As filed with the Securities and Exchange Commission on December 9,1996
Registration No. 33-
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U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
HUNGARIAN TELECONSTRUCT CORP
(Exact name of registrant as specified in its charter)
Delaware 13-3696015
(State or jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
227 Route 206, Unit 11, Flanders, New Jersey 07836
(201) 927-6560
(Address and telephone number of principal executive offices)
Frank R. Cohen, Cohen & Cohen
445 Park Avenue, 15th Floor New York, New York 10022, (212) 758-9870
(Name, address and telephone number of agent for service)
Approximate date of commencement of proposed sale to the public: From
time to time after this Registration Statement becomes effective.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act,
under the Securities Act of 1933, other than securities offered only in
connection with dividend or interest reinvestment plans, check the following
box. [ X ]
CALCULATION OF REGISTRATION FEE
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Proposed Proposed
Maximum Maximum Amount of
Title of Securities Amount to be Offering Price Aggregate Registration
to be Registered Registered Per Share Offering Price Fee
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Common Stock,
par value $.001
per share........... 960,790 $3.00 2,882,370 $873
(1) Estimated solely for the purpose of calculating the registration fee on
the basis of the average high/low price on December 2, 1996 as quoted on
the NASDAQ system.
The Registrant hereby amends this registration statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
<PAGE> Subject to Completion, dated December 9, 1996
PRELIMINARY PROSPECTUS
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
960,790 Shares
HUNGARIAN TELECONSTRUCT CORP.
COMMON STOCK
This prospectus relates to the offering of 960,790 shares of Common Stock
("Shares") of Hungarian Teleconstruct Corp. (the "Corporation") which are held
by the Selling Stockholders named herein (see "Selling Stockholders").
The Corporation will not receive any proceeds from the sale of Shares by the
Selling Stockholders. All expenses incurred in connection with this offering
are being borne by the Corporation, other than any commissions or discounts
paid or allowed by the Selling Stockholders to underwriters, dealers, brokers
or agents.
The Selling Stockholders have not advised the Corporation of any specific
plans for the distribution of the Shares, but it is anticipated that the Shares
may be sold from time to time in transactions (which may include block
transactions) on the NASDAQ SmallCap Market at the market prices then
prevailing. Sales of the Shares may also be made through negotiated
transactions or otherwise. The Selling Stockholders and the brokers and dealers
through which the sales of the Shares may be made may be deemed to be
"underwriters" within the meaning set forth in the Securities Act of 1933, as
amended, and their commissions and discounts and other compensation may be
regarded as underwriters' compensation. See "Plan of Distribution."
The Common Stock is traded on the NASDAQ SmallCap Market under the "HTEL."
The last reported sale price of the Common Stock as reported on the NASDAQ
SmallCap Market on December 6, 1996 was $3 per share.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE COMMISSION
OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is December 9, 1996
<PAGE>
No person has been authorized by the Corporation to give any information or
to make any representation not contained in this Prospectus in connection with
the offer made hereby, and, if given or made, such information or
representation must not be relied upon as having been authorized by the
Corporation. Neither the delivery of this Prospectus nor any sales made
hereunder shall under any circumstances create any implication that there has
been no change in the affairs of the Corporation since the date hereof.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
and Exchange Commission (the "Exchange Act") and in accordance therewith files
reports, proxy statements and other information with Securities and Exchange
Commission (the "Commission"). Such reports, proxy statements and other
information can be inspected and copied at the public reference facilities
maintained by the maintained by the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549; at its Regional Offices located at 7 World Trade
Center, New York, New York 10048; and at 500 West Madison Street, Chicago,
Illinois 60661-2511. Copies of such material can also be obtained from the
Public Reference Section of the Securities and Exchange Commission, 450 Fifth
Street, N.W., Washington, D.C. 20549 at prescribed rates. The Corporation's
Common Stock is quoted and traded on the NASDAQ SmallCap Market and is listed
on the Boston Stock Exchange.
A Registration Statement under the Securities Act of 1933, as amended (the
"Securities Act"), has been filed with the Commission with respect to the
shares of Common Stock offered hereby. This Prospectus omits certain
information contained in the Registration Statement, including exhibits
thereto. For further information with respect to the Corporation and the Common
Stock, reference is made to the Registration Statement and exhibits thereto,
copies of which may be inspected at the offices of the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549, or obtained from the Commission at the
same address at prescribed rates.
INCORPORATION BY REFERENCE
The following documents filed with the Securities and Exchange Commission,
as stated above (Commission File No. 1-1200), are hereby incorporated by
reference in this Prospectus:
1. The Corporation's annual report on Form 10-KSB for the year ended
December 31, 1995.
2. The Corporation's proxy statement dated May 15, 1995 with respect to its
annual meeting of shareholders held on June 8, 1995.
3. The Corporation's quarterly reports on Form 10-QSB for the quarters
ended March 31, 1996, June 30, 1996 and September 30, 1996.
4. The description of Common Stock contained in Corporation's Registration
Statement filed under Section 12(b) of the Exchange Act. See
"Description of Common Stock" in this Prospectus for a description of
Corporation's Common Stock.
All documents filed by the Corporation after the date of this Prospectus
pursuant to Sections 13, 14 and 15(d) of the Securities Exchange Act of 1934,
prior to the filing of a post-effective amendment to the Registration Statement
of which this Prospectus constitutes a part, which indicates that all
securities then remaining unsold shall be deregistered, shall be deemed to be
incorporated by reference in this Prospectus and to be a part hereof from the
date of filing of such documents.
<PAGE>
THE COMPANY
The Company is a Delaware corporation which was organized on November 9,
1992. It was a development stage company through December 31, 1993. Through its
wholly-owned Hungarian Subsidiary, Teleconstruct Epitesi RT ("Teleconstruct")
which was organized on March 19, 1993 with the intention to contract with
community-sponsored telecom companies in Hungary to construct and maintain
local telephone exchanges in their areas. The Company had two operating
business segments: (1) building of condominium apartments and building
renovation and (2) design and civil engineering, and laying of underground
optic fiber telephone and cable lines. The latter segment was discontinued in
1994. Teleconstruct is currently building for sale two luxury 14-unit
condominiums in Budapest.
The Corporation, the executive offices of which are located at 227 Route
206, Unit 11, Flanders, New Jersey 07836, is the issuer of the Common Stock,
$.001 par value covered by the Registration Statement and being offered by this
Prospectus. The Corporation's telephone number is (201) 927-6560. The Company
and its subsidiaries are engaged primarily in the construction of buildings in
Hungary and is in the process of becoming an Internet Service Provider in
Hungary.
RISK FACTORS
1. Limited Operating History; No History of Earnings; Entering New
Business. Since its initial public offering in August 1993, the
Company has not been profitable in any fiscal year. As of September
30, 1996, the Company had an accumulated deficit of $11, 178,505.
Further, the Company is entering the business of being an Internet
Service Provider and is subject to all the risks inherent in a
relatively new business. Potential investors should be aware of the
difficulties normally encountered by an enterprise with a limited
operating history, many of which are beyond the Company's control. The
likelihood of the success of the Company must be considered in light
of the problems, expenses and delays frequently encountered in
connection with a new business, the development and use of new
technology, and the competitive environment in which the Company
operates.
2. Immediate Need for Cash; Additional Financing. Management believes
that the Company's current cash and cash equivalents will be
sufficient to enable the Company to carry out its business objectives
and continue to operate as a going concern for a period of 18 months.
The Company's continued existence thereafter will be dependent upon
its ability to generate cash flows from operations sufficient to meet
its obligations as they become due. Unless the Company can generate
cash flows from operations sufficient to fund all of its working
capital needs, the Company will be required to obtain additional
financing to continue to operate its business. There can be no
assurance that any additional financing will be available to the
Company on acceptable terms, if at all. Any inability by the Company
to obtain additional financing, if required, will have a material
adverse effect on the operations of the Company.
3. Change in Business. In December 1996, the Company acquired
substantially all of the assets and business and assumed certain
liabilities of EUNET and ENET, both Hungarian limited liability
companies that provided Internet services in Hungary. The past
operating history and past consolidated financial condition of the
Company may bear little or no relationship to the future operations of
the Company. There can be no assurance that the Company will be
successful in its change of business focus. The Company paid $400,000
and $200,000 in cash for EUNET and ENET, respectively, and agreed to
issue shares with a market value of $200,000 and $150,000,
respectively, on or prior to May 15, 1997. The Company further intends
to acquire a third Internet Service Provider known as Internet
Hungaria in December 1996 at a cost of approximately $150,000 in cash
and $100,000 in shares based on a May 15, 1997 market price.
4. Competition. The Internet Provider Service business is highly
fragmented and is made up largely of small, local companies.
Competition in the Internet Service Provider industry is significant
and is based largely on price and service. In the future, the
Company's competitors may be larger and have greater financial
resources than HTC.
5. Substantial Reliance Upon, Attraction and Retention of Key Personnel.
The Company's business if substantially reliant upon the efforts and
abilities of Richard Fry and Jeffrey Bartlett, the Company's Chief
Executive Officer and Chief Operating Officer, respectively. The loss
of or unavailability to the Company of the services of Messrs. Fry and
<PAGE>
Bartlett would have a material adverse effect on the Company's
business prospects and/or potential earning capacity until such time,
if ever, as such individuals are adequately replaced. The Company does
not currently have any "key man" insurance to compensate it for any
such loss. The loss of the services of Messrs. Fry and Bartlett would
be detrimental to the Company.
6. Risks Inherent in Foreign Investment. The Company has invested
substantial resources in operations in Hungary. Risks inherent in
foreign operations include loss of revenue, property and equipment
from expropriation, governmental royalties and fees and involuntary
renegotiation of contracts with or licenses from foreign governments.
The Company is also exposed to the risk of changes in foreign and
domestic laws, regulations and policies that govern operations of
overseas-based companies. In addition, in the event the Company had
profitable operations in Hungary, it would be subject to a 40% tax on
all profits earned in Hungary, which will necessarily erode profits
and returns to the investors.
7. Inflation and Local Currency Devaluation. The Hungarian economy has
been characterized by high rates of inflation and devaluation of the
Hungarian Forint against the U.S. Dollar and certain European
currencies. In 1993, 1994 and 1995, the annual reported inflation rate
in Hungary (measured by the national consumer price index) was
approximately 23%, 19% and 30%, respectively and 9% in the first three
months of 1996. The Hungarian Forint was devalued against the U.S.
Dollar in 1992, 1993, 1994 and 1995 by 5.4%, 14.2%, 15.9%, and 26.7%,
respectively. In March 1995, an immediate 9% devaluation of the
Hungarian Forint was announced together with a new policy of daily or
"crawling peg" devaluation. This involved daily devaluations amounting
to 1.9% monthly in the second quarter of 1995 and 1.3% monthly during
the second half of that year. During 1996 the monthly devaluation rate
was established pursuant to governmental decree at 1.2% for the first
half of the year. The monthly rate is presently expected to be further
decreased, subject to Hungary's economic condition. The exchange rate
for the Hungarian Forint, as set by the National Bank of Hungary,
declined from 100.70 Forints per U.S. Dollar at December 31, 1993 to
158.35 Forints per U.S. Dollar at September 30, 1996. United States
investors are looking for a return on investment based upon the dollar
value of the Hungarian operating results. If the inflation rate in the
country constrains the growth of MSAT or if the devaluation of the
Forint has an adverse impact upon the dollar value of this business,
investors are harmed.
8. Foreign Currency and Exchange Risks and Regulation. The Company will
be subject to significant foreign exchange risk. There are currently
no meaningful ways to hedge currency risk in Hungary. Therefore, the
Company's ability to limit its exposure to currency fluctuations is
significantly restricted. Although the Forint has recently become
exchangeable outside Hungary, there is not yet a completely freely
convertible exchange market in place for the Forint. In addition,
Hungarian law permits the repatriation of foreign currency only for
dividends to the extent of capital investment and earnings, as
determined under applicable Hungarian law. There can be no assurances
as to the future exchangeability or convertibility of Forints.
9. Maintenance Criteria for Nasdaq Securities; Effects of Possible
Delisting. In order to continue to be included in the Nasdaq system,
a Company must maintain $2,000,000 in total assets, a $200,000 market
value of the public float (defined by Nasdaq as shares not held
directly or indirectly by any officer or director of the issuer and by
any person who is the beneficial owner of more than ten percent of the
total shares outstanding) and $1,000,000 in total capital and surplus
(defined by Nasdaq as total stockholder's equity). In addition,
continued inclusion requires two market-makers and a minimum bid price
of $1.000 per share, provided, however, that if a company falls below
such minimum bid the market value of the public float is at least
$1,000,000 and the company has $2,000,000 in capital and surplus. The
failure to meet these maintenance criteria in the future may result in
the discontinuance of the inclusion of the Company's securities on the
Nasdaq system. In such event, the Company's securities will be subject
to being delisted, and trading, if any, in the Common Stock would
thereafter be conducted in the over-the-counter market in the so-called
"pink sheets," or the OTC Bulletin Board. Consequently, an investor may
find it more difficult to dispose of, or to obtain accurate quotations
as to the price of, the Company's securities. If the Company's
securities were subject to the regulations on penny stock, the market
liquidity for the Company's securities could be severely and adversely
affected by limiting the ability of broker-dealers to sell the Company's
securities and the ability of purchasers in this offering to see their
securities in the secondary market at a time and price acceptable to
them.
<PAGE>
SELLING STOCKHOLDERS
The forty (40) Selling Stockholders listed below acquired the aggregate
of 960,790 shares of Common Stock in three private placements pursuant to
exemption from registration under Section 4(2) of the Securities Act of 1933
as amended. The three private placements closed on August 9, 1993 as to
thirty-two Selling Stockholders, on April 26, 1994 as to one Selling
Stockholder, and on October 4, 1996 as to 7 Selling Stockholders. The
Corporation was represented by J.W. Barclay & Co., Inc. as placement agent
on the August 9, 1993 sale and by Nichols Safina and Lerner Inc. as
placement agent on the April 26, 1994 sale. The Corporation was not
represented by a placement agent in the October 4, 1996 sale. The
Corporation agreed to register all of the above Shares under the Securities
Act and to indemnify and hold the Selling Stockholders harmless against
certain liabilities under the Securities Act that could arise in connection
with the sale by the Selling Stockholders of the Shares. The Selling
Stockholders have likewise agreed to indemnify the Corporation against
certain liabilities under the Securities Act. The Corporation has agreed to
pay all reasonable fees and expenses incident to the filing of this
Registration Statement. The Corporation will not receive any proceeds from
the sale of the shares of Common Stock offered hereby. This aggregate of
960,790 shares of Common Stock are being registered for possible sale for
the accounts of the Selling Stockholders, none of whom has been an officer,
director or 10% shareholder of the Company or any of its affiliates during
the last three years.
August 9, 1993 Private Placement
No. of Shares No. of Shares
Name of Selling Stockholder Currently Owned Offered Hereby
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William C. Clement, Trustee 10,000 10,000
Kenneth A. De Longe 10,000 10,000
Walter W. Matthews 5,000 5,000
Mark Jeffrey Shankman 10,000 10,000
Martin T. Orne 10,000 10,000
Barbara A. Lenehan 10,000 10,000
John A. Bruno 7,500 7,500
Edmund & Mary Shea 20,000 20,000
Louis Francis 5,000 5,000
Richard G. David 5,000 5,000
Roland F. Nobis Trust 10,000 10,000
Stefan Stetkiewicz 5,000 5,000
D.R. Shipman 5,000 5,000
James W. Thomson 2,500 2,500
Kei and Ellen S. Yamane 10,000 10,000
Arthur Inden 5,000 5,000
Michael J. Wills 2,500 2,500
C.P. Baker Partners, Ltd. 10,000 10,000
Godfrey A. Rockefeller, Jr. 5,000 5,000
Arie and Bonnie Seidler, JT 5,000 5,000
Christopher Baker 10,000 10,000
Jerry Weiss 5,000 5,000
Kenneth E. Lehman 5,000 5,000
Jan M. Arnett 10,000 10,000
Ronald Hirschi 5,000 5,000
Robert Schuster 2,500 2,500
Peter Rosenbauer 10,000 10,000
Mildred J. Geiss 5,000 5,000
Joan Rivas 5,000 5,000
Karen Palacino 5,000 5,000
Fred Kassner 10,000 10,000
Stan Decker 5,000 5,000
<PAGE>
No. of Shares No. of Shares
Name of Selling Stockholder Currently Owned Offered Hereby
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Robert Schuster 2,500 2,500
Peter Rosenbauer 10,000 10,000
Mildred J. Geiss 5,000 5,000
Joan Rivas 5,000 5,000
Karen Palacino 5,000 5,000
Fred Kassner 10,000 10,000
Stan Decker 5,000 5,000
April 26, 1994 Private Placement
No. of Shares No. of Shares
Name of Selling Stockholder Currently Owned Offered Hereby
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M.D. Sabbah 180,790 180,790
October 4, 1996 Private Placement
No. of Shares No. of Shares
Name of Selling Stockholder Currently Owned Offered Hereby
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Steve Altman 50,000 50,000
Kenneth S. Grossman 25,000 25,000
Edward S. Gutman 50,000 50,000
Hudson Investment Partners 25,000 25,000
Mr. Augustus La Rocca
Mr. Joseph La Rocca 250,000 250,000
Mr. Joel Stuart 50,000 50,000
George Szakacs 100,000 100,000
PLAN OF DISTRIBUTION
The Corporation will receive no proceeds from this offering. The Shares
hereby may be sold by the Selling Stockholders from time to time in
transactions on the NASDAQ SmallCap Market, in negotiated transactions, or a
combination of such methods of sale, at fixed prices which may be changed, at
market prices prevailing at the time of sale, at prices related to prevailing
market prices or at negotiated prices. The Selling Stockholders may effect such
transactions by selling the Shares to or through broker-dealers, and such
broker-dealers may receive compensation in the form of discounts, concessions
or commissions from the Selling Stockholders and/or the purchasers of the
Shares for which such broker-dealers may act as agents or to whom they sell as
principals, or both (which compensation as to a particular broker-dealer might
be in excess of customary commissions).
In order to comply with the securities laws of certain states, if
applicable, the Shares will be sold in such jurisdictions only through
registered or licensed brokers or dealers. In addition, in certain states the
Shares may not be sold unless they have been registered or qualified for sale
in the applicable state or an exemption from the registration or qualification
requirement is available and is complied with.
The Selling Stockholders and any broker-dealers or agents that participate
with the Selling Stockholders in the distribution of the Shares may be deemed
to be "underwriters" within the meaning of the Securities Act, and any
commissions received by them and any profit on the resale of the Shares
purchased by them may be deemed to be underwriting commissions or discounts
under the Securities Act.
Under applicable rules and regulations under the Exchange Act, any person
engaged in the distribution of the Shares may not simultaneously engage in
market making activities with respect to the Common Stock of the Corporation
for a period of two (2) business days prior to the commencement of such
distribution. In addition and without limiting the foregoing, each Selling
stockholder will be subject to applicable provisions of the Exchange Act and
the rules and regulations thereunder, including, without limitation, Rules 10b-6
<PAGE>
and 10b-7, which provisions may limit the timing of purchases and sales of
shares of the Corporation's Common Stock by the Selling Stockholders.
DESCRIPTION OF CAPITAL STOCK
The Corporation's authorized capital stock consists of 10,000,000 shares of
Common Stock, $.001 par value per share. The holders of the shares of Common
Stock are entitled to one (1) vote per share on all matters submitted to
stockholders. Holders of the Common Stock do not have preemptive rights or
cumulative voting rights. Dividends on the Common Stock will be paid if, and
when, declared. The Corporation has never paid cash dividends. The Common Stock
is entitled upon liquidation to receive the entire net assets of the
Corporation remaining after payment of all debts and other claims of creditors
and after the holders of each series of Preferred Stock, if any, have been paid
the preferred liquidating distribution on their shares, if any, as fixed by the
Board of Directors of the Corporation. The Common Stock is not convertible into
shares of any other equity security of the Corporation.
Transfer Agent
The Transfer Agent and registrar of the Common Stock is American Stock
Transfer and Trust Co., 40 Wall Street, New York, New York 10005.
LEGAL MATTERS
The legality of the shares offered by this Prospectus has been passed upon
by Messrs. Cohen & Cohen, 445 Park Avenue, New York, New York 10022. As of
December 9, 1996, Frank R. Cohen, a member of the firm of Cohen & Cohen, owns
10,000 shares of the Common Stock of the Corporation and holds vested options
to purchase 110,000 shares of Common Stock exercisable at prices from $1 to
$3 per share. Frank R. Cohen also is Secretary, Treasurer and a director of the
Corporation.
EXPERTS
The consolidated financial statements incorporated by reference in this
Prospectus, have been audited by BDO Seidman, LLP, independent
certified public accountants, to the extent and for the periods set forth
in their reports incorporated herein by reference, and are incorporated
herein in reliance upon such reports given upon the authority of said firm
as experts in accounting and auditing.
PAGE
<PAGE>
FORM S-3, PART II: INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
The following table sets forth the expenses (other than underwriting
discounts and commissions) which other than the SEC registration fee are
estimates, payable by the Registrant in connection with the sale and
distribution of the shares registered hereby:
SEC registration fee...................... $ 873
Legal and accounting fees and expenses.... 10,000
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Total...................... $10,873
Item 15. Indemnification of Directors and Officers
Section 145 of the General Corporation Law of the State of Delaware
(''DGCL'') provides, in general, that a corporation incorporated under the laws
of the State of Delaware, such as registrant, may indemnify any person who was
or is a party or is threatened to be made a party to any threatened, pending
or completed action, suit or proceeding (other than a derivative action by or
in the right of the corporation) by reason of the fact that such person is or
was a director, officer, employee or agent of the corporation, or is or was
serving at the request of the corporation as a director, officer, employee or
agent of another enterprise, against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonably
incurred by such person in connection with such action, suit or proceeding if
such person acted in good faith and in a manner such person reasonable believed
to be in or not opposed to the best interests of the corporation, and, with
respect to any criminal action or proceeding, had no reasonable cause to
believe such director, officer, employee or agent of the corporation person's
conduct was unlawful. In the case of a derivative action, a Delaware
corporation may indemnify any such person against expenses (including
attorneys' fees) actually and reasonably incurred by such person in connection
with the defense or settlement of such action or suit if such person acted in
good faith and in a manner such person reasonably believed to be in or not
opposed to the best interests of the corporation, except that no
indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable to the corporation
unless and only to the extent that the Court of Chancery of the State of
Delaware or any other court in which such action was brought determines such
person is fairly and reasonably entitled to indemnity for such expenses.
Section 10 of the Company's Certificate of Incorporation, and Article X of the
Company's Bylaws filed in Exhibit 3(d) to the Registrant's initial public
offering on Form SB-2 under Registration Number 33-62672-NY provide that the
Company shall indemnify its officers, directors, employees and agents to the
extent permitted by the DGCL. In addition, Section 9 of the company's
Certificate of Incorporation filed as Exhibit 3(a) to the Registrant's initial
public offering on Form SB-2 under Registration Number 33-62672-NY provides,
in general, that no director of the Company shall be personally liable to the
Company or its stockholders for monetary damages for beach of fiduciary duty
as a director, except for liability (i) for any breach of the director's duty
of loyalty to the Company or its stockholders, (ii) for acts or omissions not
in good faith or which involve intentional misconduct or a knowing violation
of law, (iii) under Section 174 of the DGCL (which provides that under certain
circumstances, directors may be jointly and severally liable for willful or
negligent violations of the DGCL provisions regarding the payment of dividends
or stock repurchases or redemptions), or (iv) for any transaction from which
the director derived an improper personal benefit.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and persons controlling the
Company pursuant to the foregoing provisions or otherwise the Company has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act of
1933 and is, therefore, unenforceable.
Item 16. Exhibits
5. Opinion of Cohen & Cohen
23. Consents
(a) BDO Seidman, LLP
(b) Cohen & Cohen (contained in opinion filed as Exhibit 5)
<PAGE>
Item 17. Undertakings
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which it offers or sells securities,
a post-effective amendment to this Registration Statement:
(i) to include any prospectus required by Section 10(a)(3)
of the Securities Act;
(ii) to reflect in the prospectus any facts or events arising
after the effective date of this Registration Statement
(or the most recent post-effective amendment hereof)
which, individually or in the aggregate, represent a
fundamental change in the information set forth in this
Registration Statement; and
(iii) to include any material information with respect to the
plan of distribution not previously disclosed in this
Registration Statement or any material change to such
information in this Registration Statement, provided,
however, that clauses (i) and (ii) do not apply if the
information required to be included in a post-effective
amendment by those clauses is contained in periodic
reports filed by the Registrant pursuant to Section 13
or Section 15(d) of the Securities Exchange Act of 1934
that are incorporated by reference in this Registration
Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered, herein and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the Offering.
(b) The undersigned registrant hereby undertakes that for the purpose of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13 or 15(d) of the Exchange Act
(and, where applicable, each filing of an employee benefit plan's annual report
pursuant to Section 15(d) of the Exchange Act) that is incorporated by
reference in the Registration Statement shall be deemed to be a new
Registration Statement relating to the securities offered therein and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 (the "Act") may be permitted to directors, officers and controlling
persons of the undersigned Registrant pursuant to the foregoing provisions, or
otherwise, the undersigned Registrant has been advised that in the opinion of
the Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the registrant of expenses incurred or paid by a director, officer
or controlling person of the registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of New York, State of New York, on the 9th day of
December 1996.
HUNGARIAN TELECONSTRUCT CORP
By /s/ Robert Genova
-------------------------
Robert Genova
Chairman
<PAGE>
EXHIBIT 5
December 9, 1996
Board of Directors
Hungarian Teleconstruct Corp.
227 Route 206, Unit 11
Flanders, New Jersey 07836
Re: Registration Statement on Form S-3
----------------------------------
Gentlemen:
Reference is made to the registration statement (the "Registration
Statement"), which Hungarian Teleconstruct Corp. (the "Corporation") is
filing on this date with the Securities and Exchange Commission under the
Securities Act of 1933, as amended, for the registration of 960,790 shares
of the Common Stock of the Corporation.
Pursuant to your request, we have examined those of the
Corporation's records deemed relevant by us for the purpose of furnishing
you with our opinion concerning the legality and validity of issue of the
shares of Common Stock of the Corporation covered by the Registration
Statement.
Based upon the foregoing, we are of the opinion that:
1. The Corporation is duly incorporated and validly existing as a
corporation under the laws of the State of Delaware.
2. All of the shares of Common Stock proposed to be registered by
the Registration Statement on behalf of the Selling
Stockholders are validly issued, fully paid and non-assessable
by the Corporation with no personal liability attaching to the
ownership thereof.
We herewith give our consent to the use of this opinion as an
exhibit to the herein referred to Registration Statement and to the use of
our name therein.
Very truly yours,
COHEN & COHEN
Frank R. Cohen
EXHIBIT 23
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We hereby consent to the incorporation by reference in the
Prospectus constituting a part of this Registration Statement of Hungarian
Teleconstruct Corp. on Form S-3 of our report dated March 11, 1996, relating
to the consolidated financial statements of Hungarian Teleconstruct Corp.
and subsidiaries appearing in the Annual Report on Form 10-KSB of Hungarian
Teleconstruct Corp for the year ended December 31, 1995.
We also consent to the reference to us under the caption "Experts"
in the Prospectus.
/s/Adam Roth
--------------------
BDO Seidman LLP
Dated: New York, New York
December 11, 1996
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