Exhibit
10.3


 


SUBSIDIARY GUARANTY


 


This SUBSIDIARY
GUARANTY is entered into as of March 1, 2005 by the undersigned
(each a “Guarantor”, and together
with any future Subsidiaries executing this Guaranty, being collectively
referred to herein as the “Guarantors”)
in favor of and for the benefit of DEUTSCHE BANK TRUST COMPANY AMERICAS, as
agent for and representative of (in such capacity herein called “Guarantied Party”) the financial
institutions (“Lenders”) party to
the Credit Agreement referred to below and any Swap Counterparties (as
hereinafter defined).


 


RECITALS.


 


A.                                   Hexcel
Corporation, a Delaware corporation (“Company”),
has entered into that certain Credit Agreement dated as of March 1, 2005
with Lenders and Guarantied Party, as Administrative Agent for Lenders (said
Credit Agreement, as it may hereafter be amended, restated, supplemented or
otherwise modified from time to time, being the “Credit Agreement”; capitalized terms defined therein and not
otherwise defined herein being used herein as therein defined).


 


B.                                     Company
may from time to time enter, or may from time to time have entered, into one or
more Interest Rate Agreements or Currency Agreements (collectively, the “Lender Swap Agreements”) with one or more
Persons that are Lenders or Affiliates of Lenders at the time such Lender Swap
Agreements are entered into (in such capacity, collectively, “Swap Counterparties”) in accordance with
the terms of the Credit Agreement, and it is desired that the payment
obligations of Company under the Lender Swap Agreements, including without
limitation the obligation of Company to make payments thereunder in the event
of early termination thereof, together with all obligations of Company under
the Credit Agreement and the other Loan Documents, be guarantied hereunder.


 


C.                                     Guarantied
Party, Lenders and each Swap Counterparty for which Guarantied Party has
received the notice required by Section 18 hereof are sometimes referred
to herein as “Beneficiaries”.


 


D.                                    The
Guarantied Obligations (as hereinafter defined) are being incurred for and will
inure to the benefit of Guarantors (which benefits are hereby acknowledged).


 


E.                                      It
is a condition precedent to the making of the initial Loans under the Credit
Agreement that Company’s obligations thereunder be guarantied by Guarantors.


 


F.                                      Guarantors
are willing irrevocably and unconditionally to guaranty such obligations of
Company.


 


NOW, THEREFORE,
based upon the foregoing and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, and in order to induce
Lenders and Guarantied Party to enter into the Credit Agreement and to make
Loans and other extensions of credit thereunder and to induce Swap
Counterparties to enter into the Lender Swap Agreements, Guarantors hereby
agree as follows:


 


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1.                                      Guaranty.                                          (a)
Guarantors jointly and severally irrevocably and unconditionally guaranty, as
primary obligors and not merely as sureties, the due and punctual payment in
full of all Guarantied Obligations (as hereinafter defined) when the same shall
become due, whether at stated maturity, by acceleration, demand or otherwise
(including amounts that would become due but for the operation of the automatic
stay under Section 362(a) of the Bankruptcy Code).  The term “Guarantied
Obligations” means any and all Obligations of Company and all
payment obligations of Company under Lender Swap Agreements, now or hereafter
made, incurred or created, whether absolute or contingent, liquidated or
unliquidated, whether due or not due, and however arising under or in
connection with the Credit Agreement, the Lender Swap Agreements, this Guaranty
and the other Loan Documents, including those arising under successive
borrowing transactions under the Credit Agreement which shall either continue
such obligations of Company or from time to time renew them after they have
been satisfied.


 


Each Guarantor acknowledges that a portion of the
Loans may be advanced to it, that Letters of Credit may be issued for the
benefit of its business and that the Guarantied Obligations are being incurred
for and will inure to its benefit.


 


Any interest on any portion of the Guarantied
Obligations that accrues after the commencement of any proceeding, voluntary or
involuntary, involving the bankruptcy, insolvency, receivership,
reorganization, liquidation or arrangement of Company (or, if interest on any
portion of the Guarantied Obligations ceases to accrue by operation of law by
reason of the commencement of said proceeding, such interest as would have
accrued on such portion of the Guarantied Obligations if said proceeding had
not been commenced) shall be included in the Guarantied Obligations because it
is the intention of each Guarantor and Guarantied Party that the Guarantied
Obligations should be determined without regard to any rule of law or order
that may relieve Company of any portion of such Guarantied Obligations.


 


In the event that all or any portion of the Guarantied
Obligations is paid by Company, the obligations of each Guarantor hereunder
shall continue and remain in full force and effect or be reinstated, as the
case may be, in the event that all or any part of such payment(s) is rescinded
or recovered directly or indirectly from Guarantied Party or any other
Beneficiary as a preference, fraudulent transfer or otherwise, and any such
payments that are so rescinded or recovered shall constitute Guarantied
Obligations.


 


Subject to the other provisions of this Section 1,
upon the failure of Company to pay any of the Guarantied Obligations when and
as the same shall become due, each Guarantor will upon demand pay, or cause to
be paid, in cash, to Guarantied Party for the ratable benefit of Beneficiaries,
an amount equal to such amounts that have become due.


 


(b)                                 Anything
contained in this Guaranty to the contrary notwithstanding, the obligations of
each Guarantor under this Guaranty and the other Loan Documents shall be
limited to a maximum aggregate amount equal to the largest amount that would
not render its obligations hereunder subject to avoidance as a fraudulent
transfer or conveyance under Section 548 of Title 11 of the United States
Code or any applicable provisions of comparable state law (collectively, the “Fraudulent Transfer Laws”), in each case
after giving effect to all other liabilities of such Guarantor, contingent or
otherwise, that are relevant under the Fraudulent


 


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Transfer Laws
(specifically excluding, however, any liabilities of such Guarantor (x) in
respect of intercompany indebtedness to Company or other affiliates of Company
to the extent that such indebtedness would be discharged in an amount equal to
the amount paid by such Guarantor hereunder and (y) under any guaranty of
Subordinated Indebtedness which guaranty contains a limitation as to maximum
amount similar to that set forth in this Section 1(b), pursuant to which
the liability of such Guarantor hereunder is included in the liabilities taken
into account in determining such maximum amount) and after giving effect as
assets to the value (as determined under the applicable provisions of the
Fraudulent Transfer Laws) of any rights to subrogation, reimbursement,
indemnification or contribution of such Guarantor pursuant to applicable law or
pursuant to the terms of any agreement.


 


(c)                                  Each
Guarantor under this Guaranty desires to allocate among themselves
(collectively, the “Contributing Guarantors”),
in a fair and equitable manner, their obligations arising under this
Guaranty.  Accordingly, in the event any
payment or distribution is made on any date by a Guarantor under this Guaranty,
each such Guarantor or such other guarantor shall be entitled to a contribution
from each of the other Contributing Guarantors in the maximum amount permitted
by law so as to maximize the aggregate amount of the Guarantied Obligations
paid to Beneficiaries.


 


2.                                      Guaranty
Absolute; Continuing Guaranty.  The
obligations of each Guarantor hereunder are irrevocable, absolute, independent
and unconditional and shall not be affected by any circumstance which
constitutes a legal or equitable discharge of a guarantor or surety other than
payment in full of the Guarantied Obligations. 
In furtherance of the foregoing and without limiting the generality
thereof, each Guarantor agrees that:  (a) this
Guaranty is a guaranty of payment when due and not of collectibility;
(b) Guarantied Party may enforce this Guaranty upon the occurrence and
during the continuance of an Event of Default under the Credit Agreement or the
occurrence of an early termination date or similar termination event under any
Lender Swap Agreements notwithstanding the existence of any dispute between
Company and any Beneficiary with respect to the existence of such event;
(c) the obligations of each Guarantor hereunder are independent of the
obligations of Company under the Loan Documents or the Lender Swap Agreements
and the obligations of any other guarantor of obligations of Company and a
separate action or actions may be brought and prosecuted against each Guarantor
whether or not any action is brought against Company or any of such other
guarantors and whether or not Company is joined in any such action or actions;
and (d) a payment of a portion, but not all, of the Guarantied Obligations
by one or more Guarantors shall in no way limit, affect, modify or abridge the
liability of such or any other Guarantor for any portion of the Guarantied
Obligations that has not been paid.  This
Guaranty is a continuing guaranty and shall be binding upon each Guarantor and
its successors and assigns, and each Guarantor irrevocably waives any right to
revoke this Guaranty as to future transactions giving rise to any Guarantied
Obligations.


 


3.                                      Actions
by Beneficiaries.  Any Beneficiary
may from time to time, without notice or demand and without affecting the
validity or enforceability of this Guaranty or giving rise to any limitation,
impairment or discharge of any Guarantor’s liability hereunder, (a) renew,
extend, accelerate or otherwise change the time, place, manner or terms of
payment of the Guarantied Obligations, (b) settle, compromise, release or
discharge, or accept or refuse any offer of performance with respect to, or
substitutions for, the Guarantied Obligations or any


 


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agreement relating
thereto and/or subordinate the payment of the same to the payment of any other
obligations, (c) request and accept other guaranties of the Guarantied
Obligations and take and hold security for the payment of this Guaranty or the
Guarantied Obligations, (d) release, exchange, compromise, subordinate or
modify, with or without consideration, any security for payment of the
Guarantied Obligations, any other guaranties of the Guarantied Obligations, or
any other obligation of any Person with respect to the Guarantied Obligations,
(e) enforce and apply any security now or hereafter held by or for the
benefit of any Beneficiary in respect of this Guaranty or the Guarantied
Obligations and direct the order or manner of sale thereof, or exercise any other
right or remedy that Guarantied Party or the other Beneficiaries, or any of
them, may have against any such security, as Guarantied Party in its discretion
may determine consistent with the Credit Agreement, the Lender Swap Agreements
and any applicable security agreement, including foreclosure on any such
security pursuant to one or more judicial or nonjudicial sales, whether or not
every aspect of any such sale is commercially reasonable, and (f) exercise
any other rights available to Guarantied Party or the other Beneficiaries, or
any of them, under the Loan Documents or the Lender Swap Agreements.


 


4.                                      No
Discharge.  This Guaranty and the
obligations of Guarantors hereunder shall be valid and enforceable and shall
not be subject to any limitation, impairment or discharge for any reason (other
than payment in full of the Guarantied Obligations), including without
limitation the occurrence of any of the following, whether or not any Guarantor
shall have had notice or knowledge of any of them:  (a) any failure to assert or enforce or
agreement not to assert or enforce, or the stay or enjoining, by order of
court, by operation of law or otherwise, of the exercise or enforcement of, any
claim or demand or any right, power or remedy with respect to the Guarantied Obligations
or any agreement relating thereto, or with respect to any other guaranty of or
security for the payment of the Guarantied Obligations, (b) any waiver or
modification of, or any consent to departure from, any of the terms or
provisions of the Credit Agreement, any of the other Loan Documents, the Lender
Swap Agreements or any agreement or instrument executed pursuant thereto, or of
any other guaranty or security for the Guarantied Obligations, (c) the
Guarantied Obligations, or any agreement relating thereto, at any time being
found to be illegal, invalid or unenforceable in any respect, (d) the
application of payments received from any source to the payment of indebtedness
other than the Guarantied Obligations, even though Guarantied Party or the
other Beneficiaries, or any of them, might have elected to apply such payment
to any part or all of the Guarantied Obligations, (e) any failure to
perfect or continue perfection of a security interest in any collateral which
secures any of the Guarantied Obligations, (f) any defenses, set-offs or
counterclaims which Company may assert against Guarantied Party or any
Beneficiary in respect of the Guarantied Obligations, including but not limited
to failure of consideration, breach of warranty, payment, statute of frauds,
statute of limitations, accord and satisfaction and usury, and (g) any
other act or thing or omission, or delay to do any other act or thing, which
may or might in any manner or to any extent vary the risk of a Guarantor as an
obligor in respect of the Guarantied Obligations.


 


5.                                      Waivers.  Each Guarantor waives, for the benefit of
Beneficiaries:  (a) any right to
require Guarantied Party or the other Beneficiaries, as a condition of payment
or performance by such Guarantor, to (i) proceed against Company, any
other guarantor of the Guarantied Obligations or any other Person,
(ii) proceed against or exhaust any security held from Company, any other
guarantor of the Guarantied Obligations or any other Person, (iii) proceed
against or have resort to any balance of any deposit account or credit on the
books


 


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of any Beneficiary in
favor of Company or any other Person, or (iv) pursue any other remedy in
the power of any Beneficiary; (b) any defense arising by reason of the
incapacity, lack of authority or any disability or other defense of Company
including, without limitation, any defense based on or arising out of the lack
of validity or the unenforceability of the Guarantied Obligations or any agreement
or instrument relating thereto or by reason of the cessation of the liability
of Company from any cause other than payment in full of the Guarantied
Obligations; (c) any defense based upon any statute or rule of law which
provides that the obligation of a surety must be neither larger in amount nor
in other respects more burdensome than that of the principal; (d) any
defense based upon Guarantied Party’s or any other Beneficiary’s errors or
omissions in the administration of the Guarantied Obligations, except behavior
that amounts to bad faith; (e) (i) any principles or provisions of
law, statutory or otherwise, that are or might be in conflict with the terms of
this Guaranty and any legal or equitable discharge of such Guarantor’s
obligations hereunder, (ii) the benefit of any statute of limitations
affecting such Guarantor’s liability hereunder or the enforcement hereof,
(iii) any rights to set-offs, recoupments and counterclaims, and
(iv) promptness, diligence and any requirement that any Beneficiary
protect, secure, perfect or insure any Lien or any property subject thereto;
(f) notices, demands, presentments, protests, notices of protest, notices
of dishonor and notices of any action or inaction, including acceptance of this
Guaranty, notices of default under the Credit Agreement, notices of default or
early termination under any Lender Swap Agreement or any agreement or
instrument related thereto, notices of any renewal, extension or modification
of the Guarantied Obligations or any agreement related thereto, notices of any
extension of credit to Company and notices of any of the matters referred to in
Sections 3 and 4 and any right to consent to any thereof; and (g) to the
fullest extent permitted by law, any defenses or benefits that may be derived
from or afforded by law which limit the liability of or exonerate guarantors or
sureties, or which may conflict with the terms of this Guaranty.


 


6.                                      Guarantors’
Rights of Subrogation, Contribution, Etc.; Subordination of Other Obligations.  Until the Guarantied Obligations (other than
Unasserted Obligations) shall have been paid in full and the Commitments shall
have terminated and all Letters of Credit shall have expired or been cancelled,
each Guarantor shall withhold exercise of (a) any claim, right or remedy,
direct or indirect, that such Guarantor now has or may hereafter have against
Company or any of its assets in connection with this Guaranty or the
performance by such Guarantor of its obligations hereunder, in each case
whether such claim, right or remedy arises in equity, under contract, by
statute, under common law or otherwise and including without limitation
(i) any right of subrogation, reimbursement or indemnification that such
Guarantor now has or may hereafter have against Company with respect to the
Guarantied Obligations, (ii) any right to enforce, or to participate in,
any claim, right or remedy that any Beneficiary now has or may hereafter have
against Company, and (iii) any benefit of, and any right to participate
in, any collateral or security now or hereafter held by any Beneficiary and
(b) any right of contribution with respect to the Guarantied Obligations
that such Guarantor now has or may hereafter have against any other guarantor
of any of the Guarantied Obligations. 
Each Guarantor further agrees that, to the extent the agreement to
withhold the exercise of its rights of subrogation, reimbursement,
indemnification and contribution as set forth herein is found by a court of
competent jurisdiction to be void or voidable for any reason, any such rights
of subrogation, reimbursement or indemnification such Guarantor may have
against Company or against any collateral or security, and any rights of
contribution such Guarantor may have against any such other guarantor, shall be
junior and subordinate to any rights Guarantied Party or the


 


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other Beneficiaries may
have against Company, to all right, title and interest Guarantied Party or the
other Beneficiaries may have in any such collateral or security, and to any
right Guarantied Party or the other Beneficiaries may have against such other
guarantor.


 


Any indebtedness of Company to a Guarantor collected
or received by such Guarantor after an Event of Default has occurred and is
continuing, and any amount paid to a Guarantor on account of any subrogation,
reimbursement, indemnification or contribution rights referred to in the
preceding paragraph when all Guarantied Obligations have not been paid in full,
shall be held in trust for Guarantied Party on behalf of Beneficiaries and
shall forthwith be paid over to Guarantied Party for the benefit of
Beneficiaries to be credited and applied against the Guarantied Obligations.


 


7.                                      Expenses.  Guarantors jointly and severally agree to
pay, or cause to be paid, on demand, and to save Guarantied Party and the other
Beneficiaries harmless against liability for, (i) any and all costs and
expenses (including reasonable fees, costs of settlement, and disbursements of
counsel) incurred or expended by Guarantied Party or any other Beneficiary in
connection with the enforcement of or preservation of any rights under this
Guaranty and (ii) any and all costs and expenses (including those arising
from rights of indemnification) required to be paid by Guarantors under the
provisions of any other Loan Document.


 


8.                                      Financial
Condition of Company.  No Beneficiary
shall have any obligation, and each Guarantor waives any duty on the part of
any Beneficiary, to disclose or discuss with such Guarantor its assessment, or
such Guarantor’s assessment, of the financial condition of Company or any
matter or fact relating to the business, operations or condition of
Company.  Each Guarantor has adequate
means to obtain information from Company on a continuing basis concerning the financial
condition of Company and its ability to perform its obligations under the Loan
Documents and the Lender Swap Agreements, and each Guarantor assumes the
responsibility for being and keeping informed of the financial condition of
Company and of all circumstances bearing upon the risk of nonpayment of the
Guarantied Obligations.


 


9.                                      Set
Off.  Upon the occurrence and during
the continuation of an Event of Default, in addition to any other rights any
Beneficiary may have under applicable law, if any amount shall at any time be
due and owing by a Guarantor to any Beneficiary under this Guaranty, such
Beneficiary is authorized at any time or from time to time, without notice to
any Person other than Administrative Agent (any such notice being expressly waived),
to set off and to appropriate and to apply any and all deposits (general or
special, including but not limited to indebtedness evidenced by certificates of
deposit, whether matured or unmatured) and any other indebtedness of such
Beneficiary owing to a Guarantor or for the credit or the account of such
Guarantor against and on account of the Guarantied Obligations and liabilities
of such Guarantor to any Beneficiary under this Guaranty.


 


10.                               Amendments
and Waivers.  No amendment,
modification, termination or waiver of any provision of this Guaranty, and no
consent to any departure by any Guarantor therefrom, shall in any event be
effective without the written concurrence of Guarantied Party and, in the case
of any such amendment or modification, Guarantors.  Any such waiver or


 


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consent shall be
effective only in the specific instance and for the specific purpose for which
it was given.


 


11.                               Miscellaneous.  It is not necessary for Beneficiaries to
inquire into the capacity or powers of any Guarantor or Company or the
officers, directors or any agents acting or purporting to act on behalf of any
of them.


 


The rights, powers and remedies given to Beneficiaries
by this Guaranty are cumulative and shall be in addition to and independent of
all rights, powers and remedies given to Beneficiaries by virtue of any statute
or rule of law or in any of the Loan Documents or the Lender Swap Agreements or
any agreement between one or more Guarantors and one or more Beneficiaries or
between Company and one or more Beneficiaries. 
Any forbearance or failure to exercise, and any delay by any Beneficiary
in exercising, any right, power or remedy hereunder shall not impair any such
right, power or remedy or be construed to be a waiver thereof, nor shall it
preclude the further exercise of any such right, power or remedy.


 


In case any provision in or obligation under this
Guaranty shall be invalid, illegal or unenforceable in any jurisdiction, the
validity, legality and enforceability of the remaining provisions or
obligations, or of such provision or obligation in any other jurisdiction,
shall not in any way be affected or impaired thereby.


 


THIS GUARANTY AND THE RIGHTS AND
OBLIGATIONS OF GUARANTORS, GUARANTIED PARTY AND THE OTHER BENEFICIARIES
HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO
CHOICE OF LAW RULES (OTHER THAN SECTION 5-1401 OF THE GENERAL OBLIGATIONS
LAW OF THE STATE OF NEW YORK).


 


This Guaranty shall inure to the benefit of
Beneficiaries and their respective successors and permitted assigns under the
Credit Agreement or Lender Swap Agreement, as the case may be.


 


ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST ANY GUARANTOR
OR GUARANTIED PARTY ARISING OUT OF OR RELATING TO THIS GUARANTY MAY BE BROUGHT
IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE OF NEW
YORK, AND BY EXECUTION AND DELIVERY OF THIS GUARANTY GUARANTIED PARTY AND EACH
GUARANTOR ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES, GENERALLY
AND UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF THE AFORESAID COURTS AND
WAIVES ANY DEFENSE OF FORUM NON CONVENIENS AND IRREVOCABLY AGREES TO BE BOUND
BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS GUARANTY.  Guarantied Party and each Guarantor agrees
that service of all process in any such proceeding in any such court may be
made by registered or certified mail, return receipt requested, to such party
at its address set forth below its signature hereto, such service being
acknowledged by such party to be sufficient for personal jurisdiction in any
action against such party in any such court and to be otherwise effective and
binding


 


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service in every
respect.  Nothing herein shall affect the
right to serve process in any other manner permitted by law or shall limit the
right of any party hereto or any Beneficiary to bring proceedings against such
other party hereto or any Beneficiary in the courts of any other jurisdiction.


 


EACH GUARANTOR AND, BY ITS ACCEPTANCE
OF THE BENEFITS HEREOF, GUARANTIED PARTY EACH AGREES TO WAIVE ITS RESPECTIVE
RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING
OUT OF THIS GUARANTY OR ANY DEALINGS BETWEEN THEM RELATED HERETO.  THE SCOPE OF THIS WAIVER IS INTENDED TO BE
ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND
THAT RELATE TO THE SUBJECT MATTER OF THIS TRANSACTION, INCLUDING CONTRACT
CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS AND ALL OTHER COMMON LAW AND
STATUTORY CLAIMS. EACH GUARANTOR AND, BY ITS ACCEPTANCE OF THE BENEFITS HEREOF,
GUARANTIED PARTY EACH (I) ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL
INDUCEMENT FOR SUCH GUARANTOR AND GUARANTIED PARTY TO ENTER INTO A BUSINESS
RELATIONSHIP, THAT SUCH GUARANTOR AND GUARANTIED PARTY HAVE ALREADY RELIED ON
THIS WAIVER IN ENTERING INTO THIS GUARANTY OR ACCEPTING THE BENEFITS THEREOF,
AS THE CASE MAY BE, AND THAT EACH WILL CONTINUE TO RELY ON THIS WAIVER IN THEIR
RELATED FUTURE DEALINGS, AND (II) FURTHER WARRANTS AND REPRESENTS THAT
EACH HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL AND THAT EACH KNOWINGLY
AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL
COUNSEL.  THIS WAIVER IS IRREVOCABLE,
MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING (OTHER THAN BY
A MUTUAL WRITTEN WAIVER SPECIFICALLY REFERRING TO THIS PROVISION AND EXECUTED
BY GUARANTIED PARTY AND EACH GUARANTOR), AND THIS WAIVER SHALL APPLY TO ANY
SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS OF THIS GUARANTY.  In the event of litigation, this Guaranty may
be filed as a written consent to a trial by the court.


 


12.                               Additional
Guarantors.  The initial Guarantor(s)
hereunder shall be such of the Subsidiaries of Company as are signatories
hereto on the date hereof.  From time to
time subsequent to the date hereof, Subsidiaries of Company may become parties
hereto, as additional Guarantors (each an “Additional
Guarantor”), by executing a counterpart of this Guaranty.  A form of such a counterpart is attached as
Exhibit A.  Upon delivery of any such
counterpart to Guarantied Party, notice of which is hereby waived by Guarantors,
each such Additional Guarantor shall be a Guarantor and shall be as fully a
party hereto as if such Additional Guarantor were an original signatory
hereof.  Each Guarantor expressly agrees
that its obligations arising hereunder shall not be affected or diminished by
the addition or release of any other Guarantor hereunder, nor by any election
of the Guarantied Party not to cause any Subsidiary of Company to become an
Additional Guarantor hereunder.  This
Guaranty shall be fully effective as to any Guarantor that is or becomes a
party hereto regardless of whether any other Person becomes or fails to become
or ceases to be a Guarantor hereunder.


 


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13.                               Counterparts;
Effectiveness.  This Guaranty and any
amendments, waivers, consents or supplements hereto or in connection herewith may
be executed in any number of counterparts and by the different parties hereto
in separate counterparts, each of which when so executed and delivered,
including by facsimile, shall be deemed to be an original for all purposes; but
all such counterparts together shall constitute but one and the same
instrument; signature pages may be detached from multiple separate counterparts
and attached to a single counterpart so that all signature pages are physically
attached to the same document.  This
Guaranty shall become effective upon the execution of a counterpart hereof by
each of the parties hereto and receipt by each Guarantor and the Guarantied
Party of written or telephonic notification of such execution and authorization
of delivery thereof.


 


14.                               Guarantied
Party as Agent.


 


(a)                                  Guarantied
Party has been appointed to act as Guarantied Party hereunder by Lenders.  Guarantied Party shall be obligated, and
shall have the right hereunder, to make demands, to give notices, to exercise
or refrain from exercising any rights, and to take or refrain from taking any
action, solely in accordance with this Guaranty and the Credit Agreement; provided
that Guarantied Party shall exercise, or refrain from exercising, any remedies
under or with respect to this Guaranty in accordance with the instructions of
(i) Requisite Lenders, or (ii) after payment in full of all
Obligations under the Credit Agreement and the other Loan Documents (other than
Unasserted Obligations), the cancellation or expiration of all Letters of
Credit and the termination of the Commitments, the holders of a majority of the
aggregate amount then due and payable (exclusive of expenses and similar
payments but including any early termination payments then due) under Lender
Swap Agreements (including Lender Swap Agreements that have been terminated)
(Requisite Lenders or, if applicable, such holders being referred to herein as “Requisite Obligees”).


 


(b)                                 Guarantied
Party shall at all times be the same Person that is Administrative Agent under
the Credit Agreement.  Written notice of
resignation by Administrative Agent pursuant to subsection 9.5 of the
Credit Agreement shall also constitute notice of resignation as Guarantied
Party under this Guaranty; and appointment of a successor Administrative Agent
pursuant to subsection 9.5 of the Credit Agreement shall also constitute
appointment of a successor Guarantied Party under this Guaranty.  Upon the acceptance of any appointment as
Administrative Agent under subsection 9.5 of the Credit Agreement by a
successor Administrative Agent, that successor Administrative Agent shall
thereupon succeed to and become vested with all the rights, powers, privileges
and duties of the retiring Guarantied Party under this Guaranty, and the
retiring Guarantied Party under this Guaranty shall promptly (i) transfer
to such successor Guarantied Party all sums held hereunder, together with all
records and other documents necessary or appropriate in connection with the
performance of the duties of the successor Guarantied Party under this
Guaranty, and (ii) take such other actions as may be necessary or
appropriate in connection with the assignment to such successor Guarantied
Party of the rights created hereunder, whereupon such retiring Guarantied Party
shall be discharged from its duties and obligations under this Guaranty.  After any retiring Guarantied Party’s
resignation hereunder as Guarantied Party, the provisions of this Guaranty
shall inure to its benefits as to any actions taken or omitted to be taken by
it under this Guaranty while it was Guarantied Party hereunder.


 


9





















 


15.                               Notice
of Lender Swap Agreements. 
Guarantied Party shall not be deemed to have any duty whatsoever with
respect to any Swap Counterparty until it shall have received written notice in
form and substance satisfactory to Guarantied Party from Company, a Guarantor
or the Swap Counterparty as to the existence and terms of the applicable Lender
Swap Agreement.


 


16.                               Termination
and Discharge.


 


(a)                                  Upon
the latest of (i) payment in full in cash of the Guarantied Obligations (other
than in respect of any and all Unasserted Obligations) then owing to the
Guarantied Party or any other Person (including without limitation, any other
Beneficiary), (ii) the Revolving Loan Commitment Termination Date, to the
extent that there exists Revolving Loan Exposure, (iii) the Tranche B
Term Loan Maturity Date, to the extent that there exists Term Loan Exposure,
(iv) the termination or expiration of all Letters of Credit and (v) the
cancellation or termination of all Commitments, this Guaranty shall immediately
and automatically terminate, and the obligations (other than in respect of any
and all Unasserted Obligations) of the Guarantors hereunder with respect to the
Guarantied Party and any other Person (including without limitation, any
Beneficiary) shall automatically be discharged and released, in each case,
without any further action by the Guarantied Party or any other such Person.


 


(b)                                 While
the Credit Agreement is in effect, if (A) all or a majority of the stock of a
Guarantor or any of its successors in interest under this Guaranty shall be
sold or otherwise disposed of (including by merger or consolidation) in
accordance with the terms of the Loan Documents or (B) a Guarantor shall
liquidate or dissolve in accordance with the terms of the Loan Documents, then,
in each case the obligations of such Guarantor or such successor in interest,
as the case may be, hereunder shall automatically be discharged and released
without any further action by the Guarantied Party or any other Person
(including any other Beneficiary) effective as of the time of such sale,
merger, liquidation or dissolution.


 


(c)                                  Upon
any termination of the Guaranty or any discharge and release of a Guarantor’s
obligations hereunder, in each case as described in subsections (a) and (b) of
this Section 16, the Guarantied Party will, at the applicable Guarantor’s
expense, execute and deliver to such Guarantor such documents as such Guarantor
shall reasonably request to evidence such termination, discharge or release.


 


10





















 


IN WITNESS WHEREOF,
each Guarantor and Guarantied Party have caused this Guaranty to be duly
executed and delivered by their respective officers thereunto duly authorized
as of the date first written above.


 


	
   

  	
  CLARK-SCHWEBEL HOLDING CORP.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Ira J.
  Krakower

  	
   

  
	
   

  	
  Title:
  Secretary

  
	
   

  	
  Address:

  	
  c/o Hexcel
  Corporation

  
	
   

  	
   

  	
  Two Stamford
  Plaza

  
	
   

  	
   

  	
  281 Tresser
  Blvd.

  
	
   

  	
   

  	
  Stamford, CT
  06901

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  HEXCEL REINFORCEMENTS CORP.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Ira J.
  Krakower

  	
   

  
	
   

  	
  Title:
  Secretary

  
	
   

  	
  Address:

  	
  c/o Hexcel
  Corporation

  
	
   

  	
   

  	
  Two Stamford
  Plaza

  
	
   

  	
   

  	
  281 Tresser
  Blvd.

  
	
   

  	
   

  	
  Stamford, CT
  06901

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  DEUTSCHE BANK TRUST COMPANY AMERICAS

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Susan
  LeFevre

  	
   

  
	
   

  	
  Title:
  Director

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Paul O’Leary

  	
   

  
	
   

  	
  Title: Vice
  President

  
	
   

  	
   

  
	
   

  	
  Address:

  
	
   

  	
   

  	
  60 Wall Street

  
	
   

  	
   

  	
  MS NYC60-4305

  
	
   

  	
   

  	
  New York, NY 10005

  
	
   

  	
   

  	
  Attn: Marguerite Sutton

  
	
   

  	
   

  	
  (212) 280-6150

  
							



 





















 


EXHIBIT A


 


[FORM OF COUNTERPART FOR ADDITIONAL GUARANTORS]


 


This COUNTERPART (this “Counterpart”), dated               ,
20    , is delivered pursuant to Section 15 of the
Guaranty referred to below.  The
undersigned hereby agrees that this Counterpart may be attached to the
Guaranty, dated as of                           ,
20       (as it may be from time to time amended,
restated, modified or supplemented, the “Guaranty”;
capitalized terms used herein not otherwise defined herein shall have the
meanings ascribed therein), among the Guarantors named therein and                   ,
as Guarantied Party.  The undersigned, by
executing and delivering this Counterpart, hereby becomes an Additional
Guarantor under the Guaranty in accordance with Section 15 thereof and
agrees to be bound by all of the terms thereof.


 


IN WITNESS WHEREOF,
the undersigned has caused this Counterpart to be duly executed and delivered
by its officer thereunto duly authorized as of                             ,
20    .


 


	
   

  	
  [NAME OF ADDITIONAL GUARANTOR]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  [Title:

  	
   

  	
  ]

  
	
   

  	
  Address: