MANAGING DIRECTOR'S SERVICE AGREEMENT
Between _______________ represented by the shareholder, ____________, the shareholder represented by the Managing Director, ___________, (hereinafter referred to as the "Company")
and _______________ (hereinafter referred to as "Managing Director")
the following contract is concluded:
Duties and Responsibility
1. Mr. ... shall be engaged in the activity as Managing Director of the Company with effect as of May 15, 2006.
2. The Managing Director shall represent the Company both in and out of court always jointly with another Managing Director. Internally, the Managing Director will report to the Managing Directors ... and ... or any other person the board may assign.
3. Unless otherwise provided for in this Agreement, the rights and duties of the Managing Director shall be subject to the Articles of Association of the Company, as amended from time to time, the rules of procedure as amended from time to time, the directions given by the shareholders, and the laws, particularly the Limited Liability Companies' Act.
4. The Company reserves the right at any time to appoint further managing directors and establish different rules of representation.
1. For his activities the Managing Director shall receive a gross annual salary in the amount of Euro 199,200 (in words: one hundred ninetynine thousand and two hundred), to be paid in twelve equal monthly installments in arrears at the end of each calendar month to a bank account designated by the Managing Director.
2. In addition to the gross annual salary according to Cif. 1, the Managing Director is eligible to a maximum annual gross bonus of up to Euro 200,000. The payment of the bonus will be subject to the achievement of business results [to be determined]. Prepayments to such bonus will be granted at the end of each quarter in the amount of Euro 25,000. Any difference between the total of such prepayments and the actual bonus claim, determined in accordance with the achievement of the business results, has to be paid back by the Managing Director.
3. The above remuneration covers all services rendered by the Managing Director, including any overtime. The Managing Director is obliged to work even beyond the usual business working hours if this is required by the commercial interests of the Company.
4. Additionally the Company shall pay it's obligation of the legally prescribed employers' contributions to the health insurance, statutory pension insurance and unemployment insurance and nursing care insurance, which are to be borne by law in equal parts by the Managing Director and the Company. Should the Managing Director be exempted from his obligation to join the statutory health insurance, the Company shall pay to him 50% of his contributions to a private health insurance, at a maximum 50% of the contribution to the statutory health insurance, if respective proof is furnished.
5. The assignment and pledge of claims to remuneration require the prior written approval of the shareholders.
Upon submission of corresponding receipts, the Company will reimburse all reasonable expenses incurred by the Managing Director in the exercise of his duties for the Company in accordance with the company guidelines in the form applicable from time to time. As a rule, expenses can be allowed to the same extent in which they are tax deductible as operating expenses.
1. The Company will furnish the Managing Director with a company car which corresponds to the category of a BMW 540i or similar. The Managing Director is entitled to private usage of the company car. The Company shall bear all costs arising in connection with the use of the company car such as taxes, insurance, repairs, maintenance, gasoline and oil, except such gasoline costs which occur during the Managing Director's vacation outside the Federal Republic of Germany.
2. The Managing Director herewith explicitly waives all claims to which he or his family could be entitled in connection with the private use of the company car. He shall release the Company from any and all claims of his family or third parties, insofar as such claims are not included in the Company's insurance coverage.
3. Income tax which accrues from the monetary value of the benefit of having the company car for private use shall be borne by the Managing Director.
4. The company car is to be returned including any and all accessories at any time upon the request of the Company, but no later than upon termination of the employment relationship. Any right of retention is excluded. In the event of a release pursuant to Clause 11.4, the company car is to be returned including any and all accessories, unless expressly agreed in writing or otherwise. In the event the company car is returned prior to the date of expiration of the employment relationship to the Company, the Managing Director cannot claim compensation for the lost financial benefit.
The Managing Director shall be entitled to a vacation of 25 working days per calendar year. The Managing Director shall coordinate his vacation with the shareholders or the other members of management in such way that it shall not affect the interests of the Company.
1. The Managing Director shall immediately inform the Company about any work incapacity and the expected duration thereof as well as the reasons of such incapacity. In the event of illness, the Managing Director shall submit upon request a medical certificate attesting to his incapacity to work and the expected duration thereof.
2. In the event of illness the Company shall continue to pay the contractual remuneration for a period of six weeks.
1. The Managing Director shall devote all his skills and working capacity exclusively to the Company. Any outside activities of the Managing Director for compensation during the term of this Agreement require the prior written approval of the shareholders. Publications and speeches relating to the activities of the Managing Director for the Company require the prior written approval of the shareholders.
2. Furthermore any participation in any other company or the running of his own business require the prior written approval of the shareholders. The foregoing shall not apply to the purchase of shares quoted on the stock exchange for investment purposes.
Confidentiality, Non-competition Clause during the Term of Contract
1. The Managing Director shall maintain strict confidentiality with respect to third parties and unauthorized staff members of the Company as to all confidential events or business matters of the Company or any affiliated company coming to his attention within the scope of his activities for the Company, irrespective of how he obtained such knowledge. This does not apply to such information, for which a disclosure is essential for the due performance of the functions delegated to the Managing Director or which has been approved by the shareholders in advance. This duty of confidentiality shall continue to be valid even after the termination of this Service Agreement.
2. Furthermore, the Managing Director shall require the prior written approval of the shareholders for assuming any positions on supervisory boards, advisory boards and similar institutions of non affiliated companies or professional organizations.
3. During the term of this Agreement the Managing Director undertakes not to carry out any activities for any other company competing in any way with the Company or an affiliated company. Any direct or indirect activity as employee, self-employed person or consultant, as well as any direct or indirect participation in such enterprise, is prohibited.
Post-contractual Competition Prohibition
1. For a period of one year after the termination of this Agreement the Managing Director undertakes not to become active in any way, neither directly or indirectly, as a self-employed person or as an employee for any domestic or foreign enterprise competing with the Company or with any of its affiliates. During the term of this post-contractual competition prohibition, the Managing Director shall not operate any own enterprise or participate in an enterprise which competes with the Company or with any of its affiliates.
2. The geographical restriction covers Europe.
3. As compensation for the imposed restrictions the Company shall pay to the Managing Director for two years after the termination of the service relationship 50% of the remuneration last received by him.
4. The Company shall be released from the obligation under Cif. 3. if it waives the compliance with the competition restrictions by giving written notice prior to the termination of the service relationship. The waiver will become effective three months after it has been declared.
5. The Managing Director undertakes to pay to the Company for each instance of violation of the aforementioned competition restrictions a contractual penalty in the amount of Euro 50,000. The assertion of further damages by the Company remains unaffected.
6. Unless otherwise provided for in this Agreement, Sec. 74 et seq. of the German Commercial Code shall in other respects be applicable mutatis mutandis.
Rights of Use and Inventions
1. All work results in connection with the activities of the Managing Director shall inure exclusively to the Company. Insofar as work results are protected by copyright, the Managing Director grants the Company the exclusive and unrestricted right of use for all present and future kinds of use. Such right of use shall remain valid even after the termination of the service relationship. There shall be no entitlement to special remuneration for the granted rights for use. These are rather fully compensated by the contractual remuneration.
2. Any inventions of the Managing Director and technical suggestions for improvement as well as methods of engineering, patents, utility models, design patents and the like developed by the Managing Director in connection with his activities for the Company inure exclusively to the Company. The Employee Inventions Act is not applicable. The Company shall have the unrestricted and exclusive right of use to the exclusion of the person of the Managing Director who shall not be entitled to any additional compensation. Insofar as this is necessary, the Managing Director shall transfer to the Company any respective right and claim which entitles the Company to register patents, utility models or design patents in its own name and for its own account.
Duration of Contract and Notice of Termination
1. This Agreement shall be effective as of May 15, 2006 and shall be entered into for a definite period of two years until April 30, 2008. During such term it may be terminated by both parties with a notice period of three months to the end of a calendar month. Upon April 30, 2008 the contract will terminate automatically without further notice. Should the parties agree on a prolongation of the contract after April 30, 2008, the contract will continue for an indefinite term and may be terminated by both parties with six months notice to the end of a calendar month.
2. The right to dismissal without notice for good cause remains unaffected.
3. Any termination must be in writing to be effective.
4. At any time the Company shall be entitled to release the Managing Director from his duties of service whilst continuing to pay his contractual salary. Such period of release shall be offset from the Managing Director's remaining vacation entitlement.
5. The service relationship shall cease without the requirement of a notice of termination as of the end of the month in which the Managing Director attains the age of 65.
Return of Property
Upon leaving the Company or after his release from his duties of service pursuant to Clause 11.4 the Managing Director shall immediately return to the Company any and all documents, correspondence, records, drafts and the like referring to Company's affairs, including any copies thereof, which are still in his possession. The obligation to return company property extends also to the company car provided to the Managing Director pursuant to Clause 4 including any accessories thereof. The Managing Director is not entitled to exercise a right of retention concerning the afore-mentioned documents and objects.
1. There are no written or oral agreements other than the foregoing provisions. The parties hereto have not made any side agreements.
2. Amendments and supplements of this Agreement must be in writing to be effective. This also applies for an amendment of this provision.
3. As far as in this Agreement written form has been agreed upon, this form is also observed by the sending of a telegram, telex or telecopy if the author of a document is indicated.
4. Should any provision of this Agreement be or become invalid, the validity of the remaining provisions of this Agreement shall not be affected thereby. Such invalid provision shall be replaced by such provision which comes closest to the economic intention of the parties.
5. This Agreement is governed by the laws of the Federal Republic of Germany.
6. The Managing Director confirms to have received today an executed copy of this Agreement signed by the Company.
[Place, Date, Signatures]
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