UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 1 )*
Safety Components International, Inc.
(Name of Issuer)
Common Stock
(Title of Class of Securities)
786474106
(CUSIP Number)
Mr. Robert A. Zummo With a copy to:
Safety Components International, Inc. Richard A. Goldberg, Esq.
2160 North Central Road Swidler Berlin Shereff Friedman LLP
Fort Lee, NJ 07024 919 Third Avenue
(201) 592-0008 New York, New York 10022
(212) 758-9500
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
March 31, 1999
(Date of Event which Requires Filing of
this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
statement because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following:
[ ].
Note: Schedules filed in paper format shall include a signed original and five
copies of the schedule, including all exhibits. See Rule 13d-7(b) for other
parties to whom copies are to be sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
Page 1
<PAGE>
SCHEDULE 13D
CUSIP No. 786474106 Page 2 of 8 Pages
------- ---------
1 NAME OF REPORTING PERSON
I.R.S. IDENTIFICATION NO. OF ABOVE PERSON (ENTITIES ONLY)
Robert A. Zummo
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) |_|
(See Instructions) (b) |_|
3 SEC USE ONLY
4 SOURCE OF FUNDS (See Instructions)
00
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) |_|
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States
NUMBER OF 7 SOLE VOTING POWER
SHARES 0
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 1,064,910
EACH 9 SOLE DISPOSITIVE POWER
REPORTING 1,064,910
PERSON 10 SHARED DISPOSITIVE POWER
WITH 0
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
1,064,910
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES |X|
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
20.4%
14 TYPE OF REPORTING PERSON (See Instructions)
IN
Page 2
<PAGE>
Schedule 13D
This Amendment No. 1 to Statement on Schedule 13D amends and supplements
the Statement on Schedule 13D relating to the event of May 22, 1997 (the
"Schedule 13D"), filed by Robert A. Zummo (sometimes referred to as the
"Reporting Person"), the Chief Executive Officer and Chairman of the Board of
Safety Components International, Inc., a Delaware corporation (the "Company"),
relating to the common stock, $0.01 par value per share (the "Common Stock"), of
the Company. The principal executive office of the Company is located at 2160
North Central Road, Fort Lee, NJ 07024. Capitalized terms used herein and not
otherwise defined shall have the meaning ascribed thereto in the Schedule 13D.
Item 5. Interest in Securities of Issuer.
Item 5 of the Schedule 13D is amended and restated to read in
its entirety as follows:
(a) Robert A. Zummo is the beneficial owner of 1,064,910
shares of Common Stock, of which 976,576 shares were acquired in connection with
the Valentec Acquisition and 88,334 shares are issuable under currently
exercisable options held by Mr. Zummo. Such shares represent, in the aggregate,
approximately 20.4% of the issued and outstanding shares of Common Stock,
subject to dilution upon conversion of all shares of Series A Convertible
Preferred Stock, $.10 par value per share (the "Series A Preferred Stock"), of
the Company (See Item 6). The number of shares beneficially owned by the
Reporting Person and the percentage of outstanding shares represented thereby
are based on the number of outstanding shares as of December 26, 1998, which
information is known to the Reporting Person as an officer of the Company.
(b) Mr. Zummo has sole dispositive power with respect to all
shares of Common Stock beneficially owned by him. See Item 6 for information
regarding an arrangement between Mr. Zummo and (i) Brera with respect to the
voting of the shares of Common Stock owned by Mr. Zummo and (ii) Francis X.
Suozzi, a director of the Company, with respect to certain additional shares of
the Common Stock.
(c) The Reporting Person has not effected any transactions in
the Common Stock within the past 60 days.
(d) and (e) Not applicable.
Page 3
<PAGE>
Item 6. Contracts, Arrangements, Understandings or Relationships with
Respect to Securities of Issuer.
Item 6 of the Schedule 13D is amended and restated to read in
its entirety as follows:
The Company and BCPartners Investors, LLC, a Delaware limited
liability company, and Brera Capital Partners Limited Partnership, a Delaware
limited partnership, through a newly formed Delaware limited liability company,
Brera SCI, LLC ("Brera"), are parties to an Investment Agreement (the
"Investment Agreement"), dated as of March 31, 1999, pursuant to which, among
other things, Brera will purchase from the Company 28,000 shares of the
Company's Series A Preferred Stock in consideration for $28,000,000 in cash. The
Series A Preferred Stock will be convertible at an initial price of $12 per
share, subject to adjustment as provided in the certificate of designations
relating to the Series A Preferred Stock, into that number of shares of Common
Stock equal to the lesser of (i) 18% of the outstanding Common Stock and/or (ii)
the maximum number of shares that the Company can issue without shareholder
approval under Rule 4460(i) of the Nasdaq National Market (the "Nasdaq Cap").
Any portion of the Series A Preferred Stock that cannot be converted into Common
Stock as a result of the Nasdaq Cap shall be convertible only into shares of
Series B Junior Participating Preferred Stock of the Company, $0.10 par value
per share (the "Series B Preferred Stock"). Following the Stockholder Approval
(as defined below) the Series A Preferred Stock will cease to be convertible
into Series B Preferred Stock, except in the event the Company is prohibited
from issuing Common Stock upon conversion of Series A Preferred Stock as a
result of the operation of certain restrictions on conversion contained in the
Company's indenture with respect to outstanding debt securities which limit
voting rights to 49.9% of the Company's outstanding capital stock (the "Sub-Debt
Cap", and together with the Nasdaq Cap, the "Caps"). In such case, the Company
would issue Series B Preferred Stock in lieu of the Common Stock that it would
be prohibited from issuing.
The initial conversion price of the Series A Preferred Stock
shall be adjusted on the 25th trading day following the filing by the Company of
its annual report on Form 10-K for the year ended March 25, 2000 (the
"Adjustment Date"). The conversion price will be derived from a formula which is
based on the Company's EBITDA derived from its Form 10-K for the year ended
March 25, 2000. The final conversion price based on the foregoing formula will
be between $14 and $3 per share (which conversion price range would give Brera
the right to convert the Series A Preferred Stock, subject to the Caps, into
2,000,000 shares of Common Stock at $14 per share to 9,333,333 shares of Common
Stock at $3 per share) (subject to customary antidilution adjustments).
It is expected that the closing (the "Closing") of the
transactions contemplated by the Investment Agreement will occur on or prior to
May 15, 1999. It is contemplated that simultaneously with the Closing, Brera
will purchase 325,801 shares of Common Stock (the "Suozzi Shares") from Francis
X Suozzi, a director of the Company, pursuant to a Purchase Agreement, dated as
of March 31, 1999, between Brera and Mr. Suozzi (the "Purchase Agreement").
As a condition to the Closing, Brera and Robert A. Zummo will
enter into a
Page 4
<PAGE>
Stockholders' Agreement (the "Stockholders' Agreement"), pursuant to which (i)
Robert A. Zummo, at any time, will have the right, subject to certain
conditions, to put to Brera up to $2,000,000 of Common Stock owned by Mr. Zummo
at market (subject to adjustment, if the sale occurs prior to the first
anniversary of the Closing, on substantially the same terms as any adjustment to
the conversion price of the Series A Preferred Stock described above), (ii) Mr.
Zummo will agree not to otherwise transfer any Common Stock owned by him, or
grant any voting rights to any person with respect to such Common Stock, except
for (A) estate planning purposes, (B) transfers in a registered public offering,
(C) sales under Rule 144 promulgated under the Securities Act of 1933, as
amended (the "Act"), or (D) a private placement not to exceed $2,000,000, (iii)
Brera will grant Mr. Zummo the right to "tag along" in certain sales of Common
Stock by Brera on a pro-rata basis and on substantially the same terms as any
sale of Common Stock by Brera, (iv) Mr. Zummo will grant to Brera a right of
first refusal in certain sales of Common Stock by Mr. Zummo on substantially the
same terms as such sales of Common Stock by Mr. Zummo, and (v) Brera and Mr.
Zummo will agree to vote their respective shares of Common Stock to, among other
things, amend the By-Laws of the Company as provided in an exhibit to the
Investment Agreement, to elect to the Board of Directors those nominees
designated by Brera and Mr. Zummo and to amend the Company's Certificate of
Incorporation to increase the number of authorized shares of Common Stock from
10,000,000 to 30,000,000.
In connection with the Investment Agreement, Mr. Zummo and
Brera have entered into a Voting Agreement (the "Voting Agreement"), dated as of
March 31, 1999, pursuant to which Mr. Zummo has agreed to vote his Common Stock,
including any New Shares (as defined in the Voting Agreement attached hereto as
Exhibit 11), in favor of the transactions contemplated by the Investment
Agreement, including, without limitation, (i) the approval of the vesting of
voting rights in the Series A Preferred Stock, (ii) the issuance of Common Stock
upon the exercise of the conversion rights set forth in the Series A Preferred
Stock, and (iii) increasing the number of authorized shares of Common Stock of
the Company from 10,000,000 to 30,000,000 shares. Mr. Zummo has granted Brera a
limited irrevocable proxy to vote his Common Stock in accordance with the Voting
Agreement.
The Voting Agreement is effective from the date thereof
through the earlier of (i) the date upon which the Investment Agreement is
validly terminated or (ii) the date upon which the Company's stockholders
approve the transactions contemplated by the Investment Agreement (the
"Stockholders' Approval").
In connection with the Valentec Acquisition, the Company
entered into a Registration Rights Agreement (the "Registration Rights
Agreement"), dated as of May 22, 1997, with Robert A. Zummo, Francis X. Suozzi
and the Valentec ESOP, pursuant to which the Company will, (i) upon the request
of Mr. Zummo, file up to one registration statement under the Act, in order to
permit Mr. Zummo (or any subsequent holder of Registrable Securities (as defined
in the Registration Rights Agreement) representing at least 5% of the
outstanding Common Stock on the date thereof) to offer and sell all or a portion
of the Zummo Shares and (ii) notify Mr. Zummo (or any such subsequent holder) if
at any time the Company proposes to file a registration statement under the Act
and offer
Page 5
<PAGE>
to Mr. Zummo (or any such subsequent holder) the opportunity to register such
number of Zummo Shares as Mr. Zummo (or such subsequent holder) may request.
The provisions of the Stockholders' Agreement, Voting
Agreement and Registration Rights Agreement are set forth in full in the
documents which are filed as Exhibits 10 and 11 hereto and Exhibit 7 to the
Schedule 13D, respectively, and are incorporated herein in their entirety by
this reference. The foregoing description of the terms and provisions of such
documents is a summary only, and is qualified in its entirety by reference to
such documents.
In connection with the Valentec Acquisition, Mr. Zummo and Mr.
Suozzi entered into a Reallocation Agreement (the "Reallocation Agreement")
pursuant to which, among other things, 36,430 shares of Common Stock to be
received by Mr. Zummo under the Valentec Acquisition were reallocated to Mr.
Suozzi in consideration of Mr. Suozzi's release of certain claims relating to
consulting fees. As a result, Mr. Zummo received 976,576 shares of Common Stock
under the Valentec Acquisition (rather than 1,013,006 shares). In addition,
pursuant to such Reallocation Agreement, Messrs. Zummo and Suozzi agreed 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 of the Company (other
than as a result of his resignation). Mr. Suozzi beneficially owns an aggregate
of 336,634 shares of Common Stock as of the date hereof (which consists of
325,801 shares of Common Stock received by Mr. Suozzi under the Valentec
Acquisition and 10,833 shares of Common Stock issuable under currently
exercisable stock options).1 Upon consummation of the purchase by Brera of the
Suozzi Shares under the Purchase Agreement, Mr. Suozzi will resign as a member
of the Company's Board of Directors and the Reallocation Agreement will be
terminated and of no further force or effect. Shares of Common Stock owned by
Mr. Suozzi which are the subject of the Reallocation Agreement are not included
in the shares included herein as being beneficially owned by Mr. Zummo and Mr.
Zummo disclaims beneficial ownership of such shares. The provisions of the
Reallocation Agreement are set forth in full in the document which is filed as
Exhibit 8 to the Schedule 13D, and Sections 1, 2 and 4 of the Reallocation
Agreement are incorporated herein by this reference. The foregoing description
of the terms and provisions of the Reallocation Agreement is a summary only, and
is qualified in its entirety by reference to Sections 1, 2 and 4 of the
Reallocation Agreement.
1 The ownership of Common Stock by Francis X. Suozzi relating to the
Common Stock received by Mr. Suozzi under the Valentec Acquisition is based on a
Schedule 13D filed by Mr. Suozzi and dated August 22, 1997. The beneficial
ownership of Common Stock by Mr. Suozzi relating solely to Common Stock issuable
under currently exercisable stock options is based on information known to Mr.
Zummo as an officer of the Company.
Page 6
<PAGE>
In connection with the Company's initial public offering, the
Company and Mr. Zummo entered into a Stock Option Agreement (the "IPO Option
Agreement"), pursuant to which Mr. Zummo was given the option to purchase 40,000
shares of Common Stock under the Company's 1994 Stock Option Plan (the "Plan")
at an exercise price of $11.00 per share. On September 17, 1997, the vesting
schedule of all options granted by the Company under the Plan was accelerated.
Accordingly, all such options now vest in three equal annual installments
(rather than four equal annual installments) commencing one year from the date
of grant. Options to purchase all shares under the IPO Option Agreement are
currently exercisable, however, such options expire in May 1999.
The Company and Mr. Zummo are parties to five additional Stock
Option Agreements, dated May 6, 1994, May 4, 1995, May 9, 1996 (collectively,
the "May Stock Option Agreements"), July 15, 1997 (the "July 1997 Stock Option
Agreement") and March 26, 1998 (the "March Stock Option Agreement"), pursuant to
which, Mr. Zummo was given the option to purchase, under the Plan, an additional
(i) 10,000 shares of Common Stock under each of the May Stock Option Agreements,
(ii) 5,000 shares of Common Stock under the July 1997 Stock Option Agreement and
(iii) 50,000 shares of Common Stock under the March Stock Option Agreement at an
exercise price of $10.00, $21.73, $14.17, $12.38 and $14.13 per share,
respectively. Options to purchase 48,334 of such shares are either currently
exercisable or will be exercisable within 60 days from the date of this
statement, however, options to purchase 10,000 of such shares expire in May,
1999.
Item 7. Materials to Be Filed as Exhibits.
Item 7 of the Schedule 13D is amended by adding the following
at the end of such Item:
9. Stock Option Agreement, dated as of March 26, 1998, between
the Company and Robert A. Zummo.
10. Form of Stockholders' Agreement between Mr. Zummo and
Brera.
11. Voting Agreement, dated as of March 31, 1999, between Mr.
Zummo and Brera.
Page 7
<PAGE>
After reasonable inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this statement is true,
complete and correct.
Dated: April 15, 1999
/S/Robert A. Zummo
------------------
Robert A. Zummo
Page 8
SAFETY COMPONENTS INTERNATIONAL, INC.
STOCK OPTION AGREEMENT
Agreement, made as of the 26th day of March, 1998, between Safety
Components International, Inc. (the "Company"), a Delaware Corporation, and
Robert A. Zummo, (the "Optionee"), residing at 9963 North 79th Place,
Scottsdale, Arizona 85258.
The Company has duly adopted the Safety Components International, Inc. 1994
Stock Option Plan (the "Plan"), the terms of which are hereby incorporated by
reference. In the case of any conflict between the provisions hereof and those
of the Plan, the provisions of the Plan shall be controlling. A copy of the Plan
(as such may have been amended to date) will be made available for inspection by
the Optionee during normal business hours at the principal office of the
Company. All capitalized terms used but not defined herein shall have the
respective meanings ascribed to them in the Plan.
In accordance with Section 3 of the Plan, a committee of the Board of
Directors of the Company which administers the Plan (the "Committee") has
adopted a resolution granting the Optionee a stock option (the "Option) under
the Plan to purchase 50,000 shares (the "Shares") of the Company's Common Stock,
par value $.01 per share (the "Common Stock"), for the price and on the terms
and conditions set forth in this Agreement and in the Plan.
The Option is not intended to satisfy the requirements for an incentive
stock option (an "ISO") under the Internal Revenue Code of 1986, as amended (the
"Code"). The Company makes no representations or warranties as to the income,
estate or other tax consequences to the Optionee of the grant or exercise of the
Option or the sale or other disposition of the Shares acquired pursuant to the
exercise thereof.
1. (a) The price at which the Optionee shall have the right to purchase the
Shares under this Agreement is $14.125 per share subject to adjustment as
provided in Paragraph 4 below.
(b) Unless the Option is previously terminated pursuant to the Plan or this
Agreement and subject to the terms of any other agreement between Optionee and
the Company (including, without limitation, any employment or other agreement
which may provide for, among other things, an accelerated vesting schedule), the
Option shall be exercisable in three (3) installments of 16,666 Shares each on
the first and second anniversaries, and 16,668 Shares on the third anniversary
of the date of grant. In no event shall any Shares be purchasable under this
Agreement after March 26, 2008 (ten years from the date of grant) (the
"Expiration Date"). Except as provided in subparagraph (c) hereof, the Option
shall cease to be exercisable thirty (30) days after the date the Optionee
terminates services as an employee of the Company or any Affiliate of the
Company for reasons other than cause and immediately upon the termination of the
employee for cause, and all rights of the Optionee hereunder shall thereupon
terminate.
<PAGE>
(c) If the Optionee ceases to be an employee of the Company or any
Affiliate of the Company and this cessation is due to retirement (as defined by
the Committee in its sole discretion), or to disability (as defined in each case
by the Committee in its sole discretion) or to death, the Option shall be
exercisable as provided in this subparagraph. The Optionee, or in the event of
his disability, his duly appointed guardian or conservator, or in the event of
his death, his executor or administrator shall have the privilege of exercising
the unexercised portion of the Option which the Optionee could have exercised on
the day on which he ceased to be an employee of the Company or any Affiliate of
the Company, provided, however, that such exercise must be in accordance with
the terms of this Agreement and within (i) three (3) months after the Optionee's
retirement or disability or (ii) (A) twelve (12) months after the Optionee's
death or (B) three (3) months after the Optionee's death if such death occurs
during the three (3) month period following the termination of the Optionee's
employment by reason of retirement or mental or physical disability, as the case
may be. In no event, however, shall the Optionee or his executor or
administrator, as the case may be, exercise the option after the Expiration Date
specified in subparagraph 1 (b). For all purposes of this Agreement, an approved
leave of absence shall not constitute an interruption or cessation of the
Optionee's service as an employee of the Company or any Affiliate of the
Company.
2. Nothing contained herein shall be construed to confer on the Optionee
any right to continue as an employee of the Company or any Affiliate of the
Company or to derogate from any right of the Company or any Affiliate thereof to
retire, request the resignation thereof or discharge the Optionee, or to layoff
or require a leave of absence of the Optionee, with or without pay, at any time,
with or without cause.
3. The Option shall not be sold, pledged, assigned, or transferred in any
manner except to the extent that the Option may be exercised by an executor or
administrator as provided in subparagraph 1 (c) above. The Option may be
exercised, during the lifetime of the Optionee, only by the Optionee, or in the
event of his disability, his duly appointed guardian or conservator.
<PAGE>
4. (a) If the outstanding shares of Common Stock are affected by any (i)
subdivision or consolidation of shares, (ii) dividend or other distribution
(whether in the form of cash, shares of Common Stock, other securities, or other
property), (iii) recapitalization or other capital adjustment of the Company or
(iv) merger, consolidation or other reorganization of the Company or other
rights to purchase shares of Common Stock or other securities of the Company, or
other similar corporate transaction or event, such that an adjustment is
determined by the Committee to be appropriate in order to prevent dilution or
enlargement of the benefits or potential benefits intended to be made available
under the Plan, then the Committee shall, in such manner as it may deem
necessary to prevent dilution or enlargement of the benefits or potential
benefits intended to be made under the Plan, adjust any or all of (x) the number
and type of Shares subject to the unexercised portion of the Option, and (y) the
exercise price with respect to the unexercised portion of the Option, or if
deemed appropriate, make provision for a cash payment with respect to the
unexercised portion of the Option. In computing any adjustment under this
paragraph, any fractional share shall be eliminated.
(b) In the event of (i) a merger or consolidation to which the Corporation
is a party of (ii) a sale by the Company of all or substantially all of its
assets, the Option shall, after such merger, consolidation or sale, be
exercisable into the kind and number of shares of stock and/or securities, cash
or other property which Optionee would have been entitled to receive if Optionee
had held the Common Stock issuable upon the exercise of the Option immediately
prior to such consolidation, merger or sale.
5. The Option shall be exercised when written notice of such exercise,
signed by the person entitled to exercise the Option, has been delivered or
transmitted by registered or certified mail, to the Secretary of the Company at
its principal office. Said written notice shall specify the number of Shares
purchasable under the Option which such person then wishes to purchase and shall
be accompanied by such documentation, if any, as may be required by the Company
as provided in Paragraph 7 below and be accompanied by payment of the aggregate
Option price. Such payment shall be, without limitation, in the form of (i)
cash, shares of Common Stock, outstanding options or other consideration, or any
combination thereof, having a Fair Market Value (as defined in the Plan) on the
exercise date equal to the exercise price of the Option or portion thereof being
exercised or (ii) a broker-assisted cashless exercise program established by the
Committee. Delivery of said notice and such documentation shall constitute an
irrevocable election to purchase the Shares specified in said notice and the
date on which the Company receives said notice and documentation shall, subject
to the provisions of Paragraphs 6 and 7, be the date as of which the Shares so
purchased shall be deemed to have been issued. The person entitled to exercise
the Option shall not have the right or status as a holder of the Shares to which
such exercise relates prior to receipt by the Company of such payment, notice
and documentation.
6. Anything in this Agreement to the contrary notwithstanding, in no event
may the Option be exercisable if the Company shall, at any time and in its sole
discretion, determine that (i) the listing, registration or qualification of any
shares otherwise deliverable upon such exercise, upon any securities exchange or
under any state or federal law, or (ii) the consent or approval of any
regulatory body or the satisfaction of withholding tax or other withholding
liabilities is necessary or desirable in connection with such exercise. In such
event, such exercise shall be held in abeyance and shall not be effective unless
and until such withholding, listing, registration, qualification, or approval
shall have been affected or obtained free of any conditions not acceptable to
the Company.
<PAGE>
7. The Committee may require as a condition to the right to exercise the
Option hereunder that the Company receive from the person exercising the Option,
representations, warranties and agreements, at the time of any such exercise, to
the effect that the Shares are being purchased for investment only and without
any present intention to sell or otherwise distribute such Shares and that the
Shares will not be disposed of in transactions which, in the opinion of counsel
to the Company, would violate the registration provisions of the Securities Act
of 1933, as then amended, and the rules and regulations thereunder. The
certificate issued to evidence such Shares shall bear appropriate legends
summarizing such restrictions on the disposition thereof.
8. This Agreement shall be construed and enforced in accordance with the
laws of the State of Delaware and applicable Federal law. Subject to
subparagraph 1(c) hereof, this Agreement shall be binding upon and shall insure
to the benefit of the parties hereto and their respective heirs, personal
representatives, successors or assigns, as the case may be.
IN WITNESS WHEREOF, the parties have witnessed this Agreement to be duly
executed and delivered as of the date first above written.
SAFETY COMPONENTS
INTERNATIONAL, INC.
/S/ Robert A. Zummo By:/S/ Jeffrey J. Kaplan
- ------------------- ---------------------------
Optionee Jeffrey J. Kaplan
Executive Vice President
and Chief Financial Officer
STOCKHOLDER'S AGREEMENT
THIS STOCKHOLDER AGREEMENT (this "Agreement") is made this ____ day of
___________, 1999, by and between ROBERT A. ZUMMO ("Zummo") and BRERA SCI, LLC,
a Delaware limited liability company (the "Investor").
W I T N E S S E T H
WHEREAS, Safety Components International, Inc., a Delaware corporation (the
"Company"), and the Investor have entered into an Investment Agreement (the
"Investment Agreement"), pursuant to which the Investor has agreed to purchase,
in the aggregate, from the Company, and the Company has agreed to issue and sell
to the Investor, (i) 28,000 shares of the Company's Series A Convertible
Preferred Stock, par value $0.10 per share (the "Senior Preferred Stock"),
having the rights, preferences, privileges and restrictions set forth in the
form of Certificate of Designations of Series A Convertible Preferred Stock (the
"Senior Certificate of Designations"), initially convertible into shares of
common stock, $.01 par value per share (the "Common Stock"), and, under certain
circumstances, shares of the Company's Series B Junior Participating Preferred
Stock, par value $0.10 per share (the "Junior Preferred Stock," and together
with the Senior Preferred Stock, the "Preferred Stock"), having the rights,
preferences, privileges and restrictions set forth in the form of Certificate of
Designations of Series B Junior Participating Preferred Stock (the "Junior
Certificate of Designations,"and together with the Senior Certificate of
Designations, the "Certificates of Designations");
WHEREAS, Zummo is the Chief Executive Officer and a significant shareholder
of the Company;
WHEREAS, on the date hereof, Zummo and the Investor own the number of
shares of capital stock of the Company set forth on Schedule 1 hereto;
WHEREAS, as an inducement to completion of the transactions contemplated by
the Investment Agreement, Zummo and the Investor have agreed to vote the shares
of Stock owned by them pursuant to the provisions of this Agreement;
NOW, THEREFORE, in consideration of the foregoing, the parties hereto,
intending to be legally bound hereby, agree with each other as follows:
1. Certain Defined Terms. Capitalized terms used in this Agreement have the
meanings set forth in this Section 1, are defined in the provisions of this
Agreement identified in this Section 1 or, if not defined in this Agreement,
have the meanings set forth in the Investment Agreement.
(a) "Board" shall mean the Board of Directors of the Company.
1
<PAGE>
(b) "Counterpart" shall mean a counterpart to this Agreement in the form of
Exhibit A hereto, pursuant to the execution of which a Person shall become bound
by all of the terms and conditions to this Agreement.
(c) "Designated Transferee" shall mean, with respect to Zummo (i) his
spouse, (ii) any of his lineal ancestors or descendants, (iii) spouses of such
lineal descendants, (iv) trusts for the benefit of any such spouse, lineal
descendant or spouse of a lineal descendant, or (v) organizations exempt from
federal income taxation under Section 501(c)(3) of the Internal Revenue Code of
1986, as amended. With respect to any Stockholder, the term "Designated
Transferee" shall also mean only any Affiliate (as defined in Section 12b-2
under the Exchange Act of 1934, as amended) of the Stockholder or the original
parties to this Agreement.
(d) "Exempt Transaction" shall mean (i) any Transfer of shares of Stock to
a Designated Transferee; (ii) any Transfer of shares of Stock to the public
pursuant to a registration; or (iii) any Transfer of shares of Stock to the
public pursuant to Rule 144 promulgated under the Securities Act of 1933, as
amended.
(e) "Investor Nominees" means (i) one (1) individual nominated by the
Investor as of the Closing Date, (ii) two (2) additional individuals nominated
by the Investor as of the date of Shareholder Approval, (iii) two (2) additional
individuals nominated by the Investor as of the Adjustment Date (as defined in
the Senior Certificate of Designations) and (iv) additional individuals
designated by the Investor in accordance with Section C of Article VIII of the
Senior Certificate of Designations or, in each case, their replacements
designated by the Investor.
(f) "Personal Representative" shall mean, in the event of Zummo's death,
his designated beneficiary, or, in the absence of such designation, the estate
or other legal representative of Zummo and, in the event of Zummo's disability,
a Person specifically designated by him, or, in the absence of such designation,
the guardian or other legal representative of Zummo.
(g) "Shares" shall mean and include all issued and outstanding shares of
Common Stock or Preferred Stock now owned or hereafter acquired by the
Stockholders.
(h) "Stock" shall mean and include (i) all shares of Common Stock and
Preferred Stock of the Company, including without limitation, shares of Common
Stock issued, issuable or transferable (A) on the exercise of rights to acquire
shares of Common Stock or (B) on the conversion or exchange or exercise of
securities convertible into or exchangeable or exercisable for Common Stock, and
(ii) all other securities of the Company which may be issued in exchange for or
in respect of shares of Common Stock or Preferred Stock (whether by way of stock
split, stock dividend, combination, reclassification, reorganization or any
other means).
(i) "Stockholder" shall mean Zummo, the Investor, a Designated Transferee
and any other Person who becomes a party to this Agreement pursuant to the terms
hereof.
2
<PAGE>
(j) "Transfer" shall mean any transfer of Stock, whether by sale,
assignment, gift, will, devise, bequest, operation of the laws of descent and
distribution, or in trust, pledge, hypothecation, mortgage, encumbrance or other
disposition. The verb to "Transfer" shall mean to sell, assign, give, transfer
(including by gift, will, devise, bequest, or operation of laws of descent and
distribution, or in trust), pledge, hypothecate, mortgage, encumber or dispose
of.
(k) "Zummo Nominees" means five (5) individuals nominated by Zummo (which
shall include Zummo), or their replacements designated by Zummo or his Personal
Representative. Initially, the Zummo Nominees shall be the members of the Board
immediately prior to the Closing (taking into account the resignation of Francis
Suozzi) and John C. Corey.
2. Designated Transferees to become Parties to this Agreement. If any
Stockholder Transfers its Stock to any Designated Transferee, such transferee
shall, as a condition to such Transfer, execute a Counterpart and thereafter the
transferee shall be treated as a Stockholder for all purposes under this
Agreement. A Designated Transferee of Zummo (other than the Investor) shall be
required to take the actions required to be taken by Zummo hereunder, and a
Designated Transferee of the Investor (other than Zummo) shall be required to
take the actions required to be taken by the Investor hereunder. In the event
that a Stockholder Transfers its Stock to a Person that is not a Designated
Transferee in accordance with this Agreement, such transferee (except in the
case of a transfer from Zummo to Investor or an Affiliate thereof) shall not be
subject to this Agreement or entitled to any of the benefits of this Agreement,
unless otherwise agreed to by the Investor and Zummo. A Transfer by Zummo of
Stock to a Designated Transferee shall not be subject to the provisions of
Section 3 hereof.
3. Standstill Agreement. Except in accordance with the provisions of this
Agreement, Zummo agrees, until the third anniversary of this Agreement, not to:
(i) sell, transfer, pledge, assign or otherwise dispose of, or enter into any
contract, option or other arrangement or understanding with respect to the sale,
transfer, pledge, assignment or other disposition of, any shares of Stock; or
(ii) deposit any shares of Stock into a voting trust, enter into a voting
agreement or otherwise grant any voting rights to any other person or entity
with respect to any such securities. None of (x) a Transfer by Zummo of Stock in
a registered public offering nor (y) sales under Rule 144 promulgated under the
Securities Act of 1933 or (z) a private placement not to exceed $2,000,000 in
the aggregate shall be subject to the provisions of Section 3 hereof. A Transfer
by Zummo in violation of this Section 3 shall be null and void.
4. Right of First Refusal.
(a) If at any time after the third anniversary of this Agreement Zummo
desires to Transfer all or a portion of his Stock pursuant to an arm's-length
offer from a bona fide third party other than a Designated Transferee (the
"Proposed Transferee"), Zummo shall submit a written offer (the "Offer") to sell
such shares of Stock (the "Offered Shares") to the Investor, on terms and
conditions, including price, not less favorable to the Investor than those on
which Zummo proposes to sell the Offered Shares to the Proposed Transferee. The
Offer shall disclose
3
<PAGE>
the identity of the Proposed Transferee, the number of Offered Shares proposed
to be sold, the terms and conditions, including price, of the proposed sale,
that the Proposed Transferee has been informed of the Right of First Refusal (as
defined below) provided for in this Section 4 and any other material facts
relating to the proposed sale.
(b) Subject to the provisions of this Section 4, the Investor shall have
the irrevocable right of first refusal ("Right of First Refusal") for a period
of twelve (12) days after its receipt of the Offer (the "Acceptance Period") to
purchase all (but not a portion) of the Offered Shares. The Investor may
exercise its Right of First Refusal to purchase the Offered Shares by notifying
Zummo in writing (the "Acceptance Notice") within the Acceptance Period of its
intention to purchase the Offered Shares, for the price and upon the terms and
conditions specified in the Offer. If the Investor declines to purchase all of
the Offered Shares or fails to deliver the Acceptance Notice within the
Acceptance Period (which failure shall be deemed conclusive of the Investor's
intent to decline the opportunity to purchase any Offered Shares), then all of
the Offered Shares may be sold by Zummo at any time within ninety (90) days
after the date the Offer was made. Any such sale shall be to the Proposed
Transferee, at not less than the price specified in the Offer, and upon other
terms and conditions, if any, not more favorable to the Proposed Transferee than
those specified in the Offer. Any Offered Shares not sold within such 90-day
period shall continue to be subject to the requirements of a prior offer
pursuant to this Section 4.
(c) A Transfer by Zummo of Stock pursuant to an Exempt Transaction shall
not be subject to the provisions of Section 4 hereof but shall be subject to the
provisions of Section 3 hereof (except as expressly stated therein).
5. Tag-Along Rights.
(a) If the Investor at any time proposes to Transfer any shares of Stock
(other than pursuant to an Exempt Transaction), the Investor shall afford Zummo
the right to participate in such Transfer in accordance with this Section 5.
(b) If the Investor desires to Transfer any shares of Stock, the Investor
shall give written notice to Zummo (a "Notice of Transfer") not less than 12 nor
more than 120 days prior to any proposed Transfer of any such shares of Stock.
Each such Notice of Transfer shall:
(i) specify in reasonable detail (A) the number and type of shares of Stock
which such the Investor proposes to Transfer, (B) the identity of the proposed
transferee or transferees of such shares of Stock, (C) the time within which,
the price per share at which and all other terms and conditions upon which such
the Investor proposes to transfer such shares of Stock and (D) the percentage of
the Stock then owned by the Investor which the Investor proposes to Transfer to
such proposed transferee or transferees (the "Applicable Percentage"),
calculated on a fully-diluted basis and shall be carried out to a tenth of a
share; and
4
<PAGE>
(ii) make explicit reference to this Section 5 and state that the
right of Zummo to participate in such Transfer under this Section 5 shall expire
unless such offer is accepted within 12 days after receipt of such Notice of
Transfer.
(c) Zummo shall have the right to Transfer to the proposed transferee or
transferees up to that number of shares of Stock then owned by Zummo which is
multiplied by the Applicable Percentage (calculated on a fully-diluted basis and
shall be carried out to a tenth of a share and then rounded to the nearest
share), at the same price per share and on the same terms and conditions as are
applicable to the proposed transfer by the Investor, provided that (i) the
consideration payable to Zummo shall be paid in the same form as that paid to
the Investor and (ii) Zummo shall not be required in connection with any such
transaction to make any representation, warranty or covenant other than a
representation as to Zummo's power and authority to effect such Transfer, as to
Zummo's title to the shares of Stock to be transferred by him and other than
such representations, warranties or covenants made by the Investor (to the
extent applicable to Zummo).
(d) Zummo must notify the Investor, within 12 days after receipt of the
Notice of Transfer, if Zummo desires to accept such offer and to Transfer any of
his shares of Stock in accordance with this Section 5. If Zummo declines to
provide such notice within such 12-day period, such failure shall be deemed
conclusive of Zummo's intent to decline the opportunity to Transfer shares of
Stock. Any and all Transfers of shares by Zummo pursuant to this Section 5 shall
be made either concurrently with or prior to the Transfer of shares by the
Investor.
(e) A Transfer by Zummo of Stock pursuant to this Section 5 shall not be
subject to the provisions of Section 3 hereof. Zummo shall not have any rights
pursuant to this Section 5 to participate in any Exempt Transaction by the
Investor.
6. Put Rights.
(a) Zummo, at any time, shall have the right, but not the obligation, to
put to the Investor, a number of shares of Stock owned by Zummo not to exceed in
Aggregate Value (i) $2,000,000 less (ii) the gross proceeds of sales under
clause (x), (y) or (z) of Section 3. Zummo shall exercise such put by providing
a written notice (the "Put Notice") to the Investor at least twelve (12) days
before date of sale. The Investor shall then have the obligation to buy the
number of shares specified in the Put Notice at the Aggregate Value set forth in
the Put Notice. The Investor shall fulfill its obligations under this Section 6
on the date of sale set forth in the Put Notice; provided, however that Investor
shall have no such obligation at any time when the Value at the time of the Put
Notice is less than $3 per share of Stock. A Transfer by Zummo of Stock pursuant
to this Section 6 shall not be subject to the provisions of Section 3 hereof but
shall reduce the amount that can be sold under clause (y) of Section 3.
5
<PAGE>
(b) As used herein, "Value" means, with respect to a share of Stock, (A) if
the shares are listed or admitted for trading on any national securities
exchange or included in The Nasdaq National Market or Nasdaq SmallCap Market,
the last reported sales price per share as reported on such exchange or market;
(B) if the shares are not listed or admitted for trading on any national
securities exchange or included in The Nasdaq National Market or Nasdaq SmallCap
Market, the average of the last reported closing bid and asked quotation per
share for the shares as reported on the National Association of Securities
Dealers Automated Quotation System ("NASDAQ") or a similar service if NASDAQ is
not reporting such information; (C) if the shares are not listed or admitted for
trading on any national securities exchange or included in The Nasdaq National
Market or Nasdaq SmallCap Market or quoted by NASDAQ, the average of the last
reported bid and asked quotation per share for the shares as quoted by a market
maker in the shares (or if there is more than one market maker, the bid and
asked quotation shall be obtained from two market makers and the average of the
lowest bid and highest asked quotation); and (D) in the absence of any such
listing or trading, the Board shall determine in good faith the per share fair
value of the Stock, which determination shall be set forth in a certificate of
the Secretary of the Corporation. In each case, the determination of Value shall
be based on the twenty (20) trading day average, ending on the day before the
day of the Put Notice. In no event shall the Value be in excess of $14 per share
of Stock. As used herein, "Aggregate Value" means Value multiplied by the number
of shares of Stock to be sold to the Investor pursuant to this Section 6.
(c) In the event that a sale takes place pursuant to this Section 6 prior
to the Adjustment Date (as defined in the Senior Certificate of Designations)
and such Value is greater than the conversion price fixed at the Adjustment
Date, Zummo shall either (x) Transfer to the Investor, within twelve (12) days
after the Adjustment Date, a number of shares of Stock (based on the Value at
the Adjustment Date) equal to the difference between (i) the Aggregate Value
with respect to the sale and (ii) the Aggregate Value where the Value is equal
to the Conversion Price fixed at the Adjustment Date or (y) deliver to the
Investor a note bearing interest at the rate of 8.0%, maturing on March 31, 2004
and requiring equal quarterly payments of principal and interest beginning on
the last day of the calendar quarter after the Adjustment Date. In the event
that a sale takes place pursuant to this Section 6 prior to the Adjustment Date
and such Value is less than the conversion price fixed at the Adjustment Date,
the Investor shall Transfer to Zummo, within twelve (12) days after the
Adjustment Date, a number of shares of Stock (based on the Value at the
Adjustment Date) equal to the difference between (i) the Aggregate Value where
the Value is equal to the Conversion Price fixed at the Adjustment Date and (ii)
the Aggregate Value with respect to the sale. A Transfer of Stock pursuant to
this Section 6(b) shall not be subject to the provisions of Sections 3, 4 or 5
hereof.
6
<PAGE>
7. Governance Provisions.
(a) From and after the date hereof, each Stockholder agrees to vote
(including by execution of a written consent or in any other manner permitted by
law and the Company's Certificate of Incorporation and/or the By-laws) all of
his or its Shares over which he or it has voting control, and will take all
other necessary or desirable actions within his or its control, and the Company
will take all necessary or desirable actions within its control, in order to
cause:
(i) as of the Closing Date, the amendment of the By-laws of the
Company as contemplated by the Investment Agreement, in the form annexed hereto
as Exhibit A (the "Amended By-laws");
(ii) as of the date of Shareholder Approval (as defined in the Amended
Bylaws), (A) the election to the Board of the Investor Nominees contemplated by
the Amended Bylaws and (B) the amendment of the Company's Amended and Restated
Certificate of Incorporation to increase the number of authorized shares of the
Company's common stock from 10,000,000 to 30,000,000; and
(iii) as of each annual or special meeting held on or after the date
of Shareholder Approval (A) prior to the end of the Preferred Stock Period, (as
defined in the Amended By-laws) the election to the Board of the nominees for
election (including without limitation Preferred Stock Replacement Designees and
Corporation Replacement Designees, each as defined in the Amended By-laws)
presented to the Board or the Nominating Committee in accordance with the
Amended By-laws and (B) after the Preferred Stock Period but prior to the
termination of this Agreement, the election to the Board of an equal number of
nominees for election presented to the Board or the Nominating Committee by
Zummo and the Investor.
(b) Unless required for the due exercise of their fiduciary duties, the
Stockholders will not take any action to remove any Board representative
designated pursuant to this Section 7 without the prior written consent of the
Person who or which designated that director.
(c) Nothing contained in this Agreement shall have the effect of causing
any Zummo Nominee or Investor Nominee to be deemed to be the deputy of or
otherwise required to discharge his or her duties on the Board under the
direction of, or with special attention to the interests of, the person
designating such nominee to serve on the Board.
(d) Nothing in this Agreement is intended to affect the right, if any, of
holders of Preferred Stock, voting as a class, to elect additional directors to
the Board in the event of (i) six consecutive missed dividend payments, (ii) a
failure to redeem shares of Preferred Stock or (iii) a breach of the
Consolidated EBITDA (as defined in the Senior Certificate of Designations)
coverage ratio test, each as provided in the Senior Certificate of Designations.
7
<PAGE>
(e) From and after the termination of this Agreement, for so long as any
Stockholder owns at least 250,000 shares of Common Stock (or shares of Preferred
Stock convertible into Common Stock) of the Company, each Stockholder agrees to
vote (including by execution of a written consent or in any other manner
permitted by law and the Company's Certificate of Incorporation and/or the
By-laws) all of his or its Shares over which he or it has voting control, and
will take all other necessary or desirable actions within his or its control, in
order to cause the election to the Board of the nominees for election presented
to the Board or the Nominating Committee in accordance with the By-laws.
8. Further Agreements. Zummo agrees to contribute any patent rights, copyrights
and trademarks referenced in Section 3 of that certain Royalty Agreement, dated
November 9, 1998, between Valentec International Corporation and John Finnell,
to the Company or a wholly owned subsidiary thereof.
9. Specific Performance. Because of the unique character of the shares of Stock
and the agreements set forth herein, the Company will be irreparably damaged if
this Agreement is not specifically enforced. Should any dispute arise concerning
any provision of this Agreement, an injunction may be issued restraining any
action taken in contravention of this Agreement pending the determination of
such controversy. In the event of any controversy concerning any provision of
this Agreement, such right or obligation shall be enforceable in a court of
equity by a decree of specific performance. Such remedy shall be cumulative and
not exclusive, and shall be in addition to any other remedy which the Company or
the other Stockholders of the Company may have.
10. Termination. Except as provided in Sections 7(e) and 12 hereof, this
Agreement shall terminate on the first date on which (i) the Investor and its
Designated Transferees, in the aggregate, or (ii) Zummo and his Designated
Transferees, in the aggregate, no longer directly or indirectly Beneficially Own
at least 250,000 shares of Common Stock (or shares of Preferred Stock
convertible into Common Stock) of the Company; provided, however, that such
termination shall not be effective to the extent that Zummo or the Investor
falls below such ownership as a result of a Transfer in violation of this
Agreement.
11. Notices. Any notice or other communication under this Agreement shall be in
writing (including telecopier or facsimile or similar writing) and shall be
deemed to have been duly given (i) on the date of service if personally served,
(ii) on the first day after mailing if mailed to the party to whom notice is to
be given by overnight courier, or (iii) on the date sent if sent by telecopier,
to the parties at the following addresses or telecopier numbers (or at such
other address or telecopier number for a party as shall be specified by like
notice):
8
<PAGE>
If to Zummo, to:
Safety Components International, Inc.
2160 North Central Road
Fort Lee, New Jersey 07024
Attention: Robert A. Zummo
Telecopy No.: (201) 592-7501
With a copy to:
Swidler Berlin Shereff Friedman, LLP
919 Third Avenue
New York, NY 10022-9998
Attention: Richard A. Goldberg, Esq.
Telecopy No.: (212) 758-9526
If to the Investor, to
Brera SCI, LLC
c/o Brera Capital Partners LLC
712 Fifth Avenue
New York, NY 10019
Attention: Jun Tsusaka
Telecopy No.:
With a copy to:
Skadden, Arps, Slate, Meagher & Flom (Illinois)
333 West Wacker Drive
Chicago, IL 60606
Attention: Peter C. Krupp, Esq.
Telecopy No.: (312) 407-0411
12. Entire Agreement; Amendments. This Agreement supercedes that certain letter
agreement, dated February 14, 1999, among the parties hereto and this Agreement,
the Investment Agreement and the documents described therein or attached or
delivered pursuant thereto set forth the entire agreement among the parties
hereto with respect to the subject matter hereof. Neither this Agreement nor any
provision hereof may be amended, modified or supplemented in whole or in part at
any time except by an agreement in writing duly executed by the parties thereto.
No failure on the part of any party to exercise, and no delay in exercising, any
right shall operate as waiver thereof, nor shall any single or partial exercise
by any party of any right preclude any other or future exercise thereof of any
other right.
9
<PAGE>
13. Counterparts. This Agreement may be executed (including by facsimile) in two
or more counterparts, each of which shall be deemed to constitute an original,
but all of which together shall constitute one and the same instrument.
14. Governing Law. This Agreement shall be governed by, and interpreted in
accordance with, the laws of the State of Delaware applicable to contracts made
and to be performed in that State without reference to its conflicts of laws
rules. The parties hereto agree that the appropriate and exclusive forum for any
disputes arising out of this Agreement solely among the Stockholders shall be
the United States District Court for the Southern District of New York, and the
parties hereto irrevocably consent to the exclusive jurisdiction of such courts,
and agree to comply with the requirements necessary to give such courts
jurisdiction. The parties hereto further agree that the parties will not bring
suit with respect to any disputes arising out of this agreement except as
expressly set forth below for the execution or enforcement of judgment, in any
jurisdiction other than the above specified courts. Each of the parties hereby
irrevocably consents to the service of process in any action or proceeding
hereunder by the mailing of copies by registered or certified airmail, postage
prepaid, to the address specified in Section 10 hereof. The foregoing shall not
limit the rights of any party hereto to serve process in any other manner
permitted by the law or to obtain execution of judgment in any other
jurisdiction. The parties further agree, to the extent permitted by law, that
final and unappealable judgment against any of them in any action or proceeding
contemplated above shall be conclusive and may be enforced in any other
jurisdiction within or outside the United States by suit on the judgment, a
certified copy of which shall be conclusive evidence of the fact and the amount
of indebtedness. The parties agree to waive any and all rights that they may
have to a jury trial with respect to disputes arising out of this Agreement.
15. Successors and Assigns. The provisions hereof shall inure to the benefit of,
and be binding upon, the parties hereto and their successors and permitted
assigns. Except as set forth in this Agreement, neither this Agreement nor any
rights hereunder shall be assignable by operation of law or otherwise by any
party hereto without the prior written consent of the other parties hereto.
16. No Third-Party Beneficiaries. This Agreement is for the sole benefit of the
parties hereto and their respective successors and permitted assigns and nothing
herein, express or implied, is intended or shall confer upon any other Person
any legal or equitable right, benefit or remedy of any nature whatsoever under
or by reason of this Agreement, except that the provisions of Section 7 shall
inure to the benefit of and be enforceable by the Investor Nominees.
17. Severability. If any provision of this Agreement is held illegal, invalid,
or unenforceable, such illegality, invalidity, or unenforceability will not
affect any other provision hereof. This Agreement shall, in such circumstances,
be deemed modified to the extent necessary to render enforceable the provisions
hereof.
10
<PAGE>
18. Attorney's Fees. In the event of litigation of any dispute or controversy
arising from, in, under or concerning this Agreement or any amendment hereof,
including, without limiting the generality of the foregoing, any claimed breach
hereof or thereof, the prevailing party in such action shall be entitled to
recover from the other party in such action, such sum as the court shall fix as
reasonable attorney's fees incurred by such prevailing party.
IN WITNESS WHEREOF, the parties have executed this Stockholder
Agreement under seal on the date first above written.
BRERA SCI, LLC
By: ___________________________
Title:
_______________________________
Robert A. Zummo
11
<PAGE>
Exhibit A
TO
STOCKHOLDER AGREEMENT
COUNTERPART
THIS INSTRUMENT forms part of the Stockholder Agreement (the "Agreement")
made as of the __ day of ________, 1999, by and between ROBERT A. ZUMMO
("Zummo") and BRERA SCI, LLC, a Delaware limited liability company (the
"Investor"), and any additional Stockholders (as defined in the Agreement) of
Safety Components International, Inc., from time to time, which Agreement
permits execution (including by facsimile) by counterpart. The undersigned
hereby acknowledges having received a copy of the said Agreement (which is
annexed hereto as Schedule I) and having read the said Agreement in its
entirety, and for good and valuable consideration, receipt and sufficiency of
which is hereby acknowledged, hereby agrees that the terms and conditions of the
said Agreement shall be binding upon the undersigned as a Stockholder and as a
Designated Transferee (as defined in the Agreement) of __________________ and
such terms and conditions shall inure to the benefit of and be binding upon the
undersigned and its successors and permitted assigns.
IN WITNESS WHEREOF, the undersigned has executed this instrument this ____
day of ___________, 199 .
____________________________________
(SIGNATURE OF STOCKHOLDER)
____________________________________
(NAME IN BLOCK LETTERS)
12
VOTING AGREEMENT
THIS VOTING AGREEMENT ("Agreement") is being executed and delivered as of
March 31, 1999, by Robert A. Zummo ("Shareholder") in favor of and for the
benefit of Brera SCI, LLC, a Delaware limited liability company (the
"Acquiror").
WHEREAS, Shareholder controls the right to vote 976,576 shares (the
"Shares") of common stock of Safety Components International, Inc., a Dela ware
corporation (the "Company"), excluding shares of common stock owned by Francis
X. Suozzi which Shareholder has the right to vote pursuant to the terms of a
Reallocation Agreement dated as of May 22,1997.
WHEREAS, Acquiror and the Company intend to execute an Invest ment
Agreement (the "Investment Agreement") pursuant to which the Acquiror will
purchase Series A Convertible Preferred Stock of the Company.
WHEREAS, Acquiror has required, as a condition to entering into the
Investment Agreement, that Shareholder enter into this Agreement.
NOW, THEREFORE, in order to induce Acquiror to enter into the transactions
contemplated by the Investment Agreement, and in further consideration of the
mutual covenants and agreements contained herein, the parties agree as follows:
Section 1. Representation and Warranties. Shareholder represents
and warrants to Acquiror that:
(a) Shareholder is the holder and beneficial owner of the Shares and
has good and valid title to the Shares, free and clear of any liens, pledges,
security interests, adverse claims, equities, options, proxies, charges,
encumbrances or restrictions of any nature. Except as provided in this
Agreement, Shareholder has not appointed or granted any proxy or entered into a
voting agreement, which appointment, agreement or grant is still effective, with
respect to any of the Shares.
(b) This Agreement and the Proxy (defined below) (the "Transaction
Documents") (i) have been, or when executed will be, duly and validly executed
on behalf of Shareholder and (ii) constitute, or when executed will consti tute,
valid and binding obligations of Shareholder, enforceable against Shareholder in
1
<PAGE>
accordance with their respective terms, subject to laws of general application
relating to bankruptcy, insolvency and the relief of debtors, and to rules of
law governing specific performance, injunctive relief and other equitable
remedies.
(c) None of the execution, delivery or performance of any
Transaction Document will directly or indirectly, (i) result in any violation or
breach of any agreement or other instrument to which Shareholder is a party or
by which Shareholder or any of the Shares is bound; or (ii) result in a
violation of any law, rule, regulation, order, judgment or decree to which
Shareholder or any of the Shares is subject. The execution and delivery of this
Agreement by Shareholder does not, and the performance of this Agreement by
Shareholder shall not, require any consent, approval, authorization or permit
of, or filing with or notification to, any governmen tal entity.
(d) The representations and warranties contained in this Shareholder
Agreement will be accurate in all material respects at all times through the
Expiration Date (defined below) as if made on that date.
Section 2. Agreement to Vote Shares. During the period from the date of
this Shareholder Agreement through the earlier of (i) the date upon which the
Investment Agreement is validly terminated, or (ii) the date upon which the
share holders of the common stock of the Company approve the transactions
contemplated by the Investment Agreement (including without limitation the
vesting of voting rights with respect to the Series A Convertible Preferred
Stock) (the "Expiration Date"), Shareholder shall cause any holder of record of
the Shares or any New Shares to vote such Shares in favor of the transactions
contemplated by the Investment Agreement including, without limitation, (A) the
approval of the vesting of voting rights in the Series A Convertible Preferred
Stock, (B) the issuance of common stock upon the exercise of the conversion
rights set forth in the Series A Convertible Preferred Stock and (C) increasing
the number of authorized shares of Common Stock of the Corporation from
10,000,000 to 30,000,000 shares, at every meeting of the shareholders of the
Company, however called (and every adjournment or postponement thereof), or by
written consent in lieu of such a meeting or otherwise.
Section 3. Irrevocable Proxy. Concurrently with the execution of this
Agreement, Shareholder agrees to deliver to Acquiror a proxy in the form
attached hereto as Exhibit A (the "Proxy"), which shall be irrevocable to the
fullest extent permitted by law, with respect to the Shares, and shall be deemed
to be coupled with an interest. Shareholder understands and agrees that such
proxy shall be used in the event that Shareholder fails or is unable to vote the
Shares or the New Shares, if any, in accordance with Section 2.
2
<PAGE>
Section 4. Transfer and Encumbrance. Shareholder agrees not to transfer,
sell, offer or otherwise dispose of or encumber any of the Shares or any new
Shares into a voting trust or grant a proxy to enter into a voting agreement or
similar agreement with respect to any of the Shares from the date of this
Agreement through the Expiration Date, unless such transferee agrees to assume
Shareholder's obliga tions under this Agreement in a form reasonably acceptable
to Acquiror.
Section 5. Additional Purchases. Shareholder agrees that any shares of
capital stock of the Company acquired by Shareholder on or after the date of
this Agreement shall be subject to the terms of this Agreement to the same
extent as if they constituted Shares. For purposes of this Agreement, the term
"New Shares" shall mean any shares of capital stock of the Company that
Shareholder purchases or otherwise acquires beneficial ownership of, or acquires
the right to vote or share in the voting of, after the execution of this
Agreement, whether through the exercise of any option or warrant to purchase
such capital stock, or otherwise.
Section 6. No Ownership Interest. Nothing contained in this Agreement shall
be deemed to vest in Acquiror any direct or indirect ownership or incidence of
ownership of or with respect to any Shares or New Shares. All rights, ownership,
and economic benefits of and relating to the Shares and to options to acquire
Shares shall remain and belong to Shareholder, and Acquiror shall have no
authority to manage, direct, superintend, restrict, regulate, govern, or
administer any of the policies or operations of the Company or exercise any
power or authority to direct Shareholder in the voting of any of the Shares,
except as otherwise expressly provided herein.
Section 7. Specific Performance. Shareholder agrees that in the event of
any breach or threatened breach by Shareholder of any covenant, obligation or
other provision contained in this Agreement, Acquiror shall be entitled (in
addition to any other remedy that may be available to it) to (a) a decree or
order of specific performance or mandamus to enforce the observance and
performance of such covenant, obligation or other provision, and (b) an
injunction restraining such breach or threatened breach.
Section 8. Notices. All notices and other communications pursuant to this
Agreement shall be in writing and shall be deemed to be sufficient if con tained
in a written instrument and shall be deemed given if delivered personally or
sent by nationally recognized overnight courier to the parties at the following
addresses (or at such other address for a party as shall be specified by like
notice):
3
<PAGE>
If to Acquiror:
Brera SCI, LLC
c/o Brera Capital Partners, LLC
712 Fifth Avenue, 34th Floor
New York, New York 10019
Attn: Jun Tsusaka
Tel.: 212-835-1350
Fax.: 212-835-1398
with a copy to:
Skadden, Arps, Slate,
Meagher & Flom (Illinois)
333 West Wacker Drive
Suite 2100
Chicago, Illinois 60606
Attn: Peter C. Krupp
Tele 312-407-0700
Fax: 312-407-0411
if to Shareholder:
Robert A. Zummo
c/o Safety Components International, Inc.
2160 North Central Road
Fort Lee, New Jersey 07024
Telephone: (201) 592-0008
Fax: (201) 592-7501
All such notices and other communications shall be deemed to have been
received (a) in the case of personal delivery, on the date of such delivery, (b)
in the case of a telecopy, when the party receiving such copy shall have
confirmed receipt of the communication, and (c) in the case of delivery by
nationally recognized overnight courier, on the business day following dispatch.
Section 9. Severability. If any provision of this Agreement or any part of
any such provision is held under any circumstances to be invalid or enforce able
in any jurisdiction, then (a) such provision or part thereof shall, with respect
to such circumstances and in such jurisdiction, be deemed amended to conform to
applicable laws so as to be valid and enforceable to the fullest possible
extent, (b) the invalidity or unenforceability of such provision or part thereof
under such circum stances and in such jurisdiction shall not affect the validity
or enforceability of such provision or part thereof under any other
4
<PAGE>
circumstances or in any other jurisdiction, and (c) such invalidity of
enforceability of such provision or part thereof shall not affect the validity
or enforceability of the remainder of such provision or the validity or
enforceability of any other provision of this Agreement. Each provision of this
Agreement is separable from every other provision of this Agreement, and each
part of each provision of this Agreement is separable from every other part of
such provision.
Section 10. Governing Law. This Agreement shall be construed in accordance
with, and governed in all respects by, the laws of the State of New York
(without giving effect to principles of conflicts of laws that might refer the
gover nance or the construction of this Agreement to the law of another
jurisdiction).
Section 11. Waiver. No failure on the part of Acquiror to exercise any
power, right, privilege or remedy under this Agreement, and no delay on the part
of Acquiror in exercising any power, right, privilege or remedy under this Agree
ment, shall operate as a waiver of such power, right, privilege or remedy; and
no single or partial exercise of any other such power, right, privilege, or
remedy shall preclude any other or further exercise thereof or of any other
power, right, privilege or remedy. Acquiror shall not be deemed to have waived
any claim arising out of this Agreement, or any power, right, privilege or
remedy under this Agreement, unless the waiver of such claim, power, right,
privilege or remedy is expressly set forth in a written instrument duly executed
and delivered on behalf of such party; and any such waiver shall not be
applicable or have any effect except in the specific instance in which it is
given.
Section 12. Captions. The captions in this Agreement are for convenience of
reference only, shall not be deemed to be a part of this Agreement and shall not
be referred to in connection with the construction or interpretation of this
Agreement.
Section 13. Further Assurances. Shareholder shall execute or cause to be
delivered to Acquiror or the Company such instruments and other documents and
shall take such other actions as Acquiror may reasonably request to effectuate
the intent and purposes of this Agreement.
5
<PAGE>
Section 14. Entire Agreement. This Agreement sets forth the entire
understanding of Shareholder and Acquiror relating to the subject matter hereof
and supersedes all prior agreements and understandings between such parties
relating to the subject matter hereof.
Section 15. Amendments. This Agreement may not be amended, modified,
altered or supplemented other than by means of a written instrument duly
executed and delivered on behalf of Acquiror and Shareholder.
Section 16. Assignment. This Agreement and all obligations of the
Shareholder hereunder are personal to Shareholder and may not be transferred or
assigned by Shareholder at any time. Acquiror may assign its rights under this
Agreement to its affiliates at any time.
Section 17. Binding Nature. Subject to Section 16, this Agreement will be
binding upon Shareholder and Shareholder's representatives, executors,
administrators, estate, heirs, successors and assigns, and will inure to the
benefit of Acquiror and its successors and assigns. Without limiting the
generality of anything contained in Section 4, if any person or entity shall
acquire Shares or New Shares from Shareholder in any manner, whether by
operation or law or otherwise, such Shares shall be held subject to all the
terms and provisions of this Agreement, and by taking and holding such Shares,
such person or entity shall be conclusively deemed to have agreed to be bound
and to comply with all the terms and provisions of this Agreement. Without
limiting the foregoing, Shareholder agrees that the obligations of Shareholder
hereunder shall not be terminated by operation of law, whether by death or
incapacity of Shareholder, or, in the case of a trust, by the death or incapac
ity of any trustee or the termination of such trust.
Section 18. Attorneys' Fees and Expenses. If any legal action or other
legal proceeding relating to the enforcement of any position of this Agreement
is brought against Shareholder, the prevailing party shall be entitled to
recover reasonable attorneys' fees, costs and disbursements including without
limitation at the pre-trial and appellate stages of any proceeding (in addition
to any other relief to which the prevailing party may be entitled).
Section 19. Survival. The representations and warranties contained in this
Agreement shall survive the Expiration Date.
Section 20. Termination. This Agreement will terminate as of the
termination of the Investment Agreement.
6
<PAGE>
IN WITNESS WHEREOF, the undersigned has executed and delivered
this VOTING AGREEMENT as of the date first written above.
ROBERT A. ZUMMO
/S/ Robert A. Zummo
-------------------
SHARES OF THE COMPANY
BENEFICIALLY OWNED:
976,576 shares of the
Common Stock of the Company
AGREED AND ACCEPTED:
BRERA SCI, LLC
By:/S/ BRERA SCI, LLC
- ---------------------
7
<PAGE>
EXHIBIT A
LIMITED IRREVOCABLE PROXY
The undersigned shareholder of Safety Components International, Inc., a
Delaware corporation (the "Company"), hereby irrevocably appoints Brera SCI,
LLC, a Delaware limited liability company and its affiliates, and each of them,
the attorneys and proxies of the undersigned, with full power of substitution
and resubstitition, to vote the shares of capital stock of the Company which the
under signed is entitled to vote at any meeting of the shareholders of the
Company (and every adjournment or postponement thereof) or by written consent in
lieu of such a meting or otherwise, which shares are listed below (the
"Shares"), and any and all other shares of capital stock of the Company acquired
by the undersigned (or which the undersigned is otherwise entitled to vote) on
or after the date hereof (the "New Shares"), but only with respect to approval
of the consummation of the transactions contemplated by the Investment Agreement
including, without limitation, (A) the vesting of voting rights in the Series A
Convertible Preferred Stock, (B) the issuance of common stock upon the exercise
of the conversion rights set forth in the Series A Convertible Preferred Stock
and (C) increasing the number of authorized shares of Common Stock of the
Corporation from 10,000,000 to 30,000,000 shares (the "Identified Matters").
Upon the execution hereof, all prior proxies given by the undersigned with
respect to the Shares and the New Shares, if any, and any and all other shares
or securities issued or issuable in respect thereof on or after the date hereof
are hereby revoked, but only to the extent that they relate to the Identified
Matters, and no subsequent proxies will be given with respect to the Identified
Matters. This proxy is irrevocable and coupled with an interest and is granted
in connection with that certain Voting Agreement, dated as of the date hereof,
executed by the undersigned shareholder in favor of Acquiror, and is granted in
consideration of Acquiror entering into the Investment Agreement. Terms used but
not defined in this proxy shall have the meanings given to them in the Voting
Agreement. The attorneys and proxies named above will be empowered at any time
prior to the termination of the Investment Agreement (i) to exercise all voting
and other rights of the undersigned with respect to the Shares and the New
Shares, if any (including, without limitation, the power to execute and deliver
written consents with respect to the Shares and the New Shares, if any), but
only with respect to the Identified Matters, at every meeting of the
shareholders of the Company (and every adjourn ment or postponement thereof) or
by written consent in lieu of such a meeting, or otherwise, and (ii) to vote the
Shares and the New Shares, if any, in favor of approval of the Identified
Matters and the other actions and transactions contemplated by the Investment
Agreement (including, without limitation, any amendment of the Com pany's
articles of incorporation required in connection therewith). This limited
irrevocable proxy will terminate as of the termination of the Investment
Agreement.
<PAGE>
Any obligations of the undersigned pursuant to this Limited Irrevocable
Proxy shall be binding upon the successors and assigns of the undersigned.
Dated as of: March 31, 1999
ROBERT A. ZUMMO
/S/ Robert A. Zummo
-----------------------
SHARES WHICH SHAREHOLDER
IS ENTITLED TO VOTE:
976,576 shares of the common stock,
par value $.01 per share, of Safety
Components International, Inc.
