Exhibit 10.32

 

PERFORMANCE BASED AWARD AGREEMENT

under the

Hexcel Corporation 2003 Incentive Stock Plan

 

This Performance Based Award Agreement (the “Agreement”), is entered into as of
the Grant Date, by and between Hexcel Corporation, a Delaware corporation (the
“Company”), and the Grantee.

 

Pursuant to the Hexcel Corporation 2003 Incentive Stock Plan (the “Plan”), the
Compensation Committee (the “Committee”) of the Board of Directors of the
Company (the “Board”) has determined that the Grantee shall be granted a
Performance Based Award (“PBA”) upon the terms and subject to the conditions
hereinafter contained.  Capitalized terms used but not defined herein shall have
the meanings assigned to them in the Plan.

 

1.                                       Notice of Grant; Incorporation of Plan.
A Notice of Grant is attached hereto as Annex A and incorporated by reference
herein. This PBA may result in the Grantee being awarded up to that number of
unrestricted shares of Common Stock equal to the Maximum Share Award as set
forth in the Notice of Grant.  Unless otherwise provided herein, capitalized
terms used in this Agreement and set forth in the Notice of Grant shall have the
meanings ascribed to them in the Notice of Grant and capitalized terms used in
this Agreement and set forth in the Plan shall have the meanings ascribed to
them in the Plan. The Plan is incorporated by reference and made a part of this
Agreement, and this Agreement shall be subject to the terms of the Plan, as the
Plan may be amended from time to time, provided that any such amendment of the
Plan must be made in accordance with Section IX of the Plan. The PBA granted
hereunder constitutes an Award within the meaning of the Plan.

 

2.                                       Award of Unrestricted Shares of Common
Stock.

 

(a)                                  There are three Annual Performance Periods
(2009, 2010 and 2011) and a Long-Term Performance Period (2009-2011) under this
PBA.  Each Annual Performance Period shall have one or more performance measures
identical to those selected by the Committee for such Annual Performance Period
under the Annual Cash Bonus Plan. The RONCE performance measure set forth on
Annex B is the cumulative performance measure for the Long-Term Performance
Period.

 

(b)                                 As soon as practicable (but in no event
later than 90 days) after the end of each Annual Performance Period, the
Committee shall determine the Annual Payout Percentage for such Annual
Performance Period. The Annual Performance Share Award with respect to each
Annual Performance Period shall be obtained by multiplying the Annual Target
Share Award by the Annual Payout Percentage with respect to such Annual
Performance Period.

 

(c)                                  So long as the Minimum Award Condition is
met and the Grantee is employed by the Company or a Subsidiary at the end of the
Long-Term Performance Period, the Grantee shall, at such time as the number of
unrestricted shares of Common Stock is determined under this subsection 2(c),
become entitled to receive that number of unrestricted shares of Common Stock
equal to the greater of (i) the number

 

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determined in accordance with the Share Award Schedule that appears on Annex B
and (ii) the sum of the Annual Performance Share Awards for each of the three
Annual Performance Periods; provided however that if the sum of the Annual
Performance Share Awards is greater than the number determined in accordance
with the Share Award Schedule that appears on Annex B, and the Company does not
attain the Threshold Level of the Long-Term Performance Measure, then the number
of unrestricted shares of Common Stock to be received by the Grantee shall be
equal to 75% of the sum of the Annual Performance Share Awards. The Committee
shall certify the degree of achievement of the Long-Term Performance Measure
promptly (but in no event later than 90 days) after the end of the Long-Term
Performance Period.

 

(d)                                 Subject to Sections 3 and 4, if the Minimum
Award Condition is not met, the Grantee shall receive nothing and this PBA shall
be null and void.

 

3.                                       Termination of Employment.

 

(a)                                  For purposes of the grant hereunder, any
transfer of employment by the Grantee among the Company and its Subsidiaries
shall not be considered a termination of employment.  Any change in employment
that does not constitute a “separation from service” within the meaning of
Section 1.409A-1(h) of the Treasury Regulations (or any successor provision)
shall not be considered a termination of employment.  Any change in employment
that does constitute a “separation from service” within the meaning of
Section 1.409A-1(h) of the Treasury Regulations (or any successor provision)
shall be considered a termination of employment.

 

(b)                                 If during the first Annual Performance
Period the Grantee dies or terminates employment due to Disability or
Retirement, or the Grantee’s employment is involuntarily terminated without
Cause or the Grantee terminates employment for Good Reason, then the Grantee
shall be entitled to receive that number of unrestricted shares of Common Stock
equal to the Annual Performance Share Award determined for the first Annual
Performance Period multiplied by a fraction equal to M/12, where M is the number
of partial or total months the Grantee is employed by the Company during the
first Annual Performance Period.

 

(c)                               If during the second Annual Performance Period
the Grantee dies or terminates employment due to Disability or Retirement, or
the Grantee’s employment is involuntarily terminated without Cause or the
Grantee terminates employment for Good Reason, then the Grantee shall be
entitled to receive a number of unrestricted shares of Common Stock equal to the
lesser of (i) the sum of (A) the Annual Performance Share Award determined for
the first Annual Performance Period and (B) the Annual Performance Share Award
determined for the second Annual Performance Period multiplied by a fraction
equal to M/12, where M is the number of partial or total months the Grantee is
employed by the Company during the second Annual Performance Period, and
(ii) the PBA Target Share Award.

 

(d)                                 If during the last Annual Performance Period
the Grantee dies or terminates employment due to Disability or Retirement, or
the Grantee’s employment is involuntarily terminated without Cause or the
Grantee terminates employment for Good Reason, then, so long as the Minimum
Award Condition is met, the Grantee shall be entitled to receive that number of
unrestricted shares of Common Stock to which the Grantee would have been
entitled to receive had he been employed by the Company or

 

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a Subsidiary at the end of the Long-Term Performance Period multiplied by a
fraction equal to M/36, where M is the number of partial or total months the
Grantee is employed by the Company during the Long-Term Performance Period.

 

(e)                                  If, at any time during the Long-Term
Performance Period, the Grantee voluntarily terminates his employment other than
for Good Reason or is terminated by the Company for Cause, the Grantee shall
receive nothing and this PBA shall be null and void.

 

(f)                                    The Grantee shall become entitled to
receive shares of unrestricted Common Stock pursuant to Section 3(b) or
3(c) upon the date on which the Committee certifies the degree of achievement of
the applicable performance measure(s) for the Annual Performance Period during
which the Grantee’s employment terminated. The Grantee shall become entitled to
receive shares of unrestricted Common Stock under Section 3(d) at the same time
as the Grantee would become entitled to receive shares of unrestricted Common
Stock under Section 2(c) if the Grantee were employed by the Company or a
Subsidiary at the end of the Long-Term Performance Period.

 

4.                                       Change in Control.  If a Change in
Control occurs anytime during the Long-Term Performance Period and prior to the
Grantee’s receiving any payment under this PBA, the Grantee will immediately be
awarded the PBA Target Share Award.  Payment of the PBA Target Share Award shall
discharge any obligation the Company has or may have to the Grantee under this
PBA in its entirety and the Grantee shall not be entitled to payment of any
additional amounts from the Company under this PBA.

 

5.                                       Transferability of PBA; No Incidents of
Ownership; Dividends

 

(a)                                  Except as provided in this Section 6(a),
the PBA may not be sold, assigned, transferred, pledged, hypothecated or
otherwise disposed of, except by will or the laws of descent and distribution.
Any attempt to transfer the PBA in contravention of this Section 5(a) is void ab
initio.  The PBA shall not be subject to execution, attachment or other process.
Notwithstanding the foregoing, the Grantee shall be permitted to transfer the
PBA to members of his or her immediate family (i.e., children, grandchildren or
spouse), trusts for the benefit of such family members, and partnerships or
other entities whose only partners or equity owners are such family members;
provided, however, that no consideration can be paid for the transfer of the PBA
and the transferee of the PBA must agree to be subject to all conditions
applicable to the PBA (including all of the terms and conditions of this
Agreement) prior to transfer.

 

(b)                                 Except as set forth in Section 5(c), the
Grantee shall not possess any incidents of ownership (including, without
limitation, dividend and voting rights) in shares of Common Stock in respect of
the PBA unless and until the Grantee becomes entitled to receive unrestricted
shares of Common Stock.

 

(c)                                  If one or more cash dividends are paid with
respect to Common Stock during the Long-Term Performance Period then at the time
unrestricted shares of Common Stock are distributed to the Grantee, the Grantee
shall receive a cash payment equal to the aggregate dividend amount the Grantee
would have received had Grantee owned such shares of Common Stock on the
dividend record date(s).

 

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6.                                       Forfeiture of PBA on Certain
Conditions.

 

(a)                                  Notwithstanding anything to the contrary
contained in this Agreement, should the Grantee while an employee or after
termination of employment fail to comply with the “Protective Condition” (as
defined in Section 6(b)), then the PBA shall immediately expire upon the
Grantee’s failure to meet such condition.

 

(b)                                 “Protective Condition” shall mean that the
Grantee (A) complies with all terms and provisions of any obligation of
confidentiality to the Company and/or one of its Subsidiaries contained in a
written agreement signed by the Grantee, and (B) does not engage, in any
capacity, directly or indirectly, including but not limited to as employee,
agent, consultant, manager, executive, 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 the Grantee’s termination of employment with the Company
anywhere in the world (except that the Grantee may be employed by a competitor
of the Company so long as the Grantee’s duties and responsibilities do not
relate directly or indirectly to the business segment of the new employer which
is competitive with the business conducted by the Company).

 

7.                                       Issuance of Shares.  Subject to section
11(e) below, any shares of Common Stock to be issued to the Grantee under this
PBA (i) shall be delivered to the Grantee promptly, but in no event later than
ten days, after such time as the Grantee becomes entitled to receive such shares
of Common Stock, and (ii) may be issued in either certificated form, or in
uncertificated form (via the Direct Registration System or otherwise).

 

8.                                       Equitable Adjustment.  The aggregate
number of shares of Common Stock subject to this PBA shall be proportionately
adjusted for any increase or decrease in the number of issued shares of Common
Stock resulting from a subdivision or consolidation of shares or other capital
adjustment, or the payment of a stock dividend or other increase or decrease in
such shares, effected without the receipt of consideration by the Company, or
other change in corporate or capital structure. The Committee shall also make
the foregoing changes and any other changes, including changes in the classes of
securities available, to the extent reasonably necessary or desirable to
preserve the intended benefits under this Agreement in the event of any other
reorganization, recapitalization, merger, consolidation, spin-off, extraordinary
dividend or other distribution or similar transaction involving the Company.

 

9.                                       Taxes.  Upon the distribution of
unrestricted shares of Common Stock to the Grantee, absent a notification by the
Grantee to the Company (or an agent designated by the Company to administer the
Company’s stock incentive program) which is received by the Company or its agent
at least three business days prior to the date of such distribution, to the
effect that the Grantee will pay to the Company or a Subsidiary by check or wire
transfer any taxes (“Withholding Taxes”) the Company reasonably determines it or
a Subsidiary is required to withhold under applicable tax laws with respect to
such shares, the Company will reduce the number of shares of Common Stock to be
distributed to the Grantee in connection with such distribution by a number of
shares of Common Stock the Fair Market Value (as of the date the Grantee becomes
entitled to receive such shares) of which is equal to the total amount of
Withholding Taxes. In the event the Grantee elects to pay to the Company or a
Subsidiary the Withholding Taxes with respect to such shares by check or wire
transfer,

 

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the Company’s obligation to deliver such shares of Common Stock shall be subject
to the payment in available funds by the Grantee of all Withholding Taxes with
respect to such shares. The Company or a Subsidiary shall, to the extent
permitted by law, have the right to deduct from any payment of any kind
otherwise due to the Grantee any federal, state, local or other taxes required
to be withheld with respect to such payment.

 

10.                                 No Guarantee of Employment.  Nothing set
forth herein or in the Plan shall confer upon the Grantee any right of continued
employment for any period by the Company, or shall interfere in any way with the
right of the Company to terminate such employment.

 

11.                                 Section 409A.

 

(a)                                  It is intended that this Agreement comply
in all respects with the requirements of Sections 409A (a)(2) through (4) of the
Code and applicable Treasury Regulations and other generally applicable guidance
issued thereunder (collectively, the “Applicable Regulations”), and this
Agreement shall be interpreted for all purposes in accordance with this intent.

 

(b)                                 Notwithstanding any term or provision of
this Agreement (including any term or provision of the Plan incorporated herein
by reference), the parties hereto agree that, from time to time, the Company
may, without prior notice to or consent of the Grantee, amend this Agreement to
the extent determined by the Company, in the exercise of its discretion in good
faith, to be necessary or advisable to prevent the inclusion in the Grantee’s
gross income pursuant to the Applicable Regulations of any compensation intended
to be deferred hereunder. The Company shall notify the Grantee as soon as
reasonably practicable of any such amendment affecting the Grantee.

 

(c)                                  In the event that the amounts payable under
this Agreement are subject to any taxes, penalties or interest under the
Applicable Regulations, the Grantee shall be solely liable for the payment of
any such taxes, penalties or interest.

 

(d)                                 Except as otherwise specifically provided
herein, the time for distribution of unrestricted shares of Common Stock under
this PBA shall not be accelerated or delayed for any reason, unless to the
extent necessary to comply with or permitted under the Applicable Regulations.

 

(e)                                  Notwithstanding any term or provision of
this Agreement to the contrary, if the Grantee is a specified employee (as
defined in Section 409A(a)(2)(B)(i) of the Code) as of the date of his or her
termination of employment, then any amounts payable to the Grantee under this
PBA on account of his or her termination of employment (including without
limitation any dividends payable to the Grantee pursuant to Section 5(c) if
payable on account of his or her termination of employment) shall be paid to the
Grantee upon the later of (i) the date such amounts would otherwise be payable
to the Grantee under this PBA without regard to this Section 11(e) and (ii) the
date which is six months following the date of the Grantee’s termination of
employment.  The preceding sentence shall not apply in the event Grantee’s
termination of employment is due to his or her death.  If the Grantee should
terminate employment for a reason other than his or her death but subsequently
die during the six-month period described in subclause (ii) of the first
sentence above, such six-month period shall be deemed to end on the date of the
Grantee’s death.

 

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12.                                 Notices.  Any notice required or permitted
under this Agreement shall be deemed given when delivered personally, or when
deposited in a United States Post Office, postage prepaid, addressed, as
appropriate, to the Grantee at the last address specified in Grantee’s
employment records, or such other address as the Grantee may designate in
writing to the Company, or to the Company, Attention:  Corporate Secretary, or
such other address as the Company may designate in writing to the Grantee.

 

13.                                 Failure To Enforce Not a Waiver.  The
failure of either party hereto to enforce at any time any provision of this
Agreement shall in no way be construed to be a waiver of such provision or of
any other provision hereof.

 

14.                                 Governing Law.  This Agreement shall be
governed by and construed according to the laws of the State of Delaware,
without regard to the conflicts of laws provisions thereof.

 

15.                                 Counterparts.  This Agreement may be
executed in two or more counterparts, each of which shall be an original but all
of which together shall represent one and the same agreement.

 

16.                                 Miscellaneous.  This Agreement cannot be
changed or terminated orally. This Agreement and the Plan contain the entire
agreement between the parties relating to the subject matter hereof. The section
headings herein are intended for reference only and shall not affect the
interpretation hereof.

 

17.                                 Definitions.  For purposes of this
Agreement:

 

(a)                                  “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;

 

(b)                                 “Annual Cash Bonus Plan” shall mean the
Company’s Management Incentive Compensation Plan, or any successor or
replacement annual cash bonus plan adopted by the Board or the Committee;

 

(c)                                  “Annual Payout Percentage” with respect to
an Annual Performance Period shall mean the percentage of target cash award
certified by the Committee under the Annual Cash Bonus Plan for such Annual
Performance Period;

 

(d)                                 “Annual Performance Period” shall mean each
of the three calendar years 2009, 2010 and 2011;

 

(e)                                  “Annual Performance Share Award” shall be
determined as set forth in Section 2(b);

 

(f)                                    “Annual Target Share Award” shall mean
one-third of the PBA Target Share Award;

 

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(g)                                 “Beneficial Owner” (and variants thereof)
shall have the meaning given in Rule 13d-3 promulgated under the Exchange Act
and, only to the extent such meaning is more restrictive than the meaning given
in Rule 13d-3, the meaning determined in accordance with Section 318(a) of the
Code;

 

(h)                                 “Cause” shall mean (i) the willful and
continued failure by the Grantee to substantially perform the Grantee’s duties
with the Company (other than any such failure resulting from the Grantee’s
incapacity due to physical or mental illness) after a written demand for
substantial performance is delivered to the Grantee by the Company, which demand
specifically identifies the manner in which the Company believes that the
Grantee has not substantially performed the Grantee’s duties, or (ii) the
willful engaging by the Grantee in conduct which is demonstrably and materially
injurious to the Company or its subsidiaries, monetarily or otherwise. For
purposes of clauses (i) and (ii) of this definition, no act, or failure to act,
on the Grantee’s part shall be deemed “willful” unless done, or omitted to be
done, by the Grantee not in good faith and without the reasonable belief that
the Grantee’s act, or failure to act, was in the best interest of the Company;

 

(i)                                     “Change in Control” shall mean any of
the following events:

 

(i)                                     any Person is or becomes the Beneficial
Owner, directly or indirectly, of more than 50% of either (A) the combined fair
market value of the then outstanding stock of the Company (the “Total Fair
Market Value”) 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: (I) any
acquisition by the Company or any of its Controlled Affiliates, (II) any
acquisition by any employee benefit plan (or related trust) sponsored or
maintained by the Company or any of its Controlled Affiliates, (III) any Person
who becomes such a Beneficial Owner in connection with a transaction described
in the exclusion within paragraph (iv) below and (IV) any acquisition of
additional stock or securities by a Person who owns more than 50% of the Total
Fair Market Value or Total Voting Power of the Company immediately prior to such
acquisition; or

 

(ii)                                  any Person is or becomes the Beneficial
Owner, directly or indirectly, of securities of the Company that, together with
any securities acquired directly or indirectly by such Person within the
immediately preceding twelve-consecutive month period, represent 40% or more of
the Total Voting Power of the Company; excluding, however, any acquisition
described in subclauses (I) through (IV) of subsection (i) above; or

 

(iii)                               a change in the composition of the Board
such that the individuals who, as of the effective date of this Agreement,
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 effective date, whose
election, or nomination for election by the Company’s stockholders, was made or
approved 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 an Incumbent Director; but, provided, further, that any such
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

 

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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 an Incumbent Director; provided finally, however, that, as of any
time, any member of the Board who has been a director for at least twelve
consecutive months immediately prior to such time shall be considered an
Incumbent Director for purposes of this definition, other than for the purpose
of the first proviso of this definition; or

 

(iv)                              there is consummated a merger or consolidation
of the Company or any direct or indirect Subsidiary of the Company or a sale or
other disposition of all or substantially all of the assets of the Company
(“Corporate Transaction”); excluding, however, such a Corporate Transaction
(A) pursuant to which all or substantially all of the individuals and entities
who are the Beneficial Owners, respectively, of the outstanding Common Stock of
the Company 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 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 company 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, and (B) immediately following which
the individuals who comprise the Board immediately prior thereto constitute at
least a majority of the board of directors of the company resulting from such
Corporate Transaction (including, without limitation, a company 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);

 

provided, however, that notwithstanding anything to the contrary in subsections
(i) through (iv) above, an event which does not constitute a change in the
ownership of the Company, a change in the effective control of the Company, or a
change in the ownership of a substantial portion of the assets of the Company,
each as defined in Section 1.409A-3(i)(5) of the Treasury Regulations (or any
successor provision), shall not be considered a Change in Control for purposes
of this Agreement;

 

(j)                                     “Disability” shall mean that, as a
result of the Grantee’s incapacity due to physical or mental illness or injury,
the Grantee shall not have performed all or substantially all of the Grantee’s
usual duties as an employee of the Company for a period of more than
one-hundred-fifty (150) days in any period of one-hundred-eighty (180)
consecutive days;

 

(k)                                  “Good Reason” for termination by the
Grantee of the Grantee’s employment shall mean the occurrence (without the
Grantee’s express written consent) of any one of the following acts by the
Company, or failures by the Company to act, unless, in the case of any act or
failure to act described in paragraphs (1), (5) or (6) below, such act or
failure to act is corrected prior to the date of termination of the Grantee’s
employment:

 

(1)                                  a significant adverse alteration in the
nature or status of the Grantee’s responsibilities, position or authority;

 

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(2)                                  a reduction by the Company in the Grantee’s
annual base salary as in effect on the date hereof or as the same may be
increased from time to time;

 

(3)                                  the relocation of the Grantee’s principal
place of employment to a location more than fifty (50) miles from the Grantee’s
principal place of employment or the Company’s requiring the Grantee to work
anywhere other than at such principal place of employment (or permitted
relocation thereof) except for required travel on the Company’s business to an
extent substantially consistent with the Grantee’s present business travel
obligations;

 

(4)                                  the failure by the Company to pay to the
Grantee any portion of the Grantee’s current compensation, or to pay to the
Grantee any portion of an installment of deferred compensation under any
deferred compensation program of the Company, within seven (7) days of the date
such compensation is due;

 

(5)                                  the failure by the Company to continue in
effect any compensation plan in which the Grantee participates which is material
to the Grantee’s total compensation, or any substitute plans adopted, unless an
equitable arrangement (embodied in an ongoing substitute or alternative plan)
has been made with respect to such plan, or the failure by the Company to
continue the Grantee’s participation therein (or in such substitute or
alternative plan) on a basis not materially less favorable, both in terms of the
amount or timing of payment of benefits provided and the level of the Grantee’s
participation relative to other participants; or

 

(6)                                  the failure by the Company to continue to
provide the Grantee with benefits substantially similar to those enjoyed by the
Grantee under any of the Company’s pension, savings, life insurance, medical,
health and accident, or disability plans in which the Grantee participates
(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), the taking of any other action by the Company which would directly or
indirectly materially reduce any of such benefits or deprive the Grantee of any
material fringe benefit enjoyed by the Grantee, or the failure by the Company to
provide the Grantee with the number of paid vacation days to which the Grantee
is entitled on the basis of years of service with the Company in accordance with
the Company’s normal vacation policy.

 

The Grantee’s right to terminate the Grantee’s employment for Good Reason shall
not be affected by the Grantee’s incapacity due to physical or mental illness.
The Grantee’s continued employment shall not constitute consent to, or a waiver
of rights with respect to, any act or failure to act constituting Good Reason
hereunder.

 

For purposes of any determination regarding the existence of Good Reason, any
claim by the Grantee that Good Reason exists shall be presumed to be correct
unless the Company establishes to the Board by clear and convincing evidence
that Good Reason does not exist;

 

(l)                                     “Long-Term Performance Measure” is
defined on Annex B;

 

(m)                               “Long-Term Performance Period” shall mean the
period beginning on January 1, 2009 and ending on December 31, 2011;

 

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(n)                                 “Maximum Share Award” is the maximum amount
of unrestricted shares of Common Stock that can be awarded to the Grantee under
this PBA, and is set forth on Annex A;

 

(o)                                 The “Minimum Award Condition” shall be
satisfied if either (i) the Threshold Level of the Long-Term Performance Measure
is attained, or (ii) the Annual Payout Percentage is greater than zero with
respect to at least one Annual Performance Period;

 

(p)                                 “PBA Target Share Award” shall mean one-half
of the Maximum Share Award set forth on Annex A;

 

(q)                                 “Person” shall have the meaning given in
Section 3(a)(9) of the Exchange Act, as modified and used in Sections 13(d) and
14(d) of the Exchange Act and, only to the extent such meaning is more
restrictive than the meaning given in Section 3(a)(9) of the Exchange Act (as
modified as above), the meaning determined in accordance with Sections
1.409A-3(i)(5)(v)(B), (vi)(D) or (vii)(C) of the Treasury Regulations (or any
successor provisions), as applicable;

 

(r)                                    “Retirement” shall mean termination of
the Grantee’s employment, other than by reason of death or Cause, either (A) at
or after age 65 or (B) at or after age 55 after five (5) years of employment by
the Company (or a Subsidiary thereof); and

 

(s)                                  “Threshold Level” is defined on Annex B.

 

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Annex A

 

NOTICE OF GRANT

PERFORMANCE BASED AWARD

HEXCEL CORPORATION 2003 INCENTIVE STOCK PLAN

 

The following employee of Hexcel Corporation, a Delaware corporation, or a
Subsidiary, has been granted a Performance Based Award in accordance with the
terms of this Notice of Grant and the Agreement to which this Notice of Grant is
attached.

 

The terms below shall have the meanings ascribed to them below when used in the
Agreement.

 

Grantee

 

 

 

 

 

Address of Grantee

 

 

 

 

 

Foreign Sub Plan, if applicable

 

 

 

 

 

Grant Date

 

January 26, 2009

 

 

 

Maximum number of unrestricted shares of Common Stock which may be granted as a
result of this PBA (“Maximum Share Award”)

 

 

 

IN WITNESS WHEREOF, the parties hereby agree to the terms of this Notice of
Grant and the Agreement to which this Notice of Grant is attached and execute
this Notice of Grant and the Agreement as of the Grant Date.

 

 

 

HEXCEL CORPORATION

Grantee

 

 

 

 

 

 

 

 

 

 

By:

 

 

 

 

 

 

 

 

Ira J. Krakower

 

 

 

Senior Vice President

 

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Annex B

 

The “Long-Term Performance Measure” shall be Return on Net Capital Employed, or
“RONCE,” as defined on Exhibit I attached hereto.

 

The “Target Level” of the Long-Term Performance Measure shall be     %.

 

The “Threshold Level” of the Long-Term Performance Measure shall be     %.

 

The “PBA Target Share Award” to be awarded is 50% of the Maximum Share Award (as
defined on Annex A).

 

Share Award Schedule

 

Degree of Attainment of Target Level of
Long-Term Performance Measure

 

Percentage of PBA Target Share Award
to be awarded to Grantee

 

 

 

112.5% or more

 

200%

 

 

 

106.25%

 

125%

 

 

 

100%

 

100%

 

 

 

93.75%

 

50%

 

 

 

less than 93.75%

 

0

 

Interpolation shall be used, on a ratable basis, to determine the number of
unrestricted shares of Common Stock to be awarded when the degree of attainment
of the Long-Term Performance Measure is between two percentages in the left hand
column above.

 

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Exhibit I

HEXCEL CORPORATION

Definition and Computation of RONCE

For Purposes Of

Performance Share Awards for 2009-2011 Performance Cycle

 

Computation:

 

“RONCE” shall be computed by dividing the Average return by the Average Capital
employed and expressed as a percentage:

 

Average Return

Average Capital Employed

 

Definitions:

 

“Average Capital Employed” shall mean the sum of Net Capital Employed as of
December 31, 2008, December 31, 2009, December 31, 2010 and December 31, 2011,
divided by four.

 

“Average Return” shall mean the sum of the Return for the calendar years of
2009, 2010 and 2011, divided by three.

 

“Cash” as of a particular date shall mean cash and cash equivalents of the
Company and its Subsidiaries as of such date, as reported in its financial
statements.

 

“Consolidated Operating Income” shall mean the operating income of the Company
and its Subsidiaries as reported in its financial statements.

 

“Equity in Earnings from Affiliated Companies” shall mean the equity in earnings
from affiliated companies of the Company and its Subsidiaries as reported in its
financial statements.

 

“Net Capital Employed” as of a particular date shall mean the sum of
Shareholder’s Equity and Total Debt as of such date, minus Cash as of such date.

 

“Other Income (Expense), Net” of the Company shall be any expense or income
arising from transactions outside the ordinary course of business including but
not limited to any of the sale or purchase of debt or equity securities of the
Company, debt refinancing or prepayment of debt, judgment or settlement of
claims or litigation, acquisitions or divestitures, termination of a pension
plan, the sale or purchase of tangible or intangible assets and the impairment
of tangible and intangible assets.

 

“Return” for a particular period shall mean the sum of Consolidated Operating
Income, Equity in Earnings from Affiliated Companies and Other Income (Expense),
Net for such period.

 

“RONCE” is an acronym for Return on Net Capital Employed.

 

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“Shareholder’s Equity” as of a particular date shall mean total stockholder’s
equity of the Company as reported in its financial statements as of such date.

 

“Total Debt” as of a particular date shall mean the sum of “notes payable and
current maturities of capital lease obligations” and “long-term notes payable
and capital lease obligations” of the Company and its Subsidiaries as of such
date, as reported in its financial statements.

 

The Compensation Committee shall retain its powers to make appropriate
adjustments to the RONCE performance goal to reflect the impact of unusual,
non-recurring or extraordinary income or expense not reflected in such goal as
defined, as authorized under the Company’s 2003 Incentive Stock Plan.

 

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