STRICTLY CONFIDENTIAL
------------------------------------------------------
RESTRUCTURING AGREEMENT
AMONG
NETIA HOLDINGS, S.A.,
NETIA SOUTH SP. Z O.O.,
NETIA TELEKOM S.A.,
NETIA HOLDINGS B.V.,
NETIA HOLDINGS II B.V.,
NETIA HOLDINGS III B.V.,
THE CONSENTING NOTEHOLDERS SIGNATORIES HERETO,
JPMORGAN CHASE BANK,
TELIA AB (publ.),
AND
WARBURG, XXXXXX EQUITY PARTNERS, L.P.,
WARBURG, XXXXXX VENTURES INTERNATIONAL, L.P.,
WARBURG, XXXXXX NETHERLANDS EQUITY PARTNERS I, C.V.,
WARBURG, XXXXXX NETHERLANDS EQUITY PARTNERS II, C.V.,
WARBURG, XXXXXX NETHERLANDS EQUITY PARTNERS III, C.V.,
XXXXXXX XXXXX HOLDING LIMITED
Dated as of March 5, 2002
------------------------------------------------------
RESTRUCTURING AGREEMENT
RESTRUCTURING AGREEMENT, dated as of March 5, 2002 (this "Agreement"),
among NETIA HOLDINGS, S.A, a Polish joint-stock company (the "Company"), NETIA
SOUTH SP. Z O.O., a Polish limited liability company ("South"), NETIA TELEKOM
S.A., a Polish joint-stock company ("Telekom"), NETIA HOLDINGS B.V., a
Netherlands private company with limited liability ("BVI"), NETIA HOLDINGS II
B.V., a Netherlands private company with limited liability ("BVII"), NETIA
HOLDINGS III B.V., a Netherlands private company with limited liability
("BVIII", together with the Company, South, Telekom, BVI and BVII, the "Company
Group"); each of the Consenting Noteholders (as defined below) signatories
hereto; JPMORGAN CHASE BANK, ("JPMorgan") in its capacity as Swap Creditor (as
defined below); TELIA AB (publ.), a Swedish company ("Telia"); and WARBURG,
XXXXXX EQUITY PARTNERS, L.P., a Delaware limited partnership ("WPEP"), WARBURG,
XXXXXX VENTURES INTERNATIONAL, L.P., a Bermuda limited partnership ("WPVI"),
WARBURG, XXXXXX NETHERLANDS EQUITY PARTNERS I, C.V., a Dutch limited partnership
("WPNE I"), WARBURG, XXXXXX NETHERLANDS EQUITY PARTNERS II, C.V., a Dutch
limited partnership ("WPNE II"), WARBURG PINCUS NETHERLANDS EQUITY PARTNERS III,
C.V., a Dutch Limited partnership ("WPNE III") and XXXXXXX XXXXX HOLDING
LIMITED, a Cyprus company ("WNHL" and, together with WPEP, WPVI, WPNE I, WPNE II
and WPNE III, the "WP Entities" and each individually a "WP Entity").
W I T N E S S E T H:
WHEREAS, the Company and certain leading holders of Notes (as defined
below; such holders jointly with other noteholders accepting the terms hereof
are referred to as Consenting Noteholders, as defined in detail below) have
engaged in negotiations, directly or through representatives, with the objective
of reaching an agreement for the restructuring of the Notes (as defined below)
as part of a financial restructuring of the Company Group;
WHEREAS, Telia, the WP Entities, the Company, the Consenting Noteholders
and JPMorgan have agreed to implement the financial restructuring of the Company
Group upon the terms and subject to the conditions set forth herein and in the
term sheet (the "Term Sheet") attached hereto as Exhibit A (the "Financial
Restructuring") and, in particular, that the Financial Restructuring shall
involve, inter alia, cancellation or significant (up to 99%) reduction of the
Company's obligations arising out of guarantees issued for the benefit of
holders of the Notes and JPMorgan as well as cancellation of the Notes in
consideration for the issuance of Restructuring Shares and New Notes (as each is
defined below) to the benefit of the holders of the Notes and to JPMorgan,
provided that the Restructuring Shares constitute no more than 91% of the total
number of voting rights in the Company after the Financial Restructuring;
WHEREAS, the Company and the leading noteholders requested Telia, as a
strategic shareholder in the Company, to support the Financial Restructuring and
Telia,
1
following negotiations, agreed thereto on the terms and subject to the
conditions of this Agreement;
WHEREAS, the Company and the leading noteholders further requested the WP
Entities, as significant financial shareholders in the Company, to also support
the Financial Restructuring and the WP Entities, following negotiations, agreed
thereto on the terms and subject to the conditions of this Agreement;
WHEREAS, as a result of the foregoing negotiations, the parties hereto have
agreed on the terms and subject to the conditions set forth in this Agreement to
use their commercial best efforts to implement the Financial Restructuring by
adopting the Exchange Offer Steps in conjunction with the Polish Arrangement
Proceedings and the Dutch Composition Proceedings (each as defined in Section
6.1, and together, the "Restructuring Steps") as quickly as practical, and in
any event, prior to December 31, 2002 (the "Termination Date");
WHEREAS, in order to expedite and ensure the implementation of the
Financial Restructuring, each of the Consenting Noteholders, JPMorgan, Telia and
the WP Entities has agreed, on the terms and subject to the conditions of this
Agreement, to support the Financial Restructuring and to perform its other
obligations under this Agreement;
WHEREAS, Telia and the WP Entities have agreed towards the Company, the
Consenting Noteholders and JPMorgan, to vote in favor of a resolution (in this
recital called the "first resolution") at the Extraordinary General Meeting of
the Company adjourned to 12 March 2002 even though the first resolution may not
provide for all of the terms of the Financial Restructuring or completely
reflect those of the terms that it is intended to provide for, they do so on the
understanding that there are timing advantages for the implementation of the
Financial Restructuring in passing the first resolution so as to allow a filing
to be made with the Polish SEC (as defined below) and that, apart from that
filing and if necessary a similar filing with the US Securities and Exchange
Commission, the Company will not act upon the first resolution until and unless
as may be required an additional resolution is proposed or additional
resolutions are proposed supplementing the first resolution and, if necessary
amending it, at one or more other Extraordinary General Meetings of the Company
to be held as soon as practicable after the date hereof which resolutions,
either themselves or together with the first resolution will accurately and
completely provide for the Financial Restructuring;
WHEREAS, all obligations and covenants undertaken hereunder and all
consents, representations and warranties made herein by Telia on the one hand,
and the WP Entities on the other hand, have been undertaken and made by the
respective shareholders independently of each other in response to identical
proposals made to each such shareholder by the Company and/or the Consenting
Noteholders, and following negotiations of such shareholder with such other
proposing party hereto; and all the obligations, covenants, consents,
representations and warranties of each such shareholder which have been
undertaken or made pursuant to the terms of this Agreement reflect such
2
shareholder's independent determination that the proposed Financial
Restructuring represents the best possible solution to the current financial
difficulties of the Company and is aimed at preventing its bankruptcy and, as
such, is in the best interest of the Company and all of its shareholders;
WHEREAS, the Company is a public company and, therefore, all the parties
hereto are obligated to observe respective provisions of Polish Law on Public
Trading in Securities of August 21, 1997, together with all implementing
regulations; and
WHEREAS, certain terms used in this Agreement are defined in Section 6.1
and capitalized terms used in this Agreement and not defined shall have the
meanings ascribed to them in the Term Sheet;
NOW, THEREFORE, in consideration of the premises and the mutual (as the
case may be) covenants and agreements hereinafter contained, the parties hereby
agree as follows:
Article I
FINANCIAL RESTRUCTURING
1.1 Company Obligations.
-------------------
(a) The Company hereby agrees to implement the Financial Restructuring by
carrying out the following:
(i) the Company shall continue to implement the Polish Arrangement
Proceedings;
(ii) the Company shall procure that BVI, BVII and BVIII shall commence
the Dutch Composition Proceedings promptly following the completion of a
composition plan, based on the terms of this Agreement, that can be filed
in the Dutch Composition Proceedings; and
(iii) the Company shall complete the Exchange Offer Steps in
conjunction with the Polish Arrangement Proceedings and the Dutch
Composition Proceedings.
(b) The Company hereby agrees to use its commercial best efforts, and shall
cause the other companies in the Company Group to use their commercial best
efforts, to take all acts reasonably necessary to effect the Financial
Restructuring.
(c) Except as contemplated by this Agreement, the Company shall not seek to
acquire, either directly or indirectly, the beneficial ownership of, or right to
direct the disposition or vote in respect of, any of the Notes.
3
1.2 Consenting Noteholder Obligations. Each Consenting Noteholder hereby
agrees that such Consenting Noteholder:
(a) shall tender and not withdraw the relevant portion of its Notes
pursuant to the terms of the Exchange Offer Documents;
(b) shall consent to the Indenture Amendments;
(c) shall undertake to vote its Notes in favor of the Dutch Composition
Proceedings and its guarantee obligations in favor of the Polish Arrangement
Proceedings;
(d) shall take all such other steps and file all such other notices or
directions reasonably requested by the Company in order to give effect to the
Financial Restructuring and take all steps that the Company, the Committee (as
defined herein), Telia, the WP Entities and JPMorgan agree are necessary (each
acting reasonably) to give effect to the Financial Restructuring. In the case of
the Polish Arrangement Proceedings and the Dutch Composition Proceedings, the
Consenting Noteholder hereby agrees to support the Company Group in obtaining
the Proceedings Orders (as defined below) and giving effect to each, which shall
include, among other things, consenting to the reduction of up to 99% of the
debts of the Company, Telekom and South in the Polish Arrangement Proceedings
and, at the expense of the Company, filing all notices, directions or affidavits
reasonably requested by the Company (including confirmation that such Consenting
Noteholder fully supports the Polish Arrangement Proceedings and the Dutch
Composition Proceedings and that its advisors have been afforded the opportunity
to conduct a due diligence investigation of the Company Group) and directing its
legal and financial advisors to support the petitions and do all other things
reasonably necessary to assist in the obtaining of the Proceedings Orders,
including without limitation, the commitment to appoint an agent for the service
of the process in Poland and/or a qualified local counsel pursuant to Section
6.2(b) hereof, and agrees upon any occasion upon which votes are required to be
cast at a meeting of creditors pursuant to any proceedings relating to the
Financial Restructuring, to exercise all votes it may have in respect of the
Notes or other claims against any company in the Company Group in support of the
Polish Arrangement Proceedings and the Dutch Composition Proceedings;
(e) shall act in good faith in concluding the Financial Restructuring;
(f) to the extent which is lawful, shall refrain from voting (or from
causing a vote to be cast) in favor of, or otherwise supporting or preparing,
directly or indirectly, except as expressly contemplated hereby, (i) any other
proposed plan of reorganization for or involving any company in the Company
Group, or any other arrangement or composition for any such company, (ii) any
relief in an involuntary case under any applicable insolvency, bankruptcy or
other similar Law with respect to any company in the Company Group or all or
substantially all of any of such company's assets, or (iii) the appointment of
an administrator, liquidator, custodian or similar official
4
over all or substantially all of the property, assets and undertakings of any
company in the Company Group;
(g) shall not take any action or exercise any remedy against the Company as
a result of any Default (as such term is defined in the Indentures and
including, without limitation, any non-payment or prospective non-payment of
interest) in respect of the Notes (occurring prior to the termination of this
Agreement in accordance with its terms);
(h) hereby waives any Event of Default (as such term is defined in the
Indentures) occasioned by the Restructuring Steps and shall consent to
appropriate actions to rescind any acceleration that may occur as a result of
any such Event of Default not capable by the terms of the Indentures of being so
waived;
(i) shall not oppose the temporary restraining order, or such other similar
injunctive relief including, but not limited to, a preliminary injunction (the
"TRO"), obtained in the proceeding commenced by the Company in the United States
Bankruptcy Court for the Southern District of New York (the "U.S. Bankruptcy
Court") under Section 304 of the U.S. Bankruptcy Code and authorizes its legal
counsel to execute any necessary documentation to extend such TRO until the
later of the Financial Restructuring Consummation and the ratification of the
order of the Polish court approving the Polish Arrangement Proceedings;
(j) shall not support any other holders of Notes that take any action or
exercise any remedy against any company in the Company Group as a result of any
Default in respect of the Notes, and upon sufficient written notice from the
Company shall attend in person or by properly authorized proxy any meeting of
the holders of Notes convened for the purpose of discussing such matters and
shall cast the votes pertaining to its Notes against any proposal to take any
such action or exercise any such remedy and in favor of any proposal to rescind
any acceleration of the Notes;
(k) shall not instruct or procure the Trustee (as such term is defined in
each Indenture) to take any action that is inconsistent with the terms and
conditions of this Agreement;
(l) hereby acknowledges that the Company intends to de-register the Notes
under the 1934 Act following the Financial Restructuring Consummation;
(m) to the extent which is lawful, shall not act, whether alone or in
concert with others, to advise, assist or encourage any Person to act in a
manner which frustrates the Financial Restructuring and/or the Restructuring
Steps;
(n) to the extent not already bound by a confidentiality agreement with the
Company, shall agree to enter into a written confidentiality agreement
reasonably acceptable to the Company if such Consenting Noteholder seeks to
obtain from the
5
Company any price sensitive material non-public information regarding the
Company Group; and
(o) shall not sell, transfer or assign any of its Notes, any voting
interest therein, or any claim such Consenting Noteholder may have against any
company in the Company Group to any Person which is not another Consenting
Noteholder during the term of this Agreement unless such Person first enters
into an undertaking in favor of the other parties hereto agreeing to be bound by
the terms of this Agreement as if such Person were a Consenting Noteholder;
provided, that if such transfer is to another Consenting Noteholder, such
Consenting Noteholder shall promptly notify the Company of the changes in the
number and series of Notes and in the claims held.
1.3 JPMorgan Obligations. JPMorgan hereby agrees that in its capacity as a
creditor under the JPMorgan Swaps it:
(a) shall tender and not withdraw the relevant portion of its claims
against all companies in the Company Group pursuant to the terms of the Exchange
Offer Documents;
(b) shall consent to the extinguishment of all claims against one or more
members of the Company Group arising from the JPMorgan Swaps such that, upon
JPMorgan's receipt of its entitlement to its Restructuring Shares and New Notes,
none of the Company Group shall have any obligation (whether financial or
otherwise) to JPMorgan arising from the JPMorgan Swaps upon completion of the
Financial Restructuring upon the terms set out in this Agreement;
(c) agrees upon any occasion upon which votes are to be cast at a meeting
of creditors pursuant to any proceedings relating to the Financial Restructuring
to exercise all votes it may have in respect of the JPMorgan Swaps against any
company in the Company Group in support of the Polish Arrangement Proceedings
and Dutch Composition Proceedings;
(d) shall take all such other steps and file all such other notices or
directions reasonably requested by the Company in order to give effect to the
Financial Restructuring and take all steps that the Company, the Committee,
Telia, the WP Entities and JPMorgan agree are necessary (each acting reasonably)
to give effect to the Financial Restructuring. In the case of the Polish
Arrangement Proceedings and the Dutch Composition Proceedings, JPMorgan hereby
agrees to support the Company Group in obtaining the Proceedings Orders and
giving effect to each, which shall include, among other things, consenting to
the reduction of up to 99% of the debts of the Company, Telekom and South in the
Polish Arrangement Proceedings and, at the expense of the Company, filing all
notices, directions or affidavits reasonably requested by the Company (including
confirmation that JPMorgan fully supports the Polish Arrangement Proceedings and
the Dutch Composition Proceedings and directing its legal and financial advisors
to support the petitions and do all other things reasonably necessary to assist
in the obtaining of the Proceedings Orders, including without limitation, the
commitment to
6
appoint an agent for the service of the process in Poland and/or a qualified
local counsel pursuant to Section 6.2(b) hereof, and agrees upon any occasion
upon which votes are required to be cast at a meeting of creditors pursuant to
any proceedings, to exercise all votes it may have in respect of its claims
against any company in the Company Group in support of the Polish Arrangement
Proceedings and the Dutch Composition Proceedings;
(e) shall act in good faith in concluding the Financial Restructuring;
(f) to the extent which is lawful, shall not act, whether alone or in
concert with others, to advise, assist or encourage any Person to act in a
manner which frustrates the Financial Restructuring and/or the Restructuring
Steps;
(g) to the extent which is lawful, shall refrain from voting (or from
causing a vote to be cast) in favor of, or otherwise supporting or preparing,
directly or indirectly, except as expressly contemplated hereby, (i) any other
proposed plan of reorganization for or involving any company in the Company
Group, or any other arrangement or composition for any such company, (ii) any
relief in an involuntary case under any applicable insolvency, bankruptcy or
other similar Law with respect to any company in the Company Group or all or
substantially all of any of such company's assets, or (iii) the appointment of
an administrator, liquidator, custodian or similar official over all or
substantially all of the property, assets and undertakings of any company in the
Company Group; and
(h) shall not sell, transfer or assign any claim JPMorgan may have against
any company in the Company Group to any Person which is not a party hereto
during the term of this Agreement unless such Person first enters into an
undertaking in favor of the other parties hereto agreeing to be bound by the
terms of this Agreement as if such Person were a party hereto; provided, that if
such transfer is made, JPMorgan shall promptly notify each of the Company, the
Committee, Telia and the WP Entities of the changes in its claims and the
identity of the transferee.
1.4 Telia Obligations. Telia hereby agrees towards the Company, the
Consenting Noteholders and JPMorgan that it:
(a) at the Extraordinary General Meeting of the Company's shareholders
adjourned to March 12, 2002, or any further adjournment thereof, shall (i)
propose to adopt the amendments set forth in Resolutions Nos. 3, 5 and 6
included in Exhibit C hereto, and (ii) vote to approve the resolutions as
amended and attached hereto as Exhibit C on the basis of the understanding set
forth in the recitals hereto, subject to the Company having received prior
thereto signature pages duly executed by Consenting Noteholders representing 30%
or more of the total value of all claims of the holders of the Notes;
(b) shall vote to approve any additional resolutions that will be proposed
by the Company and are reasonably necessary to implement the Restructuring
Steps, including, without limitation, any resolutions to permit payment for
Company
7
shares in kind, as well as cash, resolutions with respect to the issuance of the
Warrants, and any resolutions acknowledging that the representative of the
Consenting Noteholders on the Supervisory Board has the individual power to
disapprove certain actions proposed to be taken by the Supervisory Board in
accordance with Section 5.1 herein;
(c) shall appoint and shall not withdraw (without simultaneously appointing
a replacement) that number of Telia representatives on the Company's Supervisory
Board as required by the Company's Statute; shall, with the Company's Management
Board's cooperation, use its commercial best efforts to fill any vacancy on the
Supervisory Board; and shall recommend to such appointees on the Supervisory
Board to (i) attend all meetings and cast their votes with respect to all
matters presented for a vote at the Supervisory Board, and (ii) fill any
vacancies in the composition of the Company's Management Board pursuant to the
Company's Statute;
(d) shall act in good faith in concluding the Financial Restructuring;
(e) to the extent which is lawful, shall not act, whether alone or in
concert with others, to advise, assist or encourage any Person to act in a
manner which frustrates the Financial Restructuring and/or the Restructuring
Steps;
(f) to the extent which is lawful, shall refrain from voting (or from
causing a vote to be cast) in favor of, or otherwise supporting or preparing,
directly or indirectly, except as expressly contemplated hereby, (i) any other
proposed plan of reorganization for or involving any company in the Company
Group, or any other arrangement or composition for any such company, (ii) any
relief in an involuntary case under any applicable insolvency, bankruptcy or
other similar Law with respect to any company in the Company Group or all or
substantially all of any of such company's assets, or (iii) the appointment of
an administrator, liquidator, custodian or similar official over all or
substantially all of the property, assets and undertakings of any company in the
Company Group;
(g) shall not sell, transfer or assign (beneficially or otherwise) any of
its shares in any of the Company Group, any voting interest therein, or any
claim Telia may have against any company in the Company Group to any Person
other than a WP Entity during the term of this Agreement unless such Person
first enters into an undertaking in favor of the other parties hereto agreeing
to be bound by the terms of this Agreement as if such Person were a party
hereto; provided, that if such transfer is made, such WP Entity shall promptly
notify the Company, the Committee, Telia and JPMorgan of the changes in the
number of shares and voting interests and in the claims held and the identity of
the new Person or Persons to whom a transfer or transfers were made; and
(h) shall not seek to acquire, either directly or indirectly, the
beneficial ownership of, or right to direct the disposition or vote in respect
of, any of the Notes.
1.5 WP Entities Obligations. The WP Entities hereby agree towards the
Company, the Consenting Noteholders and JPMorgan that the WP Entities:
8
(a) at the Extraordinary General Meeting of the Company's shareholders
adjourned to March 12, 2002, or any further adjournment thereof, shall (i)
propose to adopt the amendments set forth in Resolutions Nos. 3, 5 and 6
included in Exhibit C hereto, and (ii) vote to approve the resolutions as
amended and attached hereto as Exhibit C on the basis of the understanding set
forth in the recitals hereto, subject to the Company having received prior
thereto signature pages duly executed by Consenting Noteholders representing 30%
or more of the total value of all claims of the holders of the Notes;
(b) shall vote to approve any additional resolutions that will be proposed
by the Company and are reasonably necessary to implement the Restructuring
Steps, including, without limitation, any resolutions to permit payment for
Company shares in kind, as well as cash, resolutions with respect to the
issuance of the Warrants, and any resolutions acknowledging that the
representative of the Consenting Noteholders on the Supervisory Board has the
individual power to disapprove certain actions proposed to be taken by the
Supervisory Board in accordance with Section 5.1 herein;
(c) shall appoint and shall not withdraw (without simultaneously appointing
a replacement) that number of WP Entities representatives on the Company's
Supervisory Board as required by the Company's Statute; shall, with the
Company's Management Board's cooperation, use their commercial best efforts to
fill any vacancy on the Supervisory Board; and shall recommend to such
appointees on the Supervisory Board to (i) attend all meetings and cast their
votes with respect to all matters presented for a vote at the Supervisory Board,
and (ii) fill any vacancies in the composition of the Company's Management Board
pursuant to the Company's Statute;
(d) shall act in good faith in concluding the Financial Restructuring;
(e) to the extent which is lawful, shall not act, whether alone or in
concert with others, to advise, assist or encourage any Person to act in a
matter which frustrates the Financial Restructuring and/or the Restructuring
Steps;
(f) to the extent which is lawful, shall refrain from voting (or causing a
vote to be cast) in favor of, or otherwise supporting or preparing, directly or
indirectly, except as expressly contemplated hereby, (i) any other proposed plan
of reorganization for or involving any company in the Company Group, or any
other arrangement or composition for any such company, (ii) any relief in an
involuntary case under any applicable insolvency, bankruptcy or other similar
Law with respect to any company in the Company Group or all or substantially all
of any of such company's assets, or (iii) the appointment of an administrator,
liquidator, custodian or similar official over all or substantially all of the
property, assets and undertakings of any company in the Company Group;
(g) shall not sell, transfer or assign (beneficially or otherwise) any of
its shares in any of the Company Group, any voting interest therein, or any
claim such WP Entity may have against any company in the Company Group to any
Person other
9
than Telia during the term of this Agreement unless such Person first enters
into an undertaking in favor of the other parties hereto agreeing to be bound by
the terms of this Agreement as if such Person were a party hereto; provided,
that if any transfer is made, the relevant WP Entity shall promptly notify the
Company, the Committee, Telia and JPMorgan of the changes in the number of
shares and voting interests and in the claims held and the identity of the
transferee; and
(h) shall not seek to acquire, either directly or indirectly, the
beneficial ownership of, or right to direct the disposition or vote in respect
of, any of the Notes.
1.6 Preparation of the Restructuring Documents. As soon as practical
following the execution of this Agreement, the Company Group shall instruct its
counsel to prepare for review by the parties to this Agreement all of the
documentation necessary in the reasonable judgment of such counsel to implement
the issuance of the New Notes, the Restructuring Shares and the Warrants and to
proceed with the Restructuring Steps and shall consult with the legal
representatives of the Consenting Noteholders, JPMorgan, Telia and the WP
Entities in respect of all relevant documentation, including (as may be
appropriate for each of the Exchange Offer, the Polish Arrangement Proceedings
or the Dutch Composition Proceedings) but not limited to the following:
(a) all petitions and other documents required to effect the Restructuring
Steps, including without limitation any shareholder resolutions of any company
in the Company Group and any documentation relating to Dutch Composition
Proceedings and the Polish Arrangement Proceedings;
(b) an indenture relating to the New Notes, including the terms and
conditions of the New Notes, and any additional documents necessary for the
issuance and listing of the New Notes;
(c) all of the documentation necessary in the reasonable judgment of
counsel to the Company and the Committee to implement the Exchange Offer (the
"Exchange Offer Documents"), including but not limited to the following:
(i) an Exchange Offer prospectus setting out the terms of the Exchange
Offer to be sent by the Company to the holders of Notes and JPMorgan;
(ii) supplemental indentures in order to effect the Indenture
Amendments to the terms of the Notes; and
(iii) any documents necessary for the issuance of the Restructuring
Shares (including those documents necessary to facilitate a NASDAQ and/or
Warsaw Stock Exchange listing);
(d) the Warrants and documentation related to the issuance thereof; and
10
(e) any U.S. registration statements necessary to comply with the U.S.
Securities Act of 1933, as amended (the "1933 Act"), and any Polish
prospectus(es) necessary to comply with Polish securities laws, in each case as
required to give effect to the Restructuring Steps and any formalities required
to comply with the Dutch Act on the supervision of the securities trade.
1.7 General Obligation; Financial Restructuring Conditions.
------------------------------------------------------
(a) The Company, Telia, the WP Entities, JPMorgan and the Committee, on
behalf of all Consenting Noteholders and JPMorgan agree to use their commercial
best efforts to negotiate in good faith and finalize the terms of the Financial
Restructuring.
(b) Consummation of the Financial Restructuring upon the principal terms
herein specified is subject to the satisfaction (or waiver by the Company, on
behalf of the Company Group, and the Committee) of the following conditions:
(i) the Committee being satisfied that the Company Group has used its
commercial best efforts with the Polish Ministry of Infrastructure to
ensure that the respective licence/permit fees and payments (either
historical or going forward) of the Company Group have been minimised
and/or ameliorated in a manner at least consistent with those enjoyed
and/or publicly announced by the Polish Ministry of Infrastructure in
respect of other telecoms providers in Poland (whether fixed line providers
or otherwise);
(ii) the successful commencement and implementation of the
Restructuring Steps;
(iii) the necessary resolutions having been adopted to create and
authorise the issuance of the equity necessary to implement the Financial
Restructuring;
(iv) no material adverse tax consequences for the Company Group shall
arise from the Financial Restructuring;
(v) no termination and/or acceleration of any payment obligation of
any contract of any company in the Company Group which could reasonably be
expected to have a material adverse effect on the Company Group taken as a
whole; and
(vi) except for litigation known at the date hereof, no litigation is
pending or threatened which, if resolved in a manner adverse to the Company
Group, could reasonably be expected to cause a material adverse effect on
the Company Group taken as a whole.
11
Article II
TERMINATION AND RETURN OF RIGHTS
2.1 Termination of Agreement. This Agreement may be terminated as follows:
(a) at the election of any of the Company, JPMorgan, Telia or the WP
Entities after March 31, 2002, if the Company shall not have received by March
31, 2002 signature pages duly executed by Consenting Noteholders representing at
least 95% of the total value of all claims of the holders of the Notes;
(b) prior to the Financial Restructuring Consummation, at the election of
any of the Company, the Committee, JPMorgan, Telia or the WP Entities on or
after the Termination Date if both of the following are true (i) the Exchange
Offer has not been completed, and (ii) the Proceedings Orders have not been
obtained, on or prior to that date; provided that the terminating party is not
in default of any of its obligations hereunder;
(c) prior to the Financial Restructuring Consummation, by mutual written
consent of the Company, the Committee, JPMorgan, Telia and the WP Entities;
(d) prior to the Financial Restructuring Consummation, by the Company or
the Committee if there shall be in effect a final nonappealable Order of a
Governmental Body of competent jurisdiction restraining, enjoining or otherwise
prohibiting the consummation of the transactions contemplated hereby; it being
agreed that the Company shall promptly appeal any adverse determination which is
not nonappealable (and pursue such appeal with reasonable diligence); or
(e) upon the "Financial Restructuring Consummation", which shall mean for
the purposes of this Agreement, upon (i) the Restructuring Shares and the New
Notes being available for receipt by each of the Consenting Noteholders and
JPMorgan, and (ii) the Warrants being available for receipt by the Company's
shareholders (other than any Persons entitled to the Restructuring Shares) prior
to the Financial Restructuring Consummation (the "Existing Shareholders"), in
each case pursuant to the terms set forth herein.
2.2 Return of Rights. In the event of termination of this Agreement by any
party hereto pursuant to subparagraph (a), (b), (c) or (d) of Section 2.1
hereof, and unless each of the Company, JPMorgan, Telia, the WP Entities and the
Committee otherwise agree following consultation among such parties (such
consultation not to exceed five Business Days following the date of termination
of this Agreement), the parties hereto agree that the rights of the parties
hereto shall be returned following such five-Business Day consultation period to
the same as prior to the entering into of this Agreement, despite one or more of
the Restructuring Steps having been completed. For the avoidance of doubt, in
the event of termination pursuant to subparagraphs (a), (b), (c) or
12
(d) of Section 2.1, (i) the Consenting Noteholders shall maintain any rights and
remedies available to them under the Indentures, applicable Law or otherwise
with respect to any Default (as defined in the Indentures) that may have
occurred at any time prior to such an event and which Default has not been
waived or otherwise cured; and (ii) JPMorgan shall maintain any rights and
remedies available to it under the JPMorgan Swaps, applicable law or otherwise.
2.3 Procedure Upon Termination. In the event of termination and abandonment
of this Agreement by any party hereto pursuant to sub-paragraph (a), (b), (c) or
(d) of Section 2.1 hereof, written notice thereof shall forthwith be given to
the other parties, and this Agreement and the obligations of each of the parties
hereto shall terminate, and the transactions contemplated hereunder shall be
abandoned, without further action by any of the parties hereto.
2.4 Effect of Termination. In the event that this Agreement is validly
terminated as provided herein, then each of the parties shall be relieved of its
duties and obligations arising under this Agreement after the date of such
termination and such termination shall be without liability to any of the other
parties hereto; provided, however, that nothing in this Section 2.4 shall
relieve any party hereto of any liability for a breach of this Agreement.
Article III
REPRESENTATIONS AND WARRANTIES OF THE CONSENTING HOLDERS,
JPMORGAN, TELIA AND THE WP ENTITIES
Each of the Consenting Noteholders, JPMorgan, Telia and the WP Entities,
severally and not jointly, hereby represents and warrants (except for Sections
3.2, 3.3 and 3.4 hereof, with respect to which the Consenting Noteholders, Telia
and the WP Entities, respectively, only represents and warrants) to the Company
Group and each of the other parties hereto that:
3.1 Authorization of Agreement. Such Person and, if applicable, the duly
authorized attorney acting on such Person's behalf, has all requisite power,
authority and, if applicable, legal capacity to execute and deliver this
Agreement and each other agreement, document, or instrument or certificate
contemplated by this Agreement or to be executed by such Person in connection
with the consummation of the transactions contemplated by this Agreement
(collectively the "Restructuring Documents"), and to consummate the transactions
contemplated hereby and thereby. The execution, delivery and performance by such
Person of this Agreement has been, and of each Restructuring Document will be,
duly authorized by all necessary corporate or other organizational action on
behalf of such Person. This Agreement has been, and each of the Restructuring
Documents will be, duly and validly executed and delivered by such Person and
(assuming the due authorization, execution and delivery by the other parties
hereto and thereto) this Agreement constitutes, and each of the Restructuring
Documents when so executed and delivered will constitute, legal, valid and
binding obligations of such
13
Person, enforceable against such Person in accordance with its respective terms,
subject to applicable bankruptcy, insolvency, reorganization, moratorium,
procedural and similar laws affecting creditors' rights and remedies generally,
and subject, as to enforceability, to general principles of equity, including
principles of commercial reasonableness, good faith and fair dealing (regardless
of whether enforcement is sought in a proceeding at law or in equity).
3.2 Ownership of Notes. Each Consenting Noteholder (or a client for which
it has investment discretion) is the record or beneficial owner of, with power
to vote and dispose free and clear of any and all liens, that number of Notes
set forth on such Consenting Noteholder's signature page to this Agreement. Each
Consenting Noteholder does not own of record or beneficially any Notes not
otherwise listed on its signature page attached hereto.
3.3 Ownership of Shares and Notes by Telia. As of the date hereof, Telia is
the record or beneficial owner of 15,101,355 ordinary shares of the Company.
Telia does not own of record or beneficially any Notes as at the date of this
Agreement.
3.4 Ownership of Shares and Notes by the WP Entities. As of the date
hereof, the WP Entities are the record or beneficial owners in the aggregate of
2,923,684 ordinary shares of the Company. The WP Entities do not own of record
or beneficially any Notes as at the date of this Agreement.
3.5 Consents of Third Parties. Except as contemplated by this Agreement and
any Restructuring Agreement, no consent, waiver, approval, Order or
authorization of, or declaration or filing with, or notification to, any Person
or Governmental Body is required on the part of such Person in connection with
the execution and delivery of this Agreement or the Restructuring Documents, or
the compliance by such Person with any of the provision hereof or thereof.
3.6 1933 Act Representations.
------------------------
(a) Such Person is either an "accredited investor" within the meaning of
Regulation D under the 1933 Act or is not a "U.S. Person" within the meaning of
Regulation S under the 1933 Act.
(b) Neither such Person, its affiliates nor any Person acting on its or
their behalf has engaged or will engage in connection with the issue of New
Notes or the Restructuring Shares in (i) any general solicitation or general
advertising within the meaning of Rule 502(c) under the 1933 Act or (ii) any
directed selling efforts within the meaning of Rule 903 under the 1933 Act,
unless such solicitation, advertising or selling effort is then allowed under
the 1933 Act.
14
Article IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY GROUP
Each company in the Company Group hereby represents and warrants (except
for Section 4.2 hereof, with respect to which the Company only represents and
warrants) to the other parties hereto that:
4.1 Authorization of Agreement. Each company in the Company Group has full
corporate power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby and thereby. The execution,
delivery and performance by each company in the Company Group of this Agreement
has been, and of each Restructuring Document will be, duly authorized by all
necessary corporate or other organizational action on behalf of such company.
This Agreement has been, and each of the Restructuring Documents will be, duly
executed and delivered by each company in the Company Group, as applicable, and
(assuming the due authorization, execution and delivery by the other parties
hereto and thereto) this Agreement constitutes, and each of the Restructuring
Documents when so executed and delivered will constitute, legal, valid and
binding obligations of such company, enforceable against such company in
accordance with its respective terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium, procedural and similar laws affecting
creditors' rights and remedies generally, and subject, as to enforceability, to
general principles of equity, including principles of commercial reasonableness,
good faith and fair dealing (regardless of whether enforcement is sought in a
proceeding at law or in equity).
4.2 Equity Capitalization. As of the date hereof, there are 31,419,172
ordinary shares of the Company issued and outstanding.
4.3 Consents of Third Parties. Except as contemplated by this Agreement and
any Restructuring Document, no consent, waiver, approval, Order or authorization
of, or declaration or filing with, or notification to, any Person or
Governmental Body is required on the part of any company in the Company Group in
connection with the execution and delivery of this Agreement or the other
Restructuring Documents or the compliance by any such company with any of the
provisions hereof or thereof.
4.4 1933 Act Representations.
(a) The transactions specified herein will be either exempt from the
registration requirements of the 1933 Act or will be registered in accordance
with the 1933 Act; and
(b) Neither the Company, its affiliates nor any Person acting on its or
their behalf has engaged or will engage in connection with the issue of New
Notes or the Restructuring Shares in (i) any general solicitation or general
advertising within the meaning of Rule 502(c) under the 1933 Act or (ii) any
directed selling efforts within the
15
meaning of Rule 903 under the 1933 Act, unless such solicitation, advertising or
selling effort is then allowed under the 1933 Act.
4.5 Ownership of Notes. Each company in the Company Group:
(a) neither owns outright, nor has any beneficial interest in, the Notes,
as at the date of this Agreement; and
(b) has not entered into any discussions in respect of the Notes with any
Noteholders, save as may have been necessary in order to execute this Agreement
(and any agreements with other Consenting Noteholders in the same form).
Article V
COVENANTS
5.1 Conduct of the Business Pending the Financial Restructuring. After the
date on which the Company shall have received signature pages duly executed by
Consenting Noteholders representing 51% or more of the total value of all claims
of the holders of the Notes and during the term of this Agreement, except (i) as
otherwise expressly contemplated by this Agreement, (ii) as contemplated in the
resolutions attached hereto as Exhibit C, or (iii) with the prior written
consent of Xxxxxxxxxx Xxxxxxxx (the "New Supervisory Board Member"), which
consent shall not be unreasonably withheld, none of the Company, Telekom or
South shall, directly or indirectly:
(a) take any material corporate actions, including changing its capital
structure, or, other than as contemplated hereby, entering into, amending, or
terminating any major commercial contracts with any third parties or any
Affiliate such as may require the consent of its Supervisory Board or may be
prescribed in its bye-laws, including, for the avoidance of doubt:
(i) the appointment and/or removal of members of the Management Boards
of any companies in the Company's group of companies or any key employees
in such companies who would be entitled to participate in the Company's
share incentive plan upon the Financial Restructuring Consummation (as
notified to the Company by the Committee on the date hereof), issuing
bye-laws in respect of any of the Management Boards of any of the companies
in the Company's group of companies, or selecting and/or adopting any
prospective Management Board candidates to sit on the Management Board of
any such companies; or
(ii) setting or changing the compensation of members of the Management
Boards of any of the companies in the Company's group of companies and
defining other terms and conditions of their employment, including setting
and changing the terms of any incentive plan, employment agreement,
consulting agreement with, or any resolution relating to employment or
compensation matters with respect to, the
16
members of the Management Boards of any of the companies in the Company's
group of companies and/or other key employees in such companies who would
be entitled to participate in the Company's share incentive plan upon the
Financial Restructuring Consummation (for the avoidance of doubt, neither
the Company, Telekom or South shall allow any such incentive plan or any
such employment, consulting or other employment arrangement to terminate or
expire without the prior written consent of the New Supervisory Board
Member); and
(b) enter into any transactions involving consideration, either alone, or
in a series of transactions, in excess of US$100,000, including:
(i) granting consents for capital expenditure and drawing obligations;
(ii) granting consent for the giving or taking of loans or drawings or
other monetary obligations by the Company, Telekom or South;
(iii) giving any guarantees or taking any obligations to pay damages;
(iv) any acquisition of any real property by the Company, Telekom or
South;
(v) granting consents for the lease, sale, pledge, mortgage,
encumbrance or transfer of any part of the property of the Company, Telekom
or South;
(vi) consent to the commencement, settlement, assignment, or release
of any claim of or against the Company, Telekom or South;
(vii) the reaching of any compromise with the Polish Infrastructure
Ministry and/or Polish State Treasury regarding past, present or future
licence obligations of the Company or any of its subsidiaries or the
settlement or compromise of the same; or
(viii) except for the Termination Agreement, amending in any way any
agreement between any member of the Company Group, Telia (and/or any of its
subsidiaries), any WP Entity or any other Affiliate of the Company;
(c) except for the issuance of 133,233 new Series E shares to Xxxxx XX,
pursuant to the Agreement of Current and Future Shareholders and of Netia1,
dated November 22, 1999, issue equity for any purpose other than to facilitate
the Financial Restructuring or to carry out the Restructuring Steps;
(d) purchase or permit any company in the Company's group of companies to
purchase any material telecommunications businesses or assets within the
territory of the Republic of Poland or elsewhere, or any shares, or any
controlling equity
17
stake, in any other telecommunications companies or businesses within the
Republic of Poland, or elsewhere, whether fixed line or otherwise; and
(e) sell, surrender or dispose of any material asset, contractual rights
(whether contingent or otherwise) or licence not in the ordinary course of
business.
Notwithstanding anything to the contrary contained in this Section 5.1, the
Company shall not be required to obtain the consent contemplated above in
respect of payments made, directly or following intracompany transfers of funds,
in respect of operating expenses contemplated in the Company's budget for 2002;
provided that payments in respect of non-operating expenses (i.e., license fees,
etc.), whether or not so budgeted, shall require said consent before a payment
or a series of related payments, regardless of individual size, cumulating Euro
2 million or more, is made.
5.2 Observer Rights. After the date on which the Company shall have
received signature pages duly executed by Consenting Noteholders representing
51% or more of the total value of all claims of the holders of the Notes and
during the term of this Agreement, the New Supervisory Board Member shall be:
(a) entitled to act as an observer to the Company's Management Board and to
committees of the Company's Supervisory Board and to attend any of their
meetings and to be given access to any of their working papers as he sees fit;
and
(b) entitled to receive at least 48 hours advance written notice of all
regular Supervisory Board and Management Board meetings and/or actions which are
proposed to be taken or adopted in respect of the Company's affairs, or such
shorter advance notice for special meetings as may be required but in no event
later than the notice furnished to other members on such Boards.
5.3 Recruitment of New Chief Executive Officer. The Company shall continue
its search for a permanent Chief Executive Officer ("CEO") for the Company. The
Company agrees to use its commercial best efforts to appoint a new permanent CEO
no later than June 30, 2002. The terms of engagement of the Company's proposed
new CEO shall be subject to the express written consent of the New Supervisory
Board Member in accordance with Section 5.1 hereof.
5.4 Supervisory Board Member Proposal. Telia and the WP Entities shall
propose Xxxxxxxxxx Xxxxxxxx as recommended by the Committee for election to the
Supervisory Board by the shareholders at the Extraordinary General Meeting
adjourned to March 12, 2002, or any further adjournment thereof, and each of
Telia and the WP Entities individually agrees with the Company, the Consenting
Noteholders and JPMorgan to vote all shares of the Company beneficially owned by
it in favor of the election of that individual.
18
5.5 Financial Reports and Other Information.
---------------------------------------
For so long as the New Notes remain outstanding and the Company is not subject
to Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended (the
"1934 Act"), or exempt from reporting pursuant to Rule 12g3-2(b) thereunder, the
Company will furnish:
(a) to the holders of the New Notes (i) within 90 days of the end of its
financial year audited consolidated financial statements and (ii) within 45 days
of the end of its first, second and third financial quarters unaudited
consolidated financial statements in each case prepared in accordance with past
practice; and
(b) at its own expense upon request of holders of the New Notes or the
Restructuring Shares constituting "restricted securities" under the 1933 Act,
information satisfying the requirements of Rule 144A(d)(4)(i) under the 0000
Xxx.
5.6 Publicity; Disclosure.
---------------------
(a) Except as may be (i) required by applicable Law or by obligations or
rules of any securities exchange or quotation system or any agency with whose
rules it is customary for it to apply, in each case on advice of counsel, or
(ii) determined appropriate by the Committee and the Company, none of the
parties hereto or other representative on any of their behalf shall issue any
press release or public announcement concerning this Agreement or the
transactions contemplated hereby without obtaining the prior written approval of
the other parties hereto.
(b) None of the parties hereto shall disclose (i) the identity of the
Consenting Noteholders, (ii) the amount of holdings of Notes of the Consenting
Noteholder, and (iii) the terms of this Agreement, without the prior written
consent of the Committee or unless required to do so by applicable Law. The
foregoing shall not prohibit the Company from disclosing (i) the approximate
aggregate holdings of the Notes by the Consenting Noteholders as a group or the
terms of the Financial Restructuring, and (ii) the identity and the holdings of
Notes of the Consenting Noteholders to the Polish court carrying out the Polish
Arrangement Proceedings for the Company, South or Telekom for the purposes of
completing the list of creditors authorized to vote in favor of the plan of
arrangement.
5.7 Corporate Governance post Financial Restructuring. Following the
Financial Restructuring Consummation:
(a) the Company will propose to one or more general meetings of
shareholders that its corporate documents and bye-laws be amended to provide
that the Company's Supervisory Board shall comprise seven members in total. Of
this number, four members shall be nominated representatives of the Committee,
one member shall represent the interests of the Existing Shareholders, and two
members shall be independent persons representing the Company's public
shareholders. The Chairman of
19
the Company's Supervisory Board will be nominated by the Committee and as
permitted under applicable Polish law; and
(b) the Company's new Supervisory Board will meet at least monthly for an
initial period of six months and at least quarterly thereafter unless agreed
otherwise. Suitable compensation for members of the new Supervisory Board will
be agreed from time to time and all reasonable expenses reimbursed.
5.8 JPMorgan Swap Settlement Agreement.
----------------------------------
(a) None of the parties hereto shall take any action to challenge or seek
to recover any payments that have been made to JPMorgan pursuant to the swap
settlement agreement contained in the letter dated January 10, 2002 between
JPMorgan and BVIII relating to the close out of all swap transactions then
outstanding under the ISDA Master Agreement dated 18th January, 2001 between
JPMorgan and BVIII as swap counterparties (the "Settlement Letter") (any right
to which they hereby expressly waive).
(b) If at any time, notwithstanding Section 5.8(a) above, any party to this
Agreement (a "Recovering Party") receives a payment or distribution in cash or
in kind in respect of or on account of or deriving from any sums or amounts that
JPMorgan received prior to the date of this Agreement pursuant to the Settlement
Letter which JPMorgan is required to repay (a "Recovery") then the Recovering
Party shall within 3 Business Days of receipt pay to JPMorgan an amount equal to
the Recovery received to the extent permitted by Law provided always that the
Recovering Party shall remain liable to pay an amount equal to the Recovery
received to JPMorgan within 3 Business Days to the extent that the Recovering
Party is subsequently released from or no longer subject to the legal impediment
that had previously prevented such payment being made.
(c) No party to this Agreement shall sell, dispose, assign or transfer
(beneficially or otherwise) to another party any right that they may have to
receive any sums that would constitute a Recovery unless such Person first
enters into an undertaking in favor of JPMorgan agreeing to be bound by the
terms of this Section 5.8 provided that nothing in this Section 5.8 shall
prevent the parties discharging their obligations under this Agreement to
conclude the Financial Restructuring.
(d) Pending payment of any amounts due to JPMorgan under Section 5.8(b)
above the Recovering Party shall hold any Recovery upon trust for JPMorgan.
(e) The obligations and agreements of the parties set forth in this Section
5.8 shall continue in full force and effect for the benefit of JPMorgan
following the completion of the Financial Restructuring in accordance with the
terms hereof.
20
Article VI
MISCELLANEOUS
6.1 Certain Definitions.
-------------------
(a) For purposes of this Agreement, the following terms shall have the
meanings specified in this Article VI (such definitions and the other defined
terms used in this Agreement to be equally applicable to both the singular and
plural forms of the terms herein defined):
"Affiliate" shall mean, with respect to any Person, any other Person
controlling, controlled by or under common control with such Person.
"Business Day" shall mean any day of the year on which national banking
institutions in New York and in Poland are open to the public for conducting
business and are not required or authorized to close.
"Consenting Noteholders" shall mean a Person party hereto who has the right
to vote and to direct the disposition of one or more of the Notes.
"Dutch Composition Proceedings" shall mean the following:
(i) Composition proceedings for BVI, BVII and BVIII are opened in the
Netherlands.
(ii) In the Dutch composition proceedings, the creditors of BVI, BVII
and BVIII, (including, without limitation, JPMorgan and the holders of the
existing Notes of BVI and BVII), are offered interests in Euro 50 million
of New Notes of a BV guaranteed by the Company and its significant
subsidiaries. The guarantees will be new obligations to be entered into
after the completion of the Polish Arrangement Proceedings.
(iii) Upon approval of the Dutch Composition Proceedings by xxx xxxxx,
XXX, XXXX and BVIII are released from their obligations (including the
remaining obligations of BVI and BVII under the Notes) and all creditors of
BVI, BVII and BVIII are bound by the compositions.
(iv) A Section 304 proceeding is held in New York to affirm the Dutch
Composition Proceedings.
"Exchange Offer Steps" shall mean that:
(i) the Company shall hold one or more Extraordinary General Meeting
to adopt the resolutions attached hereto as Exhibit C and any other
resolutions necessary for the implementation of this Agreement;
21
(ii) the Company shall prepare as soon as possible and file, subject
to the shareholders of the Company voting in favor of the resolutions
required to implement this Agreement, with Komisja Papierow Wartosciowych i
Gield in Poland, Warsaw (the "Polish SEC") one or more offering
prospectuses, if necessary, to effect these Exchange Offer Steps;
(iii) during the pendency of the Polish Arrangement Proceedings and
the Dutch Composition Proceedings, the Company shall make an offer (the
"Exchange Offer") to all holders of the Notes and JPMorgan to exchange all
or a portion of their claims for Restructuring Shares; the Restructuring
Shares issued upon consummation of the Exchange Offer will be held in
escrow until the order in the Company's Polish Arrangement Proceeding
becomes non-appealable;
(iv) the Consenting Noteholders shall consent to make certain
amendments to the Indentures as set out in Exhibit B which Indenture
Amendments (the "Indenture Amendments") shall take effect upon the
Financial Restructuring Consummation; and
(v) the Company shall make a public offer in Poland and elsewhere to
the Existing Shareholders of the Company's debt securities with attached
Warrants; the par value of these debt securities shall be proposed by the
Company at its discretion as low as possible; these debt securities shall
bear no interest and shall not mature or be redeemed prior to expiry of the
intended exercise period for the Warrants, provided that the respective
trade regulations of the Warsaw Stock Exchange and other applicable local
regulations permit such terms; the Company shall agree to register under
the 1933 Act the shares to be issued upon exercise of the Warrants within 6
months of their issuance; the Company shall also file for registration of
the share capital increase related to the issuance of the Warrants in the
National Court Register by the appropriate Polish court.
"Governmental Body" shall mean any government or governmental or regulatory
body thereof, or political subdivision thereof, whether federal, state, local or
foreign, or any agency, instrumentality or authority thereof, or any court or
arbitrator (public or private).
"Law" shall mean any federal, state, local or foreign law (including common
law), statute, code, ordinance, rule, regulation or other requirement.
"Legal Proceeding" shall mean any judicial, administrative or arbitral
actions, suits, investigations proceedings (public or private), orders pending,
claims or governmental proceedings.
"Notes" shall mean the following notes:
(i) $200,000,000 aggregate principal amount of 10-1/4% Senior Dollar
Notes due 2007, $193,550,000 aggregate principal amount at maturity of
22
11-1/4% Senior Discount Notes due 2007 and DM 207,062,000 aggregate
principal amount at maturity of 11% Senior DM Notes due 2007 issued by BVI,
each issued pursuant to indentures dated November 3, 1997 (the "1997
Indentures");
(ii) EUR 100,000,000 aggregate principal amount of 13-1/2% Senior Euro
Senior Euro Notes due 2009 and $100,000,000 aggregate principal amount of
13-1/8% Senior Dollar Notes due 2009 issued by BVII, each issued pursuant
to indentures dated June 10, 1999 (the "1999 Indentures"); and
(iii) EUR 200,000,000 aggregate principal amount of 13-3/4% Senior
Euro Notes due 2010 (the "2000 Notes") issued by BVII pursuant to an
indenture dated as of June 9, 2000 (the "2000 Indenture", and together with
the 1997 Indentures and the 1999 Indentures, the "Indentures").
"Order" shall means any order, injunction, judgment, decree, ruling, writ,
assessment or arbitration award.
"Person" shall mean any individual, corporation, partnership, firm, joint
venture, association, joint-stock company, trust, unincorporated organization,
Governmental Body or other entity.
"Polish Arrangement Proceedings" shall mean the following:
(i) Separate Polish arrangement proceedings are held with respect to
the Company, South and Telekom.
(ii) The Company, South and Telekom agree that they will not seek an
order in their arrangement proceedings prior to the approval of the Dutch
compositions.
(iii) In the Company arrangement proceeding, the creditors of the
Company, including the holders of the guarantees related to the Notes, are
offered an installment obligation ("Installment Obligations") of the
Company. JPMorgan is made a creditor of the Company through the Company's
revocable guarantee. Upon court approval of the Company arrangement
proceeding binding upon pertinent creditors, the Company is released from
its obligations and becomes liable solely under the Installment
Obligations. Consenting Noteholders and JPMorgan agree that any payments
received from the Company under the Installment Obligations will, to the
extent permitted by law, be returned or invested in the Company.
(iv) Creditors of South and Telekom are offered installment
obligations in parallel arrangement proceedings.
(v) A Section 304 proceeding is held in New York to affirm the Polish
proceedings.
23
"Proceedings Orders" shall mean orders of the Polish, Dutch and U.S. courts
approving the arrangement, composition and Section 304 and related proceedings,
respectively, proposed by the Company.
"Restructuring Shares" shall mean the ordinary shares representing on a
primary basis (excluding the shares issuable under the new management share
option plan set forth in the Term Sheet and upon exercise of the Warrants) 91%
of the issued ordinary share capital of the Company (or another
company/companies within the Company's group of companies which is/are
acceptable to the Committee) immediately following the Financial Restructuring
Consummation.
"Termination Agreement" shall mean the Termination Agreement, dated as of
March 5, 2002, by and among Telia, the WP Entities and the Company.
"Warrants" shall mean the warrants (or debt with attached warrants) of the
Company to be issued to the Existing Shareholders with the terms set forth in
the Term Sheet.
The following terms shall have the meanings specified in the indicated
section of this Agreement.
Term Section Term Section
---- ------- ---- -------
1933 Act 1.6(e) Financial Xxxxxxxxxxxxx
0000 Xxx 5.5 Consummation 2.1(e)
1997 Indentures 6.1(a) Governmental Body 6.1(a)
0000 Xxxxxxxxxx 6.1(a) including 6.14
2000 Indenture 6.1(a) Indenture Amendments 6.1(a)
2000 Notes 6.1(a) Indentures 6.1(a)
accredited investor 3.6(a) Installment Obligations 6.1(a)
Affiliate 6.1(a) JPMorgan Preamble
Agreement Preamble Law 6.1(a)
Business Day 6.1(a) Legal Proceeding 6.1(a)
BVI Preamble New Supervisory Board Member 5.1
BVII Preamble Notes 6.1(a)
BVIII Preamble Order 6.1(a)
CEO 5.3 Person 6.1(a)
Committee 6.2(a) Polish Arrangement Proceedings 6.1(a)
Company Group Preamble Polish SEC 6.1(a)
Company Preamble Proceedings Orders 6.1(a)
Consenting Noteholders 6.1(a) Recovering Party 5.8(b)
Dutch Composition Proceedings 6.1(a) Recovery 5.8(b)
Exchange Offer Documents 1.6(c) restricted securities 5.5(b)
Exchange Offer Steps 6.1(a) Restructuring Documents 3.1
Exchange Offer 6.1(a) Restructuring Shares 6.1(a)
Existing Shareholders 2.1(e) Restructuring Steps Recitals
Financial Restructuring Recitals Settlement Letter 5.8(a)
00
Xxxxx Xxxxxxxx XXXX Xxxxxxxx
Telekom Preamble WP Entities Preamble
Telia Preamble WP Entity Preamble
Term Sheet Recitals WPEP Preamble
Termination Date Recitals WPNE I Preamble
TRO 1.2(i) WPNE II Preamble
U.S. Bankruptcy Court 1.2(i) WPNE III Preamble
U.S. Person 3.6(a) WPVI Preamble
Warrants 6.1(a)
6.2 Additional Consenting Noteholder Actions.
----------------------------------------
(a) Aberdeen Asset Managers, Alliance Capital, Federated Investments, ING
Investment Management, Xxxxxx Xxxxxxx, PEKAO Bank S.A., Trust Company of the
West and JPMorgan are hereby designated by each of the Consenting Noteholders
and JPMorgan as their representatives (the "Committee") to act for and represent
the Consenting Noteholders and JPMorgan with respect to all matters arising out
of or related to this Agreement and any Restructuring Document that specifies
that the Committee may so act, as well as matters which require notice to be
given to the Consenting Noteholders under this Agreement and any of the
Restructuring Documents. The designation of the Committee made pursuant to this
Section 6.2(a) shall terminate upon the Financial Restructuring Consummation.
(b) Each Consenting Noteholder hereby unconditionally and irrevocably
appoints Cadwalader, Xxxxxxxxxx & Xxxx (and as necessary their designated Polish
and Dutch counsel, Xxxxxxxxx & Partners and Loyens Loeff respectively) as such
Consent Holder's agent, proxy and attorney-in-fact, with full power of
substitution, for all purposes set forth in this Agreement and any Restructuring
Document, including the full power and authority on such Person's behalf to (i)
execute on such Consenting Holder's behalf any agreement or document related to
the Financial Restructuring, (ii) vote in any proceeding in accordance with such
Consenting Noteholders obligations herein, (iii) give and receive all notices
required to be given under this Agreement and any Restructuring Document and
(iv) take any and all additional action as is contemplated to be taken by the
Consenting Noteholder by the terms of this Agreement and any Restructuring
Document.
6.3 Survival of Representations and Warranties. The parties hereto hereby
agree that the representations and warranties contained in this Agreement shall
survive the execution and delivery of this Agreement and the Financial
Restructuring Consummation, regardless of any investigation made by the parties
hereto.
6.4 Expenses. Each party hereto shall be solely responsible for all costs
and expenses incurred by it in connection with the negotiation, preparation and
execution of this Agreement and with its compliance with the terms of this
Agreement; provided, however, that the Company shall pay or procure the payment
of:
25
(a) the reasonable legal fees and disbursements of Cadwalader, Xxxxxxxxxx &
Xxxx, counsel to the Committee Noteholders in connection with the Financial
Restructuring (on the terms and conditions of the engagement letter entered into
by the Company and Cadwalader, Xxxxxxxxxx & Xxxx on December 11, 2001 as
supplemented on February 18, 2002);
(b) the reasonable fees and disbursements of the Committee Noteholders'
financial advisers, Xxxxxxxx Xxxxx Xxxxxx & Xxxxx, in connection with the
Financial Restructuring (on the terms and conditions of the engagement letter
entered into by the Company and Xxxxxxxx Xxxxx Xxxxxx & Xxxxx on November 29,
2001, and amended on February 19, 2002); and
(c) the reasonable legal fees and disbursements of Xxxxx & Overy, counsel
to JPMorgan in connection with the Financial Restructuring up to a maximum
amount of (pound)250,000.
6.5 Specific Performance. Each of the parties hereto acknowledges and
agrees that the breach of this Agreement would cause irreparable damage to such
party and that it will not have an adequate remedy at law. Therefore, the
obligations of the parties hereto under this Agreement shall be enforceable by a
decree or order for specific performance issued by any court of competent
jurisdiction, and appropriate injunctive relief may be applied for and granted
in connection therewith. Such remedies shall, however, be cumulative and not
exclusive and shall be in addition to any other remedies which any party may
have under this Agreement or otherwise.
6.6 Further Assurances. Each of the parties hereto agrees to execute and
deliver such other documents or agreements and to take such other action as may
be reasonably necessary or desirable for the implementation of this Agreement
and the consummation of the transactions contemplated hereby.
6.7 Submission to Jurisdiction; Consent to Service of Process.
---------------------------------------------------------
(a) The parties hereto hereby irrevocably submit to the non-exclusive
jurisdiction of any federal or state court sitting in New York City, or in the
alternative within the State of New York, over any dispute arising out of or
relating to this Agreement or any of the transactions contemplated hereby and
each party hereby irrevocably agrees that all claims in respect of such dispute
or any suit, action proceeding related thereto may be heard and determined in
such courts. The parties hereby irrevocably waive, to the fullest extent
permitted by applicable Law, any objection which they may now or hereafter have
to the laying of venue of any such dispute brought in such court or any defense
of inconvenient forum for the maintenance of such dispute. Each of the parties
hereto agrees that a judgment in any such dispute may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by Law.
26
(b) Each of the parties hereto hereby consents to process being served by
any party to this Agreement in any suit, action or proceeding in New York by the
mailing of a copy thereof in accordance with the provisions of Section 6.11.
6.8 Entire Agreement; Amendments and Waivers. This Agreement (including the
schedules and exhibits hereto and the other instruments duly executed by the
Company, the Committee, JPMorgan, Telia and the WP Entities) represents the
entire understanding and agreement between the parties hereto with respect to
the subject matter hereof and can be amended, supplemented or changed, and any
provision hereof can be waived, only by written instrument making specific
reference to this Agreement signed by the Company, on behalf of itself and the
Company Group; the Committee, on behalf of all Consenting Noteholders and
JPMorgan; JPMorgan; Telia; and the WP Entities. Certain parties hereto may
however enter into other agreements not directly the subject matter of this
Agreement. The waiver by any party hereto of a breach of any provision of this
Agreement shall not operate or be construed as a further or continuing waiver of
such breach or as a waiver of any other or subsequent breach. No failure on the
part of any party to exercise, and no delay in exercising, any right, power or
remedy hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of such right, power or remedy by such party preclude any other
or further exercise thereof or the exercise of any other right, power or remedy.
All remedies hereunder are cumulative and are not exclusive of any other
remedies provided by law.
6.9 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH THE DOMESTIC LAWS OF THE STATE OF NEW YORK
APPLICABLE TO AGREEMENTS MADE AND TO BE WHOLLY PERFORMED IN SUCH STATE WITHOUT
GIVING EFFECT TO ANY CHOICE OR CONFLICT OF LAW PROVISION OR RULE THAT WOULD
CAUSE THE APPLICATION OF THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF
NEW YORK.
6.10 Headings. The section headings of this Agreement are for reference
purposes only and are to be given no effect in the construction or
interpretation of this Agreement.
6.11 Notices. All notices and other communications under this Agreement
shall be in writing and shall be deemed given when delivered Personally or
mailed by certified mail, return receipt requested, to the parties (and shall
also be transmitted by facsimile to the Persons receiving copies thereof) at the
following addresses (or to such other address as a party may have specified by
notice given to the other party pursuant to this provision):
If to any company in the Company Group, to:
Netia Holdings, S.A.
xx. Xxxxxxxx 00
00-000 Xxxxxxxx, Xxxxxx
27
Telephone: x00 00 000 0000
Facsimile: x00 00 000 0000 and x00 00 000 0000
Attention: Kjell-Ove Xxxx, Xxx Don-Xxxxxxx
With copies to:
Netia Holdings
Aert van Xxxxxxxxx 00
0000 XX Xxxxxxxxx, Xxx Xxxxxxxxxxx
Telephone: x00 00 000 0000
Facsimile: x00 00 000 0000
Weil, Gotshal & Xxxxxx
Xxx Xxxxx Xxxxx
Xxxxxx XX0X 0XX, X.X.
Telephone: x00 (0)00 0000 0000
Facsimile: x00 (0)00 0000 0000
Attention: Xxxxxxx Xxxxxx, Xxxxxxx Xxxxx
If to (i) a particular Consenting Noteholder, to its address listed on the
signature pages hereto, with a copy to, or (ii) the Consenting Noteholders
to:
The Committee
Cadwalader, Xxxxxxxxxx & Xxxx
00 Xxxxxxxxxxx Xxxxxx
Xxxxxx XX0X XXX, X.X.
Telephone: x00 (0)00 0000 0000
Facsimile: x00 (0)00 0000 0000
Attention: Xxxxxx Xxxxxxxxx, Xxxxxxx Xxxxxx
If to JPMorgan, to:
JPMorgan Chase Bank
000 Xxxxxx Xxxx
Xxxxxx XX0X 0XX
Telephone: x00 (0)00 0000 0000
Facsimile: x00 (0)00 0000 0000
Attention: Xxxxx X. Xxxxxxxx
28
With a copy to:
Xxxxx & Overy
Xxx Xxx Xxxxxx
Xxxxxx XX0X 0XX, X.X.
Telephone: x00 (0)00 0000 0000
Facsimile: x00 (0)00 0000 0000
Attention: Xxx Xxxxx
If to Telia, to:
Telia AB (publ)
Corporate Mergers and Acquisitions
X-000 00 Xxxxxx, Xxxxxx
Telephone: 00 0 000 0000
Facsimile: 46 8 604 7188
Attention: Xxxxxxx Xxxxx, Senior Vice President
With a copy to:
Telia AB (publ)
Corporate Legal Affairs
X-000 00 Xxxxxx, Xxxxxx
Telephone: 00 0 000 0000
Facsimile: 46 8 946 470
Attention: Jan-Henrik Ahrnell, General Counsel
If to the WP Entities, to:
Warburg Pincus & Co., LLC
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000, X.X.X.
Telephone: 0 000 000 0000
Facsimile: 1 212 878 9351
Attention: Xxxxxxx Xxxxxxx
29
With a copy to:
Warburg Pincus International LLC
Xxxxxx House
00 Xxxx Xxxxxx, Xx. Xxxxx'x
Xxxxxx XX0X 0XX, XX
Telephone: x00 (0)00 0000 0000
Facsimile: x00 (0)00 0000 0000
Attention: Xxxxxx Xxxxxx
6.12 Severability. If any provision of this Agreement is invalid or
unenforceable, the balance of this Agreement shall remain in effect.
6.13 Binding Effect; Assignment. This Agreement shall be binding upon and
inure to the benefit of the parties and their respective successors and
permitted assigns. Nothing in this Agreement shall create or be deemed to create
any third party beneficiary rights in any Person or entity not a party to this
Agreement. Except as contemplated in Sections 1.2(o), 1.3(h), 1.4(g) and 1.5(g)
herein, no assignment of this Agreement or of any rights or obligations
hereunder may be made by any of the parties hereto (by operation of law or
otherwise) without the prior written consent of the other parties hereto and any
attempted assignment without the required consents shall be void.
6.14 Construction. The parties hereto have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties and no presumption or burden of proof shall
arise favoring or disfavoring any party by virtue of the authorship of any of
the provisions of this Agreement. The word "including" shall mean including
without limitation. The parties intend that each representation, warranty, and
covenant contained herein shall have independent significance. If any party has
breached any representation, warranty, or covenant contained herein in any
respect, the fact that there exists another representation, warranty, or
covenant relating to the same subject matter (regardless of the relative levels
of specificity) which the party has not breached shall not detract from or
mitigate the fact that the party is in breach of the first representation,
warranty, or covenant.
6.15 Incorporation of Exhibits and Schedules. The Exhibits and Schedules
identified in this Agreement are incorporated herein by reference and made a
part hereof.
6.16 Counterparts; Facsimile Signatures. This Agreement may be executed in
any number of counterparts, each of which shall be deemed to be an original, and
all of which shall constitute one and the same document. This Agreement has been
executed in two language versions, English and Polish, one counterpart of each
for the parties hereto. In the event of any discrepancy between the two
agreement language versions, the English version shall prevail.
[SIGNATURES BEGIN ON NEXT PAGE]
30
[RESTRUCTURING AGREEMENT SIGNATURE PAGE]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first written above.
NETIA HOLDINGS, S.A.
By: /s/ Avi Xxxxxxx
-----------------------------------
Name:
Title:
By: /s/ Ewa Don-Xxxxxxx
-----------------------------------
Name:
Title:
NETIA SOUTH SP. Z O.O.
By: /s/ Avi Xxxxxxx
-----------------------------------
Name:
Title:
By: /s/ Ewa Don-Xxxxxxx
-----------------------------------
Name:
Title:
NETIA TELEKOM S.A.
By: /s/ Avi Xxxxxxx
-----------------------------------
Name:
Title:
By: /s/ Ewa Don-Xxxxxxx
-----------------------------------
Name:
Title:
[RESTRUCTURING AGREEMENT SIGNATURE PAGE]
NETIA HOLDINGS B.V.
By: Xxx Xxxxxxx Trust B.V.
/s/ X.X. Siomssen
-----------------------------------
Name: X.X. Siomssen
Title:
By: Xxx Xxxxxxx Trust B.V.
/s/ A.C.I. den Heijer
-----------------------------------
Name: A.C.I. den Heijer
Title:
NETIA HOLDINGS II B.V.
By: Xxx Xxxxxxx Trust B.V.
/s/ X.X. Siomssen
-----------------------------------
Name: X.X. Siomssen
Title:
By: Xxx Xxxxxxx Trust B.V.
/s/ A.C.I. den Heijer
-----------------------------------
Name: A.C.I. den Heijer
Title:
NETIA HOLDINGS III B.V.
By: Xxx Xxxxxxx Trust B.V.
/s/ X.X. Siomssen
-----------------------------------
Name: X.X. Siomssen
Title:
By: Xxx Xxxxxxx Trust B.V.
/s/ A.C.I. den Heijer
-----------------------------------
Name: A.C.I. den Heijer
Title:
[RESTRUCTURING AGREEMENT SIGNATURE PAGE]
JPMORGAN CHASE BANK
By: /s/ Xxx X. Xxxxxx 12/03/2002
-------------------------
Name: Xxx Xxxxxx
Title: Managing Director
TELIA AB (publ.)
By: /s/ Xxxxxxxx Xxxxxx
--------------------------
Name: Xxxxxxxx Xxxxxx
Title: President and CEO
WARBURG, XXXXXX EQUITY PARTNERS, L.P.
By Warburg, Xxxxxx & Co.,
its General Partner
By: /s/ Xxxxxx XxXxxxxx
-------------------------
Name: Xxxxxx XxXxxxxx
Title: Partner
WARBURG, XXXXXX VENTURES INTERNATIONAL,
L.P.
By Warburg, Xxxxxx & Co.,
its General Partner
By: /s/ Xxxxxx XxXxxxxx
-------------------------
Name: Xxxxxx XxXxxxxx
Title: Partner
[RESTRUCTURING AGREEMENT SIGNATURE PAGE]
WARBURG, XXXXXX NETHERLANDS EQUITY
PARTNERS I, C.V.
By Warburg, Xxxxxx & Co.,
its General Partner
By: /s/ Xxxxxx XxXxxxxx
-----------------------------------
Name: Xxxxxx XxXxxxxx
Title: Partner
WARBURG, XXXXXX NETHERLANDS EQUITY
PARTNERS II, C.V.
By Warburg, Xxxxxx & Co.,
its General Partner
By: /s/ Xxxxxx XxXxxxxx
-----------------------------------
Name: Xxxxxx XxXxxxxx
Title: Partner
WARBURG, XXXXXX NETHERLANDS EQUITY
PARTNERS III, C.V.
By Warburg, Xxxxxx & Co.,
its General Partner
By: /s/ Xxxxxx XxXxxxxx
-----------------------------------
Name: Xxxxxx XxXxxxxx
Title: Partner
XXXXXXX XXXXX HOLDING LIMITED
By: /s/ Xxxxxx Xxxxxx
-----------------------------------
Name: Xxxxxx Xxxxxx
Title: Attorney
[RESTRUCTURING AGREEMENT SIGNATURE PAGE]
The undersigned hereby authorizes this Restructuring Agreement Signature
Page (or a photocopy hereof, which shall be valid for all purposes) to be
attached to the Restructuring Agreement dated March 5, 2002, or counterparts
thereof.
_______________________________________ ______________________________________
Print name of Consenting Noteholder Signature of Consenting Noteholder, if
an individual
_______________________________________
Record Address of Consenting Noteholder By: __________________________________
If an entity, signature of authorized
person signing on such Consenting
_______________________________________ Noteholder's behalf
City, State and Postal Code
_______________________________________ Name: ________________________________
Country Print name of authorized person
Title:________________________________
Title of authorized person
The Consenting Noteholder shall also complete the following:
Insert number of Notes of
Check box of series of Notes owned: each series owned:
--------------------------------------------------- ---------------------------
$200,000 aggregate principal amount of
10 1/4% Senior Dollar Notes due 2007
--------------------------------------------------- ---------------------------
$193,550,000 aggregate principal amount at
maturity of 11 1/4% Senior Discount Notes due 2007
--------------------------------------------------- ---------------------------
DM 207,062,000 aggregate principal amount at
maturity of 11% Senior DM Notes due 2007
--------------------------------------------------- ---------------------------
EUR 100,000,000 aggregate principal amount of
13 1/2% Senior Euro Notes due 2009
--------------------------------------------------- ---------------------------
$100,000,000 aggregate principal amount of
13 1/8% Senior Dollar Notes due 2009
--------------------------------------------------- ---------------------------
EUR 200,000,000 aggregate principal amount of
13 3/4% Senior Euro Notes due 2010
--------------------------------------------------- ---------------------------
34
EXHIBIT A
--------------------------------------------------------------------------------
Restructuring Term Sheet
5 March 2002
STRICTLY PRIVATE AND CONFIDENTIAL
THIS DOCUMENT DOES NOT CONSTITUTE AN OFFER
35
THIS DOCUMENT DOES NOT CONSTITUTE OR FORM PART OF ANY OFFER FOR PURCHASE, SALE
OR SUBSCRIPTION OF OR SOLICITATION OR INVITATION OF ANY OFFER TO BUY, SELL OR TO
SUBSCRIBE FOR ANY SECURITIES NOR SHALL IT OR ANY PART OF IT FORM THE BASIS OF OR
BE RELIED ON IN CONNECTION WITH ANY CONTRACT OR COMMITMENT WHATSOEVER. IN
PARTICULAR, THIS DOCUMENT (A) DOES NOT CONSTITUTE OR FORM PART OF ANY OFFER TO
PURCHASE, OFFER TO SELL, SUBSCRIBE, SOLICIT, OR INVITE ANY OFFER TO PURCHASE,
SELL, SUBSCRIBE OR SOLICIT FOR ANY SECURITIES WITHIN THE MEANING OF ARTICLE 2 OF
THE POLISH PUBLIC TRADING IN SECURITIES ACT OF 21 AUGUST 1997; AND (B) SHALL NOT
CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY ANY
SECURITIES WITHIN THE UNITED STATES OR WITH RESPECT TO ANY U.S. PERSON. ANY
OFFER TO SELL OR THE SOLICITATION OF ANY OFFER TO BUY IN THE UNITED STATES IN
RESPECT OF U.S. PERSONS WILL BE MADE IN ACCORDANCE WITH THE SECURITIES ACT OF
1933 OR PURSUANT TO ONE OR MORE EXEMPTIONS FROM REGISTRATION THEREUNDER.
THIS DOCUMENT IS DIRECTED ONLY AT PERSONS WHO (I) ARE OUTSIDE THE UNITED KINGDOM
(II) FALL WITHIN ARTICLE 19(5) OF THE FINANCIAL SERVICES AND MARKETS XXX 0000
(FINANCIAL PROMOTIONS ORDER 2001 (THE "ORDER") OR (III) FALL WITHIN ARTICLE
49(2) (A) TO (D) OF THE ORDER AND TO THE `RELEVANT PERSONS' AS PRESCRIBED
THEREIN. ANY INVESTMENT OR INVESTMENT ACTIVITY TO WHICH THIS DOCUMENT APPLIES IS
AVAILABLE ONLY TO RELEVANT PERSONS AND WILL BE ENGAGED IN ONLY WITH RELEVANT
PERSONS.
THE DISTRIBUTION OF THIS DOCUMENT IN OTHER JURISDICTIONS MAY BE RESTRICTED BY
LAW, AND PERSONS INTO WHOSE POSSESSION THIS DOCUMENT COMES SHOULD INFORM
THEMSELVES ABOUT, AND OBSERVE, ANY SUCH RESTRICTIONS. BY ACCEPTING THIS DOCUMENT
YOU AGREE TO BE BOUND BY THE FOREGOING INSTRUCTIONS.
36
Detailed Terms for the Restructuring
Capitalized terms used in this Exhibit A (Term Sheet) and not defined
shall have the meanings ascribed to them in the Restructuring Agreement,
of which this Exhibit A forms a part.
The Company: Netia Holdings S.A.
The Issuers: BVI and BVII
The Guarantor: Netia Holdings S.A.
Currency Swaps: Means the JPMorgan Swaps and any currency swap
and related agreements between the Company
and/or its subsidiaries, on the one hand, and
Xxxxxxx Xxxxx, on the other hand, intended to
hedge the Company's obligations with respect to
the Notes.
JPMorgan Swaps: Means (1) the ISDA Master Agreement dated 18th
January 2001 between JPMorgan and BVIII as swap
counter-parties and (2) the Letter dated 10th
January 2002 between JPMorgan and BVIII relating
to the close out of all swap transactions then
outstanding under (1) above, and (3) all credit
support documents relating thereto including the
Deed of Undertaking and Guarantee dated 18th
January 2001 provided by South, Telekom and
BVIII in favor of JPMorgan, various
subordination agreements made between JPMorgan,
Telekom, South, BVII and the Company dated 28th
February 2001 and the revocable guarantee given
by the Company in favor of JPMorgan dated 20th
February 2002.
Swap Creditors: Means JPMorgan and Xxxxxxx Xxxxx.
Restructuring: The Notes (including all accrued interest) and
the JPMorgan Swaps will be cancelled,
terminated, exchanged and/or setoff (as
appropriate) and replaced with:
(i) Debt: Euro 50 million of new Senior Secured
Notes due 2008 with terms as set out in Appendix
1 (the "New Notes"); and
(ii) Equity: the Restructuring Shares.
As part of the Financial Restructuring, the
existing shareholders of the Company will retain
9% of the ordinary share capital of the Company
immediately following the Financial
Restructuring Consummation. The existing
shareholders of the Company will also be issued
two and three year freely transferable and
assignable Warrants with each tranche covering
7.5% of the equity outstanding immediately
following the Financial Restructuring
Consummation (and after the provision of 5.0% of
the issued ordinary share capital of the Company
immediately
37
following the Financial Restructuring
Consummation for a management share option plan)
(see Share Allocation - Hypothetical
Illustration). The strike price applicable to
Warrants in each tranche will correspond to the
volume weighted average share price for the 30
trading days beginning 31 days following the
Financial Restructuring Consummation in
accordance with the terms and subject to the
conditions of this Term Sheet and the
Restructuring Agreement to which this Term Sheet
is attached. The Company will use its commercial
best efforts to list the Warrants on the Warsaw
Stock Exchange.
(iii) Cash: Cash on hand will be retained by the
Company. The escrowed funds ("Escrowed Funds")
in respect of the 2000 Notes are presently
subject to a TRO obtained by the Company under
Section 304 U.S. Bankruptcy Code. It is agreed
that the TRO will remain in force until the
later of the Financial Restructuring
Consummation and the ratification of the Polish
Arrangement Proceedings by the U.S. Bankruptcy
Court. Prior to the Financial Restructuring
Consummation, the Escrowed Funds will remain on
deposit with the 2000 Notes' Trustee, State
Street Bank and Trust Company ("State Street").
Upon the Financial Restructuring Consummation it
is agreed that the Escrowed Funds will be turned
over to the Company. Should for any reason the
Financial Restructuring Consummation fail to
occur upon the terms and subject to the
conditions of this Term Sheet and the
Restructuring Agreement to which this Term Sheet
is attached, then the legal and/or other rights
of the Company, State Street and each Consenting
Noteholder to seek to set aside the TRO and/or
to seek to turn over of all or part of the
Escrowed Funds either to the Company, or to each
Consenting Noteholder, or to holders of the 2000
Notes, respectively, shall be expressly
reserved.
The Debt and Equity consideration due to the
Noteholders and JPMorgan will be allocated (i)
as to the 91% Equity, 9.2% to JPMorgan and 81.8%
to the Noteholders and (ii) as to the New Notes,
9.2% to JPMorgan (being the amount of Euro
4,600,000) and 90.8% to the Noteholders (being
the amount of Euro 45,400,000).
General Unsecured All general unsecured trade creditors of the
Obligations: Company will remain unaffected by the proposed
Restructuring and will be paid in full as such
claims become due and payable. The Noteholders
and the Swap Creditors will waive any claims
they may otherwise have in respect to the
Company Group paying all general unsecured trade
creditors in connection with the Restructuring
Steps.
38
Ordinary Shares: The Company's shareholders shall be required to
consent to the increase of the Company's share
capital (and to the exclusion of statutory
pre-emption rights within the meaning of article
433 section 2 of the Polish Commercial Companies
Code of 15 September 2000) necessary to create
sufficient share capital of the Company to
enable ordinary shares to be allotted (i) for
the purpose of implementing the Financial
Restructuring and (ii) to provide for the
management share option plan to be established
pursuant to the proposed Financial
Restructuring. The Restructuring Shares will
carry pre-emption rights and the parties agree
to negotiate in good faith to agree other
protections as may be appropriate equivalent to
those contained in US securities laws against
future dilution of the equity in circumstances
where the market price of the shares does not at
least reflect the intrinsic value of the
Company. Following the issue of the
Restructuring Shares it is intended that the
number of shares will be reduced through a
reverse stock split.
The capital structure of the Company immediately
following the Financial Restructuring
Consummation shall be as set out in Appendix 2
to this Term Sheet.
Structure of Transaction: The cancellation of the Notes and termination of
the JPMorgan Swaps in exchange for New Notes and
the Restructuring Shares will be implemented
through an exchange offer undertaken as part of
the Dutch Composition Proceedings and the Polish
Arrangement Proceedings.
Noteholder Undertakings: The Noteholders shall agree to waive all
defaults arising under the Indentures pertaining
to the Notes.
Noteholders representing at least 95% of the
total value of the Notes and JPMorgan shall
enter into formal undertakings committing them
to support the Financial Restructuring upon the
terms and subject to the conditions specified
herein and upon the terms and subject to the
conditions of the Restructuring Agreement to
which this Term Sheet shall be attached. The
Restructuring Agreement shall contain
appropriate voting undertakings from Consenting
Noteholders and JPMorgan which shall ensure that
if any such holder sells, assigns or otherwise
conveys its respective claim, the transferee's
assumption of the undertakings shall be a
condition of such a sale, assignment or
conveyance of those claims. In the formal
undertakings, the Consenting Noteholders shall
disclose their identities and holdings of each
series of Notes and shall agree to co-operate
with the Company in connection with the
Restructuring Steps.
39
Management & Shareholder The Company and its management shall take all
Undertakings: requisite actions as may be necessary to
effect the Financial Restructuring and the
Restructuring Steps.
Registration Requirements: One or more registration exemptions for the New
Notes and the Restructuring Shares will be
availed of in the US and/or the UK, failing
which registration will take place in the US
and/or UK as required by applicable laws. In
respect of Poland, registration of the share
capital increase contemplated hereunder is
subject to notification and/or consent of such
increase to the Polish Securities and Exchange
Commission (Komisja Papierow Wartosrowych I
Gield) as well as the consent of the Warsaw
Stock Exchange ("WSE") for listing of the new
issue of equity and standard Court registration
procedure.
Senior Credit Facility: Upon the Financial Restructuring Consummation,
the Company will use its commercial best efforts
to enter into a revolving credit facility up to
Euro 50 million (as may be required) on terms
which are reasonably acceptable to the Committee
or its successors. The revolving credit facility
will have a first priority secured position over
the assets and the undertakings of those
companies within the Company's group and be
senior to the New Notes.
Dividends: Until the Financial Restructuring Consummation,
the Company will use its commercial best efforts
to have the shareholders cause the Company not
to pay dividends.
Listings: The Company will use its commercial best efforts
to retain the listing of its ordinary shares on
the WSE and of its ADSs on Nasdaq and to list
the New Notes on the Luxembourg Stock Exchange.
Information Rights: The Company will remain subject to the periodic
reporting requirements imposed by the Securities
Exchange Act of 1934 and the Polish Public
Trading in Securities Law of 1997. In addition,
the Company proposes to produce quarterly
unaudited financial statements and annual
audited financial statements, and make these
available to the public and to the holders of
New Notes in accordance with applicable law.
Observation Rights: Consenting Noteholders shall have the
observation and other rights at the Supervisory
and Management Board meetings of the Company set
forth in the Restructuring Agreement.
Employee plans: The Company will provide for a management share
option plan covering 5% of the Company's fully
diluted ordinary share capital immediately
following the Financial Restructuring
Consummation but before issuance of Warrants to
the shareholders of the
40
Company. Options granted will be priced at fair
market value at the several date(s) of issuance.
The Company also will provide for an appropriate
cash retention plan for key employees. Terms of
the key employee retention plan, including
amounts of cash awards and identities of
recipients, will be agreed between the current
Supervisory Board and the Committee. The
specific identities of share recipients, amounts
of share grants, and other terms of the
management share option plan shall be as
determined by the Company's Supervisory Board
following the Financial Restructuring
Consummation.
Advisory fees: All fees to the professionals incurred as part
of the Financial Restructuring shall be paid by
the Company in accordance with the terms of
engagement agreed in writing with them prior to
the Financial Restructuring Consummation. Fee
arrangements not previously agreed to by the
Company and by the Committee must be reviewed
and agreed to by the Company provided that such
fee arrangements shall be disclosed to the
Committee.
Share Allocation - Assuming 10,000,000 of the Company's ordinary
Hypothetical shares were outstanding immediately following
Illustration: the Financial Restructuring Consummation,
9,100,000 shares (91.0%) would represent
Restructuring Shares, and 900,000 shares (9%)
would be retained by the existing shareholders
as a group. An aggregate of 526,315 additional
shares (i.e. 10,000,000 divided by 0.95 minus
10,000,000) would be made available for the
management share option scheme. An aggregate
additional 1,857,585 shares (i.e. 10,526,315
divided by 0.85 minus 10,526,315) would be made
available for the Warrants.
41
APPENDIX 1
Term Sheet for New Notes
Original Aggregate EUR 50 million
Principal Amount:
Currency Denomination: Euro
Issuer : A Dutch company in the Company's group of
companies.
Interest: Payable semi-annually in cash or in kind at the
Company's option for up to four interest payment
periods at a rate of 10% per annum if paid in
cash, and 12% per annum if paid in kind.
Maturity: Six years from date of issuance.
Security and Guarantee: Subject to the first priority secured position
of the proposed revolving credit facility, the
New Notes shall be secured to the extent
permitted by applicable law over the assets and
undertaking of the companies in the Company's
group of companies, including, for the avoidance
of doubt, each of the Company, Telekom and
South.
The Issuer's obligations under the New
Notes will be cross-guaranteed by the
significant subsidiaries of the Company.
Inter-creditor The relationship between the New Notes and the
Arrangements: Senior Credit Facility will be regulated by an
intercreditor deed, which will contain usual
provisions relating to priority and enforcement.
Optional Redemption: The New Notes will be subject to redemption at
the option of the Issuer upon such terms to be
agreed between the Company and counsel for the
Committee.
Mandatory Redemption: The New Notes will be mandatorily redeemable at
101% of their principal amount plus accrued
interest upon a change of control. The New Notes
must be redeemed at par plus accrued interest
with the proceeds of asset sales.
Covenants: Substantially as set out in the Indentures for
the Notes, with such amendments as may be agreed
between the Company and counsel for the
Committee.
42
Events of Default: Substantially as set out in the Indentures for
the Notes, with such amendments as may be agreed
between the Company and counsel for the
Committee.
Listing: Luxembourg Stock Exchange
Law: State of New York
43
APPENDIX 2
Capital Structure Post Financial Restructuring Consummation
Shareholders Class of Shares No. of Shares
------------ --------------- -------------
Existing shareholders A-G 31,419,172
Noteholders & JPMorgan H 317,682,740
Management Share Option Plan I 18,373,785
Shareholder Warrants J 64,848,652
Total A-J 432,324,349
44
EXHIBIT B
INDENTURE AMENDMENTS
The proposed Indenture Amendments to each of the Indentures will be contained in
Supplemental Indentures. The following is a summary of the Indenture Amendments.
Capitalised terms used but not defined in the following summary have the
meanings assigned to them in the Indentures.
The Supplemental Indentures will, in substance, eliminate the following
covenants and other provisions of the Indentures (set out in Articles 9 or 10 of
each Indenture, respectively) as to:
o Limitation on Indebtedness (Article 1009 or 9.9).
o Limitation on Restricted Payments (Article 1010 or 9.10).
o Limitation on Issuances and Sales of Capital Stock of Restricted
Subsidiaries (Article 1011 or 9.11).
o Limitation on Transactions with Affiliates (Article 1012 or 9.12).
o Limitations on Liens (Article 1013 or 9.13).
o Limitations on Issuances of Guarantees of Indebtedness by Subsidiaries
(Article 1014 or 9.14).
o Limitation on Investments in Unrestricted Subsidiaries (Article 1018 or
9.18).
o Limitation on Sales of Assets (Article 1016 or 9.16).
o Limitation on Dividends and other Payment Restrictions Affecting Restricted
Subsidiaries (Article 1017 or 9.17).
o Permitted Business (Article 1019 or 9.19).
o Cross-default provisions (Article 501(iv) or 4.1(iv)).
The Indenture Amendments will, in substance, amend the following provision
contained in the Indenture (set out in Article 4, Section 4.1(iii) or Article 5,
Section 501(iii) of each Indenture respectively):
o Failure to comply with certain covenants (i.e., default in the performance,
or breach, of any covenant or agreement of the Issuer or the Company set
out in the Indenture).
45
The Indenture Amendments will constitute a single proposal and a Consenting
Noteholder must consent to the Indenture Amendments in their entirety and may
not consent selectively with respect to certain Indenture Amendments.
The Indenture Amendments will be effected by Supplemental Indentures, which will
be executed at or promptly following the date the requisite consents have been
obtained. Although the Supplemental Indentures will be executed at or promptly
following the date the requisite consents have been obtained, the Indenture
Amendments will not become operative until validly tendered Notes are accepted
for exchange by the Company. If the Exchange Offer is terminated or withdrawn or
the Notes are not purchased, the Indenture Amendments will not become operative.
46
EXHIBIT C
RESOLUTIONS
Resolution No. 1
of the Extraordinary General Shareholders' Meeting
of Netia Holdings S.A.
dated March [12], 2002
concerning the cancellation of a part of Resolution No. 2 and
Resolution No. 3 of the Extraordinary General Shareholders' Meeting
dated February 19, 2001
The Extraordinary General Shareholders' Meeting hereby cancels sections 1-7 of
Resolution No. 2 of the Extraordinary General Shareholders' Meeting dated
February 19, 2001 relating to the increase in the Company's share capital
through the issuance of series "H" shares(1), and Resolution No. 3 of the
Extraordinary General Shareholders' Meeting dated February 19, 2001 concerning
admitting series "H" shares to public trading.(2)
----------
1 Resolution No. 2 is enclosed as Exhibit No. 1 to this resolution.
2 Resolution No. 3 is enclosed as Exhibit No. 2 to this resolution.
47
EXHIBIT NO. 1
Resolution No. 2
of the Extraordinary Shareholders' Meeting
of Netia Holdings S.A.
dated February 19, 2001
concerning increasing the Company's share capital by issuing series H shares
and excluding the pre-emptive rights of existing shareholders
1. The Company's share capital is increased by up to PLN 2,145,138 (say: two
million one hundred forty-five thousand, one hundred thirty-eight zlotys),
i.e., up to PLN 190,660,170 (say: one hundred ninety million, six hundred
sixty thousand, one hundred seventy zlotys) by issuing up to 357,523 (say:
three hundred fifty-seven thousand, five hundred twenty-three) ordinary
bearer series H shares with a nominal value of PLN 6.00 (say: six zlotys)
each.
2. The series H shares are divided into two tranches:
a) I tranche of 133,233 (say: one hundred thirty-three thousand, two
hundred thirty-three) series H shares,
b) II tranche of 224,290 (say: two hundred twenty-four thousand, two
hundred ninety) series H shares.
3. Series H shares shall be offered to investors by way of a public
subscription. The offer to acquire series H shares shall be made directly
to Xxxxx X.X. and to Telia AB (publ.):
a) I tranche of series H shares shall be offered to Xxxxx X.X.;
b) II tranche of series H shares shall be offered to Telia AB (publ.).
4. Series H shares may be subscribed for in cash.
5. The Company's Management Board, subject to the Supervisory Board's final
approval, is authorised to determine the detailed conditions of the
subscription for series H shares and, in particular:
48
a) to determine the issue price of series H shares in accordance with
Article 11 and Article 20 of the Agreement of Current and Future
Shareholders and Netia 1 dated November 22, 1999;
b) to determine the time of the opening and closing of the subscription;
c) to determine the detailed terms and conditions for the allocation and
distribution of series H shares;
d) to adopt a decision on the allocation of the series H shares.
6. Series H shares shall participate in the dividend for 2001.
7. The pre-emptive rights of the Existing Shareholders are waived with respect
to the subscription for series H shares.
The waiver of the pre-emptive right to subscribe for the newly issued
shares results from the fact that the Company has to satisfy its obligation
under Article 11 of the Agreement of Current and Future Shareholders and
Netia 1 dated November 22, 1999 (the "Agreement") entered into, among
others, between the Company, Xxxxx X.X. and Telia AB (publ.) and in
connection with Xxxxx X.X.'s delivery of a notice that it elects to
exercise its right to subscribe for the Company's shares in exchange for
cash received from the Company as payment for the shares of Netia 1 Sp. z
o.o. transferred to the Company, in accordance with the provisions of the
Agreement, and furthermore, because of Telia AB (publ.) having the right to
make an identical transaction on the basis of Article 20 of the Agreement.
The Management Board shall not offer the II tranche series H shares if
Telia AB (publ.) decides not to exercise its rights within the time
provided in the Agreement.
8. The Company's Management Board shall be authorised to withdraw, on the
basis of redundancy thereof from offering all or a part of the series H
shares designated for Xxxxx X.X. and/or for Telia AB (publ.), if such
offering has become redundant, and to withdraw from public subscription, if
the Management Board decides to change the terms and conditions of
subscription and sale of series C and E shares subscribed for by a firm
commitment underwriter, in order to perform the Company's incentive plans,
on the basis of the prospectus made on 30 November 1999 ("Prospectus"), so
that a part of the series C and E shares which are currently held by the
firm commitment underwriter will be purchased by Xxxxx X.X. and/or Telia AB
(publ) having the effect of full and complete performance of the Company's
obligations under the Agreement.
The General Shareholder's Meeting consents to the change of the terms and
conditions of distribution of the series E and C shares so that they may be
offered to Xxxxx X.X. and/or to Telia AB (publ.) and for the change of the
Prospectus in the above respect, because the performance of the Company's
obligations under
49
the Agreement in the above described manner will be the least
expensive for the Company and therefore, in the best interest of all the
Company shareholders.
The Company's Management Board is authorised, subject to approval by the
Supervisory Board, and subject to obtaining the consent of the Securities
and Exchange Commission, to change the Prospectus as necessary to perform
this resolution.
50
EXHIBIT NO. 2
Resolution No. 3
of the Extraordinary Shareholders' Meeting
of Netia Holdings S.A.
dated February 19, 2001
concerning admitting series H shares to public trading
In accordance with Art. 84, point 1 of the Law on the Public Trading of
Securities, it is resolved to introduce series H shares to public trading. The
Company's Management Board is obligated to take all actions necessary to
implement this resolution, including filing the relevant motion with the
Securities and Exchange Commission and subsequently filing an application for
admitting the shares to trading on the main market of the Warsaw Stock Exchange.
51
Resolution No. 2
of the Extraordinary General Shareholders' Meeting
of Netia Holdings S.A.
dated March [12], 2002
concerning a decrease of the Company's share capital
1. Pursuant to Article 457 ss. 1 point 1) of the Commercial Companies Code in
relation to Article 455 ss. 1 thereof, the Company's Extraordinary General
Shareholders' Meeting hereby decreases the share capital of the Company
from PLN 188,515,032 (one hundred eighty-eight million, five hundred
fifteen thousand and thirty-two Polish zlotys) to PLN 31,419,172
(thirty-one million, four hundred nineteen thousand, one hundred
seventy-two Polish zlotys), i.e., by PLN 157,095,860 (one hundred
fifty-seven million, ninety-five thousand, eight hundred sixty Polish
zlotys), by decreasing the par value of all existing shares issued by the
Company from PLN 6 (six Polish zlotys) to PLN 1 (one Polish zloty) per
share.
2. The Company's Extraordinary General Shareholders' Meeting hereby decides
that, following the decrease of the share capital pursuant to point 1 of
this Resolution, the Shareholders' contributions to the share capital of
the Company, either in cash or in-kind, shall not be returned to any
Shareholders in any form.
3. This Resolution shall become effective, provided that the Company's
Extraordinary General Shareholders' Meeting adopts a resolution increasing
the Company's share capital to at least PLN 188,515,032 (one hundred
eighty-eight million, five hundred fifteen thousand and thirty-two Polish
zlotys) through the issuance of a new series of the Company's shares that
shall be fully paid.
4. The Company's Management Board shall submit a motion to the National Court
Register concerning the decrease in the Company's share capital when the
current or new Shareholders subscribe and pay for the newly issued shares
of the Company in an amount that assures that the Company's share capital
is not lower than PLN
52
188,515,032 (one hundred eighty-eight million, five hundred fifteen
thousand and thirty-two Polish zlotys).
5. Due to the requirement of Polish law that the purchase price of any new
shares issued by the Company must not be lower than their par value, and
considering the current market valuation of the Company shares on the
Warsaw Stock Exchange and Nasdaq National Market, the decrease of the par
value of the Company's existing shares is necessary in order to enable the
issuance of new shares by the Company in the future at prices that would
exceed their par value.
53
Resolution No. 3
of the Extraordinary General Shareholders' Meeting
of Netia Holdings S.A.
dated March [12], 2002
concerning an increase of the Company's share capital
through the issuance of series "H' shares
1. [PROPOSED AMENDMENT: The Company's share capital is hereby increased by an
amount not exceeding PLN 317,682,740 (three hundred seventeen million, six
hundred eighty-two thousand, seven hundred and forty Polish zlotys) through
the issuance of up to 317,682,740 (three hundred seventeen million, six
hundred eighty-two thousand, seven hundred and forty) ordinary bearer
series "H" shares.]
2. The nominal value of each series "H" share is PLN 1 (one Polish zloty).
3. Series "H" shares shall participate in dividends from January 1, 2001.
4. Series "H" shares shall be offered in public trading.
5. The pre-emptive rights of the Company's current Shareholders shall be
excluded.
6. The exclusion of the pre-emptive rights [of the current Shareholders in
connection with the issue of] the series "H" shares is, in the view of the
Shareholders, commercially justified and in the best interests of the
Company, as well as of the different groups of its Shareholders, as
explained in detail in the Management Board's opinion attached hereto as
Annex 1.
54
7. The Company's Management Board, subject to the final approval of the
Company's Supervisory Board, is authorized to determine the detailed
conditions of the acquisition and the subscription of series "H" shares
and, in particular:
a) the division of series "H" shares into tranches and determination of
the exact number of the shares offered in each tranche of series "H"
shares to be issued within the limit set forth in point 1 of this
Resolution;
b) the issue price of series "H" shares;
c) the time of the opening and closing of the subscription of series "H"
shares;
d) the execution of agreements with entities authorised to accept
subscriptions for shares and to determine the places and dates of the
subscription for series "H" shares;
e) the execution of agreements, both paid and free of charge, in order to
secure the success of the subscription for series "H" shares, in
particular, any standby or hard commitment underwriting agreement or
agreements.
8. [PROPOSED AMENDMENT: Series "H" shares may only be used in connection with
the Restructuring Agreement, dated March 5, 2002, entered into among the
Company, Netia South Sp. z o.o., Netia Telekom S.A., Netia Holdings B.V.,
Netia Holdings II B.V., Netia Holdings III B.V., the Noteholders who signed
the Restructuring Agreement, JPMorgan Chase Bank, Telia AB (publ.),
Warburg, Xxxxxx Equity Partners, L.P., Warburg, Xxxxxx Ventures
International, L.P., Warburg, Xxxxxx Netherlands Equity Partners I, C.V.,
Warburg, Xxxxxx Netherlands Equity Partners II, C.V., Warburg, Xxxxxx
Netherlands Equity Partners III, C.V., and Xxxxxxx Xxxxx Holding Limited.]
9. Subscription for the series "H" shares shall be effective irrespective of
the actual number of series "H" shares subscribed for within the limit set
forth in section 1 of this Resolution, unless the Management Board decides
otherwise pursuant to section 7 of this Resolution.
55
Resolution No. 4
of the Extraordinary General Shareholders' Meeting
of Netia Holdings S.A.
dated March [12], 2002
concerning admitting series "H" shares to public trading
In accordance with Article 84, point 1 of the Law on the Public Trading of
Securities, it is resolved to introduce series "H" shares to public trading. The
Company's Management Board is obligated to take all actions necessary to
implement this Resolution, including filing the relevant motion with the
Securities and Exchange Commission and subsequently filing an application for
admitting the shares to trading on the main market of the Warsaw Stock Exchange.
56
Resolution No. 5
of the Extraordinary General Shareholders' Meeting
of Netia Holdings S.A.
dated March [12], 2002
concerning amending ss.5 of the Company's Statute
The current ss. 5 of the Company's Statute shall be deleted in its entirety and
replaced by the following new wording of ss. 5 of the Company's Statute:
"ss. 5
[PROPOSED AMENDMENT: The Company's share capital amounts up to PLN 349,101,912
(three hundred forty-nine million, one hundred and one thousand, nine hundred
twelve Polish zlotys) and is divided into up to 349,101,912 (three hundred
forty-nine million, one hundred and one thousand, nine hundred twelve) shares of
PLN 1 (one Polish zloty) each.]
The shares of the Company are divided into the following series:
a) 5,000 ordinary registered series A shares;
b) 1,000 preferred registered series A1 shares;
c) 3,727,340 ordinary registered series B shares;
d) 17,256,855 ordinary bearer series C shares;
e) 3,977 ordinary bearer series C1 shares;
f) 5,500,000 ordinary bearer series D shares;
g) 425,000 ordinary bearer series E shares;
57
h) 2,250,000 ordinary bearer series F shares;
i) 2,250,000 ordinary bearer series G shares;
j) up to 317,682,740 ordinary bearer series H shares.
Pursuant to Article 431 ss. 7 in relation to Article 310 ss. 2 of the Commercial
Companies Code the Management Board is authorized to make a representation, in
the form of a notarial deed, specifying the amount of the subscribed share
capital related to the issue of series H shares."
58
Resolution No. 6
of the Extraordinary General Shareholders' Meeting
of Netia Holdings S.A.
dated March [12], 2002
concerning amending the Company's Statute and authorizing the
Management Board to increase the Company's share
capital within the authorized capital
1. ss. 5A shall be added to the Company's Statute after ss. 5:
"ss. 5A
1. [PROPOSED AMENDMENT: The Management Board shall have the right to
increase the Company's share capital and to issue new Company shares
by an amount not exceeding PLN 18,373,785 (eighteen million, three
hundred and seventy-three thousand, seven hundred and eighty-five
Polish zlotys), by issuing, in one or more tranches, ordinary bearer
shares of series "I" shares or subsequent series of the Company's
shares (authorized capital). The Management Board's authority to
increase the Company's share capital and to issue new Company shares
within the limit specified above expires on March [12], 2005.]
2. Each increase of the share capital by the Management Board up to the
amount determined in ss. 5A of the Company's Statute requires the
Supervisory Board's approval.
3. Upon the approval of the Supervisory Board, the Company's Management
Board shall determine the detailed conditions of each issue of shares
within
59
the limits set forth in ss. 5A section 1 of the Company's Statute, and
in particular:
a) the exact number of shares to be issued in each tranche or
series;
b) the issuance price of every subsequent issue;
c) the time of the opening and closing of the subscription periods;
d) the detailed terms and conditions for the distribution of the
shares;
e) the date of determining pre-emptive rights, if applicable;
f) to execute agreements with entities authorised to accept
subscriptions for shares and to determine the places and dates of
such subscriptions for the shares;
g) to execute agreements, both paid and free of charge, in order to
secure the success of the subscription for the shares and, in
particular, any standby or hard commitment underwriting agreement
or agreements.
4. Upon the approval of the Company's Supervisory Board, the Management
Board is authorized to limit or exclude the pre-emptive rights of the
Company's Shareholders with respect to the Company's shares to be
issued within the limits set forth in ss. 5A section 1 of the
Company's Statute."
2. Granting the Supervisory Board the authority to consent to a limitation or
exclusion of the pre-emptive rights for shares to be issued by the
Management Board is, in the view of the Shareholders, commercially
justified and in the best interests of the Company, as well as its
Shareholders, as explained in detail in the Management Board's opinion
attached thereto as Annex 1. The pre-emptive rights of the Shareholders are
adequately protected by the requirement that the Supervisory Board has to
approve any limitation or exclusion of the pre-emptive rights. If it were
not possible to exclude the Shareholders' pre-emptive rights, the
flexibility of the Management Board to use the authorized capital would be
severely limited. This would be unjustified taking into account the
Company's current financial situation and its capital needs. The power
granted to the Company's Management Board to increase the Company's share
capital shall allow the Management Board to issue new Company shares
immediately, without additional expense to the Company and the time
constraints related to the Company's convening of a General Shareholders'
Meeting.
60
3. [PROPOSED AMENDMENT: Series "I" shares or subsequent series of the
Company's shares to be issued within authorized capital may only be used in
connection with the Restructuring Agreement, dated March 5, 2002, entered
into among the Company, Netia South Sp. z o.o., Netia Telekom S.A., Netia
Holdings B.V., Netia Holdings II B.V., Netia Holdings III B.V., the
Noteholders who signed the Restructuring Agreement, JPMorgan Chase Bank,
Telia AB (publ.), Warburg, Xxxxxx Equity Partners, L.P., Warburg, Xxxxxx
Ventures International, L.P., Warburg, Xxxxxx Netherlands Equity Partners
I, C.V., Warburg, Xxxxxx Netherlands Equity Partners II, C.V., Warburg,
Xxxxxx Netherlands Equity Partners III, C.V., and Xxxxxxx Xxxxx Holding
Limited.]
4. Taking into consideration the above facts and the Company's current
financial situation, adopting ss. 5A of the Company's Statute concerning
the authorized capital is in the best interests of the Company and its
Shareholders.
61
Resolution No. 7
of the Extraordinary General Shareholders' Meeting
of Netia Holdings S.A.
dated March [12], 2002
concerning admitting the Company's shares to be issued within
the authorized capital to public trading
In accordance with Article 84, point 1 of the Law on the Public Trading of
Securities, it is resolved to introduce to public trading series "I" shares and
subsequent series of the Company's shares to be issued by the Management Board
pursuant to ss. 5A of the Company Statute (authorized capital). Upon the issue
of new shares pursuant to the authorization granted to the Management Board in
paragraph 5A of the Company's Statute, the Management Board shall take all
actions necessary to implement this Resolution, including filing a relevant
motion with the Securities and Exchange Commission and subsequently filing an
application for admitting the shares to trading on the main market of the Warsaw
Stock Exchange.
62
Resolution No. 8
of the Extraordinary General Shareholders' Meeting
of Netia Holdings S.A.
dated March [12], 2002
concerning cancellation of ss. 15 section 4 (c) of the Company's Statute
In connection with the reduction of the number of votes at the Company's General
Shareholders' Meeting held by BRE Bank S.A. and its Permitted Controlled
Affiliate Transferees to below 3.5% of the outstanding voting securities of the
Company, ss. 15 section 4 (c) of the Company's Statute shall be deleted in its
entirety:
"ss. 15 section 4
(...) c) for so long as BRE Bank S.A. ("BRE"), a Polish
joint stock company and their Permitted Controlled Affiliate
Transferees, in the aggregate, own shares constituting 3.5%
(three and one-half) or more of the outstanding voting
securities of the Company, BRE shall have the right to
nominate for election by the General Shareholders' Meeting
the remaining 1 (one) member of such 4 (four) members.
(...)"
63
Resolution No. 9
of the Extraordinary General Shareholders' Meeting
of Netia Holdings S.A.
dated March [12], 2002
concerning the election of a Supervisory Board member
Pursuant to ss. 15 section 4 of the Company's Statute, the Extraordinary General
Shareholders' Meeting hereby elects Przemys(3)xx Xxxxxxxx as a new member of the
Company's Supervisory Board.
64
Resolution No. 10
of the Extraordinary General Shareholders' Meeting
of Netia Holdings S.A.
dated March [12], 2002
concerning authorization for the Supervisory Board to
adopt the unified version of the Company's Statute
The Extraordinary General Shareholders' Meeting hereby authorizes the Company's
Supervisory Board to adopt the unified version of the Company's Statute,
including all changes adopted by the Extraordinary General Shareholders' Meeting
which are registered in the register of entrepreneurs maintained for the Company
by the National Court Register and amendments adopted by the Extraordinary
General Shareholders' Meeting today.
65
