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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14D-9
SOLICITATION/RECOMMENDATION STATEMENT
PURSUANT TO SECTION 14(D)(4) OF THE
SECURITIES EXCHANGE ACT OF 1934
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EXIDE ELECTRONICS GROUP, INC.
(NAME OF SUBJECT COMPANY)
EXIDE ELECTRONICS GROUP, INC.
(NAME OF PERSON FILING STATEMENT)
COMMON STOCK, PAR VALUE $.01 PER SHARE
(AND ASSOCIATED PREFERRED STOCK PURCHASE RIGHTS)
(TITLE OF CLASS OF SECURITIES)
302052 6 10 5
(CUSIP NUMBER OF CLASS OF SECURITIES)
SERIES G CONVERTIBLE PREFERRED STOCK,
PAR VALUE $.01 PER SHARE
(TITLE OF CLASS OF SECURITIES)
NOT AVAILABLE
(CUSIP NUMBER OF CLASS OF SECURITIES)
WARRANTS TO PURCHASE SHARES OF COMMON STOCK
(TITLE OF CLASS OF SECURITIES)
302052 6 11 3
(CUSIP NUMBER OF CLASS OF SECURITIES)
NICHOLAS J. COSTANZA
VICE PRESIDENT, CHIEF ADMINISTRATIVE
OFFICER, GENERAL COUNSEL AND SECRETARY
EXIDE ELECTRONICS GROUP, INC.
8609 SIX FORKS ROAD
RALEIGH, NORTH CAROLINA 27615
(919) 872-3020
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON
AUTHORIZED TO RECEIVE NOTICE AND COMMUNICATIONS
ON BEHALF OF THE PERSON FILING STATEMENT)
Copy To:
DAVID M. SILK, ESQ.
WACHTELL, LIPTON, ROSEN & KATZ
51 WEST 52ND STREET
NEW YORK, NEW YORK 10019
(212) 403-1000
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ITEM 1. SECURITY AND SUBJECT COMPANY.
The name of the subject company is Exide Electronics Group, Inc. (the
"Company" or "Exide"). The address of the principal executive offices of the
Company is 8609 Six Forks Road, Raleigh, North Carolina 27615. The titles of the
classes of equity securities to which this statement relates are (i) the
Company's common stock, par value $.01 per share (the "Common Stock"), and the
associated preferred stock purchase rights (the "Rights"), (ii) the Company's
Series G Convertible Preferred Stock, par value $.01 per share (the "Preferred
Stock") and (iii) the Company's warrants to purchase shares of Common Stock at
$13.475 per share of Common Stock (the "Warrants" and, together with the shares
of Common Stock and the shares of Preferred Stock, the "Shares"). All references
herein to "Shareholders" shall mean holders of Shares.
ITEM 2. TENDER OFFER OF THE BIDDER.
This Statement relates to the tender offer by PQR Acquisition Corporation
("Bidder"), a wholly-owned subsidiary of Danaher Corporation ("Parent"), to
purchase (i) all outstanding Common Stock, and associated Rights, at $20.00 per
share, net to the seller in cash, (ii) all outstanding Preferred Stock at $20.00
per share, net to the seller in cash, and (iii) all outstanding Warrants at
$6.525 per Warrant, net to the seller in cash, in each case on the terms and
subject to the conditions set forth in the Offer to Purchase, dated July 10,
1997, and in the related Letter of Transmittal (which together constitute the
"Danaher Offer"). The Danaher Offer is disclosed in a Tender Offer Statement on
Schedule 14D-1, dated July 10, 1997 (the "Schedule 14D-1"), as filed with the
Securities and Exchange Commission (the "Commission"). The Offer to Purchase
states that the principal executive offices of Parent and Bidder are located at
1250 24th Street, N.W., Suite 800, Washington, D.C. 20037.
ITEM 3. IDENTITY AND BACKGROUND.
(a) The name and business address of the Company, which is the person
filing this Statement, are set forth in Item 1 above.
(b) Except as described herein or on pages 2-5 and 8-18 of the Company's
proxy statement, dated January 27, 1997, relating to the Company's 1997 Annual
Meeting of Shareholders, which are filed as Exhibit 1 to this Statement and are
incorporated herein by reference, to the knowledge of the Company, as of the
date hereof, there are no material contracts, agreements, arrangements or
understandings, or any actual or potential conflicts of interest, between the
Company or its affiliates and (i) the Company, its executive officers, directors
or affiliates or (ii) Bidder, Parent or their respective executive officers,
directors or affiliates.
Agreements. On July 21, 1997, the Company's Board of Directors (the
"Board") authorized the Company to enter into severance agreements (the
"Severance Agreements") with each of the four participants in Exide's Severance
Plan After a Change of Control (the "Severance Plan"): James A. Risher,
President and Chief Executive Officer and a member of the Board; Marty R.
Kittrell, Vice President and Chief Financial Officer; Nicholas A. Costanza, Vice
President, Chief Administrative Officer, General Counsel and Secretary; and
William J. Raddi, Senior Vice President -- Strategic Business Development and
Chief Technology Officer; and with Mark A. Ascolese, Vice President -- Worldwide
Services Group; Warren J. Johnson, Vice President -- Communications Group;
Herman G.P. Metzler, Vice President -- Far East Sales; and Alden R. Schnaidt,
Vice President -- Enterprise Systems Group. The Severance Agreements contain
the same substantive provisions as the Severance Plan, with the exceptions
described in the following two paragraphs.
The Severance Agreements provide that a change of control of the Company (a
"Change of Control") is, in general, deemed to occur if (i) any individual,
entity or group becomes the beneficial owner of 30% or more of the outstanding
Common Stock or of the outstanding voting securities of the Company (but not
including (a) any acquisition directly from the Company, (b) any acquisition by
the Company, (c) any acquisition by an employee benefit plan of the Company or
(d) any acquisition that complies with the provisions described in clauses (x),
(y) and (z) of subsection (iii) of this paragraph; (ii) a change in the majority
of the Board occurs; (iii) a reorganization, merger, share exchange,
consolidation or sale or other disposition of all or substantially all of the
assets of the Company, or the acquisition of assets of another entity (any of
the foregoing, a "Business Combination") is consummated unless, following such
Business Combination, (x) owners of the Common Stock and other voting securities
prior to such Business Combination own more than 60% of the Common Stock and
other voting securities of the surviving corporation, in substantially the
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same proportions as before the Business Combination, (y) no person owns 30% or
more of the voting power of the surviving corporation (except to the extent that
such ownership existed before the Business Combination) and (z) a change in the
majority of the membership of the Board has not occurred; and (iv) the
shareholders approve a complete liquidation or dissolution of the Company.
The Severance Agreements also (i) provide that severance payments are based
on a 2.5 multiple (3 multiple in the case of Mr. Risher) of Compensation (as
defined below), rather than a multiple based on length of the participant's
service, (ii) provide that health benefits for participants generally continue
for 30 months (36 months in the case of Mr. Risher) following wrongful
termination of such person's employment, (iii) provide for the payment by the
Company of an additional amount to make the executive whole for any excise tax
imposed under Section 280G of the Internal Revenue Code of 1986, as amended,
(iv) subject Messrs. Kittrell, Costanza, Ascolese, Johnson, Metzler and Schnaidt
to noncompetition provisions for a period of 2 years following termination of
employment and (v) clarify that Compensation means the sum of (1) the higher of
(A) base salary immediately prior to the Change of Control and (B) the highest
base salary following the Change of Control and (2) an amount equal to the
average of the bonuses paid with respect to the most recent three years prior to
the year in which the participant becomes eligible for severance or, if higher,
with respect to the most recent three years prior to the year of the Change of
Control.
The Severance Agreements are intended to be in lieu of benefits under the
Severance Plan, and the Board has determined to terminate the Severance Plan,
effective upon entry into such Severance Agreements with each of the
participants in the Severance Plan.
Employment Agreements of Messrs. Risher and Raddi. Conforming changes were
made to the Employment Agreements of Messrs. Risher and Raddi, in each case to
incorporate by reference the applicable Severance Agreement.
Management Incentive Plan. On July 21, 1997, certain amendments (the "MIP
Amendments") to the Company's Fiscal Year 1997 Management Incentive Plan (the
"1997 MIP") were adopted. The MIP Amendments provide that, in the event of a
Change of Control that occurs pursuant to an agreement authorized by the Board
prior to September 30, 1998, (i) all participants in the 1997 MIP (other than
the employees for whom the Board authorized Severance Agreements) will become
entitled to receive the maximum applicable MIP Payment (as defined in the 1997
MIP) available to such person pursuant to the 1997 MIP and certain other key
employees for whom Severance Agreements were not authorized will become entitled
to receive specified bonuses, (ii) each of Messrs. Risher, Kittrell and Costanza
will become entitled to receive (a) the target level MIP Payment applicable to
such employee ($270,000, $90,000 and $72,000 for Mr. Risher, Mr. Kittrell and
Mr. Costanza, respectively) and (b) an additional payment (the "Incremental
Payment") equal to a portion (50%, 25% and 25% for Mr. Risher, Mr. Kittrell and
Mr. Costanza, respectively) of the Incremental Amount (as defined below) and
(iii) each of Messrs. Raddi, Ascolese, Johnson, Metzler and Schnaidt will become
entitled to receive (a) the target level MIP Payment applicable to such employee
and (b) an additional payment (the "MIP Spread Payment") equal to a portion
(which portion is based on their relative target level MIP Payments) of the
Additional Incremental Amount (as defined below), provided that with respect to
the individuals described in this clause (iii) in no event shall the sum of any
of such person's target MIP Payment and such person's MIP Spread Payment exceed
such person's maximum applicable MIP Payment ($160,000, $153,600, $108,000,
$113,600 and $152,000 for each of Mr. Raddi, Mr. Ascolese, Mr. Johnson, Mr.
Metzler and Mr. Schnaidt). The payments to be made upon a Change of Control
pursuant to the MIP Amendments will be the amounts described in the preceding
sentence, less any MIP bonuses previously paid under the 1997 MIP without regard
to the Change of Control. Such payments are to be made in two installments, the
first on the date of the Change of Control and the second on the date which is
six months following such date; provided that such person has not voluntarily
resigned from the Company (other than for death, retirement or "Good Reason") or
been terminated for "Cause," as those terms are defined in the MIP Amendments.
For purposes of the MIP Amendments, the "Incremental Amount" is defined as
1% of the amount by which the Aggregate Change of Control Equity Value (as
defined below) exceeds $221,230,000, and the "Additional Incremental Amount" is
defined as 1% of the amount by which the Aggregate Change of Control
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Equity Value exceeds $221,230,000. The "Aggregate Change of Control Equity
Value" is (a) the higher of the highest trading price of the Common Stock during
the 60-day period ending on the date of the Change of Control or, if the Change
of Control is the result of a tender offer or a merger or similar corporate
transaction, the highest price per share paid in such tender offer or merger
times (b) the number of outstanding shares of voting stock as of the date of the
MIP Amendments (as the same may be adjusted to account for stock splits or
combinations, stock dividends and similar adjustments to capitalization). To the
extent that the consideration paid in any such transaction described above
consists all or in part of securities or other noncash consideration, the value
of such securities or other noncash consideration will be valued based upon
public trading prices or, if such consideration is not publicly traded, by the
Board of Directors.
Employee Stock Option Plans. On July 21, 1997, certain amendments (the
"Option Amendments") to the Company's 1989 Stock Option Plan and 1995 Employee
Stock Option and Restricted Stock Plan (collectively, the "Option Plans") were
adopted. The Option Amendments (i) provide for automatic full vesting of all
unvested options granted pursuant to the Option Plans and the automatic lapse of
all restrictions to which restricted stock awards are subject, in each case upon
a Change of Control and (ii) provide that in the event of a change in corporate
capitalization, such as a stock split or a corporate transaction, including,
without limitation, a merger, consolidation, spin-off, reorganization or
liquidation, the Board or a committee thereof administering such Option Plan may
make such substitution or adjustments in the number and kind of shares reserved
for issuance under the Option Plan, in the number, kind and purchase price of
shares subject to outstanding options, restricted stock and stock appreciation
rights granted under the Option Plan and/or such other equitable substitutions
and/or adjustments as it may determine to be appropriate in its discretion, in
each case except to the extent that such change would make ineligible for
pooling-of-interests accounting any transaction that the Company intends to be
eligible for such accounting treatment.
Management Notes. Certain executives of the Company have purchased shares
of Common Stock pursuant to stock purchase agreements with the Company in
exchange for promissory notes (the "Management Notes"). On July 21, 1997, each
Management Note was amended to provide that if, at the time the Management Note
would otherwise become payable, the obligor is unable, by reason of applicable
law, regulation or agreement with the Company, to dispose of his shares of
Common Stock purchased with the Management Note in an orderly fashion or if the
disposition of any such shares would, in the view of the Company's independent
accountants, jeopardize the intended accounting treatment of any transaction to
which the Company is a party, then the Management Note will not become payable
until such time as there has occurred at least 75 consecutive business days
during which the obligor has not been so unable to sell the shares and such
disposition would not, in the view of the Company's independent accountants,
jeopardize such accounting treatment.
Employee Stock Purchase Plan. On July 21, 1997, certain amendments (the
"Stock Purchase Amendments") to the Company's Employee Stock Purchase Plan were
adopted. The Stock Purchase Amendments provide that if a Change of Control
occurs, the then-current period during which purchases may be made under the
Employee Stock Purchase Plan would be bifurcated into two periods, one of which
ends as of the last payroll period to end a sufficient number of days prior to
the Change of Control to enable shares of Common Stock to be purchased and
delivered to participants in time to participate as shareholders in the Change
of Control transaction (as determined by the Human Resources Committee of the
Board, which administers the Employee Stock Purchase Plan) and the other to
begin the next day, with the number of purchase rights granted to each
participant for the latter period being the excess of (i) the number of purchase
rights originally granted for the bifurcated period over (ii) the number of
purchase rights exercised at the end of the former period.
The foregoing descriptions are qualified in their respective entireties by
reference to the texts of the applicable agreements, plans, policies, notes and
other documents, copies of which are filed as Exhibits 2 through 22 to this
Schedule and are incorporated herein by reference.
ITEM 4. THE SOLICITATION OR RECOMMENDATION.
(a) The Board met on June 14, 19 and 23, 1997 to consider a proposal by
Danaher to acquire all of the Company's outstanding securities at a price
equivalent to $20 per share, as set forth in a letter from Danaher dated June
11, 1997 (the "Original Danaher Proposal") and related matters, and met on July
16 and 21, 1997
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to consider the Danaher Offer and related matters. At those meetings, the Board
considered the Company's business, financial condition, results of operations,
current business strategy and future prospects, recent and historical market
prices for the Common Stock, the terms of the Original Danaher Proposal (at
meetings in June), the terms and conditions of the Danaher Offer (at the July
meetings), potential alternatives to the Original Danaher Proposal and the
Danaher Offer, and other matters, including information presented by the
Company's management and legal and financial advisors. At the meeting on July
21, 1997 the Board unanimously determined that the Danaher Offer is inadequate
and not in the best interests of the Company or its Shareholders and that the
interests of the Company and its Shareholders would be best served by the
Company exploring strategic alternatives available to it to maximize Shareholder
value, including a possible sale of or other extraordinary transaction involving
the Company. ACCORDINGLY, THE BOARD UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS
REJECT THE DANAHER OFFER AND NOT TENDER ANY SHARES OR RIGHTS PURSUANT THERETO.
At its July 21 meeting, and in response to requests from Danaher, the Board
unanimously (i) declined to make Section 203 of the Delaware General Corporation
Law (the "Delaware Law") inapplicable to the Danaher Offer or Danaher's proposed
second-step merger and (ii) determined not to redeem the Rights at this time. At
the July 21 meeting, the Board deferred the date that the Rights will separate
from the Common Stock and adopted certain amendments to the Rights Agreement (as
defined below). See Item 8 below.
Copies of the letter to the Company's Shareholders communicating the
Board's recommendations and the press release relating thereto are filed as
Exhibits 23 and 24, respectively, to this Statement and are incorporated herein
by reference.
(b) In reaching the conclusions and recommendations described above, the
Board considered a number of factors, including, without limitation, the
following:
(i) The Board's familiarity with the business, financial condition,
results of operations, current business strategy and future prospects of
the Company, the nature of the markets in which the Company operates, the
Company's position in such markets, the historical and current market
prices for the Common Stock, the strength of the Company's management team,
the Company's strong relationships with key worldwide customers and the
Company's unique positioning as the "one-stop" global source for all types
of uninterruptible power supply products;
(ii) Information provided by the Company's management relating to the
Company's financial performance and future prospects and by Lazard Freres &
Co., LLC, the Company's financial advisor ("Lazard Freres"), relating to
certain strategic options potentially available to the Company for
maximizing Shareholder value;
(iii) The view of the Company's management and Lazard Freres that a
strategy of investigating alternative strategic transactions with other
interested parties could lead to a value for the Shares in excess of the
$20 per share of Common Stock offered in the Danaher Offer;
(iv) Information provided by Lazard Freres concerning the Company and
the financial aspects of the Danaher Offer, and the oral opinion of Lazard
Freres to the effect that the price per Share to the Shareholders offered
in the Danaher Offer is inadequate, from a financial point of view, to such
Shareholders;
(v) The significant conditions of the Danaher Offer, including, among
other things, the requirements that (A) there be validly tendered a number
of Shares which, when added to the Shares beneficially owned by Danaher,
constitutes at least a majority of the Shares outstanding on a fully
diluted basis on the date of purchase, (B) the Board redeem the Rights or
the Bidder be satisfied, in its sole discretion, that the Rights have been
invalidated or are otherwise inapplicable to the Danaher Offer and proposed
second-step merger, (C) the Board approve the Danaher Offer or the proposed
second-step merger for purposes of Section 203 of the Delaware Law or the
Bidder being satisfied, in its sole discretion, that, following
consummation of the Danaher Offer, such Section 203 will otherwise be
inapplicable to the proposed second-step merger or other business
combination to which the Bidder will be directly or indirectly a party, (D)
there not have occurred or be threatened any change (or any condition,
event or development involving a prospective change) in the business,
properties, assets, liabilities, capitalization, shareholders equity,
condition (financial or otherwise), operations, licenses or
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franchises, results of operations or prospects of the Company or any of its
subsidiaries that, in the sole judgment of the Bidder, is or may be
materially adverse (a "Material Adverse Effect") to the Company or any of
its subsidiaries, (E) the Bidder not becoming aware of any facts that, in
its sole judgment, have or may have material adverse significance with
respect to the value of the Company or any of its subsidiaries or the value
of the Shares to Bidder, Danaher or any affiliate of Danaher, (F) there
being no change in the general political, market, economic or financial
conditions in the United States or abroad that could, in the sole judgment
of Bidder, have a Material Adverse Effect on the Company or any of its
subsidiaries or the trading in or value of the Shares and (G) a
considerable number of further conditions be satisfied which are subject to
Bidder's sole judgment or permit termination of the Danaher Offer. Although
the Danaher Offer is not by its terms subject to a financing condition, the
cumulative effect of all of the Danaher Offer's conditions is an offer
which the Board views as significantly conditional;
(vi) The financial terms of the Original Danaher Proposal and of the
Danaher Offer, as well as statements made by the Chief Executive Officer of
Danaher to the effect that Danaher may be willing to increase its offer
price to $22 per Share subject to completion of confidential due diligence
and negotiations;
(vii) The opportunistic timing of the Danaher Offer, which seeks to
exploit the Company's recent stock price in relation to historic trading
patterns;
(viii) the fact that the Company has entered into confidentiality
agreements with and supplied confidential information to certain third
parties, and has engaged and is engaged in discussions with certain of such
parties and certain other parties concerning a potential extraordinary
transaction involving the Company (see Item 7 below); and
(ix) The Board's belief, based in part on the factors referred to in
paragraphs (i) through (viii) above, that the Danaher Offer does not
reflect the current value inherent in the Company, and that the interests
of the Company and its Shareholders would be best served by the Company
exploring strategic alternatives available to it for maximizing Shareholder
value.
The foregoing discussion addresses all of the material information and
factors considered by the Board in its consideration of the Danaher Offer. In
view of the variety of factors and the amount of information considered, the
Board did not find it practicable to provide specific assessments of, quantify
or otherwise assign relative weights to the specific factors considered in
reaching its determination. The determination to recommend that Shareholders
reject the Danaher Offer was made after consideration of all the factors taken
as a whole. In addition, individual members of the Board may have given
different weights to different factors.
ITEM 5. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The Company has retained Lazard Freres as its financial advisor with
respect to the Danaher Offer and possible alternative strategic transactions.
Pursuant to the agreement between the Company and Lazard Freres, dated July 12,
1997, the Company agreed to pay Lazard Freres (i) a financial advisory retainer
fee of $400,000, and (ii) an additional fee of $3,600,000 payable upon the
earlier of (a) completion of a Transaction (as defined below) and (b) October 1,
1997 with respect to 50% of such amount, and April 1, 1998 with respect to the
remainder of such amount. A "Transaction" is defined as the sale of the Company,
an interest in the Company or a subsidiary or division of the Company to another
corporation or other business entity, which transaction takes the form of a
merger or a sale of assets or equity securities or other interests, or a
recapitalization of the Company. Lazard Freres' engagement may be terminated by
either the Company or Lazard Freres at any time; provided, however, that in the
case of termination by the Company and any expiration of the agreement with
Lazard Freres, Lazard Freres will be entitled to full payment of the fees
described in this paragraph.
The Company also has agreed to reimburse Lazard Freres for its reasonable
out-of-pocket expenses, including fees and expenses of its legal counsel, and to
indemnify it against certain expenses and liabilities if incurred in connection
with its engagement, including liabilities arising under the federal securities
laws.
The Company has retained Georgeson and Company, Inc. ("Georgeson") to
assist the Company in connection with its communication with its Shareholders
with respect to, and to provide other services to the
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Company in connection with, the Danaher Offer and possible alternative strategic
transactions. Georgeson may contact Shareholders by mail, telephone, telex,
telegraph and personal interview and may request brokers, dealers and other
nominee Shareholders to forward material relating to the Danaher Offer to
Shareholders. Georgeson will receive reasonable and customary compensation for
its services and reimbursement of out-of-pocket expenses in connection
therewith.
The Company has retained Edelman Public Relations Worldwide ("Edelman") to
assist the Company in connection with its communication with its Shareholders
with respect to the Danaher Offer and possible alternative strategic
transactions. Edelman will receive reasonable and customary compensation for its
services and reimbursement of out-of-pocket expenses in connection therewith.
Except as described above, neither the Company, nor any person acting on
its behalf, currently intends to employ, retain or compensate any other person
to make solicitations or recommendations to Shareholders on its behalf
concerning the Danaher Offer.
ITEM 6. RECENT TRANSACTIONS AND INTENT WITH RESPECT TO SECURITIES.
(a) To the knowledge of the Company, except as set forth in the following
sentence, no transactions in Shares have been effected within the past 60 days
by the Company or any executive officer, director, affiliate or subsidiary of
the Company. Between May 15 and May 19, 1997, Mr. Johnson sold an aggregate of
11,115 shares of Common Stock at an average price of $11.17.
(b) To the knowledge of the Company, its executive officers, directors,
affiliates and subsidiaries do not presently intend to tender, pursuant to the
Danaher Offer, any Shares which are held of record or are beneficially owned by
such persons.
ITEM 7. CERTAIN NEGOTIATIONS AND TRANSACTIONS BY THE SUBJECT COMPANY.
(a)-(b) At the meetings held in June and July, the Board considered and
reviewed the feasibility and desirability of exploring a variety of possible
alternatives to the Original Danaher Proposal and the Danaher Offer. As stated
in Item 4(b) above and based on the factors referred to therein, the Board
believes that the interests of the Company and its Shareholders would be best
served by the Company exploring strategic alternatives available to it to
maximize Shareholder value, including a possible sale of or other extraordinary
transaction involving the Company. These alternatives could lead to and involve
negotiations which relate to or could result in a sale of the Company or other
such extraordinary transaction, including (i) a purchase, sale or transfer of a
material amount of assets by the Company or any of its subsidiaries or a sale or
issuance of voting stock, rights or other securities of the Company or any of
its subsidiaries, (ii) a tender or exchange offer for, or open market or
privately negotiated purchases or other acquisition of securities by or of the
Company, (iii) a merger or reorganization involving the Company or any of its
subsidiaries, (iv) a material change in the present capitalization or dividend
policy of the Company, or (v) a joint venture or other business combination
involving the Company or any of its subsidiaries. In this regard, the Company
has entered into confidentiality agreements concerning the furnishing of
confidential information with, and has furnished confidential information to,
certain third parties, and has engaged and is engaged in discussions with
certain of such parties and certain other parties concerning a potential
extraordinary transaction involving the Company. The Company and Lazard Freres
have identified a number of additional parties that may be interested in a
possible extraordinary transaction, and the Company may enter into
confidentiality agreements with, furnish confidential information to and engage
in discussions concerning such a transaction with some or all of such parties or
other parties.
The Board has determined that disclosure at this time with respect to these
possible transactions or the parties thereto, and the possible terms of any
other transactions or proposals of the type referred to above in this Item 7,
might jeopardize the initiation or continuation of any discussions or
negotiations that the Company may conduct. Accordingly, the Board, on July 21,
1997, adopted a resolution instructing management of the Company not to disclose
the possible terms of any such transactions or proposals, or the parties
thereto, unless and until an agreement in principle relating thereto has been
reached.
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There can be no assurance that any of the foregoing will result in any
transaction being recommended to the Board or that any transaction that may be
recommended will be authorized or consummated, or that a transaction other than
those described herein will not be proposed, authorized or consummated. The
initiation or continuation of any of the foregoing may also be dependent upon
the future actions of Parent with respect to the Danaher Offer. The proposal,
authorization, announcement or consummation of any transaction of the type
referred to in this Item 7 could adversely affect or result in withdrawal of the
Danaher Offer.
ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED.
Litigation. On July 9, 1997, Parent and Bidder filed a suit encaptioned
Danaher Corporation and PQR Acquisition Corp. v. Exide Electronics Group, Inc.,
et al. (C.A. No. 15796) in the Court of Chancery of the State of Delaware, New
Castle County, against the Company and the members of the Board. The complaint
alleges, among other things, that the defendants have refused and will refuse to
deal in good faith with Parent in negotiating an acquisition of Exide by Bidder
and have taken certain actions in response to Parent's expressions of interest
in such an acquisition, which conduct is alleged to be in breach of the
fiduciary duties of the Board to Shareholders. In particular, the complaint
alleges that the Board acted in violation of its fiduciary duties in amending
Exide's By-Laws to provide for certain time periods with respect to any
stockholder call for a special meeting. The complaint seeks as relief, among
other things, (i) to compel redemption of the Rights, (ii) to compel the Board
to render the Delaware Takeover Statute (as defined below) inapplicable to the
proposed acquisition in connection with the Danaher Offer, (iii) to compel the
Board to call a special meeting of its stockholders at an unspecified future
date, (iv) to enjoin the Board from taking any action that would impede or
interfere with the Danaher Offer or the exercise by Exide's stockholders of
their franchise and (v) to enjoin the Board from taking any actions inconsistent
with their fiduciary obligations to Exide's stockholders.
On July 9, 1997, a purported class action encaptioned Rima Spielman v.
Exide Electronics Group, Inc., et al. (C.A. No. 15800) was commenced in Delaware
Chancery Court against the Company and the members of the Board (the
"Shareholder Action"). The Shareholder Action was purportedly brought on behalf
of the public stockholders of the Company. The complaint alleges, among other
things, that (i) the defendants have refused to take the steps necessary to
maximize stockholder value, including properly considering the Danaher Offer,
(ii) by purportedly failing and refusing to take such steps, including
adequately considering the Danaher Offer, the defendants have breached their
fiduciary duty to the plaintiff and the public stockholders and are using their
fiduciary positions of control to thwart others in their legitimate attempts to
acquire the Company and (iii) the members of the Board have purportedly
attempted to entrench themselves in their positions with the Company by
instituting certain of the By-Law Amendments. The Shareholder Action seeks as
relief, among other things, (i) to require the directors to cooperate with any
person or entity, including Danaher, having a bona fide interest in proposing
any transaction that would maximize stockholder value, including a merger or
acquisition of the Company, (ii) to enhance the value and attractiveness of the
Company as a merger/acquisition candidate, (iii) to take all appropriate steps
to create an active auction of the Company and (iv) to have such By-Law
Amendments declared void.
The foregoing summaries of litigation are qualified in their respective
entireties by reference to the texts of the respective complaints, a copy of
each of which is filed as Exhibit 25 and Exhibit 26, respectively, to this
Statement and are incorporated herein by reference.
By-Laws. At its meetings on June 23, 1997 and July 21, 1997, the Board
adopted certain amendments to the Company's By-Laws (the "By-Law Amendments"). A
copy of the By-Laws, as amended and restated to date, is filed as Exhibit 27 to
this Statement and is incorporated herein by reference. The By-Law Amendments
provide that a special meeting of shareholders of the Company may be called by
the Chairman or a majority of the Board and shall be called upon the written
request of holders of shares representing at least a majority in the amount of
the issued and outstanding capital stock of the Company entitled to vote on any
matter proposed to be considered at such special meeting, and set forth
procedures related thereto. Article II, Section 5(b) of the By-Laws requires
that shareholders who wish to call a special meeting make a written request (the
"Record Date Request") to the Company and that the Board fix a record date to
determine the shareholders entitled to request the special meeting (the "Request
Record Date"). The Board must adopt a
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<PAGE> 9
resolution fixing a Request Record Date within five business days after delivery
of the Record Date Request, and the Request Record Date must be not more than
ten days after the date of such resolution. If the Board fails to set a Request
Record Date, the Request Record Date will be the date of delivery of the Record
Date Request. To be valid the Record Date Request must, among other things, set
forth the purpose of the special meeting and must include all information
regarding the shareholders, any matters to be brought before the meeting, and
any nominees for directorships that are required of shareholders giving notice
of nominations of directors or other business to be brought before an annual
meeting.
A special meeting of shareholders is to be called upon the delivery of a
written request (a "Meeting Request") of shareholders of record as of the
Request Record Date representing at least a majority in the amount of the
capital stock of the Company issued and outstanding and entitled to vote on any
matter proposed to be considered at such special meeting (the "Requisite
Holders"). No purported request will be deemed to have been delivered to the
Company until regionally or nationally recognized independent inspectors of
elections certify to the Company that a majority of requests have been received
from Requisite Holders. The shareholders' Meeting Request must state, among
other things, the purpose for which such special meeting is to be held. A
special meeting called at the request of shareholders must be held at a date not
less than 10 and not more than 60 days after the record date for the special
meeting, as designated by the Board. If the Board fails to designate a date for
the special meeting within five business days after receiving a valid Meeting
Request from the Requisite Holders, then such meeting shall be held on the 90th
day after the date of delivery of the Meeting Request from the Requisite Holders
and the record date for the meeting shall be the 60th day before the meeting.
The Board may set a record date for the special meeting which is not later than
20 business days after the date of delivery of the valid Meeting Request from
the Requisite Holders and set a meeting not less than 10 days and not more than
60 days after such record date.
To nominate an individual for election to the Board or bring any other
business before an annual meeting of shareholders of the Company, a shareholder
must provide notice to the Company not later than 60 nor earlier than 90 days
prior to the first anniversary of the prior annual meeting, unless the date of
the annual meeting is advanced by more than 30 days or delayed more than 60 days
from such anniversary. The shareholder's notice must include information
regarding the shareholder, any matters to be brought before the meeting and any
directors to be nominated at the meeting.
To nominate an individual for election to the Board, the shareholder must
deliver a written notice to the Company not earlier than the earlier of (1) the
delivery of the request described in Section 5(b) of Article II of the By-Laws
and (2) 90 days prior to such special meeting and not later than the close of
business on the later of (a) the 60th day prior to such special meeting and (b)
the 10th day following the day on which the Company first makes a public
announcement of the date of such special meeting at which directors may be
nominated. Such written notice must set forth all of the information that would
be required to be set forth in a notice of a shareholder seeking to nominate an
individual for a directorship or bring other business before an annual meeting
of shareholders.
On June 11, 1997, in connection with the Original Danaher Proposal, the
Company received a letter (the "Danaher Meeting Request") on behalf of Bidder
and its affiliates requesting a special meeting of shareholders, at which, among
other things, Bidder would seek a vote on the Danaher Proposals (as defined
below), be called when Bidder had obtained consents from holders of a majority
of the outstanding Common Stock. As the By-Laws were amended on June 23, 1997,
counsel for the Company sent a copy of the By-Laws, as amended and restated to
such date, to counsel for Danaher on June 24, and notified Danaher that the
Company would treat the Danaher Meeting Request as a Record Date Request at such
time as the Danaher Meeting Request is supplemented by the information required
by the By-Law Amendments. To date, such supplemental information has not been
provided.
The By-Laws provide that indemnification of directors, officers or other
persons under the applicable provisions of the By-Laws shall be paid by the
Company unless a determination is made (i) by a majority vote of directors
constituting a quorum and who were not a party to the action, suit or proceeding
at issue, (ii) if such a quorum is not obtainable, or even if obtainable if a
quorum of disinterested directors so directs, by independent legal counsel in a
written opinion or (iii) by the stockholders, that indemnification of an
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<PAGE> 10
individual otherwise entitled to indemnification under such By-Law provisions is
not proper because such person has not met the applicable standard of conduct.
The By-Law Amendments provide that, in addition to the circumstances set forth
in clause (ii) above, if the director or officer seeking indemnification so
requests, the determination of whether such director or officer has met the
applicable standard of conduct will be made by independent legal counsel in a
written opinion. The By-Law Amendments define "independent legal counsel" to
mean a law firm, a member of a law firm, or an independent practitioner, that is
experienced in matters of corporation law and to exclude any person who would
have a conflict of interest. Furthermore, the By-Law Amendments preclude the
Company from asserting in any suit commenced by a claimant seeking
indemnification that the procedures and presumptions regarding indemnification
contained in the By-Laws are not valid, binding and enforceable and require the
Company to stipulate in such a suit that the Company is bound by all of the
provisions regarding indemnification contained in the By-Laws.
Consent Solicitation. On July 14, 1997, Bidder and Parent filed
preliminary proxy materials (the "Danaher Solicitation Materials") to solicit
agent designations from Shareholders in order to call a special meeting to
consider and vote upon the following proposals: (i) the amendment of the By-Laws
to increase the size of the Board from 9 to 19, (ii) the election of 10 nominees
of Parent (the "Danaher Nominees") as directors of the Company (who would then
constitute a majority of the Board), (iii) the repeal of any By-Laws or
amendments thereto adopted by the Company after December 21, 1989 and prior to
the effectiveness of the foregoing proposals, (iv) any proposals made in respect
of actions taken that could impede, delay or make more costly to Parent or DH
Holdings Corp., a Delaware corporation and a wholly owned subsidiary of Parent,
the acquisition of the Company or any of its securities or assets or gaining
control of the Company, including through the election of a majority of the
Board and (v) the transaction of such other business as may properly come before
such special meeting or any adjournment or postponement thereof.
The Rights Agreement. On November 10, 1992, the Board of Directors of the
Company declared a dividend of one Right for each outstanding share of the
Common Stock to holders of Common Stock of record at the close of business on
December 7, 1992. Each Right entitles the registered holder thereof to purchase
from the Company a unit consisting of one one-hundredth of a share (a
"Fractional Share") of Series F Junior Participating Preferred Stock (the
"Series F Preferred Stock"), at a purchase price of $80.00 per Fractional Share,
subject to adjustment (the "Purchase Price"). The description and terms of the
Rights are set forth in a Rights Agreement, dated as of November 25, 1992,
between the Company and First Union National Bank of North Carolina, as Rights
Agent, as amended by Amendment No. 1, effective as of February 9, 1996, and by
Amendment No. 2, dated as of July 22, 1997, and as it may from time to time be
further supplemented or amended (the "Rights Agreement").
The Rights are presently attached to all certificates representing
outstanding shares of Common Stock, and no separate certificates for the Rights
("Rights Certificates") will be distributed. The Rights will separate from the
Common Stock and a "Distribution Date" will occur upon the earlier of (i) 10
days following a public announcement that a person or group of affiliated or
associated persons (an "Acquiring Person") has acquired, or obtained the right
to acquire beneficial ownership of 15% or more of the outstanding shares of
Common Stock (the date of the announcement being the "Stock Acquisition Date"),
or (ii) 10 business days (or such later date as may be determined by the
Continuing Directors) following the commencement of a tender offer or exchange
offer that would result in a person's becoming an Acquiring Person.
Notwithstanding the foregoing, (a) Massachusetts Mutual Life Insurance Company
(together with its Affiliates, "Mass Mutual"), will not be deemed an Acquiring
Person unless it becomes the beneficial owner of more than 22% of the Common
Stock of the Company then outstanding and (b) Fiskars Oy Ab and its affiliates
will not be considered an Acquiring Person with respect to its 1996 acquisition
of 1,000,000 shares of Preferred Stock and 825,000 shares of Common Stock. Until
the Distribution Date, (1) the Rights will be evidenced by the Common Stock
certificates and will be transferred with and only with such Common Stock
certificate, (2) new Common Stock certificates issued after December 7, 1992
will contain a notation incorporating the Rights Agreement by reference, and (3)
the surrender for transfer of any certificate for Common Stock (with or without
a copy of the Summary of Rights) will also constitute the transfer of the Rights
associated with the Common Stock represented by such certificate.
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<PAGE> 11
The Rights are not exercisable until the Distribution Date and will expire
at the close of business on December 7, 2002, unless earlier redeemed or
exchanged by the Company as described below. As soon as practicable after the
Distribution Date, Rights Certificates will be mailed to holders of record of
Common Stock as of the close of business on the Distribution Date and,
thereafter, the separate Rights Certificates alone will evidence the Rights. All
shares of Common Stock issued prior to the Distribution Date will be issued with
Rights. Except as otherwise determined by the Board, only shares of Common Stock
issued prior to the Distribution Date will be issued with Rights.
In the event (a "Flip-In Event") that a person or group of affiliated or
associated persons becomes an Acquiring Person (except pursuant to an offer for
all outstanding shares of Common Stock at a price and on terms which a majority
of the Outside Directors (as hereinafter defined) prior to a person or group of
affiliated or associated persons becoming an Acquiring Person after receiving
advice from one or more investment banking firms determines to be fair to and
otherwise in the best interests of the Company and its stockholders (a
"Permitted Offer")), each holder of a Right will thereafter have the right to
receive, upon exercise of such Right, shares of Common Stock having a value
equal to two times the exercise price of the Right. Notwithstanding the
foregoing, following the occurrence of any Flip-In Event, all Rights that are,
or (under certain circumstances specified in the Rights Agreement) were,
beneficially owned by any Acquiring Person will be null and void in the
circumstances set forth in the Rights Agreement. However, Rights are not
exercisable following the occurrence of any Flip-In Event until such time as the
Rights are no longer redeemable by the Company as set forth below.
In the event (a "Flip-Over Event") that, at any time from and after the
time an Acquiring Person becomes such, (i) the Company is acquired in a merger
or other business combination transaction (other than certain mergers that
follow a Permitted Offer), or (ii) 50% or more of the Company's assets or
earning power is sold or transferred, each holder of a Right (except Rights that
previously have been voided as set forth above) shall thereafter have the right
to receive, upon exercise, common stock of the acquiring company having a value
equal to two times the exercise price of the Right. Flip-In Events and Flip-Over
Events are collectively referred to as "Triggering Events."
At any time until 10 days following the first date of public announcement
of the occurrence of a Flip-In Event, the Company may redeem the Rights in
whole, but not in part, at a price of $.01 per Right, payable, at the option of
the Company, in cash, shares of Common Stock or such other consideration as the
Board may determine. Under certain circumstances set forth in the Rights
Agreement, the decision to redeem shall require the concurrence of a majority of
the Continuing Directors (as defined below). Immediately upon the effectiveness
of the action of the Board ordering redemption of the Rights, with, where
required, the concurrence of the Continuing Directors, the Rights will terminate
and the only right of the holders of Rights will be to receive the $.01
redemption price.
At any time after a person or group of affiliated or associated persons
becomes an Acquiring Person and prior to the acquisition by such person or group
of 50% or more of the outstanding Common Stock, the Board may exchange the
Rights (other than Rights owned by such person or group which have become void),
in whole or in part, at an exchange ratio of one share of Common Stock per Right
(subject to adjustment).
The Purchase Price payable, and the number of one one-hundredths of a share
of Series F Preferred Stock or other securities or property issuable, upon
exercise of the Rights are subject to adjustment from time to time to prevent
dilution (i) in the event of a stock dividend on, or a subdivision, combination
or reclassification of the Series F Preferred Stock, (ii) upon the grant to
holders of the Series F Preferred Stock of certain rights or warrants to
subscribe for Series F Preferred Stock or convertible securities at less than
the current market price of the Series F Preferred Stock or (iii) upon the
distribution to holders of the Series F Preferred Stock of evidences of
indebtedness or assets (excluding regular quarterly cash dividends) or of
subscription rights or warrants (other than those referred to above).
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
such Purchase Price. No fractional shares will be issued and in lieu thereof, an
adjustment in cash will be made based on the market price of the Series F
Preferred Stock on the last trading date prior to the date of exercise.
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<PAGE> 12
In general, the Company may redeem the Rights in whole, but not in part, at
any time prior to the acquisition by a person or group of affiliated or
associated persons of 15% or more of the outstanding Common Stock, at a price of
$.01 per Right. Under certain circumstances set forth in the Rights Agreement,
the decision to redeem the Rights will require the concurrence of a majority of
the Continuing Directors. Immediately upon the action of the Board ordering
redemption of the Rights, with, where required, the concurrence of the
Continuing Directors, the Rights will terminate and the only right of the
holders of Rights will be to receive the $.01 redemption price.
Until a Right is exercised, the holder thereof, as such, will have no right
as a stockholder of the Company, including, without limitation, the right to
vote or to receive dividends. While the distribution of the Rights should not be
taxable to stockholders or to the Company, stockholders may, depending upon the
circumstances, recognize taxable income in the event that the Rights become
exercisable for Common Stock (or other consideration) of the Company or for the
common stock of the acquiring company as set forth above.
The term "Continuing Director" means any member of the Board, who was a
member of the Board prior to the date of the Rights Agreement, and any person
who is subsequently elected to the Board if such person is recommended or
approved by a majority of the Continuing Directors, but shall not include an
Acquiring Person or an affiliate or associate of an Acquiring Person, or any
representation of the foregoing entities. The term "Outside Directors" means
Continuing Directors who are not officers of the Company.
Other than those provisions relating to the principal economic terms of the
Rights, any of the provisions of the Rights Agreement may be amended by the
Board prior to the Distribution Date; provided, that after such time as a person
or group of affiliated or associated persons becomes an Acquiring Person, no
amendment that adversely affects the interests of holders of Rights is
permitted. After the Distribution Date, the provisions of the Rights Agreement
may be amended by the Board in order to cure any ambiguity, defect or
inconsistency, to make changes that do not adversely affect the interests of
holders of Rights (excluding the interests of any Acquiring Person), or to
shorten or lengthen any time period under the Rights Agreement; provided,
however, that no amendment to lengthen the time period governing redemption
shall be made at such time as the Rights are not redeemable.
The foregoing summary of the Rights is qualified in its entirety by
reference to the Rights Agreement and the amendments thereto, copies of which
are filed as Exhibits 28, 29 and 30, respectively, to this Statement and are
incorporated herein by reference.
In response to a request from the Bidder, the Board unanimously determined
on July 21, 1997 not to redeem the Rights at this time and has deferred the date
that the Rights will separate from the Common Stock.
Delaware Takeover Statute. As described in the Danaher Offer, Section 203
of the Delaware Law (the "Delaware Takeover Statute"), may have the effect of
significantly delaying Bidder's ability to acquire the entire equity interest in
the Company.
In general, the Delaware Takeover Statute prevents an "Interested
Stockholder" (defined generally as a person that is the "owner" (as defined in
the Delaware Takeover Statute) of 15% or more of a corporation's outstanding
voting stock from engaging in a "DGCL Business Combination" (defined as a
variety of transactions, including mergers, as set forth in the second following
paragraph) with a Delaware corporation for three years following the time such
person became an Interested Stockholder unless: (i) before such person became an
Interested Stockholder, the board of directors of the corporation approved the
transaction in which the Interested Stockholder became an Interested Stockholder
or approved the DGCL Business Combination; (ii) upon consummation of the
transaction which resulted in the Interested Stockholder becoming an Interested
Stockholder, the Interested Stockholder owned at least 85% of the voting stock
of the corporation outstanding at the time the transaction commenced (excluding
stock held by directors who are also officers and employee stock ownership plans
in which employee participants do not have the right to determine confidentially
whether shares held subject to the plan will be tendered in a tender or exchange
offer), or (iii) following the transaction in which such person became an
Interested Stockholder, the DGCL Business Combination is (x) approved by the
board of directors of the corporation and (y) authorized at a
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meeting of stockholders by an affirmative vote of the holders of two-thirds of
the outstanding voting stock of the corporation not owned by the Interested
Stockholder.
Under the Delaware Takeover Statute, the restrictions described above do
not apply if, among other things, (i) the corporation's original certificate of
incorporation contains a provision expressly electing not to be governed by the
Delaware Takeover Statute, (ii) the corporation, by action of its board of
directors, adopts an amendment to its by-laws within 90 days of February 2,
1988, the effective date of the Delaware Takeover Statute, expressly electing
not to be governed by the Delaware Takeover Statute, which amendment may not be
further amended by the board of directors, (iii) the corporation, by action of
its stockholders, adopts an amendment to its certificate of incorporation or
by-laws expressly electing not to be governed by the Delaware Takeover Statute,
provided that, in addition to any other vote required by law, such amendment to
the certificate of incorporation or by-laws must be approved by the affirmative
vote of a majority of the shares entitled to vote (such an amendment would not
be effective until 12 months after the adoption of such amendment and shall not
apply to any DGCL Business Combination between the corporation and any person
who became an Interested Stockholder of the corporation on or prior to such
adoption), (iv) the corporation does not have a class of voting stock that is
(x) listed on a national securities exchange, (y) authorized for quotation on
The NASDAQ Stock Market, or (z) held of record by more than 2,000 stockholders,
unless any of the foregoing results from action taken, directly or indirectly,
by an Interested Stockholder or from a transaction in which a person becomes an
Interested Stockholder, or (v) a stockholder becomes an Interested Stockholder
"inadvertently" and thereafter divests itself of ownership of a sufficient
number of shares so that such stockholder ceases to be an Interested
Stockholder. The Delaware Takeover Statute would also not apply to certain DGCL
Business Combinations proposed by an Interested Stockholder following the
announcement or notification of one of certain extraordinary transactions
involving the corporation and a person who had not been an Interested
Stockholder during the three years preceding the date of the Business
Combination or who became an Interested Stockholder with the approval of a
majority of the corporation's board of directors.
The Delaware Takeover Statute provides that during the three-year period
following the date a person becomes an Interested Stockholder, the corporation
may not merge or consolidate with an Interested Stockholder or any affiliate or
associate thereof, and also may not engage in certain other transactions with an
Interested Stockholder or any affiliate or associate thereof, including, without
limitation, (i) any sale, lease, exchange, mortgage, pledge, transfer or other
disposition of assets (except proportionately as a stockholder of the
corporation) having an aggregate market value equal to 10% or more of the
aggregate market value of either the aggregate value of all of the assets of the
corporation or the aggregate market value of all of the outstanding stock of the
corporation, (ii) any transaction which results in the issuance or transfer by
the corporation or by certain subsidiaries thereof of any stock of the
corporation to the Interested Stockholder, subject to certain exceptions, (iii)
any transaction involving the corporation or any majority-owned subsidiary
thereof which has the effect of increasing the proportionate share of the stock
of any class or series, or securities convertible into the stock of any class or
series, of the corporation or any such subsidiary which is owned by the
Interested Stockholder (except as a result of immaterial changes due to
fractional share adjustments or as a result of any purchase or redemption of any
shares of stock not caused, directly or indirectly, by the Interested
Stockholder), or (iv) any receipt by the Interested Stockholder of the benefit
(except proportionately as a stockholder of such corporation) of any loans,
advances, guarantees, pledges or other financial benefits provided by or through
the corporation.
Unless Bidder acquires a number of shares of Common Stock pursuant to the
Danaher Offer sufficient to satisfy the 85% requirement of the Delaware Takeover
Statute or unless the provisions of clause (iii) of the second preceding
paragraph or clauses (i) or (iii) of the third preceding paragraph are complied
with, Bidder would be unable to effect a merger with the Company for a period of
three years from the consummation of the Danaher Offer and would be prevented
from engaging in certain transactions by the Delaware Takeover Statute.
If Bidder acquires a number of shares of Common Stock pursuant to the
Danaher Offer sufficient to satisfy the 85% requirement of the Delaware Takeover
Statute, Bidder would be able to effect a merger with the Company without any
application of the three-year waiting period. There can be no assurance that
Bidder will be able to acquire such number of shares of Common Stock.
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<PAGE> 14
In response to a request from Bidder, on July 21, 1997 the Board
unanimously declined to act to make the Delaware Takeover Statute inapplicable
to the Danaher Offer or Bidder's proposed second-step merger.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
The following Exhibits are filed herewith:
Exhibit 1 -- Pages 2-5 and 8-18 of the Exide Electronics Group, Inc. Proxy
Statement, dated January 22, 1997, issued in connection with the
Annual Meeting of Shareholders held on February 25, 1997.
Exhibit 2 -- Employment Agreement, dated September 30, 1989, with James A.
Risher.(1)
Exhibit 3 -- Form of Amendment to Employment Agreement with James A. Risher.
Exhibit 4 -- Employment Agreement, dated March 15, 1990, with William J.
Raddi.(2)
Exhibit 5 -- Form of Amendment to Employment Agreement with William J. Raddi.
Exhibit 6 -- Stock Purchase Agreement among Exide Electronics Group, Inc.,
Fiskars Oy Ab, Fiskars Holdings, Inc. and Deltec Power Systems,
Inc., dated November 16, 1995, related to the purchase of Deltec
Power Systems, Inc.(3)
Exhibit 7 -- Letter Agreement to Amend Stock Purchase Agreement among Exide
Electronics Group, Inc., Fiskars Oy Ab, Fiskars Holdings, Inc.
and Deltec Power Systems, Inc., dated February 9, 1996.(4)
Exhibit 8 -- Stockholder Agreement, dated March 13, 1996, between the Company
and Fiskars Oy Ab.(5)
Exhibit 9 -- Severance Compensation Plan After Change of Control.(6)
Exhibit 10 -- Form of Severance Contract.
Exhibit 11 -- Exide Electronics Group, Inc. Employee Stock Purchase Plan.
Exhibit 12 -- Form of First Amendment to Exide Electronics Group, Inc. Employee
Stock Purchase Plan.
Exhibit 13 -- 1989 Stock Option Plan, as amended on August 11, 1992.(7)
Exhibit 14 -- Form of First Amendment to 1989 Stock Option Plan.
Exhibit 15 -- Non-employee Directors' Stock Option Plan, as amended on August
11, 1992.(8)
Exhibit 16 -- Exide Electronics Group, Inc. 1995 Directors Stock Option
Plan.(9)
Exhibit 17 -- Exide Electronics Group, Inc. 1995 Employee Stock Option and
Restricted Stock Plan.(10)
Exhibit 18 -- Form of First Amendment to Exide Electronics Group, Inc. 1995
Employee Stock Option and Restricted Stock Plan.
Exhibit 19 -- Exide Electronics Corporation 401(k) Retirement Benefit Plan
Summary Plan Description.(11)
Exhibit 20 -- Fiscal Year 1997 Management Incentive Plan for Exide Electronics
Group, Inc.
Exhibit 21 -- Form of First Amendment to Fiscal Year 1997 Management Incentive
Plan for Exide Electronics Group, Inc.
Exhibit 22 -- Form of Amendment to Promissory Note.
Exhibit 23 -- Letter to Exide Electronics Group, Inc. Stockholders, dated July
22, 1997.(12)
Exhibit 24 -- Press Release issued by Exide Electronics Group, Inc. on July 22,
1997.
Exhibit 25 -- Complaint for Declaratory and Injunctive Relief filed July 9,
1997 by Danaher Corporation and PQR Acquisition Corp. v. Exide
Electronics Group, Inc., et al. (C.A. No. 15796) in the Court of
Chancery of the State of Delaware in and for New Castle County.
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Exhibit 26 -- Class Action Complaint filed July 9, 1997 by Rima Spielmant v.
Exide Electronics Group, Inc., et al. (C.A. No. 15800) in the
Court of Chancery of the State of Delaware in and for New Castle
County.
Exhibit 27 -- Amended and Restated By-Laws of Exide Electronics Group, Inc.
Exhibit 28 -- Rights Agreement, dated as of November 25, 1992.(13)
Exhibit 29 -- Amendment No. 1 to Rights Agreement, effective as of February 9,
1996.
Exhibit 30 -- Form of Amendment No. 2 to Rights Agreement.
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(1) Incorporated by reference to Exhibit 10o to the Company's Annual Report on
Form 10-K, File No. 0-18106 for the fiscal year ended September 30, 1990.
(2) Incorporated by reference to Exhibit 10p to the Company's Annual Report on
Form 10-K, File No. 0-18106, for the fiscal year ended September 30, 1990.
(3) Incorporated by reference to Exhibit 10 to the Company's Current Report on
Form 8-K, File No. 0-18106, filed on November 17, 1995.
(4) Incorporated by reference to Exhibit 10.2 to the Company's Current Report
on Form 8-K, File No. 0-18106, filed on February 21, 1996.
(5) Incorporated by reference to Exhibit 4.6 to the Company's Registration
Statement on Form S-4, File No. 333-2471.
(6) Incorporated by reference to Exhibit 10o to Amendment No. 1 of Registration
Statement No. 33-31872 on Form S-1.
(7) Incorporated by reference to Exhibit 10t to the Company's Annual Report on
Form 10-K, File No. 0-18106 for the fiscal year ended September 30, 1992.
(8) Incorporated by reference to Exhibit 10u to the Company's Annual Report on
Form 10-K, File No. 0-18106, for the fiscal year ended September 30, 1992.
(9) Incorporated by reference to Appendix B to the Company's Proxy Statement
dated January 30, 1995, issued in connection with the Company's Annual
Meeting of Stockholders held on February 28, 1995.
(10) Incorporated by reference to Appendix A to the Company's Proxy Statement
dated January 30, 1995, issued in connection with the Company's Annual
Meeting of Stockholders held on February 28, 1995.
(11) Incorporated by reference to Exhibit 4c to Registration Statement No.
33-64121 on Form S-8.
(12) Included in copy mailed to stockholders.
(13) Incorporated by reference to Exhibit 1 to the Company's Current Report on
Form 8-K, File No. 0-18106, for the event on November 25, 1992.
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SIGNATURE
After reasonable inquiry and to the best of its knowledge and belief, the
undersigned certifies that the information set forth in this statement is true,
complete and correct.
EXIDE ELECTRONICS GROUP, INC.
By: /s/ MARTY R. KITTRELL
Name: Marty R. Kittrell
Title: Vice President and
Chief Financial Officer
Dated: July 22, 1997
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<PAGE> 1
EXHIBIT 1
VOTING SECURITIES AND PRINCIPAL HOLDERS
The authorized capital stock of the Company consists of 30,000,000 shares
of Common Stock, par value $0.01 per share, and 2,000,000 shares of Preferred
Stock, par value $0.01 per share. As of January 8, 1997 (the "record date"),
10,048,784 shares of Common Stock were outstanding with every share being
entitled to one vote.
Series G Preferred Stock. As of the record date, 1,000,000 shares of
preferred stock, designated as the "Series G Preferred Stock", were outstanding.
All of the shares of Series G Preferred Stock were issued to Fiskars Oy Ab and
Fiskars Holdings, Inc. (collectively "Fiskars") in connection with the Company's
acquisition on March 13, 1996 of Deltec Power Systems, Inc. and its subsidiaries
(the "Deltec Acquisition"). The Series G Preferred Stock is entitled to
quarterly dividends at a per annum rate of $0.80 per share through March 31,
2001 and $1.20 per share thereafter. Holders of the Series G Preferred Stock
have preference over the holders of Common Stock and holders of any other
preferred stock of the Company in the event of liquidation, dissolution or
winding up of the Company. That liquidation preference is equal to $20.00 per
share of Series G Preferred Stock plus accrued but unpaid dividends.
The Series G Preferred Stock is convertible at any time by the holders
thereof into shares of Common Stock on a share-for-share basis, subject to
adjustment for stock splits, dividends and combinations, and non-cash dividends,
stock purchase rights, capital reorganizations and dissolutions. In the event
that the market price of the Company's Common Stock exceeds $28.00 per share for
30 consecutive trading days, the Company may redeem any or all of its Series G
Preferred Stock at $20.00 per share through March 30, 1997, $26.00 per share
from March 31, 1997 through March 30, 1998 and $24.00 per share after March 30,
1998, plus accrued but unpaid dividends in each case. The Company's redemption
right is subject to the conversion rights of the holders of the Series G
Preferred Stock. At any time after September 30, 2006, the holders of the Series
G Preferred Stock may require the Company to repurchase the stock at $24.00 per
share plus accrued but unpaid dividends.
Shares of the Series G Preferred Stock have the same voting rights as
shares of the Company's Common Stock, with each holder of Series G Preferred
Stock entitled to the number of votes that the holder would have if the stock
were converted into Common Stock. The Series G Preferred Stock must be voted in
accordance with a stockholder agreement between the Company and Fiskars (the
"Fiskars Shareholder Agreement"), the terms of which include agreements
regarding board membership, voting, transfer restrictions and registration
rights. The Fiskars Shareholder Agreement entitles Fiskars to designate: (i) two
representatives for election to the Company's Board of Directors so long as its
beneficial ownership of Common Stock (including Common Stock that Fiskars would
own upon conversion of the Series G Preferred Stock) exceeds 10% of the
outstanding Common Stock; and (ii) one representative so long as Fiskars
beneficially owns 5% to 10% of the outstanding Common Stock. Fiskars' rights to
designate representatives for election to the Company's Board of Directors
terminate when Fiskars' beneficial ownership of Common Stock is less than 5%.
The Fiskars Shareholder Agreement requires Fiskars to vote all securities of the
Company owned or controlled by it in accordance with the recommendations of the
Company's Board of Directors. The Fiskars Shareholder Agreement contains certain
restrictions on Fiskars' ability to transfer any securities of the Company owned
or controlled by Fiskars.
Series D and E Preferred Stock. In July 1992, the Company issued to Japan
Storage Battery Co., Ltd. ("JSB") 5,100 shares of the Company's Series D
Preferred Stock (the "Series D Preferred") at a purchase price of $1,000 per
share. JSB had the right to convert some or all of the Series D Preferred into
the Company's Common Stock at a conversion price per share of $13.08. In
December 1992, JSB exercised an option to purchase 4,900 shares of Series E
Preferred Stock (the "Series E Preferred") at a purchase price of $1,000 per
share. The Series E Preferred were convertible at the option of JSB into the
Company's Common Stock at a conversion price per share of $23.86 (collectively,
the "Series D and E Preferred"). On July 1, 1995, JSB exercised these options
and converted all of the Series D and E Preferred into 595,273 shares of the
Company's Common Stock.
<PAGE> 2
Warrants. In connection with financing the Deltec Acquisition, the Company
issued 11 1/2% Senior Subordinated Notes due March 15, 2006 (the "Notes") in an
aggregate principal amount of $125 million. In conjunction with the issuance of
the Notes, the Company also issued 125,000 detachable warrants ("Warrants") to
purchase in the aggregate 643,750 shares of Common Stock, subject to adjustment
under certain circumstances. Each Warrant, when exercised, entitles the holder
thereof to receive 5.15 shares of Common Stock at an exercise price of $13.475
per share, subject to adjustment under certain circumstances. The Warrants are
exercisable at any time prior to March 15, 2006. The holders of Warrants have no
right to vote on matters submitted to the stockholders of the Company for action
and have no right to receive dividends.
The following table sets forth, as of the record date, all persons known by
the Company to be the beneficial owners of more than 5% of any class of the
voting securities of the Company. The information set forth below is based on
beneficial ownership information contained in the most recent Schedule 13D, 13F
or 13G filed on behalf of such holder or on information furnished by the holder
to the Company.
COMMON STOCK
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF PERCENT OF
NAME AND ADDRESS BENEFICIAL COMMON STOCK
OF BENEFICIAL OWNER OWNERSHIP(1) (2)(3)
- --------------------------------------------------------------- ------------ ------------
<S> <C> <C>
Fiskars Oy Ab.................................................. 1,825,000(4) 16.5%
Mannerheimintie 14 A
FIN-00100
Helsinki, Finland
Massachusetts Mutual Life Insurance............................ 1,146,789(5) 10.4%
1295 State Street
Springfield, MA 01111
Duquesne Enterprises, Inc. .................................... 1,043,750 9.4%
Grant Building, Suite 240
Pittsburgh, PA 15219
Japan Storage Battery Co., Ltd. ............................... 645,273 5.8%
1 Inobaba-cho
Nishinosho Kisshoin
Minami-ku
Kyoto, Japan
Dimensional Fund Advisors...................................... 626,426 5.7%
1299 Ocean Avenue
Santa Monica, CA 90401
</TABLE>
- ---------------
(1) Except as indicated in the footnotes to this table, the persons named in the
table have sole voting and investment power with respect to all shares of
Common Stock of the Company shown as beneficially owned by them.
(2) Assumes conversion of 1,000,000 shares of the Series G Preferred Stock
issued to Fiskars, which have the same voting rights as shares of the
Company's Common Stock.
(3) The denominator in this calculation includes 10,048,784 shares of Common
Stock outstanding as of the record date, plus 1,000,000 shares of Series G
Preferred Stock on an as-converted basis.
(4) Includes 825,000 shares of Common Stock and 1,000,000 shares of Series G
Preferred Stock which have the same voting rights as shares of the Company's
Common Stock.
(5) Massachusetts Mutual Life Insurance Company, MassMutual Corporate investors,
and MassMutual Participation investors own 802,752, 229,358 and 114,679
shares of Common Stock of the Company, respectively.
2
<PAGE> 3
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth, as of the record date, all directors,
director nominees and named executive officers who are the beneficial owners of
the Common Stock of the Company and such beneficial ownership by all executive
officers and directors as a group:
COMMON STOCK
<TABLE>
<CAPTION>
SHARES OF OPTIONS AND WARRANTS
COMMON STOCK EXERCISABLE WITHIN PERCENT OF
NAME AND ADDRESS OF BENEFICIAL OWNER (1)(2) 60 DAYS(1) COMMON STOCK(3)
- ----------------------------------------------- ------------ -------------------- ---------------
<S> <C> <C> <C>
Conrad A. Plimpton............................. 278,885(4) 17,000(8) 2.7%
James A. Risher................................ 273,090 70,103(9) 3.1%
Lance L. Knox.................................. 154,890 17,000(8) 1.6%
Ralf R. Boer................................... 2,500(5) --(10) *
Wayne L. Clevenger............................. 10,000 17,000(8) *
Ron E. Doggett................................. 8,000 12,000(8) *
James E. Fowler................................ 1,250 5,750(8) *
David J. McLaughlin............................ 4,300 14,500(8) *
Stig G. Stendahl............................... --(5) --(10) *
Chiaki Tanaka.................................. --(6) 12,000(6)(8) *
Marty R. Kittrell.............................. 38,314 30,853(11) *
Warren J. Johnson.............................. 24,927 9,552(12) *
William J. Raddi............................... 115,000 29,500(13) 1.3%
Mark A. Ascolese............................... 38,143 23,500(14) *
All Executive Officers and Directors as a Group
(17 persons)................................. 1,009,031() (7) 289,258 11.5%
</TABLE>
- ---------------
* Less than 1%.
(1) Except as indicated in the footnotes to this table, the persons named in
the table have sole voting and investment power with respect to the shares
of Common Stock of the Company shown as beneficially owned by them.
(2) Does not include options and warrants to purchase shares of Common Stock
which are listed separately under the next column "Options and Warrants
Exercisable Within 60 Days".
(3) Represents the percent of shares of Common Stock held and options and
warrants exercisable within 60 days after the record date. The numerator in
this calculation includes the shares of Common Stock plus options and
warrants exercisable within 60 days held by the beneficial owner. The
denominator includes 10,048,784 shares of Common Stock outstanding as of
the record date plus 1,000,000 shares of Series G Preferred Stock on an
as-converted basis.
(4) Includes 2,300 shares held by custodian for the Conrad A. Plimpton SERP
Trust.
(5) Does not include the 825,000 shares of Common Stock or the 1,000,000 shares
of Series G Preferred Stock held by Fiskars. Messrs. Boer and Stendahl have
shared voting and investment power over any such shares and disclaim
beneficial ownership of such shares.
(6) Does not include 595,273 shares of Common Stock which were acquired July 1,
1995, upon conversion of the Series D and E Preferred held by JSB. Mr.
Tanaka, as an officer of JSB, has shared voting and investment power over
such shares and disclaims beneficial ownership of such shares. Mr. Tanaka
will not seek re-election as director when his current term expires in
February 1997.
(7) Does not include 50,000 shares of Common Stock currently owned by JSB or
595,273 shares of Common Stock which were acquired upon conversion of the
Series D and E Preferred held by JSB. Mr. Tanaka, as an officer of JSB, has
shared voting and investment power over such shares and disclaims
beneficial ownership of such shares. Does not include 825,000 shares of
Common Stock or the
3
<PAGE> 4
1,000,000 shares of Series G Preferred Stock held by Fiskars. Messrs. Boer
and Stendahl have shared voting and investment power over any such shares
and disclaim beneficial ownership of such shares.
(8) Does not include an option to purchase 1,500 shares of Common Stock which
is not exercisable within 60 days after the record date.
(9) Does not include an option to purchase 20,000 shares of Common Stock which
is not exercisable within 60 days after the record date.
(10) Does not include an option to purchase 3,000 shares of Common Stock which
is not exercisable within 60 days after the record date.
(11) Does not include an option to purchase 29,250 shares of Common Stock which
is not exercisable within 60 days after the record date.
(12) Does not include an option to purchase 15,500 shares of Common Stock which
is not exercisable within 60 days after the record date.
(13) Does not include an option to purchase 20,000 shares of Common Stock which
is not exercisable within 60 days after the record date.
(14) Does not include an option to purchase 24,500 shares of Common Stock which
is not exercisable within 60 days after the record date.
COMPENSATION OF DIRECTORS
Mr. Risher is not compensated separately for his services as a director. In
fiscal 1996, Mr. Plimpton was paid $55,000 per year and Mr. Knox was paid
$50,000 per year for their service in the roles of Chairman and Vice Chairman,
respectively. Each was paid an expense allowance of $25,000 per year. Each of
the directors was paid an annual retainer of $20,000 and each Committee Chairman
received an additional annual retainer of $5,000. Each of the directors was also
paid a fee of $1,000 for each Board meeting and Board committee meeting attended
and $500 for each telephone Board and Board Committee meeting attended, plus
expenses. Messrs. Plimpton and Knox also received the retainers and Board
meeting fees that the other Board members received. Mr. Tanaka assigns his
compensation to JSB. The Company paid group insurance premiums on behalf of Mr.
Plimpton in the amount of $4,056. Receipt of director compensation is subject to
minimum attendance standards.
During fiscal 1996, certain changes to director compensation were approved
by the Board of Directors and will be effective in fiscal 1997. The changes are
as follows: The Chairman and Vice Chairman fees of $55,000 and $50,000,
respectively, have been eliminated. The Chairman of the Board of Directors will
receive a flat retainer fee of $25,000 for serving in that capacity. Mr. Knox
will receive an annual consulting fee of $25,000 for additional consulting
services, which include providing management and the Board of Directors counsel
and leadership on a variety of issues requiring dedicated time and effort on the
part of Mr. Knox. The lump sum expense allowance of $25,000 for Messrs. Plimpton
and Knox will be eliminated, and direct expenses will be reimbursed up to a
maximum of $15,000 each. Mr. Plimpton will reimburse the Company for group
insurance premiums paid on his behalf. Finally, all non-management members of
the Executive Committee will receive a flat retainer of $10,000 a year in lieu
of meeting fees, and the Chairman of the Executive Committee will receive an
additional $10,000 retainer.
Option Plans for Directors. The Company believes that stock options
enhance its ability to attract the services of experienced, able and
knowledgeable persons to serve as directors. It also believes that stock options
are important to promote and encourage the continued service of directors by
facilitating their purchase of a stock interest in the Company. Accordingly, the
Company adopted non-employee director stock option plans in 1989 and 1995.
1989 Directors Plan and 1995 Directors Plan. In October 1989, the Board of
Directors authorized the grant of up to 87,500 shares of the Company's Common
Stock for the Non-Employee Directors Stock Option Plan ("1989 Directors Plan").
At December 31, 1994, there were no further options available for grant to
directors under the 1989 Directors Plan. Accordingly, in 1995, the 1995
Directors Stock Option Plan (1995 Directors Plan) was adopted by the Company.
The 1989 Directors Plan had provided for the annual grant of
4
<PAGE> 5
an option to purchase 2,500 shares. Other terms are substantially the same as in
the 1995 Directors Plan as described below.
Under the terms of the 1995 Directors Plan, 150,000 shares of the Company's
Common Stock are reserved for issuance. The 1995 Directors Plan provides that
each non-employee director of the Company is granted an option to purchase 3,000
shares of stock as of the date of the director's commencement of service as a
director. Thereafter, a non-employee director is granted an additional option to
purchase 3,000 shares of stock immediately following the annual election of
directors if he or she continues to be a non-employee director on the board. The
per-share option exercise price of each of these options is the fair market
value of a share of Common Stock on the grant date as determined in accordance
with the 1995 Directors Plan.
Each option granted to a non-employee director of the Company is
exercisable for 1,500 shares of Common Stock one year following the date of
grant and exercisable for the remaining 1,500 shares two years following the
date of grant. Unexercised options granted to non-employee directors of the
Company terminate upon the expiration of one year following the date on which
the non-employee director dies or on the date on which the non-employee director
ceases to be a member of the Board for any other reason, unless such termination
of service is due to: (i) retirement from the Board; (ii) failure to stand for
election with the Board's consent; or (iii) resignation from the Board with the
Board's consent. Unexercised options expire ten years after the date of grant.
Cumulative Status of Option Plans and Fiscal 1996 Option
Grants. Cumulatively, options to purchase 97,000 shares are available for
grant. Of the 116,750 options outstanding, 79,250 options are currently
exercisable.
During fiscal 1996, options to purchase 21,000 shares of Common Stock at a
price of $13.375 per share were granted under the 1995 Directors Plan to
continuing directors, and options to purchase 6,000 shares of Common Stock at a
price of $16.00 per share were granted under the same plan to the
representatives designated by Fiskars and appointed to the Board of Directors in
May 1996.
5
<PAGE> 6
MANAGEMENT
EXECUTIVE OFFICERS
The executive officers of the Company, and their respective ages, as of the
record date are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
- --------------------------------------- --- --------------------------------------------------------
<S> <C> <C>
James A. Risher........................ 54 President and Chief Executive Officer
Conrad A. Plimpton..................... 53 Chairman of the Board
Lance L. Knox.......................... 52 Vice Chairman of the Board
Mark A. Ascolese....................... 46 Senior Vice President and General Manager, Americas
Group
Nicholas J. Costanza................... 41 Vice President, Chief Administrative Officer, General
Counsel and Secretary
Warren J. Johnson...................... 48 Vice President and General Manager, Emerging
Technologies Group
Marty R. Kittrell...................... 40 Vice President, Chief Financial Officer, Treasurer, and
Assistant Secretary
Hermann G. P. Metzler.................. 55 Vice President, International Group
William J. Raddi....................... 57 Senior Vice President, Chief Technology Officer and
General Manager, Small Systems Group
Alden R. Schnaidt...................... 48 Vice President and General Manager, Large Systems Group
</TABLE>
BIOGRAPHICAL INFORMATION -- EXECUTIVE OFFICERS
Certain information concerning the Company's executive officers is set
forth below, except that information concerning Messrs. Risher, Plimpton and
Knox is set forth above under the caption "Biographical
Information -- Directors".
Mr. Ascolese joined the Company in 1985 and assumed his current position as
Senior Vice President and General Manager, Americas Group in October 1995. Mr.
Ascolese has served in various customer service, sales management and General
Manager capacities since becoming a Vice President in 1987. He was Vice
President and General Manager, Worldwide Services Group from 1992 to January
1995, and Senior Vice President and General Manager, North American Field
Operations from January to October 1995.
Mr. Costanza joined the Company in 1980 and assumed his current position as
Vice President, Chief Administrative Officer, General Counsel and Secretary in
November 1995. As Chief Administrative Officer, Mr. Costanza has assumed
world-wide responsibility for Human Resources and certain corporate services, in
addition to such responsibility for the legal affairs of the Company. Mr.
Costanza held various legal positions with the Company prior to being promoted
to Vice President and General Counsel in 1986.
Mr. Johnson joined the Company's predecessor in 1978 serving in various
financial and managerial capacities until he assumed his current position as
Vice President and General Manager, Emerging Technologies Group in September
1995. From 1989 to 1992, Mr. Johnson was Vice President and General Manager,
Office Systems Group. From 1992 to 1995, he was Vice President, Corporate
Development, and from February to September 1995, he was Vice President and
General Manager, International Power Machines.
Mr. Kittrell joined the Company in 1989 as Vice President and Chief
Financial Officer and Treasurer. He was elected Assistant Secretary in 1991.
Mr. Metzler joined the Company in 1984 as Manager of International Sales
and Service. From 1985 until 1989, he served as Director of International
Marketing and Sales, at which time he assumed his current position of Vice
President, International Group.
6
<PAGE> 7
Mr. Raddi has been with the Company and its predecessors since 1962 and has
served in various engineering, development, and manufacturing capacities. In
1990, he assumed the title of Senior Vice President and Chief Technology
Officer. In 1992, he assumed the additional position of Senior Vice President
and General Manager, Small Systems Group.
Mr. Schnaidt joined the Company in 1986 as Director of Manufacturing, was
promoted to Vice President, Manufacturing Operations in 1988, and assumed his
current position in 1992.
HUMAN RESOURCES COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Human Resources Committee of the Board of Directors (the "HR
Committee") independently reviews executive compensation and provides counsel to
the Board of Directors on matters relating to such compensation as part of its
charter. In exercising its responsibilities, the HR Committee relies on the
advice and counsel of independent accountants, benefits consultants, and outside
legal counsel in connection with issues relating to the design of executive
compensation plans, and attendant accounting and legal considerations.
The HR Committee considers and approves matters relating to: (i) total cash
compensation of executive officers of the Company, including salaries and
incentives; (ii) grants of options under the Company's option plans; (iii)
awards under the Company's Management Incentive Compensation Plan; and (iv) the
Company's benefit plans.
The HR Committee has prepared the following report on executive
compensation, the Company's compensation philosophy, policies and their
implementation in fiscal 1996.
NATURE OF COMPANY BUSINESS
The Company provides Strategic Power Management solutions to a broad range
of businesses and institutions world-wide. The Company's products are used for
networking, financial, medical, industrial, telecommunications, military, cable
television, and aerospace applications -- wherever continuous power is essential
to daily operations. The Company has designed and sold large customized
uninterruptible power systems ("UPS") for data centers since the early 1960s.
During the 1980s, the Company broadened its product offerings by introducing
Powerware (Register mark) Systems, standardized UPS to support mainframe and
large minicomputer installations. Personal computers proliferated in the late
1980s, and the Company responded with product families that support personal
computers, workstations and local area networks ("LANs"), including the
Powerware Prestige product line that was introduced in 1993. The Company has
expanded its product offering through acquisitions and internal development to
include the full spectrum of off-line, line-interactive and on-line UPS
products, as well as a worldwide service organization.
Although there are many competitors in the UPS industry, the Company is one
of three companies competing on a worldwide basis with a full line of UPS
products and services and believes that it is one of the largest worldwide
independent suppliers of UPS products.
In this highly competitive industry, the Company must compete against
subsidiaries of large industrial companies, rapidly growing independent
companies, and non-U.S. companies for qualified personnel. Accordingly, its
compensation program needs to be competitive against a broad universe of
different sizes and types of companies.
COMPENSATION PROGRAM FOR EXECUTIVE OFFICERS
Compensation Philosophy. The executive compensation program is based on
the strong belief that a performance-based program which also encourages equity
ownership in the Company will align both annual and long-term interests of the
Company and its shareholders with those of management. The Company is dedicated
to achieving global leadership in a highly competitive industry and to
delivering superior shareholder value. The mission of the Company is to provide
power protection solutions for customers worldwide in order to create enterprise
value and achieve the common goals of: (i) superior financial performance; (ii)
customer
7
<PAGE> 8
satisfaction; (iii) associate satisfaction; and (iv) quality. The purpose of the
Company is to provide solutions that exceed customers' expectations and create
value. The vision of the Company is to become "The World-wide Leader in
Strategic Power Management". With these principles in mind, the executive
compensation program objectives are as follows:
- To provide a competitive compensation program in order to attract,
retain and motivate qualified personnel for positions of substantial
responsibility in order to promote the success of the Company's
business.
- To serve as a management tool in focusing and directing the energies and
efforts of key executives toward achieving the Company's goals through
individual and collective goals.
- To provide a long-term incentive for the executive to continue providing
service to the Company by linking the success and prosperity of the
individual to the success and prosperity of the Company.
Total Cash Compensation. Total cash compensation consists of base salary
and annual cash incentive opportunities. A total cash compensation target is
established for each position using benchmark survey comparisons. The actual
payment of the annual cash incentive portion of the total cash compensation is
based principally on the financial performance of the Company.
To determine the competitive level of total compensation (including
short-term and long-term incentives), the HR Committee sets the total pay target
in a competitive compensation range as benchmarked against published survey data
and data derived through special studies of comparable industries. Most factors
of the compensation program are positioned around the 50th percentile of the
competitive range, with the ability to earn proportionately higher or lower
total cash compensation based upon achievement against established business
performance objectives.
The competitive range is compiled from data obtained from the American
Electronics Association, Radford Associates and Executive Compensation Service,
Inc. The American Electronics Association compiled survey data from 438 member
firms. Radford Associates, a subsidiary of the Alexander and Alexander
Consulting Group, compiled survey data from 433 comparable high technology
companies. Executive Compensation Service, Inc., a subsidiary of the management
consulting firm of Watson Wyatt Data Services, Inc., compiled survey data from
272 durable goods manufacturing firms. Given the Company's particular industry,
there is limited publicly available data of direct competitors for comparison
purposes. The surveys referenced use data from manufacturing companies with
international scope that are market driven, technology based, cost-oriented, and
experiencing growth and sales volume similar to the Company.
Base Salary. The HR Committee reviews executive base salaries on a regular
basis and provides for base salaries in the middle range of competitive salary
levels, with adjustments made to reflect individual performance, experience and
contributions. A discussion of Chief Executive Officer base salary compensation
is set forth below under the caption "CEO Compensation".
Management Incentive Compensation Plan ("MIP"). The objective of MIP is to
attract, retain and motivate key executives and managers by providing annual
cash incentives for goal achievement. The Company maintains a formalized annual
incentive opportunity for key executives responsible and accountable for
achieving the annual operating plan. The MIP generates 50th percentile awards in
comparison to the survey groups described above based upon the achievement of
targeted Company results. Proportionately higher or lower awards are achieved if
results are above or below target. No awards are made if a threshold level of
corporate financial performance is not achieved, unless the Board of Directors
determines it is in the best interests of the Company to do so pursuant to its
discretion under the MIP. Each eligible grade level is assigned a fixed
percentage of annual salary as the target annual incentive opportunity. For
executive officers, this ranged from 30 percent to 60 percent of annual salary
in fiscal 1996. A discussion of Chief Executive Officer incentive compensation
is set forth below under the caption "CEO Compensation".
Under the MIP, payments are made based on the Company achieving
predetermined goals established annually by the Board of Directors. These goals
typically include: (i) targets for corporate growth, such as improvements year
over year to earnings per share and cash flow; (ii) targets for strategic
business unit
8
<PAGE> 9
growth, such as improvements year over year in specific areas of financial
performance of each individual strategic business unit; and (iii) attainment of
certain individually tailored non-financial objectives for each executive. The
relative weighting for each objective is determined each year by the HR
Committee, and may vary depending upon the Company's financial and strategic
objectives for that year.
In fiscal 1996, the Company completed a major repositioning of its business
through its strategic acquisition of the worldwide UPS business of Fiskars
("Deltec Acquisition") and its successful integration of the previously acquired
operations of International Power Machines Corporation ("IPM") and Lectro
Products, Inc. ("Lectro"), enabling the Company to provide one of the broadest
product offerings in the global UPS industry. The Deltec Acquisition also
enabled the Company to significantly improve its competitive position in the
small systems UPS market, the fastest growing segment of the industry, and has
positioned the Company as a leader in the global UPS market. As a result of
these acquisitions, the Company achieved record revenues of approximately $460
million in fiscal 1996, an increase of 17.7% over the prior year. Cost savings
and operating efficiencies resulting from the continued integration and
consolidation of the operations of IPM, Lectro and the Deltec Acquisition are
expected to significantly improve the Company's future financial results.
In applying the MIP for fiscal year 1996, the HR Committee evaluated and
balanced a number of factors, including the: (i) nature and breadth of strategic
achievement, as generally described above; (ii) actual financial performance of
the Company and individual strategic business units as compared to the
applicable financial targets pre-established at the outset of the fiscal year,
which did not contemplate the Deltec Acquisition; (iii) success of accelerated
acquisition integration activities; (iv) individual executive's performance as
compared to individual financial and non-financial goals during a year of
corporate transition; and (v) discretion under the MIP to make cash awards
deemed by the Board of Directors to be in the overall best interests of the
Company based on an evaluation of all factors, as recommended by the HR
Committee. Accordingly, eight executive officers (including the CEO) and
seventeen key managers were awarded cash payments totaling $554,500.
Supplementary Management Incentive Plan ("Supplementary MIP"). In November
1994, the Company adopted a supplementary plan to motivate executives with
matching cash awards designed to reduce individual notes associated with 1988
and 1989 stock purchase agreements (described below under the caption "Stock
Purchase Agreements"), which incent continued equity positions in the Company of
eight key executive officers, including the Chief Executive Officer. Under this
plan, executives in good standing who have paid for the purchase of Common Stock
by promissory notes prior to the Company's 1989 initial public offering are
eligible to receive matching contributions up to individually set annual limits
during calendar years 1995 through 1999 of 50% of the executives' voluntary
prepayments of the balances outstanding under their notes. The match amounts are
grossed up and tax assisted. The maximum annual contribution by the Company is
limited to $200,000 per calendar year, allocated among eligible executives based
on performance and their outstanding note balance. Any portion of the maximum
annual contribution by the Company remaining unused at the end of the calendar
year will be retired and will not increase the maximum for future calendar
years. In calendar 1996, seven eligible executive officers participated.
Voluntary prepayments totaled $203,800. Company contributions, including match
and gross-up, totaled $169,800.
Option Plans for Employees. The Company provides long-term incentive
compensation through its employee stock option plans. The plans are intended to
foster management team cohesion and positively align and reinforce management
and shareholder interests. The plans are structured to allow the HR Committee
discretion in creating employee equity incentives which assist the Company in
attracting, motivating and retaining the appropriate talent needed to conduct
its business successfully. Key managers as well as executive officers are
eligible for grants under the plans, which seek to implement the Company's
long-term incentive approach primarily through the utilization of nonstatutory
options. Awards are at the 50th percentile of the compensation range of the
survey groups previously described reflecting a total compensation philosophy
that factors in long-term corporate performance as captured by stock price and
increased shareholder value. The Company believes that the plans encourage
superior performance that can result in significantly enhanced shareholder
value, which would result in compensation at a higher percentile of the
competitive range. Accordingly, the Company adopted employee stock option plans
in 1989 and 1995.
9
<PAGE> 10
1989 Stock Option Plan and 1995 Employee Stock Option and Restricted Stock
Plan. In October 1989, the Board of Directors authorized the grant of up to
550,000 shares for the 1989 Stock Option Plan ("1989 Option Plan"). At December
31, 1994, all options had been granted. In order to ensure that there was a
sufficient number of stock options and restricted stock available to meet the
intent and purpose of stock incentive programs determined in the long term
interests of the Company, the 1995 Employee Stock Option and Restricted Stock
Plan (the "1995 Option Plan") was adopted in 1995.
Under the terms of the 1995 Option Plan, 750,000 shares of the Company's
Common Stock were reserved for issuance. The 1995 Option Plan provides for the
grant of options that are intended to qualify as ISOs as defined under Section
422 of the Code, nonqualified options, and restricted stock. Unlike the 1989
Option Plan, it does not provide for SARs. It is administered by the HR
Committee, which selects the officers and employees of the Company and its
subsidiaries to whom options may be granted.
With respect to the grant of options, the HR Committee is charged with
determining the option grant date, the vesting schedule and expiration of
options, all in accordance with the 1995 Option Plan. The maximum number of
shares subject to options that can be granted under the 1995 Option Plan to any
individual executive officer or other employee of the Company or any subsidiary
is 300,000 shares during the first ten years of the 1995 Option Plan and 50,000
shares per year thereafter.
With respect specifically to ISOs, no person may receive any ISO if, at the
time of grant, such person owns directly or indirectly more than 10% of the
total combined voting power of the Company. There is also a $100,000 limit on
the value of stock (determined at the time of grant) covered by incentive stock
options that first become exercisable by an optionee in any calendar year. No
incentive stock option may be granted more than 10 years after the effective
date of the 1995 Option Plan.
The HR Committee determines the service requirements and performance goals
necessary for awards of restricted stock to be made. The maximum number of
shares of restricted stock that can be granted under the 1995 Option Plan to any
individual executive officer or other employee of the Company or any subsidiary
is 300,000 shares during the first ten years of the 1995 Option Plan, and 50,000
shares per year thereafter. At its discretion, the HR Committee may grant
restricted stock subject to objective performance goals established prior to
April 15 of the year in which the grant is made and while the outcome is
substantially uncertain. Performance goals must be in accordance with the terms
of the 1995 Option Plan.
Cumulative Status of Option Plans and Fiscal 1996 Option
Grants. Cumulatively, options to purchase 432,334 shares are currently
available for grant. Of the 754,767 options outstanding, 296,203 options are
exercisable. Currently, there are eight executive officers and one hundred four
key employees who have been granted options under the 1989 Option Plan and 1995
Option Plan since inception. For fiscal 1996, Messrs. Kittrell, Johnson, Raddi
and Ascolese were awarded options to purchase 18,000, 19,000, 12,500 and 12,000
shares, respectively, to incent and reward their ongoing contributions enhancing
the market and financial position of the Company. The awards were based in part
on the value and number of options they held relative to other executive
officers and to their peers at other comparable companies with which the Company
competes for human resources.
401(k) Retirement Benefit Plan. The Company maintains a savings plan
qualified under Section 401(k) of the Internal Revenue Code of 1986 for the
benefit of all active U.S. employees. Employees may elect to defer from Federal
income tax up to 15% of their total compensation up to the annual statutory
maximum, which was $9,500 for calendar year 1996. The Company contributes to the
employee's account an amount equal to 2% of an employee's total annual
compensation up to annual compensation of $150,000 for calendar year 1996 and
matches up to 4% of an employee's contributions at a rate of 50 cents on the
dollar. In addition, the HR Committee may recommend that the Board of Directors
make additional discretionary contributions each year based on the Company
meeting certain profit objectives. In fiscal 1996, the Company made a
discretionary contribution of $150,000, which is allocated in accordance with
the terms of the plan to the accounts of all eligible participants.
10
<PAGE> 11
CEO COMPENSATION
As indicated previously, the Company's executive compensation program is
reviewed regularly and is based upon business performance and the achievement of
individual objectives. The Chief Executive Officer's base salary and total cash
compensation are positioned at approximately the 50th percentile of the
competitive compensation range as described above. Proportionately higher or
lower awards are achieved if results are above or below target. Mr. Risher's
goals for fiscal 1996 focused his efforts principally on: (i) financial
performance of the Company (especially earnings per share and cash flow); (ii)
strategic corporate development and repositioning; (iii) integration of
previously acquired companies; and (iv) restructuring the Company on a global
basis, including all key personnel, organizations and succession matters.
Strategic corporate development and repositioning goals generally consisted of
achieving specific revenue and growth targets for each strategic business unit,
new acquisitions, the continued focus on cost effective manufacturing, the
increase in productivity and total quality management, and the enhancement of
market position. The organizational goals included a multi-year focus on
improving managerial capabilities and increasing the number of experienced
executives to meet the human resource needs of the Company. A primary focus is
to improve the overall effectiveness of the organization through establishing an
appropriate structure to meet business objectives. Another key focus is on
succession planning and management training and development.
Mr. Risher is a participant in the Company's MIP. A discussion of the MIP
as it applies to all executives (including Mr. Risher), achievements by the
Company in fiscal year 1996 and balancing of factors in the HR Committee's
annual review of Mr. Risher's performance is set forth above under the caption
"Management Incentive Compensation Plan ("MIP")". At the targeted 50th
percentile, Mr. Risher's potential incentive compensation under the MIP would
approximate 60% of Mr. Risher's base salary. Mr. Risher's achievement of
individual objectives described above and the financial performance of the
Company resulted in an incentive compensation payment under the MIP of $100,000
in fiscal 1996. That incentive compensation payment represented approximately
24% of Mr. Risher's base salary, which was $425,000 in fiscal 1996. Mr. Risher's
total cash compensation in fiscal 1996 was below the targeted 50th percentile.
SUBMITTED BY THE HUMAN RESOURCES COMMITTEE OF THE BOARD OF DIRECTORS:
<TABLE>
<S> <C> <C>
David J. McLaughlin Lance L. Knox Ron E. Doggett
Chairman
</TABLE>
HUMAN RESOURCE COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Human Resources Committee performs the functions of a compensation
committee for the Board of Directors. The current members of the Human Resources
Committee are Messrs. McLaughlin, Knox, and Doggett. Mr. Knox currently serves
as Vice Chairman of the Board of Directors and has served in that position since
1982. Mr. Knox was paid $50,000, plus an expense allowance of $25,000, for his
service in that role in 1996 for the Company as described above under the
caption "Compensation of Directors."
EXECUTIVE COMPENSATION AND RELATED INFORMATION
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The Summary Compensation Table indicates the cash compensation paid by the
Company and its subsidiaries as well as certain other compensation paid or
accrued to the Chief Executive Officer and the four other highest paid executive
officers ("Named Executive Officers"), for services rendered in all capacities
during the fiscal years ended September 30, 1996, 1995, and 1994, respectively.
The Company does not have any long term incentive, defined benefit or actuarial
plans for the Named Executive Officers.
11
<PAGE> 12
SUMMARY COMPENSATION TABLE
LONG TERM COMPENSATION AWARDS
<TABLE>
<CAPTION>
SECURITIES OTHER ANNUAL RESTRICTED UNDERLYING
ANNUAL SALARY($) STOCK OPTIONS/
NAME AND PRINCIPAL POSITION YEAR COMPENSATION AWARDS($) BONUS($) SARS(#) COMPENSATION($)
- ---------------------------- ---- ------------ ------------ ---------- ------- ----------------
<S> <C> <C> <C> <C> <C> <C>
James A. Risher............. 1996 425,000 100,000 141,473(2) 0 0
President and Chief 1995 375,000 160,000 126,159(2) 0 40,000
Executive Officer 1994 350,000 200,000 123,597(2) 0 0
Marty R. Kittrell........... 1996 200,000 70,000 (3) 0 18,000
Vice President, CFO, 1995 200,000 55,000 (3) 0 15,000
Treasurer, and Assistant 1994 170,833 63,900 (3) 0 15,000
Secretary
Warren J. Johnson........... 1996 135,000 125,000(1) (3) 0 19,000
Vice President, General 1995 135,000 -- 48,201(2) 0 0
Manager, Emerging 1994 126,600 40,500 (3) 0 0
Technologies Group
William J. Raddi............ 1996 200,000 40,000 (3) 0 12,500
Senior Vice President, 1995 200,000 45,000 (3) 0 20,000
Chief Technology Officer, 1994 180,000 47,300 24,568(2) 0 0
General Manager, Small
Systems Group
Mark A. Ascolese............ 1996 192,000 32,000 26,117(2) 0 12,000
Senior Vice President, 1995 189,000 68,000 (3) 0 30,000
General Manager, Americas 1994 184,500 65,100 (3) 0 0
Group
</TABLE>
<TABLE>
<CAPTION>
ALL OTHER
NAME AND PRINCIPAL POSITION COMPENSATION(4)($)
- --------------------------------------------------------------------------- ------------------
<S> <C>
James A. Risher............................................................ 86,974
President and Chief Executive Officer 51,675
55,006
Marty R. Kittrell.......................................................... 13,341
Vice President, CFO, Treasurer, and 11,384
Assistant Secretary 14,750
Warren J. Johnson.......................................................... 26,803
Vice President, General Manager, Emerging 12,533
Technologies Group 18,390
William J. Raddi........................................................... 55,341
Senior Vice President, Chief Technology 45,463
Officer, General Manager, Small Systems Group 48,013
Mark A. Ascolese........................................................... 24,729
Senior Vice President, General Manager, 13,204
Americas Group 14,348
</TABLE>
- ---------------
(1) Includes a $100,000 bonus for calendar year 1995.
(2) Includes the following reported amounts for particular perquisites which
exceed 25% of the total amount of perquisites for the Named Executive
Officers. Includes for fiscal 1996: (a) reimbursement for payment of taxes:
James A. Risher -- $61,368; (b) automobile allowance: Mark A.
Ascolese -- $12,000. Includes for fiscal 1995: (a) reimbursement for payment
of taxes: James A. Risher -- $41,624; (b) automobile allowance: James A.
Risher -- $35,597; (c) reimbursement for relocation: Warren J. Johnson --
$35,000. Includes for fiscal 1994: (a) reimbursement of payment of taxes:
James A. Risher -- $32,687; (b) automobile allowance: James A.
Risher -- $38,376; William J. Raddi -- $9,000; (c) reimbursement of loan
interest: William J. Raddi -- $10,306.
(3) Total perquisites were less than 10% of total fiscal year salary and bonus.
12
<PAGE> 13
(4) The total in this column reflects the aggregate value of the Company
contributions under the 401(k) Retirement Benefit Plan, the portion of the
premiums paid by the Company in the covered fiscal year under a "split
dollar" insurance arrangement and the Company's contributions to the
Supplementary MIP, as described above under the caption "Compensation
Program for Executive Officers". Company contributions for each of the Named
Executive Officers for fiscal 1996 are as follows:
<TABLE>
<CAPTION>
SPLIT-DOLLAR SUPPLEMENTARY
401(k) INSURANCE MIP
------ ------------ -------------
<S> <C> <C> <C>
James A. Risher............................... $5,399 $ 46,575 $35,000
Marty R. Kittrell............................. 6,274 4,567 2,500
Warren J. Johnson............................. 9,417 8,286 9,100
William J. Raddi.............................. 6,274 38,767 10,300
Mark A. Ascolese.............................. 6,274 5,455 13,000
</TABLE>
STOCK OPTIONS AND SARS
For fiscal 1996, options to purchase 272,250 shares were granted to 25
employees as a group. Each of the Named Executive Officers received grants as
follows: Mr. Kittrell, an option to purchase 18,000 shares which represented
6.6% of the total granted to all employees as a group for fiscal 1996; Mr.
Johnson, 19,000, 6.9%; Mr. Raddi, 12,500, 4.6%; and Mr. Ascolese, 12,000, 4.4%.
The following table sets forth all material terms with regard to grants of stock
options to each of the Named Executive Officers for the fiscal year ended Sep-
tember 30, 1996. All such grants were made under the 1995 Option Plan. No SARs
have been granted under the 1989 Option Plan and SARs are not provided for in
the 1995 Option Plan.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
INDIVIDUAL GRANTS OPTIONS ---------------------------------------------
% OF TOTAL NUMBER GRANTED VALUE AT ASSUMED
OF SECURITIES TO ANNUAL RATES OF STOCK
UNDERLYING EMPLOYEES EXERCISE PRICE APPRECIATION
OPTIONS GRANTED IN FISCAL PRICE EXPIRATION FOR OPTION TERM
NAMES (#) YEAR(1) ($/SH) DATE 5%($)(2) 10%($)(3)
- ------------------------ ----------------- --------- -------- ---------- -------- ---------------------
<S> <C> <C> <C> <C> <C> <C>
Marty R. Kittrell....... 15,000 5.5% 14.000 12/05/05 132,068 334,686
3,000 1.1% 11.750 11/06/06 22,169 56,179
Warren J. Johnson....... 5,000 1.8% 18.750 10/25/05 58,959 149,413
9,000 3.3% 14.000 12/05/05 79,241 200,812
5,000 1.8% 11.750 11/06/06 36,948 93,632
William J. Raddi........ 10,000 3.7% 14.000 12/05/05 88,045 223,124
2,500 0.9% 11.750 11/06/06 18,474 46,816
Mark A. Ascolese........ 10,000 3.7% 14.000 12/05/05 88,045 223,124
2,000 0.7% 11.750 11/06/06 14,779 37,453
</TABLE>
- ---------------
(1) For fiscal 1996, options to purchase 272,250 shares were granted to 25
employees as a group.
(2) Represents the gain before income taxes, equal to the appreciated value of
the options less the exercise price, at an assumed 5% rate of stock price
appreciation, compounded annually, over the ten-year life of the option.
Assumes an appreciated stock price of $30.54, $22.80 and $19.14 at October
25, 2005, December 5, 2005 and November 6, 2006, respectively.
(3) Represents the gain before income taxes, equal to the appreciated value of
the options less the exercise price, at an assumed 10% rate of stock price
appreciation, compounded annually, over the ten-year life of the option.
Assumes an appreciated stock price of $48.63, $36.31 and $30.48 at October
25, 2005, December 5, 2005 and November 6, 2006, respectively.
13
<PAGE> 14
The following table sets forth information with regard to exercises of
stock options during the fiscal year ended September 30, 1996, by each of the
Named Executive Officers and the fiscal year-end value of all unexercised
options held by such individuals.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
NO. OF UNEXERCISED IN-THE-MONEY
SHARES OPTIONS AT OPTIONS AT
ACQUIRED FY-END FY-END
ON VALUE EXERCISABLE/ EXERCISABLE/
NAME EXERCISE VALUE REALIZED($) UNEXERCISABLE(#) UNEXERCISABLE(1)
- ---------------------------------------- -------- ----------------- ---------------- ----------------
<S> <C> <C> <C> <C>
James A. Risher......................... -0- -0- 60,000/30,000 $ 0/$0
Marty R. Kittrell....................... -0- -0- 23,250/36,750 $ 0/$0
Warren J. Johnson....................... -0- -0- 7,250/17,750 $ 0/$0
William J. Raddi........................ -0- -0- 22,000/27,500 $ 0/$0
Mark A. Ascolese........................ -0- -0- 13,500/34,500 $ 0/$0
</TABLE>
- ---------------
(1) Closing price of the Common Stock of the Company at September 30, 1996, was
$10.75.
COMPARATIVE COMPANY PERFORMANCE
The following line graph compares cumulative total shareholder return for
the Company with a performance indicator of the overall stock market, the S&P
500 Stock Index, and a nationally recognized industry group, the Dow Jones
Electrical Components and Equipment Industry Group, since October 1, 1991.
COMPARISON OF CUMULATIVE TOTAL RETURN
AMONG EXIDE ELECTRONICS GROUP, INC.
DOW JONES ELECTRICAL COMPONENTS AND
EQUIPMENT INDUSTRY GROUP,
AND S&P 500
(Performance graph appears here with the following plot points.)
<TABLE>
<CAPTION>
1992(1) 1993(1) 1994(1) 1995(1) 1996(1)
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Exide Electronics (XUPS)...................... 233 343 355 306 176
S&P 500 Index (S&P 500)....................... 111 126 130 169 203
Dow Jones Electrical Components and Equipment
Industry Group (ELQ)........................ 109 126 139 172 191
ASSUMES $100 INVESTED ON OCTOBER 1, 1991(1)
ASSUMES DIVIDENDS REINVESTED
FISCAL YEARS ENDING SEPTEMBER 30
</TABLE>
- ---------------
(1) Closing price of the Common Stock on September 30, 1992, 1993, 1994, 1995,
and 1996 was $14.25, $21.00, $21.75, $18.75 and $10.75, respectively.
CERTAIN AGREEMENTS EMPLOYMENT AND SEVERANCE AGREEMENTS WITH CERTAIN EXECUTIVE
OFFICERS
In fiscal 1986, the Company entered into an employment agreement with Mr.
Risher at the time he was hired. Upon the expiration of that employment
agreement, in fiscal 1990 the Company entered into a new employment agreement
with Mr. Risher. The agreement provides that in the event of termination of Mr.
Risher's employment by the Company, other than for cause, Mr. Risher would be
entitled to severance payments equal to three years total compensation,
including base salary and bonus. The agreement also includes provisions
prohibiting Mr. Risher from competing with the Company for a period of time
after termination of his employment under certain circumstances. The Company
also entered into employment agreements with the Named Executive Officers and
other executive officers of the Company, which provide
14
<PAGE> 15
for severance up to two years total compensation in each case, depending on the
number of years of service with the Company and the individual's
responsibilities, and otherwise contain terms similar to those described above
for Mr. Risher. In addition, the Company has a severance plan for certain
executive officers of the Company providing for severance payments if their
employment is terminated (including constructive termination) for reasons other
than cause during the five-year period following a "change in control" of the
Company. The plan defines a "change in control" as occurring when a person
acquires 30% or more of the Company's voting securities or when there is a
business combination (as defined in the plan) which has been approved by the
Company's shareholders, a change in a majority of the members of the Board of
Directors over a three-year period (other than due to death, disability or
resignation), or a change in control for purposes of specified federal
securities laws. Under this plan, the affected officer would receive a payment
equal to six months compensation plus an additional two months compensation for
each year of service, up to an aggregate maximum severance payment equal to 30
months compensation.
STOCK PURCHASE AGREEMENT
In fiscal years 1986 and 1988, Mr. Risher purchased an aggregate of 200,000
shares of Common Stock from the Company at $4.00 per share in exchange for
10-year promissory notes secured by the Common Stock. The promissory notes
delivered by Mr. Risher bear interest at the applicable Federal rate, as
determined under Section 1274(d) of the Internal Revenue Code (the "Federal
Rate"), and are payable immediately upon the sale of the shares purchased with
the promissory notes. The maturity date of the 1986 promissory note has been
extended to coincide with the maturity date of the 1988 promissory note. As of
September 30, 1996, the aggregate principal and interest amount outstanding on
these promissory notes was $580,000 and $370,330, respectively. The largest
principal amount outstanding during fiscal 1996 was $700,000 in November 1995.
The largest amount of interest accrued on these promissory notes during fiscal
1996 was $540,166 in October 1995.
During fiscal 1989, all of the Company's current executive officers who
were at that time employees of the Company, except for Messrs. Plimpton and
Knox, purchased Common Stock from the Company pursuant to stock purchase
agreements for $8.00 per share in exchange for 10-year promissory notes. The
promissory notes delivered by the executive officers are secured by the shares
of Common Stock, bear simple interest at the prime rate and are payable
immediately upon the sale of the underlying shares and, following termination of
an executive officer's employment, upon the first to occur of (i) the original
maturity date of the promissory note, (ii) three years after the date of
termination of employment or (iii) 90 days after the Company has filed its
second registration statement under the Securities Act of 1933, as amended, for
its Common Stock, following such termination of employment, pursuant to which
such person could have registered such shares. The following information sets
forth the name of each current executive officer who purchased shares during
fiscal 1989 in exchange for notes, the number of shares purchased and the
principal amount outstanding on the notes as of September 30, 1996: Mr. Risher,
136,090 shares, $1,008,720; Mr. Ascolese, 35,000 shares, $280,000; Mr. Costanza,
28,250 shares, $205,432; Mr. Johnson, 18,250 shares, $127,824; Mr. Kittrell,
50,000 shares, $275,008; Mr. Metzler, 12,250 shares, $80,280; Mr. Raddi, 68,000
shares, $544,000; Mr. Schnaidt, 30,000 shares, $221,632. These balances were the
largest principal amounts outstanding at any time during fiscal 1996 for Messrs.
Ascolese, Raddi and Risher. In the case of Messrs. Costanza, Kittrell, Johnson,
Metzler and Schnaidt, the largest principal outstanding during fiscal 1996 was
$226,000, $280,000, $146,000, $85,272 and $240,000, respectively, each in
December 1995. The interest accrued on these notes exchanged for stock for each
of the executive officers as of September 30, 1996, is as follows: Mr. Risher,
$504,051, Mr. Ascolese, $172,210, Mr. Costanza, $134,670, Mr. Johnson, $83,093,
Mr. Kittrell, $158,558, Mr. Metzler, $49,639, Mr. Raddi, $318,221, Mr. Schnaidt,
$145,512. These amounts were the largest amounts of interest accrued at any time
during fiscal 1996 for all but two of the executive officers. The largest amount
of interest accrued on these notes for Messrs. Ascolese and Johnson was $152,660
and $74,122, respectively, in November 1995. All shares were vested as of
September 30, 1996, and are registered for resale through a currently effective
registration statement on Form S-3.
The Company provides incentives for the executives in good standing to make
payments on the promissory notes through the Supplementary MIP (described above
under the caption "Compensation Program for Executive Officers").
15
<PAGE> 1
EXHIBIT 3
FORM OF
AMENDMENT TO EMPLOYMENT AGREEMENT
This Amendment, made and entered into as of the day of July, 1997, amends
the Employment Agreement dated as of September 30, 1989 (the "Agreement") by and
between Exide Electronics Group, Inc. and Exide Electronics Corporation
(collectively "Exide"), Delaware corporations, and James A. Risher ("Employee").
1. Section 7 of the Agreement is hereby amended to read in its entirety as
follows:
The Severance Contract by and between Exide Electronics Group, Inc.
and Employee, effective the day of July, 1997, (the "Severance
Contract") is hereby incorporated into, and made a part of, this Agreement.
In the event Employee shall be entitled to severance payments pursuant
to the Severance Contract, then such severance payments shall be in lieu
of, and not in addition to, the severance payments provided for in Sections
3(d)(i) and 3(d)(ii) of this Agreement.
2. The Agreement is in all other respects ratified and confirmed without
amendment.
IN WITNESS WHEREOF, this Amendment has been duly executed by the parties
hereto as of the day and year first written above.
By
------------------------------------
Authorized Officer
EXIDE ELECTRONICS GROUP, INC.
EXIDE ELECTRONICS CORPORATION
By
------------------------------------
James A. Risher
<PAGE> 1
EXHIBIT 5
FORM OF
AMENDMENT TO EMPLOYMENT AGREEMENT
This Amendment, made and entered into as of the day of July, 1997, amends
the Employment Agreement dated as of March 15, 1990 (the "Agreement") by and
between Exide Electronics Group, Inc. and Exide Electronics Corporation
(collectively "Exide"), Delaware corporations, and William J. Raddi
("Employee").
1. Section 7 of the Agreement is hereby amended to read in its entirety as
follows:
The Severance Contract by and between Exide Electronics Group, Inc.
and Employee, effective the day of July, 1997, (the "Severance
Contract") is hereby incorporated into, and made a part of, this Agreement.
In the event Employee shall be entitled to severance payments pursuant
to the Severance Contract, then such severance payments shall be in lieu
of, and not in addition to, the severance payments provided for in Sections
3(d)(i) and 3(d)(ii) of this Agreement.
2. The Agreement is in all other respects ratified and confirmed without
amendment.
IN WITNESS WHEREOF, this Amendment has been duly executed by the parties
hereto as of the day and year first written above.
By
------------------------------------
Authorized Officer
EXIDE ELECTRONICS GROUP, INC.
EXIDE ELECTRONICS CORPORATION
By
------------------------------------
William J. Raddi
<PAGE> 1
EXHIBIT 10
FORM OF
SEVERANCE CONTRACT
This Severance Contract, made and entered into in Raleigh, North Carolina
effective the [ ] day of [ ], 1997 (the "Agreement") by and between
Exide Electronics Group Inc. (the "Company"), a Delaware corporation, and
[ ] (the "Employee").
WITNESSETH:
WHEREAS, the Company recognizes that plant shutdowns, plant relocations,
different management, change of Company culture, and reduced employee benefits
all may flow from an acquisition or other change of control, and all impose
costs which must be borne by the Employee and the Employee's family;
WHEREAS, the Company recognizes that it will no longer have the power to
protect the interests of the Employee after an acquisition or other change of
control, the Company believes that it is in its interest to provide the Employee
with the right to compensation in certain circumstances following an acquisition
or other change of control;
WHEREAS, the parties desire by this Agreement to provide Employee with the
right to compensation in certain circumstances following an acquisition or other
change of control.
NOW THEREFORE, in consideration of the mutual covenants and agreements
hereinafter contained and other good and valuable consideration, receipt of
which is hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS AND CONSTRUCTION
1.1 DEFINITIONS
Whenever used in the Agreement, the following terms shall have the meanings
set forth below and, when the meaning is intended, the initial letter of the
term is capitalized.
(a) "Base Salary" means the aggregate amount the Employee is entitled to
receive as wages or salary on an annualized basis, payable by the Company and/or
any affiliate of the Company, as consideration for the Employee's services
(regardless of whether the Employee elects or has elected to defer receipt of
all or any portion thereof).
(b) "Beneficial Owner" shall have the meaning ascribed to such term in Rule
13d-3 of the General Rules and Regulations under the Securities Exchange Act of
1934, as amended (the "Exchange Act").
(c) "Bonus Amount" means, with respect to the Employee, the average of the
aggregate amounts paid or payable to the Employee by the Company or any
affiliate of the Company as cash bonuses and/or cash incentive compensation with
respect to each of the three most recently completed fiscal years prior to the
year in which the Employee becomes entitled to a Severance Payment, or if
higher, with respect to each of the three most recently completed fiscal years
prior to the year of the Change of Control (in either case, regardless of
whether the Employee elects or has elected to defer receipt of all or any
portion thereof).
(d) "Business Combination" shall mean any reorganization, merger, share
exchange or consolidation or sale or other disposition of all or substantially
all of the assets of the Company or the acquisition of assets of another entity.
(e) "Change of Control" shall mean:
<PAGE> 2
(i) Any individual, entity or group (within the meaning of Section
13(d)(3) or 14(d)(2) of the Exchange Act) becomes the Beneficial Owner of
30% or more of either (A) the then outstanding shares of common stock of
the Company (the "Outstanding Company Common Stock") or (B) the combined
voting power of the then outstanding voting securities of the Company
entitled to vote generally in the election of directors (the "Outstanding
Company Voting Securities"); provided, however, that for purposes of this
subsection (i), the following acquisitions shall not constitute a Change of
Control: (I) any acquisition directly from the Company, (II) any
acquisition by the Company, (III) any acquisition by any employee benefit
plan (or related trust) sponsored or maintained by the Company or any
corporation controlled by the Company or (IV) any acquisition pursuant to a
transaction which complies with clauses (A), (B) and (C) of subsection
(iii) of this Section 1.1(e); or
(ii) Individuals who, as of the date hereof, constitute the Board (the
"Incumbent Board") cease for any reason to constitute at least a majority
of the Board; provided, however, that any individual becoming a director
subsequent to the date hereof whose election, or nomination for election by
the Company's shareholders, was approved by a vote of at least a majority
of the directors then comprising the Incumbent Board shall be considered as
though such individual were a member of the Incumbent Board, but excluding,
for this purpose, any such individual whose initial assumption of office
occurs as a result of an actual or threatened election contest with respect
to the election or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person other than
the Board; or
(iii) Consummation by the Company of a Business Combination unless,
following such Business Combination, (A) all or substantially all of the
individuals and entities who were the beneficial owners, respectively, of
the Outstanding Company Common Stock and Outstanding Company Voting
Securities immediately prior to such Business Combination beneficially own,
directly or indirectly, more than 60% of, respectively, the then
outstanding shares of common stock and the combined voting power of the
then outstanding voting securities entitled to vote generally in the
election of directors, as the case may be, of the corporation resulting
from such Business Combination (including, without limitation, a
corporation which as a result of such transaction owns the Company or all
or substantially all of the Company's assets either directly or through one
or more subsidiaries) in substantially the same proportions as their
ownership, immediately prior to such Business Combination of the
Outstanding Company Common Stock and Outstanding Company Voting Securities,
as the case may be, (B) no Person (excluding any employee benefit plan (or
related trust) of the Company or such corporation resulting from such
Business Combination) beneficially owns, directly or indirectly, 30% or
more of, respectively, the then outstanding shares of common stock of the
corporation resulting from such Business Combination or the combined voting
power of the then outstanding voting securities of such corporation except
to the extent that such ownership existed with respect to the Company prior
to the Business Combination and (C) at least a majority of the members of
the board of directors of the corporation resulting from such Business
Combination were members of the Incumbent Board at the time of the
execution of the initial agreement, or of the action of the Board,
providing for such Business Combination; or
(iv) Approval by the shareholders of the Company of a complete
liquidation or dissolution of the Company.
(f) "Company" means Exide Electronics Group, Inc., a Delaware corporation,
and any successor as provided in Article V hereof.
(g) "Compensation" of the Employee means the sum of the Employee's (i)
Required Base Salary and (ii) Bonus Amount.
(h) "Disability" means, with respect to the Employee, his total and
permanent disability for purposes of any long-term disability plan sponsored by
the Company or an affiliate of the Company in which the Employee participates.
(i) "Company" means the Company or a subsidiary of the Company.
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<PAGE> 3
(j) "Just Cause" means the termination of employment of the Employee shall
have taken place as a result of an act or acts of dishonesty by the Employee
which constitutes a felony under the laws of the State of North Carolina and
results in gain or personal enrichment of the Employee at the expense of the
Company.
(k) "Person" shall have the meaning ascribed to such term in Rules 13d and
14d-2 of the General Rules and Regulations under the Exchange Act.
(l) "Required Base Salary" means, with respect to the Employee, the higher
of (x) the Employee's Base Salary as in effect immediately before the Change of
Control (but disregarding any reduction thereof that occurs at the request of a
third party who has taken steps reasonably calculated to effect a Change of
Control or otherwise arises in connection with or anticipation of a Change of
Control) and (y) the Employee's highest Base Salary in effect at any time
thereafter.
(m) "Retirement" means, with respect to the Employee, his voluntary normal
or early retirement under a pension plan sponsored by the Company or an
affiliate of the Company in which the Employee participates, as defined in such
plan.
(n) "Severance Payment" means the payment of severance compensation and
benefits as provided in Article II hereof.
1.2 APPLICABLE LAW
To the extent not preempted by the laws of the United States, the laws of
the State of North Carolina shall be the controlling law in all matters relating
to this Agreement.
1.3 SEVERABILITY
If a provision of this Agreement shall be held illegal or invalid, the
illegality or invalidity shall not affect the remaining parts of the Agreement
and the Agreement shall be construed and enforced as if the illegal or invalid
provision had not been included.
ARTICLE II
SEVERANCE PAYMENTS
2.1 RIGHT TO SEVERANCE PAYMENT
The Employee shall be entitled to receive from the Company a Severance
Payment in the amount provided in Section 2.3 if there occurs a Change of
Control of the Company and if either (i) within five (5) years thereafter or
(ii) before the Change of Control but at the request of a third party who has
taken steps reasonably calculated to effect a Change of Control or otherwise in
connection with or anticipation of a Change of Control, the Employee's
employment by the Company shall terminate for any reason specified in Section
2.2, whether the termination is voluntary or involuntary, but excluding any
termination as a result of the Employee's death, Retirement, or Disability or a
termination for Just Cause.
2.2 GOOD REASONS FOR TERMINATION
Following a Change of Control, the Employee shall be entitled to a
Severance Payment if his employment by the Company is terminated, voluntarily or
involuntarily, for any one or more of the following reasons:
(a) The Employee's Base Salary is reduced below the Required Base Salary.
(b) Without the Employee's express written consent, the Employee is
assigned any duties inconsistent in any respect with the Employee's position
(including status, offices, titles and reporting requirements), authority,
duties or responsibilities as in effect before the Change of Control, or the
Company takes any other action which results in a diminution in such position,
authority, duties or responsibilities as compared to before the Change of
Control, excluding for this purpose an isolated, insubstantial and inadvertent
action not taken in
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<PAGE> 4
bad faith and which is remedied by the Company promptly after receipt of notice
thereof given by the Employee.
(c) Without the Employee's express written consent, the Company requires
the Employee to change the location of his job or office, so that he will be
based at a location more than fifty (50) miles from the location of his job or
office immediately prior to the Change of Control.
(d) The Company fails to continue in effect, or, in the case of a
discontinuance, fails to replace with a superior or substantially similar
benefit or plan, any benefit or compensation plan, profit sharing plan, 401(k)
plan, stock purchase plan, stock option plan, life insurance plan, or health,
accident or disability plan in which the Employee is participating before the
Change of Control (or plans providing no less favorable and substantially
similar benefits), or the Company takes any action which would materially
adversely affect the Employee's participation or materially reduce the
Employee's benefits under any of such plans.
(e) The Company takes any action which would deprive the Employee of any
material fringe benefit to which he was entitled immediately prior to the Change
of Control.
(f) A successor company fails or refuses to assume the Company's obligation
under this Agreement, as required by Article V.
(g) The Company or any successor company breaches any of the provisions of
this Agreement.
(h) The Company terminates the employment of the Employee other than for
Just Cause or Disability.
(i) If the Employee is party to any employment agreement with the Company
that incorporates the provisions of this Agreement by reference or otherwise
provides for the participation of the Employee herein, the material breach by
the Company of any provision of such employment agreement.
2.3 AMOUNT OF SEVERANCE PAYMENT
(a) The Employee shall receive from the Company a lump sum cash payment
equal to [2.5][3]* times his Compensation.
(b) The Employee shall not be required to mitigate damages or the amount of
his Severance Payment by seeking other employment or otherwise, nor shall the
amount of such payment be reduced by any compensation earned by the Employee as
a result of employment after his termination of employment by the Company.
2.4 CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY
(a) Anything in this Agreement to the contrary notwithstanding and except
as set forth below, in the event it shall be determined that any payment or
distribution by the Company to or for the benefit of the Employee (whether paid
or payable or distributed or distributable pursuant to the terms of this
Agreement or otherwise, but determined without regard to any additional payments
required under this Section 2.4) (a "Payment") would be subject to the excise
tax imposed by Section 4999 of the Internal Revenue Code of 1986, as amended
(the "Code"), or any corresponding provision of state or local tax laws, or any
interest or penalties are incurred by the Employee with respect to such excise
tax (such excise tax, together with any such interest and penalties, are
hereinafter collectively referred to as the "Excise Tax"), then the Employee
shall be entitled to receive an additional payment (a "Gross-Up Payment") in an
amount such that after payment by the Employee of all taxes (including any
interest or penalties imposed with respect to such taxes), including, without
limitation, any income taxes (and any interest and penalties imposed with
respect thereto) and Excise Tax imposed upon the Gross-Up Payment, the Employee
retains an amount of the Gross-Up Payment to the Excise Tax imposed upon the
Payments. Notwithstanding the foregoing provisions of this Section 2.4, if it
shall be determined that the Employee is entitled to a Gross-Up Payment, but
that the Payments do not exceed 110% of the greatest amount (the "Reduced
Amount") that could be paid to the Employee such that the receipt of Payments
would not give rise to any Excise Tax, then no Gross-Up Payment shall be made to
the Employee and the Payments, in the aggregate, shall be reduced to the Reduced
Amount.
- ---------------
* James A. Risher will receive a lump sum cash payment equal to 3 times his
Compensation.
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<PAGE> 5
(b) Subject to the provisions of Section 2.4(c), all determinations
required to be made under this Section 2.4, including whether and when a
Gross-Up Payment is required and the amount of such Gross-Up Payment and the
assumptions to be utilized in arriving at such determination, shall be made by
[accounting firm] or such other certified public accounting firm as may be
designated by the Employee (the "Accounting Firm"), which shall provide detailed
supporting calculations both to the Company and the Employee within 15 business
days of the receipt of notice from the Employee that there has been a Payment,
or such earlier time as is requested by the Company. In the event that the
Accounting Firm is serving as accountant or auditor for the individual, entity
or group effecting the Change of Control, the Employee shall appoint another
nationally recognized accounting firm to make the determinations required
hereunder (which accounting firm shall then be referred to as the Accounting
Firm hereunder). All fees and expenses of the Accounting Firm shall be borne
solely by the Company. Any Gross-Up Payment, as determined pursuant to this
Section 2.4, shall be paid by the Company to the Employee within five days of
the receipt of the Accounting Firm's determination. Any determination by the
Accounting Firm shall be binding upon the Company and the Employee. As a result
of the uncertainty in the application of Section 4999 of the Code at the time of
the initial determination by the Accounting Firm hereunder, it is possible that
Gross-Up Payments which will not have been made by the Company should have been
made ("Underpayment"), consistent with the calculations required to be made
hereunder. In the event that the Company exhausts its remedies pursuant to
Section 2.4(c) and the Employee thereafter is required to make a payment of any
Excise Tax, the Accounting Firm shall determine the amount of the Underpayment
that has occurred and any such Underpayment shall be promptly paid by the
Company to or for the benefit of the Employee.
(c) The Employee shall notify the Company in writing of any claim by the
Internal Revenue Service that, if successful, would require the payment by the
Company of the Gross-Up Payment. Such notification shall be given as soon as
practicable but no later than ten business days after the Employee is informed
in writing of such claim and shall apprise the Company of the nature of such
claim and the date on which such claim is requested to be paid. The Employee
shall not pay such claim prior to the expiration of the 30-day period following
the date on which he gives such notice to the Company (or such shorter period
ending on the date that any payment of taxes with respect to such claim is due).
If the Company notifies the Employee in writing prior to the expiration of such
period that it desires to contest such claim, the Employee shall:
(i) give the Company any information reasonably requested by the
Company relating to such claim;
(ii) take such action in connection with contesting such claim as the
Company shall reasonably request in writing from time to time, including,
without limitation, accepting legal representation with respect to such
claim by an attorney reasonably selected by the Company;
(iii) cooperate with the Company in good faith in order effectively to
contest such claim; and
(iv) permit the Company to participate in any proceedings relating to
such claim;
provided, however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest and shall indemnify and hold the Employee harmless, on an
after-tax basis, for any Excise Tax or income tax (including interest and
penalties with respect thereto) imposed as a result of such representation and
payment of costs and expenses. Without limitation on the foregoing provisions of
this Section 2.4(c), the Company shall control all proceedings taken in
connection with such contest and, at its sole option, may pursue or forgo any
and all administrative appeals, proceedings, hearings and conferences with the
taxing authority in respect of such claim and may, at its sole option, either
direct the Employee to pay the tax claimed and sue for a refund or contest the
claim in any permissible manner, and the Employee agrees to prosecute such
contest to a determination before any administrative tribunal, in a court of
initial jurisdiction and in one or more appellate courts, as the Company shall
determine; provided, however, that if the Company directs the Employee to pay
such claim and sue for a refund, the Company shall advance the amount of such
payment to the Employee, on an interest-free basis and shall indemnify and hold
the Employee harmless, on an after-tax basis, from any Excise Tax or income tax
(including interest or penalties with respect thereto) imposed with respect to
such advance or with respect to any imputed income with respect to such advance;
and further provided that any extension of the statute of limitations relating
to payment of taxes for the taxable year of the Employee with respect to which
such
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<PAGE> 6
contested amount is claimed to be due is limited solely to such contested
amount. Furthermore, the Company's control of the contest shall be limited to
issues with respect to which a Gross-Up Payment would be payable hereunder and
the Employee shall be entitled to settle or contest, as the case may be, any
other issue raised by the Internal Revenue Service or any other taxing
authority.
(d) If, after the receipt by the Employee of an amount advanced by the
Company pursuant to Section 2.4(c), the Employee becomes entitled to receive any
refund with respect to such claim, the Employee shall (subject to the Company's
complying with the requirements of Section 2.4(c)) promptly pay to the Company
the amount of such refund (together with any interest paid or credited thereon
after taxes applicable thereto). If, after the receipt by the Employee of an
amount advanced by the Company pursuant to Section 2.4(c), a determination is
made that the employee shall not be entitled to any refund with respect to such
claim and the Company does not notify the Employee in writing of its intent to
contest such denial of refund prior to the expiration of 30 days after such
determination, then such advance shall be forgiven and shall not be required to
be repaid and the amount of such advance shall offset, to the extent thereof,
the amount of Gross-Up Payment required to be paid.
(e) Section 8.2 of the Company's 1995 Employee Stock Option and Restricted
Stock Plan (the "1995 Stock Plan") shall have no application to any Payment to
the Employee (including without limitation Payments arising out of or resulting
from options or restricted stock granted to the Employee pursuant to the 1995
Stock Plan).
2.5 TIME OF SEVERANCE PAYMENT
The Severance Payment to which the Employee is entitled shall be paid by
the Company to the Employee, in cash and in full, not later than ten (10)
calendar days after the termination of the Employee's employment. If such
Employee should die before all amounts payable to him have been paid, such
unpaid amounts shall be paid to the Employee's spouse, if living, otherwise to
the personal representative of the Employee's estate.
2.6 OTHER SEVERANCE PROVISIONS
In addition to the Severance Payment, the Employee will receive 100%
Company-paid health insurance in the same plan as provided to the Employee
immediately prior to the Employee's termination. If the Employee's health
insurance coverage included the Employee's dependents immediately prior to the
Employee's termination, such dependents would also be covered at Company
expense. Continuation coverage under this Section 2.6 shall continue for
[30][36]* months after the Employee's termination; provided, however, that if
the Employee becomes re-employed with another employer and is eligible to
receive health benefits under another employer-provided plan, the health
insurance benefits described herein shall be secondary to those provided under
such other plan during such applicable period of eligibility.
ARTICLE III
CONFIDENTIALITY AND NON-COMPETITION
3.1 The Employee recognizes and acknowledges that he has in the past and
shall in the future use, have access to, and participate in the development of
certain confidential information of the Company and its affiliates, including
but not limited to, manufacturing processes, procedures and data; supplier data,
customer lists and other information; financial information; sales records and
projections; technical data; inventories; processes and technology; and other
proprietary commercial information and trade secrets (hereinafter referred to
collectively as "Confidential Information") and that all such Confidential
Information constitutes valuable, special and unique property of the Company.
The Employee agrees that he will not, for any reason or purpose whatsoever,
either during or subsequent to his employment with the Company, use or disclose
any of
- ---------------
* James A. Risher's health insurance coverage will continue for 36 months.
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<PAGE> 7
such Confidential Information to any party without express prior authorization
of the Company, except as necessary in the ordinary course of performing his
duties hereunder.
3.2 The Employee shall deliver to the Company, upon the termination of his
employment or at such other time(s) as required by the Company, all notes,
memos, plans, records, and other tangible materials (and all copies hereof)
relating to the business of the Company and its affiliates that the Employee may
have in his possession or control; provided, however, the Employee shall not be
required to deliver to the Company any agreements (or copies thereof) between
the Employee and the Company or any notes, memos or letters relating thereto.
3.3 If there occurs a Change of Control of the Company and if either (i)
within five (5) years thereafter or (ii) before the Change of Control but at the
request of a third party who has taken steps reasonably calculated to effect a
Change of Control or otherwise in connection with or anticipation of a Change of
Control, the Employee's employment by the Company shall terminate for any
reason, then for a period of two years after such termination, the Employee
shall not (i) either directly or indirectly solicit, design, manufacture,
process, service, obtain, or accept orders for products competitive with those
of the Company and its affiliates from any parties who were customers of the
Company and its affiliates during his employment by the Company; (ii) commence,
engage in, or participate in any business substantially competitive with that of
the Company within the continental United States; or (iii) solicit, divert, take
away, interfere with, or attempt to induce any employee or agent of the Company
to leave his employ or other relationship with the Company, in order to compete
with the Company and its affiliates. During his employment with the Company, the
Employee shall not take any steps or make any plans whatsoever to commence, or
join any person or entity in, any activity in competition with the Company and
its affiliates.
3.4 The Employee acknowledges that his compliance with Sections 3.1, 3.2
and 3.3 hereof is necessary to protect the goodwill and other proprietary
interests of the Company and that he is one of the principal employees of the
Company and is conversant with its affairs and its Confidential Information. The
Employee acknowledges that a breach of any of his agreements in Sections 3.2 or
3.3 hereof may result in irreparable and continuing damage to the business of
the Company for which there would be no adequate remedy at law. The Employee
further agrees that in the event of any breach of the aforesaid agreements, the
Company and its successors and assigns shall be entitled to injunctive relief
and to such other and further relief as may be proper.
ARTICLE IV
OTHER RIGHTS AND BENEFITS NOT AFFECTED
4.1 OTHER BENEFITS
Neither the provisions of this Agreement nor the Severance Payment provided
for hereunder shall reduce any amounts otherwise payable to the Employee, or in
any way diminish the Employee's rights as an employee of the Company, whether
existing now or hereafter, under any benefit, incentive, retirement, stock
option, stock bonus, stock purchase plan, or any employment agreement or other
plan or arrangement.
4.2 EMPLOYMENT STATUS
This Agreement does not constitute a contract of employment or impose on
the Employee or the Company any obligation to retain the Employee as an
employee, to change the status of the Employee's employment, or to change the
Company's policies regarding termination of employment.
ARTICLE V
SUCCESSOR TO COMPANY
5.1 The Company shall require any successor or assignee, whether direct or
indirect, by purchase, merger, consolidation or otherwise, to all or
substantially all the business or assets of the Company, expressly
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<PAGE> 8
and unconditionally to assume and agree to perform the Company's obligations
under this Agreement, in the same manner and to the same extent that the Company
would be required to perform if no such succession or assignment had taken
place. In such event, the term "Company," as defined in this Agreement, shall
mean the Company as herein-above defined and any successor or assignee to the
business or assets which by reason hereof becomes bound by the terms and
provisions of this Agreement.
ARTICLE VI
DURATION
6.1 If a Change of Control has not occurred, this Agreement shall expire
fifteen (15) years from the date of this Agreement, unless sooner terminated, or
unless extended for an additional period or periods by resolution adopted by the
Board of Directors of the Company at any time during the fifteenth year of the
Agreement. If a Change of Control occurs, this Agreement shall continue in full
force and effect, and shall not terminate or expire until after the Employee
receives in full all Severance Payments to which he is entitled.
6.2 If the Employee ceases to be an employee of the Company, this
Agreement shall terminate, unless the Employee is entitled to payment of a
Severance Payment as provided in this Agreement. This Agreement shall continue
in full force and effect until the full amount of the Severance Payment has been
paid to the Employee.
6.3 Except as provided for above in this Article VI, this Agreement may
not be terminated or amended except by written agreement between the Company and
the Employee.
ARTICLE VII
LEGAL FEES AND EXPENSES
7.1 The Company agrees to pay as incurred, to the full extent permitted by
law, all legal fees and expenses which the Employee may reasonably incur as a
result of any contest (regardless of the outcome thereof) by the Company, the
Employee or others of the validity or enforceability of, or liability or
entitlement under, any provision of this Agreement (whether such contest is
between the Company and the Employee or between or among either of them and any
third party, and including as a result of any contest by the Employee about the
amount of any payment pursuant to this Agreement), plus in each case interest on
any delayed payment at the applicable Federal rate provided for in Section
7872(f)(2)(A) of the Internal Revenue Code of 1986, as amended (the "Code").
ARTICLE VIII
ARBITRATION
8.1 The Employee shall have the right and option to elect (in lieu of
litigation) to have any dispute or controversy arising under or in connection
with the Agreement settled by arbitration, conducted before a panel of three
arbitrators sitting in a location selected by the Employee within fifty (50)
miles from the location of his or her job with the Company, in accordance with
rules of the American Arbitration Association then in effect. Judgment may be
entered on the award of the arbitrator in any court having jurisdiction. All
expenses of such arbitration, including the fees and expenses of the counsel for
the Employee, shall be borne by the Company.
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<PAGE> 9
IN WITNESS WHEREOF, this Agreement has been duly signed by the parties
hereto on the day and year first written above.
By
--------------------------------------
Authorized Officer
EXIDE ELECTRONICS GROUP, INC.
By
--------------------------------------
Employee
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<PAGE> 1
EXHIBIT 11
EXIDE ELECTRONICS GROUP, INC.
EMPLOYEE STOCK PURCHASE PLAN
1. Purpose. The purpose of the Exide Electronics Group, Inc. Employee
Stock Purchase Plan is to provide as incentive for Eligible Employees to remain
in the employ of the Corporation and to devote their best efforts to its success
by affording such employees an opportunity to acquire the Corporation's Common
Stock in a convenient and advantageous fashion.
2. Definitions. Whenever used in the Plan:
(a) "Alternative Offering Price" means 85 percent of the Fair Market
Value of Common Stock on the last day of a Purchase Period.
(b) "Beneficiary" means the person designated by an Eligible Employee,
in accordance with Section 10(c), to make the election pursuant to Section
10(a) to purchase and receive shares of Common Stock or to cancel the
option and receive cash in the event of such Eligible Employee's death.
(c) "Board" means the Board of Directors of Exide Electronics Group,
Inc.
(d) "Code" means the Internal Revenue Code of 1986, as amended.
(e) "Committee" means the Benefit Plan Committee appointed by the
Board.
(f) "Common Stock" means the Common Stock, par value $0.01 per share,
of Exide Electronics Group, Inc.
(g) "Compensation" means the regular, basic salary received by an
Eligible Employee from the Corporation.
(h) "Corporation" means Exide Electronics Group, Inc. and such of its
Subsidiaries existing as of the effective date of the adoption of the Plan,
or thereafter acquired, as may be designated from time to time by the
Board.
(i) "Disability" means total disability, as defined in the Exide
Electronics Group, Inc.'s 401(k) Retirement Benefit Plan.
(j) "Eligible Employee" means any employee of the Corporation on an
Offering Date during the term of the Plan, except an employee whose
customary employment is 20 hours or less per week or is for not more than 5
months in any calendar year.
(k) "Fair Market Value" means, if regularly traded on an exchange or
in the NASDAQ National Market Systems, the average of the highest and
lowest selling prices for the five (5) immediately preceding trading dates
before a given date and if not regularly traded on an exchange or in the
NASDAQ National Market Systems, the average of the bid and asked prices at
the close of trading on the five (5) immediately preceding trading dates
before a given date.
(l) "Offering Date" means the day designated by the Board for any
offering made under the Plan.
(m) "Offering Price" means 85 percent of the Fair Market Value of
Common Stock on an Offering Date.
(n) "Plan" means the Exide Electronics Group, Inc. Employee Stock
Purchase Plan, as amended from time to time.
(o) "Purchase Period" means the period of 12 months for each offering
made under the Plan during which payroll deductions shall be made from the
Compensation of Eligible Employees granted an option under the offering,
provided, that notwithstanding the foregoing, the last day of the Initial
Purchase Period under the Plan shall be December 31, 1990.
<PAGE> 2
(p) "Retirement" means retirement under Exide Electronics Group,
Inc.'s 401(k) Retirement Benefit Plan or the retirement plan of a
Subsidiary.
(q) "Subsidiary" means a subsidiary corporation of Exide Electronics
Group, Inc., as defined in Section 425(f) of the Code.
3. Administration.
(a) Except where the Plan specifically reserves the determination of
matters to the Board, the Plan shall be administered by the Committee. In
addition to its duties with respect to the Plan stated elsewhere in the
Plan, the Committee shall have full authority, consistently with the Plan,
to interpret the Plan, to promulgate such rules and regulations with
respect to the Plan as it deems desirable and to make all other
determinations necessary or desirable for the administration of the Plan.
All decisions, determinations and interpretations of the Committee shall be
binding upon all persons.
(b) It is intended that the Plan shall constitute an "employee stock
purchase plan" within the meaning of Section 423 of the Code. The Committee
shall administer the Plan in such a manner as to carry out this intention.
4. Shares Subject to the Plan. The aggregate number of shares of Common
Stock which may be purchased pursuant to options granted under the Plan is
600,000 shares, subject to adjustment pursuant to Section 17. All options
granted pursuant to the Plan shall be subject to the same rights and privileges.
The shares of Common Stock delivered by the Corporation pursuant to the Plan may
be previously issued shares reacquired by the Corporation or authorized but
unissued shares. If any option expires or terminates for any reason without
having been exercised in full, the shares covered by the unexercised portion of
such option shall again be available for options within the limit specified
above.
5. Offerings. Subject to the provisions of the Plan, the Board shall from
time to time in its discretion make offerings to Eligible Employees to purchase
Common Stock under the Plan. The terms and conditions for each such offering
shall specify the Offering Date, the Offering Price, the Purchase Period and the
number of shares of Common Stock that may be purchased under the offering.
6. Number of Shares Employee May Purchase.
(a) Pursuant to any offering made under the Plan, and subject to the
provisions of the Plan, each Eligible Employee shall be offered an option
to purchase any number of whole shares of Common Stock not exceeding 1,000
shares.
(b) No Eligible Employee may be granted an option to purchase shares
of Common Stock under the Plan which would permit his or her rights to
purchase shares of stock under all employee stock purchase plans of Exide
Electronics Group, Inc. and its Subsidiaries to accrue at a rate which
exceeds $25,000 of fair market value of such stock (determined at the time
such option is granted) for each calendar year in which such option is
outstanding at any time.
(c) No Eligible Employee may be granted an option to purchase shares
of Common Stock under the Plan if such Eligible Employee, immediately after
the option is granted, would own stock possessing 5 percent or more of the
total combined voting power or value of all classes of stock of Exide
Electronics Group, Inc. or its Subsidiaries. For purposes of determining
stock ownership under this paragraph, the rules of Section 425(d) of the
Code shall apply and stock which the Eligible Employee may purchase under
outstanding options shall be treated as stock owned by each Eligible
Employee.
7. Method of Participation.
(a) The Committee shall give notice to Eligible Employees of each
offering of options to purchase shares of Common Stock pursuant to the Plan
and the terms and conditions for each offering. Such notice shall specify
the number of shares of Common Stock which may be covered by the option to
be offered to each Eligible Employee.
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<PAGE> 3
(b) Each Eligible Employee who desires to accept all or any part of
the option to purchase shares of Common Stock under an offering shall
signify his or her election to do so by authorizing the Corporation, in the
form and manner prescribed by the Committee, to make payroll deductions
equal to any whole percentage of his or her Compensation not to exceed 10
percent. Such election and authorization shall continue in effect unless
and until such Eligible Employee withdraws from the Plan or terminates his
or her employment with the Corporation, as provided in Sections 9 and 10,
respectively.
8. Payroll Deductions.
(a) The percentage of Compensation elected by each Eligible Employee
for the purchase of shares of Common Stock covered by the option granted to
such Eligible Employee in any offering shall be deducted from his or her
Compensation during the Purchase Period specified in the offering through
regular payroll deductions, and shall be credited to an account maintained
in his or her name. The percentage of such payroll deductions may not be
increased or decreased by the Eligible Employee during the Purchase Period,
except that such payroll deductions may be terminated in their entirety
pursuant to Section 9.
(b) If the payroll deductions of an Eligible Employee participating in
any offering under the Plan are temporarily discontinued because of leave
of absence, temporary disability or other similar reasons, such Eligible
Employee may, before the end of the Purchase Period, pay to the Corporation
in one lump sum an amount equal to the payroll deductions which were
temporarily discontinued, and such amount shall be credited to his or her
account for the purchase of shares of Common Stock under the option granted
to such Eligible Employees.
9. Right to Withdraw. At any time before the last regular payroll
deduction to be made during the Purchase Period for any offering, an Eligible
Employee granted an option to purchase shares of Common Stock under such
offering may direct the Corporation to make no further deductions from his or
her Compensation with respect to such option, in which case all payroll
deductions with respect to such option shall cease. In that event, the Eligible
Employee may direct that any amounts already credited to his or her account with
respect to the offering shall be retained by the Corporation until the end of
the Purchase Period, at which time there shall be issued to such Eligible
Employee the number of whole shares which can be purchased with the amount in
his or her account, and any remaining balance in the account shall be paid to
him or her in cash as soon as practicable thereafter. Alternatively, the
Eligible Employee may elect to cancel the option, in which case the Corporation
shall refund in cash all amounts credited to his or her account with respect to
the offering as soon as practicable after such cancellation. As Eligible
Employee's election to terminate payroll deductions but remain in the offering,
or to cancel an option and withdraw from the offering altogether, shall be made
by the filing of a notice with the Committee in the form and manner and within
the time period prescribed by it.
10. Rights Upon Death or Other Termination of Employment.
(a) If the employers of an Eligible Employee granted an option to
purchase shares of Common Stock under any offering terminates before the
final payroll deduction under such offering because of death, Disability or
Retirement, the Eligible Employee or, if applicable, such Eligible
Employee's Beneficiary or the executor or administrator of such Eligible
Employee's estate, may (i) cancel the option, in which event the
Corporation shall refund in cash all amounts credited to such Eligible
Employee's account under the offering as soon as practicable thereafter, or
(ii) elect to receive at the close of the Purchase Period for such offering
the number of whole shares which can be purchased with the amounts actually
credited to his or her account during such Purchase Period with any balance
in his or her account to be refunded in cash as soon as practicable
thereafter. An election by an Eligible Employee pursuant to this paragraph
shall be made within three months after Retirement or Disability, whichever
is applicable, and within 15 months after the date the option was granted.
An election pursuant to this paragraph in the event of the Eligible
Employee's death shall be made before the final payroll deduction under the
offering in which such Eligible Employee was participating, or within three
months after his or her death, whichever is later, but in no event more
than 15 months after the date the option was granted. Notification of an
election pursuant to this paragraph shall be filed with the Committee in
3
<PAGE> 4
the form and manner prescribed by it. If no such notification is filed
within the periods prescribed, the Corporation shall treat the option as
cancelled in accordance with subdivision (i) of this paragraph.
(b) If the employment of an Eligible Employee granted an option under
any offering terminates for any reason other than death, Disability or
Retirement, the Corporation shall refund in cash the amount credited to his
or her account under such offering.
(c) Each Eligible Employee may designate a Beneficiary, in the form
and manner prescribed by the Committee, to make the election pursuant to
paragraph (a) of this section in the event of such Eligible Employee's
death. Such Beneficiary designation may be changed by the Eligible Employee
at any time. If there is no valid Beneficiary designation at the time of
the Eligible Employee's death (because the designated Beneficiary
predeceased the Eligible Employee or for any other reason), the election
shall be made by the executor or administrator of the Eligible Employee's
estate.
11. Exercise of Options and Purchase of Shares.
(a) Unless an Eligible Employee granted an option under any offering
has subsequently withdrawn from the offering pursuant to Section 9, such
option shall be deemed to have been exercised as of the last day of the
Purchase Period for such offering and shall become on such date an
irrevocable obligation to purchase Common Stock in accordance with the
provisions of the Plan. The number of whole shares of Common Stock so
purchased by each such Eligible Employee shall be determined by dividing
the amount accumulated in his or her account during the Purchase Period by
the lower of the Offering Price or the Alternative Offering Price, and
adjusting the resulting number of shares to the next lowest whole number,
but in no event shall exceed the maximum number of shares such Eligible
Employee was entitled to purchase pursuant to the limitations provided in
Section 6. As soon as practicable thereafter, certificates for the number
of whole shares of Common Stock purchased by such Eligible Employee
pursuant to this paragraph shall be issued to him or her. Any balance
remaining in the account of an Eligible Employee after such purchase shall
be refunded to him or her in cash as soon as practicable thereafter.
(b) If, with respect to any offering made under the Plan, Eligible
Employees participating in the offering became entitled at the end of the
Purchase Period for such offering to purchase more than the aggregate
number of shares of Common Stock specified by the Board for that offering,
the Committee shall adjust the aggregate number of shares purchased by
Eligible Employees participating in the offering on a pro rata basis so as
not to exceed such specified number of shares, and any amounts remaining in
the accounts of Eligible Employees shall be refunded in cash as soon as
practicable thereafter.
12. Shareholder Rights. An Eligible Employee granted an option to
purchase shares of Common Stock under the Plan shall not be entitled to any
rights as a shareholder with respect to any shares covered by such option until
such shares shall have been registered on the transfer books of Exide
Electronics Group, Inc. in the name of such person.
13. Rights Not Transferable. An Eligible Employee's rights under the Plan
are exercisable, during his or her lifetime, only by such employee and may not
be sold, pledged, assigned or transferred in any manner other than by will or
the laws of descent and distribution. Any attempt to sell, pledge, assign or
transfer such rights shall be void and shall automatically cause the option held
by the Eligible Employee to be terminated. In such event, the Corporation shall
refund in cash all amounts credited to the account of such Eligible Employee in
an offering under the Plan.
14. Notice of Premature Disposition. If, within two years after the date
of grant of an option to an Eligible Employee under the Plan or within one year
after the transfer of shares of Common Stock to such Eligible Employee on
exercise of the option, the Eligible Employee makes a disposition (as defined in
Section 425(c) of the Code) of any shares of such Common Stock, such Eligible
Employees shall notify the Committee within 10 days after such disposition. The
Committee may direct that a legend restricting transfer in the absence of
appropriate notification be affixed to any stock certificates representing
Common Stock transferred under the Plan.
4
<PAGE> 5
15. Use of Proceeds: The proceeds received by the Corporation from the
sale by it of shares of Common Stock to persons exercising options pursuant to
the Plan will be used for the general purposes of Exide Electronics Group, Inc.
and its Subsidiaries.
16. Laws, Regulations and Listings: All rights granted or to be granted
to Eligible Employees under the Plan are expressly subject to all applicable
laws and regulations and to the approval of all governmental authorities
required in connection with the authorization, issuance, sale or transfer of the
shares of Common Stock reserved for the Plan including, without limitation,
there being a current registration statement covering the offer of shares of
Common Stock purchasable under options on the last day of the Purchase Period
applicable to such options. If a registration statement shall not then be
effective, the term of such options and the Purchase Period shall be extended
until the first business day after the effective date of such registration
statement, or post-effective amendment thereto, but in no event later than 15
months after the date such options were granted. In addition, all rights are
subject to the due listing of such shares of Common Stock in the NASDAQ National
Market System or on any stock exchanges where the Common Stock is listed.
17. Adjustment Upon Changes in Capitalization: If there is a change in
the number or kind of outstanding shares of Exide Electronics Group, Inc.'s
stock by reason of a stock dividend, stock split up, recapitalization, merger,
consolidation, combination or other similar event, appropriate adjustments shall
be made by the Board to the number and kind of shares subject to the Plan, the
number and kind of shares under options then outstanding, the maximum number of
shares available for options, the Offering Price and Alternative Offering Price,
and other relevant provisions, to the extent that the Board, in its sole
discretion, determines that such change makes such adjustments necessary or
equitable.
18. No Employment Rights. Nothing in the Plan shall confer upon any
employee of the Corporation any right to continued employment, or interfere with
the right of the Corporation to terminate his or her employment at any time.
19. Termination; Amendments
(a) The Board may at any time terminate the Plan. Unless the Plan
shall previously have been terminated by the Board, it shall terminate on
February 28, 1999. No option may be granted after such termination. Upon
termination of the Plan, shares of Common Stock shall be issued to Eligible
Employees, and cash, if any, remaining in the accounts of the Eligible
Employees shall be refunded to them, as if the Plan were terminated at the
end of a Purchase Period.
(b) The Board may at any time or times amend the Plan or amend any
outstanding option or options for the purpose of satisfying the
requirements of any changes in applicable laws or regulations or for any
other purpose which at the time may be permitted by law.
(c) Except as provided in Section 17, no such amendment shall, without
the approval of the shareholders of Exide Electronics Group, Inc.: (i)
increase the maximum number of shares which may be purchased pursuant to
options granted under the Plan; (ii) reduce the price at which shares of
Common Stock subject to options granted under the Plan may be purchased;
(iii) change the definition of Subsidiaries eligible to participate in the
Plan; (iv) change the class of persons eligible to participate in the Plan;
or (v) materially increase the benefits accruing to participants in the
Plan.
(d) No termination or amendment of the Plan shall, without the consent
of an Eligible Employee, adversely affect the Eligible Employee's rights
under any option previously granted under the Plan.
20. Effective Date. The Plan shall become effective upon approval by the
Board; provided, however, that the Plan shall be submitted to the shareholders
of Exide Electronics Group, Inc. for approval, and if not approved by the
shareholders within one year from the date of approval by the Board shall be of
no force and effect. No offering to purchase shares of Common Stock shall be
made under the Plan unless and until such shareholder approval shall have been
obtained.
5
<PAGE> 1
EXHIBIT 12
FORM OF
FIRST AMENDMENT TO
EXIDE ELECTRONICS GROUP, INC.
EMPLOYEE STOCK PURCHASE PLAN
The Exide Electronics Group, Inc. Employee Stock Purchase Stock Plan (the
"Plan"), and all options currently outstanding under the Plan ("Outstanding
Options"), are hereby amended, effective as of July , 1997, as set forth
below, pursuant to the authority of the Board set forth in Section 19(b) of the
Plan to amend the Plan. (All capitalized terms used in this First Amendment and
not defined herein shall have the meanings ascribed to them in the Plan.)
1. A new Section 21 is added to the Plan, reading in its entirety as
follows:
(a) For purposes of this Section 21, a "Change of Control" means:
(i) The acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act
of 1934, as amended (the "Exchange Act")) (a "Person") of beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of voting securities of the Corporation where such
acquisition causes such Person to own 30% or more of the combined voting
power of the then outstanding voting securities of the Corporation
entitled to vote generally in the election of directors (the
"Outstanding Corporation Voting Securities"); provided, however, that
for purposes of this subsection (i), the following acquisitions shall
not be deemed to result in a Change of Control: (A) any acquisition
directly from the Corporation, (B) any acquisition by the Corporation,
(C) any acquisition by any employee benefit plan (or related trust)
sponsored or maintained by the Corporation or any corporation controlled
by the Corporation or (D) any acquisition pursuant to a transaction that
complies with clauses (A), (B) and (C) of sub-section (iii) below;
(ii) individuals who, as of the date hereof, constitute the Board
of Directors (the "Incumbent Board") cease for any reason to constitute
at least a majority of the Board of Directors; provided, however, that
any individual becoming a director subsequent to the date hereof whose
election, or nomination for election by the Corporation's shareholders,
was approved by a vote of at least a majority of the directors then
comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of office occurs
as a result of an actual or threatened election contest with respect to
the election or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person other
than the Board of Directors; or
(iii) The approval by the shareholders of the Corporation of a
reorganization, merger or consolidation or sale or other disposition of
all or substantially all of the assets of the Corporation or the
acquisition of assets of another entity ("Business Combination") or, if
consummation of such Business Combination is subject, at the time of
such approval by shareholders, to the consent of any government or
governmental agency, the obtaining of such consent (either explicitly or
implicitly by consummation); excluding, however, such a Business
Combination pursuant to which (A) all or substantially all of the
individuals and entities who were the beneficial owners of the
Outstanding Corporation Voting Securities immediately prior to such
Business Combination beneficially own, directly or indirectly, more than
60% of, respectively, the then outstanding shares of common stock and
the combined voting power of the then outstanding voting securities
entitled to vote generally in the election of directors, as the case may
be, of the corporation resulting from such Business Combination
(including, without limitation, a corporation that as a result of such
transaction owns the Corporation or all or substantially all of the
Corporation's assets either directly or through one or more
subsidiaries) in substantially the same proportions as their ownership,
immediately prior to such Business Combination of the Outstanding
Corporation Voting Securities, (B) no Person
<PAGE> 2
(excluding any employee benefit plan (or related trust) of the
Corporation or such corporation resulting from such Business
Combination) beneficially owns, directly or indirectly, 30% or more of,
respectively, the then outstanding shares of common stock of the
corporation resulting from such Business Combination or the combined
voting power of the then outstanding voting securities of such
corporation except to the extent that such ownership existed prior to
the Business Combination and (C) at least a majority of the members of
the board of directors of the corporation resulting from such Business
Combination were members of the Incumbent Board at the time of the
execution of the initial agreement, or of the action of the Board of
Directors, providing for such Business Combination; or
(iv) approval by the shareholders of the Corporation of a complete
liquidation or dissolution of the Corporation.
(b) In the event of a Change of Control in connection with which the
Company undergoes a transaction described in Section 17 above, the
then-ongoing Purchase Period (the "Straddle Period") shall be bifurcated
into two Purchase Periods, one of which (the "Pre-Merger Period") shall end
as of the end of the last payroll period that ends a sufficient number of
business days before the consummation of such transaction described in
Section 17 above to enable all purchased shares to be delivered to
participants in time to participate in such transaction as shareholders (as
determined by the Committee), and the other of which shall begin the next
day; with the number of purchase rights granted to each Eligible Employee
for the later Purchase Period being the excess of (i) the number of
purchase rights originally granted to him or her for the Straddle Period
over (ii) the number of purchase rights exercised for such Eligible
Employee at the end of the Pre-Merger Period.
2. Notwithstanding the foregoing, any amendment made by this First
Amendment to the Plan or to any Outstanding Award shall not be effective in
connection with a Change of Control or other corporate transaction that the
Corporation intends to be eligible for pooling-of-interests accounting under APB
No. 16 if and to the extent that giving effect to such amendment would make such
transaction ineligible for such accounting treatment.
3. The Plan is in all other respects ratified and affirmed without
amendment.
2
<PAGE> 1
EXHIBIT 14
FORM OF
FIRST AMENDMENT TO
THE EXIDE ELECTRONICS GROUP, INC. 1989 STOCK OPTION PLAN
AND OPTIONS THEREUNDER
The Exide Electronics Group, Inc. 1989 Stock Option Plan (the "Plan"), and
all Options, SARs, Restricted Shares and Restricted Stock Units currently
outstanding under the Plan ("Outstanding Awards"), are hereby amended, effective
as of July 16, 1997, as set forth below, pursuant to the authority of the Board
set forth in Section 13 of the Plan to amend the Plan. (All capitalized terms
used in this First Amendment and not defined herein shall have the meanings
ascribed to them in the Plan.)
1. Section 8 of the Plan is hereby amended to read in its entirety as
follows:
8. Changes in Capitalization. In the event of any change in
corporate capitalization, such as a stock split or a corporate transaction,
such as any merger, consolidation, separation, including a spin-off, or
other distribution of stock or property of the Corporation, any
reorganization (whether or not such reorganization comes within the
definition of such term in Section 368 of the Code) or any partial or
complete liquidation of the Corporation, the Committee or Board may make
such substitution or ad-justments in the aggregate number and kind of
shares reserved for issuance under the Plan, in the number, kind and
purchase price of shares subject to outstanding Options, SARs, Restricted
Shares and Restricted Stock Units, and/or such other equitable substitution
or adjustments, and/or such amendments to other relevant provisions as it
may determine to be appropriate in its sole discretion; provided, however,
that Section 15 hereof may not be amended in connection with or in
anticipation of a Change of Control.
2. A new Section 15 is hereby added to the Plan, reading in its entirety
as follows:
15. Change of Control. a. Notwithstanding any other provision of the
Plan to the contrary (including without limitation Section 5.a. with
respect to incentive stock options), in the event of a Change in Control
(as defined below):
i. any Options and SARs outstanding as of the date of such Change
of Control that are not then fully exercisable and vested shall become
fully exercisable and vested to the full extent of the original grant;
ii. the Restriction Period applicable to all Restricted Shares
shall expire and terminate, all other restrictions to which any
Restricted Shares are subject at the time of such Change of Control
shall lapse, and all Restricted Shares shall become free of all
restrictions and become fully vested and transferable to the full extent
of the original grant and stock certificates therefor shall be delivered
to the appropriate Participants; and
iii. the Restriction Period applicable to all Restricted Stock
Units shall expire, and payment in full with respect to such Restricted
Stock Units shall be made in cash, with the per-share fair market value
of such Restricted Stock Units being deemed to equal the Change of
Control Price (as defined below); provided, that if such payment in cash
would make a Change of Control transaction ineligible for
pooling-of-interests accounting under APB No. 16 that but for the nature
of such grant would otherwise be eligible for such accounting treatment,
the Board or the Committee shall have the ability to substitute for such
cash shares of Common Stock with a fair market value equal to the cash
that would otherwise be payable hereunder.
b. For purposes of the foregoing:
i. "Change of Control" means:
(a) The acquisition by any individual, entity or group (within
the meaning of Section 13(d)(3) or 14(d)(2) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act")) (a "Person")
of beneficial ownership (within the meaning of Rule 13d-3 promulgated
<PAGE> 2
under the Exchange Act) of voting securities of the Corporation where
such acquisition causes such Person to own 30% or more of the
combined voting power of the then outstanding voting securities of
the Corporation entitled to vote generally in the election of
directors (the "Outstanding Corporation Voting Securities");
provided, however, that for purposes of this subsection (a), the
following acquisitions shall not be deemed to result in a Change of
Control: (i) any acquisition directly from the Corporation, (ii) any
acquisition by the Corporation, (iii) any acquisition by any employee
benefit plan (or related trust) sponsored or maintained by the
Corporation or any corporation controlled by the Corporation or (iv)
any acquisition pursuant to a transaction that complies with clauses
(i), (ii) and (iii) of subsection (c) below; or
(b) The individuals who, as of the date hereof, constitute the
Board of Directors (the "Incumbent Board") cease for any reason to
constitute at least a majority of the Board of Directors; provided,
however, that any individual becoming a director subsequent to the
date hereof whose election, or nomination for election by the
Corporation's shareholders, was approved by a vote of at least a
majority of the directors then comprising the Incumbent Board shall
be considered as though such individual were a member of the
Incumbent Board, but excluding, for this purpose, any such individual
whose initial assumption of office occurs as a result of an actual or
threatened election contest with respect to the election or removal
of directors or other actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than the Board of
Directors; or
(c) The approval by the shareholders of the Corporation of a
reorganization, merger or consolidation or sale or other disposition
of all or substantially all of the assets of the Corporation or the
acquisition of assets of another entity ("Business Combination") or,
if consummation of such Business Combination is subject, at the time
of such approval by shareholders, to the consent of any government or
governmental agency, the obtaining of such consent (either explicitly
or implicitly by consummation); excluding, however, such a Business
Combination pursuant to which (i) all or substantially all of the
individuals and entities who were the beneficial owners of the
Outstanding Corporation Voting Securities immediately prior to such
Business Combination beneficially own, directly or indirectly, more
than 60% of, respectively, the then outstanding shares of common
stock and the combined voting power of the then outstanding voting
securities entitled to vote generally in the election of directors,
as the case may be, of the corporation resulting from such Business
Combination (including, without limitation, a corporation that as a
result of such transaction owns the Corporation or all or
substantially all of the Corporation's assets either directly or
through one or more subsidiaries) in substantially the same
proportions as their ownership, immediately prior to such Business
Combination of the Outstanding Corporation Voting Securities, (ii) no
Person (excluding any employee benefit plan (or related trust) of the
Corporation or such corporation resulting from such Business
Combination) beneficially owns, directly or indirectly, 30% or more
of, respectively, the then outstanding shares of common stock of the
corporation resulting from such Business Combination or the combined
voting power of the then outstanding voting securities of such
corporation except to the extent that such ownership existed prior to
the Business Combination and (iii) at least a majority of the members
of the board of directors of the corporation resulting from such
Business Combination were members of the Incumbent Board at the time
of the execution of the initial agreement, or of the action of the
Board of Directors, providing for such Business Combination; or
(d) The approval by the shareholders of the Corporation of a
complete liquidation or dissolution of the Corporation.
ii. "Change of Control Price" means the higher of (i) the highest
reported sales price, regular way, of a share of Stock in any
transaction reported on the New York Stock Exchange Composite Tape or
other national exchange on which such shares are listed or on NASDAQ
during the 60-day period prior to and including the date of a Change of
Control or (ii) if the Change of Control is the
2
<PAGE> 3
result of a tender or exchange offer or a Business Combination, the
highest price per share of Stock paid in such tender or exchange offer
or Business Combination. To the extent that the consideration paid in
any such transaction described above consists all or in part of
securities or other noncash consideration, the value of such securities
or other noncash consideration shall be determined in the sole
discretion of the Board of Directors.
3. The foregoing amendments shall be applicable to all Outstanding Awards
to the same extent as if they were incorporated into the Agreements relating to
such Outstanding Awards, and any provisions of such Agreements with which such
amendments conflict shall be disregarded to the extent necessary to give effect
to such amendments. In addition, the following provision shall be added to each
such Agreement:
Notwithstanding anything else to the contrary contained herein, in the
event of an event described in Section 8 of the Plan as a result of which
the shareholders of the Company receive cash for all or a portion of their
shares, this Award shall be subject to adjustment pursuant to Section 8 of
the Plan but no portion of such Award shall become exercisable for cash
unless the Board or the Committee specifically so determines pursuant to
said Section 8.
4. Notwithstanding the foregoing, any amendment made by this First
Amendment to the Plan or to any Outstanding Award shall not be effective in
connection with a Change of Control or other corporate transaction that the
Corporation intends to be eligible for pooling-of-interests accounting under APB
No. 16 if and to the extent that giving effect to such amendment would make such
transaction ineligible for such accounting treatment.
5. The Plan is in all other respects ratified and affirmed without
amendment.
3
<PAGE> 1
EXHIBIT 18
FORM OF FIRST AMENDMENT TO
THE EXIDE ELECTRONICS GROUP, INC.
1995 EMPLOYEE STOCK OPTION AND RESTRICTED STOCK PLAN
AND OPTIONS THEREUNDER
The Exide Electronics Group, Inc. 1995 Employee Stock Option and Restricted
Stock Plan (the "Plan"), and all Options and Restricted Stock currently
outstanding under the Plan ("Outstanding Awards"), are hereby amended, effective
as of July 16, 1997, as set forth below, pursuant to the authority of the
Committee set forth in Section 17 of the Plan to amend the Plan. (All
capitalized terms used in this First Amendment and not defined herein shall have
the meanings ascribed to them in the Plan.)
1. The following new definition is added to Section 2 of the Plan:
"Change of Control" means:
(a) The acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act
of 1934, as amended (the "Exchange Act")) (a "Person") of beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of voting securities of the Corporation where such
acquisition causes such Person to own 30% or more of the combined voting
power of the then outstanding voting securities of the Corporation
entitled to vote generally in the election of directors (the
"Outstanding Corporation Voting Securities"); provided, however, that
for purposes of this subsection (a), the following acquisitions shall
not be deemed to result in a Change of Control: (i) any acquisition
directly from the Corporation, (ii) any acquisition by the Corporation,
(iii) any acquisition by any employee benefit plan (or related trust)
sponsored or maintained by the Corporation or any corporation controlled
by the Corporation or (iv) any acquisition pursuant to a transaction
that complies with clauses (i), (ii) and (iii) of subsection (c) below;
or
(b) individuals who, as of the date hereof, constitute the Board
of Directors (the "Incumbent Board") cease for any reason to constitute
at least a majority of the Board of Directors; provided, however, that
any individual becoming a director subsequent to the date hereof whose
election, or nomination for election by the Corporation's shareholders,
was approved by a vote of at least a majority of the directors then
comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of office occurs
as a result of an actual or threatened election contest with respect to
the election or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person other
than the Board of Directors; or
(c) The approval by the shareholders of the Corporation of a
reorganization, merger or consolidation or sale or other disposition of
all or substantially all of the assets of the Corporation or the
acquisition of assets of another entity ("Business Combination") or, if
consummation of such Business Combination is subject, at the time of
such approval by shareholders, to the consent of any government or
governmental agency, the obtaining of such consent (either explicitly or
implicitly by consummation); excluding, however, such a Business
Combination pursuant to which (i) all or substantially all of the
individuals and entities who were the beneficial owners of the
Outstanding Corporation Voting Securities immediately prior to such
Business Combination beneficially own, directly or indirectly, more than
60% of, respectively, the then outstanding shares of common stock and
the combined voting power of the then outstanding voting securities
entitled to vote generally in the election of directors, as the case may
be, of the corporation resulting from such Business Combination
(including, without limitation, a corporation that as a result of such
transaction owns the Corporation or all or substantially all of the
Corporation's assets either directly or through one or more
subsidiaries) in substantially the same proportions as their ownership,
immediately prior to such Business Combination of the Outstanding
Corporation Voting Securities, (ii) no Person (excluding any employee
benefit plan (or related trust) of the Corporation or such corporation
resulting from such Business Combination) beneficially owns, directly or
indirectly, 30% or more of,
<PAGE> 2
respectively, the then outstanding shares of common stock of the
corporation resulting from such Business Combination or the combined
voting power of the then outstanding voting securities of such
corporation except to the extent that such ownership existed prior to
the Business Combination and (iii) at least a majority of the members of
the board of directors of the corporation resulting from such Business
Combination were members of the Incumbent Board at the time of the
execution of the initial agreement, or of the action of the Board of
Directors, providing for such Business Combination; or
(d) approval by the shareholders of the Corporation of a complete
liquidation or dissolution of the Corporation.
2. Section 18 of the Plan is hereby amended to read in its entirety as
follows:
18.1 CHANGES IN CAPITALIZATION
In the event of any change in corporate capitalization, such as a
stock split or a corporate transaction, such as any merger, consolidation,
separation, including a spin-off, or other distribution of stock or
property of the Corporation, any reorganization (whether or not such
reorganization comes within the definition of such term in Section 368 of
the Code) or any partial or complete liquidation of the Corporation, the
Committee or Board may make such substitution or adjustments in the
aggregate number and kind of shares reserved for issuance under the Plan,
in the number, kind and option price of shares subject to outstanding
Options and Restricted Stock, and/or such other equitable substitution or
adjustments as it may determine to be appropriate in its sole discretion.
18.2 SURVIVAL OF INCENTIVE AWARDS
No event described in Section 18.1 shall cause the termination of the
Plan or of any Incentive Awards granted hereunder; provided, that such
Incentive Awards shall be subject to adjustment as provided for in Section
18.1 and, if such event constitutes a Change of Control, to the provisions
of Section 28 hereof.
3. A new Section 28 is hereby added to the Plan, reading in its entirety
as follows:
28. CHANGE OF CONTROL
Notwithstanding any other provision of the Plan to the contrary
(including without limitation Section 8.1 with respect to ISOs), in the
event of a Change in Control: (a) any Options outstanding as of the date of
such Change of Control that are not then fully exercisable and vested shall
become fully exercisable and vested to the full extent of the original
grant; and (b) all restrictions to which any Restricted Stock Awards are
subject at the time of such Change of Control shall lapse, and such
Restricted Stock shall become free of all restrictions and become fully
vested and transferable to the full extent of the original grant.
4. The foregoing amendments shall be applicable to all Outstanding Awards
to the same extent as if they were incorporated into the Agreements relating to
such Outstanding Awards, and any provisions of such Agreements with which such
amendments conflict shall be disregarded to the extent necessary to give effect
to such amendments.
5. Notwithstanding the foregoing, any amendment made by this First
Amendment to the Plan or to any Outstanding Award shall not be effective in
connection with a Change of Control or other corporate transaction that the
Corporation intends to be eligible for pooling-of-interests accounting under APB
No. 16 if and to the extent that giving effect to such amendment would make such
transaction ineligible for such ac-counting treatment.
6. The Plan is in all other respects ratified and affirmed without
amendment.
2
<PAGE> 1
EXHIBIT 20
FISCAL YEAR 1997 MANAGEMENT INCENTIVE PLAN ("THE PLAN")
FOR EXIDE ELECTRONICS GROUP, INC. (THE "COMPANY")
PURPOSE
The Plan is part of an overall compensation program intended to motivate
personnel holding positions of substantial responsibility to achieve
predetermined "Corporate," "Strategic Business Unit" and "Personal" goals which
define Company success. The Plan is designed to "pay for performance," by
providing the opportunity for an annual cash award payable based on the Company
reaching or exceeding those goals ("MIP Payment").
PLAN PERIOD AND APPROVAL
The effective period of the Plan for all purposes is October 1, 1996
through September 30, 1997 (the "Plan Period"). The Plan shall not apply to any
other periods and is not binding upon the Company unless and until approved by
the Human Resources Committee ("HRC") of the Board of Directors ("Board") of the
Company and the Board.
ELIGIBILITY
The President/CEO, Vice Presidents of the Company and those employee
Directors of the Company approved by the President/CEO and Vice President and
Chief Administrative Officer ("VP-CAO") are eligible for participation in the
Plan ("Plan Participants"). In order to be eligible for a MIP Payment under the
Plan, a participant must be an employee of the Company for the entire Plan
Period, except for new hires and promotions to the Director/Vice President level
made after October 1, 1996, and before March 31, 1997, as designated in writing
by the President/CEO and the VP-CAO. Certain employees of subsidiaries and
affiliates of the Company are eligible participants in the Plan as approved by
the HRC.
CORPORATE GOALS
The "Corporate Goals" applicable to all Plan Participants are: (i)
corporate earnings per share at target ("Target EPS") per the Company's Fiscal
Year 1997 Operating Budget approved by the Board ("Budget"); and (ii) corporate
free cash flow at target per the Budget ("Target Free Cash Flow").
STRATEGIC BUSINESS UNIT GOALS
In addition to Corporate Goals, Plan Participants having responsibility
associated with a "Strategic Business Unit" ("SBU") will also be assigned goals
by individual SBU. "SBU Goals" are: (i) "SBU Target Contribution" per Budget;
(ii) "SBU Target Cash Flow" per Budget; and (iii) personal goals assigned to
each individual associated with that person's SBU ("SBU Personal Goals")
established by the President/CEO.
CORPORATE CENTER GOALS
In addition to Corporate Goals, Plan Participants having responsibility
associated with a "Corporate Center" will also be assigned individual goals
associated with their respective functions ("Personal Goals"). "Corporate
Centers" shall include the offices of the President/CEO, Vice President and
Chief Financial Officer ("VP-CFO"), VP-CAO and other Plan Participants reporting
directly to such offices who are not assigned SBU Goals.
GOAL WEIGHTINGS
Determination of any MIP Payment will be based on weightings preassigned to
the Corporate, SBU and Personal Goals. Those weightings have been assigned in
advance in order to focus and direct the energies and efforts of Plan
Participants.
The MIP Payment weightings for Corporate Center Plan Participants are: (i)
Corporate Goals of Target EPS (30%) and Target Free Cash Flow (40%); and (ii)
Personal Goals (30%).
<PAGE> 2
The MIP Payment weightings for SBU Plan participants are: (i) Corporate
Goals of Target EPS (10%) and Target Free Cash Flow (10%); (ii) SBU Goals of SBU
Target Contribution (30%) and SBU Target Cash Flow (30%); and (iii) SBU Personal
Goals (20%).
MIP PAYMENT THRESHOLDS
Unless otherwise determined by the Board, in its discretion, to be in the
best interest of the Company, no MIP Payment will be made under the Plan unless
both: (i) corporate earnings per share of the Company; and (ii) corporate cash
flow of the Company satisfies a minimum threshold level of performance
("Threshold Corporate Goals").
MIP PAYMENT DETERMINATIONS
The Plan is designed to generate 50th percentile MIP Payment awards as
determined by reference to a survey of compensation of comparable companies.
Each Plan Participant is preassigned a fixed percentage of annual salary as
the target annual incentive opportunity for achieving Corporate, SBU and
Personal Goals ("Target MIP"). Each Plan Participant may earn a MIP Payment
greater than the Target MIP in reward for Company performance superior to
Corporate and SBU Goals, up to certain predetermined limits ("Maximum MIP").
Performance equal to Threshold Corporate Goals will generate a minimum MIP
Payment ("Minimum MIP").
Company performance greater than the Threshold Corporate Goals but less
than the Corporate Goals and, similarly, performance above Corporate Goals up to
Maximum MIP will generate MIP Payments according to: (i) a graduated scale as
established in the attached Exhibits to the Plan; and (ii) the discretion of the
Board consistent with the purposes of the Plan.
MIP Payments are determined by the Board of the Company in accordance with
the Plan based on recommendations of the HRC. The President/CEO, VP-CAO and the
VP-CFO will provide the HRC with management recommendations based on
calculations of actual performance to Corporate, SBU and Personal Goals.
MIP Payments will be made as soon as possible and practical following the
end of the fiscal year and in no event later than the end of the applicable
calendar year.
The attached Exhibits are incorporated into and made a part of the Plan:
<TABLE>
<S> <C>
Exhibit I -- all Plan Participants as of the date of the approval by the Board of the
Plan;
Exhibit II -- Threshold Corporate Goals applicable to all Plan Participants;
Exhibit III -- Minimum, Target and Maximum Corporate Goals of earnings per share and free
cash flow applicable to all Plan Participants; and
Exhibit IV -- Minimum, Target and Maximum SBU Goals applicable to SBU Plan Participants
</TABLE>
CHANGE IN COMPANY OPERATIONS
The Plan contemplates only those operations of the Company and its
affiliates consolidated as of October 1, 1996. Any acquisition, divestiture or
other material change in the operations of the Company occurring after October
1, 1996 and during the Plan Period shall result in an equitable amendment to the
Plan determined by the HRC based, in part, on the recommendations of the
President/CEO and VP-CAO. Subject to the approval of the Board, the HRC may
equitably amend the Plan during the Plan Period to the extent necessary, based
on recommendations of the President/CEO and VP-CAO, to advance the purpose of
this Plan in the event of a significant reorganization of the operations of the
Company during the Plan Period.
PLAN AMENDMENT AND TERMINATION
The Plan will automatically expire and be of no further force at the end of
the Plan Period, except for the making of MIP Payments earned during the Plan
Period. During the Plan Period, the Plan may not be terminated or changed,
except as set forth in the section of the Plan entitled "Change in Company
Operations."
2
<PAGE> 1
EXHIBIT 21
FORM OF
FIRST AMENDMENT TO
FISCAL YEAR 1997 MANAGEMENT INCENTIVE PLAN (THE "PLAN")
FOR EXIDE ELECTRONICS GROUP, INC. (THE "COMPANY")
The Plan is hereby amended, effective as of July , 1997, as set forth
below, pursuant to the authority of the HRC to amend the Plan as set forth in
the Plan. (All capitalized terms used in this First Amendment and not defined
herein shall have the meanings ascribed to them in the Plan.)
1. If a Change of Control occurs on or before September 30, 1997, the Plan
Period shall be deemed to have ended immediately before the Change of Control,
the Board shall determine MIP Payments in accordance with the Plan but based
upon performance only during the Plan Period as so ended, and MIP Payments shall
be made as soon as possible and practicable following the Change of Control and
in no event later than 90 days thereafter.
2. In addition, if a Change of Control occurs at any time after the date
of this Amendment pursuant to an agreement entered into by the Company, which
agreement is authorized by the Board on or before September 30, 1998, then each
Participant shall be entitled to receive a supplemental cash bonus (the
"Supplemental Bonus"), computed and payable as set forth below, and subject to
the conditions set forth below.
3. The Supplemental Bonus for each Special Participant shall be the
Special MIP Amount set forth opposite such Special Participant's name on
Schedule C hereto. The Supplemental Bonus for each Plan Participant shall equal
the excess (if any) of the Special MIP Amount for such Plan Participant over the
MIP Payment that becomes payable to such Plan Participant (i) pursuant to the
Plan without regard to this Amendment, if a Change of Control does not occur on
or before September 30, 1997, or (ii) pursuant to Section 1 above, if a Change
of Control does occur on or before September 30, 1997. (The amount described in
clauses (i) or (ii) of the preceding sentence, as applicable, is hereafter
referred to as the "Regular MIP Amount.") If the Special MIP Amount for a Plan
Participant does not exceed the Regular MIP Amount, then notwithstanding any
other provision of this Amendment, no Supplemental Bonus shall be payable to
such Plan Participant. If the Regular MIP Amount for a Plan Participant is zero,
then the Supplemental Bonus for such Plan Participant shall equal his or her
Special MIP Amount.
4. Any Supplemental Bonus that becomes payable to a Participant as
provided above shall be paid in two installments. The first such installment
(the "First Installment") shall equal one-half of the Special MIP Amount, and
shall be paid as soon as possible and practicable after the Change of Control
and in any event not later than the 15th day after the Change of Control. The
second such installment (the "Second Installment") shall equal one-half of the
Supplemental Bonus and shall be paid on the 180th day after the Change of
Control; provided, that in the case of Plan Participants, the amount of the
Second Installment shall be reduced (but not below zero) by the Regular MIP
Amount.
5. Notwithstanding any other provision of this Amendment, neither
installment of a Supplemental Bonus shall be paid to any Participant who has not
been an employee of the Company for the entire Required Period for such
installment. The "Required Period" for each installment of a Supplemental Bonus
shall be the period beginning on (a) the first day of the Plan Period or such
later date during the Plan Period as the Plan Participant first became a Plan
Participant pursuant to the terms of the Plan or, in the case of a Special
Participant, on the date of this Amendment and ending on (b) the earlier of (i)
in the case of the First Installment, the day before the date of the Change of
Control, and in the case of the Second Installment, the 180th day after the date
of the Change of Control, and (ii) the date there occurs any Wrongful
Termination of the Participant's employment.
6. The following new definitions are added to the Plan:
"Aggregate Change of Control Equity Value" means the Change of Control
Price times the number of outstanding shares of voting stock of the Company
as of the effective date of this Amendment,
<PAGE> 2
appropriately adjusted through the date of the Change of Control to account
for stock splits or combinations, stock dividends and similar adjustments
to capitalization (other than exercises of stock options and warrants
issued by the Company as of or before the effective date of this
Amendment).
"Cause" for termination of a Participant's employment shall be
considered to exist if the termination of employment shall have taken place
as a result of an act or acts of dishonesty by such Participant which
constitutes a felony under the laws of the State of North Carolina and
results in gain or personal enrichment of the Participant at the expense of
the Company.
"Change of Control" means:
(a) the acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act
of 1934, as amended (the "Exchange Act")) (a "Person") of beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of voting securities of the Company where such acquisition
causes such Person to own 30% or more of the combined voting power of
the then outstanding voting securities of the Company entitled to vote
generally in the election of directors (the "Outstanding Company Voting
Securities"); provided, however, that for purposes of this subsection
(a), the following acquisitions shall not be deemed to result in a
Change of Control: (i) any acquisition directly from the Company, (ii)
any acquisition by the Corporation, (iii) any acquisition by any
employee benefit plan (or related trust) sponsored or maintained by the
Company or any corporation controlled by the Company or (iv) any
acquisition pursuant to a transaction that complies with clauses (i),
(ii) and (iii) of subsection (c) below; or
(b) individuals who, as of the date hereof, constitute the Board of
Directors (the "Incumbent Board") cease for any reason to constitute at
least a majority of the Board of Directors; provided, however, that any
individual becoming a director subsequent to the date hereof whose
election, or nomination for election by the Company's shareholders, was
approved by a vote of at least a majority of the directors then
comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of office occurs
as a result of an actual or threatened election contest with respect to
the election or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person other
than the Board of Directors; or
(c) the approval by the shareholders of the Company of a
reorganization, merger or consolidation or sale or other disposition of
all or substantially all of the assets of the Company or the acquisition
of assets of another entity ("Business Combination") or, if consummation
of such Business Combination is subject, at the time of such approval by
shareholders, to the consent of any government or governmental agency,
the obtaining of such consent (either explicitly or implicitly by
consummation); excluding, however, such a Business Combination pursuant
to which (i) all or substantially all of the individuals and entities
who were the beneficial owners of the Outstanding Company Voting
Securities immediately prior to such Business Combination beneficially
own, directly or indirectly, more than 60% of, respectively, the then
outstanding shares of common stock and the combined voting power of the
then outstanding voting securities entitled to vote generally in the
election of directors, as the case may be, of the corporation resulting
from such Business Combination (including, without limitation, a
corporation that as a result of such transaction owns the Company or all
or substantially all of the Company's assets either directly or through
one or more subsidiaries) in substantially the same proportions as their
ownership, immediately prior to such Business Combination of the
Outstanding Company Voting Securities, (ii) no Person (excluding any
employee benefit plan (or related trust) of the Company or such
corporation resulting from such Business Combination) beneficially owns,
directly or indirectly, 30% or more of, respectively, the then
outstanding shares of common stock of the corporation resulting from
such Business Combination or the combined voting power of the then
outstanding voting securities of such corporation except to the extent
that such ownership existed prior to the Business Combination and (iii)
at least a majority of the members of the board of directors of the
corporation resulting
2
<PAGE> 3
from such Business Combination were members of the Incumbent Board at
the time of the execution of the initial agreement, or of the action of
the Board of Directors, providing for such Business Combination; or
(d) approval by the shareholders of the Company of a complete
liquidation or dissolution of the Company.
"Change of Control Price" means the higher of (i) the highest reported
sales price, regular way, of a share of common stock of the Company in any
transaction reported on the New York Stock Exchange Composite Tape or other
national exchange on which such shares are listed or on NASDAQ during the
60-day period prior to and including the date of a Change of Control or
(ii) if the Change of Control is the result of a tender or exchange offer
or a Business Combination, the highest price per share of Common Stock paid
in such tender or exchange offer or Business Combination. To the extent
that the consideration paid in any such transaction described above
consists all or in part of securities or other noncash consideration, the
value of such securities or other noncash consideration shall be determined
based upon trading on a national exchange or NASDAQ, if any, and otherwise,
by the Board.
"Good Reason" means:
(a) the Participant's base salary is reduced below the higher of
(i) the Participant's base salary as in effect immediately before the
Change of Control (but disregarding any reduction thereof that occurs at
the request of a third party who has taken steps reasonably calculated
to effect a Change of Control or otherwise arises in connection with or
anticipation of a Change of Control) and (ii) the Participant's highest
base salary in effect at any time thereafter;
(b) without the Participant's express written consent, the
Participant is assigned any duties inconsistent in any respect with the
Participant's position (including status, offices, titles and reporting
requirements), authority, duties or responsibilities as in effect before
the Change of Control, or the Company takes any other action which
results in a diminution in such position, authority, duties or
responsibilities as compared to before the Change of Control, excluding
for this purpose an isolated, insubstantial and inadvertent action not
taken in bad faith and which is remedied by the Company promptly after
receipt of notice thereof given by the Participant;
(c) without the Participant's express written consent, the Company
requires the Participant to change the location of his or her job or
office, so that he or she will be based at a location more than fifty
(50) miles from the location of his job or office immediately prior to
the Change of Control;
(d) the Company fails to continue in effect, or, in the case of a
discontinuance, fails to replace with a superior or substantially
similar benefit or plan, any benefit or compensation plan, profit
sharing plan, 401(k) plan, stock purchase plan, stock option plan, life
insurance plan, or health, accident or disability plan in which the
Participant is participating before the Change of Control (or plans
providing no less favorable and substantially similar benefits), or the
Employer takes any action which would materially adversely affect the
Participant's participation or materially reduce the Participant's
benefits under any of such plans;
(e) the Company takes any action which would deprive the
Participant of any material fringe benefit to which he or she was
entitled immediately prior to the Change of Control;
(f) a successor company fails or refuses to assume the Company's
obligation under the Plan;
(g) the Company or any successor company breaches any of the
provisions of the Plan; or
(h) if the Participant is party to any employment agreement or
severance agreement with the Company, the material breach by the
Employer of any provision of such employment agreement.
"Incremental Amount" means two percent of the amount by which the
Aggregate Change of Control Equity Value exceeds $221,230,000.
"Participant" means a Plan Participant or a Special Participant.
3
<PAGE> 4
"Special MIP Amount" means: (i) with respect to any Plan Participant
listed on Schedule A or Schedule B hereto, the Target MIP for such Plan
Participant plus the percentage of the Incremental Amount listed opposite
such Plan Participant's name on Schedule A or Schedule B, as applicable;
provided, that the Special MIP Amount for a Plan Participant listed on
Schedule B shall not exceed the Maximum MIP for such Plan Participant; (ii)
with respect to Plan Participants other than those listed on Schedule A or
Schedule B hereto, the Maximum MIP for 1997 for such Plan Participant (as
determined before the date of this Amendment); and (iii) with respect to
any Special Participant, the amount listed opposite such Special
Participant's name on Schedule C hereto.
"Special Participant" means an individual listed on Schedule C hereto.
"Wrongful Termination" of a Participant means: (i) a termination of
the Participant's employment after a Change of Control by the Company
without Cause or by the Participant for Good Reason; or (ii) a termination
of the Participant's employment before a Change of Control by the Company
without Cause at the request of a third party who has taken steps
reasonably calculated to effect a Change of Control or otherwise in
connection with or anticipation of a Change of Control.
7. The rights of Participants to Supplemental Bonuses hereunder are vested
subject only to the conditions set forth in this Amendment, and may not be
amended or terminated in any way adverse to Participants.
8. The Plan is in all other respects ratified and affirmed without
amendment.
4
<PAGE> 1
EXHIBIT 22
FORM OF
AMENDMENT TO PROMISSORY NOTE
The Promissory Note (the "Note") dated , 199 whereby [NAME OF
EXECUTIVE] (the "Obligor") has promised to pay to the order of Exide Electronics
Group, Inc. the principal sum of $ , on terms and conditions more fully set
forth in the Note, is hereby amended, effective as of July , 1997, as set
forth below. (All capitalized terms used in this Amendment and not defined
herein shall have the meanings ascribed to them in the Note.)
1. Notwithstanding any other provision of the Note, if at the time the
Note would otherwise become payable pursuant to its terms, the Obligor is
unable, by reason of any applicable law, regulation or agreement with the
Company, to dispose of any Shares acquired with the proceeds of such Note in an
orderly fashion, or if disposition of any such Shares by the Obligor would, in
the view of the Company's independent accountants, jeopardize the intended
accounting treatment of any transaction to which the Company is a party, the
Note shall not become payable until such time as there has occurred a period of
not less than 75 consecutive business days during which (a) the Obligor has not
been so unable to sell the Shares and (b) such disposition would not, in the
view of the Company's independent public accountants, jeopardize such accounting
treatment.
2. Notwithstanding the foregoing, the amendment made by this Amendment to
the Note shall not be effective in connection with a corporate transaction that
the Corporation intends to be eligible for pooling-of-interests accounting under
APB No. 16 if and to the extent that giving effect to such amendment would make
such transaction ineligible for such accounting treatment.
3. The Note is in all other respects ratified and affirmed without
amendment.
By
------------------------------------
Authorized Officer
EXIDE ELECTRONICS GROUP, INC.
By
------------------------------------
[INSERT NAME OF OBLIGOR]
<PAGE> 1
[EXIDE ELECTRONICS LOGO]
[ADDRESS, PHONE NUMBER]
July 22, 1997
To Our Shareholders:
On July 10, 1997, a wholly-owned subsidiary of Danaher Corporation began a
tender offer (the "Danaher Offer") for (i) all of the outstanding Common Stock
(together with the associated preferred share purchase rights) of Exide
Electronics Group, Inc. ("Exide") at a price of $20 per share, (ii) all of the
outstanding Series G Convertible Preferred Stock of Exide at a price of $20 per
share and (iii) all of the outstanding Warrants to Purchase Common Stock at a
price of $6.525 per Warrant to purchase one share of Common Stock, in each case
in cash. Your Board of Directors, together with its legal and financial
advisors, has carefully reviewed and evaluated Danaher's tender offer. BASED ON
THIS REVIEW, YOUR BOARD OF DIRECTORS HAS UNANIMOUSLY DETERMINED THAT THE DANAHER
OFFER IS INADEQUATE AND NOT IN THE BEST INTERESTS OF EXIDE OR ITS SHAREHOLDERS.
ACCORDINGLY, THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU REJECT THE
DANAHER OFFER AND NOT TENDER YOUR SHARES (INCLUDING WARRANTS) TO DANAHER.
After considering a number of factors, including the opinion of our
financial advisor, Lazard Freres & Co. LLC, and the other factors described in
the attached Schedule 14D-9, the Board concluded that the Danaher Offer is
financially inadequate, subject to a number of significant conditions and not in
the best interests of Exide or its shareholders. Management strongly believes
Danaher has significantly undervalued the strength of the Company's management
team, the excellent relationships with key worldwide customers, as well as
Exide's unique positioning as the "one-stop" global source for all types of
uninterruptible power supply products.
The Board has authorized management, working with Lazard Freres, to explore
and pursue alternative strategic options available for maximizing shareholder
value, including a possible sale of or other extraordinary transaction involving
the Company.
Under the terms of the Danaher Offer, Danaher cannot accept or pay for any
shares before 12:00 midnight, New York City time, on Wednesday, August 6, 1997.
Accordingly, you need not take any action at this time to participate in the
Danaher Offer. In addition, any shares already tendered may be withdrawn before
12:00 midnight, New York City time, on August 6, 1997.
If you have any questions or need any assistance in withdrawing your shares
(including warrants) from the Danaher Offer, please contact Georgeson and
Company, Inc. at (800) 223-2064, free of charge.
Your Directors thank you for your continued support.
Sincerely,
/s/ James A. Risher
James A. Risher
President and Chief Executive Officer
<PAGE> 1
EXHIBIT 24
FOR IMMEDIATE RELEASE
Contacts: Elliott Sloane/ Darren Brandt
Edelman Financial
212-704-8126/4449
EXIDE BOARD REJECTS INADEQUATE DANAHER OFFER
AUTHORIZES MANAGEMENT TO PURSUE ALTERNATIVE STRATEGIC OPTIONS
RALEIGH, NORTH CAROLINA -- July 22, 1997 -- The Board of Directors of Exide
Electronics Group, Inc. (NASDAQ: XUPS) has unanimously voted to reject the offer
of a subsidiary of Danaher Corporation (NYSE: DHR) to acquire all of the
outstanding shares of common stock and Series G preferred stock of the Company
at a price of $20 per share and all of the outstanding warrants to purchase
common stock at a price of $6.525 per warrant. The Board urges Exide's
shareholders not to tender any of their shares or warrants to Danaher in
connection with this tender offer.
The Company stated "After considering a number of factors, including the opinion
of our financial advisor, Lazard Freres & Co. LLC, we concluded that the Danaher
offer is financially inadequate, subject to a number of significant conditions
and not in the best interests of Exide or its shareholders. Management strongly
believes Danaher has significantly undervalued the strength of the Company's
management team, the excellent relationships with key worldwide customers, as
well as Exide's unique positioning as the 'one-stop' global source for all types
of uninterruptible power supply products."
The Board has authorized management, working with Lazard Freres, to explore and
pursue alternative strategic options available for maximizing shareholder value,
including a possible sale of or other extraordinary transaction involving the
Company.
The Board also delayed the separation date of the Company's preferred stock
purchase rights until such later date as may be determined by the Board.
Accordingly, the rights will continue to trade with the Company's common stock.
Headquartered in Raleigh, NC, Exide Electronics provides Strategic Power
Management(TM) solutions to a broad range of businesses and institutions
worldwide, including most Fortune 1000 companies. Exide's products are used for
networking, financial, medical, industrial, telecommunications, military and
aerospace applications -- wherever continuous power is essential to daily
operations.
# #
<PAGE> 1
EXHIBIT 25
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
<TABLE>
<S> <C>
DANAHER CORPORATION, a Delaware
corporation, and PQR ACQUISITION
CORP., a Delaware corporation,
Plaintiff,
v.
EXIDE ELECTRONICS GROUP,
INC., a Delaware corporation, C.A. No. 15796NC
CONRAD A. PLIMPTON, JAMES A.
RISHER, LANCE L. KNOX, JAMES E.
FOWLER, RALF R. BOER, RON E.
DOGGETT, DAVID J. McLAUGHLIN,
STIG STENDAHL and WAYNE L.
CLEVENGER,
Defendants.
</TABLE>
VERIFIED COMPLAINT FOR DECLARATORY AND INJUNCTIVE RELIEF
Plaintiffs Danaher Corporation ("Danaher") and PQR Acquisition Corp.
("PQR"), upon knowledge as to themselves and upon information and belief as to
all other matters, allege for their verified complaint as follows:
NATURE OF THE ACTION
1. Plaintiffs bring this action against Exide Electronics Group, Inc.
("Exide") and the members of the Exide board of directors (the "Board" or the
"Individual Defendants") for injunctive and declaratory relief to prevent the
Defendants from interfering with the ability of Exide's stockholders to realize
the substantial benefits offered by PQR's announced offer to purchase all
outstanding shares of Exide for $20 in cash (the "Offer") -- a premium of 72%
over Exide's share price on June 11, the day Danaher first contacted Exide.
2. Specifically, Plaintiffs seek (i) to compel the redemption of rights
("Rights") issued pursuant to Exide's stockholder's rights plan (the "Poison
Pill"), (ii) to compel the Board to render the Delaware Business Combination
Statute inapplicable to the proposed purchase, (iii) to compel the Board to call
a special meeting of its shareholders, (iv) to enjoin the Board from taking any
action that would impede or interfere with the Offer or the exercise by Exide's
stockholders of their franchise, and (v) to enjoin the Board from taking any
actions inconsistent with their fiduciary obligations to Exide's stockholders.
3. By refusing to deal in good faith with the Plaintiffs in negotiating an
acquisition of Exide by PQR, and by erecting significant new barriers to the
Offer in response to the Plaintiff's expressions of interest in such an
acquisition, the Exide Board has breached its fiduciary duties to Exide's
stockholders.
BACKGROUND OF THE OFFER
4. On June 12, 1997, Plaintiff PQR delivered to Exide a letter (the
"Proposal") proposing an acquisition of Exide by PQR, for cash consideration
equalling at least the equivalent of $20 per share of Exide
<PAGE> 2
common stock for all of Exide's equity securities -- a 72% premium over the
preceding day's $11.625 closing price for a share of Exide common stock.
5. In connection with the Proposal, and in reliance on certain provisions
of Exide's by-laws, PQR sent Exide a letter requesting that a special meeting be
held thirty to forty days following Exide's receipt of requests for such a
meeting from a majority of any class of Exide's stockholders. PQR also informed
Exide that it had taken steps to commence a solicitation (the "Solicitation") of
appointments of designated agents to call a special meeting of Exide's
shareholders (the "Special Meeting") at which, among other things, PQR would
propose that the holders of Exide common and preferred stock (i) increase the
size of Exide's board of directors from 9 to 19, (ii) elect 10 nominees of PQR
as Exide directors (who would then constitute a majority of the Exide board) and
(iii) repeal any by-laws or amendments thereto adopted by the Board after
December 21, 1989, the date of the most recent publicly disclosed by-laws.
6. The Proposal made clear that PQR strongly prefers a negotiated
transaction, and stands ready and willing to discuss all aspects of its proposal
with Exide.
We realize that there will be aspects of our offer which you will wish
to discuss with us and are prepared to meet with you and your advisors
without delay.
Our price is based upon our review of publicly available information
regarding Exide. If you believe that there are values not reflected in your
public filings, we ask that such information be made available to us so
that we can ensure that our offer reflects those values. In addition, given
the opportunities that will exist for the combined company, we will also be
prepared to discuss the form of consideration and structure of the
transaction in order to permit Exide's stockholders to participate in the
growth potential of the combined company. Finally, we are prepared to
discuss your view as to the proper roles for your officers and managers in
the combined company.
* * *
We are sure you appreciate the seriousness of our interest in Exide
and our strong preference for a negotiated transaction.
7. At all times, PQR has sought to negotiate in a flexible, friendly,
straightforward and confidential manner with Exide. Before delivering the
Proposal, Steven Rales, the Chairman of Danaher, attempted several times
personally to contact Conrad Plimpton, the Chairman of Exide, but Mr. Plimpton
did not return repeated calls.
8. In the days following delivery of the Proposal, Exide's Board purported
to consider negotiating with PQR and Danaher. While Exide's advisors claimed to
be willing to provide financial data to the Plaintiffs in order to permit them
to refine and potentially increase the Proposal, they conditioned access to that
data on PQR and Danaher's agreement to onerous and unreasonably lengthy
"standstill" and confidentiality agreements. When Danaher and PQR objected to
these conditions, Exide's advisors asked whether Danaher and PQR preferred a
"bloody war."
9. Moreover, at the same time that Exide's CEO was agreeing to meet with
Danaher's CEO, Exide's advisors were making plans to erect new and even more
substantial barriers to an acquisition of Exide than had previously existed.
10. Specifically, on June 24, Exide's counsel delivered a letter to
counsel for PQR and Danaher, enclosing "amended and restated By-laws of Exide"
(the "Amended By-laws"), which were adopted by the Exide Board on June 23 -- 11
days after receipt by Exide of the Proposal and notice of the Solicitation.
11. The Amended By-laws substantially impair the ability of any Exide
shareholder to request a special meeting of shareholders. Specifically, the
Board adopted amendments that add 1,000,000 shares -- all of which had already
been contractually obligated to vote with the Board -- to the number of shares
of which a majority is required to call a special meeting. The Board also
significantly enhanced its own ability to delay a special meeting by erecting a
number of new and elaborate procedural hurdles. The end result of the Amended
2
<PAGE> 3
By-laws is that the Board can unilaterally impede the exercise of the
shareholder franchise and delay a special meeting by a minimum of 107 days, or
more than three and one-half months.
12. Despite the Exide Board's unilateral action in adopting the Amended
By-laws, the Plaintiffs continued to seek a negotiated transaction. Plaintiffs
offered as much as $22 per share of Exide common stock for all of Exide's equity
securities subject to confidential due diligence and negotiations. In response,
Exide requested a guarantee that Plaintiffs would commence an offer at $22 per
share if the parties failed to negotiate a mutually satisfactory transaction.
Plaintiffs agreed to this term; however, Exide then refused to furnish any
financial information or enter into reasonable and appropriate confidentiality
and standstill agreements.
13. In light of these facts, it has become apparent that the Board is
committed to the rejection of any acquisition proposal by the Plaintiffs, and
that it will take all available steps to prevent, delay, block or otherwise
interfere with any such acquisition, as well as any exercise by the Exide
stockholders of their franchise in connection with any such acquisition.
14. Accordingly, on July 9, 1997, PQR announced its intention to commence
a tender offer for all equity securities of Exide for the equivalent of $20 cash
for each share of Exide common stock.
15. The Offer (and the Proposal before it) represent unique and compelling
opportunities for Exide's stockholders to realize value for their shares far
above values available in the market.
16. Notwithstanding the attractiveness of the Offer and the Proposal,
however, Exide continues effectively to refuse to negotiate terms of an
acquisition of Exide by Plaintiffs. Moreover, the Board has available various
defensive measures -- including the Poison Pill, the Delaware Business
Combination Statute, 8 Del C. sec. 203 ("Section 203"), certain provisions of
its certificate of incorporation, and the Amended By-Laws -- which may be used
to block the Offer, and to deprive the Exide stockholders of their fundamental
rights as owners of the company.
17. Given the nature of the Offer and Proposal, and the substantial value
they offer to Exide's stockholders, the Board should not be allowed to deprive
its stockholders of the opportunity to decide upon the merits of the Offer for
themselves. The adoption of the Amended By-Laws, and any use of Exide's
antitakeover devices or other defensive measures against the Offer, constitute
an unreasonable response to the Offer in violation of the Board's fiduciary
duties to Exide's stockholders. Moreover, the adoption of the by-law amendments
is an unlawful manipulation of the corporate machinery that will disenfranchise
Exide shareholders and entrench the current Board.
THE PARTIES
18. Plaintiff PQR is a Delaware corporation, and is the owner of 100
shares of Exide's common stock. PQR is an indirect wholly-owned subsidiary of
Plaintiff Danaher. The principal executive offices of PQR and Danaher are
located in Washington, D.C. PQR's immediate parent, DH Holdings, a Delaware
corporation, is a direct wholly-owned subsidiary of Danaher, and is the
beneficial owner of 397,300 shares of Exide's common stock, or approximately 4%
of the outstanding shares.
19. Defendant Exide is a Delaware corporation with its principal executive
offices located in Raleigh, North Carolina. Exide is a manufacturer of
computer-related equipment; directly or through its subsidiaries, Exide is a
leading manufacturer of uninterruptible power supplies, which are used, among
other things, to guard against ill effects -- such as data loss -- from an
unexpected loss of power to electronic equipment. As of February 11, 1997, Exide
had outstanding 10,049,543 shares of common stock and 1,000,000 shares of
preferred stock.
20. Defendant Conrad A. Plimpton ("Plimpton") has been a director and
Chairman of the Board since 1982. Plimpton also served as secretary of Exide
from 1982 through 1991.
21. Defendant James A. Risher has been a director of Exide since 1986 and
also currently serves as President and Chief Executive Officer of Exide.
3
<PAGE> 4
22. Defendants Lance L. Knox, James E. Fowler, Ralf R. Boer, Ron E.
Doggett, David J. McLaughlin, Stig Stendahl and Wayne Clevenger are currently
directors of Exide and have been directors of Exide at all times relevant to
this action.
FACTUAL ALLEGATIONS COMMON TO ALL COUNTS
THE OFFER
23. As outlined above, the Board has recently terminated its negotiations
and refused to discuss and fairly consider the Proposal; and, despite PQR's
express invitation to do so, the Board has declined to further negotiate with
PQR regarding alternative transactions to the Proposal. Accordingly, although it
still strongly preferred (and continues to prefer) a friendly, negotiated
transaction, on July 9, 1997, PQR announced its intention to commence the Offer
for all equity securities of Exide for the equivalent of $20 cash for each share
of Exide common stock.
24. The terms of the Offer are straightforward and non-coercive. Exide
stockholders who tender their shares into the Offer will receive not less than
the equivalent of $20 cash per common share. Moreover, the Offer makes clear
that if it is successful, non-tendering stockholders will promptly receive the
same amount they would have received had they tendered:
The purpose of the Offer is to acquire control of, and the entire
equity interest in, [Exide]. [Danaher] currently intends to propose and
seek to have [Exide] consummate, as soon as practicable, following the
consummation of the Offer, a merger or other transaction (the "Proposed
Merger") pursuant to which each then outstanding share of [stock] would be
converted into the right to receive an amount in cash equal to the price
per share of [stock] paid [to tendering stockholders] pursuant to the
Offer.
25. Thus, so long as it is clear that the Exide Board is not seeking to
block or delay completion of the Proposed Merger, stockholders will face no
improper coercion to tender, nor will there be any risk of unequal treatment as
a consequence of deciding not to tender their shares pursuant to the Offer.
THE PROPOSAL AND THE OFFER
26. On June 12, 1997, PQR delivered to Exide the Proposal to purchase
Exide. In the Proposal letter, PQR repeatedly made clear that it was ready to
discuss and negotiate any and all terms of the Proposal. In fact, during the
course of the discussions with Exide's representatives (which ultimately proved
to have been conducted by Exide's representatives in bad faith), Plaintiffs made
clear that they were prepared to pay an additional $2 per share subject to
confidential due diligence and negotiations.
27. The Offer, which is not contingent on financing, represents a unique
and compelling opportunity to enhance value for stockholders of both PQR and
Exide. It is non-coercive and non-discriminatory; it poses no threat to Exide's
corporate policy and effectiveness; it is fair to the Exide stockholders; and it
represents a substantial premium over the market price of Exide common stock
immediately prior to the public announcement of the Offer.
28. The Offer does contain certain ordinary conditions: (i) the valid
tender of sufficient shares such that PQR and Danaher's combined holdings
constitute at least a majority of the shares outstanding on a fully diluted
basis on the date of the purchase; (ii) the redemption of the Rights by the
Exide Board or, alternatively, PQR's having been satisfied that the Rights have
been otherwise rendered inapplicable to the Offer; and (iii) Board approval of
the Offer and Proposed Merger for purposes of 8 Del. C. sec. 203 or,
alternatively, PQR's having been satisfied that Section 203 is otherwise
inapplicable to the Proposed Merger.
29. Thus, the Offer cannot be completed successfully unless the Board
agrees to remove Exide's anti-takeover devices.
4
<PAGE> 5
EXIDE'S POISON PILL
30. As currently formulated, Exide's Poison Pill effectively allows the
Board unilaterally to block acquisitions by third parties -- even those, such as
the Offer, providing substantial benefits to Exide's stockholders. Unless the
Rights issued pursuant to the Poison Pill are redeemed or the Poison Pill is
declared inapplicable to PQR, the Poison Pill will effectively entrench the
present directors of Exide and prevent Exide's stockholders from reaping the
benefits of the Offer.
31. Upon information and belief, the Board does not intend to redeem the
Rights, or otherwise make the Poison Pill inapplicable to the Offer. Exercise of
the Rights would substantially dilute the holdings of PQR and make the Offer
prohibitively expensive. Accordingly, the Offer cannot be completed unless the
Board redeems the rights or amends the Poison Pill to make it inapplicable to
the Offer. Failure to take such actions would effectively and unilaterally
prevent the Exide stockholders from deciding upon the merits of the Offer for
themselves.
DELAWARE BUSINESS COMBINATION STATURE
32. Section 203 of the Delaware General Corporation Law, entitled
"Business Combinations with Interested Stockholders," applies to any Delaware
corporation that has not opted out of the statute's coverage. Exide has not
opted out of the statute's coverage.
33. Section 203 was designed to impede coercive and inadequate tender and
exchange offers. Section 203 provides that if a person acquires 15% or more of a
corporation's voting stock (thereby becoming an "interested stockholder"), such
interested stockholder may not engage in a "business combination" with the
corporation (defined to include a merger or consolidation) for three years after
the interested stockholder becomes an interested stockholder, unless (i) prior
to the 15% acquisition, the board of directors has approved either the
acquisition or the business combination; (ii) the interested stockholder
acquires 85% of the corporation's voting stock in the same transaction in which
it crosses the 15% threshold; or (iii) on or subsequent to the date of the 15%
acquisition, the business combination is approved by the board of directors and
authorized at an annual or special meeting of stockholders (and not by written
consent) by the affirmative vote of at least 66 2/3% of the outstanding voting
stock which is not owned by the interested stockholder.
34. Application of Section 203 to the Offer, which is neither coercive nor
inadequate, would delay completion and consummation of the proposed acquisition
for at least three years. Accordingly, stockholders of Exide would lose the
value of the 72% premium that the Offer represents for at least three years.
Additionally, any number of events could occur within those three years which
would prevent consummation of the Offer altogether.
35. Upon information and belief, the Board intends to refuse to exempt the
Offer from the restrictions of Section 203. Section 203 should not be used by
the Board to obstruct the Offer, which is non-coercive and non-discriminatory,
offers Exide's stockholders a substantial premium for their shares, and poses no
threat to the interests of Exide's stockholders or Exide's corporate policy and
effectiveness.
THE JUNE 23, 1997 BY-LAW AMENDMENTS
36. On June 23, 1997, in response to the Solicitation, the Exide Board
amended Exide's bylaws to substantially impair the ability of Exide shareholders
to call a Special Meeting.
37. First, Section 5 of the Exide By-laws was amended to increase the
percentage of shareholders required to request a Special Meeting. Specifically,
this section now requires the request of the owners of a majority of all issued
and outstanding shares, including both common and preferred, to call a Special
Meeting, as opposed to the owners of a majority of any class, as this section
previously required. Significantly, all of the 1,000,000 shares of preferred
outstanding are contractually obligated to vote with the Board. Thus, the
percentage of shares of common required under the new provision is approximately
55.4%, as compared to the former 50% requirement.
5
<PAGE> 6
38. In addition, the Board amended Section 5 to include complex Request
Record Date and Meeting Record Date procedures, which have the net effect of
allowing the Board to delay a Special Meeting, and thus the exercise of the
shareholder's voting rights, for a minimum of 107 days, or three and one-half
months. Specifically, the amended Section 5 now requires shareholders to request
a Request Record Date, which the Board can schedule for as many as 17 days after
the date of such a request. After a Request Record Date has been set, and the
valid requests of a majority of the owners of all issued and outstanding shares
have been certified by a recognized independent inspector of elections, which
can provide an addition significant delay, the Board can delay the Special
Meeting by 90 days simply by failing to act. Thus, from the date of the newly
imposed first step, the request of a Request Record Date, the Board can
frustrate the voting rights of Exide shareholders for 107 days, in addition to
delay inherent in the certification process.
39. Furthermore, the Board amended the by-laws to include new notice
provisions for all shareholder business or nominations for the election of
directors at a Special Meeting. As these detailed requirements were not in
effect when PQR began the Solicitation, it must now restart the process, causing
still more delay.
40. As a result of the Amended By-laws, and even if Plaintiffs immediately
comply with the Amended By-law procedures, the Exide Board can unilaterally
prevent a Special Meeting from being held until at least October 24, 1997.
DECLARATORY RELIEF
41. The court may grant the declaratory relief sought herein pursuant to
10 Del. C sec. 6501. The Board has demonstrated its unwillingness to consider
any acquisition proposal from the Plaintiffs, and therefore will neither redeem
the Rights nor amend the Poison Pill to make it inapplicable to the Offer, nor
approve the Offer for purposes of Section 203. Similarly, the Board has taken
action to impede the Solicitation and impair the voting rights of Exide's
stockholders. Such actions, or inactions, of the Board demonstrate that there is
a substantial controversy among the parties.
42. Granting of the requested declaratory relief will serve the public
interest by affording relief from uncertainty and by avoiding delay, and will
conserve judicial resources by avoiding piecemeal litigation.
IRREPARABLE INJURY
43. Failure to redeem the Rights, to amend the Poison Pill to make it
inapplicable to the Offer, and to approve the Offer for purposes of Section 203
will prevent PQR from proceeding with the Offer. Similarly, the recent amendment
of Exide's by-laws will impede the Solicitation and materially delay the Special
Meeting, thereby impairing the voting rights of all Exide stockholders,
including PQR. The resulting injury to Plaintiffs, and to all Exide's
stockholders, will not be compensable in money damages, and Plaintiffs have no
adequate remedy at law.
COUNT I
DECLARATORY AND INJUNCTIVE RELIEF: THE POISON PILL
44. Plaintiffs repeat and reallege each and every allegation set forth in
paragraphs 1 through 43 as if fully set forth herein.
45. The Exide Board stands in a fiduciary relationship with PQR in its
capacity as an Exide stockholder. As fiduciaries, the directors owe PQR the
highest duties of care, loyalty and good faith.
46. The Offer is non-coercive and non-discriminatory; it is fair to Exide
stockholders; it poses no threat to Exide's corporate policy and effectiveness;
and it represents a substantial premium over the unaffected market price of
Exide common stock.
47. Refusal by the Exide Board to redeem the Rights or to amend the Poison
Pill to make it inapplicable to the Offer constitutes a violation of its
fiduciary duties.
6
<PAGE> 7
48. Plaintiffs seek (i) a declaration that failure to redeem the Rights or
to amend the Poison Pill to make it inapplicable to the Offer is a breach of
fiduciary duty, and (ii) an injunction compelling Exide to redeem the Rights or
to amend the Poison Pill to make it inapplicable to the Offer.
49. Plaintiffs have no adequate remedy at law.
COUNT II
DECLARATORY AND INJUNCTIVE RELIEF:
INJURY TO SHAREHOLDER VOTING RIGHTS
50. Plaintiffs repeat and reallege each and every allegation set forth in
paragraphs 1 through 49 as if fully set forth herein.
51. The recent action by the Exide Board to amend the By-laws to prevent
or delay the Special Meeting, particularly after learning of the intention of
PQR to solicit agent designations to call a Special Meeting, constitutes an
unlawful manipulation of the corporate machinery and will result in the unlawful
entrenchment of the current Board. There is no compelling justification for such
actions by the Board, which will impair the exercise of stockholder voting
rights.
52. Plaintiffs seek (i) a declaration that the adoption of any defensive
measure by the Board, including the Amended By-laws, which has the effect of
impeding, thwarting, frustrating or interfering with the Offer and/or
Solicitation a breach of fiduciary duty; (ii) an order invalidating the Amended
By-laws; and (iii) an injunction prohibiting Exide from adopting any defensive
measure which has the effect of impeding, thwarting, frustrating or interfering
with the Offer and Solicitation, and requiring Exide to call a Special Meeting
and to refrain from taking any actions to delay or impair the opportunity of
Exide stockholders to exercise their voting rights.
53. Plaintiffs have no adequate remedy at law.
COUNT III
DECLARATORY AND INJUNCTIVE RELIEF: SECTION 203
54. Plaintiffs repeat and reallege each and every allegation of paragraphs
1 through 53 as if fully set forth herein.
55. Pursuant to Section 203, the Board can render the statute inapplicable
to the Offer by approving the Offer. Failure to approve the Offer and to take
any other steps necessary to render Section 203 inapplicable to the Offer
constitutes a breach of fiduciary duty.
56. Plaintiffs seek (i) a declaration that failure to render Section 203
inapplicable to the Offer is a breach of fiduciary duty, and (ii) an injunction
compelling the Board to render Section 203 inapplicable to the Offer by
approving the Offer.
57. Plaintiffs have no adequate remedy at law.
COUNT IV
DECLARATORY AND INJUNCTIVE RELIEF:
ANTI-TAKEOVER DEVICES
58. Plaintiffs repeat and reallege each and every allegation set forth in
paragraphs 1 through 57 as if fully set forth herein.
59. Adoption of any defensive measures against the Offer and/or
Solicitation -- including, but not limited to, amendments to the Poison Pill,
amendments to Exide's by-laws, alternative transactions with substantial
break-up fees and/or lock-ups, friendly stock issuances, or executive
compensation arrangements
7
<PAGE> 8
with substantial payments triggered by a change in control -- that would have
the effect of impeding the Offer or Solicitation, or that would prevent a future
board of directors from complying with its fiduciary duties, would itself be a
violation of fiduciary duties owed to Exide's stockholders.
60. Plaintiffs seek (i) a declaration that the adoption by the Board of
any such defensive measure is a breach of fiduciary duty and (ii) an injunction
prohibiting Exide from adopting any such defensive measure.
61. Plaintiffs have no adequate remedy at law.
WHEREFORE, Plaintiffs respectfully request that this Court enter an order:
a. declaring that failure to redeem the Rights or to otherwise amend
the Poison Pill to make it inapplicable to the Offer, and to render Section
203 inapplicable to the Offer, is inconsistent with the best interests of
Exide's stockholders and constitutes a breach of fiduciary duty;
b. declaring that the adoption of any defensive measure which has the
effect of impeding, thwarting, frustrating or interfering with the Offer or
Solicitation is inconsistent with the best interests of Exide's
stockholders and constitutes a breach of fiduciary duty;
c. enjoining the Board from adopting any defensive measure which has
the effect of impeding, thwarting, frustrating or interfering with the
Offer or Solicitation;
d. enjoining the Board from taking any action to delay, impede,
postpone or thwart the voting rights of Exide shareholders;
e. enjoining the Board from tilting the playing field or
discriminating against PQR in favor of other bidders;
f. invalidating the Amended By-laws;
g. compelling the Board to call a special meeting of its
stockholders;
h. compelling the Board to treat PQR and all prospective bidders
equally;
i. compelling the Board to redeem the Rights associated with the
Poison Pill or to amend the Poison Pill so as to make it inapplicable to
the Offer, and enjoining the Board from taking any action to implement,
distribute or recognize any rights or powers with respect to said Rights
(other than to redeem the Rights), and from taking any actions pursuant to
the Poison Pill that would dilute or interfere with PQR's voting rights or
in any other way discriminate against PQR in the exercise of its rights
with respect to its Exide stock;
j. compelling the Board to approve the Offer for the purposes of
Section 203, and enjoining the Board from taking any actions to enforce or
apply Section 203 that would impede, thwart, frustrate or interfere with
the Offer or Solicitation;
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<PAGE> 9
k. awarding Plaintiffs their costs and expenses in this action,
including reasonable attorneys' fees; and
1. granting such other and further relief as the Court deems just and
proper.
/s/ GEORGE F. FRALEY III
--------------------------------------
Thomas J. Allingham II
George F. Fraley III
Skadden, Arps, Slate,
Meagher & Flom LLP
One Rodney Square
P.O. Box 636
Wilmington, Delaware 19899-0636
(302) 651-3000
Attorneys for Plaintiffs
Of Counsel:
Robert E. Zimet (Of the New York Bar)
Skadden, Arps, Slate,
Meagher & Flom LLP
919 Third Avenue
New York, New York 10022
(212) 735-3000
Dated: July 9, 1997
9
<PAGE> 1
EXHIBIT 26
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
<TABLE>
<S> <C>
RIMA SPIELMAN,
Plaintiff,
-- against --
JAMES A. RISHER, LANCE L. KNOX,
CONRAD A. PLIMPTON, RON E.
DOGGETT, RALF R. BOER, WAYNE L. C. A. No. 15800NC
CLEVENGER, STIG G. STENDAHL, CLASS ACTION COMPLAINT
JAMES A. FOWLER, DAVID J.
MCLAUGHLIN, AND EXIDE ELECTRONICS
GROUP, INC.,
Defendants.
</TABLE>
Plaintiff, by her knowledge as to her own acts and upon information and
belief as to all other matters, alleges as follows:
NATURE OF THE ACTION
1. This is a stockholders' class action lawsuit brought on behalf of the
public stockholders of Exide Electronics Group, Inc. ("Exide" or the "Company")
who have been, and continue to be, deprived of the opportunity to realize fully
the benefits of their investment in the Company. The individual defendants have
wrongfully refused to take the steps necessary to maximize stockholder value,
including properly considering a bona fide offer (the "Offer") for the Company
from PQR Acquisition Corp. and Danaher Corp. (collectively, "Danaher"). By
failing and refusing to take such steps, including adequately considering the
Offer, defendants have breached their fiduciary duties to plaintiff and the
class (defined below) and are using their fiduciary positions of control over
Exide to thwart others in their legitimate attempts to acquire Exide. The
individual defendants have further attempted to entrench themselves in their
positions with the Company by wrongfully instituting newly restrictive
amendments to the Company's bylaws making it more difficult for shareholders to
call a special meeting.
PARTIES
2. Plaintiff is and, at all relevant times has been, the owner of shares
of Exide common stock.
3. Exide is a corporation duly organized and existing under the laws of
the State of Delaware. Exide designs, manufactures, markets and services
uninterruptible power supply products that protect computer equipment against
electrical power loss. Exide maintains its principal executive offices at 8609
Six Forks Road, Raleigh, North Carolina. Exide has approximately 10,049,543
shares of common stock outstanding and thousands of stockholders of record.
Exide's stock trades over the NASDAQ National Market System.
4. Defendant James A. Risher ("Risher") is the Chief Executive Officer,
President, and a director of Exide.
5. Defendant Conrad A. Plimpton ("Plimpton") is the Chairman of the Exide
Board of Directors.
6. Defendant Lance L. Knox ("Knox") is the Vice Chairman of the Exide
Board of Directors.
<PAGE> 2
7. Defendants Ron E. Doggett, Ralf R. Boer, Wayne L. Clevenger, Stig G.
Stendahl, James A. Fowler, and David J.McLaughlin are directors of Exide.
8. The defendants named in paragraphs 4 through 7 are hereinafter referred
to as the "Individual Defendants."
9. Because of their positions as officers/directors of the Company, the
Individual Defendants owe a fiduciary duty of loyalty and due care to plaintiff
and the other members of the class.
CLASS ACTION ALLEGATIONS
10. Plaintiff brings this case on her own behalf and as a class action,
pursuant to Rule 23 of the Rules of the Court of Chancery, on behalf of all
stockholders of the Company, except defendants herein and any person, firm,
trust, corporation, or other entity related to or affiliated with any of the
defendants, who will be threatened with injury arising from defendants' actions
as is described more fully below (the "Class").
11. This action is properly maintainable as a class action.
12. The Class is so numerous that joinder of all members is impracticable.
The Company has thousands of stockholders who are scattered throughout the
United States.
13. There are questions of law and fact common to the Class including,
inter alia, whether:
a. defendants have breached their fiduciary duties owed by them to
plaintiff and other members of the Class by failing and refusing to attempt
in good faith to maximize stockholder value, including considering the sale
of Exide;
b. defendants have breached or aided and abetted the breach of the
fiduciary duties owed by them to plaintiff and other members of the Class;
c. defendants engaged in a plan and scheme to thwart and reject
offers and proposals from third parties, including the offer made by
Danaher; and
d. plaintiff and other members of the Class are being and will
continue to be injured by the wrongful conduct alleged herein and, if so,
what is the proper remedy and/or measure of damages.
14. Plaintiff is committed to prosecuting the action and has retained
competent counsel experienced in litigation of this nature. Plaintiff's claims
are typical of the claims of the other members of the Class and plaintiff has
the same interests as the other members of the Class. Plaintiff is an adequate
representative of the Class.
15. The prosecution of separate actions by individual members of the Class
would create the risk of inconsistent or varying adjudications with respect to
individual members of the Class which would establish incompatible standards of
conduct for defendants, or adjudications with respect to individual members of
the Class which would as a practical matter be dispositive of the interests of
the other members not parties to the adjudications or substantially impair or
impede their ability to protect their interests.
16. The defendants have acted, or refused to act, on grounds generally
applicable to, and causing injury to, the Class and, therefore, preliminary and
final injunctive relief on behalf of the Class as a whole are appropriate.
SUBSTANTIVE ALLEGATIONS
17. On July 9, 1997, Danaher announced that, although it would prefer a
negotiated transaction with Exide, Danaher would commence a tender offer to
acquire all of the outstanding shares of Exide stock for $20 per share in a
transaction valued at approximately $200 million. Danaher made the Offer public
only after Exide rebuffed an offer Danaher made on June 12, 1997. The tender
offer has no financing contingency. It also provides that shares not tendered
will be acquired in a second step merger at the same $20 per share price.
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Thus it is non-coercive and non-discriminatory. It is conditioned on the
redemption of Exide's poison pill and the inapplicability of 8 Del. C. sec.203
by action of Exide's Board or otherwise.
18. Danaher's tender offer provides Exide shareholders with a premium of
approximately 55% over the closing market price of Exide stock on July 8, 1997,
and a premium of approximately 72% over the market price of Exide's stock on
June 11, 1997, the day Danaher first contacted Exide.
19. Danaher further informed Exide that it would be willing to pay more
than $20 per share should the Company's non-public information support an
increased price.
20. In connection with the June 12 offer, Danaher notified Exide that it
would seek a special meeting of Exide's shareholders so that the shareholders
and not just the Company's board could respond to the Offer. On or about June
23, 1997, defendants implemented certain amendments to the Company's bylaws
making it more difficult for shareholders to call a special meeting (the "By-Law
Amendments").
21. Despite the rejection of the earlier Danaher offer and implementation
of new anti-takeover measures, Exide stated only that it would respond to the
Offer within ten days and urged shareholders not to tender their shares to
Danaher.
22. Plaintiff avers that Danaher's public announcement of the Offer was
made only after considerable discussion and attempted negotiation between
Danaher and Exide to which Exide was not receptive. The defendants' failure to
apprise themselves of the terms of Danaher's offer and negotiate to maximize the
shareholders' value constitute a breach of their fiduciary duties.
23. Defendants' failure to act promptly upon Danaher's offer has no valid
business purpose, and simply evidences their disregard for the premium being
offered to Exide stockholders. By failing to meet promptly and negotiate, or
offer to meet and negotiate, with Danaher, defendants are depriving plaintiff
and the Class of their right to share in the assets and businesses of Exide and
receive the maximum value for their Exide shares.
24. Exide represents a highly attractive acquisition candidate.
Defendants' conduct is depriving Exide's public stockholders of the control
premium that Danaher is prepared to pay, or of the enhanced premium that further
negotiation or exposure of Exide to the market could provide.
25. Defendants owe fundamental fiduciary obligations to Exide's
stockholders to take all necessary and appropriate steps to maximize the value
of their shares. In addition, the Individual Defendants have the responsibility
to act independently so that the interests of Exide's public stockholders will
be protected, to seriously consider all bona fide offers for the Company, and to
conduct fair and active bidding procedures or other mechanisms for checking the
market to assure that the highest possible price is achieved. Further, the
directors of Exide must adequately ensure that no conflict of interest exists
between the Individual Defendants' own interests and their fiduciary obligations
to maximize stockholder value or, if such conflicts exist, to insure that all
such conflicts will be resolved in the best interests of the Company's
stockholders.
26. Because defendants dominate and control the business and corporate
affairs of Exide and because they are in possession of private corporate
information concerning Exide's assets, businesses and future prospects, there
exists an imbalance and disparity of knowledge of economic power between
defendants and the public shareholders of Exide. This discrepancy makes it
grossly and inherently unfair for defendants to refrain from taking those steps
necessary to maximize stockholder value. Defendants have refused to seriously
consider Danaher's offer, and have failed to announce any active auction or open
bidding procedures that would maximize stockholder value by entertaining offers
to purchase the Company.
27. The Individual Defendants have breached their fiduciary and other
common law duties owed to plaintiff and other members of the Class in that they
have not and are not exercising independent business judgement and have acted
and are acting to the detriment of the Class.
28. The Individual Defendants' refusal to negotiate with Danaher and
refusal to waive certain anti-takeover provisions of its shareholder rights plan
serves only to entrench defendants in their offices and positions and maintain
their substantial salaries and perquisites, all at the expense and to the
detriment of the public stockholders of Exide.
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29. As a result of the actions of the Individual Defendants, plaintiff and
the other members of the Class have been and will be damaged in that they have
not and will not receive their fair proportion of the value of Exide's assets
and businesses and/or have been and will be prevented from obtaining a fair and
adequate price for their shares of Exide's common stock.
30. Plaintiff seeks preliminary and permanent injunctive relief preventing
defendants from inequitably and unlawfully depriving plaintiff and the Class of
their rights to realize a full and fair value for their stock at a premium over
the market price, by unlawfully entrenching themselves in their positions of
control, and to compel defendants to carry out their fiduciary duties to
maximize stockholder value.
31. Only through the exercise of this Court's equitable powers can
plaintiff and the Class be fully protected from the immediate and irreparable
injury that defendants' actions threaten to inflict. Defendants are precluding
the enjoyment by Exide stockholders of the full economic value of their
investment by failing to proceed expeditiously and in good faith to evaluate and
pursue a premium acquisition proposal that would provide consideration for all
shares at a premium price.
32. Unless enjoined by the Court, defendants will continue to breach their
fiduciary duties owed to plaintiff and the members of the Class, and/or aid and
abet and participate in such breaches of duty, and will prevent the sale of
Exide at a substantial premium, all to the irreparable harm of plaintiff and
other members of the Class.
33. Plaintiff and the Class have no adequate remedy at law.
WHEREFORE, plaintiff demands judgment as follows:
(a) Declaring this to be a proper class action and certifying
plaintiff as a class representative;
(b) Ordering the Individual Defendants to carry out their fiduciary
duties to plaintiff and the other members of the Class by announcing their
intention to:
(i) cooperate fully with any entity or person, including Danaher,
having a bona fide interest in proposing any transaction that would
maximize stockholder value including, but not limited to, a merger or
acquisition of Exide;
(ii) immediately undertake an appropriate evaluation of Exide's
worth as a merger/acquisition candidate;
(iii) take all appropriate steps to enhance Exide's value and
attractiveness as a merger/acquisition candidate;
(iv) take all appropriate steps to effectively expose Exide to the
marketplace in an effort to create an active auction of the Company;
(v) act independently so that the interests of the Company's
public stockholders will be protected; and
(vi) adequately ensure that no conflicts of interest exist between
the Individual Defendants' own interest and their fiduciary obligation
to maximize stockholder value or, in the event such conflicts exist, to
ensure that all conflicts of interest are resolved in the best interests
of the public stockholders of Exide;
(c) Declaring the By-Law Amendments void;
(d) Ordering the Individual Defendants, jointly and severally to
account to plaintiff and the Class for all damages suffered and to be
suffered by them as a result of the acts and transactions alleged herein;
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(e) Awarding plaintiff the costs and disbursements of this action,
including a reasonable allowance for plaintiff's attorneys' and experts'
fees; and
(f) Granting such other and further relief as may be just and proper.
Dated: July 9, 1997
Respectfully submitted,
ROSENTHAL MONHAIT GROSS
& GODDESS, P.A.
By: /s/ NORMAN M. MONHAIT
------------------------------------
Norman M. Monhait, Esq.
1401 Mellon Bank Center
919 Market Street
Wilmington, Delaware 19899
(302) 656-4433
Attorneys for Plaintiff
of Counsel:
WECHSLER HARWOOD
HALEBIAN & FEFFER LLP
805 Third Avenue
New York, New York 10022
(212) 935-7400
LAW OFFICES OF KLARI NEUWELT
950 Third Avenue
New York, New York 10022
(212) 593-8800
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EXHIBIT 27
AMENDED AND RESTATED
BY-LAWS
OF
EXIDE ELECTRONICS GROUP, INC.
--------------------------------------------
(as of July 21, 1997)
ARTICLE I
OFFICES
Section 1. The registered office shall be in the City of Wilmington, County
of New Castle, State of Delaware.
Section 2. The corporation may also have offices at such other places both
within and without the State of Delaware as the board of directors may from time
to time determine or the business of the corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. Meetings of stockholders for any purpose may be held at such
time and place, within or without the State of Delaware, as shall be stated in
the notice of the meeting or in a duly executed waiver of notice thereof.
Section 2. Annual meetings of stockholders shall be held on the fourth
Tuesday in February, if not a legal holiday, and if a legal holiday, then on the
next secular day following, or at such other date as shall be designated from
time to time by the board of directors and stated in the notice of the meeting,
at which they shall elect a board of directors and transact such other business
as may properly be brought before the meeting.
Section 3. Written notice of the annual meeting stating the place, date and
hour of the meeting shall be given to each stockholder entitled to vote at such
meeting not less than ten nor more than sixty days before the date of the
meeting.
Section 4. The officer who has charge of the stock ledger of the
corporation shall prepare and make, at least ten days before every meeting of
stockholders, a complete list of the stockholders entitled to vote at the
meeting, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name of each stockholder.
Such list shall be open to the examination of any stockholder, for any purpose
germane to the meeting, during ordinary business hours, for a period of at least
ten days prior to the meeting, either at a place within the city where the
meeting is to be held, which place shall be specified in the notice of the
meeting, or, if not so specified, at the place where the meeting is to be held.
The list shall also be produced and kept at the time and place of the meeting
during the whole time thereof, and may be inspected by any stockholder who is
present.
<PAGE> 2
Section 5. Special Meetings of Stockholders.
(a) Special Meetings of the stockholders, for any purpose or purposes,
unless otherwise prescribed by statute or by the certificate of incorporation,
may be called by the Chairman and shall be called by the Chairman or secretary
at the request in writing of a majority of the board of directors, or at the
request in writing in accordance with this Section 5, of stockholders owning a
majority in the amount of the capital stock of the corporation issued and
outstanding and entitled to vote on any matter proposed to be considered at such
special meeting.
(b) In order that the corporation may determine the stockholders entitled
to request a special meeting, the board of directors may fix a record date to
determine the stockholders entitled to make such a request (the "Request Record
Date"). The Request Record Date shall not precede the date upon which the
resolution fixing the Request Record Date is adopted by the board of directors
and shall not be more than 10 days after the date upon which the resolution
fixing the Request Record Date is adopted by the board of directors. Any
stockholder of record seeking to have stockholders request a special meeting
shall, by sending written request to the secretary of the corporation, or to the
corporation's registered office in the State of Delaware or its principal place
of business, by hand or by certified or registered mail, return receipt
requested, request the board of directors to fix a Request Record Date. The
board of directors shall promptly, but in all events within 5 Business Days (as
defined herein) after the date on which a valid request to fix a Request Record
Date is so delivered, adopt a resolution fixing the Request Record Date. If no
Request Record Date has been fixed by the board of directors within 5 Business
Days after the date on which such valid request is delivered to the secretary,
the Request Record Date shall be the first date on which a signed valid request
that the board of directors fix a Request Record Date is delivered to the
corporation as set forth above. To be valid, such written request shall set
forth the purpose or purposes for which the special meeting is to be held, shall
be signed by one or more stockholders of record (or their duly authorized
proxies or other representatives), shall bear the date of signature of each such
stockholder (or proxy or other representative) and shall include all information
about each such stockholder and about the beneficial owner or owners, if any, on
whose behalf the request is made, and about any nominees or business to be
proposed by or on behalf of such stockholder or beneficial owner or owners, that
would be required to be set forth in a stockholder's notice described in the
last sentence of paragraph (a)(ii) of Section 12 of Article II of these By-Laws.
(c) In order for a stockholder or stockholders to request a special
meeting, a written request or requests for a special meeting by the holders of
record as of the Request Record Date of shares representing at least a majority
in the amount of the capital stock of the corporation issued and outstanding and
entitled to vote on any matter proposed to be considered at such special meeting
must be delivered to the secretary of the corporation, or to the corporation's
registered office in the State of Delaware or its principal place of business.
To be valid, each written request by a stockholder for a special meeting shall
set forth the specific purpose or purposes for which the special meeting is to
be held (which purpose or purposes shall be limited to the purpose or purposes
set forth in the written request to set a Request Record Date received by the
corporation pursuant to paragraph (b) of this Section 5), shall be signed by one
or more persons who as of the Request Record Date are stockholders of record (or
their duly authorized proxies or other representatives), shall bear the date of
signature of each such stockholder (or proxy or other representative), and shall
set forth the name and address, as they appear in the corporation's books, of
each stockholder signing such request and the class and number of shares of the
corporation which are owned of record by each such stockholder, shall be sent to
the corporation as set forth above by hand or by certified or registered mail,
return receipt requested, and shall be so received by the corporation within 60
days after the Request Record Date.
(d) Except as provided in the following sentence, any special meeting shall
be held at such hour and day as may be designated by whichever of the Chairman
or the secretary shall have called such meeting. In the case of any special
meeting called by the Chairman or the secretary upon the request of stockholders
(a "Request Special Meeting"), such meeting shall be held at such hour and day
as may be designated by the board of directors; provided, however, that the date
of any Request Special Meeting shall be not less than 10 and not more than 60
days after the record date for such Request Special Meeting (the "Meeting Record
Date") and provided further that in the event that the directors then in office
fail, within 5 Business Days after the date that valid written requests for such
meeting by the holders of record as of the Request Record Date of
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shares representing at least a majority in the amount of the capital stock of
the corporation issued and outstanding and entitled to vote on any matter
proposed to be considered at such special meeting are deemed pursuant to
subsection (e) hereof to have been delivered to the corporation (the "Delivery
Date"), to designate an hour and date for a Request Special Meeting and a
Meeting Record Date, then such meeting shall be held at 2:00 p.m. local time on
the 90th day after the Delivery Date or, if such 90th day is not a Business Day,
on the first preceding Business Day, and the Meeting Record Date shall be the
close of business on the 60th day before such meeting date (or if such day is
not a Business Day, on the close of business on the next Business Day). In
fixing a meeting date for any special meeting, the Chairman, the secretary or
the board of directors may consider such factors as he or it deems relevant
within the good faith exercise of his or its business judgment, including,
without limitation, the nature of the action proposed to be taken, the facts and
circumstances surrounding any request of such meeting, and any plan of the board
of directors to call an annual meeting or a special meeting for the conduct of
related business. The Meeting Record Date shall be not later than the 20th
Business Day after the Delivery Date.
(e) The corporation may engage regionally or nationally recognized
independent inspectors of elections to act as an agent of the corporation for
the purpose of promptly performing a ministerial review of the validity of any
purported written request or requests for a special meeting received by the
secretary. For the purpose of permitting the inspectors to perform such review,
no purported request shall be deemed to have been delivered to the corporation
for purposes of paragraph (d) above until such date as the independent
inspectors certify to the corporation that the valid requests received by the
corporation as set forth in paragraph (c) above represent at least a majority in
the amount of the capital stock of the corporation issued and outstanding and
entitled to vote on any matter proposed to be considered at such special
meeting. Nothing contained in this paragraph (e) shall in any way be construed
to suggest or imply that the board of directors or any stockholder shall not be
entitled to contest the validity of any request, whether before or after such
certification by the independent inspectors, or to take any other action
(including, without limitation, the commencement, prosecution or defense of any
litigation with respect thereto, and the seeking of injunctive relief in such
litigation).
(f) For purposes of these By-Laws, "Business Day" shall mean any day other
than a Saturday, a Sunday or a day on which banking institutions in the State of
North Carolina are authorized or obligated by law or executive order to close.
Section 6. Written notice of a special meeting stating the place, date and
hour of the meeting and the purpose or purposes for which the meeting is called,
shall be given not less than ten nor more than sixty days before the date of the
meeting, to each stockholder entitled to vote at such meeting.
Section 7. Business transacted at any special meeting of stockholders
shall be limited to the purposes stated in the notice.
Section 8. The holders of stock having more than fifty percent of the
voting power of the stock issued and outstanding, present in person or
represented by proxy, shall constitute a quorum at all meetings of the
stockholders for the transaction of business except as otherwise provided by
statute or by the certificate of incorporation. If, however, such quorum shall
not be present or represented at any meeting of the stockholders, the
stockholders entitled to vote thereat, present in person or represented by
proxy, shall have power to adjourn the meeting from time to time, without notice
other than announcement at the meeting, until a quorum shall be present or
represented. At such adjourned meeting at which a quorum shall be present or
represented, any business may be transacted which might have been transacted at
the meeting as originally notified. If the adjournment is for more than thirty
days, or if after the adjournment a new record date is fixed for the adjourned
meeting, a notice of the adjourned meeting shall be given to each stockholder of
record entitled to vote at the meeting.
Section 9. When a quorum is present at any meeting, the vote of the
holders of stock having more than fifty percent of the voting power of the
issued and outstanding stock, present in person or represented by proxy, shall
decide any question brought before such meeting, unless the question is one upon
which by express provision of the statutes or of the certificate of
incorporation or of these by-laws, a different vote is required, in which case
such express provision shall govern and control the decision of such question.
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<PAGE> 4
Section 10. Except as otherwise provided in the certificate of
incorporation, each stockholder shall at every meeting of the stockholders be
entitled to one vote in person or by proxy for each share of the capital stock
having voting power held by such stockholder, but no proxy shall be voted after
three years from its date, unless the proxy provides for a longer period. As
used herein, the term "voting power" means the power to vote for the election of
directors at the time any determination of voting power is made and does not
include the right to vote upon the happening of some condition or event which
has not yet occurred.
Section 11. Unless otherwise provided in the certificate of incorporation,
any action required to be taken at any annual or special meeting of stockholders
of the corporation, or any action which may be taken at any annual or special
meeting of such stockholders, may be taken without a meeting, without prior
notice and without a vote, if a consent in writing, setting forth the action so
taken, shall be signed by the holders of outstanding stock having not less than
the minimum number of votes that would be necessary to authorize or take such
action at a meeting at which all shares entitled to vote thereon were present
and voted. Prompt notice of the taking of the corporation action without a
meeting by less than unanimous written consent shall be given to those
stockholders who have not consented in writing.
Section 12. Notice of Stockholder Business and Nomination of Directors.
(a) Annual Meetings.
(i) Nominations of persons for election to the board of directors of
the corporation and the proposal of business to be considered by the
stockholders may be made at an annual meeting (A) pursuant to the
corporation's notice of meeting, (B) by or at the direction of the board of
directors or (C) by any stockholder of the corporation who is a stockholder
of record at the time of giving of notice provided for in this by-law and
who is entitled to vote at the meeting and complies with the notice
procedures set forth in this Section 12.
(ii) For nominations or other business to be properly brought before
an annual meeting by a stockholder pursuant to clause (C) of paragraph
(a)(i) of this Section 12, the stockholder must have given timely notice
thereof in writing to the secretary of the corporation and such business
must otherwise be a proper matter for stockholder action. To be timely, a
stockholder's notice shall be delivered to the secretary of the corporation
at the principal offices of the corporation not later than the close of
business on the 60th day nor earlier than the close of business on the 90th
day prior to the first anniversary of the date of the previous annual
meeting; provided, however, that in the event that the date of the Annual
Meeting is advanced by more than 30 days or delayed by more than 60 days
from the first anniversary of the date of the previous annual meeting,
notice by the stockholder to be timely must be so delivered not earlier
than the 90th day prior to the date of such annual meeting and not later
than the close of business on the later of (x) the 60th day prior to such
annual meeting and (y) the 10th day following the day on which public
announcement of the date of such meeting is first made by the corporation.
In no event shall the public announcement of an adjournment of an annual
meeting commence a new time period for the giving of a stockholder's notice
as described above. Such stockholder's notice shall set forth: (A) the name
and address, as they appear on this corporation's books, of such
stockholder and the beneficial owner or owners, if any, on whose behalf the
nomination or proposal is made; (B) the class and number of shares of the
corporation which are beneficially owned by such stockholder or beneficial
owner or owners; (C) in the case of any proposed nomination for election or
re-election as a director, (I) such information regarding each nominee
proposed by such stockholder as would be required to be disclosed in
solicitations of proxies for elections of directors, or would be otherwise
required to be disclosed, in each case pursuant to Regulation 14A and Rule
14a-11 under the Exchange Act, and (II) the written consent of each nominee
to be named in a proxy statement and to serve as a director of the
corporation if so elected; and (D) in the case of any other business that
such stockholder proposes to bring before the meeting, (I) a brief
description of the business desired to be brought before the meeting, (II)
a brief statement of such stockholder's and beneficial owner's or owners'
reasons for conducting such business at the meeting and (III) any material
interest in such business of such stockholder and beneficial owner or
owners.
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<PAGE> 5
(iii) Notwithstanding anything in the second sentence of paragraph
(a)(ii) of this Section 12 to the contrary, in the event that the number of
directors to be elected to the board of directors of the corporation is
increased and there is no public announcement by the corporation naming all
of the nominees for director or specifying the size of the increased board
of directors made by the corporation at least 70 days prior to the first
anniversary of the date of the previous annual meeting, a stockholder's
notice required by this Section 12 shall also be considered timely, but
only with respect to nominees for any new positions created by such
increase, if it shall be delivered to the secretary at the principal
offices of the corporation not later than the close of business on the 10th
day following the day on which such public announcement is first made by
the corporation.
(b) Special Meetings. Only such business shall be conducted at a special
meeting as shall have been described in the corporation's notice of meeting sent
to stockholders pursuant to Section 6 of Article II of these By-laws.
Nominations of persons for election to the board of directors may be made at a
special meeting at which directors are to be elected pursuant to such notice of
meeting (i) by or at the direction of the board of directors or (ii) by any
stockholder of the corporation who (A) is a stockholder of record at the time of
giving of such notice of meeting, (B) is entitled to vote at the meeting and (C)
complies with the notice procedures set forth in this Section 12. Any
stockholder desiring to nominate persons for election to the board of directors
at such a special meeting shall cause a written notice to be delivered to the
secretary of the corporation at the principal offices of the corporation not
earlier than the earlier of (v) the delivery of the request described in Section
5(b) of Article II of these By-laws (w) 90 days prior to such special meeting
and not later than the close of business on the later of (1) the 60th day prior
to such special meeting and (2) the 10th day following the day on which public
announcement is first made by the corporation of the date of such special
meeting at which directors may be nominated. Such written notice shall set forth
all of the information that would be required to be set forth in a stockholder's
notice described in the last sentence of paragraph (a)(ii) of this Section 12.
In no event shall the public announcement of the adjournment of a special
meeting commence a new time period for the giving of a special notice as
described above.
(c) General.
(i) Only persons who are nominated in accordance with the procedures
set forth in this Section 12 shall be eligible to serve as directors. Only
such business shall be conducted at an annual meeting or special meeting as
shall have been brought before such meeting in accordance with the
procedures set forth in this Section 12. Except as otherwise provided by
law, the chairman of the meeting shall have the power and duty to determine
whether a nomination or any business proposed to be brought before the
meeting was made in accordance with the procedures set forth in this
Section 12 and, if any proposed nomination or business is not in compliance
with this Section 12, to declare that such defective proposal shall be
disregarded.
(ii) For purposes of this Section 12, "public announcement" shall mean
disclosure in a press release reported by the Dow Jones News Service,
Associated Press or comparable national news service or in a document
publicly filed by the corporation with the Securities and Exchange
Commission pursuant to Section 13, 14 or 15(d) of the Exchange Act.
(iii) Notwithstanding the foregoing provisions of this Section 12, a
stockholder shall also comply with all applicable requirements of the
Exchange Act and the rules and regulations thereunder with respect to the
matters set forth in this Section 12. Nothing in this Section 12 shall be
deemed to limit (x) the corporation's obligation to include stockholder
proposals in its proxy statement if such inclusion is required by Rule
14a-8 under the Exchange Act or (y) the rights of the holders of any series
of Preferred Stock to elect directors under specified circumstances.
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ARTICLE III
DIRECTORS
Section 1. The numbers of directors which shall constitute the whole board
shall be not less than six (6) nor more than fifteen (15), as may be determined
from time to time by a resolution adopted by the board of directors.
Section 2. Vacancies and newly created directorships resulting from any
increase in the authorized number of directors may be filled by a majority of
directors then in office, though less than a quorum, or by the sole remaining
director, unless otherwise provided in the certificate of incorporation.
Section 3. The Board of Directors shall be divided into three classes
(which at all times shall be as nearly equal in number as possible), with the
term of office of the first class to expire at the 1991 annual meeting of
stockholders, the term of office of the second class to expire at the 1992
annual meeting of stockholders, and the term of office of the third class to
expire at the 1993 annual meeting of stockholders. At each annual meeting of
stockholders following such initial classification and election, directors
elected to succeed those directors whose terms expire shall be elected for a
term to expire at the third succeeding annual meeting of stockholders after
their election. The foregoing notwithstanding, each director shall serve until
his successor has been duly elected and qualified, unless sooner displaced. If
there are no directors in office, then an election of directors may be held in
the manner provided by statute. Vacancies and newly created directorships
resulting from any increase in the authorized number of directors may be filled
by a majority of the directors then in office, though less than a quorum. A
director so chosen to fill a vacancy shall hold office until the expiration of
the term of the director whose position he has filled and until his successor
has been duly elected and qualified, unless sooner displaced. If the Board of
Directors increases the authorized number of directors, each newly created
directorship shall be assigned to a class in such a manner as to keep the
classes as nearly equal in number as possible. A director chosen to fill a newly
created directorship shall hold office until the annual meeting of stockholders
at which the term of other directors in his class expires and until his
successor has been duly elected and qualified, unless sooner displaced.
Section 4. The business of the corporation shall be managed by or under
the direction of its board of directors which may exercise all such powers of
the corporation and do all such lawful acts and things as are not by statute or
by the certificate of incorporation or by these by-laws directed or required to
be exercised or done by the stockholders.
MEETINGS OF THE BOARD OF DIRECTORS
Section 5. The board of directors of the corporation may hold meetings,
both regular and special, either within or without the State of Delaware.
Section 6. The first meeting of each newly elected board of directors
shall be held at such time and place as shall be fixed by the vote of the
stockholders at the annual meeting and no notice of such meeting shall be
necessary to the newly elected directors in order to legally constitute the
meeting, provided a quorum shall be present. In the event of the failure of the
stockholders to fix the time or place of such first meeting of the newly elected
board of directors, or in the event such meeting is not held at the time and
place so fixed by the stockholders, the meeting may be held at such time and
place as shall be specified in a notice given as hereinafter provided for
special meetings of the board of directors, or as shall be specified in a
written waiver signed by all of the directors.
Section 7. Regular meetings of the board of directors may be held without
notice at such time and at such place as shall from time to time be determined
by the board.
Section 8. Special meetings of the board of directors may be called by the
Chairman or the secretary, and shall be called by the secretary upon the written
request of a majority of the board of directors. Notice of the time and place of
such meetings shall be served upon or telephoned to each director at least 24
hours, or mailed (postage prepaid) or telegraphed (charges prepaid) to each
director at his address as shown on the books of the corporation at least 48
hours prior to the time of the meeting, and if such notice is mailed or
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telegraphed as above provided, the notice shall be deemed to have been given at
the time it is deposited in the United States mail or with the telegraph office
for transmission, as the case may be.
Section 9. At all meetings of the board a majority of directors shall
constitute a quorum for the transaction of business and the act of a majority of
the directors present at any meeting at which there is a quorum shall be the act
of the board of directors, except as may be otherwise specifically provided by
statute or by the certificate of incorporation. If a quorum shall not be present
at any meeting of the board of directors, the directors present thereat may
adjourn the meeting from time to time, without notice other than announcement at
the meeting, until a quorum shall be present.
Section 10. Unless otherwise restricted by the certificate of
incorporation or these by-laws, any action required or permitted to be taken at
any meeting of the board of directors or of any committee thereof may be taken
without a meeting, if all members of the board or committee, as the case may be,
consent thereto in writing, and the writing or writings are filed with the
minutes of proceedings of the board or committee.
Section 11. Unless otherwise restricted by the certificate of
incorporation or these by-laws, members of the board of directors, or any
committee designated by the board of directors, may participate in a meeting of
the board of directors, or any committee, by means of conference telephone or
similar communications equipment by means of which all persons participating in
the meeting can hear each other, and such participation in a meeting shall
constitute presence in person at the meeting.
COMMITTEES OF DIRECTORS
Section 12. The board of directors may, by resolution passed by a majority
of the whole board, designate one or more committees, each committee to consist
of one or more of the directors of the corporation. The board may designate one
or more directors as alternate members of any committee, who may replace any
absent or disqualified member at any meeting of the committee.
Any such committee, to the extent provided in the resolution of the board
of directors, shall have and may exercise all the powers and authority of the
board of directors in the management of the business and affairs of the
corporation, and may authorize the seal of the corporation to be affixed to all
papers which may require it; but no such committee shall have the power or
authority in reference to amending the certificate of incorporation, adopting an
agreement of merger or consolidation, recommending to the stockholders the sale,
lease or exchange of all or substantially all of the corporation's property and
assets, recommending to the stockholders a dissolution of the corporation or a
revocation of a dissolution, or amending the by-laws of the corporation; and,
unless the resolution or the certificate of incorporation expressly so provides,
no such committee shall have the power or authority to declare a dividend or to
authorize the issuance of stock. Such committee or committees shall have such
name or names as may be determined from time to time by resolution adopted by
the board of directors.
Section 13. Each committee shall keep regular minutes of its meetings and
report the same to the board of directors when required.
COMPENSATION OF DIRECTORS
Section 14. Unless otherwise restricted by the certificate of
incorporation or these by-laws, the board of directors shall have the authority
to fix the compensation of directors. The directors may be paid their expenses,
if any, of attendance at each meeting of the board of directors and may be paid
a fixed sum for attendance at each meeting of the board of directors or a stated
salary as director. No such payment shall preclude any director from serving the
corporation in any other capacity and receiving compensation therefor. Members
of special or standing committees may be allowed like compensation for attending
committee meetings.
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REMOVAL OF DIRECTORS
Section 15. Directors may be removed only for cause by the holders of
stock having more than fifty percent of the voting power of all outstanding
stock.
ARTICLE IV
NOTICES
Section 1. Whenever, under the provisions of the statutes or of the
certificates of incorporation or of these by-laws, notice is required to be
given to any director or stockholder, it shall not be construed to mean personal
notice, but such notice may be given in writing, by mail, addressed to such
director or stockholder, at his address as it appears on the records of the
corporation, with postage thereon prepaid, and such notice shall be deemed to be
given at the time when the same shall be deposited in the United States mail.
Notice to directors may also be given by telegram or telephone.
Section 2. Whenever any notice is required to be given under the
provisions of the statutes or of the certificate of incorporation or of these
by-laws, a waiver thereof in writing, signed by the person or persons entitled
to said notice, whether before or after the time stated therein, shall be deemed
equivalent thereto. Attendance of a person, either in person or by proxy, at any
meeting, shall constitute a waiver of notice of such meeting, except where a
person attends a meeting for the express purpose of objecting to the transaction
of any business because the meeting was not lawfully called or convened.
ARTICLE V
OFFICERS
Section 1. The Board of Directors shall elect from its membership a
chairman of the board of directors (herein called "Chairman") and from its
membership or outside thereof a president, a vice president, a secretary and a
treasurer. The board of directors may also choose from its membership a vice
chairman of the board of directors and from its membership or outside thereof
additional vice presidents, and one or more assistant secretaries and assistant
treasurers. Any number of offices may be held by the same person, unless the
certificate of incorporation or these by-laws otherwise provide.
Section 2. The board of directors at its first meeting after each annual
meeting of stockholders shall choose a Chairman, a president, one or more vice
presidents, a secretary and a treasurer. The board of directors at its first
meeting after each annual meeting of stockholders may also choose one or more
assistant secretaries and one or more assistant treasurers.
Section 3. The board of directors may appoint such other officers and
agents as it shall deem necessary who shall hold their offices for such terms
and shall exercise such powers and perform such duties as shall be determined
from time to time by the board.
Section 4. The salaries of all officers and agents of the corporation
shall be fixed by the board of directors.
Section 5. The officers of the corporation shall hold office until their
successors are chosen and qualify. Any officer elected or appointed by the board
of directors may be removed at any time by the affirmative vote of a majority of
the board of directors. Any vacancy occurring in any office of the corporation
shall be filled by the board of directors.
THE CHAIRMAN
Section 6. The Chairman shall preside at all meetings of the stockholders
and the board of directors and shall see that all orders and resolutions of the
board of directors are carried into effect. In the event of the absence or
disability of the president, the Chairman shall exercise and perform the duties,
powers and functions of the president until such time as the board of directors
may otherwise direct.
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Section 7. The vice chairman of the board of directors shall, in the
absence of the chairman of the board of directors or his inability to act,
perform the duties of the Chairman. The vice chairman of the board of directors
shall also have such other duties and powers as may be assigned to our vested in
him from time to time by the board of directors.
THE PRESIDENT
Section 8. The president shall be the chief executive officer of the
corporation and, as such, shall supervise, direct and assign duties to those
officers and agents of the corporation who are engaged in its affairs. He shall
submit to the board of directors such reports with respect to the affairs of the
corporation as he deems appropriate and necessary to keep the board of directors
advised with respect thereto, and such other reports as the board of directors
or committee thereof may from time to time request. The president shall also
have such other duties and powers as may be assigned to or vested in him from
time to time by the board of directors.
THE VICE PRESIDENTS
Section 9. In the absence of the president, the Chairman and the vice
chairman or in the event of their inability or refusal to act, the vice
president (or in the event there be more than one vice president, the vice
presidents in the order designated by the directors, or in the absence of any
designation, then in the order of their election) shall perform the duties of
the president, and when so acting, shall have all the powers of and be subject
to all the restrictions upon the president. The vice presidents shall perform
such other duties and have such other powers as the board of directors may from
time to time prescribe.
THE SECRETARY AND ASSISTANT SECRETARY
Section 10. The secretary shall attend all meetings of the board of
directors and all meetings of the stockholders and record all the proceedings of
the meetings of the corporation and of the board of directors in a book to be
kept for that purpose and shall perform like duties for the standing committees
when required. He shall give, or cause to be given, notice of all meetings of
the stockholders and special meetings of the board of directors, and shall
perform such other duties as may be prescribed by the board of directors or
president, under whose supervision he shall be. He shall have custody of the
corporate seal of the corporation and he, or an assistant secretary, shall have
authority to affix the same to any instrument requiring it and when so affixed,
it may be attested by his signature or by the signature of such assistant
secretary. The board of directors may give general authority to any officer to
affix the seal of the corporation and to attest the affixing by his signature.
Section 11. The assistant secretary, or if there be more than one, the
assistant secretaries in the order determined by the board of directors (or if
there be no such determination, then in the order of their election), shall, in
the absence of the secretary or in the event of his inability or refusal to act,
perform the duties and exercise the powers of the secretary and shall perform
such other duties and have such other powers as the board of directors may from
time to time prescribe.
THE TREASURER AND ASSISTANT TREASURERS
Section 12. The treasurer shall have the custody of the corporate funds
and securities and shall keep full and accurate accounts of receipts and
disbursements in books belonging to the corporation and shall deposit all moneys
and other valuable effects in the name and to the credit of the corporation in
such depositories as may be designated by the board of directors.
Section 13. He shall disburse the funds of the corporation as may be
ordered by the board of directors, taking proper vouchers for such
disbursements, and shall render to the Chairman and the board of directors, at
its regular meetings, or when the directors so require, an account of all his
transactions as treasurer and of the financial condition of the corporation.
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Section 14. If required by the board of directors, he shall give the
corporation a bond (which shall be renewed every six years) in such sum and with
such surety or sureties as shall be satisfactory to the board of directors for
the faithful performance of the duties of his office and for the restoration to
the corporation, in case of his death, resignation, retirement or removal from
office, of all books, papers, vouchers, money and other property of whatever
kind in his possession or under his control belonging to the corporation.
Section 15. The assistant treasurer, or if there shall be more than one,
the assistant treasurers in the order determined by the board of directors (or
if there be no such determination, then in the order of their election), shall,
in the absence of the treasurer or in the event of his inability or refusal to
act, perform the duties and exercise the powers of the treasurer and shall
perform such other duties and have such other powers as the board of directors
may from time to time prescribe.
ARTICLE VI
STOCK CERTIFICATES
Section 1. Every holder of stock in the corporation shall be entitled to
have a certificate, signed by, or in the name of the corporation by, the
Chairman or vice chairman of the board of directors, or the president or a vice
president and the treasurer or an assistant treasurer or the secretary or an
assistant secretary of the corporation, certifying the number of shares owned by
him in the corporation.
Section 2. If the corporation shall be authorized to issue more than one
class of stock or more than one series of any class, the designations,
preferences and relative, participating, optional or other special rights of
each class of stock or series thereof and the qualifications, limitations or
restrictions of such preferences and/or rights shall be set forth in full or
summarized on the face or back of the certificate which the corporation shall
issue to represent such class or series of stock, provided that, except as
otherwise provided in Section 202 of the General Corporation Law of Delaware, in
lieu of the foregoing requirements, there may be set forth on the face or back
of the certificate which the corporation shall issue to represent such class or
series of stock, a statement that the corporation will furnish without charge to
each stockholder who so requests the designations, preferences and relative,
participating, optional or other special rights or each class of stock or series
thereof and the qualifications, limitations or restrictions of such preferences
and/or rights.
Section 3. Any of or all the signatures on the certificate may be
facsimile. In case any officer, transfer agent or registrar who has signed or
whose facsimile signature has been placed upon a certificate shall have ceased
to be such officer, transfer agent or registrar before such certificate is
issued, it may be issued by the corporation with the same effect as if he were
such officer, transfer agent or registrar at the date of issue.
LOST CERTIFICATES
Section 4. The board of directors may direct a new certificate or
certificates to be issued in place of any certificate or certificates
theretofore issued by the corporation alleged to have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
the certificate of stock to be lost, stolen or destroyed. When authorizing such
issue of a new certificate or certificates, the board of directors may, in its
discretion and as a condition precedent to the issuance thereof, require the
owner of such lost, stolen or destroyed certificate or certificates, or his
legal representative, to advertise the same in such manner as it shall require
and/or to give the corporation a bond in such sum as it may direct as indemnity
against any claim that may be made against the corporation with respect to the
certificate alleged to have been lost, stolen or destroyed.
TRANSFER OF STOCK
Section 5. Upon surrender to the corporation or the transfer agent of the
corporation of a certificate for shares duly endorsed or accompanied by proper
evidence of succession, assignment or authority to transfer, it shall be the
duty of the corporation to issue a new certificate to the person entitled
thereto, cancel the old certificate and record the transaction upon its books.
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FIXED RECORD DATE
Section 6. In order that the corporation may determine the stockholders
entitled to notice of or to vote at any meeting of stockholders or any
adjournment thereof, or to express consent to corporate action in writing
without a meeting, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any right in
respect of any change, conversion or exchange of stock or for the purpose of any
other lawful action, the board of directors may fix, in advance, a record date,
which shall not be more than sixty nor less than ten days before the date of
such meeting, nor more than sixty days prior to any other action. A
determination of stockholders of record entitled to notice of or to vote at a
meeting of stockholders shall apply to any adjournment of the meeting; provided,
however, that the board of directors may fix a new record date for the adjourned
meeting.
REGISTERED STOCKHOLDERS
Section 7. The corporation shall be entitled to recognize the exclusive
right of a person registered on its books as the owner of shares to receive
dividends, and to vote as such owner, and to hold liable for calls and
assessments a person registered on its books as the owner of shares, and shall
not be bound to recognize any equitable or other claim to or interest in such
share or shares on the part of any other person, whether or not it shall have
express or other notice thereof, except as otherwise provided by the laws of
Delaware.
ARTICLE VII
GENERAL PROVISIONS
DIVIDENDS
Section 1. Dividends upon the capital stock of the corporation, subject to
the provisions of the certificate of incorporation, if any, may be declared by
the board of directors at any regular or special meeting, pursuant to law.
Dividends may be paid in cash, in property, or in shares of the capital stock,
subject to the provisions of the certificate of incorporation.
Section 2. Before payment of any dividend, there may be set aside out of
any funds of the corporation available for dividends such sum or sums as the
directors from time to time, in their absolute discretion, think proper as a
reserve or reserves to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the corporation, or for such other
purpose as the directors shall think conducive to the interest of the
corporation, and the directors may modify or abolish any such reserve in the
manner in which it was created.
ANNUAL STATEMENT
Section 3. The board of directors shall present at each annual meeting,
and at any special meeting of the stockholders when called for by vote of the
stockholders, a full and clear statement of the business and condition of the
corporation.
CHECKS
Section 4. All checks or demands for money and notes of the corporation
shall be signed by such officer or officers or such other person or persons as
the board of directors may from time to time designate.
FISCAL YEAR
Section 5. The fiscal year of the corporation shall be fixed by resolution
of the board of directors.
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SEAL
Section 6. The corporate seal shall have inscribed thereon the name of the
corporation, the year of its organization and the words "Corporate Seal,
Delaware". The seal may be used by causing it or a facsimile thereof to be
impressed or affixed or reproduced or otherwise.
ARTICLE VIII
AMENDMENTS
Section 1. These By-Laws may be altered or repealed (1) at any meeting of
the Stockholders or of the board of directors, including any conference
telephone meeting of the board of directors or (2) by written consent of the
board of directors.
ARTICLE IX
MISCELLANEOUS
Section 1. Unless otherwise ordered by the board of directors, the
Chairman of the board or the vice chairman or the president or any vice
president or the secretary or the treasurer in person or by proxy or proxies
appointed by any of them shall have full power and authority on behalf of the
Corporation to vote, act and consent with respect to any shares of stock issued
by other corporations which the corporation may own or as to which the
corporation otherwise has the right to vote, act or consent.
ARTICLE X
INDEMNIFICATION OF DIRECTORS, OFFICERS AND EMPLOYEES
Section 1. Indemnification of Directors and Officers for Actions, Suits,
or Proceedings Other than by or in the Right of the Corporation. To the full
extent permitted by law, the Corporation shall indemnify any person who was or
is a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the Corporation) by
reason of the fact that he is or was or has agreed to become a director or
officer of the Corporation or is or was serving or has agreed to serve at the
request of the Corporation as a director or officer of another corporation,
partnership, joint venture, trust or other enterprise (including employee
benefit plans) or by reason of any action alleged to have been taken or omitted
in such capacity against costs, charges, expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonably incurred
by him or on his behalf in connection with any threatened, pending or completed
action, suit or proceeding and any appeal therefrom including but not limited to
liability and expenses incurred on account of profits realized by him in the
purchase or sale of securities of the Corporation, if and only if he acted in
good faith and in a manner he reasonably believed to be in or not opposed to the
best interests of the Corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful; the
termination of any action, suit or proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent, shall not, of
itself, create a presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not oppose: to the best
interests of the Corporation, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was unlawful.
Section 2. Indemnification of Directors and Officers for Actions or Suits
by or in the Right of the Corporation. To the full extent permitted by law, the
Corporation shall indemnify any person who was or is a party or is threatened to
be made a party to any threatened, pending or completed action or suit by or in
the right of the Corporation to procure a judgment in its favor by reason of the
fact that he is or was or has agreed to become a director or officer of the
Corporation, or is or was serving or has agreed to serve at the request of the
Corporation as a director or officer of another corporation, partnership, joint
venture, trust or other enterprise (including employee benefit plans), or by
reason of any action alleged to have been taken or omitted
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in such capacity, against costs, charges and expenses (including attorneys'
fees) actually and reasonably incurred by him or on his behalf in connection
with the defense or settlement of any threatened, pending or completed action or
suit and any appeal therefrom, or the defense or settlement of any claim, issue
or matter, if and only if he acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interests of the Corporation except
that no indemnification shall be made in respect of any claim, issue or matter
as to which such person shall have been adjudged to be liable to the Corporation
unless and only to the extent that the Court of Chancery of Delaware or the
court in which such action or suit was brought shall determine upon application
that, despite the adjudication of such liability but in view of all the
circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such costs, charges and expenses which the Court of Chancery or
such other court shall deem proper.
Section 3. Indemnification of Others for Actions, Suits, or Proceedings
Other than by or in the Right of the Corporation. To the full extent permitted
by law, the Corporation, in the sole discretion of the Board of Directors of the
Corporation, may indemnify any person who was or is a party or is threatened to
be made a party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative (other than
an action by or in the right of the Corporation), by reason of the fact that he
is or was or has agreed to become an employee, agent or contractor of the
Corporation, or is or was serving or has agreed to serve at the request of the
Corporation as a director, officer, employee, agent or contractor of another
corporation, partnership, joint venture, trust or other enterprise (including
employee benefit plans), or by reason of any action alleged to have been taken
or omitted in such capacity, against costs, charges, expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by him or on his behalf in connection with any threatened,
pending or completed action, suit or proceeding and any appeal therefrom,
including but not limited to liability and expenses incurred on account of
profits realized by him in the purchase or sale of securities of the
Corporation, if and only if he acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interests of the Corporation, and,
with respect to any criminal action or proceeding, had no reasonable cause to
believe his conduct was unlawful; the termination of any action, suit or
proceeding by judgment, order, settlement, conviction, or upon a plea of nolo
contendere or its equivalent, shall not, of itself, create a presumption that
the person did not act in good faith and in a manner which he reasonably
believed to be in or not opposed to the best interests of the Corporation, and,
with respect to any criminal action or proceeding, had reasonable cause to
believe that his conduct was unlawful.
Section 4. Indemnification of Others for Actions or Suits by or in the
Right of the Corporation. To the full extent permitted by law, the Corporation,
in the sole discretion of the Board of Directors of the Corporation, may
indemnify any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action or suit by or in the right of the
Corporation to procure a judgment in its favor by reason of the fact that he is
or was or has agreed to become an employee, agent or contractor of the
Corporation, or is or was serving or has agreed to serve at the request of the
Corporation as a director, officer, employee, agent or contractor of another
corporation, partnership, joint venture, trust or other enterprise (including
employee benefit plans), or by reason of any action alleged to have been taken
or omitted in such capacity, against costs, charges and expenses (including
attorneys' fees) actually and reasonably incurred by him or on his behalf in
connection with the defense or settlement of any threatened, pending or
completed action or suit and any appeal therefrom, or the defense or settlement
of any claim, issue or matter, if and only if he acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best interests of
the Corporation except that no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to be
liable to the Corporation unless and only to the extent that the Court of
Chancery of Delaware or the court in which such action or suit was brought shall
determine upon application that, despite the adjudication of such liability but
in view of all the circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such costs, charges and expenses which the
Court of Chancery or such other court shall deem proper.
Section 5. Indemnification for Costs, Charges and Expenses of Successful
Party. Notwithstanding the other provisions of these By-laws, to the extent
that a director or officer of the Corporation or other person indemnified under
Sections 1 through 4, herein, has been successful on the merits or otherwise,
including,
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without limitation, the dismissal of an action without prejudice, in defense of
any action, suit or proceeding referred to above, or in defense of any claim,
issue or matter therein, he shall be indemnified against all costs, charges and
expenses (including attorneys' fees) actually and reasonably incurred by him or
on his behalf in connection therewith.
Section 6. Determination of Right to Indemnification. Unless otherwise
ordered by a court, any indemnification under Sections 1 through 4, herein,
shall be paid by the Corporation unless a determination is made (1) by the Board
of Directors by a majority vote of a quorum consisting of directors who were not
parties to such action, suit or proceeding, or (2) if such a quorum is not
obtainable, or, even if obtainable a quorum of disinterested directors so
directs, by independent legal counsel in a written opinion, or (3) by the
stockholders, that indemnification of an individual entitled to indemnification
under Sections 1 through 4, herein, is not proper in the circumstances because
he has not met the applicable standard of conduct set forth in Sections 1
through 4, herein.
Section 7. Advance Payment of Costs, Charges and Expenses. To the full
extent permitted by law, the Corporation shall, upon request, pay costs, charges
and expenses (including attorneys' fees) incurred by a person entitled to
indemnification pursuant to Sections 1 and 2, herein, and, if applicable,
pursuant to Sections 3 and 4, herein, in defending a civil or criminal action,
suit or proceeding in advance of the final disposition of such action, suit or
proceeding; provided, however, that the payment of such costs, charges and
expenses incurred by a director or officer in his capacity as a director or
officer (and not in any other capacity in which service was or is rendered by
such person while a director or officer) in advance of the final disposition of
such action, suit or proceeding shall be made only upon receipt of an
undertaking by or on behalf of the director or officer to repay all amounts so
advanced in the event that it shall ultimately be determined that such director
or officer is not entitled to be indemnified by the Corporation as authorized in
these By-laws; such costs, charges and expenses incurred by other employees,
agents and contractors may be so paid upon such terms and conditions, if any, as
the Board of Directors deems appropriate.
Section 8. Procedure for Indemnification. Any indemnification or advance
of costs, charges and expenses provided for in Sections 1 through 7, herein,
shall be made promptly, and in any event within sixty (60) days, upon the
written request of the person entitled to indemnification; the right to
indemnification or advances as granted by these Bylaws shall be enforceable by a
director or officer or other person indemnified hereunder in any court of
competent jurisdiction. If the Corporation denies such request, in whole or in
part, or if no disposition thereof is made within sixty (60) days, such person's
costs, charges and expenses incurred in connection with successfully
establishing his right to indemnification, in whole or in part, in any such
action shall also be indemnified by the Corporation; it shall be a defense to
any such action (other than an action brought to enforce a claim for the advance
of costs, charges and expenses pursuant to Section 7, herein, where the required
undertaking, if any, has been received by the Corporation) that the claimant has
not met the standard of conduct set forth in Sections 1 through 4, herein, but
the burden of proving such defense shall be on the Corporation. Neither the
failure of the Corporation (including its Board of Directors, its independent
legal counsel, and its stockholders) to have made a determination prior to the
commencement of such action that indemnification of the claimant is proper in
the circumstances because he has met the applicable standard of conduct set
forth in Sections 1 through 4, herein, nor the fact that there has been an
actual determination by the Corporation (including its Board of Directors, its
independent legal counsel, and its stockholders) that the claimant has not met
such applicable standard of conduct, shall be a defense to the action or create
a presumption that the claimant has not met the applicable standard of conduct.
Section 9. Authorization of Corporation Officers. The proper officers of
the Corporation are, and each of them acting without the other is, authorized to
take any action, for and in the name of the Corporation, which he deems
necessary or appropriate (as conclusively presumed from the taking of such
action) to carry out and effect the foregoing Sections 1 through 8.
Section 10. Other Rights; Continuation of Right to Indemnification. The
indemnification and advancement of expenses provided by these By-laws shall not
be deemed exclusive of any other rights to which a person seeking
indemnification or advancement of expenses may be entitled under any law
(present or future, common or statutory), by-law, agreement, vote of
stockholders or disinterested directors or otherwise, both as
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to action in his official capacity and as to action in another capacity while
holding office or while employed by or acting as agent for the Corporation, and
shall continue as to a person who has ceased to serve in the capacity making him
eligible for indemnification, and shall inure to the benefit of the estate,
heirs, executors and administrators of such person; all rights to
indemnification under these By-laws shall be deemed to be a contract between the
Corporation and each director and officer of the Corporation and, as applicable,
any other person indemnified hereunder who serves or served in such capacity at
any time while these By-laws as well as the relevant provisions of the Delaware
General Corporation Law or any other applicable laws are or were in effect; any
repeal or modification hereof or of such provisions of such law shall not in any
way diminish any rights to indemnification of such director or officer or other
person entitled to indemnification or the obligations of the Corporation arising
hereunder.
Section 11. Savings Clause. If Sections 1 through 10 of these By-laws or
any portion hereof shall be invalidated on any ground by any court of competent
jurisdiction, then the Corporation shall nevertheless indemnify each director
and officer and may indemnify any other person entitled to indemnification, as
to costs, charges and expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement with respect to any action, suit or proceeding,
whether civil, criminal, administrative or investigative, including an action by
or in the right of the Corporation, to the full extent permitted by any
applicable portion of these By-laws that shall not have been invalidated and to
the full extent permitted by applicable law. To the full extent permitted by
law, the Corporation may enter into and perform agreements with persons,
including, without limitation, present and former officers, directors and
employees of the Corporation and of companies acquired by or merged with the
Corporation, obligating the Corporation, among other things, to provide
indemnification and advancement of costs, charges and expenses to such persons
in addition to any indemnification or advancement which may be available to such
person under Sections 1 through 10 of these By-laws.
Section 12. Insurance. The Board of Directors may cause the Corporation
to purchase and maintain insurance on behalf of any person who is or was or has
agreed to become a director or officer of the Corporation, or is or was serving
at the request of the Corporation as a director or officer of another
corporation, or as its representative in a partnership, joint venture, trust or
other enterprise (including employee benefit plans) against any liability
asserted against such person and incurred in any such capacity or arising out of
such status, whether or not the Corporation would have the power to indemnify
such person.
Section 13. Amendment of By-Laws. The Board of Directors may from time to
time adopt further By-laws with respect to indemnification and may amend these
and such By-laws to provide at all times the fullest indemnification permitted
by the General Corporation Law of the State of Delaware.
Section 14. Independent Counsel.
(a) For purposes of Sections 6 and 8 of this Article X and of this Section
14, "independent legal counsel" shall mean a law firm, a member of a law firm,
or an independent practitioner, that is experienced in matters of corporation
law and shall exclude any person who, under the applicable standards of
professional conduct then prevailing, would have a conflict of interest in
representing either the Corporation or the claimant in an action to determine
the claimant's rights under this By-Law. Notwithstanding anything contained in
this Article X to the contrary, the determination of entitlement to
indemnification set forth in Section 6 of this Article X may, in addition to
those parties set forth in such Section 6, be made by independent legal counsel
in a written opinion if the claimant of the indemnification so requests.
(b) In the event the determination of entitlement to indemnification is to
be made by independent legal counsel at the request of the claimant, the
independent legal counsel shall be selected by the board of directors unless
there shall have occurred within two years prior to the date of the commencement
of the action, suit or proceeding for which indemnification is claimed a "Change
of Control" (as defined below), in which case the independent legal counsel
shall be selected by the claimant unless the claimant shall request that such
selection be made by the board of directors. If it is so determined that the
claimant is entitled to indemnification, payment to the claimant shall be made
within 10 days after such determination.
(c) For purposes of this Section 14, a "Change of Control" shall be deemed
to have occurred if
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<PAGE> 16
(i) any individual, entity or group (within the meaning of Section
13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended)
becomes the beneficial owner of 30% or more of either (A) the then
outstanding shares of common stock of the Company (the "Outstanding Company
Common Stock") or (B) the combined voting power of the then outstanding
voting securities of the Company entitled to vote generally in the election
of directors (the "Outstanding Company Voting Securities"); provided,
however, that for purposes of this subsection (i), the following
acquisitions shall not constitute a Change of Control: (I) any acquisition
directly from the Company, (II) any acquisition by the Company, (III) any
acquisition by any employee benefit plan (or related trust) sponsored or
maintained by the Company or any corporation controlled by the Company or
(IV) any acquisition pursuant to a transaction which complies with clauses
(A), (B) and (C) of subsection (iii) of this Section 14(c); or
(ii) individuals who, as of the date hereof, constitute the board of
directors (the "Incumbent Board") cease for any reason to constitute at
least a majority of the board of directors; provided, however, that any
individual becoming a director subsequent to the date hereof whose
election, or nomination for election by the Company's shareholders, was
approved by a vote of at least a majority of the directors then comprising
the Incumbent Board shall be considered as though such individual were a
member of the Incumbent Board, but excluding, for this purpose, any such
individual whose initial assumption of office occurs as a result of an
actual or threatened election contest with respect to the election or
removal of directors or other actual or threatened solicitation of proxies
or consents by or on behalf of a person other than the board of directors;
or
(iii) the Company consummates a Business Combination unless, following
such Business Combination, (A) all or substantially all of the individuals
and entities who were the beneficial owners, respectively, of the
Outstanding Company Common Stock and Outstanding Company Voting Securities
immediately prior to such Business Combination beneficially own, directly
or indirectly, more than 60% of, respectively, the then outstanding shares
of common stock and the combined voting power of the then outstanding
voting securities entitled to vote generally in the election of directors,
as the case may be, of the corporation resulting from such Business
Combination (including, without limitation, a corporation which as a result
of such transaction owns the Company or all or substantially all of the
Company's assets either directly or through one or more subsidiaries) in
substantially the same proportions as their ownership, immediately prior to
such Business Combination of the Outstanding Company Common Stock and
Outstanding Company Voting Securities, as the case may be, (B) no Person
(excluding any employee benefit plan (or related trust) of the Company or
such corporation resulting from such Business Combination) beneficially
owns, directly or indirectly, 30% or more of, respectively, the then
outstanding shares of common stock of the corporation resulting from such
Business Combination or the combined voting power of the then outstanding
voting securities of such corporation except to the extent that such
ownership existed with respect to the Company prior to the Business
Combination and (C) at least a majority of the members of the board of
directors of the corporation resulting from such Business Combination were
members of the Incumbent Board at the time of the execution of the initial
agreement, or of the action of the board of directors, providing for such
Business Combination; or
(iv) the shareholders of the Company approve of a complete liquidation
or dissolution of the Company.
(d) For purposes of this Section 14, a "Business Combination" shall mean
any reorganization, merger, share exchange or consolidation or sale or other
disposition of all or substantially all of the assets of the Company or the
acquisition of assets of another entity.
Section 15. Preclusion of Defense. The Corporation shall be precluded
from asserting in any judicial proceeding commenced pursuant to Section 8 of
this Article X that the procedures and presumptions of Article X are not valid,
binding and enforceable and shall stipulate in such proceeding that the
Corporation is bound by all of the provisions of Article X.
16
<PAGE> 1
EXHIBIT 29
AMENDMENT NO. 1 TO RIGHTS AGREEMENT
This Amendment No. 1 (the "Amendment") to that certain Rights Agreement
between Exide Electronics Group, Inc. (the "Company") and First Union National
Bank of North Carolina, as Rights Agent, dated as of November 25, 1992 (the
"Agreement"), is effective as of February 9, 1996. All capitalized terms not
otherwise defined herein shall have the meanings ascribed to them in the
Agreement.
This Amendment is being effectuated to enable the Company to issue 825,000
shares of its common stock and 1,000,000 shares of its Series G Convertible
Preferred Stock to Fiskars Oy Ab in connection with the Company's acquisition of
all of the outstanding stock of Deltec Power Systems, Inc. and its subsidiaries.
NOW THEREFORE, as provided by the terms of the Agreement, the Company
hereby amends the Agreement as follows:
Section 1, paragraph (a) is hereby amended by adding the following
additional sentence to the end of said paragraph:
"Notwithstanding the foregoing, Fiskars Oy Ab (together with its Affiliates
"Fiskars"), who has entered into an agreement with the Company dated as of
November 17, 1995, as amended on February 9, 1996, whereby the Company will
acquire from Fiskars all of the outstanding capital stock of Deltec Power
Systems, Inc. and its subsidiaries in exchange for (x) 1,000,000 shares of the
Company's Series G Convertible Preferred Stock (the "Series G Stock"), which
Series G Stock is convertible into shares of the Company's Common Stock on the
terms and as provided for in the Certificate of Designation for the Series G
Stock (the "Certificate of Designation") and (y) 825,000 shares of the Company's
Common Stock (such shares of Common Stock together with such shares of Series G
Stock and any shares of Common Stock which Fiskars should acquire upon
conversion of the Series G Stock as provided for in the Certificate of
Designation are collectively referred to herein as the "Fiskars Stock"), shall
not be deemed an "Acquiring Person" as a result of Fiskars' acquisition of the
Fiskars Stock; provided, however, that Fiskars shall be deemed to be an
"Acquiring Person" in the event Fiskars shall become the Beneficial Owner of any
shares of the Company's Common Stock in addition to the Fiskars Stock.
Except as amended and modified hereby, all of the other terms and
provisions of the Agreement shall remain in effect.
EXIDE ELECTRONICS GROUP, INC.
By: /s/ JANE PASIPOULARIDES
------------------------------------
Title: Assistant Treasurer
This Amendment is hereby acknowledged by
FIRST UNION NATIONAL BANK OF
NORTH CAROLINA, as Rights Agent
By: /s/ FRANCES S. BEAM
Title: Vice President
<PAGE> 1
EXHIBIT 30
FORM OF
AMENDMENT NO. 2 TO RIGHTS AGREEMENT
AMENDMENT No. 2, dated as of July , 1997, to the Rights Agreement, dated
as of November 25, 1992 (the "Rights Agreement"), between Exide Electronics
Group, Inc., a Delaware corporation (the "Company"), and First Union National
Bank of North Carolina, as Rights Agent (the "Rights Agent").
WHEREAS, the Company and the Rights Agent have heretofore executed and
entered into the Rights Agreement;
WHEREAS, pursuant to Section 27 of the Rights Agreement, the Company and
the Rights Agent may from time to time supplement or amend the Rights Agreement
in accordance with the provisions of Section 27 thereof; and
WHEREAS, all acts and things necessary to make this Amendment a valid
agreement, enforceable according to its terms, have been done and performed, and
the execution and delivery of this Amendment by the Company and the Rights Agent
have been in all respects duly authorized by the Company and the Rights Agent.
NOW, THEREFORE, In consideration of the foregoing and the mutual agreements
set forth herein, the parties hereto agree as follows:
1. The first parenthetical contained in the first sentence of Subsection
(a) of Section 6 of the Rights Agreement is hereby deleted in its entirety and
replaced with the following:
"(or, following a Triggering Event, Common Stock)"
2. The second parenthetical contained in the first sentence of Subsection
(a) of Section 7 of the Rights Agreement is hereby deleted in its entirety and
replaced with the following:
"(or Common Stock)"
3. The first parenthetical contained in the first sentence of Subsection
(c) of Section 7 of the Rights Agreement is hereby deleted in its entirety and
replaced with the following:
"(or Common Stock)"
4. The last sentence of Subsection (c) of Section 7 of the Rights
Agreement is hereby deleted in its entirety and replaced with the following:
"In the event that the Company is obligated to issue other securities
(including Common Stock) of the Company pursuant to Section 11(a) of hereof, the
Company will make all arrangements necessary so that such securities are
available for distribution by the Rights Agent, if and when appropriate."
5. Subsection (a)(ii) of Section 11 of the Rights Agreement is hereby
deleted in its entirety and replaced with the following:
"(ii) Subject to Section 24 of the Agreement, in the event that any Person
(other than the Company, any Subsidiary of the Company, any employee benefit
plan of the Company or of any Subsidiary of the Company, or any Person or entity
organized, appointed or established by the Company for or pursuant to the terms
of any such plan), alone or together with its Affiliates and Associates, shall,
at any time after the Rights Dividend Declaration Date, become an Acquiring
Person, unless the event causing such Person to become an Acquiring Person is an
acquisition of shares of Common Stock pursuant to a cash tender offer made
pursuant to Section 14(d) of the Exchange Act for all outstanding shares of
Common Stock (other than shares of Common Stock beneficially owned by the person
making the offer or by its Affiliates or Associates) at a price and on terms
determined by at least a majority of the Outside Directors prior to a Person
(other than the Company, any Subsidiary of the Company, any employee benefit
plan of the Company or of any Subsidiary of
<PAGE> 2
the Company, or any Person or entity organized, appointed or established by the
Company for or pursuant to the terms of any such plan), alone or together with
its Affiliates and Associates, becoming an Acquiring Person, after receiving
advice from one or more investment banking firms, to be (a) at a price which is
fair to stockholders (taking into account all factors which such members of the
Board deem relevant including, without limitation, prices which could reasonably
be achieved if the Company or its assets were sold on an orderly basis designed
to realize maximum value) and (b) otherwise in the best interests of the Company
and its stockholders, proper provision shall be made so that each holder of a
Right (except as provided below and in Section 7(e) hereof) shall thereafter
have the right to receive, upon exercise thereof at the then current Purchase
Price in accordance with the terms of this Agreement, in lieu of a number of one
one-hundredths of a share of Preferred Stock, such number of shares of Common
Stock of the Company as shall equal the result obtained by (x) multiplying the
then current Purchase Price by the then number of one one-hundredths of a share
of Preferred Stock for which a Right was or would have been exercisable
immediately prior to the first occurrence of a Section 11(a)(ii) Event, whether
or not such Right was then exercisable, and (y) dividing that product (which,
following such first occurrence, shall thereafter be referred to as the
"Purchase Price" for each Right and for all purposes of this Agreement) by 50%
of the current market price per share of Common Stock (determined pursuant to
Section 11(d) hereof) on the date of such first occurrence."
6. Subsection (a)(iii) of Section 11 of the Rights Agreement is hereby
deleted in its entirety and replaced with the following:
"In the event that there shall not be sufficient Common Stock issued but
not outstanding or authorized but unissued to permit the exercise in full of the
Rights in accordance with the foregoing subparagraph (ii), the Company shall
take all such action as may be necessary to authorize additional Common Stock
for issuance upon exercise of the Rights. In the event the Company shall, after
good faith effort, be unable to take all such action as may be necessary to
authorize such additional Common Stock, the Company shall substitute, for each
share of Common Stock that would otherwise be issuable upon exercise of a Right,
a number of shares of Preferred Stock or fraction thereof such that the current
per share market price of one share of Preferred Stock multiplied by such number
or fraction is equal to the current per share market price of one share of
Common Stock as of the date of issuance of such shares of Preferred Stock or
fraction thereof."
7. Subsection (o) of Section 11 of the Rights Agreement is hereby amended
by deleting the reference contained therein to "the Distribution Date" and
replacing such reference with the phrase "any Person shall become an Acquiring
Person."
8. Section 23 of the Rights Agreement is hereby deleted in its entirety and
replaced with the following:
(a) The Board of Directors of the Company may, at its option, at any
time prior to such time as any Person becomes an Acquiring Person, redeem
all but not less than all the then outstanding Rights at a redemption price
of $.01 per Right, appropriately adjusted to reflect any stock split, stock
dividend or similar transaction occurring after the date hereof (such
redemption price being hereinafter referred to as the "Redemption Price");
provided, however, that, if the Board of Directors authorizes redemption of
the Rights in the following circumstance, then there must be Continuing
Directors then in office and such authorization shall require the
concurrence of a majority of such Continuing Directors: such authorization
occurs on or after the date of a change (resulting from a proxy or consent
solicitation effected in compliance with applicable law and regulations) in
a majority of the directors in office at the commencement of such
solicitation if any Person who is a participant in such solicitation has
stated (or, if a majority of the Board of Directors of the Company has
determined in good faith) that such Person (or any of its Affiliates or
Associates) intends to take, or may consider taking, any action which would
result in such Person becoming an Acquiring Person or which would cause the
occurrence of a Triggering Event unless, concurrently with such
solicitation, such Person (or one or more of its Affiliates or Associates)
is making a cash tender offer pursuant to a Schedule 14D-1 (or any
successor form) filed with the Securities and Exchange Commission for all
outstanding shares of Common Stock not beneficially owned by such Person
(or by its Affiliates or Associates). The redemption of the Rights by the
Board of
2
<PAGE> 3
Directors may be made effective at such time, on such basis and with such
conditions as the Board of Directors in its sole discretion may establish.
(b) Immediately upon the action of the Board of Directors of the
Company ordering the redemption of the Rights pursuant to paragraph (a) of
this Section 23, and without any further action and without any notice, the
right to exercise the Rights will terminate and the only right thereafter
of the holders of Rights shall be to receive the Redemption Price. The
Company shall promptly give public notice of any such redemption; provided,
however, that the failure to give, or any defect in, any such notice shall
not affect the validity of such redemption. Within 10 days after such
action of the Board of Directors ordering the redemption of the Rights, the
Company shall mail a notice of redemption to all the holders of the then
outstanding Rights at their last addresses as they appear upon the registry
books of the Rights Agent or, prior to the Distribution Date, on the
registry books of the transfer agent for the Common Stock. Any notice which
is mailed in the manner herein provided shall be deemed given, whether or
not the holder receives the notice. Each such notice of redemption will
state the method by which the payment of the Redemption Price will be made.
Neither the Company nor any of its Affiliates or Associates may redeem,
acquire or purchase for value any Rights at any time in any manner other
than that specifically set forth in this Section 23 or in Section 24
hereof, and other than in connection with the purchase of Common Stock
prior to the Distribution Date.
9. The following sentence shall be added at the end of Subsection (a) of
Section 24 of the Rights Agreement:
"Notwithstanding the foregoing, the Board of Directors shall not be
empowered to effect such exchange at any time after any Person (other than the
Company, any Subsidiary of the Company, any employee benefit plan of the Company
or any such Subsidiary, or any Person or entity holding Common Stock for or
pursuant to the terms of any such plan), together with all Affiliates and
Associates of such Person, becomes the Beneficial Owner of 50% or more of the
Common Stock then outstanding."
10. The following sentence shall be added at the end of Subsection (c) of
Section 24 of the Rights Agreement:
"In the event the Company shall, after good faith effort, be unable to
take all such action as may be necessary to authorize such additional
shares, the Company shall substitute, for each Common Share that would
otherwise be issuable upon exchange of a Right, a number of Preferred
Shares or fraction thereof such that the current per share market price of
one Preferred Share multiplied by such number or fraction is equal to the
current per share market price of one Common Share as of the issuance of
such Preferred Shares or fraction thereof."
11. Section 27 of the Rights Agreement is hereby amended by adding the
following proviso at the end of the first sentence thereof:
"; provided, further, that from and after such time as any Person
becomes an Acquiring Person, this Agreement shall not be amended in any
manner which would adversely affect the interests of the holders of
Rights."
12. Capitalized terms used but not defined herein shall have the meanings
ascribed thereto in the Rights Agreement.
13. This Amendment to the Rights Agreement shall be deemed to be a contract
made under the laws of the State of Delaware and for all purposes shall be
governed by and construed in accordance with the laws of such State.
14. This Amendment to the Rights Agreement may be executed in any number of
counterparts. It shall not be necessary that the signature of or on behalf of
each party appears on each counterpart, but it shall be sufficient that the
signature of or on behalf of each party appears on one or more of the
counterparts. All counterparts shall collectively constitute a single agreement.
3
<PAGE> 4
15. Except as expressly set forth herein, this Amendment to the Rights
Agreement shall not by implication or otherwise alter, modify, amend or in any
way affect any of the terms, conditions, obligations, covenants or agreements
contained in the Rights Agreement, all of which are ratified and affirmed in all
respects and shall continue in full force and effect.
16. If any term, provision, covenant or restriction of this Amendment to
the Rights Agreement is held by a court of competent jurisdiction or other
authority to be invalid, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions of this Amendment to the Rights
Agreement, and of the Rights Agreement, shall remain in full force and effect
and shall in no way be affected, impaired or invalidated.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed and attested, all as of the date and year first above written.
<TABLE>
<S> <C>
Attest: EXIDE ELECTRONICS GROUP, INC.
By: By:
Name: Name:
Title: Title:
Attest: FIRST UNION NATIONAL BANK OF
NORTH CAROLINA
By: By:
Name: Name:
Title: Title:
</TABLE>
4
