MANAGEMENT CONTRACT
entered into by and between
SPEECH DESIGN Gesellschaft fur elektronische Sprachverarbeitung mbH
Industriestra(beta)e 1, 82110 Germering
- hereinafter referred to as "the Company"
and
▇▇. ▇▇▇▇ ▇▇▇▇▇▇
Wastelbauerstra(beta)e 12
81247 Munchen
- hereinafter referred to as "the Managing Director"
ss. 1
Sphere of Activities
1. The Managing Director (Geschaftsfuhrer) was appointed by the Company.
This appointment shall not exclude the additional appointment of ▇▇.
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇. It is agreed, that the Managing Director and ▇▇.
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ will be the sole managing directors of the Company
during the Contract Term. However, it is agreed by the parties that the
Company shall be entitled to appoint another Managing Director in any
case of termination of the Management Contract of ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
for whatever reason, such Managing Director's sphere of activities to be
limited to the sphere of activities of ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇.
2. It shall be incumbent on the Managing Director to scrupulously conduct
the business of the Company and to perform the obligations assigned to
him by law, by the Company statutes as in effect from time to time and
the present contract with the appropriate responsibility.
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3. The Managing Director's principal function shall consist in the
management and supervision of the fields of production and administration
as well as it includes the taking, coordination and execution of all
measures.
4. The Managing Director's activities shall be subject to the reciprocal
coordination with the other Managing Director.
5. The Managing Director will freely organize his sphere of activities and
is not bound by the observance of specific working hours or a specific
place of office.
ss. 2
Power of Representation
1. The Managing Director shall represent the company jointly with ▇▇.
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ in and out of court as defined by his appointment and
the actual company statutes.
2. The Managing Director is released from the restrictions of section 181
German Civil Code ("prohibition of self contracting") for all
transactions between the Company on the one hand and majority-owned
enterprises of the Company on the other hand, namely at present SATELCO
AG, Switzerland, SPEECH DESIGN U.K. Ltd., United Kingdom, SPEECH DESIGN
ISRAEL, Ltd., Israel. Such release from the restrictions of section 181
German Civil Code applies also to the legal transactions undertaken in
the past by the Managing Director acting as representative of the Company
on the one hand and as representative of the above listed enterprises on
the other hand. This consent does not include any other consent or
approval, that might be necessary in relation with such transactions for
whatever other legal reason.
3. The Managing Director shall be bound to the resolutions and instructions
of the Shareholders' Meeting. The Shareholders' Meeting may in particular
establish general policies with regard to the way the business is to be
conducted.
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ss. 3
Contract Term, Termination
1. This agreement enters into force on July 1st, 1998 (hereinafter referred
to as "Effective Date") and will end after three years on June 30th,
2001 (hereinafter referred to as "Contract Term") without notice. During
the Contract Term the right to terminate this agreement without cause is
excluded. At the latest six months before the end of contract the parties
may enter into negotiations on the renewal of this contract.
2. Either party shall have the right to terminate this agreement with cause
for important reasons by written notice effective immediately. Important
reasons in the meaning of the sentence above are in particular
2.1. for the Company, if the Managing Director:
2.1.1. is convicted of any relevant crime or felony, or
2.1.2. refuses to comply with material oral or written decisions
or instructions of the Company's shareholders, provided the
Managing Director is given written notice and an adequate
cure period of at least ten days, and such failure is not
cured within such cure period, or
2.1.3. is grossly negligent or dishonest in connection with the
performance of his duties hereunder, or
2.1.4. materially breaches affirmative or negative covenants or
undertakings hereunder.
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2.2. for the Managing Director, if
2.2.1. the appointment of the Managing Director as Managing
Director of the Company is revoked without cause,
2.2.2. contrary to Section 1 hereunder an additional Managing
Director or a permanent representative is appointed by the
shareholders of the Company with the right to instruct the
Managing Director in the normal course of business,
2.2.3. the sphere of activities or the power to represent the
Company is materially restricted.
3. In addition the Managing Director shall have the right to terminate this
agreement with six months prior written notice, which notice will be
effective by the end of the calendar month in which it is given, in the
event that
3.1. the shareholders of the Company sell all or substantially all of
the tangible or intangible assets or properties of the Company,
3.2. the shareholders of the Company sell a majority participation in
the Company.
Notwithstanding ss.1 section 1 above the Company shall be entitled to
appoint additional managing directors if the Managing Director terminates
the Management Contract pursuant to section 3.1. or 3.2. above.
ss. 4
Compensation
1. The Managing Director shall receive for his services a yearly gross
salary amounting to 120.000,-- Deutsch Marks, payable in twelve equal
monthly installments of 10.000,-- Deutsch Marks each at the end of each
calendar month reduced by the statutory deductions. At the latest three
months prior to the end of every contract year, the aforesaid
remuneration will be subject to an upward revision, as may be agreed by
the parties.
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2. In addition the Managing Director shall receive an annual
performance-based bonus (hereinafter referred to as "the Bonus"). The
parties agree that the guaranteed Bonus for the calendar year 1998 will
be at DM 54.000,--. Starting with the calendar year 1999 the parties will
determine the conditions of the Bonus upon a formula to be negotiated
between the parties in separate arrangements at the beginning of each
calendar year. The parties agree, that the Bonus will be targeted at
DM 54.000,-- if the trend of business meets the expectations reflected in
the company plans for the respective calendar year. The annual Bonus is
payable on or before the later of a) March 31 of the following fiscal
year, or b) ten days after the audited financial statements for the prior
fiscal year of the Company have been finalized.
This agreement replaces all other arrangements on bonuses to be paid to
the Managing Director for the year 1998.
3. In addition the Managing Director is entitled to participate in the Stock
option plan of Bogen Communications International, Inc., as defined in
Exhibit A.
4. In addition to the social security contributions payable by employer by
act of law the Company will also bear the employee's contributions to the
statutory unemployment insurance and to the statutory social security
pension insurance and will therefore pay the Managing Director a monthly
amount corresponding to the employee's contributions.
ss. 5
Fringe Benefits
1. During the contract term the Company shall provide the Managing Director
with a Company car of the upper middle class, the leasing rates for which
shall not exceed DM 21.000,-- p.a., which the Managing Director may also
use for private travel. Possibly accruing wage tax shall be borne by the
Managing Director.
2. Contingent existing personal accident insurances and direct life
insurances remain maintained during the Contract Term at current premium
levels subject to ordinary premium increases.
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ss. 6
Expenses
The Company is under the obligation to reimburse the Managing Director for the
expenses incurred by him to the extent that such expenses are necessary and
appropriate. These expenses shall in the individual case be documented in
compliance with the applicable tax regulations unless these expenses are
accounted for at a flat rate in accordance with the said tax regulations.
ss. 7
Vacation
1. The Managing Director shall be entitled to a vacation of six weeks per
annum.
2. Safeguarding the interests of the Company, the proposed time of the
vacation shall be subject to the coordination with the other Managing
Director and with the shareholders.
ss. 8
Continued payment of Salary in the Event of Illness
1. If the Managing Director is prevented from performing his duties by
illness or by other circumstances beyond his control, he shall receive
the remuneration as set out in ss.4 and ss.5 up to a period of 6 (six)
months beginning with the month succeeding the month in which the
prevention begins.
2. Any compensation for wages paid by third parties, e.g. arising from
disability income insurance or otherwise in respect of salary, shall be
deducted from the continued payment of the salary owed by the Company in
such a way that the amount of the aforesaid compensation together with
the Company's continued payment of the salary amounts to the net base
salary the Managing Director would receive if he were able to work.
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ss. 9
Non-Competition Clause
1. During the Contract Term and for three years after the expiration of the
Management Contract (hereinafter referred to as "the Non-Competition
period") the Managing Director shall not whether directly or indirectly
1.1. hire, solicit or encourage any employee of the Company or any of
its affiliates to leave the employment of the Buyer or any of its
affiliates, or
1.2. hire, solicit or encourage any consultant under contract with the
Company or any of its affiliates to cease to work with the Company
or any of its affiliates, or
1.3. actively engage in competing business transactions, by way of
employment or self-employment, occasionally or commercially, or own
an interest in any such business as a partner, shareholder,
director, officer, principal, agent, employee, trustee, consultant,
or in any other relationship or capacity, other than owning shares
of the Company, Bogen Communications International, Inc., or
shareholders of the Company or less than 1% of the outstanding
stock of any publicly traded company.
Competing business transactions in terms of section 1.3. shall be
considered a) the development, production and/or distribution of
supplementary electronic equipment for telephone facilities
and/or services, such as PABX peripherals and unified messaging
systems, including, without limitation, any voicemail via voice or
e-mail, computer telephony integration and the like b) and any
other business in which the Company significantly participates
during the Contract Term by development, production and/or
distribution. The geographic scope of application is limited to
Europe and any other area in which the Company or its affiliates do
business during the Contract Term.
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2. During the Non-Competition Period a compensation for the abstention from
acts of competition is to be paid by the Company. The yearly compensation
will amount to 50% of the average fixed remuneration of the Managing
Director paid to the Managing Director in the last twelve months before
the expiration of the Management Contract (DM 60.000,-- p.a.). The
compensation is payable in equal monthly installments at the end of each
calendar month.
3. The Company may waive the prohibition of competition in whole or for
individual transactions at any time during the Contract Term or during
the Non-Competition Period with six months prior written notice. The
obligation to pay the compensation to the Managing Director remains in
full force if the waiver relates only to individual transactions and
expires upon the expiration of such notice period if the Company fully
waives its prohibition rights hereunder.
4. In each case of violation of his obligations under this ss.9, the
Managing Director shall pay a penalty of DM 50.000,--. In case of
permanent violation of his obligations hereunder such penalty is to be
paid for each month during such violation period. The right of the
Company to claim for damages and/or injunctive relief remains unaffected.
ss. 10
Business and Trade Secrets
The Managing Director shall be under the obligation to observe unrestricted and
complete secrecy of any and all Business and Trade Secrets as well as of all
other confidential information or details regarding the Company or its business
enterprise. The foregoing secrecy obligations will be effective even after
termination of this contract.
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ss. 11
Delivery of Documents
Upon termination of this contract the Managing Director shall be under the
obligation to return all documents, records, all existing electronic files and
other material relating to his activities as Managing Director to the Company
without being asked.
ss. 12
Inventions, Copyright
1. Any rights in inventions or technical improvements made or worked out by
the Managing Director in the course of his service for the Company, in
relation with his activities for the Company, owing to his experience
resulting from his service for the Company or owing to works carried out
by the latter, may be exclusively used by the Company. Already at the
present time, the Managing Director shall assign all respective rights to
the Company. Regarding this matter the Company shall be under no
obligation to pay any additional remuneration. For lack of the Managing
Director's status as employee, the Act on Employee Inventions shall not
apply.
2. Where, related to any of his duties or to the experience resulting from
his service for the Company or to the performance rendered by the
Company, copyrights for works are vested in the person of the Managing
Director, it is agreed herewith that he shall already at the present time
assign the exclusive and gratuitous right of use therein to the Company.
ss. 13
Absence of Subsidiary Oral Agreements,
Amendments, Written Form
1. There are no subsidiary oral agreements. Any contractual amendments
require written form.
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2. The former contract of employment as Managing Director, including all
amendments and possible provisions as to the payment of bonuses, shall
cease to be in force upon the Effective Date.
ss. 14
Severability Clause
Should any provision of this contract be or become invalid or unenforceable,
this shall not affect the validity of the remaining provisions. The invalid or
unenforceable provision shall be replaced by a regulation which comes closest to
the economic purpose of the invalid provision. The same shall apply in the event
that this contract is incomplete. This provision applies also if the invalidity
or unenforceability of a provision is due to the extent of a time limit or
period or of a geographic area. In this case the legally permitted time limit or
period or geographic area shall be applicable.
ss. 15
Place of Performance and Legal Venue
Place of performance and legal venue for all legal disputes possibly arising out
of this contract shall be the legal seat of the Company.
ss. 16
Declaration of Intention
All declarations of intention made by the Managing Director concerning the
present contract shall be addressed to the CEO (Chief Executive Officer) or the
President of the sole shareholder.
This agreement is made in duplicate each copy being original, this day of
------------------------------- -------------------------
- the company - - the Managing Director -
represented by the shareholders
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5. The Managing Director's entire range of services including, if
appropriate, possible services performed for subsidiary corporations,
holding corporations or other companies as well as services rendered on
Sundays and holidays etc. shall be deemed to be compensated by the
remunerations payable by the Company under this contract. As far as the
respective companies pay the Managing Director a direct compensation for
such services these remunerations shall be set off against his
compensation under this contract, first of all against his participation
in yield, unless expressly otherwise agreed upon.
1. During the Contract Term the Managing Director shall be barred from
engaging in competing business transactions or acting on behalf of a
competing enterprise or establishing a competing enterprise or
participating in any such enterprise, whether directly or indirectly, by
way of employment or self-employment, occasionally or commercially, or to
render advice to such an enterprise.
2. Competition in terms of ss.9 section 1 shall be considered the
development, production and/or distribution of supplementary electronic
equipment for telephone facilities and/or services which belong to the
respective development, production and/or distribution program of the
Company or of supplementary electronic equipment for telephone
facilities and/or services the development, production and/or
distribution of which is definitely intended by the Company.
3. The Company may waive the prohibition of competition in whole or for
individual transactions.