Exhibit 10.3
FORM OF
EXCHANGE PERFORMANCE ACCELERATED STOCK OPTION AGREEMENT
For
Employee
EMPLOYEE OPTION AGREEMENT, dated as of the Grant Date [October 30, 1998], 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 offer the Optionee the
opportunity to exchange all (but not less than all) of the Optionee's existing
Performance Accelerated Stock Options (regardless of when granted) for the
number of Option Shares set forth in the Notice of Grant attached hereto as
Annex A and incorporated by reference herein;
NOW, THEREFORE, the parties agree as follows:
1. NOTICE OF GRANT; INCORPORATION OF PLAN. 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 [$12.00].
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
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 a share of Company Common Stock as reported
on the New York Stock Exchange Consolidated Transactions Tape shall have
equalled or exceeded the greater of $16 or twice the Purchase Price [$24] 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 Term of the Option). The
Option, to the extent not then vested, shall immediately expire upon such
termination.
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(ii) In the event of a Change in Control (as defined inthe 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.
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
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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.
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,
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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.
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 . CANCELLATION OF EXISTING PERFORMANCE ACCELERATED STOCK OPTIONS.
Upon full execution of this Employee Option Agreement, all Performance
Accelerated Stock Options previously issued to the Optionee (regardless of when
granted) shall be deemed cancelled in exchange for the Option Shares granted
hereunder.
17. OPTIONEE REPRESENTATION. The Optionee represents that Optionee has
not transferred or purported to transfer to any Person any previously issued
Performance Accelerated Stock Options.
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18. 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
(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
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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-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;
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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 "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 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;
(IX) the term "Governance Agreement" shall have the meaning given in the
Strategic Alliance Agreement (as defined in this Section);
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(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;
(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.
Exhibit 10.3
NOTICE OF GRANT
EXCHANGE PASO
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 October 30, 1998
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Purchase Price 110% of the closing price of a share of
Hexcel Common Stock on the Grant Date
[$12.00]
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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:---------------------------------
Name:-------------------------------
Title:------------------------------
