Managing Director Service Contract
Exhibit
10.15
Managing
Director Service Contract
Between
Franklin
Electric Europa GmbH
Postfach
1280 D-54502
Xxxxxxx
Diesel Xxxxxxx 00
X-00000
Xxxxxxxx, Xxxxxxx
(hereinafter
“Company“)
and
Xx.
Xxxxx-Xxxxxxxxx Xxxxx
Am
Xxxxxxxxx 0
X-00000
Xxxxxxxx
(hereinafter
“Managing Director“)
The
Shareholders of the Company intend to appoint Xx. Xxxxx as Managing Director
of
the Company as of August 1, 2003. On this basis, the Parties agree on the
following Service Contract:
| 1. |
Position
and Scope of Duties
|
1.1 As
of
August 1, 2003 Xx. Xxxxx shall be employed by the Company as Managing Director
(Gesch’ftsführer). In addition, he shall have the title “President Franklin
Electric Europa”.
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1.2
|
The
Managing Director shall represent the
Company.
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|
1.3
|
The
Shareholders may appoint additional managing directors, and may
assign to
the Managing Director further or other tasks or areas of responsibility
and may determine the allocation of responsibilities within the
management
including the Managing Director’s authority to represent the Company
singly or jointly.
|
| 1.4 |
The
Managing Director will perform his duties as Managing Director
by
observing the diligence of a prudent businessman in accordance
with the
provisions of this Service Contract, the Company’s Articles of
Association, the general and specific directions and instructions
given by
the Shareholders, and in accordance with the law. He will also
comply with
the Company’s policies, in particular with the Franklin policy on business
ethics.
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| 1.5 |
The
Managing Director shall report to the CEO of Franklin Electric
Co., Inc.,
currently Xx. Xxxxx Xxxxxxxx (the “CEO”). The CEO or the Shareholders may
at any time change the reporting
line.
|
| 1.6 |
The
Managing Director understands that he may be asked to abandon his
post of
Managing Director and transfer to the Grand Duchy of Luxembourg
and
assume, as a managing director of the Luxembourg affiliate, many
of the
management functions contemplated under the present Service
Contract.
|
| 2. |
Other
activities
|
|
2.1
|
The
Managing Director will devote his full working time and ability
to the
Company’s business. Any other activity, be it for remuneration or not,
including any part time work, is subject to the explicit prior
written
consent of the Shareholders or of the CEO who may deny such consent
if in
their view such activity was not in the interest of the
Company.
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|
2.2
|
Scientific
and literary activity is permitted, provided that the Company is
informed
prior to the publication, and that such activity does not adversely
affect
the working capacity of the Managing Director, does not give rise
to a
divulging of confidential information, or is in any other way not
in the
interest of the Company.
|
|
2.3.
|
During
the term of this Service Contract and for an additional two (2)
years
beyond the termination of this Contract, the Managing Director
may not
solicit or assist or facilitate the solicitation of any employee
of the
Company or of any of its affiliates with the intention of causing
them to
render services to any other person or
activity.
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|
2.4
|
An
indirect or direct participation in other undertakings requires
the prior
written consent of the Shareholders or of the CEO, except that
such
participation concerns publicly traded companies, does not exceed
five per
cent of the shares, and does not permit influence on the undertaking
in
any other way.
|
3.
Transactions subject to consent
|
3.1
|
The
Managing Director shall have single signature authority for obligations
in
accordance with the specific rules and regulations of the
Company.
|
| 3.2 |
The
Shareholders reserve the right to alter the amount set forth in
paragraph
(3.1) above, and they may issue and alter a list of transactions
subject
to prior consent. The Shareholders furthermore reserve the right
to issue
at any time directions of a general nature or for specific
cases.
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3.3 The
restrictions set out in section 181 German Civil Code (Bürgerliches
Gesetzbuch)
(prohibition of self-contracting) shall apply unless explicitly stipulated
otherwise in the Shareholder resolution appointing Xx. Xxxxx as Managing
Director.
4.
Remuneration
4.1 The
Managing Director shall be entitled to an annual gross base salary equivalent
to
$260,000 USD, payable in EURO’S determined at the average exchange rate for the
month, and distributed in twelve (12) equal instalments at the end of a calendar
month. One time during the term of the contract the Managing Director may
elect
to set the EURO exchange rate at the prevailing exchange rate for the reminder
of the contract. Furthermore, the Company shall pay the mandatory social
security contributions including contributions to medical insurance according
to
German law. In case the Managing Director opts for a private medical insurance
instead of the state medical insurance, the Company will bear half of the
contributions due up to a maximum of what would have to be paid by the Company
to the state medical insurance for the Managing Director’s personal medical
insurance.
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4.2
|
The
annual base salary shall be reviewed annually, considering appropriately
the financial and economic development of the Company, its affiliates,
and
the Managing Director’s personal performance. The decision whether or not
to increase the base salary shall remain at the sole discretion
of the
Company.
|
| 4.3 |
With
payment of the above-mentioned base salary, all activities, which
the
Managing Director performs under this Service Contract, shall be
compensated. In particular, he shall not be entitled to any additional
compensation for overtime work.
|
4.4 In
addition to the salary paid in accordance with Sec. 4.1, the Company may
decide
to pay the Managing Director an annual incentive bonus of up to 70% of annual
base pay. Any bonus is subject to the Company’s sole discretion. The Company
may, subject to its sole discretion, decide to establish a bonus incentive
plan
for any fiscal year, thereby making bonus payments subject to additional
predefined goals and further conditions as defined in the respective bonus
incentive plan. For
the
ongoing fiscal year, the Company shall adapt a bonus incentive plan similar
to
the Franklin Electric Co., Inc. Executive Bonus Plan. The details of the
respective bonus plan shall be communicated to the Managing Director no later
than within sixty (60) days following the start date of this contract. The
Company reserves the right to change such annual bonus and incentive plan
at any
time, in particular with respect to bonus percentages,
incentive
targets, goals and bonus amounts. The bonus payout, if any, shall become
due on
or about February 28 of the following year.
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4.5
|
An
assignment or pledge of the remuneration entitlement is excluded.
In case
that the Managing Director upon culpable injury by a third party
becomes
unable to work, and the Company continues payment to him, the Managing
Director already now assigns his damage claim against said third
party
resulting from him having been injured, to the Company up to the
amount
that the Company pays to said injured
party.
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|
4.6
|
Insofar
as the Company grants payments (bonus, ex gratia payments or other
additional payments) over and above the above-agreed remuneration,
such
payments are made voluntarily. There will be no entitlement to
them
arising for the future, even if payments were made on several and
consecutive occasions.
|
5.
Other Benefits
|
5.1
|
Travel
expenses and other necessary expenses reasonably incurred by the
Managing
Director in the furtherance of the Company’s business will be reimbursed
in accordance with the guidelines of the Company and within the
framework
of the principles of German or Luxembourg tax
law.
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|
5.2
|
The
Company will in accordance with the applicable company policy as
amended
from time to time provide the Managing Director with a car allowance
or a
company car for business and private use. If he is availed a company
car,
the Managing Director will maintain the car in good condition and
will
arrange for regular maintenance. The costs for maintenance and
use of the
company car will be borne by the Company. The value of the private
use per
month as determined by German, or, if applicable, Luxembourg tax
regulations for the particular type of car constitutes additional
compensation, the wage withholding tax for which will be borne
by the
Managing Director. In case of his suspension / release from work
the
Managing Director will return the car at any time upon request
of the
Company; he shall have no right of retention, nor shall he be entitled
to
any compensation in lieu of the private use of the Company Car.
In case
the Managing Director is given a car allowance, the taxes on such
allowance will be borne by the Managing
Director.
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| 5.3 |
The
Company will take out travel accident insurance to the benefit
of the
Managing Director with the following amounts: (a) in case of death
$1,000,000 USD (b) in case of complete invalidity $1,000,000 USD.
The
statutory taxes on the financial advantage will be borne by the
Managing
Director. In case of an insured accident, the Managing Director
has to
inform the Company immediately about such
accident.
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| 5.4 |
The
Managing Director will start accruing additional pension benefits
in the
Franklin Electric Europa GmbH Pension Plan. This benefit will be
a
continuation to the benefits the Managing Director earned under
the German
PLanfrom 1974 - 1999.
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6.
Inability to perform duties
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6.1
|
In
case the Managing Director is unable to perform his duties under
this
Service Contract, he will inform the Company immediately about
it, its
assumed duration and its reason. In case the inability to work
is due to
health reasons, the Managing Director will provide the Company
with a
medical certificate after three calendar days following the beginning
of
the illness at the latest, indicating the inability to work and
its
assumed duration.
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|
6.2
|
In
case his inability to perform his duties results from reasons of
illness
not caused by him, the Managing Director shall continue to receive
his
base salary for the time of such inability, but not for longer
than six
months. The Company’s obligation to continue to pay the Managing
Director’s base salary in accordance with this Sec. 6.2 shall be reduced
by the amount of any sick payments or disability payments the Managing
Director is paid during such time, whether out of statutory schemes,
pension funds or otherwise. In case of death of the Managing Director
not
caused by him, his widow will receive the base salary for the month
in
which the death occurred as well as for the following three months.
In
case there is no wife, the base salary shall be due jointly to
all
children who at the date of the death have not yet retained their
25th
birthday. Should such children not exist, the base salary payment
shall
cease with the date of death of the Managing
Director.
|
7.
Vacation
|
7.1
|
The
Managing Director shall be entitled to an annual holiday of 30
working
days excluding Saturdays.
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| 7.2 |
The
time of holiday shall be determined in agreement with the CEO taking
into
considera-tion the personal wishes of the Managing Director and
the
interests of the Company.
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| 7.3 |
Holiday
entitlement shall accrue month by month evenly through the calendar
year.
Holidays not taken in any calendar year may only be carried forward
to the
next calendar year with the approval of the Company or if they
could not
be taken in the preceding year due to the business of the Company
requiring the presence of the Managing Director. Absent the Company’s
approval, holidays carried forward to the next calendar year must
be
scheduled before March 31, and taken before April 30 of said next
calendar
year. Otherwise, they shall forfeit without any compensation.
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8.
Secrecy, Data Protection
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8.1
|
The
Managing Director shall not disclose to any third party, or use
for
personal gain, any confidential technical or other business information
which has been entrusted to him, or which has otherwise become
known to
the Managing Director and which relates to the Company or to any
of its
affiliated companies. In particular, no information may be disclosed
concerning the organisation of the business, the relation with
customers
and suppliers and the Company's know-how. This obligation shall
not expire
upon termination of this Service Contract but shall continue to
remain in
force thereafter.
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| 8.2 |
Business
records of any kind, including private notes concerning Company
affairs
and activities, shall be carefully kept and shall be used only
for
business purposes. No copies or extract or duplicates of drawings,
calculations, statistics and the like nor of any other business
records or
documents may be copied or extracted for purposes other than for
the
Company's business.
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| 8.3 |
Upon
termination of this Service Contract, or upon suspension/release
from
work, the Managing Director shall return all business records and
copies
thereof, regardless of the data carrier; he shall have no right
of
retention.
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8.4 According
to Section 5 of the Federal Statute on Data Protection (Bundesdatenschutzgesetz)
and respective other corresponding provisions on data protection, the Managing
Director shall not process personal data of employees or third parties for
any
other purpose than required in the ordinary fulfilment of business duties
and
shall not make such personal data available to other parties, nor publish
or use
them in any other way. The
Managing Director is aware of and agrees that, due to the internal structure
of
the Company’s group of affiliates and his position within the Company being
particularly associated also with the Company’s international functions, his
personnel data may be drawn, stored and processed not only by the Company
but
also by its affiliates, specifically by the Company’s parent company and other
affiliates located in the U.S.
9.
Inventions
| 9.1 |
All
rights pertaining to inventions, whether patentable or not, and
to
proposals for technical improvements made and to computer software
developed by the Managing Director (hereinafter jointly called
"Inventions") during the term of this Service Contract shall be
deemed
acquired by the Company without paying extra compensation therefor.
The
Managing Director shall inform the Company or a person designated
by the
Company of any Inventions immediately in writing and shall assist
the
Company in acquiring patent or other industrial property rights,
if the
Company so desires.
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Any
and
all writings or other copyrightable material produced by the Managing Director
in the course of his services reasonably relating to the actual or potential
business of the Company or one of its affiliates shall be the sole property
of
the Company or such affiliate, and the Company or one of its affiliates shall
have the exclusive right to copyright such writings or other materials in
any
country. The same shall apply to any and all significant ideas, works of
authorship, formulae, devices, improvements, methods, processes, or discoveries
that are related to the Company or one of its affiliates (hereinafter referred
to as “Improvements”) and which the Managing Director conceives, makes up,
develops, or works on in the course of his services under this Contract shall
be
the sole property of the Company or of one of its affiliates, respectively.
The
Managing Director shall execute any additional documents required to protect
the
right, title and interest of the Company or one of its affiliates in the
Improvement.
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9.2
|
Subsection
9.1 above shall apply to any Inventions, Improvements or other
industrial
or intellectual property rights, no matter whether they are related
to the
business of the Company, are based on experience and know-how of
the
Company, emanate from such duties of activities as are to be performed
by
the Managing Director within the Company, or materialise during
or outside
normal business hours of the
Company.
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| 9.3 |
The
Company's exclusive and unlimited rights to Inventions, Improvements
or
other industrial or intellectual property acquired hereunder shall
in no
way be affected by any amendments to or the termina-tion of this
Service
Contract. Should the Managing Director by law be entitled to any
compensation payment for such intellectual property rights which
- as
agreed above - solely pertain to the Company or one of its affiliates
it
is agreed that such payment is covered by the salary and that the
Managing
Director shall have no further claims against the Company or its
affiliates.
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10.
Term of Service and Notice
| 10.1 |
This
Service Contract is entered into for an indefinite period. It shall,
however, end without the need to give notice not later than the
expiry of
the month during which the Managing Director attains the age of
65, or the
month during which the Managing Director is entitled to receive
state old
age pension or pension for inability to work, whichever occurs
first. Both
parties are entitled to terminate this Contract by giving six (6)
months
prior notice effective to the end of any calendar month. In case
the
Company is obliged to observe an extended notice period, such an
extension
shall also apply for the Managing Director.
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| 10.2 |
In
case this Contract has been terminated, the Com-pany is entitled
to
suspend and relieve the Managing Director from work at any time.
In such
case the Company shall con-tinue to pay the contractual remuneration
to
the Managing Director for six (6) months as of the termination
notice. Any
holidays not yet taken shall be set off against the time period
during
which the Managing Director is suspended/relieved from work. Any
suspension period shall not count for calculating a possible bonus
or
payment exceeding his gross base salary.
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| 10.3 |
Notice
of extraordinary termination, effective immediately, may be given
for
compelling reasons. Such reasons shall specifically be deemed to
exist in
case the Managing Director violates Articles 2, 3 and 8 of this
Service
Contract. The right of both Parties to terminate extraordinarily
for other
reasons remains unaffected.
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| 10.4 |
Notice
of termination must be given in writing. A revocation of appointment
as
Managing Director shall at the same time be deemed as termination
of this
Contract with notice period, provided that no termination for cause
is
made.
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11.
Forfeiture clause
| 11.1 |
All
mutual claims arising out of the Service Contract and such claims
which
are related to the Service Contract, shall lapse if they are not
asserted
against the other party to the contract in writing within two months
after
the due date.
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11.2 If
the
other party rejects the claim in writing or if a written response is not
given
within two weeks after the assertion of the claim, the claim shall lapse
if it
is not asserted before the courts within two months after receipt of the
rejection or after expiry of the two week-period.
12.
Final provisions
| 12.1 |
This
Service Contract represents the entire agreement and understanding
of the
parties. It supersedes and replaces all other previous contracts
of
employment as issued by the Company or its affiliates. An amendment
to
this contract is the Xxxxx Xxxxx Benefit summary August 1, 2003
attached
to this contract.
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| 12.2 |
Any
amendments of or additions to this Service Contract shall be made
in
writing in order to be effective.
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| 12.3 |
If
one of the provisions of this Service Contract is held to be invalid,
the
remaining provisions shall remain valid, and the invalid provision
shall
be replaced by such valid one which shall have the closest admissible
economic effect. The same shall apply in the event that the Contract
is
found to be incomplete.
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| 12.4 |
In
the event of disputes in connection with this Service Contract,
the place
of jurisdiction shall be the European seat of the
Company.
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| 12.5 |
This
Service Contract shall be governed and construed in accordance
with the
laws of Germany.
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| 12.6 |
The
Managing Director has received an executed copy of this Service
Contract.
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Wittlich,
Germany Xxxxxx 0, 0000 Xxxxxxxx,
Xxxxxxx August 1, 2003
___________________________ ________________________
Company Managing
Director
Amendment
to Managing Director Service Contract ( 12.1 )
Xxxxx
Xxxxx Compensation and Benefit Summary August 1, 2003
Effective
with your re-assignment to Germany and the European Operations your salary
and
benefits will be adjusted as follows:
| · |
In
order to maintain the net compensation level due to the tax differential
between the U.S. and Germany your annual base salary will be $260,000.00
USD payable at the current EURO
exchange.
|
| · |
You
will retain your pension benefits earned between 1999 and 2003
in the Cash
Balance Pension Plan and Franklin Electric Basic Pension
Plan.
|
| · |
You
will start accruing additional pension benefits in the German Plan
effective August 1, 2003 until your retirement. This benefit will
be a
continuation to the pension benefits you have earned under the
German Plan
1974 - 1999.
|
| · |
The
FE EUROPA GmbH Pension Plan is
attached.
|
| · |
If
there is a termination of employment and it is effected in connection
with
a change in control of Franklin Electric Co., Inc. (the Company),
the
Company will be required to pay you your annual compensation for
two years
from the date of termination or change in control, whichever is
earlier,
and to continue to provide you with certain health benefits under
the
Company’s benefit plan in which you were a participant at the time of your
termination of employment. These health benefits will run concurrent
with
any compensation payments.
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