PERFORMANCE ACCELERATED STOCK OPTION AGREEMENT
For
Employee
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. TERMS OF OPTION.
(a) EXPIRATION DATE; TERM. Subject to Section 4(d) 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.
(b) VESTING PERIOD; EXERCISABILITY. Subject to Sections 4(c) and 4(d)
below, the Option shall vest and become exercisable as to fifteen percent
(15%) of the Option Shares on the second anniversary of the Grant Date and
shall vest and become exercisable with respect to the additional
percentages of the Option Shares indicated below on each of the next seven
anniversaries of the Grant Date:
Grant Date Percentage
Anniversary Vested
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2nd 15%
3rd 15%
4th 15%
5th 15%
6th 15%
7th 10%
8th 10%
9th 5%
(c) ACCELERATED VESTING BASED ON SHARE PRICE OR NORMAL RETIREMENT.
Notwithstanding Section 4(b) hereof, if, on or before the third anniversary
of the Grant Date, the closing price of Company common stock
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as reported on the New York Stock Exchange Consolidated Transactions Tape
shall have equalled or exceeded Thirty-five Dollars ($35) per share for
ten or more consecutive trading days, the Option shall become totally
vested and exercisable immediately after the tenth such day. Further,
if, after the third anniversary of the Grant Date, the employment of the
Optionee shall terminate by reason of Normal Retirement (as defined in
the last Section hereof), the Option shall immediately become totally
vested and exercisable.
(d) 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 either Normal or
Early 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 Normal or Early 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 Normal Retirement, the
Option shall (A) become fully and immediately vested and exercisable and
(B) remain exercisable for three years from the date of such Normal
Retirement (but not beyond the Term of the Option).
If the Optionee's employment terminates by reason of Early Retirement, the
Option (to the extent then vested) may be exercised at any time within
three years after such termination (but not beyond the
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Term of the Option). The Option, to the extent not then vested, shall
immediately expire upon such termination.
(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(d)(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 the Change in Control, (A) the
Optionee's employment is terminated by the Company without Cause or (B) the
Optionee terminates the Optionee's employment for Good Reason (as defined
in the last Section hereof).
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.
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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.
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.
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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
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defined in this Section) beneficially owns, in the aggregate, a
lesser percentage of the Total Voting Power than such Person
beneficially owns; or
(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
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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-Geigy Limited, a Swiss corporation,
or such corporation or corporations as are substituted for Ciba-Geigy
Limited, together with their respective affiliates and any former
affiliates holding Corporation voting securities pursuant to Section
4.01(b) of the Governance Agreement;
(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 "Early Retirement" shall mean termination of the
Optionee's employment, other than by reason of death or Cause, at or
after age 55 after five (5) years of employment by the Corporation (or a
Subsidiary thereof);
(VII) the term "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended from time to time;
(VIII) 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
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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;
(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
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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;
(IX) the term "Governance Agreement" shall have the meaning given in the
Strategic Alliance Agreement (as defined in this Section);
(X) the term "Normal Retirement" shall mean termination of the
Optionee's employment, other than by reason of death or Cause, either at
or after age 65;
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(XI) 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; and
(X) 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.
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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 thereof, 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
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Purchase Price
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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 CORPORATIONHEXCEL CORPORATION
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Optionee By:
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Name:
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Title:
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