EXHIBIT 10(gg)
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SHAREHOLDERS'
AGREEMENT
BY AND BETWEEN
▇▇▇▇▇▇ ▇▇.
AND
EUROWEB INTERNATIONAL CORP.
NOVEMBER 20, 1998
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TABLE OF CONTENTS
ARTICLE I.....................................................................1
ARTICLE II....................................................................2
2.1 GOVERNANCE ISSUES RELATING TO THE COMPANY............................2
2.1.1 General Meetings.................................................2
2.1.2 Board of Directors...............................................2
2.1.3 Supervisory Board................................................3
2.1.4 Chief Executive Officer..........................................3
ARTICLE III...................................................................4
3.1 TRANSFER OF SHARES.................................................4
3.2 RIGHT OF FIRST REFUSAL.............................................4
3.3 LEGEND.............................................................5
3.4 ANY TRANSFER OF SHARES IS SUBJECT TO THE APPROVAL OF THE COMPANY...5
3.5 INCORPORATION INTO THE ARTICLES OF ASSOCIATION OF THE COMPANY......6
ARTICLE IV....................................................................7
4.1 CAPITAL INCREASE BY THE GENERAL MEETING.............................7
4.2 CAPITAL INCREASE BY THE BOARD OF DIRECTORS..........................7
ARTICLE V.....................................................................8
5.1 NON-COMPETE OBLIGATIONS.............................................8
ARTICLE VI....................................................................8
6.1 GOVERNING LAW......................................................8
6.2 DISPUTE RESOLUTION.................................................8
ARTICLE VII MISCELLANEOUS PROVISIONS..........................................8
7.1 MENDMENT AND MODIFICATION.........................................8
7.2 WAIVER OF COMPLIANCE...............................................9
7.3 NOTICES............................................................9
7.4 ASSIGNMENT.........................................................9
7.5 COUNTERPARTS.......................................................9
7.6 ENTIRE AGREEMENT...................................................9
7.7 THIRD PARTIES.....................................................10
7.8 FURTHER ASSURANCE.................................................10
7.9 INVALIDITY........................................................10
7.10LANGUAGE..........................................................10
SHAREHOLDERS AGREEMENT
SHAREHOLDERS AGREEMENT, dated November 20, 1998, by and among ▇▇▇▇▇▇ ▇▇., a
company organized under the laws of the Republic of Hungary, having its
registered seat at ▇▇▇▇▇ ▇▇▇. ▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ("PanTel") and EuroWeb
International Corp., a corporation organized under the laws of the State of
Delaware, U.S.A., having its registered seat at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇
▇▇▇▇▇, U.S.A.("EuroWeb").
RECITALS
WHEREAS, PanTel and EuroWeb are the owners of all of the shares of the
registered capital of the Company (as defined below); and
WHEREAS, this Agreement sets forth the terms and conditions governing the
relationship of the Shareholders of the Company.
NOW THEREFORE, in consideration of the mutual representations, warranties
and covenants contained herein, the Parties hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1 DEFINITIONS OF SPECIFIC TERMS. The following definitions shall apply
to the to the following terms, respectively, when said terms are used in this
Agreement with an upper-case first letter:
(a) "AGREEMENT" shall mean this Shareholders Agreement, as amended or
supplemented from time to time in accordance with its terms.
(b) "AFFILIATE" of an entity shall mean any other entity Controlled by,
Controlling or under common Control with such entity.
(c) "BUSINESS DAY" shall mean a day which is neither a Saturday, Sunday or
legal holiday in Budapest, Hungary.
(d) "COMPANY" shall mean EuroWeb Internet Service Provider Rt.
(Cg. 01-10-043569), a company limited by shares, organized under the laws of
the Republic of Hungary.
(e) "CONTROL", "CONTROLLING" or "CONTROLLED" as to any entity shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such entity, whether through
ownership of voting securities or partnership interests, by contract or
otherwise. "Controlling" means any entity exercising such right, and
"Controlled" means any entity in respect of which such right is being
exercised.
(f) "PARTY" or "PARTIES" shall mean, collectively, PanTel and EuroWeb, and
individually any one of them, including any Shareholder who becomes a Party to
this Agreement pursuant hereto.
(g) "SHARE" shall mean a common share of the Company.
(h) "SHAREHOLDER" shall mean a holder of one or more Shares of the
Company.
(i) "TRANSFER" shall mean any event constituting a sale, bequest,
exchange, distribution, assignment, gift, pledge, foreclosure, or other
disposition or transfer of any kind, or action resulting in the creation of any
security interest in, lien upon or other charge or encumbrance, whether
voluntary or involuntary or by operation of law, that may affect record or
beneficial ownership in or possession of the thing at issue.
ARTICLE II
GOVERNANCE ISSUES RELATING TO THE COMPANY
2.1 GOVERNANCE ISSUES RELATING TO THE COMPANY.
2.1.1 GENERAL MEETINGS. Quorum at the General Meetings of the Company
shall consist of Shareholders representing more than fifty percent (50%)of the
Shares with a voting right.
2.1.2 BOARD OF DIRECTORS.
(a) The Board of Directors of the Company shall consist
of five (5) members. At the General Meetings of the Company, the Shareholders
shall take such action as is necessary to cause the election as members of the
Board of Directors of (i) three (3) persons designated by PanTel and (ii) two
(2) persons designated by EuroWeb. The Shareholders shall (and each Shareholder
shall cause the Company to) take all necessary action to ensure that the total
number of the directors on the Board of Directors at any one time does not
exceed five (5).
(b) If at any time between General Meetings of the
Company, PanTel or EuroWeb shall request (i) the removal of a director
designated for nomination by such Shareholder in accordance with this SECTION
and the election of a new nominee or (ii) the election of a nominee to fill a
vacancy created by the departure from the Board of Directors of a director
designated for nomination by it, each other Shareholder shall (and shall cause
the Company to) take all necessary action, including, to the extent required by
law and the Articles of Association of the Company, the calling of a General
Meeting, to bring about the election of such nominee to, or removal of such
nominee from, the Board of Directors as promptly as possible.
(c) No director may be removed without the affirmative
vote of the Shareholder that designated such director for nomination.
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(d) The Chairman of the Board of Directors of the Company
shall be selected by PanTel. If the Chairman of the Board of Directors ceases
to act as Chairman for any reason whatever, PanTel shall be entitled to select
a replacement Chairman. EuroWeb shall cause the members of the Board of
Directors nominated by it to vote in favor of the person selected by PanTel to
serve as Chairman of the Board of Directors. The Parties agree that the
Chairman of the Board of Directors shall have no additional and/or decisive
vote.
(e) Quorum at the meetings of the Board of Directors
shall consist of a majority of all members of the Board of Directors. The Board
of Directors shall adopt its resolutions with a majority vote.
2.1.3 SUPERVISORY BOARD.
(a) The Supervisory Board of the Company shall consist of
three (3) members. At the General Meetings of the Company, the Shareholders
shall take also such action as is necessary to cause the election as members of
the Supervisory Board of (i) two (2) persons as may be designated by PanTel and
(ii) one (1) person as may be designated by EuroWeb. The Shareholders shall
(and each Shareholder shall cause the Company to) take all necessary action to
ensure that the total number of members of the Supervisory Board at any one
time does not exceed three (3).
(b) If at any time between General Meetings of the
Company, PanTel or EuroWeb shall request (i) the removal of a member of the
Supervisory Board designated for nomination by such Shareholder(s) in
accordance with this Section and the election of a new nominee or (ii) the
election of a nominee to fill a vacancy created by the departure from the
Supervisory Board of a member designated for nomination by such Shareholder(s),
each Shareholder shall (and each Shareholder shall cause the Company to) take
all necessary action, including, to the extent required by law and the Articles
of Association of the Company, the calling of a General Meeting, to bring about
the election of such nominee to, or removal of such nominee from, the
Supervisory Board as promptly as possible.
(c) Each Shareholder undertakes not to vote to approve an
amendment to the Articles of Association of the Company which would transfer to
the competence of the Supervisory Board any matter determined in Section 33 of
Act CXLIV of 1997 on Business Organizations.
2.1.4 CHIEF EXECUTIVE OFFICER.
(a) The Chief Executive Officer of the Company shall be
selected by PanTel. At the meetings of the Board of Directors of the Company,
each Shareholder shall cause the directors nominated by such Shareholder to
take such action as is necessary to cause the election as Chief Executive
Officer the person designated by PanTel.
(b) If at any time between the meetings of the Board of
Directors of the Company, PanTel shall request (i) the removal of the Chief
Executive Officer and the selection of a new nominee or (ii) the selection of a
nominee to fill a vacancy created by the departure of the Chief Executive
Officer, each Shareholder shall cause the directors nominated by such
Shareholder to take all necessary action, including, to the extent required by
law and the Articles of Association of the Company, the calling of a meeting of
the Board
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of Directors, to bring about the selection of such nominee, or removal of such
nominee as Chief Executive Officer as promptly as possible.
ARTICLE III
TRANSFER OF SHARES
3.1 TRANSFER OF SHARES. Any individual, corporation, or other entity
becoming a new Shareholder shall, as a precondition to becoming such, subscribe
to and become a party to this Agreement, and thereafter shall, except as
otherwise provided in this Agreement, be considered a "Party" and a
"Shareholder" for all purposes of this Agreement and shall be fully bound by
all of the terms hereof. Each of the Parties undertakes not to make any
Transfer except as expressly provided in this Agreement.
3.2 RIGHT OF FIRST REFUSAL.
(a) If at any time a Shareholder (the "Offering Shareholder") shall
desire to Transfer any or all, of the Shares owned by it (the
"Offered Shares"), the Offering Shareholder shall obtain a bona
fide written offer (the "Offer") from a third party (the "Third
Party Purchaser") to purchase the Offered Shares for a cash
payment ("Proposed Transfer"). Prior to accepting the Offer, the
Offering Shareholder, in accordance with Section 3.4 of this
Agreement, shall request the Board of Directors of the Company to
approve the Proposed Transfer. The Offering Shareholder shall
provide the Board of Directors with all the documents the Board
of Directors deems necessary to make its decision regarding the
Proposed Transfer. If the Board of Directors of the Company does
not approve the Proposed Transfer, the Proposed Transfer may not
be completed. If the Board of Directors approves the Proposed
Transfer, the Offering Shareholder shall send the Offer to the
Shareholder(s) other than the Offering Shareholder ("Other
Shareholder(s)") who may accept the Offer upon the same terms and
conditions offered by the Third Party Purchaser in the Offer. The
Other Shareholder(s) shall have thirty (30) days after receipt of
the Offer to reply thereto and within which to accept the same
with respect to the Offered Shares. Notice of acceptance shall be
in writing and shall be given to the Offering Shareholder. Said
notice shall fix for closing a time which shall not be less than
thirty (30) nor more than forty-five (45) days from the date of
such notice. The place of closing shall be the principal office
of the Company and at the closing, the Offered Shares shall be
duly endorsed for Transfer by the Offering Shareholder, and shall
be delivered to the Other Shareholder(s) accompanied by the
Offering Shareholder's written representation and warranty that
the Offering Shareholder has full and good title to the Offered
Shares and that such Shares are free and clear of suits,
encumbrances and claims. The Other Shareholder(s) shall pay the
purchase price then required to be paid. If more than one Other
Shareholder intends to exercise the right of first refusal, such
Other Shareholders may exercise the right of first refusal in
proportion to their respective shareholdings. If only one Other
Shareholder intends to exercise the right of first refusal, such
Other Shareholder may purchase all the Offered Shares.
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(b) If the Other Shareholder(s) does not exercise within thirty (30)
days its rights of first refusal to purchase all of the Offered
Shares, the Offering Shareholder shall have the right, to
Transfer the Offered Shares, free of the prior rights of the
Other Shareholder(s) to purchase the same, but such Transfer
shall be only to the Third Party Purchaser and shall be at a
price not less than, and upon terms and conditions not more
favorable to the Third Party Purchaser than, are specified in the
Offer. If the Offering Shareholder shall not have completed the
sale of the Offered Shares to the Third Party Purchaser within
sixty (60) days after expiration of the time for acceptance of
the offer by the Other Shareholder(s), or if the Offering
Shareholder shall seek to Transfer the Offered Shares to the
Third Party Purchaser at a price, or upon terms and conditions,
more favorable to the Third Party Purchaser than that specified
in the Offer, or shall seek to Transfer such Shares to a
different party, then all the provisions of this SECTION 3.2
shall be complied with again by the Offering Shareholder prior to
making any Transfer.
3.3 LEGEND. All Shares held by the Shareholders shall have endorsed
thereon as soon as practicable after the Closing (as such term is defined in
the Share Purchase Agreement dated November 20, 1998, entered into between
PanTel and EuroWeb) a conspicuous legend substantially to the effect of the
following (translated into Hungarian):
"The transfer of this share is subject to the right of first
refusal of the Shareholders and subject to the approval of
the Company in accordance with the Articles of Association of
the Company, a copy of which is on file and may be examined
at the offices of the Company"
3.4 ANY TRANSFER OF SHARES IS SUBJECT TO THE APPROVAL OF THE COMPANY. Any
Transfer of Shares is subject to the approval of the Board of Directors of
the Company. The Board of Directors may refuse to grant its approval for
important reasons. For the purposes of this Section, important reasons are
any of the following:
(i) the Third Party Purchaser in the Proposed Transfer of
shares is a competitor of a Shareholder or the
Company;
(ii) the Proposed Transfer of Shares is to be made within
eighteen (18) months following the date of this
Shareholders' Agreement; and
(iii) the Third Party Purchaser in the Proposed Transfer has
not signed a binding statement that it will be bound
by the terms of this Agreement upon purchase of the
Shares and an original copy of such statement has not
been submitted to the Board of Directors.
3.5 INCORPORATION INTO THE ARTICLES OF ASSOCIATION OF THE COMPANY. The
rules set out in this Article III shall be incorporated into the Articles of
Association of the Company as follows:
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RIGHT OF FIRST REFUSAL.
(a) If at any time a Shareholder (the "Offering Shareholder") shall
desire to Transfer any or all, of the Shares owned by it (the
"Offered Shares"), the Offering Shareholder shall obtain a bona
fide written offer (the "Offer") from a third party (the "Third
Party Purchaser") to purchase the Offered Shares for a cash
payment ("Proposed Transfer"). Prior to accepting the Offer, the
Offering Shareholder, in accordance with Section 3.4 of this
Agreement, shall request the Board of Directors of the Company to
approve the Proposed Transfer. The Offering Shareholder shall
provide the Board of Directors with all the documents the Board
of Directors deem necessary to make its decision regarding the
Proposed Transfer. If the Board of Directors of the Company does
not approve the Proposed Transfer, the Proposed Transfer may not
be completed. If the Board of Directors has approved the Proposed
Transfer, the Offering Shareholder shall then send the Offer to
the Shareholder(s) other than the Offering Shareholder ("Other
Shareholder(s)") who may accept the Offer upon the same terms and
conditions offered by the Third Party Purchaser in the Offer. The
Other Shareholder(s) shall have thirty (30) days after receipt of
the Offer to reply thereto and within which to accept the same
with respect to the Offered Shares. Notice of acceptance shall be
in writing and shall be given to the Offering Shareholder. Said
notice shall fix for closing a time which shall not be less than
thirty (30) nor more than forty-five (45) days from the date of
such notice. The place of closing shall be the principal office
of the Company and at the closing, the Offered Shares shall be
duly endorsed for Transfer by the Offering Shareholder, and shall
be delivered to the Other Shareholder(s) accompanied by the
Offering Shareholder's written representation and warranty that
the Offering Shareholder has full and good title to the Offered
Shares and that such Shares are free and clear of suits,
encumbrances and claims. The Other Shareholder(s) shall pay the
purchase price then required to be paid. If more than one Other
Shareholder intends to exercise the right of first refusal, such
Other Shareholders may exercise the right of first refusal in
proportion to their respective shareholdings. If only one Other
Shareholder intends to exercise the right of first refusal, such
Other Shareholder may purchase all the Offered Shares.
(b) If the Other Shareholder(s) does not exercise within thirty (30)
days its rights of first refusal to purchase all of the Offered
Shares, the Offering Shareholder shall have the right, to
Transfer the Offered Shares, free of the prior rights of the
Other Shareholder(s) to purchase the same, but such Transfer
shall be only to the Third Party Purchaser and shall be at a
price not less than, and upon terms and conditions not more
favorable to the Third Party Purchaser than, are specified in the
Offer. If the Offering Shareholder shall not have completed the
sale of the Offered Shares to the Third Party Purchaser within
sixty (60) days after expiration of the time for acceptance of
the offer by the Other Shareholder(s), or if the Offering
Shareholder shall seek to Transfer the Offered Shares to the
Third Party Purchaser at a price, or upon terms and conditions,
more favorable to the Third Party Purchaser than that specified
in the Offer, or shall seek to Transfer such Shares to a
different party, then all the provisions of this SECTION shall he
complied with again by the Offering Shareholder prior to making
any Transfer.
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LEGEND. All Shares held by the Shareholders shall have endorsed
thereon a conspicuous legend substantially to the effect of the
following (translated into Hungarian):
"The Transfer of this share is subject to the right of first
refusal by the Shareholders and subject to approval by the
Company in accordance with the Articles of Association of the
Company, a copy of which is on file and may be examined at the
offices of the Company"
ANY TRANSFER OF SHARES IS SUBJECT TO THE APPROVAL OF THE COMPANY
Any Transfer of Shares is subject to the approval of the Board of
Directors of the Company. The Board of Directors may refuse to
grant its approval for important reasons. For the purposes of
this Section, important reasons are any of the following:
(i) the purchaser in the Proposed Transfer of shares is a
competitor to any Shareholder
(ii) the Proposed Transfer of Shares is to be made within
eighteen (18) months following the date of the resolution of the
Founder of the Company adopting this provision of the Articles of
Association of the Company; and
(iii) the purchaser in the Proposed Transfer has not signed a
binding statement that it will be bound by the terms of the
Shareholders Agreement being in place between the Shareholders of
the Company upon purchase of the Shares and an original copy of
such statement has not been submitted to the Board of Directors.
ARTICLE IV
FINANCING OF THE COMPANY
4.1 CAPITAL INJECTION BY PANTEL. PanTel agrees that as soon as practicable
after the Closing (as defined in the Share Purchase Agreement by and between
PanTel and EuroWeb regarding the acquisition of 51 percent of the Shares by
PanTel), PanTel will pay the HUF equivalent of USD 300,000 (three hundred
thousand US dollars ("Capital Injection") (calculated on the date of such
payment in accordance with the applicable exchange rate used by the bank making
such exchange) into the capital reserves of the Company which amount will be
used by the Company as decided by the Board of Directors of the Company. This
Capital Injection will not change the ownership ratio between PanTel and
EuroWeb.
4.2 CAPITAL INCREASE BY THE BOARD OF DIRECTORS. The Articles of
Association of the
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Company shall have the following provision:
"The Board of Directors have the authority for a period of five
years starting on the date of the passing of the resolution of
the Founder of the Company establishing such authority to
increase the capital of the Company by 25% of the Company's
registered capital each year."
ARTICLE V
NON-COMPETE OBLIGATIONS
5.1 NON-COMPETE UNDERTAKING BY EuroWeb. EuroWeb shall not (i) engage in any
business activity listed in the scope of activities of the Company, (ii) own or
control any equity interest in any person or entity that engages in any such
business activity or (iii) permit any of its employees to act as a director,
officer, manager or consultant to any person or entity that engages in any such
business activity.. If EuroWeb breaches its obligation set forth in this
Section 5.1, EuroWeb shall be required to sell to PanTel all the Shares owned
by EuroWeb at the time of such breach at a price equal to the nominal value of
such Shares within 15 days after the date of receipt by EuroWeb of the notice
from PanTel notifying EuroWeb that PanTel has become aware of such breach.
ARTICLE VI
GOVERNING LAW; DISPUTE RESOLUTION
6.1 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the Republic of Hungary
6.2 DISPUTE RESOLUTION. Any controversy or claim arising out of or relating to
this Agreement or the breach hereof shall be submitted to and settled by
arbitration in accordance with the rules of the Permanent Court of Arbitration
organized at the Hungarian Chamber of Commerce and Industry. Any decision of
such arbitration shall be final, binding on the parties and enforceable.
Arbitration shall be before a panel of three arbitrators, one of whom shall be
selected by PanTel, one of whom shall be selected by EuroWeb, and one of whom
shall be selected by the other two arbitrators. The arbitration shall be
conducted in the Hungarian language and held in Budapest, Hungary. All the
three arbitrators shall be fluent in Hungarian and English. The expenses of
arbitration shall be borne by the Party against whom the decision is rendered,
or apportioned in accordance with the decision of the arbitrators in the event
of a compromise decision. The arbitrators shall not have the authority to
delete, add to or otherwise modify the provisions of this Agreement. Judgment
upon any award may be entered in any court of competent jurisdiction.
ARTICLE VII
MISCELLANEOUS PROVISIONS
7.1 AMENDMENT AND MODIFICATION. Subject to applicable law, this Agreement may
be amended, modified and supplemented only by written agreement of the Parties.
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7.2 WAIVER OF COMPLIANCE. Any of the terms or conditions of this Agreement
which may be lawfully waived may be waived in writing at any time by the Party
which is entitled to the benefits thereof. Any such waiver by any Party shall
be in writing and signed on behalf of such Party. Any failure by any Party to
exercise or any delay, forbearance or indulgence by any Party in exercising any
right, power or remedy under this Agreement or under applicable law shall not
operate as a waiver of the right, power or remedy or preclude its exercise at
any subsequent time or on any subsequent occasion. The single or partial
exercise of any right, power or remedy shall not preclude any other or further
exercise of that right, power or remedy nor shall such waiver constitute a
continuing waiver.
7.3 NOTICES. All notices or other communications hereunder shall be in writing
and shall be deemed given effectively (i) upon delivery if delivered
personally, (ii) upon delivery if delivered by courier or (iii) upon receipt if
given by cable, telegram or telex, in each case if addressed as follows:
If to PanTel:
▇▇▇▇▇▇ ▇▇.
Terez krt. 62.
▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇
Telefax No.: (▇▇-▇) ▇▇▇-▇▇▇▇
Attention: ▇▇. ▇▇▇ ▇▇▇▇▇▇▇▇
If to EuroWeb:
EuroWeb International Corp.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
▇.▇.▇.
Telefax No.: ▇▇-▇-▇▇▇-▇▇▇-▇▇▇▇
Attention: Mr. ▇▇▇▇▇ ▇▇▇▇▇
or such other address as shall be furnished in writing
by any Party.
7.4 ASSIGNMENT. This Agreement and all of the provisions hereof shall be
binding upon and inure to the benefit of the Parties hereto and their
respective successors and permitted assigns, but neither this Agreement nor any
of the rights, interests or obligations hereunder shall be assigned by either
of the Parties without the prior written consent of the other Party.
7.5 COUNTERPARTS. This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
7.6 ENTIRE AGREEMENT. This Agreement sets forth the entire agreement and
understanding of the Parties in respect of the subject matter contained herein,
and supersede all prior agreements, promises, covenants, arrangements,
communications, representations or
9
warranties, whether oral or written, by any officer, employee or representative
of any Party.
7.7 THIRD PARTIES. Nothing herein expressed or implied is intended or shall be
construed to confer upon or give to any person or corporation other than the
Parties and their successors or assigns, any rights or remedies under or by
reason of this Agreement.
7.8 FURTHER ASSURANCES. During the terms of this Agreement, the Parties shall
cooperate in good faith with the other and will take all appropriate action and
execute any documents, instruments or conveyances of any kind which may be
reasonably necessary or advisable to carry out any of the transactions
contemplated hereunder. Without limiting the foregoing, the Parties agree to
vote their respective Shares to carry out the provisions of this Agreement and
to amend the Articles of Association of the Company to reflect the provisions
of this Agreement.
7.9 INVALIDITY. In the event that any one or more of the provisions contained
in this Agreement, or in any other instrument referred to herein, shall, for
any reason, be held to be invalid, illegal or unenforceable in any respect,
then to the maximum extent permitted by law, such invalidity, illegality or
unenforceability shall not affect any other provision of this Agreement or any
other such instrument and the Parties shall attempt to deliver the benefits of
such provision in a manner that is not invalid, illegal or unenforceable.
7.10 LANGUAGE. This Agreement has been prepared in the English language.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as set forth herein, on the day and year first above written.
▇▇▇▇▇▇ ▇▇.
By: /s/PAL ▇▇▇▇▇▇▇
--------------------------------
Name: Pal ▇▇▇▇▇▇▇
Title: Chief Executive Officer
EUROWEB INTERNATIONAL CORP.
By: /s/▇▇▇▇▇ ▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇
Title: President
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SHARE PURCHASE AGREEMENT
BY AND BETWEEN
▇▇▇▇▇▇ ▇▇.
AND
EUROWEB INTERNATIONAL CORP.
NOVEMBER 20, 1998
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TABLE OF CONTENTS
ARTICLE I DEFINITIONS..........................................................4
1.1 Definitions of Specific Terms..............................................4
ARTICLE II THE TRANSACTION.....................................................6
2.1 Purchase and Sale of the Sale Shares.......................................6
2.2 Closing....................................................................6
2.3 Closing Events and Deliveries..............................................6
ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLER...........................8
3.1 Representations and Warranties of Seller...................................8
3.2 Representations and Warranties............................................14
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BUYER............................14
4.1 Representations and Warranties of Buyer...................................14
4.2 Representations and Warranties............................................15
ARTICLE V CONDUCT OF BUSINESS.................................................15
5.1 Amendments................................................................15
5.2 Capital Changes...........................................................15
5.3 Organization..............................................................15
5.4 Regular Course of Business................................................15
5.5 No Default................................................................15
ARTICLE VI OTHER AGREEMENTS...................................................15
6.1 Confidentiality...........................................................15
6.2 Regulatory Matters........................................................16
6.3 Further Assurances........................................................16
ARTICLE VII CLOSING CONDITIONS................................................16
7.1 Conditions to Obligations of Seller.......................................16
7.2 Conditions to Obligations of Buyer........................................17
7.3 Satisfaction of Conditions................................................17
ARTICLE VIII SURVIVAL; INDEMNIFICATION........................................17
8.1 Survival..................................................................17
8.2 Indemnification...........................................................17
8.3 Notice of Third Party Claims..............................................18
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ARTICLE IX GOVERNING LAW; DISPUTE RESOLUTION.............................18
9.1 Governing Law....................................................18
9.2 Dispute Resolution...............................................18
ARTICLE X MISCELLANEOUS PROVISIONS.......................................19
10.1 Termination.......................................................19
10.2 Amendment and Modification........................................19
10.3 Waiver of Compliance..............................................19
10.4 Notices..........................................................19
10.5 Assignment........................................................20
10.6 Publicity.........................................................20
10.7 Expenses..........................................................20
10.8 Counterparts......................................................20
10.9 Entire Agreement..................................................20
10.10 Third Patties......................................................20
10.11 Further Assurances.................................................20
10.12 Invalidity.........................................................20
10.13 Language...........................................................20
3
SHARE PURCHASE AGREEMENT
SHARE PURCHASE AGREEMENT, dated November 20, 1998, by and between EuroWeb
International Corp., a corporation organized under the laws of the State
of Delaware, U.S.A., having its registered office at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇, ▇.▇.▇. ("Seller"), and ▇▇▇▇▇▇ ▇▇., company limited by shares,
organized under the laws of the Republic of Hungary, having its registered
seat at ▇▇▇▇▇ ▇▇▇. ▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇ ("Buyer").
RECITALS
WHEREAS, Seller owns shares representing one hundred percent (100%) of the
registered capital of the Company (as defined below); and
WHEREAS, this Agreement sets forth the terms and conditions upon which the
Seller will sell, and the Buyer will purchase, the Sale Shares (as defined
below), subject to the terms and conditions of this Agreement.
NOW THEREFORE, in consideration of the mutual representations, warranties
and covenants contained herein, the Parties hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1 DEFINITIONS OF SPECIFIC TERMS. The following definitions shall apply
to the to the following terms, respectively, when said terms are used in this
Agreement with an upper-case first letter:
(a) "AGREEMENT" shall mean this Share Purchase Agreement, as amended
or supplemented from time to time in accordance with its terms.
(b) "AFFILIATE" of an entity shall mean any other entity Controlled
by, Controlling or under common Control with such entity.
(c) "BUYER" shall mean ▇▇▇▇▇▇ ▇▇., a company limited by shares
organized under the laws of the Republic of Hungary.
(d) "CLOSING" shall mean the occasion on which the Buyer and the
Seller perform their respective obligations contemplated by
SECTION 2.3 hereof.
(e) "CLOSING DATE" shall mean the date upon which the Closing occurs.
(f) "COMPANY" shall mean EuroWeb Internet Service Provider Rt. (Cg.
01-10-043569), a company limited by shares, organized under the
laws of the Republic of Hungary.
4
(g) "CONTROL", "CONTROLLING" or "CONTROLLED" as to any entity shall
mean the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of
such entity, whether through ownership of voting securities or
partnership interests, by contract or otherwise. "Controlling"
means any entity exercising such right, and "Controlled" means
any entity in respect of which such right is being exercised.
(h) "ENCUMBRANCE" shall mean a mortgage, charge, pledge, lien, option,
restriction, right of first refusal, right of pre-emption, third
party right or interest or other encumbrance or security interest
of any kind, or any other type of preferential arrangement, title
transfer or retention agreement (including in the case of any
share in the Company without limitation any agreement, arrangement
or obligation to create, issue, transfer, redeem, repay or grant a
person the right (conditional or not) to require the allotment,
issue, transfer, redemption or repayment of a share in the capital
of the Company or an option or right of pre-emption or conversion
in respect of such share) or any agreement, arrangement or
obligation to create any of the above.
(i) "GOVERNMENTAL ENTITY" shall mean any department, commission,
board, agency, instrumentality or other governmental entity,
whether state, regional or local and whether domestic or foreign.
(j) "KORLATOLT FELELOSSEGU TARSASAG OR "KFT." shall mean a limited
liability company organized under the laws of the Republic of
Hungary.
(k) "LOSSES" shall mean all payments, demands, claims, suits,
judgements, liabilities, losses, costs, damages and expenses
including interest, penalties and attorney's fees, disbursements
and expenses made by, or imposed on or incurred by any natural
person or entity.
(l) "PARTY" or "PARTIES" shall mean, collectively, the Buyer and the
Seller, and individually any one of them.
(m) "PURCHASE PRICE" shall mean US$ 2,200,000 (two million and two
hundred thousand US Dollars)
(n) "RESZVENYTARSASAG" OR "RT." shall mean a company limited by
shares organized under the laws of the Republic of Hungary.
(o) "SALE SHARES" shall mean 33,700 Shares, with an aggregate nominal
value of HUF 33,700,000, representing 51% of the registered
capital of the Company.
(p) "SHAREHOLDERS AGREEMENT" shall mean the Shareholders Agreement
dated the date hereof entered into by and between Seller and
Buyer.
(q) "SHARE" shall mean a common share of the registered capital of the
Company.
(r) "SELLER" shall mean EuroWeb International Corp., a corporation
organized under the laws of the State of Delaware, U.S.A.
(s) "SUBSIDIARY" shall mean any corporation, company, Rt., Kft.,
partnership or other entity of which at least a majority of the
securities or interests having by the terms thereof
5
ordinary voting power (not dependent upon the occurrence of any
event) to elect at least a majority of the board of directors or
others performing similar functions with respect to such entity
is directly or indirectly owned or controlled by a person or
entity or any one or more of such person's or entity's
Subsidiaries.
(t) "Tax" shall mean any tax, assessment, levy, customs duty, charge,
impost, rate, fee, deduction, stamp duty or other tax,
withholding or remittance of any nature, including, without
limitation, payroll, any social security or other similar
payments, now or hereafter payable or required to be remitted to,
or imposed, levied, collected or assessed by, any Governmental
Entity, including any interest, expense, fine, penalty or other
charge payable or claimed in respect thereof.
ARTICLE II
THE TRANSACTION
2.1 PURCHASE AND SALE OF THE SALE SHARES. Subject to the terms and
conditions of this Agreement, the Seller agrees to sell, transfer and deliver
to the Buyer, and the Buyer agrees to purchase, the Sale Shares at the Closing,
free and clear of all claims and Encumbrances of whatever nature, and, in
consideration of such sale and transfer and delivery as provided in SECTION
2.3, the Buyer shall pay to the Seller the Purchase Price.
2.2 CLOSING. The Closing shall take place at the offices of Stroock &
Stroock & ▇▇▇▇▇ LLP, located at East West Business Center, 1088 Budapest,
Rakoczi ut 1-3, on November 20, 1998 or on such later date after the conditions
in ARTICLE VII shall have been satisfied or waived as the Parties may agree.
All transactions contemplated by this Agreement to be consummated at the
Closing shall be deemed to occur simultaneously and no such transaction shall
be consummated unless all such transactions are consummated.
2.3 CLOSING EVENTS AND DELIVERIES. At the Closing, the following events
shall take place:
2.3.1 Seller shall sell and Buyer shall purchase the Sale Shares.
Seller shall deliver to Seller the Sale Shares duly
endorsed in the name of Buyer.
2.3.2 Buyer shall give an irrevocable order to its bank to
transfer the full amount of the Purchase Price to the
following bank account:
EuroWeb International Corporation
▇▇▇ ▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Chase Manhattan Bank
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Account number: 116084367
ABA/Bank Code: ▇▇▇▇▇▇▇▇▇
2.3.3 Seller and Buyer shall execute the Shareholders Agreement
in the form set forth in EXHIBIT 2.3.3.
6
2.3.4 Seller shall deliver to Buyer
(i) a copy of the resolution of the Founder of the
Company dated as of the Closing Date in the form set
forth in EXHIBIT 2.3.4. (i)(a) amending the Articles
of Association of the Company, to reflect all
changes resulting from this Agreement and the
Shareholders Agreement, (b) removing at least one
member of the Board of Directors of the Company and
electing three (3) members of the Board of Directors
nominated by Buyer, (c) removing three (3) members
of the Supervisory Board of the Company and electing
two (2) members of the Supervisory Board nominated
by Buyer;
(ii) resignations of ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇. ▇▇▇▇▇▇ Josa
from the Board of Directors and resignations of ▇▇.
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇ from the
Supervisory Board of the Company in the form
acceptable to Buyer;
(iii) a copy of each non-competition agreement in the form
set forth in EXHIBIT 2.3.4(iii) entered into by the
Company on the one hand and the following persons:
Mr. ▇▇▇▇▇ ▇▇▇▇▇, ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇, and ▇▇. ▇▇▇▇▇
▇▇▇▇;
(iv) evidence that the Seller is exclusive owner of all
the Shares;
(v) a copy of the resolution of the Board of Directors
of Seller, approving the Agreement and the
transactions contemplated thereby;
(vi) good standing certificate of Seller, dated not
earlier than one business day prior to the Closing
Date; and
(viii) evidence of signature authority.
2.3.5 Buyer shall deliver to Seller
(i) a copy of the resolution of the Board of Directors
of Buyer, approving this Agreement and the
transactions contemplated thereby;
(ii) evidence of signature authority.
2.3.6 Seller and Buyer shall sign the Articles of Association of the
Company in the form set forth in EXHIBIT 2.3.6., reflecting all the changes to
be made as a result of the
7
completion of the transactions contemplated by this Agreement (i.e. because the
Company from a one-man Rt. will become a normal Rt. having more than
one shareholder).
2.3.7 The Seller shall be registered as a shareholder of the Company
into the Book of Shares of the Company.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
3.1 REPRESENTATIONS AND WARRANTIES OF SELLER. Seller hereby represents and
warrants to Buyer as follows:
(a) Seller is a corporation duly organized, validly existing in good
standing under the laws of the State of Delaware, U.S.A. and has full corporate
power and authority to carry on its business as it is now being conducted and
to own the properties and assets it now owns. True and complete copies of the
Certificate of Incorporation and By-laws of Seller have been made available to
the Buyer for review. There will be no amendment to the Certificate of
Incorporation or By-laws prior to the Closing Date.
(b) Seller has full corporate power and authority to enter into this
Agreement and to carry Out the transactions contemplated hereby. The Board of
Directors of Seller has taken all action required to be taken by it to
authorize the execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby, and no other corporate proceedings on the
part of Seller will be necessary to consummate the transactions contemplated
hereby. This Agreement is a legal, valid and binding agreement of Seller,
enforceable in accordance with its terms.
(c) The Company is a company limited by shares (an Rt.), duly
organized and validly existing under the laws of the Republic of Hungary and
has full power and authority to carry on its business as it is now being
conducted and to own the properties and assets it now owns and is duly
qualified or licensed to do business in each jurisdiction in which the
ownership of property or the conduct of its business requires such
qualification or license. True and complete copies of the Articles of
Association of the Company, as amended to the date hereof, have been made
available to the Buyer for review. Except as specifically contemplated by
SECTION 2.3.4(i) and 2.3.6, there will be no amendments or changes to such
Articles of Association prior to the Closing Date.
(d) The Company does not own, directly or indirectly, any capital
stock or other equity interests of any company, corporation, Rt., Kft.,
partnership or other entity or have any direct or indirect equity or ownership
interest in any business.
(e) The registered capital of the Company is HUF 66,000,000,
consisting of 66,000 Shares, nominal value HUF 1,000 per Share, consolidated
into 660 consolidated shares with an aggregate nominal value of HUF 100,000 per
consolidated share. All Shares of the registered capital of the Company are
validly issued and fully paid. On the Closing Date, the Buyer will be the owner
of the Sale Shares, free and clear of all claims and Encumbrances of whatever
nature. There are no outstanding (i) securities convertible into or
exchangeable for the registered capital of the Company, (ii) options or other
rights to
8
purchase or subscribe to registered capital of the Company or securities
convertible into or exchangeable for registered capital of the Company or (iii)
contracts, commitments, agreements, understandings or arrangements of any kind
to which the Company or the Seller is a party relating to the issuance of any
registered capital of the Company, any such convertible or exchangeable
securities or any such options or rights. No person has claimed to be entitled
to an Encumbrance on the share capital of the Company.
(f) No consent, approval or authorization of, or declaration, filing
or registration with, any governmental or regulatory authority by or on behalf
of the Seller is required in connection with the execution, delivery and
performance of this Agreement or the consummation of the transactions
contemplated hereby.
(g) The execution, delivery and performance by the Seller of this
Agreement and the consummation of the transactions contemplated hereby:
(i) will not violate any provision of any law, regulation,
order or judgment applicable to Seller or the Company;
(ii) will not require any consent of, or any filing with or
notification to, any governmental or regulatory
authority under any provision of applicable law or
regulation except for any consents already obtained;
(iii) will not violate or constitute a breach of any
provision of the organizational and/or foundation
documents of Seller or the Company; and
(iv) will not require any consent under and will not result
in the breach of any agreement to which Seller or the
Company is a party or by which Seller or the Company
or any of their respective material assets, are bound,
except for such consents and waivers which have been
obtained.
(h) Seller has previously delivered (i) the balance sheet of the
Company as at December 31 in each of the years 1996 and 1997, statements of
profit and loss for each of the years then ended and the notes thereto, all
audited by BDO Kontroll Konyvvizsgalo es Adotanacsado Kft, independent public
accountants, whose reports thereon (which have not been modified or revoked)
are included therein and (ii) the unaudited balance sheet of the Company as at
August 31, 1998 (the "Company Balance Sheet") and a statement of profit and
loss for the eight -month period then ended. Such balance sheets, statements of
profit and loss and statements of cash flows give a true and fair view of the
assets, liabilities and financial condition of the Company and the results of
operations thereof as of the dates and periods therein referred to, all in
accordance with Hungarian accounting standards, through the periods involved
consistently applied.
(i) The Company has no liability or obligation of any nature
(including, without limitation, contingent liabilities) that is not reflected
or reserved against in the Company Balance Sheet, except for liabilities and
obligations incurred in the ordinary course of business and consistent with
past practice since the date thereof
9
(j) Each of the accounts receivable currently outstanding and/or
reflected in the Company Balance Sheet represents amounts due to the Company
which are good and collectible in full in the ordinary and normal course of
business, except to the extent to which such accounts receivable have been paid
in full or reasonable provisions have been made for non-collectability in the
Company Balance Sheet and there is no basis for any counterclaims or set-offs
against any such accounts receivable.
(k) Since December 31, 1997, there has not been any:
(i) material adverse change in the Company's financial
condition, business, results of operations,
properties, prospects, liabilities (absolute, accrued,
contingent or otherwise) or assets;
(ii) sale, assignment or transfer of any of the assets of
the Company or any purchase of assets or other
transaction, other than in the ordinary course of
business, consistent with past practices and on an
arms' length basis;
(iii) amendment, cancellation, termination, waiver or
release of any contract, lease, license or other
instrument which amendment, cancellation or
termination would have, individually or in the
aggregate, a material adverse effect on the financial
condition, business, results of operations,
properties, prospects, liabilities (absolute, accrued,
contingent or otherwise) or assets of the Company (a
"Material Adverse Effect");
(iv) damage, destruction or loss of any of the assets of
the Company (whether or not covered by insurance)
which, individually or in the aggregate, would have a
Material Adverse Effect;
(v) making of any loan, advance or capita~ contribution to
or investment in any person by the Company on behalf
of the Company;
(vi) grant of any severance or termination pay to any
officer or employee of the Company, entering into of
any employment, deferred compensation or other similar
agreement (or any amendment to any such existing
agreement) with any officer or employee of the
Company, any increase in benefits payable under any
existing severance or termination pay policies or
employment agreements, or any increase in
compensation, bonus or other benefits payable to
officers or employees of the Company other than in
direct proportion to salary increases in the ordinary
course of business and consistent with past practices;
(vii) change in any method of accounting or accounting
practice with respect to the Company;
10
(viii) incurrence, assumption or guarantee by the Company or
on behalf of the Company by any other party of any
debt for borrowed money; or
(ix) transaction between Seller and/or any of its
Affiliates on the one hand, and the Company on the
other hand, other than the transactions which were
entered into in the ordinary course of business
consistent with past practices on an arms' length
basis.
(l) The Company has properly and timely filed all Tax (including VAT)
and property returns and reports required to be filed on or prior to the date
hereof, and has timely paid all sums shown to be due by it in such returns and
reports. The sums shown on such returns and reports reflect all Tax liabilities
of the Company for the respective time periods and dates of such returns and
reports. The balance sheet of the Company as at December 31, 1997 and the
Company Balance Sheet contain adequate provision for its Tax liabilities
existing at such dates and those provisions for Tax liabilities arising prior
to the dates of such balance sheets have been either maintained or settled
since the date hereof. The Company has not received any notice of any Tax
assessment or penalty or is aware of any factual situation which could give
rise thereto. All amounts required to be retained or withheld from employees of
the Company have been properly paid to the relevant authorities.
(m) None of the customers of the Company has terminated its contract
with the Company or has threatened to do so.
(n) The Company does not own any real property.
(o) All lease agreements for the Real Property leased by the Company
("Leased Real Property") are in full force and effect, the Company has not
defaulted under any such lease agreements, and the Company has not received a
notice of termination of or default tinder any of the lease agreements. To the
best knowledge of Seller, none of the parties to any of the lease agreements
relating to the Leased Real Property is in default thereunder.
(p) All of the Company's registrations of trademarks and of other
marks, trade names or other trade rights, and all pending applications for any
such registrations, all of the Company's patents and copyrights and all pending
applications therefor, and all other trademarks and other marks, trade names
and other trade rights, whether or not registered, which are used in the
Company's business are collectively referred to as: "Proprietary Rights" The
Company has sole and exclusive right to use such Proprietary Rights. No person
has a right to receive royalty or similar payment in respect of any Proprietary
Rights pursuant to any contractual arrangements entered into by the Company.
The Company does not have any licenses granted by or to it or other agreements
to which it is a party, relating in whole or in part to any of the Proprietary
Rights. No proceedings have been instituted against or notices received by
Seller or the Company alleging that the Company's use of its Proprietary Rights
infringes upon or otherwise violates any rights of a third party in or to such
Proprietary Rights.
(q) The Company is not in default under any of the agreements it is a
party to, and is not aware of any default by any other party thereto. There are
no material contracts
11
or arrangements to which the Company is a party and in which any employee,
manager of the Company or any person related to or associated with a manager or
employee is interested.
(r) The Company is not in default in the performance of any
obligation, agreement, instrument or undertaking to which it is a party or by
which it is bound, and there is no such obligation, agreement, instrument or
undertaking which adversely affects or is reasonably likely adversely to affect
the business, properties, prospects, operations or condition (financial or
otherwise) of its business.
(s) The Company has obtained each license, permit or other approval
necessary to enable it to continue to conduct its business as currently
conducted and each of the foregoing is valid and in force. The Company has no
reason to believe that any such license, permit or other approval will be
withdrawn, not renewed or materially modified effecting its original scope and
purposes. The Company has been and is in compliance with all laws and
regulations and the terms of each license, permit or other approval, applicable
to its business and assets. The Company has not received any notice of
noncompliance with, and there is no event or circumstance which, after notice
or lapse of time or both, would constitute noncompliance with, any applicable
law or permit.
(t) The Seller has provided the Buyer with all the employment and
other contracts relating to key employees and contractors of the Company. There
are no other agreements or other arrangements in place with key employees or
contractors of the Company. There are no severance or other similar
arrangements with any person who is or is not a full-time employee of the
Company as of the date hereof. There are no collective bargaining agreements or
other labor agreements undertaken by the Company for the benefit of its
employees.
(u) The Company has maintained all of its employee benefit plans in
compliance with all applicable law and has made as and when due all payments
and contributions (including without limitation, payments in respect of
insurance policies) required to be made thereunder. The Company does not
maintain nor is it required to maintain any pension plan for the benefit of its
employees.
(v) There is no labor dispute, strike, work stoppage or other labor
problem involving or threatened by any employees of the Company.
(w) All the insurance policies of the Company are valid and currently
effective. The Company has accurately and timely made all declarations required
under such policies and performed all obligations required and paid all
premiums due thereunder. The Company has not received any notices of default or
termination under such insurance policies. None of such policies shall be
modified or adversely affected as a result of the execution of this Agreement
or the transaction contained herein.
(x) The Company owns or has legal and valid rights to use all assets
used or held for use in its business, in the case of owned assets free and
clear of all claims and Encumbrances which would inhibit the use thereof for
the purposes currently used by the Company.
(y) The Company has not received a written or unwritten notification
or claim that the Company or any of its facilities or properties is in
violation of any law, rule,
12
regulation or ordinance relating to pollution or protection of the environment
(collectively the "Environmental Laws"), including, without limitation, laws
relating to emissions, discharges, spills, releases or threatened releases of
pollutants, contaminants, chemicals or industrial, toxic or hazardous
substances or wastes into the environment. The Company has obtained all
permits, licences and other authorizations which are required under the
Environmental Laws. There are no past, present or future events, conditions,
circumstances, activities, practices, incidents or plans which may interfere
with or prevent compliance with the Environmental laws by the Company No
pollutant, contaminant, chemical or industrial, toxic or hazardous substance or
waste has been buried in or stored on the properties and facilities of the
Company, or has spilled, leaked, discharged, emitted or released, on or from
any of the properties or facilities of the Company. There are no existing
conditions which may lead to responsibilities or liabilities, or an assertion
thereof by any governmental entity or private person, based on any action or
inaction by the Company relating to the management and disposal of toxic or
hazardous substances and wastes. The Company has not received information
indicating that any person, including any employee, may have impaired health as
the result of any exposure to hazardous materials located on or contained in
such properties.
(z) There is no action, suit, appeal, proceeding or investigation by
or before any court or governmental or other regulatory or administrative
authority or arbitrator or arbitration panel (collectively "Proceedings")
pending or threatened against or involving the Company or any Proceeding which
seeks injunctive, specific or other non-monetary relief. The Company is not
subject to any judgment, order or decree entered in any lawsuit or proceeding
which imposes injunctive, specific, or any other type of non-monetary
obligations on the Company.
(aa) The books and records of the Company (including, without
limitation, (i) books and records relating to the purchase of materials and
supplies, dealings with customers, invoices, supplier lists, personnel records
and taxes of the Company, (ii) the corporate records and books of the Company,
and (iii) computer software and data stored and all documentation relating
thereto), accurately record all transactions of the Company in all material
respects, and have in all material respects been maintained consistent with
good business practice in Hungary.
(bb) There are no agreements which is still effective or transaction
which has not yet been completed by the Company on the one hand and Seller
and/or any of its Affiliates on the other hand.
(cc) All documents provided to Buyer in connection with its due
diligence review of the Company were either original documents or true and
complete copies of original documents. None of the information or documentation
provided to Buyer in connection with its due diligence review of the Company
was misleading in any material respect.
3.2 REPRESENTATIONS AND WARRANTIES. Except for changes specifically
permitted or required by this Agreement, the representations and warranties of
the Seller contained in this Agreement shall be true and correct as though made
at and as of the Closing Date.
13
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
4.1 REPRESENTATIONS AND WARRANTIES OF BUYER. The Buyer hereby
represents and warrants to Seller as follows:
(a) Buyer is a company limited by shares duly organized,
validly existing under the laws of the Republic of Hungary.
(b) Buyer has full corporate power and authority to enter
into this Agreement and to carry out the transactions contemplated hereby. The
Board of Directors of Buyer has taken all action required to be taken by it to
authorize the execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby, and no other corporate proceedings on the
part of Buyer will be necessary to consummate the transactions contemplated
hereby. This Agreement is a legal, valid and binding agreement of Buyer,
enforceable in accordance with its terms.
(c) No consent, approval or authorization of, or declaration,
filing or registration with, any governmental or regulatory authority by or on
behalf of Buyer, or any of its affiliates is required in connection with the
execution, delivery and performance of this Agreement by Buyer, or the
consummation by Buyer of the transactions contemplated hereby.
(d) The execution, delivery and performance by the Buyer of
this Agreement and the consummation of the transactions contemplated hereby:
(i) will not violate any provision of any law,
regulation, order or judgment applicable to
Buyer;
(ii) will not require any consent of, or any filing
with or notification to, any governmental or
regulatory authority under any provision of
applicable law or regulation except for any
consents already obtained;
(iii) will not violate or constitute a breach of any
provision of the foundation documents of Buyer;
and
(iv) will not require any consent under and will not
result in the breach of any agreement to which
Buyer is a party or by which Buyer or any of its
material assets, are bound, except for such
consents and waivers which have been obtained.
4.2 REPRESENTATIONS AND WARRANTIES. Except for changes specifically
permitted or required by this Agreement, the representations and warranties of
Buyer contained in this Agreement shall be true and correct as though made at
and as of the Closing Date.
14
ARTICLE V
CONDUCT OF BUSINESS
Pending the Closing, and except as otherwise expressly provided in
this Agreement or consented to or approved in writing by Buyer with respect to
the Company:
5.1 AMENDMENTS No change or amendment shall be made in the
organizational documents or bylaws of the Company.
5.2 CAPITAL CHANGES. The Seller shall not permit the Company to
issue or sell any shares of its registered capital.
5.3 ORGANIZATION The Seller shall cause the Company to preserve its
corporate existence and use all commercially reasonable efforts to preserve its
business organization intact, to keep available to the Company, its officers
and key employees, and to preserve for the Company its relationships with
customers and others having business relations with the Company.
5.4 REGULAR COURSE OF BUSINESS. Seller shall cause the Company to
carry on its business diligently and only in the ordinary and usual course
consistent with past practice, and shall not permit the Company to institute
any new methods of management, accounting or operation or engage in any
transaction or activity, enter into any agreement or make any commitment,
except in the ordinary and usual course of business and consistent with past
practice.
5.5 NO DEFAULT. Seller shall not and shall not permit the Company to
take any action or omit to take any action which action or omission would
result in a breach of any of the representations, warranties or covenants of
Seller.
ARTICLE VI
OTHER AGREEMENTS
6.1 CONFIDENTIALITY. All information furnished by or on behalf of the
Seller or the Company to the Buyer (or its representatives) or furnished by or
on behalf of Buyer to the Seller (or their representatives and advisors)
pursuant hereto shall be treated as the sole property of the party furnishing
the information until consummation of the transactions contemplated hereby and,
if the transactions contemplated hereby shall not occur, the party receiving
the information (and their representatives) shall (and such parties shall cause
their respective representatives and advisors to) return to the party which
furnished such information all documents or other materials containing,
reflecting or referring to such information, keep confidential all such
information, and not directly or indirectly use such information for any
competitive or other commercial purpose. The obligation of the parties and
their representatives and advisors to keep such information confidential shall
not apply to (i) any information which (A) the party receiving the information
can establish was already in its possession prior to the disclosure thereof by
the party furnishing the information, (B) was then generally known to the
public, (C) became known to the public through no fault of the party receiving
the information or (D) was disclosed to the party receiving the information by
a third party not bound by an obligation of confidentiality or (ii) disclosures
in accordance with an order of a court of competent jurisdiction.
15
6.2 REGULATORY MATTERS. The Parties will cooperate with each other and
use all commercially reasonable efforts to prepare all necessary documentation,
to effect all necessary filings and to obtain all necessary permits, consents,
waivers, clearances, approvals and authorizations of all third parties and
governmental bodies necessary to consummate the transactions contemplated by
this Agreement. Each Party shall have the right to review and approve in
advance all characterizations of the information relating to it or to any of
its subsidiaries or affiliates which appear in any filing made in connection
with the transactions contemplated hereby with any Governmental Entity. In
exercising the foregoing right, each Party hereto shall act as promptly as
practicable.
6.3 FURTHER ASSURANCES. Subject to the terms and conditions of this
Agreement, each of the Parties agrees to use all commercially reasonable
efforts to take, or cause to be taken, all action and to do, or cause to be
done, all things necessary, proper or advisable under applicable laws and
regulations to consummate and make effective the transactions contemplated by
this Agreement. In case at any time after the Closing any further action is
necessary or desirable to carry out the purposes of this Agreement, the proper
officers and directors of each Party shall take all such necessary action.
ARTICLE VII
CLOSING CONDITIONS
7.1 CONDITIONS TO OBLIGATIONS OF SELLER. The performance of the
obligations of the Seller under this Agreement on the Closing Date shall be
subject to the satisfaction, at or prior to the Closing, of the following
conditions, any one or more of which may be waived by the Seller to the extent
permitted by law:
(a) the representations and warranties of the Buyer contained
in this Agreement shall be true and correct in all material respects at and as
of the Closing Date (and such representations and warranties shall be deemed to
be repeated by the Buyer at and as of the Closing Date), and the Buyer shall
have performed all agreements and covenants required hereby to be performed by
it prior to or at the Closing Date;
(b) no action, suit or proceeding by any Governmental Entity
or other person or entity shall have been instituted or threatened which
questions the validity or legality of the transactions contemplated hereby and
which could reasonably be expected materially to damage Seller if the
transactions contemplated hereunder are consummated;
(c) all consents, approvals and waivers from Governmental
Entities and other parties required in connection with the execution, delivery
and performance of this Agreement by Seller or the consummation by Seller of
the transactions contemplated hereby shall have been obtained;
(d) Buyer shall have complied with all of its obligations
under ARTICLE II.
7.2 CONDITIONS TO OBLIGATIONS OF BUYER. The performance of the
obligations of the Buyer under this Agreement on the Closing Date shall be
subject to the satisfaction, at or
16
prior to the Closing, of the following conditions, any one or more of which may
be waived by the Buyer to the extent permitted by law:
(a) all representations and warranties of the Seller
contained in this Agreement shall be true and correct in all material respects
at and as of the Closing Date (and such representations and warranties shall be
deemed to be repeated by Sellers at and as of the Closing Date) and the Seller
shall have performed all agreements and covenants required hereby to be
performed by them prior to or at the Closing Date;
(b) no action, suit or proceeding shall have been instituted
or threatened which questions the validity or legality of the transactions
contemplated hereby and which could reasonably be expected to affect the right
or ability of the Buyer to own the Sale Shares after the Closing or to damage
Buyer or the Company if the transactions contemplated hereunder are
consummated;
(c) all consents, approvals and waivers from Governmental
Entities and other parties required in connection with the execution, delivery
and performance of this Agreement by Buyer or the consummation by Buyer of the
transactions contemplated hereby shall have been obtained,
(d) Seller shall have complied with all of its obligations
under ARTICLE II.
7.3 SATISFACTION OF CONDITIONS. The Parties shall take all reasonable
efforts to achieve satisfaction of the conditions set out in SECTIONS 7.1 and
7.2 as soon as possible before the Closing Date.
ARTICLE VIII
SURVIVAL; INDEMNIFICATION
8.1 SURVIVAL. The representations and warranties contained in this
Agreement shall not be deemed waived by any investigation at any time made by
or on behalf of any Party and shall survive the Closing indefinitely.
8.2 INDEMNIFICATION.
(a) The Setter agrees to indemnify, defend and hold harmless
the Buyer and each of its officers, directors and shareholders from and against
and in respect of any and all Losses, which result from, or arise out of, or
are imposed upon or are incurred by any person to be indemnified hereunder by
reason of (i) any breach of any representation or warranty of the Seller
contained in this Agreement, or any certificate, document or other instrument
delivered pursuant to this Agreement or (ii) any breach of any covenant or
(b) The Buyer agrees to indemnify, defend and hold harmless
the Seller and each of its officers, directors and shareholders from and
against and in respect of any and all Losses resulting from, arising out of, or
imposed upon or incurred by any person to be indemnified hereunder by reason of
(i) any breach of any representation or warranty of the
17
Buyer contained in this Agreement or (ii) any breach of any covenant or
agreement of Buyer contained in this Agreement
(c) Whenever a claim shall arise for indemnification under
this ARTICLE VIII, the Party entitled to indemnification (the "Indemnified
Party") shall promptly notify in writing the Party from whom indemnification is
sought (the "Indemnifying Party") of such claim. Such written notification
shall include detailed information regarding the claim.
8.3 NOTICE OF THIRD PARTY CLAIMS. An Indemnified Party shall give
reasonably prompt notice of the assertion by any third party of any claim or
claims against such party with respect to which such party intends to seek
indemnification under this ARTICLE VIII; PROVIDED, HOWEVER, that failure of an
Indemnified Party to give reasonably prompt notice of any claim or claims shall
not release, waive or otherwise affect an Indemnifying Party's obligations with
respect thereto except to the extent that the Indemnifying Party can
demonstrate actual loss and prejudice as a result of such failure.
ARTICLE IX
GOVERNING LAW; DISPUTE RESOLUTION
9.1 GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the Republic of Hungary.
9.2 DISPUTE RESOLUTION. Any controversy or claim arising out of or
relating to this Agreement or the breach hereof shall be submitted to and
settled by arbitration in accordance with the rules of the Permanent Court of
Arbitration organized at the Hungarian Chamber of Commerce and Industry. Any
decision of such arbitration shall be final, binding on the parties and
enforceable. Arbitration shall be by a panel of three arbitrators one of whom
shall be selected by the Buyer, one of whom shall be selected by the Seller and
one of whom shall be selected by the other two arbitrators. The arbitration
shall be conducted in the English language and held in Budapest, Hungary. The
expenses of arbitration shall be borne by the Party against whom the decision
is rendered, or apportioned in accordance with the decision of the arbitrators
in the event of a compromise decision. The arbitrators shall not have the
authority to delete, add to or otherwise modify the provisions of this
Agreement. Judgment upon any award may be entered in any court of competent
jurisdiction.
18
ARTICLE X
MISCELLANEOUS PROVISIONS
10.1 TERMINATION. This Agreement may be terminated at any time prior
to the Closing (i) by mutual written agreement of the Parties or (ii) by
unilateral written notice given by the Seller or by the Buyer if the Closing
shall not have occurred on or prior to November 20, 1998, unless the failure of
such shall be due to the failure of the party seeking to terminate this
Agreement to perform its obligations under this Agreement required to be
performed by it on or prior to such date pursuant to the terms hereof. Upon
termination of this Agreement pursuant to this Section 10.1, this Agreement
shall become wholly void and of no force or effect, without any liability or
further obligation on the part of any Party or their Affiliates or any of their
respective directors, officers or employees, except that (x) SECTIONS 6.1 and
10.7 shall survive any termination of this Agreement and (y) Buyer and Seller
shall be fully liable to each other for a breach of this Agreement by it.
10.2 AMENDMENT AND MODIFICATION. Subject to applicable law, this
Agreement may be amended, modified and supplemented only by written agreement
of the Parties.
10.3 WAIVER OF COMPLIANCE. Any of the terms or conditions of this
Agreement which may be lawfully waived may be waived in writing at any time by
the Party which is entitled to the benefits thereof Any such waiver by any
Party shall be in writing and signed on behalf of such Party. Any failure by
any Party to exercise or any delay, forbearance or indulgence by any Party in
exercising any right, power or remedy tinder this Agreement or under applicable
law shall not operate as a waiver of the right, power or remedy or preclude its
exercise at any subsequent time or on any subsequent occasion. The single or
partial exercise of any right, power or remedy shall not preclude any other or
further exercise of that right, power or remedy nor shall such waiver
constitute a continuing waiver.
10.4 NOTICES. All notices or other communications hereunder shall be
in writing and shall be deemed given effectively (i) upon delivery if delivered
personally, (ii) upon delivery if delivered by courier or (iii) upon receipt if
given by telefax to be confirmed by registered mail, return receipt requested,
in each case if addressed as follows:
If to the Seller:
EuroWeb International Corp.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Telefax No.: ▇▇-▇-▇▇▇-▇▇▇-▇▇▇▇
Attention: Mr. ▇▇▇▇▇ ▇▇▇▇▇
If to the Buyer:
▇▇▇▇▇▇ ▇▇.
▇▇▇▇▇ ▇. ▇▇-▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇
▇▇▇▇▇▇▇
Telefax No.: (▇▇-▇)▇▇▇-▇▇▇▇
Attention: ▇▇. ▇▇▇ ▇▇▇▇▇▇▇▇
or such other address as shall be furnished in writing by any Party.
10.5 ASSIGNMENT. This Agreement and all of the provisions hereof shall
be binding upon and inure to the benefit of the Parties hereto and their
respective successors and permitted assigns. Neither this Agreement nor any of
the rights, interests or obligations hereunder shall be assigned by either of
the Parties without the prior written consent of the other Party.
10.6 PUBLICITY. None of the Buyer or Seller shall make or issue, or
cause to be made or issued, any public disclosure, announcement or written
statement concerning this Agreement or the transactions contemplated hereby
without the prior consent of the other Parties. This provision shall not apply,
however, to any disclosure, announcement or written statement required to be
made by law.
10.7 EXPENSES. Except as otherwise provided herein, all legal and
other costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the Party incurring such
costs and expenses.
10.8 COUNTERPARTS. This Agreement may be executed simultaneously in
two or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
10.9 ENTIRE AGREEMENT. This Agreement, the EXHIBITS and the other
documents and certificates delivered pursuant to the terms hereof and thereof,
set forth the entire agreement and understanding of the Parties in respect of
the subject matter contained herein, and supersede all prior agreements.
10.10 THIRD PARTIES. Nothing herein expressed or implied is intended
or shall be construed to confer upon or give to any person or corporation other
than the Parties and their successors or assigns, any rights or remedies under
or by reason of this Agreement.
10.11 FURTHER ASSURANCES. Both before and after the Closing Date, the
Parties shall cooperate in good faith with the other and will take all
appropriate action and execute any documents, instruments or conveyances of any
kind which may be reasonably necessary or advisable to carry out any of the
transactions contemplated hereunder.
10.12 INVALIDITY. In the event that any one or more of the provisions
contained in this Agreement, or in any other instrument referred to herein,
shall, for any reason, be held to be invalid, illegal or unenforceable in any
respect, then to the maximum extent permitted by law, such invalidity,
illegality or unenforceability shall not affect any other provision of this
Agreement or any other such instrument and the Parties shall attempt to deliver
the benefits of such provision in a manner that is not invalid, illegal or
unenforceable.
10.13 LANGUAGE. This Agreement has been prepared in the English
language.
20
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as set forth herein, on the day and year first above written
EUROWEB INTERNATIONAL CORP.
By: /s/▇▇▇▇▇ ▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇
Title: President
▇▇▇▇▇▇ ▇▇.
By: /s/PAL ▇▇▇▇▇▇▇
--------------------------------
Name: Pal ▇▇▇▇▇▇▇
Title: Chief Executive Officer
21
FOUNDER'S RESOLUTIONS
I, the undersigned, ▇▇▇▇▇ ▇▇▇▇ vice chairman, on behalf of EuroWeb
International Corporation (▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇) the founder
of EuroWeb Internet Szolgaltato Reszvenytarsasag (EuroWeb Internet Provider
Corporation) (1122 Budapest Varosmajor u.13., company registration number:
01-10-043569) (hereinafter: Company) adopt the following resolutions:
"NO. 1./1998 (20TH NOVEMBER) FOUNDER'S RESOLUTION"
Article 8 of the Foundation Memorandum of the Company shall be
cancelled and replaced with the following Article 8.:
ARTICLE 8. TRANSFER OF SHARES. RESTRICTIONS ON TRANSFER
8.1. If the Company has more than one shareholders, the approval
of the Company shall be required for the transfer of shares.
The Board of Directors shall decide on the Company approval.
The Board of Directors may only refuse approval due to
important reasons. The following shall be considered as
important reasons:
(i) the shares would be transferred to a competitor of the
Company or to a competitor of one of the shareholders
of the Company
(ii) the transfer of shares would take place within
eighteen (18) months from the approval of the
Founder's Resolution inserting this Article 8.,
(iii) the shares would be transferred to a buyer who did not
accept, in a written declaration, the Syndicate
Agreement effective among the shareholders of the
(Company as binding, or the original document
containing such a statement was not made available for
the Board of Directors.
8.2. If the Company has more than one shareholder, in the case of
any transfer of shares the other shareholders shall be
entitled to the right of pre-emptive purchase in accordance
with the following provisions:
If one shareholder (hereinafter: "Selling Shareholder") intends to
transfer one or more shares (hereinafter: "Shares for Sale"), he shall
request a written proposal (hereinafter: "Proposal") from the
potential buyer (hereinafter: "Buyer") for the purchase of Shares for
Sale in cash (hereinafter: "Planned transfer"). Before the acceptance
of the Proposal, the Selling Shareholder shall request the approval of
the Board of Directors for the Planned Transfer pursuant to Article
8.1. of the Foundation Memorandum. Upon the request of the Board of
Directors the Selling Shareholder shall submit all the documents to
the Board of Directors which is considered necessary for the approval
by the Board of Directors. If the Board of Directors refuses to
approve the Planned Transfer, the Selling Shareholder may not complete
the Planned Transfer and the Buyer may not be recorded in the Share
Register of the Company.
If the Board of Directors refuses to approve the Planned Transfer, the
Selling Shareholder may not complete the Planned Transfer and the
Buyer may not be recorded in the Share Register of the Company.
If the Board of Directors has given its approval for the Planned
Transfer, the Selling Shareholder shall send the Proposal to the other
shareholders ("Other Shareholders") who are entitled to accept the
proposal and replace the Buyer with regard to the Proposal. The Other
Shareholders shall have 30 days to decide whether they accept the
Proposal or not. The Proposal shall be accepted in a notice sent to
the Selling Shareholder. In this notice a deadline (hereinafter:
"Closing") shall be specified for the completion of the transaction
which may Pot be less than 30 days from the date of the notice but may
not exceed 45 days from the date of the notice, either. The location
of the Closing shall be the seat of the Company. At Closing the
Selling Shareholder shall be obliged to present the Shares for Sale
with blank endorsement to the Other Shareholders accepting the
Proposal together with a declaration in which the Selling Shareholder
declares that the Shares for Sale are exempt from litigation,
encumbrances or claims and the Other Shareholders accepting the
Proposal shall pay the purchase price specified in the Proposal for
the Shares for sale to
2
the Selling Shareholder at the time of Closing. If more than one of
the Other Shareholders intend to accept the Proposal, since the
shareholders may exercise their right of pre-emptive purchase in
proportion to their stake in the Company, they can accept the Proposal
in proportion to their equity participation and, as a result of the
acceptance of the Proposal, may purchase the Shares for Sale in the
same proportions. If only one of the Other Shareholders intends to
accept the Proposal, this Other Shareholder shall be entitled and
obliged to purchase all the Shares for Sale pursuant to the provisions
of this Article.
If none of the Other Shareholders accept the Proposal, the Selling
Shareholder shall be entitled to transfer the Shares for Sale to the
Buyer pursuant to the provisions of the Proposal within 60 days from
the deadline for the acceptance of the Proposal for the other
shareholders. If the Selling Shareholder fails to complete the Planned
Transfer by the deadline specified in the sentence above, or the
Planned Transfer does not take place according to the provisions of
the proposal or is not made to the Buyer, it shall be considered as a
new Planned Transfer and the Selling Shareholder shall be obliged to
comply with the provisions of this Article 8 with regard to this new
Planned Transfer, i.e. he shall obtain the approval of the Board of
Directors for this new Planned Transfer pursuant to the provisions of
this Article 8 and invite the Other Shareholders to exercise their
right of pre-emptive purchase in accordance with the provisions of
this Article 8.
8.3. All the shares of the Company must be overstamped with the
following text:
"Pursuant to Article 8. of the Articles of Association of the Company,
the approval of the Board of Directors of the Company shall be required for the
transfer of this share and, in the case of the transfer of this share, the
shareholders of the Company shall be entitled to a right of pre-emptive
purchase. Articles 8. of the Articles of Association of the Company may be
observed and an extract may be requested from it at the registered seat of the
Company."
Article 11.1. of the Foundation Memorandum of the Company shall be
cancelled and replaced with the following Article 11.1.:
3
11.1. The Board of Directors shall comprise five (5) members, and
their task shall be to control the Company.
Article 11.5 of the Foundation Memorandum of the Company
shall be cancelled and replaced with the following Article
11.5..:
11.5. The mandate of the members of the Board of Directors shall be
five(s) years.
Article 12 of the Foundation Memorandum of the Company shall
be cancelled and replaced with the following Article 12.:
ARTICLE 12. REPRESENTATION OF THE COMPANY
The company signature shall take place in a manner that the persons
authorized to represent the Company shall sign their names under the
pre-written, pre-typed or pre-printed name of the Company in accordance with
their specimen signature.
The Company signature may be signed by the following persons:
a. the chairman of the Board of Directors alone
b. the chief executive officer alone,
c. the members of the Board of Directors together
Article 13.1. of the Foundation Memorandum of the Company shall be cancelled
and replaced with the following Article 13.1 .:
13. I. The Supervisory Board shall comprise 3 (three) members elected by the
Shareholders' Meeting for five (5) years.
Article 13.9. of the Foundation Memorandum of the Company shall be
deleted,
4
The following Article 12 shall be inserted into the Foundation
Memorandum and, consequently, the numbering of the current Article 1 2
of the Foundation Memorandum shall change to 13, the numbering of
Article 13 shall change to Article 14, Article 14 shall change to
Article 15., Article 15 shall change to Article 16., Article 16 shall
change to Article 17., Article 7 shall change to Article 18., and
Article 18 shall change to Article 19.
ARTICLE 12. CHIEF EXECUTIVE OFFICER
The chief executive officer shall be the company manager with a
general right to represent the company pursuant to Article 39. section
(2) of the Act on Business Organisations and, in accordance with the
resolutions of the Board of Directors, he shall be responsible for the
control of daily operation of the Company. The Chief Executive Officer
shall be elected by the Shareholders' Meeting in a resolution adopted
with a simple majority vote for a definite period specified in this
resolution and he may be recalled with a resolution adopted with a
simple majority vote."
"NO.2./1998 (20TH NOVEMBER) FOUNDER'S RESOLUTION"
The Founder hereby approves the Foundation Memorandum in a
consolidated structure, including the amendments approved with the above No.
1/1998 (20th November) Founder's Resolution.
5
AMENDMENTS IN THE FOUNDATION MEMORANDUM
in a consolidated structure
--------------------------------------------------------------------------------
20th November 1998.
6
AMENDMENTS IN THE FOUNDATION MEMORANDUM
with which EuroWeb Internet Szolgaltato Reszvenytarsasag (EuroWeb Internet
Provider Corporation), registered by the Court of Registration at company
registration number: 0 1-10-043569/hereinafter Company/ puts into a
consolidated structure its Foundation Memorandum of 1st August 1997 and amended
on 14th August 1998:
ARTICLE 1. FOUNDER OF THE COMPANY
Founder:
EuroWeb International Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇▇▇ ▇▇▇
ARTICLE 2 NAME AND SEAT OF THE COMPANY
2.1. The company is a company limited by shares and founder privately.
2.2. Company name: EuroWeb Internet Szolgaltato Reszvenytarsasag
Abbreviated company name: EuroWeb Rt.
Company name in English: EuroWeb Internet Provider Corporation
Abbreviated company name in English: EuroWeb Corporation
2.3. Company seat: ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇.
ARTICLE 3. TERM
The company was established on lst August 1997 for an indefinite period (date
of transformation).
7
ARTICLE 4. SCOPE OF ACTIVITY
4.1. 6420 Telecommunications
7210 Hardware consultancy
7220 Software preparation, consultancy
7230 Data processing
7240 Databank activity
7250 Office and computer repair
7260 Other IT activity
7310 Natural science, technical research, development
8042 Adult and other training and education
4.2. In addition to the ones listed in article 3.1. the company may also
pursue other activities which are allowed in the effective statutory
regulations following their inclusion into this Foundation Memorandum
and registration by the Court of Registration if the registration of
the new activity is required by law.
ARTICLE 5. EQUITY AND SHARES
5.1. The equity of the Company shall be HUF 66,000,000 (i.e. sixty-six
million Forints) comprising financial contribution, and represented by
66,000 (i.e. sixty-six thousand) shares of HUF 1,000 (one thousand
Forints) par value each and which, pursuant to the resolution of the
Shareholders' Meeting shall be printed in 660 (six hundred) registered
shares of HUF 100,000 (One hundred thousand Forints ) denominations.
The shares shall be registered ordinary shares which provide equal
rights in all respect.
EuroWeb International Corp. (445 Park Avenue, New York, N.Y. 10022)
shall be the owner of 660 shares of consolidated denomination of
HUF 100,000, paid in cash.
5.2. One series may not contain shares of different face values.
8
ARTICLE 6. SHARE REGISTER
6.1. The Board of Directors shall keep a Share Register at the seat of
the Company to record the shareholders. The Share Register must contain the
name (company) and address (seat) of each shareholder and the number of shares
held by them. In addition, the amount paid for the individual shares, the
transfer of shares and all data which are required by the Board of Directors
and/or statutory regulations must also be recorded. The Company shall only
acknowledge persons included in the Share Register as shareholders.
6.2. All records made in the Share Register shall be verified by the
joint signature of two persons authorized for that.
6.3. The Board of Directors shall be entitled to decide on the
generation of shares of consolidated denomination.
ARTICLE 7. RESPONSIBILITIES OF SHAREHOLDERS
The responsibility of shareholders shall extend to the supply of the face value
or value of issue of shares and the shareholder shall not otherwise be
responsible for the liabilities of the Company.
ARTICLE 8, TRANSFER OF SHARES, RESTRICTIONS ON TRANSFER
8.1 If the Company has more than one shareholders, the approval of the
Company shall be required for the transfer of shares. The Board of
Directors shall decide on the Company approval. The Board of Directors
may only refuse approval due to important reasons. The following shall
be considered as important reasons: (i) the shares would be
transferred to a competitor of the Company or to a competitor of one
of the shareholders of the Company
(ii) the transfer of shares would take place within eighteen (18)
months from the approval of the Founder's Resolution inserting
this Article 8.,
(iii) the shares would be transferred to a buyer who did not accept,
in a written declaration, the Syndicate Agreement effective
among the shareholders of the
9
Company as binding, or the original document containing such a
statement was not made available for the Board of Directors.
8.2. If the Company has more than one shareholders, in the case of any
transfer of shares the other shareholders shall be entitled to the
right of pre-emptive purchase in accordance with the following
provisions:
If one shareholder (hereinafter: "Selling Shareholder") intends to
transfer one or more shares (hereinafter: "Shares for Sale"), he shall
request a written proposal (hereinafter: "Proposal") from the
potential buyer (hereinafter: "Buyer") for the purchase of Shares for
Sale in cash (hereinafter: "Planned transfer"). Before the acceptance
of the Proposal, the Selling Shareholder shall request the approval of
the Board of Directors for the Planned Transfer pursuant to Article
8.1. of the Foundation Memorandum. Upon the request of the Board of
Directors the Selling Shareholder shall submit all the documents to
the Board of Directors which is considered necessary for the approval
by the Board of Directors. If the Board of Directors refuses to
approve the Planned Transfer the Selling Shareholder may not complete
the Planned Transfer and the Buyer may not be recorded in the Share
Register of the Company.
If the Board of Directors refuses to approve the Planned Transfer, the
Selling Shareholder may not complete the Planned Transfer and the
Buyer may not be recorded in the Share Register of the Company.
If the Board of Directors has given its approval for the Planned
Transfer, the Selling Shareholder shall send the Proposal to the other
shareholders ("Other Shareholders") who are entitled to accept the
proposal and replace the Buyer with regard to the Proposal. The Other
Shareholders shall have 30 days to decide whether they accept the
Proposal or not. The Proposal shall be accepted in a notice sent to
the Selling Shareholder. In this notice a deadline (hereinafter:
"Closing") shall be specified for the completion of the transaction
which may not be less than 30 days from the date of the notice but may
not exceed 45 days from the date of the notice, either. The location
of the Closing shall be the seat of the Company. At Closing the
Selling Shareholder shall be obliged to present the Shares for Sale
with blank endorsement to the Other
10
Shareholders accepting the Proposal together with a declaration in
which the Selling Shareholder declares that the Shares for Sale are
exempt from litigation, encumbrances or claims and the Other
Shareholders accepting the Proposal shall pay the purchase price
specified in the Proposal for the Shares for sale to the Selling
Shareholder at the time of Closing. If more than one of the Other
Shareholders intend to accept the Proposal, since the shareholders may
exercise their right of pre-emptive purchase in proportion to their
stake in the Company, they can accept the Proposal in proportion to
their equity participation and, as a result of the acceptance of the
Proposal, may purchase the Shares for Sale in the same proportions. If
only one of the Other Shareholders intends to accept the Proposal,
this Other Shareholder shall be entitled and obliged to purchase all
the Shares for Sale pursuant to the provisions of this Article.
If none (of the Other Shareholders accept the Proposal, the Selling
Shareholder shall be entitled to transfer the Shares for Sale to the
Buyer pursuant to the provisions of the Proposal within 60 days from
the deadline for the acceptance of the Proposal for the other
shareholders. If the Selling Shareholder fails to complete the Planned
Transfer by the deadline specified in the sentence above, or the
Planned Transfer does not take place according to the provisions of
the Proposal or is not made to the Buyer, it shall be considered as a
new Planned Transfer and the Selling Shareholder shall be obliged to
comply with the provisions of this Article 8 with regard to this new
Planned Transfer, i.e he shall obtain the approval of the Board of
Directors for this new Planned Transfer pursuant to the provisions of
this Article 8 and invite the Other Shareholders to exercise their
right of pre-emptive purchase in accordance with the provisions of
this Article 8.
8.3. All the shares of the Company must be overstamped with the following text:
"Pursuant to Article 8. of the Articles of Association of the Company,
the approval of the Board of Directors of the Company shall be
required for the transfer of this share and, in the case of the
transfer of this share, the shareholders of the Company shall be
entitled 10 a right of pre-emptive purchase. Articles 8. of the
Articles of Association of
11
the Company may be observed and an extract may be requested from it at
the registered seat of the Company."
ARTICLE 9. INCREASE OF EQUITY
9.1. The equity capital may be increased on the basis of a resolution
adopted by the Founder The Founder shall decide in the conditions of
the capital increase, the related rights and preferences.
9.2. In its resolution on the capital increase, the Founder may indicate
the persons who shall be exclusively entitled to subscribe for the new
shares.
9.3. The Board of Directors shall have the right to increase the equity
capital of the company by 25% of the equity capital once a year
through the issue of new shares or conversion of retained earnings
into equity.
9.4. The Company may convert its retained earnings or part of it into
equity through an equity increase involving the issue of new shares or
overstamping of shares.
ARTICLE 10. ORGANISATLON AND CONTROL OF THE COMPANY
The Founder shall decide on company matters with a founder's
resolution.
Regarding issues referred to the exclusive competence of the
Shareholders' Meeting by Article 233 of the Act on Business
Organisations, the Founder shall be entitled to decide in writing, and
shall inform the leading officials on his resolution in writing.
ARTICLE 11. BOARD OF DIRECTORS
11.1. The Board of Directors shall comprise five (5) members, and their task
shall be to control the Company.
11.2 The Board of Directors shall elect a chairman from its members for
five (5) business years.
12
11.3. The Board of Directors shall set the dates of its meetings itself The
chairman may convene Board of Directors meetings at any time. The
Board of Directors shall hold at least two meetings every year.
11.4. The detailed organisational and operational regulations of the Board
of Directors shall be included in the Operational Procedures adopted
by the Board of Directors.
11.5. The mandate of the Board of Directors shall be for five (5) years.
ARTICLE 12. CHIEF EXECUTIVE OFFICER
The chief executive officer shall be the company manager with a
general right to represent the company pursuant to Article 39. section
(2) of the Act on Business Organisations and, in accordance with the
resolutions of the Board of Directors, he shall be responsible for the
control of daily operation of the Company. The Chief Executive Officer
shall be elected by the Founder in a resolution for a definite period
specified in this resolution and he may be recalled with a resolution.
ARTICLE 13. REPRESENTATION OF THE COMPANY
The company signature shall take place in a manner that the persons authorized
to represent the Company shall sign their names under the pre-written,
pre-typed or pre-printed name of the Company in accordance with their specimen
signature.
The Company signature may be signed by the following persons:
a. the chairman of the Board of Directors alone
b. the chief executive officer alone.
c. three members of the Board of Directors together
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ARTICLE 14. SUPERVISORY BOARD
14. 1. The Supervisory Board shall comprise 3 (three) members elected by
the Shareholders' Meeting for five (5) years.
14.2. The Supervisory Board shall elect a chairman from its members. The
mandate of the chairman shall be for three (3) business years and may
be extended.
14.3. The meetings of the Supervisory Board shall be convened by the
chairman upon his initiative or upon the request of the Board of
Directors or two members of the Supervisory Board at least once a
year.
14.4 The Supervisory Board shall check the books or the Company. In order
to perform these tasks, it may request information from the Board of
Directors and leading officials of the Company. The Supervisory Board
may also inspect the books and records of the company itself or
through appointed experts.
14.5. The Supervisory Board shall be obliged to inspect the annual financial
statements and express its views on them to the Founder.
14.6. With regard to the annual financial statements the Supervisory Board
shall take a view for the distribution of the net profits and setting
aside reserves by the Board of Directors as well as the proposals
concerning the settlement of potential losses.
14.7. The Supervisory Board shall complete all the tasks which are referred
to its competence by the statutory regulations.
14.8. The Supervisory Board shall establish its operating procedures which
shall be approved by the Founder.
14
ARTICLE 15. AUDITOR
15.1. The Founder shall elect one or more auditors. Shareholders of the
Company, members of the Board of Directors or the Supervisory Board or
employees of the Company may not be the auditor.
15.2. The auditors shall inspect the balance sheet and profit and loss
account and shall submit reports on them to the Founder. The auditors
shall complete their tasks specified by law.
15.3. The Board of Directors and the Supervisory Board may request the
auditors to conduct special audits and submit reports on them.
15.4. The mandate of auditors shall last from their appointment to the
approval of the following annual accounts.
15.5. Auditor of the Company: BDO Kontroll Audit and Audit Consultancy Kft.
(1056 Budapest, Belgrad rkpt. 13-15.) (registration number:
KE-399/97/I)
Appointed auditor: Tunde ▇▇▇▇, ▇▇▇. ▇▇▇▇▇ (reg. no. KI-2885/95/IX.)
ARTICLE 16. BUSINESS YEAR
The business year of the Company shall be identical with the calendar years.
ARTICLE 17. BOOKS AND RECORDS
17.1 The Company shall keep its books and records in the Hungarian and English
languages.
17.2. The books and all other data and documents of the Company shall be
kept at the Company seat or other places in Hungary considered
practical by the Board of Directors and they can be inspected at nay
time by the members of the Board of Directors and the Supervisory
Board.
15
ARTICLE 18. CHAPTER TITLES
The chapter titles used in this Foundation Memorandum shall be used only as a
reference basis and shall not affect the interpretation of the Foundation
Memorandum.
ARTICLE 19. OTHER PROVISIONS
This Foundation Memorandum and its appendices have been drawn in the English
and Hungarian languages. In the case of disputes the Hungarian version shall be
indicative.
The Founder hereby authorises ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ (▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇ Solicitors'
Office 1037 Budapest Kekfesto u. 26.) and ▇▇. ▇▇▇▇▇▇▇ Eordogh (1141 Budapest
Szuglo u. 190. I.4) solicitors to sign this Memorandum and represent the
Company at the Court of Registration under the terms and conditions included in
the Act on Solicitors.
Dated in Budapest 20th November 1998.
Signature: /s/▇▇▇▇▇ ▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇ vice chairman
on behalf of EuroWeb International Corp.
Prepared and countersigned by:
--------------------------------------------------------------------------------
"NO. 3./1998 (20TH NOVEMBER) FOUNDER'S RESOLUTION"
The Founder hereby releases ▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇▇ Josa from membership in the
Board of Directors and appoints the following persons as members of the Board
of Directors for a period of five (5) years:
- ▇▇▇ ▇▇▇▇▇▇▇▇ (1125 Budapest, Galgoczi u. 23/B mother's name:
Heintje ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, passport number: ▇▇▇▇▇▇▇▇▇)
16
- ▇▇▇▇▇▇ ▇▇▇▇▇▇ (1023 Budapest, Kolozsvai u. 9. mother's name:
▇▇▇▇▇ ▇▇▇▇▇▇▇▇, passport number: ▇▇▇▇▇▇▇▇▇)
- ▇▇▇▇▇ ▇. ▇▇▇▇▇ (61W 62 Street Apt. 19H ▇▇▇ ▇▇▇▇. ▇▇ ▇▇▇▇▇, ▇▇▇
passport number: 063u155167)
- ▇▇▇▇▇▇ ▇▇▇▇▇▇ (10 ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, ▇▇▇,
passport number: 063- 155921) and shall release from membership
in the Board of Directors and re-elect as a member of the Board
of Directors for a period of five (5) years:
- ▇▇▇▇▇ ▇▇▇▇ (born: Bardudvarnok, 19th February 1966, mother's
name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, personal identity card no.: AB-Il.
017979)
"NO.4./1998 (20TH NOVEMBER) FOUNDER'S RESOLUTION"
The Founder hereby releases ▇▇▇▇▇ ▇. ▇▇▇▇▇ and ▇▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇▇ and ▇▇. ▇▇▇▇▇
▇▇▇▇▇▇▇ from membership in the Supervisory Board appoints the following persons
as members of the Supervisory Board for a period of five (5) years:
- ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ (1041 Budapest, Gorgey u. 45. mother's name:
▇▇▇▇▇ ▇▇▇▇▇▇, personal identity card no.: AU-VII. 216612)
- ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇ (1164 Budapest, 0llo u. 22. mother's name:
▇▇▇▇▇ ▇▇▇▇▇▇▇▇, personal identity card no.: AU-VII 417448) and
shall release from membership in the Supervisory Board and
re-elect as a member of the Supervisory Board for a period of
five (5) years:
- ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
"No. 5./1998 (20th November) Founder's Resolution"
17
The Founder hereby appoints ▇▇▇▇▇ ▇▇▇▇ (born: Bardudvarnok, 19th February 1966,
mother's name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, personal identity card no.: AB-Il. 017979) as
the chief executive officer of the company for a period of five years."
Budapest 20th November 1998.
/s/▇▇▇▇▇ ▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇
vice chairman
on behalf of the Founder
18