AMENDED AND RESTATED EMPLOYMENT AGREEMENTEmployee Retention Agreement |
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Exhibit 10.1
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (“Agreement”) is entered into as of June 11, 2008, (the “Effective Date”) by and between Central European Distribution Corporation, Inc., a Delaware corporation (the “Company”), and William V. Carey (the “Officer”).
WHEREAS, the Company and the Officer previously entered into an employment agreement dated January 17, 2005, and subsequently amended such agreement (as amended, the “Prior Agreement”), which governed the terms and conditions of the Officer’s employment with the Company during the term of the Prior Agreement, including services provided by the Officer to Carey Agri International Poland Sp. z o.o. (the “Subsidiary”); and
WHEREAS, the Company desires to continue to employ the Officer, and the Officer desires to continue 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 Agreement, the Company agrees to employ the Officer and the Officer 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 term of employment of the Officer by the Company as provided in Section 1 hereof shall commence as of the Effective Date and end on December 31, 2009 (the “Term”). December 31, 2009 shall hereafter be referred to as the “Expiration Date”.
| 3. | Position and Duties. |
The Officer shall serve as President and Chief Executive Officer of the Company and as President and Chief Executive Officer of the Subsidiary, with such duties and responsibilities as the board of directors of the Company and/or the Subsidiary may from time to time determine and assign to the Officer. Additionally, the Officer shall serve as the chairman of the management board and the managing director of the Subsidiary. The Officer shall devote the Officer’s reasonable best efforts and substantially full business time to the performance of the Officer’s duties and the advancement of the business and affairs of the Company and the Subsidiary. The Officer acknowledges that it is the intent of the Company that his primary responsibilities shall be in connection with the business of the Company and/or Subsidiary.
| 4. | Place of Performance. |
In connection with the Officer’s employment by the Company, the Officer 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 Officer mutually agree, except for required travel on Company business.
| 5. | Compensation. |
| 5(a) | Base salary. The parties agree and acknowledge that since January 1, 2008 and through December 31, 2008, the Officer shall be paid base salary in the amount of Five-Hundred-Fifty-Seven Thousand Nine-Hundred-Forty-Eight USD ($557,948) gross per annum by the Company and Subsidiary, in the aggregate, and the parties further agree that from January 1, 2009 through December 31, 2009, the Officer shall be paid base salary in the amount of Six-Hundred-Seven Thousand Nine-Hundred-Forty-Eight USD ($607,948) gross per annum by the Company and Subsidiary, in the aggregate (the aggregate annual base |
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| salary in effect from time to time, the “Base Salary”). Any portion of the Base Salary may be paid by the Subsidiary as determined by the Company in the Company’s sole discretion. |
If the Officer’s Base Salary is increased, the increased amount shall be the Base Salary for the remainder of the employment term hereunder, except that the Company may reduce the Officer’s Base Salary at any time as part of a general salary reduction applied to all employees of the Company with annual salaries in excess of Sixty Thousand USD ($60,000) (the “Senior Executive Group”) in which case the Officer’s reduced Base Salary shall be the Base Salary for the remainder of the employment term hereunder. Any such reduction in the Officer’s Base Salary shall be no more than the lesser of the median percentage salary reduction applied to the Senior Executive Group or twenty percent (20%). The Base Salary shall be payable weekly or in such other installments as shall be consistent with the Company’s payroll procedures.
| 5(b) | Bonus. For each of fiscal years 2008 and 2009, the Officer shall be entitled to receive forty-seven percent (47%) of the aggregate cash bonus payable under the Company’s Executive Bonus Plan, the amount and rules of payout of such aggregate cash bonus being established annually by the Board of Directors. Such bonus shall be paid no later than March 15 of the calendar year following the calendar year in which the services relating to such bonus are performed by the Officer. |
| 5(c) | Options. On January 1, 2009, the Officer shall be granted options to purchase 50,000 shares of the Company’s common stock, with such grant to vest 100% on the two-year anniversary of the grant date. The exercise price of such grant shall be the closing price of the Company’s common stock on the trading day immediately preceding the grant date. |
| 5(d) | Specific Benefits. The Officer shall receive the following fringe benefits, subject to the Company’s policies in effect from time to time: |
| (d)(i) | Company Car |
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| (d)(ii) | Health plan – Medicover card |
| (d)(iii) | Housing allowance of Thirty-Six Thousand USD ($36,000) per year |
| (d)(iv) | School Fee allowance of Eighteen Thousand USD ($18,000) per year to be paid for educational expenses of the Officer’s children |
| (d)(v) | Travel and Club Membership allowance of Ten Thousand USD ($10,000) per year to be paid for personal travel to the United States and club membership and related personal/health costs. |
| (d)(vi) | Security at all times for the Officer and his family as well as pay certain housing expenditures (telephone, electricity) at an annual cost of up to Fifty Thousand USD ($50,000) per year |
| (d)(vii) | Family flight tickets to the USA for the Officer’s family at an annual cap of Fourteen Thousand ($14,000) USD per year |
| 5(e) | Other Benefits. |
The Officer also shall be entitled to participate in such other benefit plans and to receive such bonuses, incentive compensation and fringe benefits as may be granted or established by the Company and/or Subsidiary from time to time, including the use of an automobile. The Company and Subsidiary each reserve the right to amend, modify or terminate any compensation or benefit plans, policies or agreements at any time and form time to time in the Company’s or Subsidiary’s discretion, including, without limitation, changing carriers or effecting modifications in insurance coverage for the Officer.
| 5(f) | Vacation: Holidays. The Officer shall be entitled to all public holidays observed by the Subsidiary, and shall be entitled to thirty (30) vacation days per year, in accordance with the applicable vacation policies for senior executives of the Company and applicable law, which shall be taken at a reasonable time or times. |
| 5(g) | Cost-of-Living Adjustments. Any payment to the Officer made under this Agreement in cash or a cash equivalent (including, without limitation, any base |
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| salary, bonus or reimbursement, and any corresponding payment, if any, due hereunder following the Officer’s termination of employment with the Company and the Subsidiary) shall be subject to increase or decrease pursuant to a cost-of-living adjustment (the “COLA”). The COLA shall be based on the spot foreign exchange rate of PLN to USD on the day which is twenty (20) business days prior to the date of the applicable payment (such rate, the “FX Rate”), and the COLA shall be determined as follows: |
| (g)(i) | If the FX Rate is below 2.45, then the applicable payment shall be increased by 80% × the applicable payment × ((2.45 ÷ FX Rate) - 1). |
| (g)(ii) | If the FX Rate is above 3.00, then the applicable payment shall be decreased by 80% × the applicable payment × ((3.00 ÷ FX Rate) - 1). |
| (g)(iii) | If the FX Rate is greater than or equal to 2.45 but is less than or equal to 3.00, then the applicable payment shall not be adjusted. |
Any COLA under this Section 5(g) (including with respect to payments made by the Subsidiary) shall be paid by the Company. The Company’s Compensation Committee may revise the COLA in any manner, but shall only make such revisions applicable to payments prospectively from the date of revision. Without limiting the foregoing, the COLA shall apply to payments of salary and bonus made by the Company and Subsidiary to the Officer during calendar year 2008 prior to the Effective Date; such COLA shall be paid within 30 calendar days following the Effective Date.
| 5(h) | Withholding Taxes and Other Deductions. The Company and the Subsidiary shall withhold from any payments to the Officer, or with respect to any benefits provided under this Agreement, any applicable taxes or other deductions as the Company or Subsidiary determine must be withheld pursuant to applicable law or payroll policies. |
| 6. | Expenses. |
| 6(a) | The Company or the Subsidiary shall reimburse the Officer for all reasonable expenses incurred by the Officer (in accordance with the policies and procedures in effect for senior executives of the Company and the Subsidiary) in connection with the Officer’s services under this Agreement. The Officer 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. |
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| 6(b) | All reimbursements and in-kind benefits provided under the Agreement which are subject to Section 409A of the U.S. Internal Revenue Code of 1986, as amended (the “Code”), shall be made or provided in accordance with the requirements of Section 409A of the Code, including, where applicable, the requirement that (i) any reimbursement shall be for expenses incurred during the Officer’s lifetime (or during a shorter period of time specified in this agreement), (ii) the amount of expenses eligible for reimbursement, or in-kind benefits provided, during a calendar year may not affect the expenses eligible for reimbursement, or in-kind benefits to be provided, in any other calendar year, (iii) the reimbursement of an eligible expense will be made on or before the last day of the calendar year following the year in which the expense is incurred, and (iv) the right to reimbursement or in-kind benefits is not subject to liquidation or exchange for another benefit. |
| 7. | Confidential Information. |
| 7(a) | The Officer covenants and agrees that the Officer 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 Officer’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 Officer as a result of the Officer’s employment with the Company, to the extent such information has heretofore or shall hereafter remain confidential (except for unauthorized disclosures) and except as otherwise ordered by a court of competent jurisdiction. |
| 7(b) | The Officer 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 Officer agrees that in the event of a breach or threatened breach by the |
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| Officer 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 Officer 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 Officer. |
| 7(c) | The Officer 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 Officer obtained while employed by, or otherwise serving or acting on behalf of, the Company or which the Officer may then possess or have under his or her control. |
| 8. | Reserved. |
| 9. | Termination of Employment. |
| 9(a) | Death. The Officer’s employment hereunder shall terminate upon the Officer’s death. |
| 9(b) | By the Company. The Company may terminate the Officer’s employment hereunder under the following circumstances. |
| (b)(i) | If the Officer shall have been unable to perform all of the Officer’s duties hereunder by reason of illness, physical or mental disability or other similar incapacity, which inability shall continue for more than six (6) consecutive months, the Company may terminate the Officer’s employment hereunder. |
| (b)(ii) | The Company may terminate the Officer’s employment hereunder for “Cause.” For purposes of this Agreement, “Cause” shall mean any of the following: |
| (ii)(A) | the willful refusal by the Officer to follow a written order of the Chairman of the Board or the Board of Directors, in so far as the request does not breach any federal, state or local law; |
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| (ii)(B) | the Officer’s willful engagement in conduct materially injurious to the Company; |
| (ii)(C) | dishonesty of a material nature that relates to the performance of the Officer’s duties under this Agreement; |
| (ii)(D) | the Officer’s conviction of any felony involving moral turpitude; or, |
| (ii)(E) | the Officer’s continued failure to perform his duties under this Agreement (except due to the Officer’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 from the Board of Directors is delivered to the Officer specifically identifying the manner in which the Officer has failed to perform his duties. |
In addition, the Company may terminate the Officer’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 Officer for Good Reason. The Officer may terminate the Officer’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 |
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| demand for performance has been given to the Company by the Officer, 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 Officer’s responsibilities and duties for the Company or the Subsidiary. |
| 9(d) | Either the Company or the Officer may terminate the Officer’s employment for any reason, other than the reasons specified in Sections 9(b) or (c), upon written notice to the other party as specified in Section 9(e)(iii). |
| 9(e) | Notice of Termination. |
| (e)(i) | Any termination of the Officer’s employment by the Company or the Officer (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 Date of Termination, 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 Officer’s employment under the provision so indicated. |
| (e)(ii) | For any termination of the Officer’s employment by the Company pursuant to Section 9(b)(i), the Company may give Notice of Termination at any time after the six (6) consecutive month period in Section 9(b)(i) has ended. |
| (e)(iii) | For any termination of the Officer’s employment by either the Company or the Officer pursuant to Section 9(d), twelve (12) months notice must be provided in a Notice of Termination. |
| (e)(iv) | Notwithstanding any other provision of this Agreement to the contrary, if the Officer’s employment is terminated under Section 9(c) or Section 9(d), the Company, in its sole discretion, may accelerate the Date of Termination that is specified in the Notice of Termination, in which |
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| case (i) if the Officer terminated his employment with the Company pursuant to Section 9(c), or if the Company terminated the Officer’s employment pursuant to Section 9(d) without Cause, the Officer shall receive compensation and benefits pursuant to Section 10(e) without further payment with respect to the shortened notice period, and (ii) if the Officer terminated his employment pursuant to Section 9(d) without Good Reason, he shall receive from the Company, in accordance with the Company’s regularly scheduled payroll, pay in lieu of notice for the portion of the twelve (12) month notice period remaining after the accelerated Date of Termination. |
| (e)(v) | It is understood by both the Company and the Officer that termination of this agreement terminates by association any employment agreement with any and all of the Company’s subsidiaries. |
| 9(f) | Date of Termination. For purposes of this Agreement, the “Date of Termination” shall mean (i) if the Officer’s employment is terminated by the Officer’s death, the date of the Officer’s death; (ii) if the Officer’s employment is terminated pursuant to Section 9(b)(i) hereof, thirty (30) days after Notice of Termination, provided that the Officer shall not have returned to the performance of the Officer’s duties on a full-time basis during such thirty (30) day period; (iii) if the Officer’s employment is terminated for any other reason, the date specified as the Date of Termination in the Notice of Termination. Notwithstanding the previous sentence, in the case of a termination pursuant to Section 9(b)(ii), Section 9(c) or Section 9(d), if payments to the Officer may be subject to Section 409A of the Code, the Date of Termination shall be no later than the date the Officer experiences a “separation from service” as such term is defined under Section 409A of the Code. |
| 10. | Compensation Upon Termination. |
| 10(a) | If the Officer’s employment is terminated by the Officer’s death, the Company shall pay all Accrued Obligations to the Officer’s estate, or as may be directed by the legal representatives of such estate, and the Company shall have no further obligations to the Officer under this Agreement. “Accrued |
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| Obligations” shall mean the following: (1) the lump sum amount of any Base Salary accrued but unpaid through the Date of Termination, (2) the lump sum amount of any earned but unpaid annual bonus for periods with respect to which the performance period to earn such bonus has closed under the Executive Bonus plan, (3) the lump sum amount of any accrued but unused paid time off or sick pay in accordance with Company policy and applicable law, (4) the lump sum of any business expenses incurred which have been properly submitted for reimbursement in accordance with Company and/or Subsidiary policy, but not reimbursed prior to the Date of Termination, and (5) any other compensation or benefits which may be owed or provided to or in respect of the Officer, paid or provided in accordance with the terms and provisions of the applicable benefit plans or programs of the Company and/or Subsidiary. For all purposes of this Agreement, the cash payments payable to, or with respect to, the Officer under clauses (1), (2) and (3) of the definition of Accrued Obligations shall be paid within ten (10) days of the Date of Termination or, if earlier, in accordance with applicable law. |
| 10(b) | If the Company terminates the Officer’s employment due to a disability as provided in Section 9(b)(i) hereof,, the Officer shall be paid all Accrued Obligations and the Company shall have no further obligations to the Officer under this Agreement. |
| 10(c) | If the Company terminates the Officer’s employment for Cause as provided in Section 9(b)(ii) hereof, the Company shall pay the Officer all Accrued Obligations and the Company shall have no further obligations to the Officer under this Agreement. |
| 10(d) | If the Officer terminates the Officer’s employment other than for Good Reason, the Company shall pay to the Officer all Accrued Obligations and the Company shall have no further obligations to the Officer under this Agreement. |
| 10(e) | If the Company terminates the Officer’s employment other than for Cause, disability or death, or if the Officer terminates the Officer’s employment for Good Reason as provided in Section 9(c) hereof, and such termination does not |
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constitute a Qualifying CIC Termination, the Company shall: (i) pay or provide to the Officer all Accrued Obligations; and (ii) pay the Officer in
a single lump sum payment, within thirty (30) calendar days of his Date of Termination, the full Base Salary, bonuses and incentive compensation that would have been payable to the Officer under Sections 5(a), (b) and (c) from the
Date of Termination (without duplication of payments made to the Officer during the applicable notice period) through the Expiration Date, and pay the Officer any other amounts and provide to the Officer benefits that would have been received by him
under Sections 5(a), (b) and (c) hereof, at the time such amounts or benefits would otherwise have been due in accordance with the Company’s normal payroll practices, and the Company shall have no further obligations to the Officer
under this Agreement. For purposes of Section&n
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