Exhibit 10.12
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
-----------------------------------------
THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the "Agreement") is
entered into by CTC Media, Inc., a Delaware corporation (the "Company"), and
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ (the "Executive").
WHEREAS, the Company and the Executive are party to an Employment
Agreement dated May 20, 2005 (the "Existing Agreement"); and
WHEREAS, the Company and the Executive wish to amend and restate the
Existing Agreement and to supercede the Existing Agreement in its entirety with
this Agreement.
In consideration of the mutual covenants and promises contained herein,
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged by the parties hereto, the parties agree as follows:
1. Term of Employment. The Company hereby agrees to employ the Executive,
and the Executive hereby accepts employment with the Company, upon the terms set
forth in this Agreement, effective on November 1, 2004 (the "Commencement
Date"). The Executive's employment shall continue until it is terminated in
accordance with the provisions of Section 5.
2. Title; Capacity.
a) The Executive shall serve as Chief Financial Officer and
his job duties shall include managing the finance function of the
Company and each of its subsidiaries, including, without limitation,
the preparation of management accounts, U.S. GAAP financial statements
and tax filings, reporting to the Company's audit committee, working
with the Company's external auditors to ensure the delivery of timely
audit reports, supervising and assessing the Company's internal control
procedures, supervising financial due diligence reviews of the proposed
acquisition targets and managing investor relations. In addition, the
Executive also shall serve as a member of the Company's operating
committee and participate in all key management decisions. The
Executive agrees to perform such other duties and responsibilities as
the Company's Chief Executive Officer or his designee shall from time
to time reasonably assign to him.
b) The Executive shall be based at the Company's
headquarters in Moscow, Russia or such other location as the Company
and the Executive shall mutually agree.
c) The Executive shall be subject to the supervision of,
and shall have such authority as is delegated to him by, the Company's
Chief Executive Officer or his designee or the Company's Board of
Directors (the "Board").
d) The Executive agrees to devote his entire business time,
attention and energies to the business and interests of the Company
during his employment with the Company and shall not engage in any
other business activities without the prior written approval of the
Chief Executive Officer. The Executive agrees to abide by the rules,
regulations, instructions, personnel practices and policies of the
Company and any changes therein that may be adopted from time to time
by the Company.
3. Compensation and Benefits.
a) Base Salary. The Company shall pay the Executive, in
regular installments in accordance with the Company's standard payroll
practices, an annual base salary of $300,000, less all applicable U.S.
and Russian federal, state and local taxes and withholdings. Such
salary may be adjusted from time to time in accordance with normal
business practice and upon mutual agreement of the parties.
b) Discretionary Bonus. Beginning in 2005, the Executive
shall be eligible for an annual discretionary award of up to $150,000,
less all applicable U.S. and Russian federal, state and local taxes and
withholdings, subject to the reasonable discretion of the Board or a
committee thereof (which may include the Board or a committee thereof
setting performance targets the achievement thereof being the criteria
for determining whether the Executive shall be entitled to such award).
Whether such performance targets, if any, have been achieved will be
decided by the Board or a committee thereof in its reasonable
discretion. In any event, the Executive must be an active employee of
the Company on the date the bonus for any fiscal year is distributed in
order to be eligible for a bonus award.
c) IPO Bonus. Upon the closing of a firm commitment
underwritten public offering of the Company's common stock (the "IPO")
and conditional upon the Executive being an active employee of the
Company on the date of the closing of the IPO, the Company shall
promptly pay to the Executive an amount equal to $275,000 as a bonus
for his efforts in connection with the IPO.
d) Relocation Expenses. The Company shall reimburse the
Executive for all reasonable out-of-pocket relocation expenses up to an
aggregate of $85,000, including (i) an up-front $50,000 lump sum cash
payment (the "Lump-Sum Payment") to cover incidental costs related to
the relocation of the Executive and his immediate family to Moscow,
such as the sale of his house in the United States and the purchase of
replacement items in Russia, for which he shall not be required to
provide receipts, and (ii) up to a further $35,000 for the following
items upon presentation of appropriate receipts: business class
airlines tickets from the United States to Russia for the Executive and
his immediate family; shipment of household goods, temporary living and
accommodation expenses in the Moscow area for a period of up to two
months; and agency costs charged by a local broker for locating a
suitable home for the Executive and his family in the Moscow area. The
Lump-Sum Payment is contingent upon the Executive's remaining
continuously employed by the Company for twelve (12) months after the
Commencement Date. If the Executive voluntarily terminates his
employment prior to twelve (12) months after the Commencement Date for
any reason, the Lump-Sum Payment (less any taxes paid by the Executive
in respect thereof) shall be repayable to the Company and the Company
shall have the right to offset the amount of such relocation assistance
against any other amounts payable to the Executive.
-2-
e) Vacation. The Executive shall be eligible to accrue a
maximum of 20 business days of paid vacation per calendar year, subject
to proration to the Commencement Date and to be taken at such times as
may be approved by and in the sole discretion of the Company. Such
vacation days shall accrue at the rate of 1.667 days per month.
f) Insurance. While the Executive is employed by the
Company, the Company shall provide him with disability insurance
coverage to the extent of 60% of the Executive's annual base salary and
$1,000,000 in term life insurance coverage with a beneficiary or
beneficiaries of the Executive's designation. The Company also shall
provide the Executive and his immediate family with worldwide medical,
vision and dental insurance with a reputable international health
insurance provider. The Executives insurance coverage shall be governed
by the terms of the insurance policies and the Company will use its
best efforts to cause such coverage to take effect as of November 1,
2004.
g) Retirement Benefits. Prior to June 30, 2005, the Company
may establish a 401(k) plan in which the Executive shall be eligible to
participate subject to and in accordance with the formal plan documents
governing such plan. If such a plan is established, the Company shall
make a matching contribution equal to 50% of any contribution made by
the Executive to the 401(k) plan, provided that the Company shall not
be required to contribute more than $7,000 to the Executive's 401(k)
account in any calendar year. The Company is not responsible for how
any such contributions are treated for tax purposes by taxing and
government authorities. In the event that the Company determines not to
so establish a 401(k) plan for the Executive, the Company shall provide
the Executive with an annual retirement benefit of $17,200 on or before
December 31st of each year of the Executive's employment with the
Company (pro-rated for any partial employment years). The Executive
shall be responsible for all applicable U.S. and Russian federal, state
and local taxes and withholdings on such benefit.
h) Stock Options. The Company shall amend and restate the
options granted to the Executive on November 1, 2004 so that such
options are in accordance with the terms and conditions set forth in
Exhibits A and B hereto (the "Amended and Restated Options").
i) Russian visas. The Company shall use its best efforts to
assist the Executive and his immediate family to obtain the necessary
visas required for them to live in Russia and for the Executive to work
in Russia, in each case, for the term of the Executive's employment
with the Company. The Company will bear the cost of obtaining such
visas and also reimburse the Executive for any reasonable immigration
and legal consultation costs, up to $2,000 per year, relating to
preserving the U.S. residency status of the Executive's spouse. The
Company makes no representations regarding the ability of the Executive
and/or his immediate family members to obtain any such visas and/or
maintain such status. The Executive shall be responsible for
maintaining any documents relating to his entry to and continued
performance of work in Russia.
-3-
j) Transportation. The Company shall provide the Executive
with the exclusive use of a luxury class four wheel drive sedan car
such as an Audi A8 or the reasonable equivalent thereof (which shall
remain the property of the Company) and a driver during the term of the
Executive's employment with the Company.
k) Personal assistant. The Company shall provide the
Executive with a personal assistant who shall work exclusively for the
Executive.
l) Mobile phone. The Company shall provide the Executive
with a mobile phone and shall pay the line rental and service fees and
the cost of any business-related calls.
m) Equipment. The Company shall consider on a case-by-case
basis the Executive's reasonable requests for home office equipment
(such as a laptop computer, printer and/or fax machine) and, to the
extent the Company believes the Executive's service to the Company
requires the use of such items, it shall provide them to the Executive
(but, at all times, such items shall remain the property of the
Company).
n) Indemnification Agreement. The Company shall enter into
an officer indemnification agreement with the Executive (the
"Indemnification Agreement") that is reasonably acceptable to both the
Company and the Executive which shall provide that, subject to the
terms and conditions thereof, the Company shall indemnify the Executive
for liabilities incurred by him arising from his services to the Group
(as defined below).
4. Taxes. The Executive shall be responsible for all of his own federal
and/or state taxes payable in the United States, Russia or any other
jurisdiction in which he is subject to tax. During the term of the Executive's
employment with the Company and for any tax year which includes a period during
which the Executive was employed by the Company, the Company shall pay the costs
of retaining tax accountants to prepare the U.S. (federal and, if any, state)
and Russian tax returns for the Executive and his immediate family; provided,
however, that if the Executive wishes to retain his own tax accountants, their
fees must be pre-approved by the Company (if in excess of $5,000 per annum).
5. Employment Termination. The employment of the Executive by the Company
pursuant to this Agreement shall terminate upon the occurrence of any of the
following:
a) At the election of the Company, for Cause, immediately
upon written notice by the Company to the Executive. For the purposes
of this Agreement, "Cause" for termination shall be deemed to exist
upon: (i) a good faith finding by the Company that (A) the Executive
has failed to adequately perform the material aspects of his assigned
duties for the Company in a manner that materially and adversely
affects the Company, after written notice of such failure of such
duties and a reasonable opportunity to correct such failure, or (B) the
Executive has engaged in dishonesty, gross negligence or intentional
misconduct that materially and adversely affects the Company; (ii) the
Executive's conviction of, or the entry of a pleading of guilty or nolo
contendere by the Executive, to any crime involving moral turpitude or
any felony; (iii) the Executive's material breach of Section 7 or 8
hereof if such breach is caused by the Executive's intentional
misconduct or gross negligence; (iv) the Executive's intentional
violation of Company policy in a manner that materially and adversely
affects the Company, after written notice of such violation and a
reasonable opportunity to correct such failure; or (v) the Executive's
failure to obtain a visa providing him with the right to live and work
in Russia within six months of the Commencement Date or the Executive's
failure to maintain the currency of such a visa during his employment
with the Company, provided that such failure results from action or
inaction on the Executive's part and not from a change in Russian
immigration laws.
-4-
b) At the election of the Company, without Cause, upon not
less than six months' prior written notice of termination.
c) At the election of the Executive for a reason other than
those set forth in 5(d) or 5(e), upon not less than six months' prior
written notice of resignation.
d) At the election of the Executive, upon not less than
six months' prior written notice of resignation, as a result of (i) a
material reduction in the Executive's total compensation (not including
a reduction in the value of any options granted to the Executive
resulting from a decrease in the fair market value of the Company's
stock), (ii) a change in the Executive's reporting line such that he no
longer reports directly to the Company's Chief Executive Officer, (iii)
a material reduction in the Executive's responsibilities and authority
such that the Executive's responsibilities and/or authority as Chief
Financial Officer of the Company are materially different from the
responsibilities and/or authority commonly associated with a chief
financial officer of a similarly situated company or (iv) the Executive
in his role as an executive of the Company being directed by the
Company's Chief Executive Officer or any member of the Board to take
any action that violates any law, rule or regulation applicable to him
or to the Company or that would cause the consolidated financial
statements of the Company to fail to be in compliance with United
States generally accepted accounting principles, in either case, in any
material respect; provided that the Executive has previously reported
the matter to the full Board in writing but nonetheless the Executive
continues to be directed to take such action.
e) At the election of the Executive, upon not less than six
months' prior written notice of resignation, following a Related Party
Corporate Transaction (as such term is defined in the stock option
agreements related to the Options) where there occurs a material change
in the Executive's title, duties, responsibilities, total compensation
(not including a reduction in the value of any options granted to the
Executive resulting from a decrease in the fair market value of the
Company's stock) or authority.
-5-
6. Severance Upon Termination.
a) If the Company elects to terminate the Executive's
employment without Cause or the Executive resigns pursuant to Sections
5(d) or 5(e), the Company shall pay the Executive a severance payment
equal to (i) six months of the Executive's then current annual base
salary, less applicable taxes and withholdings, if the Company gives
the Executive notice of termination of his employment, or the Executive
gives notice of his resignation, as the case may be, before the first
anniversary of the Commencement Date, or (ii) twelve months of the
Executive's then current annual base salary, less applicable taxes and
withholdings, if the Company gives the Executive notice of termination
of his employment, or the Executive gives notice of his resignation, as
the case may be, on or after the first anniversary of the Commencement
Date; provided, however, that any severance payments shall be
conditioned upon the Executive signing a severance agreement and
release in a form satisfactory to the Company. The Executive shall not
be entitled to any severance payments if his employment with the
Company terminates pursuant to Sections 5(a) or 5(c). Any
post-termination payments or benefits due and payable to the Executive
by operation of law (but not pursuant to any other agreement with the
Company) shall be deducted from any amount of severance otherwise
payable under this Section 6(a).
b) In the event that any payment or benefit received or to
be received by the Executive in connection with a termination of the
Executive's employment with the Company or any corporation which is a
related corporation within the meaning of section 280G(e) of the United
States Internal Revenue Code of 1986 (the "Code") (collectively, the
"Severance Payments") would (i) constitute a "parachute payment" within
the meaning of section 280G of the Code or any similar or successor
provision and (ii) but for this Section 6(b), be subject to the excise
tax imposed by section 4999 of the Code or any similar or successor
provision (the "Excise Tax"), then, subject to the provisions of
Section 6(c) hereof, such Severance Payments (which Severance Payments
shall collectively be referred to herein as the "Severance Parachute
Payments") shall be reduced to the largest amount which would result in
no portion of the Severance Parachute Payments being subject to the
Excise Tax. The determination of any required reduction pursuant to
this Section 6(b) (including the determination as to which specific
Severance Parachute Payments shall be reduced) shall be made by the
Executive, in his sole discretion, and shall thereafter be confirmed by
the Company's auditors. If the Internal Revenue Service (the "IRS")
determines that a Severance Parachute Payment is subject to the Excise
Tax, then the Company or any related corporation shall seek to enforce
the provisions of Section 6(c) hereof. Such enforcement of Section 6(c)
hereof shall be the only remedy, under any and all applicable United
States state and federal laws or otherwise, for the Executive's failure
to reduce the Severance Parachute Payments so that no portion thereof
is subject to the Excise Tax. The Company or related corporation shall
reduce a Severance Parachute Payment in accordance with this Section
6(b) only upon written notice by the Executive indicating the amount of
such reduction, if any (which determination has been confirmed by the
Company's auditors).
-6-
c) If, notwithstanding the reduction described in Section
6(b) hereof, the IRS determines that the Executive is liable for the
Excise Tax as a result of the receipt of a Severance Parachute Payment,
then the Executive shall, subject to the provisions of this Agreement,
be obligated to pay to the Company (the "Repayment Obligation") an
amount of money in U.S. dollars equal to the "Repayment Amount." The
Repayment Amount with respect to a Severance Parachute Payment shall be
the smallest such amount, if any, as shall be required to be paid to
the Company so that the Executive's net proceeds with respect to any
Severance Parachute Payment (after taking into account the payment of
the Excise Tax imposed on such Severance Parachute Payment) shall be
maximized. Notwithstanding the foregoing, the repayment Amount with
respect to a Severance Parachute Payment shall be zero if a Repayment
Amount of more than zero would not eliminate the Excise Tax imposed on
such severance Parachute Payment. If the Excise Tax is not eliminated
through the performance of the Repayment Obligation, the Executive
shall pay the Excise Tax.
7. Non-Competition and Non-Solicitation.
a) During the term of the Executive's employment and for a
period of one (1) year with respect to subclause (i) below, and for a
period of two (2) years with respect to subclause (ii) and (iii) below,
after the termination of such employment, the Executive will not
directly or indirectly:
i) as an individual proprietor, partner, stockholder,
officer, employee, director, joint venturer, investor, lender,
or in any other capacity whatsoever (other than as the holder
of not more than one percent (1%) of the total outstanding
stock of a publicly held company), engage in the business of
television broadcasting in Russia or any other country in
which the Company or any of its subsidiaries (collectively,
the "Group") is then operating or in which it has undertaken
material preparations to begin operating; or
ii) recruit, solicit or induce, or attempt to induce,
any employee or employees of the Group to terminate their
employment with, or otherwise cease their relationship with,
the Group; or
iii) solicit, divert or take away, or attempt to
divert or to take away, the business or patronage of any of
the current or prospective business partners, advertisers or
affiliate stations of the Group with whom the Executive had
significant contact while employed by the Company.
(b) If any restriction set forth in this Section 7 is found
by any court of competent jurisdiction to be unenforceable because it
extends for too long a period of time or over too great a range of
activities or in too broad a geographic area, it shall be interpreted
to extend only over the maximum period of time, range of activities or
geographic area as to which it may be enforceable.
(c) The Executive acknowledges and agrees that the
restrictions contained in this Section 7 are necessary for the
protection of the business and goodwill of the Group and are considered
by the Executive to be reasonable for such purpose. The Executive
agrees that any breach of this Section 7 will cause the Company
substantial and irrevocable damage and therefore, in the event of any
such breach, in addition to such other remedies which may be available,
the Company shall have the right to seek specific performance and
injunctive relief.
-7-
d) The provisions of Section 7 survive the termination of
the Executive's employment and the termination of this Agreement.
8. Proprietary Information.
a) The Executive agrees that all information and know-how,
whether or not in writing, of a private, secret or confidential nature
concerning the Group's business or financial affairs (collectively,
"Proprietary Information") is and shall be the exclusive property of
the Group. By way of illustration, but not limitation, Proprietary
Information may include business processes, methods and techniques;
planned programming schedules; material terms of contracts, research
data, personnel data, computer programs and supplier lists. The
Executive shall not disclose any Proprietary Information to others
outside the Group or use the same for any unauthorized purposes without
written approval of the Chief Executive Officer or the Board, either
during or after his employment, unless and until such Proprietary
Information has become public knowledge without fault by the Executive.
(b) The Executive agrees that all files, letters, memoranda,
reports, records, data, notebooks, program listings, or other written,
photographic, or other tangible material containing Proprietary
Information, whether created by the Executive or others, which shall
come into his custody or possession, shall be and are the exclusive
property of the Group to be used by the Executive only in the
performance of his duties for the Group.
(c) The Executive agrees that his obligation not to disclose
or use information, know-how and records of the types set forth in
paragraphs (a) and (b) above, also extends to such types of
information, know-how, records and tangible property of business
partners of the Group or other third parties who may have disclosed or
entrusted the same to the Group or to the Executive in the course of
the Group's business.
d) The provisions of Section 8 survive the termination of
the Executive's employment and the termination of this Agreement.
9. No Restrictions On Employment. The Executive hereby represents that he
is not bound by the terms of any agreement with any previous employer or other
party to refrain from using or disclosing any trade secret or confidential or
proprietary information in the course of his employment with the Company or to
refrain from competing, directly or indirectly, with the business of such
previous employer or any other party. The Executive further represents that his
performance of all the terms of this Agreement and as an employee of the Company
does not and will not breach any agreement to keep in confidence proprietary
information, knowledge or data acquired by him in confidence or in trust prior
to his employment with the Company.
10. Notices. All notices required or permitted under this Agreement shall
be in writing in English and shall be deemed to have been duly given when
delivered either in person and shall be deemed effective upon personal delivery
or upon sending by a reputable overnight courier service, addressed to the other
party at the address shown on the signature page hereto, or at such other
address or addresses as either party shall designate to the other in accordance
with this Section 10.
-8-
11. Entire Agreement. This Agreement, together with the Amended and
Restated Options and the Indemnification Agreement, constitutes the entire
agreement between the parties and supersedes all prior agreements and
understandings, whether written or oral, relating to the subject matter of this
Agreement, including, without limitation, the Existing Agreement.
12. Amendment. This Agreement may be amended or modified only by a written
instrument executed by both the Chief Executive Officer or the Board and the
Executive.
13. Governing Law, Forum and Jurisdiction. This Agreement shall be governed
by and construed under and in accordance with the laws of the State of Delaware.
Any action, suit, or other legal proceeding which is commenced to resolve any
matter arising under or relating to any provision of this Agreement shall be
commenced only in a court of the State of Delaware (or, if appropriate, a
federal court located within Delaware), and the Company and the Executive each
consents to the exclusive jurisdiction of such a court.
14. Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of both parties and their respective successors and assigns,
including any corporation with which or into which the Company may be merged or
which may succeed to its assets or business, provided, however, that the
obligations of the Executive are personal and shall not be assigned by him.
15. Acknowledgment. The Executive states and represents that he has had an
opportunity to fully discuss and review the terms of this Agreement with an
attorney of his own choosing. The Executive further states and represents that
he has carefully read this Agreement, understands the contents herein, freely
and voluntarily assents to all of the terms and conditions hereof, and signs his
name of his own free act.
16. No Waiver. No delay or omission by the Company in exercising any right
under this Agreement shall operate as a waiver of that or any other right. A
waiver or consent given by the Company on any one occasion shall be effective
only in that instance and shall not be construed as a bar or waiver of any right
on any other occasion.
17. Validity/Severability. In case any provision of this Agreement shall be
invalid, illegal or otherwise unenforceable, the validity, legality and
enforceability of the remaining provisions shall in no way be affected or
impaired thereby.
18. Captions. The captions of the sections of this Agreement are for
convenience of reference only and in no way define, limit or affect the scope or
substance of any section of this Agreement.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.]
-9-
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year set forth below.
CTC MEDIA, INC.
Dated: January 31, 2006 /s/ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
-------------------- ---------------------------
By: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Chief Executive Officer
Address: ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇
Executive
Dated: January 30, 2006 /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
-------------------- ----------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Address: ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇, ▇▇▇. ▇
▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇
-10-