Exhibit 10.2
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 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. 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 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 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 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:
(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 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 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.
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: Chairman and Chief
Executive Officer
CIBA SPECIALTY
CHEMICALS HOLDING INC.
By: /s/ Hans Ulrich Miller
_________________________
Name: Hans Ulrich Miller
Title: General Counsel
By: /s/ Peter Sidler
_________________________
Name: Peter Sidler
Title: Senior Tax and
Corporate Counsel
