AMENDED AND RESTATED
GOVERNANCE AGREEMENT
dated as of
[ ], 2003
among
LXH, L.L.C,
LXH II, L.L.C.,
GS CAPITAL PARTNERS 2000, L.P.,
GS CAPITAL PARTNERS 2000 OFFSHORE, L.P.,
GS CAPITAL PARTNERS 2000 EMPLOYEE FUND, L.P.,
GS CAPITAL PARTNERS 2000 GmbH & CO. BETEILIGUNGS KG,
STONE STREET FUND 2000, L.P.
and
HEXCEL CORPORATION
AMENDED AND RESTATED GOVERNANCE AGREEMENT, dated as of [ ], 2003,
among LXH, L.L.C., a Delaware limited liability company ("LXH"), LXH II,
L.L.C., a Delaware limited liability company ("LXH II" and together with
LXH, the "LXH Investors"), GS Capital Partners 2000 L.P., a Delaware
limited partnership ("GS 2000"), GS Capital Partners 2000 Offshore, L.P., a
Cayman Islands exempted limited partnership ("GS 2000 Offshore"), GS
Capital Partners 2000 Employee Fund, L.P., a Delaware limited partnership
("GS 2000 Employee"), GS Capital Partners 2000 GmbH & Co. Beteiligungs KG,
a German limited partnership ("GS 0000 Xxxxxxx"), Stone Street Fund 2000,
L.P., a Delaware limited partnership ("Stone Street" and, collectively with
GS 2000, GS 2000 Offshore, GS 2000 Employee and GS 0000 Xxxxxxx, the
"Limited Partnerships"), and Hexcel Corporation, a Delaware corporation
("Hexcel").
WHEREAS, the Limited Partnerships and Hexcel are parties to a Stock
Purchase Agreement, dated as of December 18, 2002 (the "Purchase
Agreement"), and have consummated the transactions contemplated therein
(the "Transactions"), whereby the Investors now Beneficially Own
approximately [37.8]% of the Total Voting Power of Hexcel (as such terms
are defined below);
WHEREAS, the LXH Investors, the Limited Partnerships and Hexcel are
parties to a Governance Agreement, dated December 19, 2000 (as amended
through the date hereof, the "2000 Governance Agreement"); and
WHEREAS, each of the parties to the 2000 Governance Agreement hereto
wishes to amend and restate the 2000 Governance Agreement, to further
establish the nature of their relationship and set forth their agreement
concerning the governance of Hexcel following consummation of the
Transactions as well as certain matters relating to the Investors'
ownership of Voting Securities (as such terms are defined below).
NOW, THEREFORE, in consideration of the mutual covenants and
undertakings contained herein and for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties
hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01 DEFINITIONS. As used in this Agreement, the
following terms shall have the following meanings:
"2000 GOVERNANCE AGREEMENT" shall have the meaning set forth in the
recitals.
"ADDITIONAL SHARES" means, as of any date of determination, up to
255,381 shares of Hexcel Common Stock (as equitably adjusted to reflect any
stock split, combination, reorganization, recapitalization,
reclassification or other similar event involving the Hexcel Common Stock),
in the aggregate, (i) the Beneficial Ownership of which may be acquired
inadvertently from time to time by The Xxxxxxx Xxxxx Group, Inc. or its
Affiliates acting in connection with their activities as a broker or dealer
registered under Section 15 of the Exchange Act or as an asset manager
(excluding Affiliates formed for the purpose of effecting principal
transactions) or (ii) the Beneficial Ownership of which may be acquired by
the Investors pursuant to grants of stock options or other stock-based
awards to the Investor Directors by Hexcel pursuant to any stock option or
stock incentive plan approved by the Board of Directors of Hexcel,
including without limitation the Hexcel Incentive Stock Plan; provided,
that if and for so long as The Xxxxxxx Sachs Group, Inc. and its Affiliates
collectively Beneficially Own less than 30% of the Total Voting Power of
Hexcel, the maximum number of Additional Shares shall be 400,000 (as
equitably adjusted to reflect any stock split, combination, reorganization,
recapitalization, reclassification or other similar event involving the
Hexcel Common Stock).
An "AFFILIATE" of any Person means any other Person that directly or
indirectly, through one or more intermediaries, Controls, is Controlled by,
or is under common Control with, such first Person. "CONTROL" has the
meaning specified in Rule 12b-2 under the Exchange Act as in effect on the
date of this Agreement.
Any Person shall be deemed to "BENEFICIALLY OWN", to have "BENEFICIAL
OWNERSHIP" of, or to be "BENEFICIALLY OWNING" any securities (which
securities shall also be deemed "BENEFICIALLY OWNED" by such Person) that
such Person is deemed to "beneficially own" within the meaning of Rules
13d-3 and 13d-5 under the Exchange Act as in effect on the date of this
Agreement; provided that, except for the rights set forth in Section 3.02
hereof, any Person shall be deemed to Beneficially Own any securities that
such Person has the right to acquire, whether or not such right is
exercisable immediately.
"BERKSHIRE/GREENBRIAR DIRECTOR" means a director who is nominated to
the Board by any of the Berkshire/Greenbriar Investors pursuant to the
Berkshire/Greenbriar Stockholders Agreement.
"BERKSHIRE/GREENBRIAR INVESTORS" means any of (i) Berkshire Fund V,
Limited Partnership, a Massachusetts limited partnership, (ii) Berkshire
Fund VI, Limited Partnership, a Massachusetts limited partnership, (iii)
Berkshire Investors LLC, a Massachusetts limited liability company, (iv)
Berkshire Fund V Investment Corp., a Massachusetts corporation (for so long
as it Beneficially Owns Voting Securities), (v) Berkshire Fund VI
Investment Corp., a Massachusetts corporation (for so long as it
Beneficially Owns Voting Securities), (vi) Greenbriar Co-Investment
Partners, L.P., a Delaware limited partnership, (vii) Greenbriar Equity
Fund, L.P., a Delaware limited partnership, or (viii) any investment entity
controlled by or under common control with either of Berkshire Partners LLC
or Greenbriar Equity Group LLC; provided, however, that any such Person
specified in clause (viii) that desires to acquire Voting Securities in
accordance with the Berkshire/Greenbriar Stockholders Agreement shall, as a
condition to acquiring any such Voting Securities, execute a joinder
agreement in which it shall agree to be bound by the provisions of the
Berkshire/Greenbriar Stockholders Agreement to the same extent as the
Investors and shall thereafter be deemed to be an " Investor" for all
purposes of the Berkshire/Greenbriar Stockholders Agreement for so long as
it holds Voting Securities.
"BERKSHIRE/GREENBRIAR STOCKHOLDERS AGREEMENT" means the Stockholders
Agreement, dated [ ], 2003, among the Berkshire/Greenbriar Investors and
Hexcel.
"BOARD" means the board of directors of Hexcel.
"BROAD DISTRIBUTION" with respect to Voting Securities, means a
distribution of Voting Securities that, to the knowledge, after due
inquiry, of the Person on whose behalf such distribution is being made,
will not result in the acquisition by any other Person of Beneficial
Ownership of any such Voting Securities to the extent that, after giving
effect to such acquisition, such acquiring Person (other than any Investor
and other than any underwriter acting in such capacity in an underwritten
public offering of Hexcel Common Stock) would Beneficially Own in excess of
5% of the Total Voting Power of Hexcel.
"BUYOUT TRANSACTION" means a tender offer, merger or any similar
transaction that offers holders of Voting Securities (other than, if
applicable, the Person proposing such transaction) the opportunity to
dispose of the Voting Securities Beneficially Owned by such holders or
otherwise contemplates the acquisition by any Person or Group of Voting
Securities that would result in Beneficial Ownership by such Person or
Group of a majority of the Voting Securities outstanding, or a sale of all
or substantially all of Hexcel's assets.
"CLOSING DATE" means the date of the closing of the Transactions.
"CONVERSION SHARES" means, at any time, those shares of Hexcel Common
Stock issuable upon conversion of the shares of Series A Convertible
Preferred Stock or Series B Convertible Preferred Stock (as equitably
adjusted to reflect any stock split, combination, reorganization,
recapitalization, reclassification or other similar event involving the
Hexcel Common Stock).
"CONVERTIBLE PREFERRED STOCK" means, collectively, the Series A
Convertible Preferred Stock and the Series B Convertible Preferred Stock.
"CUSTOMARY ACQUISITION/CONTROL PREMIUM" means the aggregate realizable
value for all Voting Securities (including Voting Securities owned by the
Investors), assuming a sale of Hexcel in its entirety in a transaction or
series of related transactions to a third party or parties on an arm's
length basis in a controlled auction process designed to maximize
shareholder value by attracting all possible bidders, including the
Investors and their Affiliates.
"DEBT INSTRUMENTS" shall mean (i) Hexcel's Second Amended and Restated
Credit Agreement, dated as of September 15, 1998, as amended from time to
time, or any replacement thereof and (ii) the Indenture, dated as of
January 21, 1999, relating to Hexcel's 9-3/4% Senior Subordinated Notes Due
2009 (the "SENIOR INDENTURE").
"DISINTERESTED DIRECTORS" means, with respect to any Buyout
Transaction, those directors of Hexcel which are not interested directors
(within the meaning of Section 144 of the Delaware General Corporation Law)
with respect to such Buyout Transaction, it being understood that no
Investor Nominee shall be deemed to be not interested with respect to any
Investor Buyout Transaction.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder.
"GOVERNMENTAL ENTITY" means any court, administrative agency,
regulatory body, commission or other governmental authority, board, bureau
or instrumentality, domestic or foreign and any subdivision thereof.
"GROUP" has the meaning set forth in Section 13(d) of the Exchange Act
as in effect on the date of this Agreement.
"HEXCEL" has the meaning set forth in the recitals to this Agreement.
"HEXCEL COMMON STOCK" means the common stock of Hexcel, par value
$0.01 per share, and any equity securities issued or issuable in exchange
for or with respect to such common stock by way of a stock dividend, stock
split or combination of shares or in connection with a reclassification,
recapitalization, merger, consolidation or other reorganization.
"HEXCEL INCENTIVE STOCK PLAN" means the Hexcel Corporation Incentive
Stock Plan, as amended and restated through [ ], 2003 and any subsequent
amendment thereto or replacement thereof approved by the Board of Directors
of Hexcel.
"INDEMNIFIED INDIVIDUALS" means each of the individuals who at any
time were officers or directors of Hexcel and their respective heirs and
personal and legal representatives.
"INDEPENDENT DIRECTOR" means a director of Hexcel who is not a
Berkshire/Greenbriar Director or an Investor Director and who (i) is not
and has never been an officer, employee, partner or director of any of the
Investors, the Berkshire/Greenbriar Investors or their respective
Affiliates or associates (as defined in Rule 12b-2 under the Exchange Act),
in each case other than Hexcel and (ii) has no affiliation or compensation,
consulting or contractual relationship with any of the Investors, the
Berkshire/Greenbriar Investors or their respective Affiliates or associates
(in each case other than Hexcel) such that a reasonable person would regard
such director as likely to be unduly influenced by any of such Persons or
any of their Affiliates or associates (in each case other than Hexcel).
"INITIAL SHARES" means (i) the 47,125 shares of Series A Convertible
Preferred Stock purchased by the Limited Partnerships pursuant to the
Purchase Agreement, (ii) the 47,125 shares of Series B Convertible
Preferred Stock purchased by the Limited Partnerships pursuant to the
Purchase Agreement and (iii) the Conversion Shares (as equitably adjusted
to reflect any stock split, combination, reorganization, recapitalization,
reclassification or other similar event involving the Hexcel Common Stock
or Convertible Preferred Stock, as applicable).
"INVESTOR BUYOUT TRANSACTION" means a Buyout Transaction by the
Investors or their Affiliates or any other Person acting on behalf of the
Investors or their Affiliates, or any Person who is part of a Group with
the Investors, involving the acquisition of all (but not less than all)
Voting Securities held by the Other Holders, provided that all Other
Holders are entitled to receive Requisite Consideration upon consummation
of such Buyout Transaction.
"INVESTOR DIRECTORS" means Investor Nominees who are elected or
appointed to serve as members of the Board in accordance with this
Agreement.
"INVESTOR NOMINEES" means such Persons as are so designated by the
Investors, as such designations may change from time to time in accordance
with this Agreement, to serve as members of the Board pursuant to Section
2.03 hereof.
"INVESTORS" means any of (i) LXH, (ii) LXH II, (iii) the Limited
Partnerships or (iv) The Xxxxxxx Xxxxx Group, Inc., or any direct or
indirect Subsidiary of The Xxxxxxx Sachs Group, Inc. formed for the purpose
of effecting principal transactions; provided, however, that any such
Person specified in clause (iv) that desires to acquire Voting Securities
in accordance with this Agreement shall, as a condition to acquiring any
such Voting Securities, execute a joinder agreement in which it shall agree
to be bound by the provisions of this Agreement to the same extent as the
Investors and shall thereafter be deemed to be an " Investor" for all
purposes of this Agreement unless such Person does not hold any Voting
Securities.
"NON-INVESTOR DIRECTOR" means a director of Hexcel who is not an
Investor Director and who (i) is not and has never been an officer,
employee, partner or director of any of the Investors or their Affiliates
or associates (as defined in Rule 12b-2 under the Exchange Act), in each
case other than Hexcel, and (ii) has no affiliation or compensation,
consulting or contractual relationship with any of the Investors or their
Affiliates or associates (in each case other than Hexcel) such that a
reasonable person would regard such director as likely to be unduly
influenced by any of such Persons or any of their Affiliates or associates
(in each case other than Hexcel).
"ORDINARY COURSE BROKER DEALER SHARES" means those shares of Hexcel
Common Stock which are acquired by any Person solely in connection with the
activities of a broker or dealer registered under Section 15 of the
Exchange Act (i) as a result of underwriting activities in connection with
a registration statement filed by Hexcel (including any shares acquired for
the investment account of a broker or dealer in connection with such
underwriting activities), (ii) as a result of the exercise of investment or
voting discretion authority with respect to any of such Person's customer
accounts, or (iii) in good faith in connection with a debt previously
contracted; provided, in each case, that the Person engaging in such
activities does not Beneficially Own such shares of Hexcel Common Stock.
"ORIGINAL GOLDMAN SHARES" means the [14,563,668] shares of Hexcel
Common Stock Beneficially Owned by the Investors on the date hereof (as
equitably adjusted to reflect any stock split, combination, reorganization,
recapitalization, reclassification or other similar event involving the
Hexcel Common Stock).
"ORIGINAL STANDSTILL PERIOD" means the period commencing on the
Closing Date and terminating on December 19, 2003.
"OTHER HOLDERS" means the holders of the Other Shares.
"OTHER SHARES" means Voting Securities not Beneficially Owned by any
of the Investors or the Berkshire/Greenbriar Investors.
"PERSON" means any individual, Group, corporation, firm, partnership,
joint venture, trust, business association, organization, Governmental
Entity or other entity.
"REGISTRATION RIGHTS AGREEMENT" means the Amended and Restated
Registration Rights Agreement dated as of the date hereof between the LXH
Investors, the Limited Partnerships and Hexcel.
"REQUISITE CONSIDERATION" means consideration that is (i) approved by
(x) a majority of the Independent Directors acting solely in the interests
of the Other Holders, after the receipt of an opinion of an independent
nationally recognized investment banking firm retained by them or (y) a
majority in interest of the Other Holders by means of a Stockholder Vote
solicited pursuant to a proxy statement containing the information required
by Schedule 14A under the Exchange Act (it being understood that the
Independent Directors shall, consistent with their fiduciary duties, be
free to include in such proxy statement, if applicable, the reasons
underlying any failure by them to approve a Buyout Transaction by the
requisite vote, including whether a fairness opinion was sought by the
Independent Directors and any opinions or recommendations expressed in
connection therewith) and (ii) in the opinion of an independent nationally
recognized investment banking firm (including such a firm retained by the
Investors), fair to the Other Holders from a financial point of view. In
connection with the retention of any investment banking firm referred to
herein, the Independent Directors shall instruct such investment banking
firm, unless the Independent Directors conclude, after consultation with
their outside legal and financial advisors, that such instructions are not
appropriate, to (a) value Hexcel's businesses taking into account a premium
for control and (b) assume for purposes of such opinion that the Other
Holders are entitled to their proportionate part of a Customary
Acquisition/Control Premium.
"SEC" means the Securities and Exchange Commission or any successor
Governmental Entity.
"SECURITIES ACT" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
"SERIES A CERTIFICATE OF DESIGNATIONS" means the Certificate of
Designations for the Series A Convertible Preferred Stock.
"SERIES B CERTIFICATE OF DESIGNATIONS" means the Certificate of
Designations for the Series B Convertible Preferred Stock.
"SERIES A CONVERTIBLE PREFERRED STOCK" means the Series A Convertible
Preferred Stock, without par value, of Hexcel.
"SERIES B CONVERTIBLE PREFERRED STOCK" means the Series B Convertible
Preferred Stock, without par value, of Hexcel.
"SIGNIFICANT SUBSIDIARY" has the meaning set forth in Rule 1-02 of
Regulation S-X under the Securities Act as in effect on the date of this
Agreement.
"STANDSTILL PERIOD" means the eighteen month period commencing on the
Closing Date.
"STOCKHOLDER VOTE" means as to any matter to be presented to holders
of Voting Securities, a vote at a duly called and held annual or special
meeting of the holders of Voting Securities entitled to vote on such
matter.
"SUBSIDIARY" means, with respect to any Person, as of any date of
determination, any other Person as to which such Person owns, directly or
indirectly, or otherwise controls, more than 50% of the voting shares or
other similar interests.
"THIRD PARTY OFFER" means a bona fide offer to enter into a Buyout
Transaction by a Person other than any of the Investors or any of their
respective Affiliates, any other Person acting on behalf of any of the
Investors or any of their respective Affiliates, or any Person who is part
of a Group with any of the Investors or any of their respective Affiliates,
that does not treat the Investors or their respective Affiliates
differently than the Other Holders.
"TOTAL VOTING POWER OF HEXCEL" means the total number of votes that
may be cast in the election of directors of Hexcel if all Voting Securities
outstanding or treated as outstanding pursuant to the final two sentences
of this definition were present and voted at a meeting held for such
purpose. The percentage of the Total Voting Power of Hexcel Beneficially
Owned by any Person is the percentage of the Total Voting Power of Hexcel
that is represented by the total number of votes that may be cast in the
election of directors of Hexcel by Voting Securities Beneficially Owned by
such Person. In calculating such percentage, each share of Convertible
Preferred Stock shall be outstanding or shall be treated as outstanding for
all purposes of this Agreement without regard to the Person holding such
share until such time as such share of Convertible Preferred Stock is
redeemed or repurchased by the Company or converted into Common Stock in
accordance with the Series A Certificate of Designations or the Series B
Certificate of Designations, as applicable. In calculating such percentage,
the Voting Securities Beneficially Owned by any Person that are not
outstanding but are subject to issuance upon exercise or exchange of rights
of conversion or any options, warrants or other rights Beneficially Owned
by such Person shall be deemed to be outstanding for the purpose of
computing the percentage of the Total Voting Power of Hexcel represented by
Voting Securities Beneficially Owned by such Person, but shall not be
deemed to be outstanding for the purpose of computing the percentage of the
Total Voting Power of Hexcel represented by Voting Securities Beneficially
Owned by any other Person.
"TRANSACTIONS" has the meaning set forth in the recitals to this
Agreement.
"VOTING SECURITIES" means Hexcel Common Stock, the Convertible
Preferred Stock and any other securities of Hexcel or any Subsidiary of
Hexcel entitled to vote generally in the election of directors of Hexcel or
such Subsidiary of Hexcel.
ARTICLE II
CORPORATE GOVERNANCE
SECTION 2.01 BOARD OF DIRECTORS. Subject to Section 2.02(f), the
Board shall consist of ten members, one of whom shall be designated the
Chairman of the Board. The Chairman of the Board shall be designated by a
majority of the members of the Board.
SECTION 2.02 INVESTORS BOARD REPRESENTATION. (a) Subject to
Sections 2.02(f) and 2.05(c), for so long as the Investors Beneficially Own
20% or more of the Total Voting Power of Hexcel, the parties hereto shall
exercise all authority under applicable law to cause any slate of directors
presented to stockholders for election to the Board to consist of such
nominees that, if elected, would result in the Board consisting of three
Investor Directors and seven Non-Investor Directors (including at least
five Independent Directors); provided, however, that if the Investors,
directly or indirectly, during the term of this Agreement shall have sold,
transferred or otherwise disposed of, on a cumulative basis, Beneficial
Ownership of shares of Hexcel Common Stock and/or Convertible Preferred
Stock together representing 331/3% or more of the Total Voting Power of
Hexcel represented by the aggregate number of Original Goldman Shares and
Initial Shares as of the Closing Date to Persons that are not Investors,
then the parties hereto shall exercise all authority under applicable law
to cause any slate of directors presented to stockholders for election to
the Board to consist of such nominees that, if elected, would result in the
Board consisting of two Investor Directors and eight Non-Investor Directors
(including at least six Independent Directors).
(b) Subject to Sections 2.02(f) and 2.05(c), for so long as the
Investors Beneficially Own less than 20% but at least 15% of the Total
Voting Power of Hexcel, the parties hereto shall exercise all authority
under applicable law to cause any slate of directors presented to
stockholders for election to the Board to consist of such nominees that, if
elected, would result in the Board consisting of two Investor Directors and
eight Non-Investor Directors (including at least six Independent
Directors); provided, however, that if the Investors, directly or
indirectly, during the term of this Agreement shall have sold, transferred
or otherwise disposed of, on a cumulative basis, Beneficial Ownership of
shares of Hexcel Common Stock and/or Convertible Preferred Stock together
representing 662/3% or more of the Total Voting Power of Hexcel represented
by the aggregate number of Original Goldman Shares and Initial Shares as of
the Closing Date to Persons that are not Investors, then the parties hereto
shall exercise all authority under applicable law to cause any slate of
directors presented to stockholders for election to the Board to consist of
such nominees that, if elected, would result in the Board consisting of one
Investor Director and nine Non-Investor Directors (including at least seven
Independent Directors).
(c) Subject to Sections 2.02(f) and 2.05(c), for so long as the
Investors Beneficially Own less than 15% but at least 10% of the Total
Voting Power of Hexcel, the parties hereto shall exercise all authority
under applicable law to cause any slate of directors presented to
stockholders for election to the Board to consist of such nominees that, if
elected, would result in the Board consisting of one Investor Director and
nine Non-Investor Directors (including at least seven Independent
Directors).
(d) In order to determine (x) the number of Investor Nominees to be
included in any slate of directors to be presented to stockholders for
election to the Board and (y) the percentage of the Total Voting Power of
Hexcel Beneficially Owned by the Investors for purposes of Section 2.06,
the Investors shall be deemed to Beneficially Own a percentage of the Total
Voting Power of Hexcel that is no more than (1) 39.3% of the Total Voting
Power of Hexcel less (2) the percentage of the Total Voting Power of Hexcel
represented by any Voting Securities disposed of, directly or indirectly,
by the Investors to Persons that are not Investors since the Closing Date.
(e) Additional Shares shall not be included in any calculation of the
Investors' Beneficial Ownership of the Total Voting Power of Hexcel under
this Agreement.
(f) Notwithstanding anything in this Agreement, Hexcel may increase
the size of the Board through the appointment of one or more additional
independent directors (as such term is used in the New York Stock Exchange
("NYSE") listing requirements) in order to comply with any applicable law,
regulation or NYSE rule; provided, that, in the event of any such change,
Hexcel will use its commercially reasonable best efforts to give the
Investors the right to nominate, as nearly as possible, that proportion of
the directors as permitted by the terms of Sections 2.02(a), 2.02(b) and
2.02(c). Any director appointed to the Board pursuant to the first clause
of this Section 2.02(f) shall be selected by a majority of the Independent
Directors and shall be an Independent Director. Each of the Investors shall
perform any and all actions as reasonably requested by Hexcel in order for
the Board to be changed pursuant to this Section 2.02(f).
SECTION 2.03 DESIGNATION OF SLATE. (a) Any Investor Nominees that
are included in a slate of directors pursuant to Section 2.02 shall be
designated as provided in this Section 2.03, and any Non-Investor Director
nominees who are to be included in any slate of directors pursuant to
Section 2.02 shall be designated by majority vote by the then incumbent
Non-Investor Directors (including the Chairman of the Board if he or she is
an Independent Director) except that, to the extent that any such
Non-Investor Director nominees are to be appointed by other holders of
Voting Securities pursuant to any stockholders agreement existing on the
date hereof between Hexcel and such holders of Voting Securities, such
nominees shall be designated by such holders in accordance with the terms
of such agreement. Hexcel's nominating committee, if any (or if there is no
such nominating committee, the Board or any other duly authorized committee
thereof), shall nominate each person so designated. The initial Investor
Nominees shall be Xxxxxxx Xxxxx, Xxxxx Xxxxxxxxx and Xxxxx Xxxxxxx. The
remaining initial members of the Board shall be Xxxxx X. Xxxxxx, Xxxx X.
Xxxxxxx, Xxxxxx X. Small, [ ] (1). The initial Chairman of the Board shall
be Xxxxx X. Xxxxxx.
(b) The parties hereby agree that for so long as (i) the Investors are
permitted to designate three Investor Directors pursuant to this Agreement,
two directors shall be designated by GS Capital Partners 2000 L.P. ("GS
Capital") and one director shall be designated by LXH II; (ii) the
Investors are permitted to designate two Investor Directors pursuant to
this Agreement, one director shall be designated by GS Capital and one
director shall be designated by LXH II; and (iii) the Investors are
permitted to designate one Investor Director pursuant to this Agreement,
such director shall be designated by GS Capital.
(c) If, for any reason, all of the Investor Directors designated
pursuant to Section 2.02 and this Section 2.03 are not elected to the Board
by stockholders, then Hexcel shall exercise all authority under applicable
law to cause any person designated by the Investors to be elected to the
Board, and during any such absence of membership on the Board, Hexcel
shall, after receiving notice from the Investors as to the identity of a
representative of the Investors, (i) permit such representative to attend
all Board meetings and to the extent contemplated by Section 2.04 all
committees thereof as an observer; (ii) provide such representative advance
notice of each such meeting, including such meeting's time and place, at
the same time and in the same manner as such notice is provided to the
members of the Board (or such committee thereof); (iii) provide such
representative with copies of all materials, including notices, minutes and
consents, distributed to the members of the Board (or such committee
thereof) at the same time as such materials are distributed to such Board
(or such committee thereof) and shall permit such representative to have
the same access to information concerning the business and operations of
Hexcel as such representative would have had as an Investor Director; and
(iv) on a basis consistent with the members of the Board, permit such
representative to discuss the affairs, finances and accounts of Hexcel
with, and to make proposals and furnish advice with respect thereto, the
Board, without voting; provided, in each case, that such representative
agrees in writing to maintain the confidentiality of all materials and
information provided to him pursuant to this Section 2.03(c) and to return
to Hexcel all such materials and information at such time as such
representative ceases to act as a representative pursuant to this Section
2.03(c).
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(1) The remaining members of the Board will be selected by Hexcel and
shall consist of four members currently on the Board.
SECTION 2.04 COMMITTEE MEMBERSHIP. So long as the Investors shall
be entitled to designate two or more Investor Nominees for election to the
Board under this Agreement, the finance, compensation, nominating, audit
and any other committee of the Board shall consist of at least one Investor
Director; provided, however, that if no Investor Director is eligible for
membership on an above-listed committee under then-applicable listing
standards of the NYSE or any other applicable law, rule or regulation, then
such committee of the Board shall include an Investor Director only when so
permitted by the listing standards of the NYSE or any other applicable law,
rule or regulation; provided, further, that Hexcel shall exercise all
authority under applicable law, rule and regulation to permit the inclusion
of any Investor Director designated by the Investors on such committee,
including, without limitation, causing an increase in the number of
directors on such committee. To the extent that Investor Directors are not
eligible for membership on the finance committee, compensation committee,
nominating committee, audit committee and/or other committees of the Board,
the Investors shall be entitled to designate a representative to attend and
observe such committee meetings, provided that the observation is not
prohibited by applicable listing standards, laws, rules or regulations.
SECTION 2.05 RESIGNATIONS AND REPLACEMENTS. (a) If at any time a
member of the Board resigns (pursuant to this Section 2.05 or otherwise) or
is removed in accordance with applicable law or Hexcel's by-laws, a new
member shall be designated to replace such member until the next election
of directors. If consistent with Section 2.02 the replacement director is
to be an Investor Director, the party that designated such Investor
Director shall designate the replacement Investor Director. Except as set
forth in paragraph (c) below, if consistent with Section 2.02, the
replacement director is to be a Non-Investor Director, such Non-Investor
Director (including the Chairman of the Board if he or she is a
Non-Investor Director) shall be designated in accordance with the terms of
this Agreement.
(b) Subject to paragraph (c) below, if at any time the number of
Investor Nominees entitled to be nominated to the Board in accordance with
this Agreement in an election of directors presented to stockholders would
decrease, within 10 days thereafter the Investors shall cause a sufficient
number of Investor Directors to resign from the Board so that the number of
Investor Directors on the Board after such resignation(s) equals the number
of Investor Nominees that the Investors would have been entitled to
designate had an election of directors taken place at such time. The
Investors shall also cause a sufficient number of Investor Directors to
resign from any relevant committees of the Board so that such committees
are comprised in the manner contemplated by Section 2.04 after giving
effect to such resignations. Any vacancies created by the resignations
required by this Section 2.05(b) shall be filled by Independent Directors.
(c) If at any time the percentage of the Total Voting Power of Hexcel
Beneficially Owned by the Investors decreases as a result of an issuance of
Voting Securities by Hexcel (other than any of the issuances described in
the last sentence of this Section 2.05(c)), the Investors may notify Hexcel
that the Investors intend to acquire a sufficient amount of additional
Voting Securities in accordance with this Agreement necessary to maintain
their then current level of Board representation within 90 days. In such
event, until the end of such period (and thereafter if the Investors in
fact restore their percentage of the Total Voting Power of Hexcel during
such period and provided that the Investors continue to maintain the
requisite level of Beneficial Ownership of Voting Securities in accordance
with Section 2.02) the Board shall continue to have the number of Investor
Directors that corresponds to the percentage of the Total Voting Power of
Hexcel Beneficially Owned by the Investors prior to such issuance of Voting
Securities by Hexcel. Notwithstanding any provision herein to the contrary,
the provisions of this Section 2.05(c) shall not apply to any issuances of
Voting Securities (x) upon conversion of any convertible securities which
are either outstanding on the date hereof (including, without limitation,
issuances of securities upon any payment of dividends on, redemption of, or
otherwise payable with respect to the Series A Convertible Preferred Stock
or Series B Convertible Preferred Stock) or approved by the Board or a duly
authorized committee of the Board after the date hereof in accordance with
Section 2.06 hereof, or (y) pursuant to employee or director stock option
or incentive compensation or similar plans outstanding as of the date
hereof or, subsequent to the date hereof, approved by the Board or a duly
authorized committee of the Board.
SECTION 2.06 INVESTOR DIRECTOR APPROVALS. The Board shall not
authorize, approve or ratify any of the following actions without the
approval of a majority of the Investor Directors for so long as and at any
time the Investors Beneficially Own 15% or more of the Total Voting Power
of Hexcel (subject to the provisions of Section 2.02(d)), and, if the
Investors percentage Beneficial Ownership of the Total Voting Power of
Hexcel is reduced below 15% by an issuance of Voting Securities by Hexcel,
no such authorization, approval, or ratification shall be given by the
Board without the approval of a majority of the Investor Directors (x)
until 10 business days after Hexcel notifies the Investors in writing of
such issuance, and (y) if the Investors shall have notified Hexcel within
10 business days after their receipt of a written notification of such
issuance that the Investors, pursuant to the option granted to the
Investors by Section 3.02 of this Agreement, intend to acquire a sufficient
amount of Voting Securities within such 90-day period referred to therein,
so that the Investors will Beneficially Own at least 15% of the Total
Voting Power of Hexcel by the end of such 90-day period, subject to Section
2.05(c), during the 90-day period following an issuance of Voting
Securities by Hexcel that causes the Investors to Beneficially Own less
than 15% of the Total Voting Power of Hexcel:
(i) any merger, consolidation, acquisition or other business
combination involving Hexcel or any Subsidiary of Hexcel (other than a
Buyout Transaction) if the value of the consideration to be paid or
received by Hexcel and/or its stockholders in any such individual
transaction or in such transaction when added to the aggregate value
of the consideration paid or received by Hexcel and/or its
stockholders in all other such transactions approved by the Board
during the immediately preceding 12 months exceeds the greater of (x)
$75 million or (y) 11% of Hexcel's total consolidated assets;
(ii) any sale, transfer, assignment, conveyance, lease or other
disposition or any series of related dispositions of any assets,
business or operations of Hexcel or any of its Subsidiaries (other
than a Buyout Transaction) if the value of the assets, business or
operations so disposed during the immediately preceding 12 months
exceeds the greater of (x) $75 million or (y) 11% of Hexcel's total
consolidated assets; or
(iii) any issuance by Hexcel or any Significant Subsidiary of
Hexcel of equity or equity-related securities (other than (1) pursuant
to customary employee or director stock option or incentive
compensation or similar plans approved by the Board or a duly
authorized committee of the Board, (2) pursuant to transactions solely
among Hexcel and its wholly owned Subsidiaries (including any
Subsidiaries which would be wholly owned by Hexcel but for the
issuance of directors' or shareholders' qualifying shares), (3) upon
conversion of convertible securities or upon exercise of warrants or
options, which convertible securities, warrants or options are either
outstanding on the date of this Agreement (including, without
limitation, issuances of securities upon any payment of dividends on,
redemption of, or otherwise payable with respect to the Series A
Convertible Preferred Stock or the Series B Convertible Preferred
Stock) or approved by the Board or a duly authorized committee of the
Board after the date of this Agreement in accordance with this Section
2.06, or (4) in connection with any mergers, consolidations,
acquisitions or other business combinations involving Hexcel or any
Subsidiary of Hexcel which are approved by the Board or a duly
authorized committee of the Board in accordance with this Section 2.06
(if applicable)) for which the consideration received by Hexcel for
such transactions during the immediately preceding 12 months exceeds
$25 million.
SECTION 2.07 BOARD OF DIRECTOR APPROVALS. Subject to Section
3.03, if applicable, for so long as there are any Investor Directors
serving on the Board, the Board shall not authorize, approve or ratify any
action (a "Board Action"), at a meeting of the Board, by written consent or
otherwise, without the approval of a minimum of six (6) members of the
Board, of which at least two (2) of such six (6) members shall be
Independent Directors, or in the event that the Board shall consist of less
than six (6) members due to vacancies on the Board, the approval of all
members of the Board shall be required for any Board Action.
SECTION 2.08 SOLICITATION AND VOTING OF SHARES. (a) Hexcel shall
use commercially reasonable efforts to solicit from the stockholders of
Hexcel eligible to vote for the election of directors proxies in favor of
the Board nominees selected in accordance with Section 2.02.
(b) In any election of directors or at any meeting of the stockholders
of Hexcel called expressly for the removal of directors, for so long as the
Board includes (and will include after any such removal) Investor Directors
contemplated by Section 2.02, the Investors shall be present for purposes
of establishing a quorum and shall vote all their Voting Securities
entitled to vote (1) in favor of any nominee or director selected in
accordance with Section 2.02, (2) in favor of any nominee or director
placed by Hexcel on the slate of directors presented to stockholders for
election to the Board in accordance with the terms of any stockholders
agreement, existing on the date hereof, between Hexcel and a holder or
holders of Voting Securities, (3) against the removal of any director
designated in accordance with Section 2.02 hereof and (4) against the
removal of any director placed by Hexcel on the slate of directors
presented to stockholders for election to the Board and elected to the
Board by the stockholders in accordance with the terms of any stockholders
agreement, existing on the date hereof, between Hexcel and a holder or
holders of Voting Securities. Except as provided above and in Section 3.03,
the Investors shall be free to vote in their sole discretion all their
Voting Securities entitled to vote on any other matter submitted to or
acted upon by stockholders; provided, however, that the Investors shall
vote against any amendment to Hexcel's certificate of incorporation with
respect to the directors' and officers' indemnification provisions
contained therein which would adversely affect the rights thereunder of the
Indemnified Individuals at any time prior to such vote, except for such
modifications as are required by applicable law.
SECTION 2.09 BY-LAWS; RESTRICTIONS ON COMPANY ACTION;
ANTI-TAKEOVER MEASURES. (a) Hexcel shall cause the amendment of its by-laws
to reflect the provisions of Article II of this Agreement and such other
matters as the parties may reasonably agree. The form of such amended
by-laws is attached hereto as Exhibit A. For so long as the Investors are
entitled to designate an Investor Nominee pursuant to Section 2.02, those
by-laws reflecting the provisions of Article II of this Agreement shall not
thereafter be amended during the term of this Agreement except with the
Investors' written consent. Hexcel and each of the Investors shall each
take or cause to be taken all lawful action necessary to ensure at all
times that Hexcel's certificate of incorporation and by-laws are not at any
time inconsistent with the provisions of this Agreement.
(b) Except with the Investors' prior written consent, Hexcel shall not
cause or permit any amendment, restatement, modification or change to, or
waiver of, any provision contained in any agreement (other than customary
employee or director stock option or incentive compensation or similar
plans approved by the Board or a duly authorized committee of the Board)
between a stockholder or stockholders and Hexcel that provides such
stockholder or stockholders (1) governance rights, board representation
rights, voting rights, transfer restrictions or any other similar rights
relating to Hexcel and/or Voting Securities held by such holder or holders
or (2) registration rights with respect to Voting Securities held by such
holder or holders.
(c) Except as required by applicable law, rule or regulation, Hexcel
shall not approve or recommend to its stockholders any transaction or
approve, recommend or take any other action (other than those expressly
contemplated by this Agreement and other than those that affect the
Investors and each Other Holder or each director at the same time in the
same manner) that would (1) materially adversely discriminate against the
Investors as stockholders of Hexcel or (2) restrict the right of any
Investor Director to vote on any matter as such director believes
appropriate in light of his or her duties as a director or the manner in
which an Investor Director may participate in his or her capacity as a
director in deliberations or discussions at meetings of the Board or any
committee thereof, except with respect to (i) entering into contractual or
other business relationships with any of the Investors or any of their
Affiliates (other than in their capacity as stockholders of Hexcel), (ii)
disputes with any of the Investors or any of their Affiliates (including
disputes under this Agreement), (iii) interpretation or enforcement of this
Agreement or any other agreement with the Investors or any of their
Affiliates or (iv) any other matter involving an actual or potential
conflict of interest due to such director's relationship with the Investors
or any of their Affiliates. Notwithstanding the foregoing, Hexcel may adopt
or implement any takeover defense measures applicable to the Investors or
any of their Affiliates, including the institution or amendment by Hexcel
or any of its Subsidiaries of any stockholders rights plan or similar plan
or device, or any change of control matters (including provisions in future
agreements or collaborations), provided, that such takeover defense
measures shall not restrict the rights of the Investors to acquire any
Voting Securities pursuant to the provisions of this AGREEMENT.
ARTICLE III
STANDSTILL
SECTION 3.01 STANDSTILL. (a) Except as otherwise expressly
provided in this Agreement (including Section 2.05(c), this Section 3.01,
Section 3.02 or Section 3.03) or as specifically approved by a majority of
the Non-Investor Directors, including at least two Independent Directors
(so long as such approval was not obtained by any of the Investors in
violation of this Agreement), none of the Investors or any of their
respective Affiliates shall, directly or indirectly, (i) by purchase or
otherwise, Beneficially Own, acquire, agree to acquire or offer to acquire
any Voting Securities or direct or indirect rights or options to acquire
Voting Securities (including any voting trust certificates representing
such securities) other than the Initial Shares, the Original Goldman Shares
and Ordinary Course Broker Dealer Shares, and, subject to Section 4.01(c),
the Additional Shares, (ii) enter, propose to enter into, solicit or
support any merger or business combination or similar transaction involving
Hexcel or any of its Subsidiaries, or purchase, acquire, propose to
purchase or acquire or solicit or support the purchase or acquisition of
any portion of the business or assets of Hexcel or any of its Subsidiaries
(except for proposals to purchase or acquire a non-material portion of the
assets of Hexcel or any of its Subsidiaries that are not required to be
publicly disclosed), (iii) initiate or propose any securityholder proposal
without the approval of the Board granted in accordance with this Agreement
or make, or in any way participate in, any "solicitation" of "proxies" (as
such terms are used in the proxy rules promulgated by the SEC under the
Exchange Act) to vote, or seek to advise or influence any Person with
respect to the voting of, any Voting Securities or request or take any
action to obtain any list of securityholders for such purposes with respect
to any matter other than those upon which the Investors may vote in their
sole respective discretion pursuant to Section 2.08 (or, as to such
matters, solicit any Person in a manner that would require the filing of a
proxy statement under Regulation 14A of the Exchange Act), (iv) form, join
or in any way participate in a Group (other than a Group consisting solely
of the Investors) formed for the purpose of acquiring, holding, voting or
disposing of or taking any other action with respect to Voting Securities
that would be required under Section 13(d) of the Exchange Act to file a
Statement on Schedule 13D with respect to such Voting Securities, (v)
deposit any Voting Securities in a voting trust or enter into any voting
agreement or arrangement with respect thereto (other than this Agreement,
the Ciba Pledge Agreements (as defined in Section 4.01(b)) and such voting
trusts or agreements which are solely between Investors or made between the
Investors and the Company pursuant to this Agreement), (vi) seek
representation on the Board, the removal of any directors from the Board or
a change in the size or composition of the Board (in each case, other than
as provided in this Agreement), (vii) make any request to amend or waive
any provision of this Section 3.01, which request would require public
disclosure under applicable law, rule or regulation, (viii) disclose any
intent, purpose, plan, arrangement or proposal inconsistent with the
foregoing (including any such intent, purpose, plan, arrangement or
proposal that is conditioned on or would require the waiver, amendment,
nullification or invalidation of any of the foregoing) or take any action
that would require public disclosure of any such intent, purpose, plan,
arrangement or proposal, (ix) take any action challenging the validity or
enforceability of the foregoing or (x) assist, advise, encourage or
negotiate with any Person with respect to, or seek to do, any of the
foregoing.
(b) Nothing in this Section 3.01 shall (i) prohibit or restrict any of
the Investors from responding to any inquiries from any shareholders of
Hexcel as to the Investors' intention with respect to the voting of any
Voting Securities Beneficially Owned by such Investors so long as such
response is consistent with the terms of this Agreement; (ii) restrict the
right of each Investor Director on the Board or any committee thereof to
vote on any matter as such individual believes appropriate in light of his
or her duties as a director or committee member or the manner in which an
Investor Director may participate in his or her capacity as a director in
deliberations or discussions at meetings of the Board or as a member of any
committee thereof; (iii) subject to Section 4.01(c), prohibit the Investors
from Beneficially Owning Voting Securities issued as dividends or
distributions in respect of, or issued upon conversion, exchange or
exercise of, securities which the Investors are permitted to Beneficially
Own under this Agreement; (iv) prohibit any officer, director, employee or
agent of the Investors from purchasing or otherwise acquiring Voting
Securities so long as he or she is not a member of a Group that includes
any of the Investors or is not otherwise acting on behalf of any of the
Investors; (v) prohibit the Investors from disclosing in accordance with
their respective obligations (if any) under the federal securities laws or
other applicable law their desire (if any) that Hexcel become the subject
of a Buyout Transaction; or (vi) restrict the ability of Xxxxxxx, Sachs &
Co. and its Affiliates who are not Investors, solely as agent, to engage in
brokerage, investment advisory, anti-raid advisory, merger advisory,
financing, asset management, trading, arbitrage and other similar
activities, in each case on behalf of clients, provided in the case of this
clause (vi) that (A) no Person engaged in such activities shall be acting,
directly or indirectly, at the direction of any other Person at Xxxxxxx,
Xxxxx & Co. or any of its Affiliates which either is formed for the purpose
of effecting principal transactions or has access to confidential
information of Hexcel, and (B) appropriate protective arrangements
prohibiting disclosure of confidential information are put in place between
the Investors and the Persons who are engaging in such activities.
(c) Nothing in this Section 3.01 shall prohibit or restrict the
Investors from (i) after the Standstill Period, proposing, participating
in, supporting or causing the consummation of an Investor Buyout
Transaction, subject to Section 3.03 or (ii) participating in a Third Party
Offer in accordance with Section 3.03.
(d) Notwithstanding anything to the contrary set forth in this Section
3.01, if, at any time following the consummation of a bankruptcy proceeding
involving Hexcel, any Person (other than Hexcel) is permitted by law or the
bankruptcy court in which the proceeding is pending to propose a plan of
reorganization for Hexcel, the Investors shall be permitted to propose a
plan of reorganization for Hexcel; provided, that no plan of reorganization
shall be proposed by the Investors prior to the expiration or termination
of the exclusivity period for Hexcel's filing of a plan of reorganization,
as such exclusivity period may be extended from time to time (it being
understood and agreed that the Investors shall not object to any extension
of Hexcel's exclusivity period and shall not initiate or otherwise support
any proceeding to terminate or shorten the length of Hexcel's exclusivity
period).
SECTION 3.02 INVESTORS RIGHT TO MAINTAIN POSITION. In addition to
the rights set forth in Sections 2.05(c) and 2.06 hereof, Hexcel hereby
grants to the Investors the following irrevocable option:
If, at any time after the Closing Date for so long as the Investors
shall be entitled to designate one or more Investor Nominees for election
to the Board and Hexcel shall issue for cash any additional Voting
Securities, then Hexcel shall notify the Investors of such issuance and the
price and terms thereof, and the Investors shall have the option, for a
period of 45 days after receipt of such notice, to purchase from Hexcel an
Amount (as defined below) of such Voting Securities for the same
consideration per security and on the same terms as were applicable to such
issuance by Hexcel. The foregoing option shall not apply to any issuances
of Voting Securities (x) upon conversion of any convertible securities
which are either outstanding on the date hereof (including, without
limitation, issuances of securities upon any payment of dividends on,
redemption of, or otherwise payable with respect to the Series A
Convertible Preferred Stock or the Series B Convertible Preferred Stock) or
approved by the Board or a duly authorized committee of the Board after the
date hereof in accordance with Section 2.06 hereof, or (y) pursuant to
employee or director stock option or incentive compensation or similar
plans outstanding as of the date hereof or, subsequent to the date hereof,
approved by the Board or a duly authorized committee of the Board. An
"Amount" shall mean such number of securities that would allow the
Investors to Beneficially Own the same percentage of the Total Voting Power
of Hexcel as the Investors Beneficially Owned immediately prior to such
issuance (other than Additional Shares).
SECTION 3.03 THIRD PARTY OFFERS; INVESTOR BUYOUT TRANSACTIONS.
(a) In the event that Hexcel becomes the subject of a Third Party
Offer or, as permitted by the terms of this Agreement, an Investor Buyout
Transaction that is made during the term of this Agreement and such Third
Party Offer or Investor Buyout Transaction is approved by (x) a majority of
the Board and (y) a majority of Disinterested Directors, including the
approval of at least two Independent Directors, the Investors may act at
their sole discretion with respect to such Third Party Offer or Investor
Buyout Transaction.
(b) In the event that Hexcel becomes the subject of a Third Party
Offer that is made prior to the expiration of the Standstill Period and
such Third Party Offer is (i) not approved by a majority of the Board or
(ii) approved by a majority of the Board but not by a majority of the
Disinterested Directors, including the approval of at least two Independent
Directors, none of the Investors nor any of their respective Affiliates
may, with respect to the Initial Shares, support such Third Party Offer,
vote in favor of such Third Party Offer or tender or sell their Initial
Shares to the Person making such Third Party Offer.
(c) In the event that Hexcel becomes the subject of a Third Party
Offer that is made prior to the expiration of the Original Standstill
Period and such Third Party Offer is (i) not approved by a majority of the
Board or (ii) approved by a majority of the Board but not by a majority of
the Disinterested Directors, including the approval of at least two
Independent Directors, none of the Investors nor any of their respective
Affiliates (other than with respect to Additional Shares) may support such
Third Party Offer, vote in favor of such Third Party Offer or tender or
sell their Voting Securities to the Person making such Third Party Offer.
(d) In the event that Hexcel becomes the subject of a Third Party
Offer or an Investor Buyout Transaction that is made after the Standstill
Period and such Third Party Offer or Investor Buyout Transaction is (i) not
approved by a majority of the Board or (ii) approved by a majority of the
Board but not by a majority of the Disinterested Directors, including the
approval of at least two Independent Directors, the Investors and each of
their respective Affiliates must vote all of their Initial Shares against
such Third Party Offer or Investor Buyout Transaction in proportion to the
votes cast against such Third Party Offer or Investor Buyout Transaction
with respect to Other Shares and may not tender or sell their Initial
Shares to the Person making such Third Party Offer or Investor Buyout
Transaction in a proportion greater than the tenders or sales made by the
Other Holders to the Person making such Third Party Offer or Investor
Buyout Transaction; it being understood that the Investors may enter into
agreements to tender or sell Voting Securities to any such Person
conditioned upon final determination of the number of Voting Securities
permitted to be so tendered or sold under this Section 3.03 and Section
3.01.
(e) In the event that Hexcel becomes the subject of a Third Party
Offer or an Investor Buyout Transaction that is made after the Original
Standstill Period, and such Third Party Offer or Investor Buyout
Transaction is (i) not approved by a majority of the Board or (ii) approved
by a majority of the Board but not by a majority of the Disinterested
Directors, including the approval of at least two Independent Directors,
the Investors and each of their Affiliates (other than with respect to
Ordinary Course Broker Dealer Shares and Additional Shares) must vote all
of their Original Goldman Shares against such Third Party Offer or Investor
Buyout Transaction in proportion to the votes cast against such Third Party
Offer or Investor Buyout Transaction with respect to Other Shares and may
not tender or sell their Voting Securities to the Person making such Third
Party Offer or Investor Buyout Transaction in a proportion greater than the
tenders or sales made by the Other Holders to the Person making such Third
Party Offer or Investor Buyout Transaction; it being understood that the
Investors may enter into agreements to tender or sell Voting Securities to
any such Person conditioned upon final determination of the number of
Voting Securities permitted to be so tendered or sold under this Section
3.03 and Section 3.01.
ARTICLE IV
TRANSFER RESTRICTIONS
SECTION 4.01 RESTRICTIONS. (a) Other than sales, transfers, or
other dispositions (x) pursuant to the Series A Certificate of
Designations, (y) pursuant to the Series B Certificate of Designations, or
(z) from one Investor to another Investor (provided that such Investor is a
signatory to this Agreement or has executed, at the time of such sale,
transfer or other disposition, a joinder in which it shall agree to be
bound by the provisions of this Agreement to the same extent as the
Investors signatory hereto) and other than sales, transfers or other
dispositions of the Additional Shares by the Persons holding such
Additional Shares, none of the Investors or their respective Affiliates,
directly or indirectly, may sell, transfer or otherwise dispose of
Beneficial Ownership of the Initial Shares for a period of eighteen months
after the Closing Date. During the period commencing eighteen months from
the Closing Date, the Investors, directly or indirectly, may only sell,
transfer or otherwise dispose of Beneficial Ownership of Initial Shares (i)
to another Investor (provided that such Investor is a signatory to this
Agreement or has executed, at the time of such sale, transfer or other
disposition, a joinder in which it shall agree to be bound by the
provisions of this Agreement to the same extent as the Investors signatory
hereto), (ii) in accordance with Rule 144 under the Securities Act
(including the volume and manner-of-sale limitations of Rule 144 regardless
of whether such limitations are applicable) and otherwise subject to
compliance with the Securities Act, (iii) in a registered public offering,
(iv) in a transaction exempt from the registration requirements of the
Securities Act in a manner calculated to achieve a Broad Distribution (it
being understood that in connection with any registered offering under the
Securities Act to permit distribution to, and resale by, the limited
partners of, or other investors in, an Investor, such Investor may
distribute Initial Shares to such limited partners and such other
investors), (v) in a Third Party Offer if and to the extent permitted under
Section 3.03 or (vi) which are Additional Shares.
(b) Except as contemplated by each of the pledge agreements, dated as
of December 19, 2000, made by LXH and LXH II, respectively, in favor of
Ciba Specialty Chemicals Corporation (collectively, the "Ciba Pledge
Agreements"), the Investors, directly or indirectly, may only sell,
transfer or otherwise dispose of Beneficial Ownership of Original Goldman
Shares (i) to another Investor (provided that such Investor is a signatory
to this Agreement or has executed, at the time of such sale, transfer or
other disposition, a joinder in which it shall agree to be bound by the
provisions of this Agreement to the same extent as the Investors signatory
hereto), (ii) in accordance with Rule 144 under the Securities Act and
otherwise subject to compliance with the Securities Act (provided, however,
that prior to any sale, transfer or other disposal of Original Goldman
Shares by an Investor pursuant to this clause (ii), such Investor shall
deliver to the Company an executed certificate stating that, to the
knowledge, after due inquiry, of such Investor, the proposed transfer of
such Original Goldman Shares (A) shall not cause the transferee to
Beneficially Own 5% or more of the Total Voting Power of Hexcel and (B)
such transferee does not Beneficially Own 5% or more of the Total Voting
Power of Hexcel), (iii) in a registered public offering, (iv) in a
transaction exempt from the registration requirements of the Securities Act
in a manner calculated to achieve a Broad Distribution (it being understood
that in connection with any registered offering under the Securities Act to
permit distribution to, and resale by, the limited partners of, or other
investors in, an Investor, such Investor may distribute Original Goldman
Shares to such limited partners and such other investors), (v) in a Third
Party Offer if and to the extent permitted under Section 3.03 or (vi) which
are Additional Shares.
(c) Notwithstanding anything to the contrary in this Agreement, none
of the Investors or their Affiliates may, directly or indirectly, acquire,
sell, transfer or otherwise dispose of Beneficial Ownership of Voting
Securities if such acquisition, sale, transfer or other disposition would
result in a default or acceleration of amounts outstanding under the Debt
Instruments, unless prior to the consummation of such acquisition, sale,
transfer or other disposition, any required consents under the Debt
Instruments to effect such acquisition, sale, transfer or disposition shall
have been obtained.
SECTION 4.02 LEGENDS. (a) Except as set forth in paragraph (b)
below, during the term of this Agreement all certificates representing
Voting Securities Beneficially Owned by the Investors shall bear an
appropriate restrictive legend indicating that such Voting Securities are
subject to restrictions pursuant to this Agreement and that such Voting
Securities were not issued pursuant to a public offering registered
pursuant to the Securities Act.
(b) Upon any transfer or proposed transfer of Beneficial Ownership by
the Investors of any Voting Securities to any Person other than the
Investors that is permitted pursuant to this Agreement, Hexcel shall, upon
receipt of timely notice and such certificates, opinions and other
documentation as shall be reasonably requested by Hexcel, cause
certificates representing such transferred Voting Securities to be issued
not later than the time needed to effect such transfer (x) without any
restrictive legend if upon consummation of such transfer such Voting
Securities are no longer "restricted securities" as defined in Rule 144
under the Securities Act or (y) without any reference to this Agreement.
SECTION 4.03 EFFECT. Any purported transfer of Voting Securities
that is inconsistent with the provisions of this Article IV shall be null
and void and of no force or effect.
SECTION 4.04 CONTROL OF THE INVESTORS. Each of the Investors
represents and warrants to Hexcel, for so long as each such Investor holds
Voting Securities pursuant to this Agreement, that it is Controlled,
directly or indirectly, by The Xxxxxxx Sachs Group, Inc., and covenants
that during the term of this Agreement, such Investor shall not, without
the prior written consent of Hexcel, take or permit any action which would
result in the direct or indirect transfer of Control of such Investor from
The Xxxxxxx Xxxxx Group, Inc. to any other Person. On the date hereof, the
Limited Partnerships own, directly or indirectly, all of the membership
interests of LXH and LXH II.
ARTICLE V
TERMINATION
SECTION 5.01 TERM. (a) This Agreement shall automatically
terminate upon the earlier of:
(i) the tenth anniversary of the Closing Date; or
(ii) the occurrence of any event in accordance with this
Agreement which causes the percentage of the Total Voting Power of Hexcel
Beneficially Owned by the Investors to be either (x) less than 10% or (y)
90% or more.
(b) If Hexcel is in breach of or violates any material obligation
under this Agreement and fails to cure such breach or violation within 60
days after delivery of written notice from the Investors specifying such
breach or violation and requesting its cure, the Investors may terminate
their respective obligations under this Agreement by written notice to
Hexcel.
(c) If any of the Investors is in breach of or violates any material
obligation under this Agreement and such Investors fail to cure such breach
or violation within 60 days after delivery of written notice from Hexcel
specifying such breach or violation and requesting its cure, Hexcel may
terminate its obligations under this Agreement by written notice to the
Investors.
ARTICLE VI
MISCELLANEOUS
SECTION 6.01 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:
(a) if to Hexcel, to:
Hexcel Corporation
0 Xxxxxxxx Xxxxx
000 Xxxxxxx Xxxxxxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
(T) (000) 000-0000
(F) (000) 000-0000
Attention: Xxx X. Xxxxxxxx, Esq.
with a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
Xxxx Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
(T) (000) 000-0000
(F) (000) 000-0000
Attention: Xxxxxx X. Coco, Esq. and Xxxxxx X. Xxxxxxxxx, Esq.
(b) if to the Investors, to:
c/o Goldman Sachs Capital Partners 2000, L.P.
00 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
(T) (000) 000-0000
(F) (000) 000-0000
Attention: Xx. Xxxxxxx Xxxxx
with a copy to:
Fried, Frank, Harris, Xxxxxxx & Xxxxxxxx
Xxx Xxx Xxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
(T) (000) 000-0000
(F) (000) 000-0000
Attention: Xxxxxx X. Xxxxxxxxx, Esq.
SECTION 6.02 INTERPRETATION. The headings contained in this
Agreement are for reference purposes only and shall not affect in any way
the meaning or interpretation of this Agreement. Whenever the words
"included", "includes" or "including" are used in this Agreement, they
shall be deemed to be followed by the words "without limitation".
SECTION 6.03 SEVERABILITY. The provisions of this Agreement shall
be deemed severable and the invalidity or unenforceability of any provision
shall not affect the validity or enforceability of the other provisions
hereof. If any provision of this Agreement, or the application thereof to
any person or entity or any circumstance, is found to be invalid or
unenforceable in any jurisdiction, (a) a suitable and equitable provision
shall be substituted therefor in order to carry out, so far as may be valid
and enforceable, the intent and purpose of such invalid or unenforceable
provision and (b) the remainder of this Agreement and the application of
such provision to other Persons or circumstances shall not be affected by
such invalidity or unenforceability, nor shall such invalidity or
unenforceability affect the validity or enforceability of such provision,
or the application thereof, in any other jurisdiction.
SECTION 6.04 COUNTERPARTS. This Agreement may be executed in one
or more counterparts, each of which shall be deemed an original and all of
which shall, taken together, be considered one and the same agreement, it
being understood that both parties need not sign the same counterpart.
SECTION 6.05 ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIARIES. This
Agreement, together with the Purchase Agreement, the Registration Rights
Agreement, the Series A Certificate of Designations, the Series B
Certificate of Designations and the Agreement, dated as of October 11,
2000, by and among Hexcel and the LXH Investors (which, for the avoidance
of doubt, is the agreement entered into by Hexcel and the LXH Investors
which contains representations and warranties of Hexcel and the LXH
Investors) (a) constitutes the entire agreement and supersedes all other
prior agreements, including, without limitation, the 2000 Governance
Agreement, and understandings, both written and oral, among the parties
with respect to the subject matter hereof and (b) is not intended to confer
upon any Person, other than the parties hereto and, solely with respect to
the proviso in Section 2.08(b), the Indemnified Individuals, any rights or
remedies hereunder.
SECTION 6.06 FURTHER ASSURANCES. Each party shall execute,
deliver, acknowledge and file such other documents and take such further
actions as may be reasonably requested from time to time by the other party
hereto to give effect to and carry out the transactions contemplated
herein.
SECTION 6.07 GOVERNING LAW; EQUITABLE REMEDIES. THIS AGREEMENT
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF DELAWARE (WITHOUT GIVING EFFECT TO CONFLICT OF LAWS PRINCIPLES
THEREOF). The parties hereto agree that irreparable damage would occur in
the event that any of the provisions of this Agreement were not performed
in accordance with its specific terms or was otherwise breached. It is
accordingly agreed that the parties hereto shall be entitled to an
injunction or injunctions and other equitable remedies to prevent breaches
of this Agreement and to enforce specifically the terms and provisions
hereof in any of the Selected Courts (as defined below), this being in
addition to any other remedy to which they are entitled at law or in
equity. Any requirements for the securing or posting of any bond with
respect to such remedy are hereby waived by each of the parties hereto.
Each party further agrees that, in the event of any action for an
injunction or other equitable remedy in respect of such breach or
enforcement of specific performance, it will not assert the defense that a
remedy at law would be adequate.
SECTION 6.08 CONSENT TO JURISDICTION. With respect to any suit,
action or proceeding ("Proceeding") arising out of or relating to this
Agreement or any transaction contemplated hereby each of the parties hereto
hereby irrevocably (i) submits to the exclusive jurisdiction of the United
States District Court for the Southern District of New York or the Court of
Chancery located in the State of Delaware, County of Newcastle (the
"Selected Courts") and waives any objection to venue being laid in the
Selected Courts whether based on the grounds of forum non conveniens or
otherwise and hereby agrees not to commence any such Proceeding other than
before one of the Selected Courts; provided, however, that a party may
commence any Proceeding in a court other than a Selected Court solely for
the purpose of enforcing an order or judgment issued by one of the Selected
Courts; (ii) consents to service of process in any Proceeding by the
mailing of copies thereof by registered or certified mail, postage prepaid,
or by recognized international express carrier or delivery service, to the
Company or the Investors at their respective addresses referred to in
Section 6.01 hereof; provided, however, that nothing herein shall affect
the right of any party hereto to serve process in any other manner
permitted by law; and (iii) TO THE EXTENT NOT PROHIBITED BY APPLICABLE LAW
THAT CANNOT BE WAIVED, WAIVES, AND COVENANTS THAT IT WILL NOT ASSERT
(WHETHER AS PLAINTIFF, DEFENDANT OR OTHERWISE) ANY RIGHT TO TRIAL BY JURY
IN ANY ACTION ARISING IN WHOLE OR IN PART UNDER OR IN CONNECTION WITH THIS
AGREEMENT OR ANY OF THE CONTEMPLATED TRANSACTIONS, WHETHER NOW EXISTING OR
HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE, AND
AGREES THAT ANY OF THEM MAY FILE A COPY OF THIS PARAGRAPH WITH ANY COURT AS
WRITTEN EVIDENCE OF THE KNOWING, VOLUNTARY AND BARGAINED-FOR AGREEMENT
AMONG THE PARTIES IRREVOCABLY TO WAIVE ITS RIGHT TO TRIAL BY JURY IN ANY
PROCEEDING WHATSOEVER BETWEEN THEM RELATING TO THIS AGREEMENT OR ANY OF THE
CONTEMPLATED TRANSACTIONS WILL INSTEAD BE TRIED IN A COURT OF COMPETENT
JURISDICTION BY A JUDGE SITTING WITHOUT A JURY.
SECTION 6.09 AMENDMENTS; WAIVERS. (a) No provision of this
Agreement may be amended or waived unless such amendment or waiver is in
writing and signed, in the case of an amendment, by the parties hereto, or
in the case of a waiver, by the party against whom the waiver is to be
effective; provided that no such amendment or waiver by Hexcel shall be
effective without the approval of a majority of the Independent Directors.
Notwithstanding any provision herein to the contrary, if a majority of the
Independent Directors determine in good faith to do so, such Independent
Directors may seek to enforce, in the name and on behalf of Hexcel, the
terms of this Agreement against the Investors.
(b) No failure or delay by any party in exercising any right, power or
privilege hereunder shall operate as waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or
the exercise of any other right, power or privilege. The rights and
remedies herein provided shall be cumulative and not exclusive of any
rights or remedies provided by law.
SECTION 6.10 ASSIGNMENT. Neither this Agreement nor any of the
rights or obligations hereunder shall be assigned by any of the parties
hereto without the prior written consent of the other parties. Subject to
the preceding sentence, this Agreement will be binding upon, inure to the
benefit of and be enforceable by the parties and their respective
successors and assigns.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered, all as of the date first set forth above.
GS CAPITAL PARTNERS 2000 L.P.
By: GS Advisors 2000, L.L.C.,
its general partner
By:
--------------------------
Name:
Title:
GS CAPITAL PARTNERS 2000 OFFSHORE, L.P.
By: GS Advisors 2000, L.L.C.,
its general partner
By:
--------------------------
Name:
Title:
GS CAPITAL PARTNERS 2000 EMPLOYEE FUND, L.P.
By: GS Employee Funds 2000 G.P., L.L.C.,
its general partner
By:
--------------------------
Name:
Title:
GS CAPITAL PARTNERS 2000 GMBH & CO.
BETEILIGUNGS KG
By: Xxxxxxx, Xxxxx Management GP GmbH,
its general partner
By:
--------------------------
Name:
Title:
XXXXX XXXXXX XXXX 0000, X.X.
By: Stone Street 2000, L.L.C.,
its general partner
By:
--------------------------
Name:
Title:
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:
--------------------------
Name:
Title:
LXH II, L.L.C.
By: GS Capital Partners 2000 Offshore, L.P.,
its managing member
By: GS Advisors 2000, L.L.C.,
its general partner
By:
--------------------------
Name:
Title:
HEXCEL CORPORATION
By:
--------------------------
Name:
Title:
