EXECUTION COPY
EMPLOYMENT AGREEMENT
AGREEMENT made as of the 1st day of August, 1999, by and between CME
Development Corporation, a Delaware corporation (the "Corporation"), and Xxxx
Xxxxxxxxx ("Xxxxxxxxx" together with the Corporation the "Parties").
WITNESSETH:
WHEREAS, the Corporation wishes to employ Xxxxxxxxx, and Xxxxxxxxx wishes
to be employed by the Corporation, on the terms and conditions set forth below;
NOW, THEREFORE, in consideration of the foregoing and the terms and
conditions contained herein, the parties hereto agree as follows:
1. Position and Responsibilities.
1.1. Subject to Section 2.4 hereof, the Corporation hereby employs Xxxxxxxxx to
serve in an executive capacity as Vice President Finance and Chief Financial
Officer of the Corporation. Subject to the direction and authorization of the
President and Chief Executive of the Corporation, Xxxxxxxxx shall perform such
functions and undertake such responsibilities as are customarily associated with
such a position. All these functions will take place inside the United Kingdom.
Xxxxxxxxx shall hold such directorships and executive officerships in the
Corporation and any subsidiary to which, from time to time, he may be elected or
appointed during the term of this Agreement.
1.2. Xxxxxxxxx shall devote his full time and best efforts to the business and
affairs of the Corporation and to the promotion of its interests; provided,
however, that Xxxxxxxxx shall be entitled to devote such time as is necessary to
fulfil his obligations under the Employment Agreement dated the date hereof
between Xxxxxxxxx and Central European Media Enterprises Ltd. ("CME").
1.3. The parties acknowledge that Xxxxxxxxx will perform the duties hereunder
wholly inside the United Kingdom and acknowledge that Xxxxxxxxx has entered into
an employment agreement with Central European Media Enterprises Ltd. which would
cover services to be performed by him outside the United Kingdom. Xxxxxxxxx will
do such travelling as may reasonably be required in the performance of his
duties hereunder, which the Parties estimate to be approximately 50% of the time
on an overall basis.
2. Term.
2.1. The term of this Agreement shall commence on 1 August 1999 and terminate on
July 31, 2002, unless sooner terminated as provided in this Agreement. The term
of this Agreement and any extension thereof is herein referred to as the "Term."
2.2. Notwithstanding the provisions of Section 2.1 hereof, the Corporation shall
have the right, on written notice to Xxxxxxxxx, to terminate this Agreement for
Cause (as defined herein), such termination to be effective seven days after the
date on which written notice is given or as of such later date otherwise
specified in the notice.
2.3 For purposes of this Agreement, the term "Cause" shall mean fraud or
dishonesty or acts of gross negligence in the course of providing his services
herein which are injurious to the Corporation; wilful misrepresentation to
shareholders or directors which is injurious to the Corporation; a wilful
failure without reasonable justification to comply with a reasonable written
order of the President and Chief Executive or the Board of Directors of Central
European Media Enterprises Ltd. (the "Board of Directors"), which shall not be
cured within 20 days after written notice; a wilful and material breach of this
Agreement, which shall not be cured within 20 days after written notice; or the
commission of a felony.
2.4 Notwithstanding the provisions of Section 1.1 or Section 2.1 hereof, the
Corporation shall have the right to re-assign Xxxxxxxxx to other Executive
positions with different responsibilities as determined by the President and
Chief Executive Officer or the Board of Directors in their sole discretion. Any
such reassignment will not constitute "Good Reason" under this Employment
Agreement. "Executive" means a position with management responsibility which
reports directly to the President or Chief Operating Officer of the Corporation
or CME, and which is a Named Executive Officer in CME's reports filed under the
Securities Act of 1934 for as long as CME is required to file publicly available
reports under the Securities Act of 1934.
2.5. For purposes of this Agreement, the term "Good Reason" shall mean any of
the following: (a) a relocation outside of the London metropolitan area without
Xxxxxxxxx'x prior consent; (b) a re-assignment of Xxxxxxxxx to a non-Executive
position; or (c) failure by the Corporation to comply with any of the material
terms of this Agreement, which shall not have been cured within 20 days after
written notice thereof. For a period of 30 days after the occurrence of a Good
Reason event, Xxxxxxxxx shall have the right to terminate this Agreement for
Good Reason.
2.6. If this (i) Agreement shall be terminated (a) by the Corporation other than
pursuant to Sections 2.2, 4.1 or 4.2 hereof or (b) by Xxxxxxxxx for Good Reason
(as defined herein) or (ii) the Corporation does not offer to renew this
Agreement on terms as favourable to Xxxxxxxxx as contained in this Agreement
then the Corporation shall continue to pay to Xxxxxxxxx his salary for 15
(fifteen) months following the date of termination, but Xxxxxxxxx shall not be
entitled to receive any other compensation, bonuses, benefits or other payments
relating to such fifteen month period. In such event, the Corporation will pay
relocation expenses back to the Czech Republic or the Corporation shall pay an
amount equivalent to the cost of relocation of Xxxxxxxxx to the Czech Republic.
In the event this Agreement shall be terminated by the Corporation pursuant to
Sections 4.1 or 4.2 hereof, the Corporation shall continue to pay to Xxxxxxxxx
and/or his wife and children for all benefits provided in Section 3.3 of this
Agreement, and specifically ensure that health, life and disability insurance
shall continue in effect for the remainder of the Term.
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2.7. Upon termination of this Agreement for any reason, the Corporation will
immediately pay Xxxxxxxxx all amounts due and owing, including but not limited
to bonuses, accrued vacation, expense reimbursements and earned salary.
2.8. The Corporation will inform Xxxxxxxxx no later than six months prior to the
termination date of this Agreement whether or not the Corporation wishes to
renew the Agreement.
2.9. Upon expiration or termination of this Agreement, including any extension
thereof, for any reason, all directorships or executive officerships in the
Corporation or any of its affiliates to which Xxxxxxxxx was elected or appointed
shall also immediately terminate.
2.10. In the event that Xxxxxxxxx wishes to terminate this Agreement for other
than Good Reason, Xxxxxxxxx agrees to give the Corporation three months notice.
Nevertheless, at the option of the Corporation, Xxxxxxxxx shall be required to
perform his duties during this notice period.
3. Salary.
3.1. The Corporation shall pay to Xxxxxxxxx for the services to be rendered by
Xxxxxxxxx hereunder a salary at the rate of US$125,000 per annum. The salary
shall be payable in equal monthly installments of US$10,416.66 each. Such salary
will be adjusted on each anniversary of this Agreement to reflect the percentage
change 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; provided, however, in no
event will Xxxxxxxxx'x salary be reduced.
3.2. Xxxxxxxxx will receive a payment from the Corporation equal to 50% of his
base salary for 1999 if the Corporation or any subsidiary or affiliate obtains a
television broadcast license in the Czech Republic, or if the Corporation or any
subsidiary or affiliate enters into any agreement to restore its operations in
the Czech Republic. Such payments would be in lieu of any other bonus payments
available to Xxxxxxxxx for 1999. From 2000 onwards, the Corporation shall
provide Xxxxxxxxx with the opportunity to earn an annual cash bonus. The amount
of any such annual bonus shall be determined by the CEO of the Corporation, and
subject to the Compensation Committee's approval in its sole discretion.
Executive and the Corporation anticipate that Executive shall have a target
annual bonus of approximately 33% of his Base Salary.
3.3. Xxxxxxxxx shall be entitled to participate in, and receive benefits from,
any insurance, medical, disability, bonus, incentive compensation, or other
employee benefit plan, if any are adopted, of the Corporation or any subsidiary
which may be in effect at any time during this Agreement, provided that in any
event Xxxxxxxxx shall, at the Corporation's expense, be entitled to private
medical insurance for himself, his wife and dependent children, disability
insurance and 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
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Corporation. These benefits will not be reduced from the present level without
his prior written consent.
3.4. The Corporation agrees to reimburse Xxxxxxxxx for all reasonable and
necessary business expenses incurred by, him on behalf of the Corporation in the
course of his duties hereunder upon the presentation by Xxxxxxxxx of appropriate
receipts therefore.
3.5. For each calendar month during the Term that Xxxxxxxxx maintains a
principle residence in the Greater London Metropolitan area, Xxxxxxxxx shall be
entitled to a monthly living allowance of Pound Sterling (pound)1,666.67 to be
paid in equal monthly installments and adjusted on each anniversary of this
Agreement to reflect the percentage change 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
provided, however, in no event will this allowance be reduced.
3.6. Xxxxxxxxx'x entitlement to paid vacation is governed by the Corporation's
Employee Handbook.
4. Death; Incapacity.
4.1. If, during the Term, because of illness or other incapacity, Xxxxxxxxx
shall fail for a period of 180 consecutive days, or for shorter periods
aggregating more than 180 days during any twelve month period, to render the
services contemplated hereunder, then the Corporation, at its option, may
terminate this Agreement by notice from the Corporation to Xxxxxxxxx, effective
on the giving of such notice.
4.2. In the event of the death of Xxxxxxxxx during the Term, this Agreement
shall terminate on the date of such death.
4.3. Upon termination of this Agreement, the Corporation shall pay to Xxxxxxxxx
or his legal representatives any amounts owed to him including but not limited
to expense reimbursement, accrued vacation and earned bonuses, and Xxxxxxxxx
shall pay to the Corporation any amounts owed to the Corporation, to the date of
termination.
5. Other Activities During Agreement.
5.1. Xxxxxxxxx agrees to devote up to 120 working days per year to performing
services under this Agreement and up to 120 working days per year to performing
services under the Employment Agreement dated the date hereof between Xxxxxxxxx
and Central European Media Enterprises Ltd.; Xxxxxxxxx shall devote his full
business time to performing services under these two agreements.
5.2. During the Term and for a period of two years thereafter, and except as
contemplated herein, neither Xxxxxxxxx nor any entity in which he may be
interested as a partner, trustee, director, officer, employee, shareholder,
option holder, lender of money or guarantor (each, a "Xxxxxxxxx Affiliate")
shall be engaged directly or indirectly in the
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business of licensing of television or radio stations and provision of
programming engaged in by the Corporation, or any subsidiary, in any country in
Europe where the Corporation, or any subsidiary, conducts such business at any
time during the Term (a "Competitive Activity"); provided, however, that the
foregoing shall not be deemed to prevent Xxxxxxxxx from investing in not more
than 5% of the outstanding securities of a public company. If, for a period of
two years after the Term, Xxxxxxxxx or a Xxxxxxxxx Affiliate proposes to engage
in what may be a Competitive Activity, Xxxxxxxxx shall so notify the Corporation
in writing which shall fully set forth and describe in detail the nature of the
activity which may be a Competitive Activity, the names of the companies or
other entities with or for whom such activity is proposed to be undertaken, and
whether it is proposed to be engaged in by Xxxxxxxxx or by a Xxxxxxxxx Affiliate
(the "Section 5 Notice"). If, within 30 days after notice to the Corporation
pursuant to a Section 5 Notice, the Corporation shall fail to notify Xxxxxxxxx
that it deems the proposed activity to be a Competitive Activity, then Xxxxxxxxx
shall be free to engage in the activities described in the Section 5 Notice
without violation of this Section 5.2. It is understood and agreed that any
opportunity directly or indirectly related to any business engaged in by the
Corporation, or any subsidiary, in any country in Europe where the Corporation,
or any subsidiary, conducts such business at any time during the Term shall be
deemed a corporate opportunity of the Corporation and Xxxxxxxxx shall promptly
make such opportunity available exclusively to the Corporation.
5.3. Xxxxxxxxx shall not at any time during this Agreement or after the
termination hereof directly or indirectly divulge, furnish, use, publish or make
accessible to any person or entity other than Central European Media Enterprises
Ltd. Any Confidential Information (as hereinafter defined) other than in
connection with the performance of his duties hereunder. It is the specific
intent of the Corporation and Xxxxxxxxx that each and all of the provisions set
forth hereinabove shall be valid and enforceable as specifically set forth
hereinabove; and that Xxxxxxxxx acknowledges that the Corporation's remedies at
law are likely to be inadequate, and Xxxxxxxxx consents to the application of
the equitable remedies of specific performance to enforce the Corporation's
rights hereunder. Further, should any person seek to legally compel Xxxxxxxxx
(by oral questions, interrogatories, requests for information or documents,
subpoena, civil investigative demands or otherwise) to disclose any Confidential
Information, Xxxxxxxxx shall provide the Corporation with prompt notice followed
up in writing so that the Corporation may seek a protective order or other
appropriate remedy, failing which Xxxxxxxxx shall be entitled to make such
disclosure as is legally required. In any event Xxxxxxxxx shall use his best
efforts with the advice of counsel to furnish only that portion of the
Confidential Information which is legally required and, with the cooperation of
the Corporation, will exercise his best efforts to obtain reliable assurance
that confidential treatment will be accorded information so disclosed. In the
event of a breach or a threatened breach by Xxxxxxxxx of the provisions of this
Section 5.3, the Corporation may, in addition to any other remedies it may have,
obtain injunctive relief in any court of appropriate jurisdiction to enforce
this Section 5.3. The provisions of this Section 5.3 shall survive the
expiration or termination, for any reason, of this Agreement and shall be
separately enforceable. Any records of Confidential Information prepared by
Xxxxxxxxx or which come into Xxxxxxxxx'x possession during the Term are and
remain the property of the Corporation and upon termination of this Agreement
all such records and copies thereof shall be either left with or returned to the
Corporation.
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5.4. The term "Confidential Information" shall mean information disclosed to
Xxxxxxxxx or known, learned, created or observed by him as a consequence of or
through this Agreement, not generally known in the relevant trade or industry,
about the Corporation's business activities, services and processes, including
but not limited to information concerning advertising, sales promotion,
publicity, sales data, research, programming and plans for programming,
finances, accounting, methods, processes, business plans (including prospective
or pending license applications or investments in license holders or
applicants), client or supplier lists and records, potential client or supplier
lists, and client or supplier billing.
6. Indemnification.
6.1. The Corporation will indemnify Xxxxxxxxx and pay on his behalf all Expenses
(as defined below) incurred by Xxxxxxxxx in any Proceeding (as defined below),
whether the Proceeding which gave rise to the right of indemnification pursuant
to this Agreement occurred prior to or after the date of this Agreement provided
that Xxxxxxxxx shall promptly notify the Corporation of such Proceedings and the
Corporation shall be entitled to participate in such Proceedings and, to the
extent that it wishes, jointly with Xxxxxxxxx, assume the defense thereof with
counsel of its choice. This indemnification shall not apply if it is determined
by a court of competent jurisdiction in a Proceeding that any losses, claims,
damages or liabilities arose primarily out of the gross negligence, wilful
misconduct or bad faith of Xxxxxxxxx.
6.2. The term "Proceeding" shall include any threatened, pending or completed
action, suit or proceeding, or any inquiry or investigation, whether brought in
the name of the Corporation or otherwise and whether of a civil, criminal,
administrative or investigative nature, including, but not limited to, actions,
suits or proceedings brought under or predicated upon any securities laws, in
which Xxxxxxxxx may be or may have been involved as a party or otherwise, and
any threatened, pending or completed action, suit or proceeding or any inquiry
or investigation that Xxxxxxxxx in good faith believes might lead to the
institution of any such action, suit or proceeding or any such inquiry or
investigation, by reason of the fact that Xxxxxxxxx is or was a director,
officer, employee, agent or fiduciary of the Corporation, by reason of any
action taken by Xxxxxxxxx or of any inaction on his part while acting as such
director, officer, employee, agent or fiduciary or by reason of the fact that he
is or was serving at the request of the Corporation as a director, officer,
employee, trustee, fiduciary or agent of another corporation, partnership, joint
venture, employee benefit plan, trust or other enterprise, whether or not he is
serving in such capacity at the time any liability or expense is incurred for
which indemnification or reimbursement can be provided under this Agreement.
6.3. The term "Expenses" shall include, without limitation thereto, expenses
(including, without limitation, attorneys' fees and expenses) of investigations,
judicial or administrative proceedings or appeals, damages, judgements, fines,
penalties or amounts paid in settlement by or on behalf of Xxxxxxxxx and any
Expenses of establishing a right to indemnification under this Agreement.
6.4. The Expenses incurred by Xxxxxxxxx in any Proceeding shall be paid by the
Corporation as incurred and in advance of the final disposition of the
Proceeding at the
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written request of Xxxxxxxxx. Xxxxxxxxx hereby agrees and undertakes to repay
such amounts if it shall ultimately be decided in a Proceeding that he is not
entitled to be indemnified by the Corporation pursuant to this Agreement or
otherwise.
6.5. The indemnification and advancement of Expenses provided by this Agreement
shall not be deemed exclusive of any other rights to which Xxxxxxxxx may be
entitled under the Corporation's Articles of Incorporation or Bye-Laws, any
agreement, any vote of stockholders or disinterested directors, the laws under
which the Corporation was formed, or otherwise, and may be exercised in any
order Xxxxxxxxx elects and prior to, concurrently with or following the exercise
of any other such rights to which Xxxxxxxxx may be entitled, including pursuant
to directors and officers insurance maintained by the Corporation, both as to
action in official capacity and as to action in another capacity while holding
such office, and the exercise of such rights shall not be deemed a waiver of any
of the provisions of this Agreement. To the extent that a change in law (whether
by statute or judicial decision) permits greater indemnification by agreement
than would be afforded currently under the Corporation's Articles of
Incorporation, Bye-Laws and this Agreement, it is the intent of the parties
hereto that Xxxxxxxxx shall enjoy by this Agreement the greater benefit so
afforded by such change. The provisions of this Section 6 shall survive the
expiration or termination, for any reason, of this Agreement and shall be
separately enforceable.
7. Assignment. The Corporation shall require any successor or assign to all or
substantially all the assets of the Corporation, prior to consummation of any
transaction therewith, to expressly assume and agree to perform in writing this
Agreement in the same manner and to the same extent that the Corporation would
be required to perform it if no such succession or assignment had taken place.
This Agreement shall inure to the benefit of and be binding upon the Corporation
and its successors and assigns. Xxxxxxxxx shall not transfer, assign, convey,
pledge or encumber this Agreement, or his rights, title or interest herein
without the prior consent of the Corporation.
8. 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 2.6, 2.7, 4.3, 6 and 7 hereof.
9. Headings. The headings of the sections hereof are inserted for convenience
only and shall not be deemed to constitute a part hereof nor to affect the
meaning thereof.
10. Interpretation. In case any one or more of the provisions contained in this
Agreement shall, for any reason, be held to be invalid, illegal or unenforceable
in any respect, such invalidity, illegality or unenforceability shall not affect
any other provisions of this Agreement, and this Agreement shall be construed as
if such invalid, illegal or unenforceable provision had never been contained
herein. If, moreover, any one or more of the provisions contained in this
Agreement shall for any reason be held to be excessively broad as to duration,
geographical scope, activity or subject, it shall be construed by limiting and
reducing it, so as to be enforceable to the extent compatible with the
applicable law as it shall then appear.
11. Notices. All notices under this Agreement shall be in writing and shall be
deemed to have been given at the time when mailed by registered or certified
mail or
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when delivered by hand or recognized overnight courier service, addressed to the
address below stated of the party to which notice is given, or to such changed
address as such party may have fixed by notice:
To the Corporation:
00 Xxxxxx Xxxxxx
Xxxxxx X0X 0XX Xxxxxxx
Attn: President and Chief Executive Officer
with a copy to:
Legal Department
00 Xxxxxx Xxxxxx
Xxxxxx X0X 0XX Xxxxxxx
To Xxxxxxxxx:
00 Xxxxxx Xxxxxx
Xxxxxx X0X 0XX Xxxxxxx
with a copy to:
Xxxx X. Xxxxxxxxx, Esq.
000 Xxxxxxxxxxxx Xxxx
Xxxxxxxxxxx, XX 00000
XXX
and a copy to:
Xxxxx X. Xxxxxx
Xxxxxx & Xxxxxx PC,
00 Xxxxxxxx Xxxxxx
Xxxxxxx,
Xxx Xxxxxx 00000 XXX
provided, however, that any notice of change of address shall be effective only
upon receipt.
12. Waivers. If any party should waive any breach of any provision of this
Agreement, it shall not thereby be deemed to have waived any preceding or
succeeding breach of the same or any other provision of this Agreement.
13. Complete Agreement; Amendments. The foregoing is the entire agreement of the
parties with respect to the subject matter hereof and may not be amended,
supplemented, cancelled or discharged except by written instrument executed by
the parties hereto.
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14. Survival. Sections 2.4 - 2.9, 2.9, 3.3, 3.7, 4.3, 5.2 - 5.4, 6 and 16 shall
survive the termination hereof, whether such termination shall be by expiration
of this Agreement or an early termination pursuant to Section 2 hereof.
15. Termination of Agreements. Effective as of the date hereof, this Agreement
replaces and cancels the Employment Agreement by and between the Corporation and
Xxxxxxxxx dated as of November 21, 1997 ("Previous Agreement") and the Amendment
to the Previous Agreement, by and between the Corporation and Xxxxxxxxx dated
December 8, 1998.
16. Governing Law. This Agreement is to be governed by and construed in
accordance with the laws of New York, without giving effect to principles of
conflicts of law. The Parties hereby consent to the jurisdiction of the courts
of the State of New York with respect to any claim arising under or based upon
this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
CME DEVELOPMENT CORPORATION
By:/s/ Xxxx X. Xxxxxxxxxxx
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Name:
Title:
XXXX XXXXXXXXX /s/ Xxxx X. Xxxxxxxxx
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