Exhibit 10.1
EXECUTIVE SEVERANCE
AGREEMENT
AGREEMENT made as of the 20th day of
March, 2006, between HEXCEL CORPORATION, a Delaware corporation
with offices at Stamford, Connecticut (the “Company”),
and Robert G. Hennemuth (the “Executive”).
WHEREAS, the Company is engaged in
the business of developing, manufacturing and marketing carbon
fibers, fabrics, high-performance composite materials and parts
therefrom for the commercial aerospace, space and defense,
recreation and industrial markets throughout the world, and
hereafter may engage in other areas of business
(collectively, the “Business”);
WHEREAS, the Executive, as a result
of training, expertise and personal application over the years, has
acquired and will continue to acquire considerable and unique
expertise and knowledge which are of substantial value to the
Company in the conduct, management and operation of the
Business;
WHEREAS, the Company is willing to
provide the Executive with certain benefits in the event of the
termination of the Executive’s employment with the Company,
including in the event of a Change in Control (as hereinafter
defined); and
WHEREAS, the Executive, in
consideration of receiving such benefits from the Company, is
willing to afford certain protection to the Company in regard to
the confidentiality of its information, ownership of inventions and
competitive activities.
NOW, THEREFORE, in consideration of
the mutual covenants of the Executive and the Company and of the
Executive’s continued employment with the Company, the
parties agree as follows:
1.
Position and Duties . The Executive shall initially serve as
Senior Vice President, Human Resources of the Company and shall
have such duties, responsibilities, and authority as he may have as
of the date hereof (or any position to which he may be promoted
after the date hereof). The Executive shall devote substantially
all his working time and efforts to the business and affairs of the
Company.
2. Place
of Performance . In connection with the Executive’s
employment by the Company, the Executive shall be based at the
principal executive offices of the Company in Stamford,
Connecticut, except for required travel on the Company’s
business.
3.
Termination . The Executive’s employment hereunder may
be terminated under the following circumstances:
(a) Death . The
Executive’s employment hereunder shall automatically
terminate upon his death.
(b) Disability .
The Company may terminate the Executive’s employment
hereunder due to the Executive’s inability to perform the
customary duties of his employment by reason of any medical or
psychological illness or condition that is expected to be permanent
or of indefinite duration.
(c) Cause . The
Company may terminate the Executive’s employment hereunder
for Cause. The following shall constitute Cause:
(i)
the willful and continued failure by the Executive to substantially
perform his duties with the Company (other than any such failure
resulting from the Executive’s incapability due to physical
or mental illness or any such actual or anticipated failure after
the issuance of a Notice of Termination by the Executive for Good
Reason) after demand for substantial performance is delivered by
the Company that specifically identifies the manner in which the
Company believes the Executive has not substantially performed his
duties; or
(ii) the
willful engaging by the Executive in misconduct that is
demonstrably and materially injurious to the Company, monetarily or
otherwise including, but not limited to, conduct that violates the
covenant not to compete in Section 6 hereof. No act, or
failure to act, on the Executive’s part shall be considered
“willful” unless done, or omitted to be done, by him
not in good faith and without reasonable belief that his action or
omission was in the best interest of the Company. Notwithstanding
the foregoing, the Executive shall not be deemed to have been
terminated for Cause without (i) reasonable notice from the
Board to the Executive setting forth the reasons for the
Company’s intention to terminate for Cause,
(ii) delivery to the Executive of a resolution duly adopted by
the affirmative vote of two-thirds or more of the Board then in
office (excluding the Executive if he is then a member of the
Board) at a meeting of the Board called and held for such purpose,
finding that in the good faith opinion of the Board, the Executive
was guilty of the conduct herein set forth and specifying the
particulars thereof in detail, (iii) an opportunity for the
Executive, together with his counsel, to be heard before the Board,
and (iv) delivery to the Executive of a Notice of Termination
from the Board specifying the particulars thereof in
detail.
(d) Good Reason .
The Executive may terminate his employment hereunder for Good
Reason. The following shall constitute Good Reason:
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(i) A
diminution in the Executive’s position, duties,
responsibilities or authority (except during periods when the
Executive is unable to perform all or substantially all of his
duties or responsibilities on account of illness (either physical
or mental) or other incapacity);
(ii) A
reduction in the Executive’s annual rate of base salary as in
effect on the date hereof or as the same may be increased from time
to time;
(iii)
Failure by the Company to continue in effect any compensation plan
in which the Executive participates which is material to the
Executive’s total compensation, unless an equitable
arrangement (embodied in an ongoing substitute plan) has been made
with respect to such plan, or failure by the Company to continue
the Executive’s participation therein (or in such substitute
plan) on a basis not materially less favorable to the
Executive;
(iv)
Failure by the Company to continue to provide the Executive with
benefits substantially similar to those enjoyed by the Executive
under any of the Company’s pension, savings, life insurance,
medical, health and accident, or disability plans in which the
Executive was participating (except for across-the-board changes
similarly affecting all senior executives of the Company and
all senior executives of any Person in control of the Company), or
failure by the Company to continue to provide the Executive with
the number of paid vacation days per year equal to the greater of
(i) 20 and (ii) the number to which the Executive is
entitled in accordance with the Company’s vacation
policy;
(v) Failure
to provide facilities or services which are suitable to the
Executive’s position;
(vi)
Failure of any successor (whether direct or indirect, by purchase
of stock or assets, merger, consolidation or otherwise) to the
Company to assume the Company’s obligations hereunder or
failure by the Company to remain liable to the Executive hereunder
after such assumption;
(vii)
Any termination by the Company of the Executive’s
employment which is not effected pursuant to a Notice of
Termination satisfying the requirements of a Notice of
Termination contained in this Agreement;
(viii) The
relocation of the Executive’s principal place of employment
to a location more than fifty (50) miles from the Executive’s
principal place of employment as at the date hereof; or
(ix) Failure
to pay the Executive any portion of current or deferred
compensation within seven (7) days of the date such
compensation is due.
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The Executive’s continued
employment shall not constitute consent to, or waiver of rights
with respect to, any circumstance constituting Good Reason
hereunder; provided, however, that the Executive shall be deemed to
have waived his rights pursuant to circumstances constituting Good
Reason hereunder if he shall not have provided the Company a Notice
of Termination within ninety (90) days following his knowledge of
the occurrence of circumstances constituting Good
Reason.
(e) Other Than Death,
Disability, Cause or Good Reason . (i) The Company may
terminate the Executive’s employment, other than as provided
in Sections (3)(a), (b) or (c) hereof, upon written
notice to the Executive and (ii) the Executive may terminate
his employment with the Company, other than as provided in
Section 3(d) hereof, upon written notice to the
Company.
(f) Notice of
Termination; Date of Termination . Any termin-ation of the
Executive’s employment by the Company or by the Executive
(other than a termination pursuant to
Section 3(a) hereof) shall be communicated by written
Notice of Termination to the other party hereto in accordance with
Section 10. For purposes of this Agreement,
(i) “Notice of
Termination” shall mean a notice which shall indicate the
specific termination provision in this Agreement relied upon and
shall set forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of the Executive’s
employment under the provision so indicated, and
(ii)
“Date of Termination” shall mean (A) if the
Executive’s employment is terminated pursuant to
Section 3(a), the date of his death, (B) if the
Executive’s employment is terminated pursuant to
Section 3(b), thirty days after Notice of Termination is given
(provided that the Executive shall not have returned substantially
to full-time performance of the Executive’s duties
during such thirty day period), (C) if the Executive’s
employment is terminated pursuant to Sections 3(c), (d) or
(e), the date specified in the Notice of Termination (provided that
such date shall not be more than thirty days from the date Notice
of Termination is given and, in the case of a termination for
Cause, shall not be less than fifteen days from the date Notice of
Termination is given), or (D) if the Executive terminates his
employment and fails to provide written notice to the Company of
such termination, the date of such termination.
4.
Compensation Upon Death, Disability or
Termination.
(a) If the
Executive’s employment is terminated by his death, the
Company shall pay the Executive’s legal representative
(i) at the time such payments are due, the Executive’s
full base salary through the Date of Termination at the rate in
effect at the Date of Termination and all other unpaid amounts, if
any, to which the Executive is entitled as of the Date of
Termination including any reimbursable business expenses and
amounts earned under any compensation plan or program (including
the Bonus Plan), and (ii) within ten days following
the
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date of the Executive’s death,
a lump sum payment in an amount by which (A) the total amount
received by the beneficiary or estate of the Executive as payment
under the basic insurance provided by and at the expense of the
Company on the Executive’s life is less than
(B) twice the sum of (I) the Executive’s annual
base salary in effect as of the Date of Termination and
(II) the Executive’s Average Annual Bonus (the term
“Average Annual Bonus” shall mean the average of the
last three annual bonus amounts awarded to the Executive under the
Company’s Management Incentive Compensation Plan, or any
successor, alternate or supplemental plan (the “Bonus
Plan”) or, if the Executive has not participated in the Bonus
Plan for three completed annual award periods, the average of the
annual bonus amounts awarded, provided that any award made in
respect of an annual award period in which the Executive did not
participate for the full period (the “Pro-Rata Award”)
shall be annualized for purposes of computing the Average Bonus
Amount by multiplying the Pro-Rata Award by a fraction, of which
the numerator is 365 and the denominator is the number of days
during which the Executive participated in such annual award
period).
(b) During any period
that the Executive fails to perform his duties hereunder as a
result of incapacity due to physical or mental illness the
Executive shall continue to receive his full base salary at the
rate then in effect for such period (offset by any payments to the
Executive received pursuant to disability benefit plans maintained
by the Company) until his employment is terminated pursuant to
Section 3(b) hereof; and, within ten days following such
termination, the Company shall pay the Executive all unpaid
amounts, if any, to which the Executive is entitled as of the Date
of Termination including any reimbursable business expenses and
amounts earned under any compensation plan or program (including
the Bonus Plan).
(c) If the
Executive’s employment is terminated by the Company for Cause
or by the Executive for other than Good Reason, the Company shall
at the time such payments are due pay the Executive his full base
salary through the Date of Termination at the rate in effect at the
time Notice of Termination is given and all other unpaid amounts,
if any, to which the Executive is entitled as of the Date of
Termination including any reimbursable business expenses and
amounts earned under any compensation plan or program (including
the Bonus Plan), and the Company shall, thereafter, have no further
obligations to the Executive under this Agreement.
(d) If (1) the
Company shall terminate the Executive’s employment other than
for Disability and other than for Cause or (2) the Executive
shall terminate his employment for Good Reason, then
(i)
the Company shall pay the Executive on the Date of
Termination, by wire transfer to the bank account designated by the
Executive, the Executive’s full base salary through the Date
of Termination at the rate in effect at the time Notice of
Termination is given (disregarding any reduction in salary
rate
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which would constitute a Good
Reason) and all other unpaid amounts, if any, to which the
Executive is entitled as of the Date of Termination including any
reimbursable business expenses and amounts earned under any
compensation plan or program (including the Bonus Plan);
(ii) in lieu
of any further salary payments to the Executive for periods
subsequent to the Date of Termination, the Company shall pay to the
Executive on the Date of Termination, by wire transfer to the bank
account designated by the Executive, an amount equal to the
product of (A) the sum of (1) the Executive’s
annual base salary in effect at the time the Notice of Termination
is given (disregarding any reduction in salary rate which would
constitute a Good Reason) and (2) the Executive’s
Average Annual Bonus, and (B) (x) if the Executive
terminates his employment or the Company terminates the
Executive’s employment, in either case within two years after
the occurrence of a Change in Control, the number three or
(y) in any other case, the number one; and
(iii) the Company shall
continue the participation of the Executive for a period of one
year (except, if the Executive terminates his employment or the
Company terminates the Executive’s employment, in either case
within two years after the occurrence of a Change in Control, such
period shall be three years), in all medical, health, life and
other employee “welfare” plans and programs in which
the Executive participated immediately prior to the Date of
Termination, provided that the Executive’s continued
participation is possible under the general terms and provisions of
such plans and programs. In the event that the
Executive’s participation in any such plan or program is
barred, the Company shall by other means provide the Executive with
benefits equivalent to those which the Executive would
otherwise have been entitled to receive under such plans and
programs from which his continued participation is
barred.
(e) If the Company shall
terminate the Executive’s employment other than for Cause, or
the Executive shall terminate his employment for Good Reason,
during the period of a Potential Change in Control or at the
request of a person who, directly or indirectly, takes any action
designed to cause a Change in Control, then the Company shall make
payments and provide benefits to the Executive under this Agreement
as though a Change in Control had occurred immediately prior to
such termination. A “Potential Change in Control” shall
exist during the period commencing at the time the Company enters
into any agreement or arrangement which, if consummated, would
result in a Change in Control and ending at the time such agreement
or arrangement either (i) results in a Change in Control or
(ii) terminates, expires or otherwise becomes of no further
force or effect.
(f) For purposes
of this Agreement, a “Change in Control” shall mean the
first to occur of the following events:
(1) Any person (as
defined in Section 3(a)(9) of the Securities Exchange Act
of 1934, as amended (the “Exchange Act”), as
modified
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and used in Sections 13(d) and
14(d) of the Exchange Act) (a “Person”) is or
becomes the Beneficial Owner (within the meaning of Rule 13d-3
promulgated under the Exchange Act), directly or indirectly, of 40%
or more of either (A) the then outstanding common stock of the
Company (the “Outstanding Common Stock”) or
(B) 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: (x) any acquisition by the
Company or any of its Controlled Affiliates (an
“Affiliate” of any Person shall mean any other Person
that directly or indirectly, through one or more intermediaries,
Controls, is Controlled by, or is under common Control with, such
first Person; the term “Control” shall have the meaning
specified in Rule 12b-2 under the Exchange Act); (y) any
acquisition by any employee benefit plan (or
