SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
September 30, 1997
Date of Report (Date of earliest event reported)
Hungarian Telephone and Cable Corp.
(Exact name of Registrant as Specified in Charter)
Delaware 1-11484 13-3652685
(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number Identification No.)
100 First Stamford Place, Suite 204, Stamford, CT 06902 (Address of
principal executive offices including zip code)
(203) 348-9069
(Registrant's telephone number, including area code)
Not applicable
(Former name or address, if changed since last report)
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INFORMATION TO BE INCLUDED IN THE REPORT
Item 5. Other Events
As announced on October 7, 1997 (see Exhibit 99.8 attached hereto)
Hungarian Telephone and Cable Corp., a Delaware corporation (AMEX: HTC - the
"Registrant"), completed its purchase from Tele Danmark A/S ("TD") of 4.8% of
the outstanding capital stock of each of Kelet-Nograd Com Rt. ("KNC") and Raba
Com Rt. ("Raba-Com") (collectively, the "Equity Interests"), pursuant to a stock
purchase agreement dated as of September 30, 1997 (the "Stock Purchase
Agreement"). In consideration for the acquisition of the Equity Interests, the
Registrant issued 101,018 shares of the Registrant's common stock to TD.
In addition to the Stock Purchase Agreement, the Registrant and TD
entered into an Exchange Agreement dated as of September 30, 1997 (the "Exchange
Agreement") pursuant to which the Registrant issued 447,232 shares of the
Registrant's common stock to TD in exchange for an aggregate of $5.5 million in
loans owed by KNC and Raba-Com to TD.
KNC and Raba-Com are both Hungarian subsidiaries of the Registrant. As
a result of the purchase of the Equity Interests, the Registrant now owns 95% of
the outstanding capital stock of KNC and 91% of the outstanding capital stock of
Raba-Com.
As a result of the transactions completed pursuant to the Stock
Purchase Agreement and the Exchange Agreement, TD owns 19.3% of the presently
outstanding shares of common stock of the Registrant.
The summary information regarding the transactions and the Stock
Purchase Agreement and the Exchange Agreement discussed above is qualified in
its entirety by reference to the Stock Purchase Agreement and the Exchange
Agreement, which are attached hereto as Exhibits 10.97 and 10.98, respectively,
and are incorporated by reference into this response to Item 5.
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Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(a), (b) - Not applicable.
(c) Exhibits.
10.97 Stock Purchase Agreement, dated as of the 30th day of
September, 1997, between the Registrant and Tele Danmark
A/S.
10.98 Exchange Agreement, dated as of the 30th day of
September, 1997, between the Registrant and Tele Danmark
A/S.
99.8 Press Release Issued by the Registrant on October 7,
1997.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
HUNGARIAN TELEPHONE AND CABLE CORP.
100 First Stamford Place, Suite 204
Stamford, CT 06902
(Registrant)
By: /s/James G. Morrison
James G. Morrison
President and Chief Executive Officer
Dated: October 7, 1997
Stamford, CT
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INDEX TO EXHIBITS
Exhibit No. Description
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10.97 Stock Purchase Agreement, dated as of the 30th day of September, 1997,
between the Registrant and Tele Danmark A/S.
10.98 Exchange Agreement, dated as of the 30th day of September, 1997, between
the Registrant and Tele Danmark A/S.
99.8 Press Release issued by the Registrant on October 7, 1997.
Exhibit 10.97
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement") is made and entered
into as of the 30th day of September, 1997 between Hungarian Telephone and Cable
Corp., a Delaware, United States corporation ("HTCC"), as the buyer (HTCC or the
"Buyer"), and Tele Danmark A/S, a corporation organized under the laws of
Denmark ("TD"), as the seller (TD or the "Seller").
R E C I T A L S:
WHEREAS, Seller is the record and beneficial owner of 5,760 registered
shares (the "KNC Shares") of capital stock, par value HUF 10,000 per share, of
Kelet-Nograd Com Rt., a Hungarian corporation ("KNC"), constituting 4.8% of all
of the issued and outstanding capital stock of KNC on a fully diluted basis;
WHEREAS, Seller is the record and beneficial owner of 4,800 registered
shares (the "Raba-Com Shares") of capital stock, par value HUF 10,000 per share,
of Raba Com Rt., a Hungarian corporation ("Raba-Com"), constituting 4.8% of all
of the issued and outstanding capital stock of Raba-Com on a fully diluted
basis;
WHEREAS, KNC and Raba-Com are parties to Concession Contracts with the
Ministry of Transportation, Telecommunications and Water Management of the
Republic of Hungary which authorize such companies to provide, among other
services, local telecommunications services in the area of Salgotarjan, in the
case of KNC, and the area of Sarvar, in the case of Raba-Com;
WHEREAS, Seller purchased the KNC Shares and the Raba-Com Shares from
the Danish Investment Fund for Central and Eastern Europe effective as of
September 30, 1997;
WHEREAS, pursuant to Section 6.3 of a certain Stock Purchase Agreement
dated as of July 1, 1997, Buyer is obligated to purchase, and Seller is
obligated to sell, the KNC Shares and the Raba-Com Shares;
WHEREAS, Seller desires to sell, transfer and deliver to Buyer, and
Buyer desires to purchase and accept from Seller, all of Seller's respective
right, title and interests in the KNC Shares and the Raba-Com Shares, 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:
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:
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"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
---- -------
Buyer Preamble
HTCC Common Stock Sec. 2.2(a)
Indemnitee Sec. 7.3
Indemnitor Sec. 7.3
KNC Recitals
KNC Shares Recitals
Raba-Com Recitals
Raba-Com Shares Recitals
Seller Preamble
Transaction Shares Sec. 2.2(a)
Securities Act Sec. 2.2(b)
ARTICLE II
PURCHASE AND SALE OF SHARES
2.1 Purchase and Sale of Shares; Release of Liens. 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 Buyer shall
purchase and accept from Seller, and Seller shall sell, transfer, assign,
convey, endorse and deliver to Buyer all of Seller's right, title and interests
in the KNC Shares and the Raba-Com Shares, free and clear of all Liens.
2.2 Consideration.
(a) In consideration for the purchase of all of the Seller's
right, title and interests in the KNC Shares and the Raba-Com Shares as
provided in Section 2.1 above, as of the date hereof Buyer shall issue
to Seller an aggregate of 101,018 shares (the "Transaction Shares") of
Buyer's common stock, $.001 par value per share ("HTCC Common Stock").
(b) The Transaction Shares shall be duly authorized, validly
issued, fully paid and non-assessable. Seller agrees to hold its
Transaction Shares and not to convey such shares for a period of six
(6) months from the date hereof without the prior written consent of
Buyer and, in any event, not to offer to sell or otherwise transfer the
Transaction Shares without either registration or exemption from the
Securities Act of 1933, as amended (the "Securities Act"). Each
certificate for HTCC Common Stock issued to Seller pursuant to this
Agreement shall bear the following legend:
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" The shares of stock represented by this certificate have
been issued pursuant to a certain Stock Purchase Agreement
dated as of September 30, 1997 between Hungarian Telephone and
Cable Corp. and Tele Danmark A/S and 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."
ARTICLE III
REQUIRED DELIVERABLES
3.1 Deliveries by Seller. On or as of the date hereof and as a
condition to Buyer's obligation to issue and deliver the Transaction Shares to
Seller, Seller shall deliver or cause to be delivered to Buyer all of the
following documents and instruments as more specifically described below:
(a) the KNC Shares duly endorsed in blank for transfer to
Buyer;
(b) an irrevocable power of attorney from Seller to Buyer's
Hungarian attorney (Dr. Peter Lakatos, Koves & Partners Clifford
Chance, H-1075 Budapest, Madach Imre ut 14) authorizing him to receive
and endorse to Buyer on behalf of Seller all the Raba-Com Shares as
soon as the new Raba-Com share certificates are printed according to
the resolutions of the Board of Directors of Raba-Com; and
(c) An irrevocable declaration from Seller addressed to the
Board of Directors of Raba-Com, authorizing it to release the newly
printed Raba-Com Shares to Buyer's Hungarian attorney.
3.2 Deliveries by Buyer. On or as of the date hereof and as a condition
to Seller's obligation to deliver the deliverables as set forth in Section 3.1
above, Buyer shall deliver or cause to be delivered to Seller a certificate(s)
representing the Transaction Shares.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to Buyer as follows:
4.1 Corporate Existence and Power. Seller is a corporation duly
incorporated, validly existing and in good standing under the laws of Denmark,
and has all corporate powers and all material governmental licenses,
authorizations, consents and approvals required to carry on its business as now
conducted.
4.2 Corporate Authorization. The execution, delivery and performance of
this Agreement and the consummation of the transactions effected hereby by
Seller are within its corporate powers and have been duly authorized by all
necessary corporate action, including the approval by its board of directors.
This Agreement constitutes a valid and binding agreement of Seller.
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4.3 Governmental Authorization; Consents. The execution, delivery and
performance of this Agreement by Seller require 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.
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 of this
Agreement by Seller does not (i) contravene or conflict with the certificate of
incorporation, bylaws or other charter documents of Seller 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 Seller or
(iii) contravene or conflict with any contract to which Seller is a party.
4.5 Ownership of Shares. Seller is the record and beneficial owner of
the KNC Shares and the Raba-Com Shares which comprise 4.8% of all of the
outstanding capital stock of each of KNC and Raba-Com, on a fully diluted basis.
Seller has legal, valid and marketable title to the KNC Shares and the Raba-Com
Shares, free and clear of all Liens.
4.6 Accredited Investor. Seller understands that the Transaction Shares
that it will acquire pursuant to this Agreement have not been registered under
the Securities Act. The Transaction 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. Seller is a sophisticated or accredited investor for purposes of (i) the
securities laws of the United States of America and (ii) the ability of Buyer to
issue the Transaction Shares without registration under the securities laws of
the United States of America.
4.7 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 of
its Affiliates upon consummation of the transactions contemplated by this
Agreement.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Seller as follows:
5.1 Organization and Existence. Buyer 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
by Buyer of this Agreement and the consummation by Buyer of the transactions
contemplated hereby are within the
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corporate powers of Buyer and have been duly authorized by all necessary
corporate action on the part of Buyer. This Agreement constitutes a valid and
binding agreement of Buyer.
5.3 Governmental Authorization. The execution, delivery and performance
by Buyer 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.
5.4 Non-Contravention. The execution, delivery and performance by Buyer
of this Agreement does not contravene or conflict with the Certificate of
Incorporation or By-Laws of Buyer or any provision of any law, regulation,
judgment, injunction, order or decree binding upon Buyer.
5.5 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 Buyer who might be entitled to any fee or commission from Seller or any
Affiliate of Seller upon consummation of the transactions effected by this
Agreement.
5.6 Litigation. There is no action, suit, investigation or proceeding
pending against, or to the knowledge of Buyer, threatened against or affecting,
Buyer 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.
5.7 Transaction Shares. All of the Transaction Shares issued to Seller
in connection with the transactions effected hereby are duly authorized, validly
issued, fully paid and nonassessable shares of HTCC Common Stock.
5.8 Due Diligence. Buyer has provided Seller, through Seller's
representative employee working out of Buyer's offices in Budapest, Hungary,
with all the material financial and budgeting information regarding Buyer and
its Hungarian subsidiaries. Buyer has also provided Seller with all other
material information that Seller has requested and all such information that
investors in the United States public markets currently have access to in making
an investment decision regarding a purchase or sale of HTCC Common Stock. None
of the documents or other information provided to Seller contain any untrue
statement of a material fact or omits to state a material fact necessary in
order to make the statements contained therein not misleading.
5.9 No Undisclosed Material Liabilities; No Material Adverse Change.
Other than as disclosed in Buyer'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 Seller's representatives working at
Buyer's Hungarian offices or Seller's representative on Buyer's, KNC's or
Raba-Com's Board of Directors, since June 30, 1997, (i) there have been no
material liabilities incurred by Buyer 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 Buyer
and its Hungarian subsidiaries taken as a whole.
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ARTICLE VI
INDEMNIFICATION
6.1 Indemnification by Seller. Seller does hereby indemnify and hold
Buyer harmless from and against the following:
(a) any and all losses, claims, liabilities, damages,
deficiencies, costs or expenses suffered or incurred by Buyer or its
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 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 or its Affiliates, including reasonable
attorneys' fees and disbursements, incident to any of the foregoing.
6.2 Indemnification by Buyer. Buyer does 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 contained in this
Agreement, any document delivered by Buyer pursuant to this Agreement,
or in any statement, exhibit, schedule or certificate furnished or to
be furnished by Buyer 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 or Seller, in respect of which a party (Buyer or Seller) proposes to seek
indemnification under this Article VI, the party seeking indemnification (the
"Indemnitee") shall give prompt notice thereof to the other 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.
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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 counterparts 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 parties.
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.
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7.5 Expenses. Except as otherwise expressly provided in this Agreement,
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 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: Andrew E. Nicholson Attn: Peter T. Noone, Esq.
If to Tele Danmark A/S: With a copy to:
Larslejsstraede 5, Plesner & Gr0nborg
0900 Copenhagen C, Denmark Telephone: 011-45-33-12-11-33
Telephone: 011-45-33-99-33-99 Facsimile: 011-45-33-12-00-14
Facsimile: 011-45-33-99-81-59 Attn: Christian Th. Kjolbye
Attn: Managing Director,
Lars Gronberg
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.
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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.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
HUNGARIAN TELEPHONE AND CABLE CORP.
By: /s/James G. Morrison
James G. Morrison, President
and Chief Executive Officer
TELE DANMARK A/S
By: /s/Lars Gronberg
Name: Lars Gronberg
Title: Managing Director
Signature Page of September 30, 1997 Stock Purchase Agreement
Re: KNC and Raba-Com
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Exhibit 10.98
EXCHANGE AGREEMENT
THIS EXCHANGE AGREEMENT (this "Agreement") is made and entered into as
of the 30th day of September, 1997 between Hungarian Telephone and Cable Corp.,
a Delaware, United States corporation ("HTCC") and Tele Danmark A/S, a
corporation organized under the laws of Denmark ("TD").
R E C I T A L S:
WHEREAS, Kelet-Nograd Com Rt., a Hungarian corporation and subsidiary
of HTCC ("KNC"), is a party, as borrower, to a certain German mark denominated
loan agreement dated as of October 10, 1995 with, among others, TD, as lender
(the "KNC DEM Loan Agreement");
WHEREAS, KNC is a party, as borrower, to a certain U.S. dollar
denominated loan agreement dated as of October 10, 1995 with, among others, TD,
as lender (the "KNC USD Loan Agreement");
WHEREAS, Raba Com Rt., a Hungarian corporation and subsidiary of HTCC
("Raba-Com"), is a party, as borrower, to a certain German mark denominated loan
agreement dated as of October 10, 1995 with, among others, TD, as lender (the
Raba-Com DEM Loan Agreement");
WHEREAS, Raba-Com is a party, as borrower, to a certain U.S. dollar
denominated loan agreement dated as of October 10, 1995 with, among others, TD,
as lender (the "Raba-Com USD Loan Agreement");
WHEREAS, KNC and Raba-Com owe TD in the aggregate $5,534,490 under the
KNC DEM Loan Agreement, the KNC USD Loan Agreement, the Raba-Com DEM Loan
Agreement and the Raba-Com USD Loan Agreement;
WHEREAS, TD desires to assign, transfer and convey to HTCC, and HTCC
desires to purchase and accept from TD, all of TD's respective rights, title and
interest in the KNC DEM Loan Agreement, the KNC USD Loan Agreement, the Raba-Com
DEM Loan Agreement and the Raba-Com USD Loan Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual
undertakings herein contained, the parties hereto hereby agree as follows:
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.
<PAGE>
"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
---- -------
HTCC Common Stock Sec. 2.2(a)
Indemnitee Sec. 7.3
Indemnitor Sec. 7.3
KNC Recitals
KNC DEM Loan Agreement Recitals
KNC USD Loan Agreement Recitals
Loan Agreements 2.1
Raba-Com Recitals
Raba-Com DEM Loan Agreement Recitals
Raba-Com USD Loan Agreement Recitals
Transaction Shares Sec. 2.2(a)
Securities Act Sec. 2.2(b)
ARTICLE II
EXCHANGE
2.1 Assignment of Rights. 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 HTCC shall purchase and accept from TD, and TD shall
sell, transfer, assign, convey, endorse and deliver to HTCC all of TD's right,
title and interests in the KNC DEM Loan Agreement, the KNC USD Loan Agreement,
the Raba-Com DEM Loan Agreement and the Raba-Com USD Loan Agreement
(collectively, the "Loan Agreements"), free and clear of all Liens.
2.2 Consideration.
(a) In consideration for the purchase of all of TD's right,
title and interests in the Loan Agreements as provided in Section 2.1
above, as of the date hereof HTCC shall issue to TD an aggregate of
447,232 shares (the "Transaction Shares") of HTCC's common stock, $.001
par value per share ("HTCC Common Stock").
(b) The Transaction Shares shall be duly authorized, validly
issued, fully paid and non-assessable. TD agrees to hold its
Transaction Shares and not to convey such shares for a period of six
(6) months from the date hereof without the prior written consent of
HTCC and, in any event, not to offer to sell or otherwise transfer the
Transaction Shares without either registration or exemption from the
Securities Act of 1933, as amended (the "Securities Act"). Each
certificate for HTCC Common Stock issued to TD pursuant to this
Agreement shall bear the following legend:
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" The shares of stock represented by this certificate have
been issued pursuant to a certain Exchange Agreement dated as
of September 30, 1997 between Hungarian Telephone and Cable
Corp. and Tele Danmark A/S and 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."
ARTICLE III
REQUIRED DELIVERABLES
3.1 Delivery by HTCC. On or as of the date hereof and as a condition to
TD's obligation to assign its rights as set forth in Section 2.1 above, HTCC
shall deliver or cause to be delivered to TD a certificate(s) representing the
Transaction Shares.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF TD
TD hereby represents and warrants to HTCC as follows:
4.1 Corporate Existence and Power. TD is a corporation duly
incorporated, validly existing and in good standing under the laws of Denmark,
and has all corporate powers and all material governmental licenses,
authorizations, consents and approvals required to carry on its business as now
conducted.
4.2 Corporate Authorization. The execution, delivery and performance of
this Agreement and the consummation of the transactions effected hereby by TD
are within its corporate powers and have been duly authorized by all necessary
corporate action, including the approval by its board of directors. This
Agreement constitutes a valid and binding agreement of TD.
4.3 Governmental Authorization; Consents. The execution, delivery and
performance of this Agreement by TD require 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.
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 of this
Agreement by TD does not (i) contravene or conflict with the certificate of
incorporation, bylaws or other charter documents of TD or (ii) contravene or
conflict with or constitute a violation of any provision of any
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law, regulation, judgment, injunction, order or decree binding upon or
applicable to TD or (iii) contravene or conflict with any contract to which TD
is a party.
4.5 Creditor Status. TD is a party, as creditor, to each of the Loan
Agreements and has legal, valid and marketable title to all of its rights under
the Loan Agreements, free and clear of all Liens.
4.6 Accredited Investor. TD understands that the Transaction Shares
that it will acquire pursuant to this Agreement have not been registered under
the Securities Act. The Transaction 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. TD is a sophisticated or accredited investor for purposes of (i) the
securities laws of the United States of America and (ii) the ability of HTCC to
issue the Transaction Shares without registration under the securities laws of
the United States of America.
4.7 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 TD who might be entitled to any fee or commission from HTCC or any of its
Affiliates upon consummation of the transactions contemplated by this Agreement.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF HTCC
HTCC hereby represents and warrants to TD as follows:
5.1 Organization and Existence. HTCC 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 by
HTCC of this Agreement and the consummation by HTCC of the transactions
contemplated hereby are within the corporate powers of HTCC and have been duly
authorized by all necessary corporate action on the part of HTCC. This Agreement
constitutes a valid and binding agreement of HTCC.
5.3 Governmental Authorization. The execution, delivery and performance
by HTCC 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.
5.4 Non-Contravention. The execution, delivery and performance by HTCC
of this Agreement does not contravene or conflict with the Certificate of
Incorporation or By-Laws of HTCC or any provision of any law, regulation,
judgment, injunction, order or decree binding upon HTCC.
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5.5 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 HTCC who might be entitled to any fee or commission from TD or any Affiliate
of TD upon consummation of the transactions effected by this Agreement.
5.6 Litigation. There is no action, suit, investigation or proceeding
pending against, or to the knowledge of HTCC, threatened against or affecting,
HTCC 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.
5.7 Transaction Shares. All of the Transaction Shares issued to TD in
connection with the transactions effected hereby are duly authorized, validly
issued, fully paid and nonassessable shares of HTCC Common Stock.
5.8 Due Diligence. HTCC has provided TD, through TD's representative
employee working out of HTCC's offices in Budapest, Hungary, with all the
material financial and budgeting information regarding HTCC and its Hungarian
subsidiaries. HTCC has also provided TD with all other material information that
TD has requested and all such information that investors in the United States
public markets currently have access to in making an investment decision
regarding a purchase or sale of HTCC Common Stock. None of the documents or
other information provided to TD contain any untrue statement of a material fact
or omits to state a material fact necessary in order to make the statements
contained therein not misleading.
5.9 No Undisclosed Material Liabilities; No Material Adverse Change.
Other than as disclosed in HTCC'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 TD's representatives working at HTCC's
Hungarian offices or TD's representative on HTCC's, KNC's or Raba-Com's Boards
of Directors, since June 30, 1997, (i) there have been no material liabilities
incurred by HTCC 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 HTCC and its Hungarian
subsidiaries taken as a whole.
ARTICLE VI
INDEMNIFICATION
6.1 Indemnification by TD. TD does hereby indemnify and hold HTCC
harmless from and against the following:
(a) any and all losses, claims, liabilities, damages,
deficiencies, costs or expenses suffered or incurred by HTCC or its
Affiliates resulting from any untrue representation, breach of warranty
or non-fulfillment of any covenant or agreement by TD contained in this
Agreement, any document delivered by TD pursuant to this Agreement, or
in any statement, exhibit, schedule or certificate furnished or to be
furnished to HTCC pursuant hereto or in connection with the
transactions provided for herein; and
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(b) any and all actions, suits, proceedings, claims,
complaints, demands, assessments, judgments, costs and expenses
suffered or incurred by HTCC or its Affiliates, including reasonable
attorneys' fees and disbursements, incident to any of the foregoing.
6.2 Indemnification by HTCC. HTCC does hereby indemnify and hold TD
harmless from and against the following:
(a) any and all losses, claims, liabilities, damages,
deficiencies, costs or expenses suffered or incurred by TD resulting
from any untrue representation, breach of warranty or non-fulfillment
of any covenant or agreement by HTCC contained in this Agreement, any
document delivered by HTCC pursuant to this Agreement, or in any
statement, exhibit, schedule or certificate furnished or to be
furnished by HTCC to TD 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 TD, 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
HTCC or TD, in respect of which a party (HTCC or TD) proposes to seek
indemnification under this Article VI, the party seeking indemnification (the
"Indemnitee") shall give prompt notice thereof to the other 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.
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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 counterparts 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 parties.
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 Agreement,
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 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.
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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: Andrew E. Nicholson Attn: Peter T. Noone, Esq.
If to Tele Danmark A/S: With a copy to:
Larslejsstraede 5, Plesner & Gr0nborg
0900 Copenhagen C, Denmark Telephone: 011-45-33-12-11-33
Telephone: 011-45-33-99-33-99 Facsimile: 011-45-33-12-00-14
Facsimile: 011-45-33-99-81-59 Attn: Christian Th. Kjolbye
Attn: Managing Director,
Lars Gronberg
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, HTCC or
TD 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.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
HUNGARIAN TELEPHONE AND CABLE CORP.
By: /s/James G. Morrison
James G. Morrison, President
and Chief Executive Officer
TELE DANMARK A/S
By: /s/Lars Gronberg
Name: Lars Gronberg
Title: Managing Director
Signature Page of September 30, 1997 Exchange Agreement
Re: KNC and Raba-Com Loans
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Exhibit 99.8
HUNGARIAN TELEPHONE AND CABLE
FINALIZES TWO AGREEMENTS WITH TELE DANMARK
Stamford, Conn., October 7, 1997 - Hungarian Telephone and Cable Corp.
(AMEX:HTC) announced today that it has concluded two previously announced
agreements with Tele Danmark A/S.
In the first agreement, the Company issued 447,232 shares of HTC common
stock in exchange for $5.5 million in loans owed by two of the Company's
subsidiaries to Tele Danmark. In the second agreement, the Company issued
101,018 shares of HTC common stock in exchange for Tele Danmark's 4.8 percent
ownership interest in each of two of the Company's subsidiaries.
As a result of the transactions, Tele Danmark now owns 19.3% of the
Company's outstanding common stock. James G. Morrison, the Company's President
and Chief Executive Officer, said, "We are pleased with Tele Danmark's increased
commitment to our Company at the parent level. Our strategic relationship with
Tele Danmark has benefited and will continue to benefit our Company and its
shareholders."
Hungarian Telephone and Cable Corp. is a rapidly growing provider of
basic telephone services in five defined operating regions of the Republic of
Hungary. The Company operates through four Hungarian subsidiaries which have
been granted 25-year telecommunications concessions by the Hungarian government.
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