CONSULTING AGREEMENT
Consulting Agreement (this "Agreement"), dated as of the 31st day of
May, 1997, by and between Safety Components International, Inc. (the "Company"),
a Delaware corporation and W. Xxxxx Xxxxx (the "Consultant").
W I T N E S S E T H
WHEREAS, the Consultant was a party to an Employment Agreement with the
Company, dated as of the 19th day of April, 1994 (the "Employment Agreement");
and
WHEREAS, the Consultant intends to resign as (i) an employee under the
Employment Agreement, (ii) an officer of the Company and certain of its
subsidiaries, (iii) a director of the Company and certain of its subsidiaries,
(iv) an employee of Valentec International Corporation ("Valentec"), (v) a
director of Valentec and certain of its subsidiaries, (vi) an officer of
Valentec and certain of its subsidiaries, (vii) a trustee of Valentec's Employee
Stock Ownership Plan, as amended (the "ESOP"), and (viii) a trustee of the Xxxxx
Restated Profit Sharing Plan (the "Xxxxx Plan"), and the Company desires to
retain the Consultant as a consultant to the Company as provided in this
Agreement.
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein and for other good and valuable consideration, the receipt and
adequacy of which is hereby acknowledged, the Company and the Consultant hereby
agree as follows:
1. Resignation from Employment; Termination of Employment Agreement.
Effective as of June 1, 1997 (the "Effective Date") (i) the Consultant resigns
from his position as (a) an employee of the Company under the Employment
Agreement, (b) an officer of the Company and certain of its subsidiaries, (c) a
director of the Company and certain of its subsidiaries, (d) an employee of
Valentec, (e) a director of Valentec and certain of its subsidiaries, (f) an
officer of Valentec and certain of its subsidiaries, (g) a trustee of the ESOP,
and (h) a trustee of the Xxxxx Plan, (ii) shall cease to be an employee,
director or officer of the Company and any of its subsidiaries, (iii) shall
cease to be an employee, director or officer of Valentec and any of its
subsidiaries, and (iv) any rights that either the Company or the Consultant may
have had under the Employment Agreement are hereby terminated. No covenants
shall survive the termination of the Employment Agreement, including without
limitation non-compete, non-solicitation and confidentiality covenants, each of
which is replaced by the covenants contained herein. From and after the date of
commencement of the Term hereof, the rights and obligations of the parties shall
be governed by this Agreement.
2. Term. This Agreement shall commence on June 1, 1997 and shall
terminate on May 31, 1998 (the "Term").
3. Services.
(a) The Consultant agrees that during the Term, he will serve
as a consultant to the Company and in such capacity, perform such services as
the Chief Executive Officer,
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Chief Operating Officer or the Board of Directors of the Company may, from time
to time, reasonably request in connection with the functions of the Company
formerly performed by the Consultant, and such other projects as are mutually
agreed to by the Consultant and the Company. The Consultant shall report to the
Chief Operating Officer of the Company. The Consultant shall be available at
such times and places as are reasonably requested by the Company.
(b) The Consultant shall devote as much time to the
performance of his obligations hereunder as reasonably required, in the judgment
of the Chief Executive Officer or the Chief Operating Officer, in consultation
with the Consultant, to the business and commercial success of the Company;
provided, however, that nothing contained herein shall prevent the Consultant
from accepting another engagement or full-time position and the Consultant shall
be permitted to perform the services required hereunder in a manner which does
not interfere with his ability to fulfill the commitments of such other
engagement or position.
(c) The Consultant shall not be required to travel in
connection with his services to be performed hereunder.
4. Compensation. In consideration of the services provided by the
Consultant hereunder, the Company shall pay to the Consultant on a monthly
basis, compensation of $15,333.34 payable in twelve monthly installments on the
first day of each calendar month, if such day is a business day in the State of
California, otherwise on the next business day thereafter, during the Term of
this Agreement. It is acknowledged and agreed that (i) the Consultant has
received an advance from the Company for his expenses in an amount of $10,000,
(ii) the Consultant shall reconcile such advance against unreimbursed expenses
incurred by him within thirty days of the execution hereof, and (iii) the second
monthly installment to be made by the Company to the Consultant hereunder shall
be adjusted in favor of either the Company or the Consultant, as applicable, to
reflect any resulting difference between amounts so reconciled.
5. Other Employment.
(a) Subject to Section 7 hereof, the Consultant shall be free
to render full-time or part-time advisory, consultant or any other professional
services to other employers, whether as an employee, consultant or otherwise.
(b) Any compensation the Consultant receives from such other
employment or consultancy services shall not be offset against the payments to
be made to the Consultant by the Company hereunder.
6. Benefits.
(a) Pursuant to the requirements of COBRA, the Consultant's
covered dependents, if any, are eligible to continue health insurance coverage
for eighteen (18) months from the date of the Consultant's resignation of
employment from the Company. The Company
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shall bear the Consultant's COBRA expense during the Term hereof. After the Term
hereof, the Consultant, at his sole expense, shall be eligible to continue COBRA
coverage for the remaining six (6) months. The Consultant hereby acknowledges
that he has received the requisite COBRA information and is hereby electing to
continue his health coverage with the Company until he revokes such election by
providing the Company with reasonable prior written notice of such revocation.
(b) As provided in the Employment Agreement, all of the
options granted to the Consultant pursuant to the Company's 1994 Stock Option
Plan, as amended (the "Option Plan") and his Employment Agreement, i.e. 70,000
stock options (the "Options") shall be vested on the Effective Date. The
Consultant shall have ninety (90) days from the termination of this Agreement
(i.e., until August 31, 1998) to exercise the Options. The exercise price of the
Options is in the agreement(s) evidencing the grant of such Options.
(c) Consultant shall be entitled to receive his benefits under
(i) the Company's and Valentec's 401(k) plans (individually a "401(k) Plan", and
collectively the "401(k) Plans"), if any, and (ii) the ESOP. All rights under
the 401(k) Plans and the ESOP shall be governed by the terms of the 401(k) Plans
and the ESOP, as applicable, and the Company's and Valentec's standard
administrative practices.
(d) The Company (i) shall pay the life insurance premium on
the policy maintained by it for the benefit of the Consultant's designated
beneficiaries, in the amount of $3,000,000, which was due and payable on June
12, 1997, and (ii) has paid the insurance premium on the disability policy
maintained by it for the benefit of the Consultant's designated beneficiaries.
Thereafter, the Consultant shall have the right to assume each such policy, but
the Company shall make no further premium payments thereon.
7. Certain Covenants
(a) Confidentiality
The Consultant agrees not to use, disclose or make accessible
to any other person, firm, partnership, corporation or any other entity any
Confidential Information (as herein defined) pertaining to the business of the
Company and Valentec, their respective divisions, subsidiaries and affiliates
(collectively, the "Affiliated Group") except when required to do so by a court
of competent jurisdiction, by any governmental agency having supervisory
authority over the business of the Affiliated Group, or by any administrative
body or legislative body (including a committee thereof) with jurisdiction to
order one or more of the members of the Affiliated Group to divulge, disclose or
make accessible such information. For purposes of the Agreement, "Confidential
Information" shall mean non-public information concerning the Affiliated Group's
financial data, statistical data, strategic plans, business plans, product
development data (or other proprietary product data), customer and supplier
information, information relating to governmental relations, discoveries,
practices, processes, methods, analyses, assessments, reports, data, statistics,
correspondence, business records, business plans, strategies, contacts,
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trade secrets, marketing plans and other non-public, proprietary and
confidential information of the Affiliated Group, that, in any case, is not
otherwise generally available to the public and has not been disclosed by the
Affiliated Group to others not subject to confidentiality agreements.
(b) Non-Solicitation
The Consultant agrees that during the Term and for a period of
twelve (12) months thereafter, without the prior written consent of the Company,
he shall not, on his own behalf or on behalf of any person or entity, directly
or indirectly, hire or solicit the employment of any employee who was employed
by the Company at any time during the six (6) months immediately preceding such
date of hiring or solicitation by the Consultant.
(c) Non-Disparagement
The Consultant and the Company each agree that, except as may
be required by law, neither will at any time in the future, either directly or
indirectly, engage in, any Disparaging Conduct. For purposes of this Agreement,
"Disparaging Conduct" shall mean the publication by the Consultant or the
Company, orally or in writing, of any negative or disparaging statements,
comments, or remarks regarding the other or in the case of the Company, any
member of the Affiliated Group and their respective subsidiaries, affiliates,
directors, officers, or employees, as the case may be.
(d) Non-Competition.
The Consultant agrees that during the Term, without the prior
written consent of the Company, he shall not directly or indirectly, whether as
an owner, stockholder, director, employee, partner, agent, consultant or in any
other individual or representative capacity, (i) carry on, be engaged in or have
any financial interest or otherwise be connected with, any entity which is now
or at the time, has material operations which are engaged in any business
activity competitive (directly or indirectly) with the business of any
Affiliated Group member, including, without limitation, any business which any
member of the Affiliated Group has, as of the Effective Date, a bona fide
intention to engage in in the future, and (ii) approach, contact, solicit, sell
to any supplier or any client or customer of the Affiliated Group, for the
purpose of offering, obtaining, selling, soliciting, diverting or receiving to
or from said individual or firm, business in competition with the Affiliated
Group or orders for products in competition with those of the Affiliated Group.
(e) Confidentiality of Agreement
The Consultant and the Company (other than as required as a
matter of public disclosure under the securities laws) each agree not to
disclose the terms of this Agreement or to otherwise provide a copy of this
Agreement to anyone (other than to professional advisors and as may be required
by applicable law and the Consultant's new employer should such employer request
a copy hereof.)
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(f) Acknowledgments Respecting Confidentiality,
Non-Solicitation Non- Disparagement and Non-Competition Covenants
With respect to the covenants made by the Consultant and the
Company and set forth in this Section (individually a "Covenant" or collectively
the "Covenants"), the Consultant and the Company each acknowledge and agree
that:
(i) the Covenants are in addition to any rights they may have
at law or at equity; and
(ii) the Covenants are reasonable Covenants under the
circumstances, and if, in the opinion of any court of competent jurisdiction,
any Covenant is not reasonable in any respect, such court shall have the right,
power and authority to excise or modify such provision or provisions of such
Covenant as to the court shall appear not reasonable and to enforce (A) the
remainder of the Covenant as so amended and (B) the other Covenants. Each agrees
that any breach of any Covenant contained in this Section 7 would irreparably
injure the non-breaching party. Accordingly, each agrees that the non-breaching
party, in addition to pursuing any other remedies it may have in law or in
equity, may obtain an injunction against the breaching party from any court
having jurisdiction over the matter, restraining any further violation of this
Section 7.
8. Independent Contractor. The relationship of the Consultant to the
Company established by this Agreement is that of an independent contractor, and
nothing contained in this Agreement shall be construed to: (a) give the
Consultant the power to (i) direct or control any activities of the Company, or
(ii) create or assume any obligation on behalf of the Company for any purpose
whatsoever; (b) constitute the Consultant as an employee of the Company or
entitle the Consultant to participate in any employee benefit plans or fringe
benefit plans made available to the Company's employees; or (c) constitute the
Consultant as an agent of the Company.
9. Return of Documents.
(a) Promptly following execution of this Agreement, the
Consultant shall immediately deliver to the Company all plans, designs,
drawings, specifications, listings, manuals, memoranda, projections, minutes,
records, notebooks, computer programs and similar repositories of or containing
Confidential Information, including all copies, then in the Consultant's
possession or control or available from persons outside the Company receiving
such documents from the Consultant, whether prepared by the Consultant or
others. At such time, the Consultant shall not retain any copies or abstracts of
any such documents.
(b) Promptly upon termination of this Agreement, the
Consultant shall immediately deliver to the Company all plans, designs,
drawings, specifications, listings, manuals, memoranda, projections, minutes,
records, notebooks, computer programs and similar repositories of or containing
Confidential Information, including all copies, then in the Consultant's
possession or control or available from persons outside the Company receiving
such documents from the Consultant, whether prepared by the Consultant or
others. Upon such
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termination, the Consultant shall not retain any copies or abstracts of any such
documents.
10. Notices. For the purposes of this Agreement, notices and other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when personally delivered or sent by certified
mail, return receipt requested, postage prepaid, addressed to the respective
addresses last given by each party to the other, provided that all notices to
the Company shall be directed to the attention of the Chief Executive Officer of
the Company. All notices and communications shall be deemed to have been
received on the date of delivery thereof or on the third business day after the
mailing thereof, except that notice of change of address shall be effective only
upon receipt.
11. Successors and Assigns.
(a) This Agreement shall be binding upon and shall inure to
the benefit of the Company and its successors and assigns, and the terms the
"Company" and "Affiliated Group" as used herein shall include its successors and
assigns. The terms "successors and assigns" as used herein shall mean a
corporation or other entity acquiring all or substantially all the assets and
business of the Company or the Affiliated Group (including this Agreement)
whether by operation of law or otherwise.
(b) Neither this Agreement nor any right or interest hereunder
shall be assignable or transferable by the Consultant, his heirs, beneficiaries
or legal representatives, except by will or by the laws of descent and
distribution. This Agreement shall be binding upon and inure to the benefit of
the Consultant, his heirs, beneficiaries and legal personal representatives.
12. Miscellaneous. No provision of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in writing and signed by the Consultant and the Company. No waiver by any party
hereto at any time of any breach by any other party hereto or compliance with
any condition or provision of this Agreement to be performed by such other
party, shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time. No agreement or
representation, oral or otherwise, express or implied, with respect to the
subject matter hereof has been made by any party which is not expressly set
forth in this Agreement.
13. Governing Law. This Agreement shall be governed by and construed
and enforced in accordance with the laws of the state of Delaware without giving
effect to the conflict of law principles thereof.
14. Severability. The provision of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof.
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15. Entire Agreement and Effect on Other Agreements. This Agreement
constitutes the entirety of the agreement between the parties, and supersedes
all prior agreements, understandings and arrangements, oral or written
(including the Employment Agreement), between the parties on the subject matter
hereof. The payments and benefits provided to the Consultant under this
Agreement are in lieu of all other salary or benefit continuation benefits to
which the Consultant may otherwise be entitled under all other agreements,
plans, policies, practices and arrangements (including the Employment
Agreement).
16. Survival. The provisions of Sections 7, 9, 10, 11, 12 13, 14, 15
and 16, shall survive the termination of this Agreement.
17. Taxes. The parties acknowledge and agree that the Company will not
and shall not be obligated to make, and that it is the sole responsibility of
the Consultant to make, all periodic filings and payments required to be made in
connection with withholding taxes, estimated taxes or any other federal, state
or local taxes, payments or filings required to be made or paid in connection
with the monthly payments made to the Consultant hereunder.
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IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed by its duly authorized officer and the Consultant has executed this
Agreement as of the date set forth above.
SAFETY COMPONENTS INTERNATIONAL, INC.
By:
Name:
Title:
W. XXXXX XXXXX
ACCEPTED AND AGREED:
this day of June, 1997
VALENTEC INTERNATIONAL
CORPORATION
By:
Name:
Title:
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