REGISTRATION RIGHTS AGREEMENT
between
HEXCEL CORPORATION,
LXH, L.L.C.,
and
LXH II, L.L.C.
Dated as of December 19, 2000
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT (this "Agreement"), is made as
of December 19, 2000, between HEXCEL CORPORATION, a Delaware corporation
(the "Company"), LXH, L.L.C., a Delaware limited liability company ("LXH")
and LXH II, L.L.C., a Delaware limited liability company (together with
LXH, the "Investors").
WHEREAS, the Investors have entered into a Stock Purchase
Agreement (the "Stock Purchase Agreement"), dated as of October 11, 2000,
with Ciba Specialty Chemicals Holding Inc., a corporation organized under
the laws of Switzerland ("Ciba Holdings"), Ciba Specialty Chemicals Inc., a
corporation organized under the laws of Switzerland and wholly-owned
subsidiary of Ciba Holdings ("Ciba SCI") and Ciba Specialty Chemicals
Corporation, a corporation organized under the laws of Delaware and a
wholly-owned subsidiary of Ciba Holdings (together with Ciba Holdings and
Ciba SCI, "Ciba") pursuant to which, upon the terms and subject to the
conditions contained therein, the Investors have agreed to acquire shares
of Common Stock of the Company; and
WHEREAS, simultaneously herewith, the Investors and the Company
are executing and delivering a Governance Agreement (the "Governance
Agreement") providing, among other things, for certain rights and
obligations with respect to the ownership of the shares of Common Stock
acquired by the Investors; and
WHEREAS, (i) in connection with the execution and delivery by the
Investors of the Stock Purchase Agreement and the consummation of the
transactions contemplated hereby and (ii) to induce the Investors and their
Affiliates to execute and deliver the Governance Agreement and to
consummate the transactions contemplated thereby, the Company has agreed to
provide the Investors with the registration rights set forth in this
Agreement.
ACCORDINGLY, the parties hereto agree as follows:
1. Certain Definitions.
As used in this Agreement, capitalized terms not otherwise defined
herein shall have the meanings ascribed to them below:
"Affiliate" means (i) with respect to any Person, any other Person
directly or indirectly controlling or controlled by or under direct or
indirect common control with such specified Person or (ii) with respect to
any individual, shall also mean the spouse or child of such individual;
provided, that neither the Company nor any Person controlled by the Company
shall be deemed to be an Affiliate of any Holder.
"Certificate of Incorporation" means the Certificate of
Incorporation of the Company, as amended and in effect on the date hereof.
"Ciba Registrable Securities" means (a) any shares of Common Stock
held by Ciba after giving effect to the consummation of the transactions
contemplated by the Stock Purchase Agreement and (b) any shares of Common
Stock issued or issuable, directly or indirectly, in exchange for or with
respect to the Common Stock referenced in clause (a) above by way of stock
dividend, stock split or combination of shares or in connection with a
reclassification, recapitalization, merger, consolidation or other
reorganization. As to any particular Ciba Registrable Securities, such
securities shall cease to be Ciba Registrable Securities when (A) a
registration statement with respect to the sale of such securities shall
have been declared effective under the Securities Act and such securities
shall have been disposed of in accordance with such registration statement,
or (B) such securities shall have been sold (other than in a privately
negotiated sale) pursuant to Rule 144 (or any successor provision) under
the Securities Act and in compliance with the requirements of paragraphs
(f) and (g) of Rule 144 (notwithstanding the provisions of paragraph (k) of
such Rule).
"Common Stock" means the common stock, par value $.01 per share,
of the Company and any equity securities issued or issuable in exchange for
or with respect to the Common Stock by way of a stock dividend, stock split
or combination of shares or in connection with a reclassification,
recapitalization, merger, consolidation or other reorganization.
"Common Stock Equivalents" shall mean all options, warrants and
other securities convertible into, or exchangeable or exercisable for, (at
any time or upon the occurrence of any event or contingency and without
regard to any vesting or other conditions to which such securities may be
subject), Common Stock.
"Expenses" shall mean any and all fees and expenses incurred in
connection with the Company's performance of or compliance with Article 2,
including, without limitation: (i) SEC, stock exchange or NASD registration
and filing fees and all listing fees and fees with respect to the inclusion
of securities on the New York Stock Exchange or on any securities market on
which the Common Stock is listed or quoted, (ii) fees and expenses of
compliance with state securities or "blue sky" laws and in connection with
the preparation of a "blue sky" survey, including without limitation,
reasonable fees and expenses of blue sky counsel, (iii) printing and
copying expenses, (iv) messenger and delivery expenses, (v) expenses
incurred in connection with any road show, (vi) fees and disbursements of
counsel for the Company, (vii) with respect to each registration, the fees
and disbursements (which shall not exceed $50,000 per registration) of one
counsel for the selling Holder(s) (selected by the Initiating Holders, in
the case of a registration pursuant to Section 2.1, and selected by the
underwriter, in the case of a registration pursuant to Section 2.2), (viii)
fees and disbursements of all independent public accountants (including the
expenses of any audit and/or "cold comfort" letter) and fees and expenses
of other persons, including special experts, retained by the Company, (ix)
fees and expenses payable to a Qualified Independent Underwriter (as such
term is defined in Schedule E to the By-Laws of the NASD) and (x) any other
fees and disbursements of underwriters, if any, customarily paid by issuers
of securities (collectively, "Expenses").
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Holder" or "Holders" means any Person who is a signatory to this
Agreement and any Person who shall hereafter acquire and hold Registrable
Securities in accordance with the terms of the Governance Agreement.
"Person" means any individual, corporation, limited liability
company, limited or general partnership, joint venture, association,
joint-stock company, trust, unincorporated organization or government or
any agency or political subdivisions thereof.
"Registrable Securities" means (a) any shares of Common Stock held
by the Holders and (b) any shares of Common Stock issued or issuable,
directly or indirectly, in exchange for or with respect to the Common Stock
referenced in clause (a) above by way of stock dividend, stock split or
combination of shares or in connection with a reclassification,
recapitalization, merger, consolidation or other reorganization. As to any
particular Registrable Securities, such securities shall cease to be
Registrable Securities when (A) a registration statement with respect to
the sale of such securities shall have been declared effective under the
Securities Act and such securities shall have been disposed of in
accordance with such registration statement, or (B) such securities shall
have been sold (other than in a privately negotiated sale) pursuant to Rule
144 (or any successor provision) under the Securities Act and in compliance
with the requirements of paragraphs (f) and (g) of Rule 144
(notwithstanding the provisions of paragraph (k) of such Rule).
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
2. Registration Rights.
2.1. Demand Registrations.
(a) (i) Subject to Section 2.1(b) below, at any time
after the first anniversary of the date hereof, the Holders shall have the
right to require the Company to file a registration statement under the
Securities Act covering such aggregate number of Registrable Securities
which represents 20% or greater of the then outstanding Registrable
Securities, by delivering a written request therefor to the Company
specifying the number of Registrable Securities to be included in such
registration by such Holders and the intended method of distribution
thereof. All such requests by any Holder pursuant to this Section 2.1(a)(i)
are referred to herein as "Demand Registration Requests," and the
registrations so requested are referred to herein as "Demand Registrations"
(with respect to any Demand Registration, the Holders making such demand
for registration being referred to as the "Initiating Holders"). As
promptly as practicable, but no later than ten days after receipt of a
Demand Registration Request, the Company shall give written notice (the
"Demand Exercise Notice") of such Demand Registration Request to all
Holders of record of Registrable Securities.
(ii) The Company, subject to Sections 2.3 and
2.6, shall include in a Demand Registration (x) the Registrable Securities
of the Initiating Holders and (y) the Registrable Securities of any other
Holder of Registrable Securities which shall have made a written request to
the Company for inclusion in such registration (which request shall specify
the maximum number of Registrable Securities intended to be disposed of by
such Holders) within 30 days after the receipt of the Demand Exercise
Notice (or, 15 days if, at the request of the Initiating Holders, the
Company states in such written notice or gives telephonic notice to all
Holders, with written confirmation to follow promptly thereafter, that such
registration will be on a Form S-3).
(iii) The Company shall, as expeditiously as
possible but subject to Section 2.1(b), use its commercially reasonable
efforts to (x) effect such registration under the Securities Act of the
Registrable Securities which the Company has been so requested to register,
for distribution in accordance with such intended method of distribution,
and (y) if requested by the Initiating Holders, obtain acceleration of the
effective date of the registration statement relating to such registration.
(b) Notwithstanding anything to the contrary in Section
2.1(a), the Demand Registration rights granted in Section 2.1(a) to the
Investors are subject to the following limitations: (i) the Company shall
not be required to cause a registration pursuant to Section 2.1(a)(i) to be
declared effective within a period of 180 days after the effective date of
any other registration statement of the Company filed pursuant to the
Securities Act; (ii) if the Board of Directors of the Company, in its good
faith judgment, determines that any registration of Registrable Securities
should not be made or continued because it would materially interfere with
any material financing, acquisition, corporate reorganization or merger or
other transaction or event involving the Company or any of its subsidiaries
(a "Valid Business Reason"), the Company may postpone filing a registration
statement relating to a Demand Registration Request until such Valid
Business Reason no longer exists, but in no event for more than three
months (such period of postponement or withdrawal under this clause (ii),
the "Postponement Period"); and the Company shall give written notice of
its determination to postpone or withdraw a registration statement and of
the fact that the Valid Business Reason for such postponement or withdrawal
no longer exists, in each case, promptly after the occurrence thereof;
provided, however, the Company shall not be permitted to postpone or
withdraw a registration statement after the expiration of any Postponement
Period until twelve months after the expiration of such Postponement
Period; (iii) the Company shall not, be obligated to effect more than three
Demand Registrations under Section 2.1(a) and (iv) the Company shall not be
required to effect a Demand Registration unless the Registrable Securities
to be included in such registration have an aggregate anticipated offering
price of at least $25,000,000 (based on the then-current market price of
the Common Stock).
If the Company shall give any notice of postponement or
withdrawal of any registration statement pursuant to clause (ii) above, the
Company shall not, during the period of postponement or withdrawal,
register any Common Stock, other than pursuant to a registration statement
on Form S-4 or S-8 (or an equivalent registration form then in effect).
Each Holder of Registrable Securities agrees that, upon receipt of any
notice from the Company that the Company has determined to withdraw any
registration statement pursuant to clause (ii) above, such Holder will
discontinue its disposition of Registrable Securities pursuant to such
registration statement and, if so directed by the Company, will deliver to
the Company (at the Company's expense) all copies, other than permanent
file copies, then in such Holder's possession of the prospectus covering
such Registrable Securities that was in effect at the time of receipt of
such notice. If the Company shall have withdrawn or prematurely terminated
a registration statement filed under Section 2.1(a)(i) (whether pursuant to
clause (ii) above or as a result of any stop order, injunction or other
order or requirement of the SEC or any other governmental agency or court),
the Company shall not be considered to have effected an effective
registration for the purposes of this Agreement until the Company shall
have filed a new registration statement covering the Registrable Securities
covered by the withdrawn registration statement and such registration
statement shall have been declared effective and shall not have been
withdrawn. If the Company shall give any notice of withdrawal or
postponement of a registration statement, the Company shall, at such time
as the Valid Business Reason that caused such withdrawal or postponement no
longer exists (but in no event later than three months after the date of
the postponement or withdrawal), use its commercially reasonable best
efforts to effect the registration under the Securities Act of the
Registrable Securities covered by the withdrawn or postponed registration
statement in accordance with this Section 2.1 (unless the Initiating
Holders shall have withdrawn such request, in which case the Company shall
not be considered to have effected an effective registration for the
purposes of this Agreement).
(c) The Company, subject to Sections 2.3 and 2.6, may
elect to include in any registration statement and offering made pursuant
to Section 2.1(a)(i), (i) authorized but unissued shares of Common Stock or
shares of Common Stock held by the Company as treasury shares and (ii) any
other shares of Common Stock which are requested to be included in such
registration pursuant to the exercise of piggyback rights granted by the
Company which are not inconsistent with the rights granted in, or otherwise
conflict with the terms of, this Agreement ("Additional Piggyback Rights")
provided, however, that such inclusion shall be permitted only to the
extent that it is pursuant to and subject to the terms of the underwriting
agreement or arrangements, if any, entered into by the Initiating Holders.
(d) In connection with any Demand Registration, the
Company shall have the right to designate the lead managing underwriter in
connection with such registration and each other managing underwriter for
such registration, provided that in each case, each such underwriter is
reasonably satisfactory to the Initiating Holders.
2.2. Piggyback Registrations.
(a) If, at any time, the Company proposes or is required
to register any of its equity securities under the Securities Act (other
than pursuant to (i) registrations on such form or similar form(s) solely
for registration of securities in connection with an employee benefit plan
or dividend reinvestment plan or a merger or consolidation or (ii) a Demand
Registration under Section 2.1) on a registration statement on Form S-1,
Form S-2 or Form S-3 (or an equivalent general registration form then in
effect), whether or not for its own account, the Company shall give prompt
written notice of its intention to do so to each of the Holders of record
of Registrable Securities. Upon the written request of any such Holder,
made within 15 days following the receipt of any such written notice (which
request shall specify the maximum number of Registrable Securities intended
to be disposed of by such Holder and the intended method of distribution
thereof), the Company shall, subject to Sections 2.2(b), 2.3 and 2.6
hereof, use its commercially reasonable efforts to cause all such
Registrable Securities, the Holders of which have so requested the
registration thereof, to be included in the registration statement with the
securities which the Company at the time proposes to register to permit the
sale or other disposition by the Holders (in accordance with the intended
method of distribution thereof) of the Registrable Securities to be so
registered. No registration of Registrable Securities effected under this
Section 2.2(a) shall relieve the Company of its obligations to effect
Demand Registrations under Section 2.1 hereof.
(b) If, at any time after giving written notice of its
intention to register any equity securities and prior to the effective date
of the registration statement filed in connection with such registration,
the Company shall determine for any reason not to register or to delay
registration of such equity securities, the Company may, at its election,
give written notice of such determination to all Holders of record of
Registrable Securities and (i) in the case of a determination not to
register, shall be relieved of its obligation to register any Registrable
Securities in connection with such abandoned registration, without
prejudice, however, to the rights of Holders under Section 2.1, and (ii) in
the case of a determination to delay such registration of its equity
securities, shall be permitted to delay the registration of such
Registrable Securities for the same period as the delay in registering such
other equity securities.
(c) Any Holder shall have the right to withdraw its
request for inclusion of its Registrable Securities in any registration
statement pursuant to this Section 2.2 by giving written notice to the
Company of its request to withdraw; provided, however, that (i) such
request must be made in writing prior to the earlier of the execution of
the underwriting agreement or the execution of the custody agreement with
respect to such registration and (ii) such withdrawal shall be irrevocable
and, after making such withdrawal, a Holder shall no longer have any right
to include Registrable Securities in the registration as to which such
withdrawal was made.
2.3. Allocation of Securities Included in Registration Statement.
(a) If any requested registration made prior to 18 months
after the date hereof pursuant to Section 2.1 involves an underwritten
offering and the lead managing underwriter of such offering (the "Manager")
shall advise the Company that, in its view, the number of securities
requested to be included in such registration by the Holders of Registrable
Securities or any other persons (including those shares of Common Stock
requested by the Company to be included in such registration) exceeds the
largest number (the "Section 2.3(a) Sale Number") that can be sold in an
orderly manner in such offering within a price range acceptable to the
Initiating Holders, the Company shall use its commercially reasonable
efforts to include in such registration:
(i) first, all Registrable Securities and Ciba
Registrable Securities requested to be included in such
registration by the holders thereof; provided, however, that, if
the number of such Registrable Securities and Ciba Registrable
Securities exceeds the Section 2.3(a) Sale Number, the number of
such Registrable Securities and Ciba Registrable Securities (not
to exceed the Section 2.3(a) Sale Number) to be included in such
registration shall be allocated on a pro rata basis among all
holders requesting that Registrable Securities and Ciba
Registrable Securities be included in such registration, based on
the number of Registrable Securities and Ciba Registrable
Securities then owned by each such holder requesting inclusion in
relation to the number of Registrable Securities and Ciba
Registrable Securities owned by all holders requesting inclusion;
(ii) second, to the extent that the number of
Registrable Securities to be included pursuant to clause (i) of
this Section 2.3(a) is less than the Section 2.3(a) Sale Number,
the remaining shares to be included in such registration shall be
allocated on a pro rata basis among all holders requesting that
securities be included in such registration pursuant to the
exercise of Additional Piggyback Rights ("Piggyback Shares"),
based on the aggregate number of Piggyback Shares then owned by
each holder requesting inclusion in relation to the aggregate
number of Piggyback Shares owned by all holders requesting
inclusion, up to the Section 2.3(a) Sale Number; and
(iii) third, to the extent that the number of
securities to be included pursuant to clauses (i) and (ii) of this
Section 2.3(a) is less than the Section 2.3(a) Sale Number, any
securities that the Company proposes to register, up to the
Section 2.3(a) Sale Number.
If, as a result of the proration provisions of this
Section 2.3(a), any Holder shall not be entitled to include all Registrable
Securities in a registration that such Holder has requested be included,
such Holder may elect to withdraw his request to include Registrable
Securities in such registration or may reduce the number requested to be
included; provided, however, that (x) such request must be made in writing
prior to the earlier of the execution of the underwriting agreement or the
execution of the custody agreement with respect to such registration and
(y) such withdrawal shall be irrevocable and, after making such withdrawal,
such Holder shall no longer have any right to include Registrable
Securities in the registration as to which such withdrawal was made.
(b) If any requested registration made at any time after
18 months following the date hereof pursuant to Section 2.1 involves an
underwritten offering and the Manager shall advise the Company that, in its
view, the number of securities requested to be included in such
registration by the Holders of Registrable Securities or any other persons
(including those shares of Common Stock requested by the Company to be
included in such registration) exceeds the largest number (the "Section
2.3(b) Sale Number") that can be sold in an orderly manner in such offering
within a price range acceptable to the Initiating Holders, the Company
shall use its commercially reasonable efforts to include in such
registration:
(i) first, all Registrable Securities requested
to be included in such registration by the Holders; provided,
however, that, if the number of such Registrable Securities
exceeds the Section 2.3(b) Sale Number, the number of such
Registrable Securities (not to exceed the Section 2.3(b) Sale
Number) to be included in such registration shall be allocated on
a pro rata basis among all Holders requesting that Registrable
Securities be included in such registration, based on the number
of Registrable Securities then owned by each such Holder
requesting inclusion in relation to the number of Registrable
Securities owned by all Holders requesting inclusion;
(ii) second, to the extent that the number of
securities to be included pursuant to clause (i) of this Section
2.3(b) is less than the Section 2.3(b) Sale Number, the remaining
shares to be included in such registration shall be allocated on a
pro rata basis among all holders requesting that Piggyback Shares
(including Ciba Registrable Securities) be included in such
registration pursuant to the exercise of Additional Piggyback
Rights, based on the aggregate number of Piggyback Shares then
owned by each holder requesting inclusion in relation to the
aggregate number of Piggyback Shares owned by all holders
requesting inclusion, up to the Section 2.3(b) Sale Number; and
(iii) third, to the extent that the number of
securities to be included pursuant to clauses (i) and (ii) of this
Section 2.3(b) is less than the Section 2.3(b) Sale Number, any
securities that the Company proposes to register, up to the
Section 2.3(b) Sale Number.
If, as a result of the proration provisions of this
Section 2.3(b), any Holder shall not be entitled to include all Registrable
Securities in a registration that such Holder has requested be included,
such Holder may elect to withdraw his request to include Registrable
Securities in such registration or may reduce the number requested to be
included; provided, however, that (x) such request must be made in writing
prior to the earlier of the execution of the underwriting agreement or the
execution of the custody agreement with respect to such registration and
(y) such withdrawal shall be irrevocable and, after making such withdrawal,
such Holder shall no longer have any right to include Registrable
Securities in the registration as to which such withdrawal was made.
(c) If any registration pursuant to Section 2.2 involves
an underwritten offering that was initially proposed by the Company prior
to the first anniversary of the date hereof as a primary registration of
its securities and the Manager shall advise the Company that, in its view,
the number of securities requested to be included in such registration
exceeds the number (the "Section 2.3(c) Sale Number") that can be sold in
an orderly manner in such registration within a price range acceptable to
the Company, the Company shall include in such registration:
(i) first, all Ciba Registrable Securities
requested to be included in such registration by the holders of
such securities; provided, however, that, if the number of such
Ciba Registrable Securities exceeds the Section 2.3(c) Sale
Number, the number of such Ciba Registrable Securities (not to
exceed the Section 2.3(c) Sale Number) to be included in such
registration shall be allocated on a pro rata basis among all
holders requesting that Ciba Registrable Securities be included in
such registration, based on the number of Ciba Registrable
Securities then owned by each such holder requesting inclusion in
relation to the number of Ciba Registrable Securities owned by all
holders requesting inclusion;
(ii) second, to the extent that the number of
securities to be included pursuant to clause (i) of this Section
2.3(c) is less than the Section 2.3(c) Sale Number, any securities
that the Company proposes to register, up to the Section 2.3(c)
Sale Number (the "Company Securities");
(iii) third, to the extent that the number of
securities to be included pursuant to clauses (i) and (ii) of this
Section 2.3(c) is less than the Section 2.3(c) Sale Number, the
remaining shares to be included in such registration shall be
allocated on a pro rata basis among all Holders requesting that
Registrable Securities be included in such registration, based on
the aggregate number of Registrable Securities then owned by each
holder requesting inclusion in relation to the aggregate number of
Registrable Securities owned by all holders requesting inclusion,
up to the Section 2.3(c) Sale Number; and
(iv) fourth, to the extent that the number of
securities to be included pursuant to clauses (i), (ii) and (iii)
of this Section 2.3(c) is less than the Section 2.3(c) Sale
Number, the remaining shares to be included in such registration
shall be allocated on a pro rata basis among all holders
requesting that Piggyback Shares be included in such registration
pursuant to the exercise of Additional Piggyback Rights, based on
the aggregate number of Piggyback Shares then owned by each holder
requesting inclusion in relation to the aggregate number of
Piggyback Shares owned by all holders requesting inclusion, up to
the Section 2.3(c) Sale Number.
(d) If any registration pursuant to Section 2.2 involves
an underwritten offering that was initially proposed by the Company after
the first anniversary of the date hereof but prior to 18 months after the
date hereof as a primary registration of its securities and the Manager
shall advise the Company that, in its view, the number of securities
requested to be included in such registration exceeds the number (the
"Section 2.3(d) Sale Number") that can be sold in an orderly manner in such
registration within a price range acceptable to the Company, the Company
shall include in such registration:
(i) first, all Common Stock that the Company
proposes to register for its own account;
(ii) second, to the extent that the number of
securities to be included pursuant to clause (i) of this Section
2.3(d) is less than the Section 2.3(d) Sale Number, the remaining
shares to be included in such registration shall be allocated on a
pro rata basis among all holders requesting that Ciba Registrable
Securities be included in such registration, based on the
aggregate number of Ciba Registrable Securities then owned by each
holder requesting inclusion in relation to the aggregate number of
Ciba Registrable Securities owned by all holders requesting
inclusion, up to the Section 2.3(d) Sale Number;
(iii) third, to the extent that the number of
securities to be included pursuant to clauses (i) and (ii) of this
Section 2.3(d) is less than the Section 2.3(d) Sale Number, the
remaining shares to be included in such registration shall be
allocated on a pro rata basis among all Holders requesting that
Registrable Securities be included in such registration, based on
the aggregate number of Registrable Securities then owned by each
holder requesting inclusion in relation to the aggregate number of
Registrable Securities owned by all holders requesting inclusion,
up to the Section 2.3(d) Sale Number; and
(iv) fourth, to the extent the number of securities
to be included pursuant to clauses (i), (ii) and (iii) of this
Section 2.3(d) is less than the Section 2.3(d) Sale Number, the
remaining shares to be included in such registration shall be
allocated on a pro rata basis among all holders requesting that
Piggyback Shares be included in such registration pursuant to the
exercise of Additional Piggyback Rights, based on the aggregate
number of Piggyback Shares then owned by each holder requesting
inclusion in relation to the aggregate number of Piggyback Shares
owned by all holders requesting inclusion, up to the Section
2.3(d) Sale Number.
(e) If any registration pursuant to Section 2.2 involves
an underwritten offering that was initially proposed by the Company at any
time after 18 months following the date hereof as a primary registration of
its securities and the Manager shall advise the Company that, in its view,
the number of securities requested to be included in such registration
exceeds the number (the "Section 2.3(e) Sale Number") that can be sold in
an orderly manner in such registration within a price range acceptable to
the Company, the Company shall include in such registration:
(i) first, all Common Stock that the Company
proposes to register for its own account;
(ii) second, to the extent that the number of
securities to be included pursuant to clause (i) of this Section
2.3(e) is less than the Section 2.3(e) Sale Number, the remaining
shares to be included in such registration shall be allocated on a
pro rata basis among all holders requesting that Registrable
Securities or Ciba Registrable Securities be included in such
registration, based on the aggregate number of Registrable
Securities and Ciba Registrable Securities then owned by each
holder requesting inclusion in relation to the aggregate number of
Registrable Securities and Ciba Registrable Securities owned by
all holders requesting inclusion, up to the Section 2.3(e) Sale
Number; and
(iii) third, to the extent the number of
securities to be included pursuant to clauses (i) and (ii) of this
Section 2.3(e) is less than the Section 2.3(e) Sale Number, the
remaining shares to be included in such registration shall be
allocated on a pro rata basis among all holders requesting that
Piggyback Shares be included in such registration pursuant to the
exercise of Additional Piggyback Rights, based on the aggregate
number of Piggyback Shares then owned by each holder requesting
inclusion in relation to the aggregate number of Piggyback Shares
owned by all holders requesting inclusion, up to the Section
2.3(e) Sale Number.
(f) If any registration pursuant to Section 2.2 involves
an underwritten offering that was initially proposed prior to 18 months
after the date hereof by holders of securities of the Company that have the
right to require such registration ("Additional Demand Rights") and the
Manager shall advise the Company that, in its view, the number of
securities requested to be included in such registration exceeds the number
(the "Section 2.3(f) Sale Number") that can be sold in an orderly manner in
such registration within a price range acceptable to the Company, the
Company shall include in such registration:
(i) first, all Ciba Registrable Securities
requested to be included in such registration by the holders of
such securities; provided, however, that, if the number of such
Ciba Registrable Securities exceeds the Section 2.3(f) Sale
Number, the number of such Ciba Registrable Securities (not to
exceed the Section 2.3(f) Sale Number) to be included in such
registration shall be allocated on a pro rata basis among all
holders requesting that Ciba Registrable Securities be included in
such registration, based on the number of Ciba Registrable
Securities then owned by each such holder requesting inclusion in
relation to the number of Ciba Registrable Securities owned by all
holders requesting inclusion;
(ii) second, to the extent that the number of
securities to be included pursuant to clause (i) of this Section
2.3(f) is less than the Section 2.3(f) Sale Number, the remaining
shares to be included in such registration shall be allocated on a
pro rata basis among holders requesting that securities be
included in such registration pursuant to Additional Demand Rights
("Additional Registrable Securities"), based on the aggregate
number of Additional Registrable Securities then owned by each
holder requesting inclusion in relation to the aggregate number of
Additional Registrable Securities owned by all holders requesting
inclusion, up to the Section 2.3(f) Sale Number;
(iii) third, to the extent that the number of
securities to be included pursuant to clauses (i) and (ii) of this
Section 2.3(f) is less than the Section 2.3(f) Sale Number, the
remaining shares to be included in such registration shall be
allocated on a pro rata basis among all Holders requesting that
Registrable Securities be included in such registration, based on
the aggregate number of Registrable Securities then owned by each
holder requesting inclusion in relation to the aggregate number of
Registrable Securities owned by all holders requesting inclusion,
up to the Section 2.3(f) Sale Number;
(iv) fourth, to the extent the number of
securities to be included pursuant to clauses (i), (ii) and (iii)
of this Section 2.3(f) is less than the Section 2.3(f) Sale
Number, any Common Stock that the Company proposes to register for
its own account, up to the Section 2.3(f) Sale Number; and
(v) five, to the extent that the number of
securities to be included pursuant to clauses (i), (ii), (iii) and
(iv) of this Section 2.3(f) is less than the Section 2.3(f) Sale
Number, the remaining shares to be included in such registration
shall be allocated on a pro rata basis among all holders
requesting that Piggyback Shares be included in such registration
pursuant to the exercise of Additional Piggyback Rights, based on
the aggregate number of Piggyback Shares then owned by each holder
requesting inclusion in relation to the aggregate number of
Piggyback Shares owned by all holders requesting inclusion, up to
the Section 2.3(f) Sale Number.
(g) If any registration pursuant to Section 2.2 involves
an underwritten offering that was initially proposed after 18 months
following the date hereof by holders of securities of the Company that have
Additional Demand Rights and the Manager shall advise the Company that, in
its view, the number of securities requested to be included in such
registration exceeds the number (the "Section 2.3(g) Sale Number") that can
be sold in an orderly manner in such registration within a price range
acceptable to the Company, the Company shall include in such registration:
(i) first, all securities requested to be
included in such registration by the holders of Additional Demand
Rights ("Additional Registrable Securities"); provided, however,
that, if the number of such Additional Registrable Securities
exceeds the Section 2.3(g) Sale Number, the number of such
Additional Registrable Securities (not to exceed the Section
2.3(g) Sale Number) to be included in such registration shall be
allocated on a pro rata basis among all holders of Additional
Registrable Securities requesting that Additional Registrable
Securities be included in such registration, based on the number
of Additional Registrable Securities then owned by each such
holders requesting inclusion in relation to the number of
Additional Registrable Securities owned by all of such holders
requesting inclusion;
(ii) second, to the extent that the number of
securities to be included pursuant to clause (i) of this Section
2.3(g) is less than the Section 2.3(g) Sale Number, the remaining
shares to be included in such registration shall be allocated on a
pro rata basis among all holders requesting that Registrable
Securities or Ciba Registrable Securities be included in such
registration, based on the aggregate number of Registrable
Securities and Ciba Registrable Securities then owned by each
holder requesting inclusion in relation to the aggregate number of
Registrable Securities and Ciba Registrable Securities owned by
all holders requesting inclusion, up to the Section 2.3(g) Sale
Number;
(iii) third, to the extent the number of
securities to be included pursuant to clauses (i) and (ii) of this
Section 2.3(g) is less than the Section 2.3(g) Sale Number, any
Common Stock that the Company proposes to register for its own
account, up to the Section 2.3(g) Sale Number; and
(iv) fourth, to the extent that the number of
securities to be included pursuant to clauses (i), (ii), and (iii)
of this Section 2.3(g) is less than the Section 2.3(g) Sale
Number, the remaining shares to be included in such registration
shall be allocated on a pro rata basis among all holders
requesting that Piggyback Shares be included in such registration
pursuant to the exercise of Additional Piggyback Rights, based on
the aggregate number of Piggyback Shares then owned by each holder
requesting inclusion in relation to the aggregate number of
Piggyback Shares owned by all holders requesting inclusion, up to
the Section 2.3(g) Sale Number.
2.4. Registration Procedures. If and whenever the Company is
required by the provisions of this Agreement to use its commercially
reasonable efforts to effect or cause the registration of any Registrable
Securities under the Securities Act as provided in this Agreement, the
Company shall, as expeditiously as possible:
(a) prepare and file with the SEC a registration
statement on an appropriate registration form of the SEC for the
disposition of such Registrable Securities in accordance with the intended
method of disposition thereof, which form shall be selected by the Company
and shall comply as to form in all material respects with the requirements
of the applicable form and include all financial statements required by the
SEC to be filed therewith, and the Company shall use its commercially
reasonable efforts to cause such registration statement to become and
remain effective (provided, however, that before filing a registration
statement or prospectus or any amendments or supplements thereto, or
comparable statements under securities or blue sky laws of any
jurisdiction, the Company will furnish to one counsel for the Holders
participating in the planned offering (selected by the Initiating Holders,
in the case of a registration pursuant to Section 2.1, and selected by the
lead managing underwriter, in the case of a registration pursuant to
Section 2.2) and the lead managing underwriter, if any, copies of all such
documents proposed to be filed (including all exhibits thereto), which
documents will be subject to the reasonable review and reasonable comment
of such counsel, and the Company shall not file any registration statement
or amendment thereto or any prospectus or supplement thereto to which the
Holders of a majority of the Registrable Securities covered by such
registration statement or the underwriters, if any, shall reasonably
object);
(b) prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration
statement effective for such period as any seller of Registrable Securities
pursuant to such registration statement shall request and to comply with
the provisions of the Securities Act with respect to the sale or other
disposition of all Registrable Securities covered by such registration
statement in accordance with the intended methods of disposition by the
seller or sellers thereof set forth in such registration statement;
(c) furnish, without charge, to each seller of such
Registrable Securities and each underwriter, if any, of the securities
covered by such registration statement such number of copies of such
registration statement, each amendment and supplement thereto (in each case
including all exhibits), and the prospectus included in such registration
statement (including each preliminary prospectus) in conformity with the
requirements of the Securities Act, and other documents, as such seller and
underwriter may reasonably request in order to facilitate the public sale
or other disposition of the Registrable Securities owned by such seller
(the Company hereby consenting to the use in accordance with all applicable
law of each such registration statement (or amendment or post-effective
amendment thereto) and each such prospectus (or preliminary prospectus or
supplement thereto) by each such seller of Registrable Securities and the
underwriters, if any, in connection with the offering and sale of the
Registrable Securities covered by such registration statement or
prospectus);
(d) use its commercially reasonable efforts to register
or qualify the Registrable Securities covered by such registration
statement under such other securities or "blue sky" laws of such
jurisdictions as any sellers of Registrable Securities or any managing
underwriter, if any, shall reasonably request in writing, and do any and
all other acts and things which may be reasonably necessary or advisable to
enable such sellers or underwriter, if any, to consummate the disposition
of the Registrable Securities in such jurisdictions, except that in no
event shall the Company be required to qualify to do business as a foreign
corporation in any jurisdiction where it would not, but for the
requirements of this paragraph (d), be required to be so qualified, to
subject itself to taxation in any such jurisdiction or to consent to
general service of process in any such jurisdiction;
(e) promptly notify each Holder selling Registrable
Securities covered by such registration statement and each managing
underwriter, if any: (i) when the registration statement, any pre-effective
amendment, the prospectus or any prospectus supplement related thereto or
post-effective amendment to the registration statement has been filed and,
with respect to the registration statement or any post-effective amendment,
when the same has become effective; (ii) of any request by the SEC or state
securities authority for amendments or supplements to the registration
statement or the prospectus related thereto or for additional information;
(iii) of the issuance by the SEC of any stop order suspending the
effectiveness of the registration statement or the initiation of any
proceedings for that purpose; (iv) of the receipt by the Company of any
notification with respect to the suspension of the qualification of any
Registrable Securities for sale under the securities or blue sky laws of
any jurisdiction or the initiation of any proceeding for such purpose; (v)
of the existence of any fact of which the Company becomes aware which
results in the registration statement, the prospectus related thereto or
any document incorporated therein by reference containing an untrue
statement of a material fact or omitting to state a material fact required
to be stated therein or necessary to make any statement therein not
misleading; and (vi) if at any time the representations and warranties
contemplated by any underwriting agreement, securities sale agreement, or
other similar agreement, relating to the offering shall cease to be true
and correct in all material respects; and, if the notification relates to
an event described in clause (v), the Company shall promptly prepare and
furnish to each such seller and each underwriter, if any, a reasonable
number of copies of a prospectus supplemented or amended so that, as
thereafter delivered to the purchasers of such Registrable Securities, such
prospectus shall not include an untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make
the statements therein in the light of the circumstances under which they
were made not misleading;
(f) comply with all applicable rules and regulations of
the SEC, and make generally available to its security holders, as soon as
reasonably practicable after the effective date of the registration
statement (and in any event within 16 months thereafter), an earnings
statement (which need not be audited) covering the period of at least
twelve consecutive months beginning with the first day of the Company's
first calendar quarter after the effective date of the registration
statement, which earnings statement shall satisfy the provisions of Section
11(a) of the Securities Act and Rule 158 thereunder;
(g) (i) cause all such Registrable Securities covered by
such registration statement to be listed on the New York Stock Exchange or
the principal securities exchange on which similar securities issued by the
Company are then listed (if any), if the listing of such Registrable
Securities is then permitted under the rules of such exchange, or (ii) if
no similar securities are then so listed, to either cause all such
Registrable Securities to be listed on a national securities exchange or to
secure designation of all such Registrable Securities as a Nasdaq National
Market "national market system security" within the meaning of Rule 11Aa2-1
of the Exchange Act or, failing that, secure Nasdaq National Market
authorization for such shares and, without limiting the generality of the
foregoing, take all actions that may be required by the Company as the
issuer of such Registrable Securities in order to facilitate the managing
underwriter's arranging for the registration of at least two market makers
as such with respect to such shares with the National Association of
Securities Dealers, Inc. (the "NASD");
(h) provide and cause to be maintained a transfer agent
and registrar for all such Registrable Securities covered by such
registration statement not later than the effective date of such
registration statement;
(i) enter into such customary agreements (including, if
applicable, an underwriting agreement) and take such other actions as the
Holders of a majority of the Registrable Securities participating in such
offering shall reasonably request in order to expedite or facilitate the
disposition of such Registrable Securities (it being understood that the
Holders of the Registrable Securities which are to be distributed by any
underwriters shall be parties to any such underwriting agreement and may,
at their option, require that the Company make to and for the benefit of
such Holders the representations, warranties and covenants of the Company
which are being made to and for the benefit of such underwriters);
(j) use its commercially reasonable efforts to obtain an
opinion from the Company's counsel and a "cold comfort" letter from the
Company's independent public accountants in customary form and covering
such matters as are customarily covered by such opinions and "cold comfort"
letters delivered to underwriters in underwritten public offerings, which
opinion and letter shall be reasonably satisfactory to the underwriter, if
any, and furnish to each Holder participating in the offering and to each
underwriter, if any, a copy of such opinion and letter addressed to such
Holder or underwriter;
(k) deliver promptly to each Holder participating in the
offering and each underwriter, if any, copies of all correspondence between
the SEC and the Company, its counsel or auditors and all memoranda relating
to discussions with the SEC or its staff with respect to the registration
statement, other than those portions of any such memoranda which contain
information subject to attorney-client privilege with respect to the
Company, and, upon receipt of such confidentiality agreements as the
Company may reasonably request, make reasonably available for inspection by
any seller of such Registrable Securities covered by such registration
statement, by any underwriter, if any, participating in any disposition to
be effected pursuant to such registration statement and by any attorney,
accountant or other agent retained by any such seller or any such
underwriter, all pertinent financial and other records, pertinent corporate
documents and properties of the Company, and cause all of the Company's
officers, directors and employees to supply all information reasonably
requested by any such seller, underwriter, attorney, accountant or agent in
connection with such registration statement;
(l) use its commercially reasonable efforts to obtain the
withdrawal of any order suspending the effectiveness of the registration
statement;
(m) provide a CUSIP number for all Registrable
Securities, not later than the effective date of the registration
statement;
(n) make reasonably available its employees and personnel
for participation in "road shows" an other marketing efforts and otherwise
provide reasonable assistance to the underwriters (taking into account the
needs of the Company's businesses and the requirements of the marketing
process) in the marketing of Registrable Securities in any underwritten
offering;
(o) promptly prior to the filing of any document which is
to be incorporated by reference into the registration statement or the
prospectus (after the initial filing of such registration statement)
provide copies of such document to counsel for the selling holders of
Registrable Securities and to each managing underwriter, if any, and make
the Company's representatives reasonably available for discussion of such
document and make such changes in such document concerning the selling
holders prior to the filing thereof as counsel for such selling holders or
underwriters may reasonably request;
(p) furnish to the Holder participating in the offering
and the managing underwriter, without charge, at least one signed copy, and
to each other Holder participating in the offering, without charge, at
least one photocopy of a signed copy, of the registration statement and any
post-effective amendments thereto, including financial statements and
schedules, all documents incorporated therein by reference and all exhibits
(including those incorporated by reference);
(q) cooperate with the sellers of Registrable Securities
and the managing underwriter, if any, to facilitate the timely preparation
and delivery of certificates not bearing any restrictive legends
representing the Registrable Securities to be sold, and cause such
Registrable Securities to be issued in such denominations and registered in
such names in accordance with the underwriting agreement prior to any sale
of Registrable Securities to the underwriters or, if not an underwritten
offering, in accordance with the instructions of the sellers of Registrable
Securities at least three business days prior to any sale of Registrable
Securities and instruct any transfer agent and registrar of Registrable
Securities to release any stop transfer orders in respect thereof;
(r) take all such other commercially reasonable actions
as are necessary or advisable in order to expedite or facilitate the
disposition of such Registrable Securities; and
(s) take no direct or indirect action prohibited by
Regulation M under the Exchange Act; provided, however, that to the extent
that any prohibition is applicable to the Company, the Company will take
such action as is necessary to make any such prohibition inapplicable.
The Company may require as a condition precedent to the
Company's obligations under this Section 2.4 that each seller of
Registrable Securities as to which any registration is being effected
furnish the Company such information in writing regarding such seller and
the distribution of such Registrable Securities as the Company may from
time to time reasonably request provided that such information is necessary
for the Company to consummate such registration and shall be used only in
connection with such registration.
Each seller of Registrable Securities agrees that upon
receipt of any notice from the Company of the happening of any event of the
kind described in clause (v) of paragraph (e) of this Section 2.4, such
Holder will discontinue such Holder's disposition of Registrable Securities
pursuant to the registration statement covering such Registrable Securities
until such Holder's receipt of the copies of the supplemented or amended
prospectus contemplated by paragraph (e) of this Section 2.4 and, if so
directed by the Company, will deliver to the Company (at the Company's
expense) all copies, other than permanent file copies, then in such
Holder's possession of the prospectus covering such Registrable Securities
that was in effect at the time of receipt of such notice. In the event the
Company shall give any such notice, the applicable period mentioned in
paragraph (b) of this Section 2.4 shall be extended by the number of days
during such period from and including the date of the giving of such notice
to and including the date when each seller of any Registrable Securities
covered by such registration statement shall have received the copies of
the supplemented or amended prospectus contemplated by paragraph (e) of
this Section 2.4.
If any such registration statement or comparable
statement under "blue sky" laws refers to any Holder by name or otherwise
as the Holder of any securities of the Company, then such Holder shall have
the right to require (i) the insertion therein of language, in form and
substance reasonably satisfactory to such Holder and the Company, to the
effect that the holding by such Holder of such securities is not to be
construed as a recommendation by such Holder of the investment quality of
the Company's securities covered thereby and that such holding does not
imply that such Holder will assist in meeting any future financial
requirements of the Company, or (ii) in the event that such reference to
such Holder by name or otherwise is not in the judgment of the Company, as
advised by counsel, required by the Securities Act or any similar federal
statute or any state "blue sky" or securities law then in force, the
deletion of the reference to such Holder.
2.5. Registration Expenses.
(a) The Company shall pay all Expenses (x) with respect
to any Demand Registration whether or not it becomes effective or remains
effective for the period contemplated by Section 2.4(b) and (y) with
respect to any registration effected under Section 2.2.
(b) Notwithstanding the foregoing, (x) the provisions of
this Section 2.5 shall be deemed amended to the extent necessary to cause
these expense provisions to comply with "blue sky" laws of each state in
which the offering is made and (y) in connection with any registration
hereunder, each Holder of Registrable Securities being registered shall pay
all underwriting discounts and commissions and any transfer taxes, if any,
attributable to the sale of such Registrable Securities, pro rata with
respect to payments of discounts and commissions in accordance with the
number of shares sold in the offering by such Holder, and (z) the Company
shall, in the case of all registrations under this Article 2, be
responsible for all its internal expenses (including, without limitation,
all salaries and expenses of its officers and employees performing legal or
accounting duties).
2.6. Certain Limitations on Registration Rights. In the case of
any registration under Section 2.1 pursuant to an underwritten offering,
or, in the case of a registration under Section 2.2, if the Company has
determined to enter into an underwriting agreement in connection therewith,
all securities to be included in such registration shall be subject to an
underwriting agreement and no Person may participate in such registration
unless such Person agrees to sell such Person's securities on the basis
provided therein and, subject to Section 3.1 hereof, completes and executes
all reasonable questionnaires, and other documents (including custody
agreements and powers of attorney) which must be executed in connection
therewith, and provides such other information to the Company or the
underwriter as may be necessary to register such Person's securities.
2.7. Limitations on Sale or Distribution of Other Securities. (a)
Each seller of Registrable Securities agrees that, (i) to the extent
requested in writing by a managing underwriter, if any, of any registration
effected pursuant to Section 2.1, not to sell, transfer or otherwise
dispose of, including any sale pursuant to Rule 144 under the Securities
Act, any Common Stock, or any other equity security of the Company or any
security convertible into or exchangeable or exercisable for any equity
security of the Company (other than as part of such underwritten public
offering) during the time period reasonably requested by the managing
underwriter, not to exceed 90 days (and the Company hereby also so agrees
(except that the Company may effect any sale or distribution of any such
securities pursuant to a registration on Form S-4 (if reasonably acceptable
to such managing underwriter) or Form S-8, or any successor or similar form
which is then in effect or upon the conversion, exchange or exercise of any
then outstanding Common Stock Equivalent) to use its commercially
reasonable efforts to cause each holder of any equity security or any
security convertible into or exchangeable or exercisable for any equity
security of the Company purchased from the Company at any time other than
in a public offering so to agree), and (ii) to the extent requested in
writing by a managing underwriter of any underwritten public offering
effected by the Company for its own account (it will not sell any Common
Stock (other than as part of such underwritten public offering) during the
time period reasonably requested by the managing underwriter, which period
shall not exceed 90 days.
(b) The Company hereby agrees that, if it shall
previously have received a request for registration pursuant to Section 2.1
or 2.2, and if such previous registration shall not have been withdrawn or
abandoned, the Company shall not sell, transfer, or otherwise dispose of,
any Common Stock, or any other equity security of the Company or any
security convertible into or exchangeable or exercisable for any equity
security of the Company (other than as part of such underwritten public
offering, a registration on Form S-4 or Form S-8 or any successor or
similar form which is then in effect or upon the conversion, exchange or
exercise of any then outstanding Common Stock Equivalent), until a period
of 90 days shall have elapsed from the effective date of such previous
registration; and the Company shall so provide in any registration rights
agreements hereafter entered into with respect to any of its securities.
2.8. No Required Sale. Nothing in this Agreement shall be deemed
to create an independent obligation on the part of any Holder to sell any
Registrable Securities pursuant to any effective registration statement.
2.9. Indemnification. (a) In the event of any registration of any
securities of the Company under the Securities Act pursuant to this Article
2, the Company will, and hereby agrees to, indemnify and hold harmless, to
the fullest extent permitted by law, each Holder of Registrable Securities,
its directors, officers, fiduciaries, employees, stockholders, members or
general and limited partners (and the directors, officers, employees and
stockholders thereof), each other Person who participates as an underwriter
or a Qualified Independent Underwriter, if any, in the offering or sale of
such securities, each officer, director, employee, stockholder, fiduciary,
managing director, agent, affiliates, consultants, representatives,
successors, assigns or partner of such underwriter or Qualified Independent
Underwriter, and each other Person, if any, who controls such Holder or any
such underwriter within the meaning of the Securities Act, from and against
any and all losses, claims, damages or liabilities, joint or several,
actions or proceedings (whether commenced or threatened) and expenses
(including reasonable fees of counsel and any amounts paid in any
settlement effected with the Company's consent, which consent shall not be
unreasonably withheld or delayed) to which each such indemnified party may
become subject under the Securities Act or otherwise in respect thereof
(collectively, "Claims"), insofar as such Claims arise out of or are based
upon (i) any untrue statement or alleged untrue statement of a material
fact contained in any registration statement under which such securities
were registered under the Securities Act or the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, (ii) any untrue
statement or alleged untrue statement of a material fact contained in any
preliminary, final or summary prospectus or any amendment or supplement
thereto, together with the documents incorporated by reference therein, or
the omission or alleged omission to state therein a material fact required
to be stated therein or necessary in order to make the statements therein,
in the light of the circumstances under which they were made, not
misleading, or (iii) any violation by the Company of any federal, state or
common law rule or regulation applicable to the Company and relating to
action required of or inaction by the Company in connection with any such
registration, and the Company will reimburse any such indemnified party for
any legal or other expenses reasonably incurred by such indemnified party
in connection with investigating or defending any such Claim as such
expenses are incurred; provided, however, that the Company shall not be
liable to any such indemnified party in any such case to the extent such
Claim arises out of or is based upon any untrue statement or alleged untrue
statement of a material fact or omission or alleged omission of a material
fact made in such registration statement or amendment thereof or supplement
thereto or in any such prospectus or any preliminary, final or summary
prospectus in reliance upon and in conformity with written information
furnished to the Company by or on behalf of such indemnified party
specifically for use therein. Such indemnity and reimbursement of expenses
shall remain in full force and effect regardless of any investigation made
by as on behalf of such indemnified party and shall survive the transfer of
such securities by such Holder.
(b) Each Holder of Registrable Securities that are
included in the securities as to which any registration under Section 2.1
or 2.2 is being effected shall, severally and not jointly, indemnify and
hold harmless (in the same manner and to the same extent as set forth in
paragraph (a) of this Section 2.9) to the extent permitted by law the
Company, its officers and directors, each Person controlling the Company
within the meaning of the Securities Act and all other prospective sellers
and their respective directors, officers, fiduciaries, managing directors,
employees, agents, affiliates, consultants, representatives, successors,
assigns, general and limited partners, stockholders and respective
controlling Persons with respect to any untrue statement or alleged untrue
statement of any material fact in, or omission or alleged omission of any
material fact from, such registration statement, any preliminary, final or
summary prospectus contained therein, or any amendment or supplement
thereto, if such statement or alleged statement or omission or alleged
omission was made in reliance upon and in conformity with written
information furnished to the Company or its representatives by or on behalf
of such Holder specifically for use therein and reimburse such indemnified
party for any legal or other expenses reasonably incurred in connection
with investigating or defending any such Claim as such expenses are
incurred; provided, however, that the aggregate amount which any such
Holder shall be required to pay pursuant to this Section 2.9(b) and
Sections 2.9(c), (e) and (f) shall in no case be greater than the amount of
the net proceeds received by such Holder upon the sale of the Registrable
Securities pursuant to the registration statement giving rise to such
claim. Such indemnity and reimbursement of expenses shall remain in full
force and effect regardless of any investigation made by or on behalf of
such indemnified party and shall survive the transfer of such securities by
such Holder.
(c) Indemnification similar to that specified in the
preceding paragraphs (a) and (b) of this Section 2.9 (with appropriate
modifications) shall be given by the Company and each seller of Registrable
Securities with respect to any required registration or other qualification
of securities under any state securities and "blue sky" laws.
(d) Any Person entitled to indemnification under this
Agreement shall notify promptly the indemnifying party in writing of the
commencement of any action or proceeding with respect to which a claim for
indemnification may be made pursuant to this Section 2.9, but the failure
of any such Person to provide such notice shall not relieve the
indemnifying party of its obligations under the preceding paragraphs of
this Section 2.9, except to the extent the indemnifying party is materially
prejudiced thereby and shall not relieve the indemnifying party from any
liability which it may have to any such Person otherwise than under this
Article 2. In case any action or proceeding is brought against an
indemnified party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to
participate therein and, unless in the reasonable opinion of outside
counsel to the indemnified party a conflict of interest between such
indemnified and indemnifying parties may exist in respect of such claim, to
assume the defense thereof jointly with any other indemnifying party
similarly notified, to the extent that it chooses, with counsel reasonably
satisfactory to such indemnified party, and after notice from the
indemnifying party to such indemnified party that it so chooses, the
indemnifying party shall not be liable to such indemnified party for any
legal or other expenses subsequently incurred by such indemnified party in
connection with the defense thereof other than reasonable costs of
investigation; provided, however, that (i) if the indemnifying party fails
to take reasonable steps necessary to defend diligently the action or
proceeding within 20 days after receiving notice from such indemnified
party; or (ii) if such indemnified party who is a defendant in any action
or proceeding which is also brought against the indemnifying party
reasonably shall have concluded that there may be one or more legal
defenses available to such indemnified party which are not available to the
indemnifying party; or (iii) if representation of both parties by the same
counsel is otherwise inappropriate under applicable standards of
professional conduct, then, in any such case, the indemnified party shall
have the right to assume or continue its own defense as set forth above
(but with no more than one firm of counsel for all indemnified parties in
each jurisdiction, except to the extent any indemnified party or parties
reasonably shall have concluded that there may be legal defenses available
to such party or parties which are not available to the other indemnified
parties or to the extent representation of all indemnified parties by the
same counsel is otherwise inappropriate under applicable standards of
professional conduct) and the indemnifying party shall be liable for any
expenses therefor. No indemnifying party shall, without the written consent
of the indemnified party, which consent shall not be unreasonably withheld,
effect the settlement or compromise of, or consent to the entry of any
judgment with respect to, any pending or threatened action or claim in
respect of which indemnification or contribution may be sought hereunder
(whether or not the indemnified party is an actual or potential party to
such action or claim) unless such settlement, compromise or judgment (A)
includes an unconditional release of the indemnified party from all
liability arising out of such action or claim and (B) does not include a
statement as to or an admission of fault, culpability or a failure to act,
by or on behalf of any indemnified party.
(e) If for any reason the foregoing indemnity is
unavailable or is insufficient to hold harmless an indemnified party under
Sections 2.9(a), (b) or (c), then each indemnifying party shall contribute
to the amount paid or payable by such indemnified party as a result of any
Claim in such proportion as is appropriate to reflect the relative fault of
the indemnifying party, on the one hand, and the indemnified party, on the
other hand, with respect to such offering of securities. The relative fault
shall be determined by reference to, among other things, whether the untrue
or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the
indemnifying party or the indemnified party and the parties' relative
intent, knowledge, access to information and opportunity to correct or
prevent such untrue statement or omission. If, however, the allocation
provided in the second preceding sentence is not permitted by applicable
law, then each indemnifying party shall contribute to the amount paid or
payable by such indemnified party in such proportion as is appropriate to
reflect not only such relative faults but also the relative benefits of the
indemnifying party and the indemnified party as well as any other relevant
equitable considerations. The parties hereto agree that it would not be
just and equitable if contributions pursuant to this Section 2.9(e) were to
be determined by pro rata allocation or by any other method of allocation
which does not take account of the equitable considerations referred to in
the preceding sentences of this Section 2.9(e). The amount paid or payable
in respect of any Claim shall be deemed to include any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such Claim. No Person guilty of fraudulent
misrepresentation (within the meaning of section 11(f) of the Securities
Act) shall be entitled to contribution from any Person who was not guilty
of such fraudulent misrepresentation. Notwithstanding anything in this
section 2.9(e) to the contrary, no indemnifying party (other than the
Company) shall be required pursuant to this section 2.9(e) to contribute
any amount in excess of the net proceeds received by such indemnifying
party from the sale of Registrable Securities in the offering to which the
losses, claims, damages or liabilities of the indemnified parties relate,
less the amount of any indemnification payment made by such indemnifying
party pursuant to Sections 2.9(b) and (c).
(f) The indemnity and contribution agreements contained
herein shall be in addition to any other rights to indemnification or
contribution which any indemnified party may have pursuant to law or
contract and shall remain operative and in full force and effect regardless
of any investigation made or omitted by or on behalf of any indemnified
party and shall survive the transfer of the Registrable Securities by any
such party.
(g) The indemnification and contribution required by this
Section 2.9 shall be made by periodic payments of the amount thereof during
the course of the investigation or defense, as and when bills are received
or expense, loss, damage or liability is incurred.
3. Underwritten Offerings.
3.1. Requested Underwritten Offerings. If requested by the
underwriters for any underwritten offering by the Investors pursuant to a
registration requested under Section 2.1, the Company shall enter into a
customary underwriting agreement with the underwriters. Such underwriting
agreement shall be satisfactory in form and substance to the Initiating
Holders and shall contain such representations and warranties by, and such
other agreements on the part of, the Company and such other terms as are
generally prevailing in agreements of that type, including, without
limitation, indemnities and contribution agreements on substantially the
same terms as those contained herein. Any Holder participating in the
offering shall be a party to such underwriting agreement and may, at its
option, require that any or all of the representations and warranties by,
and the other agreements on the part of, the Company to and for the benefit
of such underwriters shall also be made to and for the benefit of such
Holder and that any or all of the conditions precedent to the obligations
of such underwriters under such underwriting agreement be conditions
precedent to the obligations of such Holder; provided, however, that the
Company shall not be required to make any representations or warranties
with respect to written information specifically provided by a selling
Holder for inclusion in the registration statement. Each such Holder shall
not be required to make any representations or warranties to or agreements
with the Company or the underwriters other than representations, warranties
or agreements regarding such Holder, its ownership of and title to the
Registrable Securities, and its intended method of distribution; and any
liability of such Holder to any underwriter or other Person under such
underwriting agreement shall be limited to liability arising from breach of
its representations and warranties and shall be limited to an amount equal
to the proceeds (net of expenses and underwriting discounts and
commissions) that it derives from such registration.
3.2. Piggyback Underwritten Offerings. In the case of a
registration pursuant to Section 2.2 hereof, if the Company shall have
determined to enter into an underwriting agreement in connection therewith,
any Registrable Securities to be included in such registration shall be
subject to such underwriting agreement. Any Holder participating in such
registration may, at its option, require that any or all of the
representations and warranties by, and the other agreements on the part of,
the Company to and for the benefit of such underwriters shall also be made
to and for the benefit of such Holder and that any or all of the conditions
precedent to the obligations of such underwriters under such underwriting
agreement be conditions precedent to the obligations of such Holder. Each
such Holder shall not be required to make any representations or warranties
to or agreements with the Company or the underwriters other than
representations, warranties or agreements regarding such Holder, its
ownership of and title to the Registrable Securities, and its intended
method of distribution; and any liability of such Holder to any underwriter
or other Person under such underwriting agreement shall be limited to
liability arising from breach of its representations and warranties and
shall be limited to an amount equal to the proceeds (net of expenses and
underwriting discounts and commissions) that it derives from such
registration.
4. General.
4.1. Adjustments Affecting Registrable Securities. The Company
agrees that it shall not effect or permit to occur any combination or
subdivision of shares of Common Stock which would adversely affect the
ability of any Holder of any Registrable Securities to include such
Registrable Securities in any registration contemplated by this Agreement
or the marketability of such Registrable Securities in any such
registration. The Company agrees that it will take all reasonable steps
necessary to effect a subdivision of shares if in the reasonable judgment
of (a) the Initiating Holders or (b) the managing underwriter for the
offering in respect of such Demand Registration Request, such subdivision
would enhance the marketability of the Registrable Securities. Each Holder
agrees to vote all of its shares of capital stock in a manner, and to take
all other actions necessary, to permit the Company to carry out the intent
of the preceding sentence including, without limitation, voting in favor of
an amendment to the Company's Certificate of Incorporation in order to
increase the number of authorized shares of capital stock of the Company.
4.2. Rule 144. The Company covenants that (i) so long as it
remains subject to the reporting provisions of the Exchange Act, it will
timely file the reports required to be filed by it under the Securities Act
or the Exchange Act (including, but not limited to, the reports under
Sections 13 and 15(d) of the Exchange Act referred to in subparagraph
(c)(1) of Rule 144 under the Securities Act), and (ii) will take such
further action as any Holder of Registrable Securities may reasonably
request, all to the extent required from time to time to enable such Holder
to sell Registrable Securities without registration under the Securities
Act within the limitation of the exemptions provided by (A) Rule 144 under
the Securities Act, as such Rule may be amended from time to time, or (B)
any similar rule or regulation hereafter adopted by the SEC. Upon the
request of any Holder of Registrable Securities, the Company will deliver
to such Holder a written statement as to whether it has complied with such
requirements.
4.3. Nominees for Beneficial Owners. If Registrable Securities are
held by a nominee for the beneficial owner thereof, the beneficial owner
thereof may, at its option, be treated as the Holder of such Registrable
Securities for purposes of any request or other action by any Holder or
Holders of Registrable Securities pursuant to this Agreement (or any
determination of any number or percentage of shares constituting
Registrable Securities held by any Holder or Holders of Registrable
Securities contemplated by this Agreement), provided that the Company shall
have received assurances reasonably satisfactory to it of such beneficial
ownership.
4.4 Amendments and Waivers. The terms and provisions of this
Agreement may be modified or amended, or any of the provisions hereof
waived, temporarily or permanently, in a writing executed and delivered by
the Company and the Investors. No waiver of any of the provisions of this
Agreement shall be deemed to or shall constitute a waiver of any other
provision hereof (whether or not similar). No delay on the part of any
party in exercising any right, power or privilege hereunder shall operate
as a waiver thereof.
4.5. Notices. Except as otherwise provided in this Agreement, all
notices, requests, consents and other communications hereunder to any party
shall be deemed to be sufficient if contained in a written instrument
delivered in person or by telecopy (with a confirmatory copy sent by a
different means within three business days of such notice), nationally
recognized overnight courier or first class registered or certified mail,
return receipt requested, postage prepaid, addressed to such party at the
address set forth below or such other address as may hereafter be
designated in writing by such party to the other parties:
(i) if to the Company, to:
Hexcel Corporation
Two Stamford Plaza
281 Tresser Boulevard
16th Floor
Stamford, Connecticut 06901-3238
Telecopy No.: (203) 358-3972
Attention: Ira J. Krakower, Esq.
Vice President, General Counsel and Secretary
with a copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
Four Times Square
New York, New York 10036
Telecopy No.: (212) 735-2000
Attention: Joseph A. Coco, Esq.
and
Paul, Weiss, Rifkind, Wharton & Garrison
1285 Avenue of the Americas
New York, New York 10019-6064
Telecopy No.: (212) 757-3990
Attention: Judith R. Thoyer, Esq.
(ii) if to the Holders:
c/o GS Capital Partners 2000, L.P.
85 Broad Street
New York, New York 10004
Telecopy: (212) 357-5505
Attention: Mr. Sanjeev Mehra
with a copy to:
Fried, Frank, Harris, Shriver & Jacobson
One New York Plaza
New York, New York 10004
Telecopy: (212) 859-8587
Attention: Robert C. Schwenkel, Esq.
All such notices, requests, consents and other communications shall be
deemed to have been given when received.
4.6. Miscellaneous.
(a) This Agreement shall be binding upon and inure to the
benefit of and be enforceable by the parties hereto and the respective
successors, personal representatives and assigns of the parties hereto,
whether so expressed or not. If any Person shall acquire Registrable
Securities from any Holder, in any manner, whether by operation of law or
otherwise, but in compliance with the Governance Agreement, such Person
shall promptly notify the Company and such Registrable Securities acquired
from such Holder shall be held subject to all of the terms of this
Agreement, and by taking and holding such Registrable Securities such
Person shall be entitled to receive the benefits of and be conclusively
deemed to have agreed to be bound by and to perform all of the terms and
provisions of this Agreement. Any such successor or assign shall agree in
writing to acquire and hold the Registrable Securities acquired from such
Holder subject to all of the terms hereof. If any Holder shall acquire
additional Registrable Securities, such Registrable Securities shall be
subject to all of the terms, and entitled to all the benefits, of this
Agreement.
(b) This Agreement (with the documents referred to herein
or delivered pursuant hereto), together with the Agreement, dated as of
October 11, 2000, between the Company and the Investors, and the Governance
Agreement, embodies the entire agreement and understanding between the
parties hereto and supersedes all prior agreements and understandings
relating to the subject matter hereof.
(c) This Agreement shall be construed and enforced in
accordance with and governed by the laws of the State of New York without
giving effect to the conflicts of law principles thereof other than
Sections 5-1401 and 5-1402 of the New York General Obligations Law.
(d) Each of the parties hereto hereby irrevocably and
unconditionally consents to submit to the exclusive jurisdiction of the
courts of the State of New York and of the United States of America, in
each case located in the County of New York, for any claim, action, suit,
or proceeding ("Litigation") arising out of or relating to this Agreement
and the transactions contemplated hereby (and agrees not to commence any
Litigation relating hereto or thereto except in such courts), and further
agrees that service of any process, summons, notice or document by U.S.
registered mail to its respective address set forth in this Agreement shall
be effective service of process for any Litigation brought against it in
any such court. Each of the parties hereto hereby irrevocably and
unconditionally waives any objection to the laying of venue of any
Litigation arising out of this Agreement or the transactions contemplated
hereby in the courts of the State of New York or the United States of
America, in each case located in the County of New York, hereby further
irrevocably and unconditionally waives and agrees not to plead or claim in
any such court that any such Litigation brought in any such court has been
brought in an inconvenient forum.
(e) The Company and the Investors hereby waive any right
they may have to a trial by jury in respect of any action, proceeding or
litigation directly or indirectly arising out of, under or in connection
with this agreement or the transaction documents.
(f) The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
All section references are to this Agreement unless otherwise expressly
provided.
(g) This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
(h) Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the remaining
terms and provisions of this Agreement or affecting the validity or
enforceability of any of the terms or provisions of this Agreement in any
other jurisdiction.
(i) The parties hereto acknowledge that there would be no
adequate remedy at law if any party fails to perform any of its obligations
hereunder, and accordingly agree that each party, in addition to any other
remedy to which it may be entitled at law or in equity, shall be entitled
to injunctive relief, including specific performance, to enforce such
obligations without the posting of any bond, and, if any action should be
brought in equity to enforce any of the provisions of this Agreement, none
of the parties hereto shall raise the defense that there is an adequate
remedy at law.
(h) Each party hereto shall do and perform or cause to be
done and performed all such further acts and things and shall execute and
deliver all such other agreements, certificates, instruments, and documents
as any other party hereto reasonably may request in order to carry out the
intent and accomplish the purposes of this Agreement and the consummation
of the transactions contemplated hereby.
4.7. No Inconsistent Agreements. The rights granted to the Holders
of Registrable Securities hereunder do not in any way conflict with and are
not inconsistent with any other agreements to which the Company is a party
or by which it is bound. Without the prior written consent of Holders of a
majority of the then outstanding Registrable Securities, the Company will
not, on or after the date of this Agreement, enter into any agreement with
respect to its securities which is inconsistent with the rights granted in
this Agreement or otherwise conflicts with the provisions hereof, other
than any lock-up agreement with the underwriters in connection with any
registered offering effected hereunder, pursuant to which the Company shall
agree not to register for sale, and the Company shall agree not to sell or
otherwise dispose of, Common Stock or any securities convertible into or
exercisable or exchangeable for Common Stock, for a specified period
following the registered offering. The Company further agrees that if any
other registration rights agreement entered into after the date of this
Agreement with respect to any of its securities contains terms which are
more favorable to, or less restrictive on, the other party thereto than the
terms and conditions contained in this Agreement are (insofar as they are
applicable) to the Holders, then the terms and conditions of this Agreement
shall immediately be deemed to have been amended without further action by
the Company or any of the Holders of Registrable Securities so that the
Holders shall each be entitled to the benefit of any such more favorable or
less restrictive terms or conditions.
IN WITNESS WHEREOF, the parties hereto have duly executed
this agreement as of the date first above written.
HEXCEL CORPORATION
By: /s/ Ira Krakower
------------------------------
Name: Ira J. Krakower
Title: Senior Vice President
LXH, L.L.C.
By: GS Capital Partners 2000, L.P.,
its managing member
By: GS Advisors 2000, L.L.C.,
its general partner
By: /s/ John Bowman
-------------------------------
Name: John E. Bowman
Title: Vice President
LXH II, L.L.C.
By: GS Capital Partners 2000 Offshore, L.P.,
its managing member
By: GS Advisors 2000, L.L.C.,
its general partner
By: /s/ John Bowman
-------------------------------
Name: John E. Bowman
Title: Vice President