Exhibit 10.14
EMPLOYMENT AGREEMENT
THIS AGREEMENT (this "Agreement") dated as of the 23rd day of August 1999
(the "Effective Date"), is made and entered into by and between Safety
Components International, Inc., a Delaware corporation (the "Company"), and
Xxxxx X. Xxxxxxx ("Employee").
WITNESSETH:
WHEREAS, the Company desires to employ Employee as the Company's Vice
President and Chief Financial Officer; and Employee desires to be employed by
the Company, 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 employs Employee and Employee hereby
accepts employment with the Company as of the Effective Date 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 the second (2nd) anniversary
thereof, 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 Vice President and Chief Financial 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 Chairman and Chief Executive Officer of the Company (the
"CEO"), the President and Chief Operating Officer of the Company (the
"COO") or the Board. Employee shall be subject to the supervision and
control of the COO and the provisions of the by-laws of the Company.
3.2 Services to be Provided. During the Term, Employee shall (i)
devote all of his 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.
4. Compensation.
4.1 Base Salary. Employee shall be paid a base salary (the "Base
Salary") at an annual rate of one hundred eighty thousand ($180,000)
dollars, 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 Compensation Committee of the
Board (the "Committee"), in its sole discretion, upon the recommendations
of the CEO and/or the COO, taking into account merit, corporate and
individual performance and general business conditions, including changes
in the cost of living index.
4.2 Bonus Compensation. Employee's bonus compensation ("Bonus
Compensation") for the Company's fiscal year ended March 2000 (the "2000
Fiscal Year") shall be governed as follows: (i) if the Company achieves 90%
of the net income set forth in the approved business plan of the Company
for the 2000 Fiscal Year, Employee will receive pro-rata Bonus Compensation
equal to 15% of Employee's Base Salary for the 2000 Fiscal Year; and (ii)
for each I% of net income (over 90%) set forth in the approved business
plan of the Company for the 2000 Fiscal Year, Employee will receive
pro-rata Bonus Compensation (in addition to the Bonus Compensation set
forth in (i) above) equal to 1 1/2% of Employee's Base Salary for the 2000
Fiscal Year. The Employee's "pro-rata" share of the bonus calculation in
(i) and (ii) above equals sixty-two and one-half percent (62 1/2 %) based
on employment date of August 23, 1999. In no event will the Bonus
Compensation for fiscal year 2000 be less than $20,000. Employee shall also
be entitled to Bonus Compensation as set forth in the next succeeding
sentence commencing with the 2001 Fiscal Year. Employee shall be entitled
to Bonus Compensation for the fiscal years of the Term pursuant to the
terms of the Management Incentive Plan of the Company (the " MIP Plan") or
in accordance with a formula to be established by the Committee in advance
of each such fiscal year. All issues of interpretation in connection with
the calculation of the 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
of the completion by the Company's certified public accountants of their
audit of the Company's financial statements for each such fiscal year or,
if the employment of Employee shall have been terminated for any reason
prior to such date, in accordance with Section 7 below.
4.3 Stock Options
(a) The Company hereby agrees to cause the issuance to Employee
of stock options ("Stock Options") to purchase 50,000 shares of common
stock, $.0l par value, of the Company ("Common Stock") on the date of
this Agreement. Grants of Stock Options to Employee shall be
considered by the Committee on or before April I of each year during
the Term, with such reviews to commence in 2000, and shall be subject
to grant in the sole discretion of the Committee, taking into account
merit, corporate and individual performance and general business
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conditions. All such Stock Options shall be issued pursuant to, and in
accordance with, the Company's 1994 Stock Option Plan, as amended (the
"Stock Option Plan").
(b) Each Stock Option shall be exercisable at a price equal to
the Fair Market Value (as defined in the Stock Option Plan) of the
Common Stock on the date of issuance of such Stock Option (or if such
date is not a business day, then such option shall be exercisable at a
price equal to the Fair Market Value on the next business day
following such date) in accordance with the terms of the Stock Option
Plan and shall vest over a three-year period from the date of grant at
a rate of 33 1/3 % per year, commencing with the first anniversary of
the date of grant. Employee's vested Stock Options shall be
exercisable for a period of ten years from the date of issuance. Upon
the termination of this Agreement, except as a result of a "change of
control" as defined in 7.4(b)(2) below, any unvested Stock Options
shall immediately lapse and Employee shall have thirty (30) days from
the date of termination of his employment with the Company to exercise
any vested Stock Options ( one year in the case of termination by
reason of death or disability of the Employee). Upon termination of
this Agreement as a result of a "change of control" as defined in
7.4(b)(2) below, any unvested Stock Options shall immediately vest,
and Employee shall have until the earlier to occur of (i) the 90th day
from the date of termination of this Agreement and (ii) the expiration
of the Stock Options in accordance with their terms and with the Stock
Option Plan to exercise any vested Stock Options.
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 all
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 and
long term disability and life insurance.
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 Company, but in no event less than three 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 additional compensation in the event that Employee, for
whatever reason, 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.
5.3 Car Allowance. During the Term, the Company shall pay Employee, on
the first day of each month, a monthly automobile allowance of $900.00 to
pay for the costs associated with Employee's local transportation expenses.
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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
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 the Employee
(collectively, the "Estate") shall be paid, Employee's unpaid Base Salary
through the month in which the death occurs and any unpaid Bonus
Compensation to the extent payable under the terms of the Company's benefit
programs and plans.
7.2 Disability. In the event Employee shall be unable to render the
services or perform his duties hereunder by reason of illness, injury or
incapacity (whether physical, mental, emotional or psychological) for a
period of either (i) ninety (90) consecutive days or (ii) one hundred
eighty (I 80) days in any consecutive three hundred sixty-five (365) day
period, 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
be paid, in addition to payments under any disability insurance policy in
effect, Employee's unpaid Base Salary through the month in which the
termination occurs, plus Bonus Compensation to the extent payable under the
Plan
7.3 Termination of Employment of Employee bv 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 month in which the
termination occurs. The term "Cause," as used herein, shall mean (i)
Employee's willful misconduct, misappropriation or fraud in the
performance of his duties hereunder; (ii) the continued failure or
refusal of Employee to carry out any reasonable request of the CEO,
COO or the Board for the provision of services hereunder; (iii) the
material breach of this Agreement by Employee; or (iv) the entering of
a plea of guilty or nolo contendere to or the conviction of Employee
for a felony or any other criminal act involving moral turpitude,
dishonesty, theft or unethical business conduct, including, without
limitation, violations of State or Federal securities laws or
regulations.
(b) Termination of employment of Employee pursuant to this
Section 7.3 shall be made by delivery to Employee of a letter from the
CEO or the COO generally setting forth a description of the conduct
which provides the basis for a termination of employment of Employee
for Cause.
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7.4 Termination of Employment Other than for Cause, Death or
Disability.
(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, (ii) by the Employee at any time and for any reason or (iii)
upon the expiration of the Term.
(b) Severance and Non-Competition Payments.
(1) If this Agreement is terminated by the Company,
including by reason of a Constructive Termination (as defined
below), other than as a result of death or disability of Employee
or for Cause (and other than in connection with a change in
control (as defined below) of the Company), the Company shall pay
Employee a severance and non-competition payment equal to the
Base Salary for the remainder of the Term earned by the Employee
in respect of the last year immediately preceding the year of
termination, multiplied by the number of year ends remaining in
the Term; provided, however that a termination during the last
six (6) months of the Term shall be governed by Subsection
7.4(b)(5) below. Such severance and non-competition payment shall
be payable in equal monthly installments commencing on the first
day of the month following termination and shall continue for the
remainder of the Term.
(2) For purposes of this Agreement, a "change in control" of
the Company means and includes each of the following: (i) the
acquisition, in one or more transactions, of beneficial ownership
(within the meaning of Rule 13d-3 of the rules and regulations
promulgated under the Securities Exchange Act of 1934, as amended
(the "Rules and Regulations")) by any person or entity or any
group of persons or entities who constitute a group (within the
meaning of Section 13(d)(3) of the Rules and Regulations) (other
than Employee, a member of his immediate family, a trust or
similar estate planning vehicle established by Employee, or an
entity in which Employee owns, directly or indirectly, a majority
of the equity securities or voting rights), of any securities of
the Company such that, as a result of such acquisition, such
person, entity or group either (A) beneficially owns (within the
meaning of Rule 13d-3 of the Rules and Regulations), directly or
indirectly, more than 30% of the Company's outstanding voting
securities entitled to vote on a regular basis for a majority of
the members of the Board or (B) otherwise has the ability to
elect, directly or indirectly, a majority of the members of the
Board; (ii) a change in the composition of the Board such that a
majority of the members of the Board are not Continuing Directors
(as defined below); or (iii) the closing date of a merger or
consolidation of the Company with any other corporation, other
than a merger or consolidation which results in the voting
securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by
being converted into voting securities of the surviving entity)
at least 51 % of the total voting power represented by the voting
securities of the Company or such surviving entity outstanding
immediately after such merger or consolidation; (iv) the
stockholders of the Company approve a plan of complete
liquidation of the Company; or (v) the closing date of the sale
or disposition by the Company (if consummated in more than one
transaction, the initial closing date) of all or substantially
all of the Company's assets, following shareholder approval of
such sale or disposition. For purposes of this Agreement, a
"Continuing Director" means members of the Board
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on the date of this Agreement (including directors appointed from
time to time pursuant to the Brera Transaction (as defined
below)) or persons nominated for election or elected to the Board
with the affirmative vote of the continuing directors who were
members of the Board at the time of such nomination or election.
In addition, the convertible preferred stock transaction
described in the Investment Agreement between the Company and
Brera Capital Partners, LLC ("Brera") or any subsequent
acquisition of securities of the Company by Brera or its
affiliates(the "Brera Transaction"), through an acquisition,
merger, consolidation or otherwise, shall not be deemed to be a
change in control.
(3) For purposes of this Agreement, a "Constructive
Termination" shall be deemed to have occurred upon (i) the
removal of Employee as the Chief Financial Officer of the
Company, (ii) any material diminution in the nature or scope of
the authorities, powers, functions, duties or responsibilities
attached to such positions or (iii) the material breach by the
Company of this Agreement if, in any such case, Employee does not
agree to such change and elects to terminate his employment A
termination by reason of a Constructive Termination shall be made
by delivery by Employee of a letter to the Board; provided,
however, that, prior to the termination of this Agreement for a
basis set forth in this Subsection 7.4(b)(3) (which is capable of
being cured), the Board shall be given notice of the basis for
termination by Employee and a reasonable opportunity (not less
than thirty (30) days) to cure such breach.
(4) In the event of a termination of employment by the
Company following a change in control of the Company (including
by reason of a Constructive Termination), the Company shall pay
the Employee a severance and non-competition payment equal to
one-half (1/2) times the sum of the Base Salary in respect of the
year immediately preceding the year of termination. Such
severance and non-competition payment shall be payable in six (6)
equal monthly installments commencing on the first day of the
month following termination.
(5) If this Agreement is not renewed beyond the Term for at
least one year on substantially similar terms by the parties
hereto or if this Agreement is terminated by the Company (other
than as a result of death or disability of Employee or for Cause
and other than in connection with a change in control), including
by reason of a Constructive Termination, in accordance with this
Section 7 during the last six (6) months of the Term, the Company
shall pay Employee a severance and non-competition payment equal
to one-half (1/2) the Base Salary in respect of the year
immediately preceding the year of termination. Such severance and
non-competition payment shall be payable in six (6) equal monthly
installments commencing on the first day of the month following
termination.
(6) If Employee terminates his employment voluntarily prior
to the expiration of the Term, Employee shall be paid his unpaid
Base Salary (but no Bonus Compensation) through the month in
which the voluntary termination occurs.
(7) Employee shall not be required to mitigate the amount of
any severance and non-competition payment provided for under this
Agreement by seeking other
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employment or otherwise. To the extent that Employee shall
receive compensation, benefits or service credit for any other
employment following termination under this Agreement, the
payments to be made and the benefits to be provided by the
Company under this Agreement shall be correspondingly reduced.
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
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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
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, 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 ordnance
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, 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
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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 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 one year from the date of such termination (herein
referred to as the "Non-Competition Period"). The provisions of this
Section 9 shall survive any termination of this Agreement
10. 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 Xxxxx Xxxxxx
Xxxxxxxxxx, Xxxxx Xxxxxxxx
Telephone: (000) 000-0000 Fax: (000) 000-0000
Attention: Xxxx X. Xxxxx
To Employee:
Xx. Xxxxx X. Xxxxxxx
00 Xxxxxxx Xxxxx
Xxxxxxx, Xxxxxx X0X0X0
11. 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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12. 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.
13. 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
14. 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.
15. Governing Law. The validity, interpretation, construction, performance
and enforcement of this Agreement shall be governed by the internal laws of the
State of Delaware, without regard to its conflicts of law rules.
16. 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.
17. 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.
18. 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
President and Chief Operating Officer
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Xxxxx X. Xxxxxxx
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