SCHEDULE "A"
TERMS AND CONDITIONS OF SEVERANCE PROGRAM
PROPOSED TERMS:(1)
Cause: Cause means, with respect to any Key Executive, the occurrence of any of
the following: (i) the commission of fraud, embezzlement or theft by the Key
Executive in connection with the Key Executive's duties; (ii) the intentional
wrongful damage to property of Safety Components by the Key Executive; (iii) the
intentional wrongful disclosure by the Key Executive of any secret process or
confidential information of Safety Components or their non-debtor affiliates;
(iv) the intentional violation of any non-disclosure, non-solicitation and
non-competition covenants to which the Key Executive is subject; (v) the Key
Executive's commission of (a) a felony or (b) a misdemeanor involving moral
turpitude; (vi) the Key Executive's intentional refusal to follow reasonable
directions or instructions of a more senior officer or the Board of Directors of
SCI as to which SCI has notified the Key Executive in writing and such refusal
shall have continued for a period of three (3) business days after receipt of
such notice; or (vii) a Key Executive's intentional or grossly negligent breach
of any stated material employment policy of SCI.
Change in Control: A Change in Control will be deemed to have occurred upon (i)
an acquisition by any person (the "Person") of Beneficial Ownership of the
shares of common stock of SCI then outstanding (the "Company Common Stock
Outstanding") or the voting securities of SCI then outstanding entitled to vote
generally in the election of directors (the "Company Voting Securities
Outstanding"); provided, however, that such acquisition of Beneficial Ownership
would result in the Person's Beneficially Owning 25% or more of the Company
Common Stock Outstanding or 25% or more of the combined voting power of the
Company Voting Securities Outstanding; and, provided, further, that immediately
prior to such acquisition such Person was not a direct or indirect Beneficial
Owner of 25% or more of the Company Common Stock Outstanding or 25% or more of
the combined voting power of Company Voting Securities Outstanding, as the case
may be; or (ii) approval by the stockholders of SCI of a reorganization, merger,
consolidation, complete liquidation or dissolution of SCI, sale or disposition
of all or substantially all of the assets of SCI, or similar corporate
transaction (in each case referred to herein as a "Corporate Transaction") or,
if consummation of such Corporate Transaction is subject, at the time of such
approval by stockholders, to the consent of any government or governmental
agency, the obtaining of such consent (either explicitly or implicitly); or
(iii) a change in the composition of the Board of Directors of SCI such that the
individuals who, as of the effective date of such Corporate Transaction (the
"Effective Date"), constitute the Board of Directors of SCI (such Board of
Directors of SCI shall be hereinafter referred to as the "Incumbent Board")
cease for any reason to constitute at least a majority of the Board of
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(1) Capitalized terms not defined herein shall have the meanings ascribed to
them in that certain Motion of Safety Components for Order, Pursuant to 11
U.S.C. ss.ss. 105(a) and 363(b)(1), Approving and Authorizing
Implementation of Employee Severance Program for Key Executives, dated May
24, 2000 (the "Motion").
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Directors of SCI; provided, however, that any individual who becomes a member of
the Board of Directors of SCI subsequent to the Effective Date whose election,
or nomination for election by SCI's stockholders, was approved by a vote of at
least a majority of those individuals who are members of the Board of Directors
of SCI and who were also members of the Incumbent Board (or deemed to be such
pursuant to this proviso) shall be considered as though such individual were a
member of the Incumbent Board; but, provided, further, that any such individual
whose initial assumption of office occurs as a result of either an actual or
threatened election contest (as such terms are used in Rule l4a-11 of Regulation
14A under the Securities Exchange Act of 1934 (as amended from time to time),
including any successor to such Rule) or other actual or threatened solicitation
of proxies or consents by or on behalf of a Person other than the Board of
Directors of SCI shall not be so considered as a member of the Incumbent Board.
Notwithstanding the provisions set forth in subparagraphs (i), (ii) and (iii)
above, the following shall not constitute a Change in Control for purposes of
the Severance Program: (1) any acquisition by or consummation of a Corporate
Transaction with any subsidiary of SCI or an employee benefit plan (or related
trust) sponsored or maintained by SCI or an affiliate; or (2) an acquisition by
any Person or Persons of Beneficial Ownership of the shares of Company Common
Stock Outstanding or shares of Company Voting Securities Outstanding, or the
change in composition of the Board of Directors of SCI, if both (a) such
acquisition of Common Stock or the change in composition of the Board of
Directors of SCI results from an exchange of debt securities of the Company in
connection with a plan of reorganization (the "Plan") under chapter 11 of the
Bankruptcy Code and (b) employment contracts covering the Key Executives for the
period subsequent to the effective date of the Plan have been either assumed by
Safety Components, approved by the Bankruptcy Court or otherwise entered into by
SCI and such Key Executive.
Company or SCI: Company or SCI means Safety Components International, Inc.
Good Reason: Good reason means the Key Executive's voluntary termination of
employment within 60 days following the occurrence of any of the following: (a)
a change in the Key Executive's duties or responsibilities, or a change in the
Key Executive's reporting relationships, either of which results in or reflects
a material diminution of the scope or importance of the Key Executive's
responsibilities; (b) a reduction in the Key Executive's then current base
salary or annual target bonus; (c) a reduction in the level of benefits
available or awarded to such Key Executives under employee and officer benefit
plans and programs including, but not limited to, annual and long-term incentive
and stock-based plans and programs (other than as part of reductions in such
benefit plans or programs affecting similarly situated employees of Safety
Components); (d) any failure of any acquirer following a Change in Control to
agree to be bound by this Severance Program, or (e) a relocation of the Key
Executive's primary employment location which is more than 50 miles from his
current primary employment location; provided, however, that for Good Reason to
exist, the Key Executive must give the Company written notice, at least 30 days
prior to the date the Key Executive intends to terminate his employment,
providing a description of the events constituting Good Reason hereunder and, in
the event the Company corrects of cures such events prior to the conclusion of
such 30 day period, then Good Reason shall not exist hereunder.
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Key Executive: Key Executive means only the following individuals: John C.
Corey, Brian P. Menezes, Stephen B. Duerk, and Daniel R. Smith.
Qualifying Termination of Employment: Qualifying Termination of Employment means
a Key Executive's termination of employment that occurs on account of any of the
following circumstances: (1) a termination of employment by the Company without
Cause (other than as a result of death or disability) or (2) a termination by
the Key Executive for Good Reason. Qualifying Termination of Employment shall
not include a termination of employment as a result of (a) death, (b)
disability, (c) retirement, (d) the Company's termination of the Key Executive's
employment for Cause, (e) the Key Executive's termination of employment for
reasons other than Good Reason.
Severance Benefits: Severance Benefits means, for each Key Executive, the cash
severance benefit and health insurance continuation provided for such Key
Executive in the chart below:
<TABLE>
<CAPTION>
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EXECUTIVE CASH SEVERANCE BENEFIT(2) HEALTH INSURANCE ANNUAL BASE
CONTINUATION SALARY
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<S> <C> <C> <C>
John C. Corey, President and Chief An amount equal to 24 months of annual 24 months $300,000
Operating Officer base salary ($600,000)
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Brian P. Menezes, Vice President and An amount equal to 18 months of annual 18 months $180,000
Chief Financial Officer base salary ($270,000)
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Stephen B. Duerk, Vice President An amount equal to 18 months of annual 18 months $175,000
base salary ($262,500)
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Daniel R. Smith, Assistant Secretary An amount equal to 12 months of annual 12 months $105,000
and Treasurer base salary ($105,000)
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</TABLE>
During the health insurance continuation period listed above, the Company shall
provide, at the same employee rates as the Key Executive paid prior to his
termination of employment, continued health insurance coverage as in effect from
time to time for the Key Executive and his dependents who were covered by the
Company's health insurance plan immediately prior to his termination of
employment, for the length of time indicated in the table above. Severance
Benefits shall not include continued participation in any incentive compensation
plans or benefit plans, other than the Company's health insurance plan.
TERMS OF SEVERANCE PLAN
Eligibility: If a Key Executive incurs a Qualifying Termination of Employment,
then such Key Executive will be entitled to receive, in the manner set forth
herein, the Severance Benefits (provided that if no Change in Control has
occurred, then such Key Executive shall execute a release with respect to the
Company substantially in the form annexed hereto). A Key Executive whose
employment terminates as a result of (i) death, (ii) disability, (iii) a
termination by the
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(2) "Term of Entitlement" refers, with respect to each Key Executive, to the
period of time that each such executive is entitled to receive severance
benefits, as set forth in this column
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Company for Cause, (iv) a termination by the Executive for reasons other than
Good Reason, or (v) retirement, shall not be eligible to receive any benefits
under the Plan. The Key Executive will not be entitled to severance under any
other plan, program, arrangement, or agreement with the Company or any other
Safety Components entity, and any other such payments or benefits to which the
Executive receives shall reduce, on a dollar for dollar basis, the payments and
benefits provided hereunder.
Timing and manner of severance benefits: Severance Benefits will be paid during
the Term of Entitlement for a Key Executive in the form of salary continuation
after a Key Executive incurs a Qualifying Termination of Employment in
accordance with the Company's normal payroll practices in existence as of the
date the Key Executive is severed.
Mitigation: Where a Key Executive has incurred a Qualifying Termination of
Employment, the cash component of the Severance Benefits received will be
subject to mitigation by any amount received as W-2 salary from a successor
employer, and the health insurance continuation component of the Severance
Benefits Group will be limited to the extent that the Key Executive becomes
covered by the group health insurance plan of a successor employer.
Notwithstanding the foregoing, there is no duty upon any Key Executive to seek
mitigation of the Severance Benefits provided hereunder.
Amendment or Termination. The Severance Program is subject to approval by the
Bankruptcy Court. The Severance Program may be amended or terminated by the
Company in its sole discretion; provided, however, that the Severance Program
cannot be amended or terminated in any manner which adversely affects the rights
of any Key Executive within: (i) twelve (12) months following the date of
adoption and (ii) in the event that a Change in Control occurs, three (3) months
preceding and twelve (12) months following the event that constitutes such
Change in Control.
