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Separation And Release Agreement

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This Agreement (the "Agreement") is made as of the 29th day of January, 1998 between Hexcel Corporation (the "Company"), for itself and on behalf of its direct and indirect affiliated entities, and Juergen Habermeier (the "Employee").


WHEREAS, the Company employs Employee on the date hereof and Employee has resigned his position as the Vice Chairman of the Board of Directors of the Company effective December 31, 1997;

WHEREAS, Employee desires to resign his employment with the Company and his officerships and/or directorships with the Company's affiliated entities;

WHEREAS, Employee has extensive knowledge of the business and operations of the Company including its technologies, customers, markets and strategic plans; and

WHEREAS, Employee and the Company are parties to the Agreements identified on schedule 1 hereto and any other agreements or arrangements between the Company and Employee (other than this Agreement) (the "Existing Agreements").

NOW THEREFORE, in consideration of the mutual terms and conditions hereof, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and Employee hereby agree as follows (subject, however, to the termination of this Agreement as provided in Section 16 hereof):

1. TERMINATION OF EMPLOYMENT. (a) Effective as of January 31,1998 (the "Termination Date"), Employee hereby voluntarily and amicably resigns (i) from his employment with the Company and (ii) from all of his officerships and directorships with the Company's affiliated entities. Employee acknowledges that all files, records, electronic data, documents and notes (and all copies, if any, thereof) relating to the Consolidated Group (as defined below), whether prepared by Employee or otherwise in his possession, custody or control, together with all office or file keys and passes and

all other property of any member of the Consolidated Group, are the exclusive property of the Consolidated Group and shall be delivered to the Company and not retained by Employee following the date hereof. The term "Consolidated Group" shall mean the Company and its direct and indirect affiliated entities.

(b) Except as otherwise provided in Section 2 (B) hereof, the Termination Date shall be the date of termination of Employee's employment with the Company for all purposes under the Existing Agreements and Employee shall not accrue any rights or benefits thereunder after the Termination Date, nor shall his termination of employment be considered a "retirement" under any Existing Agreements.

2. SEVERANCE BENEFITS. Subject to the terms and conditions of this Agreement, the Company shall extend the following severance benefits to Employee (the "Severance Benefits"):

A. The Company shall pay Employee, as a discretionary payment, severance pay in an amount equal to $25,000 per calendar month commencing February 1998 for a period of twelve months (such payments being collectively referred to herein as "Cash Severance"). Cash Severance will be directly deposited in Employee's bank account (as he may designate in writing from time to time) or, if there is no such designation, mailed to Employee at his address set forth in Section 9 hereof, on a bi-weekly basis in accordance with the Company's customary payroll practices.

B. With respect to the Option Agreement between Employee and the Company dated March 1, 1996, the Company agrees to accelerate the vesting of options that would have vested on March 1, 1998 to January 31, 1998.

C. All PARS granted to Employee under the PARS Agreements dated March 1, 1996 and January 2, 1997, shall be deemed vested as of the Termination Date, but none of such PARS shall be converted into shares of the Company's common stock and distributed to Employee prior to the approval of this Agreement by the Company's Board of Directors or a committee thereof as provided in Section 16 hereof.

D. Notwithstanding anything to the contrary contained in this Agreement, in the event Employee is in breach of this Agreement Employee shall not be entitled to exercise any options or receive


any shares pursuant to PARS in excess of the number of options or PARS that are vested under the Existing Agreements on the date hereof, and the Company shall be entitled to recover from Employee any gains realized from the exercise of options or receipt of shares pursuant to PARS in excess thereof.

3. POST-EMPLOYMENT BENEFITS. For the one-year period following the Termination Date, the Company, at its expense, will continue the group health benefits (medical, prescription, dental and vision) that Employee and/or his family were receiving immediately prior to the Termination Date. Following such one-year period, the Company shall arrange to provide Employee through COBRA with group health benefits, substantially similar to those benefits which Employee and/or his family were receiving immediately prior to the Termination Date, for such periods as required by COBRA, subject to Employee's payment to the Company or its designee of the Company's cost for such coverage to the extent permitted by COBRA. Employee agrees to notify the Company in writing promptly upon accepting employment with another employer and becoming eligible to participate in group health benefits of the new employer. All benefits and perquisites, other than those specifically mentioned in Sections 3 and 4 hereof, shall terminate effective upon the Termination Date.

4. OTHER RIGHTS. This Agreement shall not affect Employee's vested rights (determined as of the Termination Date), if any, under any welfare benefit or pension plan, except as otherwise provided in Section 13 hereof with respect to the Executive Deferred Compensation Agreement dated March 1, 1996 ("EDCA"). Employee's entitlement to a bonus payment for 1997 shall be governed and deter mined by the terms of the Management Incentive Compensation Plan (the "Plan") (under which the Company acknowledges that Employee is entitled to 100 percent of the bonus due under the Plan), but such bonus payment will be made when the Company makes its 1997 bonus payments to other employees in the ordinary course of business. This Agreement shall not affect Employee's right to reimbursement (in accordance the Company's reimbursement policy) for reasonable business expenses incurred, and to current base salary and accrued vacation earned, on or before the Termination Date.

5. CONTINUING OBLIGATIONS. (a) During the period commencing upon the Termination Date and ending on the first anniversary thereof, Employee (i) shall not, without the prior written consent of the Company, employ or solicit employment of, or suggest, encourage, or at-


tempt to influence the hiring or termination of any person employed on the date hereof by any member of the Consolidated Group, and (ii) shall not interfere with any existing or planned project or proposal of the Consolidated Group.

(b) Employee acknowledges that the Consolidated Group's trade secrets and confidential and proprietary information, including without limitation:

A. Non public information concerning the Consolidated

(i) Research activities and plans;
(ii) Marketing or sales plans;
(iii) Pricing or pricing strategies;
(iv) Manufacturing techniques; and
(v) Strategic plans;

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