EXHIBIT 3
PROMISSORY NOTE
---------------
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY
STATE AND MAY NOT BE SOLD, TRANSFERRED, OR OTHERWISE
DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE
STATE SECURITIES LAWS OR PURSUANT TO AN APPLICABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SUCH
ACT AND SUCH LAWS
THIS NOTE HAS BEEN ISSUED WITH ORIGINAL ISSUE DISCOUNT.
FOR INFORMATION REGARDING THE ISSUE PRICE OF THE NOTE,
THE AMOUNT OF ORIGINAL ISSUE DISCOUNT ON THE NOTE, THE
ISSUE DATE OF THE NOTE OR THE YIELD TO MATURITY OF THE
NOTE, CONTACT BEN ADLER AT 85 BROAD STREET, NEW YORK,
NEW YORK 10004.
THIS NOTE IS SUBJECT TO TRANSFER RESTRICTIONS
SET FORTH IN SECTION 10
LXH, L.L.C.
7.5% RECOURSE SECURED PAY-IN-KIND PROMISSORY NOTE
DUE DECEMBER 31, 2004
$20,680,780.00 New York, New York
December 19, 2000
FOR VALUE RECEIVED, the undersigned, LXH, L.L.C. ("BORROWER"), a
Delaware limited liability company, hereby promises to pay to the order of
Ciba Specialty Chemicals Corporation ("CIBA"), a corporation organized
under the laws of Delaware, or its registered assigns (the "HOLDER"), the
principal sum of TWENTY MILLION SIX HUNDRED EIGHTY THOUSAND SEVEN HUNDRED
EIGHTY DOLLARS AND ZERO CENTS ($20,680,780.00) on December 31, 2004 (the
"MATURITY DATE"), with interest thereon from time to time as provided
herein.
Capitalized terms used but not defined herein shall have the
meanings set forth in the Stock Pledge Agreement, dated as of the date
hereof, between the Borrower and Ciba (the "PLEDGE AGREEMENT").
1. Purchase Agreement. This Recourse Secured Pay-In-Kind Promissory Note
(this "NOTE") is issued by the Borrower, on the date hereof, as partial
payment for the purchase by the Borrower of shares of Common Stock, par
value $.01 per share, of Hexcel Corporation pursuant to a Stock Purchase
Agreement, dated as of the date hereof, by and among the Borrower, Ciba and
certain affiliates of Ciba (the "PURCHASE AGREEMENT"). This Note and all
promissory notes issued pursuant to paragraph 2 hereof are hereinafter
referred to as the "NOTES." The Holder is entitled to the benefits of this
Note and the Purchase Agreement, as it relates to this Note, and may
enforce the agreements of the Borrower contained herein and therein and
exercise the remedies provided for hereby and thereby or otherwise
available in respect hereto and thereto.
2. Interest. The Borrower promises to pay interest ("INTEREST") on the
unpaid principal amount of this Note at the rate of 7.5% per annum (the
"INTEREST RATE") in the manner set forth in Section 2(a). Interest shall be
due and payable on the unpaid principal amount hereof from and after the
date of this Note annually, commencing on December 31, 2001 and thereafter
on December 31 of each year (each, an "INTEREST PAYMENT DATE") until the
entire principal amount has been paid in full and upon payment (including
prepayment) of the principal amount hereof. Interest on this Note shall
accrue from and including the date of issuance through and until repayment
of the principal amount of this Note and payment of all Interest in full,
and shall be computed on the basis of a 360-day year of twelve 30-day
months.
a. PIK Notes. The Borrower shall pay interest on the principal amount
of this Note at the Interest Rate, by delivery to the Holder, by a date no
later than each Interest Payment Date, of an additional promissory note
(each a "PIK NOTE") having an aggregate principal amount equal to the
accrued but unpaid Interest on this Note (and the amount of accrued but
unpaid Interest on any previously delivered PIK Notes) and otherwise having
substantially identical terms to this Note. If for any reason one or more
PIK Notes shall not be delivered in accordance herewith, Interest on the
unpaid principal of each PIK Note shall accrue from the Interest Payment
Date in respect of which such PIK Note should have been issued until
repayment in cash of the principal and payment in cash of all accrued
Interest in full. Interest shall accrue on this Note such that the
aggregate Interest due and payable on the Maturity Date and on each
Interest Payment Date would be the same as if all PIK Notes not issued had
been issued in accordance with the terms of this Note, and the principal
payable on the Maturity Date with respect to this Note shall be an amount
equal to the sum of the principal outstanding hereunder and the aggregate
principal which would be outstanding if the PIK Notes not issued had been
issued in accordance with the terms of this Note.
b. No Usurious Interest. In the event that any interest rate provided
for in this Section 2 shall be determined to be unlawful, this Note shall
bear interest at the highest rate permitted by applicable law. Any payment
by the Borrower of any interest amount in excess of that permitted by law
shall be considered a mistake, with the excess being applied to the
principal amount of this Note without prepayment premium or penalty; if no
such principal amount is outstanding, such excess shall be returned to
Borrower.
c. Federal Income Tax Withholding. All interest due and payable
hereunder shall be subject to applicable U.S. federal income tax
withholding requirements, unless the Holder delivers to the Borrower proof
of exemption from withholding in form and substance satisfactory to the
Borrower.
3. Security.
--------
a. Pledge Agreement. Payment of the principal of and Interest on this
Note is secured pursuant to the Pledge Agreement, reference to which is
made for a description of the Collateral provided thereby and the rights of
Ciba and the Holder in respect of such Collateral.
b. Transfer of Securities. Subject to the Borrower's compliance with
Section 4 hereof and Section 2.6 of the Pledge Agreement, so long as no
Event of Default has occurred and is continuing, the Borrower shall have
the right to Transfer Collateral to a Third Party (a "COLLATERAL SALE"), or
to a Permitted Transferee.
4. Mandatory Prepayment on Sale of Collateral and Payment of Cash
Distributions. In the event of a Collateral Sale in exchange for Cash, the
Borrower shall apply the Minimum Amount to the prepayment of the Notes as
provided in Section 2.6 of the Pledge Agreement. If at any time the
Borrower receives any Cash Distributions, the Borrower shall promptly apply
such Cash Distributions to the prepayment of the outstanding principal
amount of this Note, together with accrued and unpaid interest on the
principal amount being prepaid, as provided in Section 2.3 of the Pledge
Agreement. Pursuant to Section 2.6 of the Pledge Agreement, any Non-Cash
Proceeds received by the Borrower in any Collateral Sale shall be delivered
by the Borrower to the Holder as Collateral for the Secured Obligations.
Concurrently with any prepayment of any portion of the principal
amount of this Note pursuant to Section 4 hereof, the Holder shall make a
notation of such payment hereon. If full payment in cash of all unpaid
principal of and accrued and unpaid Interest on this Note is made, this
Note shall be surrendered for cancellation and delivered to the Borrower.
5. Optional Prepayment/Redemption. The Borrower, at its option, may prepay
all or any portion of the principal amount of this Note in cash at any
time, by paying to the Holder an amount equal to the outstanding principal
amount being prepaid together with any accrued and unpaid Interest on the
principal amount being prepaid, and if accrued interest does not accompany
such payment, the Holder shall deem a portion of such payment to be the
payment of accrued interest with the remainder of such payment reflecting
principal repayment. Concurrently with any prepayment of any portion of the
principal amount of this Note pursuant to Section 5 hereof, the Holder
shall make a notation of such payment hereon. If full payment in cash of
all unpaid principal and accrued and unpaid Interest on this Note is made,
this Note shall be surrendered for cancellation and delivered to the
Borrower.
6. Defaults and Remedies.
---------------------
a. Events of Default. An "EVENT OF DEFAULT" shall occur if:
i. the Borrower shall default in the payment of the principal of
this Note or any PIK Note, when and as the same shall become due and
payable, whether at maturity or at a date fixed for prepayment or by
acceleration or otherwise; or
ii. the Borrower shall default in the payment of principal of or
interest on any indebtedness for money borrowed of the Borrower (other than
the Notes) having an aggregate principal amount of at least $500,000; or
iii. an involuntary proceeding shall be commenced or an
involuntary petition shall be filed in a court of competent jurisdiction
seeking (a) relief in respect of the Borrower, or of a substantial part of
its property or assets, under Title 11 of the United States Code, as now
constituted or hereafter amended, or any other federal or state bankruptcy,
insolvency, receivership or similar law, (b) the appointment of a receiver,
trustee, custodian, sequestrator, conservator or similar official for the
Borrower, or for a substantial part of its property or assets, or (c) the
winding up or liquidation of the Borrower; and such proceeding or petition
shall continue undismissed for 60 days, or an order or decree approving or
ordering any of the foregoing shall be entered; or
iv. the Borrower shall (a) voluntarily commence any proceeding or
file any petition seeking relief under Title 11 of the United States Code,
as now constituted or hereafter amended, or any other Federal or state
bankruptcy, insolvency, receivership or similar law, (b) consent to the
institution of, or fail to contest in a timely and appropriate manner, any
proceeding or the filing of any petition described in paragraph (iii) of
this Section 6(a), (c) apply for or consent to the appointment of a
receiver, trustee, custodian, sequestrator, conservator or similar official
for the Borrower, or for a substantial part of its property or assets, (d)
file an answer admitting the material allegations of a petition filed
against it in any such proceeding, (e) make a general assignment for the
benefit of creditors, (f) admit in writing its inability or fail generally
to pay its debts as they become due or (g) take any action for the purpose
of effecting any of the foregoing.
b. Acceleration. If an Event of Default occurs under Section 6(a)(iii)
or (iv), then the outstanding principal of and all accrued Interest on this
Note shall automatically become immediately due and payable, without
presentment, demand, protest or notice of any kind, all of which are hereby
expressly waived. If any other Event of Default occurs and is continuing,
the Holder, by written notice to the Borrower, may declare the principal of
and accrued Interest on this Note to be immediately due and payable. Upon
such declaration, such principal and Interest shall become immediately due
and payable. The Holder may rescind an acceleration and its consequences if
all existing Events of Default have been cured or waived, except nonpayment
of principal or Interest that has become due solely because of the
acceleration, and if the rescission would not conflict with any judgment or
decree.
7. Suits for Enforcement. Upon the occurrence of any one or more Events of
Default, the Holder may proceed to protect and enforce its rights hereunder
by suit in equity, action at law or by other appropriate proceeding,
whether for the specific performance of any covenant or agreement contained
in the Purchase Agreement or this Note or in aid of the exercise of any
power granted in the Purchase Agreement or this Note, or may proceed to
enforce the payment of this Note, or to enforce any other legal or
equitable right of the Holder.
8. Remedies Cumulative. No remedy herein conferred upon the Holder is
intended to be exclusive of any other remedy and each and every such remedy
shall be cumulative and shall be in addition to every other remedy given
hereunder or now or hereafter existing at law or in equity or by statute or
otherwise.
9. Remedies Not Waived. No course of dealing between the Borrower and the
Holder or any delay on the part of the Holder in exercising any rights
hereunder shall operate as a waiver of any right.
10. Transfer.
--------
a. Transfer Restrictions. The term "HOLDER" as used herein shall also
include any transferee of this Note who acquires this Note in accordance
with Section 10 and whose name has been recorded by the Borrower in the
Note Register. Each transferee of this Note acknowledges that this Note has
not been registered under the Securities Act, and may be transferred only
pursuant to an effective registration under the Securities Act or pursuant
to an applicable exemption from the registration requirements of the
Securities Act.
b. Register. The Borrower shall maintain a register (the "NOTE
REGISTER") in its principal offices for the purpose of registering this
Note and any transfer or partial transfer thereof, which register shall
reflect and identify, at all times, the ownership of record of any interest
in this Note. Upon the issuance of this Note, the Borrower shall record the
name and address of the initial purchaser of this Note in the Note Register
as the first Holder. Prior to due presentment for registration of transfer,
the Person in whose name any Note shall be registered shall be deemed and
treated as the Holder thereof for all purposes hereof, and the Borrower
shall not be affected by any notice or knowledge to the contrary. Subject
to Section 10(c), upon surrender for registration of transfer or exchange
of this Note at the principal offices of the Borrower, the Borrower shall,
at the expense of the party requesting such transfer or exchange, execute
and deliver one or more new Notes of like tenor and of like aggregate
principal amount, registered in the name of the Holder or a transferee or
transferees, which Note or Notes shall bear (i) any applicable legend
required by Treasury Regulations Section 1.1275-3 and (ii) any legends that
appear on the face of the surrendered Note. Every Note surrendered for
registration of transfer or exchange shall be duly endorsed, or be
accompanied by written instrument of transfer duly executed by the Holder
of such Note or such holder's attorney duly authorized in writing. The
Borrower may require payment of a sum sufficient to cover any stamp tax of
governmental charge imposed in respect of any such transfer of Notes. Each
new Note shall be dated, and bear Interest from the date as to which
Interest shall have been indefeasibly paid in full with respect to the
surrendered Note, or if such Interest shall not have been so paid, such new
Note shall be dated the date of the surrendered Note.
c. Transfer Restrictions. This Note may not be transferred or
assigned, in whole or in part, to any other Person without the prior
written consent of the Borrower, except that this Note may be transferred
or assigned, in whole or in part, by the Holder at any time to one or more
Affiliates of the Holder.
11. Replacement of Note. On receipt by the Borrower of an affidavit of an
authorized representative of the Holder stating the circumstances of the
loss, theft, destruction or mutilation of this Note (and in the case of any
such mutilation, on surrender and cancellation of such Note), the Borrower,
at the expense of the Holder, will promptly execute and deliver, in lieu
thereof, a new Note of like tenor. If required by the Borrower, such Holder
must provide indemnity sufficient in the reasonable judgment of the
Borrower to protect the Borrower from any loss which they may suffer if a
lost, stolen or destroyed Note is replaced.
12. Covenants Bind Successors and Assigns. All the covenants, stipulations,
promises and agreements in this Note contained by or on behalf of the
Borrower shall bind its successors and assigns, whether so expressed or
not.
13. Notices. All notices, demands and other communications provided for or
permitted hereunder shall be made in writing and shall be by registered or
certified first-class mail, return receipt requested, telecopier (with
receipt confirmed), courier service or personal delivery at the addresses
specified in Section 8.7 of the Purchase Agreement. All such notices and
communications shall be deemed to have been duly given when: delivered by
hand, if personally delivered; when delivered by courier, if delivered by
commercial overnight courier service; if mailed, five business days after
being deposited in the mail, postage prepaid; or if telecopied, when
receipt is acknowledged.
14. GOVERNING LAW. THIS NOTE 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.
15. WAIVER OF JURY TRIAL. THE BORROWER AND THE HOLDER 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 NOTE.
16. FORUM SELECTION AND CONSENT TO JURISDICTION. THE BORROWER AND THE
HOLDER HEREBY IRREVOCABLY AND UNCONDITIONALLY CONSENT 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 NOTE (AND AGREES NOT TO COMMENCE ANY
LITIGATION RELATING HERETO 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 SECTION 8.7 OF THE PURCHASE
AGREEMENT SHALL BE EFFECTIVE SERVICE OF PROCESS FOR ANY LITIGATION BROUGHT
AGAINST IT IN ANY SUCH COURT. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY
AND UNCONDITIONALLY WAIVES ANY OBJECTION TO THE LAYING OF VENUE OF ANY
LITIGATION ARISING OUT OF THIS NOTE 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.
17. Severability. If any one or more of the provisions contained herein, or
the application thereof in any circumstance, is held invalid, illegal or
unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision in every other respect and of the
remaining provisions hereof shall not be in any way impaired, unless the
provisions held invalid, illegal or unenforceable shall substantially
impair the benefits of the remaining provisions hereof.
18. Headings. The headings in this Note are for convenience of reference
only and shall not limit or otherwise affect the meaning hereof.
LXH, L.L.C.
By: GS Capital Partners 2000, L.P.,
its managing member
By: GS Advisors 2000, L.L.C.,
its general partner
By:/s/ John E. Bowman
----------------------
Name: John E. Bowman
Title: Vice President
