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 


 

















 


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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