UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K/A
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the fiscal year ended March 27, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE
REQUIRED] For the transition period from
to
Commission File Number 0-23938
SAFETY COMPONENTS INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
DELAWARE
(State or other jurisdiction of
incorporation or organization)
33-0596831
(I.R.S. Employer
Identification No.)
2160 North Central Road
Fort Lee, New Jersey
(Address of principal executive offices)
07024
(Zip Code)
Registrant's telephone number, including area code (201) 592-0008
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
NONE
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
Common Stock, par value $.01 per share
(Title of Class)
10 1/8% Senior Subordinated Notes due 2007, Series B
(Title of Class)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for at least the past 90 days.
Yes X No
------ ------
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K (ss.229.405) is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K [ ].
The aggregate market value of the common stock held by persons other than
affiliates of the registrant, as of July 23, 1999, was approximately
$18,505,913.
The number of shares outstanding of the registrant's common stock, as of
July 23, 1999, is as follows:
Class Number of Shares
- --------------------------------------------------- ----------------
Common Stock, par value $.01 per share 5,136,316
- --------------------------------------------------- ----------------
1
<PAGE>
This Form 10-K/A Amendment No. 1 (this "Amendment") amends and supplements
the Form 10-K (the "Original Form 10-K") filed by Safety Components
International, Inc., a Delaware corporation (the "Company"), on June 25, 1999.
The sole purpose of this Amendment is to amend and restate Items 10, 11, 12, 13
and 14 of Part III of the Original Form 10-K to read in their entirety as set
forth below. Defined terms not otherwise defined herein shall have the
respective meanings ascribed thereto in the Original Form 10-K.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Executive Officers
The following table sets forth the names, ages and all positions and
offices with the Company held by the Company's present executive officers.
<TABLE>
<CAPTION>
Name Age Positions and Offices Presently Held
<S> <C> <C>
Robert A. Zummo............................... 58 Chairman of the Board and Chief Executive
Officer
John C. Corey................................. 52 Director, President and Chief Operating
Officer
Jeffrey J. Kaplan(1).......................... 51 Director, Executive Vice President and Chief
Financial Officer
Stephen Duerk................................. 57 Vice President; President, North American
Automotive Group
Victor Guadagno............................... 59 Vice President; President, Systems Group
Philip Lelliott(2)............................ 42 Vice President; President, Europe/Asia
Pacific Automotive Group
Robert Sepulveda.............................. 46 Vice President; President, Metal Components
Group
Marston "Dale" Andersen....................... 49 Corporate Controller,
Secretary and Assistant Treasurer
Daniel R. Smith............................... 30 Treasurer and Assistant Secretary
</TABLE>
--------------
1. Mr. Kaplan has resigned as an officer and director of the Company,
effective as of August 31, 1999. See "--Employment Agreements."
2. Mr. Lelliot has resigned as an officer of the company, effective as of July
30, 1999
Executive officers are appointed by the Board of Directors of the Company
(the "Board") and serve at the discretion of the Board. Following is information
with respect to the Company's executive officers:
Robert A. Zummo. Mr. Zummo has served as Chairman of the Board and Chief
Executive Officer of the Company since its inception in January 1994, and as its
President since its inception in January 1994 until March 1999. Mr. Zummo is
also the Chief Executive Officer of Valentec International Corporation, LLC, a
wholly-owned limited liability company of the Company (as successor in interest
to Valentec International Corporation) ("Valentec"), which was acquired by the
Company in May 1997, and has served in such capacity since 1989. Valentec is a
manufacturer of automotive and defense-related metal components. From 1985 to
1989, Mr. Zummo was President and Chief Executive Officer of General Defense
Corporation, a defense contractor located in Hunt Valley, Maryland, where he
previously served as Executive Vice President and Chief Operating Officer from
1983 to 1985. Mr. Zummo has more than 30 years experience in the defense and
aerospace manufacturing industries.
2
<PAGE>
John C. Corey. Mr. Corey has served as President, Chief Operating Officer
and Director of the Company since March 1999. Mr. Corey served as President of
Stanley Mechanics Tools, Inc., a division of The Stanley Works, a company
engaged in the business of manufacturing and distributing mechanics' hand tools,
from September 1996 to March 1999 where he was responsible for worldwide
operations. Prior to that, Mr. Corey served as an independent consultant while
attending to personal business from December 1995 to August 1996 and as
President of Allied Signal North American Aftermarket, a division of Allied
Signal, Inc., a company engaged in the business of distribution of automotive
components, from September 1994 to November 1995. From 1984 to 1994, Mr. Corey
served in various positions for Moog Automotive, Inc., a company engaged in the
business of manufacturing and distributing automotive steering and suspension
parts, most recently as the President of the Steering and Suspension Division.
Mr. Corey has over 15 years of experience in management and manufacturing in the
automotive industry.
Jeffrey J. Kaplan. Mr. Kaplan has served as Executive Vice President, Chief
Financial Officer and a Director of the Company since February 1997. From
October 1993 to February 1997, Mr. Kaplan served as Executive Vice President,
Chief Financial Officer and a Director of International Post Limited, a leading
provider of post-production services for commercial and advertising markets; and
he served as Senior Vice President and Chief Financial Officer of Video Services
Corporation from September 1987 to February 1994. For ten years prior to
September 1987, Mr. Kaplan served as Chief Financial Officer of two public
companies.
Stephen B. Duerk. Mr. Duerk has served as Vice President of the Company and
as President of the Company's North American Automotive Group since May 1998 and
as President of Safety Components Fabric Technologies, Inc., a wholly-owned
subsidiary of the Company ("SCFTI"), since January 1998. From July 1997 to
January 1998, Mr. Duerk served the Company as Co-Managing Director of SCFTI.
Prior to the Company's acquisition (the "JPS Acquisition") of the Air Restraint
and Technical Fabrics Division of JPS Automotive, L.P., through SCFTI, in July
1997, Mr. Duerk served the JPS Automotive, L.P., a tier one supplier to the
automotive industry of carpet and knit fabrics for headliner and body cloth for
automobiles, as Vice President of Air Restraint Fabrics in the Greenville, South
Carolina facility from October 1988. From 1965 to October 1988, Mr. Duerk served
in various positions for J.P. Stevens & Co., Inc. ("JPS Stevens"), a company
engaged in the business of manufacturing industrial textiles of which JPS
Automotive, L.P. was a part until its restructering in May 1988, most recently
as the Vice President of the Industrial Synthetic Group.
Victor Guadagno. Mr. Guadagno has served as President of Valentec Systems,
Inc. since the inception of the Company's Systems business in 1994 and had
served as Vice President/General Manager of Valentec's Wells Division from
September 1994 until September 1995. Mr. Guadagno joined Valentec in 1986 as
Vice President/General Manager of the Product Development Division, and was
promoted to Vice President of Corporate Marketing in 1989. Prior to joining
Valentec, Mr. Guadagno was President and sole stockholder of Target Research,
Inc., a business engaged in the research and development of ammunition for the
United States Army. Mr. Guadagno began his career as a development engineer with
the United States Army and has over 35 years of experience in the defense
industry, including systems contracting.
Philip M. Lelliott. Mr. Lelliott has served as President of the Company's
Europe/Asia Pacific Automotive Group since June 1998. From January 1995 to June
1998, Mr. Lelliott served as Chief Executive Officer of Courtaulds Textiles
Automotive Products, the automotive division of Courtaulds Textiles, PLC, a
company engaged in the manufacture of textile products. From July 1984 to
December 1994, Mr. Lelliott served AL-KO Kober AG, a company engaged in the
manufacture of automotive components, as Managing Director of its United Kingdom
and Australian Automotive Divisions. From July 1979 to July 1984, Mr. Lelliott
served CI Group PLC, a company engaged in the manufacture of recreational
vehicles and related products, in various positions, most recently as Manager of
Production and Product Development for the HGV Trailer Division in South Africa.
Robert E. Sepulveda. Mr. Sepulveda has served as Vice President of the
Company since May 1998 and as President of the Company's Metal Components Group
and President of Valentec since March 1998. From March 1989 through March 1998,
Mr. Sepulveda served in numerous capacities at TRW Safety Systems, a tier 2 and
tier 3 supplier to the automotive industry of automotive components and parts,
including Plant Operations Manager for Driver Airbag Operations, Director of
Materials for Driver Airbag Operations and Materials Manager for Driver Airbag
Operations. Prior to joining TRW, Mr. Sepulveda was employed by Morton Thiokol,
where he served as Material Systems Manager.
Marston "Dale" Anderson. Mr. Anderson has served as the Corporate
Controller, Secretary and Assistant Secretary of the Corporation since July
1999. From October 1989 to December 1998, Mr. Anderson served JPS Automotive,
L.P., a tier one supplier to the automotive industry of carpet and knit fabrics
for headliner and body cloth for automobiles, in various positions, most
recently as Corporate Controller. From May 1988 to September 1989, Mr Anderson
served as Controller for JPS Industrial Fabrics, L.P. From September 1976 to May
1988, Mr. Anderson served in various postions for J.P. Stevens, most recently as
the division Controller of industial fabrics.
3
<PAGE>
Daniel R. Smith. Mr. Smith has served as Treasurer of the Company since
March 1997 and as Assistant Secretary of the Company since September 9, 1998.
From July 1991 to March 1997, Mr. Smith was employed by Arthur Andersen, LLP, a
leading public accounting firm, as a Manager.
Directors
The following table sets forth the names and ages of the directors and
director nominees of the Company, all of whom are currently directors of the
Company:
Name(1) Age
------- ---
Robert A. Zummo 58
John C. Corey 52
Jeffrey J. Kaplan 51
Joseph J. DioGuardi 59
Robert J. Torok 68
(1) Francis X. Suozzi resigned as a director of the Company, effective as of
July 12, 1999. See "Security Ownership of Certain Beneficial Owners and
Management, footnote 10" for information regarding a consulting arrangement
which has been agreed to in principle between the Company and Mr. Suozzi.
The Board is divided into three classes. The term of the current Class III
directors, Messrs. Zummo and Kaplan, expires in 2001; the term of the current
Class II director, Mr. Torok, expires in 2000 and the term of the current Class
I directors, Messrs. Corey and DioGuardi, expires at the next Annual Meeting of
Stockholders of the Company. Directors hold office until the Annual Meeting of
Stockholders of the Company in the year in which the term of their class expires
and until their successors have been duly elected and qualified. At each Annual
Meeting of Stockholders of the Company, the successors to the class of directors
whose term expires will be elected for a three-year term. Following is
information with respect to the directors and director nominees of the Company
who are not also executive officers of the Company:
Joseph J. DioGuardi. Mr. DioGuardi has been a Director since 1994. Mr.
DioGuardi was a member of the United States House of Representatives from 1985
through 1989, representing the 20th Congressional District in Westchester
County, New York. Since leaving Congress, Mr. DioGuardi has been an
international spokesman for human rights and founded and now chairs Albanian
American Civic League Foundation. Since leaving Congress, Mr. DioGuardi has also
founded and now chairs a non-partisan foundation named "Truth in Government,"
aimed at promoting fiscal responsibility and budgetary reform. Mr. DioGuardi, a
Certified Public Accountant, has 22 years of public accounting experience with
Arthur Andersen & Co. (currently known as Arthur Andersen, LLP), serving as
Partner from 1972 to 1984. From November 1996 to July 1998 Mr. DioGuardi was a
director of Neurocorp, Ltd., a publicly held Company in the business of
utilizing software, databases and medical devices for the diagnosis and
treatment of brain-related disorders. Mr. DioGuardi also served as the Chief
Financial Officer of Neurocorp, Ltd. from July 1997 to July 1998.
Robert J. Torok. Mr. Torok has served as a Director since 1994. Until May
1996, when Mr. Torok retired, Mr. Torok was a Vice President and Partner of
Korn/Ferry International, an executive search firm based in New York City, and
had served in such position since 1980. Prior to 1980, Mr. Torok was Senior Vice
President of Sikorsky Aircraft, a division of United Technologies Company, a
diversified manufacturing company based in Hartford, Connecticut, where Mr.
Torok worked from 1958 to 1980. Mr. Torok has 22 years of experience in
engineering, manufacturing and management.
Section 16(a) Beneficial Ownership Reporting Compliance
The Company's executive officers and directors are required under the
Securities Exchange Act of 1934, as amended, to file reports of ownership and
changes in ownership with the Securities and Exchange Commission. Copies of
those reports must also be furnished to the Company. To the Company's knowledge,
based solely on the Company's review of the copies of such reports it has
received, the Company believes that during the fiscal year ended March 27, 1999,
each of Joseph J. DioGuardi, Robert J. Torok and Francis X. Suozzi (whom
recently resigned as a director of the Company) failed to file one report on
Form 5 with respect to options granted in fiscal 1999 to each such non-employee
director under the Company's 1994 Stock Option Plan, as amended (the "Plan").
4
<PAGE>
ITEM 11. EXECUTIVE COMPENSATION
The following table summarizes the compensation paid to the Chief Executive
Officer of the Company and the four other most highly compensated executive
officers of the Company for the Company's fiscal year ended March 27, 1999 (each
person appearing in the table is referred to as a "Named Executive").
Summary Compensation Table
<TABLE>
<CAPTION>
Long Term Compensation
-----------------------------------------------------
Annual Compensation Awards Payouts
------------------------------------------------ -----------------------------------------------------
Securities
Other Annual Restricted Underlying LTIP All Other
Name and Salary Bonus Compensation Stock Options/SARs Payouts Compensation
Principal Position Year ($) ($) ($) Awards($) (#) ($) ($)
- ---------------------- ------ -------- ---------- ------------ ---------- ------------ ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Robert A. Zummo....... 1999 525,000 0 0 0 0/50,000 87,388(1)
Chairman of the Board 1998 439,185 491,000(2) 0 0 55,000/40,000 0 89,925(3)
President and Chief 1997 297,000 0 0 0 10,000/0 0 9,600
Executive Officer
Jeffrey J. Kaplan..... 1999 300,000 0 0 0 0/40,000 0 63,763(5)
Executive Vice 1998 233,018 221,000(6) 0 0 150,000/20,000 0 35,168(7)
President and Chief 1997 27,500 0 0 0 125,000/0 0 0
Financial Officer
Victor Guadagno....... 1999 162,000 0 0 0 0 0 11,552(8)
Vice President; 1998 162,000 0 0 0 0 7,635(9)
President, Systems, 1997 162,000 0 0 0 5,000/0 0 6,000
Group
Stephen B. Duerk 1999 170,833 0 0 0 0/6,000 0 11,975(11)
Vice President; 1998 78,981 72,575 0 0 10,000/6,000 0 2,707(12)
President, North
American Automotive
Group(10)
Philip Lelliott....... 1999 120,000 0 0 0 25,000/0 0 9,414(14)
Vice President; President
Europe/Asia Pacific
Automotive Group(13)
Thomas W. Cresante.... 1999 29,465 0 0 0 0/0 0 124,246(16)
Executive Vice 1998 205,393 70,000 0 0 85,667/0(17) 0 43,716(18)
President and Chief
Operating Officer(15)
John L. Hakes......... 1999 38,628 0 0 0 0/0 0 185,413(20)
President, European 1998 228,835 0 0 0 0/0 0 0
Operations(19) 1997 164,273 45,000(21) 0 0 10,000/0 0 0
</TABLE>
- ---------
1. Amount reflects $70,718 of life insurance premiums (which constitutes a
gross-up amount to offset income tax exposure), a $9,600 automobile
allowance, a $5,000 matching contribution under the company's 401(k) plan,
$720 of long-term disability insurance premiums and $1,350 of group
insurance premiums.
2. Includes $416,000 earned by Mr. Zummo under the Senior Management Plan (as
defined herein) and a $75,000 transactional bonus earned by Mr. Zummo based
on Mr. Zummo's performance in connection with the JPS Acquisition.
3. Amount reflects $78,140 of life insurance premiums (which constitutes a
gross-up amount to offset income tax exposure), a $9,600 automobile
allowance, a $2,020 matching contribution under the Company's 401(k) plan
and $165 long-term disability insurance premiums.
4. Mr. Kaplan joined the Company in February 1997.
5. Amount reflects $47,579 of life insurance premiums (which constitutes a
gross-up amount to offset income tax exposure), a $9,600 automobile
allowance, a $5,000 matching contribution under the Company's 401(k) plan,
$720 of long-term disability insurance premiums and $864 of group insurance
premiums.
6. Includes $191,000 earned by Mr. Kaplan under the Senior Management Plan and
a $30,000 transactional bonus earned by Mr. Kaplan based on Mr. Kaplan's
performance in connection with the JPS Acquisition, the Valentec
Acquisition and the related financings.
5
<PAGE>
7. Amount reflects $18,395 of life insurance premiums (which constitutes a
gross-up amount to offset income tax exposure), a $7,200 car allowance, a
$2,208 matching contribution under the Company's 401(k) plan and $165
long-term disability insurance premiums.
8. Amount reflects a $6,231 automobile allowance, a $4,313 matching
contribution under the Company's 401(k) plan and $1,008 of group insurance
premiums.
9. Amount reflects a $6,000 car allowance and a $1,635 matching contribution
under the Company's 401(k) plan.
10. Mr. Duerk joined the Company in July 1997 upon consummation of the JPS
acquisition.
11. Amount reflects a $6,000 automobile allowance, a $5,000 matching
contribution under the Company's 401(k) plan and $975 of insurance
premiums.
12. Amount a $1,500 automobile allowance and $1,207 matching contribution under
the Company's 401(k) plan.
13. Mr. Duerk joined the Company in June 1998.
14. Amount reflects a $8,789 automobile allowance and $625 of group insurance
premiums.
15. From May 1997 until the time of Mr. Cresante's resignation as an employee
of the Company in May 1998, Mr. Cresante served as Executive Vice President
and Chief Operating Officer.
16. Amount reflects payments in the aggregate amount of $83,333 under the
Cresante Consulting Agreement (as defined herein, See "--Employment
Agreements"), $26,800 of life insurance premiums (which constitutes a
gross-up amount to offset income tax exposure) , a $13,800 automobile
allowance and a $313 matching contribution under the Company's 401(k) plan.
17. Mr. Cresante received options to purchase 225,000 shares of Common Stock
under his employment Agreement and SARs with respect to 20,000 shares of
Common Stock under the SAR Plan during fiscal year 1998. However, options
to purchase 139,333 of such shares of Common Stock and all of such SARs
were subsequently forfeited by Mr. Cresante in connection with his
resignation as an employee of the Company and under the terms of the
Cresante Consulting Agreement. See "-- Employment Agreements."
18. Amount reflects $28,667 of life insurance premiums (which constitutes a
gross-up amount to offset income tax exposure), a $12,600 car allowance, a
$2,284 matching contribution under the Company's 401(k) plan and $165 of
long-term disability insurance premiums.
19. From June 1995 until the time of Mr. Hakes' resignation as an employee of
the Company in May 1998, Mr. Hakes served as President, European
Operations.
20. Amount reflects a payment of $185,413 under the Hakes Consulting Agreement
(as defined herein, See "--Employment Agreements").
21. Represents the value of an automobile awarded to Mr. Hakes' as a bonus.
Option/SAR Grants in Last Fiscal Year
The following options and Stock Appreciation Rights ("SARs") were granted
to the Named Executives during the fiscal year ended March 27, 1999 under the
Plan and the Company's Stock Appreciation Rights Award Plan (the "SAR Plan"),
respectively.
<TABLE>
<CAPTION>
Individual Grants
Number of % of Total Potential Realized
Securities Options/SARs Exercise or Value at Assumed
Underlying Granted to Base Annual Rates of
Options/SARs Employees in Price Expiration Stock Price Appreciation
Name Granted(#) Fiscal Year(1)(2) ($/sh)(3) Date for Option Term
- ---- ------------ ----------------- ----------- -------------- 5%($) (6) 10%($) (6)
------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Robert A. Zummo......... 0/50,000 0.0%/40.3% N/A/$14.25 N/A/3/29/01 (4) N/A/$112,308 N/A/$235,838
Jeffrey J. Kaplan....... 0/40,000 0.0%/32.3% N/A/$14.25 N/A/3/29/01 (4) N/A/$89,846 N/A/$188,670
Victor Guadagno......... 0/0 0.0%/0.0% N/A N/A N/A N/A
Stephen B. Duerk........ 0/0 0.0%/0.0% N/A N/A N/A N/A
Philip Lelliott......... 25,000/0 61.0%/0.0% $16.63/N/A 5/31/08 (5)/N/A $261,463/N/A $662,598/N/A
Thomas W. Cresante 0/0 0.0%/0.0% N/A N/A N/A N/A
John L. Hakes 0/0 0.0%/0.0% N/A N/A N/A N/A
</TABLE>
- -----------------
(1) Figures have been rounded to the nearest tenth.
(2) An aggregate of 11,000 of the SARs granted to employees during fiscal year
1999 were subsequently forfeited in connection with the respective
employee's resignation from the Company.
(3) Figures have been rounded to the nearest hundredth.
(4) Becomes exercisable on the termination date of the SAR.
(5) Becomes exercisable in three equal annual installments with the first
installment commencing one year from the date of grant.
(6) Rounded the nearest dollar.
6
<PAGE>
Aggregated Option/SAR Exercises in Last Fiscal Year and Fiscal Year-End
Option/SAR Values
The following table summarizes for each of the Named Executives the number
of stock options and SARs exercised during the fiscal year ended March 27, 1999,
the aggregate dollar value realized upon exercise, the total number of
unexercised options and SARs, if any, held at March 27, 1999 and the aggregate
dollar value of in-the-money, unexercised options and SARs, held at March 27,
1999. The value realized upon exercise is the difference between the fair market
value of the underlying stock on the exercise date and the exercise or base
price of the option or SAR, respectively. The value of unexercised, in-the-money
options or SARs at fiscal year-end is the difference between its exercise or
base price and the fair market value of the underlying stock on March 29, 1999,
which was $8.50 per share.
<TABLE>
<CAPTION>
Shares
Acquired on
Exercise or
with respect Number of Securities Value of Unexercised
to which Underlying Unexercised In-the-Money Options and
Options or Options and SARs at SARs at
SARs were Value Fiscal Year-End (#) Fiscal Year- End ($)
Name exercised (#) Realized ($) Exercisable/Unexercisable Exercisable/Unexercisable
- ---- ------------- ------------ ------------------------- -------------------------
<S> <C> <C> <C> <C>
Robert A. Zummo............. 0 NA 50,000/35,000(1) *
Robert A. Zummo............. 0 N/A 0/90,000(2) *
Jeffrey J. Kaplan........... 0 NA 166,669/108,331(1) *
Jeffrey J. Kaplan........... 0 N/A 0/60,000(2) *
Stephen B. Duerk............ 0 N/A 10,000/30,000(1) *
Stephen B. Duerk............ 0 N/A 0/12,000 (2) *
Victor Guadagno............. 10,000 $74,925 20,000/0(1) *
Philip Lelliott............. 0 N/A 8,333/16,667(1) *
Thomas W. Cresante.......... 0 N/A 85,667/0(1)(3) *
John L. Hakes............... 0 N/A 0/0 *
</TABLE>
- ------------
* None of the Options or SARs referenced in the chart were in-the-money on
March 27, 1999.
1. Represents options to purchase Common Stock granted by the Company to the
Named Executive under the Plan.
2. Represents SARs granted by the Company to the Named Executive under the SAR
Plan.
3. Mr. Cresante received options to purchase 225,000 shares of Common Stock at
an exercise price of $10.25 per share under his employment agreement during
fiscal year 1998. However, options to purchase 139,333 of such shares of
Common Stock were subsequently forfeited by Mr. Cresante in connection with
his resignation as an employee of the Company in May 1998 and under the
terms of the Cresante Consulting Agreement. See "--Employment Agreements."
4. In connection with the expiration of the Hakes Consulting Agreement, Mr.
Hakes forfeited options to purchase an aggregate of 35,000 shares of Common
Stock, all of which were vested.
Employment Agreements
Mr. Zummo serves as Chief Executive Officer of the Company pursuant to a
five-year employment agreement which became effective as of April 19, 1999. The
employment agreement provides for a base salary for the first year of the term
of $575,000, subject to annual increases of the Compensation Committee of the
Board of Directors commencing in fiscal year 2001. In addition to the base
salary, the employment agreement provides for an annual incentive bonus under
the Company's Senior Management Incentive Plan (the "Senior Management Plan")
and a performance based bonus for fiscal year 2000 of up to a maximum of 50% of
his base salary for such fiscal year based on the achievement of pre-determined
target levels of the Company's earnings. Mr. Zummo did not earn a bonus for
fiscal year 1999. In the event Mr. Zummo's employment is terminated by the
Company within the first four years of
7
<PAGE>
the term without "Cause" (other than as a result of death or disability or in
connection with a Change of Control), including by reason of a Constructive
Termination (as each such term is defined in the employment agreement), the
Company is required to pay Mr. Zummo an amount equal to his full salary and
incentive bonus in effect for the year immediately preceding termination for the
remainder of the full term. If such termination occurs during the last year of
the term, the Company is required to pay Mr. Zummo an amount equal to his full
salary and incentive bonus in effect for the year immediately preceding
termination and his pro rata share of his incentive bonus for the year in which
the termination occurs. If Mr. Zummo's employment is terminated for any reason
(other than for Cause, death or disability) by Mr. Zummo or the Company within
the twelve month period following a Change of Control, the Company is required
to pay Mr. Zummo an amount equal to the greater of two times his full salary and
bonus in respect of the year immediately preceding termination and (ii) an
amount equal to his full salary and incentive bonus in effect for the year
immediately preceding termination for the remainder of the full term. In
addition, if Mr. Zummo's employment agreement is not renewed by the Company
after the expiration of the initial five-year term other than for "Cause," the
Company would be required to continue to pay Mr. Zummo's full salary and
incentive bonus in effect for the year immediately preceding termination for a
period of one year from the time of termination.
Mr. Corey serves as President and Chief Operating Officer of the Company
pursuant to a three-year employment agreement which became effective as of March
28, 1999. The employment agreement provides for a base salary for the first year
of the term of $300,000, subject to annual increases in the discretion of the
Compensation Committee of the Board of Directors commencing in fiscal year 2001.
In addition to the base salary, the employment agreement provides for an annual
incentive bonus under the Senior Management Plan commencing in fiscal year 2001
and a performance based bonus for fiscal year 2000 of up to a maximum of 40% of
his base salary for such fiscal year based on the achievement of pre-determined
target levels of the Company's earnings. Pursuant to the terms of the employment
agreement, Mr. Corey was awarded options to purchase 100,000 shares of Common
Stock under the Plan and SARs relating to 40,000 shares of Common Stock under
the SAR Plan. The options granted to Mr. Corey under the Plan vest in three
equal annual installments with the first installment commencing one year from
the date of grant. The SARs granted to Mr. Corey under the SAR Plan have a term
of three years and may only be exercised on the third anniversary of the date of
grant. In the event Mr. Corey's employment is terminated by the Company during
the first two years of the term without "Cause" (other than as a result of death
or disability or in connection with a Change of Control), including by reason of
a Constructive Termination (as each such term is defined in the employment
agreement), the Company is required to pay Mr. Corey an amount equal to his full
salary in effect for the year immediately preceding termination for the
remainder of the full term. If such termination occurs during the last year of
the term, the Company is required to pay Mr. Corey an amount equal to his full
salary in effect for the year immediately preceding termination. If Mr. Corey's
employment is terminated following a Change of Control (including by reason of a
Constructive Termination), the Company is required to pay Mr. Corey an amount
equal to two times his full salary in respect of the year immediately preceding
termination. In addition, if Mr. Corey's employment agreement is not renewed by
the Company after the expiration of the initial three-year term other than for
"Cause," the Company would be required to continue to pay Mr. Corey's full
salary in effect for the year immediately preceding termination for a period of
one year from the time of termination.
Mr. Kaplan serves as Executive Vice President and Chief Financial Officer
of the Company pursuant to a three-year employment agreement which became
effective in February 1997. The employment agreement provides that Mr. Kaplan
will allocate at least 80% of his working time, attention and energies to the
affairs of the Company and the remaining 20% to Valentec; however, Mr. Kaplan
has been spending substantially all of his working time performing services for
the Company since the closing of the Valentec Acquisition. Mr. Kaplan's base
salary for the first year of the term is $220,000, subject to annual increases
at the discretion of the Board of Directors. In each of September 1997 and March
1998, the Compensation Committee of the Board of Directors approved an increase
of salary payable to Mr. Kaplan under his employment agreement to $242,000 and
$300,000, respectively. In addition to the base salary, the employment agreement
provides for an annual incentive bonus. Mr. Kaplan did not earn a bonus for
fiscal year 1999. Pursuant to the terms of the employment agreement, Mr. Kaplan
was awarded options under the Plan in accordance with the following schedule:
(i) options to purchase 125,000 shares of Common Stock were issued on February
15, 1997; (ii) options to purchase 50,000 shares of Common Stock were issued on
April 1, 1997 and (iii) options to purchase 50,000 shares of Common Stock were
to be issued on April 1, 1998, but were actually issued on August 13, 1997 after
approval by the Compensation Committee of the acceleration of the issuance of
such options. On September 17, 1997, the vesting schedule of all options granted
by the Company under the Plan was accelerated. Accordingly, all of the options
granted to Mr. Kaplan by the Company under the Plan vest in three equal
annual installments (rather than four equal annual installments) commencing one
year from the date of grant. Such stockholder approval was obtained in September
1997.
8
<PAGE>
In the event Mr. Kaplan's employment is terminated without "Cause", including by
reason of a Constructive Termination (as each such term is defined in the
employment agreement), the Company would be required to pay Mr. Kaplan an amount
equal to his full salary and incentive bonus in effect for the year immediately
preceding termination for the remainder of the full term. If Mr. Kaplan's
employment is terminated by the Company in connection with a "change in control"
(as defined in the employment agreement), the Company would be required to pay
Mr. Kaplan an amount equal to two times his full salary and incentive bonus in
respect of the year immediately preceding termination. In addition, if Mr.
Kaplan's employment agreement is not renewed by the Company after the expiration
of the initial three-year term other than for "Cause," the Company would be
required to continue to pay Mr. Kaplan's full salary and incentive bonus in
effect for the year immediately preceding termination for a period of one year
from the time of termination. In connection with Mr. Kaplan's determination to
resign from the Company, the Company and Mr. Kaplan have agreed in principle,
that such resignation will be effective as of August 31, 1999 and, subject to
the negotiation and execution of definitive agreements, (i) Mr. Kaplan will
receive one year's salary (i.e. $300,000) payable over a twelve month period,
certain fringe benefit premiums for twelve months and automobile lease payments
until February 2000, (ii) his option agreements will be amended to provide for
the immediate vesting of all unvested options upon the termination of such
employment agreement and the period of time that Mr. Kaplan can exercise his
options will be extended to a period of three years, and (iii) his outstanding
SARs will be amended to provide for continued participation during the remainder
of the respective terms thereof.
Mr. Duerk serves as Vice President of the Company and President of the
Company's North American Automotive Group, pursuant to a two year employment
agreement which became effective in June 1998. The employment agreement provides
for a base salary for the first year of the term of $175,000, subject to annual
increases at the discretion of the Compensation Committee of the Board of
Directors. The employment agreement also provides for an annual incentive bonus
under the Company's Management Incentive Plan (the "Management Incentive Plan").
Mr. Duerk did not earn a bonus for fiscal year 1999 under such plan. In
addition, the employment agreement provides that (i) in the event Mr. Duerk's
employment is terminated without "Cause" (as such term is defined in the
employment agreement), the Company is required to continue to pay Mr. Duerk's
full salary (but no bonus compensation) for a period of twelve months from the
time of termination, (ii) if Mr. Duerk's employment is terminated by the Company
in connection with a "change of control' (as such term is defined in the
employment agreement), the Company is required to pay Mr. Duerk an amount equal
to two times his full salary and incentive bonus in respect of the year
immediately preceding termination, and (iii) if Mr. Duerk's employment agreement
is not renewed by the Company after the expiration of the term other than for
Cause, the Company is required to continue to pay Mr. Duerk's full salary (but
no bonus compensation) for a period of twelve months from the time of
termination.
Mr. Guadagno serves as Vice President of the Company and President of the
Company's Systems Group, pursuant to a two-year employment agreement which
became effective in September 1994, the term of which was extended to September
1997. Mr. Guadagno's base salary for the first year of the term was $150,000,
and is subject to annual increases at the discretion of the Board of Directors.
Mr. Guadagno's current base salary is $162,000. In addition to the base salary,
the employment agreement provides for an annual incentive bonus. If Mr.
Guadagno's employment agreement is not renewed by the Company after the
expiration of the term other than for Cause, the Company would be required to
continue to pay Mr. Guadagno's full salary for a period of six months from the
time of termination.
Mr. Lelliott serves as Vice President of the Company and President of the
Company's Europe/Asia Pacific Automotive Group pursuant to the terms of an offer
letter dated as of January 23, 1998. The offer letter provides for an annual
base salary of (pound)90,000 British pounds (approximately $142,200 as of July
22, 1999), which is subject to annual increases at the discretion of the Board
of Directors. In addition to the base salary, the offer letter also provides for
an annual incentive bonus under the Management Incentive Plan. Mr. Lelliott
received a signing bonus of (pound)10,000 British pounds (approximately $15,800
as of July 22, 1999) upon commencing employment with the Company in May 1998 and
a bonus of Li.15,000 British pounds (approximately $23,700, as of July 22, 1999)
under the Management Incentive Plan for fiscal year 1999. Pursuant to the terms
of the offer letter, Mr. Lelliott was awarded options to purchase 25,000 shares
of Common Stock under the Plan. Such options vest in three equal annual
installments with the first installment commencing one year from the date of
grant. Mr. Lelliott has resigned as an officer of the Company, effective as of
July 30, 1999.
From June 1995 until his resignation as an employee of the Company in May
1998, Mr. Hakes served as President, European Operations pursuant to an
employment agreement (the "Hakes Employment Agreement"). The agreement had an
initial term of one year and was terminable thereafter on twelve months' notice
by either the Company
9
<PAGE>
or Mr. Hakes. Mr. Hakes' base salary for the first year of the term was
(pound)95,000 British pounds (approximately $150,100 as of July 22, 1999), and
was subject to annual increases at the discretion of the Board of Directors. In
addition to the base salary, the Hakes Employment Agreement provided for an
annual incentive bonus. Mr. Hakes was not awarded a bonus for fiscal 1999.
Pursuant to the Hakes Employment Agreement, if Mr. Hakes' employment was
terminated by the Company in connection with "a change in control" (as defined
in the Hakes Employment Agreement), the Company would have been required to pay
Mr. Hakes an amount equal to his full salary effective on the date of the change
in control for a period of one full year. Pursuant to the Hakes Employment
Agreement, Mr. Hakes also provided services to VIL (as defined herein) in return
for compensation paid by VIL. The Company entered into a consulting agreement
(the "Hakes Consulting Agreement") with Mr. Hakes, pursuant to which (i) the
Hakes Employment Agreement was terminated, (ii) all SARs granted to Mr. Hakes
under the SAR Plan were forfeited, and (iii) Mr. Hakes agreed to (a) provide
certain consulting services to the Company and (b) serve as the Managing
Director of VIL for a term of one year. In consideration for such services, Mr.
Hakes received a lump sum payment of approximately (pound)146,700 British pounds
(approximately $231,786 as of July 22, 1999) (less applicable withholding
taxes), which is equal to his annual base salary at the time of termination of
the Hakes Employment Agreement; options to purchase an aggregate of 35,000
shares of Common Stock previously granted to Mr. Hakes under the Plan were fully
vested pursuant to the Hakes Consulting Agreement and were available for
exercise until thirty days after the termination date of the Hakes Consulting
Agreement; and the Company provided to Mr. Hakes certain life insurance
benefits. Approximately (pound)117,350 British pounds (approximately $185,413 as
of July 22, 1998) of the lump sum payment under the Hakes Consulting Agreement
was made by the Company. The Hakes Consulting Agreement expired in May 1999.
From May 1997 until his resignation as an employee from the Company in May
1998, Mr. Cresante served as Executive Vice President and Chief Operating
Officer of the Company pursuant to a three-year employment agreement. The
employment agreement provided that Mr. Cresante would allocate at least 80% of
his working time, attention and energies to the affairs of the Company and the
remaining 20% to Valentec; however, Mr. Cresante had been spending substantially
all of his working time performing services for the Company since the closing of
the Valentec Acquisition. Mr. Cresante's base salary for the first year of the
term was $235,000, subject to annual increases at the discretion of the Board of
Directors. In addition to the base salary, the employment agreement provided for
an annual bonus. Mr. Cresante did not receive a bonus for fiscal 1999. Pursuant
to the terms of the employment agreement, Mr. Cresante was awarded options to
purchase 225,000 shares of Common Stock issued on May 19, 1997 under the Plan.
Pursuant to the employment agreement, in the event Mr. Cresante's employment was
terminated without "Cause", including by reason of a Constructive Termination
(as each such term is defined in the employment agreement), the Company would
have been required to pay Mr. Cresante an amount equal to his full salary and
incentive bonus in effect for the year immediately preceding termination for the
remainder of the full term. If Mr. Cresante's employment was terminated by the
Company in connection with a "change in control" (as defined in the employment
agreement), the Company would have been required to pay Mr. Cresante an amount
equal to two times his full salary and incentive bonus in respect of the year
immediately preceding termination. In addition, if Mr. Cresante's employment
agreement was not renewed by the Company after the expiration of the initial
three-year term other than for "Cause," the Company would have been required to
continue to pay Mr. Cresante's full salary and incentive bonus in effect for the
year immediately preceding termination for a period of one year from the time of
termination. The Company has entered into a consulting agreement (the "Cresante
Consulting Agreement") with Mr. Cresante pursuant to which Mr. Cresante's
employment agreement was terminated and he will instead provide consulting
services to the Company for a term of two years ending in May 2000. As
compensation for such services, Mr. Cresante will receive $100,000 per year,
payable at least on a monthly basis and options to purchase 85,667 shares of
Common Stock previously granted to Mr. Cresante under the Plan have been fully
vested pursuant to the Cresante Consulting Agreement and are available for
exercise until thirty days after from the termination date of the Cresante
Consulting Agreement. The remaining stock options granted by the Company to Mr.
Cresante under his employment agreement have been forfeited. In addition,
pursuant to the Cresante Consulting Agreement, the Company will provide to Mr.
Cresante certain benefits under the Company's benefit plans as well as certain
life and health insurance benefits.
Senior Management Plan
The Compensation Committee approved, and the Board of Directors and
shareholders of the Company have subsequently ratified, the Senior Management
Plan, which provides for annual performance based bonuses to certain key
executive officers, primarily based on pre-determined target levels of the
Company's earnings. Upon the occurrence of a Change of Control (as such term is
defined in the Senior Management Plan) such pre-determined target levels
relating to the fiscal year in which the Change of Control occurs shall be
deemed to have been achieved and payments of the awards shall be made promptly
after the Change of Control. In the event that the actual performance of the
Company exceeds such target levels, such awards shall be based on the actual
performance of the Company. Messrs.
10
<PAGE>
Zummo and Kaplan did not earn a bonus for fiscal year 1999 under the Senior
Management Plan. See "-Employment Agreements".
Management Incentive Plan
The Compensation Committee has approved, and the Board of Directors has
subsequently ratified, the Management Incentive Plan, which provides for annual
performanced based bonuses to certain management level employees (other than key
executive officers), primarily based on pre-determined levels of the Company's
earnings. Messrs. Duerk and Guadagno did not receive a bonus for fiscal year
1999. Mr. Lelliott earned a bonus of $(pound)15,000 (approximately $23,700 as of
July 22, 1999) for fiscal year 1999 under the Management Incentive Plan.
1994 Stock Option Plan
On January 27, 1994, the Board of Directors adopted, and the stockholders
approved the Plan. On May 4, 1996, July 29, 1996, July 22, 1997 and May 28,
1998, the Board of Directors approved certain amendments to the Plan which were
subsequently approved by the stockholders of the Company. In July 1999, the Plan
was further amended to provide that the Compensation Committee of the Board of
Directors has discretion to extend the period of time that an option granted
under the Play may be exercised by an optionee after the termination of such
optionee's employment, directorship or consulting arrangement with the Company,
as the case may be. The Plan currently provides for the issuance of options to
purchase up to 1,050,000 shares of Common Stock, of which options to purchase
975,000 shares may be issued to officers, key employees and consultants of the
Company and options to purchase 75,000 shares may be issued to non-employee
directors of the Company. Except in certain circumstances, upon the occurrence
of a Change of Control (as such term is defined in the Plan), all options
granted under the Plan that are outstanding and not yet vested (including
options granted to non-employee directors) will become 100% vested effective on
the date on which such Change of Control occurs and will be thereafter
exercisable in accordance with the terms of the Plan and any applicable award
agreement between the Company and the optionee.
SAR Plan
The SAR Plan was approved by the Compensation Committee of the Board of
Directors on October 13, 1997, effective as of April 1, 1997, and subsequently
ratified by the Board of Directors on May 28, 1998 and approved by the
shareholders of the Company on September 9, 1998. Pursuant to the SAR Plan, the
Compensation Committee of the Board of Directors may grant participating
officers and key employees of the Company SARs, which entitle the recipients
thereof to receive payments in cash equal to the appreciation in the fair market
value of a specified number of shares of Common Stock from the date of grant
until the date of exercise (the "Excess Value"). Upon the occurrence of a Change
of Control (as such term is defined in the SAR Plan), unless otherwise
specifically prohibited under applicable laws, or by the rules and regulations
of any governing governmental agencies or national securities exchanges, all
SARs granted under the SAR Plan shall become fully exercisable as of the date of
such change of control and each outstanding SAR award shall be deemed to have
been exercised on such date and entitled to an immediate cash payment in an
amount equal to the Excess Value on such deemed date of exercise; provided,
however, that if, following such date, the Common Stock shall continue to be
quoted on NASDAQ (or a successor quotation system) or publicly traded on an
exchange, the participant shall have the option whether or not his or her
employment continues after such date, to exercise his or her respective SARs in
whole, but not in part (i) upon the date of such change in control or (ii) at
any time until the earlier of (x) the expiration date thereof or (y) the date
upon which the Common Stock shall cease to be quoted or publicly traded and in
the case of such delisting, the SAR shall be deemed to have been exercised on
the date of such delisting.
Directors' Compensation
Directors who are employees of the Company receive no compensation, as
such, for service as members of the Board. Directors who are not employees of
the Company receive an annual retainer of $20,000 and an attendance fee of
$1,250 for each Board meeting or committee meeting attended in person by that
director and $300 for each telephonic Board meeting or committee meeting in
which such director participated; provided that fees for in-person meetings of
the Board and committees shall not exceed $1,250 per day. All Directors are
reimbursed for expenses incurred in connection with attendance at meetings.
Each non-employee director currently receives an automatic option grant
under the Plan, vesting in equal installments over a three-year period, at the
beginning of each calendar year in which he serves as a director of the Company.
On January 14, 1998, the Board of Directors approved an amendment to the Plan
which increased the size
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<PAGE>
of the annual formula grant to non-employee directors under the Plan from an
option to purchase 2,500 shares of Common Stock to an option to purchase 4,000
shares of Common Stock. The exercise price of the shares of Common Stock subject
to options granted to each non-employee director is the fair market value of the
shares of Common Stock on the date of grant. Options granted to non-employee
directors, with limited exceptions, may only be exercised within ten years of
the date of grant and while the recipient of the option is a director of the
Company. See "--1994 Stock Option Plan" above for a discussion of the status of
such options upon the occurrence of Change of Control (as such term is defined
in the Plan).
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Except as otherwise indicated, the following table and notes set forth
certain information regarding the beneficial ownership of the Common Stock as of
July 23, 1999 by all person(s) known by the Company to be the beneficial owner
of more than 5% of the Common Stock, by each director of the Company, by each of
the Named Executives (as defined herein) and by all directors and executive
officers of the Company as a group. Except as otherwise indicated, each
beneficial owner has the sole power to vote, as applicable, and to dispose of
all shares of Common Stock owned by such beneficial owner.
<TABLE>
<CAPTION>
Amount and Nature of Percent of
Name and Address of Beneficial Owner Beneficial Ownership Common Stock(1)
- ------------------------------------ -------------------- ---------------
<S> <C> <C>
Robert A. Zummo(2)(3).................................... 1,026,576(4) 19.8%
Cramer Rosenthal McGlynn, LLC............................ 869,800(5) 16.9%
707 Westchester Avenue
White Plains, New York 10604
Lawrence D. Greenberg 488,800(6) 9.5%
1010 Arch Street, Suite 1930
Boston, MA 02210
Jeffrey J. Kaplan(2)..................................... 166,669(7) 3.2%
Victor Guadagno(2)....................................... 20,000(7) *
Stephen Duerk............................................ 10,100(8) *
Philip Lelliott.......................................... 8,333(7) *
Thomas W. Cresante(2).................................... 85,667(7) 1.6%
John L. Hakes(2)......................................... 0 0
Joseph J. DioGuardi(2)................................... 10,833(7) 0
Francis X. Suozzi(3)(9).................................. 435,801(10) 8.3%
Robert J. Torok(2)....................................... 10,833(7) *
All executive officers and directors as a group
(consisting of 11 individuals).................... 1,273,344(11) 23.4%
</TABLE>
- -------------
* Less than 1%.
1. Shares beneficially owned, as recorded in this table, expressed as a
percentage of the shares of Common Stock outstanding, net of treasury
shares. For purposes of computing the percentage of outstanding shares held
by each person or group of persons named in this table, any securities
which such person or group of persons has the right to acquire within 60
days from July 20, 1999 is deemed to be outstanding for purposes of
computing the percentage ownership of such person or persons, but is not
deemed to be outstanding for the purpose of computing the percentage
ownership of any other person.
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<PAGE>
2. Address for each person is c/o Safety Components International, Inc., 2160
North Central Road, Fort Lee, New Jersey 07024.
3. In connection with the Valentec Acquisition, Messrs. Zummo and Suozzi
entered into an agreement, pursuant to which it was agreed, among other
things, that for a period of three years from the date thereof, Mr. Suozzi
will vote all shares of Common Stock beneficially owned by him on any
manner put to a vote of the shareholders of the Company in the same manner
as recommended by a majority of the Board of Directors of the Company or if
no such recommendation has been made, as directed by Mr. Zummo; provided,
that such agreement shall terminate if Mr. Suozzi shall cease to be on the
Board of Directors (other than as a result of his resignation). Mr Suozzi
resigned from the Board of Directors, effective as of July 12, 1999
4. Includes options which are currently exercisable (or exercisable within 60
days) to purchase 50,000 shares of Common Stock.
5. Represents the number of shares beneficially owned by Cramer Rosenthal
McGlynn, LLC ("CRM"), an investment company registered under Section 8 of
the Investment Advisers Act of 1940, according to a Schedule 13G filed by
CRM with the Commission in March 1999.
6. Lawrence D. Greenberg, an individual, is managing member of
Greenberg-Summit Partners, LLC ("GSP") and Greenberg-Summit Management, LLC
("GSM"), both Delaware limited liability companies. GSP is the General
Partner to the Mt. Everest Fund, LP, and Mt. Everest QP Fund, LP, both
Delaware limited partnership (the "Onshore Funds"). GSM is the Management
Company for the Onshore Funds and the Investment Manger for Mt. Everest
Limited, a Bermuda Limited Liability Company (the "Offshore Fund").
Lawrence D. Greenberg makes all decisions relating to the acquisition and
disposition of investments by the Onshore Funds and the Offshore Fund.
Accordingly, Mr. Greenberg has shared power to vote or dispose (or to
direct the disposition) of the Common Stock owned by the Onshore Funds (an
aggregate of 362,500 shares) and the Offshsore Fund (126,300 shares). All
information regarding Lawrence D. Greenberg, GSP, GSM, the Onshore Funds
and the Offshore Fund, including the number of shares of Common Stock
beneficially owned by each of them, is based on information included in a
Schedule 13G/A filed by such persons with the Commission in February 1999.
7. Represents only options which are currently exercisable (or exercisable
within 60 days) to purchase shares of Common Stock.
8. Includes options which are currently exercisable (or exercisable within 60
days) to purchase 10,000 shares of Common Stock.
9. Address for such person is c/o Nabisco Group Holdings, 1301 Avenue of the
Americas, New York, New York 10019.
10. Includes options which are currently exercisable (or exercisable within 60
days) to purchase 110,000 shares of Common Stock. In connection with Mr.
Suozzi's resignation as a director of the Company, the vesting schedule of
options with respect to 24,167 of such shares was accelerated and the
period of time that Mr. Suozzi could exercise his options granted under the
Plan was extended for the remainder of their respective terms. Accordingly,
all of Mr. Suozzi's options granted by the Company under the Plan are fully
vested. In addition, the Company and Mr. Suozzi have reached an agreeement
in principle with respect to a consulting arrangement, subject to the
negotiation and execution of definitive agreement, pursuant to which (i)
Mr. Suozzi will provide certain consulting services on behalf of the
Company for a term of one year and (ii) in consideration for such services
Mr. Suozzi shall receive options to purchase 75,000 shares of Common Stock
at an exercise price of $5-11/16 per share. Such options are to be non-Plan
options,fully vested and to have a term of ten years.
11. Includes options which are currently exercisable (or exercisable within 60
days) to purchase 296,668 shares of Common Stock.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company served as a sales representative in procuring a defense
contract for Valentec International Limited ("VIL"), a corporation formed under
the laws of the United Kingdom, 88.8% of which is owned by Robert A. Zummo, the
Chief Executive Officer and Chairman of the Board of the Company, and arranging
sub-contractors for such defense contract.
13
<PAGE>
During fiscal year 1999, the Company incurred additional costs of approximately
$3.4 million on behalf of VIL in connection with such defense contract. At March
27, 1999 the Company had billed VIL and recorded a receivable from affiliates in
the amount of $4.6 million, of which $1.2 million had been outstanding at March
28, 1998. Such balance at March 28, 1998 included approximately $700,000 of
costs incurred by the Company on behalf of VIL and $500,000 in respect of fees
for certain management services the Company provided on behalf of VIL. The
Company collected approximately $3.4 million of the $4.6 million outstanding
balance in May 1999 and VIL has a letter of credit with its customer related to
the defense contract which supports the remaining $1.2 million receivable.
In connection with the termination of Mr. Hakes' employment agreement with
the Company (the "Hakes Employment Agreement") and his resignation as an
employee of the Company, the Company and VIL entered into a consulting agreement
with Mr. Hakes effective as of May 18, 1998, pursuant to which (i) the Hakes
Employment Agreement was terminated, (ii) all SARs granted to Mr. Hakes under
the SAR Plan were forfeited, and (iii) Mr. Hakes (a) provided certain consulting
services to the Company for a term of one year and (b) served as the Managing
Director of VIL for a term of one year. In consideration for such services, Mr.
Hakes received a lump sum payment of (pound)146,700 British pounds
(approximately $231,786 as of July 22, 1999) (less applicable withholding
taxes), which was equal to his annual base salary at the time of termination of
the Hakes Employment Agreement; options to purchase an aggregate of 35,000
shares of Common Stock previously granted to Mr. Hakes under the Plan were fully
vested pursuant to the Hakes Consulting Agreement and were available for
exercise until thirty days after the termination date of the Hakes Consulting
Agreement; and the Company provided to Mr. Hakes certain life insurance
benefits. Approximately (pound)117,350 British pounds (approximately $185,413 as
of July 22, 1999) of the lump sum payment under the Hakes Consulting Agreement
was made by the Company and the remainder was made by VIL. The Hakes Consulting
Agreement expired in May 1999.
See "Executive Compensation - Employment Agreements" for a discussion of an
agreement in principle with respect to certain compensation to be paid, and
certain other benefits to be provided, to Mr. Kaplan in connection with his
resignation as an officer and director of the Company.
See "Security Ownership of Certain Beneficial Owners and Management,
footnote 10" for a discussion of an agreement in principle with respect to a
consulting arrangement between the Company and Mr. Suozzi, a former director of
the Company.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) The financial statements, related notes thereto and reports of
independent accountants required by Item 8 are listed on page F-1
herein.
(1) All financial statement schedules are omitted because they are not
applicable or the required information is shown in the Company's
consolidated financial statements or the notes thereto.
(2) Exhibits:
2.1 Agreement, dated June 6, 1996, among AB 9607 Verwaltungs
GmbH & Co. KG., Phoenix Aktiengesellschaft and Phoenix
Airbag GmbH (the "Phoenix Purchase Agreement")
(confidential treatment requested as to part)
2.2(12) Amendment Agreement, dated June 28, 1996, to the Phoenix
Purchase Agreement
3.1(1) Certificate of Incorporation of Safety Systems
International, Inc.
3.2(1) Amended and Restated Certificate of Incorporation of
Safety Systems International, Inc.
3.3(1) Certificate of Amendment of the Amended and Restated
Certificate of Incorporation of Safety Systems
International, Inc.
3.4(11) Certificate of Amendment to the Amended and Restated
Certificate of Safety Components International, Inc.
(the "Company" or "Safety Components")
3.5(1) By-laws of Safety Components
4.1(2) Warrant Agreement, dated as of May 13, 1994 between
Hampshire Securities Corporation and Safety Components
4.2(15) Registration Rights Agreement, dated as of May 22, 1997,
by and among Safety Components, Robert A. Zummo, Francis
X. Suozzi and the Valentec International Corporation
Employee Stock Ownership Plan
4.3(16) Form of Pledge Agreement, dated as of May 21, 1997, made
by the Pledgors named therein in favor of KeyBank
National Association, as collateral agent for the
benefit of the Secured Creditors (as defined therein)
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<PAGE>
4.4(18) Form of Indenture, dated as of July 24, 1997, by and
among Safety Components, the Subsidiary Guarantors named
therein and IBJ Schroder Bank & Trust Company.
4.5(18) Registration Rights Agreement, dated as of July 24, 1997
by and among Safety Components, the guarantors named
therein, BT Securities Corporation, Alex Brown & Sons
Incorporated and BancAmerica Securities, Inc.
4.6(18) Form of 10 1/8% Senior Subordinated Note Due 2007,
Series A, including Form of Guarantee
4.7(18) Form of 10 1/8 % Senior Subordinated Note Due 2007,
Series B, including Form of Guarantee
4.8(18) Form of Amendment No. 2 to Pledge Agreement, dated as of
July 15, 1997, made by the Pledgors named therein in
favor of KeyBank National Association, as collateral
agent for the benefit of the Secured Creditors (as
defined therein)
4.9(21) Form of Amendment No. 3 to Pledge Agreement, dated as of
June 30, 1998, made by the Pledgors named therein in
favor of KeyBank National Association, as collateral
agent for the benefit of the Secured Creditors (as
defined therein).
4.10(21) Form of Amendment No. 4 to Pledge Agreement, dated as of
February 9, 1999, made by the Pledgors named therein in
favor of KeyBank National Association, as collateral
agent for the benefit of the Secured Creditors (as
defined therein).
10.2(3) Airbag Purchase Agreement by and between TRW Vehicle
Safety Systems, Inc. and Valentec International
Corporation ("Valentec") dated March 31, 1993
(confidential treatment granted as to part)
10.3(3) Long-Term Contract for the Supply of Airbags by and
between TRW REPA GmbH and Valentec International Limited
("VIL"), dated September 20, 1993 (confidential
treatment granted as to part)
10.4(2) Representation Agreement, effective as of May 13, 1994,
by and between Automotive Safety Components
International, Inc. ("Automotive Safety") and Champion
Sales and Service Co. ("Champion")
10.5(2) Stock Option Plan of Safety Components
10.6(2) Master Asset Transfer Agreement, dated May 13, 1994,
among Valentec International Corporation, Safety
Components, Galion, Inc. and Automotive Safety
10.7(2) Asset Purchase Agreement, dated May 13, 1994, between
VIL and Automotive Safety Components International
Limited ("Automotive Limited")
10.8(9) Corporate Services Agreement, dated as of April 1, 1995,
between Valentec International Corporation and Safety
Components
10.9(2) Facility Agreement, dated May 13, 1994, between Valentec
International Corporation and Automotive Safety
10.10(2) Facility Agreement, dated May 13, 1994, between VIL and
Automotive Limited
10.11(2) Representation Agreement, effective as of May 13, 1994,
by and between Automotive Limited and Champion
10.12(5) Form of Sublease Agreement, dated May 13, 1994, between
VIL and Automotive Limited
*10.13(6) Employment Agreement, dated as of September 29, 1994 by
and between Safety Components and Paul L. Sullivan
10.14(7) Contract DAAA09-94-C-0532 between Safety Components and
the U.S. Army (the "Systems Contract") *10Employment
Agreement, effective as of September 19, 1994, between
Safety Components and Victor Guadagno
10.16(8) Lease Agreement, dated February 15, 1995 between
Inmobiliara Calibert, S.A. de C.V. and Automotive Safety
Components International SA. de C.V.
10.17(16) Credit Agreement, dated as of March 15, 1996, among
Safety Components, Automotive Safety, Galion, Valentec
Systems, Inc. and CUSA
10.18(16) Pledge and Security Agreement, dated as of March 15,
1996, made by Safety Components, Automotive Safety,
Galion, Inc. and Valentec Systems, Inc. in favor of CUSA
*10.19(10) Employment Agreement, dated June 1, 1995, between
Automotive Limited and John Laurence Hakes
10.20(10) Underwriting Agreement, dated June 15, 1995, among BT
Securities Corporation, Prime Charter Ltd., Safety
Components, Valentec International Corporation and the
other selling stockholders named therein
10.21(14) TRW/SCI Multi Year Agreement dated as of April 1, 1996
among TRW Vehicle Safety Systems, Inc., TRW, Inc. and
Safety Components. Confidential treatment requested as
to certain portions of this exhibit. Such portions have
been redacted
15
<PAGE>
10.22(15) Stock Purchase Agreement, dated as of May 22, 1997, by
and among Robert A. Zummo, Francis X. Suozzi, the
Valentec International Corporation Employee Stock
Ownership Plan and Safety Components
*10.23(16) Employment Agreement, dated as of February 15, 1997,
between Safety Components and Jeffrey J. Kaplan
*10.24(16) Employment Agreement, dated as of May 19, 1997, between
Safety Components and Thomas W. Cresante
10.25(16) Consulting Agreement, dated as of May 31, 1997, between
Safety Components and W. Hardy Myers
10.26(16) Credit Agreement (the "Credit Agreement"), dated as of
May 21, 1997, by and among Safety Components, Automotive
Safety Components International GmbH & Co. KG (f/k/a
Phoenix Airbag GmbH & Co. KG ("ASCI GmbH") and
Automotive Limited, as borrowers and KeyBank National
Association, as administrative agent, and the lending
institutions named therein
10.27(16) Form of Subsidiary Guaranty, dated as of May 21, 1997,
among the guarantors named therein, KeyBank National
Association, as administrative agent for itself and the
other Lenders (as defined in the Credit Agreement)
10.28(16) Form of Security Agreement, dated as of May 21, 1997,
among the assignors named therein and KeyBank National
Association, as collateral agent for the benefit of the
Secured Creditors (as defined therein)
10.29(17) Asset Purchase Agreement, dated as of June 30, 1997,
between Safety Components and JPS Automotive L.P.
10.30(18) Purchase Agreement, dated as of July 21, 1997, by and
among Safety Components, BT Securities Corporation, Alex
Brown & Sons Incorporated and BancAmerica Securities,
Inc.
10.31(18) Form of Amendment No. 2 to Credit Agreement, dated as of
July 15, 1997, by and among Safety Components, Phoenix
Airbag and Automotive Limited, as borrowers, and KeyBank
National Association, as administrative agent, and the
lending institutions named therein
10.32(18) Form of Amendment No. 2 to Subsidiary Guaranty, dated as
of July 15, 1997, among the guarantors named therein,
KeyBank National Association, as administrative agent
for itself and the other Lenders (as defined in the
Credit Agreement)
10.33(18) Form of Amendment No. 2 to Security Agreement, dated as
of July 15, 1997, among the assignors named therein and
KeyBank National Association, as collateral agent for
the benefit of the Secured Creditors (as defined
therein)
*10.34(19) Offer Letter, dated January 23, 1998, between Safety
Components and Philip Lelliot
*10.35(19) Employment Agreement, dated as of March 9, 1998, between
Valentec International Corporation, LLC (as successor in
interest to Valentec International Corporation) and Paul
M. Betz
*10.36(19) Employment Agreement, dated as of March 4, 1998, between
Safety Components and Robert Sepulveda
10.37(19) Consulting Agreement, dated as of May 14, 1998, between
Safety Components and Thomas W. Cresante
10.38(19) Severance Agreement, dated as of May 18, 1998, among
Automotive Limited, VIL and John L. Hakes
*10.39(19) Safety Components Senior Management Incentive Plan
*10.40(19) Safety Components Management Incentive Plan
*10.41(19) Safety Components Stock Appreciation Rights Award Plan
10.42(20) Safety Components 1994 Stock Option Plan, as amended
10.43(21) Form of Amendment No. 3 to Credit Agreement, dated as of
July 30, 1998, by and among Safety Components, ASCI GmbH
and Automotive Limited, as borrowers, and KeyBank
National Association, as administrative agent, and the
lending institutions named therein.
10.44(21) Form of Amendment No. 4 to Credit Agreement, dated as of
October 9, 1998, by and among Safety Components, ASCI
GmbH and Automotive Limited, as borrowers, and KeyBank
National Association, as administrative agent, and the
lending institutions named therein.
10.45(21) Form of Amendment No. 3 to Subsidiary Guaranty, dated as
of July 30, 1998, among the guarantors named therein,
KeyBank National Association, as administrative agent
for itself and the other Lenders (as defined in the
Credit Agreement).
10.46(21) Form of Amendment No. 3 to Security Agreement, dated as
of July 30, 1998, among the assignors named therein and
KeyBank National Association, as collateral agent for
the benefit of the Secured Creditors (as defined
therein).
*10.47(21) Form of Employment Agreement, dated as of June 1, 1998
between Safety Components and Stephen Duerk.
10.48(21) Form of Master Equipment Lease Agreement, dated as of
July 10, 1998, between KeyCorp Leasing, a division of
Key Corporate Capital Inc. and Safety Components.
16
<PAGE>
10.49(22) Form of Amendment No. 5 to Credit Agreement, dated as of
February 9, 1999, by and among Safety Components, ASCI
GmbH and Automotive Limited, as borrowers, and KeyBank
National Association, as administrative agent, and the
lending institutions named therein.
10.50(22) Form of Amendment No. 4 to Subsidiary Guaranty, dated as
of February 9, 1999, among the guarantors named therein,
KeyBank National Association, as administrative agent
for itself and the other Lenders (as defined in the
Credit Agreement).
10.51(22) Form of Amendment No. 4 to Security Agreement, dated as
of February 9, 1999, among the assignors named therein
and KeyBank National Association, as collateral agent
for the benefit of the Secured Creditors (as defined
therein).
*10.52(22) Severance Agreement, dated as of June 25, 1998, between
Valentec International Corporation LLC and Paul M. Betz.
*10.53(22) AmendmentNo. 1, dated as of March 24, 1999, to
Employment Agreement, dated February 15, 1997, between
Safety Components and Jeffrey J. Kaplan.
10.54(22) Investment Agreement, dated as of March 31, 1999,
between Brera SCI, LLC and Safety Components.
10.55(22) Termination Agreement, dated as of May 4, 1999, between
Brera SCI, LLC, Brera Capital Partners, LLC and Safety
Components
*10.56 Form of Employment Agreement, dated as of April 19,
1999, between Safety Components and Robert A. Zummo
*10.57 Form of Employment Agreement, dated as of April 19,
1999, between Safety Components and John C. Corey
21.1(22) Subsidiaries of Safety Components
23.1(22) Consent of Arthur Andersen LLP dated June 23, 1998
23.2(22) Consent of Arthur Andersen LLP dated June 25, 1999
23.3(22) Consent of PricewaterhouseCoopers LLP dated June 25,
1999
27(22) Financial Data Schedule
17
<PAGE>
(b) Reports on Form 8-K.
None.
* Indicates exhibits relating to executive compensation.
(1) Incorporated by reference to the Company's Registration
Statement on Form S-1 (the "1994 Registration Statement")
filed with the Securities and Exchange Commission (the
"Commission") on February 11, 1994.
(2) Incorporated by reference to the Company's Report on Form 10-K
for the fiscal year ended March 31, 1994, filed with the
Commission.
(3) Incorporated by reference to Amendment No. 2 to the 1994
Registration Statement, filed with the Commission on March 18,
1994.
(4) Incorporated by reference to Amendment No. 3 to the 1994
Registration Statement, filed with the Commission on April 20,
1994.
(5) Incorporated by reference to Amendment No. 4 to the 1994
Registration Statement, filed with the Commission on May 3,
1994.
(6) Incorporated by reference to the Company's Report on Form 10-Q
for the quarter ended September 30, 1994 filed with the
Commission.
(7) Incorporated by reference to the Company's Report on Form 10-Q
for the quarter ended December 31, 1994, filed with the
Commission.
(8) Incorporated by reference to the Company's Report on Form 10-K
for the fiscal year ended March 31, 1995.
(9) Incorporated by reference to Amendment No. 1 to the Company's
Registration Statement on Form S-1, filed with the Commission
on May 19, 1995.
(10) Incorporated by reference to the Company's Report on Form 10-Q
for the quarter ended June 30, 1995.
(11) Incorporated by reference to the Company's Report on Form 10-Q
for the quarter ended September 30, 1995.
(12) Incorporated by reference to the Company's Report on Form 10-K
for the fiscal year ended March 31, 1996.
(13) Incorporated by reference to the Company's Report on Form 10-Q
for the quarter ended June 30, 1996.
(14) Incorporated by reference to the Company's Report on Form 10-Q
for the quarter ended December 31, 1996.
(15) Incorporated by reference to the Company's Current Report on
Form 8-K, filed with the Commission on June 6, 1997.
(16) Incorporated by reference to the Company's Annual Report on
Form 10-K, for the fiscal year ended March 31, 1997.
(17) Incorporated by reference to the Company's Current Report on
Form 8-K, filed with the Commission on August 4, 1997.
(18) Incorporated by reference to the Company's Registration
Statement on Form S-4, filed with the Commission on August 12,
1997.
(19) Incorporated by reference to the Company's Annual Report on
Form 10-K for the fiscal year ended March 28, 1998.
(20) Incorporated by reference to the Company's Quarterly Report on
Form 10-Q for the quarter ended June 27, 1998.
(21) Incorporated by reference to the Company's Quarterly Report on
Form 10-Q for the quarter ended September 26, 1998.
(22) Incorporated by reference to the Original Form 10-K.
18
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
SAFETY COMPONENTS INTERNATIONAL, INC.
By: /s/ Robert A. Zummo
-------------------------------------
Robert A. Zummo
Chairman of the Board
and Chief Executive Officer
Date: July 26, 1999
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Name and Signature Title Date
- ------------------- ----- -----
<S> <C> <C>
Chairman of the Board and Chief
Executive Officer
/s/ Robert A. Zummo (Principal Executive Officer) July 26, 1999
- -------------------------------
Robert A. Zummo
Executive Vice President, Chief
Financial Officer and Director
/s/ Jeffrey J. Kaplan (Principal Financial Officer) July 26, 1999
- -------------------------------
Jeffrey J. Kaplan
Corporate Controller
/s/ Dale Anderson (Principal Accounting Officer) July 26, 1999
- -------------------------------
Dale Anderson
President, Chief Operating Officer an
/s/ John C. Corey Director July 26, 1999
- -------------------------------
John C. Corey
/s/ Joseph J. DioGuardi Director July 26, 1999
- -------------------------------
Joseph J. DioGuardi
/s/ Robert J. Torok Director July 26, 1999
- -------------------------------
Robert J. Torok
</TABLE>
19
