Document:

Exhibit 10.29

RESTRICTED STOCK UNIT AGREEMENT

under the

Hexcel Corporation
2003 Incentive Stock Plan

 

This Restricted
Stock Unit 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 Restricted Stock Units (“RSUs”)
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. 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 RSUs granted
herein constitute an Award within the meaning of the Plan.

2.         Terms of Restricted Stock Units.  The grant of RSUs provided in Section 1
hereof shall be subject to the following terms, conditions and restrictions:

(a)       The Grantee shall not possess any
incidents of ownership (including, without limitation, dividend and voting
rights) in shares of the Common Stock in respect of the RSUs until such RSUs
have vested and been distributed to the Grantee in the form of shares of Common
Stock.

(b)       Except as provided in this Section 2(b),
the RSUs and any interest therein may not be sold, assigned, transferred,
pledged, hypothecated or otherwise disposed of, except by will or the laws of
descent and distribution, prior to the distribution of the Common Stock in
respect of such RSUs and subject to the conditions set forth in the Plan and
this Agreement. Any attempt to transfer RSUs in contravention of this Section
is void ab initio. RSUs shall not be subject to execution, attachment or
other process. Notwithstanding the foregoing, the Grantee shall be permitted to
transfer RSUs 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 RSUs and the transferee of the RSUs musts agree to be subject to all
conditions applicable to the RSUs (including all of the terms and conditions of
this Agreement) prior to transfer.

(c)                      Forfeiture
of RSUs on Certain Conditions.

(i)    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 2(c)(ii)), then the RSUs, to the extent not
already converted into shares of Common Stock distributed to the Grantee, shall
immediately expire upon the Grantee’s failure to meet such condition.

(ii)   “Protective
Condition” shall mean that the Grantee (A) complies with all terms and
provisions of any obligation of confidentiality to the Company 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).

3.         Vesting and Conversion of RSUs.  Subject to Section 4, the RSUs shall vest and
be converted into an equivalent number of shares of Common Stock that will be
immediately distributed to the Grantee at the rate of 33-1/3% of the RSUs on
each of the first three anniversaries of the Grant Date.

4.         Termination of Employment; Change of
Control.

(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.  If the Grantee dies or terminates employment
due to Disability (as defined in the last Section hereof), all RSUs shall
immediately vest, be converted into shares of Common Stock and be distributed
to the Grantee.  If the Grantee’s
employment with the Company terminates due to the Grantee’s Retirement (as
defined in the last Section hereof), all RSUs shall continue to vest (and be
converted into an equivalent number of shares of Common Stock that will be
distributed to the Grantee) in accordance with Section 3 above. If the Grantee
dies during the three year period immediately following the Retirement of the
Grantee, then all RSUs shall immediately vest, be converted into shares of
Common Stock and be distributed to the Grantee’s personal representative.

(b)       Subject to Section 4(c), if the Grantee’s
employment terminates for any reason other than death, Disability or
Retirement, the Grantee shall forfeit all RSUs.

(c)       Notwithstanding any other provision
contained herein or in the Plan, in the event of a Change in Control (as
defined in the last Section hereof), all RSUs shall immediately vest, be
converted into shares of Common Stock and be distributed to the Grantee.

5.         Equitable Adjustment.

The aggregate
number of shares of Common Stock subject to the RSUs shall be proportionately
adjusted for any increase or decrease in the number of issued shares 

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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.

6.         Taxes.  The Grantee shall pay to the Company or a
Subsidiary promptly upon request any taxes the Company reasonably determines it
or a Subsidiary is required to withhold under applicable tax laws with respect
to the vesting and/or conversion of the RSUs. Such payment shall be made as
provided in Section VIII(f) of the Plan.

7.         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.

8.         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 Internal Revenue Code of 1986, as amended, 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.

9.         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.

10.       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.

11.       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.

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12.       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.

13.       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.

14.       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)       “Beneficial Owner” (and variants thereof)
shall have the meaning given in Rule 13d-3 promulgated under the Exchange Act;

(c)       “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;

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

(i)       any Person is or becomes the Beneficial
Owner, directly or indirectly, of 40% or more of either (A) the then
outstanding Common Stock of the Company (the “Outstanding Common Stock”) 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 and (III) any Person who becomes such a Beneficial Owner
in connection with a transaction described in the exclusion within paragraph
(iii) below; or

(ii)      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 

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Incumbent Directors (or
directors whose election or nomination for election was previously so approved)
shall be considered a member of the Incumbent Board; but, provided, further,
that any such individual whose initial assumption of office occurs as a result
of either an actual or threatened election contest (as such terms are used in
Rule 14a-11 of Regulation 14A promulgated under the Exchange Act) or other
actual or threatened solicitation of proxies or consents by or on behalf of a
person or legal entity other than the Board shall not be considered a member of
the Incumbent Board; or

(iii)     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 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); or

(iv)     the approval by the stockholders of the
Company of a complete liquidation or dissolution of the Company;

(e)       “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;

(f)        “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

(g)       “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).

 

 5

Annex A

NOTICE OF
GRANT

RESTRICTED
STOCK UNITS

HEXCEL
CORPORATION 2003 INCENTIVE STOCK PLAN

 

The following
employee of Hexcel Corporation, a Delaware corporation, or a Subsidiary, has
been granted restricted stock units 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

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Aggregate Number of RSUs Granted

  	
   

  	
   

  
							

 

        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 PresidentExhibit 10.38

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 granted up to that
number of Performance Based Restricted Stock Units (“PBRSUs”) as indicated 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 PBRSUs.  Subject to Sections 4 and 5, if, and only if,
the Threshold Level of the Performance Measure is met for the Performance
Period, the Grantee shall be awarded that number of PBRSUs in accordance with
the PBRSU Award Schedule that appears on Annex B.

(a)       As soon as practicable after the end of
the Performance Period, the Committee shall certify the degree of achievement
of the Performance Measure for the Performance Period.  If, and only if, the Threshold Level of the
Performance Measure has been met for the Performance Period, the Committee
shall determine the number of PBRSUs to be granted to the Grantee, in
accordance with the PBRSU Award Schedule that appears on Annex B.

(b)       If PBRSUs are granted to the Grantee, the
grant date shall be the date of certification by the Committee of the degree of
achievement of the Performance Measure for the Performance Period.

(c)       If the Threshold Level of the Performance
Measure is not met for the Performance Period, the Grantee shall receive
nothing and this PBA shall be null and void.

3.         Vesting and Conversion of PBRSUs.  Subject to Sections 4 and 5, PBRSUs shall
vest and be converted into an equivalent number of shares of Common Stock that
will be distributed to the Grantee as soon as practicable after the end of the
Service Period.  Upon the distribution of
the shares of Common Stock in respect of PBRSUs, the Company shall issue to the
Grantee or the Grantee’s personal representative a stock certificate
representing such shares of Common Stock, free of any restrictions.

4.         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.

(b)       Subject to Section 5, if, during the
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 Threshold Level of the Performance Measure is met for the Performance
Period, as soon as practicable after the Committee certifies the degree of
achievement of the Performance Measure for the Performance Period the Grantee
shall receive a certificate for that number of shares of Common Stock as
determined by the following formula:

	
  S = N * (Days Employed/730)

  
	
   

  
	
  Where

  
	
   

  
	
  S

  	
   

  	
  =

  	
   

  	
  Shares to be received by the Grantee

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  N

  	
   

  	
  =

  	
   

  	
  The number of PBRSUs the Grantee would have
  received, based on the degree of achievement of the Performance Measure for
  the Performance Period, had the Grantee been employed by the Company for the
  entire Performance Period

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Days

  	
   

  	
   

  	
   

  	
   

  
	
  Employed

  	
   

  	
  =

  	
   

  	
  The number of days the Grantee was employed during
  the Performance Period prior to the Grantee’s termination of employment

  

 

If the Threshold
Level of the Performance Measure is not met for the Performance Period, the
Grantee shall receive nothing and the PBA shall be null and void.

(c)       Subject to Section 5, if, during the
Service 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 immediately
upon the Grantee’s termination of employment PBRSUs granted to the Grantee
under Section 2 shall vest and be converted into an equivalent number of shares
of Common Stock that will be immediately distributed to the Grantee in the form
of a stock certificate.

(d)       If, during either the Performance Period
or the Service Period, the Grantee voluntarily terminates his employment other
than for Good Reason or is terminated for Cause, 

 2
 

the
Grantee shall receive nothing and the PBA and any PBRSUs that have been granted
hereunder shall be null and void.

5.               Change in
Control.

(a)       If a Change in Control occurs during the
Performance Period, (i) the Grantee will immediately be awarded that number of
PBRSUs that Grantee would have been awarded at the end of the Performance
Period if the degree of achievement of the Performance Measure for the
Performance Period was exactly 100% of the Target Amount of the Performance
Measure, and (ii) such PBRSUs shall vest and convert into shares as set forth
in Section 3.

(b)       If a Change in Control occurs during the
Service Period, then any PBRSUs held by the Grantee shall vest and convert into
shares as set forth in Section 3.

(c)       If following a Change in Control and
prior to the end of the Service 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 immediately upon the Grantee’s termination of employment all
PBRSUs held by the Grantee shall vest and be converted into an equivalent
number of shares of Common Stock that will be immediately distributed to the
Grantee in the form of a stock certificate.

(d)       If, in connection with a Change of
Control in which Common Stock is exchanged for another security or other form
of consideration the Qualifying Condition has not been met, then all PBRSUs
held by the Grantee shall vest and be converted into an equivalent number of
shares of Common Stock that will be immediately distributed to the Grantee.

6.         Transferability of PBA and PBRSUs;
No Incidents of Ownership; Dividends

(a)       Except as provided in this Section 6(a),
neither the PBA, the PBRSUs nor any interest therein may 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 or the
PBRSUs in contravention of this Section 6(a) is void ab initio. Neither
the PBA nor the PBRSUs shall be subject to execution, attachment or other
process. Notwithstanding the foregoing, the Grantee shall be permitted to
transfer the PBA or PBRSUs 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 or PBRSUs and the transferee of the PBA or
PBRSUs musts agree to be subject to all conditions applicable to the PBA and
PBRSUs (including all of the terms and conditions of this Agreement) prior to
transfer.

(b)       Except as set forth in Section 6(c), the
Grantee shall not possess any incidents of ownership (including, without
limitation, dividend and voting rights) in shares of the Common Stock in
respect of the PBA or the PBRSUs unless and until PBRSUs have been issued and
vested and been converted into shares of Common Stock distributed to the
Grantee.

 3
 

(c)       If one or more cash dividends are paid
with respect to the Common Stock during the Performance Period or the Service
Period and before PBRSUs have vested and converted into shares of Common Stock,
then at the time PBRSUs vest and convert into shares of Common Stock that are
distributed to the Grantee, the Grantee shall receive a cash payment equal to
the amounts Grantee would have received had Grantee owned the shares of Common
Stock with respect to such PBRSUs on the record dates with respect to such
dividends.

7.         Forfeiture of PBA or PBRSUs 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 7(b)), then the PBA and any PBRSUs (to the extent not
already converted into shares of Common Stock distributed to the Grantee),
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).

8.         Equitable Adjustment.

            The aggregate number of shares of
Common Stock subject to PBRSUs 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 conversion into shares of Common
Stock of some or all PBRSUs, absent a notification by the Grantee to the
Company which is received by the Company at least three business days prior to
the date of such conversion 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 PBRSUs which are the subject of such
conversion, the Company will reduce the number of shares of Common Stock to be
distributed to the Grantee in connection with such conversion by a number of
shares of Common Stock the Fair Market Value on the date of such conversion 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 

 4
 

Withholding
Taxes with respect to the conversion of some or all PBRSUs by check or wire
transfer, the Company’s obligation to deliver shares of Common Stock shall be
subject to the payment in available funds by the Grantee of all Withholding
Taxes with respect to PBRSUs which are the subject of such conversion.  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 Internal Revenue Code of 1986, as amended, 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.

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.

 5
 

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)       “Beneficial Owner” (and variants thereof)
shall have the meaning given in Rule 13d-3 promulgated under the Exchange Act;

(c)       “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;

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

(i)      any
Person is or becomes the Beneficial Owner, directly or indirectly, of 40% or
more of either (A) the then outstanding Common Stock of the Company (the “Outstanding
Common Stock”) 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 and (III) any
Person who becomes such a Beneficial Owner in connection with a transaction
described in the exclusion within paragraph (iii) below; or

(ii)     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 a member of the Incumbent Board; 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 Exchange Act) or other
actual or threatened solicitation of proxies or consents by or on behalf of a
person or legal entity other than the Board shall not be considered a member of
the Incumbent Board; or

 6
 

(iii)    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 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); or

(iv)   the approval by the stockholders of the
Company of a complete liquidation or dissolution of the Company;

(e)   “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;

(f)    “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;

(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;

 7
 

(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;

(g)   “Performance Measure” is defined on Annex B;

(h)   “Performance Period” shall mean the period
beginning on January 1, 2007 and ending on December 31, 2008;

(i)    “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;

(j)    “Qualifying Condition” shall mean, with
respect to a Change of Control in which Common Stock is exchanged for another
security or other form of consideration, that:

(i)   upon such Change of Control, but subject to
the fulfillment of the other terms and conditions of the PBRSUs, the holders of
PBRSUs shall be entitled to 

 8
 

receive such other security or consideration to the
same extent the holders would have been entitled to receive such security or
consideration had the PBRSUs converted into Common Stock immediately prior to
the Change of Control;

(ii)  the other terms and conditions of the PBRSUs
remain substantially unchanged; and

(iii)   such other security is listed on at least
one “exchange” (as such term is defined in Section 3(a) of the Exchange Act)
intended for use by the public.

(k)   “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);

(l)    “Service Period” shall mean the period
beginning on January 1, 2009 and ending on December 31, 2009;

(m)  “Target Amount of the Performance Measure” is
defined on Annex B; and

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

 

 9

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

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Maximum Number
  of PBRSUs which 

  may be Granted as a result of this 

  Performance Based Award (“Maximum 

  PBRSU Amount”)

  	
   

  	
   

  
								

 

        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

  	
   

  

 

Annex B

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

  
	
   

  
	
  The “Target Amount of the Performance Measure” shall
  be     %.

  
	
   

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

  
	
   

  
	
  The “Target Amount of PBRSUs” to be awarded is
  66-2/3% of the Maximum PBRSU Amount (as defined on Annex A).

  

 

PBRSU Award Schedule

	
  Degree of Attainment of
  Performance Measure

  	
   

  	
  Percentage of
  Target Amount of PBRSUs to be Awarded

  
	
   

  	
   

  	
   

  
	
  % or more

  	
   

  	
  150%

  
	
   

  	
   

  	
   

  
	
  %

  	
   

  	
  100%

  
	
   

  	
   

  	
   

  
	
  %

  	
   

  	
  50%

  
	
   

  	
   

  	
   

  
	
  less
  than    %

  	
   

  	
  0

  
	
   

  	
   

  	
   

  

 

Interpolation shall be used, on a ratable basis, to determine the
number of PBRSUs to be awarded when the degree of attainment of the Performance
Measure is between two percentages in the left hand column above.

 

Exhibit I

HEXCEL CORPORATION

Definition and Computation of RONCE

For Purposes Of

Performance Share Awards for 2007-2008 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, 2006,
December 31, 2007 and December 31, 2008, divided by three.

“Average Return”
shall mean the sum of the Return for the calendar years of 2007 and 2008,
divided by two.

“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 net income of the Company and its Subsidiaries as
reported in its financial statements together with the sum of expenses (income)
related to preferred dividends and accretion, equity in (earnings) losses of
affiliated companies and partnerships, income taxes, interest expense (net of
interest income) and Non-Operating Gains and Losses of the Company.

“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.

“Non-Operating
Gains and Losses” 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, 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 Non-Operating Gains and Losses for such period.

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

“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.

 

 13

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