Exhibit
10.53(b)


 


 


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 of 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 Apri1
22, 1996 (“Effective Date”), at Pleasanton, California, between HEXCEL CORPORATION, a Delaware corporation (“Hexcel”), and Joseph
H. Shaulson (“Employee”), on the basis of the following facts and
understandings:


 


RECITALS


                                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 and as an incentive to protect Hexcel’s
trade secrets and other confidential and proprietary information. 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 Board of Directors has
authorized it to enter into this Executive Deferred Compensation Agreement with
Employee.


 


AGREEMENT


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:


 


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1.             RETIREMENT
AND CONSULTING INCOME


 


                                1.1.          Normal Retirement.  If Employee retires or otherwise ceases to be
employed by Hexcel on or after his 65th birthday, Employee shall
receive a monthly amount of consulting and retirement income payment, without any
specification as to the amount allocated to either. Such payments shall
commence the calendar month following Employee’s retirement or other
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.


 


                                                Retirement
Before Age 65.  If Employee retires
or otherwise ceases to be employed by Hexcel after his 40th birthday
but prior to his 65th birthday, his consulting and retirement income
payments, without any specification as to the amount allocated to either,
computed pursuant to Section 1.2, shall commence the calendar month following
his 65th 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 actuarially
reduced to reflect the appropriate benefit according to the employee’s age.


 


                                Employee
shall not be entitled to any benefits under this Agreement if Employee ceases
to be employed by Hexcel prior to attaining his 40th birthday.


 


                                1.2.          The monthly consulting and retirement
income payments shall be equal to one-twelfth (1/12th) of the following: One
and one-half percent (1 1/2%) of the aggregate base salary and incentive cash
bonuses paid to Employee by Hexcel subsequent to the Effective Date, multiplied
by a fraction, the numerator of which shall be the total number of 


 


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whole calendar months of Employee’s
employment by Hexcel subsequent to the Effective Date and the denominator of
which will be 67.  In no event shall such
fraction exceed 1 (67/67).


 


                1.3.          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 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 obligation under Paragraph 3.


 


2.             DEATH
BENEFITS.  If Employee dies after his
40th birthday but prior to his 65th birthday and prior to
commencement of payments to him pursuant to Sections 1.1 or 1.2, benefit 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. In lieu of said
monthly pension, on the condition that Hexcel, in its sole discretion, consents
thereto in writing, such beneficiary may elect any other form of pension
benefit actuarially equivalent thereto, based on the actuarial assumptions,
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 after his 65th
birthday, but prior to receiving 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.


 


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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 each payment 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 other 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) working days (on the basis of eight-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.   Employee
acknowledges that the pursuit of Competitive Activity, as defined below, would
necessarily involve the use or disclosure of Confidential Information. To
forestall such disclosure, use, and breach, to protect Hexcel’s benefits under
Section 3.1, and in consideration of the benefits provided Employee under Sections
l, Employee agrees that for a period of ten (10) years after termination of his
employment, or so long as he is receiving benefits under this Agreement,
whichever is the shorter period, he shall not, directly or indirectly, (i)
divert or attempt to divert from Hexcel or 


 


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its successors, assigns, or affiliated companies (“Hexcel Companies”)
any business of any kind in which it or they are engaged at the time of
Employee’s termination or any business acquired by one of the Hexcel Companies
within six months after such termination if said acquisition was in the process
of negotiation at the time of such termination (hereinafter collectively
designated “Hexcel’s Business”), including, without limitation, the
solicitation of or interference with any of its or their customers; (ii)
solicit for employment any person employed by any of the Hexcel Companies; or
(iii) engage (as a partner, substantial owner, employee, associate, consultant,
agent or otherwise) in any business activity that is or may be competitive with
Hexcel’s Business in any county of any state or in any territory or foreign
country where any of the Hexcel Companies conducts any portion of Hexcel’s
Business (“Competitive Activity”), unless Employee can prove that any action
taken in contravention of this subsection 3.2(iii) was done without the use in
any way of Confidential Information.


 


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 Section 1.2
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 payable to Employee only 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.


 


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                4.2.          Termination of Employment.  Causes. 
Hexcel’s obligation to make payments to Employee hereunder is subject to
the condition precedent that Hexcel has not terminated Employee’s employment by
reason of Employee’s theft, fraud, embezzlement or felony, provided that the
foregoing is directly connected with his employment and Hexcel determines, in
its sole and absolute discretion, that such act is inimical to its best
interests, or by reason of violation of Section 3.2 hereof, or for wrongfully
disclosing any secret process or imparting any confidential information, or
intentionally doing any other act materially inimical to the best interests of
Hexcel. In case of any such termination of Employee’s employment by Hexcel, all
of Employee’s rights and benefits hereunder shall terminate.


 


                4.3.          Breaches of Agreement.  Hexcel’s obligation to make payments to
Employee hereunder is subject to the further conditions precedent (a) that
Employee has not breached or violated any term, convenant or provision of this
Agreement, including, without limitation, those set forth in Section 3.2, and
(b) Employee has not engaged in any of the acts mentioned in Section 4.2 while
an employee of Hexcel, which acts are discovered subsequent to Employee’s
retirement or other termination of employment. In case of any such breach or
violation under clause (a) or if Employee has engaged in the acts referred to
in clause (b) all of Employee’s rights and benefits hereunder shall terminate.


 


                4.4.          Preservation of Remedies.  In addition to the conditions precedent to
Hexcel’s obligations hereunder for any payments or benefits, Hexcel shall also
be entitled to all of its legal and equitable remedies resulting from any
breach or violation of this Agreement by Employee, including, without
limitation, recovery from Employee of all damages resulting from such breach or
violation.


 


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5.             CHANGE
IN CONTROL.  If there is a change of
control of Hexcel, Employee’s right to receive payments the effective date of
such change in control shall vest. Employee shall have the option to receive a
lump sum payment equal to the present value of such payments within thirty (30)
days of such change in control, or to receive payments pursuant to the terms of
Section 1.


 


                                5.1           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 


 


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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


 


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                                                (e)           the approval by the stockholders of
the Company of a complete liquidation or dissolution of the Company:


 


6.             RIGHTS
OF PARTIES.


 


                6.1.          Change
of Beneficiary.  Employee shall have
the right at any time to change the person or persons designated as beneficiary
or contingent beneficiary on the Beneficiary Designation form attached hereto
or by written notice to Hexcel in form satisfactory to Hexcel. Such change of
beneficiary shall become effective upon receipt and approval by Hexcel. If
Employee is married, such change of beneficiary shall be subject to the written
consent of Employee’s spouse.


 


                                6.2.          No Employment Agreement.  Nothing contained in this Agreement shall be
construed as giving to Employee the right to continued employment with Hexcel.


 


                                6.3.          Other Retirement Plans.  Nothing in this Agreement shall affect any
right the Employee may otherwise have to participate in or under any retirement
plan of Hexcel or other entity.


 


7.             NOTICES.
 Any notice required or permitted to be
given under this Agreement shall be sufficient if in writing and sent by
prepaid certified or registered mail to his last known residence in the case of
Employee, or its principal office in the case of Hexcel.


 


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8.             TRANSFER
OF INTEREST.  Except as otherwise
expressly provided herein, Employee agrees, on behalf of his heirs, legatees,
personal representatives and designated beneficiaries, that this Agreement and
the rights, interests and benefits hereunder shall not be sold, assigned,
conveyed, hypothecated, or otherwise transferred, and no such interest shall be
subject to any liabilities or obligations of any bankruptcy proceedings, claims
or creditors, attachment, garnishment, execution, levy or other legal process
against any such person or his property, provided, however, that if Employee is
indebted to Hexcel for any reason whatsoever at the time of any distribution or
distributions, Hexcel shall have the right to apply so much of such
distribution as may be necessary to satisfy Employee’s indebtedness to Hexcel.


 


9.             ARBITRATION.


 


                                9.1.          Arbitrable Claims.  All disputes between Employee (and his
attorneys, successors, and assigns) and Hexcel (and its affiliates,
shareholders, directors, officers, employees, agents, successors, attorneys,
and assigns) of any kind whatsoever, including without limitation, all disputes
relating in any manner to the employment or termination of Employee, and all
disputes arising under this Agreement (“Arbitrable Claims”) shall be resolved
by arbitration. All persons and entities specified in the preceding sentence
(other than Hexcel and Employee) shall be considered third-party beneficiaries
of the rights and obligations created by this Section on Arbitration.
Arbitrable Claims shall include, but are not limited to, contract (express or
implied) and tort claims of all kinds, as well as all claims based on any
federal, state, or local law, statute, or regulation, excepting only claims
under applicable workers’ compensation law and unemployment insurance claims.
Arbitration shall be final and binding upon the parties and shall be the
exclusive remedy for all Arbitrable 


 


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Claims, except that Hexcel may, at its
option, seek injunctive relief and damages in court for any breach of Section
3.2 of this Agreement. Subject to the foregoing sentence, THE PARTIES HEREBY
WAIVE ANY RIGHTS THEY MAY HAVE TO TRIAL BY JURY IN REGARD TO ARBITRABLE CLAIMS.


 


                                9.2.          Procedure.  Arbitration of Arbitrable Claims shall be in
accordance with the Employment Dispute Resolution Rules of the American
Arbitration Association (“AAA Employment Rules”), except as provided otherwise
in this Agreement. Arbitration shall be initiated by providing written notice
to the other party with a statement of the claim(s) asserted, the facts upon
which the claim(s) are based, and the remedy sought. In any arbitration, the
burden of proof shall be allocated as provided by applicable law. Either party
may bring an action in court to compel arbitration under this agreement and to
enforce an arbitration award. Otherwise, neither party shall initiate or
prosecute any lawsuit or administrative action in any way related to any
Arbitrable Claim. The Federal Arbitration Act shall govern the interpretation
and enforcement of this Section.


 


                                9.3           Arbitrator Selection and
Authority.  All disputes involving
Arbitrable Claims shall be decided by a single arbitrator. The arbitrator shall
be selected by mutual agreement of the parties within thirty (30) days of the
mailing or hand delivery, as applicable, of the notice initiating the
arbitration. If the parties cannot agree on an arbitrator, then the complaining
party shall notify the AAA and request selection of an arbitrator in accordance
with the AAA Employment Rules. The arbitrator shall have the same authority as
a court to award equitable relief, damages, costs, and fees as provided by law
for the particular claim(s) asserted. The fees of the arbitrator shall be paid
by the losing party, as identified by the arbitrator. The arbitrator shall have
exclusive authority to resolve all Arbitrable Claims, 


 


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including, but not limited to, any claim that
all or any part of this Agreement is void or unenforceable.


 


                                9.4.          Confidentiality.  All proceedings and documents prepared in
connection with any Arbitrable Claim shall be confidential and, unless
otherwise required by law, the subject matter thereof shall not be disclosed to
any person other than the parties to the proceeding, their counsel, witnesses
and experts, the arbitrator, and, if involved, the court and court staff. All
documents filed with the arbitrator or with a court shall be filed under seal.
The parties shall stipulate to all arbitration and court orders necessary to
effectuate fully the provisions of this subsection concerning confidentiality.


 


                                9.5.          Continuing Obligations.  The rights and obligations of Employee and
Hexcel set forth in this Section 9 shall survive the termination of Employee’s
employment and the expiration of this Agreement.


 


10.           INSURANCE
BENEFITS


 


                                10.1.        Life Insurance.  Subject to Sections 10.3 and 10.4, Hexcel
shall keep in force and pay for life insurance for Employee should Employee
retire or otherwise cease to be employed by Hexcel (“termination”) in the
following amounts so long as Employee has not received all of the payments to
which Employee is entitled under this Agreement.


 


                                                (a)           For the period prior to the time
Employee has received any payments under this Agreement and prior to the
Employee’s 65th birthday, an amount equal to two (2) times the
present value of Employee’s potential payments hereunder (in accordance with
Section 1.2 at the time of termination, provided such insurance shall not exceed
the amount of life insurance on Employee in effect at the time of retirement or
other termination.


 


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  Example:

  
	
   

  	
  Salary $80,000

  
	
   

  	
  Employee Insurance $240,000

  
	
   

  	
  Present Value of Potential Payments $200,000

  
	
   

  	
  Then lesser of

  
	
   

  	
  2 X $200,000 = $400,000

  
	
   

  	
  Insurance at term = $240,000

  
	
   

  	
  Therefore, $240,000 life insurance.

  



 


After Employee’s 65th birthday,
but only while Employee is receiving payments under this Agreement, an amount
equal to one (1) times the present value of Employee’s potential payments
hereunder (in accordance with Section 1.2 at the time of retirement or other
termination, provided such insurance shall not exceed the amount of life
insurance on Employee in effect at the time of termination.


 


	
   

  	
  Example:

  
	
   

  	
  Salary $80,000

  
	
   

  	
  Employee Insurance
  $240,000

  
	
   

  	
  Present Value of Potential
  Payments $200,000

  
	
   

  	
  Then lesser of

  
	
   

  	
  1 X $200,000 = $200,000

  
	
   

  	
  Employee Insurance =
  $240,000

  
	
   

  	
  Therefore, $200,000 life
  insurance.

  
	
   

  	
   

  



 


 


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                                10.2.        Medical and Dental Insurance.  Hexcel, at its expense, shall continue to
cover Employee in its group medical and dental insurance plan during those
periods life insurance is maintained for Employee pursuant to Section 10.1.


 


                                10.3.        Termination of Benefits.  Notwithstanding anything set forth herein,
Employee shall not be entitled to any benefits under Sections 10.1 and 10.2
should Employee receive a lump sum benefit hereunder or after Employee’s 75th
birthday.


 


                                10.4.        Eligibility.  Notwithstanding anything set forth herein,
Hexcel shall have no obligations under sections 10.1 or 10.2 unless all of the
following conditions precedent are satisfied:


 


                                                (a)           At the time of Employee’s retirement
or other termination, he was employed by Hexcel for not less than five (5)
years; and


 


                                                (b)           Employee was not terminated for any
reason set forth in Section


 


4.2; and


 


                                                (c)           Employee is in full compliance with
his obligations under this Agreement, including without limitation his
obligations under Section 3.2.


 


11.           MISCELLANEOUS.  All payments received pursuant to this
Agreement shall be subject to applicable payroll taxes and taxes withholding.
This Agreement shall inure to the benefit of and be binding upon the successors
and assigns of Hexcel and the heirs, legatees, personal representatives and
designated beneficiaries of Employee.


 


                                The
parties understand and agree that the preceding Sections recite the sole
consideration for this Agreement and that no representation or promise has been
made by Employee or Hexcel in regard to the subject matter of this Agreement,
except as expressly set forth in this Agreement. This Agreement shall supersede
all prior or contemporaneous 


 


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agreements and understandings between the
parties whether written or oral, express or implied, with respect to executive
deferred compensation, except to the extent that the provisions of any such
agreement have been expressly referred to in this Agreement as having continued
effect.


 


                                This
Agreement may not be modified, amended, or terminated except by an instrument
in writing, signed by each of the parties.


 


                                Notwithstanding
anything to the contrary contained in this Agreement, if any provisions hereof,
or the application thereof to any circumstance, is held invalid for any reason
whatsoever, such invalid provision shall be severable and shall not affect any other
provision hereof or the application thereof to any other circumstances which
can be given effect without such invalid provisions or application. This
Agreement is entered into in contemplation of and shall be interpreted and
enforced in accordance with Delaware law. For convenience, references to the
Employee herein are masculine, but shall be deemed to include the feminine
gender if Employee is female. Paragraph and Section headings have been inserted
for convenience only, and in no way shall be used to interpret or otherwise
affect the terms of this Agreement.


 


                                TO
EVIDENCE THEIR AGREEMENT to the foregoing, the parties have executed this
Agreement the day and year first above written.


	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  HEXCEL CORPORATION

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  a Delaware corporation

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  /s/ Joseph H. Shaulson

  	
   

  	
   

  	
   

  	
   

  	
  By

  	
  /s/ David M. Wong

  
	
  Joseph H. Shaulson

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  David M. Wong

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Vice President, Corporate
  Affairs

  



 


 


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