EXHIBIT 7.9
NO.__ OF TWENTY-FIVE NOTES
THIS NOTE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR ANY STATE'S
SECURITIES LAWS. NEITHER THIS NOTE NOR ANY PORTION THEREOF MAY BE SOLD,
TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF OR OFFERED FOR SALE
UNLESS AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT IS
AVAILABLE WHICH IS ACCOMPANIED BY AN OPINION OF ISSUER COUNSEL THAT SUCH
REGISTRATION IS NOT REQUIRED. THE INDEBTEDNESS EVIDENCED BY THIS NOTE IS
SUBORDINATE TO THE SENIOR OBLIGATIONS, AS DEFINED HEREIN
AMENDED & RESTATED
U.S.$ 1,000,000 UNSECURED SUBORDINATED NOTE
OF
HUNGARIAN TELEPHONE AND CABLE CORP.
(Amending and Restating a Promissory Note dated May 12, 1999)
Principal Amount: U.S. $1,000,000
Issue Date: May 12, 1999 and Expiration Date: March 31, 2007 amended and
restated April 11, 2000
For value received, Hungarian Telephone and Cable Corp., a company formed under
the laws of the State of Delaware, U.S.A. (the "Issuer"), hereby promises to pay
to Postabank es Takarekpenztar Reszvenytarsasag the principal amount of this
Note on the dates and in the amounts specified in the Conditions (as defined
below). The Issuer promises to pay interest on the unpaid principal amount of
this Note until the principal amount is paid in full, at such interest rates and
payable at such times, as specified in the Conditions.
This Note is one of a series of twenty-five Notes (collectively, the "Notes")
dated the Issue Date and amended and restated on April __, 2000 which have been
issued by the Issuer in favor of Postabank es Takarekpenztar Reszvenytarsasag
("Postabank") to amend and restate certain notes issued by the Issuer in favor
of Postabank pursuant to a securities purchase agreement (as amended, the
"Securities Purchase Agreement") dated May 10, 1999 between the Issuer and
Postabank. Each of the Notes is subject to the additional terms and conditions
which are set forth in the annex attached hereto (the "Conditions") and are
incorporated herein by reference in their entirety.
Upon any redemption of less than the entire principal amount outstanding of this
Note in accordance with the Conditions, the amount so redeemed shall be recorded
by the Issuer in the register maintained by the Issuer (the "Register") and the
principal amount outstanding of this Note from time to time shall be as recorded
in the Register. The Issuer will promptly upon written request from a Noteholder
provide free of charge to such Noteholder a certified copy of the Register
indicating the aggregate principal amount of the Notes redeemed on or prior to
the date of such copy.
This Note is issued in registered form and is not transferable in part.
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AS WITNESS the signature of a duly authorized officer on behalf of the Issuer:
HUNGARIAN TELEPHONE AND CABLE CORP., AS ISSUER
By: _______________________________
Name: ▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇
Title: President and Chief Executive Officer
▇▇▇▇ authorized signatory
EXECUTED as of April __, 2000
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FORM OF TRANSFER
BETWEEN:
(1) [Transferor] (the "Transferor"); and
(2) [Transferee] (the "Transferee").
DATE: [____________]
For value received the Transferor hereby transfers [*] Note[s] issued by
Hungarian Telephone and Cable Corp. (the "Note[s]") in the original principal
amount of U.S.$ [*] to the Transferee in accordance with the Conditions (as
defined in the Note) and instructs the Issuer to register the Transferee as
owner of the Note[s].
SIGNED:
....................................... ...............................
duly authorized signatory duly authorized signatory
for and on behalf of for and on behalf of
[Transferor] as Transferor [Transferee] as Transferee
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TERMS AND CONDITIONS OF THE AMENDED AND RESTATED UNSECURED SUBORDINATED NOTES
The issue (the "Note Issue") of the Notes (the "Notes") of Hungarian Telephone
and Cable Corp. (the "Issuer") are subject to these terms and conditions (the
"Conditions"). The Noteholders (as defined below) are bound by, and are deemed
to have notice of, all the Conditions contained herein applicable to them.
1. Defined Terms and Interpretations
As used in the Securities Purchase Agreement (including the attached Exhibits)
and in respect of the certificates for and terms and conditions of the Notes,
the following terms shall have the specified meanings (unless otherwise defined
therein):
"Arrangers" means Citibank, N.A. and Westdeutsche Landesbank Girozentrale, each
in its capacity as Arranger under the Senior Secured Credit Agreement;
"Banks" means the Arrangers and the other financial institutions from time to
time party to the Senior Secured Credit Agreement;
"Business Day" means any day (other than a Saturday or Sunday) on which banks
are not required or authorized to close in New York City and Budapest;
"Clause" means, subject to any contrary indication, a reference to a Clause
hereof;
"Condition" and "Conditions" shall have the meanings ascribed thereto herein;
"Dispute" shall mean any dispute or difference arising out of or in connection
with this Note, including any question as to its existence, validity or
termination;
"Expiration Date" means March 31, 2007, or if such day is not a Business Day,
the next succeeding day which is a Business Day;
"Facility Agent" means, at any time, the facility agent for the Banks under the
Senior Secured Credit Agreement at such time, being as at the date of the
amendment and restatement of the Notes, Citibank International plc;
"Finance Documents" means, at any time, each of the Securities Purchase
Agreement, the Warrant Agreement and any other document, notice, instrument or
agreement entered into or delivered pursuant to any of the foregoing, and
"Finance Document" shall mean any or each such document, notice, instrument or
agreement;
"Finance Parties" has the meaning ascribed to such term in the Senior Secured
Credit Agreement;
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"Fixed Margin" means in relation to each Interest Period or other relevant
period six per cent (6%) per annum; provided that if the interest on the Notes
is duly paid on the Interest Payment Date for an Interest Period when due, then
the Fixed Margin for such Interest Period shall be three and one-half per cent
(31/2%) per annum;
"Governmental Authority" means any nation or government, any state or other
political subdivision thereof and any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government;
"HTCC Consulting" means HTCC Tanacsado Reszvenytarsasag;
"HTCC Group" means the Issuer and each of its subsidiaries;
"holder" has the meaning ascribed to such term in Clause 5.2;
"Hungary" means the Republic of Hungary;
"Interbank Rate" means in relation to any Interest Period or other period, the
arithmetic mean (rounded upward to the nearest four decimal places) of the
offered quotations for U.S. dollar deposits for such period which appear on the
relevant Telerate Page of the Telerate Service which displays a British Bankers
Association Interest Settlement Rate for U.S. dollars (or such other page or
such other service as may replace such page and/or service, as appropriate, for
the purpose of displaying London Interbank Offered Rates of leading banks) at or
about 11:00 a.m. (London time) on the applicable Quotation Day; provided that if
there is one only or no such offered quotations on the relevant Telerate Page of
the Telerate Service or there is no relevant Telerate Page, the applicable
interest rate shall be the arithmetic mean (rounded upwards, if not already such
a multiple of one-sixteenth of one per cent (0.0625%)) of the rates at which
each of the Reference Banks was offering to prime banks in the Budapest
Interbank market deposits in U.S. dollars at or about 11:00 a.m. (Budapest time)
on the applicable Quotation Day for a period equal to such period and in an
amount comparable with the amount to be outstanding during such period;
"Interest Payment Date" has the meaning ascribed to it in Clause 14.2;
"Interest Payment Default" means any interest payment when due on the Interest
Payment Date therefor shall fail to be made and such failure shall continue for
at least 365 consecutive days after such Interest Payment Date; provided,
however that no Interest Payment Default shall be deemed to have occurred
hereunder if, within 10 days after the end of such 365-day period, the
Noteholder shall have received all interest accrued (including, without
limitation, interest accruing pursuant to Clause 15.1) from such Interest
Payment Date to the date the interest payment is made;
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"Interest Period" means, subject as provided below, in relation to any Note, a
period of six (6) months provided that:
(a) if any Interest Period would otherwise end on a day which is not a Business
Day, that Interest Period shall be extended to the next succeeding Business Day
unless the result of such extension would be to carry such Interest Period over
into another calendar month in which event such Interest Period shall end on the
last preceding Business Day; and
(b) any Interest Period which commences on the last day of a calendar month and
any Interest Period which commences on a day for which there is no numerically
corresponding day in the calendar month which is the relevant number of months
after the commencement of such Interest Period shall end on the last Business
Day of the calendar month which is the relevant number of calendar months after
the commencement of such Interest Period;
"Issue Date" means, as to any Note, the date(s) specified as such in such Note;
"Issuer" means Hungarian Telephone and Cable Corp., a corporation formed under
the laws of the State of Delaware;
"Majority Lenders" has the meaning ascribed to such term in the Senior Secured
Credit Agreement;
"Mandatory Prepayment Event" means any of the following:
(a) while any Senior Obligations shall remain unpaid or any commitment under the
Senior Secured Credit Agreement shall be in force, the occurrence of (i) any
Senior Default or (ii) an Interest Payment Default; or
(b) at any time after the Senior Obligations shall have been paid in full and
the commitments under the Senior Secured Credit Agreement shall have been
terminated, (i) the occurrence of any "Event of Default" (as defined in the
Senior Secured Credit Agreement as in effect immediately prior to such payment
and termination) or (ii) the Issuer shall fail to make any payment (whether of
principal, interest or otherwise) when due under this Note;
"month" is a reference to a period starting on one day in a calendar month and
ending on the numerically corresponding day in the next succeeding calendar
month save that, where any such period would otherwise end on a day which is not
a Business Day, it shall end on the next succeeding Business Day, unless that
day falls in the calendar month succeeding that in which it would otherwise have
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ended, in which case it shall end on the immediately preceding Business Day if a
period starts on the last Business Day in a calendar month or if there is no
numerically corresponding day in the month in which that period ends, that
period shall end on the last business day in that later month;
"Noteholder" has the meaning ascribed to such term in Clause 5.2;
"Notes" means the notes issued in accordance with the Securities Purchase
Agreement, as such notes have been amended and restated on April __, 2000, and
to which the Conditions contained herein are applicable;
"Person" means an individual, partnership, corporation (including a business
trust), joint stock issuer, estate, trust, limited liability issuer,
unincorporated association, joint venture or other entity, or a Governmental
Authority;
"Post-Petition Interest" means interest at the contract rate accruing subsequent
to the filing of a petition initiating any proceeding in bankruptcy, insolvency
or like proceeding whether or not such interest is an allowed claim enforceable
against the debtor in any proceeding under any applicable bankruptcy law;
"Quotation Day" means in relation to any Interest Period or other period, the
day on which interest rate quotations are ordinarily given by prime banks in the
London Interbank Market for deposits in U.S. dollars for delivery on the first
day of the Interest Period or other such period; provided that, if, for any such
period, quotations would ordinarily be given on more than one day, the Quotation
Day for such period will be the last of those days;
"Reference Banks" means the principal London offices of ABN AMRO Bank N.V.,
Citibank N.A. and ING Bank N.V., or such other bank or banks as may from time to
time be agreed between the Issuer and the Noteholders, such agreement not to be
unreasonably withheld or delayed;
"Register" means the register to be kept by the Issuer in which the Noteholders
from time to time of the Notes are registered;
"Schedule" shall, subject to any contrary indication, be construed as a
reference to a schedule hereto;
"Senior Default" means, while any Senior Obligations shall remain unpaid or any
commitment under the Senior Secured Credit Agreement shall be in force, the
occurrence of "Event of Default" (as defined in the Senior Secured Credit
Agreement) and the acceleration of the maturity of the Senior Obligations in
accordance with the terms thereof, if such acceleration shall continue for at
least 365 consecutive days after the Facility Agent has so elected such
acceleration;
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"Senior Guaranty" means the Deed of Guarantee No. 6 dated as of April __, 2000
among the Issuer, as guarantor, Citibank International plc, as Facility Agent
and beneficiary, Citibank Rt., as Security Agent and beneficiary and Hungarotel
Tavkozlesi Koncesszios Reszvenytarsasag, RABA-COM Tavkozlesi Koncesszios
Reszvenytarsasag, Papa es Tersege Tavkozlesi Koncesszios Reszvenytarsasag, and
KNC Kelet-Nograd COM Tavkozlesi Koncesszios Reszvenytarsasag, as countersignors;
"Senior Indebtedness" means all indebtedness and other obligations of any member
of the HTCC Group to the Finance Parties under or in connection with the Senior
Loan Agreements;
"Senior Loan Agreements" means the Senior Secured Credit Agreement, the Senior
Guaranty, the Senior Security Deposit Agreement, the Senior Security Agreement,
and each "Senior Finance Document" (as defined in the Senior Secured Credit
Agreement) and, in each case, any other agreement relating to the obligations
thereunder;
"Senior Obligations" means the principal, premium, if any, interest (including
Post-Petition Interest), penalties, fees, expenses, claims, charges, indemnity
obligations, attorneys' fees and expenses, and other liabilities with respect to
the Senior Indebtedness;
"Senior Secured Credit Agreement" means the EUR 130,000,000 Secured Senior Debt
Facility Agreement dated as of April __, 2000 among Hungarotel Tavkozlesi
Koncesszios Reszvenytarsasag, RABA-COM Tavkozlesi Koncesszios Reszvenytarsasag,
Papa es Tersege Tavkozlesi Koncesszios Reszvenytarsasag, and KNC Kelet-Nograd
COM Tavkozlesi Koncesszios Reszvenytarsasag, as Borrowers; the Issuer and HTCC
Consulting, as Guarantors; Citibank, N.A. and Westdeutsche Landesbank
Girozentrale, as Arrangers; the Facility Agent; Citibank Rt., as Security Agent;
and the financial institutions party to the Senior Secured Credit Agreement in
their capacity as lenders;
"Senior Security Agreement" means the Pledge and Security Agreement dated as of
April __, 2000 by the Issuer in favor of Citibank Rt., as Security Agent;
"Senior Security Deposit Agreement" means the Security Deposit No. 1 Agreement
dated as of April __, 2000 among the Issuer, as depositor, Citibank Rt., as
Security Agent and depositee, and Hungarotel Tavkozlesi Koncesszios
Reszvenytarsasag, RABA-COM Tavkozlesi Koncesszios Reszvenytarsasag, Papa es
Tersege Tavkozlesi Koncesszios Reszvenytarsasag, and KNC Kelet-Nograd COM
Tavkozlesi Koncesszios Reszvenytarsasag, as countersignors;
"Standstill Termination Date" means the earlier of (a) the repayment in full in
cash of the Senior Obligations and (b) March 31, 2007;
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"Subordinated Debt" has the meaning ascribed to such term in Clause 19;
"Subordination Event" means the occurrence of any "Event of Default" as defined
in the Senior Secured Credit Agreement;
"Tax" means any tax, levy, impost, duty or other charge of a similar nature
(including, without limitation, any penalty or interest payable in connection
with any failure to pay or any delay in paying any of the same);
"U.S. dollar", "dollars", "USD", "$" and "U.S.$" means the lawful currency of
the United States of America;
"Warrants" means the warrants to purchase common stock of the Issuer, set out as
Exhibit B to the Securities Purchase Agreement; and
"winding up", "dissolution", "administration or "re-organization" of the Issuer
or corporation shall be construed so as to include any equivalent or analogous
proceedings under the law of the jurisdiction in which the Issuer or corporation
is incorporated or any jurisdiction in which the Issuer or corporation carries
on business, including the seeking of liquidation, winding up, re-organization,
dissolution, administration, arrangement, adjustment, protection or relief of
debtors.
1.2 Save where the contrary is indicated, any reference herein to:
(a) the Securities Purchase Agreement or any other agreement or document shall
be construed as a reference to the Securities Purchase Agreement or, as the case
may be, such other agreement or document as the same may have been, or may from
time to time be, amended, varied, novated or supplemented to the extent
expressly permitted by the terms of the Senior Loan Agreements;
(b) a reference to any Person includes its successors and permitted transferees
and permitted assigns;
(c) a statute shall be construed as a reference to such statute as the same may
have been, or may from time to time be, amended or re-enacted; and
(d) a reference to the Senior Secured Credit Agreement, the Senior Guaranty, the
Senior Security Deposit Agreement and any other Senior Loan Agreement, shall be
construed as a reference to any such agreement as any such agreement may be
amended, restated, renewed, replaced, refinanced, supplemented or otherwise
modified from time to time, and to any agreement extending the maturity of,
refinancing or otherwise restructuring all or any portion of the obligations
under such agreements or any successor thereto;
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1.3 Clause and Schedule headings are for ease of reference only. Unless the
context otherwise requires, words denoting the singular shall include the plural
and vice versa.
2. The Notes
The Notes having an aggregate principal amount of twenty-five million U.S.
dollars (U.S.$ 25,000,000) have been issued in twenty-five (25) Notes of equal
value.
3. Purpose
3.1 The proceeds of the Notes have been used by the Issuer for the making of
various loans to members of the HTCC Group.
4. Constitution of the Notes
4.1 The Issuer hereby covenants in favor of the Noteholders and each Noteholder
that it will duly perform and comply with the obligations expressed to be
undertaken by it in the Conditions (and for this purpose any reference in the
Conditions to any obligation or payment under or in respect of any Note shall be
construed to include a reference to any obligation or payment under or pursuant
to this provision). The Issuer hereby unconditionally and irrevocably
acknowledges the right of every Noteholder to the prompt production of a copy of
the Securities Purchase Agreement.
4.2 The covenant set out in Clause 4.1 shall inure to the benefit of the
Noteholders and each Noteholder and its/their (and any subsequent) successors
and permitted transferees, each of which shall be entitled severally to enforce
the covenant set out in Clause 4.1.
4.3 Each Noteholder shall be entitled to transfer or assign all or any of its
rights, benefits and obligations in respect of this Clause 4 solely in
accordance with Clause 6 (Transfers of Notes).
5. Form and Title
5.1 The Notes are issued in registered form. The Issuer will maintain a register
(the "Register") in respect of the Notes.
5.2 In these Conditions, the "holder" of a Note means the person in whose name
such Note is for the time being registered in the Register (or, in the case of a
joint holding, the first named thereof) and "Noteholder" shall be construed
accordingly. The holder of a Note shall (except as otherwise required by law) be
treated as the absolute owner of such Note for all purposes (whether or not it
is overdue and regardless of any notice of ownership, trust or any other
interest therein, any writing on any Note (other than the endorsed form of
transfer) or any
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notice of any previous loss or theft of such Note) and no person shall be liable
for so treating such holder.
6. Transfers of Notes
6.1 Subject to Article XI of the Securities Purchase Agreement, Clause 6.3 and
Clause 19, a Note may be transferred in whole (but not in part) upon surrender
of such Note, with the endorsed form of transfer duly completed, at the office
of the Issuer specified in Clause 21.1, together with such evidence as the
Issuer may reasonably require to prove:
(a) the title of the transferor; and
(b) the authority of the individuals who have executed the form of transfer.
The transfer of a Note will be effected without charge.
6.2 Within five (5) Business Days of the surrender of a Note in accordance with
Clause 6.1 above, the Issuer will register the transfer in question and deliver
a new Note to the relevant holder at its specified office or (at the request and
risk of such relevant holder) by uninsured first class mail (airmail if
overseas) to the address specified for the purpose by such relevant holder.
6.3 No Noteholder may require transfers to be registered during the period of
five (5) Business Days prior to the due date for any payment of principal in
respect of any Note.
7. Status
The Notes constitute direct, general and unconditional obligations of the Issuer
which will at all times rank subordinated to the Senior Obligations and pari
passu with all other present and future unsecured obligations of the Issuer.
8. Conditions Precedent to Issuance of the Notes
The conditions precedent for the issuance of the Notes have been duly satisfied.
9. Representations and Warranties of the Issuer
The Issuer hereby repeats and on the Issue Date of any Note is deemed to repeat,
in favor of the Noteholders and each Noteholder, each of the representations and
warranties set out in Article III (Representations and Warranties of the
Company) of the Securities Purchase Agreement, as if each such representation
and warranty were set out herein, by reference to the then existing facts and
circumstances.
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10. Covenants of the Issuer
10.1 The Issuer covenants with the Noteholders and each Noteholder that it
shall provide them with such financial and other information regarding
the Issuer, its business and assets as any Noteholder may from time to
time reasonably require.
10.2 The Issuer covenants with and undertakes to the Noteholders and to each
Noteholder:
(a) to inform each Noteholder promptly upon any of the representations
and warranties given or to be given by the Issuer in Article III
of the Securities Purchase Agreement becoming materially untrue or
inaccurate, by reference to the then existing facts and
circumstances;
(b) that it shall not issue or incur any bond, note, indebtedness,
debenture or debenture stock, except (i) pursuant to, or permitted
under the terms of, the Securities Purchase Agreement or the
Senior Loan Agreements, and (ii) for the purpose of redeeming any
Note issued hereunder;
(c) to supply the Noteholders and each Noteholder with the financial
information as set out in Article VI (Affirmative Covenants of the
Issuer) of the Securities Purchase Agreement; and
(d) to promptly notify the Noteholders and each Noteholder of the
occurrence of a Mandatory Prepayment Event or a potential
Mandatory Prepayment Event.
11. Redemption
11.1 Subject to the subordination provisions set forth in Clause 19, each
Note will be redeemed at its face amount on the Expiration Date,
together with all accrued interest and any other amount payable under
the Notes. Redeemed Notes will be cancelled and may not be reissued or
resold.
11.2 The Issuer may redeem the Notes, in whole or in part, prior to the
Expiration Date
Provided that:
(a) the Issuer shall give to the Noteholders not less than ten (10)
Business Days prior written notice of its intention to make any
such prepayment;
(b) on the redemption of the whole of the Notes, the Issuer shall pay
to the Noteholders the face amount of the Notes, together with all
accrued interest and any other amount payable under the Notes;
(c) the Issuer shall pay to the Noteholder on demand a sum equal to
the reasonable breakage costs incurred by the Noteholder as a
result of
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redemption of the Note prior to the end of the applicable Interest
Period (as determined by the Noteholder);
(d) any redemption of part of the Notes will be subject to the minimum
prepayment of five million U.S. dollars (U.S.$ 5,000,000) and
integral multiples of one million U.S. dollars (U.S.$ 1,000,000),
and any such prepayment shall be applied by the Issuer pro rata
towards the prepayment of the amounts of principal of each of the
Notes then outstanding; and
(e) such redemption is expressly permitted by the terms of the Senior
Secured Credit Agreement and Clause 19 hereof.
12. Payments
12.1 On each date on which these Conditions require an amount to be paid by
the Issuer, the Issuer shall make the same available to Noteholders at
the opening of business on the due date for such payment by payment in
U.S. dollars and in immediately available cleared funds to a bank
account of each Noteholder in New York City or Budapest specified from
time to time to the Issuer by such Noteholder for this purpose.
12.2 If the date on which any payment is to be made under the Conditions is
not a Business Day then the Noteholders shall not be entitled to
payment of such amount until the next following Business Day and shall
not be entitled to any further interest or other payment in respect of
any such delay.
12.3 All payments required to be made by the Issuer hereunder shall be made
in U.S. dollars and shall be calculated without reference to any
set-off or counterclaim and shall be made free and clear of any without
any deduction for or on account of any set-off or counterdown save as
required by mandatory provisions of law.
13. Taxes and Tax Credits
13.1 All sums payable in respect of the Notes shall be made free and clear
of and without withholding or deduction for or on account of any tax
unless the Issuer is required by law to make such a payment subject to
the withholding or deduction of tax, in which case to the extent that
the Noteholder is the Noteholder the sum payable by the Issuer in
respect of which such withholding or deduction is required to be made
shall be increased to the extent necessary to ensure that, after the
making of such withholding or deduction, each Noteholder receives and
retains (free from any liability in respect of any such withholding or
deduction) a net sum equal to the sum which it would have received and
so retained had no such withholding or deduction been made or required
to be made.
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13.2 If, at any time, the Issuer is required by law to make any withholding
or deduction from any sum payable by it hereunder (or if thereafter
there is any change in the rates at which or the manner in which such
withholdings or deductions are calculated), the Issuer shall promptly
notify the Noteholder.
13.3 If, following the making of any increased payment by the Issuer
pursuant to Clause 13.1, a Noteholder receives or is granted a credit
against, remission for or repayment of any tax payable or suffered by
it which is referable to such deduction or withholding or such
increased payment and which confers a genuine benefit on such
Noteholder, such Noteholder shall, to the extent that the auditors of
such Noteholder (acting as experts and not as arbitrators) are
reasonably satisfied that it can do so without prejudice to the
retention of such credit, remission or repayment, promptly reimburse
the Issuer with such amount as the auditors of such Noteholder (acting
as experts and not as arbitrators) shall reasonably determine and
certify (substantiating in reasonably sufficient detail the amount
concerned but not including any matters which such Noteholder fairly
regards as confidential) to the Issuer to be such proportion of such
credit, remission or repayment as will leave such Noteholder (after
such reimbursement) in no better position (after tax) than would have
been the case had no such deduction or withholding been required to be
made.
13.4 Reimbursement shall be made under Clause 13.3 above within seven (7)
days after a Noteholder has actually received the benefit of such
exemption, credit, emission or repayment, but any reimbursement shall
include an amount in respect of interest or repayment supplement on or
in respect of tax actually received or credited to such Noteholder in
respect of such exemption, credit, remission or repayment and such
Noteholder shall not unreasonably delay the obtaining of such benefit.
13.5 If a Noteholder is obliged to pay to the Issuer any sum under a Note
and:
(a) any such exemption, credit, remission or repayment as is referred
to in Clause 13.3 is subsequently withdrawn in whole or in part;
or
(b) such sum is paid on the basis that it would be allowed to such
Noteholder as a deduction or offset for taxation purposes in the
accounting period of such Noteholder and such assumption
subsequently proves to be incorrect,
then the Issuer shall repay to such Noteholder promptly on demand such
amount as the auditors of such Noteholder (acting as experts and not as
arbitrators) shall reasonably determine and certify (substantiating in
reasonably sufficient detail the amount concerned and not including any
matters which such Noteholder fairly regards as confidential) to the
Issuer to be such amount as will leave such Noteholder (after such
repayment) in no better position (after tax) than would have been the
case had no such circumstances mentioned in paragraphs (a) and (b)
above existed.
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14. Interest
14.1 The rate of interest on the Notes for each Interest Period shall be the
aggregate of the applicable:
(a) Fixed Margin; and
(b) Interbank Rate.
14.2 Except as otherwise provided herein in Clause 19 or otherwise, interest
shall be payable by the Issuer in U.S. dollars in advance on the first
day of each Interest Period (each such day, an "Interest Payment
Date").
14.3 The first Interest Period in respect of the Notes will commence on May
12, 2000 with the next Interest Payment Date being six (6) months
thereafter.
14.4 Interest shall accrue from day to day from and including the last day
of the immediately preceding Interest Period to but excluding the last
day of the current Interest Period and shall be calculated at the rate
specified in Clause 14.1.
15. Default Interest and Indemnity
15.1 If interest in respect of any Note which is due and payable by the
Issuer hereunder is not paid on the due date therefor or if any sum due
and payable by the Issuer under any judgment of any court in connection
herewith is not paid on the date of such judgment, such sum (the
balance thereof for the time being unpaid being herein referred to as
an "unpaid sum") shall bear interest at the rate specified in Clause
14.1 beginning on such due date or, as the case may be, the date of
such judgment and ending on the date upon which the obligation of the
Issuer to pay is discharged.
15.2 Any interest which shall have accrued under Clause 15.1 in respect of
an unpaid sum shall be due and payable and shall be paid by the Issuer
to the relevant Noteholder(s) at the end of the period by reference to
which it is calculated or on such other date or dates as such
Noteholder(s) may specify by written notice to the Issuer, provided,
however that any such interest which shall have accrued as a result of
an event which, but for the payment of such accrued interest as
provided in the proviso set forth in the definition of "Interest
Payment Default", would become an Interest Payment Default, shall be
payable on the date upon which the obligation of the Issuer to pay such
accrued interest is discharged, whether in accordance with the
definition of "Interest Payment Default" or as otherwise provided
herein.
15.3 The Issuer undertakes to indemnify each Noteholder against any cost,
claim, loss, expense (including legal fees) or liability, which it may
sustain or incur as a
16
consequence of the occurrence of any default by the Issuer in the
performance of any of the obligations expressed to be assumed by it in
respect of the Notes.
16. Mandatory Prepayment Event
Upon the occurrence of any Mandatory Payment Event, the Issuer will,
subject to the provisions of Clause 19, immediately prepay to the
Noteholders all the outstanding principal and all interest and all
other amounts payable under the Notes.
17. Replacement of Note
Subject to Article X of the Securities Purchase Agreement, if any Note
is lost, stolen, mutilated, defaced or destroyed, it may be replaced at
the specified office of the Issuer, subject to all applicable laws,
upon payment by the claimant of the expenses incurred in connection
with such replacement and on such terms as to evidence, security,
indemnity and otherwise as the Issuer may reasonably require. Mutilated
or defaced Notes must be surrendered before replacements will be
issued.
18. Modification and Noteholders' Resolutions
18.1 Any modification to these Conditions shall be agreed in writing between
the Issuer and Noteholders holding at least eighty per cent (80%) of
the face amount of the Notes and any such modifications so agreed shall
be binding on all further Noteholders, provided that no amendment,
supplement or modification to, or waiver of, any provision set forth in
this Clause 18, Clause 16, Clause 19, Clause 22 or Clause 23 may be
effected without the prior written consent of the Facility Agent (with
the consent of the "Majority Lenders", as defined in the Senior Secured
Credit Agreement), and any such amendment, supplement, modification or
waiver entered into without the prior written consent of the Facility
Agent shall be null and void and without any force and effect
whatsoever.
18.2 Any resolution of Noteholders in relation to these Conditions may be
made in writing signed by or on behalf such Noteholders holding the
relevant face amount of Notes upon delivery to the Issuer by each such
Noteholder of such evidence as to its identity and its capacity as
Noteholder as the Issuer may reasonably require.
19. Subordination
19.1 The Issuer covenants and agrees, and the Noteholder by its acceptance
hereof likewise covenants and agrees, that all payments of the
principal of and interest and premium, if any, on the Notes and all
other obligations of the Issuer now or hereafter existing under or in
respect of the Notes (including, without limitation, amounts payable on
account of the redemption provisions set forth herein) (collectively,
the "Subordinated Debt") shall be subordinated in accordance with
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the provisions of this Clause 19 to the prior payment in full of all
Senior Obligations. For purposes hereof, the Senior Obligations shall
not be deemed to have been paid in full until the Finance Parties shall
have received payment of the Senior Obligations in full in cash. In
furtherance of the foregoing, the Issuer and the Noteholder, by its
acceptance hereof, agrees as follows:
19.2 Upon payment or distribution of assets or securities of the Issuer of
any kind or character, whether in cash, property or securities, upon
any dissolution or winding up or total or partial liquidation or
reorganization of the Issuer, whether voluntary or involuntary, or in
bankruptcy, insolvency, receivership or other proceedings or upon an
assignment for the benefit of creditors or any other marshalling of the
assets and liabilities of the Issuer, all Senior Obligations shall
first be paid in full in cash, or payment provided for in cash or cash
equivalents in a manner satisfactory to the Finance Parties, before any
direct or indirect payment or distribution, including, without
limitation, by exercise of set-off, of any cash, property or securities
on account of principal of (or premium, if any) or interest or any
other amounts on or in respect of the Notes and to that end the Finance
Parties shall be entitled to receive directly, for application to the
payment of the Senior Obligations (to the extent necessary to pay all
Senior Obligations in full after giving effect to any substantially
concurrent payment or distribution to or provision for payment to the
Finance Parties), any payment or distribution of any kind or character,
whether in cash, property or securities, in respect of the Subordinated
Debt. The Facility Agent is hereby irrevocably authorized and empowered
(in its own name or in the name of the Noteholders or otherwise), but
shall have no obligation, to demand, sue for, collect and receive
payment or distribution referred to herein and to file a claim and
proofs of claim and take such other action (including without
limitation, voting the Subordinated Debt) as it may deem necessary or
advisable for the exercise or enforcement of any of the rights or
interests of the Noteholders hereunder.
19.3 No direct or indirect payment by or on behalf of the Issuer of
principal of (premium, if any), or interest on, or any other amount
with respect to, the Subordinated Debt, and no repurchase, redemption
or other retirement of any Note, whether pursuant to the terms of the
Note, upon acceleration or otherwise, shall be made if at the time of
such payment, repurchase, redemption or retirement, a Subordination
Event has occurred for so long as such Subordination Event shall not
have been cured or waived in writing by all applicable parties;
provided, that the payment of accrued interest specified in the proviso
in the definition of "Interest Payment Default" may be paid in
accordance with such proviso; and provided, further, that on and after
the Standstill Termination Date, the Issuer may resume payments on
account of the principal of (premium, if any), and interest (including
interest pursuant to Clause 15.1) and any other amounts on the Note,
subject to the provisions of Clause 19.1 and Clause 19.2 hereof;
19.4 (a) In the event that, notwithstanding the foregoing provisions
prohibiting such payment or distribution, the Noteholders shall have
received any payment on
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account of the Subordinated Debt at a time when such payment is
prohibited by such provisions before the Senior Obligations are paid in
full, then and in such event, such payment or distribution shall be
received and held in trust by the Noteholders apart from their other
assets and forthwith paid over or delivered to the Facility Agent in
the same form as so received (with any necessary indorsement) to be
applied (in the case of cash) to, or held as collateral (in the case of
non-cash property or securities) for, the payment or prepayment of the
Senior Obligations in accordance with the terms of the Senior Loan
Agreements.
(b) Nothing contained in this Clause 19 will limit the right of the
Noteholders to take any action provided herein with respect to the
Subordinated Debt; provided that all Senior Obligations then due or
thereafter declared to be due shall first be paid in full before the
Noteholders are entitled to receive any payment from the Issuer of
principal of, or interest on, or any other amounts under any Note.
(c) Upon any payment or distribution of assets or securities referred
to in this Clause 19, the Noteholders shall be entitled to rely upon
any order or decree of a court of competent jurisdiction in which such
dissolution, winding up, liquidation or reorganization proceedings are
pending, and upon a certificate of the receiver, trustee in bankruptcy,
liquidating trustee, agent or other person making any such payment or
distribution, delivered to the Noteholders for the purpose of
ascertaining the Persons entitled to participate in such distribution,
the holders of the Senior Obligations and other indebtedness of the
Issuer, the amount thereof or payable thereon, the amount or amounts
paid or distributed thereon and all other facts pertinent thereto or to
this Clause 19.
(d) No right of any present or future holder of any Senior Obligations
to enforce subordination as herein provided shall at any time in any
way be prejudiced or impaired by any act or failure to act by any such
holder, or by any noncompliance by the Issuer or any Noteholder with
the terms and provisions and covenants herein regardless of any
knowledge thereof such holder may have or otherwise be charged with.
(e) The provisions of this Clause 19 are intended to be for the benefit
of, and shall be enforceable directly by, the holders of the Senior
Obligations. The Issuer and each Noteholder, by its acceptance hereof,
each acknowledge that the Finance Parties are relying upon the
provisions of this Clause 19 in extending such Senior Obligations.
19.5 Any payment or distribution to the Facility Agent, on behalf of the
holders of the Senior Obligations, pursuant to the provisions of this
Clause 19 shall entitle the Noteholder to a right of subrogation in
respect thereof; provided, however that all such subrogation rights are
not exercisable until the Senior Obligations shall have been paid in
full.
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19.6 Nothing contained in this Clause 19 or elsewhere in this Note is
intended to or shall impair, as between the Issuer and the Noteholder,
the obligations of the Issuer, which are absolute and unconditional, to
pay to the Noteholder the principal of (premium, if any), and interest
on, the Note as and when the same shall become due and payable in
accordance with their terms, or is intended to or shall affect the
relative rights of the Noteholder and creditors of the Issuer other
than the holders of the Senior Obligations nor shall anything herein or
therein prevent any Noteholder from exercising all remedies otherwise
permitted by applicable law upon the occurrence of a Mandatory
Prepayment Event under this Note, subject to the rights, if any, under
this Clause 19 of the holders of the Senior Obligations in respect of
cash, property or securities of the Issuer received upon the exercise
of any such remedy.
19.7 As long as the Senior Obligations shall not have been paid in full, no
Noteholder will commence, or join with any creditor other than the
holders of the Senior Obligations in commencing, or directly or
indirectly cause the Issuer to commence or assist the Issuer in
commencing, any proceeding referred to in Clause 19.2.
19.8 All rights and interests hereunder of the holders of the Senior
Obligations, and all agreements and obligations of the Noteholders and
the Issuer under this Clause 19, shall remain in full force and effect
irrespective of:
(a) the lack of validity or enforceability of any provision under any
Senior Loan Agreement or any other agreement or instrument relating
thereto;
(b) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Senior Obligations, or any other
amendment or waiver of or any consent to any departure from the Senior
Loan Agreements, including, without limitation, any increase in the
Senior Obligations resulting from the extension of additional credit to
the Issuer or any of its subsidiaries or otherwise;
(c) any taking, exchange, release or non-perfection of any other
collateral, or any taking, release or amendment or waiver of or consent
to departure from any guaranty, for all or any of the Senior
Obligations;
(d) any manner of application of collateral, or proceeds thereof, to
all or any of the Senior Obligations, or any manner of sale or other
disposition of any collateral for all or any of the Senior Obligations
or any other assets of the Issuer or any of its subsidiaries;
(e) any change, restructuring or termination of the corporate structure
or existence of the Issuer or any of its subsidiaries; or
(f) any other circumstance which might otherwise constitute a defense
available to, or a discharge of, the Issuer or a subordinated creditor.
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Each Noteholder and the Issuer hereby waives promptness, diligence,
notice of acceptance and any other notice with respect to any of the
Senior Obligations and this Clause 19 and any requirement that the
Facility Agent or any holder of the Senior Obligations protect, secure,
perfect or insure any security interest or lien or any property subject
thereto or exhaust any right or take any action against the Issuer or
any other person or entity or any collateral.
19.9 (a) The provisions of this Clause 19 shall continue to be effective or
be reinstated, and the Senior Obligations shall not be deemed to be
paid in full, as the case may be, if at any time any payment of any of
the Senior Obligations is rescinded or must otherwise be returned by
the Facility Agent or any holder of the Senior Obligations upon the
insolvency, bankruptcy or reorganization of the Issuer or otherwise,
all as though such payment had not been made.
(b) The provisions of this Clause 19 shall (i) remain in full force and
effect until the payment in full of the Senior Obligations, (ii) be
binding upon the Issuer and each Noteholder and their respective
successors, assigns and transferees and (iii) inure to the benefit of,
and be enforceable by, each Finance Party and its successors, assigns
and transferees.
20. Miscellaneous
20.1 No failure by any Noteholder to exercise, nor any delay by such
Noteholder in exercising, any right or remedy in respect of any of the
Notes shall operate as a waiver thereof, nor shall any single or
partial exercise of any right or remedy prevent any further or other
exercise thereof or the exercise of any other right or remedy. The
rights and remedies herein provided are cumulative and not exclusive of
any other rights or remedies (whether provided by law or otherwise).
20.2 Subject to Section 12.9 (Expenses) of the Securities Purchase
Agreement, the Issuer will pay all costs associated with the issuance
of the Notes.
21. Notices
21.1 Any notice required to be issued or delivered by any party hereto to
any other party hereto shall be issued or delivered, unless otherwise
provided herein, by letter, telephone or facsimile to, in the case of
the Issuer, the Issuer's other representative as set out below and, in
the case of any Noteholder, to its representative specified on the
Register (or to such other representative or to such other address as
such Noteholder may hereafter specify in writing to the other parties
hereto):
ISSUER
Address: Terez Krt, Budapest, Hungary Tel: + ▇▇ ▇ ▇▇▇-▇▇▇▇
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Facsimile: + ▇▇ ▇ ▇▇▇-▇▇▇▇
Attention of: ▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇
Copies to:
LEGAL COUNSEL
(▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇ - ▇▇▇▇▇ & Partners Clifford Chance Madach Trade Center,
▇▇▇▇▇▇ ▇▇▇▇ ut ▇▇, ▇-▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
Fax: ▇▇▇ ▇ ▇▇▇ ▇▇▇▇
Tel: ▇▇▇ ▇ ▇▇▇ ▇▇▇▇)
and
LEGAL COUNSEL
Hungarian Telephone and Cable Corp.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
Tel: ▇▇▇-▇▇▇-▇▇▇▇
21.2 Any notice delivered by hand to the notice address of the addressee
shall be deemed to be served at the time of delivery, notices sent by
facsimile shall be deemed to be served upon completion of transmission
and notices sent by first class post or pre-paid recorded delivery
shall be deemed to be served forty-eight (48) hours after time of
posting.
21.3 The Noteholder, by its acceptance hereof, understands and agrees that
it may receive a request pursuant to Section 34.2 (Exceptions) of the
Senior Secured Credit Agreement and that the response to such request
shall be required to be provided to the Person indicated therein within
fourteen (14) after delivery thereof or the Noteholder shall be deemed
to have consented to such request.
22. Law
The Notes are governed by, and shall be construed in accordance with,
the laws of the State of New York.
23. Arbitration
23.1 New York Courts. Subject to Clause 23.2 below (Option to Refer Disputes
to Arbitration), each of the Issuer and the Noteholder irrevocably
agrees for the benefit of each of the Finance Parties that the courts
of New York shall have exclusive jurisdiction to hear and determine any
suit, action or proceeding, and to
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settle any disputes, which may arise out of or in connection with this
Note and, for such purposes, irrevocably submits to the jurisdiction of
such courts.
23.2 Option to Refer Disputes to Arbitration. Notwithstanding the provisions
of Clause 23.1 above (New York Courts), (a) in the event that the
Facility Agent deems it appropriate to assert its rights relating to
this Note, or (b) at the option of either the Issuer or the Noteholder
in the event the Facility Agent has not asserted its rights related
hereto or at any time after the Senior Obligations shall have been paid
in full, such Person may, in its sole discretion assert such rights in
an arbitration proceeding under the UNCITRAL Arbitration Rules as more
particularly outlined in the Securities Purchase Agreement which is
incorporated herein by reference in its entirety.
23.3 Non-Exclusive Jurisdiction. This Clause 23.3 is for the benefit of the
Finance Parties and nothing in Clause 23.1 shall prevent the Facility
Agent from taking proceedings relating to a Dispute involving a holder
of any Note in any other courts with jurisdiction in the jurisdiction
in which such holder of such Note has its place of incorporation,
principal place of business and/or substantial assets. To the extent
allowed by law, the Facility Agent may take concurrent proceedings in
any number of jurisdictions.
23.4 Service of Process for Arbitration Proceedings. Each party hereunder
agrees that the process by which any arbitration proceedings are begun
may be served on it by being delivered to the address identified in
Clause 21 (Notices) or other its registered office for the time being.
If the appointment of the person(s) mentioned in this Clause 23.4
ceases to be effective, such party shall immediately appoint a further
person to act on its behalf as agent for the commencement of
arbitration proceedings and, failing such appointment within fifteen
(15) days, any other party or the Facility Agent shall be entitled to
appoint such a person by notice to the other parties. Nothing contained
in these Conditions shall affect the right to serve process in any
other manner permitted by law.
23.5 Consent to Enforcement. Each party 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.
24. Language
The Notes shall be executed in the English language. The Notes may be translated
into the Hungarian language. In the event that any dispute or question of
interpretation arises, the English language version shall prevail.
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25. Waiver of Jury Trial
Each of the parties hereto irrevocably waives trial by jury in any action,
proceeding or Dispute with respect to this Note.
26. Amendment and Restatement
This Note amends and restates and is a substitute for, but is not in payment or
satisfaction of, the Unsecured Note no. __ dated May 12, 1999 in the principal
amount of U.S. $1,000,000 from the Issuer to the Noteholder.
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EXECUTION
The Issuer
Executed and delivered ) Director
by ▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇, President and )
Chief Executive Officer )
HUNGARIAN TELEPHONE AND ) Director/Secretary
CABLE CORP. )
The Noteholder
signed by ) Director/Secretary
for and on behalf of )
POSTABANK ES TAKAREKPENZTAR )
RESZVENYTARSASAG )
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