Exhibit 10.4
1998 EMPLOYEE OPTION AGREEMENT
(October Grant)
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.
(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(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,
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(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).
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
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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, 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,
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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. 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
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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 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
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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;
(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
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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 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.
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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
(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 October 13, 1998
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Purchase Price $8.75
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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:___________________________________
Name:_________________________________
Title:________________________________