This Executive Compensation Plan Agreement involves
Title: Executive Deferred Compensation Agreement
Industry: Electronic Instr. and Controls Sector: Technology
Executive Deferred Compensation Agreement
The Executive Deferred Compensation and Consulting Agreement, better known as EDCA, is a non-qualified, unfunded, supplemental pension plan for key executives.
Each year benefits are accrued at one and one-half percent at that year’s base salary plus bonus payment and added to the prior year accrual balance. That accumulated benefit is then given a present value based on group annuity mortality tables and the current PBGC immediate interest rate. At retirement the monthly accrued present value benefit is payable as a 10-year certain and life annuity. The Plan also provides for the continuation of life, medical and dental benefits at retirement based on certain criteria as outlined in the Agreement.
EXECUTIVE DEFERRED COMPENSATION AND CONSULTING AGREEMENT
THIS AGREEMENT is entered into as of June 7, 1995, at Pleasanton, California, between HEXCEL CORPORATION, a Delaware corporation (“HEXCEL”), and Wayne C. Pensky (“Employee”), on the basis of the following facts and understandings:
R E C I T A L S :
A. Employee is a key executive of Hexcel and has made substantial contributions to its success.
B. Hexcel wishes to provide certain retirement, death and similar benefits for Employee in the expectation that such benefits will serve as an incentive to Employee to continue in the employ of Hexcel until his retirement or death. Hexcel also wishes to receive the benefits of Employee’s advice and consultation following retirement, which will be compensated for by the payments to be made hereunder.
C. Hexcel’s Executive Compensation Committee of the Board of Directors has authorized it to enter into this Executive Deferred Compensation Agreement with Employee.
NOW, THEREFORE, in consideration of the services rendered in the past and to be rendered in the future by Employee, the parties hereto agree as follows:
1. RETIREMENT AND CONSULTING INCOME .
1.1 Normal Retirement . If Employee retires or otherwise ceases to be employed by Hexcel on or after his 65 th birthday, Employee shall receive a monthly amount of consulting and retirement income payments, without any specification as to
the amount allocated to either, computed pursuant to Exhibit “A” which has been initialed by the parties and attached hereto. Such payments shall commence the calendar month following Employee’s retirement or termination of employment and shall continue for one hundred twenty (120) such payments or until payment for the month in which Employee dies, whichever is the last to occur.
1.2 Retirement Before Age 65 . If Employee retires or otherwise ceases to be employed by Hexcel after his 40 th birthday but prior to his 65 th birthday, his consulting and retirement income payments, without any specification as to the amount allocated to either, computed pursuant to said Exhibit “A”, shall commence the calendar month following his 65 th birthday and shall continue for one hundred twenty (120) such payments or until payment for the month in which Employee dies, whichever is the last to occur. Should the Employee request that such payments commence at an earlier date and Hexcel, in its sole and absolute discretion, consents thereto in writing, the monthly amounts payable shall be the amount reflected on Exhibit “B”, which has been initialed by the parties and attached hereto.
If Employee retires or otherwise ceases to be employed by Hexcel after his 40 th birthday but prior to his 58 th birthday, his consulting and retirement income payments shall be the same as under Section 1.2 except that until Employee attains the age of 58, the obligation of Hexcel under Section 6.2 (i.e., medical and dental insurance) shall be in effect only if Employee promptly reimburses Hexcel on its written demand for its costs of such medical and dental insurance under the group plan.
Employee shall not be entitled to any benefits under this Agreement if Employee ceases to be employed by Hexcel prior to attaining his 40 th birthday.
1.3 Possible Lump Sum, Etc. Benefits . In lieu of the payments described in Sections 1.1 and 1.2, and provided that Hexcel, in its sole and absolute discretion, consents thereto in writing, Employee may elect either (a) the applicable lump sum benefit reflected on Exhibit “B”, or (b) any other form of retirement benefit actuarially equivalent thereto. Employee’s election of benefits under this Section 1.3 shall not relieve Employee of his obligations under Paragraph 3.
2. DEATH BENEFITS . If Employee dies after his 40 th birthday but prior to commencement of payments to him pursuant to Sections 1.1 or 1.2, there will be payable to his designated beneficiary in lieu of any amount specified in Paragraph 1, a monthly pension for the balance of such beneficiary’s lifetime which is actuarially equivalent to the lump sum death benefit reflected in Exhibit “B”. In lieu of said monthly pension, on the condition that Hexcel, in its sole discretion, consents thereto in writing, such beneficiary may elect either (a) the applicable lump sum death benefit reflected on Exhibit “B” or (b) any other form of pension benefit actuarially equivalent thereto, based on the actuarial assumptions used in constructing Exhibit “B”, such election to be made by written notice to Hexcel, in form satisfactory to Hexcel, within sixty (60) days following the Employee’s death.
If Employee dies after commencement of payments to him pursuant to Sections 1.1 or 1.2, but prior to the receipt of 120 such payments or, should Employee retire after this 65 th birthday but has not as yet received the first payment under Section 1.1, his designated beneficiaries shall receive such payments until the aggregate number of payments to Employee and his beneficiary totals 120.
3. AGREEMENTS OF EMPLOYEE . As a material part of the consideration for this Agreement and as a condition precedent to Hexcel’s obligation to make payments to Employee or Employee’s successors hereunder, Employee agrees as follows:
3.1 Consultation Services . For a period of ten years following the effective date of retirement or termination of employment, Employee shall render consultation services to Hexcel from time to time upon request of Hexcel, in all areas of Hexcel’s business; provided, however, that Hexcel shall only make such requests at reasonable times and locations in light of Employee’s other commitments, and upon reasonable prior notice; and provided further that the extent of said consultation services shall be limited to not more than ten (10) man days (on the basis of seven-hour work days) per year unless agreed to by Employee. The parties acknowledge that Employee, while providing consultation services hereunder, will be acting in the capacity of an independent contractor and not an employee, and Hexcel shall not have the power to direct or control the manner in which Employee performs his duties as consultant. Hexcel shall reimburse Employee for any expenses incurred by Employee in carrying out his obligations, provided such expenses were approved in advance by Hexcel in writing.
3.2 Competitive Activity . In order to protect Hexcel’s benefits under Section 3.1 and its trade secrets in the field of engineered materials (e.g., high technology, lightweight structural materials and specialty chemicals and resins) and other products being manufactured or marketed by Hexcel or developed for manufacture or marketing at the time of Employee’s retirement or termination of employment, or the trade secrets of any business acquired by Hexcel within six months after retirement or termination of such employment if said acquisition was in the process of negotiation at
the time of such retirement or termination (herein-after collectively designated “Hexcel’s Business”), Employee agrees that at all times prior to his retirement or termination of employment and during so much of the ten-year period following such retirement or termination that Hexcel, or any of its successors, assigns or affiliated companies carries on any portion of Hexcel’s business, Employee shall not directly or indirectly, as a partner, substantial owner, employee, associate, consultant, agent or otherwise, engage in any activity related to or competitive with Hexcel’s business in any county in the State of California, or in any other state, territory or foreign country within which Hexcel carries on Hexcel’s Business or in which any of its products are sold either prior or subsequent to the date hereof.
4. CONDITIONS TO PAYMENT OF COMPENSATION.
4.1 No Vested Benefit . The parties acknowledge that the sums payable to Employee hereunder increase pursuant to the formula set forth in Exhibit “A” based upon the length of Employee’s employment with Hexcel — i.e., Employee receives credit in such formulas over the period of his employment. Hexcel may at any time upon thirty (30) days’ prior written notice to Employee, terminate Employee’s right to receive such credit for future employment with Hexcel, which shall not, however, affect such credit accrued up to the effective date of such termination. Notwithstanding such employment credit, the amounts computed in accordance with such formulas are only payable to Employee on the terms and subject to the conditions contained in this Agreement, including, without limitation, the conditions specified in Sections 4.2 and 4.3.