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BRIDGE LOAN AGREEMENT

Bridge Loan Agreement

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HUNGARIAN TELEPHONE & CABLE CORP | BNP PARIBAS TRUST CORPORATION UK LIMITED | Magyar Telecom BV

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Title: BRIDGE LOAN AGREEMENT
Governing Law: New York     Date: 5/12/2008
Industry: COMSRV     Law Firm: White Case;Latham Watkins;Baker McKenzie     Sector: SERVIC

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EXHIBIT 10.3

THE TAKING OF THIS DOCUMENT OR ANY CERTIFIED COPY OF IT OR ANY DOCUMENT WHICH CONSTITUTES SUBSTITUTE DOCUMENTATION FOR IT, OR ANY DOCUMENT WHICH INCLUDES WRITTEN CONFIRMATIONS OR REFERENCES TO IT, INTO AUSTRIA AS WELL AS PRINTING OUT ANY E-MAIL COMMUNICATION WHICH REFERS TO ANY FINANCE DOCUMENT IN AUSTRIA OR SENDING ANY E-MAIL COMMUNICATION CARRYING AN ELECTRONIC OR DIGITAL SIGNATURE WHICH REFERS TO ANY FINANCE DOCUMENT TO AN AUSTRIAN ADDRESSEE MAY CAUSE THE IMPOSITION OF AUSTRIAN STAMP DUTY. ACCORDINGLY, KEEP THE ORIGINAL DOCUMENT AS WELL AS ALL CERTIFIED COPIES THEREOF AND WRITTEN AND SIGNED REFERENCES TO IT OUTSIDE OF AUSTRIA AND AVOID PRINTING OUT ANY E-MAIL COMMUNICATION WHICH REFERS TO ANY BRIDGE FINANCE DOCUMENT IN AUSTRIA OR SENDING ANY E-MAIL COMMUNICATION CARRYING AN ELECTRONIC OR DIGITAL SIGNATURE WHICH REFERS TO ANY BRIDGE FINANCE DOCUMENT TO AN AUSTRIAN ADDRESSEE

 

 

March 3, 2008

BRIDGE LOAN AGREEMENT

MAGYAR TELECOM B.V.

as Borrower

arranged by

MERRILL LYNCH INTERNATIONAL

and

BNP PARIBAS

as Mandated Lead Arrangers and Bookrunners

with

BNP PARIBAS TRUST CORPORATION UK LIMITED

as Security Agent

and

MERRILL LYNCH INTERNATIONAL

as Administrative Agent

 

 

 


TABLE OF CONTENTS

 

          PAGE
ARTICLE I. DEFINITIONS    1
Section 1.1    Defined Terms    1
Section 1.2    Interpretation    34
Section 1.3    Intercreditor Deed    37
ARTICLE II. THE CREDIT FACILITY    37
Section 2.1    Commitments to Make Bridge Loans; Tranching; Parties    37
Section 2.2    Conversion to Term Loans    38
Section 2.3    Option to Exchange Term Loans for Exchange Notes    38
Section 2.4    Interest; Default Interest    39
Section 2.5    Mandatory Prepayment    40
Section 2.6    Optional Prepayment    41
Section 2.7    Breakage Costs; Indemnity    42
Section 2.8    Effect of Notice of Prepayment    43
Section 2.9    Payments    43
Section 2.10    Taxes    44
Section 2.11    Right of Set-Off, Sharing of Payments, Etc.    47
Section 2.12    Requirements of Law    48
Section 2.13    Failure of a Reference Bank to Supply a Rate    50
Section 2.14    Market Disruption    50
Section 2.15    Alternative Basis of Interest or Funding    50
Section 2.16    Certain Fees    51
ARTICLE III. REPRESENTATIONS AND WARRANTIES    51
Section 3.1    Representations and Warranties    51
Section 3.2    Due incorporation    51
Section 3.3    Power to borrow/guarantee    51
Section 3.4    Binding obligations    51
Section 3.5    No conflict with other obligations    51
Section 3.6    No litigation    52
Section 3.7    Financial statements    52
Section 3.8    No filing required    52
Section 3.9    Legal and beneficial owners    53
Section 3.10    No material adverse change    53
Section 3.11    Compliance with Environmental Laws and Licenses    53
Section 3.12    Environmental Claim    53
Section 3.13    Intellectual Property Rights    53
Section 3.14    Shares    54
Section 3.15    Base Case Model    54
Section 3.16    Licenses and Necessary Authorizations    54
Section 3.17    Consents obtained    54
Section 3.18    Contractual commitments    55
Section 3.19    Telecommunications Laws    55

 

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Section 3.20    No Default    55
Section 3.21    Choice of law    55
Section 3.22    No Withholding Tax    55
Section 3.23    Group Structure Chart    55
Section 3.24    Information Package    55
Section 3.25    Copies of documents to be true and accurate    56
Section 3.26    Intercompany Loans    56
Section 3.27    Repetition    56
ARTICLE IV. GENERAL UNDERTAKINGS    57
Section 4.1    Notice of Default, etc.    57
Section 4.2    Consents and authorizations    57
Section 4.3    Licenses and Necessary Authorizations    57
Section 4.4    Business    58
Section 4.5    Authorized Officers    58
Section 4.6    Auditors    58
Section 4.7    Pari passu    58
Section 4.8    Provision of further information    58
Section 4.9    Insurance    59
Section 4.10    Inspection    59
Section 4.11    Notification of Environmental Claim and Expenditure    59
Section 4.12    Compliance with laws and regulations    59
Section 4.13    Relevant Substance    59
Section 4.14    Tax    60
Section 4.15    Use of proceeds    60
Section 4.16    Material Subsidiaries    60
Section 4.17    Restricted Payments    60
Section 4.18    Virtual Mobile Services    61
Section 4.19    Memorex Shareholder Squeeze Out    61
Section 4.20    Negative Pledge    61
Section 4.21    No Merger    61
Section 4.22    Disposals    62
Section 4.23    Borrowed Money    62
Section 4.24    Guarantees    62
Section 4.25    Reduction or purchase of capital    62
Section 4.26    Investments    62
Section 4.27    Swaps and Hedging    62
Section 4.28    Change of Business    63
Section 4.29    Constitutional Documents/the Existing High Yield Funding Loan Agreement/the Existing FRN Funding Loan Agreements/ Funding Loan Agreements    63
Section 4.30    Arm’s length transactions    63
Section 4.31    The Parent and the IPO Subsidiary    63
Section 4.32    Bank Accounts    63
Section 4.33    Existing High Yield Notes and Existing FRN Bonds    64
Section 4.34    Conditions Subsequent    64
Section 4.35    Change of Control    65
Section 4.36    PIK Notes Refinancing    65
Section 4.37    Issuance of Refinancing Securities    66
Section 4.38    Marketing of Refinancing Securities    67

 

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ARTICLE V. INFORMATION UNDERTAKINGS    68
Section 5.1    Financial statements    68
Section 5.2    Requirements as to Accounts    69
Section 5.3    Budget    70
Section 5.4    Presentations    70
Section 5.5    Year-end    71
Section 5.6    Information: miscellaneous    71
Section 5.7    Notification of default    71
Section 5.8    “Know your customer” checks    71
ARTICLE VI. CONDITIONS PRECEDENT    73
Section 6.1    Initial Conditions Precedent    73
Section 6.2    Further Conditions Precedent    73
Section 6.3    Certain Funds Period    73

ARTICLE VII. TRANSFER OF THE LOANS, THE INSTRUMENTS EVIDENCING SUCH LOANS AND THE EXCHANGE NOTES; REPRESENTATIONS OF LENDERS; PARTICIPATIONS

   74
Section 7.1    Transfer of the Loans    74
Section 7.2    Transfer of the Exchange Notes    75
Section 7.3    Permitted Assignments    75
Section 7.4    Permitted Participants; Effect    75
Section 7.5    Dissemination of Information    76
Section 7.6    Replacement Securities upon Transfer or Exchange    76
Section 7.7    Register    76
Section 7.8    Promissory Note    77
ARTICLE VIII. EVENTS OF DEFAULT    77
Section 8.1    Events of Default    77
Section 8.2    Non-payment    77
Section 8.3    Breach of certain obligations    77
Section 8.4    Breach of other obligations    78
Section 8.5    Misrepresentation    78
Section 8.6    Challenge to security    78
Section 8.7    Cross-default    78
Section 8.8    Hedging Default    79
Section 8.9    Appointment of receivers and managers    79
Section 8.10    HTCC, Parent and intervening Holding Companies    79
Section 8.11    Insolvency    79
Section 8.12    Legal process    80
Section 8.13    Compositions    80
Section 8.14    Winding-up    80
Section 8.15    Analogous proceedings    81
Section 8.16    Principal Agreements    81
Section 8.17    Unlawfulness    81
Section 8.18    Telecommunications Laws    81
Section 8.19    Repudiation    81

 

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Section 8.20    Seizure    82
Section 8.21    Material events    82
Section 8.22    Acceleration    82
Section 8.23    Demand basis    82
Section 8.24    Clean-Up    82
Section 8.25    Rights and Remedies Cumulative    83
Section 8.26    Delay or Omission Not Waiver    83
Section 8.27    Waiver of Past Defaults    83
Section 8.28    Rights of Lenders to Receive Payment    84
ARTICLE IX. TERMINATION    84
Section 9.1    Termination    84
Section 9.2    Survival of Certain Provisions    84
ARTICLE X. GUARANTEE    84
Section 10.1    The Guarantees    84
Section 10.2    Limitation on Liability    86
Section 10.3    Stay of Acceleration    87
Section 10.4    Further Guarantee Provisions    87
Section 10.5    Additional Guarantors    87
Section 10.6    Release of Guarantors    88
ARTICLE XI. SECURITY    88
Section 11.1    Security Documents    88
Section 11.2    Release of Security Interest    89
Section 11.3    Further Action    90
Section 11.4    Co-Security Agent    90
ARTICLE XII. INDEMNITY    91
Section 12.1    Indemnification    91
Section 12.2    Indemnity Not Available    91
Section 12.3    Settlement of Claims    92
Section 12.4    Appearance Expenses    92
Section 12.5    Indemnity for Taxes, Reserves and Expenses    93
Section 12.6    Survival of Indemnification    93
Section 12.7    Liability Not Exclusive; Payments    94
ARTICLE XIII. THE ADMINISTRATIVE AGENT; THE ARRANGERS    94
Section 13.1    Appointment    94
Section 13.2    Delegation of Duties    94
Section 13.3    Exculpatory Provisions    94
Section 13.4    Reliance by the Administrative Agent    94
Section 13.5    Notice of Default    95
Section 13.6    Non-Reliance on the Administrative Agent and Other Lenders    95
Section 13.7    Indemnification    96
Section 13.8    Administrative Agent, in Its Individual Capacities    96

 

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Section 13.9    Successor Administrative Agent    96
Section 13.10    Role of the Arrangers    97
Section 13.11    Reliance and Engagement Letters    97
ARTICLE XIV. MISCELLANEOUS    97
Section 14.1    Expenses; Documentary Taxes    97
Section 14.2    Notices    97
Section 14.3    Consent to Amendments and Waivers    99
Section 14.4    Parties    100
Section 14.5    New York Law; Submission to Jurisdiction; Waiver of Jury Trial    100
Section 14.6    Replacement Notes    101
Section 14.7    Appointment of Agent for Service    101
Section 14.8    Marshalling; Recapture    101
Section 14.9    Limitation of Liability    101
Section 14.10    Independence of Covenants    102
Section 14.11    Currency Indemnity    102
Section 14.12    Waiver of Immunity    102
Section 14.13    Freedom of Choice    102
Section 14.14    Successors and Assigns    103
Section 14.15    Merger    103
Section 14.16    Severability Clause    103
Section 14.17    Representations, Warranties and Agreements to Survive Delivery    103
Section 14.18    Day Count Connection    103
Section 14.19    PATRIOT Act Notice    103
Section 14.20    Nature of a Bridge Finance Party’s Rights and Obligations    103
Section 14.21    Counterparts    104
Section 14.22    Place of Performance outside Austria    104
Section 14.23    Original Guarantors    104
Section 14.24    Security for Costs    105
EXHIBIT A.    FORM OF ASSIGNMENT AND ACCEPTANCE   
EXHIBIT B.    FORM OF BRIDGE NOTE   
EXHIBIT C.    FORM OF ACCESSION DOCUMENT   
EXHIBIT D.    FORM OF UTILIZATION NOTICE   
Schedule 1    Original Guarantors   
Schedule 2    Conditions Precedent Documents   
Schedule 3    Calculation of the Mandatory Cost   
Schedule 4    Commitment Amounts   
Schedule 5    Principal Agreements   

The Registrant has omitted the contents of certain schedules from the SEC Filing. The Registrant will furnish a copy of any omitted content from any schedule to the Commission or its staff upon request.

 

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THIS BRIDGE LOAN AGREEMENT , dated as of March 3, 2008 (this “ Credit Agreement ”) is made in London by and among:

(a) MAGYAR TELECOM B.V., a company incorporated in The Netherlands (registered number 33286951) with its registered office at Laan van Kronenburg 8, 1183 AS Amstelveem, The Netherlands (the “ Borrower ”);

(b) THE PERSONS listed in Schedule 1 as original guarantors (the “ Original Guarantors ”);

(c) MERRILL LYNCH INTERNATIONAL, as Administrative Agent;

(d) BNP PARIBAS TRUST CORPORATION UK LIMITED, as Security Agent;

(e) the LENDERS party hereto;

(f) MERRILL LYNCH INTERNATIONAL and BNP PARIBAS, as mandated lead arrangers, bookrunners and syndication agents (the “ Mandated Lead Arrangers ”); and

(g) MERRILL LYNCH INTERNATIONAL BANK LIMITED, LONDON BRANCH and BNP PARIBAS, as underwriters (the “ Underwriters ”).

The parties hereto agree as follows:

ARTICLE I.

DEFINITIONS

Section 1.1 Defined Terms

As used in this Credit Agreement, the following terms shall have the meanings specified below:

Acceptable Bank ” means:

(a) a Lender;

(b) any bank or financial institution which has a rating for its long-term unsecured and non credit-enhanced debt obligations of A or higher by S&P or Fitch or A1 or higher by Moody’s or a comparable rating from an internationally recognized credit rating agency; or

(c) any other bank or financial institution approved by the Administrative Agent (acting reasonably).

Accession Document ” means a document substantially in the form set out in Exhibit C with such amendments as the Administrative Agent and the Borrower may agree.

Accounting Principles ” means generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants, in the opinions and pronouncements of the Public Company Accounting Oversight Board and in the statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as have been approved by a significant segment of the accounting profession in the United States, which are in effect from time to time.

 

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Accounts ” means each set of financial statements required to be prepared by a member of the Group and supplied to the Administrative Agent pursuant to Section 5.1.

Acquisition ” means the acquisition by Invitel of Memorex on the terms of the Acquisition Documents.

Acquisition Agreement ” means the sale and purchase agreement entered into between Invitel and the Vendor relating to the Acquisition.

Acquisition Documents ” means the Acquisition Agreement and the Disclosure Letter and any other document designated as an “Acquisition Document” by the Administrative Agent and the Borrower.

Action ” has the meaning specified in Section 12.2.

Additional Guarantor ” means a member of the Group which becomes a Guarantor after the date of this Credit Agreement pursuant to Section 10.5.

Administrative Agent ” means Merrill Lynch International, acting as agent pursuant to ARTICLE XIII or any successor or replacement Administrative Agent, acting in such capacity.

Administrative Party ” means an Arranger, the Administrative Agent or the Security Agent.

Affected Party ” means any Lender, any beneficial owner which controls any Lender, and their respective successors and assigns.

Affected Person ” has the meaning specified in Section 5.3

Affiliate ” means, with respect to any specified person, any other person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified person. For the purposes of this definition, “ control ” (including with correlative meanings, the terms “ controlling ”, “ controlled by ” and “ under common control with ”), as used with respect to any person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such person, whether through the ownership of voting securities, by agreement or otherwise. Neither the Lenders nor any of their Affiliates will be treated as an Affiliate of the Borrower or any of its Subsidiaries for purposes of this Credit Agreement.

Agent’s Spot Rate of Exchange ” means the Administrative Agent’s spot rate of exchange for the purchase of the relevant currency in the London foreign exchange market with the Base Currency as of 11:00 a.m. on a particular day.

Applicable Margin ” means in relation to any Loan, initially, the greater of (i) 4.25 percent per annum and (ii) 0.50 percent per annum over the FRN Spread to Maturity at the Completion Date; provided that:

(a) from the date falling six months after the Completion Date up to the date falling nine months after the Completion Date, the Applicable Margin shall be the greater of (i) 4.75 percent per annum and (ii) 0.50 percent per annum over the FRN Spread to Maturity at the date falling six months after the Completion Date;

(b) from the date falling nine months after the Completion Date up to the Initial Maturity Date, the Applicable Margin shall be the greater of (i) 5.25 percent per annum and (ii) 0.50 percent per annum over the FRN Spread to Maturity at the date falling nine months after the Completion Date; and

 

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(c) at and from the Initial Maturity Date to the Extended Maturity Date, the Applicable Margin shall be 6.25 percent per annum.

Arrangers ” means the Mandated Lead Arrangers and the Underwriters.

Asset Sale ” means the disposal of an asset by a member of the Group to a person who is not a member of the Group, other than:

(a) where an asset (not being shares or any other ownership interest in a person) is to be (and is) replaced by another asset of or substantially similar type for use in the Group’s business (being a fixed asset in the case of a disposal of a fixed asset) within 12 months of the date of disposal and pending such replacement the Net Proceeds of that disposal are deposited in a holding account; or

(b) any Permitted Disposal.

Assignment and Acceptance ” shall mean an assignment and acceptance entered into by a Lender and an assignee, and accepted by the Administrative Agent, in the form of Exhibit A or such other form as shall be approved by the Administrative Agent.

Associated Company ” of a person means (i) any other person which is directly or indirectly controlled by, under common control with or controlling such person or (ii) any other person owning beneficially and/or legally directly or indirectly 20 percent or more of the equity interest in such person or 20 percent of whose equity interest is owned beneficially and/or legally directly or indirectly by such person. For the purposes of this definition the term “control” means possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a person whether through the ownership of interests or voting securities, by contract or otherwise.

Austrian Capital Maintenance Rules ” has the meaning given to that term in Section 10.2.

Austrian Guarantor ” means any Guarantor established under the laws of Austria as a corporation ( Gesellschaft mit beschränkter Haftung; Aktiengesellschaft ) or as a limited partnership ( Kommanditgesellschaft ) with its general partners ( Komplementäre ) being corporations.

Authorization ” means an authorization, consent, approval, resolution, license, exemption, filing, notarization or registration.

Authorized Officer ” means any officer of the Borrower authorized to sign Utilization Notices and, in the case of the Borrower or any other Obligor or Security Provider, any other notices, requests or confirmations referred to in this Credit Agreement or relating to the Bridge Loans granted hereunder.

Bankruptcy Law ” means (a) the U.S. Bankruptcy Code of 1978 or (b) any other law of the United States (or any political subdivision thereof), Hungary (or any political subdivision thereof), Romania (or any political subdivision thereof), the Republic of Turkey, the European Union (or any political subdivision thereof) or the laws of any other jurisdiction or any political subdivision thereof relating to bankruptcy, insolvency, winding up, liquidation, reorganization or relief of debtors.

 

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Base Case Model ” means the banking base case model agreed between the Borrower and the Arrangers.

Base Currency ” means euro.

Base Currency Equivalent ” means:

(a) for an amount expressed or denominated in any currency other than the Base Currency, the equivalent of that amount in the Base Currency converted at the Agent’s Spot Rate of Exchange on the date of the relevant calculation; and

(b) for an amount expressed or denominated in the Base Currency, that amount.

beneficial owner ” and “ beneficial ownership ”, as used in the definition of “Affected Party”, has the meaning as defined in Rule 13d-3 and Rule 13d-5 under the Exchange Act.

Board ” means the Board of Governors of the Federal Reserve System of the United States or any successor.

Borrower ” has the meaning specified in the preamble to this Credit Agreement.

Borrowed Money ” means Indebtedness (including, for the avoidance of doubt, but without double counting, any guarantees of such Indebtedness) in respect of (i) money borrowed or raised and debit balances at banks, (ii) any bond, note, loan stock, debenture or similar debt instrument, (iii) acceptance or documentary credit facilities, (iv) receivables sold or discounted (otherwise than on a non-recourse basis), (v) payments for assets or services acquired which provide for such payments to be deferred for a period of 180 days or more after the relevant assets or services were supplied and accepted, (vi) hire purchase contracts, (vii) principal elements of rental payments under Finance Leases, (viii) guarantees, bonds, standby letters of credit or other instruments issued in connection with the performance of contracts to the extent that the same are treated as borrowings in accordance with the generally accepted principles and practices used in the preparation of the most recent audited financial statements of the Group delivered to the Administrative Agent under this Credit Agreement (ix) derivative transactions entered into in connection with protection against or benefit from fluctuation in any rate or price (and, when calculating the value of any derivative transaction, only the marked to market value shall be taken into account) and any other transaction (including without limitation forward sale or purchase agreements and issues of redeemable shares) having the commercial effect of a borrowing or raising of money entered into for the purpose of financing a person’s operational or capital requirements provided that in making any calculation of Borrowed Money under this Credit Agreement no Indebtedness shall be taken into account more than once.

Bridge Borrower High Yield Notes ” means the high yield notes to be issued by the Borrower to refinance the Bridge Loan.

Bridge Borrower High Yield Notes Documents ” means the documentation required to implement the issue of the Bridge Borrower High Yield Notes, including without limitation, the Bridge Borrower High Yield Notes, the Indenture and the guarantees.

Bridge Finance Document ” means:

(a) this Credit Agreement as may be amended from time to time;

 

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(b) the Bridge Notes; or

(c) any Related Document.

Bridg