Document:

Exhibit 10.9

 

EMPLOYEE OPTION AGREEMENT

under the

Hexcel Corporation 2003 Incentive Stock Plan

 

EMPLOYEE
OPTION AGREEMENT, dated as of the Grant Date, by and between the Optionee and
Hexcel Corporation (the “Company”).

 

W I T N E S S E T H:

 

WHEREAS,
the Company has adopted the Hexcel Corporation 2003 Incentive Stock Plan (the “Plan”);
and

 

WHEREAS,
the Compensation Committee (the “Committee”) of the Board of Directors of the
Company (the “Board”) has determined that it is desirable and in the best
interest of the Company to grant to the Optionee a stock option as an incentive
for the Optionee to advance the interests of the Company;

 

NOW,
THEREFORE, the parties agree as follows:

 

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 herein and set forth in such Notice of Grant
shall have the meanings ascribed to them in the Notice of Grant and capitalized
terms used herein 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 Employee Option Agreement, and this Employee Option 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 Option granted herein constitutes an Award within the
meaning of the Plan.

 

2.                  Grant of
Option.  Pursuant to the Plan and subject to the terms and conditions
set forth herein and therein, the Company hereby grants to the Optionee the
right and option (the “Option”) to purchase all or any part of the Option
Shares of the Company’s common stock, $.01 par value per share (the “Common
Stock”), which Option is not intended to qualify as an incentive stock option,
as defined in Section 422 of the Internal Revenue Code of 1986, as amended
(the “Code”).

 

3.                  Purchase
Price.  The purchase price per share of the Option Shares shall be the
Purchase Price, which is not less than 100% of the Fair Market Value per share of
the Option Shares as of the Grant Date.

 

4.                  Term of
Option.

 

(a)           Expiration Date;
Term.  Subject to Section 4(c) below, the Option shall
expire on, and shall no longer be exercisable following, the tenth anniversary
of the Grant Date. The ten-year period from the Grant Date to its tenth
anniversary shall constitute the “Term” of the Option.

 

 

(b)           Vesting Period; Exercisability. 
Subject to Section 4(c) below, the Option shall vest and become
exercisable at the rate of 33-1/3% of the Option Shares on each of the first
three anniversaries of the Grant Date.

 

(c)           Termination of Employment; Change
in Control.

 

(i)            For purposes of the grant hereunder,
any transfer of employment by the Optionee among the Company and its
Subsidiaries shall not be considered a termination of employment. If the
Optionee’s employment with the Company is terminated for Cause (as defined in
the last Section hereof), the Option, whether or not then vested, shall be
automatically terminated as of the date of such termination of employment. If
the Optionee’s employment with the Company shall terminate other than by reason
of Retirement (as defined in the last Section hereof), Disability (as
defined in the last Section hereof), death or Cause, the Option (to the
extent then vested) may be exercised at any time within ninety (90) days after
such termination (but not beyond the Term of the Option).  The Option, to
the extent not then vested, shall immediately expire upon such termination.

 

If
the Optionee dies or becomes Disabled (A) while employed by the Company or
(B) within 90 days after the termination of his or her employment other
than for Cause or Retirement, the Option shall (I) become fully and immediately
vested and exercisable and (II) remain exercisable for one year from the
date of death or Disability (but not beyond the Term of the Option).

 

If
the Optionee’s employment terminates by reason of Retirement, (A) the
Option shall, if not fully vested at the time of such termination, continue to
vest in accordance with Section 4(b) above, and (B) the Option
shall expire upon the earlier to occur of the three year anniversary date of
such Retirement and the expiration of the Term. If the Optionee dies during the
three year period immediately following the Retirement of the Optionee, the
Options shall (I) become fully and immediately vested and exercisable and (II) remain
exercisable for the remainder of the three-year period from the date of
Retirement (but not beyond the Term of the Option).

 

(ii)           In the event of a Change in Control
(as defined in the last Section hereof), the Option shall immediately
become fully vested and exercisable and the post-termination periods of
exercisability set forth in Section 4(c)(i) hereof shall apply,
except that the post-termination period of exercisability shall be extended and
the Option shall remain exercisable for a period of two years from the date of
such termination of employment, if, within two years after a Change in Control,
(A) the Optionee’s employment is terminated by the Company other than by
reason of Retirement, Cause, Disability or death or (B) the Optionee
terminates the Optionee’s employment for Good Reason (as defined in the last Section hereof).

 

(d)           Forfeiture of Option on Certain
Conditions.

 

(i)                 Notwithstanding
anything to the contrary contained in this Employee Option Agreement, should
the Optionee while an employee or after termination of employment fail to
comply with the “Protective Condition” (as defined in Section 4(d)(ii)),
then the Option, to the extent not already exercised, shall immediately expire
upon the Optionee’s failure to meet such condition.

 

 

(ii)                “Protective
Condition” shall mean that the Optionee (A) complies with all terms and
provisions of any obligation of confidentiality to the Company contained in a
written agreement signed by the Optionee, 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 Optionee’s termination of employment with the
Company anywhere in the world (except that the Optionee may be employed by a
competitor of the Company so long as the Optionee’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).

 

5.             Adjustment Upon Changes in
Capitalization.

 

(a)           The aggregate number of Option Shares
and the Purchase Price shall be proportionately adjusted by the Committee 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 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 Employee Option Agreement in the
event of any other reorganization, recapitalization, merger, consolidation,
spin-off, extraordinary dividend or other distribution or similar transaction
involving the Company.

 

(b)           Any adjustment under this Section 5
in the number of Option Shares and the Purchase Price shall be subject to Section 11
below and shall apply to only the unexercised portion of the Option. If
fractions of a share would result from any such adjustment, the adjustment
shall be rounded down to the nearest whole number of shares.

 

6.             Method of Exercising Option and
Withholding.

 

(a)           The Option shall be exercised by the
delivery by the Optionee to the Company at its principal office (or at such
other address as may be established by the Committee) of written notice of the
number of Option Shares with respect to which the Option is exercised,
accompanied by payment in full of the aggregate Purchase Price for such Option
Shares.  Payment for such Option Shares shall be made (i) in U.S.
dollars by personal check, bank draft or money order payable to the order of
the Company, or by money transfers or direct account debits to an account
designated by the Company; (ii) through the delivery of shares of Common
Stock with a Fair Market Value equal to the total payment due from the
Optionee; (iii) pursuant to a “cashless exercise” program if such a
program is established by the Company; or (iv) by any combination of the
methods described in (i) through (iii) above.

 

(b)           The Company’s obligation to deliver
shares of Common Stock upon the exercise of the Option shall be subject to the
payment by the Optionee of applicable federal, state, local and other
withholding tax, if any.  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 Optionee any federal, state, local or other taxes
required to be withheld with respect to such payment.

 

7.                  Transfer. 
Except as provided in this Section 7, the Option is not transferable
otherwise than by will or the laws of descent and distribution, and the Option
may be exercised during the Optionee’s lifetime only by the Optionee.  Any
attempt to transfer the Option in contravention of this Section 7 is void
ab initio.  The Option shall not be subject to execution, attachment or
other process.  Notwithstanding the foregoing, the Optionee and, after the
death of the Optionee the estate or any estate beneficiary of the Optionee,
shall be permitted to transfer the Option 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
other equity owners are such family members; provided, however, that no
consideration can be paid for the transfer of the Option and the transferee of
the Option must agree to be subject to all conditions applicable to the Option
prior to its transfer.

 

8.                  No Rights
in Option Shares.  The Optionee shall have none of the rights of a
stockholder with respect to the Option Shares unless and until shares of Common
Stock are issued upon exercise of the Option.

 

9.                  No Right to
Employment.  Nothing contained herein shall be deemed to confer upon
the Optionee any right to remain as an employee of the Company.

 

10.                Section 409A

 

(a)           It is intended that this Employee
Option 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 Employee Option
Agreement shall be interpreted for all purposes in accordance with this intent.

 

(b)           Notwithstanding any term or provision
of this Employee Option 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 Optionee,
amend this Employee Option 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 Optionee’s gross income pursuant to the
Applicable Regulations of any compensation intended to be deferred hereunder.
The Company shall notify the Optionee as soon as reasonably practicable of any
such amendment affecting the Optionee.

 

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

 

11.           Modifications; Extensions.

 

(a)           Notwithstanding any term or provision
of this Employee Option Agreement (including any term or provision of the Plan
incorporated herein by

 

 

reference),
(i) no Modification shall be made in respect to the Option if such
Modification would result in the Option constituting a deferral of
compensation, and (ii) no Extension shall be made in respect to the Option
if such Extension would result in the Option having an additional deferral
feature from the Grant Date, in each case within the meaning of applicable
Treasury Regulations under Code section 409A.

 

(b)           Subject to subsection (d) below,
a “Modification” for purposes of subsection (a) means any change in the
terms of the Option that may provide the Optionee with a direct or indirect
reduction in the Purchase Price of the Option, regardless of whether the Optionee
in fact benefits from the change in terms.

 

(c)           Subject to subsection (d) below,
an “Extension” for purposes of subsection (a) means either (i) the
provision to the Optionee of an additional period of time within which to
exercise the Option beyond the time originally prescribed, or (ii) the
conversion or exchange of the Option for a legally binding right to
compensation in a future taxable year, or (iii) the addition of any
feature for the deferral of compensation to the terms of the Option, or (iv) any
renewal of the Option that has the effect of (i) through (iii) above.

 

(d)           Notwithstanding subsections (b) and
(c) above, it shall not be a Modification or an Extension, respectively,
to change the terms of an Option in any of the ways or for any of the purposes
provided in applicable Treasury Regulations or other guidance under Section 409A
of the Code as not resulting in a Modification or Extension for purposes of
that section.  In particular, it shall
not be an Extension to extend the exercise period of the Option to a date no later
than the earlier of (i) the latest date upon which the Option could have
expired by its original terms under any circumstances or (ii) the 10th
anniversary of the Grant Date.

 

12.                Governing
Law/Jurisdiction.  This Employee Option Agreement shall be governed by
and construed in accordance with the laws of the State of Delaware without
reference to principles of conflict of laws.

 

13.                Resolution
of Disputes.  Any disputes arising under or in connection with this
Employee Option Agreement shall be resolved by binding arbitration before a
single arbitrator, to be held in New York in accordance with the commercial rules and
procedures of the American Arbitration Association.  Judgment upon the
award rendered by the arbitrator shall be final and subject to appeal only to
the extent permitted by law.  Each party shall bear such party’s own
expenses incurred in connection with any arbitration. Anything to the contrary
notwithstanding, each party hereto has the right to proceed with a court action
for injunctive relief or relief from violations of law not within the
jurisdiction of an arbitrator.

 

14.                Notices. 
Any notice required or permitted under this Employee Option Agreement shall be
deemed given when delivered personally, or when deposited in a United States Post
Office, postage prepaid, addressed, as appropriate, to the Optionee at the last
address specified in Optionee’s employment records, or such other address as
the Optionee 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 Optionee.

 

 

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

 

16.                Counterparts. 
This Employee Option 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.

 

17.                Miscellaneous. 
This Employee Option Agreement cannot be changed or terminated orally. 
This Employee Option 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.

 

18.                Definitions. 
For purposes of this Employee Option Agreement:

 

(I)            “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;

 

(II)           “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;

 

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

 

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

 

(1)        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 (4) 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

 

(2)  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 (1) above; or

 

(3)  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

 

(4)  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 (1) through
(4) 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;

 

(V)           “Disability”
(or becoming “Disabled”) shall mean that, as a result of the Optionee’s
incapacity due to physical or mental illness or injury, he or she shall not
have performed all or substantially all of his or her 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;

 

(VI)         “Good Reason”
for termination by the Optionee of the Optionee’s employment shall mean the
occurrence (without the Optionee’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
Optionee’s employment:

 

(1) 
a significant adverse alteration in the nature or status of the Optionee’s
responsibilities, position or authority from those in effect immediately prior
to the Change in Control;

 

(2) 
a reduction by the Company in the Optionee’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 Optionee’s principal place of employment to a location
more than fifty (50) miles from the Optionee’s principal place of employment
immediately prior to the Change in Control or the Company’s requiring the
Optionee 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 Optionee’s present
business travel obligations;

 

(4) 
the failure by the Company to pay to the Optionee any portion of the Optionee’s
current compensation, or to pay to the Optionee 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 Optionee participates immediately prior to the Change in Control which is
material to the Optionee’s total compensation, or any substitute plans adopted
prior to the Change in Control, 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 Optionee’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 Optionee’s participation; or

 

 

(6) 
the failure by the Company to continue to provide the Optionee with benefits
substantially similar to those enjoyed by the Optionee under any of the Company’s
pension, savings, life insurance, medical, health and accident, or disability
plans in which the Optionee was participating immediately prior to the Change
in Control (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
Optionee of any material fringe benefit enjoyed by the Optionee at the time of
the Change in Control, or the failure by the Company to provide the Optionee with
the number of paid vacation days to which the Optionee is entitled on the basis
of years of service with the Company in accordance with the Company’s normal
vacation policy in effect at the time of the Change in Control.

 

The
Optionee’s right to terminate the Optionee’s employment for Good Reason shall
not be affected by the Optionee’s incapacity due to physical or mental illness.
The Optionee’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 Optionee 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;

 

(VII)        “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; and

 

(VIII)       “Retirement”
shall mean termination of the Optionee’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).

 

 

Annex A

 

NOTICE OF GRANT

EMPLOYEE STOCK OPTION

HEXCEL CORPORATION 2003
INCENTIVE STOCK PLAN

 

The
following employee of Hexcel Corporation, a Delaware corporation or a
Subsidiary, has been granted an option to purchase shares of the Common Stock
of Hexcel, $.01 par value, in accordance with the terms of this Notice of Grant
and the Employee Option Agreement to which this Notice of Grant is attached.

 

The
following is a summary of the principal terms of the option which has been
granted.  The terms below shall have the
meanings ascribed to them below when used in the Employee Option Agreement.

 

	
    Optionee

  	
   

  	
   

  
	
    Address
  of Optionee

  	
   

  	
   

  
	
    Foreign
  Sub Plan, if applicable

  	
   

  	
   

  
	
    Grant
  Date

  	
   

  	
   

  
	
    Purchase
  Price

  	
   

  	
   

  
	
    Aggregate
  Number of Shares 

    Granted (the “Option Shares”)

  	
   

  	
   

  

 

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

 

	
   

  	
   

  	
  HEXCEL
  CORPORATION

  
	
  Optionee

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Ira
  J. Krakower

  
	
   

  	
   

  	
   

  	
  Sr.
  Vice PresidentExhibit 10.26

 

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.  Any change in employment that does not
constitute a “separation from service” within the meaning of Section 1.409A-1(h) of
the Treasury Regulations (or any successor provision) shall not be considered a
termination of employment.  Any change in
employment that does constitute a “separation from service” within the meaning
of Section 1.409A-1(h) of the Treasury Regulations (or any successor
provision) shall be considered a termination of employment.

 

(b)           If 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 within 30 days of the date of such termination; 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 RSUs 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.  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
within 30 days of the date of such death.

 

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

 

(d)           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) or 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 RSUs shall
immediately vest, be converted into shares of Common Stock and be distributed
to the Grantee within 30 days of the date of such event or (in the event of a
complete liquidation or dissolution of the Company) as soon as administratively
practicable thereafter.

 

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 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 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(b) and 4(c) shall not be accelerated or delayed for any reason,
unless to the extent necessary to comply with or permitted under the Applicable
Regulations.

 

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.

 

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 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)            “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.

 

(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).

 

 

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 President

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