EXHIBIT 99.1
EXECUTION COPY
STRATEGIC ALLIANCE AGREEMENT
dated as of
September 29, 1995
among
CIBA-GEIGY LIMITED,
CIBA-GEIGY CORPORATION
AND
HEXCEL CORPORATION
TABLE OF CONTENTS
Page
ARTICLE I
Establishment of the Alliance
SECTION 1.01. Contribution of Transferred Business.....................1
SECTION 1.02. Transferred Business Consideration.......................4
SECTION 1.03. Assumption of Certain Liabilities........................4
SECTION 1.04. Allocation of Transferred Business Consideration.........7
ARTICLE II
The Closings
SECTION 2.01. Closing..................................................7
SECTION 2.02. Transactions To Be Effected at the Closing...............7
SECTION 2.03. The Deferred Closings....................................8
SECTION 2.04. Principal Amount of Subordinated Debt...................10
SECTION 2.05. Danutec Closing.........................................14
ARTICLE III
Representations and Warranties
SECTION 3.01. Representations and Warranties of Ciba..................15
SECTION 3.02. Representations and Warranties of Hexcel................31
ARTICLE IV
Covenants
SECTION 4.01. Conduct of Business.....................................43
SECTION 4.02. Access to Information...................................49
SECTION 4.03. Legal Requirements......................................49
SECTION 4.04. No Solicitation.........................................50
SECTION 4.05. Agreement Regarding Non-Assignable Contracts............51
SECTION 4.06. Transfer Taxes..........................................52
SECTION 4.07. Use of Names............................................52
SECTION 4.08. Insurance...............................................54
SECTION 4.09. Post-Closing Cooperation................................54
SECTION 4.10. Bulk Transfer Laws......................................56
SECTION 4.11. Supplies................................................56
SECTION 4.12. Certain Ancillary Agreements............................57
SECTION 4.13. Intellectual Property Licenses..........................57
SECTION 4.14. Directors' and Officers' Indemnification................60
SECTION 4.15. Distribution Agreement..................................61
SECTION 4.16 Local Agreements........................................61
SECTION 4.17. NYSE Listing............................................61
SECTION 4.18. Stockholder Approval; Proxy.............................61
SECTION 4.19. New Board of Directors..................................62
SECTION 4.20. Subsequent Agreement Royalty............................63
SECTION 4.21. Financial and Insurance Expertise.......................63
SECTION 4.22. Transfer of Intercompany Debts..........................64
SECTION 4.23. Supplemental Disclosure.................................64
SECTION 4.24. Non-Competition and Related Matters.....................64
ARTICLE V
Conditions Precedent
SECTION 5.01. Conditions to Each Party's Obligation...................68
SECTION 5.02. Conditions to the Obligation of Hexcel..................69
SECTION 5.03. Conditions to the Obligation of Ciba and CGC............71
ARTICLE VI
Termination, Amendment and Waiver
SECTION 6.01. Termination.............................................73
SECTION 6.02. Amendments and Waivers..................................74
ARTICLE VII
Indemnification
SECTION 7.01. Indemnification by Ciba.................................74
SECTION 7.02. Indemnification by Hexcel...............................74
SECTION 7.03. Losses Net of Insurance, etc............................75
SECTION 7.04. Termination of Indemnification..........................75
SECTION 7.05. Indemnification Procedures..............................75
SECTION 7.06. Indemnification Procedures for Tax Claims; Tax Returns..77
SECTION 7.07. Adjustment to Transferred Business Consideration........78
ARTICLE VIII
General Provisions
SECTION 8.01. Notices.................................................78
SECTION 8.02. Interpretation..........................................80
SECTION 8.03. Nonsurvival of Representations and Warranties...........80
SECTION 8.04. Severability............................................80
SECTION 8.05. Counterparts............................................80
SECTION 8.06. Entire Agreement; No Third Party Beneficiaries..........80
SECTION 8.07. Governing Law...........................................81
SECTION 8.08. Consent to Jurisdiction.................................81
SECTION 8.09. Publicity...............................................81
SECTION 8.10. Expenses................................................81
SECTION 8.11. Assignment..............................................82
APPENDICES, SCHEDULES AND EXHIBITS
Appendix A - Definitions
Schedule 1.01(b) - Hive-down Assets
Schedule 1.04 - Allocation Statement
Schedule 2.04(a1) - Ciba Closing Items
Schedule 2.04(a2) - Working Capital of Transferred Business
Schedule 2.04(b1) - Hexcel Closing Items
Schedule 2.04(b2) - Working Capital of Hexcel
Schedule 3.01(a) - Description of Activities by Jurisdiction
Schedule 3.01(b) - Ciba Non-Contravention; Consents and Approvals
Schedule 3.01(c) - Financial Statements
Schedule 3.01(d) - Compliance with Applicable Laws
Schedule 3.01(e) - Litigation; Decrees
Schedule 3.01(f) - Contributed Shares
Schedule 3.01(g) - Liens
Schedule 3.01(h)(1) - Owned Real Property
Schedule 3.01(h)(2) - Leased Real Property
Schedule 3.01(i)(1) - Trademarks
Schedule 3.01(i)(2) - Patents
Schedule 3.01(i)(3) - Licensed Intellectual Property
Schedule 3.01(j) - Insurance
Schedule 3.01(k) - Contracts
Schedule 3.01(l) - Certain Changes or Events
Schedule 3.01(m) - Taxes
Schedule 3.01(n) - Environmental Matters
Schedule 3.01(u) - Product Liability
Schedule 3.01(v) - Cost Accounting Standards
Schedule 3.01(x) - Labor Relations
Schedule 3.02(b) - Authority
Schedule 3.02(c) - Capitalization of Hexcel and its Subsidiaries
Schedule 3.02(d) - Equity Interests of Hexcel
Schedule 3.02(f) - Certain Changes or Events
Schedule 3.02(i) - Compliance with Applicable Laws
Schedule 3.02(j) - Litigation; Decrees
Schedule 3.02(k) - Liens
Schedule 3.02(l) - Intellectual Property
Schedule 3.02(m) - Insurance
Schedule 3.02(n) - Contracts
Schedule 3.02(o) - Taxes
Schedule 3.02(p) - Environmental Matters
Schedule 3.02(q) - Cost Accounting Standards
Schedule 3.02(u) - Product Liability
Schedule 3.02(w) - Labor Relations
Schedule 4.01(a)(iv) - Existing Contracts
Schedule 4.01(b)(iv) - Existing Contracts
Schedule 4.13 - Intellectual Property License
Schedule 4.13(b)(i) - Patents
Schedule 4.13(b)(ii) - Patents
Schedule 4.13(b)(iii) - Patents
Schedule 4.13(c) - Patents
Schedule 4.13(d) - Patents
Exhibit A - Governance Agreement
Exhibit B - Summary Terms of Subordinated Debt Indenture
Exhibit C - Distribution Agreement
Exhibit D - Employment Matters Agreement
Exhibit E - Form of U.S. Real Property Deeds
STRATEGIC ALLIANCE AGREEMENT dated as of September 29,
1995, among CIBA-GEIGY LIMITED, a Swiss corporation
("Ciba"), CIBA-GEIGY CORPORATION, a New York corporation and
a wholly-owned subsidiary of Ciba ("CGC"), and HEXCEL
CORPORATION, a Delaware corporation ("Hexcel").
WHEREAS Ciba (directly and indirectly through its Subsidiaries)
and Hexcel are each engaged worldwide in the development, manufacture,
marketing, sale and distribution of composites, including structures and
interiors, fabrics, laminates, prepregs, adhesive films, honeycomb core,
sandwich panels and fabricated components (the "Business");
WHEREAS Ciba and Hexcel each would like to have a continuing
interest in the Business;
WHEREAS Ciba and Hexcel are aware of their respective and
complementary strengths in the Business and wish to enhance their
respective businesses and view a strategic alliance as an attractive
opportunity;
WHEREAS Hexcel and Ciba will at the Closing (as defined below)
enter into an agreement in the form attached hereto as Exhibit A (the
"Governance Agreement") with respect to board representation, voting and
other matters relating to the relationship between Hexcel and Ciba
following the Closing;
WHEREAS the capitalized terms used herein shall have the meanings
specified in Appendix A hereto.
NOW, THEREFORE, in consideration of the mutual covenants and
undertakings contained herein and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged,
the parties hereto hereby agree as follows:
ARTICLE I
Establishment of the Alliance
SECTION 1.01. Contribution of Transferred Business. (a) Upon the
terms and subject to the conditions of this Agreement, at the Closing Ciba
and CGC shall sell, assign, transfer, convey and deliver to Hexcel, in the
manner set forth in
Section 2.02, and Hexcel shall purchase and accept from Ciba and CGC good,
valid and marketable title in and to the Contributed Shares, and all right,
title and interest of Ciba and/or any of its Subsidiaries in and to the
other business, properties, assets, goodwill and rights of Ciba and/or any
of its Subsidiaries of whatever kind and nature, real or personal, tangible
or intangible (including any identifiable and severable portions of the
foregoing (financial assets being deemed severable for purposes of this
clause)), other than the Excluded Assets, that are owned, held or used by
Ciba and/or any of its Subsidiaries on the Closing Date and that relate
exclusively or primarily to, arise exclusively or primarily out of or are
used exclusively or primarily in connection with, the Transferred Business,
but, in the case of such assets that are severable, only to the extent that
such assets relate to, arise out of or are used in connection with the
Transferred Business (collectively, the "Acquired Assets"), in each
instance free and clear of any and all Liens and free of any and all other
limitations and restrictions (other than the shares of Brochier, the
transfer of which is subject to regulation by the Direction du Tresor and
the approval of the Departement de Securite in France) other than Permitted
Liens. It is understood and agreed that the following assets are deemed to
relate exclusively or primarily to, arise exclusively or primarily out of
or be used exclusively or primarily in connection with the Transferred
Business:
(i) the Scheduled Real Property;
(ii) the Acquired Inventory;
(iii) the Acquired Equipment;
(iv) the Accounts Receivable;
(v) the Acquired Intellectual Property;
(vi) the Acquired Permits;
(vii) the Acquired Contracts;
(viii) the Business Tax Returns;
(ix) the Contributed Shares (other than the Danutec Shares);
(x) 100% of the equity interest in Danutec (the "Danutec
Equity"), if at or prior to the Closing or the Danutec Closing, as the case
may be, Ciba and/or its Subsidiaries shall have acquired, pursuant to a
Danutec Agreement, the 49% of the Danutec Equity they do not currently own;
and
(xi) the Books and Records.
(b) Notwithstanding anything herein to the contrary, from and
after the Closing, Ciba and each of its Subsidiaries shall retain all their
respective right, title and interest in and to, and there shall be excluded
from the sale, conveyance, assignment or transfer to Hexcel hereunder, and
the Acquired Assets shall not include, the following (collectively, the
"Excluded Assets"):
(i) all rights of Ciba or its Subsidiaries (other than the
Divested Subsidiaries) under this Agreement, the Ancillary Agreements
and any other agreements, instruments and certificates delivered in
connection with this Agreement;
(ii) copies of all records prepared by Ciba and/or any of its
Subsidiaries and counsel and advisors thereto in connection with the
sale of the Acquired Assets contemplated hereby;
(iii) all rights, claims, demands and judgments to the extent
relating to, arising out of or used in connection with the Excluded
Liabilities;
(iv) Ciba's Continuing Business;
(v) the Excluded Contracts;
(vi) any assets of any employee benefit plan of Ciba and/or its
Subsidiaries (other than the Divested Subsidiaries) except such assets
of employee benefit plans as are being transferred pursuant to the
Employment Matters Agreement or any other Ancillary Agreement;
(vii) the Income Tax Claims;
(viii) all Tax Returns of Ciba and/or any of its Subsidiaries
(other than the Business Tax Returns);
(ix) except as provided in Section 4.07, all rights to the Ciba
Tradenames or any variations, abbreviations, acronyms or derivations
thereof, including any such rights owned by or licensed to any
Divested Subsidiary;
(x) if the Danutec Equity is not transferred to Hexcel and/or its
designated Subsidiary or Subsidiaries at Closing, the Danutec Shares
and the business and assets of Danutec (until the Danutec Closing, if
any, upon consummation of which in accordance with this Agreement, the
Danutec Equity and the business and assets of Danutec shall be deemed
to be Acquired Assets);
(xi) the Deferred Assets (until the applicable Deferred Closing,
upon consummation of which in accordance with this Agreement and the
Distribution Agreement, the applicable Deferred Assets shall be deemed
to be Acquired Assets);
(xii) all assets and properties of Ciba UK (other than assets and
properties set forth on Schedule 1.01(b) hereto); and
(xiii) the Excluded Stock.
SECTION 1.02. Transferred Business Consideration. In
consideration of the sale, assignment, transfer, conveyance and delivery to
Hexcel of the Acquired Assets, and in consideration of establishing an
alliance with Ciba, (x) on the Closing Date Hexcel shall assume the Assumed
Liabilities, (y) in accordance with Sections 1.04(a) and 2.02(b) on the
Closing Date Hexcel shall pay and deliver or cause to be paid and delivered
to Ciba and CGC $25 million (the "Cash Price") and the Hexcel Shares and
(z) Hexcel shall deliver Subordinated Debt and, if applicable, interest
thereon, in each case, as provided in Section 2.04(g) (the amounts in (y)
and (z), together with Hexcel's assumption of the Assumed Liabilities,
being the "Transferred Business Consideration").
SECTION 1.03. Assumption of Certain Liabilities. (a) Upon the
terms and subject to the conditions of this Agreement, at the Closing,
Hexcel shall assume and shall pay, perform and discharge or cause to be
paid, performed and discharged when due, all liabilities or obligations
whatsoever, whether arising before or after the Closing and whether known
or unknown, fixed or contingent (including any identifiable and severable
portions of the foregoing (financial liabilities and obligations being
deemed severable for purposes of this clause)), other than Excluded
Liabilities, relating exclusively or primarily to or arising exclusively or
primarily out of the Transferred Business or the Acquired Assets, but, in
the case of obligations or liabilities that are severable, only to the
extent such liabilities or obligations relate to or arise out of the
Transferred Business or the Acquired Assets (the "Assumed Liabilities"). It
is understood and agreed that the following liabilities and obligations
shall be deemed to relate exclusively or primarily to or arise exclusively
or primarily out of the Transferred Business or the Acquired Assets:
(i) all obligations and liabilities of Ciba or its Subsidiaries
under the Acquired Contracts;
(ii) the Accounts Payable;
(iii) all obligations and liabilities with respect to any and all
products sold or serviced (whether or not under warranty) by the
Transferred Business at any time, including obligations and
liabilities for and with respect to any
refunds, adjustments, allowances, repairs, exchanges, returns and
warranty, merchantability, products liability (including with respect
to personal injury caused by the use or operation of products sold or
serviced by the Transferred Business) and other claims;
(iv) except as specifically provided otherwise in the UK
Agreements, any other Ancillary Agreement or a Danutec Agreement, all
obligations and liabilities arising as a result of Ciba or any of its
past or present Subsidiaries, or any predecessor in interest thereof,
being the owner or occupant of, or the operator of the activities
conducted at, the Scheduled Real Property sites at any time, including
all obligations and liabilities arising out of any Environmental Law
(including those arising under CERCLA or from off-site waste disposal
from the Scheduled Real Property sites) and all other obligations or
liabilities relating to personal injury or property damage involving
the Scheduled Real Property sites;
(v) except as otherwise provided in the Employment Matters
Agreement or any other Ancillary Agreement, all obligations and
liabilities relating to employees of the Transferred Business;
(vi) the Other Tax Liabilities and, to the extent of the amount
provided or reserved for or accrued in the balance sheet of the
Transferred Business as of the Closing Date, the Income Tax
Liabilities of the Divested Subsidiaries (other than Danutec, if the
Danutec Equity is not delivered to Hexcel at Closing) (collectively,
the "Assumed Tax Liabilities"); and
(vii) except as provided in any Ancillary Agreement or in Section
1.03(c), all other obligations of the Divested Subsidiaries (other
than Danutec, if the Danutec Equity is not delivered to Hexcel at
Closing) of any kind, whether arising before or after the Closing and
whether known or unknown, fixed or contingent.
(b) Notwithstanding anything herein to the contrary, Hexcel shall
have no liability or obligation hereunder relating to or arising out of the
following liabilities and obligations of Ciba and its Subsidiaries,
including, if applicable, any such liabilities and obligations of the
Divested Subsidiaries (the "Excluded Liabilities"), all of which are
excluded from the Assumed Liabilities, shall not be assumed by Hexcel
hereunder and shall remain the liabilities and obligations of Ciba and its
Subsidiaries (other than the Divested Subsidiaries):
(i) any obligation or liability relating to or arising out of any
of the Excluded Assets to the extent such obligation or liability
relates to the Excluded Assets, or the realization of benefits of any
of the Excluded Assets;
(ii) the Income Tax Liabilities other than those described in
Section 1.03(a)(vi) (the "Excluded Tax Liabilities");
(iii) any obligation or liability involving a claim for products
liability relating to or arising out of products of the Transferred
Business sold prior to the Closing to Ciba or its Subsidiaries, other
than products resold by Ciba or its Subsidiaries to third parties
(including as a component of another product);
(iv) any obligation or liability involving a claim for damages
caused by asbestos included in or used in the manufacture of products
of the Transferred Business that relates to or arises out of products
sold or manufactured prior to the Closing;
(v) any obligation or liability relating to or arising out of an
event occurring prior to the Closing Date for which Ciba or any of its
Subsidiaries has coverage under the following (i) AAV--Policy
#0015P-5883, (ii) Lloyd's of London Policy #576-A7A1018, (iii)
Winterthur Policy #3095089, (iv) USAIG Policy #51HL2-1224 and (v)
CIGNA--Policy #ATP014520;
(vi) all liabilities and obligations for which Ciba or CGC has
expressly assumed or retained responsibility pursuant to this
Agreement or any Ancillary Agreement;
(vii) all liabilities and obligations relating to the Satellite
Personnel (other than as provided in the Distribution Agreement); and
(viii) any obligations or liabilities relating to or arising out
of any employee benefit plan of Ciba and/or its Subsidiaries (other
than the Divested Subsidiaries) except such obligations or liabilities
as are being transferred pursuant to the Employment Matters Agreement
or any Ancillary Agreement.
(c) Notwithstanding anything herein (including Section
1.03(a)(vii)) or in any agreement relating to the "hive-down" of assets and
liabilities (including agreements relating to the Duxford property
transfer) by Ciba-Geigy PLC ("Ciba UK") to Composite Materials Limited
("CML") (the "Hive Down Agreements"), (i) the principles set forth in
Section 1.03(a) and (b) as to the allocation of particular liabilities
among Assumed Liabilities and Excluded Liabilities shall govern the
allocation of liabilities between Ciba UK on the one hand and CML on the
other hand and (ii) any and all covenants contained herein that provide for
the taking of actions by the parties which are intended to give effect to
the allocation of liabilities among Assumed Liabilities and Excluded
Liabilities shall apply to the allocation of liabilities between Ciba UK on
the one hand and CML on the other hand.
SECTION 1.04. Allocation of Transferred Business Consideration.
(a) Schedule 1.04 sets forth the agreed upon allocation of the
consideration (the "Allocation Statement").
(b) The Allocation Statement shall be revised in accordance with
applicable law from time to time jointly by the parties hereto to reflect
any adjustment of the consideration (i) pursuant to Section 2.04, (ii) as a
result of any Deferred Closing or the Danutec Closing or (iii) for Tax
purposes.
(c) Hexcel and CGC shall treat the acquisition of Acquired
Assets, including when applicable the Deferred Assets and the Danutec
Equity, as an "applicable asset acquisition" under Section 1060 of the
Code. CGC shall prepare Form 8594 under Section 1060 of the Code relating
to the transactions contemplated by this Agreement based on the Allocation
Statement. Hexcel and CGC shall file, or cause the filing of, such Form
with each relevant Taxing Authority.
(d) Hexcel and Ciba and their respective Subsidiaries shall file
and cause to be filed all Tax Returns, and execute such other documents as
may be required by any Taxing Authority, in a manner consistent with the
Allocation Statement as revised from time to time and shall refrain from
taking any position inconsistent with the Allocation Statement as revised
from time to time with any Taxing Authority.
ARTICLE II
The Closings
SECTION 2.01. Closing. The closing of the sale and transfer of
the Acquired Assets and the other transactions contemplated hereby (other
than the transactions contemplated to occur at any Deferred Closing or the
Danutec Closing) (herein referred to as the "Closing") shall take place at
the offices of Cravath, Swaine & Xxxxx, Worldwide Plaza, 000 Xxxxxx Xxxxxx,
Xxx Xxxx, Xxx Xxxx 00000, at 10:00 a.m. on the second business day
following the satisfaction or waiver of the conditions set forth in Article
V, or at such other time, date and place as shall be fixed by agreement
among the parties hereto.
SECTION 2.02. Transactions To Be Effected at the Closing. At the
Closing:
(a) Ciba and/or its Subsidiaries shall deliver to Hexcel or its
designated Subsidiary or Subsidiaries, in a manner to be agreed upon
by the parties in good faith prior to Closing, (i) such appropriately
executed and acknowledged (if necessary) deeds as to real property
substantially in the form
attached hereto as Exhibit E ("Real Property Deeds"), bills of sale,
assignments and other instruments of transfer relating to the Acquired
Assets in form and substance (x) as to real property, suitable for
filing or recordation and (y) in each case, otherwise reasonably
satisfactory to Hexcel and its counsel, (ii) a duly executed copy of
each Ancillary Agreement and (iii) such other documents as Hexcel or
its counsel may reasonably request to demonstrate satisfaction or
waiver of the conditions and compliance with the agreements set forth
in this Agreement or as a condition to the issuance of owner's title
insurance policies (with exceptions for the Permitted Liens) to be
obtained by Hexcel with respect to the fee-owned Scheduled Real
Property; and
(b) Hexcel shall deliver to Ciba or its designated Subsidiary or
Subsidiaries, in a manner to be agreed upon by the parties in good
faith prior to Closing, (i) the Transferred Business Consideration
(other than the Subordinated Debt, which shall be delivered in
accordance with Section 2.04(g) and allocated in accordance with
Section 1.04), including the Cash Price, which shall be delivered by
wire transfer in immediately available funds to an account or accounts
designated in writing by Ciba at least two business days prior to the
Closing Date, which Transferred Business Consideration shall be
allocated in accordance with Section 1.04, (ii) a duly executed copy
of each Ancillary Agreement and (iii) such other documents as Ciba or
its counsel may reasonably request to demonstrate satisfaction or
waiver of the conditions and compliance with the agreements set forth
in this Agreement.
(c) No later than 60 business days prior to Closing, Hexcel shall
designate which Trademarks or Patents that are Acquired Intellectual
Property with respect to which Hexcel wishes requisite filings to be
made to record transfer with Governmental Entities in the United
States at or prior to Closing, and within 60 days after Closing Hexcel
shall designate any Trademarks or Patents that are Acquired
Intellectual Property with respect to which Hexcel wishes requisite
filings to be made to record transfer with Governmental Entities, and
Ciba shall prepare all necessary documents in connection therewith and
shall promptly make all such filings; provided, however, that in each
case Hexcel shall pay all transfer taxes and filing fees in connection
therewith.
SECTION 2.03. The Deferred Closings. (a) The closings of the sale
and transfer of the Deferred Assets (the "Deferred Closings") shall take
place at the offices of Cravath, Swaine & Xxxxx, Worldwide Plaza, 000
Xxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, at 10:00 a.m., in each case, on
the earlier of (x) the fifth business day following the delivery by Hexcel
of notice of its intention to purchase any of the Deferred Assets as
provided in the Distribution Agreement, or (y) the date of termination of
the Distribution Agreement as to any of the Deferred
Assets, or at such other time, date and place as shall be fixed by
agreement among the parties hereto.
(b) At each Deferred Closing, Ciba and/or its Subsidiaries shall
deliver to Hexcel, in a manner to be agreed upon by the parties in good
faith prior to each such Deferred Closing, (i) such appropriately executed
and acknowledged (if necessary) real property deeds (with respect to South
African real property) in form and substance reasonably satisfactory to the
parties hereto, bills of sale, assignments and other instruments of
transfer relating to the applicable Deferred Assets in form and substance
(x) as to real property, suitable for filing or recordation and (y) in each
case, otherwise reasonably satisfactory to Hexcel and its counsel and (ii)
such other documents as Hexcel or its counsel may reasonably request to
demonstrate satisfaction or waiver of the conditions and compliance with
the agreements set forth in this Agreement and the Distribution Agreement
or as a condition to the issuance of owner's title insurance policies (with
exceptions for Permitted Liens) obtained by Hexcel with respect to the
South African real property.
(c) At each Deferred Closing, Hexcel shall deliver to Ciba or its
designated Subsidiary or Subsidiaries, (i) an undertaking to pay the
applicable Deferred Consideration in additional Subordinated Debt on the
earlier of (x) the first anniversary of the Closing Date or (y) the date of
the final sale and transfer of Deferred Assets under the Distribution
Agreement (the "Deferred Consideration Payment Date"), which Deferred
Consideration shall be allocated in accordance with Section 1.04 and (ii)
such other documents as Ciba or its counsel may reasonably request to
demonstrate satisfaction or waiver of the conditions and compliance with
the agreements set forth in this Agreement and the Distribution Agreement.
(d) At each Deferred Closing, Hexcel shall assume any and all
obligations and liabilities (including any identifiable and severable
portions of the foregoing (financial liabilities and obligations being
deemed severable for purposes of this clause) relating exclusively or
primarily to or arising exclusively or primarily out of the applicable
Deferred Assets, but, in the case of such obligations or liabilities that
are severable, only to the extent such obligations or liabilities relate to
such Deferred Assets, and all such obligations and liabilities shall
immediately thereafter be deemed to constitute Assumed Liabilities for the
purposes of this Agreement.
(e) On the Deferred Consideration Payment Date, Hexcel shall
deliver to Ciba or its designated Subsidiary or Subsidiaries Subordinated
Debt in aggregate principal amount equal to the aggregate amount of
Deferred Consideration payable in respect of all Deferred Closings
(including any Deferred Closing occurring on or before the Deferred
Consideration Payment Date) as evidenced by the undertakings referred to in
Section 2.03(c), which Subordinated Debt shall bear interest from the
Deferred Consideration Payment Date.
SECTION 2.04. Principal Amount of Subordinated Debt. (a) (i)
Within 75 days after the Closing Date, Ciba shall prepare and deliver to
Hexcel a statement (the "Ciba Statement"), certified by a duly authorized
signatory of Ciba, setting forth (A) the components of Working Capital (as
defined below) immediately prior to the Closing ("Closing Working Capital")
of the Transferred Business, in no less detail than, and determined in
accordance with U.S. GAAP applied on a basis consistent with, the balance
sheet of the Transferred Business as of June 30, 1995 included in Schedule
3.01(c) (the "Balance Sheet"), (B) if the Danutec Equity is delivered to
Hexcel at Closing, the total consideration paid by Ciba and its
Subsidiaries for equity securities of Danutec purchased after the date
hereof and on or prior to the Closing Date pursuant to a Danutec Agreement
(the "Danutec Price"), (C) the amounts as of the Closing corresponding to
individual items set forth on Schedule 2.04(a1), increases after June 30,
1995 in reserves relating to Assumed Tax Liabilities (other than deferred
Tax liabilities) for taxable periods ending on or prior to December 31,
1994) and any other reserves for non-operating liabilities that would
represent future cash expenses of the Transferred Business, all as would be
properly reflected on the balance sheet of the Transferred Business as of
the Closing Date prepared in accordance with U.S. GAAP on a basis
consistent with the Balance Sheet (the "Ciba Closing Items"), (D) the
amount of Taxes with respect to the Transferred Business paid by Ciba or
its Subsidiaries prior to the Closing that, absent the Closing, would have
been payable after the Closing ("Prepaid Taxes"), (E) the book value on the
Closing Date of the Deferred Assets that are Current Assets and the book
value of Current Liabilities relating thereto and (F) a certificate of Ciba
that the Ciba Statement has been prepared in compliance with the
requirements of this Section 2.04. Schedule 2.04(a2) sets forth the proper
calculation of Working Capital of the Transferred Business as of the date
of the Balance Sheet determined in accordance with this Section 2.04.
(ii) Hexcel shall cooperate with Ciba in connection with the
preparation of the Ciba Statement and shall, to the extent reasonably
requested by Ciba, provide Ciba and its advisors access during normal
business hours to the personnel, properties, books and records of Hexcel
and its Subsidiaries relating to the Transferred Business for such purpose;
provided, however, that Ciba shall have the primary responsibility and
authority for preparing the Ciba Statement.
(iii) During the thirty-day period following Hexcel's receipt of
the Ciba Statement, Hexcel and its advisors shall be permitted to review
the working papers relating to the Ciba Statement. Ciba shall and shall
cause its advisors to cooperate with Hexcel and Hexcel's advisors in
connection with such review. The Ciba Statement shall become final and
binding upon the parties on the thirtieth day following delivery thereof,
unless Hexcel gives written notice of its disagreement with the Ciba
Statement ("Hexcel Notice of Disagreement") to Ciba prior to such date. Any
Hexcel Notice of Disagreement shall (A) specify in reasonable detail the
nature of any disagreement so asserted and (B) be accompanied by a
certificate of Hexcel
that it has complied with the covenants set forth in this Section 2.04. If
a Hexcel Notice of Disagreement is received by Ciba in a timely manner,
then the Ciba Statement (as revised in accordance with clause (I) or (II)
below) shall become final and binding upon Ciba and Hexcel on the earlier
of (I) the date Ciba and Hexcel resolve in writing any differences they
have with respect to the matters specified in the Hexcel Notice of
Disagreement or (II) the date any disputed matters are finally resolved in
writing by the Accounting Firm (as defined below).
(b) (i) Within 75 days after the Closing Date, Hexcel shall
prepare and deliver to Ciba a statement (the "Hexcel Statement"), certified
by an officer of Hexcel, setting forth (A) the components of Closing
Working Capital of Hexcel in no less detail than, and determined in
accordance with U.S. GAAP applied on a basis consistent with, the balance
sheet of Hexcel as of July 2, 1995 included in Hexcel's quarterly report on
Form 10-Q for the quarter ended July 2, 1995 (the "Hexcel Balance Sheet"),
(B) the amounts as of the Closing Date corresponding to individual items
set forth in Schedule 2.04(b1), increases after June 30, 1995 in reserves
for Taxes (other than deferred Tax liabilities) relating to taxable periods
ending on or prior to December 31, 1994 and any other reserves for
non-operating liabilities that would represent future cash expenses of
Hexcel, all as would be properly reflected on the balance sheet of Hexcel
as of the Closing Date prepared in accordance with U.S. GAAP on a basis
consistent with the Hexcel Balance Sheet (the "Hexcel Closing Items"), (C)
the amount of Transfer Taxes paid by Hexcel pursuant to Section 4.06
(directly or by reimbursement to Ciba) on or prior to the Closing Date and
(D) a certificate of Hexcel that the Hexcel Statement has been prepared in
compliance with the requirements of this Section 2.04. Schedule 2.04(b2)
sets forth the proper calculation of Working Capital of Hexcel as of the
date of the Hexcel Balance Sheet determined in accordance with this Section
2.04.
(ii) During the thirty-day period following Ciba's receipt of the
Hexcel Statement, Ciba and its advisors shall be permitted to review the
working papers relating to the Hexcel Statement. Hexcel shall and shall
cause its advisors to cooperate with Ciba and Ciba's advisors in connection
with such review. The Hexcel Statement shall become final and binding upon
the parties on the thirtieth day following delivery thereof, unless Ciba
gives written notice of its disagreement with the Hexcel Statement ("Ciba
Notice of Disagreement") to Hexcel prior to such date. Any Ciba Notice of
Disagreement shall (A) specify in reasonable detail the nature of any
disagreement so asserted and (B) be accompanied by a certificate of Ciba
that it has complied with the covenants set forth in this Section 2.04. If
a Ciba Notice of Disagreement is received by Hexcel in a timely manner,
then the Hexcel Statement (as revised in accordance with clause (I) or (II)
below) shall become final and binding upon Hexcel and Ciba on the earlier
of (I) the date Ciba and Hexcel resolve in writing any differences they
have with respect to the matters specified in the Ciba Notice of
Disagreement or (II) the date any disputed matters are finally resolved in
writing by the Accounting Firm (as defined below).
(c) During the thirty-day period following the delivery of a
Hexcel or Ciba Notice of Disagreement, Hexcel and Ciba shall seek in good
faith to resolve in writing any differences which they may have with
respect to the matters specified in such Notice of Disagreement. During
such period each of Hexcel or Ciba, as the case may be, and its advisors
shall have access to the working papers of the other party and its advisors
prepared in connection with such Notice of Disagreement. At the end of such
thirty-day period, Hexcel and Ciba shall each submit, in the form of a
written brief, any and all matters that remain in dispute and that were
properly included in such Notice of Disagreement to such nationally
recognized independent public accounting firm (the "Accounting Firm") as
shall be agreed upon by the parties hereto in writing for final and binding
review and resolution. Hexcel and Ciba shall jointly request that the
arbitration be conducted in accordance with procedures established by the
Accounting Firm. Hexcel and Ciba agree that judgment may be entered upon
the determination of the Accounting Firm in any court having jurisdiction
over the party against which such determination is to be enforced. The cost
of such review and resolution (including the fees and expenses of the
Accounting Firm and reasonable attorneys' and accountants' fees and
expenses of the parties) pursuant to this Section 2.04 shall be borne by
Hexcel and Ciba in inverse proportion as they may prevail on the merits of
the matters resolved by the Accounting Firm, which proportionate
allocations shall also be determined by the Accounting Firm at the time the
determination of the Accounting Firm is rendered thereon. Except as set
forth in the immediately preceding sentence, the parties shall bear their
own costs and expenses (including attorneys' and accountants' fees and
expenses) in connection with the matters contemplated by this Section 2.04.
(d) The principal amount of the Subordinated Debt shall be
$48,029,000 adjusted as follows:
(i) if the Danutec Equity is delivered to Hexcel at Closing, the
principal amount shall be increased by an amount equal to (x) the
Danutec Price if the Danutec Price is $7 million or less, (y) $7
million plus 50% of the amount by which the Danutec Price exceeds $7
million if the Danutec Price does not exceed $11 million or (z) $9
million if the Danutec Price exceeds $11 million (the amount of such
increase being hereinafter referred to as the "Danutec Amount");
(ii) the principal amount shall be decreased or increased, as the
case may be, by an amount equal to the amount by which the Closing
Working Capital of Hexcel exceeds or is less than, as the case may be,
the Working Capital of Hexcel reflected on the Hexcel Balance Sheet;
(iii) the principal amount shall be increased or decreased, as
the case may be, by an amount equal to the amount by which the Closing
Working Capital of the Transferred Business exceeds or is less than,
as the case may
be, the Working Capital of the Transferred Business reflected on the
Balance Sheet;
(iv) the principal amount shall be decreased by the net book
value of the Deferred Assets that are set forth in the Ciba Statement
plus $457,500;
(v) to the extent any amount of Prepaid Taxes is not included as
a Current Asset (as defined below) in the calculation of Closing
Working Capital of the Transferred Business, the principal amount
shall be increased by an amount equal to the amount of such Prepaid
Taxes;
(vi) to the extent any amount of Transfer Taxes paid by Hexcel
pursuant to Section 4.06 (directly or by reimbursement to Ciba) on or
prior to the Closing Date is not included as a Current Asset in the
calculation of Closing Working Capital of Hexcel, the principal amount
shall be decreased by an amount equal to such Transfer Taxes; and
(vii) the principal amount shall be increased by the amount, if
any, by which the result of subtracting the total amount of Ciba
Closing Items from the total amount of Hexcel Closing Items exceeds
$83,029,000 or shall be decreased by the amount, if any, by which
$83,029,000 exceeds such result.
(e) The term "Working Capital" shall mean Current Assets minus
Current Liabilities. The terms "Current Assets" and "Current Liabilities"
shall mean the current assets and current liabilities (other than any such
assets or liabilities that are included in the adjustment required by
2.04(d)(vii)), respectively, of Hexcel or the Transferred Business, as the
case may be, calculated in accordance with U.S. GAAP on a basis consistent
with (x) in the case of the Transferred Business, the Balance Sheet and (y)
in the case of Hexcel, the Hexcel Balance Sheet; provided, (i) Current
Assets and Current Liabilities of the Transferred Business shall not
include any amounts in respect of Excluded Tax Assets or Excluded Tax
Liabilities and (ii) for purposes of calculating Working Capital of the
Transferred Business as of the date of the Balance Sheet, cash, cash
equivalents and marketable securities shall be deemed to be zero; provided
further that, if the Danutec Equity is not delivered to Hexcel at the
Closing, no amounts relating to Danutec shall be included in any component
of Closing Working Capital of the Transferred Business or Working Capital
of the Transferred Business on the date of the Balance Sheet. The parties
agree that the adjustment regarding Working Capital contemplated by this
Section 2.04 is intended to show the change in Working Capital from the
dates of the Balance Sheet and Hexcel Balance Sheet to the Closing Date,
and that such change can only be measured if each calculation is done in
the same way, using the same methods, at both dates. Accordingly, in the
event that the resolution of any dispute relating to the calculation of any
component of Working Capital as of any particular date results in a change
in the way that, or the method by which, such component of Working Capital
was
calculated, a corresponding change shall be made in the way that, or the
method by which, such component of Working Capital is calculated as of any
other date.
(f) Except as required by applicable law or U.S. GAAP, Hexcel
agrees that following the Closing and until the final resolution of the
principal amount of the Subordinated Debt pursuant hereto it shall not take
any actions with respect to the accounting books and records of the
Transferred Business that are not consistent with the past practices the
Transferred Business that would have any effect on the determination or
verification of the determination of the principal amount of the
Subordinated Debt. Without limiting the generality of the foregoing, except
as required by applicable law or U.S. GAAP, no changes shall be made in any
reserve or other account existing as of the date of the Balance Sheet
except as a result of events occurring after the date of the Balance Sheet
and, in such event, only in a manner consistent with past practices. In the
event that Hexcel is required under applicable law or U.S. GAAP to take
such an action or make such a change that affects either the Balance Sheet
or the Ciba Closing Statement, as the case may be, a corresponding
adjustment shall be made in the other.
(g) Hexcel shall, within 2 business days after the Hexcel
Statement and the Ciba Statement become final and binding on the parties,
issue and deliver to Ciba and/or its Subsidiaries an aggregate principal
amount of Subordinated Debt calculated in accordance with Section 2.04(d)
and bearing interest accruing from the Closing Date (which interest shall
be paid in cash to the extent that any interest payment date with respect
to such Subordinated Debt has passed).
SECTION 2.05. Danutec. (a) If Ciba does not deliver the Danutec
Equity to Hexcel and/or its designated Subsidiary or Subsidiaries at
Closing, Ciba shall either (x) prior to the first anniversary of the
Closing Date, deliver the Danutec Equity to Hexcel at the Danutec Closing
(as defined below) or (y) on the first anniversary of the Closing Date, pay
$11 million to Hexcel in immediately available funds by wire transfer to an
account or accounts designated by Hexcel at least two business days prior
to the first anniversary of the Closing, together with interest thereon
from the Closing Date through the first anniversary of the Closing Date at
the applicable interest rate in effect from time to time under the
Indenture.
(b) If Ciba does not deliver the Danutec Equity to Hexcel at
Closing but consummates a transaction pursuant to a Danutec Agreement, the
closing of the sale and transfer of the Danutec Equity to Hexcel (the
"Danutec Closing") shall take place at the offices of a notary public
mutually acceptable to the parties in Vienna, Austria on the fifth business
day following (i) the consummation of such Danutec Agreement if no
pre-merger notification is filed under the Austrian Cartel Act, (ii)
receipt of a confirmation from the Austrian Cartel Court resulting in a
clearance of the transaction if a pre-merger notification is filed under
the Austrian Cartel Act or
(iii) at such other time, date and place as shall be fixed by agreement
among the parties.
(c) At the Danutec Closing, Ciba and Hexcel shall execute and
deliver (i) the notarial deed required under Austrian law for the transfer
of the Danutec Equity to Hexcel and (ii) such other documents as Hexcel and
its counsel may reasonably request to demonstrate satisfaction or waiver of
the conditions and compliance with the agreements set forth herein, in each
case, in form and substance reasonably satisfactory to Hexcel and its
counsel.
(d) At the Danutec Closing, Hexcel shall deliver to Ciba or its
designated Subsidiary or Subsidiaries (i) Subordinated Debt in an aggregate
principal amount equal to the Danutec Amount and bearing interest from the
date of the Danutec Closing, which amount shall be allocated in accordance
with Section 1.04, and (ii) such documents, in form and substance
reasonably satisfactory to Ciba and its counsel, as Ciba and its counsel
shall reasonably request to demonstrate satisfaction or waiver of the
conditions and compliance with the agreements set forth herein.
(e) At the Danutec Closing, Hexcel shall assume any and all
obligations and liabilities (other than Excluded Liabilities) relating to
Danutec which are of the sort that would have been Assumed Liabilities had
the Danutec Equity been delivered to Hexcel at Closing, whether or not such
liabilities or obligations existed at Closing.
(f) If, following the Danutec Closing, any environmental
remediation is determined to be reasonably necessary (after good faith
consultation with Ciba) (i) with respect to any Danutec property as a
result of events occurring prior to the Danutec Closing or (ii) with
respect to any property as a result of the operations of Danutec prior to
the Danutec Closing, Ciba's sole obligation with respect to such
remediation shall be to pay Hexcel an amount equal to 50% of the first $2.5
million of costs incurred by Danutec in connection with all such
remediation, notwithstanding that such costs are Assumed Liabilities
hereunder.
ARTICLE III
Representations and Warranties
SECTION 3.01. Representations and Warranties of Ciba. Ciba and
CGC (with respect to themselves and, where applicable, the Subsidiaries of
Ciba) hereby represent and warrant to Hexcel as follows:
(a) Organization, Standing and Power; Structure. (i) Non-U.S.
Each of Ciba, the Divested Subsidiaries and any other non-U.S. Subsidiary
of Ciba that
owns Acquired Assets or Deferred Assets or that conducts the Transferred
Business is a legal entity duly organized, validly existing and, where
applicable, in good standing under the laws of the jurisdiction in which it
is organized, has the requisite power and authority and all material
governmental licenses, authorizations, consents and approvals required to
own the Acquired Assets and/or the Deferred Assets owned by it and to carry
on the operations of the Transferred Business as now being conducted by it
and is duly qualified to do business as a foreign corporation and, where
applicable, is in good standing in each jurisdiction in which the character
of the property owned or leased by it or the nature of its activities make
such qualification necessary, except for those jurisdictions in which the
failure to be so qualified would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect. Ciba has
heretofore made available to Hexcel true and complete copies of the
respective certificate of incorporation and by-laws (or similar
organizational documents) of Ciba and each Divested Subsidiary, in each
case as amended through the date of this Agreement. Such organizational
documents are in full force and effect, and no other organizational
documents are applicable to or binding on such entities. None of such
entities is in violation of any provision of its certificate of
incorporation or by-laws (or similar organizational documents).
(ii) U.S. CGC is a corporation duly organized, validly existing
and in good standing under the laws of the State of New York, has the
requisite corporate power and authority and all material governmental
licenses, authorizations, consents and approvals required to own the
Acquired Assets owned by it and to carry on the operations of the
Transferred Business as now being conducted by it and is duly qualified to
do business as a foreign corporation and is in good standing in each
jurisdiction where the character of the property owned or leased by it or
the nature of the activities make such qualification necessary, except for
those jurisdictions in which failure to be so qualified would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect. CGC has heretofore made available to Hexcel true and
complete copies of its certificate of incorporation and by-laws, as amended
through the date of this Agreement. Such organizational documents are in
full force and effect, and no other organizational documents are applicable
to or binding on CGC. CGC is not in violation of any provision of its
certificate of incorporation or by-laws.
(iii) Schedule 3.01(a) sets forth (x) for Ciba, CGC, each
Divested Subsidiary and each other Subsidiary of Ciba that owns Acquired
Assets or Deferred Assets or that conducts the Transferred Business, the
countries in which such entity manufactures products or retains employees,
sales representatives or distributors that are part of the Transferred
Business, and, for each such country, a brief description of the nature of
those activities and the approximate number on the date hereof of such
entity's employees that are employees of the Transferred Business and (y)
for each Excluded Jurisdiction, a brief description of the nature of the
activities related to the Deferred Assets located in such jurisdiction and
the approximate number on the
date hereof of employees engaged exclusively or primarily in such
activities ("Satellite Personnel").
(b) Authority. (i) Non-U.S. Ciba and, to the extent applicable,
each of its Subsidiaries has all requisite power and authority to execute
each of this Agreement and the Ancillary Agreements and to consummate the
transactions contemplated hereby and thereby. The execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby
have been duly authorized by all requisite action on the part of Ciba and,
to the extent applicable, each of its Subsidiaries, and the execution and
delivery of the Ancillary Agreements and the consummation of the
transactions contemplated thereby will be authorized by all necessary
corporate action on the part of Ciba and, to the extent applicable, each of
its Subsidiaries prior to the Closing, and do not and will not require the
approval of the stockholders of Ciba or any of its Subsidiaries, other than
such approvals as have heretofore been obtained. This Agreement has been
duly executed and delivered by Ciba and constitutes, and each Ancillary
Agreement when duly executed and delivered by Ciba and, to the extent
applicable, any of its Subsidiaries will constitute, legal, valid and
binding obligations of Ciba and, to the extent applicable, any such
Subsidiary enforceable against each of them in accordance with their
respective terms (subject to applicable bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and other similar laws affecting
creditors' rights generally from time to time in effect, and subject, as to
enforceability, to general principles of equity regardless of whether such
enforceability is considered in a proceeding in equity or at law). Except
as set forth on Schedule 3.01(b), none of Ciba or any of its Subsidiaries
is a party to, bound by or subject to any agreement or restriction that
would materially restrict or impede Hexcel from exercising its full rights
under, and enjoying the full benefits contemplated by, this Agreement and
the Ancillary Agreements. The execution and delivery by Ciba of this
Agreement do not, and the execution and delivery by Ciba and, to the extent
applicable, any of its Subsidiaries of the other Ancillary Agreements will
not, and the consummation by Ciba and its Subsidiaries of the transactions
contemplated hereby and thereby and the compliance by Ciba and its
Subsidiaries with the terms hereof and thereof will not, (i) violate any
law, judgment, order, decree, statute, ordinance, rule or regulation
applicable to Ciba or any of its Subsidiaries, (ii) conflict with any
provision of Ciba's or any of its Subsidiaries' certificate of
incorporation or by-laws (or similar organizational documents), (iii)
except as set forth on Schedule 3.01(b), conflict with or result in the
breach or termination of any provision of or constitute a default (with or
without the giving of notice or the lapse of time or both) under, or
require any consent under or give rise to any right of termination,
cancellation or acceleration or the loss of any benefit under any Contract
to which any of them is a party or by which any of them or any of their
respective assets or properties is bound, (iv) except as set forth on
Schedule 3.01(b), require any consent, approval, order, authorization or
other action of, or the registration, declaration or filing with, any
Governmental Entity or any other Person or (v) except as set forth on
Schedule 3.01(b), result in the creation or
imposition of any Lien on any of their respective properties or assets
other than, in the case of clauses (i), (iii), (iv) and (v), any such
conflicts, violations or Liens, the existence of which or consents the lack
of which could not reasonably be expected to (x) have a Material Adverse
Effect, (y) prevent the consummation of any of the transactions
contemplated by this Agreement and the Ancillary Agreements or (z)
materially impair Ciba's or, to the extent applicable, any of its
Subsidiaries' ability to perform its obligations under this Agreement or
any Ancillary Agreement, except (A) for the filing of a premerger
notification and report form by Ciba under the HSR Act and any filings
required pursuant to applicable antitrust and competition law statutes and
regulations in each of the Applicable Jurisdictions, (B) for compliance
with and filings under Section 13(d) of the Exchange Act, (C) for the
filing of a notice pursuant to the Exon-Xxxxxx Amendment, (D) the consent
of the Departement de Securite pursuant to the Demande d'Autorisation with
the Direction du Tresor in France, and (E) as otherwise set forth on
Schedule 3.01(b).
(ii) U.S. CGC has all corporate power and authority to execute
each of this Agreement and the Ancillary Agreements and to consummate the
transactions contemplated hereby and thereby. The execution and delivery of
this Agreement and the Employment Matters Agreement and the consummation of
the transactions contemplated hereby and thereby have been duly authorized
by all necessary corporate action on the part of CGC, and the execution and
delivery of the other Ancillary Agreements and the consummation of the
transactions contemplated thereby will be authorized by all necessary
corporate action on the part of CGC prior to the Closing, and do not and
will not require the approval of the stockholder of CGC, other than such
approvals as have heretofore been obtained. This Agreement and the
Employment Matters Agreement have been duly executed and delivered by CGC
and constitute, and each other Ancillary Agreement when duly executed and
delivered by CGC will constitute, legal, valid and binding obligations of
CGC enforceable against it in accordance with their respective terms
(subject to applicable bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and other similar laws affecting creditors'
rights generally from time to time in effect, and subject, as to
enforceability, to general principles of equity regardless of whether such
enforceability is considered in a proceeding in equity or at law). Except
as set forth on Schedule 3.01(b), CGC is not a party to, bound by or
subject to any agreement or restriction that would materially restrict or
impede Hexcel from exercising its full rights under, and enjoying the full
benefits contemplated by, this Agreement and the Ancillary Agreements. The
execution and delivery by CGC of this Agreement and the Employment Matters
Agreement do not, and the execution and delivery by CGC of the other
Ancillary Agreements to which it will be a party will not, and the
consummation by CGC of the transactions contemplated hereby and thereby and
the compliance by CGC with the terms hereof and thereof will not, (i)
violate any law, judgment, order, decree, statute, ordinance, rule or
regulation applicable to CGC, (ii) conflict with any provision of CGC's
certificate of incorporation or by-laws, (iii) except as set forth on
Schedule 3.01(b), conflict with or result in the breach or
termination of any provision of or constitute a default (with or without
the giving of notice or the lapse of time or both) under, or require any
consent under or give rise to any right of termination, cancellation or
acceleration or the loss of any benefit under any Contract to which it is a
party or by which it or any of its assets or properties is bound, (iv)
except as set forth on Schedule 3.01(b), require any consent, approval,
order, authorization or other action of, or the registration, declaration
or filing with, any Governmental Entity or any other Person or (v) except
as set forth on Schedule 3.01(b), result in the creation of any Lien on any
of the properties or assets of CGC, other than, in the case of clauses (i),
(iii), (iv) and (v), any such conflicts, violations or Liens, the existence
of which or consents the lack of which could not reasonably be expected to
(x) have a Material Adverse Effect, (y) prevent the consummation of any of
the transactions contemplated by this Agreement and the Ancillary
Agreements or (z) materially impair CGC's ability to perform its
obligations under this Agreement or any Ancillary Agreement, except (A) for
the filing of a premerger notification and report form by Ciba under the
HSR Act and any filings required pursuant to applicable antitrust and
competition law statutes and regulations in each of the Applicable
Jurisdictions, (B) for compliance with and filings under Section 13(d) of
the Exchange Act, (C) for the filing of a notice pursuant to the Exon-
Xxxxxx Amendment, (D) for the consent of the Departement de Securite
pursuant to the Demande d'Autorisation with the Direction du Tresor in
France, and (E) as otherwise set forth on Schedule 3.01(b).
(c) Financial Information; Undisclosed Liabilities. The financial
statements of the Transferred Business, including the notes thereto
(except, in the case of unaudited quarterly statements, as would be
permitted for use on Form 10-Q), which are attached as Schedule 3.01(c)
hereto (the "Financial Statements"), have been prepared in accordance with
U.S. GAAP applied on a consistent basis during the periods involved (except
as may be indicated in the notes thereto) and fairly present the
consolidated financial position of the Transferred Business as of the dates
thereof and the consolidated results of operations of the Transferred
Business for the periods then ended (subject, in the case of any unaudited
statements, to normal year-end audit adjustments). Except as set forth on
the Balance Sheet, the Transferred Business has no liabilities or
obligations of any nature (whether accrued, absolute, contingent or
otherwise), other than liabilities and obligations incurred in the ordinary
course of business and consistent with past practice since the date of the
Balance Sheet that, individually or in the aggregate, have not had and
would not reasonably be expected to have a Material Adverse Effect.
(d) Compliance with Applicable Laws. Each of Ciba and each of its
Subsidiaries has complied, and except as set forth on Schedule 3.01(h)(1)
all the Scheduled Real Property is in compliance, with all laws,
regulations, rules, orders, statutes, ordinances, Permits and
authorizations of all Governmental Entities applicable to it which relate
to the Transferred Business, except where the failure to so comply would
not, individually or in the aggregate, reasonably be expected to have
a Material Adverse Effect and, except as set forth in Schedule 3.01(d),
neither Ciba nor any of its Subsidiaries has received any written notice of
any such failure to so comply. Neither Ciba nor any of its Subsidiaries has
received any written notice that any investigation or review by any
Governmental Entity with respect to or otherwise relating to the
Transferred Business is pending or that any such investigation or review is
contemplated, except where the outcome of such investigation or review
would not, individually or in the aggregate, reasonably be expected to have
a Material Adverse Effect. This paragraph (d) does not relate to Tax laws,
laws relating to employee benefits and Environmental Laws for which Section
3.01(m), the Employment Matters Agreement and Section 3.01(w) and Section
3.01(n), respectively, are applicable in lieu of this paragraph (d).
(e) Litigation; Decrees. Schedule 3.01(e) sets forth a list of
certain lawsuits, claims, actions, investigations and proceedings. Except
as set forth in Schedule 3.01(e), there is no suit, claim, action,
investigation or proceeding pending or, to the knowledge of Ciba or any of
its Subsidiaries, threatened against Ciba or any of its Subsidiaries that
(i) if adversely determined would, individually or in the aggregate, be
reasonably likely to result in a Material Adverse Effect, (ii) in any
manner challenges or seeks to enjoin, prevent, alter or materially delay
the transactions contemplated hereby or (iii) alleges criminal action or
inaction with respect to the Transferred Business, the Acquired Assets or
the Deferred Assets. Neither Ciba nor any of its Subsidiaries is bound by
or subject to any judgment, order, injunction, rule, decree, writ,
determination or award of any Governmental Entity or arbitrator having, or
which, individually or in the aggregate, have or would reasonably be
expected to have, a Material Adverse Effect or which would prevent, alter
or materially delay the transactions contemplated hereby.
(f) Contributed Shares. Except for the Austrian Shares Contract,
the Contributed Shares are owned by Ciba, free and clear of any and all
Liens and free of any and all other limitations or restrictions and Ciba
has sufficient power and right to sell, assign, transfer, convey and
deliver the Contributed Shares to Hexcel, free and clear of any and all
Liens and free of any and all other limitations or restrictions (other than
the shares of Brochier, the transfer of which is subject to regulation by
the Direction du Tresor and the approval of the Departement de Securite in
France). The Contributed Shares are duly authorized, validly issued and
outstanding, fully paid and nonassessable, and were not issued in violation
of any preemptive or other right of any person to acquire such securities.
Except for the interest in Danutec owned by PCD Polymere Gesellschaft
m.b.H., the Contributed Shares constitute all the capital stock of or other
equity interests in the Divested Subsidiaries. Except for the right to
purchase the Danutec Shares or wind up Danutec pursuant to the Austrian
Shares Contract, there are no (i) securities of Ciba or any of its
Subsidiaries or affiliates convertible into or exchangeable for capital
stock of, other voting securities of or other equity interests in any
Divested Subsidiary or (ii) securities, options, warrants, calls or other
rights or obligations that require Ciba or any of its Subsidiaries or
affiliates to issue, deliver or sell additional shares of capital stock of
or other voting securities of or other equity interests in (or securities
convertible into or exchangeable for the same) any Divested Subsidiary.
None of the Divested Subsidiaries has any interest in any other entity,
including subsidiaries, joint ventures or partnerships. Upon transfer to
Hexcel of the Contributed Shares, Hexcel will have good and marketable
title to the Contributed Shares, free and clear of any and all Liens and
free of any and all other limitations or restrictions (including any
restriction on the right to vote, sell or otherwise dispose of such
Contributed Shares) (other than the shares of Brochier, the transfer of
which is subject to regulation by the Direction du Tresor and the approval
of the Departement de Securite in France). There are no outstanding bonds,
debentures, notes or other indebtedness having the right to vote on any
matters on which stockholders of any Divested Subsidiary may vote. Neither
the Contributed Shares nor any shares of capital stock of any Divested
Subsidiary have been issued in violation of, and none of the Contributed
Shares or such shares of capital stock are subject to, any purchase option,
call, right of first refusal, preemptive, subscription or similar rights
under any provision of applicable law, the certificate of incorporation or
by-laws or comparable governing instruments of any Divested Subsidiary or,
except pursuant to the Austrian Shares Contract, any contract, agreement or
instrument to which any Divested Subsidiary is subject, bound or a party or
otherwise. Except as set forth on Schedule 3.01(f), there are no
outstanding warrants, options, rights, "phantom" stock rights, agreements,
convertible or exchangeable securities or other commitments (other than
this Agreement) (i) pursuant to which any Divested Subsidiary is or may
become obligated to issue, sell, purchase, refund or redeem any shares of
its capital stock or other securities of or equity interests in a Divested
Subsidiary or (ii) that give any Person the right to receive any benefits
or rights similar to any rights enjoyed by or accruing to the holders of
shares of capital stock of any Divested Subsidiary. Except as set forth on
Schedule 3.01(f), there are no equity securities of any Divested Subsidiary
reserved for issuance for any purpose.
(g) Title to Acquired Assets and Deferred Assets. Either Ciba or
a Subsidiary of Ciba has good, valid and marketable title to all the
Acquired Assets and the Deferred Assets and has good and marketable title
to, or valid leasehold interests in all the personal property and assets
reflected in the Balance Sheet or thereafter acquired, except for assets
sold or otherwise disposed of for fair value since that date in the
ordinary course of business consistent with past practice and not in
violation of this Agreement, in each case free and clear of any and all
Liens and free of any and all other limitations or restrictions, except (i)
as disclosed in Schedule 3.01(g) or on the Balance Sheet or in the notes
thereto and (ii) for Permitted Liens. Ciba or CGC has sufficient power and
authority to sell, assign, transfer, convey and deliver the Acquired Assets
and the Deferred Assets to Hexcel, free and clear of any and all Liens and
free of any and all other limitations or restrictions, except for Permitted
Liens. Each Divested Subsidiary has good, valid and marketable title to all
its assets free and clear of any and all Liens and free of any and all
other limitations or restrictions except for Permitted Liens. This
paragraph (g) does not relate to real
property, interests in real property or leasehold interests in real
property or Intellectual Property, as to which Section 3.01(h) and Section
3.01(i), respectively, shall be applicable in lieu of this Section 3.01(g).
(h) Real Property. (i) Ciba or one of its Subsidiaries has good,
marketable and insurable title to, or valid leasehold interests in, or
other rights to use, all the real property required for the conduct of the
Transferred Business (including the real property interests comprising a
part of the Acquired Assets and the Deferred Assets) as currently conducted
and all the real property or interests therein reflected in the Balance
Sheet or thereafter acquired, except for real property or interests therein
sold or otherwise disposed of for fair value since the date of the Balance
Sheet or the ordinary course of business consistent with past practice and
not in violation of this Agreement, in each case free and clear of any and
all Liens of any kind and free of any and all other limitations and
restrictions except for (A) Permitted Liens, (B) easements, covenants,
rights-of-way, claims and other encumbrances or restrictions of record,
none of which, either individually or in the aggregate, materially detract
from the value of the property or materially interfere with the current use
of the property, (C) zoning, building and other similar restrictions, none
of which, either individually or in the aggregate, materially detract from
the value of the property or materially interfere with the current use of
the property, (D) unrecorded easements, covenants, rights-of-way or other
restrictions, none of which, either individually or in the aggregate,
materially detract from the value of the property or materially interfere
with the current use of the property, (E) any conditions that may be shown
by a current, accurate survey or physical inspection of any Scheduled Real
Property made prior to Closing and (F) Liens disclosed in Schedule
3.01(h)(l) or 3.01(h)(2) or in the Balance Sheet or in any notes thereto,
none of which items set forth in clauses (A) through (E) above,
individually or in the aggregate, have had or would reasonably be expected
to have a Material Adverse Effect.
(ii) Ciba and each of its Subsidiaries has complied in all
respects with the terms of all material leases to which it is a party and
the subject of which relates exclusively or primarily to, arises
exclusively or primarily out of or is used exclusively or primarily in
connection with the Transferred Business, and each of the Divested
Subsidiaries has complied in all respects with the terms of all material
leases to which it is a party. To the knowledge of Ciba or any of its
Subsidiaries all such leases are in full force and effect, all rents and
additional rents due thereunder have been paid in full when due through the
date hereof, and the tenant thereunder enjoys peaceful and undisturbed
possession under all such material leases.
(iii) Schedule 3.01(h)(1) sets forth a complete description of
all real property and interests in real property directly or indirectly
owned in fee simple by Ciba or any of its Subsidiaries that relate
exclusively or primarily to, arise exclusively or primarily out of or that
are used exclusively or primarily in connection with the
Transferred Business, and all real property and interests in real property
owned directly or indirectly in fee simple by a Divested Subsidiary.
Schedule 3.01(h)(2) sets forth a complete list of all real property and
interests in real property leased, subleased or otherwise occupied pursuant
to a written instrument by Ciba or any of its Subsidiaries that relate
exclusively or primarily to, arise exclusively or primarily out of or that
are used exclusively or primarily in connection with the Transferred
Business, except for real property and interests in real property leased by
a Divested Subsidiary.
(iv) At the date of this Agreement there has been no actual or,
to the knowledge of Ciba, threatened condemnation or taking by eminent
domain of any portion of the properties listed in Schedules 3.01(h)(1) and
3.01(h)(2).
(v) There are no Persons other than Ciba or any of its
Subsidiaries that have a possessory interest pursuant to a written
agreement with Ciba or any of its Subsidiaries in any of the properties
listed in Schedules 3.01(h)(1) and 3.01(h)(2), except as set forth on such
schedules.
(i) Intellectual Property. To Ciba's knowledge, except as set
forth on Schedule 3.01(i), no Acquired Intellectual Property, no
Intellectual Property licensed pursuant to the Trademark License Agreement
and no Intellectual Property otherwise licensed pursuant to Section 4.13
(A) has, in whole or in part, lapsed, been declared invalid or been
abandoned, dedicated or disclaimed or (B) is being infringed by any Person,
in each case, which could reasonably be expected to have a Material Adverse
Effect. To Ciba's knowledge, except as disclosed in Schedule 3.01(i) (A)
neither Ciba nor any of its Subsidiaries during the five years preceding
the date of this Agreement has been sued, charged in writing or threatened
with respect to, or been a defendant in, any claim, suit, action or
proceeding including a claim of infringement by Ciba or such Subsidiary of
any Intellectual Property which, if successful, could reasonably be
expected to have a Material Adverse Effect and (B) to Ciba's knowledge, the
conduct of the Transferred Business does not infringe the valid
intellectual property rights of any other Person in any way that could
reasonably be expected to have a Material Adverse Effect.
(j) Insurance. Schedule 3.01(j) sets forth a complete and correct
list of all insurance policies (including a brief summary of the nature and
terms thereof) providing coverage in respect of the Transferred Business,
the Acquired Assets or the Deferred Assets. All the material properties and
businesses constituting any part of the Acquired Assets or the Deferred
Assets are insured for Ciba's, CGC's or a Divested Subsidiary's benefit,
and will be so insured until the Closing or the applicable Deferred
Closing, as the case may be. Except as set forth on Schedule 3.01(j), the
coverage provided by such policies is adequate and sufficient in nature,
scope and amount in accordance with applicable prudent risk management
practices. All such policies currently in effect are in full force and
effect, no notice
of termination, cancellation or reservation of rights has been received
with respect to any such policy, there has not been any failure to present
any claim or give any notice under any such policy in a timely manner or in
the manner or detail required by such policy, and there is no default with
respect to any such policy, except for such as would not, individually or
in the aggregate, reasonably be expected to have a Material Adverse Effect.
Except as set forth on Schedule 3.01(j) or as otherwise disclosed to Hexcel
prior to the date of this Agreement, neither Ciba nor any of its
Subsidiaries self-insures or has self-insured any material risks with
respect to the Transferred Business, the Acquired Assets or the Deferred
Assets.
(k) Contracts. Schedule 3.01(k) sets forth a list of each of the
following Acquired Contracts:
(i) any collective bargaining Contract;
(ii) any Contract with any employee involving aggregate future
obligations in excess of $100,000;
(iii) any Contract entered into in the ordinary course of
business which involves payment or receipt in the future of aggregate
amounts in excess of $5,000,000;
(iv) any Contract entered into other than in the ordinary course
of business which involves payment or receipt in the future of
aggregate amounts in excess of $500,000;
(v) any credit agreement, loan agreement, indenture, guarantee,
note, mortgage, security agreement, loan commitment, evidence of
indebtedness or other Contract relating to the borrowing or lending of
funds in excess of $500,000;
(vi) any contract granting to any Person a preferential right to
purchase any of the Acquired Assets or the Deferred Assets (other than
sales of inventory in the ordinary course of business);
(vii) any Contract with respect to the discharge, transportation,
removal or storage of effluent, waste, pollutants or hazardous
substances;
(viii) any Contract containing a covenant not to compete or
similar provisions relating to any aspect of the Business or a
covenant or other provision restricting the development, manufacture,
marketing or distribution of products or services within the scope of
the Business;
(ix) any Contract for the lease of land, buildings, equipment or
other property that is material to the Transferred Business;
(x) any Contract relating to Intellectual Property that is
material to the Transferred Business (including any such Contract that
restricts the use of such Intellectual Property);
(xi) any Contract limiting or restricting the voting, acquisition
or disposition of any equity securities of or other equity interests
in any of the Divested Subsidiaries;
(xii) any Contract evidencing any Lien on the Acquired Assets or
the Deferred Assets (other than Liens created in the ordinary course
of business); and
(xiii) any Contract involving aggregate future obligations in
excess of $50,000 or involving material non-monetary obligations
relating to the Transferred Business, the Acquired Assets or the
Deferred Assets between or among Ciba and/or any of its Subsidiaries,
on the one hand, and Ciba and/or any of its Subsidiaries or
affiliates, on the other hand.
True, complete and correct copies of all the Contracts listed on Schedule
3.01(k) (including any amendments thereof or waivers with respect thereto)
have been made available to Hexcel (other than (x) purchase orders and
invoices to customers and suppliers of the Transferred Business using
standard forms made available to Hexcel and (y) employment agreements
pursuant to standard forms agreements made available to Hexcel). Except as
set forth on Schedule 3.01(k), each of the material Acquired Contracts is a
valid and binding agreement of Ciba, CGC or a Divested Subsidiary, as the
case may be, and is in full force and effect and enforceable in accordance
with its terms (subject to applicable bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and other similar laws affecting
creditors' rights generally from time to time in effect, and subject, as to
enforceability, to general principles of equity, regardless of whether such
enforceability is considered in a proceeding in equity or at law), and
neither Ciba nor any of its Subsidiaries nor, to the knowledge of Ciba or
any of its Subsidiaries, any other party thereto is in default or breach in
any material respect under the terms of any such material Acquired
Contract, nor, to the knowledge of Ciba or any of its Subsidiaries, has any
event or circumstance occurred that, with or without notice or lapse of
time or both, would constitute any material event of default or give rise
to any right of termination, cancellation or acceleration or the loss of
any benefit or require any consent thereunder other than as set forth on
Schedule 3.01(k). Except as set forth on Schedule 3.01(k), neither the
execution and delivery of this Agreement and the Ancillary Agreements nor
the consummation of the transactions contemplated by this
Agreement and the Ancillary Agreements will cause any breach of a material
Acquired Contract or, with or without notice or lapse of time or both,
result in any default, require any consent or give rise to any right of
termination, cancellation or acceleration or the loss of any benefit under
any material Acquired Contract (including benefits that may be exercised
only upon consummation of a transaction of the type contemplated by this
Agreement and the Ancillary Agreements). All Contracts involving aggregate
future obligations of $50,000 or less relating to the Transferred Business,
the Acquired Assets or the Deferred Assets between or among Ciba and/or any
of its Subsidiaries, on the one hand, and Ciba and/or any of its
Subsidiaries or affiliates, on the other hand, do not, in the aggregate,
involve aggregate future obligations in excess of $1,000,000. Except as
disclosed on Schedule 3.01(k), neither Ciba nor any of its Subsidiaries, as
the case may be, has received any written or, to its knowledge, oral notice
of termination or cancellation of or notice of an intent to terminate or
cancel any material Acquired Contract. No material Acquired Contract is the
subject of or, to the knowledge of Ciba or any of its Subsidiaries, has
been threatened to be made the subject of any arbitration, suit or legal
proceeding. With respect to any material Acquired Contract that will by its
terms terminate as of a particular date unless renewed or unless an option
to extend is exercised, neither Ciba nor any of its Subsidiaries has
received any written or, to its knowledge, oral notice, or otherwise has
knowledge that any such material Acquired Contract will not be, or is not
likely to be, so renewed or that any such extension option will not be, or
is not likely to be, so exercised. Except as set forth on Schedule 3.01(k)
or as would not, individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect, each of the foregoing representations
and warranties as to material Acquired Contracts is also true and correct
as to the other Acquired Contracts.
(l) Absence of Certain Changes or Events. Except as set forth in
Schedule 3.01(l), from the date of the Balance Sheet to the date hereof,
Ciba and its Subsidiaries have conducted the Transferred Business in the
ordinary course of business consistent in all material respects with past
practice, and there has not been any development or event or series of
events that would reasonably be expected to have a Material Adverse Effect.
(m) Taxes. Except as set forth in Schedule 3.01(m), (i) each of
the Divested Subsidiaries has timely filed, in correct and complete form
after giving effect to any applicable extensions, all Tax Returns relating
to Income Taxes or any other material Taxes required to be filed by it and
paid all Taxes required to be paid by it, (ii) each of Ciba and its
Subsidiaries (other than the Divested Subsidiaries) has timely filed, in
correct and complete form, after giving effect to any applicable
extensions, all Tax Returns relating to Income Taxes and other material
Taxes of the Transferred Business and required to be filed by it, and paid
all such Taxes required to be paid by it, and (iii) no Taxing Authority is
asserting or is expected to assert
any deficiency against Ciba or its Subsidiaries with respect to Taxes
described in (i) or (ii) above.
(n) Environmental Matters. Except as set forth in Schedule
3.01(n) and, in each case of clauses (A) through (H) below, except (i)
where the failure to so comply, (ii) where such actual or alleged liability
or (iii) to the extent that such statements, if untrue, would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect:
(A) the Transferred Business has secured and is in compliance
with all Environmental Permits and is in compliance with all
Environmental Laws;
(B) since June 30, 1990, neither Ciba nor any of its Subsidiaries
has received any written communication from a Governmental Entity that
alleges that the Transferred Business is not in compliance with any
Environmental Law or Environmental Permits;
(C) there are no writs, injunctions, decrees, orders or judgments
outstanding, or any actions, suits, proceedings or investigations
pending or, to the knowledge of Ciba or any of its Subsidiaries,
threatened, relating to compliance by the Transferred Business with,
or liability of the Transferred Business under, any Environmental Law;
(D) there are no Liens attached, asserted, or, to the knowledge
of Ciba or any of its Subsidiaries, threatened against any of the
Scheduled Real Property pursuant to any Environmental Law;
(E) there have been no releases or, to the knowledge of Ciba or
any of its Subsidiaries, threatened releases (as those terms are
defined under Environmental Law) of Hazardous Substances on, from or
adjacent to any of the Scheduled Real Property which could reasonably
be expected to give rise to liability under any Environmental Law;
(F) with respect to the Transferred Business, neither Ciba nor
any of its Subsidiaries has received a request for information or has
been named a potentially responsible party regarding any Federal
National Priority List site (as that term is defined under
Environmental Law) or any other disposal site pursuant to any similar
Environmental Law;
(G) there are no other liabilities under any Environmental Law
with respect to the Transferred Business; and
(H) following the consummation of the transactions contemplated
by this Agreement and the Ancillary Agreements, all Environmental
Permits will be transferable upon appropriate notification to relevant
Governmental Entities.
(o) Brokers. Except for CS First Boston Corporation, whose fees
will be paid by Ciba, there is no investment banker, broker, finder,
financial advisor or other intermediary that has been retained by or is
authorized to act on behalf of Ciba or any of its Subsidiaries who might be
entitled to any fee or commission in connection with the transactions
contemplated by this Agreement or the Ancillary Agreements.
(p) Sufficiency of Acquired Assets and Deferred Assets. The
Acquired Assets, the Deferred Assets and the assets of the Divested
Subsidiaries (i) together with the rights and services to be provided
pursuant to the Ancillary Agreements are sufficient for the conduct of the
Transferred Business by Hexcel in substantially the same manner as it is
currently conducted and (ii) are in the aggregate, in good and useable
condition and, to the extent applicable, in good working order, ordinary
wear and tear excepted.
(q) Investment Intent; Securities Act. Ciba, CGC and, to the
extent applicable, any other Subsidiary of Ciba are acquiring the Hexcel
Shares for their own account (not as a nominee or agent) for investment and
not with a present view to, or for sale in connection with, any
distribution or resale thereof or any granting of a participation therein.
Ciba and CGC, on behalf of themselves and any other Subsidiary of Ciba that
will own Hexcel Shares, acknowledge and understand that (i) the Hexcel
Shares may not be transferred unless they are subsequently registered under
the Securities Act or an exemption from such registration is available,
(ii) the Hexcel Shares will be subject to the restrictions on transfer,
voting agreements and other restrictive provisions of the Governance
Agreement and (iii) will contain an appropriate restrictive legend
consistent with the foregoing.
(r) Accounts Receivable. All Accounts Receivable included in the
Acquired Assets or, if applicable, the Deferred Assets represent sales
actually made in the ordinary course of business and represent legal, valid
and binding obligations of the obligors thereon. The Financial Statements
contain, as of their respective dates, adequate and sufficient reserves for
bad debts in respect of Accounts Receivable calculated in accordance with
U.S. GAAP applied on a consistent basis.
(s) Inventory. All Inventory included in the Acquired Assets and
the Deferred Assets is of a quality and quantity useable and saleable in
the ordinary course of business. All Inventory of the Transferred Business
is valued in the Balance Sheet at lower of cost or market, with obsolete or
below-standard quality materials having been written off and with adequate
and sufficient reserves for
inactive and surplus Inventory calculated in accordance with U.S. GAAP
applied on a consistent basis.
(t) Product Manufacturing. With respect to each product of the
Transferred Business, Ciba and/or its Subsidiaries (i) have obtained all
applicable Permits (other than as set forth on Schedule 3.01(n)) necessary
for the manufacture, distribution, sale and marketing of such products,
except for such Permits the lack of which would not reasonably be expected
to have a Material Adverse Effect, and (ii) are in material compliance with
the terms and conditions of all such Permits in each jurisdiction in which
such products are manufactured, distributed, sold or marketed. All products
of the Transferred Business have been manufactured in full compliance with
applicable product specifications.
(u) Product Liability. Except as set forth on Schedule 3.01(u),
there are not presently pending, or to the knowledge of Ciba or any of its
Subsidiaries, threatened any civil, criminal or administrative actions,
suits, demands, claims, hearings, notices of violation, investigations,
proceedings or demand letters relating to any alleged hazard or alleged
defect in design, manufacture, materials or workmanship, including, without
limitation, any failure to warn or alleged breach of express or implied
warranty or representation, relating to any product manufactured,
distributed or sold by or on behalf of the Transferred Business that would
reasonably be expected to have a Material Adverse Effect. Schedule 3.01(u)
sets forth a true and complete list of (i) all matters referred to in the
preceding sentence since January 1, 1992 and (ii) all material product
recalls, material reworks or material post-sale warnings ("Recalls") and
all investigations, considerations or decisions made by Ciba or any of its
Subsidiaries, or to the knowledge of Ciba or any of its Subsidiaries, by
any other person concerning a Recall relating to any product manufactured,
distributed or sold by or on behalf of the Transferred Business, in each
case, since January 1, 1992. The Financial Statements contain, as of their
respective dates, adequate and sufficient reserves for product warranty
related expenses and product returns.
(v) Cost Accounting Standards. Except as set forth on Schedule
3.01(v), Ciba and its Subsidiaries have (and are not aware of any
allegation that they have not) accounted for all Acquired Contracts (or
subcontracts relating thereto) with Governmental Entities related to the
United States Federal government in accordance with the Cost Accounting
Standards applicable thereto and have adhered in all material respects with
all Federal Acquisition Regulations, all Federal Acquisition Supplemental
Regulations and all other relevant cost accounting requirements.
(w) Foreign Benefit Plans. (i) France. Except for the Retraite
Maison covering one employee of Brochier, there are no contractual employee
benefit plans covering any employees of Brochier. Brochier has complied in
all material
respects with all its obligations under the Retraite Maison. All employees
of Brochier are subject to a "Convention Collective". Brochier has complied
in all material respects with all requirements of law applicable thereto
and under the governing documents of such Convention Collective.
(ii) Italy. There are no contractual employee benefit plans
covering any employees of Salver. All employees of Salver are subject to a
"Convenzione Collectiva". Salver has complied in all material respects with
all requirements of law applicable thereto and under the governing
documents of such Convenzione Collectiva.
(iii) General. Each employee benefit plan relating to employees
of the Transferred Business employed in Austria or the Excluded
Jurisdictions is in compliance in all material respects with all
requirements of law applicable thereto and the respective requirements of
the governing documents of such plan. Neither Ciba nor any of its
Subsidiaries has incurred any liability (nor, to the knowledge of Ciba or
any of its Subsidiaries, does any condition exist or has any event occurred
that presents a material risk that any such liability will be incurred)
with respect to any employee benefit plan relating to employees of the
Transferred Business employed outside the United States or the United
Kingdom (other than for contributions not yet due) that, when aggregated
with other such liabilities, would result in a material liability to the
Transferred Business. Each employee benefit plan relating to employees of
the Transferred Business employed outside the United States or the United
Kingdom is fully and properly funded in accordance with, and the assets
thereof are held by a Person authorized to hold such assets under,
applicable law and regulation and the governing documents of such plan.
(x) Labor Relations. Except as set forth in Schedule 3.01(x), no
collective bargaining agreement is being negotiated by Ciba or any of its
Subsidiaries with respect to the Transferred Business. Except as set forth
in Schedule 3.01(x), to the knowledge of Ciba or any of its Subsidiaries,
there are no activities or proceedings of any labor union to organize any
of the employees of the Transferred Business. There is no labor dispute,
strike or work stoppage against the Transferred Business pending or, to the
knowledge of Ciba or any of its Subsidiaries, threatened, except for such
disputes, strikes or work stoppages that would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.
(y) No Other Representations. Except for the representations and
warranties expressly set forth in this Section 3.01, none of Ciba, CGC or
any other Person makes any express or implied representation or warranty on
behalf of Ciba or any of its Subsidiaries. HEXCEL ACKNOWLEDGES THAT, SHOULD
THE CLOSING OCCUR, HEXCEL WILL ACQUIRE THE ACQUIRED ASSETS AND THEREAFTER
ACQUIRE THE DEFERRED ASSETS, IN EACH CASE WITHOUT ANY REPRESENTATION OR
WARRANTY AS TO
MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE, IN AN "AS IS"
CONDITION AND ON A "WHERE IS" BASIS, EXCEPT AS OTHERWISE EXPRESSLY
REPRESENTED OR WARRANTED HEREIN. The provisions of the immediately
preceding sentence do not apply to the Contributed Shares (it being
understood that no representations or warranties other than those expressly
set forth herein are implied with respect to the Contributed Shares).
SECTION 3.02. Representations and Warranties of Hexcel. Hexcel
hereby represents and warrants to Ciba and CGC as follows:
(a) Organization, Standing and Power. Hexcel and each of its
Subsidiaries is a legal entity duly organized, validly existing and, where
applicable, in good standing under the laws of the jurisdiction in which it
is incorporated, has the requisite corporate power and authority and all
material governmental licenses, authorizations, consents and approvals
required to carry on its business as now being conducted and is duly
qualified to do business as a foreign corporation and, where applicable, is
in good standing in each jurisdiction in which the character of the
property owned or leased by it or the nature of the activities make such
qualification necessary, except for those jurisdictions in which failure to
be so qualified would not, individually or in the aggregate, reasonably be
expected to have a Hexcel Material Adverse Effect. Hexcel has heretofore
delivered to Ciba true and complete copies of the certificate of
incorporation and by-laws (or similar organizational documents) of Hexcel
and each of its Subsidiaries, in each case as amended through the date of
this Agreement. Such organizational documents are in full force and effect,
and no other organizational documents are applicable to or binding on such
entities. None of such entities is in violation of any provision of its
certificate of incorporation or by-laws (or similar organizational
documents).
(b) Authority. Hexcel and, to the extent applicable, each of its
Subsidiaries has all corporate power and authority to execute this
Agreement and the Ancillary Agreements and to consummate the transactions
contemplated hereby and thereby. The execution and delivery of this
Agreement and the Employment Matters Agreement and the consummation of the
transactions contemplated hereby and thereby have been duly authorized by
all necessary corporate action on the part of Hexcel and, to the extent
applicable, each of its Subsidiaries, subject only to approval of (x) the
issuance of the Hexcel Shares and (y) an amendment to the certificate of
incorporation of Hexcel increasing the authorized number of shares of
Hexcel Common to 100,000,000 (the "Required Amendment"), in each case by
the requisite vote of the holders of Hexcel Common entitled to vote
thereon, and the execution and delivery of the other Ancillary Agreements
and the consummation of the transactions contemplated thereby will be
authorized by all necessary corporate action on the part of Hexcel and, to
the extent applicable, each of its Subsidiaries prior to the Closing. This
Agreement and the Employment Matters Agreement have been duly executed and
delivered by Hexcel and constitute, and each other Ancillary Agreement when
duly
executed and delivered by Hexcel and, to the extent applicable, any of its
Subsidiaries will constitute a legal, valid and binding obligation of
Hexcel and, to the extent applicable, any such Subsidiary enforceable
against each of them in accordance with their respective terms (subject to
applicable bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and other similar laws affecting creditors' rights generally
from time to time in effect, and subject, as to enforceability, to general
principles of equity regardless of whether such enforceability is
considered in a proceeding in equity or at law). Except as set forth on
Schedule 3.02(b), none of Hexcel or any of its Subsidiaries is a party to,
bound by or subject to any agreement or restriction that would materially
restrict or impede Ciba or CGC from exercising its full rights under, and
enjoying the full benefits contemplated by, this Agreement and the
Ancillary Agreements. The execution and delivery of this Agreement and the
Ancillary Agreements by Hexcel and, to the extent applicable, any of its
Subsidiaries do not and will not, and the consummation by Hexcel and, to
the extent applicable, any of its Subsidiaries of the transactions
contemplated hereby and thereby, and the compliance with the terms hereof
and thereof by Hexcel and, to the extent applicable, any of its
Subsidiaries will not (i) violate any law, judgment, order, decree,
statute, ordinance, rule and regulation applicable to it, (ii) conflict
with any provision of Hexcel's or, to the extent applicable, any of its
Subsidiaries' certificate of incorporation or by-laws (or similar
organizational documents), (iii) except as set forth on Schedule 3.02(b),
conflict with or result in the breach or termination of any provision or
constitute a default (with or without the giving of notice or the lapse of
time or both) under, or require any consent under or give rise to any right
of termination, cancellation or acceleration or the loss of any benefit
under any Contract to which it is a party or by which it or any of its
properties or assets is bound, (iv) except as set forth on Schedule
3.02(b), require any consent, approval, order, authorization or other
action of, or the registration, declaration or filing with, any
Governmental Entity or any other Person, or (v) except as set forth an
Schedule 3.02(b), result in the creation or imposition of any Lien on any
of its assets or properties other than, in the case of clauses (i), (iii),
(iv) and (v), any such conflicts, violations or Liens the existence of
which or consents the lack of which could not reasonably be expected to (x)
have a Hexcel Material Adverse Effect, (y) prevent the consummation of any
of the transactions contemplated by this Agreement and the Ancillary
Agreements or (z) materially impair Hexcel's or, to the extent applicable,
any of its Subsidiaries' ability to perform its obligations under this
Agreement or any Ancillary Agreement, except (A) for the filing of a
premerger notification and report form by Hexcel under the HSR Act and any
filings required pursuant to applicable antitrust and competition law
statutes and regulations in each of the Applicable Jurisdictions, (B) for
compliance with and filings under Sections 13(a) and 14(a) of the Exchange
Act, (C) for the filing of a notice pursuant to the ExonFlorio Amendment,
(D) for consent of the Departement de Securitie pursuant to the Demande
d'Autorisation with the Direction du Tresor in France, (E) for the filing
of a Special Security Agreement and a related request for a National
Interest Determination and all approvals of the United States Defense
Investigative Service
required in connection therewith and (F) as otherwise set forth on Schedule
3.02(b). At a meeting duly called and held, the Board of Directors of
Hexcel duly and unanimously adopted a resolution recommending that the
stockholders of Hexcel approve the issuance of the Hexcel Shares and the
Required Amendment.
(c) Capitalization of Hexcel and its Subsidiaries. On the date
hereof, the authorized capital stock of Hexcel consists of 40,000,000
shares of Hexcel Common, of which 18,093,903, are duly authorized and
validly issued and outstanding, fully paid and nonassessable and 1,500,000
shares of Hexcel Preferred, of which none are issued and outstanding. On
the Closing Date the number of shares of Hexcel Common authorized for
issuance will be 100,000,000 and, subject to stockholder approval, the
number of shares of Hexcel Preferred authorized for issuance will be
20,000,000. Except for Hexcel Common there are no shares of capital stock
or other equity securities of Hexcel outstanding. Schedule 3.02(c) sets
forth for each material Subsidiary of Hexcel the amount of its authorized
capital stock, the amount of its outstanding capital stock and the amount
of such stock owned by Hexcel. All the outstanding shares of capital stock
of each material Subsidiary of Hexcel have been duly authorized and validly
issued and are fully paid and nonassessable. Except as set forth in
Schedule 3.02(c), there are no shares of capital stock or other equity
securities of any material Subsidiary of Hexcel outstanding that are not
owned by Hexcel or a wholly owned Subsidiary of Hexcel. Neither the Hexcel
Common nor any shares of capital stock of any Subsidiary of Hexcel have
been issued in violation of, and none of the Hexcel Common or such shares
of capital stock are subject to, any purchase option, call, right of first
refusal, preemptive, subscription or similar rights under any provision of
applicable law, the certificate of incorporation or by-laws of Hexcel or
the comparable governing instruments of any Subsidiary of Hexcel, or any
contract, agreement or instrument to which Hexcel or any Subsidiary of
Hexcel is subject, bound or a party or otherwise. Except as set forth in
Schedule 3.02(c), there are no outstanding warrants, options, rights,
"phantom" stock rights, agreements, convertible or exchangeable securities
or other commitments (other than this Agreement) (i) pursuant to which
Hexcel or any Subsidiary of Hexcel is or may become obligated to issue,
sell, purchase, refund or redeem any shares of capital stock or other
securities of or equity interest in Hexcel or any Subsidiary of Hexcel or
(ii) that give any Person the right to receive any benefits or rights
similar to any rights enjoyed by or accruing to the holders of shares of
capital stock of Hexcel or any Subsidiary of Hexcel. The Hexcel Shares have
been or will be prior to Closing duly and validly authorized and when
issued and delivered in accordance with the provisions of this Agreement
will be duly and validly issued, fully paid and nonassessable. The
Indenture and the Subordinated Debt have been or will be prior to Closing
duly and validly authorized and when executed and delivered in accordance
with the provisions of this Agreement will constitute legal, valid and
binding obligations of Hexcel enforceable against Hexcel in accordance with
their terms (subject to applicable bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and other similar laws affecting
creditors' rights generally
from time to time in effect, and subject, as to enforceability, to general
principles of equity regardless of whether such enforceability is
considered in a proceeding in equity or at law). Except as set forth in
Schedule 3.02(c), there are no equity securities of Hexcel or any
Subsidiary of Hexcel reserved for issuance for any purpose. Except as set
forth in Schedule 3.02(c), Hexcel has good and valid title, directly or
through one or more wholly owned subsidiaries, to all the outstanding
shares of capital stock of each material Subsidiary of Hexcel, free and
clear of any Liens. Except as set forth in Schedule 3.02(c), there are no
outstanding bonds, debentures, notes or other indebtedness having the right
to vote on any matters on which stockholders of Hexcel or any Subsidiary of
Hexcel may vote.
(d) Equity Interests. Except for the Subsidiaries of Hexcel and
as set forth in Schedule 3.02(d), Hexcel does not directly or indirectly
have any material interest in any other entity, including subsidiaries,
joint ventures or partnerships.
(e) SEC Documents; Undisclosed Liabilities. Hexcel has filed all
required reports, schedules, forms, statements and other documents with the
SEC since December 31, 1992 (the "SEC Documents"). As of their respective
dates, the SEC Documents complied in all material respects with the
requirements of the Securities Act, or the Exchange Act, as the case may
be, applicable to such SEC Documents, and none of the SEC Documents
contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they were
made, not misleading. The financial statements of Hexcel included in the
SEC Documents as of their respective dates complied as to form in all
material respects with applicable accounting requirements and the published
rules and regulations of the SEC with respect thereto, were prepared in
accordance with U.S. GAAP (except, in the case of unaudited statements, as
permitted for use on Form 10- Q) applied on a consistent basis during the
periods involved (except as may be indicated in the notes thereto) and
fairly presented the consolidated financial position of Hexcel and its
Subsidiaries as of the dates thereof and the consolidated results of
operations of Hexcel and its Subsidiaries for the periods then ended
(subject, in the case of any unaudited statements, to normal year-end audit
adjustments). Except as set forth in the Hexcel Balance Sheet, neither
Hexcel nor any of its Subsidiaries has any liabilities or obligations of
any nature (whether accrued, absolute, contingent or otherwise), other than
liabilities and obligations incurred in the ordinary course of business
consistent with past practice since the date of such balance sheet that,
individually or in the aggregate, have not had and would not reasonably be
expected to have a Hexcel Material Adverse Effect.
(f) Absence of Certain Changes or Events. Except as set forth in
Schedule 3.02(f), from the date of the Hexcel Balance Sheet to the date
hereof, Hexcel and its Subsidiaries have conducted their business in the
ordinary course of business consistent in all material respects with past
practice, and there has not been
any development or event or series of events that would reasonably be
expected to have a Hexcel Material Adverse Effect.
(g) Brokers. Except for Bear, Xxxxxxx & Co. Inc., whose fees will
be paid by Hexcel, there is no investment banker, broker, finder, financial
advisor or other intermediary that has been retained by or is authorized to
act on behalf of Hexcel or any of its Subsidiaries who might be entitled to
any fee or commission in connection with the transactions contemplated by
this Agreement or the Ancillary Agreements.
(h) Investment Intent. Hexcel and, to the extent applicable, any
Subsidiary of Hexcel is purchasing and acquiring the Contributed Shares for
its own account (not as a nominee or agent) for investment and not with a
present view to, or for sale in connection with, any distribution or resale
thereof or any granting of a participation therein. Hexcel acknowledges, on
behalf of itself and its Subsidiaries, and understands that the Contributed
Shares may not be transferred unless they are subsequently registered under
the Securities Act or an exemption from such registration is available.
(i) Compliance with Applicable Laws. Each of Hexcel and its
Subsidiaries has complied with all laws, regulations, rules and orders,
statutes, ordinances, Permits and authorizations of all Governmental
Entities applicable to it except where the failure to so comply would not,
individually or in the aggregate, reasonably be expected to have a Hexcel
Material Adverse Effect and, except as set forth in Schedule 3.02(i),
neither Hexcel nor any of its Subsidiaries has received any written notice
of any such failure to so comply. Except as set forth on Schedule 3.02(i),
neither Hexcel nor any of its Subsidiaries has received any written notice
that any investigation or review by any Governmental Entity is pending or
that any such investigation or review is contemplated, except where the
outcome of such investigation or review would not, individually or in the
aggregate, reasonably be expected to have an Hexcel Material Adverse
Effect. This paragraph (i) does not relate to Tax laws, laws relating to
employee benefits and Environmental Laws for which Section 3.02(o), the
Employment Matters Agreement and Section 3.02(v) and Section 3.02(p),
respectively, are applicable in lieu of this paragraph (i).
(j) Litigation; Decrees. Schedule 3.02(j) sets forth a list of
certain lawsuits, claims, actions, investigations and proceedings. Except
as set forth in Schedule 3.02(j), there is no suit, claim, action,
investigation or proceeding pending or, to the knowledge of Hexcel or any
of its Subsidiaries, threatened against Hexcel or any of its Subsidiaries
that (i) if adversely determined would, individually or in the aggregate,
be reasonably likely to result in an Hexcel Material Adverse Effect, (ii)
in any manner challenges or seeks to enjoin, prevent, alter or materially
delay the transactions contemplated hereby or (iii) alleges criminal action
or inaction. Except as set forth on Schedule 3.02(j), neither Hexcel nor
any of its Subsidiaries is subject
to any judgment, order, injunction, rule, decree, writ, determination or
award of any Governmental Entity or arbitrator having, or which,
individually or in the aggregate, have or would reasonably be expected to
have, a Hexcel Material Adverse Effect or which would prevent, alter or
materially delay the transactions contemplated hereby.
(k) Properties. (i) Hexcel or a Subsidiary thereof has good,
marketable and insurable (in the case of real property) title to, or valid
leasehold interests in, or other rights to use all the real and personal
properties and assets required for the conduct of the business of Hexcel
and its Subsidiaries as currently conducted and has good and marketable
title to, or valid leasehold interests in, all the properties and assets
reflected on the Hexcel Balance Sheet or thereafter acquired, except for
assets sold or otherwise disposed of for fair value since the date of such
balance sheet in the ordinary course of business consistent with past
practice and not in violation of this Agreement, in each case free and
clear of any and all Liens of any kind and free of any and all other
limitations and restrictions except for (A) Hexcel Permitted Liens, (B)
easements, covenants, rights-of-way, claims and other encumbrances or
restrictions of record, none of which, either individually or in the
aggregate, materially detract from the value of the property or materially
interfere with the current use of the property, (C) zoning, building and
other similar restrictions, none of which, either individually or in the
aggregate, materially detract from the value of the property or materially
interfere with the current use of the property, (D) unrecorded easements,
covenants, rights-of-way or other restrictions, none of which, either
individually or in the aggregate, materially detract from the value of the
property or materially interfere with the current use of the property, (E)
any conditions that may be shown by a current, accurate survey or physical
inspection of any such property made prior to Closing and (F) Liens
disclosed in Schedule 3.02(k) or in the Hexcel Balance Sheet or in the
notes thereto, none of which items set forth in clauses (A) through (F)
above, individually or in the aggregate, have or would reasonably be
expected to have a Hexcel Material Adverse Effect.
(ii) Hexcel and each of its Subsidiaries has complied in all
respects with the terms of all material leases to which it is a party. To
the knowledge of Hexcel and its Subsidiaries, all such leases are in full
force and effect and all rents and additional rents due thereunder have
been paid in full when due through the date hereof. Hexcel or a Subsidiary
thereof enjoys peaceful and undisturbed possession under all such material
leases.
(iii) At the date of the Agreement there has been no actual or,
to the knowledge of Hexcel, threatened condemnation or taking by eminent
domain of any of its real property or any real property in which it has an
interest.
(iv) There are no Persons other than Hexcel or any of its
Subsidiaries that have a possessory interest pursuant to a written
agreement with Hexcel or any of its Subsidiaries in any of its real
property.
(v) This paragraph (d) does not relate to Intellectual Property,
as to which Section 3.02(l) shall be applicable in lieu of this Section
3.01(k).
(l) Intellectual Property. (i) Schedule 3.02(l) sets forth a
complete list of all Intellectual Property (other than Know-how) owned by
Hexcel or its Subsidiaries that is material to its business (collectively,
the "Hexcel Material Intellectual Property"). To Hexcel's knowledge, except
as disclosed in Schedule 3.02(l), no Hexcel Material Intellectual Property
(A) has, in whole or in part, lapsed, been declared invalid, or been
abandoned, dedicated or disclaimed or (B) is being infringed by any Person,
in each case, which could reasonably be expected to have a Hexcel Material
Adverse Effect.
(ii) To Hexcel's knowledge, except as disclosed in Schedule
3.02(l) (A) neither Hexcel nor any of its Subsidiaries during the five
years preceding the date of this Agreement has been sued, charged in
writing or threatened with respect to, or been a defendant in, any claim,
suit, action or proceeding including a claim of infringement by Hexcel or
such Subsidiary of any Intellectual Property which, if successful, could
reasonably be expected to have a Hexcel Material Adverse Effect and (B) to
Hexcel's knowledge, the conduct of its business does not infringe the valid
intellectual property rights of any other Person in any way that could
reasonably be expected to have a Hexcel Material Adverse Effect.
(m) Insurance. Schedule 3.02(m) sets forth a complete and correct
list of all insurance policies (including a brief summary of the nature and
terms thereof) providing coverage in respect of Hexcel and its
Subsidiaries. All the material properties of Hexcel and its Subsidiaries
are insured for Hexcel's or its Subsidiaries' benefit, and will be so
insured until the Closing. The coverage provided by such policies is
adequate and sufficient in nature, scope and amount in accordance with
applicable prudent risk management practices. All such policies currently
in effect are in full force and effect, no notice of termination,
cancellation or reservation of rights has been received with respect to any
such policy, there has not been any failure to present any claim or give
any notice under any such policy in a timely manner or in the manner or
detail required by such policy, and there is no default with respect to any
such policy, except for such as would not, individually or in the
aggregate, reasonably be expected to have a Hexcel Material Adverse Effect.
Except as set forth on Schedule 3.02(m) or as otherwise disclosed to Ciba
prior to the date of this Agreement, neither Hexcel nor any of its
Subsidiaries self-insures or has self-insured any material risks.
(n) Contracts. Schedule 3.02(n) sets forth each of the following
Contracts to which Hexcel or any of its Subsidiaries is a party or by which
any of them is bound:
(i) any collective bargaining Contract;
(ii) any Contract with any employee involving aggregate future
obligations in excess of $100,000;
(iii) any Contract entered into in the ordinary course of
business which involves payment or receipt in the future of aggregate
amounts in excess of $5,000,000;
(iv) any Contract entered into other than in the ordinary course
of business which involves payment or receipt in the future of
aggregate amounts in excess of $500,000;
(v) any credit agreement, loan agreement, indenture, guarantee,
note, mortgage, security agreement, loan commitment, evidence of
indebtedness or other Contract relating to the borrowing or lending of
funds in excess of $500,000;
(vi) any contract granting to any Person a preferential right to
purchase any assets of Hexcel or its Subsidiaries (other than sales of
inventory in the ordinary course of business);
(vii) any Contract with respect to the discharge, transportation,
removal or storage of effluent, waste, pollutants or hazardous
substances;
(viii) any Contract containing a covenant not to compete or
similar provisions or a covenant or other provision restricting the
development, manufacture, marketing or distribution of products or
services;
(ix) any Contract for the lease of land, buildings, equipment or
other property that is material to the business of Hexcel and its
Subsidiaries;
(x) any Contract limiting or restricting the voting, acquisition
or disposition of any equity securities or other equity interests of
Hexcel or any of its Subsidiaries;
(xi) any Contract relating to Intellectual Property that is
material to the business of Hexcel and its Subsidiaries (including any
such Contract that restricts the use of Intellectual Property); and
(xii) any Contract evidencing any Lien on any of the assets of
Hexcel or any of its Subsidiaries (other than Liens created in the
ordinary course of business).
True, complete and correct copies of all the Contracts listed on Schedule
3.02(n) (including any amendments thereof or waivers with respect thereto)
have been made available to Ciba (other than (x) purchase orders and
invoices to customers and suppliers using standards forms made available to
Ciba and (y) employment agreements pursuant to standard form agreements
made available to Ciba). Except as disclosed on Schedule 3.02(n), each of
the material Contracts is a valid and binding agreement of Hexcel or a
Subsidiary thereof, as the case may be, and is in full force and effect and
enforceable in accordance with its terms (subject to applicable bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and other
similar laws affecting creditors' rights generally from time to time in
effect, and subject as to enforceability, to general principles of equity,
regardless of whether such enforceability is considered in a proceeding in
equity or at law), and neither Hexcel nor any of its Subsidiaries nor, to
the knowledge of Hexcel or any of its Subsidiaries, any other party thereto
is in default or breach in any material respect under the terms of any such
Contract, nor, to the knowledge of Hexcel or any of its Subsidiaries, has
any event or circumstance occurred that, with or without notice or lapse of
time or both, would constitute any material event of default or give rise
to any right of termination, cancellation or acceleration or the loss of
any benefit or require any consent thereunder other than as set forth on
Schedule 3.02(n). Except as set forth on Schedule 3.02(n), neither the
execution and delivery of this Agreement and the Ancillary Agreements nor,
the consummation of the transactions contemplated by this Agreement and the
Ancillary Agreements by Hexcel will cause any breach of a material Contract
or, with or without notice or lapse of time or both, result in any default,
require any consent or give rise to any right of termination, cancellation
or acceleration or the loss of any benefit under any material Contract
(including benefits that may be exercised only upon consummation of a
transaction of the type contemplated by this Agreement and the Ancillary
Agreements). Except as disclosed on Schedule 3.02(n), neither Hexcel nor
any of its Subsidiaries has received any written or, to its knowledge, oral
notice of termination or cancellation of or notice of an intent to
terminate or cancel any material Contract. No material Contract is the
subject of or, to the knowledge of Hexcel or any of its Subsidiaries, has
been threatened to be made the subject of any arbitration, suit or legal
proceeding. With respect to any material Contract that will by its terms
terminate as of a particular date unless renewed or unless an option to
extend is exercised, neither Hexcel nor any of its Subsidiaries has
received any written or, to its knowledge, oral notice, or otherwise has
knowledge that any such material Contract will not be, or is not likely to
be, so renewed or that any such extension option will not be or is not
likely to be so exercised. Except as set forth on Schedule 3.02(n) or as
would not, individually or in the aggregate, reasonably be expected to have
a Hexcel Material Adverse Effect,
each of the foregoing representations and warranties as to material
Contracts is also true and correct as to the other Contracts.
(o) Taxes. Except as disclosed on Schedule 3.02(o), (i) each of
Hexcel and its Subsidiaries has timely filed, in correct and complete form
after giving effect to any applicable extensions, all Tax Returns relating
to Income Taxes and other material Taxes required to be filed by it and
paid all Taxes required to be paid by it, (ii) no Taxing Authority is
asserting or is expected to assert any deficiency against Hexcel or its
Subsidiaries with respect to any Taxes described in (i) above and (iii) the
accruals for Taxes reflected in the consolidated financial statements of
Hexcel as of December 31, 1994 adequately provide for the liability of
Hexcel and its Subsidiaries for Taxes as of that date and (iv) Hexcel's
aggregate net operating loss for U.S. Federal income Tax purposes as of
December 31, 1994 was approximately $48 million.
(p) Environmental Matters. Except as set forth in Schedule
3.02(p) and, in each case of clauses (A) through (G) below, except (i)
where the failure to so comply, (ii) where such actual or alleged liability
or (iii) to the extent that such statements, if untrue, would not,
individually or in the aggregate, reasonably be expected to have a Hexcel
Material Adverse Effect:
(A) Hexcel and its Subsidiaries have secured and are in material
compliance with all Environmental Permits and are in material
compliance with all Environmental Laws;
(B) since June 30, 1990, neither Hexcel nor any of its
Subsidiaries has received any written communication from a
Governmental Entity that alleges that Hexcel or its Subsidiaries is
not in compliance with any Environmental Law or Environmental Permits;
(C) there are no writs, injunctions, decrees, orders or judgments
outstanding, or any actions, suits, proceedings or investigations
pending or, to the knowledge of Hexcel or any of its Subsidiaries,
threatened, relating to compliance by Hexcel or its Subsidiaries with,
or liability of Hexcel or any of its Subsidiaries under, any
Environmental Law;
(D) there are no Liens attached, asserted, or, to the knowledge
of Hexcel or any of its Subsidiaries, threatened against any property
of Hexcel or any of its Subsidiaries pursuant to any Environmental
Law;
(E) there have been no releases or, to the knowledge of Hexcel or
any of its Subsidiaries, threatened releases (as those terms are
defined under Environmental Law) of Hazardous Substances on, from or
adjacent to any
property of Hexcel or its Subsidiaries which could reasonably be
expected to give rise to material liability under any Environmental
Law;
(F) neither Hexcel nor any of its Subsidiaries has received a
request for information or has been named a potentially responsible
party regarding any Federal National Priority List site (as that term
is defined under Environmental Law) or any other disposal site
pursuant to any similar Environmental Law; and
(G) there are no other material liabilities under any
Environmental Law.
(q) Cost Accounting Standards. Except as set forth on Schedule
3.02(q), Hexcel and each of its Subsidiaries have (and are not aware of any
allegation that they have not) accounted for all their Contracts (or
subcontracts relating thereto) with Governmental Entities related to the
United States Federal government in accordance with the Cost Accounting
Standards applicable thereto and have adhered in all material respects with
all Federal Acquisition Regulations, all Federal Acquisition Supplemental
Regulations and all other relevant cost accounting requirements.
(r) Accounts Receivable. All accounts receivable of Hexcel and
any of its Subsidiaries represent sales actually made in the ordinary
course of business and represent legal, valid and binding obligations of
the obligors thereon. The financial statements set forth in the SEC
Documents contain, as of their respective dates, adequate and sufficient
reserves for bad debts in respect of such accounts receivable calculated in
accordance with U.S. GAAP applied on a consistent basis.
(s) Inventory. All Inventory of Hexcel and any of its
Subsidiaries is of a quality and quantity useable and saleable in the
ordinary course of business. All such Inventory is valued in the Hexcel
Balance Sheet at lower of cost and market, with obsolete or below-standard
quality materials having been written off and with adequate and sufficient
reserves for inactive and surplus Inventory calculated in accordance with
U.S. GAAP applied on a consistent basis.
(t) Product Manufacturing. With respect to each product of Hexcel
and any of its Subsidiaries, Hexcel or such Subsidiary (i) has obtained all
applicable Permits (other than as set forth on Schedule 3.01(p)) necessary
for the manufacture, distribution, sale and marketing of such products,
except for such Permits the lack of which would not reasonably be expected
to have a Hexcel Material Adverse Effect, and (ii) is in material
compliance with the terms and conditions of all such Permits in each
jurisdiction in which such products are manufactured, distributed, sold or
marketed. All products of Hexcel and any of its Subsidiaries have been
manufactured, in full compliance with applicable product specifications.
(u) Product Liability. Except as set forth on Schedule 3.02(u),
there are not presently pending, or to the knowledge of Hexcel or any of
its Subsidiaries, threatened any civil, criminal or administrative actions,
suits, demands, claims, hearings, notices of violation, investigations,
proceedings or demand letters relating to any alleged hazard or alleged
defect in design, manufacture, materials or workmanship, including, without
limitation, any failure to warn or alleged breach of express or implied
warranty or representation, relating to any product manufactured,
distributed or sold by or on behalf of Hexcel that would reasonably be
expected to have a Hexcel Material Adverse Effect. Schedule 3.02(u) sets
forth a true and complete list of (i) all matters referred to in the
preceding sentence since January 1, 1992 and (ii) all Recalls and all
investigations, considerations or decisions made by Hexcel or any of its
Subsidiaries, or to the knowledge of Hexcel or any of its Subsidiaries, by
any other person concerning a Recall relating to any product manufactured,
distributed or sold by or on behalf of Hexcel or any of its Subsidiaries,
in each case, since January 1, 1992. The financial statements of Hexcel
included in the SEC Documents contain, as of their respective dates,
adequate and sufficient reserves for product warranty related expenses and
product returns.
(v) Foreign Benefit Plans. Each employee benefit plan relating to
employees of Hexcel employed outside the United States is in compliance in
all material respects with all requirements of law applicable thereto and
the respective requirements of the governing documents of such plan.
Neither Hexcel nor any of its Subsidiaries has incurred any liability (nor,
to the knowledge of Hexcel or any of its Subsidiaries, does any condition
exist or has any event occurred that presents a material risk that any such
liability will be incurred) with respect to any such plan relating to such
employees (other than for contributions not yet due) that, when aggregated
with other such liabilities, would result in a material liability to Hexcel
and its Subsidiaries taken as a whole. Each employee benefit plan relating
to employees of Hexcel employed outside the United States is fully and
properly funded in accordance with, and the assets thereof are held by a
Person authorized to hold such assets under, applicable law and regulation
and the governing documents of such plan.
(w) Labor Relations. Except as set forth in Schedule 3.02(w), no
collective bargaining agreement is being negotiated by Hexcel or any of its
Subsidiaries. Except as set forth in Schedule 3.02(w), to the knowledge of
Hexcel or any of its Subsidiaries, there are no activities or proceedings
of any labor union to organize any of the employees of Hexcel or any of its
Subsidiaries. There is no labor dispute, strike or work stoppage against
Hexcel or any of its Subsidiaries pending or, to the knowledge of Hexcel or
any of its Subsidiaries, threatened, except for such disputes, strikes or
work stoppages that would not, individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect.
(x) No Other Representations. Except for the representations and
warranties expressly set forth in this Section 3.02, neither Hexcel nor any
other Person makes any express or implied representation or warranty on
behalf of Hexcel or any of its Subsidiaries.
ARTICLE IV
Covenants
SECTION 4.01. Conduct of Business. (a) From and after the date of
this Agreement and until the Closing (or, if the Danutec Equity is not
delivered to Hexcel at the Closing, with respect to Danutec, until the
earlier of (x) the Danutec Closing and (y) the first anniversary of the
Closing), except as expressly provided in this Agreement or as Hexcel shall
otherwise reasonably agree, Ciba and CGC shall and Ciba shall cause each of
its Subsidiaries (other than CGC) to (i) conduct the Transferred Business
in the ordinary course of business consistent in all material respects with
past practice; (ii) use all commercially reasonable efforts to preserve
intact the business organizations and relationships with third parties of
the Transferred Business and to keep available the services of the current
employees of the Transferred Business and (iii) not sell, assign, transfer,
lease, license or otherwise dispose of any Acquired Assets or Deferred
Assets or any parts thereof except (A) pursuant to existing Contracts and
commitments (including the Austrian Shares Contract) or (B) in the ordinary
course of business consistent in all material respects with past practice
and (iv) notify Hexcel as to any material event of condemnation or casualty
affecting any of the Acquired Assets or Deferred Assets promptly after the
occurrence thereof. In addition, until the Closing (or, if the Danutec
Equity is not delivered to Hexcel at the Closing, with respect to Danutec,
until the earlier of (x) the Danutec Closing and (y) the first anniversary
of the Closing), Ciba shall not permit any Divested Subsidiary to do any of
the following, and Ciba and CGC (to the extent related to the Transferred
Business) shall not do any of the following, in each case without the prior
written consent of Hexcel:
(i) issue, authorize the issuance of, sell, purchase, redeem or
otherwise acquire (or waive any restrictions on any third party from
taking any such action with respect to) any capital stock, bonds,
debentures, notes or other securities, or authorize any stock option
plan or amendment thereto or grant any options (including employee
stock options), "phantom" stock or similar contractual rights,
warrants or other rights or commitments entitling any Person to
require the issuance, delivery, sale, refunding or redemption of any
capital stock, bonds, debentures, notes or other securities (or that
give any Person the right to receive the benefits or other similar
rights enjoyed by or accruing to holders of capital stock) or amend
the terms of any such securities or agreements outstanding as of the
date hereof;
(ii) declare, set aside or pay any dividends on, or make any
other distributions in respect of, its capital stock or the
Transferred Business (other than dividends or other distributions of
cash, cash equivalents and marketable securities);
(iii) split or reclassify any of its capital stock or issue or
authorize the issuance of any other securities in respect of, in lieu
of or in substitution for shares of its capital stock;
(iv) incur any indebtedness for borrowed money or guarantee any
such indebtedness of another Person, issue or sell any debt securities
or warrants or other rights to acquire any debt securities, guarantee
any debt securities of another Person, enter into any "keep well" or
other agreement to maintain any financial statement condition of
another Person or enter into any arrangement having the economic
effect of any of the foregoing, in any such case to the extent such
action would create an Assumed Liability, or make any loans, advances
or capital contributions to, or investments in, any other Person,
other than (A) any Divested Subsidiary, (B) pursuant to existing
Contracts as set forth on Schedule 4.01(a)(iv) and (C) non-material
loans, advances or extensions of credit to employees, customers or
suppliers in the ordinary course of business consistent with past
practice;
(v) take any action that would result in any of the
representations and warranties of Ciba or CGC set forth in this
Agreement or any Ancillary Agreement becoming untrue or any of the
conditions to the Closing not being satisfied;
(vi) acquire or agree to acquire (x) by merging or consolidating
with, or by purchasing a substantial portion of the assets of, or by
any other manner, any business or any corporation, partnership, joint
venture, association or other business organization or division
thereof or (y) any assets that are material, individually or in the
aggregate, to the Transferred Business taken as a whole, except (A)
purchases of inventory in the ordinary course of business consistent
with past practice and (B) the purchase of any interest in Danutec
pursuant to a Danutec Agreement;
(vii) mortgage or otherwise encumber or subject to any Lien
(other than Permitted Liens) or, except in the ordinary course of
business consistent with past practice, sell, lease or otherwise
dispose of (x) any of the Acquired Assets or Deferred Assets or (y) in
the case of a Divested Subsidiary, any of its properties or assets;
(viii) enter into, modify, amend or terminate any material
Acquired Contract or waive, release or assign any material rights or
claims or fail to
take any action necessary to preserve the benefits of any material
Acquired Contract;
(ix) make or agree to make any new capital expenditure relating
to the Transferred Business which is individually in excess of
$100,000 or which when taken together with all other new capital
expenditures relating to the Transferred Business is in excess of
$500,000;
(x) make any material Tax election or settle or compromise any
material liability for Taxes other than to the extent the amount of
such settlement or compromise is less than or equal to the amount of
the accruals or reserves for Taxes on the Balance Sheet;
(xi) pay, discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise) that are Assumed Liabilities, other than the payment,
discharge or satisfaction, in the ordinary course of business
consistent with past practice or in accordance with their terms, of
liabilities reflected or reserved against in the Balance Sheet or
incurred after the date thereof in the ordinary course of business
consistent with past practice;
(xii) amend, or cause or permit to be amended, the certificate of
incorporation or by-laws (or similar organizational documents) of any
Divested Subsidiary;
(xiii) (A) adopt or amend in any material respect or terminate
any pension or benefit plan relating to employees of the Divested
Subsidiaries, or (B) adopt, amend or terminate any pension or benefit
plan relating to employees of the Transferred Business employed
outside the United States (other than employees of the Divested
Subsidiaries) other than any adoption, amendment or termination that
would not individually or in the aggregate reasonably be expected to
have a Material Adverse Effect, in either case, except as required by
law, or change any actuarial or other assumption used to calculate
funding obligations with respect to any such plan (except to the
extent that failure to make such change would result in noncompliance
with U.S. GAAP, the Code or other applicable law), or change the
manner in which contributions to any such plan are made or the basis
upon which such contributions are determined, except as required by
law;
(xiv) make any material change in the compensation or benefits
of, or enter into or amend in any material respect any employment
agreement with respect to, any employee (or any director of a Divested
Subsidiary) of the Transferred Business outside the United States,
except in the ordinary course
of business consistent with past practice or, if applicable, as may be
required under existing agreements;
(xv) make any change in any method of accounting or accounting
practice or policy other than those required by U.S. GAAP;
(xvi) enter into an agreement to settle any material lawsuits,
claims, actions, investigations or proceedings; or
(xvii) authorize any of, or commit or agree to take any of, the
foregoing actions.
(b) From and after the date of this Agreement and until the
Closing, except as expressly provided in this Agreement or as Ciba shall
otherwise reasonably agree, Hexcel shall and shall cause each of its
Subsidiaries to (i) conduct its business in the ordinary course of business
consistent in all material respects with past practice, (ii) use all
commercially reasonable efforts to preserve intact its business
organizations and relationships with third parties and to keep available
the services of its current employees, (iii) not sell, assign, transfer,
lease or license or otherwise dispose of any of its assets or any parts
thereof except (A) pursuant to existing Contracts and commitments or (B) in
the ordinary course of business consistent in all material respects with
past practice and (iv) notify Ciba as to any material event of condemnation
or casualty affecting any of the properties or assets of Hexcel or any of
its Subsidiaries promptly after the occurrence thereof. In addition, until
the Closing, Hexcel shall not and shall not permit any of its Subsidiaries
to do any of the following without the prior written consent of Ciba:
(i) issue (other than (x) upon exercise of outstanding stock
options or stock options which are permitted to be granted hereunder,
(y) upon conversion of outstanding convertible debt or (z) up to
39,604 shares of Hexcel Common pursuant to Hexcel's plan of
reorganization), authorize the issuance of, sell, purchase, redeem or
otherwise acquire (or waive any restrictions on any third party from
taking any such action) any capital stock, bonds, debentures, notes or
other securities of Hexcel or its Subsidiaries or authorize any stock
option plan or any amendment thereto (other than Hexcel's Amended and
Restated Incentive Stock Plan in substantially the form previously
disclosed to Ciba) or grant any options (other than employee or
director stock options the grant of which has been authorized and
disclosed to Ciba prior to the date hereof (even if such grant is
subject to stockholder approval) or that are granted to newly hired
employees (other than directors or executive officers) in the ordinary
course of business in amounts consistent with past practice),
"phantom" stock or similar contractual rights, warrants or other
rights or commitments entitling any Person to require the issuance,
delivery, sale, refunding or redemption by Hexcel or any of its
Subsidiaries of
any capital stock, bonds, debentures, notes or other securities of
Hexcel or its Subsidiaries (or that give any Person the right to
receive the benefits or similar rights enjoyed by or accruing to
holders of shares of capital stock of Hexcel or any of its
Subsidiaries) or amend the terms of any such securities or agreements
outstanding as of the date hereof;
(ii) declare, set aside or pay any dividends on, or make any
other distributions in respect of, its capital stock;
(iii) split or reclassify any of its capital stock or issue or
authorize the issuance of any other securities in respect of, in lieu
of or in substitution for shares of its capital stock;
(iv) except for drawings on existing working capital facilities
in the ordinary course of business, incur any indebtedness for
borrowed money or guarantee any such indebtedness of another Person,
issue or sell any debt securities or warrants or other rights to
acquire any debt securities of Hexcel or any of its Subsidiaries,
guarantee any debt securities of another Person, enter into any "keep
well" or other agreement to maintain any financial statement condition
of another Person or enter into any arrangement having the economic
effect of any of the foregoing, or make any loans, advances or capital
contributions to, or investments in, any other Person, other than (A)
Hexcel or any direct or indirect wholly owned Subsidiary of Hexcel,
(B) pursuant to existing Contracts as set forth on Schedule
4.01(b)(iv) and (C) non-material loans, advances or extensions of
credit to employees, customers or suppliers in the ordinary course of
business consistent with past practice;
(v) take any action that would result in any of the
representations and warranties of Hexcel set forth in this Agreement
or any Ancillary Agreement becoming untrue or any of the conditions to
the Closing not being satisfied;
(vi) acquire or agree to acquire (x) by merging or consolidating
with, or by purchasing a substantial portion of the assets of, or by
any other manner, any business or any corporation, partnership, joint
venture, association or other business organization or division
thereof or (y) any assets that are material, individually or in the
aggregate, to Hexcel and its Subsidiaries taken as a whole, except
purchases of inventory in the ordinary course of business consistent
with past practice;
(vii) mortgage or otherwise encumber or subject to any Lien
(other than Hexcel Permitted Liens) or, except in the ordinary course
of business consistent with past practice, sell, lease or otherwise
dispose of any of its properties or assets;
(viii) enter into, modify, amend or terminate any material
Contract or waive, release or assign any material rights or claims or
fail to take any action necessary to preserve the benefits of any
material Contract;
(ix) make or agree to make any new capital expenditure which is
individually in excess of $100,000 or which when taken together with
all other new capital expenditures is in excess of $500,000;
(x) make any material Tax election or settle or compromise any
material liability for Taxes other than to the extent the amount of
such settlement or compromise is less than or equal to the amount of
the accruals or reserves for Taxes on the Hexcel Balance Sheet;
(xi) pay, discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction, in the
ordinary course of business consistent with past practice or in
accordance with their terms, of liabilities reflected or reserved
against in the Hexcel Balance Sheet or incurred after the date of the
Hexcel Balance Sheet in the ordinary course of business consistent
with past practice;
(xii) except for the Required Amendment, the authorization of an
additional 18,500,000 shares of Hexcel Preferred and except as
contemplated by the Governance Agreement, amend its certificate of
incorporation or by-laws (or similar organizational documents);
(xiii) adopt or amend in any material respect or terminate any
pension or benefit plan relating to employees of Hexcel or any of its
Subsidiaries employed outside the United States, except as required by
law, or change any actuarial or other assumption used to calculate
funding obligations with respect to any such plan (except to the
extent that failure to make such change would result in noncompliance
with U.S. GAAP, the Code or other applicable law), or change the
manner in which contributions to any such plan are made or the basis
upon which such contributions are determined, except as required by
law;
(xiv) make any material change in the compensation or benefits
of, or enter into or amend in any material respect any employment
agreement with respect to, any employee or director of Hexcel or any
of its Subsidiaries outside the United States, except in the ordinary
course of business consistent with past practice or, if applicable, as
may be required under existing agreements;
(xv) make any change in any method of accounting or accounting
practice or policy other than those required by U.S. GAAP;
(xvi) enter into an agreement to settle any material lawsuits,
claims, actions, investigations or proceedings; or
(xvii) authorize any of, or commit or agree to take any of, the
foregoing actions.
SECTION 4.02. Access to Information. Each of Hexcel and Ciba
shall, and shall cause each of their respective Subsidiaries to, afford to
the other party and to the officers, employees, accountants, counsel,
financial advisors and other representatives of such other party,
reasonable access during normal business hours during the period prior to
the Closing, to all their respective properties, books, Contracts,
commitments, personnel and records (in the case of Ciba, only to the extent
relating to the Transferred Business or the transactions contemplated by
this Agreement and the Ancillary Agreements) and, during such period, each
of Hexcel and Ciba shall, and shall cause each of their respective
Subsidiaries to, furnish promptly to the other party (a) a copy of each
report, schedule, registration statement and other document filed by it
during such period pursuant to the requirements of Federal, state or
foreign securities laws and (b) all other information concerning its
business, properties and personnel (in each case with respect to Ciba, only
to the extent relating to the Transferred Business or the transactions
contemplated by this Agreement and the Ancillary Agreements) as such other
party may reasonably request. Each of Hexcel and Ciba acknowledge that the
information being provided to it in connection with the transactions
contemplated hereby is subject to the Confidentiality Agreement, the terms
of which are incorporated herein by reference. No investigation pursuant to
this Section 4.02 shall affect any representations or warranties of the
parties herein or the conditions to the obligations of the parties
hereunder.
SECTION 4.03. Legal Requirements. Upon the terms and subject to
the conditions set forth in this Agreement, each of the parties shall use
all commercially reasonable efforts to take, or cause to be taken, all
actions, and to do, or cause to be done, and to assist and cooperate with
the other parties in doing, all things necessary, proper or advisable to
consummate and make effective, in the most expeditious manner practicable,
the transactions contemplated by this Agreement and the Ancillary
Agreements, including (i) the obtaining of all necessary actions, waivers,
consents and approvals from Governmental Entities and the making of all
necessary registrations and filings (including the prompt filing of (A) the
premerger notification and report form under the HSR Act and any filings
required pursuant to applicable antitrust and competition law statutes and
regulations in each of the Applicable Jurisdictions, (B) a notice pursuant
to the Exon-Xxxxxx Amendment, (C) all materials requested by the Department
de Securite pursuant to the Demande
d'Autorization with the Direction du Tresor in France, (D) the filing of a
Special Security Agreement and a related request for a National Interest
Determination and all approvals of the United States Defense Investigative
Service required in connection therewith and (E) any other filings
necessary with Governmental Entities, if any) and the taking of all
reasonable steps as may be necessary to obtain any approval or waiver from,
or to avoid an action or proceeding by, any Governmental Entity, (ii) the
obtaining of all necessary consents, approvals or waivers from third
parties, (iii) the defending of any lawsuits or other legal proceedings,
whether judicial or administrative, challenging this Agreement or any of
the Ancillary Agreements or the consummation of the transactions
contemplated by this Agreement or the Ancillary Agreements, including
seeking to have any stay or temporary restraining order entered by any
court or other Governmental Entity vacated or reversed and (iv) the
execution and delivery of any additional instruments necessary to
consummate the transactions contemplated by, and to fully carry out the
purposes of, this Agreement and the Ancillary Agreements.
SECTION 4.04. No Solicitation. (a) Neither Ciba nor Hexcel shall,
nor shall they permit any of their respective Subsidiaries to, nor shall
they authorize or permit any officer, director or employee of, or any
investment banker, attorney or other advisor or representative of, either
of them or their respective Subsidiaries to, (i) solicit or initiate, or
facilitate or endorse or encourage the submission of, any Interfering
Transaction, (ii) participate in any discussions or negotiations regarding,
or furnish to any person any information with respect to, or take any other
action to expedite any inquiries or the making of any proposal that
constitutes, or may reasonably be expected to lead to, any Interfering
Transaction provided, that, prior to the receipt of Hexcel stockholder
approval of (x) the issuance of the Hexcel Shares and (y) the Required
Amendment, if in the opinion of the Board of Directors of Hexcel or Ciba,
as the case may be, based on the advice of outside counsel, such failure to
act would be inconsistent with the fiduciary duties of Hexcel or Ciba or
their respective boards of directors, as the case may be, to stockholders
under applicable law, Hexcel or Ciba, as the case may be, may, in response
to an unsolicited proposal relating to an Interfering Transaction, and
subject to compliance with Section 4.04(c) below, furnish information with
respect to it to any Person pursuant to a confidentiality agreement.
Without limiting the foregoing, it is understood that any violation of the
restrictions set forth in the preceding sentence by any officer of Hexcel
or Ciba or any of their respective Subsidiaries or any investment banker,
attorney or other advisor or representative of Hexcel or Ciba or any of
their respective Subsidiaries, acting on behalf of Hexcel or Ciba or any of
their respective Subsidiaries, shall be deemed to be a breach of this
Section 4.04(a) by Hexcel or Ciba, as the case may be. For purposes of this
Agreement, "Interfering Transaction" means any transaction, other than the
transactions contemplated by this Agreement and the Ancillary Agreements,
the consummation of which prior to the consummation of the transactions
contemplated by this Agreement and the Ancillary Agreements would or could
reasonably be expected to impede, interfere with, prevent
or materially delay, or which would or could reasonably be expected to
materially dilute the benefits to Ciba or Hexcel, as the case may be, of
the transactions contemplated hereby or by the Ancillary Agreements.
(b) The Board of Directors of Hexcel shall not (i) withdraw or
modify, or propose to withdraw or modify, in a manner that would prevent
the stockholders of Hexcel from voting on, and approving if the requisite
vote is obtained, the issuance of the Hexcel Shares or the Required
Amendment, the approval or recommendation by such Board of Directors of the
transactions contemplated hereby or by the Ancillary Agreements, (ii)
approve or recommend, or propose to approve or recommend, any Interfering
Transaction or (iii) negotiate or approve or authorize entering into any
preliminary or definitive agreement or understanding with respect to any
Interfering Transaction.
(c) The boards of directors of Ciba and CGC shall not (i)
withdraw or modify, or propose to withdraw or modify, the approval or
recommendation by such boards of directors of the transactions contemplated
hereby or by the Ancillary Agreements, (ii) approve or recommend, or
propose to approve or recommend, any Interfering Transaction or (iii)
negotiate or approve or authorize entering into any preliminary or
definitive agreements or understanding with respect to any Interfering
Transaction.
(d) Hexcel and Ciba and CGC shall promptly advise each other of
the existence of any request for information or of any proposal for an
Interfering Transaction, or any inquiry with respect to, or which could
reasonably be expected to lead to, any Interfering Transaction.
(e) Nothing contained in this Section 4.04 shall prohibit Hexcel
from making any recommendation with respect to the transactions
contemplated hereby or any disclosure to Hexcel's stockholders if, based on
advice of outside counsel, such disclosure or recommendation is required by
applicable fiduciary duties, law or stock exchange rules.
SECTION 4.05. Agreement Regarding Non-Assignable Contracts. If
any Acquired Contract (i) is not assignable without the consent of any
party thereto, (ii) may by its terms be terminated or cancelled upon
assignment or (iii) is not by its terms assignable, Ciba and Hexcel shall
use all commercially reasonable efforts to obtain the consent of any
required parties thereto to effect such assignment. If any such consent or
approval can not be obtained, Ciba shall use all commercially reasonable
efforts (not involving the expenditure of money (other than incidental fees
and expenses) or the giving of financial accommodations) to secure an
arrangement reasonably satisfactory to Hexcel to provide Hexcel the
benefits that it would have received and to subject Hexcel to the
obligations it would have owed, in each case,
under such Acquired Contract following the Closing as if such consent or
approval had been obtained.
SECTION 4.06. Transfer Taxes. Ciba and Hexcel shall cooperate and
shall cause their respective Subsidiaries to cooperate in timely making and
filing all Tax Returns as may be required to comply with the provisions of
any Transfer Tax laws. To the extent legally able to do so, Hexcel and Ciba
shall deliver or cause to be delivered to each other exemption certificates
satisfactory in form and substance to each other with respect to Transfer
Taxes if such delivery would reduce the amount of Transfer Taxes that would
otherwise be imposed. To the extent permitted by law, Hexcel shall pay when
due, all Transfer Taxes, and Hexcel shall reimburse Ciba for any Transfer
Taxes paid by Ciba and its Subsidiaries within ten days of Ciba's written
request, which request shall include a calculation of such Transfer Taxes
and evidence of payment thereof. Hexcel shall provide to Ciba, within 10
days of Hexcel's payment of a Transfer Tax, a statement setting forth the
amount of such Transfer Tax, the calculation thereof and evidence of
payment thereof.
SECTION 4.07. Use of Names. (a) Following the Closing, Hexcel
shall have the right to continue to use existing inventories of the
following materials bearing Ciba Tradenames for the periods specified
below:
(i) quotation forms, order acknowledgments, purchase orders,
invoices, shipping documents, letterhead, business cards and similar
stationary sent to third parties for a period not to exceed 90 days
following the Closing Date (and with respect to those of Danutec for a
period not to exceed 90 days following the Danutec Closing, if any);
provided, however, that Hexcel shall overlabel or make such other
changes to such documents as is necessary to reflect correct payment
instructions;
(ii) packaging, labeling, containers, brochures, technical data
sheets and similar product related materials for a period of not more
than twelve months following the Closing Date (and with respect to
those of Danutec for a period of not more than twelve months following
the Danutec Closing, if any); and
(iii) internal documents and forms used in the day-to-day conduct
of the business for a period of up to twelve months following the
Closing Date (and with respect to those of Danutec for a period of up
to twelve months following the Danutec Closing, if any); provided that
in no event shall Hexcel distribute any such internal documents to any
third party.
(b) Hexcel shall use reasonable efforts to replace Ciba
Tradenames on buildings, cars, trucks and other fixed assets as soon as
possible, but in any event shall replace the same within 180 days following
the Closing Date (and with respect to Danutec within 180 days following the
Danutec Closing, if any).
(c) (i) Following the Closing Date, Hexcel shall not place any
orders for advertising copy using any of the Ciba Tradenames. Orders for
advertising copy made prior to the Closing Date (or, with respect to
Danutec, the date of the Danutec Closing) may be completed, provided that
publication of such advertising is completed prior to 180 days following
the Closing Date (and with respect to Danutec prior to 180 days following
the Danutec Closing, if any).
(ii) For a period of 180 days following the Closing Date (and
with respect to Danutec for a period of 180 days following the Danutec
Closing, if any), Hexcel shall have the right to use Ciba Tradenames in
association with Hexcel Trade Names in advertising media solely for the
purpose of communicating to customers the consummation of the transactions
contemplated by this Agreement and the Ancillary Agreements; provided,
however, that any such use shall be subject to the prior review and
approval of Ciba, not to be unreasonably withheld.
(d) (i) Hexcel and the Ciba Distributors (as defined below) shall
use their respective commercially reasonable efforts to cause the orderly
sale of all existing inventory constituting Deferred Assets and bearing
Ciba Tradenames by each Subsidiary of Ciba conducting the Transferred
Business in the Excluded Jurisdictions under the Distribution Agreement
(each, a "Ciba Distributor") as soon as reasonably practicable and
consistent with past practice for such Ciba Distributors. Thereafter,
subject to subparagraph (iii) below, Hexcel shall supply, in accordance
with the Distribution Agreement, the respective Ciba Distributors with
products that do not bear any Ciba Tradename.
(ii) Each Ciba Distributor continuing to serve as a distributor
of products of the Transferred Business following the Closing shall be
entitled to use the Ciba Tradenames in association with existing products
only until the earliest to occur of (A) the date on which all existing
inventory of such Ciba Distributor bearing any Ciba Tradename (including
any additional inventory supplied in accordance with subparagraph (iii)
below) has been sold; (B) the date of termination of the Distribution
Agreement with respect to such Ciba Distributor; or (C) the first
anniversary of the Closing Date.
(iii) Hexcel may supply directly or indirectly to any Ciba
Distributor additional inventory bearing any Ciba Tradename in volumes
consistent with past practice in effect prior to Closing for a period not
to exceed 90 days following the Closing Date. If a Danutec Closing occurs
after the Closing Date, Danutec shall be permitted to use inventory bearing
Ciba Tradenames until the earlier to occur of (x) the exhaustion of
Danutec's existing inventory as of the date of the Danutec Closing or (y)
90 days following the Danutec Closing. In the event that any Ciba
Distributor is terminated as a distributor of products of the Transferred
Business prior to the first anniversary of the Closing Date, any successor
distributor engaged by Hexcel to distribute products of the Transferred
Business in the territory formerly
serviced by such Ciba Distributor shall be entitled to use the Ciba
Tradenames in association with such products until the earlier of (A) the
date on which all the then existing inventory of the Ciba Distributor
transferred to the new distributor has been sold by such new distributor,
(B) 90 days from the date of such engagement by Hexcel, or (C) the first
anniversary of the Closing Date.
(e) Notwithstanding any other provision of this Agreement, Hexcel
agrees that Ciba and CGC shall have no responsibility for claims by third
parties arising out of, or relating to, the use by Hexcel of any Ciba
Tradename, and Hexcel agrees to indemnify and hold harmless Ciba, CGC and
each of their respective Subsidiaries and their directors, officers and
employees from any and all claims that may arise out of the use thereof by
Hexcel or any affiliate of Hexcel whether or not in accordance with this
Agreement.
SECTION 4.08. Insurance. From and after the Closing, Hexcel shall
secure insurance with respect to the Business, including the Transferred
Business, with coverages and amounts customary in the industry in
accordance with applicable prudent risk management practices.
SECTION 4.09. Post-Closing Cooperation. (a) After the Closing,
upon reasonable written notice, Hexcel and Ciba shall furnish or cause to
be furnished to each other and their respective accountants, counsel and
other representatives access, during normal business hours, to such
information (including records pertinent to the Transferred Business),
personnel and assistance relating to the Transferred Business and the
transactions contemplated hereby and by the Ancillary Agreements as is
reasonably necessary for financial reporting and accounting matters, the
preparation and filing of any Tax Returns, reports or forms, the defense of
any Tax claim or assessment, the pursuit of any adjustment or refund of
Taxes, the calculation of any deferred Tax items, the giving of testimony
or the preparation and defense or prosecution of any actions or proceedings
(other than actions or proceedings in which Ciba and Hexcel are adverse
parties) and for any other reasonable purpose relating to the transactions
contemplated by this Agreement and the Ancillary Agreements. Such
assistance shall include cooperation in responding to audit reports made by
Taxing Authorities regarding or relating to the Transferred Business and,
at the request of the party being audited, participation in audits relating
to the Transferred Business. The reasonable fees and expenses (except de
minimis fees and expenses) incurred in connection with any cooperation and
assistance provided pursuant hereto shall be reimbursed to the party
providing such cooperation and assistance by the party receiving such
cooperation and assistance. Hexcel shall retain the books and records
included in the Acquired Assets and the Deferred Assets for a period of
seven years after the Closing or such longer period as may be required by
applicable law. Ciba shall retain the books and records relating to the
Transferred Business that are Excluded Assets for a period of seven years
after the Closing or such longer period as may be required by applicable
law. After the end of such period, in the event Hexcel
or Ciba determines to dispose of such books or records, Hexcel or Ciba, as
the case may be, shall give 30 days' prior written notice to such effect to
the other party and give the other party at the other party's cost and
expense, reasonable opportunity to remove and retain all or any part of
such books or records as the other party may select.
(b) Ciba and CGC shall use all commercially reasonable efforts to
facilitate and effect the implementation of the transactions contemplated
hereby and by the Ancillary Agreements and, for such purpose but without
limitation, Ciba and CGC shall execute and deliver to Hexcel promptly at
and after the Closing such assignments, Real Property Deeds (and other
similar real property deeds in South Africa), bills of sale, consents and
other instruments as Hexcel or its counsel may reasonably request as
necessary for such purpose.
(c) In the event that after the Closing, a Deferred Closing or
the Danutec Closing, as the case may be, Ciba, CGC or Hexcel becomes aware
that any Acquired Assets or Deferred Assets were not transferred to Hexcel
by Ciba or any of its Subsidiaries at the Closing, a Deferred Closing or
the Danutec Closing, as the case may be, Ciba and CGC or Hexcel shall
promptly notify the other to that effect and Ciba and CGC shall transfer
such Acquired Assets or Deferred Assets to Hexcel or its designated
Subsidiary or Subsidiaries. In the event that after the Closing, a Deferred
Closing or the Danutec Closing, Hexcel, Ciba or CGC becomes aware that any
assets that are not Acquired Assets were transferred to Hexcel at the
Closing, a Deferred Closing or the Danutec Closing, Hexcel or Ciba and CGC
shall promptly notify the other to that effect and Hexcel shall transfer
such assets to Ciba or its designated Subsidiary or Subsidiaries.
(d) From time to time after the Closing, as and when requested by
a party hereto, the party receiving such request shall execute and deliver,
or cause to be executed and delivered, all such documents and instruments
and shall take, or cause to be taken, all such further or other actions
(including pursuant to the provisions of Sections 4.03, 4.05 and 4.19), as
the party receiving such request reasonably deems necessary or desirable to
consummate the transactions contemplated by this Agreement and the
Ancillary Agreements.
(e) Effective on the Closing Date, each of Ciba and CGC hereby
constitutes and appoints Hexcel and its successors, legal representatives
and assigns the true and lawful attorneys of Ciba and CGC with full power
of substitution, in the name of Ciba and CGC or Hexcel, but on behalf of
and for the benefit of Hexcel and its successors, legal representatives and
assigns, and at the expense of Hexcel: (i) to demand and receive from time
to time any and all the Acquired Assets and, after a Deferred Closing, the
relevant Deferred Assets and to make endorsements and give receipts and
releases for and in respect of the same and any part thereof; (ii) to
institute, prosecute, compromise and settle any and all proceedings at law,
in equity
or otherwise that Hexcel and its successors, legal representatives or
assigns may deem proper in order to collect, assert or enforce any claim,
right or title of any kind in or to the Acquired Assets and, after a
Deferred Closing, the relevant Deferred Assets; (iii) to defend or
compromise any or all actions, suits or proceedings in respect of any of
the Acquired Assets and, after a Deferred Closing, the relevant Deferred
Assets, other than actions, suits or proceedings with respect to which
indemnification is provided by Ciba and CGC pursuant to Section 4.10 or
Article VII (except as provided in Section 7.06) and (iv) to do all such
acts and things in relation to the matters set forth in the preceding
clauses (i) through (iii) as Hexcel and its successors, legal
representatives or assigns shall deem desirable. Each of Ciba and CGC
hereby agrees that the appointment hereby made and the powers hereby
granted are coupled with an interest and are and shall be irrevocable. Ciba
shall deliver to Hexcel at the Closing an acknowledged power of attorney to
the foregoing effect executed by Ciba and CGC.
(f) Effective upon the Closing Date, Hexcel and its Subsidiaries
shall have the right to receive and open all mail, packages and other
communications addressed to Ciba or any of its affiliates that are
delivered to Hexcel or any of its Subsidiaries and they shall have the
right to retain all such communications which relate exclusively or
primarily to the Transferred Business. Ciba and CGC agree promptly to
deliver to Hexcel any such mail, packages or other communications delivered
directly or indirectly to Ciba or any of its affiliates. Hexcel shall
promptly deliver to Ciba all mail, packages and other communications
delivered to Hexcel or any of its Subsidiaries that do not relate
exclusively or primarily to the Transferred Business. Hexcel shall have the
right and authority to collect, for its own account, all receivables and
other items which shall be transferred or are intended to be transferred to
Hexcel as provided in this Agreement, and to endorse with the name of Ciba
or any of its Subsidiaries any checks or drafts received on account of any
such receivables or other items, and Ciba or CGC shall promptly transfer or
deliver to Hexcel any cash or other property received directly or
indirectly by Ciba or any of its Subsidiaries or affiliates in respect of
such receivables and other items.
SECTION 4.10. Bulk Transfer Laws. Hexcel hereby waives compliance
by Ciba and its Subsidiaries with the provisions of any so-called "bulk
transfer law" of any jurisdiction in connection with the sale of the
Acquired Assets and the Deferred Assets to Hexcel. Ciba and CGC shall
indemnify and hold harmless Hexcel against any and all liabilities (other
than the Assumed Liabilities) that may be asserted by third parties against
Hexcel as a result of noncompliance with any such bulk transfer law;
provided, however, that nothing herein shall prevent Ciba or CGC from
contesting any such liabilities in good faith.
SECTION 4.11. Supplies. Except as set forth in Section 4.07,
Hexcel shall not use stationery, purchase order forms, signage, invoices,
receipts, or advertising and promotional materials, training and service
literature and materials or
other similar materials that state or otherwise indicate thereon that the
Transferred Business or any part thereof is a division or unit of Ciba or
any of its Subsidiaries.
SECTION 4.12. Certain Ancillary Agreements. Prior to the Closing,
the parties hereto shall negotiate in good faith and agree upon mutually
acceptable terms of (i) an assignment and assumption agreement relating to
the transactions contemplated hereby and by the Ancillary Agreements (the
"Assignment and Assumption Agreement"), (ii) a registration rights
agreement relating to the sale of the Hexcel Shares as contemplated by the
letter of intent dated July 11, 1995 between Hexcel and Ciba (the
"Registration Rights Agreement"), (iii) certain supply and tolling
agreements (the "Supply and Tolling Agreements"), (iv) the Trademark
License Agreement for the Trademark "Redux", (v) transitional services
agreements (which, unless otherwise agreed, shall reflect prices that do
not exceed the historically allocated cost at which such services were
provided to the Transferred Business as operated by Ciba prior to the
Closing) for the United States, the United Kingdom and France (the
"Transitional Services Agreements"), (vi) an agreement regarding employees
of the Transferred Business in the United Kingdom (the "UK Employment
Matters Agreement"), (vii) certain agreements relating to the sharing of
the Duxford site and CML (together with the Hive-Down Agreements, the "UK
Agreements") and (viii) the Indenture. At the Closing, Hexcel and Ciba (or,
as applicable, their Subsidiaries) will execute and deliver such
agreements.
SECTION 4.13. Intellectual Property Licenses. For use in this
Section 4.13, "Composite Products" shall mean composites, including
structures and interiors, fabrics, laminates, prepregs, adhesive films,
honeycomb core, sandwich panels and fabricated components.
(a) At Closing, Ciba and CGC shall grant to Hexcel pursuant to a
Trademark license agreement in form and substance reasonably satisfactory
to Ciba, CGC and Hexcel (the "Trademark License Agreement"), a paid-up,
perpetual, royalty-free, non-exclusive, license, without the right to grant
sublicenses, under the Trademark "Redux".
(b) (i) At Closing, Hexcel shall be deemed to have granted to
Ciba and its Subsidiaries a paid-up, perpetual, royalty-free, non-exclusive
license (without the right to grant sublicenses except to customers that
purchase products from Ciba) under all currently existing Patents set forth
on Schedule 4.13(b)(i) to sell products, other than Composite Products, for
the manufacture and sale by Ciba's customers of products (including
Composite Products) in any field including the Composites Field .
(ii) At Closing, Ciba shall be deemed to have granted to Hexcel
and its Subsidiaries a paid-up, perpetual, royalty-free, non-exclusive
license (without the right to grant sublicenses except to have products
licensed under the Patents set forth on Schedule 4.13(b)(ii) made for
Hexcel for internal use by Hexcel in the manufac-
ture and sale of Composite Products) to make, have made, use and sell
products licensed under the Patents set forth on Schedule 4.13(b)(ii) for
the manufacture and sale of Composites Products.
(iii) At Closing, Ciba shall be deemed to have granted to Hexcel
and its Subsidiaries a paid-up, perpetual, royalty-free, non-exclusive
license, with the right to grant sublicenses, to make, use and sell
products under the Patents set forth on Schedule 4.13(b)(iii).
(c) After Closing, Hexcel shall, upon request, grant to Ciba and
its Subsidiaries a perpetual, nonexclusive license (without the right to
grant sublicenses except to customers that purchase products from Ciba) to
sell products other than Composite Products for the manufacture and sale by
Ciba's customers of products (including Composite Products) for use in any
field including the Composites Field, bearing a commercially reasonable
royalty to be mutually agreed upon under the Patents set forth on Schedule
4.13(c).
(d) After Closing, Ciba shall, upon request, grant to Hexcel and
its Subsidiaries a perpetual, non-exclusive license (without the right to
grant sublicenses except to have products licensed under the Patents set
forth on Schedule 4.13(d) made for Hexcel for internal use by Hexcel in the
manufacture and sale of Composite Products) to make, have made, use and
sell products licensed under the Patents set forth on Schedule 4.13(d) for
the manufacture and sale of Composites Products, bearing a commercially
reasonable royalty to be mutually agreed upon.
(e) In the event that (i) the conduct of the Transferred Business
as conducted on the Closing Date would infringe any Patents developed by
the Polymers or Composites Divisions of Ciba as existing on the Closing
Date of Ciba or its Subsidiaries that are not Acquired Intellectual
Property or utilize any Know-how as existing on the Closing Date of Ciba or
its Subsidiaries that is not Acquired Intellectual Property and (ii) Hexcel
provides written notice to Ciba specifying the relevant Patent or Know-how,
Ciba or CGC shall thereupon be deemed to have granted Hexcel as of the
Closing Date a non-exclusive, paid-up, perpetual, royalty-free license
(without the right to grant sublicenses except to have products licensed
hereunder made for Hexcel for internal use by Hexcel in the manufacture and
sale of Composite Products) in order to continue to conduct the Transferred
Business as conducted on the Closing Date under such Patents and utilizing
such Know-how.
(f) In the event that (i) the conduct of Ciba's business,
excluding the manufacture of Composite Products, by the Transferred
Business as conducted on the Closing Date would infringe any Patent or
utilize any Know-how that is Acquired Intellectual Property as existing on
the Closing Date and (ii) Ciba or CGC provides written notice to Hexcel
specifying the relevant Patent or Know-how, Hexcel shall thereupon be
deemed to have granted to Ciba and CGC as of the Closing Date a non-
exclusive, paid-up, perpetual, royalty-free license (without the right to
grant sublicenses except to customers that purchase products from Ciba) to
sell product other than Composite Products for the manufacture and sale by
Ciba's customers of products (including Composite Products) in any field
including the Composites Field in order to conduct such business, under
such Patents or utilizing such Know-how.
(g) In the event that (i) the conduct of the Transferred Business
relating solely to the sale of resin systems for resin transfer molding
("RTM") applications as conducted on the Closing Date would infringe any
Patents developed by the Polymers Division or Composites Divisions of Ciba
as existing on the Closing Date of Ciba or its Subsidiaries that are not
Acquired Intellectual Property or utilize any Know-how as existing on the
Closing Date of Ciba or its Subsidiaries that is not Acquired Intellectual
Property and (ii) Hexcel provides written notice to Ciba specifying the
relevant Patent or Know-how, Ciba or CGC shall thereupon be deemed to have
granted Hexcel as of the Closing Date a non-exclusive, paid-up, perpetual,
royalty-free license, with the right to grant sublicenses, in order
continue to conduct the Transferred Business as conducted on the Closing
Date under such Patents and utilizing such Know-how.
(h) In the event that (i) the conduct of Ciba's business relating
solely to the sale of resin systems for RTM applications as conducted by
the Polymers Division of Ciba or its Subsidiaries on the Closing Date would
infringe any Patent or utilize any Know-how that is Acquired Intellectual
Property as existing on the Closing Date and (ii) Ciba or CGC provides
written notice to Hexcel specifying the relevant Patent or Know-how, Hexcel
shall thereupon be deemed to have granted to Ciba and CGC as of the Closing
Date a non-exclusive, paid-up, perpetual, royalty-free license, with the
right to grant sublicenses, in order to conduct such business under such
Patents or utilizing such Know-how.
(i) After Closing, in the event that (i) Ciba or CGC determines
that a Patent on Schedule 4.13(c) should be on 4.13(b)(i) because the
conduct of Ciba's business, excluding the manufacture of Composite
Products, by the Transferred Business as conducted on the Closing would
infringe such Patent designated on Schedule 4.13(c) and (ii) Ciba or CGC
provides written notice to Hexcel specifying the relevant Patent, Hexcel
shall thereupon be deemed to have granted to Ciba and CGC as of the Closing
Date a non-exclusive, paid-up, perpetual, royalty-free license (without the
right to grant sublicenses except to customers that purchase product from
Ciba) to sell products other than Composite Products for the manufacture
and sale by Ciba's customers of products (including Composite Products) in
any field including the Composites Field in order to conduct such business
outside the Composites Field, under such Patent.
(j) After Closing, in the event that (i) Hexcel determines that a
Patent on Schedule 4.13(d) should be on Schedule 4.13(b)(ii) because the
conduct of the
Transferred Business as conducted on the Closing Date would infringe such
Patent designated on Schedule 4.13(d) and (ii) Hexcel provides written
notice to Ciba specifying the relevant Patent, Ciba or CGC shall thereupon
be deemed to have granted Hexcel as of the Closing Date a non-exclusive,
paid-up, perpetual, royalty-free license (without the right to grant
sublicenses except to have product licensed hereunder made for Hexcel for
internal use by Hexcel in the manufacture and sale of Composite Products)
in order to continue to conduct the Transferred Business as conducted on
the Closing Date under such Patents.
SECTION 4.14. Directors' and Officers' Indemnification. The
certificate of incorporation and by-laws of Hexcel shall continue to
contain the provisions with respect to indemnification contained therein as
of the date hereof, which provisions shall not be amended, repealed or
otherwise modified for a period of six years following the Closing in any
manner that would adversely affect the rights thereunder of individuals who
at any time prior to the Closing were directors or officers of Hexcel in
respect of actions or omissions occurring at or prior to the Closing,
except for such modifications as are required by applicable law. From and
after the Closing, Hexcel shall indemnify, defend and hold harmless the
officers and directors of Hexcel as of the date hereof and their respective
heirs and personal and legal representatives (collectively, the
"Indemnified Individuals") against all losses, expense, claims, damages,
liabilities, costs or expenses (including, without limitation, reasonable
fees and expenses of counsel selected by the Indemnified Individuals;
provided that Hexcel shall in no event be responsible for the fees and
expenses of more than one counsel for all Indemnified Individuals in
respect of any particular Claim (as defined below) or group of related
Claims, unless an Indemnified Individual shall have reasonably concluded
that there may be legal defenses available to him that are not available
to, and that are in conflict with, other Indemnified Individuals in respect
of such Claim or Claims, in which case Hexcel shall be responsible for the
reasonable fees and expenses of one counsel for such Indemnified
Individual) arising out of or in connection with any civil, criminal,
administrative or investigative claim, action, suit, proceeding or
investigation based in whole or in part on the fact that such person was a
director or officer of Hexcel at or prior to the Closing (each a "Claim"),
in each case to the fullest extent permitted under Delaware law (and shall
pay the costs and expenses incurred by such Indemnified Individuals in
connection with or relating to such Claim (including fees and expenses of
counsel as provided above) upon presentation of statements in advance of
the final disposition of any such matter to the fullest extent permitted
under Delaware law, subject to receipt of the Indemnified Individual's
undertaking to repay such advances following a final and nonappealable
decision by a court of competent jurisdiction that such repayment is
required). For six years after the Closing, Hexcel shall provide directors'
and officers' liability insurance ("D&O Insurance") for the Indemnified
Individuals in respect of actions or omissions occurring at or prior to the
Closing (i) in an amount no less than that currently in effect or such
greater amount as shall hereafter be maintained for the benefit of Hexcel's
directors, (ii) with other terms no less
favorable than those currently in effect and (iii) with an insurance
carrier of comparable or better financial condition than Hexcel's current
D&O Insurance carrier, it being understood that the provision of such D&O
Insurance shall not relieve Hexcel of its indemnification obligations
pursuant to this Section 4.14. Notwithstanding the foregoing, if at any
time Hexcel does not maintain D&O Insurance for its then current directors,
the D&O Insurance referred to in the preceding sentence for the Indemnified
Individuals need only be maintained to the extent it is available on
commercially reasonable terms. The provisions of this Section 4.14 shall,
to the maximum extent permitted by law, be binding upon the successors and
assigns of Hexcel.
SECTION 4.15. Distribution Agreement. At Closing, Hexcel and Ciba
shall execute the Distribution Agreement, which relates to the Deferred
Assets and the distribution, sales, marketing and receivables collection
services currently provided to the Transferred Business in the Excluded
Jurisdictions by the Ciba Distributors.
SECTION 4.16. Local Agreements. Prior to the Closing or, if
applicable, any Deferred Closing or the Danutec Closing, the parties to
this Agreement shall negotiate in good faith and agree upon for relevant
jurisdictions other than the United States such agreements and arrangements
consistent with the terms hereof as are necessary to effectuate the
transactions contemplated hereby and by the Ancillary Agreements including
conveyancing agreements and legally required arrangements regarding
employees. In the event of any inconsistency between the provisions of any
such local agreement and this Agreement, the provisions of this Agreement
shall govern in all instances.
SECTION 4.17. NYSE Listing. Hexcel shall use all commercially
reasonable efforts to cause the Hexcel Shares to be listed on the New York
Stock Exchange at the time of the Closing, subject only to official notice
of issuance.
SECTION 4.18. Stockholder Approval; Proxy. (a) Hexcel shall hold
a vote of its stockholders to approve the matters described in paragraph
(b) below at an annual meeting of stockholders duly called and held for
that purpose as soon as practicable.
(b) Hexcel shall prepare, file with the SEC and mail to its
stockholders a proxy statement that complies as to form in all material
respects with all relevant provisions of the Exchange Act relating to the
solicitation of proxies for the approval of (i) the issuance of the Hexcel
Shares, (ii) (A) the Required Amendment and (B) an amendment to the
certificate of incorporation of Hexcel to increase the number of shares of
Hexcel Preferred authorized for issuance to 20,000,000, (iii) the election
of the slate of nominees to be directors of Hexcel described in Section
4.19, (iv) Hexcel's amended and restated incentive stock plan, (v) the
ratification of the
appointment of Hexcel's independent auditors and (vi) such other business
as may properly come before the annual meeting. Hexcel covenants that on
the date filed with the SEC and on the date first sent or given to
stockholders such proxy statement shall not contain any untrue statement of
a material fact or omit to state a material fact required to be stated
therein or necessary in order to make the statements therein, in light of
the circumstances in which they were made, not misleading, except that
Hexcel makes no such covenant as to information supplied by Ciba or any of
its Subsidiaries or affiliates in writing expressly for inclusion therein.
Ciba shall cooperate with Hexcel in the preparation of such proxy statement
and, in that connection, shall provide for use in such proxy statement such
information with respect to Ciba, CGC, the Divested Subsidiaries, any of
their respective affiliates, the Transferred Business, the Acquired Assets
and the Deferred Assets as is reasonably necessary for (i) such proxy
statement to comply as to form in all material respects with the relevant
provisions of the Exchange Act and (ii) for such proxy statement not to
contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances in which they were made,
not misleading, in each case, solely with respect to Ciba, CGC, the
Divested Subsidiaries, any of their respective affiliates, the Transferred
Business, the Acquired Assets or the Deferred Assets. Ciba covenants that
on the date such proxy statement is filed with the SEC and on the date such
proxy statement is first given or sent to Hexcel's stockholders such
information provided in writing by Ciba or any of its Subsidiaries or
affiliates for use therein shall not contain any untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary in order to make the statements related thereto
contained in such proxy statement, in light of the circumstances in which
they were made, not misleading. Hexcel and Ciba, as the case may be, shall
each promptly correct any information provided by it or any of its
Subsidiaries or affiliates for use in such proxy statement, if and to the
extent that such information shall have become false or misleading in any
material respect, and Hexcel further agrees to take all commercially
reasonable steps necessary to amend or supplement such proxy statement and
to cause such proxy statement as so amended or supplemented to be filed
with the SEC and disseminated to Hexcel's stockholders, in each case as and
to the extent required by the Exchange Act. Ciba and its counsel shall be
given a reasonable opportunity to review and comment upon the proxy
statement and all amendments and supplements thereto prior to their filing
with the SEC or dissemination to Hexcel's stockholders. Hexcel shall
provide Ciba and its counsel in writing with any comments Hexcel or its
counsel may receive from the SEC or its staff with respect to the proxy
statement promptly after the receipt of such comments.
SECTION 4.19. New Board of Directors. (a) The slate of directors
to be presented to stockholders of Hexcel in accordance with Section 4.18
is expected to be Xxxxxxxx X. Xxxxxx, Xxxxxx X. Xxxxxxx, Xxxxx X.
Xxxxxxxxx, Xxxx X. Xxx, Xxxxxx X. Xxxxxxxx, Xxxxxxxxx X. Xxxxxxx, Xxxxxxxx
X. Xxxxx, Xxxxx X. Xxxxxxx and Xxxxxx X. Xxxx.
(b) On the Closing Date, Hexcel shall cause to be delivered to
Ciba (i) duly signed resignations, effective immediately after the Closing,
of Messrs. Harrosh, Wimer, Xxxxxxx and Xxxx in order to permit the
appointment of Xxxx M.D. Xxxxxxxxx, Xxxxxxx Xxxxxxx, Xxxxxx X. Xxxxxxxx and
Xxxxxxx Xxxxxxx to fill the vacancies thereby created in accordance with
the Governance Agreement and (ii) such other resignations as may be
necessary permit Ciba's nominees to become directors and committee members
in accordance with the Governance Agreement, and Hexcel shall take such
other action as is necessary to accomplish the foregoing. Immediately
following the appointment of such Ciba nominees, the number of directors
constituting Hexcel's Board of Directors shall be fixed at ten and Xxxxxxx
Xxxxxxxxxx shall be appointed to fill the remaining vacancy in accordance
with the Governance Agreement. On the Closing Date, Ciba shall cause to be
delivered to Hexcel duly signed resignations (from the applicable boards of
directors and committees thereof), effective immediately after the Closing,
of the directors of each of the Divested Subsidiaries.
SECTION 4.20. Subsequent Agreement Royalty. If prior to Closing,
a major original equipment manufacturer enters into an agreement with CGC
that would constitute an Acquired Contract with respect to certain
interiors programs and/or the manufacturing of secondary composites for
such manufacturer in the Peoples Republic of China, Hexcel and Ciba shall
promptly negotiate in good faith the terms of a royalty agreement or
agreements providing for the payment to Ciba or CGC of a royalty with
respect to sales under such Contract or Contracts on terms to be mutually
agreed upon in good faith by the parties hereto based upon the anticipated
profitability of such Contract or Contracts to Hexcel and the level of
capital expenditures that will be required for Hexcel to perform its
obligations thereunder.
SECTION 4.21. Financial and Insurance Expertise. (a) For a period
of 12 months after the Closing, Ciba shall provide its knowledge and
expertise to Hexcel to assist Hexcel in securing sources of financing
adequate to support the operations of Hexcel assuming that the transactions
contemplated by this Agreement and the Ancillary Agreements are
consummated, provided that in no event shall Ciba be under any obligation
to provide any financial support or accommodation whatsoever (whether as
obligor, guarantor or otherwise) to Hexcel or any of its Subsidiaries or
any other party in connection with securing such financing.
(b) For a period of 24 months after the Closing in accordance
with the provisions of the Transitional Services Agreements, Ciba shall
provide its knowledge and expertise to Hexcel to assist Hexcel in obtaining
insurance coverage consistent with prudent risk management principles, at a
rate of $200 per hour, with respect to the operations of Hexcel assuming
that the transactions contemplated by this Agreement and the Ancillary
Agreements are consummated, provided that in no event shall Ciba be under
any obligation to provide any financial support or accommodation whatsoever
in connection with obtaining such insurance coverage.
SECTION 4.22 Transfer of Intercompany Debts. Ciba shall, at the
applicable closing, with respect to all indebtedness existing as of the
date of this Agreement of any Divested Subsidiary (other than Accounts
Payable incurred in the ordinary course of business) that is owed to Ciba
or any of its Subsidiaries (other than another Divested Subsidiary), cause
all such intercompany indebtedness to be transferred to Hexcel and all
documents evidencing such indebtedness to be included as Acquired
Contracts.
SECTION 4.23. Supplemental Disclosure. (a) Ciba and Hexcel shall
have the continuing obligation until the Closing promptly to notify each
other with respect to any matter hereafter arising or discovered that, if
existing or known at the date of this Agreement, would have been required
to be set forth or described in such Schedules hereto and to provide each
other with revised Schedules reflecting any such matter, provided, that no
such revision shall have any effect for purposes of determining the
satisfaction of the conditions set forth in Article V hereto.
(b) Ciba and Hexcel shall promptly notify each other of, and
furnish each other with any information that may reasonably be requested
with respect to, the occurrence to Hexcel's or Ciba's knowledge, as the
case may be, of any event or condition or the existence to Hexcel's or
Ciba's knowledge, as the case may be, of any fact that would cause any of
the conditions to the other party's obligation to consummate the
transactions contemplated by this Agreement and the Ancillary Agreements
not to be fulfilled.
SECTION 4.24. Non-Competition and Related Matters. (a)
Notwithstanding any other provision of this Agreement to the contrary, for
a period of five years from the Closing Date, Ciba and its Subsidiaries
shall not, directly or indirectly:
(i) engage in activities or businesses that compete with the
development, manufacture, marketing, distribution or sale on a
worldwide basis of composites, including structures and interiors,
fabrics, laminates, prepregs, adhesive films, honeycomb core, sandwich
panels and fabricated components, in each case as conducted on the
Closing Date (the "Composites Field"), provided, however, that Ciba
and its Subsidiaries shall retain the right to develop, manufacture,
market, distribute and/or sell adhesive films, resins systems,
additives and pigments for use in the Composites Field, except that
such adhesive films and resins systems shall not include any specific
adhesive films or prepreg formulations (or derivations thereof),
whether or not patented, used by the Transferred Business on or prior
to the Closing Date, unless such adhesive films or prepreg
formulations have been sold by Ciba and its Subsidiaries to third
parties prior to the Closing Date; and
(ii) engage in any of the following without the prior written
approval of Hexcel or any of its relevant affiliates (other than Ciba
or its Subsidiaries): (A) soliciting or recruiting any employees of
Hexcel who were employees of the Transferred Business on the Closing
Date, and (B) soliciting or encouraging any employees of Hexcel who
were employees of the Transferred Business on the Closing Date to
leave the employment of Hexcel other than any employees of Hexcel who
were employees of the Transferred Business on the Closing Date that
are released or terminated by Hexcel or any of its affiliates or
voluntarily terminated prior to such solicitation or recruitment. Ciba
and CGC acknowledge that the services performed by the employees of
the Transferred Business are of a character giving them a special,
unique and extraordinary value and that Hexcel would not have entered
into this Agreement if Ciba and CGC had not agreed to a five-year
restriction on their ability to solicit for employment employees of
the Transferred Business.
(iii) Ciba and CGC acknowledge that the five year non-competition
and no-solicitation covenants provided for in this Section 4.24(a) are
reasonable covenants under the circumstances. Moreover, it is the
desire and intent of the parties that the provisions of such covenants
shall be enforceable to the fullest extent permissible under the laws
and public policies applied in each jurisdiction in which enforcement
is sought. Accordingly, the parties agree that, should a court or
administrative body subsequently determine that the terms of such
covenants are greater than reasonably necessary to protect Hexcel's
interests, the parties will request that such court or administrative
body reform such covenants specifying the greatest time period and/or
geographic area that would not render such covenants unenforceable.
Ciba and CGC specifically agree that in the event of a breach or
threatened breach by them or any of their Subsidiaries or Affiliates
of the covenants provided for in this Section 4.24(a), Hexcel would
suffer irreparable injury and shall be entitled to seek equitable
relief by way of temporary or permanent injunction or any other
equitable remedies, and that such relief may be granted without the
necessity of proving actual damage, Ciba and CGC further agree that
the foregoing provision regarding equitable relief shall not diminish
Hexcel's right to also claim and recover monetary damages.
(b) Notwithstanding anything to the contrary contained in this
Section 4.24, Hexcel hereby agrees that the provisions set forth in Section
4.24(a) shall not be deemed breached as a result of (x) the ownership by
Ciba or any of its Subsidiaries of less than an aggregate of 5% of any
class of stock or 10% in value of any instrument of indebtedness of a
Person engaged, directly or indirectly, in the Composites Field or (y) the
acquisition by Ciba or any of its Subsidiaries of a Person which engages,
directly or indirectly, in the Composites Field if such activities account
for less than 10% of such Person's consolidated annual revenues; provided
that Hexcel is offered the opportunity to purchase, promptly following the
consummation of such acquisition and on commercially reasonable terms, the
business of such Person in the Composites Field.
(c) (i) Hexcel acknowledges, as a result of the transactions
contemplated by this Agreement and because of the sharing of common
facilities with, and the cooperation and access of employees of the
Transferred Business prior to the Closing to, businesses of Ciba other than
the Transferred Business, that Hexcel will acquire or have access to a
substantial amount of confidential and proprietary information and
technology belonging to Ciba and its Subsidiaries relating to areas outside
the Composites Field. Hexcel acknowledges that such information and
technology is and will remain proprietary to Ciba and CGC, and Hexcel
agrees and agrees to cause Hexcel's present and future Subsidiaries as well
as its and their respective employees, agents and representatives to hold
such information and technology in strict confidence for a period of ten
years from the Closing and during said period to make no use of such
information and technology except in manufacturing for, and teaching
customers solely in, the Composites Field and except as set forth in the
proviso to Section 4.24(e)(i).
(ii) Ciba and CGC acknowledge they may be in possession of a
substantial amount of confidential and proprietary information and
technology belonging to the Transferred Business relating to the Composites
Field. Ciba and CGC acknowledge that such information and technology is and
will remain proprietary to Hexcel, and Ciba and CGC agree and agree to
cause their respective present and future Subsidiaries as well as its and
their respective employees, agents and representatives to hold such
information and technology in strict confidence for a period of ten years
from the Closing and during said period to make no use of such information
and technology except in manufacturing for, and teaching customers solely
outside of the Composites Field and except as set forth in the proviso in
Section 4.24(a)(i).
(d) The provisions set forth in this Section 4.24 relating to
confidential or proprietary information shall not apply (or shall cease to
apply) with respect to information and technology that:
(i) is or hereafter becomes generally available to the public
otherwise than through breach of this Section 4.24; or
(ii) has been received from a third party who did not acquire it
directly or indirectly from a party hereto.
(e) In order to further protect the use of the proprietary
information referred to in paragraph (c)(i) above, for a period of five
years from the Closing Date, Hexcel and its Subsidiaries shall not,
directly or indirectly:
(i) engage in activities or businesses that compete with the
research, development, manufacture, marketing, distribution or sale on
a worldwide basis of syntactics and liquid and/or paste adhesives as
conducted on the Closing Date (the "Polymers Field") ; provided,
however, that Hexcel and its Subsidiaries shall be permitted to (x)
research, develop and manufacture products in the Polymers Field for
internal use in the products that it researches, develops,
manufactures, markets, distributes and sells; (y) continue the
development, manufacture, marketing, distribution and sale of existing
products in the Polymers Field manufactured at Hexcel's Casa Grande,
Arizona, Livermore, California and Welkenraedt, Belgium facilities (or
such facilities, if any, as to which the manufacture of such products
may be relocated) solely for the use or sale of such products as
auxiliaries to, or in combination with, Hexcel's products in the
Composites Field; and (z) incorporate products in the Polymers Field
as intermediate products into prepregs, panels, parts and honeycomb;
and
(ii) engage in any of the following without the prior written
approval of Ciba or any of its affiliates (other than Hexcel or its
Subsidiaries): (A) soliciting or recruiting any employees of Ciba or
its Subsidiaries who are employees of Ciba's worldwide Polymers
Division ("Polymers Employees"), and (B) soliciting or encouraging any
Polymers Employees to leave the employment of Ciba or any of its
Subsidiaries other than any Polymers Employees who are released or
terminated by Ciba or any of its Subsidiaries or voluntarily
terminated prior to such solicitation or recruitment. Hexcel
acknowledges that the services performed by the employees of Ciba and
CGC (other than employees of the Transferred Business) are of a
character giving them a special, unique and extraordinary value and
that Ciba and CGC would not have entered into this Agreement if Hexcel
had not agreed to a five-year restriction on its ability to solicit
for employment such employees.
(iii) Hexcel acknowledges that the five year non-competition and
no-solicitation covenants provided for in this Section 4.24(e) are
reasonable covenants under the circumstances. Moreover, it is the
desire and intent of the parties that the provisions of such covenants
shall be enforceable to the fullest extent permissible under the laws
and public policies applied in each jurisdiction in which enforcement
is sought. Accordingly, the parties agree that, should a court or
administrative body subsequently determine that the terms of such
covenants are greater than reasonable necessary to protect Ciba's and
CGC's interests, the parties will request that such court or
administrative
body reform such covenants specifying the greatest time period and/or
geographic area that would not render such covenants unenforceable.
Hexcel specifically agrees that in the event of a breach or threatened
breach by it or any of its Subsidiaries or Affiliates of the covenants
provided for in this Section 4.24(e), Ciba and CGC would suffer
irreparable injury and shall be entitled to seek equitable relief by
way of temporary or permanent injunction or any other equitable
remedies, and that such relief may be granted without the necessity of
proving actual damage, Hexcel further agrees that the foregoing
provision regarding equitable relief shall not diminish Ciba's or
CGC's right to also claim and recover monetary damages.
(f) Notwithstanding anything to the contrary contained in this
Section 4.24, Ciba and CGC agree that the provisions set forth in Section
4.24(e) shall not be deemed breached as a result of the (x) ownership by
Hexcel or any of its Subsidiaries of less than an aggregate of 5% of any
class of stock or 10% in value of any instrument of indebtedness of a
Person engaged, directly or indirectly, in the Polymers Field, or (y) the
acquisition by Hexcel or any of its Subsidiaries of a Person which engages,
directly or indirectly, in the Polymers Field if such activities account
for less than 10% of such Person's consolidated revenues; provided that
Ciba is offered the opportunity to purchase, promptly following the
consummation of such acquisition and on commercially reasonable terms, the
business of such Person in the Polymers Field.
(g) Notwithstanding anything herein to the contrary, nothing in
this Agreement shall prevent (x) the worldwide Polymers Division, Additives
Division and Pigments Division of Ciba from conducting their respective
businesses in all respects as conducted immediately prior to the Closing
Date and (y) Hexcel from conducting in all respects the Transferred
Business or the business of Hexcel, in each case, as conducted immediately
prior to the Closing Date.
ARTICLE V
Conditions Precedent
SECTION 5.01. Conditions to Each Party's Obligation. The
obligation of Hexcel and Ciba to consummate the transactions contemplated
to occur at the Closing shall be subject to the satisfaction prior to the
Closing of each of the following conditions, each of which may be waived
only if it is legally permissible to do so:
(a) HSR and Other Approvals. Any applicable waiting period under
the HSR Act relating to the transactions contemplated hereby shall
have expired or been terminated, and all other material
authorizations, consents,
orders or approvals of, or regulations, declarations or filings with,
or expirations of applicable waiting periods imposed by, any
Governmental Entity necessary for the consummation of the transactions
contemplated hereby, including filings and consents required pursuant
to applicable antitrust and competition law statutes and regulations
in each of the Applicable Jurisdictions, shall have been obtained or
filed or shall have occurred.
(b) No Litigation, Injunctions, or Restraints. No statute, rule,
regulation, executive order, decree, temporary restraining order,
preliminary or permanent injunction or other order enacted, entered,
promulgated, enforced or issued by any Governmental Entity or other
legal restraint or prohibition preventing the consummation of the
transactions contemplated by this Agreement or any Ancillary Agreement
shall be in effect.
(c) Security Approvals. All necessary authorizations, consents,
orders or approvals shall have been obtained from all relevant
Governmental Entities with respect to security clearance and other
similar matters in any relevant jurisdiction, including all those
necessary to retain existing security clearances and continue to
conduct activities subject thereto as currently conducted (including
any requisite consent of the Departement de Securite in France and the
of Defense Investigative Service in the United States).
(d) Stockholders Vote. The issuance of the Hexcel Shares and the
Required Amendment shall have been approved by the requisite vote of
Hexcel's stockholders.
(e) NYSE Listing. The Hexcel Shares shall have been approved for
listing on the New York Stock Exchange, subject only to official
notice of issuance.
(f) Adequate Financing. Hexcel shall have obtained adequate
financing on commercially reasonable terms in order to (x) deliver the
Cash Price at the Closing, (y) to support the operations of Hexcel and
its Subsidiaries assuming the transactions contemplated by this
Agreement and the Ancillary Agreements are consummated and (z) to the
extent desired by Hexcel, to repay currently outstanding indebtedness
of Hexcel and its Subsidiaries under the Citibank Revolver and to
refinance the BNP Reimbursement Agreement.
SECTION 5.02. Conditions to the Obligation of Hexcel. The
obligation of Hexcel to consummate the transactions contemplated to occur
at the
Closing shall be subject to the satisfaction or waiver thereof prior to the
Closing of each of the following conditions:
(a) Representations and Warranties. The representations and
warranties of Ciba and CGC and, if applicable, any other Subsidiary of
Ciba set forth in this Agreement, the Employment Matters Agreement and
the UK Employment Matters Agreement that are qualified as to
materiality shall be true and correct, and those that are not so
qualified shall be true and correct in all material respects, as of
the date of this Agreement and as of the time of the Closing as though
made at and as of such time, except to the extent such representations
and warranties expressly relate to an earlier date (in which case such
representations and warranties that are qualified as to materiality
shall be true and correct, and those that are not so qualified shall
be true and correct in all material respects, on and as of such
earlier date) and Hexcel shall have received a certificate signed by
authorized officers of Ciba and CGC to such effect.
(b) No Litigation. There shall not be pending by any Governmental
Entity any suit, action or proceeding (or by any other Person any
suit, action or proceeding which has a reasonable likelihood of
success), (A) challenging or seeking to restrain or prohibit the
transactions contemplated by this Agreement or any Ancillary Agreement
or seeking to obtain in connection with the transactions contemplated
by this Agreement or any Ancillary Agreement any damages that would
reasonably be expected to have a Hexcel Material Adverse Effect or a
Material Adverse Effect or (B) seeking to prohibit or limit the
ownership or operation by Hexcel, Ciba or both of them or any of their
respective Subsidiaries of any material portion of the business or
assets of Hexcel or the Transferred Business, or to compel Hexcel,
Ciba or both of them or any of their respective Subsidiaries to
dispose of or hold separate any material portion of the business or
assets of Hexcel or the Transferred Business or (C) seeking to
prohibit Hexcel from exercising its rights under or otherwise enjoying
the benefits of the Governance Agreement.
(c) Performance of Obligations of Ciba, CGC and the Divested
Subsidiaries. Ciba, CGC and each of Ciba's other Subsidiaries shall
each have performed or complied in all material respects with all
obligations and covenants required to be performed or complied with by
them under this Agreement and the Employment Matters Agreement prior
to the Closing, and Hexcel shall have received a certificate signed by
authorized officers of Ciba and CGC to such effect.
(d) Opinion of Ciba's Counsel. Hexcel shall have received an
opinion dated the Closing Date of Cravath, Swaine & Xxxxx (who may
rely as to certain matters, including questions of law of foreign
countries, on local
counsel retained by Ciba or counsel who are employees of Ciba or its
Subsidiaries), counsel to Ciba and CGC, reasonably satisfactory to
Hexcel and its counsel.
(e) Bills of Sale; Deeds. Ciba, CGC and each of Ciba's other
Subsidiaries, as applicable, shall have delivered to Hexcel bills of
sale or other conveyancing documents conveying the personal property,
in each case in form and substance reasonably satisfactory to Hexcel
and its counsel, and Real Property Deeds for the real property
included in the Acquired Assets.
(f) Ancillary Agreements. Ciba, CGC and each of Ciba's other
Subsidiaries, as applicable, shall have executed and delivered all
Ancillary Agreements.
(g) Other Documents. Ciba, CGC, the Divested Subsidiaries and
each of Ciba's other Subsidiaries, as applicable, shall have furnished
to Hexcel such other documents relating to their corporate existence
and authority (including copies of resolutions of the respective
boards of directors thereof), absence of Liens, receipt of all
necessary permits and waivers in respect of material Contracts and
such other matters as Hexcel or its counsel may reasonably request.
(h) Material Adverse Change. There shall not have been any
development or event or series of events occurring since the date of
this Agreement that would reasonably be expected to have a Material
Adverse Effect.
SECTION 5.03. Conditions to the Obligation of Ciba and CGC. The
obligation of Ciba, CGC and the Divested Subsidiaries to consummate the
transactions contemplated to occur at the Closing shall be subject to the
satisfaction or waiver thereof prior to the Closing of each of the
following conditions:
(a) Representations and Warranties. The representations and
warranties of Hexcel set forth in this Agreement and the Employment Matters
Agreement that are qualified as to materiality shall be true and correct,
and those that are not so qualified shall be true and correct in all
material respects, as of the date of this Agreement and as of the time of
the Closing as though made at and as of such time, except to the extent
such representations and warranties expressly relate to an earlier date (in
which case such representations and warranties that are qualified as to
materiality shall be true and correct, and those that are not so qualified
shall be true and correct in all material respects, on and as of such
earlier date), and Ciba shall have received a certificate signed by an
authorized officer of Hexcel to such effect.
(b) No Litigation. There shall not be pending by any Governmental
Entity any suit, action or proceeding (or by any other Person any suit,
action or proceeding which has a reasonable likelihood of success), (A)
challenging or seeking to restrain or prohibit the transactions
contemplated by this Agreement or any Ancillary Agreement or seeking to
obtain in connection with the transactions contemplated by this Agreement
or any Ancillary Agreement any damages that would reasonably be expected to
have a Material Adverse Effect or a Hexcel Material Adverse Effect, (B)
seeking to prohibit or limit the ownership or operation by Hexcel, Ciba or
both of them or any of their respective Subsidiaries of any material
portion of the business or assets of Hexcel or the Transferred Business, or
to compel Hexcel, Ciba or both of them or any of their respective
Subsidiaries to dispose of or hold separate any material portion of the
business or assets of Hexcel or the Transferred Business, (C) seeking to
impose limitations on the ability of Ciba to acquire or hold, or exercise
full rights of ownership of, the Hexcel Shares, including the right to vote
the Hexcel Shares on all matters properly presented to the stockholders of
Hexcel (other than those limitations provided for in the Governance
Agreement) or (D) seeking to prohibit Ciba or any Ciba Entity (as defined
in the Governance Agreement) from exercising its rights or otherwise
enjoying the benefits of the Governance Agreement.
(c) Performance of Obligations of Hexcel. Hexcel shall have
performed or complied in all material respects with all obligations and
covenants required to be performed or complied with by Hexcel under this
Agreement and the Employment Matters Agreement prior to the Closing, and
Ciba shall have received a certificate signed by an authorized officer of
Hexcel to such effect.
(d) Opinion of Hexcel's Counsel. Ciba shall have received an
opinion dated the Closing Date of Skadden, Arps, Slate, Xxxxxxx & Xxxx (who
may rely as to certain matters, including questions of law of foreign
countries, on local counsel retained by Hexcel or counsel who are employees
of Hexcel or its Subsidiaries) counsel to Hexcel, reasonably satisfactory
to Ciba and its counsel.
(e) Ancillary Agreements. Hexcel shall have executed and
delivered all Ancillary Agreements.
(f) Other Documents. Hexcel shall have furnished to Ciba and CGC
such other documents relating to Hexcel's or its Subsidiaries' corporate
existence and authority (including copies of resolutions of the respective
boards of directors of Hexcel and its Subsidiaries), absence of Liens,
receipt of all necessary permits and waivers in respect of material
Contracts and such other matters as Ciba or its counsel may reasonably
request.
(g) Sale of Hexcel's U.S. Resins Business. Hexcel shall have
consummated the sale to a Person other than Hexcel or its Subsidiaries of
its United States resins business.
(h) Material Adverse Change. There shall not have been any
development or event or series of events occurring since the date of this
Agreement that would reasonably be expected to have a Material Adverse
Effect.
ARTICLE VI
Termination, Amendment and Waiver
SECTION 6.01. Termination. (a) Notwithstanding anything to the
contrary in this Agreement, this Agreement and the Employment Matters
Agreement may be terminated and the transactions contemplated hereby and
thereby abandoned at any time prior to the Closing, (i) by mutual written
consent of Ciba and Hexcel, (ii) by Ciba if any of the conditions set forth
in Sections 5.01 or 5.03 shall have become incapable of fulfillment, and
shall not have been waived by Ciba; (iii) by Hexcel, if any of the
conditions set forth in Sections 5.01 or 5.02 shall become incapable of
fulfillment, and shall not have been waived by Hexcel or (iv) by Ciba or
Hexcel, if the Closing does not occur on or prior to April 1, 1996;
provided, however, that the party seeking termination pursuant to clauses
(ii) or (iii) is without fault in connection with the applicable condition
or conditions having become incapable of fulfillment and is otherwise in
material compliance with this Agreement and the Employment Matters
Agreement.
(b) In the event of termination by Ciba or Hexcel pursuant to
this Section 6.01, written notice thereof shall forthwith be given to the
other party and the transactions contemplated by this Agreement and the
Employment Matters Agreement shall thereupon be terminated, without further
action by either party. If the transactions contemplated by this Agreement
and the Employment Matters Agreement are terminated as provided herein:
(i) (A) Hexcel shall promptly return to Ciba all documents and
other material received from Ciba or its Subsidiaries relating to the
transactions contemplated hereby and (B) Ciba and CGC shall promptly
return to Hexcel all documents and other material received from Hexcel
or its Subsidiaries relating to the transactions contemplated hereby,
in either case, whether obtained before or after the execution hereof,
and
(ii) (A) all confidential information received by Hexcel with
respect to the businesses of Ciba or its Subsidiaries and (B) all
confidential information received by Ciba and CGC with respect to the
business of Hexcel or its
Subsidiaries shall be treated in accordance with the Confidentiality
Agreement, which shall remain in full force and effect notwithstanding
the termination of this Agreement.
(c) If this Agreement is terminated and the transactions
contemplated hereby are abandoned as described in this Section 6.01, this
Agreement and the Employment Matters Agreement shall become null and void
and of no further force and effect, except for the following provisions of
this Agreement (i) Section 4.02 relating to the confidentiality of certain
information and data, (ii) this Section 6.01, and (iii) Section 8.10
regarding certain expenses. Nothing in this Section 6.01 shall be deemed to
release any party from any liability for any breach by such party of the
terms and provisions of this Agreement or the Employment Matters Agreement.
SECTION 6.02. Amendments and Waivers. This Agreement may not be
amended except by an instrument in writing signed on behalf of each of the
parties hereto. Hexcel or Ciba and CGC may, by an instrument in writing
signed on behalf of such party or parties, waive compliance by the other
party or parties with any term or provision (other than any provisions that
may not be legally waived) of this Agreement that they were or are
obligated to comply with or perform.
ARTICLE VII
Indemnification
SECTION 7.01. Indemnification by Ciba. Except to the extent that
specific indemnification provisions contained in any Ancillary Agreement
provide for indemnification with respect to any particular matter that is
different than the indemnification provided for hereunder with respect to
such matter, Ciba shall indemnify Hexcel, its Subsidiaries and their
affiliates and their respective current and future officers, directors,
employees, stockholders, agents and representatives against, and shall hold
them harmless from, any loss, liability, claim, damage or expense
(including reasonable legal fees and expenses), as incurred (payable
quarterly upon written request), for or on account of or arising from or in
connection with or otherwise with respect to (i) any Excluded Assets or
Excluded Liabilities; or (ii) any breach of any covenant of Ciba or CGC
contained in this Agreement or in any Ancillary Agreement to be performed
after the Closing.
SECTION 7.02. Indemnification by Hexcel. Except to the extent
that specific indemnification provisions contained in any Ancillary
Agreement provide for indemnification with respect to any particular matter
that is different than the indemnification provided for hereunder with
respect to such matter, Hexcel shall indemnify Ciba, CGC, their affiliates
and their respective current and future officers, directors, employees,
stockholders, agents and representatives against, and shall hold
them harmless from, any loss, liability, claim, damage or expense
(including reasonable legal fees and expenses), as incurred (payable
quarterly upon written request), for or on account of or arising from or in
connection with or otherwise with respect to (i) any Acquired Assets or
Assumed Liabilities or (ii) any breach of any covenant of Hexcel contained
in this Agreement or in any Ancillary Agreement to be performed after the
Closing.
SECTION 7.03. Losses Net of Insurance, etc. The amount of any
loss, liability, claim, damage or expense for which indemnification is
provided under Section 4.07(e), Section 4.10 or this Article VII shall be
net of any amounts recovered or recoverable by the Person indemnified
pursuant to this Article VII (the "Indemnified Party") under insurance
policies with respect to such loss, liability, claim, damage or expense and
shall be (i) increased to take account of any net Tax cost incurred by the
Indemnified Party and arising from the receipt or accrual of indemnity
payments hereunder (grossed up for such increase) and (ii) reduced to take
account of any net Tax benefit realized by the Indemnified Party and
arising from the incurrence or payment of any such loss, liability, claim,
damage or expense. Any indemnification payment hereunder shall initially be
made without regard to this paragraph and shall be reduced by any such
insurance proceeds and increased or reduced, as the case may be, to reflect
any such net Tax cost (including gross-up) or net Tax benefit only after
the Indemnified Party has actually realized such cost or benefit. For
purposes of this Agreement, an Indemnified Party shall be deemed to have
"actually realized" a net Tax cost or net Tax benefit to the extent that,
and at such time as, the amount of Taxes payable by such Indemnified Party
is increased above or reduced below, as the case may be, the amount of
Taxes that such Indemnified Party would be required to pay but for the
receipt of the indemnity payment or the incurrence or payment of such loss,
liability, claim, damage or expense.
SECTION 7.04. Termination of Indemnification. The obligations to
indemnify and hold harmless any party pursuant to Sections 7.01, 7.02,
4.07(e) and 4.10 and the Indemnified Individuals pursuant to Section 4.14
shall not terminate.
SECTION 7.05. Indemnification Procedures. With respect to third
party claims (other than Tax Claims), all claims for indemnification by any
Indemnified Party hereunder shall be asserted and resolved as set forth in
this Section 7.05. In the event that any third party claim or demand for
which an indemnifying party, Ciba, CGC or Hexcel as the case may be (an
"Indemnifying Party"), may be liable to any Indemnified Party hereunder is
asserted against or sought to be collected from any Indemnified Party, such
Indemnified Party shall promptly, but in no event more than 15 days
following such Indemnified Party's receipt of such claim or demand, notify
the Indemnifying Party of such claim or demand and the amount or the
estimated amount thereof to the extent then feasible (which estimate shall
not be conclusive of the final amount of such claim and demand)
(the "Claim Notice"); provided, however, that failure to give such
notification shall not affect the indemnification provided hereunder except
to the extent the Indemnifying Party shall have been actually prejudiced as
a result of such failure. The Indemnifying Party shall have 45 days from
the effective date (determined in accordance with Section 8.01) of the
Claim Notice (the "Notice Period") to notify the Indemnified Party (a)
whether or not the Indemnifying Party disputes the liability of the
Indemnifying Party to the Indemnified Party hereunder with respect to such
claim or demand and (b) whether or not it desires to defend the Indemnified
Party against such claim or demand. All costs and expenses incurred by the
Indemnifying Party in defending such claim or demand shall be the liability
of, and shall be paid by, the Indemnifying Party. Except as hereinafter
provided, in the event that the Indemnifying Party notifies the Indemnified
Party within the Notice Period that it desires to defend the Indemnified
Party against such claim or demand, the Indemnifying Party shall have the
right to defend the Indemnified Party by appropriate proceedings and shall
have the sole power to direct and control such defense; provided, however,
that the Indemnified Party shall have the right to employ separate counsel
(including local counsel), and the Indemnifying Party shall bear the
reasonable fees, costs and expenses of such separate counsel if (i) the use
of counsel chosen by the Indemnifying Party to represent the Indemnified
Party would present such counsel with a conflict of interest, (ii) the
actual or potential defendants in, or targets of, any such action include
both the Indemnified Party and the Indemnifying Party and the Indemnified
Party shall have reasonably concluded that there may be legal defenses
available to it and/or other Indemnified Parties that are different from or
additional to those available to the Indemnifying Party, (iii) the
Indemnifying Party shall not have employed counsel to represent the
Indemnified Party within a reasonable time after notice of the institution
of such action or (iv) the Indemnifying Party shall authorize the
Indemnified Party to employ separate counsel at the expense of the
Indemnifying Party and provided, further, that the Indemnifying Party shall
not settle or otherwise dispose of any claim or demand without the prior
written consent of the Indemnified Party (i) if as a result thereof the
Indemnified Party could become subject to injunctive or other equitable
relief or the business of the Indemnified Party could be adversely affected
in any nonmonetary manner or (ii) such settlement or disposition does not
include as an irrevocable and unconditional term thereof a release of all
liabilities in respect of such claim or demand in favor of the Indemnified
Party. If any Indemnified Party desires to participate in any such defense
it may do so at its sole cost and expense. The Indemnified Party shall not
settle a claim or demand for which it is indemnified by the Indemnifying
Party without the written consent of the Indemnifying Party (which consent
shall not be unreasonably withheld). If the Indemnifying Party elects not
to defend or ceases to defend the Indemnified Party against any such claim
or demand, whether by not giving the Indemnified Party timely notice as
provided above or otherwise, then the amount of any such claim or demand,
or, if the same be contested by the Indemnified Party, then that portion
thereof as to which such defense is unsuccessful (and the reasonable costs
and expenses pertaining to such defense, including attorneys' fees) shall
be the liability of
the Indemnifying Party hereunder. To the extent the Indemnifying Party
shall direct, control or participate in the defense or settlement of any
third party claim or demand, the Indemnified Party will give the
Indemnifying Party and its counsel reasonable access to, during normal
business hours, the relevant business records and other documents, and
shall permit them to consult with the employees and counsel of the
Indemnified Party. The Indemnified Party and the Indemnifying Party shall
each use all commercially reasonable efforts in the defense of all such
claims or demands.
SECTION 7.06. Indemnification Procedures for Tax Claims; Tax
Returns. With respect to Tax Claims (as defined below), all claims for
indemnification by any Indemnified Party hereunder shall be asserted and
resolved as set forth in this Section 7.06. In the event that any written
claim or demand for which an Indemnifying Party would be liable to any
Indemnified Party hereunder is asserted against or sought to be collected
from any Indemnified Party by a Taxing Authority (a "Tax Claim") , such
Indemnified Party shall promptly, but in no event more than 15 days
following such Indemnified Party's receipt of such Tax Claim, notify the
Indemnifying Party of such Tax Claim with a Claim Notice; provided,
however, that failure to give such Claim Notice shall not affect the
indemnification provided hereunder except to the extent the Indemnifying
Party shall have been actually prejudiced as a result of such failure. The
Indemnifying Party shall have the Notice Period to notify the Indemnified
Party (a) whether or not the Indemnifying Party disputes the liability of
the Indemnifying Party to the Indemnified Party hereunder with respect to
such Tax Claim and (b) whether or not it desires to participate in or
control (as the case may be) the defense of the Indemnified Party against
such Tax Claim. All costs and expenses incurred by the Indemnifying Party
in participating in or controlling such Tax Claim shall be a liability of,
and shall be paid by, the Indemnifying Party. The Indemnified Party shall
control any proceedings relating to such Tax Claim; provided, however, that
if Ciba or any of its Subsidiaries is the Indemnifying Party, and a Tax
Claim relates to a Tax Return of Ciba or its Subsidiaries (other than a
separate Tax Return of a Divested Subsidiary), then Ciba shall control any
proceedings relating to such Tax Claim. The party controlling a proceeding
relating to a Tax Claim shall permit the other party to participate in such
proceeding and shall not settle such Tax Claim without the written consent
of the other party, which consent shall not be unreasonably withheld. The
Indemnified Party and the Indemnifying Party shall cooperate in contesting
or otherwise resolving any Tax Claim, and each shall give the other
reasonable access to, during normal business hours, any relevant business
records and other documents, and shall permit the other to consult with the
employees and counsel of the other. If Hexcel or Ciba or their respective
Subsidiaries would or might be entitled to a refund from a Taxing Authority
and under the terms of this Agreement the party receiving such refund would
be required to pay such refund to the other party, then the parties shall
cooperate in using their reasonable efforts to obtain such refund and the
party receiving such refund shall promptly forward it to the party entitled
to it. Hexcel shall prepare and file all Tax Returns of or with respect to
each of the Divested
Subsidiaries and the other Acquired Assets, which relate to taxable periods
beginning after the Closing Date or transactions that occur after the
Closing Date. Ciba shall prepare and file all Tax Returns of or with
respect to each of the Divested Subsidiaries and the other Acquired Assets
which relate to taxable periods ending on or before the Closing Date. Ciba
and Hexcel shall jointly prepare and Hexcel shall file all Tax Returns of
or with respect to each of the Divested Subsidiaries and the other Acquired
Assets which relate to taxable periods including (but not ending on) the
Closing Date.
SECTION 7.07. Adjustment to Transferred Business Consideration.
Ciba and Hexcel shall treat any indemnity payment under this agreement as
an adjustment to the Transferred Business Consideration for Tax purposes,
unless a final determination causes any such payment not to be treated as
an adjustment to the Transferred Business Consideration for United States
Federal Income Tax purposes.
ARTICLE VIII
General Provisions
SECTION 8.01. Notices. All notices and other communications
hereunder shall be in writing (including fax) and shall be sent, delivered
or mailed, addressed, or faxed:
(a) if to Hexcel, to:
Hexcel Corporation
000 Xxxx Xxx Xxxxxxx Xxxxxxxxx
Xxxxxxxxxx, XX 00000
(T) (000) 000-0000
(F) (000) 000-0000
Attention of Xxxxxx X. Xxxxx, Esq.
with a copy to:
Xxxx X. Xxxxx, Esq.
Skadden, Arps, Slate, Xxxxxxx & Xxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
(T) (000) 000-0000
(F) (000) 000-0000
(b) if to Ciba to:
Ciba-Geigy Limited
XX 0000
Xxxxx, Xxxxxxxxxxx
(T) (00) 00 000-0000
(F) (00) 00 000-0000
Attention of Mr. John M. D. Xxxxxxxxx
with a copy to:
Ciba-Geigy Limited
XX 0000
Xxxxx, Xxxxxxxxxxx
T (00) 00 000-0000
F (00) 00 000-0000
Attention of Xx. Xxxxx Xxxxxx
(c) if to CGC:
Ciba-Geigy Corporation
000 Xxxxx Xxxxxx Xxxx
X.X. Xxx 0000
Xxxxxxxxx, XX 00000-0000
(T) (000) 000-0000
(F) (000) 000-0000
Attention of Xxxx X. XxXxxx, Esq.
with a copy to:
Xxxxxx X. Xxxxxxx, Esq.
Cravath, Swaine & Xxxxx
000 Xxxxxx Xxxxxx
Xxx Xxxx, XX 00000
(T) (000) 000-0000
(F) (000) 000-0000
Each such notice, request or other communication shall be given (i) by hand
delivery, (ii) by nationally recognized courier service or (iii) by fax,
receipt confirmed. Each
such notice, request or communication shall be effective (A) if delivered
by hand or by nationally recognized courier service, when delivered at the
address specified in this Section 8.01 (or in accordance with the latest
unrevoked written direction from the party to whom such notice is
delivered) and (B) if given by fax, when such fax is transmitted to the fax
number specified in this Section 8.01 (or in accordance with the latest
unrevoked written direction from the party to whom such notice is
transmitted), and the appropriate confirmation is received.
SECTION 8.02. Interpretation. When a reference is made in this
Agreement to a Section, Appendix, Schedule or Exhibit, such reference shall
be to a Section, Appendix, Schedule or Exhibit of this Agreement unless
otherwise indicated. The table of contents and 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". All
accounting terms not defined in this Agreement shall have their meanings
under U.S. GAAP.
SECTION 8.03. Nonsurvival of Representations and Warranties. None
of the representations and warranties in this Agreement, the Ancillary
Agreements or any instrument delivered pursuant to this Agreement shall
survive the Closing. This Section 8.03 shall not limit any covenant or
agreement of the parties which by its terms contemplates performance after
the Closing.
SECTION 8.04. 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, entities 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 8.05. 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 8.06. Entire Agreement; No Third Party Beneficiaries.
This Agreement and the Ancillary Agreements (a) constitute the entire
agreement and
supersede all prior agreements and understandings, both written and oral,
among the parties with respect to the subject matter hereof and thereof
(other than the Confidentiality Agreement, which shall not be affected by
any provisions of this Agreement) and (b) are not intended to confer upon
any person other than the parties hereto (and the Indemnified Individuals
pursuant to Section 4.14) any rights or remedies hereunder or thereunder,
including any employees of the Transferred Business pursuant to any
provisions of this Agreement or the Employment Matters Agreement.
SECTION 8.07. Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of Delaware,
regardless of the laws that might otherwise govern under applicable
principles of conflicts of law.
SECTION 8.08. Consent to Jurisdiction. Each of Hexcel , Ciba and
CGC irrevocably submits to the exclusive jurisdiction of the United States
District Court for the Southern District of New York located in the borough
of Manhattan in the City of New York, or if such court does not have
jurisdiction, the Supreme Court of the State of New York, New York County,
for the purposes of any suit, action or other proceeding arising out of
this Agreement or any transaction contemplated hereby. Each of Hexcel, Ciba
and CGC further agrees that service of any process, summons, notice or
document by U.S. registered mail to such party's respective address set
forth in Section 8.01 (as it may be changed from time to time) shall be
effective service of process for any action, suit or proceeding in New York
with respect to any matters to which it has submitted to jurisdiction as
set forth above in the immediately preceding sentence. Each of Hexcel, Ciba
and CGC irrevocably and unconditionally waives any objection to the laying
of venue of any action, suit or proceeding arising out of this Agreement or
the transactions contemplated hereby in (a) the United States District
Court for the Southern District of New York or (b) the Supreme Court of the
State of New York, New York County, and hereby further irrevocably and
unconditionally waives and agrees not to plead or claim in any such court
that any such action, suit or proceeding brought in any such court has been
brought in an inconvenient forum.
SECTION 8.09. Publicity. Except as may be required by applicable
law, rule, regulation or legal process, so long as this Agreement is in
effect, none of Ciba, CGC, Hexcel or any of their respective Subsidiaries
or affiliates shall issue or cause the publication of any press release or
other public announcement with respect to the transactions contemplated by
this Agreement or any Ancillary Agreement without the consent of the other
party, which consent shall not be unreasonably withheld or withdrawn.
SECTION 8.10. Expenses. (a) Whether or not the Closing takes
place, all costs and expenses incurred in connection with this Agreement,
the
Ancillary Agreements and the transactions contemplated hereby and thereby
shall be borne by the party incurring such expense, except as set forth in
the next paragraph.
(b) Notwithstanding the foregoing, if (i) the stockholders of
Hexcel in a vote at the meeting of stockholders called pursuant to Section
4.18 fail to approve the issuance of the Hexcel Shares and/or the Required
Amendment or if this Agreement is terminated by Hexcel pursuant to Section
6.01(a)(iv) (other than due to the fault of Ciba or any of its
Subsidiaries) prior to such meeting taking place and prior to such vote or
termination Hexcel received a proposal for or became aware of an
Interfering Transaction (a "Trigger Event"), Hexcel shall reimburse Ciba
for the out-of-pocket expenses (including fees and expenses of legal
counsel and of CS First Boston Corporation) incurred by Ciba or any of its
Subsidiaries in connection with this Agreement and the Ancillary Agreements
or the matters contemplated hereby and thereby up to a maximum of
$1,000,000 and (ii) if during the period ending 12 months after any Trigger
Event Hexcel consummates, becomes a party to or enters into an agreement
relating to or publicly announces, a transaction that is or if consummated
prior to termination of this Agreement would have been an Interfering
Transaction, then promptly after Hexcel consummates such transaction,
Hexcel shall pay Ciba an alternative transaction fee of $1,000,000.
SECTION 8.11 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 each of the other parties,
except that after the Closing any party may assign all its rights and
obligations to a corporate successor by merger, consolidation or comparable
transaction of all or substantially all of the assets of such party,
provided that such party shall in no event be released from its obligations
hereunder without the prior written consent of each 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. Any purported assignment of this
Agreement other than in accordance with this Section 8.11 shall be null and
void and of no force or effect.
IN WITNESS WHEREOF, Ciba, CGC and Hexcel have each caused this
Agreement to be signed by their respective officers thereunto duly
authorized, all as of the date first written above.
CIBA-GEIGY LIMITED,
by
----------------------------
Name:
Title:
CIBA-GEIGY CORPORATION,
by
----------------------------
Name:
Title:
HEXCEL CORPORATION,
by
--------------------------
Name:
Title:
Appendix A
As used in the Agreement, the following terms shall have the
following meanings:
"Accounting Firm" shall have the meaning set forth in Section
2.04.
"Accounts Payable" shall mean all accounts payable owed by Ciba
or any of its Subsidiaries on the Closing Date that relate exclusively or
primarily to, or arise exclusively or primarily out of the Transferred
Business.
"Accounts Receivable" shall mean all accounts receivable of Ciba
or any of its Subsidiaries on the Closing Date that relate exclusively or
primarily to, or arise exclusively or primarily out of the Transferred
Business.
"Acquired Assets" shall have the meaning set forth in Section
1.01(a).
"Acquired Contracts" shall mean (a) all Contracts to which Ciba
or any of its Subsidiaries (other than a Divested Subsidiary) is a party or
by which Ciba or any of its Subsidiaries (other than a Divested Subsidiary)
is bound that (A) relate exclusively or primarily to, arise exclusively or
primarily out of or are used exclusively or primarily in connection with
the Transferred Business or (B) that are listed on Schedule 3.01(k) and (b)
subject to Section 1.03(c), all Contracts to which any Divested Subsidiary
is party or by which any Divested Subsidiary is bound.
"Acquired Equipment" shall mean all equipment of Ciba or any of
its Subsidiaries, other than equipment included in the Excluded Assets,
that relates exclusively or primarily to, arises exclusively or primarily
out of, or is used exclusively or primarily in connection with, the
Transferred Business.
"Acquired Intellectual Property" shall mean (i) all Intellectual
Property (other than Trademarks and the Ciba Tradenames) owned by Ciba or
any of its Subsidiaries that relates exclusively or primarily to, arises
exclusively or primarily out of or is used exclusively or primarily in
connection with, the Transferred Business (other than the patent
application on Schedule 4.13(b)(ii)), and (ii) all Trademarks set forth in
Schedule 3.01(i).
"Acquired Inventory" shall mean all Inventory held by Ciba or any
of its Subsidiaries at any location that relates exclusively or primarily
to, arises exclusively or primarily out of or is used exclusively or
primarily in connection with, the Transferred Business.
"Acquired Permits" shall mean all Permits owned or held by Ciba
or any of its Subsidiaries that relate exclusively or primarily to, arise
exclusively or primarily out of or are used exclusively or primarily in
connection with, the Transferred Business.
An "affiliate" of any Person shall mean 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" shall have the meaning specified in Rule 12b-2 under the Exchange
Act as in effect on the date hereof.
"Allocation Statement" shall have the meaning set forth in
Section 1.04.
"Ancillary Agreements" shall mean the Governance Agreement, the
Trademark License Agreement, the Registration Rights Agreement, the
Transitional Services Agreements, the Employment Matters Agreement, the UK
Employment Matters Agreement, the Indenture, the Distribution Agreement,
the Assignment and Assumption Agreement, the Supply and Tolling Agreements
and the UK Agreements.
"Applicable Jurisdictions" shall mean Austria, Belgium, Germany,
Italy and the United Kingdom.
"Assignment and Assumption Agreement" shall have the meaning set
forth in Section 4.12.
"Assumed Liabilities" shall have the meaning set forth in Section
1.03(a).
"Assumed Tax Liabilities" shall have the meaning set forth in
Section 2.04.
"Austrian Shares Contract" shall mean the Shareholders Agreement
(also referred to as the Syndication Agreement) dated as of January 1, 1990
and amended as of August 1, 1994 between Ciba and PCD Polymere Gesellschaft
m.b.H.
"Balance Sheet" shall have the meaning set forth in Section 2.04.
"BNP Reimbursement Agreement" shall mean the Amended and Restated
Reimbursement Agreement dated February 1, 1995 between Hexcel and Banque
Nationale de Paris covering seven letters of credit in principal amount of
$15.7 million.
"Books and Records" shall mean all books, ledgers, files,
invoices, customers' and suppliers' lists and operating records relating
exclusively or primarily
to, arising exclusively or primarily out of, or used exclusively or
primarily in connection with the Transferred Business.
"Business" shall have the meaning set forth in the recitals to
the Agreement.
"Business Tax Returns" shall mean (i) any Tax Returns filed by or
on behalf of any Divested Subsidiary (including the relevant portions of
any unitary, combined, consolidated or similar Tax Returns), (ii) any Tax
Returns of Ciba and its Subsidiaries relating exclusively or primarily to
Taxes attributable to the Transferred Business and (iii) the copies of the
portions of Tax Returns not described in (ii) above that relate to the
Transferred Business.
"Cash Price" shall have the meaning set forth in Section 1.02.
"CERCLA" shall mean the Comprehensive Environmental Response,
Compensation and Liability Act, as amended.
"CGC" shall mean Ciba-Geigy Corporation, a New York corporation
and a wholly owned subsidiary of Ciba.
"Ciba" shall mean Ciba-Geigy Limited, a Swiss corporation.
"Ciba Closing Items" shall have the meaning set forth in Section
2.04.
"Ciba's Continuing Business" shall mean all businesses,
operations and affairs of any kind or nature of Ciba and any of its
Subsidiaries other than the Transferred Business.
"Ciba Distributor" shall have the meaning set forth in Section
4.07.
"Ciba Notice of Disagreement" shall have the meaning set forth in
Section 2.04.
"Ciba Statement" shall have the meaning set forth in Section
2.04.
"Ciba Tradenames" shall mean any names owned or used by Ciba or
any of its Subsidiaries other than names set forth on Schedule 3.01(i).
"Ciba UK" shall have the meaning set forth in Section 1.03(c).
"Citibank Revolver" shall mean the Credit Agreement dated as of
February 8, 1995 among Hexcel, the lenders and issuing banks thereunder and
Citicorp USA, Inc., as agent, and related agreements.
"Claim" has the meaning set forth in Section 4.14.
"Claim Notice" shall have the meaning set forth in Section 7.05.
"Closing" shall have the meaning set forth in Section 2.01.
"Closing Date" shall mean the date of the Closing.
"Closing Working Capital" shall have the meaning set forth in
Section 2.04.
"CML" shall have the meaning set forth in Section 1.03(i).
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Composite Products" shall have the meaning set forth in Section
4.13.
"Composites Field" shall have the meaning set forth in Section
4.24.
"Confidentiality Agreement" shall mean the Confidentiality
Agreement dated as of May 1, 1995, between CGC and Hexcel.
"Contracts" shall mean all contracts, leases, indentures,
agreements, commitments and all other legally binding arrangements, whether
in existence on the date hereof or subsequently entered into, including any
and all amendments thereto.
"Contributed Shares" shall mean all capital stock of or other
equity interests in any Divested Subsidiary owned directly or indirectly by
Ciba.
"Copyright" shall mean copyrights in works (including computer
programs) published or unpublished, whether registered or capable of being
registered, and such rights as may exist through marking or publication.
"Current Assets" shall have the meaning set forth in Section
2.04.
"Current Liabilities" shall have the meaning set forth in Section
2.04.
"Danutec" shall mean Danutec Werkstoff Gesellschaft m.b.H., an
Austrian corporation.
"Danutec Agreement" shall mean any agreement between Ciba or any
of its Subsidiaries and Petrochemie Danubia GesmbH relating to the sale to
Ciba or any of its Subsidiaries of the 49% interest in Danutec not owned by
Ciba on the date hereof and which provides for the consummation of such
sale on or prior to the first anniversary of the Closing Date.
"Danutec Amount" shall have the meaning set forth in Section
2.04.
"Danutec Closing" shall have the meaning set forth in Section
2.05.
"Danutec Equity" shall have the meaning set forth in Section
1.01(x).
"Danutec Price" shall have the meaning set forth in Section 2.04.
"Danutec Shares" shall mean the 51% equity interest of Ciba-Geigy
AG in Danutec.
"Deferred Assets" shall mean the assets of or held by the Ciba
Distributors that relate exclusively or primarily to, arise exclusively or
primarily out of or are used exclusively or primarily in connection with,
the Transferred Business and that are located in the Excluded
Jurisdictions.
"Deferred Closings" shall have the meaning set forth in Section
2.03.
"Deferred Consideration" shall mean the amount payable by Hexcel
for any Deferred Assets calculated in accordance with the Distribution
Agreement.
"Deferred Consideration Payment Date" shall have the meaning set
forth in Section 2.03(e).
"Distribution Agreement" shall mean the distribution agreement
between Ciba and Hexcel dated the Closing Date substantially in the form
attached hereto as Exhibit C.
"Divested Subsidiary" shall mean CML, Brochier S.A., a French
corporation ("Brochier"), Salver S.r.l., an Italian corporation ("Salver"),
Confection et Diffusion de Stores et Xxxxxxx ("CDSR"), a French corporation
and Danutec.
"Employment Matters Agreement" shall mean the agreement governing
United States employment matters dated as of the date of this Agreement
between Hexcel and CGC and attached hereto as Exhibit D.
"Environmental Laws" shall mean any applicable federal, state,
local or foreign treaty, law (including applicable principles of common and
civil law), statute, ordinance, rule, regulation, permit, license, code,
order, judgment, writ, common law, decree, standard or injunction enacted,
promulgated or issued by any Governmental Entity relating to (i) the
presentation, protection and cleanup of the environment, including the air,
the ground, surface soils, and surface and subsurface waters and natural
resources, (ii) soil and ground water contamination and (iii) health and
safety of persons or property and exposure to, or the use, storage,
recycling, treatment, generation, transportation, processing, handling,
labelling, release or disposal of, Hazardous Substances.
"Environmental Permits" means all permits, licenses or
authorizations from any Governmental Entity required under Environmental
Laws for the operation of the Transferred Business or the business of
Hexcel, as the case may be.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.
"Excluded Assets" shall have the meaning set forth in Section
1.01(b).
"Excluded Contract" shall mean any Contract to which Ciba or any
of its Subsidiaries is a party or by which Ciba or any of its Subsidiaries
is bound and which is not an Acquired Contract.
"Excluded Jurisdictions" shall mean Australia, Denmark, Finland,
Germany, Hong Kong, India, Indonesia, Japan, Malaysia, New Zealand, Norway,
Singapore, Spain, South Africa, Sweden, Switzerland, Taiwan, Thailand, The
Netherlands, The Peoples Republic of China and Vietnam.
"Excluded Liabilities" shall have the meaning set forth in
Section 1.03(b).
"Excluded Stock" shall mean all capital stock and other equity
interests, other than the Contributed Shares, held by Ciba and its
Subsidiaries in any Person.
"Excluded Tax Assets" shall mean any current assets of the
Transferred Business attributable to Taxes of CGC (except to the extent any
such current asset will actually benefit Hexcel or its Subsidiaries after
the Closing).
"Excluded Tax Liabilities" shall have the meaning set forth in
Section 1.03(b).
"Exon-Xxxxxx Amendment" shall mean Section 721 of the Defense
Production Act of 1950, as amended, and the rules and regulations
promulgated thereunder.
"Financial Statements" shall have the meaning set forth in
Section 3.01(c).
"Governance Agreement" shall mean the governance agreement
between Ciba and Hexcel dated the Closing Date in substantially the form
attached hereto as Exhibit A.
"Governmental Entity" shall mean any court,
administrative agency or commission or other governmental authority or
instrumentality, domestic or foreign.
"Hazardous Substances" means all explosive or radioactive
substances or wastes, hazardous or toxic substances or wastes, pollutants,
solid, liquid or gaseous wastes, including petroleum or petroleum
distillates, asbestos or asbestos containing materials, polychlorinated
biphenyls ("PCBs") or PCB-containing equipment, radon gas, and all other
substances or wastes regulated pursuant to any Environmental Law.
"Hexcel" shall mean Hexcel Corporation, a Delaware corporation.
"Hexcel Balance Sheet" shall have the meaning set forth in
Section 2.04.
"Hexcel Common" shall mean the common stock of Hexcel
Corporation, par value $0.01 per share.
"Hexcel Material Adverse Change" shall mean any material adverse
change in the business, assets, financial condition or results of
operations of Hexcel and its Subsidiaries taken as a whole, other than
changes relating to the economy in general or changes relating to the
Business' industry in general.
"Hexcel Material Adverse Effect" shall mean any effect causing a
Hexcel Material Adverse Change.
"Hexcel Material Intellectual Property" shall have the meaning
set forth
in Section 3.02(l).
"Hexcel Notice of Disagreement" shall have the meaning set forth
in Section 2.04.
"Hexcel Permitted Liens" shall mean (A) mechanics', carriers',
workmen's, repairmen's, and other like Liens arising or incurred in the
ordinary course of business and which would not, individually or in the
aggregate, reasonably be expected to have a Hexcel Material Adverse Effect,
(B) Liens for Taxes, assessments and other governmental charges that are
not yet due and payable, or that may thereafter be paid without penalty, or
that are being contested in good faith by appropriate proceedings (which
proceedings are listed on Schedule 3.02(o)), (C) Liens under lien retention
agreements entered into in the ordinary course of business and which would
not, individually or in the aggregate, reasonably be expected to have a
Hexcel Material Adverse Effect, (D) imperfections of title and other
encumbrances that are not substantial in character or amount and do not
materially detract from, or interfere with the use of the assets of Hexcel
and its Subsidiaries in its business as currently conducted and (E) Liens
imposed pursuant to the Citibank Revolver.
"Hexcel Preferred" shall mean the preferred stock, no par value,
of Hexcel.
"Hexcel Shares" shall mean shares of Hexcel Common, representing
49.9% of the issued and outstanding shares of Hexcel Common after giving
effect to the issuance thereof.
"Hive-Down Agreements" shall have the meaning set forth in
Section 1.03(c).
"Hexcel Statement" shall have the meaning set forth in Section
2.04.
"HSR Act" shall mean the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements
Act of 1976, as amended, and the rules and regulations promulgated
thereunder.
"Income Tax" shall mean all Federal, state, local, foreign or
other Taxes imposed upon or measured by net income.
"Income Tax Claims" shall mean all rights to claims for refunds
of Income Taxes with respect to liabilities for Income Taxes relating to
the Transferred Business for any taxable period ending on or before the
Closing Date or the portion ending on the Closing Date of any taxable
period that includes (but does not end on) such date.
"Income Tax Liabilities" shall mean (i) with respect to the
Divested Subsidiaries, any Income Taxes for any taxable period ending on or
before the Closing Date, and any Income Taxes for any portion of any
taxable period that includes but does not end on the Closing Date
(determined as if such taxable period ended as of the close of business on
the Closing Date) and (ii) with respect to
Acquired Assets (other than the Divested Subsidiaries and assets held by
the Divested Subsidiaries) sold by Ciba or any of its Subsidiaries, all
obligations or liabilities of Ciba or any of its Subsidiaries for Income
Taxes attributable to the Transferred Business accruing, or with respect to
the activities of the Transferred Business occurring, on or before the
Closing Date (in each case described in (i) and (ii) above, other than
Income Taxes resulting from any action taken by Hexcel or its affiliates
after or concurrent with the Closing (other than the acquisition of the
Acquired Assets, Danutec Equity and Deferred Assets)).
"Indemnified Individuals" has the meaning set forth in Section
4.14.
"Indemnified Party" shall have the meaning set forth in Section
7.03.
"Indemnifying Party" shall have the meaning set forth in Section
7.05.
"Indenture" shall mean the Subordinated Debt indenture between
Hexcel and the trustee to be named therein for the Subordinated Debt, which
shall include terms substantially similar to the summary terms attached
hereto as Exhibit B.
"Intellectual Property" shall mean throughout the world (i)
Patents, (ii) Trademarks, (iii) Trade Names, (iv) Know-how, (v) shop rights
and (vi) copyrights.
"Interfering Transaction" shall have the meaning set forth in
Section 4.04.
"Inventory" means all raw materials, work in process,
finished goods, supplies, parts and other inventories.
"Know-how" shall mean all trade secrets, know-how (including
product know-how and use and application know-how), formulas, processes,
product designs, specifications, quality control procedures, manufacturing,
engineering and other drawings, technology, technical information, safety
information, lab journals, engineering data and design and engineering
specifications, research records, market surveys and all promotional
literature, customer and supplier lists and similar data.
"Lien" shall mean any mortgage, claim, charge, lien, security
interest, easement, right-of-way, pledge or other encumbrance.
"Material Adverse Change" shall mean any material adverse change
in the business, assets, financial condition or results of operations of
the Transferred Business taken as a whole, other than changes relating to
the economy in general or changes relating to the Business' industry in
general.
"Material Adverse Effect" shall mean any effect causing a
Material Adverse Change.
"Notice Period" shall have the meaning set forth in Section 7.05.
"Other Tax Liabilities" shall mean all obligations and
liabilities for Taxes attributable to the Transferred Business (other than
Income Tax Liabilities).
"Patents" shall mean patents (including all reissues, divisions,
re-examinations, continuations, continuations in part and extensions
thereof), patent applications and patent disclosures docketed and all other
patent rights.
"PCBs" shall have the meaning set forth in the definition of
Hazardous Substances.
"Permits" shall mean all permits, licenses, franchises, approvals
and authorizations by Governmental Entities.
"Permitted Liens" shall mean (A) mechanics', carriers',
workmen's, repairmen's, and other like Liens arising or incurred in the
ordinary course of business and which would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect, (B)
Liens for Taxes, assessments and other governmental charges that are not
yet due and payable or that may thereafter be paid without penalty, or that
are being contested in good faith by appropriate proceedings (which
proceedings are disclosed in Schedule 3.01(m)), (C) Liens under lien
retention agreements entered into in the ordinary course of business and
which would not, individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect and (D) imperfections of title (other
than title to real property) and other encumbrances that are not
substantial in character or amount and do not materially detract from, or
interfere with the use of, the Acquired Assets and the Deferred Assets in
the Transferred Business as presently conducted.
"Person" shall mean any individual, group, corporation,
partnership, joint venture, trust, business association, organization,
Governmental Entity or other entity.
"Polymers Employees" shall have the meaning set forth in Section
4.24(e)(ii).
"Polymers Field" shall have the meaning set forth in Section
4.24(e)(i).
"Prepaid Taxes" shall have the meaning set forth in Section 2.04.
"Real Property Deeds" shall have the meaning set forth in Section
2.02(a).
"Recalls" shall have the meaning set forth in Section 3.01(u).
"Registration Rights Agreement" shall have the meaning set forth
in Section 4.12.
"Required Amendment" shall have the meaning set forth in Section
3.02(b).
"RTM" shall have the meaning set forth in Section 4.13.
"Satellite Personnel" shall have the meaning set forth in Section
3.01(a).
"Scheduled Real Property" shall mean all real property,
leaseholds and other interests in real property of Ciba or its Subsidiaries
listed in Schedule 3.01(h)(1) or 3.01(h)(2), in each case together with
Ciba's and its Subsidiaries' right, title and interest in all buildings,
improvements, fixtures and all other appurtenances thereto and all
easements, rights of way, licenses, privileges, zoning and development
rights and other rights and benefits thereunto belonging to the extent used
in connection with the Transferred Business, including all surveys, plans,
specifications and other architectural and engineering drawings and all
condemnation awards and insurance proceeds payable to Ciba and/or any of
its Subsidiaries with respect to such interests for casualties or takings
occurring between the date hereof and the Closing Date or, in respect of
South Africa, the Deferred Closing Date.
"SEC" shall mean the Securities and Exchange Commission.
"SEC Documents" shall have the meaning set forth in Section
3.02(e).
"Securities Act" shall mean the Securities Act of 1933, as
amended, and the rules and regulations promulgated thereunder.
"Subordinated Debt" shall mean the subordinated notes of Hexcel
to be issued under the Indenture in the aggregate principal amounts and on
the dates provided in Sections 2.03(e), 2.04(g) and 2.05.
"Subsidiary" shall mean, 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.
"Supply and Tolling Agreements" shall have the meaning set forth
in Section 4.12.
"Tax" or "Taxes" shall mean all Federal, state, local, foreign or
other governmental taxes, assessments, duties, fees, levies or similar
charges of any kind, including all income, environmental, excise, property,
occupation, use, intangibles, sales, registration, value added, payroll,
employment and other withholding taxes, and including all interest,
penalties and additions imposed with respect to such amounts.
"Tax Claim" shall have the meaning set forth in Section 7.06.
"Tax Return" shall mean any return (including information
returns), report, declaration or statement relating to Taxes or otherwise
required to be filed with any Taxing Authority, including any schedule or
attachment thereto or amendment thereof.
"Taxing Authority" shall mean any governmental or
quasi-governmental body exercising any taxing authority or any other body
exercising Tax regulatory authority.
"Trademark License Agreement" shall have the meaning set forth in
Section 4.13.
"Trademarks" shall mean trademarks and service marks,
registrations thereof, pending applications therefor and such unregistered
rights as may exist through use.
"Trade Names" shall mean trade names, brand marks, trade dress,
brand names, logos and all other names and slogans or product goodwill for
which no trademark registration has been obtained and for which no
application is pending.
"Transferred Business" shall mean the global composites division
of Ciba and CGC consisting of the development, manufacture, marketing, sale
and distribution on a world-wide basis of composites, including structures
and interiors, fabrics, laminates, prepregs, adhesive films, honeycomb
core, sandwich panels and fabricated components, other than to the extent,
if any, such activities are conducted on the Closing Date by the worldwide
Polymers Division, Additives Division or Pigments Division of Ciba.
"Transferred Business Consideration" shall have the meaning set
forth in Section 1.02.
"Transfer Taxes" shall mean all transfer, documentary, sales,
use, registration, value-added and other similar Taxes (including all
applicable real estate transfer Taxes and real property transfer gains
Taxes) and related amounts incurred as a result of the transfer of the
Acquired Assets, Danutec Equity or Deferred Assets to Hexcel or its
designated Subsidiaries pursuant to this Agreement.
"Transitional Services Agreements" shall have the meaning set
forth in Section 4.12.
"Trigger Event" shall have the meaning set forth in Section 8.10.
"UK Agreements" shall have the meaning set forth in Section 4.12.
"UK Employment Matters Agreement" shall have the meaning set
forth in Section 4.12.
"U.S. GAAP" shall mean United States generally accepted
accounting principles.
