CONSULTING AGREEMENT
Consulting Agreement (this "Agreement"), dated as of the 14th day of May,
1998, by and between Safety Components International, Inc. (the "Company"), a
Delaware corporation and Xxxxxx X. Xxxxxxxx (the "Consultant").
W I T N E S S E T H
WHEREAS, the Consultant has been a party to an Employment Agreement with
the Company, dated May 19, 1997 (the "Employment Agreement");
WHEREAS, the Company and the Consultant have agreed that it is appropriate
to enter into an alternative arrangement to replace the Employment Agreement
with this Agreement;
WHEREAS, the Company desires to retain the Consultant, and the Consultant
desires to be retained, as a consultant to the Company as provided in this
Agreement.
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein and for other good and valuable consideration, the receipt and
adequacy of which is hereby acknowledged, the Company and the Consultant hereby
agree as follows:
1. Termination of Employment Agreement. It is hereby agreed that the
Employment Agreement is terminated in all respects effective May 14, 1998,
without any further obligation of the Company or Consultant, except as
explicitly provided herein. The parties have executed the mutual releases
annexed hereto as Exhibit A. From and after the date of commencement of the Term
hereof, the rights and obligations of the parties shall be governed by this
Agreement.
2. Term. This Agreement shall commence as of May 14, 1998 and shall
terminate on May 19, 2000 (the "Term").
3. Services.
(a) The Consultant agrees that during the Term, he will serve as a
consultant to the Company and in such capacity, perform such services as the
Chief Executive Officer or the Board of Directors of the Company may, from time
to time, reasonably request. Consultant's responsibilities shall generally
include assistance with customer relationships, attendance at industry and
customer meetings, conferences and facility tours, and such other special
projects as shall be assigned to Consultant. The Consultant shall report to the
Chief Executive Officer of the Company. The Consultant shall be available at
such times and places as are reasonably requested by the Company.
(b) The Consultant shall devote as much time to the performance of his
obligations hereunder as is reasonably required to fulfill his responsibilities
hereunder, which is estimated to average approximately 40 hours per month.
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(c) The Consultant's responsibilities hereunder may from time to time
include business travel.
4. Compensation.
(a) Cash Compensation. In consideration of the services provided by the
Consultant hereunder, the Company shall pay the Consultant compensation of
$100,000 per year, payable at least on a monthly basis.
(b) Stock Options. Notwithstanding any provisions contained in the
Employment Agreement, the Consultant and the Company hereby agree that the
Consultant shall be fully vested as of the date hereof in options to purchase
85,667 shares of common stock, $.01 par value of the Company (the "Common
Stock") (the "Stock Options" ) issued to Consultant under the Employment
Agreement pursuant to, and in accordance with, the Company's 1994 Stock Option
Plan (the "Plan"). Such options shall be exercisable for as long as Consultant
shall remain a consultant to the Company and for thirty (30) days thereafter.
The remaining Stock Options issued to the Consultant under the Employment
Agreement shall be forfeited.
(c) Bonus Compensation. Consultant shall be entitled to the greater of (x)
his guaranteed bonus of $50,000 for the fiscal year ended March 31, 1998 or (y)
his entitlement for such year under The Senior Management Incentive Plan. Such
bonus shall be paid on or before June 30, 1998. Consultant shall thereafter be
entitled only to such bonus compensation, if any, as is approved by the
Compensation Committee of the Board of Directors, in its sole discretion.
Consultant shall have no rights under the Company's Senior Management Incentive
Plan or the Stock Appreciation Rights Award Plan.
5. Reimbursement of Expenses. During the Term, the Company shall reimburse
the Consultant upon presentation of appropriate vouchers or receipts and in
accordance with the Company's expense reimbursement policies for employees, for
all reasonable travel (including first class airline tickets) and entertainment
expenses incurred by the Consultant in connection with the performance of his
duties under the Agreement.
6. Benefits.
(a) Health Insurance. During the Term, the Company shall continue to pay
the premiums on health insurance for the Consultant and his covered dependents,
if any, on a basis consistent with premiums paid during the term of his
Employment Agreement.
(b) Life Insurance; Disability 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 the
Consultant in an amount equal to two million dollars ($2,000,000) (the "Life
Insurance Amount"), the beneficiary of which shall be designated by the
Consultant. Consultant shall also be entitled to continued benefits under the
Company's short and long term disability plan to the extent such benefits are
made available to executive officers, generally.
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(c) Automobile. During the Term, the Company will provide the Consultant
with an automobile allowance of $1,200 per month for all expenses relating to
the insurance, maintenance and operation of Consultant's automobile.
(d) Country Club Membership. During the Term, the Company will, promptly
following the submission of documentation reasonably satisfactory to the
Company, reimburse the Consultant for annual membership and associated fees paid
by Consultant during such fiscal year in the so-called "Xxxxxx Ranch" country
club. At the end of the Term, the membership rights of the Company shall be
transferred to Consultant.
7. Consequences of Termination of Consultancy.
(a) Death. In the event of the death of the Consultant during the Term,
Consultant's consulting obligations hereunder shall be terminated as of the date
of his death and Consultant's designated beneficiary, or, in the absence of such
designation, the estate or other legal representative of the Consultant
(collectively, the "Estate") shall be paid, in addition to any life insurance
proceeds pursuant to Section 6(c) above, Consultant's unpaid compensation
through the month in which the death occurs.
(b) Disability. In the event the Consultant 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 Consultant ten (10) days'
prior written notice. If Consultant's engagement hereunder is so terminated,
Consultant shall be paid, in addition to payments under any disability insurance
policy in effect, Consultant's unpaid compensation through the month in which
such termination occurs.
(c) For Cause. Nothing herein shall prevent the Company from terminating
this Agreement for Cause (as defined below). In the event Consultant is
terminated for Cause, Consultant shall be paid his unpaid Compensation, if any,
under Section 4(a) through the month in which such termination occurs. The term
"Cause" as used herein, shall mean (i) Consultant's willful misconduct, material
dishonesty or fraud in the performance of his duties hereunder, (ii) the
continued failure or refusal of Consultant (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 Consultant or (iv) the entering of a plea of guilty or nolo
contendere to, or the conviction of Consultant of, a felony or any other
criminal act involving moral turpitude, dishonesty, theft or unethical business
conduct. For purposes of this Section 7(c), 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 this Agreement for Cause pursuant to this Section 7(c) shall
be made by delivery to Consultant of a letter from the Board generally setting
forth a description of the conduct which provides the basis for a termination of
this Agreement for Cause; provided,
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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),
Consultant shall be given notice of the basis for termination by the Company and
a reasonable opportunity to cure such breach.
(d) Termination of this Agreement Other than for Death, Disability, or
Cause. This Agreement may be terminated (i) by the Company (in addition to
termination pursuant to Sections 7(a), (b) or (c) above), at any time and for
any reason, (ii) by the Consultant at any time and for any reason or (iii) upon
the expiration of the Term. If the Agreement is terminated by the Company (other
than as a result of death or disability of Consultant or for Cause), the Company
shall (x) pay Consultant a severance and noncompetition payment equal to the
Compensation under Section 4(a), if any, for the remainder of the Term and (y)
shall provide fringe benefits under Section 6 to Consultant for the remainder of
the Term. 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.
(e) Voluntary Termination. If Consultant terminates this Agreement
voluntarily prior to the expiration of the Term, Consultant shall be paid his
unpaid Compensation under Section 4(a), if any, through the date of such
voluntary termination.
8. Confidential Information.
(a) The Consultant 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 its subsidiaries except (i) while providing consulting services as
provided herein to the Company in the business of and for the benefit of the
Company 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 by any administrative body or legislative body (including a
committee thereof) with jurisdiction to order the Company to divulge, disclose
or make accessible such information. For purposes of the Agreement,
"Confidential Information" shall mean non-public information concerning the
Company or its subsidiaries constituting 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 its subsidiaries,
that, in any case, is not otherwise generally available to the public and has
not been disclosed by the Company to others not subject to confidentiality
agreements. In the event Consultant's engagement hereunder is terminated for any
reason, he immediately shall return to the Company all Confidential Information
in his possession.
(b) The Consultant 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
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appear not reasonable and to enforce the remainder of the covenant as so
amended. The Consultant agrees that any breach of the covenant contained in this
Section 8 would irreparably injure the Company. Accordingly, the Consultant
agrees that the Company, in addition to pursuing any other remedies it may have
in law or in equity, may obtain an injunction against the Consultant from any
court having jurisdiction over the matter, restraining any further violation of
this Section 8.
(c) The provisions of this Section 8 shall extend for the Term and shall
survive the termination of the Agreement for two years from the date the
Agreement is terminated.
9. Non-Competition; Non-Solicitation.
(a) The Consultant agrees that, during the Non-Competition Period (as
defined in Section 9(d) below), without the prior written consent of the
Company: (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 or its subsidiaries
(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 engagement hereunder, there was a bona fide intention on the
part of the Company 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. Nothing in this paragraph shall
prevent Consultant from serving as an employee or consultant of (i) an entity in
the automotive industry so long as it is not engaged in any of the businesses
specified in clause (x) of this paragraph above or (ii) TRW Inc., Breed
Technologies Inc., or other module manufacturers or their respective
subsidiaries but only with respect to their sensor, propellant, inflater or
module businesses.
(b) During the Non-Competition Period, Consultant agrees that, without the
prior written consent of the Company (and other than on behalf of the Company),
Consultant 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.
(c) The Consultant 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 Consultant agrees that any breach of the covenants contained in
this Section 9 would irreparably
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injure the Company. Accordingly, the Consultant agrees that the Company, in
addition to pursuing any other remedies it may have in law or in equity, may
obtain an injunction against the Consultant from any court having jurisdiction
over the matter, restraining any further violation of this Section 9.
(d) The provisions of this Section 9 shall extend for the Term and survive
the termination of the Agreement for one year from the date of such termination
(herein referred to as the "Non-Competition Period").
10. Independent Contractor. The relationship of the Consultant to the
Company established by this Agreement is that of an independent contractor, and
nothing contained in this Agreement shall be construed to: (a) give the
Consultant the power to (i) direct or control any activities of the Company, or
(ii) create or assume any obligation on behalf of the Company for any purpose
whatsoever; (b) constitute the Consultant as an employee of the Company or,
except as provided herein, entitle the Consultant to participate in any employee
benefit plans or fringe benefit plans made available to the Company's employees;
or (c) constitute the Consultant as an agent of the Company.
11. Return of Documents. Promptly following termination of this Agreement
for any reason, the Consultant shall immediately deliver to the Company all
plans, designs, drawings, specifications, listings, manuals, memoranda,
projections, minutes, records, notebooks, computer programs and similar
repositories of or containing Confidential Information, including all copies,
then in the Consultant's possession or control or available from persons outside
the Company receiving such documents from the Consultant, whether prepared by
the Consultant or others. At such time, the Consultant shall not retain any
copies or abstracts of any such documents.
12. Notices. For the purposes of this Agreement, notices and other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when personally delivered, sent by overnight
courier or sent by certified mail, return receipt requested, postage prepaid,
addressed to the Company at its principal executive office and to Consultant at
the address reflected in the Company's records as the Consultant's principal
residence, or such other respective address as is last given by either party to
the other, provided that all notices to the Company shall be directed to the
attention of the Chief Executive Officer of the Company. All notices and
communications shall be deemed to have been received on the date of delivery
thereof, one day after deposit with an overnight courier, or on the third
business day after the mailing thereof, except that notice of change of address
shall be effective only upon receipt.
13. Successors and Assigns.
(a) This Agreement shall be binding upon and shall inure to the benefit of
the Company and its successors and assigns, and the term the "Company" as used
herein shall include its successors and assigns. The terms "successors and
assigns" as used herein shall mean
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a corporation or other entity acquiring all or substantially all the assets and
business of the Company (including this Agreement) whether by operation of law
or otherwise.
(b) Neither this Agreement nor any right or interest hereunder shall be
assignable or transferable by the Consultant, his heirs, beneficiaries or legal
representatives, except by will or by the laws of descent and distribution. This
Agreement shall be binding upon and inure to the benefit of the Consultant, his
heirs, beneficiaries and legal personal representatives.
14. Miscellaneous. No provision of this Agreement may be modified, waived
or discharged unless such waiver, modification or discharge is agreed to in
writing and signed by the Consultant and the Company. No waiver by any party
hereto at any time of any breach by any other party hereto or compliance with
any condition or provision of this Agreement to be performed by such other
party, shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time. No agreement or
representation, oral or otherwise, express or implied, with respect to the
subject matter hereof has been made by any party which is not expressly set
forth in this Agreement.
15. Governing Law. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the state of Delaware without giving
effect to the conflict of law principles thereof.
16. Severability. The provision of this Agreement shall be deemed severable
and the invalidity or unenforceability of any provision shall not affect the
validity or enforceability of the other provisions hereof.
17. Entire Agreement and Effect on Other Agreements. This Agreement
constitutes the entirety of the agreement between the parties, and supersedes
all prior agreements, understandings and arrangements, oral or written
(including the Employment Agreement), between the parties on the subject matter
hereof. The payments and benefits provided to the Consultant under this
Agreement are in lieu of all other salary or benefit continuation benefits to
which the Consultant may otherwise be entitled under all other agreements,
plans, policies, practices and arrangements (including the Employment
Agreement).
18. Survival. The provisions of Sections 8, 9, 10, 11, 12, 13, 14, 15, 16,
17, 18, 19 and 20 shall survive the termination of this Agreement.
19. No Admission. The execution of this Agreement shall not be construed as
an admission of a violation of any statute or law or breach of any duty or
obligation by either the Consultant or the Company.
20. Taxes. The parties acknowledge and agree that the Company will not be
obligated to make, and that it is the sole responsibility of the Consultant to
make, all periodic filings and payments required to be made in connection with
withholding taxes, estimated taxes or any other federal, state or local taxes,
payments or filings required to be made or paid in
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connection with the monthly payments made and stock options granted to the
Consultant hereunder.
21. 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.
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by
its duly authorized officer and the Consultant has executed this Agreement as of
the date 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 X. Xxxxxxxx
-------------------------
Xxxxxx X. Xxxxxxxx
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