EXHIBIT 2
CONSENT AND TERMINATION AGREEMENT
CONSENT AND TERMINATION AGREEMENT (this "Agreement") dated as of October
11, 2000, by and between Hexcel Corporation, a corporation organized under the
laws of Delaware ("Hexcel") and Ciba Specialty Chemicals Holding Inc., a
corporation organized under the laws of Switzerland ("Ciba").
WITNESSETH:
WHEREAS, Ciba Specialty Chemicals Inc., a corporation organized under the
laws of Switzerland and a wholly owned subsidiary of Ciba ("Ciba SCI"), and
Ciba Specialty Chemicals Corporation, a corporation organized under the laws
of Delaware and a wholly owned subsidiary of Ciba (together with Ciba SCI, the
"Sellers") own an aggregate of 18,021,748 shares of common stock, par value
$0.01 per share, of Hexcel (the "Shares");
WHEREAS, Ciba and the Sellers intend to enter into a Stock Purchase
Agreement (the "Stock Purchase Agreement") with LXH, L.L.C., a Delaware
limited liability company and LXH II, L.L.C., a Delaware limited liability
company (collectively, the "Purchasers"), pursuant to which the Sellers shall
sell to the Purchasers and the Purchasers shall purchase from the Sellers a
number of Shares, which shall represent no more than 39.3% of the outstanding
shares of Hexcel common stock immediately following such sale, in return for
cash and secured promissory notes (the "GS Notes") in accordance with the
provisions of the Stock Purchase Agreement (the "GS Sale");
WHEREAS, the Purchasers and Ciba shall enter into a Pledge Agreement (the
"Pledge Agreement") in connection with the GS Sale pursuant to which, among
other things, the Purchasers shall pledge to Ciba, as collateral for the GS
Notes, a continuing security interest in the Shares transferred to the
Purchasers in the GS Sale;
WHEREAS, on October 10, 2000 the board of directors of Hexcel approved,
subject to the consummation of the GS Sale, a proposed registered underwritten
public offering of shares of Hexcel common stock (the "Hexcel Offering");
WHEREAS, Hexcel and Ciba are parties to a shareholders agreement, dated
as of February 29, 1996 (the "Governance Agreement"), pursuant to which, among
other
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things, Ciba and the Sellers are subject to certain transfer restrictions with
respect to the Shares;
WHEREAS, Hexcel and Ciba are parties to a Registration Rights Agreement,
dated as of February 29, 1996 (the "Registration Rights Agreement"), as
amended, pursuant to which, among other things, Ciba may request that all or a
portion of the Shares be included in any registered underwritten public
offering of shares of Hexcel common stock;
WHEREAS, Ciba and Hexcel are parties to an Indenture, dated as of
February 29, 1996 (the "Indenture"), as amended, pursuant to which, among
other things, Hexcel is subject to certain restrictive covenants;
WHEREAS, Hexcel and Ciba desire to set forth certain rights and actions
to be taken by the parties hereto in connection with the GS Sale and the
Hexcel Offering.
NOW, THEREFORE, in consideration of the mutual covenants and undertakings
set forth in this Agreement, the parties hereto agree as follows:
ARTICLE I
Governance Provisions
SECTION 1.01. Waiver of Transfer Restrictions. In accordance with Section
6.09(a) of the Governance Agreement, and for the sole purpose of permitting
Ciba and the Sellers to consummate the GS Sale, Hexcel hereby agrees to waive
the transfer restrictions set forth in Section 4.01(a) of the Governance
Agreement in connection with the GS Sale; provided, however, that such waiver
shall become effective only upon (i) the closing of the GS Sale, (ii) the
receipt by Hexcel of the bank consent contemplated by Section 5.2(g) of the
Stock Purchase Agreement, (iii) the execution and delivery of the governance
agreement in the form of Exhibit B to the Stock Purchase Agreement and (iv)
the receipt by Hexcel of the resignations of all Ciba Directors (as such term
is defined in the Governance Agreement) pursuant to Section 1.05 of this
Agreement.
SECTION 1.02. Termination of the Governance Agreement. Upon the closing
of the GS Sale, the Governance Agreement shall be terminated; provided,
however, that, until such termination, notwithstanding Section 1.01 of this
Agreement, the Governance Agreement shall remain unmodified.
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Hexcel and Ciba agree that the Strategic Alliance Agreement dated as of
September 29, 1995 shall not be terminated by this Agreement.
SECTION 1.03. Restoration of Transfer Restrictions. If after the closing
of the GS Sale and pursuant to the Pledge Agreement, the number of shares of
Hexcel common stock owned by Ciba and the Sellers exceeds 10% of the aggregate
number of shares of Hexcel common stock outstanding, then until such time as
the number of shares of Hexcel common stock owned by Ciba and the Sellers is
less than 10% of the aggregate number of shares of Hexcel common stock
outstanding, Ciba shall not, and shall not permit any of its subsidiaries,
directly or indirectly, to sell, transfer or otherwise dispose of any shares
of Hexcel common stock, except (i) transfers solely among Ciba and its wholly
owned subsidiaries, (ii) in accordance with the volume and manner-of-sale
limitations of Rule 144 under the Securities Act of 1933 (the "Securities
Act") (regardless of whether such limitations are applicable) and otherwise
subject to compliance with the Securities Act or (iii) in a registered public
offering or a non-registered offering subject to an applicable exemption from
the requirements of the Securities Act, in the case of clauses (ii) and (iii),
in a manner calculated to achieve a Broad Distribution. As used in this
Section 1.03, "Broad Distribution" means a distribution of shares of Hexcel
common stock that, to the knowledge, after due inquiry, of the party on whose
behalf such distribution is being made, will not result in the acquisition by
any other party of any shares of Hexcel common stock to the extent that, after
giving effect to such acquisition, such acquiring party would hold in excess
of 5% (or 7% if such acquiring party is an institutional investor eligible to
file a statement on Schedule 13G (or any successor form) with respect to its
investment in Hexcel) of the total number of votes that may be cast in the
election of directors of Hexcel if all outstanding securities entitled to vote
generally in such an election were present and voted at a meeting held for
such purpose.
SECTION 1.04. Quorum. So long as Ciba or the Sellers beneficially own any
Shares, Ciba shall and shall cause any Ciba Entity (as such term is defined in
the Governance Agreement), if applicable, to be present for purposes of
establishing a quorum in respect of any matter submitted to, or to be acted
upon by the stockholders of Hexcel.
SECTION 1.05. Resignation of Ciba Directors. Upon the closing of the GS
Sale, Ciba shall cause all Ciba Directors to immediately tender to Hexcel
their resignations
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from the Hexcel board of directors and any committee thereof.
SECTION 1.06. Consent to Amendment of Hexcel Bylaws. Ciba hereby consents
to the amendment and restatement of the bylaws of Hexcel, effective upon the
consummation of the GS Sale, substantially in the form attached as Exhibit D
to the agreement dated as of the date hereof by and among Hexcel and the
Purchasers (the "Hexcel Agreement").
ARTICLE II
Registration Rights
SECTION 2.01. Continuation of Registration Rights. Notwithstanding
Section 2.02 of this Agreement, the Registration Rights Agreement shall remain
unmodified, subject, upon consummation of the GS Sale, to the provisions of
Section 2.3 of the registration rights between Hexcel and the Purchasers in
the form attached as Exhibit C to the Stock Purchase Agreement.
SECTION 2.02. Participation in Certain Public Offerings. In addition to
any rights under the Registration Rights Agreement, if the number of shares to
be offered in the Hexcel Offering or in any other Piggyback Registration (as
such term is defined in the Registration Rights Agreement) occurring prior to
the first anniversary of the consummation of the GS Sale is to be reduced
pursuant to Section 3(d)(ii) of the Registration Rights Agreement, then the
Shares, if any, requested to be included in such offering by Ciba and the
Sellers shall have first priority with respect to inclusion as compared to any
other securities, including those offered by Hexcel. In any case, (i) Hexcel
shall bear all costs and expenses incurred by it in connection with such
registration (other than SEC and Blue Sky fees incurred in connection with the
registration of the Shares) including fees and disbursements of its counsel
and accountants and printing expenses and (ii) Ciba shall pay all SEC and Blue
Sky filing fees incurred in connection with the registration of the Shares,
including the fees and disbursements of counsel for Ciba.
ARTICLE III
Indenture Provisions
SECTION 3.01. Waiver of Change in Control
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Provisions. In accordance with Article 9 of the Indenture, and for the sole
purpose of permitting Ciba and the Sellers to consummate the GS Sale, Ciba
hereby waives Hexcel's repurchase obligation as set forth in Section 4.08(a)
of the Indenture upon the occurrence of a Change of Control (as such term is
defined in the Indenture) in connection with the GS Sale.
SECTION 3.02. Amendment of the Indenture. In accordance with the Article
9 of the Indenture, the Indenture shall be amended to provide that (i) upon
the consummation of the Hexcel Offering or any other registered underwritten
public offering of the Hexcel common stock, in each case, occurring prior to
the first anniversary of the consummation of the GS Sale, the principal of and
accrued interest on all Securities (as such term is defined in the Indenture)
shall be due and payable and (ii) upon the consummation of the GS Sale, all of
the covenants set forth in Article 4 of the Indenture (other than Sections
4.01 and 4.10 which shall continue in full force and effect) shall be of no
further force and effect.
ARTICLE IV
Termination
SECTION 4.01. Termination. This Agreement shall terminate automatically,
without any further action of the parties hereto, upon the earlier of (i)
termination of the Stock Purchase Agreement, (ii) the latest of (A) November
9, 2000, if the GS Sale shall not have been consummated by such date, (B)
November 27, 2000, if the GS Sale shall not have been consummated by such date
and the condition set forth in Section 5.2(g)(i) of the Stock Purchase
Agreement shall not have been satisfied on or prior to November 8, 2000 and
(C) two business days after the satisfaction of the conditions set forth in
Sections 5.1(b), 5.1(c) and 5.1(d) of the Stock Purchase Agreement (the latest
of such dates, the "Drop Dead Date") and (iii) the termination of the Hexcel
Agreement by a vote of the Independent Directors (as defined in the Hexcel
Agreement) pursuant to Section 6.1 thereof in connection with the execution of
a definitive agreement relating to an Acquisition Proposal (as defined in the
Hexcel Agreement). Notwithstanding the foregoing, if this Agreement is
terminated pursuant to clause (iii) of this Section 4.01, then, upon the
earlier of (x) the date such Acquisition Proposal is abandoned or terminated
and (y) 120 days after the execution of such definitive agreement, if the
transactions contemplated by such Acquisition Proposal have not been
consummated within such
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120-day period, this Agreement shall be reinstated and the Drop Dead Date
shall be deemed to be 21 business days after the date of such reinstatement,
if the GS Sale shall not have been consummated by such date.
ARTICLE V
Miscellaneous
SECTION 5.01. Fees and Expenses. Except as provided in Section 2.02 or in
this Section 5.01, all fees and expenses incurred in connection with this
Agreement shall be paid by the party incurring such costs and expenses. At the
closing of the GS Sale, Ciba shall reimburse Hexcel $200,000 in the aggregate
for its reasonable costs and expenses incurred in connection with the
transactions contemplated hereby.
SECTION 5.02. Press Releases; Public Filings. Prior to the consummation
of the GS Sale, each of Hexcel and Ciba shall consult with each other before
issuing any press release or making any public filing with respect to this
Agreement or the transactions contemplated hereby and neither shall issue any
such press release or make any such public filing without having consulted
with the other.
SECTION 5.03. Entire Agreement. This Agreement contains the entire
agreement between the parties with respect to the subject matter hereof and
supersedes all prior and contemporaneous arrangements or understandings with
respect thereto.
SECTION 5.04. Notices. All notices, requests, consents and other
communication hereunder to any party shall be deemed to be sufficient if
contained in a written instrument delivered in person or sent by telecopy,
nationally recognized overnight courier or first class registered or certified
mail, return receipt request, 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:
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(i) if to Hexcel, to the following address:
Hexcel Corporation
Two Stamford Plaza
281 Tresser Boulevard
16th Floor
Stamford, Connecticut 06901-3238
Telecopy Number: (203) 358-3972
Attention: Ira J. Krakower, Esq.
Vice President, General
Counsel and Secretary
with a copy to each of the following
(which shall not constitute notice):
Skadden, Arps, Slate, Meagher & Flom
LLP
Four Times Square
New York, New York 10036
Telecopy Number: (212) 735-2000
Attention: Joseph A. Coco, Esq.
Paul, Weiss, Rifkind, Wharton &
Garrison
1285 Avenue of the Americas
New York, New York 10019-6064
Telecopy Number: (212) 757-3990
Attention: Judith R. Thoyer, Esq.
(ii) if to Ciba, to the following address:
Ciba Specialty Chemicals Holding Inc.
Klybeckstrasse 141
CH - 4002, Basel
Switzerland
Telecopy No.: 41-61-636-4728
Attention: Oliver Strub, Esq.
with a copy to (which shall not
constitute notice):
Cravath, Swaine & Moore
Worldwide Plaza
825 Eighth Avenue
New York, New York 10019-7475
Telecopy No.: (212) 474-3700
Attention: Philip A. Gelston, Esq.
All such notices, requests, consents and other communications shall be
deemed to have been given or made if and when delivered personally or by
overnight courier to the
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parties at the above addresses or sent by electronic transmission, with
confirmation received, to the telecopy numbers specified above (or at such
other address or telecopy number for a party as shall be specified by like
notice).
SECTION 5.05. Amendments. No provision of this Agreement may be amended
or waived unless such amendment or waiver is in writing and signed, in the
case of an amendment, by the parties hereto, or in the case of a waiver, by
the party against whom the waiver is to be effective.
SECTION 5.06. Counterparts. This Agreement may be executed in any number
of counterparts, and such counterparts hereof shall be deemed to be an
original instrument, but all such counterparts together shall constitute but
one agreement.
SECTION 5.07. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING
EFFECT TO THE PRINCIPLES OF CONFLICTS OF LAW (OTHER THAN SECTIONS 5-1401 AND
5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW).
SECTION 5.08. Submission to Jurisdiction. 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, investigation 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.
SECTION 5.09. Waiver of Jury Trial. Each of the parties hereto hereby
waives any right it may have to a
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trial by jury in respect of any action, proceeding or litigation directly or
indirectly arising out of, under or in connection with this Agreement.
SECTION 5.10. Severability. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid,
but if any provision of this Agreement is held to be invalid or unenforceable
in any respect, such invalidity or unenforceability shall not render invalid
or unenforceable any other provision of this Agreement.
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IN WITNESS WHEREOF, the parties hereto have duly executed and delivered
this Agreement as of the date first above written.
HEXCEL CORPORATION
By: /s/ John J. Lee
-------------------------
Name: John J. Lee
Title: Chief Executive
Officer
CIBA SPECIALTY CHEMICALS
HOLDING INC.
By: /s/ Hans-Ulrich Muller /s/ Peter Sidler
------------------------- -------------------------
Name: Hans-Ulrich Muller Peter Sidler
Title: General Counsel Senior Tax and Corporate Counsel
