STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement") is made and entered
into as of the 12th day of May, 1999 between Hungarian Telephone and Cable
Corp., a Delaware, United States corporation ("HTCC"), as the seller (HTCC or
the "Seller"), and Tele Danmark A/S, a corporation organized under the laws of
Denmark ("TD"), as the buyer (TD or the "Buyer").
R E C I T A L S:
WHEREAS, Buyer presently owns 994,158 shares of Seller's outstanding
common stock;
WHEREAS, Seller is entering into certain agreements (the "Revised
Agreements") as of the date hereof to revise its capital structure with
Postabank Rt. ("Postabank");
WHEREAS, an equity investment in Seller by Buyer is a condition
precedent for Postabank entering into the Revised Agreements;
WHEREAS, Seller desires to sell, transfer and deliver to Buyer, and
Buyer desires to purchase and accept from Seller additional shares of the
Seller's common stock 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:
"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
Closing Date Sec. 2.1
Consideration Sec. 2.2(a)
HTCC Preamble
HTCC Shares Sec. 2.1
Indemnitee Sec. 6.3
Indemnitor Sec. 6.3
Postabank Recitals
Revised Agreements Recitals
Seller Preamble
Securities Act Sec. 2.2(b)
TD Preamble
ARTICLE II
PURCHASE AND SALE OF SHARES
2.1 Purchase and Sale of 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 purchase
and accept from Seller, and Seller shall sell, transfer, assign, convey and
deliver to Buyer 1,571,429 newly issued shares of the Seller's common stock, par
value .001 per share (the "HTCC Shares"). Buyer waives any and all preemptive
rights that it has with respect to the transactions contemplated by the Revised
Agreement including the issuance of any securities to Buyer, Postabank, Citizens
Utilities or the Danish Investment Fund for Central and Eastern Europe or any of
such parties' affiliates
2.2 Consideration.
(a) In consideration for the purchase of the HTCC Shares as
provided for in Section 2.1 above, Buyer shall pay Seller the sum of
Eleven Million Dollars ($11,000.000) (the "Consideration") in cash by
wire transfer to such bank account as Seller may designate in writing
to Buyer.
(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 for a period of one year from the date hereof
without the prior written consent of Seller and, 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"). 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 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."
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ARTICLE III
REQUIRED DELIVERABLES
3.1 Delivery by Seller. On the Closing Date and as a condition to
Buyer's obligation to pay the Consideration as set forth in Section 2.2 above,
Seller shall deliver or cause to be delivered to Buyer a certificate(s)
representing the HTCC Shares.
3.2 Delivery by Buyer. On the Closing Date and as a condition to
Seller's obligations to deliver the deliverables as set forth in Section 3.1
above, Buyer shall pay the Consideration to Seller.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
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.
4.2 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.
4.3 Governmental Authorization. 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.
4.4 Non-Contravention. The execution, delivery and performance by
Seller of this Agreement does not contravene or conflict with the Certificate of
Incorporation or By-Laws of Seller or any provision of any law, regulation,
judgment, injunction, order or decree binding upon Seller.
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 against, 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.
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4.7 HTCC Shares. All of the HTCC Shares issued to Buyer in connection
with the transactions effected hereby are duly authorized, validly issued, fully
paid and nonassessable shares of HTCC Common Stock.
4.8 Due Diligence. Seller has provided Buyer, through Buyer's
representative employee working out of Seller's offices in Budapest, Hungary,
with all the material financial and budgeting information regarding Seller and
its Hungarian subsidiaries. Seller has also provided Buyer with all other
material information that Buyer 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 Buyer 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.
4.9 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
working at Seller's Hungarian offices or 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 BUYER
Buyer hereby represents and warrants to Seller as follows:
5.1 Corporate Existence and Power. Buyer 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.
5.2 Corporate Authorization. The execution, delivery and performance of
this Agreement and the consummation of the transactions effected hereby by Buyer
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 Buyer.
5.3 Governmental Authorization; Consents. The execution, delivery and
performance of this Agreement by Buyer 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.
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5.4 Non-Contravention. The execution, delivery and performance of this
Agreement by Buyer does not (i) contravene or conflict with the certificate of
incorporation, bylaws or other charter documents of Buyer 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
(iii) contravene or conflict with any contract to which Buyer 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.
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 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
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(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. 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.
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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.
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.
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. ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇-▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: ▇▇▇-▇▇-▇-▇▇▇-▇▇▇▇ Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile: 011-36-1-202-4778 Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Attn: ▇▇▇ ▇▇▇▇▇▇▇ Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
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If to Tele Danmark A/S:
IOTVH, L-142 ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇,
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇, ▇▇▇▇▇▇▇
Telephone: ▇▇▇-▇▇-▇▇-▇▇-▇▇-▇▇
Facsimile: 011-45-33-99-80-55
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇
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.
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/▇▇▇ ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, President and Chief
Executive Officer
TELE DANMARK A/S
ATTEST:
By:
Name:
Title:
Signature Page of May 12, 1999 Stock Purchase Agreement
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