SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 2)*
Hexcel Corporation
(Name of Issuer)
Common Stock, Par Value $0.01 Per Share
(Title of Class of Securities)
428290 10 0
(CUSIP Number)
Peter Rupprecht Michael Reap, Esq.
Ciba Specialty Chemicals Holding Inc. Ciba Specialty Chemicals Corporation
Ciba Specialty Chemicals Inc. P.O. Box 2005
Klybeckstrasse 141 560 White Plains Road
CH-4002, Basel Tarrytown, New York 10591
Switzerland (914) 785-2000
41-61-696-3415
(Name, Address and Telephone Number of Persons Authorized to
Receive Notices and Communications)
With a copy to:
Philip A. Gelston, Esq.
Cravath, Swaine & Moore
Worldwide Plaza
825 Eighth Avenue
New York, New York 10019
March 13, 1997
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(b)(3) or (4), check the
following box o.
Note: Six copies of this statement, including all exhibits, should be
filed with the Commission. See Rule 13d-1(a) for other parties to whom
copies are to be sent.
* The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class
of securities, and for any subsequent amendment containing information
which would alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not
be deemed to be "filed" for the purpose of Section 18 of the Securities
Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of
that section of the Act but shall be subject to all other provisions of
the Act (however, see the Notes).
(Continued on following page(s))
Page 1 of 18
<PAGE>
SCHEDULE 13D
CUSIP No. 428290 10 0
1 NAME OF REPORTING PERSON
S.S. or I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Ciba Specialty Chemicals Holding Inc.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [ ]
3 SEC USE ONLY
4 SOURCE OF FUNDS
00
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) OR 2(e) [X]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Switzerland
NUMBER OF 7 SOLE VOTING POWER
SHARES -0-
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY EACH -0-
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON WITH -0-
10 SHARED DISPOSITIVE POWER
-0-
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
18,021,748*
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES [ ]
13 PERCENT OF CLASS REPRESENTED
BY AMOUNT IN ROW (11)
49.4%*
14 TYPE OF REPORTING PERSON
HC, CO
- --------
* Ciba Specialty Chemicals Inc., which holds 9,204,503 shares, and
Ciba Specialty Chemicals Corporation, which holds 8,817,245 shares, are
each wholly owned subsidiaries of Ciba Specialty Chemicals Holding Inc.
Page 2 of 18
<PAGE>
SCHEDULE 13D
CUSIP No. 428290 10 0
1 NAME OF REPORTING PERSON
S.S. or I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Ciba Specialty Chemicals Inc.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [ ]
3 SEC USE ONLY
4 SOURCE OF FUNDS
00
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) OR 2(e) [X]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Switzerland
NUMBER OF 7 SOLE VOTING POWER
SHARES 9,204,503
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY EACH -0-
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON WITH 9,204,503
10 SHARED DISPOSITIVE POWER
-0-
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
9,204,503*
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES [ ]
13 PERCENT OF CLASS REPRESENTED
BY AMOUNT IN ROW (11)
25.2%*
14 TYPE OF REPORTING PERSON
HC, CO
- --------
* Ciba Specialty Chemicals Inc. is a wholly owned subsidiary of
Ciba Specialty Chemicals Holding Inc. and an affiliate of Ciba Specialty
Chemicals Corporation, which holds 8,817,245 shares.
Page 3 of 18
<PAGE>
SCHEDULE 13D
CUSIP No. 428290 10 0
1 NAME OF REPORTING PERSON
S.S. or I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Ciba Specialty Chemicals Corporation
I.R.S. No. 13-3904291
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [ ]
3 SEC USE ONLY
4 SOURCE OF FUNDS
00
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) OR 2(e) [X]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
NUMBER OF 7 SOLE VOTING POWER
SHARES 8,817,245
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY EACH -0-
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON WITH 8,817,245
10 SHARED DISPOSITIVE POWER
-0-
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
8,817,245*
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES [ ]
13 PERCENT OF CLASS REPRESENTED
BY AMOUNT IN ROW (11)
24.2%*
14 TYPE OF REPORTING PERSON*
CO
- --------
* Ciba Specialty Chemicals Corporation is a wholly owned subsidiary
of Ciba Specialty Chemicals Holding Inc. and an affiliate of Ciba
Specialty Chemicals Inc., which holds 9,204,503 shares.
Page 4 of 18
<PAGE>
Introduction
On October 4, 1995, Ciba-Geigy Limited ("Ciba") and Ciba-
Geigy Corporation ("CGC") filed statements on Schedule 13D (such
statements, as combined in Amendment No. 1, the "Statement") in
connection with an investment by Ciba and CGC in Hexcel Corporation's
common stock. On March 6, 1996, Ciba and CGC filed Amendment No. 1 to
the Statement, which prior to the date hereof, was the final amendment
to the Statement. In connection with the merger of Ciba and Sandoz Ltd.
("Sandoz"), the shareholders of Ciba and Sandoz determined that it was
in their best interests to spin off the specialty chemicals businesses
of Ciba and its affiliates as a separate company. Ciba Specialty
Chemicals Holding Inc. ("SCH") was formed to hold the worldwide
specialty chemicals businesses of Ciba and Ciba's affiliates. The
closing of the spin-off transaction became effective upon the opening of
business on March 13, 1997.
Accordingly, SCH, Ciba Specialty Chemicals Inc. ("SCI"), an
operating subsidiary of SCH, and Ciba Specialty Chemicals Corporation
("SCC" and, together with SCH and SCI, the "Reporting Persons"), a
company formed to hold the United States specialty chemicals businesses
of Ciba, including the specialty chemicals businesses formerly held by
CGC, hereby amend, restate and supplement the Statement formerly filed
by Ciba and CGC.
Item 1. Security and Issuer.
This amendment to a statement on Schedule 13D relates to the
Common Stock, par value $0.01 per share (the "Common Stock"), of Hexcel
Corporation, a Delaware corporation (the "Issuer"). The address of the
principal executive offices of the Issuer is Two Stamford Plaza, 281
Tresser Boulevard, Stamford, Connecticut 06901.
Item 2. Identity and Background.
(a), (b), (c) and (f) SCH, a corporation organized under the
laws of Switzerland, has its principal executive offices and principal
business at Klybeckstrasse 141, CH-4002, Basel, Switzerland. SCH is a
holding company; the principal business of its subsidiaries and
investments is researching, developing, manufacturing, marketing,
distributing and selling specialty chemicals worldwide.
SCI, a corporation organized under the laws of Switzerland,
has its principal executive offices and principal business at
Klybeckstrasse 141, CH-4002, Basel, Switzerland. SCI's principal
business is researching, developing, manufacturing, marketing,
distributing and selling specialty chemicals worldwide.
SCC, a Delaware corporation and an indirect wholly owned
subsidiary of SCH, has its principal executive offices and principal
business at 560 White Plains Road, Tarrytown, New York 10591-9005. SCC's
principal business is researching, developing, manufacturing, marketing,
distributing and selling specialty chemicals in the United States.
The name, business address, present principal occupation and
citizenship of the respective executive officers and members of the
Board of Directors of each of the Reporting Persons are set forth on
Schedule 1 hereto and are incorporated herein by reference.
(d) and (e) Other than the matters described in Schedule 2,
none of the Reporting Persons nor, to the best knowledge of each of
them, any of the Persons listed on Schedule 1 hereto with respect to
each such Reporting Person have, during the last five years, (i) been
convicted in a criminal proceeding (excluding traffic violations or
similar misdemeanors) or (ii) was a party to a civil
Page 5 of 18
<PAGE>
proceeding of a judicial or administrative body of competent
jurisdiction and as a result of such proceeding was or is subject to a
judgment, decree or final order enjoining future violations of, or
prohibiting or mandating activities subject to, Federal or state
securities laws or finding any violation with respect to such laws.
Item 3. Source and Amount of Funds or Other Consideration.
Pursuant to the terms of a Strategic Alliance Agreement (the
"Strategic Alliance Agreement") dated as of September 29, 1995, among
Ciba, CGC and the Issuer, Ciba and CGC transferred to the Issuer and the
Issuer's subsidiaries certain assets and properties and the Issuer
assumed certain liabilities, all in exchange for (a) an amount of newly
issued shares of Common Stock equal to 49.9% of the issued and
outstanding Common Stock after giving effect to such issuance, (b) $25
million in cash and (c) subordinated debt securities in an aggregate
principal amount of approximately $48 million, subject to certain post-
closing adjustments more fully described in the Strategic Alliance
Agreement. The closing of such transaction (the "Closing") occurred on
February 29, 1996. The foregoing summary of the Strategic Alliance
Agreement is qualified in its entirety by reference to the Strategic
Alliance Agreement, a copy of which was filed as Exhibit 1 to the
Statement and is incorporated by reference herein.
The Strategic Alliance Agreement was amended as of December
12, 1995 to reduce the principal amount of the subordinated debt
described above from approximately $48 million to approximately $43
million.
Item 4. Purpose of Transaction.
Ciba and CGC acquired the Common Stock to make a long-term
equity investment in the Issuer and to participate on the board of
directors of the Issuer, in each case as more fully described in the
Governance Agreement (the "Governance Agreement") between Ciba and the
Issuer dated as of the date of the Closing, the form of which was filed
as Exhibit 2 to the Statement and is incorporated by reference herein.
In a letter dated February 21, 1997 (the "Hexcel Consent Letter"), the
Issuer acknowledged the Reporting Persons as the successors to the
rights and obligations of Ciba and CGC under the Strategic Alliance
Agreement, the Governance Agreement and the other Ancillary Agreements
(as defined in the Strategic Alliance Agreement). A copy of the Hexcel
Consent Letter is filed as Exhibit 3 hereto and is incorporated by
reference herein. The Governance Agreement provides for significant
restrictions on the Reporting Persons' ability to purchase Common Stock,
to dispose of Common Stock and to vote their Common Stock. SCC reserves
the right, in light of its assessment of the Issuer's business and
prospects, market conditions, SCC's business objectives and other
relevant factors, to acquire additional shares of Common Stock or
dispose of all or part of its holdings, in each case subject to the
terms of the Governance Agreement. Except as otherwise disclosed herein
(including the board participation described above and in the exhibits
to the Statement), SCC does not contemplate seeking to effect any action
which would be required to be disclosed pursuant to this Item 4. See
also Item 6.
Item 5. Interest in Securities of the Issuer.
(a) and (b). As of the date hereof, the Reporting Persons
beneficially own a total of 18,021,748 shares of Common Stock,
representing 49.4% of the total number of outstanding shares of Common
Page 6 of 18
<PAGE>
Stock.<F1> Of this amount, 9,204,503 shares, or 25.2% of the total
number of outstanding shares, are beneficially owned indirectly by SCH
through its wholly owned subsidiary, SCI. The remaining 8,817,245
shares, or 24.2% of the total number of outstanding shares, are
beneficially owned indirectly by SCH, through its wholly owned
subsidiary, SCC.
(c) Neither the Reporting Persons nor, to the best knowledge
of the Reporting Persons, any of the persons listed in Schedule 1
hereto, has effected any transaction in Common Stock in the past 60
days.
(d) None.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships with
Respect to Securities of the Issuer.
Pursuant to the Strategic Alliance Agreement the parties
thereto have entered into various Ancillary Agreements (as defined
therein), including the Governance Agreement. Such Ancillary Agreements
include a registration rights agreement governing the registration under
the Securities Act of 1933, as amended, of dispositions of Common Stock
by SCH, SCI or SCC. The Governance Agreement provides for significant
restrictions on SCH, SCI or SCC's ability to purchase Common Stock, to
dispose of Common Stock and to vote their Common Stock.
The foregoing summary of the Governance Agreement is qualified
in its entirety by reference to the Governance Agreement, the form of
which was filed as Exhibit 2 to the Statement and is incorporated by
reference herein.
Item 7. Material to be Filed as Exhibits.
1. Strategic Alliance Agreement dated as of September 29,
1995 among Ciba, CGC and the Issuer.
2. Form of Governance Agreement between Ciba and the Issuer.
3. Consent letter of Hexcel Corporation dated February 21,
1997.
- --------
[FN]
<F1> Determined pursuant to Rule 13d-3(d)(1) under the Securities
Exchange Act of 1934, as amended, (the "Exchange Act"), and based on the
36,490,284 shares of Common Stock outstanding as of November 8, 1996, as
disclosed in the Issuer's Form 10-Q for the quarter ended September 29,
1996.
Page 7 of 18
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of the knowledge and
belief of the undersigned, the undersigned certifies that the
information set forth in this statement is true, complete and correct.
Dated March 17, 1997
CIBA SPECIALTY CHEMICALS HOLDING INC.,
by by
/s/ STEVEN BALLMER /s/ PETER RUPPRECHT
- ----------------------- -------------------------
Name: Steven Ballmer Name: Peter Rupprecht
Title: Tax Counsel Title: Corporate Counsel
After reasonable inquiry and to the best of the knowledge and
belief of the undersigned, the undersigned certifies that the
information set forth in this statement is true, complete and correct.
Dated March 17, 1997
CIBA SPECIALTY CHEMICALS INC.,
by by
/s/ STEVEN BALLMER /s/ PETER RUPPRECHT
- ----------------------- -------------------------
Name: Steven Ballmer Name: Peter Rupprecht
Title: Tax Counsel Title: Corporate Counsel
After reasonable inquiry and to the best of the knowledge and
belief of the undersigned, the undersigned certifies that the
information set forth in this statement is true, complete and correct.
Dated March 17, 1997
CIBA SPECIALTY CHEMICALS CORPORATION
by
/s/ STANLEY SHERMAN
-------------------
Name: Stanley Sherman
Title: President and Chief
Executive Officer
Page 8 of 18
<PAGE>
Index to Exhibits
Exhibit No. Description Page No.
- ----------- ----------- --------
1 Strategic Alliance Agreement *
dated as of September 29,
1995 among Ciba-Geigy
Limited, Ciba-Geigy
Corporation and Hexcel
Corporation.
2 Form of Governance Agreement *
between Ciba-Geigy Limited
and Hexcel Corporation
3 Consent Letter of Hexcel 15
dated February 21, 1997.
- --------
* Previously filed.
Page 9 of 18
<PAGE>
SCHEDULE 1
Members of the Board of Directors
and Officers of Ciba Specialty
Chemicals Holding Inc.
The name, address, citizenship and present principal occupation or
employment of each of the directors and executive officers of SCH are
set forth below. Unless otherwise indicated below, each occupation set
forth opposite an individual's name refers to employment with SCH.
Present Principal
Name, Function and Occupation or
Business Address Citizenship Employment
- ------------------ ----------- -----------------
Rolf A. Meyer Switzerland Member of the
Chairman and Delegate boards of directors
of the Board of Union Bank of
c/o Ciba Specialty Switzerland, Siber
Chemicals Holding Inc. Hegner and the
Klybeckstrasse 141 Swiss Exchange.
CH-4002
Basel, Switzerland
Theodor M. Tschopp Switzerland Member of the Board
Vice Chairman of the and Chief Executive
Board Officer of
c/o Ciba Specialty Alusuisse-Lonza,
Chemicals Holding Inc. member of the board
Klybeckstrasse 141 of Credit Suisse
CH-4002 Group
Basel, Switzerland
Erwin A. Heri Switzerland Member of the
Director executive committee
c/o Ciba Specialty of Winterthur
Chemicals Holding Inc. Versicherungen;
Klybeckstrasse 141 member of the
CH-4002 boards of directors
Basel, Switzerland of Intershop,
Commerzbank
(Schweiz)
Gertrud Hohler Germany Management
Director consultant,
c/o Ciba Specialty publicist
Chemicals Holding Inc.
Klybeckstrasse 141
CH-4002
Basel, Switzerland
Jean-Marie Pierre Lehn France Professor of
Director Chemistry and
c/o Ciba Specialty Physics, College de
Chemicals Holding Inc. France, Nobel prize
Klybeckstrasse 141 winner
CH-4002
Basel, Switzerland
Peter Littmann Germany Chairman of the
Director managing board of
c/o Ciba Specialty Hugo Boss, member
Chemicals Holding Inc. of the supervisory
Klybeckstrasse 141 board of Mercedes-
CH-4002 Benz
Basel, Switzerland
Page 10 of 18
<PAGE>
Present Principal
Name, Function and Occupation or
Business Address Citizenship Employment
- ------------------ ----------- -----------------
Armin Meyer Switzerland Member of the
Director executive committee
c/o Ciba Specialty of ABB Asea Brown
Chemicals Holding Inc. Boveri
Klybeckstrasse 141
CH-4002
Basel, Switzerland
Hermann Vodicka Switzerland Chief Executive
Director Officer
c/o Ciba Specialty
Chemicals Holding Inc.
Klybeckstrasse 141
CH-4002
Basel, Switzerland
Michael Jacobi Switzerland Chief Financial
c/o Ciba Specialty Officer
Chemicals Holding Inc.
Klybeckstrasse 141
CH-4002
Basel, Switzerland
Reinhard Neubeck Germany Head of Additives
c/o Ciba Specialty Division
Chemicals Holding Inc.
Klybeckstrasse 141
CH-4002
Basel, Switzerland
Martin Riediker Switzerland Head of Consumer
c/o Ciba Specialty Care Chemicals
Chemicals Holding Inc. Division
Klybeckstrasse 141
CH-4002
Basel, Switzerland
Werner Dittes Switzerland Head of Performance
c/o Ciba Specialty Polymers Division
Chemicals Holding Inc.
Klybeckstrasse 141
CH-4002
Basel, Switzerland
Peter Schutz Switzerland Head of Pigments
c/o Ciba Specialty Division
Chemicals Holding Inc.
Klybeckstrasse 141
CH-4002
Basel, Switzerland
Jean-Luc Schwitzguebel Switzerland Head of Textile
c/o Ciba Specialty Dyes Division
Chemicals Holding Inc.
Klybeckstrasse 141
CH-4002
Basel, Switzerland
Franz Gerny Switzerland Head of
c/o Ciba Specialty International
Chemicals Holding Inc. Coordination and
Klybeckstrasse 141 Human Resources
CH-4002
Basel, Switzerland
Page 11 of 18
<PAGE>
Present Principal
Name, Function and Occupation or
Business Address Citizenship Employment
- ------------------ ----------- -----------------
John Cheesmond United Head of Corporate
c/o Ciba Specialty Kingdom Strategy and
Chemicals Holding Inc. Business
Klybeckstrasse 141 Development
CH-4002
Basel, Switzerland
Page 12 of 18
<PAGE>
Members of the Board of Directors
and Officers of Ciba Specialty
Chemicals Corporation
The name, address, citizenship and present principal occupation or
employment of each of the directors and executive officers of SCC are
set forth below. Unless otherwise indicated below, each occupation set
forth opposite an individual's name refers to employment with SCC.
Present Principal
Name, Function and Occupation or
Business Address Citizenship Employment
- ------------------ ----------- -----------------
Stanley Sherman U.S. President and
c/o Ciba Specialty Chief Executive
Chemicals Corporation Officer
P.O. Box 2005
560 White Plains Road
Tarrytown, New York
10591
Walter Hosp U.S. Vice President
c/o Ciba Specialty and Chief
Chemicals Corporation Financial Officer
P.O. Box 2005
560 White Plains Road
Tarrytown, New York
10591
John J. McGraw, Esq. U.S. Vice President,
c/o Ciba Specialty General Counsel
Chemicals Corporation and Secretary
P.O. Box 2005
560 White Plains Road
Tarrytown, New York
10591
Page 13 of 18
<PAGE>
Members of the Board of Directors
and Officers of Ciba Specialty
Chemicals Inc.
The name, address, citizenship and present principal occupation or
employment of each of the directors and executive officers of SCI are
set forth below.
Present Principal
Name, Function and Occupation or
Business Address Citizenship Employment
- ------------------ ----------- -----------------
Rolf A. Meyer Switzerland Member of the
Director boards of
c/o Ciba Specialty directors of
Chemicals Holding Inc. Union Bank of
Klybeckstrasse 141 Switzerland,
CH-4002 Siber Hegner and
Basel, Switzerland the Swiss
Exchange.
Page 14 of 18
<PAGE>
SCHEDULE 2
On February 28, 1992, Ciba-Geigy Corporation, a predecessor of the
Reporting Persons ("CGC"), and two employees from its Toms River plant
pleaded guilty in Superior Court, Law Division, Mercer County, New
Jersey to one count of unintentional illegal disposal of pollutants in a
double-lined landfill. Judgment of conviction was entered on March 23,
1992. As part of the settlement agreement, CGC paid a criminal fine of
$3.5 million, civil penalties of $5.5 million and administrative costs
of $2.35 million. At the same time, it made a contribution to the State
of New Jersey of $2.5 million for environmental purposes.
On August 14, 1992, CGC pleaded no contest in Louisiana State
Court, 18th Judicial District, to fifteen misdemeanor counts arising
from falsification of certain back-up quality control data relating to
water discharge permits at its St. Gabriel plant and paid a $250,000
fine. At the same time, it made two contributions of $50,000 each to the
Sheriff's offices of Iberville Parish and West Baton Rouge Parish.
In 1992, CGC pleaded guilty to an Environmental Control Complaint
and Summons resulting from an odor emission at its Newport, Delaware
plant site. The matter was under the jurisdiction of the Delaware
Justice of the Peace Court, Newport, Delaware. A fine of $598.50 was
paid.
Page 15 of 18
<PAGE>
[Exhibit 3]
EXECUTION COPY
CIBA SPECIALTY CHEMICALS HOLDING INC.
CH 4002
Basle, Switzerland
February 21, 1997
Letter Agreement
Dear Sirs:
We refer to the Strategic Alliance Agreement dated as of
September 29, 1995 among Ciba-Geigy Limited ("Ciba"), Ciba-Geigy
Corporation ("CGC") and Hexcel Corporation ("Hexcel"), as amended (the
"SAA"), the Ancillary Agreements (as defined in the SAA) and the
Retention Agreement dated as of June 27, 1996, between Hexcel and Ciba
(the "Retention Agreement", and collectively with the SAA and the
Ancillary Agreements, the "Agreements"). Capitalized terms used in this
Letter Agreement but not defined herein shall have the meanings set
forth in the SAA.
Ciba and Sandoz Limited ("Sandoz") effected a business
combination on December 20, 1996 (the "Combination"), forming Novartis
Inc., a Swiss corporation ("Novartis"). Ciba previously formed a new
subsidiary, Ciba Specialty Chemicals Holding Inc. ("SpinCo"), the
holding company for Novartis' (formerly Ciba's) specialty chemicals
businesses (including its direct or indirect interest in Hexcel Common
and Senior Subordinated Debt and its rights and obligations under the
Agreements) and plans to distribute the stock of SpinCo on a pro rata
basis to the stockholders of Novartis (the "Spin-off").
In connection with the Spin-off:
1. Hexcel hereby consents to the consummation of the Spin-off
and, in connection therewith, to the assignment to and assumption by
SpinCo and any of its wholly-owned Subsidiaries (by operation of law or
otherwise in a manner reasonably satisfactory to Hexcel) of the
Agreements. Such consent is being granted by Hexcel subject to the
following: (a) the consummation of the Spin-off and the related
assignments and assumptions will have no adverse consequences to Hexcel
under the revolving credit facility as in effect on the date hereof and
entered into by Hexcel and certain of its Subsidiaries in connection
with Hexcel's acquisition of Hercules' Composite Products Division (the
"Credit Facility"), (b) SpinCo will pay (or reimburse Hexcel for) any
and all out-of-pocket fees and/or expenses incurred in connection with
obtaining any required consents to or waivers regarding the Spin-off and
the related assignments and assumptions under the Credit Facility and
(c) immediately after the Spin-off, SpinCo will contain Ciba's former
Additives, Pigments, Polymers, Textile Dyes and Chemicals Divisions.
SpinCo acknowledges that such consent shall be null and void if any of
the foregoing conditions are not satisfied.
2. As a result of the Combination and the Spin-off, the
Agreements shall be deemed amended so that all references therein to
Ciba, a Subsidiary of Ciba or the term "Ciba" shall, subject to the
effectiveness of the foregoing consents, effective upon consummation of
the Spin-off, be references to SpinCo, a Subsidiary of SpinCo or the
name of SpinCo, as the case may be.
3. Subject to the effectiveness of the foregoing consents, (a)
Hexcel waives any violations of the Agreements that may result solely
from the consummation of the Spin-off, (b) Hexcel confirms that, after
giving effect to this Letter Agreement, consummation of the Spin-off
will not conflict with or give rise to any right of termination,
cancellation or acceleration by Hexcel or any of its
Page 16 of 18
<PAGE>
Subsidiaries, or the loss by Ciba, Novartis, SpinCo or any of their
respective Subsidiaries of any right (other than by virtue of having
assigned such right to and in favor of SpinCo or any of its
Subsidiaries, as the case may be, as contemplated by this Letter
Agreement), under the Agreements and (c) upon consummation of the
Spin-off, Hexcel releases Novartis and its Subsidiaries from any and all
obligations under the Agreements, whether or not existing on the date of
this Letter Agreement.
4. For purposes of paragraph 1, adverse consequences shall
mean (a) any and all fees, costs, expenses and other adverse
consequences (including any increase in interest rates) under the Credit
Facility that result solely from the Spin-off or a Default or Event of
Default under Sections 15.1(m), (n), (o) or (p) of the Credit Facility
resulting solely from the Spin-off (a "Spin-off Event of Default"), if
at the time of the Spin-off there are no other Defaults or Events of
Defaults, as defined in the Credit Facility, and (b) in the event that
any other Default, Event of Default or other adverse consequence occurs
under the Credit Facility (other than a Spin-off Event of Default), only
those fees, costs, expenses and other adverse consequences (including
any increase in interest rates) that the lenders under the Credit
Facility (after having first met in good faith jointly with SpinCo and
Hexcel representatives) specifically identify in writing as attributable
solely to the Spin-off and/or a Spin-off Event of Default. The fees,
costs and expenses required to be paid or reimbursed by SpinCo or other
adverse consequences for which SpinCo is responsible under this Letter
Agreement shall be limited solely to those fees, costs, expenses and
other adverse consequences as described in this paragraph 4, and upon
(i) payment of all such fees, costs and expenses by SpinCo or (ii)
resolution of each other adverse consequence by SpinCo in a manner
reasonably satisfactory to Hexcel no further action shall be required
and no such adverse consequence shall be deemed to have occurred
hereunder.
5. SpinCo agrees to provide reasonable prior notice to Hexcel
as to the timing of the Spin-off and, SpinCo and Hexcel agree to
cooperate with each other in negotiating jointly in good faith with the
lenders to obtain any necessary consents or waivers, reduce or obviate
any fees, costs and expenses and minimize and otherwise resolve any
other adverse consequences for which SpinCo is responsible under
paragraph 4 of this Letter Agreement.
Notwithstanding anything herein to the contrary, SpinCo shall
retain without prejudice its right to assert that any consent or waiver
by Hexcel referred to in this Letter Agreement is not necessary in order
to consummate the Spin-off without affecting any party's rights under
any particular Agreement, and Hexcel shall retain without prejudice its
right to assert that any such consent or waiver is necessary.
The provisions of this Letter Agreement shall be governed by
and construed in accordance with the laws of the State of Delaware,
regardless of the laws that might otherwise govern under applicable
principles of conflicts of law. As used herein, the term "including"
means including, without limitation. Except as expressly set forth
herein, each of the Agreements shall remain in full force and effect.
If the foregoing is in accordance with your understanding of
our agreement, please sign where indicated below and return a copy of
the same to the undersigned, whereupon this Letter Agreement shall
represent a binding agreement between SpinCo and Hexcel.
Page 17 of 18
<PAGE>
Very truly yours,
CIBA SPECIALTY CHEMICALS HOLDING
INC.,
by /s/ B. KAMM
-----------
Name:B. Kamm
Title: Head Affiliate Financing
/s/ PETER RUDOLPH
-----------------
Name: Dr. Peter Rudolph
Title: Senior Division Counsel
The foregoing is hereby
confirmed and accepted as of
the date first above written:
HEXCEL CORPORATION,
by /s/ S. C. FORSYTH
-----------------
Name: S. C. Forsyth
Title: Senior Vice President
Page 18 of 18
