-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, cMduyRgwt1vO4XGhOMuA1GHffC5PurbTMYA0OG4D5s+yjdp6jc0JcL6fAO5BV0tp xBxuKKFjSPMhatOkxOOnWg== 0000912057-95-000145.txt : 19950607 0000912057-95-000145.hdr.sgml : 19950607 ACCESSION NUMBER: 0000912057-95-000145 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19950106 ITEM INFORMATION: Acquisition or disposition of assets ITEM INFORMATION: Bankruptcy or receivership ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19950123 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: HEXCEL CORP /DE/ CENTRAL INDEX KEY: 0000717605 STANDARD INDUSTRIAL CLASSIFICATION: METAL FORGING & STAMPINGS [3460] IRS NUMBER: 941109521 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-08472 FILM NUMBER: 95502365 BUSINESS ADDRESS: STREET 1: 5794 W LAS POSITAS BLVD CITY: PLEASANTON STATE: CA ZIP: 945888781 BUSINESS PHONE: 5108479500 MAIL ADDRESS: STREET 1: 5794 W LAS POSITAS BLVD CITY: PLEASANTON STATE: CA ZIP: 945888781 8-K 1 FORM 8-K SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ------------------------ FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 -------------------------- Date of Report (Date of earliest event reported) January 6, 1995 --------------- HEXCEL CORPORATION ------------------------------------------------------------- (Exact name of registrant as specified in its charter) Delaware 94-1109521 - -------------------------- -------------------- (State or other jurisdic- (I.R.S. Employer tion of incorporation or Identification No.) organization) 1-8472 ------------------------ (Commission File Number) 5794 West Las Positas Boulevard Pleasanton, California 94588 - -------------------------------- ------- (Address of principal (Zip Code) executive offices) Registrant's telephone number, including area code (510) 847-9500 -------------- ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS. On January 6, 1995 (the "Closing Date"), pursuant to the terms of that certain Asset Purchase Agreement dated as of November 3, 1994 (the "Purchase Agreement") between Hexcel Corporation, a Delaware corporation (the "Registrant") and Northrop Grumman Corporation, a Delaware corporation ("Northrop") (a copy of which Purchase Agreement was filed by the Registrant with the Registrant's Quarterly Report on Form 10-Q dated October 2, 1994 and is incorporated herein by reference), the Registrant closed on the sale to Northrop of its manufacturing facility located in Chandler, Arizona (the "Chandler Facility") and related assets and technology (the "EMT Technology"). The Registrant is currently the subject of a proceeding under chapter 11 of the United States Bankruptcy Code ("Chapter 11") designated as Case No. 93-48535 T before the United States Bankruptcy Court for the Northern District of California (the "Bankruptcy Court"), and the sale of the Chandler Facility and the EMT Technology was approved by the Court by order entered on December 21, 1994. The Chandler Facility was constructed in 1988 by the Registrant primarily to manufacture various materials for the B-2 bomber program. EMT Technology, as developed by the Registrant and sold to Northrop under the Purchase Agreement, enables the design, fabrication, testing and analysis of electromagnetically tailored materials and assemblies that are used to attenuate, alter, control and/or absorb electromagnetic energy. Under the terms of the Purchase Agreement, the Registrant retained a royalty-free, non-exclusive license to use the EMT Technology in non-military applications and will receive royalties from Northrop on certain of their applications of EMT Technology. During a transition period of approximately six months commencing on the Closing Date, the Registrant will move certain of its operations previously carried on at the Chandler Facility (that were not sold to Northrop) to its manufacturing facility in Casa Grande, Arizona. The gross purchase price for the sale of the Chandler Facility and the EMT Technology was $30,000,000 plus the value of existing inventory and certain contingent payments, subject to certain conditions and adjustments. The purchase price for the sale was the result of arm's length negotiations between the Registrant and Northrop and took into account certain claims the parties had against each other, as well as the current requirements of the B-2 bomber program. On the Closing Date, Northrop delivered to the Registrant the net purchase price in an amount equal to $26,545,791, which amount included (i) the $30,000,000 fixed purchase price, (ii) plus $1,139,732 for the estimated value of inventory included in the transfer (final inventory and any required adjustments to the inventory value is expected to occur on February 6, 1995), (iii) less $2,300,000 withheld by Northrop as Transition Insurance (as defined in the Purchase Agreement), as contemplated under the terms of the Purchase Agreement, which amount will be returned to the Registrant upon the satisfaction of certain conditions, (iv) less $2,293,941 as Advanced Agreement Amounts (as defined in the Purchase Agreement), for shipments of parts to Northrop made prior to close as contemplated under the Purchase Agreement. ITEM 3. BANKRUPTCY OR RECEIVERSHIP. CONFIRMATION OF FIRST AMENDED PLAN OF REORGANIZATION The Registrant commenced its Chapter 11 proceeding by filing a voluntary petition for relief under Chapter 11 on December 6, 1993. On January 12, 1995, the Bankruptcy Court entered an order dated January 10, 1995 (the "Confirmation Order") confirming the First Amended Plan of Reorganization, dated as of November 7, 1994 (the "Plan"), which was jointly proposed by the Registrant and The Official Committee of Equity Security Holders of the Registrant (the "Equity Committee"). A copy of the Confirmation Order, which includes the Plan as confirmed, is attached hereto as EXHIBIT 2.1 and is incorporated herein by reference. Set forth below is a summary of the material features of the Plan. GENERAL PROVISIONS OF THE PLAN In general, the Plan provides for the reinstatement or payment in full of all of the Registrant's creditors, except that it provides for the holders of Class 4 Claims, Class 8 Claims and Class 10 Claims to be treated as described below. The Plan provides for the payment in full of allowed administrative expense claims on the effective date of the Plan (the "Effective Date") or in accordance with the terms and conditions of agreements relating to obligations incurred in the ordinary course of business during the pendency of the Registrant's Chapter 11 case or assumed by the Registrant. At the option of the Registrant, priority tax claims will be paid in full on the Effective Date or paid over a six-year period from the date of assessment with interest at the rate of 5% per year. The Plan provides that allowed Class 1 Claims (other priority claims), which the Registrant believes do not exist, will be paid in full on the Effective Date. The Plan provides for the reinstatement of Class 2 Claims (claims of secured creditors), Class 7 Claims (certain environmental claims) that are not disallowed pursuant to a final order), and Class 9 Claims (claims of the holders of the Registrant's 7% Convertible Subordinated Debentures Due 2011 (the "Subordinated Debentures")). The Plan provides that Class 3 Claims (claims relating to outstanding industrial developmemt revenue bond financings ("IDRBs")for the benefit of the Registrant) at the Registrant's and Equity Committee's option shall be paid in full or reinstated. It is the Registrant's and the Equity Committee's intention that the Class 3 Claims be reinstated. The Plan provides that Banque Nationale de Paris ("BNP"), the holder of Class 4 Claims (claims with respect to seven letters of credit issued by BNP (the "BNP Letters of Credit") for the account of the Registrant, in connection with the "IDRBs" will receive on the Effective Date the following: (i) cash in the amount of $181,931.54 for all pre-petition unreimbursed drawings under the seven BNP Letters of Credit, draw fees, letter of credit fees, attorneys' fees, and fees and expenses paid by BNP to the remarketing agent for the IDRBs, (ii) cash in the amount of all post-petition (a) unreimbursed drawings under seven BNP Letters of Credit and unpaid accrued interest thereon at the contract non-default rate and (b) draw fees, letter of credit fees and expenses paid by BNP to the remarketing agent for the IDRBs for which BNP is entitled to reimbursement under the terms of the seven BNP reimbursement agreements between BNP and the Registrant (the "BNP Reimbursement Agreements") pursuant to which the Registrant agreed to reimburse BNP for drawings under the BNP Letters of Credit, and (iii) cash in the amount of $502,000 as payment of a one-time reinstatement and extension fee. The Plan also provides that as of the Effective Date: (i) BNP will extend the expiration date of the seven BNP Letters of Credit to December 31, 1998, (ii) BNP will waive all defaults under the seven BNP Reimbursement Agreements through the Effective Date and in connection with the consummation of the Plan, and (iii) the seven BNP Reimbursement Agreements will be amended to (a) change the covenants so that consummation of the Plan and establishment of the Registrant's new exit financing facility will not result in a default under the BNP Reimbursement Agreements (b) increase the letter of credit commitment fees to 200 basis points per annum, payable quarterly in advance, effective on the Effective Date, (c) increase the interest rate on the Liquidity Reimbursement Obligations (as defined in the BNP Reimbursement Agreements) and (d) contain such other representations, warranties, conditions, covenants and other terms as BNP, the Registrant and the Equity Committee may agree. The Plan also provides that commencing 90 days after the Effective Date and every three months thereafter, until the expiration of the seven BNP Letters of Credit, the Registrant will, at its option either (i) deposit $600,000 in a sinking fund in which BNP and/or the Trustees for the IDRBs will hold a first priority security interest to secure the Registrant's obligations under the BNP Reimbursement Agreements as amended, subject to the right of the Registrant to use all or a portion of the sinking fund to reduce the available amounts of the seven BNP Letters of Credit by the optional redemption of the IDRBs in a like principal amount or (ii) provide a letter of credit in the amount of $600,000 for the benefit of BNP to secure the Registrant's obligations under the BNP Reimbursement Agreements. All net cash proceeds from the sale or other disposition of any property, plant or equipment financed or refinanced by the issuance of the IDRBs supported by the seven BNP Letters of Credit will be applied to the reduction of the available amounts of one or more of the BNP Letters of Credit by optional redemption of the IDRBs or will be deposited into the sinking fund. Such net cash proceeds may, at the option of the Registrant, be credited against the $600,000 quarterly deposit referred to above. In addition, if the Registrant causes one or more of the BNP Letters of Credit to be reduced as the result of the optional redemption of any IDRBs, it may, at its option, credit the amount of such reduction against any sinking fund payments or letters of credit designated by it until the full amount of such reduction has been credited. The Plan provides that allowed Class 5 Claims (general unsecured claims not included in the other Classes) will be paid in full, with interest as provided in the Plan except that the Registrant (i) will not pay interest on any Class 5 Claim that becomes allowed pursuant to a compromise, settlement or judgment that does not expressly provide for the accrual or payment of interest and (ii) will pay interest on any Class 5 Claim that becomes allowed pursuant to a compromise, settlement or judgment that expressly provides for a different rate of interest at such different rate. The Plan provides for the holder of the Class 6 Claims (claims related to certain notes issued to Principal Mutual Life Insurance Company pursuant to two separate Note Agreements) to receive payment on the Effective Date of $35,500,000 plus interest at the rate of 10% per year from October 1, 1994. The holders of Class 8 Claims (certain intercompany claims) will be entitled to receive cash at anytime after September 30, 1998 and, with respect to Class 8A Claims (claims held by the Registrant's subsidiary, Hexcel S.A., Lyon, France), interest semi-annually at the rate of 6.9% per year. The holders of allowed Class 10 Claims (certain claims for rescission or damages brought against the Registrant by persons who traded in the Old Common (as defined below)) will receive $200,000 worth of New Common (as defined below) valued at a price equal to the average of the daily average prices of the New Common for the 20 trading days beginning 30 calendar days following the expiration of the Rights described below. No distributions will be made to holders of Class 10 Claims until all of the allowed claims in Class 10 and the holders thereof have been determined. The holders of Class 11 Claims (claims of holders of Old Common) will be treated as described below. All outstanding options to purchase Old Common representing Class 12 Interests, will remain in effect. ISSUANCE OF NEW COMMON STOCK The Plan also provides that as of the Effective Date, the Registrant's common stock, par value $.01 per share ("Old Common"), will be cancelled and exchanged for (i) one share of the Registrant's new common stock, par value $.01 per share ("New Common") and (ii) subscription rights ("Rights") to purchase New Common. Each stockholder of record on the Effective Date will receive, in exchange for each share of Old Common held of record, one share of New Common plus 1.21273 Rights to purchase New Common. Stockholders are not required to turn in their stock certificates evidencing the Old Common. Each Right entitles the owner to purchase one share of New Common at an exercise price of $4.625 per share. A total of approximately 8,864,865 shares of New Common (the "Offered Shares") may be subscribed for and purchased from the Registrant pursuant to the exercise of the Rights. In addition, each holder of record of Old Common on the Effective Date (and each beneficial owner of stock held of record on the Effective Date by a bank, trust company, depositary or securities broker or dealer) who exercises all of the Rights issued directly to him (or to his institutional nominee for his account) by the Registrant will have the right ("Oversubscription Right") to subscribe for the shares of New Common, if any, which are designated for the "Stockholder Pool," at an exercise price of $4.625 per share and subject to proration in the event that there are insufficient shares designated in the Stockholder Pool to fulfill all exercised Oversubscription Rights. The Stockholder Pool will consist of 75% of the excess of (i) the number of shares of New Common which are subject to Rights which expire unexercised over (ii) 108,108 shares, which will be sold to John J. Lee. Reference is made to the Subscription Rights Plan, which is included in EXHIBIT B to the Confirmation Order and is incorporated by reference herein, for a more complete description of the Rights, the Oversubscription Rights and the method of proration. The Rights, but not the Oversubscription Rights, are transferable. Under the Plan, all outstanding options to purchase Old Common will remain in effect. STANDBY PURCHASE COMMITMENT Mutual Series Fund Inc. ("Mutual Series") entered into a Standby Purchase Commitment dated October 24, 1994, with the Registrant and the Equity Committee (the "Standby Purchase Commitment"), a copy of which is included as EXHIBIT B to the Plan and is incorporated by reference herein. The Plan provides for the Registrant to perform its obligations under the Standby Purchase Commitment. The Standby Purchase Commitment provides that on the Effective Date Mutual Series will purchase from the Registrant 1,945,946 shares of New Common (the "Minimum Shares") for a purchase price of $9,000,000 ($4.625 per share) and lend the Registrant $41,000,000 (the "Advance") upon (i) the receipt from the Registrant of a $500,000 commitment fee, (ii) reimbursement for certain out-of-pocket costs and expenses and (iii) the Registrant entering into a registration rights agreement with Mutual Series, as described below. The Advance will be secured by the proceeds payable to the Registrant from the Rights offering. The Standby Purchase Commitment further provides that upon the consummation of the Rights offering Mutual Series will, subject to receipt of certain payments described below, purchase the Offered Shares not previously purchased from the Registrant pursuant to the exercise of the Rights or the purchase by John J. Lee described below (the "Standby Shares"), at a price of $4.625 per share. Mutual Series will pay the aggregate purchase price of the Standby Shares by the cancellation of a portion of the principal amount of the Advance representing the purchase price of the Standby Shares. At the closing of the sale of the Standby Shares, the Registrant will repay the Advance (to the extent not previously repaid) plus all unpaid interest on the Advance and certain out- of-pocket costs and expenses incurred by Mutual Series. The registration rights agreement between the Registrant and Mutual Series (the "Mutual Registration Rights Agreement") provides that Mutual Series has the right to demand that the Registrant effect the registration for public sale under the Securities Act of 1933, as amended, of the New Common purchased by Mutual Series pursuant to the Standby Purchase Commitment for a period of five years commencing on the date of the closing of the sale of the Standby Shares. Mutual Series may compel registration three times if its investment is less than $30,000,000 and may compel registration five times if its investment is equal to or greater than $30,000,000. Mutual Series is prohibited from compelling more than one registration during any 180-day period and is required to register a certain minimum number of shares of New Common, provided that Mutual Series always has the right to compel a registration with respect to the sale of all of the Registrable Securities then held by it. The Registration Rights Agreement also provides that Mutual Series is entitled to certain "piggy-back" registration rights during such five year time period. Reference is made to the Mutual Registration Rights Agreement, which is included in EXHIBIT B to the Plan and is incorporated by reference herein. CERTIFICATE OF INCORPORATION AND BY-LAWS Pursuant to the Plan, on the Effective Date the Registrant's Certificate of Incorporation will be amended and restated as provided in EXHIBIT C to the Plan and its Bylaws will be amended and restated as provided in EXHIBIT D to the Plan. The authorized capital stock of the Registrant will be increased to 40,000,000 shares of New Common and 1,500,000 shares of preferred stock. As amended, the Registrant's Certificate of Incorporation (the "Certificate of Incorporation") eliminates (i) the classified board of directors of the Registrant (the "Board"), so that after the Effective Date all Board positions will be up for election at each annual meeting of the Registrant's stockholders and (ii) certain supermajority provisions which required the affirmative vote of 75% of the voting power of the Registrant (a) to change the number of directors within the authorized range, (b) for certain business combinations and other transactions, (c) to adopt, amend or repeal, certain By-laws or provisions of the Certificate of Incorporation and (d) to adopt any cumulative voting provisions. The Certificate of Incorporation and the Registrant's By-laws, as amended (the "By-laws"), provide that special meetings of the stockholders may be called at any time by the Board, the Chairman of the Board, the Chief Executive Officer, the President, or by a committee of the Board which has been designated by the Board and which has the power and authority to call such a meeting or by any stockholder or stockholders holding in the aggregate in excess of 25% of the outstanding common stock of the Registrant. Notwithstanding the foregoing, the By-laws provide that the next annual meeting of stockholders of the Registrant shall be held not earlier than nine months after the Effective Date unless otherwise determined by mutual agreement of the two or three (as the case may be) members of the Board designated by Mutual Series, on the one hand, and the three members of the Board designated by the Equity Committee, on the other hand. BOARD OF DIRECTORS As of the Effective Date, the Plan provides that the Board will initially consist of eight individuals. One or two additional directors will be added after the Effective Date in accordance with the terms of the Confirmation Order and the Plan, as described below. The Confirmation Order provides that the initial Board will be comprised of John J. Lee and Peter Langerman, who were designated by Mutual Series, Joseph Harrosh, Robert L. Witt and Peter D. Wolfson, who were designated by the Equity Committee and Dr. George S. Springer, Franklin S. Wimer and Marshall S. Geller, who were designated by joint selection of the Equity Committee and Mutual Series. The directors were designated in accordance with the terms of the Plan and the Standby Purchase Commitment. One seat on the Board will be reserved for the new Chief Executive Officer, who will join the Board immediately upon commencement of his or her employment. In addition, if upon the consummation of the Rights offering Mutual Series owns more than 50% of the shares of New Common, Mutual Series shall designate one additional director; if upon the consummation of the Rights offering Mutual Series owns less than 25% of the shares of New Common, then one additional director shall be designated by mutual agreement of those directors previously designated by the Equity Committee, on the one hand, and those directors previously designated by mutual agreement of the Equity Committee and Mutual Series, on the other hand. REGISTRANT'S CHIEF EXECUTIVE OFFICER The Plan provides that Mr. John J. Lee, the Registrant's Chairman of the Board and Chief Executive Officer, will continue as Chief Executive Officer until a new Chief Executive Officer is hired. Following the selection of a new Chief Executive Officer, Mr. Lee will resign as an officer and be retained as a consultant to the Registrant for a period of two years pursuant to a consulting agreement. The consulting agreement will contain the following terms: (i) Mr. Lee will be paid base compensation (salary and fees) of $180,000 per year during the first year and $230,000 during the second year plus the same benefits provided to him in his interim employment agreement and (ii) the Board may terminate the agreement at the end of the first year. In addition, Mr. Lee will have an opportunity to earn a bonus based upon the attainment of certain goals established by the Board. The Plan provides for the Registrant to sell and for Mr. Lee to purchase 108,108 shares (the "Lee Shares") of New Common, at a purchase price of $4.625 per share following the expiration of the Rights offering. The Plan also provides that Mr. Lee will receive stock options (the "Lee Options") for approximately .625% of the shares of the New Common on a fully diluted basis (without giving effect to the conversion of the Subordinated Debentures) at a price equal to the average of the daily average prices of New Common for the 20 trading days beginning 30 calendar days after the expiration of the offering of the Rights. The Lee Options will vest in equal monthly installments over the two-year term of the consulting agreement, subject to being fully vested upon early termination (other than for cause or voluntary resignation) and will be exercisable until the later of three years from the Effective Date or one year after the expiration of the consulting agreement. If Mr. Lee agrees to be bound by the terms of the Mutual Registration Rights Agreement then, with respect to the Lee Shares, Mr. Lee will be entitled to "piggy-back" registration rights similar to those granted to Mutual Series and will have the right to participate in any demand registration requested by Mutual Series. REGISTRATION RIGHTS AGREEMENT FOR AFFILIATES The Plan provides that the Registrant shall enter into a registration rights agreement (the "Affiliate Registration Rights Agreement") with and for the benefit of any person who, on the Effective Date, either is a director, executive officer, or owner of 10% or more of the outstanding shares of New Common ("Affiliated Holders"). The Affiliate Registration Rights Agreement grants certain "piggy-back" rights in connection with certain registrations of securities by the Registrant during the three year period commencing on the Effective Date to any Affiliated Holder who, at the time the Registrant proposes to effect such registration, is either a director, executive officer or owner of 10% or more of the outstanding shares of New Common. Reference is made to the Affiliate Registration Rights Agreement, which is included as EXHIBIT E to the Plan and is incorporated by reference herein. TERMINATION OF RIGHTS TO PURCHASE PREFERRED STOCK The Plan provides that on the Effective Date, the Agreement, dated as of August 14, 1986 between the Registrant and The Bank of California, which provides for the issuance of certain rights to purchase preferred stock of the Registrant, will be terminated and cancelled. LONG TERM INCENTIVE PLAN. The Board adopted the Registrant's Long-Term Incentive Plan (the "Incentive Plan") on October 25, 1994. The Confirmation Order provides that (i) the Plan and the First Amended Disclosure Statement pursuant to Section 1125 of the Bankruptcy Code for the Plan constituted a solicitation to the holders of Old Common for the approval of the Incentive Plan, (ii) the acceptance of the Incentive Plan by the holders of Old Common is confirmed and (iii) the Confirmation Order constitutes evidence of stockholder approval of the Incentive Plan for purposes of compliance with Rule 16b-3 under the Securities Exchange Act of 1934, as amended. The Incentive Plan will replace the 1988 Management Stock Program, which will be terminated on the Effective Date, except that the restrictions in such terminated plan concerning outstanding restricted stock will continue to govern outstanding options and restricted shares of New Common issued with respect thereto. The following is a brief summary of the principal features of the Incentive Plan and is qualified in its entirety by reference to the full text of the Incentive Plan, which is attached as EXHIBIT 99.2 hereto and is incorporated by reference herein. The purpose of the Incentive Plan is to attract and retain employees of the Registrant and to induce such employees to exert their maximum efforts toward the Registrant's success. Under the Incentive Plan, the Registrant may grant to eligible individuals stock options, dividend equivalent rights, stock awards, restricted share awards, or other awards which are valued in whole or in part by reference to, or are otherwise based on, the New Common, standing alone, in combination or in tandem ("Awards"). Any employee, officer, director (other than a member of the committee administering the Incentive Plan (the "Committee")) or consultant of the Registrant or any subsidiary thereof selected by the Committee is eligible to receive Awards. The Incentive Plan will be administered by the Committee which shall have the authority to take such actions as provided in the Incentive Plan, including but not limited to determining the individuals to whom Awards shall be granted and the timing, type and terms of such Awards. The maximum aggregate number of shares of New Common as to which Awards may at any time be granted under the Incentive Plan is 1,000,000 (which is exclusive of any options outstanding on the Effective Date). Shares of New Common underlying Awards that have terminated, expired, or been canceled, forfeited or surrendered without having been exercised shall again be available for the grant of Awards. Awards payable in cash will not reduce the number of shares available for Awards under the Incentive Plan. The Incentive Plan will terminate on the tenth anniversary of its adoption and no Awards may be granted after such termination. The Incentive Plan may be amended, modified or terminated at any time by the affirmative vote of the holders of a majority of the outstanding shares of New Common present or represented and entitled to vote at a duly held stockholders meeting. STOCK ISSUED AND OUTSTANDING. On the date of the Confirmation Order there were 7,309,827 shares of Old Common issued and outstanding. On the Effective Date there will be 9,255,773 shares of New Common issued and outstanding (7,309,827 of which will be issued in exchange for the Old Common and 1,945,946 of which will be purchased by Mutual Series on the Effective Date) and there will be Rights to purchase approximately an additional 8,864,865 shares of New Common (the "Offered Shares"). In addition, $200,000 worth of New Common, valued at a price equal to the average of the daily average prices of the New Common for the 20 trading days beginning 30 calendar days following the expiration of the Rights will be distributed to holders of Class 10 Claims. The aggregate total of such number of shares cannot be determined at this time. Pursuant to the Plan, upon consummation of the Rights offering up to approximately 8,972,973 additional shares of New Common will be issued pursuant to the exercise of Rights, the purchase of Standby Shares by Mutual Series and the purchase of shares by John J. Lee as described above, which will result in there being an aggregate of approximately 18,228,746 outstanding shares of New Common, excluding the shares issuable to holders of Class 10 Claims. BALANCE SHEET OF THE REGISTRANT. The Condensed Consolidated Balance Sheets as of October 2, 1994 and December 31, 1993 were filed by the Registrant as part of the Registrant's Form 10-Q for the Quarter ended October 2, 1994 and are incorporated by reference herein. ITEM 7. PRO FORMA FINANCIAL INFORMATION AND EXHIBITS. (b) PRO FORMA FINANCIAL INFORMATION. The required PRO FORMA financial information is attached hereto on pages F-1 through F-4. (c) EXHIBITS. 2.1 - Order Confirming First Amended Plan of Reorganization proposed by the Debtor and the Official Committee of Equity Security Holders, dated as of November 7, 1994 and entered on January 12, 1995 by the United States Bankruptcy Court for the Northern District of California (the "Confirmation Order"); Exhibit A to the Confirmation Order, the First Amended Plan of Reorganization Proposed by the Debtor and the Official Committee of Equity Security Holders, dated as of November 7, 1994 was filed as Exhibit 2 to the Registrant's Form 10-Q for the Quarter Ended October 2, 1994 and is incorporated by reference; and Exhibit B to the Confirmation Order is included with the Confirmation Order. 4.1 - Amended and Restated Certificate of Incorporation of the Registrant is included as Exhibit C to the Plan which was filed as Exhibit 2 to the Registrant's Form 10-Q for the Quarter Ended October 2, 1994 and is incorporated by reference. 4.2 - Amended and Restated By-Laws of the Registrant, is included as Exhibit D to the Plan which was filed as Exhibit 2 to the Registrant's Form 10-Q for the Quarter Ended October 2, 1994 and is incorporated by reference. 10- Asset Purchase Agreement Between Hexcel Corporation and Northrop Grumman Corporation which was filed as Exhibit 10 to the Registrants Form 10-Q for the Quarter Ended October 2, 1994 and is incorporated by reference. 99.1 - Condensed Consolidated Statements of Operations for the Quarter and Year-to-Date Ended October 2, 1994 and September 30, 1993; Condensed Consolidated Balance Sheets as of October 2, 1994 and December 31, 1993; Condensed Consolidated Statements of Cash Flows for the Year-to-Date Ended October 2, 1994 and September 30, 1993; and Notes to Consolidated Financial Statements were filed as part of the Registrant's Form 10-Q for the Quarter Ended October 2, 1994 and are incorporated by reference. 99.2 - Registrant's Long-Term Incentive Plan. SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Date: January 23, 1995 HEXCEL CORPORATION (Registrant) By: /s/ Rodney P. Jenks ---------------------------------- Rodney P. Jenks, Jr. Vice President, Secretary and General Counsel (b) Pro Forma Financial Information Page ------------------------------- ---- F-1 Pro Forma Financial Information -- Condensed Consolidated Balance Sheet as of October 2, 1994. F-3 Pro Forma Financial Information -- Condensed Consolidated Statement of Operations for the Year-to-Date Ended October 2, 1994. F-4 Pro Forma Financial Information -- Condensed Consolidated Statement of Operations for the Year Ended December 31, 1993. HEXCEL CORPORATION AND SUBSIDIARIES PRO FORMA FINANCIAL INFORMATION CONDENSED CONSOLIDATED BALANCE SHEET AS OF OCTOBER 2, 1994
Unaudited ---------------------------------------------------------------------- Pro forma Adjustments ------------------------------------------- Sale of Sale of Confirmation As Euro-resins EMT of Plan of Pro forma (IN THOUSANDS, EXCEPT PER SHARE DATA) Reported Business (1) Business Reorganization Results - ------------------------------------------------------------------------------------------------------------------------------- Assets Current assets: Cash and equivalents $ 1,099 $ 22,586 (e) $ (22,986) (i) $ 699 Accounts receivable 64,910 4,071 (f) 68,981 Inventories 48,730 (1,263) (f) 47,467 Prepaid expenses 3,990 (813) (f) 3,177 Net assets of discontinued operations 12,000 $(9,000) (a) 3,000 - ------------------------------------------------------------------------------------------------------------------------------- Total current assets 130,729 (9,000) 24,581 (22,986) 123,324 - ------------------------------------------------------------------------------------------------------------------------------- Property, plant and equipment 206,684 (19,530) (f) 187,154 Less accumulated depreciation 115,335 (11,984) (f) 103,351 - ------------------------------------------------------------------------------------------------------------------------------- Net property, plant and equipment 91,349 (7,546) 83,803 - ------------------------------------------------------------------------------------------------------------------------------- Investments and other assets 20,720 (4,458) (f) (925) (j) 15,337 - ------------------------------------------------------------------------------------------------------------------------------- Total assets $242,798 $(9,000) $ 12,577 $ (23,911) $222,464 - ------------------------------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------------------------------- Liabilities and Shareholders' Equity (Deficit) Current liabilities: Notes payable and current maturities of long-term liabilities $ 20,393 $(8,685) (b) $ (4,196) (e) $ 20,382 (i) $ 27,894 Accounts payable 14,915 183 (f) 15,098 Accrued liabilities 28,421 145 (c) 577 (f) 9,972 (i) 39,115 - ------------------------------------------------------------------------------------------------------------------------------- Total current liabilities 63,729 (8,540) (3,436) 30,354 82,107 - ------------------------------------------------------------------------------------------------------------------------------- Long-term liabilities, less current maturities 49,169 42,737 (i) 91,906 Liabilities subject to disposition in bankruptcy reorganization 132,130 (132,130) (k) - ------------------------------------------------------------------------------------------------------------------------------- Shareholders' equity (deficit): Common stock, $0.01 par value, authorized 20,000 shares, shares issued and outstanding of 7,310 in 1994 73 109 (h) 182 Additional paid-in capital 62,562 50,091 (h) 112,653 Accumulated deficit (70,129) (460) (d) 16,013 (g) (15,072) (l) (69,648) Minimum pension obligation adjustment (646) (646) Cumulative currency translation adjustment 5,910 5,910 - ------------------------------------------------------------------------------------------------------------------------------- Total shareholders' equity (deficit) (2,230) (460) 16,013 35,128 48,451 - ------------------------------------------------------------------------------------------------------------------------------- Total liabilities and shareholders' equity (deficit) $242,798 $(9,000) $ 12,577 $ (23,911) $222,464 - ------------------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------------------
See notes to pro forma financial information on next page F-1 HEXCEL CORPORATION AND SUBSIDIARIES PRO FORMA FINANCIAL INFORMATION CONDENSED CONSOLIDATED BALANCE SHEET AS OF OCTOBER 2, 1994 NOTES TO PRO FORMA FINANCIAL INFORMATION (1) This column reflects the sale of the European resins business which was disclosed in a previous Form 8-K filed on January 13, 1995 (a) Net assets of European resins business sold (b) Net cash proceeds from the sale of Hexcel Corporation's European resins business are assumed to have been used to pay down outstanding revolving debt (c) Miscellaneous accrued liabilities (d) Net loss from the disposal of Hexcel Corporation's European resins business (e) Net cash proceeds from the sale of Hexcel Corporation's EMT business and related inventory are assumed to have been used to pay off remaining revolving debt and then increase cash (f) Assets and liabilities of EMT business sold (g) Net gain from the disposal of Hexcel Corporation's EMT business and related inventory (h) Amount reflects a $50 million equity infusion from Mutual Series Fund and the common stock rights offering (i) Reinstatement and/or payment of prepetition liabilities based upon the provisions of the plan (j) Miscellaneous asset reductions (k) Reflects both the payment and/or reclassification of prepetition indebtedness (l) Reflects additional bankruptcy and other expenses pursuant to the plan F-2 HEXCEL CORPORATION AND SUBSIDIARIES PRO FORMA FINANCIAL INFORMATION CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE YEAR-TO-DATE ENDED OCTOBER 2, 1994
Unaudited -------------------------------------------------------- Pro forma Adjustments ---------------------------- Sale of Sale of As Euro-resins EMT Pro forma (IN THOUSANDS, EXCEPT PER SHARE DATA) Reported Business (1) Business Results - ------------------------------------------------------------------------------------------------------------------------------- Net sales $237,080 $ (4,688) (b) $ 232,392 Cost of sales (199,631) 4,057 (c) (195,574) - ------------------------------------------------------------------------------------------------------------------------------- Gross margin 37,449 (631) 36,818 Other operating costs and expenses: Marketing, general and administrative expenses (34,441) 275 (d) (34,166) Other income (expenses) (8,146) (8,146) - ------------------------------------------------------------------------------------------------------------------------------- Operating income (loss) (5,138) (356) (5,494) Interest expenses (7,086) 1,406 (e) (5,680) Bankruptcy reorganization expenses (11,945) (11,945) - ------------------------------------------------------------------------------------------------------------------------------- Income (loss) from continuing operations before income taxes (24,169) 1,050 (23,119) Benefit (provision) for income taxes (1,369) (1,369) - ------------------------------------------------------------------------------------------------------------------------------- Income (loss) from continuing operations (25,538) 1,050 (24,488) Income (losses) from discontinued operations (1,847) $ (984) (a) (2,831) - ------------------------------------------------------------------------------------------------------------------------------- Net income (loss) $(27,385) $ (984) $ 1,050 $ (27,319) - ------------------------------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------------------------------- Net income (loss) per share and equivalent share: Primary and fully diluted: Continuing operations $ (3.50) $ 0.14 $ (3.36) Discontinued operations (0.25) $(0.13) (0.38) - ------------------------------------------------------------------------------------------------------------------------------- Net income (loss) $ (3.75) $(0.13) $ 0.14 $ (3.74) - ------------------------------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------------------------------- Weighted average shares and equivalent shares 7,310 7,310 7,310 7,310 - ------------------------------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------------------------------- (1) This column reflects the sale of the European resins business which was disclosed in a previous Form 8-K filed on January 13, 1995 (a) Elimination of net income from Hexcel Corporation's European resins business (b) Elimination of net sales attributable to Hexcel Corporation's EMT business (c) Elimination of cost of sales attributable to Hexcel Corporation's EMT business (d) Elimination of general and administrative expenses attributable to Hexcel Corporation's EMT business (e) Reduction of interest expenses resulting from the use of net cash proceeds from the sale of Hexcel Corporation's EMT business to pay off remaining revolving debt and generate interest income
F-3 HEXCEL CORPORATION AND SUBSIDIARIES PRO FORMA FINANCIAL INFORMATION CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1993
Unaudited -------------------------------------------------------- Pro forma Adjustments ---------------------------- Sale of Sale of As Euro-resins EMT Pro forma (IN THOUSANDS, EXCEPT PER SHARE DATA) Reported Business (1) Business Results - ------------------------------------------------------------------------------------------------------------------------------- Net sales $310,635 $(14,981) (b) $ 295,654 Cost of sales (263,090) 11,937 (c) (251,153) - ------------------------------------------------------------------------------------------------------------------------------- Gross margin 47,545 (3,044) 44,501 Other operating costs and expenses: Marketing, general and administrative expenses (52,510) 866 (d) (51,644) Other income (expenses) (12,780) (12,780) Restructuring expenses (46,600) (46,600) - ------------------------------------------------------------------------------------------------------------------------------- Operating income (loss) (64,345) (2,178) (66,523) Interest expenses (8,862) 1,875 (e) (6,987) Bankruptcy reorganization expenses (641) (641) - ------------------------------------------------------------------------------------------------------------------------------- Income (loss) from continuing operations before income taxes (73,848) (303) (74,151) Benefit (provision) for income taxes (6,024) (6,024) - ------------------------------------------------------------------------------------------------------------------------------- Income (loss) from continuing operations (79,872) (303) (80,175) Income (losses) from discontinued operations (10,623) $ 421 (a) (10,202) - ------------------------------------------------------------------------------------------------------------------------------- Income (loss) before cumulative effect of accounting changes (90,495) 421 (303) (90,377) Cumulative effect of change in accounting for income taxes 4,500 4,500 - ------------------------------------------------------------------------------------------------------------------------------- Net income (loss) $(85,995) $ 421 $ (303) $ (85,877) - ------------------------------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------------------------------- Net income (loss) per share and equivalent share: Primary and fully diluted: Continuing operations $ (10.90) $ (0.04) $ (10.94) Discontinued operations (1.44) $0.06 (1.38) Cumulative effect of change in accounting for income 0.61 0.61 - ------------------------------------------------------------------------------------------------------------------------------- Net income (loss) $ (11.73) $0.06 $ (0.04) $ (11.71) - ------------------------------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------------------------------- Weighted average shares and equivalent shares 7,330 7,330 7,330 7,330 - ------------------------------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------------------------------- (1) This column reflects the sale of the European resins business which was disclosed in a previous Form 8-K filed on January 1, 1995 (a) Elimination of net losses from Hexcel Corporation's European resins business (b) Elimination of net sales attributable to Hexcel Corporation's EMT business (c) Elimination of cost of sales attributable to Hexcel Corporation's EMT business (d) Elimination of general and administrative expenses attributable to Hexcel Corporation's EMT business (e) Reduction of interest expenses resulting from the use of net cash proceeds from the sale of Hexcel Corporation's EMT business to pay off remaining revolving debt and generate interest income
F-4 Exhibit Index - ------------- Page ---- 2.1 - Order Confirming First Amended Plan of Reorganization proposed by the Debtor and the Official Committee of Equity Security Holders, dated as of November 7, 1994 and entered on January 12, 1995 by the United States Bankruptcy Court for the Northern District of California (the "Confirmation Order"); Exhibit A to the Confirmation Order, the First Amended Plan of Reorganization Proposed by the Debtor and the Official Committee of Equity Security Holders, dated as of November 7, 1994 was filed as Exhibit 2 to the Registrant's Form 10-Q for the Quarter Ended October 2, 1994 and is incorporated by reference; and Exhibit B to the Confirmation Order is included with the Confirmation Order. 4.1 - Amended and Restated Certificate of Incorporation of the Registrant is included as Exhibit C to the Plan which was filed as Exhibit 2 to the Registrant's Form 10-Q for the Quarter Ended October 2, 1994 and is incorporated by reference. 4.2 - Amended and Restated By-Laws of the Registrant, is included as Exhibit D to the Plan which was filed as Exhibit 2 to the Registrant's Form 10-Q for the Quarter Ended October 2, 1994 and is incorporated by reference. 10 - Asset Purchase Agreement Between Hexcel Corporation and Northrop Grunmman Corporation which was filed as Exhibit 10 to the Registrants Form 10-Q for the Quarter Ended October 2, 1994 and is incorporated by reference. 99.1 - Condensed Consolidated Statements of Operations for the Quarter and Year-to-Date Ended October 2, 1994 and September 30, 1993; Condensed Consolidated Balance Sheets as of October 2, 1994 and December 31, 1993; Condensed Consolidated Statements of Cash Flows for the Year-to-Date Ended October 2, 1994 and September 30, 1993; and Notes to Consolidated Financial Statements were filed as part of the Registrant's Form 10-Q for the Quarter Ended October 2, 1994 and are incorporated by reference. 99.2 - Registrant's Long-Term Incentive Plan. EX-2.1 2 EXHIBIT 2.1 EXHIBIT 2.1 KRONISH, LIEB, WEINER & HELLMAN ROBERT J. FEINSTEIN, ESQ. CHET F. LIPTON, ESQ. 1114 Avenue of the Americas New York, New York 10036 Telephone: (212) 479-6000 - and - GOLDBERG, STINNETT, MEYERS & DAVIS A Professional Corporation MERLE C. MEYERS, ESQ. #066849 44 Montgomery Street, Suite 2900 San Francisco, California 94104 Telephone: (415) 362-5045 Attorneys for the Debtor in Possession MARCUS MONTGOMERY WOLFSON P.C. PETER D. WOLFSON, ESQ. ROBINSON MARKEL, ESQ. SUZANNE D.T. LOVETT, ESQ. 53 Wall Street New York, New York 10005 Telephone: (212) 858-5200 Attorneys for the Official Committee of Equity Security Holders of Hexcel Corporation UNITED STATES BANKRUPTCY COURT NORTHERN DISTRICT OF CALIFORNIA ) In re ) No. 93-48535 T ) HEXCEL CORPORATION, a ) Chapter 11 Delaware corporation, ) ) Debtor. ) ___________________________________) ORDER CONFIRMING FIRST AMENDED PLAN OF REORGANIZATION PROPOSED BY THE DEBTOR AND THE OFFICIAL COMMITTEE OF EQUITY SECURITY HOLDERS, DATED AS OF NOVEMBER 7, 1994 The First Amended Plan of Reorganization Proposed by Hexcel Corporation, a Delaware corporation ("Hexcel" or the "Debtor") and the Official Committee of Equity Security Holders of Hexcel Corporation (the "Equity Committee"), dated as of November 7, 1994 (which, together with all modifications thereto on or before the date hereof are herein referred to as the "Plan"), a copy of which is annexed hereto as Exhibit A,(1) having been proposed and filed with this Court by its co-proponents, Hexcel and the Equity Committee (collectively, the "Proponents"); and the First Amended Disclosure Statement Pursuant to Section 1125 of the Bankruptcy Code for the First Amended Plan of Reorganization Proposed by the Debtor and the Equity Committee, dated as of November 7, 1994 (the "Disclosure Statement"), having been approved by the Court and transmitted to the Debtor's creditors and equity security holders in accordance with the Order of the Court dated November 9, 1994 approving the Disclosure Statement under Section 1125 of the Bankruptcy _________________________ (1) Unless otherwise defined herein, capitalized terms used herein shall have the meanings ascribed to them in the Plan. 2 Code and establishing solicitation and tabulation procedures and providing for other relief (the "Solicitation Order"); and a hearing having been held before the Court commencing on January 10, 1995 to consider confirmation of the Plan (the "Confirmation Hearing"); and due notice of the Confirmation Hearing and the time for filing objections to confirmation of the Plan having been given to all parties in interest in accordance with the Solicitation Order and other applicable Orders of this Court; and the Court having found that the form and scope of the notice of the Confirmation Hearing were appropriate under the circumstances, that all parties in interest had an opportunity to appear and be heard at the Confirmation Hearing, and that the procedures by which Ballots for acceptance or rejection of the Plan were distributed and tabulated were fair and were properly conducted in accordance with the Solicitation Order and other applicable Orders of this Court; and the Court having considered all of the objections to the confirmation of the Plan; and after due consideration and deliberation, IT IS HEREBY ORDERED, DETERMINED, ADJUDGED, FOUND AND DECREED that: 3 JURISDICTION 1. This Court has jurisdiction to approve and confirm the Plan pursuant to 28 U.S.C. Section 1334. 2. Confirmation of the Plan is a core proceeding pursuant to 28 U.S.C. Section 157(b). MODIFICATION OF THE PLAN 3. The Proponents have modified the Plan as set forth on Exhibit B hereto, which modifications are incorporated into and made part of the Plan. 4. The modifications of the Plan do not adversely change the treatment of the Claim of any creditor or the Interest of any Equity Interest holder and otherwise comply with Section 1127 of the Bankruptcy Code. CONFIRMATION OF THE PLAN 5. The Plan complies with the applicable provisions of the Bankruptcy Code. 6. The Proponents of the Plan have complied with the applicable provisions of the Bankruptcy Code, including the disclosure and solicitation requirements of Section 1125 of the Bankruptcy Code. 4 7. Based on the Disclosure Statement, Hexcel's public dissemination of reports on its recent financial results, and the record of the Confirmation Hearing, Hexcel believes that all known material information concerning Hexcel and its financial condition, as required under Section 1125 of the Bankruptcy Code or otherwise, has been disclosed, and Hexcel believes there is no known material non-public information relating to Hexcel and its financial condition that has not been disclosed. 8. The Plan has been proposed in good faith and not by any means forbidden by law. 9. All payments made or to be made by the Debtor, or by a person issuing securities or acquiring property under the Plan, for services or for costs and expenses in or in connection with the Chapter 11 Case, or in connection with the Plan and incident to the Chapter 11 Case, have been approved, have been fully disclosed to the Court and are reasonable or, if to be fixed after confirmation of the Plan, will be subject to approval of the Court. 10. The identity, qualifications and affiliations of the persons who are to be directors and officers of the Debtor after confirmation of the Plan have 5 been fully disclosed, and the appointment or continuance of such persons in such offices is consistent with the interests of creditors and equity security holders of the Debtor and with public policy. 11. The identity of any insider that will be employed or retained by the Reorganized Debtor and the nature of such insider's compensation have been fully disclosed. 12. No governmental regulatory commission has jurisdiction, after confirmation of the Plan, over the rates of the Debtor. 13. With respect to each impaired Class of Claims or Equity Interests, each holder of a Claim or Equity Interest of such Class has accepted the Plan or will receive or retain under the Plan property of a value, as of the Effective Date, that is not less than the amount that such holder would receive or retain if the Debtor were liquidated under chapter 7 of the Bankruptcy Code on such date. 14. Classes 1, 2, 3, 5, 6, 7, 9, 10 and 12 of the Plan are not impaired by the Plan. 15. Classes 4, 8A, 8B and 11 of the Plan are impaired and have voted to accept the Plan. All of the holders of Claims in Classes 4, 8A and 8B who voted, have 6 accepted the Plan. The holders of approximately 96% of the shares in Class 11 which were voted, have accepted the Plan. Although Classes 5 and 6 are not impaired, the votes of creditors in such Classes were solicited. Approximately 99% in number and 99% in dollar amount of Class 5 creditors who voted, have accepted the Plan, and the sole creditor in Class 6 voted to accept the Plan. No Class of Claims or Interests has rejected the Plan. 16. Except to the extent that the holder of a Claim of a kind specified in Section 507(a) of the Bankruptcy Code has agreed to a different treatment of such Claim, the Plan provides that: (a) with respect to a Claim of a kind specified in Section 507(a)(1), (2), (3), (4), (5) or (6) of the Bankruptcy Code, on the Effective Date, the holder of such Claim will receive on account of such Claim Cash equal to the Allowed Amount of such Claim; and (b) with respect to a Claim of a kind specified in Section 507(a)(7) of the Bankruptcy Code, the holder of such Claim will receive on account of such Claim deferred Cash payments, over a period not exceeding six years after the date of assessment of such Claim, of a value, on the Effective Date or as 7 soon thereafter as is practicable, equal to the Allowed Amount of such Claim. 17. At least one Class of Claims that is impaired under the Plan has accepted the Plan, determined without including any acceptance of the Plan by any insider. 18. Confirmation of the Plan is not likely to be followed by the liquidation, or the need for further financial reorganization, of the Debtor. 19. All fees payable under Section 1930 of title 28 of the United States Code have been paid or the Plan provides that they will be paid as Administrative Expenses under the Plan. 20. The Plan provides for the continuation after the Effective Date of all "retiree benefits" of Hexcel as defined by Section 1114(a) of the Bankruptcy Code, for the duration of the period Hexcel has obligated itself to provide such benefits. 21. Each of the conditions to the effectiveness of the Plan has been or is expected promptly to be satisfied. 22. Section 8.4 of the Plan provides that the Certificate of Incorporation of the Debtor shall be amended as of the Effective Date to provide, among other things, for 8 the inclusion of a provision prohibiting the issuance of non-voting equity securities and providing, as to the classes of securities possessing voting power, an appropriate distribution of such power among such classes. 23. The objections to the Plan be, and they hereby are, overruled. 24. Pursuant to Section 1129 of the Bankruptcy Code, the Plan be, and it hereby is, confirmed. 25. Any security, money or other property or distributions pursuant to the Plan that are unclaimed for a period of one year after distribution thereof shall be revested in and become the property of Reorganized Hexcel. 26. Any payment made on behalf of a holder of a Class 9 Claim to the indenture trustee for the Subordinated Debentures pursuant to the Plan, including any payment of interest, that is unclaimed by the holder of a Subordinated Debenture Claim for a period of one year after the distribution thereof shall be returned to and revested in Reorganized Hexcel. 27. Except as otherwise provided herein and in the Plan, in accordance with Section 1141(d) of the Bankruptcy Code, the Debtor is discharged of and from any and all debts and Claims that arose before the date of entry 9 of this Order, including, without limitation, any debt or Claim of a kind specified in Sections 502(g), 502(h) or 502(i) of the Bankruptcy Code, whether or not (a) a proof of Claim based on such a debt is filed or deemed filed under Section 501 of the Bankruptcy Code, (b) such Claim is allowed under Section 502 of the Bankruptcy Code, or (c) the holder of such Claim has accepted the Plan. 28. Nothing in this Order or in the Plan is intended to limit the rights of creditors, if any, to seek allowance of their Claims pursuant to Section 502(e)(2) or reconsideration of their Claims pursuant to Section 502(j) of the Bankruptcy Code. 29. Except as otherwise provided in the Plan, in accordance with Sections 1141(b) and 1141(c) of the Bankruptcy Code, all property of the Debtor's estate and all other property dealt with in the Plan be, and it hereby is, vested in the Debtor and is free and clear of all debts, Claims and interests of creditors and holders of Equity Interests of the Debtor. 30. Except as provided in the Plan and subject only to the occurrence of the Effective Date, any judgment at any time obtained, to the extent that such judgment is a determination of personal liability of the Debtor with 10 respect to any debt or Claim discharged hereunder be, and it hereby is, rendered null and void. 31. Unless otherwise provided herein, all injunctions or stays provided for in the Chapter 11 Case pursuant to Sections 105 or 362 of the Bankruptcy Code or otherwise extant on the date of entry of this Order shall remain in full force and effect until the Effective Date of the Plan. 32. Unless otherwise provided herein, the stay in effect pursuant to Section 362(a) of the Bankruptcy Code and any stay entered in the Chapter 11 Case by this Court under Section 105 of the Bankruptcy Code be, and they hereby are, dissolved and of no force or effect after the Effective Date of the Plan. 33. Except as provided in the Plan and subject only to the occurrence of the Effective Date, the commencement or continuation of any action, the employment of any process, or any act to collect, recover or offset any debt discharged hereunder as a personal liability of the estate or Debtor, or from or against property of the estate or Debtor, is permanently enjoined, stayed and restrained. 34. Subject only to the occurrence of the Effective Date, pursuant to Article VII of the Plan and 11 Sections 365 and 1123(b)(2) of the Bankruptcy Code, and without further motion to or order of the Bankruptcy Court, (i) the assumption of all executory contracts and unexpired leases other than those (a) which have been rejected pursuant to a prior Order of this Court, (b) which are set forth in Schedules 7.1(a) and 7.3 to the Plan, or (c) as to which a motion for approval of the rejection thereof has been filed and served on or prior to the Effective Date, be, and the same hereby is, approved in all respects; (ii) the rejection of all executory contracts set forth in Schedules 7.1(a) and 7.3 to the Plan be, and the same hereby is, approved in all respects; and (iii) all Claims arising from contracts and leases assumed prior to or as a result of the Effective Date are hereby disallowed. 35. Proof of any Claim for breach of an executory contract or unexpired lease rejected pursuant to Section 7.1(a) or Section 7.3 of the Plan be, and it hereby is, required to be served and filed with the Court no later than thirty days after notice of entry of this Order, or it shall then be barred and discharged. 36. Pursuant to Section 365(d)(4) of the Bankruptcy Code, the time within which Hexcel may assume or reject the executory contracts and unexpired leases 12 specified in Section 7.1(a) and (b) and Section 7.3 of the Plan be, and it hereby is, extended through the later to occur of (a) the date of entry of an order approving the assumption or rejection of such executory contracts or unexpired leases and (b) the Effective Date; PROVIDED, HOWEVER, that in the event that the Effective Date does not occur and this Order is vacated pursuant to the terms and provisions of the Plan or otherwise, the time within which Hexcel may assume or reject all such executory contracts and unexpired leases be, and it hereby is, extended for a period of thirty days after the date this Order is vacated. 37. No payment or distribution provided for in the Plan shall be made prior to the Effective Date. All distributions of Cash, Reorganized Hexcel Common Stock, Rights or other consideration required to be made by Hexcel pursuant to the Plan shall be made within the time provided by the Plan and, in the case of distributions of Cash, shall be timely and proper if (i) mailed by first class mail on or before the distribution dates set forth in the Plan to the last known address of the persons entitled thereto, or (ii) payment is made by wire transfer as provided for in Section 6.2(b) of the Plan on or before the distribution dates set forth in the Plan. 13 38. The amendment and restatement of the Certificate of Incorporation and Bylaws of Hexcel be, and they hereby are, approved. 39. Hexcel, Reorganized Hexcel, their officers, and all parties in interest be, and they hereby are, authorized, empowered and directed to issue, execute, deliver, file or record any agreement, document or security, and take any action necessary or appropriate, to implement, effectuate and consummate the Plan in accordance with its terms, including, without limitation, any agreement, release, amendment or restatement of Hexcel's Certificate of Incorporation and Bylaws, the agreements annexed or referred to in the Plan and/or the Disclosure Statement and the issuance of the Rights, without further application to or order of this Court. 40. All actions authorized to be taken pursuant to the Plan, including, without limitation the amendment and restatement of Hexcel's Certificate of Incorporation and Bylaws, shall be effective as of the Effective Date pursuant to this Order without any further action by the stockholders or directors of the Debtor, the Debtor in Possession or Reorganized Hexcel. 14 41. Hexcel, Reorganized Hexcel and their officers be, and hereby are, authorized to execute and file any and all documents necessary or appropriate to effectuate or evidence any or all corporate actions authorized to be taken pursuant to the Plan or the Disclosure Statement, and any or all such documents shall be accepted by each of the respective State filing offices and recorded in accordance with applicable State law and shall become effective in accordance with their terms and the provisions of State law as of the Effective Date. 42. This Order shall constitute all approvals and consents required, if any, by the laws, rules or regulations of any State or any other governmental authority with respect to the implementation or consummation of the Plan, and any other documents, instruments or agreements, and any amendments or modifications thereto, and any other acts referred to in or contemplated by the Plan, the Disclosure Statement and any other documents, instruments or agreements, and any amendments or modifications thereto, including the issuance of the Rights and conducting the Rights Offering. 43. By operation of Section 1145 of the Bankruptcy Code, the distribution of Reorganized Hexcel 15 Common Stock (including, but not limited to, that issuable on exercise of the Rights and that distributable to creditors in Class 10 under the Plan) and the Rights to be issued and distributed under the Plan, shall be exempt from registration under Section 5 of the Securities Act of 1933, as amended, and any State or local law requiring registration for offer or sale of a security or registration or licensing of an issuer of, or broker or dealer in a security. All such securities so issued shall be freely transferable by the initial recipients thereof, except for any securities received by an underwriter within the meaning of Section 1145(b) of the Bankruptcy Code. 44. The Plan and the Disclosure Statement constitute a solicitation to the holders of Hexcel Common Stock for the approval of the Hexcel Corporation New Long Term Incentive Plan, a copy of which is annexed as Exhibit G to the Disclosure Statement, and the acceptance of the Hexcel Corporation New Long Term Incentive Plan by the holders of Hexcel Common Stock is hereby confirmed. Entry of this Order constitutes evidence of stockholder approval of the Hexcel Corporation New Long Term Incentive Plan, for purposes of compliance with Rule 16b-3 issued under Securities Exchange Act of 1934, as amended. 16 45. Pursuant to Section 1146 of the Bankruptcy Code, the issuance, transfer or exchange of notes or equity securities under the Plan, the creation of any mortgage, deed or trust or other security interest, the making or assignment of any lease or sublease, or the making or delivery of any deed or other instrument of transfer under, in furtherance of, or in connection with the Plan, including the agreements executed in connection with (i) the sale of Hexcel's Chandler, Arizona manufacturing plant, electromagnetic technology and other assets to Northrop Grumman Corporation, and (ii) the sale of Hexcel's four European subsidiaries comprising its Europeans resins business, and any of the other transactions contemplated under the Plan be, and they hereby are, exempt from any stamp, real estate transfer, mortgage recording or other similar tax. 46. The Standby Purchase Commitment among Hexcel, the Equity Committee and Mutual Series Fund Inc. ("Mutual Series"), dated October 24, 1994 (the "Standby Purchase Commitment"), a copy of which is annexed to the Plan as Exhibit B, and the exhibits thereto (including, but not limited to, the form of Secured Promissory Note, Security Agreement and Registration Rights Agreement), be, 17 and they hereby are, approved and the Standby Purchase Commitment constitutes, and such Secured Promissory Note, Security Agreement and Registration Rights Agreement when executed and delivered pursuant to the Standby Purchase Commitment will constitute, the legal, valid and binding obligations of Reorganized Hexcel enforceable against Reorganized Hexcel in accordance with their respective terms. 47. Pursuant to Section 1123(a)(5) of the Bankruptcy Code, Hexcel, Reorganized Hexcel and their officers be, and they hereby are, authorized and directed to consummate the transactions contemplated by the Standby Purchase Commitment, Secured Promissory Note, Security Agreement and Registration Rights Agreement in accordance with their terms without further approval or action by either the directors or stockholders of Hexcel or Reorganized Hexcel, which approval has been, and shall be deemed to have been, given for all purposes. 48. The Registration Rights Agreement for Affiliates between Hexcel and certain present and future holders of its equity securities who qualify as Eligible Holders as defined therein, a copy of which is annexed to the Plan as Exhibit E be, and it hereby is, approved and 18 when executed and delivered by Hexcel shall be the legal, valid and binding obligation of Reorganized Hexcel enforceable against Reorganized Hexcel in accordance with its terms. 49. The commitment letter, dated January 6, 1995, between Hexcel and Citicorp USA, Inc. ("Citicorp") (the "Commitment Letter") and the facility fees letter, dated January 6, 1995, between Hexcel and Citicorp (the "Facility Fees Letter"), shall be the legal, valid and binding obligations of Hexcel enforceable against Hexcel in accordance with their terms. Hexcel, Reorganized Hexcel and their officers be, and they hereby are, authorized and directed to negotiate, execute, deliver, and perform a working capital credit agreement, security agreement and other loan documents (collectively, the "Loan Documents") substantially in accordance with the terms set forth in the Commitment Letter and the Facility Fees Letter. Upon execution and delivery of the Loan Documents, said Loan Documents shall be the legal, valid and binding obligation of Reorganized Hexcel enforceable against Reorganized Hexcel in accordance with their terms. 50. The validity, enforceability, perfection and first priority of the security interests and liens granted 19 pursuant to the Loan Documents, be, and they hereby are, authorized and approved, without any further act required by Citicorp. 51. Hexcel, Reorganized Hexcel and their officers be, and they hereby are, authorized and directed to negotiate, execute, and deliver an Amended and Restated BNP Reimbursement Agreement, with exhibits and schedules thereto, in conformity with the terms set forth in Article IV of the Plan and the Amended and Restated BNP Reimbursement Agreement and any documents delivered in connection therewith shall be, and they hereby are, approved and when executed and delivered by Reorganized Hexcel shall be the legal, valid and binding obligation of Reorganized Hexcel enforceable against Reorganized Hexcel in accordance with their terms. Execution and delivery of an Amended and Restated BNP Reimbursement Agreement in form mutually satisfactory to the Proponents and BNP shall be a condition to the Effective Date in addition to those conditions set forth in Article X of the Plan. 52. Pursuant to Section 9.3 of the Plan, on the Effective Date, all rights, claims, causes of action, avoiding powers, suits and proceedings arising under Sections 544, 545, 547, 548, 549, 550 and 553 of the 20 Bankruptcy Code shall be extinguished whether or not then pending. 53. None of Hexcel, Reorganized Hexcel, Mutual Series, the Creditors' Committee, the Equity Committee or any of their respective members, officers, directors, employees, attorneys, advisors or agents shall have or incur any liability to any holder of a Claim or Equity Interest for any act or omission in connection with, or arising out of, the pursuit of confirmation of the Plan, the conduct of the business or affairs of Hexcel as a debtor in possession, the consummation of the Plan or the administration of the Plan or the property to be distributed under the Plan except for willful misconduct or gross negligence, and, in all respects, Hexcel, Reorganized Hexcel, the Creditors' Committee, the Equity Committee, Mutual Series and each of their respective members, officers, directors, employees, advisors and agents shall be entitled to rely upon the advice of counsel with respect to their duties and responsibilities under the Plan and retain the benefit, if any, of any immunity available to Committee members. 54. Upon the Effective Date, any and all claims held by Hexcel against any present or former officers or 21 directors shall be forever waived, released and discharged, and will not be retained or enforced by Reorganized Hexcel. 55. Upon the Effective Date, to the fullest extent allowable under applicable bankruptcy law, any and all claims and causes of action, whether direct or derivative, against any present or former officer or director of Hexcel by any holder of a Claim or Interest under the Plan shall be forever waived, released and discharged, and not retained or enforced by such holder. 56. Upon the cure of all defaults, if any, under the IDRB's, on the Effective Date the IDRB's shall be Reinstated. 57. Payment of all past due principal and interest due under the Subordinated Debentures, including compound interest at the contract rate of 7% or such other rate as determined by the Court, on the Effective Date shall constitute the cure of all defaults under the Subordinated Debentures and the Subordinated Debenture Indenture, and the Subordinated Debentures and the Subordinated Debenture Indenture shall be Reinstated. 58. Pursuant to Exhibit C of the Standby Purchase Commitment, the initial Board of Directors shall be comprised of John J. Lee, Dr. George S. Springer, Franklin 22 S. Wimer, Marshall S. Geller, Peter Langerman, Joseph Harrosh, Robert L. Witt, Peter D. Wolfson and the new Chief Executive Officer of Hexcel commencing with his employment by Hexcel. If Mutual Series owns more than 50% of the outstanding common stock of Hexcel upon the conclusion of the Subscription Rights Period, Mutual Series shall designate one additional director. If Mutual Series owns less than 25% of the outstanding common stock of Hexcel upon conclusion of the Subscription Rights Period, the directors nominated by the Equity Committee, together with the directors nominated by mutual agreement of the Equity Committee and Mutual Series, will select one additional director. The new Board of Directors will select (with the approvals of at least two of the nominees of the Equity Committee) one of the directors as initial Chairman. The initial Board of Directors of Hexcel shall hold office until the first post- consummation annual meeting of stockholders of Hexcel, and until such directors' successors shall be elected and qualified. The first post-consummation annual meeting of stockholders shall be held not earlier than nine months after the Effective Date unless otherwise agreed by the board designees of Mutual Series and the Equity Committee. 23 59. Pending selection of a new Chief Executive Officer mutually acceptable to the Board nominees of the Equity Committee and Mutual Series, John J. Lee will continue as Chief Executive Officer of Reorganized Hexcel. When the new Chief Executive Officer takes office, (a) Mr. Lee will resign as an officer of Hexcel and will be retained as a consultant by Hexcel for strategic planning, reporting to the Chief Executive Officer and Board of Directors of Hexcel under a two year agreement, subject to termination at the end of the first year by resolution of the Board of Directors delivered to Mr. Lee not earlier than 60 days and not later than 30 days prior to the end of the first year; (b) Mr. Lee will receive (i) base compensation (salary and fees) of $180,000 per year during the first year, $230,000 during the second year, plus the same benefits provided to him in his interim employment agreement approved by the Bankruptcy Court; (ii) appropriate bonus opportunity determined by the Board of Directors based upon attainment of the goals established by the Board of Directors; (iii) stock options for approximately .625% of Reorganized Hexcel's fully diluted common stock (without giving effect to the conversion of the 7% Convertible Subordinated Debentures due 2011) at a price equal to the average of the 24 daily average prices of the stock for the 20 trading days beginning 30 calendar days following the conclusion of the Subscription Rights Period; (iv) such options will vest in equal monthly installments over the two-year term of the consulting agreement, subject to being fully vested upon any early termination thereof (other than for cause or voluntary resignation) and will be exercisable until the later of three years following the Effective Date or one year after expiration of the consulting agreement. 60. Pursuant to the Stipulation and Order attached to the Disclosure Statement as Exhibit H, on the Effective Date the PVSC Claims (as defined in said Exhibit H) shall be settled, and the Debtor's objection to the PVSC Claims as well as any other claims assertable by the Debtor, Debtor in Possession or Trustee, or successor predicated on bankruptcy law are dismissed with prejudice and, in the interim, all litigation between the Debtor in Possession and PVSC as to the Objection is stayed. The fact of this stay shall not be used by any party in prejudice of any other party's rights to discovery, withdrawal of the reference or otherwise. This stay may be terminated on three days written and faxed notice if the Effective Date has not occurred by April 1, 1995. 25 61. Until the entry of a Final Decree in this Chapter 11 Case, this Court shall retain jurisdiction over Reorganized Hexcel and this Chapter 11 Case for all purposes including those listed in Article XI of the Plan and to enforce compliance with any orders of the type referred to in Section 1142 of the Bankruptcy Code. 62. The reversal or modification of this Order on appeal shall not affect the validity of the Plan or any other agreement or action authorized by this Order as to any entity acting in good faith, whether or not that entity knows of the appeal, unless this Order is stayed pending appeal. 63. Nothing contained in the Confidentiality Order dated February 24, 1994 shall prohibit members of the Equity Committee and the Creditors' Committee from trading in securities of or claims against Hexcel or Reorganized Hexcel. MISCELLANEOUS 64. All applications for final allowances of compensation and reimbursement of disbursements pursuant to Sections 330 and 503(b) of the Bankruptcy Code shall be 26 filed with the Court and served upon the Debtor within forty-five days from and after the Effective Date. 65. Reorganized Hexcel and the Equity Committee shall have the exclusive right (except as to (i) Claims or applications for bonuses of the Debtor's officers, directors and employees and (ii) applications for allowances of compensation and reimbursement of expenses under Sections 330 and 503 of the Bankruptcy Code) to make and file objections to Administrative Expense Claims and Claims and shall serve a copy of each objection upon the holder of the Administrative Expense Claim or Claim to which the objection is made as soon as practicable, but in no event later than thirty days after the Effective Date; provided, however that the Equity Committee shall not file an objection (other than with respect to (i) Claims or applications for bonuses of the Debtor's officers, directors and employees and (ii) applications for allowances of compensation and reimbursement of expenses under Sections 330 and 503 of the Bankruptcy Code), without first making prior demand that Reorganized Hexcel file such an objection and ten days having elapsed without such objection being filed by Reorganized Hexcel. 27 66. Within fifteen days after entry of this Order or within such further time as the Court may allow, the Proponents shall (a) mail to all known creditors, shareholders and other parties in interest notice of the entry of this Order and (b) publish such notice on one occasion in the national editions of THE WALL STREET JOURNAL, THE NEW YORK TIMES and THE OAKLAND TRIBUNE. Dated: Oakland, California January 10, 1995 at 11:30 a.m. /s/ ---------------------------- HONORABLE LESLIE TCHAIKOVSKY UNITED STATES BANKRUPTCY JUDGE APPROVED AS TO FORM: KRONISH, LIEB, WEINER & HELLMAN By: /s/ ------------------------------------- Co-Counsel for the Debtor MARCUS MONTGOMERY WOLFSON P.C. By: /s/ ------------------------------------- Counsel to the Official Committee of Equity Security Holders PILLSBURY MADISON & SUTRO By: /s/ ------------------------------------- Counsel to the Official Creditors' Committee 28 EXHIBIT A SUBSCRIPTION RIGHTS PLAN RECITAL This Subscription Rights Plan (this "Plan") is adopted by Hexcel Corporation ("Hexcel") pursuant to, and as of the Effective Date of, the First Amended Plan of Reorganization proposed by the Debtor and the Official Committee of Equity Security Holders under Chapter 11 of the Bankruptcy Code, dated November 7, 1994 (the "Chapter 11 Plan"), as confirmed by the Bankruptcy Court in Hexcel's chapter 11 case. Except as otherwise provided herein, capitalized terms used in this Plan have the meanings assigned to them in the Chapter 11 Plan. TERMS OF PLAN 1. THE SUBSCRIPTION RIGHTS. 1.1 This Plan authorizes the distribution of 1.21273 rights to subscribe for additional shares of Reorganized Hexcel Common Stock as described below ("Subscription Right"), with respect to each share of Hexcel Common Stock, par value $.01 per share (the "Common Stock"), issued and outstanding as of the close of business on the Effective Date (the "Record Date"), other than shares of Reorganized Hexcel Common Stock issued by Reorganized Hexcel on the Effective Date. Each Subscription Right entitles the holder to purchase one share of Reorganized Hexcel Common Stock for an aggregate of approximately 8,864,865 shares of Reorganized Hexcel Common Stock (the "Offered Shares"), subject to rounding as provided herein. Each holder of record of Common Stock (other than shares of Reorganized Hexcel Common Stock issued by Reorganized Hexcel on the Effective Date) on the Record Date (an "Original Holder") shall be deemed to have received a distribution of such Subscription Rights. Original Holders and transferees of the Basic Subscription Rights of Original Holders are referred to herein as "Holders." 1.2 Each Subscription Right entitles the Holder thereof: 1.2.1 to the right (each, a "Basic Subscription Right") to purchase one Offered Share at a purchase price of $4.625 per share; plus 1.2.2 in the case of Original Holders, conditioned upon such Original Holder's qualifying as an Eligible Rights Holder (as defined in Section 1.3(c) of this Plan), such Original Holder also has the right to purchase any desired number of Offered Shares from the Stockholder Pool at a purchase price of $4.625 per share (the "Oversubscription Rights"), subject to Proration as provided herein. OVERSUBSCRIPTION RIGHTS ARE NOT TRANSFERABLE AND MAY NOT BE EXERCISED BY ANY HOLDER OTHER THAN AN ELIGIBLE RIGHTS HOLDER. The "Oversubscription Pool" consists of all Offered Shares subject to Basic Subscription Rights that expire unexercised. The "Standby Pool" consists of 25% of the Oversubscription Pool remaining after the first 108,108 shares of Reorganized Hexcel Common Stock have been allocated for purchase by John J. Lee pursuant to the Chapter 11 Plan (the "Designated Shares"). The "Stockholder Pool" consists of the Oversubscription Pool remaining after excluding the Standby Pool and the Designated Shares. 1.3 For purposes of this Plan: (a) "BENEFICIAL RIGHTS HOLDER" means a person or entity who is listed on the records of any Nominee as the beneficial owner of any Common Stock held in the name of such Nominee (either of record or through another Nominee) as of the close of business on the Record Date. (b) "ELIGIBLE BENEFICIAL RIGHTS HOLDER" means a Beneficial Rights Holder on whose behalf a Nominee has, at such Beneficial 2 Rights Holder's direction, exercised in accordance with the terms of this Plan, all Basic Subscription Rights issued to or for the account of such Nominee by Reorganized Hexcel pursuant to this Plan with respect to Common Stock beneficially owned by such Beneficial Rights Holder. (c) "ELIGIBLE RIGHTS HOLDER" means (i) an Original Holder, other than a Nominee, who has exercised, in accordance with the terms of this Plan, all Basic Subscription Rights issued to such holder by Reorganized Hexcel pursuant to the Chapter 11 Plan, and (ii) a Nominee to the extent acting on behalf of an Eligible Beneficial Rights Holder, regardless of whether such Nominee has exercised less than all of the Basic Subscription Rights issued to it pursuant to the Chapter 11 Plan. (d) "NOMINEE" means any bank, trust company, depositary or securities broker or dealer which holds Common Stock, either of record or beneficially through another Nominee, on the Record Date otherwise than as the beneficial owner thereof. 1.4 A Nominee may only exercise Oversubscription Rights on behalf of Eligible Beneficial Rights Holders who beneficially own Basic Subscription Rights registered in that Nominee's name. Hexcel may prescribe the procedures for verifying that Nominees are exercising Oversubscription Rights only on behalf of Eligible Beneficial Rights Holders. All questions concerning the validity of any exercise of Basic Subscription Rights or Oversubscription Rights and the proper Proration of shares in the Stockholder Pool, will be determined by Hexcel or by the Subscription Agent, and such determinations shall be final and binding. For purposes of administering this Plan, including without limitation for purposes of determining whether Oversubscription Rights have been properly exercised and for purposes of Proration, (i) in the event that any person or entity has accounts with more than one Nominee through which such person or entity is listed as the beneficial owner of Common Stock as of the close of business on the Record Date, then each account or group of accounts of that person or entity with each different Nominee will be treated by Hexcel or by the Subscription Agent as a separate Beneficial Rights Holder, and (ii) in the event that a Beneficial Rights Holder is also a Record Holder of Hexcel Common Stock, then Hexcel and the Subscription Agent will treat that person or entity in its 3 capacity as a Record Holder of Hexcel Common Stock as being separate from that person or entity in its capacity as a Beneficial Rights Holder; accordingly, a person or entity which owns shares of Common Stock either through separate Nominees or both of record and through one or more Nominees may be treated by Hexcel and the Subscription Agent as multiple persons or entities for purposes of Proration and other matters under this Plan. 2. SUBSCRIPTION PRICE. The Subscription Price for each share of Reorganized Hexcel Common Stock is $4.625. The aggregate Subscription Price for any subscription shall be rounded up to the nearest whole cent. 3. PRORATION. 3.1 The number of shares of Reorganized Hexcel Common Stock issuable upon the exercise of Basic Subscriptions Rights shall not be subject to proration. 3.2 If the aggregate number of shares of Reorganized Hexcel Common Stock subscribed for through the exercise of Oversubscription Rights is more than the number of shares available in the Stockholder Pool, the available shares will be apportioned among the Eligible Rights Holders who exercised their Oversubscription Rights in proportion to the number of Basic Subscription Rights originally issued by Hexcel to, and exercised by, each Eligible Rights Holder through repeated application of the proration procedure described in the next paragraph, and subject to rounding as provided in Section 6.2 of this Plan. Each time the following procedure is applied, the "number of shares of Reorganized Hexcel Common Stock remaining in the Stockholder Pool" shall mean the number of shares in the Stockholder Pool not apportioned by prior applications of the procedures described in this paragraph. The number of shares of Reorganized Hexcel Common Stock remaining in the Stockholder Pool shall be apportioned among all those Eligible Rights Holders who 4 have not yet been apportioned (through previous applications of this procedure) the full number of shares subscribed for by them in their respective exercises of Oversubscription Rights. Apportionment among them shall be based on the ratio of the number of Basic Subscription Rights originally issued by Hexcel to, and exercised by, each Eligible Rights Holder; provided, that if the number of shares so apportioned to any Eligible Rights Holder exceeds the number of shares subscribed for by that Eligible Rights Holder's exercise of Oversubscription Rights, then the excess shall not be apportioned, and that Eligible Rights Holder shall thereafter not be apportioned any additional shares should there be further applications of this procedure. This procedure shall be repeated until either (i) all of the shares in the Stockholder Pool shall have been apportioned and there are no shares left in the Stockholder Pool for further apportionment, or (ii) a sufficient number of shares has been apportioned to all Eligible Rights Holders to satisfy all of their exercised Oversubscription Rights, whichever occurs first. 4. SUBSCRIPTION PERIOD. The Subscription Rights will be exercisable only during the period (the "Subscription Period") commencing 15 days after the Effective Date and expiring at 5:00 P.M., Eastern Standard Time, on the first Business Day that occurs not less than 45 days after the Effective Date (the "Subscription Rights Expiration Date"). After the Subscription Rights Expiration Date, unexercised Subscription Rights will be null and void. Hexcel shall not be obligated to honor any purported exercise of Subscription Rights received after the Subscription Rights Expiration Date, regardless of when the documents relating to such exercise were sent, except pursuant to the Guaranteed Delivery Procedures described below. 5. DISTRIBUTION OF CERTIFICATES. 5.1 As soon as practicable after the Effective Date, 5 but not later than 15 days thereafter, Hexcel shall distribute to Original Holders transferable certificates ("Subscription Rights Certificates") in the form attached to and governed by this Plan, representing the Subscription Rights issued to Original Holders pursuant to this Plan. 5.2 As soon as practicable after the Subscription Rights Expiration Date, Hexcel shall distribute to Holders who have duly exercised their Subscription Rights stock certificates representing that number of shares of Reorganized Hexcel Common Stock subscribed for and to be issued in accordance with the terms of this Plan. 5.3 Subscription Rights Certificates shall be executed on behalf of Hexcel by its Chairman, Vice Chairman, Chief Executive Officer or President, under its corporate seal reproduced thereon attested by its Secretary or an Assistant Secretary. The signature of any of these officers on the certificate may be manual or facsimile. 6. NO FRACTIONAL REORGANIZED HEXCEL COMMON STOCK. 6.1 The number of Basic Subscription Rights issuable to any Holder will be rounded to the nearest whole number, with .50 Basic Subscription Right being rounded up to the next whole Basic Subscription Right. 6.2 No fractional shares of Reorganized Hexcel Common Stock shall be issued. The number of shares of Reorganized Hexcel Common Stock issuable to any Holder pursuant to the exercise of Oversubscription Rights will be rounded down to the next lowest whole number of shares. 6.3 No Subscription Rights may be divided in such a way as to permit the holder to receive a greater number of shares 6 of Reorganized Hexcel Common Stock than the number to which such Subscription Rights entitles its Holder, except that a depositary, bank, trust company, or securities broker or dealer holding shares of Common Stock on the Record Date for more than one beneficial owner may, upon proper showing to the Subscription Agent, exchange its Subscription Rights Certificate to obtain Subscription Rights Certificates for each beneficial owner on the Record Date. 7. SUBSCRIPTION AND OTHER AGENTS. 7.1 Hexcel shall appoint an agent to act in administering the Subscription Rights (the "Subscription Agent") under this Plan. Hexcel may also appoint an escrow agent for the receipt of funds on exercise of Subscription Rights and a transfer agent for the registration and transfer of the Subscription Rights and Reorganized Hexcel Common Stock. The terms of Hexcel's agreements with such agents, regarding the form of certificates, countersignatures, procedures for assignment or exercise, or the like, shall be deemed adopted by Hexcel as part of this Plan. 7.2 All questions concerning the Subscription Rights will be determined by Hexcel (or the Subscription Agent, as permitted below), whose determinations will be final and binding. Hexcel may waive any defect or irregularity, or permit a defect or irregularity to be corrected within such time as it may determine, or reject the purported exercise of any Subscription Right. The Subscription Agent may exercise all the rights of Hexcel under this Plan, including determination of the timeliness, validity, form and eligibility of any exercise of Subscription Rights, calculation of shares of Reorganized Hexcel Common Stock subscribed for, calculation of any required proration and any other actions required for the orderly distribution of the Subscription Rights and Reorganized Hexcel Common Stock. Subscriptions will not be deemed to have been received or accepted until all irregularities have been waived or cured within such time as Hexcel or the Subscription Agent 7 determines in its sole discretion. Neither Hexcel nor the Subscription Agent will be under any duty to give notification of any defect or irregularity in connection with the submission of Subscription Rights Certificates or incur any liability for failure to give such notification. 8. RESERVATION OF REORGANIZED HEXCEL COMMON STOCK. Hexcel shall at all times reserve and hold available for issuance the number of shares of Reorganized Hexcel Common Stock required to be issued pursuant to the Subscription Rights. 9. EXERCISE OF SUBSCRIPTION RIGHTS. 9.1 ONCE A HOLDER HAS EXERCISED THE SUBSCRIPTION RIGHTS IN THE MANNER PROVIDED BELOW, THE SUBSCRIPTION IS IRREVOCABLE. 9.2 Subscription Rights may be exercised by delivering to the Subscription Agent during the Subscription Period, the properly completed and executed Subscription Rights Certificate, with any required signature guarantees, together with payment in full of the aggregate Subscription Price for all shares subscribed for pursuant to the Subscription Rights (whether through the exercise of Basic Subscription Rights or the Oversubscription Rights). Such payment in full must be by (a) check or bank draft drawn upon a U.S. bank or postal, telegraphic or express money order payable to the Subscription Agent or the Escrow Agent, as set forth in the Instructions, or (b) wire transfer of funds to the account specified for such purpose designated in the Subscription Rights Certificates. The Subscription Price will be deemed to have been received by the Subscription Agent only upon (i) clearance of any uncertified check, (ii) receipt by the Subscription Agent or Escrow Agent of any certified check or bank draft drawn upon a U.S. bank or of 8 any postal, telegraphic or express money order or (iii) receipt of good funds in the account designated in the Subscription Rights Certificates. If paying by uncertified personal check, please note that the funds paid thereby may take at least five Business Days to clear. ACCORDINGLY, HOLDERS WHO WISH TO PAY THE SUBSCRIPTION PRICE BY MEANS OF UNCERTIFIED PERSONAL CHECK ARE URGED TO MAKE PAYMENT SUFFICIENTLY IN ADVANCE OF THE SUBSCRIPTION RIGHTS EXPIRATION DATE TO ENSURE THAT SUCH PAYMENT IS RECEIVED AND CLEARS BY SUCH DATE AND ARE URGED TO CONSIDER PAYMENT BY MEANS OF CERTIFIED OR CASHIER'S CHECK, MONEY ORDER OR WIRE TRANSFER OF FUNDS. 9.3 The Subscription Agent may elect to treat subscriptions accompanied by payment of an insufficient amount as a subscription for the number of shares of Reorganized Hexcel Common Stock whose Subscription Price is paid by the amount received. Payments in an amount greater than the aggregate Subscription Price required by the stated Basic Subscription and Oversubscription shall be treated as subscriptions for the amounts stated on the Subscription Rights Certificate only; excess amounts shall be refunded in due course after the Subscription Rights Expiration Date. 9.4 The permitted methods of delivery and the address to which Subscription Rights Certificates and payment of the Subscription Price should be delivered shall be set forth in the Instructions which will be delivered with the Subscription Rights Certificates. 9.5 If a Holder wishes to exercise Subscription Rights, but time will not permit such Holder to cause the Subscription Rights Certificate to reach the Subscription Agent on or prior to the Subscription Rights Expiration Date, such Subscription Rights may nevertheless be exercised if all of the following conditions (the "Guaranteed Delivery Procedures") are met: 9.5.1 such Holder has caused payment in full of the aggregate Subscription 9 Price for all shares being subscribed for pursuant to the Basic Subscription Rights or Oversubscription Rights to be received (in the manner set forth above) by the Subscription Agent on or prior to the Subscription Rights Expiration Date; 9.5.2 the Subscription Agent receives, on or prior to the Subscription Rights Expiration Date, a guarantee notice (a "Notice of Guaranteed Delivery"), substantially in the form provided with the Instructions, from a member of a registered national securities exchange or a member of the National Association of Securities Dealers, Inc. (the "NASD"), or from a commercial bank or trust company having an office or correspondent in the United States (each, an "Eligible Institution"), stating the name of the exercising Holder, the number of Rights represented by the Subscription Rights Certificate or Subscription Rights Certificates held by such exercising Holder, the number of shares being subscribed for pursuant to the Subscription Rights, and guaranteeing the delivery to the Subscription Agent of any Subscription Rights Certificate evidencing such Subscription Rights within five days following the date of the Notice of Guaranteed Delivery; and 9.5.3 the properly completed Subscription Rights Certificate evidencing the 10 Subscription Rights being exercised, with any required signature guarantees, is received by the Subscription Agent within five days following the date of the Notice of Guaranteed Delivery relating thereto. The Notice of Guaranteed Delivery may be delivered to the Subscription Agent as set forth in the Instructions, or may be transmitted to the Subscription Agent by telegram or facsimile transmission, as permitted by the Subscription Agent and set forth in the Instructions. 9.6 Unless a Subscription Rights Certificate (i) provides that the shares to be issued pursuant to the exercise of Subscription Rights represented thereby are to be delivered to the Holder or (ii) is submitted for the account of an Eligible Institution, signatures on such Subscription Rights Certificate must be guaranteed by an Eligible Institution. 9.7 Nominees and others who hold shares of Common Stock for the account of others, should notify the respective beneficial owners of such shares as soon as possible to ascertain such beneficial owners' intentions and to obtain instructions with respect to the Subscription Rights. If the beneficial owner so instructs, the record holder of such Subscription Right should complete Subscription Rights Certificates and submit them to the Subscription Agent with the proper payment. In addition, beneficial owners of Common Stock or Subscription Rights held through such a Holder should contact the Holder and request the Holder to effect transactions in accordance with the beneficial owner's instructions. 9.8 The Instructions should be read carefully and followed in detail. DO NOT SEND SUBSCRIPTION CERTIFICATES TO HEXCEL CORPORATION. BENEFICIAL RIGHTS HOLDERS SHOULD PROMPTLY SUBMIT INSTRUCTIONS TO THEIR NOMINEE AS TO THE EXERCISE OF THEIR SUBSCRIPTION RIGHTS WITH APPROPRIATE PAYMENT, AND SHOULD NOT SEND THEM TO HEXCEL OR THE SUBSCRIPTION AGENT. 11 THE METHOD OF DELIVERY OF SUBSCRIPTION RIGHTS CERTIFICATES AND PAYMENT OF THE SUBSCRIPTION PRICE TO THE SUBSCRIPTION AGENT WILL BE AT THE ELECTION AND RISK OF THE HOLDERS, BUT IF SENT BY MAIL IT IS RECOMMENDED THAT SUCH CERTIFICATES AND PAYMENTS BE SENT BY MAIL, PROPERLY INSURED, WITH RETURN RECEIPT REQUESTED, AND THAT A SUFFICIENT NUMBER OF DAYS BE ALLOWED TO ENSURE DELIVERY TO THE SUBSCRIPTION AGENT AND CLEARANCE OF PAYMENT PRIOR TO 5:00 P.M., NEW YORK CITY TIME, ON THE SUBSCRIPTION RIGHTS EXPIRATION DATE. BECAUSE UNCERTIFIED PERSONAL CHECKS MAY TAKE AT LEAST FIVE BUSINESS DAYS TO CLEAR, HOLDERS ARE STRONGLY URGED TO PAY, OR ARRANGE FOR PAYMENT, BY MEANS OF CERTIFIED OR CASHIER'S CHECK, MONEY ORDER OR WIRE TRANSFER OF FUNDS. 10. METHOD OF TRANSFERRING RIGHTS. 10.1 Basic Subscription Rights and the corresponding Subscription Rights Certificates may be transferred by Holders. Subject to compliance with applicable securities laws, the Basic Subscription Rights evidenced by a Subscription Rights Certificate may be transferred in whole by endorsing the Subscription Rights Certificate for transfer in accordance with the Instructions. A portion of the Basic Subscription Rights evidenced by a single Subscription Rights Certificate (but not fractional Basic Subscription Rights) may be transferred by delivering to the Subscription Agent a Subscription Rights Certificate properly endorsed for transfer, with instructions to register such portion of the Basic Subscription Rights evidenced thereby in the name of the transferee (and to issue a new Subscription Rights Certificate to the transferee evidencing such transferred Basic Subscription Rights). In such event, a new Subscription Rights Certificate evidencing the balance of the Basic Subscription Rights will be issued to the holder or, if the holder so instructs, to an additional transferee. THE OVERSUBSCRIPTION RIGHTS ARE NOT TRANSFERABLE. 10.2 Holders wishing to transfer all or a portion of their Basic Subscription Rights (but not fractional Basic Subscription Rights) should allow a sufficient amount of time prior to the Subscription Rights Expiration Date for (i) the transfer instructions to be received and processed by the Subscription Agent, (ii) a new Subscription Rights Certificate to be issued and transmitted to the 12 transferee or transferees with respect to transferred Basic Subscription Rights, and to the Holder with respect to retained Basic Subscription Rights, if any, and (iii) the Basic Subscription Rights evidenced by such new Subscription Certificates to be exercised or sold by the recipients thereof. Neither Hexcel nor the Subscription Agent shall have any liability to a transferee or transferor of Rights if Subscription Rights Certificates are not received in time for exercise prior to the Subscription Rights Expiration Date. 10.3 Except for the fees charged by the Subscription Agent, the transfer agent and the Escrow Agent, if any (all of which will be paid by Hexcel), all commissions, fees and other expenses (including brokerage commissions and transfer taxes) incurred in connection with the purchase, sale or exercise of Subscription Rights will be for the account of the Holder, and none of such commissions, fees or expenses will be paid by Hexcel or the Subscription Agent. 11. AMENDMENTS TO PLAN. Hexcel reserves the right to amend the terms, procedures for subscription, form of Subscription Rights Certificate and other provisions of this Plan prior to the distribution of the Subscription Rights Certificates, provided, that such amendment shall not affect the number of shares of Reorganized Hexcel Common Stock purchasable hereunder by the Holders or reduce the Subscription Period below 30 days. 13 EXHIBIT A TO SUBSCRIPTION RIGHTS PLAN SERIAL NO. _________ HEXCEL CORPORATION SUBSCRIPTION RIGHTS CERTIFICATE [***Name and Address of holder] Number of Basic Subscription Rights: ____________________ This certifies that the above-named person, or registered assigns, is the registered holder of _________________________________________________ Basic Subscription Rights to purchase Common Stock, par value $.01 per share, of Hexcel Corporation (the "CORPORATION"), subject to the terms, provisions and conditions of the Subscription Rights Plan of the Corporation (the "RIGHTS PLAN"), which are hereby incorporated herein by reference and made a part hereof. Except as otherwise provided herein, capitalized terms used herein have the meanings assigned to them in the Rights Plan. Pursuant to the First Amended Plan of Reorganization, dated November 7, 1994, proposed by the Corporation and by the Official Committee of Equity Security Holders and confirmed by the United States Bankruptcy Court for the Northern District of California on ________ __, 1995, each stockholder has been granted Subscription Rights to purchase additional shares of Common Stock as set forth in the Rights Plan. Reference is made to the Rights Plan and the First Amended Disclosure Statement, dated November 7, 1994 ("DISCLOSURE STATEMENT"), for a more complete description of the Corporation, the Subscription Rights and the Common Stock purchasable hereunder. This Subscription Rights Certificate shall not be valid or obligatory for any purpose unless and until it shall have been countersigned by the Subscription Rights Agent. Witness the facsimile signature of the proper officers of the Corporation and its corporate seal. Dated: __________, 1995 [Seal] ATTEST: Hexcel Corporation By: - ------------------------- ------------------------------ Secretary Countersigned: [***Subscription Agent] By: ----------------------- 14 FOR YOUR SUBSCRIPTION TO BE EFFECTIVE, A COMPLETED SUBSCRIPTION CERTIFICATE MUST BE RECEIVED BY *** ________________________ (THE "SUBSCRIPTION AGENT") AT ITS ADDRESS BELOW NO LATER THAN 5:00 P.M. EASTERN STANDARD TIME ON ________ __, 1995 ACCOMPANIED BY PAYMENT TO [*** BANK], AS ESCROW AGENT FOR THE CORPORATION, IN THE AMOUNT OF THE TOTAL OF THE SUBSCRIPTION PRICE FOR THE NUMBER OF SHARES OF COMMON STOCK SUBSCRIBED FOR THROUGH THE EXERCISE OF BASIC SUBSCRIPTION RIGHTS AND THE OVERSUBSCRIPTION RIGHTS. SEE INSTRUCTIONS FOR PERMITTED MEANS OF PAYMENT. ITEM 1. BASIC SUBSCRIPTION. COMPLETE ITEMS A AND B BELOW. The undersigned desires to purchase, and hereby irrevocably subscribes for, the number of shares of Common Stock indicated below, at the price of $4.625 per share: A. Each Basic Subscription Right entitles the holder to purchase one share of Common Stock at a Subscription Price of $4.625 per share. You can exercise all or any portion of the number of Basic Subscription Rights held by you as indicated on the face of the Subscription Rights Certificate, provided that you may not exercise a fractional Basic Subscription Right. NUMBER OF BASIC SUBSCRIPTION RIGHTS EXERCISED: TO EXERCISE ALL OF THE BASIC SUBSCRIPTION RIGHTS REPRESENTED BY THE SUBSCRIPTION RIGHTS CERTIFICATE, CHECK BOX (1). TO EXERCISE LESS THAN ALL OF THE BASIC SUBSCRIPTION RIGHTS REPRESENTED BY THE SUBSCRIPTION RIGHTS CERTIFICATE, CHECK BOX (2) AND FILL IN THE NUMBER OF SHARES FOR WHICH YOU WISH TO SUBSCRIBE. (1) / / I wish to exercise all of my Basic Subscription Rights at $4.625 per share. OR (2) / / I wish to exercise my Basic Subscription Rights to subscribe for the following number of shares: _______________________________________________ (must be a whole number not exceeding the total number of Basic Subscription Rights represented by this certificate) 15 B. Compute the BASIC subscription price: x $4.625 = $ ------------------------- --------------------- No. of shares subscribed Total Price for (no fractions) (round fraction to next highest whole cent) ITEM 2. OVERSUBSCRIPTION NOTE: OVERSUBSCRIPTION RIGHTS MAY ONLY BE EXERCISED BY ELIGIBLE RIGHTS HOLDERS (THAT IS, HOLDERS OF COMMON STOCK AS OF THE CLOSE OF BUSINESS ON THE EFFECTIVE DATE UNDER THE FIRST AMENDED PLAN OF REORGANIZATION WHO EXERCISE ALL OF THE BASIC SUBSCRIPTION RIGHTS ISSUED TO THEM OR THEIR ACCOUNT PURSUANT TO SUCH PLAN OR ANY BANK, TRUST COMPANY, DEPOSITARY OR SECURITIES BROKER OR DEALER WHICH HOLDS SUBSCRIPTION RIGHTS AS NOMINEE ON BEHALF OF AN ELIGIBLE BENEFICIAL RIGHTS HOLDER, AS DEFINED IN THE RIGHTS PLAN). In addition to shares subscribed for by exercise of the Basic Subscription Rights, the undersigned desires to purchase, if available, and hereby irrevocably subscribes for, the number of shares of Common Stock indicated below through the exercise of Oversubscription Rights. The actual number of shares of Common Stock available for Oversubscriptions depends on the number of Basic Subscription Rights exercised by all holders thereof and other factors, and is subject to proration as set forth in the Rights Plan. The undersigned understands that the Total Price shown below must be paid with this subscription, and that any excess payment resulting from proration will be refunded. ___________________ x $4.625 = $____________ No. of shares Total Price (no fractions) (round fraction to next highest whole cent) PAYMENT TO [*** BANK AS ESCROW AGENT FOR THE CORPORATION] IN THE AMOUNT OF THE TOTAL PURCHASE PRICE FOR THE SHARES SUBSCRIBED FOR BY THE EXERCISE OF BASIC SUBSCRIPTION RIGHTS AND THE OVERSUBSCRIPTION RIGHTS MUST ACCOMPANY THIS SUBSCRIPTION. IMPORTANT NOTE: NO SUBSCRIPTION WILL BE ACCEPTED WITHOUT PAYMENT IN THE FULL AMOUNT OF THE PURCHASE PRICE DUE IN CONNECTION WITH THE EXERCISE OF BOTH THE BASIC SUBSCRIPTION RIGHTS AND THE OVERSUBSCRIPTION RIGHTS. 16 PAYMENT IN AMOUNTS INSUFFICIENT TO COVER THE STATED SUBSCRIPTIONS WILL BE TREATED AS SUBSCRIPTIONS FOR THE NUMBER OF SHARES PURCHASABLE BY SUCH LESSER AMOUNT. PAYMENT IN AMOUNTS GREATER THAN REQUIRED BY THE STATED SUBSCRIPTIONS WILL BE TREATED AS PAYMENT FOR THE STATED SUBSCRIPTIONS ONLY, AND THE EXCESS PAYMENT WILL BE REFUNDED. Each holder of Subscription Rights, by signing below, certifies that he, she or it has been provided with a copy of the Plan and the Disclosure Statement. Dated: , 1995 ---------- ------------------------- Print Name of Holder ------------------------- Authorized Signature Note: The signature must correspond with the name as written and the name must be that of the registered owner. Guaranteed by: Note: If shares of Common Stock are to be delivered to a person other than the one in whose name this certificate is issued, the signature must be guaranteed by a bank or trust company having an office or correspondent in the United States, a member of a registered national securities exchange or a member of the National Association of Securities Dealers, Inc. If Common Stock is to be issued in a different name, please complete the following: --------------------------------- Name for Registration --------------------------------- Mailing Address --------------------------------- City State Zip Code * * * * * * * * * * 17 ASSIGNMENT FOR VALUE RECEIVED, the undersigned owner of the Subscription Rights represented by this Subscription Rights Certificate hereby sells, assigns and transfers unto the Assignee, ______________________________, having an address at _______________________________________________________ _________________ __________________________, _________________ of the Basic Subscription Rights of the undersigned represented by this Subscription Rights Certificate and does hereby irrevocably constitute and appoint________________ _____________________________________ Attorney to transfer said rights on the books of Hexcel Corporation, a Delaware corporation, maintained for such purpose, with full power of substitution in the premises. Dated: , 1995 ------------ ---------------------------------- Print Name of Holder ---------------------------------- Authorized Signature Note: The signature must correspond with the name as written and the name must be that of the registered owner. Guaranteed by: Note: The signature must be guaranteed by a bank or trust company having an office or correspondent in the United States, a member of a registered national securities exchange or a member of the National Association of Securities Dealers, Inc. 18 GENERAL INSTRUCTIONS The following Instructions should be read carefully and followed in detail. DO NOT SEND SUBSCRIPTION RIGHTS CERTIFICATES TO HEXCEL CORPORATION. INSTRUCTIONS FOR BANKS, BROKERS AND OTHER NOMINEE HOLDERS ONLY. 11.0.1 If you are the holder of record, but not the beneficial owner, of any of the shares for which you are listed as the record holder, you should have received Subscription Rights in the names of the beneficial owners of which you notified the Corporation. You should forward Subcription Rights Instructions, as well as a copy of the Plan and Disclosure Statement, to such beneficial owners. 11.0.2 No fees or commissions or other remuneration will be payable to any broker in connection with the solicitation of subscriptions from beneficial owners. Upon written request, the Corporation will reimburse you for customary mailing and handling expenses incurred in forwarding the Subscription Rights Certificate and accompanying solicitation packages to your clients, not in excess of proxy solicitation rates or reimbursement approved by the New York Stock Exchange. 11.0.3 If you have any question regarding this Subscription Right or the procedures for its transmittal to beneficial owners, or if you need additional copies of the Plan and the Disclosure statement, please contact: ***SUBSCRIPTION AGENT [ADDRESS] NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL DEEM YOU, OR ANY OTHER PERSON, THE AGENT OF THE CORPORATION OR THE SUBSCRIPTION AGENT, OR AUTHORIZE YOU OR ANY PERSON TO USE ANY DOCUMENT OR MAKE ANY STATEMENTS ON BEHALF OF THE CORPORATION OR THE SUBSCRIPTION AGENT WITH RESPECT TO THE PLAN, THE SUBSCRIPTION RIGHTS OR THE COMMON STOCK, EXCEPT FOR THE STATEMENTS CONTAINED IN THE PLAN AND DISCLOSURE STATEMENT AS APPROVED BY THE UNITED STATES BANKRUPTCY COURT. 19 INSTRUCTIONS FOR RECORD OWNERS AND TRANSFEREES ONLY. If you are a registered owner, or a transferee, of the Subscription Rights represented by this Subscription Rights Certificate, you must complete this Subscription Rights Certificate and it must be received by the Subscription Agent, properly completed with a check in the amount of the total subscription price (in connection with the exercise of the Basic Subscription Rights and the Oversubscription Rights, if any), at the following address on or after ***_____________, 1995 and no later than 5:00 p.m EST on ***________, 1995. NOTE: Transferees may not exercise Oversubscription Rights. Also, registered owners who are Nominees may, to the extent acting as a nominee, only exercise Oversubscription Rights on behalf of beneficial owners and only to the extent permitted under the Rights Plan. ***SUBSCRIPTION AGENT [ADDRESS] PAYMENT: Payment in full must be by (a) check or bank draft drawn upon a U.S. bank or postal, telegraphic or express money order payable to ***_________________________, as Subscription Agent, or (b) wire transfer of funds to the account maintained by the Subscription Agent for such purpose at [***wire transfer instructions to be inserted]. The Subscription Price will be deemed to have been received by the Subscription Agent only upon (i) clearance of any uncertified check, (ii) receipt by the Subscription Agent of any certified check or bank draft drawn upon a U.S. bank or of any postal, telegraphic or express money order or (iii) receipt of good funds in the Subscription Agent's account at ***________________. Holders are strongly urged to pay, or arrange for payment, by means of certified or cashier's check, money order or wire transfer of funds. If paying by uncertified personal check, please note that the funds paid thereby may take at least five business days to clear. ACCORDINGLY, HOLDERS OF SUBSCRIPTION RIGHTS WHO WISH TO PAY THE SUBSCRIPTION PRICE BY MEANS OF UNCERTIFIED PERSONAL CHECK ARE URGED TO MAKE PAYMENT SUFFICIENTLY IN ADVANCE OF THE SUBSCRIPTION RIGHTS EXPIRATION DATE TO ENSURE THAT SUCH PAYMENT IS RECEIVED AND CLEARS BY SUCH DATE AND ARE URGED TO CONSIDER PAYMENT BY MEANS OF CERTIFIED OR CASHIER'S CHECK, MONEY ORDER OR WIRE TRANSFER OF FUNDS. IMPORTANT NOTE: Neither the Corporation nor the Subscription Agent can be responsible for Subscription Rights not received on or prior to 5:00 p.m. EST on the Subscription Rights Expiration Date, whether lost, stolen or delayed. The Rights Plan provides for GUARANTEED DELIVERY PROCEDURES by delivery through a bank, broker or other eligible institution. Please refer to the Rights Plan. Any questions or requests for assistance concerning the method of exercising Subscription Rights or requests for additional copies of the Rights Plan, the Instructions or the Guaranteed Delivery Procedures for late subscriptions should be directed to the Subscription Agent at (***) ________. 20 EXHIBIT B TO CONFIRMATION ORDER REVISE SECTION 1.36 OF THE PLAN TO READ AS FOLLOWS: 1.36 ELIGIBLE RIGHTS HOLDER means (i) a Record Holder of Hexcel Common Stock, other than a Nominee, who has exercised , in accordance with the terms of the Rights Plan, all Basic Subscription Rights issued to such holder by Reorganized Hexcel pursuant to the Plan, and (ii) a Nominee to the extent acting on behalf of an Eligible Beneficial Rights Holder, regardless of whether such Nominee has exercised less than all of the Basic Subscription Rights issued to it pursuant to the Plan. ADD THE FOLLOWING DEFINITIONS TO ARTICLE I OF THE PLAN: 1.88 BENEFICIAL RIGHTS HOLDER means a person or entity who is listed on the records of any Nominee as the beneficial owner of any Common Stock held in the name of such Nominee (either of record or through another Nominee) as of the close of business on the Effective Date. 1.89 ELIGIBLE BENEFICIAL RIGHTS HOLDER means a Beneficial Rights Holder on whose behalf a Nominee has, at such Beneficial Rights Holder's direction, exercised in accordance with the terms of the Rights Plan, all Basic Subscription Rights issued to or for the account of such Nominee by Reorganized Hexcel pursuant to the Plan with respect to Common Stock beneficially owned by such Beneficial Rights Holder. 1.90 NOMINEE means any bank, trust company, depositary or securities broker or dealer which holds Common Stock, either of record or beneficially through another Nominee, on the Effective Date otherwise than as the beneficial owner thereof. REPLACE THE THIRD SENTENCE OF SECTION 4.11(b) OF THE PLAN WITH THE FOLLOWING: In addition, under the Rights Plan an Eligible Rights Holder will have the right to exercise his Oversubscription Rights and thereby subscribe for all or a portion of the shares of Reorganized Hexcel Common Stock, if any, which are in the Stockholder Pool, subject to Proration in accordance with the terms of the Rights Plan; provided that Nominees may only exercise Oversubscription Rights on behalf of Eligible Beneficial Rights Holders with respect to whose Common Stock Basic Subscription Rights were issued to or for the account of such Nominee. ADD THE FOLLOWING TO THE END OF SECTION 5.2(g) OF THE PLAN: A Nominee may only exercise Oversubscription Rights on behalf of Eligible Beneficial Rights Holders who beneficially own Basic Subscription Rights registered in that Nominee's name. Under the Rights Plan, Reorganized Hexcel may prescribe the procedures for verifying that Nominees are exercising Oversubscription Rights only on behalf of Eligible Beneficial Rights Holders. ADD THE FOLLOWING TO THE END OF SECTION 5.2 OF THE PLAN: (h) ADMINISTRATION OF RIGHTS PLAN. All questions concerning the Subscription Rights, including but not limited to questions as to the validity of any exercise of Basic Subscription Rights or Oversubscription Rights and the proper Proration of shares in the Stockholder Pool, will be determined by Reorganized Hexcel or by the Subscription Agent under the Rights Plan, and such determinations shall be final and binding. For purposes of administering the Rights Plan, including without limitation for purposes of determining whether Oversubscription Rights have been properly exercised and for purposes of Proration, (i) in the event that any person or entity has accounts with more than one Nominee through which such person or entity is listed as the beneficial owner of Common Stock as of the close of business on the Effective Date, then each account or group of accounts of that person or entity with each different Nominee will be treated by Reorganized Hexcel or by the Subscription Agent under the Rights Plan as a separate Beneficial Rights Holder, and (ii) in the event that a Beneficial Rights Holder is also a Record Holder of Hexcel Common Stock, then Reorganized Hexcel and the Subscription Agent under the Rights Plan will treat that person or entity in its capacity as a Record Holder of Hexcel Common Stock as being separate from that person or entity in its capacity as a Beneficial Rights Holder. EX-99.2 3 EXHIBIT 99.2 EXHIBIT 99.2 HEXCEL CORPORATION LONG-TERM INCENTIVE PLAN ------------ I. PURPOSE The purpose of the Hexcel Corporation Long-Term Incentive Plan (the "Plan") is to attract and retain and provide incentives to Employees, officers, directors and consultants of the Corporation, and to thereby increase overall shareholders' value. The Plan generally provides for the granting of stock, stock options, stock appreciation rights, restricted shares, other stock-based awards or any combination of the foregoing to the eligible participants. II. DEFINITIONS (a) "Award" includes, without limitation, stock options (including incentive stock options within the meaning of Section 422(b) of the Code) with or without stock appreciation rights, dividend equivalent rights, stock awards, restricted share awards, or other awards that are valued in whole or in part by reference to, or are otherwise based on, the Common Stock ("other Common Stock- based Awards"), all on a stand alone, combination or tandem basis, as described in or granted under this Plan. (b) "Award Agreement" means a written agreement setting forth the terms and conditions of each Award made under this Plan. (c) "Board" means the Board of Directors of the Corporation. (d) "Code" means the Internal Revenue Code of 1986, as amended from time to time. (e) "Committee" means the Executive Compensation and Organization Committee of the Board or such other committee of the Board as may be designated by the Board from time to time to administer this Plan the members of which shall consist solely of members of the Board who are "disinterested persons" within the meaning of Rule 16b-3 of the Exchange Act and are "outside directors" for purposes of Code Section 162(m)(4)(C) of the Code. (f) "Common Stock" means the $.01 par value common stock of the Corporation. (g) "Corporation" means Hexcel Corporation, a Delaware corporation. (h) "Employee" means an employee of the Corporation or a Subsidiary. (i) "Exchange Act" means the Securities Exchange Act of 1934, as amended. (j) "Fair Market Value" means the closing price for the Common Stock as reported in publications of general circulation for the New York Stock Exchange Composite Transactions on such date, or, if there were no sales on the valuation date, on the next preceding date on which such closing price was recorded; provided, however, that the Committee may specify some other definition of Fair Market Value with respect to any particular Award. (k) "Participant" means an Employee, officer, director or consultant who has been granted an Award under the Plan. (l) "Plan Year" means a calendar year. (m) "Subsidiary" means any corporation or other entity, whether domestic or foreign, in which the Corporation has or obtains, directly or indirectly, a proprietary interest of more than 50% by reason of stock ownership or otherwise. III. ELIGIBILITY Any Employee, officer, director (other than a director described in the next sentence) or consultant of the Corporation or Subsidiary selected by the Committee is eligible to receive an Award. A director shall not be eligible if he is (i) a member of 2 the Committee; (2) a member of a Committee administering any other stock option, stock appreciation, stock bonus or other stock plan of the Corporation of any Subsidiary unless such plan does not permit participation by directors; or (3) a former (within one year) member of the Committee or any committee administering any other such plan. IV. PLAN ADMINISTRATION (a) Except as otherwise determined by the Board, the Plan shall be administered by the Committee. The Board, or the Committee to the extent determined by the Board, shall periodically make determinations with respect to the participation of Employees, officers, directors and consultants in the Plan and, except as otherwise required by law or this Plan, the grant terms of Awards, including vesting schedules, price, restriction or option period, dividend rights, post-retirement and termination rights, payment alternatives such as cash, stock, contingent awards or other means of payment consistent with the purposes of this Plan, and such other terms and conditions as the Board or the Committee deems appropriate which shall be contained in an Award Agreement with respect to a Participant. (b) The Committee shall have authority to interpret and construe the provisions of the Plan and any Award Agreement and make determinations pursuant to any Plan provision or Award Agreement which shall be final and binding on all persons. No member of the Committee shall be liable for any action or determination made in good faith, and the members shall be entitled to indemnification and reimbursement in the manner provided in the Corporation's Certificate of Incorporation, as it may be amended from time to time. (c) The Committee shall have the authority at any time to provide for the conditions and circumstances under which Awards shall be forfeited. 3 V. CAPITAL STOCK SUBJECT TO THE PROVISIONS OF THIS PLAN (a) The capital stock subject to the provisions of this Plan shall be shares of authorized but unissued Common Stock and shares of Common Stock held as treasury stock. Subject to adjustment in accordance with the provisions of Section X, and subject to Section V(c) below, the maximum number of shares of Common Stock that shall be available for grants of Awards under this Plan shall be 1,000,000. (b) Any shares ceasing to be subject to a stock option or incentive stock option because of the surrender of such option in lieu of exercise shall become again available for Awards under the Plan. The grant of a restricted share Award shall be deemed to be equal to the maximum number of shares which may be issued under the Award. Awards payable only in cash will not reduce the number of shares available for Awards granted under the Plan. (c) There shall be carried forward and be available for Awards under the Plan, in addition to shares available for grant under paragraph (a) of this Section V, all of the following: (i) any unused portion of the limit set forth in paragraph (a) of this Section V; (ii) shares represented by Awards which are cancelled, forfeited, surrendered, terminated, paid in cash or expire unexercised; and (iii) the excess amount of variable Awards which become fixed at less than their maximum limitations. VI. AWARDS UNDER THIS PLAN As the Board or Committee may determine, the following types of Awards and other Common Stock-based Awards may be granted under this Plan on a stand alone, combination or tandem basis: (a) STOCK OPTION. A right to buy a specified number of shares of Common Stock at a fixed exercise price during a specified time, all as the Committee may determine. 4 (b) INCENTIVE STOCK OPTION. An Award which may be granted only to Employees in the form of a stock option which shall comply with the requirements of Code Section 422 or any successor section as it may be amended from time to time. The exercise price of any incentive stock option shall not be less than 100% of the Fair Market Value of the Common Stock on the date of grant of the incentive stock option Award. Subject to adjustment in accordance with the provisions of Section X, the aggregate number of shares which may be subject to incentive stock option Awards under this Plan shall not exceed the maximum number of shares provided in paragraph (a) of Section V above. To the extent that Code Section 422 requires certain provisions to be set forth in a written plan, said provisions are incorporated herein by this reference. (c) STOCK OPTION IN LIEU OF COMPENSATION ELECTION. A right given with respect to a year to a director, officer or key Employee to elect to exchange annual retainers, fees or compensation for stock options. (d) STOCK APPRECIATION RIGHT. A right which may or may not be contained in the grant of a stock option or incentive stock option to receive the excess of the Fair Market Value of a share of Common Stock on the date the option is surrendered over the option exercise price contained in the Award Agreement. (e) RESTRICTED SHARES. A transfer of Common Stock to a Participant subject to forfeiture until such restrictions, terms and conditions as the Committee may determine are fulfilled. (f) DIVIDEND OR EQUIVALENT. A right to receive dividends or their equivalent in value in Common Stock, cash or in a combination of both with respect to any new or previously existing Award. (g) STOCK AWARD. An unrestricted transfer of ownership of Common Stock. (h) OTHER STOCK-BASED AWARDS. Other Common Stock-based Awards which are related to or serve a similar function to those Awards set forth in this Section VI. 5 VII. AWARD AGREEMENTS Each Award under the Plan shall be evidenced by an Award Agreement setting forth the terms and conditions of the Award and executed by the Corporation and Participant. VIII. OTHER TERMS AND CONDITIONS (a) ASSIGNABILITY. Unless provided to the contrary in any Award, no Award shall be assignable or transferable except by will, by the laws of descent and distribution and during the lifetime of a Participant, the Award shall be exercisable only by such Participant. (b) TERMINATION OF EMPLOYMENT. The Committee shall determine the disposition of the grant of each Award in the event of the retirement, disability, death or other termination of a Participant's employment or other relationship with the Corporation or a Subsidiary. (c) RIGHTS AS A STOCKHOLDER. A Participant shall have no rights as a stockholder with respect to shares covered by an Award until the date the Participant is the holder of record. No adjustment will be made for dividends or other rights for which the record date is prior to such date. (d) NO OBLIGATION TO EXERCISE. The grant of an Award shall impose no obligation upon the Participant to exercise the Award. (e) PAYMENTS BY PARTICIPANTS. The Committee may determine that Awards for which a payment is due from a Participant may be payable: (i) in U.S. dollars by personal check, bank draft or money order payable to the order of the Corporation, by money transfers or direct account debits; (ii) through the delivery or deemed delivery based on attestation to the ownership of shares of Common Stock with a Fair Market Value equal to the total payment due from the Participant; (iii) pursuant to a broker-assisted "cashless exercise" program if established by the Corporation; (iv) by a combination of the methods described in (i) through (iii) above; or (v) by such other methods as the Committee may deem appropriate. 6 (f) WITHHOLDING. Except as otherwise provided by the Committee, (i) the deduction of withholding and any other taxes required by law will be made from all amounts paid in cash and (ii) in the case of payments of Awards in shares of Common Stock, the Participant shall be required to pay the amount of any taxes required to be withheld prior to receipt of such stock, or alternatively, a number of shares the Fair Market Value of which equals the amount required to be withheld may be deducted from the payment. (g) RESTRICTIONS ON SALE AND EXERCISE. With respect to officers and directors for purposes of Section 16 of the Exchange Act, and if required to comply with rules promulgated thereunder, (i) no Award providing for exercise, a vesting period, a restriction period or the attainment of performance standards shall permit unrestricted ownership of Common Stock by the Participant for at least six months from the date of grant, and (ii) Common Stock acquired pursuant to this Plan (other than Common Stock acquired as a result of the granting of a "derivative security") may not be sold for at least six months after acquisition. (h) Maximum Awards. The maximum number of shares of Common Stock that may be issued to any single Participant pursuant to options under this Plan is equal to the maximum number of shares provides for in paragraph (a) of Section V. IX. TERMINATION, MODIFICATION AND AMENDMENTS (a) The Plan may from time to time be terminated, modified or amended by the affirmative vote of the holders of a majority of the outstanding shares of the capital stock of the Corporation present or represented and entitled to vote at a duly held stockholders meeting. (b) The Board may at any time terminate the Plan or from time to time make such modifications or amendments of the Plan as it may deem advisable; provided, however, that the Board shall not make any material amendments to the Plan without the approval of at least the affirmative vote of the holders of a majority of the outstanding shares of the capital stock of the Corporation 7 present or represented and entitled to vote at a duly held stockholders meeting. (c) No termination, modification or amendment of the Plan may adversely affect the rights conferred by an Award without the consent of the recipient thereof. X. RECAPITALIZATION The aggregate number of shares of Common Stock as to which Awards may be granted to Participants, the number of shares thereof covered by each outstanding Award, and the price per share thereof in each such Award, shall all be proportionately adjusted for any increase or decrease in the number of issued shares of Common Stock resulting from a subdivision or consolidation of shares or other capital adjustment, or the payment of a stock dividend or other increase or decrease in such shares, effected without receipt of consideration by the Corporation, or other change in corporate or capital structure; provided, however, that any fractional shares resulting from any such adjustment shall be eliminated. The Committee may also make the foregoing changes and any other changes, including changes in the classes of securities available, to the extent it is deemed necessary or desirable to preserve the intended benefits of the Plan for the Corporation and the Participants in the event of any other reorganization, recapitalization, merger, consolidation, spin-off, extraordinary dividend or other distribution or similar transaction. XI. NO RIGHT TO EMPLOYMENT No person shall have any claim or right to be granted an Award, and the grant of an Award shall not be construed as giving a Participant the right to be retained in the employ of, or in the other relationship with, the Corporation or a Subsidiary. Further, the Corporation and each Subsidiary expressly reserve the right at any time to dismiss a Participant free from any liability, or any claim under the Plan, except as provided herein or in any Award Agreement issued hereunder. 8 XII. GOVERNING LAW To the extent that federal laws do not otherwise control, the Plan shall be construed in accordance with and governed by the laws of the State of California. XIII. SAVINGS CLAUSE This Plan is intended to comply in all aspects with applicable laws and regulations, including, with respect to those Employees who are officers or directors for purposes of Section 16 of the Exchange Act, Rule 16b-3 under the Exchange Act. In case any one more of the provisions of this Plan shall be held invalid, illegal or unenforceable in any respect under applicable law and regulation (including Rule 16b-3), the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby and the invalid, illegal or unenforceable provision shall be deemed null and void; however, to the extent permissible by law, any provision which could be deemed null and void shall first be construed, interpreted or revised retroactively to permit this Plan to be construed in compliance with all applicable laws (including Rule 16b-3) so as to foster the intent of this Plan. XIV. EFFECTIVE DATE AND TERM This Plan shall become effective immediately upon the effectiveness of the plan of reorganization filed by the Corporation with the United States Bankruptcy Court in the Corporation's Chapter 11 case which was commenced on December 6, 1993 (the "Plan of Reorganization"), subject to approval by stockholders of the Corporation within twelve months of such adoption as provided in Code Section 422(b)(1) and Rule 16b-3(b). Awards granted prior to such approval by the stockholders shall be subject to such approval. The Plan shall terminate on the tenth anniversary of the effective date of the Plan. No awards shall be granted after the termination of the Plan. 9 -----END PRIVACY-ENHANCED MESSAGE-----