(Against All Defendants for Violations of Section 14(a) of the Exchange Act and   17 C.F.R. § 244.100 Promulgated Thereunder)   (Against the Individual Defendants for Violations   of Section 20(a) of the Exchange Act)   (Against All Defendants for Violations of Section 14(a) of the Exchange Act and   Rule 14a-9 Promulgated Thereunder)   1.pdf.  See also The Spectranetics Corp., SEC Staff Comment Letter 1 (July 18, 2017) (“Item 4.  The Solicitation or Recommendation Certain Spectranetics Forecasts, page 39 . . . [P]rovide the  reconciliation  required  under  Rule  100(a)  of  Regulation  23.  Plaintiff brings this class action pursuant to Fed. R. Civ. P. 23 on behalf of himself  and the other public shareholders of Hexcel (the “Class”).  Excluded from the Class are Defendants  herein and any person, firm, trust, corporation, or other entity related to or affiliated with any  Defendant.   25.  Hexcel is an advanced composite company that develops, manufactures and  markets lightweight, high-performance structural materials including carbon fibers, specialty  reinforcements, prepregs and other fiber-reinforced matrix materials, honeycomb, adhesives, radio  frequency/electromagnetic interference and microwave absorbing materials, engineered  honeycomb and composite structures.  The Company’s products are used in a wide variety of end  applications, such as commercial and military aircraft, space launch vehicles and satellites, wind  turbine blades, automotive, recreational products and other industrial applications.   27.  Hexcel is well-positioned for financial growth and the Merger Consideration fails  to adequately compensate the Company’s shareholders.  It is imperative that Defendants disclose  the material information they have omitted from the S-4, discussed in detail below, so that the  Company’s shareholders can properly assess the fairness of the Merger Consideration for  themselves and make an informed decision concerning whether or not to vote in favor of the  Proposed Transaction.   28.  If the false and/or misleading S-4 is not remedied and the Proposed Transaction is  consummated, Defendants will directly and proximately have caused damages and actual  economic loss (i.e. the difference between the value to be received as a result of the Proposed  Transaction and the true value of their shares prior to the merger), in an amount to be determined  at trial, to Plaintiff and the Class.  II.  The Materially Incomplete and Misleading S-4    30.  The S-4 discloses that the first discussions relating to the Proposed Transaction  took place on September 18, 2019, when Individual Defendant Nick L. Stanage discussed with  Individual Defendant Thomas A. Gendron the potential benefits of a strategic transaction. S-4 53.  Over the next roughly four months, the Merger Agreement and all other transactions contemplated  by the merger were completed.  Id. 53-60.  From the description contained in the Background of  the Merger, the expedited sales process appears to be flawed and designed to facilitate a transaction  with Woodward.   32.  Additionally, the S-4 fails to disclose the timing and the nature of the employment  and governance communications between the Company and Woodward. These discussions are  material because the Board’s interests are divergent from the shareholders in this regard and the  content of the communications illustrates to shareholders if the Board was truly negotiating for  their benefit.  The Materiality of Financial Projections    33.  A company’s financial forecasts are material information a board relies on to  determine whether to approve a merger transaction and recommend that shareholders vote to  approve the transaction.  Here, the S-4 discloses that in connection with evaluating a possible  transaction with Woodward, Hexcel’s management created certain unaudited prospective financial  information for fiscal years 2020 through 2024, and projected EBITDA synergies for the next five  years following the merger.  Id. at 84-87.   34.  When soliciting proxies from shareholders, a company must furnish the  information found in Schedule 14A (codified as 17 C.F.R. § 240.14a-101).  Item 14 of Schedule  14A sets forth the information a company must disclose when soliciting proxies regarding mergers  and acquisitions.  In regard to financial information, companies are required to disclose “financial  information required by Article 11 of Regulation S-X[,]” which includes Item 10 of Regulation S- K.  See Item 14(7)(b)(11) of 17 C.F.R. § 240.14a-101.     36.  In order to facilitate investor understanding of the Company’s financial projections,  the SEC provides companies with certain factors “to be considered in formulating and disclosing  such projections[,]” including:  (i) When management chooses to include its projections in a Commission filing,  the disclosures accompanying the projections should facilitate investor  understanding of the basis for and limitations of projections. In this regard investors  should be cautioned against attributing undue certainty to management’s  assessment, and the Commission believes that investors would be aided by a  statement indicating management’s intention regarding the furnishing of updated  projections. The Commission also believes that investor understanding would be  enhanced by disclosure of the assumptions which in management’s opinion are  most significant to the projections or are the key factors upon which the financial  results of the enterprise depend and encourages disclosure of assumptions in a  manner that will provide a framework for analysis of the projection.  (ii) Management also should consider whether disclosure of the accuracy or  inaccuracy of previous projections would provide investors with important insights  into the limitations of projections. In this regard, consideration should be given to  presenting the projections in a format that will facilitate subsequent analysis of the  reasons for differences between actual and forecast results. An important benefit  may arise from the systematic analysis of variances between projected and actual  results on a continuing basis, since such disclosure may highlight for investors the  most significant risk and profit-sensitive areas in a business operation.  17 C.F.R. § 229.10(b)(3) (emphasis added).   37.  Here, Hexcel shareholders would clearly find complete and non-misleading  financial projections material in deciding how to vote, considering that the Board specifically  relied on the financial forecasts in reaching its decision to, among other things, approve the Merger  Agreement and the transactions contemplated by it. S-4 60-63.   39.  The S-4 discloses that in connection with evaluating a possible transaction with  Woodward, Hexcel’s management created certain unaudited prospective financial information for  fiscal years 2020 through 2024, and projected EBITDA synergies for the next five years following  the merger.  Id. at 84-87.   40.  The S-4 goes on to disclose, inter alia, forecasted values for projected non-GAAP  financial metrics for 2020 through 2024 for EBITDA, but fails to provide (i) the line items used to  calculate the non-GAAP metric or (ii) a reconciliation of the non-GAAP projections to the most  comparable GAAP measure.  Id. at 87.   41.  The S-4 does not define EBITDA, reconcile EBITDA to its most comparable  GAAP measure or disclose the line items used to calculate EBITDA, rendering the S-4 materially  false and/or misleading.  Id.   42.  Thus, the S-4’s disclosure of non-GAAP financial forecasts provides an incomplete  and materially misleading understanding of the Company’s future financial prospects and the  inputs and assumptions for which those prospects are based upon.  It is clear that those inputs and  assumptions were in fact forecasted and utilized in calculating the non-GAAP measure disclosed  and relied on by the Board to recommend the Proposed Transaction in violation of Section 14(a)  of the Exchange Act.   44.  As such, this information must be disclosed in order to cure the materially  misleading disclosures regarding both the financial projections developed by the Company as well  as the projections relied upon by the Company’s financial advisors.  The Financial Projections Violate Regulation G   45.  The SEC has acknowledged that potential “misleading inferences” are exacerbated  when the disclosed information contains non-GAAP financial measures1 and adopted Regulation  G2 “to ensure that investors and others are not misled by the use of non-GAAP financial  measures.”3     48.  The SEC has required compliance with Regulation G, including reconciliation  requirements in other merger transactions.  Compare Youku Tudou Inc., et al., Correspondence to  SEC 5 (Jan. 11, 2016) (Issuer arguing that Rule 100(d) of Regulation G does not apply to non- GAAP financials relating to a business combination),7 with Youku Tudou Inc., et al., SEC Staff  Comment Letter 1 (Jan. 20, 2016) (“[The SEC] note[s] that your disclosure of projected financial  information is not in response to the requirements of, or pursuant to, Item 1015 of Regulation M- A and is thus not excepted from Rule 100 of Regulation G.”);8 see Harbin Electric, Inc.,  Correspondence to SEC 29 (Aug. 12, 2011) (“Pursuant to the requirements of Regulation G, we  have added a reconciliation of actual and projected EBIT to GAAP net income . . . .”).9   49.  Compliance with Regulation G is mandatory under Section 14(a), and non- compliance constitutes a violation of Section 14(a).  Thus, in order to bring the S-4 into compliance  7    Available at https://www.sec.gov/Archives/edgar/data/1442596/000110465916089133/  filename1.htm.  8    Available at https://www.sec.gov/Archives/edgar/data/1442596/000000000016062042/  filename1.pdf.   9   Available at https://www.sec.gov/Archives/edgar/data/1266719/000114420411046281/  filename1.htm.  See also Actel Corporation, SEC Staff Comment Letter 2 (Oct. 13, 2010)  (“Opinion of Actel’s Financial Advisor, page 24 . . . This section includes non-GAAP financial  measures.  Please revise to provide the disclosure required by Rule 100 of Regulation G.”),  available at https://www.sec.gov/Archives/edgar/data/907687/000000000010060087/filename   72.  Plaintiff incorporates each and every allegation set forth above as if fully set forth  herein.   73.  Section 14(a)(1) of the Exchange Act makes it “unlawful for any person, by the use  of the mails or by any means or instrumentality of interstate commerce or of any facility of a  national securities exchange or otherwise, in contravention of such rules and regulations as the  Commission may prescribe as necessary or appropriate in the public interest or for the protection  of investors, to solicit or to permit the use of his name to solicit any [S-4] or consent or  authorization in respect of any security (other than an exempted security) registered pursuant to  section 78l of this title.”  15 U.S.C. § 78n(a)(1).   75.  The failure to reconcile the non-GAAP financial measures included in the S-4  violates Regulation G and constitutes a violation of Section 14(a).   76.  As a direct and proximate result of the dissemination of the false and/or misleading  S-4 Defendants used to recommend that shareholders approve the Proposed Transaction, Plaintiff  and the Class will suffer damages and actual economic losses (i.e. the difference between the value  they will receive as a result of the Proposed Transaction and the true value of their shares prior to  the merger) in an amount to be determined at trial and are entitled to such equitable relief as the  Court deems appropriate, including rescissory damages.   77.  Plaintiff incorporates each and every allegation set forth above as if fully set forth  herein.   78.  SEC Rule 14a-9 prohibits the solicitation of shareholder votes in registration  statements that contain “any statement which, at the time and in the light of the circumstances  under which it is made, is false or misleading with respect to any material fact, or which omits to  state any material fact necessary in order to make the statements therein not false or misleading[.]”   17 C.F.R. § 240.14a-9(a).    79.  Regulation G similarly prohibits the solicitation of shareholder votes by “mak[ing]  public a non-GAAP financial measure that, taken together with the information accompanying that  measure . . . contains an untrue statement of a material fact or omits to state a material fact  necessary in order to make the presentation of the non-GAAP financial measure . . . not  misleading.”  17 C.F.R. § 244.100(b) (emphasis added).     81.  In so doing, Defendants made untrue statements of fact and/or omitted material  facts necessary to make the statements made not misleading.  Each of the Individual Defendants,  by virtue of their roles as directors and/or officers, were aware of the omitted information but failed  to disclose such information, in violation of Section 14(a).  The Individual Defendants were  therefore negligent, as they had reasonable grounds to believe material facts existed that were  misstated or omitted from the S-4 but nonetheless failed to obtain and disclose such information  to shareholders although they could have done so without extraordinary effort.    82.  The Individual Defendants knew or were negligent in not knowing that the S-4 is  materially misleading and omits material facts that are necessary to render it not misleading.  The  Individual Defendants undoubtedly reviewed and relied upon the omitted information identified  above in connection with their decision to approve and recommend the Proposed Transaction.   83.  The Individual Defendants knew or were negligent in not knowing that the material  information identified above has been omitted from the S-4, rendering the sections of the S-4  identified above to be materially incomplete and misleading.     85.  Hexcel is also deemed negligent as a result of the Individual Defendants’  negligence in preparing and reviewing the S-4.   86.  The misrepresentations and omissions in the S-4 are material to Plaintiff and the  Class, who will be deprived of their right to cast an informed vote if such misrepresentations and  omissions are not corrected prior to the vote on the Proposed Transaction.   87.  As a direct and proximate result of the dissemination of the false and/or misleading  S-4 Defendants used to recommend that shareholders approve the Proposed Transaction, Plaintiff  and the Class will suffer damages and actual economic losses (i.e. the difference between the value  they will receive as a result of the Proposed Transaction and the true value of their shares prior to  the merger) in an amount to be determined at trial and are entitled to such equitable relief as the  Court deems appropriate, including rescissory damages.    88.  Plaintiff incorporates each and every allegation set forth above as if fully set forth  herein.   90.  Each of the Individual Defendants was provided with or had unlimited access to  copies of the S-4 and other statements alleged by Plaintiff to be misleading prior to and/or shortly  after these statements were issued and had the ability to prevent the issuance of the statements or  cause the statements to be corrected.   91.  In particular, each of the Individual Defendants had direct and supervisory  involvement in the day-to-day operations of the Company and, therefore, is presumed to have had  the power to control or influence the particular transactions giving rise to the Exchange Act  violations alleged herein and exercised the same. The S-4 at issue contains the unanimous  recommendation of each of the Individual Defendants to approve the Proposed Transaction.  They  were thus directly involved in preparing the S-4.   92.  In addition, as the S-4 sets forth at length, and as described herein, that the  Individual Defendants were involved in negotiating, reviewing, and approving the Merger  Agreement.  The S-4 purports to describe the various issues and information that the Individual  Defendants reviewed and considered.  The Individual Defendants participated in drafting and/or  gave their input on the content of those descriptions.   93.  By virtue of the foregoing, the Individual Defendants have violated Section 20(a)  of the Exchange Act.   I.  The Proposed Transaction   