Exhibit 10.7
EMPLOYEE OPTION AGREEMENT
(Special Executive Grant)
December 2, 1999
EMPLOYEE OPTION AGREEMENT, dated as of the Grant Date, by and between the
Optionee and Hexcel Corporation (the "Corporation").
W I T N E S S E T H:
WHEREAS, the Corporation has adopted the Hexcel Corporation Incentive Stock Plan
(the "Plan"); and
WHEREAS, the Executive Compensation Committee (the "Committee") of the Board of
Directors of the Corporation (the "Board") has determined that it is desirable
and in the best interest of the Corporation to grant to the Optionee a stock
option as an incentive for the Optionee to advance the interests of the
Corporation;
NOW, THEREFORE, the parties agree as follows:
1. Notice of Grant; Incorporation of Plan. A Notice of Grant is attached hereto
as Annex A and incorporated by reference herein. Unless otherwise provided
herein, capitalized terms used herein and set forth in such Notice of Grant
shall have the meanings ascribed to them in the Notice of Grant and capitalized
terms used herein and set forth in the Plan shall have the meanings ascribed to
them in the Plan. The Plan is incorporated by reference and made a part of this
Employee Option Agreement, and this Employee Option Agreement shall be subject
to the terms of the Plan, as the Plan may be amended from time to time, provided
that any such amendment of the Plan must be made in accordance with Section X of
the Plan. The Option granted herein constitutes an Award within the meaning of
the Plan.
2. Grant of Option. Pursuant to the Plan and subject to the terms and conditions
set forth herein and therein, the Corporation hereby grants to the Optionee the
right and option (the "Option") to purchase all or any part of the Option Shares
of the Corporation's common stock, $.01 par value per share (the "Common
Stock"), which Option is not intended to qualify as an incentive stock option,
as defined in Section 422 of the Internal Revenue Code of 1986, as amended (the
"Code").
3. Purchase Price. The purchase price per share of the Option Shares shall be
the Purchase Price.
4. Term of Option.
(a) Expiration Date; Term. Subject to Section 4(c) below, the Option
shall expire on, and shall no longer be exercisable following, the
tenth anniversary of the Grant Date. The ten-year period from the Grant
Date to its tenth anniversary shall constitute the "Term" of the
Option.
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(b) Vesting Period; Exercisability. Subject to Section 4(c) below, the
Option shall vest and become exercisable at the rate of 33-1/3% of the
Option Shares on each of the first three anniversaries of the Grant
Date.
(c) Termination of Employment; Change in Control.
(i) For purposes of the grant hereunder, any transfer of employment by
the Optionee among the Corporation and the Subsidiaries shall not be
considered a termination of employment. If the Optionee's employment
with the Corporation is terminated for Cause (as defined in the last
Section hereof), the Option, whether or not then vested, shall be
automatically terminated as of the date of such termination of
employment. If the Optionee's employment with the Corporation shall
terminate other than by reason of Retirement (as defined in the last
Section hereof), Disability (as defined in the last Section hereof),
death or Cause, the Option (to the extent then vested) may be exercised
at any time within ninety (90) days after such termination (but not
beyond the Term of the Option). The Option, to the extent not then
vested, shall immediately expire upon such termination.
If the Optionee dies or becomes Disabled (A) while employed by the
Corporation or (B) within 90 days after the termination of his or her
employment other than for Cause or Retirement, the Option (to the
extent then vested) may be exercised at any time within one year after
the Optionee's death or Disability (but not beyond the Term of the
Option). The Option, to the extent not then vested, shall immediately
expire upon such death or disability.
If the Optionee's employment terminates by reason of Retirement, the
Option shall (A) become fully and immediately vested and exercisable
and (B) remain exercisable for three years from the date of such
Retirement (but not beyond the Term of the Option).
(ii) In the event of a Change in Control (as defined in the last
Section hereof), the Option shall immediately become fully vested and
exercisable and the post-termination periods of exercisability set
forth in Section 4(c)(i) hereof shall apply, except that the
post-termination period of exercisability shall be extended and the
Option shall remain exercisable for a period of three years from the
date of such termination of employment, if, within two years after a
Change in Control, (A) the Optionee's employment is terminated by the
Company other than by reason of Retirement, Cause, Disability or death
or (B) the Optionee terminates the Optionee's employment for Good
Reason (as defined in the last Section hereof).
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5. Adjustment Upon Changes in Capitalization.
(a) The aggregate number of Option Shares and the Purchase Price shall
be appropriately adjusted by the Committee for any increase or decrease
in the number of issued shares of Common Stock resulting from a
subdivision or consolidation of shares or other capital adjustment, or
the payment of a stock dividend or other increase or decrease in such
shares, effected without receipt of consideration by the Corporation,
or other change in corporate or capital structure. The Committee shall
also make the foregoing changes and any other changes, including
changes in the classes of securities available, to the extent
reasonably necessary or desirable to preserve the intended benefits
under this Employee Option Agreement in the event of any other
reorganization, recapitalization, merger, consolidation, spin-off,
extraordinary dividend or other distribution or similar transaction
involving the Corporation.
(b) Any adjustment under this Section 5 in the number of Option Shares
and the Purchase Price shall apply to only the unexercised portion of
the Option. If fractions of a share would result from any such
adjustment, the adjustment shall be rounded down to the nearest whole
number of shares.
6. Method of Exercising Option and Withholding.
(a) The Option shall be exercised by the delivery by the Optionee to
the Corporation at its principal office (or at such other address as
may be established by the Committee) of written notice of the number of
Option Shares with respect to which the Option is exercised,
accompanied by payment in full of the aggregate Purchase Price for such
Option Shares. Payment for such Option Shares shall be made (i) in U.S.
dollars by personal check, bank draft or money order payable to the
order of the Corporation, or by money transfers or direct account
debits to an account designated by the Corporation; (ii) through the
delivery of shares of Common Stock with a Fair Market Value equal to
the total payment due from the Optionee; (iii) pursuant to a "cashless
exercise" program if such a program is established by the Corporation;
or (iv) by any combination of the methods described in (i) through
(iii) above.
(b) The Corporation's obligation to deliver shares of Common Stock upon
the exercise of the Option shall be subject to the payment by the
Optionee of applicable federal, state and local withholding tax, if
any. The Corporation shall, to the extent permitted by law, have the
right to deduct from any payment of any kind otherwise due to the
Optionee any federal, state or local taxes required to be withheld with
respect to such payment.
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7. Transfer. Except as provided in this Section 7, the Option is not
transferable otherwise than by will or the laws of descent and distribution, and
the Option may be exercised during the Optionee's lifetime only by the Optionee.
Any attempt to transfer the Option in contravention of this Section 7 is void ab
initio. The Option shall not be subject to execution, attachment or other
process. Notwithstanding the foregoing, the Optionee shall be permitted to
transfer the Option to members of his or her immediate family (i.e., children,
grandchildren or spouse), trusts for the benefit of such family members, and
partnerships whose only partners are such family members; provided, however,
that no consideration can be paid for the transfer of the Option and the
transferee of the Option shall be subject to all conditions applicable to the
Option prior to its transfer.
8. No Rights in Option Shares. The Optionee shall have none of the rights of a
stockholder with respect to the Option Shares unless and until shares of Common
Stock are issued upon exercise of the Option.
9. No Right to Employment. Nothing contained herein shall be deemed to confer
upon the Optionee any right to remain as an employee of the Corporation.
10. Governing Law/Jurisdiction. This Employee Option Agreement shall be governed
by and construed in accordance with the laws of the State of Delaware without
reference to principles of conflict of laws.
11. Resolution of Disputes. Any disputes arising under or in connection with
this Employee Option Agreement shall be resolved by binding arbitration before a
single arbitrator, to be held in New York in accordance with the commercial
rules and procedures of the American Arbitration Association. Judgment upon the
award rendered by the arbitrator shall be final and subject to appeal only to
the extent permitted by law. Each party shall bear such party's own expenses
incurred in connection with any arbitration; provided, however, that the cost of
the arbitration, including without limitation, reasonable attorneys' fees of the
Optionee, shall be borne by the Corporation in the event the Optionee is the
prevailing party in the arbitration. Anything to the contrary notwithstanding,
each party hereto has the right to proceed with a court action for injunctive
relief or relief from violations of law not within the jurisdiction of an
arbitrator.
12. Notices. Any notice required or permitted under this Employee Option
Agreement shall be deemed given when delivered personally, or when deposited in
a United States Post Office, postage prepaid, addressed, as appropriate, to the
Optionee at the last address specified in Optionee's employment records, or such
other address as the Optionee may designate in writing to the Corporation, or to
the Corporation, Attention: Corporate Secretary, or such other address as the
Corporation may designate in writing to the Optionee.
13. Failure To Enforce Not a Waiver. The failure of either party hereto to
enforce at any time any provision of this Employee Option Agreement shall in no
way be construed to be a waiver of such provision or of any other provision
hereof.
14. Counterparts. This Employee Option Agreement may be executed in two or more
counterparts, each of which shall be an original but all of which together shall
represent one and the same agreement.
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15. Miscellaneous. This Employee Option Agreement cannot be changed or
terminated orally. This Employee Option Agreement and the Plan contain the
entire agreement between the parties relating to the subject matter hereof. The
section headings herein are intended for reference only and shall not affect the
interpretation hereof.
16. Definitions. For purposes of this Employee Option Agreement:
(I) the term "Beneficial Owner" (and variants thereof) shall have the
meaning given in Rule 13d-3 promulgated under the Exchange Act;
(II) the term "Cause" shall mean (A) the willful and continued failure
by the Optionee to substantially perform the Optionee's duties with the
Corporation (other than any such failure resulting from the Optionee's
incapacity due to physical or mental illness) after a written demand
for substantial performance is delivered to the Optionee by the
Corporation, which demand specifically identifies the manner in which
the Corporation believes that the Optionee has not substantially
performed the Optionee's duties, or (B) the willful engaging by the
Optionee in conduct which is demonstrably and materially injurious to
the Corporation or its subsidiaries, monetarily or otherwise. For
purposes of clauses (A) and (B) of this definition, no act, or failure
to act, on the Optionee's part shall be deemed "willful" unless done,
or omitted to be done, by the Optionee not in good faith and without
the reasonable belief that the Optionee's act, or failure to act, was
in the best interest of the Corporation;
(III) the term "Change in Control" shall mean any of the following
events:
(1)(a) any Person (as defined in this Section) is or
becomes the Beneficial Owner of 20% or more of either (i) the
then outstanding Common Stock of the Corporation (the
"Outstanding Common Stock") or (ii) the combined voting power
of the then outstanding securities entitled to vote generally
in the election of directors of the Corporation (the "Total
Voting Power"); excluding, however, the following: (A) any
acquisition by the Corporation or any of its affiliates or (B)
any acquisition by any employee benefit plan (or related
trust) sponsored or maintained by the Corporation or any of
its affiliates and (b) Ciba (as defined in this Section)
beneficially owns, in the aggregate, a lesser percentage of
the Total Voting Power than such Person beneficially owns; or
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(2) a change in the composition of the Board such
that the individuals who, as of the effective date of this
Employee Option Agreement, constitute the Board (such
individuals shall be hereinafter referred to as the "Incumbent
Directors") cease for any reason to constitute at least a
majority of the Board; provided, however, for purposes of this
definition, that any individual who becomes a director
subsequent to such effective date, whose election, or
nomination for election by the Corporation's stockholders, was
made or approved pursuant to the Governance Agreement (as
defined in this Section) or by a vote of at least a majority
of the Incumbent Directors (or directors whose election or
nomination for election was previously so approved) shall be
considered 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 14a-11 of
Regulation 14A promulgated under the Exchange Act) or other
actual or threatened solicitation of proxies or consents by or
on behalf of a person or legal entity other than the Board
shall not be considered a member of the Incumbent Board; or
(3) the approval by the stockholders of the
Corporation of a reorganization, merger or consolidation or
sale or other disposition of all or substantially all of the
assets of the Corporation ("Corporate Transaction");
excluding, however, such a Corporate Transaction (a) pursuant
to which all or substantially all of the individuals and
entities who are the beneficial owners, respectively, of the
Outstanding Common Stock and Total Voting Power immediately
prior to such Corporate Transaction will beneficially own,
directly or indirectly, more than 50%, respectively, of the
outstanding common stock and the combined voting power of the
then outstanding securities entitled to vote generally in the
election of directors of the company resulting from such
Corporate Transaction (including, without limitation, a
corporation which as a result of such transaction owns the
Corporation or all or substantially all of the Corporation's
assets either directly or through one or more subsidiaries) in
substantially the same proportions as their ownership
immediately prior to such Corporate Transaction of the
Outstanding Common Stock and Total Voting Power, as the case
may be, or (b) after which no Person beneficially owns a
greater percentage of the combined voting power of the then
outstanding securities entitled to vote generally in the
election of directors of such corporation than does Ciba; or
(4) Ciba shall become the Beneficial Owner of more
than 57.5% of the Total Voting Power; or
(5) the approval by the stockholders of the
Corporation of a complete liquidation or dissolution of the
Corporation;
(IV) the term "Ciba" shall mean Ciba Specialty Chemicals Holding Inc.,
a Swiss corporation, together with its affiliates holding Corporation
voting securities pursuant to Section 4.01(b) of the Governance
Agreement;
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(V) the term "Disability (or becoming Disabled)" shall mean that, as a
result of the Optionee's incapacity due to physical or mental illness
or injury, he or she shall not have performed all or substantially all
of his or her usual duties as an employee of the Corporation for a
period of more than one-hundred-fifty (150) days in any period of
one-hundred-eighty (180) consecutive days;
(VI) the term "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended from time to time;
(VII) the term "Good Reason" for termination by the Optionee of the
Optionee's employment shall mean the occurrence (without the Optionee's
express written consent) of any one of the following acts by the
Corporation, or failures by the Corporation to act, unless, in the case
of any act or failure to act described in paragraphs (1), (5) or (6)
below, such act or failure to act is corrected prior to the date of
termination of the Optionee's employment:
(1) a significant adverse alteration in the
nature or status of the Optionee's responsibilities, position
or authority from those in effect immediately prior to the
Change in Control;
(2) a reduction by the Corporation in the
Optionee's annual base salary as in effect on the date hereof
or as the same may be increased from time to time;
(3) the relocation of the Optionee's
principal place of employment to a location more than fifty
(50) miles from the Optionee's principal place of employment
immediately prior to the Change in Control or the
Corporation's requiring the Optionee to work anywhere other
than at such principal place of employment (or permitted
relocation thereof) except for required travel on the
Corporation's business to an extent substantially consistent
with the Optionee's present business travel obligations;
(4) the failure by the Corporation to pay to
the Optionee any portion of the Optionee's current
compensation, or to pay to the Optionee any portion of an
installment of deferred compensation under any deferred
compensation program of the Corporation, within seven (7) days
of the date such compensation is due;
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(5) the failure by the Corporation to
continue in effect any compensation plan in which the Optionee
participates immediately prior to the Change in Control which
is material to the Optionee's total compensation, or any
substitute plans adopted prior to the Change in Control,
unless an equitable arrangement (embodied in an ongoing
substitute or alternative plan) has been made with respect to
such plan, or the failure by the Corporation to continue the
Optionee's participation therein (or in such substitute or
alternative plan) on a basis not materially less favorable,
both in terms of the amount or timing of payment of benefits
provided and the level of the Optionee's participation
relative to other participants, as existed immediately prior
to the Change in Control; or
(6) the failure by the Corporation to
continue to provide the Optionee with benefits substantially
similar to those enjoyed by the Optionee under any of the
Corporation's pension, savings, life insurance, medical,
health and accident, or disability plans in which the Optionee
was participating immediately prior to the Change in Control
(except for across-the-board changes similarly affecting all
senior executives of the Corporation and all senior executives
of any Person in control of the Corporation), the taking of
any other action by the Corporation which would directly or
indirectly materially reduce any of such benefits or deprive
the Optionee of any material fringe benefit enjoyed by the
Optionee at the time of the Change in Control, or the failure
by the Corporation to provide the Optionee with the number of
paid vacation days to which the Optionee is entitled on the
basis of years of service with the Corporation in accordance
with the Corporation's normal vacation policy in effect at the
time of the Change in Control.
The Optionee's right to terminate the Optionee's employment for Good
Reason shall not be affected by the Optionee's incapacity due to
physical or mental illness. The Optionee's continued employment shall
not constitute consent to, or a waiver of rights with respect to, any
act or failure to act constituting Good Reason hereunder.
For purposes of any determination regarding the existence of Good
Reason, any claim by the Optionee that Good Reason exists shall be
presumed to be correct unless the Corporation establishes to the Board
by clear and convincing evidence that Good Reason does not exist;
(VIII) the term "Governance Agreement" shall have the meaning given in
the Strategic Alliance Agreement (as defined in this Section);
(IX) the term "Person" shall have the meaning given in Section 3(a)(9)
of the Exchange Act, as modified and used in Sections 13(d) and 14(d)
of the Exchange Act, but excluding Ciba for so long as Ciba is subject
to the restrictions imposed by the Governance Agreement;
(X) the term "Retirement" shall mean termination of the Optionee's
employment, other than by reason of death or Cause, either (A) at or
after age 65 or (B) at or after age 55 after five (5) years of
employment by the Corporation (or a Subsidiary thereof); and
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(XI) the term "Strategic Alliance Agreement" shall mean the Strategic
Alliance Agreement among the Corporation, Ciba-Geigy Limited and
Ciba-Geigy Corporation, dated as of September 29, 1995, as amended, and
any of their respective permitted successors or assigns thereunder.
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Annex A
NOTICE OF GRANT
EMPLOYEE STOCK OPTION
HEXCEL CORPORATION INCENTIVE STOCK PLAN
The following employee of Hexcel Corporation, a Delaware corporation
("Hexcel") or a Subsidiary, has been granted an option to purchase shares of the
Common Stock of Hexcel, $.01 par value, in accordance with the terms of this
Notice of Grant and the Employee Option Agreement to which this Notice of Grant
is attached.
The following is a summary of the principal terms of the option which
has been granted. The terms below shall have the meanings ascribed to them below
when used in the Employee Option Agreement.
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Optionee
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Address of Optionee
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Employee Number
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Employee ID Number
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Foreign Sub Plan, if applicable
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Grant Date December 2, 1999
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Purchase Price $5.75
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Aggregate Number of Shares
Granted (the "Option Shares")
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IN WITNESS WHEREOF, the parties hereby agree to the terms of this
Notice of Grant and the Employee Option Agreement to which this Notice of Grant
is attached and execute this Notice of Grant and Employee Option Agreement as of
the Grant Date.
HEXCEL CORPORATION
Optionee
By:
Xxxxx X. Xxxx
Vice President, Corporate
Affairs
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