6) Perf. Mon. Consolidation Licence........ NTQJ90EF
TN-MS NRM (Rel6) Connection Management Licence........... NTQJ90FF
TN-MS NRM (Rel6) Software Management User Guide.......... NTQJ19FT
TN-MS NRM (Rel6) Inventory Management User Guide......... NTQJ19FX
TN-MS NRM (Rel6) Performance Management User Guide....... NTQJ19FW
TN-MS NRM (Rel6) Connection Management User Guide........ NTQJ19FV
Router 2501 OSI.......................................... NTJM01BA
Router 2514 OSI.......................................... NTJM01KA
DCN RConfig "P" 2514 ent. 0 tunnels, Ser: 2 L2,0 L1 CPC
Allocated: A0741950.................................... NTJM9914
DCN RConfig "P" 2514 ent. 1 tunnel, Ser: 1 L2,1 L1 CPC
Allocated: A0741941.................................... NTJM9912
HS modem SP-1-AR,AC...................................... NTJM01SA
Shelf Cantilever 19in mounting........................... P0878672
</TABLE>
- ------------------------
* The confidential portion has been omitted pursuant to a request for
confidential treatment and omitted material has been filed separately with
the commission.
123
<PAGE>
<TABLE>
<CAPTION>
VIATEL CIRCE 1 CONTRACT
ANNEX C
SCHEDULE OF PRICES
SECTION E--FRANCE
<S> <C> <C> <C> <C> <C>
Transceiver 10BaseT....................................... NTJM01VA
Ethernet 10BaseT Transceiver............................. A0383333
Baystack 101 10baseT hub 12 port RJ45 250VAC............. NTJM02PA
***Cable Assy LAN RJ45--RJ45 h/e......................... 32YCN00727AFA
***Ethernet kit for OPC hub (20m,OC-48).................. NT7E44JE
1.6 NETWORK SYNCHRONISATION *
DCD-521C.................................................
DCD-Cs ETSI Standalone Cesium PRC........................ 990-43100-02
DCD-LPR Shelf GPS Applications........................... 990-44100-12
GPS Timing Kit E1 (Rubidium or Quartz)................... 990-44140-14
Blank Unit LPR........................................... 090-44198-01
LOU-2 Dual oscillator.................................... 090-44145-02
DCD-521/C ETSI Shelf Master/Expansion.................... 990-44210-01
MRC-EA/Input card 2MHz/2Mb/s, 4 inputs................... 090-44010-06
TNCE Clock card rubidium................................. 090-44017-02
TNC Clock card transit node OCXO......................... 090-44020-02
TO-EA Output card 2MHz/2Mb/s 10 outputs.................. 090-44029-01
MIS Maint i'f analysis/config/remote..................... 990-44018-14
Blank Panel 1 TO slot wide............................... 074-00208-01
Timing Input Module MRC SMB.............................. 990-45107-02
Timing Output Module SMB,1:1 prot........................ 990-45105-07
1.7 EQUIPMENT PRACTICE
Mechanical bay assy ETSI (no expansion sh)............... NTCE89AA * * *
NTE-STM16 Rack (2200 x 600 x 300)--cost reduced.......... NTFW70EA *
TN-16X Installation Kit.................................. 25SKM00807ABM *
REGEN Rack Assy.......................................... NTFW71AA *
Rack side cover L/H u/o NTFW70AA......................... P0725173 *
Rack side cover R/H u/o NTFW70AA......................... P0725175 *
Mechanical assembly, rack, 42U........................... A0726263
Distribution block 8 way left hand cable entry........... A0729317
Distribution block 8 way right hand cable entry.......... A0729318
ETSI Rack, 220cm, without side panels.................... NTKD70AA *
NT ETSI Rack Standard Inst.Kit........................... 25SKM00807ABE *
ETSI Rack 48V DC Distrib Panel with Rack Alarm Unit...... 25SKM00807AAN *
1.8 ADDITIONAL ITEMS
OC-192 REL 1.4 SUPERSET CUSTOMER LOADS................... ***PLM_TN-16X_NC_1
AC Power Cable Assembly.................................. PLM_Source_locally *
***Cable Assy, RJ45 crossover............................ 32YCN01094AFA *
*** OPTICAL PATCHCORD 20M SC-SC.......................... PLM_Advanced Optics_NC_3 *
TOTAL EXTENDED EQUIPMENT PRICE *
2.0 INSTALLATION & COMMISSIONING *
Installation Materials................................... *
-------
TOTAL EXTENDED PRICE *
-------
-------
</TABLE>
- ------------------------
* The confidential portion has been omitted pursuant to a request for
confidential treatment and omitted material has been filed separately with
the commission.
124
<PAGE>
<TABLE>
<CAPTION>
VIATEL CIRCLE 1 CONTRACT
ANNEX C
SCHEDULE OF PRICES
SECTION E - FRANCE
BRUSSELS-PARIS RA5 ISSUE 1.0
----------------------------------------------------------- ----------------------------------------------------------
ABBREVIATED DESCRIPTION CODE SELLING PRICE BRU.-PARIS R/A5 EXT PRICE
----------------------------------------------------------- --------- ------------- --------------- -----------
$US $US
<S> <C> <C> <C> <C>
1.0 Transmission Equipment
1.1 TN-16 4F
Core
OC192 SC060 SHELF CONTROLLER NTCA41BA * * *
MAINTENANCE INTERFACE NTCA42AA * * *
*** CABLE ASSY (MODEM ACCESS) NTCC8930 * * *
MESSAGE TRANSFER CARD NTCA48AA * * *
BREAKER MODULE NTCA40AA * * *
COMMON EQUIPMENT FILLER CARD (1 IN.) NTCA59AA * * *
PARTITIONED OPC CONTROLLER NTCA50AA *
*** CA ASSY (10 BASE T CROSSOVER) NT7E44KC *
PARTITIONED OPC STORAGE MODULE NTCA51AA *
OPC FLASH CARTRIDGE NTCA53AA *
PARTITIONED OPC IO MODULE NTCA52AA *
*** SM OPTICAL PATCHCORD 20M (66FT) (SC-TUNED) SEE A06 NT7E46HD * * *
*** SM OPTICAL PATCHCORD 20M (66FT) (SC-TUNED) W/MVOA NT7E47HD * * *
TRANSPORT SHELF FILLER CARD NTCA49AA * * *
TRANSPORT SHELF SWITCH FILLER CARD NTCA49AB * * *
OC-192 OPTICAL AMPLIFIER W/ SERVICE CHANNEL (SC) NTCA11AC * * *
OC-192 OPTICAL AMPLIFIER (SC) NTCA11BC *
1625NM OPTICAL SERVICE CHANNEL (SC) NTCA11CC *
1550/1625NM WDM COUPLER (SC) NTCC13AC *
MOR RTU NTCA62DA * * *
1.2 TN-16X
Core
STM16 LTE/ADM/RING SHELF - COST REDUCED NTFW50EA *
SH PROCESSOR FOR SDH (DCC HUBBING) NT7E20GC *
SH PROCESSOR(ETHERNET,SYNC MSG 24M) NT7E20KA *
Maintenance Interface Unit NT7E23AA *
TN-16X Regenerator Subrack Kit NTFW51AA *
OC-48/STM-16 Ring Demux NT8E06AB *
OC48 DWDM 1528.77 NM RING TX NT8E11DQ *
OC48 DWDM 1530.33 RING TRANSMITTER NT8E11FQ *
OC48 WDM 1533.47 RING TRANSMITTER NT8E11KQ *
OC48 WDM 1535.04 RING TRANSMITTER NT8E11MQ *
OC48 DWDM 1550.92 NM RING TRANSMITTER NT8E11KR *
OC48 DWDM 1552.52 RING TRANSMITTER NT8E11MR *
OC48 DWDM 1555.75 NM RING TRANSMITTER NT8E11RR *
OC48 DWDM 1557.36 RING TRANSMITTER NT8E11TR *
OC48 DWDM 1528.77 NM REGEN NT8E13DJ *
OC48 DWDM 1530.33 REG/TX INTERFACE NT8E13FJ *
OC48 DWDM 1533.47 REG/TX INTERFACE NT8E13KJ *
OC48 DWDM 1535.04 REG/TX INTERFACE NT8E13MJ *
OC48 DWDM 1550.92 REG/TX INTERFACE NT8E13KK *
OC48 DWDM 1552.52 REG/TX INTERFACE NT8E13MK *
OC48 DWDM 1555.75 REG/TX INTERFACE NT8E13RK *
OC48 DWDM 1557.36 REG/TX INTERFACE NT8E13TK *
OC-48/STM16 LR SAW Rx Interface (SC) NT8E02DD *
STM1o IR 1310 Tributary I/F (SC) NTFW11CD *
STM1 Optical Carrier Assembly NTFW19BA *
External synchronisation interface carrier NT7E19AA *
External Synchronisation Interface (2 MHz) NTFW27AA *
*** OPTICAL PATCH CORD 20M (SC-SC) NT7E46FD *
*** OPTICAL PATCH CORD W/MVOA 20M (SC-SC) NT7E47FD *
KIT, SC OPTICAL CONNECTOR. INITIAL USE NTN401AA NTN459SC *
*** FIBRE OPTIC CABLE ASSY STM1 DUPLEX SC-SC 20M NTFW5753 *
TN-16X Regenerator Software Licence (Release 7) NTQJ93GG *
TN-16X Shared Protection Ring Software Licence (Release 7) NTQJ93HG *
Extra Traffic on Rings on Licence NTQJ93TB *
OPC with tape drive NT7E24BC *
PHOENIX SUPERSET CODE FOR REL 7 NTFW97HA *
*** CNET BAY/BAY CABLE 5.0M NT7E44JC *
TN-MS EC-16X Multi-user Licence NTQJ93CA *
TN-MS EC-16X Release 7 Licence NTQJ93AG *
TN-MS EC-16X Release 7 Standby Licence NTQJ93BG *
FW TN-16X Rel 7 NTPS (CD-ROM) NTFW64AH *
1.3 Advanced Optics (DWDM)
Core
DWDM FILTER MODULE SHELF ASSY - 4 POS - ETSI NTCE88BA *
DWDM COUPLER 8W,MB/DR W/O VOA,SC NTCA10GC *
</TABLE>
125
<PAGE>
<TABLE>
<CAPTION>
VIATEL CIRCLE 1 CONTRACT
ANNEX C
SCHEDULE OF PRICES
SECTION E - FRANCE
<S> <C> <C> <C> <C>
DWDM COUPLER 8W,DB/MR W/O VOA,SC NTCA10HC *
TN-1X
Core
TN-1X Synchronous Access Multiplexer Subrack 25GMU00750GWV *
Shelf Kit 25SKM00750HFN *
TN-1X Installation Kit 25SKM00807ABL *
Local Craft Access Panel Type 1 25UEP00750GXB *
Service Interface Module Type 10 (Misc) 25UJJ00750GXC *
Service Interface Module Type 40 (LCAP) 25UJJ00750GWX *
Subrack Cover Kit 25SKM00750HFL *
Rack Mounting Kit for ETSI 25SKM00019AAE *
Dummy Front Panel 1" 25RBN00021AAB *
Dummy SIA Panel 1" 25RBN00021AAA *
Power Supply Unit 25UPW00750HAY *
Subrack Control Unit 25UMN00750GXD *
Payload Manager (mixed payload) NTKD10AA *
STM-1 G.957 L1.2 Optical Aggregate Port Card (1550nm) 25UTM00750HWH *
STM-1 G.957 L-1.1, S1.1 Optical Tributary Card (1"wide) NTKD11AA *
***Optical patchcord 20m FC-FC NT7E46BD *
Craft Access Terminal NTQJ09AA *
RS 232 Cable Assembly 25YCN00748AAA *
TN-1 CAT Release 12 Application (3.5") NTQJ35LA
TN-MS CA-1X Release 12 Licence NTQJ91DL
Netscape Windows95 (Fastrack Server and Navigator) NTQJ81BA *
TN-1X Release 8 Software Download (from CAT) NTQJ36HA
HP B132, 128Mbytes RAM, 2Gb HD, DAT, CD, N.Hem NTQJ01FA *
TN-MS EC-1 Release 12 (DAT) NTQJ30LA
Netscape for UNIX (Fastrack Server and Navigator) NTQJ81AA *
TN-1X Release 8 software download (from EC) NTQJ31HA
TN-1C Release 3 Software kit (disk & tape) NTFT81CA *
TN-MS EC-1 Release 12 Licence for TN-1X NTQJ91AL *
TN-MS EC-1 Release 12 Standby Licence NTQJ91BL *
TN-MS EC-1 Multi-user Licence NTQJ91CA *
X terminal software on DAT NTQJ05JB *
TN-1X Rel 8 NTPs (CD-ROM MAC) 32HSC00456VEC *
TN-1C
Core
TN-1C 8x2/16x2 turbo ADM (1550nm L1.2) NTFT52BI *
AC/DC Power Unit NTFT21AA *
12V Battery NTFT24AA *
***BT43/5F & 3002 cable assy 20m 32YCN00750CAA *
***Optical patchcord 20m FC-FC NT7E46BD *
TN-MS EC-1 Release 12 Licence for TN-1C NTQJ91FL *
Craft Access Terminal NTQJ09AA *
CAT Cable Assembly NTFT15AC *
TN-1C Release 3 Software kit (disk & tape) NTFT81CA *
TN-1 CAT Release 12 Application (3.5") NTQJ35LA
Netscape Windows95 (Fastrack Server and Navigator) NTQJ81BA *
TN-1C Release 3 handbook CD-ROM NTFT66CA *
1.4 DXC *
256 Port Cross Connect (MSH84) MSH84
STM-1 Optical card
16 x 2Mbit/s Port Unit
MV-36 Element controller MV-36
Managed Object Agent (MOA)
1.5 TN-MS INM *
Hardware
HP C200 workstation, north & south hemisphere NTQJ01GC
NRM Release 6 Software and Handbooks NTQJ12FA
NRM Release 6 Feature Profile Tape - Core + IM + PM + CM NTQJ10FK
TN-MS NRM (Rel6) Alarm surveillance Licence NTQJ90AF
TN-MS NRM (Rel6) Electronic Software Delivery Licence NTQJ90BF
TN-MS NRM (Rel6) Inventory Manager Licence NTQJ90DF
TN-MS NRM (Rel6) Perf. Mon. Consolidation Licence NTQJ90EF
TN-MS NRM (Rel6) Connection Management Licence NTQJ90FF
TN-MS NRM (Rel6) Software Management User Guide NTQJ19FT
TN-MS NRM (Rel6) Inventory Management User Guide NTQJ19FX
TN-MS NRM (Rel6) Performance Management User Guide NTQJ19FW
TN-MS NRM (Rel6) Connection Management User Guide NTQJ19FV
Router 2501 OSI NTJM01BA
Router 2514 OSI NTJM01KA
DCN RConfig "P" 2514 ent. 0 tunnels, Ser: 2 L2,0 L1
CPC Allocated: A0741950 NTJM9914
DCN RConfig "P" 2514 ent. 1 tunnel, Ser: 1 L2,1 L1
CPC Allocated: A0741941 NTJM9912
HS modem SP-1-AR,AC NTJM01SA
Shelf Cantilever 19in mounting P0878672
</TABLE>
126
<PAGE>
<TABLE>
<CAPTION>
VIATEL CIRCLE 1 CONTRACT
ANNEX C
SCHEDULE OF PRICES
SECTION E - FRANCE
<S> <C> <C> <C> <C>
Transceiver 10BaseT NTJM01VA
Ethernet 10BaseT Transceiver A0383333
Baystack 101 10baseT hub 12 port RJ45 250VAC NTJM02PA
***Cable Assy LAN RJ45 - RJ45 h/e 32YCN00727AFA
***Ethernet kit for OPC hub (20m,OC-48) NT7E44JE
1.6 Network Synchronisation *
DCD-521C
DCD-Cs ETSI Standalone Cesium PRC 990-43100-02
DCD-LPR Shelf GPS Applications 990-44100-12
GPS Timing Kit E1 (Rubidium or Quartz) 990-44140-14
Blank Unit LPR 090-44198-01
LOU-2 Dual oscillator 090-44145-02
DCD-521/C ETSI Shelf Master/Expansion 990-44210-01
MRC-EA/Input card 2MHz/2Mb/s, 4 inputs 090-44010-06
TNCE Clock card rubidium 090-44017-02
TNC Clock card transit node OCXO 090-44020-02
TO-EA Output card 2MHz/2Mb/s 10 outputs 090-44029-01
MIS Maint i'f analysis/config/remote 990-44018-14
Blank Panel 1 TO slot wide 074-00208-01
Timing Input Module MRC SMB 990-45107-02
Timing Output Module SMB,1:1 prot 990-45105-07
1.7 EQUIPMENT PRACTICE
Mechanical bay assy ETSI (no expansion sh) NTCE89AA * * *
NTE-STM16 Rack (2200 x 600 x 300) - cost reduced NTFW70EA *
TN-16X Installation Kit 25SKM00807ABM *
REGEN Rack Assy NTFW71AA *
Rack side cover L/H u/o NTFW70AA P0725173 *
Rack side cover R/H u/o NTFW70AA P0725175 *
Mechanical assembly, rack, 42U A0726263
Distribution block 8 way left hand cable entry A0729317
Distribution block 8 way right hand cable entry A0729318
ETSI Rack, 220cm, without side panels NTKD70AA *
NT ETSI Rack Standard Inst.Kit 25SKM00807ABE *
ETSI Rack 48V DC Distrib Panel with Rack Alarm
Unit 25SKM00807AAN *
1.8 Additional Items
OC-192 REL 1.4 SUPERSET CUSTOMER LOADS ***PLM_TN-16X_NC_1
AC Power Cable Assembly PLM_Source_locally *
***Cable Assy, RJ45 crossover 32YCN01094AFA *
*** OPTICAL PATCHCORD 20M SC-SC PLM_Advanced Optics_NC_3 *
Total Extended Equipment Price *
2.0 Installation & Commissioning * * *
Installation Materials *
------
Total Extended Price *
------
------
</TABLE>
127
<PAGE>
<TABLE>
<CAPTION>
VIATEL CIRCLE 1 CONTRACT
ANNEX C
SCHEDULE OF PRICES
SECTION E - FRANCE
BRUSSELS-PARIS RA6 ISSUE 1.0
-------------------------------------------------- ------------------------------------------------------------------
ABBREVIATED DESCRIPTION CODE SELLING PRICE BRU.-PARIS R/A6 EXT PRICE
-------------------------------------------------- -------------------- ------------- --------------- -----------
$US $US
<S> <C> <C> <C> <C>
1.0 Transmission Equipment
1.1 TN-16 4F
Core
OC192 SC060 SHELF CONTROLLER NTCA41BA * * *
MAINTENANCE INTERFACE NTCA42AA * * *
*** CABLE ASSY (MODEM ACCESS) NTCC8930 * * *
MESSAGE TRANSFER CARD NTCA48AA * * *
BREAKER MODULE NTCA40AA * * *
COMMON EQUIPMENT FILLER CARD (1 IN.) NTCA59AA * * *
PARTITIONED OPC CONTROLLER NTCA50AA *
*** CA ASSY (10 BASE T CROSSOVER) NT7E44KC *
PARTITIONED OPC STORAGE MODULE NTCA51AA *
OPC FLASH CARTRIDGE NTCA53AA *
PARTITIONED OPC IO MODULE NTCA52AA *
*** SM OPTICAL PATCHCORD 20M (66FT) (SC-TUNED) SEE A06 NT7E46HD * * *
*** SM OPTICAL PATCHCORD 20M (66FT) (SC-TUNED) W/MVOA NT7E47HD * * *
TRANSPORT SHELF FILLER CARD NTCA49AA * * *
TRANSPORT SHELF SWITCH FILLER CARD NTCA49AB * * *
OC-192 OPTICAL AMPLIFIER W/ SERVICE CHANNEL (SC) NTCA11AC * * *
OC-192 OPTICAL AMPLIFIER (SC) NTCA11BC *
1625NM OPTICAL SERVICE CHANNEL (SC) NTCA11CC *
1550/1625NM WDM COUPLER (SC) NTCC13AC *
MOR RTU NTCA62DA * * *
1.2 TN-16X
Core
STM16 LTE/ADM/RING SHELF - COST REDUCED NTFW50EA *
SH PROCESSOR FOR SDH (DCC HUBBING) NT7E20GC *
SH PROCESSOR(ETHERNET,SYNC MSG 24M) NT7E20KA *
Maintenance Interface Unit NT7E23AA *
TN-16X Regenerator Subrack Kit NTFW51AA *
OC-48/STM-16 Ring Demux NT8E06AB *
OC48 DWDM 1528.77 NM RING TX NT8E11DQ *
OC48 DWDM 1530.33 RING TRANSMITTER NT8E11FQ *
OC48 WDM 1533.47 RING TRANSMITTER NT8E11MQ *
OC48 DWDM 1550.92 NM RING TRANSMITTER NT8E11KR *
OC48 DWDM 1552.52 RING TRANSMITTER NT8E11MR *
OC48 DWDM 1555.75 NM RING TRANSMITTER NT8E11RR *
OC48 DWDM 1557.36 RING TRANSMITTER NT8E11TR *
OC48 DWDM 1528.77 NM REGEN NT8E13DJ *
OC48 DWDM 1530.33 REG/TX INTERFACE NT8E13FJ *
OC48 DWDM 1533.47 REG/TX INTERFACE NT8E13KJ *
OC48 DWDM 1535.04 REG/TX INTERFACE NT8E13MJ *
OC48 DWDM 1550.92 REG/TX INTERFACE NT8E13KK *
OC48 DWDM 1552.52 REG/TX INTERFACE NT8E13MK *
OC48 DWDM 1555.75 REG/TX INTERFACE NT8E13RK *
OC48 DWDM 1557.36 REG/TX INTERFACE NT8E13TK *
OC-48/STM16 LR SAW Rx Interface (SC) NT8E02DD *
STM1o IR 1310 Tributary I/F (SC) NTFW11CD *
STM1 Optical Carrier Assembly NTFW19BA *
External synchronisation interface carrier NT7E19AA *
External Synchronisation Interface (2 MHz) NTFW27AA *
*** OPTICAL PATCH CORD 20M (SC-SC) NT7E46FD *
*** OPTICAL PATCH CORD W/MVOA 20M (SC-SC) NT7E47FD *
KIT, SC OPTICAL CONNECTOR. INITIAL USE NTN401AA NTN459SC *
*** FIBRE OPTIC CABLE ASSY STM1 DUPLEX SC-SC 20M NTFW5753 *
TN-16X Regenerator Software Licence (Release 7) NTQJ93GG *
TN-16X Shared Protection Ring Software Licence (Release 7) NTQJ93HG *
Extra Traffic on Rings on Licence NTQJ93TB *
OPC with tape drive NT7E24BC *
PHOENIX SUPERSET CODE FOR REL 7 NTFW97HA *
*** CNET BAY/BAY CABLE 5.0M NT7E44JC *
TN-MS EC-16X Multi-user Licence NTQJ93CA *
TN-MS EC-16X Release 7 Licence NTQJ93AG *
TN-MS EC-16X Release 7 Standby Licence NTQJ93BG *
FW TN-16X Rel 7 NTPS (CD-ROM) NTFW64AH *
1.3 Advanced Optics (DWDM)
Core
DWDM FILTER MODULE SHELF ASSY - 4 POS - ETSI NTCE88BA *
DWDM COUPLER 8W,MB/DR W/O VOA,SC NTCA10GC *
</TABLE>
128
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<TABLE>
<CAPTION>
VIATEL CIRCLE 1 CONTRACT
ANNEX C
SCHEDULE OF PRICES
SECTION E - FRANCE
<S> <C> <C> <C> <C>
DWDM COUPLER 8W,DB/MR W/O VOA,SC NTCA10HC *
TN-1X
Core
TN-1X Synchronous Access Multiplexer Subrack 25GMU00750GWV *
Shelf Kit 25SKM00750HFN *
TN-1X Installation Kit 25SKM00807ABL *
Local Craft Access Panel Type 1 25UEP00750GXB *
Service Interface Module Type 10 (Misc) 25UJJ00750GXC *
Service Interface Module Type 40 (LCAP) 25UJJ00750GWX *
Subrack Cover Kit 25SKM00750HFL *
Rack Mounting Kit for ETSI 25SKM00019AAE *
Dummy Front Panel 1" 25RBN00021AAB *
Dummy SIA Panel 1" 25RBN00021AAA *
Power Supply Unit 25UPW00750HAY *
Subrack Control Unit 25UMN00750GXD *
Payload Manager (mixed payload) NTKD10AA *
STM-1 G.957 L1.2 Optical Aggregate Port Card (1550nm) 25UTM00750HWH *
STM-1 G.957 L-1.1, S1.1 Optical Tributary Card (1"wide) NTKD11AA *
***Optical patchcord 20m FC-FC NT7E46BD *
Craft Access Terminal NTQJ09AA *
RS 232 Cable Assembly 25YCN00748AAA *
TN-1 CAT Release 12 Application (3.5") NTQJ35LA
TN-MS CA-1X Release 12 Licence NTQJ91DL
Netscape Windows95 (Fastrack Server and Navigator) NTQJ81BA *
TN-1X Release 8 Software Download (from CAT) NTQJ36HA
HP B132, 128Mbytes RAM, 2Gb HD, DAT, CD, N.Hem NTQJ01FA *
TN-MS EC-1 Release 12 (DAT) NTQJ30LA
Netscape for UNIX (Fastrack Server and Navigator) NTQJ81AA *
TN-1X Release 8 software download (from EC) NTQJ31HA
TN-1C Release 3 Software kit (disk & tape) NTFT81CA *
TN-MS EC-1 Release 12 Licence for TN-1X NTQJ91AL *
TN-MS EC-1 Release 12 Standby Licence NTQJ91BL *
TN-MS EC-1 Multi-user Licence NTQJ91CA *
X terminal software on DAT NTQJ05JB *
TN-1X Rel 8 NTPs (CD-ROM MAC) 32HSC00456VEC *
TN-1C
Core
TN-1C 8x2/16x2 turbo ADM (1550nm L1.2) NTFT52BI *
AC/DC Power Unit NTFT21AA *
12V Battery NTFT24AA *
***BT43/5F & 3002 cable assy 20m 32YCN00750CAA *
***Optical patchcord 20m FC-FC NT7E46BD *
TN-MS EC-1 Release 12 Licence for TN-1C NTQJ91FL *
Craft Access Terminal NTQJ09AA *
CAT Cable Assembly NTFT15AC *
TN-1C Release 3 Software kit (disk & tape) NTFT81CA *
TN-1 CAT Release 12 Application (3.5") NTQJ35LA
Netscape Windows95 (Fastrack Server and Navigator) NTQJ81BA *
TN-1C Release 3 handbook CD-ROM NTFT66CA *
1.4 DXC *
256 Port Cross Connect (MSH84) MSH84
STM-1 Optical card
16 x 2Mbit/s Port Unit
MV-36 Element controller MV-36
Managed Object Agent (MOA)
1.5 TN-MS INM *
Hardware
HP C200 workstation, north & south hemisphere NTQJ01GC
NRM Release 6 Software and Handbooks NTQJ12FA
NRM Release 6 Feature Profile Tape -
Core + IM + PM + CM NTQJ10FK
TN-MS NRM (Rel6) Alarm surveillance Licence NTQJ90AF
TN-MS NRM (Rel6) Electronic Software Delivery Licence NTQJ90BF
TN-MS NRM (Rel6) Inventory Manager Licence NTQJ90DF
TN-MS NRM (Rel6) Perf. Mon. Consolidation Licence NTQJ90EF
TN-MS NRM (Rel6) Connection Management Licence NTQJ90FF
TN-MS NRM (Rel6) Software Management User Guide NTQJ19FT
TN-MS NRM (Rel6) Inventory Management User Guide NTQJ19FX
TN-MS NRM (Rel6) Performance Management User Guide NTQJ19FW
TN-MS NRM (Rel6) Connection Management User Guide NTQJ19FV
Router 2501 OSI NTJM01BA
Router 2514 OSI NTJM01KA
DCN RConfig "P" 2514 ent. 0 tunnels, Ser: 2 L2,0 L1
CPC Allocated: A0741950 NTJM9914
DCN RConfig "P" 2514 ent. 1 tunnel, Ser: 1 L2,1 L1
CPC Allocated: A0741941 NTJM9912
HS modem SP-1-AR,AC NTJM01SA
Shelf Cantilever 19in mounting P0878672
</TABLE>
129
<PAGE>
<TABLE>
<CAPTION>
VIATEL CIRCLE 1 CONTRACT
ANNEX C
SCHEDULE OF PRICES
SECTION E - FRANCE
<S> <C> <C> <C> <C>
Transceiver 10BaseT NTJM01VA
Ethernet 10BaseT Transceiver A0383333
Baystack 101 10baseT hub 12 port RJ45 250VAC NTJM02PA
***Cable Assy LAN RJ45 - RJ45 h/e 32YCN00727AFA
***Ethernet kit for OPC hub (20m,OC-48) NT7E44JE
1.6 Network Synchronisation *
DCD-521C
DCD-Cs ETSI Standalone Cesium PRC 990-43100-02
DCD-LPR Shelf GPS Applications 990-44100-12
GPS Timing Kit E1 (Rubidium or Quartz) 990-44140-14
Blank Unit LPR 090-44198-01
LOU-2 Dual oscillator 090-44145-02
DCD-521/C ETSI Shelf Master/Expansion 990-44210-01
MRC-EA/Input card 2MHz/2Mb/s, 4 inputs 090-44010-06
TNCE Clock card rubidium 090-44017-02
TNC Clock card transit node OCXO 090-44020-02
TO-EA Output card 2MHz/2Mb/s 10 outputs 090-44029-01
MIS Maint i'f analysis/config/remote 990-44018-14
Blank Panel 1 TO slot wide 074-00208-01
Timing Input Module MRC SMB 990-45107-02
Timing Output Module SMB,1:1 prot 990-45105-07
1.7 EQUIPMENT PRACTICE
Mechanical bay assy ETSI (no expansion sh) NTCE89AA * * *
NTE-STM16 Rack (2200 x 600 x 300) - cost reduced NTFW70EA *
TN-16X Installation Kit 25SKM00807ABM *
REGEN Rack Assy NTFW71AA *
Rack side cover L/H u/o NTFW70AA P0725173 *
Rack side cover R/H u/o NTFW70AA P0725175 *
Mechanical assembly, rack, 42U A0726263
Distribution block 8 way left hand cable entry A0729317
Distribution block 8 way right hand cable entry A0729318
ETSI Rack, 220cm, without side panels NTKD70AA *
NT ETSI Rack Standard Inst.Kit 25SKM00807ABE *
ETSI Rack 48V DC Distrib Panel with Rack Alarm Unit 25SKM00807AAN *
1.8 Additional Items
OC-192 REL 1.4 SUPERSET CUSTOMER LOADS ***PLM_TN-16X_NC_1
AC Power Cable Assembly PLM_Source_locally *
***Cable Assy, RJ45 crossover 32YCN01094AFA *
*** OPTICAL PATCHCORD 20M SC-SC PLM_Advanced Optics_NC_3 *
Total Extended Equipment Price *
2.0 Installation & Commissioning * * *
Installation Materials *
------
Total Extended Price *
------
------
</TABLE>
130
<PAGE>
<TABLE>
<CAPTION>
VIATEL CIRCLE 1 CONTRACT
ANNEX C
SCHEDULE OF PRICES
SECTION F - NMC2
NMC2 ISSUE 1.0
----------------------------------------------------------- ----------------------------------------------------------
ABBREVIATED DESCRIPTION CODE SELLING PRICE NMC2 EXT PRICE
----------------------------------------------------------- --------- ------------- --------------- -----------
$US $US
<S> <C> <C> <C> <C>
1.0 Transmission Equipment
1.1 TN-16 4F
Core
OC192 SC060 SHELF CONTROLLER NTCA41BA *
MAINTENANCE INTERFACE NTCA42AA *
*** CABLE ASSY (MODEM ACCESS) NTCC8930 *
MESSAGE TRANSFER CARD NTCA48AA *
BREAKER MODULE NTCA40AA *
COMMON EQUIPMENT FILLER CARD (1 IN.) NTCA59AA *
PARTITIONED OPC CONTROLLER NTCA50AA *
*** CA ASSY (10 BASE T CROSSOVER) NT7E44KC *
PARTITIONED OPC STORAGE MODULE NTCA51AA *
OPC FLASH CARTRIDGE NTCA53AA *
PARTITIONED OPC IO MODULE NTCA52AA *
*** SM OPTICAL PATCHCORD 20M (66FT) (SC-TUNED) SEE A06 NT7E46HD *
*** SM OPTICAL PATCHCORD 20M (66FT) (SC-TUNED) W/MVOA NT7E47HD *
TRANSPORT SHELF FILLER CARD NTCA49AA *
TRANSPORT SHELF SWITCH FILLER CARD NTCA49AB *
OC-192 OPTICAL AMPLIFIER W/ SERVICE CHANNEL (SC) NTCA11AC *
OC-192 OPTICAL AMPLIFIER (SC) NTCA11BC *
1625NM OPTICAL SERVICE CHANNEL (SC) NTCA11CC *
1550/1625NM WDM COUPLER (SC) NTCC13AC *
MOR RTU NTCA62DA *
1.2 TN-16X
Core
STM16 LTE/ADM/RING SHELF - COST REDUCED NTFW50EA *
SH PROCESSOR FOR SDH (DCC HUBBING) NT7E20GC *
SH PROCESSOR(ETHERNET,SYNC MSG 24M) NT7E20KA *
Maintenance Interface Unit NT7E23AA *
TN-16X Regenerator Subrack Kit NTFW51AA *
OC-48/STM-16 Ring Demux NT8E06AB *
OC48 DWDM 1528.77 NM RING TX NT8E11DQ *
OC48 DWDM 1530.33 RING TRANSMITTER NT8E11FQ *
OC48 WDM 1533.47 RING TRANSMITTER NT8E11KQ *
OC48 WDM 1535.04 RING TRANSMITTER NT8E11MQ *
OC48 DWDM 1550.92 NM RING TRANSMITTER NT8E11KR *
OC48 DWDM 1552.52 RING TRANSMITTER NT8E11MR *
OC48 DWDM 1555.75 NM RING TRANSMITTER NT8E11RR *
OC48 DWDM 1557.36 RING TRANSMITTER NT8E11TR *
OC48 DWDM 1528.77 NM REGEN NT8E13DJ *
OC48 DWDM 1530.33 REG/TX INTERFACE NT8E13FJ *
OC48 DWDM 1533.47 REG/TX INTERFACE NT8E13KJ *
OC48 DWDM 1535.04 REG/TX INTERFACE NT8E13MJ *
OC48 DWDM 1550.92 REG/TX INTERFACE NT8E13KK *
OC48 DWDM 1552.52 REG/TX INTERFACE NT8E13MK *
OC48 DWDM 1555.75 REG/TX INTERFACE NT8E13RK *
OC48 DWDM 1557.36 REG/TX INTERFACE NT8E13TK *
OC-48/STM16 LR SAW Rx Interface (SC) NT8E02DD *
STM1o IR 1310 Tributary I/F (SC) NTFW11CD *
STM1 Optical Carrier Assembly NTFW19BA *
External synchronisation interface carrier NT7E19AA *
External Synchronisation Interface (2 MHz) NTFW27AA *
*** OPTICAL PATCH CORD 20M (SC-SC) NT7E46FD *
*** OPTICAL PATCH CORD W/MVOA 20M (SC-SC) NT7E47FD *
KIT, SC OPTICAL CONNECTOR. INITIAL USE NTN401AA NTN459SC *
*** FIBRE OPTIC CABLE ASSY STM1 DUPLEX SC-SC 20M NTFW5753 *
TN-16X Regenerator Software Licence (Release 7) NTQJ93GG *
TN-16X Shared Protection Ring Software Licence (Release 7) NTQJ93HG *
Extra Traffic on Rings on Licence NTQJ93TB *
OPC with tape drive NT7E24BC *
PHOENIX SUPERSET CODE FOR REL 7 NTFW97HA *
*** CNET BAY/BAY CABLE 5.0M NT7E44JC *
TN-MS EC-16X Multi-user Licence NTQJ93CA *
TN-MS EC-16X Release 7 Licence NTQJ93AG *
</TABLE>
131
<PAGE>
<TABLE>
<CAPTION>
VIATEL CIRCLE 1 CONTRACT
ANNEX C
SCHEDULE OF PRICES
SECTION F - NMC2
<S> <C> <C> <C> <C>
TN-MS EC-16X Release 7 Standby Licence NTQJ93BG *
FW TN-16X Rel 7 NTPS (CD-ROM) NTFW64AH *
1.3 Advanced Optics (DWDM)
Core
DWDM FILTER MODULE SHELF ASSY - 4 POS - ETSI NTCE88BA *
DWDM COUPLER 8W,MB/DR W/O VOA,SC NTCA10GC *
DWDM COUPLER 8W,DB/MR W/O VOA,SC NTCA10HC *
TN-1X
Core
TN-1X Synchronous Access Multiplexer Subrack 25GMU00750GWV *
Shelf Kit 25SKM00750HFN *
TN-1X Installation Kit 25SKM00807ABL *
Local Craft Access Panel Type 1 25UEP00750GXB *
Service Interface Module Type 10 (Misc) 25UJJ00750GXC *
Service Interface Module Type 40 (LCAP) 25UJJ00750GWX *
Subrack Cover Kit 25SKM00750HFL *
Rack Mounting Kit for ETSI 25SKM00019AAE *
Dummy Front Panel 1" 25RBN00021AAB *
Dummy SIA Panel 1" 25RBN00021AAA *
Power Supply Unit 25UPW00750HAY *
Subrack Control Unit 25UMN00750GXD *
Payload Manager (mixed payload) NTKD10AA *
STM-1 G.957 L1.2 Optical Aggregate Port Card (1550nm) 25UTM00750HWH *
STM-1 G.957 L-1.1, S1.1 Optical Tributary Card
(1"wide) NTKD11AA *
***Optical patchcord 20m FC-FC NT7E46BD *
Craft Access Terminal NTQJ09AA *
RS 232 Cable Assembly 25YCN00748AAA *
TN-1 CAT Release 12 Application (3.5") NTQJ35LA
TN-MS CA-1X Release 12 Licence NTQJ91DL
Netscape Windows95 (Fastrack Server and Navigator) NTQJ81BA *
TN-1X Release 8 Software Download (from CAT) NTQJ36HA
HP B132, 128Mbytes RAM, 2Gb HD, DAT, CD, N.Hem NTQJ01FA *
TN-MS EC-1 Release 12 (DAT) NTQJ30LA
Netscape for UNIX (Fastrack Server and Navigator) NTQJ81AA *
TN-1X Release 8 software download (from EC) NTQJ31HA
TN-1C Release 3 Software kit (disk & tape) NTFT81CA *
TN-MS EC-1 Release 12 Licence for TN-1X NTQJ91AL *
TN-MS EC-1 Release 12 Standby Licence NTQJ91BL *
TN-MS EC-1 Multi-user Licence NTQJ91CA *
X terminal software on DAT NTQJ05JB *
TN-1X Rel 8 NTPs (CD-ROM MAC) 32HSC00456VEC *
TN-1C
Core
TN-1C 8x2/16x2 turbo ADM (1550nm L1.2) NTFT52BI *
AC/DC Power Unit NTFT21AA *
12V Battery NTFT24AA *
***BT43/5F & 3002 cable assy 20m 32YCN00750CAA *
***Optical patchcord 20m FC-FC NT7E46BD *
TN-MS EC-1 Release 12 Licence for TN-1C NTQJ91FL *
Craft Access Terminal NTQJ09AA *
CAT Cable Assembly NTFT15AC *
TN-1C Release 3 Software kit (disk & tape) NTFT81CA *
TN-1 CAT Release 12 Application (3.5") NTQJ35LA
Netscape Windows95 (Fastrack Server and Navigator) NTQJ81BA *
TN-1C Release 3 handbook CD-ROM NTFT66CA *
1.4 DXC
256 Port Cross Connect (MSH84) MSH84
STM-1 Optical card
16 x 2Mbit/s Port Unit
MV-36 Element controller MV-36
Managed Object Agent (MOA)
1.5 TN-MS INM * * *
Hardware *
HP C200 workstation, north & south hemisphere NTQJ01GC *
NRM Release 6 Software and Handbooks NTQJ12FA *
NRM Release 6 Feature Profile Tape - Core + IM + PM + CM NTQJ10FK *
TN-MS NRM (Rel6) Alarm surveillance Licence NTQJ90AF *
</TABLE>
132
<PAGE>
<TABLE>
<CAPTION>
VIATEL CIRCLE 1 CONTRACT
ANNEX C
SCHEDULE OF PRICES
SECTION F - NMC2
<S> <C> <C> <C> <C>
TN-MS NRM (Rel6) Electronic Software Delivery Licence NTQJ90BF *
TN-MS NRM (Rel6) Inventory Manager Licence NTQJ90DF *
TN-MS NRM (Rel6) Perf. Mon. Consolidation Licence NTQJ90EF *
TN-MS NRM (Rel6) Connection Management Licence NTQJ90FF *
TN-MS NRM (Rel6) Software Management User Guide NTQJ19FT *
TN-MS NRM (Rel6) Inventory Management User Guide NTQJ19FX *
TN-MS NRM (Rel6) Performance Management User Guide NTQJ19FW *
TN-MS NRM (Rel6) Connection Management User Guide NTQJ19FV *
Router 2501 OSI NTJM01BA
Router 2514 OSI NTJM01KA *
DCN RConfig "P" 2514 ent. 0 tunnels, Ser: 2 L2,0 L1
CPC Allocated: A0741950 NTJM9914 *
DCN RConfig "P" 2514 ent. 1 tunnel, Ser: 1 L2,1 L1
CPC Allocated: A0741941 NTJM9912
HS modem SP-1-AR,AC NTJM01SA *
Shelf Cantilever 19in mounting P0878672 *
Transceiver 10BaseT NTJM01VA *
Ethernet 10BaseT Transceiver A0383333 *
Baystack 101 10baseT hub 12 port RJ45 250VAC NTJM02PA
***Cable Assy LAN RJ45 - RJ45 h/e 32YCN00727AFA
***Ethernet kit for OPC hub (20m,OC-48) NT7E44JE
1.6 Network Synchronisation *
DCD-521C
DCD-Cs ETSI Standalone Cesium PRC 990-43100-02
DCD-LPR Shelf GPS Applications 990-44100-12
GPS Timing Kit E1 (Rubidium or Quartz) 990-44140-14
Blank Unit LPR 090-44198-01
LOU-2 Dual oscillator 090-44145-02
DCD-521/C ETSI Shelf Master/Expansion 990-44210-01
MRC-EA/Input card 2MHz/2Mb/s, 4 inputs 090-44010-06
TNCE Clock card rubidium 090-44017-02
TNC Clock card transit node OCXO 090-44020-02
TO-EA Output card 2MHz/2Mb/s 10 outputs 090-44029-01
MIS Maint i'f analysis/config/remote 990-44018-14
Blank Panel 1 TO slot wide 074-00208-01
Timing Input Module MRC SMB 990-45107-02
Timing Output Module SMB,1:1 prot 990-45105-07
1.7 EQUIPMENT PRACTICE
Mechanical bay assy ETSI (no expansion sh) NTCE89AA *
NTE-STM16 Rack (2200 x 600 x 300) - cost reduced NTFW70EA *
TN-16X Installation Kit 25SKM00807ABM *
REGEN Rack Assy NTFW71AA *
Rack side cover L/H u/o NTFW70AA P0725173 *
Rack side cover R/H u/o NTFW70AA P0725175 *
Mechanical assembly, rack, 42U A0726263 *
Distribution block 8 way left hand cable entry A0729317 *
Distribution block 8 way right hand cable entry A0729318 *
ETSI Rack, 220cm, without side panels NTKD70AA *
NT ETSI Rack Standard Inst.Kit 25SKM00807ABE *
ETSI Rack 48V DC Distrib Panel with Rack Alarm Unit 25SKM00807AAN *
1.8 Additional Items
OC-192 REL 1.4 SUPERSET CUSTOMER LOADS ***PLM_TN-16X_NC_1
AC Power Cable Assembly PLM_Source_locally *
***Cable Assy, RJ45 crossover 32YCN01094AFA * * *
*** OPTICAL PATCHCORD 20M SC-SC PLM_Advanced
Optics_NC_3 *
Total Extended Equipment Price *
2.0 Installation & Commissioning *
Installation Materials
Total Extended Price *
</TABLE>
133
<PAGE>
<TABLE>
<CAPTION>
VIATEL CIRCLE 1 CONTRACT
ANNEX C
SCHEDULE OF PRICES
SECTION E - FRANCE
PROJECT MANAGEMENT ISSUE 1.0
----------------------------------------------------------- -----------
ABBREVIATED DESCRIPTION EXT PRICE
----------------------------------------------------------- -----------
$US
<S> <C>
1 Project Management / Engineering *
</TABLE>
134
<PAGE>
ANNEX D
SPECIFICATION AND STATEMENT OF WORK
135
<PAGE>
SECTION A. NETWORK SPECIFICATION OF THE VIATEL CIRCE 1 SDH HIGH CAPACITY
BACKBONE NETWORK
1. INTRODUCTION
Nortel has designed for Viatel a high capacity SDH transmission network
utilising wavelength division multiplexing (WDM) technology and network
management to form a Northern European SDH backbone ring 'Circe 1'.
2. THE NETWORK
Nortel will utilise its TN-16X (STM 16) 2.5 Gbit/s Add/Drop Multiplexer
and MOR optical amplifier technology together managed by Nortel's INM
network management system.
The network is designed to operate using Wave Division Multiplexing
(WDM) technology on two optical fibres (four on the Northern submarine
route), providing 20 Gbit/s total traffic capacity. Each fibre will carry
eight STM-16 wavelengths (four on the Northern submarine route) of
bi-directional traffic using TN-16X DWDM transmitters. Protection of the
traffic is provided using Shared Protection Rings (SPRing). This provides
full protection of the backbone traffic, additionally enabling traffic
capacity greater than STM-16 per ring, depending on traffic distribution.
Management of the TN-16X equipment at the Element control layer is
provided by the OPC. This UNIX processor based platform is installed
within the equipment rack. The main OPC site will be at the NMC in
Staines with standbys in Amsterdam
The network is designed to drop traffic at the following nine sites
around Northern Europe:
Tele House -- UK
Staines -- UK
La defense -- France
Bastille -- France
Amiens -- France
Brussels -- Belgium
136
<PAGE>
Antwerp -- Belgium
Rotterdam -- Holland
Amsterdam -- Holland
Each of the above sites will be installed with a Digital cross-connect
capable of dropping 29 x STM 1 optical tribs and 189 x E1's (2 Mbit/s).
TN-16X regenerator equipment will be installed in Tournai--France due
to the distance of the proposed route between Paris and Brussels and the
fibre type transition at this location. The MOR site spacings proposed
will allow migration of the network to sixteen wavelengths at STM-16 or
STM-64 without any change to the optical amplifier separation. Distances
between cities have been estimated based on available geographic
information, and typical fibre losses (0.25 dB/km) have been assumed.
For transmission of the network across the submerged spans of the
North Sea and English channel, Nortel will deploy TN-16X regenerator
shelves at the landing sites. The Northern route due to its long length
will transfer to four fibres at 5Gbit/s bi-directional for this submerged
section. The Submarine cable terminal stations are located near to:
Winterton-UK & Zandvoort-Holland (Northern Route)
Eastbourne-UK & Abbeville-Holland (Southern Route)
The Circe 1 network also includes a low capacity STM-1 ring in Belgium
connecting seven points of presence with the main Circe 1 network in
Antwerp. The Belgian ring network is designed with Nortel's TN-1C
product, providing 8 x E1 (2Mbit/s) traffic capacity at each site. The
Belgian ring interconnects with the main Circe 1 network using a TN-1X
(STM-1) multiplexer via an STM-1o connection. Management of the TN-1C &
TN-1X equipment is managed at the element control level Via the TNMS.
This UNIX workstation based platform will be installed at the NMC in
Staines . The Belgian ring sites are as follows:
Charleroi
Gent
137
<PAGE>
Hasselt
Kortrijk
Liege
Mons
Namur
The network design provides Network Management of the Circe 1 network
through use of the Nortel Integrated Network Manager (INM) to be located
at the NMC in Staines. INM provides centralised management of up to 1,500
elements and so can support significant growth in the Viatel network. The
INM manages the network elements via the element controllers (OPC & TNMS)
via DCN connections. A second INM is also proposed to be installed at a
further NMC planned for North America. The INM provides the following
licensed features:
Performance Monitoring
Connection Management
Inventory Management
Electronic Software Delivery
Alarm Surveillance
Network Synchronisation is to be provided in two locations via GPS
(Global Positioning System) primary reference clocks, backed-up by
Caesium clock sources. Rubidium clock shelves will also be provided as
secondary back-up at both sites. Sites of implementation to be determined
following a synchronisation audit of the existing Viatel network.
SECTION B. STATEMENT OF WORK.
1. INTRODUCTION
This document provides the Nortel scope of work associated with the Viatel
Project Circe phase 1, it defines the activities to be undertaken by Nortel.
138
<PAGE>
2. OBJECTIVES OF PROJECT CIRCE (PHASE 1)
The Objective of Project Circe (Phase 1) is to provide a 20Gbit/s
Pan-European, city to city, Synchronous Digital Hierarchy (SDH) ring, capable of
providing high capacity bandwidth of varying data interfaces as well has highly
resilient ring protection systems. The fibre must be capable of carrying Dense
Wave Division Multiplexing (DWDM) line transmission techniques or high speed
Time Division Multiplexing (TDM) line protocol techniques and be future proof.
Additional Inter-city rings may be engineered during the early life-cycle of
the project, however, the Circe Ring 1 will have top priority.
2.1 CIRCE STRATEGY
The Circe Ring 1 will provide City to City connections , with NO drop off
points at intermediate towns or business areas.
There will be NO break out of capacity or access at the submarine frontier
stations.
The integrity of the 48 fibre rings must be maintained.
The network should be a full access 20Gbit/s ring with add and drop access
to the 20Gbit/s capacity at all cities in the network. The network should be
designed to increase in capacity to 40Gbit/s in the short term (one year to
eighteen months) , including sufficient accommodation and power capabilities, as
well as expanding to 180 Gbit/s in the longer term (up to five years).
3. TIMESCALES
Circe Ring 1 must be complete by December 22nd 1998 to enable Viatel to
offer services from this date.
4. NORTEL SCOPE OF WORK
4.1 To design a Pan European SDH network in accordance with the Project
Scope.
A system design engineer will be nominated as the System Design Authority
(SDA) and be responsible for the Circe network architecture, design and
topology. Network management design, data collect network design and integration
as well as synchronisation design and design integration.
Key Inputs :- Fibre Specifications, Losses, distances and splice points.
Building locations & available space.
139
<PAGE>
Building environment.
Capacity and Traffic requirements.
Add/Drop requirements.
Submarine Terminal Sites.
In country requirements, cross-border DDF's interface specs etc.
Synchronisation requirements.
Network management requirements.
Outputs :- System Engineering Diagrams.
Network Topology diagrams including network management.
Synchronisation Maps.
Data Collect Maps
Equipment connectivity.
Equipment configurations.
Recommended spares holdings.
Network Availability figures.
Production of system edits with equipment codes.
4.2 Production of Site Specific Equipment Planning Diagrams
A Customer Application Engineer will be allocated who will be responsible
for equipment floorplans, footprints, power dissipation figures and equipment
connectivity diagrams for the equipment to be delivered.
Key Inputs :- System Engineering Diagrams from SDA.
Building Studies.
Site Locations & Visits
Equipment Specifications.
Key Outputs:- Detailed Floorplans with equipment footprints.
Rack Layout information.
Equipment connection and cabling information.
Overhead ironwork/computer floor cabling requirements.
DDF and ODF connections.
DC Power configurations.
Floor loadings.
Environment specifications.
4.3 To manufacture, supply and/or order transmission equipment against an
agreed system design and project plan.
A system design will be agreed with the customer and appropriate change
control procedures put in place for add, moves and changes to the network. The
System design authority will then ensure all equipment and peripherals are
identified for manufacture or ordering (where required).
140
<PAGE>
Key Inputs :- System Design
Equipment Edits.
Project management delivery dates.
Entry into Common Order management system.
Interfaces and special requirements.
Key Ouputs :- To manufacture the telecommunications equipment in line with the
system design and equipment edits.
To test the equipment at all stages of the manufacturing process.
4.4 To project manage the system to operational readiness in line with an
agreed delivery plan and agreed project timescales.
A project management team will be established to co-ordinate and manage the
implementation programme in association with Viatel's Prime Contractor
(Bechtel).
Key Inputs :- To agree a network scope with defined sites and equipment
requirements in line with Vital's Strategic plan.
List of Priority sites for implementation.
Building and Accommodation availability dates.
AC and DC power availability dates.
Fibre availability dates.
Key Outputs :- Production of Nortel scope of work in relation to Vital's
Strategic plan.
Production of top level and detailed project plans.
Regular review of plan and update of plan against agreed
milestones.
Co-ordination of Nortel resources and activities.
Progression of equipment orders in line with an agreed project
plan.
Provide an interface with other prime contractors.
Resolution of project specific issues and problems.
Project progression reports.
4.5 To install commission and test the agreed list of transmission
equipment and cable all electronic interfaces to the Digital Distribution Frame
(provided by Nortel). To provide the optical cabling to the Optical Distribution
Frame (ODF) to be provided by Bechtel. To install the network management systems
and connect to the data collect network provided by Viatel.
Key Inputs :- Equipment schedule on a building by building basis in line with
the project plan.
Site Addresses and contact points.
141
<PAGE>
Site plans and equipment layouts.
Equipment configurations and connections.
Network Management Centre layout.
Data Collect Network layout.
Supply of Nortel and OEM supplied equipment.
Link commission and test specifications.
Key Outputs:- Installation and test of network management systems in NOC
Installation of transmission equipment to project plan.
Commission and test of supplied equipment and production of
test results.
4.6 To integrate and test all equipment and network management systems in
line with a pre-defined test schedule prepared by Nortel and agreed with the
customer.
Key Inputs :- Equipment Configuration schedule with features
Equipment Installation project plan.
Network management schedule.
Detailed equipment list.
Customer requirements for acceptance testing.
Key Outputs:- Integration & test project plan.
Integration and test of supplied equipment to test plan.
Production of test results and handover to maintenance & support.
4.7 To support the equipment in line with a negotiated support plan.
Key Inputs :- System design and equipment specifications.
System configurations.
Installation addresses.
Contact points and access details.
Key Outputs:- 2nd, 3rd and 4th line support in line with Nortel fault handling
processes.
142
<PAGE>
[Chart indicating the Nortel Top Level Support Plan.]
5. KEY MILESTONES & DEPENDENCIES
Nortel will manage all risks associated with aspects of the project under
its control, however, to meet the completion dates set for the project Nortel
have assumed the following critical milestones and associated dates to enable
Nortel to meet its objectives.
Installation dates will be staggered over a period of five months in order
to allow efficient access to and use of resources to meet the deadlines of the
project.
Accommodation will be identified by and made ready for installation by
Viatel in line with preset dates and criteria identified in Table 1 below.
Submarine fibre systems will be installed and tested by Alcatel in line with
the top level project schedule below.
Terrestrial Fibre systems will be installed and tested by Bechtel in line
with the top level schedule below.
143
<PAGE>
[Chart indicating key milestones and dependencies for completion of the Viatel
Project Circe.]
DIVISION OF RESPONSIBILITIES FOR IMPLEMENTATION/BUILDING SERVICES FOR VIATEL ADM
LOCATIONS
144
<PAGE>
The following tables outlines those tasks which will be the responsibility
of Viatel/Bechtel and those which will be the responsibility of Nortel:
<TABLE>
<CAPTION>
TASK BECHTEL NORTEL COMMENTS
- --------------------------------------------------------------------- ------------- ----------- --------------------------
<S> <C> <C> <C>
PROVISION OF PREMISES................................................ X
REFURBISHMENT OF PREMISES AS FOLLOWS:................................ X
INTERIOR DECOR....................................................... X
PROVISION OF LIGHTING................................................ X
COMPUTER FLOOR....................................................... X
FALSE CEILING........................................................ X
AC POWER DISTRIBUTION................................................ X
AC POWER FEED TO BUILDING............................................ X
ISSUING OF ELECTRICAL SAFETY CERTIFICATION........................... X
CONNECTION TO ELECTRICITY SUPPLY..................................... X
UPS SYSTEM........................................................... X Nortel if Required
BACKUP POWER (GENERATORS)............................................ X Nortel if Required
DC POWER RECTIFIERS.................................................. X Nortel if Required
DC POWER DISTRIBUTION................................................ X Nortel if Required
BATTERIES............................................................ X Nortel if Required
TRANSMISSION SYSTEM UP TO DDF........................................ X
CABLING SWITCHES TO DDF.............................................. X
DDF.................................................................. X
ODF.................................................................. X
PATCH CORDS.......................................................... X
OPTICAL CABLES EXTERNAL TO ODF....................................... X
OPTICAL CABLES SPLICING/TERMINATIONS................................. X
TESTING OF OPTICAL CABLES............................................ X
TRANSMISSION EQUIPMENT............................................... X
DIGITAL CROSS CONNECTS............................................... X
FIRE DETECTION/SUPPRESSION SYSTEM.................................... X
SECURITY SYSTEM AND ALARMS........................................... X
ACCESS CONTROL....................................................... X
FURNISHINGS FOR MANAGEMENT AND CALL CENTRE........................... X
EQUIPMENT CABINETS AND RACKS......................................... X
CABLE TRAYS (UNDERFLOOR)............................................. X
BUILDING MAINTENANCE................................................. X
</TABLE>
DIVISION OF RESPONSIBILITIES FOR IMPLEMENTATION/BUILDING SERVICES FOR VIATEL
REGEN LOCATIONS
145
<PAGE>
The following tables outlines those tasks which will be the responsibility
of Viatel/Bechtel and those which will be the responsibility of Nortel:
<TABLE>
<CAPTION>
TASK VIATEL NORTEL COMMENTS
- --------------------------------------------------------------------- ------------- ----------- --------------------------
<S> <C> <C> <C>
Nortel could provide EAMs
PROVISION OF PREMISES (EAMS OR PERMANENT STRUCTURES)................. X if Required
REFURBISHMENT OF PREMISES AS FOLLOWS:................................ X
INTERIOR DECOR....................................................... X Nortel in EAM if Req.
PROVISION OF LIGHTING................................................ X Nortel in EAM if Req.
COMPUTER FLOOR....................................................... X Nortel in EAM if Req.
FALSE CEILING........................................................ X Nortel in EAM if Req.
AC POWER DISTRIBUTION................................................ X Nortel in EAM if Req.
AC POWER FEED TO BUILDING............................................ X
ISSUING OF ELECTRICAL SAFETY CERTIFICATION........................... X
CONNECTION TO ELECTRICITY SUPPLY..................................... X
UPS SYSTEM........................................................... X Nortel if Required
BACKUP POWER (GENERATORS)............................................ X Nortel if Required
DC POWER RECTIFIERS.................................................. X Nortel if Required
DC POWER DISTRIBUTION................................................ X Nortel if Required
BATTERIES............................................................ X Nortel if Required
TRANSMISSION SYSTEM UP TO DDF........................................ X
CABLING SWITCHES TO DDF.............................................. X
DDF.................................................................. X
ODF.................................................................. X
PATCH CORDS.......................................................... X
OPTICAL CABLES EXTERNAL TO ODF....................................... X
OPTICAL CABLES SPLICING/TERMINATIONS................................. X
TESTING OF OPTICAL CABLES............................................ X
TRANSMISSION EQUIPMENT............................................... X
FIRE DETECTION/SUPPRESSION SYSTEM.................................... X Nortel in EAM if Req.
SECURITY SYSTEM AND ALARMS........................................... X Nortel in EAM if Req.
ACCESS CONTROL....................................................... X
EQUIPMENT CABINETS AND RACKS......................................... X
CABLE TRAYS (UNDERFLOOR)............................................. X Nortel in EAM if Req.
BUILDING MAINTENANCE................................................. X
</TABLE>
146
<PAGE>
EXHIBIT 12.1
VIATEL, INC.
RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
THREE MONTHS ENDED
1993 1994 1995 1996 1997 3/31/97 3/31/98
--------- ---------- ---------- ---------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Net Loss........................ $ (5,456) $ (12,495) $ (28,476) $ (38,375) $ (43,044) $ (9,402) $ (13,003)
Interest-Expensed**............. -- 772 8,856 10,848 12,450 3,009 3,781
--------- ---------- ---------- ---------- ---------- --------- ----------
Earnings...................... (5,456) (11,723) (19,620) (27,527) (30,594) (6,393) (9,222)
--------- ---------- ---------- ---------- ---------- --------- ----------
--------- ---------- ---------- ---------- ---------- --------- ----------
Fixed Charges:
Interest-Expensed**............. -- 772 8,856 10,848 12,450 3,009 3,781
Interest-Capitalized............ -- -- 508 67 164 -- --
--------- ---------- ---------- ---------- ---------- --------- ----------
Fixed Charges................. -- 772 9,364 10,915 12,614 3,009 3,781
--------- ---------- ---------- ---------- ---------- --------- ----------
--------- ---------- ---------- ---------- ---------- --------- ----------
Ratio of Earnings to Fixed
Charges........................ n/a n/a n/a n/a n/a n/a n/a
</TABLE>
- ------------------------
** Includes accretion of senior discount notes and amortization of debt issue
costs.
The ratio of earnings to fixed charges is calculated as income before taxes,
discontinued operations and extraordinary items plus interest expense, divided
by fixed charges. Fixed charges consist of interest on indebtedness, dividends
on preferred stock and one third of rental expense. The ratio of earnings to
fixed charges for the years ended 1993, 1994, 1995, 1996 and 1997 and the three
months ended March 31, 1997 and 1998 are less than 1 and therefore the earnings
are inadequate to cover the fixed charges by $5.5 million, $12.5 million, $28.5
million, $38.4 million, $43.0 million, $9.4 million and $13.0 million,
respectively.
<PAGE>
EXHIBIT 21.1
SUBSIDIARIES OF VIATEL, INC.
<TABLE>
<CAPTION>
JURISDICTION OF
INCORPORATION
NAME OF SUBSIDIARY: OR ORGANIZATION:
- -------------------------------------------------------------------------------------- --------------------------
<S> <C>
Viatel U.K. Limited United Kingdom
Viatel Staines Limited United Kingdom
Viaphone S.R.L. Italy
Viatel S.R.L. Italy
Viatel Operations, S.A. France
Viatel S.A. France
Viafon Dat Iberica, S.A. Spain
Viatel Global Communications Espana S.A. Spain
Viatel Belgium SA/NV Belgium
Viaphone SA/NV Belgium
Viatel Gmbh Germany
Viaphone Gmbh Germany
Viatel AG Switzerland
Viaphone AG Switzerland
Viatel Global Communications BV Netherlands
Viafoperations BV Netherlands
Viacol Ltda. Colombia
Viatel Colombia Management, Inc. Delaware
Viatel Colombia Holdings, Inc. Delaware
Viatel Sales U.S.A., Inc. Delaware
YYC Communications, Inc. Delaware
Viatel Nebraska, Inc. Delaware
Viatel Sweden, Inc. Delaware
Viatel Finland, Inc. Delaware
Viatel Argentina Holdings, Inc. Delaware
Viatel Argentina Management, Inc. Delaware
Viatel Brazil Management, Inc. Delaware
Viatel Brazil Holdings, Inc. Delaware
Viatel New Jersey, Inc. Delaware
</TABLE>
<PAGE>
EXHIBIT 23.2
ACCOUNTANTS' REPORT ON SCHEDULE AND CONSENT
The Board of Directors and Stockholders
Viatel, Inc. and Subsidiaries:
The audits referred to in our report dated March 4, 1998, except as to note
13(c) which is dated as of March 18, 1998, included the related consolidated
financial statement schedule as of December 31, 1997, and for each of the years
in the three-year period ended December 31, 1997, included in the registration
statement. This consolidated financial statement schedule is the responsibility
of the Company's management. Our responsibility is to express an opinion on this
consolidated financial statement schedule based on our audits. In our opinion,
such consolidated financial statement schedule, when considered in relation to
the basic consolidated financial statements taken as a whole, presents fairly in
all material respects the information set forth therein.
We consent to the use of our reports included herein and to the references
to our firm under the headings "Summary Consolidated Financial and Other Data,"
"Selected Consolidated Financial Data" and "Experts" in the prospectus.
/s/ KPMG PEAT MARWICK LLP
New York, New York
July 9, 1998
<PAGE>
Exhibit 25.1
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FORM T-1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) / /
---
------------------------
THE BANK OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-5160382
(State of incorporation (I.R.S. employer
if not a U.S. national bank) identification no.)
48 Wall Street, New York, N.Y. 10286
(Address of principal executive offices) (Zip code)
------------------------
VIATEL, INC.
(Exact name of obligor as specified in its charter)
Delaware 13-3787366
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
800 Third Avenue
New York, New York 10022
(Address of principal executive offices) (Zip code)
------------------------
12.50% Senior Discount Notes Due 2008
(Title of the indenture securities)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
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.
- --------------------------------------------------------------------------------
Name Address
- --------------------------------------------------------------------------------
Superintendent of Banks of the State of 2 Rector Street, New York,
New York N.Y. 10006, and Albany, N.Y.
12203
Federal Reserve Bank of New York 33 Liberty Plaza, New York,
N.Y. 10045
Federal Deposit Insurance Corporation Washington, D.C. 20429
New York Clearing House Association New York, New York 10005
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
2. Affiliations with Obligor.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None.
16. List of Exhibits.
Exhibits identified in parentheses below, on file with the Commission, are
incorporated herein by reference as an exhibit hereto, pursuant to Rule
7a-29 under the Trust Indenture Act of 1939 (the "Act") and 17 C.F.R.
229.10(d).
1. A copy of the Organization Certificate of The Bank of New York (formerly
Irving Trust Company) as now in effect, which contains the authority to
commence business and a grant of powers to exercise corporate trust
powers. (Exhibit 1 to Amendment No. 1 to Form T-1 filed with Registration
Statement No. 33-6215, Exhibits 1a and 1b to Form T-1 filed with
Registration Statement No. 33-21672 and Exhibit 1 to Form T-1 filed with
Registration Statement No. 33-29637.)
4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form T-1
filed with Registration Statement No. 33-31019.)
2
<PAGE>
6. The consent of the Trustee required by Section 321(b) of the Act.
(Exhibit 6 to Form T-1 filed with Registration Statement No. 33-44051.)
7. A copy of the latest report of condition of the Trustee published
pursuant to law or to the requirements of its supervising or examining
authority.
3
<PAGE>
SIGNATURE
Pursuant to the requirements of the Act, the Trustee, The Bank 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 17th day of June, 1998.
THE BANK OF NEW YORK
By: /s/VAN K. BROWN
-----------------------
Name: VAN K. BROWN
Title: ASSISTANT VICE PRESIDENT
4
<PAGE>
Exhibit 7
Consolidated Report of Condition of
THE BANK OF NEW YORK
of 48 Wall Street, New York, N.Y. 10286
And Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System, at the close of business December 31,
1997, published in accordance with a call made by the Federal Reserve Bank of
this District pursuant to the provisions of the Federal Reserve Act.
<TABLE>
<CAPTION>
Dollar Amounts
in Thousands
------------
<S> <C>
ASSETS
Cash and balances due from depos-
itory institutions:
Noninterest-bearing balances and
currency and coin ...................................... $ 5,742,986
Interest-bearing balances ............................... 1,342,769
Securities:
Held-to-maturity securities ............................. 1,099,736
Available-for-sale securities ........................... 3,882,686
Federal funds sold and Securities pur-
chased under agreements to resell ....................... 2,568,530
Loans and lease financing
receivables:
Loans and leases, net of unearned
income .................................... 35,019,608
LESS: Allowance for loan and
lease losses .............................. 627,350
LESS: Allocated transfer risk
reserve.................................... 0
Loans and leases, net of unearned
income, allowance, and reserve ........................ 34,392,258
Assets held in trading accounts ........................... 2,521,451
Premises and fixed assets (including
capitalized leases) ..................................... 659,209
Other real estate owned ................................... 11,992
Investments in unconsolidated
subsidiaries and associated
companies ............................................... 226,263
Customers' liability to this bank on
acceptances outstanding ................................. 1,187,449
Intangible assets ......................................... 781,684
Other assets .............................................. 1,736,574
-----------
Total assets .............................................. $56,153,587
-----------
-----------
LIABILITIES
Deposits:
In domestic offices ..................................... $27,031,362
Noninterest-bearing ......................... 11,899,507
Interest-bearing ............................ 15,131,855
In foreign offices, Edge and
Agreement subsidiaries, and IBFs ........................ 13,794,449
Noninterest-bearing ......................... 590,999
Interest-bearing ............................ 13,203,450
Federal funds purchased and Securities
sold under agreements to repurchase...................... 2,338,881
Demand notes issued to the U.S.
Treasury ................................................ 173,851
Trading liabilities ....................................... 1,695,216
Other borrowed money:
With remaining maturity of one year
or less ............................................... 1,905,330
With remaining maturity of more than
one year through three years........................... 0
With remaining maturity of more than
three years ........................................... 25,664
Bank's liability on acceptances exe-
cuted and outstanding ................................... 1,195,923
Subordinated notes and debentures ......................... 1,012,940
Other liabilities ......................................... 2,018,960
-----------
Total liabilities ......................................... 51,192,576
-----------
EQUITY CAPITAL
Common stock .............................................. 1,135,284
Surplus ................................................... 731,319
Undivided profits and capital
reserves ................................................ 3,093,726
Net unrealized holding gains
(losses) on available-for-sale
securities .............................................. 36,866
Cumulative foreign currency transla-
tion adjustments ........................................ ( 36,184)
------------
Total equity capital ...................................... 4,961,011
------------
Total liabilities and equity
capital ................................................. $56,153,587
-----------
-----------
</TABLE>
I, Robert E. Keilman, Senior Vice President and Comptroller of the
above-named bank do hereby declare that this Report of Condition has been
prepared in conformance with the instructions issued by the Board of Governors
of the Federal Reserve System and is true to the best of my knowledge and
belief.
Robert E. Keilman
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and is true and
correct.
Thomas A. Renyi |
Alan R. Griffith | Directors
J. Carter Bacot |
<PAGE>
Exhibit 25.2
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FORM T-1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) / /
---
------------------------
THE BANK OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-5160382
(State of incorporation (I.R.S. employer
if not a U.S. national bank) identification no.)
48 Wall Street, New York, N.Y. 10286
(Address of principal executive offices) (Zip code)
------------------------
VIATEL, INC.
(Exact name of obligor as specified in its charter)
Delaware 13-3787366
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
800 Third Avenue
New York, New York 10022
(Address of principal executive offices) (Zip code)
------------------------
11.25% Senior Notes Due 2008
(Title of the indenture securities)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
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.
- --------------------------------------------------------------------------------
Name Address
- --------------------------------------------------------------------------------
Superintendent of Banks of the State of 2 Rector Street, New York,
New York N.Y. 10006, and Albany, N.Y.
12203
Federal Reserve Bank of New York 33 Liberty Plaza, New York,
N.Y. 10045
Federal Deposit Insurance Corporation Washington, D.C. 20429
New York Clearing House Association New York, New York 10005
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
2. Affiliations with Obligor.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None.
16. List of Exhibits.
Exhibits identified in parentheses below, on file with the Commission, are
incorporated herein by reference as an exhibit hereto, pursuant to Rule
7a-29 under the Trust Indenture Act of 1939 (the "Act") and 17 C.F.R.
229.10(d).
1. A copy of the Organization Certificate of The Bank of New York (formerly
Irving Trust Company) as now in effect, which contains the authority to
commence business and a grant of powers to exercise corporate trust
powers. (Exhibit 1 to Amendment No. 1 to Form T-1 filed with Registration
Statement No. 33-6215, Exhibits 1a and 1b to Form T-1 filed with
Registration Statement No. 33-21672 and Exhibit 1 to Form T-1 filed with
Registration Statement No. 33-29637.)
4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form T-1
filed with Registration Statement No. 33-31019.)
2
<PAGE>
6. The consent of the Trustee required by Section 321(b) of the Act.
(Exhibit 6 to Form T-1 filed with Registration Statement No. 33-44051.)
7. A copy of the latest report of condition of the Trustee published
pursuant to law or to the requirements of its supervising or examining
authority.
3
<PAGE>
SIGNATURE
Pursuant to the requirements of the Act, the Trustee, The Bank 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 17th day of June, 1998.
THE BANK OF NEW YORK
By: /s/VAN K. BROWN
-----------------------
Name: VAN K. BROWN
Title: ASSISTANT VICE PRESIDENT
4
<PAGE>
Exhibit 7
Consolidated Report of Condition of
THE BANK OF NEW YORK
of 48 Wall Street, New York, N.Y. 10286
And Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System, at the close of business December 31,
1997, published in accordance with a call made by the Federal Reserve Bank of
this District pursuant to the provisions of the Federal Reserve Act.
<TABLE>
<CAPTION>
Dollar Amounts
in Thousands
------------
<S> <C>
ASSETS
Cash and balances due from depos-
itory institutions:
Noninterest-bearing balances and
currency and coin ...................................... $ 5,742,986
Interest-bearing balances ............................... 1,342,769
Securities:
Held-to-maturity securities ............................. 1,099,736
Available-for-sale securities ........................... 3,882,686
Federal funds sold and Securities pur-
chased under agreements to resell ....................... 2,568,530
Loans and lease financing
receivables:
Loans and leases, net of unearned
income .................................... 35,019,608
LESS: Allowance for loan and
lease losses .............................. 627,350
LESS: Allocated transfer risk
reserve.................................... 0
Loans and leases, net of unearned
income, allowance, and reserve ........................ 34,392,258
Assets held in trading accounts ........................... 2,521,451
Premises and fixed assets (including
capitalized leases) ..................................... 659,209
Other real estate owned ................................... 11,992
Investments in unconsolidated
subsidiaries and associated
companies ............................................... 226,263
Customers' liability to this bank on
acceptances outstanding ................................. 1,187,449
Intangible assets ......................................... 781,684
Other assets .............................................. 1,736,574
-----------
Total assets .............................................. $56,153,587
-----------
-----------
LIABILITIES
Deposits:
In domestic offices ..................................... $27,031,362
Noninterest-bearing ......................... 11,899,507
Interest-bearing ............................ 15,131,855
In foreign offices, Edge and
Agreement subsidiaries, and IBFs ........................ 13,794,449
Noninterest-bearing ......................... 590,999
Interest-bearing ............................ 13,203,450
Federal funds purchased and Securities
sold under agreements to repurchase...................... 2,338,881
Demand notes issued to the U.S.
Treasury ................................................ 173,851
Trading liabilities ....................................... 1,695,216
Other borrowed money:
With remaining maturity of one year
or less ............................................... 1,905,330
With remaining maturity of more than
one year through three years........................... 0
With remaining maturity of more than
three years ........................................... 25,664
Bank's liability on acceptances exe-
cuted and outstanding ................................... 1,195,923
Subordinated notes and debentures ......................... 1,012,940
Other liabilities ......................................... 2,018,960
-----------
Total liabilities ......................................... 51,192,576
-----------
EQUITY CAPITAL
Common stock .............................................. 1,135,284
Surplus ................................................... 731,319
Undivided profits and capital
reserves ................................................ 3,093,726
Net unrealized holding gains
(losses) on available-for-sale
securities .............................................. 36,866
Cumulative foreign currency transla-
tion adjustments ........................................ ( 36,184)
------------
Total equity capital ...................................... 4,961,011
------------
Total liabilities and equity
capital ................................................. $56,153,587
-----------
-----------
</TABLE>
I, Robert E. Keilman, Senior Vice President and Comptroller of the
above-named bank do hereby declare that this Report of Condition has been
prepared in conformance with the instructions issued by the Board of Governors
of the Federal Reserve System and is true to the best of my knowledge and
belief.
Robert E. Keilman
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and is true and
correct.
Thomas A. Renyi |
Alan R. Griffith | Directors
J. Carter Bacot |
<PAGE>
Exhibit 25.3
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FORM T-1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) / /
---
------------------------
THE BANK OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-5160382
(State of incorporation (I.R.S. employer
if not a U.S. national bank) identification no.)
48 Wall Street, New York, N.Y. 10286
(Address of principal executive offices) (Zip code)
------------------------
VIATEL, INC.
(Exact name of obligor as specified in its charter)
Delaware 13-3787366
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
800 Third Avenue
New York, New York 10022
(Address of principal executive offices) (Zip code)
------------------------
12.40% Senior Discount Notes Due 2008
(Title of the indenture securities)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
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.
- --------------------------------------------------------------------------------
Name Address
- --------------------------------------------------------------------------------
Superintendent of Banks of the State of 2 Rector Street, New York,
New York N.Y. 10006, and Albany, N.Y.
12203
Federal Reserve Bank of New York 33 Liberty Plaza, New York,
N.Y. 10045
Federal Deposit Insurance Corporation Washington, D.C. 20429
New York Clearing House Association New York, New York 10005
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
2. Affiliations with Obligor.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None.
16. List of Exhibits.
Exhibits identified in parentheses below, on file with the Commission, are
incorporated herein by reference as an exhibit hereto, pursuant to Rule
7a-29 under the Trust Indenture Act of 1939 (the "Act") and 17 C.F.R.
229.10(d).
1. A copy of the Organization Certificate of The Bank of New York (formerly
Irving Trust Company) as now in effect, which contains the authority to
commence business and a grant of powers to exercise corporate trust
powers. (Exhibit 1 to Amendment No. 1 to Form T-1 filed with Registration
Statement No. 33-6215, Exhibits 1a and 1b to Form T-1 filed with
Registration Statement No. 33-21672 and Exhibit 1 to Form T-1 filed with
Registration Statement No. 33-29637.)
4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form T-1
filed with Registration Statement No. 33-31019.)
2
<PAGE>
6. The consent of the Trustee required by Section 321(b) of the Act.
(Exhibit 6 to Form T-1 filed with Registration Statement No. 33-44051.)
7. A copy of the latest report of condition of the Trustee published
pursuant to law or to the requirements of its supervising or examining
authority.
3
<PAGE>
SIGNATURE
Pursuant to the requirements of the Act, the Trustee, The Bank 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 17th day of June, 1998.
THE BANK OF NEW YORK
By: /s/VAN K. BROWN
-----------------------
Name: VAN K. BROWN
Title: ASSISTANT VICE PRESIDENT
4
<PAGE>
Exhibit 7
Consolidated Report of Condition of
THE BANK OF NEW YORK
of 48 Wall Street, New York, N.Y. 10286
And Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System, at the close of business December 31,
1997, published in accordance with a call made by the Federal Reserve Bank of
this District pursuant to the provisions of the Federal Reserve Act.
<TABLE>
<CAPTION>
Dollar Amounts
in Thousands
------------
<S> <C>
ASSETS
Cash and balances due from depos-
itory institutions:
Noninterest-bearing balances and
currency and coin ...................................... $ 5,742,986
Interest-bearing balances ............................... 1,342,769
Securities:
Held-to-maturity securities ............................. 1,099,736
Available-for-sale securities ........................... 3,882,686
Federal funds sold and Securities pur-
chased under agreements to resell ....................... 2,568,530
Loans and lease financing
receivables:
Loans and leases, net of unearned
income .................................... 35,019,608
LESS: Allowance for loan and
lease losses .............................. 627,350
LESS: Allocated transfer risk
reserve.................................... 0
Loans and leases, net of unearned
income, allowance, and reserve ........................ 34,392,258
Assets held in trading accounts ........................... 2,521,451
Premises and fixed assets (including
capitalized leases) ..................................... 659,209
Other real estate owned ................................... 11,992
Investments in unconsolidated
subsidiaries and associated
companies ............................................... 226,263
Customers' liability to this bank on
acceptances outstanding ................................. 1,187,449
Intangible assets ......................................... 781,684
Other assets .............................................. 1,736,574
-----------
Total assets .............................................. $56,153,587
-----------
-----------
LIABILITIES
Deposits:
In domestic offices ..................................... $27,031,362
Noninterest-bearing ......................... 11,899,507
Interest-bearing ............................ 15,131,855
In foreign offices, Edge and
Agreement subsidiaries, and IBFs ........................ 13,794,449
Noninterest-bearing ......................... 590,999
Interest-bearing ............................ 13,203,450
Federal funds purchased and Securities
sold under agreements to repurchase...................... 2,338,881
Demand notes issued to the U.S.
Treasury ................................................ 173,851
Trading liabilities ....................................... 1,695,216
Other borrowed money:
With remaining maturity of one year
or less ............................................... 1,905,330
With remaining maturity of more than
one year through three years........................... 0
With remaining maturity of more than
three years ........................................... 25,664
Bank's liability on acceptances exe-
cuted and outstanding ................................... 1,195,923
Subordinated notes and debentures ......................... 1,012,940
Other liabilities ......................................... 2,018,960
-----------
Total liabilities ......................................... 51,192,576
-----------
EQUITY CAPITAL
Common stock .............................................. 1,135,284
Surplus ................................................... 731,319
Undivided profits and capital
reserves ................................................ 3,093,726
Net unrealized holding gains
(losses) on available-for-sale
securities .............................................. 36,866
Cumulative foreign currency transla-
tion adjustments ........................................ ( 36,184)
------------
Total equity capital ...................................... 4,961,011
------------
Total liabilities and equity
capital ................................................. $56,153,587
-----------
-----------
</TABLE>
I, Robert E. Keilman, Senior Vice President and Comptroller of the
above-named bank do hereby declare that this Report of Condition has been
prepared in conformance with the instructions issued by the Board of Governors
of the Federal Reserve System and is true to the best of my knowledge and
belief.
Robert E. Keilman
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and is true and
correct.
Thomas A. Renyi |
Alan R. Griffith | Directors
J. Carter Bacot |
<PAGE>
Exhibit 25.4
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FORM T-1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) / /
---
------------------------
THE BANK OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-5160382
(State of incorporation (I.R.S. employer
if not a U.S. national bank) identification no.)
48 Wall Street, New York, N.Y. 10286
(Address of principal executive offices) (Zip code)
------------------------
VIATEL, INC.
(Exact name of obligor as specified in its charter)
Delaware 13-3787366
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
800 Third Avenue
New York, New York 10022
(Address of principal executive offices) (Zip code)
------------------------
11.15% Senior Notes Due 2008
(Title of the indenture securities)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
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.
- --------------------------------------------------------------------------------
Name Address
- --------------------------------------------------------------------------------
Superintendent of Banks of the State of 2 Rector Street, New York,
New York N.Y. 10006, and Albany, N.Y.
12203
Federal Reserve Bank of New York 33 Liberty Plaza, New York,
N.Y. 10045
Federal Deposit Insurance Corporation Washington, D.C. 20429
New York Clearing House Association New York, New York 10005
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
2. Affiliations with Obligor.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None.
16. List of Exhibits.
Exhibits identified in parentheses below, on file with the Commission, are
incorporated herein by reference as an exhibit hereto, pursuant to Rule
7a-29 under the Trust Indenture Act of 1939 (the "Act") and 17 C.F.R.
229.10(d).
1. A copy of the Organization Certificate of The Bank of New York (formerly
Irving Trust Company) as now in effect, which contains the authority to
commence business and a grant of powers to exercise corporate trust
powers. (Exhibit 1 to Amendment No. 1 to Form T-1 filed with Registration
Statement No. 33-6215, Exhibits 1a and 1b to Form T-1 filed with
Registration Statement No. 33-21672 and Exhibit 1 to Form T-1 filed with
Registration Statement No. 33-29637.)
4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form T-1
filed with Registration Statement No. 33-31019.)
2
<PAGE>
6. The consent of the Trustee required by Section 321(b) of the Act.
(Exhibit 6 to Form T-1 filed with Registration Statement No. 33-44051.)
7. A copy of the latest report of condition of the Trustee published
pursuant to law or to the requirements of its supervising or examining
authority.
3
<PAGE>
SIGNATURE
Pursuant to the requirements of the Act, the Trustee, The Bank 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 17th day of June, 1998.
THE BANK OF NEW YORK
By: /s/VAN K. BROWN
-----------------------
Name: VAN K. BROWN
Title: ASSISTANT VICE PRESIDENT
4
<PAGE>
Exhibit 7
Consolidated Report of Condition of
THE BANK OF NEW YORK
of 48 Wall Street, New York, N.Y. 10286
And Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System, at the close of business December 31,
1997, published in accordance with a call made by the Federal Reserve Bank of
this District pursuant to the provisions of the Federal Reserve Act.
<TABLE>
<CAPTION>
Dollar Amounts
in Thousands
------------
<S> <C>
ASSETS
Cash and balances due from depos-
itory institutions:
Noninterest-bearing balances and
currency and coin ...................................... $ 5,742,986
Interest-bearing balances ............................... 1,342,769
Securities:
Held-to-maturity securities ............................. 1,099,736
Available-for-sale securities ........................... 3,882,686
Federal funds sold and Securities pur-
chased under agreements to resell ....................... 2,568,530
Loans and lease financing
receivables:
Loans and leases, net of unearned
income .................................... 35,019,608
LESS: Allowance for loan and
lease losses .............................. 627,350
LESS: Allocated transfer risk
reserve.................................... 0
Loans and leases, net of unearned
income, allowance, and reserve ........................ 34,392,258
Assets held in trading accounts ........................... 2,521,451
Premises and fixed assets (including
capitalized leases) ..................................... 659,209
Other real estate owned ................................... 11,992
Investments in unconsolidated
subsidiaries and associated
companies ............................................... 226,263
Customers' liability to this bank on
acceptances outstanding ................................. 1,187,449
Intangible assets ......................................... 781,684
Other assets .............................................. 1,736,574
-----------
Total assets .............................................. $56,153,587
-----------
-----------
LIABILITIES
Deposits:
In domestic offices ..................................... $27,031,362
Noninterest-bearing ......................... 11,899,507
Interest-bearing ............................ 15,131,855
In foreign offices, Edge and
Agreement subsidiaries, and IBFs ........................ 13,794,449
Noninterest-bearing ......................... 590,999
Interest-bearing ............................ 13,203,450
Federal funds purchased and Securities
sold under agreements to repurchase...................... 2,338,881
Demand notes issued to the U.S.
Treasury ................................................ 173,851
Trading liabilities ....................................... 1,695,216
Other borrowed money:
With remaining maturity of one year
or less ............................................... 1,905,330
With remaining maturity of more than
one year through three years........................... 0
With remaining maturity of more than
three years ........................................... 25,664
Bank's liability on acceptances exe-
cuted and outstanding ................................... 1,195,923
Subordinated notes and debentures ......................... 1,012,940
Other liabilities ......................................... 2,018,960
-----------
Total liabilities ......................................... 51,192,576
-----------
EQUITY CAPITAL
Common stock .............................................. 1,135,284
Surplus ................................................... 731,319
Undivided profits and capital
reserves ................................................ 3,093,726
Net unrealized holding gains
(losses) on available-for-sale
securities .............................................. 36,866
Cumulative foreign currency transla-
tion adjustments ........................................ ( 36,184)
------------
Total equity capital ...................................... 4,961,011
------------
Total liabilities and equity
capital ................................................. $56,153,587
-----------
-----------
</TABLE>
I, Robert E. Keilman, Senior Vice President and Comptroller of the
above-named bank do hereby declare that this Report of Condition has been
prepared in conformance with the instructions issued by the Board of Governors
of the Federal Reserve System and is true to the best of my knowledge and
belief.
Robert E. Keilman
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and is true and
correct.
Thomas A. Renyi |
Alan R. Griffith | Directors
J. Carter Bacot |
