EXHIBIT 1
STOCK PURCHASE AGREEMENT
DATED AS OF
OCTOBER 11, 2000
BY AND AMONG
LXH, L.L.C.,
LXH II, L.L.C.,
CIBA SPECIALTY CHEMICALS HOLDING INC.,
CIBA SPECIALTY CHEMICALS INC.
AND
CIBA SPECIALTY CHEMICALS CORPORATION
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STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT (this "Agreement"), dated as of October 11,
2000, by and between LXH, L.L.C., a Delaware limited liability company
("LXH"), LXH II, L.L.C., a Delaware limited liability company (together with
LXH, the "Purchasers"), Ciba Specialty Chemicals Holding Inc., a corporation
organized under the laws of Switzerland ("Ciba"), Ciba Specialty Chemicals
Inc., a corporation organized under the laws of Switzerland and wholly-owned
subsidiary of Ciba ("Ciba SCI") and Ciba Specialty Chemicals Corporation, a
corporation organized under the laws of Delaware and wholly-owned subsidiary
of Ciba (together with Ciba SCI, the "Sellers").
W I T N E S S E T H :
WHEREAS, the Sellers beneficially own an aggregate of 18,021,748 shares
of common stock, par value $0.01 per share (the "Common Stock"), of Hexcel
Corporation (the "Company");
WHEREAS, the Company and Ciba are parties to a governance agreement,
dated as of February 29, 1996, pursuant to which, among other things, Ciba may
sell all or a portion of the shares of Common Stock beneficially owned by it
with the approval and consent of certain directors of the Company;
WHEREAS, upon the terms and subject to the conditions set forth in this
Agreement, the Sellers wish to sell to the Purchasers and the Purchasers wish
to purchase from the Sellers a number of shares of Common Stock beneficially
owned by the Sellers determined in accordance with Section 1.1 hereof (the
"Shares"); WHEREAS, the Independent Directors have approved and consented to
the sale of the Shares by the Sellers to the Purchasers on the terms set forth
herein; and WHEREAS, the Purchasers and the Sellers desire to provide for the
purchase and sale of the Shares and to establish certain rights and
obligations in connection therewith.
NOW, THEREFORE, in consideration of the premises and the mutual
representations, warranties, covenants and agreements set forth in this
Agreement, the parties hereto agree as follows:
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ARTICLE I
ISSUANCE AND SALE OF SHARES
1.1. Purchase and Sale . Upon the terms and subject to the conditions set
forth herein, at the Closing (as defined below) the Sellers shall sell to each
Purchaser and such Purchaser shall purchase from the Sellers the number of
Shares set forth opposite such Purchaser's name on Schedule 1.1 for a price
per Share equal to $11.00 or an aggregate purchase price of $159,775,000, (the
"Purchase Price"). Each Purchaser shall pay such Purchaser's portion of the
Purchase Price to the Sellers by delivering to the Sellers (x) cash and (y) a
secured promissory note, in the form of Exhibit A hereto (the "Notes"), in
each case in the aggregate amounts set forth opposite such Purchaser's name on
Schedule 1.1; provided, however, that the Purchasers shall have the right to
reallocate between the Purchasers the Shares to be purchased by each Purchaser
by delivering written notice of such reallocation to Ciba and the Sellers not
less than three days prior to the Closing, so long as such reallocation does
not change the total number of Shares being acquired hereunder or the Purchase
Price. At least three days prior to the Closing, the Sellers shall deliver to
the Purchasers a schedule (which schedule shall be binding on the Purchasers)
which shall set forth the number of Shares being sold by each Seller
hereunder, the portion of the Purchase Price payable to each such Seller and
the allocation of cash and the principal amount of Notes payable to each such
Seller; provided, however, that such schedule shall not change the total
number of Shares being acquired by each Purchaser, the portion of the Purchase
Price being paid by each Purchaser or the total cash amount or aggregate
principal amount of Notes being delivered hereunder. Notwithstanding anything
to the contrary set forth above, the aggregate number of Shares purchased by
the Purchasers hereunder shall be reduced to the extent required to prevent
the Purchasers from Beneficially Owning in excess of 39.3% of the outstanding
shares of Common Stock immediately following the Closing and, in such event,
the Purchase Price (and the amount of cash and the aggregate principal amount
of Notes issued by the Purchasers) shall be appropriately reduced based on the
per Share price set forth above.
1.2. The Closing; Deliveries . (a) The closing of the purchase and sale
of the Shares hereunder (the "Closing") shall take place at the offices of
Fried, Frank, Harris, Shriver & Jacobson, One New York Plaza, New York, New
York 10004 at 9:00 a.m. as promptly as practicable following the satisfaction
or waiver of the conditions set forth in Article V (other than those
conditions that by their nature are to be satisfied at the Closing, but
subject to the satisfaction or waiver of those conditions), but no earlier
than twenty days after the date hereof and no later than the Termination Date
(as defined below), or at such other place, time and/or date as shall be
mutually agreed by Ciba, the Sellers and the Purchasers (the date of the
Closing, the "Closing Date").
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(b) At the Closing, each Seller shall deliver to each Purchaser one or
more certificates representing the Shares being sold by such Seller to such
Purchaser duly endorsed for transfer in blank or accompanied by stock powers
duly endorsed in blank, with any required stock transfer stamps attached, in
an aggregate amount equal to the number of Shares being purchased by such
Purchaser hereunder. Delivery of such certificates shall be made against
receipt by such Seller of the portion of the Purchase Price payable therefor
to such Seller. The cash portion of the Purchase Price shall be paid by wire
transfer to an account or accounts designated by the Sellers at least three
business days prior to the Closing Date.
(c) The Sellers shall be responsible for and shall pay any sales, use,
transfer, documentary or other similar taxes that relate to the purchase and
sale of the Shares hereunder.
1.3. Capitalized Terms. Capitalized terms not otherwise defined herein
shall have the meanings ascribed to such terms in Section 8.1.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
Ciba and each Seller hereby represents and warrants to each Purchaser, as
of the date hereof and as of the Closing, as follows:
2.1. Title to Shares. Such Seller has good and valid title to the Shares
being sold by such Seller to each Purchaser hereunder, free and clear of all
liens, charges, claims, security interests, restrictions, options, proxies,
voting trusts or other encumbrances ("Encumbrances") other than Encumbrances
that will be released prior to or simultaneously with the Closing. Assuming
each Purchaser has the requisite power and authority to be the lawful owner of
such Shares, upon delivery to each Purchaser at the Closing of certificates
representing such Shares, and upon such Seller's receipt of the Purchase Price
for such Shares, each Purchaser will acquire all of such Seller's right, title
and interest in and to the Shares being sold to each Purchaser and will
receive good and valid title to such Shares, free and clear of any and all
Encumbrances created by such Seller.
2.2. Organization. Each of Ciba and such Seller is a corporation duly
organized, validly existing and in good standing under the laws of its
jurisdiction of organization or incorporation and has the requisite corporate
power and authority to carry on its business as it is now being conducted.
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2.3. Due Authorization. Each of Ciba and such Seller has all right, power
and authority to enter into this Agreement and each of the other Transaction
Documents to which it is a party and to consummate the transactions
contemplated hereby and thereby. The execution and delivery by each of Ciba
and such Seller of this Agreement and each of the other Transaction Documents
to which it is a party, the sale and delivery of the Shares being sold by such
Seller to each Purchaser hereunder and the compliance by each of Ciba and such
Seller with each of the provisions of this Agreement and each of the other
Transaction Documents to which it is a party have been duly authorized by all
necessary corporate action of such party. This Agreement has been, and each of
the other Transaction Documents to which each of Ciba and such Seller is a
party when executed and delivered by each of Ciba and such Seller will be,
duly and validly executed and delivered by such party, and this Agreement
constitutes, and each of such other Transaction Documents when executed and
delivered by each of Ciba and such Seller will constitute, a valid and binding
agreement of such party enforceable against such party in accordance with its
terms except as such enforcement is limited by bankruptcy, insolvency and
other similar laws affecting the enforcement of creditors' rights generally
and for limitations imposed by general principles of equity.
2.4. Consents, No Violations . Neither the execution, delivery or
performance by either Ciba or such Seller of this Agreement or any of the
other Transaction Documents to which it is a party nor the consummation of the
transactions contemplated hereby or thereby will (a) conflict with, or result
in a breach or a violation of, any provision of the certificate of
incorporation or by-laws or other organizational documents of either Ciba or
such Seller, (b) constitute, with or without notice or the passage of time or
both, a breach, violation or default, create an Encumbrance, or give rise to
any right of termination, modification, cancellation, prepayment, suspension,
limitation, revocation or acceleration, under (i) any Law or (ii) any
provision of any material agreement or other instrument to which either Ciba
or such Seller is a party or pursuant to which either Ciba or such Seller or
any of its assets or properties is subject, or (c) except for any required
filing under the HSR Act and those consents waived or obtained prior to or at
the Closing, require any consent, approval or authorization of, notification
to, filing with, or exemption or waiver by, any Governmental Entity or any
other Person on the part of either Ciba or such Seller.
2.5. Brokers or Finders. Except for Deutsche Bank, whose fees will be
paid by Ciba and the Sellers, upon the consummation of the transactions
contemplated by this Agreement, no agent, broker, investment banker or other
Person is or will be entitled to any broker's or finder's fee or any other
commission or similar fee from Ciba or such Seller in connection with any of
the transactions contemplated by this Agreement or the other Transaction
Documents.
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2.6. Disclosure. There is no fact or information relating to the Company
or any of its subsidiaries, actually known to Ciba or such Seller, that would
reasonably be expected to have a Material Adverse Effect and that has not been
disclosed to the Purchasers by Ciba or such Seller.
2.7. Qualified Purchaser Status. Such Seller is a "qualified purchaser"
as defined in Section 2(51)(A)(iv) of the Investment Company Act.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS
Each Purchaser hereby represents and warrants to Ciba and each Seller,
severally and not jointly, as of the date hereof and as of the Closing, as
follows:
3.1. Organization. Such Purchaser is a limited liability company duly
organized, validly existing and in good standing under the laws of the State
of Delaware and has the requisite power and authority to carry on its business
as it is now being conducted.
3.2. Due Authorization. Such Purchaser has all right, power and authority
to enter into this Agreement and each of the other Transaction Documents to
which it is a party and to consummate the transactions contemplated hereby and
thereby. The execution and delivery by such Purchaser of this Agreement and
each of the other Transaction Documents to which it is a party, the purchase
of the Shares being purchased by such Purchaser and the compliance by such
Purchaser with each of the provisions of this Agreement and each of the
Transaction Documents to which it is a party (a) are within the power and
authority of such Purchaser and (b) have been duly authorized by all necessary
action on the part of such Purchaser. This Agreement has been, and each of the
other Transaction Documents to which it is a party when executed and delivered
by such Purchaser will be, duly and validly executed and delivered by such
Purchaser, and this Agreement constitutes, and each of such other Transaction
Documents when executed and delivered by such Purchaser will constitute, a
valid and binding agreement of such Purchaser enforceable against such
Purchaser in accordance with its respective terms except as such enforcement
is limited by bankruptcy, insolvency and other similar laws affecting the
enforcement of creditors' rights generally and for limitations imposed by
general principles of equity.
3.3. Consents, No Violations . Neither the execution, delivery or
performance by such Purchaser of this Agreement or any of the other
Transaction Documents to which it is a party nor the consummation of the
transactions contemplated
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hereby or thereby will (a) conflict with, or result in a breach or a violation
of, any provision of the organizational documents of such Purchaser, (b)
constitute, with or without notice or the passage of time or both, a breach,
violation or default, create an Encumbrance, or give rise to any right of
termination, modification, cancellation, prepayment, suspension, limitation,
revocation or acceleration, under (i) any Law, or (ii) any provision of any
material agreement or other instrument to which such Purchaser is a party or
pursuant to which such Purchaser or its assets or properties is subject, or
(c) except for any required filing under the HSR Act, the German Act Against
Restraints of Competition, and any other foreign governmental and regulatory
filings, notices and approvals required to be made or obtained as contemplated
by Section 5.1(d) hereof, and those consents waived or obtained, require any
consent, approval or authorization of, notification to, filing with, or
exemption or waiver by, any Governmental Entity or any other Person on the
part of such Purchaser.
3.4. No Brokers or Finders. No agent, broker, investment banker or other
Person is or will be entitled to any broker's or finder's fee or any other
commission or similar fee from such Purchaser in connection with the
transactions contemplated by this Agreement or the other Transaction
Documents.
3.5. Availability of Funds. Such Purchaser has, or will have prior to
the Closing, available sufficient funds to pay such Purchaser's cash portion
of the Purchase Price.
3.6. Restricted Securities. Such Purchaser is purchasing the Shares being
purchased by it for investment and not with a view to any public resale or
other distribution thereof, except in compliance with applicable securities
laws.
ARTICLE IV
PRE-CLOSING COVENANTS
4.1. Ownership of Shares. Ciba and the Sellers shall retain beneficial
and record ownership of the Shares during the period from the date of this
Agreement and continuing until the earlier of the termination of this
Agreement or the Closing. Other than in connection with the transactions
contemplated by this Agreement, Ciba and the Sellers shall not, and shall not
authorize any of their affiliates, officers or directors (other than such
officers and directors acting in their capacities as officers or directors of
the Company) or any other Person on its behalf to, directly or indirectly, (i)
sell, assign, transfer, encumber or otherwise dispose of, or enter into any
contract, option or other arrangement or understanding with respect to the
direct or indirect sale, assignment, transfer, encumbrance or other
disposition of, any of the Shares or any economic interest
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therein or (ii) seek, solicit, propose, facilitate, participate in any
discussions or negotiations regarding, or furnish any information with respect
to any transaction or arrangement described in clause (i). Ciba and the
Sellers will notify each Purchaser promptly (and provide all details
reasonably requested by such Purchaser) if any of Ciba or the Sellers is
approached or solicited, directly or indirectly, by any person with respect to
any of the foregoing.
4.2. HSR Act; German Filing; Cooperation. The Purchasers shall make or
cause to be made all necessary filings under the HSR Act and the German Act
Against Restraints of Competition and shall use their reasonable best efforts
to take, or cause to be taken, all actions necessary, proper or advisable in
connection therewith to consummate and make effective as promptly as
practicable the transactions contemplated by this Agreement. The Purchasers,
Ciba and the Sellers agree to use their reasonable best efforts to take, or
cause to be taken, all such further actions as shall be necessary, proper or
advisable to make effective and consummate as promptly as practicable the
transactions contemplated by this Agreement.
4.3. Consents; Approvals. Ciba and each of the Sellers shall use their
reasonable best efforts to obtain, or to assist the Company in obtaining, all
consents, waivers, exemptions, approvals, authorizations or orders
(collectively, "Consents") (including, without limitation (i) Consents
required to avoid any breach, violation, default, encumbrance or right of
termination, modification, cancellation, prepayment, suspension, limitation,
revocation or acceleration of any material agreement or instrument to which
Ciba or such Seller is a party or its properties or assets are bound, (ii) all
Consents pursuant to the Company's financing documents, including without
limitation, all indentures and credit agreements of the Company, and (iii) all
United States and foreign governmental and regulatory rulings and approvals).
4.4. FIRPTA Certificate. Prior to the Closing, the Sellers shall cause
to be delivered to the Purchasers the certificate described in Treas. Reg.
Section 1.1445-2(c)(3), duly executed and acknowledged, certifying that the
stock being sold is not a United States real property interest under Section
897 of the Internal Revenue Code of 1986, as amended.
4.5. Indenture. Prior to or simultaneously with the Closing, Ciba shall
execute and deliver the Consent and Termination Agreement and shall consent in
writing to the amendment to the Indenture in the manner provided in Section
3.02 of the Consent and Termination Agreement.
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ARTICLE V
CONDITIONS
5.1. Conditions to Obligations of the Purchasers, Ciba and the Sellers.
The respective obligations of the Purchasers, Ciba and the Sellers to
consummate the transactions contemplated hereby are subject to the
satisfaction or waiver at or prior to the Closing of each of the following
conditions:
(a) No statute, rule or regulation or order of any court or
administrative agency shall be in effect which prohibits the consummation of
the transactions contemplated hereby;
(b) Any waiting period (and any extension thereof) under the HSR Act
applicable to this Agreement and the transactions contemplated hereby shall
have expired or been terminated;
(c) The German Federal Cartel Office shall have approved the transactions
contemplated hereby; and
(d) The Company and/or the Investors shall have made any other material
foreign governmental and regulatory filings, given all material notices and
obtained any material approvals that the Company and the Purchasers reasonably
agree are required in connection with the consummation of the transactions
contemplated by this Agreement, the Governance Agreement, the Registration
Rights Agreement and the Hexcel Agreement.
5.2. Conditions to Obligations of the Purchasers. The obligations of
each Purchaser to consummate the transactions contemplated hereby shall be
subject to the satisfaction or waiver at or prior to the Closing of each of
the following conditions:
(a) Each of the representations and warranties of Ciba and the Sellers
contained in this Agreement shall be true and correct in all material respects
when made and as of the Closing (except to the extent such representations and
warranties are made as of a particular date, in which case such
representations and warranties shall have been true and correct in all
material respects as of such date);
(b) Each of Ciba and the Sellers shall have performed, satisfied and
complied in all material respects with all of its covenants and agreements set
forth in this Agreement to be performed, satisfied and complied with prior to
or at the Closing;
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(c) Each of Ciba and the Sellers shall have delivered to each Purchaser
an officer's certificate certifying as to Ciba and such Seller's compliance
with the conditions set forth in clauses (a) and (b) of this Section 5.2;
(d) The transactions contemplated by the Hexcel Agreement shall be
consummated simultaneously with the transactions contemplated hereby and the
Purchasers and the Company shall have executed and delivered the governance
agreement in the form of Exhibit B hereto (the "Governance Agreement"), the
registration rights agreement in the form of Exhibit C hereto (the
"Registration Rights Agreement"), and all other agreements, documents and
instruments required to be delivered in connection therewith;
(e) Each Purchaser and Ciba shall have executed and delivered a Pledge
Agreement in the form of Exhibit D hereto (the "Pledge Agreement");
(f) Such Purchaser shall have received the opinions substantially in the
form set forth on Exhibit E from either Cravath, Swaine & Moore, John J .
McGraw, Esq. or Switzerland counsel for Ciba and the Sellers;
(g) (i) The Majority Lenders (as defined in the Credit Agreement) shall
have executed an agreement, in form and substance satisfactory to the
Purchasers, consenting to the transactions contemplated hereby and (ii) the
agreements, each dated as of the date hereof, from the Company's employees set
forth on Exhibit F hereto shall be in full force and effect as of the Closing;
(i) Mr. John J. Lee's employment agreement attached hereto as Exhibit G
and all other agreements contemplated thereby shall be in full force and
effect as of the Closing;
(j) The Consent and Termination Agreement in the form attached as Exhibit
H (the "Consent and Termination Agreement") shall have been executed and
delivered by Ciba and the Company and the Indenture shall have been amended in
the manner set forth in Section 3.02 of the Consent and Termination Agreement;
and
(k) Neither the Company nor any of its subsidiaries shall have suffered
any change, event, or development or series of changes, events or developments
which individually or in the aggregate has had or would reasonably be expected
to have a Material Adverse Effect.
5.3. Conditions to Obligations of Ciba and the Sellers . The obligations
of Ciba and the Sellers to consummate the transactions contemplated hereby
shall be subject to the satisfaction or waiver at or prior to the Closing of
each of the following conditions:
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(a) Each of the representations and warranties of the Purchasers
contained in this Agreement shall be true and correct when made and as of the
Closing (except to the extent such representations and warranties are made as
of a particular date, in which case such representations and warranties shall
have been true and correct in all material respects as of such date);
(b) The Purchasers shall have performed, satisfied and complied with all
of its covenants and agreements set forth in this Agreement to be performed,
satisfied and complied with prior to or at the Closing Date;
(c) The Purchasers shall have delivered to each of Ciba and the Sellers
an officer's certificate certifying as to the Purchasers' compliance with the
conditions set forth in clauses (a) and (b) of this Section 5.3;
(d) The Purchasers shall have executed and delivered the Pledge Agreement
and the Purchasers shall have delivered to Ciba, as collateral agent, the
Shares to be held as collateral security thereunder; and
(e) Ciba and the Sellers shall have received an opinion from Fried,
Frank, Harris, Shriver & Jacobson substantially in the form of Exhibit I
hereto.
ARTICLE VI
TERMINATION
6.1. Termination. (a) This Agreement may be terminated at any time prior
to the Closing:
(i) by mutual written agreement of (x) Ciba and the Sellers and (y) the
Purchasers;
(ii) by (x) the Purchasers or (y) Ciba and the Sellers, if the Closing
shall not have occurred by the latest of (A) November 9, 2000, (B) November
27, 2000, if the condition set forth in Section 5.2(g)(i) shall not have been
satisfied on or prior to November 9, 2000, (C) two business days after the
satisfaction of the conditions set forth in Sections 5.1(b), 5.1(c) and 5.1(d)
hereof (the latest of such dates, the "Drop Dead Date") (provided that the
right to terminate this Agreement under this Section 6.1(a)(ii) shall not be
available to any party whose failure to fulfill any obligation under this
Agreement has been the cause of or resulted in the failure of the Closing to
occur on or before such date); provided, however, that notwithstanding the
foregoing, if the Company, by a vote of the Independent Directors terminates
the Hexcel Agreement pursuant to Section 6.1 thereof in connection with the
execution of a definitive agreement
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relating to an Acquisition Proposal, the Drop Dead Date shall be automatically
extended to the earlier of (1) the business day following the consummation of
the transactions contemplated by the Acquisition Proposal and (2) the date
that is 21 business days following the date such Acquisition Proposal is
abandoned or terminated; provided, however that the Drop Dead Date shall not,
in any case, be extended past the date that is 21 business days following the
first anniversary of the date hereof; or
(iii) by (x) the Purchasers or (y) Ciba and the Sellers, if a court of
competent jurisdiction or governmental, regulatory or administrative agency or
commission shall have issued a nonappealable final order, decree or ruling or
taken any other action having the effect of permanently restraining, enjoining
or otherwise prohibiting the transactions contemplated by this Agreement.
(b) The date of any termination of this Agreement pursuant to Section
6.1(a) is referred to herein as the "Termination Date".
6.2. Effect of Termination. In the event of the termination of this
Agreement pursuant to Section 6.1(a), this Agreement shall forthwith become
void and there shall be no liability on the part of any party hereto (or any
stockholder, director, officer, partner, employee, agent, consultant or
representative of such party) except as set forth in this Section 6.2,
provided that nothing contained in this Agreement shall relieve any party from
liability for any breach of this Agreement and provided further that this
Section 6.2 and Sections 7.1, 7.2, 7.3, 8.3, 8.12, 8.13 and 8.14 shall survive
termination of this Agreement and Section 8.2 shall survive termination of
this Agreement to the extent provided therein.
ARTICLE VII
INDEMNIFICATION
7.1. Survival. The representations and warranties of the parties hereto
contained in this Agreement or in any of the other Transaction Documents shall
survive the Closing and the delivery of the Transaction Documents. In the case
of the representations and warranties made by Ciba, any Seller or any
Purchaser in this Agreement or in any of the other Transaction Documents, such
representations and warranties are being made severally and not jointly by
Ciba and the Sellers or by the Purchasers, as the case may be. The covenants
and agreements of the parties hereto contained in this Agreement or in any of
the other Transaction Documents shall survive the Closing until performed in
accordance with their terms.
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7.2. Indemnification . (a) Ciba and the Sellers jointly and severally
shall indemnify, defend and hold harmless the Purchasers, their Affiliates,
and their respective officers, directors, partners, members, employees,
agents, representatives, successors and assigns (each a "Purchaser Indemnified
Person") from and against (I) all Losses incurred or suffered by a Purchaser
Indemnified Person arising from (i) the breach of any of the representations
or warranties made by Ciba or the Sellers in this Agreement or any other
Transaction Document or (ii) the breach of any covenant or agreement made by
Ciba or the Sellers in this Agreement or any other Transaction Document and
(II) one-third of all Losses in respect of which an Investor Indemnified
Person would be entitled to indemnification under the Hexcel Agreement
pursuant to Section 7.2(a)(i) thereof after giving effect to the limitations
on such indemnification contained in the Hexcel Agreement other than the
limitation set forth in Section 7.2(c) thereof that limits the Company's
liability thereunder to one-third of all Losses incurred by the Investor
Indemnified Person; provided, that, the maximum amount recoverable under this
Section 7.2(a)(II) shall be $10,000,000.
(b) Each Purchaser, severally and not jointly, shall indemnify, defend
and hold harmless Ciba and the Sellers, their Affiliates, and their respective
officers, directors, partners, members, employees, agents, representatives,
successors and assigns (each a "Sellers Indemnified Person") from and against
all Losses incurred or suffered by a Sellers Indemnified Person arising from
(i) the breach of any of the representations or warranties made by such
Purchaser in this Agreement or any other Transaction Document or (ii) the
breach of any covenant or agreement made by such Purchaser in this Agreement
or any other Transaction Document.
7.3. Procedure for Indemnification. (a) If a Purchaser Indemnified Party
or a Sellers Indemnified Person (such Person being referred to as the
"Indemnitee") shall receive notice or otherwise learn of the assertion by a
Person who is not a party to this Agreement of any claim or of the
commencement by any such Person of any action (a "Claim") with respect to
which the other party (the "Indemnifying Party") may be obligated to provide
indemnification, such Indemnitee shall give such Indemnifying Party written
notice thereof promptly after becoming aware of such Claim; provided, that the
failure of any Indemnitee to give notice as provided in this Section 7.3 shall
not relieve the applicable Indemnifying Party of its obligations under this
Article VII, except to the extent that such Indemnifying Party is prejudiced
by such failure to give notice; provided, further, that the applicable
Indemnifying Party shall have no obligations under this Article VII unless
such written notice is received by the Indemnifying Party within the survival
periods set forth in Section 7.1. Such notice shall describe the Claim in
reasonable detail, and shall indicate the amount (estimated if necessary) of
the Loss that has been or may be sustained by or is claimed against such
Indemnitee. Such notice shall be a condition precedent to any liability of any
Indemnifying Party for any Claim under the provisions for indemnification
contained in this Agreement.
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(b) An Indemnifying Party may elect to compromise, settle or defend, at
such Indemnifying Party's own expense and by such Indemnifying Party's own
counsel, any Claim; provided, however, that the Indemnifying Party shall not
compromise, settle or defend a Claim without the consent of the Indemnitee
(which consent shall not be unreasonably withheld). If an Indemnifying Party
elects to compromise, settle or defend a Claim, it shall, within 30 days of
the receipt of notice from an Indemnitee pursuant to Section 7.3(a) (or
sooner, if the nature of such Claim so requires), notify the applicable
Indemnitee of its intent to do so, and such Indemnitee shall cooperate in the
compromise or settlement of, or defense against, such Claim. After notice from
an Indemnifying Party to an Indemnitee of its election to assume the defense
of a Claim, such Indemnifying Party shall not be liable to such Indemnitee
under this Article VII for any legal or other expenses subsequently incurred
by such Indemnitee in connection with the defense thereof (except expenses
approved in advance by the Indemnitee); provided, that such Indemnitee shall
have the right to employ one separate counsel reasonably satisfactory to the
Indemnifying Party to represent such Indemnitee if the defendants in any such
claim included both the Indemnifying Party and the Indemnitee and, in such
Indemnitee's reasonable judgment, a conflict of interest between such
Indemnitee and such Indemnifying Party exists in respect of such claim, and in
that event the reasonable fees and expenses of such separate counsel shall be
paid by such Indemnifying Party. If an Indemnifying Party elects not to
compromise, settle or defend against a Claim, or fails to notify an Indemnitee
of its election as provided in this Section 7.3 within 30 days of notice from
the Indemnitee pursuant to Section 7.3(a), such Indemnitee may compromise,
settle or defend such Claim.
(c) If an Indemnifying Party chooses to defend any claim, the applicable
Indemnitee shall make available to such Indemnifying Party any personnel or
any books, records or other documents within its control that are necessary or
appropriate for such defense.
(d) If the amount of any Loss shall, at any time subsequent to payment
pursuant to this Agreement, be reduced by recovery, settlement or otherwise,
the amount of such reduction, less any expenses incurred in connection
therewith, shall promptly be repaid by the applicable Indemnitee to the
applicable Indemnifying Party.
(e) In the event of payment by an Indemnifying Party to any Indemnitee in
connection with any Claim, such Indemnifying Party shall be subrogated to and
shall stand in the place of such Indemnitee as to any events or circumstances
in respect of which such Indemnitee may have any right or claim relating to
such Claim. Such Indemnitee shall cooperate with such Indemnifying Party in a
reasonable manner, and, at the cost and expense of such Indemnifying Party, in
prosecuting any subrogated right or claim.
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ARTICLE VIII
MISCELLANEOUS
8.1. Defined Terms; Interpretations. The following terms, as used
herein, shall have the following meanings: "Acquisition Proposal" shall have
the meaning ascribed to such term in the Hexcel Agreement. "Affiliate" shall
have the meaning ascribed to such term in Rule 12b-2 of the General Rules and
Regulations under the Exchange Act. "Aggregate Consideration Per Share" shall
have the meaning ascribed thereto in Section 8.2(b)(i).
"Agreement" shall have the meaning ascribed thereto in the preamble.
"Alternative Transaction" shall have the meaning ascribed thereto in
Section 8.2(b)(ii).
"Beneficially Owning" shall have the meaning ascribed thereto in the
Governance Agreement.
"Ciba" shall have the meaning ascribed thereto in the recitals.
"Claim" shall have the meaning ascribed thereto in Section 7.3.
"Closing" shall have the meaning ascribed thereto in Section 1.2(a).
"Closing Date" shall have the meaning ascribed thereto in Section 1.2(a).
"Common Stock" shall have the meaning ascribed thereto in the recitals.
"Company" shall have the meaning ascribed thereto in the recitals.
"Consent and Termination Agreement" shall have the meaning ascribed
thereto in Section 5.2(j).
"Consents" shall have the meaning ascribed thereto in Section 4.3.
"Credit Agreement" shall mean the Second Amended and Restated Credit
Agreement, dated as of September 15, 1998, among the Company, certain of its
subsidiaries, the Lenders parties thereto, Citibank N.A. and Credit Suisse
First Boston.
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"DGCL" shall mean the Delaware General Corporation Law.
"Drop Dead Date" shall have the meaning ascribed thereto in Section
6.1(a)(ii).
"Encumbrances" shall have the meaning ascribed thereto in Section 2.1.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, or any successor federal statute, and the rules and regulations of
the SEC thereunder, all as the same shall be in effect at the time. Reference
to a particular section of the Securities Exchange Act of 1934, as amended,
shall include reference to the comparable section, if any, of any such
successor federal statute.
"Fair Market Value" shall have the meaning ascribed thereto in Section
8.2(b)(iii).
"Governance Agreement" shall have the meaning ascribed thereto in Section
5.2(d).
"Governmental Entity" shall mean any supernational, national, foreign,
federal, state or local judicial, legislative, executive, administrative or
regulatory body or authority.
"Hexcel Agreement" shall mean the agreement, dated as of the date hereof,
among each of the Purchasers and the Company, attached as Exhibit J hereto.
"HSR Act" shall mean the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended, and the rules and regulations thereunder.
"Indemnifying Party" shall have the meaning ascribed thereto in Section
7.3.
"Indemnitee" shall have the meaning ascribed thereto in Section 7.3.
"Indenture" shall have the meaning ascribed thereto in the Consent and
Termination Agreement.
"Independent Directors" shall have the meaning ascribed thereto in the
Hexcel Agreement.
"Investment Company Act" shall mean the Investment Company Act of 1940,
as amended, and the rules and regulations thereunder.
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"Investor Indemnified Person" shall have the meaning ascribed thereto in
Section 7.2(a) of the Hexcel Agreement.
"Laws" shall include all foreign, federal, state, and local laws,
statutes, ordinances, rules, regulations, orders, judgments, decrees and
bodies of law.
"Litigation" shall have the meaning ascribed thereto in Section 8.13.
"Losses" shall mean each and all of the following items: claims, losses,
liabilities, obligations, payments, damages, charges, judgments, fines,
penalties, amounts paid in settlement, costs and expenses (including, without
limitation, interest which may be imposed in connection therewith, costs and
expenses of investigation, actions, suits, proceedings, demands, assessments
and fees, expenses and disbursements of counsel, consultants and other
experts).
"Material Adverse Effect" shall mean a material adverse effect on the
properties, business, operations, results of operations, earnings, assets,
liabilities or condition (financial or otherwise) of the Company and its
subsidiaries taken as a whole; provided, however, that changes relating to
United States or foreign economies in general or the Company's and its
subsidiaries' industries in general and not specifically relating to the
Company or its subsidiaries shall not constitute a Material Adverse Effect for
purposes of this Agreement.
Notes" shall have the meaning ascribed thereto in Section 1.1.
"Person" shall mean any individual, firm, corporation, limited liability
company, partnership, company or other entity, and shall include any successor
(by merger or otherwise) of such entity.
"Pledge Agreement" shall have the meaning ascribed thereto in Section
5.2(e).
"Purchase Price" shall have the meaning ascribed thereto in Section 1.1.
"Purchasers" shall have the meaning ascribed thereto in the preamble.
"Purchaser Indemnified Person" shall have the meaning ascribed thereto in
Section 7.2(a).
"Registration Rights Agreement" shall have the meaning ascribed thereto
in Section 5.2(d).
"SEC" shall mean the Securities and Exchange Commission.
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"Securities Act" shall mean the Securities Act of 1933, as amended, or
any successor federal statute, and the rules and regulations of the SEC
thereunder, all as the same shall be in effect at the time. Reference to a
particular section of the Securities Act shall include reference to the
comparable section, if any, of such successor federal statute.
"Sellers" shall have the meaning ascribed thereto in the preamble.
"Sellers Indemnified Person" shall have the meaning ascribed thereto in
Section 7.2(b).
"Shares" shall have the meaning ascribed thereto in the recitals.
"Step-Down Date" shall have the meaning ascribed thereto in Section
8.2(a).
"Termination Date" shall have the meaning ascribed thereto in Section
6.1(b).
"Third Party Purchaser" shall have the meaning ascribed thereto in
Section 8.2(b)(iv).
"Transaction Documents" shall mean this Agreement, the Notes, the Pledge
Agreement and all other contracts, agreements, schedules, certificates and
other documents being delivered pursuant to or in connection with this
Agreement or such other documents or the transactions contemplated hereby or
thereby.
8.2. Fees and Expenses. (a) Except as provided in this Section 8.2, all
costs and expenses incurred in connection with this Agreement shall be paid by
the party incurring such costs or expense. At the Closing, Ciba and the
Sellers shall reimburse the Purchasers for their reasonable costs and expenses
(including the fees and expenses of its counsel) incurred in connection with
this Agreement and the transactions contemplated hereby, in an amount not to
exceed $500,000. In addition, if the transactions contemplated by this
Agreement are not consummated by reason of the failure of Ciba or any Seller
to perform its obligations hereunder, then (i) on the Termination Date, Ciba
and the Sellers shall pay to the Purchasers an amount in cash equal to the
Purchasers' reasonable costs and expenses (including the fees and expenses of
its counsel) incurred in connection with this Agreement and the transactions
contemplated hereby in an amount not to exceed $1,000,000 in the aggregate and
(ii) (A) if any Alternative Transaction is consummated on or prior to March 1,
2001 (the "Step-Down Date") or thereafter pursuant to a definitive agreement
executed on or prior to the Step-Down Date, Ciba and the Sellers shall pay the
Purchasers an amount in cash equal to the product of (x) the number of Shares
sold, transferred or otherwise disposed of in such Alternative Transaction,
multiplied by (y) 25% of the Aggregate Consideration Per Share in excess of
$11.00, or
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(B) if any Alternative Transaction is consummated after the Step-Down Date and
on or prior to June 1, 2001 (in a transaction to which clause (A) does not
apply), or thereafter pursuant to a definitive agreement executed after the
Step-Down Date and on or prior to June 1, 2001, Ciba and the Sellers shall pay
the Purchasers an amount in cash equal to the product of (x) the number of
shares sold, transferred or otherwise disposed of in such Alternative
Transaction, multiplied by (y) 10% of the Aggregate Consideration Per Share in
excess of $11.00. Any amounts payable by Ciba and the Sellers to the
Purchasers pursuant to clause (ii) above shall be paid to the Purchasers no
later than the first business day after the closing of each Alternative
Transaction to which such clause (ii) applies; provided, however, that in no
event shall any amounts be paid pursuant to clause (ii) above if any
Alternative Transaction to which clause (ii) applies does not close.
(b) Notwithstanding anything to the contrary contained herein, if (i) the
Hexcel Agreement is terminated by the Company by a vote of the Independent
Directors pursuant to Section 6.1 thereof upon execution of a definitive
agreement with respect to an Acquisition Proposal, and (ii) the transactions
contemplated by such Acquisition Proposal are consummated on or prior to the
date that is 21 business days following the first anniversary of the date
hereof without the Closing hereunder having occurred, then Ciba and the
Sellers shall pay the Purchasers no later than the first business day after
the closing of such transactions, an amount in cash equal to the product of
(i) the lesser of (A) the number of Shares sold, transferred or otherwise
disposed of in such Acquisition Proposal and (B) the number of Shares being
purchased by the Purchasers hereunder, multiplied by (ii) 100% of the
Aggregate Consideration Per Share in excess of $11.00.
(c) For purposes of this Section 8.2:
(i) "Aggregate Consideration Per Share" shall mean the amount per Share
payable to any Seller and/or any of its Affiliates pursuant to any Alternative
Transaction or Acquisition Proposal. The amount per Share payable with respect
to any Alternative Transaction or Acquisition Proposal shall be determined by
dividing (A) the sum of (x) all cash amounts payable to any Seller and/or any
of its Affiliates and (y) the Fair Market Value of all securities, property or
other consideration payable to any Seller and/or any of its Affiliates, in
each case pursuant to such Alternative Transaction or Acquisition Proposal by
(B) the number of Shares sold, transferred or otherwise disposed of pursuant
to such Alternative Transaction or Acquisition Proposal.
(ii) "Alternative Transaction" shall mean any sale, transfer or other
disposition of all or any portion of the Shares by any Seller and/or any of
its Affiliates to a Third Party Purchaser.
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(iii) "Fair Market Value" shall mean (a) with respect to securities (i)
listed for trading on a national securities exchange or admitted for trading
on a national market system, either (x) the closing price quoted on the
principal securities exchange on which such securities are listed for trading
or (y) if not so listed, the average of the closing bid and asked prices for
such securities quoted on the national market system on which such securities
are admitted for trading, each as published in the Eastern Edition of The Wall
Street Journal, in each case for the ten (10) trading days prior to the date
such securities are delivered to Ciba or the Sellers or (ii) not listed for
trading on a national securities exchange or admitted for trading on a
national market system, the fair market value of such securities as determined
in good faith from time to time according to the mutual agreement of the
Purchasers, Ciba and the Sellers; provided, however, in the event that Ciba,
the Purchasers and the Sellers are unable to reach an agreement as to the fair
market value of such securities, the fair market value of such securities will
be determined by a neutral third party mutually agreed upon by the Purchasers,
Ciba and the Sellers, with such determination by the neutral third party being
binding on the Purchasers, Ciba and the Sellers and not subject to any
recourse or appeal or (b) with respect to any other property, the fair market
value of such property as determined in good faith from time to time according
to the mutual agreement of the Purchasers, Ciba and the Sellers; provided,
however, in the event that the Purchasers, Ciba and the Sellers are unable to
reach an agreement as to the fair market value of such property, the fair
market value of such property will be determined by a neutral third party
mutually agreed upon by the Purchasers, Ciba and the Sellers, with such
determination by the neutral third party being binding on the Purchasers, Ciba
and the Sellers and not subject to any recourse or appeal.
(iv) "Third Party Purchaser" shall mean any Person other than Ciba, any
Seller or any Affiliates of Ciba or any Seller.
8.3. Public Announcements. The Purchasers, Ciba and the Sellers shall
consult with each other before issuing any press release with respect to this
Agreement or the transactions contemplated hereby and neither shall issue any
such press release, make any such public statement or make any filings
required by Law without the prior consent of the other, which consent shall
not be unreasonably withheld or delayed; provided, however, that a party may,
without the prior consent of the other party, issue such press release, make
such public statement or make such required filing as may upon the advice of
counsel be required by Law or any exchange on which Ciba or the Sellers'
securities are listed and, to the extent time permits, it has used all
reasonable efforts to consult with the other party prior thereto.
8.4. Further Assurances. At any time or from time to time after the
Closing, Ciba and the Sellers, on the one hand,
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and the Purchasers, on the other hand, agree to cooperate with each other, and
at the request of the other party, to execute and deliver any further
instruments or documents and to take all such further action as the other
party may reasonably request in order to evidence or effectuate the
consummation of the transactions contemplated hereby or by the other
Transaction Documents and to otherwise carry out the intent of the parties
hereunder or thereunder.
8.5. Successors and Assigns. This Agreement shall bind and inure to the
benefit of Ciba, the Sellers and the Purchasers and the respective successors,
permitted assigns, heirs and personal representatives of Ciba, the Sellers and
the Purchasers, provided that prior to the Closing none of Ciba or the Sellers
may assign its rights or obligations under this Agreement to any Person
without the prior written consent of the Purchasers, and provided further that
the Purchasers may not assign their rights or obligations under this Agreement
to any Person (other than an Affiliate of such Purchaser) without the prior
written consent of Ciba and the Sellers. In addition, and whether or not any
express assignment has been made, the provisions of this Agreement which are
for the Purchasers' benefit as Purchasers or holders of the Shares are also
for the benefit of, and enforceable by, any Affiliates of the Purchasers who
hold such Shares and received such Shares in accordance with the terms of this
Agreement.
8.6. Entire Agreement. This Agreement and the other Transaction Documents
contain the entire agreement between the parties with respect to the subject
matter hereof and supersede all prior and contemporaneous arrangements or
understandings with respect thereto, including, without limitation, the Letter
Agreement, dated September 1, 2000, between GS Capital Partners 2000, L.P. and
Ciba Specialty Chemicals Holding Inc. and Ciba Specialty Chemicals
Corporation, as amended prior to the date hereof.
8.7. Notices. All notices, requests, consents and other communications
hereunder to any party shall be deemed to be sufficient if contained in a
written instrument delivered in person or sent by telecopy, nationally
recognized overnight courier or first class registered or certified mail,
return receipt requested, postage prepaid, addressed to such party at the
address set forth below or such other address as may hereafter be designated
in writing by such party to the other parties:
(i) if to Ciba and the Sellers, to each of the following addresses:
Ciba Specialty Chemicals Holding Inc.
Klybeckstrasse 141
CH - 4002, Basel
Switzerland
Telecopy No.: 41-61-636-4728
Attention: Oliver Strub, Esq.
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Ciba Specialty Chemicals Inc.
Klybeckstrasse 141
CH - 4002, Basel
Switzerland
Telecopy No.: 41-61-636-4728
Attention: Oliver Strub, Esq.
Ciba Specialty Chemicals Corporation
P.O. Box 2005
560 White Plains Road
Tarrytown, New York 10591
Telecopy No.: (914) 785-3622
Attention: Mr. Stanley Sherman
John J. McGraw, Esq.
with a copy to (which shall not constitute notice):
Cravath, Swaine & Moore
Worldwide Plaza
825 Eighth Avenue
New York, New York 10019-7475
Telecopy No.: (212) 859-4000
Attention: Philip A. Gelston, Esq.
(ii) if to the Purchasers, to:
c/o Goldman Sachs Capital Partners 2000, L.P.
85 Broad Street
New York, New York 10004
Telecopy No.: (212) 357-5505
Attention: Mr. Sanjeev Mehra
with a copy to:
Fried, Frank, Harris, Shriver & Jacobson
One New York Plaza
New York, New York 10004
Telecopy No.: (212) 859-8587
Attention: Robert C. Schwenkel, Esq.
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All such notices, requests, consents and other communications shall be
deemed to have been given or made if and when delivered personally or by
overnight courier to the parties at the above addresses or sent by electronic
transmission, with confirmation received, to the telecopy numbers specified
above (or at such other address or telecopy number for a party as shall be
specified by like notice).
8.8. Amendments. The terms and provisions of this Agreement may be
modified or amended, or any of the provisions hereof waived, temporarily or
permanently, in a writing executed and delivered by Ciba, the Sellers and the
Purchasers. No waiver of any of the provisions of this Agreement shall be
deemed to or shall constitute a waiver of any other provision hereof (whether
or not similar). No delay on the part of any party in exercising any right,
power or privilege hereunder shall operate as a waiver thereof.
8.9. Counterparts. This Agreement may be executed in any number of
counterparts, and each such counterpart hereof shall be deemed to be an
original instrument, but all such counterparts together shall constitute but
one agreement.
8.10. Headings. The headings of the sections of this Agreement have been
inserted for convenience of reference only and shall not be deemed to be a
part of this Agreement.
8.11. Nouns and Pronouns. Whenever the context may require, any pronouns
used herein shall include the corresponding masculine, feminine or neuter
forms, and the singular form of names and pronouns shall include the plural
and vice versa.
8.12. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO THE
PRINCIPLES OF CONFLICTS OF LAW OTHER THAN SECTIONS 5-1401 AND 5-1402 OF THE
NEW YORK GENERAL OBLIGATIONS LAW.
8.13. Submission to Jurisdiction. Each of the parties hereto hereby
irrevocably and unconditionally consents to submit to the exclusive
jurisdiction of the courts of the State of New York and of the United States
of America, in each case located in the County of New York, for any claim,
action, suit, investigation or proceeding ("Litigation") arising out of or
relating to this Agreement or the other Transaction Documents and the
transactions contemplated hereby and thereby (and agrees not to commence any
Litigation relating hereto or thereto except in such courts), and further
agrees that service of any process, summons, notice or document by U.S.
registered mail to its respective address set forth in this Agreement shall be
effective service of process
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for any Litigation brought against it in any such court. Each of the parties
hereto hereby irrevocably and unconditionally waives any objection to the
laying of venue of any Litigation arising out of this Agreement or the
transactions contemplated hereby in the courts of the State of New York or the
United States of America, in each case located in the County of New York,
hereby further irrevocably and unconditionally waives and agrees not to plead
or claim in any such court that any such Litigation brought in any such court
has been brought in an inconvenient forum.
8.14. WAIVER OF JURY TRIAL. CIBA, THE SELLERS AND THE PURCHASERS HEREBY
WAIVE ANY RIGHT THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY ACTION,
PROCEEDING OR LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN
CONNECTION WITH THIS AGREEMENT OR THE TRANSACTION DOCUMENTS.
8.15. Severability. Whenever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid, but if any
provision of this Agreement is held to be invalid or unenforceable in any
respect, such invalidity or unenforceability shall not render invalid or
unenforceable any other provision of this Agreement.
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IN WITNESS WHEREOF, the parties hereto have duly executed and delivered
this Agreement as of the date first above written.
LXH, L.L.C.
By: GS Capital Partners 2000, L.P.,
its Managing Member
By: GS Advisors 2000, LLC, its general partner
By: /s/ Katherine L. Nissenbaum
----------------------------------
Name: Katherine L. Nissenbaum
Title: Vice President
LXH II, L.L.C.
By: GS Capital Partners 2000, L.P.,
its Managing Member
By: GS Advisors 2000, LLC, its general partner
By: /s/ Katherine L. Nissenbaum
----------------------------------
Name: Katherine L. Nissenbaum
Title: Vice President
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CIBA SPECIALTY CHEMICALS HOLDING INC.
By: /s/ Hans-Ulrich Muller /s/ Peter Sidler
---------------------------------- ------------------------------
Name: Hans-Ulrich Muller Peter Sidler
Title: General Counsel Senior Tax and Corporate
Counsel
CIBA SPECIALTY CHEMICALS INC.
By: /s/ Hans-Ulrich Muller /s/ Peter Sidler
---------------------------------- ------------------------------
Name: Hans-Ulrich Muller Peter Sidler
Title: General Counsel Senior Tax and Corporate
Counsel
CIBA SPECIALTY CHEMICALS CORPORATION
By: /s/ Stanley Sherman
----------------------------------
Name: Stanley Sherman
Title: President and Chief Executive
Officer
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