EXHIBIT 10.5
[LOGO] CEDC
EMPLOYMENT AGREEMENT
--------------------
THIS EMPLOYMENT AGREEMENT ("Agreement") is entered into as of September 16,
2001, by and between Central European Distribution Corporation, Inc., a Delaware
corporation (the "Company"), and Evangelos Evangelou (the "Executive").
WHEREAS, the Company desires to employ the Executive, and the Executive desires
to be employed by the Company, on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth herein and other good and valuable consideration, the receipt and
sufficiency of which hereby are acknowledged, the parties hereto agree as
follows:
1. Employment.
-----------
On the terms and conditions set forth in this Agreement, the Company agrees to
employ the Executive and the Executive agrees to be employed by the Company for
the term set forth in Section 2 hereof and in the position and with the duties
set forth in Section 3 hereof.
2. Term.
-----
The employment of the Executive by the Company as provided in Section 1 hereof
shall commence as of September 16, 2001 and end three (3) years thereafter (the
"Expiration Date").
3. Position and Duties.
-------------------
The Executive shall serve as chief operating officer of the Company as well as
the chief operating officer of the Company's subsidiary, Carey-Agri
International Sp.z 0.0 (the
"Subsidiary") with such duties and responsibilities as the board of directors of
the Company (the "Board") may from time to time determine and assign to the
Executive. The Executive shall devote the Executive's reasonable best efforts
and substantially full business time to the performance of the Executive's
duties and the advancement of the business and affairs of the Company and the
Subsidiary. The Executive acknowledges that it is the intent of the Company that
his primary responsibilities shall be in connection with the business of the
Subsidiary.
4. Place of Performance.
---------------------
In connection with the Executive's employment by the Company, the Executive
shall be based at the principal executive office of the Subsidiary, which the
Company retains the right to change in its discretion, or such other place as
the Company and the Executive mutually agree, except for required travel on
Company business.
5. Compensation.
-------------
5(a). Base salary.
------------
The Executive shall be paid an annual base salary (the "Base Salary") as
outlined below;
By the Company $55,200 net per annum.
By the various subsidiaries of the Company the total of 181,554.70 pln gross per
annum. Any amendments to the base salary will be agreed by both parties in
writing and attached as an annex to this agreement.
5(b). Bonus
- -----------
(i) Bonus will be calculated on base EBITDA as presented to the Board in
the approved projections at Board Meeting of May 1, 2001. The
calculation principle has been accepted over the three years of this
contract.
(ii) Calculation of EBIDTA will not include for-ex adjustments.
(iii) The bonus will be calculated as 2% of EBITDA achieved by CEDC for a
figure reported between a base threshold and an upper threshold. These
thresholds will agreed by the board after the annual shareholders
meeting.
(iv) The 2% figure, if achieved, will be distributed amongst the key CEDC
management. The amount granted to the Executive will account for 25% of
the amount.
(v) In additional the Executive will get an award of option should the
above target be reached at amount of 5,000 options. Terms of options
will be confirmed on day of grant.
(vi) If CEDC achieves EBIDTA greater than the upper threshold the amount of
the bonus pool will rise and be calculated as 2.5% of figure achieved.
It will be distributed in the same proportion as described above.
(vii) The option grant will rise if amount reaches the upper threshold the
Executive will receive 7,500 options.
The bonus and the options will be granted following the approval of CEDC's
audited accounts.
The above bonus will be valid for the years 2001, 2002, 2003 and 2004 unless it
is decided otherwise by annual CEDC Management Board meeting.
5(c). Specific Benefits.
------------------
The Executive shall be receive the following special benefit:
(1) Company Car - value as to be agreed with the Company's chief executive
officer.
(2) Mobile phone - to the level agreed with the Company's chief executive
officer.
5(d). Other Benefits.
---------------
The Executive shall be entitled to receive disability salary continuation and
life insurance coverage in accordance with policies in effect for senior
executives of the Company.
The Executive also shall be entitled to participate in such plans and to receive
such bonuses, incentive compensation and fringe benefits as may be granted or
established by the Company from time to time. Nothing contained in this
Agreement shall prevent the Company from changing carriers or from affecting
modifications in insurance coverage for the Executive.
5(e). Vacation: Holidays.
-------------------
The Executive shall be entitled to all public holidays observed by the
Subsidiary and vacation days in accordance with the applicable vacation policies
for senior executives of the Company, which shall be taken at a reasonable time
or times.
5(f). Withholding Taxes and Other Deductions.
---------------------------------------
To the extent required by law, the Company and the Subsidiary shall withhold
from any payments due Executive under this Agreement any applicable federal,
state or local taxes and such other deductions as are prescribed by law or
Company or Subsidiary policy.
6. Expenses.
---------
The Company and the Subsidiary shall reimburse the Executive for all reasonable
expenses incurred by the Executive (in accordance with the policies and
procedures in effect for senior executives of the Company and the Subsidiary) in
connection with the Executive's services under this Agreement. The Executive
shall account to the Company or the Subsidiary, as the case may be, for such
expenses in accordance with policies and procedures established by the Company
or the Subsidiary.
7. Confidential Information.
-------------------------
7(a). The Executive covenants and agrees that the Executive will not ever,
without the prior written consent of the Board or a person authorized by the
Board, publish or disclose to any unaffiliated third party or use for the
Executive's personal benefit or advantage any confidential information with
respect to any of the Company's or Subsidiary's products, services, subscribers,
suppliers, marketing techniques, methods or future plans disclosed to the
Executive as a result of the Executive's employment with the Company, to the
extent such information has heretofore remained confidential (except for
unauthorized disclosures) and except as otherwise ordered by a court of
competent jurisdiction.
7(b). The Executive acknowledges that the restrictions contained in Section
7(a) hereof are reasonable and necessary, in view of the nature of the Company's
business, in order to protect the legitimate interests of the Company, and that
any violation thereof would result in irreparable injury to the Company.
Therefore, the Executive agrees that in the event of a breach or threatened
breach by the Executive of the provisions of Section 7(a) hereof, the Company
shall be entitled to obtain from any court of competent jurisdiction,
preliminary or permanent injunctive relief restraining the Executive from
disclosing or using any such confidential information. Nothing herein shall be
construed as prohibiting the Company from pursuing any other remedies available
to it for such breach or threatened breach, including, without limitation,
recovery of damages from the Executive.
7(c). The Executive shall deliver promptly to the Company on termination of
employment, or at any other time the Company may so request, all confidential
memoranda, notes, records, reports and other documents (and all copies thereof)
relating to the Company's and its affiliates' businesses which the Executive
obtained while employed by, or otherwise serving or acting on behalf of, the
Company or which the Executive may then possess or have under his or her
control.
8. Non-Competition
---------------
8(a). The Executive covenants and agrees that the Executive will not, during the
Executive's employment hereunder and for a period of six (6) months thereafter
(to the extent permitted by law), at any time and in any state or other
jurisdiction in which the Company or Subsidiary is engaged in or, has reasonably
firm plans to engage in business, (i) compete with the Company or Subsidiary on
behalf of the Executive or any third party; (ii) participate as a director,
agent, representative or partner or have any direct financial interest in any
enterprise which engages in the alcohol product distribution business or any
other business in which the Company or Subsidiary is engaged; or (iii)
participate as an employee or officer in any enterprise in which the Executive's
responsibility relates to the alcohol product distribution business or any other
business in which the Company or Subsidiary is engaged. The ownership by the
Executive of less than five percent (5%) of the outstanding stock of any
corporation listed on a national securities exchange conducting any such
business shall not be deemed a violation of this Section 8(a).
8(b). Injunctive Relief. In the event the restrictions against engaging in a
------------------
competitive activity contained in Section 8(a) hereof shall be determined by any
court of competent jurisdiction to be unenforceable by reason of their extending
for too great a period of time or over too great a geographical area or by
reason of their being too extensive in any other respect, Section 8(a) hereof
shall be interpreted to extend only over the maximum period of time for which it
may be enforceable and over the maximum geographical area as to which it may be
enforceable and to the maximum extent in all other respects as to which it may
be enforceable, all as determined by such court in such action.
8(c). Non-Solicitation. The Executive covenants and agrees that the Executive
-----------------
will not, during the Executive's employment hereunder and for a period of one
(1) year thereafter induce or attempt to induce any employee of the Company or
the Subsidiary to render services for any other person, firm, or corporation.
9. Termination of Employment
-------------------------
9(a). Death.
------
The Executive's employment, hereunder, shall terminate upon the Executive's
death.
9(b). By the Company.
---------------
The Company may terminate the Executive's employment hereunder under the
following circumstances:
(i) If the Executive shall have been unable to perform all of the Executive's
duties hereunder by reason of illness, physical or mental disability or other
similar incapacity, which inability shall continue for more than six (6)
consecutive months, the Company may terminate the Executive's employment
hereunder.
(ii) The Company may terminate the Executive's employment hereunder for "Cause."
For purposes of this Agreement, "Cause" shall mean
(A) willful refusal by the Executive to follow a written order of the Chairman
of the Board or the Board of Directors, in so far as the request does not breach
and federal, state or local law, (B) the Executive's willful engagement in
conduct materially injurious to the Company, (C) dishonesty of a material nature
that relates to the performance of the Executive's duties under this Agreement,
(D) the Executive's conviction for any felony involving moral turpitude, and (E)
the Executive's continued failure to perform his duties under this Agreement
(except due to the Executive's incapacity as a result of physical or mental
illness) to the satisfaction of the Board of Directors of the Company for a
period of at least forty-five (45) consecutive days after written notice is
delivered to the Executive specifically identifying the manner in which the
Executive has failed to perform his duties. In addition, the Company may
terminate the Executive's employment for "Cause" if the normal business
operations of the Company are rendered commercially impractical as a consequence
of an act of God, accident, fire, labor controversy, riot or civil commotion,
act of public enemy, law, enactment, rule, order, or any act of government or
governmental instrumentality, failure of facilities, or other cause of a similar
or dissimilar nature that is not reasonably within the control of the Company or
which the Company could not, by reasonable diligence, have avoided.
9(c). By the Executive.
-----------------
The Executive may terminate the Executive's employment hereunder for "Good
Reason." For purposes of this Agreement, "Good Reason" shall mean (i) the
Company's failure to perform or observe any of the material terms or provisions
of this Agreement, and the continued failure of the Company to cure such default
within thirty (30) days after written demand for
performance has been given to the Company by the Executive, which demand shall
describe specifically the nature of such alleged failure to perform or observe
such material terms or provisions; or (ii) a material reduction in the scope of
the Executive's responsibilities and duties.
9.(d) In case Executive's contract is terminated before September 16, 2004 by
either party other than for reasons indicated in section 9(i) (B), (C) or (D)
the Executive is entitled to six months salary in full payable at termination
date. Where termination is for reason under Section 9 (i) (B), (C) or (D) then
no compensation is due.
9(e). Notice of Termination.
----------------------
Any termination of the Executive's employment by the Company or the Executive
(other than pursuant to Section 9(a) hereof) shall be communicated by written
"Notice of Termination" to the other party hereto in accordance with Section 11
hereof. For purposes of this Agreement, a "Notice of Termination" shall mean a
notice which shall indicate the specific termination provision in this Agreement
relied upon, if any, and shall set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the Executive's
employment under the provision so indicated.
For any termination of the Executives employment by either the Company or the
Executive (other than pursuant to section 9(a) hereof) the length of termination
note shall be six (6) months.
It is understood by both the Company and the Executive that termination of this
agreement terminates by association any employment agreement with any and all of
the Companys' subsidiaries.
9(f). Date of Termination.
--------------------
For purposes of this Agreement, the "Date of Termination" shall mean (i) if the
Executive's employment is terminated by the Executive's death, the date of the
Executive's death; (ii) if the Executive's employment is terminated pursuant to
Section 9(b)(i) hereof, thirty (30) days after Notice of Termination, provided
that the Executive shall not have returned to the performance of the Executive's
duties on a full-time basis during such 30-day period; (iii) if the Executive's
employment is terminated pursuant to Section 9(b)(ii) or 9(c) hereof, the date
specified in the Notice of Termination; and (iv) if the Executive's employment
is terminated for any other reason, the date on which Notice of Termination is
given.
10. Compensation Upon Termination.
------------------------------
10(a). If the Executive's employment is terminated by the Executive's death, the
Company shall pay to the Executive's estate, or as may be directed by the legal
representatives of such estate, the Executive's full Base Salary through the
Date of Termination and all other unpaid amounts, if any, to which the Executive
is entit1ed as of the Date of Termination in connection with any fringe benefits
or under any incentive compensation plan or program of the Company pursuant to
Sections 5(b) and (c) hereof, at the time such payments are due and the Company
shall have no further obligations to the Executive under this Agreement.
10(b). During any period that the Executive fails to perform the Executive's
duties hereunder as a result of incapacity due to physical or mental illness
("disability period"), the Executive shall continue to receive (i) the
Executive's full Base Salary through the Date of Termination and all other
unpaid amounts, if any, to which the Executive is entit1ed as of the Date of
Termination in connection with any fringe benefits o};" under any incentive
compensation plan or program of the Company pursuant to Sections 5(b) and (c)
hereof, at the time such payments are due; provided, that payments so made to
--------
the Executive during the disability period shall be reduced by the sum of the
amounts, if any, payable to the Executive at or prior to the time of any such
payment under disability benefit plans of the Company and which amounts were not
previously applied to reduce any such payment and the Company shall have no
further obligations to the Executive under this Agreement.
10(c). If the Company terminates the Executive's employment for Cause as
provided in Section 9(b)(ii) hereof, the Company shall pay the Executive the
Executive's full Base Salary through the Date of Termination and all other
unpaid amounts, if any, to which Executive is entitled as of the Date of
Termination in connection with any fringe benefits or under any incentive
compensation plan or program of the Company pursuant to Sections 5(b) and (c)
hereof.
Should the salary and benefits arising from the associated termination of
subsidiary employment contracts not fulfill the total termination compensation
of this agreement the Company agrees to make good any short-fall.
10(d). If the Executive terminates the Executive's employment other than for
Good Reason, the Company shall pay the Executive the Executive's full Base
Salary through the Date of Termination and all other unpaid amounts, if any, to
which Executive is entitled as of the Date of Termination in connection with any
fringe benefits or under any incentive compensation plan or program of the
Company pursuant to Sections 5(b) and 5(c) hereof.
Should the salary and benefits arising from the associated termination of
subsidiary employment contracts not fulfill the total termination compensation
of this agreement the Company agrees to make good any short-fall.
10(e). If the Company terminates the Executive's employment other than for
Cause, disability or death, or the Executive terminates the Executive's
employment for Good Reason as provided in Section 9(c) hereof, the Company shall
pay the Executive (i) the Executive's full Base Salary through the Date of
Termination and all other unpaid amounts, if any, to which the Executive is
entitled as of the Date of Termination in connection with any fringe benefits or
under any incentive compensation plan or program of the Company pursuant to
Sections 5(b) and (c) hereof, at the time such payments are due; and (ii)
subject to Section 10(g), the full Base Salary, bonuses and incentive
compensation that would have been payable to the Executive under Sections 5(a)
and 5(c) from the Date of Termination through the Expiration Date in a single
lump sum payment within five (5) business days of his Date of Termination and
any other amounts or benefits that would have been received under Section 5(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 Executive under this Agreement. For purposes
of Section 10(e)(ii), the Executive will be considered to be entitled to an
annual cash bonus equal to the average dollar bonus earned by the Executive
during the Company's two fiscal years immediately prior to Executive's Date of
Termination. Should two full years not have been served prior to termination
then any bonus will be based on the previously reported year to date figures as
applied to the rules in Sections 5(c)
10(f). Mitigation.
----------
The Executive shall not be required to mitigate amounts payable pursuant to
Section 10 hereof by seeking other employment provided, however, that any sums
-----------------
earned by the Executive pursuant to any subsequent employment shall be offset
against any remaining obligation the Company may have to pay by virtue of
termination under this Agreement and, further provided that, the Company's
obligation to continue to provide the Executive with fringe benefits pursuant to
Section 10(e), above, shall cease if the Executive becomes eligible to
participate in fringe benefits substantially similar to those provided for in
this Agreement as a result of the Executive's employment during the period that
the Executive is entitled to such fringe benefits.
11. Notices.
--------
All notices, demands, requests or other communications required or permitted to
be given or made hereunder shall be in writing and shall be delivered,
telecopied or mailed by first class registered or certified mail, postage
prepaid, addressed as follows:
(a) If to the Company:
Central European Distribution Corporation
1343 Main Street,
Suite 301 Sarasota,
FL 34236
Telecopier: 941-330-1558
Attention: Jeffrey Peterson
Vice President and Secretary
(b) If to the Executive:
Evangelos Evangelou
Fosa 37B flat 45
Warsaw, Poland
or to such other address as may be designated by either party in a notice to the
other. Each notice, demand, request or other communication that shall be given
or made in the manner described above shall be deemed sufficiently given or made
for all purposes at such time as it
is delivered to the addressee (with the return receipt, the delivery receipt,
the answer back or the affidavit of messenger being deemed conclusive evidence
of such delivery) or at such time as delivery is refused by the addressee upon
presentation.
12. Severability.
-------------
The invalidity or unenforceability of any one or more provisions of this
Agreement shall not affect the validity or enforceability of the other
provisions of this Agreement, which shall remain in full force and effect.
13. Survival.
---------
It is the express intention and agreement of the parties hereto that the
provisions of Sections 7 and 8 hereof shall survive the termination of
employment of the Executive. In addition, all obligations of the Company to make
payments hereunder shall survive any termination of this Agreement on the terms
and conditions set forth herein.
14. Assignment.
-----------
The rights and obligations of the parties to this Agreement shall not be
assignable, except that the rights and obligations of the Company hereunder
shall be assignable in connection with any subsequent merger, consolidation,
sale of all substantially all of the assets of the Company or similar
reorganization of a successor corporation.
15. Binding Effect.
---------------
Subject to any provisions hereof restricting assignment, this Agreement shall be
binding upon the parties hereto and shall inure to the benefit of the parties
and their respective heirs, devisees, executors, administrators, legal
representatives, successors and assigns.
16. Amendment Waiver. This Agreement shall not be amended, altered or modified
-----------------
except by an instrument in writing duly executed by the parties hereto. Neither
the waiver by either of the parties hereto of a breach of or a default under any
of the provisions of this Agreement, nor the failure of either of the parties,
on one or more occasions, to enforce any of the provisions of this Agreement or
to exercise any right or privilege hereunder, shall thereafter be construed as a
waiver of any subsequent breach or default of a similar nature, or as a waiver
of any such provisions, rights or privileges hereunder.
17. Headings.
---------
Section and subsection headings contained in this Agreement are inserted for
convenience of reference only, shall not be deemed to be a part of this
Agreement for any purpose, and shall not in any way define or affect the
meaning, construction or scope of any of the provisions hereof.
18. Governing Law.
--------------
This Agreement, the rights and obligations of the parties hereto, and any
claims or disputes relating thereto, shall be governed by and construed in
accordance with the laws of the Commonwealth of Florida (but not including the
choice of law rules thereof).
19. Action of Behalf of the Subsidiary.
-----------------------------------
The Company is executing this Agreement also on behalf of its Subsidiary and
agrees to cause the Subsidiary to fulfill its obligations hereunder, though the
appointment and removal, if necessary, of members of the management board of the
Subsidiary.
20. Entire Agreement.
-----------------
This Agreement constitutes the entire agreement between the parties hereto with
respect to the subject matter hereof, and it supersedes all prior oral or
written agreements, commitments or understandings with respect to the matters
provided for herein.
21. Counterparts.
-------------
This Agreement may be executed in two or more counterparts, each of which shall
be an original and all of which shall be deemed to constitute one and the same
instrument
IN WITNESS WHEREOF, the undersigned have duly executed this Agreement, or have
caused this Agreement to be duly executed on their behalf, as of the day and
year first hereinabove written.
CENTRAL EUROPEAN DISTRIBUTION CORPORATION
By:
- ---
- --------------------------------
Name: William V. Carey
Title: Chairman
- --------------------------------
Name: Evanglos Evangelou
Title: Executive