1997 PERFORMANCE ACCELERATED
RESTRICTED STOCK UNIT AGREEMENT
This Performance Accelerated Restricted Stock Unit Agreement (the
"Agreement"), is entered into as of the Grant Date, by and between Hexcel
Corporation, a Delaware corporation (the "Company"), and the Grantee.
Pursuant to the Hexcel Corporation Incentive Stock Plan (the
"Plan"), the Executive Compensation Committee (the "Committee") of the Board
of Directors of the Company (the "Board") has determined that the Grantee
shall be granted Performance Accelerated Restricted Stock Units ("PARS") upon
the terms and subject to the conditions hereinafter contained. Capitalized
terms used but not defined herein shall have the meanings assigned to them in
the Plan.
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 in this Agreement and set
forth in the Notice of Grant shall have the meanings ascribed to them in the
Notice of Grant and capitalized terms used in this Agreement 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 Agreement, and this
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 PARS granted herein
constitute an Award within the meaning of the Plan.
2. TERMS OF RESTRICTED STOCK. The grant of PARS provided in
Section 1 hereof shall be subject to the following terms, conditions and
restrictions:
(a) The Grantee shall not possess any incidents of ownership
(including, without limitation, dividend and voting rights) in shares of
Common Stock in respect of the PARS until such PARS have vested and been
distributed to the Grantee in the form of shares of Common Stock.
(b) Except as provided in this Section 2 (b), the PARS and any
interest therein may not be sold, assigned, transferred, pledged, hypothecated
or otherwise disposed of, except by will or the laws of descent and
distribution, prior to the distribution of the Common Stock in respect of such
PARS and subject to the conditions set forth in the Plan and this Agreement. Any
attempt to transfer PARS in contravention of this Section is void AB INITIO.
PARS shall not be subject to execution, attachment or other process.
Notwithstanding the foregoing, the Grantee shall be permitted to transfer PARS
to members of this 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 PARS and the transferee of the PARS shall
be subject to all conditions applicable to the PARS (including all of the
terms and conditions of this Agreement) prior to transfer.
3. VESTING AND CONVERSION OF PARS. The PARS shall vest on (a)
January 1, 2004, or (b) on an earlier date or dates to the extent certain
pre-determined performance criteria (the "PARS Goals") are achieved. The
PARS Goals shall be as follows: if earnings of the Company before interest
and taxes (determined by reference to the Company's audited financial
statements) ("EBIT") equal or exceed $86 million for any fiscal year of the
Company, 33-1/3% (or, if applicable, an additional 33 1/3%) of the total
number of PARS shall become vested; if EBIT for any fiscal year of the
Company equals or exceeds $120 million, 66-2/3% (or, if applicable, up to an
additional 66 2/3%) of the total number of PARS shall become vested; and if
EBIT for any fiscal year of the Company equals or exceeds $158 million, 100%
of the total number of PARS shall become vested; PROVIDED, HOWEVER, that no
more than 100% of the total number of PARS may become vested. Upon the later
to occur of (i) January 1, 2000 or (ii) the vesting of a certain number of
PARS, such vested PARS shall be converted into an equivalent number of shares
of Common Stock that will be immediately distributed to the Grantee;
PROVIDED, HOWEVER, that, to the extent that (and only to the extent that) the
Company would be precluded from deducting the associated compensation expense
because of Section 162(m) of the Internal Revenue Code of 1986, as amended
(the "Code"), such PARS shall be converted and distributed to the Grantee on
the first business day of the first year (or years, if the first deferred
distribution shall not include all of such PARS) in which the Company will
not be so precluded; and PROVIDED FURTHER, that no PARS shall be converted
and distributed to the Grantee unless the Grantee is an employee of the
Company (or a Subsidiary) on December 31, 1999. On each dividend payment
date with respect to the Common Stock subsequent to any PARS becoming fully
vested but not yet converted and distributed by virtue of the immediately
preceding proviso, the Company shall credit the Grantee with an additional
number of fully vested whole and partial PARS (assuming each such PARS unit
was a share of Common Stock) equal in value to the amount of dividends which
the Grantee would have received on such dividend payment date if all such
vested PARS (including PARS previously credited to the Grantee pursuant to
this section) which had not yet been converted into shares had been so
converted prior to the record date of such dividend. Such dividends will be
credited as vested PARS as of the payment date of such dividends and such
vested PARS shall thereafter be treated in the same manner as other PARS
under this Agreement (the foregoing method of dividend crediting being
referred to herein as being credited with the "Dividend Equivalent").
Upon the distribution of the shares of Common Stock in respect of the
PARS, the Company shall issue to the Grantee or the Grantee's personal
representative a stock certificate representing such shares of Common Stock,
free of any
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restrictions.
4 TERMINATION OF EMPLOYMENT; CHANGE OF CONTROL.
(a) For purposes of the grant hereunder, any transfer of employment
by the Grantee among the Company and its Subsidiaries shall not be considered
a termination of employment. Notwithstanding any other provision contained
herein or in the Plan, (i) if the Grantee dies or terminates employment due
to Disability (as defined in the last Section hereof), all PARS shall vest,
be converted into shares of Common Stock and be immediately distributed to
the Grantee, (ii) if the Grantee's employment with the Company is
involuntarily terminated other than for Cause (as defined in the last Section
hereof), all PARS shall vest, be converted into shares of Common Stock and be
immediately distributed to the Grantee, (iii) if the Grantee voluntarily
terminates employment with the Company, all vested PARS shall be converted
into shares of Common Stock and be immediately distributed to the Grantee,
provided that the Grantee is an employee of the Company (or a Subsidiary) on
December 31, 1999, and (iv) if the Grantee's employment with the Company
terminates due to the Grantee's Retirement (as defined in the last Section
hereof), all PARS shall vest, be converted in shares of Common Stock and be
immediately distributed to the Grantee; PROVIDED, HOWEVER, that in each case
an appropriate number of such PARS shall not be converted and distributed to
the Grantee until the first business day of the first year in which the
Company is not precluded from deducting the associated compensation expense
under Section 162(m) of the Code, but only to the extent such number of PARS
would not be deductible until such time; FURTHER, PROVIDED, that the Grantee
shall, if applicable, be credited with the Dividend Equivalent with respect
to such PARS.
If the Grantee's employment with the Company is involuntarily
terminated for Cause or the Grantee voluntarily terminates his employment
with the Company, the Grantee shall forfeit all PARS which have not yet
become vested as of the date of termination of employment.
(b) In the event of a Change in Control (as defined in the last
Section hereof), all PARS shall vest, be converted into shares of Common
Stock and be immediately distributed to the Grantee.
5 EQUITABLE ADJUSTMENT.
The aggregate number of shares of Common Stock subject to the
PARS shall be proportionately adjusted 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 the
receipt of consideration by the Company, 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 secu-
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rities available, to the extent reasonably necessary or desirable to
preserve the intended benefits under this Agreement in the event of any other
reorganization, recapitalization, merger, consolidation, spin-off,
extraordinary dividend or other distribution or similar transaction involving
the Company.
6 TAXES. The Grantee shall pay to the Company promptly upon
request any taxes the Company reasonably determines it is required to
withhold under applicable tax laws with respect to the PARS. Such payment
shall be made as provided in Section IX(f) of the Plan.
7 NO GUARANTEE OF EMPLOYMENT. Nothing set forth herein or in the
Plan shall confer upon the Grantee any right of continued employment for any
period by the Company, or shall interfere in any way with the right of the
Company to terminate such employment.
8 NOTICES. Any notice required or permitted under this Agreement
shall be deemed given when delivered personally, or when deposited in a
United States Post Office, postage prepaid, addressed, as appropriate, to the
Grantee at the last address specified in Grantee's employment records, or
such other address as the Grantee may designate in writing to the Company, or
to the Company, Attention: Corporate Secretary, or such other address as the
Company may designate in writing to the Grantee.
9 FAILURE TO ENFORCE NOT A WAIVER. The failure of either party
hereto to enforce at any time any provision of this Agreement shall in no way
be construed to be a waiver of such provision or of any other provision
hereof.
10 GOVERNING LAW. This Agreement shall be governed by and
construed according to the laws of the State of Delaware, without regard to
the conflicts of laws provisions thereof.
11 INCORPORATION OF PLAN. The Plan is hereby incorporated by
reference and made a part of this Agreement, and this 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 PARS granted herein constitute Awards within
the meaning of the Plan.
12 COUNTERPARTS. This 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.
13 MISCELLANEOUS. This Agreement cannot be changed or terminated
orally. This Agreement and the Plan contain the entire agreement between the
parties relating to the subject matter hereof. The section headings herein are
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intended for reference only and shall not affect the interpretation hereof.
14 DEFINITIONS. For purposes of this 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 Grantee to substantially perform the Grantee's duties with the Company
(other than any such failure resulting from the Grantee's incapacity due to
physical or mental illness) after a written demand for substantial
performance is delivered to the Grantee by the Company, which demand
specifically identifies the manner in which the Company believes that the
Grantee has not substantially performed the Grantee's duties, or (B) the
willful engaging by the Grantee in conduct which is demonstrably and
materially injurious to the Company or its subsidiaries, monetarily or
otherwise. For purposes of clauses (A) and (B) of this definition, no act,
or failure to act, on the Grantee's part shall be deemed "willful" unless
done, or omitted to be done, by the Grantee not in good faith and without
the reasonable belief that the Grantee's act, or failure to act, was in the
best interest of the Company;
(III) the term "Change in Control" shall mean any of the following events:
(A)(i) any Person (as defined in this Section), is or becomes the
Beneficial Owner of 20% or more of either (x) the then outstanding
Common Stock of the Company (the "Outstanding Common Stock") or (y)
the combined voting power of the then outstanding securities entitled
to vote generally in the election of directors of the Company (the
"Total Voting Power"); excluding, however, the following: (1) any
acquisition by the Company or any of its affiliates or (2) any
acquisition by any employee benefit plan (or related trust) sponsored
or maintained by the Company or any of its affiliates and (ii) 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
(B) a change in the composition of the Board such that the
individuals who, as of the effective date of this 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
Company'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
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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
(C) the approval by the stockholders of the Company of a
reorganization, merger or consolidation or sale or other disposition
of all or substantially all of the assets of the Company ("Corporate
Transaction"); excluding, however, such a Corporate Transaction (i)
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 Company or all or substantially all of the Company'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 (ii) 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
(D) Ciba shall become the Beneficial Owner of more than 57.5% of
the Total Voting Power; or
(E) the approval by the stockholders of the Company of a complete
liquidation or dissolution of the Company.
(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
Company voting securities pursuant to Section 4.01(b) of the Governance
Agreement;
(V) the term "Disability" shall mean that, as a result of the Grantee's
incapacity due to physical or mental illness or injury, the Grantee shall
not have performed all or substantially all of the Grantee's usual duties
as an employee of the Company for
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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;
(VII) the term "Governance Agreement" shall have the meaning given in the
Strategic Alliance Agreement (as defined in this Section);
(VIII) 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;
(IX) the term "Retirement" shall mean termination of the Grantee'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
Company (or a Subsidiary thereof); and
(X) the term "Strategic Alliance Agreement" shall mean the Strategic
Alliance Agreement among the Company, Ciba-Geigy Limited and Ciba-Geigy
Corporation, dated as of September 29, 1995, as amended.
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ANNEX A
NOTICE OF GRANT
PERFORMANCE ACCELERATED RESTRICTED STOCK UNITS
HEXCEL CORPORATION INCENTIVE STOCK PLAN
The following employee of Hexcel Corporation, a Delaware corporation
("Hexcel") or a Subsidiary, has been granted performance accelerated
restricted stock units in accordance with the terms of this Notice of Grant
and the Agreement to which this Notice of Grant is attached.
The terms below shall have the meanings ascribed to them below when used
in the Agreement.
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Grantee
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Address of Grantee
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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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Aggregate Number of PARS Granted
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IN WITNESS WHEREOF, the parties hereby agree to the terms of this Notice of
Grant and the Agreement to which this Notice of Grant is attached and execute
this Notice of Grant and the Agreement as of the Grant Date.
HEXCEL CORPORATION
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Grantee By:
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Name:
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Title:
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