EMPLOYMENT AGREEMENT
AGREEMENT made as of the 21st day of November 1997, by and between Central
European Media Enterprises Ltd., a Bermuda corporation (the "Corporation") and
Xxxx Xxxxxxxxx ("Xxxxxxxxx")
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. 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 outside the United Kingdom.
Xxxxxxxxx shall hold such directorships and executive officersh ips 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 CME Development Corporation.
1.3. The parties acknowledge that Xxxxxxxxx will perform the duties
hereunder wholly outside of the United Kingdom and acknowledge that Xxxxxxxxx
has entered into an employment agreement with CME Development Corporation which
would cover services to be performed by him within the United Kingdom. Xxxxxxxxx
will do such travelling as may reasonably be required in the performance of his
duties hereunder, consistent with his level of travel during the twelve months
prior to the date hereof.
2. Term.
2.1. The term of this Agreement shall commence on 1 August 1997 and
terminate on August 14, 1999, 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, 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. For purposes of this Agreement, the term "Good Reason" shall mean any
of the following: (a) the assignment to Xxxxxxxxx by the Corporation of duties
inconsistent with, or a material reduction in the nature of, Xxxxxxxxx'x
responsibilities as Vice President and Chief Financial Officer of the
Corporation; (b) a relocation outside of the London metropolitan area without
Xxxxxxxxx'x prior consent; (c) failure by the Corporation to comply with any of
the material terms of this Agreement, which shall not ha ve been cured within 20
days after written notice thereof; or (d) Xxxxxxxxx shall no longer be Vice
President Finance and Chief Financial Officer of the Corporation (except by
reason of Sections 2.2, 4.1 or 4.2 hereof). 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.
2.5. If this 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) then the Corporation shall continue to pay to
Xxxxxxxxx all compensation, bonuses, benefits, reimbursement and other payments
to which Xxxxxxxxx is entitled to under this Agreement for the Term. 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 3.2 of this Agreement, and specifically ensure that health, life and
disability insurance shall continue in effect for the remainder of the Term.
2.6 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.
2.7 The Company will inform Xxxxxxxxx no later than six months prior to the
termination date of this Agreement whether or not the Company wishes to renew
the Agreement.
2.8 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.
2.9 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$112,500 per annum. The salary
shall be payable in equal monthly installments of US$9,375 each. Such salary
will be increased on the first anniversary of this Agreement to US$125,000,
payable in
equal monthly installments of US$10,416.66. The Board of Directors of
the Corporation in its sole discretion may xxxxx Xxxxxxxxx an annual bonus.
3.2 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 Corporation. These
benefits will not be reduced from the present level without his prior written
consent.
3.3 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 therefor.
3.4 For each calendar month during the term Xxxxxxxxx shall be entitled to
a monthly living allowance of Pound Sterling 1,000 to be paid in equal monthly
installments.
3.5 Xxxxxxxxx'x entitlement to paid vacation is governed by the
Corporation's Employee Handbook.
3.6(a) As soon as practicable after the Commencement Date the President and
Chief Executive Officer of the Corporation shall recommend to the Compensation
Committee of the Board of Directors of the Corporation that, pursuant to the
1995 Stock Option Plan (the "Plan") of the Corporation, Xxxxxxxxx shall be
granted for his services hereunder an option to purchase of 80,000 shares of
Class A Common Stock of the Corporation at an exercise price per share equal to
the market value of a share of such stock as of August 1997. The option shall
become exercisable
in two installments, with an option to purchase 40,000 shares becoming
exercisable on the first and second anniversary dates of such date, subject to
the terms of the Plan. (b) In addition, for each of the next two years the
President and Chief Executive Officer of the Corporation may, if in his sole
discretion he believes Xxxxxxxxx to have fully and adequately performed his
duties under this Agreement in such a manner as to meet or exceed expectations
("P erformance Goals"), recommend to the Compensation Committee of the Board of
Directors of the Corporation that Xxxxxxxxx be granted, in addition to any
option granted in accordance with par. 3.5(a) of this Agreement, an option to
purchase additional shares, but no more than 20,000 additional shares per year,
of Class A Common Stock of the Corporation. at an exercise price per share equal
to the market value of a share of such stock determined in accordance with the
terms of the existing stock option plan. Xxxxxxxxx and the President and Chief
Executive Officer of the Corporation shall determine the precise nature of these
Performance Goals within 30 days after the signing of this Agreement. Options
will be incentive stock options to the extent permitted by Section 422(d) of the
US Internal Revenue Code 1986, as amended. Xxxxxxxxx acknowledges and agrees
that this provision is not a guarantee that the Board of Directors Compensation
Committee will actually grant any options to Xxxxxxxxx.
3.7 In the event that any of the terms of the Plan become more favourable
to employees, then Xxxxxxxxx shall be entitled to benefit from such provisions
to the extent allowed by the Compensation Committee.
3.8 In the event that this Agreement is terminated by the Corporation for
any reason other than for Cause or if the Agreement is terminated by Xxxxxxxxx
for Good Reason, the Corporation shall be obliged to enter into a non-exclusive
Consulting Agreement with Xxxxxxxxx for the nominal fee of US$ 1.00 per year for
a period which will allow all of the options granted to Xxxxxxxxx by the
Corporation to vest and thus become exercisable. The sole purpose of such a
Consulting Agreement
is to enable certain of Sc hwallie's options granted under this Section 3
to vest and remain exercisable as though Xxxxxxxxx were still an employee under
the terms of this Agreement. It is understood that the Consulting Agreement
itself would not prevent Xxxxxxxxx from taking a full-time job with another
company.
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 CME Development Corporation; 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 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 wher e 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 desc ribe 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 sha ll 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 CME Development Corporation 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 specifi cally 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 xx all 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 Confiden tial 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.
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 pl ans
(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 w ith 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 actio n, 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 a t 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 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 Incorpo ration, By-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 2.5, 2.6, 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 h eld 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 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 X'Xxxxxx Xxxxxx
Xxxxxx X0X 0XX Xxxxxxx
Attn: Xxxxxxx X. Xxxxxx
with a copy to:
Legal Department
00 X'Xxxxxx Xxxxxx
Xxxxxx X0X 0XX Xxxxxxx
To Xxxxxxxxx:
00 X'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.
14. Survival. Sections 2.4 - 2.8, 2.8, 3.2, 3.8, 4.3, 5.2 - 5.4, 6 and 15
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. 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 laws.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
CENTRAL EUROPEAN MEDIA ENTERPRISES LIMITED
By: /s/ Xxxxxxx X. Xxxxxx
---------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: President and Chief Executive Officer
XXXX XXXXXXXXX
/s/ Xxxx Xxxxxxxxx
-------------------------------------
Xxxx Xxxxxxxxx
Approval by Central European Media Enterprises Ltd.'s Compensation
Committee of the Board of Directors
