Exhibit 10.34
SECURITY DEPOSIT NO. 1 AGREEMENT
dated April 11, 2000
between
HUNGARIAN TELEPHONE AND CABLE CORP.
as Depositor
and
CITIBANK RT.
as Depositee and Security Agent
and
HUNGAROTEL TAVKOZLESI KONCESSZIOS RESZVENYTARSASAG
RABA-COM TAVKOZLESI KONCESSZIOS RESZVENYTARSASAG
PAPA ES TERSEGE TAVKOZLESI KONCESSZIOS RESZVENYTARSASAG
KNC KELET-NOGRAD COM TAVKOZLESI KONCESSZIOS
RESZVENYTARSASAG
Ormai es Tarsai
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HTCC TANACSADO RESZVENYTARSASAG
as Countersignors
THIS SECURITY DEPOSIT NO. 1 AGREEMENT (the "Agreement") is made on 11 April 2000
BETWEEN:
(1) HUNGARIAN TELEPHONE AND CABLE CORP. as depositor (the "Depositor");
(2) CITIBANK RT. as depositee (the "Depositee"), acting on its own behalf
and in its capacity as Security Agent (acting on behalf of each Finance
Party);
AND IS COUNTERSIGNED BY:
(3) HUNGAROTEL TAVKOZLESI KONCESSZIOS RESZVENYTARSASAG as countersignor;
(4) RABA-COM TAVKOZLESI KONCESSZIOS RESZVENYTARSASAG as countersignor;
(5) PAPA ES TERSEGE TAVKOZLESI KONCESSZIOS RESZVENYTARSASAG as
countersignor;
(6) KELET-NOGRAD COM TAVKOZLESI KONCESSZIOS RESZVENYTARSASAG as
countersignor; and
(7) HTCC TANACSADO RESZVENYTARSASAG RESZVENYTARSASAG as countersignor.
(the parties detailed at (3) to (7) inclusive above each a "Countersignor" and
together, the "Countersignors")
(the parties detailed at (1) to (7) inclusive above each a "Contracting Party"
and together, the "Contracting Parties").
The Depositee is acting on its own behalf and in its capacity as Security Agent
(acting on behalf of each Finance Party) by way of a power of attorney, each
substantially in the form set out in the Schedule 1 (Form of the power of
attorney from each Finance Party to the Security Agent).
IT IS HEREBY AGREED as followed:
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1. DEFINITIONS AND INTERPRETATION
1.1 Definitions
In this Agreement:
"Cancelled Shares" means the share certificates being serial numbers
0007013-0007412, 0008018-0010749, 0023769-0026396 and 0072109-0096108
of the ordinary share capital of KNC Kelet-Nograd COM Tavkozlesi
Koncesszios Reszvenytarsasag.
"Depositee's Declaration" means the written declaration made by the
Depositee and delivered to the Depositor and to each of the
Countersignors as required to terminate the Security Deposit and to
delete the notation from the share registry of each of the
Countersignors, substantially in the form set out in the Schedule 3
(Form of the Depositee's Declaration regarding the termination of the
Security Deposit).
"Deposit Period" means the period commencing on the date of this
Agreement and terminating on the date on which the Secured Liabilities
have been finally and duly paid, duly performed and/or duly discharged
(as appropriate) in full.
"Deposited Shares" means the registered shares of each of the
Countersignors identified and listed in Schedule 2 (List of the
Deposited Shares).
"Dispute" shall have the meaning ascribed to it in Clause 18.3
(Arbitration).
"Loan" means, at any time, the amount of principal outstanding under
the Senior Secured Debt Facility Agreement at such time, which can be
in the aggregate for an amount of up to one hundred and thirty million
euros (EUR 130,000,000).
"Material Adverse Effect" means the occurrence of any material adverse
change in the value of the Deposited Shares and/or in the ability of
the Depositee to enforce any or all of its rights arising under this
Agreement.
"Permitted Encumbrance" means any Encumbrance falling within the scope
of paragraph (c) of Clause 21.3 (Negative pledge) of the Senior Secured
Debt Facility Agreement.
"Power of Attorney" means the power of attorney to be provided by the
Depositor to the Depositee on the date of this Agreement and every
twelve (12) months thereafter, substantially in the form set out in
Schedule 5 (Form of the Power of Attorney from a Depositor to the
Depositee to exercise shareholders' rights).
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"Re-issued Shares" means the new ordinary shares of KNC Kelet-Nograd
COM Tavkozlesi Koncesszios Reszvenytarsasag which will be issued in
replacement of the Cancelled Shares.
"Rules" shall have the meaning ascribed to it in Clause 18.3
(Arbitration).
"Secured Liabilities" mean collectively, all moneys, obligations and
liabilities whatsoever (in the same currency in which such moneys,
obligations and liabilities are, as appropriate, expressed to be
payable), which are now or which may at any time after the date of this
Agreement be due, owing, incurred and/or outstanding from any of the
Countersignors to the Depositee or any Finance Party or any transferee
or assignee or replacement or successor of the Depositee or such
Finance Party under any of the Senior Finance Documents to which any of
the Countersignors and such person is a party and which arise under
such Senior Finance Documents, the principal details of which are set
out in Clause 2 (The Secured Liabilities).
"Security Deposit" means the deposit ("zarolt letet") created and
granted over the Deposited Shares by the Depositors in favour of the
Depositee pursuant to Clause 3.1. (Security Deposit).
"Senior Secured Debt Facility Agreement" means the EUR 130,000,000
senior secured debt facility agreement dated on or about the date of
this Agreement made between: (1) Hungarotel Tavkozlesi Koncesszios
Reszvenytarsasag as Borrower; (2) RABA-COM Tavkozlesi Koncesszios
Reszvenytarsasag as Borrower; (3) Papa es Tersege Tavkozlesi
Koncesszios Reszvenytarsasag as Borrower; (4) KNC Kelet-Nograd COM
Tavkozlesi Koncesszios Reszvenytarsasag as Borrower; (5) Hungarian
Telephone and Cable Corp. as Guarantor; (6) HTCC Tanacsado
Reszvenytarsasag as Guarantor; (7) Citibank, N.A. and Westdeutsche
Landesbank Girozentrale as Arrangers; (8) Citibank International plc.
as Facility Agent; (9) Citibank Rt. as Security Agent; and (10) the
financial institutions defined in such senior secured debt facility
agreement as the Original Lenders.
"Valuation Price" has the meaning provided for in Clause 10.2
(Procedure).
2.1 Defined terms in the Senior Secured Debt Facility Agreement
In this Agreement all terms and expressions shall, in the absence of
contrary intention or unless otherwise defined, have the meanings
attributed to such terms and expressions in the Senior Secured Debt
Facility Agreement (including by reference to any other document),
mutatis mutandis. Clause 1.2 (Construction) of the Senior Secured Debt
Facility Agreement shall be deemed to be incorporated in this
Agreement, mutatis mutandis.
2. THE SECURED LIABILITIES
2.1 Liabilities arising under the Senior Finance Documents
The Contracting Parties hereby declare that under the terms and
conditions of the Senior Finance Documents:
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(a) the Depositor undertook, subject to the terms and conditions of
the Senior Finance Documents to which it is a party:
(i) to pay certain fees, costs and expenses arising in relation
to such Senior Finance Documents; and
(ii) to perform and/or comply with its obligations under such
Senior Finance Documents,
Provided that the aggregate secured amount under (i) shall not
exceed the equivalent of twenty five million euro (EUR
25,000,000);
(b) Hungarotel Tavkozlesi Koncesszios Reszvenytarsasag undertook,
subject to the terms and conditions of the Senior Finance
Documents to which it is a party:
(i) to repay any Facility A Loans then drawn down by it and
outstanding, which may be for an aggregate amount of up to
the equivalent of seventy nine million euro (EUR 79,000,000),
in accordance with the following repayment schedule (as
amended from time to time pursuant to the Senior Secured Debt
Facility Agreement);
Repayment Date Repayment of Facility A
Loans (%)
-------------- -------------------------
30 June 2001 three per cent. (3%)
31 December 2001 four per cent. (4%)
30 June 2002 five per cent. (5%)
31 December 2002 six per cent. (6%)
30 June 2003 seven per cent. (7%)
31 December 2003 seven per cent. (7%)
30 June 2004 seven per cent. (7%)
(ii) to repay each Facility B Loan drawn down by it, which may be
for an amount of up to five million euro (EUR 5,000,000), at
the end of the relevant Interest Period in accordance with
the terms and conditions provided for in the Senior Secured
Debt Facility Agreement;
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(iii) to pay interest on the Facility A Loan and any Facility B
Loan, in each case, drawn down by it and outstanding, which
shall accrue on a daily basis and be calculated on the basis
of a year of three hundred and sixty (360) days and the
actual number of days elapsed and the rate of such interest
shall be the percentage rate per annum which is the
aggregate of: (A) one point seven five per cent. per annum
(1.75% p.a.), subject to any reduction pursuant to Clause
9.6 (Adjustments to Margin) of the Senior Secured Debt
Facility Agreement; (B) in relation to any Loan denominated
in forint, BUBOR, or in relation to any Loan denominated in
euro, EURIBOR; and (C) the Associated Costs, if any;
(iv) to pay certain fees, costs and expenses arising in relation
to such Senior Finance Documents; and
(v) to perform and/or comply with its obligations under such
Senior Finance Documents,
Provided that the aggregate secured amount under (iv) shall not
exceed the equivalent of twenty five million euro (EUR
25,000,000);
(c) RABA-COM Tavkozlesi Koncesszios Reszvenytarsasag undertook,
subject to the terms and conditions of the Senior Finance
Documents to which it is a party:
(i) to repay any Facility A Loans then drawn down by it and
outstanding, which may be for an aggregate amount of up to
the equivalent of fourteen million euro (EUR 14,000,000), in
accordance with the following repayment schedule (as amended
from time to time pursuant to the Senior Secured Debt
Facility Agreement);
Repayment Date Repayment of Facility A
Loans (%)
-------------- ----------------------------
30 June 2001 three per cent. (3%)
31 December 2001 four per cent. (4%)
30 June 2002 five per cent. (5%)
31 December 2002 six per cent. (6%)
30 June 2003 seven per cent. (7%)
31 December 2003 seven per cent. (7%)
30 June 2004 seven per cent. (7%)
31 December 2004 seven per cent. (7%)
30 June 2005 eight per cent. (8%)
31 December 2005 eight per cent. (8%)
30 June 2006 eight per cent. (8%)
31 December 2006 ten per cent. (10%)
30 June 2007 ten per cent. (10%)
31 December 2007 ten per cent. (10%)
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Repayment Date Repayment of Facility A
Loans (%)
-------------- ----------------------------
TOTAL: one hundred per cent.
(100%)
(ii) to repay each Facility B Loan drawn down by it, which may be
for an amount of up to five million euro (EUR 5,000,000), at
the end of the relevant Interest Period in accordance with
the terms and conditions provided for in the Senior Secured
Debt Facility Agreement;
(iii) to pay interest on the Facility A Loan and any Facility B
Loan, in each case, drawn down by it and outstanding, which
shall accrue on a daily basis and be calculated on the basis
of a year of three hundred and sixty (360) days and the
actual number of days elapsed and the rate of such interest
shall be the percentage rate per annum which is the
aggregate of: (A) one point seven five per cent. per annum
(1.75% p.a.), subject to any reduction pursuant to Clause
9.6 (Adjustments to Margin) of the Senior Secured Debt
Facility Agreement; (B) in relation to any Loan denominated
in forint, BUBOR, or in relation to any Loan
denominated in euro, EURIBOR; and (C) the Associated Costs,
if any;
(iv) to pay certain fees, costs and expenses arising in relation
to such Senior Finance Documents; and
(v) to perform and/or comply with its obligations under such
Senior Finance Documents,
Provided that the aggregate secured amount under (iv) shall not
exceed the equivalent of twenty five million euro (EUR
25,000,000);
(d) Papa es Tersege Tavkozlesi Koncesszios Reszvenytarsasag undertook,
subject to the terms and conditions of the Senior Finance
Documents to which it is a party:
(i) to repay any Facility A Loans then drawn down by it and
outstanding, which may be for an aggregate amount of up to
the equivalent of thirteen million euro (EUR 13,000,000), in
accordance with the following repayment schedule (as amended
from time to time pursuant to the Senior Secured Debt
Facility Agreement);
Repayment Date Repayment of Facility A
Loans (%)
-------------- ----------------------------
30 June 2001 three per cent. (3%)
31 December 2001 four per cent. (4%)
30 June 2002 five per cent. (5%)
31 December 2002 six per cent. (6%)
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Repayment Date Repayment of Facility A
Loans (%)
-------------- ----------------------------
30 June 2003 seven per cent. (7%)
31 December 2003 seven per cent. (7%)
30 June 2004 seven per cent. (7%)
31 December 2004 seven per cent. (7%)
30 June 2005 eight per cent. (8%)
31 December 2005 eight per cent. (8%)
30 June 2006 eight per cent. (8%)
31 December 2006 ten per cent. (10%)
30 June 2007 ten per cent. (10%)
31 December 2007 ten per cent. (10%)
TOTAL: one hundred per cent.
(100%)
(ii) to repay each Facility B Loan drawn down by it, which may be
for an amount of up to five million euro (EUR 5,000,000), at
the end of the relevant Interest Period in accordance with
the terms and conditions provided for in the Senior Secured
Debt Facility Agreement;
(iii) to pay interest on the Facility A Loan and any Facility B
Loan, in each case, drawn down by it and outstanding, which
shall accrue on a daily basis and be calculated on the basis
of a year of three hundred and sixty (360) days and the
actual number of days elapsed and the rate of such interest
shall be the percentage rate per annum which is the
aggregate of: (A) one point seven five per cent. per annum
(1.75% p.a.) annum, subject to any reduction pursuant to
Clause 9.6 (Adjustments to Margin) of the Senior Secured
Debt Facility Agreement; (B) in relation to any Loan
denominated in forint, BUBOR, or in relation to any Loan
denominated in euro, EURIBOR; and (C) the Associated Costs,
if any;
(iv) to pay certain fees, costs and expenses arising in relation
to such Senior Finance Documents; and
(v) to perform and/or comply with its obligations under such
Senior Finance Documents,
Provided that the aggregate secured amount under (iv) shall not
exceed the equivalent of twenty five million euro (EUR
25,000,000);
(e) KNC Kelet-Nograd COM Tavkozlesi Koncesszios Reszvenytarsasag
undertook, subject to the terms and conditions of the Senior
Finance Documents to which it is a party:
(i) to repay any Facility A Loans then drawn down by it and
outstanding, which may be for an aggregate amount of up to
the
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equivalent of twenty six million euro (EUR 26,000,000),
in accordance with the following repayment schedule (as
amended from time to time pursuant to the Senior Secured
Debt Facility Agreement);
Repayment Date Repayment of Facility A
Loans (%)
-------------- ----------------------------
30 June 2001 three per cent. (3%)
31 December 2001 four per cent. (4%)
30 June 2002 five per cent. (5%)
31 December 2002 six per cent. (6%)
30 June 2003 seven per cent. (7%)
31 December 2003 seven per cent. (7%)
30 June 2004 seven per cent. (7%)
31 December 2004 seven per cent. (7%)
30 June 2005 eight per cent. (8%)
31 December 2005 eight per cent. (8%)
30 June 2006 eight per cent. (8%)
31 December 2006 ten per cent. (10%)
30 June 2007 ten per cent. (10%)
31 December 2007 ten per cent. (10%)
TOTAL: one hundred per cent.
(100%)
(ii) to repay each Facility B Loan drawn down by it, which may be
for an amount of up to five million euro (EUR 5,000,000), at
the end of the relevant Interest Period in accordance with
the terms and conditions provided for in the Senior Secured
Debt Facility Agreement;
(iii) to pay interest on the Facility A Loan and any Facility B
Loan, in each case, drawn down by it and outstanding, which
shall accrue on a daily basis and be calculated on the basis
of a year of three hundred and sixty (360) days and the
actual number of days elapsed and the rate of: (A) such
interest shall be the percentage rate per annum which is the
aggregate of one point seven five per cent. per annum (1.75%
p.a.), subject to any reduction pursuant to Clause 9.6
(Adjustments to Margin) of the Senior Secured Debt Facility
Agreement; (B) in relation to any Loan denominated in
forint, BUBOR, or in relation to any Loan denominated in
euro, EURIBOR; and (C) the Associated Costs, if any;
(iv) to pay certain fees, costs and expenses arising in relation
to such Senior Finance Documents; and
(v) to perform and/or comply with its obligations under such
Senior Finance Documents,
8
Provided that the aggregate secured amount under (iv) shall not
exceed the equivalent of twenty five million euro (EUR
25,000,000);
(f) HTCC Tanacsado Reszvenytarsasag undertook, subject to the terms
and conditions of the Senior Finance Documents to which it is a
party:
(i) to pay certain fees, costs and expenses arising in relation
to such Senior Finance Documents; and
(ii) to perform and/or comply with its obligations under such
Senior Finance Documents,
Provided that the aggregate secured amount under (i) shall not
exceed the equivalent of twenty five million euro (EUR
25,000,000);
2.2 Liabilities arising under this Agreement
The Contracting Parties hereby declare that, under the terms and
conditions of this Agreement, the Depositor undertakes, subject to such
terms and conditions:
(a) to pay the fees, costs and expenses arising in relation to this
Agreement; and
(b) to perform and/or comply with its obligations.
2.3 Secured Liabilities
Each of the Depositor and the Countersignors hereby unconditionally and
irrevocably acknowledges and agrees that the Secured Liabilities will
not be duly and fully discharged until each and every of their
respective obligations and/or liabilities whatsoever provided for in
Clause 2.1 (Liabilities arising under the Senior Finance Documents) and
Clause 2.2 (Liabilities arising under this Agreement) have been duly
and fully discharged.
3. THE SECURITY DEPOSIT
3.1 Security Deposit
For the purpose of securing the Secured Liabilities the Depositor
hereby irrevocably and unconditionally creates a Security Deposit over
each registered share comprising the Deposited Shares. The Deposited
Shares shall be blank endorsed. The Security Deposit is made in favour
of the Depositee acting on its own behalf and in its capacity as
Security Agent acting on behalf of each Finance Party and any
transferees or assignees or replacements or successors of the Depositee
or any such Finance Party, for the full amount of the Secured
Liabilities.
3.2 Joint and several security
The Security Deposit established by this Agreement is joint and
several. Each Deposited Share serves as Encumbrance for the whole of
the Secured Liabilities. The Depositee shall be entitled to select any
one or more of the
9
Deposited Shares as the Depositee, in the Depositee's absolute
discretion sees fit, against which to enforce the Security Deposit.
3.3 Additional security
The rights constituted by this Agreement are in addition to and are not
in any way prejudiced or affected by any other Encumbrance, security,
guarantee, indemnity or other right whatsoever now or subsequently held
by the Depositee and/or any Finance Party for any of the Secured
Liabilities. The powers conferred on the Depositee by this Agreement in
relation to the Secured Liabilities and the Deposited Shares, shall be
in addition to and not in substitution for the rights conferred on
Depositee and the Finance Parties by laws and regulations of Hungary or
other Applicable Law except in so far as they are expressly excluded in
this Agreement and, where there is any ambiguity or conflict between
such rights contained in any such laws and regulations of Hungary or
other Applicable Law and those conferred by this Agreement, then the
terms of this Agreement shall, to the extent permitted by such laws and
regulations of Hungary or other Applicable Law, prevail.
3.4 Continuing security
(a) The Contracting Parties agree and confirm that any transferee becoming
a party to the Senior Secured Debt Facility Agreement pursuant to
Clause 23 (Changes to the Lenders) of such Senior Secured Debt Facility
Agreement as a Lender or any other person otherwise becoming a party to
the Senior Secured Debt Facility Agreement as an assignee or transferee
or replacement or successor of a Finance Party shall thereupon become
entitled to the benefit of the provisions contained in this Agreement
as if such transferee or person had originally been and had been named
as a party to this Agreement (subject to compliance with Clause 11
(Release notice)).
(b) The Security Deposit constituted by this Agreement shall:
(i) be a continuing Encumbrance for the due payment, satisfaction and
discharge in full of the Secured Liabilities and such Encumbrance
shall not be considered as satisfied or discharged or prejudiced
by any intermediate payment, satisfaction or settlement of any
part of the Secured Liabilities or any other matter or thing
whatsoever; and
(ii) not be prejudiced by any time or indulgence granted to any person,
or any abstention or delay by the Depositee or any Finance Party
in perfecting or enforcing any Encumbrance, securities,
guarantees, or rights or remedies whatsoever.
4. CONSTITUTION OF THE SECURITY DEPOSIT
The Security Deposit established by this Agreement shall be constituted
upon the execution of this Agreement.
10
5. NOTATION IN THE SHARE REGISTRY
Each of the Countersignors hereby irrevocably and unconditionally
undertakes to enter and maintain in its share registry notations
reflecting the fact that the Deposited Shares have been deposited in
favour of the Depositee in its own capacity and in its capacity as
Security Agent, in form and substance acceptable to the Depositee. The
Depositor shall deliver to the Depositee a certified copy of each
Countersignor's share registry showing the notations referred to above
simultaneously with the execution of this Agreement.
Until the Secured Liabilities are duly paid, satisfied and discharged
in full, if each of the Countersignors shall: (i) make a bonus issue of
shares; or (ii) sub-divide its outstanding shares; or (iii) reclassify
any of its shares into other securities of the respective
Countersignor; or (iv) grant, issue or offer to shareholders of the
respective Countersignor options, rights or warrants entitling them to:
(1) subscribe for or purchase shares; or (2) subscribe for or purchase
securities convertible into or exchangeable for, or which carry rights
to subscribe or purchase shares; or (v) make or do any similar or
analogous action or deed, then any such shares or securities so granted
offered or issued to the Depositor shall become security in favour of
the Depositee, and shall immediately be deposited by the Depositor in
accordance with the terms and conditions of this Agreement.
6. PRIORITY OF THE SECURITY DEPOSIT
6.1 The priority of the Security Deposit
No other Encumbrance whatsoever shall be created over the Deposited
Shares where such Encumbrance would rank ahead of the Security Deposit
except as expressly provided for and permitted by operation of
mandatory provisions of laws and regulations of Hungary.
6.2 Delegation of rights
The Depositee may, at any time and from time to time, delegate to any
person all or any of the rights and benefits which are at such time,
being exercised or capable of being exercised by the Depositee under
this Agreement in relation to the Deposited Shares or any part thereof.
7. REPRESENTATIONS AND WARRANTIES OF THE DEPOSITOR
The Depositor makes each of the representations and warranties set out
in this Clause 7 to the Depositee and acknowledges that the Depositee
has entered into this Agreement and that each Finance Party and the
Security Agent have entered into the Senior Secured Debt Facility
Agreement and the documents provided for therein, in reliance on these
representations and warranties.
7.1 The Deposited Shares
Save as expressly disclosed in writing to the Depositee prior to the
date of this Agreement or promptly upon the acquisition of any new
shares in any of the Countersignors by the Depositor, the Depositor
confirms that:
(a) it is the exclusive owner of the Deposited Shares and has not sold
or otherwise disposed of or agreed to sell or otherwise dispose of
the
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Deposited Shares or any of its rights or benefits in respect of
the Deposited Shares or any part thereof except in accordance with
this Agreement;
(b) it has all necessary power, has taken all necessary corporate
action, has obtained all necessary consents of all government
agencies and bodies and has taken all action necessary or required
by laws and regulations of Hungary or other Applicable Law to
enable it to duly execute this Agreement and to duly perform
and/or comply with its obligations arising under this Agreement;
(c) there subsists no fact(s), event(s) and/or circumstance(s) and/or
any breach of any law or regulation of Hungary or other Applicable
Law which may have a Material Adverse Effect;
(d) there are no third party rights whatsoever affecting the Deposited
Shares save for the Permitted Encumbrances;
(e) it has received no notice of any claims (adverse or otherwise) by
any person in respect of the ownership of the Deposited Shares or
claiming any interest whatsoever in such Deposited Shares, nor has
any acknowledgement whatsoever been given to any person in respect
of the Deposited Shares;
(f) this Agreement creates a valid and perfected first priority
Encumbrance over the Deposited Shares and each and every part
thereof, which secures the payment of the Secured Liabilities,
and which is enforceable as such against all creditors and
purchasers of the Depositor; and
(g) neither the making of this Agreement nor their compliance with
this Agreement will conflict with or result in a breach of any of
the terms, conditions or provisions of or constitute a default
(however described or provided for) under any other agreement to
which it is a party or by which it is bound, or violate any of the
terms and conditions of its constitutional documents or any
judgement, decree or order, rule or regulation applicable to it.
7.2 Security
This Agreement creates those Encumbrances it purports to create and may
not be avoided or otherwise set aside on the winding-up, liquidation or
bankruptcy of the Depositor or otherwise except by operation of
mandatory provisions of the laws and regulations of ▇▇▇▇▇▇▇.
▇▇
▇. UNDERTAKINGS OF EACH DEPOSITOR
8.1 Duration
The undertakings set out in this Clause 8 remain in force at all times
throughout the Deposit Period.
8.2 Prohibited use, disposals
Unless otherwise provided by this Agreement or the Senior Secured Debt
Facility Agreement, the Depositor may not, without the prior written
consent of the Depositee, save as expressly disclosed in writing to the
Depositee prior to the date of this Agreement or promptly after the
acquisition of new shares in any of the Countersignors following the
date of this Agreement:
(a) create or permit to subsist any Encumbrance whatsoever on any of
the Deposited Shares or any part thereof; or
(b) sell, transfer, grant, lease or otherwise dispose of any interest
whatsoever in the Deposited Shares (or any part of such Deposited
Shares); or
(c) waive its right(s) of ownership in the Deposited Shares, or
otherwise do or permit to be done any act or thing which might
jeopardise the interests and/or rights of the Depositee or any
Finance Party.
The Contracting Parties acknowledge that such restrictions of dealing
may not be registered in the share registers of the Countersignors and
may therefore not be binding on third parties.
8.3 Cancelled Shares and Re-issued Shares
The Depositor and KNC Kelet-Nograd COM Tavkozlesi Koncesszios
Reszvenytarsasag hereby jointly, unconditionally and irrevocably
undertake to facilitate the cancellation procedure in respect of the
Cancelled Shares. To the extent that the cancellation procedure
initiated by KNC Kelet-Nograd COM Tavkozlesi Koncesszios
Reszvenytarsasag is terminated because the Cancelled Shares are found
or for any other reason(s) whatsoever (other than the final and binding
cancellation of the Cancelled Shares), the Depositor shall as quickly
as practicable deposit such Cancelled Shares with Depositee. The
Depositor and KNC Kelet-Nograd COM Tavkozlesi Koncesszios
Reszvenytarsasag hereby jointly, unconditionally and irrevocably
undertake to procure, as quickly as practicable, the issue of the
Re-issued Shares, following which, the Depositor shall, as quickly as
practicable, deposit the Re-issued Shares with the Depositee.
9. PROTECTION OF ENCUMBRANCE
If the Depositor fails to do so and/or immediately after the occurrence
of emergency or extreme circumstance(s), the Depositee shall be
entitled at any time to take any such action as the Depositee, in its
reasonable discretion, thinks fit for the purpose of protecting the
Encumbrance constituted by this Agreement. The Depositor hereby
unconditionally and irrevocably agrees to
13
indemnify the Depositee on demand against any losses, liabilities,
fees, costs and expenses, properly and duly incurred or expended by the
Depositee in the protection or attempted protection of the Encumbrance
constituted by this Agreement.
10. DEPOSITEE'S RIGHT OF SATISFACTION
10.1 Sale
The Contracting Parties irrevocably and unconditionally agree that the
Depositee may exercise its right to satisfaction under this Agreement
by transfer, sale or other disposal of the Deposited Shares following
the occurrence of an Event of Default on its own behalf and on behalf
of each and every Finance Party.
10.2 Procedure
The Contracting Parties hereby irrevocably and unconditionally agree
that notwithstanding the provisions of Clause 10.1 (Sale), once the
right to seek satisfaction under this Agreement from the Security
Deposit or any part thereof has arisen, the Depositee shall be entitled
and the Depositor hereby unconditionally and irrevocably authorises the
Depositee, pursuant to the power of attorney, the form of which is set
out in Schedule 5 (Form of the Power of Attorney from a Depositor to
the Depositee to exercise shareholder's rights), until the earlier of:
(i) the Secured Liabilities being duly paid, satisfied and discharged
in full; and (ii) the transfer, sale or other disposal of the Deposited
Shares, to exercise for and on behalf of the Depositor and without any
limitation, all or any of their shareholders' rights, as shareholder of
the relevant Countersignor.
The Depositor hereby irrevocably and unconditionally agrees to renew
the power of attorney, issued on the date of this Agreement
substantially in the form of Schedule 5 (Form of the Power of Attorney
from a Depositor to the Depositee to exercise shareholders' rights)
every twelve (12) months after the date of this Agreement throughout
the Deposit Period.
In addition to the above, the Depositee shall be entitled to transfer,
sell or otherwise dispose for value the Deposited Shares. In the event
that the Depositee, in exercising its rights under this Agreement,
shall decide to transfer, sell or otherwise dispose of all or part of
the Deposited Shares, the Depositee shall use reasonable endeavours to
transfer, sell or otherwise dispose of the Deposited Shares through an
independent, internationally recognised auction house appointed by the
Depositee. The Deposited Shares shall be initially offered at the
market value as determined by an independent, internationally
recognised accounting firm appointed jointly by the Depositee, the
Depositor and the relevant Countersignor (the "Valuation Price").
Notwithstanding the foregoing, the Depositor may solicit potential
offers for the Deposited Shares, and the Depositee agrees to consider
any offers so solicited. In the event that no offers are received at or
above the Valuation Price within sixty (60) days of appointment of the
aforementioned accounting
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firm, then the Depositee shall be free to accept any third party
offer(s) made for the transfer, sale or other disposal of the Deposited
Shares.
10.3 Application of proceeds
Any moneys received by the Depositee after the Security Deposit created
by this Agreement has been enforced pursuant to this Agreement shall be
applied in the following order of priority (but without prejudice to
the right of any Finance Party to recover any and all shortfall(s)
arising under the Senior Finance Documents from the Depositor and/or
any Countersignor) by the Depositee:
(a) in satisfaction of, or provision, for all fees, costs and expenses
incurred by the Depositee in connection with the enforcement of
this Agreement;
(b) in or towards payment of the Secured Liabilities; and
(c) in payment of the surplus (if any) to the relevant Depositor.
11. RELEASE NOTICE
The Depositee undertakes at the end of the Deposit Period to issue to
the Depositor the Depositee's Declaration, which is required for the
deletion of the Security Deposit from the share registry of the
relevant Countersignor at the end of the Deposit Period.
12. FURTHER ASSURANCES
By executing this Agreement, the Depositor hereby unconditionally and
irrevocably consents to the Depositee taking whatever actions the
Depositee may reasonably and practicably require at the Depositor's own
expense, for:
(a) registering or protecting the rights created by this Agreement
over any of the Deposited Shares; and/or
(b) facilitating the enforcement against any Deposited Share or the
exercise of any right, power or discretion exercisable, by the
Depositee or any of its or their delegates or agents in respect of
any of the Deposited Shares; and/or
(c) the execution of any document or the giving of any notice, order
or direction and the making of any registration, which in any such
case, the Depositee may reasonably think expedient.
13. APPOINTMENT OF ATTORNEY
In order to maintain the perfection, enforce or realise the Security
Deposit constituted by this Agreement the Depositor and each of the
Countersignors hereby jointly unconditionally appoint:
(a) the Depositee; and
(b) each such delegate as is referred to in Clause 6.2 (Delegation of
rights),
15
to be its attorney at any time to sign and do all such acts and things
which the Depositor and any of the Countersignors could do or ought to
do pursuant to the provisions contained in this Agreement in relation
to the Deposited Shares and generally in the name of the Depositor and
each of the Countersignors to maintain the perfection, enforce or
realise the Security Deposit.
14. AMENDMENTS
The Contracting Parties hereby agree that any provisions of this
Agreement may only be amended in writing with the consent of each
Contracting Party.
15. EXPENSES AND INDEMNITY
The Depositor and each of the Countersignors shall, on the basis of
joint and several liability, forthwith on demand pay to the Depositee
and each Finance Party, all properly documented fees, costs and
expenses (including, but not limited to, legal fees) properly incurred
by the Depositee or such Finance Party, as applicable, in connection
with this Agreement or in connection with the enforcement of or the
preservation of any rights under any of the Senior Finance Documents to
which the Depositor and/or any of the Countersignors are a party and
keep the Depositee and each Finance Party indemnified against any
failure or delay of the Depositor and/or any of the Countersignors
and/or any of its agents and representatives in paying the same.
16. ASSIGNS
Neither the Depositor nor any of the Countersignors shall be entitled
to assign or transfer all or any of their respective rights, benefits
and obligations under this Agreement. The Depositee and each Finance
Party may assign or transfer all or any of their rights, benefits and
obligations under this Agreement, in accordance with the provisions set
out in Section 8 (Changes to Parties) of the Senior Secured Debt
Facility Agreement.
17. NOTICES
17.1 Communications in writing
Each communication to be made under this Agreement shall be made in
writing and, unless otherwise stated, shall be made by fax or letter
provided that if any notice is delivered by fax, the written original
of such notice shall be sent to the Depositee by first class prepaid
letter.
17.2 Delivery Any communication or document to be made or delivered by
one person to another pursuant to this Agreement shall (unless that
other person has by fifteen (15) days' written notice to the Depositee
specified another address) be made or delivered to that other person at
the address set out in Clause 17.4 (Addresses for notices) below (or,
in the case of a Transferee, at the end of the Transfer Certificate to
which it is a party as a Transferee) and shall be deemed to have been
made or delivered in the case of any communication made:
16
(a) by letter, when left at that address or (as the case may be) ten
(10) days after being deposited in the post postage prepaid in an
envelope addressed to it at that address;
(b) by facsimile, when dispatched Provided that: (a) a confirmation of
uninterrupted transmission by a transmission report is received;
and (b) there having been no telephonic communication by the
recipient to the sender (any such telephonic communication to be
confirmed in writing) that the facsimile has not been received in
legible form within 3 hours after sending, if sent on a Business
Day between the hours of 9:00 a.m. and 4:00 p.m. in the
recipient's time zone or if sent other than between the hours of
9:00 a.m. and 4:00 p.m. in the recipient's time zone on a Business
Day, by noon on the next following Business Day. For the purposes
of this sub-clause, a Business Day is a day (other than a Saturday
or Sunday) on which banks (generally) are open for business in the
places where both the sender and the recipient of the facsimile
are situated,
Provided that any communication or document to be made or delivered to
the Depositee shall be effective only when received by the Depositee
and then only if the same is expressly marked for the attention of the
department or officer identified in Clause 17.4 (Addresses for notices)
below (or such other department or officer as the Depositee shall from
time to time specify for this purpose).
17.3 Language
Each communication and document made or delivered by one Contracting
Party to another pursuant to this Agreement shall be in the English
language.
17.4 Addresses for notices
(a) The address, telephone number and facsimile number of the Depositor for
all notices under or in connection with this Agreement are:
Address: Hungarian Telephone and Cable Corp.
Attention: Kaj ▇▇▇ ▇▇▇▇▇▇▇
Telephone: ▇▇▇ ▇ ▇▇▇ ▇▇▇▇
Facsimile: ▇▇▇ ▇ ▇▇▇ ▇▇▇▇
Copied to: Legal Counsel
(▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇ - ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Chance Punder
Madach Trade Center, ▇▇▇▇▇▇ ▇▇▇▇ ut 14, ▇-▇▇▇▇ ▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇
Telephone: ▇▇▇ ▇ ▇▇▇ ▇▇▇▇
Facsimile: ▇▇▇ ▇ ▇▇▇ ▇▇▇▇)
or such other as it may notify to the Depositee and each of the
Countersignors by not less than fifteen (15) Business Days' prior
written notice;
17
(b) the address, telephone number and facsimile number of the Depositee for
all notices under or in connection with this Agreement are:
Address: Citibank Rt.
Citibank Tower, Bank Center
Szabadsag ter 7.
▇-▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇
Attention: Corporate Bank Head (▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇)
Legal Department Head (▇▇. ▇▇▇▇▇▇ ▇▇▇▇)
Telephone: ▇▇▇ ▇ ▇▇▇ ▇▇▇▇
Facsimile: ▇▇▇ ▇ ▇▇▇ ▇▇▇▇
or such other as it may notify to the Depositor, and each of the
Countersignors by not less than fifteen (15) Business Days' prior
written notice;
(c) the address, telephone number and facsimile number of Hungarotel
Tavkozlesi Koncesszios Reszvenytarsasag for all notices under or in
connection with this Agreement are:
Address: Hungarotel Tavkozlesi Koncesszios Reszvenytarsasag
Attention: Kaj ▇▇▇ ▇▇▇▇▇▇▇
Telephone: ▇▇▇ ▇ ▇▇▇ ▇▇▇▇
Facsimile: ▇▇▇ ▇ ▇▇▇ ▇▇▇▇
Copied to: Legal Counsel
(▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇ - ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Chance Punder
Madach Trade Center, ▇▇▇▇▇▇ ▇▇▇▇ ut 14, ▇-▇▇▇▇ ▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇
Telephone: ▇▇▇ ▇ ▇▇▇ ▇▇▇▇
Facsimile: ▇▇▇ ▇ ▇▇▇ ▇▇▇▇)
or such other as it may notify to the Depositor, the Depositee and each
of the other Countersignors by not less than fifteen (15) Business
Days' prior written notice;
(d) the address, telephone number and facsimile number of RABA-COM
Tavkozlesi Koncesszios Reszvenytarsasag for all notices under or in
connection with this Agreement are:
Address: RABA-COM Tavkozlesi Koncesszios Reszvenytarsasag
Attention: Kaj ▇▇▇ ▇▇▇▇▇▇▇
Telephone: ▇▇▇ ▇ ▇▇▇ ▇▇▇▇
Facsimile: ▇▇▇ ▇ ▇▇▇ ▇▇▇▇
Copied to: Legal Counsel
(▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇ - ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Chance Punder
18
Madach Trade Center, ▇▇▇▇▇▇ ▇▇▇▇ ut 14, ▇-▇▇▇▇ ▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇
Telephone: ▇▇▇ ▇ ▇▇▇ ▇▇▇▇
Facsimile: ▇▇▇ ▇ ▇▇▇ ▇▇▇▇)
or such other as it may notify to the Depositor, the Depositee, and
each of the other Countersignors by not less than fifteen (15) Business
Days' prior written notice;
(e) the address, telephone number and facsimile number of Papa es Tersege
Tavkozlesi Koncesszios Reszvenytarsasag for all notices under or in
connection with this Agreement are:
Address: Papa es Tersege Tavkozlesi Koncesszios Reszvenytarsasag
Attention: Kaj ▇▇▇ ▇▇▇▇▇▇▇
Telephone: ▇▇▇ ▇ ▇▇▇ ▇▇▇▇
Facsimile: ▇▇▇ ▇ ▇▇▇ ▇▇▇▇
Copied to: Legal Counsel
(▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇ - ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Chance Punder
Madach Trade Center, ▇▇▇▇▇▇ ▇▇▇▇ ut 14, ▇-▇▇▇▇ ▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇
Telephone: ▇▇▇ ▇ ▇▇▇ ▇▇▇▇
Facsimile: ▇▇▇ ▇ ▇▇▇ ▇▇▇▇)
or such other as it may notify to the Depositor, the Depositee and each
of the other Countersignors by not less than fifteen (15) Business
Days' prior written notice; and
(f) the address, telephone number and facsimile number of KNC Kelet-Nograd
COM Tavkozlesi Koncesszios Reszvenytarsasag for all notices under or in
connection with this Agreement are:
Address: KNC Kelet-Nograd COM Tavkozlesi Koncesszios
Reszvenytarsasag
Attention: Kaj ▇▇▇ ▇▇▇▇▇▇▇
Telephone: ▇▇▇ ▇ ▇▇▇ ▇▇▇▇
Facsimile: ▇▇▇ ▇ ▇▇▇ ▇▇▇▇
Copied to: Legal Counsel
(▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇ - ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Chance Punder
Madach Trade Center, ▇▇▇▇▇▇ ▇▇▇▇ ut 14, ▇-▇▇▇▇ ▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇
Telephone: ▇▇▇ ▇ ▇▇▇ ▇▇▇▇
Facsimile: ▇▇▇ ▇ ▇▇▇ ▇▇▇▇)
19
or such other as it may notify to the Depositee, the Depositor and each
of the other Countersignors by not less than fifteen (15) Business
Days' prior written notice;
(g) the address, telephone number and facsimile number of HTCC Tanacsado
Reszvenytarsasag for all notices under or in connection with this
Agreement are:
Address: HTCC Tanacsado Reszvenytarsasag
Attention: Kaj ▇▇▇ ▇▇▇▇▇▇▇
Telephone: ▇▇▇ ▇ ▇▇▇ ▇▇▇▇
Facsimile: ▇▇▇ ▇ ▇▇▇ ▇▇▇▇
Copied to: Legal Counsel
(▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇ - ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Chance Punder
Madach Trade Center, ▇▇▇▇▇▇ ▇▇▇▇ ut 14, ▇-▇▇▇▇ ▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇
Telephone: ▇▇▇ ▇ ▇▇▇ ▇▇▇▇
Facsimile: ▇▇▇ ▇ ▇▇▇ ▇▇▇▇)
or such other as it may notify to the Depositee, the Depositor and each
of the Countersignors by not less than fifteen (15) Business Days'
prior written notice;
17.5 Representation
The Depositor, the Depositee and each of the Countersignors shall each
procure and ensure that for the duration of this Agreement, they shall
maintain a representative at the addresses specified above, duly
empowered to take receipt of any such notice or communication during
regular business hours.
18. MISCELLANEOUS
18.1 Language
This Agreement shall be executed in the English language.
18.2 Governing law
This Agreement shall be governed by, and shall be construed in
accordance with Hungarian law.
18.3 Arbitration
Any dispute (a "Dispute") arising out of or in connection with this
Agreement (including a Dispute regarding the existence, validity,
interpretation, breach or termination of this Agreement or the
consequences of its nullity) shall be referred to and finally settled
by arbitration under the Rules of Conciliation and Arbitration (the
"Rules") of the Arbitration Court of the Hungarian Chamber of Commerce
by three arbitrators appointed in accordance with the Rules. The
20
place and seat of any arbitration proceedings commenced pursuant to
this Clause 18.3 shall be Budapest. The language in which such
arbitration shall be conducted shall be English or Hungarian, by
agreement of the parties to such proceedings, or failing such
agreement, as the Depositee may in its sole discretion elect. Any
judgement or determination rendered shall be final and binding on the
parties thereto and may be entered in any court having jurisdiction or
application may be made to such court for an order of enforcement as
the case may require. No failure or delay in exercising any rights of
any Finance Party under this Agreement shall operate as a waiver, or
preclude the further exercise of such rights.
18.4 Service of process for arbitration proceedings The Depositor and
each of the Countersignors agree that the process by which any
arbitration proceedings are begun may be served on it by being
delivered to the address identified in Clause 17.4 (Address for
notices) above or other its registered office for the time beings or on
the person duly appointed by the Depositor as its agent for service of
process in Hungary and so notified in writing to the Depositee. If the
appointment of the person(s) mentioned in this Clause 18.4 ceases to be
effective the Depositor and/or the relevant Countersignor shall
immediately appoint a further person in Hungary to act on its behalf in
Hungary as agent for the commencement of arbitration proceedings and,
failing such appointment within fifteen (15) days, the Depositee shall
be entitled to appoint such a person by notice to the Depositor and the
relevant Countersignor. Nothing contained in this Agreement shall
affect the right to serve process in any other manner permitted by
Applicable Law.
18.5 Consent to enforcement
The Depositor and each of the Countersignors hereby consents generally
in respect of any proceedings to the giving of any relief or the issue
of any process in connection with such proceedings including the
making, enforcement or execution against any property whatsoever
(irrespective of its use or intended use) of any order or judgement
which may be made or given in such proceedings.
18.6 Waiver of immunity
To the extent that the Depositor or any of the Countersignors may in
any jurisdiction claim for itself or its assets immunity from suit,
execution, attachment or other legal process, the Depositor and/or the
relevant Countersignor waive immunity in respect of:
(a) the giving of any relief by way of injunction or order for
specific performance or for the recovery of assets or revenues;
and/or
(b) the issue of any process against its assets for the enforcement of
a judgement or, in an action in rem, for the arrest, detention or
sale of any of its assets and revenues.
21
18.7 Partial invalidity
If, at any time, any provision of this Agreement is or becomes illegal,
invalid or unenforceable in any respect under the law of any
jurisdiction, neither the legality, validity or enforceability of the
remaining provisions of this Agreement nor the legality, validity or
enforceability of such provision under the law of any other
jurisdiction shall in any way be affected or impaired thereby.
AS WITNESS the hands of the duly authorised representatives of the Contracting
Parties to this Agreement the day and year first before written.
22