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Exhibit 10.38
 

DATED
27 December 2007

PRO TV SA

- and -

Adrian Sarbu

 
CONTRACT FOR THE PERFORMANCE OF THE OFFICE
 

 

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CONTRACT FOR THE PERFORMANCE OF THE OFFICE
 

Name and Address of the Company:
PRO TV SA with its registered office at Blvd. Pache Protopopescu 109, sector 2,
postal code 021409, Bucharest, Romania, registered with the Romanian Trade
Registry under no.  J40/24578/1992, fiscal registration no. CUI R 2835638 (the
“Company”)
   
Name and Address of the Director:
Adrian Sarbu, born April 18, 1955, residing at 230 Calea Dorobantilor, sector 1,
Bucharest, Romania (“Mr. Sarbu”)

 
(The Company and Mr. Sarbu shall hereinafter also be referred to collectively as
the “Parties” and each individually as a “Party”, and this contract shall
hereinafter be referred to as the "Contract")
 
WHEREAS:
 
(A)
Based on the resolution of the shareholders of the Company dated 1 June 2007,
taken on the basis of the provisions of art. 17 of the Constitutive Act of the
Company, as restated on 4 October 2007, Mr. Sarbu was re-appointed to the office
of the President of the Board of Directors of the Company and General Director
of the Company (the “Director”);

 
(B)
The Company is a member of a group of companies consisting of Central European
Media Enterprises Ltd. (“CME Ltd.”) and any and all companies under its control
(the “CME Group”); and

 
(C)
The Company and Mr. Sarbu hereby wish to agree upon and set forth the terms and
conditions of their mutual co-operation, which shall be carried out in
connection with an exercise by Mr. Sarbu of his position of the Director.

 
THE PARTIES AGREE AS FOLLOWS
 
1 
SUBJECT-MATTER OF CONTRACT

 
1.1
The subject matter hereof shall be the stipulation of the terms and conditions
related to the performance by Mr. Sarbu of the office of the Director in
consideration of the remuneration and other benefits set forth below.

 
2
OFFICE AND DUTIES

 
2.1
Mr. Sarbu shall occupy the position of the Director of the Company. In such
capacity Mr. Sarbu shall perform the duties referred to in Section 2.3 hereof
and the Parties shall not enter into a separate agreement in respect of the
performance by Mr. Sarbu of such duties.

 

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2.2
For the avoidance of doubt, both Parties hereby acknowledge and agree that no
employment relationship shall be established between Mr. Sarbu and the Company
hereunder or in connection with any activities carried out by Mr. Sarbu
hereunder. The relationship created hereunder constitutes a common law contract
based on the provisions of Law 31/1990 regarding commercial companies as amended
and republished and the relevant provisions from the Civil and Commercial Code.

 
2.3
Mr. Sarbu shall perform the duties of the Director as they arise from any
applicable generally binding legal provisions, the provisions of art. 20 from
the valid Constitutive Act of the Company, its internal regulations, the
policies of CME Ltd. or from the directives and instructions provided (if any)
and decisions adopted by the Company's General Meeting of Shareholders including
decisions regarding the annual budget, unless the performance of such duties,
obligations, directives and/or instructions contravenes generally binding legal
provisions.

 
2.4
Mr. Sarbu shall perform his office of the Director and any and all of his
obligations arising hereunder with due care. He shall be obliged to do so in
person and in a thorough and diligent manner.

 
2.5
Mr. Sarbu shall use his best endeavours to promote and protect the interests of
the Company and shall not do anything which would be harmful with respect
thereto.

 
2.6
During the exercise of his duties Mr. Sarbu, in his capacity of General Director
of the Company may delegate some of his authority to other executives of the
Company.  In respect of a limited number of issues he may delegate some of his
authority to third parties (lawyers, consultants).

 
3
PLACE OF WORK

 
3.1
In general, Mr. Sarbu shall perform his office of the Director in Bucharest, at
the Company’s headquarters or, to the extent required, at the local stations of
the Company.

 
4
REMUNERATION

 
4.1
Mr. Sarbu’s base monthly remuneration for the performance of the office of the
Director shall be RON 120,000 (in words: one hundred and twenty thousand
Romanian Lei) per month ("Monthly Remuneration"), that being RON 1,440,000 (in
words: one million four hundred and forty thousand Romanian Lei) per year
("Annual Remuneration").

 
4.2
The Monthly Remuneration shall be payable in arrears no later than on the date
of salary payment as fixed for the Company’s employees. The Company shall pay
the Monthly Remuneration, after deducting all mandatory payments as required to
be made by the Company in accordance with the applicable laws of Romania,
including, without limitation, any withholding or other taxes and payments of
social security and health insurance, by wire transfer to the credit of Mr.
Sarbu’s bank account which Mr. Sarbu notifies the Company in writing no later
than 10 days prior to the due date of the Monthly Remuneration (the “Bank
Account”).

 
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4.3
From January 1, 2010, the Parties have agreed that they shall review the amount
of the Monthly Remuneration and consider an increase thereof on annual basis.
For this purpose, both Parties undertake to enter into good faith negotiations
regarding the increase of the Monthly Remuneration provided that both Parties
agree to use best efforts to finalize such negotiations by no later than January
31 of each calendar year.

 
4.4
Mr. Sarbu shall be entitled to receive a bonus for 2007 (the “Old Bonus”) based
on the Company’s bonus policy as approved by the Company’s Board of Directors.

 
4.5
From January 1, 2008, so long as Mr. Sarbu remains as the Chief Operating
Officer of CME Ltd., he will be eligible to receive an annual bonus of up to RON
2,160,000 subject to the approval of the General Meeting of Shareholders of the
Company, (the “COO  Bonus”).

 
4.6
In the event that Mr. Sarbu is no longer the holder of the position of Chief
Operating Officer of CME Ltd., he will be entitled to receive, from that moment
onward, on a pro rata basis if such an event happens in the middle of a calendar
year, a bonus based on the following formula (the “Revised Bonus”):

 
4.6.1
An additional 12 months of salary will be payable if Total Segment EBITDA for
the Company is equal to Budgeted EBITDA for the financial year to which such
revised Bonus relates; and

 
4.6.2
A further 6 months of salary will be payable if Total Segment EBITDA for the
Company is equal to 105% of Budgeted EBITDA  for the financial year to which
such revised Bonus relates.

 
Budgeted EBITDA for the Company will be  the Total Segment EBITDA for the
Romania operations as set forth in the annual budget of CME Ltd. as approved by
the Board of Directors of CME Ltd. and ratified by the Board of Directors of the
Company for the financial year to which the Revised Bonus relates.
 
4.7
The COO Bonus shall not be payable prior to the date on which CME Ltd. publishes
its Annual Report on Form 10-K for the financial year to which such COO Bonus
relates. The Old Bonus, and, subject to the previous sentence, the Revised Bonus
and the COO Bonus, if any, shall be paid to Mr. Sarbu at the Bank Account not
later than within 30 days following an approval of the financial statement of
the Company for the prior financial year by the General Meeting of the
Shareholders of the Company.

 
4.8
Notwithstanding the foregoing, the Parties hereby acknowledge that additional
criteria may be agreed thereby for the purposes of determining as to whether any
of the Old Bonus, the Revised Bonus and/or the COO Bonus shall be payable in
accordance herewith.

 
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5
OTHER BENEFITS

 
5.1
The Company shall, at its own cost and expense, provide Mr. Sarbu with an office
in the place in which the Company has its seat, including adequate technical and
material equipment and personnel support, as is reasonably necessary for the
performance of Mr. Sarbu’s duties hereunder.

 
5.2
The Company shall be obliged to ensure that Mr. Sarbu be insured by travel
health insurance of the type “Executive plus policy” based on the reasonable
selection of Mr. Sarbu, providing him with the highest standard of insurance
protection for the whole period of the performance of his duties hereunder. The
Company shall be obliged to pay the insurance premiums for such travel health
insurance.

 
5.3
The Company shall, at its own expense, provide Mr. Sarbu with above-standard
health care by providing Mr. Sarbu with above-standard health insurance cover
based upon his reasonable selection.

 
5.4
The Company shall, at its own expense, also provide Mr. Sarbu with
above-standard life insurance based upon his reasonable selection.

 
5.5
Mr. Sarbu shall be entitled to compensation in an amount equivalent to his
Annual Remuneration, or the relevant part thereof, in the event of his suffering
illness resulting in an inability to work,  provided that such inability to work
is proved to the Company by a doctor’s certificate (the “Sick Leave
Compensation”). The Sick Leave Compensation shall be in each case equal to the
respective portion of the Annual Remuneration in the respective year for the
period of time during which Mr. Sarbu is unable to work, provided that the  such
inability to work lasts three (3) months or less. In the event  Mr. Sarbu’s
inability to work exceeds three (3) months, the Sick Leave Compensation shall be
further paid to Mr. Sarbu in an amount equal to 50% of such Annual Remuneration.

 
The Company shall have the right to appoint a reputable physician in order to
verify whether the health of Mr. Sarbu justifies his claim of illness and/or
inability to work in connection with any payment of Sick Leave Compensation
hereunder.
 
5.6
The provision of any insurance scheme shall not in any way prevent the Company
from lawfully terminating this Contract in accordance with the provisions of
Section 9 hereof even if such termination would deprive Mr. Sarbu of membership
in or cover under any such scheme.

 
5.7
Mr. Sarbu shall be entitled to use a company car of an executive class
reasonably selected by Mr. Sarbu with a driver on a 24/7 basis whilst in
Romania. He shall be entitled to use such car for both business and private
purposes. All costs incurred with respect to the operation and use of such car
(including all consumed fuel) shall be covered by the Company.

 
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6
EXPENSES

 
6.1
Neither the travel nor any other costs incurred by Mr. Sarbu in the course of
the exercise of the office of the Director are included in the Monthly
Remuneration, bonus or in any other remuneration or benefits hereunder. The
Company shall reimburse any and all duly documented necessary costs and
expenses, which shall be reasonably incurred by the Director in connection with
the exercise of his office hereunder whether in Bucharest or on business trips,
as evidenced by receipts in accordance with the Company expense policy.

 
7
TIME INVOLVEMENT IN THE COMPANY

 
7.1
Mr. Sarbu shall devote sufficient time to proper performance of his duties
hereunder. Save as set forth herein, no additional pay or time off shall be
permitted to Mr. Sarbu in connection with his performance of the office
hereunder based on the fact that the remuneration set forth herein has been
agreed between the Parties upon taking into consideration the anticipated
overtime required of Mr. Sarbu in connection with his duties hereunder.

 
8
HOLIDAYS

 
8.1
Mr. Sarbu shall be entitled to a vacation of up to 25 days per annum during
which Mr. Sarbu shall not be obliged to perform any duties or obligations
related to the office of the Director to the extent permitted by applicable
laws; provided, however, that during such time, his right to receive
remuneration in accordance with Section 4 hereof and other benefits set forth
hereunder shall not be affected.

9
TERMINATION

 
9.1
This Contract shall be entered into for a definite period of time, expiring on
the date on which the term of Mr. Sarbu’s office of Director shall be terminated
in accordance with the terms hereof, the legal provisions applicable and the
Constitutive Act of the Company, unless stipulated otherwise herein; provided,
however, that the obligations of Mr. Sarbu under Sections 10 and 11 hereof shall
survive the termination of this Contract.

 
9.2
The exercise of Mr. Sarbu’s office of the Director and this Contract shall be
terminated upon:

 
 
(a)
the removal of Mr. Sarbu from the office of the Director on the grounds of a
decision adopted by the General Meeting of Shareholders of the Company in a
manner complying with the respective legal regulations and the Constitutive Act
of the Company other than for the reason set forth under Section 9.2(b) hereof;

 
(b)
the removal of Mr. Sarbu from the office of the Director on the grounds of a
decision adopted by the General Meeting of Shareholders of the Company in a
manner complying with the respective legal regulations and the valid
Constitutive Act of the Company when such grounds are based on Cause;

 
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(c)
the resignation of Mr. Sarbu from his office of the Director in accordance with
the respective legal provisions and the valid Constitutive Act of the Company;

 
(d)
mutual agreement between the Parties; or

 
(e)
The death of the Mr. Sarbu.

 
For the purposes of this Contract, “Cause” shall include any action by Mr. Sarbu
constituting gross misconduct in the performance of his duties hereunder,
including (i) breach of this Contract, (ii) embezzlement or any theft or
misappropriation of the Company’s assets, (iii) gross negligence or wilful
misconduct by Mr. Sarbu in the performance of his duties hereunder, (iv) the
provision of information to the Board of Directors of the Company or the General
Meeting of Shareholders of the Company containing any material misstatement or
material omission, or (v) the failure to observe any instruction or resolution
of the Board of Directors of the Company, the General Meeting of Shareholders of
the Company or CME Ltd.

9.3
Termination pursuant to Section 9.2(a) and (c) hereof shall be on twelve months’
prior written notice. Termination pursuant to Section 9.2(b) hereof shall not
require any prior written notice and shall be effective from the moment of
recall of Mr. Sarbu from the office of the Director. As of the day of the
termination of the office of Mr. Sarbu hereunder, he shall cease to exercise
duties related to the office of the Director.

 
9.4
Upon the termination, by whatever means, of this Contract, Mr. Sarbu shall
immediately, however no later than within three (3) business days from the date
of such termination, return to the Company all documents, computer media and all
other property or assets belonging to or relating to the business of the Company
and the performance of his duties hereunder which is in his possession or under
his power or control or otherwise available to Mr. Sarbu, and Mr. Sarbu must not
retain copies of any of the above, save for cases in which it is necessarily
required by mandatory applicable legal regulations to keep such copies in order
to be able to produce evidence in a proceeding that might be initiated against
Mr. Sarbu in relation to the performance of his duties hereunder.

 
10
CONFIDENTIAL INFORMATION

 
10.1
Mr. Sarbu agrees, during the term hereof and after the termination of the office
of the Director, not to use or disclose to any person (and shall use his best
endeavours to prevent the use, publication or disclosure of) any confidential
information:

 
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10.1.1
concerning the business of the Company and/or the CME Group which comes to the
knowledge of Mr. Sarbu during the course of or in connection with the holding of
his office of the Director; or

 
10.1.2
concerning the business of any client or person having dealings with the Company
and/or the CME Group and/or a company within the CME Group which is obtained
directly or indirectly in circumstances where the Company is subject to a duty
of confidentiality.

 
10.2
For the purposes of Section 10.1 above, information of a confidential or secret
nature includes, but shall not be not limited to, information disclosed to Mr.
Sarbu or known, learned, created or observed by him as a consequence of his
holding of the office of the Director, not generally known in the relevant trade
or industry about the Company’s and/or the CME Group’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 plans
(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 billings.

 
10.3
This Section shall not apply to information which is:

 
10.3.1
disclosed in the proper performance by Mr. Sarbu of duties of the Director or
with the consent of the Company;

 
10.3.2
ordered to be disclosed by a court of competent jurisdiction or otherwise
necessarily required to be disclosed by law or pursuant to the rules of any
applicable stock exchange; or

 
10.3.3
in or comes into the public domain otherwise than due to an omission or a breach
by Mr. Sarbu hereof.

 
11
NON-COMPETITION

 
11.1
For the duration of the office of Mr. Sarbu as the Director and for a period of
twelve (12) months after the termination hereof for any cause, Mr. Sarbu shall
not:

 
 
(a)
either on his own account or on behalf of any other person, firm or company,
directly or indirectly, carry on or be engaged, concerned or interested in any
business which is competitive with a business in which the Company and/or the
CME Group are engaged, including securing television licenses, operating
television stations, programming services and broadcasting, and with which Mr.
Sarbu was actively involved in the twelve months preceding the termination of
his employment;

 
 
(b)
seek to do business and/or do business in competition with any company of the
CME Group with any person, firm or company who at any time during the twelve
months preceding the termination of his employment was a customer or supplier of
the Company and/or any company of the CME Group and/or with whom during that
period Mr. Sarbu or another person on his behalf had material dealings in the
ordinary course of business;

 
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(c)
interfere or seek to interfere or take such steps as may interfere with the
continuance of supplies (whether service or goods) to the Company and/or any
company of the CME Group, or the terms on which they are so supplied, from any
suppliers supplying any company of the CME Group at any time during the period
of twelve months prior to such termination; and/or

 
solicit or employ or cause to be employed, whether directly or indirectly, any
employee of the Company and/or the CME Group who has substantial knowledge of
confidential aspects of the business of the Company and/or the CME Group, and
with whom, at any time during the period of twelve months prior to such
termination, Mr. Sarbu had material dealings.
 
11.2
For the duration of the office of Mr. Sarbu as Director, he shall not accept or
invest in, whether directly or indirectly, any opportunity (a “Corporate
Opportunity”) (i) which is in the line of business of any company of the CME
Group, (ii) which arises or becomes known to him as a result of his position as
Director of the Company, or (iii) in which the CME Group has an interest or
expectancy unless (a) he has presented the Corporate Opportunity to the Board of
Directors of CME Ltd. in reasonable detail and (b) the Board of Directors of CME
Ltd. has decided not to pursue such Corporate Opportunity after such
presentation by him.

 
11.3
Each of the restrictions in this Section shall be enforceable independently of
each other and their validity shall not be affected if any of the others are
invalid. In the event that any of the restrictions are void, but would be valid
if some part of the restriction were deleted, the restriction in question shall
apply with such modification as may be necessary to make it valid.

 
12
INTELLECTUAL PROPERTY

 
12.1
Should Mr. Sarbu acquire any Intellectual Property Rights (as hereinafter
defined) arising out of  the performance of his duties as Director of the
Company, Mr. Sarbu shall assign such rights to the Company, by way of an
assignment contracts or a license granted to the Company. The compensation shall
be provided by the Company to Mr. Sarbu for the assignment of any Intellectual
Property Right by way of deducting it from the Annual Remuneration for the year
in which the Parties executed the respective License.

 
12.2
Mr. Sarbu shall inform the Company of all and full particulars of any
Intellectual Property Right in any work or performance or thing created by Mr.
Sarbu, immediately after such Intellectual Property Right has arisen ; however
no later than within 3 days thereafter. Mr. Sarbu shall not use, assign, purport
to assign or disclose to any person or exploit any Intellectual Property Right
without the prior written approval of the shareholders of the Company.

 
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12.3
“Intellectual Property Right” shall mean any copyright or any other intellectual
property right with respect to any performance, work or another product or any
part thereof or any patent right, trademark right, industrial design right or
any other intangible industrial right or any other intellectual property right
of any nature whatsoever throughout the world (whether registered or
unregistered and including all applications and rights to apply for the same),
which:

 
12.3.1
relates to the business or any product or service of the Company and/or CME
Group; and

 
12.3.2
is invented, developed, created or acquired by Mr. Sarbu (whether alone or
jointly with any other person) during the term of his office of the Director
hereunder within the performance by him of his obligations arising under the
office of the Director hereunder or in connection herewith.

 
13
DATA PROTECTION

 
13.1
Mr. Sarbu acknowledges and explicitly agrees that the Company will hold and
process personal and sensitive data relating to Mr. Sarbu (the “Data”) for
personnel administration and management purposes within the period of (i) the
duration of this Contract; and (ii) to the extent required by law, also after
the termination hereof.  The Data shall include, in particular, Mr. Sarbu’s full
name, address, date of birth, birth number, identification card and passport
numbers, references, bank details, performance appraisals, work, holiday and
sickness records, next of kin, remuneration reviews, remuneration details and
other records (which may, where necessary, include sensitive data relating to
health and data held for equal opportunities purposes).

 
13.2
By signing this Contract, Mr. Sarbu agrees that the Company may process any Data
for the above purposes and may, when necessary for those purposes, make such
Data or any part thereof available to its advisers, to third parties providing
products and/or services to the Company and as required by law.

 
14
GENERAL

 
14.1
This Contract constitutes the whole and only agreement between the Company and
Mr. Sarbu relating to the subject matter hereof, including any performance of
any work or duties of Mr. Sarbu for the Company, and supersedes all previous
contracts, agreements, proposals, both oral and written, negotiations,
presentations, commitments, writings and all other communications between the
Company or any affiliate of the Company and Mr. Sarbu, including all agreements
on individual and remuneration conditions, and the Parties represent and warrant
to each other that there are no unsettled claims and/or obligations arising in
connection with the foregoing as of the date hereof.

 
14.2
Should any of the provisions of this Contract be or become invalid or
unenforceable, such invalidity or unenforceability shall not impair the validity
or enforceability of the other provisions of this Contract to the extent
permitted by relevant laws. Should this be the case, the Parties undertake to
replace such invalid or unenforceable provision with a new one, which shall be
valid, enforceable and shall, in accordance with relevant laws, comply to the
fullest extent possible with the meaning and effect of the original provision.

 
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14.3
This Contract may be amended or modified only by a written instrument duly
executed by both Parties.

 
14.5
This Contract can be terminated only as stipulated in Section 9 above.

 
14.6
This Contract has been executed in four counterparts, two in the English
language and two in the Romanian language. Each of the Parties shall obtain one
counterpart of the Contract in each language.  In case of discrepancies between
the English and Romanian language, the English language version shall prevail.

 
14.7
This Contract shall come into force and effect as of the date on which it is
signed by both Parties and approved by the General Meeting of Shareholders of
the Company. The Company shall use its best efforts to ensure that the approval
of the General Meeting of the Company is granted without undue delay, however,
no later than within 3 weeks from the execution hereof.

 
14.8
This Contract shall be governed by and construed in accordance with Romanian
law.

 
THE COMPANY AND MR. SARBU AGREE TO THE TERMS SET OUT ABOVE. IN WITNESS WHEREOF
THEY SIGNED THE CONTRACT AS FOLLOWS:
 
In Bucharest, on 27 December 2007
     
For PRO TV SA.:
ADRIAN SARBU
   
By: /s/ Oliver Meister
/s/ Adrian Sarbu
Name:
OLIVER MEISTER
 
Title:
Director
 

 
 
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