EXHIBIT 10.89
FIRST AMENDMENT TO STOCK OPTION AGREEMENT
THIS FIRST AMENDMENT TO STOCK OPTION AGREEMENT ("First Amendment") is
made and entered into effective as of October 18, 1996, by and between CU
CapitalCorp., a Delaware corporation ("CUCC"), and Hungarian Telephone and Cable
Corp., a Delaware corporation (the "Company").
W I T N E S S E T H
WHEREAS, CUCC and the Company are parties to that certain Stock Option
Agreement dated as of May 31, 1995 (the "Original Agreement");
WHEREAS, requisite Stockholder Approval was obtained on September 12,
1996, and has not been rescinded, and no further action by the stockholders of
the Company is required in connection with the Original Agreement or this First
Amendment;
WHEREAS, CUCC or an affiliate thereof has furnished or has agreed to
furnish additional financial support to the Company and/or its subsidiaries,
including through the issuance to Citicorp North America, Inc. ("CNA") of a
letter of comfort and a letter indemnifying CNA against all events of political,
currency exchange and other cross-border risks in connection with a $75 million
Secured Term Loan Credit Facility for the Company from CNA, the issuance to
Postabank Rt. of a letter of support in connection with a $170 million Credit
Facility for the Hungarian subsidiaries of the Company from Postabank, and the
provision of assurance to CNA of the repayment by the Company of any and all
amounts owed to CNA by October 15, 1996 in connection with the CNA Credit
Facility;
WHEREAS, CUCC or an affiliate thereof has negotiated the extension of a
$750,000 contingent commitment fee payable by the Company to CNA in connection
with the CNA Credit Facility and a $2,000,000 interest credit payable to a
subsidiary of the Company by Postabank in connection with the Postabank Credit
Facility;
WHEREAS, CUCC has insisted, as compensation for providing such
additional financial support to the Company and its subsidiaries and for
obtaining such financial benefits for the Company and its subsidiaries, that the
Company (i) extend the exercise periods of the Warrant, the Two-Year Option, the
Three- Year Option and the Four-Year Option to coincide with the exercise period
of the Five-Year Option, (ii) grant to CUCC the option to purchase an additional
875,850 shares of Common Stock at an exercise price of $12.75, exercisable at
any time through September 12, 2000, and (iii) pay to CUCC $750,000;
WHEREAS, the Company believes that the receipt of such additional
financial support from CUCC and the receipt of the
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financial benefits arising from CUCC's negotiations with CNA and Postabank was
and would be in the best interests of all stockholders of the Company and,
therefore, in order to compensate CUCC for obtaining such financial benefits for
the Company and its subsidiaries and for providing such additional financial
support in connection with the CNA Credit Facility, and to induce CUCC to
proceed to provide such additional financial support in connection with the
Postabank Credit Facility, the Company is willing (i) to extend the exercise
periods of the Warrant, the Two-Year Option, the Three-Year Option and the Four-
Year Option to coincide with the exercise period of the Five-Year Option, (ii)
concurrently with the execution of this First Amendment, to enter into a Third
Stock Option Agreement with CUCC granting to CUCC the option to purchase 875,850
additional shares of Common Stock (the "Third Stock Option Agreement"), and
(iii) to pay CUCC $750,000; and
WHEREAS, the parties now desire to amend the Original Agreement through
execution of this First Amendment.
NOW, THEREFORE, in consideration of the premises hereof, the parties
hereby agree as follows:
1. The second and third sentences of Sections 1(a), (b) and (c) of the
Original Agreement are each hereby amended to provide for a five-year exercise
period for the Two-Year Option, the Three-Year Option and the Four-Year Option,
such that in each case the exercise period of such Stock Options would be "from
the date of Stockholder Approval through five (5) years after the date of
Stockholder Approval," and to provide for exercise of any or all of the Two-Year
Option, the Three-Year Option and the Four-Year Option by written notice to the
Company "at any time and from time to time during such five-year exercise
period."
2. Clause (B) of Section 3(b)(iv) of the Original
Agreement is hereby amended to read in its entirety as follows:
"(B) shares of Common Stock issued upon any exercise of any option or
warrant to purchase shares of Common Stock granted to CUCC or any
affiliate thereof."
3. The Company hereby confirms that the condition to exercisability of
the Stock Options set forth in Section 1(f) of the Original Agreement has been
satisfied and, therefore, that all of the Stock Options are exercisable in
accordance with the terms of the Original Agreement, as amended by this First
Amendment.
4. The Company hereby agrees that shares of Common Stock and options to
acquire shares of Common Stock that are issued or granted to CUCC or any
affiliate thereof as compensation for providing financial support or other
services to the Company,
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including without limitation the option granted to CUCC pursuant to the Third
Stock Option Agreement, together with any additional stock options granted to
CUCC or shares of Common Stock acquired by CUCC pursuant to Section 4.3(d) of
the Master Agreement to the extent relating to such compensation shares and
stock options, shall be excluded and not considered when calculating the number
of Three-Year Option Shares, Four-Year Option Shares and Five- Year Option
Shares in accordance with the Original Agreement.
5. All other provisions of the Original Agreement shall
remain in full force and effect, except as expressly amended
herein.
6. Any capitalized term used in this First Amendment that is not
otherwise defined herein shall have the same meaning given to it in the Original
Agreement.
7. This First Amendment shall in all respects be governed by and
construed in accordance with the internal laws of the State of Delaware (except
that no effect shall be given to any conflicts of law principles of the State of
Delaware that would require the application of the laws of any other
jurisdiction). In accordance with Title 6, Section 2708 of the Delaware Code
Annotated, the parties agree to the jurisdiction of the courts of Delaware and
to be served with legal process from any of such courts.
8. This First Amendment may be executed in counterparts, each of which
shall be an original, but such counterparts shall together constitute but one
and the same document.
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IN WITNESS WHEREOF, CUCC and the Company have caused this First
Amendment to Stock Option Agreement to be duly executed by their authorized
representatives, all as of the day and year first written above.
ATTEST: HUNGARIAN TELEPHONE AND CABLE CORP.
/s/ Xxxxxxx X. Xxxxx By: /s/ Xxxxx X. Xxxxxxxx
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Xxxxxxx X. Xxxxx Xxxxx X. Xxxxxxxx
Controller Chief Executive Officer
CU CAPITALCORP.
By: /s/ Xxxxxxx X. Xxxxx
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Xxxxxxx X. Xxxxx
Authorized Signatory
