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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________________
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended March 31, 1997
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OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from ___________ to __________
Commission file Number 1-11263
Exide Corporation
(Exact name of registrant as specified in its charter)
Delaware 23-0552730
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
1400 N. Woodward Avenue
Bloomfield Hills, Michigan 48304
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (248) 258-0080
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of each class which registered
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Common Stock, $.01 par value New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
NONE
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No .
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
. Aggregate market value of the voting stock held by non-affiliates of the
registrant as of June 26, 1997 was approximately $396,000,000.
. 21,336,067 outstanding shares of the Registrant's common stock as of June 26,
1997.
(DOCUMENTS INCORPORATED BY REFERENCE)
Portions of the Proxy Statement relating to the Annual Meeting of Stockholders
to be held August 12, 1997, are incorporated into Part III of this report.
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EXIDE CORPORATION
TABLE OF CONTENTS
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PART I
Item 1 Business 1
Item 2 Properties 16
Item 3 Legal Proceedings 18
Item 4 Submission of Matters to a Vote of Security Holders 19
PART II
Item 5 Market for Registrant's Common Equity and Related
Stockholder Matters 20
Item 6 Selected Financial Data 21
Item 7 Management's Discussion and Analysis of Financial
Condition and Results of Operations 22
Item 8 Financial Statements and Supplementary Data 28
Item 9 Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure 29
PART III
Item 10 Directors and Executive Officers of the Registrant 29
Item 11 Executive Compensation 29
Item 12 Description of Capital Stock 29
Item 13 Certain Relationships and Related Transactions 30
PART IV
Item 14 Exhibits, Financial Statement Schedules and Reports on
Form 8-K 30
SIGNATURES 32
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULES F-1
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EXIDE CORPORATION
PART I
Item 1. Business
(a) General Development of Business
The Company is a Delaware corporation organized in 1966 to succeed to the
business of a New Jersey corporation founded in 1888 by Thomas A Edison. The
principal executive offices of the Company are located at 1400 North Woodard
Avenue, Bloomfield Hills, Michigan 48304, telephone number (248) 258-0080.
Exide Corporation (together with its subsidiaries, "Exide" or the
"Company") is the leading manufacturer and marketer of starting, lighting and
ignition ("SLI") batteries in the world. During 1994 and 1995 through its
acquisitions of B.I.G. Batteries Group Limited ("BIG"), Sociedad Espanola del
Acumulador Tudor, S.A. ("Tudor") and Compagnie Europeenne d'Accumulateurs S.A.
("CEAc"), as well as its assumption of the customers of Gemala Battery Company
Limited ("Gemala Battery"), the Company became Europe's largest producer
and marketer of SLI batteries and industrial batteries.
Rationalization and Consolidation
The Company is currently implementing a comprehensive overall European
rationalization and consolidation strategy with respect to its recent European
acquisitions. The Company plans to lower fixed and variable production costs
through plant closings, thereby increasing capacity utilization at the remaining
plants, shifting production to lower cost areas and reducing overhead. In
conjunction with its plant closings, the Company continues to rationalize its
distribution system, reducing the number of warehouses and improving its
delivery systems. In addition, the Company is rationalizing its product range,
significantly reducing the number of stockkeeping units and improving inventory
management. The Company anticipates that this consolidation will produce
significant cost savings. Exide is also rationalizing its SLI battery brand
strategy in Europe and will concentrate its sales and marketing efforts on its
strongest brands, including Exide, Tudor, Fulmen, Sonnenschein and Hagen
Batterie.
The Company's strategy will reduce its total number of automotive and
industrial battery manufacturing facilities in Europe from 30 as of June 30,
1995 to 12 by the year 2000. To date, the Company has not experienced any
significant labor problems in its restructuring program.
The Company plans to continue rationalizing its manufacturing and
production facilities in North America as well. The Company has closed four
manufacturing facilities in North America within the last two fiscal years.
North America
Exide and its affiliates have a unit market share in SLI batteries of
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approximately 39% in the United States and Canada, based on information provided
by an industry trade association. The Company believes that it is the lowest
cost major producer in its North American markets.
The Company has realized significant cost savings through consolidations of
operations, particularly after it doubled its size by acquiring General Battery
Corporation in 1987, the installation of more efficient equipment and processes
and continued vertical integration. The Company's relatively high level of
vertical integration, through lead smelting, plastics reprocessing and separator
production, reduces the effects on Exide of changes in the market prices of raw
materials and can result in substantial raw material cost savings. In August
1995 the Company acquired Schuylkill Holdings, Inc. ("Schuylkill"), a U.S.
company that operates two secondary lead smelters. Exide continues to increase
production at its Bristol, Tennessee battery manufacturing facility, which the
Company intends to be similar to its Salina, Kansas plant, which the Company
believes is the highest volume and one of the lowest cost automotive battery
plants in the world.
For the fiscal year ended March 31, 1997, Exide's North American operations
accounted for approximately 37% of Exide's consolidated net sales.
Europe
Exide targeted the European market as an attractive opportunity because it
is the largest battery market outside of North America and because the Company
believes that its experience with rationalization and consolidation of
manufacturing and distribution operations can be successfully applied in Europe.
The Company believes the battery manufacturing industry in Europe is undergoing
rationalization and consolidation activity similar to that which has occurred in
the United States over the last twenty years. The key components of the
Company's European strategy include maintaining or improving (i) strong market
shares, (ii) broad geographic coverage, (iii) low production costs, (iv)
distribution systems, (v) strong customer relationships and (vi) experienced
management.
In implementing this strategy, the Company acquired two European battery
manufacturers in 1994 and one in 1995. In May 1995, the Company acquired 99.7%
of the stock of CEAc (subsequently increased to 100%), one of the largest SLI
producers and the largest industrial battery manufacturer in Europe, for
approximately $425.0 million in cash. In October 1994, Exide acquired for
approximately $229.0 million 89.4% (subsequently increased to 95.8%) of the
outstanding capital stock and 25% of the convertible bonds of Tudor,
headquartered in Madrid, Spain, which was the third largest lead acid battery
producer in Western Europe. In March 1994, the Company acquired BIG, an SLI
battery manufacturer based in Wales, for approximately $35.0 million. In
addition, in September 1994, the Company assumed the customers of, and began to
temporarily operate the facilities of, Gemala Battery, a battery producer based
in England. In exchange, the owner of Gemala Battery received an 18.5% interest
in the combined operations of BIG and
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Gemala Battery.
Exide is the leading manufacturer and marketer of SLI and industrial
batteries in Europe with major market presence in most European countries. The
Company believes it is one of the lowest cost, highest quality suppliers of SLI
and industrial batteries in Europe. SLI batteries and industrial batteries
accounted for approximately 52% and 43%, respectively, of the net sales of
Exide's European operations for the fiscal year ended March 31, 1997.
Approximately 70% of all automotive batteries sold in Europe are sold in the
aftermarket and approximately 71% of the automotive battery net sales of Exide's
operations in Europe during fiscal 1997 were of automotive replacement
batteries. Exide also produces SLI batteries for the European original equipment
manufacturing ("OEM") market. The Company plans to focus its SLI battery
marketing efforts on certain of its strong brands. As in the automotive market,
the Company's industrial battery brands, including Exide, Hagen Batterie, Tudor,
Fulmen, Sonnenschein, Chloride Motive Power, Magneti Marelli and BIG, are well
recognized in their markets.
The Company's European operations are vertically integrated (although to a
lesser extent than its North American operations), with four secondary lead
smelters in Europe. The Company supplies a large part of its own European needs
for plastic components.
For the fiscal year ended March 31, 1997, Exide's European operations
accounted for approximately 63% of Exide's consolidated net sales.
(b) Financial Information About Industry Segments
The Company is primarily engaged in one industry segment, namely, the
manufacture, distribution and sale of lead acid batteries and related
accessories. (See Note 17 to the Company's Consolidated Financial Statements
appearing elsewhere herein.)
(c) Narrative Description of Business
Exide is the leading manufacturer and marketer of SLI batteries in the
world. The Company's acquisitions of BIG, Tudor and CEAc, as well as its
assumption of the customers of Gemala Battery, have made it Europe's largest
producer and marketer of SLI batteries and industrial batteries.
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Products
SLI Batteries. SLI batteries for the automotive aftermarket and the OEM
market represented 67% of consolidated revenues of Exide for the fiscal year
ended March 31, 1997. In the United States and Canada, Exide has the most
complete line of automotive batteries, and the Company has introduced numerous
new products, including batteries for superior performance in hot and cold
climates, such as the Exide Heat Guard battery, the first climatized battery,
Exide maintenance-free batteries that require no watering and have an extended
shelf life and the Exide 911 Emergency Vehicle Battery that employs patented
technology to provide the high performance required for emergency vehicles. In
addition, the Company has introduced a sealed recombinant battery in Europe,
which the Company believes will present a significant opportunity as it has a
longer shelf life and is the first battery sealed in such a manner that allows
the battery to be relocated from the engine to the passenger compartment of the
vehicle.
The Company also produces SLI batteries for commercial applications, such
as trucks, farm equipment, tractors and other off-road vehicles, as well as
specialty batteries for marine and garden tractor applications. For the marine
market, Exide has introduced the Nautilus Mega Cycle high performance, dual
terminal battery and the Power Probe battery which allows boaters to instantly
check their battery power.
Industrial Batteries. Sales of industrial batteries represented 27% of
consolidated revenues of Exide for the fiscal year ended March 31, 1997. Exide
is the largest manufacturer and marketer in Europe of industrial batteries.
Standby (also known as "stationary") batteries are used primarily in
telecommunications, as well as electric installations, security and emergency
systems, such as for airports and hospitals, and uninterruptible power systems.
Exide is one of Europe's leading suppliers of submarine batteries and its
customers include the navies of Norway, Israel, Turkey, Sweden, Greece, Germany
and Spain. Exide's European operations have developed the Dry Safe line of
maintenance-free standby batteries, an improvement over existing sealed
batteries. Traction batteries are used to drive electric vehicles such as
forklifts and mine locomotives. The traction battery market is divided into the
OEM market, comprised of the manufacturers of electric vehicles, and the
replacement market, which includes large users of electric vehicles as well as
OEM dealer networks.
In 1991 Exide sold its North American industrial battery product line to
Yuasa-Exide, Inc. ("YEI"), an entity in which the Company has a 13.5% interest.
YEI, which is a leading manufacturer of industrial batteries in North America,
supplies the Company with motorcycle batteries built to Exide's specifications.
Other Products. Sales of products other than SLI and industrial batteries
represented 6% of consolidated revenues of Exide for the fiscal year ended March
31, 1997. The Company also produces battery chargers and has expanded its
presence in the North American automotive market by adding its Speed Clip line
of battery related accessories and wheel weights and its Sure Start line of
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remanufactured starters and alternators. Its European operations also
manufacture and market other products such as battery chargers and accessories,
plastic components and nickel-cadmium and lithium batteries.
Markets and Marketing
North America. Over 80% of all automotive batteries sold in the United
States and Canada are sold in the aftermarket, which is the Company's principal
market. The aftermarket is influenced more by the age and number of vehicles in
service than new production levels and tends to be less cyclical than the OEM
market. In April 1994, Sears Roebuck and Co. ("Sears"), one of the largest
retailers of SLI batteries in the United States, selected the Company as the
primary supplier of its batteries, including the Die Hard brand and in June
1997, the relationship was expanded. The Company is now the principal battery
supplier to Sears and affiliated companies including Sears Auto Centers, Sears
Hardware and the new NTB National Tire and Battery stores. Exide is the leading
supplier for most of the 20 largest battery retailers in the United States,
including Sears, NAPA Distribution Centers, Kmart Corp., CSK Inc., Paccar and
The Pep Boys-Manny, Moe & Jack. The Company also produces SLI batteries for the
OEM market in North America. Customers include Chrysler Corporation, for whom
the Company is the primary battery supplier, as well as John Deere, E-Z-GO, Ford
New Holland, Mitsubishi Motor Manufacturing Company, NAVISTAR and others.
Current management, which is led by Arthur M. Hawkins, Chairman,
President and Chief Executive Officer, who joined Exide in 1985, has transformed
the Company into a marketing-driven business by developing a new customer base
focused on leading mass-merchandisers, auto supply chains and wholesalers and
introducing merchandise displays, innovative packing and programs to assist
customers in marketing and inventory management. To support and expand this
customer base, Exide has expanded its Company-owned distribution system from 12
wholesale branch outlets in 1985 to approximately 130 today. These outlets,
which distribute Exide batteries to both large accounts and local dealers and
other small volume customers, also allow Exide to collect used batteries for
recycling in the Company's lead smelters as part of its recycling program aimed
at reducing costs and protecting the environment. In addition, in recent years
the Company has introduced several new products including an advanced line of
maintenance-free batteries and an emergency vehicle battery. The Company, which
markets its products under various trademarks including Exide, Willard and
Prestolite, has strengthened its brand recognition through promotional
activities, including sponsoring a NASCAR Winston Cup racing team. The Company
also produces and markets, under license from NASCAR, the Exide NASCAR Select
line of batteries and remanufactured starters and alternators. A 1992 Marketing
Research Institute study that surveyed 20,000 households showed that the Exide
brand had the second highest level of battery brand recognition in the United
States.
Europe. The Company's European revenues are diversified across many
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European countries. Approximately 52% of the sales of Exide's European
operations in fiscal 1997 were of SLI batteries. The Company has a leading
position in the aftermarket in most European countries. Exide's replacement SLI
battery brands include Fulmen, Sonnenschein, Tudor, Hagen Batterie, LYAC Power,
SONNAK, Anker, BIG and Exide. In addition to the markets in which it has a
direct presence through manufacturing subsidiaries, the Company markets
batteries in and exports batteries to approximately 50 other countries.
The Company is one of the major suppliers to Fiat S.p.A. ("Fiat"), the
Volkswagen group (Volkswagen AG/AUDI AG/Seat/Skoda Automobilova AS), the PSA
group (Peugeot S.A./Citroen), the Renault group and Volvo. By assuming the
customers of Gemala Battery, the Company is also a supplier to Ford Motor Co. in
Europe. As development supplier to the PSA group and several other automobile
manufacturers, Exide works closely with such customers as they develop new
models with varying requirements. As in the United States, OEM battery sales
are closely linked to new vehicle sales.
The Company has the leading market share in industrial batteries in
western Europe. The Company's standby batteries are used for
telecommunications, uninterruptible power supplies, security systems,
submarines, power plants, railways and miscellaneous mobile applications (such
as wheelchairs and golf carts). Major standby battery customers include
telecommunications companies and European armed forces. Major traction battery
customers in Europe include the electric vehicle operations of the Linde group
(Still GmbH, LL Fenwicks, Fiat and Lansing), Clark and Jungheinrich, and to a
wide variety of customers in the aftermarket, ranging from large industrial
concerns to small warehouses. Technical expertise and assistance and customer
service are more important in the industrial battery markets than in the SLI
battery markets and the Company has technical service agreements with a number
of its customers.
Customers. The Company has a number of major retail and OEM customers,
both in North America and Europe. No single customer accounted for more than
10% of consolidated net sales. The Company does not believe that a material
part of its business is dependent upon a single customer the loss of which would
have a material impact on the long-term business of the Company. However, the
loss of one or more of the Company's largest customers would have a negative
short-term impact on the Company's results of operations.
Distribution Networks
North America. As part of its program to improve its customer base and
its service to such customer base, the Company has developed a network of over
130 Company-owned wholesale distribution outlets throughout the United States
and Canada that sell and distribute Exide batteries to local auto part
retailers, service stations, local repair shops and other smaller volume
customers as well as collect used and spent batteries for recycling in the
Company-owned lead smelters. The
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Company's wholesale outlet distribution system has grown to constitute the third
largest distribution system of SLI batteries in the United States. The
development of its wholesale outlet distribution system, which is supplemented
by regional accounts, small battery wholesalers and battery specialists, has
been a key component in the Company's success and has enabled the Company to
provide cost effective product distribution to the Company's national accounts.
Europe. Exide's European operations distribute their aftermarket SLI
batteries primarily through battery wholesalers, OEM dealer networks,
hypermarkets, European purchasing centers and oil companies, although on a
country by country basis distribution strategy varies greatly. Battery
wholesalers sell and distribute batteries to a network of automotive parts
retailers, service stations, independent retailers and supermarkets throughout
Europe. Wholesalers, who sell to repair shops and service stations, and OEM
dealers represent the large majority of this market, but supermarket chains,
replacement part stores (who are represented by purchasing associations) and
hypermarkets have become increasingly important. The Company's distribution
network will be enhanced as certain manufacturing facilities closed pursuant to
the ongoing rationalization and consolidation are converted to use as
distribution centers.
Given the importance of service and technical assistance, Exide's
European operations generally ship standby batteries directly to system
suppliers and uninterruptible power supply manufacturers who include the standby
batteries in the equipment and distribute products to end users. Traction
batteries are distributed through OEM dealers, independent distributors and
directly to large fleet users. Exide's European operations also distribute both
standby and traction batteries through their own branch network. Exide has
begun a restructuring of its distribution network to better serve the mass
merchandising segment and currently plans to reduce the number of its warehouse
outlets and subcontract the rest of its company-owned distribution operations.
Research and Development; Quality
In North America, Exide has increased its number of engineers from just 2
in 1985 to 68 today. This commitment to research and development has allowed
the Company to introduce more new products in the last five years than the rest
of the domestic SLI battery industry combined, including the NASCAR Select line
featuring superior performance and durability characteristics. Exide has
received over 100 new patents since 1985 and is now working on the next
generation of power solutions. The Company's presence in the North American OEM
markets for automobiles and commercial vehicles, particularly its close working
relationship with Chrysler Corporation, helps it to remain current with
technological innovations. Similarly, Exide through its European operations,
devotes substantial efforts to research and development and benefits from its
appointment as development supplier to several major automobile manufacturers.
The Company has received the maximum research
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and development rating from the PSA group and similar ratings from most of the
other European automobile companies it serves. For the SLI market, Exide is
developing lighter batteries which will result in lower fuel consumption and
recently developed a new line of very low maintenance batteries with higher
starting power. With respect to industrial batteries, Exide has focused on
improving efficiency and reducing maintenance.
Exide continues to devote substantial efforts to research and development
for batteries for electric cars and other vehicles. These efforts include not
only research with lead acid batteries but also more exotic battery technologies
such as lithium ion. The Company participated in the development of an electric
vehicle which has set various speed and endurance records and was demonstrated
at the 1994 Indianapolis 500. The Company is participating in electric vehicle
battery research projects funded by the European Union and a consortium of
battery manufacturers and by the Spanish Ministry of Industry and Energy. The
Company is also running a demonstration fleet in conjunction with the Tennessee
Valley Authority ("TVA").
Exide's performance and product quality has been widely recognized by its
customers. In recent years, in the United States, Exide has received the
"Desert Storm" Commendation from the United States military, Carport Vendor of
the Year Award, Chrysler Quality Excellence Award, Chrysler Preferred Supplier
Evaluation, Ford Q1 Award, Navistar QA 7 Award, NAPA Excellence Through
Performance Award, Kmart Innovation of Products and Marketing Award, Quality
Stores Vendor of the Year, and the ADAP Stores Vendor of the Year. An
independent testing laboratory of national repute subjected SLI batteries in the
North American market to rigorous tests designed to simulate conditions that
those batteries would experience in actual use. The reported results of those
tests indicated that Exide's batteries were superior to the other batteries
tested.
For 1997, Exide's quality systems have achieved another milestone by being
recognized for its compliance to QS-9000 standards.
Exide's European operations have received awards for quality automotive
OEM production, including the Formel Q and Most Value to Customer awards from
Volkswagen, and one of the Company's batteries was chosen as the best
replacement battery in France in a study conducted by Auto Plus, a French
automobile magazine. In the industrial market, the Company's standby batteries
have received quality approval certificates from such major telecommunications
companies as the Deutsches Bundespost Telekom and from European defense
organizations. Many of the Company's European facilities have been recognized
for meeting ISO standards.
Manufacturing, Raw Materials and Suppliers
North America. The major reasons for the Company's emergence as the low-
cost producer in the United States and Canadian automotive battery industry have
been the achievement of economies of scale through strategic acquisitions, the
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consolidation of facilities, the Company's relatively low labor costs and
increased vertical integration in the areas of lead smelting, plastics and
battery separators. Since 1985 and following the acquisition of General Battery
in May 1987, the Company consolidated the operations of seven plants and eight
distribution centers into larger, more efficient locations with lower labor
costs. This has led to a significant reduction in unit costs and improved labor
productivity. The Company also is a leader in developing advanced production
techniques, such as continuous plate processing, statistical process control and
computer-aided design and manufacturing. The Company's manufacturing plant in
Salina, Kansas is the highest volume and one of the lowest cost automotive
battery plants in the world. The Company continues to increase production at its
manufacturing facility in Bristol, Tennessee, a modern, highly efficient battery
manufacturing plant similar to the Company's Salina, Kansas facility.
Exide believes its overall unit conversion costs (production costs other
than raw materials) are significantly below the conversion costs of its major
United States and Canadian competitors. These cost efficiencies result from the
Company's high volume of production, emphasis on cost control and competitive
labor costs. The Company's relatively high level of vertical integration
reduces the effects of changes in the market prices of raw materials on
production costs and, when lead market prices are higher, may result in
substantial raw material cost savings. Lead is the principal raw material in
the manufacture of batteries, representing approximately one-third of the cost
of goods sold. The Company can obtain substantially all of its lead
requirements through the operation of four secondary lead smelters, which
reclaim lead by recycling spent lead-acid batteries. Prior to its acquisition
of two such smelters in August 1995 through its purchase of Schuylkill, the
Company was purchasing a larger portion of its lead requirements, making the
cost of its batteries more sensitive to lead price changes. The Company obtains
batteries for recycling from its customers and through its wholesale
distribution outlet system. Exide obtains the balance of its lead from a number
of suppliers. The Company believes it has a significant competitive advantage
from its in-house lead smelting and from back hauling of spent batteries for
recycling through its distribution network and wholesale distribution outlets.
When lead market prices decline, the Company's lead cost advantage from vertical
integration can be reduced or eliminated. Because Exide adjusts its pricing to
a substantial number of customers pursuant to a formula based on a published
price of lead, if market prices were to decline below the Company's lead
production cost for an extended period of time, the Company could be forced to
obtain more of its requirements from third parties.
The Company also produces most of its U.S. plastic molding requirements
utilizing plastic obtained through in-house reclamation of spent battery cases
as part of its recycling program.
Other key raw materials and components in the production of batteries
include separators, lead oxide and chemicals, all of which are generally
available from multiple sources. The Company currently produces substantially
all of its North
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American requirements of battery separators. The Company has not experienced any
material stoppage or slowdown in production as a result of the unavailability,
or delays in the availability, of raw materials.
Europe. The Company operates manufacturing plants in France, Italy, Spain,
Portugal, Germany, the United Kingdom and elsewhere in Europe. Through CEAc's
investment in Turkey and its acquisition in Poland, and Tudor's investment in
India, the Company has a presence in Eastern Europe and Asia as well.
Exide has four secondary lead smelters in Europe that supply approximately
32% of its lead requirements (with a plan to bring that figure to 50% by the
year 2000). The Company's European operations are affected by changes in lead
prices more than its North American operations because European operations are
less vertically integrated and do not always have the benefit of contract
provisions that automatically pass lead price increases through to customers to
the extent of the North American business. Major investments have been made in
these plants in recent years to improve lead treatment and recycling processes.
The Company produces most of its own plastic components.
The Company is implementing a cohesive overall European rationalization and
consolidation strategy with respect to its European acquisitions. The Company is
in the process of lowering fixed and variable production costs through plant
closings, thereby increasing capacity utilization at the remaining plants,
shifting production to lower cost areas and reducing overhead. In conjunction
with its plant closings, the Company is rationalizing its distribution system,
reducing the number of warehouses and improving its delivery systems. In
addition, the Company is reducing administrative expenses by eliminating
duplicate functions and services and plans to rationalize its product range,
significantly reducing the number of stockkeeping units and improving inventory
management. The Company anticipates that this consolidation and rationalization
will produce significant cost savings.
Competition
North America. The United States and Canadian market for SLI and
specialty batteries is mature and highly competitive. Battery manufacturers
compete primarily on the basis of price, quality, service, warranty period and
timeliness of delivery. Generally, sales are made without long-term contracts.
Because the domestic industry has had excess capacity, competition and increased
pressure for cost reduction from SLI battery customers in the SLI aftermarket
and from automotive OEMs and other customers in the OEM markets for SLI
batteries have resulted in declining prices in the last several years and some
smaller competitors were unable to survive.
The Company's primary domestic competitors are Johnson Controls, Inc.,
Delco Remy (a division of General Motors Corporation) and GNB Incorporated (a
subsidiary of Pacific Dunlop, Ltd.). Regional manufacturers are also
significant,
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accounting for approximately 13% of the United States market.
Europe. The SLI and industrial battery markets are very competitive and
competition intensified as a result of reduced demand due to the recent European
recession. As in the North American SLI and industrial battery market, European
manufacturers compete primarily on the basis of price, quality, service,
warranty period and timeliness of delivery. The excess capacity in the industry
and competition and increased pressure for cost reduction from large customers
in both the SLI and industrial battery markets have resulted in declining prices
in previous years. However, during fiscal 1997, this trend has been reversed due
to significantly higher lead costs. Currency fluctuations among the European
countries can have considerable competitive effects. Among Exide's competitors
in Europe are VB Autobatterie GmbH ("Varta/Bosch"), Hawker Batteries, Fiamm,
Delco Remy, Autosil, Hoppecke, Yuasa and Matsushita.
Backlog
The Company does not have a material amount of backlog orders.
Employees
North America. As of March 31, 1997, the Company employed approximately
1,550 salaried employees and approximately 4,480 hourly employees in North
America. Approximately 43% of such salaried employees are engaged in sales,
service and marketing and approximately 45% in manufacturing and engineering.
Approximately 31% of its hourly employees are represented by unions. Relations
with the unions are generally good. Contracts covering approximately 721 and 494
of the Company's union employees expire in fiscal 1998 and 1999, respectively,
and the remainder thereafter.
Europe. As of March 31, 1997, the Company employed approximately 3,523
salaried employees and approximately 6,261 hourly employees in Europe.
Approximately 17% of such salaried employees are engaged in sales, service and
marketing and approximately 63% in manufacturing and engineering. The Company's
hourly employees are generally represented by unions. Relations with the unions
are generally good. Contracts covering the Company's European union employees
expire on various dates through 1999.
Trademarks and Patents
The Company owns or has a license to use various trademarks which are of
value in the conduct of its business. Illustrative of the licenses the Company
enters into is a recent agreement with the National Association for Stock Car
Auto Racing, Inc. ("NASCAR(C)") pursuant to which Exide has the exclusive rights
to market batteries and related accessories bearing the NASCAR name and logo.
The Company has launched a program to market a line of very high quality
batteries and accessories bearing the name NASCAR Select. The initial market
acceptance of these products is most encouraging. While the Company believes
such trademarks and trade names enhance the brand recognition of its products
and therefore are important to its business, the Company also believes that its
products, engineering
11
<PAGE>
skills, reputation for quality and relationships with its customers are equally
important for the maintenance and growth of its business. An unaffiliated firm
has rights to the Exide mark in approximately 37 foreign countries. In addition,
Exide Electronics Group, Inc., an unaffiliated company, is licensed to use the
Exide name on certain devices.
Exide has been issued many patents worldwide, some of which are active,
with several additional patents in process covering design of lead acid
batteries and battery manufacturing equipment. While the Company believes that
patents are important to its business operations, it also believes that the loss
of any single patent or several patents would not have a material adverse effect
on the Company.
Environmental, Health and Safety Matters
North America. The Company, particularly as a result of its manufacturing
and secondary lead smelting operations, is subject to numerous environmental
laws and regulations and is exposed to liabilities and compliance costs arising
from its past and current handling, processing, recycling, storing and disposing
of hazardous substances and hazardous wastes. The Company's operations are also
subject to federal, state and provincial occupational safety and health laws and
regulations, particularly relating to the monitoring of employee health. Except
as disclosed herein, the Company believes that it is in substantial compliance
with all material environmental, health and safety requirements.
The Company has been advised by the EPA and various state agencies that
it is a PRP under CERCLA or similar state laws at 54 federally defined Superfund
or state equivalent sites. At 31 of these sites, the Company has either paid or
is in the process of paying its share of liability. Other than the sites
specifically discussed below, the Company's obligations are not expected to be
significant because its portion of any potential liability appears to be minor
to insignificant in relation to the total liability of all PRP's that have been
identified and which are viable. The Company's share of the anticipated
remediation costs associated with all of the Superfund sites where it has been
named a PRP, which share is based on the Company's estimated volumetric
contribution to each site, is included in the environmental remediation reserves
discussed below.
Because the Company's liability for environmental remediation costs under
such statutes may be imposed on a joint and several basis, the Company's
liability may not necessarily be based on volumetric contributions and could be
greater than the Company's estimates. Management believes, however, that its PRP
status at these Superfund sites will not have a material adverse effect on the
Company's business or financial condition because, based on the Company's
experience, it is reasonable to expect that liability will be roughly
proportionate to its volumetric contribution of waste to the sites.
The Company has greater than 50% liability at only one Superfund site.
The
12
<PAGE>
Company recently paid its share at another site where it was a primary PRP,
discussed below. Other than these sites, the Company's volumetric contribution
exceeds 5% at only five Superfund sites at which the Company's share of
liability has not been paid as of March 31, 1997. The current volumetric
contribution at these five sites averages 12.8%. At all other sites, the
Company's volumetric contribution is currently estimated to be less than 5% of
the total waste at the site. However, in some instances the Company's volumetric
share of the waste at a site is not the sole determinant of the Company's share
of the remediation costs because some PRPs are unable to fund their allotted
share and the shortfall is divided among the viable PRPs. Management believes,
however, that its PRP status at these Superfund sites will not have a material
adverse effect on the Company's business or financial condition because, based
on the Company's experience, it is reasonable to expect that the liability will
be roughly proportionate to its volumetric contribution of waste to the site.
The Brown's Battery site, located in Pennsylvania, was operated by third
party owners in the 1960's and early 1970's. EPA completed its study of this
site and issued a final Record of Decision ("ROD") in 1992. The ROD provides two
alternative remedies, one which employs an innovative technology advocated by
the Company which has not yet been used for lead remediation on a production
volume basis, and one which employs a tested and accepted stabilization
technology. EPA sued the Company and the District Court held the Company liable
for the site cleanup. To avoid additional litigation expense, the Company signed
a consent decree to remediate the site with EPA and paid $3.0 million of EPA's
$6.5 million past costs.
The Company was the primary PRP at the Wortham Lead Salvage State Superfund
Site, located in Mabank, Texas, another site that was owned and operated by
third parties. The Company remediated the Wortham site at a cost of $.4 million.
The Company has completed the field work in the first quarter of fiscal 1998 and
is awaiting final approval from the Texas Natural Resources Conservation
Commission. No significant future costs are expected for this site.
The Company is also involved in the assessment and remediation of various
other properties, including certain Company owned or operated facilities. Such
assessment and remedial work is being conducted pursuant to a number of state,
federal and provincial environmental laws and with varying degrees of
involvement by state, federal and provincial authorities. Where reasonably
estimable, the costs of such projects have been accrued in reserves established
by the Company, as discussed further below. In addition, certain environmental
matters concerning the Company are pending with regulatory agencies.
While the ultimate outcome of the foregoing environmental matters is
uncertain, after consultation with legal counsel, management does not believe
the resolution of these matters will have a material adverse effect on the
Company's business or financial condition. The Company's policy is to accrue for
environmental costs when it is probable that a liability has been incurred and
the amount of such liability
13
<PAGE>
is reasonably estimable. While the Company believes its current estimates of
future remediation costs are reasonable, future findings or changes in estimates
could have a material effect on the recorded reserves.
Pursuant to a refinancing, the Company agreed with a former holder of its
preferred stock which had sold the Company a portion of its business to provide
certain environmental management services relating to twelve landfills and other
sites not operated by the Company at which lead contamination by such businesses
and others is alleged and to indemnify such holder from certain potential
environmental liabilities relating to such sites. The Company established an
additional environmental reserve of $6.0 million with respect to this liability,
which the Company believes is adequate.
The Company has established reserves for onsite and offsite environmental
remediation costs and believes that such reserves are adequate. These reserves
consist of amounts accrued for active Company facilities, closed facilities, and
specifically for 11 of the Superfund sites. Because environmental liabilities
are not accrued until liability is determined to be probable and reasonably
estimable, not all potential future environmental liabilities have been included
in the Company's environmental reserves and, therefore, additional earnings
charges are possible.
In 1993, the CNA Insurance Companies ("CNA") filed a declaratory judgement
action in the Superior Court of Delaware, in Wilmington, Delaware. In the
lawsuit, Continental Casualty Company, et al. v. General Battery Corporation, et
al., (the "CNA Action") CNA sought to have the court determine that CNA owed no
duty to defend or reimburse General Battery Corporation, Dixie Metals Company
and certain other Exide subsidiaries for costs of defending environmental
actions against those companies and for response costs, property damage and
bodily injury claims arising from environmental conditions allegedly caused,
suffered or allowed by those companies. In addition to suing the Company, the
CNA Action named Northwest Industries, Fruit of the Loom and over 75 other
insurance companies as defendants.
The Company has reached settlements with all but one of its insurers with
respect to the Company's environmental liabilities. The Company does not
currently maintain environmental impairment liability insurance in light of the
unavailability of meaningful coverage and the prohibitive cost of obtaining even
limited coverage.
The Company has taken an active role in addressing environmental issues
associated with its business and has a staff of more than 70, not including
consultants, focusing on environmental, safety and health matters. The Company
maintains numerous permits with the EPA, various state agencies and provincial
regulatory authorities which allow the Company to transport, store and recycle
spent lead acid batteries, lead-bearing hazardous wastes and certain other
hazardous wastes in the United States.
To protect the environment, minimize future liability and help ensure a
stable supply of lead to its battery manufacturing facilities, the Company has
developed a
14
<PAGE>
comprehensive materials recycling program. Under this program, the Company
obtains spent lead-acid batteries through its wholesale distribution outlet
system and lead-bearing materials from third parties. These materials are
transported to the Company's secondary lead smelting facilities. Batteries are
separated at the smelters into three constituent units: lead, dilute sulfuric
acid and plastic casing material. The lead is reclaimed and refined into lead
alloys for use at the Company's battery manufacturing facilities. The plastic
from battery cases is broken into pieces and extruded into pellets by adding
strengtheners and other additives. The pellets are then used at the Company's
battery casing molding facility to make new battery cases. The dilute sulfuric
acid solution is neutralized and discharged in accordance with federal, state
and provincial permits. The Company is investigating methods of recycling spent
battery acid.
Europe. With regard to its overseas operations, the Company is subject to
numerous environmental, health and safety requirements and is exposed to
differing degrees of liabilities and compliance costs arising from its past and
current manufacturing and recycling activities. The laws and regulations
applicable to such activities differ from country to country and also
substantially differ from United States laws and regulations. Except as
disclosed herein, the Company believes, based upon reports from its foreign
subsidiaries and/or independent qualified opinions, that it is in substantial
compliance with all material environmental, health and safety requirements in
each country. The Company believes it has adequate reserves for environmental
remediation costs in Europe. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations-Future Environmental
Developments."
Certain facilities in France, Poland and Spain are not in compliance with
certain limits contained in air and wastewater treatment discharge permits. In
every case, the Company is working cooperatively with appropriate authorities to
come into compliance. It is possible that the Company could be subject to fines
or penalties with regard to these violations, although management believes any
such fines/penalties will not be material. The cost to upgrade the facilities to
attain compliance is not expected to be material. The subject violations are not
expected to interfere with continued operations in the subject facilities.
CEAc's German subsidiary, Sonnenschein, GmbH, has signed a consent order
with the administrative enforcement authorities to complete remediation of a
river which flows along the lead-acid battery manufacturing facility in
Budingen, Germany. That cleanup is proceeding and CEAc has established a reserve
to cover the cost of completing the project; the Company does not expect the
cost of such remediation to be material.
The Company's Polish subsidiary, Centra, is a former state-owned entity.
Under the sales agreement with the Polish State Treasury, the Company is
obligated to spend $1.0 million per annum in capital improvements in
environmental controls at the Centra facilities. The funds needed to cover this
commitment are included in CEAc's capital budget. Management believes that these
funds will be needed to
15
<PAGE>
ensure compliance with anticipated new air regulations in Poland.
The Company expects that its overseas operations will continue to incur
capital and operating expenses in order to maintain compliance with evolving
environmental, health and safety requirements or more stringent enforcement of
existing requirements in each country. In addition, accelerated consolidation
of Exide's European operations could increase its expenditures. See Note 13 of
Notes to the Company's Consolidated Financial Statements appearing elsewhere
herein.
(d) Financial Information About Foreign and Domestic Operations and Export
Sales
See Note 17 of Notes to the Company's Consolidated Financial Statements
appearing elsewhere herein.
Item 2. Properties
The chart below lists the location of the principal facilities of the
Company. All of the facilities are owned unless otherwise indicated. In North
America, all of such owned properties and the leases for the leased properties
are subject to liens under the Credit Agreement. The leases for leased
facilities expire at various dates through 2015. In addition to these
properties, Tudor holds a portfolio of undeveloped land totaling approximately
39 acres of which it divests portions from time to time.
<TABLE>
<CAPTION>
Approximate
Location Square Footage Use
- -------------------- --------------------- --------------------------------
<S> <C> <C>
North America:
Auburn Hills, MI 5,000 (leased) OEM Engineering and Sales
Baton Rouge, LA 176,000 Secondary Lead Smelting
Bloomfield Hills, MI 10,000 (leased) Executive Offices
Bristol, TN 120,000 (leased) Automotive Accessory Manufacturing
Bristol, TN 510,000 (leased) Battery Manufacturing
Burlington, IA 189,000 Battery Manufacturing
Cannon Hollow, MO 120,000 Secondary Lead Smelting
Cooper, TX 30,000 (leased) Starter and Alternator Manufacturing
Corydon, IN 161,000 Separator Manufacturing
Drummondville, 72,000 Distribution Center
Quebec, Canada
Frankfort, IN 211,000 Distribution Center
Hamburg, PA 30,000 Distribution Center
Indianapolis, IN 135,000 Starter and Alternator Manufacturing
Lampeter, PA 82,000 Battery Plastics Manufacturing
Logansport, IN 197,000 Battery Manufacturing
Manchester, IA 240,000 Battery Manufacturing
Maple, Ontario, Canada 169,000 Distribution and Administration
Muncie, IN 174,000 Secondary Lead Smelting
</TABLE>
16
<PAGE>
<TABLE>
<CAPTION>
Approximate
Location Square Footage Use
- ------------------- -------------------- -------------------------------
<S> <C> <C>
North Bay, Ontario, 30,000 Battery Charger Manufacturing
Canada
Reading, PA 72,000 Engineering and Research and
Development
Reading, PA 125,000 Secondary Lead Smelting and Poly
Reprocess
Reading, PA 15,000 (leased) Technical Center
Reading, PA 135,000 Administrative Offices
Reading, PA 280,000 Battery Manufacturing
Reading, PA 77,000 Distribution Center
Salina, KS 260,000 (leased) Battery Manufacturing
Salina, KS 100,000 Distribution Center
Sumner, WA 56,000 (leased) Distribution Center
Europe and Other:
Florival, Belgium 290,000 Distribution Center
Herlev, Denmark 15,000 Executive Offices
Witham Essex, England 20,000 (leased) Executive Offices
Bristol, England 5,000 Warehouse
Over Hulton, England 279,000 Industrial Battery Manufacturing
Vantaa, Finland 133,000 (leased) Administration
Auxerre, France 176,000 SLI Battery Manufacturing
Gennevilliers, France 55,000 Executive Offices
Nanterre, France 169,000 SLI Battery Manufacturing
Nimes, France 120,000 SLI Battery Manufacturing
Perrone, France 96,000 Battery Plastics Manufacturing
Pont Ste Maxence, 71,000 Secondary Lead Smelting
France
Vierzon, France 174,000 Industrial Battery Manufacturing
Budingen, Germany 258,000 Industrial Battery Manufacturing
Budingen, Germany 15,000 Lithium Cells Manufacturing
Kassel, Germany 212,000 Distribution Center
Soest, Germany 386,000 Industrial Battery Manufacturing
Weiden, Germany 208,000 Industrial Battery Manufacturing
Schimitari, Greece 69,000 SLI Battery Manufacturing
Maarssen, Holland 26,000 Executive Offices
Vlaardingen, Holland 51,000 Industrial Battery Assembly
Avellino, Italy 35,000 Lids and Containers Manufacturing
Bergamo, Italy 203,000 Lids, Containers and Separators Manufacturing
Casalnuovo, Italy 483,000 Industrial Battery Manufacturing
Fumane, Italy 65,000 SLI Battery Manufacturing
Romano Di Lombardia, 266,000 (leased) SLI Battery Manufacturing
Italy
Horten, Norway 108,000 (leased) Industrial Battery Manufacturing
</TABLE>
17
<PAGE>
<TABLE>
<CAPTION>
Approximate
Location Square Footage Use
- ------------------- -------------------- -------------------------------
<S> <C> <C>
Poznan, Poland (five) 887,000 SLI Battery Manufacturing
Castanheira, Portugal 471,000 SLI and Industrial Battery Manufacturing
Ilhavo, Portugal 54,000 Manual Tools Manufacturing
Azambuja (Sonalur), 21,000 Secondary Lead Smelting
Portugal
Azambuja (Azai), 21,000 Lids and Containers Manufacturing
Portugal
Lisbon, Portugal 12,000 Executive Offices
Cubas, Spain 323,000 Secondary Lead Smelting
Azuqueca de Henares, 434,000 SLI Battery Manufacturing and Research
Spain
Torrejon de Ardoz, 54,000 Industrial Battery and NiCad Manufacturing
Spain
Loeches, Spain 12,000 (leased) Traction Chargers Manufacturing
Malpica, Zaragoza, 213,000 SLI Battery Manufacturing
Spain
S. Esteban de Gormaz, 63,000 Secondary Lead Smelting
Spain
Madrid, Spain 38,000 (leased) Executive Offices
Zaragoza, Spain 248,000 Industrial Battery Manufacturing
Nol, Sweden 447,000 SLI and Industrial Battery Manufacturing
Izmir, Turkey 64,000 SLI Battery Manufacturing
Cwmbran, Wales 105,000 Executive Offices and SLI Battery Manufacturing
</TABLE>
In addition, the Company temporarily operates an SLI battery manufacturing
facility in Dagenham, England, which includes some executive offices. The
Company also leases distribution outlets in Europe.
The Company believes that its facilities are in good operating condition,
adequately maintained, and suitable to meet its present needs and future plans.
Item 3. Legal Proceedings
In August 1996, a Portland, Oregon jury found that the Company infringed a
patent relating to a device for inserting battery plates into battery
separators, and awarded damages of $5.0 million. Later, the Court, acting on the
jury's verdict, entered a judgment against Exide for $5.5 million. On April 28,
1997, the Court denied Exide's post-trial motions relating to the judgment. On
May 16, 1997, Exide filed its Notice of Appeal. On May 21, 1997, plaintiffs
filed a cross appeal. Exide, following consultation with its independent patent
counsel, intends to vigorously prosecute the
18
<PAGE>
appeal. Management and legal counsel remain confident that the jury verdict and
the court's judgment relating to the patent asserted at trial will be reversed
and that the cross appeal is without merit and, therefore, shall be rejected.
Exide anticipates receiving a decision on the appeal some time during the first
quarter of 1998.
The Company is now or recently has been involved in several related
lawsuits pending in state and federal courts in Alabama, North Carolina and
South Carolina. These actions contain allegations that the Company sold old or
used batteries as new batteries. One action that had been certified as a class
action was later decertified by the Alabama Supreme Court and has now been
dismissed. In another action, the judge directed a verdict in favor of the
Company following presentation of the plaintiff's evidence. That case is now on
appeal. The remaining actions seek compensatory and punitive damages and, in one
case, injunctive relief. The Company disputes the material legal claims in these
matters and intends to vigorously defend itself.
The Company is involved in various other claims and litigation incidental
to the conduct of its business. Based on consultation with legal counsel,
management does not believe that any claims or litigation to which the Company
is a party will have a material adverse effect on the Company's financial
condition or results of operations. In the fourth quarter of fiscal 1996, the
Company paid $5.6 million as a result of an unfavorable verdict from the U.S.
Court of Appeals in a patent infringement matter. Such amount was recorded as
Other Expense (Income), net.
Item 4. Submission of Matters to a Vote of Security Holders
None
19
<PAGE>
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder
Matters
The Common Stock is listed and traded on the New York Stock Exchange under
the symbol EX. The reported range of the high and low prices of the Common Stock
on the New York Stock Exchange Composite Tape and dividends paid are shown in
the following table for the periods indicated.
<TABLE>
<CAPTION>
Sales Prices Quarterly
------------------ Cash
High Low Dividends
------- ------- -----------
<S> <C> <C> <C>
(per share)
Fiscal 1996:
First Quarter $44-1/2 $29-1/2 $0.02
Second Quarter 53-7/8 42-1/2 0.02
Third Quarter 50 41-1/4 0.02
Fourth Quarter 51-1/8 23-1/4 0.02
Fiscal 1997:
First Quarter $30-1/4 $18-7/8 $0.02
Second Quarter 28-1/2 22-1/2 0.02
Third Quarter 28-7/8 22-5/8 0.02
Fourth Quarter 25-1/2 16 0.02
</TABLE>
At June 26, 1997 the reported last sale price of the stock was $ 21-9/16.
As of May 30, 1997, there were 546 record holders of Common Stock.
20
<PAGE>
Item 6. Selected Financial Data (In thousands, except per-share data):
<TABLE>
<CAPTION>
Fiscal Year Ended March 31
--------------------------------------------------------------------------------
1993 1994 1995 1996 1997
-------- -------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Income Statement Data:
Net sales $578,755 $679,649 $1,198,546 $2,342,616 $2,333,230
Gross profit 131,021 161,003 264,018 558,354 595,276
Operating expenses 83,851 99,245 199,856 429,131 453,798
Operating income 47,170 61,758 64,162 129,223 141,478
Interest expense, net 35,261 33,150 52,565 120,600 118,837
Income taxes 3,400 10,794 5,160 6,300 14,732
Income before extraordinary loss
and cumulative effect of
accounting change 5,153 17,217 4,491 939 18,992
Extraordinary loss (10,363)/(1)/ -- (3,597)/(2)/ (9,600)/(3)/ (2,767)/(4)/
Cumulative effect of accounting
change/(5)/ -- (12,711) -- -- --
Net income (loss) (5,210) 4,506 894 (8,661) 16,225
Preferred dividends 4,996 -- -- -- --
Net income (loss) applicable to
common stock (10,206) 4,506 894 (8,661) 16,225
Net income (loss) per common and
common equivalent share (1.22) 0.41 0.06 (0.42) 0.77
Balance sheet data (at end of
year):
Working capital 132,339 153,711 395,875 598,895 630,440
Property, plant and
equipment, net 136,392 181,147 423,876 578,722 521,836
Total assets 474,868 629,090 1,637,589 2,711,429 2,438,495
Total debt 305,562 291,821 645,135 1,340,025 1,289,682
Preferred stock 6,462 -- -- -- --
Common stockholders' equity 45,096 164,450 413,230 439,400 371,410
Other data: EBITDA/(6)/ 72,427 91,465 110,759 230,131 267,309
Ratio of earnings to fixed
charges/(7)/ 1.2x 1.7x 1.2x 1.0x 1.2x
Capital expenditures 20,266 47,164 61,257 106,385 84,200
Net cash provided by (used in)
operating activities 24,959 49,364 (69,134) 36,058 78,126
Net cash used in investing
activities (21,845) (54,859) (322,896) (499,830) (61,652)
Net cash provided by (used in)
financing activities (2,948) 38,701 418,314 449,473 (17,000)
</TABLE>
21
<PAGE>
(1) During fiscal 1993, the Company recorded a loss of $10,400 (net of a tax
benefit of $1,900) resulting from the early extinguishment of debt in
connection with the refinancing of its previously existing debt.
(2) During fiscal 1995, the Company recorded a loss of $3,600 (net of a tax
benefit of $2,300) resulting from the early retirement of the former
U.S. Credit Agreement in connection with entering a new U.S. Credit
Agreement.
(3) During fiscal 1996, the Company recorded a loss of $9,600 (net of a tax
benefit of $6,000) from the early retirement of debt under the U.S. Credit
Agreement.
(4) During fiscal 1977, the Company recorded a loss of $2,800 with no
income tax effect resulting from a modification of debt in connection with
entering into a series of bond swap agreements for $38,000 (principal
amount) of its 10% and 10.75% Senior Notes.
(5) Effective April 1, 1993, the Company adopted Statement of Financial
Accounting Standards ("SFAS") #106 which resulted in a charge of $12,700
with no income tax effect because of the uncertainty of deductibility at
that time.
(6) Represents earnings before interest, taxes, depreciation of property, plant
and equipment, amortization of goodwill and equity in earnings of joint
ventures. EBITDA should not be considered as an alternative to net income
as an indicator of the Company's operating performance or to cash flows as
a measure of liquidity. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations".
(7) For purposes of computing the ratio of earnings to fixed charges, earnings
consist of income (loss) before income taxes and equity in earnings of
joint ventures plus fixed charges (excluding capitalized interest) and
dividends from joint ventures. Fixed charges consist of interest expense,
amortization of debt expense, capitalized interest, and one-third of rent
expense, representative of the interest factor.
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operation
General
-------
The mild winters of 1995-1996 and 1996-1997 had a substantial adverse effect on
the Company's results of operations for fiscal 1996 and 1997. See "Seasonality
and Weather."
The Company through its European acquisitions is exposed to foreign currency
risk in most Western European countries, principally France, Spain, Germany,
Italy and the U.K. The Company does not have material operations in countries
whose economies can be classified as hyper-inflationary. Movements of exchange
rates vis-a-vis the U.S. dollar can result in both unrealized and realized
exchange gains or losses. In some instances gains in one currency may be offset
by losses in another as all currencies may not move in unison vis-a-vis the U.S.
dollar. Because it is not possible to forecast future movements in foreign
exchange rates it is the policy of the Company to reduce foreign currency risk
by balancing net foreign currency positions
22
<PAGE>
where possible. During the fourth quarter of fiscal 1997 total stockholders'
equity decreased by $61.0 million due to foreign currency translation
adjustments associated with the weakening of foreign currencies relative to the
U.S. dollar.
Results of Operations
Year Ended March 31, 1997 Compared with Year Ended March 31, 1996
Net sales decreased less than 1% ($9.4 million) to $2,333.2 million in
fiscal 1997 from $2,342.6 million in fiscal 1996. This net decrease principally
represents the adverse impact of changes in foreign exchange rates versus the
U.S. dollar ($93.0 million) and lower automotive and non-battery sales ($87.0
million), offset by the incremental effect related to the inclusion of CEAc for
the entire twelve months of fiscal 1997 (ten months in fiscal 1996) of $123.0
million and higher selling prices in North America and Europe of approximately
$50.0 million. Industrial battery sales (included above) for fiscal year 1997
were $631.1 million versus $613.6 million in fiscal 1996. This increase is also
primarily attributed to the inclusion of CEAc for the entire twelve months of
fiscal 1997 offset by the adverse impact of foreign exchange rates. See Note 2
to the Company's Consolidated Financial Statements appearing elsewhere herein.
Gross profit increased $36.9 million (6.6%) and gross profit margin
increased by 1.7 percentage points in fiscal 1997 versus 1996. The increases in
gross profit and gross profit margin were principally the result of the
inclusion of CEAc for the entire twelve months of fiscal 1997 ($29.0 million),
cost reductions generated by the European manufacturing rationalization/
consolidation process, and North American and European selling price increases,
offset by higher lead costs ($36.0 million), the adverse impact of foreign
exchange rates ($25.0 million) and the margin associated with the decline in
automotive and non-battery revenues.
Operating expenses increased $24.7 million, or 5.7% in fiscal 1997 versus
1996, primarily due to the inclusion of CEAc for the entire twelve months of
fiscal 1997 ($33.9 million), offset by the impact of foreign exchange rates
($16.0 million).
Operating income increased $12.3 million, or 9.5%, primarily as a result of
the matters discussed above.
Interest expense decreased $1.8 million, or 1.5% primarily due to lower
European interest rates and borrowing levels associated with reduced working
capital levels related to the rationalization/consolidation process, offset by
the incremental interest cost attributable to the inclusion of CEAc for the
entire twelve months of fiscal 1997.
Other expense (income), net was $12.4 million income for fiscal 1997 versus
$1.8 million expense for fiscal 1996. This $14.2 million change principally
relates to the $8.3 million gain on the sale of Evanite and the absence of a
$5.5 million
23
<PAGE>
judgement (recognized in fiscal 1996) related to a patent infringement claim,
offset by a $1.7 million higher loss on the sales of receivables (due to a
larger facility arrangement).
Income before income taxes, minority interest and extraordinary loss
increased $28.3 million primarily as a result of the matters discussed above.
Provision for income taxes increased $8.4 million due to the higher level
of earnings.
Net income increased $24.9 million, primarily as a result of the matters
discussed above and a $6.8 million reduction from fiscal 1996 to 1997 in the
extraordinary loss related to the early retirement of debt.
Year Ended March 31, 1996 Compared with Year Ended March 31, 1995
Net sales increased $1,144.1 million , or 95.5% to $2,342.6 million in
fiscal year 1996 compared with fiscal 1995. The sales increase was principally
attributable to the inclusion of CEAc since June 1995 ($749.8 million) and the
incremental effect related to the inclusion of Tudor for the entire twelve
months of fiscal 1996 (six months in fiscal 1995) of $275.5 million. Sales in
fiscal 1996 were also favorably impacted by shipments to Sears Roebuck and Co.,
which was a significant new customer added late in the second quarter of fiscal
1995, growth of the Company's business in the U.K. (net sales increased $17.4
million) and the inclusion of Evanite, a battery separator manufacturer, with
net sales of $40.7 million, a February 1995 acquisition. Industrial battery
sales (included above) for fiscal year 1996 were $613.6 million versus $130.1
million in fiscal year 1995. See Note 2 to the Company's Consolidated Financial
Statements appearing elsewhere herein. Gross profit increased $294.3 million
while the gross profit margin increased by 1.8 percentage points in fiscal 1996
versus 1995. The increase in gross profit was principally the result of the
inclusion of CEAc ($232.9 million) and the incremental effect related to the
inclusion of Tudor for the entire twelve months of fiscal 1996 (six months in
fiscal 1995) of $85.1 million. The Company's gross profit margin increased due
to higher gross margins in Europe, partially offset by higher lead costs and
usage.
Operating expenses increased $229.3 million, or 114.7%, compared to fiscal
year 1995, primarily due to the inclusion of CEAc ($160.6 million), and the full
year impact of Tudor ($53.3 million), for a combined $213.9 million of the
increase. Additional increases resulted from the inclusion of Evanite ($4.0
million), and expenses related to the growth in the U.K. business ($7.2
million).
Operating income increased $65.1 million, or 101.4%, primarily as a result
of the matters discussed above.
Interest expense increased $68.0 million, or 129.4%, in fiscal 1996
compared to
24
<PAGE>
fiscal 1995, principally as a result of the interest cost attributable to the
financing of the Company's European and North American acquisitions, inclusion
of CEAc ($11.6 million) and the incremental expense related to the inclusion of
Tudor for the entire twelve months in fiscal 1996 ($10.0 million).
Other expense, net is primarily comprised of a $5.5 million judgement
related to a patent infringement suit, and loss on the sales of receivables of
$2.6 million, offset by $6.5 million of net European currency transaction gains.
Income before extraordinary loss was $3.6 million lower in fiscal 1996
compared with fiscal 1995. The extraordinary loss of $9.6 million in fiscal 1996
is related to the writeoff of unamortized deferred financing costs associated
with the early extinguishment of debt. In fiscal 1995, the Company incurred a
$3.6 million writeoff of a similar nature. See Note 5 to the Company's
Consolidated Financial Statements appearing elsewhere herein.
Net income decreased $9.6 million, primarily as a result of the matters
discussed above.
Seasonality and Weather
The automotive aftermarket is seasonal as retail sales of replacement
batteries are generally higher in the fall and winter (the Company's second and
third fiscal quarters). Accordingly, demand for the Company's automotive
batteries is generally highest in the fall and early winter as retailers build
inventories in anticipation of the winter season. European sales are
concentrated in the fourth calendar quarter (the Company's third quarter), due
to the shipment of batteries for the winter season and the practice of many
industrial battery customers (particularly governmental and quasi governmental
entities) of deferring purchasing decisions until the end of the calendar year.
Demand for automotive batteries is significantly affected by weather conditions.
Unusually cold winters or hot summers accelerate battery failure and increase
demand for automotive replacement batteries.
Liquidity and Capital Resources
The Company's liquidity requirements arise primarily from the funding of
its seasonal working capital needs, obligations on its indebtedness and capital
expenditures. In addition, the Company has paid cash dividends of $.02 per share
on the common stock in each completed quarter following its initial public
offering. Historically, the Company has met these liquidity requirements through
cash flows generated from operating activities and with borrowed funds and the
proceeds of sales of accounts receivable. The Company is party to a U.S.
receivables purchase agreement under which the other party has committed
(subject to certain exceptions) to purchase selected accounts receivable of the
Company, up to a maximum
25
<PAGE>
commitment of $75.0 million. Due to the seasonal demands of the battery
industry, the Company builds inventory in advance of the typically stronger
selling periods during the fall and winter. The Company's greatest cash demands
from operations occur during the months of June through October. During fiscal
1998 and beyond the Company also expects to meet its liquidity requirements in
the same manner.
Funds generated (used) from operations were $(69.1) million, $36.1 million
and $78.1 million in fiscal 1995, fiscal 1996 and fiscal 1997, respectively.
Because of the seasonality of the Company's business, more funds are typically
generated in its third and fourth fiscal quarters. During fiscal 1997, improved
operating profitability and a reduction in working capital requirements were
mostly responsible for the additional funds generated. Offsetting this was the
use of cash for the Company's European restructuring activities, which require
large amounts of cash for severance associated with plant closures. During
fiscal 1997, the Company closed three plants in Europe and one plant in the U.S.
All of this is part of the Company's long-term strategy of reducing its
manufacturing and distribution cost structure, especially in Europe. In the next
several years, the Company will continue to complete the closure of various
European plants which will necessitate cash payments for severance, etc. While
the Company believes that a large portion of its cash requirements for its
European plant consolidation activities will be generated from operations, it
has substantial liquidity and capital resources through its European Facilities
Agreement, discussed below, and also has substantial borrowing availability
under its U.S. Credit Agreement.
The Company's capital expenditures were $61.3 million in fiscal 1995,
$106.4 million in fiscal 1996 and $84.2 million in fiscal 1997. Capital
expenditures increased over 1995 levels in fiscal 1996 and 1997 principally due
to the European acquisition and Schuylkill Metals in fiscal 1996 and on-going
European capital expenditures in Europe in fiscal 1997. The U.S. Credit
Agreement and the European Facilities Agreement restrict the amount of capital
expenditures which may be made by the Company and its subsidiaries. See Note 5
to the Company's Consolidated Financial Statements appearing elsewhere herein.
However, the Company believes that it has sufficient resources for its capital
expenditure programs from operating cash flows and borrowing availability under
its existing credit agreements.
On November 30, 1995, the Company entered into a Pan-European,
multicurrency, multiborrower credit facility ("European Facilities Agreement").
The facility contains a Tranche A term loan in the amount of 236 million French
francs (U.S. $41.8 million), a Tranche B term loan in the amount of 930 million
French francs (U.S. $164.9 million), and a revolving facility of 1,403 million
French francs (U.S. $248.7 million). The Tranche A term loan matures on November
30, 2000, and the Tranche B term loan matures on November 30, 2002. Both term
loans require semiannual principal payments throughout their terms. The
revolving facility expires on September 30, 2002. Substantially all of the
Company's European bank debt, including indebtedness under the former European
Facilities Agreement that was utilized to finance a portion of the CEAc
acquisition, was refinanced with this European Facilities Agreement.
26
<PAGE>
As of March 31, 1997, the Company had $25.0 million outstanding on its U.S.
Credit Agreement, including letters of credit, and $367.8 million was
outstanding under the European Facilities Agreement, including letters of
credit. Obligations under the U.S. Credit Agreement and the European Facilities
Agreement bear interest at fluctuating rates. Increases in interest rates on
such obligations could adversely affect the Company's results of operations and
financial condition. The Company has two interest rate collar agreements and an
interest rate swap agreement which reduce the impact of changes in interest
rates on a portion of the Company's floating rate debt. The collar agreements
effectively limit the LIBOR base interest rate on $100.0 million of borrowings
under the U.S. Credit and European Facilities Agreements to no more than 8%
through December 30, 1997. If interest rates fall below certain levels, Exide is
required to make payments to the counterparties under the agreements. The
Company also had an interest rate swap agreement which effectively fixed LIBOR
interest rates on $50.0 million at 6.2% through May 16, 1997. Additionally,
effective March 29, 1997, the Company entered into two interest rate collar
agreements which reduce the impact of changes in interest rates on a portion of
the Company's floating rate debt. The agreements effectively limit the MIBOR
base interest rate on 11 billion Spanish peseta (U.S.$77.1 million) of
borrowings and the PIBOR base interest rate on 575 million French franc
(U.S.$101.9 million) of borrowings under the European Facilities Agreement to no
more than 7.5% and 6%, respectively, and no less than 3.5% and 2%, respectively.
Additionally, the Company entered into a series of bond swap agreements which
effectively converted $38.0 million (principal amount) of the 10% and 10 3/4%
Senior Notes into a variable LIBOR interest rate through December 15, 1999 and
April 15, 2000. The Company has the right to terminate the $38.0 million bond
swap agreements at any time before maturity. See Note 5 to the Company's
Consolidated Financial Statements appearing elsewhere herein.
As of March 31, 1997 the Company had $175.1 million available under its
U.S. Credit Agreement. Effective March 1997, the maximum capacity was increased
to $200.0 million, of which $50.0 million is reserved for a Tranche D variable
rate term loan which will mature on June 15, 2001. As of March 31, 1997, the
Company's European and Canadian operations had borrowing availability of
approximately $81.5 million. See Note 5 to the Company's Consolidated Financial
Statements appearing elsewhere herein.
Subsequent to March 31, 1997, the Company announced several financing
arrangements. On May 7, 1997, the Company redeemed $108.1 million (face value)
of its outstanding 12.25% Zero-Coupon Bonds for $104.1 million. The Company
financed the tender offer through borrowings under the U.S. Credit Agreement,
$50 million of which was from the new $50 million Tranche D variable rate term
loan and the balance was financed with borrowings from the revolver. On April
23, 1997, the Company issued 175 million Deutsche mark (U.S. $103.0 million) 9
1/8% Senior Notes due on April 15, 2004. The Company used the funds to repay
indebtedness under the European Facilities Agreement.
Additionally, the Company's planned acquisition of DETA (see Note 18 to the
Company's Consolidated Financial Statements appearing elsewhere herein) will
effectively be financed through the European Facilities Agreement.
The Company believes it has adequate reserves for offsite and onsite
environmental remediation costs. See "Business-Environmental, Health and Safety
27
<PAGE>
Matters" and "Future Environmental Developments."
As of March 31, 1997, the Company has significant NOL carryforwards in
Europe and in the United States which may be available, subject to certain
restrictions, to offset future U.S. and European taxable income. See Note 10 to
the Company's Consolidated Financial Statements appearing elsewhere herein.
Effect of Inflation
Inflation has not had a material impact on the operations of the Company
during the past three years. The Company generally has been able to offset the
effects of inflation with price increases, cost-reduction programs and operating
efficiencies.
Future Environmental Developments
The Company is subject to extensive federal, state, local and foreign
environmental, health and safety laws and regulations. In the future
environmental, health and safety standards may be more stringent. The Company
anticipates that such standards could cause an increase in the Company's capital
expenditures and operating costs. Until the standards are adopted it is not
possible to estimate these costs with any certainty or to predict whether they
will have a material effect on the Company's financial condition or results of
operations.
Item 8. Financial Statements and Supplementary Data.
See Index to Consolidated Financial Statements and Schedule at page F-1
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
Not applicable.
PART III
Item 10. Directors and Executive Officers of the Registrant
The biographical information under the heading Election of Directors in the
Company's definitive Proxy Statement for its annual meeting of stockholders to
be held on August 12, 1997, is hereby incorporated by reference.
In addition to the executive officers named in the biographical section,
Messrs. George J. Tinker and William J. Rankin are executive officers.
28
<PAGE>
Mr. Tinker (age 52) was appointed Chief Executive Officer of Exide's
European Operations in June of 1995. Since joining Exide in March 1994, he has
been Chief Executive Officer of Euro Exide Corporation Limited. Prior to joining
Exide, he was a Divisional and Main Board Director of the Ross Group Plc and
prior to that he was the Chief Executive Officer of the Stellar Group. In May
1997, Mr. Tinker resigned following completion of his agreed upon assignments
relating to the consolidation of the Company's European acquisitions. He will
continue to work as a consultant with the Company focusing on customer and
industry relations.
Mr. Rankin (age 59), Executive Vice President of the Company, has been
primarily responsible for operations since June 1987. Mr. Rankin was formerly on
the Board of Directors. His prior experience was with Monroe Automotive
Equipment Company where he served as Vice President of Manufacturing as well as
Vice President of Product Engineering.
Item 11. Executive Compensation
The information under the heading Executive Compensation in the Company's
definitive Proxy Statement for its annual meeting of stockholders to be held on
August 12, 1997, is hereby incorporated by reference.
Item 12. Description of Capital Stock
The information under the heading Stock Ownership in the Company's
definitive Proxy Statement for its annual meeting of stockholders to be held on
August 12, 1997, is hereby incorporated by reference.
Item 13. Certain Relationships and Related Transactions
The information under the heading Certain Transactions in the Company's
definitive Proxy Statement for its annual meeting of stockholders to be held on
August 12, 1997, is hereby incorporated by reference.
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on
Form 8-K
(a) Index to Financial Statements
See Index to Consolidated Financial Statements and Schedule at page F-1.
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the last quarter of the period
covered by this report.
29
<PAGE>
(c) Exhibits Required by Item 601 of Regulation S-K
See Index to Exhibits.
(d) Financial Statement Schedules
See Index to Consolidated Financial Statements and Schedule at page F-1.
CAUTIONARY STATEMENT FOR PURPOSES OF THE
SAFE HARBOR PROVISION OF THE
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
Except for historical information, this report may be deemed to contain
"forward-looking" statements. The Company desires to avail itself of the Safe
Harbor provisions of the Private Securities Litigation Reform Act of 1995 (the
"Act") and is including this cautionary statement for the express purpose of
availing itself of the protection afforded by the Act.
Examples of forward-looking statements include, but are not limited to (a)
projections of revenues, cost of raw materials, income or loss, earnings or loss
per share, capital expenditures, growth prospects, dividends, the effect of
currency translations, capital structure and other financial items, (b)
statements of plans of and objectives of the Company or its management or Board
of Directors, including the introduction of new products, or estimates or
predictions of actions by customers, suppliers, competitors or regulating
authorities, (c) statements of future economic performance and (d) statements of
assumptions, such as the prevailing weather conditions in the Company's market
areas, underlying other statements and statements about the Company or its
business.
The Company's core business, the design, manufacture and sale of lead acid
batteries, and the Company's structure involves risk and uncertainty. Important
factors that could affect the Company's results include, but are not limited to
(i) unseasonable weather (warm winters and cool summers) which adversely affects
demand for automotive and some industrial batteries, (ii) the Company's
substantial debt and debt service requirements which restrict the Company's
operational and financial flexibility, as well as imposing significant interest
and financing costs, (iii) the Company's assets include the tax benefits of net
operating loss carry forwards, realization of which are dependent upon future
taxable income, (iv) lead, which experiences significant fluctuations in market
price and which, as a hazardous material, may give rise to costly environmental
and safety claims, can affect the Company's results because it is a major
constituent in most of the Company's products, (v) the battery markets in North
America and Europe are very competitive and, as a result, it is often difficult
to maintain margins, (vi) the Company's consolidation and rationalization of
recently acquired European entities requires substantial management time and
financial and other resources and is not without risk, and (vii) foreign
operations involve risks such as disruption of markets, changes in import and
export laws, currency restrictions and currency exchange rate fluctuations.
Therefore, the Company cautions each reader of this report to carefully consider
those factors hereinabove set forth, because such factors have, in some
instances, affected and in the future could affect, the ability of the Company
to achieve its projected results and may cause actual results to differ
materially from those expressed herein.
30
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
EXIDE CORPORATION
By: /s/ Arthur M. Hawkins
---------------------
Arthur M. Hawkins,
President Principal Executive Officer
By: /s/ Alan E. Gauthier
--------------------
Alan E. Gauthier
Principal Financial and
Accounting Officer
Date: June 27, 1997
-------------------------
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the date indicated.
By: /s/ Arthur M. Hawkins By: /s/ Douglas N. Pearson
---------------------------- ---------------------------------
Arthur M. Hawkins, President Douglas N. Pearson, Executive
Chairman of the Board and Vice President, President - North
Director American Operations and Director
By: /s/ Alan E. Gauthier By: /s/ Earl Dolive
---------------------------- ---------------------------------
Alan E. Gauthier, Executive Earl Dolive
Vice President and Director Director
By: /s/ Robert H. Irwin By: /s/ Thomas J. Reilly, Jr.
--------------------------- ---------------------------------
Robert H. Irwin Thomas J. Reilly, Jr.
Director Director
By: /s/ Arthur R. Taylor By: /s/ James T. Watson
---------------------------- ---------------------------------
Arthur R. Taylor James T. Watson
Director Director
31
<PAGE>
<TABLE>
<CAPTION>
Exhibits:
- --------
<C> <S>
3.1 Restated Certificate of Incorporation of the Registrant, incorporated by
reference to Exhibit 4.1 of the Registrant's Registration Statement on
Form S-3 (No. 333-29991).
3.2 Restated Bylaws of the Registrant, incorporated by reference to Exhibit
of same number to the 1993 Registration Statement.
4.1 Form of Senior Note Indenture (including form of Senior Note),
incorporated by reference to Exhibit 4.1 of the Registrant's Registration
Statement on Form S-2 (No. 33-53666), as amended (the "S-2 Registration
Statement").
4.2 Form of Senior Subordinated Deferred Coupon Debenture Indenture
(including form of Senior Subordinated Debenture), incorporated by
reference to Exhibit 4.2 of the S-2 Registration Statement (the
"Debenture Indenture").
4.3 Third Supplemental Indenture, dated May 6, 1997, to the Debenture
Indenture.
4.4 Agreement dated as of December 7, 1992, between the Registrant and Inco
United States, Inc., relating to the assumption of certain liabilities,
incorporated by reference to Exhibit 10.30 to the S-2 Registration
Statement.
4.5 Registration Rights Agreement among the Registrant, Wilmington
Securities, Inc. and certain other holders of the Registrant's Common
Stock, incorporated by reference to Exhibit 4.14 to the 1993 Registration
Statement.
4.6 Registration Rights Agreement dated as of December 15, 1995 among the
Registrant and the placement agents for the Notes issued under the
Indenture filed as Exhibit 4.7.
4.7 Indenture dated as of April 28, 1995, between the Registrant and The Bank
of New York, as trustee, incorporated by reference to Exhibit 99.3 of the
Registrant's Form 8-K dated June 2, 1995.
4.8 Indenture dated as of December 15, 1995 between the Registrant and The
Bank of New York, as trustee, incorporated by reference to Exhibit 4.7 to
the 1996 Form 10-K.
4.9 Fiscal and Paying Agency Agreement, dated April 23, 1997, by and among
Exide Holding Europe S.A., Exide Corporation, The Bank of New York and
Deutsche Bank Aktiengesellschaft.
10.1 Receivables Purchase Agreement, dated as of March 31, 1997, among Exide
U.S. Funding Corporation, Three Rivers Funding Corporation and the
Registrant.
10.2 Sale Agreement, dated March 31, 1997, between the Registrant and Exide
U.S. Funding Corporation.
</TABLE>
32
<PAGE>
<TABLE>
<CAPTION>
<C> <S>
10.3 Employment Agreement dated June 15, 1985 between the Registrant and
Arthur M. Hawkins, incorporated by reference to Exhibit 10.4 of the
Registrant's Registration Statement on Form S-1 (No. 33-13632), as
amended (the "S-1 Registration Statement").
10.4 Employment Agreement dated June 15, 1985 between the Registrant and
Douglas N. Pearson, incorporated by reference to Exhibit 10.5 to the S-1
Registration Statement.
10.5 Employment Agreement dated June 1, 1987 between the Registrant and
William J. Rankin.
10.6 Amendment dated July 7, 1988 to Employment Agreement between the
Registrant and Douglas N. Pearson, incorporated by reference to Exhibit
10.2 to the Registrant's Form 10-Q for the quarter ended October 2, 1988.
10.7 Stock Purchase Agreement dated May 27, 1987 among the Registration, Fruit
of the Loom, Inc. and Northwest Industries Leasing Company, incorporated
by reference to Exhibit 2 to the S-1 Registration Statement.
10.8 Lease Agreement dated July 1, 1988 between the Registrant and an officer
of the Registrant pertaining to Chippewa Trail Lodge, incorporated by
reference to Exhibit 10.28 to the 1989 10-K.
10.9 Amendment to Lease Agreement dated October 24, 1988 between the
Registrant and Chippewa Trail Lodge, Inc., incorporated by reference to
Exhibit 10.29 to the 1989 10-K.
10.10 Assignment of Lease dated July 1, 1988 between an officer of the
Registrant and Chippewa Trail Lodge, Inc., incorporated by reference to
Exhibit 10.30 to the 1989 10-K.
10.11 Assignment and Assumption of Lease dated October 24, 1988 between an
officer of the Registrant and Chippewa Trail Lodge, Inc., incorporated by
reference to Exhibit 10.31 to the 1989 10-K.
10.12 Lease Agreement dated August 1, 1978 pertaining to the Reading,
Pennsylvania administrative office facilities, amended as of April 1,
1979, incorporated by reference to Exhibit 10.20 to the S-1 Registration
Statement.
10.13 Lease Agreement dated February 1, 1974 pertaining to the Manchester, Iowa
manufacturing facilities, incorporated by reference to Exhibit 10.21 to
the S-1 Registration Statement.
10.14 Lease Agreements (Series A and Series B) dated September 1, 1976
pertaining to the Salina, Kansas manufacturing facilities, incorporated
by reference to Exhibit 10.22 to the S-1 Registration Statement.
</TABLE>
33
<PAGE>
<TABLE>
<CAPTION>
<C> <S>
10.15 Lease Agreement dated August 1, 1978, pertaining to the Reading,
Pennsylvania engineering facilities, incorporated by reference to Exhibit
10.23 to the S-1 Registration Statement.
10.16 Lease Agreement dated January 5, 1978, pertaining to the City of
Industry, California distribution facilities, incorporated by reference
to Exhibit 10.24 to the S-1 Registration Statement.
10.17 Lease Agreement dated August 11, 1986, pertaining to the Sumner,
Washington Distribution facilities, incorporated by reference to Exhibit
10.27 to the S-1 Registration Statement.
10.18 Lease Agreement beginning December 1, 1987, pertaining to the Travelers
Rest, South Carolina distribution facilities, incorporated by reference
to Exhibit 10.27 to the Registrant's Form 10-K for the fiscal year ended
March 31, 1988.
10.19 Asset Purchase Agreement, dated as of June 10, 1991, between the
Registrant and Yuasa Battery (America), Inc., incorporated by reference
to Exhibit 1 to the Registrant's Form 8-K dated June 25, 1991.
10.20 EC Acquisition, Inc. 1993 Stock Award Plan, incorporated by reference to
Exhibit 10.23 to the 1993 Registration Statement.
10.21 Exide 1993 Long Term Incentive Plan, incorporated by reference to Exhibit
10.25 to the 1993 Registration Statement.
10.22 Agreement dated September 30, 1994, among Gemala (Isle of Man) Limited,
PT Sapta Panji Manggala, and B.I.G. Batteries Group Limited. Deed dated
September 30, 1994, among Euro Exide Corporation Limited, Gemala (Isle of
Man) Limited and B.I.G. Batteries Group Limited. Master Agreement dated
September 30, 1994 among Euro Exide Corporation Limited, Gemala (Isle of
Man) Limited, B.I.G. Batteries Group Limited and PT Sapta Panji Manggala,
incorporated by reference to Exhibit 10.24 of the December 1994
Registration Statement.
10.23 Composite copy of the Credit Agreement (the "Credit Agreement") dated
as of August 30, 1994, as amended, among the Registrant, various
financial institutions, Bankers Trust Company, Bank of America National
Trust and Savings Association and Bank of Montreal, as Agents, and
Bankers Trust Company, as Administrative Agent incorporated by reference
to Exhibit 10.25 to the 1996 Form 10-K.
10.24 Twelfth Amendment, dated March 31, 1997, to the Credit Agreement.
10.25 Facilities Agreement dated November 30, 1995, as amended, among certain
of the Registrant's subsidiaries, the banks listed for the Credit
Agreement, Citibank International plc and other lenders.
10.26 Lease Agreement dated February 7, 1994, pertaining to the Bristol,
Tennessee incorporated by reference to Exhibit 10.27 to the 1996 Form
10-K.
</TABLE>
34
<PAGE>
<TABLE>
<CAPTION>
<C> <S>
manufacturing facility and related amendment dated May 1995.
11.1 Statement re computation of per-share earnings.
21.1 Subsidiaries of the Registrant.
23.1 Consent of independent public accountants
27.0 Financial data schedule.
</TABLE>
35
<PAGE>
EXIDE CORPORATION AND SUBSIDIARIES
----------------------------------
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULE
-------------------------------------------------------
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS F-2
CONSOLIDATED STATEMENTS OF OPERATIONS F-3
CONSOLIDATED BALANCE SHEETS F-4
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY F-6
CONSOLIDATED STATEMENTS OF CASH FLOWS F-7
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS F-8
CONSOLIDATED SUPPORTING SCHEDULE FILED:
II--VALUATION AND QUALIFYING ACCOUNTS AND RESERVES F-35
All other schedules are omitted because they are not applicable,
not required, or the information required to be set forth therein
is included in the Consolidated Financial Statements or in the
Notes thereto.
F-1
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors and Stockholders of
Exide Corporation:
We have audited the accompanying consolidated balance sheets of Exide
Corporation (a Delaware corporation) and subsidiaries as of March 31, 1996 and
1997, and the related consolidated statements of operations, stockholders'
equity and cash flows for each of the three fiscal years in the period ended
March 31, 1997. These financial statements and the schedule referred to below
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements and the schedule based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Exide Corporation and
subsidiaries as of March 31, 1996 and 1997, and the results of their operations
and their cash flows for each of the three fiscal years in the period ended
March 31, 1997, in conformity with generally accepted accounting principles.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The schedule listed in the accompanying
index to consolidated financial statements is presented for purposes of
complying with the Securities and Exchange Commission's rules and is not part of
the basic financial statements. This schedule has been subjected to the auditing
procedures applied in our audits of the basic financial statements and, in our
opinion, fairly states in all material respects the financial data required to
be set forth therein in relation to the basic financial statements taken as a
whole.
ARTHUR ANDERSEN LLP
Philadelphia, Pa.,
June 24, 1997
F-2
<PAGE>
EXIDE CORPORATION AND SUBSIDIARIES
----------------------------------
CONSOLIDATED STATEMENTS OF OPERATIONS
-------------------------------------
(In thousands, except share and per-share data)
<TABLE>
<CAPTION>
For the Fiscal Year Ended March 31
--------------------------------------------------
1995 1996 1997
----------- ----------- -----------
<S> <C> <C> <C>
Net sales $ 1,198,546 $ 2,342,616 $ 2,333,230
Cost of sales 934,528 1,784,262 1,737,954
----------- ----------- -----------
Gross profit 264,018 558,354 595,276
----------- ----------- -----------
Operating expenses:
Selling, marketing and advertising 135,774 276,076 290,076
General and administrative 59,744 137,086 145,869
Goodwill amortization 4,338 15,969 17,853
----------- ----------- -----------
199,856 429,131 453,798
----------- ----------- -----------
Operating income 64,162 129,223 141,478
Interest expense, net 52,565 120,600 118,837
Other expense (income), net 874 1,893 (12,382)
----------- ----------- -----------
Income before income taxes, minority interest and
extraordinary loss 10,723 6,730 35,023
Provision for income taxes 5,160 6,300 14,732
----------- ----------- -----------
Income before minority interest and extraordinary loss 5,563 430 20,291
Minority interest 1,072 (509) 1,299
----------- ----------- -----------
Income before extraordinary loss 4,491 939 18,992
Extraordinary loss related to early retirement of debt,
net of income tax benefit of $2,320, $5,958 and $0 (3,597) (9,600) (2,767)
----------- ----------- -----------
Net income (loss) $ 894 $ (8,661) $ 16,225
=========== =========== ===========
Net income (loss) per common and common
equivalent share:
Income before extraordinary loss $ 0.28 $ 0.05 $ 0.90
Extraordinary loss (0.22) (0.47) (0.13)
----------- ----------- -----------
Net income (loss) $ 0.06 $ (0.42) $ 0.77
=========== =========== ===========
Weighted average number of common and common
equivalent shares outstanding 16,191,075 20,384,806 21,204,241
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these statements.
F-3
<PAGE>
EXIDE CORPORATION AND SUBSIDIARIES
-----------------------------------
CONSOLIDATED BALANCE SHEETS
---------------------------
(In thousands, except share and per-share data)
<TABLE>
<CAPTION>
March 31
-----------------------
ASSETS 1996 1997
------ ---------- ----------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 47,259 $ 42,706
Receivables, net of allowance for doubtful accounts
of $45,350 and $3886 605,573 569,683
Inventories 595,161 533,514
Prepaid expenses and other 17,840 21,889
Deferred income taxes 20,672 23,667
---------- ----------
Total current assets 1,286,505 1,191,459
---------- ----------
PROPERTY, PLANT AND EQUIPMENT:
Land 62,086 50,873
Buildings and improvements 220,546 205,826
Machinery and equipment 463,431 500,883
Construction in progress 52,704 40,190
---------- ----------
798,767 797,772
Less--accumulated depreciation and amortization (220,045) (275,936)
---------- ----------
Property, plant and equipment, net 578,722 521,836
---------- ----------
OTHER ASSETS:
Goodwill, net 673,045 596,254
Investments in affiliates 23,123 24,016
Deferred financing costs, net 33,412 26,770
Deferred income taxes 66,747 40,306
Other 49,875 37,854
---------- ----------
846,202 725,200
---------- ----------
Total assets $2,711,429 $2,438,495
========== ==========
</TABLE>
The accompanying notes are an integral part of these statements.
(Continued)
F-4
<PAGE>
EXIDE CORPORATION AND SUBSIDIARIES
-----------------------------------
CONSOLIDATED BALANCE SHEETS (Continued)
---------------------------------------
(In thousands, except share and per-share data)
<TABLE>
<CAPTION>
March 31
--------------------------
1996 1997
---------- ----------
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES:
Short-term borrowings $ 8,310 $ 16,123
Current maturities of long-term debt 30,477 37,488
Accounts payable, trade and other 279,225 236,889
Accrued interest 22,248 24,671
Accrued compensation 105,639 98,316
Product warranty reserve 37,654 36,243
Other current liabilities 204,057 111,289
---------- ----------
Total current liabilities 687,610 561,019
---------- ----------
LONG-TERM DEBT 1,301,238 1,236,071
---------- ----------
NONCURRENT RETIREMENT OBLIGATIONS 127,320 107,756
---------- ----------
OTHER NONCURRENT LIABILITIES 127,211 142,791
---------- ----------
COMMITMENTS AND CONTINGENCIES (Notes 13 and 15)
MINORITY INTEREST 28,650 19,448
---------- ----------
STOCKHOLDERS' EQUITY:
Common stock, $.01 par value, 30,000,000 and 60,000,000
shares authorized, 20,893,693 and 21,336,757 shares
issued and outstanding 209 213
Additional paid-in capital 490,919 489,427
Accumulated deficit (36,121) (21,569)
Notes receivable--stock award plan (1,696) (1,696)
Unearned compensation (710) (516)
Minimum pension liability adjustment (5,956) (4,993)
Cumulative translation adjustment (7,245) (89,456)
---------- ----------
Total stockholders' equity 439,400 371,410
---------- ----------
Total liabilities and stockholders' equity $2,711,429 $2,438,495
========== ==========
</TABLE>
The accompanying notes are an integral part of these statements.
F-5
<PAGE>
EXIDE CORPORATION AND SUBSIDIARIES
----------------------------------
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
-----------------------------------------------
FOR THE FISCAL YEARS ENDED MARCH 31, 1995, 1996 and 1997
--------------------------------------------------------
(In thousands, except share and per-share data)
<TABLE>
<CAPTION>
Notes Minimum Foreign
Additional Receivable- Pension Currency
Common Paid-In Accumulated Stock Award Unearned Liability Translation
Stock Capital Deficit Plan Compensation Adjustment Adjustment
------ ---------- ----------- ----------- ------------ ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at March 31, 1994 $148 $194,097 $(25,446) $(1,826) $ -- $(1,331) $ (1,192)
Net income for fiscal 1995 -- -- 894 -- -- -- --
Public offering of stock 52 247,466 -- -- -- -- --
Compensation under stock grants -- 1,935 -- -- (1,806) -- --
Forfeiture of common stock grants -- (52) -- 52 -- -- --
Cash dividends paid ($0.08/share) -- -- (1,285) -- -- -- --
Minimum pension liability
adjustment -- -- -- -- -- (4,196) --
Translation adjustment -- -- -- -- -- -- 5,720
---- -------- -------- ------- ------- ------- --------
Balance at March 31, 1995 200 443,446 (25,837) (1,774) (1,806) (5,527) 4,528
Net loss for fiscal 1996 -- -- (8,661) -- -- -- --
Common stock issued for
acquisitions 9 48,135 -- -- -- -- --
Common stock issued under
employee stock purchase plan -- 100 -- -- -- -- --
Forfeiture of common stock
grants -- (762) -- 78 709 -- --
Amortization of unearned
compensation -- -- -- -- 387 -- --
Cash dividends paid ($0.08/share) -- -- (1,623) -- -- -- --
Minimum pension liability
adjustment -- -- -- -- -- (429) --
Translation adjustment -- -- -- -- -- -- (11,773)
---- -------- -------- ------- ------- ------- --------
Balance at March 31, 1996 209 490,919 (36,121) (1,696) (710) (5,956) (7,245)
Net income for fiscal 1997 -- -- 16,225 -- -- -- --
Common stock issued for
acquisitions (Note 2) 4 (1,741) -- -- -- -- --
Common stock issued under
employee stock purchase plan -- 211 -- -- -- -- --
Common stock issued pursuant
to Board of Directors grants -- 38 -- -- -- -- --
Amortization of unearned
compensation -- -- -- -- 194 -- --
Cash dividends paid ($0.08/share) -- -- (1,673) -- -- -- --
Minimum pension liability
adjustment -- -- -- -- -- 963 --
Translation adjustment -- -- -- -- -- -- (82,211)
---- -------- -------- ------- ------- ------- --------
Balance at March 31, 1997 $213 $489,427 $(21,569) $(1,696) $ (516) $(4,993) $(89,456)
==== ======== ======== ======= ======= ======= ========
</TABLE>
The accompanying notes are an integral part of these statements.
F-6
<PAGE>
EXIDE CORPORATION AND SUBSIDIARIES
----------------------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS
-------------------------------------
(In thousands)
<TABLE>
<CAPTION>
For the Fiscal Year Ended March 31
------------------------------------
1995 1996 1997
---------- --------- --------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 894 $ (8,661) $ 16,225
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities-
Depreciation and amortization 48,524 106,717 115,308
Extraordinary loss 3,597 9,600 2,767
Gain on sale of business -- -- (8,344)
Deferred income taxes (863) 300 6,255
Original issue discount on notes 8,942 12,411 19,502
Provision for losses on accounts receivable 3,238 4,016 4,638
Minority interest 1,072 (509) 1,299
Changes in assets and liabilities excluding effects
of acquisitions and divestitures-
Receivables (32,608) (24,973) (27,382)
Inventories (138,568) 46,832 22,717
Prepaid expenses and other 14,522 16,522 (6,766)
Payables and accrued expenses 32,984 (131,035) (72,424)
Other, net (10,868) 4,838 4,331
--------- --------- ---------
Net cash provided by (used in) operating activities (69,134) 36,058 78,126
--------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisitions of certain businesses (262,995) (401,325) (15,057)
Capital expenditures (61,257) (106,385) (84,200)
Proceeds from sales of assets 1,356 7,880 37,605
--------- --------- ---------
Net cash used in investing activities (322,896) (499,830) (61,652)
--------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase (decrease) in short-term borrowings 20,402 (71,701) 9,080
Repayment of U.S. Credit Agreement borrowings (105,000) (194,500) --
Borrowings under U.S. Credit Agreement 286,500 -- 17,000
Repayment of European term loans (1,421) (51,265) (11,138)
Repayment of Former European Facilities Agreement -- (156,873) --
Repayment of European Facilities Agreement -- -- (25,329)
Borrowings under European Facilities Agreement -- 436,940 --
Issuance of 2.9% Convertible Senior Subordinated Notes -- 287,797 --
Issuance of 10% Senior Notes -- 300,000 --
Repayment of Guaranteed Unsecured Loan Notes -- (35,282) --
Repayment of Spanish Convertible Notes -- (23,675) --
Proceeds from public offering, net of fees 247,519 -- --
Dividends paid (1,284) (1,623) (1,673)
Decrease in other debt (4,211) (9,455) (3,445)
Debt issuance costs (24,191) (30,890) (1,495)
--------- --------- ---------
Net cash provided by (used in) financing activities 418,314 449,473 (17,000)
--------- --------- ---------
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND
CASH EQUIVALENTS 3,370 (1,803) (4,027)
--------- --------- ---------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 29,654 (16,102) (4,553)
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 33,707 63,361 47,259
--------- --------- ---------
CASH AND CASH EQUIVALENTS, END OF YEAR $ 63,361 $ 47,259 $ 42,706
========= ========= =========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the year for-
Interest (net of amounts capitalized) $ 41,442 $ 86,557 $ 92,726
Income taxes $ 4,047 $ 9,243 $ 15,224
</TABLE>
The accompanying notes are an integral part of these statements.
F-7
<PAGE>
EXIDE CORPORATION AND SUBSIDIARIES
----------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
(In thousands, except share and per-share data)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Principles of Consolidation
The consolidated financial statements include the accounts of Exide Corporation
and all of its majority-owned subsidiaries (collectively the "Company"). All
significant intercompany transactions have been eliminated.
Investments in affiliates largely represents investments accounted for by the
cost method. Investments in 20%- to 50%-owned companies are included in the
consolidated financial statements on the basis of the equity method of
accounting. The Company's equity in the net income (loss) of these companies is
not material.
Nature of Operations
The Company is a leading manufacturer and marketer of starting, lighting and
ignition ("SLI") batteries. The Company produces SLI batteries for both the
aftermarket and original equipment manufacturers ("OEM") in North America and
Europe. The Company also manufactures and markets industrial batteries in
Europe. Industrial sales include both standby and traction battery lines.
Individual customers include telecommunication companies, European navies and
the electric vehicle operations of large European companies. Other products
manufactured include batteries for trucks, farm equipment and other off-road
vehicles, boats, garden tractors and golf carts, battery chargers and
accessories, wheel weights, and remanufactured starters and alternators.
Seasonality and Weather
The automotive aftermarket is seasonal as retail sales of replacement batteries
are generally higher in the fall and winter (the Company's second and third
fiscal quarters). Accordingly, demand for the Company's automotive batteries is
generally highest in the fall and early winter as retailers build inventories in
anticipation of the winter season. European sales are concentrated in the fourth
calendar quarter (the Company's third fiscal quarter) due to the shipment of
batteries for the winter season and the practice of many industrial battery
customers (particularly governmental and quasi-governmental entities) of
deferring purchasing decisions until the end of the calendar year. Demand for
automotive batteries is significantly affected by weather conditions. Unusually
cold winters or hot summers accelerate battery failure and increase demand for
automotive replacement batteries.
F-8
<PAGE>
Major Customers
The Company has a number of major retail and OEM customers, both in North
America and Europe. No single customer accounted for more than 10% of
consolidated net sales. The Company does not believe that a material part of its
business is dependent upon a single customer the loss of which would have a
material impact on the long-term business of the Company. However, the loss of
one or more of the Company's largest customers would have a negative short-term
impact on the Company's results of operations.
Foreign Currency Translation
Assets and liabilities of the Company's foreign subsidiaries and affiliates are
translated into U.S. dollars at the current rate of exchange existing at year-
end, and revenues and expenses are translated at the average monthly exchange
rates. Translation gains or losses are recorded in a separate component of
stockholders' equity, and transaction gains and losses are included in Other
expense (income), net. The Company recorded transaction losses (gains) of $837,
$(6,453) and $(5,796) in fiscal 1995, 1996 and 1997, respectively.
For disclosure purposes, foreign currency amounts have been translated to U.S.
dollars using the March 31, 1997 spot rate.
Cash Equivalents
The Company considers all highly liquid investments with a maturity of three
months or less when purchased to be cash equivalents.
Inventories
Inventories, which consist of material, labor and overhead, are stated at the
lower of cost or market. Cost is determined by the last-in, first-out ("LIFO")
method for most U.S. inventories and by the first-in, first-out ("FIFO") method
for all remaining inventories.
Property, Plant and Equipment
Property, plant and equipment are stated at cost. Depreciation is calculated by
the straight-line method over the estimated useful lives of depreciable assets.
Accelerated methods are used for tax purposes. Useful lives of depreciable
assets, by class, are as follows:
<TABLE>
<CAPTION>
<S> <C>
Buildings and improvements 5 to 40 years
Machinery and equipment 3 to 10 years
</TABLE>
F-9
<PAGE>
Cost and accumulated depreciation for property retired or disposed of are
removed from the accounts, and any gain or loss on disposal is credited or
charged to earnings. Expenditures for maintenance and repairs are charged to
expense as incurred. In connection with constructing certain property and
equipment, the Company capitalized $1,678, $2,341 and $2,444 of interest costs
during fiscal years 1995, 1996 and 1997, respectively. Depreciation expense was
$38,417, $77,397 and $82,842 for fiscal years 1995, 1996 and 1997, respectively.
Goodwill
Goodwill is amortized over 40 years on a straight-line basis. Accumulated
amortization as of March 31, 1996 and 1997, was $29,517 and $44,229,
respectively. It is the Company's policy to review goodwill (and other
intangible assets) for possible impairment on the basis of whether the carrying
amount of such assets is fully recoverable from projected, undiscounted net cash
flows of the related business. If such review indicates that the carrying amount
of goodwill and other intangible assets is not recoverable, then the Company's
policy is to reduce the carrying amount of such assets to fair value.
Other Assets
Other assets consist principally of prepaid pension costs related to overfunded
pension plans and noncurrent receivables.
Estimated Warranty Costs
The Company recognizes the estimated cost of warranty obligations in the period
in which the related products are sold. These estimates are based on historical
trends.
Interest Rate Agreements
The differential to be paid or received is accrued as interest rates change and
is recognized monthly over the life of the agreements.
Income Taxes
The Company accounts for income taxes under the provisions of Statement of
Financial Accounting Standards ("SFAS") No. 109, which requires the use of a
liability method in accounting for deferred taxes. If it is more likely than not
that some portion or all of a deferred tax asset will not be realized, a
valuation allowance is recognized.
Noncurrent Retirement Obligations
Noncurrent retirement obligations consist principally of reserves for pension
obligations, postretirement health care and other retirement benefits.
F-10
<PAGE>
Other Noncurrent Liabilities
Other noncurrent liabilities consist principally of reserves for environmental
cleanup and for severance associated with restructurings and plant closures.
Earnings Per Share
The net income (loss) per common and common equivalent share is based on the
weighted average number of common and common equivalent shares outstanding
during the period. Fully diluted earnings per share are not materially different
from primary earnings per share (see Note 16).
In February 1997, the Financial Accounting Standards Board ("FASB") issued SFAS
No. 128, "Earnings Per Share," which will be effective for the Company in fiscal
1998. Primary and fully diluted earnings per share will be replaced by basic and
diluted earnings per share. Prior period results will be restated. The most
significant difference is that basic earnings per share no longer assume
potentially dilutive securities in the computation. The adoption of SFAS No. 128
is not expected to have a significant impact on the Company's currently reported
earnings per share.
Revenue Recognition
The Company records a sale upon transfer of title to the customer, which
typically occurs upon shipment.
Advertising
The Company generally expenses advertising costs as incurred. The Company is
also party to certain sponsorship agreements, whereby they recognize the related
costs over the life of the agreement. Unamortized amounts under such agreements
are not material at March 31, 1996 and 1997.
Use of Estimates in the Preparation of Financial Statements
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Risks Associated with International Operations and Currency Risk
The Company's international operations are subject to risks normally associated
with foreign operations, including, but not limited to, the disruption of
markets, changes in export or import laws, restrictions on currency exchanges,
and the modification or introduction of other government policies with
potentially adverse effects. The majority of
F-11
<PAGE>
the Company's sales and expenses are denominated in currencies other than U.S.
dollars, and changes in exchange rates may have a material effect on the
Company's reported results of operations and financial position. In addition, a
significant portion of the Company's indebtedness relating to foreign
acquisitions is denominated in U.S. dollars whereas the related sales are
denominated in foreign currencies. During the fourth quarter of fiscal 1997,
major European currencies weakened significantly which resulted in a large
reduction of stockholders' equity.
Reclassifications
Certain previously reported amounts have been reclassified to conform to the
current presentation.
Recently Issued Accounting Standards
In fiscal 1998, the Company will adopt SFAS No. 129, "Disclosure of Information
about Capital Structure." This statement was issued in conjunction with SFAS No.
128 and is intended to standardize capital structure disclosure requirements and
to expand the number of companies subject to the requirements. The Company is
currently in compliance with the capital structure disclosure requirements, and
does not expect its disclosures to materially change under SFAS No. 129.
In June 1996, the FASB issued SFAS No. 125, "Accounting for Transfers and
Servicing of Financial Assets and Extinguishments of Liabilities." This
statement was effective for transfers and servicing of financial assets and
extinguishments of liabilities occurring after December 31, 1996. SFAS No. 125
provides accounting and reporting standards based on consistent application of a
financial-components approach that focuses on control. Under that approach,
after a transfer of financial assets, an entity recognizes the financial and
servicing assets it controls and the liabilities it has incurred, and
derecognizes liabilities when extinguished. In the fourth quarter of fiscal
1997, the Company amended its Receivables Sale Agreement to ensure the sale of
the Company's accounts receivable qualified as a sale under SFAS No. 125 (see
Note 11).
2. ACQUISITIONS AND DIVESTITURES:
In July 1996, the Company acquired the majority of the stock of Metalurgica De
Cubas S.L. ("Cubas"), a secondary lead smelter located near Madrid, Spain, for
approximately $7,500. In November 1996, the remaining stock was purchased for
approximately $3,200. The acquisition was accounted for as a purchase and the
results of Cubas' operations are included in the Company's consolidated
statements of operations effective July 1, 1996. The cost of the acquisition has
been allocated on the basis of the estimated fair value of the assets acquired
and the liabilities assumed. This acquisition resulted in goodwill of
approximately $7,300.
In May 1995, the Company acquired 99.7% of the outstanding stock of Compagnie
Europeene d'Accumulateurs S.A. ("CEAc") for approximately $425,000 in cash
($553,500 less assumed debt of $131,900 plus interest from March 31, 1995, of
$3,400). Subsequent open
F-12
<PAGE>
market purchases of CEAc stock have increased the ownership to 100%. The cost of
the acquisition has been allocated on the basis of the estimated fair value of
the assets acquired and the liabilities assumed. In accordance with Emerging
Issues Task Force Issue No. 87-11 ("EITF 87-11"), reserves of $12,000 were
established in fiscal 1996 for the expected 12-month operating losses
attributable to certain manufacturing and distribution facilities acquired that
were identified for closure and sale, all of which have been utilized.
This acquisition was accounted for as a purchase, and the results of CEAc's
operations are included in the Company's consolidated statements of operations
effective June 1, 1995. CEAc, which is headquartered in France, was one of the
largest SLI producers and the largest industrial battery manufacturer in Europe,
with operations primarily in France, Italy and Germany.
In October 1994, the Company acquired approximately 89.4% of the outstanding
capital stock and approximately 25% of the convertible bonds of Sociedad
Espanola del Acumulador Tudor, S.A. ("Tudor") for 1,145 pesetas per share or
approximately $229,000 (before fees and expenses). In December 1994, one of the
shareholders of Tudor sold its remaining 5% ownership to Tudor at the tender
offering price in accordance with the terms of the purchase agreement. After
completion of this sale and subsequent open market purchases of Tudor stock, the
Company's ownership in Tudor is approximately 95.8%. In addition, the Company
provided a letter of credit that guaranteed payment of the convertible bonds
held by that same shareholder. Tudor, which is headquartered in Madrid, Spain,
was the third-largest lead acid battery producer in Western Europe.
This acquisition was accounted for as a purchase, and the results of Tudor's
operations are included in the Company's consolidated statements of operations
effective October 3, 1994. The cost of the acquisition has been allocated on the
basis of the estimated fair value of the assets acquired and the liabilities
assumed. Included in the liabilities are reserves established, in accordance
with EITF 87-11, for the 12-month operating losses attributed to certain
manufacturing and distribution facilities acquired that were identified for
closure and sale. Approximately $23,600 of such reserves were established, all
of which have been utilized.
With respect to its European acquisitions, the Company recorded liabilities of
$153,000, related to severance benefits to be paid to certain employees who will
be terminated as a result of the consolidation and targeted plant closings.
Through March 31, 1997, $62,500 of severance benefits have been paid. Remaining
expenditures are expected to occur over the next several years as the Company is
required to comply with European Union and other applicable regulations. Based
on exchange rates at the acquisition dates, total goodwill resulting from the
CEAc and Tudor acquisitions was $585,000.
In April 1996, the Company acquired 14.4% of the remaining 15.6% minority
interest in a subsidiary of Tudor for $3,562.
In September 1994, the Company and PT Sapta Panji Manggala ("PT Sapta"), an
Indonesian company, signed an agreement whereby the Company contributed its
interest in B.I.G. Batteries Group Limited and PT Sapta contributed its interest
in Gemala Holdings Limited
F-13
<PAGE>
("Gemala") into a newly formed entity, Exide Batteries Limited. In exchange for
PT Sapta's interest in Gemala, the Company gave PT Sapta an 18.5% equity
interest in Exide Batteries Limited and the right to certain benefits to be
realized from Gemala's tax loss carryforwards. PT Sapta also received the right
to require the Company to purchase its 18.5% interest at any time after five
years from the closing date of the transaction for a defined multiple of
earnings.
In January 1996, the Company acquired the remaining 25% minority interest in a
subsidiary of CEAc, in exchange for 350,000 shares of the Company's common
stock. Pursuant to the purchase, the holder of these shares will receive 366,009
additional shares of the Company's common stock in 1997 as an adjustment in the
number of shares issued for changes in the Company's stock price. The total
adjusted value of the acquisition was $14,000, which resulted in a reduction to
goodwill and additional paid-in capital of approximately $3,200.
On August 31, 1995, the Company acquired Schuylkill Holdings, Inc. ("SHI") from
Heller Financial, Inc. ("Heller") through a merger, and purchased all of SHI's
stock options and subordinated notes from various holders and the secured debt
of SHI's operating subsidiary, Schuylkill Metals Corporation, the owner of two
lead smelters in Louisiana and Missouri. The Company paid $2,000 in cash for
SHI's stock, options and notes; for the secured debt, it issued 593,210 shares
of its common stock valued at $31,000, paid $3,700 in cash and issued a
contingent note, the value of which will be based on future market lead prices.
Under the terms of the purchase agreement, the Company is required to make an
additional payment to Heller in fiscal 2000 if lead prices for the four-and-one-
half-year period subsequent to the acquisition date reach defined levels. Based
on the Company's projection of lead prices for such period, in the fourth
quarter of fiscal 1996, the Company increased goodwill by $10,000. The Company
and Heller also entered into an agreement to share certain tax liabilities of
SHI. The purchase price was allocated primarily to receivables, inventories and
fixed assets and resulted in $22,000 of goodwill.
On May 3, 1994, the Company acquired General Electric Credit Corporation's
secured debt position in Evanite Fiber Corporation ("Evanite"), a debtor-in-
possession, for approximately $33,700. Evanite was a manufacturer, and the
Company's primary supplier, of battery separators. On February 21, 1995, the
Company acquired all of the assets and assumed certain liabilities of Evanite in
exchange for its secured debt position. The purchase price was allocated
primarily to receivables, inventories and fixed assets and resulted in no
goodwill. In June 1996, the Company sold certain assets related to a division of
Evanite for $13,000 cash. On December 27, 1996, the Company sold substantially
all of the remaining net assets, except for certain assets related to the
battery separator business, of Evanite for approximately $23,000 (subject to
final adjustments) and recorded a gain of approximately $8,300, which is
included in Other expense (income), net in the accompanying consolidated
statements of operations.
F-14
<PAGE>
The following summarized unaudited pro forma consolidated results of operations
for the fiscal year ended March 31, 1996, illustrates the estimated effects of
the CEAc and SHI acquisitions, as if the transactions were consummated as of
April 1, 1995.
<TABLE>
<CAPTION>
1996
----------
<S> <C>
Net sales $2,474,640
==========
Loss before extraordinary item $ (5,271)
==========
Net loss $ (14,871)
==========
Pro forma earnings per common and common
equivalent share:
Loss before extraordinary item $ (0.26)
==========
Net loss $ (0.72)
==========
</TABLE>
Pro forma adjustments include only the effects of events directly attributable
to a transaction that are factually supportable and expected to have a
continuing impact. Pro forma adjustments reflecting anticipated "efficiencies"
in operations resulting from a transaction are not permitted and, therefore, are
not reflected herein. The above unaudited pro forma financial information is not
necessarily indicative of the results that would actually have been obtained if
the transactions had been effected on the dates indicated or that may be
obtained in the future. The pro forma effects of the fiscal 1997 acquisitions
are not material.
3. INVENTORIES:
<TABLE>
<CAPTION>
March 31,
------------------------
1996 1997
-------- --------
<S> <C> <C>
Raw materials $138,809 $117,038
Work-in-process 94,340 70,805
Finished goods 362,012 345,671
-------- --------
$595,161 $533,514
======== ========
</TABLE>
At March 31, 1996 and 1997, inventories valued by the LIFO method were
approximately 29% and 33% of consolidated inventories, respectively. If all
inventories had been determined using the first-in, first-out method, such
inventories would have been $578,094 and $516,447 at March 31, 1996 and 1997,
respectively. The carrying amount of inventories on a LIFO basis exceeds
replacement cost. LIFO inventories reflect the fair value of inventories as of
August 31, 1989, when all of the outstanding common shares of the Company were
acquired in a leveraged buyout, as inventories subsequently produced cost less
to manufacture. The Company believes that no write-down of the carrying amount
of inventories to replacement cost is necessary, as no loss will be realized
upon their final sale.
In connection with the purchase of lead for anticipated manufacturing
requirements, the Company enters into commodity forward and futures contracts.
These contracts are used as a hedging strategy to help protect against
volatility in lead prices. The Company remains at risk for possible changes in
the market value of the commodity contracts; however, such
F-15
<PAGE>
risk should be mitigated by price changes in lead. The contracts are accounted
for as hedges and, accordingly, gains or losses are deferred and recognized in
inventory upon execution of the contract. At March 31, 1997, the Company had
outstanding contracts hedging lead purchases through May 1998 at fixed prices of
approximately $34,411 for 47,700 metric tons.
4. SHORT-TERM BORROWINGS:
At March 31, 1996 and 1997, short-term borrowings consisted of various operating
lines of credit and working capital facilities maintained by certain of the
Company's foreign subsidiaries. These borrowings are secured by receivables,
inventories or property. These facilities, which are typically for one-year
renewable terms, generally bear interest at the current market rates plus up to
1%. As of March 31, 1996 and 1997, the weighted average interest rate on these
borrowings was 10.9% and 12.0%, respectively.
5. LONG-TERM DEBT:
Following is a summary of the Company's long-term debt at March 31, 1996 and
1997:
<TABLE>
<CAPTION>
1996 1997
---------- ----------
<S> <C> <C>
U.S. Credit Agreement borrowings primarily
at LIBOR plus 2.5%; 8.2% at March 31, 1997 $ -- $ 17,000
10% Senior notes, due April 15, 2005 300,000 300,000
10.75% Senior notes, due December 15, 2002 150,000 150,000
12.25% Senior subordinated deferred coupon
debentures, due December 15, 2004 89,856 101,187
Convertible senior subordinated notes, due
December 15, 2005 290,124 298,295
European Facilities Agreement, borrowings
primarily at LIBOR plus 1.25% at rates
ranging from 5.6% to 10.9% at March 31,
1996, and 4.8% to 7.8% at March 31, 1997 436,940 356,865
European Term Loans at rates ranging from
7.6% to 10.1% at March 31, 1996, and 8.7%
at March 31, 1997 12,021 883
Other, primarily capital lease obligations at
interest rates ranging from 3.7% to 11.2% due
in installments through 2015 52,774 49,329
---------- ----------
1,331,715 1,273,559
Less - Current maturities (30,477) (37,488)
---------- ----------
$1,301,238 $1,236,071
========== ==========
</TABLE>
In December 1995, the Company issued 2.9% Convertible Senior Subordinated Notes
due December 15, 2005, with a face amount of $397,900 discounted to $287,797,
after the underwriters' exercise of their overallotment option. These notes
have a coupon rate of 2.9% with a yield to maturity of 6.75%. The notes are
convertible into the Company's
F-16
<PAGE>
common stock at a conversion rate of 12.5473 shares per $1,000 principal amount
at maturity, subject to adjustments in certain events. The Company used the
funds to repay indebtedness under the U.S. Credit Agreement.
On November 30, 1995, the Company entered into a Pan-European, multicurrency,
multiborrower credit facility ("European Facilities Agreement"). As of March 31,
1997, this facility contained a Tranche A term loan in the amount of 236,000
French francs (U.S. $41,840), a Tranche B term loan in the amount of 930,000
French francs (U.S. $164,879), and a revolving facility of 1,403,000 French
francs (U.S. $248,737). The Tranche A term loan matures on November 30, 2000,
and the Tranche B term loan matures on November 30, 2002. Both term loans
require semiannual principal payments throughout their terms. The revolving
facility expires on September 30, 2002. Substantially all of the Company's
European bank debt, including indebtedness under the former European Facilities
Agreement that was utilized to finance a portion of the CEAc acquisition, was
refinanced with this European Facilities Agreement.
Borrowings under the European Facilities Agreement bear interest at local market
rates (comparable to LIBOR) plus a margin of 1.5% per annum, reducing in 0.25%
increments beginning after one year to 1.0% so long as the European borrowing
group, as defined, meets and maintains certain interest coverage and leverage
tests.
Borrowings under the European Facilities Agreement are supported by guarantees
of most of the Company's European subsidiaries and secured by pledges of the
stock of the Company's Euro Exide, CEAc and Tudor subsidiaries. The European
Facilities Agreement contains a number of financial and other covenants
customary for such agreements including restrictions on new indebtedness, liens,
minimum net worth, leverage rates, acquisitions and capital expenditures. The
Company was in compliance with these covenants at March 31, 1997.
In April 1995, the Company issued $300,000 in aggregate principal amount of 10%
Senior Notes, the net proceeds of which were used, along with borrowings under
the U.S. Credit Agreement, to finance the CEAc acquisition. The 10% Senior Notes
are redeemable at the option of the Company, in whole or in part, at any time on
or after April 15, 2000, initially at 105% of the principal amount, plus accrued
interest, declining to 100% of the principal amount, plus accrued interest on or
after April 15, 2002.
Effective August 30, 1994, the Company entered into a new U.S. Credit Agreement
that initially provided a borrowing capacity of $550,000 with three components:
Term Loan A ($100,000), having a five-year term; Term Loan B ($100,000), having
a seven-year term; and a Revolving Credit Facility ($350,000, subsequently
reduced to $165,000), expiring September 30, 1999. Both Term Loan A and Term
Loan B were repaid during fiscal 1996. Effective March 31, 1997, the U.S. Credit
Agreement was amended to provide $50,000 of additional borrowing capacity under
Term Loan D maturing on June 15, 2001. The Revolving Credit Facility provides
for the Company's working capital and letter of credit needs and is permanently
reduced $15,000 annually for three years beginning September 30, 1996. As of
March 31, 1997, the Company had $7,891 of letters of credit outstanding and
$125,109 of additional availability under the Revolving Credit Facility.
Borrowings under
F-17
<PAGE>
the Revolving Credit Facility are limited by the amount of eligible domestic
receivables and inventory. The U.S. Credit Agreement contains a number of
financial and other covenants that, among other things, place restrictions on
dividends, new indebtedness, liens, acquisitions and capital expenditures. The
Company was in compliance with these covenants at March 31, 1997. Substantially
all of the assets, less receivables sold, of the Company's U.S. operations are
pledged as collateral for the U.S. Credit Agreement.
Initial borrowings under the new U.S. Credit Agreement were used in the paydown
and early termination of the former Credit Agreement in fiscal 1995 that
resulted in an extraordinary loss in fiscal 1995 of $3,597, net of $2,320 income
tax benefit. The new U.S. Credit Agreement also provided funding for the
acquisition of Tudor.
Debt issuance costs of $20,228 were incurred in fiscal 1996 in connection with
the new U.S. Credit Agreement. Amortization of deferred financing costs related
to the current and previous Credit Agreements amounted to $2,249, $3,002 and
$1,544 in fiscal 1995, 1996 and 1997, respectively. In fiscal 1995, the Company
expensed $2,000 of bridge loan commitment fees.
In connection with the issuance of the 12.25% Senior Subordinated Debentures,
10.75% Senior Notes, 10% Senior Notes and 2.9% Convertible Senior Subordinated
Notes, the Company incurred financing costs of $27,813. Amortization expense
related to this senior debt during fiscal 1995, 1996 and 1997 was $784, $2,215
and $2,831, respectively.
In fiscal 1996, deferred financing costs were written off due to early repayment
of the former European Facilities Agreement, European Term Loans, Spanish
Convertible Debentures and Term Loan A and Term Loan B under the U.S. Credit
Agreement, as well as permanent reductions in the Revolving Credit Facility
under the U.S. Credit Agreement, resulting in an extraordinary loss of $9,600
net of $5,958 income tax benefit.
During fiscal 1997, the Company entered into a series of bond swap agreements
for $19,975 (principal amount) of its 10% Senior Notes and $18,000 (principal
amount) of its 10.75% Senior Notes. Under the agreements, the Company pays LIBOR
plus 1.75% to a counterparty and receives from the counterparty the fixed coupon
rate payments made by the Company. At the end of the agreements, the
counterparty is guaranteed repayment of its open market purchase price of the
Notes which exceeded face value by $1,848. This debt modification was accounted
for as an extinguishment of debt, and the related write-off of unamortized
deferred financing costs along with the premium paid by the counterparty
resulted in an extraordinary loss of $2,767. No income tax benefit on the
extraordinary loss was recognized.
The Company enters into interest rate hedge agreements to manage interest costs
and exposure to changing interest rates. Effective December 1994, the Company
entered into two interest rate collar agreements that reduce the impact of
changes in interest rates on a portion of the Company's floating rate debt.
These agreements effectively limit the LIBOR base interest rate on $100,000 of
borrowings under the U.S. Credit and European Facilities Agreements to no more
than 8% and no less than 5.5% graduating up to 7.5% through December 30, 1997.
Effective May 17, 1995, the Company entered into an interest rate swap
F-18
<PAGE>
agreement that fixed the LIBOR base interest rate on a notional amount of
$50,000 at 6.21% for two years. Additionally, effective March 29, 1997, the
Company entered into two interest rate collar agreements which reduce the impact
of changes in interest rates on a portion of the Company's floating rate debt.
The agreements effectively limit the MIBOR base interest rate on 11,000,000
Spanish peseta (U.S. $77,055) of borrowings and the PIBOR base interest rate on
575,000 French franc (U.S. $101,948) of borrowings under the European Facilities
Agreement to no more than 7.5% and 6%, respectively, and no less than 3.5% and
2%, respectively. During fiscal 1995, 1996 and 1997, the Company recognized $24,
$580 and $1,952, respectively, of additional interest expense related to these
swap and collar agreements.
Counterparties to bond swap transactions and interest rate hedge agreements are
major financial institutions. Management believes the risk of incurring losses
related to credit risk is remote and any losses would be immaterial.
In April 1997, the Company initiated a tender offer and during May 1997 retired,
pursuant to the tender offer, approximately 98% of its 12.25% Senior
Subordinated Debentures for approximately $104,000, resulting in an
extraordinary loss of approximately $6,000, which will be recorded in the first
quarter of fiscal 1998. The tender offer was financed with borrowings under the
U.S. Credit Agreement.
In April 1997, Exide Holding Europe, a wholly-owned European subsidiary of the
Company, privately issued 175,000 German deutsche mark (U.S. $103,000) of 9.125%
Senior Notes due 2004. The proceeds of the offering were used to repay a portion
of the borrowings under the European Facilities Agreement.
Annual principal payments required under long-term debt obligations, reflective
of the April and May 1997 financing transactions, are as follows:
<TABLE>
<CAPTION>
Fiscal Year Amount
----------- ------
<S> <C>
1998 $ 37,488
1999 39,948
2000 199,082
2001 38,152
2002 288,499
Thereafter 670,390
</TABLE>
6. STOCKHOLDERS' EQUITY:
During fiscal 1994, the Company completed an initial public offering ("IPO") and
secondary offering of its common stock, which raised $126,000 (before fees and
expenses) for the issuance of 5,600,000 shares of common stock.
On December 22, 1994, the Company raised $258,750 (before fees and expenses)
through the issuance of 5,175,000 additional shares of common stock.
F-19
<PAGE>
On August 14, 1996, the Company amended its certificate of incorporation to
increase the total number of authorized shares of common stock from 30,000,000
shares to 60,000,000 shares.
7. EMPLOYEE BENEFIT PLANS:
North American Pension Plans
The Company has noncontributory defined benefit pension plans covering
substantially all hourly employees in North America. Plans covering hourly
employees provide pension benefits of stated amounts for each year of credited
service. Substantially all salaried employees in North America are covered
under a defined contribution plan, which requires the Company to contribute 4%
of eligible employees' salaries on an annual basis.
The components of net periodic pension cost for the defined benefit plans and
pension expense for the defined contribution plans for the fiscal years ended
March 31, 1995, 1996 and 1997, are as follows:
<TABLE>
<CAPTION>
1995 1996 1997
------- -------- -------
<S> <C> <C> <C>
Defined benefit plans:
Service cost of current period $ 1,217 $ 1,378 $ 1,726
Interest cost on projected benefit obligation 4,609 5,474 6,068
Actual return on plan assets 3,173 (11,721) (7,979)
Net amortization and deferrals (7,909) 7,306 2,386
------- -------- -------
Net defined benefit pension expense 1,090 2,437 2,201
Defined contribution plan 2,003 2,167 2,150
------- -------- -------
Total pension expense $ 3,093 $ 4,604 $ 4,351
======= ======== =======
</TABLE>
It is the Company's policy to make contributions sufficient to meet the minimum
contributions required by law and regulation.
F-20
<PAGE>
The following table sets forth the funded status and the amounts recognized in
the consolidated balance sheets for the Company's defined benefit pension plans:
<TABLE>
<CAPTION>
March 31
-------------------------
1996 1997
-------- -------
<S> <C> <C>
Actuarial present value of:
Vested benefit obligation $ 70,309 $76,332
======== =======
Accumulated benefit obligation $ 73,300 $79,639
======== =======
Actuarial present value of:
Projected benefit obligation $ 74,617 $81,663
Plan assets at fair value 60,414 75,124
-------- -------
Plan assets less than projected benefit obligation (14,203) (6,539)
Prior service cost 1,614 1,557
Unrecognized net loss 8,826 6,694
Additional minimum liability recognized (10,087) (8,983)
-------- -------
Accrued pension cost $(13,850) $(7,271)
======== =======
</TABLE>
The weighted average discount rate used in determining the projected benefit
obligation was 7.75% as of March 31, 1996 and 1997. The rate of increase in
future compensation levels and the expected long-term rate of return on plan
assets were 6.0% and 10.5%, respectively, as of March 31, 1996, and 6.0% and
9.5%, respectively, as of March 31, 1997. The pension plan assets are invested
primarily in equity and fixed income securities.
SFAS No. 87 requires that underfunded pension plans reflect an additional
balance sheet liability if the excess of the accumulated benefit obligation over
the plan assets exceeds the accrued pension liability. However, SFAS No. 87
also permits the Company to establish an intangible asset, not to exceed the
unrecognized prior service cost, as an offsetting entry. Any remaining amount of
additional liability that is not offset by the intangible asset must be offset
through a charge against equity. Accordingly, the Company's minimum additional
pension liability of $10,087 and $8,983 consists of intangible assets of $924
and $1,424 and charges against equity of $9,163 and $7,682 (tax effected to
$5,956 and $4,993) at March 31, 1996 and 1997, respectively.
European Pension Plans
European subsidiaries of the Company sponsor several defined benefit and defined
contribution plans that cover substantially all employees who are not covered by
statutory plans. For defined benefit plans, charges to expense are based upon
costs computed by independent actuaries. In most cases, the defined benefit
plans are not funded; book reserves are maintained. Benefit formulas are
similar to those used by the North American plans.
Total pension expense related to the European plans was $4,953 and $5,914 in
fiscal 1996 and 1997, respectively. The accrued pension liability, reflected in
Noncurrent Retirement Obligations as of March 31, 1996 and 1997, which relates
to the defined benefit plans that are not funded, approximates the projected
benefit obligation. The projected benefit
F-21
<PAGE>
obligation of such plans is $72,700 and $69,300, as of March 31, 1996 and 1997,
of which $67,600 and $61,200, respectively, is vested. The discount rates used
in determining the actuarial present value of the projected benefit obligation
ranged from 6.5% to 8.5%, and the assumed increase in future compensation levels
ranged from 3.5% to 5% in fiscal 1996 and 1997.
With respect to funded plans, as of March 31, 1996 and 1997, the Company
recognized $10,400 and $9,300, respectively, of prepaid pension costs reflected
in Other Assets, representing the overfunded status of certain defined benefit
plans. The projected benefit obligation of the plans as of March 31, 1996 and
1997, is $40,700 and $47,000, respectively, of which $26,000 and $30,000 is
vested, and the plan assets at fair value are $51,100 and $52,300, respectively.
The discount rate used in determining the projected benefit obligation were
7.75% and 8.00%, respectively as of March 31, 1996 and 1997, the rate of
increase in future compensation levels were 6.5% and 7.0% and the expected long-
term rate of return on plan assets were 9.5% and 9.0%.
8. POSTRETIREMENT HEALTH CARE AND LIFE INSURANCE BENEFITS:
The Company provides certain health care and life insurance benefits for a
limited number of retired employees in the U.S. In addition, a limited
number of the Company's active U.S. employees may become eligible for those
benefits if they reach normal retirement age while working for the Company. The
Company accrues the estimated cost of providing postretirement benefits during
the employees' applicable years of service.
The following table sets forth the plan's postretirement benefit liability as of
March 31:
<TABLE>
<CAPTION>
1996 1997
------- -------
<S> <C> <C>
Accumulated postretirement benefit obligation:
Retirees, beneficiaries and dependents $12,399 $13,203
Fully eligible actives 563 534
Not fully eligible actives 1,855 1,552
------- -------
Total 14,817 15,289
Unrecognized loss (2,242) (2,410)
------- -------
Accrued postretirement benefit cost $12,575 $12,879
======= =======
</TABLE>
The net periodic postretirement benefit cost for fiscal 1995, 1996 and 1997
included the following components:
<TABLE>
<CAPTION>
1995 1996 1997
----- ------ ------
<S> <C> <C> <C>
Service cost $ 99 $ 95 $ 102
Interest cost 856 1,032 1,121
----- ------ ------
Net periodic postretirement benefit cost $ 955 $1,127 $1,223
===== ====== ======
</TABLE>
The significant assumptions used to calculate the net periodic postretirement
benefit cost and the accumulated postretirement benefit obligation as of March
31, 1996 and 1997, were
F-22
<PAGE>
a discount rate of 7.75% and medical costs that are assumed to increase at a
rate of 9% per year grading down to 5% per year by 2004. The effect of a one-
percentage-point increase in the assumed health care cost trend rate would
increase the accumulated postretirement benefit obligation as of March 31, 1997,
by approximately $1,345, and the aggregate of the service and interest cost
components of net periodic postretirement benefit cost by approximately $126.
9. STOCK GRANTS AND OPTIONS:
On April 28, 1993, the Board of Directors adopted an Incentive Compensation
Plan, under which certain members of the Company's management were granted
811,662 shares of the Company's common stock. These shares vest after five
years and have certain restrictions related to sale, transferability, and
employment with the Company. Upon complete vesting, participants must pay $2.25
per share, the estimated fair value at the grant date, prior to transferring
such shares.
In October 1993, the Board of Directors adopted the Long Term Incentive Plan
("Incentive Stock Plan"), which may grant awards to key employees in the form
of incentive stock options, nonqualified stock options, restricted shares of
common stock or units valued on the basis of long-term performance of the
Company ("Performance Units"). Options may be accompanied by stock
appreciation rights ("Rights"). The maximum aggregate number of shares of
common stock with respect to which options, restricted shares, Performance Units
and Rights granted without accompanying options that may be granted pursuant to
the Incentive Stock Plan is 700,000 shares.
During fiscal 1995, a total of 40,000 restricted shares of the Company's common
stock were granted to certain employees. The market value of the shares awarded
on the date of grant ($1,935) has been recorded as unearned compensation and is
shown as a separate component of stockholders' equity. Unearned compensation is
being amortized to expense over the five-year vesting period and amounted to
$387 and $194 in fiscal 1996 and 1997, respectively. In fiscal 1996, grants for
20,000 shares of the restricted stock were canceled.
During fiscal 1997 the Company approved a plan whereby Directors of the Company
are granted common stock as part of their total compensation. Under this plan
1,500 shares were granted during fiscal 1997.
F-23
<PAGE>
Stock grant and option transactions are summarized as follows:
<TABLE>
<CAPTION>
Incentive
Compensation Incentive
Plan Stock Grants Stock Plan
------------ ------------ ----------
<S> <C> <C> <C>
Shares under option:
Outstanding at April 1, 1994 811,662 -- --
Granted -- 40,000 --
Exercised -- -- --
Canceled (23,190) -- --
------- ------- -------
Outstanding at April 1, 1995 788,472 40,000 --
Granted -- -- 102,000
Exercised (10,822) -- --
Canceled (23,972) (20,000) --
------- ------- -------
Outstanding at April 1, 1996 753,678 20,000 102,000
Granted -- 1,500 577,000
Exercised -- -- --
Canceled -- -- --
------- ------- -------
Outstanding at March 31, 1997 753,678 21,500 679,000
======= ======= =======
Options available for grant at
March 31, 1997 -- -- 21,000
======= ======= =======
</TABLE>
Shares under the Incentive Compensation Plan were exercised at $2.25 per share
in fiscal 1996. For outstanding shares under option at March 31, 1997, option
prices ranged from $25.875 to $50.00 (and averaged $27.39) per share related to
the Incentive Stock Plan and $2.25 per share for the Incentive Compensation
Plan. The outstanding stock options under the Incentive Stock Plan have an
average remaining contractual life of 8.33 years at March 31, 1997. At March
31, 1997, options for 30,400 shares of common stock under the Incentive Stock
Plan with an aggregate purchase price of $910 were exercisable.
In October 1995, the FASB issued SFAS No. 123, "Accounting for Stock-Based
Compensation." SFAS No. 123 encourages a fair-value-based method of accounting
for employee stock options and similar equity instruments. SFAS No. 123 also
allows an entity to continue to account for stock-based employee compensation
using the intrinsic value for equity instruments using APB Opinion No. 25. As
provided for in SFAS No. 123, the Company elected to continue the intrinsic
value method of expense recognition. Accordingly, no compensation cost has been
recognized for the stock option plans. Had compensation expense for the stock
option plans been determined consistent with the provisions of SFAS No. 123, the
Company's net income (loss) and net income (loss) per
F-24
<PAGE>
common and common equivalent share would have been the pro forma amounts
indicated below:
<TABLE>
<CAPTION>
Fiscal Year Ended March 31
-----------------------------
1996 1997
------------ -----------
<S> <C> <C>
Net Income (Loss):
As Reported $(8,661) $16,225
Pro Forma $(8,858) $15,617
Net Income (Loss) Per Common and
Common Equivalent Share:
As Reported $ (0.42) $ 0.77
Pro Forma $ (0.43) $ 0.74
</TABLE>
The fair value of each option grant was estimated on the date of grant using the
Black-Scholes option-pricing model with the following range of assumptions used
for the five option grants which occurred during fiscal 1996 and 1997:
<TABLE>
<CAPTION>
Fiscal Year Ended March 31
-----------------------------------
1996 1997
--------------- ----------------
<S> <C> <C>
Volatility 34.3% 31.3% - 33.5%
Risk-free interest rate 6.4% 6.3% - 6.5%
Expected life in years 5.5 5.25 - 10.0
Dividend yield 0.4% 0.4%
</TABLE>
10. INCOME TAXES:
The provision for income taxes includes federal, state and foreign taxes
currently payable and those deferred because of temporary differences between
the financial statement and tax bases of assets and liabilities. The components
of the provision for income taxes for the fiscal years ended March 31, 1995,
1996 and 1997, are as follows:
<TABLE>
<CAPTION>
1995 1996 1997
-------------- ---------------- --------------
Current:
<S> <C> <C> <C>
Federal $ 2,940 $ -- $ --
State 218 700 --
Foreign 2,865 5,300 8,477
------- -------- -------
6,023 6,000 8,477
------- -------- -------
Deferred:
Federal (4,253) (23,838) --
State (911) (2,347) --
Foreign 4,301 26,485 6,255
------- -------- -------
(863) 300 6,255
------- -------- -------
Total provision $ 5,160 $ 6,300 $14,732
======= ======== =======
</TABLE>
F-25
<PAGE>
Major differences between the federal statutory rate and the effective tax rate
are as follows:
<TABLE>
<CAPTION>
1995 1996 1997
---------- ---------- ----------
<S> <C> <C> <C>
Federal statutory rate 35.0% 35.0% 35.0%
State taxes, net of federal benefit (4.2) (22.6) --
Nondeductible goodwill 15.3 87.1 16.6
Difference in rates on foreign subsidiaries 0.8 11.5 (6.8)
Other, net 1.2 (17.4) (2.7)
------ ------ ------
Effective tax rate 48.1% 93.6% 42.1%
===== ====== =====
</TABLE>
The following is a summary of the significant components of the Company's
deferred tax assets and liabilities as of March 31, 1996 and 1997:
<TABLE>
<CAPTION>
1996 1997
----------- -----------
Deferred tax assets:
<S> <C> <C>
Operating loss and tax credit carryforwards $ 133,870 $ 146,199
Compensation reserves 37,440 31,260
Environmental reserves 16,539 15,507
Interest 10,584 14,155
Retirement benefits 14,553 11,740
Self-insurance 4,536 3,805
Warranty 3,310 3,212
Other 18,607 13,664
Valuation allowance (129,477) (152,718)
--------- ---------
109,962 86,824
--------- ---------
Deferred tax liabilities:
Depreciation/property basis (13,824) (12,695)
Inventory basis difference (5,879) (7,183)
Other (3,423) (4,180)
--------- ---------
(23,126) (24,058)
--------- ---------
Net deferred tax assets $ 86,836 $ 62,766
========= =========
</TABLE>
As of March 31, 1997, the Company has net operating loss carryforwards for U.S.
income tax purposes of approximately $79,950, which expire in years 2006 through
2012. Certain of these carryforwards have preacquisition tax attributes, which
will reduce goodwill upon realization. For financial reporting purposes, a
valuation allowance has been recognized to offset the deferred tax assets
related to these preacquisition tax attributes and certain other deferred tax
assets for which it is more likely than not that the benefits will not be
realized.
As of March 31, 1997, certain of the Company's European subsidiaries have net
operating loss carryforwards for income tax purposes of approximately $301,772,
of which $97,762 expire in years 1998 through 2004. Most of these carryforwards
are preacquisition tax attributes, which will reduce goodwill upon realization.
For financial
F-26
<PAGE>
reporting purposes, a valuation allowance has been recognized to offset the
deferred tax assets related to these preacquisition tax attributes and certain
nondeductible reserves for which it is more likely than not that related tax
benefits will not be realized.
Non-U.S. pre-tax income of the Company was $18,800, $71,900 and $72,300 in
fiscal 1995, 1996 and 1997, respectively (see Note 17). Most of the increase in
the valuation allowance is offset by increases in deferred tax assets associated
with the European acquisitions, which resulted from finalizing the prior year
tax returns.
The Company's net deferred tax assets include certain amounts of net operating
loss carryforwards principally in the U.S., which management believes
are realizable through a combination of anticipated tax planning strategies and
forecasted future taxable income. The Company intends to implement the
necessary tax planning strategies to realize the benefit of such deferred tax
assets. However, failure to achieve forecasted future taxable income might
affect the ultimate realization of recorded net deferred tax assets.
As of March 31, 1997, the Company has not provided for withholding or U.S.
federal income taxes on undistributed earnings of foreign subsidiaries since
such earnings are expected to be reinvested indefinitely.
11. RECEIVABLES SALE AGREEMENT:
The Company entered into a Receivables Sale Agreement with certain banks (the
"Purchasers"), and under this agreement, the Purchasers have committed to
purchase, with limited recourse, all right, title and interest in selected
accounts receivable of the Company, up to a maximum net investment of $75,000
(increased from $40,000 effective December 20, 1995, after being reduced from
$50,000 effective February 17, 1994). In connection with the Receivables Sale
Agreement, during fiscal 1997 the Company established a wholly owned, bankruptcy
remote subsidiary, Exide Funding, Inc., to purchase accounts receivable at a
discount from the Company on a continuous basis, subject to certain limitations
as described in the Receivables Sale Agreement. Exide U.S. Funding Corporation
simultaneously sells the accounts receivable at the same discount to the
Purchasers. As of March 31, 1996 and 1997, gross uncollected receivables sold
under the Receivables Sale Agreement were $112,109 and $102,187, respectively.
Losses on receivables sold under this agreement for fiscal years 1995, 1996 and
1997 were $1,616, $2,554 and $4,290, respectively, and are included in Other
expense (income), net in the Consolidated Statements of Operations.
12. RELATED-PARTY TRANSACTIONS:
The Company purchased $20,493, $20,290 and $4,920 of product from Yuasa-Exide,
Inc. ("YEI"), a 13.5%-owned affiliate, during fiscal 1995, 1996 and 1997,
respectively. The Company also sold $10,850, $10,618 and $6,580 of product to
YEI during fiscal 1995, 1996 and 1997, respectively. In addition, the Company
provides certain administrative services and pays certain expenses for YEI. YEI
reimbursed the Company for these costs totalling $4,867, $2,282 and $1,753
during fiscal 1995, 1996 and 1997, repsectively. As of March 31, 1996 and 1997,
the Company had a net receivable of $2,119 and $5,051, respectively.
F-27
<PAGE>
13. ENVIRONMENTAL MATTERS:
The Company, particularly as a result of its manufacturing and secondary lead
smelting operations, is subject to numerous environmental laws and regulations
and is exposed to liabilities and compliance costs arising from its past and
current handling, processing, recycling, storing and disposing of hazardous
substances and hazardous wastes. The Company's operations are also subject to
occupational safety and health laws and regulations, particularly relating to
the monitoring of employee health in North America and, to a lesser extent, in
Europe. Except as disclosed herein, the Company believes that it is in
substantial compliance with all material environmental, health and safety
requirements.
North America
The Company has been advised by the U.S. Environmental Protection Agency
("EPA") that it is a "Potentially Responsible Party" ("PRP") under the
Comprehensive Environmental Response, Compensation and Liability Act
("CERCLA") or similar state laws at 54 federally defined Superfund or state
equivalent sites. At 31 of these sites, the Company has either paid or is in
the process of paying its share of liability. In most instances, the Company's
obligations are not expected to be significant because its portion of any
potential liability appears to be minor to insignificant in relation to the
total liability of all PRPs that have been identified and are viable. The
Company's share of the anticipated remediation costs associated with all of the
Superfund sites where it has been named a PRP, based on the Company's estimated
volumetric contribution to each site, is included in the environmental
remediation reserves discussed below.
Because the Company's liability under such statutes may, as a technical matter,
be imposed on a joint and several basis, the Company's liability may not
necessarily be based on volumetric allocations and could be greater than the
Company's estimates. Management believes, however, that its PRP status at these
Superfund sites will not have a material adverse effect on the Company's
business or financial condition because, based on the Company's experience, it
is reasonable to expect that the liability will be roughly proportionate to its
volumetric contribution of waste to the sites.
The Company currently has greater than 50% liability at only one Superfund site,
discussed below. The Company recently paid its share at another site where it
was a primary PRP, also discussed below. Other than these sites, the Company's
volumetric allocation exceeds 5% at only five sites at which the Company's share
of liability has not been paid as of March 31, 1997. The current volumetric
allocation at these five sites averages 12.8%.
The Company is the primary PRP at the Brown's Battery Breaking Superfund site
located in Pennsylvania. The site was operated by third-party owners in the
1960s and early 1970s. The EPA issued a Record of Decision ("ROD") in 1992
adopting an innovative technology advocated by the Company as the first
alternative remedy, and traditional stabilization as the second alternative
remedy. The Company has established its reserves based upon its estimates of
the remediation cost. During fiscal 1997, the Company signed a consent decree
and paid $3,000 of the EPA's $6,500 in past costs.
F-28
<PAGE>
The Company was the primary PRP at the Wortham Lead Salvage State Superfund Site
located in Texas, another site that was owned and operated by third parties.
The Company remediated the Wortham Site at a cost of $400, which was completed
in the first quarter of fiscal year 1998. Post-closure activities are not
expected to be significant.
The Company is also involved in the assessment and remediation of various other
properties, including certain Company-owned or -operated facilities. Such
assessment and remedial work is being conducted pursuant to a number of state
and federal environmental laws and with varying degrees of involvement by state
and federal authorities. Where reasonably estimable, the costs of such projects
have been accrued in reserves established by the Company, as discussed below.
In addition, certain environmental matters concerning the Company are pending in
federal and state courts or with regulatory agencies.
While the ultimate outcome of the foregoing environmental matters is uncertain,
after consultation with legal counsel, management does not believe the
resolution of these matters will have a material adverse effect on the Company's
business, cash flows, financial condition or results of operations. The
Company's policy is to accrue for environmental costs when it is probable that a
liability has been incurred and the amount of such liability is reasonably
estimable. While the Company believes its current estimates of future
remediation costs are reasonable, future findings or changes in estimates could
have a material effect on the recorded reserves.
The Company has established reserves for on-site and off-site environmental
remediation costs and believes that such reserves are adequate. As of March 31,
1997, the amount of such reserves on the Company's balance sheet was $27,249. Of
this amount, $25,589 was included in "Other Noncurrent Liabilities." Because
environmental liabilities are not accrued until a liability is determined to be
probable and reasonably estimable, not all potential future environmental
liabilities have been included in the Company's environmental reserves and,
therefore, additional earnings charges are possible.
In 1993, the CNA Insurance Companies ("CNA") filed a declaratory judgment
lawsuit in Delaware state court. CNA sought to have the court determine that
CNA owed no duty to the Company for costs to defend environmental actions and to
pay response costs, property damage and bodily injury claims resulting from
environmental conditions. The Company vigorously defended this suit and sought
to have the court determine that CNA and numerous other insurance carriers were
required to defend the Company and to reimburse or indemnify it for certain
response costs, property damage and bodily injury claims allegedly resulting
from environmental conditions. In fiscal 1997, the Company reached settlement
with most of the carriers in an amount aggregating $17,309. This settlement,
which was reflected in cost of sales, offset certain legal costs that the
Company incurred in fiscal 1997, as well as the elimination of $7,000 of legal
fees deferred in fiscal 1996. Negotiations with the remaining insurance
carrier is ongoing. Based upon the current status of these negotiations and
after consultation with legal counsel, the Company recorded a $5,250 receivable
during the fourth quarter of fiscal 1997. Legal counsel and
F-29
<PAGE>
management believe that such recovery is probable and anticipate that the
ultimate recovery might be higher.
Europe
The Company is subject to numerous environmental, health and safety requirements
and is exposed to differing degrees of liabilities and compliance costs arising
from its past and current manufacturing and recycling activities in various
European countries. The laws and regulations applicable to such activities
differ from country to country and also substantially differ from U.S. laws and
regulations. Except as disclosed herein, the Company believes, based upon
reports from its foreign subsidiaries and/or independent qualified opinions,
that it is in substantial compliance with all material environmental, health and
safety requirements in each country, except as noted below.
Certain facilities in France, Germany and Spain are not in compliance with
certain limits contained in air and wastewater treatment discharge permits. In
every case, the Company is working cooperatively with appropriate authorities to
come into compliance. It is possible that the Company could be subject to fines
or penalties with regard to these violations, although management believes any
such fines/penalties will not be material. The cost to upgrade the facilities
to attain compliance is not expected to be material. The violations are not
expected to interfere with continued operations at the subject facilities.
The Company expects that its European operations will continue to incur capital
and operating expenses in order to maintain compliance with evolving
environmental, health and safety requirements or more stringent enforcement of
existing requirements in each country.
As a result of the Company's plans to consolidate its European manufacturing
operations, it is probable that certain environmental costs will be incurred.
An estimate of the probable liability has been included in the Tudor and CEAc
purchase price allocations.
14. FAIR VALUE OF FINANCIAL INSTRUMENTS:
The estimated fair value of financial instruments has been determined by the
Company using available market information and appropriate methodologies;
however, considerable judgment is required in interpreting market data to
develop the estimates for fair value. Accordingly, the estimates presented
herein are not necessarily indicative of the amounts that the Company could
realize in a current market exchange. Certain of these financial instruments
are with major financial institutions and expose the Company to market and
credit risks and may at times be concentrated with certain counterparties or
groups of counterparties. The creditworthiness of counterparties is continually
reviewed, and full performance is anticipated.
The methods and assumptions used to estimate the fair value of each class of
financial instruments are set forth below:
F-30
<PAGE>
. Cash and cash equivalents, accounts receivable and accounts payable--The
carrying amounts of these items are a reasonable estimate of their fair
values at March 31, 1997.
. Investments in affiliates--The estimated fair value of these items could
not be obtained without incurring excessive costs as these investments
have no quoted market price.
. Long-term receivables--The carrying amounts of these items are a
reasonable estimate of their fair value.
. Short-term borrowings--Borrowings under the line of credit arrangements
have variable rates that reflect currently available terms and conditions
for similar debt. The carrying amount of this debt is a reasonable
estimate of its fair value.
. Long-term debt--Borrowings under the U.S. and European Facilities Credit
Agreements have variable rates that reflect currently available terms and
conditions for similar debt. The carrying amount of this debt is a
reasonable estimate of its fair value.
Senior notes and senior subordinated debentures are traded occasionally in
public markets.
Interest rate protection agreements have no carrying value; however, if
the Company were to terminate these agreements at March 31, 1997, the
Company would be obligated to pay $1,181, based on quotes from financial
institutions.
. Lead forward and futures contracts--The contract value of the outstanding
contracts at March 31, 1997, exceeds the estimated fair value by $1,426,
based on quotes from brokers.
The carrying values and estimated fair values of the Company's long-term debt
for which the amounts differ are as follows at March 31, 1997:
<TABLE>
<CAPTION>
Estimated
Carrying Fair
Value Value
-------- ---------
<C> <S> <C> <C>
10.00% Senior Notes $300,000 $298,500
10.75% Senior Notes 150,000 154,500
12.25% Senior Subordinated Debentures 101,187 103,400
2.90% Convertible Senior Subordinated Notes 298,295 222,824
</TABLE>
F-31
<PAGE>
15. COMMITMENTS AND CONTINGENCIES:
In August 1996, a Portland, Oregon jury found that the Company infringed a
patent relating to a device for inserting battery plates into battery
separators, and awarded damages of $5,000. Later, the Court, acting on the
jury's verdict, entered a judgment against the Company for $5,456. On April 28,
1997, the Court denied the Company's post-trial motions relating to the
judgment. On May 16, 1997, the Company filed its Notice of Appeal. On May 21,
1997, plaintiffs filed a cross appeal. The Company, following consultation with
its independent patent counsel, intends to vigorously prosecute the appeal.
Management and legal counsel remain confident that the jury verdict and the
court's judgment relating to the patent asserted at trial will be reversed and
that the cross appeal is without merit and, therefore, shall be rejected. The
Company anticipates receiving a decision on the appeal some time during the
first quarter of 1998.
The Company is now or recently has been involved in several related lawsuits
pending in state and federal courts in Alabama, North Carolina and South
Carolina. These actions contain allegations that the Company sold old or used
batteries as new batteries. One action that had been certified as a class action
was later decertified by the Alabama Supreme Court and has now been dismissed.
In another action, the judge directed a verdict in favor of the Company
following presentation of the plaintiff's evidence. That case is now on appeal.
The remaining actions seek compensatory and punitive damages and, in one case,
injunctive relief. The Company disputes the material legal claims in these
matters and intends to vigorously defend itself.
The Company is involved in various other claims and litigation incidental to the
conduct of its business. Based on consultation with legal counsel, management
does not believe that any claims or litigation to which the Company is a party
will have a material adverse effect on the Company's financial condition or
results of operations. In the fourth quarter of fiscal 1996, the Company paid
$5,548 as a result of an unfavorable verdict from the U.S. Court of Appeals in a
patent infringement matter. Such amount was recorded as Other expense (income),
net.
Future minimum lease payments under operating and capital leases that have
initial or remaining noncancelable lease terms in excess of one year at
March 31, 1997, are:
<TABLE>
<CAPTION>
Fiscal Year Operating Capital
----------- --------- -------
<S> <C> <C>
1998 $ 36,587 $ 3,398
1999 28,742 3,087
2000 20,101 2,764
2001 11,811 2,200
2002 8,411 2,035
Thereafter 31,234 18,668
-------- -------
Total minimum payments $136,886 32,152
========
Less - Interest on capital leases (9,798)
-------
Total principal payable on capital
leases (included in Note 5) $22,354
=======
</TABLE>
F-32
<PAGE>
Rent expense amounted to $21,994, $47,837 and $52,701 for fiscal years 1995,
1996 and 1997, respectively.
The Company has various purchase commitments for materials, supplies and other
items incident to the ordinary course of business. In the aggregate, such
commitments are not at prices in excess of current market.
16. SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED):
The following is a summary of the Company's unaudited quarterly consolidated
results of operations for fiscal years 1996 and 1997:
<TABLE>
<CAPTION>
Fiscal Quarter Ended
------------------------------------------------------------
July 2, October 1, December 31, March 31,
1995 1995 1995 1996
-------- ---------- ------------- ---------
<S> <C> <C> <C> <C>
Net sales $432,320 $628,907 $719,929 $561,460
Gross profit 88,703 146,537 185,803 137,311
Income (loss) before
extraordinary loss (14,678) 10,286 22,583 (17,252)
Net income (loss) (14,678) 10,286 12,995 (17,264)
Per share:
Income (loss) before
extraordinary loss $ (0.74) $ 0.51 $ 1.10 $ (0.83)
Extraordinary loss -- -- (0.47) --
-------- -------- -------- --------
Net income (loss) $ (0.74) $ 0.51 $ 0.63 $ (0.83)
======== ======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
Fiscal Quarter Ended
--------------------------------------------------------------
June 30, September 29, December 29, March 31,
1996 1996 1996 1997
---------- ------------- ------------ ---------
<S> <C> <C> <C> <C>
Net sales $556,020 $587,403 $677,544 $512,263
Gross profit 130,701 155,816 179,174 129,585
Income (loss) before
extraordinary loss (11,119) 11,691 26,205 (7,785)
Net income (loss) (11,119) 11,691 26,205 (10,552)
Per share:
Income (loss) before
extraordinary loss $ (0.53) $ 0.56 $ 1.26 $ (0.37)
Extraordinary loss -- -- -- (0.13)
-------- -------- -------- --------
Net income (loss) $ (0.53) $ 0.56 $ 1.26 $ (0.50)
======== ======== ======== ========
</TABLE>
Fully diluted earnings per share were $1.13 in the third quarter of fiscal 1997.
F-33
<PAGE>
17. BUSINESS SEGMENT AND GEOGRAPHIC INFORMATION:
The Company is primarily engaged in one industry segment, namely, the
manufacture, distribution and sale of lead acid batteries and related
accessories. Financial information, summarized by geographic area, is as
follows:
<TABLE>
<CAPTION>
North Intercompany
America Europe Other Eliminations Consolidated
-------------- ------------ ---------- ----------------- ------------
<S> <C> <C> <C> <C> <C>
Year ended March 31, 1996:
Sales to unaffiliated
customers $926,543 $1,416,073 $ -- $ -- $2,342,616
Income (loss) before income
taxes, minority interest and
extraordinary loss
(64,822) 71,552 -- -- 6,730
Identifiable assets 861,096 1,827,834 191,213 (168,714) 2,711,429
Year ended March 31, 1997:
Sales to unaffiliated
customers $872,985 $1,460,346 $ -- $ (101) $2,333,230
Income (loss) before income
taxes, minority interest and
extraordinary loss
(891) 75,914 -- (40,000) 35,023
Identifiable assets 863,210 1,656,758 157,465 (238,938) 2,438,495
</TABLE>
Other includes cash and cash equivalents, deferred tax assets, investments and
deferred financing costs.
18. SUBSEQUENT EVENTS:
On June 1, 1997, the Company announced that it had agreed to acquire three
related German producers and marketers of SLI and industrial batteries, DETA
Akkumularorenwerk GmbH, MAREG Accumulatoren GmbH, and FRIWO SILBERKRAFT GmbH
(together "DETA") for approximately $35,000 plus assumed debt of approximately
$68,000. The purchase price is subject to a postclosing adjustment based on the
net equity of DETA as of May 31, 1997. DETA competes in most western European
countries and is the largest supplier of SLI batteries to BMW in Germany. The
transaction is subject to, among other things, the approval of appropriate
governmental authorities.
In June 1997, certain of the Company's European subsidiaries established a
receivables sale facility with a bank to sell selected trade accounts receivable
of the Company, up to a maximum of $175,000. The initial proceeds are expected
to be approximately $100,000 and will be used to repay a portion of borrowings
under the European Facilities Agreement.
F-34
<PAGE>
SCHEDULE II
EXIDE CORPORATION AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES (Amounts in thousands)
---------------------------------------------------------------------
<TABLE>
<CAPTION>
Balance at Additions Balance
Beginning Charged to at End of
of Period Expense Write-offs Other (1) Period
---------- ---------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C>
Year ended March 31, 1997:
Allowance for doubtful accounts $45,350 $4,638 $ (7,531) $(3,971) $38,486
======= ====== ======== ======= =======
Year ended March 31, 1996:
Allowance for doubtful accounts $23,274 $4,016 $ (7,423) $25,483 $45,350
======= ====== ======== ======= =======
Year ended March 31, 1995:
Allowance for doubtful accounts $ 4,846 $3,238 $(12,508) $27,698 $23,274
======= ====== ======== ======= =======
</TABLE>
(1) Represents primarily acquisitions of certain businesses in fiscal 1995 and
1996 and currency translation and disposition in fiscal 1997.
F-35
<PAGE>
Exhibit 4.3
THIRD SUPPLEMENTAL INDENTURE
THIRD SUPPLEMENTAL INDENTURE (the "Supplemental Indenture"), dated as of
May 6, 1997, between EXIDE CORPORATION, a Delaware corporation (the "Company"),
and THE BANK OF NEW YORK, a New York banking corporation (the "Trustee").
WITNESSETH:
WHEREAS, in accordance with Section 9.2 of the Indenture, relating to the
12 1/4 % Senior Subordinated Deferred Coupon Debentures due 2004 of the Company,
dated as of December 17, 1992, between the Company and the Trustee, as amended
on January 3, 1995 and January 16,1996 (the "Indenture"), the Trustee, the
Company and the Holders of a majority in principal amount at maturity of the
Securities outstanding as of the date hereof desire to amend certain terms of
the Indenture as described below; and
WHEREAS, the Company has solicited consents from the Holders to the
amendments contained in this Supplemental Indenture (the "Solicitation") and the
Company has received consents from Holders of a majority in principal amount at
maturity of the Securities outstanding as of the date hereof; and
WHEREAS, concurrent with the Solicitation, the Company has offered to
purchase for cash on certain terms and conditions any and all of the outstanding
Securities from the Holders thereof (the "Offer"); and
WHEREAS, it is intended that this Supplemental Indenture become effective
upon acceptance for purchase by the Company pursuant to the Offer of the
Securities tendered into the Offer (the "Acceptance Date"); and
WHEREAS, all things necessary to make this Supplemental Indenture a valid
supplement to Indenture according to its terms and the terms of the Indenture
have been done:
NOW, THEREFORE, the parties hereto agree as follows:
SECTION 1 Certain Terms Defined in the Indenture. All capitalized terms
used herein without definition herein shall have the meanings ascribed thereto
in the Indenture.
SECTION 2 Deletion of Certain Definitions. The following definitions in
Section 1.1 of the Indenture are hereby deleted in their entirety:
Acquired Indebtedness
Average Life
Operating Lease
Permitted Liens
Plan
Principal Property
<PAGE>
Restricted Payments
Series B Stock
Series C Stock
Series D Stock
SECTION 3 Amendment of Certain Definitions. The following definitions in
Section 1.1 of the Indenture shall be amended as indicated:
(A) Adjusted Consolidated Net Income. The text of clause (ii) of the
definition of Adjusted Consolidated Net Income shall be deleted in its
entirely.
(B) Investment. The following words shall be deleted in the eleventh and
twelfth lines of the definition of Investment: "and Section 4.4 of this
Indenture".
(C) Redeemable Stock. The following words shall be inserted in the
eighteenth and last lines of the definition of Redeemable Stock after the
word Indenture in both such lines: "as originally adopted and prior to any
amendment thereto".
(D) Refinancing. The following words shall be inserted in the sixth line
of the definition of Refinancing after the word Indenture: "as originally
adopted and prior to any amendment thereto".
(F) Senior Indebtedness. In the fifteenth line of the definition of
Senior Indebtedness, the words "this Section 1.1" shall be deleted and
replaced by the following words: "Section 1.1 of this Indenture as
originally adopted and prior to any amendment thereto".
(G) Transaction Date. In the fourth and fifth lines of the definition of
Transaction Date, the words "and, with respect to any Restricted Payment,
the date such Restricted Payment is to be made" shall be deleted.
SECTION 4 Deletion of Certain Covenants. The text of Sections 4.3
(Limitation on Indebtedness), 4.4 (Limitation on Restricted Payments), 4.5
(Limitation on Dividend and Other Payment Restrictions Affecting Restricted
Subsidiaries), 4.6 (Limitation on Issuance of Capital Stock of Restricted
Subsidiaries), 4.7 (Limitation on Transactions with Shareholders and
Affiliates), 4.8 (Limitation on Liens) and 4.9 (Limitation on Senior
Subordinated Indebtedness) of the Indenture is hereby deleted in its entirety.
SECTION 5 Effectiveness. This Supplemental Indenture shall become
effective upon the Acceptance Date.
SECTION 6 Governing Law. This Supplemental Indenture shall be governed by
the laws of the State of New York.
2
<PAGE>
SECTION 7 Counterparts. This Supplemental Indenture may be signed in any
number of counterparts, each of which shall be an original, with the same effect
as if the signatures thereto and hereto were upon the same instrument.
* * *
3
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Indenture to be duly executed as of the date first above written.
EXIDE CORPORATION
By: /s/ Catherine B. Hnatin
------------------------------
Title:
By: /s/ Stephen D. Kovacs
------------------------------
Title:
THE BANK OF NEW YORK
By: /s/ Mary Jane Morrissey
------------------------------
Title: MARY JANE MORRISSEY
VICE PRESIDENT
<PAGE>
Exhibit 4.9
===============================================================================
FISCAL AND PAYING AGENCY AGREEMENT
Dated as of April 23, 1997
among
EXIDE HOLDING EUROPE S.A.
as Issuer
and
EXIDE CORPORATION
and
THE BANK OF NEW YORK
as U.S. Paying Agent, Transfer Agent and Registrar
and
DEUTSCHE BANK AG
as DM Paying Agent, Transfer Agent and Co-Registrar
===============================================================================
<PAGE>
This Fiscal and Paying Agency Agreement (this "Agreement") is made on April
23, 1997, by and among Exide Holding Europe S.A., a limited liability company
formed under the laws of the Republic of France (the "Issuer"), Exide
Corporation, a Delaware corporation ("Exide Parent"), The Bank of New York, a
New York banking corporation, as U.S. fiscal and paying agent (the "U.S. Paying
Agent") and Deutsche Bank Aktiengesellschaft ("Deutsche Bank"), as DM fiscal and
paying agent (the "DM Paying Agent" and, together with the U.S. Paying Agent,
the "Paying Agents"). The Bank of New York is also acting as U.S. transfer agent
(in such capacity, the "U.S. Transfer Agent") and as registrar (in such
capacity, the "Registrar") under this Agreement. Deutsche Bank is also acting as
DM transfer agent (in such capacity, the "DM Transfer Agent" and, together with
the U.S. Transfer Agent, the "Transfer Agents") and as co-registrar (in such
capacity, the "Co-Registrar" and, together with the Registrar, the "Registrars")
under this Agreement. Capitalized terms used herein and not otherwise defined
herein shall have the meanings set forth in the Notes (as defined below).
W I T N E S S E T H:
WHEREAS, the Issuer proposes to issue DM 175,000,000 principal amount of
its 9% Senior Notes due 2004 (the "Notes") without registration under the
United States Securities Act of 1933, as amended (the "Securities Act"), in one
transaction pursuant to an applicable exemption from, or in a transaction not
subject to, the registration requirements of the Securities Act; and
WHEREAS, the Issuer wishes to appoint the Paying Agents, the Transfer
Agents and the Registrars (collectively, the "Agents") as set forth in the
recital of parties to this Agreement upon the terms and subject to the terms and
conditions set forth herein;
NOW, THEREFORE, in consideration of the mutual promises contained herein,
the parties hereto agree as follows:
1. Appointment of Agents. The Issuer appoints the Agents as its agents in
respect of the Notes in the capacities set forth in the recital of parties to
this Agreement and upon the terms and subject to the conditions set forth herein
and in the Notes, and the Agents hereby accept such appointment. The Agents, and
any successor or successors of any such Agent qualified and appointed in
accordance with Section 9 hereof, are herein referred to as if appointed
hereunder. The Agents shall have the powers and authority granted to and
conferred upon them in this Agreement and in the Notes and such further powers
and authority to act in the name of and on behalf of the Issuer as may be
mutually agreed upon by the Issuer and the Agents. All of the terms and
provisions with respect to such powers and authority contained in the Notes are
subject to and governed by the terms and provisions hereof.
1
<PAGE>
(a) In acting under this Agreement and in connection with the Notes and the
Coupons (as defined in Section 2(d) hereof), each of the Agents, in its capacity
as such, is acting exclusively as an agent for the Issuer and does not have any
relationship of agency or trust with the Holders of the Notes or Coupons.
(b) The Issuer may appoint additional agents and revoke the appointment of
any Agent. Notice of such appointment or revocation shall be provided to all
Agents in accordance with Section 12(a) hereof.
(c) Except during the continuance of a Default, the Paying Agents will not
be liable, except for the performance of such duties as are specifically set
forth in the Notes and this Agreement. If an Event of Default has occurred and
is continuing, each Paying Agent shall use the same degree of care and skill in
its exercise as a prudent person would exercise under the circumstances in the
conduct of such person's own affairs.
2. Authorization of Notes; Form. (a) The Notes delivered to the
Registrars for authentication on issuance pursuant to Section 3 of this
Agreement have been authorized by and will be established pursuant to the
decision of the President of the Board of Directors of the Issuer dated April
17, 1997 taken pursuant to resolutions of the Board of Directors of the Issuer,
dated April 9, 1997.
(b) Each of the Notes shall be issued only in denominations of DM 1,000 or
DM 10,000 (or such multiples thereof as the Issuer may deem appropriate) (the
"Authorized Denominations"). The face of the Notes shall be substantially in
the form of certain exhibits hereto as described below and the reverse of the
Notes shall contain the Terms and Conditions (the "Terms") substantially as set
forth in Exhibit B-1 hereto.
Notes initially offered and sold to qualified institutional buyers (as
defined in Rule 144A under the Securities Act ("Rule 144A")) ("QIBs") in
reliance upon the exemption from the registration requirements of the Securities
Act provided by Rule 144A shall be issued in the form of a single, permanent
global certificate in registered form (the "Global Registered Note"), deposited
with The Bank of New York, as custodian for DTC (in such capacity, the
"Custodian"), duly executed by the Issuer and authenticated by the Registrar as
hereinafter provided. The face of the Global Registered Note shall be
substantially in the form of Exhibit A-1 hereto and shall bear the legend
included therein relating to transfer restrictions.
Notes initially offered and sold to persons other than U.S. persons
("Foreign Purchasers") in offshore transactions in reliance on Regulation S
under the Securities Act ("Regulation S") shall be issued in the form of a
single, permanent global certificate in bearer form (the "Global Bearer Note")
deposited with Deutscher Kassenverein AG, Frankfurt am Main ("DKV"), duly
executed by the Issuer and authenticated by the Co-Registrar as hereinafter
provided. The face of the Global Bearer Note shall be substantially in the form
of Exhibit A-2 hereto and shall bear the legend included therein relating to
transfer restrictions.
2
<PAGE>
The aggregate principal amount of each of the Global Registered Note and
the Global Bearer Note (together, the "Global Notes") may from time to time be
increased or decreased by adjustments made on the records of the Registrar and
the Co-Registrar as hereinafter provided. Every Global Note shall have affixed
to its reverse a schedule for the purpose of recording such adjustments.
References herein to the "Notes" shall be deemed to include the Global
Notes and the Definitive Notes (as defined in Section 2(d) hereof) unless the
context requires otherwise. The Notes may have such additional provisions,
omissions, variations or substitutions as are not inconsistent with the
provisions of this Agreement and may have such letters, numbers or other marks
of identification and such legends or endorsements placed thereon as may be
required to comply with any law or with any rules made pursuant thereto or with
the rules of any securities depositary, clearance facility, securities exchange
or governmental agency or as may, consistently herewith, be determined by the
Authorized Officer (as defined in Section 3(a) hereof) of the Issuer executing
such Notes, as conclusively evidenced by execution of such Notes.
(c) The Global Registered Note shall be initially registered in the name of
Cede & Co. ("Cede"), the nominee of The Depository Trust Company (together with
any successor clearing agency, "DTC"). The Global Registered Note shall be held
by the Custodian on behalf of DTC under the custody agreement between DTC and
the Custodian (the "Custody Agreement"). As long as DTC or its nominee is the
registered holder of a Global Registered Note, such holder will be considered
the absolute owner and holder of such Global Registered Note for all purposes
whatsoever. None of the Issuer, Exide Parent, the Custodian or any Agent will
have any responsibility or liability for any aspect of the records relating to
or payments made by DTC on account of beneficial interests in the Global
Registered Note. Owners of beneficial interests in the Global Registered Note
will not be entitled to have Notes registered in their names, and will not
receive and will not be entitled to receive physical delivery of definitive
certificates representing individual Notes.
(d) The Global Bearer Note shall be kept in custody by DKV. An owner of
legal co-ownership interests in the Global Bearer Note will be entitled to
receive definitive notes ("Definitive Notes") in Authorized Denominations in
exchange for such interests in the Global Bearer Note, upon the availability
thereof and upon such owner's request to DKV and presentation by DKV to the DM
Transfer Agent of such documentation and information as the DM Transfer Agent
may request for such purpose. No Definitive Notes will be issued prior to June
3, 1997, and Definitive Notes will not be made available in exchange for
interests in the Global Bearer Note unless the holder provides evidence
satisfactory to the DM Transfer Agent that it is not a "U.S. person" (as defined
in Regulation S) or holding its interest for the account or benefit of a U.S.
person. No claim for Definitive Notes may be made prior to the first date of
exchange of interests in the Global Bearer Note for Definitive Notes. Seven
annual bearer interest coupons ("Coupons") Nos. 1-7 will be attached to each
Definitive Note at the time of issue if issued prior to the first Interest
Payment Date (as defined in the Notes) and thereafter with such number of
Coupons as corresponds to the number of unmatured Coupons and matured Coupons in
default
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as of the date of issuance of such Definitive Note. The face of the Definitive
Notes and the Coupons shall be substantially in the form of Exhibit A-3 hereto.
(e) If from time to time a portion of the aggregate principal amount of a
Global Note is repurchased and cancelled by the Issuer, so long as the Custodian
or DKV, as the case may be, is in possession of such Global Note (with respect
to the Global Registered Note, on behalf of DTC pursuant to the Custody
Agreement), the Registrar or the Co-Registrar, as the case may be, in lieu of
issuing new Notes upon surrender of a Global Note, as would otherwise be
required pursuant to the provisions hereof and of the relevant Global Note,
shall, and is authorized by the holder of the relevant Global Note, by its
acceptance thereof, to, endorse on the schedule affixed to the relevant Global
Note (or on a continuation of such schedule affixed to the relevant Global Note
and made a part thereof), an appropriate notation evidencing the date and the
reduction in the principal amount of the Global Note equal to the principal
amount of the portion of the relevant Global Note so repurchased and cancelled.
Such Registrar's actions in endorsing the schedule (or such continuation
thereof) affixed to a Global Note pursuant to the preceding sentence shall be
subject to the same standard of care as the issuance by such Registrar of new
Notes upon any repurchase of a portion of a Definitive Note and all provisions
hereof and of the Global Notes referred to in the first sentence of this
paragraph (e) relating to the repurchase of Notes (other than those relating to
the issuance and authentication of a new Note) shall apply to each repurchase
resulting in a decrease in the principal amount of a Global Note.
(f) Together, the Notes represented by the Global Bearer Note, the Global
Registered Note and Definitive Notes will equal the aggregate principal amount
of the Notes outstanding at any time.
(g) The Issuer may, subject to Section 7 of the Terms and applicable law,
issue additional Notes under this Agreement. The Notes offered hereby and any
additional Notes subsequently issued would be treated as a single class for all
purposes under this Agreement.
3. Execution of Notes and the Partial Parent Guarantee; Dating;
Authentication. (a) Each Note shall be executed manually or by facsimile,
imprint or other reproduction on behalf of the Issuer by an Authorized Officer
(as defined below) of the Issuer. With the delivery of this Agreement, the
Issuer is furnishing and from time to time thereafter may furnish a certificate
(each, an "Authorization Certificate") identifying and certifying the incumbency
and specimen signatures of (i) officers of the Issuer authorized to execute the
Notes ("Authorized Officers") and (ii) persons authorized to act, and to give
and receive instructions and notices, on behalf of the Issuer hereunder
(together with the Authorized Officers, "Authorized Representatives"). Until the
Agents receive a subsequent Authorization Certificate of the Issuer, the Agents
shall be entitled to rely on the last Authorization Certificate delivered to
them by the Issuer for purposes of determining the Issuer's Authorized Officers
and Authorized Representatives. Any such signature may be in facsimile and may
be imprinted or otherwise reproduced. In case any person who shall have executed
any Note shall cease for any reason to be an Authorized Officer of the Issuer
before such Note shall be authenticated and delivered by either Registrar or
disposed of by
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the Issuer, such Note may nevertheless be authenticated and delivered or
disposed of as though such person had not ceased to be an Authorized Officer of
the Issuer; and any Note may be executed on behalf of the Issuer by any such
person as, at the date of execution thereof, shall be an Authorized Officer of
the Issuer, although at the date hereof any such person was not an Authorized
Officer of the Issuer.
(b) Exide Parent agrees to execute and deliver, and maintain in effect, a
Partial Parent Guarantee (as defined in Section 7(b) of the Terms) if the Issuer
is required to cause Exide Parent to do so pursuant to Section 7(b) of the
Terms. In the event that Exide Parent is obligated to execute a Partial Parent
Guarantee, the Partial Parent Guarantee shall be executed manually or by
facsimile, imprint or other reproduction on behalf of Exide Parent by an
authorized officer of Exide Parent (each, an "Authorized Officer of Exide
Parent"). Upon execution of the Partial Parent Guarantee, Exide Parent shall
furnish, and, from time to time thereafter may furnish, a certificate (each, an
"Authorization Certificate of Exide Parent") identifying and certifying the
incumbency and specimen signatures of (i) Authorized Officers of Exide Parent
authorized to execute the Partial Parent Guarantee and (ii) authorized
representatives of Exide Parent authorized to act, and to give and receive
instructions and notices on behalf of Exide Parent hereunder (together with the
Authorized Officers of Exide Parent, the "Authorized Representatives of Exide
Parent"). Until the Agents receive a subsequent Authorization Certificate of
Exide Parent, the Agents shall be entitled to rely on the last Authorization
Certificate of Exide Parent delivered to them by Exide Parent for purposes of
determining the Authorized Officers of Exide Parent and Authorized
Representatives of Exide Parent. Any such signature may be in facsimile and may
be imprinted or otherwise reproduced. In case any person who shall have executed
any Partial Parent Guarantee shall cease for any reason to be an Authorized
Officer of Exide Parent before such Partial Parent Guarantee shall be executed
and delivered by Exide Parent, such Partial Parent Guarantee may nevertheless be
executed and delivered as though such person had not ceased to be an Authorized
Officer of Exide Parent; and any Partial Parent Guarantee may be executed on
behalf of Exide Parent by any such person as, at the date of execution thereof,
shall be an Authorized Officer of Exide Parent, although at the date hereof any
such person was not an Authorized Officer of Exide Parent.
(c) The Registrars are authorized, upon receipt of Notes duly executed on
behalf of the Issuer, to authenticate and to deliver such Notes to or upon the
written order of the Issuer signed by any Authorized Officer of the Issuer or by
a duly authorized attorney-in-fact.
(d) The Notes shall be dated the date of their authentication by the
Registrar or Co-Registrar, as the case may be.
4. Payment. (a) In order to provide for the payment of principal of and
interest on the Notes as the same shall become due and payable, the Issuer or
Exide Parent (in the event Exide Parent is obligated to make payments in respect
of the Notes) hereby agrees to pay to the U.S. Paying Agent or the DM Paying
Agent, as the case may be, by wire transfer of immediately available funds for
credit to the account of the U.S. Paying Agent or the DM Paying Agent, as
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the case may be, as specified in Section 12(b) hereof prior to 10:00 a.m., local
time, on each interest payment date or the maturity date (including a date fixed
for redemption) of the Notes in such coin or currency of the Federal Republic of
Germany as at the time of payment shall be legal tender for the payment of
public and private debts, an amount in cash which (together with any cash then
held by the Paying Agents and available for such purpose) shall be sufficient to
pay the interest or principal or both, as the case may be, becoming due on such
date; provided, however, that if such date is not a Business Day, the Issuer or
Exide Parent, as the case may be, shall make such payment on the next succeeding
Business Day. With respect to payments made to the U.S. Paying Agent, a
"Business Day" shall mean any day other than a Saturday, Sunday or a day on
which banking institutions in New York City are authorized or required by law or
executive order to close. With respect to payments made to the DM Paying Agent,
a "Business Day" shall mean any day on which banking institutions in New York
City, in Frankfurt am Main and London are not authorized or obligated by law or
executive order to be closed and on which foreign exchange markets in each of
such cities are open for business. The Paying Agents shall apply such amounts to
the payment due on such date and, pending such application, such amounts shall
be held in trust by the Paying Agents for the benefit of the persons entitled
thereto.
(b) The Issuer or Exide Parent (in the event Exide Parent is obligated to
make payments in respect of the Notes) shall procure that the bank through which
any payments due hereunder are to be made shall supply the Paying Agents by
10:00 a.m., local time, two Business Days prior to the due date for any such
payment, an irrevocable confirmation (by tested telex or Swift MT 100 Message)
of its intention to make such payment.
(c) If the Issuer or Exide Parent becomes liable to pay additional amounts
pursuant to Section 3(b) of the Terms (all such amounts being referred to as
"Additional Amounts"), then at least 30 days prior to the date of any payment by
the Issuer or Exide Parent, as the case may be, of principal or interest on the
Notes, the Issuer or Exide Parent, as the case may be, will furnish each Paying
Agent with a certificate which specifies the amount required to be withheld, if
any, on such payment to holders of the Notes and the Additional Amounts, if any,
due to holders of the Notes, and will pay to the Paying Agents such Additional
Amounts as shall be required to be paid to such holders. All references in this
Agreement or in the Notes to the payment of amounts based upon the principal
amount of the Notes or of principal, premium, if any, and interest or any other
amount payable under or with respect to the Notes shall, unless the context
otherwise requires, be deemed to mean and include all Additional Amounts to the
extent that, in such context, Additional Amounts are, were or would be payable
in respect thereof.
(d) If either Paying Agent pays out, or becomes liable to pay out, funds on
or after the due date of payment therefor on the assumption that the
corresponding payment by the Issuer or Exide Parent (in the event Exide Parent
is obligated to make payments in respect of the Notes) has been or will be made
and such payment has in fact not been so made by the Issuer or Exide Parent, as
the case may be, the Issuer or Exide Parent, as the case may be, shall on demand
reimburse such Paying Agent for such funds, including interest on such amount
from the date on which it was paid out to the date of reimbursement at a rate
per annum equal to the cost to such
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Paying Agent of funding the amount paid out, as certified by such Paying Agent,
expressed as a rate per annum.
(e) Subject to compliance with Section 4(a), by the Issuer or Exide Parent,
as the case may be, and subject to and in accordance with the terms of the
Notes, the Paying Agents will pay or cause to be paid on behalf of the Issuer or
Exide Parent, as the case may be, on and after each due date therefor the
amounts due in respect of the Notes. Pending such payment, amounts received by
the Paying Agents for such payment will be held in trust by the Paying Agents
for the benefit of the persons entitled thereto. If any payment provided for in
Section 4(a) hereof is made late but otherwise in accordance with this
Agreement, the U.S. Paying Agent or DM Paying Agent, as the case may be, or both
shall nevertheless endeavor to make such payment in respect of the Notes. If,
in such a case, the DM Paying Agent in its sole discretion makes any payment of
principal or interest on the due date therefor the Issuer or Exide Parent, as
the case may be, shall compensate the DM Paying Agent for the overnight use of
such funds at the overnight interbank interest rate. However, unless and until
the full amount of any such payment has been made to the such Agent(s), the
Paying Agents will not be bound to make such payments.
5. Transfer of the Global Notes. (a) The Global Registered Note
initially shall (i) be registered in the name of Cede & Co. as the nominee of
DTC, (ii) be delivered to the Custodian as custodian for DTC and (iii) bear
legends set forth in Exhibit A-1 hereto. The Global Bearer Note initially shall
(i) be delivered to DKV and (ii) bear legends as set forth in Exhibit A-2
hereto.
Members of, or participants in, DTC ("Participants") shall have no rights
under this Agreement with respect to the Global Registered Note held on their
behalf by DTC, or the Custodian as DTC's custodian, or under the Global
Registered Note, and DTC may be treated by the Issuer, Exide Parent, the Agents
and any agent of the Issuer, Exide Parent or the Agents as the absolute owner of
the Global Registered Note for all purposes whatsoever. Notwithstanding the
foregoing, nothing herein shall prevent the Issuer, Exide Parent, the Agents or
any agent of the Issuer, Exide Parent or the Agents, from giving effect to any
written certification, proxy or other authorization furnished by DTC or impair,
as between DTC and its Participants, the operation of customary practices
governing the exercise of the rights of a holder of any Note. Beneficial
interests in the Global Registered Notes may be held only through Participants
in DTC.
DKV account holders ("Account Holders") shall have no rights under this
Agreement with respect to the Global Bearer Note held on their behalf by DKV or
under the Global Bearer Note and DKV may be treated by the Issuer, Exide Parent,
the Agents and any agent of the Issuer, Exide Parent or the Agents as the
absolute owner of the Global Bearer Note for all purposes whatsoever.
Notwithstanding the foregoing, nothing herein shall prevent the Issuer, Exide
Parent, the Agents or any agent of the Issuer, Exide Parent or the Agents, from
giving effect to any written certification, proxy or other authorization
furnished by DKV or impair, as between DKV and the Account Holders, the
operation of customary practices governing
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the exercise of the rights of a holder of any Note. Beneficial interests in the
Global Bearer Note may be held only through DKV or through accounts with Morgan
Guaranty Trust Company of New York, Brussels office, as operator of the
Euroclear System ("Euroclear") or Cedel Bank, societe anonyme ("Cedel Bank").
(b) Transfers of interests in the Global Notes shall be limited to
transfers of book-entry interests between and within DKV and DTC except as
provided below. Transfers of interests in the Global Notes between DKV Account
holders, on the one hand, and DTC Participants, on the other hand, shall be
effected by an increase or a reduction in the aggregate amount of Notes
represented by the Global Bearer Note and the corresponding reduction or
increase in the aggregate amount of Notes represented by the Global Registered
Note. Interests of beneficial owners in the Global Notes may be transferred in
accordance with the rules and procedures of DTC and the provisions of Section 6
hereof.
(c) Any beneficial interest in one of the Global Notes that is transferred
to a person who takes delivery in the form of an interest in another Global Note
will, upon transfer, cease to be an interest in such first Global Note and
become an interest in the other Global Note and, accordingly, will thereafter be
subject to all transfer restrictions, if any, and other procedures applicable to
beneficial interests in such other Global Note for as long as it remains such an
interest.
(d) The holder of a Global Note may grant proxies and otherwise authorize
any person, including Participants and Account Holders, as the case may be, and
persons that may hold interests through Participants and Account Holders, as the
case may be, to take any action which a holder is entitled to take under this
Agreement or the Notes.
6. Transfer and Exchange of Notes; Cancellation. (a) The Registrar and
the Co-Registrar, or an agent duly authorized by the Registrar or the Co-
Registrar, as the case may be, are hereby authorized from time to time in
accordance with the provisions of the Notes and of this Section 6 to
authenticate and deliver Notes in exchange for or in lieu of Notes which become
mutilated, destroyed, stolen or lost and Notes of authorized denominations in
exchange for a like aggregate principal amount of Notes.
(b) The following restrictions with respect to the registration of any
transfer of any Notes shall apply:
(i) Definitive Notes will not be issued in exchange for beneficial
interests in the Global Registered Note and all beneficial interests in the
Global Registered Note will be held directly or indirectly through a
Participant.
(ii) Transfers of interests in one Global Note to parties who will hold the
interests through the same Global Note will be effected in the ordinary way in
accordance
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with the respective rules and operating procedures of the DKV, DTC, Euroclear
or Cedel Bank, as the case may be.
(iii) Transfers of interests between the Global Notes will be effected
through the Transfer Agents who shall contact the Registrars to procure the
exchange of interests in one Global Note for interests of an equal principal
amount in the other Global Note; provided, however, that prior to June 3, 1997
(the expiration of 40 days after the later of the commencement of the offering
of the Notes and the closing date with respect to the Notes), the Transfer
Agents will not be required to accept for registration any transfer of an
interest in the Global Bearer Note to the Global Registered Note if the
transferee is not a QIB. For each transfer of interests between the Global
Notes, the Registrar shall endorse on the Schedule attached to each Global
Note the appropriate notations to reflect the respective modifications to the
aggregate principal amount of each Global Note.
(iv) In the case of transfers of interests in the Global Bearer Note to
Definitive Notes, such transfers may be made only in accordance with the
legend contained on the face of such Global Bearer Note and the Transfer
Agents will not be required to accept for registration of transfer any
interests in the Global Bearer Note, except upon presentation of evidence
satisfactory to the Issuer and the Transfer Agents that such legend has been
complied with including, without limitation, a certificate of transfer
substantially in the form of the certificate of transfer set forth in Exhibit
A-2 hereto. In the case of transfers of any Definitive Notes to interests in
the Global Bearer Note, the Transfer Agents shall deliver to the Co-Registrar
such Definitive Notes (and shall procure the authentication and delivery of
new Definitive Notes representing the remainder of such Definitive Notes where
less than the whole interest in such Definitive Notes was transferred,
provided in all cases that any such new Definitive Note must be of an
Authorized Denomination) representing interests so exchanged and shall provide
the Co-Registrar any information the Co-Registrar may require to make the
appropriate notations on the Schedule attached to the Global Bearer Note. No
Definitive Notes shall be transferred for interests in the Global Registered
Note and the Transfer Agents shall not be required to effect any such
transfer.
The Paying Agents shall obtain and retain copies of all letters, notices
and other written communications received by any Agent pursuant to this Section
6(b). The Issuer and Exide Parent have the right to inspect all such letters,
notices or other written communications at any reasonable time.
(c) Each Note authenticated and delivered upon any transfer or exchange for
or in lieu of the whole or any part of any Note shall carry all the rights to
interest, if any, accrued and unpaid and to accrue which were carried by the
whole or such part of such Note, and notwithstanding anything to the contrary
herein contained, such new Note shall be so dated that neither gain nor loss in
interest shall result from such transfer, exchange or substitution.
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(d) The Issuer or Exide Parent, as the case may be, shall execute and
deliver to the Paying Agents or the Registrars Notes in such Authorized
Denominations and at such times as may be necessary to enable each of the
Registrars to fulfill its responsibilities under this Agreement and the Notes.
(e) The Transfer Agents and the Registrars may decline to exchange or
register the transfer of any Note during the period of 15 days preceding (i) the
due date for any payment of principal of or interest, if any, on the Notes or
(ii) the date on which Notes are scheduled for redemption.
(f) Transfer, registration and exchange shall be permitted and executed as
provided in this Section 6 without any charge other than any stamp or other
taxes or governmental charges or insurance charges payable on transfers or any
expenses of delivery by other than regular mail, but subject to such reasonable
regulations as the Issuer, Exide Parent and the Paying Agents may prescribe.
Registration of the transfer of a Note by the Registrar or the Co-Registrar, as
the case may be, shall be deemed to be the acknowledgment of such transfer on
behalf of the Issuer.
(g) All Notes or Coupons surrendered for payment, redemption, or exchange,
as the case may be, shall be delivered to, or to the order of, the U.S. Paying
Agent or DM Paying Agent, as the case may be. Such Paying Agent shall cancel or
procure the cancellation of and may destroy or procure the destruction of all
such Notes and Coupons surrendered for payment, redemption or exchange, as the
case may be, and, in the case of destruction, shall deliver a certificate of
destruction to the Issuer upon its written request.
(h) Upon the transfer, exchange or replacement of interests in the Global
Notes, the Registrars shall deliver only Notes bearing the legend relating to
transfer restrictions as described in Section 2(b) hereof unless either (i) such
delivery is at least two years after the later of the original issue date of the
Notes and the last date on which the Issuer, Exide Parent or any affiliate of
the Issuer or Exide Parent held any beneficial interest in such Note or (ii)
there is delivered to the U.S. Paying Agent or DM Paying Agent, as the case may
be, an opinion of counsel reasonably satisfactory to the Issuer, Exide Parent
and the U.S. Paying Agent or DM Paying Agent, as the case may be, to the effect
that neither such legend nor the restrictions on transfer set forth in Section
6(b) hereof are required in order to maintain compliance with the provisions of
the Securities Act.
(i) The Issuer agrees that the transfer, exchange or replacement of Notes
through the Registrars shall be deemed to be a notification to the Issuer of
such transfer, exchange or replacement. As between the Registrars and the
Issuer it is agreed that the Registrars shall without delay notify the Issuer of
such transfer, registration, exchange or replacement.
(j) Upon the issuance of any substitute Note, the Issuer or Exide Parent,
as the case may be, may require the payment of a sum sufficient to cover any tax
or other governmental
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charge that may be imposed in relation thereto and any other expenses (including
the fees and expenses of the Agents) connected therewith.
A Registrar's actions in endorsing any schedule (or continuation thereof)
affixed to any Global Note pursuant to this Section 6 shall be subject to the
same standard of care as the issuance by such Registrar of new Notes upon any
transfer of a Note, and all provisions of this Section 6 relating to the
transfer of Notes (other than those relating to the issuance and authorization
of a new Note) shall apply to any transfer resulting in an increase in the
principal amount of such Global Note.
7. Register. The Registrar and Co-Registrar, as agents of the Issuer and
Exide Parent for the purpose, shall maintain at its corporate trust office in
New York City and Frankfurt am Main, Germany, respectively, a register (the
"Register") for the exchange, registration and registration of transfers of
registered Notes. Each Registrar will keep a record of all registered Notes at
such office and will make such record available for inspection upon the
reasonable request of the Issuer or Exide Parent. Included in such record will
be notations as to whether such Notes have been redeemed or otherwise paid or
canceled, and, in the case of mutilated, destroyed, stolen or lost Notes,
whether such Notes have been replaced. In the case of the replacement of any of
the Notes, each Registrar will keep a record of the Note so replaced, and the
Note issued in replacement thereof. In the case of the cancellation of any of
the Notes, each Registrar will keep a record of the Note so cancelled and the
date on which such Note was cancelled.
8. Conditions of Agents' Obligations. The Agents accept appointment
hereunder and their obligations herein and in the Notes set forth upon the terms
and conditions hereof and thereof, including the following, to all of which the
Issuer and Exide Parent agree and to all of which the rights of the holders from
time to time of the Notes shall be subject:
(a) Each Agent shall be entitled to compensation to be agreed upon in
writing with the Issuer for all services rendered by it, and the Issuer agrees
promptly to pay such compensation to the U.S. Paying Agent who shall apportion
such payment among the Agents. The Issuer shall on demand reimburse each Agent
for its reasonable out-of-pocket expenses (including reasonable fees and
expenses of counsel) incurred by it in connection with the services rendered
by it hereunder. The Issuer hereby agrees to indemnify each Agent, for, and to
hold it harmless against, any loss, liability, action, suit, judgment, demand,
damage, cost or expense, including advertising, telex and postage expenses,
properly incurred without negligence, wilful deceit or bad faith on its part
arising out of or that are in any way related to this Agreement or any Note in
connection with its acting as Agent of the Issuer hereunder. The Agents shall
be protected and shall incur no liability for or in respect of any action
taken or omitted to be taken or damages suffered by them in reliance upon any
Note, notice, direction, consent, certificate, affidavit, statement, telex,
facsimile or other paper or document reasonably believed by them, in good
faith and without negligence, to be genuine and to have been presented, signed
or sent by an Authorized Representative of the Issuer or an Authorized
Representative of
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Exide Parent. The obligations of the Issuer under this Section 8(a) shall
survive payment of the Notes, the resignation or removal of such Agents or the
termination of this Agreement.
(b) In acting under this Agreement and in connection with the Notes, the
Agents are acting solely as agents of the Issuer and Exide Parent and do not
assume any obligation towards or relationship of agency or trust for or with
any of the owners or holders of the Notes, except that all funds held by any
Paying Agent or Registrar for the payment of principal of or interest on the
Notes shall be held in trust by it for such owner or holder and applied as set
forth herein and in the Notes, but need not be segregated from other funds
held by it, except as required by law; provided that the Issuer may deposit
with the local court (Amtsgericht) in Frankfurt am Main principal and interest
not claimed by holders within 12 months after maturity with or without a
waiver of the right to withdraw such deposit irrespective of whether such
holders are in default of acceptance. To the extent the right to withdraw is
waived, all claims of such holders against the Issuer shall cease.
(c) Any Agent may consult with counsel satisfactory to it and any advice or
written opinion of such counsel shall be full and complete authorization and
protection in respect of any action taken, suffered or omitted to be taken by
it hereunder in good faith and without negligence and in accordance with such
advice or opinion.
(d) The Agents in their individual capacity or any other capacity, may
become the owners of, or acquire any interest in, any Notes or other
obligations of the Issuer or Exide Parent with the same rights that it would
have if they were not such Agents, and may engage or be interested in any
financial or other transaction with the Issuer or Exide Parent, and may act
on, or as depositary, trustee or agent for, any committee or body of holders
of securities or other obligations of the Issuer or Exide Parent, as freely as
if they were not such Agents.
(e) Subject to any agreement between the Issuer, Exide Parent and the
Agents to the contrary, the Agents shall not be under any liability for
interest on any moneys received by them pursuant to any of the provisions of
this Agreement or the Notes.
(f) The recitals contained in this Agreement and in the Notes (except the
Registrar's certificates of authentication) shall be taken as the statements
of the Issuer and Exide Parent and the Agents do not assume any responsibility
for the correctness of the same. The Agents do not make any representation
(other than with respect to themselves) as to the validity or sufficiency of
this Agreement or the Notes, except for the Agents' due authorization,
execution and delivery of this Agreement. The Agents shall not be accountable
for the use or application by the Issuer or Exide Parent of any of the Notes
or the proceeds thereof.
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(g) The Agents, their officers, employees and agents shall be obligated to
perform such duties and only such duties as are specifically set forth in this
Agreement and in the Notes, and no implied duties or obligations shall be read
into this Agreement or the Notes against them. No Agent shall be responsible
for the acts or omissions of any other Agent.
9. Resignation and Appointment of Successor; Maintenance of Office or
Agency for Certain Purposes. (a) Each of the Issuer and Exide Parent agree, for
the benefit of the holders, from time to time, of the Notes, that until all of
the Notes are no longer outstanding or until moneys for the payment of all
principal of and interest, if any, on all outstanding Notes shall have been made
available at the office of any Paying Agent and shall have been returned to the
Issuer or Exide Parent, as the case may be, as provided in Section 8(b) hereof,
whichever occurs earlier, there shall at all times be a DM Paying Agent that
shall at all times maintain an office or agency in Frankfurt am Main, Germany
and a U.S. Paying Agent that shall at all times maintain an office or agency in
New York, New York, where the Notes may be presented or surrendered for payment,
registration of transfer or exchange, as provided in such Notes, and where
notices and demands to or upon the Issuer or Exide Parent, as the case may be,
in respect of such Notes and this Agreement may be served. Each Paying Agent
shall at all times be a responsible financial institution which is authorized by
law to exercise its powers and duties hereunder.
(b) Any Agent may at any time resign by giving written notice of its
resignation to the Issuer, Exide Parent (and the U.S. Paying Agent, in the case
of the resignation of an Agent other than the U.S. Paying Agent) and specifying
the date on which its resignation shall become effective; provided that such
date shall be at least 30 days after the date on which such notice is given
unless the Issuer and Exide Parent agree in writing to accept shorter notice.
Upon receiving such notice of resignation, the Issuer or Exide Parent shall
promptly appoint a successor agent, qualified as aforesaid, by written
instrument in duplicate, signed on behalf of the Issuer or Exide Parent, as the
case may be, one copy of which shall be delivered to the resigning Agent and one
copy to the successor agent. Such resignation shall become effective upon the
earlier of (i) the effective date of such resignation or (ii) the acceptance of
appointment by the successor agent as provided in Section 9(d) hereof. The
Issuer or Exide Parent may, at any time and for any reason, remove any Agent and
appoint a successor agent, qualified as aforesaid, by written instrument in
duplicate, signed on behalf of the Issuer or Exide Parent, as the case may be,
one copy of which shall be delivered to each of the U.S. Paying Agent (if such
Agent is not the Agent being removed), the Agent being removed and the successor
agent. Any removal of an Agent and any appointment of a successor agent shall
become effective upon acceptance of appointment by the successor agent as
provided in Section 9(d) hereof. In the event of resignation by an Agent, if a
successor agent has not been appointed by the Issuer or Exide Parent within 30
days after the giving of notice by such Agent of its intention to resign, such
Agent may, at the expense of the Issuer or Exide Parent, petition any court of
competent jurisdiction for appointment of a successor agent. Upon its
resignation or removal, an Agent shall be entitled to the payment by the Issuer
or Exide Parent of its compensation for the services rendered hereunder and to
the reimbursement
13
<PAGE>
of all reasonable out-of-pocket expenses incurred in connection with the
services rendered by it hereunder.
(c) The Issuer or Exide Parent shall remove an Agent and appoint a
successor agent if such Agent (i) shall become incapable of acting, (ii) shall
be adjudged bankrupt or insolvent, (iii) shall commence a voluntary case or
other proceeding seeking liquidation, reorganization or other relief with
respect to it or its debts under any bankruptcy, insolvency or other similar law
now or hereafter in effect or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official of it or any substantial part of
its property, (iv) shall consent to, or shall have had entered against it a
court order for, any such relief or the appointment of or taking possession by
any such official in any involuntary case or other proceedings commenced against
it, (v) shall make a general assignment for the benefit of creditors or (vi)
shall fail generally to pay its debts as they become due.
(d) Any successor agent appointed as provided in Section 9(b) or (c)
hereof shall execute and deliver to its predecessor and to the Issuer and Exide
Parent an instrument accepting such appointment hereunder, and thereupon such
successor agent, without any further act, deed or conveyance, shall become
vested with all the rights, powers, trusts, duties and obligations of its
predecessor hereunder, with like effect as if originally named as such Agent
hereunder, and such predecessor, upon payment of its compensation and out-of-
pocket expenses owing pursuant hereto then unpaid, shall deliver over to such
successor agent all moneys, securities, books, records or other property at the
time held by it hereunder.
(e) Any corporation into which an Agent may be merged or converted or any
corporation with which such Agent may be consolidated or any corporation
resulting from any merger, conversion or consolidation to which such Agent shall
be a party or any corporation succeeding to the corporate trust business of such
Agent shall be the successor to such Agent hereunder (provided that such
corporation shall be qualified as aforesaid) without the execution or filing of
any document or any further act on the part of any of the parties hereto.
10. Meetings; Notice to Holders. (a) The Issuer and Exide Parent may at
any time and from time to time call a meeting of the holders of the Notes, such
meeting to be held at such time and at such place as the Issuer and Exide Parent
shall determine, for the purpose of obtaining a waiver of any covenant or
condition set forth in the Terms of the Notes. Upon a request in writing made by
holders of the Notes of not less than 25% of the aggregate outstanding principal
amount of the Notes, after the Notes have become due and payable due to a
default, the Paying Agents shall convene a meeting of the holders of the Notes,
such meeting to be held at such time and at such place as the Issuer, Exide
Parent or the holders shall determine. Notice of any meeting of holders of the
Notes, setting forth the time and place of such meeting and in general terms the
action proposed to be taken at such meeting, shall be not less than 20 nor more
than 90 days prior to the date fixed for the meeting. To be entitled to vote at
any meeting of holders of the Notes a person shall be (i) a holder of one or
more Notes or (ii) a person appointed by an instrument in writing as proxy by
the Holder of one or more of such Notes. The only
14
<PAGE>
persons who shall be entitled to be present or to speak at any meeting of such
holders shall be the persons entitled to vote at such meeting and their counsel
and any representatives and counsel of the Issuer and Exide Parent.
The term "outstanding" means, as of any particular time, all Notes
authenticated and delivered by the Registrar or Co-Registrar under this
Agreement, except (i) Notes theretofore cancelled by the Registrar or Co-
Registrar or delivered to the Registrar or Co-Registrar for cancellation; (ii)
Notes, or portions thereof, for the payment of which moneys in the necessary
amount shall have been deposited in trust with the Paying Agents; and (iii)
Notes in substitution for which other Notes shall have been authenticated and
delivered pursuant to the terms of Section 6 hereof unless proof satisfactory to
the Registrar or Co-Registrar is presented that any such Note is held by a
person in whose hands such Note is a legal, valid and binding obligation of the
Issuer and Exide Parent.
In determining whether the Holders of the requisite aggregate principal
amount of Notes have concurred in any direction, request, demand, authorization,
notice, consent or waiver under this Agreement or the Notes, Notes which are
owned by the Issuer, Exide Parent or by any person directly or indirectly
controlling or controlled by or under direct or indirect common control with the
Issuer or Exide Parent shall be disregarded and deemed not to be outstanding for
the purpose of any such determination, except that for the purpose of
determining whether the Agents shall be protected in relying on any such
direction, consent or waiver, only Notes that either Registrar knows are so
owned shall be so disregarded. Notes so owned that have been pledged in good
faith may be regarded as outstanding if the pledgee establishes to the
satisfaction of the Registrar or Co-Registrar, as the case may be, the pledgee's
right so to act with respect to such Notes and that the pledgee is not the
Issuer, Exide Parent or any person directly or indirectly controlling or
controlled by or under direct or indirect common control with the Issuer or
Exide Parent. In case of a dispute as to such right, the advice of counsel shall
be full protection in respect of any decision made by any Registrar in
accordance with such advice. Any certificate, statement or opinion of counsel
may be based insofar as it relates to factual matters or information that is in
the possession of any Registrar, upon the certificate, statement or opinion of,
or representations by, such Registrar unless such counsel knows that the
certificate, statement or opinion or representations with respect to the matters
upon which his certificate, statement or opinion may be based as aforesaid are
erroneous, or in the exercise of reasonable care should know that the same are
erroneous.
(b) The persons entitled to vote at least a majority in aggregate
principal amount of the Notes at the time outstanding shall constitute a quorum
for the purpose of any action to be taken at a meeting of holders of the Notes.
No business shall be transacted in the absence of a quorum, unless a quorum is
present when the meeting is called to order. In the absence of a quorum within
30 minutes of the time appointed for any such meeting, the meeting may be
adjourned for a period of not less than 10 days as determined by the chairman of
the meeting. In the absence of a quorum at any such adjourned meeting, such
adjourned meeting shall be further adjourned for a period of not less than 10
days as determined by the chairman of the
15
<PAGE>
meeting. Notice of the reconvening of any adjourned meeting shall be given as
provided above except that such notice must be given not less than five days
prior to the date on which the meeting is scheduled to be reconvened. Subject to
the foregoing, at the reconvening of any meeting further adjourned for lack of a
quorum, the persons entitled to vote at least 25% in aggregate principal amount
of the Notes at the time outstanding shall constitute a quorum for the taking of
any action set forth in the notice of the original meeting. Notice of the
reconvening of an adjourned meeting shall state expressly the percentage of the
aggregate principal amount of the outstanding Notes which shall constitute a
quorum. At a meeting or an adjourned meeting duly convened and at which a quorum
is present as aforesaid, any resolution to waive compliance by the Issuer or
Exide Parent, as the case may be, with any of the covenants or conditions
referred to above shall be effectively passed and decided if passed and/or
decided by the persons entitled to vote the percentage of the aggregate
principal amount of the outstanding Notes required to amend or modify the Notes
pursuant to Section 10 of the Terms. It shall not be necessary for the vote or
consent of the Holders of Notes to approve the particular form of any proposed
modification, amendment, supplement, authorization, notice, consent, waiver or
other action, but it shall be sufficient if such vote or consent shall approve
the substance thereof.
(c) Any holder of the Notes who has executed an instrument in writing
appointing a person as proxy shall be deemed to be present for the purposes of
determining a quorum and be deemed to have voted; provided that such holder
shall be considered as present or voting only with respect to the matters
covered by such instrument in writing. Any resolution passed or decision taken
at any meeting of holders duly held in accordance with this Section 10 shall be
binding on all the holders whether or not present or represented at the meeting.
(d) The holding of the Global Registered Note by a registered holder shall
be proved by the registry books maintained in accordance with Section 7 hereof
or by a certificate or certificates of a Registrar in its capacity as the agent
of the Issuer and Exide Parent for the maintenance of such books. The holding of
the Global Bearer Note and the Definitive Notes by unregistered holders shall be
proved by possession thereof.
(e) The Issuer or Exide Parent shall appoint a temporary chairman of the
meeting. A permanent chairman and a permanent secretary of the meeting shall be
elected by vote of the holders of at least a majority in aggregate principal
amount of the Notes represented at the meeting. At any meeting each holder or
proxy shall be entitled to one vote for each DM 1,000 principal amount of Notes
held or represented by him; provided that no vote shall be cast or counted at
any meeting in respect of any Note challenged as not outstanding and ruled by
the chairman of the meeting to be not outstanding. The chairman of the meeting
shall have no right to vote except as a holder or proxy. Any meeting of holders
duly called at which a quorum is present may be adjourned from time to time, and
the meeting may be held as so adjourned without further notice.
(f) The vote upon any resolution submitted to any meeting of holders of
the Notes shall be by written ballot on which shall be subscribed the signatures
of the Holders or
16
<PAGE>
proxies and on which shall be inscribed the serial number or numbers of the
Notes held or represented by them. The permanent chairman of the meeting shall
appoint two inspectors of votes who shall count all votes cast at the meeting
for or against any resolution and who shall make and file with the secretary of
the meeting their verified written reports in duplicate of all votes cast at the
meeting. A record in triplicate of the proceedings of each meeting of holders
shall be prepared by the secretary of the meeting and there shall be attached to
said record the original reports of the inspectors of votes on any vote by
ballot taken thereat and affidavits by one or more persons having knowledge of
the facts setting forth a copy of the notice of the meeting and showing that
said notice was published as provided above. The record shall be signed and
verified by the permanent chairman and secretary of the meeting and one of the
duplicates shall be delivered to the Issuer or Exide Parent and the other to
each of the Paying Agents to be preserved by the Paying Agents, the Paying
Agents to have attached thereto the ballots voted at the meeting. Any record so
signed and verified shall be conclusive evidence of the matters therein stated.
(g) Any modifications, amendments or waivers to this Agreement or to the
Terms will be conclusive and binding on all holders of the Notes, whether or not
they have given such consent or were present at such meeting, and on all future
holders of Notes, whether or not notation of such modifications, amendments or
waivers is made upon the Notes. Any instrument given by or on behalf of any
holder of a Note in connection with any consent to any such modification,
amendment or waiver will be irrevocable once given and will be conclusive and
binding on all subsequent holders of such Note.
(h) Where this Agreement provides for notice of any event to holders by
the Issuer or Paying Agents, such notice shall be sufficiently given (unless
otherwise herein expressly provided): to registered holders of any Note, if in
writing and mailed, first-class postage (or, if first class mail is unavailable,
by airmail) prepaid, to each registered holder at his address as it appears in
the Register, in each case not later than the latest date, and not earlier than
the earliest date, prescribed hereunder for the giving of such notice; or, to
unregistered holders of any Note, if such notice is published in the following
journals: (i) the Bundesanzeiger and one mandatory nationwide newspaper (if
practicable, the Borsen-Zeitung) designated by the Stock Exchange in Frankfurt
am Main in the German language; (ii) a leading daily newspaper (if practicable,
The Wall Street Journal (Eastern Edition)) printed in the English language and
of general circulation in New York; and (iii) a leading daily newspaper (if
practicable, the Financial Times (London Edition)) printed in the English
language and of general circulation in London, in each case, once in each of
three successive calendar weeks, the first publication to be not later than the
latest date, and not earlier than the earliest date, prescribed hereunder for
the giving of such notice.
Any notice to registered holders shall be deemed to have been given on the
fourth weekday after the date of mailing. Any notice to unregistered holders
will become effective for all purposes on the date of its publication in the
Bundesanzeiger.
17
<PAGE>
11. Payment of Taxes. The Issuer agrees to pay all stamp and other duties,
if any, to which, under the laws of the United States of America the Republic of
France or the Federal Republic of Germany, this Agreement or the initial
issuance of the Notes may be subject.
12. Notices. (a) All notices or communications hereunder, as herein
otherwise specifically provided, shall be in writing and if sent to any Agent
shall be delivered, telexed or telecopied and confirmed to such Agent care of:
The Bank of New York
101 Barclay Street
Floor 21 West
New York, New York 10286
Telex no.: 1 (212) 815-4701
Facsimile: 1 (212) 815-5915/5917
Attention: Corporate Trust Administration
Deutsche Bank Aktiengesellschaft
Taunusanlage 12
D-60262 Frankfurt am Main
Facsimile: 49 (69) 910-38794
Attention: Fiscal Agency Group
and if sent to the Issuer or Exide Parent delivered or sent via facsimile and
confirmed at:
Exide Corporation
645 Penn Street
P.O. Box 14205
Reading, Pennsylvania 19612-4205
Facsimile: 1 (610) 378-0232
Attention: Chief Financial Officer
(or such other address as shall be specified in writing by any Paying Agent to
the Issuer and Exide Parent or by the Issuer or Exide Parent to any Paying Agent
to the other). If any Agent shall receive any notice or demand addressed to the
Issuer or Exide Parent by the holder of a Note pursuant to the provisions of the
Notes, such Agent shall promptly forward such notice or demand to the Issuer or
Exide Parent, as the case may be. Any notice sent to any Agent from the Issuer
or Exide Parent, or any notice sent to the Issuer or Exide Parent from any Agent
shall be deemed effective upon receipt.
18
<PAGE>
(b) Payments to the U.S. Paying Agent and DM Paying Agent by wire transfer
of immediately available funds as provided in Section 4(a) hereof shall be made
in Deutsche marks to such account with such bank in New York City and Germany,
respectively, as the U.S. Paying Agent or DM Paying Agent, as the case may be,
may from time to time notify to the Issuer or Exide Parent (in the event Exide
Parent is obligated to make payments in respect of the Notes) reasonably in
advance of the time any such payment is due and payable.
13. Additional Representations, Warranties and Agreements of the Issuer.
The Issuer will not acquire any beneficial interest, and will use its reasonable
efforts to cause its "affiliates" (as defined in paragraph (a)(1) of Rule 144
under the Securities Act) not to acquire any beneficial interest, in any Note
unless the Issuer or such affiliate notifies the U.S. Paying Agent of such
acquisition. The Issuer shall, and shall cause the relevant affiliates to,
immediately notify the U.S. Paying Agent if the Issuer or any such affiliate
shall cease to be the beneficial owner of any such Notes, specifying the date of
such occurrence. The Agents and all holders of Notes shall be entitled to rely
without further investigation on any such notification (or the lack thereof).
14. No Recourse Against Others. No recourse for the payment of the
principal of or interest on any of the Notes or for any claim based thereon or
otherwise in respect thereof, and no recourse under or upon any obligation,
covenant or agreement of the Issuer or Exide Parent in this Agreement or in the
Notes or because of the creation of any Indebtedness represented thereby, shall
be had against any incorporator, shareholder, officer, director, employee,
Executive Committee member or controlling person of the Issuer or Exide Parent
or of any successor Person thereof. Each holder, by accepting the Notes, waives
and releases all such liability; it being expressly understood that such waiver
and release are part of the consideration for issuance of the Notes.
15. Governing Law. (a) This Agreement, the Notes and the Partial Parent
Guarantee shall be governed by and construed in accordance with the laws of the
State of New York without regard to principles of conflict of laws, except as
referred to in Section 16 hereof.
(b) The Issuer and Exide Parent hereby irrevocably consent and agree to
submit to the non-exclusive jurisdiction of any New York State or United States
federal court sitting in the Borough of Manhattan, New York, New York over any
suit, action or proceeding arising out of or related to this Agreement, any Note
or the Partial parent Guarantee. The Issuer and Exide Parent irrevocably waive,
to the fullest extent permitted by law, any objection which they may have to the
laying of the venue of any such suit, action or proceeding brought in such a
court and any claim that any such suit, action or proceeding brought in such a
court has been brought in an inconvenient forum.
(c) As long as any of the Notes remain outstanding, the Issuer and Exide
Parent will at all times have an authorized agent in The City of New York, upon
whom process may be served in any suit, action or proceeding arising out of or
relating to this Agreement, any Note or the Partial Parent Guarantee. Service of
process upon such agent and written notice of such
19
<PAGE>
service mailed or delivered to the Issuer or Exide Parent shall to the extent
permitted by law be deemed in every respect effective service of process upon
the Issuer in any such suit, action or proceeding. Each of the Issuer and Exide
Parent hereby appoints CT Corporation System as its agent for such purpose, and
covenants and agrees that service of process in any suit, action or proceeding
may be made upon it at the office of such agent at 1633 Broadway, 23rd Floor,
New York, New York 10019 (or at such other address or at the office of such
other authorized agent as the Issuer may designate by written notice to the U.S.
Paying Agent).
(d) In the event that the Issuer or Exide Parent, as the case may be,
executes and delivers this Agreement through an attorney-in-fact (the "Attorney-
in-Fact"), it is agreed by the parties hereto that the law of the Republic of
France is applicable to the existence and extent of the Attorney-in-Fact's
authority and the effects of the Attorney-in-Fact's exercise or purported
exercise of his authority to execute and deliver this agreement.
16. Substitution of Currency. If the Federal Republic of Germany adopts
the Euro, the regulations of the European Commission relating to the Euro shall
apply to the Notes and this Agreement. The circumstances and consequences
described in this Section 16 entitle neither the Issuer nor any holder to early
redemption, rescission, notice, repudiation, adjustment or renegotiation of the
terms and conditions of the Notes or this Agreement or to raise other defenses
or to request any compensation, claim, nor will they affect any of the other
obligations of the Issuer under the Notes and this Agreement.
17. Counterparts. This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument. Such counterparts
shall together constitute but one and the same instrument.
20
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
EXIDE HOLDING EUROPE S.A.
By /s/ Jean Louis Claudel
----------------------------------------------
Name: Jean Louis Claudel
Title: Chief Financial Officer
EXIDE CORPORATION
By /s/ Catherine B. Hnatin
----------------------------------------------
Name: Catherine B. Hnatin
Title: Vice President & Treasurer
THE BANK OF NEW YORK,
as U.S. Paying Agent, Transfer Agent and
Registrar
By /s/ Ming J. Shiang
----------------------------------------------
Name: Ming J. Shiang
Title: Vice President
DEUTSCHE BANK AKTIENGESELLSCHAFT,
as DM Paying Agent, Transfer Agent and Co-
Registrar
By /s/ Peter Zabel
----------------------------------------------
Name: Peter Zabel
Title: Vice President
21
<PAGE>
EXHIBIT A-1
[Form of Face of Global Registered Note]
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), AND ACCORDINGLY, MAY NOT BE OFFERED OR
SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S.
PERSONS EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION
HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL
BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) OR (B) IT IS AN
INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(a)(1), (2), (3) OR
(7) OF REGULATION D UNDER THE SECURITIES ACT) (AN "INSTITUTIONAL ACCREDITED
INVESTOR") OR (C) IT IS NOT A U.S. PERSON AND IS ACQUIRING THIS NOTE IN AN
OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER THE SECURITIES ACT,
(2) AGREES THAT IT WILL NOT, WITHIN TWO YEARS AFTER THE ORIGINAL ISSUANCE OF
THIS NOTE, RESELL OR OTHERWISE TRANSFER THIS NOTE EXCEPT (A) TO EXIDE HOLDING
EUROPE S.A. OR ANY SUBSIDIARY THEREOF, (B) INSIDE THE UNITED STATES TO A
QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES
ACT, (C) INSIDE THE UNITED STATES TO AN INSTITUTIONAL ACCREDITED INVESTOR THAT,
PRIOR TO SUCH TRANSFER, FURNISHES TO THE U.S. PAYING AGENT A SIGNED LETTER
CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS
ON TRANSFER OF THIS NOTE (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM THE U.S.
PAYING AGENT) AND, IF SUCH TRANSFER IS IN RESPECT OF AN AGGREGATE PRINCIPAL
AMOUNT OF NOTES AT THE TIME OF TRANSFER OF LESS THAN DM1,000,000, AN OPINION OF
COUNSEL ACCEPTABLE TO EXIDE HOLDING EUROPE S.A. THAT SUCH TRANSFER IS IN
COMPLIANCE WITH THE SECURITIES ACT, (D) OUTSIDE THE UNITED STATES IN AN OFFSHORE
TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT, (E) PURSUANT
TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT
(IF AVAILABLE) OR (F) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT AND (3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS
NOTE IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN
CONNECTION WITH ANY TRANSFER OF THIS NOTE WITHIN TWO YEARS AFTER THE ORIGINAL
ISSUANCE OF THIS NOTE, THE HOLDER MUST CHECK THE APPROPRIATE BOX ON THE
CERTIFICATE SET FORTH ON THE REVERSE HEREOF RELATING TO THE MANNER OF SUCH
TRANSFER AND SUBMIT SUCH CERTIFICATE TO A PAYING AGENT. IF THE PROPOSED
TRANSFEREE IS AN INSTITUTIONAL ACCREDITED INVESTOR, THE HOLDER MUST, PRIOR TO
SUCH TRANSFER, FURNISH TO THE U.S.
A-1-1
<PAGE>
PAYING AGENT AND EXIDE HOLDING EUROPE S.A. SUCH CERTIFICATIONS, LEGAL OPINIONS
OR OTHER INFORMATION AS EITHER OF THEM MAY REASONABLY REQUIRE TO CONFIRM THAT
SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION
NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. AS USED
HEREIN, THE TERMS "OFFSHORE TRANSACTION," "UNITED STATES" AND "U.S. PERSON" HAVE
THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT. THE PAYING
AGENCY AGREEMENT CONTAINS A PROVISION REQUIRING THE PAYING AGENTS TO REFUSE TO
REGISTER ANY TRANSFER OF THIS NOTE IN VIOLATION OF THE FOREGOING RESTRICTIONS.
THIS IS A GLOBAL NOTE REFERRED TO IN SECTION 2 OF THE WITHIN-MENTIONED
PAYING AGENCY AGREEMENT.
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL IN AS MUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
A-1-2
<PAGE>
EXIDE HOLDING EUROPE S.A.
Up to DM 175,000,000
9-1/8% Senior Note Due 2004
CUSIP 301961AA6
CINS F33884AA9
EXIDE HOLDING EUROPE S.A., a limited liability company incorporated
under the laws of the Republic of France (the "Issuer"), for value received,
hereby promises to pay to CEDE & CO., or registered assigns, the aggregate
unpaid principal amount shown on the schedule affixed thereto and made a part
hereof (or on a continuation thereof which shall be affixed hereto and made a
part hereof) as endorsed by the Registrar (as defined on the reverse hereof)
pursuant to the Paying Agency Agreement (as defined on the reverse hereof),
which amount is on the date hereof [PRINCIPAL AMOUNT IN WORDS] DEUTSCHE MARKS,
on April 15, 2004 (the "Stated Maturity"), in such coin or currency of the
Federal Republic of Germany as at the time of payment shall be legal tender for
the payment of public and private debts. In addition, the Issuer promises to pay
interest annually in arrears on April 15 of each year (each, an "Interest
Payment Date"), commencing April 15, 1998 on such principal sum, in like coin or
currency, at the rate per annum specified in the title of this Note (calculated
on the basis of a 360-day year of twelve 30-day months), from and including
April 23, 1997 or from and including the most recent Interest Payment Date to
which interest on this Note (or any predecessor Note) has been paid or duly
provided for, until payment of such principal sum has been made or duly provided
for. The interest payable hereon on any Interest Payment Date will be interest
accrued from and including such dates as stated in the immediately preceding
sentence, to but excluding such Interest Payment Date; provided, however, that
the interest payable hereon on the Stated Maturity will be interest accrued from
and including such dates to but excluding such Stated Maturity. Subject to
certain exceptions referred to on the reverse hereof, interest so payable on any
Interest Payment Date will be paid to the person in whose name this Note is
registered at the close of business on the March 31 immediately preceding such
Interest Payment Date (each, a "Record Date").
The statements set forth in the legend, if any, set forth above are an
integral part of the terms of this Note and by acceptance hereof each holder of
this Note agrees to be subject to and bound by the terms and provisions set
forth in such legend, if any.
Reference is made to the further provisions of this Note set forth on
the reverse hereof. Such further provisions shall for all purposes have the same
effect as though fully set forth at this place.
This Note may under certain circumstances become entitled to the
benefit of a Guarantee by Exide Corporation, a Delaware corporation, to the
extent but only to the extent set forth in Section 7(b) on the reverse hereof.
The form of such Guarantee by Exide Corporation is attached
A-1-3
<PAGE>
as an exhibit to the Fiscal and Paying Agency Agreement dated as of April 23,
1997 among the Issuer, Exide Corporation, The Bank of New York, as U.S. Paying
Agent, Transfer Agent and Registrar and Deutsche Bank Aktiengesellschaft, as DM
Paying Agent, Transfer Agent and Co-Registrar. Any holder hereof may from time
to time request either Paying Agent to confirm to it the amount, if any, of such
Guarantee applicable at the time of such request and may request copies of the
certificates and calculations with respect thereto, as set forth in Section
7(b)(4) and (5) on the reverse hereof.
IN WITNESS WHEREOF, the Issuer has caused this instrument to be signed
manually or by facsimile by its duly Authorized Officer.
EXIDE HOLDING EUROPE S.A.
By _______________________
Name:
Title:
Date: ____________________
[FORM OF CERTIFICATE OF AUTHENTICATION]
This is the Global Registered Note referred to in the within-mentioned
Paying Agency Agreement.
By or on behalf of
THE BANK OF NEW YORK,
as Registrar
By ______________________
Authorized Signatory
Date: ___________________
A-1-4
<PAGE>
[FORM OF TRANSFER NOTICE FOR REGISTERED NOTES]
FOR VALUE RECEIVED the undersigned registered holders hereby sell(s), assign(s)
and transfer(s) unto
Insert Taxpayer Identification No.
- ---------------------------------- ------------------------------------
____________________________________________________________________________
____________________________________________________________________________
[Please print or typewrite name and address, including postal zip code of
assignee]
the within Note and all rights thereunder, hereby irrevocably constituting and
appointing
__________________________________________________ as attorney to transfer such
Note on the books of the Issuer with full power of substitution in the premises.
In connection with any transfer of this Note occurring prior to the date which
is two years after the later of [______], 1997 and the last date, if any, that
this Note (or any predecessor Note) was owned by the Issuer or an affiliate of
the Issuer, the undersigned confirms that without utilizing any general
solicitation or general advertising that:
[Check one below]
[ ] (a) this Note is being transferred to the Issuer or an affiliate thereof
and such transferee shall make the appropriate notification to the U.S.
Paying Agent pursuant to Section 13 of the Paying Agency Agreement.
or
[ ] (b) this Note is being transferred inside the United States to a QIB in
compliance with Rule 144A.
or
[ ] (c) this Note is being transferred outside the United States in
compliance with Rule 904 under the Securities Act.
or
A-1-5
<PAGE>
[ ] (d) this Note is being transferred pursuant to the exemption from
registration provided by Rule 144 under the Securities Act (if available).
or
[ ] (e) this Note is being transferred pursuant to an effective registration
statement under the Securities Act.
In addition, the undersigned will provide the Issuer and the Transfer Agents
such certifications, legal opinions and other information, if any, as they may
reasonably require to confirm that the proposed transfer is being made pursuant
to an exemption from, or in a transaction not subject to, the registration
requirements of the Securities Act.
If none of the foregoing boxes is checked, the U.S. Paying Agent shall not be
obligated to register this Note in the name of any person other than the holder
hereof unless and until the conditions to any such transfer of registration set
forth herein and in Section 6(b) of the Paying Agency Agreement shall have been
satisfied.
Date: _______________________
_________________________________________
NOTICE: The signature to this assignment must
correspond with the name as written upon the
face of the within-mentioned instrument in every
particular, without alteration or any change
whatsoever.
TO BE COMPLETED BY PURCHASER IF (b) ABOVE IS CHECKED:
The undersigned represents and warrants that it is purchasing the Note for
its own account or an account with respect to which it exercises sole investment
discretion and that it and any such account is a "qualified institutional buyer"
within the meaning of Rule 144A under the Securities Act of 1933, as amended,
and is aware that the sale to it is being made in reliance on Rule 144A and
acknowledges that it has received such information regarding the Issuer as the
undersigned has requested pursuant to Rule 144A or has determined not to request
such information and that it is aware that the transferor is relying upon the
undersigned's foregoing representations in order to claim the exemption from
registration provided by Rule 144A.
Date: ____________________ _________________________________________
NOTICE: To be executed by an executive officer
A-1-6
<PAGE>
SCHEDULE TO GLOBAL REGISTERED NOTE
Initial Principal Amount : DM
--------------------------------
Amount of Principal
Amount of Principal Increased (Decreased) Aggregate
Repurchased, Upon Transfer Between Principal
Date Redeemed or Repaid Global Notes Amount
- ---- ------------------- --------------------- ---------
A-1-7
<PAGE>
EXHIBIT A-2
[Form of Face of Global Bearer Note]
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), AND ACCORDINGLY, MAY NOT BE OFFERED OR SOLD
WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS
EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF, THE
HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS
DEFINED IN RULE 144A UNDER THE SECURITIES ACT) OR (B) IT IS AN INSTITUTIONAL
"ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(a)(1), (2), (3) OR (7) OF
REGULATION D UNDER THE SECURITIES ACT) (AN "INSTITUTIONAL ACCREDITED INVESTOR")
OR (C) IT IS NOT A U.S. PERSON AND IS ACQUIRING THIS NOTE IN AN OFFSHORE
TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER THE SECURITIES ACT, AND (2)
AGREES THAT IT WILL NOT, WITHIN TWO YEARS AFTER THE ORIGINAL ISSUANCE OF THIS
NOTE, RESELL OR OTHERWISE TRANSFER THIS NOTE EXCEPT (A) TO EXIDE HOLDING EUROPE
S.A. OR ANY SUBSIDIARY THEREOF, (B) INSIDE THE UNITED STATES TO A QUALIFIED
INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, (C)
INSIDE THE UNITED STATES TO AN INSTITUTIONAL ACCREDITED INVESTOR THAT, PRIOR TO
SUCH TRANSFER, FURNISHES TO THE U.S. PAYING AGENT A SIGNED LETTER CONTAINING
CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER
OF THIS NOTE (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM THE U.S. PAYING
AGENT) AND, IF SUCH TRANSFER IS IN RESPECT OF AN AGGREGATE PRINCIPAL AMOUNT OF
NOTES AT THE TIME OF TRANSFER OF LESS THAN DM1,000,000, AN OPINION OF COUNSEL
ACCEPTABLE TO EXIDE HOLDING THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE
SECURITIES ACT, (D) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN
COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT, (E) PURSUANT TO THE EXEMPTION
FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE)
OR (F) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT.
IF THE PROPOSED TRANSFEREE IS AN INSTITUTIONAL ACCREDITED INVESTOR, THE HOLDER
MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE U.S. PAYING AGENT AND EXIDE HOLDING
SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS EITHER OF THEM MAY
REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN
EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT. AS USED HEREIN, THE TERMS "OFFSHORE
TRANSACTION," "UNITED STATES" AND "U.S. PERSON" HAVE THE
A-2-1
<PAGE>
MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT. THE PAYING
AGENCY AGREEMENT CONTAINS A PROVISION REQUIRING THE PAYING AGENTS TO REFUSE TO
REGISTER ANY TRANSFER OF THIS NOTE IN VIOLATION OF THE FOREGOING RESTRICTIONS.
THIS GLOBAL BEARER NOTE MAY NOT BE EXCHANGED FOR DEFINITIVE BEARER NOTES
PRIOR TO JUNE 3, 1997, AND DEFINITIVE NOTES WILL NOT BE MADE AVAILABLE IN
EXCHANGE FOR INTERESTS IN THIS GLOBAL BEARER NOTE UNLESS THE PERSON REQUESTING
SUCH EXCHANGE PROVIDES EVIDENCE SATISFACTORY TO THE DM TRANSFER AGENT THAT IT IS
NOT A "U.S. PERSON" (AS DEFINED IN REGULATION S UNDER THE SECURITIES ACT) OR
HOLDING ITS INTEREST FOR THE ACCOUNT OR BENEFIT OF A U.S. PERSON.
THIS IS A GLOBAL NOTE REFERRED TO IN SECTION 2 OF THE WITHIN MENTIONED
PAYING AGENCY AGREEMENT.
A-2-2
<PAGE>
EXIDE HOLDING EUROPE S.A.
Up to DM 175,000,000
9% Senior Note Due 2004
WKN 191285
COMMON CODE 7567731
ISIN DE0001912855
CINS F33884AA9
EXIDE HOLDING EUROPE S.A., a limited liability company formed under the
laws of the Republic of France (the "Issuer"), for value received, hereby
promises to pay to the bearer hereof, the aggregate unpaid principal amount
shown on the schedule affixed hereto and made a part hereof (or on a
continuation thereof which shall be affixed hereto and made a part thereof) as
endorsed by the Co-Registrar (as defined on the reverse hereof) pursuant to the
Paying Agency Agreement (as defined on the reverse hereof), which amount is on
the date hereof [PRINCIPAL AMOUNT IN WORDS] DEUTSCHE MARKS, on April 15, 2004
(the "Stated Maturity"), in such coin or currency of the Federal Republic of
Germany as at the time of payment shall be legal tender for the payment of
public and private debts. In addition, the Issuer promises to pay interest
annually in arrears on April 15 of each year (each, an "Interest Payment Date"),
commencing April 15, 1998 on such principal sum, in like coin or currency, at
the rate per annum specified in the title of this Note (calculated on the basis
of a 360-day year of twelve 30-day months), from and including April 23, 1997 or
from and including the most recent Interest Payment Date to which interest on
this Note (or any predecessor Note) has been paid or duly provided for, until
payment of such principal sum has been made or duly provided for. The interest
payable hereon on any Interest Payment Date will be interest accrued from and
including such dates as stated in the immediately preceding sentence, to but
excluding such Interest Payment Date; provided, however, that the interest
payable hereon on the Stated Maturity will be interest accrued from and
including such dates to but excluding such Stated Maturity. Subject to certain
exceptions referred to on the reverse hereof, interest so payable on any
Interest Payment Date will be paid to the bearer hereof upon presentment at the
office of the DM Paying Agent on or after the Interest Payment Date for such
interest. This Global Note is without interest coupons.
It is intended that this Global Note shall be delivered to and held by
Deutscher Kassenverein Aktiengesellschaft ("DKV"). DKV as the bearer hereof may
be treated as the absolute owner of this Global Note for all purposes
whatsoever.
The statements set forth in the legend, if any, set forth above are an
integral part of the terms of this Note and by acceptance hereof each holder of
this Note agrees to be subject to and bound by the terms and provisions set
forth in such legend, if any.
A-2-3
<PAGE>
Reference is made to the further provisions of this Note set forth on the
reverse hereof. Such further provisions shall for all purposes have the same
effect as though fully set forth at this place.
This Note may under certain circumstances become entitled to the benefit of
a Guarantee by Exide Corporation, a Delaware corporation, to the extent but only
to the extent set forth in Section 7(b) on the reverse hereof. The form of such
Guarantee by Exide Corporation is attached as an exhibit to the Fiscal and
Paying Agency Agreement dated as of April 23, 1997 among the Issuer, Exide
Corporation, The Bank of New York, as U.S. Paying Agent, Transfer Agent and
Registrar and Deutsche Bank Aktiengesellschaft, as DM Paying Agent, Transfer
Agent and Co-Registrar. Any holder hereof may from time to time request either
Paying Agent to confirm to it the amount, if any, of such Guarantee applicable
at the time of such request and may request copies of the certificates and
calculations with respect thereto, as set forth in Section 7(b)(4) and (5) on
the reverse hereof.
IN WITNESS WHEREOF, the Issuer has caused this instrument to be signed
manually or by facsimile by its duly Authorized Officer.
EXIDE HOLDING EUROPE S.A.
By
-----------------------------
Name:
Title:
Date:
--------------------------
A-2-4
<PAGE>
[FORM OF CERTIFICATE OF AUTHENTICATION]
This is the Global Bearer Note referred to in the within-mentioned
Paying Agency Agreement.
By or on behalf of
DEUTSCHE BANK
AKTIENGESELLSCHAFT,
as Co-Registrar
By __________________________
Authorized Signatory
Date: ________________________
A-2-5
<PAGE>
SCHEDULE TO GLOBAL BEARER NOTE
Initial Principal Amount : DM
-----------------------------
<TABLE>
<CAPTION>
Amount of Principal
Increased (Decreased)
Amount of Principal Upon Transfer Between Aggregate
Repurchased, Global Notes or to or Principal
Date Redeemed or Repaid from Definitive Notes Amount
- ---- ------------------- --------------------- ---------
<S> <C> <C> <C>
</TABLE>
A-2-6
<PAGE>
[FORM OF CERTIFICATE OF TRANSFER]
[Date]
The Bank of New York
Deutsche Bank AG
c/o Deutsche Bank AG,
as DM Transfer Agent
Taunusanlage 12
60262 Frankfurt am Main
Re: Exide Holding Europe S.A. 9 1/8% Senior Notes due 2004
-----------------------------------------------------------
Ladies and Gentlemen:
In connection with our proposed purchase of certain 9 1/8% Senior Notes due
2004 of Exide Holding Europe S.A. to be delivered to us in definitive bearer
form (the "Notes"), we hereby confirm that we are acquiring the Notes in
compliance with Rule 904 of Regulation S under the Securities Act of 1933, as
amended, and accordingly, that we are a foreign purchaser outside the United
States and at the time the buy order was originated for the Notes we were
outside the United States. We understand that any transfer of the Notes is
subject to certain restrictions and conditions as set forth in the Notes and the
Fiscal and Paying Agency Agreement, dated as of April 23, 1997, among Exide
Holding Europe S.A., Exide Corporation, The Bank of New York and Deutsche Bank
AG, pursuant to which the Notes were issued, and we agree to be bound by and not
to resell, pledge or otherwise transfer the Notes except in compliance with such
restrictions and conditions.
Very truly yours,
[NAME OF PURCHASER]
By
---------------------------
Name:
Title:
Aggregate Principal Amount of Notes
To Be Purchased:
DM _________________________
A-2-7
<PAGE>
EXHIBIT A-3
[Form of Face of Definitive Note]
EXIDE HOLDING EUROPE S.A.
DM ______________
9 1/8% Senior Note Due 2004
<TABLE>
<CAPTION>
No. ___
<S> <C>
COMMON CODE 7567731
WKN 191285
ISIN DE0001912855
CINS F33884AA9
</TABLE>
EXIDE HOLDING EUROPE S.A., a limited liability company formed under the
laws of the Republic of France (the "Issuer"), for value received, hereby
promises to pay to the bearer hereof upon surrender hereof, the principal sum of
[PRINCIPAL AMOUNT IN WORDS] DEUTSCHE MARKS on April 15, 2004 (the "Stated
Maturity"), in such coin or currency of the Federal Republic of Germany as at
the time of payment shall be legal tender for the payment of public and private
debts. In addition, the Issuer promises to pay interest, annually in arrears on
April 15 of each year (each, an "Interest Payment Date"), commencing April 15,
1998 on such principal sum, in like coin or currency, at the rate per annum
specified in the title of this Note (calculated on the basis of a 360-day year
of twelve 30-day months), from and including April 23, 1997 or from and
including the most recent Interest Payment Date to which interest on this Note
(or any predecessor Note) has been paid or duly provided for, until payment of
such principal sum has been made or duly provided for. The interest payable
hereon on any Interest Payment Date will be interest accrued from and including
such dates as stated in the immediately preceding sentence, to but excluding
such Interest Payment Date, provided, however, that the interest payable hereon
on the Stated Maturity will be interest accrued from and including such dates to
but excluding such Stated Maturity. Subject to certain exceptions referred to on
the reverse hereof, interest so payable on any Interest Payment Date will be
paid to the holder of this Note upon surrender of the Coupon for such interest
installment at the specified office of either of the Paying Agents on or after
the Interest Payment Date for such interest installment.
The statements set forth in the legend, if any, set forth above are an
integral part of the terms of this Note and by acceptance hereof each holder of
this Note agrees to be subject to and bound by the terms and provisions set
forth in such legend, if any.
A-3-1
<PAGE>
Reference is made to the further provisions of this Note set forth on the
reverse hereof. Such further provisions shall for all purposes have the same
effect as though fully set forth at this place.
This Note may under certain circumstances become entitled to the benefit of
a Guarantee by Exide Corporation, a Delaware corporation, to the extent but only
to the extent set forth in Section 7(b) on the reverse hereof. The form of such
Guarantee by Exide Corporation is attached as an exhibit to the Fiscal and
Paying Agency Agreement dated as of April 23, 1997 among the Issuer, Exide
Corporation, The Bank of New York, as U.S. Paying Agent, Transfer Agent and
Registrar and Deutsche Bank Aktiengesellschaft, as DM Paying Agent, Transfer
Agent and Co-Registrar. Any holder hereof may from time to time request either
Paying Agent to confirm to it the amount, if any, of such Guarantee applicable
at the time of such request and may request copies of the certificates and
calculations with respect thereto, as set forth in Section 7(b)(4) and (5) on
the reverse hereof.
IN WITNESS WHEREOF, the Issuer has caused this instrument to be signed
manually or by facsimile by its duly Authorized Officer.
EXIDE HOLDING EUROPE S.A.
By
-----------------------------------
Name:
Title:
Date:
------------------------------
[The Definitive Notes shall be printed with a "souche" (counterfoil), as
required by French law.]
A-3-2
<PAGE>
[FORM OF CERTIFICATE OF AUTHENTICATION]
This is one of the Definitive Notes referred to in the within-mentioned
Paying Agency Agreement.
By or on behalf of
DEUTSCHE BANK AKTIENGESELLSCHAFT,
as Co-Registrar
By
-----------------------------------
Authorized Signatory
Date:
--------------------------------
A-3-3
<PAGE>
[FORM OF COUPON]
9 1/8% SENIOR NOTE DUE 2004
NO. _______
ANY UNITED STATES PERSON WHO HOLDS THIS OBLIGATION WILL BE SUBJECT TO
LIMITATIONS UNDER THE UNITED STATES INCOME TAX LAWS, INCLUDING THE LIMITATIONS
PROVIDED IN SECTIONS 165(j) AND 1287(a) OF THE UNITED STATES INTERNAL REVENUE
CODE.
EXIDE HOLDING EUROPE S.A.
9 1/8% SENIOR NOTE DUE 2004
DM [Insert Interest Amount due]
Due
----------------------------------
Unless the Note to which this coupon appertains shall have been previously
redeemed or repaid, EXIDE HOLDING EUROPE S.A. (the "Issuer") will, on the date
set forth herein, pay to bearer, upon surrender hereof at such agencies in such
places as the Issuer may determine from time to time (the "Paying Agents"),
interest on the principal amount of such Note as specified above (together with
any additional amounts in respect thereof which the Issuer may be required to
pay according to the terms of such Note), in such coin or currency of the
Federal Republic of Germany as at the time of payment shall be legal tender for
the payment of public and private debts, except as specified in such Note.
Payment on this Coupon shall be made, at the option of the bearer hereof and
subject to any applicable laws and regulations or procedures of any Paying
Agent, by a check mailed to an address outside the United States furnished by
such bearer or by wire transfer to an account maintained by the payee with a
bank located outside the United States, except as otherwise provided in such
Note.
This coupon is subject to the terms of the Note to which it has been
attached and the Paying Agency Agreement referred to therein.
EXIDE HOLDING EUROPE S.A.
By:
----------------------------------
Name:
Title:
DM PAYING AGENT AND TRANSFER AGENT
Deutsche Bank Aktiengesellschaft
Taunusanlage 12
D-60262 Frankfurt am Main
<PAGE>
EXHIBIT B-1
[FORM OF REVERSE OF NOTE]
TERMS AND CONDITIONS OF THE NOTES
1. General. (a) This Note is one of a duly authorized issue of debt
securities of the Issuer, designated as its 9 1/8% Senior Notes due 2004 (the
"Notes"), and issued or to be issued pursuant to a fiscal and paying agency
agreement, dated as of April 23, 1997 (the "Paying Agency Agreement"), between
the Issuer, Exide Parent, and The Bank of New York, as U.S. fiscal and paying
agent (the "U.S. Paying Agent") and Deutsche Bank Aktiengesellschaft ("Deutsche
Bank"), as DM fiscal and paying agent (the "DM Paying Agent" and, together with
the U.S. Paying Agent, the "Paying Agents"). The Bank of New York is also acting
as U.S. transfer agent (in such capacity, the "U.S. Transfer Agent") and as
registrar (in such capacity, the "Registrar") under the Paying Agency Agreement.
Deutsche Bank is also acting as DM transfer agent (in such capacity, the "DM
Transfer Agent" and, together with the U.S. Transfer Agent, the "Transfer
Agents") and as co-registrar (in such capacity, the "Co-Registrar" and, together
with the Registrar, the "Registrars") under the Paying Agency Agreement. A copy
of the Paying Agency Agreement is on file and may be inspected at the corporate
trust office of the Paying Agents and the Registrars.
(b) The issue of the Notes was authorized pursuant to a resolution of the
Board of Directors of the Issuer dated April 9, 1997.
(c) The Notes are unsecured senior obligations of the Issuer and rank pari
passu in right of payment with each other and all other unsecured and
unsubordinated obligations of the Issuer and senior in right of payment to all
subordinated obligations of the Issuer. The Issuer may, subject to Section 7
hereof, issue additional Notes under the Paying Agency Agreement.
(d) The Notes may be exchanged, and transfers thereof shall be registered,
as provided herein and in the Paying Agency Agreement. With respect to the
registered Notes, the person in whose name a Note shall be registered may (to
the fullest extent permitted by applicable laws) be treated at all times, by all
persons and for all purposes as the absolute owner of such Note regardless of
any notice of ownership, theft or loss or of any writing thereon. With respect
to the bearer Notes, the bearer thereof shall be treated at all times, by all
persons and for all purposes as the absolute owner of such Note regardless of
any notice of ownership, theft or loss or of any writing thereon.
2. Payments and Paying Agencies. (a) In order to provide for the payment
of principal of and interest on the Notes as the same shall become due and
payable, the Issuer or
B-1
<PAGE>
Exide Parent (in the event Exide Parent is obligated to make payments in respect
of the Notes) shall pay to the Paying Agents on or before each Interest Payment
Date or the Stated Maturity or any date fixed for redemption of the Notes in
such coin or currency of the Federal Republic of Germany as at the time shall be
legal tender for the payment of public and private debts, an amount in
immediately available funds which (together with any funds then held by any
Paying Agent or Registrar and available for this purpose) shall be sufficient to
pay the interest or principal or both, as the case may be, becoming due on such
date; provided, however, that if such date is not a Business Day, the Issuer
shall make such payment on the next succeeding Business Day. All sums payable to
the Paying Agents hereunder shall be paid to such account and with such bank as
the U.S. Paying Agent and DM Paying Agent may from time to time notify to the
Issuer or Exide Parent reasonably in advance of the time such sum is due and
payable.
(b) (1) Payment of interest and principal with respect to interests in
Global Notes will be credited to the account of the holders of such interests
with Deutscher Kassenverein AG ("DKV"), The Depository Trust Company ("DTC"),
Morgan Guaranty Trust Company of New York, Brussels office, as operator of the
Euroclear System ("Euroclear") or Cedel Bank, societe anonyme ("Cedel Bank"), as
the case may be.
(A) Any person holding beneficial interests in the Global Registered Note
(a "Registered Note Holder") shall receive payments of principal and interest
in respect of the Notes in U.S. dollars, unless such Registered Note Holder
elects to receive payments in Deutsche marks in accordance with the procedures
set forth below. To the extent that the Registered Note Holders shall not have
made such election in respect of any payment of principal or interest, the
aggregate amount designated for all such Registered Note Holders in respect of
such payment (the "DM Conversion Amount") shall be credited to the U.S. Paying
Agent's account and converted by the U.S. Paying Agent into U.S. dollars and
paid by wire transfer of same-day funds to the registered holder of the Global
Registered Note for payment through DTC's settlement system to the relevant
DTC Participants. All costs of any such conversion and wire transfer shall be
deducted from such payments. Any such conversion shall be based on The Bank of
New York bid quotation, at or prior to 11.00 a.m. New York time, on the second
New York Business Day (as defined below) preceding the relevant payment date,
for the purchase by the U.S. Paying Agent of the DM Conversion Amount of U.S.
dollars for settlement on such payment date. If such bid quotation is not
available for any reason, the U.S. Paying Agent shall endeavor to obtain a bid
quotation from the leading foreign exchange bank in New York City selected by
the U.S. Paying Agent for such purpose. If no bid quotation from a leading
foreign exchange bank is available, payment of the DM Conversion Amount will
be made in Deutsche marks to the account or accounts specified by DTC to the
U.S. Paying Agent.
(B) In addition to acting in its capacity as U.S. Paying Agent, The Bank of
New York may act as a foreign exchange dealer for purposes of converting
Deutsche marks to U.S. dollars as described in Section 2(b)(1)(A) hereof and,
when acting as a foreign
B-2
<PAGE>
exchange dealer, will derive profits from such activities in addition to the
fees earned by it for its services as Paying Agent, Registrar and U.S. Paying
Agent. Each such conversion will be made on such terms, conditions, and
charges not inconsistent with the terms of the Notes as The Bank of New York
may from time to time establish in accordance with its regular foreign
exchange practices, and subject to applicable U.S. law and regulations.
(C) A Registered Note Holder may elect to receive payment of principal and
interest with respect to the Notes in Deutsche marks by causing DTC through
the relevant DTC participant to notify the U.S. Paying Agent by the time
specified below of (i) such Registered Note Holder's election to receive all
or a portion of such payment in Deutsche marks and (ii) wire transfer
instructions to a Deutsche mark account in Germany. Such election in respect
of any payment must be made by the Registered Note Holder at the time and in
the manner required by the DTC procedures applicable from time to time and
shall, in accordance with such procedures, be irrevocable and shall relate
only to such payment. DTC notifications of such election, wire transfer
instructions and the amount payable in Deutsche marks must be received by the
U.S. Paying Agent prior to 5:00 p.m. New York time on the fifth New York
Business Day following the relevant record date in the case of interest, and
prior to 5:00 p.m. New York time on the tenth day prior to the payment date
for the payment of principal. Any payments in Deutsche marks shall be made by
wire transfer of same-day funds to Deutsche mark accounts designated by DTC.
(D) Payments by DTC Participants and Indirect DTC Participants (as defined
below) to owners of beneficial interest in the Global Registered Notes will be
governed by standing instructions and customary practices, as is now the case
with securities held by the accounts of customers registered in "street name"
and will be the responsibility of the DTC Participants or Indirect DTC
Participants. Neither Paying Agent will have any responsibility or liability
for any aspect of the records of DTC relating to or payments made by DTC on
account of beneficial interests in the Global Registered Note or for
maintaining, supervising or reviewing any records of DTC relating to such
beneficial interests.
(E) Any person holding co-ownership interests in the Global Bearer Note
shall receive payments of principal and interest in respect of the Notes in
Deutsche marks through DKV in accordance with the ordinary procedures therefor
of DKV and its participants, including Euroclear and Cedel Bank.
(2) (A) Payment of principal of and interest and Additional Amounts, if
any, on the Definitive Notes (including interest on amounts in default) will
be made against surrender of the Definitive Notes or Coupons, as the case may
be, on or after the relevant payment date at the specified office of either of
the Paying Agents, at the Holder's option, by transfer to a Deutsche mark
account maintained by the Holder with, or by a Deutsche mark cheque drawn on,
a bank in Germany. No payment of principal of or interest or
B-3
<PAGE>
Additional Amounts on the Definitive Notes will be made to an address in the
United States or by transfer to a bank account in the United States.
(B) If the due date for payment of any amount of principal or interest in
respect of any Definitive Note or Coupon is not a business day, then the
Holder thereof shall not be entitled to payment until the next following
business day, unless such next following business day falls in the next
succeeding calendar month, in which case the related payment will be made on
the immediately preceding business day as if made on the date such payment was
due. No further interest shall be paid in respect of the delay in such
payment. In this paragraph "business day" means a day on which banking
institutions in the City of New York, in Frankfurt am Main and London are not
authorized or obligated by law or executive order to be closed and on which
foreign exchange markets in each of such cities are open for business. If the
due date for payment is a business day but is a day on which any Paying Agent
is closed, holders of Definitive Notes or Coupons will not be entitled to
payment at the location of such Paying Agent until the next succeeding day on
which banking institutions in the place of payment are not authorized or
obligated by law or executive order to be closed and foreign exchange markets
in the place of payment are open for business and no further interest shall be
paid in respect of the delay in such payment.
(C) If the principal of any Note becomes due and payable prior to its
stated maturity, the amount due in respect of any missing unmatured Coupons
(or, in the case of payment not being made in full, the proportion of the
amount of such missing unmatured Coupons which the sum of principal so paid
bears to the total principal amount due) will be deducted from the principal
amount due for payment. Any amount of principal so deducted will be paid in
the manner provided herein against presentation and surrender of the relevant
missing Coupons within a period of six years from the date for the payment of
such principal.
(c) Payment of interest on the registered Notes will be made to the
person in whose name such Note is registered at the close of business on the
Record Date next preceding the relevant Interest Payment Date notwithstanding
the cancellation of such Note upon any transfer or exchange thereof subsequent
to the Record Date and prior to such Interest Payment Date; provided that: (i)
interest payable at the Stated Maturity will be payable to the person to whom
principal shall be payable; and (ii) if and to the extent the Issuer shall
default in the payment of interest due on such Interest Payment Date, such
defaulted interest shall be paid to the persons in whose names the Notes are
registered at the close of business on a subsequent record date established by
notice given by mail by or on behalf of the Issuer to the Holders of Notes not
less than 15 days preceding such subsequent record date, such record date to be
not less than 10 days preceding the date of payment of such defaulted interest.
(d) The Issuer has initially appointed the Paying Agents, the Transfer
Agents and the Registrars for the Notes as stated above. The Issuer may appoint
additional paying agents,
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transfer agents and registrars and revoke the appointment of any Paying Agent,
Transfer Agent or Registrar, provided that while the Notes are outstanding the
Issuer will maintain in New York City and in Frankfurt am Main, Germany an
office or agency for the payment of principal of and interest on this Note as
herein provided. Notice of any such termination or appointment and of any
change in the office through which any paying agent, transfer agent or registrar
will act will be promptly given once in the manner described in paragraph 12
herein.
(e) The Issuer may deposit with the local court (Amtsgericht) in
Frankfurt am Main principal and interest not claimed by Holders within 12 months
after maturity with or without a waiver of the right to withdraw such deposit
irrespective of whether such Holders are in default of acceptance. To the extent
the right to withdraw is waived, all claims of such Holders against the Issuer
shall cease.
(f) Should the Issuer or Exide Parent, as the case may be, at any time
default in the payment of any principal of this Note, the Issuer or Exide
Parent, as the case may be, will pay interest on the amount in default at the
rate of interest borne by the Notes.
3. Additional Amounts. (a) All payments made by the Issuer under or
with respect to the Notes, or by Exide Parent in respect of any Partial Parent
Guarantee shall be made free and clear of and without withholding or deduction
for or on account of any present or future Taxes imposed or levied by or on
behalf of any Taxing Authority within France, or within any other jurisdiction
in which the Issuer is organized or engaged in business for tax purposes, unless
the Issuer or Exide Parent, as the case may be, is required to withhold or
deduct Taxes by law or by the interpretation or administration thereof.
(b) If the Issuer or Exide Parent, as the case may be, is required to
withhold or deduct any amount for or on account of Taxes imposed by a Taxing
Authority within France, or within any other jurisdiction in which the Issuer is
organized or engaged in business for tax purposes, from any payment made under
or with respect to the Notes or any Partial Parent Guarantee, as the case may
be, the Issuer or Exide Parent will pay such additional amounts ("Additional
Amounts") as may be necessary so that the net amount received by each holder of
Notes (including Additional Amounts) after such withholding or deduction will
not be less than the amount the holder and beneficial owner would have received
if such Taxes had not been withheld or deducted; provided that no Additional
Amounts will be payable with respect to a payment made to a holder of Notes (an
"Excluded Holder") with respect to:
(1) any Tax which would not have been imposed, payable or due: (i) but for
the existence of any present or former connection between the holder (or the
beneficial owner of, or person ultimately entitled to obtain an interest in,
such Notes) and France or other jurisdiction in which the Issuer is organized
or engaged in business for tax purposes other than the holding of, or the
receipt of payments under, the Notes; (ii) if the payment could have been made
by or through another paying agent without such withholding; or (iii) if the
beneficial owner of, or person ultimately entitled to obtain an interest in
such
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Notes had been the holder of the Notes and would not be entitled to the
payment of Additional Amounts; or
(2) any Tax which is payable otherwise than by withholding from payments
of, or in respect of principal of, or any interest on, the Notes.
(c) The Issuer shall (i) make such withholding or deduction and (ii) remit
the full amount deducted or withheld to the relevant authority in accordance
with applicable law. The Issuer or Exide Parent will make reasonable efforts to
obtain certified copies of tax receipts evidencing the payment of any Taxes so
deducted or withheld from each Taxing Authority imposing such Taxes. The Issuer
or Exide Parent, as the case may be, will furnish to the registered Holders, and
unregistered holders upon request, within 60 days after the date the payment of
any Taxes so deducted or withheld is due pursuant to applicable law, either
certified copies of tax receipts evidencing such payment by the Issuer or Exide
Parent, as the case may be, or, if such receipts are not obtainable, other
evidence of such payments by the Issuer or Exide Parent, as the case may be.
(d) At least 30 days prior to each date on which any payment under or
with respect to the Notes or any Partial Parent Guarantee is due and payable, if
the Issuer or Exide Parent, as the case may be, will be obligated to pay
Additional Amounts with respect to such payment, the Issuer will deliver to the
Paying Agents an Officers' Certificate stating the fact that such Additional
Amounts will be payable and the amounts so payable and will set forth such other
information necessary to enable the Paying Agents to pay such Additional Amounts
to the holders of Notes on the payment date.
4. Redemption. (a) The Notes will be redeemable, at the Issuer's
option, in whole or in part, at any time or from time to time, on or after
October 15, 2000, and prior to maturity, upon not less than 30 nor more than 60
days' prior notice, at the following Redemption Prices (expressed in percentages
of principal amount), plus accrued and unpaid interest, if any, to the
Redemption Date, if redeemed during the periods set forth below:
<TABLE>
<CAPTION>
Period Redemption
------ ----------
<S> <C>
October 15, 2000 through April 14, 2001.......... 106.84%
April 15, 2001 through April 14, 2002............ 104.56%
April 15, 2002 through April 14, 2003............ 102.28%
</TABLE>
and thereafter at 100% of the principal amount plus accrued and unpaid interest,
if any, to the Redemption Date.
(b) The Notes will be subject to redemption as a whole, but not in part,
at the option of the Issuer, at any time at 100% of the aggregate principal
amount at maturity thereof, together with accrued interest thereon to the
Redemption Date, if the Issuer has become or would
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become obligated to pay, on the next date on which any amount would be payable
with respect to the Notes, any Additional Amounts as a result of a change in
laws (including any regulations promulgated thereunder) or in the interpretation
or administration thereof, if such change is announced and becomes effective on
or after the Issue Date.
(c) In the case of any partial redemption, selection of the Notes for
redemption will be made by the Paying Agents on a pro rata basis, by lot or by
such other method as the Paying Agents in their sole discretion shall deem to be
fair and appropriate; provided that no Note of DM 1,000 in principal amount or
less shall be redeemed in part. If any Note is to be redeemed in part only, the
notice of redemption relating to such Note shall state the portion of the
principal amount thereof to be redeemed. A new Note in principal amount equal
to the unredeemed portion thereof will be issued to or in the name of the Holder
thereof upon cancellation of the original Note. The interest on the Notes
called for redemption will cease to accrue from and after the date fixed for
redemption (unless the Issuer defaults in providing the funds for such
redemption) and such Notes will then cease to be outstanding.
(d) Notice of any redemption will be made at least 30 days but not more
than 60 days before the redemption date to each holder of Notes to be redeemed.
Unless the Issuer defaults in payment of the redemption price, on and after the
redemption date interest ceases to accrue on the Notes or portions thereof
called for redemption.
In the event that the obligations of the Issuer or Exide Parent under the
Notes are assumed pursuant to Section 5(i) hereof by any corporation (a
"Successor Person") organized under the laws of a jurisdiction other than the
Republic of France or any political subdivision thereof (a "Successor
Jurisdiction"), such Successor Person (or the Issuer in the event that the
Successor Person is the Successor Person of Exide Parent) shall be entitled to
redeem this Note subject to the terms of the preceding paragraph, substituting
the name of the Successor Jurisdiction for the Republic of France each place
that it appears therein.
(e) Notice of redemption of this Note as provided above shall be given in
accordance with Section 13 hereof, not less than 30 nor more than 60 days prior
to the date fixed for redemption; provided that no such notice of redemption
shall be given earlier than 60 days prior to the earliest date on which the
Issuer or Exide Parent would be required to pay Additional Amounts if a payment
in respect of this Note was then due, all as provided in the Paying Agency
Agreement. Notice having been given, this Note shall become due and payable on
the date fixed for redemption and will be paid at the redemption price, together
with accrued interest to the date fixed for redemption, at the place or places
of payment and in the manner specified herein.
(f) If notice of redemption has been given as above provided, the Notes or
portions of Notes specified in such notice shall become due and payable on the
date and at the place stated in such notice at the applicable redemption price,
together with interest accrued to the date fixed for redemption, and on and
after said date (unless the Issuer shall default in the payment of such Notes as
the redemption price, together with interest accrued to said date) interest on
the
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Notes or portions of Notes so called for redemption shall cease to accrue, and
the unmatured Coupons, if any, appertaining thereto shall be void, such Notes
shall cease from and after the date fixed for redemption to be entitled to any
benefit or security under this Note, and the Holders thereof shall have no right
in respect of such Notes except the right to receive the redemption price
thereof and unpaid interest to the date fixed for redemption. On presentation
and surrender of such Notes at a place of payment specified in such notice,
together with all Coupons, if any, appertaining thereto maturing after the date
fixed for redemption, such Notes or the specified portions thereof shall be paid
and redeemed by the Issuer at the applicable redemption price, together with
interest accrued thereon to the date fixed for redemption; provided that payment
of interest becoming due on or prior to the date fixed for redemption shall be
payable in the case of Notes with Coupons attached thereto, to the Holders of
the Coupons for such interest thereto, and in the case of registered Notes, to
the Holders of such registered Notes registered as such on the relevant record
date.
If any Note called for redemption shall not be so paid upon surrender
thereof for redemption, the principal shall, until paid or duly provided for,
bear interest from the date fixed for redemption at the rate of interest borne
by such Note.
If any Note with Coupons attached thereto is surrendered for redemption and
is not accompanied by all appurtenant Coupons maturing after the date fixed for
redemption, the surrender of such missing Coupon or Coupons may be waived by the
Issuer and the Paying Agents, if there be furnished to each of them such
security of indemnity as they may require to save each of them harmless.
Upon presentation of any Note redeemed in part only, the Issuer shall
execute and the Paying Agents shall authenticate and deliver to or on the order
of the Holder thereof, at the expense of the Issuer, a new Note, of Authorized
Denominations, in principal amount equal to the unredeemed portion of the Note
so presented.
5. Consolidation, Merger and Sale of Assets. The Issuer shall not
consolidate with, merge with or into, or sell, convey, transfer, lease or
otherwise dispose of all or substantially all of its property and assets (as an
entirety or substantially an entirety in one transaction or a series of related
transactions) to, any Person (other than a Restricted Subsidiary that is a
Wholly Owned Subsidiary of the Issuer with a positive net worth; provided that,
in connection with any merger of the Issuer with a Restricted Subsidiary that is
a Wholly Owned Subsidiary of the Issuer, no consideration (other than Common
Stock in the surviving Person or the Issuer) shall be issued or distributed to
the stockholders of the Issuer) or permit any Person to merge with or into the
Issuer unless:
(i) the Issuer shall be the continuing Person, or the Person (if other
than the Issuer) formed by such consolidation or into which the Issuer is
merged or that acquired or leased such property and assets of the Issuer shall
be a corporation organized and validly existing under the laws of the United
States or any jurisdiction thereof or of any
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<PAGE>
country that is a member of the European Union and shall expressly assume, by
a supplemental fiscal and paying agency agreement, executed and delivered to
the Paying Agents, in form satisfactory to the Paying Agents, all of the
obligations of the Issuer on all of the Notes and under this Agreement;
(ii) immediately after giving effect to such transaction, no Event of
Default and no event that, after notice or passage of time or both, will
become an Event of Default, shall have occurred and be continuing;
(iii) immediately after giving effect to such transaction on a pro
forma basis, the Issuer (or any Person becoming the successor obligor of the
Notes) could Incur FF 1.00 of Indebtedness under Section 7(a) hereof;
(iv) immediately after giving effect to such transaction on a pro forma
basis, the Issuer (or any Person that becomes the successor obligor of the
Notes) shall have a Consolidated Net Worth equal to or greater than the
Consolidated Net Worth of the Issuer immediately prior to such transaction;
and
(v) the Issuer delivers to the Paying Agents an Officers' Certificate
(attaching the arithmetic computations to demonstrate compliance with clauses
(iii) and (iv)) and an Opinion of Counsel, in each case stating that such
consolidation, merger or transfer and such supplemental fiscal and paying
agency agreement comply with this provision and that all conditions precedent
provided for herein relating to such transaction have been complied with;
provided, however, that clauses (iii) and (iv) above do not apply if, in the
good faith determination of the Board of Directors, whose determination shall
be evidenced by a Board Resolution, the principal purpose of such transaction
is to change the jurisdiction of incorporation of the Issuer; and provided
further that any such transaction shall not have as one of its purposes the
evasion of the foregoing limitations.
6. Events of Default. (a) The following will be events of default
under the Notes (each an "Event of Default"):
(1) the Issuer defaults in the payment of the principal of (or premium, if
any, on) any Note when the same becomes due and payable at maturity, upon
acceleration, redemption or otherwise;
(2) the Issuer defaults in the payment of interest on any Note, when the
same becomes due and payable, and such default continues for a period of 30
days;
(3) the Issuer defaults in the performance of or breaches any other
covenant or agreement of the Issuer under the Notes and such default or breach
continues for a period of 30 consecutive days after written notice by any
Paying Agent or the Holders of 25% or more in aggregate principal amount of
the Notes;
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(4) there occurs with respect to any issue or issues of Indebtedness of
the Issuer and/or one or more Significant Subsidiaries having an outstanding
principal amount of FF50 million or more individually or FF100 million or more
in the aggregate for all such issues of all such Persons, whether such
Indebtedness now exists or shall hereafter be created, an event of default
that has caused the holder thereof to declare such Indebtedness to be due and
payable prior to its Stated Maturity and such Indebtedness has not been
discharged in full or such acceleration has not been rescinded or annulled
within 30 days of such acceleration;
(5) any final judgment or order (not covered by insurance) for the payment
of money in excess of FF50 million individually or FF100 million in the
aggregate for all such final judgments or orders against all such Persons
(treating any deductibles, self-insurance or retention as not so covered)
shall be rendered against the Issuer or any Significant Subsidiary and shall
not be discharged, and there shall be any period of 30 consecutive days
following entry of the final judgment or order in excess of FF50 million
individually or that causes the aggregate amount for all such final judgments
or orders outstanding against all such Persons to exceed FF100 million during
which a stay of enforcement of such final judgment or order, by reason of a
pending appeal or otherwise, shall not be in effect;
(6) a court having jurisdiction in the premises enters a decree or order
for (i) relief in respect of the Issuer or any Significant Subsidiary in an
involuntary case under any applicable bankruptcy, insolvency or other similar
law now or hereafter in effect, (ii) appointment of a receiver, liquidator,
assignee, custodian, trustee, sequestrator or similar official of the Issuer
or any Significant Subsidiary or for all or substantially all of the property
and assets of the Issuer or any Significant Subsidiary or (iii) the winding up
or liquidation of the affairs of the Issuer or any Significant Subsidiary and,
in each case, such decree or order shall remain unstayed and in effect for a
period of 60 consecutive days;
(7) the Issuer or any Significant Subsidiary (i) commences a voluntary
case under any applicable bankruptcy, insolvency or other similar law now or
hereafter in effect, or consents to the entry of an order for relief in an
involuntary case under any such law, (ii) consents to the appointment of or
taking possession by a receiver, liquidator, assignee, custodian, trustee,
sequestrator or similar official of the Issuer or any Significant Subsidiary
or for all or substantially all of the property and assets of the Issuer or
any Significant Subsidiary or (iii) effects any general assignment for the
benefit of creditors;
(8) the Issuer and/or one or more Significant Subsidiaries fails to make
(i) at the final (but not any interim) fixed maturity of an issue of
Indebtedness a principal payment of FF50 million or more or (ii) at the final
(but not any interim) fixed maturity of more than one issue of such
Indebtedness principal payments aggregating FF100 million or more and, in the
case of clause (i), such defaulted payment shall not have been made,
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<PAGE>
waived or extended within 30 days of the payment default and, in the case of
clause (ii), all such defaulted payments shall not have been made, waived or
extended within 30 days of the payment default that causes the amount
described in clause (ii) to exceed FF100 million; or
(9) the nonpayment of any three or more items of Indebtedness that would
constitute at the time of such nonpayments, but for the individual amounts of
such Indebtedness, an Event of Default under clause (4) or clause (8) above,
or both, and which items of Indebtedness aggregate FF100 million or more.
(b) If an Event of Default (other than an Event of Default specified in
clause (6) or (7) above that occurs with respect to the Issuer) occurs and is
continuing under the Notes, a Paying Agent thereunder or the Holders of at least
25% of the aggregate principal amount of the Notes then outstanding, by written
notice to the Issuer (and to the Paying Agents if such notice is given by the
Holders (the "Acceleration Notice")), may, and the Paying Agents at the request
of the applicable Holders shall, declare the entire unpaid principal of,
premium, if any, and accrued interest on the Notes to be immediately due and
payable. Upon a declaration of acceleration, such principal of, premium, if any,
and accrued interest shall be immediately due and payable. In the event of a
declaration of acceleration because an Event of Default set forth in clause (4)
or (8) above has occurred and is continuing, such declaration of acceleration
shall be automatically rescinded and annulled if the event of default triggering
such Event of Default pursuant to clause (4) or (8) shall be remedied, cured by
the Issuer or waived by the holders of the relevant Indebtedness within 60 days
after the declaration of acceleration with respect thereto. If an Event of
Default specified in clause (6) or (7) above occurs with respect to the Issuer,
all unpaid principal of, premium, if any, and accrued interest on the Notes then
outstanding shall ipso facto become and be immediately due and payable without
any declaration or other act on the part of the Paying Agents or any Holder. The
Holders of at least a majority in principal amount of the outstanding Notes, by
written notice to the Issuer and to the Paying Agents, may waive all past
defaults and rescind and annul a declaration of acceleration and its
consequences if (i) all existing Events of Default, other than the non-payment
of the principal of, premium, if any, and interest on Notes that have become due
solely by such declaration of acceleration, have been cured or waived and (ii)
the rescission would not conflict with any judgment or decree of a court of
competent jurisdiction.
(c) The Holders of at least a majority in aggregate principal amount of
the outstanding Notes may direct the time, method and place of conducting any
proceeding for any remedy available to such Holder. However, the Paying Agents
may refuse to follow any direction that conflicts with law or the Notes, that
may involve the Paying Agents in personal liability, or that the Paying Agents
determine in good faith may be unduly prejudicial to the rights of Holders of
Notes not joining in the giving of such direction. A Holder may not pursue any
remedy with respect to the Paying Agency Agreement or the Notes unless: (i) the
Holder gives to a Paying Agent written notice of a continuing Event of Default;
(ii) the Holders of at least 25% in aggregate principal amount of outstanding
Notes make a written request to a Paying Agent to
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pursue the remedy; (iii) such Holder or Holders offer to the Paying Agents
security or indemnity satisfactory to the Paying Agents against any costs,
liability or expense; (iv) such Paying Agent does not comply with the request
within 60 days after receipt of the request and the offer of indemnity; and (v)
during such 60-day period, the Holders of a majority in aggregate principal
amount of the outstanding Notes do not give such Paying Agent a direction that
is inconsistent with the request. However, such limitations do not apply to the
right of any Holder of a Note to receive payment of the principal of, premium,
if any, or interest on such Note or to bring suit for the enforcement of any
such payment, on or after the respective due dates expressed in the Notes which
right shall not be impaired or affected without the consent of the Holder.
7. Certain Covenants of the Issuer and Exide Parent.
(a) Limitation on Indebtedness. (1) The Issuer shall not, and will
not permit any Restricted Subsidiary to Incur any Indebtedness (including
Acquired Indebtedness) other than the Notes and Indebtedness existing on the
Issue Date and Permitted Indebtedness; provided that the Issuer or a Restricted
Subsidiary may Incur Indebtedness if, after giving effect to the Incurrence of
such Indebtedness and the receipt and application of the proceeds therefrom, the
Interest Coverage Ratio would be greater than 2.0:1.0. For purposes of this
paragraph, the principal amount of all Indebtedness that is not denominated in
French francs shall at all times be determined utilizing the relevant exchange
rate applicable on the date of incurrence of such Indebtedness.
(2) Notwithstanding any other provision of this Section 7(a), (i) the
maximum amount of Indebtedness that the Issuer or any Restricted Subsidiary may
Incur pursuant to this Section 7(a) shall not be deemed to be exceeded due
solely to the result of fluctuations in the exchange rates of currencies and
(ii) the Issuer shall not Incur any Indebtedness that is expressly subordinated
to any other Indebtedness of the Issuer unless such Indebtedness, by its terms
or the terms of any agreement or instrument pursuant to which such Indebtedness
is issued, is also expressly made subordinate to the Notes at least to the
extent it is subordinated to such other Indebtedness.
(3) For purposes of determining any particular amount of Indebtedness
under this Section 7(a), (i) Indebtedness Incurred pursuant to the Facilities
Agreement prior to or on the Issue Date shall be treated as Incurred pursuant to
clause (i) of the definition of "Permitted Indebtedness," (ii) Guarantees of, or
obligations with respect to letters of credit supporting, Indebtedness otherwise
included in the determination of such particular amount shall not be included
and (iii) any Liens granted pursuant to the equal and ratable provisions
referred to in clause (i) of the second paragraph of Section 7(g) shall not be
treated as Indebtedness. For purposes of determining compliance with this
Section 7(a), (A) in the event that an item of Indebtedness meets the criteria
of more than one of the types of Indebtedness provided for in Section 7(a)(1) or
described in the definition of "Permitted Indebtedness," the Issuer shall
classify such item of Indebtedness and only be required to include the amount
and type of such Indebtedness in Section 7(a)(1) or in one of the clauses in the
definition of "Permitted
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Indebtedness" and (B) the amount of Indebtedness issued at a price that is less
than the principal amount thereof shall be equal to the amount of the liability
in respect thereof determined in conformity with GAAP.
(b) Partial Guarantee by Exide Parent. (1) The Issuer covenants and
agrees that, each time the Issuer or any of its Restricted Subsidiaries makes
any Exide Parent Payment subsequent to the Issue Date in excess of the amount by
which the Basket Amount as of the date of such Exide Parent Payment exceeds the
sum of all Basket Payments (including such Exide Parent Payment as of such
date), the Issuer will cause Exide Parent to execute a Guarantee of the Notes
substantially in the form of Exhibit C hereto, including Notes, if any, issued
subsequent to the Issue Date (the "Partial Parent Guarantee"). The principal
amount of the Notes subject to the Partial Parent Guarantee will be equal to the
amount paid by the Issuer or any of its Restricted Subsidiaries which
constitutes (i) a dividend or any other distribution on Capital Stock (other
than Capital Stock owned by the Issuer or any of its Restricted Subsidiaries) of
the Issuer or any of its Subsidiaries (other than dividends or distributions
payable solely in Capital Stock (other than Redeemable Stock) of the Issuer),
(ii) the purchase, redemption or other acquisition or retirement for value of
any Capital Stock of the Issuer or any of its Subsidiaries, other than any such
Capital Stock owned by the Issuer or any of its Restricted Subsidiaries, (iii)
any payment of contingent or participating interest on the Intercompany Note, or
any similar instrument, issued by the Issuer or any of its Subsidiaries, (iv)
any Investment by the Issuer or any of its Restricted Subsidiaries in Exide
Parent or any of its Subsidiaries (other than the Issuer or any of its
Restricted Subsidiaries) or (v) any voluntary or optional principal payment or
optional redemption, repurchase, defeasance or other acquisition or retirement
for value of any Indebtedness held by Exide Parent or any of its Restricted
Subsidiaries (other than the Issuer and its Restricted Subsidiaries) or any such
Indebtedness previously sold or transferred by Exide Parent or any of its
Subsidiaries to a third party directly or indirectly in connection with, or in
contemplation of, the repayment, redemption, repurchase, defeasance or other
acquisition or retirement for value thereof (each of clauses (i), (ii), (iii),
(iv) and (v) being an "Exide Parent Payment"), in excess of the Basket Amount
(less all previously made Basket Payments) as of the date of such Exide Parent
Payment.
(2) The Guarantee shall provide that Exide Parent waives and shall not
in any manner whatsoever claim or take the benefit or advantage of any rights of
reimbursement, indemnity or subrogation or any other rights against the Issuer
or any of its Subsidiaries as a result of any payment by Exide Parent under the
Partial Parent Guarantee.
(3) The Partial Parent Guarantee will be applicable to each Note, but
only as to the portion of the principal amount of such Note equal to (i) the
aggregate amount of the Partial Parent Guarantee, multiplied by (ii) a fraction,
the numerator of which will be the principal amount of such Note and the
denominator of which will be the principal amount of all Notes then outstanding.
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(4) Upon receipt by Exide Parent or any Subsidiary thereof (other than
the Issuer or its Subsidiaries) of any Equity Payment which requires Exide
Parent to make a Partial Parent Guarantee or to increase any Partial Parent
Guarantee, the Issuer shall provide to the Paying Agents and, upon request, any
Holder, a certificate of its chief financial officer certifying the amounts and
calculations of the Basket Amount and any such Partial Parent Guarantee or
increase thereof.
(5) The amount of any outstanding Partial Parent Guarantee shall be
increased or decreased in accordance with the amount calculated in the annual
certificate furnished pursuant to Section 7(k)(1). In addition, the Issuer may
at any time reduce the amount of any outstanding Partial Parent Guarantee by
providing such a certificate confirmed by the Issuer's independent auditors to
the Paying Agents and, upon request, to any Holder, provided that the Partial
Parent Guarantee may not be reduced below the amount by which all Basket
Payments to date exceed the Basket Amount.
(c) Limitation on Investments and Prepayments of Subordinated
Indebtedness. (1) The Issuer will not, and will not permit any of its
Restricted Subsidiaries to, (a) make, directly or indirectly, any Investment in
an Affiliate (other than Exide Parent, the Issuer or any of their Restricted
Subsidiaries) or any Unrestricted Subsidiary, other than a Permitted Investment,
or (b) make any voluntary or optional principal payment or optional redemption,
repurchase, defeasance or other acquisition or retirement for value of any
Subordinated Indebtedness (other than Subordinated Indebtedness held by the
Exide Parent, the Issuer or any of their Restricted Subsidiaries) (any such
transaction being a "Subordinated Indebtedness Payment"), unless:
(i) no Default shall have occurred and be continuing at the time of or
after giving effect to such Investment or such Subordinated Indebtedness
Prepayment; and
(ii) immediately after giving effect to such Investment or such
Subordinated Indebtedness Prepayment, the aggregate amount of all Basket
Payments (the amount, if other than cash, to be determined in good faith by
the Board of Directors, whose determination shall be conclusive and evidenced
by a Board Resolution) made after the Issue Date shall exceed the sum of (1)
50% of the aggregate amount of the Adjusted Consolidated Net Income (or, if
the Adjusted Consolidated Net Income is a loss, minus 100% of the amount of
such loss) (determined by excluding income resulting from transfers of assets
received by the Issuer or a Restricted Subsidiary from an Unrestricted
Subsidiary) accrued on a cumulative basis during the period (taken as one
accounting period) beginning on the first day of the month immediately
following the Issue Date and ending on the last day of the last fiscal quarter
preceding the Transaction Date plus (2) the aggregate Net Cash Proceeds
received by the Issuer after the Issue Date from capital contributions or the
issuance and sale of its Capital Stock (other than Redeemable Stock) to a
Person who is not a Subsidiary of the Issuer or from the issuance to a Person
who is not a Subsidiary of the Issuer of any options, warrants or other rights
to acquire Capital Stock of the Issuer (in each case, exclusive of any
Redeemable Stock or any options,
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warrants or other rights that are redeemable at the option of the holder, or
are required to be redeemed, prior to the Stated Maturity of the Notes), plus
(3) an amount equal to the net reduction in Investments (other than reductions
in Permitted Investments) in any Person resulting from payments of interest on
Indebtedness, dividends, repayments of loans or advances, or other transfers
of assets, in each case to the Issuer or any Restricted Subsidiary or from the
Net Cash Proceeds from the sale of any such Investment (except, in each case,
to the extent any such payment or proceeds are included in the calculation of
Adjusted Consolidated Net income), or from redesignations of Unrestricted
Subsidiaries as Restricted Subsidiaries (valued in each case as provided in
the definition of "Investments"), not to exceed, in each case, the amount of
Investments previously made by the Issuer or any Restricted Subsidiary in such
Person or Unrestricted Subsidiary plus (4) an amount equal to the dividend,
loan or other distribution made from the Issuer to Exide Parent up to FF285
million in net proceeds of a Receivable Sales Transaction, provided, that the
proceeds thereof are promptly applied to repay Indebtedness of Exide Parent or
any Restricted Subsidiaries, plus (5) FF145 million (the aggregate amount of
clauses (1), (2), (3), (4) and (5) hereinafter being the "Basket Amount"). For
the purposes of the preceding clause (2), the value of the aggregate net
proceeds received by the Issuer upon the issuance of Capital Stock either upon
the conversion of convertible Indebtedness or in exchange for outstanding
Indebtedness or upon the exercise of options, warrants or rights will be the
net cash proceeds received upon the issuance of such Indebtedness, options,
warrants or rights plus the incremental amount received by the Issuer upon the
conversion, exchange or exercise thereof.
For purposes of determining the amount expended for Basket Payments, cash
distributed shall be valued at the face amount thereof and property other than
cash shall be valued at its Fair Market Value.
The foregoing provision shall not be violated by reason of: (i) the
redemption, repurchase, defeasance or other acquisition or retirement for value
of Indebtedness that is subordinated in right of payment to the Notes, including
premium, if any, and accrued and unpaid interest, with the proceeds of
Indebtedness Incurred under clause (iii) or (viii) of the definition of
"Permitted Indebtedness"; (ii) the acquisition of Indebtedness of the Issuer
that is subordinated in right of payment to the Notes in exchange for, or out of
the proceeds of a substantially concurrent offering of, shares of the Capital
Stock of the Issuer (other than Redeemable Stock); (iii) the extension by the
Issuer or any Restricted Subsidiary of trade credit to Unrestricted
Subsidiaries, represented by accounts receivable, extended on usual and
customary terms in the ordinary course of business; or (iv) Investments in
Unrestricted Subsidiaries promptly made with the proceeds of a substantially
concurrent (1) capital contribution to the Issuer or (2) issue or sale of
Capital Stock (other than Redeemable Stock) of the Issuer; provided that, in
each case, no Default shall have occurred and be continuing or occur as a
consequence of the actions or payments set forth therein.
(2) Each Investment or Subordinated Indebtedness Prepayment permitted
pursuant to the preceding paragraph shall be included in calculating whether the
conditions of
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clause (ii) of the first paragraph of this Section 7(c) have been met with
respect to any subsequent Investments or Subordination Indebtedness Prepayments
and for purposes of calculating the Basket Amount. In the event the proceeds of
an issuance of Capital Stock of the Issuer are used for the redemption,
repurchase or other acquisition of the Notes, or Indebtedness that is pari passu
with the Notes, then the Net Cash Proceeds of such issuance shall be included in
clause (ii) of Section 7(c)(1) only to the extent such proceeds are not used for
such redemption, repurchase or other acquisition of Indebtedness.
The amount of any Investment "outstanding" at any time shall be deemed
to be equal to the amount of such Investment on the date made, less the return
of capital to the Issuer and its Restricted Subsidiaries with respect to such
Investment (up to the amount of such Investment on the date made).
(d) Limitation on Dividends and Other Payment Restrictions Affecting
Restricted Subsidiaries. So long as any of the Notes are outstanding, the
Issuer will not, and will not permit any Restricted Subsidiary to, create or
otherwise cause or suffer to exist or become effective any consensual
encumbrance or consensual restriction of any kind on the ability of any
Restricted Subsidiary to (i) pay dividends or make any other distributions
permitted by applicable law on any Capital Stock of such Restricted Subsidiary
owned by the Issuer or any other Restricted Subsidiary, (ii) pay any
Indebtedness owed to the Issuer or any other Restricted Subsidiary, (iii) make
loans or advances to the Issuer or any other Restricted Subsidiary or (iv)
transfer any of its property or assets to the Issuer or any other Restricted
Subsidiary.
The foregoing provisions shall not restrict (A) in the case of clause
(i), (ii), (iii) or (iv), any such encumbrance or restriction (1) existing on
the Issue Date in the Facilities Agreement, the Notes or any other agreements in
effect on the Issue Date, and any extensions, refinancings, renewals or
replacements thereof, provided that the encumbrances and restrictions in any
such extensions, refinancings, renewals or replacements are no less favorable in
any material respect to the Holders than those encumbrances or restrictions that
are then in effect and that are being extended, refinanced, renewed or replaced;
(2) applicable to a Restricted Subsidiary which encumbrance or restriction is
contained in an agreement or instrument governing or relating to Indebtedness
(an "Indebtedness Instrument") provided that, in the case of this clause (2),
such encumbrance or restriction applies (x) only to amounts which at any point
in time other than during such periods as are described in the following clause
(y) are in excess of amounts actually used to pay interest and, at stated
maturity, principal (after giving effect to any realization by the Issuer under
any applicable Currency Agreement) due and payable (or which are to become due
and payable within 30 days) in respect of Indebtedness including the Notes of
the Issuer or any Restricted Subsidiary and/or (y) during the pendency of any
event that causes, permits or, after notice and/or lapse of time, would cause or
permit the holder(s) of the Indebtedness governed by the Indebtedness Instrument
to declare any such Indebtedness to be immediately due and payable; (3) existing
under or by reason of applicable law; (4) existing with respect to any Person or
the property or assets of such Person acquired by the Issuer or any Restricted
Subsidiary and existing at the time of such acquisition, which encumbrance or
restriction is not applicable to any Person
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or the property or assets of any Person other than such Person or the property
or assets of such Person so acquired; (5) with respect to a Restricted
Subsidiary and imposed pursuant to an agreement that has been entered into for
the sale or disposition of all or substantially all of the Capital Stock of, or
property and assets of, such Restricted Subsidiary; or (6) imposed upon a
Restricted Subsidiary which is solely engaged in the acquisition and financing
of receivables in a Receivables Sale Transaction or (B), in the case of only
clause (iv) of the first paragraph of this covenant, any such encumbrance or
restriction (I) that restricts in a customary manner the subletting, assignment
or transfer of any property or asset that is a lease, license, conveyance or
contract or similar property or asset; (II) existing by virtue of any transfer
of, agreement to transfer, option or right with respect to, or Lien on, any
property or assets of the Issuer or any Restricted Subsidiary not otherwise
prohibited by the Notes; or (III) arising or agreed to in the ordinary course of
business not relating to any Indebtedness and that does not individually, or
together with all such encumbrances or restrictions, detract from the value of
property or assets of the Issuer or any Restricted Subsidiary in any manner
material to the Issuer or Restricted Subsidiary.
Nothing contained in this Section 7(d) shall prevent the Issuer or any
Restricted Subsidiary from (a) creating, incurring, assuming or suffering to
exist any Liens otherwise permitted in Section 7(g) or (b) restricting the sale
or other disposition of property or assets of the Issuer or any of its
Restricted Subsidiaries that secure Indebtedness of the Issuer or any of its
Restricted Subsidiaries.
(e) Limitation on the Issuance and Sale of Capital Stock of Restricted
Subsidiaries. The Issuer will not sell, and will not permit any Restricted
Subsidiary, directly or indirectly, to issue or sell, any shares of Capital
Stock of a Restricted Subsidiary (including options, warrants or other rights to
purchase shares of such Capital Stock) except (i) to the Issuer or a Wholly
Owned Restricted Subsidiary, (ii) if, immediately after giving effect to such
issuance or sale, such Restricted Subsidiary would no longer constitute a
Restricted Subsidiary, (iii) in the case of issuances of Common Stock by a non-
Wholly Owned Restricted Subsidiary if, after giving effect to such issuance, the
Issuer maintains its percentage ownership of such non-Wholly Owned Restricted
Subsidiary or (iv) if an amount equal to the Net Cash Proceeds received for such
issuance or sale is applied within 30 days after the receipt thereof to repay
unsubordinated Indebtedness of the Issuer or Indebtedness of any Restricted
Subsidiary, in each case owing to a person other than the Issuer or any of its
subsidiaries.
(f) Limitation on Transactions with Shareholders and Affiliates. The
Issuer will not, and will not permit any Subsidiary of the Issuer to, directly
or indirectly, enter into, renew or extend any transaction (including, without
limitation, the purchase, sale, lease or exchange of property or assets, or the
rendering of any service) with any holder (or any Affiliate of such holder other
than those controlled by the Issuer) of 5% or more of any class of Capital Stock
of the Issuer or any Subsidiary of the Issuer or with any Affiliate of the
Issuer or any Subsidiary of the Issuer, except upon fair and reasonable terms no
less favorable to the Issuer or
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such Subsidiary of the Issuer than could be obtained in a comparable arm's-
length transaction with a Person that is not such a holder or an Affiliate.
The foregoing limitation does not limit, and shall not apply to (i)
transactions (A) approved by a majority of the disinterested members of the
Board of Directors or (B) for which the Issuer or a Subsidiary delivers to the
Paying Agents a written opinion of an internationally recognized investment
banking firm stating that the transaction is fair to the Issuer or such
Subsidiary of the Issuer from a financial point of view; (ii) any transaction
between the Issuer and any Wholly Owned Restricted Subsidiary or between Wholly
Owned Restricted Subsidiaries; (iii) the payment of reasonable and customary
regular fees to directors of the Issuer who are not employees of the Issuer;
(iv) any payments or other transactions pursuant to any tax-sharing agreement
between the Issuer and any other Person with which the Issuer is required or
permitted to file a consolidated tax return or with which the Issuer is or could
be part of a consolidated group for tax purposes; or (v) any Investments not
prohibited by Section 7(c) or any dividend, distribution or loan included in the
calculation of the Basket Amount. For purposes hereof, a "disinterested" member
of the Board of Directors shall mean a member who is not employed by, or a
shareholder of, the Person with whom the Issuer or its Subsidiary is engaged in
such transaction.
(g) Limitation on Liens. The Issuer may not, and may not permit any
Restricted Subsidiary to, create, incur, assume or suffer to exist any Lien on
any Principal Property, or any shares of Capital Stock or Indebtedness of any
Restricted Subsidiary, without making effective provision for all of the Notes
and all other amounts due under the Notes to be directly secured equally and
ratably with (or prior to) the obligation or liability secured by such Lien
unless, after giving effect thereto, the aggregate amount of any Indebtedness so
secured, plus the Attributable Indebtedness for all sale-leaseback transactions
restricted as described in Section 7(g), does not exceed 20% of Consolidated Net
Tangible Assets.
The foregoing limitation does not apply to (i) Liens securing
obligations under the Facilities Agreement, the Notes or up to FF115 million of
other Indebtedness at any one time outstanding; (ii) other Liens existing on the
Issue Date; (iii) Liens with respect to the assets of a Restricted Subsidiary
granted by such Restricted Subsidiary to the Issuer or a Restricted Subsidiary
that is a Wholly Owned Subsidiary of the Issuer to secure Indebtedness owing to
the Issuer or such other Restricted Subsidiary by such Restricted Subsidiary;
(iv) Liens securing Indebtedness (other than subordinated Indebtedness) Incurred
under clause (v) of the definition of "Permitted Indebtedness"; (v) Liens
granted in connection with the extension, renewal or refinancing, in whole or in
part, of any Indebtedness described in clauses (i) through (iv) above; provided
that (1) such new Indebtedness is permitted to be Incurred under Section 7(a)
and (2) the amount of Indebtedness secured by such Lien is not increased thereby
(except to the extent that Indebtedness under clause (i) above is increased to
the extent permitted by clause (i) of the definition of "Permitted
Indebtedness"); and provided further that the extension, renewal or refinancing
of Indebtedness of the Issuer may not be secured by Liens on assets of any
Restricted Subsidiary other than to the extent the Indebtedness being extended,
renewed or refinanced was
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<PAGE>
at any time previously secured by Liens on assets of such Restricted Subsidiary;
(vi) Liens with respect to Acquired Indebtedness and refinancings thereof
permitted under clause (vii) of the definition of "Permitted Indebtedness";
provided that such Liens do not extend to or cover any property or assets of the
Issuer or any Restricted Subsidiary of the Issuer other than the property or
assets of the Subsidiary acquired; (vii) Liens securing Indebtedness which is
Incurred to refinance secured Indebtedness and which is permitted to be Incurred
under clause (i) or (iii) of the definition of "Permitted Indebtedness";
provided that such Liens do not extend to or cover any property or assets of the
Issuer or any Restricted Subsidiary other than the property or assets securing
the Indebtedness being refinanced; (viii) Liens securing obligations under any
revolving credit or other working capital facility Incurred under clause (ix) of
the definition of "Permitted Indebtedness"; (ix) Permitted Liens; (x) Liens on
(A) the stock of Restricted Subsidiaries, provided that each such Restricted
Subsidiary is either (x) acquired after January 3, 1995 or (y) formed for the
purpose of holding stock referred to in clause (x) and holds no assets other
than such stock, its minimum statutory capital, intercompany notes, assets
having a value not in excess of FF100,000 and dividends, distributions or
advances received; provided that such dividends, distributions or advances are
promptly paid to such Restricted Subsidiary's parent; and (B) intercompany
notes; provided that with respect to each of clause (A) and clause (B) above,
such intercompany notes and stock of Restricted Subsidiaries are only used to
secure Indebtedness, all or a substantial portion of which constituted a
substantial portion of the financing of an acquisition of, or relating to the
acquisition of, a Restricted Subsidiary (or a direct or indirect parent of such
Restricted Subsidiary), and refinancings of such Indebtedness; and provided
further that with respect to each of clause (A) and clause (B) above, (1) any
such refinancing Indebtedness shall have (A) an Average Life no less than the
Indebtedness being refinanced, (B) a Stated Maturity no earlier than the
Indebtedness being refinanced and (C) a principal amount not in excess of the
Indebtedness being refinanced (plus premiums, accrued interest, fees and
expenses) and (2) in no event shall Indebtedness of the Issuer be refinanced by
Indebtedness of a Restricted Subsidiary pursuant to this clause, and this clause
(x) shall not be construed to permit Liens on property other than such stock or
such intercompany notes; or (xi) Liens on assets of each Restricted Subsidiary
acquired on or subsequent to the Issue Date that are incurred for the purpose of
securing Indebtedness, all or a portion of which constituted a substantial
portion of the financing of the acquisition of, or relating to the acquisition
of, such Restricted Subsidiary (or a direct or indirect parent of such
Restricted Subsidiary) and refinancings of such Indebtedness; provided that, in
the case of each such Restricted Subsidiary, the Indebtedness secured by the
Principal Property of such Restricted Subsidiary that is subject to any Lien
incurred pursuant to this clause (xi) shall not exceed 80% of the fair market
value (as determined by the Board of Directors of the Issuer in good faith as of
the date of incurrence of such Lien) of the Principal Property
of such Restricted Subsidiary; provided that fluctuations in such fair market
values shall be deemed not to result in a violation of this Section 7(g).
(h) Limitation on Sale-Leaseback Transactions. The Issuer will not,
and will not permit any Restricted Subsidiary to, enter into any sale-leaseback
transaction involving any Principal Property, unless the aggregate amount of all
Attributable Indebtedness with respect to such transactions, plus all
Indebtedness secured by Liens on Principal Properties (excluding
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secured Indebtedness that is excluded as described in the "Limitation on Liens"
covenant) does not exceed 20% of Consolidated Net Tangible Assets.
The foregoing restriction does not apply to, and any computation of
Attributable Indebtedness under such limitation shall exclude, any sale-
leaseback transaction if (i) the lease is for a period, including renewal
rights, of not in excess of three years; (ii) the sale or transfer of the
Principal Property is entered into prior to, at the time of, or within 12 months
after the later of the acquisition of the Principal Property or the completion
of construction thereof; (iii) the lease secures or relates to industrial
revenue or pollution control bonds; (iv) the transaction is between the Issuer
and any Restricted Subsidiary or between Restricted Subsidiaries; or (v) the
Issuer or such Restricted Subsidiary, within 12 months after the sale of any
Principal Property is completed, applies an amount not less than the net
proceeds received from such sale to the retirement of Senior Indebtedness, to
Indebtedness of a Restricted Subsidiary or to the purchase of other property
that will constitute Principal Property or improvements thereto.
(i) Limitation on Asset Sales. (1) In the event and to the extent that the
Net Cash Proceeds received by the Issuer or any of its Restricted Subsidiaries
from one or more Asset Sales occurring on or after the Issue Date in any period
of 12 consecutive months (other than Asset Sales by the Issuer or any Restricted
Subsidiary to the Issuer or another Restricted Subsidiary) exceed 20% of
Consolidated Net Tangible Assets in any one fiscal year (determined as of the
date closest to the commencement of such 12-month period for which a balance
sheet of the Issuer and its Subsidiaries has been prepared), then the Issuer
shall, or shall cause such Restricted Subsidiary to, (i) within 12 months after
the date Net Cash Proceeds so received exceed 20% of Consolidated Net Tangible
Assets in any one fiscal year (determined as of the date closest to the
commencement of such 12-month period for which a balance sheet of the Issuer and
its Subsidiaries has been prepared) (A) apply an amount equal to such excess Net
Cash Proceeds to repay unsubordinated Indebtedness of the Issuer or Indebtedness
of any Restricted Subsidiary, in each case owing to a Person other than the
Issuer or any of its Subsidiaries or (B) invest an equal amount, or the amount
not so applied pursuant to clause (A) (or enter into a definitive agreement
committing to so invest within 12 months after the date of such agreement), in
property or assets of a nature or type or that are used in a business (or in a
company having property and assets of a nature or type, or engaged in a
business) similar or related to the nature or type of the property and assets
of, or the business of, the Issuer and its Subsidiaries existing on the date
thereof (as determined in good faith by the Board of Directors, whose
determination shall be conclusive and evidenced by a Board Resolution) and (ii)
apply such excess Net Cash Proceeds (to the extent not applied pursuant to
clause (i)) as provided in the following paragraphs of this Section 7(i). The
amount of such excess Net Cash Proceeds required to be applied (or to be
committed to be applied) during such 12-month period as set forth in clause (A)
or (B) of the preceding sentence and not applied as so required by the end of
such period shall constitute "Excess Proceeds."
(2) If, as of the first day of any calendar month, the aggregate amount of
Excess Proceeds not theretofore subject to an Excess Proceeds Offer (as defined
below) totals at least FF57 million, the Issuer must, not later than the
fifteenth Business Day of such month, make an
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offer (an "Excess Proceeds Offer") to purchase from the Holders on a pro rata
basis an aggregate principal amount of Notes equal to the Excess Proceeds on
such date, at a purchase price equal to 101% of the principal amount of such
Notes, plus accrued interest (if any) to the date of purchase (the "Excess
Proceeds Payment").
(3) The Issuer shall commence an Excess Proceeds Offer by mailing a notice
to the Paying Agents and providing notice to each Holder stating: (i) that the
Excess Proceeds Offer is being made pursuant to this Section 7(i) and that all
Notes validly tendered will be accepted for payment on a pro rata basis; (ii)
the purchase price and the date of purchase (which shall be a Business Day no
earlier than 30 days nor later than 60 days from the date such notice is mailed)
(the "Excess Proceeds Payment Date"); (iii) that any Note not tendered will
continue to accrue interest pursuant to its terms; (iv) that, unless the Issuer
defaults in the payment of the Excess Proceeds Payment, any Note accepted for
payment pursuant to the Excess Proceeds Offer shall cease to accrue interest
after the Excess Proceeds Payment Date; (v) that Holders electing to have a Note
purchased pursuant to the Excess Proceeds Offer will be required to surrender
the Note, together with the form entitled "Option of the Holder to Elect
Purchase" on the reverse side of the Note completed, to a Paying Agent at the
address specified in the notice prior to the close of business on the Business
Day immediately preceding the Excess Proceeds Payment Date; (vi) that Holders
will be entitled to withdraw their election if such Paying Agent receives, not
later than the close of business on the third Business Day immediately preceding
the Excess Proceeds Payment Date, a telegram, telex, facsimile transmission or
letter setting forth the name of such Holder, the principal amount of Notes
delivered for purchase and a statement that such Holder is withdrawing his
election to have such Notes purchased; and (vii) that Holders whose Notes are
being purchased only in part will be issued new Notes equal in principal amount
to the unpurchased portion of the Notes surrendered; provided that each Note
purchased and each new Note issued shall be in a principal amount at maturity of
DM 1,000 or integral multiples thereof.
(4) On the Excess Proceeds Payment Date, the Issuer shall (i) accept for
payment on a pro rata basis Notes or portions thereof tendered pursuant to the
Excess Proceeds Offer; (ii) deposit with a Paying Agent money sufficient to pay
the purchase price of all Notes or portions thereof so accepted; and (iii)
deliver or cause to be delivered to such Paying Agent all Notes or portions
thereof so accepted, together with an Officers' Certificate specifying the Notes
or portions thereof accepted for payment by the Issuer. Such Paying Agent shall
promptly mail to the Holders of Notes so accepted payment in an amount equal to
the purchase price, and such Paying Agent shall promptly authenticate and mail
to such Holders a new Note equal in principal amount to any unpurchased portion
of the Note surrendered; provided that each Note purchased and each new Note
issued shall be in an original principal amount at maturity of DM 1,000 or
integral multiples thereof. The Issuer will publicly announce the results of the
Excess Proceeds Offer as soon as practicable after the Excess Proceeds Payment
Date.
(j) Repurchase upon Change of Control Triggering Event. (1) Upon the
occurrence of a Change of Control Triggering Event (as defined below), each
Holder shall have the right to require the repurchase of its Notes by the Issuer
in cash pursuant to the offer described
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below (the "Change of Control Offer") at a purchase price equal to 101% of the
principal amount of such Notes plus accrued interest (if any) to the date of
purchase (the "Change of Control Payment").
(2) Within 30 days following any Change of Control Triggering Event, the
Issuer shall mail a notice to the Paying Agents and provide notice to each
Holder stating: (i) that a Change of Control Triggering Event has occurred, that
the Change of Control Offer is being made pursuant to this Section 7(j) and that
all Notes validly tendered will be accepted for payment; (ii) the purchase price
and the date of purchase (which shall be a Business Day no earlier than 30 days
nor later than 60 days from the date such notice is mailed) (the "Change of
Control Payment Date"); (iii) that any Note not tendered will continue to accrue
interest pursuant to its terms; (iv) that, unless the Issuer defaults in the
payment of the Change of Control Payment, any Note accepted for payment pursuant
to the Change of Control Offer shall cease to accrue interest after the Change
of Control Payment Date; (v) that Holders electing to have any Note purchased
pursuant to the Change of Control Offer will be required to surrender such Note,
together with the form entitled "Option of the Holder to Elect Purchase" on the
reverse side of such Note completed, to the Paying Agent at the address
specified in the notice prior to the close of business on the Business Day
immediately preceding the Change of Control Payment Date; (vi) that Holders will
be entitled to withdraw their election such Paying Agent receives, not later
than the close of business on the third Business Day immediately preceding the
Change of Control Payment Date, a telegram, telex, facsimile transmission or
letter setting forth the name of such Holder, the principal amount of Notes
delivered for purchase and a statement that such Holder is withdrawing his
election to have such Notes purchased; and (vii) that Holders whose Notes are
being purchased only in part will be issued new Notes equal in principal amount
to the unpurchased portion of the Notes surrendered; provided that each Note
purchased and each new Note issued shall be in a principal amount at maturity of
DM 1,000 or integral multiples thereof.
(3) On the Change of Control Payment Date, the Issuer shall: (i) accept
for payment Notes or portions thereof tendered pursuant to the Change of Control
Offer; (ii) deposit with a Paying Agent money sufficient to pay the purchase
price of all Notes or portions thereof so accepted; and (iii) deliver, or cause
to be delivered, to the Paying Agents all Notes or portions thereof so accepted,
together with an Officers' Certificate specifying the Notes or portions thereof
accepted for payment by the Issuer. Such Paying Agent shall promptly mail to the
Holders of Notes so accepted payment in an amount equal to the purchase price,
and such Paying Agent shall promptly authenticate and mail to such Holders a new
Note equal in principal amount to any unpurchased portion of the Note
surrendered; provided that each Note purchased and each new Note issued shall be
in a principal amount at maturity of DM 1,000 or integral multiples thereof. The
Issuer will publicly announce the results of the Change of Control Offer on or
as soon as practicable after the Change of Control Payment Date.
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(k) Compliance Certificates. (1) The principal accounting officer of the
Issuer shall provide the Paying Agents with a certificate, on or before a date
not more than 90 days after the end of each fiscal year, to the effect that a
review has been conducted of the activities of the Issuer and its Restricted
Subsidiaries, and of the Issuer's and Exide Parent's performance under the Notes
and the Paying Agency Agreement, and that the Issuer and Exide Parent have, to
the best of their knowledge, fulfilled all obligations under the Notes and the
Paying Agency Agreement, or, if there has been a default in the fulfillment of
any such obligation, specifying each such default and the nature and status
thereof. The Issuer will also be obligated to notify the Paying Agents of any
default or defaults in the performance of any covenants or agreements under the
Notes and the Paying Agency Agreement.
(2) The Issuer shall provide an annual certificate to the Paying Agents,
on or before a date not more than 90 days after the end of each fiscal year of
its chief financial officer certifying (i) that no default has occurred and is
continuing under the Notes and (ii) as to the amounts and calculations of the
Basket Amount and any Partial Parent Guarantee, which amounts and calculations
shall be confirmed by the Issuer's independent auditor.
(l) Reports to Holders. The Issuer agrees that for so long as any of the
Notes remain outstanding it shall: (i) furnish to the registered Holders, and
unregistered Holders upon request and proof of ownership, the annual financial
information required to be contained in an annual report distributed to the
stockholders of the Issuer in connection with its annual general meeting by the
French Company Law Act; (ii) comply with the applicable ongoing reporting
obligations relating to issuers with debt securities listed on the Frankfurt
Stock Exchange; (iii) prepare and furnish to registered Holders of the Notes,
and unregistered Holders of the Notes upon request and proof of ownership, for
the first six months of each fiscal year unaudited semi-annual results of
operations and a balance sheet, computed in accordance with French GAAP, and a
discussion and analysis of financial condition and results of operations by
management within 60 days of the end of each such six-month period; and (iv)
make available to any beneficial owner of the Notes in connection with any sale
thereof (and to any prospective purchaser designated by such owner) the
information required by Rule 144(d)(4) under the Securities Act.
(m) Definitions. The following terms shall have the following respective
meanings:
"Acquired Indebtedness" means Indebtedness of a Person existing at the time
such Person became a Restricted Subsidiary and not Incurred in connection with,
or in contemplation of, such Person becoming a Subsidiary.
"Adjusted Consolidated Net Income" means, for any period, the aggregate net
income (or loss) of any Person and its consolidated Subsidiaries for such period
determined in conformity with GAAP; provided that the following items shall be
excluded in computing Adjusted Consolidated Net Income (without duplication):
(i) the net income (or loss) of such Person (other than a Subsidiary of such
Person) in which any other Person (other than such Person or any of its
Subsidiaries) has a
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joint interest, except to the extent of the amount of dividends or other
distributions actually paid to such Person or any of its Subsidiaries by such
other Person during such period; (ii) solely for the purposes of calculating the
amount of Investments that may be made pursuant to clause (ii) of the first
paragraph of Sections 7(c) (and in such case, except to the extent including
pursuant to the foregoing clause (i) above), the net income (or loss) of such
Person accrued prior to the date it becomes a Subsidiary of any other Person or
is merged into or consolidated with such other Person or any of its Subsidiaries
or all or substantially all of the property and assets of such Person are
acquired by such other Person or any of its Subsidiaries; (iii) the net income
(or loss) of any Subsidiary of any Person to the extent that the declaration or
payment of dividends or similar distributions by such Subsidiary of such net
income is not at the time permitted by the operation of the terms of its charter
or any agreement, instrument, judgment, decree, order, statute, rule or
governmental regulation applicable to such Subsidiary; (iv) any gains or losses
(on an after-tax basis) attributable to Asset Sales; (v) all extraordinary gains
and extraordinary losses; and (vi) any gains, losses, revenues and expenses
attributable to non-cash items to the extent included under GAAP but not
included under U.S. GAAP; provided that, solely for purposes of calculating the
Interest Coverage Ratio (and in such case, except to the extent included
pursuant to clause (i) above), "Adjusted Consolidated Net Income" of Exide
Holding shall include the amount of all cash dividends received by Exide Holding
or any Subsidiary of Exide Holding from an Unrestricted Subsidiary.
"Affiliate" means, as applied to any Person, any other Person directly or
indirectly controlling, controlled by, or under direct or indirect common
control with, such Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as applied to any Person, is defined to mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting securities, by contract or otherwise.
"Asset Acquisition" means (i) an Investment or capital contribution (by
means of transfers of cash or other property to others or payments for property
or services for the account or use of others, or otherwise) by the Issuer, or
any Restricted Subsidiary in any other Person, or any acquisition or purchase of
Capital Stock of another Person by the Issuer or any Restricted Subsidiary, in
either case pursuant to which such Person shall become a Restricted Subsidiary
or shall be merged with or into or consolidated with the Issuer or any
Restricted Subsidiary or (ii) an acquisition by the Issuer or any Restricted
Subsidiary of the property and assets of any Person other than the Issuer or any
Restricted Subsidiary which constitute substantially all of a division,
operating unit or line of business of such Person or which is otherwise outside
the ordinary course of business.
"Asset Disposition" means the sale or other disposition by the Issuer or
any of its Subsidiaries (other than to the Issuer or another Subsidiary of the
Issuer) of (i) all or substantially all of the Capital Stock of any Subsidiary
of the Issuer or (ii) all or substantially all of the assets that constitute a
division or line of business of the Issuer or any of its Subsidiaries.
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<PAGE>
"Asset Sale" means, with respect to any Person, any sale, transfer or other
disposition (including by way of merger, consolidation or sale-leaseback
transactions) in one transaction or a series of related transactions by such
Person or any of its Subsidiaries to any Person other than the Issuer or any of
its Subsidiaries of (i) all or any of the Capital Stock of any Subsidiary of
such Person, (ii) all or substantially all of the property and assets of an
operating unit or business of such Person or any of its Subsidiaries or (iii)
any other property and assets of such Person or any of its Subsidiaries outside
the ordinary course of business of such Person or such Subsidiary and, in each
case, that is not governed by the provisions of the Notes applicable to mergers,
consolidations and transfers of all or substantially all of the property and
assets of the Issuer; provided that none of (A) sales or other dispositions of
inventory, receivables and other current assets, (B) sales or other dispositions
of surplus equipment, furniture or fixtures in an aggregate amount not to exceed
FF10 million (or if non-French franc denominated, the French franc Equivalent
thereof) in any fiscal year of the Issuer or (C) sales of receivables and
related assets in Receivables Sale Transactions shall be included within the
meaning of "Asset Sale."
"Attributable Indebtedness" means, when used in connection with a sale-
leaseback transaction referred to in Section 7(h) hereof, at any date of
determination; the product of (i) the net proceeds from such sale-leaseback
transaction and (ii) a fraction, the numerator of which is the number of full
years of the term of the lease relating to the property involved in such sale-
leaseback transaction (without regard to any options to renew or extend such
term) remaining at the date of the making of such computation and the
denominator of which is the number of full years of the term of such lease
(without regard to any options to renew or extend such term) measured from the
first day of such term.
"Average Life" means, at any date of determination with respect to any debt
security, the quotient obtained by dividing (i) the sum of the products of (a)
the number of years from such date of determination to the dates of each
successive scheduled principal payment of such debt security and (b) the amount
of such principal payment by (ii) the sum of all such principal payments.
"Basket Amount" has the meaning specified in Section 7(c).
"Basket Payment" means any of the following: (i) any Exide Parent Payment,
(ii) the making of any Investment in an Affiliate (other than Exide Parent, the
Issuer or any of their Restricted Subsidiaries) or any Unrestricted Subsidiary,
other than a Permitted Investment, and (iii) any Subordinated Indebtedness
Prepayment.
"Board of Directors" means the Board of Directors of the Issuer or any
committee of such Board of Directors duly authorized to act under the Notes.
"Business Day" means any day (other than a Saturday or Sunday) on which
DTC, Euroclear or Cedel and banks in London and New York are open for business.
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<PAGE>
"Capital Stock" means, with respect to any Person, any and all shares,
interests, participations, rights in or other equivalents (however designated,
whether voting or non-voting) in equity of such Person, whether outstanding at
the Issue Date or issued after the Issue Date, including, without limitation,
all Common Stock and Preferred Stock, and any and all rights, warrants or
options exchangeable for or convertible into any thereof.
"Capitalized Lease" means, as applied to any Person, any lease or license
of, or other agreement conveying the right to use, any property (whether real,
personal or mixed, movable or immovable) of which the present value of the
obligations of such Person to pay rent or other amounts is required, in
conformity with GAAP, to be classified and accounted for as a finance lease
obligation; and "Capitalized Lease Obligation" means the capitalized present
value of the obligations to pay rent or other amounts under such lease or other
agreement, determined in accordance with GAAP.
"Cash Equivalents" means (i) commercial paper maturing not more than nine
months from the date of issue and rated at least A-1 by S&P or P-1 by Moody's;
(ii) any deposit of not more than one year's maturity with, or acceptance
maturing not more than one year after issue accepted by, a bank or credit
institution which has a combined capital and surplus and undistributable profits
of not less than FF1,000,000,000 (or an equivalent amount) and whose short term
unsecured, unsubordinated debt rating is at least A-1 by S&P or P-1 by Moody's;
(iii) securities issued or directly and fully guaranteed or insured by the
governments of Germany, Switzerland, France, Great Britain or the United States
(or, up to an amount of FF5,000,000 or its equivalent, of Spain) or any agency
or instrumentality thereof having maturities of not more than one year from the
date of acquisition; (iv) repurchase obligations with a term of not more than
seven days fully collateralized by underlying securities of the types described
in clauses (i) and (ii) above entered into with any bank meeting the
qualifications specified in clause (ii) above; or (v) debt securities having not
more than one year until final maturity and listed on a recognized stock
exchange and rated at least AA by S&P or Aa by Moody's.
"Cedel" means Cedel Bank, societe anonyme.
"Change of Control" means such time as (i) a "person" or "group" (within
the meaning of Sections 13(d) and 14(d) of the Exchange Act), other than the
Permitted Holders and their respective Affiliates, becomes the "beneficial
owner" (as defined in Rule 13d-3 under the Exchange Act) of more than fifty
percent (50%) of the total voting power of the then outstanding Voting Stock of
the Issuer; or (ii) during any period of two consecutive calendar years,
individuals who at the beginning of such period constituted the Issuer's Board
of Directors (together with any new directors whose election by the Issuer's
Board of Directors or whose nomination for election by the Issuer's shareholders
was approved by a vote of at least two-thirds of the Directors then still in
office who either were Directors at the beginning of such period or whose
election or nomination for election was previously so approved) cease for any
reason to constitute a majority of the directors then in office; or (iii) (A)
the Issuer consolidates with or merges into any other Person or conveys,
transfers or leases all or substantially all of its assets to any Person or (B)
any Person merges into the Issuer,
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<PAGE>
in either event pursuant to a transaction in which any Voting Stock of the
Issuer outstanding immediately prior to the effectiveness thereof is
reclassified or changed into or exchanged for cash, securities or other
property; provided that any consolidation, conveyance, transfer or lease (x)
between the Issuer and any of its Subsidiaries or between Subsidiaries
(including, without limitation, the reincorporation of the Issuer in another
jurisdiction) or (y) for the purpose of creating a public holding company for
the Issuer in another jurisdiction or (z) for the purpose of creating a public
holding company for the Issuer in which all holders of the Issuer's Capital
Stock would be entitled to receive (other than cash in lieu of fractional
shares) solely Capital Stock of the holding company in amounts proportionate to
their holdings of Capital Stock of the Issuer immediately prior to such
transaction, shall be excluded from the operation of this clause (iii).
"Change of Control Triggering Event" means the occurrence of both a Change
of Control and a Rating Decline.
"Commodity Agreement" means any agreement or arrangement designed to
protect the Issuer or any of its Subsidiaries against fluctuations in the prices
of commodities used by the Issuers or any of its Subsidiaries in the ordinary
course of its business entered into with any bank.
"Common Stock" means, with respect to any Person, any and all shares,
interests or other participations in, and other equivalents (however designated
and whether voting or non-voting) of such Person's common stock or ordinary
shares, whether or not outstanding at the Issue Date, and includes, without
limitation, all series and classes of such common stock or ordinary shares.
"Consolidated EBITDA" means, with respect to any Person for any period, the
sum of the amounts for such period of (i) Adjusted Consolidated Net Income, (ii)
Consolidated Interest Expense, (iii) income taxes (other than income taxes
(either positive or negative) attributable to extraordinary and nonrecurring
gains or losses or sales of assets), (iv) depreciation expense, (v) amortization
expense and (vi) all other non-cash items reducing Adjusted Consolidated Net
Income, less all non-cash items increasing Adjusted Consolidated Net Income, all
as determined on a consolidated basis for such Person and its Subsidiaries in
conformity with GAAP; provided that, if a Person has any Subsidiary that is not
a Wholly Owned Subsidiary of such Person, Consolidated EBITDA of such Person
shall be reduced by an amount equal to (A) the Adjusted Consolidated Net Income
of such Subsidiary multiplied by (B) the quotient of (1) the number of shares of
outstanding Common Stock of such Subsidiary not owned on the last day of such
period by such Person or any Subsidiary of such Person divided by (2) the total
number of shares of outstanding Common Stock of such Subsidiary on the last day
of such period.
"Consolidated Interest Expense" means, with respect to any Person for any
period, the aggregate amount of interest in respect of Indebtedness (including
amortization of original issue discount on any Indebtedness and the interest
portion of any deferred payment obligation, calculated in accordance with the
effective interest method of accounting; all commissions, discounts and other
fees and charges owed with respect to letters of credit and bankers' acceptance
financing; and the net costs associated with Interest Rate Agreements) and all
but the principal component of rentals in
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<PAGE>
respect of Capitalized Lease Obligations paid, accrued or scheduled to be paid
or to be accrued by such Person and its consolidated subsidiaries during such
period; excluding, however, (i) any amount of such interest of any Subsidiary of
such Person if the net income (or loss) of such Subsidiary is excluded in the
calculation of Adjusted Consolidated Net Income for such Person pursuant to
clause (iii) of the definition thereof (but only in the same proportion as the
net income (or loss) of such Subsidiary is excluded from the calculation of
Adjusted Consolidated Net Income for such Person pursuant to clause (iii) of the
definition thereof), (ii) any premiums, fees and expenses (and any amortization
thereof) payable in connection with the Offering, all as determined on a
consolidated basis in conformity with GAAP, and (iii) interest expense
attributable to cash discounts taken by customers for early payment of
obligations to the Issuer and its Subsidiaries.
"Consolidated Net Tangible Assets" means the total amount of assets of the
Issuer and its Subsidiaries (less applicable depreciation, amortization and
other valuation reserves), except to the extent resulting from write-ups of
capital assets (excluding write-ups in connection with accounting for
acquisitions in conformity with GAAP), after deducting therefrom (i) all current
liabilities of the Issuer and its consolidated Subsidiaries (excluding
intercompany items) and (ii) all goodwill, trade names, trademarks, patents,
unamortized debt discount and expense and other like intangibles, all as set
forth on the most recently available consolidated balance sheet of the Issuer
and its consolidated Subsidiaries, prepared in conformity with GAAP.
"Consolidated Net Worth" means, at any date of determination, shareholders'
equity as set forth on the most recently available consolidated balance sheet of
the Issuer and its consolidated Subsidiaries (which shall be as of a date not
more than 60 days prior to the date of such computation), less any amounts
attributable to Redeemable Stock or any equity security convertible into or
exchangeable for Indebtedness, the cost of treasury stock and the principal
amount of any promissory notes receivable from the sale of Capital Stock of the
Issuer or any Subsidiary of the Issuer, each item to be determined in accordance
with GAAP (excluding the effects of foreign currency exchange adjustments).
"Currency Agreement" means any foreign exchange contract, currency swap
agreement or other similar agreement or arrangement designed to protect the
Issuer or any Restricted Subsidiary against fluctuations in currency values.
"Default" means an event that after notice or passage of time or both would
become an Event of Default.
"Euroclear" means Morgan Guaranty Trust Company of New York, Brussels
office, as operator of the Euroclear system.
"Facilities Agreement" means the facilities agreement, dated as of November
30, 1995, of the Issuer and certain of its subsidiaries with a group of lenders
arranged by Bankers Trust International PLC and co-arranged by Bank of America
International Limited, Bank of Montreal and Citibank International PLC, as
amended, and including any amendments, supplements,
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<PAGE>
modifications, novations, extensions, refinancings and renewals thereof and all
documents related thereto including security documents and deeds of accession.
"Fair Market Value" means, with respect to any asset or property, the price
that could be negotiated in an arms-length free market transaction, for cash,
between a willing seller and a willing buyer, neither of whom is under pressure
or compulsion to complete the transaction.
"Federal Republic of Germany Obligations" means securities that are direct
and unconditional obligations of the Federal Republic of Germany or any of its
states (Bundeslander), as defined in Section 1807 No. 2 of the German Civil Code
(Burgerliches Gesetzbuch), as from time to time amended, and are not callable or
redeemable at the option of the issuer thereof.
"French franc Equivalent" means, with respect to any monetary amount in a
currency other than French francs, at any time for the determination thereof,
the amount of French francs obtained by converting such foreign currency
involved in such computation into French francs at the spot rate for the
purchase of French francs with the applicable foreign currency as quoted by the
Financial Times (European edition) published on the last Business Day
immediately preceding such determination.
"GAAP" means, at any date of determination, generally accepted accounting
principles in effect in France as of the Issue Date.
"Guarantee" means any obligation, contingent or otherwise, of any Person
directly or indirectly guaranteeing any Indebtedness or other obligation of any
other Person and, without limiting the generality of the foregoing, any
obligation, direct or indirect, contingent or otherwise, of such Person (i) to
purchase or pay (or advance or supply funds for the purchase or payment of) such
Indebtedness or other obligation of such other Person (whether arising by virtue
of partnership arrangements, or by agreements to keep-well, to purchase assets,
goods, securities or services, to take-or-pay, or to maintain financial
statement conditions or otherwise) or (ii) entered into for purposes of assuring
in any other manner the obligee of such Indebtedness or other obligation of the
Payment thereof or to protect such obligee against loss in respect thereof (in
whole or in part); provided that the term "Guarantee" shall not include
endorsements for collection or deposit in the ordinary course of business. The
term "Guarantee" used as a verb has a corresponding meaning.
"Holder" means the registered holders of any Note or the holder of the
Global Bearer Note or any Definitive Note.
"Incur" means, with respect to any Indebtedness, to incur, create, issue,
assume, Guarantee or otherwise, contingently or otherwise, become liable,
directly or indirectly, for or with respect to, or become responsible for, the
payment of such Indebtedness; provided that neither the accrual of interest
(whether such interest is payable in cash or in kind) nor the accretion of
original issue discount shall be considered an Incurrence of Indebtedness. The
term "Incurrence" used as a noun has a corresponding meaning.
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<PAGE>
"Indebtedness" means, with respect to any Person at any date of determination
(without duplication), (i) any indebtedness of such Person for borrowed money,
(ii) all obligations of such Person evidenced by bonds, debentures, notes or
other similar instruments, (iii) all obligations of such Person in respect of
letters of credit or other similar instruments (including reimbursement
obligations with respect thereto and purchase money obligations), (iv) all
obligations of such Person to pay the deferred and unpaid purchase price of
property or services, which purchase price is due more than six months after the
date of placing such property in service or taking delivery and title thereto or
the completion of such services, except for Trade Payables and except for any
deferred purchase price or other purchase price obligation payable by a
Restricted Subsidiary as part of the consideration for the purchase of
receivables in a Receivables Sales Transaction, (v) all obligations of such
Person as lessee under Capitalized Leases, (vi) all Indebtedness of other
Persons secured by a Lien on any asset of such Person (other than a Lien
permitted under Section 7(g) hereof), whether or not such Indebtedness is
assumed by or is otherwise the legal liability of such Person; provided that the
amount of such Indebtedness shall be the lesser of (A) the Fair Market Value of
such asset at such date of determination and (B) the amount of such
Indebtedness, (vii) all Indebtedness of other Persons Guaranteed by such Person
or which is otherwise the legal liability of such Person, to the extent such
Indebtedness is Guaranteed by or is otherwise the legal liability of such
Person, (viii) to the extent not otherwise included in this definition,
obligations under Currency Agreements and Interest Rate Agreements, and (ix) any
and all deferrals, renewals, extensions and refundings of, or amendments of or
supplements to, any liability or obligation of the kind described in this
definition. The amount of Indebtedness of any Person at any date shall be the
outstanding balance at such date of all unconditional obligations as described
above and, with respect to contingent obligations, the maximum liability upon
the occurrence of the contingency giving rise to the obligation, provided that
the amount outstanding at any time of any Indebtedness issued with original
issue discount is the face amount of such Indebtedness less the remaining
unamortized portion of the original issue discount of such Indebtedness at such
time as determined in conformity with GAAP. A Receivables Sales Transaction
shall not constitute Indebtedness, irrespective of its treatment under GAAP.
"Intercompany Note" means the note issued on March 29, 1996 by the Issuer
to Exide International, Inc., a wholly owned subsidiary of Exide Parent.
"Interest Coverage Ratio" means, with respect to any Person on any Transaction
Date, the ratio of (i) the aggregate amount of Consolidated EBITDA of such
Person for the four fiscal quarters preceding the Transaction Date for which
financial statements of Exide Parent have been filed with the U.S. Securities
and Exchange Commission to (ii) the aggregated Consolidated Interest Expense of
such Person during such four fiscal quarters. In making the foregoing
calculation, (A) pro forma effect shall be given to (1) any Indebtedness
Incurred subsequent to the end of the four-fiscal-quarter period referred to in
clause (i) and prior to the Transaction Date (other than Indebtedness Incurred
under a revolving credit or similar arrangement to the extent of the commitment
thereunder (or under any predecessor revolving credit or similar arrangement) on
the last day of such period), (2) any Indebtedness Incurred during such period
to the extent such Indebtedness is outstanding at the Transaction Date and (3)
any Indebtedness to be incurred on the Transaction Date, in each case as if such
Indebtedness had been Incurred on the first day of such four-fiscal-quarter
period and after
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<PAGE>
giving pro forma effect to the application of the proceeds thereof as if such
application occurred on such first day; (B) Consolidated Interest Expense
attributable to interest on any Indebtedness (whether existing or being
Incurred) computed on a pro forma basis and bearing a floating interest rate
shall be computed as if the rate in effect on the Transaction Date (taking into
account any Interest Rate Agreement applicable to such Indebtedness if such
Interest Rate Agreement has a remaining term in excess of 12 months) had been
the applicable rate for the entire period; (C) there shall be excluded from
Consolidated Interest Expense any Consolidated Interest Expense related to any
amount of Indebtedness that was outstanding during such four-fiscal-quarter
period or thereafter but that is not outstanding or is to be repaid on the
Transaction Date, except for Consolidated Interest Expense accrued (as adjusted
pursuant to clause (B)) during such four-fiscal-quarter period under a revolving
credit or similar arrangement to the extent of the commitment thereunder (or
under any successor revolving credit or similar arrangement) on the Transaction
Date; (D) pro forma effect shall be given to Asset Dispositions and Asset
Acquisitions (including giving pro forma effect to the application of proceeds
of any Asset Disposition) that occur during such four-fiscal-quarter period or
thereafter and prior to the Transaction Date as if they had occurred and any
such proceeds had been applied on the first day of such four-fiscal-quarter
period; and (E) pro forma effect shall be given to asset dispositions and asset
acquisitions that have been made by any Person that has become a Subsidiary of
the Issuer or has been merged with or into the Issuer or any Subsidiary of the
Issuer during the four-fiscal-quarter period referred to above or subsequent to
such period and prior to the Transaction Date and that would have been Asset
Dispositions or Asset Acquisitions had such transactions occurred when such
Person was a Subsidiary of the Issuer as if such asset dispositions or asset
acquisitions were Asset Dispositions or Asset Acquisitions that occurred on the
first day of such period.
"Interest Rate Agreement" means any interest rate protection agreement,
interest rate future agreement, interest rate option agreement, interest rate
swap agreement, interest rate cap agreement, interest rate collar agreement,
interest rate hedge agreement or other similar agreement or arrangement designed
to protect the Issuer or any of its Subsidiaries against fluctuations in
interest rates to or under which the Issuer or any of its Subsidiaries is a
party or a beneficiary on the date of the Paying Agency Agreement or becomes a
party or a beneficiary thereafter.
"Investment" means, with respect to any Person, any advance, loan (other
than advances to customers in the ordinary course of business that are recorded
as accounts receivable of any Person or its Subsidiaries), or other extension of
credit (including, without limitation, by means of any guarantee) or any capital
contribution to (by means of transfers of property to others, payments for
property or services for the account or use of others, or otherwise), or any
purchase or ownership of any stocks, bonds, notes, debentures or other
securities, of any other Person. Notwithstanding the foregoing, in no event
shall any issuance of Capital Stock (other than Redeemable Stock) of the Issuer
in exchange for Capital Stock, property or assets of another Person constitute
an Investment by the Issuer in such other Person. For purposes of the definition
of "Unrestricted Subsidiary" described below and Section 7(c) described above,
(i) "Investment" shall include the Fair Market Value of the assets (net of
liabilities) of any Restricted Subsidiary of the Issuer at the time that such
Restricted Subsidiary of the Issuer is designated an Unrestricted Subsidiary and
shall exclude the
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Fair Market Value of the assets (net of liabilities) of any Unrestricted
Subsidiary at the time that such Unrestricted Subsidiary is designated a
Restricted Subsidiary of the Issuer, and (ii) any property transferred to or
from an Unrestricted Subsidiary shall be valued at its Fair Market Value at the
time of such transfer, in each case as determined by the Board of Directors of
the Issuer in good faith.
"Investment Grade" means BBB- or higher by S&P or Baa3 or higher by Moody's
or the equivalent of such ratings by S&P or Moody's. In the event that the
Issuer shall select any other Rating Agency, the equivalent of such ratings by
such Rating Agency shall be used.
"Issue Date" means the original date of issuance of the Notes.
"Lien" means any mortgage, charge, pledge, security interest, encumbrance,
lien (statutory or other), hypothecation, assignment for security, claim, or
preference or priority or other encumbrance of any kind upon or with respect to
any property (including, without limitation, any conditional sale or other title
retention agreement or lease in the nature thereof, any sale with recourse
against the seller or any Affiliate of the seller, or any agreement to give any
security interest).
"Moody's" means Moody's Investors Service, Inc. and its successors.
"Net Cash Proceeds" means (a) with respect to any Asset Sale, the proceeds
of such Asset Sale in the form of cash or Cash Equivalents, including payments
in respect of deferred payment obligations (to the extent corresponding to the
principal, but not interest, component thereof) when received in the form of
cash or Cash Equivalents (except to the extent such obligations are financed or
sold with recourse to the Issuer or any Restricted Subsidiary of the Issuer) and
proceeds from the conversion of other property received when converted to cash
or Cash Equivalents if converted within 12 months after receipt, net of (i)
brokerage commissions and other fees and expenses (including fees and expenses
of counsel and investment bankers) related to such Asset Sale, (ii) provisions
for all taxes (whether or not such taxes will actually be paid or are payable)
as a result of such Asset Sale without regard to the consolidated results of
operations of the Issuer and its Restricted Subsidiaries, taken as a whole,
(iii) payments made to repay Indebtedness or any other obligation outstanding at
the time of such Asset Sale that either (A) is secured by a Lien on the property
or assets sold or (B) is required to be paid as a result of such sale and (iv)
appropriate amounts to be provided by the Issuer or any Restricted Subsidiary of
the Issuer as a reserve against any liabilities associated with such Asset Sale,
including, without limitation, pension and other post-employment benefit
liabilities, liabilities related to environmental matters and liabilities under
any indemnification obligations associated with such Asset Sale, all as
determined in conformity with GAAP, and (b) with respect to any issuance or sale
of Capital Stock, the proceeds of such issuance or sale in the form of cash or
Cash Equivalents, including payments in respect of deferred payment obligations
(to the extent corresponding to the principal, but not interest, component
thereof) when received in the form of cash or Cash Equivalents (except to the
extent such obligations are financed or sold with recourse to the Issuer or any
Restricted Subsidiary of the Issuer) and proceeds from the conversion of other
property received when converted to cash or Cash Equivalents, net of attorneys'
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fees, accountants' fees, underwriters' or placement agents' fees, discounts or
commissions and brokerage, consultant and other fees incurred in connection with
such issuance or sale and net of taxes paid or payable as a result thereof.
"Officers' Certificate" means a certificate signed by any two of the
Managing Director, Chief Executive Officer, Chief Operating Officer and Chief
Financial Officer of the Issuer.
"Operating Lease" means, as applied to any Person, any lease of any
property (whether real, personal or mixed) that is not a Capitalized Lease.
"Opinion of Counsel" means a written opinion from legal counsel who is
reasonably acceptable to the Paying Agents, which may include an individual
employed as counsel to the Paying Agents.
"Permitted Holders" means Exide Corporation, a Delaware corporation, its
controlled Affiliates and its controlling Affiliates on the Issue Date.
"Permitted Indebtedness" means the following indebtedness which may be
Incurred by the Issuer or any Restricted Subsidiary (except as otherwise
provided below):
(i) Indebtedness outstanding at any one time in an aggregate
principal amount not to exceed the greater of (A) 110% of the total
commitment under the Facilities Agreement on the date of this Memorandum or
(B) 30% of accounts receivable and 20% of inventory, in each case net of
reserves and as shown on the consolidated balance sheet of the Issuer as of
the most recent month for which financial statements are available;
(ii) Indebtedness of the Issuer to any of its Restricted
Subsidiaries that is a Wholly-Owned Subsidiary of the Issuer, or of a
Restricted Subsidiary to the Issuer or to any other Restricted Subsidiary
that is a Wholly Owned Subsidiary of the Issuer;
(iii) Indebtedness the net proceeds of which are used to refinance
outstanding Indebtedness of the Issuer or any of its Restricted
Subsidiaries, other than Indebtedness Incurred under clause (i), (iv),
(vi), (viii), (ix) or (x) of this definition and any refinancings thereof,
in an amount (or, if such new Indebtedness provides for an amount less than
the principal amount thereof to be due and payable upon a declaration of
acceleration thereof, with an original issue price) not to exceed the
amount so refinanced (plus premiums, accrued interest, fees and expenses);
provided that Indebtedness the proceeds of which are used to refinance the
Notes or other Indebtedness of the Issuer that is subordinated in right of
payment to the Notes shall only be permitted under this clause (iii) if (A)
in case the Notes are refinanced in part, such Indebtedness, by its terms
or by the terms of any agreement or instrument pursuant to which such
Indebtedness is issued, is expressly made pari passu with, or subordinate
in right of payment to, the remaining Notes, (B) in case the Indebtedness
to be refinanced is subordinated in right of payment to the Notes, such
Indebtedness, by its
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terms or by the terms of any agreement or instrument pursuant to which such
Indebtedness is issued, is expressly made subordinate in right of payment
to the Notes at least to the extent that the Indebtedness to be refinanced
is subordinated to the Notes and (C) in case the Notes are refinanced in
part or the Indebtedness to be refinanced is subordinated in right of
payment to the Notes, such Indebtedness, determined as of the date of
Incurrence of such new Indebtedness, does not mature prior to one year
after the Stated Maturity of the Indebtedness being refinanced and the
Average Life of such Indebtedness is equal to or greater than the remaining
Average Life of the Indebtedness being refinanced plus one year; and
provided further that in no event may Indebtedness of the Issuer that is
pari passu with, or subordinated in right of payment to, the Notes be
refinanced by means of Indebtedness of any Subsidiary of the Issuer
pursuant to this clause (iii);
(iv) unsecured Indebtedness, in an aggregate principal amount not to
exceed FF23 million at any one time outstanding, Incurred by the Issuer in
connection with the purchase, redemption, acquisition, cancellation or
other retirement for value of shares of Capital Stock of the Issuer,
options on any such shares or related stock appreciation rights or similar
securities held by officers or employees or former officers or employees
(or their estates or beneficiaries under their estates) or by any Plan,
upon death, disability, retirement, termination of employment or pursuant
to the terms of such Plan, or any other agreement under which such shares
of stock or related rights were issued; provided that (A) such
Indebtedness, by its terms or by the terms of any agreement or instrument
pursuant to which such Indebtedness is issued, is expressly made
subordinate in right of payment to the Notes, at least to the extent that
the Senior Subordinated Debentures of Exide Parent issued in 1992 were
subordinated to Senior Indebtedness (as defined in the indenture pursuant
to which the Senior Subordinated Debentures were issued ("Senior
Indebtedness")), (B) such Indebtedness, by its terms or by the terms of any
agreement or instrument pursuant to which such Indebtedness is issued,
provides that no payments of principal of such Indebtedness by way of
sinking fund, mandatory redemption or otherwise (including defeasance) may
be made by the Issuer at any time prior to one year after the Stated
Maturity of the Notes, and (C) the scheduled maturity of all principal of
such Indebtedness is one year beyond the Stated Maturity of the Notes;
(v) Indebtedness (A) in respect of performance bonds, bankers'
acceptances, letters of credit and surety or appeal bonds provided in the
ordinary course of business and letters of credit under the Facilities
Agreement, (B) under Currency Agreements, Interest Rate Agreements and
Commodity Agreements; provided that, in the case of Currency Agreements
that relate to other Indebtedness, such Currency Agreements do not increase
the Indebtedness of the Issuer outstanding at any time other than as a
result of fluctuations in foreign currency exchange rates or by reason of
fees, indemnities and compensation payable thereunder and (C) arising from
agreements providing for indemnification, adjustment of purchase price or
similar obligations, or from Guarantees or letters of credit, surety bonds
or performance bonds securing any obligations of the Issuer or any
Subsidiary of the Issuer pursuant to such agreements, in any case Incurred
in connection with the disposition of any
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business, assets or Subsidiary of the Issuer (other than Guarantees of
Indebtedness Incurred by any Person acquiring all or any portion of such
business, assets or Subsidiary of the Issuer for the purpose of financing such
acquisition), in a principal amount not to exceed the gross proceeds actually
received by the Issuer or any Restricted Subsidiary in connection with such
disposition;
(vi) Indebtedness under Guarantees Incurred by the Issuer in respect of
obligations of Unrestricted Subsidiaries outstanding at any time in an
aggregate amount not to exceed FF115 million;
(vii) Acquired Indebtedness; provided that, after giving pro forma effect
to the Incurrence of such Indebtedness, the Issuer could Incur at least FF1.00
of Indebtedness under the first paragraph of the "Limitation on Indebtedness"
covenant; and refinancings thereof, provided that such refinancing
Indebtedness may not be Incurred by any Person other than the Issuer or the
Restricted Subsidiary that is the obligor on such Acquired Indebtedness;
(viii) unsecured Indebtedness of the Issuer outstanding at any time in
an aggregate amount not to exceed FF285 million; provided that such
Indebtedness, (A) by its terms or by the terms of any agreement or instrument
pursuant to which such Indebtedness is issued, is expressly made subordinate
in right of payment to the Notes, at least to the extent the Senior
Subordinated Debentures were subordinated to Senior Indebtedness, (B)
determined as of the date of Incurrence of such Indebtedness, does not mature
prior to one year after the Stated Maturity of the Notes, and the Average Life
of such Indebtedness is one year beyond the remaining Average Life of the
Notes, (C) by its terms or by the terms of any agreement or instrument
pursuant to which such Indebtedness is issued, provides that no payments of
principal of such Indebtedness by way of sinking fund, mandatory redemption or
otherwise (including defeasance) may be made by the Issuer (including, without
limitation, at the option of the holder thereof, other than an option given to
a holder pursuant to an "asset sale" provision that is no more favorable to
the holders of such Indebtedness than the provisions contained in the
"Limitation on Asset Sales" covenant described above and such Indebtedness
specifically provides that the Issuer will not repurchase or redeem such
Indebtedness pursuant to such provision prior to the Issuer's repurchase of
the Notes required to be repurchased by the Issuer under the "Limitation on
Asset Sales" covenant) at any time prior to the Stated Maturity of the Notes;
and provided further that after giving effect to the Incurrence of such
Indebtedness and the receipt and application of the proceeds therefrom, the
Interest Coverage Ratio of the Issuer would be at least 1.25:1;
(ix) Indebtedness under any revolving credit or other working capital
facility in an aggregate amount not to exceed, at any one time outstanding,
FF460 million; and
(x) other Indebtedness in an aggregate principal amount not to exceed FF570
million at any one time outstanding.
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"Permitted Investment" means (a) an Investment in a Restricted Subsidiary
or a Person which will, upon the making of such Investment, become a Restricted
Subsidiary or be merged or consolidated with or into or transfer or convey all
or substantially all its assets to the Issuer or a Restricted Subsidiary; (b)
Cash Equivalents; (c) Investments in prepaid expenses, negotiable instruments
held for collection and lease, utility and workers' compensation, performance
and other similar deposits; (d) loans and advances to employees made in the
ordinary course of business; (e) Interest Rate Agreements and Currency
Agreements; and (f) any purchase money note, deferred purchase price or other
right to future payments received by or payable to a Restricted Subsidiary as
part of the consideration for the purchase of receivables in a Receivables Sale
Transaction.
"Permitted Liens" means (i) Liens for taxes, assessments, governmental
charges or claims that are being contested in good faith by appropriate legal
proceedings promptly instituted and diligently conducted and for which a reserve
or other appropriate provision, if any, as shall be required in conformity with
GAAP shall have been made; (ii) statutory Liens of landlords and carriers,
warehousemen, mechanics, suppliers, materialmen, repairmen or other similar
Liens arising in the ordinary course of business and with respect to amounts not
yet delinquent or being contested in good faith by appropriate legal proceedings
promptly instituted and diligently conducted and for which a reserve or other
appropriate provision, if any, as shall be required in conformity with GAAP
shall have been made; (iii) Liens incurred or deposits made in the ordinary
course of business in connection with workers' compensation, unemployment
insurance and other types of social security; (iv) Liens incurred or deposits
made to secure the performance of tenders, bids, leases, statutory or regulatory
obligations, bankers' acceptances, surety and appeal bonds, government
contracts, performance and return-of-money bonds and other obligations of a
similar nature incurred in the ordinary course of business (exclusive of
obligations for the payment of borrowed money); (v) easements, rights-of-way,
municipal and zoning ordinances and similar charges, encumbrances, title defects
or other irregularities that do not materially interfere with the ordinary
course of business of the Issuer or any of its Restricted Subsidiaries; (vi)
Liens (including extensions and renewals thereof) upon real or personal property
acquired after the Issue Date; provided that (a) such Lien is created solely for
the purpose of securing Indebtedness Incurred, in accordance with Section 7(a)
described above, (1) to finance the costs (including the cost of improvement or
construction) of the item of property or assets subject thereto and such Lien is
created prior to, at the time of or within six months after the later of the
acquisition, the completion of construction or the commencement of full
operation of such property; or (2) to refinance any Indebtedness previously so
secured, (b) the principal amount of the Indebtedness secured by such Lien does
not exceed 100% of such cost plus reasonable fees and expenses incurred in
connection with the acquisition or construction of such asset and for the
refinancing of such indebtedness and (c) any such Lien shall not extend to or
cover any property or assets other than such item of property or assets, any
improvements thereto and the proceeds thereof; (vii) leases or subleases granted
to others that do not materially interfere with the ordinary course of business
of the Issuer and its Restricted Subsidiaries, taken as a whole; (viii) Liens
encumbering property or assets under construction arising from progress or
partial payments by a customer of the Issuer or its Restricted Subsidiaries
relating to such property or assets; (ix) any interest or title of a lessor in
the property subject to any Capitalized Lease or operating lease; (x) Liens
arising from filing financing statements
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<PAGE>
regarding leases or the equivalent thereof of any non-U.S. jurisdiction; (xi)
Liens in favor of the Issuer or any Restricted Subsidiary; (xii) Liens securing
any real property or other assets of the Issuer or any Subsidiary of the Issuer
in favor of the France or the government of the jurisdiction of incorporation of
any such Subsidiary, or any department, agency, instrumentality or political
subdivision thereof, in connection with the financing of industrial revenue bond
facilities or of any equipment or other property designed primarily for the
purpose of air or water pollution control; provided, however, that any such Lien
on such facilities, equipment or other property shall not apply to any other
assets of the Issuer or such Subsidiary of the Issuer; (xiii) Liens arising from
the rendering of a final judgment or order against the Issuer or any Restricted
Subsidiary of the Issuer that does not give rise to an Event of Default; (xiv)
Liens securing reimbursement obligations with respect to letters of credit that
encumber documents and other property relating to such letters of credit and the
products and proceeds thereof; (xv) Liens in favor of customs and revenue
authorities arising as a matter of law to secure payment of customs duties in
connection with the importation of goods; (xvi) Liens encumbering customary
initial deposits and margin deposits, and other Liens that are either within the
general parameters customary in the industry or incurred in the ordinary course
of business or otherwise permitted under the terms of the Facilities Agreement,
in each case, securing Indebtedness under Interest Rate Agreements and Currency
Agreements, and forward contracts, options, future contracts, future options or
similar agreements or arrangements designed to protect the Issuer or any of its
Restricted Subsidiaries from fluctuations in the price of commodities; (xvii)
Liens arising out of conditional sale, title retention, consignment or similar
arrangements for the sale of goods entered into by the Issuer or any of its
Restricted Subsidiaries in the ordinary course of business of the Issuer and its
Restricted Subsidiaries; (xviii) Liens on or sales of receivables; and (xix)
Liens, if any, of the Paying Agents pursuant to the Notes and the Paying Agency
Agreement.
"Person" means any individual, corporation, partnership, joint venture,
trust, unincorporated organization or government or any agency or political
subdivision thereof.
"Preferred Stock" means, with respect to any Person, any and all shares,
interests, participations or other equivalents (however designated) of such
Person's preferred or preference stock, whether now outstanding, or issued after
the Issue Date, and including, without limitation, all classes and series of
preferred or preference stock of such Person.
"Principal Property" means any manufacturing, processing or smelting plant,
warehouse or other building used by the Issuer or any Restricted Subsidiary,
other than a plant, warehouse or other building that, in the good faith opinion
of the Board of Directors as reflected in a Board Resolution, is not of material
importance to the respective businesses conducted by the Issuer or any
Restricted Subsidiary as of the date such Board Resolution is adopted.
"Rating Agencies" means (i) S&P and (ii) Moody's or (iii) if S&P or Moody's
or both shall not make a rating of the Notes publicly available, a nationally
recognized securities rating agency or agencies, as the case may be, selected by
the Issuer, which shall be substituted for S&P or Moody's or both, as the case
may be.
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"Rating Category" means (i) with respect to S&P, any of the following
categories: BB, B, CCC, CC, C and D (or equivalent successor categories); (ii)
with respect to Moody's, any of the following categories: Ba, B, Caa, Ca, C and
D (or equivalent successor categories); and (iii) the equivalent of any such
category of S&P or Moody's used by another Rating Agency. In determining whether
the rating of the Notes has decreased by one or more gradations, gradations
within Rating Categories (+ and - for S&P; 1, 2 and 3 for Moody's; or the
equivalent gradations for another Rating Agency) shall be taken into account
(e.g., with respect to S&P, a decline in rating from BB+ to BB, as well as from
BB- to B+, will constitute a decrease of one gradation).
"Rating Date" means the date which is 90 days prior to the earlier of (i) a
Change of Control and (ii) public notice of the occurrence of a Change of
Control or of the intention by the Issuer to effect a Change of Control.
"Rating Decline" means the occurrence of the following on, or within 90
days after, the date of public notice of the occurrence of a Change of Control
or of the intention by the Issuer to effect a Change of Control (which period
shall be extended so long as the rating of the Notes is under publicly announced
consideration for possible downgrade by any of the Rating Agencies): (a) in the
event the Notes are rated by either Moody's or S&P on the Rating Date as
Investment Grade, the rating of the Notes by both Rating Agencies shall be below
Investment Grade, or (b) in the event the Notes are rated below Investment Grade
by both Rating Agencies on the Rating Date, the rating of the Notes by either
Rating Agency shall be decreased by one or more gradations (including gradations
within Rating Categories as well as between Rating Categories).
"Receivables Purchase Facility" means the receivables purchase facility
established by the Issuer and certain of its subsidiaries with Citibank N.A.
"Receivables Sales Agreement" means any agreement providing for the
purchase, factoring or other disposition of accounts receivable of the Issuer or
any Subsidiary, whether or not there is any recourse against the Issuer or any
Subsidiary with respect thereto; provided that such purchase, factoring or other
disposition shall qualify as a sale of assets under U.S. generally accepted
accounting principles in effect on the issue date and the obligations of the
Issuer and its Subsidiaries under such agreement and related documentation are
not required to be recorded on their balance sheet (except for any reserves
required as a result of recourse against the Issuer or any of its Subsidiaries)
under U.S. generally accepted accounting principles in effect on the Issue Date.
"Receivables Sales Transaction" means any transaction or series of
transactions pursuant to which the Issuer or any Subsidiary, in one or more
steps, transfers receivables and related assets to a purchaser under a
Receivables Sale Agreement.
"Redeemable Stock" means, with respect to any Person, any Capital Stock of
such Person which, by its terms (or by the terms of any security into which it
is convertible or for which it is exchangeable), or upon the happening of any
event, matures or is mandatorily redeemable, pursuant to a sinking fund
obligation or otherwise, or is exchangeable for Indebtedness, or is redeemable
at
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the option of the holder thereof, in whole or in part, on or prior to the final
maturity date of the Notes.
"Redemption Date" means, with respect to any Note, the date on which such
Note is to be redeemed by the Issuer pursuant to the terms of the Note.
"Restricted Subsidiary" means any Subsidiary of the Issuer (including any
newly acquired or newly formed Subsidiary of the Issuer) other than an
Unrestricted Subsidiary.
"Senior Subordinated Debentures" means the 12 1/4% Senior Subordinated
Deferred Coupon Debentures Due June 2004 of Exide Parent.
"Significant Subsidiary" means, at any date of determination, any
Restricted Subsidiary of the Issuer that, together with its Subsidiaries, (i)
for the most recent fiscal year of the Issuer, account for more than 10% of the
consolidated revenues of the Issuer and its Restricted Subsidiaries or (ii) as
of the end of such fiscal year, was the owner of more than 10% of the
consolidated assets of the Issuer and its Restricted Subsidiaries, all as set
forth on the most recently available consolidated financial statements of the
Issuer for such fiscal year.
"Sonnenschein" means Sonnenschein GmbH and its successors.
"S&P" means Standard & Poor's Ratings Group and its successors.
"Stated Maturity" means (i) with respect to any debt security, the date
specified in such debt security as the fixed date on which the final installment
of principal of such debt security is due and payable and (ii) with respect to
any scheduled installment of principal of or interest on any debt security, the
date specified in such debt security as the fixed date on which such installment
is due and payable.
"Subordinated Indebtedness" means any Indebtedness of the Issuer or any of
its Restricted Subsidiaries which is expressly subordinated in right of payment
to the Notes or any other unsubordinated Indebtedness of the Issuer or its
Restricted Subsidiaries.
"Subsidiary" means, with respect to any Person, any corporation,
association or other business entity (i) of which outstanding Capital Stock
having at least a majority of the votes entitled to be cast in the election of
directors is owned, directly or indirectly, by such Person and one or more other
Subsidiaries of such Person, or (ii) of which at least a majority of voting
interest is owned, directly or indirectly, by such Person and one or more other
Subsidiaries of such Person.
"Tax" means any tax, duty, levy, impost, assessment or other governmental
charge (including penalties, interest and other liabilities related thereto).
"Taxing Authority" means any government or political subdivision or
territory or possession
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of any government or any authority or agency therein or thereof having power to
tax.
"Trade Payables" means, with respect to any Person, any accounts payable or
any other Indebtedness or monetary obligation to trade creditors created,
assumed or Guaranteed by such Person or any of its Subsidiaries arising in the
ordinary course of business in connection with the acquisition of goods or
services.
"Transaction Date" means, with respect to the Incurrence of any
Indebtedness by the Issuer or any of its Restricted Subsidiaries, the date such
Indebtedness is to be Incurred and, with respect to any Basket Payment, the date
such Basket Payment is to be made.
"Tudor" means Sociedad Espanola del Acumulador Tudor, S.A. and its
successors.
"Unrestricted Subsidiary" means (i) any Subsidiary of the Issuer that at
the time of determination shall be designated an Unrestricted Subsidiary by the
Board of Directors in the manner provided below and (ii) any Subsidiary of an
Unrestricted Subsidiary. The Board of Directors may designate any Subsidiary of
the Issuer (including any newly acquired or newly formed Subsidiary of the
Issuer) to be an Unrestricted Subsidiary unless such Subsidiary owns any Capital
Stock of, or owns or holds any Lien on any property of, the Issuer or any other
Subsidiary of the Issuer that is not a Subsidiary of the Subsidiary to be so
designated; provided that either (A) the Subsidiary to be so designated has
total assets of FF10,000 or less or (B) if such Subsidiary has assets greater
than FF10,000 that such designation would be permitted under Section 7(c). The
Board of Directors may designate any Unrestricted Subsidiary to be a Subsidiary
of the Issuer; provided that immediately after giving effect to such designation
(x) the Issuer could Incur FF1.00 of additional Indebtedness under the first
paragraph of the "Limitation on Indebtedness" covenant described below and (y)
no Event of Default, or event or condition that after notice or passage of time
or both would become an Event of Default, shall have occurred and be continuing.
Any such designation by the Board of Directors shall be evidenced to the Paying
Agents by promptly filing with each of the Paying Agents a copy of the Board
Resolution giving effect to such designation and an Officers' Certificate
certifying that such designation complied with the foregoing provisions.
"Voting Stock" means, with respect to any Person, Capital Stock of any
class or kind ordinarily having the power to vote for the election of Executive
Committee members, managing directors, managers or other voting members of the
governing body of such Person.
"Wholly Owned Subsidiary" means, with respect to any Person, any Subsidiary
of such Person if at least 98.5% of the Common Stock or other similar equity
ownership interests (but not including Preferred Stock) in such Subsidiary
(other than any director's qualifying shares or Investments by foreign nationals
mandated by applicable law) is owned directly or indirectly by such Person;
provided that (i) with respect to Tudor, the Issuer directly or indirectly owns
at least 89% of the Common Stock or other similar equity ownership interest (but
not including Preferred Stock) in Tudor (other than director's qualifying shares
or Investments by foreign nationals mandated by applicable law) and (ii) with
respect to Sonnenschein, the Issuer directly or indirectly owns at least
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74.5% of the Common Stock or other similar equity ownership interest (but not
including Preferred Stock) in Sonnenschein (other than director's qualifying
shares or Investments by foreign nationals mandated by applicable law).
8. Defeasance. (a) The Issuer and Exide Parent will be deemed to have
paid and will be discharged from any and all obligations in respect of the Notes
and the provisions of the Paying Agency Agreement will no longer be in effect
with respect to the Notes on the 123rd day after the deposit described below if,
(1) the Issuer has deposited with the Paying Agents, in trust, money
and/or Federal Republic of Germany Obligations that through the payment of
interest and principal in respect thereof in accordance with their terms will
provide money in an amount sufficient to pay the principal of, premium, if
any, and accrued interest on the Notes on the Stated Maturity of such payments
in accordance with the terms of the Paying Agency Agreement and the Notes,
(2) the Issuer has delivered to the Paying Agents (i) either an Opinion of
Counsel to the effect that Holders will not recognize income, gain or loss for
federal income tax purposes as a result of the Issuer's exercise of its option
under this Section 8(a) and will be subject to U.S. federal income tax on the
same amount and in the same manner and at the same times as would have been
the case if such deposit, defeasance and discharge had not occurred, which
Opinion of Counsel must be accompanied by a ruling of the IRS to the same
effect or a change in applicable U.S. federal income tax law after the date of
the Paying Agency Agreement or a ruling directed to the Paying Agents received
from the IRS to the same effect as the aforementioned Opinion of Counsel and
(ii) an Opinion of Counsel to the effect that the creation of the defeasance
trust does not violate the Investment Company Act of 1940 and after the
passage of 123 days following the deposit, the trust fund will not be subject
to the effect of Section 547 of the United States Bankruptcy Code or Section
15 of the New York Debtor and Creditor Law,
(3) immediately after giving effect to such deposit on a pro forma basis,
no Event of Default, or event that after the giving of notice or lapse of time
or both would become an Event of Default, shall have occurred and be
continuing on the date of such deposit or during the period ending on the
123rd day after the date of such deposit, and such deposit shall not result in
a breach or violation of, or constitute a default under, any other agreement
or instrument to which the Issuer is a party or by which the Issuer is bound,
(4) if at such time the Notes are listed on a national securities
exchange, the Issuer has delivered to the Paying Agents an Opinion of Counsel
to the effect that the Notes will not be delisted as a result of such deposit,
defeasance and discharge, and
(5) the Issuer has delivered to each Paying Agent an Officer's Certificate
and an Opinion of Counsel, in each case stating that all conditions precedent
provided for herein
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relating to the satisfaction and discharge of the Issuer's obligations under
the Notes and the Paying Agency Agreement have been complied with.
Notwithstanding the foregoing, the Issuer's obligations in Sections 3, 4,
6, 9, 11, 12, 13, and 15 of the Paying Agency Agreement shall survive until the
Notes mature or are redeemed.
After such deposit, the Paying Agents upon request shall acknowledge in
writing the discharge of the Issuer's obligations under this Note, and the
Paying Agency Agreement except for those surviving in the immediately preceding
paragraph.
(b) The provisions of the Notes will no longer be in effect with respect
to clauses (iii) and (iv) of Section 5, the covenants contained in Section 7,
Section 6(a)(3) hereof with respect to such covenants and clauses (iii) and (iv)
of Section 5 and clauses (a)(4), (a)(5) and (a)(9) of Section 6 hereof shall be
deemed not to be Events of Default, upon, the deposit with the Paying Agents in
trust, of money and/or Federal Republic of Germany Obligations that through the
payment of interest and principal in respect thereof in accordance with their
terms will provide money in an amount sufficient to pay the principal of,
premium, if any, and accrued interest on the Notes on the Stated Maturity of
such payments in accordance with the terms of the Paying Agency Agreement and
the Notes, the satisfaction of the provisions described in clauses (2)(ii), (3),
(4) and (5) of the preceding section and the delivery by the Issuer to the
Paying Agents of an Opinion of Counsel to the effect that, among other things,
the Holders will not recognize income, gain or loss for federal income tax
purposes as a result of such deposit and defeasance of certain covenants and
Events of Default and will be subject to federal income tax on the same amount
and in the same manner and at the same times as would have been the case if such
deposit and defeasance had not occurred.
In the event the Issuer exercises its option to omit compliance with
certain covenants and provisions of the Paying Agency Agreement or the Notes as
described in the immediately preceding paragraph and the Notes are declared due
and payable because of the occurrence of an Event of Default that remains
applicable, and the amount of money and/or Federal Republic of Germany
Obligations on deposit with the Paying Agents are sufficient to pay amounts due
on the Notes at the time of their Stated Maturity but not sufficient to pay
amounts due on the Notes at the time of the acceleration resulting from such
Event of Default, the Issuer shall remain liable for such payments.
9. Replacement, Exchange and Transfer of Notes. (a) In case any Note
shall become mutilated, defaced or apparently destroyed, lost or stolen, the
Issuer may execute, and, upon the request of the Issuer, the Registrar or Co-
Registrar, as the case may be, shall authenticate and deliver, a new Note
bearing a number not contemporaneously outstanding, in exchange and substitution
for the mutilated or defaced Note or in lieu of and in substitution for the
apparently destroyed, lost or stolen Note. In every case the applicant for a
substitute Note shall furnish to the Issuer and to any Transfer Agent such
security or indemnity as may be required by them to indemnify and defend and to
save each of them and any agent of the Issuer or any Transfer Agent harmless
and, in every case of destruction, loss or theft, evidence to their satisfaction
of the apparent destruction, loss or theft
B-42
<PAGE>
of such Note and of the ownership thereof. Upon the issuance of any substitute
Note, the Issuer may require the payment of a sum sufficient to cover any tax or
other governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Transfer Agents) connected
therewith.
(b) Upon the terms and subject to the conditions set forth in the Paying
Agency Agreement, and subject to paragraph 9(e) hereof, a Note or Notes may be
exchanged for an equal aggregate principal amount of Notes in different
Authorized Denominations by surrender of such Note or Notes to any Transfer
Agent or at the office of any other agent of the Issuer designated for such
purpose, duly endorsed or accompanied by a proper instrument of assignment and
transfer, together with a written request for the exchange.
(c) Upon the terms and subject to the conditions set forth in the Paying
Agency Agreement, and subject to paragraph 9(e) hereof, a registered Note may be
transferred in whole or in part (in Authorized Denominations) by the Holder or
Holders surrendering the Note for registration of transfer at the office of any
Transfer Agent or at the office of any other agent of the Issuer designated for
such purpose, duly endorsed or accompanied by an executed instrument of
assignment and transfer. A bearer Note may be transferred by delivery thereof.
(d) The costs and expenses of effecting any exchange or registration of
transfer pursuant to the foregoing provisions, except for the expenses of
delivery by other than regular mail (if any) and except for the payment of a sum
sufficient to cover any tax or other governmental charge or insurance charges
that may be imposed in relation thereto, will be borne by the Issuer.
(e) The Transfer Agents or the Registrar may decline to accept any request
for an exchange or registration of transfer during the period of 15 days
preceding (i) the due date for any payment of interest on the Notes or (ii) the
date on which the Notes are scheduled for redemption.
10. Modifications and Amendments. (a) Modifications and amendments of
the Notes and the Paying Agency Agreement may be made by the Issuer, Exide
Parent and the Paying Agents with the consent of the Holders of not less than a
majority in aggregate principal amount of the outstanding Notes; provided,
however, that no such modification or amendment may, without the consent of each
Holder affected thereby: (i) change the Stated Maturity of the principal of, or
any installment of interest on, any Note; (ii) reduce the principal amount of,
or interest on, any Note or Additional Amount payable with respect thereto, or
reduce the amount payable thereon in the event of redemption or default; (iii)
change the currency in which the principal of, or interest on, any Note or
Additional Amount payable with respect thereto, except for any currency change
as described in Section 10(b)(vi) hereof; (iv) change the obligation of the
Issuer or Exide Parent to pay Additional Amounts (except as otherwise provided
by the Notes); (v) impair the right to institute suit for the enforcement of any
such payment on or with respect to the Notes; or (vi) reduce the percentage of
aggregate principal amount of Notes outstanding necessary to approve any
modification or amendment or to waive any future compliance or past defaults or
reduce the quorums required at any meeting of Holders or reduce the percentage
of aggregate principal amount
B-43
<PAGE>
of Notes outstanding necessary to rescind or annul any declaration of the
principal or accrued interest on the Notes to be due and payable.
(b) Notwithstanding the foregoing, without the consent of any Holder, the
Issuer, Exide Parent and the Paying Agents may, by supplemental fiscal and
paying agency agreement, modify or amend the Paying Agency Agreement and the
Notes (i) to evidence the succession of another Person to the Issuer, Exide
Parent or any other obligor on the Notes and the assumption by any such
successor of the covenants of the Issuer, Exide Parent or such obligor in the
Paying Agency Agreement, in the Notes, or in any Guarantee in accordance with
Section 5 hereof; (ii) to add to the covenants of the Issuer, Exide Parent or
any other obligor on the Notes for the benefit of the Holders or to surrender
any right or power conferred upon the Issuer, Exide Parent or any other obligor
on the Notes in the Paying Agency Agreement or the Notes or in any Guarantees;
(iii) to cure any ambiguity, or to correct or supplement any provision in the
Paying Agency Agreement, the Notes, or any Guarantee which may be defective or
inconsistent with any other provision in the Paying Agency Agreement, the Notes,
or any Guarantee or make any other provisions with respect to matters or
questions arising under the Paying Agency Agreement, the Notes, or any Guarantee
provided that, in each case, the Issuer shall have delivered one or more
resolutions by the Board of Directors of the Issuer, certified to have been duly
adopted by such Board and to be in full force and effect, to the Paying Agents
to the effect that such provisions do not adversely affect the rights of any
Holder of the Notes in any material respect; (iv) to evidence and provide the
acceptance of the appointment of a successor Paying Agent under the Paying
Agency Agreement; (v) to modify the resale restrictions applicable to the Notes
in order to comply with applicable law; or (vi) to facilitate the introduction
of the Euro and exchange the Deutsche mark denominated Notes for Euro
denominated Notes in a manner not adverse to the Holders of the Notes.
(c) In connection with any amendment to this Agreement, the Paying Agents
shall be entitled to receive an Opinion of Counsel stating that such amendment
is authorized by this Agreement.
11. Non-business Days; Calculation of Interest. Interest in respect of any
period of less than one year shall be calculated on the basis of a 360-day year
of twelve 30-day months.
12. Paying Agents, Transfer Agents and Registrars. In acting under the
Paying Agency Agreement and in connection with the Notes, the Paying Agents,
Transfer Agents and Registrars are acting solely as agents of the Issuer and
Exide Parent and do not assume any obligation towards or relationship of agency
or trust for or with the owners or holders of the Notes, except that any funds
held by any Paying Agent or Registrar for payment of principal of or interest on
the Notes, or Additional Amounts with respect thereto, shall be held in trust by
it for such owners and holders and applied as set forth herein, but need not be
segregated from other funds held by it, except as required by law. For a
description of the duties and the immunities and rights of the Paying Agents,
Transfer Agents and Registrars under the Paying Agency Agreement, reference is
made to the Paying Agency Agreement, and the obligations of the Paying Agents,
Transfer Agents and Registrars to the holder hereof are subject to such
immunities and rights.
B-44
<PAGE>
13. Notices. Where this Notes provides for notice of any event to Holders
by the Issuer or Paying Agents, such notice shall be sufficiently given (unless
otherwise herein expressly provided): to registered Holders, if in writing and
mailed, first-class postage (or, if first class mail is unavailable, by airmail)
prepaid, to each registered Holder at his address as it appears in the Register,
in each case not later than the latest date, and not earlier than the earliest
date, prescribed hereunder for the giving of such notice; or, to unregistered
Holders, if such notice is published in the following journals: (i) the
Bundesanzeiger and one mandatory nationwide newspaper (if practicable, the
Borsen-Zeitung) designated by the Frankfurt Stock Exchange in Frankfurt am Main
in the German language; (ii) a leading daily newspaper (if practicable, The Wall
Street Journal (Eastern Edition)) printed in the English language and of general
circulation in New York; and (iii) a leading daily newspaper (if practicable,
the Financial Times (London Edition)) printed in the English language and of
general circulation in London, in each case, once in each of three successive
calendar weeks, the first publication to be not later than the latest date, and
not earlier than the earliest date, prescribed hereunder for the giving of such
notice. Any notice to registered Holders shall be deemed to have been given on
the fourth weekday after the date of mailing. Any notice to unregistered Holders
will become effective for all purposes on the date of its publication in the
Bundesanzeiger.
14. Governing Law. (a) The Notes shall be governed by and construed in
accordance with the laws of the State of New York without regard to principles
of conflict of laws, except as referred to in Section 16 of the Paying Agency
Agreement.
(b) Each of the Issuer and Exide Parent has submitted to the non-exclusive
jurisdiction of any New York State or United States Federal court sitting in the
Borough of Manhattan, New York, New York over any suit, action or proceeding
arising out of or relating to the Paying Agency Agreement or any Note. Each of
the Issuer and Exide Parent has appointed CT Corporation System, 1633 Broadway,
23rd Floor, New York, New York 10019, as its agent upon whom process must be
served in any such suit, action or proceeding.
15. No Recourse Against Others. No recourse for the payment of the
principal of or interest on any of the Notes or for any claim based thereon or
otherwise in respect thereof, and no recourse under or upon any obligation,
covenant or agreement of the Issuer in the Paying Agency Agreement or in the
Notes or because of the creation of any Indebtedness represented thereby, shall
be had against any incorporator, shareholder, officer, director, employee,
Executive Committee member or controlling person of the Issuer or Exide Parent
or of any successor Person thereof. Each Holder, by accepting the Notes, waives
and releases all such liability. The waiver and release are part of the
consideration for issuance of the Notes. Such waiver may not be effective to
waive liabilities under European or the U.S. federal securities laws and it is
the view of the SEC that such a waiver is against public policy.
B-45
<PAGE>
16. Authentication. This Note shall not become valid or obligatory until
the certificate of authentication hereon shall have been duly signed by the
Registrar or Co-Registrar acting under the Paying Agency Agreement.
17. Descriptive Headings. The descriptive headings appearing in these
terms and conditions are for convenience of reference only and shall not alter,
limit or define the provisions hereof.
B-46
<PAGE>
EXHIBIT C
[Form of Guarantee]
GUARANTEE OF EXIDE CORPORATION
FOR VALUE RECEIVED, EXIDE CORPORATION, a Delaware corporation (the
"Guarantor"), hereby unconditionally guarantees to all of the holders of the
9 1/8 Senior Notes due 2004 (the "Notes") of Exide Holding Europe S.A. (the
"Issuer") the due and punctual payment of such amount of the principal of and
interest (including, in case of default, interest on principal and, to the
extent permitted by applicable law, on overdue interest and including any
additional interest required to be paid according to the terms of the Notes) on
the Notes, as is required in Section 7(b) of the Notes, when and as the same
shall become due and payable, whether at maturity, upon redemption or otherwise,
according to the terms thereof and of the Paying Agency Agreement referred to
therein. If the Issuer fails to punctually to pay any such principal or
interest, the Guarantor hereby agrees to cause any such payment to be made
punctually when and as the same shall become due and payable, whether at
maturity, upon redemption or otherwise, and as if such payment were made by the
Issuer. The amount of this Guarantee that shall be applicable to any particular
Note shall be computed as provided in Section 7(b) of the Notes.
The Guarantor hereby agrees that its obligations hereunder shall be direct,
unconditional, unsubordinated and unsecured, irrespective of the validity,
regularity or enforceability of the Notes or said Paying Agency Agreement, the
absence of any action to enforce the same, any waiver or consent by the holder
of said Note with respect to any provisions thereof, the recovery of any
judgment against the Issuer or any action to enforce the same, or any other
circumstance which might otherwise constitute a legal or equitable discharge or
defense of a guarantor. The Guarantor hereby waives diligence, presentment,
demand of payment, filing of claims with a court in the event of insolvency or
bankruptcy of the Issuer, any right to require a proceeding first against the
Issuer, protest, notice and all demands whatsoever and covenants that this
Guarantee will not be discharged except by complete performance of the
obligations contained in the Notes guaranteed pursuant to this Guarantee.
The Guarantor hereby waives and shall not in any manner whatsoever claim or
take the benefit or advantage of any rights of reimbursement, indemnity or
subrogation or any other rights against the Issuer or any of its Subsidiaries.
This Guarantee shall be governed by the laws of the State of New York.
The Guarantor hereby certifies and warrants that all acts, conditions and
things required to be done and performed and to have happened precedent to the
creation and issuance of this Guarantee and to constitute the same the valid
obligation of the Guarantor have been done and performed and have happened in
due compliance with all applicable laws.
<PAGE>
IN WITNESS WHEREOF, EXIDE CORPORATION has caused this Guarantee to be
executed in its corporate name by an authorized officer of the Guarantor.
Dated as of [__________]
EXIDE CORPORATION
By
--------------------------------
Name:
Title:
C-2
<PAGE>
Schedule to Guarantee
---------------------
<TABLE>
<CAPTION>
Aggregate Amount
Date of Guarantee
- ---- ---------------------
<S> <C>
DM
</TABLE>
C-3
<PAGE>
EXHIBIT 10.1
================================================================================
RECEIVABLES PURCHASE AGREEMENT
dated as of March 31, 1997
Among
EXIDE U.S. FUNDING CORPORATION,
as Seller
and
THREE RIVERS FUNDING CORPORATION,
as Buyer
and
EXIDE CORPORATION,
as Servicer
================================================================================
<PAGE>
RECEIVABLES PURCHASE AGREEMENT
Table of Contents
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE I DEFINITIONS; CONSTRUCTION..................................... 1
1.01 Certain Definitions........................................... 1
1.02 Interpretation and Construction...............................21
ARTICLE II AGREEMENT TO PURCHASE AND SELL................................22
2.01 Purchase Limits...............................................22
2.02 Amount of Purchases...........................................23
2.03 Reduction of the Maximum Net Investment and
Net Investment; Termination of the
Agreement...................................................23
2.04 Fees Payable to the Buyer.....................................24
ARTICLE III BUYER'S ALLOCATION............................................25
3.01 Buyer's Allocation............................................25
3.02 Frequency of Computation of the Buyer's
Allocation..................................................25
ARTICLE IV CLOSING PROCEDURES............................................26
4.01 Purchase and Sale Procedures..................................26
4.02 Conditions Precedent to the First
Purchase....................................................26
4.03 Conditions Precedent to Each Purchase and
Reinvestment................................................28
4.04 Purchase Price................................................29
4.05 Sale Without Recourse.........................................30
4.06 Non-Assumption by the Buyer of Obligations....................30
4.07 Character of Receivables Added to
Receivables Pools...........................................30
ARTICLE V SETTLEMENTS; ADJUSTMENTS......................................30
5.01 Settlement Statements.........................................30
5.02 Receivables Status............................................31
5.03 Non-Liquidation Settlements...................................31
5.04 Liquidation Settlements.......................................33
5.05 Allocation of Collections.....................................34
5.06 Deferred Purchase Price.......................................34
5.07 Treatment of Collections and Deemed
Collections.................................................35
</TABLE>
i
<PAGE>
<TABLE>
<S> <C> <C>
ARTICLE VI PROTECTION OF THE BUYER; ADMINISTRATION AND
COLLECTIONS...........................................36
6.01. Maintenance of Information and Computer
Records...............................................36
6.02. Protection of the Interests of the
Buyer.................................................36
6.03. Maintenance of the Location of Writings and
Records...............................................37
6.04. Information.............................................38
6.05. Performance of Undertakings Under the
Purchased Receivables;
Indemnification.......................................38
6.06. Administration and Collections;
Indemnification.......................................38
6.07. Complete Servicing Transfer.............................41
6.08. Lockboxes...............................................43
ARTICLE VII REPURCHASES BY SELLER...................................43
7.01. Repurchases.............................................43
7.02. Repurchase Price........................................44
7.03. Reassignment of Repurchased Receivables.................44
7.04. Obligations Not Affected................................44
ARTICLE VIII REPRESENTATIONS AND WARRANTIES..........................44
8.01. General Representations and Warranties of
the Seller............................................44
8.02. Representations and Warranties of the
Seller With Respect to Each Sale of
Receivables...........................................47
8.03. Representations and Warranties of the
Servicer..............................................48
ARTICLE IX COVENANTS...............................................50
9.01. Affirmative Covenants of the Seller.....................50
9.02. Negative Covenants of the Seller........................58
ARTICLE X TERMINATION.............................................60
10.01. Termination Events......................................60
10.02. Consequences of a Termination Event.....................64
ARTICLE XI MISCELLANEOUS...........................................64
11.01. Expenses................................................64
11.02. Payments................................................65
11.03. Indemnity for Taxes, Reserves and
Expenses..............................................65
11.04. Indemnity...............................................67
11.05. Holidays................................................70
11.06. Records.................................................70
</TABLE>
ii
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
11.07 Amendments and Waivers......................................70
11.08 No Implied Waiver; Cumulative Remedies......................71
11.09 No Discharge................................................71
11.10 Notices.....................................................71
11.11 Severability................................................72
11.12 Governing Law...............................................72
11.13 Prior Understandings........................................72
11.14 Survival....................................................72
11.15 Counterparts................................................73
11.16 Set-Off.....................................................73
11.17 Time of Essence.............................................74
11.18 Payments Set Aside..........................................74
11.19 No Petition.................................................74
11.20 No Recourse.................................................74
11.21 Tax Treatment...............................................75
</TABLE>
iii
<PAGE>
<TABLE>
<CAPTION>
Exhibits
<S> <C>
A Form of Certificate of Participation
B Form of Settlement Statement
C Form of Certificate of a Responsible Officer, required
pursuant to Section 4.02(e)
D Information required pursuant to Section 8.01(f)
E Intentionally Omitted
F Intentionally Omitted
G Form of Accounting Period Report, to be prepared
pursuant to Section 9.01(i)(1)
H Schedule of Accounting Periods
I Special Concentration Limits
J Form of Purchase Notice
K List of Permitted Lockbox Banks
L Dilution Horizons
M Excluded Obligors
</TABLE>
iv
<PAGE>
RECEIVABLES PURCHASE AGREEMENT
------------------------------
THIS RECEIVABLES PURCHASE AGREEMENT dated as of March 31, 1997 among
EXIDE U.S. FUNDING CORPORATION, a Delaware corporation (the "Seller"), THREE
RIVERS FUNDING CORPORATION, a Delaware corporation (the "Buyer") and EXIDE
CORPORATION, a Delaware corporation (the "Company").
WITNESSETH THAT:
WHEREAS, the Company in the ordinary course of its business generates
trade receivables resulting from the sale of merchandise and the rendering of
services to its customers; and
WHEREAS, the Company may from time to time transfer to the Seller such
receivables pursuant to the Sale Agreement dated as of March 31, 1997 between
the Company and the Seller, as the same may from time to time be amended,
supplemented or otherwise modified (the "Sale Agreement");
WHEREAS, the Seller may from time to time create pools of such
receivables; and
WHEREAS, the Buyer may from time to time purchase from the Seller
undivided percentage ownership interests in such pools of receivables pursuant
to and in accordance with the terms hereof;
NOW, THEREFORE, the parties hereto, in consideration of their mutual
covenants hereinafter set forth and intending to be legally bound hereby, agree
as follows:
ARTICLE I
DEFINITIONS; CONSTRUCTION
--------------------------
1.01. Certain Definitions. In addition to other words and terms
defined in the recitals hereof and elsewhere in this Agreement, as used herein,
the following words and terms shall have the following meanings respectively,
unless otherwise required by context:
"Account Balance" shall mean, in respect of each Receivable which is
included in the Receivables Pool, all amounts shown as owing by the related
Obligor on the
<PAGE>
accounting records of the Company and the Seller, and all other amounts which
are shown on the most recent Settlement Statement and in respect of which the
related Obligor is obligated, excluding each Defaulted Receivable.
"Accounting Period" shall mean (i) with respect to the Company Fiscal
Year ending on March 31, 1998, each period described in Exhibit H, and (ii) with
respect to each Seller Fiscal Year ending thereafter, such periods as shall be
designated by the Seller to the Buyer in accordance with the provisions of
Section 9.01(i)(6).
"Affected Party" shall mean each of the Buyer, any permitted assignee
of the Buyer, any bank or financial institution (including any assignees
thereof) providing a loan facility, line of credit, letter of credit or other
form of credit enhancement available to the Buyer to support the Buyer's
commercial paper notes, including, without limitation, the Banks, the Letter of
Credit Bank, any Funding Institution or any Enhancement Provider, or any
assignee of any of the Buyer's obligations to the Banks or the Letter of Credit
Bank, any Funding Institution or any Enhancement Provider, or under the Credit
Agreement or the Reimbursement Agreement, respectively, and the Agent.
"Affiliate" shall mean, with respect to a Person, any other Person
which directly or indirectly controls, is controlled by or is under common
control with such Person. The term "control" means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of a Person, whether through the ownership of voting securities, by
contract or otherwise.
"Agent" shall mean Mellon Bank, acting as agent for the Banks.
"Agreement" shall mean this Receivables Purchase Agreement, as the
same may from time to time be amended, supplemented or otherwise modified.
"Banks" shall mean the banks party to the Credit Agreement.
"Business Day" shall mean any day other than a Saturday, Sunday,
public holiday under the Laws of the Commonwealth of Pennsylvania or the State
of New York or other day on which banking institutions are authorized or
2
<PAGE>
obligated to close in the Commonwealth of Pennsylvania or the State of New York.
"Buyer's Allocation" shall have the meaning ascribed to such term in
Section 3.01 hereof.
"Certificate of Participation" shall mean, with respect to the
Participation Interest, the written evidence of the Buyer's interest in the
Receivables Pool related to such Participation Interest, in substantially the
form attached as Exhibit A hereto.
"Chief Executive Office" shall mean, with respect to the Seller or the
Company, the place where the Seller or the Company, as the case may be, is
located, within the meaning of Section 9-103(c)(2) of the Uniform Commercial
Code, as the same may from time to time be amended, supplemented or otherwise
modified, or any analogous provision of any successor statute or any analogous
provision of the Uniform Commercial Code in effect in the jurisdiction whose Law
governs the perfection of the Seller's ownership interest in any Receivable or
the Buyer's ownership interest in any Purchased Receivable.
"Closing Date" shall mean the date on which the Participation Interest
is initially purchased by the Buyer in the Receivables Pool pursuant to the
terms of this Agreement.
"Collateral Agent" shall mean Bankers Trust Company, as collateral
agent for the Banks, the Depositary, the Letter of Credit Bank, the Funding
Institutions, the Enhancement Providers and the holders from time to time of the
commercial paper notes of the Buyer.
"Collections" shall mean, for any Purchased Receivable as of any date,
(i) the sum of all amounts, whether in the form of cash, checks, drafts, or
other instruments (excluding promissory notes), received by the Company, the
Seller or the Servicer or in a Permitted Lockbox in payment of, or applied to,
any amount owed by an Obligor on account of such Purchased Receivable (including
but not limited to all amounts received on account of any Defaulted Receivable),
including, without limitation, all amounts received on account of such Purchased
Receivable and other fees and charges, and (ii) all amounts deemed to have been
received by the Company, the Seller or the Servicer as a Collection pursuant to
Sections 5.03(c) or 6.04 hereof.
3
<PAGE>
"Company Fiscal Year" shall mean the fiscal year of the Company and
the Seller for accounting purposes.
"Company Credit Agreement" shall have the meaning assigned to such
term in Section 4.02(h) hereof.
"Company Entity" shall have the meaning assigned to such term in
Section 9.01(s) hereof.
"Complete Servicing Transfer" shall have the meaning ascribed to such
term in Section 6.07 hereof.
"Contract" shall mean a written or oral contract, which shall be
legally binding, between the Company and an Obligor which gives rise to a
receivable arising from the sale by the Company of goods or services in the
ordinary course of the Company's business.
"Cost of Funds" shall mean, with respect to any Settlement Period, an
amount, as notified in writing by the Buyer to the Seller on or prior to the
related Settlement Date, equal to the interest or discount cost for funds
borrowed or obtained during such Settlement Period, either from the issuance of
commercial paper notes, the taking of loans or otherwise, by the Buyer for the
purpose of maintaining or acquiring the Participation Interest, including in the
computation of such cost any dealer's discount or fees and any and all other
fees which are attributable to such borrowing and are specified from time to
time in writing by the Buyer to the Seller, but excluding from such computation
general overhead charges or administrative expenses, such as rating agency fees,
issuing and paying agency fees and commitment fees.
"Credit Agreement" shall mean the Amended and Restated Credit
Agreement dated as of November 17, 1995 among the Buyer, the Banks and the
Agent, as the same may from time to time be amended, supplemented or otherwise
modified and in effect.
"Credit and Collection Policy" shall mean the objective receivable
credit and collection policies utilized by the Company, the Seller and the
Servicer as of the date hereof and approved by the Buyer, as the same may be
modified in strict compliance with this Agreement.
4
<PAGE>
"Credit Enhancement Floor" shall mean, with respect to any Settlement
Date, the sum of (a) fifteen percent (15%), plus (b) the aggregate of the
products for each type of Dilution Factor of (i) the Expected Dilution with
respect to such type of Dilution Factor as of such Settlement Date and (ii) the
Dilution Horizon Ratio with respect to such type of Dilution Factor as of such
Settlement Date.
"Credit Enhancement Reserve" shall mean, with respect to any
Settlement Date, the positive result of (i) the product of (A) the greater of
(1) the sum of (x) the aggregate of the Dilution Reserves with respect to each
type of Dilution Factor as of such Settlement Date, plus (y) the Credit Loss
Reserve as of such Settlement Date and (2) the Credit Enhancement Floor as of
such Settlement Date, and (B) the positive result, if any, of (1) the aggregate
outstanding balance of Eligible Receivables in the Receivables Pool as of the
last day of the full Accounting Period immediately preceding such Settlement
Date, minus (2) the sum of (x) the Settlement Period Amount with respect to the
related Settlement Period times 6, plus (y) the Servicer's Compensation Reserve
as of such Settlement Date, plus (z) the Overbill Reserve as of such Settlement
Date, minus (3) the aggregate amount by which the Account Balance of Eligible
Receivables of each Obligor as of the last day of the full Accounting Period
immediately preceding such Settlement Date exceeds the Standard Concentration
Limit or the Special Concentration Limit for such Obligor, minus (ii) the lesser
of (x) $3,000,000 and (y) 50% of the product of the Dilution Reserve with
respect to warranty claims and the aggregate outstanding Account Balance of
Eligible Receivables as of the last day of the full Accounting Period
immediately preceding such Settlement Date.
"Credit Loss Reserve" shall mean, with respect to any Settlement Date,
the product, expressed as a percentage, of (i) 1.5, (ii) the Loss Ratio as of
such date and (iii) the Loss Horizon Ratio as of such Settlement Date.
"Days Sales Outstanding" shall mean, (i) on the Closing Date, the
number of days in the period ending on the Closing Date and commencing on such
earlier date such that the aggregate amount of net sales of the Company during
such period is equal to the aggregate Account Balances of all Eligible
Receivables outstanding on the Closing Date (after giving effect to the Purchase
occurring on the Closing Date) and (ii) at any other time of determination, the
number of days in the period ending on the last day of the most
5
<PAGE>
recently ended Accounting Period and commencing on such earlier date such that
the aggregate amount of net sales of the Company during such period is equal to
the aggregate Account Balances of all Eligible Receivables outstanding on such
last day.
"Default Ratio" shall mean, with respect to any Settlement Date, a
fraction, expressed as a percentage, the numerator of which is the aggregate
outstanding balance of Eligible Receivables which were in the Receivables Pool
as of the first day of the full Accounting Period immediately preceding such
Settlement Date and which became Defaulted Receivables during such Accounting
Period and the denominator of which is the aggregate amount of net sales of the
Company during the fifth full Accounting Period immediately preceding such
Settlement Date.
"Defaulted Receivable" shall mean a Purchased Receivable (a) the
Obligor of which is not entitled to purchase additional merchandise or services
from the Company, by reason of any default or nonperformance by such Obligor,
under the terms of the Credit and Collection Policy, (b) which has become
uncollectible or has been written off the books of the Company or the Seller by
reason of such Obligor's inability to pay, as determined by the Buyer or the
Servicer, in either case in accordance with the Credit and Collection Policy,
(c) in respect of which an Event of Bankruptcy has occurred with respect to the
related Obligor or (d) in respect of which the Obligor is more than 90 days past
due.
"Deferred Purchase Price" shall mean the amount calculated pursuant to
Section 5.06 hereof.
"Depositary" shall mean Bankers Trust Company.
"Dilution" shall mean a reduction of the Account Balance of an
Eligible Receivable given to an Obligor in accordance with the Credit and
Collection Policy as a result of a Dilution Factor.
"Dilution Factor" shall mean each type of factor set forth on Exhibit
L resulting in, or which may result in, a Dilution.
"Dilution Horizon" shall mean, with respect to any type of Dilution
Factor, the number indicated opposite such type of Dilution Factor on Exhibit L;
provided, that the
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Buyer may at any time, in its reasonable discretion, change the Dilution Horizon
for any type of Dilution Factor through the delivery by the Buyer to the Seller
of an amended Exhibit L.
"Dilution Horizon Ratio" shall mean, as of any Settlement Date with
respect to any type of Dilution Factor, a fraction, expressed as a percentage,
the numerator of which is the aggregate amount of net sales of the Company
during the number of full Accounting Periods immediately preceding such
Settlement Date equal to the Dilution Horizon with respect to such type of
Dilution Factor and the denominator of which is the aggregate outstanding
balance of Eligible Receivables in the Receivables Pool as of the last day of
the full Accounting Period immediately preceding such Settlement Date. The
Buyer and the Seller hereby agree that the Dilution Horizon Ratio with respect
to a Dilution Factor which has a Dilution Horizon equal to zero shall be zero.
"Dilution Ratio" shall mean, as of any Settlement Date with respect to
any type of Dilution Factor, a fraction, expressed as a percentage, the
numerator of which is the aggregate dollar amount of Dilutions attributable to
such type of Dilution Factor recognized by the Company or the Seller during the
full Accounting Period immediately preceding such Settlement Date and the
denominator of which is the aggregate amount of net sales of the Company during
the "N"th full Accounting Period immediately preceding such Settlement Date,
where "N" is equal to the Dilution Horizon with respect to such type of Dilution
Factor. The Buyer and the Seller hereby agree that the Dilution Ratio with
respect to a Dilution Factor which has a Dilution Horizon equal to zero shall be
zero.
"Dilution Reserve" shall mean, as of any Settlement Date with respect
to any type of Dilution Factor, the product of (a) the sum of (i) 1.5 times the
Expected Dilution with respect to such type of Dilution Factor as of such
Settlement Date, plus (ii) the product of (x) the positive result, if any, of
the Dilution Spike Ratio with respect to such type of Dilution Factor as of such
Settlement Date, minus such Expected Dilution, and (y) a fraction, the numerator
of which is such Dilution Spike Ratio and the denominator of which is such
Expected Dilution, and (b) the Dilution Horizon Ratio with respect to such type
of Dilution Factor as of such Settlement Date.
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"Dilution Spike Ratio" shall mean, as of any Settlement Date with
respect to any type of Dilution Factor, the highest Dilution Ratio with respect
to such type of Dilution Factor for any full Accounting Period during the period
of twelve (12) consecutive full Accounting Periods immediately preceding such
Settlement Date.
"Dispute" shall mean any dispute, deduction, claim, offset, defense,
counterclaim, set-off or obligation of any kind, contingent or otherwise,
relating to a Receivable, including, without limitation, any dispute relating to
goods or services already paid for.
"Dollar", "Dollars" and the symbol "$" shall mean lawful money of the
United States of America.
"Duff" shall mean Duff & Phelps Credit Rating Co.
"Eligible Receivable" shall mean any Receivable which:
(a) duly complies with all applicable Laws and other legal
requirements, whether Federal, state or local;
(b) constitutes an "account" or a "general intangible" as defined in
the Uniform Commercial Code as in effect in the State of New York
and the jurisdiction whose Law governs the perfection of the
Buyer's Participation Interest in such Receivable;
(c) (i) was originated by the Company in the ordinary course of the
Company's business in a transaction which complied with the Credit
and Collection Policy, or (ii) was originated by a business
subsequently acquired by or merged into the Company in a
transaction which complied with the policies and procedures of
such business in effect at the time such Receivable was
originated, provided that the eligibility of such Receivable is
approved in advance in writing by the Agent;
(d) arises from a Contract and has been billed, or will be billed to
the related Obligor, or in respect of which the related Obligor is
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otherwise liable, in accordance with the terms of such Contract;
(e) constitutes a legal, valid, binding and irrevocable payment
obligation of the related Obligor, enforceable in accordance with
its terms;
(f) provides for payment in Dollars by the related Obligor;
(g) is payable into a Permitted Lockbox or directly to the Servicer or
the Seller;
(h) has not been repurchased by the Seller pursuant to the repurchase
provisions of this Agreement;
(i) if it were a Purchased Receivable, would not be a Defaulted
Receivable;
(j) has an Obligor who is entitled to purchase additional merchandise
or receive additional services from the Company under the terms of
the Credit and Collection Policy; provided, that a Receivable
which has an Obligor who is not entitled to purchase additional
merchandise or receive additional services from the Company
because such Obligor has reached the credit limit established by
the Company shall be deemed to satisfy this paragraph (j);
(k) was not originated in or subject to the Laws of a jurisdiction
whose Laws would make such Receivable, the related Contract, the
transfer of such Receivable by the Company to the Seller pursuant
to the Sale Agreement or the sale of the Participation Interest in
such Receivable to the Buyer hereunder unlawful, invalid or
unenforceable;
(l) is owned solely by the Seller free and clear of all Liens, except
for the Lien arising in connection with this Agreement and the
Security Agreement;
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(m) other than with respect to warranty claims being handled in
accordance with the Credit and Collection Policy, no rejection or
return of the goods or services which give rise to such Receivable
has occurred and all goods and services in connection therewith
have been finally performed or delivered to and accepted by the
Obligor without Dispute;
(n) is not an obligation of the United States, any state or
municipality or any agency or instrumentality or political
subdivision thereof, unless otherwise agreed to in writing by the
Buyer, the Seller and the Affected Parties;
(o) is not subject to any contractual right of set-off other than with
respect to Overbill Reserves;
(p) is an obligation representing part or all of the sales price of
merchandise or services;
(q) such Receivable must, by its terms, require full payment in
respect thereof to be paid no later than 180 days after the date
the original invoice with respect thereto was sent to the related
Obligor;
(r) has an Obligor who is located in the United States;
(s) (i) has an Obligor who is not an Affiliate of the Company or the
Seller or (ii) which is generated in an arms-length transaction
between the Company and Yuasa and which satisfies the Credit and
Collection Policy;
(t) was acquired by the Seller from the Company pursuant to and in
accordance with the terms of the Sale Agreement; and
(u) the Obligor of which has not been deemed to be ineligible by the
Buyer, in its sole discretion.
"Enhancement Provider" shall have the meaning assigned to such term in
the Credit Agreement.
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"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time.
"Event of Bankruptcy" shall mean, for any Person:
(a) if such Person shall fail generally to, or admit in writing its
inability to, pay its debts as they become due; or
(b) a proceeding shall have been instituted in a court having
jurisdiction in the premises seeking a decree or order for relief
in respect of such Person in an involuntary case under any
applicable bankruptcy, insolvency or other similar law now or
hereafter in effect, or for the appointment of a receiver,
liquidator, assignee, custodian, trustee, sequestrator,
conservator (under the Bank Conservation Act, as amended, or
otherwise) or other similar official of such Person or for any
substantial part of its property, or for the winding-up or
liquidation of its affairs; or
(c) the commencement by such Person of a voluntary case under any
applicable bankruptcy, insolvency or other similar Law now or
hereafter in effect, or such Person's consent to the entry of an
order for relief in an involuntary case under any such Law, or
consent to the appointment of or taking possession by a receiver,
liquidator, assignee, trustee, custodian, sequestrator,
conservator (under the Bank Conservation Act, as amended, or
otherwise) or other similar official of such Person or for any
substantial part of its property, or any general assignment for
the benefit of creditors, or, if a corporation or similar entity,
any corporate action in furtherance of any of the foregoing; or
(d) a decree or order of a court or agency or supervisory authority
having jurisdiction in the premises for the appointment of a
receiver, liquidator, assignee, trustee, custodian, sequestrator,
or conservator in any
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insolvency, readjustment of debt, marshalling of assets and
liabilities, or similar proceedings, shall have been entered
against such Person.
"Expected Default Ratio" shall mean, with respect to any Settlement
Date, the average of the Default Ratios for the three consecutive full
Accounting Periods immediately preceding such Settlement Date.
"Expected Dilution" shall mean, as of any Settlement Date with respect
to any type of Dilution Factor, a fraction, expressed as a percentage, the
numerator of which is the sum of the Dilution Ratios with respect to such type
of Dilution Factor for each of the twelve full Accounting Periods immediately
preceding such Settlement Date and the denominator of which is 12.
"Expiration Date" shall mean the earliest of (i) February 24, 1998,
which shall be extended thereafter on the last Business Day of each February,
May, August and November during the term of this Agreement, beginning in May,
1997, to the 24th day in the calendar month which is three months after the
month in which the then scheduled Expiration Date falls unless, prior to the
first Business Day of each February, May, August and November, as the case may
be, either the Buyer notifies the Seller that it does not desire to offer to
extend its Purchase Obligation, or the Seller notifies the Buyer that it does
not desire to continue to sell interests in the Receivables to the Buyer,
provided, that the new scheduled Expiration Date shall in no event result in a
remaining term of the Purchase Obligation that exceeds 360 days, or (ii) the
date of termination of the commitment of the Banks under the Credit Agreement.
"Forecast Dilution" shall mean, as of any Settlement Date, the sum of
(1) the aggregate amount by which the Account Balances of the Purchased
Receivables were reduced by the Company or the Seller during the six Accounting
Periods most recently ended as a result of billing errors, and (2) the amount of
the Overbill Reserve in the Accounting Period most recently ended.
"Funding Institution" shall have the meaning assigned to such term in
the Credit Agreement.
"GAAP" shall mean generally accepted accounting principles in the
United States of America, applied on a
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consistent basis and applied to both classification of items and amounts, and
shall include, without limitation, the official interpretations thereof by the
Financial Accounting Standards Board, its predecessors and successors.
"Income Taxes" shall mean any federal, state, local or foreign taxes
based upon, measured by, or imposed upon gross or net income, gross or net
receipts, capital or net worth, in each case, attributable solely to cash
received by the Affected Party that is not remitted or deemed remitted to the
Company or the Seller (regardless of the name of the tax imposed), including any
penalties, interest or additions to tax imposed with respect thereto.
"Investment" shall mean, on each date of determination, the sum of (i)
the Net Investment and (ii) the Deferred Purchase Price, if any, as determined
on the first Closing Date or as set forth on the most recently delivered
Settlement Statement.
"Law" shall mean any law (including common law), constitution,
statute, treaty, regulation, rule, ordinance, order, injunction, writ, decree or
award of any Official Body (including any law, rule, regulation or governmental
order relating to the protection of the environment or to public or employee
health or safety).
"Letter of Credit" shall mean the letter of credit issued by the
Letter of Credit Bank under the Reimbursement Agreement.
"Letter of Credit Bank" shall mean Mellon Bank, N.A., as the issuer of
the Letter of Credit under the Reimbursement Agreement.
"Lien", in respect of the property of any Person, shall mean any
ownership interest of any other Person, any mortgage, deed of trust,
hypothecation, pledge, lien, security interest, grant of a power to confess
judgment, preference, right to priority payment, filing of any financing
statement, charge or other encumbrance or security arrangement of any nature
whatsoever, including, without limitation, any conditional sale or title
retention arrangement, any assignment, deposit arrangement, consignment or lease
intended as, or having the effect of, security, or the filing of a financing
statement in connection with any of the foregoing.
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"Liquidation Day" shall mean each day which occurs on or after (i) the
date designated in a notice given by the Buyer to the Seller stating that the
conditions contained in Section 4.03 hereof are not satisfied, (ii) the
Expiration Date, (iii) the date on which a Termination Event occurs and is
continuing, or (iv) the date on which the Seller gives written notice to the
Buyer that it no longer wishes to sell interests in the Receivables Pool to the
Buyer or permit Reinvestments to be made; provided, however, there shall be no
Liquidation Day after the Net Investment shall equal zero.
"Liquidation Period" shall mean one or more consecutive Liquidation
Days.
"Lockbox Account" shall mean an account owned and maintained by the
Seller with a Permitted Lockbox Bank for the purpose of depositing payments made
by Obligors.
"Lockbox Servicing Agreement" shall mean an agreement relating to
lockbox services in connection with a Permitted Lockbox which is in form and
substance satisfactory to the Buyer and which has been executed and delivered to
the Buyer by a Permitted Lockbox Bank.
"Loss Horizon Ratio" shall mean, with respect to any Settlement Date,
a fraction, expressed as a percentage, the numerator of which is the aggregate
amount of net sales of the Company during the four full Accounting Periods
immediately preceding such Settlement Date and the denominator of which is the
aggregate outstanding balance of Eligible Receivables in the Receivables Pool as
of the last day of the full Accounting Period immediately preceding such
Settlement Date.
"Loss Ratio" shall mean, with respect to any Settlement Date, the
highest Expected Default Ratio for any full Accounting Period during the period
of twelve consecutive full Accounting Periods immediately preceding such
Settlement Date.
"Maximum Net Investment" shall mean $75,000,000 or such greater amount
as shall be established with the consent of the Buyer or such lesser amount as
shall be established in accordance with Section 2.03 hereof.
"Mellon Bank" shall mean Mellon Bank, N.A., a national banking
association.
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"Moody's" shall mean Moody's Investors Service, Inc.
"Net Investment" shall mean (a) for the Closing Date, an amount equal
to the Purchase Price (not including the Deferred Purchase Price, if any) paid
for the Participation Interest on the Closing Date, and (b) for any other day,
an amount equal to the sum of (i) the Net Investment on the Closing Date, plus
(ii) amounts paid to the Seller pursuant to Section 5.01 hereof since the
Closing Date as an increase in the Net Investment, less (iii) all Collections
and other amounts paid to the Buyer and not reinvested (which shall not include
any amounts paid to the Buyer as Settlement Period Amount or fees) pursuant to
Sections 2.03(b), 5.01, 5.03(d) and 5.04 hereof since the Closing Date. In the
event that any amount received by the Buyer constituting any portion of
Collections is rescinded or must otherwise be returned or restored for any
reason to any Person, the Net Investment shall be increased by the amount of
Collections so rescinded, returned or restored.
"Obligor" shall mean, with respect to any Receivable, the Person who
purchased goods or services under a Contract giving rise to such Receivable and
who is obligated to make payments to the Company or the Seller on such Contract
in respect of such Receivable.
"Office" shall mean, when used in connection with the Buyer, its
office located at 225 Liberty Street - 14th Floor, New York, New York, or when
used in connection with the Company or the Seller, its respective office located
at 645 Penn Street, Reading, Pennsylvania, or at such other office or offices of
the Buyer, the Company or the Seller or branch, subsidiary or Affiliate of any
thereof as may be designated in writing from time to time by any party hereto to
the other parties hereto.
"Official Body" shall mean any government or political subdivision or
any agency, authority, bureau, central bank, commission, department or
instrumentality of either, or any court, tribunal, grand jury or arbitrator, in
each case whether foreign or domestic.
"Overbill Reserve" shall mean, with respect to any Accounting Period,
the amount indicated on the records of the Company as the aggregate amount due
to Obligors in
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connection with cooperative advertising arrangements between Obligors and the
Company.
"Participation Interest" shall mean, at any time, an undivided
percentage ownership interest equal to the Buyer's Allocation at such time in
all then outstanding Receivables included in the Receivables Pool, including,
without limitation, all Collections, and all collateral security, insurance
policies, letters of credit and surety bonds given on behalf of Obligors to
secure or support payment of such Receivables, and any proceeds of any of the
foregoing.
"Permitted Lockbox" shall mean a post office box owned and maintained
by the Seller for the purpose of receiving payments made by Obligors.
"Permitted Lockbox Bank" shall mean any bank at which a Lockbox
Account is maintained, the short-term unsecured debt obligations of which are
rated at least A-1 by S&P, at least P-1 by Moody's and, if rated by Duff, at
least D-1 by Duff, appointed from time to time by the Seller and approved by the
Buyer.
"Person" shall mean an individual, corporation, partnership (general
or limited), trust, business trust, unincorporated association, joint venture,
joint-stock company, Official Body, or any other entity of whatever nature.
"Potential Servicer Event" shall mean any event or condition which,
with the giving of notice, the passage of time or both, would constitute a
Servicer Event.
"Potential Termination Event" shall mean any event or condition which,
with the giving of notice, the passage of time or both, would constitute a
Termination Event.
"Program Fee" shall mean, for any Settlement Period, the rate per
annum set forth in a separate letter agreement between the Seller and the Buyer.
"Purchase Availability Amount" shall mean, as of any date, an amount
equal to the excess, if any, of (i) the Maximum Net Investment as of such date
over (ii) the Net Investment as of such date.
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<PAGE>
"Purchase Availability Fee" shall mean the fee set forth in a separate
letter agreement between the Seller and the Buyer.
"Purchase Documents" shall mean this Agreement, the Certificate of
Participation, the Sale Agreement and such other agreements, documents and
instruments entered into and delivered by the Seller or the Company in
connection with the transactions contemplated by this Agreement.
"Purchase Notice" shall mean each notice delivered pursuant to Section
4.02(e) hereof, in such form and with such detail as the Buyer may require from
time to time.
"Purchase Obligation" shall have the meaning ascribed to such term in
Section 2.01 hereof.
"Purchase Price" shall mean, with respect to the purchase of the
Participation Interest, the amount of cash consideration set forth on the
Purchase Notice or otherwise paid by the Buyer for such Participation Interest
on the Closing Date.
"Purchased Receivable" shall mean a Receivable included in the
Receivables Pool in which the Buyer is maintaining the Participation Interest
pursuant to the terms of this Agreement.
"Rate of Collections" shall mean, for any Accounting Period, a
fraction, expressed as a percentage, the numerator of which is equal to the
total Collections in respect of all Receivables (including deemed Collections to
the extent actually received by the Servicer pursuant to Section 5.07) during
such Accounting Period and the denominator of which is equal to the aggregate
Account Balances of all Receivables as of the close of business on the last day
of the immediately preceding Accounting Period.
"Receivable" shall mean, with respect to any Contract, all
receivables, contract rights, general intangibles, accounts, chattel paper,
instruments (including, without limitation, promissory notes), amounts due and
to become due to the Company or the Seller arising under such Contract
(including but not limited to finance charges accrued with respect to such
amounts and fees), and all other rights, powers and privileges of the Company or
the Seller arising thereunder or related thereto and in the merchandise
(including returned goods) and contracts
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relating thereto, assertable against any Person whatsoever, all security
interests, guaranties and property securing or supporting payment of such
Receivable, all Records relating to such Receivable and all proceeds and
products of any of the foregoing; provided, that the term shall not include any
Receivable the Obligor of which is listed on Exhibit M hereto, as such exhibit
may be amended, supplemented or modified from time to time.
"Receivables Pool" shall mean, at any time, the group of Purchased
Receivables then outstanding which have, on the Closing Date, been identified by
the Seller as constituting a pool and each additional Receivable thereafter
added to such pool.
"Records" shall mean correspondence, memoranda, computer programs,
tapes, discs, papers, books or other documents or transcribed information of any
type whether expressed in ordinary or machine readable language.
"Reference Rate" shall mean the rate of interest established by the
Agent from time to time as its reference rate; any change in the reference rate
shall become effective as of the opening of business when such change occurs.
The "Reference Rate" is not intended to be the lowest rate of interest charged
by the Agent in connection with extensions of credit to debtors.
"Referral Agent" shall mean Mellon Bank, together with its successors
or assigns.
"Reimbursement Agreement" shall mean the Letter of Credit
Reimbursement Agreement dated as of November 17, 1995 between the Letter of
Credit Bank and the Buyer, as the same may from time to time be amended,
supplemented or otherwise modified and in effect.
"Reinvestment" shall mean the purchase by the Buyer and the sale by
the Seller of additional undivided percentage ownership interests in each and
every Purchased Receivable utilizing the proceeds of Collections that were
allocated to the Buyer for such purpose pursuant to Section 5.03(a).
"Remainder" shall have the meaning assigned to such term in Section
5.03(a) hereof.
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"Responsible Officer" shall mean the chief executive officer, chief
financial officer, controller, Executive Director - Finance or Director -
Treasury of the Company or the President or Secretary of the Seller, as the case
may be.
"Security Agreement" shall mean the Amended and Restated Security
Agreement dated as of November 17, 1995 among the Buyer, the Letter of Credit
Bank and the Collateral Agent, and consented and agreed to by the Agent and the
Depositary, as the same may from time to time be amended, supplemented or
otherwise modified and in effect.
"Servicer" shall mean the Company, or any Person other than the
Company or its Affiliates which, upon the termination of the Company as
Servicer, succeeds to the functions performed by the Company as the servicer of
the Purchased Receivables pursuant to a Complete Servicing Transfer and a
Successor Servicing Agreement.
"Servicer Event" shall mean a Termination Event (other than the
Termination Event under Section 10.01(l) relating to the Buyer).
"Servicer's Compensation" shall have the meaning ascribed to such term
in Section 6.06(e) hereof.
"Servicer's Compensation Reserve" shall mean, as of any Settlement
Date, an amount equal to the product of (i) .50%, (ii) the aggregate outstanding
balance of Eligible Receivables in the Receivables Pool as of the last day of
the full Accounting Period immediately preceding such Settlement Date, and (iii)
a fraction, the numerator of which is the product of (a) the Days Sales
Outstanding at the close of business as of the last day of such Accounting
Period and (b) three and the denominator of which is 360.
"Settlement Date" shall mean, as to each Settlement Period, the
twentieth calendar day (or, if such twentieth calendar day is not a Business
Day, the next succeeding Business Day) after the last day of the Accounting
Period most recently completed.
"Settlement Period" shall mean (a) the period from and including the
Closing Date and ending on the day immediately preceding the first Settlement
Date, and (b) thereafter, the period from and including the Settlement Date of
the immediately preceding Settlement Period and
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ending on the day immediately preceding the next Settlement Date.
"Settlement Period Amount" shall mean, with respect to any Settlement
Period, an amount equal to the sum of (i) the Cost of Funds for such Settlement
Period and (ii) the product of (a) the Program Fee, (b) the Net Investment at
the close of business on the first day of such Settlement Period, and (c) a
fraction, the numerator of which is the actual number of days in such Settlement
Period and the denominator of which is 360.
"Settlement Statement" shall mean a statement substantially in the
form of Exhibit B hereto, which, among other things, will identify any and all
Receivables included in the Receivables Pool as of the last day of the
Accounting Period most recently completed, duly completed and executed by a
Responsible Officer of the Company or, if the Company is no longer the Servicer,
of the Seller and delivered to the Buyer pursuant to Section 5.01 hereof.
"S&P" shall mean Standard & Poor's Ratings Group.
"Special Concentration Limit" shall mean, with respect to any Obligor
listed on Exhibit I (together with its Affiliates and subsidiaries), an amount
equal to the product of the aggregate of the Account Balances of the Eligible
Receivables in the Receivables Pool outstanding as of the last day of the most
recently completed Accounting Period and the percentage indicated opposite the
name of such Obligor; provided, that the Buyer may (i) at any time any such
Obligor is placed on a "credit watch list" by, or the long-term or short-term
unsecured debt rating of such Obligor is downgraded by, S&P, Moody's or Duff, in
its discretion, reduce the Special Concentration Limit for such Obligor, (ii) on
any Settlement Date, in its discretion, reduce or increase the Special
Concentration Limit for any such Obligor listed under the heading "Discretionary
Special Concentration Limit" in Exhibit I, or (iii) at any time, in its
discretion, add the name of any other Obligor to Exhibit I, in each case,
through the delivery by the Buyer to the Seller of an amended Exhibit I.
"Standard Concentration Limit" shall mean, as of any date of
determination, with respect to all of the Receivables owing from a single
Obligor (except for an Obligor listed on Exhibit I), together with Receivables
owing from its Affiliates or subsidiaries, an amount equal
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to five percent (5.00%) of the aggregate of the Account Balances of the Eligible
Receivables in the Receivables Pool outstanding as of the last day of the most
recently completed Accounting Period.
"Successor Servicing Agreement" shall mean any agreement between the
Buyer and any Person, other than the Company or its Affiliate, which contains
provisions concerning the servicing of the Purchased Receivables substantially
similar to the provisions contained herein, including Sections 5.03, 5.04, 5.06,
6.01, 6.02, 6.04, 6.06 and 6.07 hereof, pursuant to which such Person performs
servicing functions in respect of the Purchased Receivables, and all agreements,
instruments and documents attached thereto or delivered in connection therewith,
as any of the same may from time to time be amended, supplemented or otherwise
modified and in effect.
"Termination Event" shall have the meaning ascribed to such term in
Section 10.01 hereof.
"Transaction Costs" shall have the meaning ascribed to such term in
Section 11.01 hereof.
"UCC" shall have the meaning ascribed to such term in Section 1.02
hereof.
"Yuasa" shall mean Yuasa Battery (America), Inc.
1.02. Interpretation and Construction. Unless the context of this
Agreement otherwise clearly requires, references to the plural include the
singular, the singular the plural and the part the whole. References in this
Agreement to "determination" by the Buyer shall be conclusive absent manifest
error and include good faith estimates by the Buyer (in the case of quantitative
determinations) and good faith beliefs by the Buyer (in the case of qualitative
determinations). The words "hereof", "herein", "hereunder" and similar terms in
this Agreement refer to this Agreement as a whole and not to any particular
provision of this Agreement. The section and other headings contained in this
Agreement are for reference purposes only and shall not control or affect the
construction of this Agreement or the interpretation hereof in any respect.
Section, subsection and appendix references are to this Agreement unless
otherwise specified. As used in this Agreement, the masculine, feminine or
neuter gender shall
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each be deemed to include the others whenever the context so indicates. Terms
not otherwise defined herein which are defined in the Uniform Commercial Code as
in effect in the State of New York (the "UCC") on the date hereof shall have the
respective meanings ascribed to such terms therein unless the context otherwise
clearly requires. This Agreement shall be construed as a whole and in accordance
with its fair meaning.
ARTICLE II
AGREEMENT TO PURCHASE AND SELL
-------------------------------
2.01. Purchase Limits. Subject to the terms and conditions hereof,
the Seller may at its option sell to the Buyer, and the Buyer agrees to purchase
from the Seller (such agreement being referred to herein as the "Purchase
Obligation"), at any time and from time to time on and after the date hereof and
to but excluding the Expiration Date, undivided percentage ownership interests
in the Receivables Pool by purchasing the Participation Interest in such
Receivables Pool. Subject to the terms and conditions hereof, the Buyer shall
also (i) make Reinvestments by permitting the Servicer to cause Collections
allocated to the Buyer to be applied to the purchase of additional undivided
percentage ownership interests in the Receivables Pool, and (ii) increase its
Net Investment in the Participation Interest on any Settlement Date at the
request of the Seller (without regard to a minimum amount). The Buyer shall not
purchase the Participation Interest on the Closing Date, or permit a
Reinvestment to be made on any day, or increase its Net Investment on any
Settlement Date, to the extent that the amount of such purchase or Reinvestment
shall exceed the Purchase Availability Amount, or shall cause the Buyer's
Allocation (after giving effect to such purchase or Reinvestment) to exceed
100%. The Buyer shall not be obligated to increase the Maximum Net Investment.
The Buyer shall not purchase the Participation Interest if the Buyer cannot
issue its commercial paper notes or short-term promissory notes or otherwise
borrow in order to fund the Purchase Price of such Participation Interest, or to
make any such purchase or any Reinvestment or increase its Net Investment on any
Settlement Date at or after the earlier to occur of (i) the Expiration Date, and
(ii) the reduction of the Maximum Net Investment to zero pursuant to Section
2.03 hereof.
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2.02. Amount of Purchases. The sale of the Participation Interest on
the Closing Date by the Seller to the Buyer shall be for a minimum Purchase
Price of $25,000,000.
2.03. Reduction of the Maximum Net Investment and Net Investment;
Termination of the Agreement.
(a) Reduction of Maximum Net Investment. The Maximum Net Investment
shall be reduced to zero (i) on the Expiration Date, or (ii) in accordance with
Section 10.02 hereof. In addition, upon written notice from the Seller to the
Buyer, the Seller may reduce in whole or in part the Maximum Net Investment,
effective as of the next Settlement Date on or after the thirtieth (30th) day
following the date on which such notice is given; provided, however, that (i)
any partial reduction must be in an amount equal to $5,000,000 or any greater
amount which is an integral multiple of $5,000,000, and (ii) if the Maximum Net
Investment at the time of such notice is less than or equal to $20,000,000, the
Seller may only elect to reduce the amount of the Maximum Net Investment to
zero. Notwithstanding any other provision of this Agreement, the Maximum Net
Investment may not at any time be reduced below the amount of the aggregate Net
Investment in effect at such time.
(b) Reduction of the Net Investment. If at any time the Seller shall
wish to cause the reduction of the Net Investment (but not to commence the
permanent liquidation of the Participation Interest), the Seller may do so upon
ten (10) days prior written notice thereof to the Buyer (such notice to include
the amount of such proposed reduction and the proposed date on which such
reduction will commence, which date shall be agreed to by the Buyer). On the
proposed date of commencement of such reduction and on each day thereafter, the
Servicer shall refrain from making Reinvestments of Collections until the amount
of such Collections not so reinvested shall equal the desired amount of
reduction. The Servicer shall pay to the Buyer all Collections received on each
day during the period in which Reinvestment of Collections has been suspended
pursuant to this Section 2.03(b) on the date which is the earlier of (i) two (2)
Business Days or (ii) the number of days specified in Section 9-306(4)(d) of the
Uniform Commercial Code as in effect in the jurisdiction whose Laws govern the
rights of the Buyer in and to any such Collections after the day on which such
Collections are received by the Servicer.
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The Net Investment shall be deemed reduced in the amount to be paid to the Buyer
only when in fact so paid. The Seller shall use reasonable efforts to attempt to
choose a reduction amount, and the date of the commencement thereof, so that
such reduction shall commence and conclude in the same Settlement Period. The
Seller shall pay to the Buyer an amount equal any loss, cost or expense incurred
by the Buyer as the result of the repayment of the Net Investment prior to the
maturity date of any (x) loans made to the Buyer by third parties or (y)
commercial paper notes or short-term promissory notes issued by the Buyer, in
each case for the purpose of maintaining the Participation Interest.
(c) Termination of the Agreement. This Agreement shall terminate at
the latest to occur of (i) the Expiration Date, (ii) the first day on which the
Net Investment equals zero, all other amounts accrued and owing to the Buyer
under this Agreement have been paid in full and the Maximum Net Investment has
been reduced to zero, or (iii) the first day on which all Eligible Receivables
in the Receivables Pool have been collected or written off by the Seller and the
Maximum Net Investment has been reduced to zero; provided, however, that the
covenants, representations, warranties and indemnities of the Company and the
Seller to the Buyer contained herein or made pursuant hereto shall survive such
termination. Upon such termination, the Buyer shall convey to the Seller,
without recourse, its Participation Interest in all Purchased Receivables and
shall deliver to the Seller all instruments and documents relating thereto.
Upon such reconveyance, the Deferred Purchase Price shall be deemed to have been
paid in full.
2.04. Fees Payable to the Buyer.
(a) Purchase Availability Fee. The Seller agrees to pay to the Buyer,
in consideration for the Purchase Obligation hereunder, from and including the
date of execution of this Agreement to but excluding the Expiration Date, the
Purchase Availability Fee in the amount set forth in a separate letter agreement
between the Seller and the Buyer. The accrued Purchase Availability Fee shall
be due and payable in accordance with Sections 5.03 and 5.04 hereof until the
earlier of the Expiration Date or the date on which the Maximum Net Investment
is reduced to zero pursuant to Section 2.03(a) hereof. To the extent the
Purchase Availability Fee is not paid from Collections in accordance with
Section 5.03 or 5.04 hereof, the Purchase Availability
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Fee shall be an absolute and unconditional obligation of the Seller.
(b) Fees Non-Refundable. The fees to be paid to the Buyer pursuant to
this Section 2.04 are non-refundable and shall not be refunded for any reason
whatsoever, including, without limitation, the later reduction or termination of
the Maximum Net Investment in whole or in part in accordance with the provisions
of this Agreement.
ARTICLE III
BUYER'S ALLOCATION
------------------
3.01. Buyer's Allocation. The Buyer's Allocation on any day of
determination shall be a percentage, not in excess of 100%, equal to the
quotient of (i) the Investment, divided by (ii) the positive result of (a) the
aggregate Account Balances of all Eligible Receivables included in the
Receivables Pool on the date of determination before giving effect to
Collections on such date, less (b) the aggregate amount by which the Account
Balance of Eligible Receivables of each Obligor exceeds the Standard
Concentration Limit or the Special Concentration Limit for such Obligor, less
(c) the lesser of (1) the aggregate amount of accounts payable to Yuasa by the
Company, as indicated on the records of the Company, and (2) the aggregate
Account Balances of all Eligible Receivables included in the Receivables Pool
the Obligor of which is Yuasa.
3.02. Frequency of Computation of the Buyer's Allocation. The
Buyer's Allocation shall be initially computed as of the opening of business of
the Servicer on the Closing Date. Thereafter, until the Net Investment shall be
reduced to zero, the Buyer's Allocation shall be automatically recomputed as of
the close of business of the Servicer on each Business Day, and the Buyer's
Allocation shall constitute the percentage ownership interest of the Buyer in
the Receivables Pool on such date; provided, however, that on and after a
Liquidation Day and during the continuance of a Liquidation Period, the Buyer's
Allocation shall be equal to the Buyer's Allocation as computed on the first
Business Day preceding the occurrence of such Liquidation Day. The Buyer's
Allocation shall be reduced to zero at such time as the related Net Investment
shall be reduced to zero, the Buyer shall have received all amounts in respect
of accrued and unpaid Settlement Period Amounts and all other amounts payable to
it pursuant to this
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Agreement, and the Servicer, provided the Seller is not the Servicer, shall have
received the accrued Servicer's Compensation.
ARTICLE IV
CLOSING PROCEDURES
------------------
4.01. Purchase and Sale Procedures.
(a) General. The sale of the Participation Interest hereunder shall,
with respect to the Receivables Pool, transfer ownership to the Buyer of an
undivided percentage ownership interest in each Receivable in such Receivables
Pool, effective upon the creation of such Receivable.
(b) Indemnity for Failure to Close. If a sale of the Participation
Interest fails to occur on the Closing Date as specified in the Purchase Notice
delivered pursuant to Section 4.02(e) hereof and agreed to by the Buyer pursuant
to Section 4.04 hereof, the Seller shall reimburse the Buyer on demand for any
loss, cost or expense (including loss of margin) incurred by the Buyer with
respect to this Agreement, its obligations hereunder or its funding of the
proposed Purchase Price (including, without limitation, any loss, cost or
expense in obtaining, liquidating or employing deposits as loans from third
parties or the loss, cost or expense of issuing its commercial paper notes or
short-term promissory notes in order to fund such Purchase Price) until the
earlier of (A) the Closing Date as specified in a subsequent Purchase Notice
delivered pursuant to Section 4.02(e) hereof and agreed to by the Buyer pursuant
to Section 4.04 hereof or (B) the date on which (i) the Buyer redeploys any
funds committed to fund such Purchase Price at a rate of return greater than or
equal to the Cost of Funds, or (ii) such commercial paper notes or short-term
promissory notes become due and payable, as the case may be. The Buyer shall
notify the Seller of the amount determined by the Buyer (which determination
shall be conclusive and binding absent manifest error) to be necessary to
compensate the Buyer for such loss, cost or expense. Such amount shall be due
and payable by the Seller to the Buyer ten (10) Business Days after such notice
is given.
4.02. Conditions Precedent to the First Purchase. The obligation of
the Buyer to purchase the Participation Interest from the Seller on the Closing
Date shall be
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subject to the satisfaction on or before April 30, 1997 of the conditions set
forth in Section 4.03 hereof and the following further conditions:
(a) Corporate Standing. The Buyer shall have received (i) from each
of the Seller and the Company, a certificate, dated a recent date relative to
the Closing Date as determined by the Buyer, of the Secretary of State or other
similar official as to its good standing under the Laws of its jurisdiction of
incorporation, and (ii) from the Company, certificates, dated a recent date
relative to the Closing Date as determined by the Buyer, of the Secretary of
State or other similar official of each of the State of Michigan and the
Commonwealth of Pennsylvania as to its good standing under the Laws of such
jurisdictions.
(b) Opinions of Counsel. The Buyer shall have received favorable
written opinions of John Van Zile, Esq., General Counsel of the Company, and
Kirkland & Ellis, counsel for the Company and the Seller, each dated the Closing
Date, each in form and substance acceptable to the Buyer.
(c) Financing Statements, etc. The Buyer shall have received evidence
satisfactory to it of the completion of all recordings, registrations and
filings as may be necessary or, in the opinion of the Buyer, desirable, to
evidence or perfect the ownership interests to be acquired by the Buyer
hereunder, including, without limitation:
(i) acknowledgment copies of proper financing statements on Form
UCC-1 filed on or prior to the Closing Date, naming the Company as debtor
and/or assignor and the Seller as secured party and/or assignee (in respect
of the transfer of Receivables contemplated by the Sale Agreement) and
naming the Seller as debtor and/or assignor and the Buyer as secured party
and/or assignee (in respect of the transfer of the Participation Interest
contemplated by this Agreement), or such other similar instruments or
documents as may be necessary or, in the opinion of the Buyer, advisable,
under the Uniform Commercial Code or any comparable law of all appropriate
jurisdictions to evidence or perfect the Buyer's Participation Interest;
and
(ii) evidence of searches satisfactory to the Buyer listing all
effective financing statements which name the Company or the Seller as
debtor and/or assignor in the jurisdictions in which filings are made
pursuant to subsection (i) above, together with copies of such financing
statements, none of which (other than the filings made pursuant to
subsection (i) above) shall cover any Receivables or the related Contracts.
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(d) Lockbox Agreements. The Buyer shall have received duly executed
copies of Lockbox Servicing Agreements with each of one or more Permitted
Lockbox Banks.
(e) Purchase Notice. The Buyer shall have received from the Seller,
no less than two (2) Business Days prior to the Closing Date, a notice (the
"Purchase Notice") in substantially the form of Exhibit J hereto, utilizing
information as of the last day of the most recently completed Accounting Period,
together with such written documentation of the procedures utilized and
calculations made in connection with the preparation of such Purchase Notice as
the Buyer may request.
(f) Responsible Officer Certificate. The Buyer shall have received a
certificate of a Responsible Officer, dated the Closing Date, from each of the
Seller and the Company, in substantially the form attached hereto as Exhibit C,
and as to such other matters incident to the transactions contemplated by the
Purchase Documents as the Buyer may reasonably request, in form and substance
satisfactory to the Buyer. The Buyer may conclusively rely on any such
certificate unless and until a later certificate revising the prior certificate
is received by the Buyer.
(g) Certificate of Participation. The Buyer shall have received on
the Closing Date, a Certificate of Participation executed on behalf of the
Seller by a Responsible Officer.
(h) Creditors' Consent. The Buyer shall have received the written
consent of the Banks party to the Credit Agreement dated as of August 30, 1994,
as amended, among the Company, the Banks and Agents party thereto and Bankers
Trust Company, as Administrative Agent (the "Company Credit Agreement"), to the
execution and delivery of the Purchase Documents and the consummation of the
transactions contemplated hereby and thereby in form and substance satisfactory
to the Buyer.
4.03. Conditions Precedent to Each Purchase and Reinvestment. The
obligation of the Buyer to purchase the Participation Interest from the Seller
on the Closing Date, to make a Reinvestment on any date, or to increase the Net
Investment in the Receivables Pool on any Settlement Date, is subject to the
performance by each of the Company and the
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Seller of its respective obligations hereunder on or before the Closing Date,
such date on which a Reinvestment will be made or such Settlement Date, and to
the satisfaction of the following further conditions:
(a) Details, Proceedings and Documents. All legal details and
proceedings in connection with the transactions contemplated by the Purchase
Documents or the Receivables to be included in the Receivables Pool on the
Closing Date, such Settlement Date or such date of such Reinvestment shall be in
form and substance satisfactory to the Buyer, and the Buyer shall have received
all such originals or certified copies or other copies of such documents and
proceedings in connection with such transactions, in form and substance
satisfactory to the Buyer.
(b) Representations and Warranties. On and as of such date (i) the
representations and warranties of the Seller contained in Article VIII hereof
and of the Company contained in the Sale Agreement shall be true and correct
with the same force and effect as though made on and as of the Closing Date,
such Settlement Date or such date of Reinvestment (except to the extent that
such representations and warranties relate solely to an earlier date), (ii) the
Company and the Seller shall be in compliance with the respective covenants
contained in Article IX hereof and in the Sale Agreement, and (iii) no
Termination Event or Potential Termination Event shall occur as a result of the
Purchase and sale of the Participation Interest in the Receivables Pool on the
Closing Date, such Settlement Date or such date of Reinvestment, or shall have
occurred and be continuing or shall exist on the Closing Date, such Settlement
Date or such date of Reinvestment.
(c) Sale Agreement. The Sale Agreement shall be in full force and
effect.
4.04. Purchase Price. Subject to the terms and conditions hereof,
and relying upon the representations and warranties set forth herein, on the
Closing Date, the Buyer shall purchase the Participation Interest in the
Receivables Pool described in the Purchase Notice delivered by the Seller to the
Buyer and agreed upon by the Buyer. On the date of purchase of the
Participation Interest, the Buyer shall make available to the Seller at its
Office, or such other place as the Seller has notified the Buyer, the Purchase
Price therefor.
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4.05. Sale Without Recourse.
(a) The sale of the Participation Interest hereunder shall, except to
the extent specified in Section 5.06 hereof, be made without recourse to the
Seller with respect to any loss arising from Defaulted Receivables, provided,
that nothing contained herein shall limit the rights of the Buyer provided in
Section 2.04, Article V, Section 6.04 and Articles VII and XI hereof.
(b) This Agreement also constitutes a security agreement under the
UCC. The Seller hereby grants to the Buyer on the terms and conditions of this
Agreement a first priority security interest in and against all of the Seller's
right, title and interest in and to the Purchased Receivables and the proceeds
thereof for the purposes of securing the obligations of the Seller and the
rights of the Buyer under this Agreement.
4.06. Non-Assumption by the Buyer of Obligations. No obligation or
liability of the Seller to any Obligor under any Purchased Receivable or
Contract shall be assumed by the Buyer hereunder or under the Certificate of
Participation, and any such assumption is hereby expressly disclaimed. The
Buyer shall be indemnified by the Seller in accordance with Section 11.04 hereof
in respect of any losses, claims, damages, liabilities, costs or expenses
arising out of or incurred in connection with any Obligor's assertion of such
obligation or liability against the Buyer.
4.07. Character of Receivables Added to Receivables Pools. All
Receivables acquired by the Seller pursuant to the Sale Agreement shall be
included in the Receivables Pool immediately upon the Seller's acquisition
thereof. All such Receivables will comprise only one Receivables Pool.
ARTICLE V
SETTLEMENTS; ADJUSTMENTS
-------------------------
5.01. Settlement Statements. The Seller shall, or shall cause the
Servicer to, submit to the Buyer not less than two (2) Business Days prior to
each Settlement Date, a Settlement Statement signed by a Responsible Officer
dated as of such Settlement Date and including information in respect of the
Receivables Pool as of the last day of the Accounting Period most recently
completed. The execution
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and delivery of any Settlement Statement shall constitute a representation and
warranty by the Seller and the Servicer that the information contained therein
is true and correct as of the date thereof. Such Settlement Statement shall be
accompanied by such other information as the Buyer may reasonably request.
Subject to the terms and conditions of this Agreement, if the Seller requests on
a Settlement Statement that the Net Investment be increased to an amount in
excess of the Net Investment as of the immediately preceding Settlement Date,
the Buyer shall make available to the Seller at its Office, or such other place
as the Seller has notified to the Buyer, on the next succeeding Settlement Date,
the amount of such increase in the Net Investment; provided, that such increase
in the Net Investment shall not cause the Net Investment to exceed the Maximum
Net Investment then in effect. The Seller may request a reduction in the Net
Investment in accordance with Section 2.03(b).
5.02. Receivables Status. Upon ten (10) Business Days' notice from
the Buyer, the Seller or the Servicer will furnish or cause to be furnished to
the Buyer a written report, signed by a Responsible Officer, containing such
information as the Buyer may reasonably request (in such form as the Buyer may
reasonably request), which shall include, without limitation, with respect to
the Participation Interest (a) the Account Balances of the Contracts for all
Purchased Receivables, together with all Collections, Dilutions, and other
adjustments to such Receivables since the date of the last written report
furnished to the Buyer, and an aging of all Contracts as of a date no later than
the date of such notice; and (b) an analysis and explanation of significant
variances, if any, between actual Collections of Purchased Receivables during
such Settlement Period and historical collections experience.
5.03. Non-Liquidation Settlements.
(a) Daily Settlements. On each day (other than a Liquidation Day)
with regard to each Settlement Period, the Buyer shall be allocated an amount of
Collections equal to the product of (i) the Buyer's Allocation, expressed as a
decimal, and (ii) Collections, if any, with respect to the Purchased Receivables
on such day. The Servicer shall hold in trust for the benefit of the Buyer out
of such amount in respect of such Buyer's Allocation an amount equal to the
Settlement Period Amount accrued through such day and not
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previously so held (whether or not accrued during the current Settlement
Period), and (following such allocation) shall hold in trust for its own account
an amount, if available, equal to the Servicer's Compensation accrued through
such day for the Participation Interest and not previously so held and
(following such allocation) shall hold in trust for the account of the Buyer an
amount, if available, equal to the Purchase Availability Fee accrued through
such day and not previously so held. The remainder of such amount (the
"Remainder") in respect of the Buyer's Allocation shall, subject to the terms
and conditions of this Agreement, be utilized by the Servicer to make a
Reinvestment in the Receivables Pool in the amount of the Remainder, subject to
Sections 2.01 and 4.03 hereof, and after giving effect to any allocation of new
Receivables to the Receivables Pool. Any portion of the Remainder not applied to
a Reinvestment shall be held by the Servicer in accordance with subsection (d)
below. The Remainder, or any portion thereof, which is applied to a
Reinvestment, and any amount of Collections which were not allocated to the
Buyer pursuant to the first sentence of this Section 5.03(a), shall be remitted
by the Servicer to the Seller. Notwithstanding the foregoing, in the event that
at the end of any Settlement Period the amounts held in trust for the benefit of
the Buyer pursuant to the second sentence of this Section 5.03(a) and not
previously paid to the Buyer are less than the accrued and unpaid Settlement
Period Amount for such Settlement Period, then any amount which had been deemed
to be a Remainder during such Settlement Period (up to the amount of such
deficit in the amount available to pay the Settlement Period Amount) shall be
deemed to have been held in trust for the benefit of the Buyer pursuant to the
second sentence of this Section 5.03(a).
(b) Settlement Period. On each Settlement Date (other than a
Settlement Date with respect to a Settlement Period during which a Liquidation
Day occurs), the Servicer shall pay to the Buyer and the Servicer the amounts
held in trust for the benefit of the Buyer and the Servicer, respectively,
pursuant to subsection (a) above and not previously paid to the Buyer and the
Servicer, respectively.
(c) Deemed Collections. If on any day the Account Balance of a
Purchased Receivable is reduced as a result of a Dilution with respect to such
Purchased Receivable, the Servicer shall be deemed to have received on such day
a Collection of Purchased Receivables in the amount of such reduction. If on
any day any of the representations and
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warranties of the Seller set forth in Section 8.02(b) and (c) is no longer true
or was not true when made with respect to such Purchased Receivable, or if any
of the representations and warranties of the Seller set forth in Section 8.02(a)
was not true when made, the Seller shall be deemed to have received on such day
a Collection of such Purchased Receivable in full.
(d) Unreinvested Collections. Any portion of the Remainder which may
not be immediately applied to Reinvestments in the Participation Interest in
accordance with Section 5.03(a) for any reason, shall be so reinvested as soon
as practicable without violating any provisions of this Agreement; provided,
however, that if any portion of the Remainder may not be applied to
Reinvestments in the Participation Interest for any reason on the date which is
the earlier of (i) two (2) Business Days or (ii) the number of days specified in
Section 9-306(4)(d) of the Uniform Commercial Code as in effect in the
jurisdiction whose Laws govern the rights of the Buyer in and to any such
portion of the Remainder after the Servicer receives such portion of the
Remainder, the Servicer shall pay such portion of the Remainder to the Buyer on
such earlier date. The Net Investment shall be deemed reduced in the amount to
be paid to the Buyer only when in fact so paid.
(e) Notwithstanding anything to the contrary contained herein, if, on
any Settlement Date prior to the occurrence of a Liquidation Day (after giving
effect to all payments required to be made by the Seller or the Servicer to the
Agent for the account of the Buyer pursuant to this Section 5.03 and any
increase in the Net Investment effected on such day), the Buyer's Allocation
shall exceed one hundred percent (100%), the Seller shall make a payment of an
amount in immediately available funds to the Agent for the account of the Buyer
as a reduction of the Net Investment such that, after giving effect to such
payment, the Buyer's Allocation is equal to one hundred percent (100%).
5.04. Liquidation Settlements.
(a) Notwithstanding the provisions of Sections 5.03(a) and (b) hereof,
on each Liquidation Day with regard to each Settlement Period, the Servicer
shall allocate to, and hold in trust for the benefit of, the Buyer for payment
in accordance with Section 5.04(b), an amount of Collections equal to the
product of (i) the Buyer's Allocation, and
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(ii) Collections in respect of the Purchased Receivables for such Liquidation
Day. The Collections allocated to the Buyer pursuant to this section shall be
allocated on a daily basis (i) first, to the payment of any Settlement Period
Amount accrued and owing to the Buyer, (ii) second, subject to Section 6.06(e),
to the payment of any Servicer's Compensation accrued and owing to the Servicer,
(iii) third, to make payment in respect of any Purchase Availability Fee accrued
and owing to the Buyer, (iv) fourth, to make payment in respect of the Net
Investment, and (v) fifth, to the payment of any other amount accrued and owing
to the Buyer under this Agreement. Any amount of such Collections which were not
allocated to the Buyer pursuant to the first sentence of this Section 5.04 on
such Liquidation Day, shall be remitted by the Servicer to the Seller.
(b) Collections held by the Servicer on behalf of the Buyer pursuant
to this Section 5.04 shall be remitted to the Buyer on the date which is the
earlier of (i) two (2) Business Days or (ii) the number of days specified in
Section 9-306(4)(d) of the Uniform Commercial Code as in effect in the
jurisdiction whose Laws govern the rights of the Buyer in and to any such
Collections after the Servicer receives such Collections.
5.05. Allocation of Collections.
(a) Except as required by Law or the underlying Contract, if any
Obligor is obligated under one or more Purchased Receivables and also under one
or more Contracts not constituting Purchased Receivables, then any payment
received from or on behalf of such Obligor shall be applied (i) to a specific
Contract if the Obligor designates such payment to be so applied, or (ii) to the
Purchased Receivables in the order in which payments are due thereunder if the
application of such payment is not so designated.
(b) Notwithstanding any other provision of this Agreement, the Buyer
is not entitled to receive any portion of Collections once the Net Investment is
reduced to zero and the Seller has no remaining payment obligations to the Buyer
under this Agreement.
5.06. Deferred Purchase Price.
(a) On the Closing Date, the Deferred Purchase Price shall be an
amount equal to the sum of (i) the product
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of (x) the greater of (1) 12% and (2) the positive result, if any, of (I) 200%
of the product of (X) a fraction the numerator of which is the sum of (A) the
aggregate of the Account Balance of each Eligible Receivable generated by the
Branches and Battery West divisions of the Seller which, at the close of
business on the Closing Date, was outstanding and unpaid (in whole or in part)
for a period from 91 days to 180 days, inclusive, after the due date for such
Eligible Receivable as shown on the invoice which was sent to the related
Obligor with respect to such Eligible Receivable, plus (B) the aggregate of the
Account Balance of each Eligible Receivable generated by the Corporate Accounts
Receivable division of the Seller which, at the close of business on the Closing
Date, was outstanding and unpaid (in whole or in part) for a period from 91 days
to 120 days, inclusive, after the due date for such Eligible Receivable as shown
on the invoice which was sent to the related Obligor with respect to such
Eligible Receivable, and the denominator of which is the aggregate Account
Balances of the Eligible Receivables at the close of business on the Closing
Date, multiplied by (Y) the sum of (1) the greater of (m) the Days Sales
Outstanding on the Closing Date divided by 30 and (n) 2, plus (2) 4, less (II)
10%, and (y) the aggregate Account Balances of the Eligible Receivables at the
close of business on the Closing Date, plus (ii) the Forecast Dilution as
calculated on the Closing Date.
(b) In each Settlement Statement, the Servicer shall calculate the
Deferred Purchase Price as of the last day of the full Accounting Period most
recently completed, which shall be an amount equal to the sum of (1) the Credit
Enhancement Reserve, plus (2) the Forecast Dilution as calculated in such
Settlement Statement, plus (3) the Settlement Period Amount times 6, plus (4)
the Servicer's Compensation Reserve; provided, that if a Liquidation Day occurs,
the Deferred Purchase Price will thereafter be the amount of the Deferred
Purchase Price at the close of business on the day immediately preceding such
Liquidation Day.
5.07. Treatment of Collections and Deemed Collections. Any
Collections deemed to be received pursuant to this Agreement shall be paid by
the Seller to the Servicer in same day funds on the date of such deemed receipt.
The Servicer shall hold or distribute all Collections deemed received pursuant
to Sections 5.03 and 6.04 hereof to the same extent as if such Collections had
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actually been received. So long as the Servicer shall hold any Collections or
deemed Collections required to be paid to the Buyer, it shall hold such
Collections in trust and separate and apart from its own funds and shall clearly
mark its records to reflect such trust.
ARTICLE VI
PROTECTION OF THE BUYER;
ADMINISTRATION AND COLLECTIONS
------------------------------
6.01. Maintenance of Information and Computer Records. The Seller
will, or will cause the Servicer to, hold in trust and keep safely for the Buyer
all evidence of the Buyer's right, title and interest in the Receivables Pool.
The Seller will, or will cause the Servicer to, on or prior to the Closing Date,
and with respect to all Receivables that are added to the Receivables Pool after
the Closing Date, on each respective date such Receivables are added, place an
appropriate code or notation in its Records to indicate those Receivables which
are or which will be included in the Receivables Pool.
6.02. Protection of the Interests of the Buyer.
(a) The Seller will, or will cause the Servicer to, from time to time
do and perform any and all acts and execute any and all documents (including,
without limitation, the execution, amendment or supplementation of any financing
statements, continuation statements, the Certificate of Participation and
notices of Certificate of Participation relating to the Participation Interest
for filing under the provisions of the Uniform Commercial Code of any applicable
jurisdiction, the execution, amendment or supplementation of any instrument of
transfer, and the making of notations on the Records of the Seller) as may be
requested by the Buyer in order to effect the purposes of this Agreement and the
sale of the Participation Interest hereunder and to perfect the Buyer's right,
title and interest in the Receivables Pool and all Collections with respect
thereto against all Persons whomsoever.
(b) To the fullest extent permitted by applicable Law, the Seller
hereby irrevocably grants to the Buyer and the Referral Agent an irrevocable
power of attorney, with full power of substitution, coupled with an interest, to
sign and file in the name of the Seller, or in its own name, financing
statements and continuation statements and
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amendments thereto with respect to the Buyer's Participation Interest in the
Purchased Receivables.
(c) At any reasonable time and from time to time at the Buyer's
reasonable request upon notice to the Seller, the Company or the Servicer, the
Seller, the Company or the Servicer, as the case may be, shall permit such
Person as the Buyer may designate to conduct audits or visit and inspect any of
the properties of the Seller, the Company or the Servicer, as the case may be,
to examine the Records, internal controls and procedures maintained by the
Seller, the Company or the Servicer, as the case may be, and take copies and
extracts therefrom, and to discuss the Seller's, the Company's or the
Servicer's, as the case may be, affairs with its officers, employees and
independent accountants. Each of the Seller, the Company and the Servicer hereby
authorizes such officers, employees and independent accountants to discuss with
the Buyer the affairs of the Seller, the Company or the Servicer, as the case
may be. The Seller shall reimburse the Buyer for all reasonable fees, costs and
expenses incurred by or on behalf of the Buyer in connection with the foregoing
actions promptly upon receipt of a written invoice therefor.
(d) The Buyer shall have the right to do all such acts and things as
it may deem necessary to protect its interests, including, without limitation,
confirmation and verification of Purchased Receivables.
6.03. Maintenance of the Location of Writings and Records. The
Seller will at all times until completion of a Complete Servicing Transfer keep
or cause to be kept at its Chief Executive Office or at an office of the
Servicer designated in advance to the Buyer, separate and apart from all other
Records, each writing or Record which evidences, and which is necessary or
desirable to establish or protect, including such books of account and other
Records as will enable the Buyer or its designee to determine at any time the
status of, the Participation Interest of the Buyer in each Purchased Receivable;
provided, that any Records may be stored at other locations to the extent
temporary location elsewhere is necessary in connection with litigation,
repossession, other collection activities or other usual business purposes. The
Seller shall at its own expense prepare and maintain machine-readable magnetic
tapes in such format as the Buyer, in its sole discretion, may require
pertaining to the Purchased Receivables.
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6.04. Information. The Seller will, or will cause the Servicer to,
furnish to the Buyer such additional information with respect to the Purchased
Receivables (including but not limited to the Credit and Collection Policy) as
the Buyer may reasonably request. The Seller will also furnish to the Buyer all
modifications, adjustments or supplements to the Credit and Collection Policy as
in effect on the date hereof; provided, however, that neither the Seller nor the
Company shall, without the Buyer's prior written consent, alter its credit,
enforcement and other policies as in effect from time to time if the effect of
any alteration thereof would be to materially adversely affect the
collectibility of the Purchased Receivables. If any such alteration made
without the Buyer's consent is later determined by the Buyer to have had a
material adverse effect on the collectibility of Purchased Receivables, then the
Seller or the Company, as the case may be, shall promptly revise such policies
in order to prevent any such material adverse effect from occurring thereafter,
and the Purchased Receivables that, in the sole judgment of the Buyer, became
uncollectible due to such change shall be deemed collected and shall be treated
as deemed Collections pursuant to Section 5.07 hereof. Promptly upon becoming
aware of any Termination Event or Potential Termination Event, the Servicer
shall give the Buyer notice thereof.
6.05. Performance of Undertakings Under the Purchased Receivables;
Indemnification. The Company will at all times observe and perform, or cause to
be observed and performed, all obligations and undertakings to the Obligors
arising in connection with each Purchased Receivable or related Contract and
neither the Company nor the Seller will take any action or cause any action to
be taken to impair the rights of the Seller to the Receivables or the rights of
the Buyer to its Participation Interest in the Purchased Receivables. In such
connection, the Buyer shall be indemnified by the Seller in accordance with
Section 11.04 hereof and by the Company in accordance with the Sale Agreement in
respect of any losses, claims, damages, liabilities, costs or expenses incurred
or arising out of any action taken or caused to be taken by the Company or the
Seller which impairs the Seller's rights to the Receivables or the Buyer's
rights to its Participation Interest in the Purchased Receivables.
6.06. Administration and Collections; Indemnification.
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(a) General. Until a Complete Servicing Transfer shall have occurred,
the Company will be responsible for the administration, servicing and collection
of the Purchased Receivables; provided, however, that upon written approval by
the Buyer such duties may be delegated by the Company to any of its Affiliates
or a third party (without impairment of the Company's Obligations as Servicer).
If and to the extent that the Company or any of its Affiliates or any such third
party is performing such functions, the Company agrees to exercise or cause such
Affiliate or third party to exercise the same degree of skill and care and apply
the same standards, policies, procedures and diligence that it applies to the
performance of the same functions with respect to accounts owned by the Company.
(b) Administration. The Servicer shall, to the maximum extent
permitted by Law, have the power and authority, on behalf of the Buyer as part
of the Servicer's administrative and servicing obligations hereunder, to take
such action in respect of any such Purchased Receivable as the Servicer may deem
advisable, including the resale of any repossessed, returned or rejected goods;
provided, however, that the Servicer may not under any circumstances compromise,
rescind, cancel, adjust or modify (including by extension of time for payment or
granting any discounts, allowances or credits) the Account Balance of the
related Contract for any Purchased Receivable, except in accordance with the
Credit and Collection Policy or otherwise with the Buyer's prior written
consent. The Servicer undertakes to comply with each of the covenants of the
Seller included herein in respect of which the Seller undertakes to cause the
Servicer to take or avoid taking actions specified therein, and further agrees
to perform the Servicer's obligations under Article II of the Sale Agreement.
(c) Enforcement Proceedings. In the event of a default under any
Purchased Receivable before a Servicer Event, the Servicer shall, at the
Seller's expense, to the maximum extent permitted by Law, have the power and
authority, on behalf of the Buyer as part of the Servicer's administrative and
servicing obligations hereunder, to take any action in respect of any such
Purchased Receivable as the Servicer may deem advisable; provided, however, that
the Servicer or the Seller, as the case may be, shall take no enforcement action
(judicial or otherwise) with respect to such Purchased Receivable, except in
accordance with the Credit and Collection Policy or otherwise with the written
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consent of the Buyer. The Servicer or the Seller, as the case may be, will
apply or will cause to be applied at all times before a Servicer Event the same
standards and follow the same procedures with respect to deciding to commence,
and in prosecuting, litigation on such Purchased Receivables as is applied and
followed with respect to like accounts not owned by the Buyer. In no event
shall the Servicer or the Seller, as the case may be, be entitled to make or
authorize any Person to make the Buyer a party to any litigation without the
Buyer's express prior written consent.
(d) Obligations of the Buyer. The Buyer may, but shall have no
obligation to, take any action or commence any proceeding to realize upon any
Purchased Receivable. At such time as the Servicer or the Seller, as the case
may be, has any obligation to pursue the collection of Purchased Receivables and
the Buyer possesses any documents necessary therefor, the Buyer agrees to
furnish such documents to the Servicer or the Seller, as the case may be, to the
extent and for the period necessary for the Servicer or the Seller, as the case
may be, to comply with its obligations hereunder.
(e) Servicer's Compensation. The Servicer's Compensation for
performing its responsibilities as the servicer with respect to any Purchased
Receivables on any day shall be equal to the quotient of (A) the product of (1)
one-half of one percent (0.50%), and (2) the Account Balances of Purchased
Receivables on such day, divided by (B) 360. Subject to Section 6.07(a), the
Servicer's Compensation shall be retained by the Servicer in accordance with
Section 5.03 hereof or paid to the Servicer by the Buyer in the event
Collections are applied in accordance with Section 5.04 hereof; provided,
however, that if the Company is the Servicer, the Servicer's Compensation shall
not be paid on or after any day on which a Termination Event shall have occurred
and be continuing.
(f) Indemnity. The Servicer shall indemnify the Buyer in respect of
any losses, claims, damages, liabilities, costs or expenses incurred or arising
out of any action taken or caused to be taken by the Servicer under this Section
6.06.
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6.07. Complete Servicing Transfer.
(a) General. If at any time a Servicer Event shall have occurred and
be continuing, the Buyer may, by notice in writing to the Seller and the
Company, terminate the Company's capacity as Servicer in respect of the
Purchased Receivables (such termination referred to herein as a "Complete
Servicing Transfer"), notify Obligors of its interest in the Purchased
Receivables, take control of the Lockbox Accounts and exercise all other
incidences of ownership in the Purchased Receivables. After a Complete Servicing
Transfer, the Buyer may administer, service and collect the Purchased
Receivables itself, and in such event may retain the Servicer's Compensation for
its own account, in any manner it sees fit, including, without limitation, by
compromise, extension or settlement of such Purchased Receivables.
Alternatively, the Buyer may engage Mellon Bank to perform all or any part of
the administration, servicing and collection of the Purchased Receivables and
pay to Mellon Bank all or a portion of the Servicer's Compensation in
consideration thereof.
(b) Transition. The Company, within ten (10) Business Days after
receiving a notice pursuant to Section 6.07(a) hereof, shall, at its own cost
and expense, deliver or cause to be delivered to the Buyer or its designated
agent (i) a schedule of the Purchased Receivables indicating as to each such
Purchased Receivable information as to the related Obligor, the Account Balance
as of such date of the related Contract and the location of the evidences of
such Purchased Receivable and related Contract, together with such other
information as the Buyer may reasonably request and (ii) all evidence of such
Purchased Receivables and related Contracts and such other Records related
thereto (including, without limitation, true copies of any computer tapes and
data in computer memories) as the Buyer may reasonably deem necessary to enable
it to protect and enforce its rights to, or its position as owner of, a
Participation Interest therein. After any such delivery, neither the Seller nor
the Company will hold or retain any executed counterpart or any document
evidencing such Purchased Receivables or related Contracts without clearly
marking the same to indicate conspicuously that the same is not the original and
that transfer thereof does not transfer any rights against the related Obligor
or any other Person.
(c) Collections. From and after the occurrence of a Complete
Servicing Transfer, the Seller and the Servicer
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will cause to be transmitted and delivered directly to the Buyer or its
designated agent, for the Buyer's own account, forthwith upon receipt and in the
exact form received, all Collections (properly endorsed, where required, so that
such items may be collected by the Buyer) on account of its Participation
Interest in the Purchased Receivables. All such Collections consisting of cash
shall not be commingled with other items or monies of the Seller or the Company
for a period longer than the lesser of (i) two (2) Business Days or (ii) the
number of days specified in Section 9-306(4)(d) of the Uniform Commercial Code
as in effect in the jurisdiction whose Laws govern the rights of the Buyer in
and to any such Collections. If the Buyer or its designated agent receives items
or monies that are not payments on account of its Participation Interest in the
Purchased Receivables, such items or monies shall be delivered promptly to the
Seller after being so identified by the Buyer or its designated agent. The
Seller hereby irrevocably grants the Buyer or its designated agent, if any, an
irrevocable power of attorney, with full power of substitution, coupled with an
interest, to take in the name of the Seller all steps with respect to the
Purchased Receivable which the Buyer, in its sole discretion, may deem necessary
or advisable to negotiate or otherwise realize on any right of any kind held or
owned by the Seller or transmitted to or received by the Buyer or its designated
agent (whether or not from the Seller or any Obligor) in connection with its
Participation Interest in such Purchased Receivable; provided, however, that the
Buyer hereby agrees not to exercise, and not to permit its designated agents to
exercise, such power of attorney unless a Servicer Event shall have occurred and
be continuing. The Buyer will provide such periodic accountings and other
information related to disposition of funds so collected as the Seller may
reasonably request.
(d) Collection and Administration at Expense of Company. The Company
agrees that, in the event of a Complete Servicing Transfer, it will reimburse
the Buyer for all out-of-pocket expenses (including, without limitation,
attorneys' and accountants' and other third parties' fees and expenses, expenses
incurred by the Referral Agent's credit recovery group (or any successor),
expenses of litigation or preparation therefor, and expenses of audits and
visits to the offices of the Company) incurred by the Buyer or the Referral
Agent in connection with and following the transfer of functions following a
Complete Servicing
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Transfer (excluding, however, the fees of any successor Servicer).
(e) Payments by Obligors. At any time, and from time to time
following a Complete Servicing Transfer, or if a Servicer Event or Potential
Servicer Event shall have occurred and be continuing, the Seller, the Company
and the Servicer shall permit such Persons as the Buyer may designate to open
and inspect all mail received by the Seller or the Servicer at any of its
offices, and to remove therefrom any and all Collections or other correspondence
from Obligors or the Company in respect of Purchased Receivables. All
Collections received by the Buyer shall be applied in accordance with Section
5.05 hereof. The Buyer shall be entitled to notify the Obligors of Purchased
Receivables to make payments directly to the Buyer of amounts due thereunder at
any time and from time to time following the occurrence of (i) a Servicer Event,
(ii) a Complete Servicing Transfer, or (iii) a violation by the Seller of the
provisions of Section 6.08 hereof.
6.08. Lockboxes. The Seller and the Company hereby agree (i) to
cause all Collections which may be sent by mail as payment on account of
Purchased Receivables to be mailed by Obligors to Permitted Lockboxes; (ii) to
make or cause the Servicer to make the necessary bookkeeping entries to reflect
such Collections on the Records pertaining to such Purchased Receivables; (iii)
to apply or cause the Servicer to apply all such Collections as provided in this
Agreement; and (iv) not to amend or modify any term, with respect to the
disposition of such Collections or any other amounts received by the Seller, the
Company or the Servicer or any Permitted Lockbox Bank, of this Agreement or any
other agreement (including instructions with respect thereto) without the prior
written consent of the Buyer to such amendment or modification.
ARTICLE VII
REPURCHASES BY SELLER
---------------------
7.01. Repurchases. If on the last day of a Settlement Period the Net
Investment shall be equal to or less than ten percent (10%) of the Purchase
Price paid for the Participation Interest on the Closing Date, the Seller shall
be entitled on such last day to repurchase the Participation Interest from the
Buyer upon at least ten (10) Business Days' prior written notice to the Buyer.
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7.02. Repurchase Price. In the case of a repurchase by the Seller
pursuant to Section 7.01 hereof, the Seller shall, on the date of such
repurchase, pay to the Buyer, as the repurchase price thereof, an amount equal
to the sum of (i) the Net Investment as of such date, plus (ii) the Settlement
Period Amount accrued and owing as of such date, plus (iii) if the Servicer is
not the Seller, the accrued Servicer's Compensation as of such date, plus (iv)
all other amounts due to the Buyer hereunder, plus (v) any loss, cost or expense
incurred by the Buyer as the result of the repayment of the Net Investment prior
to the maturity date of any (a) loans made to the Buyer by third parties or (b)
commercial paper notes or short-term promissory notes issued by the Buyer, in
each case for the purpose of maintaining the Participation Interest.
7.03. Reassignment of Repurchased Receivables. Upon receipt of the
purchase price of the Participation Interest pursuant to Section 7.02 hereof,
the Buyer shall reassign to the Seller the Buyer's Participation Interest in
the Purchased Receivables, without recourse, representation or warranty (except
for the warranty that upon the reassignment to the Seller of the Buyer's
Participation Interest in such Purchased Receivables, no Lien created by the
Buyer will affect the Purchased Receivables).
7.04. Obligations Not Affected. The obligations of the Seller to the
Buyer under this Article VII shall not be affected by any invalidity, illegality
or irregularity of any Purchased Receivable, the related Contract or the sale
thereof, except and to the extent that any such invalidity, illegality or
irregularity is caused solely by the gross negligence or willful misconduct of
the Buyer.
ARTICLE VIII
REPRESENTATIONS AND WARRANTIES
------------------------------
8.01. General Representations and Warranties of the Seller. The
Seller, in addition to its other representations and warranties contained herein
or made pursuant hereto, hereby represents and warrants to the Buyer, on and as
of the date hereof, the Closing Date, each Settlement Date on which the Net
Investment is increased, and each date on which a Reinvestment is made, that:
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(a) Organization and Qualification. The Seller is a corporation duly
organized, validly existing and in good standing under the Laws of its
jurisdiction of incorporation. The Seller is duly qualified to do business as a
foreign corporation in good standing in each jurisdiction in which the ownership
of its properties or the nature of its activities, or both, requires it to be so
qualified or, if not so qualified, the failure to so qualify would not have a
material adverse effect on its business, operations, properties or financial
condition. All of the issued and outstanding capital stock of the Seller is
owned by the Company, free of any Liens except for the pledge of such capital
stock by the Company to secure its obligations under the Company Credit
Agreement, and has been fully paid and is nonassessable.
(b) Authorization. The Seller has the corporate power and authority
to execute and deliver the Purchase Documents, to convey the Participation
Interest to the Buyer, and to perform its obligations hereunder and thereunder.
(c) Execution and Binding Effect. Each of the Purchase Documents
(except the Certificate of Participation) has been duly and validly executed and
delivered by the Seller and constitutes a legal, valid and binding obligation
of the Seller enforceable in accordance with its terms. When duly executed and
delivered by the Seller under the provisions hereof, the Certificate of
Participation will constitute a legal, valid and binding assignment by the
Seller enforceable in accordance with the terms thereof and hereof, which will
vest absolutely and unconditionally in the Buyer a valid Participation Interest
in the Purchased Receivables purported to be assigned thereby, subject to no
Liens whatsoever. Upon the filing of the financing statements required under
Section 4.02(c) hereof, the Buyer's Participation Interest will be perfected
under Article Nine of such Uniform Commercial Code, prior to and enforceable
against all creditors of and purchasers from the Seller and all other Persons
whatsoever.
(d) Authorizations and Filings. No authorization, consent, approval,
license, exemption or other action by, and no registration, qualification,
designation, declaration or filing with, any Official Body is or will be
necessary or, in the opinion of the Seller, advisable in connection with the
execution and delivery of the Purchase Documents, the consummation of the
transactions herein or therein
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contemplated or the performance of or the compliance with the terms and
conditions hereof or thereof, to ensure the legality, validity or enforceability
hereof or thereof, or to ensure that the Buyer will have its Participation
Interest in and to the Purchased Receivables perfected and prior to all other
Liens (including competing ownership interests), other than the filing of
financing statements under the Uniform Commercial Code in the jurisdictions
required under Section 4.02(c) hereof.
(e) Absence of Conflicts. Neither the execution and delivery of the
Purchase Documents, nor the consummation of the transactions herein or therein
contemplated, nor the performance of or the compliance with the terms and
conditions hereof or thereof, will (i) violate any Law or (ii) conflict with or
result in a breach of or a default under (A) the articles or certificate of
incorporation or by-laws of the Seller or (B) any agreement or instrument,
including, without limitation, any and all indentures, debentures, loans or
other agreements to which the Seller is a party or by which it or any of its
properties (now owned or hereafter acquired) may be subject or bound.
(f) Location of Chief Executive Office, etc. As of the date hereof
the Seller's Chief Executive Office is located at 802 West Street, Wilmington,
Delaware. The Seller has only the Affiliates identified in Exhibit D hereto,
and has not changed its name, merged or consolidated with any other corporation
or been the subject of any proceeding under Title 11, United States Code
(Bankruptcy) within the past ten (10) years.
(g) No Termination Event. No event has occurred and is continuing and
no condition exists which constitutes a Termination Event or a Potential
Termination Event.
(h) Accurate and Complete Disclosure. No information, whether written
or oral, furnished by the Seller to the Buyer pursuant to or in connection with
this Agreement or any transaction contemplated hereby is false or misleading in
any material respect (and with respect to the Certificate of Participation,
Purchase Notice or Settlement Statement, when furnished, in any respect, whether
or not material) as of the date as of which such information was furnished
(including by omission of material information necessary to make such
information not misleading).
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(i) No Proceedings. There are no proceedings or investigations
pending or threatened before any court, official body, regulatory body,
administrative agency, or other tribunal or governmental instrumentality (A)
asserting the invalidity of the Purchase Documents, (B) seeking to prevent the
consummation of any of the transactions contemplated by the Purchase Documents,
or (C) seeking any determination or ruling that could materially and adversely
affect (i) the performance by the Seller or the Servicer of its obligations
under this Agreement, or (ii) the validity or enforceability of the Purchase
Documents, the Contracts or any material amount of the Receivables.
(j) Bulk Sales Act. No transaction contemplated hereby requires
compliance with any bulk sales act or similar law.
(k) Litigation. No injunction, decree or other decision has been
issued or made by any court, government or agency or instrumentality thereof
with respect to or affecting the Seller and no litigation, investigation or
proceeding of the type referred to in Section 9.01(j) exists.
(l) Margin Regulations. The use of all funds acquired by the Seller
under this Agreement will not conflict with or contravene any of Regulations G,
T, U and X of the Board of Governors of the Federal Reserve System, as the same
may from time to time be amended, supplemented or otherwise modified.
8.02. Representations and Warranties of the Seller With Respect to
Each Sale of Receivables. By selling the Participation Interest in the
Receivables Pool to the Buyer (including by Reinvestment), the Seller represents
and warrants to the Buyer as of the date of such sale or Reinvestment and as of
each Settlement Date on which the Net Investment is increased (in addition to
its other representations and warranties contained herein or made pursuant
hereto) that:
(a) Account Balances; Purchase Notice. If such sale is on the Closing
Date, the Account Balances of the related Contracts for the Purchased
Receivables are the respective amounts therefor set forth in the Purchase
Notice, and all information set forth on such Purchase Notice is true and
correct as of such Closing Date.
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(b) Assignment. The Certificate of Participation vests in the Buyer
all the right, title and interest of the Seller in and to the Purchased
Receivables (to the extent of the Participation Interest), and constitutes a
valid sale thereof, enforceable against all creditors of and purchasers from the
Seller.
(c) No Liens. Each Purchased Receivable, together with the related
Contract and all purchase orders and other agreements related to such Purchased
Receivable, is owned by the Seller free and clear of any Lien, except as
provided herein, and when the Buyer purchases the Participation Interest in such
Purchased Receivables it shall have acquired and shall continue to have
maintained an undivided percentage ownership interest to the extent of its
Participation Interest in such Purchased Receivables and in the Collections with
respect thereto free and clear of any Lien, except as provided herein.
8.03. Representations and Warranties of the Servicer. The Servicer
represents and warrants (in the case of the initial Servicer, as of the date
hereof, and in the case of any Servicer appointed thereafter pursuant to Article
VI, as of the date of its acceptance of its appointment, and in each case as of
the date of each Settlement Statement) as follows:
(a) Organization and Qualification. The Servicer is a corporation
duly organized, validly existing and in good standing under the Laws
of its jurisdiction of incorporation. The Servicer is duly qualified
to do business as a foreign corporation in good standing in each
jurisdiction in which the ownership of its properties or the nature of
its activities or both, requires it to be so qualified or, if not so
qualified, the failure to so qualify would not have a material adverse
effect on its business, operations, properties or financial condition.
(b) Authorization. The Servicer has the corporate power and authority
to execute and deliver this Agreement and to perform its obligations
hereunder.
(c) Execution and Binding Effect. This Agreement has been duly and
validly executed and delivered by the Servicer and constitutes a
legal, valid and binding obligation of the Servicer enforceable in
accordance with its terms.
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(d) Authorizations and Filings. No authorization, consent, approval,
license, exemption or other action by, and no registration,
qualification, designation, declaration or filing with, any Official
Body is or will be necessary or, in the opinion of the Servicer,
advisable in connection with the execution and delivery of this
Agreement, the consummation of the transactions herein contemplated or
the performance of or the compliance with the terms and conditions
hereof by the Servicer, to ensure the legality, validity or
enforceability hereof.
(e) Absence of Conflicts. Neither the execution and delivery of this
Agreement, nor the consummation of the transactions herein
contemplated, nor the performance of or the compliance with the terms
and conditions hereof by the Servicer, will (i) violate any Law or
(ii) conflict with or result in a breach of or a default under (A) the
articles or certificate of incorporation or by-laws of the Servicer or
(B) any agreement or instrument, including, without limitation, any
and all indentures, debentures, loans or other agreements to which the
Servicer is a party or by which it or any of its properties (now owned
or hereafter acquired) may be subject or bound.
(f) No Termination Event. No event has occurred and is continuing and
no condition exists which constitutes a Termination Event or a
Potential Termination Event.
(g) Accurate and Complete Disclosure. No information, whether written
or oral, furnished by the Servicer to the Buyer pursuant to or in
connection with this Agreement or any transaction contemplated hereby,
including without limitation information regarding the Permitted
Lockboxes and Permitted Lockbox Accounts, is false or misleading in
any material respect (and with respect to any Settlement Statement,
when furnished, in any respect, whether or not material) as of the
date as of which such information was furnished (including by omission
of material information necessary to make such information not
misleading).
(h) No Proceedings. There are no proceedings or investigations
pending or threatened before any
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court, official body, regulatory body, administrative agency, or other
tribunal or governmental instrumentality (A) asserting the invalidity
of any of this Agreement (B) seeking to prevent the consummation of
any of the transactions contemplated by any of this Agreement, or (C)
seeking any determination or ruling that could materially and
adversely affect (i) the performance by the Servicer of its
obligations under this Agreement or (ii) the validity or
enforceability of the Contracts or any material amount of the
Receivables.
ARTICLE IX
COVENANTS
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9.01. Affirmative Covenants of the Seller. In addition to its other
covenants contained herein or made pursuant hereto, the Seller covenants to the
Buyer as follows:
(a) Notice of Termination Event. Promptly upon becoming aware of any
Termination Event or Potential Termination Event, the Seller shall give the
Buyer notice thereof, together with a written statement of a Responsible Officer
setting forth the details thereof and any action with respect thereto taken or
contemplated to be taken by the Seller.
(b) Notice of Material Adverse Change. Promptly upon becoming aware
thereof, the Seller shall give the Buyer notice of any material adverse change
in the business, operations or financial condition of the Seller which could
affect adversely the collectibility of the Purchased Receivables or the ability
to service the Purchased Receivables. In order to verify compliance with this
Section 9.01(b), the Seller shall furnish the following to the Buyer:
(i) as soon as practicable and in any event within 45 days
following the close of each fiscal quarter, excluding the last fiscal
quarter, of each fiscal year of the Seller during the term of this
Agreement, an unaudited consolidated balance sheet of the Seller as at the
end of such quarter and unaudited consolidated statements of income and
statement of cash flows of the Seller for such quarter and for the fiscal
year through such
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quarter, setting forth in comparative form the corresponding figures for
the corresponding quarter of the preceding fiscal year, together with notes
thereto as are required to be included therein in accordance with GAAP, all
in reasonable detail and certified by the principal financial officer of
the Seller, subject to adjustments of the type which would occur as a
result of a year-end audit, as having been prepared in accordance with
GAAP; and
(ii) as soon as practicable and in any event within 90 days after
the close of each fiscal year of the Seller during the term of this
Agreement, a consolidated balance sheet of the Seller as at the close of
such fiscal year and consolidated statements of income and statement of
cash flows of the Seller for such fiscal year, setting forth in comparative
form the corresponding figures for the preceding fiscal year, all in
reasonable detail and certified (with respect to the consolidated financial
statements) by independent certified public accountants of recognized
standing selected by the Seller and satisfactory to the Buyer, whose
certificate or opinion accompanying such financial statements shall not
contain any qualification, exception or scope limitation not satisfactory
to the Buyer.
(c) Preservation of Corporate Existence. The Seller shall preserve
and maintain its corporate existence, rights, franchises and privileges in the
jurisdiction of its incorporation, and qualify and remain qualified in good
standing as a foreign corporation in each jurisdiction where the failure to
preserve and maintain such existence, rights, franchises, privileges and
qualification could materially adversely affect (i) the interests of the Buyer
hereunder or (ii) the ability of the Seller to perform its obligations
hereunder.
(d) Compliance with Laws. The Seller shall comply in all material
respects with all Laws applicable to the Seller, its business and properties,
and the Receivables.
(e) Enforceability of Obligations. The Seller shall ensure that, with
respect to each Purchased Receivable, the obligation of any related Obligor to
pay the unpaid balance of such Purchased Receivable in accordance with the terms
of the related Contract remains legal, valid,
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binding and enforceable against such Obligor, except (i) as otherwise permitted
by Section 6.06(b) hereof, (ii) as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws which may be applied in the event of the bankruptcy or insolvency of such
Obligor, and (iii) as such enforceability may be limited by general principles
of equity (whether considered in a suit at law or in equity).
(f) Books and Records. The Seller shall maintain and implement
administrative and operating procedures (including, without limitation, the
ability to recreate Records evidencing the Purchased Receivables in the event of
the destruction of the originals thereof), and keep and maintain all documents,
books, Records and other information reasonably necessary or advisable for the
collection of all Purchased Receivables (including, without limitation, Records
adequate to permit the identification of all Collections and adjustments to each
existing Purchased Receivable) at its Chief Executive Office, except as provided
in Section 6.03 hereof.
(g) Fulfillment of Obligations. The Seller will duly observe and
perform, or cause to be observed or performed, all obligations and undertakings
on its part to be observed and performed under or in connection with the
Purchased Receivables, and will do nothing to impair the rights, title and
interest of the Buyer in and to its Participation Interest in the Purchased
Receivables.
(h) Customer List. The Company shall at all times maintain (or cause
the Servicer to maintain) a current list (which may be stored on magnetic tapes
or disks) of all Obligors under Contracts related to Purchased Receivables,
including the name, address, telephone number and account number of each such
Obligor. The Company shall deliver or cause to be delivered a copy of such list
to the Buyer as soon as practicable following the Buyer's request.
(i) Copies of Reports, Filings, Opinions, etc.
(1) Together with each Settlement Statement required to be
delivered pursuant to Section 5.01, the Seller shall cause the Servicer to
prepare and forward to the Buyer (i) a report in substantially the form of
Exhibit G hereto, relating to the Receivables Pool, as of the close of
business on the last day of the Accounting Period most recently
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completed, and (ii) a listing by Obligor of all Purchased Receivables
together with an aging of such Purchased Receivables as of the last day of
the most recently completed Accounting Period.
(2) The Seller shall furnish to the Buyer on or before June 30 of
each year an opinion of counsel who shall be satisfactory to the Buyer with
respect to the perfection of the Buyer's right, title and interest in the
Receivables Pool and all Collections with respect thereto against all
Persons whomsoever.
(3) On or before June 30, 1997 date of this Agreement, the Buyer
shall cause a firm of nationally recognized independent certified public
accountants (who may render other services to the Servicer or the Seller)
to furnish a report (which report shall cover the twelve months ending on
March 31, 1997, and annually thereafter on or before June 30 of each year)
to the Buyer and the Referral Agent to the effect that they have applied
certain procedures agreed upon with the Servicer and Buyer and examined
certain documents and records relating to the servicing of the Receivables
under this Agreement and the predecessor Amended and Restated Receivables
Purchase Agreement between the Company and the Buyer dated as of December
20, 1995 and that, based upon such agreed-upon procedures, nothing has come
to the attention of such accountants that caused them to believe that the
servicing (including, without limitation, the allocation of the
Collections) has not been conducted in compliance with the terms and
conditions of Article V and Section 6.08 of this Agreement and such
predecessor agreement, except for such exceptions as they believe to be
immaterial and such other exceptions as shall be set forth in such
statement; and in addition, each report shall set forth the agreed upon
procedures performed.
(4) As soon as available and in any event no later than 45 days
prior to the commencement of each Company Fiscal Year, commencing with the
Company Fiscal Year ending March 31, 1999, a schedule of the Accounting
Periods for such Company Fiscal Year.
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(j) Litigation. As soon as possible, and in any event within three
(3) Business Days of the Seller's knowledge thereof, the Seller shall give the
Buyer notice of (i) any litigation, investigation or proceeding to which the
Seller is a party or which could have an adverse effect on the business,
operations, property or financial condition of the Seller or impair the ability
of the Seller to perform its obligations under this Agreement and (ii) any
material adverse development in previously disclosed litigation.
(k) Total Systems Failure. The Seller shall cause the Servicer to
promptly notify the Buyer of any total systems failure and to advise the Buyer
of the estimated time required to remedy such total systems failure and of the
estimated date on which a Settlement Statement can be delivered. Until a total
systems failure is remedied, the Seller shall cause the Servicer (i) to furnish
to the Buyer such periodic status reports and other information relating to such
total systems failure as the Buyer may reasonably request and (ii) to promptly
notify the Buyer if the Servicer believes that such total systems failure cannot
be remedied by the estimated date, which notice shall include a description of
the circumstances which gave rise to such delay, the action proposed to be taken
in response thereto, and a revised estimate of the date on which a Settlement
Statement can be delivered. The Seller shall cause the Servicer to promptly
notify the Buyer when a total systems failure has been remedied.
(l) Notice of Relocation. The Seller shall give the Buyer sixty (60)
days' prior written notice of any relocation of its Chief Executive Office if,
as a result of such relocation, the applicable provisions of the Uniform
Commercial Code of any applicable jurisdiction or other applicable Laws would
require the filing of any amendment of any previously filed financing statement
or continuation statement or of any new financing statement. The Seller will at
all times maintain its Chief Executive Office within a jurisdiction in the
United States in which Article Nine of the Uniform Commercial Code (1972 or
later revision) is in effect.
(m) Further Information. The Seller will furnish or cause to be
furnished to the Buyer such other information, as promptly as practicable, and
in such form and detail, as the Buyer may reasonably request.
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(n) Treatment of Purchase. For accounting purposes, the Seller shall
treat the Purchase and each Reinvestment made hereunder as a sale of an
undivided participation interest in the Purchased Receivables. The Seller shall
also maintain its records and books of account in a manner which clearly
reflects the sale of the Participation Interest to the Buyer and the Buyer's
Investment therein.
(o) Administrative and Operating Procedures. The Seller shall
maintain and implement administrative and operating procedures adequate to
permit the identification of the Receivables Pool and all collections and
adjustments attributable to each Receivables Pool.
(p) Certificates of Title.
(1) If any amount payable under or in connection with any
Purchased Receivable shall be or become evidenced by any promissory note,
chattel paper or other instrument, such note, chattel paper or instrument
shall be duly endorsed in a manner satisfactory to the Buyer and delivered
to the Buyer or its agent.
(2) The Seller shall deliver to the Buyer any certificate of
title or other evidence of ownership issued by the United States or any
state or any political subdivision thereof relating to any chattel held as
security for any amount payable under or in connection with any Purchased
Receivable, with evidence of perfection of the security interest in such
property noted thereon, if such notation is required under the laws of the
jurisdiction in which such property is located in order to perfect a
security interest in such property.
(3) If the Contract relating to any Purchased Receivable requires
the related Obligor to maintain insurance upon the chattel security
relating to such Contract, the Seller shall deliver to the Buyer all
documents or certificates relating to such insurance.
(4) The Seller shall deliver to the Buyer any other document
required by the terms of the related Contracts.
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(q) Acknowledgment of Servicer. If there is a Servicer other than
the Seller, the Company or the Buyer, the Seller shall deliver to the Buyer a
copy of the Successor Servicing Agreement together with an acknowledgment from
the Servicer affirming that the Successor Servicing Agreement is in full force
and effect.
(r) Transfer of Receivables from the Company. Any Receivable
transferred by the Company to the Seller shall be transferred in accordance with
the terms and conditions of the Sale Agreement.
(s) Separate Corporate Existence. The Seller hereby acknowledges
that the Buyer is entering into the transactions contemplated by this Agreement
in reliance upon the Seller's identity as a separate legal entity from the
Company or any Company Entity (as defined below). Therefore, from and after the
date of execution and delivery of this Agreement, the Seller shall take all
reasonable steps including, without limitation, all steps that the Buyer may
from time to time reasonably request, to maintain the Seller's identity as a
separate legal entity and to make it manifest to third parties that the Seller
is an entity with assets and liabilities distinct from those of the Company and
any Affiliates (other than the Seller) thereof (each of the Company and its
Affiliates (other than the Seller) shall be referred to herein as a "Company
Entity"), and not just a division of any Company Entity. Without limiting the
generality of the foregoing and in addition to and consistent with the covenants
set forth above, the Seller shall:
(i) require that all full-time employees of the Seller identify
themselves as such and not as employees of any Company Entity (including,
without limitation, by means of providing appropriate employees with
business or identification cards identifying such employees as the Seller's
employees);
(ii) to the extent any employee, consultant or agent of the
Seller is also an employee, consultant or agent of any Company Entity,
allocate the compensation of such employee, consultant or agent between the
Seller and such Company Entity on a basis
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which reflects the services rendered to the Seller and such Company Entity;
(iii) allocate all overhead expenses (including, without
limitation, telephone and other utility charges) for items shared between
the Seller and any Company Entity on a reasonable basis consistent with
GAAP;
(iv) at all times on and after the Closing Date have at least one
member of its Board of Directors (an "Independent Director") who is not (A)
a director, officer or employee of any Company Entity, (B) a person related
to any officer or director of any Company Entity, (C) a holder (directly or
indirectly) of more than 5% of any voting securities of any Company Entity,
or (D) a person related to a holder (directly or indirectly) of more than
5% of any voting securities of any Company Entity;
(v) ensure that all corporate actions are duly authorized by vote
of its Board of Directors in accordance with its charter and by-laws;
(vi) maintain the Seller's books and records separate from those
of any Company Entity and in a location which is clearly identified (by
signage or otherwise) as allocated solely to the Seller;
(vii) prepare its financial statements separately from those of
other Company Entities and insure that any consolidated financial
statements of the Company that include the Seller have a footnote clearly
stating that the Seller is a separate corporate entity and that its assets
will be available first to satisfy the claims of its creditors;
(viii) except as herein specifically otherwise provided, not
commingle funds or other assets of Seller with those of any other Company
Entity and not maintain bank accounts or other depository accounts to which
any Company Entity is an account party, into which
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any Company Entity makes deposits or from which any Company Entity has the
power to make withdrawals;
(ix) be obligated to reimburse any Company Entity which pays any
of the Seller's operating expenses; and
(xii) not permit the Seller to be named as an insured on the
insurance policy covering the property of any Company Entity, except and
only to the extent that such policy also covers property of the Seller, or
enter into an agreement with the holder of such policy whereby in the event
of a loss in connection with the property of any Company Entity, proceeds
are paid to the Seller.
9.02. Negative Covenants of the Seller. The Seller covenants that it
will not, without the prior written consent of the Buyer:
(a) Statementing for and Treatment of the Sales. Prepare any financial
statements for financial accounting or reporting purposes which shall account
for the transactions contemplated hereby in any manner other than as a sale of
the Participation Interest in the Purchased Receivables to the Buyer.
(b) No Rescissions or Modifications. Rescind or cancel any Purchased
Receivable or related Contract or modify any terms or provisions thereof, except
in accordance with the Credit and Collection Policy or otherwise with the prior
written consent of the Buyer.
(c) No Liens. Cause any of the Purchased Receivables to be sold,
pledged, assigned or transferred or to be subject to a Lien, other than the sale
and assignment of the Participation Interest therein to the Buyer and the Liens
created in connection with the transactions contemplated by this Agreement.
(d) Mergers, Acquisitions. Be a party to any merger or consolidation,
or purchase or otherwise acquire all or substantially all of the assets or any
stock of any class of, or any partnership or joint venture interest in, any
other Person.
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(e) No Changes. Change its name, identity or corporate structure in
any manner which would, could or might make any financing statement or
continuation statement filed in connection with this Agreement or the
transactions contemplated hereby seriously misleading within the meaning of
Section 9-402(7) of the Uniform Commercial Code of any applicable jurisdiction
or other applicable Laws unless it shall have given the Buyer at least sixty
(60) days' prior written notice thereof, or amend its Certificate of
Incorporation or By-Laws.
(f) Payment Instructions. Add any bank as a Permitted Lockbox Bank,
terminate any bank listed on Exhibit K hereto as a Permitted Lockbox Bank,
change any Lockbox Account listed on Exhibit K hereto, or make any change in its
instructions to Obligors regarding payments to be made to the Seller or payments
to be made to any Permitted Lockbox Bank, unless the Buyer shall have received
ten (10) Business Days' prior notice of such addition, termination or change
and, with respect to the addition of any Permitted Lockbox Bank, a Lockbox
Servicing Agreement executed by such Permitted Lockbox Bank shall have been
delivered to the Buyer.
(g) Sales, etc. Sell, transfer, convey, assign or lease all or any
substantial part of its assets, or sell or assign with or without recourse any
Receivables (other than pursuant hereto), or permit any subsidiary to do any of
the foregoing.
(h) Permitted Debt. Incur any debt or other liability except for (a)
debt of the Seller in favor of the Company which is evidenced by a promissory
note of the Seller containing the following terms: (i) a fixed date for the
payment of principal and interest which date shall be no earlier than one year
and one day after the date specified in Section 8.2(a) of the Sale Agreement;
(ii) the obligations under such promissory note shall be subordinated to all
obligations of the Seller to the Buyer and no payments shall be made under such
promissory note until all obligations to the Buyer have been satisfied in full,
provided that payments (including prepayments) of principal and interest may be
made if, after giving effect to such payment, no Termination Event or Potential
Termination Event would occur or be continuing; and (iii) the obligations of the
Seller under such promissory note shall not constitute a claim against the
Seller in the event the Seller has insufficient funds to satisfy the obligation
unless all
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obligations of the Seller to the Buyer have been paid in full and any period
during which a trustee or receiver of the Seller or the Seller's assets could
recover any payments made to the Buyer hereunder has expired, (b) obligations in
connection with operating expenses arising in the ordinary course of its
business and (c) any liability arising under this Agreement.
(i) Other Agreements. Not enter into or be a party to any agreement
or instrument other than agreements with the Company covering the lease of its
offices, the allocation of its overhead and the provision for management
expenses, agreements covering insurance, this Agreement, the Sale Agreement, or
any other agreement referred to herein or contemplated hereby, amend, modify or
waive any provision in any thereof, or give any approval or consent or
permission provided for in any thereof without the prior written consent of the
Buyer (which consent will not be unreasonably withheld); provided, however, that
each such agreement shall contain an undertaking from each Person who enters
into any such agreement with the Seller that such Person will not institute, or
join with any other Person in instituting, against the Seller any proceeding of
the type referred to in Section 11.19.
(j) Other Business. Without the prior written consent of the Buyer,
not engage in any business or enterprise or enter into any transaction other
than as contemplated by this Agreement and the Sale Agreement.
ARTICLE X
TERMINATION
-----------
10.01. Termination Events. A "Termination Event" shall mean the
occurrence and continuance of one or more of the following events or conditions:
(a) either the Seller or Servicer, as the case may be, shall fail to remit
or fail to cause to be remitted to the Buyer on any Settlement Date
any Collections or other amounts required to be remitted to the Buyer,
on such Settlement Date; or
(b) the Seller or the Company shall fail to deposit or pay, or fail to
cause to be deposited or paid, when due any other amount due hereunder
or under the Sale Agreement; or
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(c) any representation, warranty, certification or statement made by the
Seller or the Company under this Agreement or in any agreement,
certificate, report, appendix, schedule or document furnished by or on
behalf of the Seller or the Company to the Buyer pursuant to or in
connection with this Agreement (including, without limitation, the
Sale Agreement) shall prove to have been false or misleading in any
respect material to this Agreement or the transactions contemplated
hereby as of the time made or deemed made (including by omission of
material information necessary to make such representation, warranty,
certification or statement not misleading); or
(d) the Seller or the Company shall fail to obtain the prior consent of
the Buyer to any action or provision as to which such consent is
required by the terms of this Agreement or the Sale Agreement; or
(e) the Seller or the Company shall default or fail in the performance or
observance of any other covenant, agreement or duty applicable to it
contained herein or in the Sale Agreement and such default or failure
shall continue for thirty (30) days after either (i) any Responsible
Officer of the Seller or the Company becomes aware thereof or (ii)
written notice thereof to the Seller by the Buyer; or
(f) a default shall have occurred and be continuing under any instrument
or agreement evidencing, securing or providing for the issuance of
indebtedness for borrowed money of, or guaranteed by, the Seller, the
Company or any Affiliate thereof, and in an amount equal to or in
excess of $5,000,000 in the case of the Company or any Affiliate
thereof other than the Seller, which default if unremedied, uncured,
or unwaived (with or without the passage of time or the giving of
notice) would permit acceleration of the maturity of such
indebtedness; or
(g) the fraction, expressed as a percentage, the numerator of which is the
aggregate of the Account Balance of each Eligible Receivable which (i)
was
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outstanding and became unpaid (in whole or in part) during any of the
last three full Accounting Periods most recently completed for a
period from 91 days to 120 days, inclusive, after the due date for
such Eligible Receivable as shown on the invoice which was sent to the
related Obligor with respect to such Eligible Receivable, (ii) became
uncollectible in accordance with the Credit and Collection Policy
during one of such Accounting Periods or (iii) was written off the
books of the Seller by reason of the related Obligor's inability to
pay, as determined by the Buyer or the Servicer, in accordance with
the Credit and Collection Policy, during one of such Accounting
Periods, and the denominator of which is the sum of the aggregate
outstanding amount of the Account Balances of the Eligible Receivables
as of the last day of each such Accounting Period, shall, as of any
date of determination, exceed 2.16%; or
(h) a Permitted Lockbox Bank shall default or fail in the performance or
observance of any agreement or duty applicable to it under the Lockbox
Servicing Agreement executed by it and such default or failure shall
continue for two (2) Business Days after notice thereof to such
Permitted Lockbox Bank and within such period another Permitted
Lockbox with another Permitted Lockbox Bank is not established by the
Seller, if so requested by the Buyer; or
(i) litigation (including, without limitation, derivative actions),
arbitration, governmental proceedings or actions pursuant to or
brought to enforce any Law is pending against the Seller, the Company
or any Affiliate thereof which in the opinion of the Buyer is likely
to (i) adversely affect the financial position or business of the
Seller or impair the ability of the Seller to perform its obligations
under this Agreement or the Sale Agreement, or (ii) materially
adversely affect the financial position or business of the Company or
impair the ability of the Company to perform its obligations under
this Agreement, the Sale Agreement or the Company's Consent; or
(j) there shall have occurred any event which materially adversely affects
the collectibility of
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a material amount of the Purchased Receivables or there shall have
occurred any other event which materially adversely affects the
ability of the Servicer to collect the Purchased Receivables or the
ability of the Servicer to perform hereunder or the warranty in
Section 8.01(k)(y) shall not be true at any time; or
(k) an Event of Bankruptcy shall occur with respect to (i) the Seller or
the Company, or (ii) one or more Affiliates of the Seller or the
Company which could have a material adverse effect on the business,
financial condition or operations of the Seller or the Company; or
(l) the Buyer or the Receivables Pool shall be deemed to have become an
"investment company" within the meaning of the Investment Company Act
of 1940, as amended; or
(m) the Rate of Collections for any Accounting Period shall be less than
25%; or
(n) the Sale Agreement ceases to be be in full force and effect, or ceases
to evidence the transfer by the Company to the Seller of all
Receivables; or
(o) any action is taken by a secured party in respect of the capital stock
of the Seller pledged by the Company to secure its obligations under
the Company Credit Agreement to (i) sell, transfer or assign such
capital stock or any interest therein or to otherwise realize upon or
register in its own name such capital stock, or (ii) exercise any
rights as a stockholder in respect of such capital stock, including,
without limitation, voting rights; or
(p) (1) this Agreement or the Certificate of Participation shall for any
reason cease to evidence the transfer to the Buyer (or its assignees
or transferees) of legal and equitable right, title and interest to,
and ownership of, an undivided percentage ownership interest in the
Purchased Receivables and Collections with respect thereto to the
extent of the Participation Interest, or (2) if this Agreement or the
Certificate of Participation shall not evidence the transfer of an
undivided percentage ownership
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interest as described in clause (1) above, this Agreement or such
Certificate of Participation shall for any reason not create a valid
and perfected first priority security interest (as defined in the UCC)
in favor of the Buyer in the Purchased Receivables and Collections
with respect thereto.
10.02. Consequences of a Termination Event.
(a) If a Termination Event specified in Section 10.01 hereof shall
occur and be continuing, the Buyer may, by notice to the Seller, terminate its
obligation to purchase the Participation Interest or make Reinvestments
hereunder; provided, that in the case of a Termination Event under Section
10.01(k), such obligation of the Buyer hereunder shall be automatically
terminated without any action on the part of the Buyer. Any such termination
shall reduce the Maximum Net Investment in effect from time to time thereafter
to the amount of the aggregate Net Investment at such time.
(b) Upon any termination of the Buyer's obligation to purchase the
Participation Interest and to make Reinvestments pursuant to this Section 10.02,
the Buyer shall have, in addition to all rights and remedies under this
Agreement or otherwise, all other rights and remedies provided under the Uniform
Commercial Code of the applicable jurisdiction and under other applicable Laws,
which rights shall be cumulative.
(c) The parties hereto acknowledge that this Agreement is, and is
intended to be, a contract to extend financial accommodations to the Seller
within the meaning of Section 365(e)(2)(B) of the Federal Bankruptcy Code (11
U.S.C. (S)365(e)(2)(B)) (or any amended or successor provision thereof or any
amended or successor code).
ARTICLE XI
MISCELLANEOUS
-------------
11.01. Expenses. The Company agrees, upon receipt of a written
invoice, to pay or cause to be paid, and to save the Buyer and the Referral
Agent harmless against liability for the payment of, all out-of-pocket expenses
(including, without limitation, attorneys', accountant's and other third
parties' fees and expenses, any filing fees,
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stamp taxes, expenses of litigation or preparation therefor, audit expenses and
expenses incurred by officers or employees of the Buyer, but excluding salaries
and similar overhead costs of the Buyer and the Referral Agent which are
incurred notwithstanding the execution and performance of this Agreement)
incurred by or on behalf of the Buyer and the Referral Agent from time to time
(a) arising in connection with the development, audit, delivery, collection,
preparation, printing, execution, performance, administration and interpretation
of the Purchase Documents, or transactions undertaken, pursuant to or in
connection herewith or therewith (including, without limitation, the perfection
or protection of the Buyer's Participation Interest in the Purchased
Receivables), (b) relating to any amendments, waivers or consents to the
Purchase Documents requested by the Seller or the Company, (c) arising in
connection with the Buyer's or its agent's enforcement or preservation of rights
under the Purchase Documents, or (d) arising in connection with any litigation
or preparation for litigation involving the Purchase Documents, which, including
all amounts payable under Section 11.03, shall be referred to in this Agreement
as "Transaction Costs".
11.02. Payments. All payments to be made to the Buyer hereunder
shall be payable at 11:00 a.m., Pittsburgh time, on the day when due, at the
Buyer's Office in Dollars in immediately available funds. To the extent
permitted by Law, any amounts due from the Seller hereunder which are not paid
when due shall bear interest for each day from the day due until paid, payable
on demand, at a rate per annum equal to two percent (2.00%) above the Reference
Rate.
11.03. Indemnity for Taxes, Reserves and Expenses. If after the date
hereof, the adoption of any Law or guideline or any amendment or change in the
administration, interpretation or application of any existing or future Law or
guideline by any Official Body charged with the administration, interpretation
or application thereof, or the compliance with any request or directive of any
Official Body (whether or not having the force of Law):
(a) subjects an Affected Party to any tax or changes the basis of
taxation with respect to the Purchase Documents, the Participation
Interest, the Purchased Receivables or payments of amounts due hereunder or
under the Purchased Receivables (including, without limitation, any sales,
gross receipts, general corporate, personal property, privilege or license
taxes
65
<PAGE>
(unless such tax results solely from the failure to file or keep current
any certification or documentation required to qualify for any exemption
from or reduction of any such tax to which such Affected Party would
otherwise be entitled), and including claims, losses and liabilities
arising from any failure to pay or delay in paying any such tax (unless
such failure or delay results solely from such Affected Party's gross
negligence or willful misconduct), but excluding Income Taxes incurred by
such Affected Party arising out of or as a result of this Agreement or the
ownership of the Participation Interest or in respect of any Receivable),
or
(b) imposes, modifies or deems applicable any reserve (including,
without limitation, any reserve imposed by the Board of Governors of the
Federal Reserve System), special deposit or similar requirement against
assets held by, credit extended by, deposits with or for the account of, or
other acquisition of funds by, an Affected Party, or
(c) shall change the amount of capital maintained or requested or
directed to be maintained by an Affected Party, or
(d) imposes upon an Affected Party any other condition or expense
(including, without limitation, (i) loss of margin and (ii) attorneys' fees
and expenses, expenses incurred by officers or employees of the Referral
Agent's credit recovery group (or any successor thereto) and expenses of
litigation or preparation therefor in contesting any of the foregoing) with
respect to the Purchase Documents, the Participation Interest, the
Purchased Receivables or the purchase, maintenance or funding of the
purchase of the Participation Interest in any Receivables by an Affected
Party,
and the result of any of the foregoing is to increase the cost to, reduce the
income receivable by, reduce the rate of return on capital, or impose any
expense (including loss of margin) upon, an Affected Party with respect to this
Agreement, the obligations hereunder or the funding of purchases hereunder, the
Buyer may notify the Seller of the amount of such increase, reduction, or
imposition, and the Seller shall pay to the Buyer the amount so notified to the
Seller by the Buyer (which determination shall be
66
<PAGE>
conclusive) necessary to compensate the Buyer for such increase, reduction or
imposition; provided, that the Seller and any other persons who from time to
time sell receivables or interests therein to the Buyer ("Other Sellers") each
shall be liable for such amount ratably in accordance with the usage under their
respective facilities; provided, further, that (i) if any portion of such amount
is attributable to the Seller and not attributable to any Other Seller, the
Seller shall be solely liable for such portion, and (ii) if any portion of such
amount is attributable to any Other Seller and not attributable to the Seller in
any way, the Seller shall not be liable for any of such portion. The Buyer's
determination with respect to the allocation of such amounts among the Seller
and Other Sellers shall be binding on the Seller. Such amounts shall be due and
payable by the Seller to such Affected Party ten (10) Business Days after such
notice is given.
11.04. Indemnity.
(a) The Seller agrees to indemnify, defend and save harmless the
Buyer, the Referral Agent, their respective directors, officers, shareholders,
employees, agents and each legal entity, if any, who controls the Buyer or the
Referral Agent (each, an "Indemnified Party"), forthwith on demand, from and
against any and all losses, claims, damages, liabilities, costs and expenses
(including, without limitation, all attorneys' fees and expenses, expenses
incurred by their respective credit recovery groups (or any successors thereto)
and expenses of settlement, litigation or preparation therefor) which the Buyer
may incur or which may be asserted against the Buyer by any Person (including,
without limitation, the Company or any Obligor or any other Person whether on
its own behalf or derivatively on behalf of the Seller) (all of the foregoing
being collectively referred to as "Losses"), excluding, however, (a) Losses to
the extent resulting from the gross negligence or willful misconduct on the part
of such Indemnified Party, (b) recourse (except as otherwise provided in this
Agreement) for Defaulted Receivables, (c) any Losses with respect to any tax,
reserve, capital charge or expense related thereto (indemnification with respect
to such Losses being provided as and to the extent provided in Section 11.03),
or (d) Losses to the extent that such Losses resulted from an act or omission of
the Servicer, if the Servicer is not the Company or an Affiliate of the Company
arising from or incurred in connection with (i) any breach of a representation,
warranty or covenant by
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<PAGE>
the Seller or the Company made or deemed made hereunder or in connection
herewith or the transactions contemplated herewith, or (ii) any suit, action,
claim, proceeding or governmental investigation, pending or threatened, whether
based on statute, regulation or order, on tort, on contract or otherwise, before
any local, state or federal court, arbitrator or administrative, governmental or
regulatory body, which arises out of or relates to the Purchase Documents, the
Participation Interest in the Purchased Receivables or related Contracts, or the
use of the proceeds of the sale of the Participation Interest in the Receivables
pursuant hereto or the transactions contemplated hereby (all Losses, after
giving effect to the limitations set forth in clauses (a) through (d) above,
being hereinafter referred to as "Indemnified Amounts") .
(b) Without limitation of the generality of Section 11.04(a), the
Seller shall pay on demand to each Indemnified Party any and all amounts
necessary to indemnify such Indemnified Party from and against any and all
Indemnified Amounts relating to or resulting from any of the following:
(i) the creation of the Participation Interest in any Purchased
Receivable which is not at the date of the creation of such Participation
Interest an Eligible Receivable;
(ii) reliance on any representation or warranty made or deemed
made by the Seller or the Company (or any of its respective Responsible
Officers) or any statement made by any Responsible Officer of the Seller or
the Company under or in connection with this Agreement which shall have
been incorrect in any material respect when made;
(iii) the failure by the Seller or the Company to comply with
any applicable law, rule or regulation;
(iv) the failure to vest in the Buyer an undivided percentage
interest, to the extent of the Participation Interest, in the Purchased
Receivables and Collections in respect thereof, free and clear of any Lien;
(v) the failure to have filed, or any delay in filing, financing
statements or other similar instruments or documents under the UCC of any
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<PAGE>
applicable jurisdiction or under any other applicable law with respect to
the assignment of the Participation Interest;
(vi) any dispute, claim, offset or defense (other than discharge
in bankruptcy of the Obligor) of the Obligor to the payment of any
Purchased Receivable (including, without limitation, a defense based on
such Purchased Receivable or the related Contract not being a legal, valid
and binding obligation of such Obligor enforceable against it in accordance
with its terms), or any other claim resulting from the sale of the
merchandise or service related to such Purchased Receivable or the
furnishing or failure to furnish such merchandise or services;
(vii) any failure of the Seller or the Company to perform its
duties or obligations in accordance with the provisions of this Agreement;
or
(viii) any products liability claim arising out of or in
connection with merchandise, insurance or services which are the subject of
any Contract.
(c) Promptly upon receipt by any Indemnified Party hereunder of notice
of the commencement of any suit, action, claim, proceeding or governmental
investigation (an "Action"), such Indemnified Party shall, if a claim in respect
thereof is to be made against the Seller hereunder, notify the Seller in writing
of the commencement thereof. The Seller may participate in the defense of any
such Action at its expense, and no settlement thereof shall be made without the
approval of the Seller and the Indemnified Party. The approval of the Seller
will not be unreasonably withheld or delayed. In case any Action shall be
brought against any Indemnified Party, the Seller hall be entitled to
participate in and, to the extent that it shall wish, to assume the defense
thereof, with counsel satisfactory to the Indemnified Party, and after notice
from the Seller to such Indemnified Party of its election so to assume the
defense thereof, the Seller shall not be liable to such Indemnified Party for
any legal or other expenses subsequently incurred by such Indemnified Party in
connection with the defense thereof other than reasonable costs of
investigation. In any such Action, any Indemnified Party shall have the right
to retain its own counsel, but the fees and expenses of such counsel shall be at
the expense of such Indemnified Party
69
<PAGE>
unless (i) the Seller and such Indemnified Party shall have mutually agreed in
writing to the retention of such counsel or (ii) the named parties to any such
Action (including any impleaded parties) include both the Seller and such
Indemnified Party and representation of both parties by the same counsel would
be inappropriate due to actual or potential differing interests between them. It
is understood that the Seller shall not, in conjunction with any Action or
related Actions in the same jurisdiction, be liable for the fees and expenses of
more that one separate firm in addition to any local counsel for all such
Indemnified Parties, unless (i) the Seller and such Indemnified Parties shall
have mutually agreed in writing to the retention of separate counsel or (ii) the
named parties to any such Action (including any impleaded parties) include such
Indemnified Parties and representation of such Indemnified Parties by the same
counsel would be inappropriate due to actual or potential differing interests
between them, and that all such fees and expenses shall be reimbursed as they
are incurred.
(d) The indemnity contained in this Section 11.04 shall survive the
termination of this Agreement.
11.05. Holidays. Except as may be provided in this Agreement to the
contrary, if any payment due hereunder shall be due on a day which is not a
Business Day, such payment shall instead be due the next following Business Day.
11.06. Records. All amounts calculated or due hereunder shall be
determined from the records of the Buyer, which determinations shall be
conclusive absent manifest error.
11.07. Amendments and Waivers. The Buyer, the Company and the Seller
may from time to time enter into agreements amending, modifying or supplementing
this Agreement, and the Buyer, in its sole discretion, may from time to time
grant waivers of the provisions of this Agreement or consents to a departure
from the due performance of the obligations of the Seller or the Company under
this Agreement. Any such agreement, waiver or consent must be in writing and
shall be effective only to the extent specifically set forth in such writing.
Any waiver of any provision hereof, and any consent to a departure by the Seller
from any of the terms of this Agreement, shall be effective only in the specific
instance and for the specific
70
<PAGE>
purpose for which given and if such amendment, waiver or departure would have a
material adverse affect on the rights or obligations of the Agent, the Referral
Agent, the Collateral Agent, the Letter of Credit Bank or any Enhancement
Provider or Funding Institution, such amendment, departure or waiver shall not
be effective until consented to by the affected party.
11.08. No Implied Waiver; Cumulative Remedies. No course of dealing
and no delay or failure of the Buyer in exercising any right, power or privilege
under the Purchase Documents shall affect any other or future exercise thereof
or the exercise of any other right, power or privilege; nor shall any single or
partial exercise of any such right, power or privilege or any abandonment or
discontinuance of steps to enforce such a right, power or privilege preclude any
further exercise thereof or of any other right, power or privilege. The rights
and remedies of the Buyer under the Purchase Documents are cumulative and not
exclusive of any rights or remedies which the Buyer would otherwise have.
11.09. No Discharge. The obligations of the Seller and the Company
under the Purchase Documents shall be absolute and unconditional and shall
remain in full force and effect without regard to, and shall not be released,
discharged or in any way affected by (a) any exercise or nonexercise of any
right, remedy, power or privilege under or in respect of the Purchase Documents
or applicable Law, including, without limitation, any failure to set-off or
release in whole or in part by the Buyer of any balance of any deposit account
or credit on its books in favor of the Seller or the Company or any waiver,
consent, extension, indulgence or other action or inaction in respect of any
thereof, or (b) any other act or thing or omission or delay to do any other act
or thing which would operate as a discharge of the Seller or the Company as a
matter of Law.
11.10. Notices. All notices under Section 10.02 hereof shall be
given to the Seller by telephone (confirmed by first-class mail) or facsimile,
(which shall be effective when given by telephone or sent by facsimile) or by
first-class mail, express mail or courier (which shall be effective when
deposited in the mail or delivered to the courier), in all cases with charges
prepaid. All other notices, requests, demands, directions and other
communications (collectively "notices") under the provisions of this Agreement
shall be in writing (including telexed or facsimile communication) unless
otherwise expressly
71
<PAGE>
permitted hereunder and shall be sent by first-class mail, express mail, or by
facsimile, in all cases with charges prepaid, and any such properly given notice
shall be effective when received. All notices shall be sent to the applicable
party at the address stated on the signature page hereof or in accordance with
the last unrevoked written direction from such party to the other parties
hereto.
11.11. Severability. The provisions of this Agreement are intended
to be severable. If any provision of this Agreement shall be held invalid or
unenforceable in whole or in part in any jurisdiction, such provision shall, as
to such jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without in any manner affecting the validity or enforceability
of such provision in any other jurisdiction or the remaining provisions hereof
in any jurisdiction.
11.12. Governing Law. THIS AGREEMENT AND THE CERTIFICATES OF
PARTICIPATION SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK INCLUDING ITS CONFLICT OF LAWS RULES. The Seller hereby
consents to the jurisdiction of the courts of the State of New York and the
courts of the United States located in the State of New York for the purpose of
adjudicating any claim or controversy arising in connection with this Agreement,
and for such purpose, to the extent it may lawfully do so, waives any objection
to such jurisdiction or to venue therein.
11.13. Prior Understandings. This Agreement sets forth the entire
understanding of the parties relating to the subject matter hereof, and
supersedes all prior understandings and agreements, whether written or oral.
11.14. Survival. All representations and warranties of the Seller
and the Company contained herein or made in connection herewith or in connection
with the Certificate of Participation shall survive the making thereof, and
shall not be waived by the execution and delivery of this Agreement or the
Certificate of Participation, any investigation by the Buyer, the purchase,
repurchase or payment of the Participation Interest in any Purchased Receivable,
or any other event or condition whatsoever (other than a written waiver
complying with Section 11.07 hereof). All obligations of the Seller to make
payments to, or to indemnify, the Buyer or to repurchase the Participation
Interest in the Purchased
72
<PAGE>
Receivables from the Buyer shall survive the payment of all Purchased
Receivables, the termination of the Purchase Obligation and the termination of
all other obligations of the Seller hereunder and shall not be affected by
reason of an invalidity, illegality or irregularity of any Purchased Receivable.
The covenants and agreements contained in or given pursuant to this Agreement
(including, without limitation, those contained in Article IX) shall continue in
full force and effect until the termination of the Purchase Obligation,
liquidation of the Participation Interest in the Purchased Receivables and
discharge of all other obligations of the Seller and the Company hereunder.
11.15. Counterparts. This Agreement may be executed in any number of
counterparts and by the different parties hereto on separate counterparts each
of which, when so executed, shall be deemed an original, but all such
counterparts shall constitute but one and the same instrument.
11.16. Set-Off. In case a Termination Event shall occur and be
continuing, the Buyer and, to the fullest extent permitted by Law, the holder of
any assignment of the Buyer's rights hereunder (including without limitation
each Bank, the Letter of Credit Bank, any Enhancement Provider and any Funding
Institution), shall each have the right, in addition to all other rights and
remedies available to it, without notice to the Seller, to set-off against and
to appropriate and apply to any amount owing by the Seller hereunder which has
become due and payable, any debt owing to, and any other funds held in any
manner for the account of, the Seller by the Buyer or by any holder of any
assignment, including, without limitation, all funds in all deposit accounts
(whether time or demand, general or special, provisionally credited or finally
credited, or otherwise) now or hereafter maintained by the Seller with the Buyer
or any holder of any assignment. Such right shall exist whether or not such
debt owing to, or funds held for the account of, the Seller is or are matured
other than by operation of this Section 11.16 and regardless of the existence or
adequacy of any collateral, guaranty or any other security, right or remedy
available to the Buyer or any holder. Nothing in this Agreement shall be deemed
a waiver or prohibition or restriction of the Buyer's or any holder's rights of
set-off or other rights under applicable Law.
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<PAGE>
11.17. Time of Essence. Time is of the essence in this Agreement.
11.18. Payments Set Aside. To the extent that the Seller, the
Company or any Obligor makes a payment to the Buyer or the Buyer exercises its
rights of set-off and such payment or set-off or any part thereof is
subsequently invalidated, declared to be fraudulent or preferential, set aside,
recovered from, disgorged by, or is required to be refunded, rescinded,
returned, repaid or otherwise restored to the Seller, the Company, such Obligor,
a trustee, a receiver or any other Person under any Law, including, without
limitation, any bankruptcy law, any state or federal law, common law or
equitable cause, the obligation or part thereof originally intended to be
satisfied shall, to the extent of any such restoration, be reinstated, revived
and continued in full force and effect as if such payment had not been made or
such set-off had not occurred. The provisions of this Section 11.18 shall
survive the termination of this Agreement.
11.19. No Petition. Each of the Seller and the Company agrees that
it will not institute against, or join any other Person in instituting against,
the Buyer any bankruptcy, reorganization, arrangement, insolvency or liquidation
proceeding or other similar proceeding under the laws of the United States or
any state of the United States. The provisions of this Section 11.19 shall
survive the termination of this Agreement.
11.20. No Recourse. The obligations of the Buyer under this Agreement
are solely the corporate obligations of the Buyer. No recourse shall be had for
the payment of any amount owing in respect to this Agreement or for the payment
of any fee hereunder or for any other obligation or claim arising out of or
based upon this Agreement against Merrill Lynch Money Markets Inc. ("Merrill"),
against any stock holder, employee, officer, director or incorporator of the
Buyer or against the Referral Agent or any stockholder, employee, officer,
director, incorporator or affiliate thereof. For purposes of this paragraph,
the term "Merrill" shall mean and include Merrill and all Affiliates thereof and
any employee, officer, director, incorporator, shareholder or beneficial owner
of any of them; provided, however, that the Buyer shall not be considered to be
an affiliate of Merrill or the Referral Agent.
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<PAGE>
11.21. Tax Treatment. It is the intention of the parties hereto that
for the purposes of all taxes, the transactions contemplated hereby shall be
treated as a loan by the Buyer to the Seller secured by the Receivables (the
"Intended Characterization"). Each party hereby agrees that will report such
transactions for the purposes of all taxes, and otherwise will act for the
purposes of all taxes, in a manner consistent with the Intended
Characterization.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto, by their duly authorized
signatories, have executed and delivered this Agreement as of the date first
above written.
THREE RIVERS FUNDING CORPORATION
By: /s/ Stewart L. Cutler
-----------------------------
Title: Vice President
--------------------------
Address:
c/o Merrill Lynch Money Markets Inc.
Merrill Lynch World Headquarters
World Financial Center - South Tower
225 Liberty Street
New York, New York 10080
Attention: Mr. Gerard Haugh
Telephone: (212) 236-7203
Facsimile: (212) 236-7584
with a copy of all notices to:
Merrill Lynch Money Markets Inc.
World Financial Center - North Tower
250 Vesey Street
New York, New York 10281
Attention:
Telephone: (212) 449-7468
Facsimile: (212) 449-8939
EXIDE U.S. FUNDING CORPORATION
By: /s/ Stephen D. Kovacs
--------------------------
Title: President
-----------------------
Address:
645 Penn Street
Reading, Pennsylvania 19612-4205
Attention: Mr. Alan E. Gauthier
Telephone: (215) 378-0675
Facsimile: (215) 378-0232
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<PAGE>
EXIDE CORPORATION
By: Stephen D. Kovacs
----------------------------
Title: Asst. Secretary
-------------------------
Address:
645 Penn Street
Reading, Pennsylvania 19612-4205
Attention: Mr. Alan E. Gauthier
Telephone: (215) 378-0675
Facsimile: (215) 378-0232
77
<PAGE>
EXHIBIT A
TO RECEIVABLES
PURCHASE AGREEMENT
CERTIFICATE OF PARTICIPATION
EXIDE U.S. FUNDING CORPORATION (the "Seller"), having offices located
at 645 Penn Street, Reading, Pennsylvania 19612-4205, hereby sells, assigns,
transfers and conveys to THREE RIVERS FUNDING CORPORATION (the "Buyer") having
offices located at 225 Liberty Street, New York, New York 10080, a Participation
Interest with an initial Net Investment of $________ in each and every
Receivable described on the attached Schedule I constituting a Receivables Pool
and all proceeds thereof and each and every Receivable hereafter from time to
time arising and all proceeds thereof pursuant to and in accordance with the
Receivables Purchase Agreement dated as of March 31, 1997, as the same may be
amended, supplemented or otherwise modified and in effect from time to time (the
"Receivables Purchase Agreement"), entered into between the Buyer, Exide
Corporation and the Seller.
The Buyer's undivided percentage ownership interest at any time shall
be calculated in accordance with Article III of the Receivables Purchase
Agreement.
<PAGE>
Capitalized terms not otherwise defined herein shall have the meanings
assigned to such terms in the Receivables Purchase Agreement.
IN WITNESS WHEREOF, the undersigned have executed this Certificate on
the 31st day of March, 1997.
EXIDE U.S. FUNDING CORPORATION
By:
----------------------------
Authorized Signatory
THREE RIVERS FUNDING CORPORATION
By: ----------------------------
Authorized Signatory
2
<PAGE>
EXHIBIT B
TO RECEIVABLES
PURCHASE AGREEMENT
SETTLEMENT STATEMENT
<PAGE>
EXIDE U.S. FUNDING CORPORATION
SETTLEMENT STATEMENT
Month of ___________
Settlement Period From: ________ To: ________
<TABLE>
<CAPTION>
<S> <C>
A. Net Investment calculated on the previous Settlement Date $
B. Less: Net Investment calculated on the current Settlement Date $
------------
C. Change in Net Investment - Due Buyer / (Seller)
D. Settlement Period Amount $
------------
------------
E. NET CASH SETTLEMENT - Amount Due Buyer / (Seller) (Item C plus Item D) $
------------
--------------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
Date:
-------------------------------------
</TABLE>
<PAGE>
EXIDE U.S. FUNDING CORPORATION
NET INVESTMENT RECONCILIATION
Month of __________
Settlement Period From:_________ To:___________
<TABLE>
<CAPTION>
<C> <S> <C> <C> <C> <C> <C>
A. Total Accounts Receivable Available $
B. Less: Accounts greater than 90 Days Past Due $ $
YUASA Offset $
Other Ineligible Receivables $ $
--------- ---------
E. Aggregate Eligible Receivables $
F. Less: Excess over Special Concentration Limits
Obligor Limit Balance Excess
------- ----- ------- ------
$ $ $
$ $ $
$ $ $ $( )
-----------
Less: Excess over Standard Concentration Limits
Obligor Limit Balance Excess
------- ----- ------- ------
$ $ $
$ $ $
$ $ $ $( )
-----------
G. Less Deferred Purchase Price $( )
H. Less Settlement Period Amount Reserve $( )
I. Less Servicer Compensation Reserve $( )
-----------
- --------------------------------------------------------------------------------------------
J. NET INVESTMENT $
- --------------------------------------------------------------------------------------------
</TABLE>
------------------------------------
Name: _____________________________
Title: _____________________________
Date: _____________________________
<PAGE>
EXIDE U.S. FUNDING CORPORATION
CALCULATION OF NET INVESTMENT
Month of _______
Settlement Period From: _________ To: ______________
(i) Beginning Net Investment $___________
(ii) Plus Increase in Net Investment $___________
(iii) Less:
(a) Amount Paid to Reduce the Net Investment
(Sec. 2.03 (b)) $___________
(b) Unreinvested Collections $___________
(c) Liquidation Settlements $___________
(iv) Ending Net Investment $
===========
<PAGE>
EXIDE U.S. FUNDING CORPORATION
CALCULATION OF SETTLEMENT PERIOD AMOUNT
Month of _________
Settlement Period From:________ To: ___________
A. Net Investment calculated on the previous Settlement Date $
B. Program Fee %
C. Days in Settlement Period _____________
D. Amount of Program Fee (Item A x Item B x Item C/360) $
E. Cost of Funds $____________
-------------
F. Settlement Period Amount (Item D + Item E) $
-------------
<PAGE>
EXIDE U.S. FUNDING CORPORATION
CALCULATION OF DEFERRED PURCHASE PRICE
Month of ________________
Settlement Period From: _________ To:________
<TABLE>
<CAPTION>
<C> <S> <C> <C>
(i) Credit Reserve $
(ii) Dilution Reserve
Warranty Claims $
Cash Discounts $
$
Overbills $ $
----------- -----------
Total Deferred Purchase Price $
===========
- -------------------------------------------------------------------
CALCULATION OF SETTLEMENT PERIOD AMOUNT RESERVE
Settlement Period Amount Reserve
Settlement Period Amount for
immediately preceding
settlement period $
Times 600% $
----------- ===========
</TABLE>
<PAGE>
EXIDE U.S. FUNDING CORPORATION
CALCULATION OF BUYER'S ALLOCATION
Month of __________
Settlement Period From: __________ To: ___________
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Net Investment $
Plus Deferred Purchase Price $
----------
(a) Investment $
(b) Settlement Period Amount Reserve
{1} Settlement Period for the immediately preceding
Settlement Period
Times 6 $
----------
(c) Servicer's Compensation
{1} Aggregate Account Balances of Purchased Receivables $
{2} Rate of Servicer's Compensation
{3} Days in period ({1} * {2} * {3}/360)
---------- $
----------
(i) Total (a) + (b) + (c) $
----------
Aggregate Account Balances of all Eligible Receivables in the
Receivables Pool $
Less: Excess over Special Concentration Limits:
Obligor Limit Balance Excess
------ ----- ------- ------
$ $ $
$ $ $
$ $ $
--------- $( )
Less: Excess over Standard Concentration Limits:
Obligor Limit Balance Excess
------ ----- ------- ------
$ $ $
$ $ $
----------
(ii) $ $ $ $( ) $
--------- ---------- ----------
BUYER'S ALLOCATION ((i)/(ii)) %
</TABLE>
<PAGE>
EXIDE U.S. FUNDING CORPORATION
CALCULATION OF TERMINATION EVENTS
Month of __________
Settlement Period From: _____________ To: ____________
<TABLE>
<CAPTION>
(a) (b) (c) (d) (e) (f) (g) (h)
Total
Purchased Total
Receivables Collections Annualized
Acct. 61-90 of Monthly Default
Acct. Period Defaulted Day Purchased Default Trigger Collection
Period End Receivables Receivables Receivables Rate Calculation Rate
- ------ --- ----------- ----------- ----------- ---- ----------- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Notes:
Column (e): Includes cash collections and Deemed Collections
Column (f): (c) + (b+c) * 12
Column (g): 75% * (sum of current month + the two previous months in column (d))
--------------------------------------------------------------------
column (b)
Column g must be less than or equal to 3.25%
Column (h): Prior Month column (b)/current month column (e)
Column (h) must be greater than or equal to ________%
</TABLE>
<PAGE>
EXHIBIT C
TO RECEIVABLES
PURCHASE AGREEMENT
RESPONSIBLE OFFICER'S CERTIFICATE
I, ______________, the undersigned ___________ of [EXIDE U.S. FUNDING
CORPORATION] [EXIDE CORPORATION] (the "Company"), a Delaware corporation, DO
HEREBY CERTIFY that:
1. Attached hereto as Exhibit A is a true and complete copy of the
Certificate of Incorporation of the Company as in effect on the date hereof.
2. Attached hereto as Exhibit B is a true and complete copy of the
By-laws of the Company as in effect on the date hereof.
3. Attached hereto as Exhibit C is a true and complete copy of the
resolutions duly adopted by the Board of Directors of the Company on
___________, 1997, authorizing the execution, delivery and performance of each
of the documents mentioned therein, which resolutions have not been revoked,
modified, amended or rescinded and are still in full force and effect.
4. The below-named persons have been duly qualified as and at all
times since ___________, 1997, to and including the date hereof as officers or
representatives of the Company holding the respective offices or positions below
set opposite their names and the signatures below set opposite their names are
their genuine signatures:
Name Office Signatures
---- ------ ----------
President ________________
Vice President ________________
Vice President ________________
and Treasurer
Secretary ________________
5. The representations and warranties of the Company contained in
Article VIII of the Receivables
<PAGE>
Purchase Agreement dated as of March __, 1997 among Exide U.S. Funding
Corporation, Exide Corporation and Three Rivers Funding Corporation are true and
correct as if made on the date hereof.
WITNESS my hand and seal of the Company as of this ____ day of _____,
1997.
-------------------------------
Secretary
I, the undersigned, Vice President of the Company, DO HEREBY CERTIFY
that ___________________ is the duly elected and qualified _____________ of the
Company and the signature above is his/her genuine signature.
WITNESS my hand as of this __ day of ______, 1997.
-------------------------------
Vice President
2
<PAGE>
EXHIBIT D
TO RECEIVABLES
PURCHASE AGREEMENT
Information Regarding Affiliates
<PAGE>
Subsidiaries/Affiliates - Domestic
----------------------------------
GBC, Inc.
General Battery Corporation (Business Trust)
Dixie Metals Co.
Schuylkill Holdings, Inc.
Schuylkill Metals, Inc.
ECA, Inc.
Exide Investments, Inc.
ESB International Corporation
Willard Battery Company
ESB General Battery Corp. of Puerto Rico
Reignbeaux, Ltd.
Evanite Fiber Corp.
Exide International Inc.
Exide Corporation
2
<PAGE>
Subsidiaries/Affiliates - Foreign
---------------------------------
1036068 Ontario, Inc. (Canada)
Exide Canada, Inc. (Canada)
Euro Exide Corp., Ltd. (England)
Euro Exide Nominees Limited (England)
Exide Batteries Limited (England)
B.I.G. Batteries Distribution, Ltd. (England)
B.I.G. Batteries, Ltd. (England)
B.I.G. Batteries France (France)
B.I.G. Batteries Spain (Spain)
Exide (Holding) Limited (England)
Exide Limited - Dagenham (England)
Gemala Ireland Holding Limited (England)
Exide Batterier AB (Sweden)
Gemala Ireland Company Limited (Ireland)
Gemala Batteries Ireland Limited (Ireland)
Gemala Distribution, Ltd. (Ireland)
Gemala Ignition Company Limited (Ireland)
S.E.A. Tudor S.A. (Spain)
Exide Holdings France S.A. (France)
Exide France S.A. (France)
CEAC S.A. (France)
3
<PAGE>
EXHIBIT E
TO RECEIVABLES
PURCHASE AGREEMENT
Intentionally Omitted
---------------------
<PAGE>
EXHIBIT F
TO RECEIVABLES
PURCHASE AGREEMENT
Intentionally Omitted
---------------------
<PAGE>
EXHIBIT G
TO RECEIVABLES
PURCHASE AGREEMENT
Accounting Period Report
Corporate Accounts
- ------------------
Roll Forward Analysis (Summary and Detail)
Age Analysis (Summary and Detail)
Accounts Receivable List, including customers' names and addresses
Branch Accounts
- ---------------
Summary Age Analysis by Branch
Detailed Age Analysis for each Branch
Summary Roll Forward Analysis by Branch
Detailed Roll Forward for each Branch
Customer Name and Address Listing for each Branch, including Account
Balances
Corporate and Branch Combined
- -----------------------------
Defective Analysis
Detailed List of Overbill Balances by Customer
<PAGE>
EXHIBIT H
TO RECEIVABLES
PURCHASE AGREEMENT
Schedule of Accounting Periods
------------------------------
<TABLE>
<CAPTION>
Month Closing Date
----- ------------
<S> <C>
April, 1997 4/27/97
May, 1997 5/25/97
June, 1997 6/29/97
July, 1997 7/27/97
August, 1997 8/24/97
September, 1997 9/28/97
October, 1997 10/26/97
November, 1997 11/23/97
December, 1997 12/28/97
January, 1998 1/25/98
February, 1998 2/22/98
March, 1998 3/31/98
</TABLE>
<PAGE>
EXHIBIT I
TO RECEIVABLES
PURCHASE AGREEMENT
Special Concentration Limits
<TABLE>
<CAPTION>
Obligor Percentage
------- ----------
<S> <C>
Chrysler 8%
Pep Boys 6%
Sears 15%
</TABLE>
Discretionary Special Concentration Limits
<TABLE>
<CAPTION>
Obligor Percentage
------- ----------
<S> <C>
NAPA/Genuine Parts 10%
</TABLE>
<PAGE>
EXHIBIT J
TO RECEIVABLES
PURCHASE AGREEMENT
EXIDE U.S. FUNDING CORPORATION
PURCHASE NOTICE
Three Rivers Funding Corporation
World Financial Center - South Tower
225 Liberty Street - 14th Floor
New York, New York 10080
Mellon Bank, N.A.,
as Referral Agent
One Mellon Bank Center
Pittsburgh, Pennsylvania 15258
March __, 1997
Gentlemen:
Reference is hereby made to the Receivables Purchase Agreement dated
as of March 31, 1997 (the "Agreement") among Exide U.S. Funding Corporation (the
"Seller"), Exide Corporation and Three Rivers Funding Corporation (the "Buyer").
This Notice is delivered to you pursuant to Section 4.02(e) of the Agreement.
Capitalized terms used herein and not defined shall have the meanings assigned
to them in the Agreement.
The Seller hereby requests that the initial Purchase be made by the
Buyer on __________, 1997, at a Purchase Price equal to $__________, such
Purchase Price determined as set forth in Schedule A attached hereto and made a
part hereof, utilizing information as of ________, 1997 (the last day of the
most recently completed Accounting Period).
The Seller hereby certifies and warrants that on the date on which the
Purchase requested hereby is made (and the Seller, by accepting the payment of
the Purchase Price relating to such Purchase, will be deemed to have certified
on such date that) (i) the representations and warranties of the Seller
contained in Article VIII of the Agreement are
<PAGE>
true and correct on and as of the date of such Purchase as though made on and as
of such date, (ii) the Seller is in compliance with the covenants set forth in
Article IX of the Agreement and (iii) no Termination Event or Potential
Termination Event shall occur as a result of, or shall exist on the date of,
such Purchase.
The Seller agrees that if, prior to the time that the Purchase
requested hereby is made, any matter certified to herein will not be true and
correct at such time as if then made, it will immediately so notify the Buyer
and the Referral Agent.
The Seller has caused this notice to be executed and delivered, and
the certifications and warranties contained herein to be made, by its duly
authorized officer as of this _____ day of ___________, 1997.
EXIDE U.S. FUNDING CORPORATION
By:
---------------------------
Authorized Signatory
2
<PAGE>
EXHIBIT K
TO RECEIVABLES
PURCHASE AGREEMENT
List of Permitted Lockbox Banks
-------------------------------
<TABLE>
<CAPTION>
Lockbox Permitted
Name of Bank Address Account # Lockbox #
- ------------ ------- --------- ---------
<S> <C> <C> <C>
Harris Trust & Chicago, Illinois 4266375 Attention:
Savings Bank Check
Processing
311/5
CoreStates Bank, Reading, Pennsylvania 81-294771 9535
N.A.
</TABLE>
<PAGE>
EXHIBIT L
TO RECEIVABLES
PURCHASE AGREEMENT
Dilution Horizons
-----------------
<TABLE>
<CAPTION>
Dilution Factor Dilution Horizon
--------------- ----------------
<S> <C>
Credits 0
Cancellations 0
Cash discounts 1
Warranties 3
Allowances 0
Disputes 0
Rebates 0
Charge backs 0
Returned or repossessed goods 0
Other allowances, adjustments
and deductions (including,
without limitation, any special
or other discounts or any
reconciliations) that are given
to an Obligor in accordance with
the Credit and Collection Policy 0
</TABLE>
<PAGE>
EXHIBIT M
TO RECEIVABLES
PURCHASE AGREEMENT
Excluded Obligors
-----------------
None
<PAGE>
- --------------------------------------------------------------------------------
SALE AGREEMENT
dated as of March 31, 1997
between
EXIDE CORPORATION,
as Seller
and
EXIDE U.S. FUNDING CORPORATION,
as Buyer
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C> <C>
ARTICLE I
AGREEMENT TO PURCHASE AND SELL....................................1
SECTION 1.1 Contribution of Receivables.........................1
SECTION 1.2 Agreement to Purchase and Sell......................1
SECTION 1.3 Timing of Purchases.................................1
SECTION 1.4 Consideration for Purchases.........................2
SECTION 1.5 No Recourse.........................................2
SECTION 1.6 No Assumption of Obligations Relating to
Receivables or Contracts.....................2
SECTION 1.7 True Sales..........................................2
ARTICLE II
CALCULATION OF PURCHASE PRICE.....................................3
SECTION 2.1 Calculation of Purchase Price.......................3
SECTION 2.2 Definitions and Calculations Related to Purchase
Price Percentage.............................4
ARTICLE III
PAYMENT OF PURCHASE PRICE; SERVICING, ETC.........................5
SECTION 3.1 Purchase Price Payments.............................5
SECTION 3.2 The Buyer Note......................................5
SECTION 3.3 Application of Collections and Other Funds..........6
SECTION 3.4 Servicing of Receivables............................6
SECTION 3.5 Monthly Calculations................................7
SECTION 3.6 Buyer Obligation under Purchase Agreement...........7
SECTION 3.7 Payments and Computations, Etc......................7
ARTICLE IV
CONDITIONS TO PURCHASES...........................................8
SECTION 4.1 Conditions Precedent to Initial Contribution........8
SECTION 4.2 Effective Date of Initial Contribution..............9
SECTION 4.3 Certification as to Representations and Warranties..9
SECTION 4.4 Effect of Payment of Purchase Price.................9
ARTICLE V
REPRESENTATIONS AND WARRANTIES....................................9
SECTION 5.1 Representations and Warranties of Seller............9
SECTION 5.2 Representations and Warranties of Buyer............12
</TABLE>
i
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE VI
GENERAL COVENANTS OF SELLER.......................................13
SECTION 6.1 Affirmative Covenants...............................13
SECTION 6.2 Reporting Requirements..............................18
SECTION 6.3 Negative Covenants..................................19
ARTICLE VII
ADDITIONAL RIGHTS AND OBLIGATIONS IN RESPECT OF THE
RECEIVABLE........................................................21
SECTION 7.1 Rights of Buyer.....................................21
SECTION 7.2 Responsibilities of Seller..........................21
SECTION 7.3 Further Action Evidencing Purchases.................22
ARTICLE VIII
TERMINATION.......................................................23
SECTION 8.1 Termination by Seller...............................23
SECTION 8.2 Automatic Termination...............................23
ARTICLE IX
INDEMNIFICATION...................................................24
SECTION 9.1 Indemnities by Seller...............................24
ARTICLE X
MISCELLANEOUS.....................................................26
SECTION 10.1 Amendments; Waivers, Etc............................26
SECTION 10.2 Notices, Etc........................................26
SECTION 10.3 Cumulative Remedies.................................27
SECTION 10.4 Binding Effect; Assignability; Survival of
Provisions..........................................27
SECTION 10.5 Governing Law.......................................27
SECTION 10.6 Costs, Expenses and Taxes...........................27
SECTION 10.7 [Reserved]..........................................28
SECTION 10.8 Waiver of Jury Trial................................28
SECTION 10.9 Integration.........................................28
SECTION 10.10 Counterparts........................................28
SECTION 10.11 Acknowledgment and Consent..........................28
SECTION 10.12 No Partnership or Joint Venture.....................29
SECTION 10.13 No Proceedings......................................29
ii
<PAGE>
TABLE OF CONTENTS
Page
SECTION 10.14 Severability of Provisions..........................29
SECTION 10.15 Recourse to Buyer...................................30
EXHIBITS
EXHIBIT A Form of Buyer Note
EXHIBIT B Form of Seller Assignment Certificate
SCHEDULES
SCHEDULE 1 Changes in Seller's Financial Condition
SCHEDULE 2 Information Regarding Affiliates and Trade Names
SCHEDULE 3 List of Permitted Lockbox Banks and Lockbox Accounts
iii
<PAGE>
This SALE AGREEMENT, dated as of March 31, 1997 (this "Agreement"), is made
between EXIDE CORPORATION, a Delaware corporation ("Seller"), and EXIDE U.S.
FUNDING CORPORATION, a Delaware corporation ("Buyer").
Pursuant to the Receivables Purchase Agreement dated as of the date hereof
among Seller, Buyer and Three Rivers Funding Corporation, a Delaware corporation
("Second Step Purchaser") (as amended, supplemented or otherwise modified from
time to time, the "Purchase Agreement"), Buyer intends to transfer a
participation interest in the Receivables sold pursuant hereto, together with
Receivables contributed to Buyer by Seller from time to time, to the Second Step
Purchaser in order to, among other things, finance its purchases hereunder.
Except as otherwise defined herein or in Appendix A hereto, capitalized terms
have the meanings assigned to them in the Purchase Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto, intending to
be legally bound, agree as follows:
ARTICLE I
AGREEMENT TO PURCHASE AND SELL
SECTION 1.1 Contribution of Receivables. Seller hereby transfers to Buyer
all Receivables in existence on the Initial Cut-Off Date as a contribution by
Seller to the capital of Buyer (the "Contributed Receivables"). Buyer shall
issue the Buyer Note to Seller, in the initial principal amount of $0.00.
SECTION 1.2 Agreement to Purchase and Sell. Seller hereby sells,
transfers, assigns, sets over and conveys to Buyer, and Buyer agrees to purchase
from Seller, at the times set forth in Section 1.3, all of Seller's right, title
and interest in, to and under:
(a) all Receivables created by Seller that arise during the period
from and including the closing of Seller's business on the Initial Cut-Off Date
to but excluding the Purchase Termination Date, and
(b) all proceeds of the Receivables (including all Collections with
respect thereto).
SECTION 1.3 Timing of Purchases. Except to the extent otherwise provided
in Section 8.2, after the closing of Seller's business on the Initial Cut-Off
Date until the closing of Seller's business on the Business Day immediately
preceding the Purchase Termination Date, all Receivables shall be sold
automatically to Buyer pursuant hereto immediately (and without further action
by any Person) upon the creation of the Receivable.
<PAGE>
SECTION 1.4 Consideration for Purchases. On the terms and subject to the
conditions set forth in this Agreement, Buyer agrees to make the monthly
Purchase Price payments to Seller in accordance with Article III.
SECTION 1.5 No Recourse. Except as specifically provided in this
Agreement, the sale and purchase of Receivables under this Agreement shall be
without recourse to Seller; it being understood that Seller shall be liable to
Buyer for all representations, warranties, covenants and indemnities made by
Seller pursuant to the terms of this Agreement, all of which obligations have
been designed so as not to constitute recourse to Seller for the credit risk of
the Obligors.
SECTION 1.6 No Assumption of Obligations Relating to Receivables or
Contracts. Neither Buyer nor Second Step Purchaser shall have any obligation or
liability to any Obligor or other customer or client of Seller (including any
obligation to perform any of the obligations of Seller under any Receivable,
related Contracts or any other related purchase orders or other agreements). No
such obligation or liability is intended to be assumed by Buyer or Second Step
Purchaser hereunder, and any assumption thereof is expressly disclaimed.
SECTION 1.7 True Sales.
(a) Seller and Buyer intend the transfers of Receivables hereunder to
be true sales (or absolute conveyances, in the case of Contributed Receivables)
by Seller to Buyer that are absolute and irrevocable and that provide Buyer with
the full benefits of ownership of the Receivables, and neither Seller nor Buyer
intends the transactions contemplated hereunder to be, or for any purpose to be
characterized as, loans from Buyer to Seller.
(b) It is, further, not the intention of Buyer or Seller that the
conveyance of the Receivables by Seller be deemed a grant of a security interest
in the Receivables by Seller to Buyer to secure a debt or other obligation of
Seller. However, in the event that, notwithstanding the intent of the parties,
any Receivables are property of Seller's estate, then (i) this Agreement also
shall be deemed to be and hereby is a security agreement within the meaning of
the Uniform Commercial Code of any applicable jurisdiction, and (ii) the
conveyance by Seller provided for in this Agreement shall be deemed to be a
grant by Seller to Buyer of, and Seller hereby grants to Buyer, a security
interest in and to all of Seller's right, title and interest in, to and under
the Receivables to secure (1) the rights of Buyer hereunder and (2) a loan by
Buyer to Seller in the amount of the related Purchase Price of the Receivables
sold by it or the Unpaid Balance of any Contributed Receivables, as the case may
be. Seller and Buyer shall, to the extent consistent with this Agreement, take
such actions as may be necessary to ensure that, if this Agreement were deemed
to create a security interest in the Receivables, such security interest would
be deemed to be a perfected security interest of first priority (subject to
Liens created or permitted under the Purchase Agreement) in favor of Buyer under
applicable Law and will be maintained as such throughout the term of this
Agreement.
2
<PAGE>
ARTICLE II
CALCULATION OF PURCHASE PRICE
SECTION 2.1 Calculation of Purchase Price.
(a) On each Settlement Date, the Servicer shall (i) deliver to Buyer
and Seller a Sale Report with respect to Buyer's purchases of Receivables from
Seller that was made during the immediately preceding Settlement Period and (ii)
record the net increase or decrease in the Buyer Note and compute the amount of
interest thereon which is then accrued and unpaid.
(b) On each day when Receivables are purchased by Buyer from Seller
pursuant to Article I, the "Purchase Price" to be paid to Seller on such day for
the Receivables that are to be sold by Seller on such day shall be determined in
accordance with the following formula:
PP = AUB x PPP
where:
PP = the aggregate Purchase Price for the Receivables to be
purchased from Seller on such day,
AUB = the "Aggregate Unpaid Balance" of the Receivables that are
to be purchased from Seller on such day. For purposes of
this calculation, "Aggregate Unpaid Balance" shall mean, for
purposes of calculating the Purchase Price on each Business
Day after the Contribution Date, the sum of the Unpaid
Balance of each Receivable to be purchased from Seller on
such day, calculated at the time of the Receivable's sale to
Buyer, and
PPP = the Purchase Price Percentage applicable to the Receivables
to be purchased on such day, as determined pursuant to
Section 2.2.
SECTION 2.2 Definitions and Calculations Related to Purchase Price
Percentage.
(a) "Purchase Price Percentage" for the Receivables to be sold by
Seller on any day during a Settlement Period shall mean the percentage
determined in accordance with the following formula:
3
<PAGE>
PPP = 100% - (LR + PDRR)
where:
PPP = the Purchase Price Percentage in effect during such
Settlement Period,
LR = the Loss Ratio (expressed as a percentage) determined on the
Settlement Date with respect to the immediately preceding
Accounting Period, and
PDRR = the Purchase Discount Reserve Ratio (expressed as a
percentage) in effect during such Settlement Period, as
determined on such day pursuant to subsection (b) below.
The Purchase Price Percentage, the Loss Ratio and the Purchase Discount
Reserve Ratio shall be recomputed by the Servicer on each Report Date, in
each case as of the then most recent Cut-Off Date, and shall become
effective on the next Settlement Date.
(b) "Purchase Discount Reserve Ratio" for the Receivables to be sold
on any day during a Settlement Period shall mean a percentage determined in
accordance with the following formula:
PDRR = (DSO/360 x RR) + EDR + PD
where:
PDRR = the Purchase Discount Reserve Ratio in effect during such
Settlement Period,
DSO = the Days Sales Outstanding during the Accounting Period
preceding the first day of such Settlement Period,
RR = the Reference Rate in effect on such Report Date,
EDR = the Estimated Dilution Ratio (expressed as a percentage) in
effect during such Settlement Period as determined pursuant
to subsection (c) below, and
PD = a profit discount equal to 0.25 basis points.
(c) "Estimated Dilution Ratio" for the Receivables to be sold on any
day during a Settlement Period shall mean the Estimated Dilution Ratio obtained
from the most recently completed Dilution Study prepared by the Servicer. The
Servicer shall prepare a "Dilution Study"
4
<PAGE>
annually within four months following the end of each fiscal year of the Seller
and shall promptly thereafter deliver a copy of each such Dilution Study to each
of Buyer and Second Step Purchaser. In each such Dilution Study, the Servicer
shall use commercially reasonable efforts to determine the aggregate amount of
Dilution occurring during the Accounting Periods of April, May, October and
November and the aggregate dollar amount of invoices giving rise to Receivables
during the corresponding Settlement Periods. The "Estimated Dilution Ratio"
shall equal (i) (A) such aggregate amount of Dilution divided by (B) such
aggregate dollar amount of invoices giving rise to Receivables multiplied by
(ii) 1.02. Until the first Dilution Study is prepared by the Servicer, the
Estimated Dilution Ratio shall be 26.8%.
ARTICLE III
PAYMENT OF PURCHASE PRICE; SERVICING, ETC.
SECTION 3.1 Purchase Price Payments. On the Business Day following each
day on which any Receivables are purchased by Buyer pursuant to Article I, on
the terms and subject to the conditions of this Agreement, Buyer shall pay to
Seller the Purchase Price for the Receivables purchased on such day by Buyer (i)
by making a cash payment to Seller to the extent that Buyer has cash available
to make the payment pursuant to Section 3.3 and (ii) if the Purchase Price to be
paid for the Receivables of Seller exceeds the amount of any cash actually paid
for the account of Seller on such day pursuant to clause (i), by automatically
increasing the principal amount outstanding under the Buyer Note by the amount
of the excess (unless, at the option of Seller (as evidenced by notice to the
Servicer), such excess shall be considered to have been contributed to Buyer by
Seller as a capital contribution).
Seller agrees that, prior to the Seller Maturity Date, Buyer shall be
required to make payments in respect of the payment obligations evidenced by the
Buyer Note only to the extent that it has cash available under Section 3.3.
SECTION 3.2 The Buyer Note.
(a) On the Contribution Date, Buyer will deliver to Seller a
promissory note, substantially in the form of Exhibit A, payable to the order of
Seller (such promissory note, as the same may be amended, supplemented, endorsed
or otherwise modified from time to time, together with any promissory note
issued from time to time in substitution therefor or renewal thereof in
accordance with the Sale Documents, being herein called the "Buyer Note"). The
Buyer Note is payable in full on the date (the "Seller Maturity Date") that is
one year and one day after the date on which all the obligations owed by the
Buyer to the Second Step Purchaser under the Purchase Agreement have been repaid
in full. The Buyer Note shall bear interest at a rate per annum equal to the
rate publicly announced by the Agent from time to time as the Reference Rate,
determined as of each Cut-Off Date. Buyer may repay all or part of the
outstanding balance of the Buyer Note from time to time without any premium or
penalty in accordance with Section 3.3.
5
<PAGE>
(b) The Servicer (or its designee) shall hold all Buyer Notes for the
benefit of Seller and shall make all appropriate recordkeeping entries with
respect to the Buyer Notes or otherwise to reflect the payments on and
adjustment of the Buyer Notes. The Servicer's Records shall constitute
rebuttable presumptive evidence of the principal amount of and accrued interest
on each Buyer Note at any time. Seller hereby irrevocably authorizes the
Servicer to mark its Buyer Note "CANCELED" and return it to Buyer upon the final
payment thereof.
SECTION 3.3 Application of Collections and Other Funds. Buyer shall have
the right to receive all proceeds with respect to Collections and Reinvestments;
provided, however, that Buyer shall have no right to any amounts held in trust
by Servicer in accordance with the Purchase Agreement. If, on any day, Buyer
receives any amounts as set forth in the preceding sentence, Buyer shall apply
the funds as follows:
(a) first, to pay its existing expenses and to set aside funds for the
payment of expenses that are then accrued (in each case to the extent such
expenses are permitted to exist under Section 9.02 of the Purchase Agreement),
(b) second, to pay the Purchase Price as adjusted pursuant to Section
3.1 for Receivables purchased by Buyer from Seller on the next preceding
Business Day,
(c) third, to repay amounts owed by Buyer to Seller under the Buyer
Note,
(d) fourth, to loan amounts to Seller, and
(e) fifth, to declare and pay dividends to Seller to the extent
permitted by Law and the Sale Documents.
SECTION 3.4 Servicing of Receivables.
(a) Consistent with the Ownership Interest in the Receivables, as
between the parties to this Agreement, Buyer shall have the sole right to
service, administer and collect the Receivables, to assign the right and to
delegate the right to others. Without limiting the generality of Section 10.11,
Seller hereby acknowledges and agrees that Buyer shall assign to the Second Step
Purchaser the rights and interests of Buyer hereunder and agrees to cooperate
fully with the Buyer and the Second Step Purchaser in the exercise of such
rights and interests.
(b) At the Second Step Purchaser's request, Seller will (A) assemble
all of the Records that are necessary or appropriate to collect the Receivables,
and shall make the same available to the Second Step Purchaser at one or more
places selected by the Second Step Purchaser or its designee, and (B) permit,
upon not less than two Business Days' prior written notice, any successor
Servicer and its agents, employees and assignees access to their respective
facilities and their respective Records.
6
<PAGE>
SECTION 3.5 Monthly Calculations. For ease of computation, Buyer and
Seller agree that the daily payments and adjustments to the balance of the Buyer
Note shall occur automatically and without a requirement for immediate
computation, and Servicer shall only be required to reconcile the amounts of the
foregoing payments on a monthly basis on each Report Date.
SECTION 3.6 Buyer Obligation under Purchase Agreement. Seller agrees to
provide Buyer with all amounts necessary to enable Buyer to satisfy its
obligations under Section 5.03(c) of the Purchase Agreement, and Buyer and
Seller agree that either (i) the Purchase Price for Receivables purchased on the
date of such payment by Seller shall be reduced by the amount of such payment or
(ii) the principal amount outstanding under the Buyer Note on such date shall be
increased by such amount.
SECTION 3.7 Payments and Computations, Etc.
(a) All amounts to be paid by Seller to Buyer hereunder shall be
received in accordance with the terms hereof no later than 1:00 p.m., New
York City time, on the day when due in Dollars in immediately available
funds in an account that Buyer shall from time to time specify in writing.
Payments received by Buyer after such time shall be deemed to have been
received on the next Business Day. In the event that any payment otherwise
is scheduled to become due on a day that is not a Business Day, then
payment shall become due on the next Business Day. Seller shall, to the
extent permitted by Law, pay to Buyer, on demand, interest on all amounts
not paid when due hereunder at 2% per annum above the interest rate on the
Buyer Note in effect on the date the payment was due; provided, however,
that the interest rate shall not at any time exceed the maximum rate
permitted by applicable Law. All computations of interest payable hereunder
shall be made on the basis of a year of 360 days for the actual number of
days (including the first but excluding the last day) elapsed.
(b) All amounts to be paid by Buyer to Seller hereunder shall be paid
to Seller no later than 2:00 p.m., New York City time, on the day when due
in Dollars in immediately available funds to an account that Seller shall
from time to time specify in writing. Payments received by Seller after
such time shall be deemed to have been received on the next Business Day.
In the event that any payment otherwise is scheduled to become due on a day
that is not a Business Day, then such payment shall become due on the next
Business Day.
ARTICLE IV
CONDITIONS TO PURCHASES
SECTION 4.1 Conditions Precedent to Initial Contribution. The initial
contribution of Receivables hereunder is subject to the conditions precedent
that (i) each of the conditions precedent to the execution, delivery and
effectiveness of the Purchase Agreement (other than a condition precedent in the
Purchase Agreement relating to the effectiveness of this Agreement)
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shall have been fulfilled to the satisfaction of Buyer, and (ii) Buyer shall
have received (or in the case of subsection (g) below, shall have delivered)
each of the following, on or before the Contribution Date, each (unless
otherwise indicated) dated the Contribution Date and each in form and substance
satisfactory to Buyer:
(a) Seller Assignment Certificates. A Seller Assignment Certificate
from Seller in the form of Exhibit B, duly completed, executed and delivered by
Seller.
(b) Resolutions. A copy of the resolutions of the Board of Directors
of Seller approving this Agreement and the other documents to be delivered by it
hereunder and the transactions contemplated hereby and thereby and addressing
such other matters as may be required by Buyer, certified by its Responsible
Officer, each as of a recent date acceptable to Buyer.
(c) Good Standing Certificate of Seller; Certificates as to Foreign
Qualification of Seller. A good standing certificate for Seller, issued as of a
recent date by the Secretary of State of: (i) the jurisdiction of its
incorporation, (ii) Pennsylvania, and (iii) Michigan.
(d) Incumbency Certificate. A certificate of a Responsible Officer
of Seller certifying, as of a recent date reasonably acceptable to Buyer, the
names and true signatures of the Responsible Officers authorized on Seller's
behalf to sign the Sale Documents to be delivered by Seller (on which
certificate Buyer, the Second Step Purchaser and the Servicer may conclusively
rely until such time as Buyer shall receive from Seller (with a copy to the
Second Step Purchaser and the Servicer), a revised certificate meeting the
requirements of this subsection).
(e) Financing Statement, etc. The Buyer shall have received evidence
satisfactory to it of the completion of all recordings, registrations and
filings as may be necessary or, in the opinion of the Buyer, desirable, to
evidence or perfect the Ownership Interest to be acquired by the Buyer
hereunder, including:
(i) acknowledgment copies of proper financing statements on Form
UCC-1 filed on or prior to the Initial Cut-off Date, naming the Seller
as debtor and/or assignor and the Buyer as secured party and/or
assignee, or such other similar instruments or documents as may be
necessary or, in the opinion of the Buyer, advisable, under the
Uniform Commercial Code or any comparable Law of all appropriate
jurisdictions to evidence or perfect the Ownership Interest; and
(ii) evidence of searches satisfactory to the Buyer listing all
effective financing statements which name the Seller as debtor and/or
assignor in the jurisdictions in which filings are made pursuant to
subsection (i) above, together with copies of such financing
statements, none of which shall cover any Receivables or the related
Contracts.
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(f) Other Transaction Documents. Original copies, executed by each of
the parties thereto in such reasonable number as shall be specified by Buyer, of
each of the other Transaction Documents to be executed and delivered in
connection herewith.
(g) Buyer Note. The Buyer Note, executed and delivered by Buyer.
(h) Creditors' Consent. The Second Step Purchaser shall have
received the written consent of the Banks party to the Credit Agreement dated as
of August 30, 1994, as amended, among Seller, the Banks and Agents party thereto
and Bankers Trust Company, as Administrative Agent (the "Seller Credit
Agreement"), to the execution and delivery of this Agreement and the Transaction
Documents and the consummation of the transactions contemplated hereby and
thereby in form and substance satisfactory to the Second Step Purchaser.
SECTION 4.2 Effective Date of Initial Contribution. Notwithstanding the
date all conditions precedent set forth in Section 4.1 hereof are satisfied, the
initial contribution of Receivables hereunder shall be deemed to have taken
place as of March 31, 1997.
SECTION 4.3 Certification as to Representations and Warranties. Seller (by
accepting the Purchase Price paid for each Receivable and upon a contribution of
Receivables to the Buyer) shall be deemed to have certified with respect to such
Receivables to be sold or contributed on such day that its representations and
warranties contained in Article V (excluding, with respect to any day after the
date hereof, Section 5.1(k)) are true and correct on and as of such day, with
the same effect as though made on and as of such day.
SECTION 4.4 Effect of Payment of Purchase Price. Upon the payment of the
Purchase Price (whether in cash or by an increase in a Buyer Note pursuant to
Section 3.1) for any Receivable or upon a transfer of a Receivable as a capital
contribution, title to the Receivables included therein shall vest in Buyer,
whether or not the conditions precedent to such purchase or contribution were in
fact satisfied; provided, however, that Buyer shall not be deemed to have waived
any claim it may have under this Agreement for the failure by Seller in fact to
satisfy any such condition precedent.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
SECTION 5.1 Representations and Warranties of Seller. In order to induce
Buyer to enter into this Agreement and to make purchases hereunder, Seller
hereby makes the representations and warranties set forth in this section at the
times and to the extent set forth in Section 4.3.
(a) Organization and Qualification. Seller is a corporation duly
organized, validly existing and in good standing under the Laws of its
jurisdiction of incorporation. Seller is duly qualified to do business as a
foreign corporation in good standing in each jurisdiction in which the ownership
of its properties or the nature of its activities (including transactions giving
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rise to Receivables), or both, requires it to be so qualified or, if not so
qualified, the failure to so qualify would not have a material adverse effect on
its business, operations, properties or financial condition.
(b) Authorization. Seller has the corporate power and authority to
execute and deliver the Transaction Documents, to convey the Receivables to the
Buyer, and to perform its obligations hereunder and thereunder.
(c) Execution and Binding Effect. Each of the Transaction Documents
to which Seller is a party has been duly and validly executed and delivered by
Seller and constitutes a legal, valid and binding obligation of Seller
enforceable in accordance with its terms. This Agreement constitutes a legal,
valid and binding assignment of the Receivables by Seller enforceable in
accordance with the terms hereof, which will vest absolutely and unconditionally
in the Ownership Interest in the Receivables purported to be assigned hereby,
subject to no Liens whatsoever. Upon the filing of the financing statements
required under Section 4.1(e) hereof, the Ownership Interest to be acquired by
Buyer in the Receivables will be perfected under Article Nine of the Uniform
Commercial Code in all the applicable jurisdictions, prior to and enforceable
against all creditors of and purchasers from Seller and all other Persons
whatsoever. Upon the filing of the financing statements required under Section
4.02(c) of the Purchase Agreement, the Second Step Purchaser's Participation
Interest will be perfected under Article Nine of the Uniform Commercial Code in
all the applicable jurisdictions, prior to and enforceable against all creditors
of and purchasers from Seller or Buyer and all other Persons whatsoever.
(d) Authorizations and Filings. No authorization, consent, approval,
license, exemption or other action by, and no registration, qualification,
designation, declaration or filing with, any Official Body is or will be
necessary or, in the opinion of Seller, advisable in connection with the
execution and delivery of the Transaction Documents, the consummation of the
transactions herein or therein contemplated or the performance of or the
compliance with the terms and conditions hereof or thereof, to ensure the
legality, validity or enforceability hereof or thereof, or to ensure that the
Buyer will have its Ownership Interest in and to the Receivables perfected and
prior to all other Liens (including competing ownership interests) and that the
Second Step Purchaser will have its Participation Interest in and to the
Purchased Receivables perfected and prior to all other Liens (including
competing ownership interests), other than the filing of financing statements
under the Uniform Commercial Code in the jurisdictions required under Section
4.1(e) hereof or Section 4.02(c) of the Purchase Agreement.
(e) Absence of Conflicts. Neither the execution and delivery of the
Transaction Documents, nor the consummation of the transactions herein or
therein contemplated, nor the performance of or the compliance with the terms
and conditions hereof or thereof, will (i) violate any Law or (ii) conflict with
or result in a breach of or a default under (A) the certificate of incorporation
or by-laws of Seller or (B) any agreement or instrument, including, without
limitation, any and all indentures, debentures, loans or other agreements to
which Seller is a party or by which it or any of its properties (now owned or
hereafter acquired) may be subject or bound.
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(f) Location of Chief Executive Office, etc. As of the date hereof
Seller's Chief Executive Office is located at either 645 Penn Street, Reading,
Pennsylvania 19612-4205 or 1400 North Woodward, Suite 130, Bloomfield Hills,
Michigan 48304. Seller has only the Affiliates and operates only under the trade
names identified in Schedule 2 hereto, and has not changed its name, merged or
consolidated with any other corporation or been the subject of any proceeding
under Title 11, United States Code (Bankruptcy) within the past ten (10) years,
except as disclosed in Schedule 2 hereto.
(g) No Termination Event. No event has occurred and is continuing
and no condition exists which constitutes a Termination Event or a Potential
Termination Event.
(h) Accurate and Complete Disclosure. No information, whether written
or oral, furnished by Seller to Buyer pursuant to or in connection with this
Agreement, the Purchase Agreement or any transaction contemplated hereby or
thereby is false or misleading in any material respect (and with respect to
notices and documents under this Agreement or the Purchase Agreement, when
furnished, in any respect, whether or not material) as of the date as of which
such information was furnished (including by omission of material information
necessary to make such information not misleading).
(i) No Proceedings. There are no proceedings or investigations
pending or threatened before any Official Body (A) asserting the invalidity of
the Transaction Documents, (B) seeking to prevent the consummation of any of the
transactions contemplated by the Transaction Documents, or (C) seeking any
determination or ruling that could materially and adversely affect (i) the
performance by Seller or Servicer of its obligations under this Agreement or the
Purchase Agreement, or (ii) the validity or enforceability of any Transaction
Document, any Contract or any material amount of the Receivables.
(j) Bulk Sales Act. No transaction contemplated hereby required
compliance with any bulk sales act or similar Law.
(k) Financial Condition. The consolidated balance sheets of Seller
and its consolidated subsidiaries as at March 31, 1996 and the related
statements of income and shareholders' equity of Seller and its consolidated
subsidiaries for the fiscal year then ended, certified by Arthur Andersen & Co.,
independent accountants, copies of which have been furnished to the Buyer,
fairly present the consolidated financial position of Seller and its
consolidated subsidiaries as at such date and the consolidated results of the
operations of Seller and its consolidated subsidiaries for the period ended on
such date, all in accordance with GAAP, and (y) as of the date hereof, there has
been no material adverse change in any such condition, business, business
prospects or operations or in Seller's ability to perform its obligations under
this Agreement or the Purchase Agreement since March 31, 1996, except as
described in Schedule 1.
(l) Litigation. No injunction, decree or other decision has been
issued or made by any Official Body that prevents, and no threat by any Person
has been made to attempt to obtain any such decision that would prevent, Seller
from conducting a significant part of its business
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operations, and no litigation, investigation or proceeding of the type referred
to in Section 5.1(i) hereof exists.
(m) Margin Regulations. No use of funds acquired by Seller under
this Agreement will conflict with or contravene any of Regulations G, T, U and X
of the Board of Governors of the Federal Reserve System, as the same may from
time to time be amended, supplemented or otherwise modified.
(n) Eligible Receivables. (i) On the date of each purchase of
Receivables hereunder from Seller (or contribution of Receivables by Seller),
each such Receivable, unless otherwise identified to Buyer and Second Step
Purchaser by Seller or Servicer, is an Eligible Receivable, and (ii) on the date
of each Sale Report that identifies a Receivable originated by Seller as an
Eligible Receivable, such Receivable is an Eligible Receivable.
(o) No Liens. Prior to the transfer of each Receivable from Seller
to Buyer pursuant to this Agreement and the Second Step Purchaser's purchase of
a Participation Interest in the related Purchased Receivable, Seller owned such
Receivable, together with the related Contract and all purchase orders and other
agreements related to such Receivable, free and clear of any Lien, except for
Liens of Second Step Purchaser pursuant to the Amended and Restated Receivables
Purchase Agreement between Seller and Second Step Purchaser dated as of December
20, 1995.
SECTION 5.2 Representations and Warranties of Buyer. From the date hereof
until the Purchase Termination Date, Buyer hereby represents and warrants that
(a) this Agreement (i) has been duly authorized, executed and delivered by Buyer
and (ii) constitutes the legal, valid and binding obligation of Buyer,
enforceable against it in accordance with its terms, except as enforceability
may be limited by bankruptcy, insolvency, reorganization or other similar Laws
affecting the enforcement of creditors' rights generally and by general
principles of equity, regardless of whether enforceability is considered in a
proceeding in equity or at law, and (b) the execution, delivery and performance
of this Agreement does not violate any applicable Law or any agreement to which
Buyer is a party or by which its properties are bound.
ARTICLE VI
GENERAL COVENANTS OF SELLER
SECTION 6.1 Affirmative Covenants. From the date hereof until the first
day following the Purchase Termination Date on which all obligations of Seller
shall have been finally and fully paid and performed and the Second Step
Purchaser's Net Investment in the Participation Interest shall have been reduced
to zero and all other amounts accrued and owing to Second Step Purchaser by
Buyer under the Purchase Agreement have been paid in full, unless each of Second
Step Purchaser and Buyer shall otherwise give its prior written consent, Seller
hereby agrees that it will perform the covenants and agreements set forth in
this section.
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(a) Preservation of Corporate Existence. Seller shall preserve and
maintain its corporate existence, rights, franchises and privileges in the
jurisdiction of its incorporation, and qualify and remain qualified in good
standing as a foreign corporation in each jurisdiction where the failure to
preserve and maintain such existence, rights, franchises, privileges and
qualification could materially adversely affect (i) the interests of the Buyer
hereunder or Second Step Purchaser under the Purchase Agreement or (ii) the
ability of the Seller or the Servicer to perform their respective obligations
hereunder or under the Purchase Agreement.
(b) Compliance With Laws. Seller shall comply in all material
respects with all Laws applicable to Seller, its business and properties, and
the Receivables.
(c) Enforceability of Obligations. The Seller shall ensure that, with
respect to each Receivable, the obligation of any related Obligor to pay the
Unpaid Balance of such Receivable in accordance with the terms of the related
Contract remains legal, valid, binding and enforceable against such Obligor,
except (i) as otherwise permitted by Section 6.3(d) hereof, (ii) as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar Laws which may be applied in the
Event of Bankruptcy of such Obligor, and (iii) as such enforceability may be
limited by general principles of equity (whether considered in a suit at law or
in equity).
(d) Receivables Reviews. Seller shall, during regular business hours,
permit Buyer and Second Step Purchaser and their respective agents or
representatives, at the expense of Seller, (i) to examine and make copies of and
abstracts from, and to conduct accounting reviews of, all Records in the
possession or under the control of Seller relating to the Receivables generated
by Seller, and (ii) to visit the offices and properties of Seller for the
purpose of examining the materials described in clause (i) above, and to discuss
matters relating to any Receivables of Seller or Seller's performance hereunder
with any of the Responsible Officers of Seller or, with the prior consent of a
Responsible Officer of Seller, with employees of Seller having knowledge of such
matters (the examinations set forth in the foregoing clauses (i) and (ii) being
herein called a "Seller Receivables Review"). Buyer and its agents or
representatives shall be entitled to conduct Seller Receivables Reviews whenever
Buyer, in its reasonable judgment, deems it appropriate; provided, that prior to
the occurrence and continuance of a Termination Event or Potential Termination
Event, Buyer (or its agent or representative) shall give Seller at least five
Business Days' prior notice of any Seller Receivables Review, and Buyer shall
have the right to request a Seller Receivables Review not more than twice in any
calendar year.
(e) Books and Records. Seller shall maintain and implement
administrative and operating procedures (including the ability to recreate
Records evidencing the Receivables in the event of the destruction of the
originals thereof), and keep and maintain all documents, books, Records and
other information reasonably necessary or advisable for the collection of all
Receivables (including Records adequate to permit the identification of all
Collections and adjustments to each existing Receivable) at its Chief Executive
Office, except that any Records may be stored at other locations to the extent
temporary location elsewhere is necessary in
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connection with litigation, repossession, other collection activities or other
usual business purposes.
(f) Fulfillment of Obligations. The Seller will duly observe and
perform, or cause to be observed or performed, all obligations and undertakings
on its part to be observed and performed under or in connection with the
Receivables, including its obligations as Servicer, and will do nothing to
impair the rights, title and interest of the Buyer in and to the Ownership
Interest or the Second Step Purchaser in and to its Participation Interest.
(g) Customer List. The Seller shall at all times maintain (or cause
the Servicer to maintain) a current list (which may be stored on magnetic tapes
or disks) of all Obligors under Contracts related to Receivables, including the
name, address, telephone number and account number of each such Obligor. The
Seller shall deliver or cause to be delivered a copy of such list to the Buyer
as soon as practicable following the Buyer's request.
(h) Copies of Reports, Filings, Opinions, etc. Seller shall, or
shall cause the Servicer to, prepare and forward to the Buyer (i) copies of all
press releases, proxy statements, financial statements, reports and other
communications which Seller sends to its security holders or any nationally
recognized statistical rating agency, and copies of all regular, periodic and
special reports which Seller files with the Securities and Exchange Commission
or with any securities exchange or commission, and (ii) copies of all reports
and notices with respect to any Reportable Event defined in Article IV of ERISA
which Seller files under ERISA with the Internal Revenue Service or the Pension
Benefit Guaranty Corporation or the Department of Labor, or which Seller
receives therefrom.
(i) Total Systems Failure. The Seller shall, or shall cause the
Servicer to, promptly notify the Buyer of any total systems failure and shall
advise the Buyer of the estimated time required to remedy such total systems
failure and of the estimated date on which a Sale Report can be delivered. Until
a total systems failure is remedied, the Seller or the Servicer (i) will furnish
to the Buyer such periodic status reports and other information relating to such
total systems failure as the Buyer may reasonably request and (ii) will promptly
notify the Buyer if the Seller or the Servicer believes that such total systems
failure cannot be remedied by the estimated date, which notice shall include a
description of the circumstances which gave rise to such delay, the action
proposed to be taken in response thereto, and a revised estimate of the date on
which a Sale Report can be delivered. The Seller or the Servicer shall promptly
notify the Buyer when a total systems failure has been remedied.
(j) Treatment of Purchase. For accounting purposes, Seller shall
treat the assignment of the Receivables (other than Contributed Receivables)
made hereunder as a sale of the Receivables. Seller shall also maintain its
Records and books of account in a manner which clearly reflects the sale of the
Receivables to Buyer and its Ownership Interest therein. Further, Seller shall
prepare its financial statements in accordance with GAAP, and any financial
statements that are made publicly available and which are consolidated to
include Buyer will contain footnotes stating that Seller has sold or contributed
its Receivables to Buyer and that the
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assets of Buyer will not be available to Seller and its other subsidiaries
unless Buyer's liabilities have been paid in full.
(k) Credit and Collection Policies. Seller will comply in all
material respects with the Credit and Collection Policy in regard to each
Receivable of Seller and the Contract related to each such Receivable.
(l) Certificates of Title.
(1) If any amount payable under or in connection with any
Receivable shall be or become evidenced by any promissory note,
chattel paper or other instrument, such note, chattel paper or
instrument shall be duly endorsed in a manner satisfactory to the
Buyer and delivered to the Buyer or its agent.
(2) The Seller shall deliver to the Buyer any certificate of
title or other evidence of ownership issued by the United States or
any state or any political subdivision thereof relating to any chattel
held as security for any amount payable under or in connection with
any Receivable, with evidence of perfection of the security interest
in such property noted thereon, if such notation is required under the
Laws of the jurisdiction in which such property is located in order to
perfect a security interest in such property.
(3) If the Contract relating to any Receivable requires the
related Obligor to maintain insurance upon the chattel security
relating to such Contract, the Seller shall deliver to the Buyer all
documents or certificates relating to such insurance.
(4) The Seller shall deliver to the Buyer any other document
required by the terms of the related Contracts.
(m) Separate Corporate Existence of Buyer. Seller hereby
acknowledges that the Second Step Purchaser is relying upon Buyer's identity as
a legal entity separate from Seller and its other Affiliates (each of Seller and
other Affiliates a "Seller Entity"). Therefore, from and after the Contribution
Date hereof until the first day following the Purchase Termination Date on which
all obligations shall have been fully paid and performed and the Second Step
Purchaser's Net Investment in the Participation Interest shall have been reduced
to zero and all other amounts accrued and owing to Second Step Purchaser by
Buyer under the Purchase Agreement have been paid in full, Seller will, and will
cause each other Affiliate to, take all necessary steps to continue their
respective identities as separate legal entities and to make it apparent to
third Persons that each is an entity with assets and liabilities distinct from
those of Buyer and that Buyer is not a division of Seller, Servicer or any other
Person. Without limiting the foregoing, Seller will operate, conduct its
businesses and otherwise act in a manner which is consistent with this Agreement
and Seller shall:
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(1) require that all full-time employees of Buyer identify
themselves as such and not as employees of any Seller Entity
(including, without limitation, by means of providing appropriate
employees with business or identification cards identifying such
employees as Buyer's employees);
(2) to the extent any employee, consultant or agent of Buyer is
also an employee, consultant or agent of any Seller Entity, allocate
the compensation of such employee, consultant or agent between Buyer
and such Seller Entity on a basis which reflects the services rendered
to Buyer and such Seller Entity;
(3) allocate all overhead expenses (including, without
limitation, telephone and other utility charges) for items shared
between Buyer and any Seller Entity on a reasonable basis consistent
with GAAP;
(4) at all times from and after the Contribution Date have at
least one member of Buyer's Board of Directors (an "Independent
Director") who is not (A) a director, officer or employee of any
Seller Entity, (B) a person related to any officer or director of any
Seller Entity, (C) a holder (directly or indirectly) of more than 5%
of any voting securities of any Seller Entity, or (D) a person related
to a holder (directly or indirectly) of more than 5% of any voting
securities of any Seller Entity;
(5) ensure that all corporate actions are duly authorized by
vote of its Board of Directors in accordance with its charter and by-
laws;
(6) cause Buyer's books and Records to be maintained separate
from those of any Seller Entity and maintain such Records in a
location clearly identified as being allocated solely to Buyer;
(7) cause Buyer to prepare its financial statements separately
from those of other Seller Entities and insure that any consolidated
financial statements of Seller that include Buyer have a footnote
clearly stating that Buyer is a separate corporate entity and that its
assets will be available first to satisfy the claims of its creditors;
(8) except as herein specifically otherwise provided, not
commingle funds or other assets of Buyer with those of any other
Seller Entity and not maintain bank accounts or other depository
accounts to which any Seller Entity is an account party, into which
any Seller Entity makes deposits or from which any Seller Entity has
the power to make withdrawals;
(9) be obligated to reimburse any Seller Entity which pays any
of Buyer's operating expenses; and
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(10) not permit Buyer to be named as an insured on the insurance
policy covering the property of any Seller Entity except and only to
the extent that such policy also covers property of Buyer, or enter
into an agreement with the holder of such policy whereby in the event
of a loss in connection with such property, proceeds are paid to
Buyer.
(n) Payment Instructions to Obligors. Seller will instruct all
Obligors to submit all payments either (i) to one of the Permitted Lockboxes
maintained at the Permitted Lockbox Banks for deposit in a Lockbox Account or
(ii) directly to one of the Lockbox Accounts.
(o) Segregation of Collections. Seller shall use reasonable efforts
to minimize the deposit of any funds other than Collections into any of the
Lockbox Accounts and, to the extent that any such funds nevertheless are
deposited into any of the Lockbox Accounts, shall promptly identify any such
funds, or shall cause the funds to be so identified, to Buyer, Servicer and
Second Step Purchaser (following which notice, Buyer shall promptly return all
the funds to Seller).
(p) Identification of Eligible Receivables. Seller will (i) establish
and maintain such procedures as are necessary for determining no less frequently
than each Business Day whether each Receivable qualifies as an Eligible
Receivable, and for identifying, on any Business Day, all Receivables to be sold
on that date that are not Eligible Receivables, and (ii) notify Buyer prior to
the assignment of a Receivable from Seller to Buyer if a Receivable to be sold
hereunder will, to Seller's knowledge, not be an Eligible Receivable as of the
date of such Purchase.
(q) Accuracy of Information. All written information furnished on and
after the date hereof by or on behalf of Seller to Buyer, Servicer or Second
Step Purchaser pursuant to or in connection with any Sale Document or any
transaction contemplated herein or therein shall not contain any untrue
statement of a material fact or omit to state material facts necessary to make
the statements made not misleading, in each case on the date the statement was
made and in light of the circumstances under which the statements were made or
the information was furnished.
(r) Ownership of Buyer Stock. Seller will own the outstanding capital
stock of Buyer free of any Liens other than Liens pursuant to the Seller Credit
Agreement.
SECTION 6.2 Reporting Requirements. From the date hereof until the first
day following the Purchase Termination Date on which all obligations of Seller
shall have been finally and fully paid and performed and the Second Step
Purchaser's Net Investment in the Participation Interest shall have been reduced
to zero and all other amounts accrued and owing to Second Step Purchaser by
Buyer under the Purchase Agreement have been paid in full, Seller agrees that it
will, unless Buyer and Second Step Purchaser shall otherwise give prior written
consent, furnish to Buyer and Second Step Purchaser:
(a) Quarterly Financial Statements. Within 45 days after the end of
each of the first three fiscal quarters of each fiscal year of Seller, copies of
the unaudited consolidated balance sheets of Seller and its consolidated
subsidiaries as at the end of the fiscal quarter and the
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unaudited consolidated statements of income and cash flows, in each case for the
fiscal quarter and for the period from the beginning of the fiscal year through
the end of such fiscal quarter, prepared in accordance with GAAP consistently
applied throughout the periods reflected therein and certified (subject to year
end adjustments and the omission of footnotes) by a Responsible Officer of
Seller,
(b) Annual Financial Statements. As soon as possible and in any event
within 90 days after the end of each fiscal year of Seller, a copy of the
audited consolidated balance sheet of Seller and its consolidated subsidiaries
as at the end of the fiscal year and the statements of income and cash flows of
Seller and its consolidated subsidiaries for the fiscal year, setting forth in
each case in comparative form the corresponding figures for the preceding fiscal
year and prepared in accordance with GAAP consistently applied throughout the
periods reflected therein, certified by Arthur Andersen & Co. (or such other
independent certified public accountants of a nationally recognized standing in
the United States as shall be selected by Seller),
(c) Notice of Termination Event. Promptly upon becoming aware of any
Termination Event or Potential Termination Event, the Seller shall give the
Buyer and Second Step Purchaser notice thereof, together with a written
statement of a Responsible Officer setting forth the details thereof and any
action with respect thereto taken or contemplated to be taken by the Seller,
(d) Material Adverse Effect. As soon as possible and in any event
within five Business Days after a Responsible Officer of Seller has knowledge
thereof, written notice that describes in reasonable detail any event or
occurrence that, individually or in the aggregate for all such events or
occurrences, has had, or reasonably could be expected to have, a material
adverse effect on its business, operations, properties or financial condition,
(e) Proceedings. As soon as possible and in any event within three
Business Days after a Responsible Officer of Seller has knowledge thereof,
written notice of (i) any litigation, investigation or proceeding of the type
described in Section 5.1(i) not previously disclosed to Buyer and (ii) any
judgment, settlement or other final disposition with respect to any such
previously disclosed litigation, investigation or proceeding, and
(f) Other. Promptly, from time to time, (i) such other information,
documents, records or reports respecting the Receivables or (ii) such other
publicly available information respecting the condition or operations, financial
or otherwise, of Seller, in each case as Buyer or Second Step Purchaser may from
time to time reasonably request in order to protect the interests of Buyer or
Second Step Purchaser under or as contemplated by this Agreement.
SECTION 6.3 Negative Covenants. From the date hereof until the first day
following the Purchase Termination Date on which all obligations of Seller shall
have been finally and fully paid and performed and the Second Step Purchaser's
Net Investment in the Participation Interest shall have been reduced to zero and
all other amounts accrued and owing to Second Step Purchaser under the Purchase
Agreement have been paid in full, unless Buyer and Second Step Purchaser
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shall otherwise give prior written consent, Seller hereby agrees that it will
perform the covenants and agreements set forth in this Section 6.3.
(a) Statementing for and Treatment of the Sales. Seller will not
prepare any financial statements for financial accounting or reporting purposes
which shall account for the transactions contemplated hereby in any manner other
than as a sale or contribution of the Receivables to Buyer.
(b) Sales, etc. Except in the ordinary course of its business, Seller
will not sell, transfer, convey, assign or lease all or any substantial part of
its assets, or sell or assign with or without recourse any Receivables (other
than pursuant hereto), or permit any of its subsidiaries to do any of the
foregoing, except for any such sale, transfer, conveyance, lease or assignment
of or by any of its wholly-owned subsidiaries to Seller or to any other wholly-
owned subsidiary of Seller.
(c) No Liens. Seller will not cause any of the Receivables to be
sold, pledged, assigned or transferred or to be subject to a Lien, other than
the sale or contribution of the Receivables to Buyer and the Liens created in
connection with the transactions contemplated by this Agreement.
(d) Extension or Amendment of Receivables; Change in Credit and
Collection Policy or Contracts. Seller will not, (i) without the prior written
consent of Buyer and Second Step Purchaser, which consent will not be
unreasonably withheld, extend, amend or otherwise modify the terms of any
Receivable or Contract in a manner that reasonably could be expected to have a
material adverse effect on Seller's business, operations, properties or
financial condition or (ii) change the terms and provisions of the Credit and
Collection Policy in any material respect unless (x) with respect to collection
policies, the change is made with the prior written approval of Second Step
Purchaser and Buyer, (y) with respect to collection procedures, the change is
made with prior written notice to Second Step Purchaser and Buyer and no
material adverse effect on Seller's business, operations, properties or
financial condition or the collectibility of a material amount of Receivables
would result and (z) with respect to accounting policies relating to Receivables
that have become Defaulted Receivables, the change is made in accordance with
GAAP.
(e) Change in Payment Instructions to Obligors. Seller will not add
any bank as a Permitted Lockbox Bank, terminate any bank listed on Schedule 3
hereto as a Permitted Lockbox Bank, change any Lockbox Account listed on
Schedule 3 hereto, or make any change in its instructions to Obligors regarding
payments to be made to Seller or payments to be made to any Permitted Lockbox
Bank, unless the Buyer and Second Step Purchaser shall have received ten (10)
Business Days' prior notice of such addition, termination or change and, with
respect to the addition of any Permitted Lockbox Bank, a Lockbox Servicing
Agreement executed by such Permitted Lockbox Bank shall have been delivered to
the Buyer and Second Step Purchaser and become effective prior to its addition
as a Permitted Lockbox Bank.
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(f) Mergers, Acquisitions, Sales, etc. Seller will not be a party to
any merger or consolidation, or purchase or otherwise acquire all or
substantially all of the assets or any stock of any class of, or any partnership
or joint venture interest in, any other Person, except:
(1) a wholly-owned subsidiary of Seller may merge with Seller,
provided that Seller shall be the surviving corporation and no Termination
Event or Potential Termination Event shall occur and be continuing or shall
exist at such time or after giving effect to such transaction; and
(2) Seller may merge into or consolidate with any other
corporation, or purchase or otherwise acquire all or substantially all of
the assets or any stock of any class of, or any partnership or joint
venture interest in any Person, if Seller is the surviving corporation
formed by such consolidation, merger, purchase or acquisition and prior to
such consolidation and merger Seller had not breached any of its
obligations hereunder and after giving effect to such consolidation and
merger no Termination Event or Potential Termination Event shall have
occurred.
(g) Change in Name. Seller will not change its name, identity or
corporate structure in any manner which would, could or might make any financing
statement or continuation statement filed in connection with this Agreement or
the transactions contemplated hereby seriously misleading within the meaning of
Section 9-402(7) of the Uniform Commercial Code of any applicable jurisdiction
or other applicable Laws unless it shall have given the Buyer and the Second
Step Purchaser at least sixty (60) days' prior written notice thereof.
(h) Amendments to Sale Documents. Seller will not amend or otherwise
modify or supplement any Sale Document to which it is a party unless Buyer and
Second Step Purchaser shall have given prior written consent to each amendment,
modification or supplement.
ARTICLE VII
ADDITIONAL RIGHTS AND OBLIGATIONS IN
RESPECT OF THE RECEIVABLES
SECTION 7.1 Rights of Buyer.
(a) Subject to Section 7.3(b), Seller hereby authorizes Buyer, Second
Step Purchaser, Servicer and/or their respective designees to take any and all
steps in Seller's name and on behalf of Seller that Buyer, Second Step
Purchaser, Servicer and/or their respective designees determine are reasonably
necessary or appropriate to collect all amounts due under any and all
Receivables, including endorsing the name of Seller on checks and other
instruments representing Collections and enforcing Seller's rights under such
Receivables.
(b) Buyer shall have no obligation to account for any Receivables to
Seller. Buyer shall have no obligation to account for, or to return Collections,
or any interest or other
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finance charge collected pursuant thereto, to Seller, irrespective of whether
such Collections and charges are in excess of the Purchase Price for the
Receivables.
(c) Buyer shall have the unrestricted right to further assign,
transfer, deliver, hypothecate, subdivide or otherwise deal with the
Receivables, and all of Buyer's right, title and interest in, to and under this
Agreement, on whatever terms Buyer shall determine, pursuant to the Purchase
Agreement or otherwise.
(d) Buyer shall have the sole right to retain any gains or profits
created by buying, selling or holding the Receivables and shall have the sole
risk of and responsibility for losses or damages created by such buying, selling
or holding.
SECTION 7.2 Responsibilities of Seller. Anything herein to the contrary
notwithstanding, Seller hereby agrees:
(a) to deliver directly to any of the Lockbox Accounts, within two
Business Days after receipt thereof, any Collections that it receives, in the
form so received, and agrees that all such Collections shall be deemed to be
received in trust for Buyer and shall be maintained and segregated separate and
apart from all other funds and moneys of Seller until delivery of Collections to
Buyer,
(b) to perform all of its obligations hereunder and under the
Contracts to the same extent as if the Receivables had not been sold or
contributed hereunder, and the exercise by Buyer or its designee or assignee of
Buyer's rights hereunder or in connection herewith shall not relieve Seller from
any of its obligations under the Sale Documents and the Contracts related to the
Receivables, and
(c) that it hereby grants to Buyer an irrevocable power of attorney,
with full power of substitution, coupled with an interest, to take in the name
of Seller all steps necessary or advisable to endorse, negotiate or otherwise
realize on any writing or other right of any kind held or transmitted by Seller
or transmitted or received by Buyer (whether or not from Seller) in connection
with any Receivable.
SECTION 7.3 Further Action Evidencing Purchases. Seller agrees that from
time to time, at its expense, it will promptly, upon reasonable request by
Buyer, Servicer or Second Step Purchaser, execute and deliver all further
instruments and documents, and take all further action, in order to perfect,
protect or more fully evidence the sale or contribution of the
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Receivables by Seller to Buyer under this Agreement, or to enable Buyer to
exercise or enforce any of its rights under any Sale Document. Seller further
agrees that from time to time, at its expense, it will promptly, upon request,
take all action that Buyer, Servicer or Second Step Purchaser may reasonably
request in order to perfect, protect or more fully evidence the sale or
contribution of the Receivables by Seller to Buyer or to enable Buyer or Second
Step Purchaser (as the assignee of Buyer) to exercise or enforce any of its
rights hereunder or under any other Sale Document. Without limiting the
generality of the foregoing, upon the request of Buyer or Second Step Purchaser,
Seller will:
(a) execute and file such financing or continuation statements, or
amendments thereto or assignments thereof, and such other instruments or
notices, as Buyer or Second Step Purchaser may reasonably determine to be
necessary or appropriate, and
(b) mark the master data processing records evidencing the
Receivables with the following legend:
"THE RECEIVABLES DESCRIBED HEREIN HAVE BEEN SOLD OR CONTRIBUTED TO
EXIDE U.S. FUNDING CORPORATION ("BUYER") PURSUANT TO A SALE AGREEMENT,
DATED AS OF MARCH 31, 1997, BETWEEN EXIDE CORPORATION AND BUYER; AND
SUCH RECEIVABLES HAVE BEEN TRANSFERRED TO THREE RIVERS FUNDING
CORPORATION PURSUANT TO A RECEIVABLES PURCHASE AGREEMENT, DATED AS OF
THE SAME DATE, AMONG BUYER, AS TRANSFEROR, EXIDE CORPORATION, AS THE
INITIAL SERVICER, AND THREE RIVERS FUNDING CORPORATION, AS SECOND STEP
PURCHASER."
Seller hereby authorizes Buyer or its designee to file one or more
financing or continuation statements, and amendments thereto and assignments
thereof, relative to all or any of the Receivables of Seller, in each case
whether now existing or hereafter generated by Seller. Except for material
performance obligations of Seller to any Obligor hereunder or under any of the
Contracts, if (i) Seller fails to perform any of its agreements or obligations
under this Agreement and does not remedy the failure within the applicable cure
period, if any, and (ii) Buyer in good faith reasonably believes that the
performance of such agreements and obligations is necessary or appropriate to
protect its interests under this Agreement, then Buyer or its designee may (but
shall not be required to) perform, or cause performance of, such agreement or
obligation and the reasonable expenses of Buyer or its designee or assignee
incurred in connection with such performance shall be payable by Seller as
provided in Section 9.1.
ARTICLE VIII
TERMINATION
SECTION 8.1 Termination by Seller. Prior to the commencement of a
Termination Event under the Purchase Agreement, Seller may terminate its
agreement to sell Receivables hereunder to Buyer by giving Buyer and Second Step
Purchaser not less than thirty days' prior written notice of its election not to
continue to sell Receivables to Buyer; provided, that such notice shall specify
the effective date of termination.
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SECTION 8.2 Automatic Termination.
(a) Unless otherwise agreed to by Seller, Buyer and Second Step
Purchaser in writing, the agreement of Seller to sell Receivables hereunder, and
the agreement of Buyer to purchase Receivables from Seller hereunder, shall
terminate automatically at the latest to occur of (i) the Expiration Date, (ii)
the first day on which the Net Investment equals zero, all other amounts accrued
and owing to the Second Step Purchaser under the Purchase Agreement have been
paid in full and the Maximum Net Investment has been reduced to zero, or (iii)
the first day on which all Eligible Receivables in the Receivables Pool have
been collected or written off by the Seller and the Maximum Net Investment has
been reduced to zero; provided, however, that the covenants, representations,
warranties and indemnities of the Seller to the Buyer contained herein or made
pursuant hereto shall survive such termination.
(b) If an Event of Bankruptcy shall occur with respect to Seller, the
Buyer's obligation to purchase Receivables from Seller hereunder shall be
terminated automatically without any action on the part of the Buyer.
ARTICLE IX
INDEMNIFICATION
SECTION 9.1 Indemnities by Seller.
(a) Seller agrees to indemnify, defend and save harmless the Buyer
and Second Step Purchaser and their respective directors, officers,
shareholders, employees and agents (each, an "Indemnified Party"), forthwith on
demand, from and against any and all losses, claims, damages, liabilities, costs
and expenses (including, without limitation, all attorneys' fees and expenses,
expenses incurred by their respective credit recovery groups (or any successors
thereto) and expenses of settlement, litigation or preparation therefor) which
the Buyer or Second Step Purchaser may incur or which may be asserted against
the Buyer or Second Step Purchaser by any Person (including, without limitation,
any Obligor or any other Person whether on its own behalf or derivatively on
behalf of Seller) (all of the foregoing being collectively referred to as
"Losses"), excluding, however, (a) Losses to the extent resulting from the gross
negligence or willful misconduct on the part of such Indemnified Party, (b)
recourse (except as otherwise provided in this Agreement) for Defaulted
Receivables, (c) any Losses with respect to any tax, reserve, capital charge or
expense related thereto (indemnification with respect to such Losses being
provided as and to the extent provided in the Purchase Agreement), or (d)
Losses, to the extent that such Losses resulted from an act or omission of the
Servicer if the Servicer is not Seller or an Affiliate of Seller, arising from
or incurred in connection with (i) any breach of a representation, warranty or
covenant by Seller or Buyer made or deemed made hereunder or under the Purchase
Agreement or in connection herewith or therewith or the transactions
contemplated herewith or therewith, or (ii) any suit, action, claim, proceeding
or governmental investigation, pending or threatened, whether based on statute,
regulation or order, on tort, on contract or otherwise, before any Official
Body, which arises out of or relates to the Transaction Documents, the Ownership
Interest or the Participation Interest in the Receivables or related Contracts,
or the use of the proceeds of the
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Receivables pursuant hereto or to the Purchase Agreement or the transactions
contemplated hereby or thereby (all Losses, after giving effect to the
limitations set forth in clauses (a) through (d) hereof, being hereinafter
referred to as "Indemnified Amounts").
(b) Without limitation of the generality of Section 9.1(a), Seller
shall pay on demand to each Indemnified Party any and all amounts necessary to
indemnify such Indemnified Party from and against any and all Indemnified
Amounts relating to or resulting from any of the following:
(1) the creation of the Participation Interest in any Receivable
which is not at the date of the creation of such Ownership Interest an
Eligible Receivable;
(2) reliance on any representation or warranty made or deemed made
by Seller (or any of its respective Responsible Officers) or any
statement made by any Responsible Officer of Seller under or in
connection with this Agreement which shall have been incorrect in any
material respect when made;
(3) the failure by Seller to comply with any applicable Law, rule
or regulation;
(4) the failure to vest in the Buyer the Ownership Interest in the
Receivables and Collections in respect thereof, free and clear of any
Lien;
(5) the failure to vest in the Second Step Purchaser the
Participation Interest in the Receivables and Collections in respect
thereof, free and clear of any Lien;
(6) the failure to have filed, or any delay in filing, financing
statements or other similar instruments or documents under the Uniform
Commercial Code of any applicable jurisdiction or under any other
applicable Law with respect to the sale or contribution of the
Receivables by Seller to Buyer;
(7) any dispute, claim, offset or defense (other than discharge in
bankruptcy of the Obligor) of the Obligor to the payment of any
Receivable (including, without limitation, a defense based on such
Receivable or the related Contract not being a legal, valid and
binding obligation of such Obligor enforceable against it in
accordance with its terms), or any other claim resulting from the sale
of the merchandise or service related to such Receivable or the
furnishing or failure to furnish such merchandise or services;
(8) any failure of Seller to perform its duties or obligations in
accordance with the provisions of this Agreement;
(9) any products liability claim arising out of or in connection
with merchandise, insurance or services which are the subject of any
Contract; or
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(10) any failure by Buyer to make any payment required by Section
11.03 of the Purchase Agreement.
(c) Promptly upon receipt by any Indemnified Party, hereunder of
notice of the commencement of any suit, action, claim, proceeding or
governmental investigation (an "Action"), such Indemnified Party shall, if
a claim in respect thereof is to be made against Seller hereunder, notify
Seller in writing of the commencement thereof. Seller may participate in
the defense of any such Action at its expense, and no settlement thereof
shall be made without the approval of Seller and the Indemnified Party. The
approval of Seller will not be unreasonably withheld or delayed. In case
any Action shall be brought against any Indemnified Party, Seller shall be
entitled to participate in and, to the extent that it shall wish, to assume
the defense thereof, with counsel satisfactory to the Indemnified Party,
and after notice from Seller to such Indemnified Party of its election so
to assume the defense thereof, Seller shall not be liable to such
Indemnified Party for any legal or other expenses subsequently incurred by
such Indemnified Party in connection with the defense thereof other than
reasonable costs of investigation. In any such Action, any Indemnified
Party shall have the right to retain its own counsel, but the fees and
expenses of such counsel shall be at the expense of such Indemnified Party
unless (i) Seller and such Indemnified Party shall have mutually agreed in
writing to the retention of such counsel or (ii) the named parties to any
such Action (including any impleaded parties) include both Seller and such
Indemnified Party and representation of both parties by the same counsel
would be in appropriate due to actual or potential differing interests
between them. It is understood that Seller shall not, in conjunction with
any Action or related Actions in the same jurisdiction, be liable for the
fees and expenses of more that one separate firm in addition to any local
counsel for all such Indemnified Parties, unless (i) Seller and such
Indemnified Parties shall have mutually agreed in writing to the retention
of separate counsel or (ii) the named parties to any such Action (including
any impleaded parties) include such Indemnified Parties and representation
of such Indemnified Parties by the same counsel would be inappropriate due
to actual or potential differing interests between them, and that all such
fees and expenses shall be reimbursed as they are incurred.
(d) The indemnity contained in this Section 9.1 shall survive the
termination of this Agreement.
ARTICLE X
MISCELLANEOUS
SECTION 10.1 Amendments; Waivers, Etc.
-------------------------
(a) The provisions of this Agreement may from time to time be amended,
modified or waived, if such amendment, modification or waiver is in writing and
signed by Buyer and Seller (with respect to an amendment) or by Buyer (with
respect to a waiver or consent by it) and such amendment, modification or waiver
is consented to by Second Step Purchaser, and then
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any such waiver or consent shall be effective only in the specific instance and
for the specific purpose for which given.
(b) No failure or delay on the part of Buyer, any Indemnified Party or
any other third party beneficiary referred to in Section 10.11(a) in exercising
any power or right hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise of any such power or right preclude any other or
further exercise thereof or the exercise of any other power or right. No notice
to or demand on Seller in any case shall entitle it to any notice or demand in
similar or other circumstances. No waiver or approval by Buyer or Second Step
Purchaser under this Agreement shall, except as may otherwise be stated in the
waiver or approval, be applicable to subsequent transactions. No waiver or
approval under this Agreement shall require any similar or dissimilar waiver or
approval thereafter to be granted hereunder.
SECTION 10.2 Notices, Etc. All notices and other communications provided
for hereunder shall, unless otherwise stated herein, be in writing (including
facsimile communication) and shall be personally delivered or sent by certified
mail, postage prepaid, by facsimile or by overnight courier, to the intended
party at the address or facsimile number of such party set forth under its name
on the signature pages hereof or at such other address or facsimile number as
shall be designated by the party in a written notice to the other parties hereto
given in accordance with this section and to Second Step Purchaser at the
address or facsimile number set forth under its name on the signature pages of
the Purchase Agreement. All notices and communications provided for hereunder
shall be effective, (a) if personally delivered, when received, (b) if sent by
certified mail, four Business Days after having been deposited in the mail,
postage prepaid and properly addressed, (c) if transmitted by facsimile, when
sent, receipt confirmed by telephone or electronic means and (d) if sent by
overnight courier, two Business Days after having been given to the courier
unless sooner received by the addressee.
SECTION 10.3 Cumulative Remedies. The remedies herein provided are
cumulative and not exclusive of any remedies provided by Law. Without limiting
the foregoing, Seller hereby authorizes Buyer, at any time and from time to
time, to the fullest extent permitted by Law, to set-off, against any
obligations of Seller to Buyer that are then due and payable or that are not
then due and payable from Seller to Buyer but have then accrued, any and all
indebtedness or other obligations at any time owing to Seller by Buyer to or for
the credit or the account of any Seller or that are not then due and payable
from Buyer to Seller but have then accrued.
SECTION 10.4 Binding Effect; Assignability; Survival of Provisions. This
Agreement shall be binding upon and inure to the benefit of each of Buyer and
Seller and its respective successors and permitted assigns (including, in the
case of Buyer, Second Step Purchaser). Seller may not assign any of its rights
hereunder or any interest herein without the prior written consent of Buyer.
This Agreement shall create and constitute the continuing obligations of the
parties hereto in accordance with its terms, and shall remain in full force and
effect until the first date following the Purchase Termination Date, but not
later than the date on which the Purchase Agreement is terminated pursuant to
Section 2.03(c) of the Purchase Agreement, on which all obligations shall have
been finally and fully paid and performed or such other time as the parties
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hereto shall agree. The rights and remedies with respect to any breach of any
representation and warranty made by Seller pursuant to Article V and the
indemnification and payment provisions of Article IX and Section 10.6 shall be
continuing and shall survive any termination of this Agreement.
SECTION 10.5 Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICT OF
LAWS PRINCIPLES, EXCEPT TO THE EXTENT THAT THE PERFECTION OF THE INTERESTS OF
BUYER IN THE RECEIVABLES ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN
THE STATE OF NEW YORK.
SECTION 10.6 Costs, Expenses and Taxes. In addition to the obligations
of Seller under Article IX, Seller agrees to pay on demand:
(a) all reasonable out-of-pocket and other costs and expenses in
connection with the enforcement of this Agreement or the other Transaction
Documents by Buyer or Second Step Purchaser, and
(b) all stamp and other taxes and fees payable or determined to be
payable in connection with the execution and delivery, and the filing and
recording, of this Agreement or the other Sale Documents, and agrees to
indemnify each Indemnified Party against any liabilities with respect to or
resulting from any delay in paying or omission to pay the taxes and fees.
SECTION 10.7 [Reserved]
SECTION 10.8 Waiver of Jury Trial. Each party hereto waives any right
to a trial by jury in any action or proceeding to enforce or defend any rights
under or relating to the Sale Documents or any amendment, instrument, document
or agreement delivered or that may in the future be delivered in connection
therewith or arising from any course of conduct, course of dealing, statements
(whether verbal or written), actions of either of the parties hereto or any
other relationship existing in connection with the Sale Documents, and agrees
that any such action or proceeding shall be tried before a court and not before
a jury.
SECTION 10.9 Integration. This Agreement and the other Sale Documents
contain a final and complete integration of all prior expressions by the parties
hereto with respect to the subject matter hereof and thereof and shall together
constitute the entire agreement between the parties hereto with respect to the
subject matter hereof and thereof, superseding all prior oral or written
understandings.
SECTION 10.10 Counterparts. This Agreement may be executed in any number
of counterparts and by different parties hereto in separate counterparts, each
of which when so executed shall be deemed to be an original and all of which
together shall constitute one and the same agreement.
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SECTION 10.11 Acknowledgment and Consent.
--------------------------
(a) Seller acknowledges that, contemporaneously herewith, Buyer is
selling, transferring, assigning, setting over and otherwise conveying to Second
Step Purchaser all of Buyer's right, title and interest in, to and under the
Receivables, this Agreement and other Sale Documents pursuant to Section 2.01 of
the Purchase Agreement. Seller hereby consents to the sale, transfer,
assignment, set over and conveyance to Second Step Purchaser by Buyer of all
right, title and interest of Buyer in, to and under this Agreement and the other
Sale Documents, and all of Buyer's rights, remedies, powers and privileges, and
all claims of Buyer against Seller, under or with respect to this Agreement and
the other Sale Documents (whether arising pursuant to the terms of this
Agreement or otherwise available at law or in equity), including (i) the right
of Buyer, at any time, to enforce this Agreement against Seller and the
obligations of Seller hereunder, (ii) the right to appoint a successor to the
Servicer at the times and upon the conditions set forth in the Purchaser
Agreement, and (iii) the right, at any time, to give or withhold any and all
consents, requests, notices, directions, approvals, demands, extensions or
waivers under or with respect to this Agreement, any other Sale Document or the
obligations in respect of Seller thereunder to the same extent as Buyer may do.
Each of the parties hereto acknowledges and agrees that Second Step Purchaser is
a third party beneficiary of the rights of Buyer arising hereunder and under the
other Sale Documents to which Seller is a party.
(b) Seller hereby agrees to execute all agreements, instruments and
documents, and to take all other action, that Buyer or Second Step Purchaser
reasonably determines is necessary or appropriate to evidence its consent
described in subsection (a) above. To the extent that Buyer, individually or
through Servicer, has granted or grants powers of attorney to Second Step
Purchaser under the Purchase Agreement, Seller hereby grants a corresponding
power of attorney on the same terms to Buyer. Seller hereby acknowledges and
agrees that Buyer, in all of its capacities, shall assign to Second Step
Purchaser the powers of attorney and other rights and interests granted by
Seller to Buyer hereunder and agrees to cooperate fully with Second Step
Purchaser in the exercise of the rights.
SECTION 10.12 No Partnership or Joint Venture. Nothing contained in this
Agreement shall be deemed or construed by the parties hereto or by any third
person to create the relationship of principal and agent or of partnership or of
joint venture.
SECTION 10.13 No Proceedings. Seller hereby agrees that it will not
institute against Buyer, or join any other Person in instituting against Buyer,
any insolvency proceeding (such as any proceeding of the type referred to in the
definition of Event of Bankruptcy) so long as any Net Investment of Second Step
Purchaser in the Participation Interest shall be outstanding or there shall not
have elapsed one year plus one day since the last day on which any such Net
Investment of Second Step Purchaser in the Participation Interest shall have
been outstanding. The foregoing shall not limit the right of Seller to file any
claim in or otherwise take any action with respect to any insolvency proceeding
that was instituted against Buyer or Second Step Purchaser by any Person other
than Seller or any other Affiliates of Seller (provided that no such action may
be
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taken by Seller until such proceeding has continued undismissed, unstayed and
in effect for a period of ten (10) days).
SECTION 10.14 Severability of Provisions. If any one or more of the
covenants, agreements, provisions or terms of this Agreement or any of the other
Sale Documents shall for any reason whatsoever be held invalid, then the
unenforceable covenants, agreements, provisions or terms shall be deemed
severable from the remaining covenants, agreements, provisions or terms of this
Agreement or the other Sale Documents (as applicable) and shall in no way affect
the validity or enforceability of the other provisions of this Agreement or any
of the other Sale Documents.
SECTION 10.15 Recourse to Buyer. Except to the extent expressly provided
otherwise in the Sale Documents, the obligations of Buyer under the Sale
Documents to which it is a party are solely the obligations of Buyer. No
recourse shall be had for payment of any fee payable by or other obligation of
or claim against Buyer that arises out of any Sale Document to which Buyer is a
party against any director, officer or employee of Buyer. The provisions of this
section shall survive the termination of this Agreement.
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<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their respective officers thereunto duly authorized, as of the date first
above written.
<TABLE>
<CAPTION>
EXIDE CORPORATION, as Seller
<S> <C> <C>
By: /s/ Stephen D. Kovacs
Name: Stephen D. Kovacs
Title: Assistant Secretary
Address: 645 Penn Street
Reading, Pennsylvania 19612-4205
Attention: Stephen D. Kovacs
Telephone: (610) 378-0602
Facsimile: (610) 378-0315
EXIDE U.S. FUNDING CORPORATION, as Buyer
By: /s/ Stephen D. Kovacs
Name: Stephen D. Kovacs
Title: President
Address: 645 Penn Street
Reading, Pennsylvania 19612-4205
Attention: Stephen D. Kovacs
Telephone: (610) 378-0602
Facsimile: (610) 378-0315
</TABLE>
30
<PAGE>
EXHIBIT A
to Sale Agreement
FORM OF
BUYER NOTE
----------
___________, 1997
FOR VALUE RECEIVED, the undersigned, EXIDE U.S. FUNDING CORPORATION, a
Delaware corporation ("Buyer"), promises to pay to EXIDE CORPORATION, a Delaware
corporation ("Seller" and together with its successors and assigns, "Holder"),
on the terms and subject to the conditions set forth in this promissory note
(this "Note") and in the Sale Agreement, dated as of March 31, 1997 (the
"Agreement") between Buyer and Seller, the amount specified pursuant to Article
III of the Agreement as owing hereunder. Such amount, as shown in the records
of the Servicer, will be rebuttable presumptive evidence of the principal amount
and interest owing under this Note.
1. Purchase Agreement. This Note is the Buyer Note described in, and is
subject to the terms and conditions set forth in, the Agreement. Reference is
hereby made to the Agreement for a statement of certain other rights and
obligations of Buyer and Seller.
2. Rules of Construction; Definitions. Certain rules of construction
governing the interpretation of this Note are as set forth in Appendix A to the
Agreement and, except as otherwise specifically provided herein, capitalized
terms used but not defined herein have the meanings ascribed to the Agreement.
In addition, as used herein, the following terms have the following meanings:
"Final Maturity Date" means the date occurring one year and one day after
the date specified in Section 8.2(a) of the Sale Agreement.
"Highest Lawful Rate" has the meaning set forth in paragraph 8.
3. Interest. Buyer promises to pay interest on the aggregate unpaid
principal amount of this Note outstanding on each day at an adjustable rate per
annum equal to the Reference Rate in effect on such day.
4. Interest Payment Dates.
(a) Buyer shall pay accrued interest on this Note on each Settlement
Date and on the Final Maturity Date. Buyer also shall pay accrued interest on
the principal amount of each repayment hereof on the date of such repayment.
<PAGE>
(b) Notwithstanding the provisions of paragraph 4(a), in the event
that on the date an interest payment is due hereunder the amount of funds
available therefor pursuant to Section 3.3 of the Agreement is insufficient
to pay any amount due pursuant to paragraph 4(a), then interest shall be
payable only to the extent that funds are available therefor in accordance
with Section 3.3 of the Agreement. All interest on this Note that is not
paid when due pursuant to this paragraph shall be payable on the next date
on which an interest payment on this Note is due and on which funds are
available therefor pursuant to Section 3.3 of the Agreement, and all such
unpaid interest shall accrue interest at the Reference Rate until paid in
full.
5. Basis of Computation. Interest accrued hereunder shall be computed for
the actual number of days elapsed on the basis of a 360-day year.
6. Principal Payment Dates. Any unpaid principal of this Note shall only
become due and payable on the Final Maturity Date. The principal amount of and
accrued interest on this Note may be repaid on any Business Day without premium
or penalty in accordance with Section 3.3 of the Agreement.
7. General. No failure or delay on the part of the Holder in exercising
any power or right hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise of any such power or right preclude any other or
further exercise thereof or the exercise of any other power or right. No
amendment, modification or waiver of, or consent with respect to, any provision
of this Note shall in any event be effective unless (a) the same shall be in
writing and signed and delivered by Buyer and Seller, and (b) all consents
required for such actions under the Sale Documents shall have been received by
the appropriate Persons.
8. Limitation on Interest. Notwithstanding anything in this Note to the
contrary, Buyer shall never be required to pay unearned interest on any amount
outstanding hereunder, and shall never be required to pay interest on the
principal amount outstanding hereunder, at a rate in excess of the maximum
nonusurious interest rate that may be contracted for, charged or received under
applicable federal or state law (such maximum rate being herein called the
"Highest Lawful Rate"). If the effective rate of interest that would otherwise
be payable under this Note would exceed the Highest Lawful Rate, or the Holder
shall receive any unearned interest or shall receive monies that are deemed to
constitute interest that would increase the effective rate of interest payable
by Buyer under this Note to a rate in excess of the Highest Lawful Rate, then
(a) the amount of interest that would otherwise be payable by Buyer under this
Note shall be reduced to the amount allowed by applicable law, and (b) any
unearned interest paid by Buyer or any interest paid by Buyer in excess of the
Highest Lawful Rate shall be refunded to Buyer. Without limitation of the
foregoing, all calculations of the rate of interest contracted for, charged or
received by the Holder under this Note that are made for the purpose of
determining whether such rate exceeds the Highest Lawful Rate shall be made, to
the extent permitted by applicable usury laws (now or hereafter enacted), by
amortizing, prorating and spreading in equal parts during the actual period
during which any amount has been outstanding hereunder all interest at any time
contracted for, charged or received by the Holder in connection herewith. If at
any time and from time to time (i)
2
<PAGE>
the amount of interest payable to the Holder on any date shall be computed at
the Highest Lawful Rate pursuant to the provisions of the foregoing sentence,
and (ii) in respect of any subsequent interest computation period the amount of
interest otherwise payable to the Holder would be less than the amount of
interest payable to the Holder computed at the Highest Lawful Rate, then the
amount of interest payable to the Holder in respect of such subsequent interest
computation period shall continue to be computed at the Highest Lawful Rate
until the total amount of interest payable to the Holder shall equal the total
amount of interest that would have been payable to the Holder if the total
amount of interest had been computed without giving effect to the provisions of
the foregoing sentence.
9. No Negotiation. This Note is not negotiable.
10. Governing Law. THIS NOTE SHALL BE DEEMED TO BE A CONTRACT MADE UNDER
AND CONSTRUED IN ACCORDANCE WITH THE AGREEMENT AND THE INTERNAL LAWS OF THE
STATE OF NEW YORK WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES.
11. Security Interest. Seller may grant a security interest in or
otherwise pledge this Note as security, and any Person to whom such security
interest is granted or to whom this Note is pledged shall be bound by, and for
all purposes takes this Note subject to, the restrictions and other provisions
set forth herein.
12. Captions. Paragraph captions used in this Note are provided solely for
convenience of reference and shall not affect the meaning or interpretation of
any provision of this Note.
13. No Petition. Seller agrees that, prior to a date that is one year and
one day after the termination of the Purchase Agreement and the reduction of the
Net Investment thereunder to zero, it will not (a) commence, or join with any
other creditor of Buyer in commencing, against Buyer, any bankruptcy,
insolvency, arrangement, reorganization, receivership, relief or similar
proceeding under any bankruptcy or similar law or assignment for the benefit of
creditors or any marshaling of assets an liabilities or (b) demand or accept
payment in respect of this Note, other than those required under the Sale
Documents, or declare an event of default under this Note or accelerate Buyer's
obligations under this Buyer Note.
14. Limited Recourse. Notwithstanding anything to the contrary herein,
Buyer shall make the payments required herein from the assets of Buyer. Buyer's
obligation to make payments hereunder shall not constitute a claim against Buyer
in excess of assets of Buyer available to pay such claim in the event such
assets are insufficient to pay the full amount otherwise due under this Note.
EXIDE U.S. FUNDING CORPORATION
By: ...........................
Name: ...........................
Title: ...........................
3
<PAGE>
EXHIBIT B
to Sale Agreement
FORM OF
SELLER ASSIGNMENT CERTIFICATE
-----------------------------
Reference is made to the Sale Agreement, dated as of March 31, 1997 (as the
same may be amended, supplemented, amended and restated or otherwise modified
from time to time, the "Agreement") between EXIDE CORPORATION ("Seller") and
EXIDE U.S. FUNDING CORPORATION ("Buyer"). Unless otherwise defined herein,
capitalized terms used herein have the meanings ascribed to them pursuant to the
Agreement.
The undersigned hereby sells, transfers, assigns, sets over and conveys
unto Buyer and its successors and assigns all right, title and interest of
Seller in, to and under:
(a) all Receivables created by Seller that arise during the period from
and including the closing of Seller's business on the Initial Cut-Off Date to
but excluding the Purchase Termination Date; and
(b) all proceeds of the Receivables.
This Seller Assignment Certificate is made without recourse but on the
terms and subject to the conditions set forth in the Sale Documents to which
Seller is a party. Seller acknowledges and agrees that Buyer is accepting this
Seller Assignment Certificate in reliance on the representations, warranties and
covenants of Seller contained in the Sale Documents to which Seller is a party.
THIS SELLER ASSIGNMENT CERTIFICATE SHALL BE CONSTRUED IN ACCORDANCE WITH
THE AGREEMENT AND THE INTERNAL LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO
CONFLICT OF LAWS PRINCIPLES.
IN WITNESS WHEREOF, the undersigned has caused this Seller Assignment
Certificate to be duly executed and delivered by its Responsible Officer this
_____ day of _______________, 1997.
EXIDE CORPORATION
By: ......................
Name: ......................
Title: ......................
<PAGE>
SCHEDULE 1
to Sale Agreement
CHANGES IN SELLER'S FINANCIAL CONDITION
---------------------------------------
None.
<PAGE>
SCHEDULE 2
to Sale Agreement
AFFILIATES/LEGAL NAMES
----------------------
[Same as Exhibit D of Receivables Purchase Agreement]
TRADE NAMES
-----------
[Same as Exhibit D of Receivables Purchase Agreement,
<PAGE>
SCHEDULE 3
to Sale Agreement
LIST OF PERMITTED LOCKBOX BANKS AND LOCKBOX ACCOUNTS
----------------------------------------------------
<TABLE>
<CAPTION>
Lockbox Permitted
Name of Bank Address Account # Lockbox #
- ------------ ------- --------- ---------
<S> <C> <C> <C>
Harris Trust & Chicago, Illinois 4266375 Attention:
Savings Bank Check
Processing
311/5
CoreStates Bank, N.A. Reading, Pennsylvania 81-294771 9535
</TABLE>
<PAGE>
APPENDIX A
DEFINITIONS
A. Defined Terms. As used in the Sale Documents, unless otherwise defined
in the Purchase Agreement:
"Action" is defined in Section 9.1(c) of the Sale Agreement.
"Aggregate Unpaid Balance" is defined in Section 2.1(b) of the Sale
Agreement.
"Buyer" means Exide U.S. Funding Corporation, a Delaware corporation.
"Buyer Note" is defined in Section 3.2(a) of the Sale Agreement and
substantially in the form of Exhibit A to the Sale Agreement.
"Contributed Receivables" is defined in Section 1.1 of the Sale Agreement.
"Contribution Date" means the date on which Seller contributes the
Contributed Receivables to Buyer pursuant to Section 1.1 of the Sale Agreement.
"Cut-Off Date" means the last day of any Accounting Period.
"Indemnified Amounts" is defined in Section 9.1(a) of the Sale Agreement.
"Indemnified Party" is defined in Section 9.1 of the Sale Agreement.
"Independent Director" is defined in Section 6.1(l)(4) of the Sale
Agreement.
"Initial Cut-Off Date" means the Business Day immediately preceding the
date when the Sale Agreement becomes effective.
"Losses" is defined in Section 9.1(a) of the Sale Agreement.
"Ownership Interest" means the complete ownership of the Receivables Buyer
acquires from Seller under the Sale Documents.
"Purchase Agreement" is defined in the recitals in the Sale Agreement.
"Purchase Discount Reserve Ratio" is defined in Section 2.2(b) of the Sale
Agreement.
<PAGE>
"Purchase Price Percentage" is defined in Section 2.2(a) of the Sale
Agreement.
"Purchase Termination Date" means the earlier to occur of (a) the date
specified by the Seller pursuant to Section 8.1 of the Sale Agreement and (b)
any event referred to in Section 8.2 of the Sale Agreement.
"Report Date" means the Business Day that is three Business Days prior to a
Settlement Date.
"Sale Agreement" means the Sale Agreement, dated as of March 31, 1997,
between Seller and Buyer, as it may be amended, supplemented or otherwise
modified from time to time.
"Sale Documents" mean the Sale Agreement, the Buyer Note and the other
documents executed and delivered by Buyer or Seller in connection therewith.
"Sale Report" is defined in Section 6.1(h) of the Sale Agreement.
"Second Step Purchaser" means Three Rivers Funding Corporation, a Delaware
corporation.
"Seller" means Exide Corporation, a Delaware corporation.
"Seller Assignment Certificate" means an assignment by Seller,
substantially in the form of Exhibit B to the Sale Agreement, evidencing Buyer's
acquisition of the Receivables generated by Seller, as it may be amended,
supplemented or otherwise modified from time to time.
"Seller Credit Agreement" is defined in Section 4.1(h) of the Sale
Agreement.
"Seller Maturity Date" is defined in Section 3.2 of the Sale Agreement.
"Seller Receivables Review" is defined in Section 6.1(d) of the Sale
Agreement.
"Transaction Documents" mean the Purchase Agreement and the Sale Documents.
"Unpaid Balance" of any Receivable means at any time the unpaid amount
thereof as shown in the books of Servicer at such time.
B. Other Interpretative Matters. For purposes of any Sale Document,
unless otherwise specified therein: (1) accounting terms used and not
specifically defined therein shall be construed in accordance with GAAP; (2)
terms used in Article 9 of the UCC, and not specifically defined in that Sale
Document, are used therein as defined in such Article 9; (3) the term
"including" means "including without limitation," and other forms of the verb
"to include" have correlative meanings; (4) references to any Person include
such Person's permitted successors and assigns; (5) in the computation of a
period of time from a specified date to a later specified date, the word "from"
page A-2
<PAGE>
means "from and including" and the words "to" and "until" each means "to but
excluding"; (6) the words "hereof," "herein," "hereunder" and words of similar
import refer to such Sale Document as a whole and not to any particular
provision of such Sale Document; (7) references to "Section," "Schedule" and
"Exhibit" in such Sale Document are references to Sections, Schedules and
Exhibits in or to such Sale Document; (8) the various captions (including any
table of contents) are provided solely for convenience of reference and shall
not affect the meaning or interpretation of such Sale Document; and (9)
references to any statute or regulation refer to that statute or regulation as
amended from time to time, and include any successor statute or regulation of
similar import.
page A-3
<PAGE>
EXHIBIT 10.24
TWELFTH AMENDMENT
-----------------
TWELFTH AMENDMENT (this "Amendment"), dated as of March 31, 1997, among
EXIDE CORPORATION, a Delaware corporation (the "Company"), the lenders party to
the Credit Agreement referred to below (each a "Bank" and, collectively, the
"Banks"), BANKERS TRUST COMPANY, BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION, AND BANK OF MONTREAL, as Agents (each, an "Agent" and,
collectively, the "Agents"), and BANKERS TRUST COMPANY as Administrative Agent.
All capitalized terms used herein and not otherwise defined herein shall have
the respective meanings provided such terms in the Credit Agreement referred to
below.
W I T N E S S E T H :
-------------------
WHEREAS, the Company, the Banks, the Agents and the Administrative Agent
are parties to a Credit Agreement, dated as of August 30, 1994, as amended,
modified or supplemented by the First Amendment thereto, dated as of October 21,
1994, the Second Consent, Waiver and Agreement with respect thereto, dated as of
December 9, 1994, the Third Amendment thereto, dated as of February 3, 1995, the
Consent and Waiver with respect thereto, dated as of February 21, 1995, the
Fourth Amendment thereto, dated as of March 6, 1995, the Waiver with respect
thereto, dated as of March 31, 1995, the Fifth Amendment and Consent thereto,
dated as of April 18, 1995, the Sixth Amendment and Consent thereto, dated as of
April 21, 1995, the Seventh Amendment and Consent thereto, dated as of April 24,
1995, the Eighth Amendment and Consent thereto, dated as of August 17, 1995, the
Ninth Amendment and Consent thereto, dated as of November 22, 1995, the Tenth
Amendment Consent and Agreement thereto, dated as of March 28, 1996, the
Eleventh Amendment, Consent, Waiver and Agreement thereto, dated as of May 17,
1996, and the Consent and Waiver, dated as of December 2, 1996 (as so amended,
modified or supplemented, the "Credit Agreement");
WHEREAS, the Company, through its Wholly-Owned Subsidiary Exide Holding
Europe S.A., wishes to acquire 100% of the capital stock of DETA (as defined
below) for consideration in the form of cash and assumed debt (the "DETA
Acquisition");
<PAGE>
WHEREAS, the Company wishes to tender for, repurchase and/or redeem
and retire an amount greater than 50% of the outstanding Senior Subordinated
Notes (the "Senior Subordinated Notes Redemption");
WHEREAS, the Company has requested certain amendments and
modifications to the Credit Agreement in order to consummate the transactions
described in the two preceding recitals and to effect certain other changes to
the Credit Agreement and the Security Agreement;
WHEREAS, the parties hereto wish to further amend the Credit Agreement
as herein provided;
NOW, THEREFORE, it is agreed:
I. Amendments and Modifications to Credit Agreement
1. On and after the Twelfth Amendment Effective Date (as defined in
Section III(5) below), Section 1.01 of the Credit Agreement shall be amended by
inserting the following new clause (g) immediately at the end of said Section
1.01:
"(g) Subject to and upon the terms and conditions set forth herein,
each Bank with a Tranche D Term Loan Commitment severally agrees to make,
on each Tranche D Term Loan Borrowing Date, a term loan (each, a "Tranche D
Term Loan" and, collectively, the "Tranche D Term Loans") to the Company,
which Tranche D Term Loans made on any Tranche D Term Loan Borrowing Date
(i) shall be made and initially maintained as a single Borrowing of Base
Rate Loans (subject to the option to convert such Tranche D Term Loans
pursuant to Section 1.06) and (ii) by each Bank shall be in a principal
amount that does not exceed the Tranche D Term Loan Commitment of such Bank
as in effect on such Tranche D Term Loan Borrowing Date (before giving
effect to any reductions thereto on such date pursuant to Section
3.03(s)(i) or (ii) but after giving effect to any reductions thereto prior
to such date pursuant to Sections 3.03(s)(i) and (ii) and on or prior to
such date pursuant to Section 3.03(s)(iii)). At the time of each
incurrence of Tranche D Term Loans pursuant to this Section 1.01(g), the
Company shall certify that cash in an amount equal to the amount of the
CEAc Acquisition Corp. Repatriation has theretofore been (or will
concurrently with the utilization of proceeds of the Tranche D Term Loans
be) utilized to make payments in connection with the Senior Subordinated
Notes Redemption and that all proceeds of the Tranche D Term Loans then
being borrowed will, within one Business Day after the respective Borrowing
-2-
<PAGE>
pursuant to this Section 1.01(g), be used to make additional payments owing
in connection with the Senior Subordinated Notes Redemption or to reimburse
the Company for payments theretofore made by it in connection with the
Senior Subordinated Notes Redemption which exceed the amount of the CEAc
Acquisition Corp. Repatriation and the gross cash proceeds of all Tranche D
Term Loans theretofore incurred by the Company. Once repaid, Tranche D Term
Loans incurred hereunder may not be reborrowed."
2. On and after the Twelfth Amendment Effective Date, Section
1.03(a) of the Credit Agreement shall be amended by inserting the phrase ",
Tranche D Term Loans" immediately following the phrase "Tranche C Term Loans"
appearing in the second sentence thereof.
3. On and after the Twelfth Amendment Effective Date, Section
1.05(a) of the Credit Agreement shall be amended by (1) deleting the word "and"
appearing at the end of clause (v) thereof and inserting in lieu thereof a comma
and (2) inserting immediately prior to the period at the end thereof the
following new clause (vii):
"and (vii) if Tranche D Term Loans, by a promissory note duly executed and
delivered by the Company substantially in the form of Exhibit B-6, with
blanks appropriately completed in conformity herewith (each, a "Tranche D
Term Note" and, collectively, the "Tranche D Term Notes")".
4. On and after the Twelfth Amendment Effective Date, Section 1.05
of the Credit Agreement shall be further amended by inserting the following new
clause (h) immediately after clause (g) of said Section 1.05:
"(h) The Tranche D Term Note issued to each Bank shall (i) be executed
by the Company, (ii) be payable to the order of such Bank and be dated the
Initial Tranche D Term Loan Borrowing Date or, in the case of Tranche D
Term Notes issued thereafter, the date of the issuance thereof, (iii) be in
a stated principal amount equal to the sum of the Tranche D Term Loan
Commitment and, without duplication, the outstanding principal amount of
Tranche D Term Loans of such Bank on the date of the issuance of the
respective Tranche D Term Note and be payable in the principal amount of
the Tranche D Term Loans evidenced thereby from time to time, (iv) mature
on the Tranche D Term Loan Maturity Date, (v) bear interest as provided in
the appropriate clause of Section 1.08 in respect of the Base Rate Loans
and Eurodollar Loans, as the case may be, evidenced thereby, (vi) be
subject to mandatory repayment as provided in Section 4.02 and (vii) be
entitled to the benefits of this Agreement and the other Credit Documents."
-3-
<PAGE>
5. On and after the Twelfth Amendment Effective Date, Section 1.06
of the Credit Agreement shall be amended by (1) inserting "(x)" immediately
prior to the phrase "Tranche C Loans" appearing therein and (2) inserting the
phrase "and (y) Tranche D Term Loans, the Tranche D Syndication Termination
Date" immediately following the phrase "Tranche C Syndication Termination Date"
appearing therein.
6. On and after the Twelfth Amendment Effective Date, Section 1.07
of the Credit Agreement shall be amended by deleting the first sentence
contained therein in its entirety and inserting in lieu thereof the following
new first sentence to said Section 1.07:
"All Borrowings of Tranche A Term Loans, Tranche B Term Loans, Tranche
C Term Loans, Tranche D Term Loans and Revolving Loans under this Agreement
shall be incurred from the Banks pro rata on the basis of their respective
Tranche A Term Loan Commitments, Tranche B Term Loan Commitments, Tranche C
Term Loan Commitments, Tranche D Term Loan Commitments or Revolving Loan
Commitments, as the case may be; provided, that all Borrowings of Revolving
Loans made pursuant to a Mandatory Borrowing shall be incurred from the
Banks with a Revolving Loan Commitment pro rata on the basis of their
Adjusted RL Percentages."
7. On and after the Twelfth Amendment Effective Date, Section 1.09
of the Credit Agreement shall be amended by deleting clause (vii) contained
therein in its entirety and inserting in lieu thereof the following new clause
(vii):
"(vii) no Interest Period in respect of any Borrowing of Tranche A
Term Loans, Tranche B Term Loans, Tranche C Term Loans or Tranche D Term
Loans, as the case may be, shall be selected which extends beyond any date
upon which a mandatory repayment of such Tranche of Term Loans will be
required to be made under Section 4.02(b), (c), (n) or (p), as the case may
be, if the aggregate principal amount of Tranche A Term Loans, Tranche B
Term Loans, Tranche C Term Loans or Tranche D Term Loans, as the case may
be, which have Interest Periods which will expire after such date will be
in excess of the aggregate principal amount of Tranche A Term Loans,
Tranche B Term Loans, Tranche C Term Loans or Tranche D Term Loans, as the
case may be, then outstanding less the aggregate amount of such required
prepayment; and".
8. On and after the Twelfth Amendment Effective Date, Section 1.13
of the Credit Agreement shall be amended by (1) relettering clause (i)(d) of the
proviso thereto as clause (i)(e), (2) inserting the phrase ", (d) the Tranche D
Term Loan
-4-
<PAGE>
Commitment, such Tranche D Term Loan Commitment" immediately prior to the phrase
"and/or" appearing in clause (i) of the proviso thereto, and (3) inserting the
phrase ", a Tranche D Term Loan Commitment" immediately after the phrase
"Tranche C Term Loan Commitment" appearing in clause (x) of the last sentence of
said Section 1.13.
9. On and after the Twelfth Amendment Effective Date, Section 3.01
of the Credit Agreement shall be amended by adding the following new clause (g)
at the end thereof:
"(g) The Company agrees to pay the Administrative Agent for
distribution to each Bank with a Tranche D Term Loan Commitment a
commitment commission (the "Tranche D Commitment Commission") for the
period from the Twelfth Amendment Effective Date to and including the
Tranche D Term Loan Commitment Termination Date (or such earlier date as
the Total Tranche D Term Loan Commitment is reduced to $0), computed at a
rate for each day equal to 1/2 of 1% on the daily average Tranche D Term
Loan Commitment of such Bank. Accrued Tranche D Commitment Commission shall
be due and payable quarterly in arrears on each Quarterly Payment Date and
on such date upon which the Total Tranche D Term Loan Commitment is
terminated."
10. On and after the Twelfth Amendment Effective Date, Section 3.02
of the Credit Agreement shall be amended by adding the following new clause (d)
at the end thereof:
"(d) Upon at least two Business Days' prior notice to the
Administrative Agent at its Notice Office (which notice the Administrative
Agent shall promptly transmit to each of the Banks), the Company shall have
the right, at any time or from time to time, without premium or penalty, to
terminate the Total Tranche D Term Loan Commitment (and the Tranche D Term
Loan Commitment of each Bank) in whole or in part, in each case in integral
multiples of $5,000,000 in the case of partial reductions; provided that
(i) each such reduction shall apply proportionately to permanently reduce
the Tranche D Term Loan Commitment of each Bank with such a Commitment and
(ii) any partial reduction to the Total Tranche D Term Loan Commitment
shall apply to reduce the then remaining Tranche D Scheduled Repayments in
inverse order of maturity."
11. On and after the Twelfth Amendment Effective Date, Section 3.03
of the Credit Agreement shall be amended by inserting the following new clause
(s) immediately at the end thereof:
-5-
<PAGE>
"(s) In addition to any other mandatory commitment reductions pursuant
to this Section 3.03, the Total Tranche D Term Loan Commitment shall (i)
terminate in its entirety on the Tranche D Term Loan Commitment Termination
Date (after giving effect to the making of any Tranche D Term Loans on such
date), (ii) on each Tranche D Term Loan Borrowing Date, be reduced by the
aggregate principal amount of Tranche D Term Loans being made on such date
(which reduction shall occur immediately after the making of such Tranche D
Term Loans) and (iii) on each date prior to the Tranche D Term Loan
Commitment Termination Date on which the repayment of principal of Tranche
D Term Loans would be required pursuant to the applicable provisions in
Section 4.02 in an amount (determined as if an unlimited principal amount
of Tranche D Term Loans were then outstanding) which exceeds the aggregate
principal amount of Tranche D Term Loans then outstanding, be reduced by an
amount equal to the amount of such excess. Each reduction to the Total
Tranche D Term Loan Commitment pursuant to this Section 3.03 shall be
applied proportionately to reduce the Tranche D Term Loan Commitment of
each Bank with such a Commitment. Any reductions to the Total Tranche D
Term Loan Commitment pursuant to this Section 3.03(s) shall apply to reduce
the Tranche D Scheduled Repayments in inverse order of maturity."
12. On and after the Twelfth Amendment Effective Date, Section 4.01
of the Credit Agreement shall be amended by (1) deleting clause (v) of clause
(a) contained in said Section 4.01 in its entirety and inserting in lieu thereof
the following new clause (v):
"(v) voluntary prepayments of Term Loans effected pursuant to this
Section 4.01 (except pursuant to the preceding clause (iv)) shall be
applied to the Tranche A Term Loans, Tranche B Term Loans, Tranche C Term
Loans and Tranche D Term Loans on a pro rata basis (based upon the then
outstanding principal amount of Tranche A Term Loans, Tranche B Term Loans,
Tranche C Term Loans and Tranche D Term Loans); and"
and (2) deleting the phrase "and Tranche C Term Loans" appearing in clause (b)
of said Section 4.01 and inserting in lieu thereof the phrase ", Tranche C Term
Loans and Tranche D Term Loans".
13. On and after the Twelfth Amendment Effective Date, Section
4.02(a)(vi) of the Credit Agreement shall be amended by deleting the number
"$20,000,000" contained in said Section 4.02(vi) and inserting in lieu thereof
the number "$50,000,000".
-6-
<PAGE>
14. On and after the Twelfth Amendment Effective Date, Section
4.02(e)(i) of the Credit Agreement shall be amended by (i) deleting the phrase
"(other than Tudor, CEAc and their respective Subsidiaries)" appearing therein
and by inserting in lieu thereof the phrase "(other than CEAc Acquisition Corp.
and its Subsidiaries)" and (ii) deleting the phrase "Exide European
Restructuring Date" appearing therein and by inserting in lieu thereof the
phrase "Twelfth Amendment Effective Date".
15. On and after the Twelfth Amendment Effective Date, Section
4.02(e)(iii) of the Credit Agreement shall be amended by deleting the phrase
"Exide European Restructuring Date" appearing therein and by inserting in lieu
thereof the phrase "Twelfth Amendment Effective Date".
16. On and after the Twelfth Amendment Effective Date, Section
4.02(f)(iii) is hereby amended by (1) deleting the phrase "Exide European
Refinancing Facility Agreement as originally in effect" appearing therein and by
inserting in lieu thereof the phrase "Exide European Refinancing Facility
Agreement as in effect on the Twelfth Amendment Effective Date" and (2) deleting
the phrase "as in effect on the Exide European Restructuring Date" and inserting
in lieu thereof the phrase "as in effect on the Twelfth Amendment Effective
Date".
17. On and after the Twelfth Amendment Effective Date, Section
4.02(g)(ii) shall be amended by deleting the existing text thereof and by
inserting in lieu thereof the phrase "[INTENTIONALLY OMITTED]".
18. On and after the Twelfth Amendment Effective Date, Section
4.02(i) of the Credit Agreement shall be amended by deleting the existing text
thereof in its entirety and by inserting in lieu thereof the phrase
"[INTENTIONALLY OMITTED]".
19. On and after the Twelfth Amendment Effective Date, Section
4.02(m) shall be amended by (i) adding "(x)" immediately before the phrase
"result in a violation" appearing in the proviso to the second sentence thereof
and (ii) deleting the phrase ", the application pursuant to this sentence may be
delayed until the respective repatriations are permitted to be made" appearing
in the proviso to the second sentence thereof and by inserting in lieu thereof
the phrase "or (y) require that the Company deliver a guaranty as a result of
the receipt of such amounts pursuant to the terms of the Exide Holding Senior
Unsecured Note Documents as originally in effect (and so long as such documents
are in effect), the application pursuant to this sentence may be delayed until
the respective repatriations are permitted to be made without causing the
results described in preceding clauses (x) and (y)".
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<PAGE>
20. On and after the Twelfth Amendment Effective Date, Section 4.02
of the Credit Agreement shall be further amended by inserting the following new
clause (p) immediately at the end of said Section 4.02:
"(p) In addition to any other mandatory repayments or commitment
reductions pursuant to this Section 4.02, on each date set forth below, the
Company shall be required to repay that principal amount of Tranche D Term
Loans, to the extent then outstanding, as is set forth opposite such date
(each such repayment, as the same may be reduced as provided in Sections
3.03, 4.01 and 4.02(j), a "Tranche D Scheduled Repayment," and each such
date, a "Tranche D Scheduled Repayment Date"):
<TABLE>
<CAPTION>
Tranche D
Scheduled Repayment Date Amount
------------------------ ------
<S> <C>
June 30, 1997 $125,000
September 30, 1997 $125,000
December 31, 1997 $125,000
March 31, 1998 $125,000
June 30, 1998 $125,000
September 30, 1998 $125,000
December 31, 1998 $125,000
March 31, 1999 $125,000
June 30, 1999 $125,000
September 30, 1999 $125,000
December 31, 1999 $125,000
March 31, 2000 $125,000
June 30, 2000 $125,000
March 31, 2001 $125,000
Tranche D Term Loan
Maturity Date $48,250,000".
</TABLE>
21. On and after the Twelfth Amendment Effective Date, the Credit
Agreement shall be further amended by inserting the following new Section 6B
immediately after Section 6A contained therein:
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<PAGE>
"SECTION 6B. Conditions Precedent to Initial Tranche D Term Loan
Borrowing Date. The obligation of each Bank to make Tranche D Term Loans on
the Initial Tranche D Term Loan Borrowing Date is subject, at the time of
the making of such Loans, to the satisfaction of the following conditions:
6B.01 Notes. On or prior to the Initial Tranche D Term Loan Borrowing
Date, there shall have been delivered to the Administrative Agent for the
account of each Tranche D Bank the appropriate Tranche D Term Note in the
amount, maturity and as otherwise provided herein.
6B.02 Officer's Certificate. On the Initial Tranche D Term Loan
Borrowing Date, the Administrative Agent shall have received a certificate,
dated the Initial Tranche D Term Loan Borrowing Date and signed on behalf
of the Company by the President or the Chief Financial Officer of the
Company, stating that all of the conditions in Sections 6B.04, 6B.05,
6B.06, 6B.09, 6B.12, 6B.13, 7.01 and 7.03 have been satisfied on such date.
6B.03 Opinions of Counsel. On the Initial Tranche D Term Loan
Borrowing Date, the Administrative Agent shall have received from (i)
Kirkland & Ellis, U.S. counsel to the Company and its Subsidiaries, an
opinion addressed to the Administrative Agent, the Agents, the Collateral
Agent and each of the Banks and dated the Initial Tranche D Term Loan
Borrowing Date, which opinion shall cover matters, and shall be in form and
substance, satisfactory to each of the Agents and (iii) such local counsel
(satisfactory to the Agents), if any, as may have been requested by the
Agents, legal opinions each of which (x) shall be addressed to the
Administrative Agent, the Agents, the Collateral Agent and each of the
Banks and dated the Initial Tranche D Term Loan Borrowing Date, (y) shall
be in form and substance satisfactory to the Agents and (z) shall cover the
Tranche D Mortgage Amendments and such other matters incident to the
transactions contemplated herein as the Agents may reasonably request.
Without limiting the foregoing, the foregoing legal opinion of Kirkland &
Ellis shall be required to include its opinions, in form and substance
satisfactory to the Agents and the Required Banks and addressed to the
Banks, to the effect that (A) each Credit Event under this Agreement, as
amended through and including the date of the delivery of such opinion, may
occur without causing any violation of the Senior Notes Indenture or the
Senior Subordinated Notes Indenture or the 2005 Senior Unsecured Notes
Indenture, and (B) neither the execution, delivery nor performance by the
Company or any of its Subsidiaries of this Agreement and the other Credit
Documents, as this Agreement and such other Credit Documents have been
amended through and including the date of the delivery of such opinion,
will cause a violation under
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<PAGE>
the Senior Notes Indenture, the Senior Subordinated Notes Indenture or the
2005 Senior Unsecured Notes Indenture.
6B.04 Corporate Documents; Proceedings, etc. All corporate and legal
proceedings and all instruments and agreements in connection with the
transactions contemplated by this Agreement and the other Documents shall
be reasonably satisfactory in form and substance to the Agents and the
Required Banks, and the Administrative Agent shall have received all
information and copies of all documents and papers, including records of
corporate proceedings, governmental approvals, good standing certificates
and bring-down telegrams or facsimiles, if any, which the Agents reasonably
may have requested in connection therewith, such documents and papers where
appropriate to be certified by proper corporate or governmental
authorities.
6B.05 Adverse Change, etc. Since the Twelfth Amendment Effective Date,
nothing shall have occurred (and the Banks shall have become aware of no
facts, conditions or other information not previously known) which the
Agents, the Required Banks or the Required Tranche D Banks shall determine
could have a material adverse effect on the rights or remedies of the
Agents or the Banks, or on the ability of the Company, or the Company and
its Subsidiaries taken as a whole, to perform their respective obligations
to the Agents and the Banks or which could have a material adverse effect
on the business, property, assets, nature of assets, liabilities, condition
(financial or otherwise) or prospects of the Company or the Company and its
Subsidiaries taken as a whole.
6B.06 Litigation. On the Initial Tranche D Term Loan Borrowing Date,
no litigation or investigation by any entity (private or governmental)
shall be pending or threatened with respect to this Agreement or any
documentation executed in connection herewith or the transactions
contemplated hereby, or with respect to any material Indebtedness of the
Company or its Subsidiaries, or which the Agents, the Required Banks or the
Required Tranche D Banks shall determine could have a material adverse
effect on the business, property, assets, nature of assets, liabilities,
condition (financial or otherwise) or prospects of the Company or the
Company and its Subsidiaries taken as a whole.
6B.07 Mortgages. On the Initial Tranche D Term Loan Borrowing Date,
the Collateral Agent shall have received fully executed counterparts of
amendments (the "Tranche D Mortgage Amendments"), in form and substance
satisfactory to the Collateral Agent, to each of the Mortgages, together
with evidence that counterparts of each of the Tranche D Mortgage
Amendments
-10-
<PAGE>
have been delivered to the title company ensuring the Lien on the existing
Mortgages for recording in all places to the extent necessary or desirable,
in the judgment of the Collateral Agent, effectively to maintain a valid
and enforceable first priority mortgage lien on the Mortgaged Properties in
favor of the Collateral Agent for the benefit of the Secured Creditors, and
the Collateral Agent shall have received endorsements to the existing
Mortgage Policies assuring the Collateral Agent that each Mortgage, after
giving effect to the respective Tranche D Mortgage Amendment, is a valid
and enforceable first priority mortgage lien on the respective Mortgaged
Properties, free and clear of all defects and encumbrances except Permitted
Encumbrances.
6B.08 Projections; Pro Forma Financial Statements; Accountants'
Certificates. On or prior to the Initial Tranche D Term Loan Borrowing
Date, the Company shall have delivered to each Bank:
(i) projected financial statements for the Company and its
Subsidiaries for the period from March 31, 1997 to and including the
Tranche D Term Loan Maturity Date (the "Tranche D Projections"), which
Tranche D Projections (x) shall reflect the forecasted financial
condition and income and expenses of the Company and its Subsidiaries
after giving effect to the Senior Subordinated Notes Redemption
(assuming all Senior Subordinated Notes are repurchased or redeemed
and as if same had occurred on March 31, 1997) and the related
financing thereof (including, without limitation, the incurrence of
the Tranche D Term Loans) and the other transactions contemplated
hereby and thereby, (y) shall be certified by the chief financial
officer of the Company and (z) shall be reasonably satisfactory in
form and substance to the Agents and the Required Banks; and
(ii) pro forma financial statements (including a balance sheet
and income statement) for the Company and its Subsidiaries for the
period of four consecutive fiscal quarters (taken as one accounting
period) last ended prior to the Tranche D Term Loan Borrowing Date for
which financial information in respect thereof is available, assuming
the Senior Subordinated Notes Redemption was effected and all Senior
Subordinated Notes repurchased or redeemed on the first day of such
one year period, and such pro forma financial statements shall have
been certified by the chief financial officer of the Company, and the
Agents and the Required Banks shall be reasonably satisfied with such
pro forma financial statements;
-11-
<PAGE>
all of which shall be in form and substance satisfactory to the Agent and
the Required Banks.
6B.09 CEAc Acquisition Corp. Repatriation. On or prior to the Initial
Tranche D Term Loan Borrowing Date the Company shall have received at least
$20,000,000 in cash from CEAc Acquisition Corp. and/or its Subsidiaries
representing payments of accrued interest owed to the Company and/or
certain of its Wholly-Owned Subsidiaries (other than CEAc Acquisition Corp.
and its Subsidiaries), payments in connection with the purchase of accounts
receivable and inventory from the Company (the "CEAc Acquisition Corp.
Repatriation"), which amount shall be used to make payments in connection
with the Senior Subordinated Notes Redemption before or concurrently with
the use of any proceeds of Tranche D Term Loans for such purpose.
6B.10 Solvency Certificate. On the Initial Tranche D Term Loan
Borrowing Date, the Company shall cause to be delivered to the
Administrative Agent a certificate in form satisfactory to the Agents,
addressed to the Agents and each of the Banks and dated the Tranche D Term
Loan Borrowing Date, from the chief financial officer of the Company,
providing the opinion of the chief financial officer of the Company that,
after giving effect to the incurrence of all financings contemplated herein
(assuming the full utilization of the Total Tranche D Term Loan
Commitment), each of the Company, on a stand-alone basis, and the Company
and its Subsidiaries taken as a whole, is not insolvent and will not be
rendered insolvent by the indebtedness incurred in connection herewith,
will not be left with unreasonably small capital with which to engage in
its business and will not have incurred debts beyond its ability to pay
such debts as they mature and become due.
6B.11 Fees, etc. On the Initial Tranche D Term Loan Borrowing Date,
the Company shall have paid to the Administrative Agent, each Agent and
each Bank all costs, fees and expenses (including, without limitation,
legal fees and expenses) payable to the Administrative Agent, such Agent
and such Bank to the extent then due.
6B.12 Notices to Holders of Certain Indebtedness. (a) On the Initial
Tranche D Term Loan Borrowing Date, the Company shall have delivered to the
trustee under the Senior Note Indenture, notice to the effect that this
Agreement, as amended by the Twelfth Amendment, constitutes the "Amended
Credit Agreement" (as defined in such indenture), and the Company shall
have taken all other action as may be necessary or, in the opinion of the
Agents,
-12-
<PAGE>
desirable to ensure that this Agreement is entitled to all the rights and
benefits afforded the "Amended Credit Agreement" under such indenture.
(b) On the Initial Tranche D Term Loan Borrowing Date, the Company
shall have delivered to the trustee under the Senior Subordinated Note
Indenture, notice to the effect that this Agreement, as amended by the
Twelfth Amendment, constitutes the "Amended Credit Agreement" (as defined
in such indenture), and the Company shall have taken all other action as
may be necessary or, in the opinion of the Agents, desirable to ensure that
this Agreement is entitled to all the rights and benefits afforded the
"Amended Credit Agreement" under such indenture.
(c) On the Initial Tranche D Term Loan Borrowing Date, the Company
shall have delivered to the Administrative Agent evidence in form, scope
and substance satisfactory to the Agents that the matters set forth in this
Section 6B.12 have been satisfied as of such date.
6B.13 Certain Documentation. On or prior to the Twelfth Amendment
Effective Date, the Company shall have delivered to the Administrative
Agent true and correct copies, certified as such by a financial officer of
the Company, of the following documentation as then in effect (or, to the
extent such documentation is not then in effect, the most recent drafts of
the respective documentation): (i) the European Receivables Facility and
all related documentation, (ii) the Exide Holding Senior Unsecured Notes
Documents, (iii) the DETA Acquisition Documents and, to the extent then
available to the Company, all documentation relating to any Indebtedness
which is, or is expected to become, DETA Acquisition Assumed Indebtedness,
(v) the Receivables Facility and (vi) the Exide European Refinancing
Facility Agreement. On the Initial Tranche D Term Loan Borrowing Date, the
Company shall have delivered to the Administrative Agent a certification to
the effect that there have been no modifications or additions (including as
a result of additional documentation being made available to the Company)
to the documentation previously delivered pursuant to the immediately
preceding sentence or, to the extent there have been any such modifications
or additions, attaching true and correct copies of the relevant documents.
All documentation delivered pursuant to this Section 6B.13 shall be
required to be in form and substance reasonably satisfactory to the
Required Banks and the Required Tranche D Banks.
The acceptance of the proceeds of the Tranche D Term Loans shall
constitute a representation and warranty by the Company to the Agents and
each of the Banks that all the conditions specified in this Section 6B and
Section 7 exist
-13-
<PAGE>
as of that time. All of the Tranche D Term Notes, certificates, legal
opinions and other documents and papers referred to in this Section 6B and
Section 7, unless otherwise specified, shall be delivered to the
Administrative Agent at the Notice Office for the account of each of the
Banks and, except for the Tranche D Term Notes, in sufficient counterparts
for each of the Tranche D Banks and shall be in form and substance
reasonably satisfactory to the Required Banks and the Required Tranche D
Banks."
22. On and after the Twelfth Amendment Effective Date, Section 8.08
of the Credit Agreement shall be amended by inserting the following new clause
(e) immediately following clause (d) contained in said Section 8.08:
"(e) All proceeds of the Tranche D Term Loans shall be used promptly
after the incurrence thereof by the Company to finance, in whole or in
part, the Senior Subordinated Notes Redemption, in each case in accordance
with the relevant certification required to be delivered at the time of the
incurrence of such Loans pursuant to Section 1.01(g)."
23. On and after the Twelfth Amendment Effective Date, Section 8.15
of the Credit Agreement shall be amended by deleting the second sentence thereof
in its entirety and by inserting in lieu thereof the following new sentence:
"Schedule XIV lists each Subsidiary of the Company, and shows the direct
and indirect ownership interests of the Company in each such Subsidiary, in
each case as of the Twelfth Amendment Effective Date."
24. On and after the Twelfth Amendment Effective Date, the Credit
Agreement shall be further amended by inserting the following new Section 8.27
immediately following existing Section 8.26:
"8.27 Special Purpose Corporation. (a) The Receivables Subsidiary was
formed for the purpose of purchasing, and receiving contributions of,
receivables from the Company and its Subsidiaries, and selling such
receivables to, or obtaining secured loans from, the Receivables Financier,
pursuant to the Receivables Facility and except in connection with the
foregoing (and activities reasonably incidental thereto), the Receivables
Subsidiary engages (and shall engage) in no business activities and has
(and will have) no significant assets or liabilities.
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<PAGE>
(b) The European Receivables Subsidiaries were formed for the purpose
of purchasing, and receiving contributions of, receivables from the CEAc
Acquisition Corp. and its Subsidiaries, and selling such receivables to, or
obtaining secured loans from, the European Receivables Financier, pursuant
to the European Receivables Facility and the making of intercompany loans
to CEAc Acquisition Corp. and its Subsidiaries to the extent permitted
hereby and by the Exide European Refinancing Facility Agreement, and except
in connection with the foregoing (and activities reasonably incidental
thereto), the European Receivables Subsidiaries engage (and shall engage)
in no business activities and have (and will have) no significant assets or
liabilities."
25. On and after the Twelfth Amendment Effective Date, Section
9.19(a) of the Credit Agreement shall be amended by deleting the existing text
thereof and by inserting in lieu thereof the following new text:
"With respect to each Subsidiary of the Company (other than CEAc
Acquisition Corp. and its Subsidiaries), the Company (directly or
indirectly through its Subsidiaries (other than CEAc Acquisition Corp. and
its Subsidiaries) shall at all times own at least that percentage of the
outstanding capital stock of such Subsidiary as is shown as being owned
(directly or indirectly) by the Company in Schedule XIV hereto. With
respect to CEAc Acquisition Corp. and its Subsidiaries, the Company (in the
case of CEAc Acquisition Corp.) and CEAc Acquisition Corp. (in the case of
such other Subsidiaries) shall (directly or indirectly) at all times own at
least that percentage of the outstanding capital stock of such Subsidiary
as is shown as being owned (directly or indirectly) by the Company in
Schedule XIV hereto."
26. On and after the Twelfth Amendment Effective Date, Section 9.20
of the Credit Agreement shall be amended by inserting the following new sentence
at the end thereof:
"Notwithstanding anything to the contrary contained above or elsewhere
in this Agreement, the Receivables Subsidiary shall be permitted to be
established and shall not be required to become a party to any Credit
Document, although 100% of the capital stock of the Receivables Subsidiary
shall be required to be pledged pursuant to the relevant Pledge Agreement."
27. On and after the Twelfth Amendment Effective Date, the Credit
Agreement shall be further amended by adding the following new Sections 9.21 and
9.22 immediately after existing Section 9.20 thereof:
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<PAGE>
"9.21 Completion of Senior Subordinated Notes Redemption. The
Company shall take all actions as may be required so that the Senior
Subordinated Notes Redemption shall be completed on, or within 90 days
after, the Initial Tranche D Term Loan Borrowing Date. All Senior
Subordinated Notes repaid, repurchased or redeemed pursuant to the Senior
Subordinated Notes Redemption shall be permanently retired (and shall not
thereafter be reissued).
9.22 Consummation of DETA Acquisition. The Company shall use its
best efforts to cause all of the conditions precedent to its ability to
consummate the DETA Acquisition, as specified in Section 10.02(xx), to be
satisfied on, or within 180 days after, the Twelfth Amendment Effective
Date and to cause the DETA Acquisition Date to occur on, or within 180 days
after, the Twelfth Amendment Effective Date. If the DETA Acquisition Date
does not for any reason occur on, or within 180 days after, the Twelfth
Amendment Effective Date, the consummation of the DETA Acquisition shall
not be permitted to occur thereafter unless the Required Banks (in their
sole discretion) specifically consent thereto in writing."
28. On and after the Twelfth Amendment Effective Date, Section 10.01
of the Credit Agreement shall be amended by (1) in clause (vi) thereof, deleting
the phrase "Section 10.05(ix)" and inserting in lieu thereof "Section
10.05(xi)", (2) in clause (xi) thereof, deleting the phrase "or (xix)" in each
place it appears therein and by inserting in lieu thereof the phrase ", (xix) or
(xx)", (3) in clause (xv) thereof, deleting the phrase "(xviii) or" appearing
therein and by inserting the phrase "or (xx)" immediately before the phrase
"shall be permitted" appearing therein, (4) deleting the word "and" appearing at
the end of clause (xvii) thereof, (5) deleting the period at the end of clause
(xviii) thereof and inserting a semi-colon in lieu thereof and (6) inserting at
the end thereof the following new clauses:
"(xix) Liens on accounts receivable and proceeds thereof, in each
case so long as said accounts receivable are sold pursuant to the European
Receivables Facility in accordance with the requirements of Section
10.02(xiv) and any European Receivables Facility Attributed Indebtedness at
such time is permitted pursuant to Section 10.05(xxvi); and
(xx) Liens securing DETA Acquisition Assumed Indebtedness incurred in
accordance with the requirements of Section 10.05(xxiv) and so long as such
Liens extend only to assets of CEAc Acquisition Corp. and its
Subsidiaries."
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<PAGE>
29. On and after the Twelfth Amendment Effective Date, Section 10.02
of the Credit Agreement shall be amended by (1) in clause (ii)(B) thereof,
deleting the phrase "originally in effect" and by inserting in lieu thereof the
phrase "in effect on the Twelfth Amendment Effective Date", (2) in clause (xiv)
thereof, (x) deleting the phrase "originally in effect" in both places it
appears therein and by inserting in lieu thereof the phrase "in effect on the
Twelfth Amendment Effective Date" and (y) inserting the phrase "(other than
those expressly consented to by the Administrative Agent and the Required
Banks)" immediately following the phrase "with respect thereto" both times such
phrase appears therein, (3) deleting the word "and" immediately at the end of
clause (xviii) thereof, (4) deleting the period at the end of clause (xix)
thereof and by inserting in lieu thereof "; and" (5) inserting the following new
clause immediately after clause (xix) thereof:
"(xx) The DETA Acquisition may be effected so long as: (I) no
Default or Event of Default is in existence at the time of the consummation
of the DETA Acquisition or immediately after giving effect thereto, (II)
the Company shall have delivered to the Administrative Agent and each of
the Banks true and correct copies, certified as true and complete by the
chief financial officer of the Company, of the DETA Acquisition Documents
and copies of all documentation relating to any DETA Acquisition Assumed
Indebtedness with a principal amount (or the Dollar Equivalent thereof) in
excess of $1,000,000, (III) all the terms and conditions of such DETA
Acquisition Documents and documentation relating to DETA Acquisition
Assumed Indebtedness are in form and substance reasonably satisfactory to
the Administrative Agent and the Required Banks, (IV) without limiting
preceding clause (III), none of the Company nor any of its Subsidiaries,
other than CEAc Acquisition Corp. and its Subsidiaries, shall have any
obligations or liabilities pursuant to the DETA Acquisition Documents or
with respect to the DETA Acquisition or any DETA Acquisition Assumed
Indebtedness, provided that the Company may have customary representations,
warranties and undertakings satisfactory to the Administrative Agent and
the Required Banks in the DETA Stock Agreement solely in connection with
the issuance of Company Common Stock as consideration and in a registration
rights agreement entered into in connection therewith, (V) the aggregate
consideration in connection with the DETA Acquisition shall be as set forth
in the DETA Acquisition Documents delivered as described above and, in any
event, shall not exceed DM 175,000,000, of which up to DM 60,000,000 may
be in the form of cash (all of which shall be paid by CEAc Acquisition
Corp. and/or its Subsidiaries, and not by the Company or any of its
Subsidiaries other than CEAc Acquisition Corp. and its Subsidiaries), up to
DM 115,000,000 may be in the form of DETA Acquisition Assumed Indebtedness
and the remainder shall be in the form of Company Common Stock, (VI) if the
DETA Acquisition
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<PAGE>
is not consummated on, or within 180 days after, the Twelfth Amendment
Effective Date, same shall not thereafter be permitted to occur unless the
Required Banks specifically consent thereto, (VII) at the time of such
consummation the Administrative Agent and the Banks shall have received,
and the Administrative Agent and the Required Banks shall be reasonably
satisfied with the form and substance of, financial statements with respect
to DETA and its Subsidiaries for the fiscal year then last ended and (VIII)
prior to such consummation CEAc Acquisition Corp. shall have received gross
cash proceeds of at least DM 140,000,000 from the Exide Holding Senior
Unsecured Notes Issuance."
30. On and after the Twelfth Amendment Effective Date, Section 10.03
of the Credit Agreement shall be amended by (1) deleting the word "and" at the
end of clause (v) thereof, (2) deleting the period at the end of clause (vi) and
inserting in lieu thereof "; and" and (3) inserting at the end of said Section
the following new clause (vii):
"(vii) so long as no Default or Event of Default then exists or would
exist after giving effect thereto, on any date after July 1, 1997, the
Company may repurchase Company Common Stock and/or options to purchase
Company Common Stock provided that, at the time of such repurchase and
after giving effect thereto and to any amounts expended on such date
pursuant to Section 10.12(c), the aggregate amount of cash Dividends paid
pursuant to this clause (vii) since the Twelfth Amendment Effective Date
(together with the aggregate amount of cash paid pursuant to Section
10.12(c) since the Twelfth Amendment Effective Date) shall not exceed
$20,000,000."
31. On and after the Twelfth Amendment Effective Date, Section 10.04
of the Credit Agreement shall be amended by inserting the following new clauses
(c) and (d) immediately at the end of Section 10.04:
"(c) The Receivables Subsidiary shall engage in no business
activities other than the purchase, acquisition, sale and pledge of
receivables (or interests therein) pursuant to the Receivables Facility and
borrowings thereunder and any business activities reasonably incidental
thereto, all in accordance with the Receivables Facility, and shall have no
assets or liabilities, other than receivables purchased from or contributed
by the Company, cash collections therefrom, any investments of such cash
collections and other assets and liabilities reasonably incidental to the
foregoing activities.
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<PAGE>
(d) The European Receivables Subsidiaries shall engage in no business
activities other than the purchase, acquisition, sale and pledge of
receivables (or interests therein) pursuant to the European Receivables
Facility and borrowings thereunder and any business activities reasonably
incidental thereto, all in accordance with the European Receivables
Facility, and shall have no assets or liabilities, other than receivables
purchased from or contributed by CEAc Acquisition Corp. and its
Subsidiaries, cash collections therefrom, any investments of such cash
collections and other assets and liabilities reasonably incidental to the
foregoing activities."
32. On and after the Twelfth Amendment Effective Date, Section 10.05
of the Credit Agreement shall be amended by (1) in clause (iii) thereof,
inserting the phrase "(x) not more than $54,999,999 in aggregate principal
amount of Senior Subordinated Notes shall be permitted to remain outstanding
after the occurrence of both the Initial Tranche D Term Loan Borrowing Date and
the Tranche D Term Loan Commitment Termination Date and (y)" immediately after
the phrase "provided further, that" appearing therein, (2) in clause (xii)
thereof, inserting the phrase ", Section 10.06(xiii)" immediately after the
phrase "10.06(vi) through (ix)" appearing therein, (3) in clause (xx) thereof,
inserting the following new proviso immediately after the phrase "remain
outstanding" appearing at the end thereof:
"; provided that, on the Exide Holding Senior Unsecured Notes Issuance
Date (only if same occurs), this clause (xx) shall automatically be
deemed modified by (i) deleting the number "2,825,900,000" appearing
in clause (a)(x) above and by inserting in lieu thereof the phrase
"2.489 billion" and (ii) inserting the phrase "after the permanent
prepayment of certain amounts under the Exide European Refinancing
Facility with proceeds of the European Receivables Facility as
required by the Exide European Refinancing Facility Agreement"
immediately after the phrase "Exide European Facility Agreement"
appearing in clause (a)(y) above".
, (4) in clause (xxi) thereof, inserting the phrase "and following clause
(xxiv)" immediately after the phrase "preceding clauses (xvii) and (xviii)"
appearing therein (5) in clause (xxi) thereof, deleting the phrase "(xvii) and
(xviii)" and inserting in lieu thereof the phrase "(xix) and (xx)" and (6)
inserting at the end thereof the following new clauses:
"(xxiv) DETA Acquisition Assumed Indebtedness incurred in accordance
with the requirements with Section 10.02(xx) and so long as (x) the
requirements of said Section are met, (y) none of the Company or any of its
Subsidiaries other than CEAc Acquisition Corp. and its Subsidiaries shall
at any time
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<PAGE>
have any obligations or liabilities pursuant to, or with respect to, the
DETA Acquisition Assumed Indebtedness and (z) the aggregate principal
amount of such Indebtedness does not exceed the principal amount thereof
originally assumed pursuant to the DETA Acquisition (in any event not to
exceed DM 175,000,000 at the time of the consummation of the DETA
Acquisition) less any permanent repayments thereof made after the
consummation of the Deta Acquisition;
(xxv) Indebtedness of CEAc Acquisition Corp. evidenced by the Exide
Holding Senior Unsecured Notes in an aggregate principal amount not to
exceed DM 175,000,000 less the aggregate principal amount of repayments
thereof actually made after the Exide Holding Senior Unsecured Notes
Issuance Date, which Indebtedness as described in this clause (xxv) shall
only be permitted so long as (1) on the date of the incurrence of such
Indebtedness, the Agents and the Banks shall have received a legal opinion
from Kirkland & Ellis, in form and substance satisfactory to the Agents and
the Required Banks and addressed to the Banks, to the effect that neither
the incurrence of the Exide Holding Senior Unsecured Notes nor the
execution, delivery and performance by Exide Holding of the Exide Holding
Senior Unsecured Notes Paying Agency Agreement and the other Exide Holding
Senior Unsecured Notes Documents will cause a violation of the Senior Notes
Indenture, the Senior Subordinated Notes Indenture or the 2005 Senior
Unsecured Notes Indenture, and (2) in no event (including pursuant to any
other clause of this Section 10.05 or other provision of this Agreement)
shall the Company or any of its Subsidiaries (other than CEAc Acquisition
Corp. and its Subsidiaries) be permitted at any time to execute or deliver
any guaranty with respect to any portion of any obligations of any Person
under the Exide Holding Senior Unsecured Note Paying Agency Agreement or
with respect to the Exide Holding Senior Unsecured Notes; and
(xxvi) Indebtedness of CEAc Acquisition Corp. and/or its Subsidiaries
which may be deemed to exist pursuant to the European Receivables Facility
as permitted by the Exide European Refinancing Facility Agreement and
consistent with Section 10.02(xiv), so long as such European Receivables
Facility does not violate the terms of any Indebtedness of the Company and
its Subsidiaries which is to remain outstanding after giving effect
thereto."
33. On and after the Twelfth Amendment Effective Date, Section 10.06
of the Credit Agreement shall be amended by (1) deleting the word "and"
appearing at the end of clause (xxii) thereof, (2) deleting the period at the
end of clause (xxiii) thereof and inserting in lieu thereof "; and" and (3)
inserting at the end thereof the following new clause:
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<PAGE>
"(xxiv) the Company may make additional Investments in Penske Auto
Centers Holding Corporation in the form of cash or Company Common Stock in
an aggregate amount, for all Investments made pursuant to this clause
(xxiv), not to exceed $1,750,000."
34. On and after the Twelfth Amendment Effective Date, Section 10.08
of the Credit Agreement shall be amended by (1) in clause (a)(ii) thereof,
deleting the phrase "(other than CEAc US Holdco, Tudor and their respective
Subsidiaries)" in each place it appears therein and by inserting in lieu thereof
the phrase "(other than CEAc Acquisition Corp. and its Subsidiaries)", (2) in
clause (a)(iii) thereof, deleting the phrase "CEAc US Holdco, Tudor and their
respective" appearing therein and by inserting in lieu thereof the phrase "CEAc
Acquisition Corp. and its" and (3) in clause (b)(iii) thereof, inserting the
phrase ", the DETA Acquisition" immediately after the phrase "CEAc Acquisition"
appearing therein.
35. On and after the Twelfth Amendment Effective Date, Section 10.09
of the Credit Agreement shall be amended by (1) deleting the ratios "1.00:1" and
"1.25:1" set forth in the chart therein and (2) inserting in lieu thereof (in
descending order) the ratios "0.50:1" and "1.00:1".
36. On and after the Twelfth Amendment Effective Date, Section 10.10
of the Credit Agreement shall be amended by (1)(x) deleting the table contained
in clause (a) thereof in its entirety and (y) inserting in lieu thereof the
following table:
<TABLE>
<CAPTION>
"Period Amount
------ ------
<S> <C>
From and including the last day
of the fiscal quarter ended in
March, 1996 to but excluding the
last day of the fiscal quarter
ended in June, 1996 $60,000,000
Thereafter from and including the
last day of the fiscal quarter
ended in June, 1996 to but excluding
the last day of the fiscal quarter
ended in September, 1996 $63,000,000
Thereafter from and including the
last day of the fiscal quarter
ended in September, 1996 to but
</TABLE>
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<PAGE>
excluding the last day of the
fiscal quarter ended in
December, 1996 $65,000,000
Thereafter from and including the
last day of the fiscal quarter
ended in December, 1996 to but
excluding the last day of the
fiscal quarter ended in
March, 1997 $80,000,000
Thereafter from and including
the last day of the fiscal
quarter ended in March, 1997
to but excluding the last day
of the fiscal quarter ended in
June, 1997 $70,000,000
Thereafter from and including the
last day of the fiscal quarter
ended in June, 1997 to but excluding
the last day of the fiscal quarter
ended in September, 1997 $55,000,000
Thereafter from and including the
last day of the fiscal quarter
ended in September, 1997 to but
excluding the last day of the
fiscal quarter ended in
December, 1997 $60,000,000
Thereafter from and including the
last day of the fiscal quarter
ended in December, 1997 to but
excluding the last day of the
fiscal quarter ended in
March, 1998 $65,000,000
Thereafter from and including
the last day of the fiscal
quarter ended in March, 1998
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<PAGE>
to but excluding the last day
of the fiscal quarter ended in
March, 1999 $90,000,000
Thereafter $100,000,000"
and (2)(x) deleting the table in clause (b) thereof in its entirety and (y)
inserting in lieu thereof the following table:
"Period Amount
------ ------
Ended after April 1, 1995 to but
excluding the last day of the
fiscal quarter ended in
September, 1995 $150,000,000
Thereafter from and including
the last day of the fiscal
quarter ended in September,
1995 to but excluding the
last day of the fiscal quarter
ended in December, 1995 $175,000,000
Thereafter from and including
the last day of the fiscal
quarter ended in December,
1995 to but excluding the last
day of the fiscal quarter
ended in March, 1996 $200,000,000
Thereafter from and including
the last day of the fiscal
quarter ended in March, 1996
to but excluding the last day
of the fiscal quarter ended
in December, 1996 $210,000,000
Thereafter from and including
the last day of the fiscal
quarter ended in December, 1996
to but excluding the last day
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<PAGE>
of the fiscal quarter ended
in March, 1997 $230,000,000
Thereafter from and including
the last day of the fiscal
quarter ended in March, 1997
to but excluding the last day
of the fiscal quarter ended
in June, 1997 $235,000,000
Thereafter from and including
the last day of the fiscal
quarter ended in June, 1997
to but excluding the last day
of the fiscal quarter ended
in March, 1998 $225,000,000
Thereafter from and including
the last day of the fiscal quarter
ended in March, 1998 to but
excluding the last day of the fiscal
quarter ended in March, 1999 $265,000,000
Thereafter $300,000,000".
37. On and after the Twelfth Amendment Effective Date, Section 10.11
of the Credit Agreement shall be amended by (1)(y) deleting the table contained
in clause (a) thereof in its entirety and (2) inserting in lieu thereof the
following table:
"Period Ratio
------ -----
From and including the
last day of the fiscal quarter
ended in March, 1996 to but excluding
the last day of the fiscal quarter
ended in June, 1996 10.75:1
Thereafter from and including the
last day of the fiscal quarter
ended in June, 1996 to but excluding
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<PAGE>
the last day of the fiscal quarter
ended in September, 1996 9.50:1
Thereafter from and including the
last day of the fiscal quarter
ended in September, 1996 to but
excluding the last day of the
fiscal quarter ended in
December, 1996 9.25:1
Thereafter from and including the
last day of the fiscal quarter
ended in December, 1996 to but
excluding the last day of the
fiscal quarter ended in
March, 1997 8.00:1
Thereafter from and including the
last day of the fiscal quarter
ended in March, 1997 to but
excluding the last day of the
fiscal quarter ended in
June, 1997 10.00:1
Thereafter from and including the
last day of the fiscal quarter
ended in June, 1997 to but
excluding the last day of the
fiscal quarter ended in
September, 1997 13.00:1
Thereafter from and including the
last day of the fiscal quarter
ended in September, 1997 to but
excluding the last day of the
fiscal quarter ended in
December, 1997 12.00:1
From and including the last
day of the fiscal quarter
ended in December, 1997 to
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<PAGE>
but excluding the last day of
the fiscal quarter ended
in March, 1998 11.00:1
Thereafter from and including the
last day of the fiscal quarter
ended in March, 1998 to but
excluding the last day of the
fiscal quarter ended in
March, 1999 7.50:1
Thereafter 6.75:1"
and (2)(x) deleting the table contained in clause (b) thereof and (y) inserting
in lieu thereof the following table:
"Period Ratio
------ -----
From and including the last
day of the fiscal quarter
ended in March, 1996 to
but excluding the last day of
the fiscal quarter ended
in June, 1996 7.00:1
Thereafter from and including the
last day of the fiscal quarter
ended in June, 1996 to but
excluding the last day of the
fiscal quarter ended in September,
1996 7.00:1
Thereafter from and including the
last day of the fiscal quarter
ended in September, 1996 to but
excluding the last day of the
fiscal quarter ended in December,
1996 7.00:1
Thereafter from and including the
last day of the fiscal quarter
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<PAGE>
ended in December, 1996 to but
excluding the last day of the
fiscal quarter ended in March,
1997 6.50:1
Thereafter from and including the
last day of the fiscal quarter
ended in March, 1997 to but
excluding the last day of the
fiscal quarter ended in June,
1997 6.00:1
Thereafter from and including the
last day of the fiscal quarter
ended in June, 1997 to but
excluding the last day of the
fiscal quarter ended in September,
1997 8.00:1
Thereafter from and including the
last day of the fiscal quarter
ended in September, 1997 to but
excluding the last day of the
fiscal quarter ended in
December, 1997 7.50:1
Thereafter from and including the
last day of the fiscal quarter
ended in December, 1997 to but
excluding the last day of the
fiscal quarter ended in March,
1998 7.00:1
Thereafter from and including the
last day of the fiscal quarter
ended in March, 1998 to but
excluding the last day of the
fiscal quarter ended in March,
1999 6.00:1
Thereafter 5.00:1".
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<PAGE>
38. On and after the Twelfth Amendment Effective Date, Section 10.12
of the Credit Agreement shall be amended by (1) inserting immediately following
the period at the end of the title thereof "(a)", (2) inserting the phrase "the
Exide Holding Senior Unsecured Notes Paying Agency Agreement, any Exide Holding
Senior Unsecured Note" immediately following the phrase "any 2005 Senior
Unsecured Note" contained in clause (i) thereof, (3) inserting the phrase "or
Exide Holdings Senior Unsecured Notes" immediately after the phrase "2005 Senior
Unsecured Notes" contained in clause (ii) thereof and (4) inserting at the end
thereof the following new clauses:
"(b) Notwithstanding anything to the contrary contained in clause (a)
above, the Company may on any date consummate, in whole or in part, the
Senior Subordinated Notes Redemption so long as (i) no Default or Event of
Default then exists or would on such date result therefrom, (ii) the
Company has received the CEAc Acquisition Corp. Repatriation in accordance
with the requirements of Section 6B.09 and (iii) the aggregate amount so
expended does not exceed $105,000,000 or, in the case of a partial
redemption or repayment of the Senior Subordinated Notes, an amount equal
to the aggregate principal amount of Senior Subordinated Notes so redeemed
or repurchased; provided that no proceeds of Revolving Loans may be
incurred to consummate any portion of the Senior Subordinated Notes
Redemption unless and until (1) the Initial Tranche D Term Loan Borrowing
Date has occurred and (2) the Total Tranche D Term Loan Commitment has been
terminated pursuant to Section 3.03(s)(ii) and all proceeds of Tranche D
Term Loans used as set forth in Section 8.08(e); and
(c) Notwithstanding anything to the contrary contained clause (a) and
in addition to anything permitted by clause (b) above, on any date after
July 1, 1997, the Company may repurchase Senior Notes, Senior Subordinated
Notes and/or 2005 Senior Unsecured Notes so long as (i) no Default or Event
of Default then exists or would result thereby and (ii) at the time of such
repurchase or redemption, and after giving effect thereto and to any
Dividends paid on such date pursuant to Section 10.03(vii), the aggregate
amount expended to make repurchases or redemptions pursuant to this clause
(c) since the Twelfth Amendment Effective Date (together with the aggregate
amount of cash Dividends paid pursuant to Section 10.03(vii) since the
Twelfth Amendment Effective Date) shall not exceed $20,000,000."
39. On and after the Twelfth Amendment Effective Date, Section 10.13
of the Credit Agreement shall be amended by (1) in clause (iii) thereof,
inserting the
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<PAGE>
phrase "Twelfth Amendment" immediately before the phrase the "Effective Date"
appearing therein and (2) deleting the text of clause (iv) thereof in its
entirety and by inserting in lieu thereof the following new text:
"restrictions contained in any other issue of Existing Indebtedness to the
extent such restrictions are described in Schedule VII, restrictions
contained in any issue of CEAc Existing Indebtedness to the extent such
restrictions are described on Schedule XVII and any restrictions contained
in the Exide European Refinancing Facility Agreement as in effect on the
Twelfth Amendment Effective Date, restrictions contained in the Exide
Holdings Senior Unsecured Note Documents so long as same are consistent
with the restrictions contained in the documentation furnished to the Banks
prior to the Twelfth Amendment Effective Date, restrictions contained in
the European Receivables Facility (so long as same relate only to the
assets transferred pursuant thereto by CEAc Acquisition Corp. and its
Subsidiaries, and to any Subsidiary of CEAc Acquisition Corp. formed in
connection with the European Receivables Facility) and restrictions
contained in any issue of DETA Acquisition Assumed Indebtedness (so long as
such restrictions only relate to DETA and its Subsidiaries),".
40. On and after the Twelfth Amendment Effective Date, Section 10.16
of the Credit Agreement shall be amended by (1) in the first sentence thereof,
inserting the phrase "the Receivables Subsidiary as a Wholly-Owned Subsidiary of
the Company (but not a Subsidiary of CEAc Acquisition Corp.), of the European
Receivables Subsidiaries as Wholly-Owned Subsidiaries of CEAc Acquisition Corp.,
of" immediately after the phrase "except for the creation of" appearing therein
and (2) in the first sentence thereof, deleting the phrase "and (xviii)"
appearing therein and by inserting in lieu thereof the phrase ", (xviii) and
(xx)".
41. On and after the Twelfth Amendment Effective Date, Section 10.19
of the Credit Agreement shall be amended by inserting, immediately after the
phrase "less (y)" appearing therein, the phrase "the sum of the aggregate
principal amount of Tranche D Term Loans then outstanding plus the sum of the
Total Tranche D Term Loan Commitment (if any) as then in effect and".
42. On and after the Twelfth Amendment Effective Date, Section 11 of
the Credit Agreement shall be amended by (1) inserting at the end of Section
11.11 thereof the word "or" and (2) inserting a immediately following Section
11.11 the following new Section 11.12:
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<PAGE>
"11.12 Exide Holding Senior Unsecured Note Guaranty. The Company
shall have executed or delivered a guaranty of, or shall at any time be
required to guaranty, any portion of any obligations of any Person under
the Exide Holding Senior Unsecured Note Paying Agency Agreement or with
respect to the Exide Holding Senior Unsecured Notes;".
43. On and after the Twelfth Amendment Effective Date, the definition
of "Acquired Indebtedness" contained in Section 12 of the Credit Agreement shall
be amended by (1) inserting the phrase "DETA Acquisition Assumed Indebtedness,"
immediately prior to the phrase "Engitec Equipment Commitments" appearing
therein and (2) inserting the following new proviso immediately at the end of
the second sentence of such definition:
"; provided that no violation of Section 9.15(a) (including without
limitation as a result of the aggregate principal amount of DETA
Acquisition Assumed Indebtedness incurred in connection therewith) shall
result from the consummation of the DETA Acquisition in accordance with the
requirements of Section 10.02(xx), although the amount of Acquired
Indebtedness assumed or incurred as a result of the DETA Acquisition shall
be taken into account in determining whether Acquired Indebtedness may be
incurred or assumed in connection with Permitted Acquisitions effected
thereafter".
44. On and after the Twelfth Amendment Effective Date, the definition
of "Clean-Down Period" contained in Section 12 of the Credit Agreement shall be
amended by deleting the number "$20,000,000" appearing therein and inserting in
lieu thereof the number "$50,000,000".
45. On and after the Twelfth Amendment Effective Date, the definition
of "Combined Consolidated Indebtedness" contained in Section 12 of the Credit
Agreement shall be amended by inserting the phrase "and European Receivables
Facility Attributed Indebtedness" immediately following the phrase "Receivables
Facility Attributed Indebtedness" contained in clause (y) thereof.
46. On and after the Twelfth Amendment Effective Date, the definition
of "Combined Consolidated Interest Expense" contained in Section 12 of the
Credit Agreement shall be amended by (w) inserting the phrase "or European
Receivables Financier, as applicable," immediately following the phrase
"Receivables Financier" contained in clause (x) thereof, (x) inserting the
phrase "or any of its Subsidiaries" immediately following the phrase "to the
Company" contained in clause (x) thereof (y) inserting the phrase "or servicing"
immediately following the phrase "for the purchase" contained in clause (x)
thereof and (z) inserting the phrase "or the European
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<PAGE>
Receivables Facility, as applicable," immediately following the phrase
"Receivables Facility" in clause (x) thereof.
47. On and after the Twelfth Amendment Effective Date, the definition
of "Company Consolidated Indebtedness" contained in Section 12 of the Credit
Agreement shall be amended by deleting the first parenthetical contained therein
in its entirety and inserting in lieu thereof the parenthetical "(excluding CEAc
Acquisition Corp. and its Subsidiaries)".
48. On and after the Twelfth Amendment Effective Date, the definition
of "Company Excess Cash Flow" contained in Section 12 of the Credit Agreement
shall be amended by (1) deleting the phrase "and (4)" appearing therein and by
inserting in lieu thereof the phrase ", (4) payments made pursuant to the Senior
Subordinated Notes Redemption and (5)", (2) deleting the phrase "or (n)"
appearing therein and by inserting in lieu thereof the phrase ", (n) or (p)" and
(3) inserting the phrase "or (vii) and payments made during such period pursuant
to Section 10.12(c)" immediately at the end of the first sentence thereof.
49. On and after the Twelfth Amendment Effective Date, the definition
of "Company Retained Excess Cash Flow Amount" contained in Section 12 of the
Credit Agreement shall be amended by inserting the parenthetical "(other than
the DETA Acquisition)" immediately following the phrase "any Permitted
Acquisition" contained in clause (iii) thereof.
50. On and after the Twelfth Amendment Effective Date, the definition
of "Permitted Acquisition" contained in Section 12 of the Credit Agreement shall
be amended by deleting the phrase "and (y)" appearing in the second sentence
thereof and by inserting in lieu thereof the phrase ", (y) the DETA Acquisition
may only be effected in accordance with the requirements of Section 10.02(xx) of
this Agreement and, so long as effected in accordance with said requirements,
same shall be deemed to constitute a Permitted Acquisition and the other
requirements contained above in this definition and in Section 9.15 shall not
apply thereto and (z) except as provided in preceding clause (y),".
51. On and after the Twelfth Amendment Effective Date, Section 12 of
the Credit Agreement shall be amended by deleting the following definitions
appearing therein in their entirety:
"Applicable Margin"
"Approved Incremental Financing"
"Borrowing Base"
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<PAGE>
"CEAc Acquisition Corp."
"Commitment"
"Loan"
"Maturity Date"
"Note"
"Required Banks"
"Scheduled Repayments"
"Term Loan"
"Term Loan Commitment"
"Total Term Loan Commitment"
"Tranche"
52. On and after the Twelfth Amendment Effective Date, Section 12 of
the Credit Agreement shall be further amended by inserting in the appropriate
alphabetical order the following new definitions:
"Applicable Margin" shall mean a percentage per annum equal to (i)
(A) in the case of Loans other than Tranche B Term Loans and Tranche D Term
Loans which are maintained as Base Rate Loans, 1.25%, less the then
applicable Interest Reduction Discount, (B) in the case of Tranche B Term
Loans which are maintained as Base Rate Loans, 1.75%, and (C) in the case
of Tranche D Term Loans which are maintained as Base Rate Loans, 1.50% and
(ii) (A) in the case of Loans other than Tranche B Term Loans and Tranche D
Term Loans which are maintained as Eurodollar Loans, 2.50%, less the then
applicable Interest Reduction Discount, (B) in the case of Tranche B Term
Loans which are maintained as Eurodollar Loans, 3.00% and (C) in the case
of Tranche D Term Loans which are maintained as Eurodollar Loans, 2.75%.
"Approved Incremental Financing" shall mean the Company's 2.9%
Convertible Senior Subordinated Notes due 2005.
"Borrowing Base" shall mean, as at any date on which the amount
thereof is being determined, an amount equal to the remainder (but not less
than $0) of (1) the sum of (x) 75% of Eligible Receivables and (y) 60% of
Eligible Inventory and (z) $50,000,000 (representing the value of property,
plant and equipment), minus (2) the aggregate principal amount of Tranche D
Term Loans outstanding on such date. The Borrowing Base in effect at any
given time shall be the Borrowing Base derived from the Borrowing Base
Certificate most recently delivered in compliance with Section 9.01(n), but
adjusted for the actual principal amount of Tranche D Term Loans from time
to time outstanding; provided that, so long as the most recent Borrowing
Base Certificate required
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<PAGE>
to be delivered has not been so delivered, the Borrowing Base in effect
will be zero.
"CEAc Acquisition Corp." shall mean Exide Holding Europe S.A., a
corporation organized under the laws of the Republic of France.
"CEAc Acquisition Corp. Repatriation" shall have the meaning provided
in Section 6B.09.
"Commitment" shall mean any of the commitments of any Bank, i.e.,
whether the Tranche A Term Loan Commitment, Tranche B Term Loan Commitment,
Tranche C Term Loan Commitment, Tranche D Term Loan Commitment or Revolving
Loan Commitment.
"Company Common Stock" shall have the meaning provided in Section
8.14(a)(i).
"DETA" shall mean DETA Akkumulatorenwerk GmbH, a German corporation,
MAREG Accumulatoren GmbH, a German corporation, and FRIWO Silberkraft GmbH,
a German corporation.
"DETA Acquisition" shall mean the acquisition by CEAc Acquisition
Corp. or a Wholly-Owned Subsidiary thereof of 100% of the capital stock of
DETA in accordance with the terms hereof.
"DETA Acquisition Assumed Indebtedness" shall mean the Indebtedness of
DETA and its Subsidiaries which is to remain outstanding after the
consummation of the DETA Acquisition; provided that such Indebtedness shall
not constitute an obligation of the Company and its Subsidiaries (other
than CEAc Acquisition Corp. and its Subsidiaries) after giving effect to
the DETA Acquisition.
"DETA Acquisition Date" shall mean the date on which the DETA
Acquisition is consummated in accordance with the terms hereof.
"DETA Acquisition Documents" shall mean the DETA Stock Purchase
Agreement, all agreements and instruments executed in connection therewith
and all of the annexes, schedules and exhibits to any of the foregoing.
"DETA Stock Purchase Agreement" shall mean the stock purchase
agreement with respect to the DETA Acquisition to be entered into between
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<PAGE>
CEAc Acquisition Corp. (and/or one or more of its Subsidiaries) and the
respective seller or sellers pursuant to the DETA Acquisition, and all of
the annexes, schedules and exhibits thereto.
"DM" shall mean Deutsche Marks.
"European Receivables Facility" shall mean the receivables purchase or
financing agreements among CEAc Acquisition Corp. and/or its Subsidiaries
and one or more European Receivables Financiers. No recourse shall be
provided to the Company or any of its Subsidiaries (other than CEAc
Acquisition Corp. and its Subsidiaries) pursuant to the European
Receivables Facility or any documentation related thereto (and no
representations, warranties, undertakings or assurances shall be provided
by the Company or any of its Subsidiaries (other than CEAc Acquisition
Corp. and its Subsidiaries) in connection therewith.
"European Receivables Facility Attributed Indebtedness" at any time
shall mean the aggregate amount theretofore paid to CEAc Acquisition Corp.
and/or its Subsidiaries in respect of the receivables sold by any of them
pursuant to the European Receivables Facility, in each case to the extent
the respective receivables have not yet been repaid by the respective
account debtor or repurchased by CEAc Acquisition Corp. and/or its
Subsidiaries (it being the intent of the parties that the amount of
European Receivables Facility Attributed Indebtedness at any time
outstanding approximate as closely as possible the principal amount of
indebtedness which would be outstanding at such time under the European
Receivables Facility if same were structured as a secured lending
agreement).
"European Receivables Financier" at any time shall mean any purchaser,
lender or provider of credit (excluding CEAc Acquisition Corp. and its
Subsidiaries) pursuant to the European Receivables Facility as then in
effect.
"European Receivables Subsidiaries" shall mean two Wholly-Owned
Subsidiaries of CEAc Acquisition Corp. which engage in no activities other
than in connection with the financing of accounts receivable and which are
designated (as provided below) as European Receivables Subsidiaries (a) no
portion of the Indebtedness or any other obligations (contingent or
otherwise) of which (i) is guaranteed by the Company or any other
Subsidiary of the Company (excluding guarantees of obligations (other than
the principal of, and interest on, Indebtedness)) pursuant to Standard
Securitization Undertakings, (ii) is recourse to or obligates the Company
or any other Subsidiary of the Company in any way (other than pursuant to
Standard Securitization Undertakings) or (iii) subjects
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<PAGE>
any property or asset of the Company or any other Subsidiary of the
Company, directly or indirectly, contingently or otherwise, to the
satisfaction thereof (other than pursuant to Standard Securitization
Undertakings), (b) with which neither the Company nor any of its
Subsidiaries has any contract, agreement, arrangement or understanding
(other than pursuant to the European Receivables Facility (including with
respect to fees payable in the ordinary course of business in connection
with the servicing of accounts receivable and related assets)) on terms
less favorable to the Company or such Subsidiary than those that might be
obtained at the time from persons that are not Affiliates of the Company,
and (c) to which neither the Company nor any other Subsidiary of the
Company has any obligation to maintain or preserve either such entity's
financial condition or cause such entity to achieve certain levels of
operating results. Any such designation shall be evidenced to the
Administrative Agent by filing with the Administrative Agent an officer's
certificate of the Company certifying that, to the best of such officer's
knowledge and belief after consultation with counsel, such designation
complied with the foregoing conditions.
"Exide Holding Preliminary Offering Memorandum" shall mean the
Preliminary Offering Memorandum, dated as of April 3, 1997, providing for
the issuance by CEAc Acquisition Corp. of an aggregate principal amount of
DM 175,000,000 of the Exide Holding Senior Unsecured Notes, as in effect on
the Twelfth Amendment Effective Date and with any amendments, modifications
or supplements thereto as are reasonably satisfactory to the Administrative
Agent and Required Banks.
"Exide Holding Senior Unsecured Notes" shall mean the senior unsecured
promissory notes issued pursuant to the Exide Holding Senior Unsecured
Notes Paying Agency Agreement.
"Exide Holding Senior Unsecured Notes Documents" shall mean all
documents or agreements related to the consummation of the Exide Holding
Senior Unsecured Notes Issuance, including, without limitation, the Exide
Holding Senior Unsecured Notes Paying Agency Agreement, the Exide Holding
Preliminary Offering Memorandum and all other documents and agreements
entered into in connection therewith.
"Exide Holding Senior Unsecured Notes Issuance" shall mean the
issuance of the Exide Holding Senior Unsecured Notes pursuant to the terms
contained in the Exide Holding Preliminary Offering Memorandum.
-35-
<PAGE>
"Exide Holding Senior Unsecured Notes Issuance Date" shall mean the
first date on which any Exide Holding Senior Unsecured Note is issued or
sold.
"Exide Holding Senior Unsecured Notes Paying Agency Agreement" shall
mean the Fiscal and Paying Agency Agreement to be entered into by CEAc
Acquisition Corp., pursuant to which the Exide Holding Senior Unsecured
Notes are to be issued, in form and substance satisfactory to the
Administrative Agent and the Required Banks.
"Initial Tranche D Term Loan Borrowing Date" shall mean the first
Tranche D Term Loan Borrowing Date to occur after the Twelfth Amendment
Effective Date.
"Loan" shall mean each Tranche A Term Loan, each Tranche B Term Loan,
each Tranche C Term Loan, each Tranche D Term Loan, each Revolving Loan and
each Swingline Loan.
"Maturity Date" shall mean, with respect to any Tranche of Loans, the
Tranche A Term Loan Maturity Date, the Tranche B Term Loan Maturity Date,
the Tranche C Term Loan Maturity Date, the Tranche D Term Loan Maturity
Date or the Revolving Loan Maturity Date, as the case may be.
"Note" shall mean each Tranche A Term Note, each Tranche B Term Note,
each Tranche C Term Note, each Tranche D Term Note, each Revolving Note and
the Swingline Note.
"Receivables Subsidiary" shall mean a Wholly-Owned Subsidiary of the
Company which engages in no activities other than in connection with the
financing of accounts receivable and which is designated (as provided
below) as the Receivables Subsidiary (a) no portion of the Indebtedness or
any other obligations (contingent or otherwise) of which (i) is guaranteed
by the Company or any other Subsidiary of the Company (excluding guarantees
of obligations (other than the principal of, and interest on,
Indebtedness)) pursuant to Standard Securitization Undertakings, (ii) is
recourse to or obligates the Company or any other Subsidiary of the Company
in any way (other than pursuant to Standard Securitization Undertakings) or
(iii) subjects any property or asset of the Company or any other Subsidiary
of the Company, directly or indirectly, contingently or otherwise, to the
satisfaction thereof (other than pursuant to Standard Securitization
Undertakings), (b) with which neither the Company nor any of its
Subsidiaries has any contract, agreement, arrangement or understanding
(other than pursuant to the Receivables Facility (including with
-36-
<PAGE>
respect to fees payable in the ordinary course of business in connection
with the servicing of accounts receivable and related assets)) on terms
less favorable to the Company or such Subsidiary than those that might be
obtained at the time from persons that are not Affiliates of the Company,
and (c) to which neither the Company nor any other Subsidiary of the
Company has any obligation to maintain or preserve such entity's financial
condition or cause such entity to achieve certain levels of operating
results. Any such designation shall be evidenced to the Administrative
Agent by filing with the Administrative Agent an officer's certificate of
the Company certifying that, to the best of such officer's knowledge and
belief after consultation with counsel, such designation complied with the
foregoing conditions.
"Required Banks" shall mean Non-Defaulting Banks, the sum of whose
outstanding Tranche A Term Loans and TL Percentages of Tranche A Letter of
Credit Outstandings, Tranche B Term Loans, Tranche C Term Loans (or, if
prior to the Tranche C Term Loan Borrowing Date, Tranche C Term Loan
Commitments), Tranche D Term Loans and, if prior to the termination
thereof, Tranche D Term Loan Commitments and Revolving Loan Commitments (or
after the termination thereof, outstanding Revolving Loans and Adjusted RL
Percentages of Swingline Loans and Revolving Letter of Credit Outstandings)
represent an amount greater than 50% of the sum of all outstanding Tranche
A Term Loans and Tranche A Letter of Credit Outstandings of Non-Defaulting
Banks, all outstanding Tranche B Term Loans of Non-Defaulting Banks, all
outstanding Tranche C Term Loans (or, if prior to the Tranche C Term Loan
Borrowing Date, Tranche C Term Loan Commitments), Tranche D Term Loans and,
if prior to the termination thereof, Tranche D Term Loan Commitments of
Non-Defaulting Banks and the Adjusted Total Revolving Loan Commitment (or
after the termination thereof, the sum of the then total outstanding
Revolving Loans of Non-Defaulting Banks and the aggregate Adjusted RL
Percentages of all Non-Defaulting Banks of the total outstanding Swingline
Loans and Revolving Letter of Credit Outstandings at such time).
"Required Tranche D Banks" shall mean Non-Defaulting Banks, the sum of
whose outstanding Tranche D Term Loans and, if prior to the termination
thereof, Tranche D Term Loan Commitments, represent an amount greater than
50% of the sum of all outstanding Tranche D Term Loans and, if prior to the
termination thereof, Tranche D Term Loan Commitments of Non-Defaulting
Banks.
-37-
<PAGE>
"Scheduled Repayments" shall mean the Tranche A Scheduled Repayments,
the Tranche B Scheduled Repayments, the Tranche C Scheduled Repayments and
the Tranche D Scheduled Repayments.
"Senior Subordinated Notes Redemption" shall mean the repurchase
(whether by means of tender offer, open market purchases or otherwise)
and/or redemption by the Company of an amount greater than 50% of its
Senior Subordinated Notes outstanding on the Twelfth Amendment Effective
Date, in each case to the extent that the respective repurchases and/or
redemptions are effected after the Twelfth Amendment Effective Date and on
or prior to the Tranche D Term Loan Commitment Termination Date.
"Standard Securitization Undertakings" means representations,
warranties, covenants and indemnities entered into by the Company or any
Subsidiary thereof in connection with the Receivables Facility or the
European Receivables Facility which are reasonably customary in an accounts
receivable transaction.
"Term Loan" shall mean any Tranche A Term Loan, Tranche B Term Loan,
Tranche C Term Loan or Tranche D Term Loan.
"Term Loan Commitment" shall mean each Tranche A Term Loan Commitment,
Tranche B Term Loan Commitment, Tranche C Term Loan Commitment and Tranche
D Term Loan Commitment, with the Term Loan Commitment of any Bank at any
time to equal the sum of its Tranche A Term Loan Commitment, Tranche B Term
Loan Commitment, Tranche C Term Loan Commitment and Tranche D Term Loan
Commitment, as then in effect.
"Total Term Loan Commitment" shall mean at any time the sum of the
Total Tranche A Term Loan Commitment, the Total Tranche B Term Loan
Commitment, the Total Tranche C Term Loan Commitment and the Total Tranche
D Term Loan Commitment.
"Total Tranche D Term Loan Commitment" shall mean, at any time, the
sum of the Tranche D Term Loan Commitments of each of the Banks.
"Tranche" shall mean the respective facility and commitments utilized
in making Loans hereunder, with there being six separate Tranches, i.e.,
Tranche A Term Loans, Tranche B Term Loans, Tranche C Term Loans, Tranche D
Term Loans, Revolving Loans and Swingline Loans.
-38-
<PAGE>
"Tranche D Bank" shall mean each Bank with a Tranche D Term Loan
Commitment or an outstanding Tranche D Term Loan.
"Tranche D Commitment Commission" shall have the meaning provided in
Section 3.01(g).
"Tranche D Mortgage Amendments" shall have the meaning provided in
Section 6B.07.
"Tranche D Projections" shall have the meaning provided in Section
6B.08.
"Tranche D Scheduled Repayment" shall have the meaning provided in
Section 4.02(p).
"Tranche D Scheduled Repayment Date" shall have the meaning provided
in Section 4.02(p).
"Tranche D Syndication Termination Date" shall mean the earlier of (x)
the 90th day after the Initial Tranche D Term Loan Borrowing Date or (y)
that date upon which BTCo determines in its sole discretion (and notifies
the Company) that the primary syndication (and resultant addition of
institutions as Banks pursuant to Section 14.04) relating to Tranche D Term
Loan Commitments and outstanding Tranche D Term Loans, if any, has been
completed.
"Tranche D Term Loan" shall have the meaning provided in Section
1.01(g).
"Tranche D Term Loan Borrowing Date" shall mean each date on which a
Borrowing of Tranche D Term Loans occurs pursuant to Section 1.01(g).
"Tranche D Term Loan Commitment" shall mean, for each Bank, the amount
set forth opposite such Bank's name in Schedule I hereto directly below the
column entitled "Tranche D Term Loan Commitment", as the same may be (x)
reduced from time to time pursuant to Sections 3.03, 4.02 and/or 11 or (y)
adjusted from time to time as a result of assignments to or from such Bank
pursuant to Sections 1.13 and/or 14.04.
"Tranche D Term Loan Commitment Termination Date" shall mean May 30,
1997.
-39-
<PAGE>
"Tranche D Term Loan Maturity Date" shall mean June 15, 2001.
"Tranche D Term Note" shall have the meaning provided in Section
1.05(a).
"Twelfth Amendment" shall mean the Twelfth Amendment to this
Agreement, dated as of March 31, 1997.
"Twelfth Amendment Effective Date" shall have the meaning provided in
the Twelfth Amendment."
53. On and after the Twelfth Amendment Effective Date, Section
14.17(b) of the Credit Agreement is hereby amended by (1) deleting the phrase
"such limitations shall cease to apply at such time, if any, as no Senior Notes
remain outstanding," appearing at the end of the first sentence thereof and by
inserting in lieu thereof the following new text:
"such limitations shall cease to apply on the Twelfth Amendment Effective
Date and shall thereafter have no further force or effect. From and after
the Twelfth Amendment Effective Date, the entire principal amount of Loans
outstanding from time to time hereunder, as well as all other Obligations
under this Agreement and the other Credit Documents, shall be fully
secured, without limitation, by the Restricted Collateral".
and (2) by deleting the text of clause (d) thereof in its entirety and by
inserting in lieu thereof the phrase "[INTENTIONALLY OMITTED]".
54. On and after the Twelfth Amendment Effective Date, the Credit
Agreement shall be further amended by adding the following new Section 14.21
immediately after Section 14.20 appearing therein:
"14.21 Agreement by Signatories to Twelfth Amendment for Benefit of
Tranche D Banks. Each Bank which executes and delivers a copy of the
Twelfth Amendment, by its execution and delivery thereof, agrees (which
agreement shall be binding only on such Bank and its successors), for the
benefit of each Tranche D Bank, that it will not agree to any change,
waiver, modification or amendment of Section 4.02(p) (as added pursuant to
the Twelfth Amendment) unless the respective change, waiver, modification
or amendment receives the consent of those Tranche D Banks which would
constitute the Required Tranche D Banks if the percentage "50%" appearing
in the definition thereof instead read "66-2/3%"."
-40-
<PAGE>
55. On and after the Twelfth Amendment Effective Date, the Credit
Agreement shall be amended by (i) deleting Schedules I and XIV, and Exhibits A
and Q, in their entirety and replacing such Schedules and Exhibits with Schedule
I, Schedule XIV, Exhibit A and Exhibit Q, respectively, attached to this
Amendment and (ii) adding new Exhibit B-6 in the respective form attached to
this Amendment.
56. It is acknowledged and agreed that the documents relating to the
Receivables Facility in the form of (1) the Receivables Purchase Agreement,
dated as of March 31, 1997, among Exide U.S. Funding Corporation, as seller, and
Three Rivers Funding Corporation, as buyer, and the Company, as servicer, (2)
the Receivables Repurchase Agreement, dated as of March 31, 1997, between the
Company and Three Rivers Funding Corporation, (3) the Sale Agreement, dated as
of March 31, 1997, between the Company, as seller, and Exide U.S. Funding
Corporation, as buyer, and (4) the Buyer Note, dated as of March 31, 1997, from
Exide U.S. Funding Corporation to the Company, shall be considered changes to
the Receivables Facility approved by the Required Banks to the extent such
approval is required by the definition of Receivables Facility.
II. Amendments to Security Agreement.
--------------------------------
1. On and after the Twelfth Amendment Effective Date, Section 1.1 of
the Security Agreement shall be amended by inserting at the end of said Section
1.1 the following new clause (c):
"(c) Notwithstanding anything to the contrary contained above or
elsewhere herein, the Collateral shall at no time include any Excluded
Receivables Facility Assets."
2. On and after the Twelfth Amendment Effective Date, the definition
of "Excluded Receivables" contained in Article IX of the Security Agreement
shall be deleted in its entirety.
3. On and after the Twelfth Amendment Effective Date, the definition
of "Receivables" contained in Article IX of the Security Agreement shall be
amended by deleting the phrase "Excluded Receivable" contained in the last
sentence thereof and inserting in lieu thereof the phrase "Excluded Receivables
Facility Assets".
4. On and after the Twelfth Amendment Effective Date, Article IX of
the Security Agreement shall be further amended by inserting in the appropriate
alphabetical order the following new definition:
-41-
<PAGE>
"Excluded Receivables Facility Assets" shall mean any Receivable (as
defined herein, but without regard to the second sentence of said
definition), account or general intangible in which the Receivables
Subsidiary or the Receivables Financier has acquired an interest for so
long, and to the extent, the same has been transferred to the Receivables
Subsidiary or to the Receivables Financier pursuant to or as contemplated
by the Receivables Facility, including (in each case to the extent arising
therefrom or related thereto) all contract rights, property rights
(including without limitation intellectual property rights), chattel paper,
instruments, computer programs, proprietary information and all other
rights, powers and privileges arising therefrom or related thereto, and all
security interests, guaranties, insurance policies and property securing or
supporting payment thereof, all records and rights in the merchandise
relating thereto and all proceeds and products of any of the foregoing;
provided that at such time, if any, as, and to the extent that, any such
Receivable, account or general intangible set forth above is repurchased by
an Assignor, it (and the respective related assets described above) shall
cease to constitute Excluded Receivables Facility Assets."
III. Miscellaneous Provisions
------------------------
1. In order to induce the Agent and the Banks to enter into this
Amendment, the Company hereby (i) makes each of the representations, warranties
and agreements contained in Section 8 of the Credit Agreement on the Twelfth
Amendment Effective Date, both before and after giving effect to this Amendment
and (ii) represents and warrants that no Default or Event of Default is in
existence on the Twelfth Amendment Effective Date, both before and after giving
effect to this Amendment.
2. This Amendment is limited as specified and shall not constitute a
modification, acceptance or waiver of any other provision of the Credit
Agreement, the Security Agreement or any other provision of any other Credit
Document.
3. This Amendment may be executed in any number of counterparts and
by the different parties hereto on separate counterparts, each of which
counterparts when executed and delivered shall be an original, but all of which
shall together constitute one and the same instrument. A complete set of
counterparts shall be lodged with the Company and the Administrative Agent.
4. This Amendment and the rights and obligations of the parties
hereunder shall be construed in accordance with and governed by the law of the
State of New York.
-42-
<PAGE>
5. This Amendment shall become effective as of the date first written
above on the date (the "Twelfth Amendment Effective Date") when the Company,
each Domestic Subsidiary Guarantor, the Required Banks, and each of the Tranche
D Banks shall have signed a counterpart hereof (whether the same or different
counterparts) and shall have delivered (including by way of facsimile
transmission) the same to the Administrative Agent and approval of
implementation of the changes with respect to the Receivables Facility set forth
in Paragraph 55 starting March 31, 1997 shall become effective as of such date.
6. The Company and each Domestic Subsidiary Guarantor, by its
execution and delivery of a counterpart hereof, hereby agrees that all
Obligations (including, without limitation, the principal of, and interest on,
all Tranche D Term Loans) shall be entitled to the benefits of the Domestic
Subsidiaries Guaranty and shall be secured by the Security Documents in
accordance with the respective terms thereof.
7. To induce the Agents and the Banks to enter into the Twelfth
Amendment, the Company hereby agrees that (x) none of the Agents nor any Bank
shall be responsible or liable to the Company or any of its Subsidiaries for any
consequential damages which may be alleged as a result of the entering into of
the Twelfth Amendment or the making of any determinations or the taking of any
actions by the Agents or any Bank pursuant to, or with respect to, the Credit
Agreement as amended thereby (including, without limitation, pursuant to Section
6B of the Credit Agreement), and (y) none of the Agents nor any Bank shall have
any responsibility or liability to any other Person as a result of the entering
into of the Twelfth Amendment or the making of any determinations or the taking
of any actions by the Agents or any Bank pursuant to the Credit Agreement.
* * *
-43-
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused a
counterpart of this Amendment to be duly executed and delivered as of the date
first above written.
EXIDE CORPORATION
By /s/ Catherine B. Hnatin
-------------------------------
Title: VP & TREASURER
BANKERS TRUST COMPANY,
Individually, as an Agent and as
Administrative Agent
By
-------------------------------
Title:
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused a
counterpart of this Amendment to be duly executed and delivered as of the date
first above written.
EXIDE CORPORATION
By
----------------------------
Title:
BANKERS TRUST COMPANY,
Individually, as an Agent and as
Administrative Agent
By /s/ Patricia Hogan
----------------------------
Title: Vice President
BANK OF MONTREAL,
Individually and as Agent
By /s/ Michael D. Peist
----------------------------
Title: Director
BANK POLSKA KASA OPIEKI, S.A.
By /s/ William A. Shea
----------------------------
Title: Vice President
Senior Lending Officer
CAISSE NATIONALE DE CREDIT
AGRICOLE
By /s/ David Bouhl, F.V.P.
----------------------------
Title: Head of Corporate Banking
Chicago
CITIBANK, N.A.
By /s/ Hans L. Christensen
----------------------------
Title: Vice President
COMERICA BANK
By /s/ Mark B. Grover
----------------------------
Title: Vice President
CORESTATES BANK, N.A.
By /s/ Corestates Bank, N.A.
----------------------------
Title:
ISTITUTO BANCARIO SAN PAOLO DI
TORINO LTD., NEW YORK BRANCH
By /s/ Carlo Persico
----------------------------
Title: Deputy General Manager
By /s/ Robert Wurster
----------------------------
Title: First Vice President
LEHMAN COMMERCIAL PAPER, INC.
By /s/ Michele Swanson
----------------------------
Title: Authorized Signatory
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
By /s/ Morgan Guaranty Trust
Company of New York
----------------------------
Title:
ORIX USA CORPORATION
By /s/ Orix USA Corporation
------------------------------
Title:
TRANSAMERICA BUSINESS CREDIT
CORPORATION
By /s/ Transamerica Business
Credit Corporation
------------------------------
Title:
<PAGE>
ACKNOWLEDGMENT AND AGREEMENT
----------------------------
The undersigned, each being a Guarantor, hereby acknowledges and
agrees to the provisions (including, without limitation, Section 6 of Part III
thereof) of the Twelfth Amendment to the Credit Agreement (as well as the
previous amendments to the Credit Agreement referenced in the recitals to the
Twelfth Amendment), which precedes this Acknowledgment and Agreement.
GBC, INC.
By /s/ Catherine B. Hnatin
--------------------------------
Title: Assist. Secretary
GENERAL BATTERY CORPORATION
By /s/ Catherine B. Hnatin
--------------------------------
Title: Assist. Secretary
DIXIE METALS COMPANY
By /s/ Catherine B. Hnatin
--------------------------------
Title: Assist. Secretary
-46-
<PAGE>
<TABLE>
SCHEDULE I
----------
COMMITMENTS AND TERM LOANS OUTSTANDING AS OF MARCH 31, 1997
-----------------------------------------------------------
<CAPTION>
Aggregate Aggregate Aggregate
Principal Amount Principal Amount Principal Amount
of Outstanding of Outstanding of Outstanding Tranche D
Revolving Loan Tranche A Tranche B Tranche C Term Loan
Bank Commitment Term Loans Term Loans Term Loan Commitment
- ---- ---------- ---------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C>
Bankers Trust Company $130,401.30 -- -- -- $50,000,000
Bank of America $11,691,076.60 -- -- -- --
National Trust and
Savings Association
Bank of Montreal $8,993,135.85 -- -- -- --
Bank Polska Kasa $1,861,778.06 -- -- -- --
Opieki, S.A.
Banque Francaise du $5,277,309.28 -- -- -- --
Commerce Exterieur
The Bank of Tokyo- $5,277,309.28 -- -- -- --
Mitsubishi, Limited
The Bank of Tokyo- $3,518,206.17 -- -- -- --
Mitsubishi Trust
Company
Caisse Nationale de $5,277,309.28 -- -- -- --
Credit Agricole
Citibank, N.A. $8,091,874.24 -- -- -- --
Comerica Bank $3,518,206.17 -- -- -- --
Corestates Bank, N.A. $5,277,309.28 -- -- -- --
Girocredit Bank A.G. $3,518,206.17 -- -- -- --
Der Sparkassen, Grand
Cayman Island Branch
Instituto Bancario $2,167,657.44 -- -- -- --
San Paolo di Torino
Ltd., New York
Branch
Kredietbank N.V. $5,277,309.28 -- -- -- --
Lehman Commercial $16,656,125.39 -- -- -- --
Paper, Inc.
Mellon Bank, N.A. $ 8,091,874.24 -- -- -- --
The Mitsubishi Trust and $ 5,277,309.28 -- -- -- --
Banking Corporation
Mitsui Leasing (U.S.A.) $ 5,277,309.28 -- -- -- --
Inc.
Morgan Guaranty Trust $ 2,167,657.47 -- -- -- --
Company of New York
Orix USA Corporation $ 2,462,744.34 -- -- -- --
PNC Bank, National $ 8,091,874.24 -- -- -- --
Association
Societe Generale, $ 7,098,017.36 -- -- -- --
Chicago Branch
Transamerica Business $25,000,000.00 -- -- -- --
Credit Corporation
TOTAL $150,000,000.00 -0- -0- -0- $50,000,000
</TABLE>
-47-
<PAGE>
31/12/1996
SCHEDULE XIV
<TABLE>
-------------------------
EXIDE HOLDING EUROPE S.A.
FRANCE
-------------------------
-----------------------------------------------------------------------------------------
17.00
<S> <C> <C> <C> <C>
--------------------- ----------------- ------------------ -----------------
EURO EXIDE CORP. LTD. EXIDE FRANCE S.A. 83.00 CEAC S.A. S.E.A. TUDOR S.A.
---->
UK FRANCE FRANCE SPAIN
--------------------- ----------------- ------------------ -----------------
-------------------------------------------------------------------
-------------------------- ---------------------- ----------------------
TUDOR A.B. EXIDE SONNAK A.S. EXIDE OY
----- -----
SWEDEN NORWAY FINLAND
-------------------------- ---------------------- ----------------------
-------------------------- ---------------------- ----------------------
EXIDE DANMARK A.S. ANKER DEFENSE A.S. LYAC HOLDING A.S.
-----> ----->
DENMARK NORWAY DENMARK
-------------------------- ---------------------- ----------------------
-------------------------- ----------------------
CMP BATTERIER A.S. CMP BATTERIER A.S.
-----> ----->
DENMARK NORWAY
-------------------------- ----------------------
--------------------------
CMP BATTERIER A.B.
----->
SWEDEN
--------------------------
</TABLE>
Ownership interests in each legal entity is represented by a single class of
common shares.
Unless otherwise noted, the legal entities are 100% owned by Exide or an Exide
subsidiary as listed.
<PAGE>
31/12/1996
<TABLE>
<CAPTION>
<S> <C>
--------------------------- ------------------------
EURO EXIDE CORPORATION LTD. EURO EXIDE Nominees LTD.
U.K. 9900 U.K.
--------------------------- ------------------------
|
</TABLE>
---------------------------------- 8150
| |
------------------------- ---------------------
<TABLE>
<CAPTION>
<S> <C> <C>
OMP BATTERIES LTD. EXIDE BATTERIES LTD. c
U.K. U.K.
------------------------- ---------------------
------------------------- --------------------- -------------------------
FULMEN UK LTD BIG BATTERIES LTD. GEMALA IRELAND
(HOLDINGS) LTD.
U.K. U.K.
------------------------- --------------------- U.K.
------------------------- --------------------- -------------------------
EUROBAT INTERNAT. LTD BIG BATTERIES GEMALA IRELAND COMPANY
DISTRIBUTION LTD. LTD.
U.K.
------------------------- U.K. IRELAND
--------------------- -------------------------
------------------------- --------------------- -------------------------
SPITFIRE BATTERIES LTD. BIG BATTERIES FRANCE EXIDE BATTERIES (IRELAND)
SARL LTD.
U.K.
------------------------- FRANCE IRELAND
--------------------- -------------------------
------------------------- --------------------- -------------------------
9000 O.H.E. LTD. A BIG ESPANA S.A. GEMALA DISTRIBUTORS LTD.
U.K. SPAIN IRELAND
------------------------- --------------------- -------------------------
------------------------- --------------------- -------------------------
T.S. BATTERIES LTD EXIDE (HOLDINGS) LTD. GEMALA IGNITON COMPANY
LTD.
U.K. U.K.
------------------------- --------------------- IRELAND
------------------------- --------------------- -------------------------
9900 OMP BATTERIES PENS, LTD. B EXIDE (DAGENHAN) LTD. ALL BATTERIES LTD.
U.K. U.K. IRELAND
------------------------- --------------------- -------------------------
---------------------
EXIDE BATTERIES A.B.
SWEDEN
---------------------
</TABLE>
<TABLE>
<CAPTION>
- ---OTHER SHAREHOLDERS---------------------------------------------- ---OTHER INVESTMENTS----------------------------------------
<S> <C>
A: CEAC: 10.00 a: 1 share of EURO EXIDE CORPORATION LTD.
B: CEAC S.A. 1.00 1 share of CMP BATTERIES LTD.
C: P.T. SAPTA: 16.50
- ------------------------------------------------------------------- ------------------------------------------------------------
</TABLE>
Ownership interests in each legal entity are represented by a single class of
common shares. Unless otherwise noted, the legal entities are 100% owned by
Exide or an Exide subsidiary as listed.
-49-
<PAGE>
<TABLE>
<CAPTION>
31/12/1996
---------------------------
CEAC S.A.
FRANCE
---------------------------
<S> <C> <C> <C> <C>
------------------- ----------------------- ----------------- -------------------------
97.77 EXIDE AUTOMOTIVE A SINAC S.R.L. 50.00 INCI-CEAC L'ACCUMULAT. FULMEN SARL
BELGIUM a ITALY TURKEY FRANCE c
------------------- ----------------------- ----------------- -------------------------
------------------- ----------------------- ----------------- -------------------------
??.?? AIM GmbH COMP. GEN. ACCUMULA SPA 96.05 CENTRA SA ATSA FRANCE S.A.
GERMANY ITALY POLAND FRANCE
------------------- ----------------------- ----------------- -------------------------
63.16 36.81
---------------------- ----------------------- ----------------- -------------------------
99.94 CMP BATTERLIEN NV B T.S. BATTERUE S.R.L. ??.?? INITIATIVE S.A. b SFAT S.A.
BELGIUM ITALY LUXEMBURG b FRANCE
---------------------- ----------------------- ----------------- -------------------------
---------------------- ----------------------- ----------------- -------------------------
HAGEN B.V. 99.13 I.C.S. c 20.00 DAISA S.A. 99.99 SOC.EXPL ACC. MAHIEU SARL f
NETHERLANDS ITALY SPAIN FRANCE
---------------------- ----------------------- ----------------- -------------------------
---------------------- ----------------------- ----------------- -------------------------
ANKER ACCU, BENELUX B.V. ACC. SONNENSCHEIN GmbH ?0.00 DAIMA SRL T.S. BATTERIES S.A.
NETHERLANDS GERMANY SPAIN FRANCE
---------------------- ----------------------- ----------------- -------------------------
---------------------- ----------------------- ----------------- -------------------------
T.S. ACCU. WACHT B.V. 50.00 SONNENSC LITHIUM GmbH ??.?? FULMEN IBERICA BA BATTERIE HAGEN S.A.
NETHERLANDS GERMANY SPAIN FRANCE
---------------------- ----------------------- ----------------- -------------------------
---------------------- -----------------------
CMP BATTERIJEN BV 10.00 SUNSHINE BATTERIES
NETHERLANDS NIGERIA
---------------------- -----------------------
----------------------
ATSA BATTERIJEN BV
NETHERLANDS
----------------------
----------------------
FTS B.V.
NETHERLANDS
----------------------
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------- ----------------------------------------------------------------------
OTHER SHAREHOLDERS OTHER INVESTMENTS
<S> <C> <C> <C>
A: INITIATIVE SA: 2.05 D: EXIDE AUTOMOTIVE: 0.02 a: INITIATIVE S.A. : 0.02 c: FULMEN IBERICA S.A.: 0.25
B: CEAC SA: 0.06 E: L'ACCUMULATEUR FULMEN: 0.25 b: EXIDE AUTOMOTIVE: 2.05 SOC. EXPL ACC. MAHIEU SARL: 0.01
C: INITIATIVE: 0.87 F: L'ACCUMULATEUR FULMEN: 0.01 ?????? EXIDE AUTOMOIVE (Belgium): 0.001
- ----------------------------------------------------------- ----------------------------------------------------------------------
</TABLE>
Ownership interests in each legal entity are represented by a single class of
common shares. Unless otherwise noted, the legal entities are 100% owned by
Exide or an Exide subsidiary as listed.
62
<PAGE>
<TABLE>
<CAPTION>
------------------------
S.E.A. TUDOR
SPAIN 31/12/1996
------------------------
<S> <C> <C> <C>
- ---------------------------- ---------------------------- ------------------- --------------------------
TERRENOS Y CONSTRUCCIONES GAZTAMBIDE S.A. S.P.A.T. EXIDE
S.A. VERWALTUNGSGESELLOHAFT
SPAIN SPAIN PORTUGAL GmbH
- ---------------------------- ---------------------------- ------------------- --------------------------
- ---------------------------- ---------------------------- ------------------- --------------------------
ELECTRO MERCANTIL INDUSTRIAL AMISGAR CIDAILIDA EXIDE AUTOMOTIVE
S.A. BATTERIE GmbH
SPAIN SPAIN PORTUGAL GERMANY
- ---------------------------- ---------------------------- ------------------- --------------------------
- ---------------------------- ---------------------------- ------------------- --------------------------
TUDOR ELECTRONICA S.A. ESPACO 2000 LTDA AZAILDA HAGEN BATTERIE AG
SPAIN PORTUGAL PORTUGAL GERMANY
- ---------------------------- ---------------------------- ------------------- --------------------------
- ---------------------------- ---------------------------- ------------------- --------------------------
MEGORSA RENOVACION URBANA LTD. SORICOL EXIDE BATTERIEWERKE GmbH
SPAIN PORTUGAL PORTUGAL AUSTRIA
- ---------------------------- ---------------------------- ------------------- --------------------------
- ---------------------------- ---------------------------- ------------------- --------------------------
PRODESA NERCOLEC SONALUR U-KASSE HAGEN
SPAIN LUXEMBURG PORTUGAL GERMANY
- ---------------------------- ---------------------------- ------------------- --------------------------
- ---------------------------- ---------------------------- ------------------- --------------------------
TUDOR SERVICIOS INDUSTRIALES MERCOLEC TUDOR B.V. COMTUDOR S.A. ACCU.-FABRIK TUDOR
SPAIN NETHERLANDS PORTUGAL GERMANY
- ---------------------------- ---------------------------- ------------------- --------------------------
- ---------------------------- ---------------------------- ------------------- --------------------------
RUCOMEX TUDOR HELLENIC GEOFINANCA S.A. TUDOR HOLDING OY.
SPAIN GREECE PORTUGAL FINLAND
- ---------------------------- ---------------------------- ------------------- --------------------------
- ---------------------------- ---------------------------- -------------------
TUDOR S.L. INTRA DEVELOPMENT CROVAM S.A.
SPAIN DENMARK PORTUGAL
- ---------------------------- ---------------------------- -------------------
- ---------------------------- ---------------------------- -------------------
METALLURGICA DE CUBAS S.L. TUDOR INDIA EMACEL
SPAIN INDIA ANGOLA
- ---------------------------- ---------------------------- -------------------
</TABLE>
Ownership interests in each legal entity are represented by a single class of
common shares.
<TABLE>
- ----------OTHER SHAREHOLDERS------------------------- ------------OTHER INVESTMENTS -----------------------------
<S> <C> <C> <C>
A: TERRENOS: 28.00 E: MERCOLEC: 20.00 a: ESPACO 2000 LTDA: 28.00 d: CIDAI: 25.00
B: TERRENOS: 29.00 SONALUR: 10.00 RENOVACION URBANA: 29.00 SONALUR: 15.00
C: SONALUR: 0.06 F: CIDAI: 50.00 GATZAMBIDE: 0.0001 e: S.P.A.T.: 0.05
S.P.A.T: 10.00 G: S.E.A. TUDOR: 20.00 b: AZAI: 20.00 AZAI: 10.00
D: AZAI: 25.00 AZAI: 15.00 c: SORICOL: 50.00 f: SONALUR: 20.00
H: CIDAI: 50.00 COMTUDOR: 60.00
- ----------------------------------------------------- -----------------------------------------------------------
</TABLE>
Unless otherwise noted, the legal entities are 100% owned by Exide or an
Exide subsidiary as listed.
<PAGE>
EXHIBIT A
---------
NOTICE OF BORROWING
[Date]
Bankers Trust Company, as
Administrative Agent for
the Banks party to the Credit
Agreement referred to below
One Bankers Trust Plaza
New York, New York 10006
Attention: ______________________
Gentlemen:
The undersigned, Exide Corporation (the "Company"), refers to the
Credit Agreement, dated as of August 30, 1994 (as amended, modified or
supplemented from time to time, the "Credit Agreement"; except as otherwise
defined herein, the terms defined therein being used herein as therein defined),
among the Company, various Banks from time to time party thereto, Bankers Trust
Company, Bank of America National Trust and Savings Association and Bank of
Montreal, as Agents, and you, as Administrative Agent for such Banks, and hereby
gives you notice, irrevocably, pursuant to Section 1.03(a) of the Credit
Agreement, that the undersigned hereby requests a Borrowing under the Credit
Agreement, and in that connection sets forth below the information relating to
such Borrowing (the "Proposed Borrowing") as required by Section 1.03(a) of the
Credit Agreement:
(i) The Business Day of the Proposed Borrowing is _________,
19__./1/
(ii) The aggregate principal amount of the Proposed Borrowing is
U.S. $___________.
- -----------------------
/1/ Shall be a Business Day at least one Business Day in the case of Base Rate
Loans and three Business Days in the case of Eurodollar Rate Loans, in each
case, after the date hereof.
<PAGE>
EXHIBIT A
Page 2
(iii) The Proposed Borrowing is to consist of [Tranche A Term Loans]
[Tranche B Term Loans] [Tranche C Term Loans] [Tranche D Term Loans]
[Revolving Loans].
(iv) The Loans to be made pursuant to the Proposed Borrowing shall
be initially maintained as [Base Rate Loans] [Eurodollar Loans]./2/
[(v) The initial Interest Period for the Proposed Borrowing is ___
month(s).]/3/
The undersigned hereby certifies that the following statements are
true and correct on the date hereof, and will be true and correct on the date of
the Proposed Borrowing:
(A) the representations and warranties contained in the Credit
Agreement and in the other Credit Documents are and will be true and
correct in all material respects, both before and after giving effect to
the Proposed Borrowing and to the application of the proceeds thereof, as
though made on such date (it being understood and agreed that any
representation or warranty which by its terms is made as of a specified
date shall be required to be true and correct in all material respects as
of such specified date); and
(B) no Default or Event of Default has occurred and is continuing, or
would result from such Proposed Borrowing or from the application of the
proceeds thereof.
Very truly yours,
EXIDE CORPORATION
By____________________________
Name:
Title:
- -------------------
/2/ Eurodollar Loans may not be incurred prior to the Syndication Termination
Date.
/3/ To be included for a Proposed Borrowing of Eurodollar Loans.
<PAGE>
EXHIBIT B-6
-----------
TRANCHE D TERM NOTE
U.S. $________________ New York, New York
_________ __, 199_
FOR VALUE RECEIVED, EXIDE CORPORATION, a Delaware corporation (the
"Company"), hereby promises to pay to the order of _____________________ or its
registered assigns (the "Bank"), in lawful money of the United States of America
in immediately available funds, at the office of Bankers Trust Company (the
"Administrative Agent"), initially located at One Bankers Trust Plaza, New York,
New York 10006, on the Tranche D Term Loan Maturity Date (as defined in the
Agreement referred to below) the principal sum of _______________ U.S. DOLLARS
or, if less, the then unpaid principal amount of all Tranche D Term Loans (as
defined in the Agreement) made by the Bank pursuant to the Agreement.
The Company promises also to pay interest on the unpaid principal
amount hereof in like money at said office from the date hereof until paid at
the rates and at the times provided in Section 1.08 of the Agreement.
This Note is one of the Tranche D Term Notes referred to in the Credit
Agreement, dated as of August 30, 1994, among the Company, the lenders from time
to time party thereto (including the Bank), Bankers Trust Company, Bank of
America National Trust and Savings Association, and Bank of Montreal, as Agents,
and Bankers Trust Company as the Administrative Agent (as amended, modified or
supplemented from time to time, the "Agreement"), and is entitled to the
benefits thereof and of the Domestic Subsidiaries Guaranty (as defined in the
Agreement). This Note is secured by the Security Documents (as defined in the
Agreement). As provided in the Agreement, this Note is subject to voluntary
prepayment and mandatory repayment prior to the Tranche D Term Loan Maturity
Date, in whole or in part.
This Tranche D Term Note may not be transferred except in accordance
with the terms and conditions of the Agreement. Transfers of this Tranche D
Term Note must be recorded in the Register maintained by the Administrative
Agent pursuant to the terms of the Agreement.
<PAGE>
EXHIBIT B-6
Page 2
In case an Event of Default (as defined in the Agreement) shall occur
and be continuing, the principal of and accrued interest on this Note may be
declared to be due and payable in the manner and with the effect provided in the
Agreement.
The Company hereby waives presentment, demand, protest or notice of
any kind in connection with this Note.
THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE
LAW OF THE STATE OF NEW YORK.
EXIDE CORPORATION
By_____________________________
Title:
<PAGE>
EXHIBIT O
---------
BORROWING BASE CERTIFICATE AS OF [DATE]
---------------------------------------
To: The Banks party to the Credit Agreement, dated
as of August 30, 1994, among Exide Corporation
(the "Company"), the financial institutions party
thereto and Bankers Trust Company, Bank of America
National Trust and Savings Association and Bank of
Montreal, as Agents, and Bankers Trust Company as
Administrative Agent, as amended (the "Credit Agreement")
1. Accounts Receivable Amount
------
Total face amount of the
receivables of the Company and
its Domestic Wholly-Owned
Subsidiaries which are party to
the Security Agreement
(excluding any receivables
which are in any way subject to
the Receivables Facility) which
conform to the representations
and warranties contained in the
Security Agreement (including, $__________
without limitation, that the
Collateral Agent shall have and
maintain a first priority
perfected security interest in
all such receivables), and at
all times continue to be
acceptable to the Collateral
Agent in its reasonable judgment
Less:
Returns, discounts, claims,
credits and allowances of any
nature (whether issued, owing, ($_________)
granted or outstanding)
Reserves for any other matter
affecting the creditworthiness
of account debtors with respect ($_________)
to the receivables:
Bill and hold (deferred ($_________)
shipment) transactions
Contracts or sales to any
Affiliate of the Company or ($_________)
any governmental entity
<PAGE>
All receivables which have not
been paid in full within 90
days after the due date thereof
or the amount of such ($_________)
receivables which have been
disputed by the account debtor
Receivables of any account
debtor of which 50% or more of
the aggregate outstanding
receivables of such account
debtor owed to the Company and ($_________)
its Domestic Wholly-Owned
Subsidiaries would be excluded
pursuant to the preceding item
Sales to account debtors
residing or located outside the ($_________)
United States
Receivables of any account
debtor with respect to which
any action or event of the
types described in Section ($_________)
11.05 of the Credit Agreement
has occurred
To the extent that the receivables of
any account debtor exceed 20% of the
total outstanding receivables of all
account debtors owed to the Company
and its Domestic Wholly-Owned ($_________)
Subsidiaries, that portion of such
receivables in excess of such 20%
Receivables of any account ($_________)
debtor arising
out of a consignment arrangement
2. Eligible Receivables
(Net Amount of No. 1) $__________
3. 75% of Eligible Receivables $__________
4. Inventory
Gross dollar value (valued at
the lower of cost (determined
on a first in-first out basis)
or market value) of the
inventory of the Company and
its Domestic Wholly-Owned
Subsidiaries which are party to
the Security Agreement which
conforms to the representations
and warranties contained in the
Security Agreement including,
without limitation, that
<PAGE>
<TABLE>
<S> <C>
the Collateral Agent shall have
and maintain a first priority
perfected security interest in
all such inventory, which
inventory constitutes raw
materials, work-in-progress or
finished goods and which is
not, in the Company's good
faith opinion and consistent
with past practice, excess,
obsolete or unmerchantable $__________
Less:
Any supplies (other than raw
materials), spare parts and ($_________)
goods returned to suppliers
Inventory subject to any Lien
other than the Liens created
under the Security Documents ($_________)
Any market reserves maintained
by the Company and its
Subsidiaries ($_________)
5. Eligible Inventory (Net Amount
No. 4) $__________
6. 60% of Eligible Inventory $__________
7. Value of property, plant and
equipment $50,000,000
8. Aggregate principal amount of
Tranche D Term
Loans outstanding $__________
9. Borrowing Base
(Remainder (but not less than $__________
$0) of (1) the sum of No. 3,
No. 6 and No. 7, minus (2)
No. 8)
10. Outstanding Principal
Amount of Revolving Loans,
Swingline Loans and Revolving
Letter of Credit Outstandings $__________
11. Borrowing Base Surplus
(Deficiency)
(No. 9 minus No. 10) $__________
</TABLE>
70
<PAGE>
The undersigned hereby certifies that all of the information provided
above is true and correct as of the date first above written.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand this
__ day of ____________, 19__.
EXIDE CORPORATION
By_________________________
Name:
Title: Chief Financial Officer
71
<PAGE>
PAGE>
Exhibit 11.1
(Page 1 of 2)
Exide Corporation and Subsidiaries
Computation of Per-Share Earnings
(After Extraordinary Loss and Cumulative Effect of Accounting Changes)
(Amounts in thousands except share and per-share data)
<TABLE>
<CAPTION>
Fiscal Fiscal Fiscal
Year Year Year
Ended Ended Ended
March 31, March 31, March 31,
1995 1996 1997
---------- --------- ----------
<S> <C> <C> <C>
Primary earnings per common share:
Income before extraordinary loss and cumulative effect of
accounting change applicable to common stock $ 4,491 $ 939 $ 18,992
=========== =========== ===========
Net income (loss) applicable to common stock $ 894 $ (8,661) $ 16,225
=========== =========== ===========
Shares and equivalents outstanding-
Base shares after ECA exchange 8,388,338 8,388,338 8,388,347
Common stock equivalents-
Stock award grants, assuming exercised at
the average market price 763,080 775,062 702,226
Stock award grants exercised - 1,992 10,822
Stock options, assuming exercised at
the average market price - 23,159 -
IPO shares (average shares outstanding throughout the year) 4,600,000 4,600,000 4,600,000
Secondary offering shares (average shares outstanding
throughout the year) 1,000,000 1,000,000 1,000,000
12/94 stock offering (average shares outstanding throughout
the year) 1,439,657 5,175,000 5,175,000
Shares issued to acquire Schuylkill Holdings, Inc. (average
shares outstanding throughout the year) - 348,755 593,210
Shares issued to acquire remaining interest in CEAc subsidiary
(average shares outstanding throughout the year) - 72,116 350,000
Additional shares issued to acquire remaining interest in CEAc
subsidiary (average shares outstanding throughout the year) - - 366,009
Shares issued to acquire a sales branch operation - - 10,870
Shares issued under Employee Stock Purchase Plan (average shares
outstanding throughout the year) - 384 6,813
Shares issued under Stock Award Plan (average shares
outstanding throughout the year) - - 944
----------- ----------- -----------
Weighted average of common shares outstanding and equivalents 16,191,075 20,384,806 26,196,812
=========== =========== ===========
Primary earnings per common share before extraordinary loss
and cumulative effect of accounting change $ 0.28 $ 0.05 $ 0.90
=========== =========== ===========
Primary earnings (loss) per common share $ 0.06 $ (0.42) $ 0.77
=========== =========== ===========
</TABLE>
<PAGE>
Exhibit 11.1
(Page 2 of 2)
Exide Corporation and Subsidiaries
Computation of Per-Share Earnings
(After Extraordinary Loss and Cumulative Effect of Accounting Changes)
(Amounts in thousands except share and per-share data)
<TABLE>
<CAPTION>
<S>
Fiscal Fiscal Fiscal
Year Year Year
Ended Ended Ended
March 31, March 31, March 31,
1995 1996 1997
----------- ----------- -----------
<S> <C> <C> <C>
Fully dilluted earnings per common share:
Income before extraordinary loss and cumulative effect of
accounting change applicable to common stock $ 4,491 $ 939 $ 18,992
Elimination of interest expense on convertible senior
subordinated notes, net of income tax benefit - 3,404 12,015
----------- ----------- -----------
Adjusted income before extraordinary loss and cumulative
effect of accounting change applicable to common stock $ 4,491 $ 4,343 $ 31,007
=========== =========== ===========
Net income (loss) applicable to common stock $ 894 $ (8,661) $ 16,225
Elimination of interest expense on convertible senior subordinated
notes, net of income tax benefit - 3,404 $ 12,015
----------- ----------- -----------
Adjusted net income (loss) applicable to common stock $ 894 $ (5,257) $ 28,240
=========== =========== ===========
Shares and equivalents outstanding-
Base shares after ECA exchange 8,388,338 8,388,338 8,388,347
Common stock equivalents-
Stock award grants, assuming exercised at
the average market price 763,080 775,062 702,226
Stock award grants exercised - 1,992 10,822
Stock options, assuming exercised at
the average market price - 23,159 -
IPO shares (average shares outstanding throughout the year) 4,600,000 4,600,000 4,600,000
Secondary offering shares (average shares outstanding
throughout the year) 1,000,000 1,000,000 1,000,000
12/94 stock offering (average shares outstanding throughout
the year) 1,439,657 5,175,000 5,175,000
Shares issued to acquire Schuylkill Holdings, Inc. (average
shares outstanding throughout the year) - 348,755 593,210
Shares issued to acquire remaining interest in CEAc subsidiary
(average shares outstanding throughout the year) - 72,116 350,000
Additional shares issued to acquire remaining interest in CEAc
subsidiary (average shares outstanding throughout the year) - - 366,009
Shares issued to acquire a sales branch operation - - 10,870
Shares issued under Employee Stock Purchase Plan (average shares
outstanding throughout the year) - 384 6,813
Shares issued under Stock Award Plan (average shares
outstanding throughout the year) - - 944
Convertible shares (assumed average shares outstanding
throughout the year) - 1,477,254 4,992,571
----------- ----------- -----------
Weighted average of common shares outstanding and equivalents 16,191,075 21,862,060 26,196,812
=========== =========== ===========
Fully diluted earnings per common share before extraordinary loss
and cumulative effect of accounting change $ 0.28 $ N.A.* $ N.A.*
=========== =========== ===========
Fully diluted earnings (loss) per common share $ 0.06 $ N.A.* $ N.A.*
=========== =========== ===========
</TABLE>
* antidilutive
<PAGE>
Exhibit 21.1
(Page 1 of 4)
<TABLE>
<CAPTION>
Jurisdiction
Subsidiary Name Ownership of Incorporation
- --------------------------------------------------------------------------------
<S> <C> <C>
Exide Canada, Inc. 100.00% Canada
8301 Keele St.
Maple, Ontario
Canada L6A 1T2
General Battery Corporation 100.00% Pennsylvania
645 Penn Street
Reading, PA 19601
Sociedad Espanola del Acumulador Tudor, SA 95.77% Spain
Condesa de Venadito, 1
28027 Madrid, Spain
Gaztambide, SA 100.00% Spain
Condesa de Venadito, 1
28027 Madrid, Spain
Terrenos y Construcciones, SA 100.00% Spain
Condesa de Venadito, 1
28027 Madrid, Spain
Sociedad Portugesa do Acumulador Tudor, SA (SPAT) 94.51% Portugal
Rua Actor Tasso, 1
1050 Lisboa, Portugal
Exide Verwaltungsgesellschaft 100.00% Germany
Coesterweg, 45
D-59494 Soest, Germany
Hagen, AG 98.50% Germany
Coesterweg, 45
D-59494 Soest, Germany
Exide Automotive, GmbH 100.00% Germany
Miramstrasse 74
34123 Kassel, Germany
Exide Batteriewerke, GmbH 100.00% Austria
Puntigamerstrasse 127
8055 Graz, Austria
Mercolec Tudor, BV 100.00% Netherlands
Amsteldjik 166
1079 LH Amsterdam, Netherlands
</TABLE>
<PAGE>
(Page 2 of 4)
<TABLE>
<CAPTION>
Jurisdiction
Subsidiary Name Ownership of Incorporation
- --------------------------------------------------------------------------------
<S> <C> <C>
Tudor Hellenic SA 100.00% Greece
3 Plastira Str
GR 144-52 Metamorfosi, Greece
Tudor India 51.00% India
147 Jolly Maker Chambers 2 - 14th Floor
Nariman Point - Bombay 400021 India
Exide Holding Europe SA 100.00% France
5 a 7 allee des Pierres Mayettes
92636 Gennevilliers, France
Compagnie Europeene d' Accumulateurs 100.00% France
5 a 7 allee des Pierres Mayettes
92636 Gennevilliers, France
TS Batteries 100.00% France
5 a 7 allee des Pierres Mayettes
92636 Gennevilliers, France
Batterie Hagen SA 100.00% France
5 a 7 allee des Pierres Mayettes
92636 Gennevilliers, France
Exide Automotive BV 99.81% Belgium
93 rue de Florival
1390 Archennes, Belgium
CPM Batterijen NV 99.81% Belgium
93 rue de Florival
1390 Archennes, Belgium
Hagen Batterijen BV 100.00% Netherlands
Zoonebaan 6
3606 CA Maarsen, Netherlands
CMP Batterijen BV 100.00% Netherlands
Postus 162 Produktiestraat 25
3130 AD Viaardingen, Netherlands
ATSA Batterijen BV 100.00% Netherlands
Energieweg 105 Postbus 26
3640 AA Mijdrecht, Netherlands
</TABLE>
<PAGE>
(Page 3 of 4)
<TABLE>
<CAPTION>
Jurisdiction
Subsidiary Name Ownership of Incorporation
- --------------------------------------------------------------------------------
<S> <C> <C>
Exide Automotive BV 100.00% Netherlands
Energieweg 105
3641 RT Mijdrecht, Netherlands
Industria Composizione Stampate SpA (ICS) 100.00% Italy
Via bergamo, 1
Canonica d'Adda Bergamo 28040, Italy
Societa Industriale Accumulatori Srl (SINAC) 100.00% Italy
Via Dante Alighieri 100/106
Romano Di Lombardia, Italy
Compagnie Generale Accumulatori SpA (CGA) 100.00% Italy
Via Benevento 40
80013 Casalnuovo di Napoli, Italy
TS Batterie Srl 100.00% Italy
Via Monzese 76
Segrate, Italy
Accumulatorenfabrik Sonnencshein GmbH 100.00% Germany
Thiergarten
63654 Budingen
Sonnenschein Lithium GmbH 100.00% Germany
Industriesstrasse 22
63654 Budigen
CENTRA Spolka Akcyjna (CENTRA) 96.05% Poland
Gdynska 31/33
61-0166 Pozen, Poland
INCI CEAc Aku Sanayi; Anoi Sirketi 50.00% Turkey
Organize Sanayi Bolgesi
45030 Maines, Turkey
Fulmen Iberica 96.12% Spain
Poligono Industrial El Pla
C/Miguel Torello Pages, 11-13
06750 Molin de rel, Spain
Tudor AB 100.00% Sweden
S-44041 NOL Sweden
</TABLE>
<PAGE>
(Page 4 of 4)
<TABLE>
<CAPTION>
Jurisdiction
Subsidiary Name Ownership of Incorporation
- --------------------------------------------------------------------------------
<S> <C> <C>
Exide Sonnak A/S 100.00% Norway
Molovelen 25
N-3191 Horten, Norway
Exide Oy 100.00% Finland
Sahkotie, 8
Sf-01510 Vantaa, Finland
CMP Batteries Limited 100.00% England
PO Box 1 Salford Road Over Hulton
Bolton BL5 1DD
TS Batteries Limited 100.00% England
PO Box 1 Salford Road Over Hulton
Bolton BL5 1DD
Euro Exide Corporation Limited 100.00% United Kingdom
Exide House, 24 Atlantic Square
Station Road, Witham Essex, UK
Exide Batteries Limited 81.50% United Kingdom
Caldicot Way, Cwmbran
Gwent, Wales
BIG Batteries Limited 81.50% United Kingdom
Caldicot Way, Cwmbran
Gwent, Wales
BIG France SARL 81.50% France
6/10 rue Olaf Palme, Emerinville Pariest, 77312
Marne la Vallee, France
Exide (Holdings) Limited 81.50% United Kingdom
Chequers Lane
Dagenham, Essex RM9 6PX
Exide (Dagenham) Limited 81.50% United Kingdom
Chequers Lane
Dagenham, Essex RM9 6PX
Exide Batterier AB 81.50% Sweden
Box 458
651 10 Karistad, Stockholm, Sweden
</TABLE>
<PAGE>
Exhibit 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of our
report included in this Form 10-K, into the Company's previously filed
Registration Statements File Nos. 333-29991, 333-11695, 333-00885, 333-00413,
33-64169, 33-62295, 33-62467.
ARTHUR ANDERSEN LLP
Philadelphia, Pennsylvania
June 30, 1997
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 42,706
<SECURITIES> 0
<RECEIVABLES> 608,169
<ALLOWANCES> 38,486
<INVENTORY> 533,514
<CURRENT-ASSETS> 1,191,459
<PP&E> 797,772
<DEPRECIATION> 275,936
<TOTAL-ASSETS> 2,438,495
<CURRENT-LIABILITIES> 561,019
<BONDS> 1,236,071
0
0
<COMMON> 213
<OTHER-SE> 371,197
<TOTAL-LIABILITY-AND-EQUITY> 2,438,495
<SALES> 2,333,230
<TOTAL-REVENUES> 2,333,230
<CGS> 1,737,954
<TOTAL-COSTS> 1,737,954
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 4,638
<INTEREST-EXPENSE> 118,837
<INCOME-PRETAX> 35,023
<INCOME-TAX> 14,732
<INCOME-CONTINUING> 18,992
<DISCONTINUED> 0
<EXTRAORDINARY> 2,767
<CHANGES> 0
<NET-INCOME> 16,225
<EPS-PRIMARY> 0.77
<EPS-DILUTED> 0.77
</TABLE>
