Document:

Exhibit 10.35

 

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 within 90 days 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.  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)           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, within 90 days after the end of 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; provided, however, that if the Grantee is a “specified
employee” within the meaning of Section 409A(a)(2)(B)(i) of the
Internal Revenue Code of 1986, as amended (the “Code”) as of the date of such
termination, all PBRSUs shall immediately vest but shall not be converted into
shares of Common Stock and distributed to the Grantee until the earlier of (i) the
date which is six months after the date of the Grantee’s termination of
employment and (ii) the date of the Grantee’s death.

 

(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, 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; provided, however, that if the
Grantee is a “specified employee” within the meaning of Section 409A(a)(2)(B)(i) of
the Code as of the date of such termination, all PBRSUs shall immediately vest
but shall not be converted into shares of Common Stock and distributed to the
Grantee until the earlier of (i) the date which is six months after the
date of the Grantee’s termination of employment and (ii) the date of the
Grantee’s death.

 

(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, or in the event of
the termination of this Agreement within twelve months of a complete
liquidation or dissolution of the Company that is taxed under Section 331
of the Code, 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.

 

(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 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 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 the RSUs as provided in Sections
3, 4 and 5 shall not be accelerated or delayed for any reason, unless to the
extent necessary to comply with or permitted under the Applicable Regulations.

 

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)           “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;

 

(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 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 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 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;

 

(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;

 

(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, 2008 and ending on December 31,
2009;

 

(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 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;

 

(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
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, 2010 and ending on December 31,
2010;

 

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

 

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

 

 

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 50% 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

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  113.3% or more

  	
   

  	
  200%

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  109%

  	
   

  	
  150%

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  100%

  	
   

  	
  100%

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  87%

  	
   

  	
  50%

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  less than 87%

  	
   

  	
  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 2008-2009 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,
2007, December 31, 2008 and December 31, 2009, divided by three.

 

“Average
Return” shall mean the sum of the Return for the calendar years of 2008 and
2009, 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 Other Expense (Income), Net, 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.

 

“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.

 

“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.Exhibit 10.46(b)

 

SERVICE AGREEMENT

 

BETWEEN

 

CIBA-GEIGY PLC

 

AND

 

MR W HUNT

 

 

CIBA-GEIGY UK GROUP KEY EXECUTIVE SERVICE AGREEMENT

 

THIS
AGREEMENT is made the 1st day of January 1992 BETWEEN

 

CIBA-GEIGY PLC

 

(hereinafter
called “the Company”) and

 

MR W HUNT

 

(hereinafter
called “the Employee”)

 

WHEREBY
IT IS AGREED AS FOLLOWS:

 

The
Company shall employ the Employee and the Employee shall serve the Company upon
the following terms:

 

1.             COMMENCEMENT

 

                This agreement shall have effect from 1st
January 1992 and revoke all previous agreements and arrangements relating
to the Employee’s employment with the Company. 
The Employee’s employment under this agreement forms part of a period of
continuous employment with the Company.

 

2.             DUTIES AND PLACE OF
EMPLOYMENT

 

(a)   The employee shall be
employed as Managing Director, Bonded Structures, or in such other capacity as
shall be mutually agreed.

 

(b)   The Employee’s principal
place of employment will be Ciba-Geigy Bonded Structures, Duxford

 

(c)   The Employee’s hours of work
will be those operating at the Employee’s principal place of employment.

 

(d)   The Employee shall devote
his attention to the business of the Company and shall not, without the consent
of the Company, be directly engaged, concerned or interested 

 

2

 

(otherwise than as a stock or shareholder in a company listed on the
Stock Exchange or in the Unlisted Securities Market) in any other business or
employment whatsoever.

 

(e)   The Employee shall use his
best endeavours to improve and extend the business of the Company and in this
connection shall give all reasonable assistance to the Directors and Managers
of the Company in whatever Direction the same may properly be required.

 

(f)    The Employee shall discharge
his duties diligently and according to the best of his skill, and shall obey
and observe all lawful orders given to him by any Director of the Company or
any other person authorized in that behalf.

 

3.             REMUNERATION

 

(a)   The Employee shall receive
an annual salary at the rate of £92,667or at such higher rate as may be
notified to the Employee by the Company or as may from time to time be agreed
by the parties.

 

(b)   The Employee shall be paid,
the addition to his annual salary, a bonus equal to 4 percent of the Employee’s
basic monthly salary at the date of payment multiplied by the number of full
months service with the Company completed by the Employee in the year in
respect of which payment is made.

 

(c)   The Company shall review the
performance of the Employee at the end of each year.  If it is satisfied on such review that the
Employee’s performance merits special Recognition, it may at its discretion in
addition to any salary adjustment pay to the Employee a performance bonus.

 

(d)   During absence from work
through sickness or injury the Employee will be entitled to receive sick pay in
accordance with the provisions set out in the Company’s Personnel Policy Manual
for the time being in force (hereinafter referred to as the Personnel Policy
Manual).

 

3

 

4.             OTHER BENEFITS

 

(a)   Pension:       The Employee shall unless
given written notification to the contrary be a member of the Company pension
scheme as described in the pensions booklet.

 

(b)   Company Car:        The Company shall make a
company car available to the Employee. 
The type of car and the conditions on which it is made available shall
be governed by the Company Car Policy for the time being in force.

 

(c)   Private Health Insurance:        The Employee and his
dependants shall be entitled to membership of the Company’s Private Health
Insurance scheme.

 

(d)   Life Assurance Scheme:  The Employee shall, for so long as he remains
a member of the Company’s pension scheme, be covered under the Company’s Life
Assurance scheme.

 

(e)   Company Loan: 
The Employee is eligible for a Company loan in accordance with the
provisions of the Company Loan Scheme for the time being in force.

 

5.             HOLIDAYS

 

The
Employee shall be entitled to annual holiday with pay of 28 working days and
United Kingdom statutory holidays.  The
Employee’s right to holiday in respect of part of a year shall be the same
proportion of his annual holiday entitlement as that part of a year bears to
twelve months.

 

6.             RESTRICTIONS ON
DISCLOSURE AND USE OF INFORMATION

 

(a)   Except to the extent necessary for the discharge of
his duties under this Agreement or unless required to do so by law the Employee
shall not during his employment or at any time thereafter disclose to any
person any information relating to the business of the CIBA-GEIGY Group
comprising CIBA-GEIGY AG and any company which it controls directly or
indirectly (hereinafter referred to as “the Group”) or of any of its members or
to the conduct or management of such business and in particular (but without
limiting the general nature of this obligation) shall not disclose to any
person:

 

(i)            the name or address of any
customer of a member of the Group;

 

(ii)           the price at which a member of the Group sells or
purchases any product or service;

 

(iii)          any trade secret or other information of any kind
whatsoever relating to the products, processes, machinery, appliances or
apparatus manufactured, sold, used or devised by any member of the group; or

 

(iv)          any information disclosed in confidence to any
member of the Group by a third party provided that this obligation shall not
apply to any information 

 

4

 

which subsequently enters the public domain other
than through the act or default of the Employee.

 

(b)   The Employee shall not at any time except as is
necessary for the purpose of his employment use, adopt or employ or be a party
to the use, adoption or employment of any information obtained or acquired by
him during his employment relating to:

 

(i)            any processes,
methods, formulae, drawings, recipes, appliances, machinery, apparatus or plant
belonging to any member of the Group:

 

(ii)           the results of
any investigations or experiments made by a member of the Group or by its
predecessors in business or by any person by or under the order or direction or
for the benefit of any such member or its predecessors other than information
accessible to the general public otherwise than through default by the
Employee; and

 

(iii)          any information
disclosed in confidence to any member of the Group by a third party.

 

7.             INVENTIONS

 

IF
the Employee, either alone or jointly with others, should during the course of
his duties as defined in S.39(1) Patents Act 1977 or any amending
legislation, make any discovery or invention (whether patentable or not),
develop any process or create any design relating or applicable to the business
of any member of the Group or should acquire any such discovery, invention or
design or rights therein in the course of his employment, his entire share
therein shall automatically become the property of the Company and he shall at
the request and expense of the Company execute all such documents and do all
such things as are necessary or in the Company’s opinion desirable to vest the
same in the Company and to enable the Company or its nominees to obtain Letters
Patent for the same, or such other form of protection as may be appropriate in
any country of the world.

 

8.             MISCONDUCT

 

(a)   The Company shall (without prejudice to any other
rights and remedies) be entitled to terminate this Agreement forthwith if the
Employee:

 

(i)            commits any
serious or persistent breach of his express or implied obligations under this
Agreement or refuses or neglects to comply with any lawful order or directions
given to him by the Directors or Managers of the Company, the result of which
is seriously detrimental to the Company’s interests;

 

(ii)           is guilty of
dishonesty, corrupt or improper practice, or is convicted of an offence in
circumstances liable to have a materially adverse effect on the relationship
between the Employee and the Company;

 

(iii)          commits any
other act of gross misconduct which is seriously detrimental to the Company’s
interests;

 

5

 

whereupon
the Employee shall have no claim against the Company for damages or otherwise
by reason of such termination.

 

(b)   The Company and Employee shall be subject to the
local disciplinary procedures operating at the Employee’s principal place of
employment in connection with any disciplinary action taken against the
Employee under this Clause or otherwise.

 

9.             GRIEVANCE
PROCEDURE

 

The
Company and Employee shall be subject to the local grievance procedure
operating at the Employee’s principal place of employment.

 

10.           COMPANY PROPERTY

 

All
books, letters, papers and records relating to the Company’s business
(including trade catalogues, price lists, pattern cards and lists of customers)
in the possession of the Employee shall be the exclusive property of the
Company and shall be returned to the Company on the termination of
employment.  The Employee shall on demand
whether before or after the termination of his employment furnish to the
Directors of the Company or any person or persons appointed by them such
information regarding the customers of the Company as they may require.

 

11.           TERMINATION AND NOTICES

 

(a)   This Agreement shall continue, subject as herein
provided, until terminated by:

 

(i)            Either party
giving to the other not less than 12 months notice in writing;

 

(ii)           The Employee
reaching his normal retirement age as set out in the Personal Policy Manual;

 

(iii)          Termination
under the Company’s scheme for early retirement, redundancy, or following
disciplinary proceedings, or for any other reason in accordance with the
provisions of the Personnel Policy Manual.

 

(iv)          At any time, by
mutual agreement.

 

(b)   Any notice required or
authorized to be served under the terms of the Agreement shall be sufficiently
served on the Employee if given to him or left at or sent by recorded delivery
post to his last known residence in the United Kingdom and shall be
sufficiently served on the Company if delivered personally to the Employee’s
superior or left with or sent by recorded delivery post addressed to the
Managing Director of the Company or of the Division in which the Employee was
employed.

 

6

 

12.           OTHER PROVISIONS

 

The
policies and conditions of employment set out in the Personnel Policy Manual
will apply to this Agreement except to the extent (if any) that they are
inconsistent with the terms of this Agreement. 
A copy of the Personnel Policy Manual will at all times be available to
the Employee for reference purposes.

 

13.           EMPLOYEE’S COVENANTS AGAINST COMPETITION

 

A.            (i)            In this Clause:

 

“Prohibited
Area” means the United Kingdom.

“Restricted
Period” means the period of 12 months commencing with the Termination Date.

“Termination
Date” means the date on which this Agreement shall determine irrespective of
the cause or manner.

 

(ii)           Since the
Employee is likely to obtain in the course of his employment with the Company
confidential information and personal knowledge of and influence over customers
of the Group (as defined in Clause 6 herein) the Employee herby agrees with the
Company that in addition to the other terms of this Agreement and without
prejudice to other restrictions imposed upon him by law, he will be

 

bound
by the following covenants:

 

(a)   that he will not during the Restricted Period and
within the Prohibited Area be employed in any business which is or is about to
be in competition with the business of the Company being carried on by the
Company at the Termination Date and in which the Employee was directly
concerned or connected at any time during the last 12 months of his service
with the Company provided that this restriction shall not extend to any
employment the performance of which could not involve the Employee in such
competition;

 

(b)   that he will not during the
Restricted Period and within the Prohibited Area carry on for his own account
or for any other person, firm or organisation (or be concerned as a director in
any company engaged in) any business which is or is about to be in competition
with the business of the Company being carried on by the Company at the
Termination Date and in which the Employee was concerned or connected at any
time during the last 12 months of his service with the Company provided that
this restriction shall not extend to any activity the performance of which
could not involve the Employee in such competition;

 

(c)   that he will not during the
Restricted Period within the Prohibited Area canvass or solicit or endeavour to
canvass or solicit (whether on his own account or for any other person, firm or
organisation) in competition with the Company the custom of any person, firm or
company who at any time during the last 12 months of his service with the
Company was a customer of, or in the habit of dealing with, the Company and
with whom the Employee shall have been personally concerned;

 

7

 

(d)   that he will not during the
Restricted Period either on his own behalf or for any other person, firm or
organisation solicit or endeavour to entice away from the Company or any other
member of the Group any person who was to his knowledge at any time during the
last 12 months of his service with the Company an employee of such company.

 

(iii)          The Employee agrees that each of the paragraphs
contained in sub-Clause A (ii) above constitutes an entirely separate and
independent covenant on his part and the validity of one paragraph shall not be
affected by the validity or unenforceability of another.

 

B.    If after the
Termination Date (subject to the provisos hereinafter contained) the Employee
wishes to accept employment or be engaged in work which would in the opinion of
the Company constitute a breach of any of the covenants on his part contained
in Clause 13A(ii) of this Agreement then provided that the Employee
produces evidence satisfactory to the Company that a reasonable offer of such
employment has been made to him or that such work is open to him then the
Company covenants that it will pay to the Employee monthly a sum equal to the
monthly salary of the Employee at the Termination Date during the period which
he remains bound by and observes the covenants herein contained PROVIDED THAT
the Company shall not be obliged to make or continue to make any payment under
this Clause to the Employee in any of the following events:

 

(i)            if before or on
the Termination Date or any time during the Restricted Period the Company shall
by notice in writing release the Employee from the said restrictions;

 

(ii)           if such
termination is due to misconduct or any other breach or material non-observance
by the Employee of the terms of this Agreement;

 

(iii)          retirement of
the Employee on reaching his normal retirement age as set out in the Personnel
Policy Manual; or

 

(iv)          if the Employee
commits any serious or persistent  breach
or material non-observance of any of the provisions of this Agreement which
operate or have effect after the Termination Date

 

and
PROVIDED FURTHER that the amount the Employee shall be entitled to receive from
the Company under this clause shall be reduced by the amount of any payment
made in lieu of notice and by the amount of any remuneration (including
commission, bonuses and like payments, if any) receivable by the Employee in
respect of any other employment whether or not with the Company, for the period
during which the said restrictions are in force notwithstanding that payment
may not be made until the said period has expired.

 

IN
Witness whereof the parties hereto have signed this Agreement the day and year
first before written.

 

Signed
for and on

behalf
of the Company:

 

8

 

Signed
by the Employee:

 

9

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