EXHIBIT 4
REGISTRATION RIGHTS AGREEMENT
between
HEXCEL CORPORATION,
LXH, L.L.C.,
and
LXH II, L.L.C.
Dated as of _________, 2000
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REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT (this "Agreement"), is made as of
___________, 2000, between HEXCEL CORPORATION, a Delaware corporation (the
"Company"), LXH, L.L.C., a Delaware limited liability company ("LXH") and LXH
II, L.L.C., a Delaware limited liability company (together with LXH, the
"Investors").
WHEREAS, the Investors have entered into a Stock Purchase Agreement (the
"Stock Purchase Agreement"), dated as of October 11, 2000, with Ciba Specialty
Chemicals Holding Inc., a corporation organized under the laws of Switzerland
("Ciba Holdings"), Ciba Specialty Chemicals Inc., a corporation organized
under the laws of Switzerland and wholly-owned subsidiary of Ciba Holdings
("Ciba SCI") and Ciba Specialty Chemicals Corporation, a corporation organized
under the laws of Delaware and a wholly-owned subsidiary of Ciba Holdings
(together with Ciba Holdings and Ciba SCI, "Ciba") pursuant to which, upon the
terms and subject to the conditions contained therein, the Investors have
agreed to acquire shares of Common Stock of the Company; and
WHEREAS, simultaneously herewith, the Investors and the Company are
executing and delivering a Governance Agreement (the "Governance Agreement")
providing, among other things, for certain rights and obligations with respect
to the ownership of the shares of Common Stock acquired by the Investors; and
WHEREAS, (i) in connection with the execution and delivery by the
Investors of the Stock Purchase Agreement and the consummation of the
transactions contemplated hereby and (ii) to induce the Investors and their
Affiliates to execute and deliver the Governance Agreement and to consummate
the transactions contemplated thereby, the Company has agreed to provide the
Investors with the registration rights set forth in this Agreement.
ACCORDINGLY, the parties hereto agree as follows:
1. Certain Definitions.
As used in this Agreement, capitalized terms not otherwise defined herein
shall have the meanings ascribed to them below:
"Affiliate" means (i) with respect to any Person, any other Person
directly or indirectly controlling or controlled by or under direct or
indirect common control with such specified Person or (ii) with respect to any
individual, shall also mean the spouse or child of such individual; provided,
that neither the Company nor any Person controlled by the Company shall be
deemed to be an Affiliate of any Holder.
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"Certificate of Incorporation" means the Certificate of Incorporation of
the Company, as amended and in effect on the date hereof.
"Ciba Registrable Securities" means (a) any shares of Common Stock held
by Ciba after giving effect to the consummation of the transactions
contemplated by the Stock Purchase Agreement and (b) any shares of Common
Stock issued or issuable, directly or indirectly, in exchange for or with
respect to the Common Stock referenced in clause (a) above by way of stock
dividend, stock split or combination of shares or in connection with a
reclassification, recapitalization, merger, consolidation or other
reorganization. As to any particular Ciba Registrable Securities, such
securities shall cease to be Ciba Registrable Securities when (A) a
registration statement with respect to the sale of such securities shall have
been declared effective under the Securities Act and such securities shall
have been disposed of in accordance with such registration statement, or (B)
such securities shall have been sold (other than in a privately negotiated
sale) pursuant to Rule 144 (or any successor provision) under the Securities
Act and in compliance with the requirements of paragraphs (f) and (g) of Rule
144 (notwithstanding the provisions of paragraph (k) of such Rule).
"Common Stock" means the common stock, par value $.01 per share, of the
Company and any equity securities issued or issuable in exchange for or with
respect to the Common Stock by way of a stock dividend, stock split or
combination of shares or in connection with a reclassification,
recapitalization, merger, consolidation or other reorganization.
"Common Stock Equivalents" shall mean all options, warrants and other
securities convertible into, or exchangeable or exercisable for, (at any time
or upon the occurrence of any event or contingency and without regard to any
vesting or other conditions to which such securities may be subject), Common
Stock.
"Expenses" shall mean any and all fees and expenses incurred in
connection with the Company's performance of or compliance with Article 2,
including, without limitation: (i) SEC, stock exchange or NASD registration
and filing fees and all listing fees and fees with respect to the inclusion of
securities on the New York Stock Exchange or on any securities market on which
the Common Stock is listed or quoted, (ii) fees and expenses of compliance
with state securities or "blue sky" laws and in connection with the
preparation of a "blue sky" survey, including without limitation, reasonable
fees and expenses of blue sky counsel, (iii) printing and copying expenses,
(iv) messenger and delivery expenses, (v) expenses incurred in connection with
any road show, (vi) fees and
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disbursements of counsel for the Company, (vii) with respect to each
registration, the fees and disbursements (which shall not exceed $50,000 per
registration) of one counsel for the selling Holder(s) (selected by the
Initiating Holders, in the case of a registration pursuant to Section 2.1, and
selected by the underwriter, in the case of a registration pursuant to Section
2.2), (viii) fees and disbursements of all independent public accountants
(including the expenses of any audit and/or "cold comfort" letter) and fees
and expenses of other persons, including special experts, retained by the
Company, (ix) fees and expenses payable to a Qualified Independent Underwriter
(as such term is defined in Schedule E to the By-Laws of the NASD) and (x) any
other fees and disbursements of underwriters, if any, customarily paid by
issuers of securities (collectively, "Expenses").
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Holder" or "Holders" means any Person who is a signatory to this
Agreement and any Person who shall hereafter acquire and hold Registrable
Securities in accordance with the terms of the Governance Agreement.
"Person" means any individual, corporation, limited liability company,
limited or general partnership, joint venture, association, joint-stock
company, trust, unincorporated organization or government or any agency or
political subdivisions thereof.
"Registrable Securities" means (a) any shares of Common Stock held by the
Holders and (b) any shares of Common Stock issued or issuable, directly or
indirectly, in exchange for or with respect to the Common Stock referenced in
clause (a) above by way of stock dividend, stock split or combination of
shares or in connection with a reclassification, recapitalization, merger,
consolidation or other reorganization. As to any particular Registrable
Securities, such securities shall cease to be Registrable Securities when (A)
a registration statement with respect to the sale of such securities shall
have been declared effective under the Securities Act and such securities
shall have been disposed of in accordance with such registration statement, or
(B) such securities shall have been sold (other than in a privately negotiated
sale) pursuant to Rule 144 (or any successor provision) under the Securities
Act and in compliance with the requirements of paragraphs (f) and (g) of Rule
144 (notwithstanding the provisions of paragraph (k) of such Rule).
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
2. Registration Rights.
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2.1. Demand Registrations.
(a) (i) Subject to Section 2.1(b) below, at any time after the first
anniversary of the date hereof, the Holders shall have the right to require
the Company to file a registration statement under the Securities Act covering
such aggregate number of Registrable Securities which represents 20% or
greater of the then outstanding Registrable Securities, by delivering a
written request therefor to the Company specifying the number of Registrable
Securities to be included in such registration by such Holders and the
intended method of distribution thereof. All such requests by any Holder
pursuant to this Section 2.1(a)(i) are referred to herein as "Demand
Registration Requests," and the registrations so requested are referred to
herein as "Demand Registrations" (with respect to any Demand Registration, the
Holders making such demand for registration being referred to as the
"Initiating Holders"). As promptly as practicable, but no later than ten days
after receipt of a Demand Registration Request, the Company shall give written
notice (the "Demand Exercise Notice") of such Demand Registration Request to
all Holders of record of Registrable Securities.
(ii) The Company, subject to Sections 2.3 and 2.6, shall include in a
Demand Registration (x) the Registrable Securities of the Initiating Holders
and (y) the Registrable Securities of any other Holder of Registrable
Securities which shall have made a written request to the Company for
inclusion in such registration (which request shall specify the maximum number
of Registrable Securities intended to be disposed of by such Holders) within
30 days after the receipt of the Demand Exercise Notice (or, 15 days if, at
the request of the Initiating Holders, the Company states in such written
notice or gives telephonic notice to all Holders, with written confirmation to
follow promptly thereafter, that such registration will be on a Form S-3).
(iii) The Company shall, as expeditiously as possible but subject to
Section 2.1(b), use its commercially reasonable efforts to (x) effect such
registration under the Securities Act of the Registrable Securities which the
Company has been so requested to register, for distribution in accordance with
such intended method of distribution, and (y) if requested by the Initiating
Holders, obtain acceleration of the effective date of the registration
statement relating to such registration.
(b) Notwithstanding anything to the contrary in Section 2.1(a), the
Demand Registration rights granted in Section 2.1(a) to the Investors are
subject to the following limitations: (i) the Company shall not be required to
cause a registration pursuant to Section 2.1(a)(i) to be declared effective
within a period of 180 days after the effective date of any other registration
statement of the Company filed pursuant to the Securities Act; (ii) if the
Board of Directors of the Company, in its good faith judgment, determines that
any registration of Registrable Securities should not be made or continued
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because it would materially interfere with any material financing,
acquisition, corporate reorganization or merger or other transaction or event
involving the Company or any of its subsidiaries (a "Valid Business Reason"),
the Company may postpone filing a registration statement relating to a Demand
Registration Request until such Valid Business Reason no longer exists, but in
no event for more than three months (such period of postponement or withdrawal
under this clause (ii), the "Postponement Period"); and the Company shall give
written notice of its determination to postpone or withdraw a registration
statement and of the fact that the Valid Business Reason for such postponement
or withdrawal no longer exists, in each case, promptly after the occurrence
thereof; provided, however, the Company shall not be permitted to postpone or
withdraw a registration statement after the expiration of any Postponement
Period until twelve months after the expiration of such Postponement Period;
(iii) the Company shall not, be obligated to effect more than three Demand
Registrations under Section 2.1(a) and (iv) the Company shall not be required
to effect a Demand Registration unless the Registrable Securities to be
included in such registration have an aggregate anticipated offering price of
at least $25,000,000 (based on the then-current market price of the Common
Stock).
If the Company shall give any notice of postponement or withdrawal of any
registration statement pursuant to clause (ii) above, the Company shall not,
during the period of postponement or withdrawal, register any Common Stock,
other than pursuant to a registration statement on Form S-4 or S-8 (or an
equivalent registration form then in effect). Each Holder of Registrable
Securities agrees that, upon receipt of any notice from the Company that the
Company has determined to withdraw any registration statement pursuant to
clause (ii) above, such Holder will discontinue its disposition of Registrable
Securities pursuant to such registration statement and, if so directed by the
Company, will deliver to the Company (at the Company's expense) all copies,
other than permanent file copies, then in such Holder's possession of the
prospectus covering such Registrable Securities that was in effect at the time
of receipt of such notice. If the Company shall have withdrawn or prematurely
terminated a registration statement filed under Section 2.1(a)(i) (whether
pursuant to clause (ii) above or as a result of any stop order, injunction or
other order or requirement of the SEC or any other governmental agency or
court), the Company shall not be considered to have effected an effective
registration for the purposes of this Agreement until the Company shall have
filed a new registration statement covering the Registrable Securities covered
by the withdrawn registration statement and such registration statement shall
have been declared effective and shall not have been withdrawn. If the Company
shall give any notice of withdrawal or postponement of a registration
statement, the Company shall, at such time as the Valid Business Reason that
caused such withdrawal or postponement no longer exists (but in no event later
than three months after the date of the postponement or withdrawal), use its
commercially reasonable best efforts to effect the registration under the
Securities Act of the Registrable Securities covered by the withdrawn or
postponed registration statement
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in accordance with this Section 2.1 (unless the Initiating Holders shall have
withdrawn such request, in which case the Company shall not be considered to
have effected an effective registration for the purposes of this Agreement).
(c) The Company, subject to Sections 2.3 and 2.6, may elect to include in
any registration statement and offering made pursuant to Section 2.1(a)(i),
(i) authorized but unissued shares of Common Stock or shares of Common Stock
held by the Company as treasury shares and (ii) any other shares of Common
Stock which are requested to be included in such registration pursuant to the
exercise of piggyback rights granted by the Company which are not inconsistent
with the rights granted in, or otherwise conflict with the terms of, this
Agreement ("Additional Piggyback Rights") provided, however, that such
inclusion shall be permitted only to the extent that it is pursuant to and
subject to the terms of the underwriting agreement or arrangements, if any,
entered into by the Initiating Holders.
(d) In connection with any Demand Registration, the Company shall have
the right to designate the lead managing underwriter in connection with such
registration and each other managing underwriter for such registration,
provided that in each case, each such underwriter is reasonably satisfactory
to the Initiating Holders.
2.2. Piggyback Registrations.
(a) If, at any time, the Company proposes or is required to register any
of its equity securities under the Securities Act (other than pursuant to (i)
registrations on such form or similar form(s) solely for registration of
securities in connection with an employee benefit plan or dividend
reinvestment plan or a merger or consolidation or (ii) a Demand Registration
under Section 2.1) on a registration statement on Form S-1, Form S-2 or Form
S-3 (or an equivalent general registration form then in effect), whether or
not for its own account, the Company shall give prompt written notice of its
intention to do so to each of the Holders of record of Registrable Securities.
Upon the written request of any such Holder, made within 15 days following the
receipt of any such written notice (which request shall specify the maximum
number of Registrable Securities intended to be disposed of by such Holder and
the intended method of distribution thereof), the Company shall, subject to
Sections 2.2(b), 2.3 and 2.6 hereof, use its commercially reasonable efforts
to cause all such Registrable Securities, the Holders of which have so
requested the registration thereof, to be included in the registration
statement with the securities which the Company at the time proposes to
register to permit the sale or other disposition by the Holders (in accordance
with the intended method of distribution thereof) of the Registrable
Securities to be so registered. No registration of Registrable Securities
effected under this Section 2.2(a) shall relieve the Company of its
obligations to effect Demand Registrations under Section 2.1 hereof.
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(b) If, at any time after giving written notice of its intention to
register any equity securities and prior to the effective date of the
registration statement filed in connection with such registration, the Company
shall determine for any reason not to register or to delay registration of
such equity securities, the Company may, at its election, give written notice
of such determination to all Holders of record of Registrable Securities and
(i) in the case of a determination not to register, shall be relieved of its
obligation to register any Registrable Securities in connection with such
abandoned registration, without prejudice, however, to the rights of Holders
under Section 2.1, and (ii) in the case of a determination to delay such
registration of its equity securities, shall be permitted to delay the
registration of such Registrable Securities for the same period as the delay
in registering such other equity securities.
(c) Any Holder shall have the right to withdraw its request for inclusion
of its Registrable Securities in any registration statement pursuant to this
Section 2.2 by giving written notice to the Company of its request to
withdraw; provided, however, that (i) such request must be made in writing
prior to the earlier of the execution of the underwriting agreement or the
execution of the custody agreement with respect to such registration and (ii)
such withdrawal shall be irrevocable and, after making such withdrawal, a
Holder shall no longer have any right to include Registrable Securities in the
registration as to which such withdrawal was made.
2.3. Allocation of Securities Included in Registration Statement.
(a) If any requested registration made prior to 18 months after the date
hereof pursuant to Section 2.1 involves an underwritten offering and the lead
managing underwriter of such offering (the "Manager") shall advise the Company
that, in its view, the number of securities requested to be included in such
registration by the Holders of Registrable Securities or any other persons
(including those shares of Common Stock requested by the Company to be
included in such registration) exceeds the largest number (the "Section 2.3(a)
Sale Number") that can be sold in an orderly manner in such offering within a
price range acceptable to the Initiating Holders, the Company shall use its
commercially reasonable efforts to include in such registration:
(i) first, all Registrable Securities and Ciba Registrable
Securities requested to be included in such registration by the holders
thereof; provided, however, that, if the number of such Registrable
Securities and Ciba Registrable Securities exceeds the Section 2.3(a)
Sale Number, the number of such Registrable Securities and Ciba
Registrable Securities (not to exceed the Section 2.3(a) Sale Number) to
be included in such registration shall be allocated on a pro rata basis
among all holders requesting that Registrable Securities and Ciba
Registrable Securities be included in such registration, based on the
number
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of Registrable Securities and Ciba Registrable Securities then owned by
each such holder requesting inclusion in relation to the number of
Registrable Securities and Ciba Registrable Securities owned by all
holders requesting inclusion;
(ii) second, to the extent that the number of Registrable Securities
to be included pursuant to clause (i) of this Section 2.3(a) is less than
the Section 2.3(a) Sale Number, the remaining shares to be included in
such registration shall be allocated on a pro rata basis among all
holders requesting that securities be included in such registration
pursuant to the exercise of Additional Piggyback Rights ("Piggyback
Shares"), based on the aggregate number of Piggyback Shares then owned by
each holder requesting inclusion in relation to the aggregate number of
Piggyback Shares owned by all holders requesting inclusion, up to the
Section 2.3(a) Sale Number; and
(iii) third, to the extent that the number of securities to be
included pursuant to clauses (i) and (ii) of this Section 2.3(a) is less
than the Section 2.3(a) Sale Number, any securities that the Company
proposes to register, up to the Section 2.3(a) Sale Number.
If, as a result of the proration provisions of this Section 2.3(a), any
Holder shall not be entitled to include all Registrable Securities in a
registration that such Holder has requested be included, such Holder may elect
to withdraw his request to include Registrable Securities in such registration
or may reduce the number requested to be included; provided, however, that (x)
such request must be made in writing prior to the earlier of the execution of
the underwriting agreement or the execution of the custody agreement with
respect to such registration and (y) such withdrawal shall be irrevocable and,
after making such withdrawal, such Holder shall no longer have any right to
include Registrable Securities in the registration as to which such withdrawal
was made.
(b) If any requested registration made at any time after 18 months
following the date hereof pursuant to Section 2.1 involves an underwritten
offering and the Manager shall advise the Company that, in its view, the
number of securities requested to be included in such registration by the
Holders of Registrable Securities or any other persons (including those shares
of Common Stock requested by the Company to be included in such registration)
exceeds the largest number (the "Section 2.3(b) Sale Number") that can be sold
in an orderly manner in such offering within a price range acceptable to the
Initiating Holders, the Company shall use its commercially reasonable efforts
to include in such registration:
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(i) first, all Registrable Securities requested to be included in
such registration by the Holders; provided, however, that, if the number
of such Registrable Securities exceeds the Section 2.3(b) Sale Number,
the number of such Registrable Securities (not to exceed the Section
2.3(b) Sale Number) to be included in such registration shall be
allocated on a pro rata basis among all Holders requesting that
Registrable Securities be included in such registration, based on the
number of Registrable Securities then owned by each such Holder
requesting inclusion in relation to the number of Registrable Securities
owned by all Holders requesting inclusion;
(ii) second, to the extent that the number of securities to be
included pursuant to clause (i) of this Section 2.3(b) is less than the
Section 2.3(b) Sale Number, the remaining shares to be included in such
registration shall be allocated on a pro rata basis among all holders
requesting that Piggyback Shares (including Ciba Registrable Securities)
be included in such registration pursuant to the exercise of Additional
Piggyback Rights, based on the aggregate number of Piggyback Shares then
owned by each holder requesting inclusion in relation to the aggregate
number of Piggyback Shares owned by all holders requesting inclusion, up
to the Section 2.3(b) Sale Number; and
(iii) third, to the extent that the number of securities to be
included pursuant to clauses (i) and (ii) of this Section 2.3(b) is less
than the Section 2.3(b) Sale Number, any securities that the Company
proposes to register, up to the Section 2.3(b) Sale Number.
If, as a result of the proration provisions of this Section 2.3(b), any
Holder shall not be entitled to include all Registrable Securities in a
registration that such Holder has requested be included, such Holder may elect
to withdraw his request to include Registrable Securities in such registration
or may reduce the number requested to be included; provided, however, that (x)
such request must be made in writing prior to the earlier of the execution of
the underwriting agreement or the execution of the custody agreement with
respect to such registration and (y) such withdrawal shall be irrevocable and,
after making such withdrawal, such Holder shall no longer have any right to
include Registrable Securities in the registration as to which such withdrawal
was made.
(c) If any registration pursuant to Section 2.2 involves an underwritten
offering that was initially proposed by the Company prior to the first
anniversary of the date hereof as a primary registration of its securities and
the Manager shall advise the Company that, in its view, the number of
securities requested to be included in such registration exceeds the number
(the "Section 2.3(c) Sale Number") that can be sold in an
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orderly manner in such registration within a price range acceptable to the
Company, the Company shall include in such registration:
(i) first, all Ciba Registrable Securities requested to be included
in such registration by the holders of such securities; provided,
however, that, if the number of such Ciba Registrable Securities exceeds
the Section 2.3(c) Sale Number, the number of such Ciba Registrable
Securities (not to exceed the Section 2.3(c) Sale Number) to be included
in such registration shall be allocated on a pro rata basis among all
holders requesting that Ciba Registrable Securities be included in such
registration, based on the number of Ciba Registrable Securities then
owned by each such holder requesting inclusion in relation to the number
of Ciba Registrable Securities owned by all holders requesting inclusion;
(ii) second, to the extent that the number of securities to be
included pursuant to clause (i) of this Section 2.3(c) is less than the
Section 2.3(c) Sale Number, any securities that the Company proposes to
register, up to the Section 2.3(c) Sale Number (the "Company
Securities");
(iii) third, to the extent that the number of securities to be
included pursuant to clauses (i) and (ii) of this Section 2.3(c) is less
than the Section 2.3(c) Sale Number, the remaining shares to be included
in such registration shall be allocated on a pro rata basis among all
Holders requesting that Registrable Securities be included in such
registration, based on the aggregate number of Registrable Securities
then owned by each holder requesting inclusion in relation to the
aggregate number of Registrable Securities owned by all holders
requesting inclusion, up to the Section 2.3(c) Sale Number; and
(iv) fourth, to the extent that the number of securities to be
included pursuant to clauses (i), (ii) and (iii) of this Section 2.3(c)
is less than the Section 2.3(c) Sale Number, the remaining shares to be
included in such registration shall be allocated on a pro rata basis
among all holders requesting that Piggyback Shares be included in such
registration pursuant to the exercise of Additional Piggyback Rights,
based on the aggregate number of Piggyback Shares then owned by each
holder requesting inclusion in relation to the aggregate number of
Piggyback Shares owned by all holders requesting inclusion, up to the
Section 2.3(c) Sale Number.
(d) If any registration pursuant to Section 2.2 involves an underwritten
offering that was initially proposed by the Company after the first
anniversary of the date hereof but prior to 18 months after the date hereof as
a primary registration of its securities and the Manager shall advise the
Company that, in its view, the number of
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securities requested to be included in such registration exceeds the number
(the "Section 2.3(d) Sale Number") that can be sold in an orderly manner in
such registration within a price range acceptable to the Company, the Company
shall include in such registration:
(i) first, all Common Stock that the Company proposes to register
for its own account;
(ii) second, to the extent that the number of securities to be
included pursuant to clause (i) of this Section 2.3(d) is less than the
Section 2.3(d) Sale Number, the remaining shares to be included in such
registration shall be allocated on a pro rata basis among all holders
requesting that Ciba Registrable Securities be included in such
registration, based on the aggregate number of Ciba Registrable
Securities then owned by each holder requesting inclusion in relation to
the aggregate number of Ciba Registrable Securities owned by all holders
requesting inclusion, up to the Section 2.3(d) Sale Number;
(iii) third, to the extent that the number of securities to be
included pursuant to clauses (i) and (ii) of this Section 2.3(d) is less
than the Section 2.3(d) Sale Number, the remaining shares to be included
in such registration shall be allocated on a pro rata basis among all
Holders requesting that Registrable Securities be included in such
registration, based on the aggregate number of Registrable Securities
then owned by each holder requesting inclusion in relation to the
aggregate number of Registrable Securities owned by all holders
requesting inclusion, up to the Section 2.3(d) Sale Number; and
(iv) fourth, to the extent the number of securities to be included
pursuant to clauses (i), (ii) and (iii) of this Section 2.3(d) is less
than the Section 2.3(d) Sale Number, the remaining shares to be included
in such registration shall be allocated on a pro rata basis among all
holders requesting that Piggyback Shares be included in such registration
pursuant to the exercise of Additional Piggyback Rights, based on the
aggregate number of Piggyback Shares then owned by each holder requesting
inclusion in relation to the aggregate number of Piggyback Shares owned
by all holders requesting inclusion, up to the Section 2.3(d) Sale
Number.
(e) If any registration pursuant to Section 2.2 involves an underwritten
offering that was initially proposed by the Company at any time after 18
months following the date hereof as a primary registration of its securities
and the Manager shall advise the Company that, in its view, the number of
securities requested to be included in such registration exceeds the number
(the "Section 2.3(e) Sale Number") that can be sold
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in an orderly manner in such registration within a price range acceptable to
the Company, the Company shall include in such registration:
(i) first, all Common Stock that the Company proposes to register
for its own account;
(ii) second, to the extent that the number of securities to be
included pursuant to clause (i) of this Section 2.3(e) is less than the
Section 2.3(e) Sale Number, the remaining shares to be included in such
registration shall be allocated on a pro rata basis among all holders
requesting that Registrable Securities or Ciba Registrable Securities be
included in such registration, based on the aggregate number of
Registrable Securities and Ciba Registrable Securities then owned by each
holder requesting inclusion in relation to the aggregate number of
Registrable Securities and Ciba Registrable Securities owned by all
holders requesting inclusion, up to the Section 2.3(e) Sale Number; and
(iii) third, to the extent the number of securities to be included
pursuant to clauses (i) and (ii) of this Section 2.3(e) is less than the
Section 2.3(e) Sale Number, the remaining shares to be included in such
registration shall be allocated on a pro rata basis among all holders
requesting that Piggyback Shares be included in such registration
pursuant to the exercise of Additional Piggyback Rights, based on the
aggregate number of Piggyback Shares then owned by each holder requesting
inclusion in relation to the aggregate number of Piggyback Shares owned
by all holders requesting inclusion, up to the Section 2.3(e) Sale
Number.
(f) If any registration pursuant to Section 2.2 involves an underwritten
offering that was initially proposed prior to 18 months after the date hereof
by holders of securities of the Company that have the right to require such
registration ("Additional Demand Rights") and the Manager shall advise the
Company that, in its view, the number of securities requested to be included
in such registration exceeds the number (the "Section 2.3(f) Sale Number")
that can be sold in an orderly manner in such registration within a price
range acceptable to the Company, the Company shall include in such
registration:
(i) first, all Ciba Registrable Securities requested to be included
in such registration by the holders of such securities; provided,
however, that, if the number of such Ciba Registrable Securities exceeds
the Section 2.3(f) Sale Number, the number of such Ciba Registrable
Securities (not to exceed the Section 2.3(f) Sale Number) to be included
in such registration shall be allocated
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on a pro rata basis among all holders requesting that Ciba Registrable
Securities be included in such registration, based on the number of Ciba
Registrable Securities then owned by each such holder requesting
inclusion in relation to the number of Ciba Registrable Securities owned
by all holders requesting inclusion;
(ii) second, to the extent that the number of securities to be
included pursuant to clause (i) of this Section 2.3(f) is less than the
Section 2.3(f) Sale Number, the remaining shares to be included in such
registration shall be allocated on a pro rata basis among holders
requesting that securities be included in such registration pursuant to
Additional Demand Rights ("Additional Registrable Securities"), based on
the aggregate number of Additional Registrable Securities then owned by
each holder requesting inclusion in relation to the aggregate number of
Additional Registrable Securities owned by all holders requesting
inclusion, up to the Section 2.3(f) Sale Number;
(iii) third, to the extent that the number of securities to be
included pursuant to clauses (i) and (ii) of this Section 2.3(f) is less
than the Section 2.3(f) Sale Number, the remaining shares to be included
in such registration shall be allocated on a pro rata basis among all
Holders requesting that Registrable Securities be included in such
registration, based on the aggregate number of Registrable Securities
then owned by each holder requesting inclusion in relation to the
aggregate number of Registrable Securities owned by all holders
requesting inclusion, up to the Section 2.3(f) Sale Number;
(iv) fourth, to the extent the number of securities to be included
pursuant to clauses (i), (ii) and (iii) of this Section 2.3(f) is less
than the Section 2.3(f) Sale Number, any Common Stock that the Company
proposes to register for its own account, up to the Section 2.3(f) Sale
Number; and
(v) five, to the extent that the number of securities to be included
pursuant to clauses (i), (ii), (iii) and (iv) of this Section 2.3(f) is
less than the Section 2.3(f) Sale Number, the remaining shares to be
included in such registration shall be allocated on a pro rata basis
among all holders requesting that Piggyback Shares be included in such
registration pursuant to the exercise of Additional Piggyback Rights,
based on the aggregate number of Piggyback Shares then owned by each
holder requesting inclusion in relation to the aggregate number of
Piggyback Shares owned by all holders requesting inclusion, up to the
Section 2.3(f) Sale Number.
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(g) If any registration pursuant to Section 2.2 involves an underwritten
offering that was initially proposed after 18 months following the date hereof
by holders of securities of the Company that have Additional Demand Rights and
the Manager shall advise the Company that, in its view, the number of
securities requested to be included in such registration exceeds the number
(the "Section 2.3(g) Sale Number") that can be sold in an orderly manner in
such registration within a price range acceptable to the Company, the Company
shall include in such registration:
(i) first, all securities requested to be included in such
registration by the holders of Additional Demand Rights ("Additional
Registrable Securities"); provided, however, that, if the number of such
Additional Registrable Securities exceeds the Section 2.3(g) Sale Number,
the number of such Additional Registrable Securities (not to exceed the
Section 2.3(g) Sale Number) to be included in such registration shall be
allocated on a pro rata basis among all holders of Additional Registrable
Securities requesting that Additional Registrable Securities be included
in such registration, based on the number of Additional Registrable
Securities then owned by each such holders requesting inclusion in
relation to the number of Additional Registrable Securities owned by all
of such holders requesting inclusion;
(ii) second, to the extent that the number of securities to be
included pursuant to clause (i) of this Section 2.3(g) is less than the
Section 2.3(g) Sale Number, the remaining shares to be included in such
registration shall be allocated on a pro rata basis among all holders
requesting that Registrable Securities or Ciba Registrable Securities be
included in such registration, based on the aggregate number of
Registrable Securities and Ciba Registrable Securities then owned by each
holder requesting inclusion in relation to the aggregate number of
Registrable Securities and Ciba Registrable Securities owned by all
holders requesting inclusion, up to the Section 2.3(g) Sale Number;
(iii) third, to the extent the number of securities to be included
pursuant to clauses (i) and (ii) of this Section 2.3(g) is less than the
Section 2.3(g) Sale Number, any Common Stock that the Company proposes to
register for its own account, up to the Section 2.3(g) Sale Number; and
(iv) fourth, to the extent that the number of securities to be
included pursuant to clauses (i), (ii), and (iii) of this Section 2.3(g)
is less than the Section 2.3(g) Sale Number, the remaining shares to be
included in such registration shall be allocated on a pro rata basis
among all holders requesting that Piggyback Shares be included in such
registration pursuant to the exercise of Additional Piggyback Rights,
based on the aggregate number of Piggyback Shares then owned by each
holder requesting inclusion in relation to the aggregate number of
Piggyback Shares owned by all holders requesting inclusion, up to the
Section 2.3(g) Sale Number.
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<PAGE>
2.4. Registration Procedures. If and whenever the Company is required by
the provisions of this Agreement to use its commercially reasonable efforts to
effect or cause the registration of any Registrable Securities under the
Securities Act as provided in this Agreement, the Company shall, as
expeditiously as possible:
(a) prepare and file with the SEC a registration statement on an
appropriate registration form of the SEC for the disposition of such
Registrable Securities in accordance with the intended method of disposition
thereof, which form shall be selected by the Company and shall comply as to
form in all material respects with the requirements of the applicable form and
include all financial statements required by the SEC to be filed therewith,
and the Company shall use its commercially reasonable efforts to cause such
registration statement to become and remain effective (provided, however, that
before filing a registration statement or prospectus or any amendments or
supplements thereto, or comparable statements under securities or blue sky
laws of any jurisdiction, the Company will furnish to one counsel for the
Holders participating in the planned offering (selected by the Initiating
Holders, in the case of a registration pursuant to Section 2.1, and selected
by the lead managing underwriter, in the case of a registration pursuant to
Section 2.2) and the lead managing underwriter, if any, copies of all such
documents proposed to be filed (including all exhibits thereto), which
documents will be subject to the reasonable review and reasonable comment of
such counsel, and the Company shall not file any registration statement or
amendment thereto or any prospectus or supplement thereto to which the Holders
of a majority of the Registrable Securities covered by such registration
statement or the underwriters, if any, shall reasonably object);
(b) prepare and file with the SEC such amendments and supplements to such
registration statement and the prospectus used in connection therewith as may
be necessary to keep such registration statement effective for such period as
any seller of Registrable Securities pursuant to such registration statement
shall request and to comply with the provisions of the Securities Act with
respect to the sale or other disposition of all Registrable Securities covered
by such registration statement in accordance with the intended methods of
disposition by the seller or sellers thereof set forth in such registration
statement;
(c) furnish, without charge, to each seller of such Registrable
Securities and each underwriter, if any, of the securities covered by such
registration statement such number of copies of such registration statement,
each amendment and supplement thereto
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<PAGE>
(in each case including all exhibits), and the prospectus included in such
registration statement (including each preliminary prospectus) in conformity
with the requirements of the Securities Act, and other documents, as such
seller and underwriter may reasonably request in order to facilitate the
public sale or other disposition of the Registrable Securities owned by such
seller (the Company hereby consenting to the use in accordance with all
applicable law of each such registration statement (or amendment or
post-effective amendment thereto) and each such prospectus (or preliminary
prospectus or supplement thereto) by each such seller of Registrable
Securities and the underwriters, if any, in connection with the offering and
sale of the Registrable Securities covered by such registration statement or
prospectus);
(d) use its commercially reasonable efforts to register or qualify the
Registrable Securities covered by such registration statement under such other
securities or "blue sky" laws of such jurisdictions as any sellers of
Registrable Securities or any managing underwriter, if any, shall reasonably
request in writing, and do any and all other acts and things which may be
reasonably necessary or advisable to enable such sellers or underwriter, if
any, to consummate the disposition of the Registrable Securities in such
jurisdictions, except that in no event shall the Company be required to
qualify to do business as a foreign corporation in any jurisdiction where it
would not, but for the requirements of this paragraph (d), be required to be
so qualified, to subject itself to taxation in any such jurisdiction or to
consent to general service of process in any such jurisdiction;
(e) promptly notify each Holder selling Registrable Securities covered by
such registration statement and each managing underwriter, if any: (i) when
the registration statement, any pre-effective amendment, the prospectus or any
prospectus supplement related thereto or post-effective amendment to the
registration statement has been filed and, with respect to the registration
statement or any post-effective amendment, when the same has become effective;
(ii) of any request by the SEC or state securities authority for amendments or
supplements to the registration statement or the prospectus related thereto or
for additional information; (iii) of the issuance by the SEC of any stop order
suspending the effectiveness of the registration statement or the initiation
of any proceedings for that purpose; (iv) of the receipt by the Company of any
notification with respect to the suspension of the qualification of any
Registrable Securities for sale under the securities or blue sky laws of any
jurisdiction or the initiation of any proceeding for such purpose; (v) of the
existence of any fact of which the Company becomes aware which results in the
registration statement, the prospectus related thereto or any document
incorporated therein by reference containing an untrue statement of a material
fact or omitting to state a material fact required to be stated therein or
necessary to make any statement therein not misleading; and (vi) if at any
time the representations and warranties contemplated by any underwriting
agreement, securities sale agreement, or
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other similar agreement, relating to the offering shall cease to be true and
correct in all material respects; and, if the notification relates to an event
described in clause (v), the Company shall promptly prepare and furnish to
each such seller and each underwriter, if any, a reasonable number of copies
of a prospectus supplemented or amended so that, as thereafter delivered to
the purchasers of such Registrable Securities, such prospectus shall not
include an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein
in the light of the circumstances under which they were made not misleading;
(f) comply with all applicable rules and regulations of the SEC, and make
generally available to its security holders, as soon as reasonably practicable
after the effective date of the registration statement (and in any event
within 16 months thereafter), an earnings statement (which need not be
audited) covering the period of at least twelve consecutive months beginning
with the first day of the Company's first calendar quarter after the effective
date of the registration statement, which earnings statement shall satisfy the
provisions of Section 11(a) of the Securities Act and Rule 158 thereunder;
(g) (i) cause all such Registrable Securities covered by such
registration statement to be listed on the New York Stock Exchange or the
principal securities exchange on which similar securities issued by the
Company are then listed (if any), if the listing of such Registrable
Securities is then permitted under the rules of such exchange, or (ii) if no
similar securities are then so listed, to either cause all such Registrable
Securities to be listed on a national securities exchange or to secure
designation of all such Registrable Securities as a Nasdaq National Market
"national market system security" within the meaning of Rule 11Aa2-1 of the
Exchange Act or, failing that, secure Nasdaq National Market authorization for
such shares and, without limiting the generality of the foregoing, take all
actions that may be required by the Company as the issuer of such Registrable
Securities in order to facilitate the managing underwriter's arranging for the
registration of at least two market makers as such with respect to such shares
with the National Association of Securities Dealers, Inc. (the "NASD");
(h) provide and cause to be maintained a transfer agent and registrar for
all such Registrable Securities covered by such registration statement not
later than the effective date of such registration statement;
(i) enter into such customary agreements (including, if applicable, an
underwriting agreement) and take such other actions as the Holders of a
majority of the Registrable Securities participating in such offering shall
reasonably request in order to expedite or facilitate the disposition of such
Registrable Securities (it being understood that the Holders of the
Registrable Securities which are to be distributed by any
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<PAGE>
underwriters shall be parties to any such underwriting agreement and may, at
their option, require that the Company make to and for the benefit of such
Holders the representations, warranties and covenants of the Company which are
being made to and for the benefit of such underwriters);
(j) use its commercially reasonable efforts to obtain an opinion from the
Company's counsel and a "cold comfort" letter from the Company's independent
public accountants in customary form and covering such matters as are
customarily covered by such opinions and "cold comfort" letters delivered to
underwriters in underwritten public offerings, which opinion and letter shall
be reasonably satisfactory to the underwriter, if any, and furnish to each
Holder participating in the offering and to each underwriter, if any, a copy
of such opinion and letter addressed to such Holder or underwriter;
(k) deliver promptly to each Holder participating in the offering and
each underwriter, if any, copies of all correspondence between the SEC and the
Company, its counsel or auditors and all memoranda relating to discussions
with the SEC or its staff with respect to the registration statement, other
than those portions of any such memoranda which contain information subject to
attorney-client privilege with respect to the Company, and, upon receipt of
such confidentiality agreements as the Company may reasonably request, make
reasonably available for inspection by any seller of such Registrable
Securities covered by such registration statement, by any underwriter, if any,
participating in any disposition to be effected pursuant to such registration
statement and by any attorney, accountant or other agent retained by any such
seller or any such underwriter, all pertinent financial and other records,
pertinent corporate documents and properties of the Company, and cause all of
the Company's officers, directors and employees to supply all information
reasonably requested by any such seller, underwriter, attorney, accountant or
agent in connection with such registration statement;
(l) use its commercially reasonable efforts to obtain the withdrawal of
any order suspending the effectiveness of the registration statement;
(m) provide a CUSIP number for all Registrable Securities, not later than
the effective date of the registration statement;
(n) make reasonably available its employees and personnel for
participation in "road shows" an other marketing efforts and otherwise provide
reasonable assistance to the underwriters (taking into account the needs of
the Company's businesses and the requirements of the marketing process) in the
marketing of Registrable Securities in any underwritten offering;
(o) promptly prior to the filing of any document which is to be
incorporated by reference into the registration statement or the prospectus
(after the initial
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filing of such registration statement) provide copies of such document to
counsel for the selling holders of Registrable Securities and to each managing
underwriter, if any, and make the Company's representatives reasonably
available for discussion of such document and make such changes in such
document concerning the selling holders prior to the filing thereof as counsel
for such selling holders or underwriters may reasonably request;
(p) furnish to the Holder participating in the offering and the managing
underwriter, without charge, at least one signed copy, and to each other
Holder participating in the offering, without charge, at least one photocopy
of a signed copy, of the registration statement and any post-effective
amendments thereto, including financial statements and schedules, all
documents incorporated therein by reference and all exhibits (including those
incorporated by reference);
(q) cooperate with the sellers of Registrable Securities and the managing
underwriter, if any, to facilitate the timely preparation and delivery of
certificates not bearing any restrictive legends representing the Registrable
Securities to be sold, and cause such Registrable Securities to be issued in
such denominations and registered in such names in accordance with the
underwriting agreement prior to any sale of Registrable Securities to the
underwriters or, if not an underwritten offering, in accordance with the
instructions of the sellers of Registrable Securities at least three business
days prior to any sale of Registrable Securities and instruct any transfer
agent and registrar of Registrable Securities to release any stop transfer
orders in respect thereof;
(r) take all such other commercially reasonable actions as are necessary
or advisable in order to expedite or facilitate the disposition of such
Registrable Securities; and
(s) take no direct or indirect action prohibited by Regulation M under
the Exchange Act; provided, however, that to the extent that any prohibition
is applicable to the Company, the Company will take such action as is
necessary to make any such prohibition inapplicable.
The Company may require as a condition precedent to the Company's
obligations under this Section 2.4 that each seller of Registrable Securities
as to which any registration is being effected furnish the Company such
information in writing regarding such seller and the distribution of such
Registrable Securities as the Company may from time to time reasonably request
provided that such information is necessary for the Company to consummate such
registration and shall be used only in connection with such registration.
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Each seller of Registrable Securities agrees that upon receipt of any
notice from the Company of the happening of any event of the kind described in
clause (v) of paragraph (e) of this Section 2.4, such Holder will discontinue
such Holder's disposition of Registrable Securities pursuant to the
registration statement covering such Registrable Securities until such
Holder's receipt of the copies of the supplemented or amended prospectus
contemplated by paragraph (e) of this Section 2.4 and, if so directed by the
Company, will deliver to the Company (at the Company's expense) all copies,
other than permanent file copies, then in such Holder's possession of the
prospectus covering such Registrable Securities that was in effect at the time
of receipt of such notice. In the event the Company shall give any such
notice, the applicable period mentioned in paragraph (b) of this Section 2.4
shall be extended by the number of days during such period from and including
the date of the giving of such notice to and including the date when each
seller of any Registrable Securities covered by such registration statement
shall have received the copies of the supplemented or amended prospectus
contemplated by paragraph (e) of this Section 2.4.
If any such registration statement or comparable statement
under "blue sky" laws refers to any Holder by name or otherwise as the Holder
of any securities of the Company, then such Holder shall have the right to
require (i) the insertion therein of language, in form and substance
reasonably satisfactory to such Holder and the Company, to the effect that the
holding by such Holder of such securities is not to be construed as a
recommendation by such Holder of the investment quality of the Company's
securities covered thereby and that such holding does not imply that such
Holder will assist in meeting any future financial requirements of the
Company, or (ii) in the event that such reference to such Holder by name or
otherwise is not in the judgment of the Company, as advised by counsel,
required by the Securities Act or any similar federal statute or any state
"blue sky" or securities law then in force, the deletion of the reference to
such Holder.
2.5. Registration Expenses.
(a) The Company shall pay all Expenses (x) with respect to any Demand
Registration whether or not it becomes effective or remains effective for the
period contemplated by Section 2.4(b) and (y) with respect to any registration
effected under Section 2.2.
(b) Notwithstanding the foregoing, (x) the provisions of this Section 2.5
shall be deemed amended to the extent necessary to cause these expense
provisions to comply with "blue sky" laws of each state in which the offering
is made and (y) in connection with any registration hereunder, each Holder of
Registrable Securities being registered shall pay all underwriting discounts
and commissions and any transfer taxes, if
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any, attributable to the sale of such Registrable Securities, pro rata with
respect to payments of discounts and commissions in accordance with the number
of shares sold in the offering by such Holder, and (z) the Company shall, in
the case of all registrations under this Article 2, be responsible for all its
internal expenses (including, without limitation, all salaries and expenses of
its officers and employees performing legal or accounting duties).
2.6. Certain Limitations on Registration Rights. In the case of any
registration under Section 2.1 pursuant to an underwritten offering, or, in
the case of a registration under Section 2.2, if the Company has determined to
enter into an underwriting agreement in connection therewith, all securities
to be included in such registration shall be subject to an underwriting
agreement and no Person may participate in such registration unless such
Person agrees to sell such Person's securities on the basis provided therein
and, subject to Section 3.1 hereof, completes and executes all reasonable
questionnaires, and other documents (including custody agreements and powers
of attorney) which must be executed in connection therewith, and provides such
other information to the Company or the underwriter as may be necessary to
register such Person's securities.
2.7. Limitations on Sale or Distribution of Other Securities . (a) Each
seller of Registrable Securities agrees that, (i) to the extent requested in
writing by a managing underwriter, if any, of any registration effected
pursuant to Section 2.1, not to sell, transfer or otherwise dispose of,
including any sale pursuant to Rule 144 under the Securities Act, any Common
Stock, or any other equity security of the Company or any security convertible
into or exchangeable or exercisable for any equity security of the Company
(other than as part of such underwritten public offering) during the time
period reasonably requested by the managing underwriter, not to exceed 90 days
(and the Company hereby also so agrees (except that the Company may effect any
sale or distribution of any such securities pursuant to a registration on Form
S-4 (if reasonably acceptable to such managing underwriter) or Form S-8, or
any successor or similar form which is then in effect or upon the conversion,
exchange or exercise of any then outstanding Common Stock Equivalent) to use
its commercially reasonable efforts to cause each holder of any equity
security or any security convertible into or exchangeable or exercisable for
any equity security of the Company purchased from the Company at any time
other than in a public offering so to agree), and (ii) to the extent requested
in writing by a managing underwriter of any underwritten public offering
effected by the Company for its own account (it will not sell any Common Stock
(other than as part of such underwritten public offering) during the time
period reasonably requested by the managing underwriter, which period shall
not exceed 90 days.
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(b) The Company hereby agrees that, if it shall previously have received
a request for registration pursuant to Section 2.1 or 2.2, and if such
previous registration shall not have been withdrawn or abandoned, the Company
shall not sell, transfer, or otherwise dispose of, any Common Stock, or any
other equity security of the Company or any security convertible into or
exchangeable or exercisable for any equity security of the Company (other than
as part of such underwritten public offering, a registration on Form S-4 or
Form S-8 or any successor or similar form which is then in effect or upon the
conversion, exchange or exercise of any then outstanding Common Stock
Equivalent), until a period of 90 days shall have elapsed from the effective
date of such previous registration; and the Company shall so provide in any
registration rights agreements hereafter entered into with respect to any of
its securities.
2.8. No Required Sale. Nothing in this Agreement shall be deemed to
create an independent obligation on the part of any Holder to sell any
Registrable Securities pursuant to any effective registration statement.
2.9. Indemnification. (a) In the event of any registration of any
securities of the Company under the Securities Act pursuant to this Article 2,
the Company will, and hereby agrees to, indemnify and hold harmless, to the
fullest extent permitted by law, each Holder of Registrable Securities, its
directors, officers, fiduciaries, employees, stockholders, members or general
and limited partners (and the directors, officers, employees and stockholders
thereof), each other Person who participates as an underwriter or a Qualified
Independent Underwriter, if any, in the offering or sale of such securities,
each officer, director, employee, stockholder, fiduciary, managing director,
agent, affiliates, consultants, representatives, successors, assigns or
partner of such underwriter or Qualified Independent Underwriter, and each
other Person, if any, who controls such Holder or any such underwriter within
the meaning of the Securities Act, from and against any and all losses,
claims, damages or liabilities, joint or several, actions or proceedings
(whether commenced or threatened) and expenses (including reasonable fees of
counsel and any amounts paid in any settlement effected with the Company's
consent, which consent shall not be unreasonably withheld or delayed) to which
each such indemnified party may become subject under the Securities Act or
otherwise in respect thereof (collectively, "Claims"), insofar as such Claims
arise out of or are based upon (i) any untrue statement or alleged untrue
statement of a material fact contained in any registration statement under
which such securities were registered under the Securities Act or the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, (ii) any
untrue statement or alleged untrue statement of a material fact contained in
any preliminary, final or summary prospectus or any amendment or supplement
thereto, together with the documents incorporated by reference therein, or the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary in order
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to make the statements therein, in the light of the circumstances under which
they were made, not misleading, or (iii) any violation by the Company of any
federal, state or common law rule or regulation applicable to the Company and
relating to action required of or inaction by the Company in connection with
any such registration, and the Company will reimburse any such indemnified
party for any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any such Claim as such
expenses are incurred; provided, however, that the Company shall not be liable
to any such indemnified party in any such case to the extent such Claim arises
out of or is based upon any untrue statement or alleged untrue statement of a
material fact or omission or alleged omission of a material fact made in such
registration statement or amendment thereof or supplement thereto or in any
such prospectus or any preliminary, final or summary prospectus in reliance
upon and in conformity with written information furnished to the Company by or
on behalf of such indemnified party specifically for use therein. Such
indemnity and reimbursement of expenses shall remain in full force and effect
regardless of any investigation made by as on behalf of such indemnified party
and shall survive the transfer of such securities by such Holder.
(b) Each Holder of Registrable Securities that are included in the
securities as to which any registration under Section 2.1 or 2.2 is being
effected shall, severally and not jointly, indemnify and hold harmless (in the
same manner and to the same extent as set forth in paragraph (a) of this
Section 2.9) to the extent permitted by law the Company, its officers and
directors, each Person controlling the Company within the meaning of the
Securities Act and all other prospective sellers and their respective
directors, officers, fiduciaries, managing directors, employees, agents,
affiliates, consultants, representatives, successors, assigns, general and
limited partners, stockholders and respective controlling Persons with respect
to any untrue statement or alleged untrue statement of any material fact in,
or omission or alleged omission of any material fact from, such registration
statement, any preliminary, final or summary prospectus contained therein, or
any amendment or supplement thereto, if such statement or alleged statement or
omission or alleged omission was made in reliance upon and in conformity with
written information furnished to the Company or its representatives by or on
behalf of such Holder specifically for use therein and reimburse such
indemnified party for any legal or other expenses reasonably incurred in
connection with investigating or defending any such Claim as such expenses are
incurred; provided, however, that the aggregate amount which any such Holder
shall be required to pay pursuant to this Section 2.9(b) and Sections 2.9(c),
(e) and (f) shall in no case be greater than the amount of the net proceeds
received by such Holder upon the sale of the Registrable Securities pursuant
to the registration statement giving rise to such claim. Such indemnity and
reimbursement of expenses shall remain in full force and effect regardless of
any investigation made by or on behalf of such indemnified party and shall
survive the transfer of such securities by such Holder.
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(c) Indemnification similar to that specified in the preceding paragraphs
(a) and (b) of this Section 2.9 (with appropriate modifications) shall be
given by the Company and each seller of Registrable Securities with respect to
any required registration or other qualification of securities under any state
securities and "blue sky" laws.
(d) Any Person entitled to indemnification under this Agreement shall
notify promptly the indemnifying party in writing of the commencement of any
action or proceeding with respect to which a claim for indemnification may be
made pursuant to this Section 2.9, but the failure of any such Person to
provide such notice shall not relieve the indemnifying party of its
obligations under the preceding paragraphs of this Section 2.9, except to the
extent the indemnifying party is materially prejudiced thereby and shall not
relieve the indemnifying party from any liability which it may have to any
such Person otherwise than under this Article 2. In case any action or
proceeding is brought against an indemnified party and it shall notify the
indemnifying party of the commencement thereof, the indemnifying party shall
be entitled to participate therein and, unless in the reasonable opinion of
outside counsel to the indemnified party a conflict of interest between such
indemnified and indemnifying parties may exist in respect of such claim, to
assume the defense thereof jointly with any other indemnifying party similarly
notified, to the extent that it chooses, with counsel reasonably satisfactory
to such indemnified party, and after notice from the indemnifying party to
such indemnified party that it so chooses, the indemnifying party shall not be
liable to such indemnified party for any legal or other expenses subsequently
incurred by such indemnified party in connection with the defense thereof
other than reasonable costs of investigation; provided, however, that (i) if
the indemnifying party fails to take reasonable steps necessary to defend
diligently the action or proceeding within 20 days after receiving notice from
such indemnified party; or (ii) if such indemnified party who is a defendant
in any action or proceeding which is also brought against the indemnifying
party reasonably shall have concluded that there may be one or more legal
defenses available to such indemnified party which are not available to the
indemnifying party; or (iii) if representation of both parties by the same
counsel is otherwise inappropriate under applicable standards of professional
conduct, then, in any such case, the indemnified party shall have the right to
assume or continue its own defense as set forth above (but with no more than
one firm of counsel for all indemnified parties in each jurisdiction, except
to the extent any indemnified party or parties reasonably shall have concluded
that there may be legal defenses available to such party or parties which are
not available to the other indemnified parties or to the extent representation
of all indemnified parties by the same counsel is otherwise inappropriate
under applicable standards of professional conduct) and the indemnifying party
shall be liable for any expenses therefor. No indemnifying party shall,
without the written consent of the indemnified party, which consent shall not
be unreasonably withheld, effect the settlement or compromise of, or
<PAGE>
consent to the entry of any judgment with respect to, any pending or
threatened action or claim in respect of which indemnification or contribution
may be sought hereunder (whether or not the indemnified party is an actual or
potential party to such action or claim) unless such settlement, compromise or
judgment (A) includes an unconditional release of the indemnified party from
all liability arising out of such action or claim and (B) does not include a
statement as to or an admission of fault, culpability or a failure to act, by
or on behalf of any indemnified party.
(e) If for any reason the foregoing indemnity is unavailable or is
insufficient to hold harmless an indemnified party under Sections 2.9(a), (b)
or (c), then each indemnifying party shall contribute to the amount paid or
payable by such indemnified party as a result of any Claim in such proportion
as is appropriate to reflect the relative fault of the indemnifying party, on
the one hand, and the indemnified party, on the other hand, with respect to
such offering of securities. The relative fault shall be determined by
reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact relates to information supplied by the indemnifying party or the
indemnified party and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such untrue statement or
omission. If, however, the allocation provided in the second preceding
sentence is not permitted by applicable law, then each indemnifying party
shall contribute to the amount paid or payable by such indemnified party in
such proportion as is appropriate to reflect not only such relative faults but
also the relative benefits of the indemnifying party and the indemnified party
as well as any other relevant equitable considerations. The parties hereto
agree that it would not be just and equitable if contributions pursuant to
this Section 2.9(e) were to be determined by pro rata allocation or by any
other method of allocation which does not take account of the equitable
considerations referred to in the preceding sentences of this Section 2.9(e).
The amount paid or payable in respect of any Claim shall be deemed to include
any legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such Claim. No Person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any Person who was not
guilty of such fraudulent misrepresentation. Notwithstanding anything in this
Section 2.9(e) to the contrary, no indemnifying party (other than the Company)
shall be required pursuant to this Section 2.9(e) to contribute any amount in
excess of the net proceeds received by such indemnifying party from the sale
of Registrable Securities in the offering to which the losses, claims, damages
or liabilities of the indemnified parties relate, less the amount of any
indemnification payment made by such indemnifying party pursuant to Sections
2.9(b) and (c).
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<PAGE>
(f) The indemnity and contribution agreements contained herein shall be
in addition to any other rights to indemnification or contribution which any
indemnified party may have pursuant to law or contract and shall remain
operative and in full force and effect regardless of any investigation made or
omitted by or on behalf of any indemnified party and shall survive the
transfer of the Registrable Securities by any such party.
(g) The indemnification and contribution required by this Section 2.9
shall be made by periodic payments of the amount thereof during the course of
the investigation or defense, as and when bills are received or expense, loss,
damage or liability is incurred.
3. Underwritten Offerings.
3.1. Requested Underwritten Offerings. If requested by the underwriters
for any underwritten offering by the Investors pursuant to a registration
requested under Section 2.1, the Company shall enter into a customary
underwriting agreement with the underwriters. Such underwriting agreement
shall be satisfactory in form and substance to the Initiating Holders and
shall contain such representations and warranties by, and such other
agreements on the part of, the Company and such other terms as are generally
prevailing in agreements of that type, including, without limitation,
indemnities and contribution agreements on substantially the same terms as
those contained herein. Any Holder participating in the offering shall be a
party to such underwriting agreement and may, at its option, require that any
or all of the representations and warranties by, and the other agreements on
the part of, the Company to and for the benefit of such underwriters shall
also be made to and for the benefit of such Holder and that any or all of the
conditions precedent to the obligations of such underwriters under such
underwriting agreement be conditions precedent to the obligations of such
Holder; provided, however, that the Company shall not be required to make any
representations or warranties with respect to written information specifically
provided by a selling Holder for inclusion in the registration statement. Each
such Holder shall not be required to make any representations or warranties to
or agreements with the Company or the underwriters other than representations,
warranties or agreements regarding such Holder, its ownership of and title to
the Registrable Securities, and its intended method of distribution; and any
liability of such Holder to any underwriter or other Person under such
underwriting agreement shall be limited to liability arising from breach of
its representations and warranties and shall be limited to an amount equal to
the proceeds (net of expenses and underwriting discounts and commissions) that
it derives from such registration.
3.2. Piggyback Underwritten Offerings. In the case of a registration
pursuant to Section 2.2 hereof, if the Company shall have determined to enter
into an underwriting
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<PAGE>
agreement in connection therewith, any Registrable Securities to be included
in such registration shall be subject to such underwriting agreement. Any
Holder participating in such registration may, at its option, require that any
or all of the representations and warranties by, and the other agreements on
the part of, the Company to and for the benefit of such underwriters shall
also be made to and for the benefit of such Holder and that any or all of the
conditions precedent to the obligations of such underwriters under such
underwriting agreement be conditions precedent to the obligations of such
Holder. Each such Holder shall not be required to make any representations or
warranties to or agreements with the Company or the underwriters other than
representations, warranties or agreements regarding such Holder, its ownership
of and title to the Registrable Securities, and its intended method of
distribution; and any liability of such Holder to any underwriter or other
Person under such underwriting agreement shall be limited to liability arising
from breach of its representations and warranties and shall be limited to an
amount equal to the proceeds (net of expenses and underwriting discounts and
commissions) that it derives from such registration.
4. General.
4.1. Adjustments Affecting Registrable Securities. The Company agrees
that it shall not effect or permit to occur any combination or subdivision of
shares of Common Stock which would adversely affect the ability of any Holder
of any Registrable Securities to include such Registrable Securities in any
registration contemplated by this Agreement or the marketability of such
Registrable Securities in any such registration. The Company agrees that it
will take all reasonable steps necessary to effect a subdivision of shares if
in the reasonable judgment of (a) the Initiating Holders or (b) the managing
underwriter for the offering in respect of such Demand Registration Request,
such subdivision would enhance the marketability of the Registrable
Securities. Each Holder agrees to vote all of its shares of capital stock in a
manner, and to take all other actions necessary, to permit the Company to
carry out the intent of the preceding sentence including, without limitation,
voting in favor of an amendment to the Company's Certificate of Incorporation
in order to increase the number of authorized shares of capital stock of the
Company.
4.2. Rule 144. The Company covenants that (i) so long as it remains
subject to the reporting provisions of the Exchange Act, it will timely file
the reports required to be filed by it under the Securities Act or the
Exchange Act (including, but not limited to, the reports under Sections 13 and
15(d) of the Exchange Act referred to in subparagraph (c)(1) of Rule 144 under
the Securities Act), and (ii) will take such further action as any Holder of
Registrable Securities may reasonably request, all to the extent required from
time to time to enable such Holder to sell Registrable Securities without
registration under the Securities Act within the limitation of the exemptions
provided by (A) Rule 144
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<PAGE>
under the Securities Act, as such Rule may be amended from time to time, or
(B) any similar rule or regulation hereafter adopted by the SEC. Upon the
request of any Holder of Registrable Securities, the Company will deliver to
such Holder a written statement as to whether it has complied with such
requirements.
4.3. Nominees for Beneficial Owners. If Registrable Securities are held
by a nominee for the beneficial owner thereof, the beneficial owner thereof
may, at its option, be treated as the Holder of such Registrable Securities
for purposes of any request or other action by any Holder or Holders of
Registrable Securities pursuant to this Agreement (or any determination of any
number or percentage of shares constituting Registrable Securities held by any
Holder or Holders of Registrable Securities contemplated by this Agreement),
provided that the Company shall have received assurances reasonably
satisfactory to it of such beneficial ownership.
4.4 Amendments and Waivers. The terms and provisions of this Agreement
may be modified or amended, or any of the provisions hereof waived,
temporarily or permanently, in a writing executed and delivered by the Company
and the Investors. No waiver of any of the provisions of this Agreement shall
be deemed to or shall constitute a waiver of any other provision hereof
(whether or not similar). No delay on the part of any party in exercising any
right, power or privilege hereunder shall operate as a waiver thereof.
4.5. Notices. Except as otherwise provided in this Agreement, all
notices, requests, consents and other communications hereunder to any party
shall be deemed to be sufficient if contained in a written instrument
delivered in person or by telecopy (with a confirmatory copy sent by a
different means within three business days of such notice), nationally
recognized overnight courier or first class registered or certified mail,
return receipt requested, postage prepaid, addressed to such party at the
address set forth below or such other address as may hereafter be designated
in writing by such party to the other parties:
(i) if to the Company, to:
Hexcel Corporation
Two Stamford Plaza
281 Tresser Boulevard
16th Floor
Stamford, Connecticut 06901-3238
Telecopy No.: (203) 358-3972
Attention: Ira J. Krakower, Esq.
Vice President, General Counsel
and Secretary
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<PAGE>
with a copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
Four Times Square
New York, New York 10036
Telecopy No.: (212) 735-2000
Attention: Joseph A. Coco, Esq.
and
Paul, Weiss, Rifkind, Wharton & Garrison
1285 Avenue of the Americas
New York, New York 10019-6064
Telecopy No.: (212) 757-3990
Attention: Judith R. Thoyer, Esq.
(ii) if to the Holders:
c/o GS Capital Partners 2000, L.P.
85 Broad Street
New York, New York 10004
Telecopy: (212) 357-5505
Attention: Mr. Sanjeev Mehra
with a copy to:
Fried, Frank, Harris, Shriver & Jacobson
One New York Plaza
New York, New York 10004
Telecopy: (212) 859-8587
Attention: Robert C. Schwenkel, Esq.
All such notices, requests, consents and other communications shall be deemed
to have been given when received.
4.6. Miscellaneous.
(a) This Agreement shall be binding upon and inure to the benefit of and
be enforceable by the parties hereto and the respective successors, personal
representatives and assigns of the parties hereto, whether so expressed or
not. If any Person shall acquire Registrable Securities from any Holder, in
any manner, whether by
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<PAGE>
operation of law or otherwise, but in compliance with the Governance
Agreement, such Person shall promptly notify the Company and such Registrable
Securities acquired from such Holder shall be held subject to all of the terms
of this Agreement, and by taking and holding such Registrable Securities such
Person shall be entitled to receive the benefits of and be conclusively deemed
to have agreed to be bound by and to perform all of the terms and provisions
of this Agreement. Any such successor or assign shall agree in writing to
acquire and hold the Registrable Securities acquired from such Holder subject
to all of the terms hereof. If any Holder shall acquire additional Registrable
Securities, such Registrable Securities shall be subject to all of the terms,
and entitled to all the benefits, of this Agreement.
(b) This Agreement (with the documents referred to herein or delivered
pursuant hereto), together with the Agreement, dated as of October 11, 2000,
between the Company and the Investors, and the Governance Agreement, embodies
the entire agreement and understanding between the parties hereto and
supersedes all prior agreements and understandings relating to the subject
matter hereof.
(c) This Agreement shall be construed and enforced in accordance with and
governed by the laws of the State of New York without giving effect to the
conflicts of law principles thereof other than Sections 5-1401 and 5-1402 of
the New York General Obligations Law.
(d) Each of the parties hereto hereby irrevocably and unconditionally
consents to submit to the exclusive jurisdiction of the courts of the State of
New York and of the United States of America, in each case located in the
County of New York, for any claim, action, suit, or proceeding ("Litigation")
arising out of or relating to this Agreement and the transactions contemplated
hereby (and agrees not to commence any Litigation relating hereto or thereto
except in such courts), and further agrees that service of any process,
summons, notice or document by U.S. registered mail to its respective address
set forth in this Agreement shall be effective service of process for any
Litigation brought against it in any such court. Each of the parties hereto
hereby irrevocably and unconditionally waives any objection to the laying of
venue of any Litigation arising out of this Agreement or the transactions
contemplated hereby in the courts of the State of New York or the United
States of America, in each case located in the County of New York, hereby
further irrevocably and unconditionally waives and agrees not to plead or
claim in any such court that any such Litigation brought in any such court has
been brought in an inconvenient forum.
(e) The Company and the Investors hereby waive any right they may have to
a trial by jury in respect of any action, proceeding or litigation directly or
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<PAGE>
indirectly arising out of, under or in connection with this agreement or the
transaction documents.
(f) The headings in this Agreement are for convenience of reference only
and shall not limit or otherwise affect the meaning hereof. All section
references are to this Agreement unless otherwise expressly provided.
(g) This Agreement may be executed in any number of counterparts, each of
which shall be an original, but all of which together shall constitute one
instrument.
(h) Any term or provision of this Agreement which is invalid or
unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction.
(i) The parties hereto acknowledge that there would be no adequate remedy
at law if any party fails to perform any of its obligations hereunder, and
accordingly agree that each party, in addition to any other remedy to which it
may be entitled at law or in equity, shall be entitled to injunctive relief,
including specific performance, to enforce such obligations without the
posting of any bond, and, if any action should be brought in equity to enforce
any of the provisions of this Agreement, none of the parties hereto shall
raise the defense that there is an adequate remedy at law.
(h) Each party hereto shall do and perform or cause to be done and
performed all such further acts and things and shall execute and deliver all
such other agreements, certificates, instruments, and documents as any other
party hereto reasonably may request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.
4.7. No Inconsistent Agreements. The rights granted to the Holders of
Registrable Securities hereunder do not in any way conflict with and are not
inconsistent with any other agreements to which the Company is a party or by
which it is bound. Without the prior written consent of Holders of a majority
of the then outstanding Registrable Securities, the Company will not, on or
after the date of this Agreement, enter into any agreement with respect to its
securities which is inconsistent with the rights granted in this Agreement or
otherwise conflicts with the provisions hereof, other than any lock-up
agreement with the underwriters in connection with any registered offering
effected hereunder, pursuant to which the Company shall agree not to register
for sale, and the Company shall agree not to sell or otherwise dispose of,
Common Stock or any
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securities convertible into or exercisable or exchangeable
for Common Stock, for a specified period following the registered offering.
The Company further agrees that if any other registration rights agreement
entered into after the date of this Agreement with respect to any of its
securities contains terms which are more favorable to, or less restrictive on,
the other party thereto than the terms and conditions contained in this
Agreement are (insofar as they are applicable) to the Holders, then the terms
and conditions of this Agreement shall immediately be deemed to have been
amended without further action by the Company or any of the Holders of
Registrable Securities so that the Holders shall each be entitled to the
benefit of any such more favorable or less restrictive terms or conditions.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed this agreement
as of the date first above written.
HEXCEL CORPORATION
By:
--------------------------------
Name:
Title:
LXH, L.L.C.
By: GS Capital Partners 2000, L.P.,
its managing member
By: GS Advisors 2000, L.L.C.,
its general partner
By:
--------------------------------
Name:
Title:
By: GS Capital Partners 2000 Offshore, L.P.,
its managing member
By: GS Advisors 2000, L.L.C.,
its general partner
By:
--------------------------------
Name:
Title:
