Exhibit 10.11

 

FORM OF EMPLOYEE OPTION AGREEMENT

under the

Hexcel Corporation 2003 Incentive Stock Plan

 

This Employee Option Agreement (the “Agreement”), is entered into as of the
Grant Date, by and between the Optionee and Hexcel Corporation, a Delaware
corporation (the “Company”).

 

The Company maintains 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 Optionee shall be granted
an Option (as defined below) upon the terms and subject to the conditions
hereinafter contained.  Capitalized terms used but not defined herein shall have
the meaning assigned to them in the Plan.

 

1.             Notice of Grant; Acceptance of Agreement.      The number of
Options granted and the Grant Date shall be as set forth under Optionee’s
account on Merrill Lynch Benefits OnLine®.  Optionee will be deemed to accept
the terms and conditions of this Agreement by clicking the “Accept” button on
the Merrill Lynch Benefits OnLine® Award Acceptance screen with regard to the
Option.

 

2.             Incorporation of 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 Option granted herein constitutes an Award within the meaning of the
Plan.

 

3.             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 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”).  Each Option
entitles the Optionee to purchase one share of Common Stock in accordance with,
and subject to the terms of, this Agreement, and the aggregate number of shares
purchasable is equal to the number of Options hereby granted (“Option Shares”).

 

4.             Purchase Price.  The Purchase Price per share of the Option
Shares is the Fair Market Value per share of Common Stock as of the Grant Date.

 

5.             Terms of Option.

 

(a)           Expiration Date; Term.  Subject to Section 5(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 5(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.

 

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(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 any of its Subsidiaries or any other
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 by the Company
or a Subsidiary.  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.

 

If the Optionee’s employment with the Company or a Subsidiary 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.  Subject to Section 5(c)(ii), if the Optionee’s employment with the
Company or a Subsidiary 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
Subsidiary or (B) within 90 days after the termination of his or her employment
with the Company or a Subsidiary 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).

 

Subject to Section 5(c)(ii), if the Optionee’s employment with the Company or a
Subsidiary 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 5(b) above, and (B) the Option shall expire upon the earlier to
occur of the five-year anniversary date of such Retirement and the expiration of
the Term. If the Optionee dies during the five-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 five-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), provided the Optionee has been continuously employed by the
Company and its Subsidiaries from the Grant Date through the date of such Change
in Control or has terminated employment prior to the date of such Change in
Control due to Retirement, the Option shall immediately become fully vested and
exercisable and the post-termination periods of exercisability set forth in
Section 5(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 (but not
beyond the Term of the Option), 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. Optionee hereby
acknowledges that the Company has given or will give Optionee access to certain
confidential, proprietary or trade secret information, which the Company
considers extremely valuable and which provides the Company with a competitive
advantage in the markets in which the Company develops or sells its products. 
The Optionee further acknowledges that the use of such information by Optionee

 

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other than in furtherance of Optionee’s job responsibilities with the Company
would be extremely detrimental to the Company and would cause immediate and
irreparable harm to the Company.  In exchange for access to such confidential,
proprietary or trade secret information, Optionee hereby agrees as follows:

 

(i)            Notwithstanding anything to the contrary contained in this
Agreement, should the Optionee breach the “Protective Condition” (as defined in
Section 5(d)(ii)), then (A) the Option, to the extent not previously exercised,
shall immediately be forfeited upon such breach, (B) the Optionee shall
immediately deliver to the Company the number of Option Shares previously
distributed to the Optionee during the 180-day period prior to the termination
of the Optionee’s employment with the Company (or a Subsidiary) and (C) if any
Option Shares were sold during the 180-day period immediately prior to such
termination of employment in an arms’ length transaction or disposed of in any
other manner, the Optionee shall immediately deliver to the Company all proceeds
of such arms’ length sales and if disposed of otherwise than in an arms’ length
sale, the Fair Market Value of such Option Shares determined at the time of
disposition.  The Option Shares and proceeds to be delivered under clauses
(B) and (C) may be reduced to reflect (x) the exercise price paid by the
Optionee in connection with such Option Shares and (y) the Optionee’s liability
for taxes payable on such Option Shares and proceeds.

 

(ii)          “Protective Condition” shall mean that (A) the Optionee complies
with all terms and provisions of any obligation of confidentiality contained in
a written agreement with the Company (or a Subsidiary) signed by the Optionee,
or otherwise imposed on Optionee by applicable law, and (B) during the time
Optionee is employed by the Company (or a Subsidiary) and for a period of one
year following the termination of the Optionee’s employment with the Company (or
a Subsidiary), the Optionee does not (x) 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 enterprise
then engaged in competition with the business conducted by the Company anywhere
in the world; provided, however, that the Optionee may be employed by a
competitor of the Company within such one year period so long as the duties and
responsibilities of Optionee’s position with such competitor do not involve the
same or substantially similar duties and responsibilities as those performed by
the Optionee for the Company (or a Subsidiary) in a business segment of the new
employer which competes with the business segment(s) with which the Optionee
worked or had supervisory authority over while employed by the Company (or a
Subsidiary) during the twelve (12) months immediately preceding the date on
which the Optionee’s employment terminates, (y) employ or attempt to employ,
solicit or attempt to solicit, or negotiate or arrange the employment or
engagement with Optionee or any other Person, of any Person who was at the date
of termination of the Optionee’s employment, or within twelve (12) months prior
to that date had been, a member of the senior management of the Company with
whom the Optionee worked closely or was an employee with whom the Optionee
worked closely or had supervisory authority over during the twelve months
immediately preceding the date on which the Optionee’s employment terminates or
(z) disparage the Company, its Subsidiaries, any of their respective current or
former directors, officers or employees or any of their respective products.

 

(iii)          In the event any of Section 5(d)(i) or Section 5(d)(ii) is
unenforceable in the jurisdiction in which the Optionee is employed on the date
hereof, such section nevertheless shall be enforceable to the full extent
permitted by the laws of any jurisdiction(s) in which the Company shall have the
ability to seek remedies against the Optionee arising from any activity
prohibited by this Section 5(d).

 

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(iv)          Notwithstanding any other provision in the Plan or this Agreement
to the contrary, whenever the Company may be entitled or required by law,
Company policy or the requirements of an exchange on which the Company’s shares
are listed for trading, to cause an Award to be forfeited or to recoup
compensation paid to the Optionee pursuant to the Plan, the Optionee shall
accept such forfeiture and comply with any Company request or demand for
recoupment.

 

6.             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
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 6 in the number of Option Shares
and the Purchase Price shall be subject to Section 13 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.

 

7.             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; (iv) by the Company withholding
shares of Common Stock with a Fair Market Value equal to all or any part of the
payment due from the Optionee; or (v) by any combination of the methods
described in (i) through (iv) 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, including Option Shares otherwise due to the
Optionee any federal, state, local or other taxes required to be withheld with
respect to such payment.

 

8.             Transfer.  Except as provided in Section 8, 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

 

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contravention of this Section 8 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.

 

9.                 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.

 

10.               Issuance of Shares.  Any shares of Common Stock to be issued
to the Optionee under this Agreement may be issued in either certificated form,
or in uncertificated form (via the Direct Registration System or otherwise).

 

11.               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.

 

12.               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 in this Agreement 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 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 Option Shares issuable under this 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.

 

13.           Modifications; Extensions.

 

(a)           Notwithstanding any term or provision of this Agreement (including
any term or provision of the Plan incorporated in this Agreement 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

 

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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.

 

14.           Governing Law/Jurisdiction.  This 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.

 

15.           Resolution of Disputes.  Any disputes arising under or in
connection with this Agreement shall be resolved by binding arbitration before
three arbitrators constituting an Employment Dispute Tribunal, to be held in
Connecticut 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.

 

16.           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 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, Attention: 
Corporate Secretary, or such other address as the Company may designate in
writing to the Optionee.

 

17.           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.

 

18.           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.  This Agreement inures to the
benefit of, and is binding upon, the Company and its successors-in-interest and
its assigns, and the Grantee, the Grantee’s heirs, executors, administrators and
legal representatives.  The section headings herein are intended for reference
only and shall not affect the interpretation hereof.

 

19.           Definitions.  For purposes of this Agreement:

 

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(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 modified to reflect
ownership pursuant to Section 318(a) of the Code;

 

(III)         “Cause” shall have the meaning ascribed to such term in the
Executive Severance Agreement;

 

(IV)         “Change in Control” shall have the meaning ascribed to such term in
the Executive Severance Agreement;

 

(V)           “Disability” (or becoming “Disabled”) shall have the meaning
ascribed to such term in the Executive Severance Agreement;

 

(VI)         “Executive Severance Agreement” shall mean the Employment
Agreement, Employment and Severance Agreement, or Executive Severance Agreement,
as applicable, between the Company and the Optionee, as amended from time to
time;

 

(VII)        “Good Reason” shall have the meaning ascribed to such term in the
Executive Severance Agreement;

 

(VIII)       “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 shall include “persons acting as a group” within the meaning of
Section 1.409A-3(i)(5)(v)(B) of the Treasury Regulations (or any successor
provision); and

 

(IX)         “Retirement” shall mean termination of the Optionee’s employment
with the Company or a Subsidiary, 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).

 

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