-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, DU5dHJGg9fAasYzaHGb3Z9ZlyH6G4bPUA6Wiqo0kT6xYpfwEJlQ1lO9emNkMnS/I olcaSXnjsOimQenBWSO9rw== 0001156973-02-000296.txt : 20020618 0001156973-02-000296.hdr.sgml : 20020618 20020618124958 ACCESSION NUMBER: 0001156973-02-000296 CONFORMED SUBMISSION TYPE: F-3 PUBLIC DOCUMENT COUNT: 12 FILED AS OF DATE: 20020618 FILER: COMPANY DATA: COMPANY CONFORMED NAME: KONINKLIJKE PHILIPS ELECTRONICS NV CENTRAL INDEX KEY: 0000313216 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRONIC & OTHER ELECTRICAL EQUIPMENT (NO COMPUTER EQUIP) [3600] STATE OF INCORPORATION: P7 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: F-3 SEC ACT: 1933 Act SEC FILE NUMBER: 333-90686 FILM NUMBER: 02681286 BUSINESS ADDRESS: STREET 1: REMBRANDT TOWER AMSTELPLEIN 1 STREET 2: 1096 HA AMSTERDAM CITY: THE NETHERLANDS BUSINESS PHONE: 0113140791 MAIL ADDRESS: STREET 1: REMBRANDT TOWER AMSTELPLEIN 1 STREET 2: 1096 HA AMSTERDAM CITY: THE NETHERLANDS FORMER COMPANY: FORMER CONFORMED NAME: PHILIPS NV DATE OF NAME CHANGE: 19910903 FORMER COMPANY: FORMER CONFORMED NAME: PHILIPS ELECTRONICS N V DATE OF NAME CHANGE: 19930727 F-3 1 u45117fv3.txt FORM - F3 As filed with the Securities and Exchange Commission on June 18, 2002 REGISTRATION NO. 333- ================================================================================ SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ---------------------- FORM F-3 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ---------------------- KONINKLIJKE PHILIPS ELECTRONICS N.V. (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) THE NETHERLANDS (STATE OR OTHER JURISDICTION OF INCORPORATION OR ORGANIZATION) NONE (I.R.S. EMPLOYER IDENTIFICATION NO.) BREITNER CENTER, AMSTELPLEIN 2, 1096 BC AMSTERDAM, THE NETHERLANDS. TEL. NO: 011-31-20-59-77-777 (Address and telephone number of Registrant's principal executive offices) ---------------------- BELINDA CHEW GENERAL COUNSEL PHILIPS ELECTRONICS NORTH AMERICA CORPORATION 1251 AVENUE OF THE AMERICAS NEW YORK, NY 10020-1104 (Name, address and telephone number of agent for service) PLEASE SEND COPIES OF ALL COMMUNICATIONS TO: RICHARD C. MORRISSEY, ESQ. JOHN O'CONNOR, ESQ. SULLIVAN & CROMWELL 1 NEW FETTER LANE LONDON EC4A 1AN ENGLAND TEL. NO.: 011-44-20-7959-8900 Approximate date of commencement of proposed sale to the public: From time to time after the effective date of this Registration Statement as determined by market conditions. If the only securities being registered on this Form are being offered pursuant to dividend or interest reinvestment plans, please check the following box. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, please check the following box. [X] If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. [ ] CALCULATION OF REGISTRATION FEE
TITLE OF EACH CLASS AMOUNT TO BE PROPOSED MAXIMUM OFFERING PROPOSED MAXIMUM AMOUNT OF OF SECURITIES TO BE REGISTERED REGISTERED(1) PRICE PER UNIT(1) AGGREGATE OFFERING PRICE REGISTRATION FEE - ------------------------------ ------------- ------------------------- ------------------------ ---------------- Debt Securities $1,800,000,000 100% $1,800,000,000 $165,600
- ------------------ (1) Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(o) under the Securities Act. ---------------------- In accordance with Rule 429 under the Securities Act of 1933, this Registration Statement contains a combined prospectus that also relates to a Registration Statement on Form F-3 (File No. 333-4582) relating to Koninklijke Philips Electronics N.V.'s debt securities, previously filed by Koninklijke Philips Electronics N.V. and declared effective on May 20, 1996. This Registration Statement constitutes Post-Effective Amendment No. 1 to Koninklijke Philips Electronics N.V.'s Registration Statement on Form F-3 (File No. 333-4582) with respect to the remaining $700,000,000 of unsold securities registered thereunder. Such Post-Effective Amendment No. 1 shall hereafter become effective concurrently with the effectiveness of this Registration Statement in accordance with Section 8(c) of the Securities Act of 1933. THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SECTION 8(a), MAY DETERMINE. The information in this preliminary prospectus is not complete and may be changed. A registration statement relating to these securities has been declared effective by the Securities and Exchange Commission. We are not using this prospectus to offer to sell these securities or to solicit offers to buy these securities in any place where the offer or sale is not permitted. SUBJECT TO COMPLETION, DATED JUNE 18, 2002 ================================================================================ KONINKLIJKE PHILIPS ELECTRONICS N.V. DEBT SECURITIES up to an aggregate initial offering price of $2,500,000,000. We will give you the specific terms of the securities we are offering in supplements to this prospectus. You should read this prospectus and the supplements carefully before you invest. We may sell these securities to or through underwriters, and also to other purchasers or through agents. We will indicate the names of any underwriters in the accompanying prospectus supplement. SEE "RISK FACTORS" BEGINNING ON PAGE 4. NEITHER THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED THAT THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. This prospectus may not be used to sell securities unless it is accompanied by a prospectus supplement. The date of this prospectus is , 2002. TABLE OF CONTENTS KONINKLIJKE PHILIPS ELECTRONIC N.V..........................................3 INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE ........................... 3 FURTHER INFORMATION.........................................................4 PRESENTATION OF FINANCIAL INFORMATION.......................................4 RISK FACTORS................................................................4 FORWARD LOOKING STATEMENTS..................................................6 USE OF PROCEEDS.............................................................6 RATIO OF EARNINGS TO FIXED CHARGES..........................................7 CAPITALIZATION AND INDEBTEDNESS.............................................8 DESCRIPTION OF DEBT SECURITIES..............................................9 CLEARANCE AND SETTLEMENT...................................................21 TAXATION...................................................................27 PLAN OF DISTRIBUTION.......................................................38 SERVICE OF PROCESS AND ENFORCEMENT OF LIABILITIES..........................39 VALIDITY OF SECURITIES.....................................................40 EXPERTS....................................................................40 EXPENSES...................................................................40
-2- KONINKLIJKE PHILIPS ELECTRONIC N.V. Koninklijke Philips Electronics N.V. is a limited liability company incorporated under Netherlands law tracing its origins to Philips & Co., which was established in 1891. Philips is the holding company for, and part of, the Philips group of companies. Its shares are listed on Euronext Amsterdam, the New York Stock Exchange, the London Stock Exchange and several other stock exchanges. As of December 31, 2001, Philips had approximately 160 production sites in 35 countries and sales and service outlets in approximately 150 countries. It delivers products, systems and services in the fields of lighting, consumer electronics, domestic appliances and personal care, components, semiconductors and medical systems. Philips' principal executive office is located at: BREITNER CENTER, AMSTELPLEIN 2, 1096 BC AMSTERDAM, THE NETHERLANDS. TEL. NO: 011-31-20-59-77-777 Our website is www.philips.com INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE The United States Securities and Exchange Commission, commonly referred to as the SEC or the Commission, allows us to "incorporate by reference" in this prospectus the information we file with them, which means we can disclose important information to you by referring you to those documents. The information that we incorporate by reference is an important part of this prospectus. We incorporate by reference in this prospectus the following document and any future filings that we make with the SEC under Sections 13(a), 13(c) and 15(d) of the Securities Exchange Act of 1934, as amended, until the completion of any offering using this prospectus, including Reports on Form 6-K furnished to or filed with the SEC after the date of this prospectus, but only to the extent that any such Report expressly states that we incorporate it by reference in this prospectus: o Our annual Report on Form 20-F for the period ended December 31, 2001 (the "2001 Form 20-F"). The information we file with the SEC, including future filings, automatically updates and supersedes information in documents filed at earlier dates. All information appearing in this prospectus is qualified in its entirety by the information and financial statements, including the notes, contained in the documents that we incorporate by reference in this prospectus. We will provide to you, upon your request and without charge, a copy of any or all of the documents we referred to above which we incorporate in this document by reference, other than certain exhibits to those documents. You should direct your requests to Koninklijke Philips Electronics N.V. Groenewoudseweg 1, Building VO-1, 5621 BA, Eindhoven, The Netherlands, Attention: Corporate Legal Department (telephone 011-31-40-27-83271). Our SEC filings are available to the public through the internet at the SEC's website at www.sec.gov. You may also inspect and copy reports and other information that we file with the Commission at the public reference facilities maintained by the Commission at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549. Copies of such material may also be obtained by mail from the Public Reference Section of the Commission at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed rates. In addition, you may inspect and copy that material at the offices of the New York Stock Exchange, 20 Broad Street, New York, New York 10005, on which our shares of New York registry are listed. -3- FURTHER INFORMATION We have filed with the SEC a registration statement on Form F-3 with respect to the securities offered with this prospectus. This prospectus is a part of that registration statement and it omits some information that is contained in the registration statement. You can inspect the registration statement together with exhibits at the SEC's website or at the offices of the SEC and obtain that additional information about us and about the securities offered with this prospectus. PRESENTATION OF FINANCIAL INFORMATION For periods prior to January 1, 2002, we prepared our consolidated financial statements in accordance with accounting principles generally accepted in The Netherlands ("Dutch GAAP"), which differs in certain significant respects from U.S. GAAP. For a discussion of significant differences between Dutch GAAP and U.S. GAAP and a reconciliation of consolidated net income and consolidated ordinary shareholders' equity between amounts calculated under Dutch GAAP and those calculated under U.S. GAAP, you should read Note 27 to the Consolidated Financial Statements of the Philips Group which are a part of the 2001 Form 20-F. On March 28, 2002, we announced that we would prepare our financial statements in accordance with U.S. GAAP, for periods commencing on or after January 1, 2002. We have reported our financial results in euros since January 1, 1999. Previously reported financial statements denominated in Dutch guilders, or for all earlier periods presented have been translated into euros using the irrevocably fixed conversion rate applicable since January 1, 1999 (euro 1 = 2.20371 Dutch guilders). We believe that data redenominated into euros reflects the same information as previously reported. Our financial data from periods prior to 1999 may not be comparable to the financial data for the same periods of other companies that also report in euros if those other companies did not use the irrevocably fixed conversion rate applicable since January 1, 1999 or if those other companies previously reported in a currency other than the Dutch guilder. In this document, references to "U.S. dollars" or "$" are to U.S. currency and references to "EUR" or "euro " are references to euros. Solely for your convenience, this document contains translations of certain euro amounts into U.S. dollar amounts at specified rates. By including those translations we do not represent that the euro amounts actually represent those U.S. dollar amounts or could be converted into U.S. dollars at the rates indicated. Those translations of euros into U.S. dollars have been made at the noon buying rate in New York City for cable transfers in foreign currencies as announced by the U.S. Federal Reserve Bank of New York for customs purposes on a specified date. We refer to this rate as the "noon buying rate". The noon buying rate on a particular date may differ from the actual rates used in the preparation of our consolidated financial statements. The U.S. dollar financial information in this document has been translated for convenience at the rate of U.S.$1.00 to euro l.12, the noon buying rate for euro at December 31, 2001. RISK FACTORS We discuss risks related to our business, our financial condition and the external environment in which we operate in the 2001 Form 20-F and we incorporate that discussion herein by reference. RISKS RELATING TO THE DEBT SECURITIES SINCE WE ARE A HOLDING COMPANY AND CURRENTLY CONDUCT OUR OPERATIONS THROUGH SUBSIDIARIES, YOUR RIGHT TO RECEIVE PAYMENTS ON THE DEBT SECURITIES IS SUBORDINATED TO THE OTHER LIABILITIES OF OUR SUBSIDIARIES. We are organized as a holding company, and substantially all of our operations are carried on through subsidiaries. Our principal source of income is the dividends and distributions we receive from our subsidiaries. Our ability to meet our financial obligations is dependent upon the availability of cash flows from our domestic and foreign subsidiaries and affiliated companies through dividends, intercompany advances, management fees -4- and other payments. Our subsidiaries are not guarantors on the debt securities we may offer. Moreover, these subsidiaries and affiliated companies are not required and may not be able to pay dividends to us. Claims of the creditors of these subsidiaries have priority as to the assets of such subsidiaries over the claims of our creditors. Consequently, holders of our debt securities are structurally subordinated, on our insolvency, to the prior claims of the creditors of our subsidiaries including in respect to indebtedness for money borrowed. As of March 31, 2002, our subsidiaries had total outstanding indebtedness of euro 0.8 billion. It is possible that our subsidiaries will incur more debt in the future. In addition, some of our subsidiaries are subject to laws restricting the amount of dividends they may pay. For example, these laws may prohibit dividend payments when net assets would fall below subscribed share capital, when the subsidiary lacks available profits or when the subsidiary fails to meet certain capital and reserve requirements. Other statutory and general law obligations also affect the ability of directors of our subsidiaries to declare dividends and the ability of our subsidiaries to make payments to us on account of intercompany loans. SINCE THE DEBT SECURITIES ARE UNSECURED, YOUR RIGHT TO RECEIVE PAYMENTS MAY BE ADVERSELY AFFECTED BY THE LEVEL OF OUR SECURED INDEBTEDNESS The debt securities that we are offering will be unsecured. The debt securities are not subordinated to any of our other debt obligations and therefore they will rank equally with all our other unsecured and unsubordinated indebtedness. As of December 31, 2001, Koninklijke Philips Electronics N.V., our holding company, had no secured indebtedness outstanding. However, it may incur secured debt in the future. If we default on the debt securities, or after bankruptcy, liquidation or reorganization, then, to the extent that we have granted security over our assets, the assets that secure our debts will be used to satisfy the obligations under that secured debt before we can make payment on the debt securities. There may only be limited assets available to make payments on the debt securities in the event of an acceleration of the maturity date of the debt securities. If there is not enough collateral to satisfy the obligations of the secured debt then the remaining amounts on the secured debt would share equally with all unsubordinated unsecured indebtedness of Koninklijke Philips Electronics N.V. The debt of Koninklijke Philips Electronics N.V., as our top level holding company, is structurally subordinated to the debt of our subsidiaries as described in the previous risk factor. SINCE WE ARE A NETHERLANDS COMPANY AND A SUBSTANTIAL PORTION OF OUR ASSETS AND KEY PERSONNEL ARE LOCATED OUTSIDE THE UNITED STATES, YOU MAY NOT BE ABLE TO ENFORCE ANY U.S. JUDGMENT FOR CLAIMS YOU MAY BRING AGAINST US OR OUR KEY PERSONNEL OUTSIDE THE UNITED STATES Koninklijke Philips Electronics N.V. is organized under the laws of The Netherlands. Many of our assets are located outside the United States. In addition, most of the members of our Supervisory Board, Board of Management and officers are residents of countries other than the United States. As a result, it may be impossible for you to effect service of process within the United States upon us or these persons. It may also be difficult to enforce against us or these persons any judgments in civil and commercial matters, including judgments under United States federal securities laws. Service of process and enforcement of judgments are described in greater detail in the section "Service of Process and Enforcement of Liabilities." THE NATURE OF THE TRADING MARKET THAT DEVELOPS FOR THE DEBT SECURITIES BEING OFFERED MAY NOT BE FAVORABLE. If any of the debt securities are traded after their initial issuance, they may trade at a discount from their initial offering price. We may decide to list a particular series of debt securities on one or more stock exchanges. Factors that could cause the debt securities to trade at a discount are: o an increase in prevailing interest rates; o a decline in our credit worthiness; o a weakness in the market for similar securities; and -5- o declining general economic conditions. FORWARD LOOKING STATEMENTS THE FORWARD-LOOKING INFORMATION IN THIS PROSPECTUS MAY NOT ACCURATELY PREDICT FUTURE RESULTS From time to time, we may make statements regarding our assumptions, projections, expectations, intentions or beliefs about future events. These statements are intended as "Forward-Looking Statements" under the Private Securities Litigation Reform Act of 1995. We caution that these statements may and often do vary from actual results and the differences between these statements and actual results can be material. Accordingly, we cannot assure you that actual results will not differ materially from those expressed or implied by the forward-looking statements. Forward looking statements can be identified generally as those containing words such as "anticipates", "assumes", "believes", "estimates", "expects", "should", "will", "will likely result", "forecast", "outlook", "projects" or similar expressions. Some of the factors that could cause actual achievements and events to differ materially from those expressed or implied in any forward-looking statements are: o levels of consumer and business spending in major economies; o changes in consumer tastes and preferences; o the level of our marketing and promotional expenditures and those of our competitors; o raw materials and employee costs; o changes in future exchange and interest rates (in particular, changes relating to the euro and the U.S. dollar); o changes in tax rates; o changes in Philips' debt rating; o future business combinations, acquisitions or dispositions; and o the rate of technological change. USE OF PROCEEDS Unless otherwise indicated in the accompanying prospectus supplement, the net proceeds from the offering of the securities will be used to support the development and expansion of our business and to further strengthen our capital base. -6- RATIO OF EARNINGS TO FIXED CHARGES RATIO OF EARNINGS TO FIXED CHARGES The ratios of our earnings to fixed charges for the five years ended December 31, 2001 using financial information calculated in accordance with Dutch GAAP and financial information adjusted to reflect U.S. GAAP, were:
YEAR ENDED DECEMBER 31, ---------------------------------------------------------------- 2001 2000 1999 1998 1997 -------- -------- -------- -------- -------- Dutch GAAP (a) 29.79 6.82 3.40 6.38 U.S. GAAP (a) 29.73 5.78 3.49 6.62
For periods commencing on or after January 1, 2002, we will prepare our financial statements in accordance with U.S. GAAP. The ratios of our earnings to fixed charges for the three months ended March 31, 2002 and 2001 using financial information calculated in accordance with U.S. GAAP, were:
THREE MONTHS ENDED MARCH 31, --------------------- 2002 2001 ------ ------ U.S. GAAP 1.46 4.94
- ----------------- (a) For the year ended December 31, 2001 the Company had losses of euro 1.738 million and fixed charges of euro 503 million, respectively, as calculated in accordance with Dutch GAAP (losses of euro 1.762 million and fixed charges of euro 503 million respectively as calculated in accordance with U.S. GAAP). The ratio of earnings to fixed charges is computed by aggregating (a) in the case of Dutch GAAP, income before taxes, adjusted for gains and losses on the sale of unconsolidated companies and, in the case of U.S. GAAP, income (loss) from continuing operations before taxes (b) dividend income receivable from unconsolidated companies and (c) fixed charges, and dividing the total by fixed charges. Fixed charges comprise (a) interest and similar payments including financing costs on all indebtedness and (b) one third of rental expense (being that portion of rental expense representative of the interest factor). -7- CAPITALIZATION AND INDEBTEDNESS The following table sets out our capitalization and indebtedness on an historical basis at March 31, 2002, which have been calculated in accordance with U.S. GAAP.
EURO IN US$ IN MILLIONS MILLIONS* -------- --------- Bank loans and overdrafts due within one year 1,447 1,262 Loans due after more than one year 6,550 5,710 ------ ------ Total indebtedness 7,997 6,972 Called up share capital: Equity share capital 263 229 Equity reserves: Share premium account 22 19 Retained earnings 19,944 17,388 Accumulated other comprehensive income (693) (604) Treasury stock (1,271) (1,108) Net income (January - March, 2002) 9 8 ------ ------ Minority interests 199 173 Total shareholders' funds and minority interests 18,473 16,105 ------ ------ Total capitalization and indebtedness 26,470 23,077
- ----------------- * Translations into U.S. dollars in this section are solely for convenience and are computed at the rate of U.S.$1.00 to euro 1.147, the noon buying rate from the Federal Reserve Bank of New York as of March 31, 2002. On June 17, 2002 the noon buying rate was U.S. $1.00 to euro 1.059. Of the total indebtedness at December 31, 2001, euro 37 million was secured by our assets. The current position as of June 18, 2002 does not materially deviate from the position at December 31, 2001. We have given letters of guarantee to secure obligations related to unconsolidated companies and third parties amounting to euro 0.8 billion at March 31, 2002 with respect to loans, bank advances and future lease obligations. The current position as at June 18, 2002 was approximately euro 1 billion. -8- DESCRIPTION OF DEBT SECURITIES The following is a summary of the general terms of the debt securities. It sets forth possible terms and provisions for each series of debt securities. Each time that we offer debt securities, we will prepare and file a prospectus supplement with the SEC, which you should read carefully. The prospectus supplement may contain additional terms and provisions of those securities. If there is any inconsistency between the terms and provisions presented here and those in the prospectus supplement, those in the prospectus supplement will apply and will replace those presented here. The debt securities of any series will be our unsecured obligations, and will rank equally with all of our other unsecured and unsubordinated obligations. We will issue the debt securities under an indenture between us and Citibank N.A. as trustee. The terms of the debt securities include those stated in the indenture, and those made part of the indenture by reference to the Trust Indenture Act. You should read the indenture. We have filed a copy of the indenture, including supplements deemed to be part of the indenture, as an exhibit to the registration statement, of which this prospectus is a part. Because this section is a summary, it does not describe every aspect of the debt securities in detail. This summary is subject to, and qualified by reference to, all of the definitions and provisions of both the indenture and each series of debt securities. Certain terms, unless otherwise defined here, have the meaning given to them in the indenture. GENERAL The debt securities are not deposits and are not insured by any regulatory body of the United States or The Netherlands. Citibank N.A. acts as the trustee under the indenture. The trustee has two principal functions: o First, it can enforce your rights against us if we default on debt securities issued under the indenture. There are some limitations on the extent to which the trustee acts on your behalf, described under "Events of Default; Limitation of Remedies - Remedies If an Event of Default Occurs" below; and o Second, the trustee performs administrative duties for us, such as sending you interest payments, transferring your debt securities to a new buyer if you sell and sending you notices. The indenture does not limit the amount of debt securities that we may issue. We may issue the debt securities in one or more series, or as units comprised of two or more related series. The prospectus supplement will indicate for each series or for two or more related series of debt securities: o the title of the series of debt securities; o the issue price; o any limit on the aggregate principal amount of the series of debt securities; o any stock exchange on which we will list the series of debt securities; o the date or dates on which we will pay the principal of the series of debt securities; o the rate or rates, which may be fixed or variable, per annum at which the series of debt securities will bear interest, if any, and the date or dates from which that interest, if any, will accrue; -9- o the dates of which interest, if any, on the series of debt securities will be due and payable and the regular record dates for the interest payment dates; o any mandatory or optional sinking funds or analogous provisions or provisions for redemption at the option of the holder; o the date, if any, after which and the price or prices at which the series of debt securities may, in accordance with any optional or mandatory redemption provisions that are not described in this prospectus, be redeemed and the other detailed terms and provisions of those optional or mandatory redemption provisions, if any; o the terms under which any series of debt securities will be convertible into, or exchangeable for, other securities, including equity securities; o the denominations in which the debt securities will be issuable; o the currency of payment of principal and any premium or interest on the series of debt securities if other than U.S. dollars and the manner of determining the equivalent amount in U.S. dollars; o any index we will use to determine the amount of any payments of, premium, if any, and interest on the series of debt securities; o the applicability of the provisions described later under "Defeasance and Covenant Defeasance - Defeasance and Discharge"; o if the series of debt securities will be issuable in whole or part in the form of a global security as described under "Legal Ownership - Global Securities", and the depositary or its nominee with respect to the series of debt securities, and any special circumstances under which the global security may be registered for transfer or exchange in the name of a person other than the depositary or its nominee; and o any other special features of the series of debt securities. We may sell debt securities that bear no interest or that bear interest at a rate below the prevailing market interest rate or at a discount to their stated principal amount ("discount securities"). (Section 101) We may also denominate securities in a currency other than U.S. dollars. The relevant prospectus supplement will describe any special United States federal income tax considerations applicable to debt securities denominated in a currency other than U.S. dollars. The indenture does not provide for any debt covenants that would afford the holders of debt securities any protection in the event of a highly leveraged transaction. Holders of debt securities have no voting rights except as explained below under "Modification and Waiver " and "Events of Default; Limitation of Remedies". -10- FORM OF DEBT SECURITIES Debt securities will be issued only in fully registered form and may be represented in whole or in part by one or more global securities. Each debt security, including a global debt security, will be represented by a certificate in registered form and the person or entity named in the certificate is the holder. LEGAL OWNERSHIP Street Name and Other Indirect Holders Investors who hold debt securities in accounts at banks or brokers will generally not be recognized by us as legal holders of debt securities. This is called holding in street name. Instead, we would recognize only the bank or broker, or the financial institution the bank or broker uses to hold its debt securities. These intermediary banks, brokers and other financial institutions pass along principal, interest and other payments on the debt securities, either because they agree to do so in their customer agreements or because they are legally required. If you hold debt securities in street name, you should check with your own institution to find out: o how it handles debt securities payments and notices; o whether it imposes fees or charges; o how it would handle voting if it were ever required; o whether and how you can instruct it to send your debt securities, registered in your own name so you can be a direct holder as described below; and o how it would pursue rights under the debt securities if there were a default or other event triggering the need for holders to act to protect their interests. A global security is a special type of indirectly held security. If we choose to issue debt securities in the form of global securities, the ultimate beneficial owners can only be indirect holders. Direct Holders Our obligations, as well as the obligations of the trustee and those of any third parties employed by us or the trustee, run only to persons who are registered as holders of debt securities. As noted above, we do not have obligations to you if you hold in street name or other indirect means, either because you choose to hold debt securities in that manner or because the debt securities are issued in the form of global securities as described below. For example, once we make payment to the registered holder, we have no further responsibility for the payment even if that holder is legally required to pass the payment along to you as a street name customer but does not do so. GLOBAL SECURITIES When we issue a series of debt securities that will be represented in whole or in part by one or more global securities, we require that the global security be registered in the name of a financial institution we select, normally the book-entry clearing system. In addition, we require that the debt securities included in the global security not be transferred to the name of any other direct holder unless the special circumstances described below occur. The financial institution that acts as the sole direct holder of the global security is called the depositary. Typically the book entry clearing system, or its nominee, will act as depositary. Any person wishing to own a security must do so indirectly by virtue of an account with a broker, bank or other financial institution that in turn has an account with the depositary. The prospectus supplement indicates whether your series of debt securities will be issued only in the form of global securities. SPECIAL INVESTOR CONSIDERATIONS FOR GLOBAL SECURITIES. As an indirect holder, an investor's rights relating to a global security will be governed by the account rules of the investor's financial institution and -11- of the depositary, as well as general laws relating to securities transfers. We do not recognize this type of investor as a holder of debt securities and instead deal only with the depositary that holds the global security. If you are an investor in debt securities that are issued only in the form of global debt securities, you should be aware that: o You cannot get debt securities registered in your own name. o You cannot receive physical certificates for your interest in the debt securities. o You will be a street name holder and must look to your own bank or broker for payments on the debt securities and protection of your legal rights relating to the debt securities, as explained earlier under "Legal Ownership - Street Name and Other Indirect Holders". o You may not be able to sell interests in the debt securities to some insurance companies and other institutions that are required by law to own their debt securities in the form of physical certificates. o The depositary's policies will govern payments, transfers, exchange and other matters relating to your interest in the global security. We and the trustee have no responsibility for any aspect of the depositary's actions or for its records of ownership interests in the global security. We and the trustee also do not supervise the depositary in any way. o The depositary will require that interests in a global security be purchased or sold within its system using same-day funds. SPECIAL SITUATIONS WHEN THE GLOBAL SECURITY WILL BE TERMINATED. In a few special situations, the global security will terminate and interests in it will be exchanged for physical certificates representing debt securities. After that exchange, the choice of whether to hold debt securities directly or in street name will be up to the investor. Investors must consult their own bank or brokers to find out how to have their interests in debt securities transferred to their own name so that they will be direct holders. The rights of street name investors and direct holders in the debt securities have been previously described in the subsections entitled "Legal Ownership - Street Name and Other Indirect Holders" and "Legal Ownership - Direct Holders". The special situations for termination of a global security are: o When the depositary notifies us that it is unwilling, unable or no longer qualified to continue as depositary; and o When an Event of Default on the debt securities has occurred and has not been cured. Defaults are discussed below under "Events of Default; Limitation of Remedies - Events of Default". The prospectus supplement may also list additional situations for terminating a global security that would apply only to the particular series of debt securities covered by the prospectus supplement. When a global security terminates, the depositary (and not we or the trustee) is responsible for deciding the names of the institutions that will be the initial direct holders. (Sections 305 and 204) IN THE REMAINDER OF THIS DESCRIPTION "YOU" MEANS DIRECT HOLDERS AND NOT STREET NAME OR OTHER INDIRECT HOLDERS OF DEBT SECURITIES. INDIRECT HOLDERS SHOULD READ THE SUBSECTION ENTITLED "LEGAL OWNERSHIP - STREET NAME AND OTHER INDIRECT HOLDERS". -12- PAYMENT The relevant prospectus supplement will specify the date on which we will pay interest and the date for payments of principal and any premium, on any particular series of debt securities. The prospectus supplement will also specify the interest rate or rates, if any, or how the rate or rates will be calculated. ADDITIONAL AMOUNTS Unless the relevant prospectus supplement provides otherwise, we will pay any amounts to be paid by us on any series of debt securities without deduction or withholding for, or on account of, any and all present or future income, stamp and other taxes, levies, imposts, duties, charges, fees, deductions or withholdings ("taxes") now or hereafter imposed, levied, collected, withheld or assessed by or on behalf of The Netherlands or any political subdivision or authority of The Netherlands that has the power to tax, unless the deduction or withholding is required by law. If at any time a taxing jurisdiction of The Netherlands requires us to deduct or withhold taxes, we will pay the additional amounts of, or in respect of, the principal of, any premium, and any interest, or other amounts to which a holder is entitled on the debt securities ("Additional Amounts") that are necessary so that the net amounts paid to the holders, after the deduction or withholding, shall equal the amounts which would have been payable had no such deduction or withholding been required. However, we will not pay Additional Amounts for taxes in any of the following circumstances: o The tax or charge is imposed only because the holder, or a fiduciary, settlor, beneficiary or member or shareholder of, or possessor of a power over, the holder, if the holder is an estate, trust, partnership or corporation, was or is connected to the taxing jurisdiction. These connections include, but are not limited to, where the holder or related party: o is or has been a citizen or resident of the jurisdiction; o is or has been engaged in trade or business in the jurisdiction; o has or had a permanent establishment in the jurisdiction; or o has, or has had, a substantial interest in our share capital. o The tax or charge is imposed due to the presentation of a debt security, if presentation is required, for payment on a date more than 30 days after the security became due or after the payment was provided for. o There is an estate, inheritance, gift, sale, transfer, personal property or similar tax, assessment or other governmental charge. o The tax, assessment or governmental charge is payable in a manner that does not involve withholdings. o The tax, assessment or governmental charge is imposed or withheld because the holder or beneficial owner failed to comply with any of our requests for the following that the statutes, treaties, regulations or administrative practices of the taxing jurisdiction require as a precondition to exemption from all or part of such withholding: o to provide information about the nationality, residence or identity of the holder or beneficial owner; or o to make a declaration or satisfy any other information requirements. o The withholding or deduction is imposed pursuant to any European Directive on the taxation of savings (of which a proposal has been announced by the European Commission on July 18, 2001) implementing the conclusions of the ECOFIN Council meeting of November 26 and 27, 2000, or any law implementing such Directive. -13- o The withholding or deduction is imposed on a holder or beneficial owner who could have avoided such withholding or deduction by presenting its debt securities to another paying agent in a member state of the European Union. o The holder is a fiduciary or partnership or an entity that is not the sole beneficial owner of the payment of the principal of, or any interest on, any security, and the laws of the jurisdiction require the payment to be included in the income of a beneficiary or settlor for tax purposes with respect to such fiduciary or a member of such partnership or a beneficial owner who would not have been entitled to such additional amounts had it been the holder of such security. The prospectus supplement relating to the debt securities may describe additional circumstances in which we would not be required to pay Additional Amounts. Whenever we refer in this prospectus and any prospectus supplement to the payment of the principal of, any premium, or any interest, or other amounts to which a holder is entitled, if any, on, or in respect of, any debt securities of any series, we mean to include the payment of Additional Amounts to the extent that, in context, Additional Amounts are, were or would be payable. In the opinion of T.P.M. Schmit, our internal tax counsel, under current Netherlands law and practice we will not be required to deduct or withhold any Netherlands taxes, levies or other similar charges from any payment due or to become due in respect of the debt securities, except in the event o any payments on the debt securities are contingent, or are deemed to be contingent, on the existence or distribution of our profits, or o the debt securities are deemed to be equity securities. In either case, any payments on the debt securities may be treated as dividend for Netherlands tax purposes, meaning that the dividend withholding tax will apply to payments made on such debt securities. Debt securities may be deemed to be equity if they share significant characteristics with equity securities, for example if they are subordinated to all our other debt and if they are not redeemable except upon our liquidation. REDEMPTION FOR TAX REASONS Unless the relevant prospectus supplement provides otherwise, we will have the option to redeem the debt securities of any series upon not less than 30 nor more than 60 days' notice at any time (except in the case of debt securities that have a variable rate of interest, which may be redeemed on any interest payment date), if we determine that as a result of: o a change in or amendment to the laws or regulations of The Netherlands (or of any political subdivision or taxing authority thereof or therein), including any treaty to which The Netherlands (or of any political subdivision or taxing authority thereof or therein) is a party, or o a change in an official application or interpretation of those laws or regulations, including a decision of any court or tribunal, which becomes effective on or after the date of the applicable prospectus supplement, we will or would be required to pay holders Additional Amounts, and we cannot avoid such payment by reasonable measures available to us. In each case, before we give a notice of redemption or conversion, we shall be required to deliver to the trustee an officer's certificate confirming that we are entitled to exercise our right of redemption or conversion. The redemption or conversion must be made in respect of all, but not some, of the debt -14- securities of the relevant series. The redemption price will be equal to 100% of the principal amount of debt securities being redeemed together with any accrued but unpaid interest to the date fixed for redemption or, in the case of discount securities, such portion of the principal amount of such discount securities as may be specified by their terms. MODIFICATION AND WAIVER There are three types of changes we can make to the indenture and the debt securities. Changes Requiring Your Approval. First, there are changes that cannot be made to your debt securities without your specific approval. Following is a list of those types of changes: o change the stated maturity of the principal, or any installment of principal, or interest on a debt security; o reduce any amounts and the rate of interest of a debt security or any premium due upon its redemption; o reduce the amount of principal payable upon acceleration of the maturity of an original issue discount security or any other debt security following a default; o change the place or currency of payment on a debt security; o impair your right to sue for payment or conversion; o reduce the percentage of holders of debt securities whose consent is needed to modify or amend the indenture; o reduce the percentage of holders of debt securities whose consent is needed to waive compliance with various provisions of the indenture or to waive various defaults; o modify any other aspect of the provisions dealing with modification and waiver of the indenture, unless to provide that additional provisions of the indenture cannot be modified or waived without your consent; and o modify or affect in any manner adverse to you any of our obligations that relate to payment of principal, premium and interest, sinking fund payments and conversion rights. (Section 902) Changes Requiring a Majority Vote. The second type of change to the indenture and the debt securities is the kind that requires a vote in favor by holders of debt securities owning a majority of the principal amount of the particular series affected. Most changes fall into this category, except for clarifying changes, amendments, supplements and other changes that would not adversely affect holders of the debt securities in any material respect. (Section 902) The same majority vote would be required for us to obtain a waiver of all or part of the Covenants described below or a waiver of a past default. However, we cannot obtain a waiver of a payment default or any other aspect of the indentures or the debt securities listed in the first category described previously under "Changes Requiring Your Approval" unless we obtain your individual consent to the waiver. (Section 513) Changes Not Requiring Approval. The third type of change does not require any vote by holders of debt securities. This type is limited to clarifications and other changes that would not adversely affect holders of the debt securities in any material respect. (Section 901) Further Details Concerning Voting. When taking a vote, we will use the following rules to decide how much principal amount to attribute to a security: o For discount securities, we will use the principal amount that would be due and payable on the voting date if the maturity of the debt securities were accelerated to that date because of a default. o For debt securities whose principal amount cannot be determined at the time of issuance (for example, because it is based on an index), we will use a special rule for that security described in the prospectus supplement. -15- o For debt securities denominated in one or more foreign currencies or currency units we will use the U.S. dollar equivalent. o Debt securities will not be considered outstanding, and therefore not eligible to vote, if we have deposited or set aside in trust for you money for their payment or redemption and notice has been given to you of such redemption. Debt securities will also not be eligible to vote if they have been fully defeased as described later under "Defeasance and Covenant Defeasance - Defeasance and Discharge". (Section 101 - "Outstanding") o We will generally be entitled to set any day as a record date for the purpose of determining the holders of outstanding debt securities that are entitled to vote or take other action under the indenture. In limited circumstances, the trustee will be entitled to set a record date for action by holders. If we or the trustee set a record date for a vote or other action to be taken by holders of a particular series, that vote or action may be taken only by persons who are holders of outstanding debt securities of that series on the record date and must be taken within 180 days following the record date or another period that we may specify (or as the trustee may specify, if it sets the record date). We may shorten or lengthen this period from time to time. (Section 104) STREET NAME AND OTHER INDIRECT HOLDERS SHOULD CONSULT THEIR BANKS OR BROKERS FOR INFORMATION ON HOW APPROVAL MAY BE GRANTED OR DENIED IF WE SEEK TO CHANGE THE INDENTURE OR THE DEBT SECURITIES OR REQUEST A WAIVER. EVENTS OF DEFAULT; LIMITATION OF REMEDIES EVENT OF DEFAULT You will have special rights if an Event of Default occurs and is not cured, as described later in this subsection. The following are Events of Default: o we fail to pay principal or any premium on any security of that series when due and payable (other than, in limited circumstances, on account of an administrative error); o we fail to pay any interest or additional amounts of interest on any debt securities of that series when due and payable, and the failure continues for 30 days; o we fail to deposit when due any sinking fund payment in respect of any debt security of that series, beyond any applicable grace periods; o we fail to perform any other covenant included in the indenture (other than a covenant included in the indenture for the benefit of a series other than that series) that continues for 60 days after we have received written notice from the trustee or holders of at least 25% in principal amount of outstanding debt securities of that series; o we undertake or are subject to certain events in bankruptcy or insolvency. o any other Event of Default defined with respect to a particular series. (Section 501) Remedies if an Event of Default Occurs. If an Event of Default occurs, the trustee or the holder(s) of at least 25% in aggregate principal amount of the outstanding debt securities of any affected series may declare the principal amount of the debt securities of the series to be due and payable immediately. In the case of discount securities, this amount will be the portion of principal amount specified in its terms. However, after this declaration but before the trustee obtains a judgment or decree for payment of money due, the holder(s) of a majority in aggregate principal amount of the outstanding debt securities of the series may rescind the declaration of acceleration and its consequences, but only if the Event of Default has been cured or waived and all payments due, other than those due as a result of acceleration, have been made. (Section 502) Except in the cases of an Event of Default, where the trustee has some special duties, the trustee is not required to take any action under the indenture at the request of any holders unless the holders offer the -16- trustee reasonable protection from expenses and liability. This protection is called an indemnity. (Section 603) If reasonable indemnity is provided, the holders of a majority in principal amount of the outstanding debt securities of the relevant series may direct the time, method and place of conducting any lawsuit or other formal legal action seeking any remedy available to the trustee. These majority holders may also direct the trustee in performing any other action under the indenture. (Section 512) Before you bypass the trustee and bring your own lawsuit or other formal legal action or to take other steps to enforce your rights or protect your interests relating to the debt securities, the following must occur: o You must give the trustee written notice that an Event of Default has occurred and remains uncured; o The holders of 25% in aggregate principal amount of all outstanding debt securities of the affected series must make a written request that the trustee take action because of the default, and must offer reasonable indemnity to the trustee against the cost and other liabilities of taking that action; and o The trustee must have not taken action for 60 days after receipt of the above notice and offer of indemnity. (Section 507) STREET NAME AND OTHER INDIRECT HOLDERS SHOULD CONSULT THEIR BANKS OR BROKERS FOR INFORMATION ON HOW TO GIVE NOTICE OR DIRECTION TO OR MAKE A REQUEST OF THE TRUSTEE AND TO MAKE OR CANCEL A DECLARATION OF ACCELERATION. Waivers of an Event of Default. The holder(s) of not less than a majority in aggregate principal amount of the debt securities of any affected series may on behalf of the holders of all of the debt securities of that affected series, waive any past Event of Default with respect to the series, except any default in respect of either: o the payment of principal of, or any premium, or interest, on any debt securities; or o a covenant or provision of the relevant indenture which cannot be modified or amended without the consent of each holder of debt securities of the series. (Section 513) We will furnish to the trustee every year a written statement of certain of our officers certifying that, to their knowledge, we are in compliance with the indenture and the debt securities, or else specifying any default. (Section 1005) Notwithstanding any contrary provisions, nothing shall impair the right of a holder, absent the holder's consent, to sue for any payments due but unpaid with respect to the debt securities. COVENANTS As used in this section: o Principal property means a building or other structure or facility, and the land on which it sits and its associated fixtures that are located in the Unites States or The Netherlands and that we or a restricted subsidiary own or lease. The gross book value of the property must exceed 2% of our consolidated shareholders' equity. Any property or portion of any property is not a principal property if our board of directors: o does not view it as materially important to the total business conducted by us and our subsidiaries as an entirety; or o does not view any portion of the property as materially important for the use of the property. -17- We and our subsidiaries currently do not have any principal property. o Restricted subsidiary means any subsidiary that has two characteristics. First, its assets and operations are substantially located within the United States or The Netherlands. Second, it owns a principal property. However, a restricted subsidiary does not include two types of subsidiaries. It does not include a subsidiary that is primarily engaged in leasing or in financing installment receivables or a subsidiary that primarily acts to finance our operations and those of our consolidated subsidiaries. None of our subsidiaries is currently a restricted subsidiary. RESTRICTIONS ON LIENS Some of our property may be subject to a mortgage or other legal mechanism that gives our lenders preferential rights in that property over other lenders, including you and the other holders of the debt securities, or over our general creditors if we fail to pay them back. These preferential rights are called liens. We promise that we and our restricted subsidiaries will not become obligated on any new debt for borrowed money that is secured by a lien on any of our principal properties or on any shares of stock of any of our restricted subsidiaries, unless we grant an equivalent or higher-ranking lien on the same property to direct holders of the debt securities. We do not need to comply with this restriction if the amount of all debt that would be secured by liens on our principal properties and the shares of stock of our restricted subsidiaries, excluding debt secured by the liens that are listed later, is less than 15% of our consolidated shareholders' equity. This restriction on liens applies only to liens for borrowed money. For example, liens imposed by operation of law, such as liens to secure statutory obligations for taxes or workers' compensation benefits, or liens we create to secure obligations to pay legal judgments or surety bonds, would not be covered by this restriction. This restriction on liens also does not apply to debt secured by a number of different types of liens and we can disregard this debt when we calculate the limits imposed by this restriction. These types of liens that we can disregard include the following: o any lien existing on or before the date of the indenture; o judgment liens not giving rise to an Event of Default; o any lien arising by operation of law and not securing amounts more than ninety days overdue or otherwise being contested in good faith; o any lien on a principal property, shares or title documents for such property, shares of stock of any restricted subsidiary that we or any restricted subsidiary acquired as security for, or for indebtedness incurred, to finance all or part of the price of its acquisition, development, redevelopment, modification or improvement; o any lien over any principal property, or title documents for such property, shares of stock of any restricted subsidiary that we or any restricted subsidiary acquired subject to the lien; o any lien to secure indebtedness for borrowed money incurred in connection with a specifically identifiable project where the lien relates to a principal property involved in the project that we or -18- any restricted subsidiary acquired after the date of the indenture and where the recourse of the creditors relating to the indebtedness is limited to the project and principal property; o any lien incurred or deposits made in the ordinary course of business including but not limited to: o any mechanics', materialsmen's, carriers', workmens', vendors' or similar lien, o any lien arising in connection with equipment leases, and o any easements or rights-of-way restrictions and other similar charges. o any lien or deposits securing the performance of tenders, bids, leases, statutory obligations, surety bonds and appeal bonds, government contracts, performance and return-of-money bonds and other similar obligations incurred in the ordinary course of business. o any lien in our principal property or that of any restricted subsidiary in favor of the U.S. federal or any state government or The Netherlands or EU government or any instrumentality of any of them, securing our obligations or those of any restricted subsidiary as a result of any contract; o any lien securing taxes or assessments or other applicable governmental charges or levies; o any lien securing industrial revenue, development or similar bonds issued by us or for our benefit or the benefit of any of our restricted subsidiaries, provided that the industrial revenue, development or similar bonds are non-recourse to us or our restricted subsidiary; o any lien in our favor or in favor of any of our subsidiaries; and o any extension, renewal or replacement or successive extensions, renewals or replacements, as a whole or in part, of any lien included earlier in this list, for amounts not exceeding the principal amount of the borrowed money secured by the lien which is to be so extended, renewed or replaced provided that the extension, renewal, or replacement lien is limited to all or part of the same property, including improvements, that secured the lien to be extended, renewed or replaced. (Section 1009) RESTRICTIONS ON SALES AND LEASEBACKS Neither we nor any of our restricted subsidiaries will enter into any sale and leaseback transaction involving a principal property unless we comply with this covenant. A sale and leaseback transaction is an arrangement between us or a restricted subsidiary and a bank, insurance company or other lender or investor where we or our restricted subsidiary leases a principal property that we or our restricted subsidiary has owned for more than six months and which has been sold to a lender or investor or to any person to whom the lender or investor has advanced funds on the security of the principal property. We can comply with this covenant in either of two different ways. First, we will be in compliance if we or our restricted subsidiary could grant a lien on the principal property in an amount equal to the indebtedness attributable to the sale and leaseback transaction without being required to grant an equivalent or higher-ranking lien to you and the other direct holders of the debt securities under the restriction on liens described above. Second, we can comply if we invest an amount equal to at least the net proceeds of the sale of the principal property that we or our restricted subsidiary leases in the transaction or the fair value of that property, whichever is greater. This amount must be invested in any principal property or used to retire indebtedness for money that we or our restricted subsidiaries borrowed, incurred or assumed and that either has a maturity of 12 months or more from the date of incurrence of the indebtedness or has a maturity of less than 12 months from that date but is by its terms renewable or extendible beyond 12 months from that date at the option of the borrower, within one year of the transaction. (Section 1010) -19- This restriction on sales and leasebacks does not apply to any sale and leaseback transaction that is between us and one of our subsidiaries, or between one of our restricted subsidiaries and either us or one of our other subsidiaries. It also does not apply to any lease with a term, including renewals, of three years or less. CONSOLIDATION, MERGER AND SALE OF ASSETS; ASSUMPTION We may, without the consent of the holders of any of the debt securities, consolidate with, merge into or transfer or lease our assets substantially as an entirety to, any person of the persons specified in the applicable indenture, provided that: o any successor corporation formed by any consolidation or amalgamation, or any transferee or lessee of our assets, must assume our obligations on the debt securities; o immediately after giving effect to the transaction, no event which, after notice or lapse of time, would become an Event of Default shall have occurred and be continuing; and o certain other conditions are met (including the payment of any Additional Amounts that are payable). (Article 8) DEFEASANCE AND COVENANT DEFEASANCE The following discussion of defeasance and discharge of our obligations in relation to the debt securities will be applicable to your series of debt securities only if we choose to have them apply to that series. If we do so choose, we will state that in the prospectus supplement. (Article 13) DEFEASANCE AND DISCHARGE We can legally release ourselves from any payment or other obligations on the debt securities, except for various obligations described below, if we, in addition to other actions, put in place the following arrangements for you to be repaid: o We must deposit in trust for your benefit and the benefit of all other direct holders of the debt securities a combination of money and U.S. government or U.S. government agency notes or bonds that will generate enough cash to make interest, principal and any other payments on the debt securities on their various due dates. o We must deliver to the trustee a legal opinion of our counsel confirming that under current U.S. federal income tax law we may make the above deposit without causing you to be taxed on the debt securities any differently that if we did not make the deposit and just repaid the debt securities ourselves. We would not have to deliver this opinion if we received from, or there has been published by, the United States Internal Revenue Service a ruling that states the same conclusion. However, even if we take these actions, a number of our obligations relating to the debt securities will remain. These include the following obligations: o to register the transfer and exchange of debt securities; o to replace mutilated, destroyed, lost or stolen debt securities; o to maintain paying agencies; and o to hold money for payment in trust. (Section 1302) COVENANT DEFEASANCE We can legally release ourselves from compliance with certain restrictive covenants, including those described under "Covenants" and any that may be described in the applicable prospectus supplement, and the occurrence of certain Events of Default in relation to such restrictive covenants, if we, in addition to -20- other actions, deposit the monies, bonds and notes, and deliver the opinion, specified above under "Defeasance and Discharge". However, we will remain liable in the event that an acceleration following our Event of Default has the result that the deposited monies, bonds and notes are not sufficient to pay amounts due on such debt securities. In such event, we will remain liable for the remaining amounts due. (Sections 1303 and 1304) GOVERNING LAW The debt securities and indentures will be governed by and construed in accordance with the laws of New York State, except that our authorization and execution of the indenture and the debt securities will be governed by the laws of The Netherlands. NOTICES Notices to holders of debt securities will be given by mail to the addressees of such holders as they appear in the security register. (Sections 101 and 106) REGARDING THE TRUSTEE Citibank N.A. will be the trustee under the indentures. We and some of our subsidiaries maintain deposit accounts and conduct other banking transactions with the trustee in the ordinary course of our respective businesses. We are required to furnish to the trustee annual reports which will include a description of operations and annual audited consolidated financial statements prepared in accordance with U.S. GAAP or such other generally accepted accounting principles adopted by Philips, together with a reconciliation of consolidated net income and consolidated ordinary shareholders' equity to amounts in accordance with U.S. GAAP, if applicable. We will also furnish the trustee with interim reports that will include unaudited interim summary consolidated financial information prepared in accordance with U.S. GAAP or such other generally accepted accounting principles adopted by Philips. If we choose to do so, any interim reports prepared in accordance with generally accepted accounting principles other than U.S. GAAP may contain a reconciliation of consolidated net income and consolidated ordinary shareholders' equity to amounts in accordance with U.S. GAAP, if applicable. We will furnish the trustee with all notices of meetings at which holders of securities are entitled to vote, and all other reports and communications that are made generally available to those holders. CONSENT TO SERVICE The indenture provides that we irrevocably designate the trustee as our authorized agent for service of process in any proceeding arising out of or relating to the indenture or debt securities brought in any federal or state court in New York City, and we irrevocably submit to the jurisdiction of these courts. CLEARANCE AND SETTLEMENT Debt securities we issue may be held through one or more U.S. and international clearing systems. The principal clearing systems we will use are the book-entry systems operated by The Depository Trust Company, or DTC, in the United States, Clearstream Banking, Societe Anonyme, or Clearstream, Luxembourg and Euroclear Bank S.A./N.V., or Euroclear, in Brussels, Belgium. These systems have established electronic securities and payment transfer, processing, depositary and custodial links among themselves and others, either directly or through custodians and depositaries. These links allow securities to be issued, held and transferred among the clearing systems without the physical transfer of certificates. -21- Special procedures to facilitate clearance and settlement have been established among these clearing systems to trade securities across borders in the secondary market. Where payments for debt securities we issue in global form will be made in U.S. dollars, these procedures can be used for cross-market transfers and the securities will be cleared and settled on a delivery against payment basis. Global securities will be registered in the name of a nominee for, and accepted for settlement and clearance by, one or more of, Euroclear, Clearstream, Luxembourg, DTC and any other clearing system identified in the applicable prospectus supplement. Cross-market transfers of debt securities that are not in global form may be cleared and settled in accordance with other procedures that may be established among the clearing systems for these securities. Investors in debt securities that are issued outside of the United States, its territories and possessions must initially hold their interests through Euroclear, Clearstream, Luxembourg or the clearance system that is described in the applicable prospectus supplement. The policies of DTC, Clearstream, Luxembourg and Euroclear will govern payments, transfers, exchange and other matters relating to the investors' interests in securities held by them. This is also true for any other clearance system that may be named in a prospectus supplement. Euroclear and Clearstream, Luxembourg hold interests on behalf of their participants through customers' securities accounts in Euroclear's and Clearstream Luxembourg's names on the books of their respective depositaries which, in the case of securities for which a global security in registered form is deposited with DTC, in turn hold such interests in customers' securities accounts in the depositaries' names on the books of DTC. We have no responsibility for any aspect of the actions of DTC, Clearstream, Luxembourg or Euroclear or any of their direct or indirect participants. We have no responsibility for any aspect of the records kept by DTC, Clearstream, Luxembourg or Euroclear or any of their direct or indirect participants. We also do not supervise these systems in any way. This is also true for any other clearing system indicated in a prospectus supplement. DTC, Clearstream, Luxembourg, Euroclear and their participants perform these clearance and settlement functions under agreements they have made with one another or with their customers. You should be aware that they are not obligated to perform these procedures and may modify them or discontinue them at any time. The description of the clearing systems in this section reflects our understanding of the rules and procedures of DTC, Clearstream, Luxembourg and Euroclear as they are currently in effect. Those systems could change their rules and procedures at any time. THE CLEARING SYSTEMS DTC DTC has advised us as follows: o DTC is: (1) a limited purpose trust company organized under the laws of the State of New York; (2) a "banking organization" within the meaning of New York Banking Law; (3) a member of the Federal Reserve System; -22- (4) a "clearing corporation" within the meaning of the New York Uniform Commercial Code; and (5) a "clearing agency" registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. o DTC was created to hold securities for its participants and to facilitate the clearance and settlement of securities transactions between participants through electronic book-entry changes to accounts of its participants. This eliminates the need for physical movement of certificates. o Participants in DTC include securities brokers and dealers, banks, trust companies and clearing corporations and may include certain other organizations. DTC is partially owned by some of these participants or their representatives. o Indirect access to the DTC system is also available to banks, brokers, dealers and trust companies that have relationships with participants. o The rules applicable to DTC and DTC participants are on file with the SEC. CLEARSTREAM, LUXEMBOURG Clearstream, Luxembourg has advised us as follows: o Clearstream, Luxembourg is a duly licensed bank organized as a societe anonyme incorporated under the laws of Luxembourg and is subject to regulation by the Luxembourg Commission for the supervision of the financial sector (Commission de surveillance du secteur financier.) o Clearstream, Luxembourg holds securities for its customers and facilitates the clearance and settlement of securities transactions among them. It does so through electronic book-entry transfers between the accounts of its customers. This eliminates the need for physical movement of certificates. o Clearstream, Luxembourg provides other services to its customers, including safekeeping, administration, clearance and settlement of internationally traded securities and lending and borrowing of securities. It interfaces with the domestic markets in over 30 countries through established depositary and custodial relationships. o Clearstream, Luxembourg's customers include worldwide securities brokers and dealers, banks, trust companies and clearing corporations and may include certain other professional financial intermediaries. Its U.S. customers are limited to securities brokers and dealers and banks. o Indirect access to the Clearstream, Luxembourg system is also available to others that clear through Clearstream, Luxembourg customers or that have custodial relationships with its customers, such as banks, brokers, dealers and trust companies. EUROCLEAR Euroclear has advised us as follows: o Euroclear is incorporated under the laws of Belgium as a bank and is subject to regulation by the Belgian Banking and Finance Commission (Commission Bancaire et Financiere) and the National Bank of Belgium (Banque Nationale de Belgique). o Euroclear holds securities for its participants and facilitates the clearance and settlement of securities transactions among them. It does so through simultaneous electronic book-entry delivery against payments, thereby eliminating the need for physical movement of certificates. o Euroclear provides other services to its participants, including credit, custody, lending and borrowing of securities and tri-party collateral management. It interfaces with the domestic markets of several countries. o Euroclear customers include banks, including central banks, securities brokers and dealers, banks, trust companies and clearing corporations and certain other professional financial intermediaries. -23- o Indirect access to the Euroclear system is also available to others that clear through Euroclear customers or that have custodial relationships with Euroclear customers. o All securities in Euroclear are held on a fungible basis. This means that specific certificates are not matched to specific securities clearance accounts. OTHER CLEARING SYSTEMS We may choose any other clearing system for a particular series of debt securities. The clearance and settlement procedures for the clearing system we choose will be described in the applicable prospectus supplement. PRIMARY DISTRIBUTION The distribution of the debt securities will be cleared through one or more of the clearing systems that we have described above or any other clearing system that is specified in the applicable prospectus supplement. Payment for securities will be made on a delivery versus payment or free delivery basis. These payment procedures will be more fully described in the applicable prospectus supplement. Clearance and settlement procedures may vary from one series of debt securities to another according to the currency that is chosen for the specific series of securities. Customary clearance and settlement procedures are described below. We will submit applications to the relevant system or systems for the securities to be accepted for clearance. The clearance numbers that are applicable to each clearance system will be specified in the prospectus supplement. CLEARANCE AND SETTLEMENT PROCEDURES - DTC DTC participants that hold debt securities through DTC on behalf of investors will follow the settlement practices applicable to United States corporate debt obligations in DTC's Same-Day Funds Settlement System. Debt securities will be credited to the securities custody accounts of these DTC participants against payment in same-day funds, for payments in U.S. dollars, on the settlement date. For payments in a currency other than U.S. dollars, securities will be credited free of payment on the settlement date. CLEARANCE AND SETTLEMENT PROCEDURES - EUROCLEAR AND CLEARSTREAM, LUXEMBOURG We understand that investors that hold their debt securities through Euroclear or Clearstream, Luxembourg accounts will follow the settlement procedures that are applicable to conventional Eurobonds in registered form. Debt securities will be credited to the securities custody accounts of Euroclear and Clearstream, Luxembourg participants on the business day following the settlement date, for value on the settlement date. They will be credited either free of payment or against payment for value on the settlement date. SECONDARY MARKET TRADING TRADING BETWEEN DTC PARTICIPANTS Secondary market trading between DTC participants will occur in the ordinary way in accordance with DTC's rules. Secondary market trading will be settled using procedures applicable to United States corporate debt obligations in DTC's Same-Day Funds Settlement System. -24- If payment is made in U.S. dollars, settlement will be in same-day funds. If payment is made in a currency other than U.S. dollars, settlement will be free of payment. If payment is made other than in U.S. dollars, separate payment arrangements outside of the DTC system must be made between the DTC participants involved. TRADING BETWEEN EUROCLEAR AND/OR CLEARSTREAM, LUXEMBOURG PARTICIPANTS We understand that secondary market trading between Euroclear and/or Clearstream, Luxembourg participants will occur in the ordinary way following the applicable rules and operating procedures of Euroclear and Clearstream, Luxembourg. Secondary market trading will be settled using procedures applicable to conventional eurobonds in registered form. TRADING BETWEEN A DTC SELLER AND A EUROCLEAR OR CLEARSTREAM, LUXEMBOURG PURCHASER A purchaser of debt securities that are held in the account of a DTC participant must send instructions to Euroclear or Clearstream, Luxembourg at least one business day prior to settlement. The instructions will provide for the transfer of the securities from the selling DTC participant's account to the account of the purchasing Euroclear or Clearstream, Luxembourg participant. Euroclear or Clearstream, Luxembourg, as the case may be, will then instruct the common depositary for Euroclear and Clearstream, Luxembourg to receive the securities either against payment or free of payment. The interests in the securities will be credited to the respective clearing system. The clearing system will then credit the account of the participant, following its usual procedures. Credit for the securities will appear on the next day, European time. Cash debit will be back-valued to, and the interest on the securities will accrue from, the value date, which would be the preceding day, when settlement occurs in New York. If the trade fails and settlement is not completed on the intended date, the Euroclear or Clearstream, Luxembourg cash debit will be valued as of the actual settlement date instead. Euroclear participants or Clearstream, Luxembourg participants will need the funds necessary to process same-day funds settlement. The most direct means of doing this is to preposition funds for settlement, either from cash or from existing lines of credit, as for any settlement occurring within Euroclear or Clearstream, Luxembourg. Under this approach, participants may take on credit exposure to Euroclear or Clearstream, Luxembourg until the securities are credited to their accounts one business day later. As an alternative, if Euroclear or Clearstream, Luxembourg has extended a line of credit to them, participants can choose not to pre-position funds and will instead allow that credit line to be drawn upon to finance settlement. Under this procedure, Euroclear participants or Clearstream, Luxembourg participants purchasing securities would incur overdraft charges for one business day (assuming they cleared the overdraft as soon as the securities were credited to their accounts). However, interest on the securities would accrue from the value date. Therefore, in many cases, the investment income on securities that is earned during that one business day period may substantially reduce or offset the amount of the overdraft charges. This result will, however, depend on each participant's particular cost of funds. Because the settlement will take place during New York business hours, DTC participants will use their usual procedures to deliver securities to the depositary on behalf of Euroclear participants or Clearstream, Luxembourg participants. The sale proceeds will be available to the DTC seller on the settlement date. For the DTC participants, then, a cross-market transaction will settle no differently than a trade between two DTC participants. SPECIAL TIMING CONSIDERATIONS You should be aware that investors will only be able to make and receive deliveries, payments and other communications involving the debt securities through Clearstream, Luxembourg and Euroclear or any -25- other clearance system that may be named in the prospectus supplement on days when those systems are open for business. Those systems may not be open for business on days when banks, brokers and other institutions are open for business in the United States. In addition, because of time-zone differences, there may be problems with completing transactions involving Clearstream, Luxembourg and Euroclear or any other clearance system that may be named in the prospectus supplement on the same business day as in the United States. U.S. investors who wish to transfer their interests in the debt securities, or to receive or make a payment or delivery of the debt securities, on a particular day, may find that the transactions will not be performed until the next business day in Luxembourg or Brussels, depending on whether Clearstream, Luxembourg or Euroclear is used. -26- TAXATION This section describes the material Netherlands income, gift and inheritance tax and United States federal income tax consequences of owning debt securities. It applies to you only if you are a beneficial holder of a debt security that you acquire upon its initial issuance. It does not purport to be a complete analysis of all tax considerations relating to debt securities, and the information provided in this section may not apply in your particular circumstances. In addition, this section is based upon the law as in effect on the date of this Prospectus and is subject to any change in law that may take effect in the future. This section does not apply to any debt securities if any payments of principal or interest on the debt securities are contingent on, or determined by reference to, the existence or distribution of our profits or if the debt securities share significant characteristics with equity, for example, they are subordinated to all our other debt or they may be redeemed only upon our liquidation. If we issue any such debt securities, we will address the relevant tax consequences in the prospectus supplement. YOU SHOULD CONSULT YOUR OWN TAX ADVISOR CONCERNING THE TAX CONSEQUENCES UNDER NETHERLANDS, UNITED STATES, AND ANY OTHER TAX LAWS OF OWNING DEBT SECURITIES IN YOUR PARTICULAR CIRCUMSTANCES. THE NETHERLANDS This section describes the material Netherlands income, gift and inheritance tax consequences of owning debt securities. It represents the opinion of T.P.M. Schmit, our internal tax adviser. Prospective purchasers of the debt securities should consult their tax advisers as to the consequences under the tax laws of The Netherlands of acquiring, holding and disposing of the debt securities and receiving payments of interest, principal and other amounts under the debt securities. This summary is based upon the law as in effect on the date of this Prospectus and is subject to any change in law that may take effect after such date. Under Dutch law as in effect on the date of this Prospectus: (i) You will not be subject to Netherlands taxes on income from a debt security or coupon or capital gains on the disposition of a debt security or coupon unless: (a) you are, or are deemed to be, a resident of The Netherlands; (b) you have made an election for the application of the rules of The Netherlands Income Tax Act 2001 to you as they apply to residents of The Netherlands; (c) the debt security or coupon is attributable to an enterprise or an interest in an enterprise that you own, or are deemed to own, and that is carried on, in whole or in part, in The Netherlands through a permanent establishment, a deemed permanent establishment or a permanent representative; (d) you carry on activities that exceed regular asset management or constitute taxable miscellaneous activities in The Netherlands (as defined in the Netherlands Income Tax Act 2001) and such income or capital gains can be attributed to such activities; or (e) you or certain classes of individuals related to you (including foster children and certain relatives by blood or marriage in the direct line of descent) have, a substantial interest or deemed substantial interest in our share capital, and such substantial interest, or the debt securities, do not form part of the assets of an enterprise. The debt security will generally not form part of a substantial interest or a deemed substantial interest unless you, your spouse, certain other relatives (including foster children), and certain persons -27- sharing your household, alone or together and whether directly or indirectly, own or hold certain other rights over shares, or rights resembling shares, representing five percent or more of our total issued and outstanding capital (or the issued and outstanding capital of any class of our shares) or the ownership of certain profit-participating rights that relate to 5% or more of our annual profits and/or to 5% or more of the liquidation proceeds payable to shareholder or a particular class of holders in the event we were liquidated. (ii) Netherlands gift, estate and inheritance tax will not apply if you transfer a debt security or coupon by gift or upon your death, unless: (a) at the time of the transfer, you are resident or deemed to be resident in The Netherlands; (b) at the time of the transfer, you have an enterprise, or an interest in an enterprise, that is, in whole or in part, carried on in The Netherlands, through a permanent establishment or a permanent representative and the debt security is attributable to this enterprise; or (c) you transfer the debt security by gift and die within 180 days after the date of the gift, and you are resident or deemed to be resident in The Netherlands at the time of your death. For purposes of Netherlands gift, estate and inheritance tax, you will be deemed to be resident in The Netherlands if you are a national of the Netherlands and you have been resident in The Netherlands at any time during the ten years preceding the date of the gift or your death. For purposes of Netherlands gift tax, but not estate or inheritance tax, you will be deemed to be resident in The Netherlands if you have been resident in The Netherlands at any time during the twelve months preceding the date of the gift, even if you are not a national of the Netherlands. (iii) We will not be required to deduct or withhold any Netherlands taxes from any payment on the debt securities, unless any payments on the debt securities are contingent (or deemed to be contingent) on the existence or distribution of our profits, or the debt securities are deemed to be equity and the income thereon is treated as dividend for Netherlands tax purposes. (iv) You will not be subject to Netherlands stamp or other issuance taxes or duties in connection with our issuance of the debt securities or the sale and delivery of the debt securities. (v) You will not be subject to Netherlands registration tax, customs duty, stamp duty or any other similar tax or duty (other than court fees) if you sue to enforce our obligations under the debt securities (including a suit in the courts of The Netherlands to enforce a foreign judgment). (vi) You will not be treated as a resident or deemed resident of The Netherlands solely as a result of holding or enforcing your rights under a debt security. (vii) On July 18, 2001 the EU Commission published a proposal for a new directive regarding the taxation of savings income. It is proposed that each EU member state under its domestic laws requires disbursing agents (within the meaning of the directive) established within its territory to provide to the tax authorities of another member state details of the payment of interest or other similar income such as discount or premium to an individual resident in that other member state. It is currently not possible to predict whether, when and/or in what form the proposal will ultimately be adopted. Beneficial owners should note that, if this proposal is adopted, the provisions relating to "Additional Amounts" referred to under the heading "Description of Debt Securities -- Additional Amounts" may not apply in respect of any withholding tax imposed as a result thereof. UNITED STATES -28- This section describes the material United States federal income tax consequences of owning debt securities. It represents the opinion of Sullivan & Cromwell, our U.S. counsel. It applies only to United States holders. You are a United States holder if you are a beneficial owner of a debt security and you are: o a citizen or resident of the United States; o a domestic corporation; o an estate whose income is subject to United States federal income tax regardless of its source, or o a trust if a United States court can exercise primary supervision over the trust's administration and one or more United States persons are authorized to control all substantial decisions of the trust. This section does not apply to you if you are a member of a class of holders subject to special rules, such as: o a dealer in securities or currencies, o a trader in securities that elects to use a mark-to-market method of accounting for your securities holdings, o a bank, o a life insurance company, o a tax-exempt organization, o a person that holds debt securities that are a hedge or that are hedged against interest rate or currency risks, o a person that holds debt securities as part of a straddle or conversion transaction for tax purposes, or o a person whose functional currency for tax purposes is not the U.S. dollar. This section deals only with debt securities that are due to mature 30 years or less from the date on which they are issued. The United States federal income tax consequences of owning debt securities that are due to mature more than 30 years from their date of issue will be discussed in an applicable prospectus supplement. This section is based on the Internal Revenue Code of 1986, as amended, its legislative history, existing and proposed regulations under the Internal Revenue Code, published rulings, and court decisions, all as currently in effect. These laws are subject to change, possibly on a retroactive basis. PAYMENTS OF INTEREST Except as described below in the case of interest on a discount security that is not qualified stated interest each as defined below under "Original Issue Discount -- General", you will be taxed on any interest on your debt security, whether payable in U.S. dollars or a foreign currency, including a composite currency or basket of currencies other than U.S. dollars, as ordinary income at the time you receive the interest or when it accrues, depending on your method of accounting for tax purposes. Interest that we pay on the debt securities and original issue discount, if any, accrued with respect to the debt securities (as described below under "Original Issue Discount") constitutes income from sources outside the United States, but, with certain exceptions, will be "passive" or "financial services" income, which is treated separately from other types of income for purposes of computing the foreign tax credit allowable to a United States holder. Cash Basis Taxpayers. If you are a taxpayer that uses the cash receipts and disbursements method of accounting for tax purposes and you receive an interest payment that is denominated in, or determined by reference to, a foreign currency, you must recognize income equal to the U.S. dollar value of the interest payment, based on the exchange rate in effect on the date of receipt, regardless of whether you actually convert the payment into U.S. dollars. -29- Accrual Basis Taxpayers. If you are a taxpayer that uses an accrual method of accounting for tax purposes, you may determine the amount of income that you recognize with respect to an interest payment denominated in, or determined by reference to, a foreign currency by using one of two methods. Under the first method, you will determine the amount of income accrued based on the average exchange rate in effect during the interest accrual period or, with respect to an accrual period that spans two taxable years, that part of the period within the taxable year. If you elect the second method, you would determine the amount of income accrued on the basis of the exchange rate in effect on the last day of the accrual period, or, in the case of an accrual period that spans two taxable years, the exchange rate in effect on the last day of the part of the period within the taxable year. Additionally, under this second method, if you receive a payment of interest within five business days of the last day of your accrual period or taxable year, you may instead translate the interest accrued into U.S. dollars at the exchange rate in effect on the day that you actually receive the interest payment. If you elect the second method it will apply to all debt instruments that you hold at the beginning of the first taxable year to which the election applies and to all debt instruments that you subsequently acquire. You may not revoke this election without the consent of the Internal Revenue Service. When you actually receive an interest payment, including a payment attributable to accrued but unpaid interest upon the sale or retirement of your debt security, denominated in, or determined by reference to, a foreign currency for which you accrued an amount of income, you will recognize ordinary income or loss measured by the difference, if any, between the exchange rate that you used to accrue interest income and the exchange rate in effect on the date of receipt, regardless of whether you actually convert the payment into U.S. dollars. ORIGINAL ISSUE DISCOUNT General. A debt security, other than a debt security with a term of one year or less, will be treated as a "discount note" issued at an original issue discount if the amount by which the stated redemption price at maturity of the debt security exceeds its issue price is more than a de minimis amount. Generally, the issue price of a debt security will be the first price at which a substantial amount of debt securities included in the issue of which the debt security is a part is sold to persons other than bond houses, brokers, or similar persons or organizations acting in the capacity of underwriters, placement agents, or wholesalers. The stated redemption price at maturity of a debt security is the total of all payments provided by the debt security that are not payments of "qualified stated interest." Generally, an interest payment is qualified stated interest if it is one of a series of stated interest payments on a debt security that are unconditionally payable at least annually at a single fixed rate, with certain exceptions for lower rates paid during some periods, applied to the outstanding principal amount of the debt security. There are special rules for variable rate debt securities that are discussed below under "Original Issue Discount - Variable Rate Instruments." In general, a debt security is not a discount note if the amount by which its stated redemption price at maturity exceeds its issue price is less than 1/4 of 1 percent of the stated redemption price at maturity multiplied by the number of complete years to its maturity. A debt security will have de minimis original issue discount if the amount of the excess is less than the de minimis amount. If your debt security has de minimis original issue discount, you must include the de minimis amount in income as stated principal payments are made on the debt security, unless you make the election described below under "Original Issue Discount - Election to Treat All Interest as Original Issue Discount." You can determine the includible amount with respect to each such payment by multiplying the total amount of the debt security's de minimis original issue discount by a fraction equal to: o the amount of the principal payment made divided by: o the stated principal amount of the debt security. -30- Generally, if you hold a debt security that is a discount note and that matures more than one year from its date of issue, you must include original issue discount in income before you receive cash attributable to that income. The amount of OID that you must include in income is calculated using a constant-yield method, and generally you will include increasingly greater amounts of OID in income over the life of your debt security. More specifically, you can calculate the amount of OID that you must include in income by adding the daily portions of OID with respect to the debt security for each day during the taxable year or portion of the taxable year that you hold the debt security. You can determine the daily portion by allocating to each day in any accrual period a pro rata portion of the OID allocable to that accrual period. You may select an accrual period of any length, and you may vary the length of each accrual period over the term of the debt security. However, no accrual period may be longer than one year and each scheduled payment of interest or principal on the debt security must occur on either the first or final day of an accrual period. You can determine the amount of OID allocable to an accrual period by: o multiplying the debt security's adjusted issue price at the beginning of the accrual period by the debt security's yield to maturity, and then o subtracting from this figure the sum of the payments of qualified stated interest on the debt security allocable to the accrual period. You must determine the debt security's yield to maturity on the basis of compounding at the close of each accrual period and adjusting for the length of the accrual period. Further, you determine a discount note's yield to maturity at the beginning of any accrual period by: o adding the issue price of the debt security and any accrued OID for each prior accrual period, and then o subtracting any payments previously made on the debt security that were not qualified stated interest payments. If an interval between payments of qualified stated interest on a discount note contains more than one accrual period, then, when you determine the amount of OID allocable to an accrual period, you must allocate the amount of qualified stated interest payable at the end of the interval, including any qualified stated interest that is payable on the first day of the accrual period immediately following the interval, pro rata to each accrual period in the interval based on their relative lengths. In addition, you must increase the adjusted issue price of the debt security at the beginning of each accrual period in the interval by the amount of any qualified stated interest that has accrued prior to the first day of the accrual period but that is not payable until the end of the interval. You may compute the amount of OID allocable to an initial short accrual period by using any reasonable method if all other accrual periods, other than a final short accrual period, are of equal length. The amount of OID allocable to the final accrual period is the difference between: o the amount payable at the maturity of the debt security, other than any payment of qualified stated interest, and o the debt security's adjusted issue price as of the beginning of the final accrual period. Acquisition Premium. If you purchase your debt security for an amount that is less than or equal to the sum of all amounts, other than qualified stated interest, payable on the debt security after the purchase date but is greater than the adjusted issue price of your debt security, as determined above under "Original Issue Discount - General," the excess is acquisition premium. If you do not make the election described below under "Original Issue Discount - Election to Treat All Interest as Original Issue Discount," then you must reduce the daily portions of OID by a fraction equal to: o the excess of your adjusted basis in the debt security immediately after purchase over the adjusted issue price of the debt security, divided by: o the excess of the sum of all amounts payable, other than qualified stated interest, on the debt security after the purchase date over the debt security's adjusted issue price. -31- Pre-Issuance Accrued Interest. An election may be made to decrease the issue price of your debt security by the amount of pre-issuance accrued interest if: o a portion of the initial purchase price of the debt security is attributable to pre-issuance accrued interest, o the first stated interest payment on the debt security is to be made within one year of the issue date of the debt security, and o the payment will equal or exceed the amount of pre-issuance accrued interest. If this election is made, a portion of the first stated interest payment will be treated as a return of the excluded pre-issuance accrued interest and not as an amount payable on the debt security. Debt Securities Subject to Contingencies Including Optional Redemption. Your debt security is subject to a contingency if it provides for an alternative payment schedule or schedules applicable upon the occurrence of a contingency or contingencies, other than a remote or incidental contingency, whether such contingency relates to payments of interest or of principal. In such a case, you must determine the yield and maturity of your debt security by assuming that the payments will be made according to the payment schedule most likely to occur if: o the timing and amounts of the payments that comprise each payment schedule are known as of the issue date, and o one of such schedules is significantly more likely than not to occur. If there is no single payment schedule that is more likely than not to occur, other than because of a mandatory sinking fund, you must include income on your debt security in accordance with the general rules that govern contingent payment obligations. These rules will be addressed in the applicable Prospectus Supplement. Notwithstanding the general rules for determining yield and maturity, if your debt security is subject to contingencies, and either you or we have an unconditional option or options that, if exercised, would require payments to be made on the debt security under an alternative payment schedule or schedules, then: o in the case of an option or options that we may exercise, we will be deemed to exercise or not exercise an option or combination of options in the manner that minimizes the yield on the debt security, and o in the case of an option or options that you may exercise, you will be deemed to exercise or not exercise an option or combination of options in the manner that maximizes the yield on the debt security. If both you and we hold options described in the preceding sentence, those rules will apply to each option in the order in which the options may be exercised. You may determine the yield on your debt security for purposes of these calculations by using any date on which the debt security may be redeemed or repurchased as the maturity date and treating the amount payable on such date in accordance with the terms of the debt security as the principal amount payable at maturity. If a contingency, including the exercise of an option, actually occurs or does not occur contrary to an assumption made according to the above rules then, except to the extent that a portion of the debt security is repaid as a result of this change in circumstances and, solely to determine the amount and accrual of OID, you must redetermine the yield and maturity of the debt security by treating the debt security as retired and reissued on the date of the change in circumstances for an amount equal to the adjusted issue price of the debt security on that date. Election to Treat All Interest as Original Issue Discount. You may elect to include in gross income all interest that accrues on a debt security using the constant-yield method described above under the heading "Original Issue Discount - General," with the modifications described below. For purposes of this election, interest will include stated interest, OID, de minimis original issue discount, market discount, de minimis -32- market discount and unstated interest, as adjusted by any amortizable bond premium, described below under "Debt Securities Purchased at a Premium," or acquisition premium. If you make this election, then, when you apply the constant-yield method to a debt security, o the issue price of the debt security will equal your cost, o the issue date of the debt security will be the date you acquired it, and o no payments on the debt security will be treated as payments of qualified stated interest. Generally, this election will apply only to the debt security for which you make it. If the debt security has amortizable bond premium, however, you will be deemed to have elected to apply amortizable bond premium against interest with respect to all debt instruments with amortizable bond premium, other than debt instruments the interest on which is excludible from gross income, that you hold as of the beginning of the taxable year to which the election applies or any taxable year thereafter. Additionally, if you make this election for a market discount note, you will be treated as having made the election discussed below under "Market Discount" to include market discount in income currently over the life of all debt instruments that you currently own or later acquire. You may not revoke any election to apply the constant-yield method to all interest on a debt security or the deemed elections with respect to amortizable bond premium or market discount notes without the consent of the Internal Revenue Service. Variable Rate Instruments. A debt security will be a variable rate instrument if: o the issue price of the debt security does not exceed the total noncontingent principal payments on the debt security by more than the lesser of: (a) .015 multiplied by the product of the total noncontingent principal payments on the debt security and the number of complete years to maturity from the issue date, and (b) 15 percent of the total noncontingent principal payments; and o the debt security provides for stated interest, compounded or paid at least annually, only at: (a) one or more qualified floating rates, (b) a single fixed rate and one or more qualified floating rates, (c) a single objective rate, or (d) a single fixed rate and a single objective rate that is a qualified inverse floating rate. Your debt security will have a variable rate that is a qualified floating rate if: o variations in the value of the rate can reasonably be expected to measure contemporaneous variations in the cost of newly borrowed funds in the currency in which the debt security is denominated; or o the rate is equal to such a rate multiplied by either: (a) a fixed multiple that is greater than 0.65 but not more than 1.35, or (b) a fixed multiple that is greater than zero but not more than 1.35, increased or decreased by a fixed rate; and o the value of the rate on any date during the term of the debt security is set no earlier than three months prior to the first day on which that rate is in effect and no later than one year following that first day. If a debt security provides for two or more qualified floating rates that are within 0.25 percentage points of each other on the issue date or can reasonably be expected to have approximately the same values throughout the term of the debt security, the qualified floating rates together constitute a single qualified floating rate. Your debt security will not have a qualified floating rate, however, if the rate is subject to certain restrictions (including caps, floors, governors, or other similar restrictions) unless such restrictions are fixed throughout the term of the debt security or are not reasonably expected to significantly affect the yield on the debt security. Your debt security will have a variable rate that is a single objective rate if: o the rate is not a qualified floating rate, -33- o the rate is determined using a single, fixed formula that is based on objective financial or economic information that is not within our control or the control of a person related to us, and is not unique to our circumstances or the circumstances of a person related to us, and o the value of the rate on any date during the term of the debt security is set no earlier than three months prior to the first day on which that rate is in effect and no later than one year following that first day. Your debt security will not have a variable rate that is an objective rate, however, if it is reasonably expected that the average value of the rate during the first half of the term of the debt security will be either significantly less than or significantly greater than the average value of the rate during the final half of the term of the debt security. An objective rate as described above is a qualified inverse floating rate if: o the rate is equal to a fixed rate minus a qualified floating rate, and o the variations in the rate can reasonably be expected to inversely reflect contemporaneous variations in the cost of newly borrowed funds. Your debt security will also have a single qualified floating rate or an objective rate if interest on the debt security is stated at a fixed rate for an initial period of one year or less followed by either a qualified floating rate or an objective rate for a subsequent period, and either: o the fixed rate and the qualified floating rate or objective rate have values on the issue date of the debt security that do not differ by more than 0.25 percentage points, or o the value of the qualified floating rate or objective rate is intended to approximate the fixed rate. In general, if a debt security that is a variable rate instrument provides for stated interest at a single qualified floating rate or objective rate, or one of those rates after a single fixed rate for an initial period, all stated interest on the variable rate instrument is qualified stated interest. In this case, the amount of OID, if any, is determined by using, in the case of a qualified floating rate or qualified inverse floating rate, the value as of the issue date of the qualified floating rate or qualified inverse floating rate, and, in the case of any other objective rate, a fixed rate that reflects the yield reasonably expected for the debt security. If a debt security that is a variable rate instrument does not provide for stated interest at a single qualified floating rate or objective rate, and also does not provide for interest payable at a fixed rate other than a single fixed rate for an initial period, you generally must determine interest and OID accruals on the debt security by: o determining a fixed-rate substitute for each variable rate provided under the debt security, o constructing the equivalent fixed rate debt instrument using the fixed-rate substitute, o determining the amount of qualified stated interest and OID with respect to the equivalent fixed rate debt instrument, and o adjusting for actual variable rates during the applicable accrual period. When you determine the fixed rate substitute for each variable rate provided under a variable rate instrument, you generally will use the value of the variable rate as of the issue date or, for an objective rate that is not a qualified inverse floating rate, a rate that reflects the reasonably-expected yield on the debt security. If a debt security that is a variable rate instrument provides for stated interest either at one or more qualified floating rates or at a qualified inverse floating rate, and also provides for stated interest at a single fixed rate other than a single fixed rate for an initial period, you generally must determine interest and OID accruals using the method described in the preceding paragraph. However, the debt security will be treated for purposes of the first three steps of the determination as if it had provided for a qualified floating rate or a qualified inverse floating rate rather than the fixed rate. The qualified floating rate or qualified inverse floating rate that replaces the fixed rate must be such that the fair market value of the debt security as of the -34- issue date approximates the fair market value of an otherwise-identical debt instrument that provides for the qualified floating rate or qualified inverse floating rate rather than the fixed rate. Short-Term Debt Securities. In general, if you are an individual or other cash-basis holder of a debt security with a term of one year or less, you are not required to accrue OID, as specially defined below for the purposes of this paragraph, for United States federal income tax purposes unless you elect to do so (although it is possible that you will be required to include any stated interest in income as you receive it). If you are an accrual-basis taxpayer, a taxpayer in a special class (including, but not limited to, a regulated investment company, common trust fund, or a certain type of pass-through entity), or a cash-basis taxpayer who so elects, you will be required to accrue OID on short-term debt securities on either a straight-line basis or under the constant-yield method, based on daily compounding. If you are not required to and do not elect to include OID in income currently, any gain you realize on the sale or retirement of the debt security will be ordinary income to the extent of the accrued OID, which will be determined on a straight-line basis unless you make an election to accrue the OID under the constant-yield method, through the date of sale or retirement. However, if you are not required to accrue OID on short-term debt securities and do not elect to do so, you will be required to defer deductions for interest on borrowings allocable to short-term debt securities in an amount not exceeding the deferred income until the deferred income is realized. When you determine the amount of OID subject to these rules, you must include all interest payments on a short-term debt security, including stated interest, in the stated redemption price at maturity of the debt security. Foreign Currency Discount Notes. If a debt security is a discount note that is denominated in, or determined by reference to, a foreign currency, you must determine OID for any accrual period in the foreign currency and then translate the amount of OID into U.S. dollars in the same manner as stated interest accrued by an accrual basis United States holder, as described above under "Payments of Interest." You may recognize ordinary income or loss when you receive an amount attributable to OID in connection with a payment of interest or the sale or retirement of your debt security. MARKET DISCOUNT You will be treated as if you had purchased your debt security at a market discount, and the debt security will be a market discount note, if: o the debt security is not a short-term debt security, o you purchase the debt security for less than its issue price as determined above under "Original Issue Discount - General," and o the difference between the stated redemption price at maturity of the debt security or, in the case of a discount note, the revised issue price of the debt security, and the price you paid for the debt security is greater than 1/4 of 1 percent of the stated redemption price at maturity or revised issue price, respectively, of the debt security, multiplied by the number of complete years to the maturity of the debt security. To determine the revised issue price of a debt security for these purposes, you generally add any OID that has accrued on the debt security to its issue price. If the stated redemption price at maturity of the debt security, or, in the case of a discount note, its revised issue price, exceeds the price you paid for the debt security by less than 1/4 of 1 percent multiplied by the number of complete years to the maturity of the debt security, the excess constitutes de minimis market discount, and the rules discussed below are not applicable to you. You must treat any gain you recognize on the maturity or disposition of a market discount note as ordinary income to the extent of the accrued market discount on the debt security. Alternatively, you may elect to include market discount in income currently over the life of the debt security. If you make this election, it will apply to all debt instruments with market discount that you acquire on or after the first day of the first taxable year to which the election applies. You may not revoke this election without the consent -35- of the Internal Revenue Service. If you own a market discount note and do not make this election, you will generally be required to defer deductions for interest on borrowings allocable to your debt security in an amount not exceeding the accrued market discount on the debt security until the maturity or disposition of the debt security. You will accrue market discount on a market discount note on a straight-line basis unless you elect to accrue market discount using a constant-yield method. If you make this election, it will apply only to the debt security with respect to which it is made and you may not revoke it. DEBT SECURITIES PURCHASED AT A PREMIUM If you purchase a debt security for an amount in excess of its principal amount, you may elect to treat the excess as amortizable bond premium. If you make this election, you will reduce the amount required to be included in your income each year with respect to interest on the debt security by the amount of amortizable bond premium allocable to that year, based on the yield to maturity of the debit security. If your debt security that is denominated in, or determined by reference to, a foreign currency, you will compute your amortizable bond premium in units of foreign currency, and your amortizable bond premium will reduce your interest income in units of the foreign currency. Gain or loss recognized that is attributable to changes in exchange rates between the time your amortized bond premium offsets interest income and the time of the acquisition of the debt security is generally taxable as ordinary income or loss. If you make an election to amortize bond premium, it will apply to all debt instruments, other than debt instruments the interest on which is excludible from gross income, that you hold at the beginning of the first taxable year to which the election applies or that you thereafter acquire, and you may not revoke it without the consent of the Internal Revenue Service. See also "Original Issue Discount - Election to Treat All Interest as Original Issue Discount." PURCHASE, SALE AND RETIREMENT OF THE DEBT SECURITIES Your tax basis in a debt security will generally be the U.S. dollar cost, as defined below, of the debt security, adjusted by: o adding any OID or market discount, de minimis original issue discount and de minimis market discount previously included in income with respect to the debt security, and then o subtracting any payments on the debt security that are not qualified stated interest payments and any amortizable bond premium applied to reduce interest on the debt security. If you purchase your debt security with foreign currency, the U.S. dollar cost of the debt security will generally be the U.S. dollar value of the purchase price on the date of purchase. However, if you are a cash-basis taxpayer, or an accrual-basis taxpayer if you so elect, and your debt security is traded on an established securities market, as defined in the applicable Treasury regulations, the U.S. dollar cost of your debt security will be the U.S. dollar value of the purchase price on the settlement date of your purchase. You will generally recognize gain or loss on the sale or retirement of a debt security equal to the difference between the amount you realize on the sale or retirement and your tax basis in the debt security. If the debt security is sold or retired for an amount in foreign currency, the amount you realize will be the U.S. dollar value of such amount on: o the date payment is received, if you are a cash-basis taxpayer and the debt securities are not traded on an established securities market, as defined in the applicable Treasury regulations, o the date of disposition, if you are an accrual-basis taxpayer, or o the settlement date for the sale, if you are a cash-basis taxpayer, or an accrual-basis taxpayer that so elects, and the debt securities are traded on an established securities market, as defined in the applicable Treasury regulations. -36- You will recognize capital gain or loss when you sell or retire your debt securities, except to the extent: o described above under "Original Issue Discount - Short-Term Debt Securities" or "Original Issue Discount - Market Discount," o attributable to accrued but unpaid interest, o the rules governing contingent payment obligations apply, or o attributable to changes in exchange rates as described below. Capital gain of a non-corporate United States holder is generally taxed at a maximum rate of 20 per cent where the property is held more than one year, and 18 per cent where the property is held for more than five years. You must treat any portion of the gain or loss that you recognize on the sale or retirement of a debt security as ordinary income or loss to the extent attributable to changes in exchange rates. However, you take exchange gain or loss into account only to the extent of the total gain or loss you realize on the transaction. Exchange of Amounts in Other Than U.S. Dollars. If you receive foreign currency as interest on a debt security or on the sale or retirement of a debt security, your tax basis in the foreign currency will equal its U.S. dollar value when the interest is received or at the time of the sale or retirement. If you purchase foreign currency, you generally will have a tax basis equal to the U.S. dollar value of the foreign currency on the date of your purchase. If you sell or dispose of a foreign currency, including by using it to purchase debt securities or exchanging it for U.S. dollars, any gain or loss recognized generally will be ordinary income or loss. Indexed Debt Securities and Renewable, Extendible and Amortizing Debt Securities. The applicable Prospectus Supplement will discuss any special United States federal income tax rules with respect to debt securities if the payments on the debt securities are determined by reference to any index, if the debt securities are subject to the rules governing contingent payments and are not subject to the rules governing variable rate instruments, if the debt securities are renewable or extendible, or if the debt securities provide for the periodic payment of principal over the life of the securities. BACKUP WITHHOLDING AND INFORMATION REPORTING In general, if you are a non-corporate United States holder, we and other payers are required to report to the Internal Revenue Service all payments of principal, any premium and interest on your debt security, and the accrual of OID on a debt security if it is a discount note. In addition, we and other payers are required to report to the Internal Revenue Service any payment of proceeds of the sale of your debt security within the United States before the maturity of the debt security. Additionally, backup withholding will apply to any payments, including payments of OID, if you fail to provide an accurate taxpayer identification number or you are notified by the Internal Revenue Service that you have failed to report all interest and dividends required to be shown on your federal income tax returns. -37- PLAN OF DISTRIBUTION We may sell all or part of the securities from time to time, in terms determined at that time, through o underwriters, o dealers and/or agents, or o directly to purchasers. We will set forth in the applicable prospectus supplement: o the terms of the offering of the securities, o the names of any underwriters, dealers or agents involved in the sale of the securities, o the principal amounts of securities any underwriters will purchase, o any applicable commissions or discounts, and o our net proceeds. UNDERWRITERS If we use underwriters in the sale, they will acquire the securities for their own account and they may effect distribution of the securities from time to time in one or more transactions. These transactions may be at a fixed price or prices, which they may change, or at prevailing market prices, or related to prevailing market prices, or at negotiated prices. The securities may be offered to the public either through underwriting syndicates represented by managing underwriters or underwriters without a syndicate. Unless the applicable prospectus supplement specifies otherwise, the underwriters' obligations to purchase the securities will depend on certain conditions being satisfied. If the conditions are satisfied, the underwriters will be obligated to purchase all of the securities of the series, if they purchase any of them. The initial public offering price of any securities and any discounts or concessions allowed or reallowed or paid to dealers may change from time to time. DEALERS If we use dealers in the sale, unless the applicable prospectus supplement specifies otherwise, we will sell the securities to the dealers as principals. The dealers may then resell the securities to the public at varying prices that the dealers will determine at the time of resale. AGENTS AND DIRECT SALES We may also sell securities through agents we designate from time to time, or we may sell securities directly. The applicable prospectus supplement will name any agent involved in the offering and sale of the securities, and will also set forth any commissions that we will pay. Unless the applicable prospectus supplement indicates otherwise, any agent will be acting on a best efforts basis for the period of its appointment. In connection with the sale of securities, underwriters may receive compensation from us or from purchasers of securities for whom they may act as agents. Compensation may be in the form of discounts, concessions or commissions. Underwriters may sell securities to or through dealers, and these dealers may receive compensation in the form of discounts, concessions or commissions from the underwriters. Dealers may also receive commissions from the purchasers for whom they may act as agents. Underwriters, dealers and agents that participate in the distribution of securities may be deemed to be underwriters, and any discounts or commissions received by them from us and any profit on the resale of securities by them may be deemed to be underwriting discounts and commissions under the Securities Act. The prospectus supplement will identify any underwriter or agent, and describe any compensation that we provide. -38- INSTITUTIONAL INVESTORS If the applicable prospectus supplement so indicates, we will authorize underwriters, dealers or agents to solicit offers to purchase the securities from institutional investors. In this case, the prospectus supplement will also indicate on what date payment and delivery will be made. There may be a minimum amount which an institutional investor may purchase, or a minimum portion of the aggregate principal amount of the securities which may be sold by this type of arrangement. Institutional investors may include: o commercial and savings banks, o insurance companies, o pension funds, investment companies, o educational and charitable institutions, and o any other institutions we may approve. The purchasers' obligations under delayed delivery and payment arrangements will not be subject to any conditions; however, the institutional investors' purchase of particular securities must not at the time of delivery be prohibited under the laws of any relevant jurisdiction in respect, either of the validity of the arrangements, or the performance by us or the institutional investors under the arrangements. INDEMNIFICATION We may enter into agreements with the underwriters, dealers and agents who participate in the distribution of the securities that will fully or partially indemnify them against some civil liabilities, including liabilities under the Securities Act. Underwriters, dealers and agents may be our customers, engage in transactions with, or perform services for us, in the ordinary course of business. MARKET MAKING Certain broker-dealers may, but will not be obligated to, make a market in the securities of any series. They may also discontinue market making at any time without notice. We cannot give any assurance as to the liquidity of the trading market for the securities. SERVICE OF PROCESS AND ENFORCEMENT OF LIABILITIES We are a Netherlands corporation. Substantially all of our directors and executive officers and a number of the experts named in this document are non-residents of the United States. All or a substantial portion of the assets of those persons are located outside the United States. Most of our assets are located outside of the United States. As a result, it may not be possible for you to effect service of process within the United States upon those persons or to enforce against them judgments of U.S. courts based upon the civil liability provisions of the federal securities laws of the United States. We have been advised by our Netherlands counsel that, given the absence of an applicable convention between The Netherlands and the United States providing for the reciprocal recognition and enforcement of judgments in civil and commercial matters, a judgment rendered by a court in New York against us or our non-U.S. resident Supervisory Board and Board of Management members and officers will not be recognized and enforced by the courts of The Netherlands. In order to obtain a judgment against us or our non-U.S. resident Supervisory Board or Board of Management members, you would have to file a claim against us or the aforementioned board members and officers with The Netherlands court of competent jurisdiction and, in the course of these proceedings, you would be permitted to submit the judgment rendered by a New York court. If The Netherlands court finds that the jurisdiction of the New York court has been based on grounds which are internationally acceptable and the proper legal procedures -39- have been observed, The Netherlands court would in principle give effect to the final judgment of the New York court unless such judgment contravenes Netherlands public policy. VALIDITY OF SECURITIES The validity of the debt securities under New York law will be passed upon for us by our United States counsel, Sullivan & Cromwell. The validity of the securities under Netherlands law will be passed upon by our Netherlands Legal Adviser, Mr. Albert F. Verdam. Sullivan & Cromwell may rely on the opinions of Mr. Verdam for all matters of Netherlands law and Mr. Verdam may rely on the opinion of Sullivan & Cromwell as to all matters of New York law. If this prospectus is delivered in connection with an underwritten offering, the validity of the debt securities may be passed upon for the underwriters by United States and Netherlands counsel for the underwriters specified in the related prospectus supplement. If no Netherlands counsel is specified, such United States counsel to the underwriters may also rely on the opinion of Mr. Verdam as to certain matters of Netherlands law. EXPERTS KPMG Accountants N.V., public accountants, have audited our consolidated financial statements included in the 2001 Form 20-F and incorporated by reference in this document and the Registration Statement. We have incorporated the consolidated financial statements in reliance on the report of KPMG Accountants N.V., public accountants, given on the authority of their firm as experts in auditing and accounting. EXPENSES The following are the estimated expenses to be incurred in connection with the issuance and distribution of the securities registered under the Registration Statement of which this prospectus forms part: Securities and Exchange Commission registration fee.................. $ 165,600 Printing and engraving expenses...................................... 25,000 Blue Sky fees and expenses .......................................... 35,000 Legal fees and expenses ............................................. 950,000 Accounting fees and expenses......................................... 330,000 Indenture Trustee's fees and expenses ............................... 35,000 Rating Agencies' fees ............................................... 50,000 Miscellaneous ....................................................... 50,000 ------------ Total ............................................................... $ 1,640,600 ============
-40- PART II OF FORM F-3 INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 8. INDEMNIFICATION OF DIRECTORS AND OFFICERS The Articles of Association of the Company contain no provisions under which any member of its Board of Management or Supervisory Board or officers is indemnified in any manner against any liability which he may incur in his capacity as such. However, notwithstanding anything contained in the Articles of Association of the Company, a full discharge of the Board of Management and the Supervisory Board from liability for the performance of their respective duties in the financial year concerned can be constituted by a resolution to that effect by the general meeting of shareholders of the Company. Under Netherlands' law, this discharge is not absolute and would not be effective as to any matters not disclosed to the General Meeting of Shareholders. Members of the Supervisory Board, the Board of Management and certain officers of the Company are, to a limited extent, insured under an insurance policy against damages resulting from their conduct when acting in their capacities as such. Pursuant to the Underwriting Agreement: The form of Underwriting Agreement filed as an Exhibit to this Registration Statement provides that each Underwriter, severally, will indemnify us and our respective directors and officers who sign the Registration Statement and each person, if any, who controls us within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act from and against certain civil liabilities, but only with reference to information relating to such underwriter furnished in writing for use in this prospectus or any prospectus supplement. Item 9. Exhibits 1.1 Form of Underwriting Agreement Standard Provisions. 1.2 Form of Distribution Agreement. 3.1 Articles of Association of the Company (incorporated by reference to Exhibit 1.1 of the Company's Annual Report on Form 20-F for the fiscal year ended December 31, 2000 (File No. 2.20193)). 4.1 Indenture, dated as of August 1, 1993, between the Company and Morgan Guaranty Trust Company of New York, as the trustee (predecessor trustee to Citibank N.A). 4.2 Form of Debt Securities (included in Exhibit 4.1). 4.3 First Supplemental Indenture, dated as of May 6, 1994, between the Company and Morgan Guaranty Trust Company of New York, as the trustee (predecessor trustee to Citibank N.A). 4.4 Form of Second Supplemental Indenture, dated as of , 2002, between the Company and Citibank N.A., as the trustee. 5.1 Opinion of Mr. Albert F. Verdam, legal adviser to the Company, as to the validity of the debt securities under Netherlands law. II-1 5.2 Opinion of Sullivan & Cromwell, U.S. legal counsel to the Company, as to the validity of the debt securities under New York law. 8.1 Opinion of T.P.M. Schmit, internal Netherlands tax counsel to the Company, as to certain matters of Netherlands' taxation. 8.2 Opinion of Sullivan & Cromwell, U.S. legal counsel to the Company, as to certain matters of U.S. taxation. 12.1 Statement regarding computation of ratios of earnings to fixed charges. 23.1 Consent of Mr. Albert F. Verdam, legal adviser to the Company (included in Exhibit 5.1). 23.2 Consent of T.P.M. Schmit, internal Netherlands tax counsel to the Company (included in Exhibit 8.1). 23.3 Consent of Sullivan & Cromwell, U.S. legal counsel to the Company (included in Exhibit 5.2 and 8.2). 23.4 Consent of KPMG Accountants, N.V., independent auditors. 24.1 Powers of attorney (included on signature pages). Item 10. Undertakings The undersigned registrant hereby undertakes: (1) To file, during any period in which offers or sales of the registered securities are being made, a post-effective amendment to this registration statement: (i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933; (ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20 percent change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement; (iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement; provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed with or II-2 furnished to the Commission by the undersigned registrant pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in this registration statement. (2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. (4) To file a post-effective amendment to the registration statement to include any financial statements required by Item 8.A of Form 20-F at the start of any delayed offering or throughout a continuous offering. Financial statements and information otherwise required by Section 10(a)(3) of the Securities Act of 1933 need not be furnished, provided that the registrant includes in the prospectus, by means of a post-effective amendment, financial statements required pursuant to this paragraph (4) and other information necessary to ensure that all other information in the prospectus is at least as current as the date of those financial statements. Notwithstanding the foregoing, a post-effective amendment need not be filed to include financial statements and information required by Section 10(a)(3) of the Securities Act of 1933 or Item 8.A. of Form 20-F if such financial statements and information are contained in periodic reports filed with or furnished to the Commission by the registrant pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the registration statement. The undersigned registrant hereby undertakes, that for purposes of determining any liability under the Securities Act of 1933, each filing of Koninklijke Philips Electronics N.V. annual report pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions set forth in Item 8 above, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defence of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act of 1933 and will be governed by the final adjudication of such issue. II-3 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the registrant, Koninklijke Philips Electronics N.V., certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form F-3 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in Eindhoven, The Netherlands on the 18th day of June, 2002. KONINKLIJKE PHILIPS ELECTRONICS N.V. By: /s/ J.H.M. Hommen ----------------------------------------------- Name: J.H.M. Hommen Title: Vice-Chairman of the Board of Management and Chief Financial Officer POWER OF ATTORNEY Each person whose signature appears below hereby authorizes and appoints any member of the Board of Management of Koninklijke Philips Electronics NV as his attorney-in-fact, with the power of substitution, for him in any and all capacities, to sign any and all amendments to this Registration Statement (including post-effective amendments), and to file the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that said attorney-in-fact, or his substitute or substitutes, may do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the following capacities on the 18th day of June, 2002. Name Title ---- ----- /s/ G.J. Kleisterlee President/CEO, Chairman of the Board - ---------------------------------- of Management G.J. Kleisterlee /s/ J.H.M. Hommen Vice-Chairman of the Board of Management - ---------------------------------- and Chief Financial Officer (Principal J.H.M. Hommen Financial Officer and Principal Accounting Officer) Executive Vice-President, Member of the - ---------------------------------- Board of Management A.P.M. van der Poel /s/ G.H. Dutine Executive Vice-President, Member of the - ---------------------------------- Board of Management G.H. Dutine /s/ A. Huisjer Executive Vice-President, Member of the - ---------------------------------- Board of Management A. Huisjer /s/ L.C. van Wachem Chairman of the Supervisory Board - ---------------------------------- L.C. van Wachem /s/ W. de Kleuver Vice-Chairman and Secretary of the - ---------------------------------- Supervisory Board W. de Kleuver /s/ L. Schweitzer Member of the Supervisory Board - ---------------------------------- L. Schweitzer /s/ Sir Richard Greenbury Member of the Supervisory Board - ---------------------------------- Sir Richard Greenbury /s/ J-M. Hessels Member of the Supervisory Board - ---------------------------------- J-M. Hessels /s/ K.A.L.M. van Miert Member of the Supervisory Board - ---------------------------------- K.A.L.M. van Miert /s/ Belinda Chew Authorized U.S. Representative - ---------------------------------- Belinda Chew II-6 INDEX TO EXHIBITS 1.1 Form of Underwriting Agreement Standard Provisions. 1.2 Form of Distribution Agreement. 3.1 Articles of Association of the Company (incorporated by reference to Exhibit 1.1 of the Company's Annual Report on Form 20-F for the fiscal year ended December 31, 2000 (File No. 2.20193)). 4.1 Indenture, dated as of August 1, 1993, between the Company and Morgan Guaranty Trust Company of New York, as the trustee (predecessor trustee to Citibank N.A). 4.2 Form of Debt Securities (included in Exhibit 4.1). 4.3 First Supplemental Indenture, dated as of May 6, 1994, between the Company and Morgan Guaranty Trust Company of New York, as the trustee (predecessor trustee to Citibank N.A). 4.4 Form of Second Supplemental Indenture, dated as of , 2002, between the Company and Citibank N.A., as the trustee. 5.1 Opinion of Mr. Albert F. Verdam, legal adviser to the Company, as to the validity of the debt securities under Netherlands law. 5.2 Opinion of Sullivan & Cromwell, U.S. legal counsel to the Company, as to the validity of the debt securities under New York law. 8.1 Opinion of T.P.M. Schmit, internal Netherlands tax counsel to the Company, as to certain matters of Netherlands' taxation. 8.2 Opinion of Sullivan & Cromwell, U.S. legal counsel to the Company, as to certain matters of U.S. taxation. 12.1 Statement regarding computation of ratios of earnings to fixed charges. 23.1 Consent of Mr. Albert F. Verdam, legal adviser to the Company (included in Exhibit 5.1). 23.2 Consent of T.P.M. Schmit, internal Netherlands tax counsel to the Company (included in Exhibit 8.1). 23.3 Consent of Sullivan & Cromwell, U.S. legal counsel to the Company (included in Exhibit 5.2 and 8.2). 23.4 Consent of KPMG Accountants, N.V., independent auditors. 24.1 Powers of attorney (included on signature pages). EX-1.1 3 u45117exv1w1.txt UNDERWRITING AGREEMENT Exhibit 1.1 KONINKLIJKE PHILIPS ELECTRONICS N.V. UNDERWRITING AGREEMENT STANDARD PROVISIONS (DEBT SECURITIES) From time to time, Koninklijke Philips Electronics N.V., a Netherlands corporation (the "Company") having its registered corporate office in Eindhoven, The Netherlands and its principal office in Amsterdam, The Netherlands, may enter into one or more underwriting agreements that provide for the sale of designated securities to the several underwriters named therein. The standard provisions set forth herein may be incorporated by reference in any such underwriting agreement (an "Underwriting Agreement"). The Underwriting Agreement, including the provisions incorporated therein by reference, is herein sometimes referred to as this Agreement. Terms defined in the Underwriting Agreement are used herein as therein defined. The Company has filed with the Securities and Exchange Commission (the "Commission") one or more registration statements, including a prospectus, relating to the Debt Securities and has filed with, or transmitted for filing to, or shall promptly hereafter file with, or transmit for filing to, the Commission pursuant to Rule 424 under the Securities Act of 1933, as amended (the "Securities Act"), a prospectus supplement (the "Prospectus Supplement") and, if applicable, an abbreviated term sheet described in Rule 434(c) under the Securities Act (the "Abbreviated Term Sheet"), in each case specifically relating to the Debt Securities. The term "Registration Statement" means the registration statement, including the exhibits thereto, as amended to the date of this Agreement. If the Company files an abbreviated registration statement to register additional Debt Securities pursuant to Rule 462(b) under the Securities Act (the "Rule 462 Registration Statement"), then any reference herein to the term "Registration Statement" shall be deemed to include such Rule 462 Registration Statement. The term "Basic Prospectus" means the prospectus included in the Registration Statement. The term "Prospectus" means the Basic Prospectus together with the Prospectus Supplement and, if applicable, the Abbreviated Term Sheet. The term "preliminary prospectus" means a preliminary prospectus supplement specifically relating to the Offered Securities, together with the Basic Prospectus. As used herein, the terms "Basic Prospectus", "Prospectus" and "preliminary prospectus" shall include in each case the documents, if any, incorporated by reference therein. The terms "supplement", "amendment" and "amend" as used herein shall include all documents deemed to be incorporated by reference in the Prospectus that are filed subsequent to the date of the Basic Prospectus by the Company with the Commission pursuant to the Securities Exchange Act of 1934, as amended (the "Exchange Act"). The term Contract Securities means the Offered Securities to be purchased pursuant to the delayed delivery contracts substantially in the form of Schedule I hereto, with such changes therein as the Company may approve (the "Delayed Delivery Contracts"). The term "Underwriters' Securities" means the Offered Securities other than Contract Securities. I. The Company represents and warrants to and agrees with each of the Underwriters that: (a) The Registration Statement has become effective; no stop order suspending the effectiveness of the Registration Statement is in effect, and no proceedings for such purpose are pending before or, to the Company's knowledge, threatened by the Commission. (b) (i) Each document filed or to be filed pursuant to the Exchange Act and incorporated by reference in the Prospectus complied or will comply when so filed in all material respects with the Exchange Act and the applicable rules and regulations of the Commission thereunder, (ii) each part of the Registration Statement, when such part became effective, did not contain and each such part, as amended or supplemented, if applicable, will not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading, (iii) the Registration Statement and the Prospectus comply and, as amended or supplemented, if applicable, will comply in all material respects with the Securities Act and the applicable rules and regulations of the Commission thereunder and (iv) the Prospectus does not contain and, as amended or supplemented, if applicable, will not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, except that the representations and warranties set forth in this paragraph 1(b) do not apply (A) to statements or omissions in the Registration Statement or the Prospectus based upon information relating to any Underwriter furnished to the Company in writing by such Underwriter through the Manager expressly for use therein or (B) to that part of the Registration Statement that constitutes the Statement of Eligibility (Form T-1) under the U.S. Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"), of the Trustee. (c) The Company is a limited liability stock corporation duly organized and validly existing under the laws of The Netherlands, has the power and authority (corporate and other) to own its property and to conduct its business as described in its Articles of Association and in the Prospectus. -2- (d) Each Significant Subsidiary (as such term is defined in Regulation S-X under the Securities Act) of the Company has been duly incorporated, is validly existing as a corporation in good standing under the laws of the jurisdiction of its incorporation, has the power and authority to own its property and to conduct its business as conducted as of the date hereof, is duly qualified to transact business and is in good standing in each jurisdiction in which the conduct of its business or its ownership or leasing of property requires such qualification, except to the extent that the failure to be so incorporated or validly existing, to have such power, or to be so qualified or in good standing, would not have a material adverse effect on the consolidated financial position or results of operations of the Company and its subsidiaries taken as a whole (a "Material Adverse Effect"). (e) The Offered Securities have been duly authorized and, when executed and authenticated in accordance with the provisions of the Indenture and delivered to and paid for by the Underwriters in accordance with the terms of the Underwriting Agreement, in the case of the Underwriters' Securities, or by institutional investors in accordance with the terms of the Delayed Delivery Contracts, in the case of the Contract Securities, will be entitled to the benefits of the Indenture and will be valid and binding obligations of the Company enforceable in accordance with their terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors' rights and to general equity principles. (f) This Agreement has been duly authorized, executed and delivered by the Company. (g) The Indenture has been duly qualified under the Trust Indenture Act and has been duly authorized, executed and delivered by the Company and is a valid and binding agreement of the Company enforceable in accordance with its terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors' rights and to general equity principles. (h) The Delayed Delivery Contracts, if any, have been duly authorized, executed and delivered by the Company and are valid and binding agreements of the Company enforceable in accordance with their respective terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors' rights and to general equity principles. (i) The execution and delivery by the Company of, and the performance by the Company of its obligations under, this Agreement, the Indenture, the Offered Securities and the Delayed Delivery Contracts will not -3- contravene (x) any provision of the Articles of Association of the Company or (y) any provision of applicable Netherlands or United States law or any agreement or other instrument binding upon the Company or any of its Significant Subsidiaries or any judgment, order or decree of any governmental body, agency or court having jurisdiction over the Company or any Significant Subsidiary, in each case with respect to this sub-clause (y), except for any contravention that would not affect the validity or enforceability of the Offered Debt Securities or the consummation of the transactions contemplated hereby or have a Material Adverse Effect; and no consent, approval, authorization or order of or qualification with any governmental body in the United States of America or The Netherlands or agency is required for the performance by the Company of its obligations under this Agreement, the Indenture, the Offered Securities or the Delayed Delivery Contracts, except for the announcements and the statements required by section 3 of the Exemption Regulation pursuant to the Netherlands 1995 Act on the Supervision of the Securities Trade (Wet toezicht effectenverkeer 1995), and except for the registration of the Offered Securities under the Securities Act and except such as may be required by the securities or Blue Sky laws of the various states of the United States in connection with the offer and sale of the Offered Securities. (j) There has not occurred any material adverse change, or any development involving a prospective material adverse change, in or affecting the general affairs, management, financial position, stockholders' equity or results of operations of the Company and its subsidiaries, taken as a whole, from that set forth in the Prospectus (exclusive of any amendments or supplements thereto effected subsequent to the date of the Underwriting Agreement). (k) Other than as set forth or contemplated in the Prospectus, there are no (i) legal or governmental proceedings pending or threatened in writing to which the Company or any of its subsidiaries is a party or to which any of the properties of the Company or any of its subsidiaries is subject which (x) would individually have a Material Adverse Effect or (y) in the judgment of the Company after reasonable investigation by the Company and its subsidiaries, would, in the aggregate, have a Material Adverse Effect; nor (ii) any contracts or other documents that are required to be described in the Registration Statement or Prospectus or to be filed as Exhibits to the Registration Statement that are not described or filed as required. (l) The Company or one of its subsidiaries owns or possesses all patents, patent applications, trademarks, service marks, trade names, trade secrets, licenses and rights in any thereof which are necessary for the conduct of the business of the Company and its subsidiaries, taken as a whole, substantially in the manner in which it has been or is being conducted and, except as set forth in the Prospectus, there are no unresolved assertions that the Company or any of its subsidiaries has infringed the patent or trademark rights of others, other than -4- assertions which would not, in the judgment of the Company, individually or in the aggregate have a Material Adverse Effect. (m) No stamp or other issuance taxes or duties are payable by or on behalf of the Underwriters in The Netherlands in connection with the issuance of the Offered Securities or the sale and delivery by the Underwriters of the Offered Securities, all in the manner contemplated in this Agreement. (n) No authorization, approval or consent of any governmental authority or agency of or in The Netherlands is required to effect payments made by the Company within or outside The Netherlands in respect of the Offered Securities. II. If the Prospectus provides for sales of Offered Securities pursuant to Delayed Delivery Contracts, the Company hereby authorizes the Underwriters to solicit offers to purchase Contract Securities on the terms and subject to the conditions set forth in the Prospectus pursuant to Delayed Delivery Contracts. Delayed Delivery Contracts may be entered into only with institutional investors approved by the Company of the types set forth in the Prospectus. On the Closing Date, the Company will pay to the Manager as compensation for the accounts of the Underwriters the commission, if any, set forth in the Underwriting Agreement in respect of the Contract Securities. The Underwriters will not have any responsibility in respect of the validity or the performance of any Delayed Delivery Contracts. If the Company executes and delivers Delayed Delivery Contracts with institutional investors, the aggregate amount of Offered Securities to be purchased by the several Underwriters shall be reduced by the aggregate amount of Contract Securities; such reduction shall be applied to the commitment of each Underwriter pro rata in proportion to the amount of Offered Securities set forth opposite such Underwriter's name in the Underwriting Agreement, except to the extent that the Manager determines that such reduction shall be applied in other proportions and so advises the Company; provided, however, that the total amount of Offered Securities to be purchased by all Underwriters shall be the aggregate amount set forth above, less the aggregate amount of Contract Securities. III. The Company is advised by the Manager that the Underwriters propose to make a public offering of their respective portions of the Underwriters' Securities as soon after this Agreement has been entered into as in the Manager's judgment is advisable. The terms of the public offering of the Underwriters' Securities are set forth in the Prospectus. -5- Each Underwriter represents and agrees that, as part of its initial distribution or at any time thereafter, (a) it has not offered, transferred or sold and will not offer, transfer or sell any Offered Securities: (i) before a statement that the laws and regulations referred to in (c) of this section are complied with, has been submitted to the Netherlands Authority for the Financial Markets; or (ii) to persons who are established, domiciled or have their residence in The Netherlands; and (b) with respect to each offer of Offered Securities, and each announcement and documents in respect thereof, made by it, it has stated and will state that the Offered Securities are not and will not be offered to persons as referred to in (a)(ii) of this section; and (c) with respect to each offer of Offered Securities, and each announcement and documents in respect thereof, made by it, it has complied and will comply with the laws and regulations of any jurisdiction where persons to whom the offer is made are resident; and (d) a statement that the laws and regulations referred to in (c) of this section are complied with, has been and will be included in each announcement made by it of any offer of Offered Securities. IV. Except as otherwise provided in the Underwriting Agreement, payment for the Underwriters' Securities shall be made by wire transfer in immediately available funds to the account specified by the Company to the Manager, no later than noon the Business Day (as defined below) prior to the Time of Delivery (as defined below), on the date and at the time and place set forth in the Underwriting Agreement (or at such other time and place on the same or such other date, no later than the fifth Business Day (as defined below) thereafter, as the Manager and the Company may agree in writing). As used herein, the term "Business Day" means any day other than a day on which banks are permitted or required to be closed in New York City. The time and date of such payment and delivery with respect to the applicable Designated Securities are referred to herein as the "Time of Delivery". Payment for the Underwriters' Securities shall be made against delivery to the nominee of the depository specified in the Underwriting Agreement for the respective accounts of the several Underwriters of the applicable Underwriters' Securities (the details of such accounts provided by the Manager in writing not less than two Business -6- Days prior to the Time of Delivery) of one or more global notes (with respect to each issuance of Underwriters' Securities, each a "Global Note") representing such Underwriters' Securities, with any transfer taxes payable in connection with the transfer to the Underwriters of the Underwriters Securities duly paid by the Company. V. The several obligations of the Underwriters hereunder are subject to the following conditions: (a) Subsequent to the execution and delivery of the Underwriting Agreement and prior to the Closing Date, (i) there shall not have occurred any downgrading, nor shall any publicly announced notice have been given of any intended downgrading or of any review for a possible change that does not indicate the direction of the possible change, in the rating accorded any of the Company's securities by any "nationally recognized statistical rating organization," as such term is defined for purposes of Rule 436(g)(2) under the Securities Act; and (ii) there shall not have occurred any change, or any development involving a prospective change, in or affecting the general affairs, management, financial position, stockholders' equity or results of operations of the Company and its subsidiaries, taken as a whole, from that set forth in the Prospectus (exclusive of any amendments thereto effected subsequent to the execution and delivery of the Underwriting Agreement), that, in the good faith judgment of the Manager, is material and adverse and that makes it, in the good faith judgment of the Manager, after consultation with the Company, impracticable to market the Offered Securities on the terms and in the manner contemplated in the Prospectus. (b) The Manager shall have received on the Closing Date a certificate, dated the Closing Date and signed by an executive officer of the Company, to the effect set forth in clause (a)(i) above and to the effect that the representations and warranties of the Company contained in this Agreement are true and correct as of the Closing Date and that the Company has complied with all of the agreements and satisfied all of the conditions on its part to be performed or satisfied hereunder on or before the Closing Date. (c) The Manager shall have received on the Closing Date an opinion of A.F. Verdam, Esq., counsel for the Company, dated the Closing Date, to the effect that: -7- (i) the Company has been duly incorporated and is validly existing as a legal entity in the form of a limited liability company ("naamloze vennootschap") duly organized under the laws of The Netherlands, with corporate power and authority to perform its obligations under the Agreement; (ii) the Agreement has been duly authorized by all internal corporate action of the Company and has been validly executed and delivered by the Company insofar as the laws of The Netherlands are concerned and constitutes valid and legally binding obligations of the Company enforceable against it in accordance with its terms under the laws of the Netherlands; (iii) neither the execution of any of the Agreement, the Indenture or the Offered Securities, nor the fulfillment of or compliance with their respective terms and provisions, by the Company will result in any violation of the provisions of the Articles of Association of the Company or any statute, rule or regulation in The Netherlands or to the best of such counsel's knowledge, any order applicable to the Company of any court or governmental agency or body in The Netherlands having jurisdiction over the Company or any other judgment, agreement or instrument to which the Company is a party or by which the Company or any of its property is bound, in each case except for breaches and violations which would not materially affect the validity of the Agreement, the Indenture or the Offered Securities (as the case may be) or would not materially adversely affect the Company's ability to perform its obligations under any of these agreements; (iv) no consent, approval, authorization, order, registration, filing or other recording or qualification of or with any court, governmental agency or body or other entity in The Netherlands, or any other legal formality under Dutch law is required to be obtained or made by the Company to enforce its rights under or to ensure the validity, effectiveness, enforceability or admissibility in evidence of the Agreement, the Indenture or the Offered Securities or by reason of the execution of any of the Agreement, the Indenture or the Offered Securities or the performance by the Company of its obligations under any of these agreements; (v) to the best of such counsel's knowledge [why knowledge qualification for a legal conclusion?] no consent, approval, authorization, order, registration, filing or otherwise recording or qualification of or with any court, governmental agency or body or other entity in The Netherlands, or any other legal formality under Dutch law, is currently required to be obtained or made by the Company to effect payments made -8- by the Company within or outside The Netherlands in respect of the Offered Securities within or outside The Netherlands upon redemption of the Offered Securities, except for the Company's obligation to comply with notification and registration requirements of The Netherlands Central Bank ("De Nederlandsche Bank N.V.") in connection with the issue of and all payments in respect of the Offered Securities to or from non-residents of The Netherlands in accordance with the General Reporting Instructions 2000 ("Rapportage Voorschriften Buitenlands Betalingsverkeer 2000") issued by DNB pursuant to the External Financial Relations Act 1994 ("Wet Financiele Betrekkingen Buitenland 1994"), although a failure to perform any of these formalities should not adversely affect the validity, effectiveness, enforceability or admissibility in evidence of the Agreement or the Offered Securities or any payment made or to be made thereunder; (vi) the choice of the laws of New York as the governing law of the Agreement is valid and binding on the Company, except that when applying New York law as the law expressed to be governing the Agreement, the competent court of the Netherlands, if any, - may give effect to mandatory rules of the law of any other jurisdiction with which the situation has a significant connection, if and insofar as, under the laws of the latter jurisdiction, those rules must be applied irrespective of the chosen law; - will apply the laws of the Netherlands in a situation where they are mandatory irrespective of the chosen law; - will apply the laws of the Netherlands in a situation where they are mandatory irrespective of the law otherwise applicable to the Agreement; - may refuse to apply New York law if such application is manifestly incompatible with public policy of the Netherlands; (vii) the submission to the jurisdiction of the state courts in the State of New York, County of New York and the federal courts in the Southern District of New York by the Company contained in the Agreement are valid and binding on the Company and not subject to revocation and the appointment of (subject to the appointment of a successor pursuant to Article VIII hereof) Philips Electronics North America Corporation as authorized agent of the Company for the purposes described in Article VIII hereof has been duly authorized by the Company; -9- (viii) in the absence of an applicable convention providing for the reciprocal recognition and enforcement of judgments in civil and commercial matters between the Netherlands and the United States of America, a judgment rendered by a court in New York against the Company will not be recognized and enforced by the courts of the Netherlands; in order to obtain a judgment which is enforceable against the Company the claimant will have to file its claim against the Company with the competent Netherlands court, and in the course of these proceedings the claimant may submit the judgment rendered by the New York court; if the Netherlands court finds that the jurisdiction of the New York court has been based on grounds which are internationally acceptable and the proper legal procedures have been observed, the Netherlands court would, in principle, give binding effect to the final judgment which has been rendered in New York court, unless such judgment contravenes principles of Netherlands public policy; (ix) to the best of such counsel's knowledge, there is no litigation or governmental proceedings pending or threatened in writing against or affecting the Company or any of its property, which litigation or governmental proceeding is reasonably expected to have a material adverse effect on the Company' ability to consummate the transactions contemplated under the Agreement or the validity of the Agreement; and (x) no stamp, registration or other tax, charges or other costs are payable in The Netherlands in connection with or in relation to the execution, delivery or performance under the Agreement. Such counsel may state that he expresses no opinion of any law other than the laws of The Netherlands as presently existing, and that this opinion is given on the understanding that it will be governed by and construed in accordance with the laws of The Netherlands. The opinion expressed shall be subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors' rights and to general equity principles, such as the principle of "reasonableness and fairness" ("redelijkheid en billijkheid"). In rendering such opinion, such counsel may rely on the opinion of Sullivan & Cromwell as to matters of United States and New York law and certificates of officers and directors of the Company and its subsidiaries as to matters of fact. (d) The Manager shall have received on the Closing Date an opinion of Mr. Theo P.M. Schmit of Philips Corporate Fiscal Department, internal tax counsel for the Company, dated the Closing Date to the effect that the statements contained in the prospectus under the caption "Taxation - The Netherlands" insofar as they relate to matters of Netherlands tax law, are correct in all material -10- respects. In rendering such opinion, such counsel may rely on the opinion of Sullivan & Cromwell as to matters of United States and New York law and certificates of officers of the Company and its subsidiaries as to matters of fact. (e) The Manager shall have received on the Closing Date an opinion of Sullivan & Cromwell, United States counsel for the Company dated the Closing Date to the effect that: (i) the issuance of the Offered Securities in accordance with the Indenture and the sale of the Offered Securities by the Company to the Underwriters pursuant to this Agreement do not, and the performance by the Company of its obligations under the Indenture, this Agreement and the Offered Securities will not, violate any Federal law of the United States or the law of the State of New York applicable to the Company; provided, however, that, with respect to this paragraph (i), such counsel need express no opinion with respect to Federal or state securities laws, other antifraud laws and fraudulent transfer laws; provided, further, that insofar as performance by the Company and its obligations under the Indenture, this Agreement and the Offered Securities is concerned, such counsel need express no opinion as to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors' rights and to general equity principles; (ii) all regulatory consents, authorizations, approvals and filings required to be obtained or made by the Company under the Federal laws of the United States and the laws of the State of New York for the issuance, sale and delivery of the Offered Securities by the Company to the Underwriters have been obtained or made; (iii) assuming that this Agreement has been duly authorized, executed and delivered insofar as the laws of The Netherlands are concerned, the Company has legally, validly, effectively and irrevocably submitted to the jurisdiction of any United States or state court in the State of New York, County of New York, and has legally, validly, effectively and irrevocably appointed (subject to the appointment of a successor pursuant to Article VIII hereof) Philips Electronics North America Corporation, 1251 Avenue of the Americas, New York, NY 10020-1104, (hereinafter referred to as "PENAC") as the authorized agent of the Company for the purposes described in Article VIII; (iv) assuming that this Agreement has been duly authorized, executed and delivered insofar as the laws of The Netherlands are concerned, this Agreement has been duly executed and delivered by the Company; -11- (v) assuming that the Indenture has been duly authorized, executed and delivered insofar as the laws of The Netherlands are concerned, the Indenture has been duly executed and delivered by the Company and has been duly qualified under the Trust Indenture Act and constitutes a valid and legally binding obligation of the Company enforceable in accordance with its terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors' rights and to general equity principles; (vi) assuming that the Offered Securities have been duly authorized, executed and delivered insofar as the laws of The Netherlands are concerned, the Offered Securities have been duly executed, authenticated, issued and delivered and constitute valid and legally binding obligations of the Company enforceable in accordance with their terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors' rights and to general equity principles; (vii) the statements contained in the Prospectus under the caption "Taxation - the United States", insofar as they relate to matters of United States federal tax law, are correct in all material respects; and (viii) as United States counsel for the Company, such counsel reviewed the Registration Statement and Prospectus, participated in discussions with representatives of the Manager and those of the Company, its counsel and its accountants, and advised the Company as to the requirements of the Securities Act and the applicable rules and regulations thereunder; between the date of the Prospectus Supplement and the time of delivery of this letter, such counsel participated in further discussions with representatives of the Manager and those of the Company, its counsel and its accountants at which certain portions of the Prospectus were discussed, and reviewed certificates of certain officers of the Company, opinions of the Company's counsel and a letter from the Company's accountants; on the basis of the information that such counsel gained in the course of the performance of such services, considered in the light of their understanding of the applicable law (including the requirements of Form F-3 and the character of the prospectus contemplated thereby) and experience they have gained through their practice under the Securities Act, such counsel confirm to the Manager that, in their opinion, the Registration Statement, as of its effective date, and the Prospectus, as of the date of the Prospectus Supplement, appeared on their face to be appropriately responsive in all material respects to the requirements of the Securities Act, the Trust Indenture Act and the applicable rules and regulations of the Commission thereunder; and -12- nothing that came to such counsel's attention in the course of such review has caused them to believe that the Registration Statement, as of its effective date, contained any untrue statement of a material fact or omitted to state any material fact required to be stated therein or necessary to make the statements therein not misleading or that the Prospectus, as of the date of the Prospectus Supplement, contained any untrue statement of a material fact or omitted to state any material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; also, nothing that has come to such counsel's attention in the course of the procedures discussed in the second clause of this sub-paragraph (viii) has caused such counsel to believe that the Prospectus, as of the date and time of delivery of this letter, contained any untrue statement of a material fact or omitted to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, provided, however, that such opinion may state that the limitation inherent in the independent verification of factual matters and the character of determinations involved in the registration process are such that such counsel do not assume any responsibility for the accuracy, completeness or fairness of the statements contained in the Registration Statement or the Prospectus, except for those made in the Prospectus under the captions "Description of Debt Securities", "Description of Notes" and "Underwriting" insofar as they relate to provisions of documents therein described and that such counsel need not express any opinion or belief as to the financial statements or other financial data contained in the Registration Statement or the Prospectus, or as to the statement of the eligibility of the Trustee under the Indenture under which the Offered Securities are being issued. In rendering such opinions, such counsel may rely on the opinions of Mr. A.F. Verdam, Esq. as to matters of Netherlands law and certificates of officers of the Company and its subsidiaries as to matters of fact. (f) The Manager shall have received on the Closing Date an opinion of counsel for the Underwriters, counsel for the Underwriters, dated the Closing Date, to the effect that: (i) the statements in the Prospectus under the caption "Plan of Distribution", insofar as such statements constitute summaries of the legal matters referred to therein, fairly present the information called for with respect to such legal matters and fairly summarize the matters referred to therein; and (ii) covering the matters referred to in sub-paragraph (v), (vi) and (viii) of paragraph (d). -13- In rendering such opinions, such counsel may rely on the opinions of Mr. A.F. Verdam, Esq. and as to matters of Netherlands law and certificates of officers of the Company as to matters of fact. With respect to sub-paragraph (viii) of paragraph (d) above, Sullivan & Cromwell and counsel for the Underwriters may state that their opinion and belief are based upon their participation in the preparation of the Registration Statement and Prospectus and any amendments or supplements thereto (other than the documents incorporated by reference) and review and discussion of the contents thereof (including documents incorporated therein by reference), but are without independent check or verification except as specified. (g) The Manager shall have received, on each of the date hereof and the Closing Date, a letter dated the date hereof or the Closing Date, as the case may be, in form and substance satisfactory to the Manager, from the independent auditors who have audited the financial statements of the Company and its subsidiaries included in the Registration Statement and the Prospectus, containing statements and information of the type ordinarily included in accountants' "comfort letters" to underwriters with respect to the financial statements and certain financial information contained in or incorporated by reference into the Registration Statement and the Prospectus. VI. In further consideration of the agreements of the Underwriters herein contained, the Company covenants as follows: (a) To furnish the Manager, without charge, a signed copy of the Registration Statement (including exhibits thereto) and for delivery to each other Underwriter a conformed copy of the Registration Statement (without exhibits thereto) and to furnish to the Manager in New York City, without charge, prior to 10:00 A.M. local time on the business day next succeeding the date of the Underwriting Agreement and during the period mentioned in paragraph (c) below, as many copies of the Prospectus, any documents incorporated by reference therein and any supplements and amendments thereto or to the Registration Statement as the Manager may reasonably request. The terms "supplement" and "amendment" or "amend" as used in this Agreement shall include all documents subsequently filed by the Company with the Commission pursuant to the Exchange Act that are deemed to be incorporated by reference in the Prospectus. (b) Before amending or supplementing the Registration Statement or the Prospectus with respect to the Offered Securities, to furnish to the Manager a copy of each such proposed amendment or supplement and not to file any such proposed amendment or supplement to which the Manager reasonably objects on a timely basis. -14- (c) If, during such period after the first date of the public offering of the Offered Securities, a prospectus relating to the Offered Securities is required by applicable United States law to be delivered in connection with sales by an Underwriter or dealer, any event shall occur as a result of which it is necessary to amend or supplement the Prospectus in order to make the statements therein, in the light of the circumstances when the Prospectus is delivered to a purchaser, not misleading, or if it is necessary to amend or supplement the Prospectus to comply with applicable United States law, forthwith to prepare, file with the Commission and furnish, at the expense of the Company, to the Underwriters and to the dealers (whose names and addresses the Manager will furnish to the Company) to which Offered Securities may have been sold by the Manager on behalf of the Underwriters and to any other dealers upon request, either amendments or supplements to the Prospectus so that the statements in the Prospectus as so amended or supplemented will not, in the light of the circumstances when the Prospectus is delivered to a purchaser, be misleading or so that the Prospectus, as amended or supplemented, will comply with law; provided that, in the case of any amendment or supplement to the Prospectus made pursuant to this paragraph (c) more than nine months after the Closing Date, the expense of such amendment or supplement shall be paid for by the Underwriters. (d) To endeavor to qualify the Offered Securities for offer and sale under the securities or Blue Sky laws of such jurisdictions as the Manager shall reasonably request and to maintain such qualification for as long as the Manager shall reasonably request provided, however, that the Company will not be obligated to qualify the Offered Securities in any jurisdiction where such qualification would require the Company to qualify to do business as a foreign corporation or file a general consent to service of process or to take any other action which would subject it to service of process in suits in any jurisdiction other than those arising out of the offering or sale of the Offered Securities in such jurisdiction. (e) To make generally available to its security holders and to the Manager as soon as practicable an earning statement (which need not be audited) covering a twelve month period beginning on the first day of the first full fiscal quarter after the date of the Underwriting Agreement, which earning statement shall satisfy the provisions of Section 11(a) of the Securities Act and the rules and regulations of the Commission thereunder. (f) During the period beginning on the date of the Underwriting Agreement and continuing to and including the earlier of (i) the termination of trading restrictions on the Offered Securities, as notified promptly to the Company by the Manager and (ii) the Closing Date not to offer, sell, contract to sell or otherwise dispose of in a public offering in the United States any debt securities of the Company or warrants to purchase debt securities of the Company substantially similar to the Offered Securities which mature more than one year -15- after the Closing Date without the Manager's prior written consent, such consent not to be unreasonably withheld. (g) Whether or not any sale of Offered Securities is consummated, to pay all reasonable expenses incident to the performance of its obligations under this Agreement, including: (i) the preparation and filing of the Registration Statement and the Prospectus and all amendments and supplements thereto; (ii) the preparation, issuance and delivery of the Offered Securities; (iii) the fees and disbursements of the Company's counsel and accountants and of the Trustee and its counsel; (iv) the qualification of the Offered Securities under securities or Blue Sky laws in accordance with the provisions of paragraph 6(d), including filing fees and the fees and disbursements of counsel for the Underwriters in connection therewith and in connection with the preparation of any Blue Sky memoranda or Legal Investment Memoranda; (v) the listing of the Offered Securities on the New York Stock Exchange, if the Offered Securities are to be listed; (vi) the printing and delivery to the Underwriters in quantities as hereinabove stated of copies of the Registration Statement and all amendments thereto and of the Prospectus and any amendments or supplements thereto; (vii) the printing and delivery to the Underwriters of copies of any Blue Sky memoranda or Legal Investment Memoranda; (viii) any fees charged by rating agencies for the rating of the Offered Securities; and (ix) any expenses incurred by the Company in connection with a "road show" presentation to potential investors. It is understood, however, that, except as provided in this Article, Article VII and Article X, the Manager will pay all of its own costs and expenses, including the fees of its counsel, transfer taxes on resale of any of the Offered Securities by it, and any advertising expenses connected with any offers it makes. -16- VII. The Company agrees to indemnify and hold harmless each Underwriter and each person, if any, who controls any Underwriter within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act, from and against any and all direct losses, claims, damages and liabilities (including, without limitation, any legal or other out-of-pocket expenses reasonably incurred in connection with defending or investigating any such action or claim) caused by any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement or any amendment thereof, any preliminary prospectus or the Prospectus (as amended or supplemented if the Company shall have furnished any amendments or supplements thereto), or caused by any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, except insofar as such losses, claims, damages or liabilities are caused by any such untrue statement or omission or alleged untrue statement or omission based upon information relating to any Underwriter furnished to the Company in writing by such Underwriter through the Manager expressly for use therein; provided, however, that the foregoing indemnity agreement with respect to any preliminary prospectus shall not inure to the benefit of any Underwriter from whom the person asserting any such direct losses, claims, damages or liabilities purchased Offered Securities, or any person controlling such Underwriter, if a copy of the Prospectus (as then amended or supplemented if the Company shall have furnished any amendments or supplements thereto) was not sent or given by or on behalf of such Underwriter to such person, if required by law so to have been delivered, at or prior to the written confirmation of the sale of the Offered Securities to such person, and if the Prospectus (as so amended or supplemented) would have cured the defect giving rise to such losses, claims, damages or liabilities. In no event shall the Company be liable for indirect or consequential losses. Each Underwriter agrees, severally and not jointly, to indemnify and hold harmless the Company, members of the Board of Management and Supervisory Board, its officers who sign the Registration Statement, the Company's authorized representative in the United States named in the Registration Statement and each person, if any, who controls the Company within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act to the same extent as the foregoing indemnity from the Company to such Underwriter, but only with reference to information relating to such Underwriter furnished to the Company in writing by such Underwriter through the Manager expressly for use in the Registration Statement, any preliminary prospectus, the Prospectus or any amendments or supplements thereto. In case any proceeding (including any governmental investigation) shall be instituted involving any person in respect of which indemnity may be sought pursuant to either of the two preceding paragraphs, such person (the "indemnified party") shall promptly notify the person against whom such indemnity may be sought (the "indemnifying party") in writing and the indemnifying party, upon request of the indemnified party, shall retain counsel reasonably satisfactory to the indemnified party to -17- represent the indemnified party and any others the indemnifying party may designate in such proceeding and shall pay the fees and disbursements of such counsel related to such proceeding. In any such proceeding, any indemnified party shall have the right to retain its own counsel, but the fees and expenses of such counsel shall be at the expense of such indemnified party unless (i) the indemnifying party and the indemnified party shall have mutually agreed to the retention of such counsel or (ii) the named parties to any such proceeding (including any impleaded parties) include both the indemnifying party and the indemnified party and representation of both parties by the same counsel would be inappropriate due to actual or potential differing interests between them. It is understood that the indemnifying party shall not, in respect of the legal expenses of any indemnified party in connection with any proceeding or related proceedings in the same jurisdiction, be liable for the fees and expenses of more than one separate firm (in addition to any Netherlands and local counsel) for all such indemnified parties and that all such fees and expenses shall be reimbursed as they are incurred. Such firm shall be designated in writing by the Manager, in the case of parties indemnified pursuant to the first paragraph of this Article VII above, and by the Company, in the case of parties indemnified pursuant to the second paragraph of this Article VII above. The indemnifying party shall not be liable for any settlement of any proceeding effected without its written consent, but if settled with such consent or if there be a final judgment for the plaintiff, the indemnifying party agrees to indemnify the indemnified party from and against any direct loss or liability by reason of such settlement or judgment. Notwithstanding the foregoing sentence, if at any time an indemnified party shall have requested an indemnifying party to reimburse the indemnified party for fees and expenses of counsel as contemplated by the second and third sentences of this paragraph, the indemnifying party agrees that it shall be liable for any settlement of any proceeding effected without its written consent if (i) such settlement is entered into more than 30 days after receipt by such indemnifying party of the aforesaid request and (ii) such indemnifying party shall not have reimbursed the indemnified party in accordance with such request prior to the date of such settlement. No indemnifying party shall, without the prior written consent of the indemnified party, effect any settlement of any pending or threatened proceeding in respect of which any indemnified party is or could have been a party and indemnity could have been sought hereunder by such indemnified party, unless such settlement includes an unconditional release of such indemnified party from all liability on claims that are the subject matter of such proceeding. To the extent the indemnification provided for in the first or second paragraph of this Article VII is unavailable to an indemnified party or insufficient in respect of any direct losses, claims, damages or liabilities referred to therein, then each indemnifying party under such paragraph, in lieu of indemnifying such indemnified party thereunder, shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages or liabilities (i) in such proportion as is appropriate to reflect the relative benefits received by the Company on the one hand and the Underwriters on the other hand from the offering of the Offered Securities or (ii) if the allocation provided by clause (i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) -18- above but also the relative fault of the Company on the one hand and of the Underwriters on the other hand in connection with the statements or omissions that resulted in such losses, claims, damages or liabilities, as well as any other relevant equitable considerations. The relative benefits received by the Company on the one hand and the Underwriters on the other hand in connection with the offering of the Offered Securities shall be deemed to be in the same respective proportions as the net proceeds from the offering of such Offered Securities (before deducting expenses) received by the Company and the total underwriting discounts and commissions received by the Underwriters, in each case as set forth in the table on the cover of the Prospectus Supplement, bear to the aggregate public offering price of the Offered Securities. The relative fault of the Company on the one hand and the Underwriters on the other hand shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company or by the Underwriters and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The Underwriters' respective obligations to contribute pursuant to this Article VII are several in proportion to the respective principal amounts of Offered Securities they have purchased hereunder, and not joint. The Company and the Underwriters agree that it would not be just or equitable if contribution pursuant to this Article VII were determined by pro rata allocation (even if the Underwriters were treated as one entity for such purpose) or by any other method of allocation that does not take account of the equitable considerations referred to in the immediately preceding paragraph. The amount paid or payable by an indemnified party as a result of the losses, claims, damages and liabilities referred to in the immediately preceding paragraph shall be deemed to include, subject to the limitations set forth above, any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this Article VII, no Underwriter shall be required to contribute any amount in excess of the amount by which the total price at which the Offered Securities underwritten by it and distributed to the public were offered to the public exceeds the amount of any damages that such Underwriter has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The remedies provided for in this Article VII are not exclusive and shall not limit any rights or remedies which may otherwise be available to any indemnified party at law or in equity. VIII. The Company, by execution and delivery of this Agreement, agrees that, until the fifth anniversary date of the Closing Date, service of process may be made upon it at the office of PENAC (or any successor pursuant to the last sentence of this Article -19- VIII), to the attention of its company secretary, in any suit or proceeding against the Company instituted by any Underwriter or by any person controlling any Underwriter based on or arising under this Agreement in any United States or state court in the State of New York, County of New York and expressly accepts the non-exclusive jurisdiction of any such court in respect of any such suit or proceeding. The Company further, by the execution and delivery of this Agreement, irrevocably designates and appoints until the fifth anniversary date of the Closing Date hereunder (or until a successor is appointed pursuant to the last sentence of this Article VIII) said PENAC in the County, City and State of New York, United States of America, as the authorized agent of the Company under whom process may be served in any such suit or proceeding, it being understood that the designation and appointment of said PENAC as such authorized agent shall become effective immediately without any further action on the part of the Company. The Company represents to each Underwriter that it has notified said PENAC of such designation and appointment and that said PENAC has accepted the same in writing. The Company further agrees that, to the extent permitted by law, service of process upon said and written notice of said service to the Company mailed first-class or by airmail or delivered to it at its principal office and directed to the attention of "Treasurer at the Corporate Finance Department", shall be deemed in every respect effective service of process on the Company in any such suit or proceeding. The Company further agrees to take any and all action, including the execution and filing of all such instruments and documents, as may be necessary to continue such designation and appointment in full force and effect for five years from the Closing Date. Notwithstanding the foregoing, the Company may appoint a successor to PENAC on the terms provided above, provided such successor accepts such appointment in writing, provided further that written notice of such appointment shall have been given to each Underwriter and the Manager. IX. This Agreement shall be subject to termination by notice given by the Manager to the Company, if (a) after the execution and delivery of the Underwriting Agreement and prior to the Closing Date (i) trading generally shall have been suspended or materially limited on or by, as the case may be, either of the Euronext Amsterdam N.V.'s stock market or the New York Stock Exchange, (ii) a general moratorium on commercial banking activities in Amsterdam or New York shall have been declared by Netherlands, United States Federal or New York State authorities, as the case may be, (iii) there shall have occurred any outbreak or escalation of hostilities that, in the good faith judgment of the Manager, is material and adverse and (b) in the case of any of the events specified in clauses (a)(i) through (iii), such event, singly or together with any other such event, makes it, in the good faith judgment of the Manager, impracticable to market the Offered Securities on the terms and in the manner contemplated in the Prospectus. -20- X. If, on the Closing Date, any one or more of the Underwriters shall fail or refuse to purchase Underwriters' Securities that it has or they have agreed to purchase hereunder on such date, and the aggregate amount of Underwriters' Securities which such defaulting Underwriter or Underwriters agreed but failed or refused to purchase is not more than one-tenth of the aggregate amount of the Underwriters' Securities to be purchased on such date, the other Underwriters shall be obligated severally in the proportions that the amount of Underwriters' Securities set forth opposite their respective names in the Underwriting Agreement bears to the aggregate amount of Underwriters' Securities set forth opposite the names of all such non-defaulting Underwriters, or in such other proportions as the Manager may specify, to purchase the Underwriters' Securities which such defaulting Underwriter or Underwriters agreed but failed or refused to purchase on such date; provided that in no event shall the amount of Underwriters' Securities that any Underwriter has agreed to purchase pursuant to this Agreement be increased pursuant to this Article X by an amount in excess of one-ninth of such amount of Underwriters' Securities without the written consent of such Underwriter. If, on the Closing Date, any Underwriter or Underwriters shall fail or refuse to purchase Underwriters' Securities and the aggregate amount of Underwriters' Securities with respect to which such default occurs is more than one-tenth of the aggregate amount of Underwriters' Securities to be purchased on such date, and arrangements satisfactory to the Manager and the Company for the purchase of such Underwriters' Securities are not made within 36 hours after such default, this Agreement shall terminate without liability on the part of any non-defaulting Underwriter or the Company. In any such case either the Manager or the Company shall have the right to postpone the Closing Date, but in no event for longer than seven days, in order that the required changes, if any, in the Registration Statement and in the Prospectus or in any other documents or arrangements may be effected. Any action taken under this paragraph shall not relieve any defaulting Underwriter from liability in respect of any default of such Underwriter under this Agreement. If this Agreement shall be terminated by the Underwriters, or any of them, because of any failure or refusal on the part of the Company to comply with the terms or to fulfill any of the conditions of this Agreement, or if for any reason the Company shall be unable to perform its obligations under this Agreement, the Company will reimburse the Underwriters or such Underwriters as have so terminated this Agreement with respect to themselves, severally, for all out-of-pocket expenses (including the fees and disbursements of their counsel) reasonably incurred by such Underwriters in connection with this Agreement or the offering of the Offered Securities. The respective indemnity and contribution agreements and the representations, warranties and other statements of the Company, its officers and the Underwriters set forth in this Agreement will remain in full force and effect regardless of (i) any termination of this Agreement, (ii) any investigation made by or on behalf of any Underwriter or any person controlling any Underwriter or by or on behalf of the -21- Company, its officers or directors or any person controlling the Company and (iii) acceptance of any payment for any of the Offered Securities. This Agreement will inure to the benefit of and be binding upon the parties hereto and their respective successors and the officers, directors (including members of the Board of Management and Supervisory Board of the Company) and controlling persons referred to in Article VII, and no other person will have any right or obligation hereunder. The Underwriting Agreement may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. -22- EX-1.2 4 u45117exv1w2.txt FORM OF DISTIBUTION AGREEMENT Exhibit 1.2 KONINKLIJKE PHILIPS ELECTRONICS N.V. Up to U.S. $[ ] MEDIUM-TERM NOTES Guaranteed as to Payment of Principal, Premium (if any) and Interest by FORM OF DISTRIBUTION AGREEMENT [ ], 2002 [NAME & ADDRESS OF AGENT(S)] Ladies and Gentlemen: Koninklijke Philips Electronics N.V., a public limited company incorporated under the laws of The Netherlands (the "Issuer"), proposes to issue and sell from time to time their Medium-Term Notes, [Due 18 Months to 30 Years From Date of Issue (the "Securities"), at an aggregate initial offering price up to U.S.$[ ] (or the equivalent thereof at the time of original issuance in one or more foreign currencies or composite currencies), and each of them agrees with each of you (individually, an "Agent", and collectively, the "Agents") as set forth in this Agreement. The Securities are to be issued pursuant to the provisions of an indenture, dated August 1, 1993, as supplemented by a First Supplemental Indenture dated May 6, 1994 and a Second Supplemental Indenture dated [ ], 2002 (the "Indenture"), between Koninklijke Philips Electronics N.V., and Citibank, N.A., as Trustee (the "Trustee"). Subject to the terms and conditions stated herein and to the reservation by the Issuer of the right to sell Securities directly on its own behalf, the Issuer hereby (i) appoints each Agent as an agent of the Issuer for the purpose of soliciting and receiving offers to purchase Securities from the Issuer pursuant to Section II(a) hereof and (ii) agrees that, except as otherwise contemplated herein, whenever it determines to sell Securities directly to any Agent as principal, it will enter into a separate agreement (each a "Terms Agreement"), which may be oral and confirmed in writing or which may be substantially in the form of Annex I hereto, relating to such sale in accordance with Section II(b) hereof. The Issuer has filed with the Securities and Exchange Commission (the "Commission") registration statements on Form F-3 (nos. 333-4582 and [-]) including a prospectus relating to the Securities to be issued severally from time to time by the Issuer. The Issuer also has filed with, or proposes to file with, the Commission pursuant to Rule 424 under the Securities Act of 1933, as amended (the "Securities Act"), a prospectus supplement specifically relating to the Securities (the "Prospectus Supplement"). Upon request, but not without the agreement of each applicable Agent, the applicable Issuer may also file a registration statement in accordance with Rule 462(b) under the Securities Act. The registration statements as amended to the Commencement Date (as hereinafter defined) and any Rule 462(b) Registration Statement that becomes effective thereafter are hereinafter referred to as the "Registration Statement" and the related prospectus covering the Securities in the form first used to confirm sales of the Securities is hereinafter referred to as the "Basic Prospectus". The Basic Prospectus as supplemented by the Prospectus Supplement specifically relating to the Securities in the form first used to confirm sales of the Securities is hereinafter referred to as the "Prospectus". Any reference in this Agreement to the Registration Statement, the Basic Prospectus, any preliminary form of prospectus (including the Basic Prospectus, a "preliminary prospectus") previously filed with the Commission pursuant to Rule 424 or the Prospectus shall be deemed to refer to and include the documents incorporated by reference therein pursuant to Item 6 of Form F-3 under the Securities Act which were filed under the Securities Exchange Act of 1934, as amended (the "Exchange Act") on or before the date of this Agreement or the date of the Basic Prospectus, any preliminary prospectus or the Prospectus, as the case may be; and any reference to "amend", "amendment" or "supplement" with respect to the Registration Statement, the Basic Prospectus, any preliminary prospectus or the Prospectus shall be deemed to refer to and include any documents filed under the Exchange Act after the date of this Agreement, the date of the Basic Prospectus, the date of any preliminary prospectus or the date of the Prospectus, as the case may be, which are deemed to be incorporated by reference therein. Any reference to "Rule 462(b) Registration Statement" shall be deemed to refer to a registration statement and any amendments thereto filed pursuant to Rule 429 or Rule 462(b) relating to the offering covered by the initial Registration Statement. I. The Issuer represents and warrants to each of the Agents that: (a) The Registration Statement has become effective; no stop order suspending the effectiveness of the Registration Statement is in effect, and no proceedings for such purpose are pending before or, to the Issuer's knowledge, threatened by the Commission. (b) (i) Each document filed or to be filed pursuant to the Exchange Act and incorporated by reference in the Prospectus complied or will comply when so filed in all material respects with the Exchange Act and the applicable rules and regulations of the Commission thereunder, (ii) each part of the Registration Statement, when such part became effective, did not contain and each such part, as amended or supplemented, if applicable, will not contain any untrue statement -2- of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading, (iii) the Registration Statement and the Prospectus comply and, as amended or supplemented, if applicable, will comply in all material respects with the Securities Act and the applicable rules and regulations of the Commission thereunder and (iv) the Prospectus does not contain and, as amended or supplemented, if applicable, will not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, except that the representations and warranties set forth in this paragraph I(b) do not apply (A) to statements or omissions in the Registration Statement or the Prospectus based upon information relating to any Agent furnished to the Issuer in writing by such Agent expressly for use therein or (B) to that part of the Registration Statement that constitutes the Statement of Eligibility (Form T-1) under the U.S. Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"), of the Trustee. (c) The Issuer is a limited liability stock corporation duly organized and validly existing under the laws of The Netherlands, has the power and authority (corporate and other) to own its property and to conduct its business as described in its Articles of Association and in the Prospectus. (d) Each Significant Subsidiary (as such term is defined in Regulation S-X under the Securities Act) of the Issuer has been duly incorporated, is validly existing as a corporation in good standing under the laws of the jurisdiction of its incorporation, has the power and authority to own its property and to conduct its business as conducted as of the date hereof , is duly qualified to transact business and is in good standing in each jurisdiction in which the conduct of its business or its ownership or leasing of property requires such qualification, except to the extent that the failure to be so incorporated or validly existing, to have such power or to be so qualified or be in good standing, would not have a material adverse effect on the consolidated financial position or results of operations of the Issuer and its subsidiaries taken as a whole (a "Material Adverse Effect"). (e) The Securities have been duly authorized and, when executed and authenticated in accordance with the provisions of the Indenture and delivered to and paid for by the Agent or Agents or when delivered to and paid for by purchasers of the Securities in accordance with the terms of this Distribution Agreement, will be entitled to the benefits of the Indenture and will be valid and binding obligations of the Issuer enforceable in accordance with their terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors' rights and to general equity principles. (f) This Distribution Agreement has been duly authorized, executed -3- and delivered by the Issuer. (g) The Indenture has been duly qualified under the Trust Indenture Act and has been duly authorized, executed and delivered by the Issuer and is a valid and binding agreement of the Issuer enforceable in accordance with its terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors' rights and to general equity principles. (h) The execution and delivery by the Issuer of, and the performance by the Issuer of its obligations under, this Distribution Agreement, the Indenture and the Securities will not contravene (x) any provision of the Articles of Association of the Issuer or (y) any provision of applicable Netherlands or United States law or any agreement or other instrument binding upon the Issuer or any of its Significant Subsidiaries or any judgment, order or decree of any governmental body, agency or court having jurisdiction over the Issuer or any Significant Subsidiary, in each case with respect to this sub-clause (y), except for any contravention that would not affect the validity or enforceability of the Securities or the consummation of the transactions contemplated hereby or have a Material Adverse Effect; and no consent, approval, authorization or order of or qualification with any governmental body in the United States of America or The Netherlands or agency is required for the performance by the Issuer of its obligations under this Agreement, the Indenture or the Securities, except for the announcements and the statements required by section 3 of the Exemption Regulation pursuant to the Netherlands 1995 Act on the Supervision of the Securities Trade ("Wet toezicht effectenverkeer 1995"), and except for the registration of the Securities under the Securities Act and except such as may be required by the securities or Blue Sky laws of the various states of the United States in connection with the offer and sale of the Securities. (i) Since the date as of which information is given in the Registration Statement and the Prospectus, there has not occurred anything that would have a material adverse effect, or any development involving a prospective material adverse effect, on the general affairs, management, financial position, stockholders' equity or results of operations of the Issuer and its subsidiaries, taken as a whole, from that set forth in the Prospectus (exclusive of any amendments or supplements thereto effected subsequent to the date of the Distribution Agreement). (j) Other than as set forth or contemplated in the Prospectus, there are no (i) legal or governmental proceedings pending or threatened in writing to which the Issuer or any of its subsidiaries is a party or to which any of the properties of the Issuer or any of its subsidiaries is subject which (x) would individually have a Material Adverse Effect or (y) in the judgment of the Issuer -4- after reasonable investigation by the Issuer and its subsidiaries, would, in the aggregate, have a Material Adverse Effect; nor (ii) any contracts or other documents that are required to be described in the Registration Statement or Prospectus or to be filed as Exhibits to the Registration Statement that are not described or filed as required. (k) The Issuer or one of its subsidiaries owns or possesses all patents, patent applications, trademarks, service marks, trade names, trade secrets, licenses and rights in any thereof which are necessary for the conduct of the business of the Issuer and its subsidiaries, taken as a whole, substantially in the manner in which it has been or is being conducted and, except as set forth in the Prospectus, there are no unresolved assertions that the Issuer or any of its subsidiaries has infringed the patent or trademark rights of others, other than assertions which, in the judgment of the Issuer, would not individually or in the aggregate be likely to have a Material Adverse Effect. (l) No stamp or other issuance taxes or duties are payable by or on behalf of an Agent in The Netherlands in connection with the issuance of the Securities or the sale and delivery by an Agent of Securities, all in the manner contemplated in this Agreement. (m) No authorization, approval or consent of any governmental authority or agency of or in The Netherlands is required to effect payments made by the Issuer within or outside The Netherlands in respect of the Securities. II. (a) On the basis of the representations and warranties of the Issuer, and subject to the terms and conditions herein set forth, each of the Agents hereby severally and not jointly agrees, as agent of the Issuer, to use its reasonable best efforts to solicit and receive offers to purchase the Securities from the Issuer upon the terms and conditions set forth in the Prospectus as amended or supplemented from time to time. The Issuer reserves the right (i) to accept offers to purchase Securities, to solicit offers to purchase Securities and to sell Securities to or through one or more agents other than the Agents or to agree with another agent that such agent shall become an Agent hereunder, in each case, without obtaining the consent of the Agents, provided, however, that the Issuer will notify the Agents promptly following the issuance and sale of any Security issued and sold in respect of any offer so accepted and (ii) to sell, and solicit and accept offers to purchase, Securities directly on its own behalf; and, in the case of any such sale not resulting from a solicitation made by any Agent, no commission will be payable with respect to such sale. -5- If any other agent is to be named as an Agent under this Agreement, such agent and the Issuer will execute an agreement substantially in the form of Annex III hereto, whereupon such agent shall become a party to this Agreement and shall be subject to the same obligations and receive the same benefits as an Agent would be subject to or would receive hereunder. If any other agent is to be appointed as Agent by the Issuer solely in connection with a particular issue of Securities, such agent and the Issuer will execute an agreement substantially in the form of Annex IV hereto. Procedural details relating to the issue and delivery of Securities, the solicitation of offers to purchase Securities and the payment in each case therefore shall be as set forth in the Administrative Procedures, attached hereto as Annex II, as they may be amended from time to time by written agreement between the Agents and the Issuer (the "Procedures"). The provisions of the Procedures shall apply to all transactions contemplated hereunder other than those made pursuant to a Terms Agreement. Each Agent and the Issuer agrees to perform the respective duties and obligations specifically provided to be performed by each of them in the Procedures. The Issuer will furnish to the Trustee a copy of the Procedures as from time to time in effect. The Issuer reserves the right, in its sole discretion, to instruct the Agents to suspend at any time, for any period of time or permanently, the solicitation of offers to purchase the Securities from the Issuer. As soon as practicable after receipt of notice from the Issuer, the Agents will suspend solicitation of offers to purchase Securities from the Issuer until such time as the Issuer has advised the Agents that such solicitation may be resumed. While such solicitation is suspended, the Issuer shall not be required to deliver any certificates, opinions or letters in accordance with Sections V(i), V(j) and V(k); provided, however, that if the Registration Statement or Prospectus is amended or supplemented during the period of suspension (other than by an amendment or supplement providing solely for a change in the interest rates, redemption provisions, amortization schedules or maturities offered on the Securities or for a change the Agents deem to be immaterial), no Agent shall be required to resume soliciting offers to purchase Securities until the Issuer has delivered such certificates, opinions and letters as such Agent may reasonably request. Unless otherwise agreed by the Issuer and the applicable Agent at the time of any sale of a Security by such Issuer through such Agent, the Issuer agrees to pay each Agent a commission (or grant an equivalent discount) at the time of settlement of any sale of a Security by the Issuer as a result of a solicitation made by such Agent, in an amount to be negotiated. Each Agent shall communicate to the Issuer, orally or in writing, each offer to purchase Securities received by such Agent as agent that in its judgment -6- should be considered by the Issuer. The Issuer shall have the sole right to accept offers to purchase Securities and may reject any offer in whole or in part. Each Agent shall have the right to reject any offer to purchase Securities that it considers to be unacceptable, and any such rejection shall not be deemed a breach of its agreements contained herein. (b) Each sale of Securities to any Agent as principal shall be made in accordance with the terms of this Agreement and (unless the Issuer and such Agent shall otherwise agree) a Terms Agreement which will provide for the sale of such Securities to, and the purchase thereof by, such Agent. A Terms Agreement may also specify certain provisions relating to the reoffering of such Securities by such Agent. The commitment of any Agent to purchase Securities as principal, whether pursuant to any Terms Agreement or otherwise, shall be deemed to have been made on the basis of the representations and warranties of the Issuer herein contained and shall be subject to the terms and conditions herein set forth. Each Terms Agreement shall specify the principal amount of Securities to be purchased by any Agent pursuant thereto, the price to be paid to the Issuer for such Securities, any provisions relating to rights of, and default by, underwriters acting together with such Agent in the reoffering of the Securities and the time and date and place of delivery of and payment for such Securities. Such Terms Agreement shall also specify requirements, if any, for opinions of counsel, accountants' letters and officers' certificates pursuant to Section VI hereof. For each sale of Securities to an Agent as principal that is not made pursuant to a Terms Agreement, the procedural details relating to the issue and delivery of such Securities and payment therefor shall be as set forth in the Procedures. For each such sale of Securities to an Agent as principal, the Issuer agrees to pay such Agent a commission (or grant an equivalent discount) as provided in Section II(a) hereof. Securities may also be sold by any Agent to or through dealers who may resell to investors. The Agents may pay all or part of their discount or commission to such dealers. Each time and date of delivery of and payment for Securities to be purchased by an Agent as principal, whether set forth in a Terms Agreement or in accordance with the Procedures, is referred to herein as a "Time of Delivery". (c) The Issuer acknowledges that the obligations of the Agents under this Agreement are several and not joint. (d) The documents required to be delivered pursuant to Section VI hereof on the Commencement Date (as defined below) shall be delivered to the Agents at the offices of Sullivan & Cromwell, 1 New Fetter Lane, London EC4A 1AN at 9:00 a.m., New York City time, on the date of this Agreement, which date -7- and time of such delivery may be postponed by agreement among the Agents and the Issuer but in no event shall be later than the day prior to the date on which solicitation of offers to purchase Securities is commenced or on which any Terms Agreement is executed (such time and date being referred to herein as the "Commencement Date"). III. Each Agent agrees, with respect to any Security denominated in a currency other than U.S. dollars, as agent, directly or indirectly, not to solicit offers to purchase, and as principal under any Terms Agreement or otherwise, directly or indirectly, not to offer, sell or deliver, such Security except as permitted by applicable law of the country issuing such currency. IV. Each Agent severally represents and agrees that (i) it has not offered or sold and, prior to the expiry of the period of six months from the date of issue of the Securities, will not offer or sell any such Securities to persons in the United Kingdom except to persons whose ordinary activities involve them in acquiring, holding, managing or disposing of investments (as principal or agent) for the purposes of their businesses or otherwise in circumstances which have not resulted and will not result in an offer to the public in the United Kingdom within the meaning of the Public Offers of Securities Regulations 1995, (ii) it has complied and will comply with all applicable provisions of the Financial Services and Markets Act 2000 (the "FSMA") with respect to anything done by it in relation to the Securities in, from or otherwise involving the United Kingdom and (iii) it has only communicated or caused to be communicated and will only communicate or cause to be communicated any invitation or inducement to engage in investment activity (within the meaning of Section 21 of the FSMA) received by it in connection with the issue and sale of such Securities in circumstances in which Section 21(1) of the FSMA does not apply to the Issuer. Each Agent further represents and agrees that from the date of issue of the Securities or at any time thereafter, that (a) it has not offered, transferred or sold and will not offer, transfer or sell any Securities: (i) before a statement that the laws and regulations referred to in (c) of this section are complied with, has been submitted to the Netherlands Authority for the Financial Markets; or (ii) to persons who are established, domiciled or have their residence in The Netherlands; and -8- (b) with respect to each offer of Securities, and each announcement and documents in respect thereof, made by it, it has stated and will state that the Securities are not and will not be offered to persons as referred to in (a)(ii) of this section; and (c) with respect to each offer of Securities, and each announcement thereof, made by it, it has complied and will comply with the laws and regulations of any jurisdiction where persons to whom the offer is made are resident; and a statement that the laws and regulations referred to in (c) of this section are complied with, has been and will be included in each announcement made by it of any offer of Securities. V. The Issuer covenants and agrees with each Agent: (a) (i) To make no amendment or supplement to the Registration Statement or the Prospectus after the date of any Terms Agreement or other agreement by an Agent to purchase Securities as principal and prior to the related Time of Delivery which shall have been reasonably disapproved by any Agent party to such Terms Agreement or otherwise purchasing as principal promptly after reasonable notice thereof; (ii) to prepare, with respect to any Securities to be sold through or to such Agent pursuant to this Agreement, a Pricing Supplement with respect to such Securities in a form previously approved by such Agent and to file such Pricing Supplement pursuant to and in accordance with Rule 424(b) under the Securities Act; (iii) to make no amendment or supplement to the Registration Statement or Prospectus (other than any Pricing Supplement), without having afforded each Agent a reasonable opportunity to review and comment thereon; provided, however, that the requirements in clauses (i) and (iii) of this Section V(a) shall not apply with respect to an amendment or supplement which relates to Securities sold through or to agents other than the Agents or contains no new information other than the terms of such Securities and the plan of distribution thereof; (iv) to file promptly all reports or information statements required to be filed by such Issuer or the Guarantor with the Commission pursuant to Section 13(a), 13(c), or 15(d) of the Exchange Act for so long as the delivery of a prospectus is required in connection with the offering or sale of the Securities, and during such same period to advise such Agent, promptly after the Issuer receives notice thereof, of the time when any amendment to the Registration Statement has been filed or has become effective or any supplement to the Prospectus or any amended Prospectus (other than any Pricing Supplement that relates to Securities not purchased through or by such Agent) has been filed with -9- the Commission, of the issuance by the Commission of any stop order or of any order preventing or suspending the use of any prospectus relating to the Securities, of the suspension of the qualification of the Securities for offering or sale in any jurisdiction, of the initiation or threatening of any proceeding for any such purpose, or of any request by the Commission for the amendment or supplement of the Registration Statement or Prospectus or for additional information; and (v) in the event of the issuance of any such stop order or of any such order preventing or suspending the use of any such prospectus or suspending any such qualification, to use promptly its reasonable best efforts to obtain its withdrawal. (b) Promptly from time to time to take such action as such Agent reasonably may request to qualify the Securities for offering and sale under the securities laws of such jurisdictions as such Agent may request and to comply with such laws so as to permit the continuance of sales and dealings therein for as long as may be necessary to complete the distribution or sale of the Securities, provided, however, that in connection therewith the Issuer shall not be required to qualify as a foreign corporation or to file a general consent to service of process in any jurisdiction. (c) At the request of such Agent, to furnish such Agent with a copy of the Registration Statement and each amendment thereto, with a copy of the Prospectus and each amendment or supplement thereto, and additional copies of the Prospectus as each time amended or supplemented, other than any Pricing Supplement (except as provided in the Procedures), in the form in which it is filed with the Commission pursuant to Rule 424 under the Act, and with copies of the documents incorporated by reference therein, all in such quantities as such Agent may reasonably request; and if at any time any event shall have occurred as a result of which the Prospectus as then amended or supplemented would include an untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made when such Prospectus is delivered, not misleading, or, if for any other reason it shall be necessary to amend or supplement the Prospectus or to file under the Exchange Act any document incorporated by reference in the Prospectus in order to comply with the Act, the Exchange Act or the Trust Indenture Act, to notify such Agent promptly and request such Agent to suspend solicitation of offers to purchase Securities from the Issuer (and, if so notified, such Agent shall cease such solicitations as soon as practicable, but in any event not later than one business day after notification); and if the Issuer shall decide to amend or supplement the Registration Statement or the Prospectus as then amended or supplemented, to so advise such Agent promptly and to prepare and to cause to be filed with the Commission an amendment or supplement to the Registration Statement or the Prospectus as then amended or supplemented that will correct such statement or omission or effect such compliance; provided, -10- however, that if, at any time prior to the expiration of nine months after the Time of Delivery with respect to any Securities, such Agent continues to own Securities purchased from the Issuer by such Agent as principal, the Issuer shall promptly prepare and deliver to such Agent such an amendment or supplement that will correct such statement or omission; provided further, however, that if at any time nine months or more after the Time of Delivery with respect to any Securities, such Agent continues to own Securities purchased from the Issuer by such Agent as principal, the Issuer, upon such Agent's request but at the sole expense of such Agent, shall prepare and deliver to such Agent as many copies as such Agent shall request of such an amendment or supplement. (d) To make generally available to its Security holders as soon as practicable, but in any event not later than eighteen months after the effective date of the Registration Statement an earning statement of the Issuer and its subsidiaries (which need not be audited) complying with Section 11(a) of the Act and the rules and regulations of the Commission thereunder (including, at the option of the Issuer, Rule 158). (e) For a period of three years after the completion of the sale of all the Securities, to deliver to such Agent as soon as they are available, copies of any reports and financial statements of the Issuer furnished to or filed with the Commission or any United States or The Netherlands or other European national securities exchange on which any class of securities of the Issuer is listed. (f) That, from the date of any Terms Agreement with such Agent and continuing to and including the related Time of Delivery, not to offer, sell, contract to sell or otherwise dispose of in each case in the United States any debt securities of the Issuer or warrants to purchase debt securities of the Issuer substantially similar to the Securities, in each which mature more than one year after such Time of Delivery, without the Agents' prior written consent such consent not to be unreasonably withheld. (g) That each acceptance by the Issuer of an offer to purchase Securities hereunder (including any purchase by such Agent as principal not pursuant to a Terms Agreement), and each execution and delivery by the Issuer of a Terms Agreement with such Agent, and each amendment or supplement of the Registration Statement or the Basic Prospectus by the Issuer, shall be deemed to be an affirmation to such Agent that the representations and warranties of the Issuer contained in or made pursuant to this Agreement are true and correct as of the date of such acceptance or of such Terms Agreement or of such amendment or supplement, as the case may be, as though made at and as of such date, and an undertaking that such representations and warranties will be true and correct as of the settlement date for the Securities relating to such acceptance or as of the Time of Delivery relating to such sale, as the case may be, as though made at and as of -11- such date (except that such representations and warranties shall be deemed to relate to the Registration Statement and the Prospectus as amended or supplemented to each such date). (h) That each time the Issuer sells Securities to such Agent as principal pursuant to a Terms Agreement and such Terms Agreement specifies the delivery of an opinion or opinions by counsel to the Agents, as a condition to the purchase of Securities pursuant to such Terms Agreement, the Issuer shall furnish to such counsel such papers and information as they may reasonably request to enable them to furnish to such Agent the opinion or opinions referred to in Section VI (c) hereof. (i) That each time the Issuer's annual report on Form 20-F is filed and is incorporated by reference into the Prospectus and each time the Issuer sells Securities to such Agent as principal pursuant to a Terms Agreement and such Terms Agreement specifies the delivery of an opinion under this Section V(i) as a condition to the purchase of Securities pursuant to such Terms Agreement, the Issuer shall notify each Agent of such filing and furnish or cause to be furnished forthwith to such agent (but, in the case of the filing of the Issuer's annual report on Form 20-F, only if so requested in writing by [the Lead Agent]): (x) a written opinion of Netherlands legal advisor to the Issuer, dated the date of such filing or the Time of Delivery relating to such sale, as the case may be, in form reasonably satisfactory to such Agent, to the effect set forth in Section VI(b) hereof; provided, however, that to the extent appropriate such opinion or opinions may reconfirm matters set forth in a prior opinion of Netherlands legal advisor delivered under Section VI(b) or this Section V(i); and (y) a written opinion of Sullivan & Cromwell, United States counsel for the Issuer, or other counsel for the Issuer satisfactory to such Agent, dated the date of such filing or Time of Delivery relating to such sale, as the case may be, in form reasonably satisfactory to such Agent, to the effect set forth in Section VI(a) hereof; provided, however, that to the extent appropriate such opinion or opinions may reconfirm matters set forth in a prior opinion of United States counsel delivered under Section VI(a) or this Section V(i); and (j) That each time the Issuer's annual report on Form 20-F is filed and incorporated by reference into the prospectus and each time the Issuer sells Securities to such Agent as principal pursuant to a Terms Agreement and such Terms Agreement specifies the delivery of a letter under this Section V(j) as a condition to the purchase of Securities pursuant to such Terms Agreement, the -12- Issuer shall notify each Agent of such filing and (but, in the case of the filing of the Issuer's annual report on Form 20-F, only if so requested in writing by [the Lead Agent]) shall cause the independent auditors who have audited the financial statements of the Issuer and its subsidiaries included in the Registration Statement and the Prospectus forthwith to furnish such Agent a letter, dated the date of such filing or Time of Delivery relating to such sale, as the case may be, in form reasonably satisfactory to such Agent, of the same tenor as the letter referred to in Section VI(d) hereof but modified to relate to the Registration Statement and the Prospectus as amended or supplemented to the date of such letter, with such changes as may be necessary to reflect changes in the financial statements and other information derived from the accounting records of the Issuer, to the extent such financial statements and other information are available as of a date not more than three business days prior to the date of such letter; provided, however, that, in the case of a letter furnished in connection with a sale of Securities to such Agent as principal, with respect to any financial information or other matter, such letter may reconfirm as true and correct at such date as though made at and as of such date, rather than repeat, statements with respect to such financial information or other matter made in the letter referred to in Section VI(e) hereof which was last furnished to such Agent. (k) That each time the Issuer's annual report on Form 20-F is filed and each time the Issuer sells Securities to such Agent as principal and the applicable Terms Agreement specifies the delivery of a certificate under this Section V(k) as a condition to the purchase of Securities pursuant to such Terms Agreement (but, in the case of the filing of the Issuer's annual report on Form 20-F, only if so requested in writing by [the Lead Agent]), the Issuer shall furnish or cause to be furnished forthwith to such Agent a certificate or certificates, dated the date of such filing or Time of Delivery relating to such sale, as the case may be, in such form and executed by such officers of the Issuer as shall be reasonably satisfactory to such Agent, to the effect that the statements contained in the certificate or certificates referred to in Section VI(h) hereof which was last furnished to such Agent are true and correct in all material respects at such date as though made at and as of such date (except that such statements shall be deemed to relate to the Registration Statement and the Prospectus as amended and supplemented to such date) or, in lieu of such certificate or certificates, a certificate or certificates of the same tenor as the certificate or certificates referred to in said Section VI(i) but modified to relate to the Registration Statement and the Prospectus as amended and supplemented to such date; each such officer may certify to the best of his or her knowledge. (l) To offer to any person who has agreed to purchase Securities as the result of an offer to purchase solicited by such Agent the right to refuse to purchase and pay for such Securities if, on the related settlement date fixed pursuant to the Procedures, any condition set forth in Section VI(e), (f), (g) or (i) -13- hereof shall not have been satisfied (it being understood that the judgment of such person with respect to the impracticability or inadvisability of such purchase of Securities shall be substituted, for purposes of this Section V(l), for the respective judgment of an Agent with respect to certain matters referred to in such Sections VI(e) and (g), and that such Agent shall have no duty or obligation whatsoever to exercise the judgment permitted under such Section VI(e) and (g) on behalf of any such person). (m) The Issuer covenants and agrees with each Agent that the Issuer will pay or cause to be paid the following: (i) the fees, disbursements and expenses of the Issuer's counsel and accountants in connection with the issuance of the Securities, the preparation, printing and filing of the Registration Statement, any Preliminary Prospectus, the Prospectus and any Pricing Supplements and all other amendments and supplements thereto, and the mailing and delivering of copies thereof to such Agent; (ii) the reasonable fees, direct disbursements and expenses of counsel for the Agents in connection with the establishment and updating of the program contemplated hereby, any opinions to be rendered by such counsel hereunder and the transactions contemplated hereunder; (iii) the cost of printing, preparing by word processor or reproducing any Terms Agreement, any Indenture, and any other documents in connection with the offering, purchase, sale and delivery of the Securities; (iv) all expenses in connection with the qualification of the Securities for offering and sale under state securities laws as provided in Section V(b) hereof, including fees and disbursements of counsel for the Agents in connection with such qualification and in connection with the Blue Sky and legal investment surveys; (v) any fees charged by securities rating services for rating the Securities; (vi) the cost of preparing the Securities (including any global Securities); and (vii) the reasonable fees and direct expenses of the Trustee and any agent of the Trustee and any transfer or paying agent of the Issuer and the reasonable fees and disbursements of counsel for the Trustee and any such agent in connection with the Indentures and the Securities. Except as provided in Sections VII and VIII hereof, each Agent shall pay all other expenses it incurs. VI. The obligation of any Agent, as agent of the Issuer, at any time ("Solicitation Time") to solicit offers to purchase the Securities and the obligation of any Agent to purchase Securities as principal, pursuant to any Terms Agreement or otherwise, shall in each case be subject, in such Agent's discretion, to the condition that all representations and warranties and other statements of the Issuer herein (and, in the case of an obligation of an Agent under a Terms Agreement, in or incorporated in such Terms Agreement by reference) are true and correct at and as of the Commencement Date and any applicable date referred to in Section V(k) hereof that is prior to such Solicitation Time or Time of Delivery, as the case may be, and at and as of such Solicitation Time or Time of -14- Delivery, as the case may be, the condition that prior to such Solicitation Time or Time of Delivery, as the case may be, the Issuer shall have performed in all material respects all of their respective obligations hereunder theretofore to be performed, and the following additional conditions: (a) Sullivan & Cromwell, United States counsel for the Issuer, or other counsel for the Issuer satisfactory to such Agent, shall have furnished to such Agent their written opinion, dated the Commencement Date and each applicable date referred to in Section V(i) hereof that is on or prior to such Time of Delivery, in form and substance satisfactory to such Agent, to the effect that: (i) assuming that the Indenture has been duly authorized, executed and delivered by the Issuer insofar as the laws of the Netherlands are concerned, the Indenture has been duly qualified under the Trust Indenture Act of 1939 and constitutes a valid and legally binding obligation of the Issuer, enforceable in accordance with its terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors' rights and to general equity principles; (ii) any series of Securities established on or prior to the date of such opinion has been duly authorized and established in conformity with the Indenture, and, when the terms of a particular Security and of its issuance and sale have been duly authorized and established by all necessary corporate action in conformity with the Indenture, and such Security has been duly completed, executed, authenticated and issued in accordance with the Indenture and delivered against payment as contemplated by this Agreement, such Security will constitute a valid and legally binding obligation of the Issuer enforceable in accordance with its terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors' rights and to general equity principles; in rendering such opinion at any time other than pursuant to a Terms Agreement such counsel may assume that at the time of issuance, sale and delivery of each particular Security the authorization of the Securities will not have been modified or rescinded and, with respect to each Security, that such Security will conform to the respective forms of the Securities examined by them (such latter assumption may be made even if such opinion is rendered pursuant to a Terms Agreement) and that the Trustee's certificate of authentication of such Security will be manually signed by one of the Trustee's authorized officers; such counsel may also assume that at the time of the issuance, sale and delivery of each particular Security there will not have occurred any change in law affecting the validity, legally binding character or enforceability of such Security and -15- that the issuance, sale and delivery of such Security, all of the terms of such Security and the performance by the Issuer of its obligations thereunder will comply with applicable law and with each requirement or restriction imposed by any court or governmental body having jurisdiction over the Issuer and will not result in a default under or a breach of any agreement or instrument then binding upon the Issuer; (iii) assuming this Agreement and any applicable Terms Agreement have been duly authorized, executed and delivered by the Issuer insofar as the laws of The Netherlands are concerned, this Agreement and any applicable Terms Agreement have been duly executed and delivered by the Issuer; (iv) the execution and delivery by the Issuer of the Indenture and the Distribution Agreement do not, and the completion, execution and issuance of each particular Security in accordance with the Indenture and the sale by the Issuer of such Security in accordance with this Agreement and any applicable Terms Agreement and the performance by the Issuer of its obligations under the Indenture, the Agreement and any applicable Terms Agreement and the Securities will not violate any Federal law of the United States or the law of the State of New York applicable to the Issuer; provided, however, that, with respect to this paragraph VI(a)(iv), such counsel need express no opinion with respect to Federal or state securities laws, other anti-fraud laws, fraudulent transfer laws and laws that restrict transactions between United States persons and citizens or residents of certain foreign countries or specifically designated nationals and organizations; provided, further, that insofar as performance by the Issuer of its obligations under the Indenture, this Agreement, any applicable Terms Agreement, and the Securities is concerned, such counsel need express no opinion as to bankruptcy, insolvency, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors' rights; In rendering such opinion, such counsel may state that their opinion is limited to the Federal laws of the United States and the laws of the State of New York and such counsel may (i) note that, as to matters of Dutch law, the Agents have received the opinion of Dutch counsel for the Issuer, rendered pursuant to Section VI(b); (ii) assume that the Issuer has been duly incorporated and is an existing company under the laws of The Netherlands, and (iii) each Security issued by the Issuer will be duly executed and delivered in accordance with the laws of The Netherlands. Such counsel may also state that, with your approval, they have relied as to certain matters or information obtained from public officials, officers of the Issuer and other sources believed by them to be responsible, and that they have assumed that the -16- Indenture has been duly authorized, executed and delivered by the Trustee and that the signatures on all documents examined by them are genuine, assumptions which they have not independently verified. Such counsel shall also state that they have reviewed the Registration Statement, the Basic Prospectus and the Prospectus Supplement and participated in discussions with representatives of the Issuer its Dutch counsel, representatives of the accountants for the Issuer and representatives of the Agents and their United States counsel; and on the basis of the information that they gained in the course of the performance of such services, considered in the light of their understanding of the applicable law and the experience they have gained through their practice in this field, such counsel shall confirm to the Agents that each part of the Registration Statement, when such part became effective, and the Basic Prospectus, as supplemented by the Prospectus Supplement as of the date of the Prospectus Supplement, appeared on their face to be appropriately responsive in all material respects to the requirements of the Securities Act, the Trust Indenture Act of 1939 and the applicable rules and regulations of the Commission thereunder; and nothing that has come to the attention of such counsel has caused them to believe (x) that any part of the Registration Statement, when such part became effective, contained any untrue statement of a material fact or omitted to state any material fact required to be stated therein or necessary to make the statements therein not misleading or that the Basic Prospectus as supplemented by the Prospectus Supplement as of the date of the Prospectus Supplement, contained any untrue statement of material fact or omitted to state any material fact necessary in order to make the statements therein, in the light of the circumstances in which they were made, not misleading or (y) that, in the course of specified procedures performed by them subsequent to the effective date of the Registration Statement, the Basic Prospectus, as supplemented by a Prospectus Supplement, as of the date of such opinion contained any untrue statement of a material fact or omitted to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. Such opinion may state (1) that such counsel do not assume any responsibility for the accuracy, completeness or fairness of the statements contained in the Registration Statement, Basic Prospectus or the Prospectus Supplement except for those made under the captions "Description of Debt Securities" and "Taxation --- The United States" in the Basic Prospectus and ["Description of Notes" and "Plan of Distribution"] in the Prospectus Supplement insofar as they relate to the provisions of documents therein described and (2) that they do not express any opinion or belief as to the financial statements or other financial data or as to any statement made by Dutch counsel to the Issuer with respect to the laws of The Netherlands, contained in the Registration Statement, the Basic Prospectus or any Prospectus Supplement, or documents incorporated by reference therein, or as to the statement of the eligibility and qualification of the Trustee under the Indentures under which the Securities are being issued. (b) A.F. Verdam Esq., counsel for the Company, shall have furnished to such Agent his written opinion, dated the Commencement Date and each -17- applicable date referred to in Section V(i)(B) hereof that is on or prior to such Time of Delivery, as the case may be, in form and substance satisfactory to such Agent, to the effect: (i) the Issuer has been duly incorporated and is validly existing as a legal entity in the form of a limited liability company ("naamloze vennootschap") duly organized under the laws of The Netherlands, with corporate power and authority to perform its obligations under the Agreement; (ii) the Agreement has been duly authorized by all internal corporate action of the Issuer and has been validly executed and delivered by the Issuer insofar as the laws of The Netherlands are concerned and constitutes valid and legally binding obligations of the Issuer enforceable against it in accordance with its terms under the laws of the Netherlands; (iii) neither the execution of any of the Agreement, the Indenture or the Securities, nor the fulfilment of or compliance with their respective terms and provisions, by the Issuer will result in any violation of the provisions of the Articles of Association of the Issuer or any statute, rule or regulation in The Netherlands or to the best of such counsel's knowledge, any order applicable to the Issuer of any court or governmental agency or body in The Netherlands having jurisdiction over the Issuer or any other judgment, agreement or instrument to which the Issuer is a party or by which the Issuer or any of its property is bound, in each case except for breaches and violations which would not materially affect the validity of the Agreement, the Indenture or the Securities (as the case may be) or would not materially adversely affect the Issuer' ability to perform its obligations under any of these agreements; (iv) no consent, approval, authorization, order, registration, filing or other recording or qualification of or with any court, governmental agency or body or other entity in The Netherlands, or any other legal formality under Dutch law is required to be obtained or made by the Issuer to enforce its rights under or to ensure the validity, effectiveness, enforceability or admissibility in evidence of the Agreement, the Indenture or the Securities or by reason of the execution of any of the Agreement, the Indenture or the Securities or the performance by the Issuer of its obligations under any of these agreements; (v) to the best of such counsel's knowledge no consent, approval, authorization, order, registration, filing or otherwise recording or qualification of or with any court, governmental agency or body or other -18- entity in The Netherlands, or any other legal formality under Dutch law, is currently required to be obtained or made by the Issuer to effect payments made by the Issuer within or outside The Netherlands in respect of the Securities within or outside The Netherlands upon redemption of the Securities, except for the Issuer's obligation to comply with notification and registration requirements of The Netherlands Central Bank (De Nederlandsche Bank N.V.) in connection with the issue of and all payments in respect of the Securities to or from non-residents of The Netherlands in accordance with the General Reporting Instructions 2000 (Rapportage Voorschriften Buitenlands Betalingsverkeer 2000) issued by DNB pursuant to the External Financial Relations Act 1994 (Wet Financiele Betrekkingen Buitenland 1994), although a failure to perform any of these formalities should not adversely affect the validity, effectiveness, enforceability or admissibility in evidence of the Agreement or the Securities or any payment made or to be made thereunder; (vi) the choice of the laws of New York as the governing law of the Agreement is valid and binding on the Issuer, except that when applying New York law as the law expressed to be governing the Agreement, the competent court of the Netherlands, if any, - may give effect to mandatory rules of the law of any other jurisdiction with which the situation has a significant connection, if and insofar as, under the laws of the latter jurisdiction, those rules must be applied irrespective of the chosen law; - will apply the laws of the Netherlands in a situation where they are mandatory irrespective of the chosen law; - will apply the laws of the Netherlands in a situation where they are mandatory irrespective of the law otherwise applicable to the Agreement; - may refuse to apply New York law if such application is manifestly incompatible with public policy of the Netherlands; (vii) the submission to the jurisdiction of the state courts in the State of New York, County of New York and the federal courts in the Southern District of New York by the Issuer contained in the Agreement are valid and binding on the Issuer and not subject to revocation and the appointment of (subject to the appointment of a successor pursuant to Article XIII hereof) Philips Electronics North America Corporation as authorized agent of the Issuer for the purposes described in Article XIII hereof has been duly authorized by the Issuer; -19- (viii) in the absence of an applicable convention providing for the reciprocal recognition and enforcement of judgments in civil and commercial matters between the Netherlands and the United States of America, a judgment rendered by a court in New York against the Issuer will not be recognized and enforced by the courts of the Netherlands; in order to obtain a judgment which is enforceable against the Issuer the claimant will have to file its claim against the Issuer with the competent Netherlands court, and in the course of these proceedings the claimant may submit the judgment rendered by the New York court; if the Netherlands court finds that the jurisdiction of the New York court has been based on grounds which are internationally acceptable and the proper legal procedures have been observed, the Netherlands court would, in principle, give binding effect to the final judgment which has been rendered in New York court, unless such judgment contravenes principles of Netherlands public policy; (ix) to the best of such counsel's knowledge, there is no litigation or governmental proceedings pending or threatened in writing against or affecting the Issuer or any of its property, which litigation or governmental proceeding is reasonably expected to have a material adverse effect on the Issuer' ability to consummate the transactions contemplated under the Agreement or the validity of the Agreement; and (x) no stamp, registration or other tax, charges or other costs are payable in The Netherlands in connection with or in relation to the execution, delivery or performance under the Agreement. In giving such opinion, such counsel may state that such opinion is confined to and given on the basis of Dutch law as currently applied by the Dutch courts and on the basis that it will be governed by and construed and have effect in accordance with Dutch law. The opinion expressed shall be subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors' rights and to general equity principles, such as the principle of "reasonable and fairness" ("redelijkheid en billiijkheid"). Such opinion also may state that nothing therein is to be taken as indicating that the remedy of an order for specific performance or the issue of an injunction would be available in a Dutch court in respect of the obligations arising under the Indenture, this Agreement or any applicable Terms Agreement in that such remedies are available only at the discretion of the court and are not usually granted where damages would be an adequate remedy. -20- Also in giving such opinion, such counsel may rely upon the opinion or opinions of counsel named in paragraph (a) of this Section VI as to matters of New York and United States federal law. (c) United States counsel to the Agents, shall have furnished to such Agent (i) such opinion or opinions, dated the Commencement Date, covering certain of the matters referred to in subparagraph (i), (ii), (iii), (iv), and the last paragraph of clause (a) of this Section VI, and (ii) if and to the extent requested by such Agent, with respect to each applicable date referred to in Section V(h) hereof that is on or prior to such Time of Delivery, as the case may be, an opinion or opinions, dated such applicable date, to the effect that such Agent may rely on the opinion or opinions which were last furnished to such Agent pursuant to this Section VI(c) to the same extent as though it or they were dated the date of such letter authorizing reliance (except that the statements in such last opinion or opinions shall be deemed to relate to the Registration Statement and the Prospectus as amended and supplemented to such date) or, in any case, in lieu of such an opinion or opinions, an opinion or opinions of the same tenor as the opinion or opinions referred to in clause (i) but modified to relate to the Registration Statement and the Prospectus as amended and supplemented to such date; and in each case such counsel shall have received such papers and information as they may reasonably request to enable them to pass upon such matters; in giving such opinion, such counsel may rely upon the opinion or opinions of counsel named in paragraph (b) of this Section VI as to matters of Dutch law. (d) Mr. Theo P.M. Schmit of Philips Corporate Fiscal Department, internal tax counsel for the Issuer, dated the Commencement Date to the effect that the statements contained in the prospectus under the caption "Taxation - The Netherlands" insofar as they relate to matters of Netherlands tax law, are correct in all material respects. In rendering such opinion, such counsel may rely on the opinion of Sullivan & Cromwell as to matters of United States and New York law and certificates of officers of the Issuer and its subsidiaries as to matters of fact. (e) On the Commencement Date and on each applicable date referred to in Section V(j) hereof that is on or prior to such Solicitation Time or Time of Delivery, as the case may be, the independent auditors who have audited the financial statements of the Issuer and its subsidiaries included in the Registration Statement and the Prospectus shall have furnished to such Agent a letter, dated the Commencement Date or such applicable date, as the case may be, in form and substance reasonably satisfactory to such Agent, containing statements and information of the type ordinarily included in accountants' "comfort letters" to agents or underwriters with respect to the financial statements and certain financial information contained in the Registration Statement and the Prospectus, both as amended or supplemented. -21- (f) There shall not have occurred any change, or any development involving a prospective change, in the condition, financial or otherwise, or in the earnings, business or operations, of the Issuer and its subsidiaries, taken as a whole, from that set forth in the Registration Statement and Prospectus, as amended or supplemented, that, in the reasonable judgment of each applicable Agent, is material and adverse and that makes it, in the reasonable judgment of such applicable Agent, after consultation with the Issuer, impracticable to market the Securities on the terms and in the manner contemplated in the Prospectus and Prospectus Supplement. (g) There shall not have been any downgrading, nor shall any notice have been given of any intended or potential downgrading or of any review for a possible change that does not indicate the direction of the possible change, in the rating accorded any of the Issuer's securities by any "nationally recognized statistical rating organization" as such term is defined for purposes of Rule 436(g)(2) under the Securities Act. (h) There shall not have occurred any of the following: (i) trading generally shall have been suspended or materially limited on or by, as the case may be, any of the Euronext Amsterdam N.V.'s stock market or the New York Stock Exchange, (ii) a general moratorium on commercial banking activities in Amsterdam or New York shall have been declared by Netherlands, United States Federal or New York State authorities, as the case may be, (iii) there shall have occurred any outbreak or escalation of hostilities that, in the good faith judgment of the applicable Agent, is material and adverse and (b) in the case of any of the events specified in clauses (a)(i) through (iii), such event, singly or together with any other such event, makes it, in the good faith judgment of an Agent, after consultation with the Issuer, impracticable to market the Securities on the terms and in the manner contemplated in the Prospectus). (i) The Issuer shall have furnished or caused to be furnished to such Agent certificates of officers of the Issuer dated the Commencement Date and each applicable date referred to in Section V(k) hereof that is on or prior to such Time of Delivery, in such form and executed by such officers of the Issuer as shall be reasonably satisfactory to such Agent, as to the accuracy of the representations and warranties of the Issuer herein at and as of the Commencement Date or such applicable date, as the case may be, as to the performance in all material respects by the Issuer of all of its obligations hereunder to be performed at or prior to the Commencement Date or such applicable date, as the case may be, as to the matters set forth in subsection (f) and (g) of this Section VI, and as to such other matters as such Agent may reasonably request. (j) The applicable Prospectus Supplement shall have been filed with -22- the Commission pursuant to Rule 424 within the applicable time period prescribed for such filing by the rules and regulations under the Securities Act and no stop order suspending the effectiveness of the Registration Statement shall be in effect. VII. The Issuer agrees to indemnify and hold harmless each Agent and each person, if any, who controls any Agent within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act, from and against any and all direct losses, claims, damages and liabilities (including, without limitation, any legal or other out-of-pocket expenses reasonably incurred in connection with defending or investigating any such action or claim) caused by any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement or the Prospectus (as amended or supplemented if the Issuer shall have furnished any amendments or supplements thereto) or any preliminary prospectus, or caused by any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, except insofar as such losses, claims, damages or liabilities are caused by any such untrue statement or omission or alleged untrue statement or omission based upon information relating to the Agents furnished to the Issuer in writing by any Agent expressly for use therein; provided, however, the foregoing indemnity with respect to any untrue statement or omission or alleged untrue statement or omission made in a preliminary prospectus shall not inure to the benefit of any Agent (or any person controlling such Agent) from whom the person asserting any such direct losses, liability, claim, damage or expense purchased any of the Securities that are the subject thereof if such person was not sent or given a copy of the Prospectus (or the Prospectus as amended or supplemented) (if the Issuer shall have furnished any amendments or supplements thereto to the Agents), at or prior to the written confirmation of the sale of such Securities to such person and the untrue statement or omission or alleged untrue statement or omission made in such preliminary prospectus was corrected in the Prospectus (or the Prospectus as amended or supplemented). In no event shall the Issuer be liable for indirect or consequential losses. Each Agent agrees, severally and not jointly, to indemnify and hold harmless the Issuer, its directors, its officers who sign the Registration Statement and each person, if any, who controls the Issuer within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act to the same extent as the foregoing indemnity from the Issuer to each Agent, but only with reference to information relating to such Agent furnished to the Issuer in writing by such Agent expressly for use in the Registration Statement, any preliminary prospectus, the Prospectus, or any amendment or supplement thereto. In case any proceeding (including any governmental investigation) shall be instituted involving any person in respect of which indemnity may be sought pursuant to -23- either of the two preceding paragraphs, such person (hereinafter called the "indemnified party") shall promptly notify the person against whom such indemnity may be sought (hereinafter called the "indemnifying party") in writing (or by facsimile and confirmed in writing) and the indemnifying party, upon request of the indemnified party, shall retain counsel reasonably satisfactory to the indemnified party to represent the indemnified party and any others the indemnifying party may designate in such proceeding and shall pay the fees and disbursements of such counsel related to such proceeding. In any such proceeding, any indemnified party shall have the right to retain its own counsel, but the fees and expenses of such counsel shall be at the expense of such indemnified party unless (i) the indemnifying party and the indemnified party shall have mutually agreed to the retention of such counsel, (ii) the indemnifying party has failed within a reasonable time to retain counsel reasonably satisfactory to the indemnified party or (iii) the named parties to any such proceeding (including any impleaded parties) include both the indemnifying party and the indemnified party and representation of both parties by the same counsel would be inappropriate due to actual or potential differing interests between them. It is understood that the indemnifying party shall not, in connection with any proceeding or related proceedings in the same jurisdiction, be liable for the fees and expenses of more than one separate firm (in addition to any local counsel) for all such indemnified parties, and that all such fees and expenses shall be reimbursed as they are incurred. Such firm shall be designated in writing by [Lead Agent] or, if [Lead Agent] is not an indemnified party and is not reasonably likely to become an indemnified party, by the Agents that are indemnified parties, in the case of parties indemnified pursuant to the second preceding paragraph and by the Issuer in the case of parties indemnified pursuant to the first preceding paragraph. The indemnifying party shall not be liable for any settlement of any proceeding effected without its written consent, but if settled with such consent or if there shall be a final judgment for the plaintiff, the indemnifying party agrees to indemnify the indemnified party from and against any direct loss or liability by reason of such settlement or judgment. Notwithstanding the foregoing sentence, if at any time an indemnified party shall have requested an indemnifying party to reimburse the indemnified party for fees and expenses of counsel as contemplated by the third sentence of this paragraph, the indemnifying party agrees that it shall be liable for any settlement of any proceeding effected without its written consent if (i) such settlement is entered into more than 30 days after receipt by such indemnifying party of the aforesaid request and (ii) such indemnifying party shall not have reimbursed the indemnified party in accordance with such request prior to the date of such settlement. No indemnifying party shall, without the prior written consent of the indemnified party, effect any settlement of any pending or threatened proceeding in respect of which any indemnified party is or could have been a party and indemnity could have been sought hereunder by such indemnified party, unless such settlement includes an unconditional release of such indemnified party from all liability on claims that are the subject matter of such proceedings. If the indemnification provided for in the first or second paragraph of this Section VII is unavailable to an indemnified party or insufficient in respect of any direct losses, claims, -24- damages or liabilities referred to therein, then each indemnifying party under such paragraph, in lieu of indemnifying such indemnified party thereunder, shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages or liabilities (i) in such proportion as is appropriate to reflect the relative benefits received by the Issuer, on the one hand, and such Agent, on the other hand, from the offering of the Securities to which such loss, claim, damage, liability or action in respect thereof relates or (ii) if the allocation provided by clause (i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the Issuer, on the one hand, and of such Agent, on the other hand, in connection with the statements or omissions that resulted in such losses, claims, damages or liabilities, as well as any other relevant equitable considerations. The relative benefits received by the Issuer, on the one hand, and such Agent, on the other hand, shall be deemed to be in the same respective proportions as the net proceeds from such offering (before deducting expenses) received by the Issuer and the total discounts and commissions received by such Agent, in respect thereof. The relative fault of the Issuer, on the one hand, and of such Agent, on the other hand, shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Issuer, on the one hand, or by such Agent, on the other hand, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The Issuer and each Agent agree that it would not be just and equitable if contribution pursuant to this Section VII were determined by pro rata allocation (even if the Agents were treated as one entity for such purpose) or by any other method or allocation that does not take account of the equitable considerations referred to in the immediately preceding paragraph. The amount paid or payable by an indemnified party as a result of the losses, claims, damages and liabilities referred to in the immediately preceding paragraph shall be deemed to include, subject to the limitations set forth above, any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this Section VII, no Agent shall be required to contribute any amount in excess of the amount by which the total price at which the Securities referred to in the preceding paragraph and purchased by it or through it were sold exceeds the amount of any damages that such Agent has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The Agents' respective obligations to contribute pursuant to this Section VII are several in proportion to the respective principal amounts of Securities purchased by them or through them to which such loss, claim, damage, liability or action in respect thereof relates, and not joint. The remedies provided for in this Section VII are not exclusive and shall not limit any rights or remedies which may otherwise be available to any indemnified party at law or in equity. -25- VIII. Each Agent, in soliciting offers to purchase Securities from the Issuer and in performing the other obligations of such Agent hereunder (other than in respect of any purchase by an Agent as principal, pursuant to a Terms Agreement or otherwise), is acting solely as agent for the Issuer and not as principal. Each Agent will make reasonable efforts to assist the Issuer in obtaining performance by each purchaser whose offer to purchase Securities from the Issuer was solicited by such Agent and has been accepted by the Issuer, but such Agent shall not have any liability to the Issuer in the event such purchase is not consummated for any reason. If the Issuer shall default on its obligation to deliver Securities to a purchaser whose offer it has accepted, the Issuer shall (i) hold each Agent harmless against any direct loss, claim or damage arising from or as a result of such default by the Issuer and (ii) notwithstanding such default, pay to the Agent that solicited such offer any commission to which it would be entitled in connection with such sale. IX. The respective indemnities, agreements, representations, warranties and other statements of the Agents, the Issuer contained in this Agreement shall remain operative and in full force and effect regardless of (i) any termination of this Agreement or any applicable Terms Agreement, (ii) any investigation made by or on behalf of any Agent or any person controlling any Agent or by or on behalf of any of the Issuer, their respective officers or directors or any other person controlling the Issuer and (iii) acceptance of and payment for any of the Securities. X. The provisions of this Agreement authorizing the solicitation of offers to purchase Securities from the Issuer may be suspended or terminated at any time by the Issuer as to any Agent or by any Agent upon the giving of written notice of such suspension or termination to such Agent or the Issuer, as the case may be. In the event of such suspension or termination with respect to any Agent, (x) this Agreement shall remain in full force and effect with respect to any Agent as to which such suspension or termination has not occurred, (y) this Agreement shall remain in full force and effect with respect to the rights and obligations of any party which have previously accrued or which relate to Securities which are already issued, agreed to be issued or the subject of a pending offer at the time of such suspension or termination and (z) in any event, this Agreement shall remain in full force and effect insofar as the fourth paragraph of Section II(a) with respect to solicitations made prior to such suspension or termination, Section V(e), Section V(m), Section VII, Section VIII and Section IX are concerned. -26- XI. Except as otherwise specifically provided herein or in the Procedures, all statements, requests, notices and advices hereunder shall be in writing, or by telephone if promptly confirmed in writing, and if to [Lead Agent] shall be sufficient in all respects when delivered or sent by facsimile transmission or registered mail to [ ], Attention: [ ] (telefax: 212-[ ]) with a copy to [ ], Attention: [ ] (telefax: 212-[ ]); if to -, [ ], Attention: [ ] (telefax: 212-[]); and if to Koninklijke Philips Electronics N.V., Breitner Center, Amstelplein 2, 1070 MX Amsterdam, The Netherlands., Attention: [ ] (telefax: 011-[ ]). XII. This Agreement and any Terms Agreement shall be binding upon, and inure solely to the benefit of, the parties hereto or thereto, respectively, and to the extent provided in Section VII and Section VIII hereof, the officers and directors of the Issuer and any person who controls any Agent or the Issuer, and their respective personal representatives, successors and assigns, and no other person shall acquire or have any right under or by virtue of this Agreement or any Terms Agreement. No purchaser of any of the Securities through or from any Agent hereunder shall be deemed a successor or assign by reason merely of such purchase. XIII. The Issuer has appointed Philips Electronics North America Corporation (or any successor pursuant to this Article XIII) as its authorized agent (the "Authorized Agent") upon which process may be served, to the attention of its company secretary, in any action based on this Agreement that may be instituted in any state or federal court in the City, County and State of New York by any Agent or by any person controlling any Agent, and expressly accepts the jurisdiction of any such court in respect of such action. Unless otherwise agreed by the Agents and their counsel, such appointment shall be irrevocable for a period of five years from and after the completion of sale of all the Securities unless and until a successor Authorized Agent shall be appointed and such successor shall accept such appointment for the remainder of such five year period. The Issuer represents to each of the Agents that it has notified the Authorized Agent of such designation and appointment and that Authorized Agent has accepted the same in writing. The Issuer will take any and all action, including the filing of any and all documents and instruments, that may be necessary to continue such appointment or appointments in full force and effect as aforesaid. Service of process upon the Authorized Agent and written notice of such service to the Issuer (mailed or delivered as aforesaid) shall be deemed, in every respect, effective service of process upon the Issuer. Notwithstanding the foregoing, any action based on this Agreement may be instituted by any Agent against the Issuer in any competent court in The Netherlands. -27- XIV. Time shall be of the essence in this Agreement and any Terms Agreement. As used herein, the term "business day" shall mean any day when the office of the Commission in Washington, D.C. is open for business and when banking institutions The Netherlands are open for business. XV. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. XVI. This Agreement may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. If the foregoing is in accordance with your understanding, please sign and return to us ten counterparts hereof, whereupon this letter and the acceptance by each of you thereof shall constitute a binding agreement between the Issuer and each of you in accordance with its terms. Very truly yours, KONINKLIJKE PHILIPS ELECTRONICS N.V. By__________________________________ Name: Title: The foregoing Agreement is hereby confirmed and accepted as of the date first above written. [Lead Agent] By__________________________________ Name: Title: -28- [ ] ____________________________________ Name: Title: -29- EX-4.1 5 u45117exv4w1.txt INDENTURE DATED 1ST AUGUST 1993 EXHIBIT 4.1 CONFORMED COPY PHILIPS ELECTRONICS N.V., ISSUER TO MORGAN GUARANTY TRUST COMPANY OF NEW YORK, TRUSTEE INDENTURE Dated as of August 1, 1993 DEBT SECURITIES PHILIPS ELECTRONICS N.V. CERTAIN SECTIONS OF THIS INDENTURE RELATING TO SECTIONS 310 THROUGH 318, INCLUSIVE, OF THE TRUST INDENTURE ACT OF 1939:
TRUST INDENTURE ACT SECTION INDENTURE SECTION Section 310(a)(1).......................................... 609 (a)(2) ............................................... 609 (a)(3) ............................................... Not Applicable (a)(4) ............................................... Not Applicable (b) ............................................... 608 610 Section 311(a)............................................. 613 (b) .............................................. 613 Section 312(a)............................................. 701 702 (b) ............................................... 702 (c) ............................................... 702 Section 313(a)............................................. 703 (b) ............................................... 703 (c) ............................................... 703 (d) ............................................... 703 Section 314(a)............................................. 704 (a)(4) ............................................... 101 1004 (b) ............................................... Not Applicable (c)(1) ............................................... 102 (c)(2) ............................................... 102 (c)(3) ............................................... Not Applicable (d) ............................................... Not Applicable (e) ............................................... 102 Section 315(a)............................................. 601 (b) ............................................... 602 (c) ............................................... 601 (d) ............................................... 601 (e) ............................................... 514 Section 316(a)............................................. 101 (a)(1)(A) ............................................... 502 512 (a)(1)(B) ............................................... 513 (a) (2) ............................................... Not Applicable (b) ............................................... 508 (c) ............................................... 104 Section 317(a)(1).......................................... 503 (a)(2) ............................................... 504 (b) ............................................... 1003 Section 318(a)............................................. 107
NOTE: This reconciliation and tie shall not, for any purpose, be deemed to be a part of the Indenture. INDENTURE, dated as of August 1, 1993, between Philips Electronics N.V., a corporation duly organized and existing under the laws of The Netherlands (herein called the "Company"), having its corporate seat and principal office in Eindhoven, The Netherlands and its principal office at Groenewoudseweg 1, 5621 BA Eindhoven, The Netherlands and Morgan Guaranty Trust Company of New York, a banking corporation duly organized and existing under the laws of the State of New York, as Trustee hereunder (herein called the "Trustee"). RECITALS OF THE COMPANY The Company has duly authorized the execution and delivery of this Indenture to provide for the issuance from time to time of its unsecured debentures, notes or other evidences of indebtedness (herein called the "Securities"), to be issued in one or more series as in this Indenture provided. All things necessary to make this Indenture a valid agreement of the Company, in accordance with its terms, have been done. NOW, THEREFORE, THIS INDENTURE WITNESSETH: For and in consideration of the premises and the purchase of the Securities by the Holders thereof, it is mutually agreed, for the equal and proportionate benefit of all Holders of the Securities or of series thereof, as follows: ARTICLE ONE DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION SECTION 101. Definitions. For all purposes of this Indenture, except as otherwise expressly provided or unless the context otherwise requires: (1) the terms defined in this Article have the meanings assigned to them in this Article and include the plural as well as the singular; (2) all other terms used herein which are defined in the Trust Indenture Act, either directly or by reference therein, have the meanings assigned to them therein; (3) all accounting terms not otherwise defined herein have the meanings assigned to them in accordance with generally accepted accounting principles, and, except as otherwise herein expressly provided, the term "generally accepted accounting principles" with respect to any computation required or permitted hereunder shall mean such accounting principles as are generally accepted in The Netherlands at the date of such computation and as applied by the Company; (4) unless the context otherwise requires, any reference to an "Article" or a "Section" refers to an Article or a Section, as the case may be, of this Indenture; and (5) the words "herein", "hereof" and "hereunder" and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section or other sub division. "Act", when used with respect to any Holder, has the meaning specified in Section 104. "Affiliate" of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For the purposes of this definition, "control" when used with respect to any specified Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms "controlling" and "controlled" have meanings correlative to the foregoing. "Authenticating Agent" means any Person authorized by the Trustee pursuant to Section 614 to act on behalf of the Trustee to authenticate Securities of one or more series. "Board of Management" means the Board of Management of the Company or any committee of such Board duly authorized to act for it in respect hereof. "Board Resolution" means a copy of a resolution certified by the Secretary to have been duly adopted by the Board of Management and to be in full force and effect on the date of such certification, and delivered to the Trustee. "Business Day", when used with respect to any Place of Payment, means each Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on which banking institutions in that Place of Payment or in New York City are authorized or obligated by law or executive order to close. "Commission" means the Securities and Exchange Commission, from time to time constituted, created under the Exchange Act, or, if at any time after the execution of this instrument such Commission is not existing and performing the duties now assigned to it under the Trust Indenture Act, then the body performing such duties at such time. "Company" means the Person named as the "Company" in the first paragraph of this instrument until a successor Person shall have become such pursuant to the applicable provisions of this Indenture, and thereafter "Company" shall mean such successor Person. "Company Request" or "Company Order" means a written request or order signed on behalf of the Company by any two members of the Board of Management acting jointly or any other Person duly authorized to sign such requests or orders by any two members of the Board of Management acting jointly in an instrument delivered to the Trustee. "Corporate Trust Office" means the principal corporate trust office of the Trustee in the Borough of Manhattan, The City of New York at which at any particular time its corporate trust business shall be administered, which office at the date of initial execution of this Indenture is 60 Wall Street, New York, New York 10260 except that with respect to the presentation of Securities for payment or for registration of transfer or exchange, such term shall mean the office or agency of the Trustee in said Borough at which at any particular time its corporate agency business shall be conducted, which office at the date of initial execution of this Indenture is 55 Exchange Place, Basement A, New York, New York, 10260, Corporate Trust Operations. "corporation" means a corporation, association, company, joint-stock company or business trust. "Covenant Defeasance" has the meaning specified in Section 1303. "Defaulted Interest" has the meaning specified in Section 307. "Defeasance" has the meaning specified in Section 1302. "Depositary" means, with respect to Securities of any series issuable in whole or in part in the form of one or more Global Securities, a clearing agency registered under the Exchange Act that is designated to act as Depositary for such Securities as contemplated by Section 301. "Encumbrance" means any mortgage, pledge, security interest or lien. "European Community" means the European Economic Community, the European Coal and Steel Community and the European Atomic Energy Community. "Event of Default" has the meaning specified in Section 501. "Exchange Act" means the Securities Exchange Act of 1934 and any statute successor thereto, in each case as amended from time to time. "Expiration Date" has the meaning specified in Section 104. "Global Security" means a Security that evidences all or part of the Securities of any series and bears the legend set forth in Section 204 (or such legend as may be specified as contemplated by Section 301 for such Securities). -3- "Group Equity" means, with respect to the Company and its Subsidiaries considered as an entirety, the sum of the amounts described in the Company's most recent audited Consolidated Balance Sheet, as "Other group equity" and "Stockholders' equity" (or such other terms as may be used by the Company to describe the equity of the Group or the stockholders' equity of the Group determined in accordance with its accounting policies). Group Equity will also be deemed to include any capital securities of the Company or similar instruments issued from time to time, provided that the terms of such capital securities or similar instruments do not require the Company, or permit the holder thereof to require the Company, to repay, redeem or repurchase such securities or instruments for any consideration other than securities constituting Group Equity. "Holder" means a Person in whose name a Security is registered in the Security Register. "Indenture" means this instrument as originally executed and as it may from time to time be supplemented or amended by one or more indentures supplemental hereto entered into pursuant to the applicable provisions hereof, including, for all purposes of this instrument and any such supplemental indenture, the provisions of the Trust Indenture Act that are deemed to be a part of and govern this instrument and any such supplemental indenture, respectively. The term "Indenture" shall also include the terms of particular series of Securities established as contemplated by Section 301. "interest", when used with respect to an Original Issue Discount Security which by its terms bears interest only after Maturity, means interest payable after Maturity. "Interest Payment Date", when used with respect to any Security, means the Stated Maturity of an installment of interest on such Security. "Investment Company Act" means the Investment Company Act of 1940 and any statute successor thereto, in each case as amended from time to time. "Maturity", when used with respect to any Security, means the date on which the principal of such Security or an installment of principal becomes due and payable as therein or herein provided, whether at the Stated Maturity or by declaration of acceleration, call for redemption or otherwise. "Notice of Default" means a written notice of the kind specified in Section 501(4) or 501(5). "Officers' Certificate" means a certificate delivered to the Trustee signed by any two members of the Board of Management or by any other Person duly authorized to sign Officers' Certificates by any two members of the Board of Management in an instrument delivered to the Trustee. "Opinion of Counsel" means a written opinion of counsel, who may be counsel for the Company or other counsel acceptable to the Trustee. -4- "Original Issue Discount Security" means any Security which by its terms provides for an amount less than the principal amount thereof to be due and payable upon a declaration of acceleration of the Maturity thereof pursuant to Section 502. "Outstanding", when used with respect to Securities, means, as of the date of determination, all Securities theretofore authenticated and delivered under this Indenture, except: (1) Securities theretofore cancelled by the Trustee or delivered to the Trustee for cancellation; (2) Securities for whose payment or redemption money in the necessary amount has been theretofore deposited with the Trustee or any Paying Agent (other than the Company) in trust or set aside and segregated in trust by the Company (if the Company shall act as its own Paying Agent) for the Holders of such Securities; provided that, if such Securities are to be redeemed, notice of such redemption has been duly given pursuant to this Indenture or provision therefor satisfactory to the Trustee has been made; (3) Securities as to which Defeasance has been effected pursuant to Section 1302; and (4) Securities which have been paid pursuant to Section 306 or in exchange for or in lieu of which other Securities have been authenticated and delivered pursuant to this Indenture, other than any such Securities in respect of which there shall have been presented to the Trustee proof satisfactory to it that such Securities are held by a bona fide purchaser in whose hands such Securities are valid obligations of the Company; provided, however, that in determining whether the Holders of the requisite principal amount of the Outstanding Securities have given, made or taken any request, demand, authorization, direction, notice, consent, waiver or other action hereunder as of any date, (A) the principal amount of an Original Issue Discount Security which shall be deemed to be Outstanding shall be the amount of the principal thereof which would be due and payable as of such date upon acceleration of the Maturity thereof to such date pursuant to Section 502, (B) if, as of such date, the principal amount payable at the Stated Maturity of a Security is not determinable, the principal amount of such Security which shall be deemed to be Outstanding shall be the amount as specified or determined as contemplated by Section 301, (C) the principal amount of a Security denominated in one or more foreign currencies or currency units which shall be deemed to be Outstanding shall be the U.S. dollar equivalent, determined as of such date in the manner provided as contemplated by Section 301, of the principal amount of such Security (or, in the case of a Security described in Clause (A) or (B) above, of the amount determined as provided in such Clause), and (D) Securities owned by the Company or any other obligor upon the Securities or any Affiliate of the Company or of such other obligor shall be disregarded and deemed not to be Outstanding, except -5- that, in determining whether the Trustee shall be protected in relying upon any such request, demand, authorization, direction, notice, consent, waiver or other action, only Securities which the Trustee knows to be so owned shall be so disregarded. Securities so owned which have been pledged in good faith may be regarded as Outstanding if the pledgee establishes to the satisfaction of the Trustee the pledgee's right so to act with respect to such Securities and that the pledgee is not the Company or any other obligor upon the Securities or any Affiliate of the Company or of such other obligor. "Paying Agent" means any Person authorized by the Company to pay the principal of or any premium or interest on any Securities on behalf of the Company and which initially shall be the Trustee. "Person" means any individual, corporation, partnership, joint venture, trust, unincorporated organization or government or any agency or political subdivision thereof. "Place of Payment", when used with respect to the Securities of any series, means the place or places where the principal of and any premium and interest on the Securities of that series are payable as specified as contemplated by Section 301. "Predecessor Security" of any particular Security means every previous Security evidencing all or a portion of the same debt as that evidenced by such particular Security; and, for the purposes of this definition, any Security authenticated and delivered under Section 306 in exchange for or in lieu of a mutilated, destroyed, lost or stolen Security shall be deemed to evidence the same debt as the mutilated, destroyed, lost or stolen Security. "Principal Property" means any building, structure or other facility, together with the land upon which it is erected and fixtures comprising a part thereof, used primarily for manufacturing or processing and located in the United States or The Netherlands, owned or leased by the Company or any Restricted Subsidiary, the net book value of which on the date as of which the determination is being made exceeds 2% of the Group Equity of the Company, other than (i) any such building, structure or other facility or portion thereof which, in the opinion of the Board of Management, is not of material importance to the total business conducted by the Company and its Subsidiaries as an entirety or (ii) any portion of any such property which, in the opinion of the Board of Management, is not of material importance to the use or operation of such property. "Redemption Date", when used with respect to any Security to be redeemed, means the date fixed for such redemption by or pursuant to this Indenture. "Redemption Price", when used with respect to any Security to be redeemed, means the price at which it is to be redeemed pursuant to this Indenture. "Regular Record Date" for the interest payable on any Interest Payment Date on the Securities of any series means the date specified for that purpose as contemplated by Section 301. -6- "Restricted Subsidiary" means any Subsidiary (i) substantially all of the physical properties of which are located, or substantially all the operations of which are conducted, within the United States or The Netherlands and (ii) which owns a Principal Property; provided, however, that the term "Restricted Subsidiary" shall not include any Subsidiary which is principally engaged in leasing or in financing installment receivables or which is principally engaged in financing the operations of the Company and its consolidated Subsidiaries. "Secretary" means the individual, or deputy of such individual, holding from time to time the office of Secretary to the Board of Management. "Securities" has the meaning stated in the first recital of this Indenture and more particularly means any Securities authenticated and delivered under this Indenture. "Securities Act" means the Securities Act of 1933 and any statute successor thereto, in each case as amended from time to time. "Security Register" and "Security Registrar" have the respective meanings specified in Section 305. "Special Record Date" for the payment of any Defaulted Interest means a date fixed by the Trustee and the Company pursuant to Section 307. "Stated Maturity", when used with respect to any Security or any installment of principal thereof or interest thereon, means the date specified in such Security as the fixed date on which the principal of such Security or such installment of principal or interest is due and payable. "Subsidiary" means a corporation (i) more than 50% of the outstanding voting stock or equity interest of which is owned, directly or indirectly, by the Company or by one or more other Subsidiaries, or by the Company and one or more other Subsidiaries or (ii) which is fully consolidated into the Company's financial statements prepared in accordance with generally accepted accounting principles. For the purposes of this definition, "voting stock" means stock which ordinarily has voting power for the election of directors, whether at all times or only so long as no senior class of stock has such voting power by reason of any contingency. "Trust Indenture Act" means the U.S. Trust Indenture Act of 1939 as in force at the date as of which this instrument was executed, except as provided in Section 905; provided, however, that in the event the Trust Indenture Act of 1939 is amended after such date, "Trust Indenture Act" means, to the extent required by any such amendment, the Trust Indenture Act of 1939 as so amended. "Trustee" means the Person named as the "Trustee" in the first paragraph of this instrument until a successor Trustee shall have become such pursuant to the applicable provisions of this Indenture, and thereafter "Trustee" shall mean or include each -7- Person who is then a Trustee hereunder, and if at any time there is more than one such Person, "Trustee" as used with respect to the Securities of any series shall mean the Trustee with respect to Securities of that series. "U.S. Government Obligation" has the meaning specified in Section 1304. SECTION 102. Compliance Certificates and Opinions. Upon any application or request by the Company to the Trustee to take any action under any provision of this Indenture, the Company shall furnish to the Trustee such certificates and opinions as may be required under the Trust Indenture Act. Each such certificate or opinion shall be given in the form of an Officers' Certificate, if to be given by the Company, or an Opinion of Counsel, if to be given by counsel, and shall comply with the requirements of the Trust Indenture Act and any other requirements set forth in this Indenture. Every certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture (except for certificates provided for in Section 1004) shall include, (1) a statement that each individual signing such certificate or opinion has read such covenant or condition and the definitions herein relating thereto; (2) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based; (3) a statement that, in the opinion of each such individual, such individual has made such examination or investigation as is necessary to enable such individual to express an informed opinion as to whether or not such covenant or condition has been complied with; and (4) a statement as to whether, in the opinion of each such individual, such condition or covenant has been complied with. SECTION 103. Form of Documents Delivered to Trustee. In any case where several matters are required to be certified by, or covered by an opinion of, any specified Person, it is not necessary that all such matters be certified by, or covered by the opinion of, only one such Person, or that they be so certified or covered by only one document, but one such Person may certify or give an opinion with respect to some matters and one or more other such Persons as to other matters, and any such Person may certify or give an opinion as to such matters in one or several documents. Any certificate or opinion of an officer of the Company may be based, insofar as it relates to legal matters, upon a certificate or opinion of, or representations by, counsel, -8- unless such officer knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to the matters upon which his certificate or opinion is based are erroneous. Any such certificate or opinion of counsel may be based, insofar as it relates to factual matters, upon a certificate or opinion of, or representations by, an officer or officers of the Company stating that the information with respect to such factual matters is in the possession of the Company, unless such counsel knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to such matters are erroneous. Where any Person is required to make, give or execute two or more applications, requests, consents, certificates, statements, opinions or other instruments under this Indenture, they may, but need not, be consolidated and form one instrument. SECTION 104. Acts of Holders; Record Dates. Any request, demand, authorization, direction, notice, consent, waiver or other action provided or permitted by this Indenture to be given, made or taken by Holders may be embo died in and evidenced by one or more instruments of substantially similar tenor signed by such Holders in person or by an agent duly appointed in writing; and, except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments are delivered to the Trustee and, where it is hereby expressly required, to the Company. Such instrument or instruments (and the action embodied therein and evidenced thereby) are herein sometimes referred to as the "Act" of the Holders signing such instrument or instruments. Proof of execution of any such instrument or of a writing appointing any such agent shall be sufficient for any purpose of this Indenture and (subject to Section 601) conclusive in favor of the Trustee and the Company, if made in the manner provided in this Section. The fact and date of the execution by any Person of any such instrument or writing may be proved by the affidavit of a witness of such execution or by a certificate of a notary public or other officer authorized by law to take acknowledgments of deeds, certifying that the individual signing such instrument or writing acknowledged to him the execution thereof. Where such execution is by a signer acting in a capacity other than his individual capacity, such certificate or affidavit shall also constitute sufficient proof of his authority. The fact and date of the execution of any such instrument or writing, or the authority of the Person executing the same, may also be proved in any other manner which the Trustee deems sufficient. The ownership of Securities shall be proved by the Security Register. Any request, demand, authorization, direction, notice, consent, waiver or other Act of the Holder of any Security shall bind every future Holder of the same Security and the Holder of every Security issued upon the registration of transfer thereof or in exchange therefor or in lieu thereof in respect of anything done, omitted or suffered to be done by the Trustee or the Company in reliance thereon, whether or not notation of such action is made upon such Security. -9- The Company may set any day as a record date for the purpose of determining the Holders of Outstanding Securities of any series entitled to give, make or take any request, demand, authorization, direction, notice, consent, waiver or other action provided or permitted by this Indenture to be given, made or taken by Holders of Securities of such series, provided that the Company may not set a record date for, and the provisions of this paragraph shall not apply with respect to, the giving or making of any notice, declaration, request or direction referred to in the next paragraph. If any record date is set pursuant to this paragraph, the Holders of Outstanding Securities of the relevant series on such record date, and no other Holders, shall be entitled to take the relevant action, whether or not such Holders remain Holders after such record date; provided that no such action shall be effective hereunder unless taken on or prior to the applicable Expiration Date by Holders of the requisite principal amount of Outstanding Securities of such series on such record date. Nothing in this paragraph shall be construed to prevent the Company from setting a new record date for any action for which a record date has previously been set pursuant to this paragraph (whereupon the record date previously set shall automatically and with no action by any Person be cancelled and of no effect), and nothing in this paragraph shall be construed to render ineffective any action taken by Holders of the requisite principal amount of Outstanding Securities of the relevant series on the date such action is taken. Promptly after any record date is set pursuant to this paragraph, the Company, at its own expense, shall cause notice of such record date, the proposed action by Holders and the applicable Expiration Date to be given to the Trustee in writing and to each Holder of Securities of the relevant series in the manner set forth in Section 106. The Trustee may set any day as a record date for the purpose of determining the Holders of Outstanding Securities of any series entitled to join in the giving or making of (i) any Notice of Default, (ii) any declaration of acceleration referred to in Section 502, (iii) any request to institute proceedings referred to in Section 507(2) or (iv) any direction referred to in Section 512, in each case with respect to Securities of such series. If any record date is set pursuant to this paragraph, the Holders of Outstanding Securities of such series on such record date, and no other Holders, shall be entitled to join in such notice, declaration, request or direction, whether or not such Holders remain Holders after such record date; provided that no such action shall be effective hereunder unless taken on or prior to the applicable Expiration Date by Holders of the requisite principal amount of Outstanding Securities of such series on such record date. Nothing in this paragraph shall be construed to prevent the Trustee from setting a new record date for any action for which a record date has previously been set pursuant to this paragraph (whereupon the record date previously set shall automatically and with no action by any Person be cancelled and of no effect), and nothing in this paragraph shall be construed to render ineffective any action taken by Holders of the requisite principal amount of Outstanding Securities of the relevant series on the date such action is taken. Promptly after any record date is set pursuant to this paragraph, the Trustee, at the Company's expense, shall cause notice of such record date, the proposed action by Holders and the applicable Expiration Date to be given to the Company in writing and to each Holder of Securities of the relevant series in the manner set forth in Section 106. -10- With respect to any record date set pursuant to this Section, the party hereto which sets such record dates may designate any day as the "Expiration Date" and from time to time may change the Expiration Date to any earlier or later day; provided that no such change shall be effective unless notice of the proposed new Expiration Date is given to the other parties hereto in writing, and to each Holder of Securities of the relevant series in the manner set forth in Section 106, on or prior to the existing Expiration Date. If an Expiration Date is not designated with respect to any record date set pursuant to this Section, the party hereto which set such record date shall be deemed to have initially designated the 180th day after such record date as the Expiration Date with respect thereto, subject to its right to change the Expiration Date as provided in this paragraph. Without limiting the foregoing, a Holder entitled hereunder to take any action hereunder with regard to any particular Security may do so with regard to all or any part of the principal amount of such Security or by one or more duly appointed agents each of which may do so pursuant to such appointment with regard to all or any part of such principal amount. SECTION 105. Notices, Etc., to Trustee and Company. Any request, demand, authorization, direction, notice, consent, waiver or Act of Holders or other document provided or permitted by this Indenture to be made upon, given or furnished to, or filed with, (1) the Trustee by any Holder or by the Company shall be sufficient for every purpose hereunder if made, given, furnished or filed or mailed first-class postage prepaid in writing to or with the Trustee at its Corporate Trust Office, Attention: Corporate Trust Administration, or (2) the Company by the Trustee or by any Holder shall be sufficient for every purpose hereunder (unless otherwise herein expressly provided) if in writing and mailed international air mail postage prepaid and addressed to its principal office specified in the first paragraph of this instrument to the attention of its Securities Department, or at such other registered address previously furnished in writing to the Trustee by the Company. SECTION 106. Notice to Holders; Waiver. Where this Indenture provides for notice to Holders of any event, such notice shall be sufficiently given (unless otherwise herein expressly provided) if in writing and mailed, first-class postage prepaid, to each Holder affected by such event, at his address as it appears in the Security Register, not later than the latest date (if any), and not earlier than the earliest date (if any), prescribed for the giving of such notice. In any case where notice to Holders is given by mail, neither the failure to mail such notice, nor -11- any defect in any notice so mailed, to any particular Holder shall affect the sufficiency of such notice with respect to other Holders. Where this Indenture provides for notice in any manner, such notice may be waived in writing by the Person entitled to receive such notice, either before or after the event, and such waiver shall be the equivalent of such notice. Waivers of notice by Holders shall be filed with the Trustee, but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such waiver. In case by reason of the suspension of regular mail service or by reason of any other cause it shall be impracticable to give such notice by mail, then such notification as shall be made with the approval of the Trustee shall constitute a sufficient notification for every pur pose hereunder. SECTION 107. Language of Notices, Etc. Any request, demand, authorization, direction, notice, consent or waiver required or permitted under this Indenture shall be in the English language, except that any published notice may be in an official language of the country of publication. SECTION 108. Conflict with Trust Indenture Act. If any provision hereof limits, qualifies or conflicts with a provision of the Trust Indenture Act which is required under such Act to be a part of and govern this Indenture, the latter provision shall control. If any provision of this Indenture modifies or excludes any provision of the Trust Indenture Act which may be so modified or excluded, the latter provision shall be deemed to apply to this Indenture as so modified or to be excluded, as the case may be. SECTION 109. Effect of Headings and Table of Contents. The Article and Section headings herein and the Table of Contents are for convenience only and shall not affect the construction hereof. SECTION 110. Successors and Assigns. All covenants and agreements in this Indenture by the Company shall bind its successors and assigns, whether so expressed or not. SECTION 111. Separability Clause. -12- In case any provision in this Indenture or in the Securities shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. SECTION 112. Benefits of Indenture. Nothing in this Indenture or in the Securities, express or implied, shall give to any Person, other than the parties hereto and their successors hereunder and the Holders, any benefit or any legal or equitable right, remedy or claim under this Indenture. SECTION 113. Governing Law. This Indenture and the Securities shall be governed by and construed in accordance with the law of the State of New York, except that the authorization and execution by the Company of the Indenture or the Securities shall be governed by the laws of The Netherlands. SECTION 114. Saturdays, Sundays and Legal Holidays. In any case where any Interest Payment Date, Redemption Date or Stated Maturity of any Security shall not be a Business Day at any Place of Payment, then (notwithstanding any other provision of this Indenture or of the Securities (other than a provision of any Security which specifically states that such provision shall apply in lieu of this Section)) payment of interest or principal (and premium, if any) need not be made at such Place of Payment on such date, but may be made on the next succeeding Business Day at such Place of Payment with the same force and effect as if made on the Interest Payment Date or Redemption Date, or at the Stated Maturity; provided that no interest shall accrue for the period from and after such Interest Payment Date, Redemption Date or Stated Maturity, except as provided in Section 501(2). SECTION 115. Appointment of Agent for Service. By the execution and delivery of this Indenture, the Company hereby appoints CT Corporation System as its agent upon which process may be served in any legal action or proceeding which may be instituted in any Federal or State court in the Borough of Manhattan, the City of New York, arising out of or relating to the Securities or this Indenture, but for that purpose only. Service of process upon such agent at the office of such agent at 1633 Broadway, New York, New York 10019, and written notice of said service to the Company by the Person serving the same addressed as provided by Section 105, shall be deemed in every respect effective service of process upon the Company in any such legal action or proceeding. The Company hereby submits to the jurisdiction of any such court or any competent court in The Netherlands in which any -13- such legal action or proceeding is so instituted. Such appointment shall be irrevocable so long as the Holders of Securities shall have any rights pursuant to the terms thereof or of this Indenture until the appointment of a successor by the Company with the consent of the Trustee and such successor's acceptance of such appointment. The Company further agrees to take any and all action, including the execution and filing of any and all such documents and instruments, as may be necessary to continue such designation and appointment of such agent or successor. -14- ARTICLE TWO SECURITY FORMS SECTION 201. Forms Generally. The Securities of each series shall be in substantially the form set forth in this Article, or in such other form as shall be established by or pursuant to a Board Resolution or in one or more indentures supplemental hereto, in each case with such appropriate insertions, omissions, substitutions and other variations as are required or permitted by this Indenture, and may have such letters, numbers or other marks of identification and such legends or endorsements placed thereon as may be required to comply with the rules of any securities exchange or Depositary therefor or as may, consistently herewith, be determined by the officers executing such Securities, as evidenced by their execution thereof. If the form of Securities of any series is established by action taken pursuant to a Board Resolution, a copy of an appropriate record of such action shall be certified by the Secretary or Deputy Secretary of the Company and delivered to the Trustee at or prior to the delivery of the Company Order contemplated by Section 303 for the authentication and delivery of such Securities. The definitive Securities shall be printed, lithographed or engraved on steel engraved borders or may be produced in any other manner, all as determined by the officers executing such Securities, as evidenced by their execution of such Securities. SECTION 202. Form of Face of Security. [Insert any legend required by the Internal Revenue Code and the regulations thereunder.] PHILIPS ELECTRONICS N.V. [TITLE OF SECURITY] No. ......... $ ........ Philips Electronics N.V., a corporation duly organized and existing under the laws of The Netherlands (herein called the "Company", which term includes any successor Person under the Indenture hereinafter referred to), having its corporate seat and principal office in Eindhoven, The Netherlands, for value received, hereby promises to pay to ................................................., or registered assigns, the principal sum of ...................................... Dollars on .......................................................... [if the Security is to bear interest prior to Maturity, insert-- , and to pay interest thereon from ............... or from the most recent Interest Payment Date to which interest has been paid or duly provided for, semi-annually on ............ and .............. in each year, commencing ........., at -15- the rate of ....% per annum, until the principal hereof is paid or made available for payment [if applicable, insert -- , provided that any principal and premium, and any such installment of interest, which is overdue shall bear interest at the rate of ...% per annum (to the extent that the payment of such interest shall be legally enforceable), from the dates such amounts are due until they are paid or made available for payment, and such interest shall be payable on demand]. The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date will, as provided in such Indenture, be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest, which shall be the ....... or ....... (whether or not a Business Day), as the case may be, next preceding such Interest Payment Date. Any such interest not so punctually paid or duly provided for will forthwith cease to be payable to the Holder on such Regular Record Date and may either be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on a Special Record Date for the payment of such Defaulted Interest to be fixed by the Trustee, notice whereof shall be given to Holders of Securities of this series not less than 10 days prior to such Special Record Date, or be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Securities of this series may be listed, and upon such notice as may be required by such exchange, all as more fully provided in said Indenture]. [If the Security is not to bear interest prior to Maturity, insert -- The principal of this Security shall not bear interest except in the case of a default in payment of principal upon acceleration, upon redemption or at Stated Maturity and in such case the overdue principal and any overdue premium shall bear interest at the rate of ....% per annum (to the extent that the payment of such interest shall be legally enforceable), from the dates such amounts are due until they are paid or made available for payment. Interest on any overdue principal or premium shall be payable on demand. Any such interest on overdue principal or premium which is not paid on demand shall bear interest at the rate of ......% per annum (to the extent that the payment of such interest on interest shall be legally enforceable), from the date of such demand until the amount so demanded is paid or made available for payment. Interest on any overdue interest shall be payable on demand.] Payment of the principal of (and premium, if any) and [if applicable, insert -- any such] interest on this Security will be made at the office or agency of the Company maintained for that purpose in ............, in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts [if applicable, insert -- ; provided, however, that at the option of the Company payment of interest may be made by check mailed to the address of the Person entitled thereto as such address shall appear in the Security Register]. Reference is hereby made to the further provisions of this Security set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place. -16- Unless the certificate of authentication hereon has been executed by the Trustee referred to on the reverse hereof, directly or through an Authenticating Agent, by manual signature of an authorized signatory, this Security shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose. IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed Dated: Philips Electronics N.V. By ............................ Name Title By ............................ Name Title SECTION 203. Form of Reverse of Security. This Security is one of a duly authorized issue of securities of the Company (herein called the "Securities"), issued and to be issued in one or more series under an Indenture, dated as of August 1, 1993 (herein called the "Indenture", which term shall have the meaning assigned to it in such instrument), between the Company and Morgan Guaranty Trust Company of New York, as Trustee thereunder (herein called the "Trustee", which term includes any successor trustee under the Indenture), and reference is hereby made to the Indenture and all indentures supplemental thereto for a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Company and the Trustee and the Holders of the Securities and of the terms upon which the Securities are, and are to be, authenticated and delivered. This Security is one of the series designated on the face hereof [if applicable, insert-- , limited in aggregate principal amount to $...........]. [If applicable, insert-- The Securities of this series are subject to redemption upon not less than 30 days' notice by mail, [if applicable, insert-- (1) on ........... in any year commencing with the year ...... and ending with the year ...... through operation of the sinking fund for this series at a Redemption Price equal to 100% of the principal amount, and (2)] at any time [if applicable, insert-- on or after .........., ..], as a whole or in part, at the election of the Company, at the following Redemption Prices (expressed as percentages of the principal amount): If redeemed [if applicable, insert-- on or -17- before ..............., ...%, and if redeemed] during the 12-month period beginning ............. of the years indicated, Redemption Redemption Year Price Year Price and thereafter at a Redemption Price equal to .....% of the principal amount, together in the case of any such redemption [if applicable, insert -- (whether through operation of the sinking fund or otherwise)] with accrued interest to the Redemption Date, but interest installments whose Stated Maturity is on or prior to such Redemption Date will be payable to the Holders of such Securities, or one or more Predecessor Securities, of record at the close of business on the relevant Record Dates referred to on the face hereof, all as provided in the Indenture.] [If applicable, insert-- The Securities of this series are subject to redemption upon not less than 30 nor more than 60 days' notice by mail, (1) on .............. in any year commencing with the year .... and ending with the year ...... through operation of the sinking fund for this series at the Redemption Prices for redemption through operation of the sinking fund (expressed as percentages of the principal amount) set forth in the table below, and (2) at any time [if applicable, insert-- on or after ............], as a whole or in part, at the election of the Company, at the Redemption Prices for redemption otherwise than through operation of the sinking fund (expressed as percentages of the principal amount) set forth in the table below: If redeemed during the 12-month period beginning ............ of the years indicated, Redemption Price For Redemption Redemption Price For Through Operation Redemption Otherwise of the Than Through Operation Year Sinking Fund of the Sinking Fund -18- and thereafter at a Redemption Price equal to .....% of the principal amount, together in the case of any such redemption (whether through operation of the sinking fund or otherwise) with accrued interest to the Redemption Date, but interest installments whose Stated Maturity is on or prior to such Redemption Date will be payable to the Holders of such Securities, or one or more Predecessor Securities, of record at the close of business on the relevant Record Dates referred to on the face hereof, all as provided in the Indenture.] [If applicable, insert -- Notwithstanding the foregoing, the Company may not, prior to ............., redeem any Securities of this series as contemplated by [if applicable, insert -- Clause (2) of] the preceding paragraph as a part of, or in anticipation of, any refunding operation by the application, directly or indirectly, of moneys borrowed having an interest cost to the Company (calculated in accordance with generally accepted financial practice) of less than .....% per annum.] [If applicable, insert -- The sinking fund for this series provides for the redemption on ............ in each year beginning with the year ....... and ending with the year ...... of [if applicable, insert -- not less than $.......... ("mandatory sinking fund") and not more than] $......... aggregate principal amount of Securities of this series. Securities of this series acquired or redeemed by the Company otherwise than through [if applicable, insert -- mandatory] sinking fund payments may be credited against subsequent [if applicable, insert -- mandatory] sinking fund payments otherwise required to be made [if applicable, insert -- , in the inverse order in which they become due].] The Securities of each Series may be redeemed at the option of the Company, in whole but not in part, upon not less than 30 nor more than 60 days' notice at any time (except in the case of Securities that have a variable rate of interest, which may be redeemed on any Interest Payment Date) at the Redemption Price equal to the principal amount thereof plus accrued interest to the date fixed for redemption [if the Security is an Original Issue Discount Security, insert formula for determining amount], if, as a result of any change in or amendment to the laws or any regulations or rulings promulgated thereunder of The Netherlands (or of any political subdivision or taxing authority thereof or therein) or any change in the official application or interpretation of such laws, regulations or rulings, or any change in the official application or interpretation of, or any execution of or amendment to, any treaty or treaties affecting taxation to which The Netherlands (or such political subdivision or taxing authority) is a party, which change, execution or amendment becomes effective on or after _________________, the Company is or would be required on the next succeeding Interest Payment Date to pay additional amounts with respect to the Securities as set forth below with respect to the Securities and such payments cannot be avoided by the use of any reasonable measures available to the Company. [If the Security is subject to redemption of any kind, insert -- In the event of redemption of this Security in part only, a new Security or Securities of this series and of like tenor for the unredeemed portion hereof will be issued in the name of the Holder hereof upon the cancellation hereof.] -19- [If applicable, insert -- The Indenture contains provisions for defeasance at any time of [the entire indebtedness of this Security] [or] [certain restrictive covenants and Events of Default with respect to this Security] [,in each case] upon compliance with certain conditions set forth in the Indenture.] [If the Security is not an Original Issue Discount Security, insert -- If an Event of Default with respect to Securities of this series shall occur and be continuing, the principal of the Securities of this series may be declared due and payable in the manner and with the effect provided in the Indenture.] [If the Security is an Original Issue Discount Security, insert -- If an Event of Default with respect to Securities of this series shall occur and be continuing, an amount of principal of the Securities of this series may be declared due and payable in the manner and with the effect provided in the Indenture. Such amount shall be equal to -- insert formula for determining the amount. Upon payment (i) of the amount of principal so declared due and payable and (ii) of interest on any overdue principal, premium and interest (in each case to the extent that the payment of such interest shall be legally enforceable), all of the Company's obligations in respect of the payment of the principal of and premium and interest, if any, on the Securities of this series shall terminate.] [If applicable insert -- If any deduction or withholding for any present or future taxes, assessments or other governmental charges of The Netherlands (or any political subdivision or taxing authority thereof or therein) shall at any time be required by The Netherlands (or any such political subdivision or taxing authority) in respect of any amounts to be paid by the Company under the Securities of a series, the Company will pay to the Holder of this Security such additional amounts of interest as may be necessary in order that the net amounts paid to the Holder of this Security who, with respect to any such tax, assessment, or other governmental charge, is not resident in The Netherlands, after such deduction or withholding, shall be not less than the amounts specified in such Security to which such Holder is entitled; provided, however, that the Company shall not be required to make any payment of additional amounts to a Holder for or on account of: (a) any tax, assessment or other governmental charge which would not have been imposed but for (i) the existence of any present or former connection between such Holder (or between a fiduciary, settlor, beneficiary, member or shareholder of, or possessor of a power over, such Holder, if such Holder is an estate, trust, partnership or corporation) and The Netherlands or any political subdivision or territory or possession thereof or area subject to its jurisdiction, including, without limitation, such Holder (or such fiduciary, settlor, beneficiary, member, shareholder or possessor) being or having been a domiciliary, national or resident thereof or being or having been present or engaged in trade or business therein or having or having had a permanent establishment therein or having directly or indirectly a substantial interest in the share capital of the Company or otherwise having or having had some connection with The Netherlands or such political subdivision, territory or possession other than the holding or ownership of a Security or the collection of principal of and interest, if any, on, or the enforcement of, a Security or (ii) the presentation of a -20- Security (where presentation is required) for payment on a date more than 30 days after the date on which such payment became due and payable or the date on which payment thereof is duly provided for, whichever occurs later; (b) any estate, inheritance, gift, sale, transfer, personal property or similar tax, assessment or other governmental charge; (c) any tax, assessment, or other governmental charge which is payable otherwise than by withholding from payments of (or in respect of), premium, if any, or interest on, the Securities; (d) any tax, assessment or other governmental charge that is imposed or withheld by reason of the failure to comply by the Holder or the beneficial owner of a Security with a request of the Company addressed to the Holder (i) to provide information concerning the nationality, residence, identity or connection with The Netherlands or any political subdivision thereof of the Holder or such beneficial owner or (ii) to make any declaration or other similar claim or satisfy any information or reporting requirement, which, in the case of (i) or (ii), is required or imposed by a statute, treaty, regulation or administrative practice of the taxing jurisdiction as a precondition to exemption from all or part of such tax, assessment or other governmental charge, or (e) any combination of items (a), (b), (c) and (d); nor shall additional amounts of interest be paid with respect to any payment of the principal of, premium, if any, or any interest on this Security to any Holder who is a fiduciary or partnership or other than the sole beneficial owner of such payment to the extent such payment would be required by the laws of The Netherlands (or any political subdivision or taxing authority thereof or therein) to be included in the income for tax purposes of a beneficiary or settlor with respect to such fiduciary or a member of such partnership or a beneficial owner who would not have been entitled to such additional amounts of interest had it been the Holder of this Security.] The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Company and the rights of the Holders of the Securities of each series to be affected under the Indenture at any time by the Company and the Trustee with the consent of the Holders of a majority in principal amount of the Securities at the time Outstanding of each series to be affected. The Indenture also contains provisions permitting the Holders of specified percentages in principal amount of the Securities of each series at the time Outstanding, on behalf of the Holders of all Securities of such series, to waive compliance by the Company with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. Any such consent or waiver by the Holder of this Security shall be conclusive and binding upon such Holder and upon all future Holders of this Security and of any Security issued upon the registration of transfer hereof or in exchange herefor or in lieu hereof, whether or not notation of such consent or waiver is made upon this Security. -21- As provided in and subject to the provisions of the Indenture, no Holder of any Security of this series will have the right to institute any proceeding with respect to the Indenture, this Security or for the appointment of a receiver or trustee or for any other remedy thereunder, unless such Holder shall have previously given the Trustee written notice of a continuing Event of Default with respect to the Securities of this series, the Holders of not less than 25% in principal amount of the Securities of this series at the time Outstanding shall have made written request to the Trustee to institute proceedings in respect of such Event of Default as Trustee and offered the Trustee reasonable indemnity, and the Trustee shall not have received from the Holders of a majority in principal amount of Securities of this series at the time Outstanding a direction inconsistent with such request, and shall have failed to institute any such proceeding, for 60 days after receipt of such notice, request and offer of indemnity. The foregoing shall not apply to any suit instituted by the Holder of this Security for the enforcement of any payment of principal hereof or any premium or interest hereon on or after the respective due dates expressed herein. No reference herein to the Indenture and no provision of this Security or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of and any premium and interest on this Security at the times, place and rate, and in the coin or currency, herein prescribed. As provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Security is registrable in the Security Register, upon surrender of this Security for registration of transfer at the office or agency of the Company in any place where the principal of and any premium and interest on this Security are payable, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company and the Security Registrar duly executed by, the Holder hereof or his attorney duly authorized in writing, and thereupon one or more new Securities of this series and of like tenor, of authorized denominations and for the same aggregate principal amount, will be issued to the designated transferee or transferees. The Securities of this series are issuable only in registered form without coupons in denominations of $....... and any integral multiple thereof. As provided in the Indenture and subject to certain limitations therein set forth, Securities of this series are exchangeable for a like aggregate principal amount of Securities of this series and of like tenor of a different authorized denomination, as requested by the Holder surrendering the same. No service charge shall be made for any such registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith. Prior to due presentment of this Security for registration of transfer or exchange, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name this Security is registered as the owner hereof for all purposes, -22- whether or not this Security be overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the contrary. All terms used in this Security which are defined in the Indenture shall have the meanings assigned to them in the Indenture. SECTION 204. Form of Legend for Global Securities. Unless otherwise specified as contemplated by Section 301 for the Securities evidenced thereby, every Global Security authenticated and delivered hereunder shall bear a legend in substantially the following form: THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE THEREOF. THIS SECURITY MAY NOT BE EXCHANGED IN WHOLE OR IN PART FOR A SECURITY REGISTERED, AND NO TRANSFER OF THIS SECURITY IN WHOLE OR IN PART MAY BE REGISTERED, IN THE NAME OF ANY PERSON OTHER THAN SUCH DEPOSITARY OR A NOMINEE THEREOF, EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE. SECTION 205. Form of Trustee's Certificate of Authentication. The Trustee's certificates of authentication shall be in substantially the following form: This is one of the Securities of the series designated therein referred to in the within- mentioned Indenture. Morgan Guaranty Trust Company of New York, As Trustee By....................... Authorized Officer -23- ARTICLE THREE THE SECURITIES SECTION 301. Amount Unlimited; Issuable in Series. The aggregate principal amount of Securities which may be authenticated and delivered under this Indenture is unlimited. The Securities may be issued in one or more series. There shall be established in or pursuant to a Board Resolution of the Company and, subject to Section 303, set forth, or determined in the manner provided, in an Officers' Certificate, or established in one or more indentures supplemental hereto, prior to the issuance of Securities of any series, (1) the title of the Securities of the series (which shall distinguish the Securities of the series from Securities of any other series); (2) any limit upon the aggregate principal amount of the Securities of the series which may be authenticated and delivered under this Indenture (except for Securities authenticated and delivered upon registration of transfer of, or in exchange for, or in lieu of, other Securities of the series pursuant to Section 304, 305, 306, 906 or 1107 and except for any Securities which, pursuant to Section 303, are deemed never to have been authenticated and delivered hereunder); (3) the Person to whom any interest on a Security of the series shall be payable, if other than the Person in whose name that Security (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest; (4) the date or dates on which the principal of any Securities of the series is payable; (5) the rate or rates at which any Securities of the series shall bear interest, if any, the date or dates from which any such interest shall accrue, the Interest Payment Dates on which any such interest shall be payable and the Regular Record Date for any such interest payable on any Interest Payment Date; (6) the place or places where, subject to the provisions of Section 1002, the principal of and any premium and interest on any Securities of the series shall be payable, Securities of the series may be surrendered for exchange and notices and demands to or upon the Company in respect of any Securities of the series and this Indenture may be served; (7) the period or periods within which, the price or prices at which and the terms and conditions upon which any Securities of the series may be redeemed, in whole or -24- in part, at the option of the Company (including the period referred to in Section 1108) and, if other than by a Board Resolution, the manner in which any election by the Company to redeem the Securities shall be evidenced; (8) other than with respect to any redemption of Securities pursuant to Section 1108, the obligation, if any, of the Company to redeem or purchase any Securities of the series pursuant to any sinking fund or analogous provisions or at the option of the Holder thereof and the period or periods within which, the price or prices at which and the terms and conditions upon which any Securities of the series shall be redeemed or purchased, in whole or in part, pursuant to such obligation; (9) if other than denominations of $1,000 and any integral multiple thereof, the denominations in which any Securities of the series shall be issuable; (10) if the amount of principal of or any premium or interest on any Securities of the series may be determined with reference to an index or pursuant to a formula, the manner in which such amounts shall be determined; (11) if other than the currency of the United States of America, the currency, currencies or currency units in which the principal of or any premium or interest on any Securities of the series shall be payable and the manner of determining the equivalent thereof in the currency of the United States of America for any purpose, including for purposes of the definition of "Outstanding" in Section 101; (12) if the principal of or any premium or interest on any Securities of the series is to be payable, at the election of the Company or a Holder thereof, in one or more currencies or currency units other than that or those in which such Securities are stated to be payable, the currency, currencies or currency units in which the principal of or any premium or interest on such Securities as to which such election is made shall be payable, the periods within which and the terms and conditions upon which such election is to be made and the amount so payable (or the manner in which such amount shall be determined); (13) if other than the entire principal amount thereof, the portion of the principal amount of any Securities of the series which shall be payable upon declaration of acceleration of the Maturity thereof pursuant to Section 502; (14) if the principal amount payable at the Stated Maturity of any Securities of the series will not be determinable as of any one or more dates prior to the Stated Maturity, the amount which shall be deemed to be the principal amount of such Securities as of any such date for any purpose thereunder or hereunder, including the principal amount thereof which shall be due and payable upon any Maturity other than the Stated Maturity or which shall be deemed to be Outstanding as of any date prior to the Stated Maturity (or, in any such case, the manner in which such amount deemed to be the principal amount shall be determined); -25- (15) if applicable, that the Securities of the series, in whole or any specified part, shall be defeasible pursuant to Section 1302 or Section 1303 or both such Sections and, if other than by a Board Resolution, the manner in which any election by the Company to defease such Securities shall be evidenced; (16) if applicable, that any Securities of the series shall be issuable in whole or in part in the form of one or more Global Securities and, in such case, the respective Depositaries for such Global Securities, the form of any legend or legends which shall be borne by any such Global Security in addition to or in lieu of that set forth in Section 204 and any circumstances in addition to or in lieu of those set forth in Clause (2) of the last paragraph of Section 305 in which any such Global Security may be exchanged in whole or in part for Securities registered, and any transfer of such Global Security in whole or in part may be registered, in the name or names of Persons other than the Depositary for such Global Security or a nominee thereof; (17) any addition to or change in the Events of Default which applies to any Securities of the series and any change in the right of the Trustee or the requisite Holders of such Securities to declare the principal amount thereof due and payable pursuant to Section 502; (18) any addition to or change in the covenants set forth in Article Ten which applies to Securities of the series; (19) if additional amounts, pursuant to Section 1004, will be payable by the Company; and (20) any other terms of the series (which terms shall not be inconsistent with the provisions of this Indenture, except as permitted by Section 901(5)). All Securities of any one series shall be substantially identical except as to denomination and except as may otherwise be provided in or pursuant to the Board Resolution referred to above and (subject to Section 303) set forth, or determined in the manner provided, in the Officers' Certificate referred to above or in any such indenture supplemental hereto. If any of the terms of the Securities of any series are established by action taken pursuant to a Board Resolution of the Company, a copy of an appropriate record of such action shall be certified by the Secretary, each delivered to the Trustee at or prior to the delivery of the Officers' Certificate setting forth the terms of the series. -26- SECTION 302. Denominations. The Securities of each series shall be issuable only in registered form without coupons and only in such denominations as shall be specified as contemplated by Section 301. In the absence of any such specified denomination with respect to the Securities of any series, the Securities of such series shall be issuable in denominations of $1,000 and any integral multiple thereof. SECTION 303. Execution, Authentication, Delivery and Dating. The Securities shall be executed on behalf of the Company by any two members of the Board of Management. The signature of any of such persons on the Securities may be manual or facsimile. Securities bearing the manual or facsimile signatures of individuals who were at any time members of the Board of Management shall bind the Company notwithstanding that such individuals or any of them have ceased to hold such position prior to the authentication and delivery of such Securities or did not hold such offices at the date of such Securities. At any time and from time to time after the execution and delivery of this Indenture, the Company may deliver Securities of any series executed by the Company to the Trustee for authentication, together with a Company Order for the authentication and delivery of such Securities and the Trustee in accordance with the Company Order shall authenticate and deliver such Securities. If the form or terms of the Securities of the series have been established by or pursuant to one or more Board Resolutions as permitted by Sections 201 and 301, in authenticating such Securities, and accepting the additional responsibilities under this Indenture in relation to such Securities, the Trustee shall be entitled to receive, and (subject to Section 601) shall be fully protected in relying upon, an Opinion of Counsel stating, (1) if the forms of such Securities have been established by or pursuant to a Board Resolution as permitted by Section 201, that such forms have been established in conformity with the provisions of this Indenture; (2) if the terms of such Securities have been established by or pursuant to a Board Resolution as permitted by Section 301, that such terms have been established in conformity with the provisions of this Indenture; and (3) that such Securities, when authenticated and delivered by the Trustee and issued by the Company in the manner and subject to any conditions specified in such Opinion of Counsel, will constitute valid and legally binding obligations of the Company enforceable in accordance with their terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors' rights, to general equity principles and to such other matters as counsel may state therein. -27- If such form or terms have been so established, the Trustee shall not be required to authenticate such Securities if the issue of such Securities pursuant to this Indenture will affect the Trustee's own rights, duties or immunities under the Securities and this Indenture or otherwise in a manner which is not reasonably acceptable to the Trustee. Notwithstanding the provisions of Section 301 and of the preceding paragraph, if all Securities of a series are not to be originally issued at one time, it shall not be necessary to deliver the Officers' Certificate otherwise required pursuant to Section 301 or the Company Order and Opinion of Counsel otherwise required pursuant to such preceding paragraph at or prior to the authentication of each Security of such series if such documents are delivered at or prior to the authentication upon original issuance of the first Security of such series to be issued, and reasonably contemplate the issuance of all Securities of such series. Each Security shall be dated the date of its authentication. No Security shall be entitled to any benefit under this Indenture or be valid or obligatory for any purpose unless there appears on such Security a certificate of authentication substantially in the form provided for herein executed by the Trustee by manual or facsimile signature, and such certificate upon any Security shall be conclusive evidence, and the only evidence, that such Security has been duly authenticated and delivered hereunder. Notwithstanding the foregoing, if any Security shall have been authenticated and delivered hereunder but never issued and sold by the Company, and the Company shall deliver such Security to the Trustee for cancellation as provided in Section 309, for all purposes of this Indenture such Security shall be deemed never to have been authenticated and delivered hereunder and shall never be entitled to the benefits of this Indenture. SECTION 304. Temporary Securities. Pending the preparation of definitive Securities of any series, the Company may execute, and upon compliance with Section 303 the Trustee shall authenticate and deliver, temporary Securities which are printed, lithographed, typewritten, mimeographed or otherwise produced, in any authorized denomination, substantially of the tenor of the definitive Securities in lieu of which they are issued and with such appropriate insertions, omissions, substitutions and other variations as the officers executing such Securities may determine, as evidenced by their execution of such Securities. If temporary Securities of any series are issued, the Company will cause definitive Securities of that series to be prepared without unreasonable delay. After the preparation of definitive Securities of such series, the temporary Securities of such series shall be exchangeable for definitive Securities of such series upon surrender of the temporary Securities of such series at the office or agency of the Company in a Place of Payment for that series, without charge to the Holder. Upon surrender for cancellation -28- of any one or more temporary Securities of any series, the Company shall execute and the Trustee shall authenticate and deliver in exchange therefor one or more definitive Securities of the same series, of any authorized denominations and of like tenor and aggregate principal amount. Until so exchanged, the temporary Securities of any series shall in all respects be entitled to the same benefits under this Indenture as definitive Securities of such series and tenor. SECTION 305. Registration, Registration of Transfer and Exchange. The Company shall cause to be kept at the Corporate Trust Office of the Trustee a register (the register maintained in such office and in any other office or agency of the Company in a Place of Payment being herein sometimes collectively referred to as the "Security Register") in which, subject to such reasonable regulations as it may prescribe, the Company shall provide for the registration of Securities and of transfers of Securities. The Trustee is hereby appointed "Security Registrar" for the purpose of registering Securities and transfers of Securities as herein provided. Upon surrender for registration of transfer of any Security of a series at the office or agency of the Company in a Place of Payment for that series, the Company shall execute, and the Trustee shall authenticate and deliver, in the name of the designated transferee or transferees, one or more new Securities of the same series, of any authorized denominations and of like tenor and aggregate principal amount. At the option of the Holder, Securities of any series may be exchanged for other Securities of the same series, of any authorized denominations and of like tenor and aggregate principal amount, upon surrender of the Securities to be exchanged at such office or agency. Whenever any Securities are so surrendered for exchange, the Company shall execute, and the Trustee shall authenticate and deliver, the Securities which the Holder making the exchange is entitled to receive. All Securities issued upon any registration of transfer or exchange of Securities shall be the valid obligations of the Company, evidencing the same debt, and entitled to the same benefits under this Indenture, as the Securities surrendered upon such registration of transfer or exchange. Every Security presented or surrendered for registration of transfer or for exchange shall (if so required by the Company or the Trustee) be duly endorsed, or be accompanied by a written instrument of transfer in form satisfactory to the Company and the Security Registrar duly executed, by the Holder thereof or his attorney duly authorized in writing. No service charge shall be made for any registration of transfer or exchange of Securities, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any registration of transfer or exchange of Securities, other than exchanges pursuant to Section 304, 906 or 1107 not involving any transfer. -29- If the Securities of any series (or of any series and specified tenor) are to be redeemed in part, the Company shall not be required (A) to issue, register the transfer of or exchange any Securities of that series (or of that series and specified tenor, as the case may be) during a period beginning at the opening of business 15 days before the day of the mailing of a notice of redemption of any such Securities selected for redemption under Section 1103 and ending at the close of business on the day of such mailing, or (B) to register the transfer of or exchange any Security so selected for redemption in whole or in part, except the unredeemed portion of any Security being redeemed in part. The provisions of Clauses (1), (2), (3) and (4) below shall apply only to Global Securities: (1) Each Global Security authenticated under this Indenture shall be registered in the name of the Depositary designated for such Global Security or a nominee thereof and delivered to such Depositary or a nominee thereof or custodian therefor, and each such Global Security shall constitute a single Security for all purposes of this Indenture. (2) Notwithstanding any other provision in this Indenture, no Global Security may be exchanged in whole or in part for Securities registered, and no transfer of a Global Security in whole or in part may be registered, in the name of any Person other than the Depositary for such Global Security or a nominee thereof unless (A) such Depositary (i) has notified the Company that it is unwilling or unable to continue as Depositary for such Global Security or (ii) has ceased to be a clearing agency registered under the Exchange Act, (B) there shall have occurred and be continuing an Event of Default with respect to such Global Security or (C) there shall exist such circumstances, if any, in addition to or in lieu of the foregoing as have been specified for this purpose as contemplated by Section 301. (3) Subject to Clause (2) above, any exchange of a Global Security for other Securities may be made in whole or in part, and all Securities issued in exchange for a Global Security or any portion thereof shall be registered in such names as the Depositary for such Global Security shall direct. (4) Every Security authenticated and delivered upon registration of transfer of, or in exchange for or in lieu of, a Global Security or any portion thereof, whether pursuant to this Section, Section 304, 306, 906 or 1107 or otherwise, shall be authenticated and delivered in the form of, and shall be, a Global Security, unless such Security is registered in the name of a Person other than the Depositary for such Global Security or a nominee thereof. SECTION 306. Mutilated, Destroyed, Lost and Stolen Securities. -30- If any mutilated Security is surrendered to the Trustee, the Company shall execute and the Trustee shall authenticate and deliver in exchange therefor a new Security of the same series and of like tenor and principal amount and bearing a number not contemporaneously outstanding. If there shall be delivered to the Company and the Trustee (i) evidence to their satisfaction of the destruction, loss or theft of any Security and (ii) such security or indemnity as may be required by them to save each of them and any agent of either of them harmless, then, in the absence of notice to the Company or the Trustee that such Security has been acquired by a bona fide purchaser, the Company shall execute and the Trustee shall authenticate and deliver, in lieu of any such destroyed, lost or stolen Security, a new Security of the same series and of like tenor and principal amount and bearing a number not con temporaneously outstanding. In case any such mutilated, destroyed, lost or stolen Security has become or is about to become due and payable, the Company in its discretion may, instead of issuing a new Security, pay such Security. Upon the issuance of any new Security under this Section, the Company may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Trustee) connected therewith. Every new Security of any series issued pursuant to this Section in lieu of any destroyed, lost or stolen Security shall constitute an original additional contractual obligation of the Company, whether or not the destroyed, lost or stolen Security shall be at any time enforceable by anyone, and shall be entitled to all the benefits of this Indenture equally and proportionately with any and all other Securities of that series duly issued hereunder. The provisions of this Section are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost or stolen Securities. SECTION 307. Payment of Interest; Interest Rights Preserved. Except as otherwise provided as contemplated by Section 301 with respect to any series of Securities, interest on any Security which is payable, and is punctually paid or duly provided for, on any Interest Payment Date shall be paid to the Person in whose name that Security (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest and, at the option of the Company, may be paid by check mailed to the address of the Person as it appears in the Security Register. -31- Any interest on any Security of any series which is payable, but is not punctually paid or duly provided for, on any Interest Payment Date (herein called "Defaulted Interest") shall forthwith cease to be payable to the Holder on the relevant Regular Record Date by virtue of having been such Holder, and such Defaulted Interest may be paid by the Company, at its election in each case, as provided in Clause (1) or (2) below: (1) The Company may elect to make payment of any Defaulted Interest to the Persons in whose names the Securities of such series (or their respective Predecessor Securities) are registered at the close of business on a Special Record Date for the payment of such Defaulted Interest, which shall be fixed in the following manner. The Company shall notify the Trustee in writing of the amount of Defaulted Interest proposed to be paid on each Security of such series and the date of the proposed payment, and at the same time the Company shall deposit with the Trustee an amount of money equal to the aggregate amount proposed to be paid in respect of such Defaulted Interest or shall make arrangements satisfactory to the Trustee for such deposit prior to the date of the proposed payment, such money when deposited to be held in trust for the benefit of the Persons entitled to such Defaulted Interest as in this Clause provided. Thereupon the Trustee, upon consultation with the Company, shall fix a Special Record Date for the payment of such Defaulted Interest which shall be not more than 15 days and not less than 10 days prior to the date of the proposed payment and not less than 10 days after the receipt by the Trustee of the notice of the proposed payment. The Trustee shall promptly notify the Company of such Special Record Date and, in the name and at the expense of the Company, shall cause notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor to be given to each Holder of Securities of such series in the manner set forth in Section 106, not less than 10 days prior to such Special Record Date. Notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor having been so mailed, such Defaulted Interest shall be paid to the Persons in whose names the Securities of such series (or their respective Predecessor Securities) are registered at the close of business on such Special Record Date and shall no longer be payable pursuant to the following Clause (2). (2) The Company may make payment of any Defaulted Interest on the Securities of any series in any other lawful manner not inconsistent with the requirements of any securities exchange on which such Securities may be listed, and upon such notice as may be required by such exchange, if, after notice given by the Company to the Trustee of the proposed payment pursuant to this Clause, such manner of payment shall be deemed practicable by the Trustee. Subject to the foregoing provisions of this Section and Section 305, each Security delivered under this Indenture upon registration of transfer of or in exchange for or in lieu of any other Security shall carry the rights to interest accrued and unpaid, and to accrue, which were carried by such other Security. -32- SECTION 308. Persons Deemed Owners. Prior to due presentment of a Security for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name such Security is registered as the owner of such Security for the purpose of receiving payment of principal of and any premium and (subject to Section 305 and Section 307) any interest on such Security and for all other purposes whatsoever, whether or not such Security be overdue, and neither the Company, the Trustee nor any agent of the Company or the Trustee shall be affected by notice to the contrary. SECTION 309. Cancellation. All Securities surrendered for payment, redemption, registration of transfer or exchange or for credit against any sinking fund payment shall, if surrendered to any Person other than the Trustee, be delivered to the Trustee and shall be promptly cancelled by it. The Company may at any time deliver to the Trustee for cancellation any Securities previously authenticated and delivered hereunder which the Company may have acquired in any manner whatsoever, and may deliver to the Trustee (or to any other Person for delivery to the Trustee) for cancellation any Securities previously authenticated hereunder which the Company has not issued and sold, and all Securities so delivered shall be promptly cancelled by the Trustee. No Securities shall be authenticated in lieu of or in exchange for any Securities cancelled as provided in this Section, except as expressly permitted by this Indenture. All cancelled Securities held by the Trustee shall be disposed of as directed by a Company Order, and the Trustee will deliver to the Company its certificates evidencing such destruction. SECTION 310. Computation of Interest. Except as otherwise specified as contemplated by Section 301 for Securities of any series, interest on the Securities of each series shall be computed on the basis of a 360-day year of twelve 30-day months. -33- ARTICLE FOUR SATISFACTION AND DISCHARGE SECTION 401. Satisfaction and Discharge of Indenture. This Indenture shall upon Company Request cease to be of further effect (except as to any surviving rights of registration of transfer or exchange of Securities herein expressly provided for and the obligation of the Company to pay any additional amounts as contemplated by Section 1004), and the Trustee, at the expense of the Company, shall execute proper instruments acknowledging satisfaction and discharge of this Indenture, when (1) either (A) all Securities theretofore authenticated and delivered (other than (i) Securities which have been destroyed, lost or stolen and which have been replaced or paid as provided in Section 306 and (ii) Securities for whose payment money has theretofore been deposited in trust or segregated and held in trust by the Company and thereafter repaid to the Company or discharged from such trust, as provided in the last paragraph of Section 1003) have been delivered to the Trustee for cancellation; or (B) all such Securities not theretofore delivered to the Trustee for cancellation (i) have become due and payable, or (ii) will become due and payable at their Stated Maturity within one year, or (iii) are to be called for redemption within one year under arrangements satisfactory to the Trustee for the giving of notice of redemption by the Trustee in the name, and at the expense, of the Company, and the Company, in the case of (i), (ii) or (iii) above, has deposited or caused to be deposited with the Trustee as trust funds in trust for the purpose money in an amount sufficient to pay and discharge the entire indebtedness on such Securities not theretofore delivered to the Trustee for cancellation, for principal and any premium and interest to the date of such deposit (in the case of Securities which have become due and payable) or to the Stated Maturity or Redemption Date, as the case may be; (2) the Company has paid or caused to be paid all other sums payable hereunder by the Company; and -34- (3) the Company has delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that all conditions precedent herein provided for relating to the satisfaction and discharge of this Indenture have been complied with. Notwithstanding the satisfaction and discharge of this Indenture, the obligations of the Company to the Trustee under Section 607, the obligations of the Trustee to any Authenticating Agent under Section 614 and, if money shall have been deposited with the Trustee pursuant to subclause (B) of Clause (1) of this Section, the obligations of the Trustee under Section 402 and the last paragraph of Section 1003 shall survive. SECTION 402. Application of Trust Money. Subject to the provisions of the last paragraph of Section 1003, all money deposited with the Trustee pursuant to Section 401 shall be held in trust and applied by it, in accordance with the provisions of the Securities and this Indenture, to the payment, either directly or through any Paying Agent (including the Company acting as its own Paying Agent) as the Trustee may determine, to the Persons entitled thereto, of the principal and any premium and interest for whose payment such money has been deposited with the Trustee. The Trustee shall have no obligation to pay interest on or to invest any funds held in trust under the Indenture, except as otherwise agreed with and for the benefit of the Company. -35- ARTICLE FIVE REMEDIES SECTION 501. Events of Default. "Event of Default", wherever used herein with respect to Securities of any series, means any one of the following events (whatever the reason for such Event of Default and whether it shall be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body): (1) default in the payment of any interest or additional interest upon any Security of that series when it becomes due and payable, and continuance of such default for a period of 30 days; or (2) default in the payment of the principal of or any premium on any Security of that series at its Maturity; provided however, it shall not be a default if the non-payment is due solely to administrative error (whether by the Company or a bank involved in transferring funds to the Trustee), continues for up to three Business Days and the Company pays any interest (at the rate stated in such security or, in the case of an Original Issue Discount Security, the imputed rate of interest) accrued on such principal or premium to but not including the date of payment; or (3) default in the deposit of any sinking fund payment, when and as due by the terms of a Security of that series or beyond any period of grace provided with respect thereto; or (4) any default in the performance, or breach, of any covenant or warranty of the Company in this Indenture (other than a covenant or warranty a default in whose performance or whose breach is elsewhere in this Section specifically dealt with or which has expressly been included in this Indenture solely for the benefit of series of Securities other than that series), and continuance of such default or breach for a period of 60 days after there has been given, by registered or certified international air mail, to the Company by the Trustee or to the Company and the Trustee by the Holders of at least 25% in principal amount of the Outstanding Securities of that series, a written notice specifying such default or breach and requiring it to be remedied and stating that such notice is a "Notice of Default" hereunder; or (5) an application made by the Company for its bankruptcy (the term "bankruptcy" to be interpreted for the purpose of this Section 501 as "faillissement" within the meaning of the Dutch Bankruptcy Act), or an application is made by anyone else for the bankruptcy of the Company and such application is not being contested in good faith, or the Company is declared as bankrupt by a competent court in The Netherlands or similar law, or the Company applies for (provisional) suspension of payments (the term "(provisional) suspension of payments" to be -36- interpreted for the purpose of this Section 501 as "(voorlopige) surseance van betaling" within the meaning of the Dutch Bankruptcy Act); or (6) an order is made by a competent court in The Netherlands for the liquidation or dissolution of the Company or an effective resolution is passed for liquidation or dissolution of the Company; or (7) any other Event of Default provided with respect to Securities of that series pursuant to Section 301 (17). SECTION 502. Acceleration of Maturity; Rescission and Annulment. If an Event of Default (other than an Event of Default specified in Section 501(5) or 501(6)) with respect to Securities of any series at the time Outstanding occurs and is continuing, then in every such case the Trustee or the Holders of not less than 25% in principal amount of the Outstanding Securities of that series may declare the principal amount of all the Securities of that series (or, if any Securities of that series are Original Issue Discount Securities, or the principal amount of such Outstanding Securities is not then determinable, such portion of the principal amount of such Securities or such other amount in lieu of such principal amount as may be specified by the terms thereof) to be due and payable immediately, by a notice in writing to the Company (and to the Trustee if given by Holders), and upon any such declaration such principal amount (or specified amount) shall become immediately due and payable. If an Event of Default specified in Section 501(5) or 501(6) with respect to Securities of any series at the time Outstanding occurs, the principal amount of all the Securities of that series (or, if any Securities of that series are Original Issue Discount Securities, or the principal amount of such Outstanding Securities is not then determinable, such portion of the principal amount of such Securities or such other amount in lieu of such principal amount as may be specified by the terms thereof) shall automatically, and without any declaration or other action on the part of the Trustee or any Holder, become immediately due and payable. At any time after such a declaration of acceleration with respect to Securities of any series has been made and before a judgment or decree for payment of the money due has been obtained by the Trustee as hereinafter in this Article provided, the Holders of a majority in principal amount of the Outstanding Securities of that series, by written notice to the Company and the Trustee, may rescind and annul such declaration and its consequences if (1) the Company has paid or deposited with the Trustee a sum sufficient to pay (A) all overdue interest on all Securities of that series, (B) the principal of (and premium, if any, on) any Securities of that series which have become due otherwise than by such declaration of acceleration and any interest accrued thereon at the rate or rates prescribed therefor in such Securities, -37- (C) to the extent that payment of such interest is lawful, interest upon overdue interest at the rate or rates prescribed therefor in such Securities, and (D) all sums paid or advanced by the Trustee hereunder and the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel; and (2) all Events of Default with respect to Securities of that series, other than the non-payment of the principal of Securities of that series which have become due solely by such declaration of acceleration, have been cured or waived as provided in Section 513. No such rescission shall affect any subsequent default or impair any right consequent thereon. SECTION 503. Collection of Indebtedness and Suits for Enforcement by Trustee. The Company covenants that in case of any Event of Default as described in Section 502(1) or 502(2), the Company will, upon demand of the Trustee, pay to it, for the benefit of the Holders of such Securities, the whole amount then due and payable on such Securities for principal and any premium and interest and, to the extent that payment of such interest shall be legally enforceable, interest on any overdue principal and premium and on any overdue interest, at the rate or rates prescribed therefor in such Securities, and, in addition thereto, such further amount as shall be sufficient to cover the costs and expenses of collection, including the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel. If an Event of Default with respect to Securities of any series occurs and is continuing, the Trustee may in its discretion proceed to protect and enforce its rights and the rights of the Holders of Securities of such series by such appropriate judicial proceedings as the Trustee shall deem most effectual to protect and enforce any such rights, whether for the specific enforcement of any covenant or agreement in this Indenture or in aid of the exercise of any power granted herein, or to enforce any other proper remedy. SECTION 504. Trustee May File Proofs of Claim. In case of any judicial proceeding relative to the Company or any other obligor upon the Securities, or the property of the Company or other obligor or their creditors, the Trustee shall be entitled and empowered, by intervention in such proceeding or otherwise, to take any and all actions authorized under the Trust Indenture Act in order to have claims of the Holders and the Trustee allowed in any such proceeding. In -38- particular, the Trustee shall be authorized to collect and receive any moneys or other property payable or deliverable on any such claims and to distribute the same; and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Holder to make such payments to the Trustee and, in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay to the Trustee all amounts due under Section 607. No provision of this Indenture shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment or composition affecting the Securities or the rights of any Holder thereof or to authorize the Trustee to vote in respect of the claim of any Holder in any such proceeding; provided, however, that the Trustee may, if permitted by applicable bankruptcy law, on behalf of the Holders, vote for the election of a trustee in bankruptcy or similar official and be a member of a creditors' or other similar committee. SECTION 505. Trustee May Enforce Claims Without Possession of Securities. All rights of action and claims under this Indenture or the Securities may be prosecuted and enforced by the Trustee without the possession of any of the Securities or the production thereof in any proceeding relating thereto, and any such proceeding instituted by the Trustee shall be brought in its own name as trustee of an express trust, and any recovery of judgment shall, after provision for all amounts due under Section 607 be for the ratable benefit of the Holders of the Securities in respect of which such judgment has been recovered. SECTION 506. Application of Money Collected. Any money collected by the Trustee pursuant to this Article shall be applied in the following order, at the date or dates fixed by the Trustee and, in case of the distribution of such money on account of principal or any premium or interest, upon presentation of the Securities and the notation thereon of the payment if only partially paid and upon surrender thereof if fully paid: FIRST: To the payment of all amounts due to the Trustee under Section 607; SECOND: To the payment of the amounts then due and unpaid for principal of and any premium and interest on the Securities in respect of which or for the benefit of which such money has been collected, ratably, without preference or priority of any kind, according to the amounts due and payable on such Securities for principal, any premium and interest, respectively; and -39- THIRD: To the payment of the balance, if any, to the Company or any other Person or Persons legally entitled thereto. SECTION 507. Limitation on Suits. No Holder of any Security of any series shall have any right to institute any proceeding, judicial or otherwise, with respect to this Indenture, the Securities or for the appointment of a receiver or trustee, or for any other remedy hereunder, unless (1) such Holder has previously given written notice to the Trustee of a continuing Event of Default with respect to the Securities of that series specifying such Event of Default and stating that such notice is a "Notice of Default" hereunder; and (2) the Holders of not less than 25% in principal amount of the Outstanding Securities of that series shall have made written request to the Trustee to institute proceedings in respect of such Event of Default in its own name as Trustee hereunder; and (3) such Holder or Holders have offered to the Trustee reasonable indemnity against the costs, expenses and liabilities to be incurred in compliance with such request; and (4) the Trustee for 60 days after its receipt of such notice, request and offer of indemnity has failed to institute any such proceeding; and (5) no direction inconsistent with such written request has been given to the Trustee during such 60-day period by the Holders of a majority in principal amount of the Outstanding Securities of that series; it being understood and intended that no one or more of such Holders shall have any right in any manner whatever by virtue of, or by availing of, any provision of this Indenture to affect, disturb or prejudice the rights of any other of such Holders, or to obtain or to seek to obtain priority or preference over any other of such Holders or to enforce any right under this Indenture, except in the manner herein provided and for the equal and ratable benefit of all of such Holders. SECTION 508. Unconditional Right of Holders to Receive Principal, Premium and Interest. Notwithstanding any other provision in this Indenture, the Holder of any Security shall have the right, which is absolute and unconditional, to receive payment of the principal of and any premium and (subject to Section 307) interest on such Security on the respective Stated Maturities expressed in such Security (or, in the case of redemption, on the Redemption Date) and to institute suit for the enforcement of any such payment, and such rights shall not be impaired without the consent of such Holder. -40- SECTION 509. Restoration of Rights and Remedies. If the Trustee or any Holder has instituted any proceeding to enforce any right or remedy under this Indenture and such proceeding has been discontinued or abandoned for any reason, or has been determined adversely to the Trustee or to such Holder, then and in every such case, subject to any determination in such proceeding, the Company, the Trustee and the Holders shall be restored severally and respectively to their former positions hereunder and thereafter all rights and remedies of the Trustee and the Holders shall continue as though no such proceeding had been instituted. SECTION 510. Rights and Remedies Cumulative. Except as otherwise provided with respect to the replacement or payment of mutilated, destroyed, lost or stolen Securities in the last paragraph of Section 306, no right or remedy herein conferred upon or reserved to the Trustee or to the Holders is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy. SECTION 511. Delay or Omission Not Waiver. No delay or omission of the Trustee or of any Holder of any Securities to exercise any right or remedy accruing upon any Event of Default shall impair any such right or remedy or constitute a waiver of any such Event of Default or an acquiescence therein. Every right and remedy given by this Article or by law to the Trustee or to the Holders may be exercised from time to time, and as often as may be deemed expedient, by the Trustee or by the Holders, as the case may be. SECTION 512. Control by Holders. The Holders of a majority in principal amount of the Outstanding Securities of any series shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred on the Trustee, with respect to the Securities of such series, provided that (1) such direction shall not be in conflict with any rule of law or with this Indenture, (2) the Trustee may take any other action deemed proper by the Trustee which is not inconsistent with such direction, and -41- (3) the Trustee need not follow any such direction if doing so would in its reasonable discretion either involve it in personal liability or be unduly prejudicial to Holders not joining in such direction; provided, further, that the Trustee shall have no obligation to make any determination with respect to any such conflict, personal liability or undue prejudice. SECTION 513. Waiver of Past Defaults. The Holders of not less than a majority in principal amount of the Outstanding Securities of any series may, by written notice to the Trustee, on behalf of the Holders of all the Securities of such series waive any past default hereunder with respect to such series and its consequences, except a default (1) in the payment of the principal of or any premium or interest on any Security of such series, or (2) in respect of a covenant or provision hereof which under Article Nine cannot be modified or amended without the consent of the Holder of each Outstanding Security of such series affected. Upon any such waiver, such default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured, for every purpose of this Indenture; but no such waiver shall extend to any subsequent or other default or impair any right consequent thereon. SECTION 514. Undertaking for Costs. In any suit for the enforcement of any right or remedy under this Indenture, or in any suit against the Trustee for any action taken, suffered or omitted by it as Trustee, a court may require any party litigant in such suit to file an undertaking to pay the costs of such suit, and may assess costs against any such party litigant, in the manner and to the extent provided in the Trust Indenture Act; provided that neither this Section nor the Trust Indenture Act shall be deemed to authorize any court to require such an undertaking or to make such an assessment in any suit instituted by the Company, in any suit instituted by the Trustee, in any suit instituted by any Holder, or group of Holders, holding in the aggregate more than 10% in principal amount of the Outstanding Securities of any series, or in any suit instituted by any Holder for the enforcement of the payment of the principal of or any premium or interest on any Security on or after the Stated Maturity or Maturities expressed in such Security (or, in the case of redemption on or after the Redemption Date). SECTION 515. Waiver of Usury, Stay or Extension Laws. -42- The Company covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, or plead, or in any manner whatsoever claim or take the benefit or advantage of, any usury, stay or extension law wherever enacted, now or at any time hereafter in force, which may affect the covenants or the performance of this Indenture; and the Company (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law and covenants that it will not hinder, delay or impede the execution of any power herein granted to the Trustee, but will suffer and permit the execution of every such power as though no such law had been enacted. -43- ARTICLE SIX THE TRUSTEE SECTION 601. Certain Duties and Responsibilities. (a) Except during the continuance of an Event of Default, (1) the Trustee undertakes to perform such duties and only such duties as are specifically set forth in this Indenture, and no implied covenants or obligations shall be read into this Indenture against the Trustee; and (2) in the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture; but in the case of any such certificates or opinions which by any provision hereof are specifically required to be furnished to the Trustee, the Trustee shall be under a duty to examine the same to determine whether or not they conform to the requirements of this Indenture. (b) In case an Event of Default has occurred and is continuing, the Trustee shall exercise such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in their exercise, as a prudent man would exercise or use the circumstances in the conduct of his own affairs. (c) No provision of this Indenture shall be construed to relieve the Trustee from liability for its own negligent action, its own negligent failure to act, or its own wilful misconduct, except that (1) this subsection (c) shall not be construed to limit the effect of subsection (a) of this Section; (2) the Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer, unless it shall be proved that the Trustee was negligent in ascertaining the pertinent facts; (3) the Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the Holders of a majority in principal amount of the Outstanding Securities of any series relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee under this Indenture with respect to the securities of such series; and (4) no provision of this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its -44- duties hereunder, or in the exercise of any of its rights or powers, if it shall have reasonable grounds for believing that repayments of such funds or adequate indemnity against such risk or liability is not reasonably assured to it. (d) Whether or not therein expressly so provided, every provision of this Indenture relating to the conduct or affecting the liability of or affecting the liability of or affording protection to the Trustee shall be subject to the provisions of this Section of the Securities of each series affected thereby. SECTION 602. Notice of Defaults. Within 90 days after the occurrence of any default hereunder, the Trustee shall transmit to all Holders of the Securities of each series affected thereby, in the manner provided in Section 106, notice of such default hereunder known to the Trustee, unless such default shall have been cured or waived; provided, however, that, except in the case of a default in the payment of the principal of, premium, if any, or interest on any Security of such series, the Trustee shall be protected in withholding such notice if and so long as the board of directors, the executive committee or a trust committee of directors or officers (assigned by the Trustee to administer its corporate trust matters) of the Trustee in good faith determines that the withholding of such notice is in the interest of the Holders; and provided, further, that in the case of any default of the character specified in Section 501(4), no such notice to Holders shall be given until at least 30 days after the occurrence thereof. For the purpose of this Section, the term "default" means any event which is, or after notice or lapse of time or both would become, an Event of Default with respect to Securities of such series. SECTION 603. Certain Rights of Trustee. Subject to the provisions of Section 601: (1) the Trustee may rely and shall be protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties; (2) any request or direction of the Company mentioned herein shall be sufficiently evidenced by a Company Request or Company Order, and any resolution of the Board of Management of the Company shall be sufficiently evidenced by a Board Resolution; (3) whenever in the administration of this Indenture the Trustee shall deem it desirable that a matter be proved or established prior to taking, suffering or omitting any action hereunder, the Trustee (unless other evidence be herein specifically pre- -45- scribed) may, in the absence of bad faith on its part, rely upon an Officers' Certificate; (4) the Trustee may consult with counsel and the written advice of such counsel or any Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon; (5) the Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction of any of the Holders pursuant to this Indenture, unless such Holders shall have offered to the Trustee reasonable security or indemnity against the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction; (6) the Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document, but the Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit, and, if the Trustee shall determine to make such further inquiry or investigation, it shall be entitled, to the extent necessary to perform its duties hereunder, to examine the books, records and premises of the Company, personally or by agent or attorney, provided that the Trustee shall not be entitled to such information which the Company is prevented from disclosing as a matter of law or contract; and (7) the Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents or attorneys and the Trustee shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it hereunder. SECTION 604. Not Responsible for Recitals or Issuance of Securities. The recitals contained herein and in the Securities, except the Trustee's certificates of authentication, shall be taken as the statements of the Company, and neither the Trustee nor any Authenticating Agent assumes any responsibility for their correctness. The Trustee makes no representations as to the validity or sufficiency of this Indenture or of the Securities. Neither the Trustee nor any Authenticating Agent shall be accountable for the use or application by the Company of Securities or the proceeds thereof. SECTION 605. May Hold Securities. The Trustee, any Authenticating Agent, any Paying Agent, any Security Registrar or any other agent of the Company or the Trustee, in its individual or any other capacity, may become the owner or pledgee of Securities and, subject to Sections 608 -46- and 613, may otherwise deal with the Company with the same rights it would have if it were not Trustee, Authenticating Agent, Paying Agent, Security Registrar or such other agent. SECTION 606. Money Held in Trust. Money held by the Trustee in trust hereunder need not be segregated from other funds except for the extent required by law. The Trustee shall be under no liability for interest on or investment of any money received by it hereunder, except as otherwise agreed with and for the sole benefit of the Company. SECTION 607. Compensation and Reimbursement. The Company agrees (1) to pay to the Trustee from time to time such compensation as may be agreed for all services rendered by it hereunder (which compensation shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust); (2) except as otherwise expressly provided herein, to reimburse the Trustee upon its request for all reasonable expenses, disbursements and advances reasonably incurred or made by the Trustee in accordance with any provision of this Indenture (including the reasonable compensation and the expenses and disbursements of its agents and counsel) all as may be agreed between the Trustee and the Company, except to the extent any such expense, disbursement or advance may be attributable to its negligence or bad faith; and (3) to indemnify the Trustee for, and to hold it harmless against, any loss, liability or expense arising out of or in connection with the acceptance or administration of the trust or trusts hereunder and the performance of its duties hereunder, including the costs and expenses of defending itself against any claim or liability in connection with the exercise or performance of any of its powers or duties hereunder, except to the extent any such loss, liability or expense may be attributable to its negligence or bad faith. The Trustee shall have a right prior to the Holders to payment of amounts due it under this Section 607 from funds held by the Trustee hereunder. "Trustee" for purposes hereof includes any predecessor trustee, but the negligence or bad faith of any trustee shall not affect the rights of any other trustee hereunder. SECTION 608. Conflicting Interests. If the Trustee has or shall acquire a conflicting interest within the meaning of the Trust Indenture Act, the Trustee shall either eliminate such interest or resign, to the -47- extent and in the manner provided by, and subject to the provisions of, the Trust Indenture Act and this Indenture. To the extent permitted by such Act, the Trustee shall not be deemed to have a conflicting interest by virtue of being a trustee under this Indenture with respect to Securities of more than one series. SECTION 609. Corporate Trustee Required; Eligibility. There shall at all times be one (and only one) Trustee hereunder with respect to the Securities of each series, which may be Trustee hereunder for Securities of one or more other series. Each Trustee shall be a Person that is eligible pursuant to the Trust Indenture Act to act as such, and has a combined capital and surplus of at least $50,000,000 and has its Corporate Trust Office in the Borough of Manhattan, The City of New York, New York. If any such Person publishes reports of condition at least annually, pursuant to law or to the requirements of its supervising or examining authority, then for the purposes of this Section and to the extent permitted by the Trust Indenture Act, the combined capital and surplus of such Person shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. If at any time the Trustee with respect to the Securities of any series shall cease to be eligible in accordance with the provisions of this Section, it shall resign immediately in the manner and with the effect hereinafter specified in this Article. SECTION 610. Resignation and Removal; Appointment of Successor. No resignation or removal of the Trustee and no appointment of a successor Trustee pursuant to this Article shall become effective until the acceptance of appointment by the successor Trustee in accordance with the applicable requirements of Section 611. The Trustee may resign at any time with respect to the Securities of one or more series by giving written notice thereof to the Company. If the instrument of acceptance by a successor Trustee required by Section 611 shall not have been delivered to the Trustee within 30 days after the giving of such notice of resignation, the resigning Trustee may petition any court of competent jurisdiction for the appointment of a successor Trustee with respect to the Securities of such series. The Trustee may be removed at any time with respect to the Securities of any series by Act of the Holders of a majority in principal amount of the Outstanding Securities of such series, delivered to the Trustee and to the Company. If at any time: (1) the Trustee shall fail to comply with Section 608 after written request therefor by the Company or by any Holder who has been a bona fide Holder of a Security for at least six months, or -48- (2) the Trustee shall cease to be eligible under Section 609 and shall fail to resign after written request therefor by the Company or by any such Holder, or (3) the Trustee shall become incapable of acting or shall be adjudged a bankrupt or insolvent or a receiver of the Trustee or of its property shall be appointed or any public officer shall take charge or control of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation, then, in any such case, (A) the Company by a Board Resolution may remove the Trustee with respect to all Securities, or (B) subject to Section 514, any Holder who has been a bona fide Holder of a Security for at least six months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the removal of the Trustee with respect to all Securities and the appointment of a successor Trustee or Trustees. If the Trustee shall resign, be removed or become incapable of acting, or if a vacancy shall occur in the office of Trustee for any cause, with respect to the Securities of one or more series, the Company, by a Board Resolution, shall promptly appoint a successor Trustee or Trustees with respect to the Securities of that or those series (it being understood that any such successor Trustee may be appointed with respect to the Securities of one or more or all of such series and that at any time there shall be only one Trustee with respect to the Securities of any particular series) and shall comply with the applicable requirements of Section 611. If, within one year after such resignation, removal or incapability, or the occurrence of such vacancy, a successor Trustee with respect to the Securities of any series shall be appointed by Act of the Holders of a majority in principal amount of the Outstanding Securities of such series delivered to the Company and the retiring Trustee, the successor Trustee so appointed shall, forthwith upon its acceptance of such appointment in accordance with the applicable requirements of Section 611, become the successor Trustee with respect to the Securities of such series and to that extent supersede the successor Trustee appointed by the Company. If no successor Trustee with respect to the Securities of any series shall have been so appointed by the Company or the Holders and accepted appointment in the manner required by Section 611, any Holder who has been a bona fide Holder of a Security of such series for at least six months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the appointment of a successor Trustee with respect to the Securities of such series. The Company shall give notice of each resignation and each removal of the Trustee with respect to the Securities of any series and each appointment of a successor Trustee with respect to the Securities of any series to all Holders of Securities of such series in the manner provided in Section 106. Each notice shall include the name of the successor Trustee with respect to the Securities of such series and the address of its Corporate Trust Office. SECTION 611. Acceptance of Appointment by Successor. -49- In case of the appointment hereunder of a successor Trustee with respect to all Securities, every such successor Trustee so appointed shall execute, acknowledge and deliver to the Company and to the retiring Trustee an instrument accepting such appointment, and thereupon the resignation or removal of the retiring Trustee shall become effective and such successor Trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring Trustee; but, on the request of the Company or the successor Trustee, such retiring Trustee shall, upon payment of its charges, execute and deliver an instrument transferring to such successor Trustee all the rights, powers and trusts of the retiring Trustee and shall duly assign, transfer and deliver to such successor Trustee all property and money held by such retiring Trustee hereunder. In case of the appointment hereunder of a successor Trustee with respect to the Securities of one or more (but not all) series, the Company, the retiring Trustee and each successor Trustee with respect to the Securities of one or more series shall execute and deliver an indenture supplemental hereto wherein each successor Trustee shall accept such appointment and which (1) shall contain such provisions as shall be necessary or desirable to transfer and confirm to, and to vest in, each successor Trustee all the rights, powers, trusts and duties of the retiring Trustee with respect to the Securities of that or those series to which the appointment of such successor Trustee relates, (2) if the retiring Trustee is not retiring with respect to all Securities, shall contain such provisions as shall be deemed necessary or desirable to confirm that all the rights, powers, trusts and duties of the retiring Trustee with respect to the Securities of that or those series as to which the retiring Trustee is not retiring shall continue to be vested in the retiring Trustee, and (3) shall add to or change any of the provisions of this Indenture as shall be necessary to provide for or facilitate the administration of the trusts hereunder by more than one Trustee, it being understood that nothing herein or in such supplemental indenture shall constitute such Trustees co-trustees of the same trust and that each such Trustee shall be trustee of a trust or trusts hereunder separate and apart from any trust or trusts hereunder administered by any other such Trustee; and upon the execution and delivery of such supplemental indenture the resignation or removal of the retiring Trustee shall become effective to the extent provided therein and each such successor Trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring Trustee with respect to the Securities of that or those series to which the appointment of such successor Trustee relates; but, on request of the Company or any successor Trustee, such retiring Trustee shall duly assign, transfer and deliver to such successor Trustee all property and money held by such retiring Trustee hereunder with respect to the Securities of that or those series to which the appointment of such successor Trustee relates. Upon request of any such successor Trustee, the Company shall execute any and all instruments for more fully and certainly vesting in and confirming to such successor Trustee all such rights, powers and trusts referred to in the first or second preceding paragraph, as the case may be. No successor Trustee shall accept its appointment unless at the time of such acceptance such successor Trustee shall be qualified and eligible under this Article. -50- SECTION 612. Merger, Conversion, Consolidation or Succession to Business. Any corporation into which the Trustee may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Trustee shall be a party, or any corporation succeeding to all or substantially all the corporate trust business of the Trustee, shall be the successor of the Trustee hereunder, provided such corporation shall be otherwise qualified and eligible under this Article, without the execution or filing of any paper or any further act on the part of any of the parties hereto. In case any Securities shall have been authenticated, but not delivered, by the Trustee then in office, any successor by merger, conversion or consolidation to such authenticating Trustee may adopt such authentication and deliver the Securities so authenticated with the same effect as if such successor Trustee had itself authenticated such Securities. SECTION 613. Preferential Collection of Claims Against Company. Reference is made to Section 311 of the Trust Indenture Act. For purposes of Section 311(b)(4) and (6) of such Act, the following terms shall mean: (a) "cash transaction" means any transaction in which full payment for goods or securities sold is made within seven days after delivery of the goods or securities in currency or in checks or other orders drawn upon banks or bankers any payable upon demand; and (b) "self-liquidating paper" means any draft, bill of exchange, acceptance or obligation which is made, drawn, negotiated or incurred by the Company for the purpose of financing the purchase, processing, manufacturing, shipment, storage or sale of goods, wares or merchandise and which is secured by documents evidencing title to, possession of, or a lien upon, the goods, wares or merchandise or the receivables or proceeds arising from the sale of the goods, wares or merchandise previously constituting the security, provided the security is received by the Trustee simultaneously with the creation of the creditor relationship with the Company arising from the making, drawing, negotiating or incurring of the draft, bill of exchange, acceptance or obligation. SECTION 614. Appointment of Authenticating Agent. The Trustee may appoint an Authenticating Agent or Agents with respect to one or more series of Securities which shall be authorized to act on behalf of the Trustee to authenticate Securities of such series issued upon original issue and upon exchange, registration of transfer or partial redemption thereof or pursuant to Section 306, and Securities so authenticated shall be entitled to the benefits of this Indenture and shall be valid and obligatory for all purposes as if authenticated by the Trustee hereunder. Wherever reference is made in this Indenture to the authentication and delivery of -51- Securities by the Trustee or the Trustee's certificate of authentication, such reference shall be deemed to include authentication and delivery on behalf of the Trustee by an Authenticating Agent and a certificate of authentication executed on behalf of the Trustee by an Authenticating Agent. Each Authenticating Agent shall be acceptable to the Company and shall at all times be a corporation organized and doing business under the laws of the United States of America, any State thereof or the District of Columbia, authorized under such laws to act as Authenticating Agent, having a combined capital and surplus of not less than $50,000,000 and subject to supervision or examination by Federal or State authority. If such Authenticating Agent publishes reports of condition at least annually, pursuant to law or to the requirements of said supervising or examining authority, then for the purposes of this Section, the combined capital and surplus of such Authenticating Agent shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. If at any time an Authenticating Agent shall cease to be eligible in accordance with the provisions of this Section, such Authenticating Agent shall resign immediately in the manner and with the effect specified in this Section. Any corporation into which an Authenticating Agent may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which such Authenticating Agent shall be a party, or any corporation succeeding to the corporate agency or corporate trust business of an Authenticating Agent, shall continue to be an Authenticating Agent, provided such corporation shall be otherwise eligible under this Section, without the execution or filing of any paper or any further act on the part of the Trustee or the Authenticating Agent. An Authenticating Agent may resign at any time by giving written notice thereof to the Trustee and to the Company. The Trustee may at any time terminate the agency of an Authenticating Agent by giving written notice thereof to such Authenticating Agent and to the Company. Upon receiving such a notice of resignation or upon such a termination, or in case at any time such Authenticating Agent shall cease to be eligible in accordance with the provisions of this Section, the Trustee may appoint a successor Authenticating Agent which shall be acceptable to the Company and shall give notice of such appointment in the manner provided in Section 106 to all Holders of Securities of the series with respect to which such Authenticating Agent will serve. Any successor Authenticating Agent upon acceptance of its appointment hereunder shall become vested with all the rights, powers and duties of its predecessor hereunder, with like effect as if originally named as an Authenticating Agent. No successor Authenticating Agent shall be appointed unless eligible under the provisions of this Section. The Trustee agrees to pay to each Authenticating Agent from time to time reasonable compensation for its services under this Section, and the Trustee shall be entitled to be reimbursed for such payments, subject to the provisions of Section 607. If an appointment with respect to one or more series is made pursuant to this Section, the Securities of such series may have endorsed thereon, in addition to the Trustee's certificate of authentication, an alternative certificate of authentication in the following form: -52- This is one of the Securities of the series designated therein referred to in the within-mentioned Indenture. Morgan Guaranty Trust Company of New York, As Trustee By........................................., As Authenticating Agent By.......................................... Authorized Officer If all of the Securities of a series may not be originally issued at one time, and if the Trustee does not have an office capable of authenticating Securities upon original issuance located in a Place of Payment where the Company wishes to have Securities of such series authenticated upon original issuance, the Trustee, if so requested by the Company in writing (which writing need not comply with Section 102 and need not be accompanied by an Opinion of Counsel), shall appoint in accordance with this Section an Authenticating Agent having an office in a Place of Payment designated by the Company with respect of such series of Securities. -53- ARTICLE SEVEN HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY SECTION 701. Company to Furnish Trustee Names and Addresses of Holders. The Company will furnish or cause to be furnished to the Trustee (1) semi-annually, not later than 15 days after each Regular Record Date in each year, a list, in such form as the Trustee may reasonably require, of the names and addresses of the Holders of Securities of each series as of such Regular Record Date, and (2) at such other times as the Trustee may request in writing within 30 days after the receipt by the Company of any such request, a list of similar form and content as of a date not more than 15 days prior to the time such list is furnished; excluding from any such list names and addresses received by the Trustee in its capacity as Security Registrar. SECTION 702. Preservation of Information; Communications to Holders. The Trustee shall preserve, in as current a form as is reasonably practicable, the names and addresses of Holders contained in the most recent list furnished to the Trustee as provided in Section 701 and the names and addresses of Holders received by the Trustee in its capacity as Security Registrar. The Trustee may destroy any list furnished to it as provided in Section 701 upon receipt of a new list so furnished. The rights of Holders to communicate with other Holders with respect to their rights under this Indenture or under the Securities, and the corresponding rights and privileges of the Trustee, shall be as provided by the Trust Indenture Act. Every Holder of Securities, by receiving and holding the same, agrees with the Company and the Trustee that neither the Company nor the Trustee nor any agent of either of them shall be held accountable by reason of any disclosure of information as to names and addresses of Holders made pursuant to the Trust Indenture Act. SECTION 703. Reports by Trustee. The Trustee shall transmit on or before July 15, 1994 and each July 15 thereafter when Securities are Outstanding to Holders such reports, if any, dated as of the preceding May 15, concerning the Trustee and its actions under this Indenture as may be required pursuant to the Trust Indenture Act in the manner provided pursuant thereto. -54- A copy of each such report shall, at the time of such transmission to Holders, be filed by the Trustee with each stock exchange upon which any Securities are listed, with the Commission and with the Company. The Company will notify the Trustee in writing or by facsimile when any Securities are listed on any stock exchange. SECTION 704. Reports by Company. The Company shall file with the Trustee and the Commission, and transmit to Holders, such information, documents and other reports, and such summaries thereof, as may be required pursuant to the Trust Indenture Act at the times and in the manner provided pursuant to such Act; provided that any such information, documents or reports required to be filed with the Commission pursuant to Section 13 or 15(d) of the Exchange Act shall be filed with the Trustee within 15 days after the same is so required to be filed with the Commission. -55- ARTICLE EIGHT CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE SECTION 801. Company May Consolidate, Etc., Only on Certain Terms. The Company shall not consolidate with or merge into any other Person or convey, transfer or lease its properties and assets substantially as an entirety to any Person, unless: (1) in case the Company shall consolidate with or merge into another Person or convey, transfer or lease its properties and assets substantially as an entirety to any Person, the Person formed by such consolidation or into which the Company is merged or the Person which acquires by conveyance or transfer, or which leases, the properties and assets of the Company substantially as an entirety shall be organized and validly existing under the laws of the applicable jurisdiction and shall expressly assume, by an indenture supplemental hereto, executed and delivered to the Trustee, in form satisfactory to the Trustee, the due and punctual payment of the principal of and any premium and interest (including all additional amounts, if any, payable pursuant to Section 1004 and subsection (3) below) on all the Securities and the performance or observance of every covenant of this Indenture on the part of the Company to be performed or observed; (2) immediately after giving effect to such transaction and treating any indebtedness which becomes an obligation of the Company or any Subsidiary as a result of such transaction as having been incurred by the Company or such Subsidiary at the time of such transaction, no Event of Default, and no event which, after notice or lapse of time or both, would become an Event of Default, shall have happened and be continuing; (3) the Person formed by such consolidation or into which the Company is merged or to whom the Company has conveyed, transferred or leased its properties or assets agrees to indemnify the Holder or the beneficial owner of each Security against (a) any tax, assessment or governmental charge imposed on any such Holder or the beneficial owner or required to be withheld or deducted from any payment to such Holder or the beneficial owner as a consequence of such consolidation, merger, conveyance, transfer or lease; and (b) any costs or expenses of the act of such consolidation, merger, conveyance, transfer or lease; (4) if, as a result of any such consolidation or merger or such conveyance, transfer or lease, properties or assets of the Company would become subject to a mortgage, pledge, lien, security interest or other encumbrance which would not be permitted by this Indenture, the Company or such successor Person, as the case may be, shall take such steps as shall be necessary effectively to secure the Securities equally and ratably with (or prior to) all indebtedness secured thereby; and -56- (5) the Company has delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that such consolidation, merger, conveyance, transfer or lease and, if a supplemental indenture is required in connection with such transaction, such supplemental indenture comply with this Article and that all conditions precedent herein provided for relating to such transaction have been complied with. SECTION 802. Successor Substituted. Upon any consolidation of the Company with, or merger of the Company into, any other Person or any conveyance, transfer or lease of the properties and assets of the Company substantially as an entirety in accordance with Section 801, the successor Person formed by such consolidation or into which the Company is merged or to which such conveyance, transfer or lease is made shall succeed to, and be substituted for, and may exercise every right and power of, the Company under this Indenture with the same effect as if such successor Person had been named as the Company herein, as the case may be, and thereafter, except in the case of a lease, the predecessor Person shall be relieved of all obligations and covenants under this Indenture and the Securities. -57- ARTICLE NINE SUPPLEMENTAL INDENTURES SECTION 901. Supplemental Indentures Without Consent of Holders. Without the consent of any Holders, the Company, when authorized by a Board Resolution, and the Trustee, at any time and from time to time, may enter into one or more indentures supplemental hereto, in form satisfactory to the Trustee, for any of the following purposes: (1) to evidence the succession of another Person to the Company and the assumption by any such successor of the covenants of the Company herein and in the Securities pursuant to 801(1); or (2) to add to the covenants of the Company for the benefit of Holders of all or any series of Securities (and if such covenants are to be for the benefit of less than all series of Securities, stating that such covenants are expressly being included solely for the benefit of such series) or to surrender any right or power herein conferred upon the Company; or (3) to add any additional Events of Default for the benefit of the Holders of all or any series of Securities (and if such additional Events of Default are to be for the benefit of less than all series of Securities, stating that such additional Events of Default are expressly being included solely for the benefit of such series); or (4) to add to or change any of the provisions of this Indenture to such extent as shall be necessary to permit or facilitate the issuance of Securities in bearer form, registrable or not registrable as to principal, and with or without interest coupons, or to permit or facilitate the issuance of Securities in uncertificated form, provided that any such action shall not adversely affect the interests of the Holders of any Outstanding Securities of any series in any material respect; or (5) to add to, change or eliminate any of the provisions of this Indenture in respect of the Securities of one or more series, provided that any such addition, change or elimination (A) shall neither (i) apply to any Security of any series Outstanding when such supplemental Indenture is executed and entitled to the benefit of such provision nor (ii) modify the rights of any Holder of any such Security with respect to such provision or (B) shall become effective only when there is no such Security Outstanding; or (6) to secure the Securities; or (7) to establish the form or terms of Securities of any series as permitted by Sections 201 and 301; or -58- (8) to evidence and provide for the acceptance of appointment hereunder by a successor Trustee with respect to the Securities of one or more series and to add to or change any of the provisions of this Indenture as shall be necessary to provide for or facilitate the administration of the trusts hereunder by more than one Trustee, pursuant to the requirements of Section 611; or (9) to cure any ambiguity, to correct or supplement any provision herein which may be defective or inconsistent with any other provision herein, or to make any other provisions with respect to matters or questions arising under this Indenture, provided that such action pursuant to this Clause (9) shall not adversely affect the interests of the Holders of Securities of any series in any material respect. SECTION 902. Supplemental Indentures With Consent of Holders. With the consent of the Holders of not less than a majority in principal amount of the Outstanding Securities of each series affected by such supplemental indenture, by Act of said Holders delivered to the Company and the Trustee, the Company, when authorized by a Board Resolution, and the Trustee may enter into an indenture or indentures supplemental hereto for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Indenture or of modifying in any manner the rights of the Holders of Securities of such series under this Indenture; provided, however, that no such supplemental indenture shall, without the consent of the Holder of each Outstanding Security affected thereby, (1) change the Stated Maturity of the principal of, or any installment of principal of or interest on, any Security, or reduce the principal amount thereof or the rate of interest thereon or any premium payable upon the redemption thereof, or reduce the amount of the principal of an Original Issue Discount Security or any other Security which would be due and payable upon a declaration of acceleration of the Maturity thereof pursuant to Section 502, or change any Place of Payment where, or the coin or currency in which, any Security or any premium or interest thereon is payable, or impair the right to institute suit for the enforcement of any such payment on or after the Stated Maturity thereof (or, in the case of redemption, on or after the Redemption Date), or (2) reduce the percentage in principal amount of the Outstanding Securities of any series, the consent of whose Holders is required for any such supplemental indenture, or the consent of whose Holders is required for any waiver (of compliance with certain provisions of this Indenture or certain defaults hereunder and their consequences) provided for in this Indenture, or (3) modify any of the provisions of this Section, Section 513 or Section 1011, except to increase any such percentage or to provide that certain other provisions of this Indenture cannot be modified or waived without the consent of the Holder of each Out standing Security affected thereby; provided, however, that this clause shall not be deemed to require the consent of any Holder with respect to changes in the -59- references to "the Trustee" and concomitant changes in this Section and Section 1011, or the deletion of this proviso, in accordance with the requirements of Sections 611 and 901(8), or (4) modify or affect in any manner adverse to the interests of the Holders of any Securities the terms and conditions of the obligations of the Company in respect of the due and punctual payment of the principal thereof (and premium, if any) and interest, if any, thereon or any sinking fund payments provided in respect thereof. A supplemental indenture which changes or eliminates any covenant or other provision of this Indenture which has expressly been included solely for the benefit of one or more particular series of Securities, or which modifies the rights of the Holders of Securities of such series with respect to such covenant or other provision, shall be deemed not to affect the rights under this Indenture of the Holders of Securities of any other series. It shall not be necessary for any Act of Holders under this Section to approve the particular form of any proposed supplemental indenture, but it shall be sufficient if such Act shall approve the substance thereof. SECTION 903. Execution of Supplemental Indentures. In executing, or accepting the additional trusts created by, any supplemental indenture permitted by this Article or the modifications thereby of the trusts created by this Indenture, the Trustee shall be entitled to receive, and (subject to Section 601) shall be fully protected in relying upon, an Opinion of Counsel stating that the execution of such supplemental indenture is authorized or permitted by this Indenture. The Trustee may, but shall not be obligated to, enter into any such supplemental indenture which affects the Trustee's own rights, duties or immunities under this Indenture or otherwise. SECTION 904. Effect of Supplemental Indentures. Upon the execution of any supplemental indenture under this Article, this Indenture shall be modified in accordance therewith, and such supplemental indenture shall form a part of this Indenture for all purposes; and every Holder of Securities theretofore or thereafter authenticated and delivered hereunder shall be bound thereby. SECTION 905. Conformity with Trust Indenture Act. Every supplemental indenture executed pursuant to this Article shall conform to the requirements of the Trust Indenture Act as in effect at the time of such execution. SECTION 906. Reference in Securities to Supplemental Indentures. -60- Securities of any series authenticated and delivered after the execution of any supplemental indenture pursuant to this Article may, and shall if required by the Trustee, bear a notation in form approved by the Company and the Trustee as to any matter provided for in such supplemental indenture. If the Company shall so determine, new Securities of any series so modified as to conform, in the opinion of the Trustee and the Company, to any such supplemental indenture may be prepared and executed by the Company and such securities may be authenticated and delivered by the Trustee in exchange for Outstanding Securities of such series. -61- ARTICLE TEN COVENANTS SECTION 1001. Payment of Principal, Premium and Interest. The Company covenants and agrees for the benefit of the Holders of each series of Securities that it will duly and punctually pay the principal of and any premium and interest on the Securities of that series in accordance with the terms of the Securities and this Indenture. SECTION 1002. Maintenance of Office or Agency. The Company will maintain in each Place of Payment for any series of Securities an office or agency where Securities of that series may be presented or surrendered for payment, where Securities of that series may be surrendered for registration of transfer or exchange and where notices and demands to or upon the Company in respect of the Securities of that series and this Indenture may be served. The Company will maintain in the Borough of Manhattan, The City of New York, an office or agency where notices and demands to or upon the Company in respect of Securities of any series and this Indenture may be served. The Company will give prompt written notice to the Trustee of the location, and any change in the location, of such office or agency. If at any time the Company shall fail to maintain any such required office or agency or shall fail to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served at the Corporate Trust Office of the Trustee, and the Company hereby appoints the Trustee as its agent to receive all such presentations, surrenders, notices and demands. The Company may also from time to time designate one or more other offices or agencies where the Securities of one or more series may be presented or surrendered for any or all such purposes and may from time to time rescind such designations; provided, however, that no such designation or rescission shall in any manner relieve the Company of its obligation to maintain an office or agency in each Place of Payment for Securities of any series for such purposes. The Company will give prompt written notice to the Trustee of any such designation or rescission and of any change in the location of any such other office or agency. SECTION 1003. Money for Securities Payments to Be Held in Trust. If the Company shall at any time act as its own Paying Agent with respect to any series of Securities, it will, on or before each due date of the principal of or any -62- premium or interest on any of the Securities of that series, segregate and hold in trust for the benefit of the Persons entitled thereto a sum sufficient to pay the principal and any premium and interest so becoming due until such sums shall be paid to such Persons or otherwise disposed of as herein provided and will promptly notify the Trustee of its action or failure so to act. Whenever the Company shall have one or more Paying Agents for any series of Securities, it will, not later than each due date of the principal of or any premium or interest on any Securities of that series, deposit with a Paying Agent a sum sufficient to pay such amount, such sum to be held as provided by the Trust Indenture Act, and (unless such Paying Agent is the Trustee) the Company will promptly notify the Trustee of its action or failure so to act. The Company will cause each Paying Agent for any series of Securities other than the Trustee to execute and deliver to the Trustee an instrument in which such Paying Agent shall agree with the Trustee, subject to the provisions of this Section, that such Paying Agent will (1) comply with the provisions of the Trust Indenture Act applicable to it as a Paying Agent and (2) during the continuance of any default by the Company (or any other obligor upon the Securities of that series) in the making of any payment in respect of the Securities of that series, upon the written request of the Trustee, forthwith pay to the Trustee all sums held in trust by such Paying Agent for payment in respect of the Securities of that series. The Company may at any time, for the purpose of obtaining the satisfaction and discharge of this Indenture or for any other purpose, pay, or by Company Order direct any Paying Agent to pay, to the Trustee all sums held in trust by the Company or such Paying Agent, such sums to be held by the Trustee upon the same trusts as those upon which such sums were held by the Company or such Paying Agent; and, upon such payment by any Paying Agent to the Trustee, such Paying Agent shall be released from all further liability with respect to such money. Any money deposited with the Trustee or any Paying Agent, or then held by the Company, in trust for the payment of the principal of or any premium or interest on any Security of any series and remaining unclaimed for two years after such principal, premium or interest has become due and payable shall be paid to the Company on Company Request, or (if then held by the Company) shall be discharged from such trust; and the Holder of such Security shall thereafter, as an unsecured general creditor, look only to the Company for payment thereof, and all liability of the Trustee or such Paying Agent with respect to such trust money, and all liability of the Company as trustee thereof, shall thereupon cease. SECTION 1004. Additional Amounts. If the Securities of a series provide as contemplated by Section 301 for the payment of additional amounts, the Company will pay to the Holder of any Security of such series additional amounts as provided therein. Whenever in this Indenture there is -63- mentioned, in any context, the payment of the principal of or any premium or interest on, or in respect of, any Security of any series or the net proceeds received on the sale or exchange of any Security of any series, such mention shall be deemed to include mention of the payment of additional amounts provided for in this Section to the extent that, in such context, additional amounts are, were or would be payable in respect thereof pursuant to the provisions of this Section and express mention of the payment of additional amounts (if applicable) in any provisions hereof shall not be construed as excluding additional amounts in those provisions hereof where such express mention is not made. If the Securities of a series so provide for the payment of additional amounts, at least 10 days prior to the first Interest Payment Date with respect to that series of Securities (or if the Securities of that series will not bear interest prior to Maturity, the first day on which a payment of principal and any premium is made), and at least 10 days prior to each date of payment of principal and any premium or interest if there has been any change with respect to the matters set forth in the below-mentioned Officers' Certificate, the Company will furnish the Trustee and the Company's principal Paying Agent or Paying Agents, if other than the Trustee, with an Officers' Certificate instructing the Trustee and such Paying Agent or Paying Agents whether such payment of principal of and any premium or interest on the Securities of that series shall be made to Holders of Securities of that series without withholding for or on account of any tax, assessment or other governmental charge described in the Securities of that series. If any such withholding shall be required, then such Officers' Certificate shall specify by country the amount, if any, required to be withheld on such payments to such Holders of Securities and the Company will pay to the Trustee or such Paying Agent or Paying Agents the additional amounts required by this Section. The Company covenants to indemnify the Trustee and any Paying Agent for, and to hold them harmless against, any loss, liability or expense reasonably incurred, arising out of, or in connection with, actions taken or omitted by any of them in reliance on any Officers' Certificate furnished pursuant to this Section, except with respect to each of them to the extent such loss, liability or expense may be attributable to its own negligence or bad faith. SECTION 1005. Statement by Officers as to Default. The Company will deliver to the Trustee, within 120 days after the end of each fiscal year of the Company ending after the date hereof, a brief certificate (which need not be an Officers' Certificate), from the principal executive, financial or accounting officer of the Company as to his or her knowledge of the Company's compliance with all conditions and covenants of this Indenture (without regard to any period of grace or requirement of notice provided hereunder). SECTION 1006. Existence. -64- Subject to Article Eight, the Company will do or cause to be done all things necessary to preserve and keep in full force and effect its existence, rights (charter and statutory) and franchises; provided, however, that the Company shall not be required to preserve any such right or franchise if the Company shall determine that the preservation thereof is no longer desirable in the conduct of the business of the Company and that the loss thereof is not disadvantageous in any material respect to the ability of the Company to make payments hereunder. SECTION 1007. Maintenance of Properties. The Company will cause all properties used or useful in the conduct of its business or the business of any Subsidiary to be maintained and kept in good condition, repair and working order and supplied with all necessary equipment and will cause to be made all necessary repairs, renewals, replacements, betterments and improvements thereof, all as in the judgment of the Company may be necessary so that the business carried on in connection therewith may be properly and advantageously conducted at all times; provided, however, that nothing in this Section shall prevent the Company from discontinuing the operation or maintenance of any of such properties if such discontinuance is, in the judgment of the Company desirable in the conduct of its business or the business of any Subsidiary and not disadvantageous in any material respect to the ability of the Company to make payments hereunder. SECTION 1008. Payment of Taxes and Other Claims. The Company will pay or discharge or cause to be paid or discharged, before the same shall become delinquent, (1) all material taxes, assessments and governmental charges levied or imposed upon the Company or any Subsidiary or upon the income, profits or property of the Company or any Subsidiary, and (2) all material lawful claims for labor, materials and supplies which, if unpaid, might by law become a lien upon the property of the Company or any Subsidiary; provided, however, that the Company shall not be required to pay or discharge or cause to be paid or discharged any such tax, assessment, charge or claim whose amount, applicability or validity is being contested in good faith by appropriate proceedings. SECTION 1009. Limitations on Liens. So long as any of the Securities are Outstanding, the Company shall not, and the Company shall procure that no Restricted Subsidiary will, create or permit to subsist any Encumbrance (other than the Encumbrances excepted from this Covenant), on the whole or any part of any Principal Property or upon any shares or stock of any Restricted Subsidiary to secure any present or future indebtedness for borrowed money without making, or causing such Restricted Subsidiary to make, effective provision whereby the Securities (together with, if the Company shall so determine, any other indebtedness of the Company or such Restricted Subsidiary then existing or thereafter -65- created which is not subordinate to the Securities) shall be secured equally and ratably with (or, at the option of the Company or such Restricted Subsidiary, prior to) such indebtedness for borrowed money, so long as such indebtedness for borrowed money shall be so secured. However, such limitations above shall not apply to: (1) any Encumbrance subsisting on or prior to the date hereof: (2) any Encumbrance arising by operation of law and not securing amounts more than ninety (90) days overdue or otherwise being contested in good faith; (3) judgment Encumbrances not giving rise to an Event of Default; (4) any Encumbrance subsisting over a Principal Property or shares or stock of any Restricted Subsidiary (which becomes a Restricted Subsidiary after the date hereof) subsisting prior to the date of such Restricted Subsidiary becoming a Restricted Subsidiary, provided that such Encumbrance was not created in contemplation of such Restricted Subsidiary becoming a Restricted Subsidiary; (5) any Encumbrance over any Principal Property (or documents of title thereto), shares or stock of any Restricted Subsidiary acquired by the Company or any Restricted Subsidiary as security for, or for indebtedness incurred, to finance all or part of the price of its acquisition, development, redevelopment, modification or improvement; (6) any Encumbrance over any Principal Property (or documents of title thereto), shares or stock of any Restricted Subsidiary which is acquired by the Company or any Restricted Subsidiary subject to such Encumbrance; (7) any Encumbrance to secure indebtedness for borrowed money incurred in connection with a specifically identifiable project where the Encumbrance relates to a Principal Property for which such project has been undertaken and the recourse of the creditors in respect of such indebtedness is limited to such project and Principal Property; (8) any Encumbrance incurred or deposits made in the ordinary course of business, including, but not limited to, (a) any mechanics', materialmen's, carriers', workmen's, vendors' or other like Encumbrances, (b) any Encumbrances securing amounts in connection with workers' compensation, unemployment insurance and other types of social security, and (c) any easements, rights-of-way, restrictions and other similar charges; (9) any Encumbrance incurred or deposits made securing the performance of tenders, bids, leases, statutory obligations, surety and appeal bonds, government contracts, performance and return-of-money bonds and other obligations of like nature incurred in the ordinary course of business; -66- (10) any Encumbrance on any Principal Property of the Company or any Restricted Subsidiary in favor of the Federal Government of the United States or the government of any State thereof, or the government of The Netherlands, or the European Community, or any instrumentality of any of them, securing the obligations of the Company or any Restricted Subsidiary pursuant to any contract or payments owed to such entity pursuant to applicable laws, rules, regulations or statutes; (11) any Encumbrance securing taxes or assessments or other applicable governmental charges or levies; (12) any Encumbrance securing industrial revenue, development or similar bonds issued by or for the benefit of the Company or any of its Restricted Subsidiaries, provided that such industrial revenue, development or similar bonds are non-recourse to the Company or such Restricted Subsidiary; (13) Encumbrances in favor of the Company or any Subsidiary of the Company; and (14) any extension, renewal or replacement (or successive extensions, renewals or replacements), as a whole or in part, of any Encumbrance referred to in clauses (1) to (13), inclusive, for amounts not exceeding the principal amount of the borrowed money secured by the Encumbrance so extended, renewed or replaced, provided that such extension, renewal or replacement Encumbrance is limited to all or a part of the same Principal Property, shares or stock of the Restricted Subsidiary that secured the Encumbrance extended, renewed or replaced (plus improvements on such Principal Property). Notwithstanding the foregoing, the Company or any Restricted Subsidiary may create or permit to subsist Encumbrances over any Principal Property, shares or stock of any of the Restricted Subsidiaries so long as the aggregate amount of indebtedness for borrowed money secured by all such Encumbrances (excluding therefrom the amount of the indebtedness secured by Encumbrances set forth in clauses (1) through (14), inclusive, above) does not exceed 15% of the Group Equity of the Company. SECTION 1010. Limitation on Sales and Leasebacks. So long as any of the Securities are Outstanding, the Company shall not, and the Company shall procure that no Restricted Subsidiary will, enter into any arrangement with any bank, insurance company or other lender or investor (not including the Company or any Subsidiary), or to which any such lender or investor is a party, providing for the leasing by the Company or a Restricted Subsidiary for a period, including renewals, in excess of three years of any Principal Property which has been owned by the Company or a Restricted Subsidiary for more than six months and which has been or is to be sold or transferred by the Company or any Restricted Subsidiary to such lender or investor or to any person to whom funds have been or are to be -67- advanced by such lender or investor on the security of such Principal Property (herein referred to as a "sale and leaseback transaction") unless either: (1) the Company or such Restricted Subsidiary could create indebtedness secured by an Encumbrance pursuant to Section 1009 on the Principal Property to be leased back in an amount equal to the indebtedness attributable to such sale and leaseback transaction without equally and ratably securing the Securities; or (2) the Company, within one year after the sale or transfer shall have been made by the Company or Restricted Subsidiary, applies an amount equal to the greater of (i) the net proceeds of the sale of the Principal Property sold and leased back pursuant to such arrangement or (ii) the fair market value of the Principal Property so sold and leased back at the time of entering into such arrangement (as determined by any two members of the Board of Management of the Company) to (A) the retirement of indebtedness for money borrowed ranking prior to or on parity with the Securities, incurred or assumed by the Company or any Restricted Subsidiary which by its terms matures at, or is extendible or renewable at the option of the obligor to, a date more than twelve months after the date of incurring, assuming or guaranteeing such indebtedness or (B) investment in any Principal Property. SECTION 1011. Waiver of Certain Covenants. Except as otherwise specified as contemplated by Section 301 for Securities of such series, the Company may, with respect to the Securities of any series, omit in any particular instance to comply with any term, provision or condition set forth in any covenant provided pursuant to Section 301(19), 901(2) or 901(7) for the benefit of the Holders of such series or in any of Sections 1004, 1009 or 1010 if before the time for such compliance the Holders of not less than a majority in principal amount of the Outstanding Securities of such series shall, by Act of such Holders, either waive such compliance in such instance or generally waive compliance with such term, provision or condition, but no such waiver shall extend to or affect such term, provision or condition except to the extent so expressly waived, and, until such waiver shall become effective, the obligations of the Company and the duties of the Trustee in respect of any such term, provision or condition shall remain in full force and effect. -68- ARTICLE ELEVEN REDEMPTION OF SECURITIES SECTION 1101. Applicability of Article. Securities of any series which are redeemable before their Stated Maturity shall be redeemable in accordance with their terms and (except as otherwise specified as contemplated by Section 301 for such Securities) in accordance with this Article. SECTION 1102. Election to Redeem; Notice to Trustee. The election of the Company to redeem any Securities shall be evidenced by a Board Resolution or in another manner specified as contemplated by Section 301 for such Securities. In case of any redemption at the election of the Company of less than all the Securities of any series (including any such redemption affecting only a single Security), the Company shall, at least 60 days prior to the Redemption Date fixed by the Company (unless a shorter notice shall be reasonably satisfactory to the Trustee in its sole discretion), notify the Trustee of such Redemption Date, of the principal amount of Securities of such series to be redeemed and, if applicable, of the tenor of the Securities to be redeemed. In the case of any redemption of Securities prior to the expiration of any restriction on such redemption provided in the terms of such Securities or elsewhere in this Indenture, the Company shall furnish the Trustee with an Officers' Certificate evidencing compliance with such restriction. SECTION 1103. Selection by Trustee of Securities to Be Redeemed. If less than all the Securities of any series are to be redeemed (unless all the Securities of such series and of a specified tenor are to be redeemed or unless such redemption affects only a single Security), the particular Securities to be redeemed shall be selected not more than 60 days prior to the Redemption Date by the Trustee, from the Outstanding Securities of such series not previously called for redemption, by such method as the Trustee shall deem fair and appropriate and which may provide for the selection for redemption of a portion of the principal amount of any Security of such series, provided that the unredeemed portion of the principal amount of any Security shall be in an authorized denomination (which shall not be less than the minimum authorized denomination) for such Security. If less than all the Securities of such series and of a specified tenor are to be redeemed (unless such redemption affects only a single Security), the particular Securities to be redeemed shall be selected not more than 60 days prior to the Redemption Date by the Trustee, from the Outstanding Securities of such series and specified tenor not previously called for redemption in accordance with the preceding sentence. -69- The Trustee shall promptly notify the Company in writing of the Securities selected for redemption as aforesaid and, in case of any Securities selected for partial redemption as aforesaid, the principal amount thereof to be redeemed. The provisions of the two preceding paragraphs shall not apply with respect to any redemption affecting only a single Security, whether such Security is to be redeemed in whole or in part. In the case of any such redemption in part, the unredeemed portion of the principal amount of the Security shall be in an authorized denomination (which shall not be less than the minimum authorized denomination) for such Security. For all purposes of this Indenture, unless the context otherwise requires, all provisions relating to the redemption of Securities shall relate, in the case of any Securities redeemed or to be redeemed only in part, to the portion of the principal amount of such Securities which has been or is to be redeemed. SECTION 1104. Notice of Redemption. Notice of redemption shall be given by first-class mail, postage prepaid, mailed not less than 30 nor more than 60 days prior to the Redemption Date, to each Holder of Securities to be redeemed, at his address appearing in the Security Register. All notices of redemption shall state: (1) the Redemption Date, (2) the Redemption Price, and the amount of accrued interest, if any, to the Redemption Date (3) if less than all the Outstanding Securities of any series consisting of more than a single Security are to be redeemed, the identification (and, in the case of partial redemption of any such Securities, the principal amounts) of the particular Securities to be redeemed and, if less than all the Outstanding Securities of any series consisting of a single Security are to be redeemed, the principal amount of the particular Security to be redeemed, (4) that on the Redemption Date the Redemption Price and such accrued interest, if any, will become due and payable upon each such Security to be redeemed and, if applicable, that interest thereon will cease to accrue on and after said date, (5) the place or places where each such Security is to be surrendered for payment of the Redemption Price, and (6) that the redemption is for a sinking fund, if such is the case. Notice of redemption of Securities to be redeemed at the election of the Company shall be given by the Company or, at the Company's request, by the Trustee in the name and at the expense of the Company and shall be irrevocable. Such notice may -70- indicate the CUSIP numbers of Securities to be redeemed but neither the Company nor the Trustee shall have any responsibility or liability for the accuracy of any CUSIP number included in such notice. SECTION 1105. Deposit of Redemption Price. On or prior to any Redemption Date, the Company shall deposit with the Trustee or with a Paying Agent (or, if the Company is acting as its own Paying Agent, segregate and hold in trust as provided in Section 1003) an amount of money sufficient to pay the Redemption Price of, and (except if the Redemption Date shall be an Interest Payment Date) any accrued interest on, all the Securities which are to be redeemed on that date. SECTION 1106. Securities Payable on Redemption Date. Notice of redemption having been given as aforesaid, the Securities so to be redeemed shall, on the Redemption Date, become due and payable at the Redemption Price and accrued interest, if any, therein specified, and from and after such date (unless the Company shall default in the payment of the Redemption Price and such accrued interest) such Securities shall cease to bear interest (if applicable). Upon surrender of any such Security for redemption in accordance with said notice, such Security shall be paid by the Company at the Redemption Price, together with accrued interest, if any, to the Redemption Date; provided, however, that, unless otherwise specified as contemplated by Section 301, installments of interest on Securities whose Stated Maturity is on or prior to the Redemption Date will be payable to the Holders of such Securities, or one or more Predecessor Securities, registered as such at the close of business on the relevant Record Dates according to their terms and subject to the provisions of Section 307. If any Security called for redemption shall not be so paid upon surrender thereof for redemption, the principal and any premium shall, until paid, bear interest from the Redemption Date at the rate prescribed therefor in the Security. SECTION 1107. Securities Redeemed in Part. Any Security which is to be redeemed only in part shall be surrendered at a Place of Payment therefor (with, if the Company or the Trustee so requires, due endorsement by, or a written instrument of transfer in form satisfactory to the Company and the Trustee duly executed by, the Holder thereof or his attorney duly authorized in writing), and the Company shall execute, and the Trustee shall authenticate and deliver to the Holder of such Security without service charge, a new Security or Securities of the same series and of like tenor, of any authorized denomination as requested by such Holder, in aggregate principal amount equal to and in exchange for the unredeemed portion of the principal of the Security so surrendered. -71- SECTION 1108. Optional Redemption Due to Changes in Tax Treatment. The Securities of each series may be redeemed at the option of the Company (or any person who has been substituted for the Company pursuant to Section 802 of this Indenture), in whole but not in part, upon not less than 30 nor more than 60 days' notice given as provided in this Indenture at any time (except in the case of Securities that have a variable rate of interest, which may be redeemed on any Interest Payment Date) at a Redemption Price equal to the principal amount thereof plus accrued interest to the date fixed for redemption (except in the case of Original Issue Discount Securities which may be redeemed at the Redemption Price specified by the terms of such series of Securities) if, as a result of any change in or amendment to the laws or any regulations or rulings promulgated thereunder of The Netherlands (or of any political subdivision or taxing authority thereof or therein) or, in the case of any Person who has been substituted for the Company pursuant to Section 802 of this Indenture, the jurisdiction of incorporation of such Person (or of any political subdivision or taxing authority thereof or therein), or any change in the official application or interpretation of such laws, regulations or rulings, or any change in the official application or interpretation of, or any execution of or amendment to, any treaty or treaties affecting taxation to which The Netherlands (or such other jurisdiction), or such political subdivision or taxing authority, is a party, which change, execution or amendment becomes effective on or after the date specified for such series pursuant to Section 301(7) (or, in the case of any Person who has been substituted for the Company pursuant to Section 802 of this Indenture, the date of such substitution), the Company (or such Person) is or would be required on the next succeeding Interest Payment Date to pay additional amounts with respect to the Securities as described in Section 203 or Section 301(20) and such payments cannot be avoided by the use of any reasonable measures available to the Company. Prior to the giving of notice of redemption of such Securities pursuant to this Indenture, the Company (or such Person) will deliver to the Trustee an Officers' Certificate, stating that the Company (or such Person) is entitled to effect such redemption and setting forth in reasonable detail a statement of circumstances showing that the conditions precedent to the right of the Company (or such Person) to redeem such Securities pursuant to this Section have been satisfied. -72- ARTICLE TWELVE SINKING FUNDS SECTION 1201. Applicability of Article. The provisions of this Article shall be applicable to any sinking fund for the retirement of Securities of any series except as otherwise specified as contemplated by Section 301 for such Securities. The minimum amount of any sinking fund payment provided for by the terms of Securities of any series is herein referred to as a "mandatory sinking fund payment", and any payment in excess of such minimum amount provided for by the terms of such Securities is herein referred to as an "optional sinking fund payment". If provided for by the terms of any series of Securities, the cash amount of any sinking fund payment may be subject to reduction as provided in Section 1202. Each sinking fund payment shall be applied to the redemption of Securities as provided for by the terms of such Securities. SECTION 1202. Satisfaction of Sinking Fund Payments with Securities. The Company (1) may deliver Outstanding Securities of a series (other than any previously called for redemption) and (2) may apply as a credit Securities of a series which have been redeemed either at the election of the Company pursuant to the terms of such Securities or through the application of permitted optional sinking fund payments pursuant to the terms of such Securities, in each case in satisfaction of all or any part of any sinking fund payment with respect to any Securities of such series required to be made pursuant to the terms of such Securities as and to the extent provided for by the terms of such Securities; provided that the Securities to be so credited have not been previously so credited. The Securities to be so credited shall be received and credited for such purpose by the Trustee at the Redemption Price, as specified in the Securities so to be redeemed, for redemption through operation of the sinking fund and the amount of such sinking fund payment shall be reduced accordingly. SECTION 1203. Redemption of Securities for Sinking Fund. Not less than 60 days prior to each sinking fund payment date for any Securities, the Company will deliver to the Trustee an Officers' Certificate specifying the amount of the next ensuing sinking fund payment for such Securities pursuant to the terms of such Securities, the portion thereof, if any, which is to be satisfied by payment of cash and the portion thereof, if any, which is to be satisfied by delivering and crediting Securities pursuant to Section 1202 and will also deliver to the Trustee any Securities to be so delivered. Not less than 30 days prior to each such sinking fund payment date, the Trustee shall select the Securities to be redeemed upon such sinking fund payment date -73- in the manner specified in Section 1103 and cause notice of the redemption thereof to be given in the name of and at the expense of the Company in the manner provided in Section 1104. Such notice having been duly given, the redemption of such Securities shall be made upon the terms and in the manner stated in Sections 1106 and 1107. -74- ARTICLE THIRTEEN DEFEASANCE AND COVENANT DEFEASANCE SECTION 1301. Option of Company to Effect Defeasance or Covenant Defeasance. The Company may elect, at its option at any time prior to the authentication and delivery of any Security or series of Securities, to have Section 1302 or Section 1303 applied to such Security or series of Securities, as the case may be, pursuant to Section 301. Upon compliance with the conditions set forth below in this Article, the Company may elect, at its option at any time, to discharge its obligations with respect to Securities to which Section 1302 or 1303 apply. Any such election shall be evidenced by a Board Resolution or in another manner specified as contemplated by Section 301 for such Securities. SECTION 1302. Defeasance and Discharge. Upon the exercise by the Company of its option (if any) under this Section in respect of any Securities or any series of Securities, as the case may be, the Company shall be deemed to have been discharged from its obligations with respect to such Securities as provided in this Section on and after the date the conditions set forth in Section 1304 are satisfied (hereinafter called "Defeasance"). For this purpose, such Defeasance means that the Company shall be deemed to have paid and discharged the entire indebtedness represented by such Securities and to have satisfied all their other obligations under such Securities and this Indenture insofar as such Securities are concerned (and the Trustee, at the expense of the Company, shall execute proper instruments acknowledging the same), subject to the following which shall survive until otherwise terminated or discharged hereunder: (1) the rights of Holders of such Securities to receive, solely from the trust fund described in Section 1304 and as more fully set forth in such Section, payments in respect of the principal of and any premium and interest on such Securities when payments are due, (2) the obligations of the Company with respect to such Securities under Sections 304, 305, 306, 1002 and 1003, and with respect to the payment of Additional Amounts, if any, on such Securities as contemplated by Section 1004 (3) the rights, powers, trusts, duties and immunities of the Trustee hereunder and (4) this Article. Subject to compliance with this Article, the Company may exercise its option (if any) to have this Section applied to any Securities notwithstanding the prior exercise of its option (if any) to have Section 1303 applied to such Securities. -75- SECTION 1303. Covenant Defeasance. Upon exercise by either the Company of its option (if any) under this Section in respect of any Securities or any series of Securities, as the case may be, (1) the Company shall be released from their obligations under Section 801(3), Sections 1006 through 1010, inclusive, and any covenants provided pursuant to Section 301(19), 901(2) or 901(7) for the benefit of the Holders of such Securities, and (2) the occurrence of any event specified in Sections 501(4) (with respect to any of Section 801(3), Sections 1006 through 1010, inclusive, and any such covenants provided pursuant to Section 301(19), 901(2) or 901(7)) and 501(7) shall be deemed not to be or result in an Event of Default, in each case with respect to such Securities as provided in this Section on and after the date the conditions set forth in Section 1304 are satisfied (hereinafter called "Covenant Defeasance"). For this purpose, such Covenant Defeasance means that, with respect to such Securities, the Company may omit to comply with and shall have no liability in respect of any term, condition or limitation set forth in any such specified Section (to the extent so specified in the case of Section 501(4)), whether directly or indirectly by reason of any reference elsewhere herein to any such Section or by reason of any reference in any such Section to any other provision herein or in any other document, but the remainder of this Indenture and such Securities shall be unaffected thereby. SECTION 1304. Conditions to Defeasance or Covenant Defeasance. The following shall be the conditions to the application of Section 1302 or Section 1303 to any Securities or any series of Securities, as the case may be: (1) The Company shall irrevocably have deposited or caused to be deposited with the Trustee (or another trustee which satisfies the requirements contemplated by Section 609 and agrees to comply with the provisions of this Article applicable to it) as trust funds in trust for the purpose of making the following payments dedicated solely to, the benefits of the Holders of such Securities, (A) money in an amount, or (B) U.S. Government Obligations which through the scheduled payment of principal and interest in respect thereof in accordance with their terms will provide, not later than one day before the due date of any payment, money in an amount, or (C) a combination thereof, in each case sufficient, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee, to pay and discharge, and which shall be applied by the Trustee (or any such other qualifying trustee) to pay and discharge, (i) the principal of and any premium and interest on such Securities on the respective Stated Maturities, and (ii) any mandatory sinking fund payments or analogous payments applicable to such Outstanding Securities on the day on which such payments are due and payable, in accordance with the terms of this Indenture and such Securities. As used herein, "U.S. Government Obligation" means (x) any security which is (i) a direct obligation of the United States of America for the payment of which the full faith and credit of the United States of America is pledged or (ii) an obligation of a Person controlled or supervised by and acting as an agency or instrumentality of the United States of America the payment of which is unconditionally guaranteed as a -76- full faith and credit obligation by the United States of America, which, in either case (i) or (ii), is not callable or redeemable at the option of the issuer thereof, and (y) any depositary receipt issued by a bank (as defined in Section 3(a)(2) of the Securities Act) or trust company as custodian with respect to any U.S. Government Obligation which is specified in Clause (x) above and held by such bank for the account of the holder of such depositary receipt, or with respect to any specific payment of principal of or interest on any U.S. Government Obligation which is so specified and held, provided that (except as required by law) such custodian is not authorized to make any deduction from the amount payable to the holder of such depositary receipt from any amount received by the custodian in respect of the U.S. Government Obligation or the specific payment of principal or interest evidenced by such depositary receipt. (2) The Company shall have delivered to the Trustee an Opinion of Counsel stating that (A) the Company has received from, or there has been published by, the Internal Revenue Service a ruling or (B) since the date of this instrument, there has been a change in the applicable U.S. Federal income tax law, in either case (A) or (B) to the effect that, and based thereon such opinion shall confirm that, the Holders or beneficial owners of such Securities will not recognize gain or loss for U.S. Federal income tax purposes as a result of the deposit, Defeasance and discharge to be effected with respect to such Securities and will be subject to U.S. Federal income tax on the same amount, in the same manner and at the same times as would be the case if such deposit, Defeasance and Discharge were not to occur. (3) The Company shall have delivered to the Trustee an Opinion of Counsel to the effect that the Holders or beneficial owners of such Securities will not recognize gain or loss for U.S. Federal income tax purposes as a result of the deposit and Covenant Defeasance to be effected with respect to such Securities and will be subject to U.S. Federal income tax on the same amount, in the same manner and at the same times as would be the case if such deposit and Covenant Defeasance were not to occur. (4) The Company shall have delivered to the Trustee an Opinion of Counsel to the effect that such deposit, Defeasance and discharge, or such deposit and Covenant Defeasance, as the case may be, will not cause the Holders or beneficial owners of such Securities, to recognize income, gain or loss for Netherlands tax purposes, and to the effect that all payments out of the trust fund will be made free and exempt from any and all withholding or other income taxes of whatever nature of The Netherlands or any political subdivision or taxing authority thereof or therein, except in the case of Holders or beneficial owners who would have been subject to such taxes on income in respect of the Securities in the absence of such deposit, Defeasance and discharge, or such deposit and Covenant Defeasance, as the case may be. (5) The Company shall have delivered to the Trustee an Officers' Certificate to the effect that neither such Securities nor any other Securities of the same series, if then listed on any securities exchange, will be delisted as a result of such deposit. -77- (6) No event which is, or after notice or lapse of time or both would become, an Event of Default with respect to such Securities or any other Securities shall have occurred and be continuing at the time of such deposit or, with regard to any such event specified in Sections 501(5) and (6), at any time on or prior to the 90th day after the date of such deposit (it being understood that this condition shall not be deemed satisfied until after such 90th day). (7) Such Defeasance or Covenant Defeasance shall not cause the Trustee to have a conflicting interest within the meaning of the Trust Indenture Act (assuming all Securities are in default within the meaning of such Act). (8) Such Defeasance or Covenant Defeasance shall not result in a breach or violation of, or constitute a default under, any other agreement or instrument to which the Company is a party or by which it is bound. (9) Such Defeasance or Covenant Defeasance shall not result in the trust arising from such deposit constituting an investment company within the meaning of the Investment Company Act unless such trust shall be registered under such Act or exempt from registration thereunder. (10) The Company shall have delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that all conditions precedent with respect to such Defeasance or Covenant Defeasance have been complied with. SECTION 1305. Deposited Money and U.S. Government Obligations to Be Held in Trust; Miscellaneous Provisions. Subject to the provisions of the last paragraph of Section 1003, all money and U.S. Government Obligations (including the proceeds thereof) deposited with the Trustee or other qualifying trustee (solely for purposes of this Section and Section 1306, the Trustee and any such other trustee are referred to collectively as the "Trustee") pursuant to Section 1304 in respect of any Securities shall be held in trust and applied by the Trustee, in accordance with the provisions of such Securities and this Indenture, to the payment, either directly or through any such Paying Agent (including the Company acting as its own Paying Agent) as the Trustee may determine, to the Holders of such Securities, of all sums due and to become due thereon in respect of principal and any premium and interest, but money so held in trust need not be segregated from other funds except to the extent required by law. The Company shall pay and indemnify the Trustee against any tax, fee or other charge imposed on or assessed against the U.S. Government Obligations deposited pursuant to Section 1304 or the principal and interest received in respect thereof other than any such tax, fee or other charge which by law is for the account of the Holders of Outstanding Securities. -78- Anything in this Article to the contrary notwithstanding, the Trustee shall deliver or pay to the Company from time to time upon Company Request any money or U.S. Government Obligations held by it as provided in Section 1304 with respect to any Securities which, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee, are in excess of the amount thereof which would then be required to be deposited to effect the Defeasance or Covenant Defeasance, as the case may be, with respect to such Securities. SECTION 1306. Reinstatement. If the Trustee or the Paying Agent is unable to apply any money in accordance with this Article with respect to any Securities by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, then the obligations under this Indenture and such Securities from which the Company has been discharged or released pursuant to Section 1302 or 1303 shall be revived and reinstated as though no deposit had occurred pursuant to this Article with respect to such Securities, until such time as the Trustee or Paying Agent is permitted to apply all money held in trust pursuant to Section 1305 with respect to such Securities in accordance with this Article; provided, however, that if the Company makes any payment of principal of or any premium or interest on any such Security following such reinstatement of its obligations, the Company shall be subrogated to the rights (if any) of the Holders of such Securities to receive such payment from the money so held in trust. This instrument may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument. -79- IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed, and the Trustee corporate seal to be hereunto affixed and attested, all as of the day and year first above written. PHILIPS ELECTRONICS N.V. By /s/ D.G. Eustace ---------------------------- By /s/ H. Bodt ---------------------------- MORGAN GUARANTY TRUST COMPANY OF NEW YORK By /s/ John W. Cole ---------------------------- Attest: /s/ Robert Rich - ---------------------------- -80- TABLE OF CONTENTS
PAGE ---- PARTIES................................................................................. 1 RECITALS OF THE COMPANY................................................................. 1 ARTICLE ONE DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION SECTION 101. Definitions: Act..................................................................... 2 Affiliate; control...................................................... 2 Authenticating Agent.................................................... 2 Board of Management..................................................... 2 Board Resolution........................................................ 2 Business Day............................................................ 2 Commission.............................................................. 2 Company................................................................. 2 Company Request; Company Order.......................................... 3 Corporate Trust Office.................................................. 3 corporation............................................................. 3 Covenant Defeasance..................................................... 3 Defaulted Interest...................................................... 3 Defeasance.............................................................. 3 Depositary.............................................................. 3 Encumbrance............................................................. 3 European Community...................................................... 3 Event of Default........................................................ 3 Exchange Act............................................................ 3 Expiration Date......................................................... 3 Global Security......................................................... 3 Group Equity............................................................ 4 Holder.................................................................. 4 Indenture............................................................... 4 interest................................................................ 4 Interest Payment Date................................................... 4 Investment Company Act.................................................. 4 Maturity................................................................ 4 Notice of Default....................................................... 4 Officers' Certificate................................................... 4 Opinion of Counsel...................................................... 4 Original Issue Discount Security........................................ 5
-i-
PAGE ---- Outstanding............................................................. 5 Paying Agent............................................................ 6 Person.................................................................. 6 Place of Payment........................................................ 6 Predecessor Security.................................................... 6 Principal Property...................................................... 6 Redemption Date......................................................... 6 Redemption Price........................................................ 6 Regular Record Date..................................................... 6 Restricted Subsidiary................................................... 6 Secretary............................................................... 7 Securities.............................................................. 7 Securities Act.......................................................... 7 Security Register and Security Registrar................................ 7 Special Record Date..................................................... 7 Stated Maturity......................................................... 7 Subsidiary.............................................................. 7 Trust Indenture Act..................................................... 7 Trustee................................................................. 7 U.S. Government Obligation.............................................. 7 SECTION 102. Compliance Certificates and Opinions.................................... 8 SECTION 103. Form of Documents Delivered to Trustee.................................. 8 SECTION 104. Acts of Holders; Record Dates........................................... 9 SECTION 105. Notices, Etc., to Trustee and Company................................... 11 SECTION 106. Notice to Holders; Waiver............................................... 11 SECTION 107. Language of Notices, Etc................................................ 12 SECTION 108. Conflict with Trust Indenture Act....................................... 12 SECTION 109. Effect of Headings and Table of Contents................................ 12 SECTION 110. Successors and Assigns.................................................. 12 SECTION 111. Separability Clause..................................................... 12 SECTION 112. Benefits of Indenture................................................... 13 SECTION 113. Governing Law........................................................... 13 SECTION 114. Saturdays, Sundays and Legal Holidays................................... 13 SECTION 115. Appointment of Agent for Service........................................ 13 ARTICLE TWO SECURITY FORMS SECTION 201. Forms Generally......................................................... 15 SECTION 202. Form of Face of Security................................................ 15 SECTION 203. Form of Reverse of Security............................................. 17 SECTION 204. Form of Legend for Global Securities.................................... 23 SECTION 205. Form of Trustee's Certificate of Authentication......................... 23 ARTICLE THREE
-ii-
PAGE ---- THE SECURITIES SECTION 301. Amount Unlimited; Issuable in Series.................................... 24 SECTION 302. Denominations........................................................... 26 SECTION 303. Execution, Authentication, Delivery and Dating.......................... 27 SECTION 304. Temporary Securities.................................................... 28 SECTION 305. Registration, Registration of Transfer and Exchange..................... 29 SECTION 306. Mutilated, Destroyed, Lost and Stolen Securities........................ 30 SECTION 307. Payment of Interest; Interest Rights Preserved.......................... 31 SECTION 308. Persons Deemed Owners................................................... 32 SECTION 309. Cancellation............................................................ 33 SECTION 310. Computation of Interest................................................. 33 ARTICLE FOUR SATISFACTION AND DISCHARGE SECTION 401. Satisfaction and Discharge of Indenture................................. 34 SECTION 402. Application of Trust Money.............................................. 35 ARTICLE FIVE REMEDIES SECTION 501. Events of Default....................................................... 36 SECTION 502. Acceleration of Maturity; Rescission and Annulment...................... 37 SECTION 503. Collection of Indebtedness and Suits for Enforcement by Trustee.............................................. 38 SECTION 504. Trustee May File Proofs of Claim........................................ 38 SECTION 505. Trustee May Enforce Claims Without Possession of Securities....................................................... 39 SECTION 506. Application of Money Collected.......................................... 39 SECTION 507. Limitation on Suits..................................................... 40 SECTION 508. Unconditional Right of Holders to Receive Principal, Premium and Interest................................................ 40 SECTION 509. Restoration of Rights and Remedies...................................... 41 SECTION 510. Rights and Remedies Cumulative.......................................... 41 SECTION 511. Delay or Omission Not Waiver............................................ 41 SECTION 512. Control by Holders...................................................... 41 SECTION 513. Waiver of Past Defaults................................................. 42
-iii-
PAGE ---- SECTION 514. Undertaking for Costs................................................... 42 SECTION 515. Waiver of Usury, Stay or Extension Laws................................. 43 ARTICLE SIX THE TRUSTEE SECTION 601. Certain Duties and Responsibilities..................................... 44 SECTION 602. Notice of Defaults...................................................... 45 SECTION 603. Certain Rights of Trustee............................................... 45 SECTION 604. Not Responsible for Recitals or Issuance of Securities.................. 46 SECTION 605. May Hold Securities..................................................... 46 SECTION 606. Money Held in Trust..................................................... 47 SECTION 607. Compensation and Reimbursement.......................................... 47 SECTION 608. Conflicting Interests................................................... 47 SECTION 609. Corporate Trustee Required; Eligibility................................. 48 SECTION 610. Resignation and Removal; Appointment of Successor....................... 48 SECTION 611. Acceptance of Appointment by Successor.................................. 49 SECTION 612. Merger, Conversion, Consolidation or Succession to Business......................................................... 50 SECTION 613. Preferential Collection of Claims Against Company....................... 51 SECTION 614. Appointment of Authenticating Agent..................................... 51 ARTICLE SEVEN HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY SECTION 701. Company to Furnish Trustee Names and Addresses of Holders............................................... 54 SECTION 702. Preservation of Information; Communications to Holders.......................................................... 54 SECTION 703. Reports by Trustee...................................................... 54 SECTION 704. Reports by Company...................................................... 55 ARTICLE EIGHT CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE SECTION 801. Company May Consolidate, Etc., Only on Certain Terms....................................................... 56 SECTION 802. Successor Substituted................................................... 57
-iv-
PAGE ---- ARTICLE NINE SUPPLEMENTAL INDENTURES SECTION 901. Supplemental Indentures Without Consent of Holders...................... 58 SECTION 902. Supplemental Indentures With Consent of Holders......................... 59 SECTION 903. Execution of Supplemental Indentures.................................... 60 SECTION 904. Effect of Supplemental Indentures....................................... 60 SECTION 905. Conformity with Trust Indenture Act..................................... 60 SECTION 906. Reference in Securities to Supplemental Indentures...................... 61 ARTICLE TEN COVENANTS SECTION 1001. Payment of Principal, Premium and Interest.............................. 62 SECTION 1002. Maintenance of Office or Agency......................................... 62 SECTION 1003. Money for Securities Payments to Be Held in Trust....................... 63 SECTION 1004. Additional Amounts...................................................... 64 SECTION 1005. Statement by Officers as to Default..................................... 64 SECTION 1006. Existence............................................................... 65 SECTION 1007. Maintenance of Properties............................................... 65 SECTION 1008. Payment of Taxes and Other Claims....................................... 65 SECTION 1009. Limitations on Liens.................................................... 65 SECTION 1010. Limitation on Sales and Leasebacks...................................... 67 SECTION 1011. Waiver of Certain Covenants............................................. 68 ARTICLE ELEVEN REDEMPTION OF SECURITIES SECTION 1101. Applicability of Article................................................ 69 SECTION 1102. Election to Redeem; Notice to Trustee................................... 69 SECTION 1103. Selection by Trustee of Securities to Be Redeemed....................... 69 SECTION 1104. Notice of Redemption.................................................... 70 SECTION 1105. Deposit of Redemption Price............................................. 71 SECTION 1106. Securities Payable on Redemption Date................................... 71 SECTION 1107. Securities Redeemed in Part............................................. 71 SECTION 1108. Optional Redemption Due to Change in Tax Treatment...................... 72
-v-
PAGE ---- ARTICLE TWELVE SINKING FUNDS SECTION 1201. Applicability of Article................................................ 73 SECTION 1202. Satisfaction of Sinking Fund Payments with Securities................... 73 SECTION 1203. Redemption of Securities for Sinking Fund............................... 73 ARTICLE THIRTEEN DEFEASANCE AND COVENANT DEFEASANCE SECTION 1301. Option of Company to Effect Defeasance or Covenant Defeasance................................................. 75 SECTION 1302. Defeasance and Discharge................................................ 75 SECTION 1303. Covenant Defeasance..................................................... 76 SECTION 1304. Conditions to Defeasance or Covenant Defeasance......................... 76 SECTION 1305. Deposited Money and U.S. Government Obligations to Be Held in Trust; Miscellaneous Provisions....................... 78 SECTION 1306. Reinstatement........................................................... 79
-vi- EX-4.3 6 u45117exv4w3.txt FIRST SUPPLEMENTAL INDENTURE DATED 6 MAY 1994 Exhibit 4.3 PHILIPS ELECTRONICS N.V., (previously called N.V. Philips' Gloeilampenfabrieken) Issuer TO MORGAN GUARANTY TRUST COMPANY OF NEW YORK, Trustee -------------- FIRST SUPPLEMENTAL INDENTURE Dated as of May 6, 1994 -------------- Debt Securities FIRST SUPPLEMENTAL INDENTURE, dated as of May 6, 1994, between PHILIPS ELECTRONICS N.V., a corporation duly organized and validly existing under the laws of The Netherlands (herein called "New Electronics" and previously called N.V. Philips' Gloeilampenfabrieken), having its principal office at Groenewoudseweg 1, 5621 BA Eindhoven, The Netherlands and MORGAN GUARANTY TRUST COMPANY OF NEW YORK, a banking corporation duly organized and existing under the laws of New York, as Trustee under the Indenture hereinafter defined (herein called the "Trustee"). RECITALS Philips Electronics N.V., the parent company of N.V. Philips Gloeilampenfabrieken before the Merger (as hereinafter defined), has heretofore executed and delivered to the Trustee a certain indenture, dated as of August 1, 1993 (herein called the "Indenture"), pursuant to which one or more series of unsecured debentures, notes or other evidences of indebtedness (herein called the "Securities") may be issued from time to time. All terms used in this First Supplemental Indenture which are defined in the Indenture and not defined herein shall have the meanings assigned to them in the Indenture. Subsection (1) of Section 801 of the Indenture provides that the Company shall not merge into any other Person unless the Person into which the Company is merged shall expressly assume, by a supplement to the Indenture, the due and punctual payment of the principal of and any premium and interest (including all additional amounts, if any, payable pursuant to Section 1004 of the Indenture and subsection (3) of Section 801 of the Indenture) on all the Securities and the performance or observance of every covenant of the Indenture to be performed or observed by the Company. Subsection (1) of Section 901 of the Indenture provides that a Supplemental Indenture may be entered into by the Company when authorized by a Board Resolution, without the consent of any Holders, for the purpose of evidencing the succession of another Person to the Company and the assumption by any such successor of the covenants of the Company contained in the Indenture. Simultaneously herewith, the Company has merged into its wholly owned subsidiary, New Electronics (the "Merger"). The Company desires and hereby requests the Trustee to join with it in the execution and delivery of this First Supplemental Indenture. The Company has furnished the Trustee with (i) Opinions of Counsel stating that the execution of the First Supplemental Indenture is authorized or permitted by the Indenture, (ii) an Officers' Certificate stating that all conditions precedent provided for in the Indenture with respect to this First Supplemental Indenture have been complied with and (iii) a copy of the resolutions of the Board of Management of New Electronics certified by its Secretary pursuant to which New Electronics' execution and delivery of this First Supplemental Indenture has been authorized. All things necessary to make this First Supplemental Indenture a valid agreement between New Electronics and the Trustee and a valid supplement to the Indenture have been done. NOW, THEREFORE, THIS FIRST SUPPLEMENTAL INDENTURE WITNESSETH: For and in consideration of the premises, the parties covenant and agree: (1) New Electronics hereby expressly assumes the due and punctual payment of the principal of and any premium and interest (including all additional amounts, if any, payable pursuant to Section 1004 of the Indenture and subsection (3) of Section 801 of the Indenture) on all the Securities and the performance or observance of every covenant of the Indenture on the part of the Company to be performed or observed. (2) New Electronics hereby agrees to indemnify the Holder or the beneficial owner of each Security against (a) any tax, assessment or governmental charge imposed on any such Holder or the beneficial owner or required to be withheld or deducted from -2- any payment to such Holder or the beneficial owner as a consequence of the Merger and (b) any costs or expenses of the act of the Merger. (3) The Recitals herein contained are made by the Company and the Trustee shall have no responsibility therefor. The Trustee shall have no responsibility for the validity or sufficiency of this First Supplemental Indenture. (4) No notation on Securities authenticated and delivered hereafter or exchange of new Securities for Outstanding Securities shall be required in respect of this First Supplemental Indenture. This instrument may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument. -3- IN WITNESS WHEREOF, the parties hereto have caused this First Supplemental Indenture to be duly executed on behalf of each of them all as of the day and year first above written. PHILIPS ELECTRONICS N.V. (Previously called N.V. Philips' Gloeilampenfabrieken) By: /s/ D.G. Eustace ----------------------- Name: D.G. Eustace Title: Executive Vice-President and Member of the Board of Management By: /s/ F.P. Carrubba ----------------------- Name: F.P. Carrubba Title: Executive Vice-President and Member of the Board of Management MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as Trustee By: /s/ John W. Cole ----------------------- Name: John W. Cole Title: Vice President -4- STATE OF NEW YORK ) ) ss.: COUNTY OF NEW YORK ) On the sixth day of May, 1994, before me personally came John W. Cole, to me known, who, being by me duly sworn, did depose and say that he is Vice President of MORGAN GUARANTY TRUST COMPANY of New York, one of the corporations described in and which executed the foregoing instrument, and that he signed his name thereto by authority of the Board of Directors. By: /s/ Joanne E. Ilse ------------------------------- Joanne E. Ilse Notary Public, State of New York No. 01IL5018680 Qualified in Queens County Commission Expires October 4, 1995 [NOTARIAL SEAL] -5- EX-4.4 7 u45117exv4w4.txt FORM OF SECOND SUPPLEMENTAL INDENTURE Exhibit 4.4 ================================================================================ KONINKLIJKE PHILIPS ELECTRONICS N.V. As Issuer TO CITIBANK N.A. As Trustee --------------- SECOND SUPPLEMENTAL INDENTURE Dated as of [ ], 2002 TO THE INDENTURE BETWEEN KONINKLIJKE PHILIPS ELECTRONICS N.V. (formerly Philips Electronics N.V.), AS ISSUER, AND CITIBANK N.A. (as successor to MORGAN GUARANTY TRUST COMPANY OF NEW YORK) AS TRUSTEE, DATED AS OF AUGUST 1, 1993, AS AMENDED BY THE FIRST SUPPLEMENTAL INDENTURE BETWEEN KONINKLIJKE PHILIPS ELECTRONICS N.V. (formerly Philips Electronics N.V.) AS ISSUER, AND CITIBANK N.A. (as successor to MORGAN GUARANTY TRUST COMPANY OF NEW YORK) AS TRUSTEE, DATED AS OF MAY 6, 1994 ---------------- ================================================================================ TABLE OF CONTENTS
Page ARTICLE ONE AMENDMENTS TO THE INDENTURE SECTION 101. SECURITY FORMS.......................................2 SECTION 102. COVENANTS............................................2 ARTICLE TWO MISCELLANEOUS PROVISIONS SECTION 201. INTEGRAL PART........................................3 SECTION 202. GENERAL DEFINITIONS..................................3 SECTION 203. ADOPTION, RATIFICATION AND CONFIRMATION..............3 SECTION 204. COUNTERPARTS.........................................3 SECTION 205. SEVERABILITY.........................................3 SECTION 206. TRUSTEE NOT RESPONSIBLE FOR RECITALS.................3 SECTION 207. GOVERNING LAW........................................4
KONINKLIJKE PHILIPS ELECTRONICS N.V., AS ISSUER SECOND SUPPLEMENTAL INDENTURE THIS SECOND SUPPLEMENTAL INDENTURE, dated as of , 2002, is entered into between KONINKLIJKE PHILIPS ELECTRONICS N.V., a corporation duly organized and validly existing under the laws of The Netherlands (the "ISSUER"), having its registered office at Breitner Center, Amstelplein 2, 1070 MX Amsterdam, The Netherlands, and CITIBANK N.A., (as successor to Morgan Guaranty Trust Company of New York pursuant to a Tripartite Agreement among the Issuer, Citibank N.A. and Morgan Guaranty Trust Company of New York dated May 20, 1994), a company duly organized and existing under the laws of the State of New York, as Trustee (the "TRUSTEE") under the Indenture dated as of August 1, 1993 between the Issuer and the Trustee (the "INITIAL BASE INDENTURE"), as amended by the First Supplemental Indenture dated as of May 6, 1994 between the Issuer and the Trustee (the "FIRST SUPPLEMENTAL INDENTURE" and, collectively, the "SUPPLEMENTED BASE INDENTURE" and, as supplemented by this Second Supplemental Indenture, the "INDENTURE"). RECITALS The Issuer has delivered to the Trustee the Initial Base Indenture on August 1, 1993 and the First Supplemental Indenture on May 6, 1994. Section 901(5) of the Supplemented Base Indenture provides that the Issuer, when authorized by or pursuant to a Board Resolution, and the Trustee, at any time and from time to time, may enter into one or more indentures supplemental to the Indenture to add to, change or eliminate any of the provisions of this Indenture in respect of the Securities of one or more series, provided that any such addition, change or elimination (A) shall neither (i) apply to any Security of any series Outstanding when such supplemental Indenture is executed and entitled to the benefit of such provision nor (ii) modify the rights of any Holder of any such Security with respect to such provision or (B) shall become effective only when there is no such Security Outstanding. The Issuer and the Trustee deem it advisable to enter into this Second Supplemental Indenture for the purpose of amending and supplementing certain sections of the Supplemented Base Indenture. All conditions and requirements of the Indenture necessary to make this Second Supplemental Indenture a valid, binding and legal instrument in accordance with its terms have been performed and fulfilled by the parties hereto. NOW, THEREFORE, THIS SUPPLEMENTAL INDENTURE WITNESSETH, For and in consideration of the premises, it is mutually agreed, for the equal and proportionate benefit of all Holders, as follows: 1 ARTICLE ONE AMENDMENTS TO THE INDENTURE SECTION 101. SECURITY FORMS Section 203 of the Supplemented Base Indenture shall be amended by: (a) Inserting after the paragraph (d) of Section 203 on page 21 of the Supplemented Base Indenture the following: "(e) any withholding or deduction imposed on a payment to an individual which is required to be made pursuant to any European Union Directive on the taxation of savings implementing the conclusions of ECOFIN Council meeting of November 26-27, 2000 or any law implementing or complying with, or introduced in order to conform to, such Directive; (f) any withholding or deduction required to be made with respect to a Security presented for payment by or on behalf of a Holder of such Security who would have been able to avoid such withholding or deduction by presenting the relevant Security to another Paying Agent in a member state of the European Union; or" (b) deleting paragraph (e) of Section 203 and replacing it with new paragraph (g) as follows: "(g) any combination of (a), (b), (c), (d), (e) or (f) above." SECTION 102. COVENANTS Article 10 of the Supplemented Base Indenture shall be amended by: (a) Inserting the following sentence of the end of the second paragraph Section 1004 ("ADDITIONAL AMOUNTS"): "The Company further covenants that if the conclusions of the ECOFIN Council meeting of November 26-27, 2000 are implemented, it will maintain a paying agent in a European Union member state that will not be obliged to withhold or deduct tax pursuant to any directive implementing such conclusions (such obligation of the Company being conditional upon the existence of such member state). The Company may, at any time, terminate the appointment of any paying agent, appoint additional paying agents, and approve any change in the office through which any paying agent acts. In the event that the Issuer should change its paying agent provided in accordance with this clause, the Issuer shall give notice in accordance with Section 105 of the Indenture." 2 ARTICLE TWO MISCELLANEOUS PROVISIONS SECTION 201. INTEGRAL PART This Second Supplemental Indenture constitutes an integral part of the Indenture. In the event of a conflict or inconsistency between the Supplemented Base Indenture and this Second Supplemental Indenture, this Second Supplemental Indenture shall control. SECTION 202. GENERAL DEFINITIONS For all purposes of this Second Supplemental Indenture: capitalized terms used herein without definition shall have the meanings specified in the Supplemented Base Indenture; and the terms "HEREIN", "HEREOF", "HEREUNDER", "HEREOF" and other words of similar import refer to this Second Supplemental Indenture. SECTION 203. NO APPLICATION TO SECURITIES OF ALL SERIES OUTSTANDING The provisions of the Indenture effected through this Second Supplemental Indenture shall not have retroactive effect and shall neither (i) apply to any Security of any series Outstanding when such Second Supplemental Indenture is executed and entitled to the benefit of such provision nor (ii) modify the rights of any Holder of any such Security with respect to such provision. SECTION 204. ADOPTION, RATIFICATION AND CONFIRMATION The Supplemented Base Indenture, as supplemented and amended by this Second Supplemental Indenture, is in all respects hereby adopted, ratified and confirmed. SECTION 205. COUNTERPARTS This Second Supplemental Indenture may be executed in any number of counterparts, each of which when so executed shall be deemed an original; and all such counterparts shall together constitute but one and the same instrument. SECTION 206. SEVERABILITY If any provision in the Supplemented Base Indenture or this Second Supplemental Indenture shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. SECTION 207. TRUSTEE NOT RESPONSIBLE FOR RECITALS The recitals herein contained are made by the Issuer and not by the Trustee, and the Trustee assumes no responsibility for the correctness thereof. The Trustee makes no representation as to the validity or sufficiency of this Second Supplemental Indenture. 3 SECTION 208. GOVERNING LAW THIS SECOND SUPPLEMENTAL INDENTURE SHALL BE GOVERNED BY AND BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. 4 IN WITNESS WHEREOF, the parties hereto have caused this Second Supplemental Indenture to be duly executed and their respective corporate seals to be hereunto fixed and attested as of the day and year first written above. KONINKLIJKE PHILIPS ELECTRONICS N.V. as Issuer By: ------------------------------- Name: Title: CITIBANK N.A. as Trustee By: ------------------------------- Name: Title: 5 EX-5.1 8 u45117exv5w1.txt OPINION OF MR. A.F.VERDAM Exhibit 5.1 DR. A.F. VERDAM BREITNER CENTER AMSTELPLEIN 2 P.O. BOX 77900 1070 MX AMSTERDAM THE NETHERLANDS TEL: +31 20 5977237 FAX: +31 20 5977230 To: Koninklijke Philips Electronics N.V., Breitner Center, Amstelplein 2, 1096 BC Amsterdam, The Netherlands. Amsterdam, June 13, 2002 Dear Sirs, I have acted as Legal Advisor to the Koninklijke Philips Electronics N.V. (the "COMPANY") as to matters of Dutch law and I am giving this legal opinion to you in connection with the contemplated issue by the Company of securities ("Debt Securities") under and in accordance with the indenture dated as of August 1, 1993 (the "Indenture") between the Company and Citibank N.A. as successor to Morgan Guaranty Trust Company of New York, as trustee (the "Trustee"), as amended by the first supplemental indenture, dated as of May 6, 1994 (the "First Supplemental indenture") and to be further amended by a second supplemental indenture (the "Second Supplemental Indenture"). In connection herewith I, or legal advisors under my supervision, have examined the following documents: (a) a copy of the text of the executed Indenture; (b) a copy of the text of the executed First Supplemental Indenture; (c) a draft of the Second Supplemental Indenture, in the form proposed to be filed as an exhibit to the Company's registration statement on Form F-3 (the "Registration Statement") relating to the Debt Securities; (d) a copy of the text of the Koninklijke Philips Electronics N.V. Underwriting Agreement Standard Provisions (Debt Securities) in the form proposed to be filed as an exhibit to the Registration Statement (the "Underwriting Agreement"); (e) a copy of the text of the form of distribution agreement in the form proposed to be filed as an exhibit to the Registration Statement (the "Distribution Agreement") (f) a draft, dated June 12, 2002 of the Registration Statement, including a prospectus (the "Prospectus") relating to the Debt Securities; (the documents referred to under (a) through (e) collectively referred to as the "AGREEMENTS"), and (g) a copy of the resolutions of the Board of Management of the Company passed at the meeting of the Board of Management of the Company, held on January 22, 2002; (h) a copy of the resolutions of the Supervisory Board of the Company passed at the meeting of the Supervisory Board of the Company, held on February 1, 2002, and; (i) a copy of the resolutions of the Board of management of the Company passed at the meeting of the Board of management of the Company, held on May 28, 2002, (the documents referred to under (g) through (i) collectively referred to as the "BOARD RESOLUTIONS"); and all relevant documents of the Company and such further documents as I have considered necessary or appropriate for the preparation of this opinion. For the purposes of rendering this opinion I have assumed: (i) that, if and when the Debt Securities are issued, such issue will be duly authorised by a resolution of the Board of Management of the Company; (ii) that the Second Supplemental Indenture, the Underwriting Agreement, the Distribution Agreement and the Debt Securities have been or will be executed substantially in the form of the drafts and forms, and that the Registration Statement, including the Prospectus will be finalized substantially in the forms that I have reviewed for the purpose of rendering this opinion; (iii) the power, capacity and authority of all the parties (other than the Company) and that all the documents have been or will be (where appropriate) duly authorised, executed and delivered by all the parties thereto (other than the Company); (iv) that the Agreements are or will be within the capacity and powers of, and have been or will be duly authorised and executed by, and constitute the valid, binding and enforceable obligations of all the parties thereto (other than the Company); (v) that the parties to the Agreements (other than the Company) shall duly perform their respective obligations under the Agreements; (vi) the genuineness of all signatures on original documents and that the signatures on original documents are the signatures of the persons purported to have executed the same and the conformity of all copies to originals documents; (vii) that the Debt Securities will not be offered, transferred or sold, as part of their initial distribution or at any time thereafter, to any persons (including legal entities) established, domiciled or resident in the Netherlands; (viii) that the Company has submitted before the issue of the Debt Securities to the Netherlands Authority for the Financial Markets (Autoriteit Finaciele Markten) a statement that the laws and regulations of any jurisdiction where persons to whom the offer is made are resident are complied with; (ix) that the Debt Securities will be issued, offered, sold and delivered (a) as contemplated in accordance with the Indenture, the First Supplemental Indenture and the Second Supplemental Indenture, the Registration Statement and the Prospectus, (b) in accordance with applicable law and (c) with such terms as not to violate any applicable law (including, for the avoidance of doubt, any law applicable at the time of such issue, offer, sale and delivery); (x) that the Debt Securities will be executed in the name of the Company by the manual or facsimile signature of authorized representative(s), duly issued, delivered and authenticated in accordance with the terms of the Indenture, the First Supplemental indenture and the Second Supplemental Indenture and duly paid for. Based on the assumptions set out above in paragraph (i) up to and including (x) and subject to any relevant factual matters, documents and events not disclosed to me in the course of my examination referred to above, I am, at the date hereof, having regard to such legal consideration as I deem relevant of the following opinion: 1. the Company has been duly incorporated and is validly existing as a legal entity in the form of a limited liability company ("naamloze vennootschap") duly organised under the laws of The Netherlands; 2. the Debt Securities, if and when issued, will constitute valid and legally binding obligations of the Company under the laws of the Netherlands. I express no opinion of any law other than the laws of The Netherlands as presently existing. My opinion shall be governed by and construed in accordance with the laws of The Netherlands. The opinions expressed above are subject to bankruptcy, insolvency, fraudulent transfer, reorganisation, moratorium and similar laws of general applicability relating to or affecting creditor's rights and to general equity principles, such as the Netherlands legal principle of "reasonableness and fairness" ("redelijkheid en billijkheid"). I have relied as to certain factual matters on information obtained from public officials, officers of the Company or other sources believed by me to be responsible and I believe that you and I are justified to rely on such information. I hereby consent to the filing of this opinion as an exhibit to the Registration Statement and the references to my name under the heading "Validity of Securities" in the Prospectus. In giving such consent, I do not thereby admit that I am in the category of persons whose consent is required under Section 7 of the United States Securities Act of 1933, as amended. Yours faithfully, /s/ A.F. Verdam A.F. Verdam EX-5.2 9 u45117exv5w2.txt OPINION OF SULLIVAN & CROMWELL EXHIBIT 5.2 [on Sullivan & Cromwell Letterhead] June 14, 2002 Koninklijke Philips Electronics N.V., Breitner Center, Amstelplein 2, 1096 BC Amsterdam, The Netherlands. Dear Sirs: In connection with the registration under the Securities Act of 1933 (the "Act") of U.S.$2,500,000,000 principal amount of debt securities (the "Securities") of Koninklijke Philips Electronics N.V., a company organized under the laws of the Netherlands (the "Company"), we, as your United States counsel, have examined such corporate records, certificates and other documents, and such questions of law, as we have considered necessary or appropriate for the purposes of this opinion. Upon the basis of such examination, we advise you that, in our opinion, when (i) the Registration Statement has become effective under the Act, (ii) the Second Supplemental Indenture (the "Second Supplemental Indenture") to the Indenture relating to the Securities, dated August 1, 1993, between the Company and Citibank N.A., as successor Koninklijke Philips Electronics N.V. -2- trustee (the "Initial Indenture"), as supplemented by the First Supplemental Indenture, dated May 6, 1994, between the Company and Citibank N.A., as successor trustee (the "First Supplemental Indenture") and, together with the Second Supplemental Indenture and the Initial Indenture, the "Indenture"), has been duly authorized, executed and delivered, (iii) the terms of the Securities and of their issuance and sale have been duly established in conformity with the Indenture so as not to violate any applicable law or result in a default under or breach of any agreement or instrument binding upon the Company and so as to comply with any requirement or restriction imposed by any court or governmental body having jurisdiction over the Company, and (iv) the Securities have been duly executed and authenticated in accordance with the Indenture and issued and sold as contemplated in the Registration Statement, the Securities will constitute valid and legally binding obligations of the Company subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors' rights and to general equity principles. Koninklijke Philips Electronics N.V. -3- We note that, as of the date of this opinion, a judgment for money in an action based on a Security denominated in a foreign currency or currency unit in a Federal or state court in the United States ordinarily would be enforced in the United States only in United States dollars. The date used to determine the rate of conversion of the foreign currency or currency unit in which a particular Security is denominated into United States dollars will depend on various factors, including which court renders the judgment. In the case of a Security denominated in a foreign currency, a state court in the State of New York rendering a judgment on such Security would be required under Section 27 of the New York Judiciary Law to render such judgment in the foreign currency in which the Security is denominated, and such judgment would be converted into United States dollars at the exchange rate prevailing on the date of the entry of the judgment. The foregoing opinion is limited to the Federal laws of the United States and the laws of the State of New York and we are expressing no opinion as to the effect of the laws of any other jurisdiction. We note that, as to all matters of Netherlands law, you are being provided with the Koninklijke Philips Electronics N.V. -4- opinion, dated today's date, of Mr. Albert F. Verdam, Netherlands legal advisor to the Company. We have, with your approval, relied as to certain matters on information obtained from public officials, officers of the Company and other sources believed by us to be responsible. We have assumed that (i) the Initial Indenture and the First Supplemental Indenture have been, and the Second Supplemental Indenture will be, duly authorized, executed and delivered by the Trustee thereunder, (ii) the Initial Indenture and the First Supplemental Indenture have been, and the Second Supplemental Indenture will be, duly authorized, executed and delivered under Netherlands law and (iii) the Securities will constitute valid and legally binding obligations of the Company under Netherlands law, assumptions which we have not independently verified. We hereby consent to the filing of this opinion as an exhibit to the Registration Statement and to the reference to us under the heading "Validity of Securities" in the Prospectus included in the Registration Statement. In giving such consent, we do not thereby admit that we are in the category of persons whose consent is required under Section 7 of the Act. Very truly yours, /s/ Sullivan & Cromwell EX-8.1 10 u45117exv8w1.txt OPINION OF T.P.M.SCHMIT Exhibit 8.1 [on Philips International B.V. letterhead] To: Koninklijke Philips Electronics N.V., Breitner Center, Amstelplein 2, 1096 BC Amsterdam, The Netherlands. June 14, 2002 RE: Koninklijke Philips Electronincs N.V. - Registration Statement on Form F-3 Dear Sirs: I have acted as internal tax counsel to Koninklijke Philips Electronics N.V. (the "Debt Issuer") in connection with the registration statement on Form F-3, filed by the Debt Issuers (the "Registration Statement") under the Securities Act of 1933 (the "Act") of $ 2,500,000,000 aggregate amount of debt securities of the Debt Issuer. I hereby confirm to you my opinion as set forth in the Registration Statement under the caption "Taxation" insofar as it relates to matters of Netherlands income, gift and inheritance tax law and under the caption "Description of Debt Securities - Additional Amounts" insofar as it relates to withholding or deduction of Netherlands taxes, levies or similar charges. I hereby consent to the use of our name in, and the filing of this letter as an exhibit to, the Registration Statement. In giving such consent, I do not thereby admit that I am in the category of persons whose consent is required under Section 7 of the Act. Very truly yours, /s/ T.P.M. Schmit T.P.M. Schmit EX-8.2 11 u45117exv8w2.txt CONSENT OF SULLIVAN & CROMWELL Exhibit 8.2 [on Sullivan & Cromwell letterhead] June 14, 2002 Koninklijke Philips Electronics N.V., Breitner Center, Amstelplein 2, 1096 BC Amsterdam, The Netherlands. RE: Koninklijke Philips Electronics N.V.- Registration Statement on Form F-3 Dear Sirs: We have acted as United States counsel to Koninklijke Philips Electronics N.V. (the "Debt Issuer") in connection with the registration statement on Form F-3, filed by the Debt Issuer (the "Registration Statement") under the Securities Act of 1933 (the "Act") of $2,500,000,000 aggregate amount of debt securities (the "Debt Securities") of the Debt Issuer. In our opinion, the material United States federal income tax consequences to a purchaser of the Debt Securities are as set forth in the Registration Statement under the caption "Taxation - United States," subject to the qualifications and limitations set forth in the Registration Statement. We hereby consent to the use of our name in, and the filing of this letter as an exhibit to, the Registration Statement. In giving such consent, we do not thereby admit that we are in the category of persons whose consent is required under Section 7 of the Act. Very truly yours, /s/ Sullivan & Cromwell EX-12.1 12 u45117exv12w1.txt COMPUTATION OF RATIO OF EARNINGS EXHIBIT 12.1 I COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES (in millions of euros, except ratios)
Year ended December 31, ------------------------------------------------------------------- 2001 2000 1999 1998 1997 (a) IN ACCORDANCE WITH DUTCH GAAP * EARNINGS Income (loss) before taxes (2,326) 9,666 1,883 949 2,608 Dividend income from unconsolidated companies 85 150 2 1 14 Add: fixed charges 503 341 324 396 487 ---------- ----------- ----------- ----------- ----------- Total earnings, as defined (1,738) 10,157 2,209 1,346 3,109 FIXED CHARGES Interest paid 454 265 261 318 411 Costs related to indebtedness 10 14 15 17 20 Interest included in capital lease payments 3 1 1 2 2 Rental expense representative of interest 36 61 47 59 54 ---------- ----------- ----------- ----------- ----------- Total fixed charges, as defined 503 341 324 396 487 RATIO OF EARNINGS TO FIXED CHARGES (3.46) 29.79 6.82 3.40 6.38 (b) IN ACCORDANCE WITH US GAAP Total adjusted estimated earnings available for payment of fixed charges, after taking account of adjustments to income before taxes in accordance with US GAAP (1,762) 10,139 1,872 1,381 3,223 RATIO OF EARNINGS TO FIXED CHARGES (3.50) 29.73 5.78 3.49 6.62
o Reclassified for comparison purposes The ratio of earnings to fixed charges is computed by aggregating (a) in the case of Dutch GAAP, income (loss) before taxes adjusted for gains and losses on sale of unconsolidated companies and, in case of US GAAP, income (loss) from continuing operations before taxes, (b) dividend income receivable from unconsolidated companies and (c) fixed charges, and dividing the total by fixed charges. Fixed charges comprise (a) interest and similar payments including financing costs on all indebtedness and (b) one third of rental expense (being that portion of rental expense representative of the interest factor). Under US GAAP, the deficiency is equivalent to an amount of EUR 2,265 million for the year ended December 31, 2001. I COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES (in millions of euros, except ratios)
Periods ended March 31, -------------------------- 2002 2001 ---------- ------------- IN ACCORDANCE WITH US GAAP* EARNINGS Income before taxes 53 229 Dividend income from unconsolidated companies - 82 Add: fixed charges 115 79 -------- --------- Total earnings, as defined 168 390 FIXED CHARGES Interest paid 102 66 Costs related to indebtedness 2 3 Interest included in capital lease payments - 1 Rental expense representative of interest 11 9 -------- --------- Total fixed charges, as defined 115 79 RATIO OF EARNINGS TO FIXED CHARGES 1.46 4.94
- --------------- * US GAAP applied from January 1, 2002 onwards The ratio of earnings to fixed charges is computed by aggregating (a) income (loss) from continuing operations before taxes, (b) dividend income receivable from unconsolidated companies and (c) fixed charges, and dividing the total by fixed charges. Fixed charges comprise (a) interest and similar payments including financing costs on all indebtedness and (b) one third of rental expense (being that portion of rental expense representative of the interest factor). EX-23.4 13 u45117exv23w4.txt CONSENT OF KPMG Exhibit 23.4 CONSENT OF THE INDEPENDENT AUDITORS To the Supervisory Board and Board of Management of Koninklijke Philips Electronics N.V. We consent to the incorporation by reference in this registration statement on Form F-3 of our report dated February 5, 2002, relating to the consolidated balance sheets of Koninklijke Philips Electronics N.V. and subsidiaries as of December 31, 2001 and 2000, and the consolidated statements of income, cash flows and stockholders' equity for each of the years in the three-year period ended December 31, 2001, included in the December 31, 2001 annual report on Form 20-F of Koninklijke Philips Electronics N.V., and to the reference to our firm under the heading "Experts" in the prospectus. Eindhoven, The Netherlands June 14 , 2002. /s/ KPMG Accountants N.V. -----END PRIVACY-ENHANCED MESSAGE-----