Document:

Exhibit 10.33

                           No.__ of Twenty-Five Notes

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THIS NOTE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR ANY STATE'S
SECURITIES LAWS. NEITHER THIS NOTE NOR ANY PORTION THEREOF MAY BE SOLD,
TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF OR OFFERED FOR SALE
UNLESS AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT IS
AVAILABLE WHICH IS ACCOMPANIED BY AN OPINION OF ISSUER COUNSEL THAT SUCH
REGISTRATION IS NOT REQUIRED. THE INDEBTEDNESS EVIDENCED BY THIS NOTE IS
SUBORDINATE TO THE SENIOR OBLIGATIONS, AS DEFINED HEREIN
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                               AMENDED & RESTATED
                   U.S.$ 1,000,000 UNSECURED SUBORDINATED NOTE
                                       OF
                       HUNGARIAN TELEPHONE AND CABLE CORP.
                 (Amending and Restating a Promissory Note dated
                                  May 12, 1999)

Principal Amount: U.S. $1,000,000

Issue Date: May 12, 1999 and                    Expiration Date:  March 31, 2007
amended and restated April __, 2000

For value received, Hungarian Telephone and Cable Corp., a company formed under
the laws of the State of Delaware, U.S.A. (the "Issuer"), hereby promises to pay
to Postabank es Takarekpenztar Reszvenytarsasag the principal amount of this
Note on the dates and in the amounts specified in the Conditions (as defined
below). The Issuer promises to pay interest on the unpaid principal amount of
this Note until the principal amount is paid in full, at such interest rates and
payable at such times, as specified in the Conditions.

This Note is one of a series of twenty-five Notes (collectively, the "Notes")
dated the Issue Date and amended and restated on April __, 2000 which have been
issued by the Issuer in favor of Postabank es Takarekpenztar Reszvenytarsasag
("Postabank") to amend and restate certain notes issued by the Issuer in favor
of Postabank pursuant to a securities purchase agreement (as amended, the
"Securities Purchase Agreement") dated May 10, 1999 between the Issuer and
Postabank. Each of the Notes is subject to the additional terms and conditions
which are set forth in the annex attached hereto (the "Conditions") and are
incorporated herein by reference in their entirety.

<PAGE>

Upon any redemption of less than the entire principal amount outstanding of this
Note in accordance with the Conditions, the amount so redeemed shall be recorded
by the Issuer in the register maintained by the Issuer (the "Register") and the
principal amount outstanding of this Note from time to time shall be as recorded
in the Register. The Issuer will promptly upon written request from a Noteholder
provide free of charge to such Noteholder a certified copy of the Register
indicating the aggregate principal amount of the Notes redeemed on or prior to
the date of such copy.

This Note is issued in registered form and is not transferable in part.

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<PAGE>

AS WITNESS the signature of a duly authorized officer on behalf of the Issuer:

HUNGARIAN TELEPHONE AND CABLE CORP., as Issuer

By:    _______________________________
Name:  Kaj Ole Bertram
Title: President and Chief Executive Officer

duly authorized signatory
EXECUTED as of April __, 2000

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<PAGE>

FORM OF TRANSFER

BETWEEN:

(1)  [Transferor] (the "Transferor"); and

(2)  [Transferee] (the "Transferee").

DATE:   [____________]

For value received the Transferor hereby transfers [*] Note[s] issued by
Hungarian Telephone and Cable Corp. (the "Note[s]") in the original principal
amount of U.S.$ [*] to the Transferee in accordance with the Conditions (as
defined in the Note) and instructs the Issuer to register the Transferee as
owner of the Note[s].

SIGNED:

 ......................................           ...............................
duly authorized signatory                        duly authorized signatory
for and on behalf of                             for and on behalf of
[Transferor] as Transferor                       [Transferee] as Transferee

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<PAGE>

 Terms and Conditions of the Amended and Restated Unsecured Subordinated Notes

The issue (the "Note Issue") of the Notes (the "Notes") of Hungarian Telephone
and Cable Corp. (the "Issuer") are subject to these terms and conditions (the
"Conditions"). The Noteholders (as defined below) are bound by, and are deemed
to have notice of, all the Conditions contained herein applicable to them.

1.       Defined Terms and Interpretations

         As used in the Securities Purchase Agreement (including the attached
         Exhibits) and in respect of the certificates for and terms and
         conditions of the Notes, the following terms shall have the specified
         meanings (unless otherwise defined therein):

         "Arrangers" means Citibank, N.A. and Westdeutsche Landesbank
         Girozentrale, each in its capacity as Arranger under the Senior Secured
         Credit Agreement;

         "Banks" means the Arrangers and the other financial institutions from
         time to time party to the Senior Secured Credit Agreement;

         "Business Day" means any day (other than a Saturday or Sunday) on which
         banks are not required or authorized to close in New York City and
         Budapest;

         "Clause" means, subject to any contrary indication, a reference to a
         Clause hereof;

         "Condition" and "Conditions" shall have the meanings ascribed thereto
         herein;

         "Dispute" shall mean any dispute or difference arising out of or in
         connection with this Note, including any question as to its existence,
         validity or termination;

         "Expiration Date" means March 31, 2007, or if such day is not a
         Business Day, the next succeeding day which is a Business Day;

         "Facility Agent" means, at any time, the facility agent for the Banks
         under the Senior Secured Credit Agreement at such time, being as at the
         date of the amendment and restatement of the Notes, Citibank
         International plc;

         "Finance Documents" means, at any time, each of the Securities Purchase
         Agreement, the Warrant Agreement and any other document, notice,
         instrument or agreement entered into or delivered pursuant to any of
         the foregoing, and "Finance Document" shall mean any or each such
         document, notice, instrument or agreement;

         "Finance Parties" has the meaning ascribed to such term in the Senior
         Secured Credit Agreement;

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<PAGE>

         "Fixed Margin" means in relation to each Interest Period or other
         relevant period six per cent (6%) per annum; provided that if the
         interest on the Notes is duly paid on the Interest Payment Date for an
         Interest Period when due, then the Fixed Margin for such Interest
         Period shall be three and one-half per cent (31/2%) per annum;

         "Governmental Authority" means any nation or government, any state or
         other political subdivision thereof and any entity exercising
         executive, legislative, judicial, regulatory or administrative
         functions of or pertaining to government;

         "HTCC Consulting" means HTCC Tanacsado Reszvenytarsasag;

         "HTCC Group" means the Issuer and each of its subsidiaries;

         "holder" has the meaning ascribed to such term in Clause 5.2;

         "Hungary" means the Republic of Hungary;

         "Interbank Rate" means in relation to any Interest Period or other
         period, the arithmetic mean (rounded upward to the nearest four decimal
         places) of the offered quotations for U.S. dollar deposits for such
         period which appear on the relevant Telerate Page of the Telerate
         Service which displays a British Bankers Association Interest
         Settlement Rate for U.S. dollars (or such other page or such other
         service as may replace such page and/or service, as appropriate, for
         the purpose of displaying London Interbank Offered Rates of leading
         banks) at or about 11:00 a.m. (London time) on the applicable Quotation
         Day; provided that if there is one only or no such offered quotations
         on the relevant Telerate Page of the Telerate Service or there is no
         relevant Telerate Page, the applicable interest rate shall be the
         arithmetic mean (rounded upwards, if not already such a multiple of
         one-sixteenth of one per cent (0.0625%)) of the rates at which each of
         the Reference Banks was offering to prime banks in the Budapest
         Interbank market deposits in U.S. dollars at or about 11:00 a.m.
         (Budapest time) on the applicable Quotation Day for a period equal to
         such period and in an amount comparable with the amount to be
         outstanding during such period;

         "Interest Payment Date" has the meaning ascribed to it in Clause 14.2;

         "Interest Payment Default" means any interest payment when due on the
         Interest Payment Date therefor shall fail to be made and such failure
         shall continue for at least 365 consecutive days after such Interest
         Payment Date; provided, however that no Interest Payment Default shall
         be deemed to have occurred hereunder if, within 10 days after the end
         of such 365-day period, the Noteholder shall have received all interest
         accrued (including, without limitation, interest accruing pursuant to
         Clause 15.1) from such Interest Payment Date to the date the interest
         payment is made;

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<PAGE>

         "Interest Period" means, subject as provided below, in relation to any
         Note, a period of six (6) months provided that:

         (a)  if any Interest Period would otherwise end on a day which is not a
              Business Day, that Interest Period shall be extended to the next
              succeeding Business Day unless the result of such extension would
              be to carry such Interest Period over into another calendar month
              in which event such Interest Period shall end on the last
              preceding Business Day; and

         (b)  any Interest Period which commences on the last day of a calendar
              month and any Interest Period which commences on a day for which
              there is no numerically corresponding day in the calendar month
              which is the relevant number of months after the commencement of
              such Interest Period shall end on the last Business Day of the
              calendar month which is the relevant number of calendar months
              after the commencement of such Interest Period;

         "Issue Date" means, as to any Note, the date(s) specified as such in
         such Note;

         "Issuer" means Hungarian Telephone and Cable Corp., a corporation
         formed under the laws of the State of Delaware;

         "Majority Lenders" has the meaning ascribed to such term in the Senior
         Secured Credit Agreement;

         "Mandatory Prepayment Event" means any of the following:

                      (a) while any Senior Obligations shall remain unpaid or
                  any commitment under the Senior Secured Credit Agreement shall
                  be in force, the occurrence of (i) any Senior Default or (ii)
                  an Interest Payment Default; or

                      (b) at any time after the Senior Obligations shall have
                  been paid in full and the commitments under the Senior Secured
                  Credit Agreement shall have been terminated, (i) the
                  occurrence of any "Event of Default" (as defined in the Senior
                  Secured Credit Agreement as in effect immediately prior to
                  such payment and termination) or (ii) the Issuer shall fail to
                  make any payment (whether of principal, interest or otherwise)
                  when due under this Note;

         "month" is a reference to a period starting on one day in a calendar
         month and ending on the numerically corresponding day in the next
         succeeding calendar month save that, where any such period would
         otherwise end on a day which is not a Business Day, it shall end on the
         next succeeding Business Day, unless that day falls in the calendar
         month succeeding that in which it would otherwise have

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<PAGE>

         ended, in which case it shall end on the immediately preceding Business
         Day if a period starts on the last Business Day in a calendar month or
         if there is no numerically corresponding day in the month in which that
         period ends, that period shall end on the last business day in that
         later month;

         "Noteholder" has the meaning ascribed to such term in Clause 5.2;

         "Notes" means the notes issued in accordance with the Securities
         Purchase Agreement, as such notes have been amended and restated on
         April __, 2000, and to which the Conditions contained herein are
         applicable;

         "Person" means an individual, partnership, corporation (including a
         business trust), joint stock issuer, estate, trust, limited liability
         issuer, unincorporated association, joint venture or other entity, or a
         Governmental Authority;

         "Post-Petition Interest" means interest at the contract rate accruing
         subsequent to the filing of a petition initiating any proceeding in
         bankruptcy, insolvency or like proceeding whether or not such interest
         is an allowed claim enforceable against the debtor in any proceeding
         under any applicable bankruptcy law;

         "Quotation Day" means in relation to any Interest Period or other
         period, the day on which interest rate quotations are ordinarily given
         by prime banks in the London Interbank Market for deposits in U.S.
         dollars for delivery on the first day of the Interest Period or other
         such period; provided that, if, for any such period, quotations would
         ordinarily be given on more than one day, the Quotation Day for such
         period will be the last of those days;

         "Reference Banks" means the principal London offices of ABN AMRO Bank
         N.V., Citibank N.A. and ING Bank N.V., or such other bank or banks as
         may from time to time be agreed between the Issuer and the Noteholders,
         such agreement not to be unreasonably withheld or delayed;

         "Register" means the register to be kept by the Issuer in which the
         Noteholders from time to time of the Notes are registered;

         "Schedule" shall, subject to any contrary indication, be construed as a
         reference to a schedule hereto;

         "Senior Default" means, while any Senior Obligations shall remain
         unpaid or any commitment under the Senior Secured Credit Agreement
         shall be in force, the occurrence of "Event of Default" (as defined in
         the Senior Secured Credit Agreement) and the acceleration of the
         maturity of the Senior Obligations in accordance with the terms
         thereof, if such acceleration shall continue for at least 365
         consecutive days after the Facility Agent has so elected such
         acceleration;

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<PAGE>

         "Senior Guaranty" means the Deed of Guarantee No. 6 dated as of April
         __, 2000 among the Issuer, as guarantor, Citibank International plc, as
         Facility Agent and beneficiary, Citibank Rt., as Security Agent and
         beneficiary and Hungarotel Tavkozlesi Koncesszios Reszvenytarsasag,
         RABA-COM Tavkozlesi Koncesszios Reszvenytarsasag, Papa es Tersege
         Tavkozlesi Koncesszios Reszvenytarsasag, and KNC Kelet-Nograd COM
         Tavkozlesi Koncesszios Reszvenytarsasag, as countersignors;

         "Senior Indebtedness" means all indebtedness and other obligations of
         any member of the HTCC Group to the Finance Parties under or in
         connection with the Senior Loan Agreements;

         "Senior Loan Agreements" means the Senior Secured Credit Agreement, the
         Senior Guaranty, the Senior Security Deposit Agreement, the Senior
         Security Agreement, and each "Senior Finance Document" (as defined in
         the Senior Secured Credit Agreement) and, in each case, any other
         agreement relating to the obligations thereunder;

         "Senior Obligations" means the principal, premium, if any, interest
         (including Post-Petition Interest), penalties, fees, expenses, claims,
         charges, indemnity obligations, attorneys' fees and expenses, and other
         liabilities with respect to the Senior Indebtedness;

         "Senior Secured Credit Agreement" means the EUR 130,000,000 Secured
         Senior Debt Facility Agreement dated as of April __, 2000 among
         Hungarotel Tavkozlesi Koncesszios Reszvenytarsasag, RABA-COM Tavkozlesi
         Koncesszios Reszvenytarsasag, Papa es Tersege Tavkozlesi Koncesszios
         Reszvenytarsasag, and KNC Kelet-Nograd COM Tavkozlesi Koncesszios
         Reszvenytarsasag, as Borrowers; the Issuer and HTCC Consulting, as
         Guarantors; Citibank, N.A. and Westdeutsche Landesbank Girozentrale, as
         Arrangers; the Facility Agent; Citibank Rt., as Security Agent; and the
         financial institutions party to the Senior Secured Credit Agreement in
         their capacity as lenders;

         "Senior Security Agreement" means the Pledge and Security Agreement
         dated as of April __, 2000 by the Issuer in favor of Citibank Rt., as
         Security Agent;

         "Senior Security Deposit Agreement" means the Security Deposit No. 1
         Agreement dated as of April __, 2000 among the Issuer, as depositor,
         Citibank Rt., as Security Agent and depositee, and Hungarotel
         Tavkozlesi Koncesszios Reszvenytarsasag, RABA-COM Tavkozlesi
         Koncesszios Reszvenytarsasag, Papa es Tersege Tavkozlesi Koncesszios
         Reszvenytarsasag, and KNC Kelet-Nograd COM Tavkozlesi Koncesszios
         Reszvenytarsasag, as countersignors;

         "Standstill Termination Date" means the earlier of (a) the repayment in
         full in cash of the Senior Obligations and (b) March 31, 2007;

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<PAGE>

         "Subordinated Debt" has the meaning ascribed to such term in Clause 19;

         "Subordination Event" means the occurrence of any "Event of Default" as
         defined in the Senior Secured Credit Agreement;

         "Tax" means any tax, levy, impost, duty or other charge of a similar
         nature (including, without limitation, any penalty or interest payable
         in connection with any failure to pay or any delay in paying any of the
         same);

         "U.S. dollar", "dollars", "USD", "$" and "U.S.$" means the lawful
         currency of the United States of America;

         "Warrants" means the warrants to purchase common stock of the Issuer,
         set out as Exhibit B to the Securities Purchase Agreement; and

         "winding up", "dissolution", "administration or "re-organization" of
         the Issuer or corporation shall be construed so as to include any
         equivalent or analogous proceedings under the law of the jurisdiction
         in which the Issuer or corporation is incorporated or any jurisdiction
         in which the Issuer or corporation carries on business, including the
         seeking of liquidation, winding up, re-organization, dissolution,
         administration, arrangement, adjustment, protection or relief of
         debtors.

1.2      Save where the contrary is indicated, any reference herein to:

         (a)  the Securities Purchase Agreement or any other agreement or
              document shall be construed as a reference to the Securities
              Purchase Agreement or, as the case may be, such other agreement or
              document as the same may have been, or may from time to time be,
              amended, varied, novated or supplemented to the extent expressly
              permitted by the terms of the Senior Loan Agreements;

         (b)  a reference to any Person includes its successors and permitted
              transferees and permitted assigns;

         (c)  a statute shall be construed as a reference to such statute as the
              same may have been, or may from time to time be, amended or
              re-enacted; and

         (d)  a reference to the Senior Secured Credit Agreement, the Senior
              Guaranty, the Senior Security Deposit Agreement and any other
              Senior Loan Agreement, shall be construed as a reference to any
              such agreement as any such agreement may be amended, restated,
              renewed, replaced, refinanced, supplemented or otherwise modified
              from time to time, and to any agreement extending the maturity of,
              refinancing or otherwise restructuring all or any portion of the
              obligations under such agreements or any successor thereto;

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<PAGE>

1.3      Clause and Schedule headings are for ease of reference only. Unless the
         context otherwise requires, words denoting the singular shall include
         the plural and vice versa.

2.       The Notes

         The Notes having an aggregate principal amount of twenty-five million
         U.S. dollars (U.S.$ 25,000,000) have been issued in twenty-five (25)
         Notes of equal value.

3.       Purpose

3.1      The proceeds of the Notes have been used by the Issuer for the making
         of various loans to members of the HTCC Group.

4.       Constitution of the Notes

4.1      The Issuer hereby covenants in favor of the Noteholders and each
         Noteholder that it will duly perform and comply with the obligations
         expressed to be undertaken by it in the Conditions (and for this
         purpose any reference in the Conditions to any obligation or payment
         under or in respect of any Note shall be construed to include a
         reference to any obligation or payment under or pursuant to this
         provision). The Issuer hereby unconditionally and irrevocably
         acknowledges the right of every Noteholder to the prompt production of
         a copy of the Securities Purchase Agreement.

4.2      The covenant set out in Clause 4.1 shall inure to the benefit of the
         Noteholders and each Noteholder and its/their (and any subsequent)
         successors and permitted transferees, each of which shall be entitled
         severally to enforce the covenant set out in Clause 4.1.

4.3      Each Noteholder shall be entitled to transfer or assign all or any of
         its rights, benefits and obligations in respect of this Clause 4 solely
         in accordance with Clause 6 (Transfers of Notes).

5.       Form and Title

5.1      The Notes are issued in registered form. The Issuer will maintain a
         register (the "Register") in respect of the Notes.

5.2      In these Conditions, the "holder" of a Note means the person in whose
         name such Note is for the time being registered in the Register (or, in
         the case of a joint holding, the first named thereof) and "Noteholder"
         shall be construed accordingly. The holder of a Note shall (except as
         otherwise required by law) be treated as the absolute owner of such
         Note for all purposes (whether or not it is overdue and regardless of
         any notice of ownership, trust or any other interest therein, any
         writing on any Note (other than the endorsed form of transfer) or any

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<PAGE>

         notice of any previous loss or theft of such Note) and no person shall
         be liable for so treating such holder.

6.       Transfers of Notes

6.1      Subject to Article XI of the Securities Purchase Agreement, Clause 6.3
         and Clause 19, a Note may be transferred in whole (but not in part)
         upon surrender of such Note, with the endorsed form of transfer duly
         completed, at the office of the Issuer specified in Clause 21.1,
         together with such evidence as the Issuer may reasonably require to
         prove:

         (a)  the title of the transferor; and

         (b)  the authority of the individuals who have executed the form of
              transfer.

         The transfer of a Note will be effected without charge.

6.2      Within five (5) Business Days of the surrender of a Note in accordance
         with Clause 6.1 above, the Issuer will register the transfer in
         question and deliver a new Note to the relevant holder at its specified
         office or (at the request and risk of such relevant holder) by
         uninsured first class mail (airmail if overseas) to the address
         specified for the purpose by such relevant holder.

6.3      No Noteholder may require transfers to be registered during the period
         of five (5) Business Days prior to the due date for any payment of
         principal in respect of any Note.

7.       Status

         The Notes constitute direct, general and unconditional obligations of
         the Issuer which will at all times rank subordinated to the Senior
         Obligations and pari passu with all other present and future unsecured
         obligations of the Issuer.

8.       Conditions Precedent to Issuance of the Notes

         The conditions precedent for the issuance of the Notes have been duly
         satisfied.

9.       Representations and Warranties of the Issuer

         The Issuer hereby repeats and on the Issue Date of any Note is deemed
         to repeat, in favor of the Noteholders and each Noteholder, each of the
         representations and warranties set out in Article III (Representations
         and Warranties of the Company) of the Securities Purchase Agreement, as
         if each such representation and warranty were set out herein, by
         reference to the then existing facts and circumstances.

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<PAGE>

10.      Covenants of the Issuer

10.1     The Issuer covenants with the Noteholders and each Noteholder that it
         shall provide them with such financial and other information regarding
         the Issuer, its business and assets as any Noteholder may from time to
         time reasonably require.

10.2     The Issuer covenants with and undertakes to the Noteholders and to each
         Noteholder:

         (a)  to inform each Noteholder promptly upon any of the representations
              and warranties given or to be given by the Issuer in Article III
              of the Securities Purchase Agreement becoming materially untrue or
              inaccurate, by reference to the then existing facts and
              circumstances;

         (b)  that it shall not issue or incur any bond, note, indebtedness,
              debenture or debenture stock, except (i) pursuant to, or permitted
              under the terms of, the Securities Purchase Agreement or the
              Senior Loan Agreements, and (ii) for the purpose of redeeming any
              Note issued hereunder;

         (c)  to supply the Noteholders and each Noteholder with the financial
              information as set out in Article VI (Affirmative Covenants of the
              Issuer) of the Securities Purchase Agreement; and

         (d)  to promptly notify the Noteholders and each Noteholder of the
              occurrence of a Mandatory Prepayment Event or a potential
              Mandatory Prepayment Event.

11.      Redemption

11.1     Subject to the subordination provisions set forth in Clause 19, each
         Note will be redeemed at its face amount on the Expiration Date,
         together with all accrued interest and any other amount payable under
         the Notes. Redeemed Notes will be cancelled and may not be reissued or
         resold.

11.2     The Issuer may redeem the Notes, in whole or in part, prior to the
         Expiration Date

         Provided that:

         (a)  the Issuer shall give to the Noteholders not less than ten (10)
              Business Days prior written notice of its intention to make any
              such prepayment;

         (b)  on the redemption of the whole of the Notes, the Issuer shall pay
              to the Noteholders the face amount of the Notes, together with all
              accrued interest and any other amount payable under the Notes;

         (c)  the Issuer shall pay to the Noteholder on demand a sum equal to
              the reasonable breakage costs incurred by the Noteholder as a
              result of

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<PAGE>

              redemption of the Note prior to the end of the applicable Interest
              Period (as determined by the Noteholder);

         (d)  any redemption of part of the Notes will be subject to the minimum
              prepayment of five million U.S. dollars (U.S.$ 5,000,000) and
              integral multiples of one million U.S. dollars (U.S.$ 1,000,000),
              and any such prepayment shall be applied by the Issuer pro rata
              towards the prepayment of the amounts of principal of each of the
              Notes then outstanding; and

         (e)  such redemption is expressly permitted by the terms of the Senior
              Secured Credit Agreement and Clause 19 hereof.

12.      Payments

12.1     On each date on which these Conditions require an amount to be paid by
         the Issuer, the Issuer shall make the same available to Noteholders at
         the opening of business on the due date for such payment by payment in
         U.S. dollars and in immediately available cleared funds to a bank
         account of each Noteholder in New York City or Budapest specified from
         time to time to the Issuer by such Noteholder for this purpose.

12.2     If the date on which any payment is to be made under the Conditions is
         not a Business Day then the Noteholders shall not be entitled to
         payment of such amount until the next following Business Day and shall
         not be entitled to any further interest or other payment in respect of
         any such delay.

12.3     All payments required to be made by the Issuer hereunder shall be made
         in U.S. dollars and shall be calculated without reference to any
         set-off or counterclaim and shall be made free and clear of any without
         any deduction for or on account of any set-off or counterdown save as
         required by mandatory provisions of law.

13.      Taxes and Tax Credits

13.1     All sums payable in respect of the Notes shall be made free and clear
         of and without withholding or deduction for or on account of any tax
         unless the Issuer is required by law to make such a payment subject to
         the withholding or deduction of tax, in which case to the extent that
         the Noteholder is the Noteholder the sum payable by the Issuer in
         respect of which such withholding or deduction is required to be made
         shall be increased to the extent necessary to ensure that, after the
         making of such withholding or deduction, each Noteholder receives and
         retains (free from any liability in respect of any such withholding or
         deduction) a net sum equal to the sum which it would have received and
         so retained had no such withholding or deduction been made or required
         to be made.

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<PAGE>

13.2     If, at any time, the Issuer is required by law to make any withholding
         or deduction from any sum payable by it hereunder (or if thereafter
         there is any change in the rates at which or the manner in which such
         withholdings or deductions are calculated), the Issuer shall promptly
         notify the Noteholder.

13.3     If, following the making of any increased payment by the Issuer
         pursuant to Clause 13.1, a Noteholder receives or is granted a credit
         against, remission for or repayment of any tax payable or suffered by
         it which is referable to such deduction or withholding or such
         increased payment and which confers a genuine benefit on such
         Noteholder, such Noteholder shall, to the extent that the auditors of
         such Noteholder (acting as experts and not as arbitrators) are
         reasonably satisfied that it can do so without prejudice to the
         retention of such credit, remission or repayment, promptly reimburse
         the Issuer with such amount as the auditors of such Noteholder (acting
         as experts and not as arbitrators) shall reasonably determine and
         certify (substantiating in reasonably sufficient detail the amount
         concerned but not including any matters which such Noteholder fairly
         regards as confidential) to the Issuer to be such proportion of such
         credit, remission or repayment as will leave such Noteholder (after
         such reimbursement) in no better position (after tax) than would have
         been the case had no such deduction or withholding been required to be
         made.

13.4     Reimbursement shall be made under Clause 13.3 above within seven (7)
         days after a Noteholder has actually received the benefit of such
         exemption, credit, emission or repayment, but any reimbursement shall
         include an amount in respect of interest or repayment supplement on or
         in respect of tax actually received or credited to such Noteholder in
         respect of such exemption, credit, remission or repayment and such
         Noteholder shall not unreasonably delay the obtaining of such benefit.

13.5     If a Noteholder is obliged to pay to the Issuer any sum under a Note
         and:

         (a)  any such exemption, credit, remission or repayment as is referred
              to in Clause 13.3 is subsequently withdrawn in whole or in part;
              or

         (b)  such sum is paid on the basis that it would be allowed to such
              Noteholder as a deduction or offset for taxation purposes in the
              accounting period of such Noteholder and such assumption
              subsequently proves to be incorrect,

         then the Issuer shall repay to such Noteholder promptly on demand such
         amount as the auditors of such Noteholder (acting as experts and not as
         arbitrators) shall reasonably determine and certify (substantiating in
         reasonably sufficient detail the amount concerned and not including any
         matters which such Noteholder fairly regards as confidential) to the
         Issuer to be such amount as will leave such Noteholder (after such
         repayment) in no better position (after tax) than would have been the
         case had no such circumstances mentioned in paragraphs (a) and (b)
         above existed.

                                       15
<PAGE>

14.      Interest

14.1     The rate of interest on the Notes for each Interest Period shall be the
         aggregate of the applicable:

         (a)  Fixed Margin; and

         (b)  Interbank Rate.

14.2     Except as otherwise provided herein in Clause 19 or otherwise, interest
         shall be payable by the Issuer in U.S. dollars in advance on the first
         day of each Interest Period (each such day, an "Interest Payment
         Date").

14.3     The first Interest Period in respect of the Notes will commence on May
         12, 2000 with the next Interest Payment Date being six (6) months
         thereafter.

14.4     Interest shall accrue from day to day from and including the last day
         of the immediately preceding Interest Period to but excluding the last
         day of the current Interest Period and shall be calculated at the rate
         specified in Clause 14.1.

15.      Default Interest and Indemnity

15.1     If interest in respect of any Note which is due and payable by the
         Issuer hereunder is not paid on the due date therefor or if any sum due
         and payable by the Issuer under any judgment of any court in connection
         herewith is not paid on the date of such judgment, such sum (the
         balance thereof for the time being unpaid being herein referred to as
         an "unpaid sum") shall bear interest at the rate specified in Clause
         14.1 beginning on such due date or, as the case may be, the date of
         such judgment and ending on the date upon which the obligation of the
         Issuer to pay is discharged.

15.2     Any interest which shall have accrued under Clause 15.1 in respect of
         an unpaid sum shall be due and payable and shall be paid by the Issuer
         to the relevant Noteholder(s) at the end of the period by reference to
         which it is calculated or on such other date or dates as such
         Noteholder(s) may specify by written notice to the Issuer, provided,
         however that any such interest which shall have accrued as a result of
         an event which, but for the payment of such accrued interest as
         provided in the proviso set forth in the definition of "Interest
         Payment Default", would become an Interest Payment Default, shall be
         payable on the date upon which the obligation of the Issuer to pay such
         accrued interest is discharged, whether in accordance with the
         definition of "Interest Payment Default" or as otherwise provided
         herein.

15.3     The Issuer undertakes to indemnify each Noteholder against any cost,
         claim, loss, expense (including legal fees) or liability, which it may
         sustain or incur as a

                                       16
<PAGE>

         consequence of the occurrence of any default by the Issuer in the
         performance of any of the obligations expressed to be assumed by it in
         respect of the Notes.

16.      Mandatory Prepayment Event

         Upon the occurrence of any Mandatory Payment Event, the Issuer will,
         subject to the provisions of Clause 19, immediately prepay to the
         Noteholders all the outstanding principal and all interest and all
         other amounts payable under the Notes.

17.      Replacement of Note

         Subject to Article X of the Securities Purchase Agreement, if any Note
         is lost, stolen, mutilated, defaced or destroyed, it may be replaced at
         the specified office of the Issuer, subject to all applicable laws,
         upon payment by the claimant of the expenses incurred in connection
         with such replacement and on such terms as to evidence, security,
         indemnity and otherwise as the Issuer may reasonably require. Mutilated
         or defaced Notes must be surrendered before replacements will be
         issued.

18.      Modification and Noteholders' Resolutions

18.1     Any modification to these Conditions shall be agreed in writing between
         the Issuer and Noteholders holding at least eighty per cent (80%) of
         the face amount of the Notes and any such modifications so agreed shall
         be binding on all further Noteholders, provided that no amendment,
         supplement or modification to, or waiver of, any provision set forth in
         this Clause 18, Clause 16, Clause 19, Clause 22 or Clause 23 may be
         effected without the prior written consent of the Facility Agent (with
         the consent of the "Majority Lenders", as defined in the Senior Secured
         Credit Agreement), and any such amendment, supplement, modification or
         waiver entered into without the prior written consent of the Facility
         Agent shall be null and void and without any force and effect
         whatsoever.

18.2     Any resolution of Noteholders in relation to these Conditions may be
         made in writing signed by or on behalf such Noteholders holding the
         relevant face amount of Notes upon delivery to the Issuer by each such
         Noteholder of such evidence as to its identity and its capacity as
         Noteholder as the Issuer may reasonably require.

19.      Subordination

19.1     The Issuer covenants and agrees, and the Noteholder by its acceptance
         hereof likewise covenants and agrees, that all payments of the
         principal of and interest and premium, if any, on the Notes and all
         other obligations of the Issuer now or hereafter existing under or in
         respect of the Notes (including, without limitation, amounts payable on
         account of the redemption provisions set forth herein) (collectively,
         the "Subordinated Debt") shall be subordinated in accordance with

                                       17
<PAGE>

         the provisions of this Clause 19 to the prior payment in full of all
         Senior Obligations. For purposes hereof, the Senior Obligations shall
         not be deemed to have been paid in full until the Finance Parties shall
         have received payment of the Senior Obligations in full in cash. In
         furtherance of the foregoing, the Issuer and the Noteholder, by its
         acceptance hereof, agrees as follows:

19.2     Upon payment or distribution of assets or securities of the Issuer of
         any kind or character, whether in cash, property or securities, upon
         any dissolution or winding up or total or partial liquidation or
         reorganization of the Issuer, whether voluntary or involuntary, or in
         bankruptcy, insolvency, receivership or other proceedings or upon an
         assignment for the benefit of creditors or any other marshalling of the
         assets and liabilities of the Issuer, all Senior Obligations shall
         first be paid in full in cash, or payment provided for in cash or cash
         equivalents in a manner satisfactory to the Finance Parties, before any
         direct or indirect payment or distribution, including, without
         limitation, by exercise of set-off, of any cash, property or securities
         on account of principal of (or premium, if any) or interest or any
         other amounts on or in respect of the Notes and to that end the Finance
         Parties shall be entitled to receive directly, for application to the
         payment of the Senior Obligations (to the extent necessary to pay all
         Senior Obligations in full after giving effect to any substantially
         concurrent payment or distribution to or provision for payment to the
         Finance Parties), any payment or distribution of any kind or character,
         whether in cash, property or securities, in respect of the Subordinated
         Debt. The Facility Agent is hereby irrevocably authorized and empowered
         (in its own name or in the name of the Noteholders or otherwise), but
         shall have no obligation, to demand, sue for, collect and receive
         payment or distribution referred to herein and to file a claim and
         proofs of claim and take such other action (including without
         limitation, voting the Subordinated Debt) as it may deem necessary or
         advisable for the exercise or enforcement of any of the rights or
         interests of the Noteholders hereunder.

19.3     No direct or indirect payment by or on behalf of the Issuer of
         principal of (premium, if any), or interest on, or any other amount
         with respect to, the Subordinated Debt, and no repurchase, redemption
         or other retirement of any Note, whether pursuant to the terms of the
         Note, upon acceleration or otherwise, shall be made if at the time of
         such payment, repurchase, redemption or retirement, a Subordination
         Event has occurred for so long as such Subordination Event shall not
         have been cured or waived in writing by all applicable parties;
         provided, that the payment of accrued interest specified in the proviso
         in the definition of "Interest Payment Default" may be paid in
         accordance with such proviso; and provided, further, that on and after
         the Standstill Termination Date, the Issuer may resume payments on
         account of the principal of (premium, if any), and interest (including
         interest pursuant to Clause 15.1) and any other amounts on the Note,
         subject to the provisions of Clause 19.1 and Clause 19.2 hereof;

19.4     (a) In the event that, notwithstanding the foregoing provisions
         prohibiting such payment or distribution, the Noteholders shall have
         received any payment on

                                       18
<PAGE>

         account of the Subordinated Debt at a time when such payment is
         prohibited by such provisions before the Senior Obligations are paid in
         full, then and in such event, such payment or distribution shall be
         received and held in trust by the Noteholders apart from their other
         assets and forthwith paid over or delivered to the Facility Agent in
         the same form as so received (with any necessary indorsement) to be
         applied (in the case of cash) to, or held as collateral (in the case of
         non-cash property or securities) for, the payment or prepayment of the
         Senior Obligations in accordance with the terms of the Senior Loan
         Agreements.

         (b) Nothing contained in this Clause 19 will limit the right of the
         Noteholders to take any action provided herein with respect to the
         Subordinated Debt; provided that all Senior Obligations then due or
         thereafter declared to be due shall first be paid in full before the
         Noteholders are entitled to receive any payment from the Issuer of
         principal of, or interest on, or any other amounts under any Note.

         (c) Upon any payment or distribution of assets or securities referred
         to in this Clause 19, the Noteholders shall be entitled to rely upon
         any order or decree of a court of competent jurisdiction in which such
         dissolution, winding up, liquidation or reorganization proceedings are
         pending, and upon a certificate of the receiver, trustee in bankruptcy,
         liquidating trustee, agent or other person making any such payment or
         distribution, delivered to the Noteholders for the purpose of
         ascertaining the Persons entitled to participate in such distribution,
         the holders of the Senior Obligations and other indebtedness of the
         Issuer, the amount thereof or payable thereon, the amount or amounts
         paid or distributed thereon and all other facts pertinent thereto or to
         this Clause 19.

         (d) No right of any present or future holder of any Senior Obligations
         to enforce subordination as herein provided shall at any time in any
         way be prejudiced or impaired by any act or failure to act by any such
         holder, or by any noncompliance by the Issuer or any Noteholder with
         the terms and provisions and covenants herein regardless of any
         knowledge thereof such holder may have or otherwise be charged with.

         (e) The provisions of this Clause 19 are intended to be for the benefit
         of, and shall be enforceable directly by, the holders of the Senior
         Obligations. The Issuer and each Noteholder, by its acceptance hereof,
         each acknowledge that the Finance Parties are relying upon the
         provisions of this Clause 19 in extending such Senior Obligations.

19.5     Any payment or distribution to the Facility Agent, on behalf of the
         holders of the Senior Obligations, pursuant to the provisions of this
         Clause 19 shall entitle the Noteholder to a right of subrogation in
         respect thereof; provided, however that all such subrogation rights are
         not exercisable until the Senior Obligations shall have been paid in
         full.

                                       19
<PAGE>

19.6     Nothing contained in this Clause 19 or elsewhere in this Note is
         intended to or shall impair, as between the Issuer and the Noteholder,
         the obligations of the Issuer, which are absolute and unconditional, to
         pay to the Noteholder the principal of (premium, if any), and interest
         on, the Note as and when the same shall become due and payable in
         accordance with their terms, or is intended to or shall affect the
         relative rights of the Noteholder and creditors of the Issuer other
         than the holders of the Senior Obligations nor shall anything herein or
         therein prevent any Noteholder from exercising all remedies otherwise
         permitted by applicable law upon the occurrence of a Mandatory
         Prepayment Event under this Note, subject to the rights, if any, under
         this Clause 19 of the holders of the Senior Obligations in respect of
         cash, property or securities of the Issuer received upon the exercise
         of any such remedy.

19.7     As long as the Senior Obligations shall not have been paid in full, no
         Noteholder will commence, or join with any creditor other than the
         holders of the Senior Obligations in commencing, or directly or
         indirectly cause the Issuer to commence or assist the Issuer in
         commencing, any proceeding referred to in Clause 19.2.

19.8     All rights and interests hereunder of the holders of the Senior
         Obligations, and all agreements and obligations of the Noteholders and
         the Issuer under this Clause 19, shall remain in full force and effect
         irrespective of:

         (a) the lack of validity or enforceability of any provision under any
         Senior Loan Agreement or any other agreement or instrument relating
         thereto;

         (b) any change in the time, manner or place of payment of, or in any
         other term of, all or any of the Senior Obligations, or any other
         amendment or waiver of or any consent to any departure from the Senior
         Loan Agreements, including, without limitation, any increase in the
         Senior Obligations resulting from the extension of additional credit to
         the Issuer or any of its subsidiaries or otherwise;

         (c) any taking, exchange, release or non-perfection of any other
         collateral, or any taking, release or amendment or waiver of or consent
         to departure from any guaranty, for all or any of the Senior
         Obligations;

         (d) any manner of application of collateral, or proceeds thereof, to
         all or any of the Senior Obligations, or any manner of sale or other
         disposition of any collateral for all or any of the Senior Obligations
         or any other assets of the Issuer or any of its subsidiaries;

         (e) any change, restructuring or termination of the corporate structure
         or existence of the Issuer or any of its subsidiaries; or

         (f) any other circumstance which might otherwise constitute a defense
         available to, or a discharge of, the Issuer or a subordinated creditor.

                                       20
<PAGE>

         Each Noteholder and the Issuer hereby waives promptness, diligence,
         notice of acceptance and any other notice with respect to any of the
         Senior Obligations and this Clause 19 and any requirement that the
         Facility Agent or any holder of the Senior Obligations protect, secure,
         perfect or insure any security interest or lien or any property subject
         thereto or exhaust any right or take any action against the Issuer or
         any other person or entity or any collateral.

19.9     (a) The provisions of this Clause 19 shall continue to be effective or
         be reinstated, and the Senior Obligations shall not be deemed to be
         paid in full, as the case may be, if at any time any payment of any of
         the Senior Obligations is rescinded or must otherwise be returned by
         the Facility Agent or any holder of the Senior Obligations upon the
         insolvency, bankruptcy or reorganization of the Issuer or otherwise,
         all as though such payment had not been made.

         (b) The provisions of this Clause 19 shall (i) remain in full force and
         effect until the payment in full of the Senior Obligations, (ii) be
         binding upon the Issuer and each Noteholder and their respective
         successors, assigns and transferees and (iii) inure to the benefit of,
         and be enforceable by, each Finance Party and its successors, assigns
         and transferees.

20.      Miscellaneous

20.1     No failure by any Noteholder to exercise, nor any delay by such
         Noteholder in exercising, any right or remedy in respect of any of the
         Notes shall operate as a waiver thereof, nor shall any single or
         partial exercise of any right or remedy prevent any further or other
         exercise thereof or the exercise of any other right or remedy. The
         rights and remedies herein provided are cumulative and not exclusive of
         any other rights or remedies (whether provided by law or otherwise).

20.2     Subject to Section 12.9 (Expenses) of the Securities Purchase
         Agreement, the Issuer will pay all costs associated with the issuance
         of the Notes.

21.      Notices

21.1     Any notice required to be issued or delivered by any party hereto to
         any other party hereto shall be issued or delivered, unless otherwise
         provided herein, by letter, telephone or facsimile to, in the case of
         the Issuer, the Issuer's other representative as set out below and, in
         the case of any Noteholder, to its representative specified on the
         Register (or to such other representative or to such other address as
         such Noteholder may hereafter specify in writing to the other parties
         hereto):

         ISSUER

         Address:          Terez Krt, Budapest, Hungary
         Tel:     + 36 1 474-7732

                                       21
<PAGE>

         Facsimile:        + 36 1 474-0350
         Attention of:     Kaj Ole Bertram

         Copies to:

         Legal Counsel

         (Dr. Peter Lakatos - Koves & Partners Clifford Chance
         Madach Trade Center, Madach Imre ut 14, H-1075 Budapest,
         Hungary
         Fax: +36 1 268 1610
         Tel: +36 1 268 1600)

         and

         Legal Counsel

         Hungarian Telephone and Cable Corp.
         100 First Stamford Place
         Stamford, CT 06902
         Fax:  203-348-9128
         Tel:   203-348-9069

21.2     Any notice delivered by hand to the notice address of the addressee
         shall be deemed to be served at the time of delivery, notices sent by
         facsimile shall be deemed to be served upon completion of transmission
         and notices sent by first class post or pre-paid recorded delivery
         shall be deemed to be served forty-eight (48) hours after time of
         posting.

21.3     The Noteholder, by its acceptance hereof, understands and agrees that
         it may receive a request pursuant to Section 34.2 (Exceptions) of the
         Senior Secured Credit Agreement and that the response to such request
         shall be required to be provided to the Person indicated therein within
         fourteen (14) after delivery thereof or the Noteholder shall be deemed
         to have consented to such request.

22.      Law

         The Notes are governed by, and shall be construed in accordance with,
         the laws of the State of New York.

23.      Arbitration

23.1     New York Courts. Subject to Clause 23.2 below (Option to Refer Disputes
         to Arbitration), each of the Issuer and the Noteholder irrevocably
         agrees for the benefit of each of the Finance Parties that the courts
         of New York shall have exclusive jurisdiction to hear and determine any
         suit, action or proceeding, and to

                                       22
<PAGE>

         settle any disputes, which may arise out of or in connection with this
         Note and, for such purposes, irrevocably submits to the jurisdiction of
         such courts.

23.2     Option to Refer Disputes to Arbitration. Notwithstanding the provisions
         of Clause 23.1 above (New York Courts), (a) in the event that the
         Facility Agent deems it appropriate to assert its rights relating to
         this Note, or (b) at the option of either the Issuer or the Noteholder
         in the event the Facility Agent has not asserted its rights related
         hereto or at any time after the Senior Obligations shall have been paid
         in full, such Person may, in its sole discretion assert such rights in
         an arbitration proceeding under the UNCITRAL Arbitration Rules as more
         particularly outlined in the Securities Purchase Agreement which is
         incorporated herein by reference in its entirety.

23.3     Non-Exclusive Jurisdiction. This Clause 23.3 is for the benefit of the
         Finance Parties and nothing in Clause 23.1 shall prevent the Facility
         Agent from taking proceedings relating to a Dispute involving a holder
         of any Note in any other courts with jurisdiction in the jurisdiction
         in which such holder of such Note has its place of incorporation,
         principal place of business and/or substantial assets. To the extent
         allowed by law, the Facility Agent may take concurrent proceedings in
         any number of jurisdictions.

23.4     Service of Process for Arbitration Proceedings. Each party hereunder
         agrees that the process by which any arbitration proceedings are begun
         may be served on it by being delivered to the address identified in
         Clause 21 (Notices) or other its registered office for the time being.
         If the appointment of the person(s) mentioned in this Clause 23.4
         ceases to be effective, such party shall immediately appoint a further
         person to act on its behalf as agent for the commencement of
         arbitration proceedings and, failing such appointment within fifteen
         (15) days, any other party or the Facility Agent shall be entitled to
         appoint such a person by notice to the other parties. Nothing contained
         in these Conditions shall affect the right to serve process in any
         other manner permitted by law.

23.5     Consent to Enforcement. Each party hereby consents generally in respect
         of any proceedings to the giving of any relief or the issue of any
         process in connection with such proceedings including the making,
         enforcement or execution against any property whatsoever (irrespective
         of its use or intended use) of any order or judgement which may be made
         or given in such proceedings.

24.      Language

         The Notes shall be executed in the English language. The Notes may be
         translated into the Hungarian language. In the event that any dispute
         or question of interpretation arises, the English language version
         shall prevail.

                                       23
<PAGE>

25.      Waiver of Jury Trial

         Each of the parties hereto irrevocably waives trial by jury in any
         action, proceeding or Dispute with respect to this Note.

26.      Amendment and Restatement

         This Note amends and restates and is a substitute for, but is not in
         payment or satisfaction of, the Unsecured Note no. __ dated May 12,
         1999 in the principal amount of U.S. $1,000,000 from the Issuer to the
         Noteholder.

                                       24
<PAGE>

         EXECUTION

The Issuer

Executed and delivered                   )     Director
by Kaj Ole Bertram, President and        )
Chief Executive Officer                  )
HUNGARIAN TELEPHONE AND                  )     Director/Secretary
CABLE CORP.                              )

The Noteholder

signed by                                )     Director/Secretary
for and on behalf of                     )
POSTABANK ES TAKAREKPENZTAR              )
RESZVENYTARSASAG                         )

                                       25Exhibit 10.34

                        SECURITY DEPOSIT NO. 1 AGREEMENT

                              dated April 11, 2000

                                     between

                       HUNGARIAN TELEPHONE AND CABLE CORP.
                                  as Depositor

                                       and

                                  CITIBANK RT.
                         as Depositee and Security Agent

                                       and

               HUNGAROTEL TAVKOZLESI KONCESSZIOS RESZVENYTARSASAG

                RABA-COM TAVKOZLESI KONCESSZIOS RESZVENYTARSASAG

             PAPA ES TERSEGE TAVKOZLESI KONCESSZIOS RESZVENYTARSASAG

                   KNC KELET-NOGRAD COM TAVKOZLESI KONCESSZIOS
                                RESZVENYTARSASAG

         Ormai es Tarsai
       CMS Cameron McKenna                           CMS Cameron McKenna
    Citibank Tower, 4th Floor                            Mitre House
           Bank Center                              160 Aldersgate Street
         Szabadsag ter 7                                   London
         H-1944 Budapest                                  EC1A 4DD
             Hungary                                       England
       Tel: +36 1 302 9302                          Tel: +44 171 367 3000
       Fax: +36 1 302 9300                          Fax: +44 171 367 2000

<PAGE>

                         HTCC TANACSADO RESZVENYTARSASAG

                                as Countersignors

<PAGE>

THIS SECURITY DEPOSIT NO. 1 AGREEMENT (the "Agreement") is made on 11 April 2000

BETWEEN:

(1)      HUNGARIAN TELEPHONE AND CABLE CORP. as depositor (the "Depositor");

(2)      CITIBANK RT. as depositee (the "Depositee"), acting on its own behalf
         and in its capacity as Security Agent (acting on behalf of each Finance
         Party);

AND IS COUNTERSIGNED BY:

(3)      HUNGAROTEL TAVKOZLESI KONCESSZIOS RESZVENYTARSASAG as countersignor;

(4)      RABA-COM TAVKOZLESI KONCESSZIOS RESZVENYTARSASAG as countersignor;

(5)      PAPA ES TERSEGE TAVKOZLESI KONCESSZIOS RESZVENYTARSASAG as
         countersignor;

(6)      KELET-NOGRAD COM TAVKOZLESI KONCESSZIOS RESZVENYTARSASAG as
         countersignor; and

(7)      HTCC TANACSADO RESZVENYTARSASAG RESZVENYTARSASAG as countersignor.

(the parties detailed at (3) to (7) inclusive above each a "Countersignor" and
together, the "Countersignors")

(the parties detailed at (1) to (7) inclusive above each a "Contracting Party"
and together, the "Contracting Parties").

The Depositee is acting on its own behalf and in its capacity as Security Agent
(acting on behalf of each Finance Party) by way of a power of attorney, each
substantially in the form set out in the Schedule 1 (Form of the power of
attorney from each Finance Party to the Security Agent).

IT IS HEREBY AGREED as followed:

                                       1
<PAGE>

1.       DEFINITIONS AND INTERPRETATION

1.1      Definitions

         In this Agreement:

         "Cancelled Shares" means the share certificates being serial numbers
         0007013-0007412, 0008018-0010749, 0023769-0026396 and 0072109-0096108
         of the ordinary share capital of KNC Kelet-Nograd COM Tavkozlesi
         Koncesszios Reszvenytarsasag.

         "Depositee's Declaration" means the written declaration made by the
         Depositee and delivered to the Depositor and to each of the
         Countersignors as required to terminate the Security Deposit and to
         delete the notation from the share registry of each of the
         Countersignors, substantially in the form set out in the Schedule 3
         (Form of the Depositee's Declaration regarding the termination of the
         Security Deposit).

         "Deposit Period" means the period commencing on the date of this
         Agreement and terminating on the date on which the Secured Liabilities
         have been finally and duly paid, duly performed and/or duly discharged
         (as appropriate) in full.

         "Deposited Shares" means the registered shares of each of the
         Countersignors identified and listed in Schedule 2 (List of the
         Deposited Shares).

         "Dispute" shall have the meaning ascribed to it in Clause 18.3
         (Arbitration).

         "Loan" means, at any time, the amount of principal outstanding under
         the Senior Secured Debt Facility Agreement at such time, which can be
         in the aggregate for an amount of up to one hundred and thirty million
         euros (EUR 130,000,000).

         "Material Adverse Effect" means the occurrence of any material adverse
         change in the value of the Deposited Shares and/or in the ability of
         the Depositee to enforce any or all of its rights arising under this
         Agreement.

         "Permitted Encumbrance" means any Encumbrance falling within the scope
         of paragraph (c) of Clause 21.3 (Negative pledge) of the Senior Secured
         Debt Facility Agreement.

         "Power of Attorney" means the power of attorney to be provided by the
         Depositor to the Depositee on the date of this Agreement and every
         twelve (12) months thereafter, substantially in the form set out in
         Schedule 5 (Form of the Power of Attorney from a Depositor to the
         Depositee to exercise shareholders' rights).

                                       2
<PAGE>

         "Re-issued Shares" means the new ordinary shares of KNC Kelet-Nograd
         COM Tavkozlesi Koncesszios Reszvenytarsasag which will be issued in
         replacement of the Cancelled Shares.

         "Rules" shall have the meaning ascribed to it in Clause 18.3
         (Arbitration).

         "Secured Liabilities" mean collectively, all moneys, obligations and
         liabilities whatsoever (in the same currency in which such moneys,
         obligations and liabilities are, as appropriate, expressed to be
         payable), which are now or which may at any time after the date of this
         Agreement be due, owing, incurred and/or outstanding from any of the
         Countersignors to the Depositee or any Finance Party or any transferee
         or assignee or replacement or successor of the Depositee or such
         Finance Party under any of the Senior Finance Documents to which any of
         the Countersignors and such person is a party and which arise under
         such Senior Finance Documents, the principal details of which are set
         out in Clause 2 (The Secured Liabilities).

         "Security Deposit" means the deposit ("zarolt letet") created and
         granted over the Deposited Shares by the Depositors in favour of the
         Depositee pursuant to Clause 3.1. (Security Deposit).

         "Senior Secured Debt Facility Agreement" means the EUR 130,000,000
         senior secured debt facility agreement dated on or about the date of
         this Agreement made between: (1) Hungarotel Tavkozlesi Koncesszios
         Reszvenytarsasag as Borrower; (2) RABA-COM Tavkozlesi Koncesszios
         Reszvenytarsasag as Borrower; (3) Papa es Tersege Tavkozlesi
         Koncesszios Reszvenytarsasag as Borrower; (4) KNC Kelet-Nograd COM
         Tavkozlesi Koncesszios Reszvenytarsasag as Borrower; (5) Hungarian
         Telephone and Cable Corp. as Guarantor; (6) HTCC Tanacsado
         Reszvenytarsasag as Guarantor; (7) Citibank, N.A. and Westdeutsche
         Landesbank Girozentrale as Arrangers; (8) Citibank International plc.
         as Facility Agent; (9) Citibank Rt. as Security Agent; and (10) the
         financial institutions defined in such senior secured debt facility
         agreement as the Original Lenders.

         "Valuation Price" has the meaning provided for in Clause 10.2
         (Procedure).

2.1      Defined terms in the Senior Secured Debt Facility Agreement
         In this Agreement all terms and expressions shall, in the absence of
         contrary intention or unless otherwise defined, have the meanings
         attributed to such terms and expressions in the Senior Secured Debt
         Facility Agreement (including by reference to any other document),
         mutatis mutandis. Clause 1.2 (Construction) of the Senior Secured Debt
         Facility Agreement shall be deemed to be incorporated in this
         Agreement, mutatis mutandis.

2.       THE SECURED LIABILITIES

2.1      Liabilities arising under the Senior Finance Documents
         The Contracting Parties hereby declare that under the terms and
         conditions of the Senior Finance Documents:

                                       3

<PAGE>

         (a)  the Depositor undertook, subject to the terms and conditions of
              the Senior Finance Documents to which it is a party:

              (i)  to pay certain fees, costs and expenses arising in relation
                   to such Senior Finance Documents; and

              (ii) to perform and/or comply with its obligations under such
                   Senior Finance Documents,

              Provided that the aggregate secured amount under (i) shall not
              exceed the equivalent of twenty five million euro (EUR
              25,000,000);

         (b)  Hungarotel Tavkozlesi Koncesszios Reszvenytarsasag undertook,
              subject to the terms and conditions of the Senior Finance
              Documents to which it is a party:

              (i)  to repay any Facility A Loans then drawn down by it and
                   outstanding, which may be for an aggregate amount of up to
                   the equivalent of seventy nine million euro (EUR 79,000,000),
                   in accordance with the following repayment schedule (as
                   amended from time to time pursuant to the Senior Secured Debt
                   Facility Agreement);

                    Repayment Date                     Repayment of Facility A
                                                       Loans (%)
                    --------------                     -------------------------

                    30 June 2001                         three per cent. (3%)
                    31 December 2001                     four per cent. (4%)
                    30 June 2002                         five per cent. (5%)
                    31 December 2002                     six per cent. (6%)
                    30 June 2003                         seven per cent. (7%)
                    31 December 2003                     seven per cent. (7%)
                    30 June 2004                         seven per cent. (7%)

              (ii)  to repay each Facility B Loan drawn down by it, which may be
                    for an amount of up to five million euro (EUR 5,000,000), at
                    the end of the relevant Interest Period in accordance with
                    the terms and conditions provided for in the Senior Secured
                    Debt Facility Agreement;

                                       4

<PAGE>

              (iii) to pay interest on the Facility A Loan and any Facility B
                    Loan, in each case, drawn down by it and outstanding, which
                    shall accrue on a daily basis and be calculated on the basis
                    of a year of three hundred and sixty (360) days and the
                    actual number of days elapsed and the rate of such interest
                    shall be the percentage rate per annum which is the
                    aggregate of: (A) one point seven five per cent. per annum
                    (1.75% p.a.), subject to any reduction pursuant to Clause
                    9.6 (Adjustments to Margin) of the Senior Secured Debt
                    Facility Agreement; (B) in relation to any Loan denominated
                    in forint, BUBOR, or in relation to any Loan denominated in
                    euro, EURIBOR; and (C) the Associated Costs, if any;

              (iv)  to pay certain fees, costs and expenses arising in relation
                    to such Senior Finance Documents; and

              (v)   to perform and/or comply with its obligations under such
                    Senior Finance Documents,

              Provided that the aggregate secured amount under (iv) shall not
              exceed the equivalent of twenty five million euro (EUR
              25,000,000);

         (c)  RABA-COM Tavkozlesi Koncesszios Reszvenytarsasag undertook,
              subject to the terms and conditions of the Senior Finance
              Documents to which it is a party:

              (i)   to repay any Facility A Loans then drawn down by it and
                    outstanding, which may be for an aggregate amount of up to
                    the equivalent of fourteen million euro (EUR 14,000,000), in
                    accordance with the following repayment schedule (as amended
                    from time to time pursuant to the Senior Secured Debt
                    Facility Agreement);

                    Repayment Date                  Repayment of Facility A
                                                    Loans (%)
                    --------------                  ----------------------------

                    30 June 2001                    three per cent. (3%)
                    31 December 2001                four per cent. (4%)
                    30 June 2002                    five per cent. (5%)
                    31 December 2002                six per cent. (6%)
                    30 June 2003                    seven per cent. (7%)
                    31 December 2003                seven per cent. (7%)
                    30 June 2004                    seven per cent. (7%)
                    31 December 2004                seven per cent. (7%)
                    30 June 2005                    eight per cent. (8%)
                    31 December 2005                eight per cent. (8%)
                    30 June 2006                    eight per cent. (8%)
                    31 December 2006                ten per cent. (10%)
                    30 June 2007                    ten per cent. (10%)
                    31 December 2007                ten per cent. (10%)

                                       5
<PAGE>

                    Repayment Date                  Repayment of Facility A
                                                    Loans (%)
                    --------------                  ----------------------------

                    TOTAL:                          one hundred per cent.
                                                    (100%)

              (ii)  to repay each Facility B Loan drawn down by it, which may be
                    for an amount of up to five million euro (EUR 5,000,000), at
                    the end of the relevant Interest Period in accordance with
                    the terms and conditions provided for in the Senior Secured
                    Debt Facility Agreement;

              (iii) to pay interest on the Facility A Loan and any Facility B
                    Loan, in each case, drawn down by it and outstanding, which
                    shall accrue on a daily basis and be calculated on the basis
                    of a year of three hundred and sixty (360) days and the
                    actual number of days elapsed and the rate of such interest
                    shall be the percentage rate per annum which is the
                    aggregate of: (A) one point seven five per cent. per annum
                    (1.75% p.a.), subject to any reduction pursuant to Clause
                    9.6 (Adjustments to Margin) of the Senior Secured Debt
                    Facility Agreement; (B) in relation to any Loan denominated
                    in forint, BUBOR, or in relation to any Loan
                    denominated in euro, EURIBOR; and (C) the Associated Costs,
                    if any;

              (iv)  to pay certain fees, costs and expenses arising in relation
                    to such Senior Finance Documents; and

              (v)   to perform and/or comply with its obligations under such
                    Senior Finance Documents,

              Provided that the aggregate secured amount under (iv) shall not
              exceed the equivalent of twenty five million euro (EUR
              25,000,000);

         (d)  Papa es Tersege Tavkozlesi Koncesszios Reszvenytarsasag undertook,
              subject to the terms and conditions of the Senior Finance
              Documents to which it is a party:

              (i)   to repay any Facility A Loans then drawn down by it and
                    outstanding, which may be for an aggregate amount of up to
                    the equivalent of thirteen million euro (EUR 13,000,000), in
                    accordance with the following repayment schedule (as amended
                    from time to time pursuant to the Senior Secured Debt
                    Facility Agreement);

                    Repayment Date                  Repayment of Facility A
                                                    Loans (%)
                    --------------                  ----------------------------

                    30 June 2001                      three per cent. (3%)
                    31 December 2001                  four per cent. (4%)
                    30 June 2002                      five per cent. (5%)
                    31 December 2002                  six per cent. (6%)

                                       6

<PAGE>

                    Repayment Date                  Repayment of Facility A
                                                    Loans (%)
                    --------------                  ----------------------------

                    30 June 2003                      seven per cent. (7%)
                    31 December 2003                  seven per cent. (7%)
                    30 June 2004                      seven per cent. (7%)
                    31 December 2004                  seven per cent. (7%)
                    30 June 2005                      eight per cent. (8%)
                    31 December 2005                  eight per cent. (8%)
                    30 June 2006                      eight per cent. (8%)
                    31 December 2006                  ten per cent. (10%)
                    30 June 2007                      ten per cent. (10%)
                    31 December 2007                  ten per cent. (10%)
                    TOTAL:                            one hundred per cent.
                                                      (100%)

              (ii)  to repay each Facility B Loan drawn down by it, which may be
                    for an amount of up to five million euro (EUR 5,000,000), at
                    the end of the relevant Interest Period in accordance with
                    the terms and conditions provided for in the Senior Secured
                    Debt Facility Agreement;

              (iii) to pay interest on the Facility A Loan and any Facility B
                    Loan, in each case, drawn down by it and outstanding, which
                    shall accrue on a daily basis and be calculated on the basis
                    of a year of three hundred and sixty (360) days and the
                    actual number of days elapsed and the rate of such interest
                    shall be the percentage rate per annum which is the
                    aggregate of: (A) one point seven five per cent. per annum
                    (1.75% p.a.) annum, subject to any reduction pursuant to
                    Clause 9.6 (Adjustments to Margin) of the Senior Secured
                    Debt Facility Agreement; (B) in relation to any Loan
                    denominated in forint, BUBOR, or in relation to any Loan
                    denominated in euro, EURIBOR; and (C) the Associated Costs,
                    if any;

              (iv)  to pay certain fees, costs and expenses arising in relation
                    to such Senior Finance Documents; and

              (v)   to perform and/or comply with its obligations under such
                    Senior Finance Documents,

              Provided that the aggregate secured amount under (iv) shall not
              exceed the equivalent of twenty five million euro (EUR
              25,000,000);

         (e)  KNC Kelet-Nograd COM Tavkozlesi Koncesszios Reszvenytarsasag
              undertook, subject to the terms and conditions of the Senior
              Finance Documents to which it is a party:

              (i)   to repay any Facility A Loans then drawn down by it and
                    outstanding, which may be for an aggregate amount of up to
                    the

                                       7

<PAGE>

                    equivalent of twenty six million euro (EUR 26,000,000),
                    in accordance with the following repayment schedule (as
                    amended from time to time pursuant to the Senior Secured
                    Debt Facility Agreement);

                    Repayment Date                  Repayment of Facility A
                                                    Loans (%)
                    --------------                  ----------------------------

                    30 June 2001                      three per cent. (3%)
                    31 December 2001                  four per cent. (4%)
                    30 June 2002                      five per cent. (5%)
                    31 December 2002                  six per cent. (6%)
                    30 June 2003                      seven per cent. (7%)
                    31 December 2003                  seven per cent. (7%)
                    30 June 2004                      seven per cent. (7%)
                    31 December 2004                  seven per cent. (7%)
                    30 June 2005                      eight per cent. (8%)
                    31 December 2005                  eight per cent. (8%)
                    30 June 2006                      eight per cent. (8%)
                    31 December 2006                  ten per cent. (10%)
                    30 June 2007                      ten per cent. (10%)
                    31 December 2007                  ten per cent. (10%)
                    TOTAL:                            one hundred per cent.
                                                      (100%)

              (ii)  to repay each Facility B Loan drawn down by it, which may be
                    for an amount of up to five million euro (EUR 5,000,000), at
                    the end of the relevant Interest Period in accordance with
                    the terms and conditions provided for in the Senior Secured
                    Debt Facility Agreement;

              (iii) to pay interest on the Facility A Loan and any Facility B
                    Loan, in each case, drawn down by it and outstanding, which
                    shall accrue on a daily basis and be calculated on the basis
                    of a year of three hundred and sixty (360) days and the
                    actual number of days elapsed and the rate of: (A) such
                    interest shall be the percentage rate per annum which is the
                    aggregate of one point seven five per cent. per annum (1.75%
                    p.a.), subject to any reduction pursuant to Clause 9.6
                    (Adjustments to Margin) of the Senior Secured Debt Facility
                    Agreement; (B) in relation to any Loan denominated in
                    forint, BUBOR, or in relation to any Loan denominated in
                    euro, EURIBOR; and (C) the Associated Costs, if any;

              (iv)  to pay certain fees, costs and expenses arising in relation
                    to such Senior Finance Documents; and

              (v)   to perform and/or comply with its obligations under such
                    Senior Finance Documents,

                                       8
<PAGE>

              Provided that the aggregate secured amount under (iv) shall not
              exceed the equivalent of twenty five million euro (EUR
              25,000,000);

         (f)  HTCC Tanacsado Reszvenytarsasag undertook, subject to the terms
              and conditions of the Senior Finance Documents to which it is a
              party:

              (i)   to pay certain fees, costs and expenses arising in relation
                    to such Senior Finance Documents; and

              (ii)  to perform and/or comply with its obligations under such
                    Senior Finance Documents,

              Provided that the aggregate secured amount under (i) shall not
              exceed the equivalent of twenty five million euro (EUR
              25,000,000);

2.2      Liabilities arising under this Agreement
         The Contracting Parties hereby declare that, under the terms and
         conditions of this Agreement, the Depositor undertakes, subject to such
         terms and conditions:

         (a)  to pay the fees, costs and expenses arising in relation to this
              Agreement; and

         (b)  to perform and/or comply with its obligations.

2.3      Secured Liabilities
         Each of the Depositor and the Countersignors hereby unconditionally and
         irrevocably acknowledges and agrees that the Secured Liabilities will
         not be duly and fully discharged until each and every of their
         respective obligations and/or liabilities whatsoever provided for in
         Clause 2.1 (Liabilities arising under the Senior Finance Documents) and
         Clause 2.2 (Liabilities arising under this Agreement) have been duly
         and fully discharged.

3.       THE SECURITY DEPOSIT

3.1      Security Deposit
         For the purpose of securing the Secured Liabilities the Depositor
         hereby irrevocably and unconditionally creates a Security Deposit over
         each registered share comprising the Deposited Shares. The Deposited
         Shares shall be blank endorsed. The Security Deposit is made in favour
         of the Depositee acting on its own behalf and in its capacity as
         Security Agent acting on behalf of each Finance Party and any
         transferees or assignees or replacements or successors of the Depositee
         or any such Finance Party, for the full amount of the Secured
         Liabilities.

3.2      Joint and several security
         The Security Deposit established by this Agreement is joint and
         several. Each Deposited Share serves as Encumbrance for the whole of
         the Secured Liabilities. The Depositee shall be entitled to select any
         one or more of the

                                       9
<PAGE>

         Deposited Shares as the Depositee, in the Depositee's absolute
         discretion sees fit, against which to enforce the Security Deposit.

3.3      Additional security
         The rights constituted by this Agreement are in addition to and are not
         in any way prejudiced or affected by any other Encumbrance, security,
         guarantee, indemnity or other right whatsoever now or subsequently held
         by the Depositee and/or any Finance Party for any of the Secured
         Liabilities. The powers conferred on the Depositee by this Agreement in
         relation to the Secured Liabilities and the Deposited Shares, shall be
         in addition to and not in substitution for the rights conferred on
         Depositee and the Finance Parties by laws and regulations of Hungary or
         other Applicable Law except in so far as they are expressly excluded in
         this Agreement and, where there is any ambiguity or conflict between
         such rights contained in any such laws and regulations of Hungary or
         other Applicable Law and those conferred by this Agreement, then the
         terms of this Agreement shall, to the extent permitted by such laws and
         regulations of Hungary or other Applicable Law, prevail.

3.4      Continuing security
(a)      The Contracting Parties agree and confirm that any transferee becoming
         a party to the Senior Secured Debt Facility Agreement pursuant to
         Clause 23 (Changes to the Lenders) of such Senior Secured Debt Facility
         Agreement as a Lender or any other person otherwise becoming a party to
         the Senior Secured Debt Facility Agreement as an assignee or transferee
         or replacement or successor of a Finance Party shall thereupon become
         entitled to the benefit of the provisions contained in this Agreement
         as if such transferee or person had originally been and had been named
         as a party to this Agreement (subject to compliance with Clause 11
         (Release notice)).

(b)      The Security Deposit constituted by this Agreement shall:

         (i)  be a continuing Encumbrance for the due payment, satisfaction and
              discharge in full of the Secured Liabilities and such Encumbrance
              shall not be considered as satisfied or discharged or prejudiced
              by any intermediate payment, satisfaction or settlement of any
              part of the Secured Liabilities or any other matter or thing
              whatsoever; and

         (ii) not be prejudiced by any time or indulgence granted to any person,
              or any abstention or delay by the Depositee or any Finance Party
              in perfecting or enforcing any Encumbrance, securities,
              guarantees, or rights or remedies whatsoever.

4.       CONSTITUTION OF THE SECURITY DEPOSIT
         The Security Deposit established by this Agreement shall be constituted
         upon the execution of this Agreement.

                                       10

<PAGE>

5.       NOTATION IN THE SHARE REGISTRY
         Each of the Countersignors hereby irrevocably and unconditionally
         undertakes to enter and maintain in its share registry notations
         reflecting the fact that the Deposited Shares have been deposited in
         favour of the Depositee in its own capacity and in its capacity as
         Security Agent, in form and substance acceptable to the Depositee. The
         Depositor shall deliver to the Depositee a certified copy of each
         Countersignor's share registry showing the notations referred to above
         simultaneously with the execution of this Agreement.

         Until the Secured Liabilities are duly paid, satisfied and discharged
         in full, if each of the Countersignors shall: (i) make a bonus issue of
         shares; or (ii) sub-divide its outstanding shares; or (iii) reclassify
         any of its shares into other securities of the respective
         Countersignor; or (iv) grant, issue or offer to shareholders of the
         respective Countersignor options, rights or warrants entitling them to:
         (1) subscribe for or purchase shares; or (2) subscribe for or purchase
         securities convertible into or exchangeable for, or which carry rights
         to subscribe or purchase shares; or (v) make or do any similar or
         analogous action or deed, then any such shares or securities so granted
         offered or issued to the Depositor shall become security in favour of
         the Depositee, and shall immediately be deposited by the Depositor in
         accordance with the terms and conditions of this Agreement.

6.       PRIORITY OF THE SECURITY DEPOSIT

6.1      The priority of the Security Deposit
         No other Encumbrance whatsoever shall be created over the Deposited
         Shares where such Encumbrance would rank ahead of the Security Deposit
         except as expressly provided for and permitted by operation of
         mandatory provisions of laws and regulations of Hungary.

6.2      Delegation of rights
         The Depositee may, at any time and from time to time, delegate to any
         person all or any of the rights and benefits which are at such time,
         being exercised or capable of being exercised by the Depositee under
         this Agreement in relation to the Deposited Shares or any part thereof.

7.       REPRESENTATIONS AND WARRANTIES OF THE DEPOSITOR
         The Depositor makes each of the representations and warranties set out
         in this Clause 7 to the Depositee and acknowledges that the Depositee
         has entered into this Agreement and that each Finance Party and the
         Security Agent have entered into the Senior Secured Debt Facility
         Agreement and the documents provided for therein, in reliance on these
         representations and warranties.

7.1      The Deposited Shares
         Save as expressly disclosed in writing to the Depositee prior to the
         date of this Agreement or promptly upon the acquisition of any new
         shares in any of the Countersignors by the Depositor, the Depositor
         confirms that:

         (a)  it is the exclusive owner of the Deposited Shares and has not sold
              or otherwise disposed of or agreed to sell or otherwise dispose of
              the

                                       11

<PAGE>

              Deposited Shares or any of its rights or benefits in respect of
              the Deposited Shares or any part thereof except in accordance with
              this Agreement;

         (b)  it has all necessary power, has taken all necessary corporate
              action, has obtained all necessary consents of all government
              agencies and bodies and has taken all action necessary or required
              by laws and regulations of Hungary or other Applicable Law to
              enable it to duly execute this Agreement and to duly perform
              and/or comply with its obligations arising under this Agreement;

         (c)  there subsists no fact(s), event(s) and/or circumstance(s) and/or
              any breach of any law or regulation of Hungary or other Applicable
              Law which may have a Material Adverse Effect;

         (d)  there are no third party rights whatsoever affecting the Deposited
              Shares save for the Permitted Encumbrances;

         (e)  it has received no notice of any claims (adverse or otherwise) by
              any person in respect of the ownership of the Deposited Shares or
              claiming any interest whatsoever in such Deposited Shares, nor has
              any acknowledgement whatsoever been given to any person in respect
              of the Deposited Shares;

         (f)  this Agreement creates a valid and perfected first priority
              Encumbrance over the Deposited Shares and each and every part
              thereof, which secures the payment of the Secured Liabilities,
              and which is enforceable as such against all creditors and
              purchasers of the Depositor; and

         (g)  neither the making of this Agreement nor their compliance with
              this Agreement will conflict with or result in a breach of any of
              the terms, conditions or provisions of or constitute a default
              (however described or provided for) under any other agreement to
              which it is a party or by which it is bound, or violate any of the
              terms and conditions of its constitutional documents or any
              judgement, decree or order, rule or regulation applicable to it.

7.2      Security
         This Agreement creates those Encumbrances it purports to create and may
         not be avoided or otherwise set aside on the winding-up, liquidation or
         bankruptcy of the Depositor or otherwise except by operation of
         mandatory provisions of the laws and regulations of Hungary.

                                       12

<PAGE>

8.       UNDERTAKINGS OF EACH DEPOSITOR

8.1      Duration
         The undertakings set out in this Clause 8 remain in force at all times
         throughout the Deposit Period.

8.2      Prohibited use, disposals
         Unless otherwise provided by this Agreement or the Senior Secured Debt
         Facility Agreement, the Depositor may not, without the prior written
         consent of the Depositee, save as expressly disclosed in writing to the
         Depositee prior to the date of this Agreement or promptly after the
         acquisition of new shares in any of the Countersignors following the
         date of this Agreement:

         (a)  create or permit to subsist any Encumbrance whatsoever on any of
              the Deposited Shares or any part thereof; or

         (b)  sell, transfer, grant, lease or otherwise dispose of any interest
              whatsoever in the Deposited Shares (or any part of such Deposited
              Shares); or

         (c)  waive its right(s) of ownership in the Deposited Shares, or
              otherwise do or permit to be done any act or thing which might
              jeopardise the interests and/or rights of the Depositee or any
              Finance Party.

         The Contracting Parties acknowledge that such restrictions of dealing
         may not be registered in the share registers of the Countersignors and
         may therefore not be binding on third parties.

8.3      Cancelled Shares and Re-issued Shares
         The Depositor and KNC Kelet-Nograd COM Tavkozlesi Koncesszios
         Reszvenytarsasag hereby jointly, unconditionally and irrevocably
         undertake to facilitate the cancellation procedure in respect of the
         Cancelled Shares. To the extent that the cancellation procedure
         initiated by KNC Kelet-Nograd COM Tavkozlesi Koncesszios
         Reszvenytarsasag is terminated because the Cancelled Shares are found
         or for any other reason(s) whatsoever (other than the final and binding
         cancellation of the Cancelled Shares), the Depositor shall as quickly
         as practicable deposit such Cancelled Shares with Depositee. The
         Depositor and KNC Kelet-Nograd COM Tavkozlesi Koncesszios
         Reszvenytarsasag hereby jointly, unconditionally and irrevocably
         undertake to procure, as quickly as practicable, the issue of the
         Re-issued Shares, following which, the Depositor shall, as quickly as
         practicable, deposit the Re-issued Shares with the Depositee.

9.       PROTECTION OF ENCUMBRANCE
         If the Depositor fails to do so and/or immediately after the occurrence
         of emergency or extreme circumstance(s), the Depositee shall be
         entitled at any time to take any such action as the Depositee, in its
         reasonable discretion, thinks fit for the purpose of protecting the
         Encumbrance constituted by this Agreement. The Depositor hereby
         unconditionally and irrevocably agrees to

                                       13

<PAGE>

         indemnify the Depositee on demand against any losses, liabilities,
         fees, costs and expenses, properly and duly incurred or expended by the
         Depositee in the protection or attempted protection of the Encumbrance
         constituted by this Agreement.

10.      DEPOSITEE'S RIGHT OF SATISFACTION

10.1     Sale
         The Contracting Parties irrevocably and unconditionally agree that the
         Depositee may exercise its right to satisfaction under this Agreement
         by transfer, sale or other disposal of the Deposited Shares following
         the occurrence of an Event of Default on its own behalf and on behalf
         of each and every Finance Party.

10.2     Procedure
         The Contracting Parties hereby irrevocably and unconditionally agree
         that notwithstanding the provisions of Clause 10.1 (Sale), once the
         right to seek satisfaction under this Agreement from the Security
         Deposit or any part thereof has arisen, the Depositee shall be entitled
         and the Depositor hereby unconditionally and irrevocably authorises the
         Depositee, pursuant to the power of attorney, the form of which is set
         out in Schedule 5 (Form of the Power of Attorney from a Depositor to
         the Depositee to exercise shareholder's rights), until the earlier of:
         (i) the Secured Liabilities being duly paid, satisfied and discharged
         in full; and (ii) the transfer, sale or other disposal of the Deposited
         Shares, to exercise for and on behalf of the Depositor and without any
         limitation, all or any of their shareholders' rights, as shareholder of
         the relevant Countersignor.

         The Depositor hereby irrevocably and unconditionally agrees to renew
         the power of attorney, issued on the date of this Agreement
         substantially in the form of Schedule 5 (Form of the Power of Attorney
         from a Depositor to the Depositee to exercise shareholders' rights)
         every twelve (12) months after the date of this Agreement throughout
         the Deposit Period.

         In addition to the above, the Depositee shall be entitled to transfer,
         sell or otherwise dispose for value the Deposited Shares. In the event
         that the Depositee, in exercising its rights under this Agreement,
         shall decide to transfer, sell or otherwise dispose of all or part of
         the Deposited Shares, the Depositee shall use reasonable endeavours to
         transfer, sell or otherwise dispose of the Deposited Shares through an
         independent, internationally recognised auction house appointed by the
         Depositee. The Deposited Shares shall be initially offered at the
         market value as determined by an independent, internationally
         recognised accounting firm appointed jointly by the Depositee, the
         Depositor and the relevant Countersignor (the "Valuation Price").
         Notwithstanding the foregoing, the Depositor may solicit potential
         offers for the Deposited Shares, and the Depositee agrees to consider
         any offers so solicited. In the event that no offers are received at or
         above the Valuation Price within sixty (60) days of appointment of the
         aforementioned accounting

                                       14

<PAGE>

         firm, then the Depositee shall be free to accept any third party
         offer(s) made for the transfer, sale or other disposal of the Deposited
         Shares.

10.3     Application of proceeds
         Any moneys received by the Depositee after the Security Deposit created
         by this Agreement has been enforced pursuant to this Agreement shall be
         applied in the following order of priority (but without prejudice to
         the right of any Finance Party to recover any and all shortfall(s)
         arising under the Senior Finance Documents from the Depositor and/or
         any Countersignor) by the Depositee:

         (a)  in satisfaction of, or provision, for all fees, costs and expenses
              incurred by the Depositee in connection with the enforcement of
              this Agreement;

         (b)  in or towards payment of the Secured Liabilities; and

         (c)  in payment of the surplus (if any) to the relevant Depositor.

11.      RELEASE NOTICE
         The Depositee undertakes at the end of the Deposit Period to issue to
         the Depositor the Depositee's Declaration, which is required for the
         deletion of the Security Deposit from the share registry of the
         relevant Countersignor at the end of the Deposit Period.

12.      FURTHER ASSURANCES
         By executing this Agreement, the Depositor hereby unconditionally and
         irrevocably consents to the Depositee taking whatever actions the
         Depositee may reasonably and practicably require at the Depositor's own
         expense, for:

         (a)  registering or protecting the rights created by this Agreement
              over any of the Deposited Shares; and/or

         (b)  facilitating the enforcement against any Deposited Share or the
              exercise of any right, power or discretion exercisable, by the
              Depositee or any of its or their delegates or agents in respect of
              any of the Deposited Shares; and/or

         (c)  the execution of any document or the giving of any notice, order
              or direction and the making of any registration, which in any such
              case, the Depositee may reasonably think expedient.

13.      APPOINTMENT OF ATTORNEY

         In order to maintain the perfection, enforce or realise the Security
         Deposit constituted by this Agreement the Depositor and each of the
         Countersignors hereby jointly unconditionally appoint:
         (a)  the Depositee; and
         (b)  each such delegate as is referred to in Clause 6.2 (Delegation of
              rights),

                                       15

<PAGE>

         to be its attorney at any time to sign and do all such acts and things
         which the Depositor and any of the Countersignors could do or ought to
         do pursuant to the provisions contained in this Agreement in relation
         to the Deposited Shares and generally in the name of the Depositor and
         each of the Countersignors to maintain the perfection, enforce or
         realise the Security Deposit.

14.      AMENDMENTS
         The Contracting Parties hereby agree that any provisions of this
         Agreement may only be amended in writing with the consent of each
         Contracting Party.

15.      EXPENSES AND INDEMNITY
         The Depositor and each of the Countersignors shall, on the basis of
         joint and several liability, forthwith on demand pay to the Depositee
         and each Finance Party, all properly documented fees, costs and
         expenses (including, but not limited to, legal fees) properly incurred
         by the Depositee or such Finance Party, as applicable, in connection
         with this Agreement or in connection with the enforcement of or the
         preservation of any rights under any of the Senior Finance Documents to
         which the Depositor and/or any of the Countersignors are a party and
         keep the Depositee and each Finance Party indemnified against any
         failure or delay of the Depositor and/or any of the Countersignors
         and/or any of its agents and representatives in paying the same.

16.      ASSIGNS
         Neither the Depositor nor any of the Countersignors shall be entitled
         to assign or transfer all or any of their respective rights, benefits
         and obligations under this Agreement. The Depositee and each Finance
         Party may assign or transfer all or any of their rights, benefits and
         obligations under this Agreement, in accordance with the provisions set
         out in Section 8 (Changes to Parties) of the Senior Secured Debt
         Facility Agreement.

17.      NOTICES

17.1     Communications in writing
         Each communication to be made under this Agreement shall be made in
         writing and, unless otherwise stated, shall be made by fax or letter
         provided that if any notice is delivered by fax, the written original
         of such notice shall be sent to the Depositee by first class prepaid
         letter.

         17.2 Delivery Any communication or document to be made or delivered by
         one person to another pursuant to this Agreement shall (unless that
         other person has by fifteen (15) days' written notice to the Depositee
         specified another address) be made or delivered to that other person at
         the address set out in Clause 17.4 (Addresses for notices) below (or,
         in the case of a Transferee, at the end of the Transfer Certificate to
         which it is a party as a Transferee) and shall be deemed to have been
         made or delivered in the case of any communication made:

                                       16

<PAGE>

         (a)  by letter, when left at that address or (as the case may be) ten
              (10) days after being deposited in the post postage prepaid in an
              envelope addressed to it at that address;

         (b)  by facsimile, when dispatched Provided that: (a) a confirmation of
              uninterrupted transmission by a transmission report is received;
              and (b) there having been no telephonic communication by the
              recipient to the sender (any such telephonic communication to be
              confirmed in writing) that the facsimile has not been received in
              legible form within 3 hours after sending, if sent on a Business
              Day between the hours of 9:00 a.m. and 4:00 p.m. in the
              recipient's time zone or if sent other than between the hours of
              9:00 a.m. and 4:00 p.m. in the recipient's time zone on a Business
              Day, by noon on the next following Business Day. For the purposes
              of this sub-clause, a Business Day is a day (other than a Saturday
              or Sunday) on which banks (generally) are open for business in the
              places where both the sender and the recipient of the facsimile
              are situated,

         Provided that any communication or document to be made or delivered to
         the Depositee shall be effective only when received by the Depositee
         and then only if the same is expressly marked for the attention of the
         department or officer identified in Clause 17.4 (Addresses for notices)
         below (or such other department or officer as the Depositee shall from
         time to time specify for this purpose).

17.3     Language
         Each communication and document made or delivered by one Contracting
         Party to another pursuant to this Agreement shall be in the English
         language.

17.4     Addresses for notices

(a)      The address, telephone number and facsimile number of the Depositor for
         all notices under or in connection with this Agreement are:

         Address:       Hungarian Telephone and Cable Corp.
         Attention:     Kaj Ole Bertram
         Telephone:     +36 1 474 7701
         Facsimile:     +36 1 474 0350

         Copied to:     Legal Counsel
                        (Dr. Peter Lakatos - Koves Clifford Chance Punder
                        Madach Trade Center, Madach Imre ut 14, H-1075 Budapest,
                        Hungary
                        Telephone: +36 1 268 1600
                        Facsimile: +36 1 268 1610)

         or such other as it may notify to the Depositee and each of the
         Countersignors by not less than fifteen (15) Business Days' prior
         written notice;

                                       17

<PAGE>

(b)      the address, telephone number and facsimile number of the Depositee for
         all notices under or in connection with this Agreement are:

         Address:       Citibank Rt.
                        Citibank Tower, Bank Center
                        Szabadsag ter 7.
                        H-1051 Budapest
                        Hungary
         Attention:     Corporate Bank Head (Mark T. Robinson)
                        Legal Department Head (Dr. Karoly Foti)
         Telephone:     +36 1 374 5000
         Facsimile:     +36 1 374 5115

         or such other as it may notify to the Depositor, and each of the
         Countersignors by not less than fifteen (15) Business Days' prior
         written notice;

(c)      the address, telephone number and facsimile number of Hungarotel
         Tavkozlesi Koncesszios Reszvenytarsasag for all notices under or in
         connection with this Agreement are:

         Address:       Hungarotel Tavkozlesi Koncesszios Reszvenytarsasag
         Attention:     Kaj Ole Bertram
         Telephone:     +36 1 474 7701
         Facsimile:     +36 1 474 0350

         Copied to:     Legal Counsel

                        (Dr. Peter Lakatos - Koves Clifford Chance Punder
                        Madach Trade Center, Madach Imre ut 14, H-1075 Budapest,
                        Hungary
                        Telephone: +36 1 268 1600
                        Facsimile: +36 1 268 1610)

         or such other as it may notify to the Depositor, the Depositee and each
         of the other Countersignors by not less than fifteen (15) Business
         Days' prior written notice;

(d)      the address, telephone number and facsimile number of RABA-COM
         Tavkozlesi Koncesszios Reszvenytarsasag for all notices under or in
         connection with this Agreement are:

         Address:       RABA-COM Tavkozlesi Koncesszios Reszvenytarsasag
         Attention:     Kaj Ole Bertram
         Telephone:     +36 1 474 7701
         Facsimile:     +36 1 474 0350

         Copied to:     Legal Counsel
                        (Dr. Peter Lakatos - Koves Clifford Chance Punder

                                       18

<PAGE>

                        Madach Trade Center, Madach Imre ut 14, H-1075 Budapest,
                        Hungary
                        Telephone: +36 1 268 1600
                        Facsimile: +36 1 268 1610)

         or such other as it may notify to the Depositor, the Depositee, and
         each of the other Countersignors by not less than fifteen (15) Business
         Days' prior written notice;

(e)      the address, telephone number and facsimile number of Papa es Tersege
         Tavkozlesi Koncesszios Reszvenytarsasag for all notices under or in
         connection with this Agreement are:

         Address:       Papa es Tersege Tavkozlesi Koncesszios Reszvenytarsasag
         Attention:     Kaj Ole Bertram
         Telephone:     +36 1 474 7701
         Facsimile:     +36 1 474 0350

         Copied to:     Legal Counsel

                        (Dr. Peter Lakatos - Koves Clifford Chance Punder
                        Madach Trade Center, Madach Imre ut 14, H-1075 Budapest,
                        Hungary
                        Telephone: +36 1 268 1600
                        Facsimile: +36 1 268 1610)

         or such other as it may notify to the Depositor, the Depositee and each
         of the other Countersignors by not less than fifteen (15) Business
         Days' prior written notice; and

(f)      the address, telephone number and facsimile number of KNC Kelet-Nograd
         COM Tavkozlesi Koncesszios Reszvenytarsasag for all notices under or in
         connection with this Agreement are:

         Address:       KNC Kelet-Nograd COM Tavkozlesi Koncesszios
                        Reszvenytarsasag
         Attention:     Kaj Ole Bertram
         Telephone:     +36 1 474 7701
         Facsimile:     +36 1 474 0350

         Copied to:     Legal Counsel
                        (Dr. Peter Lakatos - Koves Clifford Chance Punder
                        Madach Trade Center, Madach Imre ut 14, H-1075 Budapest,
                        Hungary
                        Telephone: +36 1 268 1600
                        Facsimile: +36 1 268 1610)

                                       19

<PAGE>

         or such other as it may notify to the Depositee, the Depositor and each
         of the other Countersignors by not less than fifteen (15) Business
         Days' prior written notice;

(g)      the address, telephone number and facsimile number of HTCC Tanacsado
         Reszvenytarsasag for all notices under or in connection with this
         Agreement are:

         Address:       HTCC Tanacsado Reszvenytarsasag
         Attention:     Kaj Ole Bertram
         Telephone:     +36 1 474 7701
         Facsimile:     +36 1 474 0350

         Copied to:     Legal Counsel
                        (Dr. Peter Lakatos - Koves Clifford Chance Punder
                        Madach Trade Center, Madach Imre ut 14, H-1075 Budapest,
                        Hungary
                        Telephone: +36 1 268 1600
                        Facsimile: +36 1 268 1610)

         or such other as it may notify to the Depositee, the Depositor and each
         of the Countersignors by not less than fifteen (15) Business Days'
         prior written notice;

17.5     Representation
         The Depositor, the Depositee and each of the Countersignors shall each
         procure and ensure that for the duration of this Agreement, they shall
         maintain a representative at the addresses specified above, duly
         empowered to take receipt of any such notice or communication during
         regular business hours.

18.      MISCELLANEOUS

18.1     Language
         This Agreement shall be executed in the English language.

18.2     Governing law
         This Agreement shall be governed by, and shall be construed in
         accordance with Hungarian law.

18.3     Arbitration
         Any dispute (a "Dispute") arising out of or in connection with this
         Agreement (including a Dispute regarding the existence, validity,
         interpretation, breach or termination of this Agreement or the
         consequences of its nullity) shall be referred to and finally settled
         by arbitration under the Rules of Conciliation and Arbitration (the
         "Rules") of the Arbitration Court of the Hungarian Chamber of Commerce
         by three arbitrators appointed in accordance with the Rules. The

                                       20

<PAGE>

         place and seat of any arbitration proceedings commenced pursuant to
         this Clause 18.3 shall be Budapest. The language in which such
         arbitration shall be conducted shall be English or Hungarian, by
         agreement of the parties to such proceedings, or failing such
         agreement, as the Depositee may in its sole discretion elect. Any
         judgement or determination rendered shall be final and binding on the
         parties thereto and may be entered in any court having jurisdiction or
         application may be made to such court for an order of enforcement as
         the case may require. No failure or delay in exercising any rights of
         any Finance Party under this Agreement shall operate as a waiver, or
         preclude the further exercise of such rights.

         18.4 Service of process for arbitration proceedings The Depositor and
         each of the Countersignors agree that the process by which any
         arbitration proceedings are begun may be served on it by being
         delivered to the address identified in Clause 17.4 (Address for
         notices) above or other its registered office for the time beings or on
         the person duly appointed by the Depositor as its agent for service of
         process in Hungary and so notified in writing to the Depositee. If the
         appointment of the person(s) mentioned in this Clause 18.4 ceases to be
         effective the Depositor and/or the relevant Countersignor shall
         immediately appoint a further person in Hungary to act on its behalf in
         Hungary as agent for the commencement of arbitration proceedings and,
         failing such appointment within fifteen (15) days, the Depositee shall
         be entitled to appoint such a person by notice to the Depositor and the
         relevant Countersignor. Nothing contained in this Agreement shall
         affect the right to serve process in any other manner permitted by
         Applicable Law.

18.5     Consent to enforcement
         The Depositor and each of the Countersignors hereby consents generally
         in respect of any proceedings to the giving of any relief or the issue
         of any process in connection with such proceedings including the
         making, enforcement or execution against any property whatsoever
         (irrespective of its use or intended use) of any order or judgement
         which may be made or given in such proceedings.

18.6     Waiver of immunity
         To the extent that the Depositor or any of the Countersignors may in
         any jurisdiction claim for itself or its assets immunity from suit,
         execution, attachment or other legal process, the Depositor and/or the
         relevant Countersignor waive immunity in respect of:

         (a)  the giving of any relief by way of injunction or order for
              specific performance or for the recovery of assets or revenues;
              and/or

         (b)  the issue of any process against its assets for the enforcement of
              a judgement or, in an action in rem, for the arrest, detention or
              sale of any of its assets and revenues.

                                       21

<PAGE>

18.7     Partial invalidity
         If, at any time, any provision of this Agreement is or becomes illegal,
         invalid or unenforceable in any respect under the law of any
         jurisdiction, neither the legality, validity or enforceability of the
         remaining provisions of this Agreement nor the legality, validity or
         enforceability of such provision under the law of any other
         jurisdiction shall in any way be affected or impaired thereby.

AS WITNESS the hands of the duly authorised representatives of the Contracting
Parties to this Agreement the day and year first before written.

                                       22

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