Form of Officer Severance Agreement entered into between Hexcel Corporation and Gina Fitzsimons, dated October 6, 2023
Exhibit 10.31
T
OFFICER SEVERANCE AGREEMENT
This SEVERANCE AGREEMENT (this “Agreement”) between HEXCEL CORPORATION, a Delaware corporation with offices in Stamford, Connecticut (the "Company"), and (the "Officer"), dated (the “Effective Date”).
WHEREAS, the Company is engaged in the business of developing, manufacturing and marketing carbon fibers, structural reinforcements, honeycomb structures, resins, and a variety of 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 Officer, 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 Officer with certain benefits in the event of the termination of the Officer’s employment with the Company, including in the event of a Change in Control (as hereinafter defined); and
WHEREAS, the Officer, 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 Officer and the Company and of the Officer's continued employment with the Company, the parties agree as follows:
No act, or failure to act, on the Officer's part shall be considered "willful" unless done, or omitted to be done, not in good faith and without reasonable belief that the action or omission was in the best interest of the Company. The Officer shall not be deemed to have been terminated for Cause without delivery to the Officer of a written notice of termination from the CEO specifying the grounds for Cause.
(d)Date of Termination. The Date of Termination shall mean if the Officer's employment is terminated pursuant to Section 2, the date specified in the applicable notice of termination (provided that such date shall not be more than 30 days from the date such notice is given under Section 2(a) and shall not be less than fifteen nor more than 30 days from the date notice of termination is given under Section 2(b) and 2(c), respectively.
3. Compensation Upon Termination. If the Officer's employment is terminated by the Company other than for Cause (and other than for death or disability as defined under the Company’s then-existing disability compensation program), or is terminated by the Officer for Good Reason, then
(i) if the Date of Termination is within two years after the occurrence of a Change in Control, the Company shall pay the Officer a cash lump sum equal to the product of (A) the sum of (1) the Officer’s annual base salary in effect at the time the notice of termination is given and (2) the Officer’s Average Annual Bonus (as defined below) and (B) the number 2.0; and
(ii) if the Date of Termination is not governed by clause (c)(i) immediately above, the Company shall pay the Officer a cash lump sum equal to the sum of (1) the Officer’s annual base salary in effect at the time the notice of termination is given and (2) the Officer’s Average Annual Bonus (as defined below).
The term “Average Annual Bonus” shall mean the average of the last three annual bonus amounts earned by the Officer under the Company’s Management Incentive Compensation Plan (as may be amended hereafter, the “MICP”) for the last three plan years completed prior to the Date of Termination or, if the Officer has not participated in the MICP for three completed annual award periods, the average of the annual amounts earned for the completed annual award period(s), provided that any award made in respect of an annual award period in which the Officer did not participate for the full period shall be annualized for purposes of computing the Average Annual Bonus by multiplying such award by a fraction, of which the numerator is 365 and the denominator is the number of days during which the Officer participated in such annual award period; and provided further that any award for the plan year during which the Date of Termination occurs shall not be used in computing Average Annual Bonus.
The severance benefits that are payable pursuant to this Section 3(c) shall be paid to the Officer within 60 days following the Officer’s Date of Termination, except as otherwise provided in Sections 3(d) or 17 below.
(d) Subject to Section 4, if the Officer’s employment with the Company is terminated by the Company other than for Cause (death or disability as defined above), or is terminated by the Officer for Good Reason, during the period of a “Potential Change in Control” or at the request of a Person (as defined in Section (f)(1) below) who, directly or indirectly, takes any action designed to cause a Change in Control (an “Anticipatory Termination”), then the Company shall make payments and provide benefits to the Officer under Section 3(c)(ii) of this Agreement and if a Change in Control to which the Potential Change in Control relates occurs within six months following the Officer’s Date of Termination, then the Officer shall receive an additional payment within 60 days following the date of the Change in Control, which additional payment shall be equal to the difference between the amount payable to the Officer pursuant to Sections 3(c)(i) and 3(e)(ii) of this Agreement and the amount payable to the Officer pursuant to Sections 3(c)(ii) and 3(e)(i) of this Agreement, provided that if the Change in Control does not occur within six months following the Officer’s Date of Termination, the additional amount described in this Section 3(d) shall not be payable to the Officer. 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.
(e) The Company shall offer the Officer and any eligible family members the opportunity to elect to continue medical and dental coverage pursuant to the requirements of the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”). The Company shall provide COBRA continuation coverage only if such coverage is timely elected by the Officer or other eligible family member, and the Officer shall be responsible for paying the full amount of the required monthly premiums for that coverage. If the Officer is enrolled in the Company’s medical or dental plans as of the Date of Termination, and subject to the Officer executing, and not revoking, the release described in Section 3(c) above, the Company shall pay to the Officer in a single lump sum cash payment an amount equal to the Company COBRA Premium (as defined below), multiplied by (i) twelve, or (ii) twenty four if the Date of Termination is within two years after the occurrence of a Change in Control, or the Officer incurs an Anticipatory Termination and a Change in Control to which the Potential Change in Control relates occurs within six months following the Officer’s Date of Termination, in each case net of deductions and tax withholdings, as applicable. The “Company COBRA Premium” shall be an amount equal to the excess, if any, of (i) the applicable monthly COBRA premium in effect on the Date of Termination for the medical and dental plan options in which the Officer (along with eligible family members) is enrolled on such date, over (ii) the monthly premium paid for those medical and dental plan options by the Officer as in effect on the day immediately preceding the Date of Termination. The Company COBRA Premium shall be paid to the Officer within 60 days following the Officer’s Date of Termination and shall be paid whether or not the Officer or any eligible family member timely elects COBRA continuation coverage, the Officer or any eligible family member continues COBRA coverage for the applicable continuation period, or the Officer receives health insurance coverage from another employer following the Date of Termination.
(f) For purposes of this Agreement, a "Change in Control" shall mean the first to occur of the following events:
4. No Mitigation or Offset.
(a) (i) The Officer shall not be required to mitigate the amount of any payment provided for in this Agreement by seeking other employment or otherwise and, other than as provided in Section 3(e) for continuation of benefits, the amount of any payment or benefit provided for in this Agreement shall not be reduced by any compensation earned by the Officer as the result of employment by another employer.
(ii) The amount of any payment or benefit provided for in this Agreement shall not be reduced by retirement benefits or offset against any amount the Company claims to be owed by the Officer.
(a) The Officer acknowledges that, as a senior management employee, the Officer will be involved, on a high level, in the development, implementation and management of the Company's global business plans, including those which involve the Company's finances, research, marketing, planning, operations, and acquisition strategies. By virtue of the Officer's position and knowledge of the Company, the Officer acknowledges that her employment by a competitor of the Company represents a serious competitive danger to
the Company, and that the use of the Officer's experience and knowledge about the Company's business, strategies and plans by a competitor can and would constitute a valuable competitive advantage over the Company. In view of the foregoing, and in consideration of the payments made to the Officer under this Agreement, the Officer covenants and agrees that, if the Officer's employment is terminated and the Company has fulfilled its obligations under this Agreement, for a period of one year (or one and one-half years if the Officer receives payments under Section 3(c)(i) or 3(d) hereof) after the Date of Termination the Officer will not (A) engage, in any capacity, directly or indirectly, including but not limited as employee, agent, consultant, manager, Officer, owner or stockholder (except as a passive investor holding less than a 5% equity interest in any enterprise) in any business entity engaged in competition with the Business conducted by the Company on the Date of Termination anywhere in the world, or (B) solicit a customer of the Business in violation of clause (A), provided, that the Officer may be employed by a competitor of the Company so long as the Officer's duties and responsibilities do not relate directly or indirectly to the business segment of the new employer which is actually or potentially competitive with the Business, or (C) directly or indirectly solicit, induce or otherwise encourage any person to discontinue or refrain from entering into any employment relationship (contractual or otherwise) with the Company.
(b) The Officer agrees and covenants not to disparage the reputation or character of the Company or its officers and directors.
(a) In addition to any obligation regarding Inventions, the Officer acknowledges that the trade secrets and confidential and proprietary information of the Company, its subsidiaries and affiliates, including without limitation: (i) unpublished information concerning (A) research activities and plans, (B) marketing or sales plans, C) pricing or pricing strategies, (D) operational techniques, and (E) strategic plans; (ii) unpublished financial information, including information concerning revenues, profits and profit margins;
(iii) internal confidential manuals; and (iv) any "material inside information" as such phrase is used for purposes of the Securities Exchange Act of 1934, as amended; all constitute valuable, special and unique information of the Company, its subsidiaries and affiliates. In recognition of this fact, the Officer agrees that the Officer will not disclose any such trade secrets or confidential or proprietary information (except (A) information which becomes publicly available without violation of this Agreement, (B) information of which the Officer, prior to disclosure by the Officer, did not know and should not have known was disclosed to the Officer by a third party in violation of any other person's confidentiality or fiduciary obligation, (C) disclosure required in connection with any legal process (provided the Officer promptly gives the Company written notice of any legal process seeking to compel such disclosure and reasonably cooperates in the Company’s attempt to eliminate or limit the scope of such disclosure) and (D) disclosure while employed by the Company which the Officer reasonably and in good faith believes to be in or not opposed to the interests of the Company) to any person, firm, corporation, association or other entity, for any reason or purpose whatsoever, nor shall the Officer make use of any such information for the benefit of any person, firm, corporation or other entity except on behalf of the Company, its subsidiaries and affiliates.
(b)(i) Nothing in this Agreement shall prohibit or restrict the Officer from initiating communications directly with, responding to any inquiries from, providing testimony before, providing confidential information to, reporting possible violations of law or regulation to, or filing a claim or assisting with an investigation directly with a government agency or entity or a self-regulatory authority, or from making other disclosures that are protected under the whistleblower provisions of any applicable law or regulation. The Officer need not notify the Company that the Officer is engaging in the activities described in the preceding sentence. However, if the Officer is required by law to disclose confidential information, other than to a government agency or entity or a self-regulatory authority, the Officer shall give prompt written notice to the General Counsel of the Company and shall otherwise comply with the requirements of subsection (a)(iv)(C) above. Notwithstanding the foregoing, under no circumstance will the Officer be authorized to disclose any information covered by attorney-client privilege or attorney work product of the Company or any of its subsidiaries without prior written consent of the Company’s General Counsel or other officer designated by the Board of Directors of the Company.
(ii) The Officer has been advised that the U.S. Defend Trade Secrets Act of 2016 provides criminal and civil immunity to U.S. federal and state claims for trade secret misappropriation to individuals who disclose a trade secret to their attorney, a court, or a government official in certain confidential circumstances that are set forth in 18 U.S.C. §§ 1833(b)(1) and 1833(b)(2) related to the reporting or
investigation of a suspected violation of the law, or in connection with a lawsuit for retaliation for reporting a suspected violation of the law.
8. Binding Agreement. This Agreement and all rights of the Officer hereunder shall inure to the benefit of and be enforceable by the Officer's personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. If the Officer should die while any amounts would still be payable to him hereunder if he had continued to live, all such amounts, unless otherwise provided in this Agreement, shall be paid to the Officer's devisee, legatee, or other designee or, if there be no such designee, to the Officer's estate.
If to the Officer:
If to the Company:
Hexcel Corporation
281 Tresser Blvd.
Stamford, CT ###-###-####
Attn: General Counsel
or to such other address as any party may have furnished to the other in writing in accordance herewith, except that notices of change of address shall be effective only upon receipt.
11. Validity and Enforceability. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect. It is the desire and intent of the parties that the provisions of Sections 5, 6 and 7 hereof shall be enforceable to the fullest extent permitted by applicable law or public policy. If any such provision or the application thereof to any person or circumstance shall, to any extent, be construed to be invalid or unenforceable in whole or in part, then such provision shall be construed in a manner so as to permit its enforceability to the fullest extent permitted by applicable law or public policy. In any case, the provisions or the application thereof to any person or circumstance other than those to which they have been held invalid or unenforceable shall remain in full force and effect. In the event any provision is unenforceable in the jurisdiction in which the Officer is employed on the date hereof, such provision nevertheless shall be enforceable to the fullest extent permitted by the laws of any other jurisdiction in which the Company shall have the ability to seek remedies against the Officer.
12. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument.
13. Arbitration. Any dispute or controversy arising under or in connection with this Agreement shall be settled exclusively by arbitration, conducted before a panel of three arbitrators in the State of Connecticut, constituting an Employment Dispute Tribunal in accordance with the rules of the American Arbitration Association then in effect. Judgment may be entered on the arbitrator's award in any court having jurisdiction; provided, however, that the Company shall be entitled to seek a restraining order or injunction in any court of competent jurisdiction to prevent any continuation of any violation of the provisions of Sections 5, 6 or 7 hereof.
14. Entire Agreement. This Agreement is the entire agreement or understanding between the Company and the Officer regarding the subject matter hereof, and all prior or contemporaneous agreements or understandings including, without limitation, offers of employment, post-hiring agreements, or other oral or written understandings between the Company and the Officer, are expressly superseded by this Agreement, and are of no further force or effect, except that any executory relocation benefit previously extended to the Officer will not be affected by this Agreement.
15. Remedies. The Officer agrees that in addition to any other remedy provided at law or in equity or in this Agreement, the Company shall be entitled to a temporary restraining order and both preliminary and permanent injunctions restraining Officer from violating any provision of Sections 5, 6 and 7 hereof. The Company shall pay to the Officer all legal fees and expenses incurred in contesting, arbitrating or disputing any action or failure to act by the Company or in seeking to obtain or enforce any right under this Agreement, provided that the Officer has obtained a final determination supporting at least part of her claim and there has been no determination that the balance of her claim was made in bad faith.
16. Consent to Jurisdiction and Forum. The Officer hereby expressly and irrevocably agrees that any action, whether at law or in equity, permitted to be brought by the Company under this Agreement may be brought in the State of Connecticut or in any federal court therein. The Officer hereby irrevocably consents to personal jurisdiction in such court and to accept service of process in accordance with the provisions of the laws of the State of Connecticut. In the event the Company commences any such action in the State of Connecticut or in any Federal court therein, the Company shall reimburse the Officer for the reasonable expenses incurred by the Officer in her appearance in such forum which are in addition to the expenses the Officer would have incurred by appearing in the forum of the Officer's residence at that time, including but not limited to additional legal fees.
17. Code Section 409A. This Agreement is intended to comply with Section 409A of the Internal Revenue Code of 1986, as amended (“Section 409A”), or an exemption thereto, and payments may only be made under this Agreement upon an event and in a manner permitted by Section 409A, to the extent applicable. All payments to be made upon a termination of employment under this Agreement subject to Section 409A may only be made upon a “separation from service” under Section 409A. For purposes of Section 409A, each payment is a separate payment and the right to a series of installment payments under this Agreement shall be treated as a right to a series of separate payments. In no event may the Officer, directly or indirectly, designate the calendar year of a payment. If any payment conditioned on the execution of the release constitutes deferred compensation subject to Section 409A, and the period for which such payment may commence spans two calendar years, the payment shall be paid in the second calendar year. Any reimbursement or payment for expenses that would constitute nonqualified deferred compensation subject to Section 409A shall be subject to the following additional rules: (i) no reimbursement or payment of any such expense shall affect the Officer’s right to reimbursement of any such expense in any other taxable year; (ii) reimbursement or payment of the expense shall be made, if at all, promptly, but not later than the end of the calendar year following the calendar year in which the expense was incurred; and (iii) the right to reimbursement or payment shall not be subject to liquidation or exchange for any other benefit. Notwithstanding any provision to the contrary in this Agreement, in the event that at the time the Officer’s employment terminates, the Company (or any service recipient required to be aggregated with Company under Section 409A) has equity that is publicly traded (as defined in Section 409A and the regulations and other guidance promulgated thereunder), then if on the date of the Officer’s separation from service, the Officer is a “specified employee” (as such term is defined in Section 409A(a)(2)(B)(i) and its corresponding regulations) as determined in the sole discretion by the Company (or any successor) in accordance with the Company’s (or any successor’s) “specified employee” determination policy, then all severance benefits payable to the Officer under this Agreement that are deemed as deferred compensation subject to the requirements of Section 409A shall be postponed for a period of six months following the Officer’s separation from service with the Company (or any successor thereto). The postponed amounts shall be paid to the Officer (without interest) in a lump sum on the first business day after the date that is six (6) months following the Officer’s separation from service with the Company (or any successor thereto). If the Officer dies during such six (6) month period and prior to payment of the postponed amounts hereunder, the amounts delayed on account of Section 409A shall be paid to the personal representative of the Officer’s estate within sixty (60) days after the Officer’s death. The Company makes no representations nor warranties the Officer as to whether any amounts payable under this Agreement are subject to Section 409A and in no event shall the Company have any liability relating to the failure of any payment or benefit under this Agreement to be exempt from the requirements of Section 409A. Further, in the event that the amounts payable under this Agreement are subject to any taxes, penalties or interest under Section 409A, the Officer shall be solely liable for the payment of any such taxes, penalties or interest.
18. Term of Agreement. The term of this Agreement (the “Term”) commenced on the Effective Date and shall end on the first anniversary thereof; provided, however, that commencing on the first anniversary of the Effective Date and on each subsequent anniversary of the Effective Date (each such anniversary a “Renewal date”), the Term shall automatically be extended for one additional year unless, not later than the date which is one year prior to such Renewal Date, the Company shall have given notice to the Officer that the Term will not be renewed for one additional year.
IN WITNESS WHEREOF, the parties have executed this Severance Agreement as of the date and year first above written.
HEXCEL CORPORATION
By:
Name: Nick L. Stanage
Title: Chairman, President and Chief Executive Officer
("Officer")