Exhibit 10.8
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
This Amended and Restated Employment Agreement (this "Agreement") is
made and entered into as of January 31, 2001, 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 ▇▇▇ ▇▇▇▇▇▇▇
("Executive").
[RECITALS:]
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 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 in Budapest, Hungary.
3. Term. The term of employment under this Agreement shall commence on
January 1, 1999 and continue through December 31, 2001, unless earlier
terminated in accordance with the terms of this Agreement (the "Employment
Period"). Executive shall have an option to extend the term of this Agreement to
December 31, 2002 on substantially the same terms as set forth in this
Agreement. Executive shall notify the Company of his decision to exercise such
option by June 1, 2001.
4. Annual Salary. Executive is receiving for 2001 a monthly salary
based on an annualized rate of Two Hundred Fifty Thousand Dollars ($250,000).
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 - 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.
5. Option Award. Pursuant to the 1998 Employment Agreement, the Company
has awarded Executive options to purchase 200,000 shares of the Company's common
stock from the Company's 1992 Incentive Stock Option Plan, as amended (the
"Plan"). Options to purchase 100,000 of such shares have vested and options to
purchase the remaining 100,000 shares shall vest in 50,000 increments on June
30, 2000 and December 31, 2000, respectively, provided Executive has maintained
continuous service with the Company through such dates. Provided that Executive
has maintained continuous service with the Company through January 1, 2001, the
Company shall grant Executive options to purchase an additional 100,000 shares
("2001 Tranche Options") of the Company's common stock from the Plan on January
2, 2001. If Executive exercises his option to extend his term of employment
through December 31, 2002 and has maintained continuous service with the Company
through January 1, 2002, the Company shall grant options to purchase another
100,000 shares ("2002 Tranche Options") of the Company's common stock from the
Plan on January 2, 2002. Executive's rights to the 2001 Tranche Options and the
2002 Tranche Options will vest 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 options shall be
forfeited and cancelled:
Vesting Date Options Vested
------------ --------------
June 30, 2001 50,000
December 31, 2001 50,000
June 30, 2002 50,000
December 31, 2002 50,000
The options shall have a five-year exercise period. The initial
purchase price per share for the 2001 Tranche Options and the 2002 Tranche
Options shall be the fair market value per share of the Company's common stock
(as determined by the Plan) on the date of such grants.
6. Annual Performance Bonus. Executive shall be entitled to receive an
annual cash bonus if the Company achieves certain pre-determined objectives to
be mutually agreed upon by Executive and the Compensation Committee. The
Committee established the 2000 objectives on January 12, 2000. Such bonus for
2000, if any, shall be payable by April 30, 2001 following the completion of the
Company's audited financial statements for 2000. The Committee shall set the
2001 bonus objectives by January 31, 2001. If Executive exercises his right to
extend this Agreement through December 31, 2002, the Committee shall set the
2002 bonus objectives by January 31, 2002. The bonus for 2001 and 2002, if any,
shall be payable by April 30th of the year following the year in which the bonus
is attributable (the "Bonus Year") after the completion of the Company's audited
financial statements for the Bonus Year, provided that if the Bonus Year is
Executive's last year of employment, then the bonus, if any, shall be payable by
December 31st of the Bonus Year subject to an agreement between Executive and
the Committee on a final bonus
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settlement upon the completion of the audited financial statements for the Bonus
Year. For any year in which the Company's performance reaches at least 75% of
such year's objectives, Executive shall be entitled to receive the following
bonus:
75%: $67,500 101%: 90,900
76%: 68,400 102%: 91,800
77%: 69,300 103%: 92,700
78%: 70,200 104%: 93,600
79%: 71,100 105%: 94,500
80%: 72,000 106%: 95,400
81%: 72,900 107%: 96,300
82%: 73,800 108%: 97,200
83%: 74,700 109%: 98,100
84%: 75,600 110%: 99,000
85%: 76,500 111%: 99,900
86%: 77,400 112%: 100,800
87%: 78,300 113%: 101,700
88%: 79,200 114%: 102,600
89%: 80,100 115%: 103,500
90%: 81,000 116%: 104,400
91%: 81,900 117%: 105,300
92%: 82,800 118%: 106,200
93%: 83,700 119%: 107,100
94%: 84,600 120%: 108,000
95%: 85,500 121%: 108,900
96%: 86,400 122%: 109,800
97%: 87,300 123%: 110,700
98%: 88,200 124%: 111,600
99%: 89,100 125% or more 112,500
100%: $90,000
7. 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.
8. Employee Taxes. Executive shall be solely responsible for any and
all of Executive's (i) income and (ii) social security, medicare or any other
miscellaneous taxes applicable to any salary, bonus, option grant, allowance,
severance benefit or any other type of compensation or benefit received by
Executive pursuant to this Agreement which is subject to taxation and payable by
Executive to any governmental taxing authority including, but not limited to,
any governmental taxing authority in the Republic of Hungary, the United States
of America or Denmark.
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9. Pension Account. The Company is making, and shall continue to make
during Executive's term of employment, a monthly contribution based on an annual
rate of $30,000 to the Danish pension account of Executive which account
Executive may not withdraw therefrom until the retirement of Executive.
10. Insurance. If requested by Executive, the Company shall provide
Executive and his spouse with health insurance coverage under a fully
comprehensive international scheme.
11. Automobile. The Company will provide Executive with the use of a
private Company automobile to be maintained by the Company.
12. Vacation. Executive will be entitled to thirty (30) business days
annual paid vacation.
13. Work Permits. With the Company's assistance, Executive shall obtain
and keep current any Hungarian work permits, residency permits or other similar
licenses as may be required by Hungarian law as a result of Executive's
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 the Company's Board of Directors, 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.
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.
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(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
(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 to 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 upon 90 days notice; (iv) by Executive, if he suffers a
demotion or a lower status with the Company other than for cause; or
(v) 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
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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 Paragraphs 13(d) and 14(d)
of the U.S. Securities and Exchange Act (the "Exchange Act")), other
than (x) Citizens Utilities Company and/or any one or more direct or
indirect wholly-owned subsidiary of Citizens Utilities Company
(together, "Citizens"), or (y) Tele Danmark A/S and/or any one or more
direct or indirect wholly-owned subsidiary of Tele Danmark A/S
(together, Tele Danmark"), 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 or
Tele Danmark; (3) the consummation of a merger or consolidation of the
Company with or into any other corporation (other than with Citizens or
Tele Danmark), 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 pursuant to Paragraph 18(a) prior to the expiration of the
term of this Agreement for any reason noted above other than by the
Company for "cause" or by Executive upon 90 days notice as set forth in
clause (iii) of Paragraph 18(a), Executive will be entitled to receive
the following benefits as severance (the "Severance Benefits"):
(i) a lump sum payment equal to six (6) months'
salary at Executive's then-current annual salary
level;
(ii) payment of any salary, expenses, allowances
and benefits accrued by Executive up to the date of
the termination; and
(iii) the immediate vesting and release of any
unvested unreleased portion of the options granted as
of the date of such termination pursuant to this
agreement, without restriction.
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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 to 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 except in
the case of termination by Executive as set forth in clause (iii) of
Paragraph 18(a) pursuant to which Executive is required to give the
Company 90 days notice. All benefits to which Executive is entitled
under subparagraph (b) hereof shall be provided within thirty (30) days
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.
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
Attn: General Counsel
If to Executive, to:
the address or facsimile number
for Executive as set forth
in the Company's records
with a required copy to:
(to be provided by Executive)
(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.
(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.
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(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) Prior Employment Agreement. This Agreement amends and
restates the 1998 Employment Agreement.
(j) Amendment. This Agreement may not be amended except
by an instrument in writing signed on behalf of each of the parties.
(k) 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.
(l) 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.
HUNGARIAN TELEPHONE AND CABLE CORP.
By: /s/▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Chairman of the Compensation -
Stock Option Committee
▇▇▇ ▇▇▇▇▇▇▇
/s/▇▇▇ ▇▇▇▇▇▇▇
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