Exhibit 10.5
EMPLOYMENT AGREEMENT
THIS AGREEMENT (this "Agreement") dated as of the 18 day of May, 2001 (the
"Effective Date"), is made and entered into by and between Safety Components
International, Inc., a Delaware corporation (the "Company"), and Xxxx X. Xxxxx
("Employee").
WITNESSETH:
WHEREAS, the Company and the Employee wish to enter into this new agreement
to replace and supercede any and all prior agreements and understandings,
including, but not limited to, that contemplated by that certain Motion of
Safety Components for Order, Pursuant to 11 U.S.C. ss.ss.105(a) and 363(b)(1),
Approving and Authorizing Implementation of Employee Severance Program for Key
Executives dated May 24, 2000 filed by the Company with the United States
District Court for the District of Delaware in connection with its bankruptcy
proceeding in that court pursuant to Chapter 11 of the United States Bankruptcy
Code (as permitted thereby); and
WHEREAS, the Company desires to continue to employ Employee as the
Company's President and Chief Executive Officer, and Employee desires to
continue to be employed by the Company, each upon the terms set forth in this
Agreement;
NOW THEREFORE, in consideration of the premises and mutual covenants
contained herein and for other good and valuable consideration, the adequacy and
receipt of which are hereby acknowledged, the parties agree as follows:
1. Employment. The Company hereby continues to employ Employee and Employee
hereby accepts the continued employment with the Company for the Term (as
defined below), in the position and with the duties and responsibilities set
forth in Section 3 below, and upon the other terms and subject to the conditions
hereinafter stated.
2. Term. Except as otherwise specifically provided in Section 7 below, the
term of Employee's employment under this Agreement (the "Term") shall commence
as of the Effective Date, and shall continue until terminated in accordance
with, and subject to, the terms and conditions of this Agreement.
3. Position, Duties, Responsibilities and Services.
3.1 Position, Duties and Responsibilities. During the Term, Employee
shall serve as the Company's President and Chief Executive Officer, and
shall be responsible for the duties attendant to such office, which duties
will be generally consistent with his position as an executive officer of
the Company, and such other managerial duties and responsibilities with the
Company, its subsidiaries or divisions as may be assigned by the Board of
Directors of the
Company (the "Board"). Additionally, the Company will nominate and
recommend Employee for election to the Board for each fiscal year during
the Term. Employee shall be subject to the supervision and control of the
Board and the provisions of the by-laws of the Company. Employee shall be
based in Greenville, South Carolina.
3.2 Services to be Provided. During the Term, Employee shall (i)
devote his full working time, attention and energies to the affairs of the
Company and its subsidiaries and divisions, (ii) use his best efforts to
promote its and their best interests, (iii) faithfully and diligently
perform his duties and responsibilities hereunder, and (iv) comply with and
be bound by the Company's operational policies, procedures and practices
from time to time in effect during the Term. This Agreement shall not be
construed as preventing Employee from serving as an outside director of any
other company or from investing his assets in such form or manner as will
not require a material amount of his time, in each case subject to the
confidentiality, non-competition and non-solicitation obligations contained
in Sections 8 and 9 below as such obligations are reasonably interpreted by
the Board.
4. Compensation.
4.1 Base Salary. Employee shall be paid a base salary (the "Base
Salary") at an annual rate of three hundred and fifteen thousand dollars
($315,000), payable at such intervals as the other executive officers of
the Company are paid, but in any event at least on a monthly basis. The
Base Salary shall be subject to increase by the Board, in its sole
discretion, upon the recommendations of the Compensation Committee of the
Board (the "Committee"), taking into account merit, corporate and
individual performance and general business conditions, including changes
in the cost of living index.
4.2 Bonus Compensation.
(a) MIP Plan; Annual Bonuses. Employee's annual bonus
compensation entitlement for each of the fiscal years of the Term
generally shall be pursuant to the terms of the Management Incentive
Plan of the Company (the "MIP Plan"), or in accordance with a formula
or other bonus plan to be established by the Committee in advance of
each such fiscal year; provided, however, that with respect only to
termination of employment by reason of death, Disability, or
termination of employment other than for Cause (as the foregoing are
described in Sections 7.1, 7.2, and 7.4), and provided that such
termination occurs more than six months after the beginning of the
then current fiscal year, then Employee (or his beneficiary under
Section 7.1) shall also be entitled to a pro-rated annual bonus based
upon the proportion of the fiscal year during which Employee was
actively employed, but payable only if and when the annual bonus would
have been paid if no termination had occurred.
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(b) Special Change of Control Bonus. In addition, in the event a
Change of Control (as defined in Section 7 below) occurs:
(i) while the Employee is still employed in good
standing under this Agreement; or
(ii) to the extent Employee has surrendered his Class A
Options in exchange for stock appreciation rights
(provided, that Employee's Option Grant so permits
and such surrender occurs during the time period
required by the Grant), within twenty-four (24)
months following the Employee's termination by
Employer other than for Cause or termination by
Employee by reasons of a Constructive Termination
(each as provided in Section 7.4 below), provided
the Change of Control has occurred within such
twenty-four (24) month period; or,
(iii) in the event that Employee has been terminated by
Employer other than for Cause, or in the event of
termination by Employee by reason of a Constructive
Termination (each as provided in Section 7.4 below),
but only to the extent Employee has exercised his
Options (provided, that Employee's Option grant so
permits);
then Employee also shall be paid a one-time bonus amount equal to Nine
Hundred Sixty One Thousand Four Hundred Dollars ($961,400) at the time
the Change of Control is consummated; provided, that subsection (iii)
shall apply only to the extent that the Change of Control occurs and
is consummated within ten years following the date of Employee's
termination of employment at a time when Employee is still alive
(regardless of whether he is still receiving severance or other
payments).
(c) Provisions Applicable to All Bonus Payments. All issues of
interpretation in connection with the calculation of any and all bonus
compensation of Employee shall be resolved by the Committee in its
reasonable discretion. The Company shall pay the bonus compensation to
Employee for each fiscal year of the Term within 30 days following the
completion by the Company's certified public accountants of their
audit of the Company's financial statements for each such fiscal year
(or, in the event of a Special Bonus under Subsection (b), within 60
days of the occurrence of all events necessary to trigger such Special
Bonus); or, if the employment of Employee shall have been terminated
for any reason prior to such date, in accordance with Section 7 below.
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4.3 Stock Options.
(a) Initial Grant; Other Grants In General. The Company hereby
agrees to cause the issuance to Employee of stock options ("Stock
Options") to purchase 173,200 shares of common stock, $.0l par value,
of the Company ("Common Stock") on the date of this Agreement. The
foregoing initial grant of Stock Options shall consist of Class A
Options to purchase 110,000 shares of Common Stock and Class B Options
to purchase 63,200 shares of Common Stock (each as defined in and
subject to the Employee's Stock Option Agreement and Grant (the
"Grant") and the Company's 2001 Stock Option Plan, as amended in
effect from time to time (the "Stock Option Plan"). Additional grants
of Stock Options to Employee, if any, shall be considered by the
Committee on or before April 1 of each year during the Term, and shall
be subject to grant in the sole discretion of the Committee, taking
into account merit, corporate and individual performance and general
business conditions.
(b) Class C Grant. In the event that both (i) Employee is still
employed in good standing on April 1, 2002 and (ii) a Change of
Control (as defined in Section 7.4 below) has not occurred on or
before that date, then Employee also shall be awarded additional Class
C Stock Options to purchase 36,800 shares of Common Stock, which shall
be vested and exercisable in accordance with the Stock Option Plan and
Grant. If a Change of Control has occurred prior to April 1, 2002, at
a time when Employee is still employed in good standing, then Employee
shall be issued (as replacement and in lieu of the above Class C Stock
Options), additional Class B Stock Options to purchase 36,800 shares
of Common Stock.
(c) Unless otherwise specifically determined by the Committee,
all terms and provisions (including vesting and exercisability)
governing Employee's Stock Options (both the foregoing Stock Options
and any other options) shall be governed by the Stock Option Plan and
the Non-statutory Stock Option Agreement and Grant thereunder between
the Company and Employee.
5. Employment Benefits.
5.1 Benefit Programs. During the Term, Employee shall be entitled to
participate in and receive benefits made available now or hereafter to
executive officers of the Company under all benefit programs, arrangements
or perquisites of the Company, including, but not limited to, 401(k) plans,
hospitalization, surgical, dental and major medical coverage, short-term
and long-term disability and life insurance, provided that Employee meets
the generally applicable eligibility requirements for participation in such
programs and arrangements.
5.2 Vacation. During the Term, Employee shall be entitled to such
vacation with pay during each year of his employment hereunder consistent
with the policies of the
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Company, but in no event less than four (4) weeks in any such calendar year
(pro-rated as necessary for partial calendar years during the Term);
provided, however, that the vacation days taken do not interfere with the
operations of the Company. Such vacation may be taken, in Employee's
discretion, at such time or times as are not inconsistent with the
reasonable business needs of the Company. Employee shall not be entitled to
any compensation in lieu of vacation in the event that Employee, for
whatever reason, including termination of employment, fails to take such
vacation during any year of his employment hereunder. Employee shall also
be entitled to all paid holidays given by the Company to its executive
officers.
5.2 Supplemental Medical Insurance. Subject to availability on
commercially reasonable terms, during the Term, the Company shall maintain
in effect and pay the premiums for a supplemental medical insurance policy
(separate from any medical insurance policies referenced in Section 5.1
hereof) providing for reimbursement covering Employee and his eligible
dependents (consistent with past practice) under the Company's generally
available medical plan for most uncovered expenses up to five thousand
dollars ($5,000.00) per diagnosis per year.
5.3 Car Allowance. During the Term, the Company shall pay Employee, on
the first day of each month, a monthly automobile allowance of twelve
hundred dollars ($1,200.00) to pay for the costs associated with Employee's
local transportation expenses.
5.4 Country Club Expenses. During the Term, the Company shall
reimburse Employee, on the first day of each month, for his country club
fees in an amount not to exceed three hundred sixty dollars ($360.00) per
month. The Company shall also pay, on behalf of Employee, for country club
initiation fees in an amount not to exceed a one-time payment of
twenty-five thousand dollars ($25,000).
5.5 Life Insurance. During the Term, the Company shall reimburse
Employee, upon presentation of appropriate vouchers or receipts, for
premiums paid by the Employee to maintain in effect a life insurance policy
or policies covering Employee, the beneficiary of which shall be designated
by Employee; provided, however, that the amounts to be reimbursed by the
Company under this section shall not exceed fifteen thousand dollars
($15,000.00) per annum.
5.6 Taxes. Employee shall be responsible for any income tax
liabilities arising out of the Company's payment or reimbursement of any
amounts described in this Section 5.
6. Expenses. During the Term, the Company shall reimburse Employee upon
presentation of appropriate vouchers or receipts and in accordance with the
Company's expense reimbursement policies for executive officers, for all
reasonable travel and entertainment expenses incurred by Employee in connection
with the performance of his duties under this Agreement.
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7. Consequences of Termination of Employment.
7.1 Death. In the event of the death of Employee during the Term,
Employee's employment hereunder shall be terminated as of the date of his
death, and Employee's designated beneficiary, or, in the absence of such
designation, the estate or other legal representative of Employee shall be
paid Employee's unpaid Base Salary (but no Bonus Compensation except as
specifically provided in Section 4.2(a) with respect to a prorated annual
bonus) through the end of the month in which the death occurs. No other
benefits shall be payable under this Section 7 due to Employee's
termination in the event of death.
7.2 Disability. In the event that Employee is reasonably determined to
be disabled as that term is defined in the Company's long term disability
plan in effect from time to time (the "LTD Plan"), the Company shall have
the right to terminate Employee's employment under this Agreement by giving
Employee ten (10) days' prior written notice. If Employee's employment
hereunder is so terminated, Employee shall continue to receive his Base
Salary (but no Bonus Compensation except as specifically provided in
Section 4.2(a) with respect to a prorated annual bonus) from the date of
termination until such time as Employee begins receiving benefits under the
LTD Plan. No other benefits shall be payable under this Section 7 due to
Employee's termination in the event the Committee reasonably determines
that the Company's termination of Employee's employment was due to
disability.
7.3 Termination of Employment by the Company for Cause.
(a) Nothing herein shall prevent the Company from terminating
Employee's employment under this Agreement for Cause. In the event
Employee is terminated for Cause, Employee shall be paid his unpaid
Base Salary (but no Bonus Compensation) through the end of the month
in which the termination occurs. The term "Cause", as used herein,
shall mean any act, action or series of acts or actions or any
omission, omissions, or series of omissions which result in, or which
have the effect of resulting in, any of the following: (i) the
Employee's commission of fraud, embezzlement or theft in connection
with the Employee's duties for the Company or any Subsidiary; (ii) the
Employee's commission of a misdemeanor involving moral turpitude or
the Employee's commission of a felony; (iii) the wrongful material
damage to Company or Subsidiary property by the Employee; (iv) the
wrongful disclosure of any secret process or confidential information
of the Company or any Subsidiary; (v) the violation of any
non-disclosure, non-solicitation or non-competition covenants to which
the Employee is subject; (vi) the Employee's intentional or grossly
negligent breach of any stated material employment policy of the
Company or any Subsidiary; or (vii) the Employee's refusal to follow
reasonable directions or instructions of a more senior officer or the
Board as to which the Company has notified the Employee in writing and
such refusal shall have continued for a period of three (3) business
days after actual receipt of such notice.
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(b) Termination of employment of Employee pursuant to this
Section 7.3 shall be made by delivery to Employee of a letter from the
Chairman of the Board generally setting forth a description of the
conduct which provides the basis for a termination of employment of
Employee for Cause.
7.4 Termination of Employment Other than for Cause.
(a) Termination. The Employee's employment under this Agreement
may be terminated: (i) by the Company (in addition to termination
pursuant to Sections 7.1, 7.2 or 7.3 above) at any time and for any
reason; or (ii) by the Employee at any time and for any reason.
(b) Severance and Non-Competition Payments.
(1) If this Agreement is terminated by the Company other
than by reason of death or disability or for Cause, or if this
Agreement is terminated by Employee by reason of a Constructive
Termination (as defined below) and such termination is other than
in connection with a Change of Control (as defined below), the
Company shall pay Employee a severance and non-competition
payment equal to two (2) times the Employee's Base Salary (but no
Bonus Compensation) at the time of termination. Such severance
and non-competition payment shall be payable in equal monthly
installments commencing on the first day of the month following
termination and continuing for a total of twenty-four (24)
months; provided, that in the event such a termination occurs on
or before October 31, 2001, then the foregoing twenty-four (24)
month period and the corresponding dollar amount of severance and
non-competition payments shall be increased by one month for each
full calendar month by which such termination precedes November
1, 2001. In addition, the Company shall provide, at no expense to
the Employee for the eighteen (18) month COBRA period, continued
health insurance coverage as in effect from time to time for the
Employee and, to the extent they continue to be eligible for such
coverage under COBRA, his dependents who were covered by the
Company's health insurance plan immediately prior to his
termination of employment.
(2) For the purposes of this agreement, a "Change of
Control" will be deemed to have occurred upon:
(i) the acquisition by any one person or a group
of associated persons (the "Person") of
beneficial ownership (within the meaning of
Rule 13d-3 under the Securities Exchange Act
of 1934, as amended) of the shares of Common
Stock then outstanding (the "Outstanding
Common Stock") or the voting securities of
the Company then outstanding entitled
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to vote generally in the election of
directors (the "Outstanding Voting
Securities"), if such acquisition of
beneficial ownership would result in such
Person beneficially owning either
individually or in the aggregate 50.1% or
more of the Outstanding Common Stock or 50.1%
or more of the combined voting power of the
Outstanding Voting Securities; provided,
however, that immediately prior to such
acquisition such Person(s) was not a direct
or indirect beneficial owner of 50.1% or more
of the Outstanding Common Stock or 50.1% or
more of the combined voting power of
Outstanding Voting Securities, as the case
may be; and provided further, however, that
if such acquisition is by a person who was a
shareholder of the Company as of October 31,
2000, then a Change of Control does not occur
unless both this Subsection (i) and
Subsection (iii)'s change in Board
composition provisions are met; or
(ii) approval by the stockholders of the Company
of a reorganization, merger, consolidation,
substantial liquidation or dissolution of the
Company, sale or disposition of all or
substantially all of the assets of the
Company, or similar corporate transaction (in
each case referred to herein as a "Corporate
Transaction"); provided, however, in any such
case, payment of any benefits, or amounts
(cash, stock or otherwise) shall be
conditioned upon the actual consummation of
such Corporate Transaction; or
(iii) a change in the composition of the Board such
that the individuals who, immediately prior
to the Effective Date, constitute the Board
(such Board hereinafter referred to as the
"Incumbent Board") cease for any reason to
constitute at least a majority of the Board;
provided, however, that any individual who
becomes a member of the Board on or
subsequent to the Effective Date whose
election, or nomination for election by the
Company's stockholders, was as a result of
the retirement, resignation or removal of a
Board member in the ordinary course of
business and was approved by a vote of at
least a majority of those individuals who are
members of the Board and who were also
members of the Incumbent Board (or deemed to
be such pursuant to this proviso) shall be
considered as though such individual were a
member of the Incumbent Board; but, provided,
further, that any such individual whose
initial assumption of office occurs as a
result of
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either an actual or threatened election
contest (as such terms are used in Rule
l4a-11 of Regulation 14A under the Securities
Exchange Act of 1934 (as amended from time to
time), including any successor to such Rule)
or other actual or threatened solicitation of
proxies or consents by or on behalf of a
Person(s) other than the Board shall not be
so considered as a member of the Incumbent
Board.
(3) For purposes of this Agreement, a "Constructive
Termination" shall be deemed to have occurred upon the Employee's
voluntary termination of employment within 60 days (or 120 days
in the event a Change of Control also has occurred) following the
occurrence of any of the following: (a) a change in the
Employee's duties or responsibilities, or a change in the
Employee's reporting relationships, either of which results in or
reflects a material diminution of the scope or importance of the
Employee's responsibilities; (b) a reduction in the Employee's
then current base salary or annual target bonus; (c) a reduction
in the level of benefits available or awarded to the Employee
under employee and officer benefit plans and programs including,
but not limited to, annual and long-term incentive and
stock-based plans and programs (other than as part of reductions
in such benefit plans or programs affecting similarly situated
employees of the Company); (d) any failure of any acquirer
following a Change of Control to agree to be bound by this
Agreement, or (e) a relocation of the Employee's primary
employment location which is more than 50 miles from his current
primary employment location; provided, however, that for
Constructive Termination to have been deemed to have occurred,
the Employee must give the Company written notice, at least 30
days prior to the date the Employee intends to terminate his
employment, providing a description of the events constituting
Constructive Termination hereunder and, in the event the Company
corrects or cures such events prior to the conclusion of such 30
day period, then Constructive Termination shall not exist
hereunder. In the event of a Constructive Termination, except as
may specifically be provided to the contrary, Employer shall be
treated in the same manner as if he had been terminated by the
Company without Cause.
(4) If this Agreement is terminated by the Company in
connection with a Change of Control, and: (i) if Employee is not
offered a position with similar responsibilities; or (ii)
Employee is offered and accepts a position with similar
responsibilities but is terminated without Cause within twelve
(12) months after accepting such position, then (in lieu of any
other severance payment under this Agreement) the Company shall
pay Employee a severance and non-competition payment equal to two
(2) times the Employee's Base Salary (but no Bonus Compensation)
at the time of termination. Such severance and non-competition
payment shall be payable in equal monthly installments commencing
on the first day of the month following termination and
continuing for a total of twenty-four (24) months;
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provided, that in the event such a termination occurs on or
before October 31, 2001, then the foregoing twenty-four month
period shall be increased by one month for each full calendar
month by which such termination precedes November 1, 2001.
Company also, to the extent provided in the Grant, shall permit
Employee to exercise his Options (or surrender the Options and
obtain instead stock appreciation rights or other defined
payments). In addition, the Company shall provide, at no expense
to the Employee for the eighteen (18) month COBRA period,
continued health insurance coverage as in effect from time to
time for the Employee and his dependents who were covered by the
Company's health insurance plan immediately prior to his
termination of employment.
(5) If Employee terminates his employment voluntarily, other
than in the context of a Constructive Termination, Employee shall
be paid his unpaid Base Salary (but no Bonus Compensation)
through the date on which the voluntary termination occurs.
(6) Notwithstanding anything else in this Agreement, the
cash component and benefits component of any severance and
non-competition payment under this Agreement shall totally cease
in the event that Employee engages to any extent in a competitive
employment or business as described in Section 9. In addition,
the cash component of any severance and non-competition payment
also shall be reduced by fifty percent (50%) of any amount of
"Severance Period Earnings" (as defined below), whether or not
competitive, to the extent such Severance Period Earnings are
equal to or less than One Hundred Thousand Dollars ($100,000) in
any consecutive twelve (12) month period. In addition, the cash
component of any severance and non-competition payment under this
Agreement shall no longer be payable to any extent in the event
that the Employee receives any amount of Severance Period
Earnings in excess of One Hundred Thousand Dollars ($100,000) in
any consecutive twelve (12) month period. For purposes of this
Agreement, Severance Period Earnings shall mean any amount(s)
received as income from a subsequent employer or business during
the period such severance or non-competition amount otherwise
would be payable. In addition, the health insurance continuation
component of any severance and non-competition payment under this
Agreement also (except as required by applicable federal or state
"COBRA" continuation laws) shall no longer apply in the event
that the Employee becomes covered, or becomes eligible to be
covered (even if Employee contribution or application is
required), by a group health insurance plan of a subsequent
employer or business.
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8. Confidential Information, Inventions.
8.1 The Employee agrees not to use, disclose or make accessible to any
other person, firm, partnership, corporation or any other entity any
Confidential Information (as defined below) pertaining to the business of
the Company or any entity controlling, controlled by or under common
control with the Company (each an "Affiliate") except (i) while employed by
the Company in the business of and for the benefit of the Company or its
Affiliates or (ii) when required to do so by a court of competent
jurisdiction, by any governmental agency having supervisory authority over
the business of the Company or its Affiliates, or by any administrative
body or legislative body (including a committee thereof) with jurisdiction
to order the Company or its Affiliates to divulge, disclose or make
accessible such information. For purposes of this Agreement, "Confidential
Information" shall mean non-public information concerning the Company's
financial data, statistical data, strategic business plans, product
development (or other proprietary product data), customer and supplier
lists, customer and supplier information, pricing data, information
relating to governmental relations, discoveries, practices, processes,
methods, trade secrets, developments (as defined below) marketing plans and
other non-public, proprietary and confidential information of the Company
or its Affiliates, that, in any case, is not otherwise generally available
to the public and has not been disclosed by the Company, or its Affiliates,
as the case may be, to others not subject to confidentiality agreements. In
the event the Employee's employment is terminated hereunder for any reason,
he immediately shall return to the Company all Confidential Information in
his possession.
8.2 Employee shall make full and prompt disclosure to the Company of
all inventions, improvements, ideas, concepts, discoveries, methods,
developments, software and works of authorship, whether or not
copyrightable, trademarkable or licensable, which are created, made,
conceived or reduced to practice by Employee in the course of or in
connection with his services with the Company, whether or not during normal
working hours or on the premises of the Company (all of which are
collectively referred to in this Agreement as "Developments"). All
Developments shall be the sole property of the Company, and Employee hereby
assigns to the Company, without further compensation, all of his rights,
title and interests in and to the Developments and any and all related
patents, patent applications, copyrights, copyright applications,
trademarks and trade names in the United States and elsewhere.
8.3 Employee shall assist the Company in obtaining, maintaining and
enforcing patent, copyright and other forms of legal protection for
intellectual property in any country. Upon the request of the Company,
Employee shall sign all applications, assignments, instruments and papers
and perform all acts necessary or desired by the Company in order to
protect its rights and interests in any Developments.
8.4 The Employee and the Company agree that this covenant regarding
Confidential Information and Developments is a reasonable covenant under
the circumstances, and further agree that if, in the opinion of any court
of competent jurisdiction, such covenant is not reasonable in any respect,
such court shall have the right, power and authority to excise or modify
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such provision or provisions of this covenant as to the court shall appear
not reasonable and to enforce the remainder of the covenant as so amended.
The Employee agrees that any breach of the covenant contained in this
Section 8 would irreparably injure the Company and/or its Affiliates.
Accordingly, the Employee agrees that the Company and/or its Affiliates, in
addition to pursuing any other remedies it or they may have in law or in
equity, may obtain an injunction against the Employee from any court having
jurisdiction over the matter, restraining any further violation of this
Section 8.
8.5 The provisions of this Section 8 shall extend for the Term and
shall further extend for the greater of (x) the period in which severance
and non-competition payments are made pursuant to this Agreement or (y) two
years from the date this Agreement is terminated. The provisions of this
Section 8 shall survive any termination of this Agreement.
9. Non-Competition, Non-Solicitation.
9.1 The Employee agrees that during the Non-Competition Period (as
defined in Section 9.4 below), without the prior written consent of the
Company: (a) he shall not, within the Territory (as defined in Section 9.5
below), directly or indirectly, either as principal, manager, agent,
consultant, officer, director, greater than two (2%) percent holder of any
class or series of equity securities, partner, investor, lender or employee
or in any other capacity, carry on, be engaged in or have any financial
interest in 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 the
Company or its Affiliates (currently (i) the manufacture and sale of (x)
automotive airbag fabric and cushions, (y) value-added synthetic fabrics
used in a variety of niche industrial and commercial applications and (z)
metal airbag, industrial and ordinance components and (ii) systems
integration and manufacturing for ordnance programs) including, for these
purposes, any business in which, at the termination of his employment,
there was a bona fide intention on the part of the Company or its
Affiliates to engage in the future; and (b) he shall not, within the
Territory (as defined in Section 9.5 below), on behalf of any competing
entity, directly or indirectly, have any dealings or contact with any
suppliers or customers of the Company or its Affiliates.
9.2 During the Non-Competition Period, Employee agrees that, without
the prior written consent of the Company (and other than on behalf of the
Company), Employee 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 has been employed by the Company or its Affiliates at any time
during the six (6) months immediately preceding such date of hiring or
solicitation.
9.3 The Employee and the Company agree that the covenants of
non-competition and non-solicitation are reasonable covenants under the
circumstances, and further agree that if, in the opinion of any court of
competent jurisdiction such covenants are not reasonable in any respect,
such court shall have the right, power and authority to excise or modify
such provision or provisions of these covenants as to the court shall
appear not reasonable land to
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enforce the remainder of these covenants as so amended. The Employee agrees
that any breach of the covenants contained in this Section 9 would
irreparably injure the Company and/or its Affiliates. Accordingly, the
Employee agrees that the Company and/or its Affiliates, in addition to
pursuing any other remedies it or they may have in law or in equity, may
obtain an injunction against the Employee from any court having
jurisdiction over the matter, restraining any further violation of this
Section 9.
9.4 The provisions of this Section 9 shall extend for the Term and
shall further extend for any period following the date of the termination
of Employee's employment for any reason during which the Employee (or his
dependents) is receiving severance and/or non-competition payment and/or
extended benefits coverage from the Company (herein referred to as the
"Non-Competition Period"). The provisions of this Section 9 shall survive
any termination of this Agreement.
9.5 For purposes of this Agreement, "Territory" shall mean:
(a) Europe;
(b) The United Kingdom;
(c) Germany;
(d) The Czech Republic;
(e) Japan;
(f) Mexico;
(g) The United States; and
(h) Any state within the United States in which the Company or
its Affiliates does business during the Term.
10. Compliance with Internal Revenue Codess.280G.
10.1 All provisions of this Agreement which are contingent upon a
change of control and "parachute payments" as defined by Code ss. 280G
("parachute payments") shall in all cases be subject and contingent upon
the approval by a separate vote of the persons who owned, immediately
before the change in ownership or control which would trigger the
application of Code ss. 280G, more than seventy-five (75%) percent of the
voting power of all outstanding stock of the Company. Such seventy-five
(75%) percent vote shall be made following adequate disclosures to such
voting persons of all material facts
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concerning all such material parachute payments, and such vote shall
determine the right of the individual to receive or retain such parachute
payment.
10.2 Notwithstanding the foregoing, the provisions of subparagraph
10.1 shall not apply in the event that a substantial portion of the assets
of the Company consists directly or indirectly of stock in a corporation
and any ownership interest in such entity is readily tradable on an
established securities market or otherwise. To the extent that it is
determined by the Company's independent auditors that Codess.ss.280G and
4999 apply due to this existence of readily tradable stock or interest,
then Employee's payments which are deemed to be contingent upon a change of
control shall be increased by an amount that the Company's independent
auditors determine equals twenty (20%) percent (or any lesser percentage
amount equal to the excise tax percentage in Codess.4999 applicable to
Employee) of the "excess parachute payment" under Code ss.280G, calculated
without taking into account this additional payment. The provisions of this
paragraph shall in all events be interpreted so as to comply with
Codess.280G(b)(5) and the regulations, proposed regulations and other
official guidance thereunder.
11. Notices. All notices and other communications hereunder shall be in
writing and shall be deemed to have been given if delivered personally or sent
by facsimile transmission, overnight courier, or certified, registered or
express mail, postage prepaid. Any such notice shall be deemed given when so
delivered personally or sent by facsimile transmission (provided that a
confirmation copy is sent by overnight courier), one day after deposit with an
overnight courier, or if mailed, five (5) days after the date of deposit in the
United States mails, as follows:
To the Company:
Safety Components International, Inc.
00 Xxxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000
Telephone: (000) 000-0000
Fax: (000) 000-0000
Attention: Vice President of Human Resources
To Employee:
Xxxx X. Xxxxx
000 Xxxxxxxxxx Xxxx Xxx
Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000
12. Entire Agreement. This Agreement contains the entire agreement between
the parties hereto with respect to the matters contemplated herein and
supersedes all prior agreements or understandings among the parties related to
such matters.
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13. Binding Effect. Except as otherwise provided herein, this Agreement
shall be binding upon and inure to the benefit of the Company and its successors
and assigns and upon Employee. "Successors and assigns" shall mean, in the case
of the Company, any successor pursuant to a merger, consolidation, or sale, or
other transfer of all or substantially all of the assets or common stock of the
Company.
14. No Assignment. This Agreement shall not be assignable or otherwise
transferable by Employee. The Company shall have the right to assign this
Agreement to any successor or any Affiliate which agrees to be bound by the
terms hereof.
15. Amendment or Modification: Waiver. No provision of this Agreement may
be amended or waived unless such amendment or waiver is authorized by the Board
and is agreed to in writing, signed by Employee and by an officer of the Company
thereunto duly authorized. Except as otherwise specifically provided in this
Agreement, no waiver by either party hereto of any breach by the other party
hereto of any condition or provision of this Agreement to be performed by such
other party shall be deemed a waiver of a similar or dissimilar provision or
condition at the same or at any prior or subsequent time.
16. Governing Law. The validity, interpretation, construction, performance
and enforcement of this Agreement shall be governed by the internal laws of the
State of South Carolina, without regard to its conflicts of law rules.
17. Titles. Titles to the Sections in this Agreement are intended solely
for convenience and no provision of this Agreement is to be construed by
reference to the title of any Section.
18. Counterparts. This Agreement may be executed in one or more
counterparts, which together shall constitute one agreement. It shall not be
necessary for each party to sign each counterpart so long as each party has
signed at least one counterpart.
19. Severability. Any term or provision of this Agreement which is invalid
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms and
provisions of this Agreement in any other jurisdiction.
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IN WITNESS THEREOF, the parties hereto have executed this Agreement as of
the day and year first set forth above.
SAFETY COMPONENTS INTERNATIONAL, INC.
By:
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Xxxx X. Xxxxx
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