YEAR
INTEREST ---------------------- ORIGINAL PRINCIPAL
TITLE RATE (%) ISSUE MATURITY(1) AMOUNT CONTRACTED AMOUNT OUTSTANDING
- ------------------------------------------ -------- -------- ----------- -------------------- -------------------------
b. EIB
Railways I................................ MT 1998 2017 EUR 60,000,000 EUR 47,586,207
Railways I-B.............................. Floating 2001 2012 EUR 40,000,000 EUR 40,000,000
Railways II-B............................. Floating 2001 2013 EUR 90,000,000 EUR 90,000,000
Railways III.............................. Floating 2002 2014 EUR 40,000,000 EUR 40,000,000
Railways IV............................... Floating 2004 2014 EUR 27,000,000 EUR 27,000,000
Railways V................................ Floating 2005 2015 EUR 27,000,000 EUR 27,000,000
Environment............................... 4.67 2001 2013 EUR 43,000,000 EUR 43,000,000
Environment II............................ Floating 2002 2014 EUR 80,000,000 EUR 64,352,000
Environment III........................... 4.49 2003 2014 EUR 45,900,000 EUR 45,900,000
Flood protection.......................... Floating 2001 2012 EUR 60,000,000 EUR 60,000,000
Roads III................................. Floating 2003-4 2014 EUR 75,000,000 EUR 75,000,000
Roads IV.................................. Floating 2003 2014 EUR 190,000,000 EUR 119,000,000
M0 Motorway Floating 2005 2015 EUR 50,000,000 EUR 50,000,000
M4 Underground Floating 2005 2016 EUR 300,000,000 EUR 300,000,000
Structural funds Floating 2004 2014 EUR 110,000,000 EUR 110,000,000
-------------------------
Total............................................................................................ EUR 1,138,838,207
=========================
c. Bonds
EUR Bond.................................. 4.375 1999 2009 EUR 500,000,000 EUR 500,000,000
EUR Bond.................................. 5.625 2001 2011 EUR 1,000,000,000 EUR 1,000,000,000
EUR Bond.................................. 4500 2003 2013 EUR 1,000,000,000 EUR 1,000,000,000
EUR Bond.................................. 4.000 2003 2010 EUR 1,000,000,000 EUR 1,000,000,000
EUR Bond.................................. 4.500 2004 2014 EUR 1,000,000,000 EUR 1,000,000,000
EUR Bond.................................. 3.625 2004 2011 EUR 1,000,000,000 EUR 1,000,000,000
EUR Bond.................................. 3.875 2005 2020 EUR 1,000,000,000 EUR 1,000,000,000
EUR Bond.................................. Floating 2005 2012 EUR 500,000,000 EUR 500,000,000
-------------------------
Total............................................................................................ EUR 7,000,000,000
=========================
d. Other loans raised
Council of Europe
Development Bank
loans................................... Various 1999-03 2009-15 EUR 390,412,698 EUR 272,372,698
EBRD loans................................ Floating 2003 2014 EUR 4,739,006 EUR 3,826,002
KfW DEM loan.............................. 6.0583 1999-00 2015 DEM 120,000,000 EUR 47,196,157
KfW EUR loan.............................. 5.715 2000 2008 EUR 71,600,000 EUR 26,850,000
Syndicated loan........................... Floating 2003 2008 EUR 500,000,000 EUR 500,000,000
-------------------------
Total............................................................................................ EUR 850,244,857
=========================
e. Other loans assumed
EIB/Railways II-A......................... Various 2002 2015 EUR 40,000,000 EUR 40,000,000
EIB/M3 Toll Motorway.................... MT 2002 2015 EUR 49,599,224 EUR 38,153,249
DEM loans................................. Various 2000,02 2005-06 DEM 66,596,000 EUR 20,090,703
EUR loans................................. Various 2001-04 2006-18 EUR 416,620,707 EUR 163,511,117
-------------------------
Total............................................................................................ EUR 261,755,069
=========================
T-5
f. Swap arrangements
EUR/USD Floating 2004 2006 EUR 75,210,000 EUR 75,210,000
EUR/USD 6.95 2004 2011 EUR 2,509,806 EUR 1,572,141
EUR/USD 3.8075 2005 2015 EUR 383,612,000 EUR 383,612,000
EUR/USD 3.815 2005 2015 EUR 383,612,000 EUR 383,612,000
EUR/USD Floating 2005 2015 EUR 383,612,000 EUR 383,612,000
EUR/GBP 4.495 2004 2014 EUR 753,200,000 EUR 753,200,000
EUR/GBP 3.82 2005 2017 EUR 486,948,000 EUR 486,948,000
EUR/GBP Floating 2005 2017 EUR 250,852,000 EUR 250,852,000
EUR/JPY 3.917 2004 2009 EUR 375,000,000 EUR 375,000,000
EUR/JPY Floating 2005 2010 EUR 225,411,000 EUR 225,411,000
EUR/JPY 3.092 2005 2012 EUR 338,320,000 EUR 338,320,000
EUR/EUR 3.625 2004 2011 EUR (330,000,000) EUR (330,000,000)
EUR/EUR Floating 2004 2011 EUR 330,000,000 EUR 330,000,000
EUR/EUR 3.253 2005 2012 EUR 250,000,000 EUR 250,000,000
EUR/EUR Floating 2005 2012 EUR (250,000,000) EUR (250,000,000)
EUR/EUR 3.259 2005 2012 EUR 250,000,000 EUR 250,000,000
EUR/EUR Floating 2005 2012 EUR (250,000,000) EUR (250,000,000)
EUR/EUR 4.500 2004 2014 EUR (300,000,000) EUR (300,000,000)
EUR/EUR Floating 2004 2014 EUR 300,000,000 EUR 300,000,000
EUR/EUR 4.500 2004 2014 EUR (700,000,000) EUR (700,000,000)
EUR/EUR Floating 2004 2014 EUR 700,000,000 EUR 700,000,000
EUR/EUR 4.495 2004 2014 EUR (300,000,000) EUR (300,000,000)
EUR/EUR Floating 2004 2014 EUR 300,000,000 EUR 300,000,000
EUR/EUR 3.875 2005 2020 EUR (200,000,000) EUR (200,000,000)
EUR/EUR Floating 2005 2020 EUR 200,000,000 EUR 200,000,000
-------------------------
Total............................................................................................ EUR 3,657,349,141
=========================
Total Euro Debt...................................................................................... EUR 12,931,756,701
U.S. Dollar equivalent........................................................................... USD 15,302,195,295
=========================
3. POUND STERLING DEBT
a. Bonds
GBP Bond.................................. 5.500 2004 2014 GBP 500,000,000 GBP 500,000,000
GBP Bond.................................. 5.000 2005 2017 GBP 500,000,000 GBP 500,000,000
-------------------------
Total............................................................................................ GBP 1,000,000,000
=========================
b. Swap arrangements
GBP/EUR................................... 5.500 2004 2014 GBP (500,000,000) GBP (500,000,000)
GBP/EUR................................... 5.000 2005 2017 GBP (330,000,000) GBP (330,000,000)
GBP/EUR................................... 5.000 2005 2017 GBP (170,000,000) GBP (170,000,000)
-------------------------
Total............................................................................................ GBP (1,000,000,000)
=========================
Total Pound Sterling Debt............................................................................ GBP 0
U.S. Dollar equivalent........................................................................... USD 0
=========================
T-6
4. JAPANESE YEN DEBT
a. Bonds
JPY Bond.................................. 1.09 2004 2009 JPY 50,000,000,000 JPY 50,000,000,000
JPY Bond.................................. 0.62 2005 2010 JPY 30,000,000,000 JPY 30,000,000,000
JPY Bond.................................. 0.96 2005 2012 JPY 45,000,000,000 JPY 45,000,000,000
-------------------------
Total............................................................................................ JPY 125,000,000,000
=========================
b. Swap arrangements
JPY/EUR................................... 1.09 2004 2009 JPY (50,000,000,000) JPY (50,000,000,000)
JPY/EUR................................... 0.62 2005 2010 JPY (30,000,000,000) JPY (30,000,000,000)
JPY/EUR................................... 0.96 2005 2012 JPY (45,000,000,000) JPY (45,000,000,000)
-------------------------
(125,000,000,000)
Total............................................................................................ JPY 0
=========================
Total Japanese Yen Debt.............................................................................. JPY 0
U.S. Dollar equivalent........................................................................... USD 0
=========================
5. SWISS FRANC DEBT
a. Loans assumed
EUROFIMA
loans................................... Floating 2002 2002-08 CHF 126,050,000 CHF 74,440,000
Total............................................................................................ CHF 74,440,000
=========================
Total Swiss Frank Debt............................................................................... CHF 74,440,000
U.S. Dollar equivalen............................................................................ USD 56,577,607
=========================
REPUBLIC OF HUNGARY
Total External Funded Convertible Currency Debt.................................................. USD 16,262,901,282
=========================
TOTAL EXTERNAL CONVERTIBLE CURRENCY FUNDED DEBT OF
THE BANK AND OF THE REPUBLIC(4)...................................................................... USD 16,811,888,881
=========================
- ----------
Source: National Bank of Hungary and Government Debt Management Agency
(4) All totals calculated on the basis of exchange rates as at December 31,
2005.
T-7
TABLES AND SUPPLEMENTARY INFORMATION
INTERNAL DEBT OF THE REPUBLIC
(As at December 31, 2005)
YEAR
-------------------------- ORIGINAL
INTEREST AMOUNT PRINCIPAL
TITLE RATE (%) ISSUE MATURITY CONTRACTED AMOUNT OUTSTANDING
- ------------------------------------------ ----------- ----------- ------------ ------------------ ------------------
(HUF and USD millions)
==================
1. Loans taken over at the end of 2002. Floating 2002 2008 HUF 1,660.0 HUF 844.0
USD 3.95
==================
2. HUNGARIAN TREASURY BONDS FOR THE
PURPOSE OF:
Fixed
a. 1991-05 Central Budget............. Floating 1991-05 2006-20 HUF HUF 6,242,470.3
b. Housing Loans...................... Floating 1992 2016 HUF 83,200.0 HUF 36,740.0
c. Purchase of net rouble
receivables held by the Bank.......... 8.4 1992 2002, 07, 12 HUF 48,300.0 HUF 15,132.2
d. Loan Consolidation Program and
Bank Consolidation Program............ Floating 1993-96 2013-16 HUF 395,000.0 HUF 259,783.0
e. Securitization of non-interest
bearing debt outstanding to the Bank.. Floating 1994-96 2004-26 HUF 417,110.0 HUF 329,649.0
f. Bonds given to the Hungarian
Privatization and State Holding
Company............................... Floating 1998, 2002 2006-10 HUF 60,148.6 HUF 13,540.2
g. Bonds given to the Postabank by Floating,
Consolidation......................... Fixed 1998 1999-08 HUF 129,022.3 HUF 79,022.3
h. Bonds given to the Hungarian
Development Bank Ltd. Fixed 2002 2003-11 HUF 138,537.7 HUF 56,672.6
------------------
Total Hungarian Treasury Bonds................................................................... HUF 7,033,009.6
USD 32,929.16
==================
3. HUNGARIAN TREASURY BILLS:
a. Fixed interest rate................ 4.5-9 2004-5 2006-7 HUF 588,712.2
b. Discount........................... - 2005 2006 HUF 1,530,925.7
------------------
Total Hungarian Treasury Bills................................................................... HUF 2,119,637,9
USD 9,924.33
==================
TOTAL REPUBLIC INTERNAL DEBT......................................................................... HUF 9,153,491.5
U.S. Dollar Equivalent(1)........................................................................ USD 42,857.44
==================
- -------------
Source: Government Debt Management Agency
(1) All totals calculated on the basis of exchange rates as of December 31,
2005. The exchange rate was 213.58 HUF/USD on December 31, 2005.
T-8
TABLES AND SUPPLEMENTARY INFORMATION
GUARANTEES PROVIDED BY THE REPUBLIC
(As of September 30, 2005)
TITLE PRINCIPAL AMOUNT OUTSTANDING
- ---------------------------------------------------------------------------- -----------------------------
(thousands)
REPUBLIC GUARANTEED DEBT IN FOREIGN CURRENCY
(expressed in USD equivalents)(1)
Loans raised from international financial institutions.................... USD 298.89
Guarantees for various purposes........................................... USD 297.14
Guarantees based on law................................................... USD 1,572.04
-----------------------------
Total Guarantees in Foreign Currency...................................... USD 2,168.07
=============================
REPUBLIC GUARANTEED DEBT IN HUF
Guarantees for various purposes........................................... HUF 425,570.58
Guarantees based on law................................................... HUF 389,412.46
-----------------------------
Total Guarantees in HUF................................................... HUF 814,983.04
USD Equivalent(1)........................................................ USD 3,926.49
=============================
TOTAL REPUBLIC FOREIGN CURRENCY
AND HUF GUARANTEES......................................................... USD 6,094.56
=============================
- -------------
Source: Government Debt Management Agency
(1) Calculated on the basis of exchange rates as of September 30, 2005.
T-9
You should rely only on the information contained or incorporated by
reference in this prospectus. We have not authorized anyone to provide you with
information that is different from what is contained in this prospectus. You
should not assume that the information contained in this prospectus is accurate
as of any date other than the date of this prospectus. This prospectus is not an
offer to sell or a solicitation of an offer to buy any of our debt securities in
any jurisdiction in which such offer or solicitation would be unlawful.
PART II
(As required by Items (11) and (14) of Schedule B of the Securities Act of 1933)
I. The Republic hereby agrees to furnish the opinions of the Legal Department of
the Government Debt Management Agency as to the legality of each issue of
securities in post-effective amendments to this Registration Statement, in each
case together with a translation, where necessary, into the English language.
II. An itemized statement showing estimated expenses of the Republic, other than
underwriting discounts and commissions, in connection with the issuance of the
debt securities that are the subject of this Registration Statement will be
provided in the post-effective amendment to the Registration Statement relating
to such issue or in a report filed under the Securities Exchange Act of 1934
that is incorporated by reference in this Registration Statement.
UNDERTAKINGS
The Republic hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(i) to include any prospectus required by section 10(a)(3) of the
Securities Act of 1933; and
(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 thereof) 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 the Republic shall not be required to file a
post-effective amendment otherwise required by clause (i) or clause (ii) above
if the information required to be included in a post-effective amendment is
contained in any report filed under the Securities Exchange Act of 1934 that is
incorporated by reference in this Registration Statement.
(2) That, for the purpose of determining any liability under the Securities Act
of 1933, each such post-effective amendment that contains a form of prospectus
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.
(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.
II-1
(4) That, for purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the Republic pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act shall be deemed to be part of this registration
statement as of the time it was declared effective.
II-2
CONTENTS OF REGISTRATION STATEMENT
The Registration Statement consists of:
(1) Facing sheet.
(2) Cross Reference sheet.
(3) Part I consisting of the Prospectus.
(4) Part II consisting of pages numbered II-1 through II-6.
(5) The following exhibits:
A. Form of Fiscal Agency Agreement.
B. Form of proposed Debt Security (attached to the form of Fiscal
Agency Agreement under A above).
C. Form of proposed Underwriting Agreement.
(6) Opinion of the Legal Department of the Government Debt Management Agency of
the Republic of Hungary as to the legality of the Debt Securities.*
(7) Opinion of White & Case LLP, U.S. counsel to the Republic of Hungary as to
the legality of the Debt Securities.*
(8) The consent of the Legal Department of the Government Debt Management Agency
of the Republic of Hungary (included in Exhibit 6).
(9) The consent of White & Case LLP (included in Exhibit 7).
(10) Consent of Mr. Janos Veres, Finance Minister, Ministry of Finance, Republic
of Hungary (included on page II-4).
- ------------
* Filed previously as an exhibit to this Registration Statement.
II-3
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Republic of
Hungary has duly caused this Amendment No. 1 to the Registration Statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of Budapest, Hungary on April 18, 2006.
THE REPUBLIC OF HUNGARY,
Acting by and through its
Ministry of Finance
By: /s/ Janos Veres
----------------------------------
Name: Mr. Janos Veres*
Title: Finance Minister
- ----------------------------------
* Consent is hereby given to the use of his name in connection with the
information specified in this registration statement or amendment to have been
supplied by him and stated on his authority.
II-4
SIGNATURE OF AUTHORIZED REPRESENTATIVE
Pursuant to the requirements of the Securities Act of 1933, the
undersigned, the duly authorized representative of the Republic of Hungary in
the United States, has signed this Amendment No. 1 to the Registration Statement
in the city of Chicago, Illinois, on April 18, 2006.
By: /s/ Miklos Martin-Kovacs
-----------------------------------
Name: Mr. Miklos Martin-Kovacs
Title: Director
Office of the Hungarian Trade
Commission
II-5
EXHIBIT INDEX
Exhibit
Number Description
(5) A. Form of Fiscal Agency Agreement.
B. Form of proposed Debt Security (attached to the form of Fiscal
Agency Agreement under A above).
C. Form of proposed Underwriting Agreement.
(6) Opinion of the Legal Department of the Government Debt Management
Agency of the Republic of Hungary as to the legality of the Debt
Securities.*
(7) Opinion of White & Case LLP, U.S. counsel to the Republic of
Hungary as to the legality of the Debt Securities.*
(8) The consent of the Legal Department of the Government Debt
Management Agency of the Republic of Hungary (included in
Exhibit 6).
(9) The consent of White & Case LLP (included in Exhibit 7).
(10) Consent of Mr. Janos Veres, Finance Minister, Ministry of
Finance, Republic of Hungary (included on page II-4).
- ------------
* Filed previously as an exhibit to this Registration Statement.
II-6
Exhibit (5)(A)
FORM OF FISCAL AGENCY AGREEMENT
REPUBLIC OF HUNGARY
FISCAL AGENCY AGREEMENT (the "Agreement") dated as of [____], between the
Republic of Hungary (the "Republic"), and [____] (the "Fiscal Agent,"
"Registrar," or "Agent").
1. The Debt Securities. The Republic is issuing and selling, pursuant to an
Underwriting Agreement described in Schedule I hereto (the "Underwriting
Agreement"), the debt securities as described in Schedule I and substantially in
the form of Exhibit I attached hereto (each a "Debt Security," and collectively,
the "Debt Securities"). The Debt Securities may be issued in the form and in the
denominations specified in Schedule I hereto and integral multiples thereof.
The Debt Securities may have such letters, numbers or other marks of
identification or endorsements not referred to herein placed thereon as may be
required to comply with any law or with any rules made pursuant thereto or with
the rules of any securities exchange or governmental agency or as may,
consistently herewith, be determined by the authorized signatory of the Republic
specified in Schedule I hereto (the "Republic Authorized Signatory"), as
conclusively evidenced by his execution of the Debt Securities.
The Debt Securities will be issued in the form of one or more fully registered
global debt securities (the "Global Debt Securities") which will be deposited
with, or on behalf of, The Depository Trust Company, New York, New York (the
"Depository" or "DTC") and registered in the name of Cede & Co., the
Depository's nominee. Beneficial interests in the Global Debt Securities will be
represented through book-entry accounts of financial institutions acting on
behalf of beneficial owners as direct and indirect participants in the
Depository ("participants"). Investors may elect to hold interests in the Global
Debt Securities through either the Depository (in the United States) or
Euroclear Bank S.A./N.V., Brussels Office, as operator of the Euroclear System
("Euroclear") or Clearstream Banking, societe anonyme ("Clearstream,
Luxembourg") (in Europe), if they are participants of such systems, or
indirectly through organizations which are participants in such systems.
Euroclear and Clearstream, Luxembourg will hold interests on behalf of their
participants through customers' securities accounts in Euroclear's and
Clearstream, Luxembourg's names on the books of their respective depositaries,
which in turn will hold such interests in customers' securities accounts in such
depositaries' names on the books of the Depository. Except as set forth in
Condition 8 of the Debt Securities, the Global Debt Securities may be
transferred, in whole and not in part, only to another nominee of the Depository
or to a successor of the Depository or its nominee.
So long as the Depository or its nominee is the registered owner of the Global
Debt Securities, the Depository or such nominee, as the case may be, will be
considered the sole owner or holder or the Debt Securities represented by the
Global Debt Securities for all purposes under this Agreement. Except as provided
in Condition 8 of the Debt Securities, owners of beneficial interests in the
Global Debt Securities will not be entitled to have Debt Securities represented
by the Global Debt Securities registered in their names, will not receive or be
entitled to receive physical delivery of Debt Securities in definitive form and
will not be considered the owners or holders thereof under this Agreement.
Interest will be payable quarterly on each "Interest Payment Date," as defined
in the Debt Securities, to holders of record on each "Record Date," as defined
in the Debt Securities. Notwithstanding anything to the contrary provided
herein, any payment of principal or interest or additional amounts, if any,
falling due on a day which is not a business day for the Fiscal Agent will be
payable on the next succeeding business day and no interest shall accrue for
such intervening period, provided however that if that next succeeding business
day falls in the next calendar month, such payment of principal or interest will
be payable on the first preceding business day. Except as otherwise provided
below, interest will be paid by check mailed to each holder of record on the
relevant Record Date at the address of such person as shown on the Debt Security
register. Any record holder of Debt Securities, the aggregate principal amount
of which equals or exceeds U.S. $1,000,000, may, by written notice to the Fiscal
Agent no later than the Record Date therefor, elect to receive, and the Fiscal
Agent shall pay, the interest payment in respect of such Debt Securities by wire
transfer in same-day funds to a bank account maintained by such holder in the
United States.
2. Appointment as Agent. The Republic hereby appoints the Fiscal Agent as its
Paying Agent and Registrar for the Debt Securities to perform such duties as are
hereinafter set forth.
3. Duties as Paying Agent. The Republic hereby authorizes and directs the
Fiscal Agent, and the Fiscal Agent hereby agrees, to calculate interest on the
Global Debt Securities in the manner provided in the Global Debt Securities, to
make payments of the principal of and interest, and additional amounts, if any,
on the Global Debt Securities in the manner provided in the Global Debt
Securities and in accordance with the regular procedures established by the
Depository for the Global Debt Securities specified in Schedule I hereto. If the
Debt Securities are issued in definitive form, the Republic hereby authorizes
and directs the Fiscal Agent, and the Fiscal Agent hereby agrees, to make
payments on behalf of the Republic in the City and State of New York or London
of principal of and interest and additional amounts, if any, on the Debt
Securities in the manner provided in the Debt Securities. The Republic will
ensure that, no later than 10:00 a.m. (New York time) on the second Business Day
prior to each date on which any payment in respect of the Debt Securities
becomes payable by the Republic under this Section, the Fiscal Agent shall
receive from the bank paying on behalf of the Republic an irrevocable payment
confirmation that such payment will be made to the Fiscal Agent. The Republic
shall deposit with the Fiscal Agent at its bank in The City of New York at 10:00
a.m. New York time on the payment date in U.S. dollar denominated Federal funds
sums sufficient for such payments of principal of and interest and additional
amounts, if any, on the Debt Securities. However, unless and until the full
amount of any such payment has been made to the Fiscal Agent or unless and until
the Fiscal Agent is satisfied that such payment will be made, neither it nor the
Paying Agent shall be bound to make payments in respect of the Debt Securities
as aforesaid. If the Agent makes any such payment on behalf of the Republic
under this Section 3, the Republic shall be liable on demand by the Agent to pay
to the Agent the amount so paid out, together with interest thereon at such a
rate as the Agent may certify as the aggregate of 1% per annum and the cost of
funding any such payment made by it (as reasonably determined by the Agent).
The Fiscal Agent shall not be liable for any interest on any such monies held by
it under this Agreement and any money held by it need not be segregated except
as required by law.
-2-
In the event that any holder of Debt Securities shall deliver to the Republic
written notice of a default and/or an event of acceleration, as provided in the
Debt Securities, the Republic shall, by telefax, relay such notice to the Fiscal
Agent. Such notice shall be confirmed in writing by the Republic, as promptly as
possible, to the Fiscal Agent. In the event that any holder of Debt Securities
shall deliver to the Fiscal Agent notice of a default and/or an event of
acceleration, the Fiscal Agent shall relay such notice to the Republic as
promptly as possible by telefax and post pursuant to Section 10 hereof.
If the Debt Securities are issued in definitive form the Republic shall appoint
a paying agent in the City and State of New York.
The Agent shall, at the request of any holder of the Debt Securities, issue
Voting Certificates and Block Voting Instructions in a form and manner which
comply with the provisions of Schedule II (Provisions for Meetings of the
Holders of the Debt Securities) hereto (except that it shall not be required to
issue the same less than 48 hours before the time fixed for any Meeting provided
for therein). The Agent shall keep a full record of Voting Certificates and
Block Voting Instructions issued by it and shall give to the Republic, not less
than 24 hours before the time appointed for any Meeting, full particulars of all
Voting Certificates and Block Voting Instructions issued by it in respect of
such Meeting.
The Fiscal Agent shall promptly forward to the Republic a copy of any notice or
communication addressed to the Republic by any holder of the Debt Securities
which is received by the Fiscal Agent.
The Fiscal Agent shall, upon and in accordance with instructions of the Republic
received at least 10 days before the proposed publication date, arrange for the
publication at the expense of the Republic of any notice which is to be given to
the holders of the Debt Securities and shall supply a copy thereof to each
Euroclear, Clearstream, Luxembourg and any stock exchange on which the Debt
Securities may be listed.
With respect to the Debt Securities in definitive form, upon request by the
Republic, as soon as practicable (and in any event within three months) after
each Interest Payment Date, the Fiscal Agent shall notify the Republic (on the
basis of the information available to it) of the number of any Debt Securities
in definitive form against surrender of which payment has been made and of the
number of any Debt Securities in definitive form which have not yet been
surrendered for payment.
The Agent shall also perform any other duties of the Paying Agent specified in
the Debt Securities.
The Debt Securities shall not be amended to change or increase the duties of the
Agent without the Fiscal Agent's prior written consent, which consent may not be
unreasonably withheld.
The Fiscal Agent shall comply with all United States backup withholding tax and
information reporting requirements under the Internal Revenue Code of 1986, as
amended, and the Treasury Regulations issued thereunder applicable to payments
under, or with respect to, the Debt Securities in definitive form (including the
collection of Internal Revenue Service Forms W-8 or W-9 and the filing of Forms
1096 and 1099 with respect to such payments).
-3-
4. Duties as Registrar and Fiscal Agent. The Fiscal Agent, as Registrar, shall
keep at its office in London a register of the names and addresses of the
holders of Debt Securities and nominal value of the Debt Securities held by them
and in which transfers of Debt Securities shall be registered.
The Debt Securities shall be executed on behalf of the Republic manually or by
the facsimile signature of the Republic Authorized Signatory and shall bear the
facsimile of the written, printed or stamped name of the Republic thereon
imprinted. The Fiscal Agent may rely, in good faith, on Debt Securities bearing
the signature of an individual who was at any time the Republic Authorized
Signatory which signature shall bind the Republic, notwithstanding that such
individual shall have ceased to hold such office prior to the authentication and
delivery of such Debt Securities. The Republic will deliver to the Fiscal Agent
a certificate of authorization for the Republic Authorized Signatory.
The Fiscal Agent shall authenticate and deliver on original issuance the
aggregate principal amount of the Debt Securities to or upon the order of the
Republic Authorized Signatory, registered in the name of Cede & Co. and in the
denominations as requested by the Underwriters named in the Underwriting
Agreement (the "Underwriters"). The Debt Securities shall be dated the date of
their authentication by the Fiscal Agent. Thereafter, the Fiscal Agent is
authorized from time to time to authenticate and deliver Debt Securities upon
transfers or exchanges thereof or in exchange for mutilated Debt Securities or
in lieu of destroyed, stolen or lost Debt Securities.
Transfers of the Debt Securities shall be effected in compliance with Condition
8 of the Debt Securities.
In the event that a Global Debt Security is exchanged for certificated
Securities in definitive registered form, pursuant to Condition 8 of the Debt
Security, such Debt Securities may be exchanged or transferred for one another
only in accordance with such procedures as may be, from time to time, adopted by
the Republic so as to comply with the Securities Act and the rules and
regulations promulgated thereunder.
If the Debt securities are issued in definitive form the Republic shall appoint
a transfer agent in the City and State of New York.
The Republic may from time to time deliver to the Fiscal Agent Debt Securities
in definitive form for cancellation, whereupon the Fiscal Agent shall cancel
such Debt Securities in definitive form. In addition, the Republic may from time
to time procure the delivery to the Fiscal Agent of a Global Debt Security with
instructions to cancel a specified aggregate principal amount of Debt Securities
represented by it (which instructions shall be accompanied by confirmation from
Euroclear or Clearstream, Luxembourg that Debt Securities having such aggregate
principal amount may be cancelled), whereupon the Fiscal Agent shall procure
that there is noted on the schedule to such Global Debt Security the aggregate
principal amount of Debt Securities so cancelled and the remaining principal
amount of such Global Debt Security (which shall be the previous principal
amount thereof less the aggregate principal amount of the Debt Securities so
cancelled) and shall procure the signature of such notation on its behalf.
The Fiscal Agent shall also perform any other duties of Registrar specified in
the Debt Securities.
-4-
The Debt Securities shall not be amended to change or increase the duties of the
Fiscal Agent as Registrar without such Agent's prior written consent. Such
consent shall not be unreasonably withheld.
5. Terms of Acceptance of Appointments. The Fiscal Agent hereby accepts its
appointments as Paying Agent and Registrar under this Agreement upon the further
terms and conditions hereinafter set forth:
(a) the Agent undertakes to perform only such duties as are specifically set
forth in this Agreement or are incorporated into this Agreement by reference to
the Debt Securities;
(b) no provisions of this Agreement shall relieve the Agent from liability for
its own negligent action or willful default, or its own willful misconduct
except that:
(1) the duties of the Agent shall be limited as provided in paragraph (a) of
this Section; and
(2) in the absence of bad faith on the part of the Agent, the Agent may
conclusively rely upon and be protected in acting or refraining from acting upon
certificates or opinions conforming to the requirements of this Agreement as to
the truth of the statements and the correctness of opinions expressed therein;
(c) the Agent may rely in good faith and shall be protected in acting on any
instruction, resolution, certificate, opinion, notice, request, order,
appraisal, report, information, Debt Security or other paper or document
reasonably believed by it to be genuine and to have been signed by the
authorized party or parties;
(d) the Agent may consult with counsel or other professional advisers selected
by it (who may be counsel for the Republic) and an opinion of such counsel or
adviser shall be full and complete authorization and protection in respect of
any action taken, suffered or omitted by it hereunder in good faith and in
accordance with such opinion;
(e) the Agent, in its individual or any other capacity, may become the owner or
pledgee of Debt Securities with the same rights it would have if it was not
Paying Agent or Registrar and may engage or be interested in any financial or
other transaction with the Republic, and may act on, or as depository, trustee
or agent for, any committee or body of holders of Debt Securities or other
obligations of the Republic, as freely as if it was not an Agent or such
aforementioned person;
(f) in acting under this Agreement, the Agent is acting solely as agent of the
Republic, does not assume any obligation or relationship of agency or trust for
or with any of the owners or holders of the Debt Securities and does not assume
any responsibility for the correctness of the recitals in the Debt Securities,
except that (i) all funds held by the Agent as Paying Agent for payment of
principal of or interest on the Debt Securities shall be held in trust for the
benefit of the holders of Debt Securities entitled thereto subject to the
provisions of the following paragraph (g) and
(ii) the provisions of Section 6 hereof are for the benefit of the holders of
Debt Securities;
(g) any moneys deposited with the Fiscal Agent, as Paying Agent, for the payment
of the principal of and interest and additional amounts, if any, on any Debt
Security remaining unclaimed for two years after such principal of or interest
on or additional amounts on such Debt
-5-
Security shall have become due and payable shall be repaid, and notice of the
existence of such funds shall be given to the Republic by the Fiscal Agent, and
the holder of such Debt Security shall thereafter, as an unsecured general
creditor, look only to the Republic for any payment to which such holder may be
entitled;
(h) all Debt Securities (i) surrendered to the Fiscal Agent, as Registrar, for
exchange or transfer or (ii) paid by the Fiscal Agent, as Paying Agent, shall be
canceled by the Fiscal Agent and kept by the Fiscal Agent in accordance with its
customary procedures, and, upon request of the Republic, evidence of such
cancellation (and any subsequent destruction) shall be promptly forwarded by the
Fiscal Agent to the Republic, and the registered owner thereof shall be stricken
from the register of Debt Securities held by the Fiscal Agent;
(i) notwithstanding any other provision of this Agreement to the contrary, under
no circumstances shall the Agent be liable to the Republic or any other party to
this Agreement for any consequential loss (being loss of business, goodwill or
opportunity or profit) even if advised of the possibility of such loss or
damage.
(j) whenever in the administration of this Agreement, the Agent shall deem it
desirable that a matter be proved or established prior to taking, suffering or
omitting any action hereunder, the Agent (unless other evidence be herein
specifically prescribed) may rely in good faith upon a certificate signed by a
Republic Authorized Signatory and delivered to the Agent; and
(k) the duties and obligations of the Agent shall be determined solely by the
express provisions of this Agreement, and the Agent shall be liable only for the
performance of such duties and obligations as are specifically set forth in this
Agreement, and no implied covenants or obligations shall be read into this
Agreement with respect to the Agent.
6. Resignation and Removal; Appointment of Successor. The Agent may resign at
any time by giving written notice to the Republic of its resignation, specifying
the date on which its resignation shall become effective (which shall not be
less than 60 days after the date on which notice is received, unless the
Republic shall agree in writing to a shorter period); and the Republic may
remove the Agent at any time by giving at least 60 days' notice pursuant to
Section 10 hereof to the Fiscal Agent, specifying the date on which such removal
shall become effective, but in each case only in accordance with the following
provisions:
(a) any resignation or removal of the Agent shall be effective only upon
appointment by the Republic of a qualified successor paying agent and registrar
and the latter's acceptance thereof;
(b) if the Agent shall resign, be removed or become incapable of acting as
Paying Agent or Registrar for any cause, the Republic shall promptly appoint a
successor paying agent or registrar;
(c) any successor paying agent and registrar appointed by the Republic shall be
a reputable financial institution legally qualified to act as such successor and
having an established place of business in London, and the City and State of
New York;
(d) every successor paying agent or registrar appointed hereunder shall execute
and deliver to the Republic and to the retiring paying agent or registrar an
instrument accepting such appointment,
-6-
which shall set forth its agreement to be bound by the terms hereof, and
thereupon the resignation or removal of the retiring paying agent or registrar
shall become effective and the successor, without further act or deed, shall
become vested with all the rights, powers, trusts and duties of the retiring
paying agent or registrar. Such retiring paying agent or registrar shall, at the
direction of the Republic and upon payment of its compensation and expenses then
unpaid, promptly deliver to its successor all sums held hereunder together with
all records, unissued Debt Security certificates and other documents necessary
or appropriate in connection with the performance of the duties of the successor
paying agent or registrar under this Agreement;
(e) The Republic shall give, or cause to be given, notice of each resignation
and each removal of a paying agent or registrar and each appointment of a
successor paying agent or registrar by publishing such notice in English in
London in the Financial Times and in New York in The Wall Street Journal (U.S.
Edition). If at any time publication in any such newspaper is not practicable,
notices will be valid if published in an English language newspaper with general
circulation in the respective market regions as the Republic shall determine.
Any such notice shall be deemed to have been given on the date of such
publication or, if published more than once on different dates, on the first
date on which publication is made; and
(f) The Republic agrees with the Fiscal Agent that, if on the day falling 30
days before the expiry of any notice given under Section 6, the Republic has not
appointed a replacement Agent, then the Agent shall be entitled, on behalf of
the Republic, to appoint in its place a reputable financial institution and the
Republic shall not unreasonably object to such appointment, and if the Republic
objects to such appointment, the Fiscal Agent may petition a court of competent
jurisdiction to make such appointment.
7. Merger, Consolidation and Sale of Fiscal Agent. In the event of any merger
or consolidation of the Fiscal Agent into another corporation or the sale of all
or substantially all the Fiscal Agent's corporate trust business, the
corporation resulting from such merger or consolidation, or the transferee in
the case of any such sale, shall be the paying agent and registrar hereunder
without further act or deed; provided, however, that such corporation shall be
otherwise qualified and eligible under this Agreement.
8. Compensation and Indemnification. The Republic agrees (1) to pay the
Fiscal Agent reasonable compensation for its services as Paying Agent and
Registrar under this Agreement, and to reimburse it upon its request in writing
for all reasonable costs and expenses incurred by the Agent in accordance with
any provision of this Agreement, such compensation and the further terms of such
reimbursement to be mutually agreed upon from time to time by separate written
agreements, and (2) to indemnify the Agent for, and to hold it harmless against
any loss, liability or expense incurred by it without negligence, willful
misconduct or bad faith on its part, arising out of or in connection with the
acceptance or acting pursuant to this Agreement or the Debt Securities,
including the reasonable costs and expenses (including counsel fees) of
defending itself against any claim or liability in connection with the exercise
or performance of any of its powers or duties hereunder or under the Debt
Securities. The obligations of the Republic under this Section 8 shall survive
payment of all of the Debt Securities or the resignation or removal of the Agent
or the termination or expiry of this Agreement. None of the provisions contained
in this Agreement shall require the Agent to expend or risk its own funds or
otherwise incur personal financial liability in the performance of any of its
duties.
-7-
9. Appointment of Agent for Service. The Republic hereby appoints the Republic
of Hungary, Office of the Hungarian Trade Commissioner, 500 North Michigan
Avenue, Suite 810, Chicago, Illinois, 60611, as its authorized agent (the
"Authorized Agent") upon which process may be served in any action arising out
of or based on this Agreement or the Debt Securities which may be instituted in
any State or Federal court in New York, New York by the holder of a Debt
Security of which the Fiscal Agent is acting as fiscal agent hereunder, and the
Republic expressly accepts the jurisdiction of any such court in respect of any
such action. Such appointment shall be irrevocable so long as any Debt
Securities remain outstanding unless and until a successor agent shall have been
appointed as the Republic's Authorized Agent and such successor Authorized Agent
shall have accepted such appointment. The Republic will take any and all action,
including the filing of any and all documents and instruments, that may be
necessary to continue such appointment or appointments in full force and effect
as aforesaid. Service of process upon the Authorized Agent at the address
indicated in this Section 9, or at such other address in the Borough of
Manhattan, The City of New York, as may be the address of the Authorized Agent
at the time of such service, and written notice of such service to the Republic
(mailed or delivered to the Republic at the address set forth in Section 10
hereof) shall be deemed, in every respect, effective service of process upon the
Republic. Upon receipt of such service of process, the Authorized Agent shall
advise the Republic promptly in writing by telefax of its receipt thereof, but
the failure to so advise shall have no effect on the validity or timeliness of
any such service. Notwithstanding the foregoing, any action against the Republic
arising out of or based on the Debt Securities may also be instituted by the
holder of a Debt Security in any competent court in the Republic of Hungary. The
Republic hereby waives irrevocably, to the fullest extent permitted by law, any
immunity from jurisdiction to which it might otherwise be entitled in any action
arising out of or based on this Agreement or the Debt Securities which may be
instituted as provided in this Section in any State or Federal court in New
York, New York, or in any competent court in the Republic of Hungary. Such
waiver constitutes only a limited and specific waiver for the purposes of this
Agreement and the Debt Securities and under no circumstances shall it be
interpreted as a general waiver by the Republic or a waiver with respect to
proceedings not arising out of or based on this Agreement or the Debt
Securities. Neither such appointment nor such waiver shall be interpreted to
include the waiver of any immunity with respect to: (i) actions brought against
the Republic under U.S. State or Federal securities laws; (ii) present or future
"premises of the mission" as defined in the Vienna Convention on Diplomatic
Relations signed in 1961; (iii) "Consular premises" as defined in the Vienna
Convention on Consular Relations signed in 1963; (iv) any other property or
assets used solely or mainly for official state purposes in the Republic or
elsewhere; or (v) military property or military assets or property or assets of
the Republic related thereto.
10. Notices. Any notice given pursuant to any of the provisions of this
Agreement shall be made in the English language or shall be accompanied by a
certified English translation and shall be delivered:
(a) to the Republic at:
Government Debt Management Agency Ltd.
Csalogany u. 9-11H
1027 Budapest
Hungary
Attention: Mr. Laszlo Buzas
Telephone: +36-1-488-9420
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Telecopier: +36-1-488-9425
(b) to the Fiscal Agent at the address specified in Schedule I hereto, or at
such other address as may be specified in writing to the other party.
11. Governing Law and Counterparts. This Agreement shall be construed in
accordance with the laws of the State of New York, without regard to the
conflicts of law principles of such State (other than Section 5-1401 of the
General Obligation Law of the State of New York), except with respect to its
authorization and execution by the Republic, which shall be governed by the laws
of the Republic of Hungary. This Agreement may be executed in any number of
counterparts each of which will be considered to be an original.
12. Amendments. This Agreement may be amended by written agreement of the
parties hereto, without the consent of the registered holders of the Debt
Securities, for the purpose of curing any ambiguity, or of curing, correcting or
supplementing any defective provision contained herein, or in regard to matters
or questions arising under this Agreement as such parties may deem necessary or
desirable and that shall not be inconsistent with the Debt Securities and shall
not, as solely determined by the Republic, adversely affect the interests of the
holders of Debt Securities.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date specified in Schedule I hereto.
On behalf of the Republic of Hungary
By:
----------------------------------------------
Name: Ferenc Szarvas
Title: Chief Executive Officer of the Government
Debt Management Agency Ltd. of the Republic
of Hungary as attorney for the Republic of
Hungary represented by its Minister of Finance
On behalf of the Fiscal Agent
----------------------------------------------
By:
----------------------------------------------
Name:
Title:
-9-
SCHEDULE I
Date of Agreement: [____]
Name of Fiscal Agent: [____]
Address for Notices: [____]
[____]
Attn:[____]
Fax: [____]
Tel: [____]
Republic Authorized Signatory: Mr. Ferenc Szarvas
Description of Debt
Securities:
Aggregate principal amount: U.S. $[____]
Form of Debt Securities: Fully registered global bonds
Depository: Depository Trust Company,
New York, New York
Denominations: U.S. $[____] and integral
multiples thereof
Interest rate: [____]
Currency of payment of interest: U.S. Dollars
Maturity: [____]
Description of Underwriting Agreement:
Date of Underwriting Agreement: [____]
Names of parties: The Republic and the several
Underwriters named in
Schedule I thereto
-10-
SCHEDULE II
PROVISIONS FOR MEETINGS OF THE HOLDERS OF THE DEBT SECURITIES
1. Definitions
In this Agreement and the Conditions of the Debt Securities, the following
expressions have the following meanings:
"Block Voting Instruction" means, in relation to any Meeting, a document in the
English language issued by the Agent:
(a) certifying that certain specified Debt Securities (the "deposited Debt
Securities") have been deposited with the Agent (or to its order at a bank or
other depositary) or blocked in an account with a clearing system and will not
be released until the earlier of:
(i) the conclusion of the Meeting; and
(ii) the surrender to the Agent, not less than 48 hours before the time fixed
for the Meeting (or, if the Meeting has been adjourned, the time fixed for its
resumption), of the receipt for the deposited or blocked Debt Securities and
notification thereof by the Agent to the Republic;
(b) certifying that the depositor of each deposited Debt Security or a duly
authorized person on its behalf has instructed the Agent that the votes
attributable to such deposited Debt Security are to be cast in a particular way
on each resolution to be put to the Meeting and that, during the period of 48
hours before the time fixed for the Meeting, such instructions may not be
amended or revoked;
(c) listing the total number and (if in definitive form) the certificate numbers
of the deposited Debt Securities, distinguishing for each resolution between
those in respect of which instructions have been given to vote for, or against,
the resolution; and
(d) authorizing a named individual or individuals to vote in respect of the
deposited Debt Securities in accordance with such instructions;
"Chairman" means, in relation to any Meeting, the individual who takes the chair
in accordance with paragraph 7 (Chairman);
"Conditions" mean the terms and conditions of the Debt Securities, substantially
in the form of Exhibit I and as modified from time to time in accordance with
their terms, and any reference to a numbered "Condition" is to the
correspondingly numbered provision thereof;
"Extraordinary Resolution" means:
(a) in relation to any Reserved Matter:
(i) a resolution passed at a Meeting duly convened and held in accordance with
this Schedule by a majority consisting of not less than 75% of the aggregate
principal amount of all outstanding Debt Securities; or
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(ii) a resolution in writing signed by or on behalf of holders of not less than
75% of the aggregate principal amount of all outstanding Debt Securities; and
(b) in relation to any other matter:
(i) a resolution passed at a Meeting duly convened and held in accordance with
this Schedule by a majority consisting of not less than 66.67% of the aggregate
principal amount of the outstanding Debt Securities which are represented at
that Meeting; or
(ii) a resolution in writing signed by or on behalf of holders of not less than
66.67% of the aggregate principal amount of all outstanding Debt Securities;
"Meeting" means a meeting of holders of the Debt Securities (whether originally
convened or resumed following an adjournment); "Proxy" means, in relation to any
Meeting, a person appointed to vote under a Block Voting Instruction other than:
(a) any such person whose appointment has been revoked and in relation to whom
the Fiscal Agent has been notified in writing of such revocation by the time
which is 48 hours before the time fixed for such Meeting; and
(b) any such person appointed to vote at a Meeting which has been adjourned for
want of a quorum and who has not been re-appointed to vote at the Meeting when
it is resumed;
"Relevant Fraction" means:
(a) for all business other than voting on an Extraordinary Resolution, one
tenth;
(b) for voting on any Extraordinary Resolution other than one relating to a
Reserved Matter, one more than half; and
(c) for voting on any Extraordinary Resolution relating to a Reserved Matter,
three quarters;
provided, however, that, in the case of a Meeting which has resumed after
adjournment for want of a quorum it means:
(a) for all business other than voting on an Extraordinary Resolution relating
to a Reserved Matter, the fraction of the aggregate principal amount of the
outstanding Debt Securities represented or held by the Voters actually present
at the Meeting; and
(b) for voting on any Extraordinary Resolution relating to a Reserved Matter,
one quarter; "Reserved Matter" means any proposal to:
(a) change any date, or the method for determining the date, fixed for payment
of principal or interest in respect of the Debt Securities, to reduce the amount
of principal or interest payable on any date in respect of the Debt Securities
or to alter the method of calculating the amount of any payment in respect of
the Debt Securities on redemption or maturity or the date for any such payment;
-12-
(b) effect the exchange or substitution of the Debt Securities for, or the
conversion of the Debt Securities into, shares, bonds or other obligations or
securities of the Republic or any other person or body corporate formed or to be
formed;
(c) reduce or cancel the principal amount of the Debt Securities;
(d) vary the currency or place of payment in which any payment in respect of the
Debt Securities is to be made;
(e) amend the status of the Debt Securities;
(f) amend the obligation of the Republic to pay additional amounts under
Condition 2;
(g) amend the Events of Default or the Events of Acceleration set out in
Condition 4;
(h) amend the law governing the Debt Securities, the courts to the jurisdiction
to which the Republic has submitted in the Debt Securities, the Republic's
obligation to maintain an agent for service of process in the United States or
the Republic's waiver of immunity, in respect of actions or proceedings brought
by any holder of the Debt Securities set out in Condition 6 and 7;
(i) modify the provisions contained in this Schedule concerning the quorum
required at any Meeting or any adjournment thereof or concerning the majority
required to pass an Extraordinary Resolution or the percentage of votes required
for the taking of any action;
(j) change the definition of "Extraordinary Resolution" or "outstanding" in the
conditions of the Debt Securities and/or in this Schedule.
(k) instruct any holder of the Debt Securities or committee appointed on behalf
of all holders of the Debt Securities pursuant to paragraph 17 of this Schedule
to withdraw, settle or compromise any proceeding or claim being asserted
pursuant to Condition 4;
(l) confer upon any committee appointed pursuant to paragraph 17 of this
Schedule any powers or discretions which the holder of the Debt Securities could
themselves exercise by Extraordinary Resolution; or
(m) amend this definition;
"Voter" means, in relation to any Meeting, the bearer of a Voting Certificate, a
Proxy or the bearer of a Debt Security in definitive form who produces such Debt
Security in definitive form at the Meeting; "Voting Certificate" means, in
relation to any Meeting, a certificate in the English language issued by the
Agent and dated in which it is stated:
(a) that certain specified Debt Securities (the "deposited Debt securities")
have been deposited with the Agent (or to its order at a bank or other
depositary) or blocked in an account with a clearing system and will not be
released until the earlier of:
(i) the conclusion of the Meeting; and
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(ii) the surrender of such certificate to the Agent; and
(b) that the bearer of such certificate is entitled to attend and vote at the
Meeting in respect of the deposited Debt Securities;
"24 hours" means a period of 24 hours including all or part of a day upon which
banks are open for business in both of the places where the relevant Meeting is
to be held and in each of the places where the Agent has its address, as
specified in Schedule I, (disregarding for this purpose the day upon which such
Meeting is to be held) and such period shall be extended by one period or, to
the extent necessary, more periods of 24 hours until there is included as
aforesaid all or part of a day upon which banks are open for business as
aforesaid; and
"48 hours" means 2 consecutive periods of 24 hours.
2. Issue Of Voting Certificates And Block Voting Instructions
The holder of a Debt Security may obtain a Voting Certificate from the Agent or
require the Agent to issue a Block Voting Instruction by depositing such Debt
Security with the Agent or arranging for such Debt Security to be (to its
satisfaction) held to its order or under its control or blocked in an account
with a clearing system not later than 48 hours before the time fixed for the
relevant Meeting. A Voting Certificate or Block Voting Instruction shall be
valid until the release of the deposited Debt Securities to which it relates.
So long as a Voting Certificate or Block Voting Instruction is valid, the bearer
thereof (in the case of a Voting Certificate) or any Proxy named therein (in the
case of a Block Voting Instruction) shall be deemed to be the holder of the Debt
Securities to which it relates for all purposes in connection with the Meeting.
A Voting Certificate and a Block Voting Instruction cannot be outstanding
simultaneously in respect of the same Debt Security.
3. References To Deposit/Release Of Debt Securities
Where Debt Securities are represented by the Global Debt Securities or are held
in definitive form within a clearing system, references to the deposit, or
release, of Debt Securities shall be construed in accordance with the usual
practices (including blocking the relevant account) of such clearing system.
4. Validity Of Block Voting Instructions
A Block Voting Instruction shall be valid only if it is deposited at the address
of the Fiscal Agent, as specified in Schedule I, or at some other place approved
by the Fiscal Agent, at least 24 hours before the time fixed for the relevant
Meeting or the Chairman decides otherwise before the Meeting proceeds to
business. If the Fiscal Agent requires, a notarised copy of each Block Voting
Instruction and satisfactory proof of the identity of each Proxy named therein
shall be produced at the Meeting, but the Fiscal Agent shall not be obliged to
investigate the validity of any Block Voting Instruction or the authority of any
Proxy.
5. Convening Of Meeting
The Republic may convene a Meeting at any time, and shall be obliged to do so
upon the request in writing of holders of the Debt Securities holding not less
than one tenth of the aggregate principal
-14-
amount of the outstanding Debt Securities delivered at the address of the Fiscal
Agent, as specified in Schedule I.
6. Notice
At least 21 days' notice (exclusive of the day on which the notice is given and
of the day on which the relevant Meeting is to be held) specifying the date,
time and place of the Meeting shall be given to the holders of the Debt
Securities and the Agent (with a copy to the Republic). The notice shall set out
the full text of any resolutions to be proposed and shall state that the Debt
Securities may be deposited with, or to the order of, the Agent for the purpose
of obtaining Voting Certificates or appointing Proxies not later than 48 hours
before the time fixed for the Meeting.
7. Chairman
An individual (who may, but need not, be a holder of the Debt Securities)
nominated in writing by the Republic may take the chair at any Meeting but, if
no such nomination is made or if the individual nominated is not present within
15 minutes after the time fixed for the Meeting, those present shall elect one
of themselves to take the chair, failing which the Republic may appoint a
Chairman. The Chairman of an adjourned Meeting need not be the same person as
was the Chairman of the original Meeting.
8. Quorum
The quorum at any Meeting shall be at least two Voters representing or holding
not less than the Relevant Fraction of the aggregate principal amount of the
outstanding Debt Securities; provided, however, that, so long as at least the
Relevant Fraction of the aggregate principal amount of the outstanding Debt
Securities is represented by the Global Debt Security, a single Proxy
representing the holder thereof shall be deemed to be two Voters for the purpose
of forming a quorum.
9. Adjournment For Want Of Quorum
If within 15 minutes after the time fixed for any Meeting a quorum is not
present, then:
(a) in the case of a Meeting requested by holder of the Debt Securities, it
shall be dissolved; and
(b) in the case of any other Meeting, it shall be adjourned for such period
(which shall be not less than 14 days and not more than 42 days) and to such
place as the Chairman determines; provided, however, that:
(i) the Meeting shall be dissolved if the Republic so decides; and
(ii) no Meeting may be adjourned more than once for want of a quorum.
10. Adjourned Meeting
The Chairman may, with the consent of (and shall if directed by) any Meeting,
adjourn such Meeting from time to time and from place to place, but no business
shall be transacted at any
-15-
adjourned Meeting except business which might lawfully have been transacted at
the Meeting from which the adjournment took place.
11. Notice Following Adjournment
Paragraph 6 (Notice) shall apply to any Meeting which is to be resumed after
adjournment for want of a quorum save that:
(a) 10 days' notice (exclusive of the day on which the notice is given and of
the day on which the Meeting is to be resumed) shall be sufficient; and
(b) the notice shall specifically set out the quorum requirements which will
apply when the Meeting resumes.
It shall not be necessary to give notice of the resumption of a Meeting which
has been adjourned for any other reason.
12. Participation
The following may attend and speak at a Meeting:
(a) Voters;
(b) representatives of the Republic and the Fiscal Agent;
(c) the financial advisers of the Republic;
(d) the legal counsel to the Republic and the Fiscal Agent; and
(e) any other person approved by the Meeting.
13. Show Of Hands
Except where the proviso to paragraph 8 (Quorum) applies, every question
submitted to a Meeting shall be decided in the first instance by a show of
hands. Unless a poll is validly demanded before or at the time that the result
is declared, the Chairman's declaration that on a show of hands a resolution has
been passed, passed by a particular majority, rejected or rejected by a
particular majority shall be conclusive, without proof of the number of votes
cast for, or against, the resolution.
14. Poll
A demand for a poll shall be valid if it is made by the Chairman, the Republic
or one or more Voters representing or holding not less than one fiftieth of the
aggregate principal amount of the outstanding Debt Securities. The poll may be
taken immediately or after such adjournment as the Chairman directs, but any
poll demanded on the election of the Chairman or on any question of adjournment
shall be taken at the Meeting without adjournment. A valid demand for a poll
shall not prevent the continuation of the relevant Meeting for any other
business as the Chairman directs.
15. Votes
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Every Voter shall have:
(a) on a show of hands, one vote; and
(b) on a poll, one vote in respect of each U.S. dollars [___] in aggregate face
amount of the outstanding Debt Securities represented or held by him.
In the case of a voting tie the Chairman shall have a casting vote.
Unless the terms of any Block Voting Instruction state otherwise, a Voter shall
not be obliged to exercise all the votes to which he is entitled or to cast all
the votes which he exercises in the same way.
16. Validity Of Votes By Proxies
Any vote by a Proxy in accordance with the relevant Block Voting Instruction
shall be valid even if such Block Voting Instruction or any instruction pursuant
to which it was given has been amended or revoked, provided that the Fiscal
Agent has not been notified in writing of such amendment or revocation by the
time which is 24 hours before the time fixed for the relevant Meeting. Unless
revoked, any appointment of a Proxy under a Block Voting Instruction in relation
to a Meeting shall remain in force in relation to any resumption of such Meeting
following an adjournment; provided, however, that no such appointment of a Proxy
in relation to a Meeting originally convened which has been adjourned for want
of a quorum shall remain in force in relation to such Meeting when it is
resumed. Any person appointed to vote at such a Meeting must be re-appointed
under a Block Voting Instruction Proxy to vote at the Meeting when it is
resumed.
17. Powers
A Meeting shall have power (exercisable by Extraordinary Resolution), without
prejudice to any other powers conferred on it or any other person:
(a) to approve any Reserved Matter;
(b) to approve any proposal by the Republic for any modification, abrogation,
variation or compromise of any of the Conditions or any arrangement in respect
of the obligations of the Republic under or in respect of the Debt Securities;
(c) to approve the substitution of any person for the Republic (or any previous
substitute) as principal obligor under the Debt Securities;
(d) to waive any breach or authorize any proposed breach by the Republic of its
obligations under or in respect of the Debt Securities or any act or omission
which might otherwise constitute an event of default under the Debt Securities;
(e) to authorize the Fiscal Agent or any other person to execute all documents
and do all things necessary to give effect to any Extraordinary Resolution;
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(f) to give any other authorization or approval which is required to be given by
Extraordinary Resolution; and
(g) to appoint any person or persons (whether holder of the Debt Securities or
not) as a committee or committees to represent the interests of the holder of
the Debt Securities (in any discussions with the Republic or any other creditors
of the Republic in connection with any Event of Default, Event of Acceleration,
any proposed restructuring of the Debt Securities or other indebtedness of the
Republic or otherwise) and to confer upon a committee or committees (appointed
pursuant to this paragraph or Condition 5) any powers or discretions which the
holder of the Debt Securities could themselves exercise by Extraordinary
Resolution.
18. Extraordinary Resolution Binds All Holders
An Extraordinary Resolution shall be binding upon all holders of the Debt
Securities whether or not present at such Meeting and each of the holder of the
Debt Securities shall be bound to give effect to it accordingly. Notice of the
result of every vote on an Extraordinary Resolution shall be given to the holder
of the Debt Securities and the Agent (with a copy to the Republic) within 14
days of the conclusion of the Meeting.
19. Minutes
Minutes shall be made of all resolutions and proceedings at each Meeting. The
Chairman shall sign the minutes, which shall be prima facie evidence of the
proceedings recorded therein. Unless and until the contrary is proved, every
such Meeting in respect of the proceedings of which minutes have been summarized
and signed shall be deemed to have been duly convened and held and all
resolutions passed or proceedings transacted at it to have been duly passed and
transacted.
20. Outstanding Debt Securities
For the purposes of (i) ascertaining the right to attend and vote at any
Meeting, and (ii) Conditions 4 and 5, those Debt Securities (if any) which are
for the time being held by any person (including but not limited to the
Republic) for the benefit of the Republic or by any public body owned or
controlled, directly or indirectly, by the Republic shall (unless and until
ceasing to be so held) be deemed not to remain outstanding.
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EXHIBIT I
FORM OF NOTE
REPUBLIC OF HUNGARY
[__]% NOTES DUE 20[__]
This Debt Security is a Global Debt Security within the meaning of the Fiscal
Agency Agreement and is registered in the name of Cede & Co., as the nominee of
The Depository Trust Company, a New York Corporation ("DTC"). This Debt Security
may not be exchanged in whole or in part for a debt security registered, and no
transfer of this Debt Security in whole or in part may be registered, in the
name of any person other than DTC or a nominee thereof, except in the limited
circumstances described in the Conditions referred to within this Debt Security.
Unless this certificate is presented by an authorized representative of DTC, to
the Republic of Hungary or its agent for registration of transfer, exchange or
payment, and any certificate issued is registered in the name of Cede & Co., or
in such other name as is requested by an authorized representative of DTC (and
any payment is made to Cede & Co., or to such other entity as is requested by an
authorized representative of DTC), any transfer, pledge or other use hereof for
value or otherwise by or to any person is wrongful inasmuch as the registered
owner hereof, Cede & Co. has an interest herein.
PAYABLE AS TO PRINCIPAL AND INTEREST IN LAWFUL MONEY OF
THE UNITED STATES OF AMERICA FULLY REGISTERED NOTES
***[___]***
CUSIP No. [___]
COMMON CODE No. [___]
REGISTERED No. [___]
REGISTERED HOLDER: Cede & Co., or its registered assigns
PRINCIPAL SUM OF [___] DOLLARS
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THE REPUBLIC OF HUNGARY (the "Republic"), for value received, hereby promises to
pay to the registered owner specified above or registered assigns on the [__]
day of [___], upon presentation and surrender of this Global Debt Security, the
principal sum specified above in lawful money of the United States of America at
the office of [___] in London or The City of New York, New York, and to pay
interest thereon in like money in the manner provided in the Conditions endorsed
hereon from [___], or from the most recent interest payment date to which
interest has been paid, or duly provided for, such interest to be payable
semi-annually [___] at the rate of [__]% per annum [___] on the [__]th day of
[___], and on the [__]th day of [___] in each year (each an "Interest Payment
Date") until the principal of this Global Debt Security shall have been paid,
the first of such payments of interest to become due and payable on the 15th day
of [___]. Notwithstanding anything to the contrary provided herein, any payment
of principal or interest falling due on a day which is not a Business Day (as
defined in the Fiscal Agency Agreement between the Republic and [___], dated as
of [___]) will be payable on the next succeeding Business Day and no interest
shall accrue for the intervening period, provided however that if that next
succeeding Business Day falls in the next calendar month, such payment of
principal or interest will be payable on the first preceding business day. The
interest so payable on any such Interest Payment Date will be paid to the person
in whose name this Global Debt Security is registered at the close of business
on the fifteenth day (whether or not such day is a Business Day) preceding such
Interest Payment Date (each a "Record Date").
This Global Debt Security is a direct, unconditional, unsecured and general
obligation of the Republic. This Global Debt Security ranks and will rank at
least equally in right of payment with all other unsecured and unsubordinated
payment obligations of the Republic outstanding at the date of issue of this
Global Debt Security or issued thereafter, except for such obligations as may be
preferred by mandatory provisions of applicable law. This Global Debt Security
will be backed by the full faith and credit of the Republic. The Republic will
give no preference to one obligation over another on the basis of priority of
issue date or currency of payment.
This Global Debt Security is not redeemable prior to maturity at the option of
the Republic or of the registered holders thereof.
This Global Debt Security is subject to the Conditions endorsed on the reverse
hereof and shall not be valid or enforceable for any purpose unless
authenticated by the manual signature of the Fiscal Agent (as defined in the
Fiscal Agency Agreement). This Global Debt Security shall be dated the date of
its authentication by the Fiscal Agent.
IN WITNESS WHEREOF, the Republic has caused this Global Debt Security to be duly
executed by the facsimile signature of Mr. Ferenc Szarvas and a facsimile of the
written, printed or stamped name of the Republic to be hereon imprinted.
On behalf of the Republic of Hungary
By: ____________________________ Name: Ferenc Szarvas Title: Chief Executive
Officer of the Government Debt Management Agency Ltd. of the Republic of Hungary
as attorney for the Republic of Hungary represented by its Minister of Finance
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FISCAL AGENT'S CERTIFICATE
OF AUTHENTICATION
This is a permanent global debt security evidencing the Debt Securities referred
to in the aforementioned Fiscal Agency Agreement
[____]
By:
-------------------------
AUTHORIZED SIGNATURE
DATED:
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THE CONDITIONS WITHIN REFERRED TO
1. This Global Debt Security is one of the permanent global securities
evidencing a duly authorized issue of [__]% Notes due 20[__] of the Republic
(each a "Debt Security" and, collectively and including this Global Debt
Security, the "Debt Securities"), limited in aggregate principal amount to U.S.
[___] and issued under the Fiscal Agency Agreement dated as of [___] (as the
same may be amended, supplemented or otherwise modified from time to time, the
"Fiscal Agency Agreement"), between the Republic, and [___], as fiscal
agent (the "Fiscal Agent" or "Agent"), to which Fiscal Agency Agreement
reference is hereby made for a statement of the respective rights, duties,
limitations of rights, obligations and immunities thereunder of the Republic,
the Agent and the holders of the Debt Securities. The Debt Securities are
issuable as fully registered Debt Securities without coupons in denominations of
$[___] and integral multiples of $[___] in lawful money of the United States of
America.
The Republic may from time to time, without the consent of the holders of the
Debt Securities, create and issue further debt securities having the same terms
and conditions as the Debt Securities in all respects (or in all respects except
for the first payment of interest) so as to form a single series with the Debt
Securities.
2. All payments made in respect of this Global Debt Security, including payments
of principal and interest, to a holder that is not a resident of the Republic,
shall be made by the Republic without withholding or deduction for or on account
of any present or future taxes, duties, levies or other governmental charges of
whatever nature, imposed or levied by the Republic or by any political
subdivision or taxing authority therein or thereof ("Taxes"). If the Republic is
required by law to deduct or withhold any such amounts, it will pay such
additional amounts (including any deduction or withholding with respect to
additional amounts) to the holder hereof who is not a resident of Hungary as may
be necessary so that every net payment of the principal of and interest on this
Global Debt Security paid to such holder after making all such deductions and
withholdings shall equal the amount provided for in this Global Debt Security to
be then due and payable, except that there will be no additional amounts paid
with respect to this Global Debt Security to the holder hereof if such Taxes:
(i) would not have been imposed but for some present or former connection (or a
connection of a fiduciary, shareholder or other related party) of the holder
with the Republic, including the holder being or having been a citizen or
resident of the Republic or being or having been engaged in a trade or business
or present in the Republic or having, or having had, a permanent establishment
in the Republic;
(ii) are imposed on a payment to an individual and is required to be made
pursuant to the European Council Directive 2003/48/EC or any other directive
implementing the conclusions of the EU Council of Finance Ministers meeting of
November 26 and 27, 2000 on the taxation of savings income or any law
implementing or complying with, or introduced in order to conform to, such
Directive;
(iii) are imposed because the holder presents a Debt Security in definitive form
for payment more than thirty (30) days after the date on which the payment
became due and payable;
(iv) constitute an estate, inheritance, gift, sales, transfer or personal
property tax or any similar tax, assessment or governmental charge;
(v) are payable other than by withholding;
(vi) would not have been imposed but for the failure to comply with
certification, information or other reporting requirements concerning the
holder's nationality, residence or identity (or the
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nationality, residence or identity of the beneficial owner of this Global Debt
Security), if such holder's compliance is required by the laws of the Republic
or of any political subdivision or taxing authority of the Republic to avoid or
reduce such tax and if such compliance is not materially more onerous (in form,
in procedure and in the substance of information disclosed) than comparable
information or other reporting requirements imposed under United States tax law;
(vii) are required to be withheld by any paying agent from a payment on this
Global Debt Security if such payment can be made without such withholding by
another paying agent; or
(viii) are imposed as a result of any combination of the items listed above.
Furthermore, no additional amounts shall be paid with respect to any Debt
Security to a holder who is a fiduciary or partnership or other than the sole
beneficial owner of such payment to the extent that the settlors with respect to
such fiduciary, partner or beneficial owner, as the case may be, would not have
been entitled to payment of such additional amounts if they held this Global
Debt Security themselves.
In the event that the Republic is required to deduct or withhold Taxes with
respect to a holder, the Republic will make such deduction or withholding and
remit the full amount deducted or withheld to the relevant authority in
accordance with applicable law. The Republic will furnish such holder, upon
request, within a reasonable period of time after the date of the payment of any
Taxes due pursuant to applicable law, certified copies of tax receipts
evidencing such payment by the Republic.
3. As long as any Debt Security remains outstanding, the Republic will not allow
any Security Interest to be established on any of the Republic's or the National
Bank of Hungary's assets or revenues, present or future, in order to secure (i)
any Public External Indebtedness of the Republic having an original maturity of
at least one year; or (ii) any Public External Indebtedness of the National Bank
of Hungary having an original maturity of at least one year and incurred on or
prior to December 31, 1998, unless the debt securities are secured equally and
rateably to this external indebtedness.
For these purposes:
"External Indebtedness" means any obligation in respect of existing or future
Indebtedness denominated or payable, or at the option of the holder thereof
payable, in a currency other than the lawful currency of the Republic of
Hungary. If at any time the lawful currency of the Republic of Hungary becomes
the Euro, then External Indebtedness shall also include Indebtedness expressed
in or payable or optionally payable in Euro, if (i) such Indebtedness was issued
after the date on which the Euro became the lawful currency of the Republic of
Hungary, and (ii) more than 50% of the aggregate principal amount of such
Indebtedness was initially placed outside the Republic of Hungary.
"Public External Indebtedness" means External Indebtedness which: (i) is in the
form of, or represented by, bonds, notes or other similar securities; and (ii)
is, or may be, quoted, listed or ordinarily purchased and sold on any stock
exchange, automated trading system or over-the-counter or other securities
market.
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"Indebtedness" means any indebtedness of any Person (whether incurred as
principal or surety) for money borrowed.
"Person" means any individual, company, corporation, firm, partnership, joint
venture, association, organization, state or agency of a state or other entity,
whether or not having separate legal personality.
"Security Interest" means any lien, pledge hypothecation, mortgage, security
interest, charge or other encumbrance or arrangement which has a similar legal
and economic effect, and, without limitation, anything analogous to any of the
foregoing under the laws of any jurisdiction.
4. An "Event of Default" means any of the following:
(i) the Republic fails to pay the principal of or interest on any of the Debt
Securities for more than 30 days after payment is due; or
(ii) the Republic does not perform any of its other covenants under any of the
Debt Securities for more than 60 days after the holder of the Debt Security has
given written notice of the breach to the Republic at the Fiscal Agent's
corporate trust office.
An "Event of Acceleration" means any of the following:
(i) any action, condition or any other thing which at any time is required to be
taken, fulfilled or done in order: (A) to enable the Republic lawfully to enter
into, exercise its rights and perform and comply with its obligations under and
in respect of the Debt Securities, (B) to ensure that those obligations are
legal, valid, binding and enforceable and (C) subject to their official
translation into the Hungarian language, to make the Debt Securities admissible
in evidence in the courts of the Republic of Hungary, is not taken, fulfilled or
done within 30 days of receipt by the Republic of written notice thereof; or
(ii) it becomes illegal for the Republic to perform any of its obligations under
the Debt Securities or if these obligations become invalid and not remedied by
the Republic within 30 days' written notice thereof.
If an Event of Default or an Event of Acceleration occurs, all of the Debt
Securities may, by written notice addressed and delivered by the holders of at
least 25% of the aggregate principal amount of the outstanding Debt Securities
to the Republic at the office of the Fiscal Agent, be declared to be immediately
due and payable, unless prior to such date the Republic shall have remedied the
Event of Default or Event of Acceleration for all the Debt Securities.
If the Fiscal Agent receives notice in writing from holders of at least 50% in
aggregate principal amount of the outstanding Debt Securities and/or a
resolution is passed at a meeting of the holders of the Debt Securities, duly
convened and held in accordance with the Fiscal Agency Agreement, to the effect
that the Event(s) of Default and/or Event(s) of Acceleration giving rise to a
declaration of acceleration made pursuant to the conditions above is or are
cured or is or are waived by them following any such declaration and that such
holders request the Fiscal Agent to rescind the relevant declaration, the Fiscal
Agent shall, by notice in writing to the Republic and the holders, rescind the
relevant declaration whereupon it shall be rescinded and shall have no further
effect.
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The Republic is not obliged to provide investors with periodic evidence that
there are no Events of Default and/or Events of Acceleration. Please also note
that the Fiscal Agency Agreement does not provide for the holders to be notified
of the existence of an Event of Default or an Event of Acceleration or for any
right to examine the Debt Securities register.
5. The Fiscal Agency Agreement contains provisions for convening meetings of
holders of the Debt Securities to consider matters relating to the Debt
Securities, including, without limitation, the modification of any provision of
the terms of the Debt Securities. Any such modification may be made if, having
been approved in writing by the Republic, it is sanctioned by an Extraordinary
Resolution. Such a meeting may be convened by the Republic and shall be convened
by the Fiscal Agent upon the request in writing of holders holding not less than
10% of the aggregate principal amount of the outstanding Debt Securities. The
quorum at any meeting of holders convened to vote on an Extraordinary Resolution
will be two or more persons holding or representing not less than 50% of the
aggregate principal amount of the outstanding Debt Securities or, at any
adjourned meeting of holders, two or more persons being or representing holders,
whatever the aggregate principal amount of the outstanding Debt Securities held
or represented; provided, however, that any proposals relating to a Reserved
Matter may only be sanctioned by an Extraordinary Resolution passed at a meeting
of holders at which two or more persons holding or representing not less than
75% of the aggregate principal amount of the outstanding Debt Securities or, at
any adjourned meeting, 25% of the aggregate principal amount of the outstanding
Debt Securities form a quorum. Any Extraordinary Resolution duly passed at any
such meeting shall be binding on all the holders of the Debt Securities, whether
present or not.
If a resolution is brought in writing, such a resolution in writing may be
contained in one document or several documents in the same form, each signed by
or on behalf of one or more holders. For these purposes: "Extraordinary
Resolution" means:
(i) in relation to any Reserved Matter:
(x) a resolution passed at a meeting of holders duly convened and held in
accordance with the Fiscal Agency Agreement by a majority consisting of not less
than 75% of the aggregate principal amount of all outstanding Debt Securities;
or
(y) a resolution in writing signed by or on behalf of holders of not less than
75% of the aggregate principal amount of all outstanding Debt Securities; and
(ii) in relation to any other matter:
(x) a resolution passed at a meeting of holders duly convened and held in
accordance with the Fiscal Agency Agreement by a majority consisting of not less
than 66.67% of the aggregate principal amount of the outstanding Debt Securities
which are represented at that meeting; or
(y) a resolution in writing signed by or on behalf of holders of not less than
66.67% of the aggregate principal amount of all outstanding Debt Securities.
"Reserved Matter" means any proposal to:
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(i) change any date, or the method for determining the date, fixed for payment
of principal or interest in respect of the Debt Securities, to reduce the amount
of principal or interest payable on any date in respect of the Debt Securities
or to alter the method of calculating the amount of any payment in respect of
the Debt Securities on redemption or maturity or the date for any such payment;
(ii) effect the exchange or substitution of the Debt Securities for, or the
conversion of the Debt Securities into, shares, bonds or other obligations or
securities of the Republic or any other person or body corporate formed or to be
formed;
(iii) reduce or cancel the principal amount of the Debt Securities;
(iv) vary the currency or place of payment in which any payment in respect of
the Debt Securities is to be made;
(v) amend the status of the Debt Securities;
(vi) amend the obligation of the Republic to pay additional amounts under
Condition 2;
(vii) amend the Events of Default or the Events of Acceleration set out in
Condition 4;
(viii) amend the law governing the Debt Securities, the courts to the
jurisdiction to which the Republic has submitted in the Debt Securities, the
Republic's obligation to maintain an agent for service of process in the United
States or the Republic's waiver of immunity, in respect of actions or
proceedings brought by any holder of the Debt Securities set out in Conditions 6
and 7;
(ix) modify the provisions contained in this Schedule concerning the quorum
required at any meeting of holders of the Debt Securities or any adjournment
thereof or concerning the majority required to pass an Extraordinary Resolution
or the percentage of votes required for the taking of any action;
(x) change the definition of "Extraordinary Resolution" or "outstanding" in
these conditions of the Debt Securities and/or in the Fiscal Agency Agreement;
(xi) instruct any holder of the Debt Securities or committee appointed on behalf
of all holders of the Debt Securities pursuant to the Fiscal Agency Agreement to
withdraw, settle or compromise any proceeding or claim being asserted pursuant
to Condition 4;
(xii) confer upon any committee appointed pursuant to the Fiscal Agency
Agreement any powers or discretions which the holder of the Debt Securities
could themselves exercise by Extraordinary Resolution; or
(xiii) amend this definition.
The holders of the Debt Securities may, by a resolution passed at a meeting of
holders duly convened and held in accordance with the Fiscal Agency Agreement by
a majority of at least 50% in aggregate principal amount of the Debt Securities
then outstanding, or by notice in
-26-
writing to the Fiscal Agent signed by or on behalf of the holders of at least
50% in aggregate principal amount of the Debt Securities then outstanding,
appoint any persons as a committee to represent the interests of the holders if
any of the following events shall have occurred:
(i) an Event of Default or an Event of Acceleration;
(ii) any event or circumstance which would, with the giving of notice, lapse of
time, the issuing of a certificate and/or fulfillment of any other requirement
provided for in Condition 4 become an Event of Default or an Event of
Acceleration; or
(iii) any public announcement by the Republic, to the effect that the Republic
is seeking or intends to seek a restructuring of the Debt Securities (whether by
amendment, exchange offer or otherwise).
Such committee in its discretion may, among other things, (i) engage legal
advisers and financial advisers to assist it in representing the interests of
the holders of the Debt Securities, (ii) adopt such rules as it considers
appropriate regarding its proceedings and (iii) enter into discussions with the
Republic and/or other creditors of the Republic. The Republic shall pay any
reasonably incurred fees and expenses of any such committee (including, without
limitation, the fees and expenses of the committee's legal advisers and
financial advisers, if any) within 30 days of the delivery to the Republic of a
reasonably detailed invoice and supporting documentation.
For the purposes of (i) ascertaining the right to attend and vote at any meeting
of the holders of the Debt Securities and (ii) Conditions 4 and 5, those Debt
Securities (if any) which are for the time being held by any person (including
but not limited to the Republic) for the benefit of the Republic or by any
public body owned or controlled, directly or indirectly, by the Republic shall
(unless and until ceasing to be so held) be deemed not to remain outstanding.
6. As more fully set forth in the Fiscal Agency Agreement, the Republic has
appointed the Republic of Hungary, Office of the Hungarian Trade Commissioner,
500 North Michigan Avenue, Suite 810, Chicago, Illinois, 60611, as its
authorized agent upon which process may be served in any action arising out of
or based on the Debt Securities which may be instituted in any Federal or State
court in New York, New York by the holder of any Debt Security, and the Republic
hereby expressly accepts the jurisdiction of any such court in respect of any
such action. Such appointment shall be irrevocable so long as any of the Debt
Securities remain outstanding, unless and until a successor shall have been
appointed by the Republic as its authorized agent for such purpose and such
successor authorized agent shall have accepted such appointment. Notwithstanding
the foregoing, any action arising out of or based on the Debt Securities may be
instituted by the holder of any Debt Security in any competent court in the
Republic of Hungary. The Republic hereby waives irrevocably, to the fullest
extent permitted by law, any immunity from jurisdiction to which it might
otherwise be entitled in any such action which may be instituted by the holder
of any Debt Security in Federal or State court in New York, New York or in any
competent court in the Republic of Hungary. This waiver is intended to be
effective upon execution of this Global Debt Security without further act by the
Republic before any such court, and introduction of this Global Debt Security
into evidence shall be final and conclusive evidence of such waiver. Such waiver
constitutes only a limited and specific waiver for the purposes of the Debt
Securities and under no circumstances shall it be interpreted as a general
waiver by the Republic or a waiver with respect to proceedings unrelated to the
Debt Securities. Neither such appointment nor such waiver shall be interpreted
-27-
to include the waiver of any immunity with respect to: (i) actions brought
against the Republic under U.S. State or Federal securities laws; (ii) present
or future "premises of the mission" as defined in the Vienna Convention on
Diplomatic Relations signed in 1961; (iii) "Consular premises" as defined in the
Vienna Convention on Consular Relations signed in 1963; (iv) any other property
or assets used solely or mainly for official state purposes in the Republic or
elsewhere; or (v) military property or military assets or property or assets of
the Republic related thereto.
7. This Global Debt Security shall be governed by and construed in accordance
with the laws of the State of New York, without regard to the conflicts of law
principles of such State (other than Section 5-1401 of the General Obligation
Law of the State of New York), except with respect to its authorization and
execution by the Republic, which shall be governed by the laws of the Republic
of Hungary.
8. Except as set forth in this Condition 8, the Debt Securities are issuable
only as fully registered global securities, without coupons, each registered in
the name of DTC, a nominee thereof or a successor to DTC or a nominee thereof,
and
(i) no Global Debt Security may be transferred, except in whole and not in part,
and only to DTC, one or more nominees of DTC or one or more respective
successors of DTC and its nominees; and
(ii) no Global Debt Security may be exchanged for any Debt Security other than
another Global Debt Security.
Notwithstanding any other provisions of the Fiscal Agency Agreement or this
Global Debt Security, a Global Debt Security may be transferred to, or exchanged
for registered Debt Securities registered in the name of, a person other than
DTC, a nominee of DTC or a successor of DTC or its nominee if:
(i) DTC (a) notifies the Republic that it is unwilling or unable to continue as
depository for such Global Debt Security or (b) ceases to be a clearing agency
registered under the Securities Exchange Act of 1934 at a time when it is
required to be, and in either such case (a) or (b) a successor depository is not
appointed by the Republic within 90 days after receiving such notice or becoming
aware that DTC is no longer so registered;
(ii) the Republic, in its sole discretion, instructs the Fiscal Agent in writing
that a Global Debt Security shall be so transferable and exchangeable; or
(iii) there shall have occurred and be continuing an Event of Default and/or
Event of Acceleration with respect to the Debt Securities evidenced by this
Global Debt Security.
Registered Debt Securities issued in exchange for this Global Debt Security will
be registered in such names, and issued in such denominations (of $1,000 and
integral multiples thereof), as an authorized representative of DTC shall
request.
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9. The Republic will maintain for the Debt Securities (i) a Paying Agent and
Registrar in the City of London, England or The City and State of New York, and
(ii) if the Debt Securities are issued in definitive form, a transfer agent and
paying agent in The City and State of New York. The Republic will cause the
Registrar to maintain a register in which shall be entered the names and
addresses of the holders of the Debt Securities of this issue and the
particulars of the Debt Securities held by them respectively and in which,
subject to Condition 8 above, transfers of the Debt Securities shall be
registered. Such Paying Agent and Registrar in England shall be [___], London,
unless and until the Republic appoints a different Paying Agent or Registrar (if
applicable) in the same city. The Republic will appoint a transfer agent and
paying agent as or when required in The City and State of New York. The holders
of the Debt Securities may serve notices and demands with respect to the Debt
Securities at the office of any Paying Agent and Registrar maintained pursuant
to this Condition. In addition, all notices of the Republic will be published in
English in London in the Financial Times and in New York in The Wall Street
Journal (U.S. Edition). If at any time publication in any such newspaper is not
practicable, notices will be valid if published in such English language
newspaper with general circulation in the respective market regions as the
Republic shall determine. Any such notice shall be deemed to have been given on
the date of such publication or, if published more than once on different dates,
on the first date on which publication is made.
10. Subject to Condition 8 above, this Global Debt Security is transferable upon
presentation for such purpose at the office of the Registrar referred to in
Condition 9, accompanied by a written instrument of transfer in form approved by
the Republic executed by the registered holder hereof or by his duly authorized
attorney, whereupon this Global Debt Security will be canceled and one or more
Debt Securities of this issue for an equal aggregate principal amount will be
delivered to the transferee.
11. Subject to Condition 8 above, Debt Securities of this issue upon
presentation for such purpose at the office of the Registrar referred to in
Condition 9, accompanied by a written instrument of transfer in form approved by
the Republic executed by the registered holder or by his duly authorized
attorney, may be exchanged for an equal aggregate principal amount of other
fully registered Debt Securities of this issue in other authorized
denominations.
12. Subject to Condition 8 above, the Republic will make transfers and
exchanges of Debt Securities of this issue as aforesaid upon compliance by the
holders of the Debt Securities with such reasonable regulations as may be
prescribed by the Republic, and the Republic shall not be entitled to make any
charge in respect to transfers and exchanges of Debt Securities of this issue,
other than in respect of transfer taxes, if any. Each Debt Security issued upon
any such transfer or exchange shall be dated the date of its authentication by
the Fiscal Agent.
13. Interest on the Debt Securities of this issue shall be computed on the basis
of a 360-day year of twelve 30 day months. Unless other arrangements are made,
payments of interest on this Global Debt Security will be made by check drawn on
a bank or trust company in The City and State of New York payable to the order
of the registered holder, or, in the case of joint holders, to the order of all
such joint holders or to such person as the joint holders may request in
writing, provided that payment of principal will be made only upon prior
presentation and surrender of this Global Debt Security at the office of a
Paying Agent of the Republic referred to in Condition 9. Such check shall be
mailed to the address of the registered holder as such address shall appear on
the register maintained by the Registrar pursuant to Condition 9 hereof, or, in
the case of joint holders, to such registered address of that joint holder who
is first named in the register as one of such joint holders or to such address
specified in the aforementioned request of such joint holders. The registered
holder hereof or his legal personal representatives will be regarded as
exclusively entitled to the principal moneys hereby secured, and in the case of
joint registered holders of this Global Debt Security the said principal monies
shall be deemed to be owing to them on joint account. Any holder of Debt
Securities, the aggregate principal amount of which equals or exceeds U.S.
$1,000,000, may, by written notice to the Paying Agent no later than the Record
Date therefor, elect to receive the interest payment in respect of such Debt
Securities by wire transfer in same-day funds to a bank account maintained by
such holder in the United States. The Debt Securities do not have the benefit of
any sinking fund obligations.
14. Claims for payment of the principal amount of this Debt Security shall
become void ten years after such principal amount became due and payable. Claims
for payment of interest on this Debt Security shall become void five years after
relevant interest payment date on which the interest became due and payable.
-29-
15. In case any Debt Security shall at any time become mutilated or destroyed
or stolen or lost, and such Debt Security, or evidence of the loss, theft or
destruction thereof (together with the indemnity hereinafter referred to and
such other documents or proof as may be required in the premises) shall be
delivered to the Registrar referred to in Condition 9 above, a new Debt Security
of like tenor and date will be issued by the Republic in exchange for the Debt
Security so mutilated, or in lieu of the Debt Security so destroyed or stolen or
lost, but, in the case of any destroyed or stolen or lost Debt Security, only
upon receipt of evidence satisfactory to the Republic that such Debt Security
was destroyed or stolen or lost, and, upon receipt also of indemnity
satisfactory to the Republic. All expenses and reasonable charges associated
with procuring such indemnity and with the preparation, authentication and
delivery of a new Debt Security shall be borne by the owner of the Debt Security
mutilated, destroyed, stolen or lost.
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face of this
instrument, shall be construed as though they were written out in full according
to applicable laws or regulations:
- ----------------------- ------------------------------------------------------
TEN COM-as tenants in UNIF GIFT MIN ACT-______Custodian_______
common (Cust) (Minor)
- ----------------------- ------------------------------------------------------
TEN ENT-as tenants by Under Uniform Gifts to Minors Act________)
the entireties (State)
- ----------------------- ------------------------------------------------------
JT TEN-as joint tenants with right of survivorship and not as tenants in common
Additional abbreviations may also be used though not in the above list
TRANSFER
For Value Received the undersigned hereby sells, assigns and transfers unto
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
name and address including zip code and social security number or other
identifying number of assignee the within Debt Security, hereby irrevocably
constituting and appointing
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
Attorney to transfer the Debt Security on the register kept at the office of the
Registrar of the Republic for such purpose in the Borough of Manhattan, The City
of New York and State of New York, United States of America or London, with full
-30-
power of substitution
dated this _______ day of _______, ____.____________________Signature
NOTICE: The signature to this assignment must correspond with the name as
written upon the face of the within Debt Security in every particular without
alteration or enlargement or any change whatsoever and must be guaranteed by a
commercial bank or trust company having its principal office or correspondent in
The City of New York or by a member of the New York Stock Exchange.
-31-
Exhibit (5)(C)
FORM OF UNDERWRITING AGREEMENT
REPUBLIC OF HUNGARY
New York, New York
[DATE]
[UNDERWRITERS]
[ADDRESS]
Dear Sirs:
The Republic of Hungary (the "Republic") proposes to sell to [___], and [___]
(the "Underwriters") $[___] principal amount of its [___] Notes due 20[__]
(the "Offered Securities") pursuant to the provisions of a Fiscal Agency
Agreement dated as of [___] (the "Fiscal Agency Agreement"), between the
Republic and [___], as fiscal agent (the "Fiscal Agent").
The terms which follow, when used in this Agreement, shall have the meanings
indicated:
"Act" means the Securities Act of 1933.
"Basic Prospectus" means the prospectus included in the Registration Statement
in the form filed with the Commission, as amended or supplemented to the date of
this Agreement, but excluding any amendments or supplements related solely to an
offering of a series of debt securities other than the Offered Securities.
"Commission" means the Securities and Exchange Commission.
"Effective Date" means the latest date that the Registration Statement and any
post-effective amendment or amendments thereto became or becomes effective.
"Execution Time" means the date and time that this Agreement is executed and
delivered by the parties hereto.
"External Indebtedness" means any obligation in respect of existing or future
Indebtedness denominated or payable, or at the option of the holder thereof
payable, in a currency other than the lawful currency of the Republic of
Hungary. If at any time the lawful currency of the Republic of Hungary becomes
the Euro, then External Indebtedness shall also include Indebtedness expressed
in or payable or optionally payable in Euro, if (i) such Indebtedness was issued
after the date on which the Euro became the lawful currency of the Republic of
Hungary, and (ii) more than 50% of the aggregate principal amount of such
Indebtedness was initially placed outside the Republic of Hungary.
"Indebtedness" means any indebtedness of any Person (whether incurred as
principal or surety) for money borrowed.
"Person" means any individual, company, corporation, firm, partnership, joint
venture, association, organization, state or agency of a state or other entity,
whether or not having separate legal personality.
"preliminary prospectus" means the preliminary form (in the form dated [___]) of
the Prospectus used in connection with the offering of the Offered Securities,
including, without limitation, the Basic Prospectus and any preliminary
prospectus supplement.
"Prospectus" means the Basic Prospectus together with the prospectus supplement.
"prospectus supplement" means the final prospectus supplement dated the date
hereof filed with the Commission pursuant to Rule 424, specifically relating to
the Offered Securities.
"Public External Indebtedness" means External Indebtedness which: (i) is in the
form of, or represented by, bonds, notes or other similar securities; and
(ii) is, or may be, quoted, listed or ordinarily purchased and sold on any stock
exchange, automated trading system or over-the-counter or other securities
market.
"Registration Statement" means the registration statement referred to in
Section1(a)(i) below, as amended at the Execution Time and, in the event any
post-effective amendment thereto becomes effective prior to the Closing Date (as
hereinafter defined), shall also mean such registration statement as so amended.
Such term shall include any Rule 430A Information deemed to be included therein
at the Effective Date as provided by Rule 430A.
"Release" means Release No. 33-6424 under the Act relating to delayed offerings
by foreign governments or political subdivisions thereof.
"Rule 415," "Rule 424" and "Rule 430A" refer to such rules under the Act as
applicable to registration statements subject to Schedule B under the Act in
accordance with the Release and, to the extent any such rule is not directly
applicable, mean the provisions thereunder as made applicable by the Release.
"Rule 430A Information" means information with respect to the Offered Securities
and the offering thereof permitted to be omitted from the Registration Statement
when it becomes effective pursuant to Rule 430A.
1. Representations and Warranties. (a) The Republic represents and warrants to,
and agrees with, each Underwriter as set forth in this Section 1 (a).
(i) The Republic meets the requirements for use of Schedule B under the Act, is
a "seasoned foreign government" within the meaning of the Release, has filed
with the Commission a registration statement (file number 333-131950), including
a form of Basic Prospectus, for registration under the Act of the offering and
sale of the Offered Securities, and has filed with the Commission post-effective
amendment[s] No. [___] to such registration statement. If at any time prior to
completion of the distribution of the Offered Securities the Republic files with
the Commission one or more new amendments to such registration statement or uses
a preliminary prospectus, the Republic will promptly notify the Underwriters of
such case and will, without charge, supply to the Underwriters prior to any such
filing or distribution as many copies as the Underwriters may from time to time
reasonably request of an amended registration statement or preliminary
prospectus, as the case may be. Such registration statement, as so amended, has
become effective. Although the Basic Prospectus may not include all the
information with respect to the Offered Securities and the offering thereof
required by the Act and the rules thereunder to be included in the prospectus,
the Basic Prospectus includes all such information as required by the Act and
the rules thereunder as applicable pursuant to the Release to be included
therein as of the Effective Date. The
2
Republic will hereafter file with the Commission pursuant to the Release and
Rules 415 and 424 (b)(2) or (5) either (x) a prospectus supplement to the Basic
Prospectus or (y) an amendment to such Registration Statement, including such
prospectus supplement. In the case of clause (x), the Republic has included in
such Registration Statement, as amended at the most recent Effective Date, the
information required for such procedure pursuant to the Release. Prior to the
termination of the offering of the Offered Securities, the Republic will not
file any amendment of the Registration Statement or supplement (including the
Prospectus or any preliminary prospectus) to the Basic Prospectus unless the
Republic has furnished the Underwriters a copy for their review prior to filing
and will not file any such proposed amendment or supplement to which the
Underwriters reasonably object, unless the Republic is otherwise advised by its
U.S. counsel that such filing is required under the Act. As filed, such
prospectus supplement or such amendment and prospectus supplement shall include
all such required information with respect to the Offered Securities and the
offering thereof.
(ii) On the Effective Date, the Registration Statement did or will, and, when
the Prospectus is first filed in accordance with Rule 424(b) and on the Closing
Date (as defined in Section 3), the Prospectus (as supplemented at the time of
the Closing Date) will, comply in all material respects with the applicable
requirements of the Act, the rules thereunder and the Release; on the Effective
Date, the Registration Statement did not or will not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein not
misleading; and, on the Effective Date, the Prospectus did not and, on the date
of any filing pursuant to Rule 424(b) and on the Closing Date, the Prospectus
(as supplemented in the case of the Closing Date) will not, include any untrue
statement of a material fact or omit to state a material fact necessary in order
to make the statements therein, in the light of the circumstances under which
they were made, not misleading; provided, however, that the Republic makes no
representations or warranties as to the information contained in or omitted from
the Registration Statement or the Prospectus (or any supplement thereto) in
reliance upon and in conformity with information furnished in writing to the
Republic by or on behalf of any Underwriter specifically for inclusion in the
Registration Statement or the Prospectus (or any supplement thereto).
(iii) The issuance and sale of the Offered Securities will have been duly
authorized, and, when duly executed, authenticated, issued and delivered as will
be provided in the Fiscal Agency Agreement and paid for in accordance with the
terms hereof, the offered Securities will be duly and validly issued and
outstanding and will constitute valid and legally binding obligations of the
Republic, the payment and performance of which will be backed by the full faith
and credit of the Republic; the Offered Securities will rank at least equally in
right of payment with all other unsecured and unsubordinated obligations of the
Republic, except for such obligations as may be preferred by mandatory
provisions of applicable law. The Republic will give no preference to one
obligation over another on the basis of priority of issue date, or currency of
payment; and the Offered Securities, when issued and delivered, will conform to
the description thereof contained in the Prospectus.
(iv) This Agreement has been duly authorized, executed and delivered by the
Republic; this Agreement is, and the Fiscal Agency Agreement and the Offered
Securities will be upon the due execution, authentication, issue and delivery
thereof, as the case may be, and payment therefor by the Underwriters,
enforceable against the Republic according to its terms; this
3
Agreement, the Fiscal Agency Agreement and the Offered Securities contain no
express provision which is contrary to the laws of the Republic or public policy
of the Republic.
(v) None of the execution or delivery by the Republic of this Agreement, the
Fiscal Agency Agreement or the Offered Securities, the performance of its
obligations hereunder or thereunder or the fulfillment by the Republic of the
terms hereof or thereof requires, under the laws of the Republic, any
publication, waiver, consent, filing, registration, authorization or approval.
(vi) None of the execution or delivery by the Republic of this Agreement, the
Fiscal Agency Agreement or the Offered Securities, the performance by the
Republic of its obligations hereunder or thereunder, or the fulfillment by the
Republic of the respective terms hereof or thereof, will violate any provision
of the laws of the Republic as in effect on the date hereof or, to the best
knowledge of the Legal Advisor (as defined herein), violate any order, rule or
regulations of any Court, regulatory body, or administrative body or other
governmental body of the Republic.
(vii) The Republic is not in default under the provisions of any agreement or of
any instrument evidencing or relating to any outstanding Public External
Indebtedness; and neither the execution and delivery of, nor the compliance
with, this Agreement, the Fiscal Agency Agreement or the Offered Securities or
the covenants contained herein or therein will conflict with, or constitute a
breach or a default under, any such agreement or instrument to which the
Republic is a party or by which it is bound.
(viii) Except as set forth in the Registration Statement, the Prospectus and the
preliminary prospectus, to the best of its knowledge, the Republic: is not
involved in any litigation relating to claims or amounts which would challenge
the validity or enforceability of this Agreement, the Fiscal Agency Agreement or
the Offered Securities or the transactions contemplated thereby, and there is no
legal or governmental action, suit or proceeding pending or, to the best of the
Republic's knowledge, threatened, to which the Republic is or may be subject
that, if determined adverse to the Republic, would have a material adverse
effect on the affairs and financial condition of the Republic.
(ix) The Republic is a member of the International Monetary Fund and the
International Bank for Reconstruction and Development.
(x) The Republic is not a party to any agreement with the United States of
America relating in any way to the immunity of the Republic from jurisdiction of
courts, suit, execution upon a judgment, attachment prior to judgment or in aid
of execution upon a judgment or any other legal process other than in respect of
premises, properties or assets set forth in Section 13.
(xi) It is not necessary in order to ensure the enforceability or admissibility
in evidence of this Agreement, the Fiscal Agency Agreement or the Offered
Securities that this Agreement, the Fiscal Agency Agreement or the Offered
Securities or any other document be filed or recorded in the Republic or that
any Hungarian tax be paid on or in respect of the execution of this Agreement,
the Fiscal Agency Agreement or for the issuance of the offered Securities.
(b) Each Underwriter severally represents and warrants to, and agrees with, the
Republic as set forth in this Section 1(b):
4
(i) It has not offered, sold or delivered, and it will not offer, sell or
deliver, directly or indirectly, any of the Offered Securities or distribute the
Registration Statement, the Prospectus or any preliminary prospectus or any
other material relating to the offering of the offered Securities or the
Republic, in or from any jurisdiction except under circumstances that will, to
the best of its knowledge and belief, result in compliance with the applicable
laws and regulations thereof (including, without limitation, any prospectus
delivery requirements).
(ii) Except for registration under the Act and compliance with the rules and
regulations thereunder and the qualification of the Offered Securities for offer
and sale under the laws of such jurisdictions as the Underwriters may designate
pursuant to Section 5(d), the Republic shall not have any responsibility for,
and each Underwriter severally agrees with the Republic that each such
Underwriter and its respective affiliates will obtain any consent, approval or
authorization required by them for the purchase, offer, sale or delivery by them
of any of the Offered Securities under the laws and regulations in force in any
jurisdiction to which they are subject or in or from which they make such
purchase, offer, sale or delivery of any of the offered Securities.
(iii) Other than the Registration Statement, the Prospectus and any preliminary
prospectus, no other material or communication that may be used in connection
with the offering of the offered Securities (the "Other U.S. Offering
Materials") has been filed under the Act. Accordingly, each Underwriter
severally represents to and agrees with the Republic that it has not delivered
or distributed and will not deliver or distribute within the United States or to
any U.S. person (as such terms are defined in Regulation S under the Act) any
Other U.S. Offering Materials, except as permitted by the Act.
2. Purchase and Sale. Subject to the terms and conditions and in reliance upon
the representations and warranties herein set forth, the Republic agrees to sell
to each Underwriter, and each Underwriter agrees, severally and not jointly, to
purchase from the Republic, at a purchase price of [___]% of the principal
amount thereof, plus accrued interest, if any, on the Offered Securities from
[___], to the Closing Date, the principal amount of the Offered Securities set
forth opposite such Underwriter's name in Schedule I hereto.
3. Delivery and Payment. The Offered Securities will be represented by one or
more definitive global securities in registered form, which will be deposited by
or on behalf of the Republic with The Depository Trust Company ("DTC"), 55 Water
Street, 49th Floor, New York, NY 10041 or its designated custodian. Delivery of
and payment for the Offered Securities shall be made at 10:00 a.m., New York
City time at the offices of [___], on [___], which date and time may be
postponed by agreement between the Underwriters and the Republic or as provided
in Section 10 hereof (such date and time of delivery and payment for the Offered
Securities being herein called the "Closing Date"). Delivery of the Offered
Securities shall be made to the Underwriters through the facilities of DTC for
the respective accounts of the several Underwriters (including their accounts at
Euroclear System and Clearstream Banking, societe anonyme) against payment by
the several Underwriters of the purchase price thereof to, or upon the order of,
the Republic by wire transfer in immediately available funds. Delivery of the
other documents, certificates and opinions provided for in Section 7 shall be
made on the Closing Date.
The certificate or certificates for the Offered Securities shall be registered
in the name of the nominee of DTC and in such denominations as the Underwriters
may request not less than two full business days in advance of the Closing Date.
The Republic will cause the certificate or certificates representing the Offered
Securities to be made available to the Underwriters
5
for inspection in New York, New York, not later than 1:00 p.m. on the business
day prior to the Closing Date.
4. Offering by Underwriters. It is understood that the several Underwriters
propose to offer the Offered Securities for sale to the public as set forth in
the Prospectus.
5. Agreements. The Republic agrees with the several Underwriters that:
(a) The Republic will use its best efforts to cause the Registration Statement,
if not effective at the Execution Time, and any amendment thereto, to become
effective as soon as reasonably practicable thereafter. Prior to the termination
of the offering of the Offered Securities, the Republic will not file any
amendment of the Registration Statement or supplement (including the Prospectus
or any preliminary prospectus) to the Basic Prospectus unless the Republic has
furnished the Underwriters a copy for their review prior to filing and will not
file any such proposed amendment or supplement to which the Underwriters
reasonably object, unless the Republic is otherwise advised by its U.S. counsel
that such filing is required under the Act. Subject to the foregoing sentence,
the Republic will cause the Prospectus, properly completed, and any supplement
thereto to be filed with the Commission pursuant to the applicable paragraph of
Rule 424(b) within the time period prescribed by such Rule and will provide
evidence satisfactory to the Underwriters of such timely filing. The Republic
will promptly advise the Underwriters (i) when the Registration Statement, if
not effective at the Execution Time, and any amendment thereto, shall have
become effective, (ii) when the Prospectus, and any supplement thereto, shall
have been filed with the Commission pursuant to Rule 424(b), (iii) when, prior
to termination of the offering of the Offered Securities, any amendment to the
Registration Statement shall have been filed or become effective, (iv) of any
request by the Commission for any amendment of the Registration Statement or
supplement to the Prospectus or for any additional information, (v) of the
issuance by the Commission of any stop order suspending the effectiveness of the
Registration Statement or the institution or threatening of any proceeding for
that purpose and (vi) of the receipt by the Republic of any notification with
respect to the suspension of the qualification of the Offered Securities for
sale in any jurisdiction or the initiation or threatening of any proceeding for
such purpose. The Republic will use its best efforts to prevent the issuance of
any such stop order or the suspension of any such qualification and, if issued
or suspended, to obtain as soon as possible the withdrawal thereof.
(b) If, at any time when a prospectus relating to the Offered Securities is
required to be delivered under the Act, any event occurs as a result of which
the Prospectus as then supplemented pursuant to the prospectus supplement would
include any untrue statement of a material fact or omit to state any material
fact necessary to make the statements therein in the light of the circumstances
under which they were made not misleading, or if it shall be necessary to amend
the Registration Statement or supplement the Prospectus to comply with the Act
or the respective rules thereunder, the Republic promptly will (i) prepare and
file with the Commission, subject to the second sentence of paragraph (a) of
this Section 5, an amendment or supplement which will correct such statement or
omission or effect such compliance and (ii) supply any supplemented Prospectus
to the Underwriters in such quantities as they may reasonably request.
(c) The Republic will endeavor to qualify the Offered Securities for offer and
sale under the securities or "Blue Sky" laws of the relevant jurisdictions as
the Underwriters shall reasonably request and, except as otherwise agreed
between the Underwriters and the Republic, to pay all expenses (including
reasonable fees and disbursements of counsel) in
6
connection with such qualification and in connection with the determination of
the eligibility of the Offered Securities for investment under the laws of such
jurisdictions as the Underwriters may reasonably designate; provided, however,
that the Republic shall not be obligated to file any general or unlimited
consent to service of process or qualify as a foreign corporation, legal person
or similar entity or as a dealer in securities in any other jurisdiction in
which it is not now so qualified and shall not be required to take any action
which would subject it to general or unlimited service of process in any
jurisdiction.
(d) The Republic will make generally available to holders of the Offered
Securities, as soon as practicable, a statement in reasonable detail in the
English language of revenues and expenditures of the Republic covering the first
full fiscal year of the Republic beginning after the date of this Agreement,
which will satisfy the provisions of Section 11(a) of the Act.
(e) So long as any of the Offered Securities are outstanding, the Republic will
furnish to the Underwriters copies of all reports and financial statements filed
with the Commission in connection with the Offered Securities.
(f) During the period commencing at the Execution Time and ending one week
following the Closing Date, the Republic will not offer or sell in the United
States, or announce the offering in the United States of, any securities without
the prior written consent of the Underwriters.
(g) The Republic will furnish to the Underwriters and counsel for the
Underwriters, without charge, a signed copy of the Registration Statement
(including exhibits thereto) and, so long as delivery of a prospectus by an
Underwriter or dealer may be required by the Act, as many copies of any
preliminary prospectus and the Prospectus and any supplement thereto as the
Underwriters may reasonably request.
6. Expenses. Except as otherwise agreed by the Underwriters and the Republic,
and subject to such expense caps as they have agreed, whether or not the
transactions contemplated hereunder are consummated or this Agreement is
terminated, the Underwriters will pay all costs and expenses incidental to the
performance of the obligations of the Republic hereunder, including, without
limiting the generality of the foregoing, (i) all such costs and expenses
incidental to the preparing, printing, filing and distributing of the
Registration Statement (including all exhibits thereto), any preliminary
prospectus, the Prospectus and any amendments thereof or supplements thereto,
provided, however, that the Underwriters will pay only the Commission
registration fees applicable to the amount that the registered securities are
reduced as a result of the sale of the Offered Securities, (ii) all such costs
and expenses relating to the Fiscal Agency Agreement, (iii) any such fees
charged by securities rating services for rating the Offered Securities,
(iv) transportation and other expenses incurred in connection with presentations
to prospective purchasers of the Offered Securities and (v) the out-of-pocket
expenses of the Republic, provided, however, that the Republic will pay all its
own legal fees. Except as provided in this Section 6 and in Section 8 hereof,
the Underwriters will pay all their own costs and expenses, including the fees
of the United States and Hungarian counsel, if any.
7. Conditions to the Obligations of the Underwriters. The obligations of the
Underwriters to purchase the Offered Securities shall be subject to the accuracy
in all material respects of the representations and warranties on the part of
the Republic contained herein as of the time of the execution of this Agreement
and the Closing Date, to the accuracy in all material respects of the statements
of the Republic made in any certificates issued pursuant to the provisions
7
hereof, to the performance by the Republic of its obligations hereunder and to
the following additional conditions:
(a) If filing of the Prospectus, or any supplement thereto, is required pursuant
to Rule 424(b), the Prospectus, and any such supplement, shall have been filed
in the manner and within the time period required by Rule 424(b) and in
accordance with Section 5(a) of this Agreement; no stop order suspending the
effectiveness of the Registration Statement shall have been issued and no
proceedings for that purpose shall have been instituted or threatened; and any
request of the Commission for additional information shall have been complied
with to the satisfaction of the Underwriters.
(b) The Republic shall have furnished to the Underwriters the written opinion of
the Legal Department of the Government Debt Management Agency Ltd. (the "Legal
Advisor"), satisfactory to the Underwriters, dated the Closing Date, to the
effect that:
(i) the Offered Securities have been duly authorized in accordance with the laws
of the Republic;
(ii) all necessary action has been duly taken by or on behalf of the Republic to
authorize the issuance and sale of the offered Securities; the Offered
Securities have been duly executed, issued and delivered in accordance with the
laws of the Republic; the Offered Securities, when authenticated in accordance
with the Fiscal Agency Agreement and delivered to and paid for by the
Underwriters in accordance with the terms of this Agreement, will constitute
valid and legally binding obligations of the Republic enforceable in accordance
with their terms and entitled to the benefits of the Fiscal Agency Agreement;
the Offered Securities rank at least equally in right of payment with all other
unsecured and unsubordinated obligations of the Republic, except for such
obligations as may be preferred by mandatory provisions of applicable law; the
Republic will give no preference to one obligation over another on the basis of
priority of issue date, or currency of payment; and the full faith and credit of
the Republic has been pledged for the due and punctual payment of the principal
of and interest on the Offered Securities and for the performance of the
obligations of the Republic with respect thereto;
(iii) the obligations of the Republic under the Fiscal Agency Agreement, this
Agreement and the Offered Securities are and will be direct, general and
unconditional obligations of the Republic and are, under the laws of the
Republic, subject to civil substantive law and to the relevant procedural and/or
legal requirements relating to enforcement and recognition of foreign judgments;
(iv) the Republic has the power and authority required for the execution and
delivery of the Fiscal Agency Agreement, this Agreement, the issuance of the
Offered Securities and the performance by the Republic of its obligations
thereunder and hereunder; and none of the execution or delivery by the Republic
of this Agreement, the Fiscal Agency Agreement or the Offered Securities, the
performance of its obligations hereunder or thereunder or the fulfillment by the
Republic of the terms hereof or thereof requires, under the laws of the
Republic, any publication, waiver, consent, filing, registration, authorization
or approval;
(v) the Fiscal Agency Agreement has been duly authorized, executed and delivered
by the Republic in accordance with the laws of the Republic and is a valid and
binding agreement of the Republic;
8
(vi) this Agreement has been duly authorized, executed and delivered by the
Republic in accordance with the laws of the Republic;
(vii) subject to the qualifications of Section 13 of this Agreement, the
provisions of this Agreement and the Offered Securities wherein the Republic
consents to the jurisdiction of certain courts in the United States and agrees
not to assert the defense of immunity, on the grounds of sovereignty or
otherwise, are valid and binding; final judgment against the Republic for the
payment of money in any such suit, action or proceeding brought, in accordance
with such provisions, in the Federal or state courts in New York, New York would
be admissible in evidence against the Republic in the appropriate courts of the
Republic to enforce such claim;
(viii) subject to the qualifications of Section 13 of this Agreement, under the
laws of the Republic in effect as of the date of such opinion, the Republic
would not be entitled to plead, or cause to be pleaded on its behalf, sovereign
immunity from the jurisdiction of the courts of the Republic in respect of any
action relating to the Offered Securities, this Agreement or the Fiscal Agency
Agreement;
(ix) none of the execution or delivery by the Republic of this Agreement, the
Fiscal Agency Agreement or the Offered Securities, the performance by the
Republic of its obligations hereunder or thereunder, or the fulfillment by the
Republic of the respective terms hereof or thereof, will violate any provision
of the laws of the Republic or, to the best knowledge of the Legal Advisor,
violate any order, rule or regulations of any court, regulatory body, or
administrative body or other governmental body of the Republic;
(x) none of the execution or delivery by the Republic of this Agreement, the
Fiscal Agency Agreement or the Offered Securities, the performance by the
Republic of its obligations hereunder or thereunder, or the fulfillment by the
Republic of the respective terms hereof or thereof, will, to the best knowledge
of the Legal Advisor, violate, or result in a breach of, the terms of, or cause
a default under, any agreement or instrument evidencing or relating to any
Public External Indebtedness to which the Republic is a party or by which it is
bound, and the Republic is not in default under the provisions of any such
agreement or of any such instrument;
(xi) there is no action, suit, or proceeding pending or, to the best of the
Legal Advisor's knowledge, threatened against or affecting the Republic, before
any court or administrative agency in the Republic, challenging the validity or
enforceability of this Agreement, the Fiscal Agency Agreement, or the Offered
Securities or the transactions contemplated thereby, and, except as set forth in
the Registration Statement, the Prospectus or any preliminary prospectus, there
is no legal or governmental action, suit or proceeding pending or, to the best
of the Republic's knowledge, threatened, to which the Republic is or may be
subject that, if determined adverse to the Republic, would have a material
adverse effect on the affairs and financial condition of the Republic;
(xii) the Registration Statement, as amended, the Prospectus and their filing
with the Commission have been duly authorized by and on behalf of the Republic,
the Registration Statement has been duly executed on behalf of the Republic and
become effective under the Act and, to the best knowledge of the Legal Advisor,
no stop order suspending the effectiveness of the Registration Statement has
been issued and no proceedings for that purpose are pending before or threatened
by the Commission;
9
(xiii) Mr. Janos Veres, Minister of Finance, and other appropriate officials in
the Republic have been apprised of the disclosure standards applicable to the
offering under this Agreement and have reviewed the Prospectus. Based on such
review, the results of which have been discussed with the Legal Advisor,
although the Legal Advisor shall not have made an independent investigation or
verification of the correctness and completeness of the information included in
the Prospectus, nothing has come to the Legal Advisor's attention that would
lead the Legal Advisor to believe that (except as to the financial and
statistical data contained therein as to which the Legal Advisor need not
express any belief) (a) the Registration Statement and the Prospectus included
therein, at the time the Registration Statement became effective, did not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make statements therein not
misleading, and (b) the Prospectus, as of the date of such opinion, does not
contain any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
(xiv) the descriptions of the Offered Securities and the Fiscal Agency Agreement
in the Registration Statement, as amended, and the Prospectus fairly summarize
the material provisions thereof, and the Offered Securities conform to the
description thereof in the Prospectus; and
(xv) the information set forth in the Prospectus under the captions
"Taxation-Hungarian Taxation," "Description of the Debt Securities-Governing
Law" and "Enforceability of Judgments," insofar as such statements relate to
laws of the Republic and legal matters, documents or proceedings referred to
therein, are accurate and fairly present the information called for with respect
to such legal matters, documents and proceedings.
In rendering such opinion, the Legal Advisor may rely without independent
investigation on the opinion rendered pursuant to paragraph (c) below as to
matters of New York and United States Federal law, and such opinion shall be
subject to any limitations and exceptions contained in the opinion so relied
upon. References to the Prospectus in this paragraph (b) include any supplements
thereto at the Closing Date.
(c) The Underwriters shall have received on and as of the Closing Date an
opinion, satisfactory to the Underwriters, of White & Case, special United
States counsel to the Republic, to the effect that:
(i) When issued, delivered and paid for by the Underwriters pursuant to this
Agreement and authenticated by the Fiscal Agent pursuant to the Fiscal Agency
Agreement, the Offered Securities will have been duly executed, issued and
delivered and will constitute valid and binding obligations of the Republic
entitled to the benefits provided by the Fiscal Agency Agreement;
(ii) the statements in the Registration Statement and the Prospectus under the
caption "Description of the Debt Securities" and "Description of the Notes,"
insofar as they purport to describe certain provisions of the Offered Securities
and certain provisions of the Fiscal Agency Agreement, provide a fair summary of
such provisions;
(iii) the statements in the Registration Statement and the Prospectus under the
caption "Taxation-United States Taxation," insofar as they purport to constitute
a summary of United
10
States Federal income tax law and legal conclusions with respect thereto, are
accurate in all material respects;
(iv) the Fiscal Agency Agreement and this Agreement have been duly executed and
delivered by the Republic;
(v) the Republic has validly submitted, under the laws of the State of New York
and the Federal laws of the United States, to the jurisdiction of the State and
Federal courts in New York, New York, in any suit, action or proceeding for the
enforcement of this Agreement, the Fiscal Agency Agreement or the Offered
Securities;
(vi) the agreement of the Republic contained in this Agreement, the Offered
Securities and the Fiscal Agency Agreement that the laws of the State of New
York shall govern this Agreement, the Fiscal Agency Agreement and the offered
Securities will be (upon due execution, issue and delivery thereof) binding on
the Republic, except as described in the Prospectus under "Enforceability of
Judgments";
(vii) the Offered Securities are exempt from the provisions of the Trust
Indenture Act of 1939, as amended, under Section 304(a)(6) of said Act, and no
indenture in respect of the Offered Securities need be qualified under said Act;
(viii) the Registration Statement has become effective under the Act as of the
date and time specified in such opinion, and, in so far as such counsel is
aware, no stop order suspending the effectiveness of the Registration Statement
has been issued and no proceedings for that purpose are pending before or
threatened by the Commission; and
(ix) such counsel is of the opinion that the Registration Statement and the
Prospectus and any amendments and supplements thereto (other than financial or
statistical data included or omitted therefrom, as to which such counsel need
express no opinion) comply as to form in all material respects with the
requirements of the Securities Act; and that nothing has to come to such
counsels attention which causes such counsel to believe that (other than
financial or statistical data included therein or omitted therefrom, as to which
such counsel need express no belief) the Registration Statement and the
prospectus included therein at the time the Registration Statement became
effective contained any untrue statement of a material fact or omitted to state
a material fact required to be stated therein or necessary to make the
statements therein not misleading, or that as of the date of such opinion, the
Prospectus, as amended or supplemented, if applicable, contains any untrue
statement of a material fact or omits to state a material fact necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading.
In giving such opinion, White & Case may (i) assume that the Fiscal Agency
Agreement, the Offered Securities and this Agreement have been duly authorized,
executed and delivered by the appropriate parties thereto and that each such
party has adequate power and authority to enter therein, (ii) rely without
independent investigation on the opinion delivered pursuant to paragraph
(b) above as to matters governed by the laws of the Republic, and such opinion
shall be subject to any limitations and exceptions contained in the opinion
delivered pursuant to paragraph (b) above, (iii) rely as to material factual
matters, to the extent such counsel deems proper, on certificates of responsible
officials of the Republic and certificates or other written statements of
officials having custody of documents relating to the Republic, and (iv) with
respect to the matters covered in subparagraph (ix) above, counsel may state
that their opinion and belief is based upon their participation in the
preparation of the Registration
11
Statement and the Prospectus and any amendment or supplement thereto but is
without independent check or verification.
(d) The Underwriters shall have received from [___], counsel for the
Underwriters, such opinion and letter, dated the Closing Date, with respect to
the issuance and sale of the Offered Securities, the Fiscal Agency Agreement,
the Registration Statement and the Prospectus, as amended or supplemented, and
other related matters as the Underwriters may reasonably require, and the
Republic shall have furnished to such counsel such documents as they request for
the purpose of enabling them to pass upon such matters. In giving such opinion,
[___] may rely without independent investigation on the opinions delivered
pursuant to paragraph 7(b) above and paragraph 7(e) below as to the matters
governed by the laws of the Republic and such opinion shall be subject to any
limitations and exceptions contained in the opinions delivered pursuant to
paragraphs 7(b) and 7(e).
(e) The Underwriters shall have received from [___], special Hungarian counsel
for the Underwriters, such opinion and letter, dated the Closing Date, with
respect to the issuance and sale of the Offered Securities and the Fiscal Agency
Agreement and such other related matters as the Underwriters may reasonably
require, and the Republic shall have furnished to such counsel such documents as
they reasonably request for the purpose of enabling them to pass upon such
matters.
(f) The Republic shall have furnished to the Underwriters a certificate of the
Republic, signed by either (i) Mr. Janos Veres, Finance Minister, or (ii) other
senior official of the Republic as authorized by the Finance Minister in
writing, dated the Closing Date, to the effect that the signer of such
certificate has carefully examined the Registration Statement and the
Prospectus, as amended or supplemented, and this Agreement and that:
(i) the representations and warranties of the Republic in this Agreement are
true and correct in all material respects on and as of the Closing Date with the
same effect as if made on the Closing Date and the Republic has complied in all
material respects with the Agreement and satisfied all the conditions on its
part to be performed or satisfied at or prior to the Closing Date;
(ii) no stop order suspending the effectiveness of the Registration Statement
has been issued and no proceedings for that purpose have been instituted or, to
the Republic's knowledge, threatened, and no proceedings to restrain or enjoin
the issuance or delivery of the Offered Securities, or in any manner to question
the laws, proceedings, directives, resolutions, approvals, consents or orders
under which the Offered Securities are to be issued or to question the validity
of the Offered Securities have been instituted or, to the Republic's knowledge,
threatened, and none of said laws, directives, resolutions, consents or orders
have been repealed, revoked or rescinded in whole or in relevant part; and
(iii) there has been no material adverse change or any development involving a
prospective material adverse change in the affairs and financial condition of
the Republic from that set forth in the Prospectus (exclusive of any supplement
thereto dated after the Execution Time) that was not disclosed to the
Underwriters prior to the Execution Time.
(g) Subsequent to the Execution Time or, if earlier, the dates as of which
information is given in the Registration Statement (exclusive of any amendment
thereof dated after the Execution Time) and the Prospectus (exclusive of any
supplement thereto dated after the Execution Time), there shall not have been
any change or any development involving a prospective
12
change in the affairs and financial condition of the Republic from that set
forth in the Registration Statement that, in the reasonable judgment of the
Underwriters, is material and adverse and makes it impractical or inadvisable to
proceed with the offering or delivery of the Offered Securities as contemplated
by the Registration Statement (exclusive of any amendment thereof dated after
the Execution Time) and the Prospectus (exclusive of any supplement thereto
dated after the Execution Time).
(h) The Underwriters shall have received letters on the Closing Date confirming
the rating of the Offered Securities as A-by Standard and Poor's Corporation, A1
by Moody's Investors Service, Inc. and A-by Fitch Ratings Limited and,
subsequent to the Execution Time, there shall not have been any decrease in the
rating or related outlook of any of the Republic's debt securities by any of
these rating agencies.
(i) Subsequent to the Execution Time, no proceeding shall be pending or
threatened to restrain or enjoin the issuance, sale or delivery of the Offered
Securities or in any manner to question the laws, proceedings, directives,
resolutions, approvals, consents or orders under which the Offered Securities
are to be issued or to question the validity of the Offered Securities, and none
of such laws, proceedings, directives, resolutions, approvals, consents or
orders shall have been repealed, revoked or rescinded in whole or in part.
(j) Subsequent to the Execution Time, the issuance, sale, delivery and purchase
of the Offered Securities shall not be prohibited by any statute, order, rule or
regulation formally proposed or promulgated by any legislative or regulatory
body of the Republic, the United States of America or the State of New York,
other than "Blue Sky" regulations.
(k) Subsequent to the Execution Time, the Republic shall not have ceased to be a
member of the International Monetary Fund or the International Bank for
Reconstruction and Development.
(l) Prior to the Closing Date, the Republic shall have furnished to the
Underwriters such further information, certificates, opinions and other
documents as the Underwriters may reasonably request.
If any of the conditions specified in this Section 7 shall not have been
fulfilled in all material respects when and as provided in this Agreement, or if
any of the opinions and certificates mentioned above or elsewhere in this
Agreement shall not be in all material respects reasonably satisfactory in form
and substance to the Underwriters and to counsel for the Underwriters, this
Agreement and all obligations of the Underwriters hereunder may be canceled at,
or at any time prior to, the Closing Date by the Underwriters. Notice of such
cancellation shall be given to the Republic in writing at the addresses provided
in Section 14 hereof.
The documents required to be delivered by this Section 7 shall be delivered at
the office of [___], counsel for the Underwriters, at [___], at the Closing
Date.
8. Reimbursement of Underwriters' Expenses. If the sale of the Offered
Securities provided for herein is not consummated because any condition to the
obligations of the Underwriters set forth in Section 7 hereof is not satisfied,
because of any refusal, inability or failure on the part of the Republic to
perform any agreement herein or comply with any provision hereof other than by
reason of a default by any of the Underwriters, the Republic will reimburse the
Underwriters severally upon demand for all reasonable out-of-pocket expenses
(including
13
reasonable fees and disbursements of counsel) that shall have been incurred by
them in connection with the proposed purchase and sale of the Offered
Securities.
9. Indemnification and Contribution. (a) The Republic agrees to indemnify and
hold harmless each Underwriter, the directors, officers, employees and agents of
each Underwriter and each person who controls any Underwriter within the meaning
of either Section 15 of the Act or Section 20 of the Securities Exchange Act of
1934 (the "Exchange Act") against any and all losses, claims, damages or
liabilities, joint or several, to which they or any of them may become subject
under the Act, the Exchange Act or other Federal or state statutory law or
regulation, at common law or otherwise, insofar as such losses, claims, damages
or liabilities (or actions in respect thereof) arise out of or are based upon
any untrue statement or alleged untrue statement of a material fact contained in
the Registration Statement for the registration of the Offered Securities as
originally filed or in any amendment thereof, or in any preliminary prospectus
or the Prospectus, or in any amendment thereof or supplement thereto, or arise
out of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading or, in the case of the Prospectus, in light of the
circumstances under which they were made, not misleading, and agrees to
reimburse each such indemnified party, as incurred, for any legal or other
expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability or action; provided, however,
that (i) the Republic will not be liable in any such case to the extent that any
such loss, claim, damage, liability or action arises out of or is based upon any
such untrue statement or alleged untrue statement or omission or alleged
omission made therein in reliance upon and in conformity with written
information furnished to the Republic by or on behalf of any Underwriter
specifically for inclusion therein and (ii) such indemnity with respect to the
preliminary prospectus shall not inure to the benefit of any Underwriter (or any
person controlling such Underwriter) from whom the person asserting any such
loss, claim, damage or liability purchased the Offered Securities if such person
did not receive a copy of the Prospectus (or the Prospectus as amended or
supplemented) at or prior to the confirmation of the sale of such Offered
Securities to such person in any case where such delivery is required by the
Act, if the untrue statement or omission of a material fact contained in the
preliminary prospectus was corrected in the Prospectus (or the Prospectus as
amended or supplemented) and the Republic furnished copies thereof to such
Underwriter.
(b) Each Underwriter severally agrees to indemnify and hold harmless the
Republic, each of its officials and employees who signs the Registration
Statement, the officials and employees of the Republic to the same extent as the
foregoing indemnity from the Republic to each Underwriter, but only with
reference to written information relating to such Underwriter furnished in
writing to the Republic by or on behalf of such Underwriter specifically for
inclusion in the documents referred to in such foregoing indemnity. The
indemnity contained in this section will be in addition to any liability which
any Underwriter may otherwise have. The Republic acknowledges that the
statements set forth under the heading "Underwriting" in the prospectus
supplement and the names of the Underwriters set forth on the bottom of the
cover page of the prospectus supplement constitute the only information
furnished in writing by or on behalf of the several Underwriters for inclusion
in the documents referred to in such foregoing indemnity, and the Underwriters
confirm that such statements are correct.
(c) Promptly after receipt by an indemnified party under this Section 9 of
notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under this
Section 9, notify the indemnifying party in writing
14
pursuant to Section 14 of the Agreement of the commencement thereof; but the
failure so to notify the indemnifying party (i) will not relieve it from
liability under paragraph (a) or (b) above unless and to the extent it did not
otherwise learn of such action and such failure results in the forfeiture by the
indemnifying party of substantial rights and defenses and (ii) will not, in any
event, relieve the indemnifying party from any obligations to any indemnified
party other than the indemnification obligation provided in paragraph (a) or (b)
above. The indemnifying party shall be entitled to appoint counsel of the
indemnifying party's choice at the indemnifying party's expense to represent the
indemnified party in any action for which indemnification is sought (in which
case the indemnifying party shall not thereafter be responsible for the fees and
expenses of any separate counsel retained by the indemnified party or parties
except as set forth below); provided, however, that such counsel shall be
reasonably satisfactory to the indemnified party. Notwithstanding the
indemnifying party's election to appoint counsel to represent the indemnified
party in an action, the indemnified party shall have the right to employ
separate counsel (including local counsel), and the indemnifying party shall
bear the reasonable fees, costs and expenses of such separate counsel, if
(i) the use of counsel chosen by the indemnifying party to represent the
indemnified party would present such counsel with a conflict of interest,
(ii) the actual or potential defendants in, or targets of, any such action
include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that there may be legal
defenses available to it and/or other indemnified parties which are different
from or additional to those available to the indemnifying party, (iii) the
indemnifying party shall not have employed counsel reasonably satisfactory to
the indemnified party to represent the indemnified party within a reasonable
time after notice of the institution of such action or (iv) the indemnifying
party shall authorize the indemnified party to employ separate counsel at the
expense of the indemnifying party. It is understood that the indemnifying party
shall not, in connection with any proceeding or related proceedings in the same
jurisdiction, be liable for the reasonable fees and expenses of more than one
separate firm (in addition to local counsel) for all such indemnified parties
and that such fees and expenses shall be reimbursed as they are incurred. An
indemnifying party will not, without the prior written consent of the
indemnified parties, settle or compromise or consent to the entry of any
judgment with respect to any pending or threatened claim, action, suit or
proceeding in respect of which indemnification or contribution may be sought
hereunder (whether or not the indemnified parties are actual or potential
parties to such claim or action) unless such settlement, compromise or consent
includes an unconditional release of each indemnified party from all liability
arising out of such claim, action, suit or proceeding.
(d) In the event that the indemnity provided in paragraph (a) or (b) of this
Section 9 is unavailable or insufficient (unless such indemnity is unavailable
or insufficient by operation of the provisos set forth therein) to hold harmless
an indemnified party for any reason, the Republic and the Underwriters agree to
contribute to the aggregate losses, claims, damages and liabilities (including
legal or other expenses reasonably incurred in connection with investigating or
defending the same) (collectively, "Losses") to which the Republic and one or
more of the Underwriters may be subject in such proportion as is appropriate to
reflect the relative benefits received by the Republic and by such Underwriters
from the offering of the Offered Securities; provided, however, that in no case
shall any Underwriter (except as may be provided in any agreement among the
Underwriters relating to the offering of the Offered Securities) be responsible
for any amount in excess of the underwriting discount or commission applicable
to the Offered Securities purchased by such Underwriter hereunder. If the
allocation provided by the immediately preceding sentence is unavailable for any
reason, the Republic and the Underwriters shall contribute in such proportion as
is appropriate to reflect not only such relative benefits but also the relative
fault of the Republic and of the Underwriters in connection with the statements
or omissions which resulted in such Losses as well as any other relevant
equitable considerations. Benefits received by the Republic shall be
15
deemed to be equal to the total net proceeds from the offering (before deducting
expenses), and benefits received by the Underwriters shall be deemed to be equal
to the total underwriting discounts and commissions, in each case as set forth
on the cover page of the Prospectus. Relative fault shall be determined by
reference to whether any alleged untrue statement or omission relates to
information provided by the Republic or the Underwriters and the parties'
relative intent, knowledge, access to information and opportunity to correct or
present such statement or omission. The Republic and the Underwriters agree that
it would not be just and equitable if contribution were determined by pro rata
allocation or any other method of allocation which does not take account of the
equitable considerations referred to above. Notwithstanding the provisions of
this paragraph (d), no person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation. For purposes of
this Section 9, each person who controls an Underwriter within the meaning of
either the Act or the Exchange Act and each director, officer, employee and
agent of an Underwriter shall have the same rights to contribution as such
Underwriter, and each official of the Republic who shall have signed the
Registration Statement shall have the same rights to contribution as the
Republic, subject in each case to the applicable terms and conditions of this
paragraph (d).
10. Default by an Underwriter. If any one or more Underwriters shall fail or
refuse to purchase and pay for any of the Offered Securities agreed to be
purchased by such Underwriter or Underwriters hereunder and such failure to
purchase and pay shall constitute a default in the performance of its or their
obligations under this Agreement, the remaining Underwriters shall be obligated
severally to take up and pay for (in the respective proportions which the
principal amount of Offered Securities set forth opposite their names in
Schedule I hereto bears to the aggregate principal amount of Offered Securities
set forth opposite the names of all the remaining Underwriters) the Offered
Securities which the defaulting Underwriter or Underwriters agreed but failed to
purchase; provided, however, that, in the event that the aggregate principal
amount of the Offered Securities that the defaulting Underwriter or Underwriters
agreed but failed to purchase shall exceed 10% of the aggregate principal amount
of Offered Securities set forth in Schedule I hereto, the remaining
Underwriters, or other underwriters acceptable to the nondefaulting
Underwriters, shall have the right to purchase all, but shall not be under any
obligation to purchase any, of the Offered Securities, and if such nondefaulting
Underwriters, or other underwriters acceptable to the nondefaulting
Underwriters, do not purchase all the Offered Securities, this Agreement will
terminate without liability to any nondefaulting Underwriter or the Republic. In
the event of a default by any Underwriter as set forth in this Section 10, the
Closing Date shall be postponed when required or justified for such period, not
exceeding seven days, as the nondefaulting Underwriters shall determine in order
that the required changes in the Registration Statement and the Prospectus or in
any other documents or arrangements may be effected. Nothing contained in this
Agreement shall relieve any defaulting Underwriter of its liability, if any, to
the Republic and any nondefaulting Underwriter for damages occasioned by its
default hereunder.
11. Termination. This Agreement shall be subject to termination in the absolute
discretion of the Underwriters, by notice given to the Republic prior to
delivery of and payment for the Offered Securities, if prior to such time
(i) trading in securities on the New York Stock Exchange shall have been
suspended or limited or minimum prices shall have been established on such
Exchange, (ii) a banking moratorium shall have been declared either by Federal
or New York State authorities or Republic authorities or (iii) there shall have
occurred (x) any outbreak or material escalation of hostilities in which the
United States or the Republic is involved or
16
declaration by the United States or the Republic of a national emergency or war
or other calamity or crisis or (y) a material adverse change in the affairs
and/or financial conditions in the Republic or the United States the effect of
which on financial markets is such as to make it, in the sole but reasonable
judgment of the Underwriters impracticable or inadvisable to proceed with the
offering or delivery of the Offered Securities as contemplated by the
Prospectus.
12. Representations and Indemnities to Survive. The respective agreements,
representations, warranties, indemnities and other statements of the Republic
and of the Underwriters set forth in or made in writing under, or pursuant to
this Agreement will remain in full force and effect, regardless of any
investigation made by or on behalf of any Underwriter or the Republic or any of
the officers, directors or controlling persons referred to in Section 9 hereof,
and will survive delivery of and payment for the Offered Securities. The
provisions of Sections 8 and 9 hereof shall survive the termination or
cancellation of this Agreement.
13. Waiver of Immunity; Submission to Jurisdiction; Agent for Service of
Process. The Republic and the Underwriters agree that the Federal courts of the
United States sitting in the Southern District of New York, the courts of the
State of New York sitting in New York, New York and the courts of the Republic
shall have exclusive jurisdiction in respect of any legal action or proceeding
brought against the Republic and arising out of or relating to this Agreement.
In respect of any such proceeding which may be brought hereunder, the Republic
irrevocably submits to the jurisdiction of the Federal courts of the United
States in the Southern District of New York, the courts of the State of New York
sitting in New York, New York and the courts of the Republic and waives any
right of objection to the laying of venue in any such court, including, without
limitation, any objection on the basis of inconvenient forum. Notwithstanding
the foregoing, any action against the Republic arising out of or based on this
Agreement may also be instituted by any Underwriter in any competent court in
the Republic of Hungary, and the Republic irrevocably agrees to be bound by any
final judgment rendered thereby in connection with this Agreement from which no
appeal has been taken or is available.
The Republic hereby appoints the Republic of Hungary, Office of the Hungarian
Trade Commissioner, 500 North Michigan Avenue, Suite 810, Chicago, Illinois,
60611, as its authorized agent (the "Authorized Agent") upon which process may
be served in an action arising out of or based on this Agreement which may be
instituted in any State or Federal court in New York, New York by an Underwriter
or any controlling persons (as defined in either Section 15 of the Act or
Section 20 of the Exchange Act) of such Underwriter. Such appointment shall be
irrevocable so long as any Offered Securities remain outstanding unless and
until a successor shall have been appointed as the Republic's Authorized Agent
and such successor shall have accepted such appointment. The Republic will take
any and all action, including the filing of any and all documents and
instruments, that may be necessary to continue such appointment or appointments
in full force and effect as aforesaid. Service of process upon the Authorized
Agent at the address indicated in this Section 13, or at such other address in
the Borough of Manhattan, The City of New York, as may be the office of the
Authorized Agent at the time of such service, and written notice of such service
to the Republic (mailed or delivered to the Republic at the address set forth in
Section 14) shall be deemed, in every respect, effective service of process upon
the Republic. Upon receipt of such service of process, the Authorized Agent
shall advise the Republic promptly in writing of its receipt thereof.
The Republic hereby waives irrevocably, to the fullest extent permitted by law,
any immunity from jurisdiction to which it might otherwise be entitled in any
action arising out of or based on this Agreement which may be instituted as
provided in this Section in any State or Federal court in New York, New York or
in any competent court in the Republic of Hungary. Such waiver
17
constitutes only a limited and specific waiver for the purposes of this
Agreement, the Fiscal Agency Agreement or the Offered Securities and under no
circumstances shall it be interpreted as a general waiver by the Republic or a
waiver with respect to proceedings unrelated to this Agreement, the Fiscal
Agency Agreement or the Offered Securities. Neither such appointment nor such
waiver shall be interpreted to include the waiver of any immunity with respect
to: (1) actions brought against the Republic under U.S. State or Federal
securities laws; (ii) present or future "premises of the mission" as defined in
the Vienna Convention on Diplomatic Relations signed in 1961; (iii) "Consular
premises" as defined in the Vienna Convention on Consular Relations signed in
1963; (iv) any other property or assets used solely or mainly for official state
purposes in the Republic or elsewhere; or (v) military property or military
assets or property or assets of the Republic related thereto.
14. Notices. All communications hereunder will be in writing and effective only
on receipt, and, if sent to the Underwriters, will be mailed, delivered
or telefaxed and confirmed to [___], [ADDRESS] (fax no.: [___]), Attention:
[___] and mailed, delivered or telefaxed and confirmed to [___], [ADDRESS] (fax
no.: [___]), Attention: [___]; or, if sent to the Republic, will be mailed,
delivered or telegraphed and confirmed to it at:
Government Debt Management Agency Ltd.
Csalogany u. 9-11H
1027 Budapest
Hungary
Attention: Mr. Laszlo Buzas
Telephone: +36-1-488-9420
Telecopier: +36-1-488-9425
15. English Documents. All documents to be delivered under this Agreement by the
Republic shall be in the English language or accompanied by a certified English
translation.
16. Successors. This Agreement will inure to the benefit of and be binding upon
the parties hereto and their respective successors and the officers and
directors and controlling persons referred to in Section 9 hereof, and no other
person will have any right or obligation hereunder. No purchaser of any Offered
Securities from any Underwriter shall be deemed to be a successor or assign
merely by reason of such purchase.
17. Applicable Law. This Agreement will be governed by and construed in
accordance with the laws of the State of New York, without regard to the
conflicts of law principles of such State, except with respect to its
authorization and execution by and on behalf of the Republic, which shall be
governed by the law of the Republic.
18. Counterparts. This Agreement may be signed in two or more counterparts,
which together shall constitute one and the same instrument.
If the foregoing is in accordance with your understanding of our agreement,
please sign and return to us the enclosed duplicate hereof, whereupon this
letter and your acceptance shall represent a binding agreement among the
Republic and the several Underwriters.
Very truly yours,
The Republic of Hungary, represented by its Finance Minister
18
By:
Name: Ferenc Szarvas Title: Chief Executive Officer of the Government Debt
Management Agency Ltd. of the Republic of Hungary as attorney for the Republic
of Hungary represented by its Minister of Finance
The foregoing Agreement is
hereby confirmed and accepted
as of the date first above written.
[UNDERWRITERS]
By: [___]
By:
Name:
Title:
By: [___]
By:
Name:
Title:
19
SCHEDULE I
Principal Amount of
Offered Securities
Underwriters to be Purchased
- ----------------------------------------------------- -----------------------
$ [___]
[___]................................................ $ [___]
=======================
Total................................................ $ [___]
20
REPUBLIC OF HUNGARY
Prospectus
Dated April 18, 2006
