EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, dated as of January 1, 1998 by and
between Central European Media Enterprises Ltd., a Bermuda corporation (the
"Company"), and Xxxx Xxxxxxxxxxx ("Executive").
W I T N E S S E T H:
WHEREAS, the Company desires to secure the services of
Executive as an employee, and Executive desires to accept such employment under
the terms and conditions set forth below;
NOW, THEREFORE, in consideration of the mutual covenants
herein contained, the Company and Executive hereby agree as follows:
1. Employment.
(a) Agreement to Employ. Upon the terms and subject to the conditions
of this Agreement, the Company hereby employs Executive, and Executive hereby
accepts employment by the Company.
(b) Term of Employment. The Company shall employ Executive for a term
commencing January 1, 1998 (the "Commencement Date") and ending December 31,
2002, unless extended by a written agreement signed by both parties. The Company
will advise Executive at least six months prior to the end of the Term whether
it intends to extend the Term. The Term of this Agreement as extended as
provided herein is herein referred to as the "Term". The period commencing on
the Commencement Date and ending on the earlier of (i) the expiration of the
Term, or (ii) the date of Executive's termination of employment pursuant to
Section 5(a) shall be referred to as the "Employment Period".
(c) No Conflict. Executive represents that he is entering into this
Agreement voluntarily and that his employment hereunder and compliance by him
with the terms and
conditions of this Agreement will not conflict with or result in the breach of
any agreement to which he is a party or by which he may be bound.
2. Position and Duties.
(a) In general. Executive shall be employed as Executive Vice President
and Chief Operating Officer and shall perform such duties and services,
consistent with such position for the Company, as may be (i) specified in the
Bye-Laws of the Company or (ii) assigned to him from time to time by the Chief
Executive Officer of the Company (the "CEO") or the Chairman. The duties of the
Executive shall include serving as an officer or director or otherwise
performing services for any "Affiliate" of the Company as requested by the
Company. An "Affiliate" of any person means any entity that controls, is
controlled by or is under common control with such person. Executive shall
report to the CEO and shall be a member of the Office of the CEO. Without
limiting the generality of the foregoing the Executive shall provide regular
on-site supervision of and/or assistance to each television station operating in
countries outside the UK. Such supervision and or assistance shall be in the
areas of programming, production and marketing due to the Executive's specific
experience and background in these areas and their importance of these areas to
the stations' profitability.
(b) Full-time employment. During the Employment Period, and subject to
his obligations to CME Development Corporation, which is anticipated to require
two-thirds of his business time, Executive shall devote his full business time
to the services required of him hereunder, except for time devoted to services
required by him to be performed for any "Affiliate" of the Company, vacation
time and reasonable periods of absence due to sickness, personal injury or other
disability, and shall use his best efforts, judgement, skill and energy to
perform such services in a manner consonant with the duties of his position and
to improve and advance the business and interests of the Company, provided,
however, that Executive shall perform such services under this Agreement
exclusively outside of the United Kingdom and the United States and Executive
has entered into an employment agreement with CME Development Corporation for
his services within the United Kingdom and the United States. Executive shall
not be engaged in any other business activity which, in the reasonable judgment
of the CEO, conflicts with the duties of the Executive under this Agreement.
Executive shall travel to, and may be stationed on a short-term basis (up to
three to six months) in, such location or locations outside of the United
Kingdom and the United States as may be requested by the Company, or which
Executive believes is necessary or advisable, in the performance by Executive of
his duties hereunder or to the extent appropriate to improve and advance the
interests of the Company and its Affiliates.
2
3. Compensation.
(a) Base Salary. During the Employment Period, the Company shall pay
Executive a base salary at the annual rate of US$200,000 (the "Base Salary").
The Base Salary shall be payable in such installments (but not less frequent
than monthly) as the salaries of other executives of the Company are paid. The
Executive's base salary shall be reviewed annually by the Compensation Committee
of the Board of Directors of the Company (the "Compensation Committee"), and
shall be subject to increase at the option and sole discretion of the
Compensation Committee.
(b) Annual Bonus. The Company shall provide Executive with the
opportunity to earn an annual cash bonus in an amount up to 100% of Executive's
Base Salary. The amount of any such annual bonus shall be based upon the joint
recommendation of the Chairman and the CEO, and subject to the Compensation
Committee's approval in its sole discretion. Executive and the Company
anticipate that Executive shall have a target annual bonus of approximately 75%
of Base Salary for superior performance, and that the annual bonus may range
from zero to up to 100% of Base Salary. Both the overall performance of the
Company as a whole and the individual performance of Executive shall be taken
into account in determining the amount of the annual bonus, if any.
(c) Special Long-Term Incentive Bonus. Given that the share price of
the Company is largely dependent on the performance of the individual television
stations, if Executive is employed by the Company on December 31, 2002, and if
the Fair Market Value of a Class A Share of Company Stock on December 31, 2002
has increased from the Fair Market Value of such Share on January 1, 1998, and
the percentage increase is greater that the percentage increase in the NASDAQ
Composite Average (or, if the Company adopts a new average against which to
compare the performance of its stock in its proxy statement for 1998, such new
average) during the same period, Executive will receive a special one-time bonus
of US$750,000.
(d) Equity Participation. The Company has granted Executive an option
to purchase 100,000 Class A Shares of the Company as of January 19, 1998 and
50,000 Class A Shares on February 23, 1998 (collectively, the "Option"). The
Option shall become exercisable as to 40,000 shares on each of the first two
anniversaries of the date of grant (such portion of the Option, "Option A"), and
the remainder shall become exercisable in three equal annual installments on the
third and fourth anniversaries of the date of grant and on December 31, 2002
grant (such portion of the Option, "Option B"), provided Executive is employed
by the Company on such date. The exercise price per share as to 100,000 shares
(two-thirds of Option A and Option B, respectively) shall equal $24.00, which
was the mean between the high and low prices of the Company's Class A shares as
reported by NASDAQ for January 19, 1993. The exercise price per
3
share as to 50,000 shares (one-third of Option A and Option B, respectively)
shall equal the mean between the high and low prices of the Company's Class A
shares as reported by NASDAQ for February 23, 1998. With respect to Option B
(but not Option A), the exercise price shall increase on each January 1,
compounded annually, by an amount based on the yield to maturity on U.S.
Treasury Securities with a maturity nearest to seven years on the date that the
Option is granted (i.e., 5.55%). Option A shall expire ten years after the date
of grant and Option B shall expire seven years after the date of grant. The
Option shall become immediately exercisable in full in the event that
Executive's employment with the Company is terminated (i) by the Company other
than for Cause, (ii) by the Executive for Good Reason, (iii) by reason of the
death or Disability of the Executive or (iv) by the Company following a Change
in Control (as these terms are hereinafter defined). Once exercisable, the
option shall remain exercisable for the specified term, except that (i) if
Executive's employment is terminated for Cause the Option shall immediately
terminate and (iii) if Executive's employment terminates for any other reason,
the Option shall remain exercisable for the lesser of the remaining term of
Option and one year following termination of employment.
The timing and amount of any subsequent option awards (if
any), shall be at the discretion of the Compensation Committee and approved by
the Board of Directors, but will be generally commensurate with Executive's
position with the Company and taking into account option awards made to the
other senior executives of the Company.
As used herein, "Change in Control" means the occurrence of
(i) a sale or other disposition of stock of the Company, or an issuance of stock
of the Company as a result of which any "person" (as such term is used in
section 13(d) and 14(d) of the Securities Exchange Act of 1934), other than
Xxxxxx X. Xxxxxx ("Lauder") is or becomes the beneficial owner of more than 25%
of the total voting power of the Company, and Lauder (x) beneficially owns a
lesser percentage of the total voting power of the Company and (y) does not have
the right or ability by voting power, contract or otherwise to elect or
designate a majority of the Board of Directors or (ii) more than 50% of the
total value of the assets of the Company and its consolidated subsidiaries are
sold and the acquirer of such assets is not Lauder or a company controlled by
Lauder.
4. Benefits, Perquisites and Expenses.
(a) Benefits. During the Employment Period, Executive shall be
eligible to participate in (i) each welfare benefit plan sponsored or maintained
by the Company, including, without limitation, each group life,
hospitalization, medical, dental, health, accident or disability insurance or
similar plan or program of the Company, provided that in any event Executive
shall at the Company's expense, be entitled to private medical insurance for
himself, his wife and dependent children, disability insurance and
4
permanent health insurance at the maximum permissible levels from time to time,
and life insurance in an amount commensurate with the life insurance offered to
the other senior executives of the Company, and (ii) each pension, profit
sharing, retirement, deferred compensation or savings plan sponsored or
maintained by the Company, in each case, whether now existing or established
hereafter, to the extent that Executive is eligible to participate in any such
plan under the generally applicable provisions thereof, provided that if
Executive is also entitled to any of such benefits under an agreement with an
Affiliate, the benefits shall be provided by the Company and its Affiliates to
Executive in a manner that avoids duplication. The Company may amend or
terminate any such plan in its discretion.
(b) Perquisites. During the Employment Period, Executive shall be
entitled to home leave as specified in the Company's Employee Handbook and shall
also be entitled to receive such perquisites as are generally provided to other
senior officers of the Com pany in accordance with the then current policies and
practices of the Company, provided that if Executive is also entitled to any of
such benefits under an agreement with an Affiliate, the benefits shall be
provided by the Company and its Affiliates to Executive in a manner that avoids
duplication. For each calendar month during the Employment Period that Executive
maintains a principal residence in the Greater London Metropolitan Area,
Executive shall be entitled to receive an annual expatriate premium of Pounds
Sterling (pound)30,000 to be paid in equal monthly installments, and subject to
annual increase based on the increase in the consumer price index (HICP) for the
London metropolitan area published by the Office of National Statistics for the
preceding year, or if such index is no longer available, such other generally
available index measuring changes in consumer purchasing power (in the London
metropolitan area or nationally) designated by the Board of Directors.
(c) Business Expenses. During the Employment Period, the Company shall
pay or reimburse Executive for all reasonable expenses incurred or paid by
Executive in the performance of Executive's duties hereunder, upon presentation
of expense statements or vouchers and such other information as the Company may
require and in accordance with the generally applicable policies and procedures
of the Company.
(d) Indemnification. The Company shall indemnify Executive and hold
Executive harmless from and against any claim, loss or cause of action arising
from or out of Executive's performance as an officer, director or employee of
the Company or any of its subsidiaries or in any other capacity, including any
fiduciary capacity, in which Executive serves at the request of the Company to
the maximum extent permitted by applicable law and the Company's Memorandum of
Association and Bye-Laws. If any claim is asserted against Executive with
respect to which Executive reasonably believes in good faith he is entitled to
indemnification, the Company shall either defend Executive
5
or, at its option, pay Executive's legal expenses (or cause such expenses to be
paid) on a quarterly basis, provided that Executive shall reimburse the Company
for such amounts, plus simple interest thereon at the 90-day United States
Treasury Xxxx rate as in effect from time to time, compounded annually, if
Executive shall be found by a court of competent jurisdiction not to have been
entitled to indemnification.
(e) Withholding. Any payments provided for herein shall be reduced by
any amounts required to be withheld by the Company from time to time under any
applicable income tax or other law, rule or regulation.
(f) Currency of Payment. Payments provided for herein shall be in the
currency stated, or in such other mutually beneficial currency as the Company
and Executive shall agree from time to time sufficiently in advance of payment
to permit timely payment. Payment in a currency other than in the currency
stated shall be based at the current exchange rate at the time of payment.
(g) Right of Offset. If the Company makes any payment to a third party
on Exectuive's behalf or as guarantor of an obligation of Executive, the Company
shall be entitled to seek reimbursement from the Executive of any such amounts
and/or to offset any such amounts against any payments by the Company to
Executive hereunder.
5. Termination of Employment.
(a) Termination of the Employment Period. The Employment Period shall
end upon the earliest to occur of (i) a termination of Executive's employment on
account of Executive's death, (ii) a Termination due to Disability or
Retirement, (iii) a Termination for Cause, (iv) a Termination Without Cause, (v)
a Termination for Good Reason, (vi) a Termination Without Good Reason, or (vii)
the expiration of the Term. The Company or the Executive may initiate a
termination in any manner permitted hereunder by giving the other party written
notice thereof (the "Termination Notice"). The effective date (the "Termination
Date") of any termination shall be deemed to be the later of (i) in the case of
a Termination Notice from Executive, 45 days after the receipt by the Company of
the Termination Notice, (ii) the date on which the Termination Notice is given,
or (iii) the date specified in the Termination Notice; provided, however, that
in the case of the Executive's death, the Termination Date shall be the date of
death. Upon termination of his employment for any reason, Executive will
immediately resign from all positions that he holds with the Company and its
Affiliates.
6
(b) Payments Upon Certain Terminations.
(i) Termination for Good Reason or Termination Without Cause.
In the event that Executive's employment is terminated by Executive for Good
Reason or by the Company Without Cause, the Company shall pay Executive his
Earned Salary, Vested Benefits, and a Severance Benefit (as such terms are
hereinafter defined).
(ii) Termination due to Death. In the event of the
termination of Executive's employment due to Executive's death, the Company
shall pay Executive's estate Executive's Earned Salary, Vested Benefits, and
shall provide to Executive's surviving spouse and children Executive's Base
Salary (at the rate in effect on the date of his death) and the health insurance
provided in Section 4(a)(i) for a period of 12 months.
(iii) Termination due to Disability or Retirement. In the
event of termination of Executive's employment by the Company due to Disability
or a Termination due to Retirement, the Company shall pay Executive his Earned
Salary and Vested Benefits as provided in Section 3(c), plus, in the event of
termination due to Disability, to the Executive or his estate his Base Salary at
the Termination Date on a monthly basis, the benefits provided in Section
4(a)(i) for 12 months. In the event that Executive's employment with the Company
is terminated due to Disability, Executive's entitlement to continuation of his
Base Salary under this subsection (iii) shall be reduced by the amount of any
Company sponsored (and paid for) disability benefits paid to Executive.
(iv) Termination Without Good Reason. In the event of a
termination of Executive's employment by Executive Without Good Reason, the
Company shall pay Executive his Earned Salary and Vested Benefits.
(v) Termination for Cause. In the event of a termination of
Executive's employment by the Company for Cause, the Company shall pay Executive
his Earned Salary and Vested Benefits.
(c) Timing of Payments. Earned Salary shall be paid in a single lump
sum as soon as practicable, but in no event more than 60 days, following the end
of the Employment Period. Vested Benefits shall be payable in accordance with
the terms of the plan, policy, practice, program, contract or agreement under
which such benefits have accrued except as otherwise expressly modified by this
Agreement. Severance Benefits shall be paid in equal monthly installments.
(d) Definitions. The following capitalized terms have the following
meanings:
7
"Earned Salary" means any Base Salary earned, but unpaid, for
services rendered to the Company on or prior to the date on which the Employment
Period ends.
"Normal Retirement Age" means the first day of the month
following Executive attaining age 65.
"Severance Benefit" means Executive's minimum Base Salary for
the remainder of the Term.
"Termination due to Disability" means a termination of
Executive's employment by the Company because Executive has been incapable of
substantially fulfilling the positions, duties, responsibilities and obligations
set forth in this Agreement because of physical, mental or emotional incapacity
resulting from injury, sickness or disease for a period of (i) at least six
consecutive months or (ii) a total of more than 183 days in any twelve month
period. Any question as to the existence, extent or potentiality of Executive's
disability upon which Executive and the Company cannot agree shall be determined
by a qualified, independent physician selected by the Company and reasonably
acceptable to Executive. The determination of any such physician shall be final
and conclusive for all purposes of this Agreement. Executive or his legal
representative or any adult member of his immediate family shall have the right
to present to such physician such information and arguments as to Executive's
disability as he, she or they deem appropriate, including the opinion of
Executive's personal physician.
"Termination due to Retirement" means termination of
employment by Executive, or termination of Executive's employment by the Company
other than a Termination for Cause, on or after Executive's Normal Retirement
Age.
"Termination for Cause" means a determination by a majority of
the Board to terminate Executive's employment by the Company due to (i)
Executive's conviction of a felony or the entering by Executive of a plea of
nolo contendere with respect to a charged felony, (ii) Executive's gross
negligence, recklessness, dishonesty, fraud, willful malfeasance or willful
misconduct in the performance of the services contemplated by this Agreement,
(iii) willful misrepresentation to shareholders or directors which is injurious
to the Company; (iv) a willful failure without reasonable justification to
comply with a reasonable written order of the CEO or Board of Directors; or (v)
a willful and material breach of Executive's duties or obligations under this
Agreement. Notwith standing the foregoing, a termination shall not be treated as
a Termination for Cause unless the Company shall have delivered a written notice
to Executive stating that it intends to terminate his employment for Cause not
less than seven days following the giving of such notice and specifying the
factual basis for such termination, and the event
8
or events that form the basis for the notice, if capable of being cured, shall
not have been cured within the period stated in the receipt of such notice.
"Termination for Good Reason" means a termination of
Executive's employment by Executive within 30 days following (i) a reduction in
Executive's annual Base Salary or bonus opportunity contemplated by Sections
3(a) and (b), (ii) a material reduction in Executive's positions, duties,
responsibilities or reporting lines from those described in Section 2 hereof;
(iii) a material breach of this Agreement by the Company, or (iv) any
termination of the Executive's employment with CME Development Corporation due
to a "Termination Without Cause" by CME Development Corporation or a
"Termination With Good Reason by Executive", as those terms are defined in the
employment agreement between the Executive and CME Development Corporation.
Notwithstanding the foregoing, a termination shall not be treated as a
Termination for Good Reason (x) if Executive shall have consented in writing to
the occurrence of the event giving rise to the claim of Termination for Good
Reason or (y) unless Executive shall have delivered a written notice to the
Company within 30 days of his having actual knowledge of the occurrence of one
of such events stating that he intends to terminate his employment for Good
Reason and specifying the factual basis for such termination, and such event, if
capable of being cured, shall not have been cured within 30 days of the receipt
of such notice.
"Termination Without Cause" means any termination by the
Company of Executive's employment hereunder other than (i) a Termination due to
Disability, (ii) a Termination due to Retirement or (iii) a Termination for
Cause.
"Termination Without Good Reason" means any termination by
Executive of Executive's employment hereunder upon not less than three month's
notice to the Company other than (i) a termination due to Executive's death,
(ii) a Termination due to Retirement, (iii) a Termination for Good Reason, or
(iv) a Termination due to Disability.
"Vested Benefits" means amounts which are vested or which
Executive is otherwise entitled to receive under the terms of or in accordance
with any plan, policy, practice or program of, or any contract or agreement
with, the Company, at or subsequent to the date of his termination without
regard to the performance by Executive of further services or the resolution of
a contingency and expenses incurred prior to termination of employment that are
reimbursable under Section 4(c).
(e) Full Discharge of Company Obligations. The amounts payable to
Executive pursuant to this Section 5 following termination of his employment
(including amounts payable with respect to Vested Benefits) shall be in full and
complete satisfaction of Executive's rights under this Agreement and any other
claims he may have
9
in respect of his employment by the Company or any of its subsidiaries. Such
amounts shall constitute liquidated damages with respect to any and all such
rights and claims and, upon Executive's receipt of such amounts, the Company
shall be released and discharged from any and all liability to Executive in
connection with this Agreement or otherwise in connection with Executive's
employment with the Company and its subsidiaries, other than Executive's rights
to indemnification under Section 4(d).
6. Agreement Not to Compete With Company
(a) During the Employment Period and for a period of two years
thereafter, Executive shall not directly or indirectly own, manage, operate,
finance, join, control, advise, consult, render services to, have an interest or
future interest or participate in the ownership, management, operation,
financing or control of, or be employed by or connected in any manner with any
Competing Business (other than as a holder of common stock of the Company, and
not in excess of 1% of the outstanding voting shares of any other publicly
traded company). "Competing Business" means the business of licensing of
television or radio stations and provision of programming engaged in by the
Company or any Affiliate in any country in Europe where the Company or an
Affiliate conducts such business at any time during the Term. Any opportunity
directly or indirectly related to any business engaged in by the Company, its
subsidiaries and Affiliates of which Executive becomes aware during the Term
shall be deemed a corporate opportunity of the Company, and Executive shall
promptly make such opportunity available to the Company.
(b) If, during the period of two years after expiration of the
Term, Executive or an Affiliate of Executive proposes to engage in what may be a
Competing Business, Executive shall so notify the Company in a writing which
shall fully set forth and describe in detail the nature of the activity which
may be a competitive Business, the names of the companies or other entities with
or for whom such activity is proposed to be engaged in by Executive or by an
Affiliate of Executive (the "Section 6 Notice"). If, within 30 days after
receipt by the Company of a Section 6 Notice, the Company shall fail to notify
Executive that it deems the proposed activity to be a Competitive Business, then
Executive shall be free to engage in the activities described in the Section 6
Notice without violation of Section 6(a). If, however, the Company notifies
Executive that the proposed activities constitute a Competitive Business, then
(i) Executive shall not engage in such Competitive Business during the two-year
period following expiration of the Term, and (ii) the Company shall pay
Executive, during such two-year period, in equal monthly installments, an amount
equal to his highest Base Salary; provided that the amount payable under this
Section 6(b) shall be reduced by the amount of Severance Benefit that Executive
is receiving for such period.
10
7. Consulting Following the Term
(a) If the Company does not extend the Term, Executive shall
make himself available as an independent consultant to the Company and its
Affiliates for the period commencing on the expiration of the Term and ending on
the earlier of the second anniversary of such date and Executive's death (the
"Consulting Period"). For making himself available for consulting services
during the Consulting Period, the Company shall pay Executive a consulting fee
at the annual rate of US$150,000, payable no less frequently than monthly.
During the Consulting Period Executive shall make himself available for any
requests for consultation by the Company and its Affiliates during regular
business hours of the Company for up to 15 hours per month during the Consulting
Period. The Company shall give due consideration to Executive's other
commitments in determining the time and place of such requests and consultation.
Executive shall be entitled to be reimbursed for expenses reasonably and
necessarily incurred by him in connection with such consultation.
8. Confidential Information
(a) Without the prior written consent of the Company, Executive shall
not disclose at any time during the Employment Period or any time thereafter any
Confidential Information (as defined below) to any third person other than in
the course of fulfilling Executive's responsibilities under this Agreement
unless such Confidential Information has been previously disclosed to the public
by the Company or an Affiliate or is in the public domain (other than by reason
of Executive's breach of the provisions of this paragraph).
(b) "Confidential Information" is any non-public information pertaining
to the Company or an Affiliate, any of their businesses or the business or
personal affairs of Xxxxxx X. Xxxxxx ("Lauder") or his family and how any of
them conducts its or his business or affairs. "Confidential Information"
includes not only information disclosed by the Company or an Affiliate to
Executive, but information developed, created or learned by Executive during the
course of or as a result of Executive's employment with the Company.
"Confidential Information" specifically includes information and documents
concerning the Company's and its Affiliates' methods of doing business;
research, telecommunications technology, its actual and potential clients,
transactions and suppliers (including the Company's or an Affiliate's terms,
conditions and other business arrangements with them); client or potential
client or transaction lists and billing; advertising, marketing and business
plans and strategies (including prospective or pending licensing applications or
investments in license holders or applicants); profit margins, goals, objectives
and projections; compilations, analyses and projections regarding the Company,
its Affiliates or any of its clients or potential clients or their
11
businesses; trade secrets; salary, staffing, management organization or
employment information; information relating to members of the Board of
Directors and management of the Company or an Affiliate; files, drawings or
designs; information regarding product development, marketing plans, sales plans
or manufacturing plans; operating policies or manuals, business plans, financial
records or packaging design; or any other financial, commercial, business or
technical information relating to the Company, an Affiliate, Lauder or his
family or information designated as confidential or proprietary that the
Company, an Affiliate or Lauder may receive belonging to others who do business
with any of them.
(c) Nothing herein shall prevent the disclosure by Executive of any
information required by an order of a court having competent jurisdiction or
under subpoena from a government agency, provided that, if Executive receives a
request for the disclosure of any Confidential Information pursuant to court
process or by a government agency, Executive shall immediately (and at the
latest within two business days) notify the Company of that request and
cooperate to the maximum extent authorized by law with the Company in protecting
the Company's and it Affiliates' interest in maintaining the confidentiality of
any Confidential Information.
9. No Disparaging Comments
Each of the parties hereto agrees not to make disparaging or derogatory comments
about the other party, members of the Board or Affiliates, except to the extent
required by law, and then only after consultation with the other party to the
maximum extent possible in order to maintain goodwill for each of the parties.
10. Return of Company Property
Promptly (and at the latest within ten business days) following Executive's
termination of services, Executive shall:
(i) return to the Company all documents, records, notebooks,
computer diskettes and tapes and anything else containing the
Company's Confidential Information (as defined above), and any
other property or Confidential Information of the Company or
its Affiliates, including all copies thereof in Executive's
possession, custody or control, and
(ii) delete from any computer or other electronic storage medium
owned by Executive any of the proprietary or Confidential
Information of the Company or its Affiliates.
12
11. No Soliciting or Hiring Company Employees
During the Employment Period and for a two-year period thereafter, Executive
shall not directly or indirectly induce any employee of the Company or any
Affiliate, other than Executive's secretary or personal assistant, to terminate
employment with such entity, and during the Employment Period and for a one-year
period thereafter, shall not directly or indirectly, either individually or as
owner, agent, employee, consultant or otherwise, employ or offer employment to
any person who is or was employed by the Company or any Affiliate as an
employee, other than the Company's current Vice President of Business
Development and Executive's secretary or personal assistant.
12. Continuing Obligations Following Termination
Executive agrees that his obligations and restrictions with respect to noncom
petition, confidentiality, Company property, nondisparagement and
nonsolicitation, and the Company obligations to indemnify Executive under
Section 4(d), will continue to apply following the termination of Executive's
relationship regardless of the manner in which his relationship with the Company
is terminated, whether voluntarily, for Cause, for Good Reason, without Cause or
otherwise.
13. Arbitration of All Disputes
(a) Any dispute, controversy or claim between the Executive and the
Company or any of its officers, directors, employees or shareholders (who are
expressly made third-party beneficiaries of this agreement) arising out of,
relating to or in connection with this agreement, or the breach, termination or
validity thereof, shall be finally resolved by binding and non-appealable
arbitration, before a single arbitrator selected by the procedure set forth
below, conducted in Xxxxxxxx, Bermuda. To the extent practicable, any such
arbitration shall be consolidated with any other arbitration proceeding between
Executive and any Affiliate of the Company (if any).
(b) Either party may commence an arbitration proceeding by giving
written notice to the other party of its desire to arbitrate.
(c) The single arbitrator (the "Arbitrator") shall be selected from
among the New York City members of the New York Regional Panel of Distinguished
Neutrals (the "Panel") of the Center for Public Resources ("CPR") by mutual
agreement of the parties, or if the parties are unable to agree, by the
following means:
(A) The Company, on one hand, and Executive
on the other hand, shall simultaneously exchange lists each
containing the names
13
of five members of their choice of the Panel who have
indicated a willingness to serve.
(B) If a single name appears on both lists,
that individual shall be appointed.
(C) If more than one name appears on both
parties' lists, the Arbitrator shall be selected from the
common names by mutual agreement of the parties or by the toss
of a coin.
(D) If the lists contain no names in common,
each party shall strike four names from the other party's list
and the Arbitrator shall be selected from the remaining two
names by mutual agreement of the parties or by the toss of a
coin.
(E) If the CPR ceases to have a Panel or it
is otherwise impossible to select the Arbitrator from the
Panel as contemplated by this Agreement, the Arbitrator shall
be selected by the President of the CPR in the manner that the
President deems closest to satisfying the purposes of this
Section, or, if such person is unable to do so, by the
President of the Association of the Bar of the City of New
York.
(d) The Arbitrator, after appropriate consultation with the parties,
shall (i) determine, in his or her sole discretion, the rules governing the
arbitration proceeding, including whether and to what extent the parties shall
have any right to pre-hearing discovery or other forms of disclosure, the manner
of presentation of arguments and/or evidence before or at any hearing, whether
and to what extent formal rules of evidence shall govern the proceeding and the
parties' rights following the proceeding, and (ii) be governed in exercising
such discretion by the goal of reaching a fair and reasonable decision in an
expeditious and efficient manner while endeavoring to streamline the process and
avoid undue litigation costs.
(e) The Arbitrator shall assess the costs of the proceeding (including
the prevailing party's reasonable attorney's fees) on any unsuccessful party to
the extent the Arbitrator concludes that such party is unsuccessful, unless he
or she concludes that matters of equity or important considerations of fairness
dictate otherwise.
(f) The Arbitrator shall be required to state his or her decision in
writing and may, but shall not be required to, elaborate on the reasons for such
decision.
14
(g) The arbitrator(s) shall have the authority upon application by a
party to direct specific performance, including preliminary or interim specific
performance pending the final resolution of the arbitration, of any portion of
this agreement. The parties expressly consent to the jurisdiction and power of
any federal or state court in New York to enforce the terms of such a direction
upon application by a party. If the arbitrator(s) have not yet been appointed,
the parties may obtain injunctive or other appropriate relief from a court to
enforce the terms of this agreement pending the appointment of the arbitrator(s)
who shall thereafter have full power to continue, modify or vacate the terms of
any injunctive relief ordered by the court.
(h) Notwithstanding the terms of this agreement that provide that New
York law shall govern, the arbitration and the provisions in this agreement
dealing with arbitration shall be governed exclusively by the United States
(Federal) Arbitration Act, 9 U.S.C. xx.xx. 1-16, and judgment on or enforcement
of the award or any direction for specific performance rendered by the
arbitrators may be entered by any court having jurisdiction thereof or having
jurisdiction over the relevant party or assets of such party.
(i) If, notwithstanding the parties' agreement to arbitrate, any issue
is presented to a court for decision, the parties hereby waive any right to
trial by jury.
(j) The parties agree that any dispute between the parties and the
arbitration itself shall be kept confidential and that the existence of the
arbitration and any element of it (including but not limited to any pleading,
brief or other document submitted or exchanged, any testimony or other oral
submission, and any award) shall not be disclosed except to the arbitrator(s),
the CPR Institute for Dispute Resolution, the parties, their counsel and any
person necessary to the conduct of the proceeding, except as may be lawfully
required in judicial proceedings relating to the arbitration or otherwise.
14. No Punitive or Emotional Damages
The parties hereto agree that neither the Executive nor the Company will be
entitled to seek or obtain punitive, exemplary or similar damages of any kind
from the other or, in the case of Executive, from the Company's officers,
directors, employees or shareholders, or to seek or obtain damages or
compensation for emotional distress, as a result of any dispute, controversy or
claim arising out of, relating to or in connection with this Agreement, or the
performance, breach, termination or validity thereof. Nothing herein shall
preclude an award of compensatory or punitive damages against any other third
party.
15
15. Injunctive Relief to Avoid Irreparable Injury
(a) Executive acknowledges and agrees that the individualized services
and capabilities that he will provide to the Company under this Agreement are of
a personal, special, unique, unusual, extraordinary and intellectual character.
(b) Executive acknowledges and agrees that the restrictions in this
agreement are reasonable to protect the Company's rights under this Agreement
and to safeguard the Company's and it Affiliates' Confidential Information.
(c) Executive acknowledges and agrees that the covenants and
obligations of Executive with respect to noncompetition, nonsolicitation,
confidentiality and Company property relate to special, unique and extraordinary
matters and that a violation of any of the terms of such covenants and
obligations will cause the Company and its Affiliates irreparable injury for
which adequate remedies are not available at law. Executive therefore agrees
that the Company shall be entitled to an order of specific performance,
injunction, restraining order or such other interim or permanent equitable
relief (without the requirement to post bond) restraining Executive from
committing any violation of the covenants and obligations contained in this
Agreement
(d) These injunctive remedies are cumulative and are in addition to any
other rights and remedies the Company may have at law or in equity.
(e) Executive represents that his economic means and circumstances are
such that the provisions of this Agreement, including the noncompetition,
nonsolicitation, confidentiality and Company property provisions, will not
prevent him from providing for himself and his family on a basis satisfactory to
him and them.
16. Automatic Amendment by Court Order
and Interim Enforcement
(a) If the Arbitrator(s) or a court determines that, but for the
provisions of this paragraph, any part of this agreement is illegal, void as
against public policy or otherwise unenforceable, the relevant part will
automatically be amended to the extent necessary to make it sufficiently narrow
in scope, time and geographic area to be legally enforceable.
All other terms will remain in full force and effect.
(b) If the Executive raises any question as to the enforceability of
any part or terms of this agreement, including, without limitation, the
provisions relating to noncompetition, nonsolicitation, confidentiality and
Company property, the Executive
16
specifically agrees that he will comply fully with this Agreement unless and
until the entry of an arbitral award to the contrary.
17. Notices
All notices and other communications required or permitted hereunder shall be
sufficiently given if (a) delivered personally, (b) sent by facsimile
transmission (with confirmation received), (c) sent by a nationally-recognized
air courier assuring overnight delivery, or (d) mailed (by registered or
certified mail, return receipt requested and postage prepaid) as follows:
if to the Executive, to the Executive at:
00 X'Xxxxxx Xxxxxx
Xxxxxx X0X 0XX, Xxxxxxx
with a copy to each of:
Xxxx Xxxxxxxxxxx Xxxxx 00 Xxxxxxxxx Xxxxxxx 00 Xxxxxx
Xxxxxxxxxx Xxxxxx XX0 0XX if to the Company, to the Company at
00 X'Xxxxxx Xxxxxx
Xxxxxx X0X 0XX , Xxxxxxx
Attention: Xxxxxxx X. Xxxxxx
with a copy to each of:
Legal Department
00 X'Xxxxxx Xxxxxx
Xxxxxx X0X 0XX, Xxxxxxx
Debevoise & Xxxxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax: (000) 000-0000
Attention: Xxxxx Xxxxxx, Esq.
17
or to such other address as shall be furnished by notice from time to time by
one party hereto to the other party. Any such communication shall be deemed to
have been given, (i) in the case of personal delivery, on the date of delivery,
(ii) in the case of delivery by air courier, on the first business day following
the day on which such communication was posted, and (iii) in the case of
mailing, on the third business day following the day on which such notice was
posted.
18. Sole and Entire Understanding; Amendments
The entire understanding and agreement between the Company and Executive have
been incorporated into this Agreement. There are no other promises,
representations, understandings or inducements by the Company to Executive or
Executive to the Company other than those specifically set forth in this
Agreement. This Agreement may not be altered, amended or added to except in a
single writing signed by the Company and the Executive. Coincident herewith,
Executive and CME Development Corporation are entering into an Employment
Agreement covering Executive's services to CME Development Corporation and its
subsidiaries.
19. Waiver of Breach
A waiver or breach of any provision of this Agreement shall not constitute or
operate as a waiver of any other breach of such provision or of any other
provision, and any failure to enforce any provision hereof shall not operate as
a waiver of such provision or of any other provision.
20. Headings
The headings of sections in this Agreement are for convenience only, are not a
part of this Agreement and shall not affect the construction of the provisions
of this Agreement.
21. Arm's Length
(a) This Agreement was entered into at arm's length, without duress or
coercion, and is to be interpreted as an agreement between parties of equal
bargaining strength. Both the Company and the Executive agree that this
Agreement is clear and unambiguous as to its terms, and that no parol or other
evidence will be used or admitted to alter or explain the terms of this
Agreement, but that it will be interpreted based on the language within its four
corners in accordance with the purposes for which it is entered into.
(b) The parties hereto expressly agree that any rule or contractual
interpretation, as applied under California law or anywhere else, that would
allow parol or extrinsic
18
evidence to attempt to show fraud in the inducement or duress to contradict the
plain, unambiguous terms of this Agreement shall not apply to this Agreement and
its performance and enforcement. This provision is a material part of this
Agreement and, should any party try to introduce evidence contrary to this
provision, any other party shall be entitle to consider it a breach and to
rescind this contract in full.
22. Successors and Assigns
(a) This Agreement will inure to the benefit of, and will be binding
upon, the Company, its successors and assigns and upon the Executive and his
heirs, successors and assigns; provided, however, that, because this is an
Agreement for personal services, the Executive cannot assign any of his
obligations under this Agreement to anyone else.
(b) This Agreement may be executed in counterparts, in which case each
of the two counterparts will be deemed to be an original and the final
counterpart shall be deemed to have been executed in New York, New York.
23. No Third Party Beneficiaries
This Agreement does not create, and shall not be construed as creating, any
rights enforceable by any person not a party to this Agreement, except as
provided in Sections 4(d) and 5(b).
24. New York Law Governs
Any questions or other matters arising under this Agreement, whether of
validity, interpretation, performance or otherwise, will therefore be governed
by and construed in accordance with the laws of the State of New York applicable
to agreements made and to be wholly performed in New York, without reference to
principles of conflicts or choice of law under which the law of any other
jurisdiction would apply.
IN WITNESS WHEREOF, this Agreement has been executed by
Executive and then by the Company in New York, New York, on the dates shown
below, but effective as of the date and year first above written.
/s/ Xxxx Xxxxxxxxxxx
Date: -------------------------
------------- Xxxx Xxxxxxxxxxx
19
CENTRAL EUROPEAN MEDIA
ENTERPRISES LTD.
Date: BY: /s/ Xxxxxxx X. Xxxxxx
------------- ---------------------
Xxxxxxx X. Xxxxxx
President and Chief
Executive Offier
20
