Exhibit 10.5
TV FILME, INC.
EMPLOYMENT AGREEMENT
AGREEMENT, dated as of July 26, 1996, by and among TV Filme, Inc., a
Delaware corporation ("TV Filme"), ITSA-Intercontinental Telecomunicacoes Ltda.,
a Brazilian limitada and subsidiary of TV Filme ("ITSA") (each of TV Filme and
ITSA individually, an "Employer," and together, the "Employers"), and Hermano
Studart Lins de Albuquerque ("Executive").
RECITALS
WHEREAS, Employers, directly and through their Affiliates (as
defined below), are engaged in the subscription television business; and
WHEREAS, TV Filme is contemplating an initial public offering (the
"Initial Public Offering") of shares of its common stock, par value U.S. $.01
per share (the "Common Stock"); and
WHEREAS, effective upon consummation of the Initial Public Offering,
Employers desire to employ Executive, and Executive desires to be employed by
Employers, on the terms and conditions set forth in this Agreement.
NOW THEREFORE, in consideration of the mutual covenants and
agreements contained in this Agreement, the parties agree as follows:
1. Employment and Duties. Employers hereby employ Executive and
Executive hereby accepts employment as Chief Executive Officer and Secretary of
TV Filme, and in comparable executive positions at ITSA and, if Employers so
elect, as an executive officer or director of any company in which either or
both Employers holds a majority interest (each such company, together with TV
Filme Servicos de Telecomunicacoes Ltda., being hereinafter referred to
collectively as the "Subsidiaries"). Executive agrees to serve without
additional remuneration in such capacities for the Subsidiaries, with
responsibilities and authority commensurate with the nature of Executive's
responsibility and authority with Employers as the Board of Directors of TV
Filme (the "Board of Directors") may from time to time request, subject to
appropriate authorization by the Subsidiaries involved and any limitations under
applicable law. Executive shall perform such duties and have such powers and
authority as the Board of Directors shall determine, commensurate with
Executive's position as an executive officer of TV Filme and ITSA, as the case
may be. Executive's services for each of TV Filme and ITSA shall be rendered at
ITSA's principal place of business in Brazil (so long as such principal place of
business is in a location where ITSA is then conducting subscription television
operations), subject to reasonable travel requirements. Executive's failure to
discharge an order or perform a function because Executive reasonably and in
good faith believes such would violate a law or regulation or be dishonest shall
not be deemed a breach by him of his obligations or duties hereunder.
2. Services and Exclusivity of Services.
2.1 So long as this Agreement shall continue in effect,
Executive shall devote his full business time and energy to the business,
affairs and interests of Employers and their Subsidiaries and matters related
thereto and shall faithfully and diligently endeavor to promote such business,
affairs and interests.
2.2. Executive may serve as a director or in any other
capacity of any business enterprise, including an enterprise whose activities
may involve or relate to the business of Employers and their Subsidiaries,
provided that such service is expressly approved by the Board of Directors.
Executive may make and manage personal business investments of his choice
(provided such investments are in businesses which do not compete with Employers
and their Subsidiaries or such investments satisfy the standards set forth in
the proviso to Section 5.2.1(i) and, in either case, do not require any services
on the part of Executive in the affairs of the companies in which such
investments are made) and may serve in any capacity with any civic, educational
or charitable organization, or any governmental entity or trade association,
without seeking or obtaining approval by the Board of Directors, provided such
activities and service do not materially interfere or conflict with the
performance of his duties hereunder.
3. Compensation, Expenses and Other Benefits.
3.1. Base Salary. Executive shall receive a base salary at a
monthly rate of U.S. $9,377.34 (U.S. $125,000.00 on an annual basis) (the "Base
Salary"). The Base Salary shall be paid in substantially equal installments
consistent with ITSA's normal payroll schedule, but in no event less frequently
than bi-weekly, subject to any applicable withholding and other taxes. The Base
Salary shall be payable by ITSA in Reals at a rate equal to the U.S. dollar/Real
exchange rate in effect at the time of payment. Executive's Base Salary shall be
reviewed at least annually by the Board of Directors and may be increased but
may not be decreased.
3.2. Bonus. In addition to the Base Salary, Executive shall
also be eligible to receive an annual bonus (the "Bonus"), payable by ITSA in
Reals (calculated in a fashion consistent with paragraph 3.1), in an amount to
be determined in the sole and absolute discretion of the Board of Directors,
taking into consideration, among other things, the financial and operating
performance of TV Filme. The Board of Directors may, in its sole and absolute
discretion, award additional bonuses to Executive on other bases as it deems
appropriate from time to time.
3.3. Stock Options. Executive shall receive, on the date on
which this Agreement becomes effective, options (the "Options") to purchase
110,000 shares of Common Stock of TV Filme, in accordance with the terms of the
TV Filme, Inc. Stock Option Plan ("Stock Option Plan") and the Stock Option
Agreement, to be entered into by and between Executive and TV Filme (the "Stock
Option Agreement") concurrently with this Agreement. A form of each of the Stock
Option Plan and the Stock Option Agreement is attached hereto as Exhibit A and
Exhibit B, respectively.
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3.4. Expenses. ITSA shall promptly reimburse Executive for all
reasonable expenses incurred by him in connection with the performance of his
services under this Agreement upon presentation of appropriate documentation in
accordance with ITSA's and its Subsidiaries' customary procedures and policies
applicable to its and their senior executives.
3.5. Life Insurance; Disability. TV Filme shall obtain (i) a
life insurance policy on the life of Executive in the face amount of $1,000,000,
naming Executive or his designee as the beneficiary, and (ii) a disability
policy covering Executive in the event he becomes disabled, in a monthly amount
equal to 60% of Executive's then-current Base Salary, naming Executive as the
beneficiary thereof.
3.6. Other Benefits. Executive shall be eligible to
participate in any accident or health plans and any other employee benefit plans
(other than any stock option, life insurance, disability or similar plans) that
may from time to time be provided by TV Filme or ITSA to its executive
personnel.
3.7. Vacation. Executive shall be entitled to reasonable
vacations, the timing and duration thereof to be determined by mutual agreement
between Executive and the Board of Directors and shall be entitled to paid
holidays consistent with Employers' practices.
4. Termination.
4.1. Termination.
4.1.1. TV Filme may, in its sole and absolute
discretion, subject to the provisions of Section 4.2 hereof and applicable law,
terminate Executive's employment hereunder at any time, with or without "Cause,"
upon notice of such termination to Executive.
4.1.2. As used in this Agreement, the following terms
shall have the meaning ascribed to them below:
(i) "Cause" shall have the meaning assigned thereto under the laws
of Brazil.
(ii) "Termination Without Cause" shall mean any termination of
employment of Executive (i) by the Board of Directors for reasons
other than "Cause" or the death of Executive, (ii) by Executive
following the willful and material breach by Employers of their
obligations under Section 1 of this Agreement, which breach is not
cured within 30 days of notice of such breach to the Board of
Directors, or (iii) at the election of the Executive, within 30 days
following a "Change of Control" of TV Filme. For purposes of this
Agreement, a "Change of Control" shall mean the acquisition of more
than 50% of the voting stock of TV Filme by an entity other than a
Stockholder or an Affiliate of such Stockholder, as such terms are
defined in the Stockholders Agreement entered into by and among TV
Filme, Executive and the other parties thereto and dated as of the
date hereof.
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4.2. Rights Upon Termination.
4.2.1. Upon any termination of this Agreement for Cause
or upon the voluntary termination by Executive of his employment which does not
constitute a Termination Without Cause, TV Filme shall cause ITSA to pay to
Executive, within 10 days following such termination, any unpaid Base Salary
through the date of termination specified in the termination notice and shall
reimburse Executive for reasonable business expenses incurred prior to the date
of termination, subject to the provisions of Section 3.4 hereof.
4.2.2. Upon termination of this Agreement upon a
Termination Without Cause or because of the death of Executive, TV Filme shall
cause ITSA to pay to Executive (or to his estate, in the case of death) any
unpaid Base Salary through the date of termination specified in the termination
notice. In addition, with respect to a Termination Without Cause, TV Filme shall
cause ITSA to pay to Executive an additional amount equal to an additional
12-months' Base Salary (the "Severance Payment"). TV Filme shall also cause ITSA
to reimburse Executive for reasonable business expenses incurred prior to the
date of termination, subject to the provisions of Section 3.4 hereof. TV Filme
shall cause ITSA to pay all such amounts in a lump sum within 10 days following
such termination, provided that, at ITSA's option, the Severance Payment may be
made in equal monthly installments over the 12-month period subsequent to the
date of termination specified in the termination notice. If ITSA elects to make
such Severance Payment in equal monthly installments, and if Executive accepts
other employment or engages in his own business during such 12-month period,
Executive shall forthwith notify the Board of Directors, and ITSA shall be
entitled to set off against amounts due Executive under this Section 4.2.2 the
amounts paid to Executive in respect of such other employment or business
activity during such 12-month period; provided, however, that the amount to be
set-off shall not exceed one-half of the amount of the Severance Payment.
4.2.3. Upon any termination provided for in this
Agreement, the Options granted Executive shall be treated in the manner set
forth in the Stock Option Agreement.
4.2.4. Except as provided herein, Employer shall have no
further liability to Executive under this Agreement in respect of any
termination of this Agreement.
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5. Confidentiality and Non-Competition.
5.1. Confidentiality. Executive agrees that he will not make
use of, divulge or otherwise disclose, directly or indirectly, any trade secret
or other confidential information concerning the business, operations,
practices, or financial condition of Employers or any of their Subsidiaries
("Confidential Information"), which he may have learned as a result of his
employment by Employers or as a stockholder, officer or director of Employers or
any of their Subsidiaries, except to the extent such use or disclosure is (a)
necessary to the performance of this Agreement, (b) required by applicable law,
(c) authorized by Employers or their Subsidiaries, or (d) information which is
in the public domain through no unlawful act of Executive or which Executive
lawfully acquires subsequent to termination of his employment with Employers
from any person not subject to a confidentiality obligation to Employers or
their Subsidiaries. Executive acknowledges and recognizes that the Confidential
Information is essential to the unique nature of Employers' business and for
that reason, all such materials and information shall at all times remain the
exclusive property of Employers. Upon the termination of this Agreement, the
physical embodiment of all such Confidential Information furnished and supplied
to Executive during the time of Executive's employment by Employers shall be
returned by Executive to Employers. Executive, in the event of such termination,
will not at any time impart to anyone or use any such Confidential Information.
The provisions of this Section 5.1 shall survive the expiration, suspension or
termination, for any reason, of this Agreement.
5.2. Non-Competition.
5.2.1. Executive agrees that he shall not, during the
Restricted Period (as defined below), without the prior written consent of the
Board of Directors:
(i) directly or indirectly (whether as a sole
proprietor, partner, venturer, stockholder, director, officer, employee, or in
any other capacity as principal or agent or through any person, corporation,
partnership, entity or employee acting as nominee or agent) conduct or engage in
or be interested in or associated with any person, firm, association, syndicate,
partnership, company, corporation, or other entity which conducts or engages in
the subscription television business in any geographic areas in which Employers
or any of their Subsidiaries are then so engaged in business or propose to
engage in business in accordance with their then-current strategic plans, nor
shall Executive interfere with, disrupt or attempt to disrupt the relationship,
contractual or otherwise, between Employers or any of their Subsidiaries, on the
one hand, and any customer, supplier, lessor, lessee or employee of Employers or
any of their Subsidiaries, on the other hand; provided, however, that this
Section 5.2.1(i) shall not prohibit Executive from owning beneficially or of
record not more than 5% of the outstanding equity securities of any entity whose
equity securities are registered under the Securities Act of 1933, as amended,
or are listed for trading on any United States or foreign stock exchange; or
(ii) solicit, induce or attempt to induce any employee
of Employers or any of their Subsidiaries to terminate his or her employment
relationship in order to enter into employment with any business which shall be
in competition with any
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business conducted by Employers or any of their Subsidiaries between the date
hereof and the end of the Restricted Period.
5.2.2. As used in this Agreement, the term "Restricted
Period" shall mean the period beginning on the Effective Date of this Agreement
and ending on (a) the second anniversary of the date this Agreement is
terminated, if this Agreement is terminated by the Board or Directors for Cause
or in the event of a voluntary termination by Executive of his employment which
does not constitute a Termination Without Cause, or (b) the first anniversary of
the date this Agreement is terminated, in the event a Termination Without Cause
occurs.
5.2.3. It is the desire and intent of the parties that
the provisions of this Section 5 shall be enforced to the fullest extent
permissible under the laws and public policies applied in each jurisdiction in
which enforcement is sought. Accordingly, if any particular portion of this
Section 5 shall be adjudicated to be invalid or unenforceable, this Section 5
shall be deemed amended to delete therefrom the portion thus adjudicated to be
invalid or unenforceable, such deletion to apply only with respect to the
operation of this paragraph in the particular jurisdiction in which such
adjudication is made.
5.2.4. If there is a breach or threatened breach of the
provisions of Sections 5.1 or 5.2 of this Agreement, Employers shall be entitled
to an injunction restraining Executive from such breach. Nothing herein shall be
construed as prohibiting Employers from pursuing any other remedies for such
breach or threatened breach.
6. Insurance. Either TV Filme, ITSA or both may, at their election
and for their benefit, insure Executive against accidental loss or death, and
Executive shall submit to such physical examination and supply such information
as may be reasonably required in connection therewith.
7. Effective Date. This Agreement shall be effective automatically
upon consummation of the Initial Public Offering.
8. Indemnification. TV Filme shall indemnify Executive, in his
capacity as an executive officer and/or director of TV Filme to the fullest
extent permissible under the laws of the State of Delaware, and shall obtain
directors' and officers' reimbursements and liability insurance in connection
therewith. In addition, TV Filme and Executive shall enter into an
Indemnification Agreement (the "Indemnification Agreement"), a form of which is
attached hereto as Exhibit C.
9. Miscellaneous. This Agreement together with the Stock Option
Plan, the Stock Option Agreement and the Indemnification Agreement: (a)
constitute the entire agreement of the parties with respect to its subject
matter and supersede all previous agreements or understandings, whether oral or
written; (b) may not be amended or modified except by a written instrument
signed by all the parties; (c) are binding upon and will inure to the benefit of
the parties and their respective successors, transferees, personal
representatives, heirs, beneficiaries and permitted assigns; (d) may be executed
in duplicate originals. This
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Agreement shall be governed by and interpreted in accordance with the laws of
Brazil, without regard to its conflict of laws rules.
10. Notices. Any notice required or permitted to be given under this
Agreement shall be in writing and shall be deemed to have been given when
delivered by hand delivery by independent courier service, or by facsimile
transmission, addressed as follows:
If to Executive: c/o TV Filme, Inc.
c/o ITSA-Intercontinental
Telecomunicacoes Ltda.
SCS, Quadra 07-Bl.A
Ed. Executive Tower
Sala 601
70.300-911 Brasilia/DF BRAZIL
Attention: Hermano Studart Lins de
Albuquerque
If to Employers: TV Filme, Inc.
ITSA-Intercontinental Telecomunicacoes Ltda.
c/o Warburg, Xxxxxx Investors, L.P.
000 Xxxxxxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxx
Chairman of the Board of TV
Filme, Inc.
or to such other address as any party hereto may from time to time give notice
of to the other parties in the aforesaid manner. Any notice delivered in the
manner set forth in this Section 10 shall be deemed as of the date of delivery
in the case of hand delivery, and upon confirmation of receipt in the case of
facsimile transmission.
11. Waiver. The failure of any party to exercise any right or remedy
under this Agreement shall not constitute a waiver of such right or remedy, and
the waiver of any violation or breach of this Agreement by a party shall not
constitute a waiver of any prior or subsequent violation or breach. No waiver
under this Agreement shall be valid unless in writing and executed by the
waiving party.
12. Severability. If any provision of this Agreement is determined
by a court or other governmental authority to be invalid, illegal or
unenforceable, such invalidity, illegality or unenforceability shall not affect
the validity, legality or enforceability of any other provision of this
Agreement. Further, the provision that is determined to be invalid, illegal or
unenforceable shall be reformed and construed to the extent permitted by law so
that it will be valid, legal and enforceable to the maximum extent possible.
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13. Headings. The headings used in this Agreement are included for
the convenience of the parties for reference purposes only and are not to be
used in construing or interpreting this Agreement.
14. No Third Party Beneficiaries. Except as provided herein, this
Agreement shall not be deemed to confer in favor of any third parties any rights
whatsoever as a third-party beneficiary.
15. Successor and Assigns. This Agreement is personal in its nature
and none of the parties hereto shall, without the consent of the other, assign
or transfer this Agreement or any rights or obligations hereunder (except for an
assignment or transfer by an Employer to a successor as contemplated by the
following proviso); provided, however, that the provisions hereof shall inure to
the benefit of, and be binding upon and enforceable by, any successor of an
Employer, whether by merger, consolidation, transfer of all or substantially all
of the assets of such Employer, or otherwise, and upon Executive, his heirs,
executors, administrators and legal representatives.
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IN WITNESS WHEREOF, the undersigned have executed this Agreement as
of the date first above written.
TV FILME, INC.
By: /s/ Xxxxxx Xxxxx Xxxxxxx Xxxx de Albuquerque
---------------------------------------------
Name: Xxxxxx Xxxxx Xxxxxxx Lins de Albuquerque
Title: President
ITSA-INTERCONTINENTAL
TELECOMUNICACOES LTDA.
By: /s/ Xxxxxx Xxxxx Xxxxxxx Xxxx de Albuquerque
---------------------------------------------
Name: Xxxxxx Xxxxx Xxxxxxx Lins de Albuquerque
Title: Director
EXECUTIVE
/s/ Hermano Studart Lins de Albuquerque
----------------------------------------
Hermano Studart Lins de Albuquerque
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EXHIBIT A
FORM OF STOCK OPTION PLAN
EXHIBIT B
FORM OF STOCK OPTION AGREEMENT
EXHIBIT C
FORM OF INDEMNIFICATION AGREEMENT
