EXHIBIT 10.11
EMPLOYMENT AGREEMENT
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THIS EMPLOYMENT AGREEMENT ("Agreement") is entered into as of this 1st
day of January, 1998 by and between Central European Distribution Corporation,
Inc., a Delaware corporation (the "Company"), and Xxxxxx Xxxxxxx (the
"Executive").
WHEREAS, the Company desires to employ the Executive, and the
Executive desires to be employed by the Company, on the terms and conditions set
forth herein.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth herein and other good and valuable consideration, the
receipt and sufficiency of which hereby are acknowledged, the parties hereto
agree as follows:
1. Employment. On the terms and conditions set forth in this
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Agreement, the Company agrees to employ the Executive and the Executive agrees
to be employed by the Company for the term set forth in Section 2 hereof and in
the position and with the duties set forth in Section 3 hereof.
2. Term. The employment of the Executive by the Company as provided
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in Section 1 hereof shall commence on the date hereof and end three (3) years
thereafter (the "Expiration Date").
3. Position and Duties. The Executive shall serve as vice president
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and chief financial officer of the Company as well as the chief financial
officer of the Company's subsidiary, Xxxxx Agri International Sp. z o.o (the
"Subsidiary") with such duties and responsibilities as the board of directors of
the Company (the "Board") or the Chief Executive Officer of the Company may from
time to time determine and assign to the Executive. The Executive shall devote
the Executive's reasonable best efforts and substantially full business time to
the performance of the Executive's duties and the advancement of the business
and affairs of the Company and the Subsidiary.
4. Place of Performance. In connection with the Executive's
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employment by the Company, the Executive shall be based at the principal
executive office of the Subsidiary, which the Company retains the right to
change in its discretion, or such other place as the Company and the Executive
mutually agree, except for required travel on Company business.
5. Compensation.
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5(a). Salary. The Executive shall be paid an annual base salary
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(the "Salary") at the rate of $43,000 per year.
5(b). Stock Options. As part of the consideration for entering
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into this Agreement and performing services hereunder, the Company grants to the
Executive stock options for 30,000 shares of its common stock, par value $.01
per share (the "Common Stock") to vest and be exercisable as follows: (i)
options for 5,000 shares to be exercisable at the selling price to the public in
the Company's initial public offering and to become exercisable on January 1,
1999; (ii) options for 10,000 shares to be exercisable at the average trading
price of the Common Stock for the last five trading days of 1998 and to become
exercisable on January 1, 2000; and (iii) options for 15,000 shares to be
exercisable at the average trading price of the Common Stock for the last five
trading days of 1999 and to become exercisable on November 1, 2000. All such
options are granted under the Company's 1997 Stock Incentive Plan and are
contingent upon the successful completion of the Company's initial public
offering and the approval of the shareholders of the Company of the 1997 Stock
Incentive Plan. All such options shall have a term ending on but including
December 31, 2000. This grant shall be documented in a stock option agreement
to be provided to the Executive by the Company.
5(c). Bonus. The Executive shall be paid on terms and
conditions to be agreed to in a separate agreement an annual bonus equal to at
least one-twelfth of the Salary.
5(d). Withholding Taxes and Other Deductions. To the extent
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required by law, the Company and the Subsidiary shall withhold from any payments
due Executive under this Agreement any applicable federal, state or local taxes
and such other deductions as are prescribed by law or Company or Subsidiary
policy.
6. Expenses. The Company and the Subsidiary shall reimburse the
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Executive for all reasonable expenses incurred by the Executive (in accordance
with the policies and procedures in effect for senior executives of the Company
and the Subsidiary) in connection with the Executive's services under this
Agreement. The Executive shall account to the Company or the Subsidiary, as the
case may be, for such expenses in accordance with policies and procedures
established by the Company or the Subsidiary.
7. Confidential Information.
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7(a). The Executive covenants and agrees that the Executive will
not ever, without the prior written consent of the Board or a person authorized
by the Board, publish or disclose to any unaffiliated third party or use for the
Executive's personal benefit or advantage any confidential information with
respect to any of the Company's or Subsidiary's products, services, subscribers,
suppliers, marketing techniques, methods or future plans disclosed to the
Executive as a result of the Executive's employment with the Company, to the
extent such information has
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heretofore remained confidential (except for unauthorized disclosures) and
except as otherwise ordered by a court of competent jurisdiction.
7(b). The Executive acknowledges that the restrictions contained
in Section 7(a) hereof are reasonable and necessary, in view of the nature of
the Company's business, in order to protect the legitimate interests of the
Company, and that any violation thereof would result in irreparable injury to
the Company. Therefore, the Executive agrees that in the event of a breach or
threatened breach by the Executive of the provisions of Section 7(a) hereof, the
Company shall be entitled to obtain from any court of competent jurisdiction,
preliminary or permanent injunctive relief restraining the Executive from
disclosing or using any such confidential information. Nothing herein shall be
construed as prohibiting the Company from pursuing any other remedies available
to it for such breach or threatened breach, including, without limitation,
recovery of damages from the Executive.
7(c). The Executive shall deliver promptly to the Company on
termination of employment, or at any other time the Company may so request, all
confidential memoranda, notes, records, reports and other documents (and all
copies thereof) relating to the Company's and its affiliates' businesses which
the Executive obtained while employed by, or otherwise serving or acting on
behalf of, the Company or which the Executive may then possess or have under his
or her control.
8. Non-Competition.
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8(a). Non-Competition. The Executive covenants and agrees that
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the Executive will not, during the Executive's employment hereunder and for a
period of one (1) year thereafter (to the extent permitted by law), at any time
and in any state or other jurisdiction in which the Company or Subsidiary is
engaged or has reasonably firm plans to engage in business, (i) compete with the
Company or Subsidiary on behalf of the Executive or any third party; (ii)
participate as a director, agent, representative, stockholder or partner or have
any direct or indirect financial interest in any enterprise which engages in the
alcohol product distribution business or any other business in which the Company
or Subsidiary is engaged; or (iii) participate as an employee or officer in any
enterprise in which the Executive's responsibility relates to the alcohol
product distribution business or any other business in which the Company or
Subsidiary is engaged. The ownership by the Executive of less than five percent
(5%) of the outstanding stock of any corporation listed on a national securities
exchange conducting any such business shall not be deemed a violation of this
Section 8(a).
8(b). Injunctive Relief. In the event the restrictions against
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engaging in a competitive activity contained in Section 8(a) hereof shall be
determined by any court of competent jurisdiction to be unenforceable by reason
of their extending for too great a period of time or over too great a
geographical area or by reason of their being too extensive in any other
respect, Section 8(a) hereof shall be interpreted to extend only over the
maximum period of time for which it may be enforceable and over the maximum
geographical area as to which it may be enforceable and to the maximum
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extent in all other respects as to which it may be enforceable, all as
determined by such court in such action.
8(c). Non-Solicitation. The Executive covenants and agrees that
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the Executive will not, during the Executive's employment hereunder and for a
period of one (1) year thereafter induce or attempt to induce any employee of
the Company or the Subsidiary to render services for any other person, firm, or
corporation.
9. Termination of Employment.
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9(a). Death. The Executive's employment hereunder shall
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terminate upon the Executive's death.
9(b). By the Company. The Company may terminate the Executive's
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employment hereunder under the following circumstances:
(i) If the Executive shall have been unable to perform all of
the Executive's duties hereunder by reason of illness, physical or mental
disability or other similar incapacity, which inability shall continue for more
than three (3) consecutive months, the Company may terminate the Executive's
employment hereunder.
(ii) The Company may terminate the Executive's employment
hereunder for "Cause." For purposes of this Agreement, "Cause" shall mean (A)
willful refusal by the Executive to follow a written order of the Chairman of
the Board or the Board of Directors, (B) the Executive's willful engagement in
conduct materially injurious to the Company, (C) dishonesty of a material nature
that relates to the performance of the Executive's duties under this Agreement,
(D) the Executive's conviction for any felony involving moral turpitude, (E) the
Executive's continued failure to perform his duties under this Agreement (except
due to the Executive's incapacity as a result of physical or mental illness) to
the satisfaction of the Board of Directors of the Company for a period of at
least forty-five (45) consecutive days after written notice is delivered to the
Executive specifically identifying the manner in which the Executive has failed
to perform his duties, and (F) termination of the Executive's employment
agreement with the Subsidiary. In addition, the Company may terminate the
Executive's employment for "Cause" if the normal business operations of the
Company are rendered commercially impractical as a consequence of an act of God,
accident, fire, labor controversy, riot or civil commotion, act of public enemy,
law, enactment, rule, order, or any act of government or governmental
instrumentality, failure of facilities, or other cause of a similar or
dissimilar nature that is not reasonably within the control of the Company or
which the Company could not, by reasonable diligence, have avoided.
9(c). By the Executive. The Executive may terminate the
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Executive's employment hereunder for "Good Reason." For purposes of this
Agreement, "Good Reason" shall mean (i) the Company's failure to perform or
observe any of the material terms or provisions of this Agreement, and the
continued failure of the Company to cure such default within thirty (30) days
after written demand for
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performance has been given to the Company by the Executive, which demand shall
describe specifically the nature of such alleged failure to perform or observe
such material terms or provisions; or (ii) a material reduction in the scope of
the Executive's responsibilities and duties.
9(d). Notice of Termination. Any termination of the Executive's
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employment by the Company or the Executive (other than pursuant to Section 9(a)
hereof) shall be communicated by written "Notice of Termination" to the other
party hereto in accordance with Section 11 hereof. For purposes of this
Agreement, a "Notice of Termination" shall mean a notice which shall indicate
the specific termination provision in this Agreement relied upon, if any, and
shall set forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of the Executive's employment under the
provision so indicated.
9(e). Date of Termination. For purposes of this Agreement, the
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"Date of Termination" shall mean (i) if the Executive's employment is terminated
by the Executive's death, the date of the Executive's death; (ii) if the
Executive's employment is terminated pursuant to Section 9(b)(i) hereof, thirty
(30) days after Notice of Termination, provided that the Executive shall not
have returned to the performance of the Executive's duties on a full-time basis
during such 30-day period; (iii) if the Executive's employment is terminated
pursuant to Section 9(b)(ii)(A) - (E) or 9(c) hereof, the date specified in the
Notice of Termination;, if the Executive's employment is terminated pursuant to
Section 9(b)(ii)(F) hereof, the date the Executive's employment agreement with
the Subsidiary is terminated after the required notice provision under Polish
law, and (iv) if the Executive's employment is terminated for any other reason,
the date on which Notice of Termination is given.
10. Compensation Upon Termination.
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10(a). If the Executive's employment is terminated by the
Executive's death, the Company shall pay to the Executive's estate, or as may be
directed by the legal representatives of such estate, the Executive's Salary
through the Date of Termination and the Company shall have no further
obligations to the Executive under this Agreement.
10(b). During any period that the Executive fails to perform the
Executive's duties hereunder as a result of incapacity due to physical or mental
illness ("disability period"), the Executive shall continue to receive (i) the
Executive's Salary through the Date of Termination; provided, that payments so
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made to the Executive during the disability period shall be reduced by the sum
of the amounts, if any, payable to the Executive at or prior to the time of any
such payment under disability benefit plans of the Company and which amounts
were not previously applied to reduce any such payment and the Company shall
have no further obligations to the Executive under this Agreement.
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10(c). If the Company terminates the Executive's employment for
Cause as provided in Section 9(b)(ii) hereof, the Company shall pay the
Executive the Executive's Salary through the Date of Termination and the Company
shall have no further obligations to the Executive under this Agreement.
10(d). If the Executive terminates the Executive's employment
other than for Good Reason, the Company shall pay the Executive the Executive's
Salary through the Date of Termination and the Company shall have no further
obligations to the Executive under this agreement.
10(e). If the Company terminates the Executive's employment
other than for Cause, disability or death, or the Executive terminates the
Executive's employment for Good Reason as provided in Section 9(c) hereof, the
Company shall pay the Executive the Executive's Salary through the Date of
Termination and the Company shall have no further obligations to the Executive
under this Agreement.
10(f). Parachute Limitations. Notwithstanding any other
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provision of this Agreement or of any other agreement, contract or understanding
heretofore or hereafter entered into by the Executive with the Company or any
subsidiary or affiliate thereof, except an agreement, contract or understanding
hereafter entered into that expressly modifies or excludes application of this
Section 10(f) (the "Other Agreements"), and notwithstanding any formal or
informal plan or other arrangement heretofore or hereafter adopted by the
Company (or any subsidiary or affiliate thereof) for the direct or indirect
compensation of the Executive (including groups or classes of participants or
beneficiaries of which the Executive is a member), whether or not such
compensation is deferred, is in cash, or is in the form of a benefit to or for
the Executive (a "Benefit Plan"), if the Executive is a "disqualified
individual" (as defined in Section 280G(c) of the Internal Revenue Code of 1986,
as amended (the "Code")), any right to receive any payment or benefit under this
Agreement shall not become exercisable (i) to the extent that such right to
payment or benefit, taking into account all other rights, payments or benefits
to or for the Executive under this Agreement, all Other Agreements and all
Benefit Plans, would cause any payment or benefit to the Executive under this
Agreement to be considered a "parachute payment" within the meaning of Section
280G(b)(2) of the Code as then in effect (a "Parachute Payment") and (ii) if, as
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a result of receiving a Parachute Payment, the aggregate after-tax amount
received by the Executive from the Company under this Agreement, all Other
Agreements and all Benefit Plans would be less than the maximum after-tax amount
that could be received by the Executive without causing any such payment or
benefit to be considered a Parachute Payment. In the event that the receipt of
any such right to payment or benefit under this Agreement, any Other Agreement
or any Benefit Plan would cause the Executive to be considered to have received
a Parachute Payment under this Agreement that would have the effect of
decreasing the after-tax amount received by the Executive as described in clause
(ii) of the preceding sentence, then the Executive shall have the right, in the
Executive's sole discretion, to designate those rights, payments or benefits
under this Agreement, any Other Agreements and any Benefit
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Plans that should be reduced or eliminated so as to avoid having the payment or
benefit to the Executive under this Agreement be deemed to be a Parachute
Payment.
10(g). Mitigation. Any sums earned by the Executive pursuant to
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any subsequent employment shall be offset against any remaining obligation the
Company may have to pay by virtue of termination under this Agreement.
11. Notices. All notices, demands, requests or other communications
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required or permitted to be given or made hereunder shall be in writing and
shall be delivered, telecopied or mailed by first class registered or certified
mail, postage prepaid, addressed as follows:
(a) If to the Company:
Central European Distribution Corporation
000 Xxxxx Xxxxx Xxxxxx, #000
Xxxxxxxxxx, Xxxxxxxx 00000
Telecopier: 000-000-0000
Attention: Xxxxxxx X. Xxxxx
President
(b) If to the Executive:
Xxxxxx Xxxxxxx
Fabryczna 25 Street, App. 00
00-000 Xxxxxx, Xxxxxx
Telephone: 000-00-00
or to such other address as may be designated by either party in a notice to the
other. Each notice, demand, request or other communication that shall be given
or made in the manner described above shall be deemed sufficiently given or made
for all purposes at such time as it is delivered to the addressee (with the
return receipt, the delivery receipt, the answer back or the affidavit of
messenger being deemed conclusive evidence of such delivery) or at such time as
delivery is refused by the addressee upon presentation.
12. Severability. The invalidity or unenforceability of any one or
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more provisions of this Agreement shall not affect the validity or
enforceability of the other provisions of this Agreement, which shall remain in
full force and effect.
13. Survival. It is the express intention and agreement of the
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parties hereto that the provisions of Sections 7 and 8 hereof shall survive the
termination of employment of the Executive. In addition, all obligations of the
Company to make payments hereunder shall survive any termination of this
Agreement on the terms and conditions set forth herein.
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14. Assignment. The rights and obligations of the parties to this
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Agreement shall not be assignable, except that the rights and obligations of the
Company hereunder shall be assignable in connection with any subsequent
merger, consolidation, sale of all substantially all of the assets of the
Company or similar reorganization of a successor corporation.
15. Binding Effect. Subject to any provisions hereof restricting
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assignment, this Agreement shall be binding upon the parties hereto and shall
inure to the benefit of the parties and their respective heirs, devisees,
executors, administrators, legal representatives, successors and assigns.
16. Amendment; Waiver. This Agreement shall not be amended, altered
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or modified except by an instrument in writing duly executed by the parties
hereto. Neither the waiver by either of the parties hereto of a breach of or a
default under any of the provisions of this Agreement, nor the failure of either
of the parties, on one or more occasions, to enforce any of the provisions of
this Agreement or to exercise any right or privilege hereunder, shall thereafter
be construed as a waiver of any subsequent breach or default of a similar
nature, or as a waiver of any such provisions, rights or privileges hereunder.
17. Headings. Section and subsection headings contained in this
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Agreement are inserted for convenience of reference only, shall not be deemed to
be a part of this Agreement for any purpose, and shall not in any way define or
affect the meaning, construction or scope of any of the provisions hereof.
18. Governing Law. This Agreement, the rights and obligations of the
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parties hereto, and any claims or disputes relating thereto, shall be governed
by and construed in accordance with the laws of the Commonwealth of Virginia
(but not including the choice of law rules thereof).
19. Action of Behalf of the Subsidiary. The Company is executing
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this Agreement also on behalf of its Subsidiary and agrees to cause the
Subsidiary to fulfill its obligations hereunder, though the appointment and
removal, if necessary, of members of the management board of the Subsidiary.
20. Entire Agreement. This Agreement constitutes the entire
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agreement between the parties hereto with respect to the subject matter hereof,
and it supersedes all prior oral or written agreements, commitments or
understandings with respect to the matters provided for herein.
21. Counterparts. This Agreement may be executed in two or more
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counterparts, each of which shall be an original and all of which shall be
deemed to constitute one and the same instrument.
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IN WITNESS WHEREOF, the undersigned have duly executed this Agreement,
or have caused this Agreement to be duly executed on their behalf, as of the day
and year first hereinabove written.
CENTRAL EUROPEAN DISTRIBUTION
CORPORATION
By: /s/ Xxxxxxx X. Xxxxx
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Name: Xxxxxxx X. Xxxxx
Title: President and Chief Executive
Officer
THE EXECUTIVE:
/s/ Xxxxxx Xxxxxxx
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Xxxxxx Xxxxxxx
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