March 30, 2004
Exhibit
10.9
March 30,
2004
Xx.
Xxxxxxx X. Xxxxx
00 Xxxxx
Xxxx
Xxxxxxxxxx,
Xxx Xxxx 00000
Dear
Xxxxxxx:
We are
pleased to confirm to you our offer of employment by CME Development
Corporation (the “Company”). The purpose of this letter
agreement (this “Agreement”) is to set forth our understanding of the terms of
your employment.
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1.
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Your
employment with the Company will be for a term commencing February 2,
2004, and ending January 31, 2008 (subject to earlier termination in
accordance with paragraph 7 hereof), unless extended by a written
agreement signed by you and the
Company.
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2.
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Your
duties will be performed in the United States of America and in the United
Kingdom. Your annual base salary for your duties performed in the United
States of America will be $485,000 and your annual base salary for your
duties performed in the United Kingdom will be $140,000, payable in
accordance with the Company’s payroll practices. Although your duties
hereunder will be performed in the United States and in the United
Kingdom, you maintain your principal residence in Westchester County, New
York. If the performance of your duties results in the taxation of your
income and/or withholdings from your income (e.g., withholdings to fund
governmental health programs) which are in excess of the taxation and
withholdings that would apply if all of your income were received by you
in New York then, after taking account of any tax credits resulting from
tax treaties or otherwise, the Company will pay you a tax-equalization
amount so that, on an after-tax basis, your total combined income
hereunder is no less than would have been the case had all of your
compensation hereunder been received in New York. In addition, Company
will reimburse you for costs you incur for multiple tax returns and tax
advice, not to exceed US$15,000 in any
year.
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3.
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The
Compensation Committee of the Board of Directors of the Company’s ultimate
sole shareholder, the Central European Media Enterprises Limited (“CME
Ltd”) (the “Board”) will review your base salary at least
annually, and the Board may, in its discretion, increase, but not
decrease, your base salary.
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4.
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You
will be employed as the Chief Executive Officer of the Company, reporting
solely to the Board. All employees of the Company will report
directly to you or your designees. During the term of your
employment, you will also be a director of CME Ltd. Your duties
shall include serving as an officer and otherwise performing services for
the Company or for any parent company of the Company, for any holding
company of the Company and any subsidiaries of the Company or of any such
holding company, any associated company of any of them and any joint
venture in which any of the foregoing are a partner, member or shareholder
(each of the foregoing, other than the Company, an “Affiliate”) as
requested by the Board. All such services requested of you will
be consistent with your senior status as the Company’s Chief Executive
Officer. You acknowledge that you shall be required to travel
regularly to and work at the Company’s and any Affiliate’s offices and
facilities in central and eastern Europe and/or from time to time, such
other locations in Europe as appropriate to the performance of your
services on behalf of the Company and the Affiliates, or as requested by
the Board. You agree to serve the Company faithfully and to the
best of your ability and to devote your full business time, energy,
experience and talents to the business of the Company and the Affiliates;
provided, however, that you
shall be permitted to manage your personal investments and to engage in or
serve such civic, community, charitable, educational, or religious
organizations as you may reasonably select as long as such service does
not interfere with the performance of your duties under this
Agreement. The Company recognizes that you currently serve as a
director of Canal Plus Nordic, Cablecom, AMC Theatres and American Media
and serve as an advisor to MortgageIT and that you may be invited to serve
on MortgageIT’s board of directors. You agree, if so requested
by the Company, to limit your service and engagements as described in the
immediately preceding sentence to the extent necessary to comply with any
corporate governance recommendations of the U.S. Securities and Exchange
Commission or the National Association of Securities Dealers, and, as so
limited, you may continue such services and engagements as long as such
services and engagements do not interfere with the performance of your
duties under this Agreement or violate the restrictive covenants described
in paragraph 6 hereof.
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5.
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While
you are employed by the Company, you will be eligible to receive an annual
incentive bonus in any amount not exceeding your combined annual base
salary payable for your duties performed in the United States of America
and in the United Kingdom, as described in this paragraph
4. One-half of any such bonus will be based upon achievement of
reasonable quantitative performance criteria established by the Board and
one-half of any such bonus shall be based upon subjective criteria
established by the Board.
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6.
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While
you are employed by the Company, you will be eligible to participate in
the employee benefit plans and programs made available from time to time
for the Company’s other senior executive officers (provided, however, the Company
shall continue to provide you with medical and travel insurance benefits
in the event the Company ceases to provide medical and travel insurance
benefits to other employees). Without limiting the foregoing,
while you are employed by the Company, (a) you will be eligible to receive
options to purchase Class A Common Shares of the Company as described in
Annex A
hereto, (b) the Company will provide you with an assistant selected by
you, and (c) the Company will pay or reimburse all reasonable travel
expenses you incur in providing services for the Company, in accordance
with the Company’s policies, provided, however, that in no
event will your use of business class travel be deemed to violate such
policies.
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7.
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You
acknowledge and agree that the individualized services and capabilities
that you will provide to the Company under this Agreement are of a
personal, special, unique, unusual, extraordinary and intellectual
character. Therefore, you will comply with and be bound by the
restrictive covenants set forth in Annex B
attached to, and made a part of, this Agreement, and you acknowledge and
agree that the restrictions in this Agreement (and the duration, extent
and application thereof) are no greater than is necessary to protect the
goodwill and trade connection of the Business (as defined in Annex B) and
are reasonable to protect the Company’s rights under this Agreement and to
safeguard the Company’s and the Affiliates’ Confidential Information (as
defined in Annex
B). You and the Company agree that the obligations and
restrictions with respect to non-competition, confidentiality, Company
property, nondisparagement and non-solicitation, as set forth in Annex B, will
continue to apply to you following the termination of your relationship
regardless of the manner in which your relationship with the Company is
terminated, whether voluntarily, due to Termination for Cause (as defined
herein), not due to Termination for Cause or otherwise. You
represent that your economic means and circumstances are such that the
provisions of this Agreement, including the noncompetition,
nonsolicitation, confidentiality and Company property provisions, will not
prevent you from providing for yourself and your family on a basis
satisfactory to you and them. You acknowledge and agree that
your covenants and obligations 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 the
Affiliates irreparable injury for which adequate remedies are not
available at law. You therefore agree 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 you from committing any violation of
the covenants and obligations contained in this
Agreement. These remedies are cumulative and are in addition to
any other rights and remedies the Company may have at law or in
equity. You agree that each of the paragraphs and
sub-paragraphs of Annex B
constitutes an entirely separate, severable and independent covenant and
restriction on you. If the arbitrator appointed under
paragraph 9 hereof 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 of this Agreement will remain in
full force and effect. If you raise 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, you specifically agree that you will
comply fully with this Agreement unless and until the entry of an arbitral
decision to the contrary.
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2
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8.
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You
may terminate your employment hereunder upon at least ninety days' prior
written notice to the Company, and you will not be entitled to any
additional compensation, severance, termination pay, salary continuation
or similar compensation or benefits upon or after such termination of
employment. If the Company terminates your employment, other
than due to Termination for Cause, and not because of your death or
disability (as determined in the good faith judgment of the Board) and not
due to expiration of the employment term set forth in paragraph 1 hereof
(or if you terminate your employment other than pursuant to the
immediately preceding sentence because of alleged breaches by the Company
of this Agreement), you will have those rights to which you are entitled
as a matter of law in respect of your loss of compensation, stock options
and other contractual entitlements hereunder, and (a) you will not
otherwise be entitled to any additional compensation, severance,
termination pay, salary continuation or similar compensation or benefits
upon or after termination of your employment with the Company, and (b) in
connection with such termination of employment the Company will not assert
that you have any duty to mitigate damages, provided, however, that if you
are engaged to render full-time services following such termination of
employment with the Company, amounts you earn from such full-time
employment during the period you otherwise would have been on the
Company's payroll hereunder shall offset any financial obligation of the
Company to you, and you agree to notify the Company in writing of your
acceptance of any such other employment within five (5) days after
accepting such other employment. For purposes of this
Agreement, “Termination for Cause” means a determination by a majority of
the Board to terminate your employment due to your (i) conviction of a
felony or entering of a plea of nolo contendere with respect to a charged
felony, (ii) 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 of the Company which is injurious to the
Company; (iv) willful failure without reasonable justification to comply
with a reasonable written order of the Board; or (v) willful and material
breach of your duties or obligations under this
Agreement. Notwithstanding the foregoing, a termination shall
not be treated as a Termination for Cause unless (A) the Company shall
have delivered a written notice to you, stating that it intends to
terminate your employment due to Termination for Cause not less than seven
days following the giving of such notice, and specifying the factual basis
for such termination, and (B) the event or events that form the basis for
such notice, if capable of being cured, shall not have been cured within
30 days of receipt of such
notice.
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3
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9.
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For
one year following termination of your employment with the Company other
than due to Termination for Cause, the Company will engage you as a
consultant, and you agree to consult and cooperate with, and assist the
Company in any legal or business matter relating to the Company or the
Affiliates, as requested by the Company, upon reasonable advance notice by
the Company; provided that you shall
not be required to devote more than twenty hours per month to providing
such services and such services need not be provided to the Company on an
exclusive basis, as long as you comply with the restrictive covenants
described in paragraph 6 hereof. In consideration for your
provision of such services during such one-year period, the Company will
pay you an aggregate fee of $250,000, payable in equal monthly
installments in arrears.
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10.
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You
and the Company agree that any dispute, claim or controversy between you
and the Company or an Affiliate or any of their respective officers,
directors, employees or shareholders (who are hereby expressly made
third-party beneficiaries of this Agreement for this purpose) arising out
of, relating to or in connection with this Agreement, or the breach,
termination or validity thereof, or otherwise arising from your employment
or the termination of your employment, will be referred to and finally
resolved by binding and non-appealable arbitration, before a single
arbitrator under the American Arbitration Association’s National Rules for
the Resolution of Employment Disputes, which Rules are deemed to be
incorporated by reference into this Agreement. The place of
arbitration shall be New York City. To the extent practicable,
any such arbitration shall be consolidated with any other arbitration
proceeding between you and any
Affiliate.
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11.
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You
and the Company agree that neither you nor the Company will be entitled to
seek or obtain punitive, exemplary or similar damages of any kind from the
other or, in your case, 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.
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4
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12.
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The
Company will indemnify and hold you harmless from and against any claim,
loss or cause of action arising from or out of your 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 you
serve 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 you with respect to
which you reasonably believe in good faith you are entitled to
indemnification, the Company will either defend you or, at its option, pay
your reasonable legal expenses (or cause such expenses to be paid) as they
become payable by you, provided that you will
reimburse the Company for any 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 the Company’s payment or reimbursement of
such amounts violates any law binding on the
Company.
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13.
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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:
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If to
you, to you at:
Xxxxxxx
X. Xxxxx
00 Xxxxx
Xxxx
Xxxxxxxxxx,
Xxx Xxxx 00000
Facsimile
number: (000) 000-0000
With a
copy to:
Franklin,
Xxxxxxx, Xxxxxx & Xxxxxxxx, P.C.
000
Xxxxxxx Xxxxxx
Xxx Xxxx,
Xxx Xxxx 00000
Facsimile
number: (000) 000-0000
Attention: Xxxxxxx
X. Xxxxxx, Esq.
5
If to the
Company, to the Company at
0xx Xxxxx,
Xxxxxxx Xxxxx
00-00
Xxxxxxx
Xxxxxx
XX0X 0XX
Xxxxxx
Xxxxxxx
Facsimile
number: 00-000-000-0000
Attention: Xxxxxx
Xxxxx, Esq.
With a
copy to:
the
Chairman of the Compensation Committee
of the
Board of Directors of Central European Media Enterprises Ltd767 Xxxxx
Xxxxxx
Xxxxx
0000
Xxx Xxxx,
XX 00000
Facsimile
number: (000) 000-0000
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.
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14.
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This
Agreement constitutes the entire agreement between you and the Company
with respect to the subject matter hereof, supersedes any prior agreements
and undertakings, both written and oral, and may not be modified or
amended in any way except in writing by you and the
Company. The validity, interpretation, construction and
performance of this Agreement, and all disputes arising under or in
connection with this Agreement, shall be governed by the laws of the State
of New York (to the exclusion of its conflict of law
rules). All amounts payable hereunder shall be subject to the
withholding of all applicable taxes and deductions required by any
applicable law.
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If you
agree with the terms outlined in this Agreement, please acknowledge the same by
signing this Agreement and the enclosed duplicate original hereof and returning
such signed duplicate original copy in the envelope provided.
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Sincerely,
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CME
Development Corporation
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By:
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/s/ Xxxxxx X. Xxxxxx
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Name: Xxxxxx
X. Xxxxxx
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Title: Director
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Accepted
and Agreed to as of this 2nd day of
February 2004:
/s/ Xxxxxxx
Xxxxx
XXXXXXX
XXXXX
6
Annex
A
Stock
Options
You have
been granted, effective February 2, 2004, a non-qualified stock option to
purchase 160,000 Class A Common Shares of CME Ltd under CME Ltd’s
1995 Stock Option Plan (the “Option Plan”). Such option will become
exercisable for 25% of the total number of shares subject to such option on each
of the following dates: January 31, 2005, 2006, 2007 and 2008, as
long as you have been continuously employed by the Company through each such
respective date, except to the extent that you may become entitled to
an accelerated right to exercise the option pursuant to the terms of the Option
Plan; or
except as otherwise provided in the Option Plan with regard to death, disability
or retirement at or after age 65; provided, however, that if
the Company terminates your employment, other than due to Termination for Cause,
such option shall become exercisable in full and may be exercised in accordance
with the Option Plan. The exercise price of such option shall be the
fair market value of the Class A Common Shares on February 2, 2004 as determined
in accordance with the Option Plan. The terms and conditions of such
option shall be governed by the Option Plan and the applicable option agreement
(which shall be consistent with the Option Plan and the terms
hereof).
7
Annex
B
Restrictive
Covenants
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1
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Definitions
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the
Business
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the
business of investing in, developing and operating national and regional
commercial television stations and networks in Central and Eastern Europe
or any part of it carried on by the Company or any Affiliate at any time,
or, with respect to matters following the Termination Date, any such
business in respect of which Executive had been concerned or involved to
any material extent at any time during the twelve (12) month period
immediately prior to the Termination Date.
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Executive
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Xxxxxxx
Xxxxx
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Material
Interest
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(a) the
holding of any position as director, officer, employee, consultant,
partner, principal or agent;
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(b) the
direct or indirect control or ownership (whether jointly or alone) of any
shares (or any voting rights attached to them) or debentures except for
the ownership for investment purposes only of not more than 1% of the
issued ordinary shares of a company whose shares are listed on any
recognized investment exchange; or
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(c) the
direct or indirect provision of any financial
assistance.
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Senior
Executive
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a
person with whom Executive had dealings in the course of his employment or
services and who is or was:
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(a) engaged
or employed as an employee, director or consultant of the Company or any
Affiliate;
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(b) engaged
or employed in a capacity in which he obtained Confidential Information;
and
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(c) with
respect to matters following the Termination Date, engaged or employed at
the Termination Date or at any time during the twelve (12) month period
immediately prior to the Termination Date.
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Termination
Date
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the
date on which Executive’s employment with the Company terminates,
howsoever occurring, or, if later, the later of: (a) the date
on which the one-year term of Executive’s consulting, cooperation and
assistance services pursuant to paragraph 8 of this Agreement terminates,
and (b) the expiration of any period during or with respect to which
Executive received compensation or other payments from the Company in
respect of his loss of compensation, stock options and other contractual
entitlements under this Agreement in connection with any termination of
his employment by the
Company.
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8
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2
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Executive
covenants with the Company that he shall not (other than on behalf of the
Company) without the prior written consent of the Board (such consent to
be withheld only insofar as it may be reasonably necessary to protect the
legitimate interests of the Company and any Affiliates) directly or
indirectly:
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2.1
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during
the term of Executive’s employment by, or other services to, the Company,
and for twelve (12) months following the Termination Date hold a Material
Interest in a business the same as or in competition with the Business
anywhere in the Czech Republic; Romania; Ukraine; Bulgaria; Slovakia;
Slovenia; Russia; Poland; Latvia; Croatia; Yugoslavia or any other country
or territory in which the Company of any Affiliate has any business
interests.
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2.2
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during
the term of Executive’s employment by, or other services to, the Company,
and for 12 months following the Termination
Date:
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2.2.1
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in
relation to a business the same as or in competition with the Business
perform any services or supply goods to any person, firm or company who
was a client or customer of the Company or any Affiliate at any time, or,
with respect to matters following the Termination Date, at the Termination
Date or during the twelve (12) month period immediately prior to the
Termination Date, and with whom during that period Executive had contact
or dealings or was aware of in the course of his employment or
services;
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9
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2.2.2
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in
relation to a business the same as or in competition with the Business,
canvass, solicit or approach, or cause to be canvassed, solicited or
approached, for the purpose of obtaining business, orders or custom any
person, firm or company who was a client or customer of the Company or any
Affiliate at any time, or, with respect to matters following the
Termination Date, at the Termination Date or during the twelve (12) month
period immediately prior to the Termination Date and with whom during that
period Executive had contact or dealings or was aware of in the course of
his employment or services; or
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2.2.3
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in
relation to a business the same as or in competition with the Business,
offer employment to or employ or offer or conclude any contract for
services with any Senior Executive or procure or facilitate the making of
such an offer by any person, firm or
company;
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2.3
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at
any time solicit, entice or prepare or endeavor to solicit, entice or
procure:
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2.3.1
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an
employee of the Company or any Affiliate to breach his contract of
employment; or
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2.3.2
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a
person to breach his contract for services with the Company or any
Affiliate;
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2.4
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at
any time:
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2.4.1
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falsely
represent himself as being connected with or interested in the Company or
any Affiliate or in the Business;
or
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2.4.2
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do
or say anything likely or calculated to lead any person firm or company to
withdraw from or cease to continue offering to the Company or any
Affiliate any rights of purchase, sale, import, distribution or agency
then enjoyed by it.
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3
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Without
the prior written consent of the Company, Executive shall not disclose at
any time during his term of employment or services with the Company 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). “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 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
perspective or pending licensing applications or investments in license
holders or applicants); profit margins, goals, objectives and projections;
compilations, analyses and projections regarding the Company, Affiliates
or any of its clients or potential clients or their business; 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. 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 the Affiliates’
interest in maintaining the confidentiality of any Confidential
Information.
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4
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Each
of the parties to this Agreement 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.
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5
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Promptly
(and at the latest within ten business days) following Executive’s
termination of services, Executive
shall:
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5.1
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return
to the Company all documents, records, notebooks, computer diskettes and
tapes and anything else containing the Company’s Confidential Information,
and any other property or Confidential Information of the Company or
Affiliates, including all copies thereof in Executive’s possession,
custody or control, and
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5.2
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delete
from any computer or other electronic storage medium owned by Executive
any of the proprietary or Confidential Information of the Company or
Affiliate
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11
