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EXHIBIT 10.51
Between
Xxxxxx Xxxxxxxxxx AG, Xxxxxxxxx
-- hereinafter: "KHAG" --
represented by the Chairman of the Supervisory Board,
Xx. Xxxxxx Xxxx
and
Xx. Xxxx X. Gemmersdorfer
the following
EMPLOYMENT AGREEMENT
is concluded:
SS. 1 ACTIVITIES
(1) Effective as of 1 August 1998, Xx. Xxxx X. Gemmersdorfer enters KHAG's
service as Chairman of the Management Board.
Mr. Gemmersdorfer is aware of the fact that in accordance with the
Take-Over Codex the majority shareholder is to make a compensation
offer to the minority shareholders and that the Company may possibly be
converted into a partnership.
(2) Mr. Gemmersdorfer is obligated to conduct the Company's business with
the care of a prudent businessman in accordance with the statutory
regulations, the provisions of the Articles of Association, the Rules
of Procedure for the Management Board and this Employment Agreement,
and to represent the Company.
The Management Board's overall responsibility is not affected by any
departmental division.
(3) Without the Supervisory Board's consent Mr. Gemmersdorfer may during
the term of the employment not engaged in any secondary activities,
whether against or without valuable consideration.
For the purpose of realization of synergies between Decora Industries
Inc. ("Decora") and KHAG, Mr. Gemmersdorfer may accept a position with
Decora or with a company affiliated with it.
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SS. 2 REMUNERATION
(1) Mr. Gemmersdorfer will receive for his activities a fixed annual basic
salary in the amount of
DM 500,000,--
for the first time on a pro-rata basis for calendar year 1998. The
salary has to be paid in twelve equal monthly installments each time
subsequently at the end of a month subject to deduction of taxes and
social security contributions.
(2) In addition, Mr. Gemmersdorfer will receive a variable remuneration of
DM 200,000,-- for business year 1999 and for the years 2000 through
2003 a variable remuneration in the amount of DM 250,000,-- each,
provided that the respective budget targets adopted by the Supervisory
Board will be achieved.
The variable remuneration is calculated as follows:
1. Achievement of the targeted KHAG profit before taxes in US GAAP
(30% of the variable remuneration).
2. Achievement of the targeted KHAG cash flow in US GAAP (30% of the
variable remuneration).
3. Planned synergies between Decora and KHAG will be achieved after
adoption by the Supervisory Board (40% of the variable
remuneration).
Planning is the planning of the Management Board as coordinated
with the Supervisory Board for the respective business year.
4. For the business year 1999, the target remuneration for criteria
1-3 amounts to:
DM 200,000.--
For the business years 2000 through 2003, the target
remunerations for criteria 1-3 amount to:
DM 250,000.--
The calculation of the remuneration is effected in the following
way:
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Remuneration for each criterion starts with a target achievement
exceeding 85%.
a. For each percentage point over 85% up to 100%, 6.67% of the
target remuneration will be paid, i.e., in case of
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Target Achievement Calculation Payment Factor
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85% 0.07% x 0 0%
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100% 6.67% x 15 100%
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Example in case of 100% achievement of all criteria in:
1999: DM 200,000.--
2000 - 2003: DM 250,000.--
b. For each percentage point over 100% up to 110%, 1% of the
target remuneration will be paid additionally, i.e. in case
of
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Target Achievement Calculation Payment Factor
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101% 1% x 1 1%
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110% 1% x 10 10%
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Example in case of 110% achievement of all criteria
in:
1999: DM 220,000.--
2000 - 2003: DM 275,000.--
c. For each percentage point over 110%, 3% of the target
remuneration will be paid additionally, i.e. in case
of
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Target Achievement Calculation Payment Factor
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120% 3% x 10 30%
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130% 3% x 20 60%
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Example in case of 120% achievement of all criteria in:
1999: DM 280,000.--
2000 - 2003: DM 350,000.--
Example in case of 130% achievement of all criteria in:
1999: DM 340,000.--
2000 - 2003: DM 425,000.--
d. The variable remuneration may as a maximum be equal to the
amount of the fixed remuneration and may not exceed the
latter.
This management bonus is due after adoption of the annual
accounts by the Supervisory Board.
SS. 3 REMOVAL COSTS, TRANSITIONAL ARRANGEMENT, TRAVEL EXPENSES, BUSINESS
ENTERTAINMENT EXPENSES, MOTOR VEHICLE
(1) Within 12 months after the start of this Employment Agreement, Mr.
Gemmersdorfer will relocate his domicile from Bad Homburg to 74679
Weissbach or into the Weissbach region.
KHAG will assume the costs for the removal firm hired to handle the
move as well as the broker's commission for rented property as
customary in the locality.
(2) Up to the day of the move, but for no more than 12 months after the
start of this Employment Agreement, KHAG will assume the costs for a
second residence up to a maximum gross amount of DM 1,000,-- per month.
(3) In case of business travel on KHAG's behalf, Mr. Gemmersdorfer is
entitled to reimbursement of his travel and business entertainment
expenses in such amount as is
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reimbursed tax-free to management-level employees (per diem, hotel
expenses in accordance with receipt, first class tickets, first class
transcontinental flights).
(4) An Audi AB 2.71 with car telephone and other fittings is available to
Mr. Gemmersdorfer for business trips and may also be used for private
purposes. The Company will bear operation and maintenance costs.
Payment of tax on the benefit in money's worth on the basis of tax
directives as well as social security contributions will be on Mr.
Gemmersdorfer's account.
(5) KHAG will assume the costs for the private telephone; income tax
accruing thereupon as well as social security contributions will have
to be borne by Mr. Gemmersdorfer.
SS. 4 INSURANCE
KHAG will take out for Mr. Gemmersdorfer the following personal
insurance, whose premiums will during the term of this Agreement have
to be paid by KHAG:
a. For death by accident DM 1,000,000.--
b. for the event of permanent disablement DM 2,000,000.--
c. for additional medical costs DM 20,000.--
d. as bridging compensation DM 300,000.--
Furthermore, a baggage insurance in the amount of DM 10,000.-- will be
taken out for Mr. Gemmersdorfer on KHAG's account.
Possibly accruing income tax and social security contributions on the
premiums or insurance benefits will be on Mr. Gemmersdorfer's account.
The insurance is valid for both the professional and the private areas.
Benefits from such personal insurance will be effected in addition to
possible benefits in accordance with xx.xx. 7-11.
SS. 5 LEAVE
Mr. Gemmersdorfer is entitled to annual leave of 30 working days, which
may also be taken parts. For 1998 there is a proportionate leave
entitlement. Mr. Gemmersdorfer will coordinate his vacation times with
the Chairman of the Supervisory Board under consideration of business
matters.
Leave days not taken during a calendar year will become forfeited on
31 March of the following calendar year.
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SS. 6 INVENTIONS
(1) KHAG is entitled to any Inventions made by Mr. Gemmersdorfer in KHAG's
special fields and improvements of inventions. Should industrial
property rights be applied for, then this will be done in KHAG's name:
the inventor, whose statutory claims to remuneration will remain
unaffected by this, will be named. Incidentally, the provisions of the
Employee Invention Act of 22.7.1957 (Federal Law Gazette
--Bundeegesetzblatt-- 1967 Part 1 pages 758 et seq.) and the
implementing regulations issued about it will be applicable.
(2) The same applies to possible inventions by Mr. Gemmersdorfer in the
special fields of KHAG's subsidiaries.
SS. 7 MEDICAL CHECK-UP
Mr. Gemmersdorfer undertakes to have a thorough medical check-up
performed at Deutache Klinik fur Diagnostik DKD in Wiesbaden once per
calendar year.
Costs will be assumed by KHAG up to an amount of DM 2,000.--. Should
Mr. Gemmersdorfer's health insurance refund a portion of the medical
costs and should this not cause any disadvantages for the return of
premium, then KHAG will only assume such amount as not refunded by the
health insurance.
SS. 8 ILLNESS, DEATH
(1) Should Mr. Gemmersdorfer due to an illness be prevented from performing
his activities, then he will continue to receive his undiminished fixed
remuneration in accordance with ss. 2 Para. (1) for a period of six
months.
(2) In the event of Mr. Gemmersdorfer's death during the time of his active
services or during his retirement, such remuneration or pension will be
paid to his surviving dependents for three months, calculated as of the
first month following the month of Mr. Gemmersdorfer's death.
SS. 9 RETIREMENT PENSION
(1) Mr. Gemmersdorfer will obtain a claim to old-age pension pursuant to
Paragraphs (2) through (4) provided that he has been in the Company's
services for five full years of service.
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(2) Upon retirement on reaching the age of 65, Mr. Gemmersdorfer will
receive an old-age pension for life of at most 50% (fifty of hundred)
of the remuneration pursuant to ss. 2 Para. (1). Thereby, the
remuneration pursuant to ss. 2 Para. (1) last received by Mr.
Gemmersdorfer prior to his retirement from service will be decisive.
(3) The old age pension will for each year of service completed with KHAG
after the start of this Agreement be 3% of the decisive remuneration
(please see (2)), but no more than 50% of such remuneration. Only full
years of service with us will be taken into consideration.
(4) a. Should Mr. Gemmersdorfer due to cancellation, termination or
non-extension retire from his employment prior to reaching the age of
65 and should be meet the conditions of Para. (1), then his claim to
old-age pension will be left to him in the amount as applicable in
accordance with Para. (2) at the time of his retirement.
b. Should Mr. Gemmersdorfer pass away in such case as described in
a) after reaching the age of 65, then his present wife, Xxx. Xxxxx
Gemmersdorfer, and the children descending from this marriage will
receive a widow's and orphan's pension pursuant to xx.xx. 11 and 12.
(5) In addition to the retirement pension listed in Paragraphs (1) through
(4), the premium for a life insurance taken out by Mr. Gemmersdorfer in
the amount of DM 1,800.-- p.m. will be paid by KHAG up to the gross
amount of DM 25,000.-- p.a., i.e. subject to deduction of social
security contributions and income tax to be paid by Mr. Gemmersdorfer.
Possible income taxes and social security contributions accruing
additionally will have to be borne by Mr. Gemmersdorfer. The
entitlement to a pension (retirement capital share) acquired by this
payment - during the term of employment - will be counted against
future pension payment in accordance with ss. 9 (1) through (4). The
same applies to xx.xx. 11 and 12.
SS. 10 OCCUPATIONAL DISABILITY
In the event of occupational disability, Mr. Gemmersdorfer -- provided
that he is in KHAG's services --will receive an occupational disability
pension in the amount of 50% of the remuneration in accordance with ss.
2 Para. (1).
SS. 11 WIDOW'S PENSION
(1) Should Mr. Gemmersdorfer pass away, then his present wife, Xxx. Xxxxx
Gemmersdorfer, will receive a widow's pension.
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Such widow's pension will amount to 50% of the pension that Mr.
Gemmersdorfer did in fact receive at the time of his death and/or of
the old-age pension that Mr. Gemmersdorfer could have claimed had his
employment with the Company continued up to his reaching the age of 65,
whereby the remuneration last received in accordance with ss. 2 Para.
(1) will be decisive.
(2) Payment of the widow's pension will start upon the end of the payments
in accordance with ss. B (2). The widow's pension will be granted for
life, but no longer than up to a possible remarriage. The widow's
pension commitment will become discharged in the event of absolute
divorce of the marriage.
SS. 12 ORPHAN'S PENSION
(1) In the event of Mr. Gemmersdorfer's death, his children descending from
his marriage with Xxx. Xxxxx Gemmersdorfer will receive an orphans'
pension at the same conditions as orphans' pensions are in accordance
with the Federal Act for the Remuneration of Public Officials granted
to surviving dependents of public officials.
(2) The orphans' pension will for each orphan (but for no more than three
orphans) amount to 25% of the old-age pension that Mr. Gemmersdorfer
did in fact receive at the time of his death and/or of the old-age
pension that Mr. Gemmersdorfer could have claimed had his employment
with the Company continued up to his reaching the age of 65, whereby
the remuneration last received in accordance with ss. 2 Para. (1) will
be decisive.
As long as a widow's pension in accordance with ss. 11 is granted as
well as the orphans' pension, the above rate will be reduced to 15%.
Widow's and orphans' pensions together may not exceed the old-age
pension that Mr. Gemmersdorfer could have claimed had his employment
with the Company continued up to his reaching the age of 65, whereby
the remuneration last received in accordance with ss. 2 Para. (1) will
be decisive; otherwise they will be cut back on a pro-rata basis.
(3) The orphans' pensions will be paid as of the time as of which in
accordance with ss. 11 the widow's pension will have to be paid. They
will and in each case with the completion of the professional training,
but no later than upon completion of the 27th year of life.
SS. 13 SECRECY
(1) Mr. Gemmersdorfer is obligated to maintain secrecy about all business
transactions, trade secrets, operating methods and other confidential
information he becomes privy to at KHAG and its subsidiaries due to his
activities as a KHAG Management Board member. This obligation will
remain in existence even after his withdrawal from KHAG's services.
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(2) All written instructions, drawings, notes, memoranda or records
regarding such trade secrets or confidential information that are in
Mr. Gemmersdorfer's possession during the term of this Agreement are
KHAG's property and have to be returned upon request and in any case in
the event of termination of this Agreement. Mr. Gemmersdorfer will not
keep any copies or excerpts of records. The same responsibility applies
to his heirs.
SS. 14 TERMINATION OF EMPLOYMENT
(1) Except in the event of expiration of the term of this Agreement in
accordance withss.15, the employment will end:
a. Upon reaching the age of 65 or
b. if Mr. Gemmersdorfer should become permanently disabled in
accordance with the social security legislation or
c. in the event of revocation of the appointment in accordance with
ss. 84 Para. (3) Companies Act (Aktiengeestz). Illness lasting
for more than six months may also constitute an important reason
for such revocation of appointment.
(2) 12 months prior to the end of the term of this Agreement in accordance
with ss. 15, both parties will declare whether the cooperation shall be
continued after the expiration of the Agreement. Such declaration will
have to be made in writing.
(3) In case of premature termination of this Agreement during the first
three years, Mr. Gemmersdorfer will notwithstanding the remaining term
of the Agreement be entitled to a maximum claim for remuneration for
the remaining term of this Agreement inclusive of a settlement in the
amount of two annual salaries in accordance with ss. 2 Para. (1).
SS. 15 TERM OF AGREEMENT
This Agreement starts on 1 August 1998 and will expire on 31 July 2003.
In the event of reappointment, this Agreement will be extended for the
term of such reappointment.
SS. 16 FINAL REMARKS
(1) All modifications and amendments to this Agreement require written form
in order to be valid; this requirement may not be excluded by oral
agreement.
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(2) Should individual provisions of this Agreement be or become totally or
partially invalid or should there be a gap in this Agreement, then the
validity of the remaining provisions shall remain unaffected. Instead
of the invalid provision such valid provision will be deemed as agreed
upon as corresponds as closely as possible to the meaning and purpose
of the invalid provision.
The Agreement will enter into force subject to the KHAG Personnel
Committee's consent to this Agreement and the resolution by the KHAG
Supervisory Board concerning the appointment.
Konigstein, 18 July 1998 Konigstein, 18 July 1998
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Xxxxxx Xxxxxxxxxx AG Xxxx X. Gemmersdorfer
represented by the Chairman of the
Supervisory Board, Xx. Xxxxxx Xxxx
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