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


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


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

iii


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


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.

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 ”);

(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

“ 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.

“ 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

(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.

“ 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;

(b) the Bridge Notes; or

“ Bridg