SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
May 10, 2000 (April 26, 2000)
-------------------------------------
Date of report (Date of earliest event reported)
Hexcel Corporation
-------------------------------------------
(Exact Name of Registrant as Specified in Charter)
Delaware 1-8472 94-1109521
--------------------------------------------------------------------
(State of (Commission File No.) (IRS Employer
Incorporation) Identification No.)
Two Stamford Plaza
281 Tresser Boulevard
Stamford, Connecticut 06901-3238
------------------------------------------------------
(Address of Principal Executive Offices and Zip Code)
(203) 969-0666
--------------------------------------------------
(Registrant's telephone number, including area code)
N/A
-----------------------------------------------------------
(Former Name or Former Address, if Changed Since Last Report)
<PAGE>
Item 2. ACQUISITION OR DISPOSITION OF ASSETS.
------------------------------------
On April 26, 2000, Hexcel Corporation (the "Company") completed the
sale of its Bellingham aircraft interiors business to Britax Cabin
Interiors, Inc. ("Britax"), a wholly owned subsidiary of Britax
International plc, pursuant to an Asset-Purchase Agreement dated March 31,
2000 between the Company and Britax. A copy of the agreement is attached to
this report as Exhibit 2.1. The divested Bellingham business is engaged in
the design, engineering, manufacture and sale of commercial aircraft
interior components and systems for refurbishment, reconfiguration and OEM
applications.
The purchase price paid by Britax to the Company for the Bellingham
business at closing was $115.4 million in cash reflecting estimated pre-
closing changes in the net assets of Bellingham, subject to certain
further post-closing adjustments. The Company estimates reporting in the
second quarter of 2000, a pre-tax gain of approximately $65 million to $75
million relating to the sale. Net proceeds from the sale were used to
repay a portion of the Company's outstanding term debt under its senior
credit facility.
Item 7. FINANCIAL STATEMENTS AND EXHIBITS.
---------------------------------
(b) UNAUDITED PRO FORMA FINANCIAL INFORMATION.
-----------------------------------------
Unaudited pro forma consolidated financial statements as of and for
the year ended December 31, 1999, and as of and for the quarter ended March
31, 2000 are attached hereto on pages PF-1 through PF-7.
Additionally, pro forma and actual net sales to third-party customers
by product group and market segment and business segment data, for each of
the quarters ended March 31, June 30, September 30, and December 31, 1999,
as well as for the year ended December 31, 1999, and the quarter ended
March 31, 2000, are attached to this report as Exhibits 99.2 through 99.5.
(c) EXHIBITS.
--------
2.1 Asset-Purchase Agreement dated March 31, 2000 between Hexcel
Corporation and Britax Cabin Interiors, Inc.
99.1 Press Release.
99.2 Unaudited Pro Forma 1999 and First Quarter 2000 Net Sales to
Third-Party Customers by Product Group and Market Segment.
99.3 Unaudited Actual 1999 and First Quarter 2000 Net Sales to Third-Party
Customers by Product Group and Market Segment.
99.4 Unaudited Pro Forma 1999 and First Quarter 2000 Business Segment Data.
99.5 Unaudited Actual 1999 and First Quarter 2000 Business Segment Data.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: May 10, 2000
HEXCEL CORPORATION
By: /S/ KIRK FORBECK
----------------
Name: Kirk Forbeck
Title: Corporate Controller
<PAGE>
PRO FORMA FINANCIAL INFORMATION
The following unaudited pro forma consolidated statements of operations for
the fiscal year ended December 31, 1999, and the quarter ended March 31, 2000,
as well as the unaudited pro forma condensed consolidated balance sheets as of
December 31, 1999 and March 31, 2000, were prepared to illustrate the estimated
effects of the sale of Bellingham, a division of Hexcel Corporation ("Hexcel"),
and the application of the net proceeds from the sale to debt outstanding under
Hexcel's senior credit facility. The unaudited pro forma consolidated
statements of operations assume that the sale occurred at the beginning of the
periods presented. The unaudited pro forma condensed consolidated balance
sheets assume that the sale occurred as of the respective balance sheet date.
The unaudited pro forma financial information presented is derived from the
audited financial statements of Hexcel as of and for the year ended December 31,
1999, and the unaudited financial statements of Hexcel as of and for the three
months ended March 31, 2000. The unaudited pro forma financial information
should be read in conjunction with "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and the consolidated financial
statements of Hexcel, including the notes thereto, appearing in Hexcel's Annual
Form 10-K for the year ended December 31, 1999. The unaudited pro forma
financial information does not purport to be indicative of the results of
operations or financial condition that would have been reported had the events
assumed occurred on the dates indicated, nor does it purport to be indicative of
results of operations, or financial condition that may be achieved in the
future.
PF-1
<PAGE>
<TABLE>
UNAUDITED PRO FORMA FINANCIAL INFORMATION
CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1999
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<CAPTION>
HISTORICAL
---------------------------------
<S> <C> <C> <C> <C>
ADJUSTMENTS PRO FORMA
HEXCEL BELLINGHAM (NOTE 1) CONSOLIDATED
------------- ------------- ----------- -------------
Net sales $ 1,151.5 $ 70.0 $ - $ 1,081.5
Cost of sales 909.0 55.1 - 853.9
------------- ------------- ----------- -------------
Gross margin 242.5 14.9 - 227.6
Selling, general and administrative expenses 128.7 6.9 - 121.8
Research and technology expenses 24.8 - - 24.8
Business acquisition and consolidation expenses 20.1 - - 20.1
------------- ------------- ----------- -------------
Operating income 68.9 8.0 - 60.9
Interest expense 73.9 - (8.1) (a) 65.8
------------- ------------- ----------- -------------
Income (loss) before income taxes (5.0) 8.0 (8.1) (4.9)
Recovery of (provision for) income taxes 1.7 (2.8) 2.8 (b) 1.7
Equity in income and write-down of
investments in affiliated companies (20.0) - - (20.0)
------------- ------------- ----------- -------------
Net income (loss) $ (23.3) $ 5.2 $ (5.3) $ (23.2)
------------- ------------- ----------- -------------
Net loss per share:
Basic $ (0.64) $ (0.64)
Diluted (0.64) (0.64)
Weighted average shares
Basic 36.4 36.4
Diluted 36.4 36.4
OTHER FINANCIAL DATA
EBITDA (Note 3) $ 130.3 $ 9.1 $ - $ 121.2
Adjusted EBITDA (Note 3) 150.4 9.1 - 141.3
Cash flows provided by (used for):
Operating activities 133.7 4.6 (7.0) 136.1
Investing activities (40.3) (3.5) - (36.8)
Financing activities (99.5) (1.1) 7.0 (105.4)
Depreciation and amortization 61.3 1.1 - 60.2
Capital expenditures 35.6 3.5 - 32.1
Ratio of earnings to fixed charges 0.7x - - 0.7x
<FN>
See accompanying notes to Unaudited Pro Forma Financial Information
</FN>
</TABLE>
PF-2
<PAGE>
<TABLE>
UNAUDITED PRO FORMA FINANCIAL INFORMATION
CONSOLIDATED STATEMENT OF OPERATIONS
QUARTER ENDED MARCH 31, 2000
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<CAPTION>
HISTORICAL
---------------------------------
<S> <C> <C> <C> <C>
ADJUSTMENTS PRO FORMA
HEXCEL BELLINGHAM (NOTE 1) CONSOLIDATED
------------- ------------- ----------- -------------
Net sales $ 279.8 $ 16.6 $ - $ 263.2
Cost of sales 217.6 12.1 - 205.5
------------- ------------- ----------- -------------
Gross margin 62.2 4.5 - 57.7
Selling, general and administrative expenses 32.9 3.4 - 29.5
Research and technology expenses 6.3 - - 6.3
Business consolidation expenses 1.2 - - 1.2
------------- ------------- ----------- -------------
Operating income 21.8 1.1 - 20.7
Interest expense 18.4 - (2.3) (a) 16.1
------------- ------------- ----------- -------------
Income before income taxes 3.4 1.1 (2.3) 4.6
Provision for income taxes (1.2) (0.4) 0.8 (b) (1.6)
Equity in income of affiliated companies 0.4 - - 0.4
------------- ------------- ----------- -------------
Net income $ 2.6 $ 0.7 $ (1.5) $ 3.4
------------- ------------- ----------- -------------
Net income per share:
Basic $ 0.07 $ 0.09
Diluted 0.07 0.09
Weighted average shares
Basic 36.6 36.6
Diluted 36.8 36.8
Other Financial Data
EBITDA (Note 3) $ 36.8 $ 1.4 $ - $ 35.4
Adjusted EBITDA (Note 3) 38.0 1.4 - 36.6
Cash flows provided by (used for):
Operating activities (6.1) 1.6 (1.2) (6.5)
Investing activities (7.8) (0.2) - (7.6)
Financing activities 17.8 (1.4) 1.2 18.0
Depreciation and amortization 15.0 0.3 - 14.7
Capital expenditures 4.4 0.2 - 4.2
Ratio of earnings to fixed charges 1.2x - - 1.3x
<FN>
See accompanying notes to Unaudited Pro Forma Financial Information
</FN>
</TABLE>
PF-3
<PAGE>
<TABLE>
UNAUDITED PRO FORMA FINANCIAL INFORMATION
CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31, 1999
(IN MILLIONS)
<CAPTION>
HISTORICAL
-----------------------------
<S> <C> <C> <C> <C>
ADJUSTMENTS PRO FORMA
HEXCEL BELLINGHAM (NOTE 2) CONSOLIDATED
------------ ------------- ----------- -------------
ASSETS
Current assets:
Cash and cash equivalents $ 0.2 $ - $ - $ 0.2
Accounts receivable 158.6 14.6 - 144.0
Inventories 153.7 9.1 - 144.6
Prepaid expenses and other assets 5.1 0.1 (0.3) (a) 4.7
Deferred tax asset 10.2 - (0.2) (b) 10.0
------------ ------------- ----------- -------------
Total current assets 327.8 23.8 (0.5) 303.5
Net property, plant and equipment 392.1 20.3 - 371.8
Goodwill and other purchased intangibles, net 411.2 4.9 406.3
Investments in affiliated companies and other assets 130.8 - (27.2) (b) 103.6
------------ ------------- ----------- -------------
Total assets $ 1,261.9 $ 49.0 $ (27.7) $ 1,185.2
------------ ------------- ----------- -------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable and current maturities of capital
lease obligations $ 34.3 $ - $ (5.7) (c) $ 28.6
Accounts payable 80.3 5.4 - 74.9
Accrued liabilities 95.9 1.7 (1.1) (d) 93.1
------------ ------------- ----------- -------------
Total current liabilities 210.5 7.1 (6.8) 196.6
Long-term notes payable and capital lease obligations 712.5 - (106.3) (c) 606.2
Indebtedness to related parties 24.1 - - 24.1
Other non-current liabilities 44.7 0.2 - 44.5
------------ ------------- ----------- -------------
Total liabilities 991.8 7.3 (113.1) 871.4
Total stockholders' equity 270.1 41.7 85.4 (e) 313.8
------------ ------------- ----------- -------------
Total liabilities and stockholders' equity $ 1,261.9 $ 49.0 $ (27.7) $ 1,185.2
------------ ------------- ----------- -------------
<FN>
See accompanying notes to Unaudited Pro Forma Financial Information.
</FN>
</TABLE>
PF-4
<PAGE>
<TABLE>
UNAUDITED PRO FORMA FINANCIAL INFORMATION
CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF MARCH 31, 2000
(IN MILLIONS)
HISTORICAL
---------------------------
<CAPTION>
<S> <C> <C> <C> <C>
ADJUSTMENTS PRO FORMA
HEXCEL BELLINGHAM (NOTE 2) CONSOLIDATED
------------ ----------- --------- -------------
ASSETS
Current assets:
Cash and cash equivalents $ 4.8 $ - $ - $ 4.8
Accounts receivable 177.1 10.8 - 166.3
Inventories 164.0 9.2 - 154.8
Prepaid expenses and other assets 3.7 0.1 (0.5) (a) 3.1
Deferred tax asset 10.1 - (0.8) (b) 9.3
------------ ----------- --------- -------------
Total current assets 359.7 20.1 (1.3) 338.3
Net property, plant and equipment 381.7 20.2 - 361.5
Goodwill and other purchased intangibles, net 407.6 4.9 - 402.7
Investments in affiliated companies and other assets 141.0 - (26.4) (b) 114.6
------------ ----------- --------- -------------
Total assets $ 1,290.0 $ 45.2 $ (27.7) $ 1,217.1
------------ ----------- --------- -------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable and current maturities of capital
lease obligations $ 26.4 $ - $ (6.1) (c) $ 20.3
Accounts payable 88.7 4.0 - 84.7
Accrued liabilities 94.8 4.1 (1.0) (d) 89.7
------------ ----------- --------- -------------
Total current liabilities 209.9 8.1 (7.1) 194.7
Long-term notes payable and capital lease obligations 738.3 - (105.8) (c) 632.5
Indebtedness to related parties 24.1 - - 24.1
Other non-current liabilities 47.4 0.2 - 47.2
------------ ----------- --------- -------------
Total liabilities 1,019.7 8.3 (112.9) 898.5
Total stockholders' equity 270.3 36.9 85.2 (e) 318.6
------------ ----------- --------- -------------
Total liabilities and stockholders' equity $ 1,290.0 $ 45.2 $ (27.7) $ 1,217.1
------------ ----------- --------- -------------
<FN>
See accompanying notes to Unaudited Pro Forma Financial Information
</FN>
</TABLE>
PF-5
<PAGE>
NOTES TO UNAUDITED PRO FORMA FINANCIAL INFORMATION
NOTE 1 - ADJUSTMENTS TO UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
(a) Adjustment to reflect the net decrease in interest expense attributable to
repayments of term debt under the senior credit facility. Interest on
outstanding borrowings under the senior credit facility is computed at
variable rates based on the London interbank rate, or, at the option of
Hexcel, at the base rate of the administrative agent for the lenders. For
purpose of estimating pro forma adjustments, a weighted average interest
rate of approximately 7.25% and 8.25% was used for the year ended December
31, 1999 and the quarter ended March 31, 2000, respectively.
(b) Adjustment to reflect an approximate average income tax rate of 35.2%.
NOTE 2 - ADJUSTMENTS TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE
SHEETS
(a) Represents the removal of deferred transaction costs in connection with
the sale of Bellingham.
(b) Reflects the estimated deferred income tax effect relating to the sale of
Bellingham and to the resulting pro forma reduction of interest expense.
(c) Adjustment to reduce indebtedness under the senior credit facility with
net cash proceeds from the sale of Bellingham.
(d) Adjustment to reduce the senior credit facility's accrued interest due to
the reduction in indebtedness.
(e) The net increase in stockholders' equity primarily represents the after-tax
gain on the sale of Bellingham, including the transfer of Bellingham's
equity to Hexcel.
NOTE 3 - EBITDA AND ADJUSTED EBITDA
"EBITDA" is defined as income before interest, taxes, depreciation,
amortization and equity in income and write-down in affiliated companies.
"Adjusted EBITDA" is defined as EBITDA before business acquisition and
consolidation expenses. Hexcel believes that EBITDA and adjusted EBITDA provide
useful information regarding Hexcel's ability to service its indebtedness,
but should not be considered in isolation or as a substitute for operating
income or cash flow from operations, which is determined in accordance with
generally accepted accounting principles, as an indicator of Hexcel's
operating performance or as a measure of Hexcel's liquidity. Adjusted EBITDA may
not be comparable to other similarly titled financial measures of other
companies.
PF-6
<PAGE>
<TABLE>
A reconciliation of net income to EBITDA and adjusted EBITDA is as follows (in millions):
<CAPTION>
HISTORICAL
-----------------------------
<S> <C> <C> <C> <C>
PRO FORMA
HEXCEL BELLINGHAM ADJUSTMENTS CONSOLIDATED
------------ ------------- --------------- -------------
FOR THE YEAR ENDED DECEMBER 31, 1999
Net income (loss) $ (23.3) $ 5.2 $ (5.3) $ (23.2)
Provision for (recovery of) income taxes (1.7) 2.8 (2.8) (1.7)
Interest expense 73.9 - 8.1 65.8
Depreciation and amortization 61.3 1.1 - 60.2
Equity in income and write-down in
affiliated companies 20.0 - 20.0
Other 0.1 - - 0.1
------------ ------------- --------------- -------------
EBITDA 130.3 9.1 - 121.2
Business acquisition and consolidation expenses 20.1 - - 20.1
------------ ------------- --------------- -------------
Adjusted EBITDA $ 150.4 $ 9.1 $ - $ 141.3
------------ ------------- --------------- -------------
FOR THE QUARTER ENDED MARCH 31, 2000
Net income $ 2.6 $ 0.7 $ (1.5) $ 3.4
Provision for income taxes 1.2 0.4 (0.8) 1.6
Interest expense 18.4 - 2.3 16.1
Depreciation and amortization 15.0 0.3 - 14.7
Equity in income of affiliated companies (0.4) - - (0.4)
------------ ------------- --------------- -------------
EBITDA 36.8 1.4 - 35.4
Business consolidation expenses 1.2 - - 1.2
------------ ------------- --------------- -------------
Adjusted EBITDA $ 38.0 $ 1.4 $ - $ 36.6
------------ ------------- --------------- -------------
</TABLE>
PF-7
Exhibit 2.1
- ------------------------------------------------------------------------------
ASSET PURCHASE AGREEMENT
between
HEXCEL CORPORATION
and
BRITAX CABIN INTERIORS, INC.
Dated as of March 31, 2000
- ------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE 1- SALE OF ASSETS AND ASSUMPTION OF LIABILITIES.......................1
1.1 Sale of Assets by Seller...............................................1
1.2 Risk of Loss...........................................................3
1.3 Excluded Assets........................................................3
1.4 Assumed Liabilities....................................................4
1.5 Excluded Liabilities...................................................4
ARTICLE 2- PURCHASE PRICE AND ADJUSTMENTS.....................................6
2.1 Purchase Price and Allocation..........................................6
2.2 Payment of Cash Purchase Price.........................................7
2.3 Cash Purchase Price Adjustment.........................................7
ARTICLE 3- REPRESENTATIONS AND WARRANTIES OF SELLER...........................9
3.1 Corporate Existence....................................................9
3.2 Corporate Authority....................................................9
3.3 No Conflicts...........................................................9
3.4 Governmental Approvals; Consents.......................................10
3.5 Financial Statements...................................................10
3.6 Absence of Changes.....................................................10
3.7 Personal and Real Properties...........................................11
3.8 Contracts..............................................................12
3.9 Litigation.............................................................13
3.10 Proprietary Rights....................................................13
3.11 Insurance.............................................................14
3.12 Tax Matters...........................................................14
3.13 Employment and Benefits...............................................14
3.14 Compliance with Laws..................................................15
3.15 Finders; Brokers......................................................15
3.16 Environmental Matters.................................................16
3.17 Sufficiency of Assets.................................................16
3.18 Labor Matters.........................................................17
3.19 Undisclosed Liabilities...............................................17
3.20 Accounts Receivable...................................................18
3.21 Inventory.............................................................18
3.22 Condition of Certain Assets...........................................18
3.23 Seller's Lenders' Consents............................................18
3.24 No Other Representations or Warranties................................18
<PAGE>
ARTICLE 4- REPRESENTATIONS OF BUYER...........................................18
4.1 Corporate Existence....................................................18
4.2 Corporate Authority....................................................19
4.3 No Conflicts...........................................................19
4.4 Governmental Approvals; Consents.......................................19
4.5 Finders; Brokers.......................................................20
4.6 Financial Capacity.....................................................20
4.7 Export Licenses........................................................20
4.8 No Other Representations or Warranties.................................20
ARTICLE 5- AGREEMENTS OF BUYER AND SELLER.....................................20
5.1 Operation of the Business..............................................20
5.2 Investigation of the Business..........................................21
5.3 Mutual Cooperation.....................................................21
5.4 Public Disclosures.....................................................22
5.5 Post-Closing Access to Records and Personnel...........................22
5.6 Excluded Seller Information............................................23
5.7 Confidentiality........................................................24
5.8 "As Is" Condition......................................................25
5.9 Intercompany Transactions..............................................25
5.10 Financing.............................................................25
5.11 Transfer of Boeing Doorliner Agreement................................25
5.12 Transition Services Agreement.........................................25
5.13 Materials Supply Agreement............................................26
5.14 Non-Competition Agreements............................................26
5.15 Third Party Consents..................................................26
5.16 Use of Hexcel Supplies................................................26
5.17 Compliance with Bulk Sales Laws.......................................27
5.18 Delivery of Exemption Certificates....................................27
5.19 Exclusivity...........................................................27
5.20 Certain Matters Relating to Customer Warranty Obligations.............27
5.21 Retention Agreements..................................................28
5.22 Confidentiality Agreements with Transferred Employees.................29
5.23 Agreement Concerning Kent Assets......................................29
ARTICLE 6- TRANSFERRED EMPLOYEES..............................................30
6.1 Hiring of Employees....................................................30
6.2 Employee Benefit Plans and Arrangements................................30
ARTICLE 7- CONDITIONS.........................................................33
7.1 Conditions Precedent to the Obligations of Buyer and Seller............33
7.2 Conditions Precedent to the Obligations of Seller......................34
7.3 Conditions Precedent to the Obligations of Buyer.......................34
<PAGE>
ARTICLE 8- CLOSING............................................................36
8.1 Closing Date...........................................................36
8.2 Buyer Deliveries.......................................................36
8.3 Seller Deliveries......................................................37
ARTICLE 9- INDEMNIFICATION....................................................37
9.1 Survival of Representations, Warranties and Covenants..................37
9.2 Indemnification by Seller..............................................37
9.3 Indemnification by Buyer...............................................39
9.4 Indemnification Calculations...........................................40
ARTICLE 10- TERMINATION.......................................................41
10.1 Termination Events.....................................................41
10.2 Effect of Termination..................................................41
ARTICLE 11- MISCELLANEOUS AGREEMENTS OF THE PARTIES...........................41
11.1 Notices................................................................41
11.2 Transaction Taxes......................................................43
11.3 Further Assurances; Asset Returns......................................43
11.4 Expenses...............................................................43
11.5 Non-Assignability......................................................43
11.6 Amendment; Waiver......................................................43
11.7 Schedules and Exhibits.................................................44
11.8 No Third Party Beneficiaries...........................................44
11.9 Governing Law..........................................................44
11.10 Consent to Jurisdiction...............................................44
11.11 Definitions...........................................................45
11.12 Entire Agreement......................................................53
11.13 Section Headings; Table of Contents...................................53
11.14 Severability..........................................................53
11.15 Counterparts..........................................................54
<PAGE>
EXHIBITS
EXHIBIT A - Financial Statements of the Business
EXHIBIT B - Form of Transition Services Agreement
EXHIBIT C - Form of Materials Supply Agreement
EXHIBIT D - Form of Seller Non-Competition Agreement
EXHIBIT E - Form of Buyer Non-Competition Agreement
EXHIBIT F - Form of Agreement Concerning Kent Assets
EXHIBIT G - Form of Assumption Agreement
EXHIBIT H - Form of Bill of Sale
EXHIBIT I - Form of Special Warranty Deed
EXHIBIT J - Form of Trademark Assignment
EXHIBIT K - Form of Patent Assignment
<PAGE>
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement, dated as of March 31, 2000, between
HEXCEL CORPORATION, a Delaware corporation ("SELLER"), and BRITAX CABIN
INTERIORS, INC., a Delaware corporation ("BUYER").
WITNESSETH:
WHEREAS, Seller is engaged in the Business (as defined herein); and
WHEREAS, Buyer desires to purchase from Seller and Seller desires to
sell to Buyer, on the terms and subject to the conditions of this Agreement, the
Business and the Assets (as defined herein) of Seller, and, in connection
therewith, Buyer has agreed to assume certain liabilities and obligations of
Seller relating to the Business, all on the terms set forth herein. All
capitalized terms used in this Agreement and not otherwise defined shall have
the meanings set forth in Section 11.11.
NOW, THEREFORE, in consideration of the premises and the mutual
promises and agreements contained herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereby agree as follows:
ARTICLE 1
SALE OF ASSETS AND ASSUMPTION OF LIABILITIES
1.1 SALE OF ASSETS BY SELLER.
------------------------
Subject to the satisfaction or waiver of the conditions set forth in
this Agreement, at the Closing, Seller shall sell, assign, transfer, convey and
deliver to Buyer free of all liens and encumbrances other than Permitted Liens,
and Buyer shall purchase and accept, Seller's right, title and interest in and
to (A) all tangible assets, properties and rights of Seller located at the
Facilities and used in the Business (other than any such tangible assets,
properties or rights which are Excluded Assets); and (B) all intangible assets,
properties and rights of Seller used primarily in the Business wherever located
(other than any such intangible assets, properties or rights which are Excluded
Assets), including, without limitation, those described in clauses (a)-(m) of
this Section 1.1 ("ASSETS").
(1) OWNED REAL PROPERTY. Those parcels of real property set
forth on -------------------
SCHEDULE 1.1(a) ("OWNED REAL PROPERTY")and all of the rights arising out of
- -------------- -------------------
the ownership thereof or appurtenant thereto, together with all buildings,
structures,facilities, fixtures and other improvements thereto ("IMPROVEMENTS");
------------
<PAGE>
(2) REAL PROPERTY LEASES. The leases of real property
described on ----------------------
SCHEDULE 1.1(b), and any options to purchase the underlying property,
- ---------------
leasehold improvements and all other rights appurtenant to such leases and
subleases ("REAL PROPERTY LEASES");
--------------------
(3) MACHINERY AND EQUIPMENT. The Major Equipment and all other
---------------------------
machinery, equipment, tools, furniture, furnishings, goods and other tangible
items of personal property owned or leased by Seller as of the Closing Date and
which are located at the Facilities or which are located at the facilities of
customers, suppliers or subcontractors and used in connection with the
performance of a Contract (excluding the items set forth on SCHEDULE 1.1(C)(II))
("MACHINERY"), and all warranties and guarantees, if any, existing for the
benefit of Seller in connection with the Machinery to the extent transferable;
(4) VEHICLES. All motor vehicles listed on SCHEDULE 1.1(d)
("VEHICLES"), and all warranties and guarantees,
--------
if any, existing for the benefit of Seller in connection with the Vehicles to
the extent transferable;
(5) INTANGIBLE PROPERTY.
-------------------
(1) INTELLECTUAL PROPERTY. All right, title and
--------------------------
interest of Seller in and to the patents and patent applications, trademarks,
trademark registrations and trade names set forth on SCHEDULE 1.1(e)
--------------
("INTELLECTUAL PROPERTY") along with all goodwill associated therewith; and
- ------------------------
(2) BUSINESS KNOW-HOW. The Business Know-How;
---------------------
PROVIDED, HOWEVER, Seller and its Affiliates shall retain equal and
independent ownership rights with Buyer in and to any Business Know-How
which is the same or substantially the same as information or devices
heretofore used at any facilities of Seller or any of its Affiliates other than
the Facilities; PROVIDED, FURTHER, that the use by Seller and its Affiliates of
the rights reserved to them in the Business Know-How shall be subject to the
terms of the Seller Non-Competition Agreement;
(6) BOOKS AND RECORDS. All books and records of Seller relating
-----------------
primarily to the Business, including but not limited to, advertising, marketing
and sales programs, business and strategic plans and customer lists;
(7) CONTRACTS. Subject to Section 5.15, all commitments,
---------
contracts, agreements, and all other legally binding arrangements, written or
oral, to which Seller is a party or by which Seller is bound as of the Closing
Date, in each case relating primarily to the Business or Assets, other than
those described on SCHEDULE 1.1(G) ("CONTRACTS");
(8) LICENSES AND PERMITS. To the extent transferable, the
---------------------
licenses, permits, certificates of authority, authorizations, approvals,
registrations, qualifications, waivers and similar consents granted or issued to
Seller by any Governmental Authority and which are primarily related to the
Business ("LICENSES AND PERMITS");
--------------------
<PAGE>
(9) INVENTORY. All raw materials, work in process and
---------
finished products of the Business as of the Closing Date, wherever located
("INVENTORY");
---------
(10) ACCOUNTS RECEIVABLE. All accounts receivable of the
-------------------
Business as of the Closing Date;
(11) SECURITY DEPOSITS. All security deposits deposited by or
------------------
on behalf of Seller as lessee or sublessee under any lease or sublease included
in the Assets;
(12) CAUSES OF ACTION. All causes of action (including actions
----------------
for past infringement of the Intellectual Property) to the extent that they
relate to the Assets or the Business other than (i) causes of action relating to
Excluded Assets or (ii) causes of action against any Seller Indemnitee; and
(13) OTHER ASSETS. All other assets of Seller reflected in the
------------
Closing Statement.
1.2 RISK OF LOSS.
------------
On the Closing Date, risk of loss as to the Assets shall pass from
Seller to Buyer.
1.3 EXCLUDED ASSETS.
---------------
Notwithstanding any other provision in this Agreement, it is expressly
agreed that Seller shall retain and Buyer shall not acquire any of Seller's
right, title and interest in and to the following assets, properties or rights
("EXCLUDED ASSETS"):
(1) CASH AND CASH EQUIVALENTS. Cash and cash equivalents, and
-------------------------
accrued interest thereon, wherever located, as of the Closing;
(2) TAX REFUNDS. Any refunds, credits or other assets or
------------
rights (including interest thereon or claims therefor) with respect to any Taxes
paid by Seller relating to the Business or the Assets prior to the Closing
including those reflected as a liability on the Closing Statement but excluding
any of those reflected as an asset on the Closing Statement;
(3) INSURANCE POLICIES. Any insurance policies at any time in
------------------
effect or claims, causes of action or proceeds with respect thereto, and any
reimbursement for, or other benefit associated with, prepaid insurance,
including, without limitation, insurance policies covering events occurring in
whole or in part prior to the Closing Date;
(4) EMPLOYEE BENEFIT ASSETS. Except as expressly provided
-------------------------
in Article 6 hereof, all assets relating to the Hexcel Benefit Plans;
<PAGE>
(5) RIGHTS UNDER AGREEMENTS. All rights of Seller under this
-----------------------
Agreement, the Ancillary Agreements and any other agreements, instruments and
certificates delivered in connection with this Agreement or any of the
transactions contemplated hereby or thereby;
(6) NAMES AND LOGOS. The name "Hexcel" and the honeycomb/
----------------
three hexagon logo and similar names and logos (collectively, the
("HEXCEL LOGO"), and the goodwill associated therewith;
(7) BUSINESS ACQUISITION AGREEMENTS. All rights under the BP
---------------------------------
Acquisition Agreements, the BSB Acquisition Agreements and the Ciba
Acquisition Agreements;
(8) GENERAL TERMS AGREEMENT. All rights under the General
------------------------
Terms Agreement, other than rights relating to the performance under the
Boeing Auburn Agreement;
(9) THE BOEING DOORLINER AGREEMENT. All rights under the
--------------------------------
Boeing Doorliner Agreement and all other contracts with Boeing (other than the
Boeing Auburn Agreement), including any accounts receivables, inventory,
work in process, tools and drawings related thereto; and
(10) OTHER ASSETS. All other assets, properties or rights of
------------
Seller not included in the Assets.
1.4 ASSUMED LIABILITIES.
-------------------
As of the Closing Date, Buyer shall assume and shall pay, perform and
discharge when due, all liabilities and obligations of Seller to the extent
arising out of or relating to the Business or the Assets of any nature, whether
known or unknown, fixed or contingent, and whether arising before or after the
Closing (other than any such liabilities and obligations which are Excluded
Liabilities) ( "ASSUMED LIABILITIES").
1.5 EXCLUDED LIABILITIES.
--------------------
It is expressly agreed that Seller shall retain and shall pay, perform
and discharge when due and Buyer shall not assume and shall not pay, perform and
discharge any of the following liabilities or obligations of Seller, whether
known or unknown, fixed or contingent, and whether arising before or after the
Closing ("EXCLUDED LIABILITIES"):
(1)EXCLUDED ASSETS. All liabilities and obligations to the
---------------
extent arising out of the Excluded Assets;
(2)BORROWED MONEY. All liabilities and obligations for
--------------
indebtedness (including interest thereon) for borrowed money;
<PAGE>
(3) CERTAIN TAXES. All liabilities and obligations for (i)
-------------
Taxes relating to the Business or the Assets prior to the Closing other than
those reflected as a liability on the Closing Statement which are capable of
being transferred to Buyer but including those reflected as an asset on the
Closing Statement; and (ii) Taxes arising solely out of the transactions
contemplated by this Agreement (except in both cases as provided in Section
11.2);
(4) EMPLOYEE LIABILITIES. All liabilities and obligations to
---------------------
any current or former employee or retiree of the Business, whether arising as a
result of employment by Seller or any prior owner of the Business, including
liabilities and obligations under the Hexcel Benefit Plans, the EDCA and for
workers' compensation resulting from injuries incurred prior to the Closing
Date, except that the following liabilities and obligations shall be Assumed
Liabilities: (i) those arising under the retention agreements listed on SCHEDULE
1.5(D) (the "RETENTION AGREEMENTS") to the extent payable by Buyer as set forth
in Section 5.21; (ii) accrued wages, salaries, vacation, commissions and bonuses
owed to Transferred Employees as a result of the conduct of the Business prior
to the Closing Date but only to the extent of the amounts therefor reflected in
the Closing Statement; and (iii) those assumed by Buyer under Article 6 hereof;
(5)LIABILITY CLAIMS. All liabilities and obligations in
-----------------
respect of any claim by any Person based on use, handling or ingestion of,
exposure to or contact with any chemical, substance or process used, handled
or distributed by the Business prior to the Closing Date;
(6) PRODUCTS AND SERVICES. All liabilities or obligations for
---------------------
personal injury or property damage relating to or arising out of products sold
or services rendered by the Business prior to the Closing Date, except that all
liabilities and obligations of Seller in connection with the Business to
replace, repair or permit the return of products or to make any monetary refund
or adjustment with respect to any such product or service delivered or performed
prior to Closing (collectively "CUSTOMER WARRANTY OBLIGATIONS") shall be Assumed
Liabilities;
(7) ENVIRONMENTAL CLAIMS. All liabilities and obligations for
---------------------
Environmental Claims arising out of anything done or omitted to be done prior to
the Closing Date, except that all liabilities and obligations relating to
Environmental Claims associated with the presence of any Hazardous Substance at
or on the Real Property shall be Assumed Liabilities;
(8) VIOLATION OF LAW. All liabilities and obligations arising
----------------
from or related to violations of Law committed by the Business prior to the
Closing Date;
(9) BUSINESS ACQUISITION AGREEMENTS. All liabilities and
---------------------------------
obligations arising out of or related to the BP Acquisition Agreements, the BSB
Acquisition Agreements and the Ciba Acquisition Agreements;
(10) GENERAL TERMS AGREEMENT. All liabilities and obligations
------------------------
arising out of or related to the General Terms Agreement, other than liabilities
and obligations arising out of or related to the performance under the Boeing
Auburn Agreement;
<PAGE>
(11) COMPLETED CONTRACTS. All liabilities and obligations
--------------------
other than Customer Warranty Obligations) arising out of orders for goods or
services made by customers of the Business prior to the Closing that have
been delivered or performed prior to the Closing;
(12) THE BOEING DOORLINER AGREEMENT. All liabilities and
--------------------------------
obligations arising under the Boeing Doorliner Agreement and all other
contracts with Boeing (other than the Boeing Auburn Agreement), including any
accounts payable and customer claims related thereto; and
(13) OTHER LIABILITIES. All liabilities and obligations which
-----------------
Seller has expressly retained under any provision of this Agreement, any
Ancillary Agreement or any other agreement, instrument or certificate delivered
by Seller in connection with the transactions contemplated hereby or thereby.
ARTICLE 2
PURCHASE PRICE AND ADJUSTMENTS
2.1 PURCHASE PRICE AND ALLOCATION.
-----------------------------
(1) The aggregate purchase price for the Business and the
Assets shall be (i) One Hundred Sixteen Million Eight Hundred Fifty Thousand
Dollars ($116,850,000), subject to adjustment as provided in Section 2.3 (the
"CASH PURCHASE PRICE") and (ii) the assumption by Buyer of the Assumed
Liabilities (collectively, the "PURCHASE PRICE").
(2) (1) As soon as practicable after the date of this
Agreement, Seller and Buyer shall cooperate in the preparation of a joint
schedule (the "ALLOCATION STATEMENT"), allocating the Purchase Price among the
Assets on the basis of the fair market values of the Assets agreed upon by
Seller and Buyer. If Seller and Buyer cannot agree upon the fair market values
of the Assets, the fair market values of the Assets shall be determined by
reference to appraisals or valuations of the Assets prepared by appropriately
qualified independent appraisers or valuation experts. The selection of
appropriately qualified independent appraisers or valuation experts will be made
by Seller, and Seller and Buyer shall be each responsible for the payment of 50%
of the fees and expenses of the appraisers or valuation experts. Seller and
Buyer shall file Internal Revenue Service Form 8594 and any required attachments
thereto, together with all Federal, state and local tax returns, in accordance
with the Allocation Statement. Seller and Buyer shall provide the other promptly
with any other information required to complete the Allocation Statement. If,
however, Seller and Buyer are unable to complete the Allocation Statement within
one hundred twenty (120) days following the Closing, each of Seller and Buyer
may file Form 8594, and any Federal, state and local tax returns allocating the
Purchase Price in the manner each believes appropriate, provided that such
allocation is reasonable and in accordance with Section 1060 of the Code and the
regulations thereunder.
(2) Not later than ten (10) days prior to the filing
of their respective Form 8594 relating to this transaction, each party shall
deliver to the other party a copy of its Form 8594.
<PAGE>
2.2 PAYMENT OF CASH PURCHASE PRICE.
------------------------------
The Cash Purchase Price shall be payable at Closing by wire transfer of
immediately available federal funds to such bank account or accounts as shall be
designated by Seller to Buyer at least three (3) business days prior to the
Closing.
2.3 CASH PURCHASE PRICE ADJUSTMENT.
------------------------------
(1) CALCULATION OF THE CASH PURCHASE PRICE ADJUSTMENT. The
---------------------------------------------------
Cash Purchase Price shall be increased or decreased, on a dollar-for-dollar
basis, by the amount by which the Net Asset Value of the Business immediately
prior to the Closing (the "CLOSING NAV"), as finally determined pursuant to
Section 2.3(d), is greater or less than Thirty Seven Million Eight Hundred
Seventy Thousand Dollars ($37,870,000) (the "BASE NAV") being the Net Asset
Value of the Business at December 31, 1999, calculated in accordance with
SCHEDULE 2.3(C). If the Closing NAV is greater than the Base NAV, then Buyer
shall pay to Seller the amount of such excess in accordance with Sections 2.3(b)
and (e) below. If the Closing NAV is less than the Base NAV, then Seller shall
pay to Buyer the amount of such deficiency in accordance with Sections 2.3(b)
and (e) below.
(2) ESTIMATED CLOSING NAV. Immediately prior to the Closing,
----------------------
Seller and Buyer shall in good faith agree on an estimate of the Closing NAV
(the "ESTIMATED CLOSING NAV"). If the Estimated Closing NAV is in excess of the
Base NAV, then the Cash Purchase Price payable at the Closing shall be increased
by an amount equal to such excess. If the Estimated Closing NAV is less than the
Base NAV, then the Cash Purchase Price payable at the Closing shall be decreased
by an amount equal to such deficiency.
(3) SELLER'S CLOSING STATEMENT. Within thirty (30) days after
--------------------------
the Closing, Seller will prepare and deliver to Buyer a statement substantially
in the form set forth as a part of SCHEDULE 2.3(C) ("SELLER'S CLOSING
STATEMENT") setting forth Seller's good faith calculation of the Closing NAV
prepared consistently with and in accordance with the accounting policies,
principles and practices and allocations used in the Financial Statements except
for adjustments as described in SCHEDULE 2.3(C) and otherwise in accordance with
GAAP (the "ACCOUNTING PRINCIPLES"). The value of the Inventory to be reflected
in Seller's Closing Statement shall be calculated in accordance with the
arrangements set forth in SCHEDULE 2.3(C).
<PAGE>
(4) CLOSING CALCULATION.
-------------------
(1) Seller shall engage at its own expense
PricewaterhouseCoopers LLP to perform the following agreed upon procedures with
respect to the computation of the Closing NAV as soon as practicable after the
Closing Date: (i) review supporting documentation for the adjustments made to
the amounts contained in the Books and Records of the Business as of the
Closing Date for purposes of computing the Closing NAV in accordance with
Section 2.3, to determine that such adjustments were computed consistent with
the adjustments used to compute the Base NAV included in SCHEDULE 2.3(C);
(ii) verify the mathematical accuracy of the computation of the Closing NAV; and
(iii) provide an agreed-upon procedures report addressed to both Seller and
Buyer describing the procedures performed and the results of those
procedures. Buyer shall engage at its own expense PricewaterhouseCoopers LLP
to review Seller's Closing Statement. If Buyer believes, after consultation
with PricewaterhouseCoopers LLP, in good faith that the Closing NAV set forth on
Seller's Closing Statement has not been properly calculated in accordance with
this Section 2.3, it shall, within thirty (30) days after receipt of Seller's
Closing Statement, give written notice ("BUYER'S OBJECTION") to Seller, setting
forth the basis of each Buyer's objection in reasonable detail and, to the
extent practicable, the adjustments to Seller's Closing Statement which Buyer
believes should be made. Failure to so notify Seller within such thirty (30) day
period shall constitute acceptance and approval by Buyer of Seller's Closing
Statement. If any proposed change set forth in Buyer's Objection is not accepted
by Seller, then Seller shall within fifteen (15) days after receipt of Buyer's
Objection give written notice to Buyer of Seller's objection to such change
("SELLER'S OBJECTION"). Failure to so notify Buyer within such fifteen (15) day
period shall constitute acceptance and approval by Seller of Buyer's Objection.
Seller's Closing Statement, as adjusted for any matter included in Buyer's
Objection that is not disputed in Seller's Objection, shall be deemed
conclusively accepted by Seller and Buyer, except in respect of those matters
still in dispute in accordance herewith. For a period of thirty (30) days after
Seller's Objection (the "NEGOTIATION PERIOD"), Seller and Buyer shall negotiate
in good faith to resolve any remaining disputes as expeditiously as possible.
If, after the Negotiation Period, any disputes still remain unresolved, then:
(2) Seller and Buyer promptly shall engage Ernst
& Young or such other accounting firm mutually acceptable to Buyer and Seller
(the "NEUTRAL ACCOUNTING FIRM") to resolve such disputes. The Neutral
Accounting Firm shall act as an arbitrator and shall resolve, solely on the
basis of any presentations submitted by Seller and Buyer, only those issues set
forth in Buyer's Objection and Seller's Objection which are still in dispute.
Each of Buyer and Seller shall make its complete submission to the
Neutral Accounting Firm within ten (10) days following the engagement of the
Neutral Accounting Firm. The failure by either party to make a complete
submission prior to the expiration of such ten (10) day period shall be deemed a
waiver of such party's right to make a submission to the Neutral
Accounting Firm. The parties shall instruct the Neutral Accounting Firm to
resolve the remaining disputes and to determine the Closing NAV (in a manner
consistent with the provisions of this Section 2.3) within thirty (30) days
following the date on which the last submission from a party is timely made. The
Neutral Accounting Firm shall resolve the remaining disputes and determine the
Closing NAV not on the basis of an independent review, but only within the
disputed ranges. Such resolution shall be set forth in a written statement
delivered to Seller and Buyer, and shall be final, binding and conclusive absent
manifest error. Seller's Closing Statement, as may be adjusted following
completion of the procedures set forth in this Section 2.3(d), shall be the
"CLOSING STATEMENT." The fees and any expenses of the Neutral Accounting Firm
shall be shared equally by Seller and Buyer.
<PAGE>
(5) PAYMENT OF CASH PURCHASE PRICE ADJUSTMENT. If the Closing
-----------------------------------------
NAV (adjusted in accordance with Section 5.9) exceeds the Estimated Closing NAV,
the Cash Purchase Price shall be increased by an amount equal to such excess. If
the Closing NAV (adjusted in accordance with Section 5.9) is less than the
Estimated Closing NAV, the Cash Purchase Price shall be decreased by an amount
equal to such deficiency. Payment of any adjustment in the Cash Purchase Price
pursuant to this Section 2.3(e) shall be made by wire transfer of immediately
available federal funds to an account designated by Seller or Buyer, as the case
may be, within three (3) business days after the Closing NAV has been finally
determined, and shall include interest from the Closing Date to the date of
payment at the "base rate" of Citibank, N.A. or any successor thereto in New
York, New York in effect on the Closing Date, based on a 360-day year.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer that:
3.1 CORPORATE EXISTENCE.
-------------------
Seller is a corporation duly incorporated, validly existing and in good
standing under the laws of the State of Delaware and Seller has the requisite
power and authority to own, lease and operate the Assets and to carry on the
Business as the same is now being conducted. Seller is duly authorized,
qualified or licensed to do business as a foreign corporation and in good
standing in every jurisdiction wherein, by reason of the nature of the Business
or the character of the Assets, it is necessary for Seller to be so authorized,
qualified or licensed and in good standing, except where the failure to be so
authorized, qualified or licensed and in good standing would not reasonably be
likely to result in a Material Adverse Effect.
3.2 CORPORATE AUTHORITY.
-------------------
This Agreement, the Ancillary Agreements and the consummation of all of
the transactions provided for hereby and thereby have been duly authorized by
all requisite corporate action of Seller. Seller has the corporate power and
authority to execute and deliver this Agreement and the Ancillary Agreements and
to perform its obligations hereunder and thereunder. This Agreement and the
Ancillary Agreements have been duly executed and delivered by Seller and
constitute valid and legally binding obligations of Seller enforceable in
accordance with their terms, except as enforceability may be (a) limited by
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or
other similar laws affecting the enforcement of creditor's rights, or (b)
subject to general principles of equity.
<PAGE>
3.3 NO CONFLICTS.
------------
The execution and delivery by Seller of this Agreement and the
Ancillary Agreements and the consummation by Seller of the transactions
contemplated hereby and thereby do not and will not (a) violate or conflict with
any provision of the certificate of incorporation or bylaws of Seller or (b)
except as disclosed on SCHEDULE 3.3, conflict with, result in a violation or
breach of, or constitute, with or without the giving of notice or the lapse of
time or both, a default or give rise to any right of termination, cancellation
or acceleration under, the terms of any note, bond, indenture, mortgage or
agreement to which Seller is a party or by which Seller or any of its properties
are bound, except for any such conflict, violation, breach or default which
would not reasonably be likely to result in a Material Adverse Effect.
3.4 GOVERNMENTAL APPROVALS; CONSENTS.
--------------------------------
Seller is not subject to any injunction, order, judgment or decree
which would prevent the consummation of the transactions contemplated hereby. No
claim, legal action, suit, arbitration, investigation by a Governmental
Authority, action or other legal or administrative proceeding is pending or, to
the knowledge of Seller, threatened against Seller which would enjoin or delay
the transactions contemplated hereby. Other than the expiration of the waiting
or review period under the HSR Act and the GWB or as set forth on SCHEDULE 3.4
hereto, no license, certificate, approval, consent, permit, authorization,
waiver, order or qualification of, or filing or registration with (collectively,
"CONSENTS"), any Governmental Authority, or any third party (including Seller's
lenders under the Credit Agreement) under any note, bond, indenture, mortgage or
agreement to which Seller is a party or by which Seller or any of its properties
are bound, is required on the part of Seller in connection with the execution
and delivery of this Agreement or the consummation of the transactions
contemplated hereby, except for such Consents which have already been obtained
or made or the failure of which to obtain or make would not reasonably be likely
to result in a Material Adverse Effect.
3.5 FINANCIAL STATEMENTS.
--------------------
EXHIBIT A contains a copy of the audited (a) balance sheet of the
Business as at December 31, 1998 and December 31, 1999 and (b) Income Statement
and Statement of Cash Flow of the Business for the periods ended December 31,
1997, December 31, 1998 and December 31, 1999, together with the accompanying
notes and a report thereon by Seller's independent accountants (the "FINANCIAL
STATEMENTS"). The Financial Statements have been prepared in conformity with
GAAP and the accompanying notes to the Financial Statements and fairly present
in all material respects the financial condition and results of the Business at
and for the periods therein indicated subject to the accompanying notes thereto.
3.6 ABSENCE OF CHANGES.
------------------
Except as otherwise disclosed on SCHEDULE 3.6 hereto or as contemplated
by this Agreement, since December 31, 1999, (a) the Business has been conducted
in all material respects in the ordinary course consistent with past practice;
(b) there has not occurred any event or circumstance in the Business which would
reasonably be likely to result in a Material Adverse Effect, other than such
events or circumstances attributable to general economic conditions or to other
changes generally affecting companies in the same industry as the Business; and
(c) Seller has not taken any action in respect of the Business which would, if
taken after the date of this Agreement, require Buyer's consent under Section
5.1.
<PAGE>
3.7 PERSONAL AND REAL PROPERTIES.
----------------------------
(1) SCHEDULE 1.1(C)(I) is an accurate and complete list of all
machinery and equipment included in the Assets which have a net book value in
excess of $100,000 ("MAJOR EQUIPMENT"). Seller has good title to the Major
Equipment and the other personal property included in the Assets, free and clear
of all liens, charges and other encumbrances, except (i) as set forth on
SCHEDULE 3.7(A); (ii) liens for Taxes relating to the Assets or the Business
prior to the Closing not yet due and payable, or, if due, (A) not delinquent or
(B) being contested in good faith by appropriate proceedings during which
collection or enforcement against the property is stayed; (iii) mechanics',
workmen's, repairmen's, warehousemen's, carriers' or other like liens arising or
incurred in the ordinary course of business if the underlying obligations are
not past due; (iv) title retention or security interests under conditional sales
contracts, and equipment leases with third parties entered into in the ordinary
course of business; (v) liens, charges or encumbrances relating to purchase
money obligations; (vi) liens arising from the failure of Seller to comply with
bulk sales laws or similar laws in any jurisdiction; and (vii) and other liens,
charges or encumbrances which individually or in the aggregate would not
reasonably be likely to result in a Material Adverse Effect (collectively, such
liens, charges and encumbrances described in clauses (i)-(vii) hereof are
referred to herein as "PERSONAL PROPERTY PERMITTED LIENS").
(2) Seller has good and marketable fee simple title to the
Owned Real Property included in the Assets, free and clear of all liens, charges
and other encumbrances, except (i) as set forth on SCHEDULE 3.7(B); (ii) liens
for Taxes relating to the Assets or the Business prior to the Closing not yet
due and payable, or, if due, (A) not delinquent or (B) being contested in good
faith by appropriate proceedings during which collection or enforcement against
the property is stayed; (iii) mechanics', workmen's, repairmen's,
warehousemen's, carriers' or other like liens arising or incurred in the
ordinary course of business if the underlying obligations are not past due; (iv)
any restriction contained in any covenant or deed of record; (v) easements,
licenses, covenants, rights-of-way and other similar restrictions, including,
without limitation, any other agreements or restrictions which would be shown by
a current title report or other similar report or listing; (vi) any conditions
that may be shown by a current survey, title report or physical inspection;
(vii) zoning, building and other similar restrictions, so long as none of (iv),
(v), (vi) or (vii) renders the title of such real property unmarketable or
prevents the use of such real property substantially as currently used; and
(viii) other liens, charges or encumbrances which individually or in the
aggregate would not reasonably be likely to result in a Material Adverse Effect
(collectively, such liens, charges and encumbrances described in clauses
(i)-(viii) hereof are referred to herein as "REAL PROPERTY PERMITTED LIENS" and
together with the Personal Property Permitted Liens, the "PERMITTED LIENS").
There is no special assessment pending or, to the knowledge of Seller,
threatened, which would affect the Owned Real Property which could reasonably be
expected to have a Material Adverse Effect.
<PAGE>
(3) Seller has a valid leasehold interest in and to all of the
real property covered by the Real Property Leases (the "LEASED REAL PROPERTY").
Except as set forth on SCHEDULE 3.7(C) and except in each case as would not
reasonably be likely to result in a Material Adverse Effect, (i) each of the
Real Property Leases is in full force and effect, enforceable in accordance with
its terms; (ii) Seller is not in material default or breach under the terms of
any Real Property Lease nor would be in material default or breach with notice
or lapse of time or both; (iii) Seller has taken possession of the Leased Real
Property and the Owned Real Property (collectively, the "REAL PROPERTY"); and
(iv) other than Seller, there are no lessees, tenants at sufferance, trespassers
or other occupants on any portion of the Real Property.
3.8 CONTRACTS.
---------
(1) SCHEDULE 3.8(A) sets forth a list of each Contract
relating primarily to the Business (collectively, the "MATERIAL AGREEMENTS")
which:
(1) is a Contract for the purchase of goods or
services by the Business involving future payments by the Business on an
individual basis in excess of $1,000,000;
(2) is a Contract for the sale of goods or
services by the Business involving future revenues for the Business on an
individual basis in excess of $2,000,000;
(3) is a collective bargaining Contract;
(4) is a Contract that after the Closing would
materially restrict the freedom of Buyer to compete with any Person with respect
to the Business as currently conducted by Seller;
(5) is a Contract relating to employment,
compensation, severance or indemnification between Seller and any of the
employees of the Business (and is not a Hexcel Benefit Plan), but excluding
confidentiality agreements entered into in the ordinary course of business;
(6) is a Contract relating to Proprietary Rights
that is material to the Business, but excluding confidentiality agreements
entered into in the ordinary course of business;
(7) is a Contract that obligates Seller to
indemnify any Person other than in the ordinary course of business;
(8) is a Contract involving a guarantee by the
Business of the debts of any Person for borrowed money or the performance of a
material obligation of another Person (but excluding guarantees to a customer of
the performance by a supplier or subcontractor of the Business);
(9) is a Contract for the lease of real property;
<PAGE>
(10) is a Contract which creates or purports to
create a partnership, alliance or joint venture;
(11) is a Contract for the lease of personal
property requiring annual rental payments in excess of $100,000; or
(12) is a Contract for the license of software
that is material to the Business.
(2) Seller has furnished or made available to Buyer a true and
correct copy of each Material Agreement. Each Material Agreement is in full
force and effect according to its terms and Seller and, to Seller's knowledge,
the other parties to any Material Agreement are not in material default or
breach thereof nor would they be in material default or breach thereof with
notice or lapse of time, or both, except as disclosed on SCHEDULE 3.8(b) or
where such invalidity, ineffectiveness, default or breach would not reasonably
be likely to result in a Material Adverse Effect.
(3) Except for the Material Agreements listed on SCHEDULE
3.8(c), no Material Agreement requires the consent of any other party thereto to
effectuate the assignment thereof to Buyer.
(4) SCHEDULE 3.8(d) contains a list of all customer Contracts
(other than Material Agreements) with a value in excess of $50,000 which are in
effect on March 27, 2000 but under which Seller's performance has not been
completed with respect to orders for products or services made under such
Contracts.
3.9 LITIGATION.
----------
Except as set forth on SCHEDULE 3.9, there are no actions, suits,
proceedings or investigations pending or, to the knowledge of Seller,
threatened, in law or in equity, or before any Governmental Authority which, if
determined or resolved adversely against Seller would reasonably be likely to
result in a Material Adverse Effect. Except as set forth on SCHEDULE 3.9, Seller
is not in default under any injunction, order, judgment or decree of any
Governmental Authority relating to any Asset or the Business, except for such
defaults, injunctions, orders, judgments or decrees which would not reasonably
be likely to result in a Material Adverse Effect.
3.10 PROPRIETARY RIGHTS.
------------------
(1) Except as set forth on SCHEDULE 3.10, (i) Seller owns and
possesses all right, title and interest in and to all of the Intellectual
Property; and (ii) no claim by any third party contesting the validity,
enforceability, use or ownership of any of the Intellectual Property is pending
or has been made since January 1, 1998 and, to Seller's knowledge, no such claim
is threatened against Seller nor is there any valid basis therefor.
<PAGE>
(2) Except as set forth on SCHEDULE 3.10, (i) Seller owns or
possesses rights in and to the Business Know-How to the extent necessary to
conduct the Business as currently conducted; and (ii) no claim by any third
party contesting the use or ownership of any of the Business Know-How is pending
or has been made since January 1, 1998 and, to Seller's knowledge, no such claim
is threatened against Seller nor is there any valid basis therefor.
3.11 INSURANCE.
---------
Set forth on SCHEDULE 3.11 are Seller's current policies of insurance
relating to the Assets or the Business.
3.12 TAX MATTERS.
-----------
Except as set forth on SCHEDULE 3.12, all Tax Returns required to be
filed by Seller with respect to Taxes relating to the Business or the Assets
which are due and payable prior to the Closing Date have been filed, and all
Taxes which are shown to be due and payable on such Tax Returns have been paid
except for such amounts as are being contested by Seller in good faith by
appropriate proceedings and with respect to which adequate reserves have been
set aside on the Financial Statements. Except as set forth on SCHEDULE 3.12,
there are no pending or, to the knowledge of Seller, threatened claims that have
been asserted by a Taxing Authority against Seller which if adversely determined
would reasonably be likely to result in a Material Adverse Effect.
3.13 EMPLOYMENT AND BENEFITS.
-----------------------
(1) SCHEDULE 3.13(A) sets forth a list of each "employee
pension benefit plan" (as defined in Section 3(2) of ERISA) (hereinafter a
"PENSION PLAN"), "employee welfare benefit plan" (as defined in Section 3(1) of
ERISA) (hereinafter a "WELFARE PLAN"), and each other plan, arrangement or
policy (written or oral) relating to stock options, stock purchases, deferred
compensation, severance, fringe benefits or other employee benefits, in each
case maintained or contributed to, or required to be maintained or contributed
to, by Seller or any other Person that, together with Seller, is treated as a
single employer under Section 414 of the Code for the benefit of employees of
the Business. All such plans, arrangements and policies shall be referred to
herein collectively as the "HEXCEL BENEFIT PLANS". Seller has delivered to Buyer
true, complete and correct copies of (1) the documents or instruments pursuant
to which each Hexcel Benefit Plan is maintained (or, in the case of any
unwritten Hexcel Benefit Plans, descriptions thereof) and (2) the most recent
summary plan description (or similar document) for each Hexcel Benefit Plan for
which such a summary plan description was provided to plan participants or
beneficiaries.
<PAGE>
(2) The Hexcel Pension Plan and the Hexcel 401(k) Plan have
been administered in all material respects in accordance with their terms and,
except as described on SCHEDULE 3.13(b), are in substantial compliance in all
material respects with the applicable provisions of ERISA, the Code, and all
other applicable Laws. There are no proceedings, suits or claims (other than
claims in the ordinary course), and to Seller's knowledge there are no
investigations, against or involving the Hexcel Pension Plan or the Hexcel
401(k) Plan or asserting any rights to or claims for benefits under the Hexcel
Pension Plan or the Hexcel 401(k) Plan that could give rise to any material
liability. The Hexcel Pension Plan and the Hexcel 401(k) Plan each have been the
subject of a determination letter from the IRS to the effect that each is
qualified and its related trust is exempt from Federal income taxes under
Sections 401(a) and 501(a), respectively, of the Code; such determination
letters have not been revoked, and, to the knowledge of Seller, revocation has
not been threatened; except as described on SCHEDULE 3.13(b), to Seller's
knowledge, no event has occurred and no circumstances exist that could
reasonably be expected to adversely affect the tax-qualification of the Hexcel
Pension Plan or the Hexcel 401(k) Plan; and neither the Hexcel Pension Plan nor
the Hexcel 401(k) Plan has been amended since the effective date of its most
recent determination letter in any respect that could reasonably be expected to
adversely affect its qualification. Seller has delivered to Buyer a copy of the
most recent determination letters received with respect to the Hexcel Pension
Plan and the Hexcel 401(k) Plan, as well as a copy of any pending application by
Seller for a determination letter; all amendments to the Hexcel Pension Plan and
the Hexcel 401(k) Plan as to which a favorable determination letter has not yet
been received; the most recent annual reports on Form 5500 filed with the IRS
with respect to the Hexcel Pension Plan and the Hexcel 401(k) Plan; and a true,
correct and complete copy of the trust agreements relating, respectively, to the
Hexcel Pension Plan and the Hexcel 401(k) Plan.
(3) All "group health plans" (as such term is defined in
Section 5000(b)(1) of the Code) maintained by Seller with respect to the
Business have been operated with respect to the employees of the Business and
their dependents in material compliance with the group health plan continuation
coverage requirements of Section 4980B of the Code and Section 601 of ERISA to
the extent such requirements are applicable.
3.14 COMPLIANCE WITH LAWS.
--------------------
To Seller's knowledge, except as disclosed on SCHEDULE 3.14 and except
for violations or defaults the existence of which would not reasonably be likely
to result in a Material Adverse Effect, Seller is not, and since January 1, 1998
has not been, in violation of or default under any Law applicable to the
operation of the Business.
3.15 FINDERS; BROKERS.
----------------
With the exception of commissions, fees and expenses payable to Credit
Suisse First Boston, which shall be Seller's sole responsibility, Seller is not
a party to any agreement with any finder or broker, or in any other way
obligated to any finder or broker, for any commissions, fees or expenses in
connection with the origin, negotiation, execution or performance of this
Agreement.
<PAGE>
3.16 ENVIRONMENTAL MATTERS.
---------------------
Except as disclosed on SCHEDULE 3.16:
(1) Seller is in compliance with, and has since January 1,
1998, been in compliance with, all Environmental Laws applicable to the Business
as conducted by Seller during such period, except for violations of
Environmental Laws that would not reasonably be likely to result in a Material
Adverse Effect.
(2) Seller holds, and is in compliance with, and has since
January 1, 1998, been in compliance with, all licenses and permits required
under Environmental Laws applicable to the Business as conducted by Seller
during this period, except for the absence of, or the noncompliance with, such
licenses and permits that would not reasonably be likely to result in a Material
Adverse Effect.
(3) Seller has not received any notice of any pending or
threatened Environmental Claim by any Person alleging a violation of or
liability under any Environmental Law arising from the conduct of the Business
or with respect to any Real Property, except in all such cases that would not
reasonably be likely to result in a Material Adverse Effect.
(4) There has been no Release of any Hazardous Substance on,
upon or from the Real Property in violation of Environmental Law, except for any
such violations that would not reasonably be likely to result in a Material
Adverse Effect.
(5) The Real Property is not contaminated by any Hazardous
Substance, except for such contamination that would not reasonably be likely to
result in a Material Adverse Effect.
(6) Seller has not released, transported, disposed of, stored,
treated, arranged for disposal, treatment, storage, release or threatened
release of any Hazardous Substance from or on the Real Property in violation of
Environmental Law, except for any such violations that would not reasonably be
likely to result in a Material Adverse Effect.
(7) There are no underground storage tanks,
asbestos-containing materials, polychlorinated biphenyls, landfills, surface
impoundments or disposal areas on the Real Property the existence of which would
reasonably be likely to result in a Material Adverse Effect.
<PAGE>
3.17 SUFFICIENCY OF ASSETS.
---------------------
Except for the Excluded Assets described in Section 1.3(a)-(j) and
except as set forth on SCHEDULE 3.17, the Assets, together with the products and
services to be provided to Buyer pursuant to the Ancillary Agreements,
constitute all the assets, properties and rights (i) reflected in the audited
balance sheet of the Business as at December 31, 1999 (being a part of the
Financial Statements) or used, in each case subject to the disposition and
addition of assets in the ordinary course of business since that date, to
produce the financial results reflected in the audited income statement of the
Business for the year ended December 31, 1999 (being a part of the Financial
Statements); (ii) necessary to conduct the Business in all material respects as
currently conducted by Seller; and (iii) necessary to perform the Material
Agreements described in Section 3.8(a)(ii).
3.18 LABOR MATTERS.
-------------
Except as described on SCHEDULE 3.18, (1) there is no labor dispute
involving employees of the Business pending or, to Seller's knowledge,
threatened, except for any such disputes that would not reasonably be likely to
result in a Material Adverse Effect; (2) no strike, work stoppage or slowdown
has occurred at the Real Property since Seller acquired the Business; (3) no
labor organization has filed any representation petition or made any demand for
recognition at the Real Property since Seller acquired the Business; and (4) to
Seller's knowledge, no Transferred Employee is a party to any confidentiality or
non-competition agreement with any Person (other than Seller) that imposes on
such Transferred Employee any material restriction on his or her rights to
perform the duties currently assigned. SCHEDULE 3.18 contains, as of the date
hereof, an accurate list of each employee of Seller engaged primarily in the
Business, his or her date of hire, current annual compensation and the location
of his or her principal place of employment.
3.19 UNDISCLOSED LIABILITIES.
-----------------------
Except for liabilities or obligations (a) disclosed or reflected in the
audited balance sheet of the Business as at December 31, 1999 included as part
of the Financial Statements, (b) disclosed or reflected in this Agreement
(including the Excluded Liabilities, the Exhibits and the Schedules) or (c)
disclosed in any other representation or warranty of Seller contained in this
Agreement, Seller has no liability or obligation (whether known or unknown,
fixed or contingent) with respect to the Business or the Assets other than
liabilities or obligations incurred in the ordinary course of business since
December 31, 1999 and except for those which, individually or in the aggregate,
would not reasonably be likely to result in a Material Adverse Effect; PROVIDED
THAT for the purpose of this Section 3.19, (x) such liabilities and obligations
shall not be treated as having been disclosed or reflected by virtue of (i)
Section 1.4; or (ii) being Permitted Liens unless the liability or obligation
giving rise to such Permitted Lien is included in the Closing Statement to the
extent required by the Accounting Principles; (y) to the extent that any of the
representations and warranties contained in Article 3 are qualified by Seller's
knowledge, there shall be no breach of this Section 3.19 by virtue of any
liability or obligation that exists in relation to such representations and
warranties of which Seller has no knowledge; and (z) to the extent that any of
the representations and warranties contained in Article 3 are limited in
duration under Section 9.1, there shall be no breach of this Section 3.19 to the
extent of any liability or obligation that exists in relation to such
representations and warranties after the applicable date set forth in Section
9.1.
<PAGE>
3.20 ACCOUNTS RECEIVABLE.
-------------------
All accounts receivable included in the Assets represent sales made in
the ordinary course of business. The Financial Statements contain, as of their
respective dates, adequate reserves for bad debts in respect of accounts
receivable included in the Assets.
3.21 INVENTORY.
---------
All Inventory is of a quality and quantity useable and saleable in the
ordinary course of business and is valued in the Financial Statements at the
lower of cost or market. The Financial Statements contain, as of their
respective dates, adequate reserves for unuseable or unsaleable Inventory.
3.22 CONDITION OF CERTAIN ASSETS.
---------------------------
Except as would not reasonably be likely to result in a Material
Adverse Effect, the Machinery, the Vehicles and the Owned Real Property and
Improvements are, in the aggregate, in good and useable condition, ordinary wear
and tear excepted.
3.23 SELLER'S LENDERS' CONSENT.
-------------------------
Seller has obtained the consent of its lenders under the Credit
Agreement to release their liens on the Assets upon consummation of this
Agreement and the transactions contemplated hereby.
3.24 NO OTHER REPRESENTATIONS OR WARRANTIES.
--------------------------------------
Except for the representations and warranties contained in this Article
3 or in any other document or instrument delivered by Seller pursuant to this
Agreement, neither Seller nor any other Person makes any other express or
implied representation or warranty on behalf of Seller, including, without
limitation, any representation or warranty as to the probable success or
profitability of the ownership, use or operation of the Business or the Assets
by Buyer after the Closing.
<PAGE>
ARTICLE 4
REPRESENTATIONS OF BUYER
Buyer represents and warrants that:
4.1 CORPORATE EXISTENCE.
-------------------
Buyer is a corporation duly incorporated, validly existing and in good
standing under the laws of the State of Delaware and has the requisite power and
authority to execute and deliver this Agreement and the Ancillary Agreements and
to perform the transactions contemplated hereby and thereby.
4.2 CORPORATE AUTHORITY.
-------------------
This Agreement, the Ancillary Agreements and the consummation of all of
the transactions provided for hereby and thereby have been duly authorized by
all requisite corporate action of Buyer. Buyer has the corporate power and
authority to execute and deliver this Agreement and the Ancillary Agreements and
to perform its obligations hereunder and thereunder. This Agreement and the
Ancillary Agreements have been duly executed and delivered by Buyer and
constitute valid and legally binding obligations of Buyer enforceable in
accordance with their terms, except as enforceability may be (a) limited by
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or
other similar laws affecting the enforcement of creditor's rights, or (b)
subject to general principles of equity.
4.3 NO CONFLICTS.
------------
The execution and delivery by Buyer of this Agreement and the Ancillary
Agreements and the consummation by Buyer of the transactions contemplated hereby
and thereby do not and will not (a) violate or conflict with any provision of
the certificate of incorporation or bylaws of Buyer, or (b) except as disclosed
on SCHEDULE 4.3, conflict with, result in a violation or breach of, or
constitute, with or without the giving of notice or the lapse of time or both,
any default or give rise to any right of termination, cancellation or
acceleration under the terms of, any note, bond, indenture, mortgage or
agreement to which Buyer is a party or by which Buyer or any of its properties
are bound, except for any such conflict, violation, breach or default which
would not reasonably be likely to result in a material adverse effect on the
ability of Buyer to consummate the transactions contemplated hereby (a "BUYER
MATERIAL ADVERSE EFFECT").
4.4 GOVERNMENTAL APPROVALS; CONSENTS.
--------------------------------
Buyer is not subject to any injunction, order, judgment or decree which
would prevent the consummation of the transactions contemplated hereby. No
claim, legal action, suit, arbitration, investigation by a Governmental
Authority, action or other legal or administrative proceeding is pending or, to
the knowledge of Buyer, threatened against Buyer which would enjoin or delay the
transactions contemplated hereby. Other than the expiration of the waiting or
review period under the HSR Act and the GWB or as set forth on SCHEDULE 4.4
hereto, no Consent of any Governmental Authority or any third party under any
note, bond, indenture, mortgage or agreement to which Buyer is a party or by
which Buyer or any of its properties are bound is required on the part of Buyer
in connection with the execution and delivery of this Agreement or the
consummation of the transactions contemplated hereby, except for such Consents
which have already been obtained or made or the failure of which to obtain or
make would not reasonably be likely to result in a Buyer Material Adverse
Effect.
<PAGE>
4.5 FINDERS; BROKERS.
----------------
With the exception of commissions, fees and expenses payable to Lazard,
which shall be Buyer's sole responsibility, Buyer is not a party to any
agreement with any finder or broker, or in any other way obligated to any finder
or broker, for any commissions, fees or expenses in connection with the origin,
negotiation, execution or performance of this Agreement.
4.6 FINANCIAL CAPACITY.
------------------
Subject to receipt from Seller of a certified resolution of Seller's
Board of Directors authorizing the execution and delivery of this Agreement by
Seller and the performance of its obligations hereunder, Buyer has available
binding and unconditional commitments under its existing credit facilities
necessary to consummate the transactions contemplated by this Agreement on the
Closing (including without limitation payment of the Cash Purchase Price) (the
"FINANCING").
4.7 EXPORT LICENSES.
---------------
Buyer has no intention to export any goods, technology, technical data
or software transferred to Buyer pursuant to this Agreement or the Ancillary
Agreements which is subject to control under the Export Administration
Regulations without first obtaining all required export licenses.
4.8 NO OTHER REPRESENTATIONS OR WARRANTIES.
--------------------------------------
Except for the representations and warranties contained in this Article
4 or in any other document or instrument delivered by Buyer pursuant to this
Agreement, neither Buyer nor any other Person makes any other express or implied
representation or warranty on behalf of Buyer.
ARTICLE 5
AGREEMENTS OF BUYER AND SELLER
5.1 OPERATION OF THE BUSINESS.
-------------------------
Except as otherwise contemplated by this Agreement or as disclosed on
SCHEDULE 5.1, Seller covenants that until the Closing it will continue to
operate the Business in the ordinary course consistent with past practices of
the Business, and use commercially reasonable efforts to maintain and preserve
intact the Business and its relationships with suppliers, customers, employees
and others having business relationships with it with a view toward preserving
the Business, the Assets and the goodwill included therewith for Buyer. Until
the Closing Date, Seller shall not, without the prior written approval of Buyer
(which approval shall not be unreasonably withheld), except as described on
SCHEDULE 5.1, take any of the following actions:
<PAGE>
(1) sell, transfer or otherwise dispose of the Assets,
other than inventory in the ordinary course of business consistent with past
practices;
(2) grant any increase in the compensation or benefits of
Transferred Employees, except for increases in the ordinary course of business
consistent with past practices;
(3) make any new capital expenditure pertaining to the
Business which is individually in excess of $500,000 or which when taken
together with all other new capital expenditures is in excess of $2,000,000;
(4) encumber by mortgage, pledge, lien or otherwise, or
grant any security interest in or to, any Assets, except for Permitted Liens;
(5) transfer or grant any material rights with respect to
the Proprietary Rights other than in the ordinary course of business;
(6) lease or dispose of any interest in the Owned Real
Property;
(7) enter into a Material Agreement or modify in a manner
adverse to the Business any material term of a Material Agreement; or
(8) agree, whether in writing or otherwise, to do any of
the foregoing.
5.2 INVESTIGATION OF THE BUSINESS.
-----------------------------
Buyer may, prior to the Closing Date, make or cause to be made such
investigation of the business and properties of the Business and of its
financial and legal condition as Buyer deems necessary or advisable; PROVIDED,
HOWEVER, that any such investigation does not unreasonably interfere with the
normal operations of Seller, any of its Affiliates or the Business. Seller will
permit Buyer and its authorized agents or representatives, including its
independent accountants, to have full access to the properties, books and
records of the Business at reasonable hours to review information and
documentation relative to the properties, books, contracts, commitments and
other records of the Business; PROVIDED, HOWEVER, that prior to the Closing
Buyer shall not have access to the Business Know-How, any patent applications
included in the Intellectual Property or any information which Seller is
prohibited by Law from disclosing to Buyer. Buyer and its representatives will
hold in confidence all confidential information obtained from or through Seller,
its officers, agents, representatives or employees in accordance with the
provisions of the letter dated December 7, 1999 between Buyer and Seller (the
"CONFIDENTIALITY AGREEMENT").
<PAGE>
5.3 MUTUAL COOPERATION.
------------------
(10 Subject to the terms and conditions hereof, Seller and
Buyer agree to use their reasonable best efforts to take, or cause to be taken,
all actions and to do, or cause to be done, all things necessary, proper or
advisable to consummate and make effective the transactions contemplated by this
Agreement and the Ancillary Agreements including all of the following: (i) the
obtaining of all Consents as are necessary for the consummation of the
transactions contemplated by this Agreement and the Ancillary Agreements
including, but not limited to, such Consents as may be required from
Governmental Authorities (including under the HSR Act, the GWB and any similar
foreign legislation); (ii) the timely and prompt filing of all required notices,
applications and all other reports and requests; (iii) the defending of all
legal proceedings challenging the consummation of the transactions contemplated
by this Agreement and the Ancillary Agreements; and (iv) the execution and
delivery of any additional documents necessary to consummate the transactions
contemplated by this Agreement and the Ancillary Agreements.
(2) Without limitation to Section 5.3(a), Buyer and Seller
shall within ten (10) days after the execution and delivery of this Agreement
make all filings which may be required by each of them in connection with the
consummation of the transactions contemplated by this Agreement and the
Ancillary Agreements under the HSR Act and the GWB.
(3) Seller and Buyer shall reasonably cooperate with each
other and shall furnish each other such necessary information and assistance as
the other party may reasonably request in connection with the matters described
in this Section 5.3.
(4) Each of Seller and Buyer shall notify and keep the other
advised as to any litigation or administrative proceeding pending, or to its
knowledge threatened, which seeks to prevent, hinder, delay or invalidate any of
the transactions contemplated hereby.
5.4 PUBLIC DISCLOSURES.
------------------
Prior to the Closing Date, neither party to this Agreement (nor their
Affiliates) will issue any press release or make any other public disclosures
concerning this transaction or the contents of this Agreement without the prior
written consent of the other party. Notwithstanding the above, nothing in this
Section 5.4 will preclude any party (or its Affiliates) from making any
disclosures required by any Governmental Authority, Law or stock exchange or
market on which any of its securities are listed or traded; provided, HOWEVER,
that the party required to make the release or statement shall use reasonable
efforts to allow the other party reasonable time to comment on such release or
statement in advance of such issuance.
5.5 POST-CLOSING ACCESS TO RECORDS AND PERSONNEL.
--------------------------------------------
(1) After the Closing, the parties shall retain the books,
records, documents, instruments, accounts, correspondence, writings, evidences
of title and other papers relating to the Business and the Assets in their
respective possession (the "BOOKS AND RECORDS") for at least seven (7) years or
for such longer period of time set forth in their respective records retention
policies on the Closing Date or as may be required by Law or any court order.
<PAGE>
(2) After the Closing, the parties shall allow each other
reasonable access to and use of the Books and Records, and to personnel having
knowledge of the whereabouts and/or contents of the Books and Records, for
legitimate business reasons, such as the preparation of Tax Returns or the
prosecution or defense of litigation. The requesting party will hold in
confidence all confidential information identified as such by, and obtained
from, the disclosing party or any of its officers, agents, representatives or
employees; PROVIDED, HOWEVER, that a requesting party will not be under any
obligation of confidentiality with respect to information which (i) is or shall
have become generally available to the public without breach of the
Confidentiality Agreement or this Agreement; (ii) was or becomes known to the
requesting party without any obligation of confidentiality from a third party
who the requesting party believes, after due inquiry, is not prohibited from
disclosing such information by a contractual, legal or fiduciary obligation to
the disclosing party or its Affiliates; or (iii) is required to be disclosed by
Law, provided that the requesting party shall provide the other party with
prompt notice of such requirement and shall, prior to disclosing such
information, cooperate with such other party with respect to any such disclosure
including, without limitation, assisting such other party at such other party's
expense in obtaining an appropriate protective order.
5.6 EXCLUDED SELLER INFORMATION.
---------------------------
(1) Buyer acknowledges that, because certain Transferred
Employees prior to the Closing have had access to the businesses and operations
of Seller or its Affiliates not included in the Business, Buyer will have access
to a substantial amount of confidential and proprietary information belonging to
Seller or its Affiliates which is not an Asset (including, without limitation,
the information described on SCHEDULE 5.6(A)) (collectively, "EXCLUDED SELLER
INFORMATION"). Buyer acknowledges that all Excluded Seller Information is and
will remain the property of Seller or its Affiliates and that Buyer acquires no
rights to any Excluded Seller Information pursuant to this Agreement. To the
extent that any documents, whether in written or electronic media, contain any
Excluded Seller Information and remain in the possession of Buyer following the
Closing, Buyer will immediately return such documents to Seller and destroy all
copies.
<PAGE>
(2) Buyer acknowledges that neither it nor any of its
Affiliates currently manufactures or sells special process core (i.e., honeycomb
or other core which has been carved, shaped, machined, milled, bonded, or
otherwise formed, with or without additional processing) other than as an
intermediate part incorporated by Buyer or its Affiliates into finished products
of their business, and that Buyer is not acquiring the Assets or the Business
for the purpose of engaging in the business of manufacturing or selling special
process core other than as an intermediate part incorporated by Buyer or its
Affiliates into finished products of the Business or the business of its
Affiliates. Buyer further acknowledges that, should Buyer in the future decide
to engage in the business of manufacturing or selling special process core as an
unincorporated product, it would be impractical for Buyer to disaggregate the
confidential or proprietary information of Seller or its Affiliates from any
similar information used by Buyer in such business. Accordingly, in order to
further protect the confidential or proprietary information of Seller and its
Affiliates, Buyer agrees that, for a period of three (3) years after the
Closing, neither Buyer nor any Affiliate of Buyer shall (i) engage in any
activities or business involving the manufacture or sale of special process core
anywhere in the world other than as an intermediate part incorporated by Buyer
or its Affiliates into finished products of the Business or the business of its
Affiliates or (ii) solicit or recruit any current or future employee of Seller
or its Affiliates who are engaged in the development, manufacture, use or sale
of honeycomb, core, special process core, laminates or panels; PROVIDED,
HOWEVER, the use of general media advertisements and activities intended to
result in employment as a result thereof shall not be deemed a solicitation by
Buyer or its Affiliates. Notwithstanding the foregoing, this Section 5.6(b)
shall not restrict Buyer or any of its Affiliates from (x) acquiring less than
10% of any class of voting securities of any Person engaged in the manufacture
or sale of special process core; or (y) acquiring a Person which manufacturers
or sells special process core, if such activities account for less than 10% of
such Person's consolidated annual revenues.
(3) Buyer acknowledges that the three (3) year non-competition
and non-solicitation covenants provided for in Section 5.6(b) are reasonable
covenants under the circumstances. Moreover, it is the desire and intent of the
parties that the provisions of such covenants shall be enforceable to the
fullest extent permissible under the laws and public policies applied in each
jurisdiction in which enforcement is sought. Accordingly, the parties agree
that, should a court or administrative body subsequently determine that the
terms of such covenants are greater than reasonably necessary to protect
Seller's or its Affiliates' interests, the parties will request that such court
or administrative body reform such covenants specifying the greatest time period
and/or geographic area that would not render such covenants unenforceable. Buyer
specifically agrees that, in the event of a breach or threatened breach by it or
any of its Affiliates of the covenants provided for in Section 5.6(b), Seller
and its Affiliates would suffer irreparable injury and shall be entitled to seek
equitable relief by way of temporary or permanent injunction or any other
equitable remedies.
5.7 CONFIDENTIALITY.
---------------
(1) Buyer shall hold, and shall cause its employees, agents
and representatives to hold, Excluded Seller Information in strict confidence
and make no use or disclosure thereof without the prior written consent of
Seller; PROVIDED, however, that (A) Buyer shall not be under any restriction on
the use or disclosure of any information which (i) is or shall have become
generally available to the public without breach of the Confidentiality
Agreement or this Agreement; (ii) was or becomes known to Buyer without any
obligation of confidentiality from a third party who Buyer believes, after due
inquiry, is not prohibited from disclosing such information by a contractual,
legal or fiduciary obligation to Seller or its Affiliates; or (iii) is developed
by Buyer independently without use or reference to such information; and (B)
Buyer may disclose information to the extent required by Law, provided that
Buyer shall provide Seller with prompt notice of such requirement and shall,
prior to disclosing such information, cooperate with Seller with respect to any
such disclosure including, without limitation, assisting Seller in obtaining an
appropriate protective order.
(2) Until the Closing shall actually have occurred, Buyer
acknowledges that it remains subject to all of the terms and conditions of the
Confidentiality Agreement. The Confidentiality Agreement shall survive the
termination of this Agreement.
<PAGE>
5.8 "AS IS" CONDITION.
-----------------
Except as to title and as may be specifically provided in this
Agreement, Buyer expressly understands and agrees that it shall accept the sale
and transfer by Seller of all of the Assets on an "As Is Where Is" basis on the
Closing Date regardless of the condition of the Assets and whether Buyer has
inspected and examined them. EXCEPT AS MAY BE SPECIFICALLY PROVIDED IN THIS
AGREEMENT, SELLER MAKES NO WARRANTY WITH RESPECT TO THE VALUE, CONDITION OR USE
OF THE ASSETS, WHETHER EXPRESSED OR IMPLIED, INCLUDING, WITHOUT LIMITATION, ANY
IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE.
5.9 INTERCOMPANY TRANSACTIONS.
-------------------------
After the Closing NAV has been finally determined pursuant to Section
2.3, the Closing NAV shall be decreased by the change in the amount by which
amounts owed by Seller or its Affiliates to the Business exceed amounts owed by
the Business to Seller or its Affiliates between December 31, 1999 and the
Closing Date, or alternatively, the Closing NAV shall be increased by the change
in the amount by which amounts owed by the Business to Seller or its Affiliates
exceed amounts owed by Seller or its Affiliates to the Business between December
31, 1999 and the Closing Date.
5.10 FINANCING.
---------
(1) Buyer expressly acknowledges that the consummation of the
Financing shall not be a condition to Buyer's obligations under this Agreement.
(2) Buyer shall immediately inform Seller of any issues
adversely affecting the availability of the Financing.
5.11 TRANSFER OF BOEING DOORLINER AGREEMENT.
--------------------------------------
Buyer hereby agrees and acknowledges that the Boeing Doorliner
Agreement and any related work, accounts receivable, tools, inventory and
drawings thereto shall be transferred from the Business to Seller's operations
in Kent, Washington, and shall not be part of the Business. To the extent that
the foregoing has not been transferred to Seller's operations in Kent,
Washington, prior to the Closing, Buyer hereby agrees, upon the request of
Seller or Seller's Affiliates, at Seller's expense, to take all actions
reasonably necessary to effect such transfer of the foregoing.
5.12 TRANSITION SERVICES AGREEMENT.
-----------------------------
At the Closing, Buyer and Seller shall execute and deliver the
Transition Services Agreement, substantially in the form set forth in EXHIBIT B
hereto (the "TRANSITION SERVICES AGREEMENT").
<PAGE>
5.13 MATERIALS SUPPLY AGREEMENT.
--------------------------
At the Closing, Buyer and Seller shall execute and deliver the
Materials Supply Agreement, substantially in the form set forth in EXHIBIT C
hereto (the "MATERIALS SUPPLY AGREEMENT").
5.14 NON-COMPETITION AGREEMENTS.
--------------------------
At the Closing, Buyer and Seller shall execute and deliver the Seller
Non-Competition Agreement, substantially in the form set forth in EXHIBIT D
hereto (the "SELLER NON-COMPETITION AGREEMENT"), and the Buyer Non-Competition
Agreement, substantially in the form of EXHIBIT E hereto (the "BUYER
NON-COMPETITION AGREEMENT").
5.15 THIRD PARTY CONSENTS.
--------------------
To the extent that any Consent needed to assign or transfer any Asset
to Buyer has not been obtained on or prior to the Closing Date, this Agreement
shall not constitute an assignment or transfer or attempted assignment or
transfer thereof if such assignment or transfer or attempted assignment or
transfer would constitute a breach or violation of any agreement or applicable
Law. If any such Consent shall not be obtained on or prior to the Closing, then
(a) Seller and Buyer shall use their reasonable commercial efforts in good faith
to obtain such Consent as promptly as practicable thereafter and (b) if such
Consent is not obtained, the parties shall use commercially reasonable efforts
in good faith to effect any lawful arrangement designed to provide for Buyer the
benefits after Closing that it would have received, and to subject Buyer
directly to the obligations thereunder, as if such Consent had been obtained
(but at Buyer's sole cost which shall include reimbursement to Seller of its
costs of any such arrangement). Nothing in this Section 5.15 shall be deemed to
waive the provisions of Section 7.3(e).
5.16 USE OF HEXCEL SUPPLIES.
----------------------
Nothing in this Agreement gives Buyer any rights to the ownership or
use of the name "Hexcel" or the Hexcel Logo, except that following the Closing
Date and solely in connection with the Business, Buyer may use (i) packaging
materials for a period of six (6) months; (ii) building signs for a period of
one (1) month; (iii) marketing or promotional materials for a period of three
(3) months; (iv) forms, invoices, stationery or other documents sent to third
parties for a period of three (3) months; and (v) documents for internal use for
a period of three (3) months, in each case displaying the name "Hexcel" or the
Hexcel Logo (collectively, the "HEXCEL SUPPLIES"); PROVIDED, HOWEVER, that Buyer
may only use the quantities of Hexcel Supplies existing on the Closing Date and
may not print or create any additional Hexcel Supplies. Buyer shall destroy any
unused Hexcel Supplies remaining at the expiration of the period described in
this Section 5.16 applicable to any such Hexcel Supplies.
<PAGE>
5.17 COMPLIANCE WITH BULK SALES LAWS.
-------------------------------
Buyer and Seller hereby waive compliance by the other with the bulk
sales laws and any other similar laws in any applicable jurisdiction in respect
of the transactions contemplated by this Agreement.
5.18 DELIVERY OF EXEMPTION CERTIFICATES.
----------------------------------
Buyer shall have executed and delivered to Seller, within thirty (30)
days after the Closing Date, all certificates required by all relevant Taxing
Authorities that are necessary to support any exemption from the imposition of
any sales, use, excise, value added or similar Tax on the transfer of the
Assets.
5.19 EXCLUSIVITY.
-----------
Seller will not, and will cause its respective officers, directors,
agents and Affiliates to not, discuss a possible sale or other disposition
(whether in an independent transaction or in combination with the assets of
Seller's facilities in Kent, Washington) of all or any part of the Assets
(whether by merger, reorganization, recapitalization or otherwise), other than
Assets intended to be sold or disposed of in the ordinary course of business
consistent with past practice, with any potential acquirer thereof other than
Buyer (an "ACQUISITION PROPOSAL") or provide any information to any potential
acquirer thereof other than Buyer regarding such a possible sale or disposition
other than information that is provided in the ordinary course of business where
Seller and its officers, directors, agents and Affiliates have no reason to
believe that such information may be utilized to evaluate such a possible sale
or disposition; PROVIDED, HOWEVER, nothing in this Section 5.19 shall preclude
Seller from agreeing to or effecting a merger, reorganization, recapitalization
or other transaction, so long as the surviving entity or buyer assumes Seller's
obligations under this Agreement. Seller and its officers, directors and
Affiliates (a) do not have any agreement, arrangement or understanding binding
Seller to consummate transactions contemplated by an Acquisition Proposal, (b)
will cease and cause to be terminated any and all discussions with potential
acquirers regarding any Acquisition Proposal and (c) will promptly notify Buyer
if any Acquisition Proposal is made. Notwithstanding anything contained in this
Section 5.19, in the event that the Financing shall cease to be in effect after
the date hereof, this Section 5.19 shall terminate and be of no further force
and effect.
5.20 CERTAIN MATTERS RELATING TO CUSTOMER WARRANTY OBLIGATIONS.
---------------------------------------------------------
(1) In deciding whether and how to perform Customer Warranty
Obligations and in determining the costs incurred by Buyer in performing
Customer Warranty Obligations, Buyer shall follow substantially the same
policies and procedures used by the Business prior to the Closing Date. In
addition, Buyer shall allow Seller a reasonable opportunity (which shall include
access to Buyer's books and records dealing with Customer Warranty Obligations
and relevant personnel) to verify (i) that Buyer has followed such policies and
procedures and (ii) Excess Warranty Costs and Seller Excess Warranty Costs.
<PAGE>
(2) Subject to Buyer's compliance with its obligations under
Section 5.20(a), Seller shall reimburse Buyer for fifty percent (50%) of Excess
Warranty Costs and for one hundred percent (100%) of Seller Excess Warranty
Costs, as the case may be, such reimbursement to be made within thirty (30) days
after delivery to Seller by Buyer of an invoice therefor in such detail as
Seller may reasonably request.
(3) For purposes of this Agreement, "EXCESS WARRANTY COSTS"
shall mean the amount by which the costs of direct labor, direct materials and
shipping actually and reasonably incurred by Buyer in performing Customer
Warranty Obligations (other than the Seller Customer Warranty Obligations) (the
"SHARED CUSTOMER WARRANTY OBLIGATIONS") in accordance with the first sentence of
Section 5.20(a) from time to time from and after the Closing Date until the
third anniversary of the Closing Date exceed the reserve therefor on the Closing
Statement. Such reserve established on the Closing Statement shall be designated
as covering the Shared Customer Warranty Obligations only.
(4) For purposes of this Agreement, "SELLER EXCESS WARRANTY
COSTS" shall mean the amount by which the costs of direct labor, direct
materials and shipping actually and reasonably incurred by Buyer in performing
Customer Warranty Obligations in accordance with the first sentence of Section
5.20(a) with respect to products manufactured and services rendered under the
Contracts described on SCHEDULE 5.20 (the "SELLER CUSTOMER WARRANTY
OBLIGATIONS") from time to time from and after the Closing Date until the third
anniversary of the Closing Date exceed the reserve therefor on the Closing
Statement. Such reserve established on the Closing Statement shall be designated
as covering the Seller Customer Warranty Obligations.
(5) On the third anniversary of the Closing Date, Buyer shall
pay to Seller the excess, if any, of the reserves established on the Closing
Statement for Seller Customer Warranty Obligations over the costs of direct
labor, direct material and shipping actually and reasonably incurred by Buyer in
performing Seller Customer Warranty Obligations in accordance with this Section
5.20 during the preceding three-year period.
(6) From and after the third anniversary of the Closing Date,
Seller shall have no liability to Buyer for Customer Warranty Obligations
performed or required to be performed on or after such date.
<PAGE>
5.21 RETENTION AGREEMENTS.
--------------------
Seller and Buyer agree that each party shall make the following
payments (before deduction or withholding of payroll and other applicable taxes)
owed to Transferred Employees under the Retention Agreements. Upon the Closing
(or shortly thereafter), Seller shall pay $33,333 to Charlie Seaton in
accordance with the terms and conditions of his Retention Agreement. After the
Closing, Buyer shall pay $66,667 to Charlie Seaton at such times specified in,
and in accordance with the terms and conditions of, his Retention Agreement.
Upon the Closing (or shortly thereafter), Seller shall pay $14,667 to Andy
Parkes in accordance with the terms and conditions of his Retention Agreement.
After the Closing, Buyer shall pay $29,333 to Andy Parkes at such times
specified in, and in accordance with the terms and conditions of, his Retention
Agreement. Upon the Closing (or shortly thereafter), Seller shall pay $17,667 to
Bruce Wilson in accordance with the terms and conditions of his Retention
Agreement. After the Closing, Buyer shall pay $35,333 to Bruce Wilson at such
times specified in, and in accordance with the terms and conditions of, his
Retention Agreement. Upon the Closing (or shortly thereafter), Seller shall pay
$13,667 to Jay Cates in accordance with the terms and conditions of his
Retention Agreement. After the Closing, Buyer shall pay $27,333 to Jay Cates at
such times specified in, and in accordance with the terms and conditions of, his
Retention Agreement. Upon the Closing (or shortly thereafter), Seller shall pay
$15,667 to Curt Bisby in accordance with the terms and conditions of his
Retention Agreement. After the Closing, Buyer shall pay $31,333 to Curt Bisby at
such times specified in, and in accordance with the terms and conditions of, his
Retention Agreement. Nothing in this Section 5.21 creates any rights for the
Transferred Employees named herein or any liabilities or obligations for Seller
or Buyer not otherwise set forth in the Retention Agreements.
5.22 CONFIDENTIALITY AGREEMENTS WITH TRANSFERRED EMPLOYEES.
-----------------------------------------------------
For a period of forty-five (45) days after Closing, at Buyer's written
request and Buyer's sole cost (including legal fees), Seller will enforce the
confidentiality agreements it has entered into with the Transferred Employees,
solely as such agreements relate to the Assets; PROVIDED THAT Buyer provides
Seller with a reasonable basis for enforcement. At the expiration of such
forty-five (45) day period (or such earlier date if informed in writing by
Buyer), Seller hereby agrees not to enforce the confidentiality agreements
described in the previous sentence, solely as such agreements relate to the
Assets, except for pending actions initiated in accordance with the previous
sentence. Seller will not otherwise enforce such confidentiality agreements
solely as they relate to the Assets except as provided in this Section 5.22.
5.23 AGREEMENT CONCERNING KENT ASSETS.
--------------------------------
Upon the closing of the sale or other disposition of all or
substantially all of Seller's assets and business used by Seller at Seller's
facilities in Kent, Washington (the "KENT ASSETS"), to a Person who is not an
Affiliate of Seller (the "KENT PURCHASER"), Seller shall either (a) cause the
Kent Purchaser to execute and deliver to Buyer the Agreement Concerning Kent
Assets, substantially in the form attached hereto as EXHIBIT F, or (b) release
Buyer from its obligations contained in the Buyer Non-Competition Agreement and
in Section 3 of the Seller Non-Competition Agreement (other than for breaches
occurring prior to the date of the closing of such sale or disposition),
effective from the date of the closing of such sale or disposition.
<PAGE>
ARTICLE 6
TRANSFERRED EMPLOYEES
6.1 HIRING OF EMPLOYEES.
-------------------
Buyer shall offer employment to all employees of the Business listed on
SCHEDULE 3.18 and all employees of the Business who are hired between the date
of this Agreement and the Closing in the ordinary course of business consistent
with past practice who continue to be employees of Seller as of the Closing Date
(excluding (a) those employees receiving salary continuation benefits under any
Seller's short-term disability or salary continuation program and active
employees on military service or other approved absences; or (b) any employees
absent from work pursuant to sick leave or other leave granted or required to be
granted under the terms of the Family and Medical Leave Act). In the case of an
employee listed on SCHEDULE 3.18 and described in clause (a) or (b) above who is
reasonably expected to return to active service and who does so subsequent to
Closing, Buyer shall offer such employee employment upon his or her return. Such
offers of employment by Buyer shall be on terms and conditions which, in the
aggregate, are at least comparable to the terms and conditions applicable to
their employment by Seller on the Closing Date, except that Buyer shall not be
required to offer Transferred Employees equity participation rights, including
stock options, or to put in place or maintain a defined benefit pension plan.
Except as set forth in SCHEDULE 6.1 or otherwise disclosed to Buyer, Seller
shall use commercially reasonable efforts to keep available the services of the
current employees of the Business. All such employees who are offered and accept
employment with Buyer shall become Buyer's employees as of the Closing Date (or,
in the case of the employees described in clause (a) or (b) above, as of the
date they return to work and accept offers of employment with Buyer) (the
"TRANSFERRED Employees"). If an individual employed by Seller on the Closing
Date and listed on SCHEDULE 3.18 (including any employee described in the
parenthetical in the first sentence of this section) retires or terminates
employment with Seller and is subsequently hired by Buyer within one hundred
eighty (180) days of the Closing Date, he or she shall be treated as a
Transferred Employee effective the date of hire by Buyer.
6.2 EMPLOYEE BENEFIT PLANS AND ARRANGEMENTS.
---------------------------------------
(1) GENERAL.
-------
(1) For a period of one (1) year from the Closing
Date, Buyer shall provide each of the Transferred Employees with a level of
compensation and benefits that, in the aggregate, is at least comparable to
the compensation and benefits provided to such employee by Seller prior to the
Closing Date, except that Buyer shall not be required to offer Transferred
Employees equity participation rights, including stock options, or to put
in place or maintain a defined benefit pension plan. As of the Closing Date,
Buyer shall maintain such employee benefit plans, programs or arrangements
necessary for it to fulfill its obligation as set forth in the previous
sentence ("BUYER'S PLANS").
<PAGE>
(2) Effective as of the Closing Date, the benefits
and participation of the Transferred Employees in the Hexcel Benefit Plans
shall be limited to benefits accrued as of the Closing Date, and no further
benefit accruals shall accrue by reason of their continued employment with
Buyer.
(2) PAST SERVICE CREDIT. To the extent permitted by Law, Buyer
-------------------
shall cause Buyer's Plans to give the Transferred Employees full credit for
service recognized under any Hexcel Benefit Plan for purposes of eligibility and
vesting but not for the determination of benefit accruals under Buyer's Plans.
(3) PENSION, PROFIT-SHARING, AND DEFERRED COMPENSATION PLANS.
--------------------------------------------------------
(1) As of the Closing Date, Buyer shall maintain for
the benefit of the Transferred Employees a profit sharing plan intended to be
qualified pursuant to Section 401(a) of the Code that shall contain a qualified
cash-or-deferred arrangement ("BUYER'S 401(K) PLAN"). Within sixty (60) days
of the Closing Date, Buyer shall adopt any amendments to Buyer's 401(k)
Plan that Seller reasonably deems necessary in order for a transfer to the
Buyer's 401(k)Plan from the Hexcel 401(k)Plan of the assets and all liabilities
representing the account balances and accrued benefits of the Transferred
Employees to satisfy the applicable requirements of Sections 401, 411(d)(6),
414(l) and 501 of the Code, and shall have taken such steps as are necessary to
obtain a favorable determination letter with respect to such plan. Within a
reasonable period following Seller's determination that Buyer's obligations
under the foregoing provisions of this Section 6.2(c)(i) have been fulfilled,
but not less than thirty (30) days following the joint filing with the IRS
of any required notices, Seller shall cause the trustee under the Hexcel 401(k)
Plan to transfer the assets and liabilities representing the account balances
and accrued benefits of the Transferred Employees under the Hexcel 401(k) Plan,
determined as of the most recent valuation date, to thetrustee under Buyer's
401(k) Plan and Buyer shall cause the trustee under Buyer's 401(k) Plan to
accept such transferred assets and liabilities. The assets to be transferred
shall be in the form of cash and any notes representing loans to the Transferred
Employees made by the Hexcel 401(k) Plan. Following the transfer of assets and
liabilities, Buyer and Buyer's 401(k) Plan shall be solely responsible for
any benefits to which Transferred Employees were entitled under the Hexcel
401(k) Plan as of the Closing, and to which Transferred Employees shall
thereafter become entitled under Buyer's 401(k) Plan.
(2) Seller shall not assign to Buyer and Buyer
shall not assume the rights, liabilities and obligationsunder the EDCA or any
assets or liabilities under the Hexcel 401(k) Restoration Plan.
(3) On or before the Closing Date, Seller shall
amend the Hexcel 401(k) Plan and the Hexcel Pension Plan to provide that the
accrued benefits of the Transferred Employees thereunder will be fully
vested and non-forfeitable as of the Closing Date so that at the Closing all
Transferred Employees shall be fully vested in these benefits.
<PAGE>
(4) From and after the Closing Date and until the
transfer of the Hexcel 401(k) Plan accounts of theTransferred Employees as
provided under Section 6.2(c)(i) of this Agreement, Buyer shall take all
necessary steps to enable Transferred Employees to pay installments due on
loans from the Hexcel 401(k) Plan by means of payroll deductions from their
wages or salary as employees of Buyer, and shall remit all funds so collected
directly to the trustee of the Hexcel 401(k) Plan within five (5) business days
of the payroll date to which they relate, together with such accounting records
as the trustee of the Hexcel 401(k) Plan may reasonably require in order
for the trustee of the Hexcel 401(k) Plan to credit such payments to the
respective loan accounts of the Transferred Employees making such installment
payments.
(4) MEDICAL AND DENTAL PLANS.
------------------------
(1) As of the Closing Date, Buyer shall enroll each
Transferred Employee and his or her dependents in Buyer's medical and dental
plans (including any flexible spending accounts, hereinafter referred to as
an "FSA"), without imposing a waiting period, and shall waive all restrictions
and limitations for pre-existing conditions under such plans (other than any
pre-existing condition that was not waived by Seller's medical and dental
plans as of the Closing Date). Buyer's medical and dental plans shall contain
such provisions as to ensure that Seller will have no obligation to Transferred
Employees or their dependents under COBRA. Each Transferred Employee shall
be given credit under Buyer's medical and dental plans against any deductible
and/or maximum copayment and/or out-of-pocket payment limitations applicable
under Buyer's medical and dental plans for the full amount of deductibles,
copayments and out-of-pocket expenses he or she incurred during the period
beginning on January 1 of the year in which the Closing Date occurs and ending
on the Closing Date. The credit referred to in the preceding sentence shall
be applicable during the plan year of Buyer's medical and dental plans that
includes the Closing Date and, unless such plan year ends no sooner than
December 31 of the calendar year that includes the Closing Date, during the
subsequent plan year of Buyer's medical and dental plans. As of the Closing
Date, Buyer shall have the sole responsibility for the provision, payment or
reimbursement of medical or dental care provided on or after the Closing
Date with respect to Transferred Employees and their dependents,
including any legally mandated continuation of health care coverage for such
employees and their dependents who have a loss of health care coverage due to a
"qualifying event" (as defined in COBRA) after the Closing Date. Seller shall
have the sole responsibility for the provision, payment and reimbursement
of medial or dental care incurred under Seller's plans with respect to such
Transferred Employees and their dependents prior to the Closing Date.
(2) Effective as of the Closing Date, Seller shall
create a spin off of Hexcel's Flexible Spending Plan and Hexcel's Pre-Tax
Premium Plan such that the spin off covers only the Transferred Employees,
and Buyer shall adopt and become the plan sponsor of such plan, and shall
establish initial account balances for such plan reflecting the amounts
credited to the accounts of each Transferred Employee under Hexcel's Flexible
Spending Plan and Hexcel's Pre-Tax Premium Plan immediately prior to the
Closing Date. As of the Closing Date, Buyer shall be solely responsible for
any benefits to which Transferred Employees were entitled under Hexcel's
Flexible Spending Plan and Hexcel's Pre-Tax Premium Plan as of the Closing, and
to which any Transferred Employee thereafter becomes entitled to under the
spun-off plan.
<PAGE>
(5) DISABILITY. Effective as of the Closing Date, Buyer shall
----------
enroll the Transferred Employees in disability plans, without a waiting period,
and shall waive all restrictions and limitations regarding pre-existing
conditions under such plans (other than any pre-existing condition that was not
waived by the Hexcel disability plans as of the Closing Date). From and after
the Closing Date, Buyer shall have the sole responsibility for the payment of
short-term or long-term disability benefits to which Transferred Employees may
become entitled under a Seller's plan, a Buyer's Plan or as otherwise required
by Law, provided the condition which gave rise to the salary continuation
obligation occurred on or after the Closing Date.
(6) SEVERANCE. If a Transferred Employee is terminated by
---------
Buyer from employment within one (1) year following the Closing Date for any
reason other than gross misconduct, the Transferred Employee shall receive a
severance benefit from Buyer of not less than the severance benefit to which he
or she would have been entitled as of the day prior to the Closing Date under
Seller's severance policy, applied as if such employee had been terminated on
such date under circumstances in which severance benefits would have been
payable. After the Closing Date, Buyer shall be solely responsible for severance
benefits under Buyer's Plans or as otherwise required by Law with respect to any
Transferred Employee whose employment is terminated after the Closing Date.
(7) ACCRUED VACATION. As of the Closing Date, Buyer shall
------------------
grant to each Transferred Employee and be solely responsible for payment in
respect of accrued vacation equal to all vacation accrued by such Transferred
Employee as an employee of Seller that was unused as of the Closing Date to the
extent of the amount of the reserve therefor reflected in the Closing Statement.
ARTICLE 7
CONDITIONS
7.1 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF BUYER AND SELLER.
-----------------------------------------------------------
The respective obligations of Buyer and Seller to consummate the
transactions contemplated by this Agreement shall be subject to the satisfaction
at or prior to the Closing Date of the following conditions:
(1) NO INJUNCTION, ETC. There shall be no suit, action or
other proceeding threatened, or brought, by any Governmental Authority which
seeks to restrain or prohibit, or any injunction, order, judgment or decree in
effect and issued by any Governmental Authority which restrains or prohibits,
the consummation of the transactions contemplated by this Agreement, except for
the transfer of any Assets the failure of which to transfer are not,
individually or in the aggregate, material to the operations of the Business
taken as a whole.
(2) REGULATORY AUTHORIZATIONS. The consents, approvals or
authorizations under the HSR Act and the GWB as are necessary for the
consummation of the transactions contemplated by this Agreement shall have been
obtained; provided that for purposes of this clause (b), applicable waiting or
review periods specified under the HSR Act and the GWB with respect to the
transactions contemplated by this Agreement shall have lapsed or been
terminated.
<PAGE>
7.2 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF SELLER.
-------------------------------------------------
The obligation of Seller to consummate the transactions provided for in
this Agreement is subject to fulfillment of each of the following conditions:
(1) ACCURACY OF BUYER'S REPRESENTATIONS AND WARRANTIES. The
representations and warranties of Buyer contained in this Agreement that are
qualified as to materiality shall be true and correct and the representations
and warranties of Buyer set forth in this Agreement that are not so qualified
shall be true and correct in all material respects, in each case on the date of
this Agreement and on the Closing Date as though made on the Closing Date,
except to the extent such representations and warranties speak as of an earlier
date, and Seller shall have received a certificate to such effect that has been
signed by an authorized officer of Buyer; PROVIDED THAT Buyer shall have the
right to cure any breaches of its representations and warranties which occur
between the date of this Agreement and the Closing, but Buyer's right to cure
shall not include the right to amend any of the Schedules without Seller's
consent.
(2) PERFORMANCE OF COVENANTS. Buyer shall have complied in all
material respects with all covenants contained in this Agreement to be performed
by it on or prior to the Closing, and Seller shall have received a certificate
to such effect that has been signed by an authorized officer of Buyer.
(3) ANCILLARY AGREEMENTS. Buyer shall have executed and
delivered each of the Ancillary Agreements.
(4) ASSUMPTION AGREEMENT. Buyer shall have executed and
delivered an undertaking (the "ASSUMPTION AGREEMENT"), substantially in the form
of EXHIBIT G, pursuant to which Buyer shall assume all of the Assumed
Liabilities.
(5) SELLER REQUIRED CONSENTS. Each of the consents listed on
SCHEDULE 7.2(E) shall have been obtained.
(6) PAYMENT OF CASH PURCHASE PRICE. Buyer shall have paid the
Cash Purchase Price as provided herein.
(7) CORPORATE MATTERS. All actions, proceedings, resolutions,
instruments and documents on the part of Buyer required to carry out this
Agreement or incidental hereto shall have been approved on or before the Closing
Date by Seller and its counsel in the exercise of their reasonable judgment.
7.3 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF BUYER.
------------------------------------------------
The obligation of Buyer to consummate the transactions provided for in
this Agreement is subject to fulfillment of each of the following conditions:
<PAGE>
(1) ACCURACY OF REPRESENTATIONS AND WARRANTIES OF SELLER. The
-----------------------------------------------------
representations and warranties of Seller contained in this Agreement that are
qualified as to materiality shall be true and correct and the representations
and warranties of Seller set forth in this Agreement that are not so qualified
shall be true and correct in all material respects, in each case on the date of
this Agreement and on the Closing Date as though made on the Closing Date,
except to the extent such representations and warranties speak as of an earlier
date, and Buyer shall have received a certificate to such effect that has been
signed by an authorized officer of Seller; PROVIDED THAT Seller shall have the
right to cure any breaches of its representations and warranties which occur
between the date of this Agreement and the Closing, but Seller's right to cure
shall not include the right to amend any of the Schedules without Buyer's
consent.
(2) PERFORMANCE OF COVENANTS. Seller shall have complied in
-------------------------
all material respects with all covenants contained in this Agreement to be
performed by it on or prior to the Closing, and Buyer shall have received a
certificate to such effect that has been signed by an authorized officer of
Seller.
(3) ANCILLARY AGREEMENTS. Seller shall have executed and
--------------------
delivered each of the Ancillary Agreements.
(4) BILL OF SALE; DEEDS. Seller shall have executed and
--------------------
delivered the Bill of Sale (the "BILL OF SALE"), substantially in the form of
EXHIBIT H hereto, and appropriately executed and acknowledged special warranty
deeds to the Owned Real Property, substantially in the form of EXHIBIT I hereto,
suitable for filing or recordation.
(5) BUYER REQUIRED CONSENTS. Each of the consents listed on
------------------------
SCHEDULE 7.3(e) shall have been obtained.
(6) TRADEMARK ASSIGNMENT. Seller shall have executed and
--------------------
delivered the Trademark Assignment, substantially in the form of EXHIBIT J
hereto (the "TRADEMARK ASSIGNMENT").
(7) PATENT ASSIGNMENT. Seller shall have executed and
-----------------
delivered the Patent Assignment substantially in the form of EXHIBIT K hereto
(the "PATENT ASSIGNMENT").
(8) TITLE POLICY. Seller will have obtained, at its cost, an
------------
ALTA Form 10-17-92 title insurance policy ("TITLE POLICY") for the Owned Real
Property on or before the Closing from a title insurer reasonably satisfactory
to Buyer (the "TITLE INSURER"). Seller will deliver to the Title Insurer all
affidavits, undertakings and other title clearance documents reasonably
necessary to issue the Title Policy and endorsements thereto. The Title Policy
will be dated as of the date of the Closing and (i) insure title to the
applicable parcels of real estate and all recorded easements benefitting such
parcels, subject only to Real Property Permitted Liens and (ii) contain such
endorsements as Buyer and Buyer's lender, if any, may reasonably request.
<PAGE>
(9) SURVEY. Seller shall have procured, at its cost, in
------
preparation for the Closing, and Buyer shall have received, a current survey of
each parcel of Owned Real Property, prepared by a licensed surveyor, reasonably
satisfactory to Buyer, and conforming to 1997 ALTA/ACSM Minimum Detail
Requirements for Urban Land Title Surveys (the "SURVEY"), and such standards as
the Title Insurer may require as a condition to the removal of any survey
exceptions from the Title Policy, and certified to Buyer, Buyer's lender, if
any, and the Title Insurer, within ten (10) days of the Closing Date, in a form
reasonably satisfactory to such parties. The Survey shall disclose the location
of all Improvements, easements, party walls, sidewalks, roadways, utility lines
and such matters shown customarily on such surveys, show access affirmatively to
public streets and roads, and include Table A Item Nos. 1-4 and 6-14. The Survey
shall not disclose any survey defect or encroachment from or onto any of the
Owned Real Property that is material to the operations of the Business that has
not been cured or insured over prior to the Closing.
(10) RELEASE OF LIENS. Buyer shall have received evidence
----------------
reasonably satisfactory to Buyer evidencing the release of all Liens on the
Assets except Permitted Liens.
(11) CORPORATE MATTERS. All actions, proceedings, resolutions,
-----------------
instruments and documents on the part of Seller required to carry out this
Agreement or incidental hereto shall have been approved on the Closing Date by
Buyer and its counsel, in the exercise of their reasonable judgment.
ARTICLE 8
CLOSING
8.1 CLOSING DATE.
------------
Unless this Agreement shall have been terminated and the transactions
herein shall have been abandoned pursuant to Section 10 hereof, the closing of
the transactions contemplated by this Agreement (the "CLOSING") shall take place
at the offices of Kronish Lieb Weiner & Hellman LLP, at 10:00 am., New York City
time, on April 21, 2000 (or as soon as practicable thereafter as all of the
conditions to the Closing set forth in Article 7 hereof are satisfied or
waived), or such other date, time and place as shall be agreed upon by Seller
and Buyer (the actual date and time being herein called the "CLOSING DATE"). The
Closing shall be deemed effective as of 12:01 a.m. on the Closing Date. All
references in this Agreement to the Closing Date shall be deemed made to the
Closing.
8.2 BUYER DELIVERIES.
----------------
At the Closing, Buyer shall deliver to Seller (i) the Cash Purchase
Price as provided in Section 2.3(b) hereof, (ii) the Ancillary Agreements, (iii)
the Assumption Agreement, (iv) the agreements, documents, certificates and
instruments to be delivered by Buyer pursuant to Section 7.2 hereof and (v) such
other documents and instruments as Seller and its counsel reasonably request.
<PAGE>
8.3 SELLER DELIVERIES.
-----------------
At the Closing, Seller shall deliver to Buyer (i) the Ancillary
Agreements, (ii) the Bill of Sale, (iii) the agreements, documents, certificates
and instruments to be delivered by Seller pursuant to Section 7.3 hereof and
(iv) such other documents and instruments as Buyer and its counsel reasonably
request.
ARTICLE 9
INDEMNIFICATION
9.1 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS.
-----------------------------------------------------
Subject to the limitations and other provisions of this Agreement
including the provisions of this Article 9, the representations and warranties
of the parties shall survive the Closing and shall remain in full force and
effect, regardless of any investigation made by or on behalf of Seller or Buyer,
for a period of one (1) year after the Closing Date; PROVIDED THAT (a) the
representations and warranties made by Seller in (i) Sections 3.1, 3.2, 3.7(a)
and 3.15 shall survive indefinitely; (ii) Section 3.19 shall survive for two (2)
years after the Closing Date; and (iii) Section 3.16 shall survive for three (3)
years after the Closing Date and (b) the representations and warranties made by
Buyer in Sections 4.1, 4.2 and 4.5 shall survive indefinitely. The agreements
and covenants of the parties shall remain in full force and effect until the
applicable period under the statute of limitations therefor has expired.
<PAGE>
9.2 INDEMNIFICATION BY SELLER.
-------------------------
(1) Seller shall defend, indemnify and hold Buyer, any
Affiliate of Buyer or their respective current or future officers, directors,
controlling persons, employees, agents, successors and permitted assigns
(collectively, "BUYER INDEMNITEES") harmless from and against and in respect of
any and all actual losses, liabilities, damages, claims, suits, proceedings,
judgments, settlements and expenses, including reasonable attorneys' fees,
incurred by any such Buyer Indemnitee (hereinafter "BUYER LOSSES") which arise
out of or in connection with (i) any breach of any of the representations and
warranties contained in Article 3 hereof, (ii) any breach by Seller of any of
its covenants in this Agreement, (iii) the Excluded Assets or (iv) the Excluded
Liabilities. For the sole purpose of Section 9.2(a)(i), Seller shall be deemed
to have made the representations and warranties in Article 3 without any
qualifications or exceptions as to the presence or absence of, or resulting in,
or being reasonably likely to result in, or not resulting in or having or being
reasonably likely to have, as the case may be, a Material Adverse Effect. Buyer
shall give Seller prompt written notice of any third party claim (which in any
event shall be within thirty (30) days of receiving such claim) which may give
rise to any indemnity obligation under this Section 9.2(a), together with the
estimated amount of such claim, and Seller shall have the right to assume the
defense of any such claim through counsel of its own choosing, by so notifying
Buyer within thirty (30) days of receipt of Buyer's written notice; PROVIDED,
HOWEVER, that Seller's counsel shall be reasonably satisfactory to Buyer.
Failure to give prompt notice shall not affect the indemnification obligations
hereunder in the absence of actual prejudice. If Buyer desires to participate in
any such defense assumed by Seller, it may do so at its sole cost and expense,
and Seller and its counsel shall give Buyer and its counsel reasonable access to
the relevant records and documents and employees of Seller in connection
therewith. If Seller declines to assume any such defense, it shall be liable for
all reasonable costs and expenses of defending such claim incurred by Buyer,
including reasonable fees and disbursements of counsel. Neither party shall,
without the prior written consent of the other party, which consent shall not be
unreasonably withheld, settle, compromise or offer to settle or compromise any
such claim or demand on a basis which would result in the imposition of a
consent order, injunction or decree which would restrict the future activity or
conduct of the other party or any Affiliate thereof or if such settlement or
compromise does not include an irrevocable and unconditional release of the
other party for any liability arising out of such claim or demand or any related
claim or demand.
(2) The foregoing obligation to indemnify Buyer Indemnitees
set forth in Section 9.2(a) shall be subject to each of the following
limitations:
(1) Seller's indemnification obligation for any
breach of the representations and warranties set forth in Article 3 of this
Agreement shall survive for the period specified in Section 9.1, and thereafter
all such representations and warranties of Seller under this Agreement shall be
extinguished. No claim for the recovery of such Buyer Losses may be asserted by
a Buyer Indemnitee after the period specified in Section 9.1; PROVIDED, HOWEVER,
that claims first asserted in writing with as much specificity as is
reasonably available within such period shall not be extinguished;
(2) No indemnification for Buyer Losses asserted
against Seller under Section 9.2(a)(i) shall be required unless and until the
cumulative amount of such Buyer Losses equals or exceeds two million dollars
($2,000,000.00) ("SELLER THRESHOLD") and then only to the extent that the
cumulative amount of Buyer Losses, as finally determined, exceeds the Seller
Threshold, and in no event shall include special, indirect, incidental,
consequential or punitive damages; and
(3) Seller's liability to Buyer Indemnitees
under Section 9.2(a)(i) for Buyer Losses in excess of the Seller Threshold shall
not exceed twenty million dollars ($20,000,000.00).
(3) None of the limitations contained in Section 9.2(b)(ii)
and (iii) shall apply to Seller's indemnification obligations in respect of the
representations and warranties in Sections 3.1, 3.2, 3.7(a) or 3.15.
(4) Other than claims based on fraud, the indemnity provided
in this Section 9.2 shall be the sole and exclusive remedy of the indemnified
party against the indemnifying party at law or equity for any matter covered by
Sections 9.2(a) and 9.2(b), except that Buyer shall at all times be free to seek
specific performance or injunctive relief to enforce the Seller Non-Competition
Agreement.
<PAGE>
(5) For the avoidance of doubt, Buyer hereby acknowledges that
any amounts paid by Buyer in connection with Customer Warranty Obligations,
Seller Customer Warranty Obligations or Shared Customer Warranty Obligations
under Section 5.20 hereof shall not be applied towards the Seller Threshold and
will not be a Buyer Loss subject to a claim under Section 9.2(a)(i) hereunder.
9.3 INDEMNIFICATION BY BUYER.
------------------------
(1) Buyer shall defend, indemnify and hold Seller, any
Affiliate of Seller or their respective current or future officers, directors,
controlling persons, employees, agents, successors and permitted assigns
(collectively, "SELLER INDEMNITEES") harmless from and against and in respect of
any and all actual losses, liabilities, damages, claims, suits, proceedings,
judgments, settlements and expenses, including reasonable attorney's fees,
incurred by any such Seller Indemnitee (hereinafter "SELLER LOSSES"; together
with Buyer Losses, "LOSSES") arising out of or in connection with (i) any breach
of any of the representations and warranties contained in Article 4 hereof, (ii)
any breach by Buyer of any of its covenants in this Agreement, (iii) the
ownership, operation or use of the Business or the Assets on or after the
Closing Date other than in relation to Excluded Liabilities, (iv) any action
taken by any regulatory authority which has the effect, in whole or in part, of
voiding or unwinding any of the transactions contemplated hereby which had
effect on or after the Closing or (v) the Assumed Liabilities. For the sole
purpose of Section 9.3(a)(i), Buyer shall be deemed to have made the
representations and warranties in Article 4 without any qualifications or
exceptions as to the presence or absence of, or resulting in or having or being
reasonably likely to result in, or not resulting in or having or being
reasonably likely to have, as the case may be, a Buyer Material Adverse Effect.
Seller shall give Buyer prompt written notice of any third party claim (which in
any event shall be within thirty (30) days of receiving such claim) which may
give rise to any indemnity obligation under this Section 9.3(a), together with
the estimated amount of such claim, and Buyer shall have the right to assume the
defense of any such claim through counsel of its own choosing, by so notifying
Seller within thirty (30) days of receipt of Seller's written notice; PROVIDED,
HOWEVER, that Buyer's counsel shall be reasonably satisfactory to Seller.
Failure to give prompt notice shall not affect the indemnification obligations
hereunder in the absence of actual prejudice. If Seller desires to participate
in any such defense assumed by Buyer, it may do so at its sole cost and expense,
and Buyer and its counsel shall give Seller and its counsel reasonable access to
the relevant records and documents and employees of Buyer in connection
therewith. If Buyer declines to assume any such defense, it shall be liable for
all costs and expenses of defending such claim incurred by Seller, including
reasonable fees and disbursements of counsel. Neither party shall, without the
prior written consent of the other party, which consent shall not be
unreasonably withheld, settle, compromise or offer to settle or compromise any
such claim or demand on a basis which would result in the imposition of a
consent order, injunction or decree which would restrict the future activity or
conduct of the other party or any Affiliate thereof or if such settlement or
compromise does not include an irrevocable and unconditional release of the
other party for any liability arising out of such claim or demand or any related
claim or demand.
(2) The foregoing obligation to indemnify Seller Indemnities
set forth in Section 9.3(a) shall be subject to each of the following
limitations:
<PAGE>
(1) Buyer's indemnification obligation for any
breach of the representations and warranties set forth in Article 4 of this
Agreement shall survive for the period specified in Section 9.1, and thereafter
all such representations and warranties of Buyer under this Agreement shall be
extinguished. No claim for the recovery of such Seller Losses may be asserted by
a Seller Indemnitee after the period specified in Section 9.1; PROVIDED,
HOWEVER, that claims first asserted in writing with as much specificity as
is reasonably available within such period shall not be extinguished;
(2) No indemnification for Seller Losses
asserted against Buyer under Section 9.3(a)(i) above shall be required unless
and until the cumulative amount of such Seller Losses equals orexceeds two
million dollars ($2,000,000.00) ("BUYER THRESHOLD") and then only to the extent
that the cumulative amount of Seller Losses, as finally determined, exceeds the
Buyer Threshold, and in no event shall include special, indirect, incidental,
consequential or punitive damages; and
(3) Buyer's liability to Seller Indemnitees
under Section 9.3(a)(i) for Seller Losses in excess of the Buyer Threshold shall
not exceed twenty million dollars ($20,000,000.00).
(3) None of the limitations contained in Section 9.3(b)(ii)
and (iii) shall apply to Buyer's indemnification obligations in respect of the
representations and warranties in Sections 4.1, 4.2 or 4.5.
(4) Other than claims based on fraud, the indemnity provided
in this Section 9.3 shall be the sole and exclusive remedy of the indemnified
party against the indemnifying party at law or equity for any matter covered by
Sections 9.3(a) and 9.3(b), except that Seller shall at all times be free to
seek specific performance or injunctive relief to enforce Section 5.6(b) and the
Buyer Non-Competition Agreement.
9.4 INDEMNIFICATION CALCULATIONS.
----------------------------
(1) An indemnity claim under Section 9 (an "INDEMNITY CLAIM")
shall be reduced by the amount of any Tax Benefit realized by the party making
the claim. For the purposes of this Agreement, any Tax Benefit shall be treated
as though it were a reduction in the amount of the initial Indemnity Claim, and
the liabilities of the parties under this Section 9 shall be redetermined as
though the Indemnity Claim and the Tax Benefit were simultaneous events at or
prior to the time that the Indemnity Claim was made (and any necessary
reimbursements shall be made to the indemnifying party in connection therewith).
For purposes of this Section 9.4, "Tax Benefit" means the amount by which the
Tax liability of the party (or group of entities including the party) making the
Indemnity Claim is reduced below the amount which it would otherwise be required
to pay but for the circumstances giving rise to the Indemnity Claim. Each party
shall promptly inform the other party of the extent of any Tax Benefit realized
and shall permit such other party's independent accountants to reasonably verify
the extent of such Tax Benefit.
<PAGE>
(2) The parties agree that any indemnification payments made
pursuant to this Agreement shall be treated for tax purposes as an adjustment to
the Purchase Price, unless otherwise required by applicable Law.
ARTICLE 10
TERMINATION
10.1 TERMINATION EVENTS.
------------------
Without prejudice to other remedies which may be available to the
parties under Law or under this Agreement, this Agreement may be terminated and
the transactions contemplated herein may be abandoned:
(1) by mutual written consent of the parties hereto;
(2) by Seller, in its sole discretion, if at any time the
Financing ceases to be in effect; and
(3) by any party by written notice to the other party if the
Closing shall not have been consummated on or before July 31, 2000, provided
that the Closing did not fail to occur by such date due to the breach or default
of the party electing so to terminate this Agreement.
10.2 EFFECT OF TERMINATION.
---------------------
In the event of any termination of the Agreement as provided in Section
10.1 above, this Agreement shall forthwith become wholly void and of no further
force and effect and there shall be no liability on the part of Buyer or Seller,
except that (i) Sections 3.15 (Finders/Brokers with respect to Seller), 4.5
(Finders/Brokers with respect to Buyer), 5.7 (confidentiality) and 11.4
(expenses) of this Agreement shall remain in full force and effect and (ii)
termination shall not preclude either party from suing the other party for
breach of this Agreement.
ARTICLE 11
MISCELLANEOUS AGREEMENTS OF THE PARTIES
11.1 NOTICES.
-------
All communications provided for hereunder shall be in writing and shall
be deemed to be given when delivered in person or by private courier with
receipt, when telefaxed and received, or three (3) days after being deposited in
the United States mail, first-class, registered or certified, return receipt
requested, with postage paid and,
<PAGE>
If to Buyer: Britax Cabin Interiors, Inc.
c/o Britax International plc
Seton House
Warwick Technology Park
Gallows Hill
Warwick CV34 6DE
United Kingdom
Attn: Stephen Duffield
Tel.: (44) 01926-406333
Fax: (44) 01926-402599
With a copy to: Jones, Day, Reavis & Pogue
901 Lakeside Avenue
Cleveland, Ohio 44114
Attn: John P. Dunn, Esq.
Tel.: (216) 586-7095
Fax: (216) 579-0212
and
Jones, Day, Reavis & Pogue
Bucklersbury House
3 Queen Victoria Street
London EC4N 8NA
England
Attn: Hugh Chapman, Esq.
Tel.: (44) 01712-363939
Fax: (44) 01712-361113
If to Seller: Hexcel Corporation
Two Stamford Plaza
281 Tresser Boulevard
Stamford, CT 06901
Attn.: General Counsel
Tel: (203) 969-0666
Fax: (203) 358-3972
With a copy to: Kronish Lieb Weiner & Hellman LLP
1114 Avenue of the Americas
New York, NY 10036
Attn: Ralph J. Sutcliffe, Esq.
Tel: (212) 479-6170
Fax: (212) 997-3527
<PAGE>
or to such other address as any such party shall designate by written notice to
the other parties hereto.
11.2 TRANSACTION TAXES.
-----------------
Buyer shall be responsible for the payment of all sales, use, excise,
transfer, recording and other similar taxes and imposts, if any, which may be
payable with respect to the consummation of the transactions contemplated by
this Agreement and the Ancillary Agreements and shall file all necessary
documentation and Tax Returns with respect to such taxes, except that any such
taxes in excess of $500,000 shall be borne by Seller to the extent such taxes
exceed $500,000. To the extent any exemptions from such taxes are available,
Seller and Buyer will cooperate to prepare any certificates or other documents
necessary to claim such exemptions.
11.3 FURTHER ASSURANCES; ASSET RETURNS.
---------------------------------
Upon request from time to time, Seller shall execute and deliver all
documents, take all rightful oaths and do all other acts that may be reasonably
necessary or desirable, in the reasonable opinion of counsel for Buyer, to
effect the transfer of the Assets in accordance herewith. Buyer shall reimburse
Seller for all costs and expenses resulting from any such request, including
reasonable attorneys' fees. In the event that Buyer receives any assets,
properties or rights of Seller that are not intended to be transferred pursuant
to the terms of this Agreement, whether or not related to the Business, Buyer
agrees to promptly return such assets, properties and rights to Seller at
Seller's expense. If Seller or any of its Affiliates receives payment from and
after the Closing Date of any account receivable included in the Assets, it
shall promptly remit such payment in full to Buyer.
11.4 EXPENSES.
--------
Subject to Section 11.2, Seller and Buyer shall each pay their
respective expenses (including without limitation legal, investment banking,
finder's, broker's and accounting fees) incurred in connection with the
origination, negotiation and execution of this Agreement, except that Buyer
shall be responsible for the payment of any filing fee under the HSR Act and the
GWB.
11.5 NON-ASSIGNABILITY.
-----------------
This Agreement shall inure to the benefit of and be binding on the
parties hereto and their respective successors and permitted assigns. This
Agreement shall not be assigned by either party hereto without the express prior
written consent of the other party, and any attempted assignment, without such
consents, shall be null and void.
<PAGE>
11.6 AMENDMENT; WAIVER.
-----------------
This Agreement may be amended, supplemented or otherwise modified only
by a written instrument executed by the parties hereto. No waiver by either
party of any of the provisions hereof shall be effective unless explicitly set
forth in writing and executed by the party so waiving. Except as provided in the
preceding sentence, no action taken pursuant to this Agreement, including,
without limitation, any investigation by or on behalf of any party, shall be
deemed to constitute a waiver by the party taking such action of compliance with
any representations, warranties, covenants or agreements contained herein, and
in any documents delivered or to be delivered pursuant to this Agreement and in
connection with the Closing hereunder. The waiver by any party hereto of a
breach of any provision of this Agreement shall not operate or be construed as a
waiver of any subsequent breach.
11.7 SCHEDULES AND EXHIBITS.
----------------------
All exhibits and schedules hereto are hereby incorporated by reference
and made a part of this Agreement. Any fact or item which is disclosed on any
Schedule or Exhibit to this Agreement or in the Financial Statements in such a
way as to make its relevance to a representation or warranty made elsewhere in
this Agreement or to information called for by another Schedule or Exhibit to
this Agreement reasonably apparent shall be deemed to be an exception to such
representation or warranty or to be disclosed on such other Schedule or Exhibit,
as the case may be, notwithstanding the omission of a reference or cross
reference thereto. Any fact or item disclosed on any Schedule or Exhibit hereto
shall not by reason only of such inclusion be deemed to be material and shall
not be employed as a point of reference in determining any standard of
materiality under this Agreement.
11.8 NO THIRD PARTY BENEFICIARIES.
----------------------------
Nothing herein, expressed or implied, shall create or establish any
third-party beneficiary hereto nor confer upon any person not a party to this
Agreement (including any employee or former employee of Seller or Buyer or any
of their Affiliates) any rights or remedies, including, without limitation, any
right to employment or continued employment for any specified period, of any
nature or kind whatsoever, under or by reason of this Agreement.
11.9 GOVERNING LAW.
-------------
This Agreement shall be governed by, and construed in accordance with,
the laws of the State of New York applicable to a contract executed and
performed in such State without giving effect to the conflicts of laws
principles thereof.
<PAGE>
11.10 CONSENT TO JURISDICTION.
-----------------------
Each of the parties hereto irrevocably submits to the exclusive
jurisdiction of the United States District Court for the Southern District of
New York located in the borough of Manhattan in the City of New York, or if such
court does not have jurisdiction, the Supreme Court of the State of New York,
New York County, for the purposes of any suit, action or other proceeding
arising out of this Agreement, the Ancillary Agreements or any transaction
contemplated hereby or thereby. Each of the parties hereto further agrees that
service of any process, summons, notice or document by U.S. registered mail to
such party's respective address set forth in Section 11.1 shall be effective
service of process for any action, suit or proceeding with respect to any
matters to which it has submitted to jurisdiction as set forth above in the
immediately preceding sentence. Each of the parties hereto irrevocably and
unconditionally waives any objection to the laying of venue of any action, suit
or proceeding arising out of this Agreement, the Ancillary Agreements or the
transactions contemplated hereby or thereby in (i) the United States District
Court for the Southern District of New York or (ii) the Supreme Court of the
State of New York, New York County, and hereby further irrevocably and
unconditionally waives and agrees not to plead or claim in any such court that
any such action, suit or proceeding brought in any such court has been brought
in an inconvenient forum.
11.11 DEFINITIONS.
-----------
(1) As used in this Agreement, the following defined terms
shall have the meanings indicated below:
"ACCOUNTING PRINCIPLES" has the meaning ascribed to it in
Section 2.3(c).
"ACQUISITION PROPOSAL" has the meaning ascribed to it in
Section 5.19.
"AFFILIATE" means any Person that directly, or indirectly
through one of more intermediaries, controls or is controlled by or is under
common control with the Person specified.
"AGREEMENT" means this Asset Purchase Agreement and the
Exhibits and the Schedules hereto.
"ALLOCATION STATEMENT" has the meaning ascribed to it in
Section 2.1(b).
"ANCILLARY AGREEMENTS" means the Transition Services
Agreement, the Materials Supply Agreement, the Buyer Non-Competition Agreement
and the Seller Non-Competition Agreement.
"ASSETS" has the meaning ascribed to it in Section 1.1.
"ASSUMED LIABILITIES" has the meaning ascribed to it in
Section 1.4.
"ASSUMPTION AGREEMENT" has the meaning ascribed to it in
Section 7.2(d).
"BASE NAV" has the meaning ascribed to it in Section 2.3(a).
"BILL OF SALE" has the meaning ascribed to it in Section
7.3(d).
"BOEING" means The Boeing Company, a Delaware corporation.
"BOEING AUBURN AGREEMENT" means POP Special Business
Provisions (6-5087-35-1154) dated November 24, 1998 between Boeing and Seller.
<PAGE>
"BOEING DOORLINER AGREEMENT" means POP Special Business
Provisions (6-5087-31-1113) dated October 13, 1998 between Boeing and Seller.
"BOOKS AND RECORDS" has the meaning ascribed to it in Section
5.5(a).
"BP ACQUISITION AGREEMENTS" means the following agreements:
(i) the Asset Purchase Agreement dated as of August 25, 1994 between BP
Chemicals Inc. and Ciba-Geigy Corporation, as amended by a Letter Agreement
dated as of August 25, 1994; (ii) the Assignment and Assumption Agreement dated
as of August 25, 1994 between BP Chemicals Inc. and Ciba-Geigy Corporation; and
(iii) the Novation Agreement among BP Chemicals Inc., Ciba-Geigy Corporation and
Grumman Aerospace Corporation (executed by BP Chemicals Inc. and Ciba-Geigy
Corporation on September 7, 1994 and by Grumman Aerospace Corporation on
September 9, 1994), as modified by the Assignment and Assumption Agreement dated
as of February 29, 1996 by and among Ciba-Geigy Corporation, Seller and Grumman
Aerospace Corporation.
"BSB ACQUISITION AGREEMENTS" means the following agreements:
(i) the Asset Purchase Agreement dated as of January 25, 1988 between B.S.B.
Diversified Company, Inc. and Phoenix Washington Corporation, a wholly-owned
subsidiary of Ciba-Geigy Corporation; (ii) the Agreement dated as of January 25,
1988 between Phoenix Washington Corporation and Criton Technologies; (iii) the
Guaranty dated as of January 25, 1988 by Ciba-Geigy Corporation in favor of
B.S.B. Diversified Company, Inc. relating to the obligations of Phoenix
Washington Corporation; (iv) the Assumption Agreement dated as of January 25,
1988 between B.S.B. Diversified Company, Inc. and Phoenix Washington
Corporation; (v) the Novation Agreement dated January 22, 1988 among
Douglas Aircraft Company, B.S.B. Diversified Company, Inc. and Phoenix
Washington Corporation; (vi) the Agreement dated as of April 10, 1989 between
B.S.B. Diversified Company, Inc. and Heath Tecna Aerospace Co. (formerly
Phoenix Washington Corporation) relating to certain provisions of the
agreement described in (i) above; and (vii) the Agreement dated as of
April 10, 1989 between Heath Tecna Aerospace Co. and Criton Technologies
relating to certain provisions in the agreement described in (ii) above.
"BUSINESS" means the development, manufacture and sale of
finished aircraft interior assemblies produced at the Facilities and the
installation and engineering support services rendered to customers with respect
to such assemblies. Notwithstanding anything in this Agreement to the contrary,
the Business shall not include any other assets, properties, rights, businesses
or operations of Seller or its Affiliates (i) located at any facility other than
the Facilities, including without limitation the development, manufacture or
sale of fibers, prepregs, honeycomb, core, including special process core,
laminates, sandwich panels, fabrics or products manufactured at Seller's
facilities in Kent, Washington, whether or not furnished by Seller or its
Affiliates to, or used by, the Business; or (ii) involving products manufactured
using HexAmp compression molding, resin transfer molding, resin film infusion,
pultrusion (including CRTM), reaction injection molding, filament winding and
automatic tape or fiber placement.
<PAGE>
"BUSINESS KNOW-HOW" means confidential or proprietary
information and devices embodying such information (including all intellectual
property (other than Intellectual Property)) used in the Business conducted at
the Facilities and as used in rendering installation and engineering support
services to customers of the Business with respect to finished aircraft interior
assemblies produced at the Facilities (other than Excluded Seller Information).
"BUYER" has the meaning ascribed to it in the forepart of this
Agreement.
"BUYER INDEMNITIES" has the meaning ascribed to it in Section
9.2(a).
"BUYER LOSSES" has the meaning ascribed to it in Section
9.2(a).
"BUYER MATERIAL ADVERSE EFFECT" has the meaning ascribed to it
in Section 4.3.
"BUYER NON-COMPETITION AGREEMENT" has the meaning ascribed to
it in Section 5.14.
"BUYER THRESHOLD" has the meaning ascribed to it in Section
9.3(b).
"BUYER'S OBJECTION" has the meaning ascribed to it in Section
2.3(d).
"BUYER'S PLANS" has the meaning ascribed to it in Section
6.2(a).
"BUYER'S 401(K) PLAN" has the meaning ascribed to it in
Section 6.2(c).
"CASH PURCHASE PRICE" has the meaning ascribed to it in
Section 2.1(a).
"CIBA ACQUISITION AGREEMENTS" means the following agreements:
(i) the Strategic Alliance Agreement dated as of September 29, 1995 among
Ciba-Geigy Limited, Ciba-Geigy Corporation and Seller, as amended by an
Amendment dated as of December 12, 1995 and further amended by a Letter
Agreement dated as of February 28, 1996; (ii) the Agreement Governing United
States Employment Matters dated as of September 29, 1995 between Ciba-Geigy
Corporation and Seller; (iii) the Assignment and Assumption Agreement dated
February 29, 1996 among Ciba-Geigy Limited, Ciba-Geigy Corporation and Seller;
(iv) the Governance Agreement dated as of February 29, 1996 between Ciba-Geigy
Limited and Seller; and (v) the Registration Rights Agreement dated February 29,
1996 between Ciba-Geigy Limited and Seller.
"CLOSING" has the meaning ascribed to it in Section 8.1.
"CLOSING DATE" has the meaning ascribed to it in Section 8.1.
"CLOSING NAV" has the meaning ascribed to it in Section
2.3(a).
"CLOSING STATEMENT" has the meaning ascribed to it in Section
2.3(d).
<PAGE>
"COBRA" means those provisions of the Consolidated Omnibus
Budget Reconciliation Act of 1985 applicable to "group health plans" as defined
in Section 5000(b)(1) of the Code.
"CODE" means the Internal Revenue Code of 1986, as amended.
"CONFIDENTIALITY AGREEMENT" has the meaning ascribed to it in
Section 5.2.
"CONSENTS" has the meaning ascribed to it in Section 3.4.
"CONTRACTS" has the meaning ascribed to it in Section 1.1(g).
"CREDIT AGREEMENT" means that certain Second Amended and
Restated Credit Agreement dated September 15, 1998, by and among Seller and
certain of its subsidiaries, the lenders party thereto, Credit Suisse First
Boston and Citibank N.A., as amended.
"CUSTOMER WARRANTY OBLIGATIONS" has the meaning ascribed to it
in Section 1.5(f).
"EDCA" means the Executive Deferred Compensation and
Consulting Agreement dated March 1, 1996 between Seller and David R. Tanonis.
"ENVIRONMENTAL CLAIMS" means any claim, action, cause of
action, investigation or notice (written or oral) by any Person alleging
potential liability (including, without limitation, potential liability for
investigatory costs, cleanup costs, governmental response costs, natural
resources damages, property damages, personal injuries, or penalties) arising
out of, based on or resulting from (a) the presence, migration or release into
the environment of any Hazardous Substance that originated from the Business or
the Facilities from any location at which such Hazardous Substance has come to
be located, whether or not such location is owned or operated by Seller or (b)
circumstances forming the basis of any violation, or alleged violation, of any
Environmental Law.
"ENVIRONMENTAL LAW" means any current federal or state or
local statute, law or regulation relating to pollution or protection of the
environment.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, and the rules and regulations promulgated thereunder.
"ESTIMATED CLOSING NAV" has the meaning ascribed to it in
Section 2.3(b).
"EXCESS WARRANTY COSTS" has the meaning ascribed to it in
Section 5.20(c).
"EXCLUDED ASSETS" has the meaning ascribed to it in Section
1.3.
"EXCLUDED LIABILITIES" has the meaning ascribed to it in
Section 1.5.
<PAGE>
"EXCLUDED SELLER INFORMATION" has the meaning ascribed to it
in Section 5.6(a).
"FACILITIES" means the Owned Real Property and the Leased Real
Property.
"FINANCIAL STATEMENTS" has the meaning ascribed to it in
Section 3.5.
"FINANCING" has the meaning ascribed to it in Section 4.6.
"FSA" has the meaning ascribed to it in Section 6.2(d).
"GAAP" means United States generally accepted accounting
principles, consistently applied throughout the specified period and in the
immediately prior comparable period.
"GENERAL TERMS AGREEMENT" means General Terms Agreement Number
BCA-65657-0005 between Seller and The Boeing Company (executed by Seller on
April 2, 1997 and by The Boeing Company on April 4, 1997).
"GOVERNMENTAL AUTHORITY" means any court, tribunal,
arbitrator, authority, agency, commission, official or other instrumentality of
the United States, any foreign country or any domestic or foreign state, county,
city or other political subdivision.
"GWB" means the German Act Against Restraints of Competition.
"HAZARDOUS SUBSTANCE" means petroleum, petroleum by-products,
polychlorinated biphenyls and any other chemicals, materials, substances or
wastes which are currently defined as "hazardous substances," "hazardous
materials," "hazardous wastes," "extremely hazardous wastes," "restricted
hazardous wastes," "toxic substances," "toxic pollutants," "pollutants," or
"contaminants" under any Environmental Law.
"HEXCEL BENEFIT PLANS" has the meaning ascribed to it in
Section 3.13(a).
"HEXCEL LOGO" has the meaning ascribed to it in Section
1.3(f).
"HEXCEL PENSION PLAN" means the Hexcel Corporation Pension
Plan (amended and restated as of July 1, 1996), as amended to date.
"HEXCEL SUPPLIES" has the meaning ascribed to it in Section
5.16.
"HEXCEL'S FLEXIBLE SPENDING PLAN" means the plan pursuant to
which eligible employees of Seller may elect to receive a portion of their wages
or salary in cash or in the form of coverage under the Health Care Expense
Reimbursement Plan and the Dependent Care Reimbursement Plan described therein.
<PAGE>
"HEXCEL'S PRE-TAX PREMIUM PLAN" means the plan pursuant to
which eligible employees of Seller may elect to receive a portion of their wages
or salary in cash or in the form of coverage under a medical benefit plan.
"HEXCEL 401(K) PLAN" means the Hexcel Corporation 401(k)
Retirement Savings Plan (amended and restated as of July 1, 1996), as amended to
date.
"HEXCEL 401(K) RESTORATION PLAN" means the Hexcel Corporation
401(k) Restoration Plan (effective as of September 1, 1996), as amended to date.
"HSR ACT" means Section 7A of the Clayton Act (Title II of the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended) and the rules
and regulations promulgated thereunder.
"IMPROVEMENTS" has the meaning ascribed to it in Section
1.1(a).
"INDEMNITY CLAIM" has the meaning ascribed to it in Section
9.4(a).
"INTELLECTUAL PROPERTY" has the meaning ascribed to it in
Section 1.1(e).
"INVENTORY" has the meaning ascribed to it in Section 1.1(i).
"IRS" means the United States Internal Revenue Service.
"KENT ASSETS" has the meaning ascribed to it in Section 5.23.
"KENT PURCHASER" has the meaning ascribed to it in Section
5.23.
"LAW" means any law, statute, rule, regulation, ordinance and
other pronouncement having the effect of law of the United States, any foreign
country or any domestic or foreign state, county, city or other political
subdivision or of any Governmental Authority.
"LEASED REAL PROPERTY" has the meaning ascribed to it in
Section 3.7(c).
"LICENSES AND PERMITS" has the meaning ascribed to it in
Section 1.1(h).
"LOSSES" has the meaning ascribed to it in Section 9.3(a).
"MACHINERY" has the meaning ascribed to it in Section 1.1(c).
"MAJOR EQUIPMENT" has the meaning ascribed to it in Section
3.7(a).
<PAGE>
"MATERIAL ADVERSE EFFECT" means an event or series of events
that have resulted in or are reasonably likely to result in a material adverse
effect on the results of operations, financial condition or business of the
Business taken as a whole.
"MATERIAL AGREEMENTS" has the meaning ascribed to it in
Section 3.8(a).
"MATERIALS SUPPLY AGREEMENT" has the meaning ascribed to it in
Section 5.13.
"MULTI-EMPLOYER PLAN" has the meaning ascribed to it in
Section (3)(37) of ERISA.
"NEGOTIATION PERIOD" has the meaning ascribed to it in Section
2.3(d).
"NET ASSET VALUE" means the sum of the book value of the
Assets less the sum of the book value of the Assumed Liabilities.
"NEUTRAL ACCOUNTING FIRM" has the meaning ascribed to it in
Section 2.3(d).
"OWNED REAL PROPERTY" has the meaning ascribed to it in
Section 1.1(a).
"PATENT ASSIGNMENT" has the meaning ascribed to it in Section
7.3(g).
"PENSION PLAN" has the meaning ascribed to it in Section
3.13(a).
"PERMITTED LIENS" has the meaning ascribed to it in Section
3.7(b).
"PERSON" means any natural person, corporation, general
partnership, limited partnership, proprietorship, other business organization,
trust, union, association or Governmental Authority.
"PERSONAL PROPERTY PERMITTED LIENS" has the meaning ascribed
to it in Section 3.7(a).
"PROPRIETARY RIGHTS" means, collectively, the Intellectual
Property and the Business Know-How.
"PURCHASE PRICE" has the meaning ascribed to it in Section
2.1(a).
"REAL PROPERTY" has the meaning ascribed to it in Section
3.7(c).
"REAL PROPERTY LEASES" has the meaning ascribed to it in
Section 1.1(b).
"REAL PROPERTY PERMITTED LIENS" has the meaning ascribed to it
in Section 3.7(b).
<PAGE>
"RELEASE" means any spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, escaping, leaching, dumping, or
disposing of a Hazardous Substance into the environment.
"RETENTION AGREEMENTS" has the meaning ascribed to it in
Section 1.5(d).
"SELLER" has the meaning ascribed to it in the forepart of
this Agreement.
"SELLER CUSTOMER WARRANTY OBLIGATIONS" has the meaning
ascribed to it in Section 5.20(d).
"SELLER EXCESS WARRANTY COSTS" has the meaning ascribed to it
in Section 5.20(d).
"SELLER INDEMNITEES" has the meaning ascribed to it in Section
9.3(a).
"SELLER LOSSES" has the meaning ascribed to it in Section
9.3(a).
"SELLER NON-COMPETITION AGREEMENT" has the meaning ascribed to
it in Section 5.14.
"SELLER THRESHOLD" has the meaning ascribed to it in Section
9.2(b).
"SELLER'S CLOSING STATEMENT" has the meaning ascribed to it in
Section 2.3(c).
"SELLER'S OBJECTION" has the meaning ascribed to it in Section
2.3(d).
"SHARED CUSTOMER WARRANTY OBLIGATIONS" has the meaning
ascribed to it in Section 5.20(c).
"SURVEY" has the meaning ascribed to it in Section 7.3(i).
"TAX" or "TAXES" means all federal, state, local or foreign
net or gross income, gross receipts, net proceeds, sales, use, value added,
franchise, bank shares, withholding, payroll, employment, excise, property,
alternative or add-on minimum, environmental, stamp or other taxes, assessments,
duties, fees, levies, imposts or other governmental charges of any nature
whatsoever, whether disputed or not, together with any interest, penalties,
additions to tax or additional amounts with respect thereto.
"TAX RETURN" means any returns, reports, schedules, documents
or statements (including any information returns) required to be filed for
purposes of a particular Tax.
"TAXING AUTHORITY" means any governmental agency, board,
bureau, body, department or authority of any United States federal, state or
local jurisdiction or any foreign jurisdiction, having or purporting to exercise
jurisdiction with respect to any Tax.
<PAGE>
"TITLE INSURER" has the meaning ascribed to it in Section
7.3(h).
"TITLE POLICY" has the meaning ascribed to it in Section
7.3(h).
"TRADEMARK ASSIGNMENT" has the meaning ascribed to it in
Section 7.3(f).
"TRANSFERRED EMPLOYEES" has the meaning ascribed to it in
Section 6.1.
"TRANSITION SERVICES AGREEMENT" has the meaning ascribed to it
in Section 5.12.
"VEHICLES" has the meaning ascribed to it in Section 1.1(d).
"WELFARE PLAN" has the meaning ascribed to it in Section
3.13(a).
(2) Unless the context of this Agreement otherwise requires,
(i) words of any gender include each other gender, (ii) words using the singular
or plural number also include the plural or singular number, respectively, (iii)
the terms "hereof," "herein," "hereby" and derivative or similar words refer to
this entire Agreement, (iv) the term "Section" refers to the specified Section
of this Agreement, (v) the phrases "ordinary course of business" and "ordinary
course of business consistent with past practice" refer to the business and
practice of Seller in connection with the Business. All accounting terms used
herein and not expressly defined herein shall have the meanings given to them
under GAAP. Unless otherwise stated, all monetary amounts specified in this
Agreement shall be in United States Dollars.
11.12 ENTIRE AGREEMENT.
----------------
This Agreement, the Schedules and the Exhibits and the other agreements
referred to herein set forth the entire understanding of the parties hereto, and
no modifications or amendments to this Agreement shall be binding on the parties
unless in writing and signed by the party or parties to be bound by such
modification or amendment.
11.13 SECTION HEADINGS; TABLE OF CONTENTS.
-----------------------------------
The section headings contained in this Agreement and the Table of
Contents to this Agreement are for reference purposes only and shall not affect
the meaning or interpretation of this Agreement.
11.14 SEVERABILITY.
------------
If any provision of this Agreement shall be declared by any court of
competent jurisdiction to be illegal, void or unenforceable, all other
provisions of this Agreement shall not be affected and shall remain in full
force and effect.
<PAGE>
11.15 COUNTERPARTS.
------------
This Agreement may be executed in any number of counterparts, each of
which shall be deemed to be an original and all of which together shall be
deemed to be one and the same instrument. The parties to this Agreement need not
execute the same counterpart.
IN WITNESS WHEREOF, the parties have caused this Agreement to
be duly executed as of the date first above written.
HEXCEL CORPORATION
By:_____________________________
Name:
Title:
BRITAX CABIN INTERIORS, INC.
By:_____________________________
Name:
Title:
<PAGE>
Exhibit 99.1
NEWS RELEASE
HEXCEL CORPORATION, 281 TRESSER BOULEVARD, STAMFORD, CT 06901 (203) 969-0666
CONTACTS: Investors:
Stephen C. Forsyth
203-969-0666 Ext. 425
[email protected]
Media:
Michael W. Bacal
203-969-0666 Ext. 426
[email protected]
HEXCEL COMPLETES SALE OF ITS BELLINGHAM INTERIORS BUSINESS
TO BRITAX INTERNATIONAL PLC
STAMFORD, CT, April 26, 2000 - Hexcel Corporation (NYSE/PCX: HXL) and Britax
International plc today announced that they had completed the sale of Hexcel's
Bellingham interiors business to Britax for approximately $117 million, as
adjusted for changes in net assets under the terms of the agreement. The
purchase price was paid in cash. This transaction resulted from Hexcel's
previously announced strategic review of its Engineered Products business.
Mr. John J. Lee, Hexcel's Chairman & CEO commented: "We are pleased that this
transaction has closed so quickly. As previously mentioned, the net proceeds
from the transaction will be used to further reduce the company's bank debt. In
light of the company's tax loss carry forwards, virtually all of the proceeds,
net of transaction costs, will be available for debt repayment. The gain on the
transaction will be reported in our second quarter results. Meanwhile, we
continue to evaluate the strategic alternatives for the Kent segment of our
Engineered Products business."
The Bellingham business is a leader in the design, engineering and manufacture
of commercial aircraft interior components and systems for OEM, refurbishment
and reconfiguration applications. Its products include the innovative stowage
bin expansion kit that increases passenger carry-on luggage capacity on existing
aircraft and consequently speeds gate operations for airlines.
Hexcel acquired the Bellingham business as part of its 1996 acquisition of Ciba
Geigy's worldwide composites business. The business employs approximately 325
people. Credit Suisse First Boston acted as Hexcel's financial advisor on the
transaction. Lazard acted as financial advisors to Britax International plc.
* * *
Hexcel Corporation is the world's leading advanced structural materials company.
It designs, manufactures and markets lightweight, high reinforcement products,
composite materials and engineered products for use in commercial aerospace,
space and defense, electronics, general industrial, and recreation applications.
- --------------------------------------------------------------------------------
DISCLAIMER ON FORWARD LOOKING STATEMENTS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
This press release contains statements that are forward looking, including
statements relating to Hexcel's tax position and its plans and the timing of a
strategic review of the options for its engineered products business. Additional
risk factors are described in the company's filings with the SEC. The company
does not undertake an obligation to update its forward looking statements to
reflect future events or circumstances.
- --------------------------------------------------------------------------------
<PAGE>
<TABLE>
Exhibit 99.2
HEXCEL CORPORATION AND SUBSIDIARIES
PRO FORMA 1999 AND FIRST QUARTER 2000 NET SALES TO THIRD-PARTY CUSTOMERS BY PRODUCT GROUP AND MARKET SEGMENT
- --------------------------------------------------------------------------------------------------------------------------
UNAUDITED
<CAPTION>
--------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
COMMERCIAL SPACE &
(IN MILLIONS) AEROSPACE DEFENSE ELECTRONICS INDUSTRIAL TOTAL
- ----------------------------------- ------------------ --------------- ----------------- --------------- -----------------
PRO FORMA FIRST QUARTER 1999 NET SALES
Reinforcement products $ 15.3 $ 5.5 $ 42.3 $ 22.7 $ 85.8
Composite materials 119.7 29.6 - 28.9 178.2
Engineered products 37.4 3.3 - - 40.7
- ----------------------------------- --- ------------- --- ------------- -- ------------- - ------------- -- -------------
Total $ 172.4 $ 38.4 $ 42.3 $ 51.6 $ 304.7
56% 13% 14% 17% 100%
- ----------------------------------- --- ------------- --- ------------- -- ------------- - ------------- -- -------------
PRO FORMA SECOND QUARTER 1999 NET SALES
Reinforcement products $ 13.5 $ 5.5 $ 42.2 $ 22.1 $ 83.3
Composite materials 101.4 26.0 - 29.9 157.3
Engineered products 33.4 3.4 - - 36.8
- ----------------------------------- --- ------------- --- ------------- -- ------------- - ------------- -- -------------
Total $ 148.3 $ 34.9 $ 42.2 $ 52.0 $ 277.4
53% 13% 15% 19% 100%
- ----------------------------------- --- ------------- --- ------------- -- ------------- - ------------- -- -------------
PRO FORMA THIRD QUARTER 1999 NET SALES
Reinforcement products $ 12.3 $ 4.2 $ 40.6 $ 24.2 $ 81.3
Composite materials 81.2 25.7 - 27.7 134.6
Engineered products 32.7 3.5 - - 36.2
- ----------------------------------- --- ------------- --- ------------- -- ------------- - ------------- -- -------------
Total $ 126.2 $ 33.4 $ 40.6 $ 51.9 $ 252.1
50% 13% 16% 21% 100%
- ----------------------------------- --- ------------- --- ------------- -- ------------- - ------------- -- -------------
PRO FORMA FOURTH QUARTER 1999 NET SALES
Reinforcement products $ 10.9 $ 3.0 $ 41.3 $ 25.3 $ 80.5
Composite materials 85.6 19.7 - 30.5 135.8
Engineered products 28.2 2.8 - - 31.0
- ----------------------------------- --- ------------- --- ------------- -- ------------- - ------------- -- -------------
Total $ 124.7 $ 25.5 $ 41.3 $ 55.8 $ 247.3
50% 10% 17% 23% 100%
- ----------------------------------- --- ------------- --- ------------- -- ------------- - ------------- -- -------------
PRO FORMA 1999 NET SALES
Reinforcement products $ 52.0 $ 18.2 $ 166.4 $ 94.3 $ 330.9
Composite materials 387.9 101.0 - 117.0 605.9
Engineered products 131.7 13.0 - - 144.7
- ----------------------------------- --- ------------- --- ------------- -- ------------- - ------------- -- -------------
Total $ 571.6 $ 132.2 $ 166.4 $ 211.3 $ 1,081.5
53% 12% 15% 20% 100%
- ----------------------------------- --- ------------- --- ------------- -- ------------- - ------------- -- -------------
PRO FORMA FIRST QUARTER 2000 NET SALES
Reinforcement products $ 15.6 $ 4.1 $ 43.6 $ 23.8 $ 87.1
Composite materials 92.6 19.8 - 34.1 146.5
Engineered products 27.1 2.5 - - 29.6
- ----------------------------------- --- ------------- --- ------------- -- ------------- - ------------- -- -------------
Total $ 135.3 $ 26.4 $ 43.6 $ 57.9 $ 263.2
51% 10% 17% 22% 100%
- ----------------------------------- --- ------------- --- ------------- -- ------------- - ------------- -- -------------
<FN>
The above unaudited pro forma financial information assumes that the sale of
Bellingham, a division of Hexcel Corporation, occurred on January 1, 1999 for
1999 financial information, and on January 1, 2000 for 2000 financial
information. The unaudited pro forma financial information does not purport to
be indicative of the results of operations that would have been reported had the
sale occurred on the dates indicated, nor does it purport to be indicative
of results of operations that may be achieved in the future.
</FN>
</TABLE>
<PAGE>
<TABLE>
Exhibit 99.3
HEXCEL CORPORATION AND SUBSIDIARIES
ACTUAL 1999 AND FIRST QUARTER 2000 NET SALES TO THIRD-PARTY CUSTOMERS BY PRODUCT GROUP AND MARKET SEGMENT
- --------------------------------------------------------------------------------------------------------------------------
UNAUDITED
<CAPTION>
--------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
COMMERCIAL SPACE &
(IN MILLIONS) AEROSPACE DEFENSE ELECTRONICS INDUSTRIAL TOTAL
- ----------------------------------- ------------------ --------------- ----------------- --------------- -----------------
FIRST QUARTER 1999 NET SALES
Reinforcement products $ 15.3 $ 5.5 $ 42.3 $ 22.7 $ 85.8
Composite materials 119.7 29.6 - 28.9 178.2
Engineered products 48.9 3.3 - - 52.2
- ----------------------------------- --- ------------- --- ------------- -- ------------- - ------------- -- -------------
Total $ 183.9 $ 38.4 $ 42.3 $ 51.6 $ 316.2
58% 12% 13% 17% 100%
- ----------------------------------- --- ------------- --- ------------- -- ------------- - ------------- -- -------------
SECOND QUARTER 1999 NET SALES
Reinforcement products $ 13.5 $ 5.5 $ 42.2 $ 22.1 $ 83.3
Composite materials 101.4 26.0 - 29.9 157.3
Engineered products 48.6 3.4 - - 52.0
- ----------------------------------- --- ------------- --- ------------- -- ------------- - ------------- -- -------------
Total $ 163.5 $ 34.9 $ 42.2 $ 52.0 $ 292.6
56% 12% 14% 18% 100%
- ----------------------------------- --- ------------- --- ------------- -- ------------- - ------------- -- -------------
THIRD QUARTER 1999 NET SALES
Reinforcement products $ 12.3 $ 4.2 $ 40.6 $ 24.2 $ 81.3
Composite materials 81.2 25.7 - 27.7 134.6
Engineered products 54.7 3.5 - - 58.2
- ----------------------------------- --- ------------- --- ------------- -- ------------- - ------------- -- -------------
Total $ 148.2 $ 33.4 $ 40.6 $ 51.9 $ 274.1
54% 12% 15% 19% 100%
- ----------------------------------- --- ------------- --- ------------- -- ------------- - ------------- -- -------------
FOURTH QUARTER 1999 NET SALES
Reinforcement products $ 10.9 $ 3.0 $ 41.3 $ 25.3 $ 80.5
Composite materials 85.6 19.7 - 30.5 135.8
Engineered products 49.5 2.8 - - 52.3
- ----------------------------------- --- ------------- --- ------------- -- ------------- - ------------- -- -------------
Total $ 146.0 $ 25.5 $ 41.3 $ 55.8 $ 268.6
55% 9% 15% 21% 100%
- ----------------------------------- --- ------------- --- ------------- -- ------------- - ------------- -- -------------
1999 NET SALES
Reinforcement products $ 52.0 $ 18.2 $ 166.4 $ 94.3 $ 330.9
Composite materials 387.9 101.0 - 117.0 605.9
Engineered products 201.7 13.0 - - 214.7
- ----------------------------------- --- ------------- --- ------------- -- ------------- - ------------- -- -------------
Total $ 641.6 $ 132.2 $ 166.4 $ 211.3 $ 1,151.5
57% 11% 14% 18% 100%
- ----------------------------------- --- ------------- --- ------------- -- ------------- - ------------- -- -------------
FIRST QUARTER 2000 NET SALES
Reinforcement products $ 15.6 $ 4.1 $ 43.6 $ 23.8 $ 87.1
Composite materials 92.6 19.8 - 34.1 146.5
Engineered products 43.7 2.5 - - 46.2
- ----------------------------------- --- ------------- --- ------------- -- ------------- - ------------- -- -------------
Total $ 151.9 $ 26.4 $ 43.6 $ 57.9 $ 279.8
54% 9% 16% 21% 100%
- ----------------------------------- --- ------------- --- ------------- -- ------------- - ------------- -- -------------
</TABLE>
<PAGE>
<TABLE>
Exhibit 99.4
HEXCEL CORPORATION AND SUBSIDIARIES
PRO FORMA 1999 AND FIRST QUARTER 2000 BUSINESS SEGMENT DATA
- -------------------------------------------------------------------------------------------------------------------------
UNAUDITED
<CAPTION>
- -------------------------------------- ----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
REINFORCEMENT COMPOSITE ENGINEERED CORPORATE
(IN MILLIONS) PRODUCTS MATERIALS PRODUCTS & OTHER 1 TOTAL
- -------------------------------------- ----------------- --------------- -------------- -------------- ------------------
- ---------------------------------------- -- ----------- ----- ---------- --- ---------- -- ----------- ---- -------------
PRO FORMA FIRST QUARTER 1999
Net sales to external customers $ 85.8 $ 178.2 $ 40.7 $ - $ 304.7
Intersegment sales 35.7 2.4 - - 38.1
- ---------------------------------------- -- ----------- ----- ---------- --- ---------- -- ----------- ---- -------------
Total sales 121.5 180.6 40.7 - 342.8
Adjusted EBIT 2 10.3 25.1 3.0 (9.3) 29.1
Depreciation and amortization 8.9 5.1 0.7 0.7 15.4
BA&C expenses 2.6 0.1 0.1 - 2.8
Capital expenditures 4.2 3.6 0.6 0.1 8.5
- ---------------------------------------- -- ----------- ----- ---------- --- ---------- -- ----------- ---- -------------
PRO FORMA SECOND QUARTER 1999
Net sales to external customers $ 83.3 $ 157.3 $ 36.8 $ - $ 277.4
Intersegment sales 27.1 1.6 - - 28.7
- ---------------------------------------- -- ----------- ----- ---------- --- ---------- -- ----------- ---- -------------
Total sales 110.4 158.9 36.8 - 306.1
Adjusted EBIT 11.1 18.8 3.7 (8.8) 24.8
Depreciation and amortization 8.8 5.2 0.7 0.8 15.5
BA&C expenses 0.2 - 0.2 1.1 1.5
Capital expenditures 3.2 4.0 0.3 0.1 7.6
- ---------------------------------------- -- ----------- ----- ---------- --- ---------- -- ----------- ---- -------------
PRO FORMA THIRD QUARTER 1999
Net sales to external customers $ 81.3 $ 134.6 $ 36.2 $ - $ 252.1
Intersegment sales 24.9 1.9 - - 26.8
- ---------------------------------------- -- ----------- ----- ---------- --- ---------- -- ----------- ---- -------------
Total sales 106.2 136.5 36.2 - 278.9
Adjusted EBIT 6.3 12.0 4.8 (8.4) 14.7
Depreciation and amortization 8.9 5.1 0.7 0.7 15.4
BA&C expenses 3.5 8.1 1.3 0.6 13.5
Write-down of investment in an
affiliated company 20.0 - - - 20.0
Capital expenditures 3.0 4.2 0.2 - 7.4
- ---------------------------------------- -- ----------- ----- ---------- --- ---------- -- ----------- ---- -------------
PRO FORMA FOURTH QUARTER 1999
Net sales to external customers $ 80.5 $ 135.8 $ 31.0 $ - $ 247.3
Intersegment sales 23.3 2.1 - - 25.4
- ---------------------------------------- -- ----------- ----- ---------- --- ---------- -- ----------- ---- -------------
Total sales 103.8 137.9 31.0 - 272.7
Adjusted EBIT 6.0 12.1 2.9 (8.5) 12.5
Depreciation and amortization 7.8 4.9 0.6 0.6 13.9
BA&C expenses 0.4 1.5 - 0.4 2.3
Capital expenditures 3.6 4.3 0.4 0.3 8.6
- ---------------------------------------- -- ----------- ----- ---------- --- ---------- -- ----------- ---- -------------
PRO FORMA 1999
Net sales to external customers $ 330.9 $ 605.9 $ 144.7 $ - $ 1,081.5
Intersegment sales 111.0 8.0 - - 119.0
- ---------------------------------------- -- ----------- ----- ---------- --- ---------- -- ----------- ---- -------------
Total sales 441.9 613.9 144.7 - 1,200.5
Adjusted EBIT 33.7 68.0 14.4 (35.0) 81.1
Depreciation and amortization 34.4 20.3 2.7 2.8 60.2
BA&C expenses 6.7 9.7 1.6 2.1 20.1
Write-down of investment in an
affiliated company 20.0 - - - 20.0
Capital expenditures 14.0 16.1 1.5 0.5 32.1
- ---------------------------------------- -- ----------- ----- ---------- --- ---------- -- ----------- ---- -------------
<FN>
- ---------
1 The company does not allocate corporate expenses to its business segments.
2 Consists of earnings before interest, taxes, equity in income (losses) and
write-down in affiliated companies and business acquisition and consolidation
("BA&C") expenses.
</FN>
</TABLE>
<PAGE>
<TABLE>
- -------------------------------------- ----------------------------------------------------------------------------------
UNAUDITED
- -------------------------------------- ----------------------------------------------------------------------------------
<CAPTION>
<S> <C> <C> <C> <C> <C>
REINFORCEMENT COMPOSITE ENGINEERED CORPORATE
(IN MILLIONS) PRODUCTS MATERIALS PRODUCTS & OTHER TOTAL
- -------------------------------------- ----------------- --------------- -------------- -------------- ------------------
PRO FORMA FIRST QUARTER 2000
Net sales to external customers $ 87.1 $ 146.5 $ 29.6 $ - $ 263.2
Intersegment sales 27.2 1.8 - - 29.0
- ---------------------------------------- -- ----------- ----- ---------- --- ---------- -- ----------- ---- -------------
Total sales 114.3 148.3 29.6 - 292.2
Adjusted EBIT 10.5 18.5 2.1 (9.2) 21.9
Depreciation and amortization 8.6 4.8 0.7 0.6 14.7
Business consolidation expenses 0.7 0.4 0.1 - 1.2
Capital expenditures 1.0 3.0 0.2 - $ 4.2
- ---------------------------------------- -- ----------- ----- ---------- --- ---------- -- ----------- ---- -------------
<FN>
The above unaudited pro forma financial information assumes that the sale of
Bellingham, a division of Hexcel Corporation, occurred on January 1, 1999 for
1999 financial information, and on January 1, 2000 for 2000 financial
information. The unaudited pro forma financial information does not purport to
be indicative of the results of operations or cash flows that would have been
reported had the sale occurred on the dates indicated, nor does it purport
to be indicative of results of operations or cash flows that may be achieved in
the future.
</FN>
</TABLE>
<PAGE>
<TABLE>
Exhibit 99.5
HEXCEL CORPORATION AND SUBSIDIARIES
ACTUAL 1999 AND FIRST QUARTER 2000 BUSINESS SEGMENT DATA
- -------------------------------------------------------------------------------------------------------------------------
UNAUDITED
- -------------------------------------- ----------------------------------------------------------------------------------
<CAPTION>
<S> <C> <C> <C> <C> <C>
REINFORCEMENT COMPOSITE ENGINEERED CORPORATE
(IN MILLIONS) PRODUCTS MATERIALS PRODUCTS & OTHER 3 TOTAL
- -------------------------------------- ----------------- --------------- -------------- -------------- ------------------
- ---------------------------------------- -- ----------- ----- ---------- --- ---------- -- ----------- ---- -------------
FIRST QUARTER 1999
Net sales to external customers $ 85.8 $ 178.2 $ 52.2 $ - $ 316.2
Intersegment sales 35.7 2.8 - - 38.5
- ---------------------------------------- -- ----------- ----- ---------- --- ---------- -- ----------- ---- -------------
Total sales 121.5 181.0 52.2 - 354.7
Adjusted EBIT 4 10.3 25.1 3.9 (9.3) 30.0
Depreciation and amortization 8.9 5.1 0.9 0.7 15.6
BA&C expenses 2.6 0.1 0.1 - 2.8
Capital expenditures 4.2 3.6 1.5 0.1 9.4
- ---------------------------------------- -- ----------- ----- ---------- --- ---------- -- ----------- ---- -------------
SECOND QUARTER 1999
Net sales to external customers $ 83.3 $ 157.3 $ 52.0 $ - $ 292.6
Intersegment sales 27.1 1.8 - - 28.9
- ---------------------------------------- -- ----------- ----- ---------- --- ---------- -- ----------- ---- -------------
Total sales 110.4 159.1 52.0 - 321.5
Adjusted EBIT 11.1 18.8 5.2 (8.8) 26.3
Depreciation and amortization 8.8 5.2 0.9 0.9 15.8
BA&C expenses 0.2 - 0.2 1.1 1.5
Capital expenditures 3.2 4.0 1.3 0.1 8.6
- ---------------------------------------- -- ----------- ----- ---------- --- ---------- -- ----------- ---- -------------
THIRD QUARTER 1999
Net sales to external customers $ 81.3 $ 134.6 $ 58.2 $ - $ 274.1
Intersegment sales 24.9 2.1 - - 27.0
- ---------------------------------------- -- ----------- ----- ---------- --- ---------- -- ----------- ---- -------------
Total sales 106.2 136.7 58.2 - 301.1
Adjusted EBIT 6.3 12.0 6.4 (8.4) 16.3
Depreciation and amortization 8.9 5.1 0.9 0.8 15.7
BA&C expenses 3.5 8.1 1.3 0.6 13.5
Write-down of investment in an
affiliated company 20.0 - - - 20.0
Capital expenditures 3.0 4.2 1.5 - 8.7
- ---------------------------------------- -- ----------- ----- ---------- --- ---------- -- ----------- ---- -------------
FOURTH QUARTER 1999
Net sales to external customers $ 80.5 $ 135.8 $ 52.3 $ - $ 268.6
Intersegment sales 23.3 2.3 - - 25.6
- ---------------------------------------- -- ----------- ----- ---------- --- ---------- -- ----------- ---- -------------
Total sales 103.8 138.1 52.3 - 294.2
Adjusted EBIT 6.0 12.1 6.9 (8.5) 16.5
Depreciation and amortization 7.8 4.9 0.8 0.7 14.2
BA&C expenses 0.4 1.5 - 0.4 2.3
Capital expenditures 3.6 4.3 0.7 0.3 8.9
- ---------------------------------------- -- ----------- ----- ---------- --- ---------- -- ----------- ---- -------------
1999
Net sales to external customers $ 330.9 $ 605.9 $ 214.7 $ - $ 1,151.5
Intersegment sales 111.0 9.0 - - 120.0
- ---------------------------------------- -- ----------- ----- ---------- --- ---------- -- ----------- ---- -------------
Total sales 441.9 614.9 214.7 - 1,271.5
Adjusted EBIT 33.7 68.0 22.4 (35.0) 89.1
Depreciation and amortization 34.4 20.3 3.5 3.1 61.3
BA&C expenses 6.7 9.7 1.6 2.1 20.1
Write-down of investment in
affiliated company 20.0 - - - 20.0
Capital expenditures 14.0 16.1 5.0 0.5 35.6
- ---------------------------------------- -- ----------- ----- ---------- --- ---------- -- ----------- ---- -------------
<FN>
- --------
3 The company does not allocate corporate expenses to its business segments.
4 Consists of earnings before interest, taxes, equity in income (losses) and
write-down in affiliated companies and business acquisition and consolidation
("BA&C") expenses.
</FN>
</TABLE>
<PAGE>
<TABLE>
- -------------------------------------- ----------------------------------------------------------------------------------
UNAUDITED
- -------------------------------------- ----------------------------------------------------------------------------------
<CAPTION>
<S> <C> <C> <C> <C> <C>
REINFORCEMENT COMPOSITE ENGINEERED CORPORATE
(IN MILLIONS) PRODUCTS MATERIALS PRODUCTS & OTHER TOTAL
- -------------------------------------- ----------------- --------------- -------------- -------------- ------------------
FIRST QUARTER 2000
Net sales to external customers $ 87.1 $ 146.5 $ 46.2 $ - $ 279.8
Intersegment sales 27.2 2.3 - - 29.5
- ---------------------------------------- -- ----------- ----- ---------- --- ---------- -- ----------- ---- -------------
Total sales 114.3 148.8 46.2 - 309.3
Adjusted EBIT 10.5 18.5 3.2 (9.2) 23.0
Depreciation and amortization 8.6 4.8 1.0 0.6 15.0
Business consolidation expenses 0.7 0.4 0.1 - 1.2
Capital expenditures 1.0 3.0 0.4 - 4.4
- ---------------------------------------- -- ----------- ----- ---------- --- ---------- -- ----------- ---- -------------
</TABLE>
