Exhibit 10.7
In Madrid, on 30 April Nineteen hundred and ninety-eight.
TOGETHER
Of the one part, Fundiciones Viuda de Ansola S.A., a company validly
constituted for an indefinite period on 7 December 1963 before Mr. Luis
Valentin Chacartegui Saenz de Tejada, Notary of Bilbao, under protocol number
2290, registered at the Mercantile Registry of Bilbao at tome 1408, section
eight, book 941, folio 64, page 4439, with registered office in Poligono
Industrial Galarza, s/n, Etrcherria (Vizcaya), and Fiscal Identification
Number A-48036669 (hereinafter the "Company") represented by Mrs. Maria
Segimon de Manzanos, of legal age, married, of Spanish nationality, with
Fiscal Identification Number 826.346.W, with professional address in Madrid,
Paseo de la Castellana 110, a natural person representative of the Company
Sole Administrator.
And of the other, Juan Manuel Orbea Soro of legal age, born in San Sebastian,
on 28 August 1951, married, economist, of Spanish nationality, holding
identity National Document number 15.339.990, and resident in Zarautz.
C/ Nafarroa Kalea 11 F, 1-degree-B (hereinafter the "Senior Executive").
THEY DECLARE
That the parties recognise reciprocally each other's full capacity to enter
into obligations and contract and that it is in the interest of both of them
to agree the terms and conditions of an employment contract and, thus, to
formalise a special employment contract for senior executive staff regulated
by Royal Decree 1382/1985 dated 1 August (hereinafter the "Contract") based
on the mutual trust existing between them and in accordance with the
following.
CLAUSES
1. APPOINTMENT, LEGAL NATURE AND DURATION OF THE CONTRACT
1.1 The Company contracts the services of the Senior Executive for an
indefinite term, and the Contract may be terminated at any moment
pursuant to Clause 9 of this Contract.
1.2 The Senior Executive shall hold the post of General Manager
("DIRECTOR GENERAL") of the Company.
1.3 The Company acknowledges to the Senior Executive a length of service
from 15 March 1977. Both parties declare that the post of General
Manager set forth above, which implies the condition of Senior
Executive and the mandatory application of Royal Decree 1382/1985
dated 1 August, has been held by the Senior Executive since he began
to work for the Company. Thus, both parties declare that the signing
of this Contract does not modify the special nature of the
employment relationship between them and, consequently, this is not
a case of "internal promotion" ("PROMOCION INTERNA").
2. DUTIES AND RESPONSIBILITIES
2.1 The Senior Executive assumes all the responsibilities inherent in
the job of General Manager of the Company, his tasks being those
applicable to someone in his position. For the carrying out of his
work and activities in the Company, the Senior Executive shall
report to and follow the criteria and direct instructions issued by
the Board of Directors of the Company. The Company has granted and
will grant the necessary powers of attorney (which are duly
registered at the relevant Mercantile Registry) in favour of the
Senior Executive so that he may carry out the duties assigned to him
under this Contract as General Manager of the Company.
2.2 The workplace of the Senior Executive shall be the registered office
of the Company, but the Company may ask the Senior Executive to
travel to other workplaces within and outside of the province and,
if necessary, outside Spain, which the Senior Executive hereby
accepts as an integral part of the duties.
2.3 The Senior Executive undertakes to provide his services to the
Company in a full, constant and exclusive manner, for the duration
of this Contract, and not to provide his services to any other
person or entity, even when the activity of the latter does not
involve any competition whatsoever for the Company. Similarly, he
will place all his professional knowledge at the disposal of the
Company and will dedicate all his efforts to the defence and
development of the interests of the Company. However, both parties
agree that as an exception to the aforementioned prohibition, the
Senior Executive will be able to sign an employment contract with the
Company "Ansola Acquisition Corporation S.R.L.".
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2.4 For the duration of this Contract the Senior Executive shall not be
able to enter into employment or service contracts of any kind with
any other persons or entities, except in respect to "Ansola
Acquisition Corporation S.R.L." as provided in Clause 2.3, above.
Similarly, save with written authorisation from the Company, the
Senior Executive shall not be able to accept the post of director or
administrator of any other entity of any type, and the Senior
Executive declares that upon the date of the signature of this
Contract, he is not the holder of any post of this nature.
2.5 For the duration of this Contract the Senior Executive hereby
undertakes not to participate, without written authorisation from
the Company, in any form whatsoever (save as a shareholder of
companies whose securities are quoted on the stock exchange) in any
firm that may constitute direct or indirect competition for the
Company. Similarly, the Senior Executive declares that on the date
of the signature of this Contract he is not a shareholder nor does he
participate in the capital of any firm of this type.
2.6 Apart from the employment conditions agreed in this Contract, both
parties declare that the Senior Executive will participate in the JL
French Automotive Castings, Inc. Stock Option Plan, according to and
as permitted by CS and Spanish Law. Furthermore, both parties
declare that the Senior Executive will sign and will be part of a
"Stockholders Agreement" which will govern the transferability of
the stock and provide for the rights and obligations of the Senior
Executive on certain "Termination Events". The referred "Termination
Events" will be referred to those provided for in clause 9 of this
Contract, in the following terms:
"Termination for Cause": fair disciplinary dismissal ("DESPIDO
DISCIPLINARIO PROCEDENTE"),
"Voluntary termination": resignation ("DIMISION")
"Termination not for Cause": unfair disciplinary dismissal
("DESPIDO DISCIPLINARIO IMPROCEDENTE"): termination at the
discretion of the Company ("DESISTIMIENTO"), voluntary
termination according to clause 9.2.
3. CONFIDENTIALITY
3.1 The Senior Executive undertakes not to reveal to any person or
entity, for the duration of this Contract and following the
termination hereof, any information relating to business, clients,
operations, installations, accounts or finances of the Company, or
its procedures, methods, transactions, "know how" or any other
aspect related to the activity of the Company which the Senior
Executive may know or have known as a result of the provision of his
services to the Company, and shall act with the greatest diligence
to avoid the publication or revelation of any confidential
information relating to this material.
3.2 All the documents, material, files or any other article of any type
related to the Company shall be deemed confidential. Upon the
termination of this Contract for any
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reason, the Senior Executive undertakes to return to the Company any
material of this nature which is, at such time, in his possession
and formally waives any right that he may have to retain it.
4. INVENTIONS, KNOW-HOW AND PATENTS
Any invention, know-how or patent invented or created by the Senior
Executive during the provision of his services to the Company shall
belong to the Company to the extent permitted, in accordance with the
terms of Articles 15 to 20 of Patent Law 11/1986 dated 20 March, and the
Company may freely use such inventions, know-how and patents without
having to pay the Senior Executive any amount by way of royalty or rent.
If it is necessary in order to perfect the title of the Company to the
said inventions, know-how and patents, the Senior Executive undertakes to
assign to the Company any right of this type which belongs to him, so
that the Company may register itself as owner therefore at the relevant
public Registry.
5. REMUNERATION
As consideration for the performance of his services, the Senior Executive
shall receive:
5.1 A base salary of 17,000,000 pesetas (SEVENTEEN MILLION PESETAS)
gross per annum (that is to say, before tax deductions and Social
Security payments) payable in twelve equal monthly payments. This
amount is the compensation for the services rendered, including all
the conditions agreed in clause 2 above, and replaces the salary and
allowance paid under previous arrangements between both parties.
5.2 A variable salary; an annual incentive bonus, which will be set in
the following terms:
An incentive annual bonus of 10,000,000 pesetas (TEN MILLION
PESETAS) will be paid for the fiscal year 1998 if the Company
achieves a "pre-bonus EBITDA" (Earnings Before Income Taxes and
Amortisations) in this year of at least 850 million pesetas. If the
figure of the referred "EBITDA" figure for this year is below that
level, a lower bonus will be paid to the Senior Executive, based on
the following levels:
(AMOUNTS IN MILLIONS OF PESETAS)
"PRE-BONUS EBITDA" INCENTIVE ANNUAL BONUS
850 or greater 10.0
800 up to 850 7.5
750 up to 800 5.0
700 up to 750 2.5
Below 700 0.0
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The relevant payment of the annual incentive bonus for the fiscal
year of 1998 will be made in 1999 upon receipt of the financial
audit of 1998 and in the following month upon the approval of 1998
annual accounts by the Board of Directors.
For subsequent years, an equivalent annual incentive bonus will be
paid based on achievement of certain "EBITDA targets" that will be
decided by the Board of Directors before commencing the relevant
fiscal year.
5.3 Due to the simultaneity of this Contract with other contract to be
entered into by the Senior Executive with "Ansola Acquisition
Corporation S.R.L.", the Company guarantees to the Senior Executive
that in the event of termination of this second contract for reasons
beyond the Senior Executive's control, his gross base salary as
established in clause 5.1 above will be increased by an amount
equivalent to the remuneration paid to the Senior Executive by
virtue of the said contract with "Ansola Acquisition Corporation
S.R.L.", and effective from the date of termination of this second
contract.
6. EXPENSES
The Senior Executive shall be entitled, upon the submission of receipts,
to the reimbursement of reasonable expenses incurred in the performance
of his duties by and with the approval of the Company, which may be
subject to as such.
7. VEHICLE
7.1 The Company makes an all expenses paid vehicle ("Company Car")
available to the Senior Executive for the duration of the Contract,
according to the Company's policy in respect of this matter.
7.2 The Senior Executive hereby undertakes to maintain the Company Car
properly and regularly and to insure it with comprehensive coverage
in the name of the Company, and expressly waives any right that may
correspond to him or any member of his family or a third party to
file a claim for damages against the Company, derived from or
related to the use of the Company Car for strictly personal reasons.
7.3 The Company will reimburse the Senior Executive for private petrol
costs for regular travel, but not for private long haul travel. The
Senior Executive hereby undertakes to pay any tax or fine derived
from or relating to the personal use of the Company Car and shall
not allow the Company Car to be used by a third party, except for
his wife, as well as other employees of the Company (in this case,
in relation to the needs of the Company and in accordance with the
current practice of the Company).
7.4 According to the conditions of Clause 7.1 above, the Senior
Executive undertakes to return the Company Car to the company once
this Contract has been terminated.
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8. INSURANCE FOR OTHER BENEFITS
The Company acknowledges to the Senior Executive the continuation of his
current conditions regarding "Individual Standard Accident Insurance",
"Lider Accident Insurance", and any other benefit plan currently applied
to him and in place in the Company.
Furthermore, in cases of temporary disability ("UNCAPACIDAD TEMPORAL")
according to Social Security legislation, the Senior Executive will be
entitled to maintain his insurance benefits.
9. TERMINATION
9.1 This Contract may be terminated at the discretion of the Senior
Executive by "resignation" ("DIMISION" or "BAJA VOLUNTARIA"), who
will send written notice thereof to Company at least three months in
advance. In this case, the Senior Executive will not be entitled to
receive any kind of compensation for the termination of the Contract.
If the Senior Executive fails either totally or partially to comply
with the notice obligation, the Company shall be entitled to
compensation equivalent to the salary corresponding to the period of
notice not complied with.
9.2 The Senior Executive shall be able to terminate this contract and
shall be entitled to the compensation established in Clause 9.3
below, in the circumstances provided for in articles 10.3 and 11.1
of Royal Decree 1382/1985, based on the following grounds:
9.2.1 Substantial modifications in his working conditions which
will plainly damage his professional training to the
detriment of his dignity, or which are decided upon in
serious breach of good faith by the Company.
9.2.2 A failure to pay or a continuous delay in paying his agreed
salary.
9.2.3 Any other serious breach by the Company of its contractual
obligations, except for cases of FORCE MAJEURE, where the
payment of the compensation referred to herein shall not be
admissible.
9.2.4 A succession in the business or a significant change in the
ownership of the Company which results in the renewal of its
governing bodies or in the content and basis of its principal
activity, provided that the termination takes place within
the first three months immediately following the occurrence
of these changes.
9.3 This Contract may be terminated at the discretion of the Company
("DESISSIMIENTO"), which shall send written notice thereof to the
Senior Executive at least three months in advance. In this case, the
Senior Executive shall be entitled to compensation equivalent to
twenty one (21) monthly payments of his base salary (according to
clause 5.1 above) plus benefits (according to clauses 7 and 8
above). Furthermore, if the Company fails either totally or
partially to comply with the notice obligation, the
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Senior Executive shall be entitled to compensation equivalent to
the salary corresponding to the period of notice not complied with.
The above amount of compensation is agreed as the single and
complete compensation to be paid for the complete termination of
the whole employment relationship between both parties. Thus,
although both parties agree that there is no "internal promotion"
("PROMOTION INTERNA") in their employment relationship according to
article 9 of the Royal Decree 1382/1985, in the hypothetical event
of any claim or decision regarding this matter, the agreed
compensation set forth above will include any legal compensation or
any compensation which could be claimed in relation to the
complete termination of the employment relationship between both
parties.
Furthermore, the Senior Executive will be entitled to the accrued
but unpaid bonus (according to clause 5.2 above) at the time of the
termination of the Contracts decided by the Company.
In relation to this right, it is understood that the Senior
Executive will receive a proportional part of the bonus
corresponding to the year in which the termination of the contract
takes place, in proportion to the time of services rendered during
the said year and in accordance with "EBITDA targets" achieved
during the said period in relation to the annual total. To this
effect, said payment will be effective once the annual accounts are
approved under the terms provided in Clause 5.2 above and,
thereafter the corresponding estimates will be calculated in
accordance with the auditors' report. As an example, if the
termination of the contract took place by the end of the first
quarter of any given year and if during said quarter 25% of the
"EBITDA targets" were accomplished, the Senior Executive would be
entitled to 25% of the yearly bonus corresponding to the year in
which the contract termination takes place.
9.4 The Company may terminate his Contract by way of disciplinary
dismissal based on a serious breach of the contract by the Senior
Executive in the form and with the effect established in Article 55
of the Workers' Statute. The Senior Executive will not be entitled
to receive any kind of compensation in the case of "fair
disciplinary dismissal" ("DESPIDO DISCIPLINARIO PROCEDENTE").
However, both parties agree that if the disciplinary dismissal is
declared to be unfair ("DESPIDO DISCIPLINARIO IMPROCEDURE"), the
Senior Executive will be entitled to the compensation referred in
Clause 9.3 above.
9.5 If the Contract is terminated by death or serious invalidity, or
total or absolute permanent invalidity ("GRAN INVALIDEZ", or
"INVALIDEZ, PERMANENTE TOTAL O ABSOLUTA"), the Senior Executive (or
his legal successors in the case of his death) shall be entitled to
compensation equivalent to the amount of fifteen monthly payments
of his base salary (according to clause 5.1 above) plus benefits
(according to clauses 7 and 9 above).
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Furthermore, the Senior Executive will be entitled to the accrued
but unpaid bonus (according to clause 5.2 above) at the time of the
termination of the Contract by death or total and permanent
disability. The relevant provisions in the fourth paragraph of
Clause 9.3 above shall also be applicable.
9.6 In the following clause 10 both parties agree the terms and
conditions regarding the Senior Executive's non-competition
obligation after the termination of the contract applicable to any
event of termination of the Contract, and with the relevant payment
of the specific compensation agreed to clause 10.
10. NON-COMPETITION
10.1 Based on the peculiarity and special nature of the duties which he
must carry out under this Contract, the Senior Executive undertakes
not to compete with the Company, once the Contract has been
terminated, whether for himself or for a third party, providing
services to firms or entities whose activity may involve
competition for the Company. Similarly, the Senior Executive
undertakes not to take on employees who, at the time of the
termination of this Contract, form part of the work force of the
Company.
10.2 The duration of the undertakings contained in clause 10.1, once the
Contract has been terminated, shall be for two years from the date
of the termination of the Contract, and its breach shall give rise
to compensation for damages from the Senior Executive to the Company.
10.3 As consideration for this limitation on his activities, the Senior
Executive shall receive adequate compensation from the Company,
which is agreed by both parties to be the payment of an amount
equivalent to 50% of his gross base annual salary as at the date of
the Contract's termination (per year of non-competition), payable
in monthly installments, one every month during the aforementioned
period of two years. That is to say, the complete payment of the
"adequate compensation" regarding the total period of two years of
non-competition will be equivalent to one year of the gross base
annual salary of the Senior Executive as at the date of the
Contract's termination.
The breach of the obligations undertaken in this clause shall, apart
from the compensation indicate in clause 10.2 above, require the
Senior Executive to return the amount paid by the Company referred
to in this paragraph.
11. APPLICABLE LAW
This Contract shall be governed by Spanish Law.
12. MODIFICATIONS
This Contract may be amended or modified solely by way of a document
signed by or on behalf of the parties hereto.
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13. ENTIRE AGREEMENTS
This Contract constitutes the entire employment agreement between the
parties in relation to its content and revokes and replaces any previous
contract or agreement in relation to its content between the parties.
14. NOTICES
Any notice to be given by one party to the other pursuant to this
Contract shall be in writing and sent by certified post with
acknowledgements of receipt or by notarial notice.
15. ADDRESSES
For the purposes of this Contract, the addresses of the parties for
notices shall be the following:
15.1 The Company:
Poligono Industrial Galarza ??
Etxebarria
48277 Vizcaya
Attention: Mr. Charles Waldon
Copy to: Clifford Chance (Maria Segimon)
15.2 The Senior Executive:
C/Nafarroa Kalea 11 F.1" B
Edificio Eguzki-Lore
20800 Zarauci
16. INTERPRETATIONS
16.1 Headings are exclusively for the purpose of clarification and should
be ignored when interpreting the Contract.
16.2 In this Contract, "EBITDA" shall be considered to be the relevant
figure corresponding to "Earnings before Income Taxes" and
amortisations ("BENEFICIOS ANTERS 4e IMPUESTOS Y AMORTIZACIONES"),
according to "generally accepted accounting principles" (g.a.a.p).
Thus, "EBITDA" is defined as follows: with respect to any fiscal
period means the sum of net earnings (or loss) before provision for
income taxes for such period plus the net sum of financial expenses,
depreciation and amortisation for said period as determined in
accordance with "g.a.a.p.". "EBITDA excludes any
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gain or loss arising from the sale of capital assets or
extraordinary items, or any gain arising from any write-up of assets
17. CONDITION PRECEDENT
The validity and effectiveness of this Contract is conditional upon the
purchase of all of the shares of the Company not held by the same as
treasury stock, by "Ansola Acquisition Corporation S.R.L.".
This Contract may be executed in any number of counterparts, in English
and Spanish language, each of which, when executed and delivered, shall
be deemed to be an original, but all of which shall collectively
constitute one and the same instrument. In interpreting this Contract,
the Spanish version will prevail in case of conflict between the two
versions.
AND IN WITNESS WHEREOF, the parties, having carefully read the document,
they ratify and sign it in duplicate, each copy having identical weight.
[ILLEGABLE] [ILLEGABLE]
THE COMPANY THE SENIOR EXECUTIVE
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