As filed with the Securities and Exchange Commission
on October 18, 1996
Registration No. 33-
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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
--------------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------------
HUNGARIAN TELEPHONE AND CABLE CORP.
(Exact name of registrant as specified in its charter)
Delaware 13-3652685
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
100 First Stamford Place, Stamford, CT 06902
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(Address of principal executive offices) (Zip Code)
EMPLOYMENT CONTRACTS WITH JAMES G. MORRISON,
ANDREW E. NICHOLSON AND DANIEL R. VAUGHN
------------------------------------------
(Full title of the plan)
Copy to:
Peter T. Noone Stephen A. Bouchard, Esq.
Hungarian Telephone and Cable Corp. Fleischman and Walsh, L.L.P.
100 First Stamford Place 1400 Sixteenth Street, NW
Stamford, CT 06902 Suite 600
(203) 348-9069 Washington, DC 20036
(202) 929-7900
(Name, address including zip code,
and telephone number including
area code, of agent for service)
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<PAGE>
CALCULATION OF REGISTRATION FEE
- -----------------------------------------------------------------
Proposed Proposed
Title of Maximum Maximum Amount
Securities Amount Offering Aggregate of
to be to be Price Per Offering Registration
Registered Registered Share Price Fee
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Common Stock,
par value
$.001 per
Share 110,500(1) $12.5625(2) $1,388,156.25(2) $479.00
- -----------------------------------------------------------------
(1) Consists of 55,000 shares of Common Stock issued to James G. Morrison,
the Registrant's President and Chief Executive Officer and Director,
issued pursuant to his amended and restated employment contract dated
as of October 17, 1996; 36,500 shares of Common Stock issued to Andrew
E. Nicholson, the Registrant's Senior Vice President - Finance,
pursuant to his amended and restated employment contract dated as of
October 17, 1996; and 19,000 shares of Common Stock issued to Daniel R.
Vaughn, the Registrant's Vice President and Chief Operating Officer,
pursuant to his amended and restated employment contract dated as of
October 17, 1996.
(2) Estimated in accordance with Rule 457(h), solely for the purpose of
calculating the registration fee and based upon the average of the high
and low prices of the Common Stock as reported on the American Stock
Exchange on October 16, 1996 of $12.5625 per share.
- ----------------
Note: This Registration Statement, pursuant to Instruction C of Form 8, includes
a Re-Offer Prospectus for the resale of shares of Common Stock previously issued
to certain employees in connection with certain employment contracts.
<PAGE>
HUNGARIAN TELEPHONE AND CABLE CORP.
Cross-Reference Sheet Showing Location in Prospectus
of Information Required by Items of Form S-8
Form S-8 Item and Heading Location in Prospectus
- ------------------------- ----------------------
1. Forepart of the Registration
Statement and Outside Front
Cover Page of Prospectus.............Front Cover Page
2. Inside Front and Outside Back
Cover................................Inside Front Cover Page
3. Summary Information, Risk
Factors and Ratio of Earnings
to Fixed Charges.....................The Company
4. Use of Proceeds......................Use of Proceeds
5. Determination of Offering
Price................................Not applicable
6. Dilution.............................Not applicable
7. Selling Security Holders.............Selling Stockholders
8. Plan of Distribution.................Plan of Distribution
9. Description of Securities to
be Registered........................Description of Capital
Stock
10. Interest of Named Experts
and Counsel..........................Not applicable
11. Material Changes.....................Not applicable
12. Incorporation of Certain
Information by Reference.............Incorporation of
Certain Documents by
Reference
13. Disclosure of Commission
Position on Indemnification for
Securities Act Liabilities...........Indemnification of
Directors and Officers
<PAGE>
PART I
INFORMATION REQUIRED IN THE SECTION 10(A) PROSPECTUS
The document(s) containing the information specified in Part I of Form S-8
will be sent or given to Messrs. Morrison, Nicholson and Vaughn as specified by
Rule 428(b)(1) promulgated by the Securities and Exchange Commission (the
"Commission") under the Securities Act of 1933, as amended (the "Securities
Act").
Such document(s) (along with the documents incorporated by reference into
the Registration Statement pursuant to Item 3 of Part II hereof) constitute a
prospectus that meets the requirements of Section 10(a) of the Securities Act.
<PAGE>
RE-OFFER PROSPECTUS
HUNGARIAN TELEPHONE AND CABLE CORP.
110,500 SHARES OF COMMON STOCK
-------------------------------
(Par Value $0.001 Per Share)
OFFERED AS SET FORTH HEREIN PURSUANT TO EMPLOYMENT
CONTRACTS BETWEEN HUNGARIAN TELEPHONE AND CABLE CORP. AND
JAMES G. MORRISON, ANDREW E. NICHOLSON AND DANIEL R. VAUGHN
-------------------------
This Prospectus relates to offers and sales of 110,500 currently
outstanding shares (the "Shares") of Common Stock of Hungarian Telephone and
Cable Corp., a Delaware corporation (the "Company"), that were acquired prior to
October 18, 1996 by certain employees of the Company (the "Selling
Stockholders") pursuant to certain employment contracts.
The Shares may be offered for sale hereby from time to time by any or all
of the Selling Stockholders for their own benefit. The Company will receive no
portion of the proceeds of sales made hereunder. All expenses of registration
incurred in connection with this offering are being borne by the Company, but
all selling and other expenses incurred by Selling Stockholders will be borne by
such Selling Stockholders.
All or a portion of the shares of Common Stock offered hereby may be
offered for sale, from time to time in one or more transactions on a securities
exchange, in negotiated transactions or otherwise, at market prices prevailing
at the time of sale, at prices related to such prevailing market prices or at
negotiated prices. All brokers' commissions, concessions or discounts will be
paid by the Selling Stockholders.
The Selling Stockholders and any brokers executing sale orders on behalf of
the Selling Stockholders may be deemed to be "underwriters" within the meaning
of the Securities Act of 1933, as amended (the "Securities Act"), in which event
commissions received by such brokers may be deemed to be underwriting
commissions under the Securities Act.
The Common Stock of the Company trades on the American Stock Exchange under
the symbol "HTC." On October 18, 1996, the average of the high and low prices of
the Company's Common Stock as reported on the American Stock Exchange was
$12.5625.
-------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION (THE "COMMISSION") OR ANY STATE SECURITIES COMMISSION (THE
"STATE COMMISSION") NOR HAS THE COMMISSION OR ANY STATE COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
-------------------------
<PAGE>
NEITHER THE FACT THAT A REGISTRATION STATEMENT HAS BEEN FILED
WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION NOR THE
FACT THAT A SECURITY IS EFFECTIVELY REGISTERED CONSTITUTES A
FINDING BY THE SECRETARY OF STATE OF NEW HAMPSHIRE THAT THE
REGISTRATION STATEMENT IS TRUE, COMPLETE AND NOT MISLEADING.
NEITHER ANY SUCH FACT NOR THE FACT THAT AN EXEMPTION OR EXCEPTION
IS AVAILABLE FOR A SECURITY OR A TRANSACTION MEANS THAT THE
SECRETARY OF STATE OF NEW HAMPSHIRE HAS PASSED IN ANY WAY UPON
THE MERITS OR QUALIFICATIONS OF, OR RECOMMENDED OR GIVEN APPROVAL
TO, ANY PERSON, SECURITY, OR TRANSACTION. IT IS UNLAWFUL TO
MAKE, OR CAUSE TO BE MADE, TO ANY PROSPECTIVE PURCHASER,
CUSTOMER, OR CLIENT ANY REPRESENTATION INCONSISTENT WITH THE
PROVISIONS OF THIS PARAGRAPH.
-----------------
No person has been authorized to give any information or to make any
representations, other than as contained herein, in connection with the offer
contained in this Prospectus, and, if given or made, such information or
representations must not be relied upon. This Prospectus does not constitute an
offering in any state in which such offering may not lawfully be made. Neither
the delivery of this Prospectus nor any sales made hereunder shall under any
circumstances create any implication that there has been no change in the
information herein or in the affairs of the Company since the date of this
Prospectus.
-------------------------
The Date of this Prospectus is October 18, 1996
<PAGE>
TABLE OF CONTENTS
Page
----
AVAILABLE INFORMATION........................................ 1
INCORPORATION OF CERTAIN DOCUMENTS BY
REFERENCE.................................................... 1
THE COMPANY.................................................. 3
USE OF PROCEEDS.............................................. 3
DESCRIPTION OF CAPITAL STOCK................................. 3
SELLING
STOCKHOLDERS................................................. 4
TRANSFER AGENT AND
REGISTRAR.................................................... 4
PLAN OF
DISTRIBUTION................................................. 4
LEGAL
MATTERS...................................................... 5
INDEMNIFICATION OF DIRECTORS AND OFFICERS.................... 5
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") and in accordance
therewith files reports and other information with the Commission. Such reports,
proxy statements and other information can be inspected and copied at the Public
Reference Facilities of the Commission at the offices of the Commission at Room
1024, 450 Fifth Street, NW, Washington, D.C. 20549; and at its regional offices
located at Northwestern Atrium Center, Suite 1400, 500 West Madison Street,
Chicago, Illinois 60661-2511, and at 7 World Trade Center, 13th Floor, New York,
New York 10048. Copies of such material may also be obtained, upon payment of
prescribed fees, from the Public Reference Section of the Commission at
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549. Such material
also may be accessed electronically by means of the Commission's home page on
the Internet at http://www.sec.gov. In addition, such material, dated through
December 19, 1995, is also available for inspection at the offices of the NASDAQ
Stock Market, Reports Section, 1735 K Street, N.W., Washington, D.C. 20006. Such
material, beginning December 20, 1995, is also available for inspection at the
offices of the American Stock Exchange, 86 Trinity Place, New York, New York
10006. This Prospectus does not contain all of the information set forth in the
Registration Statements of which this Prospectus is a part and which the Company
has filed with the Commission. For further information with respect to the
Company and the securities offered hereby, reference is made to the Registration
Statement, including the exhibits filed as a part thereof, copies of which can
be inspected at, or obtained at prescribed rates in the manner set forth above.
Additional updating information with respect to the Company may be provided in
the future by means of appendices or supplements to the Prospectus.
The Company hereby undertakes to provide without charge to each person to
whom a copy of this Prospectus is delivered, upon written or oral request of
such person, a copy of any and all of the information that has been or may be
incorporated herein by reference (other than exhibits to such documents unless
such exhibits are specifically incorporated by reference into such documents).
Requests should be directed to Peter T. Noone, General Counsel, Hungarian
Telephone and Cable Corp., 100 First Stamford Place, Stamford, Connecticut
06902; telephone number (203) 348-9069.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, previously filed by the Company with the
Commission are hereby incorporated by reference into this Prospectus and are
contained in a file maintained at the principal United States executive offices
of the Company.
1. The Company's Annual Report on Form 10-K for the year
ended December 31, 1995.
<PAGE>
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2. The Company's Quarterly Reports on Form 10-Q for the quarters ended
March 31, 1996 and June 30, 1996.
3. All other reports filed by the Company pursuant to Section 13 or 15(d)
of the Exchange Act since the end of the fiscal year covered by the annual
report referred to above.
4. The Company's Definitive Proxy Statement for its Annual
Meeting of Stockholders held on May 9, 1996.
5. The description of the Common Stock, par value $.001 per share, of the
Company contained in the Company's Registration Statement filed under Section
12(b) of the Exchange Act, including any amendments or reports filed for the
purpose of updating such description. See "Description of Capital Stock" in this
Prospectus for a description of the Registrant's Common Stock.
All documents filed by the Company with the Commission pursuant to Section
13(a), 13(c), 14, or 15(d) of the Exchange Act after the date hereof and prior
to the filing of a post-effective amendment which indicates that all securities
offered hereby have been sold or which deregisters all securities remaining
unsold, shall be deemed to be incorporated by reference into this Prospectus and
to be a part hereof and thereof from the date of filing of such documents. Any
statement contained in the documents incorporated, or deemed to be incorporated,
by reference herein or therein shall be deemed to be modified or superseded for
purposes of this Prospectus to the extent that a statement contained herein or
therein or in any other subsequently filed document which also is, or is deemed
to be, incorporated by reference herein or therein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Prospectus.
The Company shall furnish without charge to each person to whom the
Prospectus is delivered, on the written or oral request of such person, a copy
of any or all of the documents incorporated by reference, other than exhibits to
such documents (unless such exhibits are specifically incorporated by reference
to the information that is incorporated). Requests for information regarding the
Employment Contracts or the aforementioned documents should be directed to Peter
T. Noone, General Counsel, Hungarian Telephone and Cable Corp., 100 First
Stamford Place, Stamford, Connecticut 06902; telephone number (203) 348-9069.
All information appearing in this Prospectus is qualified in its entirety
by the detailed information, including financial statements, appearing in the
documents incorporated herein or therein by reference.
<PAGE>
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THE COMPANY
The Company, a Delaware corporation, through its Hungarian subsidiaries, is
engaged in the provision of basic telephone services in five defined regions
with in the Republic of Hungary.
The Company's United States office is located at 100 First Stamford
Place, Suite 204, Stamford, Connecticut 06902; telephone (203) 348-9069. The
Company's principal office in Hungary is located at Kiralyhago u.2, H-1126,
Budapest; telephone (361) 212- 1100.
USE OF PROCEEDS
The Company will not receive any proceeds from the sale of the Shares
offered hereby.
DESCRIPTION OF CAPITAL STOCK
Common Stock
The authorized capital stock of the Company consists of (i) 25,000,000
shares of Common Stock, par value $.001 and (ii) 5,000,000 shares of Preferred
Stock, par value $.001 per share (the "Preferred Stock").
The holders of Common Stock are entitled to one vote for each share of
record held by them on all matters to be voted on by stockholders. There is no
right to cumulative voting.
The holders of Common Stock are entitled to receive dividends when, as
and if declared by the Board of Directors out of funds legally available
therefor. In the event of liquidation, dissolution or winding up of the affairs
of the Company, the holders of Common Stock are entitled to share ratably in all
assets remaining available for distribution to them after payment of
liabilities. Holders of shares of Common Stock have no preemptive, subscription,
conversion, redemption or sinking fund rights. The rights, preferences and
privileges of holders of Common Stock are subject to any class or series of
Preferred Stock which the Company may issue in the future.
Preferred Stock
The Board of Directors of the Company is authorized to issue Preferred
Stock in classes or series and to fix the designations, preferences,
qualifications, limitations, or restrictions of any class or series with respect
to the rate and nature of dividends, the price and terms and conditions on which
shares may be redeemed, the amount payable in the event of voluntary or
involuntary liquidation, the terms and conditions for conversion
<PAGE>
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or exchange into any other class or series of stock, voting rights and other
terms.
SELLING STOCKHOLDERS
The Shares that may be offered for sale from time to time by the
Selling Stockholders consist of Shares that were acquired by such Selling
Stockholders prior to the date hereof pursuant to their employment contracts.
The following table sets forth the name of each Selling Stockholder, the
nature of his position with the Company, the number of Shares of Common Stock
owned by each Selling Stockholder prior to the offering, and the number of
Shares and (if one percent or more) the percentage of the class to be owned by
such Selling Stockholder after the offering.
Shares Shares
Owned Shares Owned
Prior to Offered After
Name and Title Offering Hereby Offering Percent
- ----------------------------------------------------------------
James G. Morrison,
Director, President
and Chief Executive
Officer of the Company 55,000 55,000 0 *
Andrew E. Nicholson,
Senior Vice President,
Finance of the Company 36,500 36,500 0 *
Daniel R. Vaughn,
Vice President and Chief
Operating Officer of the
Company 19,000 19,000 0 *
* Represents as to each Selling Stockholder less than 1% of the shares of Common
Stock outstanding.
TRANSFER AGENT AND REGISTRAR
The Transfer Agent and Registrar for the Common Stock of
the Company is Continental Stock Transfer & Trust Company, 2
Broadway, New York, New York 10004.
PLAN OF DISTRIBUTION
The Selling Stockholders have advised the Company that they wish to be
in a position to sell the Shares offered hereby from time to time. The number of
Shares that actually may be sold by
<PAGE>
-5-
the Selling Stockholders will be determined by each Selling Stockholder and will
depend on a number of factors, including the market price of the Common Stock
and the Selling Stockholders' personal financial circumstances.
The Selling Stockholders may sell shares of Common Stock in any of the
following ways: (i) through dealers; (ii) through agents; or (iii) directly to
one or more purchasers. The distribution of the shares of Common Stock may be
effected from time to time in one or more transactions on a securities exchange,
in negotiated transactions or otherwise, at market prices prevailing at the time
of the sale, at prices related to such prevailing market prices or at negotiated
prices or fixed prices. The Selling Stockholders may effect such transactions by
selling shares of Common Stock to or through broker-dealers, and such
broker-dealers may receive compensation in the form of discounts, concessions,
or commissions from Selling Stockholders and/or commissions from purchasers of
shares of Common Stock for whom they may act as agents. The Selling Stockholders
and any broker-dealers or agents that participate in the distribution of shares
of Common Stock by them might be deemed to be underwriters, and any discounts,
commissions or concessions received by any such broker-dealers or agents might
be deemed to be underwriting discounts and commissions under the Securities Act.
Each of the Selling Stockholders is selling the Shares for his own
account. The Company will not receive any of the proceeds from the sale of the
Shares.
The Company intends to maintain the effectiveness of the Registration
Statement (of which this Prospectus is a part) during the period commencing on
the date hereof and ending at such time as all the Shares are sold or the
Company delivers to the Selling Stockholders an opinion of counsel to the effect
that the Shares may be sold without compliance with the registration
requirements of the Securities Act. The Company is bearing all expenses incurred
in connection with the registration of the Shares.
LEGAL MATTERS
The legality of the Shares offered hereby has been passed upon for the
Company by Fleischman and Walsh, L.L.P, 1400 Sixteenth Street, Suite 600,
Washington, DC 20036.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Certificate of Incorporation of the Company provides that the
Company shall indemnify each officer and director of the Registrant to the
fullest extent permitted by applicable law. Section 145 of the Delaware General
Corporation Law (the "DGCL")
<PAGE>
-6-
provides that a Delaware corporation may indemnify any person against expenses,
fines and settlements actually and reasonably incurred by any such person in
connection with a threatened, pending or completed action, suit or proceeding in
which he is involved by reason of the fact that he is or was a director,
officer, employee or agent of such corporation, provided that (i) he acted in
good faith and in a manner he reasonably believed to be in or not opposed to the
best interests of the corporation and (ii) with respect to any criminal action
or proceeding, he had no reasonable cause to believe his conduct was unlawful.
The Certificate of Incorporation and By-Laws of the Company also provides that,
to the fullest extent permitted by the DGCL, a director of the Company shall not
be liable to the Company or its stockholders for monetary damages for breach of
fiduciary duty as a director to the Company or its stockholders. Such limitation
does not affect the liability of a director (i) for any transaction from which
the director derives an improper personal benefit, (ii) for acts or omissions
not in good faith or that involve intentional misconduct or a knowing violation
of law, (iii) for improper payment of dividends or redemption of shares or (iv)
for any breach of a director's duty of loyalty to the Company or its
stockholders.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 (the "Act") may be permitted to directors, officers or persons
controlling the Registrant pursuant to the foregoing provisions, the Registrant
has been informed that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is
therefore unenforceable.
<PAGE>
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PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Certain Documents by Reference
- ---------------------------------------------------------
The following documents previously filed by Hungarian Telephone and Cable
Corp. (the "Registrant") with the Securities and Exchange Commission (the
"Commission") are hereby incorporated by reference in this Registration
Statement except as superseded or modified as described herein:
(a) the Registrant's Annual Report on Form 10-K for the fiscal
year ended December 31, 1995;
(b) the Registrant's Quarterly Report on Form 10-Q for the
quarters ended March 31, 1996 and June 30, 1996;
(c) all other reports filed by the Registrant pursuant to Section 13(a) or
15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act") since the end of the fiscal year covered by the Annual Report
referred to above;
(d) the Registrant's definitive Proxy Statement for its Annual
Meeting of Stockholders held on May 9, 1996; and
(e) the description of the common stock, par value $.001 per share, of the
Registrant contained in the Company's Re-Offer Prospectus (under the
caption "Description of Capital Stock") filed with this Registration
Statement and all amendments or reports filed for the purpose of
updating such description.
All documents subsequently filed by the Registrant with the Commission
pursuant to Sections 13(a), 13(c), 14, or 15(d) of the Exchange Act, prior to
the filing of a post-effective amendment which indicates that all securities
offered hereby have been sold or which deregisters all securities then remaining
unsold, shall be deemed incorporated by reference into this Registration
Statement and to be a part thereof from the date of the filing of such
documents. Any statement contained in the documents incorporated, or deemed to
be incorporated, by reference herein or therein shall be deemed to be modified
or superseded for purposes of this Registration Statement and the Prospectus to
the extent that a statement contained herein or therein or in any other
subsequently filed document which also is, or is deemed to be, incorporated by
reference herein or therein modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Registration Statement and the
Prospectus.
<PAGE>
-8-
The Registrant shall furnish without charge to each person to whom the
Prospectus is delivered, on the written or oral request of such person, a copy
of any or all of the documents incorporated by reference, other than exhibits to
such documents (unless such exhibits are specifically incorporated by reference
to the information that is incorporated). Requests should be directed to Peter
T. Noone, General Counsel, Hungarian Telephone and Cable Corp., 100 First
Stamford Place, Stamford, Connecticut 06902; telephone number (203) 348-9069.
All information appearing in this Registration Statement and the Prospectus
is qualified in its entirety by the detailed information, including financial
statements, appearing in the documents incorporated herein or therein by
reference.
Item 4. Description of Securities.
- -----------------------------------
Not Applicable.
Item 5. Interests of Named Experts and Counsel.
- -------------------------------------------------
Not Applicable.
Item 6. Indemnification of Directors and Officers.
- ----------------------------------------------------
The Certificate of Incorporation of the Registrant provides that the
Registrant shall indemnify each officer and director of the Registrant to the
fullest extent permitted by applicable law. Section 145 of the Delaware General
Corporation Law (the "DGCL") provides that a Delaware corporation may indemnify
any person against expenses, fines and settlements actually and reasonably
incurred by any such person in connection with a threatened, pending or
completed action, suit or proceeding in which he is involved by reason of the
fact that he is or was a director, officer, employee or agent of such
corporation, provided that (i) he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation and (ii) with respect to any criminal action or proceeding, he had
no reasonable cause to believe his conduct was unlawful. The Certificate of
Incorporation and By-Laws of the Registrant also provides that, to the fullest
extent permitted by the DGCL, a director of the Registrant shall not be liable
to the Registrant or its stockholders for monetary damages for breach of
fiduciary duty as a director to the Registrant or its stockholders. Such
limitation does not affect the liability of a director (i) for any transaction
from which the director derives an improve personal benefit, (ii) for acts or
omissions not in good faith or that involve intentional misconduct or a knowing
violation of law, (iii) for improper payment of dividends or redemption of
shares or (iv) for any breach of a director's duty of loyalty to the Registrant
or its stockholders.
<PAGE>
-9-
Item 7. Exemption from Registration Claimed.
- ----------------------------------------------
The 110,500 Shares of Common Stock that hereby are being registered for
resale were issued to the officers of the Company pursuant to their employment
contracts. All such shares of Common Stock were issued without registration in
reliance on the exemption afforded by Section 4(2) of the Securities Act of
1933, as amended (the "Securities Act").
Item 8. Exhibits.
- -------------------
Regulation
S-K Reference to Prior
Exhibit Filing or Exhibit
Number Document Number Attached Hereto
- ----------- --------------------------- ----------------------
3.1 Certificate of Incorporation *
of Hungarian Telephone and
Cable Corp.
3.2 Bylaws of Hungarian Telephone
and Cable Corp. *
5 Opinion of Fleischman and Attached as
Walsh, L.L.P. Exhibit 5
10.81 Amended and Restated Employment Attached as
Contract dated as of October Exhibit 10.81
17, 1996 between Hungarian
Telephone and Cable Corp. and
James G. Morrison
10.82 Amended and Restated Employment Attached as
Contract dated as of October Exhibit 10.82
17, 1996 between Hungarian
Telephone and Cable Corp. and
Andrew E. Nicholson
10.83 Amended and Restated Employment Attached as
Contract dated as of October Exhibit 10.83
17, 1996 between Hungarian
Telephone and Cable Corp. and
Daniel R. Vaughn
23 Consent of Fleischman and
Walsh, L.L.P. (included in
Exhibit 5)
23.1 Consent of KPMG Peat Marwick Attached as
LLP, certified public Exhibit 23.1
accountants
<PAGE>
-10-
23.2 Consent of BDO Seidman, LLP, Attached as
certified public accountants Exhibit 23.2
24 Power of Attorney Contained on
Signature Page
- --------------------
* Filed as exhibits to Registrant's Registration Statement on
Form SB-2 dated October 20, 1992, as amended (Registration
No. 33-53582-NY as amended).
<PAGE>
-11-
Item 9. Undertakings.
- ----------------------
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or
sales are being made, a post-effective amendment to this
Registration Statement:
(i) to include any prospectus required by Section
10(a)(3) of the Securities Act,
(ii) to reflect in the prospectus any facts or
events arising after the effective date of
the Registration Statement (or the most
recent post-effective amendment thereto)
which, individually or in the aggregate,
represent a fundamental change in the
information set forth in the Registration
Statement,
(iii) to include any material information with
respect to the plan of distribution not
previously disclosed in the Registration
Statement or any material change to such
information in the Registration Statement.
Provided, however, that paragraphs (a)(1)(i) and
(a)(1)(ii) do not apply if the information required
to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed
with or furnished to the Commission by the Registrant
pursuant to Section 13 or Section 15(d) of the
Exchange Act that are incorporated by reference in
the Registration Statement.
(2) That, for the purpose of determining any
liability under the Securities Act of 1933, each such post-effective amendment
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a
post-effective amendment any of the securities being registered which remain
unsold at the termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in the
registration statement shall be deemed to be a new registration
<PAGE>
-12-
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
<PAGE>
-13-
SIGNATURES
The Registrant. Pursuant to the requirements of the Securities Act of
1933, the Registrant certifies that it has reasonable grounds to believe that it
meets all the requirements for filing on Form S-8 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized in the City of Budapest, Republic of Hungary, on October 17,
1996.
HUNGARIAN TELEPHONE AND CABLE CORP.
By: /s/ James G. Morrison
-------------------------------
James G. Morrison, President,
Chief Executive Officer and
Director
(Duly Authorized Representative)
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints James G. Morrison, his true and lawful
attorney-in-fact and agent, with full power of substitution and resubstitution,
for him and in his name, place and stead, in any and all capacities, to sign any
and all amendments (including post-effective amendments) to this Registration
Statement, and to file the same, with all exhibits thereto, and all other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents full power and authority to do
and perform each and every act and thing requisite and necessary to be done, as
fully to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all said attorneys-in-fact and agents or their
substitutes or substitute may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the date indicated:
/s/James G. Morrison Director, President October 17, 1996
- --------------------- and Chief Executive
James G. Morrison Officer
<PAGE>
-14-
/s/Richard P. Halka Controller October 17, 1996
- ----------------------
Richard P. Halka
/s/Andrew E. Nicholson Senior Vice President, October 17, 1996
- ---------------------- Finance
Andrew E. Nicholson
/s/Daniel R. Vaughn Chief Operating October 17, 1996
- ----------------------- Officer
Daniel R. Vaughn
/s/David A. Finley Director October 17, 1996
- -----------------------
David A. Finley
/s/Warren B. French, Jr. Director October 17, 1996
- ------------------------
Warren B. French, Jr.
/s/John B. Ryan Director October 17, 1996
- -----------------------
John B. Ryan
/s/James H. Season Director October 17, 1996
- -----------------------
James H. Season
/s/Ronald E. Spears Director October 17, 1996
- -----------------------
Ronald E. Spears
/s/William E. Starkey Director October 17, 1996
- ------------------------
William E. Starkey
<PAGE>
-15-
INDEX TO EXHIBITS
Exhibit
No. Description
- ----------------------------------------------------------------
3.1 *Certificate of Incorporation of Hungarian
Telephone and Cable............................
3.2 *Bylaws of Hungarian Telephone and Cable
Corp...........................................
5 Opinion of Fleischman and Walsh, L.L.P (which
includes their consent)........................
10.81 Amended and Restated Employment Contract dated
October 17, 1996 between Hungarian Telephone
and Cable Corp. and James G. Morrison..........
10.82 Amended and Restated Employment Contract dated
October 17, 1996 between Hungarian Telephone
and Cable Corp. and Andrew E. Nicholson........
10.83 Amended and Restated Employment Contract dated
October 17, 1996 between Hungarian Telephone
and Cable Corp. and Daniel R. Vaughn...........
23.1 Consent of KPMG Peat Marwick LLP, certified
public accountants.............................
23.2 Consent of BDO Seidman, LLP, certified public
accountants....................................
- --------------------
* Filed as exhibits to Registrant's Registration Statement on
Form SB-2 dated October 20, 1992, as amended (Registration
No. 33-53582-NY as amended).
EXHIBIT 5
October 17, 1996
Board of Directors
Hungarian Telephone and
Cable Corp.
100 First Stamford Place
Stamford, Connecticut 06902
Gentlemen:
We have acted as counsel to Hungarian Telephone and Cable Corp. (the
"Company") in connection with the preparation and filing with the Securities and
Exchange Commission of a registration statement on Form S-8 under the Securities
Act of 1933, as amended, (the "Registration Statement") relating to 110,500
shares of the Company's Common Stock, par value $.001 per share (the "Common
Stock"), offered pursuant to certain employment contracts with James G.
Morrison, Andrew E. Nicholson, and Daniel R. Vaughn each dated as of October 17,
1996 (the "Employment Contracts").
In this connection, we have reviewed originals or copies, certified or
otherwise identified to our satisfaction, of the Company's Certificate of
Incorporation, Bylaws, resolutions of its Board of Directors and such other
documents and corporate records as we deem appropriate for the purpose of giving
this
opinion.
Based upon the foregoing, it is our opinion that:
1. The shares of Common Stock being so registered have
been duly authorized.
2. The shares of Common Stock issued by the Company pursuant to the
Employment Contracts were, when issued, legally issued, fully paid and
non-assessable shares of Common Stock of the Company.
We hereby consent to the inclusion of this opinion as Exhibit 5 of this
Registration Statement and the reference to our firm in the Prospectus under the
heading "Legal Matters." In giving this consent, we do not admit that we are
within the category of persons whose consent is required under Section 7 of the
Securities Act of 1933, as amended, or the rules and regulations of the
Securities and Exchange Commission thereunder.
Very truly yours,
/s/FLEISCHMAN AND WALSH, L.L.P.
-----------------------------------
FLEISCHMAN AND WALSH, L.L.P.
EXHIBIT 10.81
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
This Amended and Restated Employment Agreement (this "Agreement") is
made and entered into as of this 17th day of October, 1996, by and between
Hungarian Telephone and Cable Corp., a corporation organized under the laws of
the State of Delaware, United States of America (the "Company") and James G.
Morrison ("Executive").
RECITALS:
A. The Company and Executive are parties to that certain
Employment Agreement, dated December 14, 1995 ("1995 Agreement").
B. On July 26, 1996, Executive's position with the Company was changed
from that of Vice President and Chief Operating Officer to that of President and
Chief Executive Officer, thereby significantly increasing Executive's duties and
responsibilities.
C. The parties desire to amend and restate the 1995 Agreement to set
forth the terms and conditions under which Executive shall continue to serve in
the above-stated capacity of President and Chief Executive Officer of the
Company.
NOW, THEREFORE, in consideration of the respective covenants and
agreements of the parties set forth herein, it is agreed as follows:
1. Employment and Duties. The Company agrees to employ Executive and
Executive accepts the employment, subject to the terms and conditions herein, to
serve as President and Chief Executive Officer of the Company. Executive shall
report and be responsible solely to the Board of Directors of the Company (the
"Board"). Executive's duties and responsibilities shall include the duties and
responsibilities as set forth in the Company's bylaws from time to time in
effect and such other duties and responsibilities as the Board may from time to
time reasonably assign Executive, in all cases consistent with Executive's
position. Executive shall perform faithfully the executive duties assigned to
him to the best of his ability.
2. Place of Employment. Executive shall be employed at
the Company's offices located at Kiralyhago u.2, Budapest,
Hungary.
3. Term. The term of employment under this Agreement
shall continue through December 31, 1999, unless earlier
terminated in accordance with the terms of this Agreement (the
"Employment Period").
<PAGE>
-2-
4. Effective Date. The effective date of this Agreement
is July 26, 1996, the date on which Executive was elected
President and Chief Executive Officer by the Board.
5. Annual Salary. Executive will receive an annual base salary of One
Hundred Sixty-Five Thousand Dollars ($165,000), payable in equal monthly
installments on the last day of each month. The Company shall be entitled to
deduct or withhold all taxes and charges which the Company may be required by
law to deduct or withhold therefrom. The Compensation and Stock Option Committee
of the Board (the "Compensation Committee") shall annually review Executive's
base salary in light of the performance of Executive and, if it finds
Executive's performance to be satisfactory, the Compensation Committee shall
increase such base salary by an amount it determines to be appropriate, but in
no event shall such increase be less than the annual change in the United States
Consumer Price Index for the most recently reported twelve (12) month period.
6. Share Award. In consideration of the Executive's (i) past services
to the Company and (ii) delivery of the aggregate par value therefor, the
Company hereby sells and assigns Executive fifty thousand (50,000) shares (the
"Shares") of the Company's common stock, par value $.001, ("Common Stock"),
which will be promptly registered with the United States Securities and Exchange
Commission (the "Commission") on Form S- 8. Executive's rights to the Shares
will vest and certificates evidencing ownership of the Shares will be released
according to the following schedule, provided that if Executive has not
maintained continuous service with the Company from the date hereof until the
related vesting date (other than in circumstances set forth in Paragraphs 19(b)
and (c) all as yet unvested Shares shall be forfeited and cancelled, so no
certificate(s) therefor shall be released to the Executive:
Release Date Shares released
October 10, 1996 12,500
October 10, 1997 12,500
October 10, 1998 12,500
October 10, 1999 12,500
Prior to the scheduled release date of any installment of Shares, such
unreleased Shares may not be sold, assigned, transferred, pledged, or otherwise
encumbered by Executive. Executive hereby grants the Company an option to
purchase such number of Shares released to Executive as shall be sufficient to
allow Executive to pay taxes due on the released Shares, provided such purchase
by the Company does not violate the Company's certificate of incorporation, its
bylaws or the Delaware General Corporation Law.
<PAGE>
-3-
7. Renegotiation Bonus. As consideration of (i) Executive's agreement
to amend and restate the 1995 Agreement and to waive his rights to certain
benefits under such agreement and (ii) delivery of the aggregate par value
thereof, the Company hereby sells and assigns Executive five thousand (5,000)
shares of Common Stock, which Shares will be promptly registered with the
Commission on Form S-8. The shares of Common Stock due Executive under this
grant shall be delivered to Executive as soon as reasonably practicable
following the execution of this Agreement.
8. Annual Housing Allowance. Executive will receive an annual housing
allowance (the "Housing Allowance") of Thirty-Six Thousand Dollars ($36,000),
payable in equal monthly installments. The Compensation Committee shall review
the amount of the Housing Allowance on an annual basis, and may increase the
amount based on cost of living increases, if applicable.
9. Annual Stock Options. Executive shall be entitled to
receive an award of options to purchase a target of thirty
thousand (30,000) shares of Common Stock annually (the
"Options").
(a) Calendar Year 1996. A determination of the Options to
which Executive will be entitled for the calendar year 1996 shall be
based on a combination of the annual line growth (representing 25% of
the grant) and the Operating Income Before Interest, Taxes,
Depreciation and Amortization (representing 75% of the grant). The
payout formula is as follows:
Less than 90% of objective = 0% of award
90% to 94.9% of objective = 70% of award
95% to 99.9% of objective = 85% of award
100% to 104.9% of objective = 100% of award
105% to 110% of objective = 115% of award
The objectives for annual line growth and Operating Income Before
Interest, Taxes, Depreciation and Amortization are those previously
established and agreed to by Executive and the Company in the 1995
Agreement and a letter dated May 1, 1996. The Options will be priced at
the lowest closing sale price during either January or December of
1996. The terms of the Options shall be set forth in a written stock
option contract and shall contain an exercise period beginning on April
1, 1997 and ending on March 31, 2002. The shares of Common Stock
purchased through such Options shall be delivered to Executive as soon
as reasonably practicable following written notice of exercise.
(b) Calendar Years 1997 through 1999. For the years
1997 through 1999, Executive will be entitled to participate
in the Company's 1992 Incentive Stock Option Plan, as
amended (the "ISO Plan"). Under the ISO Plan, Executive
<PAGE>
-4-
shall be entitled to receive an award of options to purchase a target
of thirty thousand (30,000) shares of Common Stock annually on terms to
be established by the Compensation Committee. The Compensation
Committee shall establish such terms, including exercise price, by
March 31st of the year following the year in which such Options are
attributable. In any given year, Executive may receive an award that is
less than, equal to, or greater than the target award, depending upon
the Company's performance measured against annual financial targets
agreed to by and between Executive and the Compensation Committee.
10. Insurance. The Company will provide Executive, his
spouse and his minor dependents with health insurance coverage
under a fully comprehensive international scheme.
11. Automobile. The Company will provide Executive with an
automobile to be leased or purchased and maintained by the
Company.
12. Annual Leave. Executive will be entitled to thirty
(30) days annual paid vacation and a home leave allowance of Five
Thousand Dollars ($5,000).
13. Company Business Allowance. Section 911 of the Internal Revenue
Code provides an exemption for the payment of income taxes on $70,000 of
"foreign earned income," provided such taxpayer is present in a foreign country
or foreign countries (and not present in the United States) during at least
three hundred and thirty (330) full days in any 12 consecutive month period for
which the exemption is claimed. Executive agrees to reserve for Company business
fifteen (15) days annually of the time he is allowed to be in the United States
without incurring a loss of the above-stated tax exemption. If Executive is
required by Company business to be present in the United States for more than
fifteen (15) days in any calendar year and, thereby, loses or reduces tax
exemptions to which he would otherwise have been entitled, the Company will
reimburse Executive for any additional tax liability he incurs as a result of
such lost or reduced tax exemptions.
14. Hungarian Taxes. The Company will reimburse Executive
for (a) all Hungarian taxes, work permits, or other governmental
assessments that relate to his employment by the Company and (b)
any additional U.S. taxes resulting from such reimbursement.
15. Covenant Not to Compete. Executive hereby agrees that during the
term of this Agreement he will not, either through any kind of ownership (other
than ownership of securities of a publicly held corporation of which Executive
owns less than five percent (5%) of any class of outstanding securities), or as
a director, officer, principal, agent, employee, employer, advisor, consultant,
co-partner, or in any individual or representative capacity whatever, either for
his own benefit or for the benefit
<PAGE>
-5-
of any other person, firm, or corporation, without the prior written consent of
a duly authorized officer of the Company, compete with the Company by engaging
in any act, including, but not limited to, any of the following: (a) canvass,
solicit, accept, or perform any type of work performed by the Company for any
"customer" (as hereinafter defined) of the Company; (b) develop, design, market
any services that may be sold by the Company during the term of this Agreement;
(c) request or advise any firm to withdraw, curtail, or cancel its business with
the Company; (d) give or attempt to give any person, partnership, or corporation
the right to solicit or canvass any customer for the performance of services
provided by the Company; and (e) induce or attempt to influence any employee of
the Company or any employee of any customer to terminate his employment with the
view toward competing with the Company or any customer. As used herein, the term
"customer" includes any of the Company customers at any time during the term of
this Agreement.
16. Confidential Information.
(a) Nondisclosure. Executive expressly covenants and agrees
that he will not during the term of this Agreement or at any time after
the termination hereof, irrespective of the time, manner, or cause of
termination, reveal, divulge, disclose, or communicate to any person,
firm, or corporation, other than authorized officers, directors, and
employees of the Company, in any manner whatsoever, any "confidential
information" (as hereinafter defined) of the Company that would be
inconsistent with the position held by Executive or the duties being
performed by Executive at the direction of the Company.
(b) Return of Confidential Information and Other Property.
Upon termination of this Agreement, Executive will surrender to the
Company all confidential information including, without limitation, all
lists, charts, schedules, reports, financial statements, books and
records, and all copies thereof, of the Company and all other property
belonging to the Company whatsoever. As used herein, "confidential
information" means information disclosed to or known by Executive as a
consequence of or through his employment for the Company, not generally
known in the business in which the Company is or may become engaged,
about the Company, its business, products and processes.
17. Breach of Covenant Not to Compete and Confidentiality Provision.
Executive agrees that a substantial violation on his part of any covenant
contained in Paragraphs 15 and 16 above will cause such damage to the Company as
will be irreparable and for that reason, Executive further agrees that the
Company shall be entitled as a matter of right, to an injunction out of any
court of competent jurisdiction, restraining any further violation of said
covenants by Executive, his employer, employees, partners, or agents. Such right
to injunction shall be cumulative and in
<PAGE>
-6-
addition to whatever other remedies the Company may have, including,
specifically, recovery of liquidated and additional damages. Executive expressly
acknowledges and agrees that the respective covenants and agreements shall be
construed in such a manner as to be enforceable under applicable laws if a more
limited scope of time is determined by a court or competent jurisdiction to be
required.
18. Indemnification. The Company agrees that if Executive is made a
party, or is threatened to be made a party, to any action, suit or proceeding,
whether civil, criminal, administrative or investigative (a "Proceeding"), by
reason of the fact that he is or was a director, officer or employee of the
Company, Executive shall be indemnified and held harmless by the Company to the
fullest extent legally permitted or authorized by the Company's certificate of
incorporation or bylaws or resolutions of the Board or, if greater, by the laws
of the State of Delaware, against all cost, expense, liability and loss
(including, without limitation, attorney's fees, judgments, fines, ERISA excise
taxes or penalties and amounts paid or to be paid in settlement) reasonably
incurred or suffered by Executive in connection therewith. The Company agrees to
continue and maintain a directors' and officers' liability insurance policy
covering Executive to the extent the Company provides such coverage for any of
its other executive officers.
19. Termination.
(a) Reasons for Termination. The employment of Executive with
the Company shall be terminated automatically upon Executive's death
and may be terminated by written notice (i) by the Company, upon
Executive's disability which renders him unable to perform his usual
and customary duties for a period of 180 consecutive days; (ii) by the
Company, with or without "cause" (as hereinafter defined); (iii) by the
Executive, if he suffers a demotion or a lower status with the Company;
or (iv) by the Executive, in the event of a "change in control" (as
hereinafter defined), whether or not Executive suffers a demotion or a
lower status with the Company. For purposes of this Agreement, "cause"
shall mean (i) a failure by Executive to substantially perform
Executive's reasonable and legal duties and as defined by goals
established by the Board and agreed to by Executive, other than a
failure resulting from Executive's complete or partial incapacity due
to physical or mental illness or impairment, (ii) a willful act by
Executive that constitutes gross misconduct and that is injurious to
the Company, (iii) a willful breach by Executive of a material
provision of this Agreement, or (iv) a material and willful violation
of a federal or state law or regulation applicable to the business of
the Company. No act, or failure to act, by Executive shall be
considered "willful" unless committed without good faith and without a
reasonable belief that the act or omission was in the Company's best
interest. For
<PAGE>
-7-
purposes of this Agreement, a "change of control" shall be deemed to
have occurred if (1) any "person" (as such term is used in Sections
13(d) and 14(d) of the U.S. Securities and Exchange Act (the "Exchange
Act")), other than Citizens Utilities Company or its affiliates
(together, "Citizens"), is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly,
of securities of the Company representing thirty-five percent (35%) or
more of the combined voting power (with respect to the election of
directors) of the Company's then outstanding securities; (2) at any
time after the execution of this Agreement, a majority of the Board
shall be replaced, over a two-year period, from the directors who
constituted the Board at the beginning of such period, and such
replacement shall not have been approved by either two-thirds (2/3) of
the Board as constituted at the beginning of such period or Citizens;
(3) the consummation of a merger or consolidation of the Company with
or into any other corporation (other than Citizens), other than a
merger or consolidation which would result in the voting securities of
the Company outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted into
voting securities of the surviving entity) more than sixty-five percent
(65%) of the combined voting power (with respect to the election of
directors) of the securities of the Company or of such surviving entity
outstanding immediately after such merger or consolidation; or (4) the
consummation of a plan of complete liquidation of the Company or of an
agreement for the sale or disposition by the Company of all or
substantially all of the Company's business or assets.
(b) Termination Benefits. If Executive's employment is
terminated prior to the expiration of the term of this Agreement, for
any reason noted above (other than for "cause"), Executive will be
entitled to receive the following benefits as severance (the "Severance
Benefits"):
(i) a lump sum payment equal to nine (9) months'
salary and nine (9) months' Housing Allowance at
Executive's then-current annual base salary and
Housing Allowance levels;
(ii) payment of any salary, expenses, allowances
and benefits accrued by Executive up to the date
of the termination;
(iii) the immediate vesting and release of any
unvested unreleased portion of the shares of
Common Stock granted hereunder, without
restriction; and
(iv) a pro-rata share of stock options, if any,
that are awardable under any incentive stock
<PAGE>
-8-
option plan (in addition to the ISO Plan)
established by the Company.
(c) Benefits in the Event of Executive's Death. Except as set
forth below, if Executive's employment terminates automatically in the
event of Executive's death, Executive's estate will be entitled to
receive the Severance Benefits. The Company may, at its option,
maintain a life insurance policy for Executive in an amount deemed to
be appropriate by the Board and designating Executive's estate as the
beneficiary. If the Company elects to maintain such life insurance and
the policy amount equals or exceeds the value of the Severance Benefits
(as determined by the Board), Executive's estate shall only be entitled
to receive the proceeds of the insurance policy. If the policy amount
is less than the value of the Severance Benefits, the Company shall pay
to Executive's estate an amount equal to the difference between the
value of the Severance Benefits and the amount to which the estate
would be entitled under the insurance policy. The Company shall
determine the value of the Severance Benefits as soon as practicable
after Executive's death but in no event later than thirty (30) days
thereafter.
(d) Date of Termination; Provision of Severance Benefits. The
date of termination of Executive's employment by the Company under this
Paragraph 19 shall be one (1) month after receipt by Executive of
written notice of termination, provided, however, that if the
termination is for cause the date of termination shall be the date
specified in the notice of termination or if no date is specified then
the date on which such notice is received by the Executive. The date of
termination by Executive under this Paragraph 19 shall be one (1) month
after receipt by the Company of written notice of termination. All
benefits to which Executive is entitled under subparagraph (b) hereof
shall be provided on the date of termination. In the case of automatic
termination in the event of Executive's death, the benefits shall be
provided no later than thirty (30) days from the date of Executive's
death.
20. Miscellaneous.
(a) Rights Under Plans and Programs. Notwithstanding anything
in this Agreement to the contrary no provision of this Agreement is
intended, nor shall it be construed, to reduce or in any way restrict
any benefit to which Executive may be entitled under any agreement,
plan, arrangement, or program providing benefits for Executive.
(b) Entire Agreement. This Agreement constitutes the
entire agreement between the parties with respect to the
subject matter of this Agreement and supersedes all prior
written and oral and all contemporaneous oral agreements and
<PAGE>
-9-
understandings with respect to the subject matter of this
Agreement.
(c) Notices. Any notice or request to be given hereunder by
any party to the other shall be in writing and shall be deemed to have
been duly given on the next business day after the same is sent, if
delivered personally or sent by telecopy or overnight delivery, or five
calendar days after the same is sent, if sent by registered or
certified mail, return receipt requested, postage prepaid, as set forth
below, or to such other persons or addresses as may be designated in
writing in accordance with the terms hereof by the party to receive
such notice.
If to the Company, to:
Hungarian Telephone and Cable Corp.
First Stamford Place
Stamford, CT 06902
Facsimile No.: 203/348-9128
Attn: General Counsel
with a required copy to:
Fleischman and Walsh, L.L.P.
1400 Sixteenth Street, N.W.
Washington, D.C. 20036
Facsimile No.: 202/745-0916
Attn: Jeffry L. Hardin, Esq.
If to Executive, to:
the address or facsimile number
for Executive as set forth
in the Company's records
with a required copy to:
Covington and Burling
1201 Pennsylvania Ave., N.W.
Washington, D.C. 20044
Facsimile No.: 202/662-6291
Attn: Paul Berman, Esq.
(d) Governing Law; Forum;Consent to Jurisdiction. This
Agreement shall be governed by and construed in accordance with the
laws of the State of New York without giving effect to the principles
of conflict of laws thereof. Each of the parties to this Agreement
hereby irrevocably and unconditionally (i) consents to submit to the
exclusive jurisdiction of the courts of the State of New York for any
proceeding arising in connection with this Agreement (and each such
party agrees not to commence any such proceeding, except in such
courts), (ii) to the extent such party is not
<PAGE>
-10-
a resident of the State of New York, agrees to appoint an agent in the
State of New York as such party's agent for acceptance of legal process
in any such proceeding against such party with the same legal force and
validity as if served upon such party personally within the State of
New York, and to notify promptly each other party hereto of the name
and address of such agent, (iii) waives any objection to the laying of
venue of any such proceeding in the courts of the State of New York,
and (iv) waives, and agrees not to plead or to make, any claim that any
such proceeding brought in any court of the State of New York has been
brought in an improper or otherwise inconvenient forum.
(e) Counterparts. This Agreement may be executed in one or
more counterparts, and each of such counterparts shall for all purposes
be deemed to be an original, but all such counterparts together shall
constitute but one instrument.
(f) Executive's Successors. This Agreement and all
rights of Executive hereunder shall inure to the benefit of,
and be enforceable by, Executive's personal or legal
representatives, executors, administrators, successors,
heirs, distributees, devisees and legatees.
(g) Assignment. Neither this Agreement, nor the
rights and obligations hereunder, may be assigned by either
party without the prior written consent of the other party.
(h) Parties in Interest. Nothing in this Agreement, expressed
or implied, is intended to confer on any person other than the parties
hereto or their respective successors or assigns, any rights, remedies,
obligations or liabilities under or by reason of this Agreement.
(i) Amendment. This Agreement may not be amended
except by an instrument in writing signed on behalf of each
of the parties.
(j) Extension; Waiver. Either party to this Agreement may (a)
extend the time for the performance of any of the obligations or other
acts of the other party to this Agreement or (b) waive compliance by
the other party with any of the agreements or conditions contained
herein or any breach thereof. Any agreement on the part of a party to
any such extension or waiver shall be valid only if set forth in an
instrument in writing signed on behalf of such party.
(k) Severability. The provisions of this Agreement are
severable and, if any provision of this Agreement is determined to be
invalid or unenforceable by any court of competent jurisdiction, such
provision (in any other jurisdiction) and the other provisions hereof
(in any jurisdiction) shall not be rendered otherwise invalid or
<PAGE>
-11-
unenforceable and such provision shall be deemed to be modified to the
extent necessary to render it legal, valid and enforceable, and if no
such modification shall render it legal, valid and enforceable, then
this Agreement shall be construed as if not containing the provision
held to be invalid, and the rights and obligations of the parties shall
be construed and enforced accordingly.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
HUNGARIAN TELEPHONE AND CABLE
CORP.
By:/s/ Ronald E. Spears
--------------------------------
Ronald E. Spears
Director, Member of
Compensation/Stock Option
Committee
JAMES G. MORRISON
/s/ James G. Morrison
-----------------------------------
EXHIBIT 10.82
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
This Amended and Restated Employment Agreement (this "Agreement") is
made and entered into as of this 17th day of October, 1996, by and between
Hungarian Telephone and Cable Corp., a corporation organized under the laws of
the State of Delaware, United States of America (the "Company") and Andrew E.
Nicholson ("Executive").
RECITALS:
A. The Company and Executive are parties to that certain
Employment Agreement, dated December 14, 1995 ("1995 Agreement").
B. On July 26, 1996, Executive's position with the Company
was changed from that of Controller to that of Senior Vice
President - Finance, thereby significantly increasing Executive's
duties and responsibilities.
C. The parties desire to amend and restate the 1995 Agreement to set
forth the terms and conditions under which Executive shall continue to serve in
the above-stated capacity of Senior Vice President - Finance of the Company.
NOW, THEREFORE, in consideration of the respective covenants and
agreements of the parties set forth herein, it is agreed as follows:
1. Employment and Duties. The Company agrees to employ Executive and
Executive accepts the employment, subject to the terms and conditions herein, to
serve as Senior Vice President Finance of the Company. Executive shall report
and be responsible solely to the President and Chief Executive Officer of the
Company. Executive's duties and responsibilities shall include the duties and
responsibilities as set forth in the Company's bylaws from time to time in
effect and such other duties and responsibilities as the President and Chief
Executive Officer may from time to time reasonably assign Executive, in all
cases consistent with Executive's position. Executive shall perform faithfully
the executive duties assigned to him to the best of his ability.
2. Place of Employment. Executive shall be employed at
the Company's offices located at Kiralyhago u.2, Budapest,
Hungary.
3. Term. The term of employment under this Agreement
shall continue through December 31, 1999, unless earlier
terminated in accordance with the terms of this Agreement (the
"Employment Period").
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4. Effective Date. The effective date of this Agreement
is July 26, 1996, the date on which Executive was elected Senior
Vice President - Finance by the Board of Directors of the Company
(the "Board").
5. Annual Salary. Executive will receive an annual base salary of One
Hundred Forty-Five Thousand Dollars ($145,000), payable in equal monthly
installments on the last day of each month. The Company shall be entitled to
deduct or withhold all taxes and charges which the Company may be required by
law to deduct or withhold therefrom. The Compensation and Stock Option Committee
of the Board (the "Compensation Committee") shall annually review Executive's
base salary in light of the performance of Executive and, if it finds
Executive's performance to be satisfactory, the Compensation Committee shall
increase such base salary by an amount it determines to be appropriate, but in
no event shall such increase be less than the annual change in the United States
Consumer Price Index for the most recently reported twelve (12) month period.
6. Share Award. In consideration of the Executive's (i) past services
to the Company and (ii) delivery of the aggregate par value therefor, the
Company hereby sells and assigns Executive thirty-five thousand (35,000) shares
(the "Shares") of the Company's common stock, par value $.001, ("Common Stock"),
which will be promptly registered with the United States Securities and Exchange
Commission (the "Commission") on Form S-8. Executive's rights to the Shares will
vest and certificates evidencing ownership of the Shares will be released
according to the following schedule, provided that if Executive has not
maintained continuous service with the Company from the date hereof until the
related vesting date (other than in circumstances set forth in Paragraphs 18(b)
and (c) all as yet unvested Shares shall be forfeited and cancelled, so no
certificate(s) therefor shall be released to the Executive:
Release Date Shares released
October 10, 1996 8,750
October 10, 1997 8,750
October 10, 1998 8,750
October 10, 1999 8,750
Prior to the scheduled release date of any installment of Shares, such
unreleased Shares may not be sold, assigned, transferred, pledged, or otherwise
encumbered by Executive. Executive hereby grants the Company an option to
purchase such number of Shares released to Executive as shall be sufficient to
allow Executive to pay taxes due on the released Shares, provided such purchase
by the Company does not violate the Company's certificate of incorporation, its
bylaws or the Delaware General Corporation Law.
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7. Renegotiation Bonus. As consideration of (i) Executive's agreement
to amend and restate the 1995 Agreement and to waive his rights to certain
benefits under such agreement and (ii) delivery of the aggregate par value
thereof, the Company hereby sells and assigns Executive one thousand five
hundred (1,500) shares of Common Stock, which Shares will be promptly registered
with the Commission on Form S-8. The shares of Common Stock due Executive under
this grant shall be delivered to Executive as soon as reasonably practicable
following the execution of this Agreement.
8. Annual Housing Allowance. Executive will receive an annual housing
allowance (the "Housing Allowance") of Thirty-Six Thousand Dollars ($36,000),
payable in equal monthly installments. The Compensation Committee shall review
the amount of the Housing Allowance on an annual basis, and may increase the
amount based on cost of living increases, if applicable.
9. Annual Stock Options. Executive shall be entitled to
receive an award of options to purchase a target of twenty
thousand (20,000) shares of Common Stock annually (the
"Options").
(a) Calendar Year 1996. A determination of the Options to
which Executive will be entitled for the calendar year 1996 shall be
based on a combination of the annual line growth (representing 25% of
the grant) and the Operating Income Before Interest, Taxes,
Depreciation and Amortization (representing 75% of the grant). The
payout formula is as follows:
Less than 90% of objective = 0% of award
90% to 94.9% of objective = 70% of award
95% to 99.9% of objective = 85% of award
100% to 104.9% of objective = 100% of award
105% to 110% of objective = 115% of award
The objectives for annual line growth and Operating Income Before
Interest, Taxes, Depreciation and Amortization are those previously
established and agreed to by Executive and the Company in the 1995
Agreement and a letter dated May 1, 1996. The Options will be priced at
the lowest closing sale price during either January or December of
1996. The terms of the Options shall be set forth in a written stock
option contract and shall contain an exercise period beginning on April
1, 1997 and ending on March 31, 2002. The shares of Common Stock
purchased through such Options shall be delivered to Executive as soon
as reasonably practicable following written notice of exercise.
(b) Calendar Years 1997 through 1999. For the years 1997
through 1999, Executive will be entitled to participate in the
Company's 1992 Incentive Stock Option Plan, as amended (the "ISO
Plan"). Under the ISO Plan, Executive shall be entitled to receive an
award of options to purchase
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a target of twenty thousand (20,000) shares of Common Stock annually on
terms to be established by the Compensation Committee. The Compensation
Committee shall establish such terms, including exercise price, by
March 31st of the year following the year in which such Options are
attributable. In any given year, Executive may receive an award that is
less than, equal to, or greater than the target award, depending upon
the Company's performance measured against annual financial targets
agreed to by and between Executive and the Compensation Committee.
10. Insurance. The Company will provide Executive, his
spouse and his minor dependents with health insurance coverage
under a fully comprehensive international scheme.
11. Automobile. The Company will provide Executive with an
automobile to be leased or purchased and maintained by the
Company.
12. Annual Leave. Executive will be entitled to thirty
(30) days annual paid vacation and a home leave allowance of Five
Thousand Dollars ($5,000).
13. Hungarian Taxes. The Company will reimburse Executive
for all Hungarian taxes, work permits, or other governmental
assessments that relate to his employment by the Company.
14. Covenant Not to Compete. Executive hereby agrees that during the
term of this Agreement he will not, either through any kind of ownership (other
than ownership of securities of a publicly held corporation of which Executive
owns less than five percent (5%) of any class of outstanding securities), or as
a director, officer, principal, agent, employee, employer, advisor, consultant,
co-partner, or in any individual or representative capacity whatever, either for
his own benefit or for the benefit of any other person, firm, or corporation,
without the prior written consent of a duly authorized officer of the Company,
compete with the Company by engaging in any act, including, but not limited to,
any of the following: (a) canvass, solicit, accept, or perform any type of work
performed by the Company for any "customer" (as hereinafter defined) of the
Company; (b) develop, design, market any services that may be sold by the
Company during the term of this Agreement; (c) request or advise any firm to
withdraw, curtail, or cancel its business with the Company; (d) give or attempt
to give any person, partnership, or corporation the right to solicit or canvass
any customer for the performance of services provided by the Company; and (e)
induce or attempt to influence any employee of the Company or any employee of
any customer to terminate his employment with the view toward competing with the
Company or any customer. As used herein, the term "customer" includes any of the
Company customers at any time during the term of this Agreement.
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15. Confidential Information.
(a) Nondisclosure. Executive expressly covenants and agrees
that he will not during the term of this Agreement or at any time after
the termination hereof, irrespective of the time, manner, or cause of
termination, reveal, divulge, disclose, or communicate to any person,
firm, or corporation, other than authorized officers, directors, and
employees of the Company, in any manner whatsoever, any "confidential
information" (as hereinafter defined) of the Company that would be
inconsistent with the position held by Executive or the duties being
performed by Executive at the direction of the Company.
(b) Return of Confidential Information and Other Property.
Upon termination of this Agreement, Executive will surrender to the
Company all confidential information including, without limitation, all
lists, charts, schedules, reports, financial statements, books and
records, and all copies thereof, of the Company and all other property
belonging to the Company whatsoever. As used herein, "confidential
information" means information disclosed to or known by Executive as a
consequence of or through his employment for the Company, not generally
known in the business in which the Company is or may become engaged,
about the Company, its business, products and processes.
16. Breach of Covenant Not to Compete and Confidentiality Provision.
Executive agrees that a substantial violation on his part of any covenant
contained in Paragraphs 14 and 15 above will cause such damage to the Company as
will be irreparable and for that reason, Executive further agrees that the
Company shall be entitled as a matter of right, to an injunction out of any
court of competent jurisdiction, restraining any further violation of said
covenants by Executive, his employer, employees, partners, or agents. Such right
to injunction shall be cumulative and in addition to whatever other remedies the
Company may have, including, specifically, recovery of liquidated and additional
damages. Executive expressly acknowledges and agrees that the respective
covenants and agreements shall be construed in such a manner as to be
enforceable under applicable laws if a more limited scope of time is determined
by a court or competent jurisdiction to be required.
17. Indemnification. The Company agrees that if Executive is made a
party, or is threatened to be made a party, to any action, suit or proceeding,
whether civil, criminal, administrative or investigative (a "Proceeding"), by
reason of the fact that he is or was a director, officer or employee of the
Company, Executive shall be indemnified and held harmless by the Company to the
fullest extent legally permitted or authorized by the Company's certificate of
incorporation or bylaws or resolutions of the Board or, if greater, by the laws
of the State of Delaware, against all cost, expense, liability and loss
<PAGE>
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(including, without limitation, attorney's fees, judgments, fines, ERISA excise
taxes or penalties and amounts paid or to be paid in settlement) reasonably
incurred or suffered by Executive in connection therewith. The Company agrees to
continue and maintain a directors' and officers' liability insurance policy
covering Executive to the extent the Company provides such coverage for any of
its other executive officers.
18. Termination.
(a) Reasons for Termination. The employment of Executive with
the Company shall terminate automatically upon Executive's death and
may be terminated by written notice (i) by the Company, upon
Executive's disability which renders him unable to perform his usual
and customary duties for a period of 180 consecutive days; (ii) by the
Company, with or without "cause" (as hereinafter defined); (iii) by
Executive, if he suffers a demotion or a lower status with the Company
other than for cause; or (iv) by Executive, in the event of a "change
in control" (as hereinafter defined), whether or not he suffers a
demotion or a lower status with the Company. For purposes of this
Agreement, "cause" shall mean (i) a failure by Executive to
substantially perform Executive's reasonable and legal duties and as
defined by goals established by the Board and agreed to by Executive,
other than a failure resulting from Executive's complete or partial
incapacity due to physical or mental illness or impairment, (ii) a
willful act by Executive that constitutes gross misconduct and that is
injurious to the Company, (iii) a willful breach by Executive of a
material provision of this Agreement, or (iv) a material and willful
violation of a federal or state law or regulation applicable to the
business of the Company. No act, or failure to act, by Executive shall
be considered "willful" unless committed without good faith and without
a reasonable belief that the act or omission was in the Company's best
interest. For purposes of this Agreement, a "change of control" shall
be deemed to have occurred if (1) any "person" (as such term is used in
Sections 13(d) and 14(d) of the U.S. Securities and Exchange Act (the
"Exchange Act")), other than Citizens Utilities Company or its
affiliates (together, "Citizens"), is or becomes the "beneficial owner"
(as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Company representing thirty-five
percent (35%) or more of the combined voting power (with respect to the
election of directors) of the Company's then outstanding securities;
(2) at any time after the execution of this Agreement, a majority of
the Board shall be replaced, over a two-year period, from the directors
who constituted the Board at the beginning of such period, and such
replacement shall not have been approved by either two-thirds (2/3) of
the Board as constituted at the beginning of such period or Citizens;
(3) the consummation of a merger or consolidation of the Company with
or into any other corporation (other
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than Citizens), other than a merger or consolidation which would result
in the voting securities of the Company outstanding immediately prior
thereto continuing to represent (either by remaining outstanding or by
being converted into voting securities of the surviving entity) more
than sixty-five percent (65%) of the combined voting power (with
respect to the election of directors) of the securities of the Company
or of such surviving entity outstanding immediately after such merger
or consolidation; or (4) the consummation of a plan of complete
liquidation of the Company or of an agreement for the sale or
disposition by the Company of all or substantially all of the Company's
business or assets.
(b) Termination Benefits. If Executive's employment is
terminated prior to the expiration of the term of this Agreement, for
any reason noted above (other than for "cause"), Executive will be
entitled to receive the following benefits as severance (the "Severance
Benefits"):
(i) a lump sum payment equal to nine (9) months'
salary and nine (9) months' Housing Allowance at
Executive's then-current annual salary and Housing
Allowance levels;
(ii) payment of any salary, expenses, allowances
and benefits accrued by Executive up to the date
of the termination;
(iii)the immediate vesting and release of any
unvested unreleased portion of the shares of
Common Stock granted hereunder, without
restriction; and
(iv) a pro-rata share of stock options, if any,
that are awardable under any incentive stock
option plan (in addition to the ISO Plan)
established by the Company.
(c) Benefits in the Event of Executive's Death. Except as set
forth below, if Executive's employment terminates automatically in the
event of Executive's death, Executive's estate will be entitled to
receive the Severance Benefits. The Company may, at its option,
maintain a life insurance policy for Executive in an amount deemed to
be appropriate by the Board and designating Executive's estate as the
beneficiary. If the Company elects to maintain such life insurance and
the policy amount equals or exceeds the value of the Severance Benefits
(as determined by the Board), Executive's estate shall only be entitled
to receive the proceeds of the insurance policy. If the policy amount
is less than the value of the Severance Benefits, the Company shall pay
to Executive's estate an amount equal to the difference between the
value of the Severance Benefits
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and the amount to which the estate would be entitled under the
insurance policy. The Company shall determine the value of the
Severance Benefits as soon as practicable after Executive's death but
in no event later than thirty (30) days thereafter.
(d) Date of Termination; Provision of Severance Benefits. The
date of termination of Executive's employment by the Company under this
Paragraph 18 shall be one (1) month after receipt by Executive of
written notice of termination, provided, however, that if the
termination is for cause the date of termination shall be the date
specified in the notice of termination or if no date is specified then
the date on which such notice is received by the Executive. The date of
termination by Executive under this Paragraph 18 shall be one (1) month
after receipt by the Company of written notice of termination. All
benefits to which Executive is entitled under subparagraph (b) hereof
shall be provided on the date of termination. In the case of automatic
termination in the event of Executive's death, the benefits shall be
provided no later than thirty (30) days from the date of Executive's
death.
19. Miscellaneous.
(a) Rights Under Plans and Programs. Notwithstanding anything
in this Agreement to the contrary no provision of this Agreement is
intended, nor shall it be construed, to reduce or in any way restrict
any benefit to which Executive may be entitled under any agreement,
plan, arrangement, or program providing benefits for Executive.
(b) Entire Agreement. This Agreement constitutes the entire
agreement between the parties with respect to the subject matter of
this Agreement and supersedes all prior written and oral and all
contemporaneous oral agreements and understandings with respect to the
subject matter of this Agreement.
(c) Notices. Any notice or request to be given hereunder by
any party to the other shall be in writing and shall be deemed to have
been duly given on the next business day after the same is sent, if
delivered personally or sent by telecopy or overnight delivery, or five
calendar days after the same is sent, if sent by registered or
certified mail, return receipt requested, postage prepaid, as set forth
below, or to such other persons or addresses as may be designated in
writing in accordance with the terms hereof by the party to receive
such notice.
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If to the Company, to:
Hungarian Telephone and Cable Corp.
100 First Stamford Place, Suite 204
Stamford, CT 06902
Facsimile No.: 203/348-9128
Attn: General Counsel
with a required copy to:
Fleischman and Walsh, L.L.P.
1400 Sixteenth Street, N.W.
Washington, D.C. 20036
Facsimile No.: 202/745-0916
Attn: Jeffry L. Hardin
If to Executive, to:
the address or facsimile number
for Executive as set forth
in the Company's records
with a required copy to:
Covington and Burling
1201 Pennsylvania Ave., N.W.
Washington, D.C. 20044
Facsimile No.: 202/662-6291
Attn: Paul Berman, Esq.
(d) Governing Law; Forum;Consent to Jurisdiction. This
Agreement shall be governed by and construed in accordance with the
laws of the State of New York without giving effect to the principles
of conflict of laws thereof. Each of the parties to this Agreement
hereby irrevocably and unconditionally (i) consents to submit to the
exclusive jurisdiction of the courts of the State of New York for any
proceeding arising in connection with this Agreement (and each such
party agrees not to commence any such proceeding, except in such
courts), (ii) to the extent such party is not a resident of the State
of New York, agrees to appoint an agent in the State of New York as
such party's agent for acceptance of legal process in any such
proceeding against such party with the same legal force and validity as
if served upon such party personally within the State of New York, and
to notify promptly each other party hereto of the name and address of
such agent, (iii) waives any objection to the laying of venue of any
such proceeding in the courts of the State of New York, and (iv)
waives, and agrees not to plead or to make, any claim that any such
proceeding brought in any court of the State of New York has been
brought in an improper or otherwise inconvenient forum.
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(e) Counterparts. This Agreement may be executed in one or
more counterparts, and each of such counterparts shall for all purposes
be deemed to be an original, but all such counterparts together shall
constitute but one instrument.
(f) Executive's Successors. This Agreement and all
rights of Executive hereunder shall inure to the benefit of,
and be enforceable by, Executive's personal or legal
representatives, executors, administrators, successors,
heirs, distributees, devisees and legatees.
(g) Assignment. Neither this Agreement, nor the
rights and obligations hereunder, may be assigned by either
party without the prior written consent of the other party.
(h) Parties in Interest. Nothing in this Agreement, expressed
or implied, is intended to confer on any person other than the parties
hereto or their respective successors or assigns, any rights, remedies,
obligations or liabilities under or by reason of this Agreement.
(i) Amendment. This Agreement may not be amended
except by an instrument in writing signed on behalf of each
of the parties.
(j) Extension; Waiver. Either party to this Agreement may (a)
extend the time for the performance of any of the obligations or other
acts of the other party to this Agreement or (b) waive compliance by
the other party with any of the agreements or conditions contained
herein or any breach thereof. Any agreement on the part of a party to
any such extension or waiver shall be valid only if set forth in an
instrument in writing signed on behalf of such party.
(k) Severability. The provisions of this Agreement are
severable and, if any provision of this Agreement is determined to be
invalid or unenforceable by any court of competent jurisdiction, such
provision (in any other jurisdiction) and the other provisions hereof
(in any jurisdiction) shall not be rendered otherwise invalid or
unenforceable and such provision shall be deemed to be modified to the
extent necessary to render it legal, valid and enforceable, and if no
such modification shall render it legal, valid and enforceable, then
this Agreement shall be construed as if not containing the provision
held to be invalid, and the rights and obligations of the parties shall
be construed and enforced accordingly.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
HUNGARIAN TELEPHONE AND CABLE
CORP.
By:/s/ James G. Morrison
---------------------------
James G. Morrison
President and Chief
Executive Officer
ANDREW E. NICHOLSON
/s/ Andrew E. Nicholson
------------------------------
EXHIBIT 10.83
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
This Amended and Restated Employment Agreement (this "Agreement") is
made and entered into as of this 17th day of October, 1996, by and between
Hungarian Telephone and Cable Corp., a corporation organized under the laws of
the State of Delaware, United States of America (the "Company") and Daniel R.
Vaughn ("Executive").
RECITALS:
A. The Company and Executive are parties to that certain
Employment Agreement, dated December 18, 1995 ("1995 Agreement").
B. On July 26, 1996, Executive's position with the Company
was changed from that of Director of Operations to that of Vice
President and Chief Operating Officer, thereby significantly
increasing Executive's duties and responsibilities.
C. The parties desire to amend and restate the 1995 Agreement to set
forth the terms and conditions under which Executive shall continue to serve in
the above-stated capacity of Vice President and Chief Operating Officer of the
Company.
NOW, THEREFORE, in consideration of the respective covenants and
agreements of the parties set forth herein, it is agreed as follows:
1. Employment and Duties. The Company agrees to employ Executive and
Executive accepts the employment, subject to the terms and conditions herein, to
serve as Vice President and Chief Operating Officer of the Company. Executive
shall report and be responsible solely to the President and Chief Executive
Officer of the Company. Executive's duties and responsibilities shall include
the duties and responsibilities as set forth in the Company's bylaws from time
to time in effect and such other duties and responsibilities as the President
and Chief Executive Officer may from time to time reasonably assign Executive,
in all cases consistent with Executive's position. Executive shall perform
faithfully the executive duties assigned to him to the best of his ability.
2. Place of Employment. Executive shall be employed at
the Company's offices located at Kiralyhago u.2, Budapest,
Hungary.
3. Term. The term of employment under this Agreement
shall continue through December 31, 1999, unless earlier
terminated in accordance with the terms of this Agreement (the
"Employment Period").
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4. Effective Date. The effective date of this Agreement
is July 26, 1996, the date on which Executive was elected Vice
President and Chief Operating Officer by the Board of Directors
of the Company (the "Board").
5. Annual Salary. Executive will receive an annual base salary of One
Hundred Forty-Five Thousand Dollars ($145,000), payable in equal monthly
installments on the last day of each month. The Company shall be entitled to
deduct or withhold all taxes and charges which the Company may be required by
law to deduct or withhold therefrom. The Compensation and Stock Option Committee
of the Board (the "Compensation Committee") shall annually review Executive's
base salary in light of the performance of Executive and, if it finds
Executive's performance to be satisfactory, the Compensation Committee shall
increase such base salary by an amount it determines to be appropriate, but in
no event shall such increase be less than the annual change in the United States
Consumer Price Index for the most recently reported twelve (12) month period.
6. Share Award. In consideration of the Executive's (i) past services
to the Company and (ii) delivery of the aggregate par value therefor, the
Company hereby sells and assigns Executive seventeen thousand five hundred
(17,500) shares (the "Shares") of the Company's common stock, par value $.001,
("Common Stock"), which will be promptly registered with the United States
Securities and Exchange Commission (the "Commission") on Form S-8. Executive's
rights to the Shares will vest and certificates evidencing ownership of the
Shares will be released according to the following schedule, provided that if
Executive has not maintained continuous service with the Company from the date
hereof until the related vesting date (other than in circumstances set forth in
Paragraphs 19(b) and (c) all as yet unvested Shares shall be forfeited and
cancelled, so no certificate(s) therefor shall be released to the Executive:
Release Date Shares released
October 10, 1996 8,750
October 10, 1997 8,750
Prior to the scheduled release date of any installment of Shares, such
unreleased Shares may not be sold, assigned, transferred, pledged, or otherwise
encumbered by Executive. Executive hereby grants the Company an option to
purchase such number of Shares released to Executive as shall be sufficient to
allow Executive to pay taxes due on the released Shares, provided such purchase
by the Company does not violate the Company's certificate of incorporation, its
bylaws or the Delaware General Corporation Law.
7. Renegotiation Bonus. As consideration of
(i) Executive's agreement to amend and restate the 1995 Agreement
and to waive his rights to certain benefits under such agreement
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and (ii) delivery of the aggregate par value thereof, the Company hereby sells
and assigns Executive one thousand five hundred (1,500) shares of Common Stock,
which Shares will be promptly registered with the Commission on Form S-8. The
shares of Common Stock due Executive under this grant shall be delivered to
Executive as soon as reasonably practicable following the execution of this
Agreement.
8. Annual Housing Allowance. Executive will receive an annual housing
allowance (the "Housing Allowance") of Thirty-Six Thousand Dollars ($36,000),
payable in equal monthly installments. The Compensation Committee shall review
the amount of the Housing Allowance on an annual basis, and may increase the
amount based on cost of living increases, if applicable.
9. Annual Stock Options. Executive shall be entitled to
receive an award of options to purchase a target of twenty
thousand (20,000) shares of Common Stock annually (the
"Options").
(a) Calendar Year 1996. A determination of the Options to
which Executive will be entitled for the calendar year 1996 shall be
based on a combination of the annual line growth (representing 25% of
the grant) and the Operating Income Before Interest, Taxes,
Depreciation and Amortization (representing 75% of the grant). The
payout formula is as follows:
Less than 90% of objective = 0% of award
90% to 94.9% of objective = 70% of award
95% to 99.9% of objective = 85% of award
100% to 104.9% of objective = 100% of award
105% to 110% of objective = 115% of award
The objectives for annual line growth and Operating Income Before
Interest, Taxes, Depreciation and Amortization are those previously
established and agreed to by Executive and the Company in the 1995
Agreement and a letter dated May 1, 1996. The Options will be priced at
the lowest closing sale price during either January or December of
1996. The terms of the Options shall be set forth in a written stock
option contract and shall contain an exercise period beginning on April
1, 1997 and ending on March 31, 2002. The shares of Common Stock
purchased through such Options shall be delivered to Executive as soon
as reasonably practicable following written notice of exercise.
(b) Calendar Years 1997 through 1999. For the years 1997
through 1999, Executive will be entitled to participate in the
Company's 1992 Incentive Stock Option Plan, as amended (the "ISO
Plan"). Under the ISO Plan, Executive shall be entitled to receive an
award of options to purchase a target of twenty thousand (20,000)
shares of Common Stock annually on terms to be established by the
Compensation
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Committee. The Compensation Committee shall establish such terms,
including exercise price, by March 31st of the year following the year
in which such Options are attributable. In any given year, Executive
may receive an award that is less than, equal to, or greater than the
target award, depending upon the Company's performance measured against
annual financial targets agreed to by and between Executive and the
Compensation Committee.
10. Insurance. The Company will provide Executive, his
spouse and his minor dependents with health insurance coverage
under a fully comprehensive international scheme.
11. Automobile. The Company will provide Executive with an
automobile to be leased or purchased and maintained by the
Company.
12. Annual Leave. Executive will be entitled to thirty
(30) days annual paid vacation and a home leave allowance of Five
Thousand Dollars ($5,000).
13. Company Business Allowance. Section 911 of the Internal Revenue
Code provides an exemption for the payment of income taxes on $70,000 of
"foreign earned income," provided such taxpayer is present in a foreign country
or foreign countries (and not present in the United States) during at least
three hundred and thirty (330) full days in any 12 consecutive month period for
which the exemption is claimed. Executive agrees to reserve for Company business
fifteen (15) days annually of the time he is allowed to be in the United States
without incurring a loss of the above-stated tax exemption. If Executive is
required by Company business to be present in the United States for more than
fifteen (15) days in any calendar year and, thereby, loses or reduces tax
exemptions to which he would otherwise have been entitled, the Company will
reimburse Executive for any additional tax liability he incurs as a result of
such lost or reduced tax exemptions.
14. Hungarian Taxes. The Company will reimburse Executive
for (a) all Hungarian taxes, work permits, or other governmental
assessments that relate to his employment by the Company and (b)
any additional U.S. taxes resulting from such reimbursement.
15. Covenant Not to Compete. Executive hereby agrees that during the
term of this Agreement he will not, either through any kind of ownership (other
than ownership of securities of a publicly held corporation of which Executive
owns less than five percent (5%) of any class of outstanding securities), or as
a director, officer, principal, agent, employee, employer, advisor, consultant,
co-partner, or in any individual or representative capacity whatever, either for
his own benefit or for the benefit of any other person, firm, or corporation,
without the prior written consent of a duly authorized officer of the Company,
compete with the Company by engaging in any act, including, but
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not limited to, any of the following: (a) canvass, solicit, accept, or perform
any type of work performed by the Company for any "customer" (as hereinafter
defined) of the Company; (b) develop, design, market any services that may be
sold by the Company during the term of this Agreement; (c) request or advise any
firm to withdraw, curtail, or cancel its business with the Company; (d) give or
attempt to give any person, partnership, or corporation the right to solicit or
canvass any customer for the performance of services provided by the Company;
and (e) induce or attempt to influence any employee of the Company or any
employee of any customer to terminate his employment with the view toward
competing with the Company or any customer. As used herein, the term "customer"
includes any of the Company customers at any time during the term of this
Agreement.
16. Confidential Information.
(a) Nondisclosure. Executive expressly covenants and agrees
that he will not during the term of this Agreement or at any time after
the termination hereof, irrespective of the time, manner, or cause of
termination, reveal, divulge, disclose, or communicate to any person,
firm, or corporation, other than authorized officers, directors, and
employees of the Company, in any manner whatsoever, any "confidential
information" (as hereinafter defined) of the Company that would be
inconsistent with the position held by Executive or the duties being
performed by Executive at the direction of the Company.
(b) Return of Confidential Information and Other Property.
Upon termination of this Agreement, Executive will surrender to the
Company all confidential information including, without limitation, all
lists, charts, schedules, reports, financial statements, books and
records, and all copies thereof, of the Company and all other property
belonging to the Company whatsoever. As used herein, "confidential
information" means information disclosed to or known by Executive as a
consequence of or through his employment for the Company, not generally
known in the business in which the Company is or may become engaged,
about the Company, its business, products and processes.
17. Breach of Covenant Not to Compete and Confidentiality Provision.
Executive agrees that a substantial violation on his part of any covenant
contained in Paragraphs 15 and 16 above will cause such damage to the Company as
will be irreparable and for that reason, Executive further agrees that the
Company shall be entitled as a matter of right, to an injunction out of any
court of competent jurisdiction, restraining any further violation of said
covenants by Executive, his employer, employees, partners, or agents. Such right
to injunction shall be cumulative and in addition to whatever other remedies the
Company may have, including, specifically, recovery of liquidated and additional
damages. Executive expressly acknowledges and agrees that the
<PAGE>
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respective covenants and agreements shall be construed in such a manner as to be
enforceable under applicable laws if a more limited scope of time is determined
by a court or competent jurisdiction to be required.
18. Indemnification. The Company agrees that if Executive is made a
party, or is threatened to be made a party, to any action, suit or proceeding,
whether civil, criminal, administrative or investigative (a "Proceeding"), by
reason of the fact that he is or was a director, officer or employee of the
Company, Executive shall be indemnified and held harmless by the Company to the
fullest extent legally permitted or authorized by the Company's certificate of
incorporation or bylaws or resolutions of the Board or, if greater, by the laws
of the State of Delaware, against all cost, expense, liability and loss
(including, without limitation, attorney's fees, judgments, fines, ERISA excise
taxes or penalties and amounts paid or to be paid in settlement) reasonably
incurred or suffered by Executive in connection therewith. The Company agrees to
continue and maintain a directors' and officers' liability insurance policy
covering Executive to the extent the Company provides such coverage for any of
its other executive officers.
19. Termination.
(a) Reasons for Termination. The employment of Executive with
the Company shall terminate automatically upon Executive's death and
may be terminated by written notice (i) by the Company, upon
Executive's disability which renders him unable to perform his usual
and customary duties for a period of 180 consecutive days; (ii) by the
Company, with or without "cause" (as hereinafter defined); (iii) by
Executive, if he suffers a demotion or a lower status with the Company
other than for cause; or (iv) by Executive, in the event of a "change
in control" (as hereinafter defined), whether or not Executive suffers
a demotion or a lower status with the Company. For purposes of this
Agreement, "cause" shall mean (i) a failure by Executive to
substantially perform Executive's reasonable and legal duties and as
defined by goals established by the Board and agreed to by Executive,
other than a failure resulting from Executive's complete or partial
incapacity due to physical or mental illness or impairment, (ii) a
willful act by Executive that constitutes gross misconduct and that is
injurious to the Company, (iii) a willful breach by Executive of a
material provision of this Agreement, or (iv) a material and willful
violation of a federal or state law or regulation applicable to the
business of the Company. No act, or failure to act, by Executive shall
be considered "willful" unless committed without good faith and without
a reasonable belief that the act or omission was in the Company's best
interest. For purposes of this Agreement, a "change of control" shall
be deemed to have occurred if (1) any "person" (as such term is used in
Sections 13(d) and
<PAGE>
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14(d) of the U.S. Securities and Exchange Act (the "Exchange Act")),
other than Citizens Utilities Company or its affiliates (together,
"Citizens"), is or becomes the "beneficial owner" (as defined in Rule
13d-3 under the Exchange Act), directly or indirectly, of securities of
the Company representing thirty-five percent (35%) or more of the
combined voting power (with respect to the election of directors) of
the Company's then outstanding securities; (2) at any time after the
execution of this Agreement, a majority of the Board shall be replaced,
over a two-year period, from the directors who constituted the Board at
the beginning of such period, and such replacement shall not have been
approved by either two-thirds (2/3) of the Board as constituted at the
beginning of such period or Citizens; (3) the consummation of a merger
or consolidation of the Company with or into any other corporation
(other than Citizens), other than a merger or consolidation which would
result in the voting securities of the Company outstanding immediately
prior thereto continuing to represent (either by remaining outstanding
or by being converted into voting securities of the surviving entity)
more than sixty-five percent (65%) of the combined voting power (with
respect to the election of directors) of the securities of the Company
or of such surviving entity outstanding immediately after such merger
or consolidation; or (4) the consummation of a plan of complete
liquidation of the Company or of an agreement for the sale or
disposition by the Company of all or substantially all of the Company's
business or assets.
(b) Termination Benefits. If Executive's employment is
terminated prior to the expiration of the term of this Agreement, for
any reason noted above (other than for "cause"), Executive will be
entitled to receive the following benefits as severance (the "Severance
Benefits"):
(i) a lump sum payment equal to nine (9) months'
salary and nine (9) months' Housing Allowance at
Executive's then-current annual salary and Housing
Allowance levels;
(ii) payment of any salary, expenses, allowances
and benefits accrued by Executive up to the date
of the termination;
(iii) the immediate vesting and release of any
unvested unreleased portion of the shares of
Common Stock granted hereunder, without
restriction; and
(iv) a pro-rata share of stock options, if any,
that are awardable under any incentive stock
option plan (in addition to the ISO Plan)
established by the Company.
<PAGE>
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(c) Benefits in the Event of Executive's Death. Except as set
forth below, if Executive's employment terminates automatically in the
event of Executive's death, Executive's estate will be entitled to
receive the Severance Benefits. The Company may, at its option,
maintain a life insurance policy for Executive in an amount deemed to
be appropriate by the Board and designating Executive's estate as the
beneficiary. If the Company elects to maintain such life insurance and
the policy amount equals or exceeds the value of the Severance Benefits
(as determined by the Board), Executive's estate shall only be entitled
to receive the proceeds of the insurance policy. If the policy amount
is less than the value of the Severance Benefits, the Company shall pay
to Executive's estate an amount equal to the difference between the
value of the Severance Benefits and the amount to which the estate
would be entitled under the insurance policy. The Company shall
determine the value of the Severance Benefits as soon as practicable
after Executive's death but in no event later than thirty (30) days
thereafter.
(d) Date of Termination; Provision of Severance Benefits. The
date of termination of Executive's employment by the Company under this
Paragraph 19 shall be one (1) month after receipt by Executive of
written notice of termination, provided, however, that if the
termination is for cause the date of termination shall be the date
specified in the notice of termination or if no date is specified then
the date on which such notice is received by the Executive. The date of
termination by Executive under this Paragraph 19 shall be one (1) month
after receipt by the Company of written notice of termination. All
benefits to which Executive is entitled under subparagraph (b) hereof
shall be provided on the date of termination. In the case of automatic
termination in the event of Executive's death, the benefits shall be
provided no later than thirty (30) days from the date of Executive's
death.
20. Miscellaneous.
(a) Rights Under Plans and Programs. Notwithstanding anything
in this Agreement to the contrary no provision of this Agreement is
intended, nor shall it be construed, to reduce or in any way restrict
any benefit to which Executive may be entitled under any agreement,
plan, arrangement, or program providing benefits for Executive.
(b) Entire Agreement. This Agreement constitutes the entire
agreement between the parties with respect to the subject matter of
this Agreement and supersedes all prior written and oral and all
contemporaneous oral agreements and understandings with respect to the
subject matter of this Agreement.
<PAGE>
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(c) Notices. Any notice or request to be given hereunder by
any party to the other shall be in writing and shall be deemed to have
been duly given on the next business day after the same is sent, if
delivered personally or sent by telecopy or overnight delivery, or five
calendar days after the same is sent, if sent by registered or
certified mail, return receipt requested, postage prepaid, as set forth
below, or to such other persons or addresses as may be designated in
writing in accordance with the terms hereof by the party to receive
such notice.
If to the Company, to:
Hungarian Telephone and Cable Corp.
100 First Stamford Place, Suite 204
Stamford, CT 06902
Facsimile No.: 203/348-9128
Attn: General Counsel
with a required copy to:
Fleischman and Walsh, L.L.P.
1400 Sixteenth Street, N.W.
Washington, D.C. 20036
Facsimile No.: 202/745-0916
Attn: Jeffry L. Hardin
If to Executive, to:
the address or facsimile number
for Executive as set forth
in the Company's records
with a required copy to:
Covington and Burling
1201 Pennsylvania Ave., N.W.
Washington, D.C. 20044
Facsimile No.: 202/662-6291
Attn: Paul Berman, Esq.
(d) Governing Law; Forum;Consent to Jurisdiction. This
Agreement shall be governed by and construed in accordance with the
laws of the State of New York without giving effect to the principles
of conflict of laws thereof. Each of the parties to this Agreement
hereby irrevocably and unconditionally (i) consents to submit to the
exclusive jurisdiction of the courts of the State of New York for any
proceeding arising in connection with this Agreement (and each such
party agrees not to commence any such proceeding, except in such
courts), (ii) to the extent such party is not a resident of the State
of New York, agrees to appoint an agent in the State of New York as
such party's agent for acceptance of legal process in any such
proceeding against
<PAGE>
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such party with the same legal force and validity as if served upon
such party personally within the State of New York, and to notify
promptly each other party hereto of the name and address of such agent,
(iii) waives any objection to the laying of venue of any such
proceeding in the courts of the State of New York, and (iv) waives, and
agrees not to plead or to make, any claim that any such proceeding
brought in any court of the State of New York has been brought in an
improper or otherwise inconvenient forum.
(e) Counterparts. This Agreement may be executed in one or
more counterparts, and each of such counterparts shall for all purposes
be deemed to be an original, but all such counterparts together shall
constitute but one instrument.
(f) Executive's Successors. This Agreement and all
rights of Executive hereunder shall inure to the benefit of,
and be enforceable by, Executive's personal or legal
representatives, executors, administrators, successors,
heirs, distributees, devisees and legatees.
(g) Assignment. Neither this Agreement, nor the
rights and obligations hereunder, may be assigned by either
party without the prior written consent of the other party.
(h) Parties in Interest. Nothing in this Agreement, expressed
or implied, is intended to confer on any person other than the parties
hereto or their respective successors or assigns, any rights, remedies,
obligations or liabilities under or by reason of this Agreement.
(i) Amendment. This Agreement may not be amended
except by an instrument in writing signed on behalf of each
of the parties.
(j) Extension; Waiver. Either party to this Agreement may (a)
extend the time for the performance of any of the obligations or other
acts of the other party to this Agreement or (b) waive compliance by
the other party with any of the agreements or conditions contained
herein or any breach thereof. Any agreement on the part of a party to
any such extension or waiver shall be valid only if set forth in an
instrument in writing signed on behalf of such party.
(k) Severability. The provisions of this Agreement are
severable and, if any provision of this Agreement is determined to be
invalid or unenforceable by any court of competent jurisdiction, such
provision (in any other jurisdiction) and the other provisions hereof
(in any jurisdiction) shall not be rendered otherwise invalid or
unenforceable and such provision shall be deemed to be modified to the
extent necessary to render it legal, valid and enforceable, and if no
such modification shall render it
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legal, valid and enforceable, then this Agreement shall be construed as
if not containing the provision held to be invalid, and the rights and
obligations of the parties shall be construed and enforced accordingly.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
HUNGARIAN TELEPHONE AND CABLE
CORP.
By:/s/ James G. Morrison
---------------------------
James G. Morrison
President and Chief
Executive Officer
DANIEL R. VAUGHN
/s/ Daniel R. Vaughn
------------------------------
EXHIBIT 23.1
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors of
Hungarian Telephone and Cable Corp.
We consent to incorporation by reference in the Registration Statement on
Form S-8 of Hungarian Telephone and Cable Corp. of our report dated March 29,
1996, relating to the consolidated balance sheet of Hungarian Telephone and
Cable Corp. and Subsidiaries as of December 31, 1995, and the related
consolidated statements of operations, stockholders' equity, and cash flows for
the year then ended, which report appears in the December 31, 1995 annual report
on Form 10-K of Hungarian Telephone and Cable Corp.
KPMG Peat Marwick LLP
/s/KPMG Peat Marwick LLP
- ----------------------------
New York, New York
October 16, 1996
EXHIBIT 23.2
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors and Stockholders
of Hungarian Telephone and Cable Corp.
We hereby consent to the incorporation by reference in this
Registration Statement on Form S-8 of our report dated March 27,
1995, relating to the consolidated financial statements of
Hungarian Telephone and Cable Corp. and subsidiaries, appearing
in the Company's Annual Report on Form 10-K for the year ended
December 31, 1995.
BDO Seidman, LLP
/s/BDO Seidman, LLP
- ------------------------------
New York, New York
October 16, 1996
