EMPLOYMENT AGREEMENT
THIS AGREEMENT (the "Agreement") is made and entered into by and
between Safety Components International, Inc., a Delaware corporation (the
"Company"), and Xxxxxxx X. Xxxxxx ("Employee") and is dated as of the 15th day
of February, 1997.
W I T N E S S E T H:
WHEREAS, the Company desires to employ Employee as its Executive Vice
President and Chief Financial Officer; and
WHEREAS, Employee desires to accept such employment upon the terms set
forth in the 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 is hereby acknowledged, the parties agree as follows:
1. Employment. The Company hereby employs Employee and Employee hereby
accepts employment with the Company, commencing as of February 15, 1997 (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 the Agreement (the "Term") shall commence on the Effective Date and
shall continue until the third (3rd) anniversary of the Effective Date, subject
to the terms and conditions of the Agreement.
3. Position, Duties, Responsibilities and Services.
3.1 Position, Duties and Responsibilities. During the Term, Employee
shall serve as Executive Vice President and Chief Financial Officer of the
Company and shall be responsible for the duties attendant to such offices, 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 Company's Chief
Executive Officer or 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.
3.2 Services to be Provided. During the Term, Employee shall (i) devote
at least eighty percent (80%) 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
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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 as are from time to time in
effect during the Term. It shall be understood that, during the Term, Employee
shall devote the remaining portion of his working time, attention and energies
(not to exceed twenty percent (20%) to the affairs of Valentec International
Corporation ("Valentec") as its Executive Vice President and Chief Financial
Officer. The Agreement shall not be construed as preventing Employee from
serving as an outside director of any other company, from investing his assets
or from winding down certain business matters relating to his previous
employment, in each case, to the extent that it does not require a material
amount of his time and, in each case, subject to the non-competition obligations
contained in Section 9 below.
3.3 Domicile. During the Term, the Employee shall conduct his business
activities at a Company office located in the New York metropolitan area, it
being understood however, that business travel shall be required.
4. Compensation.
4.1 Base Salary. Employee shall be paid a base salary ("Base Salary")
at an annual rate of two hundred and twenty thousand dollars ($220,000) per
year, 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
reviewed by the Board on or before April 1 (the first day of the fiscal year of
the Company) of each year during the Term, based upon recommendations of the
Company's Chief Executive Officer, with such reviews to commence in 1998, and
shall be subject to increase in the sole discretion of the Board, taking into
account the recommendation of the Company's Chief Executive Officer, merit,
corporate and individual performance and general business conditions, including
changes in the cost of living index. Any such increase shall be retroactive to
the February 15 immediately preceding such review.
4.2 Bonus Compensation. Employee shall also be eligible for an annual
performance-related bonus ("Bonus Compensation") commencing with the Company's
fiscal year ended March 31, 1998 (the "1998 Fiscal Year). For the 1998 Fiscal
Year, the Company shall pay Employee Bonus Compensation of a minimum of $30,000.
The Bonus Compensation of Employee, if any, for each fiscal year of the Term,
including any amount in excess of the $30,000 minimum amount for the 1998 Fiscal
Year, shall be determined by the Board, in its sole discretion, taking into
account the recommendation of the Company's Chief Executive Officer, and may be
paid in cash and/or capital stock of the Company in the Board's sole discretion.
The Company shall pay the Bonus Compensation to Employee for each fiscal year of
the Term within thirty (30) days of the completion by the Company's accountants
of their audit of the Company's financial statements for such fiscal year.
4.3 Stock Options. The Company hereby agrees to cause the issuance to
Employee of stock options ("Stock Options") to purchase shares of common stock,
$.01 par value, of the Company ("Common Stock") in accordance with the following
schedule: (i) Stock
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Options to purchase 125,000 shares of Common Stock to be issued on February 15,
1997; (ii) Stock Options to purchase 50,000 shares of Common Stock to be issued
on April 1, 1997, unless Employee is not, for any reason, an employee of the
Company on such date; and (iii) Stock Options to purchase 50,000 Shares of
Common Stock to be issued on April 1, 1998, unless Employee is not, for any
reason, an employee of the Company on such date. All such Stock Options shall be
issued pursuant to, and in accordance with, the Company's 1994 Stock Option Plan
(the "Plan"). The Company shall submit for approval of its Shareholders at the
next annual meeting of Shareholders of the Company, any increase in the shares
authorized under the Plan as may be necessary for issuance of the Stock Options
to be granted hereunder. The maximum number of such Stock Options shall be
qualified stock options under the Plan as would not cause a disqualification
under applicable Internal Revenue Code Sections or regulations thereunder, and
the remainder of such Stock Options shall be non-qualified stock options under
the Plan. Each Stock Option shall be exercisable at a price equal to the Fair
Market Value (as defined in the Plan) of the Common Stock on the date of
issuance of such Stock Option (or if such date is not a business day, than 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 Plan
and shall vest over a four year period from the date of grant at a rate of 25%
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 the Agreement, any unvested Stock
Options shall lapse, except as otherwise provided in Section 7 below, and
Employee shall have ninety (90) days from the date of termination of his
employment with the Company, for any reason, to exercise any vested Stock
Options (one year in the case of termination by reason of death or disability of
Employee).
5. Employee Benefits.
5.1 Benefit Programs. During the Term, Employee shall be entitled to
participate in and receive benefits generally 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, pension and other
retirement plans, hospitalization, surgical, dental and major medical coverage.
In addition, Employee shall be entitled to short and long term disability
benefits at least comparable to those made available to the previous Chief
Financial Officer of the Company.
5.2 Vacation. During the Term, Employee shall be entitled to four (4)
weeks vacation with pay during each year of his employment hereunder consistent
with his position as an executive officer of the Company (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.
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5.3 Life Insurance. Subject to the availability on commercially
reasonable terms, during the Term, the Company shall maintain in effect and pay
the premiums for a term life insurance policy covering Employee in an amount
equal to two million dollars ($2,000,000) (the "Life Insurance Amount"), the
beneficiary of which shall be designated by Employee.
5.4 Automobile. During the Term, the Company shall lease and provide
the Employee with an appropriate automobile, and pay or reimburse Employee for
all expenses relating to the insurance, maintenance and operation thereof. The
total cost borne by the Company under this Section 5.4 shall be approximately
$1,200 per month, unless a greater amount is approved by the Company's Chief
Executive Officer.
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 (other than automobile expenses)
incurred by Employee in connection with the performance of his duties under the
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, in addition to any life insurance proceeds pursuant to
Section 5.3 above, Employee's unpaid Base Salary through the month in which the
death occurs and any unpaid Bonus Compensation which is set forth in this
Agreement or thereafter approved by the Company's Board (taking into account the
recommendation of the Company's Chief Executive Officer) for any fiscal year
which has ended as of the date of such termination or which was at least one
half (1/2) completed as of the date of death. In the case of such incomplete
fiscal year, the Bonus Compensation shall be pro-rated and all such Bonus
Compensation payable as a result of this Section 7.1 shall be otherwise payable
as set forth in Section 4.2 above. The Estate shall be entitled to all other
death benefits in accordance with 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 (180) days
in any consecutive three hundred sixty-five (365) day period, the Company shall
have the right to terminate 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 such
termination occurs, plus Bonus Compensation on the same basis as is set forth in
Section 7.1 above.
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7.3 Termination of Employment of Employee by the Company for Cause.
Nothing herein shall prevent the Company from terminating Employee's employment
under the Agreement for Cause (as defined below). 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 such termination occurs. The term
"Cause" as used herein, shall mean (i) Employee's willful misconduct, material
dishonesty or fraud in the performance of his duties hereunder, (ii) the
continued failure or refusal of Employee (following written notice thereof) to
carry out any reasonable request of the Company's Chief Executive Officer or
Board for the provision of services hereunder, (iii) the material breach of the
Agreement by Employee or (iv) the entering of a plea of guilty or nolo
contendere to, or the conviction of Employee of, a felony or any other criminal
act involving moral turpitude, dishonesty, theft or unethical business conduct.
For purposes of this Section 7.3, no act or omission shall be considered willful
unless done or omitted to be done in bad faith and without reasonable belief
that such act or omission was in the best interest of the Company.
Termination of employment of Employee pursuant to this Section 7.3
shall be made by delivery to Employee of a letter from the Board generally
setting forth a description of the conduct which provides the basis for a
termination of employment of Employee for Cause; provided, however, that, prior
to the termination of the Agreement for a basis set forth in Sections 7.3(ii) or
7.3(iii) above (which is capable of being cured), Employee shall be given notice
of the basis for termination by the Company and a reasonable opportunity to cure
such breach.
7.4 Termination of Employment Other than for Cause, Death or
Disability.
(a) Termination. The 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 the 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 of the Company (as defined below)), the
Company shall pay Employee a severance and noncompetition payment equal to the
sum of (x) an amount equal to the Base Salary for the remainder of the Term plus
(y) an amount equal to the Bonus Compensation earned by the Employee in respect
of the last year immediately preceding the year of termination, multiplied by
the number of years remaining in the Term (including, in the case of a partial
year, the fraction of such year which is remaining); provided; however, that a
termination during the last twelve (12) 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 the Agreement, a "change in control of the
Company" shall be deemed to have occurred if (i) the Company shall have merged
or consolidated with an unaffiliated entity or the Company shall have
transferred or sold all or substantially all of its assets to an unaffiliated
entity, other than a transaction which is approved by Employee in his capacity
as director or shareholder of the Company, or (ii) there shall be a change in
the constituency of a majority of the members of the Board within any twelve
(12) month period, other than a change which Employee voted in favor of in his
capacity as a director or shareholder of the Company.
(3) For purposes of the Agreement, a "Constructive
Termination" shall be deemed to have occurred upon (i) the removal of Employee
from or a failure of Employee to continue as Executive Vice President and 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, (iii) the breach by the Company of the domicile provision
contained in Section 3.3 hereof, or (iv) the material breach by the Company of
the Agreement if, in any such case, the Employee does not agree to such change
and elects to terminate his employment.
(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 two (2) times the sum of the Base Salary plus
the Bonus Compensation in respect of the year immediately preceding the year of
termination. Such severance and non-competition payment shall be payable in a
lump sum on the first day of the month following the termination. In addition,
all unvested Stock Options which were granted prior to the date of termination
shall be deemed to have vested on the date of such change in control.
(5) If this Agreement is not renewed beyond the Term by the
parties hereto or if the 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 twelve (12)
months of the Term, the Company shall pay Employee a severance and
noncompetition payment equal to the sum of (x) an amount equal to the Base
Salary in respect of the year immediately preceding the year of termination plus
(y) an amount equal to the Bonus Compensation earned by Employee in respect of
the year immediately preceding the year of termination. Such severance and
non-competition payment shall be payable in twelve (12) equal monthly
installments commencing on the first day of the month following termination. In
addition, all unvested Stock Options shall be deemed to have vested on the date
of such termination.
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(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) The Employee shall not be required to mitigate the amount
of any severance and non-competition payment provided for under the Agreement by
seeking other employment or otherwise.
8. Confidential Information.
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 Valentec except (i) while employed by the Company or Valentec, in the
business of and for the benefit of the Company or Valentec 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 Valentec, or by any
administrative body or legislative body (including a committee thereof) with
jurisdiction to order the Company or Valentec to divulge, disclose or make
accessible such information. For purposes of the Agreement, "Confidential
Information" shall mean non-public information concerning the Company's or
Valentec's financial data, statistical data, strategic business plans, product
development (or other proprietary product data), customer and supplier lists,
customer and supplier information, information relating to governmental
relations, discoveries, practices, processes, methods, trade secrets, marketing
plans and other non-public, proprietary and confidential information of the
Company or Valentec, that, in any case, is not otherwise generally available to
the public and has not been disclosed by the Company or Valentec to others not
subject to confidentiality agreements. In the event Employee's employment is
terminated hereunder for any reason, he immediately shall return to the Company
or Valentec all Confidential Information in his possession.
8.2 The Employee and the Company agree that the covenant regarding
confidential information contained in this Section 8 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 or Valentec, as the case may be.
Accordingly, the Employee agrees that the Company and/or Valentec, in addition
to pursuing any other remedies it 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.
8.3 The provisions of this Section 8 shall extend for the Term and
shall survive the termination of the Agreement for the greater of (x) the period
in which severance and
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non-competition payments are made pursuant to the Agreement or (y) two years
from the date the Agreement is terminated.
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
or Valentec, as the case may be: (i) 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 (currently the manufacture and sale of (i) automotive airbags and (ii)
military ordnance products) or Valentec 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 Valentec to engage in the future; and
(ii) 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
Valentec.
9.2 During the Non-Competition Period, Employee agrees that, without
the prior written consent of the Company or Valentec, as the case may be, (and
other than on behalf of the Company or Valentec), 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
Valentec at any time during the one (1) year period 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 contained in this Section 9 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 and 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 or Valentec, as the case may be.
Accordingly, the Employee agrees that the Company, or Valentec, as the case may
be, in addition to pursuing any other remedies it 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
survive the termination of the Agreement for the greater of (x) one year from
the date of such termination and (y) the period in which severance and
non-competition payments are made to Employee pursuant to this Agreement (herein
referred to as the "Non-Competition Period").
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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.
0000 Xxxxxxx Xxxxxx
Xxxxx Xxxx, Xxxxxxxxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Attention: Chief Executive Officer
or to its principal executive offices as set forth on the cover page of its
latest filing with the Securities and Exchange Commission, if different.
To Employee: Xxxxxxx X. Xxxxxx
00 Xxxxxx Xxxxxx
Xxxxx, Xxx Xxxx 00000
or to such other address as is reflected in the Company's records as the
Employee's principal residence.
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.
12. Binding Effect. Except as otherwise provided herein, the 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 capital stock of the
Company.
13. No Assignment. Except as contemplated by Section 12 above, the
Agreement shall not be assignable or otherwise transferable by either party.
14. Amendment or Modification; Waiver. No provision of the 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 a duly authorized
officer of the Company. 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
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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. Fees and Expenses. If either party institutes any action or
proceedings to enforce any rights the party has under this Agreement, or for
damages by reason of any alleged breach of any provision of this Agreement, or
for a declaration of each party's rights or obligations hereunder or to set
aside any provision hereof, or for any other judicial remedy, the prevailing
party shall be entitled to reimbursement from the other party for its costs and
expenses incurred thereby, including but not limited to, reasonable attorneys'
fees and disbursements.
16. Governing Law. The validity, interpretation, construction,
performance and enforcement of this Agreement shall be governed by the internal
laws of the State of New York, 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 the
Agreement or affecting the validity or enforceability of any of the terms and
provisions of the Agreement in any other jurisdiction.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first set forth above.
SAFETY COMPONENTS INTERNATIONAL, INC.
By:
-------------------------------------
Name: Xxxxxx X. Xxxxx
Title: President and Chief Executive Officer
-------------------------------------
Xxxxxxx X. Xxxxxx
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