AGREEMENT
THIS AGREEMENT (this "Agreement") dated this 4th day of March 1998, is made
and entered into by and between Safety Components International, Inc., a
Delaware corporation (the "Company"), and Xxxxxx Xxxxxxxxx ("Employee").
W I T N E S S E T H :
WHEREAS, the Company desires to employ Employee as its President--Metal
Components; and
WHEREAS, Employee desires to accept such employment 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 commencing on March 23, 1998 (the
"Commencement 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
on the Commencement 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 President--Metal Components of the Company with responsibility for the
Xxxxx Division (the "Xxxxx Division") of Valentec International Corporation and
Galion, Inc., each a wholly-owned subsidiary of the Company, or such other
office and position as is assigned to him during the Term by the Board of
Directors (the "Board") 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 Chairman of the Board, President and Chief Executive
Officer of the Company (the "CEO"), the Executive Vice President and Chief
Operating Officer of the Company (the "COO") or the Board. Employee shall be
subject to the supervision and control of the CEO and the COO and the provisions
of the By-Laws of the Company.
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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 thirty thousand ($130,000) 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 reviewed by the
Compensation Committee of the Board (the "Committee"), upon the recommendation
of the CEO and the COO, on or before April 1 (the first day of the fiscal year
of the Company) of each year during the Term, with such reviews to commence in
1999, and shall be subject to increase in the sole discretion of the Committee
taking into account merit, corporate and individual performance and general
business conditions, including changes in the cost of living index. Such
increase, if any, shall be effective on April 1 of each year during the Term
commencing in 1999.
4.2 Bonus Compensation. Employee shall also be entitled to an annual
performance-related bonus as set forth in the next succeeding sentence
commencing with the Company's fiscal year ended March 31, 1999 (the "1999 Fiscal
Year"). Employee shall be entitled to a bonus (the "Bonus Compensation")
pursuant to the terms of the Management Incentive Plan of the Company (the
"Plan") equal to 30% of the Base Salary paid to Employee in the immediately
preceding fiscal year if and to the extent that the Xxxxx Division and Galion,
Inc. achieve earnings before interest charges, income taxes, depreciation and
amortization ("EBITDA") of a target amount(s) to be fixed each year by the
Committee (the "Target") as determined by reference to the Company's audited
financial statements for such fiscal year prepared by the Company's certified
public accountants (the "Accountants") in accordance with generally accepted
accounting principles; provided, however, that (i) in the event that EBITDA is
less than 100% of the Target but equal to or greater than 90% of the Target for
any fiscal year during the Term, the amount of the Bonus Compensation shall be
reduced by 5% for every 1% that EBITDA is below the Target for each such fiscal
year, (ii) in the event that EBITDA is below 90% of the Target for any fiscal
year during the Term, the Bonus Compensation shall be equal to zero, and (iii)
in the event that EBITDA is greater than the Target for any fiscal year during
the Term, the amount of the Bonus Compensation shall be increased by 4% for
every 1% that EBITDA is above the Target for each such fiscal year, up to a
maximum of 90% of the Base Salary (the Bonus Compensation, as adjusted, shall be
referred to herein as the "Bonus Compensation"); provided, further, that,
notwithstanding any of the foregoing, the Bonus Compensation for the 1999 Fiscal
Year shall be at least thirty thousand dollars ($30,000).
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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
Accountants of their audit of the Company's financial statements for each such
fiscal year, unless the employment of the Employee shall have been terminated
for any reason prior to such date, except as set forth in Sections 7.1 and 7.2
below.
4.3 Stock Options. The Company hereby agrees to cause the issuance to
Employee as of the Commencement Date of stock options to purchase 20,000 shares
of common stock ("Common Stock"), $.01 par value per share, of the Company
("Base Stock Options"). Employee will also be eligible for consideration of
additional stock options during each year of the Term, as determined by the
Committee, in its sole discretion ("Additional Stock Options"). All Base Stock
Options and any Additional Stock Options shall be issued pursuant to, and in
accordance with, the Company's 1994 Stock Option Plan (the "Stock Option Plan").
All Base Stock Options and Additional Stock Options shall be qualified stock
options under the Stock Option Plan up to the maximum number as would not cause
a disqualification under applicable Internal Revenue Code Sections or
regulations thereunder, and the remainder of Base Stock Options and Additional
Stock Options shall be non-qualified stock options under the Stock Option Plan.
Each Base 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 Base 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 331/3% per year, commencing with the first anniversary of the date
of grant. Employee's vested Base Stock Options shall be exercisable for a period
of ten years from the date of issuance. Upon the termination of employment for
any reason, any unvested Base Stock Options shall lapse and Employee shall have
thirty (30) days from the date of termination of his employment with the Company
to exercise any vested Base Stock Options (one year in the case of termination
by reason of death or disability of 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 all
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,
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 two (2) 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
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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 $600.00 to pay for
the costs associated with Employee's local transportation expenses.
5.4 Country Club Membership. The Company will, promptly following the
submission of documentation reasonably satisfactory to the Company, reimburse
Employee for (i) monthly country club membership fees of up to $350 paid by
Employee during the Term and (ii) annual country club membership fees of up to
$4,000 paid by Employee during the first year of the Term.
6. Expenses.
6.1 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.
6.2 Relocation Expenses. The Company shall reimburse Employee for
reasonable relocation expenses, upon presentation of appropriate vouchers or
receipts, up to the amount permitted by, and in accordance with, the Company's
expense reimbursement policies for executive officers; provided, however, that,
Employee shall have completed such relocation by September 1, 1998. The amounts
to be reimbursed by the Company under this Section 6.2, which are subject to
federal or state income taxes and for which Employee is not entitled to any
deduction for reimbursed expenses paid by Employee, shall be adjusted for any
federal and/or state income taxes paid by Employee (or on Employee's behalf)
with respect to such amounts (the "Tax Adjustment") so that Employee receives on
an after-tax basis the same amount that he would have received had such
reimbursements and the Tax Adjustment been excluded from Employee's gross
income. Employee agrees that the Tax Adjustment shall not result in additional
payments to Employee in excess of the amount necessary to reimburse Employee for
any such taxes paid by Employee.
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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 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 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 (to the extent earnings based upon EBITDA
for the fiscal year ending next following the date of death) 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, if any, 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 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 on the same
pro-rata basis as is set forth in Section 7.1 above.
7.3 Termination of Employment of Employee by the Company for Cause. 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 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 the 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.
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, other than as a result
of death or disability of Employee or for Cause, the Company shall pay the
Employee a severance and non-competition payment equal to the Base Salary for
twelve (12) months (but no Bonus Compensation). 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.
(2) If this Agreement is not renewed beyond the Term by the parties hereto
solely as a result of the refusal by the Company to extend the term, the Company
shall pay Employee a severance and non-competition payment equal to the Base
Salary for six (6) months (but no Bonus Compensation). Such severance and
non-competition payment shall be payable in equal monthly installments
commencing on the first day of the month after expiration of the Term.
(3) 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 date of such termination.
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 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, marketing plans and other non-public, proprietary and
confidential information of
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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 The Employee and the Company agree that this covenant regarding
Confidential Information 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.
8.3 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.
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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 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 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.
0000 Xxxxx Xxxxxxx Xxxx
Xxxx Xxx, XX 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxx
To Employee: Xx. Xxxxxx Xxxxxxxxx
000 Xxxxx 00xx Xxxxxx
Xxxx, XX 00000
Telephone: (000) 000-0000
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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, 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 CEO
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 WHEREOF, the parties hereto have executed this Agreement as
of the day and year first set forth above.
SAFETY COMPONENTS INTERNATIONAL, INC.
By: /s/ Xxxxxxx X. Xxxxxx
----------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Executive Vice President
and Chief Financial Officer
/s/ Xxxxxx Xxxxxxxxx
----------------------------
Xxxxxx Xxxxxxxxx
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