SAFETY COMPONENTS INTERNATIONAL, INC.
Effective as of August 31, 1999
Xx. Xxxxxxx X. Xxxxxx
000 Xxxxx Xxxx
Xxxxxxxxx, Xxx Xxxx 00000
Dear Xx. Xxxxxx:
You have indicated to us and confirm by your signature below that you are
resigning all positions as officer and/or director which you hold with Safety
Components International, Inc. (the "Company") and any all subsidiaries of the
Company effective August 31, 1999. Notwithstanding such resignation, we have
agreed to provide you with certain severance benefits to which you would not
otherwise be entitled, as set forth in this letter agreement. This letter
agreement sets forth such benefits in connection with your resignation and in
settlement of our respective rights and obligations relating to your employment.
You understand that you will be receiving the termination payments
discussed in this Letter Agreement as consideration for signing and returning
the acknowledgment copy enclosed herewith, by which you also agree to abide by
the other obligations described herein. You also understand and agree, by
signing the acknowledgment copy of this Letter Agreement, that there are no
other commitments, express or implied, by the Company to you (including any
commitments contained in the Employment Agreement by and between the Company and
you, dated as of February 15, 1997, and as amended on March 24, 1999 (the
"Employment Agreement")) other than those set forth in this Letter Agreement.
1. Termination Payments
For the period from September 1, 1999 to August 31, 2000, the Company shall
continue to pay to you your current salary payments (based on your current
annual salary of $300,000 per year). Such payments shall be made on the same
dates which you would have received salary payments in accordance with the
Company's customary payroll practice had you remained employed by the Company.
Such payments shall be subject to all applicable federal, state and local
withholding taxes.
2. Other Benefits
(a) The Company will maintain in effect and pay the premiums for the short
and long term disability benefits, the medical benefits, the dental benefits and
the Exec-U-Care benefits currently being provided to you for a period of twelve
(12) months, commencing September 1, 1999.
(b) The Company will pay the premiums for a life insurance policy currently
being paid by the Company on your behalf providing death benefits in an amount
equal to two million four hundred thousand dollars ($2,400,000), the beneficiary
of which shall be designated by you, for a period of twelve months, commencing
September 1, 1999.
(c) The Company shall continue to pay the lease payments and associated
automobile expenses consistent with the Employment Agreement through February
2000 with respect to the automobile currently leased by the Company on your
behalf.
(d) You will have three (3) years from the termination of your employment
(i.e., until August 31, 2002) to exercise the stock options ("Options") granted
to you pursuant to the Company's 1994 Stock Option Plan, to purchase an
aggregate of 325,000 shares of the Company's common stock, par value $.01 per
share. The Options were granted on the dates, in the amounts, at the exercise
prices and are exercisable for the terms contained in the applicable stock
option agreement (collectively, the "Stock Option Agreements") and set forth on
Schedule I attached hereto.
(e) You shall continue to participate in each of the Company's 1998, 1999
and 2000 Stock Appreciation Rights Programs (the "SAR Programs") for the
remainder of the term of each such SAR Program with respect to the 100,000 Stock
Appreciation Rights (the "SARS") granted to you pursuant to the Company's Stock
Appreciation Rights Award Plan. The SARS were granted on the dates, in the
amounts, at the base prices and are exercisable based upon the terms contained
in the stock appreciation rights agreements (the "SAR Agreements") previously
entered into between the Company and you and set forth on Schedule II attached
hereto, notwithstanding your resignation.
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3. Restrictive Covenants
(a) Non-Disclosure
You acknowledge and agree that you had access to Confidential Information
(as defined below) concerning the business of the Company and that all
information pertaining to the prior, current or contemplated business of the
Company (excluding (i) publicly available information (in substantially the form
in which it is publicly available) unless such information is publicly available
by reason of your unauthorized disclosure and (ii) information disclosed to you
by a third party not under any confidentiality obligations to the Company),
constitutes valuable and confidential assets of the Company. "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, information relating to governmental relations,
discoveries, practices, processes, methods, trade secrets, marketing plans and
other non-public, proprietary and confidential information concerning the
Company and its subsidiaries, customers and suppliers. You will hold all such
information in trust and confidence for the Company and shall not use or
disclose any such information to any entity or person; provided, however, that
you may disclose such information if you are compelled to do so by legal
process, after giving prompt notice to the Company so that it may seek
protection of its confidential information. You agree that the covenant
regarding confidential information contained in this Section 3(a) 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. You agree that any breach of the covenant contained in this Section
3(a) would irreparably injure the Company. In addition to pursuing any other
remedies it may have in law or in equity, the Company may obtain an injunction
against you from any court having jurisdiction over the matter, restraining any
further violation of Section 3(a).
(b) Non-Competition; Non-Solicitation
(i) You hereby agree that, during the Non-Competition Period (as
defined in Section 3.2(b)(iv) below), without the prior written consent of
the Company, as the case may be: (i) you 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 (x)
automotive airbag fabric and cushions and metal airbag components; (y)
synthetic fabrics; and (z) military ordnance products) 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 to
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engage in the future; and (ii) you shall not, on behalf of any competing
entity, directly or indirectly, have any dealings or contact with any
suppliers or customers of the Company.
(ii) During the Non-Competition Period, Employee agrees that, without
the prior written consent of the Company, as the case may be, (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 at any time
during the one (1) year period immediately preceding such date of hiring or
solicitation.
(iii) The Employee and the Company agree that the covenants of
non-competition and non-solicitation contained in this Section 3.2(b) 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 3.2(b) would irreparably
injure the Company, as the case may be. Accordingly, the Employee agrees
that the Company, 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 3.2(b).
(iv) The provisions of this Section 3.2(b) shall extend until August
31, 2000 (the "Non-Competition Period").
(c) Acknowledgments Respecting Confidentiality, Non-Disparagement,
Non-Competition and Non-Solicitation Covenants
With respect to the covenants made by you and set forth in this
Section (individually a "Covenant" or collectively the "Covenants"), you
acknowledge and agree that:
(i) the Covenants are in addition to any rights the Company may have
at law or at equity; and
(ii) it is impossible to measure in money the damages that will accrue
to the Company. Therefore, in the event that you materially breach any
Covenant hereunder, in addition to any other relief to which the Company
may be entitled at law or at equity, you will forfeit your rights hereunder
and the Company will be entitled to an injunction restraining you from
violating any such Covenant. If the Company shall institute any action or
proceeding to enforce any Covenant, you hereby waive the claim or defense
that the Company has an adequate remedy at law and you agree not to assert
in any such action or proceeding the claim or defense that the Company has
an adequate remedy at law.
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4. General Release and Waiver
(a) You agree to release, remise, acquit and discharge the Company and its
subsidiaries, partners, agents, employees, consultants, independent contractors,
attorneys, advisers, successors and assigns, jointly and severally, from any and
all claims, known or unknown, which you, your heirs, successors, or assigns have
or may have against any of such parties and any and all liability which any of
such parties may have to you whether denominated claims, demands, causes of
action, obligations, damages or liabilities arising from any and all bases,
however denominated, including but not limited to claims under the Employment
Agreement, claims of discrimination under the Civil Rights Act of 1866, as
amended, the Civil Rights Act of 1991, as amended, Title VII of the United
States Civil Rights Act of 1964, as amended, 42 U.S.C. Section 1981, or any
other federal, New Jersey or other state or local law concerning wages,
employment and discharge, any other law, rule, or regulation or workers'
compensation or disability claim under any such laws. Notwithstanding any other
provision of this Letter Agreement, this release is not intended to interfere
with your right to file a charge with the U.S. Equal Employment Opportunity
Commission in connection with any claim you believe you may have against the
Company. However, by signing and returning the acknowledgment copy of this
Letter Agreement, you agree to waive the right to recover damages in any
proceeding you may bring before the U.S. Equal Employment Opportunity Commission
or in any proceeding brought by the U.S. Equal Employment Opportunity Commission
on your behalf. This release relates to claims arising from and during your
employment relationship with the Company or as a result of the termination of
such relationship. This release is for any relief, no matter how denominated,
including but not limited to wages, back pay, front pay, tort claims,
compensatory damages or punitive damages, in any such case whether or not such
claims have been previously asserted by you. You further agree that you will not
file or permit to be filed on your behalf any such released claim. This release
shall not apply to the obligations set forth in this Letter Agreement or any
other claims that may arise after the date on which you sign the acknowledgment
copy of this Letter Agreement.
(b) You expressly acknowledge that the termination payments being offered
to you hereby constitute consideration for the foregoing release.
(c) The Company agrees to release, remise, acquit and discharge you from
any and all claims known to it, which it may have against you, whether
denominated claims, demands, causes of action, obligations, damages or
liabilities arising from and during your employment relationship with the
Company or as a result of the termination of such relationship. The Company
agrees not to file or permit to be filed on its behalf any such released claim.
This release shall not apply to the obligations set forth in this Letter
Agreement, claims not known to the Company or any other claims that may arise
after the date on which you sign the acknowledgment copy of this Letter
Agreement.
(d) The Company expressly acknowledges that your releases hereunder
constitute consideration for the foregoing release.
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5. Return of Company Property
You represent that you have returned to the Company, and the Company
represents that it has received, any of the Company's documents held by you as
well as keys and company credit cards.
6. Heirs and Assigns
(a) This Letter Agreement is personal to you and, without the prior written
consent of the Company, shall not be assignable by you otherwise than by will or
the laws of descent and distribution.
(b) The terms of this Letter Agreement shall inure to the benefit of and
shall be binding on the Company and shall be binding upon and inure to the
benefit of its respective successors and assigns.
7. General Provisions
(a) This Letter Agreement constitutes the entire understanding of the
Company and you with respect to the subject matter hereof, and supersedes all
prior understandings, written or oral, including the Employment Agreement and
the proposed employment agreement by and between the Company and you, dated as
of April 19, 1999, other than under the Stock Option Agreements and the SAR
Agreements. The terms of this Letter Agreement may be changed, modified or
discharged only by an instrument in writing signed by the parties hereto. A
failure of a party to insist on strict compliance with any provision of this
Letter Agreement shall not be deemed a waiver of such provision or any other
provision hereof. The invalidity of unenforceability of any provision of this
Letter Agreement shall in no way affect the validity or enforceability of any
other provision. In the event that any provision of this Letter Agreement is
determined to be so broad as to be unenforceable, such provision shall be
interpreted to be only so broad as is enforceable.
(b) This Letter Agreement shall be construed, enforced and interpreted in
accordance with and governed by the laws of the State of Delaware without
reference to the principles of conflicts of law.
(c) The payments hereunder will not constitute compensation for any purpose
under any retirement plan maintained by the Company.
(d) In the event of any material breach of this Agreement (including a
payment obligation), the nonbreaching party shall be relieved of its obligations
hereunder. The prevailing party shall be entitled to reimbursement of its
reasonable attorneys fees and court costs incurred in connection with any
dispute under this Agreement.
(e) The Company represents that this Agreement has been duly authorized and
executed by an officer authorized to sign this Agreement on behalf of the
Company.
(f) This Agreement shall be binding upon the parties hereto and their
respective heirs, successors and assigns.
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Upon your signature and return of this Letter Agreement, this Letter
Agreement will be effective, enforceable and irrevocable.
Sincerely,
By:
----------------------------
Name: Xxxxxx Xxxxx
Title: President
Agreed to and Accepted as of the date first above-written:
------------------
Xxxxxxx X. Xxxxxx
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Schedule I
Number of Options Grant Date Exercise Price Exercise Period
----------------- ---------- -------------- ---------------
125,000 February 17, 1997 $11.50 10 years
50,000 April 1, 1997 $10.00 10 years
50,000 August 13, 1997 $12.125 10 years
50,000 March 26, 1998 $14.125 10 years
50,000 May 5, 1999 $5.125 10 years
Schedule II
Number of SARS Grant Date Base Price Term
-------------- ---------- ---------- ----
20,000 April 1, 1997 $10.00 3 years
40,000 March 30, 1998 $14.125 3 years
40,000 March 29, 1999 $8.50 3 years