<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
FORM 10-Q
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended June 30, 1997
or
/ / Transition Report Pursuant to Section 13 or 15 (d) of the
Securities Exchange Act of 1934
For the transition period from _______________ to _________________
Commission File Number 1-8472
----------------------
HEXCEL CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Delaware 94-1109521
(STATE OF INCORPORATION) (I.R.S. EMPLOYER
IDENTIFICATION NO.)
Two Stamford Plaza
281 Tresser Boulevard
Stamford, Connecticut 06901-3238
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES AND ZIP CODE)
Registrant's telephone number, including area code: (203) 969-0666
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No
--- ---
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a
plan of reorganization confirmed by a US Bankruptcy Court. Yes X No
--- ---
Indicate the number of shares outstanding of each of the registrant's
classes of common stock, as of the latest practicable date.
Class Outstanding at August 8, 1997
----- -----------------------------
COMMON STOCK 36,814,739
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<PAGE>
HEXCEL CORPORATION AND SUBSIDIARIES
INDEX
PAGE
PART I. FINANCIAL INFORMATION
- Condensed Consolidated Balance Sheets -- 2
June 30, 1997 and December 31, 1996
- Condensed Consolidated Statements of 3
Operations -- The Quarter and Year-to-Date Periods
Ended June 30, 1997 and 1996
- Condensed Consolidated Statements of 4
Cash Flows -- The Year-to-Date Periods Ended
June 30, 1997 and 1996
- Notes to Condensed Consolidated 5
Financial Statements
- Management's Discussion and Analysis 10
of Financial Condition and Results of
Operations
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security
Holders 17
Item 6. Exhibits and Report on Form 8-K 18
SIGNATURES 19
<PAGE>
HEXCEL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
UNAUDITED
----------------------------------
JUNE 30, December 31,
(IN THOUSANDS, EXCEPT PER SHARE DATA) 1997 1996
- -------------------------------------------------------------------------------------------------------------
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 3,345 $ 7,975
Accounts receivable 196,373 151,263
Inventories 153,118 145,884
Prepaid expenses 10,658 11,809
- -------------------------------------------------------------------------------------------------------------
Total current assets 363,494 316,931
- -------------------------------------------------------------------------------------------------------------
Property, plant and equipment 474,520 468,173
Less accumulated depreciation (152,765) (141,390)
- -------------------------------------------------------------------------------------------------------------
Net property, plant and equipment 321,755 326,783
- -------------------------------------------------------------------------------------------------------------
Intangibles and other assets 58,126 58,022
- -------------------------------------------------------------------------------------------------------------
Total assets $ 743,375 $ 701,736
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable and current maturities of long-term liabilities $ 25,606 $ 23,835
Accounts payable 67,766 73,117
Accrued liabilities 97,035 91,860
- -------------------------------------------------------------------------------------------------------------
Total current liabilities 190,407 188,812
- -------------------------------------------------------------------------------------------------------------
Long-term notes payable and capital lease obligations 281,483 254,919
Indebtedness to related parties 34,238 32,262
Deferred liabilities 39,839 46,414
- -------------------------------------------------------------------------------------------------------------
Stockholders' equity:
Common stock, $0.01 par value, 100,000 shares authorized, shares
issued and outstanding of 36,782 in 1997 and 36,561 in 1996 368 366
Additional paid-in capital 262,634 259,592
Accumulated deficit (65,810) (89,171)
Cumulative currency translation adjustment 216 8,542
- -------------------------------------------------------------------------------------------------------------
Total stockholders' equity 197,408 179,329
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity $ 743,375 $ 701,736
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</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS.
<PAGE>
HEXCEL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
UNAUDITED
--------------------------------------------------------------------------
THE QUARTER ENDED JUNE 30, THE YEAR-TO-DATE ENDED JUNE 30,
---------------------------------- ------------------------------------
(IN THOUSANDS, EXCEPT PER SHARE DATA) 1997 1996 1997 1996
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net sales $ 241,629 $ 166,770 $ 455,638 $ 293,188
Cost of sales (183,811) (131,582) (350,931) (231,217)
- ----------------------------------------------------------------------------------------------------------------------------
Gross margin 57,818 35,188 104,707 61,971
Selling, general and administrative expenses (30,484) (23,879) (58,090) (41,361)
Business acquisition and consolidation expenses (2,818) (29,209) (5,717) (34,420)
Other income, net - 288 - 2,985
- ----------------------------------------------------------------------------------------------------------------------------
Operating income (loss) 24,516 (17,612) 40,900 (10,825)
Interest expense (5,829) (4,849) (11,517) (8,482)
- ----------------------------------------------------------------------------------------------------------------------------
Income (loss) before income taxes 18,687 (22,461) 29,383 (19,307)
Provision for income taxes (3,552) (1,206) (6,022) (2,512)
- ----------------------------------------------------------------------------------------------------------------------------
Net income (loss) $ 15,135 $ (23,667) $ 23,361 $ (21,819)
- ----------------------------------------------------------------------------------------------------------------------------
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Net income (loss) per share and equivalent share:
Primary $ 0.40 $ (0.65) $ 0.62 $ (0.72)
Fully Diluted 0.38 (0.65) 0.60 (0.72)
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Weighted average shares and equivalent shares:
Primary 37,904 36,547 37,917 30,483
Fully Diluted 45,145 36,547 45,158 30,483
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THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS.
</TABLE>
<PAGE>
HEXCEL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
UNAUDITED
--------------------------------
THE YEAR-TO-DATE ENDED JUNE 30,
(IN THOUSANDS) 1997 1996
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 23,361 $ (21,819)
Reconciliation to net cash provided (used) by operating activities:
Depreciation and amortization 18,399 9,977
Accrued business acquisition and consolidation expenses 5,717 34,420
Business acquisition and consolidation payments (9,641) (2,256)
Working capital changes and other (68,640) (21,659)
- ----------------------------------------------------------------------------------------------------------------
Net cash used by operating activities (30,804) (1,337)
- ----------------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
Capital expenditures (18,090) (8,652)
Proceeds from the sale of Knytex joint venture 5,000 -
Cash paid for the Acquired Ciba Business - (25,000)
Cash paid for the Acquired Hercules Business - (135,000)
Other (1,250) 1,560
- ----------------------------------------------------------------------------------------------------------------
Net cash used by investing activities (14,340) (167,092)
- ----------------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Proceeds from issuance of long-term debt 21,145 163,703
Payments of long-term debt (15,514) (8,006)
Proceeds from short-term debt, net 30,196 15,174
Proceeds from issuance of common stock 3,044 2,191
- ----------------------------------------------------------------------------------------------------------------
Net cash provided by financing activities 38,871 173,062
- ----------------------------------------------------------------------------------------------------------------
Effect of exchange rate changes on cash and cash equivalents 1,643 (17)
- ----------------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents (4,630) 4,616
Cash and cash equivalents at beginning of year 7,975 3,829
- ----------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of period $ 3,345 $ 8,445
- ----------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS.
</TABLE>
<PAGE>
HEXCEL CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
NOTE 1 -- BASIS OF ACCOUNTING
The accompanying condensed consolidated financial statements have been
prepared from the unaudited records of Hexcel Corporation and subsidiaries
("Hexcel" or the "company") in accordance with generally accepted accounting
principles, and, in the opinion of management, include all adjustments
necessary to present fairly the balance sheet of the company as of June 30,
1997, and the results of operations for the quarters and year-to-date periods
ended June 30, 1997 and 1996, and the cash flows for the year-to-date periods
ended June 30, 1997 and 1996. The condensed consolidated balance sheet of
the company as of December 31, 1996 was derived from the audited 1996
consolidated balance sheet. Certain information and footnote disclosures
normally included in financial statements have been omitted pursuant to rules
and regulations of the Securities and Exchange Commission. Certain prior
period amounts in the condensed consolidated financial statements and notes
have been reclassified to conform to the 1997 presentation. These condensed
consolidated financial statements should be read in conjunction with the
consolidated financial statements and notes thereto included in the company's
1996 Annual Report on Form 10-K.
As discussed in Note 2, Hexcel acquired the worldwide composites division
of Ciba-Geigy Limited, a Swiss corporation, and Ciba-Geigy Corporation, a New
York corporation (collectively, "Ciba"), including most of Ciba's composite
materials, parts and structures businesses, on February 29, 1996. The
company subsequently acquired Ciba's Austrian composites business on May 30,
1996, and various remaining assets of Ciba's worldwide composites division at
various dates through February 28, 1997. As also discussed in Note 2, Hexcel
acquired the composite products division of Hercules Incorporated
("Hercules") on June 27, 1996. Accordingly, the accompanying condensed
consolidated balance sheets, statements of operations and cash flows include
the financial position, results of operations and cash flows, respectively,
of the businesses acquired from Ciba and Hercules as of such dates and for
such periods that these businesses were owned by the company.
NOTE 2 - BUSINESS ACQUISITIONS AND CONSOLIDATION
ACQUIRED CIBA BUSINESS
Hexcel acquired most of Ciba's composite materials, parts and structures
businesses on February 29, 1996, Ciba's Austrian composites business on May
30, 1996, and various remaining assets of Ciba's worldwide composites
division (collectively, the "Acquired Ciba Business") at various dates
through February 28, 1997. The company acquired the assets and assumed the
liabilities of the Acquired Ciba Business, other than certain excluded assets
and liabilities, in exchange for: (a) 18,022 newly issued shares of Hexcel
common stock; (b) $25,000 in cash; (c) senior subordinated notes in an
aggregate principal amount of approximately $37,650; and (d) senior demand
notes in an aggregate principal amount of $5,329. The aggregate purchase
price for the net assets acquired was approximately $209,100.
On February 21, 1997, Hexcel consented to an assignment by Ciba of Ciba's
rights and obligations under various agreements with the company. As a
result of the assignment of these rights and obligations, the Hexcel common
stock and the senior subordinated notes previously held by Ciba are now
beneficially held by Ciba Specialty Chemicals Holding Inc., a Swiss
corporation ("CSC").
5
<PAGE>
ACQUIRED HERCULES BUSINESS
Hexcel acquired the assets of the composite products and carbon fibers
businesses of Hercules (the "Acquired Hercules Business") on June 27, 1996.
The Acquired Hercules Business was purchased for $135,000 in cash subject to
certain post-closing adjustments. The adjusted purchase price was
approximately $139,400 as of June 30, 1997, but additional post-closing
purchase price adjustments could arise in 1997.
PRO FORMA FINANCIAL INFORMATION
The pro forma net sales, net loss and net loss per share of Hexcel for
the year-to-date period ended June 30, 1996, giving effect to the
acquisitions of the Acquired Ciba Business and the Acquired Hercules Business
as if they had occurred on January 1, 1996, were:
- --------------------------------------------------------------------------------
6/30/97
- --------------------------------------------------------------------------------
Pro forma net sales $ 397,021
Pro forma net loss (23,448)
Pro forma net loss per share (0.65)
- --------------------------------------------------------------------------------
Weighted average shares and equivalent shares
used in computing pro forma net loss per share 36,201
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BUSINESS CONSOLIDATION
In May 1996 in conjunction with the integration of the Acquired Ciba
Business, Hexcel announced the commencement of a plan to consolidate the
company's operations over a period of three years. In December of 1996, the
company announced the commencement of further consolidation activities
identified during the ongoing integration of the acquired businesses. The
total expense of the business consolidation program is estimated to be
approximately $58,000, of which approximately $42,000 relates to cash
expenditures. Of the total estimated expense, $42,370 was incurred in 1996
and $5,717 was incurred in the first half of 1997. The company expects to
record the majority of the remaining expenses of approximately $10,000 during
the latter half of 1997.
The objective of the business consolidation program is to integrate
acquired assets and operations into Hexcel, and to reorganize the company's
manufacturing and research activities around strategic centers dedicated to
select product technologies. The business consolidation is also intended to
eliminate excess manufacturing capacity and redundant administrative
functions. Specific actions either commenced or contemplated by the
consolidation program include the closure of the Anaheim, California facility
acquired in connection with the purchase of the Acquired Ciba Business, the
closure of a portion of the Welkenraedt, Belgium facility, the reorganization
of the company's manufacturing operations in France, the consolidation of the
company's US special process manufacturing activities, and the integration of
sales, marketing and administrative resources.
Management expects that the business consolidation program will take up
to three years to complete, in part because of the aerospace industry
requirements to "qualify" specific equipment and manufacturing facilities for
the manufacture of certain products. These qualification requirements
increase the complexity, cost and time of moving equipment and rationalizing
manufacturing activities. Based on Hexcel's experience with previous plant
consolidations, compliance with these qualification requirements necessitates
an approach to the consolidation of manufacturing facilities that generally
requires two to three years to complete. Accordingly, the business
consolidation program is not expected to be complete until sometime during
1998.
6
<PAGE>
The following table sets forth the company's accrued business acquisition
and consolidation expenses for the period from December 31, 1996 to June 30,
1997:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
EMPLOYEE FACILITY
SEVERANCE CLOSURE &
AND EQUIPMENT
RELOCATION RELOCATION OTHER TOTAL
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
BALANCE AS OF 12/31/96 $ 19,083 $ 5,198 $ 1,076 $ 25,357
Business acquisition and
consolidation expenses 119 3,573 2,025 5,717
Cash expenditures (3,684) (3,967) (1,990) (9,641)
Non-cash usage, including
asset write-downs and
currency translation effects (132) (579) (202) (913)
- --------------------------------------------------------------------------------
BALANCE AS OF 6/30/97 $ 15,386 $ 4,225 $ 909 $ 20,520
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
</TABLE>
Approximately 75 positions were eliminated during 1996, and another 143
positions were eliminated during the first half of 1997.
NOTE 3 -- PROPOSED BUSINESS ACQUISITION
On April 21, 1997, Hexcel announced that it has entered into an agreement
to acquire selected assets and businesses of Fiberite, Inc. ("Fiberite") for
approximately $300 million in cash and the assumption of certain operating
liabilities relating to the businesses to be acquired. Fiberite,
headquartered in Tempe, Arizona, is engaged in the manufacture and marketing
of advanced composite materials for commercial aerospace, space and defense,
recreation, and general industrial markets. The lines of business to be
acquired by the company include certain prepreg operations, as well as
Fiberite's ablatives, carbon-carbon, molding compounds and engineered
components businesses. The proposed acquisition is expected to be completed
in the third quarter of 1997, subject to customary conditions of closing and
required regulatory approvals.
In connection with this proposed acquisition, Hexcel has obtained a
commitment for a new bank credit facility, the proceeds of which would be
sufficient to fund the proposed acquisition, refinance certain existing
indebtedness including the Revolving Credit Facility (see Note 5), and
provide for the ongoing working capital and other financing requirements of
the company.
NOTE 4 -- INVENTORIES
Inventories as of June 30, 1997 and December 31, 1996 were:
- --------------------------------------------------------------------------------
6/30/97 12/31/96
- --------------------------------------------------------------------------------
Raw materials $ 82,710 $ 66,055
Work in progress 44,659 45,469
Finished goods 25,749 34,360
- --------------------------------------------------------------------------------
Total inventories $ 153,118 $ 145,884
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
7
<PAGE>
NOTE 5 -- NOTES PAYABLE, CAPITAL LEASE OBLIGATIONS AND INDEBTEDNESS TO RELATED
PARTIES
Notes payable, capital lease obligations and indebtedness to related
parties as of June 30, 1997 and December 31, 1996 were:
- --------------------------------------------------------------------------------
6/30/97 12/31/96
- --------------------------------------------------------------------------------
Revolving credit facility, expires 1999 $ 126,087 $ 98,656
European credit and overdraft facilities 29,886 23,405
Convertible subordinated notes, due 2003 114,485 114,500
Convertible subordinated debentures, due 2011 25,625 25,625
Obligations under IDRB variable rate demand notes 8,450 8,450
Various notes payable 1,008 1,212
- --------------------------------------------------------------------------------
Total notes payable 305,541 271,848
Capital lease obligations 1,548 6,906
Senior subordinated notes payable to CSC,
net of unamortized discount of $2,450 and
$2,666 as of June 30, 1997 and
December 31, 1996, respectively 34,238 32,262
- --------------------------------------------------------------------------------
Total notes payable, capital lease obligations
and indebtedness to related parties $ 341,327 $ 311,016
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Notes payable and current maturities
of long-term liabilities $ 25,606 $ 23,835
Long-term notes payable and capital
lease obligations, less current maturities 281,483 254,919
Indebtedness to related parties 34,238 32,262
- --------------------------------------------------------------------------------
Total notes payable, capital lease obligations
and indebtedness to related parties $ 341,327 $ 311,016
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
REVOLVING CREDIT FACILITY
In connection with the acquisition of the Acquired Hercules Business on
June 27, 1996, Hexcel obtained the Revolving Credit Facility to: (a)
refinance certain outstanding indebtedness; (b) finance the purchase of the
Acquired Hercules Business; and (c) provide for the ongoing working capital
and other financing requirements of the company on a worldwide basis. The
Revolving Credit Facility initially provided for up to $310,000 of borrowing
capacity. However, as a result of the company's issuance of convertible
subordinated notes in July of 1996, maximum availability under the Revolving
Credit Facility was reduced from $310,000 to $254,600, in accordance with the
terms of that facility.
As of June 30, 1997, letters of credit with an aggregate face amount of
$12,700 were outstanding under the Revolving Credit Facility.
SENIOR SUBORDINATED NOTES PAYABLE TO CSC
In connection with the purchase of the Acquired Ciba Business, Hexcel has
delivered to Ciba Senior Subordinated Notes in an aggregate principal amount
of $34,928, and has undertaken to deliver additional Senior Subordinated
Notes in an aggregate principal amount of approximately $2,700. On February
21, 1997, the company consented to an assignment by Ciba of Ciba's rights and
obligations under various agreements with Hexcel. As a result of the
assignment of these rights and obligations, the Hexcel common stock and the
senior subordinated notes previously held by Ciba are now beneficially held
by CSC.
8
<PAGE>
NOTE 6 -- PROVISION FOR INCOME TAXES
Income tax provisions of $6,022 and $2,512 in the year-to-date periods
ended June 30, 1997 and 1996, respectively, primarily reflect international
taxes on certain European subsidiaries, state taxes, and settlement of
various tax audits. No provision for U.S. federal or Belgium income taxes
has been recorded for these periods since the company has available net
operating loss carryforwards to offset taxes in these jurisdictions. The
income tax provision is determined by the company's level of profitability in
each jurisdiction in which it is subject to tax. The level of profitability
of the company by country may vary, which could result in changes in the
effective tax rate and could cause the estimated tax rate in interim quarters
to vary from the actual annual effective tax rate for the year.
At June 30, 1997, the company has a deferred tax asset valuation allowance
(a reserve against the company's deferred tax assets) of approximately
$60,000, that is primarily attributable to U.S. federal and Belgium deferred
tax assets. Realization of the deferred tax assets is dependent on generating
sufficient future U.S. and Belgium taxable income to utilize deductions and
credits prior to their expiration. The amount of the valuation allowance is
periodically reassessed and may be adjusted depending on the company's
outlook for future U.S. and Belgium taxable income. During the latter half
of the year, the company develops its strategic and annual business plans.
These plans provide additional insight into the outlook for the company's
future U.S. and Belgium taxable income, and when combined with other factors
(such as recent operating results), may serve as a basis for a future
reduction of the valuation allowance. When it is determined that all or a
portion of the valuation allowance is not needed, such amount will be reversed
resulting in an increase in net income. Once all of the valuation
allowance has been reversed, the company expects that its effective income
tax rates for U.S. and Belgium income will approximate the statutory rates.
NOTE 7 -- EARNINGS PER SHARE
In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 128, "Earnings per Share"
("SFAS 128"). Hexcel is required to adopt SFAS 128 in the fourth quarter of
1997, and at that time will restate earnings per share ("EPS") data for prior
periods to conform with SFAS 128. Earlier application of the provisions of
SFAS 128 is not permitted.
SFAS 128 replaces current EPS reporting requirements and requires a dual
presentation of basic and diluted EPS. Basic EPS excludes dilution and is
computed by dividing net income by the weighted average shares of common
stock outstanding for the period. Diluted EPS reflects the potential
dilution that could occur if stock options, convertible debt instruments, or
other securities or contracts to issue common stock were exercised or
converted into common stock.
If SFAS 128 had been in effect during the current and prior year periods,
basic EPS and diluted EPS would have been as follows:
- --------------------------------------------------------------------------------
THE QUARTER ENDED JUNE 30, THE YEAR-TO-DATE ENDED JUNE 30,
1997 1996 1997 1996
- --------------------------------------------------------------------------------
Basic $0.41 ($0.65) $0.64 ($0.72)
Diluted $0.38 ($0.65) $0.60 ($0.72)
- --------------------------------------------------------------------------------
9
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
BUSINESS ACQUISITIONS AND CONSOLIDATION
BUSINESS ACQUISITIONS
Hexcel acquired most of Ciba's composite materials, parts and structures
businesses on February 29, 1996, Ciba's Austrian composites business on May
30, 1996, and various remaining assets of Ciba's worldwide composites
division at various dates through February 28, 1997. The aggregate purchase
price for the net assets acquired was approximately $209.1 million.
Hexcel acquired the assets of the composite products and carbon fibers
businesses of Hercules on June 27, 1996. The Acquired Hercules Business was
purchased for $135.0 million in cash subject to certain post-closing
adjustments. The adjusted purchase price was approximately $139.4 million as
of June 30, 1997, but additional post-closing adjustments could arise in 1997.
On April 21, 1997, Hexcel announced that it has entered into an agreement
to acquire selected assets and businesses of Fiberite, Inc. for approximately
$300 million in cash and the assumption of certain operating liabilities
relating to the businesses to be acquired. The lines of business to be
acquired by the company include certain prepreg operations, as well as
Fiberite's ablatives, carbon-carbon, molding compounds and engineered
components businesses. The proposed acquisition is expected to be completed
in the third quarter of 1997, subject to customary conditions of closing and
required regulatory approvals.
Further discussion of the acquisitions of the Acquired Ciba Business and
the Acquired Hercules Business is contained in Note 2 to the accompanying
condensed consolidated financial statements. Further discussion of the
proposed acquisition of selected assets and businesses from Fiberite is
contained in Note 3 to the accompanying condensed consolidated financial
statements.
BUSINESS CONSOLIDATION
In May 1996 in conjunction with the integration of the Acquired Ciba
Business, Hexcel announced the commencement of a plan to consolidate the
company's operations over a period of three years. In December 1996, the
company announced the commencement of further consolidation activities
identified during the ongoing integration of the acquired businesses. The
total expense of the business consolidation program is estimated to be
approximately $58.0 million of which approximately $42,000 relates to cash
expenditures. Of the total estimated expense, $42.4 million was incurred in
1996 and $5.7 million was incurred in the first half of 1997. The company
expects to incur the majority of the remaining expenses of approximately $10
million during the latter half of 1997.
Further discussion of the business consolidation program is contained in
Note 2 to the accompanying condensed consolidated financial statements.
10
<PAGE>
RESULTS OF OPERATIONS
SECOND QUARTER
NET SALES: Net sales for the second quarter of 1997 were $241.6 million,
compared with net sales for the 1996 second quarter of $166.8 million.
Results for the second quarter of 1997 include the results of the Acquired
Ciba Business and the Acquired Hercules Business, while second quarter 1996
results include only the business operations acquired from Ciba. The second
quarter is traditionally the company's strongest. Pro forma net sales for
the second quarter of 1996, giving effect to the acquisition of the Acquired
Hercules Business as if the transaction had occurred at the beginning of the
quarter, were $198.1 million.
The 22% increase in 1997 second quarter sales over pro forma 1996 second
quarter sales was largely attributable to improved sales of composite
materials to commercial aerospace customers, and reflects the impact of
increases in production rates for certain aircraft as well as the increased
utilization of composite materials on new generation aircraft. In
particular, Hexcel benefited from higher sales of carbon honeycomb core and
carbon fiber based prepregs. The company also benefited from increased sales
of engineered products, largely as a result of the production of structural
and interior components outsourced to Hexcel by The Boeing Company.
Commercial aerospace now accounts for more than 60% of net sales, compared to
52% of pro forma sales two years ago. These sales gains were partially
offset by the translation impact of a strengthening US dollar on European
revenues. Sales to European customers and export sales from European
factories comprise approximately 40% of consolidated sales. Changes in
currency exchange rates reduced 1997 second quarter sales, relative to the
second quarter of 1996, by nearly 4%.
Hexcel believes that the availability of certain carbon fibers, an
important raw material in manufacturing advanced structural materials, is
currently insufficient to satisfy worldwide demand. The company estimates it
has production capacity and sufficient contracts to purchase carbon fiber to
meet its estimated 1997 aerospace customer requirements. However, should
customer demand grow faster than expected or the mix or timing of customer
requirements change, the company may not be able to satisfy all of its
customers' requirements. Carbon fiber manufacturers, including the company,
have announced plans to increase carbon fiber production capacity during the
next twelve months. At the end of June 1997, the company completed the first
phase of its previously announced carbon fiber capacity expansion program.
The following table summarizes net sales to third-party customers by
product group and market segment for the quarter ended June 30, 1997:
- --------------------------------------------------------------------------------
COMMERCIAL SPACE & GENERAL
(IN MILLIONS) AEROSPACE DEFENSE RECREATION INDUSTRIAL TOTAL
- --------------------------------------------------------------------------------
Fibers and Fabrics $ 5.0 $ 2.7 $ 3.0 $ 33.0 $ 43.7
Composite Materials 101.1 18.0 17.4 18.5 155.0
Engineered Products 40.8 2.1 -- -- 42.9
- --------------------------------------------------------------------------------
Total $ 146.9 $ 22.8 $ 20.4 $ 51.5 $ 241.6
61% 9% 8% 22% 100%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BACKLOG: The backlog of orders for commercial and military aerospace
materials to be filled within 12 months increased from $347.5 million as of
December 31, 1996, to $427.6 million as of June 30, 1997. The 23.1%
improvement reflects the impact of increased commercial aircraft build rates,
as well as an increase in orders for engineered products. The order backlog
for non-aerospace materials increased from $54.2 million as of December 31,
1996, to $69.9 million as of June 30, 1997. This improvement is primarily
attributable to increased orders from train and wind energy customers.
11
<PAGE>
The following tables summarizes the backlog of orders by product group as
of June 30, 1997 and December 31, 1996:
- --------------------------------------------------------------------------------
JUNE 30, 1997 NON-
(IN MILLIONS) AEROSPACE AEROSPACE TOTAL
- --------------------------------------------------------------------------------
Fibers and Fabrics $ 20.5 $ 35.8 $ 56.3
Composite Materials 256.7 33.6 290.3
Engineered Products 150.4 0.5 150.9
- --------------------------------------------------------------------------------
Total $ 427.6 $ 69.9 $ 497.5
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
DECEMBER 31, 1996 NON-
(IN MILLIONS) AEROSPACE AEROSPACE TOTAL
- --------------------------------------------------------------------------------
Fibers and Fabrics $ 26.9 $ 33.6 $ 60.5
Composite Materials 194.6 15.8 210.4
Engineered Products 126.0 4.8 130.8
- --------------------------------------------------------------------------------
Total $ 347.5 $ 54.2 $ 401.7
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
GROSS MARGIN: Gross margin for the second quarter of 1997 was $57.8
million, or 23.9% of sales, compared with $35.2 million for the second
quarter of 1996, or 21.1% of sales. Aside from the impact of business
acquisitions, the improvement in 1997 second quarter gross margin is the
result of higher sales volume, favorable product mix, enhanced manufacturing
productivity resulting from Hexcel's business consolidation program, and the
benefits from the recent investments made in our carbon fibers business. Due
to the highly competitive nature of most of the markets in which the company
competes, product price changes were not a significant factor in the 1997
gross margin improvement. Management expects gross margin as a percentage of
sales for the remainder of 1997 to be comparable to second quarter levels or
to show continued modest improvement.
SELLING, GENERAL AND ADMINISTRATIVE ("SG&A"): SG&A expenses were $30.5
million, in the second quarter of 1997, or 12.6% of sales, which includes
$4.9 million of research and technology expenses. This compares with 1996
second quarter SG&A expenses of $23.9 million, or 14.3% of sales. The
aggregate dollar increase in SG&A expenses from 1996 to 1997 is primarily
attributable to the acquired businesses. The decrease in SG&A expenses as a
percentage of sales primarily reflects higher sales levels. Management does
not expect any significant change in SG&A expenses, as a percentage of
sales, for the remainder of 1997.
OPERATING INCOME: Operating income was $24.5 million in the second quarter
of 1997, compared with a loss of $17.6 million in the second quarter of 1996.
The 1996 quarterly loss includes a charge for business acquisition and
consolidation expenses of $29.2 million, compared to $2.8 million for the
second quarter of 1997. Excluding the charge for business acquisition and
consolidation expenses, the improvement in operating income as a percentage
of sales (11.3% in second quarter 1997 and 7.0% in second quarter 1996)
reflects both improved gross margin and lower SG&A expenditures relative to
sales.
INTEREST EXPENSE: Interest expense totaled $5.8 million in the second
quarter of 1997 and $4.8 million in the second quarter of 1996. The
quarter-on-quarter increase primarily reflects the additional cost of
financing the Acquired Hercules Business with various debt and credit
facilities. The second quarter of 1996 included a $1.8 million write-off of
capitalized debt financing costs resulting from the refinancing of the credit
facility.
12
<PAGE>
INCOME TAXES: Income tax provisions of $3.6 million and $1.2 million for
the quarters ended June 30, 1997 and 1996, respectively, primarily reflect
international taxes on certain European subsidiaries, state taxes, and
settlement of various tax audits. No provision for U.S. federal or Belgium
income taxes has been recorded for these periods since the company has
available net operating loss carryforwards to offset taxes in these
jurisdictions. The income tax provision is determined by the company's level
of profitability in each jurisdiction in which it is subject to tax. The
level of profitability of the company by country may vary, which could result
in changes in the annual effective tax rate and could cause the estimated tax
rate in interim quarters to vary from the actual annual effective tax rate
for the year.
At June 30, 1997, the company has a deferred tax asset valuation allowance
(a reserve against the company's deferred tax assets) of approximately $60.0
million, that is primarily attributable to U.S. federal and Belgium deferred
tax assets. Realization of the deferred tax assets is dependent on
generating sufficient future U.S. and Belgium taxable income to utilize
deductions and credits prior to their expiration. The amount of the
valuation allowance is periodically reassessed and may be adjusted depending
on the company's outlook for future U.S. and Belgium taxable income. During
the latter half of the year, the company develops its strategic and annual
business plans. These plans provide additional insight into the outlook for
the company's future U.S. and Belgium taxable income, and when combined with
other factors (such as recent operating results), may serve as a basis for a
future reduction of the valuation allowance. When it is determined that all
or a portion of the valuation allowance is not needed, such amount will be
reversed thereby resulting in an increase in net income. Once all of the
valuation allowance has been reversed, the company expects that its effective
income tax rates for U.S. and Belgium will approximate the statutory rates.
NET INCOME (LOSS) AND NET INCOME (LOSS) PER SHARE: Net income for the 1997
second quarter was $15.1 million, or $0.38 per share on a fully diluted
basis, compared with a net loss for the 1996 second quarter of $23.7 million,
or $0.65 per share. The results include business acquisition and
consolidation expenses of $2.8 million, or $0.06 per share after income
taxes, for the 1997 quarter, and $29.2 million, or $0.77 per share after
income taxes, for the 1996 quarter. Information regarding the impact of SFAS
128 on earnings per share is contained in Note 8 to the accompanying
condensed consolidated financial statements.
There were 45.1 million weighted-average shares and equivalent shares
outstanding during the second quarter of 1997, versus 36.5 million during the
second quarter of 1996. The quarter-on-quarter increase in the number of
weighted average shares and equivalent shares is primarily attributable to
the inclusion of 7.2 million common share equivalents from the $114.5 million
Convertible Subordinated Notes which were issued in July 1996.
YEAR-TO-DATE
NET SALES AND GROSS MARGIN: Net sales for the first half of 1997 were
$455.6 million, compared with $293.2 million for the first half of 1996. Pro
forma net sales for the first half of 1996 were $397.0 million. Gross
margin for the first half of 1997 was $104.7 million, or 23.0% of sales,
versus gross margin for the same period of 1996 of $62 million, or 21.1% of
sales. These increases primarily reflect the same factors noted above.
13
<PAGE>
The following table summarizes net sales to third-party customers by
product group and market segment for the year-to-date period ended June 30,
1997:
- --------------------------------------------------------------------------------
COMMERCIAL SPACE & GENERAL
(IN MILLIONS) AEROSPACE DEFENSE RECREATION INDUSTRIAL TOTAL
- --------------------------------------------------------------------------------
Fibers and Fabrics $ 13.8 $ 6.0 $ 4.5 $ 62.8 $ 87.1
Composite Materials 192.7 30.3 32.4 32.6 288.0
Engineered Products 74.0 5.1 -- 1.4 80.5
- --------------------------------------------------------------------------------
Total $ 280.5 $ 41.4 $ 36.9 $ 96.8 $ 455.6
62% 9% 8% 21% 100%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
OPERATING INCOME: Operating income for the first six months of 1997 was
$40.9 million, compared with operating loss for the same period of 1996 of
$10.8 million. Results for the six-month period ended June 30, 1996 include
$34.4 million of business consolidation and acquisition expenses, compared to
$5.7 million for the first half of 1997. The business acquisition and
consolidation expenses incurred in the first half of 1996 included non-cash
expenditures of $3,635 of compensation expense resulting from stock options
that were granted in 1995 subject to stockholder approval and stock options
which vested in connection with the acquisition of the Acquired Ciba Business
and $11,356 of write downs on various assets primarily relating to the
disposal of certain manufacturing equipment and a building.
Excluding the business consolidation and acquisition expenses, the
improvement in operating income is the result of the benefit from the
acquired businesses and improvements in gross margin, offset by higher SG&A
expenses. SG&A expenses were $58.1 million in the 1997 period, or 12.8% of
sales, versus $41.4 million in the 1996 period, or 14.1% of sales. Results
for 1996 also include $3.0 million of other income, which was largely
attributable to the receipt of an additional $1.6 million of cash in
connection with the sale of a manufacturing facility and related assets in
1994, and to the partial settlement for $1.1 million of a claim arising from
the sale of certain assets in 1991.
NET INCOME (LOSS) AND NET INCOME (LOSS) PER SHARE: The 1997 year-to-date
net income was $23.4 million, or $0.60 per share on a fully diluted basis,
versus net loss of $21.8 million, or $0.72 per share, for the comparable
period of 1996. The 1997 net income includes $11.5 million of interest
expense, compared with $8.5 million for the 1996 period, and reflects the
additional debt used to finance the business acquisitions. The 1996 period
includes a write-off of $3.4 million of capitalized debt financing costs.
There were approximately 45.2 million weighted-average shares and equivalent
shares outstanding during the first half of 1997, versus 30.5 million during
the first half of 1996. The difference in the number of weighted average
shares and equivalent shares reflects the issuance of approximately 18.0
million shares of new common stock to Ciba on February 29, 1996 in connection
with the acquisition of the Acquired Ciba Business as well as the inclusion
of 7.2 million of common share equivalents from the $114.5 Convertible
Subordinated Notes which were issued in July 1996.
CAPITAL RESOURCES AND LIQUIDITY
FINANCIAL RESOURCES
In connection with the purchase of the Acquired Ciba Business on February
29, 1996, Hexcel obtained a three-year senior secured credit facility of up
to $175.0 million to: (a) fund the cash component of the purchase price; (b)
refinance outstanding indebtedness under certain US and European credit
facilities; and (c) provide for the ongoing working capital and other
financing requirements of the company on a worldwide basis. This senior
secured credit facility was subsequently replaced with the
14
<PAGE>
Revolving Credit Facility in connection with the purchase of the Acquired
Hercules Business in June 1996.
The Revolving Credit Facility was obtained to: (a) refinance outstanding
indebtedness under a senior secured credit facility obtained in connection
with the purchase of the Acquired Ciba Business; (b) finance the purchase of
the Acquired Hercules Business; and (c) provide for the ongoing working
capital and other financing requirements of the company on a worldwide basis.
The Revolving Credit Facility initially provided for up to $310.0 million of
borrowing capacity. However, as a result of the company's issuance of $114.5
million in Convertible Subordinated Notes in July 1996, maximum availability
under the Revolving Credit Facility was reduced from $310.0 million to $254.6
million, in accordance with the terms of that facility. As of June 30, 1997,
outstanding borrowings and letter of credit commitments under the Revolving
Credit Facility totaled $138.8 million. The Revolving Credit Facility
expires in February 1999.
Management expects that the financial resources of Hexcel, together with
the available funds under the Revolving Credit Facility, will be sufficient
to fund the company's worldwide operations without regard to the Fiberite
acquisition. In connection with the proposed acquisition of selected
Fiberite assets and businesses, Hexcel has obtained a commitment for a new
bank credit facility, the proceeds of which would be sufficient to fund the
proposed acquisition, refinance certain existing indebtedness including the
Revolving Credit Facility, and provide for the ongoing working capital and
other financing requirements of the company. Further discussion of the
company's financial resources is contained in Note 5 to the accompanying
condensed consolidated financial statements.
EBITDA AND CASH FLOWS
FIRST HALF, 1997: Earnings before business acquisition and consolidation
expenses, other income, interest, taxes, depreciation and amortization
("Adjusted EBITDA") were $65.0 million. Net cash used by operating
activities was $30.8 million, as an increase of $68.6 million in working
capital more than offset $23.4 million of net income and $18.4 million of
non-cash depreciation and amortization. The substantial increase in working
capital reflects higher levels of accounts receivable and inventory resulting
from increased sales and production volumes. The working capital increase
also reflects reductions in accrued liabilities from peak year-end levels,
primarily due to the payment in 1997 of obligations incurred during 1996 for
capital projects and employee incentive and benefit programs.
Net cash used for investing activities was $14.3 million, reflecting
$18.1 million of capital expenditures and the receipt of $5.0 million in
connection with the sale of a 50% equity interest in the Knytex joint
venture. Net cash provided from financing activities was $38.9 million which
was primarily the result of $30.2 million of borrowings under the Revolving
Credit Facility.
FIRST HALF, 1996: Adjusted EBITDA was $30.6 million, and net cash used by
operating activities was $1.3 million. Net cash used for investing
activities totaled $167.1 million, including cash payments of $160.0 million
in connection with the purchase of the Acquired Ciba Business and the
Acquired Hercules Business. As noted above, a substantial portion of the
consideration paid for the Acquired Ciba Business was comprised of Hexcel
common stock, senior subordinated notes and senior demand notes. Net cash
provided by financing activities was $173.1 million.
Adjusted EBITDA has been presented to provide a measure of Hexcel's
operating performance that is commonly used by investors and financial
analysts to analyze and compare companies. Adjusted EBITDA does not
represent an alternative measure of the company's cash flows or operating
income, and should not be considered in isolation or as a substitute for
measures of performance presented in accordance with generally accepted
accounting principles.
15
<PAGE>
CAPITAL EXPENDITURES
Capital expenditures increased to $18.1 million in the first half of
1997, from $8.7 million in the first half of 1996. This increase is
attributable to capital expenditures incurred in connection with the business
consolidation program as well as expenditures to improve manufacturing
processes and to expand production capacity for select product lines that are
in high demand. Management expects capital spending for all of 1997 to
approximate $60 million.
RISKS, UNCERTAINTIES AND OTHER FACTORS WITH RESPECT TO "FORWARD-LOOKING
STATEMENTS"
Certain statements contained in this Quarterly Report on Form 10-Q
constitute "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. Such forward-looking statements
involve known and unknown risks, uncertainties and other factors that may
cause the actual results, performance or achievements of Hexcel, or industry
results, to be materially different from any future results, performance or
achievements expressed or implied by such forward-looking statements. Such
factors include, among others, the following: General economic and business
conditions; changes in political, social and economic conditions and local
regulations, particularly in Europe and Asia; foreign currency fluctuations;
level of profitability by country, particularly in the U.S. and Belgium;
changes in, or failure to comply with, government regulations; demographic
changes; the ability to complete the proposed Fiberite acquisition; changes
in sales mix; maintaining current pricing levels; the loss of any significant
customers; changes in methods of distribution and technology; industry
capacity; competition; availability of carbon fiber; capacity constraints;
changes in business strategy or development plans; availability of liquidity
sufficient to meet the company's need for capital; availability of qualified
personnel; and various other factors referenced in this Quarterly Report on
Form 10-Q. The company assumes no obligation to update the forward-looking
information to reflect actual results or changes in the factors affecting
such forward-looking information.
The forward-looking information referred to above includes, but is not
limited to: (a) order backlog information; (b) expectations regarding sales
growth, sales mix, gross margins, manufacturing productivity, and selling,
general and administrative expenses; (c) the availability and utilization of
net operating loss carryforwards and other deferred tax assets for income tax
purposes; (d) expectations regarding Hexcel's financial condition and
liquidity, as well as future cash flows; (e) expectations regarding capital
expenditures; and (f) the estimated total cost of the company's business
consolidation program.
In addition to the risks, uncertainties and other factors referred to
above which may cause the actual costs of the business consolidation program
to differ materially from estimated amounts, such estimated amounts are based
on various factors and were derived utilizing numerous important assumptions,
including: (a) achieving estimated reductions in the number of total
employees within anticipated time frames and at currently projected severance
costs levels, while maintaining work flow in the business areas affected; (b)
the ability to maintain manufacturing know-how with respect to production
processes conducted at facilities that will be closed or at which the number
of employees will be reduced, including cooperation by employees who will be
terminated; (c) the assimilation of the production processes at closed
facilities with production at other company facilities without undue
disruption to the manufacturing, marketing and distribution functions,
including the cooperation of customers in connection with requalifying the
subject products for various customer and government programs; (d) selling a
vacated facility within an anticipated time frame at an anticipated selling
price; and (e) the absence of changes in business conditions that would
require significant modifications to the current program, including the
effects of the proposed acquisition and assimilation of Fiberite. The
failure of these assumptions to be realized may cause the actual total cost
or benefit of the consolidation program to differ materially from the
estimates.
16
<PAGE>
PART II. OTHER INFORMATION
HEXCEL CORPORATION AND SUBSIDIARIES
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
An Annual Meeting of Stockholders of the company was held on May 22,
1997. Stockholders holding 35,586,511 shares of Hexcel common stock were
present, either in person or by proxy. The following matters were submitted
to the company's stockholders for a vote at that meeting, with the results of
the vote indicated:
1 The election of nominees to the Board of Directors:
Votes Cast
-------------------------------------------------------
Director For Withheld
-------------------------------------------------------
John M. D. Cheesmond 35,272,903 313,608
-------------------------------------------------------
Marshall S. Geller 35,290,483 296,028
-------------------------------------------------------
Juergen Habermeier 35,289,696 296,815
-------------------------------------------------------
John J. Lee 35,289,602 296,909
-------------------------------------------------------
Stanley Sherman 35,290,633 295,878
-------------------------------------------------------
Martin L. Solomon 35,290,633 295,878
-------------------------------------------------------
George S. Springer 35,290,633 295,878
-------------------------------------------------------
Joseph T. Sullivan 35,290,633 295,878
-------------------------------------------------------
Hermann Vodicka 35,290,633 295,878
-------------------------------------------------------
Franklin S. Wimer 35,290,633 295,878
-------------------------------------------------------
2. The approval and adoption of the Hexcel Incentive Stock Plan as
described in the Proxy Statement:
Votes Cast
-------------------------------------------------------
For Against Abstentions
-------------------------------------------------------
27,659,838 4,443,584 36,874
-------------------------------------------------------
3. The approval and adoption of the Hexcel Management Stock Purchase Plan
as described in the Proxy Statement:
Votes Cast
-------------------------------------------------------
For Against Abstentions
-------------------------------------------------------
30,139,459 1,960,691 40,146
-------------------------------------------------------
17
<PAGE>
Item 6. EXHIBITS AND REPORT ON FORM 8-K
(a) Exhibits:
10.1 Asset Purchase Agreement, by and among Stamford FHI
Acquisition Corp., Fiberite, Inc. and Hexcel Corporation,
dated as of April 21, 1997.
10.2 Hexcel Corporation 1997 Employee Stock Purchase Plan.
10.3 Hexcel Corporation Incentive Stock Plan, As Amended and
Restated January 30, 1997.
10.4 Form of Non-Qualified Stock Option Agreement (1997).
10.5 Form of Performance Accelerated Restricted Stock Units.
10.6 Form of Performance Accelerated Stock Option Agreement
(Director).
10.7 Form of Performance Accelerated Stock Option Agreement
(Employee).
10.8 Form of Reload Option Agreement (1997).
10.9 Hexcel Corporation Management Stock Purchase Plan.
10.10 Form of Grant of Restricted Stock Units Agreement.
11. Statement Regarding Computation of Per Share Earnings.
27. Financial Data Schedule (electronic filing only).
(b) Report on Form 8-K:
Current Report on Form 8-K dated July 10, 1997, relating to Hexcel's
change in independent accountants.
18
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized, and in the capacity indicated.
HEXCEL CORPORATION
(Registrant)
August 13, 1997 /s/ Wayne C. Pensky
- ------------------------- ----------------------------------
(Date) Wayne C. Pensky,
Corporate Controller and
Chief Accounting Officer
19
<PAGE>
- -------------------------------------------------------------------------------
ASSET PURCHASE AGREEMENT
BY AND AMONG
STAMFORD FHI ACQUISITION CORP.,
FIBERITE, INC.
AND
HEXCEL CORPORATION
DATED AS OF APRIL 21, 1997
- -------------------------------------------------------------------------------
0
<PAGE>
TABLE OF CONTENTS
-----------------
PAGE
-----
ARTICLE I
PURCHASE AND SALE OF
ASSETS AND ASSUMPTION OF LIABILITIES 2
Section 1.1 Purchase and Sale....................................... 2
Section 1.2 Consideration........................................... 10
Section 1.3 Closing................................................. 11
Section 1.4 Deliveries by Fiberite.................................. 11
Section 1.5 Deliveries by Buyer..................................... 12
ARTICLE II-A
REPRESENTATIONS AND WARRANTIES OF
STAMFORD 12
Section 2A.1 Organization............................................ 12
Section 2A.2 Authority............................................... 13
Section 2A.3 No Violations; Consents and Approvals................... 13
ARTICLE II-B
REPRESENTATIONS AND WARRANTIES OF
FIBERITE 14
Section 2B.1 Organization............................................ 14
Section 2B.2 Authority............................................... 15
Section 2B.3 No Violations; Consents and Approvals................... 15
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BUYER 16
Section 3.1 Organization............................................ 16
Section 3.2 Authority............................................... 16
Section 3.3 No Violations; Consents and Approvals................... 16
ARTICLE IV
COVENANTS 17
Section 4.1 Conduct of Business..................................... 17
Section 4.2 Access to Information................................... 19
Section 4.3 Commercially Reasonable Efforts; Other Actions.......... 19
Section 4.4 Public Announcements.................................... 20
Section 4.5 Notification of Certain Matters......................... 20
Section 4.6 Expenses................................................ 20
Section 4.7 Affected Employees...................................... 20
Section 4.8 Insurance............................................... 22
Section 4.9 Sums Received in Respect of Acquired Businesses and
Excluded Businesses..................................... 23
Section 4.10 Name.................................................... 23
i
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Section 4.11 Books and Records....................................... 23
Section 4.12 Allocation of the Purchase Price........................ 24
Section 4.13 Agreements Regarding Intellectual Property.............. 24
Section 4.14 Assignment of Contracts; Nonassignability............... 25
Section 4.15 Assignment of Certain Indemnification Rights............ 26
Section 4.16 Continuation of Certain Plans........................... 26
Section 4.17 Exon-Florio............................................. 27
Section 4.18 Transitional Services................................... 27
Section 4.19 Supply Agreement........................................ 27
Section 4.20 Tax Cooperation......................................... 27
Section 4.21 Directors' and Officers' Insurance...................... 28
Section 4.22 Pre-Closing Adjustment.................................. 29
ARTICLE V
CONDITIONS TO THE OBLIGATIONS OF BUYER 29
Section 5.1 Consents and Approvals.................................. 29
Section 5.2 Certain Proceedings..................................... 29
Section 5.3 Financing............................................... 29
Section 5.4 Stock Purchase Agreement................................ 29
ARTICLE VI
CONDITIONS TO THE OBLIGATIONS OF STAMFORD AND FIBERITE 30
Section 6.1 Consents and Approvals.................................. 30
Section 6.2 Certain Proceedings..................................... 30
ARTICLE VII
TERMINATION AND ABANDONMENT 30
Section 7.1 Termination............................................. 30
Section 7.2 Termination by Buyer.................................... 31
Section 7.3 Termination by Stamford................................. 31
Section 7.4 Procedure for Termination............................... 32
Section 7.5 Effect of Termination and Abandonment................... 32
ARTICLE VIII
SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION 32
Section 8.1 Survival of Representations and Warranties,
Covenants, etc. ........................................ 32
Section 8.2 Fiberite's and Stamford's Agreements to Indemnify....... 33
Section 8.3 Buyer's Agreement to Indemnify.......................... 33
Section 8.4 Indemnification Based on Net Damage..................... 34
Section 8.5 Third Party Claims...................................... 34
ii
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ARTICLE IX
MISCELLANEOUS 35
Section 9.1 Fees, Expenses and Taxes................................ 35
Section 9.2 Further Assurances...................................... 36
Section 9.3 Notices................................................. 36
Section 9.4 Severability............................................ 38
Section 9.5 Binding Effect; Assignment.............................. 38
Section 9.6 Bulk Sales Law.......................................... 39
Section 9.7 No Third Party Beneficiaries............................ 39
Section 9.8 Interpretation.......................................... 39
Section 9.9 Jurisdiction and Consent to Service..................... 39
Section 9.10 Governing Law........................................... 40
Section 9.11 Entire Agreement........................................ 40
Section 9.12 Amendment, Modification and Waiver...................... 40
Section 9.13 Specific Performance.................................... 40
Section 9.14 Counterparts............................................ 41
Section 9.15 Effective Date.......................................... 41
ARTICLE X
CERTAIN DEFINITIONS 41
iii
<PAGE>
SCHEDULES
Schedule 1.1(a)(xii) Warranties/Indemnification Provisions
Schedule 1.1(a)(xv) Certain Acquired Intellectual Property
Schedule 1.1(a)(xvii) Certain Acquired Assets
Schedule 1.1(b)(ii) Deeds for Certain Properties
Schedule 1.1(c) Certain Intellectual Property
Schedule 1.1(c)(iv) Certain Excluded Intellectual Property
Schedule 1.1(c)(vi) Certain Excluded Assets
Schedule 1.1(e)(xv) Certain Excluded Employment Agreements
Schedule 1.4(c) Material Contracts Requiring Consents
Schedule 2B.3(b)(iii) Certain Consents, Orders and Filings of Fiberite
Schedule 3.3(b)(iii) Certain Consents, Orders and Filings of Buyer
EXHIBITS
EXHIBIT A Stock Purchase and Sale Agreement
EXHIBIT B Bill of Sale and Assignment
EXHIBIT C Undertaking
EXHIBIT D FIRPTA Certificate
iv
<PAGE>
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (this "Agreement"), dated as of April
21, 1997, is by and among Fiberite, Inc., a Delaware corporation
("Fiberite"), Stamford FHI Acquisition Corp., a Delaware corporation
("Stamford"), and Hexcel Corporation, a Delaware corporation ("Buyer",
together with Fiberite and Stamford, the "Parties").
RECITALS
A. Stamford has entered into a Stock Purchase and Sale Agreement (the
"Stock Purchase Agreement"), dated as of April 20, 1997, by and among, Stamford,
Fiberite Holdings, Inc., a Delaware corporation and as of the Closing Date (as
defined in Section 1.3 hereof) the former parent of Fiberite ("Fiberite
Holdings"), and the Selling Stockholders of Fiberite Holdings providing for,
among other things, the purchase and sale of all of the outstanding shares of
Common Stock of Fiberite Holdings and which is attached hereto as Exhibit A.
B. Upon the closing of the transactions contemplated by the Stock
Purchase Agreement, Fiberite desires to sell to Buyer, and Buyer desires to
purchase from Fiberite, certain assets and operations of Fiberite as more fully
described herein, upon the terms and subject to the conditions set forth herein.
Now, therefore, in consideration of the mutual agreements herein and
in reliance upon the representations and warranties herein and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged and intending to be legally bound hereby, the Parties hereby
agree as follows:
ARTICLE I
PURCHASE AND SALE OF
ASSETS AND ASSUMPTION OF LIABILITIES
Section 1.1 PURCHASE AND SALE.
(a) Subject to the terms and conditions of this Agreement, at
the Closing, Fiberite will sell,
<PAGE>
convey, assign, transfer and deliver to Buyer, and Buyer will purchase,
acquire and accept from Fiberite, all of its rights, title and interests in
and to all properties, contracts and other assets (of every kind, nature,
character and description, whether real, personal or mixed, whether tangible
or intangible, whether accrued, contingent or otherwise and wherever
situated), goodwill and business as a going concern of Fiberite other than
the Excluded Assets (as defined in Section 1.1(c) hereof), including without
limitation, the following assets (collectively, the "Acquired Assets"):
(i) all real property, together with all buildings,
fixtures and improvements erected thereon, owned by Fiberite;
(ii) all leases of real property and all contracts,
commitments or other agreements relating thereto to which Fiberite is
a party or by which Fiberite is bound;
(iii) all computer hardware and software, computer
programs and systems, databases, documentation and resource material
relating thereto, of Fiberite;
(iv) all inventory, wherever located, including raw
materials, work-in-progress, finished goods, supplies and other
inventories which relate to the Acquired Businesses (the "Inventory")
and any rights of Fiberite to the warranties received from suppliers
and any related claims, credits, rights of recovery and setoff with
respect to such Inventory;
(v) all furniture, fixtures, vehicles, spare parts,
tools, supplies, leasehold improvements, plant and equipment and all
other tangible property of Fiberite;
(vi) all rights in, to and under all contracts,
licenses, leases (other than leases for real property), commitments,
purchase orders and other agreements;
(vii) all customer lists of Fiberite;
2
<PAGE>
(viii) all accounts receivable of Fiberite;
(ix) all Intellectual Property rights and other
proprietary rights of Fiberite and the German subsidiary (as defined
herein) (the "Acquired Intellectual Property");
(x) all permits, licenses, approvals and
authorizations by governmental authorities or third parties which are
transferable by Fiberite;
(xi) all of the books of account and other accounting
records (or copies thereof) of Fiberite;
(xii) all warranties, rights to indemnification or
similar rights, whether arising by contract, operation of law or
otherwise in favor of Fiberite or Fiberite Holdings including, without
limitation, rights to indemnification under the contracts listed on
Schedule 1.1(a)(xii), to the extent related to the Acquired
Businesses, Acquired Assets or Assumed Liabilities (as defined in
Section 1.1(d));
(xiii) all of the capital stock and all rights,
title, and interests in and to all properties, contracts, and other
assets, goodwill and operations of the business as a going concern of,
Fiberite France SARL, a corporation formed under the laws of France
("Fiberite France");
(xiv) subject to Section 4.10, the name "Fiberite" and
all derivatives and extensions thereof and all associated goodwill;
(xv) all Intellectual Property related to or arising
from the research and development projects described on Schedule
1.1(a)(xv);
(xvi) all rights, title and interests in and to all of
the properties, contracts and other assets, goodwill and operations of
the business as a going concern of any
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subsidiary of Fiberite Holdings (other than Fiberite) or Fiberite
organized under a jurisdiction within the United States of America (a
"Domestic Subsidiary"); and
(xvii) the assets of Fiberite listed on Schedule
1.1(a)(xvii).
(b) Such sale, assignment, transfer and delivery of the Acquired
Assets will be effected by delivery by Fiberite to Buyer of (i) a duly executed
bill of sale and assignment agreement (the "Bill of Sale and Assignment")
substantially in the form set forth as Exhibit B attached hereto, (ii) properly
executed and acknowledged deeds without covenants against grantor's acts for the
properties listed on Schedule 1.1(b)(ii), each in recordable form, effective to
convey fee title to each such property to Buyer in the state in which each such
property is located such that a reputable title insurance company licensed to do
business in the state in which each such property is located would issue a title
insurance policy insuring Buyer's fee title to each such property (the "Deeds"),
and (iii) such other duly executed, good and sufficient instruments of
conveyance, transfer and assignment as shall be necessary to convey to Buyer all
of Fiberite's rights, title and interests in and to the Acquired Assets
(collectively, the "Other Instruments").
(c) Notwithstanding anything contained herein to the contrary,
Fiberite shall not sell, convey, assign, transfer or deliver, or cause to be
sold, conveyed, assigned, transferred or delivered, to Buyer, and Buyer shall
not purchase, acquire or accept from Fiberite, the rights, title and interests
in all of the following properties, contracts and other assets (the "Excluded
Assets"):
(i) all of the capital stock and all rights, title,
and interests in and to all properties, contracts and other assets,
goodwill and business as a going concern of, Fiberite Europe GmbH, a
corporation formed under the laws of Germany (the "German
Subsidiary"), other than (A) Intellectual Property not exclusively
used in the business of the German Subsidiary and (B) the Intellectual
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Property and distribution agreements described on Schedule 1.1(c);
(ii) all of Stamford's and Fiberite's rights, title
and interests in and to all of the properties, contracts and other
assets (of every kind, nature, character and description, whether
real, personal or mixed, whether tangible or intangible, whether
accrued contingent or otherwise and wherever situated) relating
exclusively to the following businesses: (A) the businesses conducted
at the Orange Facility (the "Orange Businesses") (B) the recycling
business, and (C) the Ligustica business (together with the German
Businesses, the "Excluded Businesses"), including all Intellectual
Property exclusively relating thereto other than the Intellectual
Property described on Schedule 1.1(c);
(iii) all capital stock of Domestic Subsidiaries held
by Fiberite, Stamford or any of their subsidiaries;
(iv) all Intellectual Property related to or arising
from the research and development projects described on Schedule
1.1(c)(iv);
(v) cash and cash equivalents of Fiberite;
(vi) the assets of Fiberite listed on Schedule
1.1(c)(vi); and
(vii) the assets of Fiberite located at the Orange
Facility other than those listed on Schedule 1.1(a)(xvii).
(d) On and as of the Closing Date (as defined in Section 1.3),
Buyer shall assume and agree to perform, pay and discharge, all of the following
obligations and liabilities of Fiberite (whether liquidated or unliquidated,
known or unknown, contingent or otherwise) (collectively, the "Assumed
Liabilities"):
(i) the Buyer Allocated Liabilities (as defined in
Section 1.1(f));
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(ii) any and all obligations and liabilities arising
exclusively from the Acquired Businesses or relating exclusively to
the Acquired Assets;
(iii) eighty-one percent (81%) of all post-retirement
liabilities for medical, dental and life insurance programs (other
than multi-employer programs and plans), for U.S. employees or former
U.S. employees of Fiberite Holdings and its subsidiaries who retire
(or have retired) before the Closing Date;
(iv) eighty-five and six tenths percent (85.6%) of any
and all liabilities and obligations, direct or indirect, fixed or
contingent, for federal income taxes of Fiberite or any of its
subsidiaries or any member of any affiliated group (within the meaning
of Section 1504 of the Code) or any similar state, local or foreign
group of which such entities are or have been a member, for taxable
periods, or portions thereof ending prior to the closing of the Stock
Purchase Agreement;
(v) without limiting Section 1.1(d)(ii), all
environmental liabilities and obligations arising from or relating to
the following sites: (A) American Chemical Services, Griffith,
Indiana; (B) Artel Chemical, Nitro, West Virginia; (C) P.C.B.
Treatment, Inc., Kansas City, Kansas and Kansas City, Missouri; (D) an
unspecified local municipal landfill, Winona, Minnesota; and (E) any
property formerly owned or operated by Fiberite which relates
exclusively to the Acquired Businesses; and
(vi) any liability with respect to the Affected
Employees arising from the notice to be given pursuant to Section 4.7
hereof, whether or not the transactions contemplated by this Agreement
are consummated.
(e) On and as of the Closing Date Buyer shall not assume or
agree to perform, pay or discharge and Fiberite shall retain all of the
following obligations and liabilities of Fiberite (whether liquidated or
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unliquidated, known or unknown, contingent or otherwise) (collectively, the
"Excluded Liabilities"):
(i) the Fiberite Allocated Liabilities (as defined in
Section 1.1(f);
(ii) any and all obligations and liabilities arising
exclusively from the Excluded Businesses or relating exclusively to
the Excluded Assets;
(iii) (A) fourteen and four tenths percent (14.4%) of
any and all liabilities and obligations, direct or indirect, fixed or
contingent, for federal income taxes of Stamford, Fiberite or any of
their subsidiaries or any member of any affiliated group (within the
meaning of Section 1504 of the Code) or any similar state, local or
foreign group of which any of such entities is or has been a member on
or prior to the date hereof, for taxable periods (or portions thereof)
ending on or prior to the closing of the Stock Purchase Agreement and
100% of such federal income taxes or any state, local or foreign
income taxes for any taxable period (or portion thereof) beginning on
or after the closing of the Stock Purchase Agreement; and (B)
notwithstanding anything in this Agreement to the contrary, any and
all liabilities and obligations, direct or indirect, fixed or
contingent, for federal, state, local or foreign income taxes due as a
result of any of the transactions contemplated by this Agreement or
any transactions occurring on the date of the closing of the Stock
Purchase Agreement;
(iv) all obligations remaining for the payment of the
purchase price for the Ligustica business and for the assets acquired
in connection therewith;
(v) severance for employees who participate in the ICI
Composites Severance Plan (or, if applicable, its successor plan, the
Fiberite, Inc. Severance Plan) who are not Affected Employees (as
defined in Section 4.7);
(vi) certain collective bargaining agreements,
including the Agreement
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Between ICI Fiberite, A Business Unit of ICI Composites, Inc. and General
Drivers, Helpers, Warehousemen, and Inside Employees Local Union No. 160
affiliated with the International Brotherhood of Teamsters, effective
January 1, 1993 to December 31, 1997; and Agreement Between ICI Fiberite,
A Business Unit of ICI Composites, Inc. and United Steelworkers of
America, AFL-CIO, Local No. 13421, effective March 28, 1993 to March 29,
1998;
(vii) the settlement agreement between Fiberite and
Paul Pendorf;
(viii) Nineteen percent (19%) of all post-retirement
liabilities for medical, dental and life insurance programs (other
than multi-employer programs and plans), for U.S. employees or former
U.S. employees of Fiberite Holdings and its subsidiaries who retire
(or have retired) before the Closing Date;
(ix) all outstanding indebtedness for borrowed money
of Fiberite (together with all interest accrued thereon);
(x) all Expenses (as defined in the Stock Purchase
Agreement) to the extent not paid prior to the Closing;
(xi) the 11.3% Zero Coupon Subordinated Notes of
Fiberite Holdings due in 2002 and 2003;
(xii) subject to Section 4.16, all liabilities and
obligations with respect to the Fiberite, Inc. Pension Plan, Fiberite,
Inc. Service Related Pension Plan, Fiberite, Inc. 401(k) Plan I and
Fiberite, Inc. 401(k) Plan II;
(xiii) without limiting Section 1.1(e)(ii), all
environmental liabilities and obligations arising from or related to
the following sites: (A) Stringfellow Landfill, Glen Avon, California;
(B) Frank R. Bowerman Landfill (formerly known as Bee Canyon Landfill)
near Irvine, Orange County, California; (C)
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Olinda/Olinda Alpha Landfill, Brea, Orange County, California; (D)
Santiago Canyon Landfill, Orange County, California and (E) any property
formerly owned or operated by Fiberite which relates exclusively to the
Excluded Businesses;
(xiv) all obligations and liabilities of Stamford,
Fiberite Holdings (or any successor) or Fiberite which may arise in
connection with the transactions contemplated by the Stock Purchase
Agreement, the proposed sale of Fiberite Holdings, or this Agreement
to indemnify, defend and hold harmless the present and former
officers, directors, employees and agents of Fiberite Holdings,
Fiberite and the Selling Stockholders other than Buyer's obligation to
maintain insurance pursuant to Section 4.21 hereof; and
(xv) all obligations and liabilities of Stamford,
Fiberite Holdings (or any successor) or Fiberite arising in connection
with the employment agreements set forth on Schedule 1.1(e)(xv),
including, without limitation, obligations and liabilities relating to
the payment of "excess parachute payments" within the meaning of
Section 280G of the Code.
(f) For purposes of this Agreement, all obligations and
liabilities of Fiberite (whether liquidated or unliquidated, known or unknown,
contingent or otherwise) that are neither (1) described in subclauses (ii)
through (v) of clause (d) above, nor (2) described in subclauses (ii) through
(xv) of clause (e) above shall be "Allocated Liabilities", and shall be borne by
the parties in the following proportions, 80% by Buyer ("Buyer Allocated
Liabilities") and 20% by Fiberite and Stamford ("Fiberite Allocated
Liabilities"); PROVIDED, HOWEVER, that the percentage of any Allocated Liability
to be borne by Buyer on the one hand and Fiberite and Stamford on the other hand
shall be varied from the percentages set forth above in the event that the
parties in good faith reasonably agree to such other allocation based upon such
facts and circumstances giving rise to such liability and the relationship of
such liability to the Acquired Businesses and Acquired Assets on the one hand
and the Excluded Businesses and Excluded Assets on the other hand. In no event
shall (i) Buyer be liable
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for, and Stamford and Fiberite hereby indemnify and
agree to hold harmless Buyer from, the payment of any Fiberite Allocated
Liabilities or (ii) Stamford or Fiberite be liable for, and Buyer hereby
indemnifies and agrees to hold harmless Stamford and Fiberite from, the payment
of any Buyer Allocated Liabilities. With respect to any third party claim that
is subject to the provisions of this Section 1.1(f), the administration,
management and control of such third party claim shall be undertaken by the
party hereto with the greatest exposure for loss under such third party claim
(the "Administrator") and shall be administered, managed and controlled in the
manner contemplated by Section 8.5 below as if the Administrator were the
Indemnifying Party described in Section 8.4, but subject to the allocation of
liability set forth in or determined pursuant to this Section 1.1(f). Each
party hereby agrees to notify the other of any third party claim or other
obligation or liability subject to this Section 1.1(f) promptly following such
party's obtaining knowledge thereof; PROVIDED that any delay in providing such
notice shall affect such party's rights or obligations hereunder, only to the
extent the party to be notified is actually prejudiced.
Section 1.2 CONSIDERATION. Subject to the terms and conditions of
this Agreement, the consideration to be paid for the Acquired Assets and
Acquired Businesses shall consist of:
(a) $297,790,000 as adjusted by the Pre-Closing Adjustment
Amount referred to in Section 4.22 (the "Purchase Price"), payable at Closing,
by wire transfer of immediately available funds to such bank account as shall be
designated by Fiberite at least two business days prior to the Closing; and
(b) an undertaking substantially in the form set forth as
Exhibit C attached hereto (the "Undertaking"), whereby Buyer will assume and
agree to pay and discharge the Assumed Liabilities as provided in the
Undertaking.
Section 1.3 CLOSING. The Closing of the transactions contemplated
by this Agreement shall take place following the satisfaction or waiver of
all of the conditions to Closing set forth in Article V and Article VI
hereof, and immediately following the Closing of the transactions
contemplated in the Stock Purchase Agree-
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ment, at the offices of Skadden, Arps, Slate, Meagher & Flom LLP, 919 Third
Avenue, New York, New York, or on such other date and at such other time or
place as the Parties may agree. The date of the Closing is sometimes
referred to herein as the "Closing Date."
Section 1.4 DELIVERIES BY FIBERITE. At the Closing, Fiberite will
deliver or cause to be delivered to Buyer (unless delivered previously) the
following:
(a) a duly executed Bill of Sale and Assignment;
(b) the books and records of Fiberite other than those books
and records that relate exclusively to the Excluded Businesses to the extent
provided in Section 4.11 hereof;
(c) the consents required for assignment of the contracts
listed on Schedule 1.4(c);
(d) a Certificate of Non-Foreign Status in the form attached
hereto as Exhibit D (the "FIRPTA Certificate"), provided, however, that if
Fiberite fails to provide the FIRPTA Certificate, the transaction shall
nonetheless close and Buyer shall withhold from the Purchase Price and pay
over to the appropriate taxing authorities the amount required to be withheld
under Section 1445 of the Code as determined by Buyer;
(e) the Deeds;
(f) certain affidavits and certificates required in connection
with the recordation of the deeds;
(g) a duly executed and acknowledged assignment and assumption
agreement with respect to the ground lease for the property located at 2055
East Technology Circle, Tempe, Arizona; and
(h) all other documents, instruments and writings (including,
if necessary, the Other Instruments) required to be delivered by Stamford,
Fiberite Holdings and Fiberite at or prior to the Closing pursuant to this
Agreement or otherwise required in connection herewith.
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Section 1.5 DELIVERIES BY BUYER. At the Closing, Buyer will
deliver or cause to be delivered to Fiberite (unless previously delivered)
the following:
(a) the Purchase Price referred to in Section 1.2(a) hereof;
(b) the duly executed Undertaking; and
(c) all other documents, instruments or writings required to
be delivered by Buyer at or prior to the Closing pursuant to this Agreement
or otherwise required in connection herewith.
ARTICLE II-A
REPRESENTATIONS AND WARRANTIES OF
STAMFORD
Stamford represents and warrants to Buyer as follows:
Section 2A.1 ORGANIZATION. Stamford is a corporation duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation. True and complete copies of the certificate
of incorporation and by-laws of Stamford, as they are currently in effect and
as they will be in effect at Closing, have been made available to Buyer.
Section 2A.2 AUTHORITY. Stamford has full corporate power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly
authorized and approved by Stamford. No other proceedings on the part of
Stamford are necessary to authorize this Agreement or the consummation of the
transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by Stamford, and, assuming this Agreement constitutes a
legal, valid and binding agreement of Buyer, constitutes a legal, valid and
binding agreement of Stamford, enforceable against Stamford in accordance with
its terms, except that enforcement thereof may be subject to (i) bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium or other similar
laws now or hereafter in
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effect relating to creditors' rights generally and (ii) general principles of
equity and the discretion of the court before which any proceeding therefor
may be brought.
Section 2A.3 NO VIOLATIONS; CONSENTS AND APPROVALS.
(a) Neither the execution and delivery of this Agreement nor
the consummation of the transactions contemplated hereby to be performed by
Stamford nor compliance by Stamford with any of the provisions hereof will
(i) violate any provision of Stamford's certificate of incorporation or
by-laws, (ii) result in a violation or breach of, or constitute (with or
without due notice or lapse of time or both) a default, or give rise to any
right of termination, cancellation or acceleration or any right that becomes
effective upon the occurrence of a merger, consolidation, sale of assets or
change in control, under, any of the terms, conditions or provisions of any
note, bond, mortgage, indenture, other instrument of indebtedness for money
borrowed, license, franchise, permit or agreement to which Stamford is a
party, or by which Stamford or any of its properties is bound immediately
prior to the closing of the Stock Purchase Agreement or (iii) violate any
statute, rule, regulation, order or decree of any public body or authority by
which Stamford or any of its properties is bound immediately prior to the
closing of the Stock Purchase Agreement, excluding from the foregoing clauses
(ii) and (iii) violations, breaches, defaults or rights that, either
individually or in the aggregate, would not have a Material Adverse Effect or
materially impair its ability to consummate the transactions contemplated
hereby or for which it has received, or prior to the Closing shall have
received, appropriate consents or waivers.
(b) No filing or registration with, notification to, or
authorization, consent or approval of, any governmental entity is required by
Stamford in connection with the execution and delivery of this Agreement or the
consummation of the transactions contemplated hereby, except (i) in connection
with the applicable requirements of the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended (the "HSR Act") and as required pursuant to applicable
antitrust and competition law statutes and regulations of applicable foreign
jurisdictions, (ii) for filing a notice pursuant to the Exon-Florio Amendment
and (iii) such other consents, orders,
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authorizations, registrations, declarations and filings the failure of which
to obtain would not have a Material Adverse Effect.
ARTICLE II-B
REPRESENTATIONS AND WARRANTIES OF
FIBERITE
Fiberite (as of the Effective Date) represents and warrants to Buyer
as follows:
Section 2B.1 ORGANIZATION. Fiberite is a corporation duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation and Fiberite has all requisite corporate power
and authority to own, lease and operate its properties and to carry on its
business as now being conducted. True and complete copies of the certificate
of incorporation and by-laws of Fiberite, as they are currently in effect and
as they will be in effect at Closing, have been made available to Buyer.
Section 2B.2 AUTHORITY. Fiberite has full corporate power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly
authorized and approved by Fiberite. No other proceedings on the part of
Fiberite are necessary to authorize this Agreement or the consummation of the
transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by Fiberite, and, assuming this Agreement constitutes a
legal, valid and binding agreement of Buyer, constitutes a legal, valid and
binding agreement of Fiberite enforceable against Fiberite in accordance with
its terms, except that enforcement thereof may be subject to (i) bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium or other similar
laws now or hereafter in effect relating to creditors' rights generally and (ii)
general principles of equity and the discretion of the court before which any
proceeding therefor may be brought.
Section 2B.3 NO VIOLATIONS; CONSENTS AND APPROVALS.
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(a) Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby to be performed by Fiberite
nor compliance by Fiberite with any of the provisions hereof will violate any
provision of Fiberite's certificate of incorporation or by-laws.
(b) No filing or registration with, notification to, or
authorization, consent or approval of, any governmental entity is required by
Fiberite in connection with the execution and delivery of this Agreement or the
consummation of the transactions contemplated hereby, except (i) in connection
with the applicable requirements of the HSR Act and as required pursuant to
applicable antitrust and competition law statutes and regulations of applicable
foreign jurisdictions, (ii) for filing a notice pursuant to the Exon-Florio
Amendment and (iii) such other consents, orders, authorizations, registrations,
declarations and filings the failure of which to obtain would not have a
Material Adverse Effect or which are set forth on Schedule 2B.3(b)(iii).
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Stamford and Fiberite as follows:
Section 3.1 ORGANIZATION. Buyer is a corporation duly organized,
validly existing and in good standing under the laws of its jurisdiction of
incorporation and has all requisite corporate power and authority to own, lease
and operate its properties and to carry on its business as now being conducted.
Section 3.2 AUTHORITY. Buyer has full corporate power and authority
to execute and deliver this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly and validly
authorized and approved by Buyer, and no other proceedings on the part of Buyer
are necessary to authorize this Agreement or the consummation of the
transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by Buyer and, assuming this Agreement constitutes a
legal, valid and binding agreement of the other parties hereto, con-
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stitutes a legal, valid, and binding agreement of Buyer, enforceable against
Buyer in accordance with its terms, except that enforcement thereof may be
subject to (i) bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium or other similar laws nor or hereafter in effect relating to
creditors' rights generally and (ii) general principles of equity and the
discretion of the court before which any proceeding therefor may be brought.
Section 3.3 NO VIOLATIONS; CONSENTS AND APPROVALS.
(a) Neither the execution and delivery of this Agreement nor
the consummation of the transactions contemplated hereby nor compliance by
Buyer with any of the provisions hereof will (i) violate any provision of the
certificate of incorporation or by-laws of Buyer, (ii) result in a violation
or breach of, or constitute (with or without due notice or lapse of time or
both) a default, or give rise to any right of termination, cancellation or
acceleration or any right that becomes effective upon the occurrence of a
merger, consolidation, sale of assets or change in control, under, any of the
terms, conditions or provisions of any note, bond, mortgage, indenture, other
instrument of indebtedness for money borrowed, license, franchise, permit or
agreement to which Buyer is a party, or by which any of their respective
properties is bound, or (iii) violate any statute, rule, regulation, order or
decree of any public body or authority by which Buyer or any of its
properties is bound, excluding from the foregoing clauses (ii) and (iii),
violations, breaches, defaults or rights that, either individually or in the
aggregate, would not materially impair Buyer's ability to consummate the
transactions contemplated hereby or for which Buyer has received or, prior to
the Closing, shall have received appropriate consents or waivers.
(b) No filing or registration with, notification to, or
authorization, consent or approval of, any governmental entity is required by
Buyer in connection with the execution and delivery of this Agreement, or the
consummation by Buyer of the transactions contemplated hereby, except (i) in
connection with the applicable requirements of the HSR Act and as required
pursuant to applicable antitrust and competition law statutes and regulations
of applicable foreign jurisdictions, (ii) for filing a notice pursuant to the
Exon-
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Florio Amendment and (iii) such other consents, orders, authorizations,
registrations, declarations and filings not obtained prior to the Closing the
failure of which to be obtained or made would not, individually or in the
aggregate, materially impair the ability of Buyer to perform its obligations
hereunder or prevent the consummation of any of the transactions contemplated
hereby or which are set forth on Schedule 3.3(b)(iii).
ARTICLE IV
COVENANTS
Section 4.1 CONDUCT OF BUSINESS. (a) During the period from the
date of the closing of the Stock Purchase Agreement to the Closing, Fiberite
shall (i) operate the Acquired Businesses only in the ordinary course of
business consistent with past practice, (ii) use its reasonable efforts to
preserve intact the Acquired Assets (except for wear and tear in the ordinary
course of business) and the Acquired Businesses and keep available the
services of the Affected Employees (as defined in Section 4.7(a) herein),
(iii) preserve and maintain the Acquired Assets and use its reasonable
efforts to preserve and maintain satisfactory relationships with suppliers,
distributors and customers in connection with the Acquired Businesses, and
(iv) take all commercially reasonable steps to protect the Intellectual
Property rights of the Acquired Businesses and prevent any of it from falling
into the public domain.
(b) During the period from the date of the closing of the Stock
Purchase Agreement to the Closing, without the prior written consent of
Buyer, Fiberite shall not (i) mortgage, pledge or subject to any Lien (other
than Permitted Liens or as will be discharged and released prior to Closing),
any of the Acquired Assets, (ii) transfer, convey or otherwise dispose of any
of the Acquired Assets (except for sales of inventory in the ordinary course
of business), (iii) provide any Acquired Intellectual Property or any other
confidential or proprietary information with respect to the Acquired
Businesses or the Acquired Assets to any person, (iv) take any action which
could be reasonably expected to prevent or materially delay the consummation
of the transactions contemplated by this Agreement or to materially impair
the value of the Acquired Assets or the Acquired Busi-
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nesses, (v) change any of the accounting principles or practices applied with
respect to the Acquired Assets or the Acquired Businesses, (vi) enter into,
adopt, amend (except as required by applicable law, with notice to Buyer) or
terminate any of the Plans as they apply to any of the Affected Employees or
increase the amount or accelerate the payment or vesting of any benefits
payable thereunder, (vii) increase in any manner the compensation or fringe
benefits of any Affected Employee or enter into or offer to enter into any
employment or consulting arrangement with any person who would be an Affected
Employee, (viii) amend or terminate any material contracts (including, but
not limited to the material contracts listed on Schedule 1.4(c)) or take any
action or fail to take any action that, to the knowledge of Fiberite, with or
without notice or lapse of time, would constitute a default under any such
contract; or (ix) take, or agree to take, any of the foregoing actions or any
action which would make any representation or warranty of Fiberite contained
in this Agreement untrue or incorrect as of the date when made or as of the
Closing Date or which would reasonably be expected to prevent or materially
delay the satisfaction of any condition to Closing set forth in Article V
hereof.
Section 4.2 ACCESS TO INFORMATION.
From the date of this Agreement until the Closing Date, Stamford
shall authorize and provide Buyer and Buyer's authorized representatives
(including counsel, financial advisers, environmental and other consultants,
accountants and auditors) full access to the information regarding Fiberite
Holdings and its subsidiaries provided to Stamford pursuant to Section 5.02
of the Stock Purchase Agreement and agree to exercise its rights pursuant to
Section 5.02 to obtain promptly such information as Buyer may reasonably
request (or to designate Buyer and Buyer's representatives as its authorized
representatives to obtain such information), subject to the limitations set
forth therein.
Section 4.3 COMMERCIALLY REASONABLE EFFORTS; OTHER ACTIONS. Subject
to the terms and conditions herein provided and applicable law, Buyer, on the
one hand, and Stamford and Fiberite, on the other, shall use their commercially
reasonable efforts promptly to take, or cause to be taken, all other actions and
do, or cause to be done, all other things necessary, proper, appropriate or
advisable under applicable laws and regulations to
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consummate and make effective the transactions contemplated by this
Agreement, including, without limitation, (i) the filing of Notification and
Report Forms under the HSR Act with the Federal Trade Commission (the "FTC")
and the Antitrust Division of the Department of Justice (the "Antitrust
Division") and using their commercially reasonable efforts to respond as
promptly as practicable to all inquiries received from the FTC or the
Antitrust Division for additional information or documentation and (ii) the
obtaining of all necessary consents, approvals or waivers under applicable
law or its material contracts; PROVIDED, HOWEVER, the agreement of the
Parties contained herein shall not require Buyer to take any action that
would (i) require divestiture by Buyer of any of its existing business
operations or of a not insubstantial portion of the Acquired Assets or
Acquired Businesses, or (ii) impose a commercially unreasonable burden on, or
restriction upon, Buyer's existing business operations or the Acquired
Businesses or the Acquired Assets.
Section 4.4 PUBLIC ANNOUNCEMENTS. Except as may be required by
applicable law, rule, regulation or legal process, so long as this Agreement
is in effect, none of Stamford, Fiberite, Buyer or any of their respective
subsidiaries or Affiliates shall issue or cause the publication of any press
release or other public announcement with respect to the transactions
contemplated by this Agreement without the consent of the other parties
hereto, which consent shall not be unreasonably withheld or withdrawn,
PROVIDED, HOWEVER, nothing in this Section 4.4 shall limit or restrict Buyer
from communicating with customers, suppliers, advisors or analysts with
respect to the transactions contemplated by this Agreement or require the
consent from any other Party hereto.
Section 4.5 NOTIFICATION OF CERTAIN MATTERS. Stamford shall
provide to Buyer within one business day of receipt thereof a copy of any
notification received by Stamford pursuant to Section 5.05 of the Stock
Purchase Agreement. Stamford shall provide to Buyer such notification in the
manner described in Section 9.3 hereof.
Section 4.6 EXPENSES. Except as provided herein, Buyer, on the one
hand, and Stamford and Fiberite, on the other hand, shall bear their respective
expenses incurred in connection with this Agreement and the transactions
contemplated hereby, and all fees and
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expenses of their respective investment bankers, finders, brokers, agents,
representatives, counsel and accountants.
Section 4.7 AFFECTED EMPLOYEES.
(a) Buyer shall offer to employ (effective as of the Closing)
the employees (other than the Executives as defined in Section 4.7(d)) of
Fiberite Holdings and its subsidiaries who are actively employed in the
United States and who are either (i) employed exclusively in the Acquired
Businesses or (ii) primarily work in the Acquired Businesses (together, the
"Affected Employees"). Consistent with the foregoing, the Parties shall
mutually agree between the date of this Agreement and the Closing Date on
appropriate mechanisms for the orderly transition from Fiberite to Buyer of
Affected Employees who accept employment with Buyer.
(b) Buyer shall provide to each Affected Employee who is not
covered by a collective bargaining agreement, and who accepts Buyer's offer,
a compensation and benefits package which is generally comparable in the
aggregate to the compensation and benefits package provided such Affected
Employee immediately prior to the Closing Date, which compensation and
benefits package shall not be changed in any manner that would cause such
package to not be generally comparable at any time prior to January 1, 1998.
Fiberite Holdings and its subsidiaries which employ Affected Employees shall
give notice to each Affected Employee who is not covered by a collective
bargaining agreement (in compliance with Section 3.3(ii) of the ICI
Composites Severance Plan or, if applicable, its successor plan, the
Fiberite, Inc. Severance Plan, as provided in the draft thereof delivered to
Buyer's counsel by Fiberite Holdings' counsel) that Fiberite Holdings and its
subsidiaries intend to terminate his or her employment if he or she does not
accept Buyer's offer. Buyer shall provide compensation and benefits, on
terms and conditions to be determined by Buyer, to each Affected Employee who
is covered by a collective bargaining agreement, and who accepts Buyer's
offer. Subject to compliance with the foregoing provisions of this Section
4.7(b), Buyer reserves the right to establish, amend, modify or terminate any
terms or conditions of employment for such Affected Employees. Nothing in
this Section 4.7 shall be deemed (i) to require the employment of any
Affected Employee to be continued for any particular
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period of time after the Closing Date, or (ii) to require Buyer to assume any
collective bargaining agreement.
(c) If any Affected Employee who is not covered by a
collective bargaining agreement and who accepts Buyer's offer becomes a
participant in any employee benefit or compensation plan of Buyer, such
Affected Employee shall be given credit under such plan for all prior service
with Fiberite Holdings and its subsidiaries, Affiliates and predecessors
which is recognized by Fiberite Holdings or its subsidiaries, solely for
purposes of determining eligibility and vesting (but not benefit accrual or
any other purposes); provided, however, that such service need not be
credited to the extent it would result in a duplication of benefits,
including without limitation, benefit accrual service under defined benefit
plans. Nothing in this Section 4.7(c) shall be construed to alter Buyer's
obligations under Section 4.7(b) above.
(d) Fiberite will make available (on a non-exclusive basis)
the services of Messrs. Ashton, Smith, Miller, DeVault and Bowman (the
"Executives") to work for Buyer in the Acquired Businesses for a period of up
to six (6) months from the Closing at their salaries on the date hereof,
including pro-rata target bonuses and benefits packages (without changing
their domicile) which such expenses will be allocated between Fiberite and
Buyer on a pro rata basis. In addition, Fiberite shall cause the Executives
to terminate their respective employment and severance agreements and to
waive all of their respective rights thereunder as of the Closing Date. The
provisions of Sections 4.7(a), 4.7(b) and 4.7(c) do not apply to the
Executives.
Section 4.8 INSURANCE. Subsequent to the Closing, neither Fiberite
Holdings (or any successor) nor Fiberite shall surrender their respective rights
under any policies of insurance which were in effect at the time immediately
prior to the Closing Date in respect of risks and losses arising out of events
or occurrences occurring prior to the Closing Date in the course or as a result
of the conduct of the Acquired Businesses, with respect to the Acquired Assets,
Assumed Liabilities or Buyer Allocated Liabilities ("Prior Occurrences");
PROVIDED, HOWEVER, that nothing herein shall be deemed to require Fiberite
Holdings (or any successor) or Fiberite to maintain any insurance with respect
to events or occurrences occurring after the Closing Date. Fiberite
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Holdings (or any successor) and Fiberite shall cause Buyer to be designated
as loss payee under such policies with respect to the Prior Occurrences, and
shall assign to Buyer, or designate Buyer as their agent with respect to, all
claims and other rights to enforce or assure insurance coverage under such
policies with respect to Prior Occurrences; PROVIDED further, that in the
event Fiberite Holdings (or any successor) or Fiberite is unable to designate
Buyer as loss payee under such policies, Fiberite Holdings (or any successor)
and Fiberite shall cooperate with Buyer and use their commercially reasonable
efforts to provide Buyer the equivalent benefits of such policies.
Section 4.9 SUMS RECEIVED IN RESPECT OF ACQUIRED BUSINESSES AND
EXCLUDED BUSINESSES. Fiberite shall pay or cause to be paid over to Buyer,
promptly after the receipt thereof after the Closing Date, all sums received in
respect or on account of the Acquired Assets and the Acquired Businesses, other
than the Purchase Price and any other amounts paid to Stamford by Buyer pursuant
to this Agreement. Buyer shall pay or cause to be paid over to Fiberite,
promptly after the receipt thereof after the Closing Date, all sums received in
respect or on account of the Excluded Assets and the Excluded Businesses, other
than amounts paid to Buyer by Fiberite, Fiberite Holdings or Stamford pursuant
to this Agreement.
Section 4.10 NAME. From and after the Closing Date and consistent
with the terms hereof, Buyer shall possess, to the exclusion of Stamford,
Fiberite Holdings and Fiberite and their respective subsidiaries and Affiliates,
all rights to the use of the Acquired Intellectual Property (except as set forth
in Section 4.13 hereof), including the name "Fiberite", and Fiberite and its
subsidiaries shall each, as promptly as commercially practicable following the
Closing Date, change its name to a name which does not contain either "Fiberite"
or any word confusingly similar with such word. Notwithstanding the previous
sentence, Fiberite may continue to use the Fiberite name in the ordinary course
of the Excluded Businesses for the period terminating on the six month
anniversary of the Closing.
Section 4.11 BOOKS AND RECORDS. Each of the Parties agree that all
books and records of Fiberite Holdings and Fiberite, wherever located, which
a Party
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acquires hereunder (including, but not limited to, correspondence, memoranda,
books of account, personnel and payroll records and the like) (the "Business
Records") shall be preserved by such Party for a period of at least seven (7)
years following the Closing Date. Following such seven (7) year period,
neither Stamford, Fiberite Holdings and Fiberite (or any successor thereof),
on the one hand, nor Buyer, on the other hand, will dispose of any such books
and records without first offering such books and records to the other Party.
After the Closing Date, where there is some legitimate business purpose, the
Party in possession of any Business Records shall provide the other Party and
its authorized representatives with access, upon prior reasonable notice
specifying the need therefor, during regular business hours, to the Business
Records, and the other Party or its representatives shall have the right to
examine and make copies of such Business Records; provided that the foregoing
right shall not be exercisable in such a manner as to unreasonably interfere
with the normal operations of such Party.
Section 4.12 ALLOCATION OF THE PURCHASE PRICE. As soon as
practicable after the date hereof, but in no event less than 10 days prior to
the Closing Date, Buyer and Stamford shall mutually agree on an allocation
(the "Allocation Statement") of the Purchase Price payable by Buyer pursuant
to Section 1.2 hereof plus the amount of any Assumed Liabilities
(collectively, the "Allocable Amount") for federal income tax purposes in
accordance with their fair market values and with the requirements of Section
1060 of the Code. Each of Buyer and Fiberite shall (i) report for all Tax
purposes the purchase of the Acquired Assets in a manner consistent with the
Allocation Statement and in a manner consistent with all applicable rules and
regulations; (ii) timely file a Form 8594 in accordance with the requirements
of Section 1060 of the Code and this Section 4.12; (iii) not assert, in
connection with any Return, Tax audit or similar proceedings, any allocation
of the Allocable Amount that differs from that agreed to herein; and (iv)
notify the other in the event any taxing authority is taking or proposing to
take a position inconsistent with such allocation.
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Section 4.13 AGREEMENTS REGARDING INTELLECTUAL PROPERTY. At
Closing, Buyer, Fiberite and the German Subsidiary shall enter into
agreements, which agreements shall be in form and substance agreeable to
Buyer, Fiberite and the German Subsidiary (as applicable), regarding the
exploitation of certain Intellectual Property following the Closing by the
Orange Businesses, the German Businesses and the Acquired Businesses. Any or
all of such agreements may contain royalty payment provisions, and such
royalties may take the form of a lump sum fully paid up royalty.
Section 4.14 ASSIGNMENT OF CONTRACTS; NONASSIGNABILITY. From and
after the Closing Date Fiberite shall use commercially reasonable efforts to
obtain all necessary consents, approvals or waivers required for the transfer to
Buyer of the agreements, contracts and commitments, and any other property
interest or right that is included in the Acquired Assets. Notwithstanding the
foregoing, to the extent that any contract, agreement or commitment, or any
other property interest or right included in the Acquired Assets, is not capable
of being assigned or transferred without the consent or waiver of the other
party thereto, or any third person (including a government or governmental
unit), or if such assignment or transfer or attempted assignment or transfer
would constitute a breach thereof or a violation of any law, decree, order,
regulation or other governmental edict or is otherwise not practicable, this
Agreement shall not constitute an assignment, transfer or sublease thereof, or
an attempted assignment, transfer or sublease thereof prior to the time that the
appropriate consent or waiver is obtained. To the extent that any contract,
agreement or commitment or any other property interest or right included in the
Acquired Assets is not assigned hereby (the "Non-Assigned Contracts"), then
Fiberite shall, and Stamford shall cause Fiberite to, use commercially
reasonable efforts to provide to Buyer the economic benefit of the Non-Assigned
Contracts. The parties acknowledge that to the extent the rights under an
agreement are validly assigned or to the extent that Buyer receives the economic
benefit of any such agreement, the Buyer will assume the obligations under such
agreement, PROVIDED THAT, Buyer will use commercially reasonable efforts,
including where appropriate partial performance, to assist Stamford and Fiberite
to provide to Buyer the economic benefit of any agreement. Furthermore, the
Parties hereto acknowledge and agree that to the extent the transactions
contemplated by this Agreement have closed and there exists any Non-Assigned
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Contracts, Buyer does not waive any rights to receive any assignment of or to
receive the economic benefit from the Non-Assigned Contracts. In the event a
contract relating to raw materials is used by both the Acquired Businesses
and the Excluded Businesses as of the Closing, the Buyer and Fiberite agree
for a commercially reasonable period to share or otherwise allocate the
benefits and obligations under such contract in the proportion used by the
respective businesses over the recent past.
Section 4.15 ASSIGNMENT OF CERTAIN INDEMNIFICATION RIGHTS. From
and after the Closing Date, Fiberite shall use commercially reasonable
efforts to obtain the consents and approvals necessary to assign all rights
of Fiberite Holdings (and any successor) and Fiberite to indemnification from
any party under the agreements listed on Schedule 1.1(a)(xii) to the extent
related to the Acquired Assets, Acquired Businesses or any Assumed
Liabilities and to the extent that, by operation of law or otherwise, Buyer
is held liable for any Excluded Liabilities. Stamford, Fiberite and Buyer
shall each cooperate and use commercially reasonable efforts to provide for
the allocation of all indemnification rights available under the agreements
listed on Schedule 1.1(a)(xii) such that the Party who has assumed any
liability for which any such agreement provides indemnification may exercise
rights directly to obtain such indemnification. To the extent that a Party
may not directly seek indemnification under an agreement listed on Schedule
1.1(a)(xii) with respect to any covered liability, then the Party who may
seek such indemnification directly shall, use commercially reasonable efforts
to obtain such indemnification from the third party and to provide to the
Party subject to such liability the economic benefit of such indemnification
received from such third party.
Section 4.16 CONTINUATION OF CERTAIN PLANS.
Upon written request from the Buyer delivered to Fiberite within the
first ninety (90) days immediately following the Closing Date, Stamford shall
take, or shall cause the sponsoring employer to take, all necessary or
appropriate actions reasonably requested by the Buyer with respect to the
Fiberite, Inc. 401(k) Plan I and the Fiberite, Inc. 401(k) Plan II
(collectively the "Fiberite 401(k) Plans") to cause and facilitate the
transfers of any assets related to Affected Employees who accept employment
with Buyer from the respective trustees of the Fiberite, Inc. 401(k) Plans to
the trustee(s) of one or
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more retirement plans qualified under Code Sections 401(a) and 401(k) which
are designated or established by Buyer (the "Buyer's 401(k) Plans"). Upon
the transfer, each Buyer's 401(k) Plan shall indemnify and hold harmless the
corresponding Fiberite 401(k) Plan from and against all liabilities
attributable to the account balances transferred to such Buyer's 401(k) Plan.
Section 4.17 EXON-FLORIO. During the period from the execution of
the Stock Purchase Agreement through the Closing Date, Fiberite shall not,
and Stamford shall not permit Fiberite to, engage in any activity that would
result in Fiberite or Fiberite Holdings being required to file an amendment
to its initial filing with respect to compliance with the terms of the
Exon-Florio Amendment in connection with the transactions contemplated hereby.
Section 4.18 TRANSITIONAL SERVICES. Each of the Parties agree that
for a transitional period commencing on the Closing Date and expiring 90 days
thereafter, or such later date as the Parties shall mutually agree Buyer on
the one hand and Fiberite on the other hand, shall provide such other Party
with all services reasonable and necessary to operate such other Party's
business as it is being operated as of the Closing Date. The Party
requesting such services shall pay to the Party upon request (with such
requests not being made more often than once every thirty days) providing
such services all Costs incurred by the providing Party in connection with
providing such services. As used herein, "Costs" shall mean an amount equal
to the total direct costs and expenses incurred in connection with providing
the applicable services, calculated in accordance with generally accepted
accounting principles, consistently applied.
Section 4.19 SUPPLY AGREEMENT. On or after the Closing Date, the
Parties will enter into a mutually satisfactory supply agreement whereby Buyer
will provide fabric and certain other raw materials to the business conducted at
the Orange Facility and the German Subsidiary.
Section 4.20 TAX COOPERATION. The Parties and their respective
affiliates shall cooperate in the preparation of all Returns relating in whole
or in part to taxable periods ending on or before or including the Closing Date
that are required to be filed after such date. Such cooperation shall include,
but not be limited
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to, furnishing prior years' Returns or return preparation packages
illustrating previous reporting practices or containing historical
information relevant to the preparation of such Returns, providing reasonable
access to employees with knowledge of such Returns during regular business
hours and furnishing such other information within such party's possession
requested by the party filing such Returns as is relevant to their
preparation. Additionally, a Party filing any such Returns (the "Filing
Party") shall mail a draft copy of such Returns to the other party (the
"Non-Filing Party"), not less than 30 days prior to the expected filing date
and shall provide the Non-Filing Party and its representatives, advisors and
agents with such materials and such access to the books and records of the
Filing Party related to such Return so that the Non-Filing Party may review
and comment on such Return prior to the filing thereof. The Filing Party and
the Non-Filing Party shall mutually agree on the final preparation content
and filing of any Return referred to in this Section 4.20.
Section 4.21 DIRECTORS' AND OFFICERS' INSURANCE. Buyer agrees to
maintain in effect for not less than six years after the Closing Date the
current policies of directors' and officers' liability insurance maintained
by Fiberite with respect to matters occurring prior to the Closing Date;
PROVIDED, HOWEVER, that (i) Buyer may substitute therefor policies of at
least the same coverage containing terms and conditions which are no less
advantageous to the covered officers and directors and (ii) Buyer shall not
be required to pay an annual premium for such insurance coverage in excess of
one hundred and twenty-five percent (125%) of the current annual premium paid
by Fiberite for its existing coverage, but in such case shall purchase as
much coverage as possible for such amount. If Buyer proposes to change the
liability insurance coverage referred to in this Section 4.21 such change
shall become effective upon obtaining the consent from a duly appointed
representative of the persons covered by such liability insurance (which
consent shall not be unreasonably withheld). In addition, Buyer hereby
waives any and all claims that Buyer may have against the officers and
directors of Fiberite and its subsidiaries in their capacities as such.
Section 4.22 PRE-CLOSING ADJUSTMENT. Prior to the Closing Date, the
parties shall mutually agree on the value of certain assets listed on Schedule
1.1(a)(xvii) (the "Pre-Closing Adjustment Amount"), at which time, the
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consideration to be paid by Buyer under Section 1.2 hereof will be increased
by the Pre-Closing Adjustment Amount.
ARTICLE V
CONDITIONS TO THE OBLIGATIONS OF BUYER
The obligation of Buyer to perform its obligations under this
Agreement shall be subject to the fulfillment, on or before the Closing Date
of each of the following conditions, any one or more of which may be waived
by Buyer:
Section 5.1 CONSENTS AND APPROVALS. All necessary consents and
approvals of any United States or any other governmental authority that are
required for the consummation of the transactions contemplated by this
Agreement, shall have been obtained and any waiting period applicable to the
consummation of the transactions contemplated by this Agreement under the HSR
Act and under any applicable antitrust and competition law statutes and
regulations of foreign jurisdictions, or other applicable law shall have
expired or been terminated.
Section 5.2 CERTAIN PROCEEDINGS. No writ, order, decree or
injunction of a court of competent jurisdiction, governmental entity or
regulatory body shall be in effect against any of the Parties or their
respective subsidiaries and no proceedings therefor shall have been
threatened or commenced by any governmental entity or regulatory body, in
each case, which prohibits or restricts the consummation of the transactions
contemplated by this Agreement.
Section 5.3 FINANCING Buyer shall have received the funds
necessary to consummate the transactions contemplated by this Agreement.
Section 5.4 STOCK PURCHASE AGREEMENT. The representations and
warranties of Fiberite Holdings (including the disclosure Schedules attached
thereto) contained in Article II of the Stock Purchase Agreement shall have been
true and correct in all material respects as of the closing of the transactions
contemplated by the Stock Purchase Agreement and shall be true and correct in
all material respects as of the Closing Date. Each of the conditions contained
in Article VI and Article VII of
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the Stock Purchase Agreement shall have been satisfied and complied with,
shall not have been waived without Buyer's prior written consent, the
transactions contemplated by the Stock Purchase Agreement shall have been
consummated and Stamford shall have caused Fiberite to execute and deliver
this Agreement.
ARTICLE VI
CONDITIONS TO THE OBLIGATIONS OF
STAMFORD AND FIBERITE
The obligations of Stamford and Fiberite to perform their respective
obligations under this Agreement shall be subject to the fulfillment on or
before the Closing Date of each of the following conditions, any one or more of
which may be waived by Stamford and Fiberite:
Section 6.1 CONSENTS AND APPROVALS. All necessary consents and
approvals of any United States or any other governmental authority that are both
required for the consummation of the transactions contemplated by this Agreement
shall have been obtained and any waiting period applicable to the consummation
of the transactions contemplated hereby under the HSR Act and under any
applicable antitrust and competition law statutes and regulations of foreign
jurisdictions, or other applicable law shall have expired or been terminated.
Section 6.2 CERTAIN PROCEEDINGS. No writ, order, decree or
injunction of a court of competent jurisdiction, governmental entity or
regulatory body shall be in effect against any of the Parties or their
respective subsidiaries, and no proceedings therefor shall have been threatened
or commenced by any governmental entity, which prohibits or restricts the
consummation of the transactions contemplated by this Agreement.
ARTICLE VII
TERMINATION AND ABANDONMENT
Section 7.1 TERMINATION. This Agreement may be terminated at any
time prior to the closing of the Stock Purchase Agreement:
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(a) by mutual written consent of Stamford and Buyer;
(b) by Stamford or Buyer if, without fault of such terminating
party, the transactions contemplated by this Agreement shall not have been
consummated on or before September 15, 1997, which date may be extended by
mutual written consent of Stamford and Buyer; or
(c) by either Stamford or Buyer if any court of competent
jurisdiction in the United States or other governmental body in the United
States shall have issued an order (other than a temporary restraining order),
decree or ruling or taken any other action restraining, enjoining or
otherwise prohibiting the transactions contemplated by this Agreement, and
such order, decree, ruling or other action shall have become final and
nonappealable; PROVIDED that the party seeking to terminate this Agreement
shall have complied with the provisions of Section 4.3.
Section 7.2 TERMINATION BY BUYER. This Agreement may be terminated
and the transactions contemplated by this Agreement may be abandoned, at any
time prior to the closing of the Stock Purchase Agreement by Buyer, if (a)
either Stamford or Fiberite has failed to comply in any material respect with
any of the material covenants or agreements contained in this Agreement to be
complied with or performed by Stamford or Fiberite, at or prior to such date
of termination, (b) there exists a breach or breaches of any representation
or warranty of Stamford or Fiberite contained in this Agreement such that the
closing conditions set forth in Article V would not be satisfied; PROVIDED,
HOWEVER, that if such breach or breaches are capable of being cured prior to
the closing of the Stock Purchase Agreement, termination pursuant to this
Section 7.2 shall be permitted only to the extent such breaches shall not
have been cured within 30 days of delivery to Stamford or Fiberite, as the
case may be, of written notice of such breach or breaches, or (c) any event
occurs which renders impossible compliance with one or more of the conditions
set forth in Article V hereof, and compliance with such condition or
conditions are not waived by Buyer.
Section 7.3 TERMINATION BY STAMFORD. This Agreement may be
terminated and the transactions contemplated by this Agreement may be
abandoned by Stamford at
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any time prior to the closing of the Stock Purchase Agreement, if (a) Buyer
shall have failed to comply in any material respect with any of the material
covenants or agreements contained in this Agreement to be complied with or
performed by it at or prior to such date of termination, (b) there exists a
breach or breaches of any representation or warranty of Buyer contained in
this Agreement such that the closing conditions set forth in Article VI would
not be satisfied; PROVIDED, HOWEVER, that if such breach or breaches are
capable of being cured prior to the closing of the Stock Purchase Agreement,
termination pursuant to this Section shall be permitted only to the extent
such breaches shall not have been cured within 30 days of delivery to Buyer
of written notice of such breach or breaches, or (c) any event occurs which
renders impossible compliance with one or more of the conditions set forth in
Article VI hereof, and compliance with such condition or conditions are not
waived by Stamford.
Section 7.4 PROCEDURE FOR TERMINATION. In the event of termination
and abandonment of the transactions contemplated by this Agreement by
Stamford or Buyer pursuant to this Article VII, written notice thereof shall
forthwith be given to the other.
Section 7.5 EFFECT OF TERMINATION AND ABANDONMENT. In the event of
proper termination of this Agreement and abandonment of the transactions
contemplated by this Agreement pursuant to this Article VII, no Party hereto
(or any of its directors or officers) shall have any liability or further
obligation to any other Party to this Agreement, except that in such event
nothing herein shall relieve any Party from liability for any breach of this
Agreement.
ARTICLE VIII
SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION
Section 8.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES, COVENANTS,
ETC. Except for the respective covenants and other agreements of the Parties
made in this Article VIII and Article IX hereof, the respective representations,
warranties, covenants and other agreements of the Parties shall not survive the
Closing or any termination of this Agreement. This Section 8.1 shall
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not limit any covenant or agreement of the Parties which contemplates
performance after the Closing, including, without limitation, any such
covenants and agreements set forth in Article IV hereof and in the
Undertaking.
Section 8.2 FIBERITE'S AND STAMFORD'S AGREEMENTS TO INDEMNIFY.
Subject to the terms, conditions and limitations set forth in
Sections 8.1 and 8.5, from and after the Closing, Stamford and Fiberite shall
defend, indemnify and hold harmless Buyer, its Affiliates and if applicable,
their respective directors, officers, employees, attorneys, representatives
and agents, and each of the heirs, executors, successors and assigns of any
of the foregoing (each a "Buyer Indemnitee") of Buyer from and against any
costs or expenses (including, without limitation, reasonable attorneys' fees,
investigation costs and remediation costs), judgments, fines, losses,
actions, claims, damages and assessments of any nature (collectively,
"Losses") imposed on, sustained, incurred or suffered by or asserted against
any Buyer Indemnitee that arise out of or relate to (i) any breach of or
failure to perform any covenant to be performed on or after the Closing Date
made by or on behalf of Stamford or Fiberite under this Agreement, the Other
Instruments or in any certificate, exhibit or other instrument contemplated
by this Agreement and delivered by Stamford or Fiberite in connection
herewith and (ii) the Excluded Liabilities.
Section 8.3 BUYER'S AGREEMENT TO INDEMNIFY.
Subject to the terms, conditions and limitations set forth in Sections
8.1 and 8.5, from and after the Closing, Buyer shall defend, indemnify and hold
harmless Stamford and Fiberite and their respective Affiliates, and if
applicable, their respective directors, officers, attorneys, representatives and
agents and each of the heirs, executors, successors and assigns of any of the
foregoing (each a "Seller Indemnitee") of Stamford, Fiberite Holdings and
Fiberite from and against any Losses imposed on, sustained, incurred or suffered
by or asserted against any Seller Indemnitee that arise out of or are the result
of (i) any breach of or failure to perform any covenant to be preformed on or
after the Closing Date made by or on behalf of Buyer under this Agreement, the
Other Instruments or in any certificate, exhibit or other instrument
contemplated by this Agree-
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ment and delivered by Buyer in connection herewith and (ii) the Assumed
Liabilities.
Section 8.4 INDEMNIFICATION BASED ON NET DAMAGE. In calculating
amounts payable from a party required to indemnify a party under this
Agreement (the "Indemnifying Party") to a party entitled to indemnification
under this Agreement (an "Indemnified Party"), the amount of the indemnified
Losses shall be computed net of payments received by the Indemnified Party
under any insurance policy or contract with respect to such Losses.
Section 8.5 THIRD PARTY CLAIMS. In the event that a claim for
indemnification ("Claim") involves a claim by a Third Party against the
Indemnified Party, the Indemnifying Party shall notify the Indemnified Party in
writing within ten business days after receipt of written notice from the
Indemnified Party if it agrees to undertake the defense thereof. The written
notice provided to the Indemnifying Party from the Indemnified Party shall be
delivered promptly following the Indemnified Party's obtaining knowledge of the
Claim and shall state the basis of the Claim with reasonable specificity,
including the Section or Sections of this Agreement alleged to have been
breached. If the Indemnifying Party so notifies the Indemnified Party, then the
Indemnifying Party shall control such defense and shall bear all costs of such
defense, PROVIDED, that the Indemnified Party may participate in such settlement
or defense through counsel chosen by it (the fees and expenses of which shall be
borne by the Indemnified Party). Notwithstanding anything in this Section 8.5
to the contrary, the Indemnifying Party may, with the consent of the Indemnified
Party (which consent shall not be unreasonably withheld), settle or compromise
any action or consent to the entry of any judgment which includes as a term
thereof the delivery by the claimant or plaintiff to the Indemnified Party of a
duly executed written unconditional release of the Indemnified Party from all
liability in respect of such action, which release shall be reasonably
satisfactory in form and substance to counsel for the Indemnified Party. If the
Indemnifying Party does not notify the Indemnified Party within ten business
days after the receipt of the Indemnified Party's notice of a claim of indemnity
hereunder that it elects to undertake the defense thereof, the Indemnified Party
shall have the right to contest, settle or compromise the claim but shall not
thereby waive any right to indemnity therefor pursuant to this Agreement.
Notwithstanding the forego-
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ing, the Indemnified Party, during the period the Indemnifying Party is
determining whether to elect to assume the defense of a matter covered by
this Section 8.5, may take such reasonable actions as it deems necessary to
preserve any and all rights with respect to the matter, without such actions
being construed as a waiver of the Indemnified Party's rights to defense and
indemnification pursuant to this Agreement. No failure to provide any notice
required by this Section 8.5 shall relieve the Indemnifying Party of any
obligation to indemnify the Indemnified Party hereunder except to the extent
that the Indemnifying Party is actually prejudiced thereby.
ARTICLE IX
MISCELLANEOUS
Section 9.1 FEES, EXPENSES AND TAXES.
(a) Whether or not the transactions contemplated herein are
consummated pursuant hereto, except as otherwise provided herein, each of the
Parties shall pay all of its respective fees and expenses incurred by, or in
connection with, or in anticipation of, this Agreement and the consummation
of the transactions contemplated hereby and thereby. Each of the Parties
shall indemnify and hold harmless the other parties from and against any and
all claims or liabilities for brokerage commissions and financial advisory
and finders' fees incurred by reason of any action taken by such Party or
otherwise arising out of the transactions contemplated by this Agreement by
any person claiming to have been engaged by such Party. Buyer shall be
responsible for the payment of any fee, sales tax, transfer tax, filing
expense or other charge incurred in connection with the transfer of the
Acquired Assets or the Acquired Business.
(b) Each of Buyer and Fiberite shall provide the other with
such assistance and documents, without charge, as may be reasonably requested
by either of them in connection with the preparation of any Return, the
conduct of any audit or administrative or court proceeding, and any other Tax
related matter that is a subject of this Agreement. Such cooperation and
assistance shall be provided to the requesting Party promptly upon its
request.
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(c) Unless otherwise required by law, the Parties shall treat
any indemnification payments made under this Agreement as an adjustment to the
Allocable Amount for all Tax purposes, including, without limitation, in
connection with all income Tax Returns and all proceedings in connection with
income Taxes. Each of Buyer, Fiberite Holdings (or any successor) and Fiberite
shall notify the others in the event any taxing authority is taking or proposing
to take a position inconsistent with the treatment of an indemnification
payment, pursuant to the first sentence of this Section 9.1(c), as an adjustment
to the Allocable Amount.
Section 9.2 FURTHER ASSURANCES. From time to time after the
Closing Date, at the request of another Party hereto and at the expense of
the Party so requesting, each of the parties hereto shall execute and deliver
to such requesting Party such documents and take such other action as such
requesting Party may reasonably request in order to consummate more
effectively the transactions contemplated hereby.
Section 9.3 NOTICES. All notices, requests, demands, waivers and
other communications required or permitted to be given under this Agreement
shall be in writing and may be given by any of the following methods: (a)
personal delivery; (b) facsimile transmission; (c) registered or certified
mail, postage prepaid, return receipt requested; or (d) overnight delivery
service. Notices shall be sent to the appropriate Party at its address or
facsimile number given below (or at such other address or facsimile number
for such Party as shall be specified by notice given hereunder):
If to Stamford, to:
Stamford FHI Acquisition Corp.
206 Danbury Rd.
Wilton, CT 06899
(203) 834-6360
Attention: President
with copies to:
Latham & Watkins
885 Third Avenue
New York, NY 10022
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Fax No.: (212) 751-4864
Attention: Steve Della Rocca, Esq.
If to Fiberite, to:
Fiberite, Inc.
206 Danbury Rd.
Wilton, CT 06899
(203) 834-6360
Attention: President
with a copy to:
Latham & Watkins
885 Third Avenue
New York, NY 10022
Fax No.: (212) 751-4864
Attention: Steve Della Rocca, Esq.
If to Buyer, to:
Hexcel Corporation
Two Stamford Plaza
281 Tresser Boulevard
Stamford, CT 06901-3238
Fax No.: (203) 358-3972
Attention: Ira J. Krakower, Esq.
with copies to:
Skadden, Arps, Slate,
Meagher & Flom LLP
919 Third Avenue
New York, New York 10022-9931
Fax No.: (212) 735-2000
Attention: Joseph A. Coco, Esq.
All such notices, requests, demands, waivers and communications shall be
deemed received upon (i) actual receipt thereof by the addressee, (ii) actual
delivery thereof to the appropriate address or (iii) in the case of a
facsimile transmission, upon transmission thereof by the sender and issuance
by the transmitting machine of a confirmation slip that the number of pages
constituting the notice have been transmitted without error. In the case of
notices sent by facsimile transmission, the sender shall contemporaneously
mail a copy of the notice to the addressee at the address provided for above.
However,
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such mailing shall in no way alter the time at which the facsimile notice is
deemed received.
Section 9.4 SEVERABILITY. Should any provision of this Agreement
for any reason be declared invalid or unenforceable, such decision shall not
affect the validity or enforceability of any of the other provisions of this
Agreement, which remaining provisions shall remain in full force and effect
and the application of such invalid or unenforceable provision to persons or
circumstances other than those as to which it is held invalid or
unenforceable shall be valid and enforced to the fullest extent permitted by
law.
Section 9.5 BINDING EFFECT; ASSIGNMENT. This Agreement and all of
the provisions hereof shall be binding upon and shall inure to the benefit of
the Parties and their respective successors and permitted assigns. Neither
this Agreement nor any of the rights, interests or obligations hereunder
shall be assigned, directly or indirectly, including, without limitation, by
operation of law, by any Party hereto without the prior written consent of
the other parties hereto. Notwithstanding anything herein to the contrary,
this Section 9.5 shall not preclude and Buyer's consent shall not be required
for the merger of Stamford, Fiberite Holdings and Fiberite immediately
following the closing under the Stock Purchase Agreement and the transfer of
Stamford's rights hereunder caused thereby.
Section 9.6 BULK SALES LAW. Buyer hereby waives compliance by
Fiberite with the requirements and provisions of any "bulk-transfer" laws of
any jurisdiction that may otherwise be applicable with respect to the
transactions contemplated by this Agreement.
Section 9.7 NO THIRD PARTY BENEFICIARIES. This Agreement is solely
for the benefit of Stamford, Fiberite and their respective successors and
permitted assigns, with respect to the obligations of Buyer under this
Agreement, and for the benefit of Buyer, and its respective successors and
permitted assigns, with respect to the obligations of Stamford and Fiberite,
under this Agreement, and this Agreement shall not be deemed to confer upon
or give to any other third party any remedy, claim, liability, reimbursement,
cause of action or other right.
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Section 9.8 INTERPRETATION.
(a) The article and Section headings contained in this Agreement
are solely for the purpose of reference, are not part of the agreement of the
parties and shall not in any way affect the meaning or interpretation of this
Agreement.
(b) As used in this Agreement, the term "person" shall mean and
include an individual, a partnership, a joint venture, a corporation, a
trust, an unincorporated organization and a government or any department or
agency thereof.
(c) As used in this Agreement, the term "Affiliate" shall have the
meaning set forth in Rule 12b-2 of the General Rules and Regulations under
the Securities Exchange Act of 1934, as amended.
Section 9.9 JURISDICTION AND CONSENT TO SERVICE. Without limiting
the jurisdiction or venue of any other court, each of the Parties (i) agree
that any suit, action or proceeding arising out of or relating to this
Agreement may be brought solely in the state or federal courts of New York;
(ii) consent to the exclusive jurisdiction of each such court in any suit,
action or proceeding relating to or arising out of this Agreement; (iii)
waive any objection which it may have to the laying of venue in any such
suit, action or proceeding in any such court; and (iv) agree that service of
any court paper may be made in such manner as may be provided under
applicable laws or court rules governing service of process.
Section 9.10 GOVERNING LAW. This Agreement shall be governed by
and construed in accordance with the laws of the State of New York
(regardless of the laws that might otherwise govern under applicable
principles of conflicts of laws thereof) as to all matters, including but not
limited to matters of validity, construction, effect, performance and
remedies.
Section 9.11 ENTIRE AGREEMENT. This Agreement, the Disclosure
Schedules, and the Exhibits and other documents referred to herein or delivered
pursuant hereto which form a part hereof constitute the entire agreement among
the parties with respect to the subject matter hereof and supersede all other
prior agreements
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and understandings, both written and oral, between the parties or any of them
with respect to the subject matter hereof.
Section 9.12 AMENDMENT, MODIFICATION AND WAIVER. This Agreement
may be amended, modified or supplemented at any time only by mutual written
agreement of Stamford and Buyer. Any failure of Stamford and Fiberite, on
the one hand, or Buyer, on the other hand, to comply with any term or
provision of this Agreement may be waived, with respect to Buyer, by Stamford
and, with respect to Stamford or Fiberite, by Buyer, by an instrument in
writing signed by or on behalf of the appropriate party, but such waiver or
failure to insist upon strict compliance with such term or provision shall
not operate as a waiver of, or estoppel with respect to, any subsequent or
other failure to comply.
Section 9.13 SPECIFIC PERFORMANCE. The parties acknowledge and
agree that any breach of the terms of this Agreement would give rise to
irreparable harm for which money damages would not be an adequate remedy and
accordingly the parties agree that, in addition to any other remedies, each
shall be entitled to enforce the terms of this Agreement by a decree of
specific performance without the necessity of proving the inadequacy of money
damages as a remedy.
Section 9.14 COUNTERPARTS. This Agreement may be executed in
counterparts, each of which shall be deemed to be an original, but all of
which shall constitute one and the same agreement.
Section 9.15 EFFECTIVE DATE. This Agreement shall be deemed an
agreement between Stamford and Buyer until executed by Fiberite at which time
it shall be deemed to be an agreement between Buyer, Stamford and Fiberite,
and Stamford shall cause Fiberite to execute this Agreement immediately
following the closing of the Stock Purchase Agreement (the "Effective Date").
Without limiting the generality of the foregoing, all representations,
warranties, covenants or other obligations of any kind made or incurred by
Fiberite as a result of the execution and delivery of this Agreement shall be
deemed to have been made as of, and Fiberite shall deliver its Schedules
applicable to the representations and warranties it is making at, the time of
its delivery of a signature page hereto.
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ARTICLE X
CERTAIN DEFINITIONS
For the purposes of this Agreement, the following words and phrases
shall have the following meanings:
"ACQUIRED ASSETS" has the meaning assigned in Section 1.1(a).
"ACQUIRED BUSINESSES" means the entire business conducted by Fiberite
as of the Closing Date, other than the Excluded Businesses.
"ACQUIRED INTELLECTUAL PROPERTY" has the meaning assigned in Section
1.1(a)(ix).
"ADMINISTRATOR" has the meaning assigned in Section 1.1(f).
"AFFECTED EMPLOYEE" has the meaning assigned in Section 4.7(a).
"AFFILIATE" has the meaning assigned in Section 9.8(c).
"AGREEMENT" means this agreement, dated as of April 21, 1997, together
with any amendments thereto, by and among Fiberite, Stamford and Buyer.
"ALLOCABLE AMOUNT" has the meaning assigned in Section 4.12.
"ALLOCATED LIABILITIES" has the meaning assigned in Section 1.1(f).
"ALLOCATION STATEMENT" has the meaning assigned in Section 4.12.
"ANTITRUST DIVISION" has the meaning assigned in Section 4.3.
"ASSUMED LIABILITIES" has the meaning assigned in Section 1.1(d).
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"BILL OF SALE AND ASSIGNMENT" means the duly executed bill of sale
and assignment agreement, substantially in the form attached hereto as
Exhibit B, which Stamford and Fiberite will deliver to Buyer effecting the
sale, assignment, transfer and delivery of the Acquired Assets.
"BUSINESS RECORDS" has the meaning assigned by Section 4.11.
"BUYER" means Hexcel Corporation.
"BUYER ALLOCATED LIABILITIES" has the meaning assigned by
Section 1.1(f).
"BUYER INDEMNITEE" has the meaning assigned by Section 8.2.
"BUYER'S 401(K) PLANS" has the meaning assigned in Section 4.16.
"CLAIM" has the meaning assigned by Section 8.5.
"CLOSING" means the closing of the transactions described in
Section 1.3.
"CLOSING DATE" means the date of the Closing as determined pursuant to
Section 1.3.
"CODE" means the Internal Revenue Code of 1986, as amended. All
citations to the Code, or to the Treasury Regulations promulgated thereunder,
shall include any amendments or substitute or successor provisions thereto.
"COMMON STOCK" means the shares of Common Stock, par value $.01 per
share, of Fiberite Holdings.
"COSTS" has the meaning assigned in Section 4.18.
"DEEDS" has the meaning assigned in Section 1.1(b).
"DOMESTIC SUBSIDIARY" has the meaning assigned in Section 1.1(a)(xvi).
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"EFFECTIVE DATE" has the meaning assigned in Section 9.15.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"EXCLUDED ASSETS" has the meaning assigned in Section 1.1(c).
"EXCLUDED BUSINESSES" has the meaning assigned in Section 1.1(c)(ii).
"EXCLUDED LIABILITIES" has the meaning assigned by Section 1.1(e).
"FIBERITE" means Fiberite, Inc.
"FIBERITE ALLOCATED LIABILITIES" has the meaning assigned in
Section 1.1(f).
"FIBERITE FRANCE" means Fiberite France SARL, a corporation formed
under the laws of France.
"FIBERITE HOLDINGS" means Fiberite Holdings, Inc., a Delaware
corporation.
"FIBERITE 401(K) PLANS" has the meaning assigned in Section 4.16.
"FILING PARTY" has the meaning assigned in Section 4.20.
"FIRPTA CERTIFICATE" has the meaning assigned in Section 1.4(d).
"FTC" has the meaning assigned by Section 4.3.
"GERMAN BUSINESSES" means the businesses conducted by the German
Subsidiary.
"GERMAN SUBSIDIARY" means Fiberite Europe GmbH.
"GREENVILLE FACILITY" means the facility located at 4300 Jackson
Street, Greenville, Texas.
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"HSR ACT" has the meaning assigned in Section 2A.3(b).
"INDEMNIFIED PARTY" has the meaning assigned in Section 8.4.
"INDEMNIFYING PARTY" has the meaning assigned in Section 8.4.
"INTELLECTUAL PROPERTY" shall mean throughout the world (i) Patents,
(ii) Trademarks, (iii) Trade Names, (iv) Know-how, (v) shop rights and (vi)
copyrights.
"INVENTORY" has the meaning assigned by Section 1.1(a)(iv).
"KNOW-HOW" shall mean all trade secrets, know-how (including product
know-how and use and application know-how), formulas, processes, product
designs, specifications, quality control procedures, manufacturing, engineering
and other drawings, technology, technical information, safety information, lab
journals, engineering data and design and engineering specifications, research
records, market surveys and all promotional literature, customer and supplier
lists and similar data.
"LIENS" means all mortgages, pledges, security interests, liens,
changes, options, easements, rights of way or other encumbrances.
"LOSSES" has the meaning assigned in Section 8.2.
"MATERIAL ADVERSE EFFECT" means an event which has a material adverse
effect on the business, operations, financial condition or results of operations
of the Acquired Businesses taken as a whole, or materially impairs the value or
usefulness of the Acquired Assets taken as a whole.
"NON-ASSIGNED CONTRACTS" has the meaning set forth in Section 4.14.
"NON-FILING PARTY" has the meaning assigned in Section 4.20.
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"ORANGE BUSINESSES" has the meaning assigned in Section 1.1(c)(ii).
"ORANGE FACILITY" means the facility located at 645 North Cypress,
Orange California.
"OTHER INSTRUMENTS" has the meaning assigned in Section 1.1(b).
"PARTIES" has the meaning set forth in the preamble.
"PATENTS" shall mean patents (including all reissues, divisions,
re-examinations, continuations, continuations in part and extensions
thereof), patent applications and patent disclosures docketed and all other
patent rights.
"PERMITTED LIENS" means mechanics', carriers', workers', repairers',
materialmens', warehousemens' and other similar Liens arising or incurred in the
ordinary course of business consistent with past practice and which would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
"PERSON" has the meaning assigned in Section 9.8(b).
"PLANS" means the Fiberite, Inc. Pension Plan, the Fiberite, Inc.
Service Related Pension Plan, the Fiberite, Inc. 401(k) Plan I, and the
Fiberite, Inc. 401(k) Plan II.
"PRE-CLOSING ADJUSTMENT" has the meaning assigned by Section 4.22.
"PRIOR OCCURRENCES" has the meaning assigned by Section 4.8.
"PURCHASE PRICE" has the meaning set forth in Section 1.2(a).
"RETURN" means any report, return or other information filed with or
required to be supplied to a taxing authority in connection with Taxes.
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"SCHEDULE(s)" means any schedule(s) included in the Disclosure
Schedule.
"SELLER INDEMNITEE" has the meaning assigned in Section 8.3
"SELLING STOCKHOLDERS" shall refer to the stockholders and
optionholders of Fiberite Holdings existing immediately prior to the closing of
the Stock Purchase Agreement.
"STAMFORD" means Stamford FHI Acquisition Corp.
"STOCK PURCHASE AGREEMENT" means the Stock Purchase and Sale
Agreement, dated as of April 20, 1997 by and among Stamford, Fiberite and the
Selling Stockholders.
"TAXES" means all taxes, assessments, charges, duties, fees, levies or
other governmental charges, including, without limitation, all Federal, state,
local, foreign and other income, gross receipts, franchise, profits, capital
gains, capital stock, transfer, sales, use, occupation, property, excise,
severance, windfall profits, stamp, license, payroll, withholding, social
security and other taxes, assessments, charges, duties, fees, levies or other
governmental charges of any kind whatsoever (whether payable directly or by
withholding and whether or not requiring the filing of a Return), and all
estimated taxes, deficiency assessments, additions to tax, penalties and
interest.
"THIRD PARTIES" means any parties other than the Parties to this
Agreement and their respective Affiliates.
"TRADEMARKS" shall mean trademarks and service marks, registrations
thereof, pending applications therefor and such unregistered rights as may exist
through use.
"TRADE NAMES" shall mean trade names, brand marks, trade dress, brand
names, logos and all other names and slogans or product goodwill for which no
trademark registration has been obtained and for which no application is
pending.
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"UNDERTAKING" means the duly executed undertaking, substantially in
the form attached hereto as Exhibit C, whereby Buyer will assume and agree to
pay and discharge the Assumed Liabilities.
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IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered by the duly authorized officers of the parties hereto as of the date
first above written.
STAMFORD FHI ACQUISITION CORP.
By:
-----------------------------------
Title:
--------------------------------
FIBERITE, INC.
By:
-----------------------------------
Title:
--------------------------------
HEXCEL CORPORATION
By:
-----------------------------------
Title:
--------------------------------
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HEXCEL CORPORATION
1997 EMPLOYEE STOCK PURCHASE PLAN
1. PURPOSE. The Plan is intended to provide Employees (as
defined herein) of the Company and its Designated Subsidiaries, with the
opportunity to apply a portion of their compensation to the purchase of
Common Stock of the Company in accordance with the terms of the Plan, to
promote and increase the ownership of Common Stock by such employees and to
better align the interests of the Company's employees and its stockholders
and to thereby increase overall stockholder value.
2. DEFINITIONS.
(a) "BOARD" means the Board of Directors of the Company.
(b) "BROKERAGE FIRM" means any brokerage firm selected by the
Company, from time to time, to establish Investment
Accounts for the Participants under the Plan.
(c) "CODE" means the Internal Revenue Code of 1986, as
amended.
(d) "COMMITTEE" means a committee formed or designated by the
Board to administer the Plan.
(e) "COMMON STOCK" means the Common Stock, $0.01 par value,
of the Company.
(f) "COMPANY" means Hexcel Corporation, a Delaware
corporation.
(g) "COMPENSATION" means all cash compensation, to include
regular straight time gross earnings, overtime, shift
premium, cash bonuses and commissions.
(h) "CONTINUOUS STATUS AS AN EMPLOYEE" means the absence of
any interruption or termination of service as an Employee
other than ordinary vacation and short-term disability
absences. Continuous Status as an Employee shall not be
considered interrupted in the case of a leave of absence
agreed to in writing by the Company, provided that such
leave is for a period of not more than 90 days or
reemployment upon the expiration of such leave is
guaranteed by contract or statute.
(i) "CONTRIBUTIONS" means all amounts credited to the Plan
Account of a Participant pursuant to the Plan.
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(j) "DESIGNATED SUBSIDIARIES" means the Subsidiaries, which
have been designated by the Committee from time to time
in its sole discretion as eligible to participate in the
Plan.
(k) "EMPLOYEE" means any person, excluding any officer or
director or other person or group of persons excluded
from the Plan as provided herein, who is a direct
employee and on the payroll of the Company or one of its
Designated Subsidiaries and who is employed for at least
thirty (30) hours per week and more than 1000 hours in a
calendar year by the Company or one of its Designated
Subsidiaries. The term Employee specifically excludes
any person or group of persons who is classified by the
Company or its Designated Subsidiary as a temporary
employee, contract employee, reserve employee or similar
non-direct or temporary designation. It is the intention
of the Company that the definition of Employee in this
Plan (as applied by the Committee in its sole discretion)
shall be determinative for purposes of participation in
the Plan, regardless of how a person may be characterized
by the Company or its Designated Subsidiary for any other
purpose.
(l) "EXCHANGE ACT" means the Securities Exchange Act of 1934,
as amended.
(m) "EXERCISE DATE" means the last day of each Offering
Period of the Plan.
(n) "INVESTMENT ACCOUNT" means an Employee Stock Purchase
Plan account at the Brokerage Firm, that is established
for each Participant and in which all shares of Common
Stock purchased by the Participant pursuant to the Plan
are held.
(o) "OFFERING DATE" means the first business day of each
Offering Period of the Plan.
(p) "OFFERING PERIOD" means a period of three (3) calendar
months.
(q) "PARTICIPANT" means any Employee who is eligible to
participate in the Plan who has delivered a Subscription
Agreement to the Company, whose employment has not
terminated and who has not delivered to the Company a
Participation Termination Notice.
(r) "PARTICIPATION TERMINATION NOTICE" has the meaning given
thereto in Section 10 hereof.
(s) "PLAN" means this Employee Stock Purchase Plan.
(t) "PLAN ACCOUNT" means, with respect to each Participant,
an account established by the Company to record
Contributions to the Plan made by such Participant and
the use of such Contributions as they are either (i)
applied by the Company for the purchase of Common Stock
under the Plan for the account of such Participant or
(ii) repaid to such Participant pursuant to the Plan.
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(u) "SUBSIDIARY" shall mean a corporation, domestic or
foreign, of which more than 50% of the voting shares are
held by the Company or a Subsidiary, whether or not such
corporation now exists or is hereafter organized or
acquired by the Company or a Subsidiary.
3. ELIGIBILITY. Any person who has been continuously
employed as an Employee for six (6) months as of the Offering Date of a given
Offering Period and has reached the age of majority in the state of his or
her residence shall be eligible to participate in such Offering Period under
the Plan, subject to the requirements of Section 5(a).
4. OFFERING PERIODS. The Plan shall be implemented by a
series of Offering Periods, with a new Offering Period commencing on January
1 of each year (or at such other time or times as may be determined by the
Committee), and subsequent Offering Periods will commence on the first day of
each calendar quarter (i.e., April 1, July 1, October 1). The Plan shall
continue until terminated in accordance with Section 22 hereof. The
Committee shall have the power to change the duration and/or the frequency of
Offering Periods with respect to future offerings if such change is announced
at least fifteen (15) calendar days prior to the scheduled beginning of the
first Offering period to be affected.
5. PARTICIPATION.
(a) An Employee who is eligible to participate in the Plan
pursuant to Section 3 hereof may become a participant in
the Plan by completing a subscription agreement in the
form provided by the Company (a "Subscription Agreement")
and filing it with the appropriate representative of the
Company or the Designated Subsidiary that employs such
Employee in accordance with the terms of the Subscription
Agreement at any time during the initial Offering Period
of the Plan or, for subsequent Offering Periods, not
later than fifteen (15) calendar days prior to any
Offering Date, unless a later time for filing
Subscription Agreements is established by the Committee
for all eligible Employees with respect to a given
Offering Period. Each eligible Employee's Subscription
Agreement shall set forth either (1) the whole percentage
of the Participant's Compensation (which shall be not
less than 1% and not more than 10%) or (2) the whole
dollar amount (that shall not be less than $5.00 and not
more than an amount equal to 10%, of such Participant's
Compensation) to be deducted by the Company from the
Participant's Compensation as Contributions to the Plan.
Each Subscription Agreement shall constitute the
Employee's (i) election to participate in the Plan for
all subsequent Offering Periods until such time as (1)
the Company has received notice of termination of
participation from such Employee pursuant to Section 10,
(2) a new Subscription Agreement designating a different
level of participation is delivered to the Company by
such Employee or (3) such Employee's termination of
employment, and (ii) authorization for the Company to
withhold (in the manner determined by the Company or the
applicable Subsidiary) any taxes that are required to be
withheld by the Company or the
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applicable Subsidiary due to the Employee's participation
in the Plan or the exercise of any Option or purchase of
any Common Stock under the Plan.
(b) Payroll deductions with respect to each Participant shall
commence on the first payday following the first Offering
Date following the Company's receipt of the applicable
Subscription Agreement and shall end on the last payday
on or prior to the termination of such Employee's
employment with the Company, unless sooner terminated by
the participant as provided in Section 10, provided that,
payroll deductions will begin on the first pay period
commencing after the delivery of a Subscription Agreement
for Participants who join the Plan during the initial
Offering Period. To the extent that the Participant
elects to have a percentage of his or her compensation
deducted, payroll deductions shall automatically be
increased or decreased to reflect changes in Compensation
during such Offering Period, but a Participant shall not
otherwise be entitled to increase or decrease his or her
contribution rate during an Offering Period.
6. METHOD OF PAYMENT OF CONTRIBUTIONS.
(a) The Participant shall elect to have payroll deductions
made on each payday during the Offering Period either (1)
in a whole percentage amount of between one percent (1%)
and not more than ten percent (10%) of such Participant's
Compensation on each such payday or (2) in a whole dollar
amount (that shall be not less than $5.00 and not more
than an amount equal to 10% of such Participant's
Compensation) of such Participant's Compensation on each
such payday, provided that the aggregate of such payroll
deductions during the Offering Period shall not exceed
ten percent (10%) of the Participant's aggregate
Compensation during said Offering Period. All payroll
deductions made with respect to a Participant shall be
credited to his or her Plan Account. A Participant may
not make any additional payments into his or her Plan
Account or Investment Account.
(b) A Participant may discontinue his or her participation in
the Plan as provided in Section 10. A Participant may
increase or decrease the rate of his or her Contributions
for future Offering Periods by completing and filing with
the Company a new Subscription Agreement no later than
fifteen (15) calendar days prior to the beginning of the
Offering Period for which such change will become
effective. Subject to the prior sentence, the change in
rate shall be effective as of the first pay period ending
in the first new Offering Period following the date of
filing of the new Subscription Agreement.
7. GRANT OF OPTION. On the Offering Date of each Offering
Period, each eligible Employee participating in such Offering Period shall be
granted an option to purchase on the Exercise Date during such Offering
Period a number of shares of Common Stock determined by dividing such
Employee's Contributions accumulated during such Offering Period prior to
such Exercise Date and retained in the Participant's Plan Account
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as of the Exercise Date by eighty-five percent (85%) of the closing price of
the Common Stock as determined from the New York Stock Exchange Consolidated
Transaction Tape on the Exercise Date or, if there were no sales of Common
Stock on such date, on the next preceding date on which such closing price
was recorded.
8. EXERCISE OF OPTION. Unless a Participant withdraws from
the Plan as provided in Section 10, each Participant's option for the
purchase of shares for a particular Offering Period will be exercised
automatically on the Exercise Date of such Offering Period, and the maximum
number of whole and fractional shares subject to option will be purchased for
the Participant at the price described in Section 7 with the Contributions
which were made to the Participant's Plan Account during such Offering
Period. The shares of Common Stock purchased upon exercise of an option
hereunder shall be deemed to be transferred to the Participant on the
Exercise Date. A Participant's option to purchase shares of Common Stock
hereunder will be exercised only during the Participant's lifetime.
9. DELIVERY. As promptly as reasonably practicable
following each Exercise Date, the Company shall cause the shares purchased by
each Participant to be credited to such Participant's Investment Account.
The Company will deliver to the Brokerage Firm or its nominee a stock
certificate or other evidence representing all of the full and fractional
shares that are to be allocated to the Participant's Investment Accounts,
rounded up to the nearest full share (and taking into account any excess
shares or fractional shares which are then held by the Brokerage Firm from
prior deliveries). Notwithstanding the prior sentence, in lieu of rounding
the number of shares up to the nearest full share, the Company may round down
to the nearest full share and pay to the Brokerage Firm an amount in cash
equal to the value of the fractional share that would otherwise be delivered.
Upon termination of the plan, the Brokerage Firm will redeliver to the
Company all shares (including fractional shares) of Common Stock that are not
allocated to Investment Accounts.
10. WITHDRAWAL; TERMINATION OF EMPLOYMENT.
(a) A Participant may withdraw all but not less than all the
Contributions credited to his or her Plan Account, which
have not been applied to the purchase of Common Stock,
prior to the Exercise Date of the Offering Period, by
giving written notice to the Company (a "Participation
Termination Notice") not less than ten (10) calendar days
prior to the Exercise Date of such Offering Period. Any
Participation Termination Notice delivered subsequent to
the tenth calendar day prior to any Exercise Date shall
not be effective during the Offering Period during which
it was delivered, but will be effective as of the first
day of the immediately succeeding Offering Period. Upon
the effectiveness of an Employee's Participation
Termination Notice, all of the Participant's
Contributions credited to his or her Plan Account, which
have not been applied to the Purchase of Common Stock,
and any taxes that the Company or a Designated Subsidiary
withheld in connection therewith, will be paid promptly
to the Participant, without interest, and his or her
outstanding option will automatically terminate. An
Employee who terminates his or her participation in the
Plan will not be again eligible to participate in the
Plan until the
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commencement of the first Offering Period following the
expiration of the Offering Period during which the
Participant's Participation Termination Notice becomes
effective.
(b) Upon termination of a Participant's Continuous Status as
an Employee prior to the Exercise Date of the then
current Offering Period for any reason, including
retirement or death, the Contributions credited to his or
her Plan Account, together with all taxes that the
Company or a Designated Subsidiary has withheld in
connection therewith, will be returned to him or her or,
in the case of his or her death, to the person or persons
entitled thereto under Section 14, without interest, and
his or her outstanding option and future participation in
the Plan will automatically terminate.
(c) Other than as set forth in Section 10(a), a Participant's
withdrawal from the Plan, whether voluntary or
involuntary, will not affect his or her eligibility to
participate in the Plan in the future should he or she
again qualify for participation or in any similar plan
which may hereafter be adopted by the Company.
11. INTEREST. No interest shall accrue on the Contributions of a
Participant in the plan or any taxes withheld in connection therewith.
12. STOCK.
(a) The maximum number of shares of Common Stock which shall
be made available for sale under the Plan shall be
200,000 shares or such other number of shares as may,
from time to time, be determined in the sole discretion
of the Board, subject, however, to adjustment upon
changes in capitalization of the Company as provided in
Section 18. Such shares shall be reserved from the
Company's authorized but unissued shares and/or treasury
shares that are not otherwise reserved for issuance under
any other plan or with respect to any convertible
security. If the total number of shares which would
otherwise be subject to options granted pursuant to
Section 7 hereof on the Offering Date of an Offering
Period exceeds the number of shares then available under
the Plan (after deduction of all shares for which options
have been exercised or are then outstanding), the
Committee shall make a pro rata allocation of the shares
remaining available for option grants in as uniform a
manner as shall be practicable and as it shall determine
to be equitable. Any amounts remaining in a
Participant's Plan Account not applied to the purchase of
Common Stock pursuant to this Section 12 shall be
refunded on or promptly after the applicable Exercise
Date. In such event, the Company shall give written
notice of such reduction of the number of shares subject
to the option to each Employee affected thereby and shall
cease future withholdings and Contributions under the
Plan. Only the number of shares that are issued pursuant
to exercised Options shall reduce the number of shares
available under the Plan. Shares that become subject to
Options which are later terminated shall again be
available under the Plan.
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(b) Participants will have no interest (including any
interest in any ordinary or special dividends) or voting
right in shares of Common Stock that are subject to any
option until such option has been exercised.
(c) Upon the written request of the Employee delivered to the
Brokerage Firm, the Brokerage Firm will (i) have a share
certificate issued for any number of whole shares held in
the Employees Investment Account as of the date of such
notice and, (ii) if the Employee is no longer
participating in the Plan, pay to the Employee in cash an
amount equal to the value of any fractional shares held
in the Employee's Investment Account as of the date of
such notice. Upon termination of an Employee's
employment with the Company for any reason, the Company
will (i) cause the Brokerage Firm to have a share
certificate issued for the full number of whole shares
held in the Employee's Investment Account as of the date
of such termination, and (ii) pay to the Employee in
cash an amount equal to the value of any fractional
shares held in the Employee's Investment Account as of
the date of such termination. All amounts to be paid to
an Employee pursuant to this Section 12(c) with respect
to fractional shares shall be determined by reference to
the closing price of the Common Stock determined from the
New York Stock Exchange Consolidated Transaction Tape on
the date of the Employee's notice to the Company or
termination, as applicable, or, if there were no sales of
the Common Stock on such date, on the next preceding day
on which such closing price was recorded. With respect
to the certification and delivery to the Employee of the
shares held in the Employee's Investment Account, the
Company shall pay the fee charged by the Brokeage Firm
for such service for the issuance of not more than four
certificates per Participant in any calendar year.
13. ADMINISTRATION.
(a) Except as otherwise determined by the Board, the
Committee shall administer the Plan. The Committee shall
have the authority in its discretion, subject to and not
inconsistent with the express provisions of the Plan and
the determinations of the Board, to administer the Plan
and to exercise all powers and authorities either
specifically granted to it under the Plan or necessary or
advisable in the administration of the Plan, including,
without limitation, the authority to determine, from time
to time, eligible Employees; to interpret and construe
the Plan and the provisions of the Subscription
Agreements; to prescribe, amend and rescind rules and
regulations relating to the Plan; to determine the terms
and provisions of the Subscription Agreements (which need
not be identical) and to cancel or suspend the
participation of any Employee or group of Employees, and
to make all other determinations deemed necessary or
advisable for the administration of the Plan. The
Committee or the Board may make any modification or
amendment to the Plan that it deems necessary or
advisable in order to implement the Plan in a manner
consistent with any law or regulation applicable to the
Company or any Designated
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Subsidiary. The Committee shall inform all Participants
and Employees eligible to participate in the Plan, who
would be affected thereby, of any such modification or
amendment.
(b) The Board shall fill all vacancies, however caused, in
the Committee. The Board may from time to time appoint
additional members to the Committee, and may at any time
remove one or more Committee members and substitute
others. The Committee may appoint a chairperson and a
secretary and make such rules and regulations for the
conduct of its business as it shall deem advisable, and
shall keep minutes of its meetings. The Committee shall
hold its meetings at such times and places (and its
telephonic meetings at such times) as it shall deem
advisable. The Committee may delegate to one or more of
its members or to one or more agents such administrative
duties as it may deem advisable, and the Committee or any
person to whom it has delegated duties as aforesaid may
employ one or more persons to render advice with respect
to any responsibility the Committee or such person may
have under the Plan. Except to the extent otherwise
determined by the Board, all decisions, determinations
and interpretations of the Committee shall be final and
binding on all persons, including, without limitation,
the Company, the Participants (or any person claiming any
rights under the Plan from or through any Participant)
and any stockholder.
(c) No member of the Board or of the Committee shall be
liable for any action or determination made in good
faith, and the members of the Board or of the Committee
shall be entitled to indemnification and reimbursement in
the manner provided in the Company's Certificate of
Incorporation, as it may be amended from time to time.
14. DESIGNATION OF BENEFICIARY.
(a) A Participant may file a written designation of a
beneficiary who is to receive any shares of Common Stock
and cash, if any, from the Participant's Plan Account or
Investment Account in the event of such Participant's
death by delivering notice of such beneficiary to the
Company. If a Participant is married and the designated
beneficiary is not the spouse, spousal consent shall be
required for such designation to be effective.
(b) The Participant (subject to spousal consent) may change
such designation of beneficiary at any time by written
notice delivered to the Company. In the event of the
death of a Participant and in the absence of a
beneficiary validly designated under the Plan who is
living at the time of such Participant's death, the
Company shall deliver such shares and/or cash to the
executor or administrator of the estate of the
Participant, or if no such executor or administrator has
been appointed (to the knowledge of the Company), the
Company, in its discretion, may deliver such shares
and/or cash to the spouse or to any one or more dependents
or relatives of the Participant,
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or if no spouse, dependent or relative is known to the
Company, then to such other person as the Company may
designate or as may be required by law.
15. TRANSFERABILITY. Neither Contributions credited to a
Participant's Plan Account nor any rights with regard to the exercise of an
option or to receive shares under the Plan may be assigned, transferred,
pledged or otherwise disposed of in any way (other than by will, the laws of
descent and distribution or as provided in Section 14 hereof) by the
Participant. Any such attempt at assignment, transfer, pledge or other
disposition shall be without effect, except that the Company may treat such
act as an election to withdraw funds in accordance with Section 10. No
Contribution made under this Plan or amount representing a Participant's Plan
Account balance shall be subject to execution, attachment or process.
16. USE OF FUNDS. The Participants' rights with respect to
Contributions made to the Plan and the balances, from time to time, in their
respective Plan Accounts shall be those of general creditors of the Company
or of the applicable Designated Subsidiary. All Contributions received or
held by the Company or a Designated Subsidiary under the Plan may be used for
any corporate purpose, and the Company or Designated Subsidiary, as
applicable, shall not be obligated to segregate such Contributions.
17. REPORTS AND FEES OF INVESTMENT ACCOUNTS. Individual
Investment Accounts will be maintained for each Participant. Statements of
account will be given to Participants promptly following each Exercise Date,
which statements will set forth the total amount of Contributions to the Plan
Account during the most recently completed Offering Period, the per share
purchase price and the number of shares purchased on the most recent Exercise
Date, and the total number of shares and fractional shares held in such
Participant's Investment Account. The Company shall pay the annual and any
extraordinary maintenance fees for each Investment Account and the
certification fees referenced in Section 12 above. The Participant will be
responsible for paying all transaction fees and any certification fee not
paid by the Company pursuant to Section 12 hereof.
18. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION.
(a) The number of shares of Common Stock covered by each
unexercised option under the Plan and the number of
shares of Common Stock which have been authorized for
issuance under the Plan but which have not yet been
issued and are not subject of an unexercised option
(collectively, the "Reserves"), as well as the price per
share of Common Stock covered by each option under the
Plan for which the exercise price has been determined but
which has not yet been exercised, shall be
proportionately adjusted for any increase or decrease in
the number of issued shares of Common Stock resulting
from a stock split, reverse stock split, stock dividend,
combination or reclassification of the Common Stock, or
any other increase or decrease in the number of shares of
Common Stock effected without receipt of consideration by
the Company; provided, however, that conversion of any
convertible securities of the Company shall not be deemed
to have been "effected without receipt of consideration".
Such adjustments shall be made by the Board, whose
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determination in that respect shall be final, binding and
conclusive. Except as expressly provided herein, no
issue by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class,
shall affect, and no adjustment by reason thereof shall
be made with respect to, the number or price of shares of
Common Stock subject to an option.
(b) In the event of the proposed dissolution or liquidation
of the Company, the then current Offering Period will
terminate immediately prior to the consummation of such
proposed action, unless otherwise provided by the
Committee. In the event of a proposed sale of all or
substantially all of the assets of the Company, or the
merger of the Company with or into another corporation,
each option under the Plan shall be assumed or an
equivalent option shall be substituted by such successor
corporation or a parent or subsidiary of such successor
corporation, unless the Committee determines, in the
exercise of its sole discretion and in lieu of such
assumption or substitution, to shorten the Offering
Period then in progress by setting a new Exercise Date
(the "New Exercise Date"). If the Committee shortens the
Offering Period then in progress in lieu of assumption or
substitution in the event of a merger or sale of assets,
the Committee shall notify each participant in writing,
at least ten (10) days prior to the New Exercise Date,
that the Exercise Date for his or her option has been
changed to the New Exercise Date and that his or her
option will be exercised automatically on the New
Exercise Date, unless prior to such date he or she has
withdrawn from the Offering Period as provided in Section
10. For purposes of this Section, an option granted
under the Plan shall be deemed to be assumed if,
following the sale of assets or merger, the option
confers the right to purchase, for each share of Common
Stock subject to the option immediately prior to the sale
of assets or merger, the consideration (whether stock,
cash or other securities or property) received in the
sale of assets or merger by holders of Common Stock for
each share of Common Stock held on the effective date of
the transaction (and if such holders were offered a
choice of consideration, the type of consideration chosen
by the holders of a majority of the outstanding shares of
Common Stock).
(c) The Committee may, if it so determines in the exercise of
its sole discretion, also make provision for adjusting
the Reserves, as well as the price per share of Common
Stock covered by each outstanding option, in the event
that the Company effects one or more reorganizations,
recapitalizations, rights offerings or other increases or
reductions of shares of its outstanding Common Stock, and
in the event of the Company being consolidated with or
merged into any other corporation.
19. AMENDMENT OR TERMINATION. The Board may at any time
terminate or amend the Plan. Except as provided in Section 18, no such
termination may affect options previously granted, nor may an amendment make
any change in any option theretofore granted which adversely affects the
rights of any participant.
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20. NOTICES. All notices or other communications by a
participant to the Company under or in connection with the Plan shall be
deemed to have been duly given when received in the form specified by the
Company at the location, or by the person, designated by the Company for the
receipt thereof.
21. CONDITIONS UPON ISSUANCE OF SHARES
(a) Shares shall not be issued with respect to an option
unless the exercise of such option and the issuance and
delivery of such shares pursuant thereto shall comply
with all applicable provisions of law, domestic or
foreign, including, without limitation, the Securities
Act of 1933, as amended (the "Securities Act"), the
Exchange Act, the rules and regulations promulgated
thereunder, and the requirements of any stock exchange
upon which the shares may then be listed, and shall be
further subject to the approval of counsel for the
Company with respect to such compliance.
(b) As a condition to the exercise of an option, the Company
may require the person exercising such option to
represent and warrant at the time of any such exercise
that the shares are being purchased only for investment
and without any present intention to sell or distribute
such shares if, in the opinion of counsel for the
Company, such a representation is required by any of the
aforementioned applicable provisions of law. If the
issuance of any shares of Common Stock pursuant to the
Plan is not so registered under the Securities Act,
certificates for such shares shall bear a legend reciting
the fact that such shares may only be transferred
pursuant to an effective registration statement under the
Securities Act or an opinion of counsel to the Company
that such registration is not required. The Company may
also issue "stop transfer" instructions with respect to
such shares while they are subject to such restrictions.
(c) The Company shall use its best efforts to have the shares
issued under the Plan listed on each securities exchange
on which the Common Stock is then listed as promptly as
possible. The Company shall not be obligated to issue or
sell any shares under the Plan until they have been
listed on each securities exchange on which the Common
Stock is then listed.
(d) The Company will promptly file with the Securities and
Exchange Commission a registration statement on Form S-8
covering the issuance of the shares of Common Stock
pursuant to this Plan, cause such registration statement
to become effective, and keep such registration statement
effective for the period that this Plan is in effect.
22. TERM OF PLAN. The Plan became effective upon its
adoption by the Board on May 22, 1997 and shall continue in effect until the
earliest to occur of (i) purchase of all shares of Common Stock subject to
the Plan, (ii) May 22, 2007, and (iii) the date the Plan is terminated
pursuant to Section 19.
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23. GOVERNING LAW. To the extent that federal laws do not
otherwise control, the Plan shall be construed in accordance with and
governed by the laws of the State of Delaware.
24. SAVINGS CLAUSE. This Plan is intended to comply in
all aspects with applicable laws and regulations. In case any one or more of
the provisions of this Plan shall be held invalid, illegal or unenforceable
in any respect under applicable law and regulations, the validity, legality
and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby and the invalid, illegal or unenforceable
provisions shall be deemed null and void; however, to the extent permissible
by law, any provision which could be deemed null and void shall first be
construed, interpreted or revised retroactively to permit this Plan to be
construed in compliance with all applicable laws so as to foster the intent
of this Plan.
* * * * * *
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HEXCEL CORPORATION
INCENTIVE STOCK PLAN,
AS AMENDED AND RESTATED JANUARY 30, 1997
I. PURPOSE
This Incentive Stock Plan, as approved by the stockholders of the
Corporation on February 21, 1996, combined the Hexcel Corporation Long-Term
Incentive Plan and the Hexcel Corporation 1995 Directors' Stock Option Plan
and, subject to approval by the stockholders of the Corporation, is now
amended and restated herein (as so amended and restated, the "Plan"). The
Plan is intended to attract, retain and provide incentives to Employees,
officers, Directors and consultants of the Corporation, and to thereby
increase overall stockholders' value. The Plan generally provides for the
granting of stock, stock options, stock appreciation rights, restricted
shares, other stock-based awards or any combination of the foregoing to the
eligible participants.
II. DEFINITIONS
(a) "Award" includes, without limitation, stock options (including
Director Options and incentive stock options within the meaning of Section
422(b) of the Code) with or without stock appreciation rights, dividend
equivalent rights, stock awards, restricted share awards, or other awards
that are valued in whole or in part by reference to, or are otherwise based
on, the Common Stock ("other Common Stock-based Awards"), all on a
stand-alone, combination or tandem basis, as described in or granted under
this Plan.
(b) "Award Agreement" means a written agreement setting forth the
terms and conditions of each Award made under this Plan.
(c) "Beneficial Owner" (and variants thereof) shall have the
meaning given in Rule 13d-3 promulgated under the Exchange Act.
(d) "Board" means the Board of Directors of the Corporation.
(e) "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.
(f) "Code" means the Internal Revenue Code of 1986, as amended from
time to time.
<PAGE>
(g) "Committee" means the Executive Compensation Committee of the
Board or such other committee of the Board as may be designated by the Board
from time to time to administer this Plan.
(h) "Common Stock" means the $.01 par value common stock of the
Corporation.
(i) "Corporation" means Hexcel Corporation, a Delaware corporation.
(j) "Director" means a member of the Board.
(k) "Director Option" means a stock option granted pursuant to
Section VII hereof to a Director.
(l) "Director Optionee" means a recipient of an Award of a Director
Option.
(m) "Employee" means an employee of the Corporation or a Subsidiary.
(n) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(o) "Fair Market Value" means the closing price for the Common
Stock as reported in publications of general circulation from the New York
Stock Exchange Consolidated Transactions Tape on such date, or, if there were
no sales on the valuation date, on the next preceding date on which such
closing price was recorded; provided, however, that the Committee may specify
some other definition of Fair Market Value in good faith with respect to any
particular Award.
(p) "Governance Agreement" shall have the meaning given in the
Strategic Alliance Agreement.
(q) "Participant" means an Employee, officer, Director or
consultant who has been granted an Award under the Plan.
(r) "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.
(s) "Plan Year" means a calendar year.
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(t) "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.
(u) "Subsidiary" means any corporation or other entity, whether
domestic or foreign, in which the Corporation has or obtains, directly or
indirectly, a proprietary interest of more than 50% by reason of stock
ownership or otherwise.
III. ELIGIBILITY
Any Employee, officer, Director or consultant of the Corporation or
Subsidiary selected by the Committee is eligible to receive an Award pursuant
to Section VI hereof. Additionally, Directors described in Section VII(a)
hereof are eligible to receive Awards of Director Options pursuant to Section
VII.
IV. PLAN ADMINISTRATION
(a) Except as otherwise determined by the Board, the Plan shall be
administered by the Committee. The Board, or the Committee to the extent
determined by the Board, shall periodically make determinations with respect
to the participation of Employees, officers, Directors and consultants in the
Plan and, except as otherwise required by law or this Plan, the grant terms
of Awards, including vesting schedules, price, restriction or option period,
dividend rights, post-retirement and termination rights, payment alternatives
such as cash, stock, contingent awards or other means of payment consistent
with the purposes of this Plan, and such other terms and conditions as the
Board or the Committee deems appropriate which shall be contained in an Award
Agreement with respect to a Participant.
(b) The Committee shall have authority to interpret and construe
the provisions of the Plan and any Award Agreement and make determinations
pursuant to any Plan provision or Award Agreement which shall be final and
binding on all persons. No member of the Committee shall be liable for any
action or determination made in good faith, and the members shall be entitled
to indemnification and reimbursement in the manner provided in the
Corporation's Certificate of Incorporation, as it may be amended from time to
time.
The Committee shall have the authority at the time of the grant of any
Award to provide for the conditions and circumstances under which such Award
shall be forfeited. The Committee shall have the authority to accelerate the
vesting of any Award and the time at which any Award becomes exercisable.
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V. CAPITAL STOCK SUBJECT TO THE PROVISIONS OF THIS PLAN
(a) The capital stock subject to the provisions of this Plan shall
be shares of authorized but unissued Common Stock and shares of Common Stock
held as treasury stock. Subject to adjustment in accordance with the
provisions of Section XI, and subject to Section V(c) below, the maximum
number of shares of Common Stock that shall be available for grants of Awards
under this Plan shall be 4,012,533 (the number of shares remaining available
under the Incentive Stock Plan immediately prior to its amendment and
restatement on January 30, 1997 plus 3,850,000 additional shares).
(b) The grant of a restricted share Award shall be deemed to be
equal to the maximum number of shares which may be issued under the Award.
Awards payable only in cash will not reduce the number of shares available
for Awards granted under the Plan.
(c) There shall be carried forward and be available for Awards
under the Plan, in addition to shares available for grant under paragraph (a)
of this Section V, all of the following: (i) shares represented by Awards
which are cancelled, forfeited, surrendered, terminated, paid in cash or
expire unexercised; and (ii) the excess amount of variable Awards which
become fixed at less than their maximum limitations.
VI. DISCRETIONARY AWARDS UNDER THIS PLAN
As the Board or Committee may determine, the following types of
Awards and other Common Stock-based Awards may be granted under this Plan on
a stand-alone, combination or tandem basis:
(A) STOCK OPTION. A right to buy a specified number of shares of
Common Stock at a fixed exercise price during a specified time, all as the
Committee may determine.
(B) INCENTIVE STOCK OPTION. An Award which may be granted only to
Employees in the form of a stock option which shall comply with the
requirements of Code Section 422 or any successor section as it may be
amended from time to time. The exercise price of any incentive stock option
shall not be less than 100% of the Fair Market Value of the Common Stock on
the date of grant of the incentive stock option Award. Subject to adjustment
in accordance with the provisions of Section XI, the aggregate number of
shares which may be subject to incentive stock option Awards under this Plan
shall not exceed the maximum number of shares provided in paragraph (a) of
Section V above. To the extent that the aggregate Fair
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Market Value of Common Stock with respect to which options intended to be
incentive stock options are exercisable for the first time by any individual
during any calendar year exceeds $100,000, such options shall be treated as
options which are not incentive stock options.
(C) STOCK OPTION IN LIEU OF COMPENSATION ELECTION. A right given
with respect to a year to a Director, officer or key Employee to elect to
exchange annual retainers, fees or compensation for stock options.
(D) STOCK APPRECIATION RIGHT. A right which may or may not be
contained in the grant of a stock option or incentive stock option to receive
the excess of the Fair Market Value of a share of Common Stock on the date
the option is surrendered over the option exercise price or other specified
amount contained in the Award Agreement.
(E) RESTRICTED SHARES. A transfer of Common Stock to a Participant
subject to forfeiture until such restrictions, terms and conditions as the
Committee may determine are fulfilled.
(F) DIVIDEND OR EQUIVALENT. A right to receive dividends or their
equivalent in value in Common Stock, cash or in a combination of both with
respect to any new or previously existing Award.
(G) STOCK AWARD. An unrestricted transfer of ownership of Common
Stock.
(H) OTHER STOCK-BASED AWARDS. Other Common Stock-based Awards
which are related to or serve a similar function to those Awards set forth in
this Section VI.
VII. FORMULA AWARDS UNDER THIS PLAN
In addition to discretionary Awards (including, without limitation,
options) that may be granted to Directors pursuant to Section VI hereof,
Director Options shall be granted as provided below:
(A) GRANTS OF DIRECTOR OPTIONS.
(i) As of April 4, 1995, each Director shall be granted an
Option to acquire 40,000 shares of Common Stock upon the terms and subject to
the conditions set forth in the Plan and this Section VII. With respect to
any individual who becomes a Director and who is not also a full-time
employee of the Corporation or any Subsidiary (provided such individual has
not previously received
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a grant pursuant to this Section VII(a)(i)), such individual shall be granted
as of the date of his election or appointment as a Director a Director Option
to acquire (x) 40,000 shares of Common Stock if elected or appointed between
April 4, 1995 and December 31, 1996 inclusive or, (y) 20,000 shares of
Common Stock if elected or appointed on or after January 1, 1997, upon the
terms and subject to the conditions set forth in the Plan and this Section
VII.
(ii) On April 4, 1996 and immediately after each annual
meeting of stockholders of the Corporation held after January 1, 1997 and
before February 7, 2005, each person who is not on such date also a full-time
employee of the Corporation or any Subsidiary and who (x) is a Director on
April 4, 1996 or (y) has been re-elected at such meeting, shall be granted a
Director Option to acquire 2,000 shares of Common Stock upon the terms and
subject to the conditions set forth in the Plan and this Section VII.
(iii) If on any date when Options are to be granted
pursuant to Section VII(a)(i) or (ii) the total number of shares of Common
Stock as to which Director Options are to be granted exceeds the number of
shares of Common Stock remaining available under the Plan, there shall be a
PRO RATA reduction in the number of shares of Common Stock as to which each
Director Option is granted on such day.
(B) TERMS OF DIRECTOR OPTIONS.
The terms of each Director Option granted under this Section VII
shall be determined by the Board consistent with the provisions of the Plan,
including the following:
(i) The purchase price of the shares of Common Stock subject
to each Director Option shall be equal to the Fair Market Value of such
shares on the date such option is granted.
(ii) Each Director Option shall be exercisable as to one-third
of the shares subject thereto immediately upon the grant of the option and as
to an additional one-third of such shares on the first and second
anniversaries of the date of such grant.
(iii) Shares of Common Stock obtained upon exercise of a
Director Option may not be sold until six months after the date such option
was granted.
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(iv) Each Director Option shall expire ten years after the
granting thereof. Each Director Option shall be subject to earlier
expiration as expressly provided in Section VII(c) hereof.
(C) DISABILITY, DEATH OR TERMINATION OF DIRECTOR STATUS; CHANGE IN
CONTROL.
(i) If a Director Optionee ceases to be a Director for any
reason other than his disability or death, each Director Option held by him
to the extent exercisable on the effective date of his ceasing to be a
Director shall remain exercisable until the earlier to occur of (i) the first
anniversary of such effective date and (ii) the expiration of the stated term
of the Director Option; PROVIDED, HOWEVER, that if the Director Optionee is
removed, withdraws or otherwise ceases to be a Director due to his fraud,
dishonesty or intentional misrepresentation in connection with his duties as
a Director or his embezzlement, misappropriation or conversion of assets or
opportunities of the Corporation or any Subsidiary, all unexercised Director
Options held by the Director Optionee shall expire forthwith. Each Director
Option held by the Director Optionee to the extent not exercisable on the
effective date of his ceasing to be a Director for any reason other than his
disability or death shall expire forthwith.
(ii) If a Director Optionee ceases to be a Director as a result
of his disability or death, each Director Option held by him to the extent
that the Director Option is exercisable on the effective date of his ceasing
to be a Director shall remain exercisable by the Director Optionee or the
Director Optionee's executor, administrator, legal representative or
beneficiary, as the case may be, until the earlier to occur of (x) the third
anniversary of such effective date and (y) the expiration of the stated term
of the Director Option. Each Director Option held by the Director Optionee to
the extent not exercisable on the effective date of his ceasing to be a
Director as a result of his disability or death shall expire forthwith.
(iii) In the event of a Change in Control (as hereinafter
defined) while a Director Optionee is a Director, each Director Option held
by the Director Optionee to the extent not then exercisable shall thereupon
become exercisable. If a Change in Control occurs on or before the effective
date of a Director Optionee's ceasing to be a Director, the provisions of
this subsection (iii) shall govern with respect to the exercisability of the
Director Options held by him as of the date on which the Director Optionee
ceases to be a Director and the provisions of subsection (i) or (ii) of this
Section VII(c) shall govern with respect to the period of time during which
such Director Options shall remain exercisable. For purposes of this
subsection (iii), "Change in Control" shall mean any of the following events:
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(1)(a) any Person 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 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 January 30, 1997, 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 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,
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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.
VIII. AWARD AGREEMENTS
Each Award under the Plan shall be evidenced by an Award Agreement
setting forth the terms and conditions of the Award and executed by the
Corporation and Participant.
IX. OTHER TERMS AND CONDITIONS
(A) ASSIGNABILITY. Unless provided to the contrary in any Award,
no Award shall be assignable or transferable except by will, by the laws of
descent and distribution and during the lifetime of a Participant, the Award
shall be exercisable only by such Participant. No Award granted under the
Plan shall be subject to execution, attachment or process.
(B) TERMINATION OF EMPLOYMENT OR OTHER RELATIONSHIP. Except as
provided in Section VII(c) with respect to Director Options, the Committee
shall determine the disposition of the grant of each Award in the event of
the retirement, disability, death or other termination of a Participant's
employment or other relationship with the Corporation or a Subsidiary.
(C) RIGHTS AS A STOCKHOLDER. A Participant shall have no rights as
a stockholder with respect to shares covered by an Award until the date the
Participant is the holder of record. No adjustment will be made for
dividends or other rights for which the record date is prior to such date.
(D) NO OBLIGATION TO EXERCISE. The grant of an Award shall impose no
obligation upon the Participant to exercise the Award.
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(E) PAYMENTS BY PARTICIPANTS. The Committee may determine that
Awards for which a payment is due from a Participant may be payable: (i) in
U.S. dollars by personal check, bank draft or money order payable to the
order of the Corporation, by money transfers or direct account debits; (ii)
through the delivery or deemed delivery based on attestation to the ownership
of shares of Common Stock with a Fair Market Value equal to the total payment
due from the Participant; (iii) pursuant to a "cashless exercise" program if
established by the Corporation; (iv) by a combination of the methods
described in (i) through (iii) above; or (v) by such other methods as the
Committee may deem appropriate.
(F) WITHHOLDING. Except as otherwise provided by the Committee,
(i) the deduction of withholding and any other taxes required by law will be
made from all amounts paid in cash and (ii) in the case of payments of Awards
in shares of Common Stock, the Participant shall be required to pay the
amount of any taxes required to be withheld prior to receipt of such stock,
or alternatively, a number of shares the Fair Market Value of which equals
the amount required to be withheld may be deducted from the payment.
(G) MAXIMUM AWARDS. The maximum number of shares of Common Stock
that may be issued to any single Participant pursuant to options under this
Plan is equal to the maximum number of shares provided for in paragraph (a)
of Section V.
X. TERMINATION, MODIFICATION AND AMENDMENTS
(a) The Executive Compensation Committee may at any time terminate
the Plan or from time to time make such modifications or amendments of the
Plan as it may deem advisable; provided, however, that no amendments to the
Plan which require stockholder approval under applicable law, rule or
regulation shall become effective unless the same shall be approved by the
requisite vote of the Corporation's stockholders.
(b) No termination, modification or amendment of the Plan may
adversely affect the rights conferred by an Award without the consent of the
recipient thereof.
(c) Notwithstanding anything herein to the contrary, the provisions
of Section VII shall not be amended more than once every six months, other than
to comport with changes in the Code, the Employee Retirement Income Security
Act, or the rules thereunder.
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XI. RECAPITALIZATION
The aggregate number of shares of Common Stock as to which Awards
may be granted to Participants, the number of shares thereof covered by each
outstanding Award, and the price per share thereof in each such Award, shall
all 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 receipt of
consideration by the Corporation, or other change in corporate or capital
structure; provided, however, that any fractional shares resulting from any
such adjustment shall be eliminated. The Committee shall also make the
foregoing changes and any other changes, including changes in the classes of
securities available, to the extent it is deemed necessary or desirable to
preserve the intended benefits of the Plan for the Corporation and the
Participants in the event of any other reorganization, recapitalization,
merger, consolidation, spin-off, extraordinary dividend or other distribution
or similar transaction.
XII. NO RIGHT TO EMPLOYMENT
Except as provided in Section VII with respect to Director Options,
no person shall have any claim or right to be granted an Award, and the grant
of an Award shall not be construed as giving a Participant the right to be
retained in the employ of, or in the other relationship with, the Corporation
or a Subsidiary. Further, the Corporation and each Subsidiary expressly
reserve the right at any time to dismiss a Participant free from any
liability, or any claim under the Plan, except as provided herein or in any
Award Agreement issued hereunder.
XIII. GOVERNING LAW
To the extent that federal laws do not otherwise control, the Plan
shall be construed in accordance with and governed by the laws of the State
of Delaware.
XIV. SAVINGS CLAUSE
This Plan is intended to comply in all aspects with applicable laws
and regulations. In case any one more of the provisions of this Plan shall
be held invalid, illegal or unenforceable in any respect under applicable law
and regulation, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby and the
invalid, illegal or unenforceable provision shall be deemed null and void;
however, to the extent permissible by law, any provision which could be
deemed null and void shall first be construed, interpreted
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or revised retroactively to permit this Plan to be construed in compliance
with all applicable laws so as to foster the intent of this Plan.
XV. EFFECTIVE DATE AND TERM
The Hexcel Corporation Incentive Stock Plan is amended and restated
herein on January 30, 1997. The effectiveness of such amendment and
restatement is subject to approval by stockholders of the Corporation.
AWARDS GRANTED UNDER THE AMENDED AND RESTATED PLAN PRIOR TO SUCH
APPROVAL BY THE STOCKHOLDERS SHALL BE SUBJECT TO SUCH APPROVAL. THE PLAN
SHALL TERMINATE ON FEBRUARY 8, 2005. NO AWARDS SHALL BE GRANTED AFTER THE
TERMINATION OF THE PLAN.
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EMPLOYEE OPTION AGREEMENT
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
<PAGE>
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, (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).
<PAGE>
5 ADJUSTMENT UPON CHANGES IN CAPITALIZATION.
(a) The aggregate number of Option Shares and the Purchase Price shall be
appropriately adjusted by the Committee for any increase or decrease in the
number of issued shares of Common Stock resulting from a subdivision or
consolidation of shares or other capital adjustment, or the payment of a
stock dividend or other increase or decrease in such shares, effected
without receipt of consideration by the Corporation, or other change in
corporate or capital structure. The Committee shall also make the
foregoing changes and any other changes, including changes in the classes
of securities available, to the extent reasonably necessary or desirable to
preserve the intended benefits under this Employee Option Agreement in the
event of any other reorganization, recapitalization, merger, consolidation,
spin-off, extraordinary dividend or other distribution or similar
transaction involving the Corporation.
(b) Any adjustment under this Section 5 in the number of Option Shares and
the Purchase Price shall apply to only the unexercised portion of the
Option. If fractions of a share would result from any such adjustment, the
adjustment shall be rounded down to the nearest whole number of shares.
6 METHOD OF EXERCISING OPTION AND WITHHOLDING.
(a) The Option shall be exercised by the delivery by the Optionee to the
Corporation at its principal office (or at such other address as may be
established by the Committee) of written notice of the number of Option
Shares with respect to which the Option is exercised, accompanied by
payment in full of the aggregate Purchase Price for such Option Shares.
Payment for such Option Shares shall be made (i) in U.S. dollars by
personal check, bank draft or money order payable to the order of the
Corporation, or by money transfers or direct account debits to an account
designated by the Corporation; (ii) through the delivery of shares of
Common Stock with a Fair Market Value equal to the total payment due from
the Optionee; (iii) pursuant to a "cashless exercise" program if such a
program is established by the Corporation; or (iv) by any combination of
the methods described in (i) through (iii) above.
(b) The Corporation's obligation to deliver shares of Common Stock upon
the exercise of the Option shall be subject to the payment by the Optionee
of applicable federal, state and local withholding tax, if any. The
Corporation shall, to the extent permitted by law, have the right to deduct
from any payment of any kind otherwise due to the Optionee any federal,
state or local taxes required to be withheld with respect to such payment.
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7 TRANSFER. Except as provided in this Section 7, the Option is not
transferable otherwise than by will or the laws of descent and distribution,
and the Option may be exercised during the Optionee's lifetime only by the
Optionee. Any attempt to transfer the Option in contravention of this Section
7 is void AB INITIO. The Option shall not be subject to execution,
attachment or other process. Notwithstanding the foregoing, the Optionee
shall be permitted to transfer the Option to members of his or her immediate
family (I.E., children, grandchildren or spouse), trusts for the benefit of
such family members, and partnerships whose only partners are such family
members; provided, however, that no consideration can be paid for the
transfer of the Option and the transferee of the Option shall be subject to
all conditions applicable to the Option prior to its transfer.
8 NO RIGHTS IN OPTION SHARES. The Optionee shall have none of the rights of
a stockholder with respect to the Option Shares unless and until shares of
Common Stock are issued upon exercise of the Option.
9 NO RIGHT TO EMPLOYMENT. Nothing contained herein shall be deemed to confer
upon the Optionee any right to remain as an employee of the Corporation.
10 GOVERNING LAW/JURISDICTION. This Employee Option Agreement shall be
governed by and construed in accordance with the laws of the State of Delaware
without reference to principles of conflict of laws.
11 RESOLUTION OF DISPUTES. Any disputes arising under or in connection with
this Employee Option Agreement shall be resolved by binding arbitration before a
single arbitrator, to be held in New York in accordance with the commercial
rules and procedures of the American Arbitration Association. Judgment upon the
award rendered by the arbitrator shall be final and subject to appeal only to
the extent permitted by law. Each party shall bear such party's own expenses
incurred in connection with any arbitration; PROVIDED, HOWEVER, that the cost of
the arbitration, including without limitation, reasonable attorneys' fees of the
Optionee, shall be borne by the Corporation in the event the Optionee is the
prevailing party in the arbitration. Anything to the contrary notwithstanding,
each party hereto has the right to proceed with a court action for injunctive
relief or relief from violations of law not within the jurisdiction of an
arbitrator.
12 NOTICES. Any notice required or permitted under this Employee Option
Agreement shall be deemed given when delivered personally, or when deposited in
a United States Post Office, postage prepaid, addressed, as appropriate, to the
Optionee at the last address specified in Optionee's employment records, or such
other address as the Optionee may designate in writing to the Corporation, or to
the Corporation, Attention: Corporate Secretary, or such other address as the
Corporation may designate in writing to the Optionee.
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<PAGE>
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 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
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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 the then outstanding securities entitled to vote generally in
the election of directors of such corporation than does Ciba; or
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(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 "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended from time to time;
(VII) the term "Good Reason" for termination by the Optionee of the
Optionee's employment shall mean the occurrence (without the Optionee's
express written consent) of any one of the following acts by the
Corporation, or failures by the Corporation to act, unless, in the case of
any act or failure to act described in paragraphs (1), (5) or (6) below,
such act or failure to act is corrected prior to the date of termination of
the Optionee's employment:
(1) a significant adverse alteration in the nature or
status of the Optionee's responsibilities, position or authority from
those in effect immediately prior to the Change in Control;
(2) a reduction by the Corporation in the Optionee's annual
base salary as in effect on the date hereof or as the same may be
increased from time to time;
(3) the relocation of the Optionee's principal place of
employment to a location more than fifty (50) miles from the
Optionee's principal place of employment immediately prior to the
Change in Control or the Corporation's requiring the Optionee to work
anywhere other than at such principal place of employment (or
permitted relocation thereof) except for required travel on the
Corporation's business to an extent substantially consistent with the
Optionee's present business travel obligations;
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<PAGE>
(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.
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
8
<PAGE>
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.
9
<PAGE>
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.
- -----------------------------------------------------------------------------
Optionee
- -----------------------------------------------------------------------------
Address of Optionee
- -----------------------------------------------------------------------------
Employee Number
- -----------------------------------------------------------------------------
Employee ID Number
- -----------------------------------------------------------------------------
Foreign Sub Plan, if applicable
- -----------------------------------------------------------------------------
Grant Date
- -----------------------------------------------------------------------------
Purchase Price
- -----------------------------------------------------------------------------
Aggregate Number of Shares Granted (the "Option Shares")
- -----------------------------------------------------------------------------
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:
-------------------------------
<PAGE>
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
<PAGE>
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
2
<PAGE>
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-
3
<PAGE>
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
4
<PAGE>
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
5
<PAGE>
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
6
<PAGE>
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.
7
<PAGE>
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.
- -----------------------------------------------------------------------------
Grantee
- -----------------------------------------------------------------------------
Address of Grantee
- -----------------------------------------------------------------------------
Employee Number
- -----------------------------------------------------------------------------
Employee ID Number
- -----------------------------------------------------------------------------
Foreign Sub Plan, if applicable
- -----------------------------------------------------------------------------
Grant Date
- -----------------------------------------------------------------------------
Aggregate Number of PARS Granted
- -----------------------------------------------------------------------------
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
- ----------------------------------
Grantee By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
8
<PAGE>
PERFORMANCE ACCELERATED STOCK OPTION AGREEMENT
For
Director
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 Option Agreement, and this 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").
<PAGE>
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
----------- ----------
2nd 15%
3rd 15%
4th 15%
5th 15%
6th 15%
7th 10%
8th 10%
9th 5%
(c) ACCELERATED VESTING BASED ON SHARE PRICE. Notwithstanding Section
4(b) hereof, if, on or before the third anniversary of the Grant Date, the
closing price of Company common stock 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.
(d) TERMINATION OF SERVICE AS DIRECTOR; CHANGE IN CONTROL. (i) Except as
provided in Section 4(d)(ii) hereof, if the Optionee's service as a member
of the Board is terminated for any reason, the Option (to the extent then
vested) may be exercised at any time within one year 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.
<PAGE>
(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 period 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, if the
Optionee's service as a member of the Board is terminated within two years
after the Change in Control for any reason.
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 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.
3
<PAGE>
(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 CONTINUED SERVICE AS DIRECTOR. Nothing contained herein
shall be deemed to confer upon the Optionee any right to continue to serve as
a member of the Board.
10 GOVERNING LAW/JURISDICTION. This 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 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.
4
<PAGE>
12 NOTICES. Any notice required or permitted under this 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 records with the Corporation, 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 Option Agreement shall in no way be
construed to be a waiver of such provision or of any other provision hereof.
14 COUNTERPARTS. This 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 Option Agreement cannot be changed or terminated
orally. This 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 "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
5
<PAGE>
referred to as the "Incumbent Directors") cease for any reason to
constitute at least a majority of the Board; PROVIDED, HOWEVER, for
purposes of this definition, that any individual who becomes a
director subsequent to such effective date, whose election, or
nomination for election by the Corporation's stockholders, was made or
approved pursuant to the Governance Agreement (as defined in this
Section) or by a vote of at least a majority of the Incumbent
Directors (or directors whose election or nomination for election was
previously so approved) shall be considered a member of the Incumbent
Board; but, PROVIDED, FURTHER, that any such individual whose initial
assumption of office occurs as a result of either an actual or
threatened election contest (as such terms are used in Rule 14a-11 of
Regulation 14A promulgated under the Exchange Act) or other actual or
threatened solicitation of proxies or consents by or on behalf of a
person or legal entity other than the Board shall not be considered a
member of the Incumbent Board; or
(3) the approval by the stockholders of the Corporation of a
reorganization, merger or consolidation or sale or other disposition
of all or substantially all of the assets of the Corporation
("Corporate Transaction"); excluding, however, such a Corporate
Transaction (a) pursuant to which all or substantially all of the
individuals and entities who are the beneficial owners, respectively,
of the Outstanding Common Stock and Total Voting Power immediately
prior to such Corporate Transaction will beneficially own, directly or
indirectly, more than 50%, respectively, of the outstanding common
stock and the combined voting power of the then outstanding securities
entitled to vote generally in the election of directors of the company
resulting from such Corporate Transaction (including, without
limitation, a corporation which as a result of such transaction owns
the Corporation or all or substantially all of the Corporation's
assets either directly or through one or more subsidiaries) in
substantially the same proportions as their ownership immediately
prior to such Corporate Transaction of the Outstanding Common Stock
and Total Voting Power, as the case may be, or (b) after which no
Person beneficially owns a greater percentage of the combined voting
power of the then outstanding securities entitled to vote generally in
the election of directors of such corporation than does Ciba; or
(4) Ciba shall become the Beneficial Owner of more than 57.5% of
the Total Voting Power; or
(5) the approval by the stockholders of the Corporation of a
complete liquidation or dissolution of the Corporation;
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<PAGE>
(III) 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;
(IV) the term "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended from time to time;
(V) the term "Governance Agreement" shall have the meaning given in the
Strategic Alliance Agreement (as defined in this Section);
(VI) 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
(VII) 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.
7
<PAGE>
ANNEX A
NOTICE OF GRANT
STOCK OPTION
HEXCEL CORPORATION INCENTIVE STOCK PLAN
The following member of the Board of Directors of Hexcel Corporation, a
Delaware corporation ("Hexcel"), 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 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 Option Agreement.
- ------------------------------------------------------------------------------
Optionee
- ------------------------------------------------------------------------------
Address of Optionee
- ------------------------------------------------------------------------------
Grant Date
- ------------------------------------------------------------------------------
Purchase Price
- ------------------------------------------------------------------------------
Aggregate Number of Shares
Granted (the "Option Shares")
- ------------------------------------------------------------------------------
IN WITNESS WHEREOF, the parties hereby agree to the terms of this Notice of
Grant and the Option Agreement to which this Notice of Grant is attached and
execute this Notice of Grant and Option Agreement as of the Grant Date.
HEXCEL CORPORATION
- ----------------------------------
Optionee By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
<PAGE>
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.
<PAGE>
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
----------- ----------
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
2
<PAGE>
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
3
<PAGE>
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.
4
<PAGE>
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.
5
<PAGE>
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.
6
<PAGE>
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
7
<PAGE>
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
8
<PAGE>
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
9
<PAGE>
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
10
<PAGE>
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;
11
<PAGE>
(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.
12
<PAGE>
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.
- -------------------------------------------------------------------------------
Optionee
- -------------------------------------------------------------------------------
Address of Optionee
- -------------------------------------------------------------------------------
Employee Number
- -------------------------------------------------------------------------------
Employee ID Number
- -------------------------------------------------------------------------------
Foreign Sub Plan, if applicable
- -------------------------------------------------------------------------------
Grant Date
- -------------------------------------------------------------------------------
Purchase Price
- -------------------------------------------------------------------------------
Aggregate Number of Shares Granted (the "Option Shares")
- -------------------------------------------------------------------------------
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
- ----------------------------------
Optionee By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
<PAGE>
RELOAD OPTION AGREEMENT
RELOAD 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 Optionee has previously received a Short-Term Option Agreement
dated January 30, 1997 which provides for, upon exercise thereof, the grant
of this Reload Option Agreement, subject to certain terms and conditions; and
WHEREAS, the Optionee has exercised the Short-Term Option Agreement and is in
possession of all or certain of the Common Stock (as defined below) issued to
him upon the exercise thereof (the "Short-Term Option Shares").
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.
<PAGE>
4. TERM OF OPTION.
(a) EXPIRATION DATE; TERM. Subject to Sections 4(c) and 4(d) hereof, 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)
hereof, the Option shall vest and become non-forfeitable (but not
exercisable) at the rate of 33-1/3% of the Option Shares on each of the
first three anniversaries of the Grant Date. The Option shall become
exercisable on the fourth anniversary of the Grant Date or, if sooner, as
provided in Section 4(c).
(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
<PAGE>
from the date of such termination of employment, if, within two years
after a Change in Control, (A) the Optionee's employment is terminated by
the Company other than by reason of Retirement, Cause, Disability or
death or (B) the Optionee terminates the Optionee's employment for Good
Reason (as defined in the last Section hereof).
(d) AUTOMATIC CANCELLATION
Subject to Section 4(c) hereof and only while the Optionee is employed by
the Corporation, the Option shall be deemed automatically canceled (and
without any action taken by the Corporation) with respect to that number
of Option Shares subject to the Option (such number of Option Shares
being determined in accordance with the succeeding sentence), immediately
upon any sale, disposition or assignment or transfer of any or all of the
Short-Term Option Shares prior to the earlier of the Optionee's
termination of employment with the Corporation and the fourth anniversary
of the Grant Date (as defined in the Short-Term Option Agreement). The
number of Option Shares so canceled shall equal the number of Short-Term
Option Shares so sold, disposed of, assigned or transferred prior to the
earlier of the Optionee's termination of employment with the Corporation
and the fourth anniversary of the Grant Date (as defined in the
Short-Term Option Agreement), multiplied by two (2). The Optionee shall
promptly notify the Corporation of any such sale, disposition, assignment
or transfer.
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 Reload 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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<PAGE>
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.
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 Reload 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.
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<PAGE>
11. RESOLUTION OF DISPUTES. Any disputes arising under or in connection with
this Reload 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 Reload 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 Reload Option Agreement shall in no
way be construed to be a waiver of such provision or of any other provision
hereof.
14. COUNTERPARTS. This Reload 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 Reload Option Agreement cannot be changed or
terminated orally. This Reload 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 Reload 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
5
<PAGE>
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 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
6
<PAGE>
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;
(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;
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<PAGE>
(VI) the term "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended from time to time;
(VII) the term "Good Reason" for termination by the Optionee of the
Optionee's employment shall mean the occurrence (without the Optionee's
express written consent) of any one of the following acts by the
Corporation, or failures by the Corporation to act, unless, in the case of
any act or failure to act described in paragraphs (1), (5) or (6) below,
such act or failure to act is corrected prior to the date of termination of
the Optionee's employment:
(1) a significant adverse alteration in the nature or
status of the Optionee's responsibilities, position or authority from
those in effect immediately prior to the Change in Control;
(2) a reduction by the Corporation in the Optionee's annual
base salary as in effect on the date hereof or as the same may be
increased from time to time;
(3) the relocation of the Optionee's principal place of
employment to a location more than fifty (50) miles from the
Optionee's principal place of employment immediately prior to the
Change in Control or the Corporation's requiring the Optionee to work
anywhere other than at such principal place of employment (or
permitted relocation thereof) except for required travel on the
Corporation's business to an extent substantially consistent with the
Optionee's present business travel obligations;
(4) the failure by the Corporation to pay to the Optionee
any portion of the Optionee's current compensation, or to pay to the
Optionee any portion of an installment of deferred compensation under
any deferred compensation program of the Corporation, within seven (7)
days of the date such compensation is due;
(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
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<PAGE>
Optionee's participation relative to other participants, as existed
immediately prior to the Change in Control; or
(6) the failure by the Corporation to continue to provide
the Optionee with benefits substantially similar to those enjoyed by
the Optionee under any of the Corporation's pension, savings, life
insurance, medical, health and accident, or disability plans in which
the Optionee was participating immediately prior to the Change in
Control (except for across-the-board changes similarly affecting all
senior executives of the Corporation and all senior executives of any
Person in control of the Corporation), the taking of any other action
by the Corporation which would directly or indirectly materially
reduce any of such benefits or deprive the Optionee of any material
fringe benefit enjoyed by the Optionee at the time of the Change in
Control, or the failure by the Corporation to provide the Optionee
with the number of paid vacation days to which the Optionee is
entitled on the basis of years of service with the Corporation in
accordance with the Corporation's normal vacation policy in effect at
the time of the Change in Control.
The Optionee's right to terminate the Optionee's employment for Good Reason
shall not be affected by the Optionee's incapacity due to physical or
mental illness. The Optionee's continued employment shall not constitute
consent to, or a waiver of rights with respect to, any act or failure to
act constituting Good Reason hereunder.
For purposes of any determination regarding the existence of Good Reason,
any claim by the Optionee that Good Reason exists shall be presumed to be
correct unless the Corporation establishes to the Board by clear and
convincing evidence that Good Reason does not exist;
(VIII) the term "Governance Agreement" shall have the meaning given in the
Strategic Alliance Agreement (as defined in this Section);
(IX) the term "Person" shall have the meaning given in Section 3(a)(9) of
the Exchange Act, as modified and used in Sections 13(d) and 14(d) of the
Exchange Act, but excluding Ciba for so long as Ciba is subject to the
restrictions imposed by the Governance Agreement;
(X) the term "Retirement" shall mean termination of the Optionee's
employment, other than by reason of death or Cause, either (A) at or after
age 65 or (B) at or after age 55 after five (5) years of employment by the
Corporation (or a Subsidiary thereof); and
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<PAGE>
(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.
10
<PAGE>
ANNEX A
NOTICE OF GRANT
RELOAD 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 Reload 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 Reload Option Agreement.
- ------------------------------------------------------------------------------
Optionee
- ------------------------------------------------------------------------------
Address of Optionee
- ------------------------------------------------------------------------------
Employee Number
- ------------------------------------------------------------------------------
Employee ID Number
- ------------------------------------------------------------------------------
Foreign Sub Plan, if applicable
- ------------------------------------------------------------------------------
Grant Date
- ------------------------------------------------------------------------------
Purchase Price
- ------------------------------------------------------------------------------
Aggregate Number of Shares
Granted (the "Option Shares")
- ------------------------------------------------------------------------------
IN WITNESS WHEREOF, the parties hereby agree to the terms of this Notice
of Grant and the Reload Option Agreement to which this Notice of Grant is
attached and execute this Notice of Grant and Reload Option Agreement as of
the Grant Date.
HEXCEL CORPORATION
- ----------------------------------
Optionee By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
<PAGE>
HEXCEL CORPORATION
MANAGEMENT STOCK PURCHASE PLAN
1. PURPOSES; TYPES OF GRANTS; CONSTRUCTION.
The purposes of the Hexcel Corporation Management Stock Purchase Plan
(the "Plan") are to attract and retain highly-qualified executives, to align
executive and stockholder long-term interests by creating a direct link between
annual incentive executive compensation and stockholder return and to enable
executives to purchase stock by using a portion of their annual incentive
compensation so that they can develop and maintain a substantial stock ownership
position in Hexcel Corporation (the "Company").
2. DEFINITIONS.
As used in this Plan, the following words and phrases shall have the
meanings indicated:
(a) "Agreement" shall mean an agreement entered into between
the Company and a Participant in connection with a grant under the Plan.
(b) "Annual Bonus" shall mean the bonus earned by a
Participant for any Company fiscal year under the Annual Plan.
(c) "Annual Plan" shall mean the Hexcel Corporation Management
Incentive Compensation Plan, as amended from time to time.
(d) "Beneficial Owner" (and variants thereof) shall have the
meaning given in Rule 13d-3 promulgated under the Exchange Act.
(e) "Board" shall mean the Board of Directors of the Company.
(f) "Cause" shall mean (i) the willful and continued failure
by the Participant to substantially perform the Participant's duties with the
Company (other than any such failure resulting from the Participant's
incapacity due to physical or mental illness) after a written demand for
substantial performance is delivered to the Participant by the Company, which
demand specifically identifies the manner in which the Company believes that
the Participant has not substantially per-
<PAGE>
formed the Participant's duties, or (ii) the willful engaging by the
Participant in conduct which is demonstrably and materially injurious to the
Company or its subsidiaries, monetarily or otherwise. For purposes of
clauses (i) and (ii) of this definition, no act, or failure to act, on the
Participant's part shall be deemed "willful" unless done, or omitted to be
done, by the Participant not in good faith and without reasonable belief that
the Participant's act, or failure to act, was in the best interest of the
Company.
(g) "Change in Control" shall have the meaning given in Article
6 hereof.
(h) "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.
(i) "Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time.
(j) "Committee" shall mean the Executive Compensation
Committee of the Board or such other committee of the Board as may be
designated by the Board.
(k) "Company" shall mean Hexcel Corporation, a corporation
organized under the laws of the State of Delaware, or any successor
corporation.
(l) "Disability" shall mean that, as a result of the
Participant's incapacity due to physical or mental illness or injury, the
Participant shall not have performed all or substantially all of the
Participant's usual duties as an employee for a period of more than
one-hundred-fifty (150) days in any period of one-hundred-eighty (180)
consecutive days.
(m) "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.
(n) "Fair Market Value" per share of Stock shall be the
average of the closing prices on the NYSE Consolidated Transactions Tape for
the five trading days immediately preceding the relevant valuation date and
"Fair Market Value" of a Restricted Stock Unit on any valuation date shall be
deemed to be equal to the Fair Market Value of a share of Stock on such
valuation date.
(o) "Governance Agreement" shall have the meaning given in the
Strategic Alliance Agreement.
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(p) "Participant" shall mean a person who receives a grant of
Restricted Stock Units under the Plan; all such grants are sometimes referred to
herein as "purchases".
(q) "Person", as used in Article 6 hereof, 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.
(r) "Plan" means this Hexcel Corporation Management Stock
Purchase Plan, as amended from time to time.
(s) "Restricted Period" shall have the meaning given in
Sections 5(c) and 5(h) hereof.
(t) "Restricted Stock Unit" or "Restricted Stock Units" shall
have the meaning given in Section 5 hereof.
(u) "Retirement" shall mean the termination of a Participant's
employment (other than by reason of death or Cause) which occurs either (i)
at or after age 65 or (ii) at or after age 55 after five (5) years of
employment by the Company (or a Subsidiary thereof).
(v) "Stock" shall mean shares of the common stock of the
Company, par value $.01 per share.
(w) "Strategic Alliance Agreement" shall mean the Strategic
Alliance Agreement among Hexcel Corporation, Ciba-Geigy Limited and
Ciba-Geigy Corporation, dated as of September 29, 1995, as amended.
(x) "Subsidiary" shall mean any subsidiary of the Company
(whether or not a subsidiary at the date the Plan is adopted) which is
designated by the Committee to participate in the Plan.
(y) "Term" shall have the meaning given in Article 14 hereof.
3. STOCK.
The maximum number of shares of the Stock which shall be reserved for
the grant of Restricted Stock Units under the Plan shall be 150,000, which
number shall be subject to adjustment as provided in Article 7 hereof. Such
shares
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<PAGE>
may be either authorized but unissued shares or shares that shall have been
or may be reacquired by the Company.
If any outstanding grant of Restricted Stock Units under the Plan
should, for any reason be cancelled or be forfeited before all its
restrictions lapse, the shares of Stock allocable to the cancelled or
terminated portion of such grant shall (unless the Plan shall have been
terminated) become available for subsequent grants under the Plan.
4. ELIGIBILITY.
During the Term of the Plan any Participant in the Annual Plan can
elect to receive up to fifty (50%) percent of the Participant's Annual Bonus
in Restricted Stock Units granted pursuant to, and subject to the terms and
conditions of, this Plan. Except as otherwise provided by the Committee in
its discretion with respect to the first fiscal year of the Company in which
(i) the Plan is in effect or (ii) a Participant participates in the Plan, any
such election by a Participant must be made at least six months prior to the
day the amount of the Participant's Annual Bonus is finally determined under
the Annual Plan. Since the Restricted Stock Units are "purchased" with part
or all of the Annual Bonus, all Restricted Stock Unit grants under this Plan
are sometimes referred to herein as "purchases." For purposes of the Plan,
the date of purchase of a Restricted Stock Unit shall be deemed to be the
date the Annual Bonus (from which the purchase funds are derived) is payable.
5. RESTRICTED STOCK UNITS.
Each grant of Restricted Stock Units under the Plan shall be
evidenced by a written Agreement between the Company and the Participant, in
such form as the Committee shall from time to time approve, and shall comply
with the following terms and conditions (and with such other terms and
conditions not inconsistent with the terms of this Plan as the Committee, in
its discretion, shall establish):
(a) NUMBER OF RESTRICTED STOCK UNITS. Each Agreement shall
state the number of Restricted Stock Units to be subject to a grant.
(b) PRICE. The price of each Restricted Stock Unit purchased
under the Plan shall be eighty (80%) percent of its Fair Market Value on the
date of purchase. Notwithstanding any other provision of the Plan, in no
event shall the price per Restricted Stock Unit be less than the par value
per share of Stock.
(c) NORMAL VESTING; NORMAL END OF RESTRICTED PERIOD. Subject to
Section 5(d) hereof, one-third (1/3) of Restricted Stock Units
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<PAGE>
purchased on a given date shall vest on each of the first three anniversaries
of the date of purchase, but the Restricted Period of all Restricted Stock
Units purchased on that date shall end on the third anniversary thereof.
(d) ACCELERATION OF VESTING AND END OF RESTRICTED PERIOD.
Notwithstanding Section 5(c) hereof, a Participant's Restricted Stock Units
shall immediately become completely vested and their respective Restricted
Periods shall end upon the first to occur of (x) a Change in Control, (y) the
involuntary termination of the Participant's employment without Cause, or (z)
the termination of a Participant's employment by reason of Retirement or the
Participant's death or Disability. Additionally, the Committee shall have
the authority to vest any or all of a Participant's Restricted Stock Units
and to end their respective Restricted Periods at such earlier time or times
and on such terms and conditions as the Committee shall deem appropriate.
(e) PAYMENT AT END OF RESTRICTED PERIOD. Upon the end of the
Restricted Period with respect to a Restricted Stock Unit, the Participant
(or the Participant's estate, in the event of the Participant's death) will
receive payment of all the Participant's Restricted Stock Units in the form
of an equal number of unrestricted shares of Stock.
(f) TERMINATION DURING THE RESTRICTED PERIOD AND VESTED
RESTRICTED STOCK UNITS; PAYMENT. If the termination of the employment of a
Participant occurs during the Restricted Period, the Participant (or the
Participant's estate, in the event of the Participant's death) will receive
unrestricted shares of Stock equal in number to the Participant's vested
Restricted Stock Units.
(g) TERMINATION DURING RESTRICTED PERIOD AND UNVESTED
RESTRICTED STOCK UNITS; PAYMENT. If the termination of the employment of a
Participant occurs during the Restricted Period, the Participant will receive
a cash payment equal to eighty (80%) percent of the Fair Market Value of the
Participant's unvested Restricted Stock Units on the date of their purchase.
(h) RESTRICTIONS. Restricted Stock Units (whether or not
vested) may not be sold, assigned, transferred, pledged, hypothecated or
otherwise disposed of, except by will or the laws of descent and
distribution, during the Restricted Period. The Committee may also impose
such other restrictions and conditions on the shares as it deems appropriate.
6. CHANGE IN CONTROL OF THE COMPANY.
5
<PAGE>
For purposes of the Plan, the term "Change in Control" shall mean
any of the following events:
(a) (i) any Person 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
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 date of the adoption of the Plan by the Board,
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 date, whose
election, or nomination for election by the Company's stockholders, was made
or approved pursuant to the Governance Agreement 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
(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
6
<PAGE>
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.
7. EFFECT OF CERTAIN CHANGES.
In the event of any extraordinary dividend, stock dividend,
recapitalization, merger, consolidation, stock split, warrant or rights
issuance, or combination or exchange of such shares, or other similar
transactions, the number of shares of Stock available for grants and the
number of such shares covered by outstanding grants shall be equitably
adjusted by the Committee to reflect such event and preserve the value of
such grants; provided, however, that any fractional shares resulting from
such adjustment shall be eliminated.
8. PAYMENT OF WITHHOLDING TAXES.
The Committee shall have discretion to permit or require a
Participant, on such terms and conditions as it determines, to pay all or a
portion of any taxes arising in connection with a purchase of Restricted
Stock Units hereunder or the vesting or lapse of restrictions with respect
thereto by having the applicable employer withhold shares of the Stock or by
the Participant's delivering other shares of Stock having a then-current Fair
Market Value equal to the amount of taxes to be withheld.
9. RIGHTS AS A STOCKHOLDER.
A Participant or a transferee of a grant shall have no rights as a
stockholder with respect to any shares of Stock which may become issuable
pursuant to the grant until the date of the issuance of a stock certificate
to him or her for such shares. No adjustment shall be made for dividends
(whether ordinary or extraordinary, and whether in cash, securities or other
property) or distribution of other rights for which the record date is prior
to the date such stock certificate is issued, except as provided in Article 7
hereof.
10. NO RIGHTS TO EMPLOYMENT.
7
<PAGE>
Nothing in the Plan or in any grant made or Agreement entered into
pursuant hereto shall confer upon any Participant the right to continue in
the employ of the Company or any Subsidiary or to be entitled to any
remuneration or benefits not set forth in the Plan or such Agreement or to
interfere with, or limit in any way, the right of the Company or any such
Subsidiary to terminate such Participant's employment. Grants made under the
Plan shall not be affected by any change in duties or position of a
Participant as long as such Participant continues to be employed by the
Company or any Subsidiary.
11. ADMINISTRATION.
The Plan shall be administered by the Committee. The Committee
shall have the authority in its discretion, subject to and not inconsistent
with the express provisions of the Plan, to administer the Plan and to
exercise all the powers and authorities either specifically granted to it
under the Plan or necessary or advisable in the administration of the Plan,
including, without limitation, the authority to grant Restricted Stock Units;
to determine the persons to whom, and the time or times at which grants shall
be granted; to determine the number of Restricted Stock Units to be covered
by each grant; to interpret the Plan; to prescribe, amend and rescind rules
and regulations relating to the Plan; to determine the terms and provisions
of the Agreements (which need not be identical) and to cancel or suspend
grants, as necessary; and to make all other determinations deemed necessary
or advisable for the administration of the Plan.
The Board shall fill all vacancies, however caused, in the
Committee. The Board may from time to time appoint additional members to the
Committee, and may at any time remove one or more Committee members and
substitute others. The Committee may appoint a chairperson and a secretary
and make such rules and regulations for the conduct of its business as it
shall deem advisable, and shall keep minutes of its meetings. The Committee
shall hold its meetings at such times and places (and its telephonic meetings
at such times) as it shall deem advisable. The Committee may delegate to one
or more of its members or to one or more agents such administrative duties as
it may deem advisable, and the Committee or any person to whom it has
delegated duties as aforesaid may employ one or more persons to render advice
with respect to any responsibility the Committee or such person may have
under the Plan. All decisions, determinations and interpretations of the
Committee shall be final and binding on all persons, including the Company,
the Participant (or any person claiming any rights under the Plan from or
through any Participant) and any stockholder.
No member of the Board or Committee shall be liable for any action
taken or determination made in good faith with respect to the Plan or any
grant hereunder.
8
<PAGE>
12. AMENDMENT AND TERMINATION OF THE PLAN.
The Board at any time and from time to time may suspend, terminate,
modify or amend the Plan; provided, however, that an amendment for which the
Board determines stockholder approval is necessary or appropriate under the
circumstances then prevailing shall not be effective unless approved by the
requisite vote of stockholders. Except as provided in Article 7 hereof, no
suspension, termination, modification or amendment of the Plan may adversely
affect any grant previously made to a Participant, unless the written consent
of the Participant is obtained.
13. GOVERNING LAW.
The Plan and all determinations made and actions taken pursuant
hereto shall be governed by the laws of the State of Delaware.
14. EFFECTIVE DATE; APPROVAL OF STOCKHOLDERS; TERM.
The Plan shall become effective January 1, 1997, subject to the
approval of the shareholders of the Company. Unless the Plan is terminated
earlier pursuant to Article 12 hereof, the Term of the Plan shall end on
March 31, 2007 (or such earlier date as all Restricted Stock Units to be
granted in connection with elections made under the Annual Plan with respect
to the Company's 2006 fiscal year have been granted), and no grants shall be
made thereafter. However, holdings of Restricted Stock Units granted
hereunder may extend beyond such date, and the provisions of the Plan shall
continue to apply to such Restricted Stock Units.
9
<PAGE>
[FORM OF]
GRANT OF RESTRICTED STOCK UNITS UNDER THE
HEXCEL CORPORATION MANAGEMENT STOCK PURCHASE PLAN
Grant Date: ___________, ____
1. GRANT SUBJECT TO PLAN. This Grant (defined below) is made and accepted
pursuant to the terms and provisions of the Hexcel Corporation Management
Stock Purchase Plan (the "Plan") and expressly incorporates herein all of the
terms and provisions of the Plan. Notwithstanding anything in this Grant to
the contrary, in the event that any inconsistency arises between any term or
provision of the Plan and any term or provision of this Grant, then the
applicable term or provision of the Plan shall control. By acknowledging
acceptance of this Grant the Grantee (defined below) also acknowledges
receipt of a copy of the Plan at the time the Grantee made the election
referred to in paragraph 2 below. All capitalized terms used herein and not
otherwise defined herein have the meaning ascribed thereto in the Plan.
2. GRANT. Pursuant to Plan, and in accordance with the election made by the
Grantee dated ___________ ,____, Hexcel Corporation (the "Company"), which
term shall include its successors as provided in the Plan, in lieu of making
a cash payment to the Grantee in respect of ___% of the Grantee's Annual
Bonus for the ____ fiscal year, hereby grants to < [GRANTEE'S
NAME] > (the "Grantee"), and Grantee hereby purchases from the Company,
[______________] [(_____]) Restricted Stock Units (the "Restricted Stock
Units") under the Plan, subject to the terms and conditions set forth herein
and in the Plan (together, the "Grant").
The Purchase Price for each Restricted Stock Unit is $____, which represents
80% of the Fair Market Value of such unit on the date hereof.
3. NORMAL VESTING; NORMAL END OF RESTRICTED PERIOD. Subject to Paragraph 4
of this Grant, one-third (1/3) of the Restricted Stock Units shall vest on
each of the first three anniversaries of the date hereof, but the Restricted
Period shall end on the third anniversary hereof.
4. ACCELERATION OF VESTING AND END OF RESTRICTED PERIOD. The Restricted Stock
Units shall immediately become completely vested and the
<PAGE>
Restricted Period shall end upon the first to occur of (a) a Change of
Control, (b) the involuntary termination of Grantee's employment without
Cause, or (c) the termination of Grantee's employment by reason of Retirement
or the Grantee's death or Disability.
5. PAYMENT AT END OF RESTRICTED PERIOD. Upon termination of the Restricted
Period with respect to the Restricted Stock Units, the Company will pay to
the Grantee or the Grantee's estate (in the event of Grantee's death) a
number of shares of unrestricted Stock equal to the number of Restricted
Stock Units.
6. TERMINATION DURING RESTRICTED PERIOD.
(a) VESTED RESTRICTED STOCK UNITS. If Grantee's employment is terminated
during the Restricted Period for any reason, Grantee or Grantee's estate
(in the event of Grantee's death) will receive a number of shares of
unrestricted Stock equal to the number of vested Restricted Stock Units at
the time of termination (giving effect to any vesting which may occur in
connection with such termination).
(b) UNVESTED RESTRICTED STOCK UNITS. If Grantee's employment is
terminated during the Restricted Period for any reason, Grantee or
Grantee's estate (in the event of Grantee's death) will receive a cash
payment equal to 80% of the Fair Market Value of the unvested Restricted
Stock Units on the Grant Date.
7. RESTRICTIONS. During the Restricted Period, the Grantee may not sell,
assign, transfer, pledge, hypothecate, or otherwise dispose of Restricted
Stock Units (whether vested or unvested), except by will or laws of descent
and distribution.
8. NO RIGHTS AS STOCKHOLDER. Neither the Grantee nor any permitted
transferee of the Grantee, shall have any rights as a stockholder with
respect to any shares of Stock issuable pursuant to the Restricted Stock
Units until the date on which a stock certificate (or certificates)
representing such Stock is issued.
9. EQUITABLE ADJUSTMENT OF RESTRICTED SHARES. The number of shares of
unrestricted Stock available pursuant to the Plan are subject to equitable
adjustment as provided in Section 7 of the Plan.
2
<PAGE>
10. NOTICES. Notices hereunder shall be mailed or delivered to the Company
at its principal place of business, Two Stamford Plaza, 281 Tresser
Boulevard, Stamford, Connecticut 06901, Attention: David Wong, Vice
President, Corporate Affairs, and shall be mailed or delivered to the Grantee
at the Grantee's address set forth below, or in either case at such other
address as one party may subsequently furnish to the other party in writing.
11. NO RIGHTS TO EMPLOYMENT. This Grant shall not confer upon the Grantee
any right with respect to continuance of employment by the Company or a
Subsidiary, nor shall it interfere in any way with any right of the Grantee's
employer to terminate the Grantee's employment at any time.
12. PAYMENT OF WITHHOLDING TAXES. The Committee shall have discretion to
permit or require the Grantee, on such terms and conditions as it determines,
to pay all or a portion of any taxes arising in connection with a purchase of
Restricted Stock Units hereunder or the vesting or lapse of restrictions with
respect thereto by having the Company withhold shares of Stock that would
otherwise be exchanged for Restricted Stock Units or by the Grantee's
delivering other shares of Stock having a then-current Fair Market Value
equal to the amount of taxes to be withheld or to otherwise withhold amounts
payable to the Grantee in accordance with applicable law.
13. GOVERNING LAW. This Grant and all matters related hereto shall be
governed by the laws of the State of Delaware.
* * * * *
3
<PAGE>
HEXCEL CORPORATION
By: __________________
Name: __________________
Title: __________________
Receipt of the foregoing Grant is hereby acknowledged and accepted and the
terms and conditions of the Grant are hereby agreed to as of the Grant Date.
GRANTEE ADDRESS
_______________________
Name: __________________________
__________________________
__________________________
4
<PAGE>
EXHIBIT 11
STATEMENT REGARDING COMPUTATION OF PER SHARE EARNINGS - UNAUDITED
The company reports net income (loss) per share data on a primary and fully
diluted bases. Primary net income (loss) per share is based upon the
weighted average number of outstanding common shares and common equivalent
shares from stock options. Fully diluted net income (loss) per share is
based upon (a) the weighted average number of outstanding common shares and
common equivalent shares from stock options and the assumed conversion of the
7% convertible subordinated notes and convertible subordinated debentures,
due 2003 and 2011, respectively, and (b) net income (loss) increased by the
expenses on the notes and debentures, due 2003 and 2011, respectively.
Computations of net income (loss) per share on the primary and fully diluted
bases for the second quarter and first half of 1997 and 1996 were:
<TABLE>
<CAPTION>
THE QUARTER ENDED JUNE 30, THE YEAR-TO-DATE ENDED JUNE 30,
-------------------------- -------------------------------
(IN THOUSANDS, EXCEPT PER SHARE DATA) 1997 1996 1997 1996
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
PRIMARY NET INCOME (LOSS) PER SHARE AND EQUIVALENT SHARE
- ----------------------------------------------------------------------------------------------------------------------------------
Net income (loss) $ 15,135 $ (23,667) $ 23,361 $ (21,819)
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
Weighted average common shares outstanding 36,729 36,547 36,672 30,483
Weighted average common equivalent shares from stock options 1,175 - 1,245 -
- ----------------------------------------------------------------------------------------------------------------------------------
Weighted average common shares and equivalent shares 37,904 36,547 37,917 30,483
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
Primary net income (loss) per share and equivalent share (1) $ 0.40 $ (0.65) $ 0.62 $ (0.72)
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
FULLY DILUTED NET INCOME (LOSS) PER SHARE AND EQUIVALENT SHARE
- ----------------------------------------------------------------------------------------------------------------------------------
Net income (loss) $ 15,135 $ (23,667) $ 23,361 $ (21,819)
Interest and issuance costs - 7% convertible subordinated notes,
due 2003 (3) 1,998 - 3,952 -
Interest and issuance costs - 7% convertible subordinated
debentures, due 2011 (2) - 295 - 590
- ----------------------------------------------------------------------------------------------------------------------------------
Adjusted net income (loss) $ 17,133 $ (23,372) $ 27,313 $ (21,229)
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
Weighted average common shares outstanding 36,729 36,547 36,672 30,483
Weighted average common equivalent shares
Stock options 1,175 - 1,245 -
7% convertible subordinated notes, due 2003 (3) 7,241 - 7,241 -
7% convertible subordinated debentures, due 2011 (2) - 834 - 834
- ----------------------------------------------------------------------------------------------------------------------------------
Weighted average common shares and equivalent shares 45,145 37,381 45,158 31,317
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
Primary net income (loss) per share and equivalent share (1) 0.38 $ (0.65) $ 0.60 $ (0.72)
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The computation of fully diluted net loss per share for the second quarter
and first half of 1996 was antidilutive. Accordingly, the amounts
reported for primary and fully diluted net loss per share are the same.
(2) The calculation of fully diluted net income per share for the second
quarter and first half of 1997, excludes the assumed conversion of the 7%
convertible subordinated debentures, due 2011, because the computation is
antidilutive.
(3) The 7% convertible subordinated notes, due 2003, were issued in July 1997,
and therefore are excluded from the 1996 calculations.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 3,345
<SECURITIES> 0
<RECEIVABLES> 203,072
<ALLOWANCES> 6,699
<INVENTORY> 153,118
<CURRENT-ASSETS> 363,494
<PP&E> 474,520
<DEPRECIATION> 152,765
<TOTAL-ASSETS> 743,375
<CURRENT-LIABILITIES> 190,407
<BONDS> 315,721
0
0
<COMMON> 368
<OTHER-SE> 197,040
<TOTAL-LIABILITY-AND-EQUITY> 743,375
<SALES> 455,638
<TOTAL-REVENUES> 455,638
<CGS> 350,931
<TOTAL-COSTS> 350,931
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 11,517
<INCOME-PRETAX> 29,383
<INCOME-TAX> 6,022
<INCOME-CONTINUING> 23,361
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 23,361
<EPS-PRIMARY> 0.62
<EPS-DILUTED> 0.60
</TABLE>
