SHARES PURCHASE AGREEMENT
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Shares Purchase Agreement
Seller PANTEL TAVKOZLESI ES KOMMUNIKACIOS RT. (REGISTRATION NUMBER:
00-00-000000, a Hungarian corporation with its principal place of
1113 BUDAPEST, BOCSKAI UT 134-146. HUNGARY ("the Seller")
Buyer EUROWEB INTERNATIONAL CORP., a Delaware corporation,
(registered seat: 0000 Xxxxxx xx xxx Xxxxxxxx 00xx Xxxxx,
Xxx Xxxx, XX 00000; IRS NUMBER: 133696015) ("the Buyer")
Transaction o Seller has a 51% ownership of a shares package of EUROWEB
HUNGARY RT., a Joint Stock Company (REGISTRATION NUMBER:
00-00-000000, a Hungarian corporation with its principal
place of 1122 BUDAPEST, VAROSMAJOR U. 13. HUNGARY)
incorporated under Hungarian law in 1 August 1997. (the
"Company"). The registered capital of the Company is HUF
76.000.000. (i.e. : seventy six million HUF), consisting of
760. (i.e. : seventy six hundred) shares, each with a
nominal value of HUF 100.000. (i.e. : One hundred thousand
HUF). The shares are materialised ones and shall hereafter
be referred to as "Shares".
o The Seller has a 51% ownership of a shares package, which
consisting of 388. (i.e. : three hundred eighty eight)
shares, each with a nominal value of HUF 100.000. (i.e. :
One hundred thousand HUF)
o The Buyer has the remaining 49% ownership of a shares
package of the Company which consisting of 372. (i.e. :
three hundred seventy two) shares, each with a nominal value
of HUF 100.000. (i.e. : One hundred thousand HUF)
o The Seller sells to the Buyer and the Buyer agrees to buy
from the Seller shares representing 51% of the registered
capital of the "Company" for a purchase price of EURO 4.252,
58 (i.e.: Four thousand two hundred fifty two and fifty
eight percentage Euro) per share resulting in a total price
of EURO 1.650.000. (i.e. : One million six hundred fifty
thousand Euro).
o The Purchase Price amounts to EURO 1.650.000. (i.e. : One
million six hundred fifty thousand Euro) payable until the
Closing Date. The Buyer's obligation to pay the Purchase
Price is deemed fulfilled at the moment at which the
respective amounts are credited to the account of the
Seller. The Buyer shall bear all bank costs related to the
bank transfer.
o The Buyer is entitled to the 51% of the full dividend due in
year 2003.
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Closing The Closing of the transaction that is the date on which the
contract enters into force shall take place upon the
fulfilment of all the following conditions:
- The Buyer transfers the Purchase Price to the Bank account
of the Seller. This obligation is deemed fulfilled at the
moment at which the Purchase Price in the amount of
1.650.000. (i.e. : One million six hundred fifty thousand
Euro) are credited to the Seller's bank account,
- the Seller declares in a separate written document, that
according to its best knowledge, there being no material
adverse changes in the assets or liabilities of the Company
between the signature of the Letter of Intent and the
Closing Date.
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- the Seller and the Company sign a Service Contract based on
the Letter of Intent signed 15th January 2004. between them,
until Closing Date, (The Letter of Intent is attached as
Exhibit 4). according to the Buyer's Hungarian subsidiaries,
(namely EuroWeb Hungary Rt., Neophone Rt., Freestart Kft.),
guarantees to buy services from the Seller up to HUF
600.000.000. +VAT annually in the coming 3 years. The
Parties sign a separate written Agreement for the case if
the Company purchases services from the Seller under the
Service Contract, in a values that is less then the
contractually required amount, 25% of the difference must be
paid to the Seller by the Buyer as penalty.
- The Buyer obtain the requisite corporate power and authority
to enter into and perform its obligation under the present
Agreement,
- The Seller obtain the PanTel's Board written approval to
enter into and perform its obligation under the present
Agreement,
- According to the Chapter 7. of the Company's Deed of
Foundation, the Seller obtain the Company's Board written
approval to enter into and perform its obligation under the
present Agreement,
- The Buyer declares conducting and completing a diligent
review of the books and records of the Company,
- The Seller and Freestart Kft. amend the Service Contract
nr.: 0002660 (Egyedi Elofizetoi Szerzodes) signed on 31
March 2003. according to the Letter of Intent signed by the
Parties on 15 January 2004.
- Freestart as debtor, the Seller as creditor and the Company
as adpromissor sign the amendment of the Loan Agreement
based on the Letter of Intent signed 15. Jan 2004. in front
of a public notary.
- Parties sign a separate written Agreement on the re-payment
of HUF 245.000.000. (i.e. : Two hundred forty five million)
plus the interest of that amount, the loan owed by Freestart
Kft. based on the Letter of Intent signed 15 January 2004.
between them, until Closing Date.,
- The Company transfers 50% of the unpaid service fee of the
leased line service provided by Pantel to the Company, which
is HUF 46.500.000. HUF + 25% VAT (forty six million five
hundred thousand forints). The Parties sign a separate
written Agreement on the payment of the remaining
46.500.000. HUF + 25% VAT (forty six million five hundred
thousand forints within 6 month from the signature of the
present Agreement.
- The Seller endorse over the Shares to the Buyer.
At the Closing, the Seller shall deliver to the Buyer the
following documents duly signed:
o The Transfer Certificate of the Shares for the transfer of
the Shares to the Buyer and a new List of Shareholders in
the form as attached in Exhibit 1;
o The resignation letter of those Board members and
Supervisory Board members of the Company who were appointed
by the Seller.
The Closing Date will happen February 2004.
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Due Diligence Prior to the signing of this Agreement the Buyer conducted a
due diligence to verify that the Company:
o is validly incorporated and existing under the laws of
Hungary;
o has an issued and fully paid capital amounting to HUF
76.000.000. (i.e. : seventy six million HUF),
consisting of 760. (i.e. : seventy six hundred) shares,
each with a nominal value of HUF 100.000. (i.e. : One
hundred thousand Hungarian Forint);
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o has prepared proper accounts as per December 31, 2003
and that these accounts have not been audited by the
statutory auditor of the Company (Kpmg Hungaria)
(Exhibit 2);
o has prepared proper interim non audited accounts as per
31st Jan, 2004 (Exhibit 3);
o is not bound by any material off-balance sheet
liabilities as of the date of signing of the present
agreement except for the penalty related to the
purchase and resale of Inet Kft and as listed in
Exhibit 6.;
o outstanding invoices according to Exhibit 6.; (Exhibit
6)
o due debts according to Exhibit 6.; (Exhibit 6)
o accruals according to Exhibit 6.; (Exhibit 6)
o litigations according to Exhibit 6.; (Exhibit 6)
o off balance sheet liabilities (Exhibit 6)
The Seller undertakes to send the audited proper accounts as
per December 31, 2003. within two working days from the
reception. Based on the statutory auditor's opinion the
audited accounts will be prepared around 22 February 2004.
This due diligence has been performed to the satisfaction of
the Buyer.
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Representations and The Seller makes the following representations and
warranties of Seller warranties on the date of this Agreement and acknowledges
entering into this Agreement in reliance of those
representations and warranties:
- The Seller is a "Joint Stock Company" duly incorporated
and validly existing under Laws of Hungary. The Seller
has the power to carry on its respective business as it
is being conducted.
- The obligations and liabilities expressed to be assumed
by the Seller in the present Agreement - to which the
Seller is a party - are subject to any general
principles of the Hungarian law.
- To the Seller's best knowledge and belief, the entry
into and the performance by the Seller of, and the
Transaction contemplated by, the present Agreement - to
which the Seller is a party - do not and will not
conflict with:
1.1 any Hungarian law or regulation except other as stated
otherwise in the present Agreement.
1.2 the constitutional documents of the Seller and/or the
Company (including all the current and up-to-date
documents such as the Articles of Association and
register of shareholders); or
1.3 any agreement, contract, deed or instrument binding
upon the Seller and/or the Company.
- The Company was duly incorporated under the laws of
Hungary.
- The Company is authorised to carry out its current
activities.
- Account books and corporate documents of the Company
have been regularly maintained and give a true and fair
view of its activities.
- The issued and fully paid capital of the Company
amounts to 76.000.000. (i.e. : seventy six million
Hungarian Forint).
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- The Seller has full and unrestricted ownership of the
51 % of the Shares, which are free and clear of any
liens, charges, pledges, attachments, security
interests, rights of usufruct and encumbrances of any
kind whatsoever on their free transferability, rights
of third parties and in particular pre-emptive rights.
- To best knowledge of the Seller the Company's accounts
non audited as per December 31st 2003. and non-audited
as per 31 January , 2004 (Exhibits 2 and 3) present
truly, completely and correctly the financial position,
the assets, the properties and any and all liabilities
and capital commitments and the results of operations
of the Company as at the relevant date and contain no
contingent debts, obligations or undertakings on the
part of the Company which are not reflected in the
Company's accounts.
- The 2003. dec 31. ADSL access costs figures of the
Company are based on the actual invoices sent by Matav.
The Seller undertakes no warranty that Matav will not
invoice further amounts for 2003. ADSL access costs.
- The principal assets of the Company are accounted for
in the books of the Company.
- To the best knowledge of the Seller, there is no
material claim against the Company, except with respect
to the listed items in Exhibit 4. No litigation is
pending with any other third party.
- Except for what is shown in the accounts in Exhibits 2
and 3, all of the Company's statements and transfers to
the financial tax and social security authorities have
been performed within the statutory deadline.
- The Company has business shares and other shares or
interest in the following companies:
- Freestart Kft. (The registered capital of this company
is being raised by the Company.) Exhibit 7. contains a
description about Freestart Kft.
- Neophone Rt. (This company is under selling procedure
by the Company.) Exhibit 8. contains a description
about Neophone Rt.
- As at the date of this Agreement, any written factual
information provided by the Seller to the Buyer for the
purposes of the present Transaction or otherwise in
connection with this Agreement and/or otherwise in
respect of the Seller's shares, was to the Seller's
best knowledge and belief true and accurate in all
material respects as at the date it was provided or as
at the date (if any) at which such information as
appropriate, is stated to be correct.
- As at the date of this Agreement, nothing has occurred
or been omitted from the present Transaction and no
information has been given or withheld that results in
any material information being untrue or misleading in
any material respect.
- To the best knowledge of the Seller, there is no
material event or circumstance that has not been
disclosed in writing which would reasonably expected
to, if disclosed, have an adverse effect on the present
transaction.
- To the best knowledge of the Seller, no undisclosed
event and/or circumstance has occurred or arisen,
including, without limitation, in respect of the
Company's business or financial condition since the
most recent financial statements were delivered, which
gives, or which would reasonably be expected to give or
rise to material adverse effect on the financial
condition of the Company; and/or the ability of the
Company to duly comply with, perform and other material
obligations and liabilities to which the Company is a
party.
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- The Company has not taken any formal corporate action
nor to the Seller's best knowledge and belief, having
made reasonable enquires thereto, have any other formal
steps been taken or legal proceedings been started or
threatened in accordance with the procedures detailed
in the Bankruptcy Act against the Company for the
Company's bankruptcy, liquidation, winding-up or final
accounting (in each case pursuant to the Bankruptcy
Act).
- Subject to any general principles of the Hungarian law
and except with respect to the leasing agreements to
which the Company is a party, no Encumbrance exists of,
over all or any of the present or future assets of the
Company.
- Prior transactions to the present Agreement will not
result in the existence of nor will oblige the Company
to create any Encumbrance over all or any of the
Company's present or future assets.
- Except what is shown in the accounts in Exhibits 2 and
3 the Company has not received any other loan.
- The Company has not opened or does not operate or
maintain any bank or similar account with any bank,
credit institution, financial institution or other
person other than with IEB Bank.
- The Tax Authority (APEH) currently audit the Company.
The management of the Company got a pre audit from an
independent expert and the Buyer is aware of this
report and the possible liability for the Company.
The above representations and warranties are deemed to be
made by the Seller by reference to the facts and
circumstances then existing on the date of Closing of the
present Agreement.
The Buyer is fully aware of the status of the Company due to
the fact that the Buyer already owns 49% of the Shares of
the Company, and consequently has full access to all the
relevant information and the Buyer's representatives in the
Company's Board took full participation in the making of the
decisions
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Limits on
Warranty
Claims
- The Buyer acknowledges and agrees with the Seller that:
(a) the Warranties are the only representations, warranties or
other assurances of any kind given by or on behalf of the
Seller and on which the Buyer may rely in entering into and
performing this Agreement;
(b) no other statement, promise or forecast made by or on behalf
of the Seller may be relied on or form the basis of, or be
pleaded in connection with, any claim by the Buyer under or
in connection with this Agreement; and
(c) at the time of entering into this Agreement it is not aware
of any matter or event, or fact which is inconsistent with
the Warranties or which would constitute a breach of any of
them.
- The liability of the Seller under or in respect of this
Agreement shall be limited as follows:
(a) any breach of the Warranties in respect of which the amount
of the damages to which the Buyer would otherwise be
entitled is less than Euro 10,000 (ten thousan Euro) will be
disregarded for all purposes;
(b) The Buyer shall not be entitled to recover any damages
unless the amount of damages in respect of such breach or
breaches, exceeds in aggregate the sum of Euro 25.000; and
(c) the maximum aggregate liability of Seller in respect of this
Agreement shall not exceed Euro 10% of the purchase price of
EURO 1.650.000.
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- The Buyer shall not be entitled to make any Warranty Claim:
(a) to the extent that provision or allowance for the matter or
liability which would otherwise give rise to the claim in
question has been made in the Accounts for the financial
years [2003 and 2004] or it is otherwise taken account of,
or reflected in, the Accounts for the financial years [2003
and 2004];
(b) in respect of anything arising directly from any
transaction, matter or thing which were known by the Buyer
or any of the Buyer's owner, or representatives;
(c) if the claim would not have arisen but for a change in
legislation announced or enacted on or after the date of
this Agreement (whether relating to taxation, rates of
taxation or otherwise) or the withdrawal after the date of
this Agreement of any tax rulings of the Hungarian tax
authority or other taxing authority (whether or not the
change purports to be effective retrospectively in whole or
in part);
(d) to the extent that the claim arises as a result of any
changes in the accounting policies or practices;
(e) in respect of anything arising directly from any decision
taken by the Board of the Company, when the board members
delagated by the Seller had majority in the board of the
Company.
- The Seller shall cease to have any liability under or in
respect of the Warranties on the date which is one (1) year
after the Closing Date.
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Survival of All representations and warranties and all claims with
representations respect to such representations and warranties shall
and warranties survive one (1) year after the Closing Date.
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Miscellaneous - This Shares Purchase Agreement shall be governed by
and construed in accordance with the laws of Hungary.
- The Parties agree that all disputes arising from or in
connection with the present Agreement, the formal Purchase
Documentation and all the agreements in connection to the
transaction its breach, termination, validity or
interpretation, shall fall within the exclusive competence
of the Court of Arbitration attached to the Hungarian
Chamber of Commerce and Industry, in accordance with its own
Rules of Proceedings.
- According to the strategic partnership between the Company
and the Seller and the fact that the direct owner of Seller
and the indirect owner of the Company is the same legal
entity, the Buyer will be bound not let the Company or its
affiliates where their interest is more than 25% to compete
with the Seller in the future projects for telecommunication
services to MOL Rt., MOL Foldgazszallito Rt. and their
subsidiaries).
- The Parties shall not disclose the existence and/ or any
conditions of the present Agreement, or any information
about it to any other third parties, except the competent
authorities and its relevant corporate bodies without the
prior written permission of the other party.
This Shares Purchase Agreement is made on ..................., 2004.
EuroWeb International XxxXxx Xx.
By:__________________ By:____________________
Xxxxx Xxxx Xxx Xxxxxx
Chief Executive Officer Chief Executive Officer
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