Exhibit 10.86
[RELEVANT SUBSIDIARY OF HUNGARIAN TELEPHONE AND CABLE CORP.]
as Pledgor
and
POSTABANK ES TAKAREKPENZTAR RT.
as Pledgee
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MORTGAGE AND
PLEDGE AGREEMENT
SECURING BANK LOAN
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THIS MORTGAGE AND PLEDGE AGREEMENT SECURING BANK LOAN ("Pledge Agreement") is
made on October 15, 1996
BETWEEN:
(1) [Relevant Subsidiary of Hungarian Telephone and Cable Corp.]
(the "PLEDGOR" or the "BORROWER"); and
(2) ▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇. ▇▇▇▇ ▇▇▇▇▇▇▇▇, Vaci ut 48.
(the "PLEDGEE").
(the Pledgor and the Pledgee are hereinafter together referred
to as the "PARTIES").
WHEREAS:
(i) The Pledgee has issued a commitment letter dated September 30,
1996 which was amended the same day (the "Commitment Letter")
in which the Pledgee irrevocably stated and confirmed that it
would finance the telecommunication development of the
Pledgor, directly on one hand, and according to the terms and
conditions of the Commitment Letter with the cooperation of
enterprises jointly appointed by Fazis Rt. and the Pledgee on
the other, and the Pledgee shall accept full responsibility
for the provision of the facility;
(ii) Based on the Commitment Letter, the Parties entered into the
Borrower's Individual Loan Agreement on October 15, 1996;
(iii) In order to secure the Borrower's Individual Loan Agreement,
the Parties agreed to enter into security arrangements, i.e a
Security Agreement and this Pledge Agreement Securing Bank
Loan;
NOW IT IS HEREBY AGREED AS FOLLOWS:
1 INTERPRETATION
Terms defined in the Borrower's Individual Loan Agreement shall have
the same meanings in this Pledge Agreement save as otherwise provided
herein.
"BORROWER'S INDIVIDUAL LOAN AGREEMENT" means the individual loan
agreement the Borrower has entered into between the Pledgee as lender,
the Borrower as borrower and and HTCC USA as guarantor;
"CIVIL CODE" means the Act No. IV of 1959 as amended;
"MULTI CURRENCY CREDIT FACILITY AGREEMENT" means the credit
facility agreement made between Hungarotel Rt., Papatel Rt.,
KNC Rt., Raba-Com Rt., HTCC Consulting Rt. as borrowers,
Postabank es Takarekpenztar Rt. as lender and Hungarian
Telephone and Cable Corp. as guarantor effective as of October
15, 1996;
"OUTSTANDING OBLIGATIONS" means collectively, all moneys and
liabilities in the currency in which such moneys and liabilities are
expressed to be payable which are now or may at any time hereafter be
due, owing or incurred and which remain outstanding from any of the
obligations incurred under the Borrower's Individual Loan Agreement to
the Pledgee;
"PLEDGE" means the pledge created by this Agreement;
"PLEDGED GOODS" means all movable and immovable assets owned by the
Pledgor (i) which were acquired and/or furnished by the Pledgor under
the previous credit facilities borrowed by the Pledgor which are to be
repaid by the proceeds of the Borrower's Individual Loan Agreement and
(ii) which are or
will be acquired and/or furnished by using the Loan borrowed under the
Borrower's Individual Loan Agreement. A list of the immovable property
will be created in cooperation with the Pledgee within twenty one (21)
days of the execution of this Agreement and a list of the remaining
assets will be created within thirty (30) days of the execution of this
Agreement.
"REGISTRY OF ASSETS" means the registry to be kept by the Pledgor in
accordance with Section 42 of Act No. XVIII of 1991 on Accounting.
2 EXCLUDED GOODS
2.1 The Parties agree that the Pledged Goods do not include any assets
acquired by the Pledgor using funds other than those provided under the
Borrower's Individual Loan Agreement.
3 CREATION OF PLEDGE
3.1 The Pledgor hereby confirms its obligation to repay the Loan together
with interest thereon and any other sums, including interest in case of
late payment and execution costs, due in respect thereof under the
Borrower's Individual Loan Agreement.
3.2 The Parties hereby agree to create (i) a pledge securing the Loan over
the movable Pledged Goods and (ii) a mortgage over the immovable
Pledged Goods in order to secure the Outstanding Obligations of the
Pledgor in the amount of the HUF equivalent of USD __________ plus
interest and charges thereon.
3.3 The Parties agree that all of the Pledged Goods serve as
security for the total Outstanding Obligations.
4 CONTINUING SECURITY
4.1 The Pledge constituted by this Agreement shall:
(i) be a continuing security for the payment,
satisfaction and discharge in full of the
Outstanding Obligations and shall not be considered
as satisfied or discharged or prejudiced by any
intermediate payment, satisfaction or settlement of
the whole or any part of the Outstanding
Obligations or any other matter or thing
whatsoever;
(ii) be in addition to and shall not operate so as in
any way to prejudice or affect or be prejudiced or
affected by any encumbrance, guarantee, indemnity
or other right or remedy which the Pledgee (or any
person on their behalf) may now or at any time
hereafter hold for or in respect of the Outstanding
Obligations or any part thereof; and
(iii) not be prejudiced by any time or indulgence granted
to any person, or any abstention or delay by the
Pledgee in perfecting or enforcing any encumbrance,
securities, guarantees, rights or remedies that the
Pledgee may now or hereafter have from or against the
Pledgor.
5 RIGHTS AND OBLIGATIONS OF THE PLEDGOR
5.1 The Pledgor shall enter the Pledge into the Registry of
Assets.
5.2 The Pledgor at its cost shall enter into insurance contracts with
various insurance companies in accordance with Section 3.4 of the
Business Regulations for Loans of the Pledgee
covering the Pledged Goods. The Pledgor undertakes that it shall,
forthwith upon the execution of this Pledge Agreement, notify the
relevant insurance companies of the interest of the Pledgee in the
policies. In the event of a claim, the Pledgor undertakes to instruct
the relevant insurance company that the proceeds are to be deposited in
a special account held by the Pledgee, and may only be used to replace
the lost or damaged assets giving rise to the claim. The Pledgor shall
furnish the Pledgee with access to the aforesaid insurance policies on
request.
5.3 The Pledgor is entitled to use the Pledged Goods for their proper
purpose and shall ensure that the Pledged Goods are always maintained
with due care. This right includes the right to sell, transfer or
assign the Pledged Goods or any part thereof in accordance with its
normal course of business or otherwise with the prior written consent
of the Pledgee.
5.4 The Pledgor shall inform the Pledgee on any material change incurred in
the value and saleability of the Pledged Goods other than in the
ordinary course of business.
5.5 The Pledgor agree that the Pledgee will register a mortgage over the
immovable Pledged Goods for the total amount of the Outstanding
Obligations into the Land Registry in favour of the Pledgee.
6 RIGHTS AND OBLIGATIONS OF THE PLEDGEE
6.1 The Pledgee is entitled to check at any time on the premises
of the Pledgor the existence, secure handling and proper use
of the Pledged Goods. A person properly authorised by the
Pledgee is entitled to carry out such verification on behalf
of the Pledgee. The person acting on behalf of the Pledgee
shall prove his authorisation with an authorisation document
duly signed by the Pledgee.
6.2 The Pledgee may if, in its reasonable opinion, it considers it
necessary for securing the Outstanding Obligations, segregate at the
cost of the Pledgor the Pledged Goods from other assets of the Pledgor.
7 ENFORCEMENT OF PLEDGE
7.1 Upon the occurrence of an Event of Default and the expiry of the notice
period defined in clause 8.2 of the Borrower's Individual Loan
Agreement, and in the absence of waiver or any new agreement the
Pledgee may, during a period of 90 days, solicit offers for the Pledged
Goods.
7.1.1 If, at the end of the 90 day period, the Pledgee
has received a bona fide offer in writing (the
"Offer"), and which
(i) is backed with a bank guarantee from a bank
independent of the Lender; or
(ii) is backed with an unconditional irrevocable
guarantee from a company rated A by both Standard &
Poors and Moodys; or
(iii) is from a third party which itself is a company
rated A by both Standard & Poors and Moodys;
it will notify the Pledgor of all aspects of the
Offer and the Pledgor has 15 business days to make a
payment to the Bank equivalent to that of the Offer
in order to retain its ownership of the Pledged
Goods; if the Pledgor cannot match the payment terms
of the Offer within the 15 business day period, the
Bank is free to accept the Offer; the Pledgor will
take all actions necessary in order that the Pledgee
may perfect the sale of the Pledged Goods.
7.1.2 If, at the end of the 90 day period, the Pledgee
has received no Offers definied in Clause 7.1.1,
the Pledgor will have a further 90 day period to
solicit offers for the Pledged Goods. If the
Pledgor receive a bona fide offer in writing (the
"Pledgor's Offer"), it will notify the Pledgee
thereof. The Pledgee will have 15 business days to
accept the Pledgor's Offer;
7.1.3 if the Pledgor receives no offers by the end of
this further 90 day period, the Pledgee may
purchase 50% of the Pledged Goods for a price of 1
HUF.
7.2 The Pledgee confirms that until the occurrence of an Event of Default
the Pledgor shall be entitled to sell or deal with the Pledged Goods in
accordance with its normal course of business and to the extent
provided by the Borrower's Individual Loan Agreement.
7.3 The Pledgee may for the repayment of the Outstanding Obligations
enforce the Pledge in accordance with Chapter 2 of the Government
Decree No 39/1984 (XI.5.) on Bank Credits. The Pledgee is entitled to
choose from among the Pledged Goods listed in Schedule 1 those on which
it will enforce the Pledge.
8 REPRESENTATION
8.1 The Pledgor represents that:
(i) it is the sole owner of Pledged Goods, and, other
than in regard to loans which will be repaid out of
the proceeds of the Loan, and it has not agreed to
sell or pledge or otherwise dispose of any of its
rights to the Pledged Goods to any third person.
The Parties agree that the Pledgor shall not, without
the prior written consent of the Pledgee, sell the
Pledged Goods and create or permit to exist any
encumbrance over the Pledged Goods other than as set
out in the Agreement or as in the future required by
law;
(ii) there is no pending material litigation or third
party claims against the Pledged Goods;
(iii) it has all necessary power, has taken all necessary
corporate action and has obtained all necessary
consents of all government agencies and has taken all
action necessary or required by law to enable it to
execute and perform this Agreement.
8.2 The Pledgor hereby covenants with the Pledgee that it shall not take or
omit to take any action the taking or omission of which might result in
the alteration or impairment of any rights under the Pledged Goods or
which might permanently adversely affect or diminish the value of the
Pledged Goods.
9 REMEDIES AND WAIVERS
No failure to exercise, nor any delay in exercising, on the part of the
Pledgee any right or remedy hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any right or
remedy prevent any further or other exercise thereof or the exercise of
any other right or remedy. The rights and remedies herein provided are
cumulative and not exclusive of any rights or remedies provided by law.
10 TERM OF THE PLEDGE AGREEMENT
This Pledge Agreement shall terminate when the Pledgee certifies to the
Pledgor, in writing, that the Outstanding
Obligations have been fully and finally discharged. The Pledgee shall
take all actions necessary to ensure that the discharge of any mortgage
over the Pledged Goods is notified on the Land Register.
11 COSTS AND EXPENSES
11.1 The Parties agree that all costs incurred in connection with this
Agreement (insurance costs, registration costs, registration to the
mortgage registry kept by the public notaries) shall be born by the
Pledgor.
12 LEGAL DISPUTE AND GOVERNING LAW
12.1 LEGAL DISPUTES
The Parties shall attempt to resolve all disputes pertaining to this
Agreement through mutual consent, and in case of the failure of such
attempts the Permanent Arbitration Court attached to the Hungarian
Chamber of Commerce and Industry will be assigned exclusively to deal
with the issue.
12.2 GOVERNING LAW
This Agreement shall be governed by the laws of the Republic of
Hungary. This Agreement is executed in Hungarian and English, and the
Hungarian version will prevail in the event of any discrepancies.
13 MISCELLANEOUS
13.1 EFFECTIVENESS
This Agreement shall come into effect upon the authorized signing by
the Parties and receipt of the approval, if required, of the Minister
of Transport, Telecommunications and
Water to the pledge of the Pledged Goods, and also subject to the
approval of Tele Denmark and the Danish Investment Fund for Central and
Eastern Europe, and the repayment of Siemens Telefongyar Kft.
supplier's credit and the full payment of MATAV.
13.2 COMMUNICATIONS AND NOTICES
Each communication and notice to be made hereunder shall be made in
writing and, unless otherwise stated, shall be made by fax, and
confirmed by letter to the following addresses and fax numbers:
(1) Postabank es Takarekpenztar Rt. 1132 Budapest, Vaci ut
48.
To the attention of: ▇▇▇▇ ▇▇▇▇▇▇▇ Fax number: ▇▇▇ ▇▇▇▇
(2) [Relevant subsidiary of Hungarian Telephone and Cable
Corp.]
To the attention of: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Fax number: 202
4778
13.3 LANGUAGE
Each communication and document made or delivered by one party to
another pursuant to this Agreement shall be in the Hungarian language
and accompanied by a translation thereof into English certified (by an
officer of the person making or delivering the same) as being a true
and accurate translation thereof.
13.4 COPIES
This Agreement is signed in 8 original copies.
13.5 CHANGES IN LAW
The Parties agree that after coming into force of the modification of
the Civil Code on pledges and mortgages, at the written request of the
Pledgee, the Pledge will be registered into the mortgage registry kept
by a public notary.
AS WITNESS the hands of the duly authorized representatives of the parties
hereto the day and year first before written.
[Duly Executed by all of the Parties]