UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 9)*
HUNGARIAN TELEPHONE AND CABLE CORP.
(Name of Issuer)
COMMON STOCK, $0.001 PAR VALUE PER SHARE
(Title of Class of Securities)
4455421030
(CUSIP Number)
L. Russell Mitten, II, Esq. with a copy to:
General Counsel Stephen A. Bouchard, Esq.
CITIZENS UTILITIES COMPANY FLEISCHMAN AND WALSH, L.L.P.
High Ridge Park 1400 Sixteenth Street, N.W.
Stamford, Connecticut 06905 Washington, D.C. 20036
(203) 329-8800 (202) 939-7900
(Name, Address and Telephone No. of Person
Authorized to Receive Notices and Communications)
MAY 12, 1999
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box. [ ]
* The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment, information which would alter disclosures provided
in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes.)
Page 1 of 8 Pages
<PAGE>
Page 2 of 8 Pages
1. Name of Reporting Person
S.S. or I.R.S. Identification No. of Above Person
CITIZENS UTILITIES COMPANY 06-0619596
2. Check the Appropriate Box if a Member of a Group* (a) [ ]
(b) [X]
3. SEC Use Only
4. Source of Funds*
OO:(See Item 4)
5. Check Box if Disclosure of Legal Proceedings
Is Required Pursuant to Items 2(d) or 2(e). [ ]
6. Citizenship Or Place Of Organization
DELAWARE
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON
WITH:
7. Sole Voting Power
9,228,126 Common Stock
8. Shared Voting Power
0 Common Stock
9. Sole Dispositive Power
9,228,126 Common Stock
10. Shared Dispositive Power
0 Common Stock
11. Aggregate Amount Beneficially Owned By Each
Reporting Person
9,228,126 Common Stock
12. Check Box If The Aggregate Amount In Row (11)
Excludes Certain Shares* [ ]
13. Percent Of Class Represented By Amount In Row (11)
48.8% Common Stock
14. Type Of Reporting Person*
CO
<PAGE>
Page 3 of 8 Pages
The statement on Schedule 13D filed on May 18, 1995, as amended by
Amendment No. 1 to Schedule 13D filed on June 6, 1995; Amendment No. 2 to
Schedule 13D filed on September 28, 1995; Amendment No. 3 to Schedule 13D filed
on October 6, 1995; Amendment No. 4 to Schedule 13D filed on November 7, 1995;
Amendment No. 5 to Schedule 13D filed on March 7, 1996; Amendment No. 6 to
Schedule 13D filed on April 16, 1996; Amendment No. 7 to Schedule 13D filed on
October 24, 1996, and Amendment No. 8 filed on October 13, 1998, relating to the
common stock, $.001 par value (the "Common Stock"), of Hungarian Telephone and
Cable Corp., a Delaware corporation (the "Issuer"), by Citizens Utilities
Company (the "Reporting Person") is hereby further amended as follows (as
amended, this "Schedule 13D").
Item 3. Source and Amount of Funds or Other Consideration
- ----------------------------------------------------------
The Reporting Person's response to Item 3 in this Schedule 13D is
hereby amended by adding the following information to its response:
On May 12, 1999, the Issuer, Citizens International Management Services
Company, a Delaware corporation and a wholly-owned subsidiary of the Reporting
Person ("CIMS"), and CU CapitalCorp, a Delaware corporation and a wholly-owned
subsidiary of the Reporting Person ("CUCC"), entered into a Stock Purchase
Agreement, a copy of which is attached hereto as Exhibit D. Pursuant to the
Stock Purchase Agreement, the Issuer issued to CIMS 1,300,000 shares of Common
Stock and 30,000 shares of Series A Preferred Stock, par value $0.001 per share
("Preferred Stock"). See Item 4 for a discussion of the potential issuance of
additional shares of Preferred Stock to CIMS on March 31, 2000 based on the
market price of shares of the Issuer's Common Stock.
As consideration for the issuance of the shares pursuant to the Stock
Purchase Agreement, CIMS agreed to (i) cancel the Promissory Note, dated
September 30, 1998, issued and delivered by the Issuer to CIMS, in the principal
amount of $8,374,498 and (ii) renounce and forego any rights under the
Replacement and Termination Agreement, dated September 30, 1998 (the
"Replacement Agreement"), among the Issuer, CIMS and CUCC to the aggregate sum
of $21,000,000 which was to be paid in equal quarterly payments by the Issuer to
CIMS from 2004 through and including 2010. The Issuer's right to receive
consulting services under the Replacement Agreement was also terminated by the
Stock Purchase Agreement.
The descriptions and summaries of the agreements in this Item 3 above
do not purport to be complete and are subject to, and qualified in their
entirety by reference to, each such agreement, copies of which have been filed
as exhibits hereto and incorporated herein by reference. (See Item 7 below).
<PAGE>
Page 4 of 8 Pages
Item 4. Purpose of Transaction
- --------------------------------
The Reporting Person's response to Item 4 in this Schedule 13D is
hereby amended by adding the following information to its response to subsection
(a).
Pursuant to the Stock Purchase Agreement described herein (See Item 3),
if the average closing price of the Issuer's Common Stock on the American Stock
Exchange or such other similar trading exchange for the twenty trading days
ending March 31, 2000 is less than $7.00 per share of Common Stock, then the
Issuer shall promptly thereafter issue to CIMS such number of shares of
Preferred Stock equal in value to (i) 1,600,000 times (ii) $7.00 less the
average closing price of the Issuer's Common Stock on the American Stock
Exchange or such other similar trading exchange for the twenty trading days
ending March 31, 2000. For purposes of this calculation, each share of Preferred
Stock shall have a value of $70.
Each share of Preferred Stock may be converted by CIMS at any time or
from time to time prior to redemption into 10 shares of Common Stock. Such
conversion ratio is subject to adjustment pursuant to the terms of the Issuer's
Certificate of Designations filed with the Secretary of State of Delaware, a
copy of which is attached as Exhibit A to the Stock Purchase Agreement.
The descriptions and summaries of the agreements in this Item 4 above
do not purport to be complete and are subject to, and qualified in their
entirety by reference to, such agreements, copies of which are filed as exhibits
hereto and incorporated herein by reference (See Item 7 below).
Item 5. Interest in Securities of the Issuer
- ----------------------------------------------
The Reporting Person's response to Item 5 in this Schedule 13D is
hereby amended by deleting the previous response in its entirety and
substituting the following:
<PAGE>
Page 5 of 8 Pages
(a) As a result of (i) the purchase by CUCC of 300,000 shares of Common
Stock made on May 31, 1995; (ii) the issuance by the Issuer to CUCC of 2,908
shares of Common Stock on October 3, 1995 in lieu of the payment of cash to
satisfy certain interest obligations on the Loan; (iii) the issuance by the
Issuer to CUCC of 250,000 shares of Common Stock on October 30, 1995 pursuant to
the Second Agreement to Amend and Restate; (iv) the issuance by the Issuer to
CUCC of 250,000 shares of Common Stock on February 26, 1996 pursuant to the
Third Agreement to Amend and Restate; (v) the purchase of 103,000 shares of
Common Stock through open-market transactions made between July, 1997 and
November, 1997; (vi) the issuance by the Issuer to CIMS of 100,000 shares of
Common Stock on September 30, 1998 pursuant to the Replacement and Termination
Agreement; (vii) the issuance by the Issuer to CUCC of options to purchase
6,622,218 shares of Common Stock (including 4,511,322 options previously granted
pursuant to the Warrant, the Stock Option Agreement, the Second Stock Option
Agreement and the Third Stock Option Agreement) pursuant to the Amended and
Restated Stock Option Agreement, (viii) the issuance to CIMS by the Issuer
pursuant to the Stock Purchase Agreement described herein (See Item 3) of
1,300,000 shares of Common Stock; and (ix) the issuance by the Issuer to CIMS
pursuant to the Stock Purchase Agreement described herein (See Item 3) of 30,000
shares of the Issuer's Preferred Stock, which number of shares may be increased
as described in Item 4 (each share of Preferred Stock, at the option of CIMS,
initially may be converted into 10 shares of Common Stock; therefore CIMS's
30,000 shares of Preferred Stock are convertible into 300,000 shares of Common
Stock, subject to adjustment in accordance with the terms of the Issuer's
Certificate of Designations filed with the Secretary of State of Delaware), the
Reporting Person may be deemed to have beneficial ownership of 9,228,126 shares
of Common Stock, of which (A) 6,622,218 shares are subject to purchase pursuant
to presently exercisable options beneficially held by the Reporting Person and
(B) 300,000 shares are subject to the conversion by CIMS of its shares of
Preferred Stock into such number of shares of Common Stock. Accordingly, the
Reporting Person beneficially owns 48.8% of all Common Stock presently reported
by the Issuer to be outstanding (assuming the exercise by CUCC of all of its
options to purchase shares of Common Stock pursuant to the Amended and Restated
Option Agreement and the conversion of all its shares of Preferred Stock into
shares of Common Stock).
(b) Common Stock
(i) Sole power to vote or direct the
vote of 9,228,126 shares of Common Stock.
(ii) Shared power to vote or direct the
vote of 0 shares of Common Stock.
<PAGE>
Page 6 of 8 Pages
(iii) Sole power to dispose or direct
the disposition of 9,228,126 shares of Common Stock.
(iv) Shared power to dispose or direct
the disposition of 0 shares of Common Stock.
(c) See responses to Items 3 and 4 above.
(a) - (c)
To the best knowledge of the Reporting Person, none of the persons
listed in Schedule I hereto beneficially owns any Common Stock or has
effected any transaction in Common Stock in the past 60 days.
(d) Not Applicable.
(e) Not Applicable.
Item 6. Contracts, Arrangements, Understandings or
Relationships with Respect to Securities of the
Issuer
- -----------------------------------------------------------------
The Reporting Person's response to Item 6 in this Schedule 13D is
hereby amended by deleting the previous response in its entirety and
substituting the following:
Pursuant to the Stock Purchase Agreement, CIMS and CUCC have agreed not
to convey any securities of the Issuer owned by them until May 15, 2000 without
the prior consent of the Issuer.
Except as otherwise described above or in the response to Item 4, as
amended hereby, there are no contracts, arrangements, understandings or
relationships (legal or otherwise) among the Reporting Person, CUCC, CIMS or, to
the best knowledge of the Reporting Person, the persons listed in Schedule I
hereto, or between the Reporting Person, CUCC, CIMS or, to the best knowledge of
the Reporting Person, any of the persons listed in Schedule I hereto, on the one
hand, and any other person, on the other hand, with respect to any securities of
the Issuer. See also Exhibits B and C attached hereto and the Registration
Agreement attached as Exhibit G to the Reporting Person's Amendment No. 1 to
Schedule 13D filed June 6, 1995, which are incorporated herein by reference.
Item 7. Materials to be Filed as Exhibits
- -------------------------------------------
Exhibit A Power of Attorney, dated September 26,
1995(1)
<PAGE>
Page 7 of 8 Pages
Exhibit B Replacement and Termination Agreement,
dated September 30, 1998, among the Issuer,
CUCC and CIMS (which includes the form of
the Promissory Note as Exhibit A thereto)(2)
Exhibit C Amended, Restated and Consolidated Stock
Option Agreement, dated September 30, 1998,
between the Issuer and CUCC (2)
Exhibit D Stock Purchase Agreement, dated as of May
12, 1999, among the Issuer, CUCC and CIMS
(which includes the form of Certificate of
Designations as Exhibit A thereto).
- --------------------------
(1) Previously filed with the Reporting Person's Amendment No. 2
to Schedule 13D filed September 28, 1995.
(2) Previously filed with the Reporting Person's Amendment No. 8
to Schedule 13D filed October 13, 1998.
<PAGE>
Page 8 of 8 Pages
SIGNATURE
---------
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
CITIZENS UTILITIES COMPANY
Dated: May 24, 1999 By: /s/ Stephen A. Bouchard
-----------------------
Stephen A. Bouchard
Attorney-In-Fact
<PAGE>
SCHEDULE I
----------
The names, addresses and principal occupations of each of the executive
officers and directors of Citizens Utilities Company are listed below.
<TABLE>
<CAPTION>
<S> <C> <C>
NAMES AND ADDRESSES PRINCIPAL OCCUPATION
------------------- --------------------
DIRECTORS
Norman I. Botwinik Director Emeritus of the Board of Governors
Building #14 University of New Haven (retired)
60 Connolly Parkway
Harnden, CT 06514
Aaron I. Fleischman Senior Partner,
Fleischman and Walsh, L.L.P. Fleischman and Walsh, L.L.P.
1400 Sixteenth Street, N.W. (legal services)
Washington, D.C. 20036
Stanley Harfenist President and Chief Executive Officer
Adesso, Inc. Adesso, Inc.
5110 W. Goldleaf Circle (computer hardware manufacturing)
Suite 50
Los Angeles, CA 90056
Andrew N. Heine Of Counsel
Gordon Altman Butowsky Weitzen Shalov & Wein Gordon Altman Butowsky Weitzen Shalov & Wein
114 West 47th Street, 20th Fl. (legal services)
New York, NY 10036-1510
John L. Schroeder Director
Morgan Stanley Dean Witter Funds Morgan Stanley
New York, NY Dean Witter Funds
(investment services)
Robert D. Siff Consultant
Citizens Utilities Company Regional Banks
3 High Ridge Park (banking services)
Stamford, CT 06905
Robert A. Stanger Chairman, Robert A. Stanger & Co., Inc.
Robert A. Stanger & Co., Inc. (publishing; investment advisory services)
1129 Broad Street
Shrewsbury, NJ 07702
Charles H. Symington, Jr. Director
3i Corporation 3i Corporation
Spring Island, SC (investment services)
Edwin Tornberg President and Director
Edwin Tornberg & Co., Inc. Edwin Tornberg & Co., Inc. (management and brokerage
7251 15th Place, N.W. services in the radio industry)
Washington, D.C. 20012
Claire L. Tow Senior Vice President
Century Communications Corp. Century Communications Corp. (cable television
50 Locust Avenue services)
New Canaan, CT 06840
Leonard Tow Chairman of the Board and Chief Executive Officer
Citizens Utilities Company Citizens Utilities Company
3 High Ridge Park
Stamford, CT 06905
NAMES AND ADDRESSES POSITIONS
------------------- ---------
EXECUTIVE OFFICERS
Leonard Tow Chairman of the Board and
Citizens Utilities Company Chief Executive Officer
3 High Ridge Park
Stamford, CT 06905
Daryl A. Ferguson President and Chief Operating
Citizens Utilities Company Officer
3 High Ridge Park
Stamford, CT 06905
Robert J. DeSantis Chief Financial Officer,
Citizens Utilities Company Vice President and Treasurer
3 High Ridge Park
Stamford, CT 06905
O. Lee Jobe Vice President
Citizens Utilities Company
3 High Ridge Park
Stamford, CT 06905
J. Michael Love Vice President
Citizens Utilities Company
3 High Ridge Park
Stamford, CT 06905
L. Russell Mitten II Vice President
Citizens Utilities Company
3 High Ridge Park
Stamford, CT 06905
James D. Ranton Vice President
Citizens Utilities Company
3 High Ridge Park
Stamford, CT 06905
David B. Sharkey Vice President
Citizens Utilities Company
3 High Ridge Park
Stamford, CT 06905
Livingston E. Ross Vice President
Citizens Utilities Company
3 High Ridge Park
Stamford, CT 06905
Donald P. Weinstein Vice President
Citizens Utilities Company
3 High Ridge Park
Stamford, CT 06905
The names, addresses and principal occupations of each of
the executive officers and directors of CU CapitalCorp. are
listed below.
NAMES AND ADDRESSES PRINCIPAL OCCUPATION
------------------- --------------------
DIRECTORS
Robert J. DeSantis Chief Financial Officer,
Citizens Utilities Company Vice President and Treasurer
3 High Ridge Park
Stamford, CT 06905
Daryl A. Ferguson President and Chief Operating Officer, Citizens
Citizens Utilities Company Utilities Company
3 High Ridge Park
Stamford, CT 06905
Peter C. Fulweiler Vice President, Bank of Delaware
Bank of Delaware
222 Delaware Avenue
Wilmington, DE 19899
Leonard Tow Chairman of the Board and Chief Executive Officer,
Citizens Utilities Company Citizens Utilities Company
3 High Ridge Park
Stamford, CT 06905
<PAGE>
NAMES AND ADDRESSES
------------------- POSITIONS
---------
EXECUTIVE OFFICERS
Robert J. DeSantis Chief Financial Officer,
Citizens Utilities Company Vice President and Treasurer
3 High Ridge Park
Stamford, CT 06905
L. Russell Mitten, II Vice President
Citizens Utilities Company
3 High Ridge Park
Stamford, CT 06905
Livingston E. Ross Vice President
Citizens Utilities Company
3 High Ridge Park
Stamford, CT 06905
Daryl A. Ferguson President and Chief Operating
Citizens Utilities Company Officer
3 High Ridge Park
Stamford, CT 06905
</TABLE>
<PAGE>
Exhibit D
_________
STOCK PURCHASE AGREEMENT
________________________
THIS STOCK PURCHASE AGREEMENT (this "Agreement") is made and entered
into as of the 12th day of May, 1999 among Hungarian Telephone and Cable Corp.,
a Delaware, United States corporation, as the seller ("HTCC" or the "Seller"),
Citizens International Management Services Company, a Delaware corporation, as
the buyer ("CIMS" or the "Buyer"), and CU CapitalCorp., a Delaware corporation
and an affiliate of CIMS ("CUCC").
R E C I T A L S:
---------------
WHEREAS, Buyer presently owns 100,000 shares of HTCC Common Shares (as
defined herein);
WHEREAS, CUCC presently owns 905,908 shares of HTCC Common Shares (as
defined herein);
WHEREAS, Seller, Buyer and CUCC are parties to a certain Replacement
and Termination Agreement dated as of September 30, 1998 (the "Replacement
Agreement");
WHEREAS, pursuant to the Replacement Agreement, Seller issued a
promissory note to Buyer in the principal amount of $8,374,498 (the "Note");
WHEREAS, pursuant to the Replacement Agreement, Seller agreed to pay to
CIMS $21,000,000 in quarterly installments from 2004 through and including 2010
(the "Payment Obligations") as payment for certain consulting services and the
cancellation of a certain management services agreement;
WHEREAS, Seller is entering into certain agreements (the "Revised
Agreements") as of the date hereof to revise its capital structure with
Postabank es Takarekpenztar Rt. ("Postabank");
WHEREAS, an additional equity investment in Seller by Buyer is a
condition precedent for Postabank entering into the Revised Agreements; and
WHEREAS, Seller desires to sell, transfer and deliver to Buyer, and
Buyer desires to purchase and accept from Seller, additional HTCC Common Shares
(as defined herein) and HTCC Preferred Shares (as defined herein) upon the terms
and conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
undertakings herein contained, the parties hereto hereby agree as follows:
<PAGE>
ARTICLE I
DEFINITIONS
1.1 Defined Terms. For purposes of this Agreement and any amendment
-------------
hereto, the following terms are defined as set out below:
"Affiliate" means, with respect to any Person, any Person directly or
indirectly controlling, controlled by, or under common control with such other
Person.
"Lien" means, with respect to any asset, any mortgage, lien, claim,
pledge, option, charge, right of first refusal, security interest or encumbrance
of any kind in respect of such asset.
"Person" means, an individual, a corporation, a partnership, an
association, a trust or other entity or organization, including a government or
political subdivision or an agency or instrumentality thereof.
1.2 List of Additional Definitions. The following is a list of some
--------------------------------
additional terms used in this Agreement and a reference to the Section thereto
in which such term is defined:
Term Section
---- -------
Agreement Preamble
Buyer Preamble
CIMS Preamble
CUCC Preamble
Closing Date Sec. 2.1
HTCC Preamble
HTCC Common Shares Sec. 2.1
HTCC Shares Sec. 2.1
HTCC Preferred Shares Sec. 2.1
Indemnitee Sec. 6.3
Indemnitor Sec. 6.3
Note Recitals
Payment Obligations Recitals
Postabank Recitals
Replacement Agreement Recitals
Revised Agreements Recitals
Seller Preamble
Securities Act Sec. 2.2(b)
<PAGE>
ARTICLE II
PURCHASE AND SALE OF SHARES
2.1 Purchase and Sale of HTCC Shares. Upon the terms and subject to
--------------------------------
the conditions of this Agreement and in exchange for the consideration set forth
in Section 2.2 below, on the date hereof (the "Closing Date"), Buyer shall pur-
chase and accept from Seller, and Seller shall sell, transfer, assign, convey
and deliver to Buyer, 1,300,000 newly issued shares of the Seller's Common
Stock, par value $0.001 per share (the "HTCC Common Shares"), and (following
compliance with the Delaware General Corporation Law) 30,000 newly issued
shares of the Seller's Series A Preferred Stock, par value $0.001 per share
(the "HTCC Preferred Shares") (the HTCC Common Shares and the HTCC Preferred
Shares together are referred to herein as the "HTCC Shares").
2.2 Consideration.
-------------
(a) In consideration for the purchase of the HTCC Shares as
provided for in Section 2.1 above, Buyer agrees to (i) transfer the
Note to Seller for cancellation and (ii) renounce and forego any rights
whatsoever forever to any of the Payment Obligations and releases
Seller from any and all liability with respect to the Payment
Obligations such that the Seller shall not be liable whatsoever for any
portion of the Payment Obligations. Subject to the terms herein, the
parties agree that without any further action being required by either
party, HTCC's right to receive the consulting services contained in
Section 1.2(c) of the Replacement Agreement shall be extinguished and
be of no further force or effect.
(b) The HTCC Shares shall be duly authorized, validly issued,
fully paid and non-assessable. Buyer agrees to hold its HTCC Shares and
not to convey such shares until May 15, 2000 without the prior written
consent of Seller and Postabank, in any event, not to offer to sell or
otherwise transfer the HTCC Shares without either registration or
exemption from the Securities Act of 1933, as amended (the "Securities
Act"). Buyer and CUCC agree to hold any and all other shares of HTCC
Common Stock and not to convey such shares until May 15, 2000 without
the prior written consent of Seller and Postabank. Each certificate for
the HTCC Shares issued to Buyer pursuant to this Agreement shall bear
the following legend:
" The shares of stock represented by this certificate have
been issued pursuant to a certain Stock Purchase Agreement
dated as of May 12, 1999 among Hungarian Telephone and Cable
Corp., Citizens International Management Services Company and
CU CapitalCorp. and are subject to certain provisions thereof.
The shares have not been registered under the Securities Act
of 1933, as amended, and may not be sold or otherwise
transferred without registration thereunder or an applicable
exemption therefrom."
3
<PAGE>
2.3 Additional HTCC Common Shares. If the average closing price of
-----------------------------
HTCC common stock on the American Stock Exchange or such other similar trading
exchange for the twenty trading days ending March 31, 2000 is less than $7.00
per HTCC Common Share, then HTCC shall promptly thereafter issue to Buyer such
number of HTCC Preferred Shares equal in value to (i) 1,600,000 times (ii) $7.00
less the average closing price of HTCC common stock on the American Stock
Exchange or such other similar trading exchange for the twenty trading days
ending March 31, 2000. For purposes of this calculation, each HTCC Preferred
Share shall have a value of $70.
2.4 Waiver of Rights. Buyer and CUCC waive any and all preemptive or
----------------
anti-dilution rights that they may have solely with respect to the transactions
contemplated by the Revised Agreements including with respect to the issuance
of any securities (including but not limited to any common stock, warrants,
shares issuable pursuant to any warrants, and notes) to Buyer, Tele Danmark A/S,
Postabank, or the Danish Investment Fund for Central and Eastern Europe or
any of such parties' affiliates. Buyer hereby acknowledges that no anti-dilution
or preemptive rights of any existing HTCC stockholder are appli-cable to the
issuance of the HTCC Shares under this Article II of this Agreement.
ARTICLE III
REQUIRED DELIVERABLES
3.1 Delivery by Seller. On the Closing Date (or as soon as
------------------
practicable thereafter) and as a condition to Buyer's obligation to convey the
consideration as set forth in Section 2.2 above, (i) Seller shall deliver
or cause to be delivered to Buyer certificates representing the HTCC Shares
and (ii) Seller shall adopt and file with the Secretary of State of Delaware the
Certificate of Designation for the Series A Preferred Stock in the form attached
hereto as Exhibit A.
---------
3.2 Delivery by Buyer. On the Closing Date (or as soon as practicable
-----------------
thereafter) and as a condition to Seller's obligations to deliver the
deliverables as set forth in Section 3.1 above, Buyer shall deliver to the
Seller the Note for cancellation by Seller.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to Buyer as follows:
4.1 Organization and Existence. Seller is a corporation duly
-----------------------------
incorporated, validly existing and in good standing under the laws of Delaware
and has all corporate powers and all material governmental licenses,
authorizations, consents and approvals required to carry on its business as now
conducted.
4
<PAGE>
4.2 Corporate Authorization. The execution, delivery and performance
-----------------------
by Seller of this Agreement and the consummation by Seller of the transactions
contemplated hereby are within the corporate powers of Seller and have been duly
authorized by all necessary corporate action on the part of Seller. This
Agreement constitutes a valid and binding agreement of Seller enforceable in
accordance with its terms.
4.3 Governmental Authorization; Consents. The execution, delivery and
-------------------------------------
performance by Seller of this Agreement requires no action by or in respect of,
or filing with, any governmental body, agency, official or authority other than
such actions or filings that have been taken or made on or prior to the date
hereof. No consent, approval, waiver or other action by any Person under any
contract, agreement, indenture, lease, instrument or other document to which it
is a party or by which it is bound is required or necessary for the execution,
delivery and performance of this Agreement or the consummation of the
transactions effected hereby.
4.4 Non-Contravention. The execution, delivery and performance by
-----------------
Seller of this Agreement does not (i) contravene or conflict with the
certificate of incorporation, by-laws or other charter documents of Seller, (ii)
contravene or conflict with or constitute a violation of any provision of any
law, regulation, judgment, injunction, order or decree binding upon or
applicable to Seller, or (iii) contravene or conflict with any contract to which
Seller is a party.
4.5 Finder's Fees. There is no investment banker, broker, finder or
-------------
other intermediary which has been retained by or is authorized to act on behalf
of Seller who might be entitled to any fee or commission from Buyer or any
Affiliate of Buyer upon consummation of the transactions effected by this
Agreement.
4.6 Litigation. There is no action, suit, investigation or proceeding
----------
pending, or to the knowledge of Seller, threatened, against or affecting Seller
before any court or arbitrator or any governmental body, agency or official
which in any manner challenges or seeks to prevent, enjoin, alter or materially
delay the transactions effected hereby.
4.7 HTCC Shares. All of the shares issued to Buyer in connection with
-----------
the transactions effected hereby are duly authorized, validly issued, fully paid
and nonassessable HTCC Common Shares or HTCC Preferred Shares.
5
<PAGE>
4.8 No Undisclosed Material Liabilities; No Material Adverse Change.
-----------------------------------------------------------------
Other than as disclosed in Seller's filings with the United States Securities
and Exchange Commission pursuant to the Securities Act or the Securities
Exchange Act of 1934, as amended, or disclosed to Buyer's representatives on
Seller's Board of Directors (i) there have been no material liabilities incurred
by Seller other than those incurred in the ordinary course of business
consistent with past practice and (ii) there has not been any material adverse
change in the business, assets or financial condition of Seller and its
Hungarian subsidiaries taken as a whole.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF SELLER
Buyer and CUCC each hereby represents and warrants to Seller as
follows:
5.1 Corporate Existence and Power. Each of Buyer and CUCC is a
--------------------------------
corporation duly incorporated, validly existing and in good standing under the
laws of Delaware, and has all corporate powers and all material governmental
licenses, authorizations, consents and approvals required to carry on its
business as now conducted.
5.2 Corporate Authorization. The execution, delivery and performance
-----------------------
of this Agreement and the consummation of the transactions effected hereby by
Buyer and CUCC are within their corporate powers and have been duly authorized
by all necessary corporate action, including the approval by its board of
directors if necessary. This Agreement constitutes a valid and binding agreement
of Buyer and CUCC enforceable in accordance with its terms.
5.3 Governmental Authorization; Consents. The execution, delivery and
-------------------------------------
performance of this Agreement by Buyer and CUCC requires no action by or in
respect of, or filing with, any governmental body, agency, official or authority
other than actions or filings which have been taken or made on or prior to the
date hereof. Except for the consent of Postabank, which consent has already been
received, no consent, approval, waiver or other action by any Person under any
contract, agreement, indenture, lease, instrument or other document to which it
is a party or by which it is bound is required or necessary for the execution,
delivery and performance of this Agreement or the consummation of the
transactions effected hereby.
5.4 Non-Contravention. The execution, delivery and performance of this
-----------------
Agreement by Buyer and CUCC does not (i) contravene or conflict with the
certificate of incorporation, bylaws or other charter documents of Buyer or
CUCC, or (ii) contravene or conflict with or constitute a violation of any
provision of any law, regulation, judgment, injunction, order or decree binding
upon or applicable to Buyer or CUCC, or (iii) contravene or conflict with any
contract to which Buyer or CUCC is a party.
5.5 Accredited Investor. Buyer understands that the HTCC Shares that it
-------------------
will acquire pursuant to this Agreement have not been registered under the
Securities Act. The HTCC Shares are being acquired under this Agreement in good
faith solely for its own account, for investment and not with a view toward
resale or other distribution within the meaning of the Securities Act. Buyer is
a sophisticated or accredited investor for purposes of (i) the securities laws
of the United States of America and (ii) the ability of Seller to issue the HTCC
Shares without registration under the securities laws of the United States of
America.
6
<PAGE>
5.6 Finder's Fees. There is no investment banker, broker, finder or
-------------
other intermediary which has been retained by or is authorized to act on behalf
of Buyer who might be entitled to any fee or commission from Seller or any of
its Affiliates upon consummation of the transactions contemplated by this
Agreement.
ARTICLE VI
INDEMNIFICATION
6.1 Indemnification by Seller. Seller does hereby indemnify and hold
--------------------------
Buyer and CUCC harmless from and against the following:
(a) any and all losses, claims, liabilities, damages,
deficiencies, costs or expenses suffered or incurred by Buyer, CUCC or
their Affiliates resulting from any untrue representation, breach of
warranty or non-fulfillment of any covenant or agreement by Seller
contained in this Agreement, any document delivered by Seller pursuant
to this Agreement, or in any statement, exhibit, schedule or
certificate furnished or to be furnished to Buyer and CUCC pursuant
hereto or in connection with the transactions provided for herein; and
(b) any and all actions, suits, proceedings, claims,
complaints, demands, assessments, judgments, costs and expenses
suffered or incurred by Buyer, CUCC or their Affiliates, including
reasonable attorneys' fees and disbursements, incident to any of the
foregoing.
6.2 Indemnification by Buyer and CUCC. Buyer and CUCC do hereby
------------------------------------
indemnify and hold Seller harmless from and against the following:
(a) any and all losses, claims, liabilities, damages,
deficiencies, costs or expenses suffered or incurred by Seller
resulting from any untrue representation, breach of warranty or
non-fulfillment of any covenant or agreement by Buyer or CUCC contained
in this Agreement, any document delivered by Buyer or CUCC pursuant to
this Agreement, or in any statement, exhibit, schedule or certificate
furnished or to be furnished by Buyer or CUCC to Seller pursuant hereto
or in connection with the transactions provided for herein; and
(b) any and all actions, suits, proceedings, claims,
complaints, demands, assessments, judgments, costs and expenses
suffered or incurred by Seller, including reasonable attorneys' fees
and disbursements, incident to any of the foregoing.
6.3 Notice of Third-Party Claims. If any action, suit or proceeding
------------------------------
shall be commenced against, or any claim or demand shall be asserted against
Buyer, Seller, or CUCC, in respect of which a party (Buyer, Seller, or CUCC)
proposes to seek indemnification under this Article VI, the party seeking
indemnification (the "Indemnitee") shall give prompt notice thereof to the other
7
<PAGE>
party (the "Indemnitor"), and shall permit the Indemnitor, at its sole cost and
expense, to assume the defense of any such claim or any litigation resulting
therefrom; provided, however, that the Indemnitee shall have the option, at its
own expense, to participate in the defense thereof; and provided further, that
the failure of any Indemnitee to give notice as provided herein shall not
relieve the Indemnitor of its obligations under this Article VI except to the
extent that the Indemnitor is actually prejudiced by such failure to give
notice. Failure by the Indemnitor to notify the Indemnitee of its election to
defend any such action within fifteen (15) days after notice thereof shall be
deemed a waiver by the Indemnitor of its right to defend such action. In the
defense of such claim or any litigation resulting therefrom, the Indemnitor
shall not, without the written consent of the Indemnitee: (a) consent to the
entry of any judgment, or (b) enter into any settlement which does not include
as an unconditional term thereof the giving by the claimant or the plaintiff to
the Indemnitee of a release from all liability in respect to such claim or
litigation. If such defense is unsuccessful or abandoned by the Indemnitor,
then, upon the Indemnitor's failure to pay an amount sufficient to discharge any
such claim or judgment, the Indemnitee may pay and settle the same and the
Indemnitor's liability shall be conclusively established by any such payment. If
the Indemnitor fails to assume the defense of any such claim or litigation
resulting therefrom, the Indemnitee may defend against and settle such claim or
litigation in such manner as it may seem appropriate and the Indemnitor shall
promptly reimburse the Indemnitee for the amount of all expenses, legal or
otherwise, incurred by the Indemnitee in connection with the defense against or
settlement of such claim or litigation. If no settlement is made, the Indemnitor
shall promptly reimburse the Indemnitee for the amount of any judgment rendered
with respect to such claim or such litigation and of all expenses, legal or
otherwise, incurred by the Indemnitee in the defense thereof.
ARTICLE VII
MISCELLANEOUS
7.1 Survival of Representations and Warranties. The representations
------------------------------------------
and warranties made herein by the parties shall survive for a period of twelve
(12) months after the date hereof. Any claim for indemnification with respect to
an alleged breach of a representation or warranty not asserted by notice to the
indemnifying party, which notice specified a particular breach and the facts and
circumstances relating thereto in reasonable detail, prior to the expiration of
such survival period may not be pursued and is irrevocably waived after such
time.
7.2 Execution of Counterparts. This Agreement may be executed in one
-------------------------
or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same document. Execution counter-
parts may be delivered by facsimile provided that original execution copies
shall be delivered to each of the parties for signature.
7.3 Assignment, Successors and Assigns. This Agreement shall be
-------------------------------------
binding upon and inure to the benefit of the parties and their successors and
assigns. Neither this Agreement nor any rights or responsibilities hereunder
shall be assigned by any party without the prior written consent of the other
party.
8
<PAGE>
7.4 Applicable Law; Consent to Jurisdiction; Forum. This Agreement
-------------------------------------------------
shall be governed by and construed and enforced in accordance with the laws of
the State of Delaware without giving effect to the provisions, policies or
principles of any state relating to choice or conflict of laws except to the
extent Hungarian corporate law may apply to any matter covered by this
Agreement. In accordance with Title 6, Section 2708 of the Delaware Code
Annotated, each party hereby submits to the jurisdiction of the courts of
Delaware and agrees to be served with legal process from any of such courts.
Each party hereby irrevocably waives, to the fullest extent permitted by law,
any objection that it may have, whether now or in the future, to the laying of
the venue in, or to the jurisdiction of, any and each of such courts for the
purpose of any such suit, action, proceeding or judgment and further waives any
claim that any such suit, action, proceeding or judgment has been brought in an
inconvenient forum.
7.5 Expenses. Except as otherwise expressly provided in this Agree-
--------
ment, each party shall bear its own expenses incurred in connection with the
execution and performance of this Agreement and the consummation of the
transactions effected hereby, including the fees, expenses and disbursements of
its counsel and advisors.
7.6 Entire Agreement; Severability. This Agreement constitutes the
--------------------------------
entire understanding among the parties and supersedes and cancels any other
agreement, representation, or communication, whether oral or written, between
the parties hereto relating to the transactions contemplated hereby or the
subject matter hereof (except to the extent this Agreement does not alter the
Replacement Agreement) unless such other agreement, representation, or
communication is in writing and bears a date contemporaneous with or subsequent
to the date hereof. In the event that any provision or any part of any provision
of this Agreement shall be void or unenforceable for any reason, whatsoever,
then such provision shall be stricken and of no force and effect. However,
unless such stricken provision goes to the essence of the consideration
bargained for by a party, the remaining provisions of this Agreement shall
continue in full force and effect, and to the extent required, shall be modified
to preserve their validity.
7.7 Notices. Any notice, certification, request, demand and other
-------
communication hereunder shall be in writing and shall be deemed to have been
duly given and delivered if mailed, by certified mail, first class postage
prepaid, or delivered personally or by recognized overnight air courier, or if
sent by telecopier transmission, with transmission confirmed in writing:
If to HTCC: and:
Kiralyhago u.2. 100 First Stamford Place, Suite 204
H-1126 Budapest, Hungary Stamford, CT 06902
Telephone: 011-36-1-457-6300 Telephone: (203)348-9069
Facsimile: 011-36-1-202-4778 Facsimile: (203)348-9128
Attn: Ole Bertram Attn: Peter T. Noone, Esq.
9
<PAGE>
If to CIMS or CUCC: With a copy to:
c/o Citizens Utilities Company Fleischman and Walsh, L.P.
3 High Ridge Park 1400 Sixteenth Street, N.W.
Stamford, CT 06902 Washington, DC 20036
Telephone: (203) 614-5047 Telephone: (202) 939-7900
Facsimile: (203) 614-4651 Facsimile: (202) 265-5706
Attn: L. Russell Mitten, II, Esq. Attn: Jeffry L. Hardin, Esq.
or to such other address as each party may designate for itself by like notice
to the other party.
7.8 Waivers. Any term or provision of this Agreement may be waived, or
-------
the time for its performance may be extended, by the party entitled to the
benefit thereof. Any such waiver shall be validly and sufficiently authorized
for the purposes of this Agreement if, as to any party, it is authorized in
writing by an authorized representative of such party. The failure of any party
hereto to enforce at any time any provision of this Agreement shall not be
construed to be a waiver of such provision, nor in any way to affect the
validity of this Agreement or any part hereof or the right of any party
thereafter to enforce each and every such provision. No waiver of any breach of
this Agreement shall be held to constitute a waiver of any other or subsequent
breach.
7.9 Further Assurances. If, at any time after the date hereof, Buyer
------------------
or Seller shall consider or be advised that any further assignments, documents,
instruments, agreements, or releases are necessary, desirable or proper to carry
out any of the provisions or purposes of this Agreement, the parties hereto
agree to execute and deliver all such assignments, documents, instruments,
agreements or releases as reasonably may be necessary, desirable or proper to
carry out any of the provisions or purposes of this Agreement.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
10
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
HUNGARIAN TELEPHONE AND CABLE CORP.
ATTEST:
By:/s/ Ole Bertram
--------------------------------
Ole Bertram, President and Chief
Executive Officer
CITIZENS INTERNATIONAL MANAGEMENT
SERVICES COMPANY
ATTEST:
By:/s/ Daryl A. Ferguson
------------------------------------
Name:Daryl A. Ferguson
Title:President and Chief
Operating Officer
CU CAPITALCORP.
ATTEST:
By:/s/ Daryl A. Ferguson
------------------------------------
Name:Daryl A. Ferguson
Title:President and Chief
Operating Officer
Signature Page of May 12, 1999 Stock Purchase Agreement
11
<PAGE>
Exhibit A
---------
CERTIFICATE OF DESIGNATIONS
OF
SERIES A PREFERRED STOCK
OF
HUNGARIAN TELEPHONE AND CABLE CORP.
(Pursuant to Section 151 of the Delaware General Corporation Law)
The undersigned, being the President and Secretary of Hungarian
Telephone and Cable Corp., a Delaware corporation (the "Corporation"), certify
that pursuant to authority granted to and vested in the Board of Directors of
the Corporation by the provisions of the Certificate of Incorporation of the
Corporation, the Board of Directors has adopted the following resolution
creating a series of Preferred Stock of the Corporation designated as the Series
A Preferred Stock:
RESOLVED, that a series of Preferred Stock, par value $0.01 per share,
consisting of Two Hundred Thousand (200,000) shares, is hereby authorized and
the designation, amount, voting powers, preferences and relative, participating,
optional and other special rights of the shares of such series, and the
qualifications, limitations or restrictions thereof (in addition to any other
rights applicable to the Preferred Stock of all series set forth in the
Certificate of Incorporation of the Corporation) are hereby fixed as follows:
<PAGE>
(1) Designation and Amount
The shares of such series shall be designated as Series A Preferred
Stock (the "Series A Preferred Stock"), and the number of shares constituting
the Series A Preferred Stock shall be 200,000. Such number of shares may be
increased or decreased by a resolution duly adopted by the Board of Directors;
provided, that no decrease shall reduce the number of shares of Series A
- --------
Preferred Stock to a number less than the number of shares then outstanding plus
the number of shares reserved for issuance upon the exercise of outstanding
options, rights, or warrants or upon the conversion of any outstanding
securities issued by the Corporation that are convertible into Series A
Preferred Stock.
(2) Dividends
(a) For purposes of this Section 2, each June 30 and December
31 on which any share of Series A Preferred Stock shall be outstanding shall be
deemed to be a "Dividend Payment Date." Commencing on the Dividend Payment Date
next following the issuance of Series A Preferred Stock (the "Initial Payment
Date"), the holders of shares of Series A Preferred Stock shall be entitled to
receive cumulative cash dividends, whether or not declared and whether or not
there are profits, surplus or other funds of the Corporation legally available
for the payment of dividends, out of funds legally available therefor, payable
in arrears at the annual rate of 5%, compounded annually, on the liquidation
value per share of Seventy Dollars ($70.00) (as adjusted for any stock
dividends, combinations, or splits with respect to such shares). Notwithstanding
the foregoing, if the date of issuance of the Series A Preferred Stock is 15 or
fewer days prior to a Dividend Payment Date, the Corporation may, at its option,
defer the initial dividend payment to the second Dividend Payment Date following
the date of issuance. Dividends payable on the initial Dividend Payment Date
shall be pro rated based on the number of days that shall have elapsed since the
date of original issue of the Series A Preferred Stock. Dividends payable on the
Series A Preferred Stock for any period greater or less than a full dividend
period shall be computed on the basis of a 360 day year consisting of twelve
30-day months.
-2-
<PAGE>
(b) The Board of Directors may fix a record date for the
determination of holders of shares of Series A Preferred Stock entitled to
receive payment of a dividend declared thereon, which record date shall be not
more than 45 days prior to the date fixed for the payment thereof.
(c) Except as provided in Subsections 2(a) above, on each
Dividend Payment Date, all dividends which shall have accrued on each share of
Series A Preferred Stock outstanding on such Dividend Payment Date shall
accumulate and be deemed to become "due." Any dividend which shall not be paid
on the Dividend Payment Date on which it shall become due shall be deemed to be
"past due" until such dividend shall be paid or until the share of Series A
Preferred Stock with regard to which such dividend became due shall no longer be
outstanding, whichever is the earlier to occur. No interest or sum of money in
lieu of interest shall be payable with regard to any dividend payment or
payments which are past due. Dividends paid on shares of Series A Preferred
Stock in an amount less than the total amount of such dividends at the time
accumulated and payable on such share shall be allocated pro rata on a
share-by-share basis among all such shares at the time outstanding.
(d) If there shall be outstanding shares of any other series
of Preferred Stock of the Corporation ranking junior to the Series A Preferred
Stock as to dividends, no dividends shall be declared or paid or set apart for
payment on any such other series for any period unless full cumulative dividends
have been, or contemporaneously are, declared and paid or declared and a sum
sufficient for the payment thereof set apart for such payment on the Series A
Preferred Stock for all dividend payment periods terminating on or prior to the
date of payment of such full cumulative dividends. When dividends are not paid
in full or are past due on the shares of the Series A Preferred Stock and on
any other series of Preferred Stock ranking on a parity as to dividends with the
Series A Preferred Stock, all dividends declared on all outstanding shares of
the Series A Preferred Stock and shares of such other series of Preferred Stock
shall be declared pro rata so that the amount of dividends declared per share on
the Series A Preferred Stock and such other Preferred Stock shall in all cases
bear to each other the same ratio that accrued and unpaid dividends per share on
the shares of the Series A Preferred stock and such other Preferred Stock to
the date of such dividend payment bear to each other. Holders of shares of
Series A Preferred Stock shall not be entitled to any dividend, whether payable
in cash, property or securities, in excess of full cumulative dividends, as
herein provided, on the Series A Preferred Stock.
-3-
<PAGE>
(e) So long as any shares of the Series A Preferred Stock are
outstanding, no dividend (other than a dividend or distribution payable pro rata
on the Common Stock payable solely in the form of additional shares of Common
Stock) shall be declared or paid or set aside for payment or other distribution
declared or made upon the Common Stock or upon any other stock ranking junior
to, or on a parity with, the Series A Preferred Stock as to dividends or upon
liquidation, dissolution or winding up, nor shall any Common Stock or any other
stock of the Corporation ranking junior to, or on a parity with, the Series A
Preferred Stock as to dividends or upon liquidation, dissolution or winding up,
be redeemed, purchased or otherwise acquired for any consideration (or any
moneys be paid to or made available for a sinking fund for the redemption of any
shares of any such stock) by the Corporation (except for the conversion of such
junior or parity stock into, or the exchange of such junior or parity stock for,
stock of the Corporation ranking junior to the Series A Preferred Stock as to
dividends and upon liquidation, dissolution, or winding up) unless, in each
case, the full cumulative dividends on all outstanding shares of the Series A
Preferred Stock shall have been paid or declared and set aside for payment for
all past dividend payment periods.
(3) Voting Rights
Except as otherwise from time to time required by applicable law or the
Certificate of Incorporation of the Corporation, the Series A Preferred Stock
shall have no voting rights.
(4) Redemption
-4-
<PAGE>
(a) Except as otherwise provided below, all (but not less than
all) shares of Series A Preferred Stock then issued and outstanding may be
redeemed by the Corporation in cash at the redemption price of Seventy Dollars
($70.00) per share of Series A Preferred Stock, plus accrued and unpaid
dividends thereon up to but excluding the date fixed for redemption.
(b) The Corporation shall give notice of such redemption to
the holders of record of shares of the Series A Preferred Stock being so
redeemed, not less than 30 nor more than 60 days prior to such redemption, by
first class mail, postage prepaid, at their addresses as shown on the stock
registration books of the Corporation; provided, that without limiting the
--------
obligation of the Corporation hereunder to give the notice provided in this
Subsection 4(b), the failure of the Corporation to give such notice shall not
invalidate any corporate action by the Corporation. Each such notice shall state
(i) the redemption date; (ii) the number of shares of Series A Preferred
Stock to be redeemed; (iii) the redemption price; (iv) the place or places
where certificates for such shares are to be surrendered for payment of the
redemption price; (v) that dividends on the shares to be redeemed will cease to
accrue on such redemption date; and (vi) that such holder has the right to
convert such shares into a number of shares of Common Stock of the Corporation
prior to the close of business on the date fixed for the redemption.
(c) Notice having been mailed as aforesaid, from and after the
applicable redemption date (unless the Corporation shall default in providing
money for the payment of the redemption price), dividends on the shares of
Series A Preferred Stock to be redeemed on such redemption date shall cease to
accrue and said shares shall no longer be deemed to be issued and outstanding,
and all rights of the holders thereof as stockholders of the Corporation (except
the right to receive from the Corporation the redemption price) shall cease;
provided, however, that notwithstanding the foregoing, if notice of redemption
- -------- -------
has been given pursuant to this Section 4 and any holder of shares of Series A
Preferred Stock shall, prior to the close of business on the redemption date,
surrender for conversion any or all of the shares to be redeemed held by such
holder in accordance with Section 5 hereof, then the conversion of such shares
to be redeemed shall become effective as provided in Section 5 and this Section
4 shall not apply to such converted shares. Upon surrender of the certificates
for any shares so redeemed (properly endorsed or assigned for transfer, if the
Board of Directors of the Corporation shall so require and the notice shall so
state), such shares shall be redeemed by the Corporation at the redemption price
aforesaid.
-5-
<PAGE>
(d) Any shares of Series A Preferred Stock which at any time
shall have been redeemed shall have, after such redemption, the status of
authorized but unissued shares of Preferred Stock, without designation as to
series, until such shares are once more designated as part of a particular
series by the Board of Directors of the Corporation.
(e) Notwithstanding the foregoing provisions of this Section
4, if any dividends on Series A Preferred Stock are past due, no shares of
Series A Preferred Stock shall be redeemed unless all outstanding shares of
Series A Preferred Stock are simultaneously redeemed, and the Corporation shall
not purchase or otherwise acquire any shares of Series A Preferred Stock;
provided, however, that the foregoing shall not prevent the purchase or
- -------- -------
acquisition of shares of Series A Preferred Stock pursuant to a purchase or
exchange offer made on the same terms to holders of all outstanding shares of
Series A Preferred Stock.
(5) Conversions.
The holders of shares of Series A Preferred Stock shall have
the following conversion rights:
5A Right to Convert. Subject to the terms and condi-
----------------
tions of this paragraph 5, the holder of any share or shares of Series A
Preferred Stock shall have the right, at its option at any time, to convert any
such shares of Series A Preferred Stock (except that upon any liquidation of
the Corporation the right of conversion shall terminate at the close of business
on the business day fixed for payment of the amount distributable on the Series
A Preferred Stock) into such number of fully paid and nonassessable shares
of Common Stock as is obtained by (i) multiplying the number of shares of Series
A Preferred Stock so to be converted by the original purchase price of
-6-
<PAGE>
$70.00 per share (the "Original Purchase Price") and (ii) dividing the result
------------------------
by the conversion price of $7.00 per share or, in case an adjustment of such
price has taken place pursuant to the further provisions of this paragraph 5,
then by the conversion price as last adjusted and in effect at the date any
share or shares of such Series A Preferred Stock are surrendered for conversion
(such price, or such price as last adjusted, being referred to as the
"Conversion Price"). Such rights of conversion shall be exercised by the
-----------------
holder thereof by giving written notice that the holder elects to convert a
stated number of shares of Series A Preferred Stock into Common Stock and
by surrender of a certificate or certificates for the shares so to be
converted to the Corporation at its principal office (or such other office
or agency of the Corporation as the Corporation may designate by notice in
writing to the holders of the Series A Preferred Stock) at any time during its
usual business hours on the date set forth in such notice, together with a
statement of the name or names (with address) in which the certificate or
certificates for shares of Common Stock shall be issued.
5B Issuance of Certificates; Time Conversion Effected.
--------------------------------------------------
Promptly after the receipt of the written notice referred to in subparagraph 5A
and surrender of the certificate or certificates for the share or shares of
Series A Preferred Stock to be converted, the Corporation shall issue and
deliver, or cause to be issued and delivered, to the holder, registered in
such name or names as such holder may direct, a certificate or certificates for
the number of whole shares of Common Stock issuable upon the conversion of such
share or shares of Series A Preferred Stock. To the extent permitted by law,
such conversion shall be deemed to have been effected and the Conversion Price
shall be determined as of the close of business on the date on which such
written notice shall have been received by the Corporation and the certificate
or certificates for such share or shares shall have been surrendered as afore-
said, and at such time the rights of the holder of such share or shares of
Series A Preferred Stock shall cease, and the person or persons in whose name
or names any certificate or certificates for shares of Common Stock shall be
issuable upon such conversion shall be deemed to have become the holder or
holders of record of the shares represented thereby.
-7-
<PAGE>
5C Fractional Shares; Dividends; Partial Conversion.
--------------------------------------------------
No fractional shares shall be issued upon conversion of Series A Preferred
Stock into Common Stock and no payment or adjustment shall be made upon any
conversion on account of any cash dividends on the Common Stock issued upon such
conversion. At the time of each conversion, the Corporation shall pay in cash
an amount equal to all dividends declared and unpaid on the shares of Series A
Preferred Stock surrendered for conversion to the date upon which such conver-
sion is deemed to take place as provided in subparagraph 5B. In case the number
of shares of Series A Preferred Stock represented by the certificate or
certificates surrendered pursuant to subparagraph 5A exceeds the number of
shares converted, the Corporation shall, upon such conversion, execute and
deliver to the holder, at the expense of the Corporation, a new certificate
or certificates for the number of shares of Series A Preferred Stock
represented by the certificate or certificates surrendered which are not to
be converted. If any fractional share of Common Stock would, except for the
provisions of the first sentence of this subparagraph 5C, be delivered upon
such conversion, the Corporation, in lieu of delivering such fractional share,
shall pay to the holder surrendering the Series A Preferred Stock for conversion
an amount in cash equal to the current market price of such fractional share as
determined in good faith by the Board of Directors of the Corporation.
5D Adjustment of Price Upon Issuance of Common Stock.
--------------------------------------------------
Except as provided in subparagraph 5E, if and whenever the Corporation shall
issue or sell, or is, in accordance with subparagraphs 5D(1) through 5D(7),
deemed to have issued or sold, any shares of Common Stock for a consideration
per share less than the lesser of the Conversion Price with respect to the
Series A Preferred Stock or market price with respect to Common Stock in effect
immediately prior to the time of such issue or sale, then, forthwith upon such
issue or sale, the Conversion Price with respect to the Series A Preferred
Stock shall be reduced to the price determined by dividing (i) an amount equal
to the sum of (a) the number of shares of Common Stock outstanding immediately
prior to such issue or sale multiplied by the then existing Conversion Price
with respect to the Series A Preferred Stock and (b) the consideration, if any,
received by the Corporation upon such issue or sale, by (ii) the total number
of shares of Common Stock outstanding immediately after such issue or sale.
-8-
<PAGE>
For purposes of this subparagraph 5D, the following
subparagraphs 5D(1) to 5D(7) shall also be applicable:
5D1 Issuance of Rights or Options. In case at any time
-----------------------------
the Corporation shall in any manner grant (whether directly or by assumption
in a merger or otherwise) any warrants or other rights to subscribe for or to
purchase, or any options for the purchase of, Common Stock or any stock or
security convertible into or exchangeable for Common Stock, other than options
issued to employees or directors of the Corporation pursuant to a stock option
plan duly adopted by the Corporation's Board of Directors, (such warrants,
rights or options being called "Options" and such convertible or exchangeable
-------
stock or securities being called "Convertible Securities") whether or not such
----------------------
Options or the right to convert or exchange any such Convertible Securities are
immediately exercisable, and the price per share for which Common Stock is
issuable upon the exercise of such Options or upon the conversion or exchange
of such Convertible Securities (determined by dividing (i) the total amount, if
any, received or receivable by the Corporation as consideration for the granting
of such Options, plus the minimum aggregate amount of additional consideration
payable to the Corporation upon the exercise of all such Options, plus, in the
case of such Options which relate to Convertible Securities, the minimum aggre-
gate amount of additional consideration, if any, payable upon the issue or sale
of such Convertible Securities and upon the conversion or exchange thereof,
by (ii) the total maximum number of shares of Common Stock issuable upon the
exercise of such Options or upon the conversion or exchange of all such Conver-
tible Securities issuable upon the exercise of such Options) shall be less than
the lesser of the Conversion Price with respect to the Series A Preferred Stock
or market price with respect to Common Stock in effect immediately prior to the
time of the granting of such Options, then the total maximum number of shares
of Common Stock issuable upon the exercise of such Options or upon conversion or
exchange of the total maximum amount of such Convertible Securities issuable
upon the exercise of such Options shall be deemed to have been issued for such
price per share as of the date of granting of such Options or the issuance
of such Convertible Securities and thereafter shall be deemed to be outstanding.
Except as otherwise provided in subparagraph 5D(3), no adjustment of the
Conversion Price with respect to the Series A Preferred Stock shall be made upon
the actual issue of such Common Stock or of such Convertible Securities upon ex-
ercise of such options or upon the actual issue of such Common Stock upon
conversion or exchange of such Convertible Securities.
5D(2)Issuance of Convertible Securities. In case the
----------------------------------
Corporation shall in any manner issue (whether directly or by assumption in a
merger or otherwise) or sell any Convertible Securities, whether or not the
rights to exchange or convert any such Convertible Securities are immediately
exercisable, and the price per share for which Common Stock is issuable upon
such conversion or exchange (determined by dividing (i) the total amount
received or receivable by the Corporation as consideration for the issue or
sale of such Convertible Securities, plus the minimum aggregate amount of
additional consideration, if any, payable to the Corporation upon the conversion
or exchange thereof, by (ii) the total maximum number of shares of Common Stock
issuable upon the conversion or exchange of all such Convertible Securities)
shall be less than the lesser of the Conversion Price with respect to the Series
A Preferred Stock or market price with respect to Common Stock in effect
immediately prior to the time of such issue or sale, then the total maximum
number of shares of Common Stock issuable upon conversion or exchange of all
such Convertible Securities shall be deemed to have been issued for such price
per share as of the date of the issue or sale of such Convertible Securities and
thereafter shall be deemed to be outstanding, provided that (a) except as other-
wise provided in subparagraph 5D(3), no adjustment of the Conversion Price
with respect to the Series A Preferred Stock shall be made upon conversion or
exchange of such Convertible Securities and (b) if any such issue or sale of
such Convertible Securities is made upon exercise of any Options to purchase
any such Convertible Securities for which adjustments of the Conversion Price
with respect to the Series A Preferred Stock have been or are to be made
pursuant to other provisions of this subparagraph 5D, no further adjustment of
the Conversion Price with respect to the Series A Preferred Stock shall be made
by reason of such issue or sale.
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<PAGE>
5D(3) Change in Option Price or Conversion Rate. Upon
------------------------------------------
the happening of any of the following events, namely, if the purchase price
provided for in any Option referred to in subparagraph 5D(1), the additional
consideration, if any, payable upon the conversion or exchange of any
Convertible Securities referred to in subparagraph 5D(1) or 5D(2), or the rate
at which Convertible Securities referred to in subparagraph 5D(1) or 5D(2) are
convertible into or exchangeable for Common Stock shall change at any time
(including, but not limited to, changes under or by reason of provisions
designed to protect against dilution), the Conversion Price with respect to the
Series A Preferred Stock in effect at the time of such event shall be readjusted
to the Conversion Price with respect to the Series A Preferred Stock which would
have been in effect at such time had such Options or Convertible Securities
still outstanding provided for such changed purchase price, additional consider-
ation or conversion rate, as the case may be, at the time initially granted,
issued or sold, but only if as a result of such adjustment the Conversion Price
with respect to the Series A Preferred Stock then in effect hereunder is thereby
reduced; and on the termination of any such Option or any such right to convert
or exchange such Convertible Securities, the Conversion Price with respect to
the Series A Preferred Stock then in effect hereunder shall be increased to the
Conversion Price with respect to the Series A Preferred Stock which would have
been in effect at the time of such termination had such Option or Convertible
Securities, to the extent outstanding immediately prior to such termination,
never been issued.
5D(4) Stock Dividends. In case the Corporation shall
---------------
declare a dividend or make any other distribution upon any stock of the
Corporation payable in Common Stock (except for dividends or distributions
upon the Common Stock), Options or Convertible Securities, any Common Stock,
Options or Convertible Securities, as the case may be, issuable in payment of
such dividend or distribution shall be deemed to have been issued or sold
without consideration.
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<PAGE>
5D(5) Consideration for Stock. In case any shares of
-----------------------
Common Stock, Options or Convertible Securities shall be issued or sold for
cash, the consideration received therefor shall be deemed to be the amount
received by the Corporation therefor, after deduction there from of reasonable
underwriting commissions or concessions (and reasonable expenses incurred)
paid or allowed by the Corporation in connection therewith. In case any shares
of Common Stock, Options or Convertible Securities shall be issued or sold for a
consideration other than cash, the amount of the consideration other than
cash received by the Corporation shall be deemed to be the fair market value
of such consideration as determined in good faith by the Board of Directors of
the Corporation, without deduction of any expenses incurred or any underwriting
commissions or concessions paid or allowed by the Corporation in connection
therewith. In case any Options shall be issued in connection with the
issue and sale of other securities of the Corporation, together comprising one
integral transaction in which no specific consideration is allocated to such
options by the parties thereto, such Options shall be deemed to have been issued
for such consideration as determined in good faith by the Board of Directors of
the Corporation.
5D(6) Record Date. In case the Corporation shall take
-----------
a record of the holders of its Common Stock for the purpose of entitling them
(i) to receive a dividend or other distribution payable in Common Stock, Options
or Convertible Securities or (ii) to subscribe for or purchase Common Stock,
Options or Convertible Securities, then such record date shall be deemed to be
the date of the issue or sale of the shares of Common Stock deemed to have been
issued or sold upon the declaration of such dividend or the making of such other
distribution or the date of the granting of such right of subscription or
purchase, as the case may be.
5D(7) Treasury Shares. The number of shares of Common
---------------
Stock outstanding at any given time shall not include shares owned or held by
or for the account of the Corporation, and the disposition of any such shares
shall be considered an issue or sale of Common Stock for the purpose of this
subparagraph 5D.
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<PAGE>
5E Subdivision or Combination of Common Stock. In
----------------------------------------------
case the Corporation shall at any time subdivide (by any stock split, stock
dividend or otherwise) its outstanding shares of Common Stock into a greater
number of shares, the Conversion Price with respect to the Series A Preferred
Stock in effect immediately prior to such subdivision shall be proportionately
reduced, and, conversely, in case the outstanding shares of Common Stock shall
be combined into a smaller number of shares, the Conversion Price with respect
to the Series A Preferred Stock in effect immediately prior to such combination
shall be proportionately increased. In case of any such subdivision, no further
adjustment shall be made pursuant to subparagraph 5D(4) by reason thereof.
5F Reorganization or Reclassification. If any capital
-----------------------------------
reorganization or reclassification of the capital stock of the Corporation shall
be effected in such a way that holders of Common Stock shall be entitled to
receive stock, securities or assets with respect to or in exchange for Common
Stock, then, as a condition of such reorganization or reclassification, lawful
and adequate provisions shall be made whereby each holder of a share or shares
of Series A Preferred Stock shall thereupon have the right to receive, upon the
basis and upon the terms and conditions specified herein and in lieu of the
shares of Common Stock immediately theretofore receivable upon the conversion of
such share or shares of Series A Preferred Stock, such shares of stock,
securities or assets as may be issued or payable with respect to or in exchange
for a number of outstanding shares of such Common Stock equal to the number of
shares of such Common Stock immediately theretofore receivable upon such
conversion had such reorganization or reclassification not taken place, and in
any such case appropriate provisions shall be made with respect to the rights
and interests of such holder to the end that the provisions hereof (including
without limitation provisions for adjustments of the Conversion Price) shall
thereafter be applicable, as nearly as may be, in relation to any shares of
stock, securities or assets thereafter deliverable upon the exercise of such
conversion rights.
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<PAGE>
5G Notice of Adjustment. Upon any adjustment of the
---------------------
Conversion Price, then and in each such case the Corporation shall give written
notice thereof, by delivery in person, certified or registered mail, return
receipt requested, telecopier or telex, addressed to each holder of shares of
Series A Preferred Stock affected by such adjustment at the address or tele-
copier number of such holder as shown on the books of the Corporation, which
notice shall state the Conversion Price resulting from such adjustment,
setting forth in reasonable detail the method upon which such calculation is
based.
5H Other Notice. In case at any time:
------------
(1) the Corporation shall declare any dividend
upon its Common Stock payable in cash or
stock or make any other distribution to the
holders of its Common Stock;
(2) the Corporation shall offer for subscription
pro rata to the holders of its Common Stock
--- ----
any additional shares of stock of any class
or other rights;
(3) there shall be any capital reorganization or
reclassification of the capital stock of the
Corporation, or a consolidation or merger of
the Corporation with or into another entity
or entities, or a sale, lease, abandonment,
transfer or other disposition of all or
substantially all of the assets of the
Corporation; or
(4) there shall be a voluntary or involuntary
dissolution, liquidation or winding up of
the Corporation;
then, in any one or more of said cases, the Corporation shall give, by delivery
in person, certified or registered mail, return receipt requested, telecopier or
telex, addressed to each holder of any shares of Series A Preferred Stock at the
address or telecopier number of such holder as shown on the books of the
Corporation, (a) at least 20 days' prior written notice of the date on which the
books of the Corporation shall close or a record shall be taken for such
dividend, distribution or subscription rights or for determining rights to vote
in respect of any such reorganization, reclassification, consolidation, merger,
disposition, dissolution, liquidation or winding up and (b) in the case of any
such reorganization, reclassification, consolidation, merger, disposition,
dissolution, liquidation or winding up, at least 20 days' prior written notice
of the date when the same shall take place. Such notice in accordance with the
foregoing clause (a) shall also specify, in the case of any such dividend,
distribution or subscription rights, the date on which the holders of Common
Stock shall be entitled thereto and such notice in accordance with the foregoing
clause (b) shall also specify the date on which the holders of Common Stock
shall be entitled to exchange their Common Stock for securities or other
property deliverable upon such reorganization, reclassification, consolidation,
merger, disposition, dissolution, liquidation or winding up, as the case may be.
5I Stock to be Reserved. The Corporation will at all
---------------------
times reserve and keep available out of its authorized Common Stock, solely for
the purpose of issuance upon the conversion of Series A Preferred Stock as
herein provided, such number of shares of Common Stock as shall then be issuable
upon the conversion of all outstanding shares of Series A Preferred Stock.
The Corporation covenants that all shares of Common Stock which shall be so
issued shall be duly and validly issued and fully paid and nonassessable and
free from all taxes, liens and charges with respect to the issue thereof, and,
without limiting the generality of the foregoing, the Corporation covenants that
it will from time to time take all such action as may be requisite to assure
that the par value per share of the Common Stock is at all times equal to or
less than the Conversion Price in effect at the time. The Corporation will take
all such action as may be necessary to assure that all such shares of Common
Stock may be so issued without violation of any applicable law or regulation,
or of any requirement of any national securities exchange upon which the Common
Stock may be listed. The Corporation will not take any action which results
in any adjustment of the Conversion Price if the total number of shares of
Common Stock issued and issuable after such action upon conversion of the Series
A Preferred Stock would exceed the total number of shares of Common Stock then
authorized by this Certificate of Incorporation.
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<PAGE>
5J No Reissuance of Series A Preferred Stock. Shares of
-----------------------------------------
Series A Preferred Stock which are converted into shares of Common Stock as
provided herein shall not be reissued.
5K Issue Tax. The issuance of certificates for shares
----------
of Common Stock upon conversion of Series A Preferred stock shall be made
without charge to the holders thereof for any issuance tax in respect thereof,
provided that the Corporation shall not be required to pay any tax which may be
payable in respect of any transfer involved in the issuance and delivery
of any certificate in a name other than that of the holder of the Series A
Preferred Stock which is being converted.
5L Closing of Books. The Corporation will at no time
----------------
close its transfer books against the transfer of any Series A Preferred Stock
or of any shares of Common Stock issued or issuable upon the conversion of any
shares of Series A Preferred Stock in any manner which interferes with the
timely conversion of such Series A Preferred Stock, except as may otherwise be
required to comply with applicable securities laws.
5M Definition of Common Stock. As used in this
------------------------------
paragraph 5, the term "Common Stock" shall mean and include the Corporation's
------ -----
authorized Common Stock, par value $0.001 per share, as constituted on the date
of filing of these terms of the Series A Preferred Stock, and shall also
include any capital stock of any class of the Corporation thereafter authorized
which shall neither be limited to a fixed sum or percentage in respect of the
rights of the holders thereof to participate in dividends nor entitled to a
preference in the distribution of assets upon the voluntary or involuntary
liquidation, dissolution or winding up of the Corporation; provided that the
--------
shares of Common Stock receivable upon conversion of shares of Series A
Preferred Stock shall include only shares designated as Common Stock of the
Corporation on the date of filing of this instrument, or in case of any
reorganization or reclassification of the outstanding shares thereof, the stock,
securities or assets provided for in subparagraph 5F.
(6) Liquidation
(a) In the event of any voluntary or involuntary dissolution,
liquidation or winding up of the Corporation (for the purposes of this Section
6, a "Liquidation"), before any payments or distribution of assets shall be made
to the holders of the Common Stock or the holders of other stock that ranks
junior to the Series A Preferred Stock in respect of distributions upon the
liquidation of the Corporation, the holder of each share of Series A Preferred
Stock then outstanding shall be entitled to be paid, out of the assets of the
Corporation available for distribution to its stockholders, an amount equal to
Seventy Dollars ($70.00) per share plus all dividends (whether or not declared
or due) accrued (subject to equitable adjustment to reflect stock splits, stock
dividends, stock combinations, recapitalization and like occurrences) and unpaid
on such share on the date fixed for the distribution of assets of the
Corporation to the holders of Series A Preferred Stock.
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<PAGE>
(b) If, upon any Liquidation of the Corporation, the assets available for
distribution to the holders of Series A Preferred Stock and any other stock of
the Corporation ranking on a parity with the Series A Preferred Stock upon
Liquidation issued by the Corporation which shall then be outstanding
(hereinafter in this paragraph called the "Total Amount Available") shall be
insufficient to pay the holder of all outstanding shares of Series A Preferred
Stock and all other such parity stock the full amounts (including all dividends
accrued and unpaid) to which they shall be entitled by reason of such
Liquidation of the Corporation, then there shall be paid to the holders of the
Series A Preferred Stock in connection with such Liquidation of the Corporation
an amount equal to the product derived by multiplying the Total Amount Available
times a fraction of which the numerator shall be the full amount to which the
holders of the Series A Preferred Stock shall be entitled under the terms of
Subsection (a) by reason of such Liquidation of the Corporation and of which the
denominator shall be the total amount which would have been distributed by
reason of such Liquidation of the Corporation with respect to the Series A
Preferred Stock and all other stock ranking on a parity with the Series A
Preferred Stock upon Liquidation then outstanding had the Corporation possessed
sufficient assets to pay the maximum amount which the holders of all such stock
would be entitled to receive in connection with such Liquidation of the
Corporation.
(c) The voluntary sale, conveyance, lease, exchange or transfer of
the property of the Corporation as an entirety or substantially as an entirety,
or the merger or consolidation of the Corporation into or with any other
corporation, or the merger of any other corporation into the Corporation, or any
purchase or redemption of some or all of the shares of any class or series
of stock of the Corporation shall be deemed to be a Liquidation of the
Corporation for the purposes of this Section 6.
(d) The holder of any shares of Series A Preferred Stock shall not be en-
titled to receive any payment owed for such shares under this Section 6
until such holder shall cause to be delivered to the Corporation (i) the
certificate or certificates representing such shares of Series A Preferred Stock
and (ii) a transfer instrument or instruments satisfactory to the Corporation
and sufficient to transfer such shares of Series A Preferred Stock to the
Corporation free of any adverse interest. As in the case of the redemption
price, no interest shall accrue on any payment upon Liquidation after the due
date thereof.
(e) After payment of the full amount of the liquidating distribution
to which they are entitled, the holders of shares of Series A Preferred Stock
will not be entitled to any further participation in any distribution of assets
by the Corporation.
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<PAGE>
(7) Payments
(a) The Corporation may provide funds for any payment of the redemption
price for any shares of Series A Preferred Stock or any amount distributable
with respect to any Series A Preferred Stock under Section 6 hereof by
depositing such funds with a bank or trust company selected by the Corporation
having a net worth of at least $100,000,000 and organized under the laws of the
United States or any state thereof or such other financial institution
satisfactory to the Corporation in trust for the benefit of the holder of such
shares of Series A Preferred Stock under arrangements providing irrevocably for
payment upon satisfaction of any conditions to such payment by the holder of
such shares of Series A Preferred Stock which shall reasonably be required by
the Corporation. The Corporation shall be entitled to make any deposit of
funds contemplated by this Section 7 under arrangements designated to permit
such funds to generate interest or other income for the Corporation, and the
Corporation shall be entitled to receive all interest and other income earned by
any funds while they shall be deposited as contemplated by this
Section 7, provided that the Corporation shall maintain on deposit funds
sufficient to satisfy all payments which the deposit arrangement shall have been
established to satisfy. If the conditions precedent to the disbursement of any
funds deposited by the Corporation pursuant to this Section 7 shall not have
been satisfied within two years after the establishment of the trust for such
funds, then (i) such funds shall be returned to the Corporation upon its
request; (ii) after such return, such funds shall be free of any trust which
shall have been impressed upon them; (iii) the person entitled to the payment
for which such funds shall have been originally intended shall have the right to
look only to the Corporation for such payment, subject to applicable escheat
laws; and (iv) the trustee which shall have held such funds shall be relieved of
any responsibility for such funds upon the return of such funds to the
Corporation.
(b) Any payment which may be owed in payment of the redemption price for
any shares of Series A Preferred Stock pursuant to Section 4 or in payment of
any amount distributable with respect to the shares of Series A Preferred
Stock under Section 6 shall be deemed to have been paid or properly provided
for upon the earlier to occur: (i) the date upon which funds sufficient
to make such payment shall be deposited in a manner contemplated by Subsection
(a) hereof; or (ii) the date upon which a check payable to the person entitled
to receive such payment shall be delivered to such person or mailed to such
person at the address of such person then appearing on the books of the
Corporation.
(8) Legal Holidays
In any case where any Dividend Payment Date, redemption date or the
last date on which a holder of Series A Preferred Stock has the right to convert
such holder's shares of Series A Preferred Stock shall not be a Business Day (as
defined below), then notwithstanding any other provision hereof, payment of a
dividend due or a redemption price or conversion of the shares of Series A
Preferred Stock need not be made on such date but may be made on the next
succeeding Business Day with the same force and effect as if made on the
Dividend Payment Date or redemption date or the last day for conversion;
provided, that for purposes of computing such payment, no interest shall accrue
for the period from and after such Dividend Payment Date or redemption date, as
the case may be. As used in this Section 10, "Business Day" means each Monday,
Tuesday, Wednesday, Thursday and Friday which is not a day on which banking
institutions in the State of New York are authorized or obligated by law or
executive order to close.
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<PAGE>
IN WITNESS WHEREOF, we have executed this Certificate of Designations
and affirm that the statements made herein are true under the penalties of
perjury, this 10th day of May, 1999.
HUNGARIAN TELEPHONE AND CABLE CORP.
By:/s/Ole Bertram
------------------
Name: Ole Bertram
Title: President and Chief Executive Officer
By:/s/ Peter T. Noone
----------------------
Name: Peter T. Noone
Title: General Counsel and Secretary
-18-
